UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2014
 
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________
Commission file number: 333-177563
American Realty Capital Global Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland
  
45-2771978
(State or other  jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
405 Park Ave., 15 th  Floor, New York, NY       
  
10022
(Address of principal executive offices)
  
(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x
(Do not check if a smaller reporting company)
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes x No

As of July 31, 2014 , the registrant had 174,910,521 shares of common stock outstanding.

AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


1
Part I — FINANCIAL INFORMATION
Item 1. Financial Statements.

AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)


 
June 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
ASSETS
 
 
 
Real estate investments, at cost:
 
 
 
Land
$
139,993

 
$
44,647

Buildings, fixtures and improvements
447,088

 
104,362

Acquired intangible lease assets
230,805

 
47,899

Total real estate investments, at cost
817,886

 
196,908

Less accumulated depreciation and amortization
(15,240
)
 
(2,307
)
Total real estate investments, net
802,646

 
194,601

Cash and cash equivalents
936,544

 
11,500

Restricted cash
2,012

 
737

Derivatives, at fair value
1,030

 
734

Receivable for sale of common stock
1,758

 
1,766

Prepaid expenses and other assets
9,365

 
3,454

Deferred costs, net
9,318

 
2,135

Total assets
$
1,762,673

 
$
214,927

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Mortgage notes payable
$
179,624

 
$
76,904

Mortgage premium, net
1,415

 
1,663

Credit facility
71,628

 
—

Below-market lease liability, net
8,827

 
5,854

Derivatives, at fair value
7,982

 
2,565

Accounts payable and accrued expenses
8,357

 
2,519

Deferred rent
6,702

 
1,862

Distributions payable
9,028

 
840

Total liabilities
293,563

 
92,207

Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding at June 30, 2014 and December 31, 2013
—

 
—

Common stock, $0.01 par value, 300,000,000 shares authorized, 172,338,258 and 15,665,827 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
1,723

 
157

Additional paid-in capital
1,529,345

 
133,592

Accumulated other comprehensive income
181

 
319

Accumulated deficit
(62,139
)
 
(11,348
)
Total stockholders' equity
1,469,110

 
122,720

Total liabilities and stockholders' equity
$
1,762,673

 
$
214,927


The accompanying notes are an integral part of these statements.

2
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except for share and per share data)
(Unaudited)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
 
Rental income
 
$
13,223

 
$
200

 
$
20,538

 
$
242

Operating expense reimbursements
 
405

 
—

 
637

 
3

Total revenues
 
13,628

 
200

 
21,175

 
245

 
 
 
 
 
 
 
 
 
 Expenses:
 
 
 
 
 
 
 
 
Property operating
 
786

 
—

 
1,019

 
—

Operating fees to affiliate
 
139

 
5

 
202

 
5

Acquisition and transaction related
 
8,244

 
1,320

 
24,759

 
1,320

General and administrative
 
1,535

 
11

 
2,511

 
15

Depreciation and amortization
 
7,640

 
124

 
11,994

 
154

Total expenses
 
18,344

 
1,460

 
40,485

 
1,494

Operating loss
 
(4,716
)
 
(1,260
)
 
(19,310
)
 
(1,249
)
Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(2,614
)
 
(52
)
 
(4,304
)
 
(65
)
(Losses) gains on foreign currency
 
(26
)
 
18

 
(19
)
 
18

Loss on derivative instruments
 
(171
)
 
—

 
(250
)
 
—

Other income
 
48

 
—

 
55

 
—

Total other expense
 
(2,763
)
 
(34
)
 
(4,518
)
 
(47
)
Net loss
 
$
(7,479
)
 
$
(1,294
)
 
$
(23,828
)
 
$
(1,296
)
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Cumulative translation adjustment
 
3,481

 
(168
)
 
4,733

 
(248
)
Designated derivatives, fair value adjustments
 
(2,008
)
 
346

 
(4,871
)
 
450

Comprehensive loss
 
$
(6,006
)
 
$
(1,116
)
 
$
(23,966
)
 
$
(1,094
)
 
 
 
 
 
 
 
 
 
Basic and diluted weighted average shares outstanding
 
111,819,848

 
2,755,487

 
74,916,338

 
1,603,691

Basic and diluted net loss per share
 
$
(0.07
)
 
$
(0.47
)
 
$
(0.32
)
 
$
(0.81
)



The accompanying notes are an integral part of these statements.


3
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 2014
(In thousands, except for share data)
(Unaudited)

 
Common Stock
 
 
 
 
 
 
 
 
 
Number of
Shares
 
Par Value
 
Additional Paid-in
Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Accumulated Deficit
 
Total
Balance, December 31, 2013
15,665,827

 
$
157

 
$
133,592

 
$
319

 
$
(11,348
)
 
$
122,720

Issuance of common stock
155,597,670

 
1,555

 
1,545,448

 
—

 
—

 
1,547,003

Common stock offering costs, commissions and dealer manager fees

 

 
(159,821
)
 
—

 
—

 
(159,821
)
Common stock repurchases
(11,345
)
 
—

 
(113
)
 
—

 
—

 
(113
)
Common stock issued through distribution reinvestment plan
1,076,050

 
11

 
10,212

 
—

 
—

 
10,223

Share-based compensation
10,056

 
—

 
27

 
—

 
—

 
27

Distributions declared
—

 
—

 
—

 
—

 
(26,963
)
 
(26,963
)
Net loss
—

 
—

 
—

 
—

 
(23,828
)
 
(23,828
)
Other comprehensive loss
—

 
—

 
—

 
(138
)
 
—

 
(138
)
Balance, June 30, 2014
172,338,258


$
1,723


$
1,529,345


$
181


$
(62,139
)

$
1,469,110


The accompanying notes are an integral part of this statement.


4
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


 
Six Months Ended June 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net loss
$
(23,828
)
 
$
(1,296
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
Depreciation
6,680

 
70

Amortization of intangibles
5,314

 
84

Amortization of deferred financing costs
806

 
8

Amortization of mortgage premium
(248
)
 
—

Accretion of below-market lease liability and amortization of above-market lease assets, net
414

 
25

Share-based compensation
27

 
8

Net realized and unrealized mark-to-market transactions
250

 
—

Changes in assets and liabilities:
 
 
 
Prepaid expenses and other assets
(886
)
 
(705
)
Accounts payable and accrued expenses
5,862

 
408

Deferred rent
4,840

 
315

Net cash used in operating activities
(769
)
 
(1,083
)
Cash flows from investing activities:
 
 
 
Investment in real estate and other assets
(514,084
)
 
(9,046
)
Deposits for real estate acquisitions
(5,484
)
 
(500
)
Net cash used in investing activities
(519,568
)
 
(9,546
)
Cash flows from financing activities:
 
 
 
Borrowings under credit facility
91,199

 
—

Repayments on credit facility
(19,571
)
 
—

Proceeds from notes payable
13,119

 
—

Payments on notes payable
(13,119
)
 
—

Payments on mortgage notes payable
(338
)
 
—

Proceeds from issuance of common stock
1,547,011

 
45,932

Payments of offering costs
(159,283
)
 
(6,531
)
Payments of deferred financing costs
(7,989
)
 
(317
)
Distributions paid
(8,552
)
 
(236
)
Advances from affiliates, net
459

 
(238
)
Restricted cash
(1,275
)
 
—

Net cash provided by financing activities
1,441,661

 
38,610

Net change in cash and cash equivalents
921,324

 
27,981

Effect of exchange rate changes on cash
3,720

 
(172
)
Cash and cash equivalents, beginning of period
11,500

 
262

Cash and cash equivalents, end of period
$
936,544

 
$
28,071

 
 
 
 
Supplemental Disclosures:
 
 
 
Cash paid for interest
$
2,400

 
$
25

Cash paid for income taxes
9

 
—

Non-Cash Financing Activities:
 
 
 
Mortgage note payable used to acquire investments in real estate
$
101,880

 
$
9,045

Common stock issued through distribution reinvestment plan
10,223

 
105

The accompanying notes are an integral part of these statements.

5
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)


Note 1 — Organization
American Realty Capital Global Trust, Inc. (the "Company"), incorporated on July 13, 2011, is a Maryland corporation that intends to qualify as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2013.
On April 20, 2012, the Company commenced its initial public offering ("IPO") on a "reasonable best efforts" basis of up to 150.0 million shares of common stock, $0.01 par value per share, at a price of $10.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form S-11 (File No. 333-177563) (the "Registration Statement") filed with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended. The Registration Statement also covers up to 25.0 million shares of common stock issuable pursuant to a distribution reinvestment plan (the "DRIP") under which the Company's common stockholders may elect to have their distributions reinvested in additional shares of the Company's common stock. On June 13, 2014, as permitted, the Company announced the reallocation of 23.8 million shares, which represented all remaining unsold shares available pursuant to the DRIP. Concurrent with such reallocation, on June 17, 2014, the Company registered an additional 25.0 million shares to be issued under the DRIP pursuant to a registration statement on Form S-3 (File No. 333-196829).
On October 24, 2012, the Company received and accepted subscriptions in excess of the minimum offering amount of $2.0 million in shares, broke escrow and issued shares of common stock to initial investors who were admitted as stockholders. As of June 30, 2014 , the Company had 172.3 million shares of stock outstanding, including unvested restricted shares and shares issued under the DRIP and had received total gross proceeds from the IPO of $1.7 billion including DRIP. As of June 30, 2014 , the aggregate value of all the common stock outstanding was $1.7 billion based on a per share value of $10.00 (or $9.50 for shares issued under the DRIP).
Until the filing of the Company's second Quarterly Report on Form 10-Q with the SEC (or Annual Report on Form 10-K should such filing constitute the second quarterly financial filing) following the Company's acquisition of at least $1.2 billion in total investment portfolio assets, the per share purchase price in the IPO will be up to $10.00 per share (including the maximum allowed to be charged for commissions and fees) and shares issued under the DRIP will initially be equal to $9.50 per share, which is equal to 95% of the initial offering price in the IPO. Thereafter, the per share purchase price will vary quarterly and will be equal to the Company's net asset value ("NAV") per share plus applicable commissions and fees in the case of the primary offering; and the per share purchase price in the DRIP will be equal to the NAV per share.
The Company was formed to primarily acquire a diversified portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. The Company may also originate or acquire first mortgage loans secured by real estate. The Company's primary geographic target is the United States, although up to 40% of its portfolio may consist of properties purchased in Europe with an additional 10% allocation to properties purchased elsewhere internationally. All such properties may be acquired and operated by the Company alone or jointly with another party. As of June 30, 2014 , the Company owned 96 properties consisting of 6.2 million rentable square feet, which were 100.0% leased, with an average remaining lease term of 12.1 years.
Substantially all of the Company's business is conducted through American Realty Capital Global Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP ("OP units"). American Realty Capital Global Special Limited Partner, LLC (the "Special Limited Partner"), an entity controlled by AR Capital Global Holdings, LLC (the "Sponsor"), contributed $200 to the OP in exchange for 22 OP units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP units has the right to convert OP units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, in accordance with the limited partnership agreement of the OP. The remaining rights of the limited partner interests are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

