ESSENTIAL PROPERTIES REALTY TRUST, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)

In this Quarterly Report on Form 10-Q, we refer to Essential Properties Realty
Trust, Inc., a Maryland corporation, together with its consolidated
subsidiaries, including its operating partnership, Essential Properties, L.P.,
as "we," "us," "our" or the "Company," unless we specifically state otherwise or
the context otherwise requires.

Special note regarding forward-looking statements

This quarterly report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In particular, many statements pertaining to our business and growth
strategies, investment, financing and leasing activities, and trends in our
business, including trends in the market for long-term, net leases of
freestanding, single-tenant properties, contain forward-looking statements. When
used in this quarterly report, the words "estimate," "anticipate," "expect,"
"believe," "intend," "may," "will," "should," "seek," "approximately," and
"plan," and variations of such words, and similar words or phrases, that are
predictions of future events or trends and that do not relate solely to
historical matters, are intended to identify forward-looking statements. You can
also identify forward-looking statements by discussions of strategy, plans,
beliefs or intentions of management.

Forward-looking statements involve known and unknown risks and uncertainties
that may cause our actual results, performance or achievements to be materially
different from the results of operations or plans expressed or implied by such
forward-looking statements; accordingly, you should not rely on forward-looking
statements as predictions of future events. Forward-looking statements depend on
assumptions, data or methods that may be incorrect or imprecise, and may not be
realized. We do not guarantee that the transactions and events described will
happen as described (or that they will happen at all). 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:

• general business and economic conditions;

•risks inherent in the real estate business, including tenant defaults or
bankruptcies, illiquidity of real estate investments, fluctuations in real
estate values and the general economic climate in local markets, competition for
tenants in such markets, potential liability relating to environmental matters
and potential damages from natural disasters;

•the performance and financial situation of our tenants;

•the availability of suitable properties in which to invest and our ability to acquire and lease such properties on favorable terms;

• our ability to renew leases, lease vacant space or re-let space as existing leases expire or are terminated;

•volatility and uncertainty in credit and broader financial markets, including potential fluctuations in the consumer price index (“CPI”);

•the degree and nature of our competition;

• our inability to generate sufficient cash flow to service our outstanding debt;

•our ability to access debt and equity capital on attractive terms;

•fluctuating interest rates;

•the availability of qualified personnel and our ability to retain our key executives;

• changes in, or the failure or inability to comply with, applicable law or regulation;

• our inability to continue to qualify for tax as a real estate investment trust (“REIT”);

• changes in the WE tax law and others WE laws, whether or not specific to REITs;

•any negative impact of the COVID-19 pandemic or other similar epidemics on the Company and its tenants; and

• the additional factors discussed in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report and in our Annual Report on Form 10-K for the financial year closed December 31, 2021.

                                       40
--------------------------------------------------------------------------------

Contents

You are cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date of this quarterly report. While forward-looking
statements reflect our good faith beliefs, they are not guarantees of future
events or of our performance. We disclaim 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, except as required by law.

Because we operate in a highly competitive and rapidly changing environment, new
risks emerge from time to time, and it is not possible for management to predict
all such risks, nor can management assess the impact of all such risks on our
business or the extent to which any risk, or combination of risks, may cause
actual results to differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of actual events or
results.

-Overview

We are an internally managed real estate company that acquires, owns and manages
primarily single-tenant properties that are net leased on a long-term basis to
middle-market companies operating service-oriented or experience-based
businesses. We generally invest in and lease freestanding, single-tenant
commercial real estate properties where a tenant conducts activities that are
essential to the generation of the tenant's sales and profits. As of
March 31, 2022, 92.9% of our $257.9 million of annualized base rent was
attributable to properties operated by tenants in service-oriented and
experience-based businesses. "Annualized base rent" means annualized
contractually specified cash base rent in effect on March 31, 2022 for all of
our leases (including those accounted for as loans or direct financing leases)
commenced as of that date and annualized cash interest on our mortgage loans
receivable as of that date.

We were organized on January 12, 2018 as a Maryland corporation. We have elected
to be taxed as a REIT for federal income tax purposes beginning with the year
ended December 31, 2018, and we believe that our current organization,
operations and intended distributions will allow us to continue to so qualify.
Our common stock is listed on the New York Stock Exchange under the symbol
"EPRT".

Our primary business objective is to maximize stockholder value by generating
attractive risk-adjusted returns through owning, managing and growing a
diversified portfolio of commercially desirable properties. As of
March 31, 2022, we had a portfolio of 1,545 properties (inclusive of 174
properties which secure our investments in mortgage loans receivable) that was
diversified by tenant, industry, concept and geography, had annualized base rent
of $257.9 million and was 100.0% occupied. Our portfolio is built based on the
following core investment attributes:

Diversification. As of March 31, 2022, our portfolio was 100.0% occupied by 323
tenants operating 461 different brands, or concepts, in 16 industries across 46
states, with none of our tenants contributing more than 3.3% of our annualized
base rent. Our goal is that, over time, no more than 5% of our annualized base
rent will be derived from any single tenant or more than 1% from any single
property.

Long Lease Term. As of March 31, 2022, our leases had a weighted average
remaining lease term of 13.9 years (based on annualized base rent), with 4.9% of
our annualized base rent attributable to leases expiring prior to January 1,
2027. Our properties generally are subject to long-term net leases that we
believe provide us a stable base of revenue from which to grow our portfolio.

Extensive use of master leases. From March 31, 202262.1% of our annualized base rent was attributable to master leases.

Rent coverage ratio and tenant financial reports. From March 31, 2022the weighted average rent coverage ratio of our portfolio was 3.8x, and 98.6% of our leases (based on an annualized base rent) require the tenant to periodically provide us with level-specific financial information of the unit.

Contractual increase in base rent. From March 31, 202297.5% of our leases (based on annualized base rent) provided future base rent increases at a weighted average rate of 1.5% per annum.

Significant Use of Sale-Leaseback Investments. We seek to acquire properties
owned and operated by middle-market businesses and lease the properties back to
the operators pursuant to our standard lease form.

                                       41
--------------------------------------------------------------------------------

Contents

In the three months ended March 31, 2022approximately 100.0% of our investments were sale-leaseback transactions.

Smaller, Low Basis Single-Tenant Properties. We generally invest in freestanding
"small-box" single- tenant properties. As of March 31, 2022, our average
investment per property was $2.3 million (which equals our aggregate investment
in our properties (including transaction costs, lease incentives and amounts
funded for construction in progress) divided by the number of properties owned
at such date), and we believe investments of similar size allow us to grow our
portfolio without concentrating a large amount of capital in individual
properties and limit our exposure to events that may adversely affect a
particular property. Additionally, we believe that many of our properties are
generally fungible and appropriate for multiple commercial uses, which reduces
the risk that a particular property may become obsolete and enhances our ability
to sell a property if we choose to do so.

Our competitive strengths

We believe the following competitive strengths set us apart from our competitors and enable us to compete in the single-tenant net rental market:

Carefully Constructed Portfolio of Recently Acquired Properties Leased to
Service-Oriented or Experience-Based Tenants. We have strategically constructed
a portfolio that is diversified by tenant, industry and geography and generally
avoids exposure to businesses that we believe are subject to pressure from
e-commerce businesses. Our properties are generally subject to long-term net
leases that we believe provide us with a stable base of revenue from which to
grow our business. As of March 31, 2022, we had a portfolio of 1,545 properties,
with annualized base rent of $257.9 million. These properties were carefully
selected by our management team in accordance with our focused and disciplined
investment strategy. Our portfolio is diversified with 323 tenants operating 461
different concepts across 46 states and 16 industries. None of our tenants
contributed more than 3.3% of our annualized base rent as of March 31, 2022, and
our strategy targets a scaled portfolio that, over time, derives no more than 5%
of its annualized base rent from any single tenant or more than 1% from any
single property.

•We focus on investing in properties leased to tenants operating in
service-oriented or experience-based businesses such as car washes, restaurants
(primarily quick service restaurants), early childhood education, medical and
dental services, convenience stores, automotive services, equipment rental,
entertainment and health and fitness, which we believe are generally more
insulated from e-commerce pressure than many others. As of March 31, 2022, 92.9%
of our annualized base rent was attributable to tenants operating
service-oriented and experience-based businesses.

•We believe that our portfolio's diversity and our rigorous and disciplined
underwriting decrease the impact on us of an adverse event affecting a specific
tenant, industry or region, and our focus on leasing to tenants in industries
that we believe are well-positioned to withstand competition from e-commerce
businesses increases the stability and predictability of our rental revenue.

Experienced and Proven Management Team. Our senior management has significant
experience in the net-lease industry and a track record of growing net-lease
businesses to significant scale.

•Our senior management team has been responsible for our focused and disciplined
investment strategy and for developing and implementing our investment sourcing,
underwriting, closing and asset management infrastructure, which we believe can
support significant investment growth without a proportionate increase in our
operating expenses. As of March 31, 2022, exclusive of our initial investment in
a portfolio of 262 net leased properties, consisting primarily of restaurants,
that we acquired on June 16, 2016 as part of the liquidation of General Electric
Capital Corporation for an aggregate purchase price of $279.8 million (including
transaction costs) (the "Initial Portfolio"), 84.6% of our portfolio's
annualized base rent was attributable to internally originated sale-leaseback
transactions and 85.7% was acquired from parties who had previously engaged in
one or more transactions that involved a member of our senior management team
(including operators and tenants and other participants in the net lease
industry, such as brokers, intermediaries and financing sources). The
substantial experience, knowledge and relationships of our senior leadership
team provide us with an extensive network of contacts that we believe allows us
to originate attractive investment opportunities and effectively grow our
business.

