Item 2.01 Completion
of Acquisition or Disposition of Assets
On
April 22, 2022, the Company, through wholly owned subsidiaries of The
Necessity Retail REIT Operating Partnership, L.P., the Company’s operating partnership (the “Operating
Partnership"), acquired five properties (the “Fourth Closing Properties”) from certain subsidiaries of CIM Real Estate
Finance Trust, Inc. (the “Sellers”) pursuant to the previously
disclosed purchase and sale agreement (the “PSA”) among the Company, the Operating Partnership and the Sellers dated
December 17, 2021. The Fourth Closing Properties consist of three power centers and grocery-anchored multi-tenant retail centers and
two single-tenant retail properties that represent the fourth tranche of the Company’s previously announced acquisition of 81
properties (together, the “CIM Portfolio”) from the Sellers. As previously reported on the Company’s Current
Reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 14, 2022, February 28,
2022 and March 21, 2022, the Company acquired 56 power centers and grocery-anchored multi-tenant retail centers and a
detention pond parcel at an aggregate purchase price of approximately $800 million, excluding closing costs. Neither
the Sellers nor CIM Real Estate Finance Trust have a material relationship with the Company, the Operating Partnership or any
of their respective subsidiaries and the acquisition was not an affiliated transaction.
The aggregate purchase
price of the Fourth Closing Properties was $49.9 million, excluding closing costs. The Company funded the purchase price of the
Fourth Closing Properties from a combination of assumed mortgages of $25.3 million (described herein) and $24.6 million under the
Company’s credit facility. The Fourth Closing Properties contain
approximately 395,414 rentable square feet, were 99%
leased to 21 tenants and had a weighted average remaining lease term of 6.3
years and 6.0 years as of September 30, 2021 and December 31, 2021, respectively. There have been no material changes to the terms
of the leases, the composition of the tenant base or the occupancy at these properties since that date.
The following table lists
information about the Fourth Closing Properties:
Portfolio | |
Number of Properties | | |
Rentable Square
Feet | | |
Remaining Lease Term(1) |
| |
Percentage
Leased(2) | |
Academy Sports | |
| 1 | | |
| 71,690 | | |
| 9.3 /9.1 |
| |
| 100 | % |
Walgreens | |
| 1 | | |
| 15,120 | | |
| 4.7 /4.4 |
| |
| 100 | % |
Wallace Commons | |
| 1 | | |
| 98,509 | | |
| 5.6 /5.2 |
| |
| 100 | % |
Terrell Mill Village | |
| 1 | | |
| 75,184 | | |
| 6.5 /6.2 |
| |
| 93 | % |
The Marquis | |
| 1 | | |
| 134,911 | | |
| 5.0 /4.7 |
| |
| 100 | % |
Total | |
| 5 | | |
| 395,414 | | |
| 6.3/6.0 |
| |
| 99 | % |
| (1) | Remaining lease term in years as of September 30, 2021 and December
31, 2021. Because the portfolio has multiple properties with varying lease expirations, the remaining lease term is calculated as a weighted-average
based on annualized rental income on a straight-line basis. |
| (2) | Occupancy data as of September 30, 2021 and December 31, 2021. There
have been no material changes to the terms of the leases or the composition of the tenant base at these properties since that date. |
The Company expects to complete
the acquisition of the remaining properties in the CIM Portfolio in the second quarter of 2022.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
On April 22,
2022, the Company, through the Operating Partnership, drew $24.6 million from its existing
credit facility with BMO Harris Bank, N.A. in connection with the acquisition of the Fourth Closing Properties. A description of the credit
facility is included in the Company’s Current Report on Form 8-K filed with the SEC on October 4, 2021. The description is a summary
and is qualified in its entirety by the terms of the credit agreement relating to the credit facility, which was filed with the SEC as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 4, 2021 and is incorporated by reference
herein. In total, the Company has drawn $369.6 million from its existing credit facility
in relation to the acquisition.
On April 22, 2022, in connection with the acquisition
of the Fourth Closing Properties, the Company and the Sellers entered into two Assumption Agreements, (together, the “Assumption
Agreements”) in which the Company assumed the loans by Wells Fargo Bank, National Association and U.S. Bank, National Association, each as trustee for the lenders, to the Sellers, as borrower, for the outstanding principal
balance of approximately $16.7 million and $8.6 million, respectively, at the time each loan was assumed by the Company. The original
amount of each loan was $16.7 million and $8.6 million, respectively, and each loan has a fixed interest rate of 4.62% and 3.90% per annum,
maturing in September 2023 and May 2023, respectively.
The statements
contained in this Current Report on Form 8-K that are not historical facts may be forward-looking statements. These forward-looking
statements involve risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “anticipates,”
“believes,” “expects,” “estimates,” “projects,” “plans,” “intends,”
“seek,” “may,” “would” and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to risks, uncertainties
and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from
the results contemplated by the forward-looking statements. These risks and uncertainties include the potential adverse effects of the
ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and
the global economy and financial markets as well as those set forth in the Company’s Current Reports on Form 8-K dated December
20, 2021, February 14, 2022, February 28, 2022 and March 21, 2022 describing additional facts and risk factors relating to the transaction
described in this filing and the Risk Factors section of the Company’s most recent Annual Report on Form 10-K for the year
ended December 31, 2021 filed on February 24, 2022 and all other filings with the SEC after that date, as such risks, uncertainties
and other important factors may be updated from time to time in the Company’s subsequent reports. In particular, the transactions
described are subject to closing conditions, including conditions that are outside of the Company’s control, and the transactions
described may not be completed on the contemplated terms, or at all, or they may be delayed. The Company may not be able to obtain financing
to acquire the remaining properties. Forward looking statements speak only as of the date they are made, and the Company undertakes no
obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results, unless required to do so by law.