6
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The Company has no direct employees. American Realty Capital Global Advisors, LLC (the "Advisor") has been retained to manage the Company's affairs on a day-to-day basis. The properties are managed and leased by American Realty Capital Global Properties, LLC (the "Property Manager"). Realty Capital Securities, LLC (the "Dealer Manager") serves as the dealer manager of the IPO. The Advisor, Property Manager, Special Limited Partner, and Dealer Manager are under common control with the parent of the Sponsor, as a result of which they are related parties, and many of which have, or may, receive compensation, fees and expense reimbursements for services related to the IPO and for the investment and management of the Company's assets. These entities receive fees, distributions and other compensation during the offering, acquisition, operational and liquidation stages. The Advisor has entered into a service provider agreement with Moor Park Capital Partners LLP (the "Service Provider"). The Service Provider is not affiliated with the Company, the Advisor or the Sponsor. Pursuant to the service provider agreement, the Service Provider provides, subject to the Advisor's oversight, certain real estate related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. Pursuant to the service provider agreement, 50.0% of the fees payable by the Company to the Advisor and a percentage of the fees paid to the Property Manager are paid or assigned to the Service Provider, solely with respect to the Company's foreign investment strategy in Europe. Such fees are deducted from fees paid to the Advisor.
Note 2 — Summary of Significant Accounting Policies
The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended June 30, 2014 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2013 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 7, 2014 . There have been no significant changes to the Company's significant accounting policies during the six months ended June 30, 2014 other than the updates described below.
Recently Issued Accounting Pronouncements
In February 2013, the FASB issued new accounting guidance clarifying the accounting and disclosure requirements for obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.
In March 2013, the FASB issued new accounting guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity.  The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.
In April 2014, the FASB amended the requirements for reporting discontinued operations. Under the revised guidance, in addition to other disclosure requirements, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the component or group of components meets the criteria to be classified as held for sale, disposed of by sale or other than by sale. The Company has adopted the provisions of this guidance effective January 1, 2014, and has applied the provisions prospectively. The adoption of this guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

7
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Note 3 — Real Estate Investments
The following table reflects the number and related base purchase prices of properties acquired as of December 31, 2013 and during the six months ended June 30, 2014 :
 
 
Number of Properties
 
Base Purchase Price (1)
 
 
 
 
(In thousands)
As of December 31, 2013
 
37
 
$
184,890

Six Months ended June 30, 2014
 
59
 
609,737

Portfolio as of June 30, 2014
 
96
 
$
794,627

________________________________________________
(1)
Contract purchase price, excluding acquisition related costs, based on the exchange rate at the time of purchase.
The following table presents the allocation of the assets acquired during the six months ended June 30, 2014 and 2013.
 
 
Six Months Ended
(Dollar amounts in thousands)
 
June 30, 2014
 
June 30, 2013
Real estate investments, at cost:
 
 
 
 
Land
 
$
94,839

 
$
6,237

Buildings, fixtures and improvements
 
342,617

 
4,868

Total tangible assets
 
437,456

 
11,105

Intangibles acquired:
 
 
 
 
In-place leases
 
151,957

 
6,986

Above market lease asset
 
29,880

 
—

Below market lease liability
 
(3,329
)
 
—

Total assets acquired, net
 
615,964

 
18,091

Mortgage notes payable used to acquire real estate investments
 
(101,880
)
 
(9,045
)
Cash paid for acquired real estate investments
 
$
514,084

 
$
9,046

Number of properties purchased
 
59

 
2

The allocations in the table above of land, buildings, fixtures and improvements, and in-place lease intangibles have been provisionally assigned to each class of asset, pending receipt of information being prepared by a third-party specialist.
The following table presents unaudited pro forma information as if the acquisitions during the six months ended June 30, 2014 , had been consummated on January 1, 2013. Additionally, the unaudited pro forma net loss attributable to stockholders was adjusted to exclude acquisition and transaction related expense of $24.8 million from the six months ended June 30, 2014 .
 
 
Six Months Ended June 30,
(In thousands)
 
2014
 
2013
Pro forma revenues
 
$
43,678

 
$
34,578

Pro forma net income
 
$
3,479

 
$
1,176


8
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The following presents future minimum base rental cash payments due to the Company over the next five years and thereafter as of June 30, 2014 . These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indices among other items.
(In thousands)
 
Future Minimum
Base Rent Payments
July 1, 2014 - December 31, 2014
 
$
33,837

2015
 
68,050

2016
 
69,012

2017
 
69,679

2018
 
70,281

Thereafter
 
560,073

 
 
$
870,932

The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of total annualized rental income for all properties on a straight-line basis as of June 30, 2014 and June 30, 2013 .  
 
 
June 30,
Tenant
 
2014
 
2013
United States of America
 
11.1%
 
*
McDonald's Property Company Limited
 
*
 
100.0%
_______________________________________________________________________
* Tenant's annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.
The termination, delinquency or non-renewal of leases by any of the above tenants may have a material adverse effect on revenues.
The following table lists the states and countries where the Company has concentrations of properties where annualized rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of June 30, 2014 and June 30, 2013 .  
 
 
June 30,
Country or State ( if domestic )
 
2014
 
2013
United Kingdom
 
40.3%
 
100.0%
Texas
 
12.7%
 
—%
Note 4 — Revolving Credit Facility
On July 25, 2013, the Company through the OP entered into a credit agreement relating to a credit facility that provides for aggregate revolving loan borrowings of up to $50.0 million (subject to borrowing base availability). The credit facility contains an “accordion feature” to allow the Company, under certain circumstances, to increase the aggregate borrowings under the credit facility to up to $750.0 million through additional commitments. On March 26, 2014, the Company amended the credit agreement to increase aggregate borrowings under the facility to $100.0 million . On June 24, 2014, the Company further amended the credit agreement to increase aggregate borrowings under the facility to $330.0 million . Availability of borrowings is based on a pool of eligible unencumbered real estate assets. 

9
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The Company has the option, based upon its corporate leverage, to have draws under the facility priced at either the Alternate Base Rate (as described below) plus 0.60% to 1.20% or at adjusted LIBOR plus 1.60% to 2.20% . The Alternate Base Rate is defined in the credit facility agreement as a rate per annum equal to the greatest of (a) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate” in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5% and (c) the Adjusted LIBOR for a month period on such day plus 1% . Adjusted LIBOR refers to LIBOR multiplied by the statutory reserve rate, as determined by the Federal Reserve System of the United States. The credit agreement requires the Company to pay an unused fee per annum of 0.25% if the unused balance of the credit facility exceeds or is equal to 50% of the available facility or a fee per annum of 0.15% if the unused balance of the credit facility is less than 50% of the available facility.
As of June 30, 2014 , total outstanding advances under the credit facility were $71.6 million . There were no outstanding advances under the credit facility as of December 31, 2013 . The unused borrowing capacity, based on the value of the borrowing base properties as of June 30, 2014 and December 31, 2013 , was $37.8 million and $31.1 million , respectively.
The credit agreement provides for quarterly interest payments for each Alternate Base Rate loan and periodic payments for each adjusted LIBOR loan, based upon the applicable LIBOR loan period, with all principal outstanding being due on the maturity date in July 2016. The credit agreement also contains two one-year extension options, subject to certain conditions. The credit facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to prior notice to the lender. In the event of a default, the lender has the right to terminate their obligations under the credit agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans.
The credit agreement requires the Company to meet certain financial covenants, including the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. As of June 30, 2014 , the Company was in compliance with the financial covenants under the credit agreement.
Note 5 — Mortgage Notes Payable
Mortgage notes payable as of June 30, 2014 and December 31, 2013 consisted of the following:
 
 
Encumbered Properties
 
Outstanding Loan Amount
 
Effective Interest Rate
 
Interest Rate
 
 
Portfolio
 
 
June 30, 2014
 
December 31, 2013
 
 
 
Maturity
 
 
 
 
(In thousands)
 
(In thousands)
 
 
 
 
 
 
McDonald's
 
1
 
$
1,295

(1)  
$
1,253

 
4.1%
(2)  
Fixed
 
Oct. 2017
Wickes Building Supplies I
 
1
 
3,316

(1)  
3,209

 
3.7%
(2)  
Fixed
 
May 2018
Everything Everywhere
 
1
 
6,815

(1)  
6,596

 
4.0%
(2)  
Fixed
 
Jun. 2018
Thames Water
 
1
 
10,223

(1)  
9,894

 
4.1%
(2)  
Fixed
 
Jul. 2018
Wickes Building Supplies II
 
1
 
2,811

(1)  
2,721

 
4.2%
(2)  
Fixed
 
Jul. 2018
Northern Rock
 
2
 
8,945

(1)  
8,657

 
4.4%
(2)  
Fixed
 
Sep. 2018
Wickes Building Supplies III
 
1
 
3,237

(1)  
3,133

 
4.3%
(2)  
Fixed
 
Nov. 2018
Western Digital
 
1
 
18,405

 
18,541

 
5.3%
 
Fixed
 
Jul. 2021
Encanto
 
18
 
22,697

 
22,900

 
6.3%
 
Fixed
 
Jun. 2017
Rheinmetall
 
1
 
14,467

(1)  
—

 
2.6%
(2)  
Fixed
 
Jan. 2019
Provident Financial
 
1
 
21,723

(1)  
—

 
4.1%
(2)  
Fixed
 
Feb. 2019
Crown Crest Group Limited
 
1
 
32,798

(1)  
—

 
4.2%
(2)  
Fixed
 
Feb. 2019
Aviva Life & Pensions UK Ltd.
 