                                       42
--------------------------------------------------------------------------------

Contents

Differentiated Investment Strategy. We seek to acquire and lease freestanding,
single-tenant commercial real estate facilities where a tenant conducts
activities at the property that are essential to the generation of its sales and
profits. We primarily seek to invest in properties leased to unrated middle-
market companies that we determine have attractive credit characteristics and
stable operating histories. We believe middle-market companies are underserved
from a capital perspective and that we can offer them attractive real estate
financing solutions while allowing us to enter into lease agreements that
provide us with attractive risk-adjusted returns. Furthermore, many net-lease
transactions with middle- market companies involve properties that are
individually relatively small, which allows us to avoid concentrating a large
amount of capital in individual properties. We maintain close relationships with
our tenants, which we believe allows us to source additional investments and
become the capital provider of choice as our tenants' businesses grow and their
real estate needs increase.

Asset Base Allows for Significant Growth. Building on our senior leadership
team's experience of more than 20 years in net-lease real estate investing, we
have developed leading origination, underwriting, financing and property
management capabilities. Our platform is scalable, and we seek to leverage our
capabilities to improve our efficiency and processes to continue to seek
attractive risk- adjusted growth. While we expect that our general and
administrative expenses could increase as our portfolio grows, we expect that
such expenses as a percentage of our portfolio and our revenues will decrease
over time due to efficiencies and economies of scale. With our smaller asset
base relative to other peers that also focus on acquiring net leased real
estate, we believe that we can achieve superior growth through manageable
investment volume.

Disciplined Underwriting Leading to Strong Portfolio Characteristics. We
generally seek to invest in single assets or portfolios of assets through
transactions which range in an aggregate purchase price from $2 million to $50
million. Our size allows us to focus on investing in a segment of the market
that we believe is underserved from a capital perspective and where we can
originate or acquire relatively smaller assets on attractive terms that provide
meaningful growth to our portfolio. In addition, we seek to invest in
commercially desirable properties that are suitable for use by different
tenants, offer attractive risk-adjusted returns and possess characteristics that
reduce our real estate investment risks.

Extensive Tenant Financial Reporting Supports Active Asset Management. We seek
to enter into lease agreements that obligate our tenants to periodically provide
us with corporate and/or unit-level financial reporting, which we believe
enhances our ability to actively monitor our investments, manage credit risk,
negotiate lease renewals and proactively manage our portfolio to protect
stockholder value. As of March 31, 2022, leases contributing 98.6% of our
annualized base rent required tenants to provide us with specified unit-level
financial information, and leases contributing 98.8% of our annualized base rent
required tenants to provide us with corporate-level financial reporting.

Our business and growth strategies

Our primary business objective is to maximize stockholder value by generating
attractive risk-adjusted returns through owning, managing and growing a
diversified portfolio of commercially desirable properties. We intend to pursue
our objective through the following business and growth strategies.

Structure and Manage Our Diverse Portfolio with Focused and Disciplined
Underwriting and Risk Management. We seek to maintain the stability of our
rental revenue and maximize the long-term return on our investments while
continuing our growth by using our focused and disciplined underwriting and risk
management expertise. When underwriting assets, we focus on commercially
desirable properties, with strong operating performance, healthy rent coverage
ratios and tenants with attractive credit characteristics.

•Leasing. In general, we seek to enter into leases with (i) relatively long
terms (typically with initial terms of 15 years or more and tenant renewal
options); (ii) attractive rent escalation provisions; (iii) healthy rent
coverage ratios; and (iv) tenant obligations to periodically provide us with
financial information, which provides us with information about the operating
performance of the leased property and/or tenant and allows us to actively
monitor the security of payments under the lease on an ongoing basis. We
strongly prefer to use master lease structures, pursuant to which we lease
multiple properties to a single tenant on a unitary (i.e., "all or none") basis.
In addition, in the context of our sale-leaseback investments, we generally seek
to establish contract rents that are at or below prevailing market rents, which
we believe enhances tenant retention and reduces our releasing risk if a lease
is rejected in a bankruptcy proceeding or expires.

                                       43
--------------------------------------------------------------------------------

Contents

•Diversification. We monitor and manage the diversification of our portfolio in
order to reduce the risks associated with adverse developments affecting a
particular tenant, property, industry or region. Our strategy targets a scaled
portfolio that, over time, will (1) derive no more than 5% of its annualized
base rent from any single tenant or more than 1% of its annualized base rent
from any single property, (2) be primarily leased to tenants operating in
service-oriented or experience- based businesses and (3) avoid significant
credit concentrations. While we consider these criteria when making investments,
we may be opportunistic in managing our business and make investments that do
not meet one or more of these criteria if we believe the opportunity presents an
attractive risk-adjusted return.

•Asset Management. We are an active asset manager and regularly review each of
our properties to evaluate various factors, including, but not limited to,
changes in the business performance of the operator at the property, credit of
the tenant and local real estate market conditions. Among other things, we use
Moody's Analytics RiskCalc, which is a model for predicting private company
defaults based on Moody's Analytics Credit Research Database, to proactively
detect credit deterioration. Additionally, we monitor market rents relative to
in-place rents and the amount of tenant capital expenditures in order to refine
our tenant retention and alternative use assumptions. Our management team
utilizes our internal credit diligence to monitor the credit profile of each of
our tenants on an ongoing basis. We believe that this proactive approach enables
us to identify and address credit issues in a timely manner and to determine
whether there are properties in our portfolio that are appropriate for
disposition.

•In addition, as part of our active portfolio management, we may selectively
dispose of assets that we conclude do not offer a return commensurate with the
investment risk, contribute to unwanted credit, industry or tenant
concentrations, or may be sold at a price we determine is attractive. We believe
that our underwriting processes and active asset management enhance the
stability of our rental revenue by reducing default losses and increasing the
likelihood of lease renewals.

Focus on Relationship-Based Sourcing to Grow Our Portfolio by Originating
Sale-Leaseback Transactions. We plan to continue our disciplined growth by
originating primarily sale-leaseback transactions and opportunistically making
acquisitions of properties subject to net leases that contribute to our
portfolio's tenant and industry diversification. As of March 31, 2022, exclusive
of the Initial Portfolio, 84.6% of our portfolio's annualized base rent was
attributable to internally originated sale- leaseback transactions and 85.7% was
acquired from parties who had previously engaged in transactions that involved a
member of our senior management team (including operators and tenants and other
participants in the net lease industry, such as brokers, intermediaries and
financing sources). In addition, we seek to leverage our relationships with our
tenants to facilitate investment opportunities, including selectively agreeing
to reimburse certain of our tenants for development costs at our properties in
exchange for contractually specified rent that generally increases
proportionally with our funding. As of March 31, 2022, exclusive of the Initial
Portfolio, approximately 45.0% of our investments were sourced from operators
and tenants who had previously consummated a transaction involving a member of
our management team. We believe our senior management team's reputation,
in-depth market knowledge and extensive network of longstanding relationships in
the net lease industry provide us access to an ongoing pipeline of attractive
investment opportunities.

Focus on Middle-Market Companies in Service-Oriented or Experience-Based
Businesses. We primarily focus on investing in properties that we lease on a
long-term, triple-net basis to middle-market companies that we determine have
attractive credit characteristics and stable operating histories. We beleive
properties leased to middle-market companies may offer us the opportunity to
achieve superior risk-adjusted returns as a result of our extensive and
disciplined credit and real estate analysis, lease structuring and portfolio
composition. We believe our capital solutions are attractive to middle- market
companies, as such companies often have limited financing options as compared to
larger, credit rated organizations. We also believe that, in many cases, smaller
transactions with middle- market companies will allow us to maintain and grow
our portfolio's diversification. Middle-market companies are often willing to
enter into leases with structures and terms that we consider attractive (such as
master leases and leases that require ongoing tenant financial reporting) and
believe contribute to the stability of our rental revenue.

•In addition, we emphasize investments in properties leased to tenants engaged
in service-oriented or experience-based businesses, such as, car washes,
restaurants (primarily quick service restaurants), early childhood education,
medical and dental services, convenience stores, automotive services, equipment
rental, entertainment and health and fitness, as we believe these businesses are
generally more insulated from e-commerce pressure than many others.

                                       44
--------------------------------------------------------------------------------

Contents

Internal Growth Through Long-Term Triple-Net Leases That Provide for Periodic
Rent Escalations. We seek to enter into long-term (typically with initial terms
of 15 years or more and with tenant renewal options), triple-net leases that
provide for periodic contractual rent escalations. As of March 31, 2022, our
leases had a weighted average remaining lease term of 13.9 years (based on
annualized base rent), with only 4.9% of which provide for annal rent increases
of our annualized base rent attributable to leases expiring prior to January 1,
2027. In addition, 97.5% of our leases (based on annualized base rent) provided
for increases in future base rent at a weighted average of 1.5% per year.

Actively Manage Our Balance Sheet to Maximize Capital Efficiency. We seek to
maintain a prudent balance between debt and equity financing and to maintain
funding sources that lock in long-term investment spreads and limit interest
rate sensitivity. We have access to multiple sources of debt capital, including,
but not limited to, the public unsecured debt market, asset-backed bond market,
through our Master Trust Funding Program, and bank debt, such as through our
revolving credit facility and unsecured term loan facilities. We believe that
our level of net debt, over time, should generally always be less than six times
our annualized adjusted EBITDAre (as defined in "Non-GAAP Financial Measures"
below) on a quarterly and annual basis. Since our initial public offering in
2018, our quarterly net debt to annualized adjusted EBITDAre has averaged 4.6x.