1
 
26,750

(1)  
—

 
3.8%
(2)  
Fixed
 
Mar. 2019
OBI DIY
 
1
 
6,142

 
—

 
2.4%
 
Fixed
 
Jan. 2019
Total
 
32
 
$
179,624

 
$
76,904

 
4.3%
 
 
 
 
___________________________________________________________
(1) Movement in principal balances are related to changes in exchange rates.
(2) Fixed as a result of an interest rate swap agreement.

10
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The following table summarizes the scheduled aggregate principal payments on the mortgage notes payable subsequent to June 30, 2014 and thereafter:
(In thousands)
 
Future Principal Payments
July 1, 2014 — December 31, 2014
 
$
342

2015
 
721

2016
 
758

2017
 
23,213

2018
 
35,684

Thereafter
 
118,906

 
 
$
179,624

Some of the Company's mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios.  As of June 30, 2014 and December 31, 2013 , the Company was in compliance with financial covenants under its mortgage notes payable agreements.
Note 6 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.
The guidance defines three levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of June 30, 2014 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company's derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company's potential nonperformance risk and the performance risk of the counterparties.

11
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The following table presents information about the Company's assets and liabilities (including derivatives that are presented net) measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 , aggregated at the fair value hierarchy level within which those instruments fall.
(In thousands)
 
Quoted Prices in Active Markets
Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 
Total
June 30, 2014
 
 
 
 
 
 
 
 
Foreign currency swaps, net
 
$
—

 
$
(7,380
)
 
$
—

 
$
(7,380
)
Foreign currency forwards, net
 
$
—

 
$
(247
)
 
$
—

 
$
(247
)
Interest rate swaps, net
 
$
—

 
$
675

 
$
—

 
$
675

December 31, 2013
 
 
 
 
 
 
 
 
Foreign currency swap
 
$
—

 
$
(2,565
)
 
$
—

 
$
(2,565
)
Interest rate swap
 
$
—

 
$
734

 
$
—

 
$
734

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2014 .
The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The fair value of short-term financial instruments such as cash and cash equivalents, due from affiliates, accounts payable and distributions payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below.
 
 
 
 
Carrying Amount (1)  at
 
Fair Value at
 
Carrying Amount (2)  at
 
Fair Value at
(In thousands)
 
Level
 
June 30,
2014
 
June 30,
2014
 
December 31,
2013
 
December 31,
2013
Mortgage notes payable
 
3
 
$
181,039

 
$
183,042

 
$
78,567

 
$
77,698

__________________________________________________________
(1) Carrying value includes $179.6 million mortgage notes payable and $1.4 million mortgage premiums, net as of June 30, 2014 .
(2) Carrying value includes $76.9 million mortgage notes payable and $1.7 million mortgage premiums, net as of December 31, 2013 .
The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of borrowing arrangements.
Note 7 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the Company's foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company's cash receipts and payments in the Company's functional currency, the U.S. dollar. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships.

12
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company primarily uses interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2014, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the six months ended June 30, 2014 and year ended December 31, 2013 , the Company recorded no hedge ineffectiveness in earnings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next 12 months , the Company estimates that an additional $4.5 million will be reclassified from other comprehensive income as an increase to interest expense.
As of June 30, 2014 and December 31, 2013 , the Company had the following outstanding interest rate derivatives that were designated as a cash flow hedges of interest rate risk:
 
 
June 30, 2014
 
December 31, 2013
Derivatives
 
Number of
Instruments
 
Notional Amount
 
Number of
Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate swaps
 
15
 
$
205,551

 
7
 
$
35,465

Net Investment Hedges
The Company is exposed to fluctuations in foreign exchange rates on property investments it holds in foreign countries which pay rental income, property related expenses and hold debt instruments in foreign currencies. The Company uses foreign currency derivatives including cross currency swaps to hedge its exposure to changes in foreign exchange rates on certain of its foreign investments. Cross currency swaps involve fixing the applicable exchange rate for delivery of a specified amount of foreign currency on specified dates.
For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in accumulated other comprehensive income (outside of earnings) as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of accumulated other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated.
As of June 30, 2014 and December 31, 2013 , the Company had the following outstanding cross currency swaps that were used to hedge its net investments in foreign operations:
 
 
June 30, 2014
 
December 31, 2013
Derivatives
 
Number of
Instruments
 
Notional Amount
 
Number of
Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Foreign currency swaps (1)
 
12
 
$
139,427

 
7
 
$
35,597

____________________________________
(1) Payments and obligations pursuant to these foreign currency swap agreements are guaranteed by AR Capital, LLC, the entity which wholly owns the Sponsor.

13
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Non-designated Hedges
The Company is exposed to fluctuations in various foreign currencies against its functional currency, the US dollar. The Company uses foreign currency derivatives including currency forward agreements to manage its exposure to fluctuations in GBP-USD and EUR-USD exchange rate. While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and a loss of $0.3 million was recognized for the six months ended June 30, 2014 . The company did not have any derivatives that were not designated in 2013.
As of June 30, 2014 and December 31, 2013 , the Company had the following outstanding derivatives that were not designated as hedges under qualifying hedging relationships.
 
 
June 30, 2014
 
December 31, 2013
Derivatives
 
Number of
Instruments
 
Notional Amount
 
Number of
Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
GBP-USD forwards
 
42
 
$
5,238

 
—
 
$
—

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2014 and December 31, 2013:
(In thousands)
 
Balance Sheet Location
 
June 30, 2014
 
December 31, 2013
Derivatives designated as hedging instruments:
 
 
 
 
 
 
Interest rate swaps
 
Derivative assets, at fair value
 
$
1,017

 
$
734

Foreign currency swaps
 
Derivative assets, at fair value
 
$
13

 
$
—

Interest rate swaps
 
Derivative liabilities, at fair value
 
$
(342
)
 
$
—

Foreign currency swaps
 
Derivative liabilities, at fair value
 
$
(7,393
)
 
$
(2,565
)
GBP-USD Forwards
 
Derivative liabilities, at fair value
 
$
(247
)
 
$
—

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and six months ended June 30, 2014 and 2013 .
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
 
2014
 
2013
 
2014
 
2013
Amount of gain (loss) recognized in accumulated other comprehensive income from derivatives (effective portion)
 
$
(2,607
)
 
340

 
$
(5,819
)
 
442

Amount of loss reclassified from accumulated other comprehensive income into income as interest expense (effective portion)
 
$
(396
)
 
(6
)
 
$
(602
)
 
(8
)
Amount of gain (loss) recognized in income on derivative instruments (ineffective portion and amount excluded from effectiveness testing)
 
$
—

 
—

 
$
—

 
—


14
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Tabular Disclosure Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of June 30, 2014 and December 31, 2013 . The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying consolidated balance sheets.
 
 
 
 
 
 
 
 
 
 
Gross Amounts Not Offset on the Balance Sheet
 
 
Derivatives  (In thousands)
 
Gross Amounts of Recognized Assets
 
Gross Amounts of Recognized (Liabilities)
 
Gross Amounts Offset on the Balance Sheet
 
Net Amounts of Assets (Liabilities) presented on the Balance Sheet
 
Financial Instruments
 
Cash Collateral Received (Posted)
 
Net Amount
June 30, 2014
 
$
1,030

 
$
(7,982
)
 
$
—

 
$
(6,952
)
 
$
—

 
$
—

 
$
(6,952
)
December 31, 2013
 
$
734

 
$
(2,565
)
 
$
—

 
$
(1,831
)
 
$
—

 
$
—

 
$
(1,831
)
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of June 30, 2014 , the fair value of derivatives in net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $8.9 million . As of June 30, 2014 , the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
Note 8 — Common Stock
The Company had 172.3 million and 15.7 million shares of common stock outstanding, including unvested restricted shares and shares issued under the DRIP, and had received total proceeds of $1.7 billion and $154.2 million as of June 30, 2014 and December 31, 2013 , respectively.
On October 5, 2012, the Company's board of directors authorized and the Company declared a distribution which is payable to stockholders of record each day during the applicable period at a rate equal to $0.00194520548 per day equivalent to a per annum yield of 7.10% based on $10.00 price per share of common stock. The distributions began to accrue on November 28, 2012, 30 days following the Company's initial property acquisition. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distributions payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distributions payments are not assured.
The Company has a Share Repurchase Program that enables stockholders to sell their shares to the Company. As of June 30, 2014 , no shares of common stock had been repurchased under the Share Repurchase Program.
Note 9 — Commitments and Contingencies
Litigation
In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of June 30, 2014 , the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

15
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Note 10 — Related Party Transactions
As of June 30, 2014 and December 31, 2013 , the Sponsor, the Special Limited Partner and a subsidiary of the Service Provider owned 244,444 shares of the Company's outstanding common stock. The Advisor and its affiliates may incur costs and fees on behalf of the Company. As of June 30, 2014 and December 31, 2013 , the Company had $4,000 payable to and $459,000 receivable from affiliated entities, respectively, primarily related to funding the payment of third party professional fees and offering costs, net of general and administrative expenses absorbed by the Advisor.
Fees Paid in Connection with the IPO
The Dealer Manager is paid fees and compensation in connection with the sale of the Company's common stock. The Dealer Manager is paid selling commissions of up to 7.0% of the per share purchase price of offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Dealer Manager is paid 3.0% of the per share purchase price from the sale of the Company's shares, before reallowance to participating broker-dealers, as a dealer-manager fee. The Dealer Manager may re-allow its dealer-manager fee to participating broker-dealers. A participating broker dealer may elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares (not including selling commissions and dealer-manager fees) by such participating broker dealers, with 2.5% thereof paid at the time of the sale and 1.0% paid on each anniversary date of the closing of the sale to the fifth anniversary date of the closing of the sale. If this option is elected, the Dealer Manager's fee will be reduced to 2.5% of the applicable gross proceeds (not including selling commissions and dealer manager fees).