Historical investment and disposal activity

The following table sets forth select information about our quarterly investment
activity for the quarters ended June 30, 2020 through March 31, 2022 (dollars in
thousands):

                                                                           Three Months Ended
                                                                  September 30,         December 31,
                                           June 30, 2021              2021                  2021               March 31, 2022
Investment volume                        $      223,186          $    230,755          $    322,203          $       237,795
Number of transactions                                  34                    31                    55                       23
Property count                                          94                    85                    96                      105
Avg. investment per unit                 $        2,354          $      2,676          $      3,230          $         2,187
Cash cap rates 1                                     7.1 %                 7.0 %                  6.9%                     7.0%
GAAP cap rates 2                                     7.8 %                 7.9 %                  7.8%                     7.8%
Master lease percentage 3,4                            83%                   80%                   59%                      83%
Sale-leaseback percentage 3,5                          88%                   84%                   96%                     100%
Percentage of financial reporting
3,6                                                   100%                  100%                   98%                     100%
Rent coverage ratio                                   2.7x                  2.8x                  3.0x                     3.3x
Lease term (in years)                                 13.5                  16.4                  16.3                     15.0

                                                                           Three Months Ended
                                                                  September 30,         December 31,
                                           June 30, 2020              2020                  2020               March 31, 2021
Investment volume                        $       42,369          $    148,877          $    244,078          $       197,816
Number of transactions                                  11                    19                    33                       22
Property count                                          13                    50                   108                       74
Avg. investment per unit                 $        2,870          $      2,866          $      2,218          $         2,650
Cash cap rates 1                                     7.4 %                 7.1 %                 7.1 %                    7.0 %
GAAP cap rates 2                                     8.1 %                 7.9 %                 7.7 %                    7.9 %
Master lease percentage 3,4                           68 %                  79 %                  89 %                      79%
Sale-leaseback percentage 3,5                        100 %                  92 %                  88 %                      85%
Percentage of financial reporting
3,6                                                  100 %                 100 %                 100 %                     100%
Rent coverage ratio                                   4.3x                  2.8x                  3.6x                     3.0x
Lease term (in years)                                 16.7                  17.6                  16.3                     16.1

_____________________________________

(1)   Annualized cash base rent for the first full month after the investment
divided by the gross investment in the property plus transaction costs.
(2)  GAAP rent for the first twelve months after the investment divided by the
gross investment in the property plus transaction costs.
(3)  As a percentage of annualized base rent.

                                       45
--------------------------------------------------------------------------------

  Table of Contents
(4)  Includes investments in mortgage loans receivable collateralized by more
than one property.
(5)  Includes investments in mortgage loans receivable made in support of
sale-leaseback transactions.
(6)  Tenants party to leases that obligate them to periodically provide us with
corporate and/or unit-level financial reporting, as a percentage of our
annualized base rent.

The following table sets forth select information about our quarterly
disposition activity for the quarters ended June 30, 2020 through March 31, 2022
(dollars in thousands):
                                                                           Three Months Ended
                                                               September 30,
                                        June 30, 2021               2021               December 31, 2021           March 31, 2022
Disposition volume1                   $       19,578          $      10,089          $            4,466          $        18,443
Cash cap rate on leased assets
2                                                 7.1 %                  6.5 %                        6.0%                     7.1%
Leased properties sold 3                           6                     11                           2                        6
Vacant properties sold 3                           1                      -                           -                        -

                                                                           Three Months Ended
                                                               September 30,
                                        June 30, 2020               2020               December 31, 2020           March 31, 2021
Disposition volume1                   $        3,420          $      19,595          $           39,042          $        25,197
Cash cap rate on leased assets
2                                                 6.8 %                  7.0 %                       7.4 %                    7.1 %
Leased properties sold 3                           3                     11                          21                       15
Vacant properties sold 3                           -                      3                           2                        1

_____________________________________

(1)   Net of transaction costs.
(2)   Annualized base rent at time of sale divided by the gross sale price
(excluding transaction costs) for the property.
(3)   Property count excludes dispositions of undeveloped land parcels or
dispositions where only a portion of the owned parcel was sold.

Update on the COVID-19 pandemic

On March 11, 2020, the World Health Organization declared the outbreak of the
novel coronavirus ("COVID-19") a pandemic. For much of 2020, the global spread
of COVID-19 created significant uncertainty and economic disruption, which
largely began to subside over the course of 2021 and generally has significantly
diminished in early 2022. However, the continuing impact of the COVID-19
pandemic and its duration are unclear, and variants of the virus, such as Delta
and Omicron, and vaccine hesitancy in certain areas could erode the progress
that has been made against the virus, or exacerbate or prolong the remaining
impact of the pandemic. Conditions similar to those experienced in 2020, at the
height of the pandemic, could return should the vaccinations prove ineffective
against future variants of the virus. Should the impact of a variant of the
virus cause conditions to occur that are similar to those experienced in 2020,
increased uncertainty, disruption and instability in the macro-economic
environment could occur and government restrictions could again force our
tenants' businesses to shut-down or limit their operations, which would
adversely impact our operations, our financial condition, our liquidity and our
prospects. Further, the extent and duration of any such conditions cannot be
predicted with any reasonable certainty.

We continue to monitor the impact of COVID-19 on all aspects of our business,
including our portfolio and the creditworthiness of our tenants. In 2020, we
entered into deferral agreements with certain of our tenants and recognized
contractual base rent pursuant to these agreements as a component of rental
revenue. These rent deferrals were negotiated on a tenant-by-tenant basis, and,
in general, allowed a tenant to defer all or a portion of their rent for a
portion of 2020, with all of the deferred rent to be paid to us pursuant to a
schedule that generally extends up to 24 months from the original due date of
the deferred rent. While our tenants' businesses and operations have largely
returned to pre-pandemic levels, any new developments that cause a
deterioration, or further deterioration, in our tenants' ability to operate
their businesses, or delays in the supply of products or services to our tenants
from vendors they require to operate their businesses, could cause our tenants
to be unable or unwilling to meet their contractual obligations to us, including
the payment of rent (including deferred rent), or to request further rent
deferrals or other concessions. The likelihood of this circumstance would
increase if variants of COVID-19, such as Delta and Omicron, intensify or
persist for a prolonged period. Additionally, whether the pandemic has caused a
material secular change in consumer behavior is not yet known as it pertains to
the patronage of service-based and/or experience-based businesses, but should
changes occur that are material, many

                                       46
--------------------------------------------------------------------------------

Contents

of our tenants would be adversely affected and their ability to meet their
obligations to us could be further impaired. During the deferral period, the
deferral agreements reduced our cash flow from operations, reduced our cash
available for distribution and adversely affected our ability to make cash
distributions to common stockholders. If tenants are unable to repay their
deferred rent, we will not receive cash in the future in accordance with our
expectations.

Cash and capital resources

As of March 31, 2022, we had $3.3 billion of net investments in our income
property portfolio, consisting of investments in 1,545 properties (inclusive of
174 properties which secure our investments in mortgage loans receivable), with
annualized base rent of $257.9 million. Substantially all of our cash from
operations is generated by our investment portfolio.

The liquidity requirements for operating our business consist primarily of
funding our investment activities, servicing our outstanding indebtedness and
paying our general and administrative expenses. The occupancy level of our
portfolio is 100.0% as of March 31, 2022 and, because substantially all of our
leases are triple-net (with our tenants generally responsible for the
maintenance, insurance and property taxes associated with the leased
properties), our liquidity requirements are not significantly impacted by the
occurrence of property costs. When a property becomes vacant because the tenant
has vacated the property due to default or at the expiration of the lease term
without a renewal or new lease being executed, we incur the property costs not
paid by the tenant, as well as those property costs accruing during the time it
takes to locate a new tenant or to sell the property. As of March 31, 2022, none
of our properties were vacant, and all properties were subject to a lease. We
expect to incur some property costs from time to time in periods during which
properties that become vacant are being marketed for lease or sale. In addition,
we may recognize an expense for certain property costs, such as real estate
taxes billed in arrears, if we believe the tenant is likely to vacate the
property before making payment on those obligations. The amount of such property
costs can vary quarter-to-quarter based on the timing of property vacancies and
the level of underperforming properties; however, we do not expect that such
costs will be significant to our operations.

We intend to continue to grow through additional investments in stand-alone
single tenant commercial properties. To accomplish this objective, we seek to
invest in real estate with a combination of debt and equity capital and with
cash from operations that we do not distribute to our stockholders. When we sell
properties, we generally reinvest the cash proceeds from our sales in new
property acquisitions. Our short-term liquidity requirements also include the
funding needs associated with 45 properties where we have agreed to provide
construction financing or reimburse the tenant for certain development,
construction and renovation costs in exchange for contractual payments of
interest or increased rent that generally increases in proportion with our level
of funding. As of March 31, 2022, we agreed to provide construction financing or
reimburse a tenant for certain development, construction and renovation costs in
an aggregate amount of $140.3 million, and, as of such date, we funded
$68.8 million of this commitment. We expect to fund the remainder of this
commitment by March 31, 2023.

Additionally, as of April 26, 2022, we were under contract to acquire 12
properties with an aggregate purchase price of $24.7 million, subject to
completion of our due diligence procedures and satisfaction of customary closing
conditions. We expect to meet our short-term liquidity requirements, including
our investment in potential future single tenant properties, primarily with our
cash and cash equivalents, net cash from operating activities, borrowings,
primarily under our Revolving Credit Facility, and through proceeds generated
from our ATM Program.

Our long-term liquidity requirements consist primarily of the funds necessary to
acquire additional properties and repay indebtedness. We expect to meet our
long-term liquidity requirements through various sources of capital, including
net cash from operating activities, borrowings under our Revolving Credit
Facility, future debt financings, sales of common stock under our ATM Program,
and proceeds from the selective sale of properties in our portfolio. However, at
any point in time, there may be a number of factors that could have a material
and adverse effect on our ability to access these capital sources, including
unfavorable conditions in the overall equity and credit markets, our level of
leverage, the portion of our portfolio that is unencumbered, borrowing
restrictions imposed by our existing debt agreements, general market conditions
for real estate and potentially REITs specifically, our operating performance,
our liquidity and general market perceptions about us. The success of our
business strategy will depend, to a significant degree, on our ability to access
these various capital sources to fund our future investments in single tenant
properties and thereby grow our cash flows.