The following table details total selling commissions and dealer manager fees incurred from and payable to the Dealer Manager related to the sale of common stock as of and for the periods presented:
 
 
 
 
 
 
 
 
 
 
Payable as of
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
June 30,
 
December 31,
(In thousands)
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Total commissions and fees to Dealer Manager
 
$
97,303

 
$
3,858

 
$
146,556

 
$
4,621

 
$
164

 
$
176

The Advisor and its affiliates are paid compensation and receive reimbursement for services relating to the IPO. Effective March 1, 2013, the Company began utilizing transfer agent services provided by an affiliate of the Dealer Manager. All offering costs incurred by the Company or by the Advisor and its affiliated entities on behalf of the Company are charged to additional paid-in capital on the accompanying consolidated balance sheets. The following table details fees and offering cost reimbursements incurred and payable to the Advisor and Dealer Manager related to the sale of common stock as of and for the periods presented:
 
 
 
 
 
 
 
 
Payable as of
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
June 30,
 
December 31,
(In thousands)
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Fees and expense reimbursements to the Advisor and Dealer Manager
 
$
3,672

 
$
281

 
$
11,746

 
$
510

 
$
578

 
$
293

The Company is responsible for paying offering and related costs from the IPO, excluding commissions and dealer manager fees, up to a maximum of 1.5% of gross proceeds received from its ongoing offering of common stock, measured at the end of the offering. Offering costs in excess of the 1.5% cap as of the end of the offering are the Advisor's responsibility. As of June 30, 2014 , offering and related costs, excluding commissions and dealer manager fees, did not exceeded 1.5% of gross proceeds received from the IPO.
After the escrow break, the Advisor elected to cap cumulative offering costs incurred by the Company, net of unpaid amounts, to 15% of gross common stock proceeds during the offering period. As of June 30, 2014 , cumulative offering costs were $180.3 million . Cumulative offering costs net of unpaid amounts, were less than the 15% threshold as of June 30, 2014 .

16
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Fees Paid in Connection With the Operations of the Company
The Advisor is paid an acquisition fee of 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment. Solely with respect to investment activities in Europe, the Service Provider is paid 50% of the acquisition fees and the Advisor is paid the remaining 50% , as set forth in the service provider agreement. The Advisor is also reimbursed for insourced expenses incurred in the process of acquiring properties, which are fixed initially at 0.5% of the contract purchase price and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company will pay third party acquisition expenses. Once the proceeds from the IPO have been fully invested, the total of all acquisition fees and acquisition expenses (including any financing coordination fee) may not exceed 4.5% of the aggregate contract purchase price of the Company's portfolio or 4.5% of the amount advanced for all loans or other investments.
If the Company's Advisor provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company pays the Advisor a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Solely with respect to our investment activities in Europe, the Service Provider is paid 50% of the financing coordination fees and the Advisor receives the remaining 50% , as set forth in the service provider agreement. Such fees will be deducted from fees payable to the Advisor, pursuant to the service provider agreement.
In connection with providing strategic advisory services related to certain portfolio acquisitions, the Company has entered into arrangements in which the investment banking division of the Dealer Manager is paid a transaction fee of 0.25% of the Transaction Value for such portfolio acquisition transactions. Pursuant to such arrangements to date, the Transaction Value has been defined as: (i) the value of the consideration paid or to be paid for all the equity securities or assets in connection with the sale transaction or acquisition transaction (including consideration payable with respect to convertible or exchangeable securities and option, warrants or other exercisable securities and including dividends or distributions and equity security repurchases made in anticipation of or in connection with the sale transaction or acquisition transaction), or the implied value for all the equity securities or assets of the Company or acquisition target, as applicable, if a partial sale or purchase is undertaken, plus (ii) the aggregate value of any debt, capital lease and preferred equity security obligations (whether consolidated, off-balance sheet or otherwise) of the Company or acquisition target, as applicable, outstanding at the closing of the sale transaction or acquisition transaction), plus (iii) the amount of any fees, expenses and promote paid by the buyer(s) on behalf of the Company or the acquisition target, as applicable. Should the Dealer Manager provide strategic advisory services related to additional portfolio acquisition transactions, the Company will enter into new arrangements with the Dealer Manager on such terms as may be agreed upon between the two parties.
Prior to January 1, 2013, the Company paid the Advisor a monthly fee equal to one-twelfth of 0.75% of the cost of investment portfolio assets (costs include the purchase price, acquisition expenses, capital expenditures and other customarily capitalized costs, but excluded acquisition fees). All or a portion of the asset management fee may have been waived or deferred at the sole discretion of our board of directors (a) to the extent that FFO, as adjusted, during the six months ending on the last day of the calendar quarter immediately preceding the date that such asset management fee is payable, is less than the distributions declared with respect to such six month period or (b) for any other reason.
Effective January 1, 2013, the following were eliminated: (i) the reduction of the asset management fee to the extent, if any, that the Company's funds from operations, as adjusted, during the six months ending on the last calendar quarter immediately preceding the date the asset management fee was payable was less than the distributions declared with respect to such six month period and (ii) the payment of asset management fees in cash, shares or restricted stock grants, or any combination thereof to the Advisor. Instead, the Company issues (subject to periodic approval by the board of directors) to the Advisor performance-based restricted partnership units of the OP designated as "Class B units," which are intended to be profits interests and will vest, and no longer be subject to forfeiture, at such time as: (x) the value of the OP's assets plus all distributions made equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pre-tax, non-compounded annual return thereon (the "economic hurdle"); (y) any one of the following occurs: (1) the termination of the advisory agreement by an affirmative vote of a majority of the Company's independent directors without cause; (2) a listing; or (3) another liquidity event; and (z) the Advisor is still providing advisory services to the Company (the "performance condition"). Such Class B units will be forfeited immediately if: (a) the advisory agreement is terminated other than by an affirmative vote of a majority of the Company's independent directors without cause; or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company's independent directors without cause before the economic hurdle has been met.

17
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The number of Class B units to be issued will be equal to: (i) the excess of (A) the product of (y) the cost of assets multiplied by (z) 0.1875% over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter; divided by (ii) the value of one share of common stock as of the last day of such calendar quarter. When and if approved by the board of directors, the Class B units are expected to be issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP. Pursuant to the service provider agreement 50.0% of the Class B units will be assigned to the Service Provider, solely with respect to the Company's foreign investment strategy in Europe. As of June 30, 2014 , the Company did not consider achievement of the performance condition to be probable. The value of issued Class B units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. The Advisor will receive distributions on unvested Class B units equal to the distribution rate received on the Company's common stock. Such distributions on issued Class B units will be expensed in the consolidated statement of operations until the performance condition is considered probable to occur. During the six months ended June 30, 2014 , the board of directors approved the issuance of 146,767 Class B Units to the Advisor and the Service Provider in connection with this agreement. No class B units were issued during the six months ended June 30, 2013 .
If the Property Manager or an affiliate provides property management and leasing services for properties owned by the Company, the Company pays fees equal to: (i) with respect to stand-alone, single-tenant net leased properties which are not part of a shopping center, 2.0% of gross revenues from the properties managed and (ii) with respect to all other types of properties, 4.0% of gross revenues from the properties managed.
For services related to overseeing property management and leasing services provided by any person or entity that is not an affiliate of the Property Manager, the Company pays the Property Manager an oversight fee equal to 1.0% of gross revenues of the property managed.
Solely with respect to our investment activities in Europe, the Service Provider or other entity providing property management services with respect to such investments is paid: (i) with respect to single-tenant net leased properties which are not part of a shopping center, 1.75% of the gross revenues from such properties and (ii) with respect to all other types of properties, 3.5% of the gross revenues from such properties. The Property Manager is paid 0.25% of the gross revenues from European single-tenant net leased properties which are not part of a shopping center and 0.5% of the gross revenues from all other types of properties, reflecting a split of the oversight fee with the Service Provider or an affiliated entity providing European property management services. Such fees are deducted from fees payable to the Advisor, pursuant to the service provider agreement.
Effective March 1, 2013, the Company entered into an agreement with the Dealer Manager to provide strategic advisory services and investment banking services required in the ordinary course of the Company's business, such as performing financial analysis, evaluating publicly traded comparable companies and assisting in developing a portfolio composition strategy, a capitalization structure to optimize future liquidity options and structuring operations. Strategic advisory fees are amortized over approximately 18 months, the estimated remaining term of the IPO as of the date of the agreement, and are included in general and administrative expenses in the consolidated statement of operations and comprehensive loss.