An additional liquidity requirement is to fund the required level of distributions, typically 90% of our REIT’s taxable income (determined without taking into account the deduction of dividends paid and excluding any net capital gains), which are

                                       47
--------------------------------------------------------------------------------

Contents

among the requirements for us to continue to qualify for taxation as a REIT.
During the three months ended March 31, 2022, our board of directors declared
total cash distributions of $0.26 per share of common stock. Holders of OP Units
and RSU's are entitled to distributions per unit equivalent to those paid by us
per share of common stock. During the three months ended March 31, 2022, we paid
$32.6 million of dividends and distributions to common stockholders and OP Unit
holders, and as of March 31, 2022, we recorded $34.3 million of dividends and
distributions payable to common stockholders and OP Unit holders. To continue to
qualify for taxation as a REIT, we must make distributions to our stockholders
aggregating annually at least 90% of our REIT taxable income, determined without
regard to the dividends paid deduction and excluding any net capital gain. As a
result of this requirement, we cannot rely on retained earnings to fund our
business needs to the same extent as other entities that are not structured as
REITs. If we do not have sufficient funds available to us from our operations to
fund our business needs, we will need to find alternative ways to fund those
needs. Such alternatives may include, among other things, selling properties
(whether or not the sales price is optimal or otherwise meets our strategic
long-term objectives), incurring additional indebtedness or issuing equity
securities in public or private transactions. The availability and
attractiveness of the terms of these potential sources of financing cannot be
assured.

Generally, our short-term debt capital needs are provided through our use of our
Revolving Credit Facility. We manage our long-term leverage position through the
issuance of long-term fixed-rate debt on an unsecured or secured basis.
Generally, we will seek to issue long-term debt on an unsecured basis as we
believe this facilitates greater flexibility in the management of our existing
portfolio and our ability to retain optionality in our overall financing and
growth strategy. By seeking to match the expected cash inflows from our
long-term leases with the expected cash outflows for our long-term debt, we seek
to "lock in," for as long as is economically feasible, the expected positive
spread between our scheduled cash inflows on our leases and the cash outflows on
our debt obligations. In this way, we seek to reduce the risk that increases in
interest rates would adversely impact our cash flows and results of operations.
Our ability to execute leases that contain annual rent escalations also
contributes to our ability to manage the risk of a rising interest rate
environment. We have and may continue to use various financial instruments
designed to mitigate the impact of interest rate fluctuations on our cash flows
and earnings, including hedging strategies such as interest rate swaps and caps,
depending on our analysis of the interest rate environment and the costs and
risks of such strategies. Although we are not required to maintain a particular
leverage ratio and may not be able to do so, we generally consider that, over
time it is prudent for a real estate company like ours, to maintain a level of
net debt (which includes recourse and non-recourse borrowings and any
outstanding preferred stock less cash and cash equivalents and restricted cash
available for future investment) that is less than six times our annualized
adjusted EBITDAre.

As of March 31, 2022, all of our long-term debt was fixed-rate debt or was
effectively converted to a fixed-rate for the term of the debt through hedging
strategies and our weighted average debt maturity was 5.8 years. As we continue
to invest in real estate properties and grow our real estate portfolio, we
intend to manage our long-term debt maturities to reduce the risk that a
significant amount of our debt will mature in any single year.

Future sources of debt capital may include public issuances of senior unsecured
notes, term borrowings from insurance companies, banks and other sources,
mortgage financing of a single-asset or a portfolio of assets and CMBS
borrowings. These sources of debt capital may offer us the opportunity to lower
our cost of funding and further diversify our sources of debt capital. Over
time, we may choose to issue preferred equity as a part of our overall strategy
for funding our investment objectives and growth goals. As our outstanding debt
matures, we may refinance it as it comes due or choose to repay it using cash
and cash equivalents or borrowings under our Revolving Credit Facility. We
believe that the cash generated by our operations, together with our cash and
cash equivalents at March 31, 2022, our borrowing availability under the
Revolving Credit Facility and our potential access to additional sources of
capital, will be sufficient to fund our operations for the foreseeable future
and allow us to invest in the real estate for which we currently have made
commitments.

Additional Guarantor Information

As permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized
financial information for the Operating Partnership as the assets, liabilities
and results of operations of the Company and the Operating Partnership are not
materially different than the corresponding amounts presented in the
consolidated financial statements of the Company, and management believes such
summarized financial information would be repetitive and not provide incremental
value to investors.

                                       48
--------------------------------------------------------------------------------

Contents

Description of certain debts

The following table summarizes our outstanding indebtedness as of March 31, 2022
and December 31, 2021:

                                                                          Principal Outstanding                        Weighted Average Interest Rate (1)
                                                                     March 31,           December 31,             March 31,                       December 31,
(in thousands)                             Maturity Date                2022                 2021                   2022                              2021
Unsecured term loans:
2024 Term Loan                              April 2024             $   200,000          $    200,000                3.3%                              3.3%
2027 Term Loan                             February 2027               430,000               430,000                2.7%                           

3.0%

Senior unsecured notes                       July 2031                 400,000               400,000                3.1%                           

3.1%

Revolving Credit Facility                  February 2026               147,000               144,000                1.4%                           

1.3%

Total principal outstanding                                        $ 1,177,000          $  1,174,000                2.8%                         

2.9%

_____________________________________

(1)Interest rates are shown taking into account our interest rate swap and lock-in agreements, where applicable.

2024 Unsecured Revolving Credit Facility and Term Loan

Through our Operating Partnership, we are party to an Amended and Restated
Credit Agreement with a group of lenders, which was amended on February 10, 2022
(the "Credit Agreement"), and which, as amended, provides for revolving loans of
up to $600.0 million (the "Revolving Credit Facility") and an additional $200.0
million term loan (the "2024 Term Loan").

As amended, the Revolving Credit Facility is scheduled to mature on February 10,
2026, with two extension options of six-month periods each, exercisable by the
Operating Partnership subject to the satisfaction of certain conditions. The
2024 Term Loan matures on April 12, 2024. The loans under each of the Revolving
Credit Facility and the 2024 Term Loan initially bear interest at an annual rate
of applicable Adjusted Term SOFR (as defined in the Credit Agreement) plus an
applicable margin (which applicable margin varies between the Revolving Credit
Facility and the 2024 Term Loan). The Adjusted Term SOFR is a rate with a term
equivalent to the interest period applicable to the relevant borrowing. In
addition, the Operating Partnership is required to pay a revolving facility fee
throughout the term of the Revolving Credit Facility. The applicable margin and
the revolving facility fee rate are initially a spread and rate, as applicable,
set according to a leverage-based pricing grid. At the Operating Partnership's
election, on and after receipt of an investment grade corporate credit rating
from S&P, Moody's or Fitch, the applicable margin and the revolving facility fee
rate will be a spread and rate, as applicable, set according to the credit
ratings provided by S&P, Moody's and/or Fitch. Each of the Revolving Credit
Facility and the 2024 Term Loan is freely pre-payable at any time. Outstanding
credit extensions under the Revolving Credit Facility are mandatorily payable if
the amount of such credit extensions the revolving facility limit. The Operating
Partnership may re-borrow amounts paid down on the Revolving Credit Facility
prior to its maturity. Loans repaid under the 2024 Term Loan cannot be
reborrowed. The Credit Agreement has an accordion feature to increase, subject
to certain conditions, the maximum availability of credit (either through
increased revolving commitments or additional term loans) by up to
$600.0 million.

The Operating Partnership is the borrower under the Credit Agreement, and we and
each of the subsidiaries of the Operating Partnership that owns a direct or
indirect interest in an eligible real property asset are guarantors under the
Credit Agreement. Under the terms of the Credit Agreement, we are subject to
various restrictive financial and nonfinancial covenants which, among other
things, require us to maintain certain secured and unsecured leverage ratios and
fixed charge and debt service coverage ratios.

The Credit Agreement restricts our ability to pay distributions to our
stockholders under certain circumstances. However, we may make distributions to
the extent necessary to maintain our qualification as a REIT under the Code. The
Credit Agreement contains customary affirmative and negative covenants that,
among other things and subject to exceptions, limit or restrict our ability to
incur indebtedness and liens, consummate mergers or other fundamental changes,
dispose of assets, make certain restricted payments, make certain investments,
modify our organizational documents, transact with affiliates, change our fiscal
periods, provide negative pledge clauses, make subsidiary distributions, enter
into certain new lines of business or engage in certain activities, and fail to
meet the requirements for taxation as a REIT.

                                       49
--------------------------------------------------------------------------------

Contents

Term Loan 2027

On February 18, 2022, we, through our Operating Partnership, amended our
existing $430.0 million term loan credit facility (the "2027 Term Loan") to,
among other things, reduce the Applicable Margin, extend the Maturity to
February 18, 2027 and make certain other changes consistent with market terms
and conditions. The 2027 Term Loan was available to be drawn in up to three
draws during the six-month period beginning on November 26, 2019 and, as of
March 31, 2022, we have borrowed the full $430.0 million available.

The borrowings under the 2027 Term Loan, as amended, bear interest at an annual
rate of applicable Adjusted Term SOFR (as defined in the Credit Agreement) plus
an applicable margin. The Adjusted Term SOFR is a rate with a term equivalent to
the interest period applicable to the relevant borrowing. The applicable margin
is initially a spread set according to a leverage-based pricing grid. At the
Operating Partnership's election, on and after receipt of an investment grade
corporate credit rating from S&P, Moody's or Fitch, the applicable margin will
be a spread set according to the credit ratings provided by S&P, Moody's and/or
Fitch. The 2027 Term Loan is pre-payable at any time by the Operating
Partnership without penalty. The 2027 Term Loan has an accordion feature to
increase, subject to certain conditions, the maximum availability of the
facility up to an aggregate of $500 million.

The Operating Partnership is the borrower under the 2027 Term Loan, and our
Company and each of its subsidiaries that owns a direct or indirect interest in
an eligible real property asset are guarantors under the facility. Under the
terms of the 2027 Term Loan, we are subject to various restrictive financial and
nonfinancial covenants which, among other things, require us to maintain certain
leverage ratios, cash flow and debt service coverage ratios, secured borrowing
ratios and a minimum level of tangible net worth.

The 2027 Term Loan restricts our ability to pay distributions to our
stockholders under certain circumstances. However, we may make distributions to
the extent necessary to maintain our qualification as a REIT under the Code. The
2027 Term Loan contains certain additional covenants that, subject to
exceptions, limit or restrict our incurrence of indebtedness and liens,
disposition of assets, transactions with affiliates, mergers and fundamental
changes, modification of organizational documents, changes to fiscal periods,
making of investments, negative pledge clauses and lines of business and REIT
qualification.

Senior Unsecured Notes

On June 22, 2021, the Operating Partnership issued $400 million aggregate
principal amount of 2031 Notes, resulting in net proceeds of $396.6 million. The
2031 Notes were issued by the Operating Partnership and the obligations of the
Operating Partnership under the 2031 Notes are fully and unconditionally
guaranteed on a senior basis by the Company. In May 2021, the Company entered
into a treasury-lock agreement which was designated as a cash flow hedge
associated with the expected public offering of the senior unsecured notes. In
June 2021, the agreement was settled in accordance with its terms.

The indenture and supplemental indenture creating the 2031 Notes contain various
restrictive covenants, including limitations on our ability to incur additional
secured and unsecured indebtedness. As of March 31, 2022, we were in compliance
with these covenants.

Cash Flows

Comparison of the three months ended March 31, 2022 and 2021

As of March 31, 2022, we had $14.3 million of cash and cash equivalents and no
restricted cash as compared to $42.8 million and $2.0 million, respectively, as
of March 31, 2021.

Cash flow for the three months ended March 31, 2022

During the three months ended March 31, 2022, net cash provided by operating
activities was $44.1 million. Our cash flows from operating activities, related
to our $26.8 million of net income, are primarily dependent upon the occupancy
level of our portfolio, the rental rates specified in our leases, the interest
on our loans and direct financing lease receivables, the collectability of rent
and interest income and the level of our operating expenses and other general
and administrative costs. In addition, our cash inflows from operating
activities reflect adjustments for non-cash items including depreciation and
amortization of tangible, intangible and right-of-use real estate assets,
amortization of deferred financing costs and other assets, loss on debt
extinguishment of $2.1 million, the provision for impairment of real estate of
$3.9 million, offset by $1.7 million of gains on dispositions of real estate,
net, and

                                       50
--------------------------------------------------------------------------------

Contents

$6.2 million related to the recognition of straight-line rent receivables. In
addition, our cash provided by operating activities reflects the adjustment to
add back the non-cash impact of $2.8 million of equity-based compensation
expense.

Net cash used in investing activities during the three months ended
March 31, 2022 was $211.6 million. Our net cash used in investing activities
generally reflects the funds deployed in our investments in real estate,
including capital expenditures and the development of our construction in
progress, and in loans receivable, which totaled $240.6 million in the aggregate
for the quarter. These cash outflows were partially offset by $18.5 million of
proceeds from sales of investments, net of disposition costs, and $10.7 million
of principal collections on our loans and direct financing lease receivables.

Net cash provided by financing activities of $122.0 million during the three
months ended March 31, 2022 reflected net cash inflows of $158.3 million from
the issuance of common stock and $148.0 million of borrowings under the
Revolving Credit Facility. These cash inflows were partially offset primarily by
repayments of $145.0 million of borrowings under the Revolving Credit Facility
and the payment of $32.6 million in dividends.

Off-balance sheet arrangements

We had no off-balance sheet arrangements March 31, 2022.

Contractual obligations

The following table provides information about our contractual obligations at March 31, 2022:

                                                                                    Payment due by period
                                                                    April 1 -
                                                                   December 31,
(in thousands)                                   Total                 2022              2023 - 2024           2025 - 2026          Thereafter

Unsecured term loans                         $   630,000          $         -          $    200,000          $          -          $  430,000
Senior unsecured notes                           400,000                    -                     -                     -             400,000
Revolving Credit Facility                        147,000                    -                     -               147,000                   -

Financing the construction of tenants and

  Reimbursement Obligations (1)                   71,482               71,482                     -                     -                   -
Operating Lease Obligations (2)                   18,700                1,112                 2,132                 1,250              14,206
Total                                        $ 1,267,182          $    72,594          $    202,132          $    148,250          $  844,206

_____________________________________

(1)Includes obligations to reimburse certain of our tenants for construction
costs that they incur in connection with construction at our properties in
exchange for contractually specified rent that generally increases
proportionally with our funding.
(2)Includes $16.4 million of rental payments due under ground lease arrangements
where our tenants are directly responsible for payment.

Additionally, we may enter into commitments to purchase goods and services in
connection with the operation of our business. These commitments generally have
terms of one-year or less and reflect expenditure levels comparable to our
historical expenditures as adjusted for growth.

We have made an election to be taxed as a REIT for federal income tax purposes
beginning with our taxable year ended December 31, 2018; accordingly, we
generally will not be subject to federal income tax for the year ended
December 31, 2022 if we distribute all of our REIT taxable income, determined
without regard to the dividends paid deduction, to our stockholders.

Significant Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States ("GAAP") requires our management to use
judgment in the application of accounting policies, including making estimates
and assumptions. Estimates and assumptions include, among other things,
subjective judgments regarding the fair values and useful lives of our
properties for depreciation and lease classification purposes, the
collectability of receivables and asset impairment analysis. We base estimates
on the best information available to us at the time, our experience and on
various other assumptions believed to be reasonable

                                       51
--------------------------------------------------------------------------------

Contents

under the circumstances. These estimates affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. If our judgment or interpretation of the facts and
circumstances relating to various transactions or other matters had been
different, it is possible that different accounting would have been applied,
resulting in a different presentation of our consolidated financial statements.
From time to time, we reevaluate our estimates and assumptions. In the event
estimates or assumptions prove to be different from actual results, adjustments
are made in subsequent periods to reflect more current estimates and assumptions
about matters that are inherently uncertain. A summary of our critical
accounting policies is included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2021 in the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations." We have not made
any material changes to these policies during the periods covered by this
quarterly report.

Our real estate investment portfolio

As of March 31, 2022, we had a portfolio of 1,545 properties, including 174
properties that secure our investments in mortgage loans receivable, that was
diversified by tenant, concept, industry and geography and had annualized base
rent of $257.9 million. Our 323 tenants operate 461 different concepts in 16
industries across 46 states. None of our tenants represented more than 3.3% of
our portfolio at March 31, 2022, and our top ten largest tenants represented
19.2% of our annualized base rent as of that date.

Diversification by tenant

As of March 31, 2022, our top ten tenants included the following concepts:
EquipmentShare, Captain D's, WhiteWater Express Car Wash, Cadence Education,
Festival Foods, Mammoth Holdings, Mister Car Wash, Spare Time, Track Holdings,
and The Nest Schools. Our 1,545 leased properties are operated by our 323
tenants. The following table details information about our tenants and the
related concepts as of March 31, 2022 (dollars in thousands):

                                                                                                                                                     % of
                                                                                                      Number of            Annualized             Annualized
Tenant(1)                                                           Concept                          Properties             Base Rent              Base Rent
Equipmentshare.com Inc.                              EquipmentShare                                        28             $    8,525                       3.3  %
Captain D's, LLC                                     Captain D's                                           75                  5,269                       2.0  %
Whitewater Holding Company, LLC                      WhiteWater Express Car Wash                           16                  4,892                       1.9  %
Cadence Education, LLC                               Various                                               23                  4,884                       1.9  %
MDSFest, Inc.                                        Festival Foods                                         5                  4,644                       1.8  %
Mammoth Holdings, LLC.                               Various                                               17                  4,485                       1.8  %
Car Wash Partners, Inc.                              Mister Car Wash                                       13                  4,443                       1.7  %
Bowl New England, Inc.                               Spare Time                                             6                  4,367                       1.7  %
The Track Holdings, LLC                              Various                                                9                  4,142                       1.6  %
The Nest Schools, Inc.                               The Nest Schools                                      17                  3,952                       1.5  %
Top 10 Subtotal                                                                                           209                 49,603                      19.2  %
Other                                                                                                   1,336                208,260                      80.8  %
Total                                                                                                   1,545             $  257,863                     100.0  %

_____________________________________

(1)Represents tenant or guarantor.

As of March 31, 2022, our five largest tenants, who contributed 10.9% of our
annualized base rent, had a rent coverage ratio of 6.1x and our ten largest
tenants, who contributed 19.2% of our annualized base rent, had a rent coverage
ratio of 4.6x.

As of March 31, 2022, 94.6% of our leases (based on annualized base rent)
were triple-net, and the tenant is typically responsible for all improvements
and is contractually obligated to pay all operating expenses, such as
maintenance, insurance, utility and tax expense, related to the leased property.
Due to the triple-net structure of our leases, we do not expect to incur
significant capital expenditures relating to our triple-net leased properties,
and the potential impact of inflation on our operating expenses is reduced.