18
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The following table reflects related party fees incurred, forgiven and contractually due as of and for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
Payable as of
 
 
2014
 
2013
 
2014
 
2013
 
June 30,
 
December 31,
(In thousands)
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
2014
 
2013
One-time fees and reimbursements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition fees and related cost reimbursements
 
$
4,224

 
$
—

 
$
295

 
$
—

 
$
9,155

 
$
—

 
$
295

 
$
—

 
$
173

 
$
—

Financing coordination fees
 
1,703

 
—

 
69

 
—

 
2,847

 
—

 
69

 
—

 
—

 
—

Ongoing fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property management and leasing fees
 
124

 
118

 
5

 
—

 
187

 
203

 
5

 
1

 
35

 
1

Strategic advisory fees
 
108

 
—

 
108

 
—

 
215

 
—

 
144

 
—

 
—

 
—

Distributions on Class B Units
 
21

 
—

 
—

 
—

 
27

 
—

 
—

 
—

 
—

 
—

Total related party operational fees and reimbursements
 
$
6,180

 
$
118

 
$
477

 
$
—

 
$
12,431

 
$
203

 
$
513

 
$
1

 
$
208

 
$
1

___________________________________________________________________________
(1) Effective January 1, 2013, the Company issues (subject to approval by the board of directors) to the Advisor restricted performance based Class B units for asset management services, which will be forfeited immediately if certain conditions occur.
The Company reimburses the Advisor's costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash reserves and excluding any gain from the sale of assets for that period. Additionally, the Company reimburses the Advisor for personnel costs in connection with other services during the operational stage, in addition to paying an asset management fee; however, the Company does not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees or real estate commissions. No reimbursement was incurred from the Advisor for providing services during the three and six months ended June 30, 2014 and 2013 .
The Company pays the Advisor an annual subordinated performance fee calculated on the basis of the Company's total return to stockholders, payable annually in arrears, such that for any year in which the Company's total return on stockholders' capital exceeds 6.0% per annum, the Advisor is entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year (which will take into account distributions and realized appreciation). This fee is payable only upon the sale of assets, distributions or other events which results in our return on stockholders' capital exceeding 6.0% per annum. Solely with respect to our investment activities in Europe, the Service Provider will be paid 50.0% of the annual subordinated performance fee payable in respect of such investments, and the Advisor or its affiliates will receive the remaining 50% , as set forth in the service provider agreement. No such amounts had been incurred during the three and six months ended June 30, 2014 and 2013 .

19
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

In order to improve operating cash flows and the ability to pay distributions from operating cash flows, the Advisor may waive certain fees including asset management and property management fees. Because the Advisor may waive certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay distributions to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor. In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's general and administrative costs or property operating expenses. These absorbed costs are presented net in the accompanying consolidated statements of operations and comprehensive loss.
The following table details property operating and general and administrative expenses absorbed by the Advisor during the three and six months ended June 30, 2014 and 2013 :
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2014
 
2013
 
2014
 
2013
Property operating expenses absorbed
$
—

 
$
—

 
$
—

 
$
4

General and administrative expenses absorbed
—

 
323

 
—

 
476

Total expenses absorbed (1)
$
—

 
$
323

 
$
—

 
$
480

___________________________________________________________________
(1) The Company had no receivable from the Advisor as of June 30, 2014 related to absorbed costs and had $0.5 million receivable as of December 31, 2013 .
Fees Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets
The Company pays a brokerage commission to the Advisor or its affiliates on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such amounts have been incurred during the three and six months ended June 30, 2014 and 2013 .
If a liquidity event occurs and the Company is not simultaneously listed on an exchange, the Company will pay a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of an annual 6.0% cumulative, pre-tax non-compounded return on the capital contributed by investors. The Company cannot assure that it will provide this 6.0% return but the Advisor will not be entitled to the subordinated participation in net sale proceeds unless the Company's investors have received a 6.0% cumulative non-compounded return on their capital contributions plus the return of capital. No such amounts have been incurred during the three and six months ended June 30, 2014 and 2013 .
The Company will distribute a subordinated incentive listing distribution of 15.0% , payable in the form of a promissory note, of the amount by which the market value of all issued and outstanding shares of the Company's common stock plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Company cannot assure that it will provide this 6.0% return but the Advisor will not be entitled to the subordinated incentive listing fee unless investors have received a 6.0% cumulative, pre-tax non-compounded return on their capital contributions plus return of capital. No such distributions have been paid during the three and six months ended June 30, 2014 and 2013 . Neither the Advisor nor any of its affiliates can receive both the subordination participation in the net proceeds and the subordinated listing distribution.
Solely with respect to the Company's properties in Europe, the Service Provider has the right to receive up to 50% of subordinated participation in the net sales proceeds of the sale of real estate assets and 50% of subordinated incentive listing distribution relating to such properties. No such fees have been incurred during the three and six months ended June 30, 2014 and 2013 .
Upon termination or non-renewal of the advisory agreement, the Advisor will receive distributions from the OP payable in the form of a promissory note. In addition, the Advisor may elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.
Note 11 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, su

20
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

pervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of the Company's common stock available for issue, transfer agency services, as well as other administrative responsibilities for the Company including accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
Note 12 — Share-Based Compensation
Stock Option Plan
 The Company has a stock option plan (the "Plan") which authorizes the grant of nonqualified stock options to the Company's independent directors, officers, advisors, consultants and other personnel, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan during the IPO will be $9.00 , until the termination of the IPO, based on NAV, and thereafter the exercise price for stock options granted to the independent directors will be equal to the fair market value of a share on the last business day preceding the annual meeting of stockholders. A total of 0.5 million shares have been authorized and reserved for issuance under the Plan. As of  June 30, 2014 and December 31, 2013 , no stock options were issued under the Plan.
Restricted Share Plan
The Company has an employee and director incentive restricted share plan (the "RSP"), which provides for the automatic grant of 3,000 restricted shares of common stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, on the date of initial election to the board of directors and on the date of each annual stockholder's meeting. Restricted stock issued to independent directors will vest over a five-year period following the first anniversary of the date of grant in increments of 20% per annum. The RSP provides the Company with the ability to grant awards of restricted shares to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The fair market value of any shares of restricted stock granted under our restricted share plan, together with the total amount of acquisition fees, acquisition expense reimbursements, asset management fees, financing coordination fees, disposition fees and subordinated distributions by the operating partnership payable to the Advisor (or its assignees), shall not exceed (a) 6% of all properties' aggregate gross contract purchase price, (b) as determined annually, the greater, in the aggregate, of 2% of average invested assets and 25% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash reserves and excluding any gain from the sale of assets for that period, (c) disposition fees, if any, of up to 3% of the contract sales price of all properties that we sell and (d) 15% of remaining net sales proceeds after return of capital contributions plus payment to investors of a 6% cumulative, pre-tax, non-compounded return on the capital contributed by investors. Additionally, the total number of shares of common stock granted under the RSP shall not exceed 5.0% of the Company's authorized shares of common stock pursuant to the IPO and in any event will not exceed 7.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).
Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares. 

21
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

The following table reflects restricted share award activity for the six months ended June 30, 2014 :
 
Number of Restricted Shares
 
Weighted-Average Issue Price
Unvested, December 31, 2013
16,200

 
$
9.00

Granted
9,000

 
9.00

Vested
(3,600
)
 
9.00

Unvested, June 30, 2014
21,600

 
$
9.00

The fair value of the restricted shares is being expensed over the vesting period of five years . Compensation expense related to restricted stock was approximately $17,000 and $8,000 during the six months ended June 30, 2014 and 2013 , respectively, and is recorded as general and administrative expense in the accompanying statements of operations.
Other Share-Based Compensation
The Company may issue common stock in lieu of cash to pay fees earned by the Company's directors at each director's election. There are no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were 1,056 shares of common stock issued in lieu of cash during the six months ended June 30, 2014 which resulted in additional share based compensation of $10,000 . There were no such shares of common stock issued in lieu of cash during the six months ended June 30, 2013 .

22
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Note 13 — Net Loss Per Share
The following is a summary of the basic and diluted net loss per share computation for the three and six months ended June 30, 2014 and 2013 :
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Net loss (in thousands)
 
$
(7,479
)
 
$
(1,294
)
 
$
(23,828
)
 
$
(1,296
)
Basic and diluted weighted average shares outstanding
 
111,819,848

 
2,755,487

 
74,916,338

 
1,603,691

Basic and diluted net loss per share
 
$
(0.07
)
 
$
(0.47
)
 
$
(0.32
)
 
$
(0.81
)
The Company had the following common share equivalents as of June 30, 2014 and 2013 , which were excluded from the calculation of diluted loss per share attributable to stockholders as the effect would have been antidilutive:
 
 
June 30,
 
 
2014
 
2013
Unvested restricted stock
 
21,600

 
16,200

OP Units
 
22

 
22

Class B units
 
170,159

 
572

Total common share equivalents
 
191,781

 
16,794

Note 14 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements, except for the following transactions:
Sales of Common Stock
As of July 31, 2014, the Company had 174.9 million shares of common stock outstanding, including unvested restricted shares and shares issued under the DRIP. Total gross proceeds, net of repurchases, from these issuances were $1.7 billion , including proceeds from shares issued under the DRIP. As of July 31, 2014, the aggregate value of all share issuances was $1.7 billion based on a per share value of $10.00 (or $9.50 per share for shares issued under the DRIP).
Total capital raised to date, including shares issued under the DRIP, is as follows:
Source of Capital (in thousands)
 
Inception to June 30, 2014
 
July 1, 2014 to July 31, 2014
 
Total
Common stock
 
$
1,711,360

 
$
25,250

 
$
1,736,610


Acquisitions
The following table presents certain information about the properties that the Company acquired from July 1, 2014 to July 31, 2014:
 
 
Number of Properties
 
Rentable
Square Feet
 
Base
Purchase Price (1)  
 
 
 
 
 
 
(In thousands)
Total portfolio, June 30, 2014
 
96

 
6,224,992

 
$
794,627

Acquisitions
 
13

 
1,710,472

 
346,850

Total portfolio, July 31, 2014
 
109

 
7,935,464

 
$
1,141,477

__________________________________________________
(1)    Contract purchase price, excluding acquisition related costs, based on the exchange rate at the time of purchase.

23
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
(Unaudited)

Revolving Credit Facility
On July 25, 2013, the Company entered into a credit facility agreement which allows for total borrowings of up to $50.0 million . The credit facility agreement contains an “accordion feature” to allow the Company, under certain circumstances, to increase the aggregate borrowings under the credit facility to up to $750.0 million through additional commitments. On July 31, 2014, the Company subsequently amended the credit facility agreement to increase aggregate borrowings to $415.0 million .