                                       52
--------------------------------------------------------------------------------

Contents

Diversification by concept

Our tenants operate their businesses through 461 concepts. The following table details these concepts in March 31, 2022 (dollars in thousands):

                                                                                Annualized                % of
                                                                                   Base                Annualized                Number of                Building
Concept                                              Type of Business              Rent                 Base Rent               Properties               (Sq. Ft.)
EquipmentShare                                     Service                     $    8,525                       3.3  %                28                   531,031
Captain D's                                        Service                          6,494                       2.5  %                88                   228,470
Applebee's                                         Service                          5,028                       1.9  %                34                   168,186
WhiteWater Express Car Wash                        Service                          4,892                       1.9  %                16                    77,746
Festival Foods                                     Retail                           4,644                       1.8  %                 5                   379,640
Mister Car Wash                                    Service                          4,443                       1.7  %                13                    54,621
Spare Time                                         Experience                       4,367                       1.7  %                 6                   272,979
Pizza Hut                                          Service                          4,183                       1.6  %                75                   202,564
The Nest Schools                                   Service                          3,952                       1.5  %                17                   217,282
Circle K                                           Service                          3,875                       1.5  %                35                   130,975
Top 10 Subtotal                                                                    50,403                      19.4  %               317                 2,263,494
Other                                                                             207,460                      80.6  %             1,228                11,997,294
Total                                                                          $  257,863                     100.0  %             1,545                14,260,788


                                       53
--------------------------------------------------------------------------------

Contents

Diversification by industry

Our tenants' business concepts are diversified across various industries. The
following table summarizes those industries as of March 31, 2022 (dollars in
thousands):

                                                             Annualized                % of
                                         Type of                Base                Annualized              Number of               Building               Rent Per
Tenant Industry                         Business                Rent                Base Rent               Properties              (Sq. Ft.)             Sq. Ft. (1)
Early Childhood Education            Service               $    36,232                     14.1  %              164                1,740,517            $      20.69
Quick Service                        Service                    33,210                     12.9  %              415                1,142,206                   29.38
Car Washes                           Service                    29,530                     11.5  %              100                  528,299                   55.90
Medical / Dental                     Service                    29,512                     11.4  %              176                1,212,184                   24.38
Automotive Service                   Service                    22,619                      8.8  %              173                1,109,172                   20.24
Casual Dining                        Service                    15,792                      6.1  %               99                  574,989                   26.81
Convenience Stores                   Service                    15,045                      5.8  %              134                  524,676                   28.82
Equipment Rental and Sales           Service                    11,109                      4.3  %               45                  812,666                   13.20
Family Dining                        Service                     5,700                      2.2  %               37                  244,706                   23.29
Pet Care Services                    Service                     5,405                      2.1  %               48                  395,905                   14.99
Other Services                       Service                     5,312                      2.1  %               24                  292,129                   18.81
Service Subtotal                                               209,466                     81.3  %            1,415                8,577,449                   24.48
Entertainment                        Experience                 14,337                      5.6  %               33                  900,786                   16.86
Health and Fitness                   Experience                 11,401                      4.4  %               28                1,045,772                   10.19
Movie Theatres                       Experience                  4,175                      1.6  %                6                  293,206                   14.24
Experience Subtotal                                             29,913                     11.6  %               67                2,239,764                   13.34
Grocery                              Retail                      9,610                      3.7  %               28                1,341,200                    7.17
Home Furnishings                     Retail                      2,048                      0.8  %                4                  217,339                    9.42
Retail Subtotal                                                 11,658                      4.5  %               32                1,558,539                    7.48
Building Materials                   Industrial                  3,801                      1.5  %               23                1,257,017                    3.02
Other Industrial                     Industrial            $     3,025                      1.1  %                8                  628,019                    4.82
Industrial Subtotal                                              6,826                      2.6  %               31                1,885,036                    3.62
Total/Weighted Average                                         257,863                    100.0  %            1,545               14,260,788            $      18.10

_____________________________________

(1)Excluding buildings without annualized base rent and buildings under construction.

                                       54
--------------------------------------------------------------------------------

Contents

Geographical diversification

Our 1,545 properties are spread across 46 states. The following table details the geographic locations of our properties at March 31, 2022
(dollars in thousands):

                     Annualized      % of Annualized       Number of           Building
State                Base Rent          Base Rent          Properties         (Sq. Ft.)
Texas               $   33,903                13.1  %         180            1,737,171
Ohio                    20,268                 7.9  %         155            1,151,496
Georgia                 17,697                 6.9  %         111              645,396
Florida                 17,614                 6.8  %          72              711,975
Wisconsin               12,512                 4.9  %          55              761,929
North Carolina          10,332                 4.0  %          54              624,883
Michigan                 8,438                 3.3  %          53              910,268
Arkansas                 8,169                 3.2  %          58              463,873
Arizona                  7,825                 3.0  %          45              388,342
Missouri                 7,798                 3.0  %          49              678,452
Alabama                  7,436                 2.9  %          50              458,898
Tennessee                6,939                 2.7  %          45              243,105
Minnesota                6,363                 2.5  %          36              467,895
Oklahoma                 6,349                 2.5  %          42              402,981
Massachusetts            6,245                 2.4  %          29              406,159
Illinois                 6,202                 2.4  %          37              261,414
Colorado                 5,412                 2.1  %          26              236,068
Pennsylvania             5,347                 2.1  %          32              320,634
South Carolina           4,856                 1.9  %          32              337,299
New York                 4,725                 1.8  %          39              185,923
Mississippi              4,717                 1.7  %          41              271,991
Iowa                     4,062                 1.6  %          25              206,904
New Jersey               4,013                 1.6  %          19              121,198
Kentucky                 3,991                 1.5  %          36              193,546
California               3,351                 1.3  %          19              180,090
New Mexico               3,307                 1.3  %          22              130,210
Connecticut              3,127                 1.2  %          13              217,984
Kansas                   3,103                 1.2  %          21              154,069
Indiana                  2,886                 1.1  %          24              190,863
Nevada                   2,409                 0.9  %           8               80,358
South Dakota             2,384                 0.9  %           9              124,912
Virginia                 2,279                 0.9  %          11              198,245
Maryland                 2,245                 0.9  %           9               79,028
Louisiana                2,106                 0.8  %          12               89,033
West Virginia            1,864                 0.7  %          29               88,802
Washington               1,673                 0.6  %          11               87,243
Oregon                   1,258                 0.5  %           8              127,673
Utah                       933                 0.4  %           2               67,659
New Hampshire              892                 0.3  %           8               99,384
Nebraska                   863                 0.3  %           9               32,948
Maine                      500                 0.2  %           1               32,115
Wyoming                    442                 0.2  %           2               14,001
Idaho                      403                 0.2  %           1               35,433
Alaska                     246                 0.1  %           2                6,630
Vermont                    217                 0.1  %           2               30,508
Rhode Island               164                 0.1  %           1                5,800
Total               $  257,863               100.0  %       1,545           14,260,788


                                       55
--------------------------------------------------------------------------------

Contents

Expiration of leases

As of March 31, 2022, the weighted average remaining term of our leases was 13.9
years (based on annualized base rent), with only 4.9% of our annualized base
rent attributable to leases expiring prior to January 1, 2027. The following
table sets forth our lease expirations for leases in place as of March 31, 2022
(dollars in thousands):

                                                                                                                                            Weighted
                                                         Annualized              % of Annualized                Number of                 Average Rent
Lease Expiration Year (1)                                 Base Rent                 Base Rent                   Properties             Coverage Ratio (2)
2022                                                    $      492                             0.2  %                  5                                3.0x
2023                                                         1,490                             0.6  %                 16                                2.9x
2024                                                         4,815                             1.9  %                 47                                5.4x
2025                                                         2,346                             0.9  %                 20                                2.1x
2026                                                         3,303                             1.3  %                 22                                2.3x
2027                                                         7,762                             3.0  %                 83                                2.6x
2028                                                         4,088                             1.6  %                 13                                1.7x
2029                                                         5,703                             2.2  %                 78                                4.3x
2030                                                         4,388                             1.7  %                 48                                6.7x
2031                                                        14,886                             5.8  %                 88                                2.9x
2032                                                         9,310                             3.6  %                 38                                5.4x
2033                                                         8,249                             3.2  %                 27                                3.4x
2034                                                        26,801                            10.4  %                207                                5.9x
2035                                                        14,391                             5.6  %                 98                                3.2x
2036                                                        39,762                            15.4  %                181                                3.5x
2037                                                        12,939                             5.0  %                 76                                9.3x
2038                                                        13,148                             5.1  %                 81                                2.2x
2039                                                        21,446                             8.3  %                111                                3.8x
2040                                                        32,403                            12.6  %                161                                2.8x
2041                                                        20,972                             8.1  %                112                                2.5x
Thereafter                                                   9,169                             3.5  %                 33                                2.6x
Total/Weighted Average                                  $  257,863                           100.0  %              1,545                                3.8x

_____________________________________

(1)Year of expiration of contracts in place at March 31, 2022, excluding any unexercised tenant renewal option periods. (2)Weighted by annualized base rent.

Coverage of rents at the unit level

Generally, we seek to acquire investments with healthy rent coverage ratios, and
as of March 31, 2022, the weighted average rent coverage ratio of our portfolio
was 3.8x. Our portfolio's unit-level rent coverage ratios (by annualized base
rent and excluding leases that do not report unit-level financial information)
as of March 31, 2022 are displayed below:

Unit Level Coverage Ratio         % of Total
? 2.00x                               73.8  %
1.50x to 1.99x                        10.2  %
1.00x to 1.49x                         6.7  %
< 1.00x                                8.0  %
Not reported                           1.3  %
                                     100.0  %


                                       56
--------------------------------------------------------------------------------

Contents

Credit ratings

Tenant financial distress is typically caused by consistently poor or
deteriorating operating performance, near-term liquidity issues or unexpected
liabilities. To assess the probability of tenant insolvency, we utilize Moody's
Analytics RiskCalc, which is a model for predicting private company defaults
based on Moody's Analytics Credit Research Database, which incorporates both
market and company-specific risk factors. The following table illustrates the
portions of our annualized base rent as of March 31, 2022 attributable to leases
with tenants having specified implied credit ratings based on their Moody's
RiskCalc scores:

Credit Rating          NR        < 1.00x      1.00 to 1.49x      1.50 to 1.99x      ? 2.00x
CCC+                    -  %       0.8  %               -  %               -  %       0.4  %
B-                      -  %       1.0  %             0.6  %             0.1  %       2.0  %
B                       -  %       2.4  %             0.3  %             0.1  %       1.1  %
B+                    0.1  %       0.4  %             0.6  %             1.6  %       2.1  %
BB-                     -  %       0.9  %             0.3  %             2.1  %       9.4  %
BB                      -  %       0.9  %             0.7  %             0.5  %      12.3  %
BB+                     -  %       1.0  %             0.7  %             1.2  %       9.2  %
BBB-                    -  %       0.2  %             2.0  %             0.1  %      10.6  %
BBB                     -  %       0.4  %             0.8  %             2.4  %      15.4  %
BBB+                    -  %       0.2  %             0.2  %             1.5  %       3.6  %
A-                      -  %         -  %             0.3  %               -  %       4.8  %
A                       -  %         -  %               -  %               -  %       1.0  %
A+                      -  %         -  %               -  %               -  %       0.8  %
AA-                     -  %         -  %               -  %               -  %         -  %

_____________________________________

NR Not reported

                                       57
--------------------------------------------------------------------------------

Contents

Operating results

The following analysis includes the results of our operations for the periods presented.

Comparison of the three months ended March 31, 2022 and 2021

                                                       Three months ended March 31,
(dollar amounts in thousands)                             2022              2021             Change                %

Income:

Rental revenue                                        $  66,112          $ 45,432          $ 20,680                 45.5  %
Interest on loans and direct financing lease
receivables                                               3,822             3,105               717                 23.1  %
Other revenue, net                                          187                15               172               1146.7  %
Total revenues                                           70,121            48,552            21,569

Expenses:
General and administrative                                8,063             6,431             1,632                 25.4  %
Property expenses                                         1,009             1,414              (405)               (28.6) %
Depreciation and amortization                            20,313            15,646             4,667                 29.8  %
Provision for impairment of real estate                   3,935             5,722            (1,787)               (31.2) %
Change in provision for loan losses                          60                38                22                 57.9  %
Total expenses                                           33,380            29,251             4,129
Other operating income:
Gain on dispositions of real estate, net                  1,658             3,788            (2,130)               (56.2) %
Income from operations                                   38,399            23,089            15,310
Other (expense)/income:
Loss on debt extinguishment                              (2,138)                -            (2,138)               100.0  %
Interest expense                                         (9,160)           (7,678)           (1,482)                19.3  %
Interest income                                              18                20                (2)               (10.0) %
Income before income tax expense                         27,119            15,431            11,688
Income tax expense                                          301                56               245                437.5  %
Net income                                               26,818            15,375            11,443
Net income attributable to non-controlling
interests                                                  (119)              (80)               39                 48.8  %
Net income attributable to stockholders               $  26,699          $ 15,295          $ 11,404


Revenues:

Rental revenue. Rental revenue increased by $20.7 million for the three months
ended March 31, 2022 as compared to the three months ended March 31, 2021. The
increase in rental revenue was driven primarily by the growth in our real estate
investment portfolio. Our real estate investment portfolio grew from 1,240
rental properties, representing $2.5 billion in net investments in real estate,
as of March 31, 2021 to 1,363 rental properties, representing $3.3 billion in
net investments in real estate, as of March 31, 2022. Our real estate
investments were acquired throughout the periods presented and were not all
owned by us for the entirety of the applicable periods; accordingly, a
significant portion of the increase in rental revenue between periods is related
to recognizing revenue in 2022 from acquisitions that were made during 2021 and
early 2022. Another component of the increase in rental revenues between periods
relates to rent escalations recognized on our leases.

Interest on loans and direct financing lease receivables. Interest on loans and
direct financing lease receivables increased by $0.7 million for the three
months ended March 31, 2022 as compared to the three months ended
March 31, 2021, primarily due to the net growth of our mortgage loans receivable
portfolio during 2021 and continuing into 2022, which led to a higher average
daily balance of loans receivable outstanding during the three months ended
March 31, 2022.

Other income. Other income increased $0.2 million in the three months ended March 31, 2022 compared to the three months ended March 31, 2021mainly due to the collection of loan prepayment fees and management fees during the three months ended March 31, 2022.

                                       58
--------------------------------------------------------------------------------

Contents

Expenses:

General and administrative. General and administrative expense increased by $1.6
million for the three months ended March 31, 2022 as compared to the three
months ended March 31, 2021. The increase was primarily related to an increase
in non-cash share-based compensation of $1.2 million, salary expense and
professional fees during the three months ended March 31, 2022.

Property expenses. Property expenses decreased by $0.4 million for the three
months ended March 31, 2022 as compared to the three months ended
March 31, 2021. The decrease in property expenses was primarily due to decreased
insurance expenses, property taxes and property-related operational costs during
the three months ended March 31, 2022 related to vacant properties and tenants
accounted for on a non-accrual basis.

Depreciation and amortization. Depreciation and amortization expense increased
by $4.7 million during the three months ended March 31, 2022 as compared to the
three months ended March 31, 2021. Depreciation and amortization expense
increased in proportion to the increase in the size of our real estate portfolio
during the three months ended March 31, 2022.

Provision for impairment of real estate. Impairment charges on real estate
investments were $3.9 million and $5.7 million for the three months ended
March 31, 2022 and 2021, respectively. During the three months ended
March 31, 2022 and 2021, we recorded a provision for impairment on four and nine
of our real estate investments, respectively. We strategically seek to identify
non-performing properties that we may re-lease or dispose of in an effort to
improve our returns and manage risk exposure. An increase in vacancy associated
with our disposition or re-leasing strategies may trigger impairment charges
when the expected future cash flows from the properties from sale or re-lease
are less than their net book value.

Change in provision for loan losses. Provision for loan losses increased by
approximately $22,000 for the three months ended March 31, 2022 as compared to
the three months ended March 31, 2021. Under ASC 326, we are required to
re-evaluate the expected loss on our portfolio of loans and direct financing
lease receivables at each balance sheet date. Changes in our provision for loan
losses are driven by revisions to global and loan-specific assumptions in our
loan loss model and by changes in the size of our loan and direct financing
lease portfolio.

Other exploitation products:

Gain on dispositions of real estate, net. Gain on dispositions of real estate,
net, decreased by $2.1 million for the three months ended March 31, 2022 as
compared to the three months ended March 31, 2021. We disposed of six and 16
real estate properties during the three months ended March 31, 2022 and 2021,
respectively.

Other (expense)/income:

Loss on extinguishment of debt. In the three months ended March 31, 2022we recorded a $2.1 million the loss on extinguishment of debt due to the write-off of deferred financing fees and the payment of fees in connection with the modification of the term loans and the revolving credit facility.

Interest charges. Interest expense increased by $1.5 million in the three months ended March 31, 2022 compared to the three months ended
March 31, 2021. The increase in interest expense is primarily due to an increase in our outstanding debt in the three months ended
March 31, 2022 compared to the three months ended March 31, 2021.

Interest income. Interest income decreased by approximately $2,000 for the three
months ended March 31, 2022 as compared to the three months ended
March 31, 2021. The decrease in interest income was primarily due to lower
average daily cash balances in our interest-bearing bank accounts, partially
offset by higher interest rates during the three months ended March 31, 2022

Income tax expense. Income tax expense increased by $0.2 million for the three
months ended March 31, 2022 as compared to the three months ended
March 31, 2021. This increase was primarily due to the accrual of income taxes
for a transaction consummated through our taxable REIT subsidiary. We are
organized and operate as a REIT and are generally not subject to U.S. federal
corporate income taxes on our REIT taxable income that is currently distributed
to our stockholders. However, the Operating Partnership is subject to taxation
in certain state and local jurisdictions that impose income taxes on a
partnership.

                                       59
--------------------------------------------------------------------------------

Contents

Non-GAAP Financial Measures

Our reported results are presented in accordance with GAAP. We also disclose the
following non-GAAP financial measures: funds from operations ("FFO"), core funds
from operations ("Core FFO"), adjusted funds from operations ("AFFO"), earnings
before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA further
adjusted to exclude gains (or losses) on sales of depreciable property and real
estate impairment losses ("EBITDAre"), adjusted EBITDAre, annualized adjusted
EBITDAre, net debt, net operating income ("NOI") and cash NOI ("Cash NOI"). We
believe these non-GAAP financial measures are industry measures used by analysts
and investors to compare the operating performance of REITs.

We compute FFO in accordance with the definition adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude
extraordinary items (as defined by GAAP), net gain or loss from sales of
depreciable real estate assets, impairment write-downs associated with
depreciable real estate assets and real estate-related depreciation and
amortization (excluding amortization of deferred financing costs and
depreciation of non-real estate assets), including the pro rata share of such
adjustments of unconsolidated subsidiaries. FFO is used by management, and may
be useful to investors and analysts, to facilitate meaningful comparisons of
operating performance between periods and among our peers primarily because it
excludes the effect of real estate depreciation and amortization and net gains
and losses on sales (which are dependent on historical costs and implicitly
assume that the value of real estate diminishes predictably over time, rather
than fluctuating based on existing market conditions).

We compute Core FFO by adjusting FFO, as defined by NAREIT, to exclude certain
GAAP income and expense amounts that we believe are infrequent and unusual in
nature and/or not related to our core real estate operations. Exclusion of these
items from similar FFO-type metrics is common within the equity REIT industry,
and management believes that presentation of Core FFO provides investors with a
metric to assist in their evaluation of our operating performance across
multiple periods and in comparison to the operating performance of our peers,
because it removes the effect of unusual items that are not expected to impact
our operating performance on an ongoing basis. Core FFO is used by management in
evaluating the performance of our core business operations. Items included in
calculating FFO that may be excluded in calculating Core FFO include certain
transaction related gains, losses, income or expense or other non-core amounts
as they occur.