24

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of American Realty Capital Global Trust, Inc. and the notes thereto. As used herein, the terms "Company," "we," "our" and "us" refer to American Realty Capital Global Trust, Inc., a Maryland corporation, including, as required by context, to American Realty Capital Global Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the "OP," and to its subsidiaries. The Company is externally managed by American Realty Capital Global Advisors, LLC (our "Advisor"), a Delaware limited liability company.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements including statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some, but not all, of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements:
•
We have a limited operating history. This inexperience makes our future performance difficult to predict.
•
All of our executive officers are also officers, managers and/or holders of a direct or indirect controlling interest in our Advisor, our dealer manager, Realty Capital Securities, LLC (the "Dealer Manager") and other American Realty Capital affiliated entities. As a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investment programs advised by American Realty Capital affiliates and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions.
•
Because investment opportunities that are suitable for us may also be suitable for other American Realty Capital advised investment programs, our Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.
•
Commencing with the filing of our second quarterly financial filing pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), following our acquisition of at least $1.2 billion in total portfolio assets, the purchase price and repurchase price for our shares will be based on our net asset value ("NAV") rather than a public trading market. Our published NAV may not accurately reflect the value of our assets. No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid.
•
If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay distributions.
•
Our initial public offering of common stock (the "IPO"), which commenced on April 20, 2012, is a blind pool offering and you may not have the opportunity to evaluate our investments before you make your purchase of our common stock, thus making your investment more speculative.
•
We may be unable to pay or maintain cash distributions or increase distributions over time.
•
We are obligated to pay fees that may be substantial to our Advisor and its affiliates.
•
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants.
•
Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.
•
Our organizational documents permit us to pay distributions from unlimited amounts of any source. Until substantially all the proceeds from our IPO are invested, we may use proceeds from our IPO and financings to fund distributions until we have sufficient cash flow. There are no established limits on the amounts of net proceeds and borrowings that we may use to fund such distribution payments.
•
Any of these distributions may reduce the amount of capital we ultimately invest in properties and other permitted investments and negatively impact the value of your investment.

25

•
We have not and may not in the future generate cash flows sufficient to pay our distributions to stockholders, as such we may be forced to incur additional debt, borrow at higher rates or depend on our Advisor to waive reimbursement of certain expenses and fees to fund our operations.
•
We are subject to risks associated with the significant dislocations and liquidity disruptions that may occur in the credit markets of the United States of America and Europe.
•
We may fail to qualify, or continue to qualify, to be treated as a real estate investment trust ("REIT") for U.S. federal income tax purposes, which would result in higher taxes, may adversely affect operations and would reduce our NAV and cash available for distributions.
•
We may be deemed to be an investment company under the Investment Company Act of 1940, as amended, and thus subject to regulation under the Investment Company Act of 1940, as amended.
Overview
We were incorporated on July 13, 2011, as a Maryland corporation that intends to qualify as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2013. On April 20, 2012, we commenced our IPO on a "reasonable best efforts" basis of up to 150.0 million shares of common stock, $0.01 par value per share, at a price of $10.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form S-11 (File No. 333-177563) (the "Registration Statement") filed with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended. The Registration Statement also covers up to 25.0 million shares of common stock pursuant to a distribution reinvestment plan (the "DRIP") under which our common stockholders may elect to have their distributions reinvested in additional shares of our common stock. On March 19, 2014, our board of directors approved the extension of our IPO to April 20, 2015, provided that the offering will be terminated if all 150.0 million shares of our common stock are sold before such date. On June 13, 2014, we announced the reallocation 23.8 million shares which represented all remaining unsold shares available pursuant to the DRIP. On June 17, 2014, we registered an additional 25.0 million shares to be issued under the DRIP pursuant to a registration statement on Form S-3 (File No. 333-196829).
On October 24, 2012, we received and accepted subscriptions in excess of the minimum offering amount of $2.0 million in shares, broke escrow and issued shares of common stock to initial investors who were admitted as stockholders. As of June 30, 2014 , we had 172.3 million shares of stock outstanding, including unvested restricted shares and had received total gross proceeds from the IPO of $1.7 billion , including shares issued under the DRIP. Until the filing of our second quarterly financial filing with the SEC, pursuant to the Exchange Act, following our acquisition of at least $1.2 billion in total investment portfolio assets (the "NAV pricing date"), the per share purchase price in the IPO will be up to $10.00 per share (including the maximum allowed to be charged for commissions and fees) and shares issued under the DRIP will be initially equal to $9.50 per share, which is 95% of the initial offering price in the IPO. Thereafter, the per share purchase price will vary quarterly and will be equal to the NAV per share plus applicable commissions and fees, and the per share purchase price of the DRIP will be equal to the NAV per share.
We were formed to primarily acquire a diversified portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. Our primary geographic target will be the United States, although up to 40% of our portfolio may consist of properties purchased in Europe with a potential additional 10% allocation of properties elsewhere internationally. All such properties may be acquired and operated by us alone or jointly with another party. We may also originate or acquire first mortgage loans secured by real estate. We purchased our first property and commenced active operations in October 2012. As of June 30, 2014 , we owned ninety-six properties consisting of 6.2 million rentable square feet, which were 100% leased, with a weighted average remaining lease term of 12.1 years .
Substantially all of our business is conducted through the OP. We are the sole general partner and hold substantially all of the units of limited partner interests in the OP ("OP units"). American Realty Capital Global Special Limited Partner, LLC (the "Special Limited Partner"), an entity controlled by AR Capital Global Holdings, LLC (the "Sponsor"), contributed $200 to the OP in exchange for 22 OP units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP units has the right to convert OP units for the cash value of a corresponding number of shares of common stock or, at the option of the OP, a corresponding number of shares of common stock, in accordance with the limited partnership agreement of the OP. The remaining rights of the limited partner interests are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

26

We have no employees. Our Advisor has been retained to manage our affairs on a day-to-day basis. The properties are managed and leased by American Realty Capital Global Properties, LLC (the "Property Manager"). The Dealer Manager serves as the dealer manager of the IPO. The Advisor, Property Manager and Dealer Manager are affiliates of the Sponsor and Special Limited Partner. These related parties have received or will receive compensation and fees for services related to the IPO and for the investment and management of our assets. These entities receive fees during the offering, acquisition, operational and liquidation stages. The Advisor and Property Manager have entered into a service provider agreement with a third party, Moor Park Capital Partners LLP (the "Service Provider"), pursuant to which the Service Provider provides, subject to the Advisor's and Property Manager's oversight, certain real estate related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to our properties in Europe. Pursuant to the service provider agreements, 50% of the fees payable by us to the Advisor and a percentage of the fees paid to the Property Manager are assigned to the Service Provider, solely with respect to our foreign investment strategy in Europe. Such fees are deducted from fees paid to the Advisor.
Significant Accounting Estimates and Critical Accounting Policies
Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:
Offering and Related Costs
Offering and related costs include all expenses incurred in connection with our IPO. Offering costs (other than selling commissions and the dealer manager fees) include costs that may be paid by the Advisor, the Dealer Manager or their affiliates on our behalf. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Dealer Manager for amounts it may pay to reimburse the bona fide diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our offering exceed 1.5% of gross offering proceeds in the IPO. As a result, these costs are only our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs do not exceed 11.5% of the gross proceeds determined at the end of the IPO.
Revenue Recognition
Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since many of our leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record a receivable, and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We defer the revenue related to lease payments received from tenants in advance of their due dates.
We continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our consolidated statements of operations.
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

27

We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in real estate, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis. We are required to present the operations related to properties that have been sold or properties that are intended to be sold as discontinued operations in the statement of operations at fair value for all periods presented to the extent the disposal of a component represents a strategic shift that has or will have a major effect on the Company's operations and financial results. Properties that are intended to be sold are to be designated as "held for sale" on the balance sheet.
Long-lived assets are carried at cost and evaluated for impairment when events or changes in circumstances indicate such an evaluation is warranted or when they are designated as held for sale. Valuation of real estate is considered a "critical accounting estimate" because the evaluation of impairment and the determination of fair values involve a number of management assumptions relating to future economic events that could materially affect the determination of the ultimate value, and therefore, the carrying amounts of our real estate. Additionally, decisions regarding when a property should be classified as held for sale are also highly subjective and require significant management judgment.
Events or changes in circumstances that could cause an evaluation for impairment include the following:
•
a significant decrease in the market price of a long-lived asset;
•
a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;
•
a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator;
•
an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; and
•
a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset.
We review our portfolio on an ongoing basis to evaluate the existence of any of the aforementioned events or changes in circumstances that would require us to test for recoverability. In general, our review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property's use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value expected, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. We are required to make subjective assessments as to whether there are impairments in the values of our investments in real estate. These assessments have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income.
Purchase Price Allocation
We allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. We utilize various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third-parties or on our analysis of comparable properties in our portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable.
The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by us in our analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 12 months. We also estimate costs to execute similar leases including leasing commissions, legal and other related expenses.

28

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease.  The capitalized below-market lease values are amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, we initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option.  The likelihood that a lessee will execute the renewal option is determined by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.
The aggregate value of intangible assets related to customer relationships is measured based on our evaluation of the specific characteristics of each tenant's lease and our overall relationship with the tenant. Characteristics considered by us in determining these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals, among other factors.
The value of in-place leases is amortized to expense over the initial term of the respective leases, which ranges from seven to 25 years. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. We also consider information obtained about each property as a result of our pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
Derivative Instruments
We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such agreements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.
We record all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.  We may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or we elect not to apply hedge accounting.
Recently Issued Accounting Pronouncements
In February 2013, the FASB issued new accounting guidance clarifying the accounting and disclosure requirements for obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows.
In March 2013, the FASB issued new accounting guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity.  The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows.

29

In April 2014, the FASB amended the requirements for reporting discontinued operations. Under the revised guidance, in addition to other disclosure requirements, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the component or group of components meets the criteria to be classified as held for sale, disposed of by sale or other than by sale. We have adopted the provisions of this guidance effective January 1, 2014, and have applied the provisions prospectively. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows.

30

Properties
The Company acquires and operates commercial properties.  All such properties may be acquired and operated by the Company alone or jointly with another party.  The Company's portfolio of real estate properties was comprised of the following properties as of June 30, 2014 :
Portfolio
 
Acquisition Date
 
Country
 
Number of Properties
 
Square Feet
 
Remaining
Lease Term (1)
 
Base
Purchase Price (2)
(In thousands)
McDonald's
 
Oct. 2012
 
UK
 
1
 
9,094

 
9.7
 
$
2,566

Wickes Building Supplies I
 
May 2013
 
UK
 
1
 
29,679

 
10.3
 
6,058

Everything Everywhere
 
Jun. 2013
 
UK
 
1
 
64,832

 
13.0
 
12,365

Thames Water
 
Jul. 2013
 
UK
 
1
 
78,650

 
8.2
 
18,233

Wickes Building Supplies II
 
Jul. 2013
 
UK
 
1
 
28,758

 
12.5
 
5,054

PPD Global Labs
 
Aug. 2013
 
US
 
1
 
73,220

 
10.5
 
9,283

Northern Rock
 
Sep. 2013
 
UK
 
2
 
86,290

 
9.2
 
16,322

Kulicke & Soffa
 
Sep. 2013
 
US
 
1
 
88,000

 
9.3
 
13,415

Wickes Building Supplies III
 
Nov. 2013
 
UK
 
1
 
28,465

 
14.4
 
6,067

Con-way Freight
 
Nov. 2013
 
US
 
7
 
105,090

 
9.4
 
12,196

Wolverine
 
Dec. 2013
 
US
 
1
 
468,635

 
8.6
 
17,201

Western Digital
 
Dec. 2013
 
US
 
1
 
286,330

 
6.4
 
28,574

Encanto
 
Dec. 2013
 
Puerto Rico
 
18
 
65,262

 
11.0
 
37,556

GE Aviation
 
Jan. 2014
 
US
 
1
 
369,000

 
11.5
 
38,857

Rheinmetall
 
Feb. 2014
 
Germany
 
1
 
320,102

 
9.5
 
28,924

Provident Financial
 
Feb. 2014
 
UK
 
1
 
117,003

 
11.4
 
41,812

Crown Crest Group Limited
 
Feb. 2014
 
UK
 
1
 
805,530

 
24.6
 
63,587

Trane
 
Feb. 2014
 
US
 
1
 
25,000

 
9.4
 
3,072

Aviva Life & Pensions UK Ltd.
 
Mar. 2014
 
UK
 
1
 
131,614

 
15.0
 
52,517

DFS Trading
 
Mar. 2014
 
UK
 
5
 
240,230

 
15.7
 
34,049

GSA - IRS
 
Mar. 2014
 
US
 
1
 
135,373

 
8.1
 
43,250

National Oilwell Varco
 
Mar. 2014
 
US
 
1
 
24,450

 
9.1
 
4,888

Talk Talk
 
April 2014
 
UK
 
1
 
48,415

 
10.7
 
14,274

OBI DIY
 
April 2014
 
Germany
 
1
 
143,633

 
9.6
 
13,216

GSA II
 
April 2014
 
US
 
2
 
24,957

 
8.7
 
9,525

DFS Trading
 
April 2014
 
UK
 
2
 
39,331

 
15.7
 
6,275

GSA III
 
April 2014
 
US
 
2
 
28,364

 
8.5
 
9,697

GSA IV
 
May 2014
 
US
 
1
 
33,000

 
11.1
 
14,828

Indiana Department of Revenue
 
May 2014
 
US
 
1
 
98,542

 
8.5
 
11,654

National Oilwell Varco
 
May 2014
 
US
 
1
 
7,500

 
14.9
 
2,360

Nissan
 
May 2014
 
US
 
1
 
462,155

 
9.3
 
25,838

GSA V
 
June 2014
 
US
 
1
 
26,533

 
8.8
 
11,556

Lippert Components
 
June 2014
 
US
 
1
 
539,137

 
12.2
 
14,776

Select Energy Services I
 
June 2014
 
US
 
3
 
135,877

 
12.5
 
24,112

Bell Supply Co I
 
June 2014
 
US
 
6
 
79,829

 
14.5
 
12,225

Axon Energy Products
 
June 2014
 
US
 
3
 
213,634

 
12.6
 
20,709

Lhoist
 
June 2014
 
US
 
1
 
22,500

 
8.5
 
3,264

GE Oil & Gas
 
June 2014
 
US
 
2
 
69,846

 
9.2
 
10,956

Select Energy Services II
 
June 2014
 
US
 
4
 
143,417

 
12.4
 
20,789

Bell Supply Co II
 
June 2014
 
US
 
2
 
19,136

 
14.5
 
3,407

Superior Energy Services
 
June 2014
 
US
 
2
 
42,470

 
10.0
 
2,455

Amcor Packaging
 
June 2014
 
UK
 
7
 
294,580

 
10.5
 
13,290

GSA VI
 
June 2014
 
US
 
1
 
6,921

 
9.8
 
1,450

Nimble Storage
 
June 2014
 
US
 
1
 
164,608

 
7.3
 
52,125

Portfolio, June 30, 2014
 
 
 
 
 
96
 
6,224,992

 
12.1
 
$
794,627

_____________________________________________________________________
(1)
Remaining lease term in years as of June 30, 2014 .
(2)
Contract purchase price, excluding acquisition related costs, based on the exchange rate at the time of purchase, where applicable.

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Results of Operations
Comparison of Three Months Ended June 30, 2014 to Three Months Ended June 30, 2013
Rental Income
Rental income was $13.2 million and $0.2 million for the three months ended June 30, 2014 and 2013 , respectively. Rental income growth was driven by our acquisition of ninety-three properties since June 30, 2013 , for an aggregate base purchase price of $773.6 million , which are 100% leased.
Operating Expense Reimbursements
Operating expense reimbursements were $0.4 million for the three months ended June 30, 2014 . Our lease agreements generally require tenants to pay all property operating expenses, in addition to base rent. Operating expense reimbursements primarily reflect insurance costs incurred by us and subsequently reimbursed by the tenant. There were no operating expense reimbursements for the three months ended June 30, 2013 .
Property Operating Expense
Property operating expense was $0.8 million for the three months ended June 30, 2014 . These costs relate to insurance on our properties, which is ultimately reimbursable by the tenants. We did not incur any property operating expenses for the three months ended June 30, 2013 .
Operating Fees to Affiliate
Our Advisor is entitled to asset management fees for the provision of asset management services, which are paid in the form of Class B Units, and are subject to forfeiture unless certain conditions are met. During the three months ended June 30, 2014 , the board of directors approved the issuance of 146,767 Class B Units to the Advisor at a price of $9.00 per unit. There were no asset management fees for the three months ended June 30, 2013 .
Our Service Provider and Property Manager are entitled to fees for the management of our properties. Property management fees are calculated as a percentage of gross revenues. During the three months ended June 30, 2014 , the Service Provider earned property management fees of $124,000 . The Property Manager elected to waive its property management fees of $118,000 for the three months ended June 30, 2014 . If the Property Manager had not elected to waive these fees, we would have incurred property management fees of $242,000 for the three months ended June 30, 2014 . We did not incur any operating fees to affiliates for the three months ended June 30, 2013 .
Acquisition and Transaction Related Costs
Acquisition and transaction related costs for the three months ended June 30, 2014 of $8.2 million related to the purchase of forty-six properties with an aggregate base purchase price of $298.8 million . Acquisition and transaction related costs for the three months ended June 30, 2013 of $1.3 million related to the purchase of two properties with an aggregate base purchase price of $18.4 million .
General and Administrative Expense
General and administrative expense of $1.5 million for the three months ended June 30, 2014 , primarily included board member compensation, directors and officers' liability insurance, and professional fees including international tax advice. General and administrative expense for the three months ended June 30, 2013 was $11,000 .
Depreciation and Amortization
Depreciation and amortization expense of $7.6 million for the three months ended June 30, 2014 related to our acquisition of ninety-six properties since October 2012 with an aggregate base purchase price of $794.6 million , as of the respective acquisition dates. The purchase price of acquired properties is allocated to tangible and identifiable intangible assets and depreciated or amortized over the estimated useful lives. Depreciation and amortization expense for the three months ended June 30, 2013 was $0.1 million
Interest Expense
Interest expense of $2.6 million for the three months ended June 30, 2014 related to mortgage notes payable which totaled $179.6 million at June 30, 2014 with an effective interest rate of 4.3% . Interest expense for the three months ended June 30, 2013 was $52,000 .
Gains (Losses) on Foreign Currency
The loss on foreign currency for the three months ended June 30, 2014 of $26,000 reflects the effect of movements in foreign currency exchange rates. A gain on foreign currency of $18,000 was realized for the three months ended June 30, 2013 .