To derive AFFO, we modify our computation of Core FFO to include other
adjustments to GAAP net income related to certain items that we believe are not
indicative of our operating performance, including straight-line rental revenue,
non-cash interest expense, non-cash compensation expense, other amortization and
non-cash charges, capitalized interest expense and transaction costs. Such items
may cause short-term fluctuations in net income but have no impact on operating
cash flows or long-term operating performance. We believe that AFFO is an
additional useful supplemental measure for investors to consider when assessing
our operating performance without the distortions created by non-cash items and
certain other revenues and expenses.

FFO, Core FFO and AFFO do not include all items of revenue and expense included
in net income, they do not represent cash generated from operating activities
and they are not necessarily indicative of cash available to fund cash
requirements; accordingly, they should not be considered alternatives to net
income as a performance measure or cash flows from operations as a liquidity
measure and should be considered in addition to, and not in lieu of, GAAP
financial measures. Additionally, our computation of FFO, Core FFO and AFFO may
differ from the methodology for calculating these metrics used by other equity
REITs and, therefore, may not be comparable to similarly titled measures
reported by other equity REITs.

                                       60
--------------------------------------------------------------------------------

Contents

The following table reconciles net income (which is the most comparable GAAP measure) with FFO, Basic FFO and AFFO attributable to shareholders and non-controlling interests:

                                                                          Three months ended March 31,
(in thousands)                                                              2022                  2021
Net income                                                           $        26,818          $   15,375
Depreciation and amortization of real estate                                  20,287              15,621
Provision for impairment of real estate                                        3,935               5,722
Gain on dispositions of real estate, net                                      (1,658)             (3,788)
FFO attributable to stockholders and non-controlling interests                49,382              32,930
Other non-recurring expenses (1)                                               2,138                   -

Basic FFO attributable to shareholders and non-controlling interests

                                                                     51,520              32,930

Adjustments:

Straight-line rental revenue, net                                             (6,265)             (3,644)
Non-cash interest                                                                661                 479
Non-cash compensation expense                                                  2,836               1,595
Other amortization expense                                                       194               1,105
Other non-cash charges                                                            56                  36
Capitalized interest expense                                                     (66)                (20)

AFFO attributable to shareholders and non-controlling interests

                                                            $      

48,936 $32,481

_____________________________________

(1)Includes our $2.1 million loss on extinguishment of debt during the three months ended March 31, 2022.

We compute EBITDA as earnings before interest, income taxes and depreciation and
amortization. In 2017, NAREIT issued a white paper recommending that companies
that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with
the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined
above) excluding gains (or losses) from the sales of depreciable property and
real estate impairment losses. We present EBITDA and EBITDAre as they are
measures commonly used in our industry. We believe that these measures are
useful to investors and analysts because they provide supplemental information
concerning our operating performance, exclusive of certain non-cash items and
other costs. We use EBITDA and EBITDAre as measures of our operating performance
and not as measures of liquidity.

EBITDA and EBITDAre do not include all items of revenue and expense included in
net income, they do not represent cash generated from operating activities and
they are not necessarily indicative of cash available to fund cash requirements;
accordingly, they should not be considered alternatives to net income as a
performance measure or cash flows from operations as a liquidity measure and
should be considered in addition to, and not in lieu of, GAAP financial
measures. Additionally, our computation of EBITDA and EBITDAre may differ from
the methodology for calculating these metrics used by other equity REITs and,
therefore, may not be comparable to similarly titled measures reported by other
equity REITs.

The following table reconciles net income (which is the most comparable GAAP
measure) to EBITDA and EBITDAre attributable to stockholders and non-controlling
interests:

                                                                        Three months ended March 31,
(in thousands)                                                            2022                   2021

Net income                                                         $        26,818          $    15,375
Depreciation and amortization                                               20,313               15,646
Interest expense                                                             9,160                7,678
Interest income                                                                (18)                 (20)
Income tax expense                                                             301                   56

EBITDA attributable to shareholders and non-controlling interests

                                                                   56,574               38,735
Provision for impairment of real estate                                      3,935                5,722
Gain on dispositions of real estate, net                                    (1,658)              (3,788)
EBITDAre attributable to stockholders and non-controlling
interests                                                          $        58,851          $    40,669


                                       61
--------------------------------------------------------------------------------

Contents

We further adjust EBITDAre for the most recently completed quarter i) based on
an estimate calculated as if all re-leasing, investment and disposition activity
that took place during the quarter had been made on the first day of the
quarter, ii) to exclude certain GAAP income and expense amounts that we believe
are infrequent and unusual in nature and iii) to eliminate the impact of lease
termination or loan prepayment fees and contingent rental revenue from certain
of our tenants, which is subject to sales thresholds specified in the applicable
leases ("Adjusted EBITDAre"). We then annualize quarterly Adjusted EBITDAre by
multiplying it by four ("Annualized Adjusted EBITDAre"), which we believe
provides a meaningful estimate of our current run rate for all of our
investments as of the end of the most recently completed quarter. You should not
unduly rely on this measure, as it is based on assumptions and estimates that
may prove to be inaccurate. Our actual reported EBITDAre for future periods may
be significantly less than our current Annualized Adjusted EBITDAre.

The following table reconciles net income (which is the most comparable GAAP measure) to annualized adjusted EBITDA attributable to shareholders and non-controlling interests for the three months ended March 31, 2022:

                                                                                      Three months ended
(in thousands)                                                                          March 31, 2022
Net income                                                                           $          26,818
Depreciation and amortization                                                                   20,313
Interest expense                                                                                 9,160
Interest income                                                                                    (18)
Income tax expense                                                                                 301

EBITDA attributable to shareholders and non-controlling interests

                     56,574
Provision for impairment of real estate                                                          3,935
Gain on dispositions of real estate, net                                                        (1,658)

EBITDA is attributable to shareholders and non-controlling interests

                     58,851

Adjustment for current quarter reletting, acquisition and disposal activities (1)

                                                                                     1,781

Adjustment to exclude other non-strategic or non-recurring activities (2)

                      3,003

Adjustment to exclude termination/prepayment fees and certain rent percentages (3)

                                                                                                  -

Adjusted EBITDA attributable to shareholders and non-controlling interests $63,635

Annualized Adjusted EBITDAre attributable to stockholders and non-controlling
interests                                                                            $         254,540

_____________________________________

(1)Adjustment assumes all re-leasing activity, investments in and dispositions
of real estate and loan repayments made during the three months ended
March 31, 2022 had occurred on January 1, 2022.
(2)Adjustment is made to exclude non-core expenses added back to compute Core
FFO, our provision for loan losses and to eliminate the impact of seasonal
fluctuation in certain non-cash compensation expense recorded in the period.
(3)Adjustment excludes contingent rent (based on a percentage of the tenant's
gross sales at the leased property) where payment is subject to exceeding a
sales threshold specified in the lease and lease termination or loan prepayment
fees.

We calculate our net debt as our gross debt (defined as total debt plus net
deferred financing costs on our secured borrowings) less cash and cash
equivalents and restricted cash available for future investment. We believe
excluding cash and cash equivalents and restricted cash available for future
investment from gross debt, all of which could be used to repay debt, provides
an estimate of the net contractual amount of borrowed capital to be repaid,
which we believe is a beneficial disclosure to investors and analysts.

                                       62
--------------------------------------------------------------------------------

Contents

The following table reconciles total debt (which is the most comparable GAAP measure) to net debt:

                                                                         March 31,           December 31,
(in thousands)                                                              2022                 2021

Unsecured term loans, net of deferred financing costs                  $   628,055          $    626,983
Revolving credit facility                                                  147,000               144,000
Senior unsecured notes, net                                                394,864               394,723
Total debt                                                               1,169,919             1,165,706
Deferred financing costs and original issue discount, net                    7,081                 8,294
Gross debt                                                               1,177,000             1,174,000
Cash and cash equivalents                                                  (14,255)              (59,758)
Restricted cash available for future investment                                  -                     -
Net debt                                                               $ 1,162,745          $  1,114,242


We compute NOI as total revenues less property expenses. NOI excludes all other
items of expense and income included in the financial statements in calculating
net income or loss, in accordance with GAAP. Cash NOI further excludes non-cash
items included in total revenues and property expenses, such as straight-line
rental revenue and other amortization and non-cash charges. We believe NOI and
Cash NOI provide useful and relevant information because they reflect only those
revenue and expense items that are incurred at the property level and present
such items on an unlevered basis.

NOI and Cash NOI are not measures of financial performance under GAAP. You
should not consider our NOI and Cash NOI as alternatives to net income or cash
flows from operating activities determined in accordance with GAAP.
Additionally, our computation of NOI and Cash NOI may differ from the
methodology for calculating these metrics used by other equity REITs, and,
therefore, may not be comparable to similarly titled measures reported by other
equity REITs.

The following table reconciles net income (which is the most comparable GAAP
measure) to NOI and Cash NOI attributable to stockholders and non-controlling
interests:

                                                                          Three months ended March 31,
(in thousands)                                                              2022                   2021
Net income                                                           $        26,818          $    15,375
General and administrative expense                                             8,063                6,431
Depreciation and amortization                                                 20,313               15,646
Provision for impairment of real estate                                        3,935                5,722
Change in provision for loan losses                                               60                   38
Gain on dispositions of real estate, net                                      (1,658)              (3,788)
Loss on debt extinguishment                                                    2,138                    -
Interest expense                                                               9,160                7,678
Interest income                                                                  (18)                 (20)
Income tax expense                                                               301                   56
NOI attributable to stockholders and non-controlling interests                69,112               47,138
Straight-line rental revenue, net                                             (6,265)              (3,644)
Other amortization and non-cash charges                                          194                1,105

Cash NOI attributable to shareholders and non-controlling interests

                                                            $      

63,041 $44,599

© Edgar Online, source Previews

Comments are closed.