32

Cash Flows for the Six Months Ended June 30, 2014
During the six months ended June 30, 2014 , net cash used in operating activities was $0.8 million . The level of cash flows used in or provided by operating activities is driven by the volume of acquisition activity, related rental income received, and the amount of borrowings outstanding during the period and the timing of interest payments on those borrowings. Cash flows used in operating activities during the six months ended June 30, 2014 also included $24.8 million of acquisition and transaction related costs.
Net cash used in investing activities during the six months ended June 30, 2014 was $519.6 million , primarily related to our acquisition of fifty-nine properties with an aggregate base purchase price of $609.7 million , and partially funded with $91.2 million borrowings under the credit facility.
Net cash provided by financing activities of $1.4 billion during the six months ended June 30, 2014 related to proceeds, net of receivables, from the issuance of common stock of $1,547.0 million and borrowings under credit facility of $91.2 million , partially offset by offering cost payments of $159.3 million and repayments on credit facility of $19.6 million Other payments included deferred financing costs of $8.0 million , distributions to stockholders of $8.6 million and net advances from affiliates of $0.5 million .
Cash Flows for the Six Months Ended June 30, 2013
During the six months ended June 30, 2013 , net cash used in operating activities was $1.1 million , primarily due to acquisition and related costs.
Net cash provided by financing activities of $38.6 million , related to proceeds, net of receivables, from the issuance of common stock of $45.9 million , partially offset by offering cost payments of $6.5 million and net advances from affiliates of $0.2 million .
Liquidity and Capital Resources
As of June 30, 2014 , we had cash of $936.5 million primarily from the net proceeds of our offering. Principal future demands on cash will include the purchase of additional properties or other investments in accordance with our investment strategy, payment of related acquisition costs, improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations and distributions to our stockholders. Management expects that as our portfolio matures rental income from our properties will cover operating expenses and the payment of our monthly distribution.
Generally, we fund our acquisitions through a combination of cash with mortgage or other debt, but we also may acquire assets free and clear of permanent mortgage or other indebtedness. See Note 5 - Mortgage Notes Payable to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from public and private offerings, proceeds from the sale of properties and undistributed funds from operations.
At June 30, 2014 we have a revolving credit facility that currently permits us to borrow up to $330.0 million. The initial maturity date of the credit facility is July 25, 2016. The credit facility also contains two one-year extension options, subject to certain conditions. See Note 4 - Revolving Credit Facility to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of the terms and conditions of this facility.
As of June 30, 2014 , total outstanding advances under the credit facility were $71.6 million . There were no outstanding advances under the credit facility as of December 31, 2013 . The unused borrowing capacity, based on the value of the borrowing base properties as of June 30, 2014 and December 31, 2013 , was $37.8 million and $31.1 million , respectively.
Under our charter, the maximum amount of our total indebtedness may not exceed 300% of our total "net assets" (as defined in our charter) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments.
Our current intention is to limit aggregate borrowings to 45% of the aggregate fair market value of our assets (calculated after the close of our offering and once we have invested substantially all the proceeds of our offering), unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation does not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value, which will enable us to satisfy our requirements under our charter. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits. As of June 30, 2014 , we had secured mortgage notes payable of $179.6 million . Our secured debt leverage ratio was 22.6% (total secured debt as a percentage of total real estate investments on the date of acquisition) as of June 30, 2014 .

33

We intend to maintain 5% of our NAV in excess of $1 billion in liquid assets. However, our stockholders should not expect that we will maintain liquid assets at or above these levels. To the extent that we maintain borrowing capacity under a line of credit, such available amount will be included in calculating our liquid assets. The Advisor will consider various factors in determining the amount of liquid assets we should maintain, including but not limited to our receipt of proceeds from sales of additional shares, our cash flow from operations, available borrowing capacity under a line of credit, if any, our receipt of proceeds from any asset sale, and the use of cash to fund repurchases. The board of directors will review the amount and sources of liquid assets on a quarterly basis.
Our board of directors has adopted a share repurchase plan that enables stockholders to sell shares back to us under limited circumstances. At the time a stockholder requests a repurchase, we may, subject to certain conditions, repurchase the shares presented for repurchase for cash to the extent we have sufficient funds available to fund such purchase. Since the inception of the Company, no shares of common stock have been repurchased or requested to be repurchased.
Acquisitions
Our Advisor evaluates potential acquisitions of real estate and real estate related assets and engages in negotiations with sellers and borrowers on our behalf. Investors should be aware that after a purchase contract is executed that contains specific terms the property will not be purchased until the successful completion of due diligence and negotiation of final binding agreements. During this period, we may decide to temporarily invest any unused proceeds from common stock offerings in certain investments that could yield lower returns than the properties. These lower returns may affect our ability to make distributions.
Funds from Operations and Modified Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to net income or loss as determined under accounting principles generally accepted in the United States ("GAAP").
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property and asset impairment writedowns, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT's policy described above.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Additionally, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indicators exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated undiscounted future cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges.

34

Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization and impairments, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. However, FFO and modified funds from operations ("MFFO"), as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.
Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT's definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses. Management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start up entities also may experience significant acquisition activity during their initial years, we believe that non-listed REITs are unique in that they have a relatively limited time frame of significant acquisition activity. We are using the proceeds raised in the offering to acquire properties, and intend to begin the process of achieving a liquidity event (i.e., listing of our common stock on a national exchange, a merger or sale or another similar transaction) within three to five years of the completion of the offering which is scheduled to expire on April 20, 2015. Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association ("IPA"), an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT having the characteristics described above. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are investing the proceeds from the IPO and acquiring properties. By providing MFFO, we believe it is presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our IPO has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our IPO and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our IPO has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on our operating performance during the periods in which properties are acquired.

35

We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations ("Practice Guideline") issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While we are responsible for managing interest rate, hedge and foreign exchange risk, we do retain an outside consultant to review all our hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of our operations, we believe it is appropriate to exclude such gains and losses in calculating MFFO, as such gains and losses are not reflective of ongoing operations.
Our MFFO calculation complies with the IPA's Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses, amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to non-controlling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us, and therefore such funds will not be available to distribute to investors. All paid and accrued acquisition fees and expenses negatively impact our operating performance during the period in which properties are acquired and will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. Therefore, MFFO may not be an accurate indicator of our operating performance, especially during periods in which properties are being acquired. MFFO that excludes such costs and expenses would only be comparable to that of non-listed REITs that have completed their acquisition activities and have similar operating characteristics as us. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments of derivatives as items which are unrealized and may not ultimately be realized. We view both gains and losses from dispositions of assets and fair value adjustments of derivatives as items which are not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our business plan to generate operational income and cash flows in order to make distributions to investors. Acquisition fees and expenses will not be reimbursed by our Advisor if there are no further proceeds from the sale of shares in our offering, and therefore such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties or from ancillary cash flows.
Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other non-listed REITs which have defined acquisition periods and targeted exit strategies. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs. For example, acquisitions costs are funded from the proceeds of our IPO and other financing sources and not from operations. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management's analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

36

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO or MFFO.
Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. The SEC, NAREIT or another regulatory body may at some future point in time decide to standardize the allowable adjustments across the non-listed REIT industry requiring possible adjustment to our calculation and characterization of FFO or MFFO.
The table below reflects the items deducted or added to net loss in our calculation of FFO and MFFO:
 
 
Three Months Ended
(In thousands)
 
June 30, 2014
Net loss (in accordance with GAAP)
 
$
(7,479
)
Depreciation and amortization
 
7,640

FFO
 
161

Acquisition fees and expenses (1)
 
8,244

Amortization of above or below market lease assets and liabilities (2)
 
348

Straight-line rent (3)
 
(906
)
Mark-to-market adjustments
 
171

Losses on foreign currency (4)
 
26

Amortization of mortgage premium
 
(124
)
MFFO
 
$
7,920

________________________________________________
(1) In evaluating investments in real estate, management differentiates the costs incurred to acquire the investment from the on-going operational revenue and costs of the investment. Such information would only be comparable for non-listed REITs that have completed their acquisition activity and have similar operating characteristics. By excluding expensed acquisition costs, management believes MFFO provides useful supplemental information for comparison of each type of real estate investment and is consistent with management's analysis and evaluation of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our Advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and are included in the determination of net income and income from continuing operations, both of which are performance measures under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property.
(2) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment. Some intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate portfolio.
(3) Under GAAP, rental receipts are allocated to periods using various methodologies which may result in income recognition that is significantly different than underlying contract terms. Adjusting MFFO for these items provides useful supplemental information on the contractual cash flows and realized economic impact of lease terms and debt investments and aligns results with management's analysis and evaluation of operating performance.
(4) Represents components of net loss primarily resulting from changes in foreign exchange rates from the time acquisition deposits are made and the related acquisition is consummated. We have excluded these changes in value from our evaluation of our operating performance and MFFO because such adjustments may not be reflective of our ongoing performance.

37

Distributions
The amount of distributions payable to our stockholders is determined by the board of directors and is dependent on a number of factors including funds available for distribution; our financial condition; capital expenditure requirements; requirements of Maryland law, as applicable; and annual distribution requirements needed to qualify and maintain our status as a REIT under the Internal Revenue Code of 1986 (the "Code").
On October 5, 2012, our board of directors authorized, and we declared, a distribution, which is calculated based on stockholders of record each day during the applicable period at a rate of $0.00194520548 per day, based on a price of $10.00 per share of common stock. Our distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. Our board of directors may reduce the amount of distributions paid or suspended distribution payments at any time and therefore distribution payments are not assured. There is no assurance that we will continue to declare distributions at this rate.
Distributions accrued from November 28, 2012 with the first distribution paid in December 2012. During the six months ended June 30, 2014 , distributions paid to common stockholders were $18.8 million , inclusive of $10.2 million of distributions issued under the DRIP. During the six months ended June 30, 2014 , cash used to pay distributions was generated from cash flows from operations, the net proceeds of our Offering and common stock issued under the DRIP. 
The following table shows the sources for the payment of distributions to common stockholders for the period indicated:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2014
 
March 31, 2014
 
June 30, 2014
(In thousands)
 
 
 
Percentage of Distributions
 
 
 
Percentage of Distributions
 
 
 
Percentage of Distributions
Distributions: (1)
 
 
 
 
 
 
 
 
 
 
 
 
Distributions paid in cash
 
$
6,524

 
 
 
$
2,028

 
 
 
$
8,552

 
 
Distributions reinvested
 
8,286

 
 
 
1,937

 
 
 
10,223

 
 
Total distributions
 
$
14,810

 
 
 
$
3,965

 
 
 
$
18,775

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source of distribution coverage:
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows provided by operations
 
$
6,524

 
44.1
%
 
$
—

 
—
%
 
$
6,524

 
34.7
%
Proceeds from issuance of common stock
 
—

 
—
%
 
2,028

 
51.1
%
 
2,028

 
10.8
%
Common stock issued under the DRIP / offering proceeds
 
8,286

 
55.9
%
 
1,937

 
48.9
%
 
10,223

 
54.5
%
Total sources of distribution coverage
 
$
14,810

 
100.0
%
 
$
3,965

 
100.0
%
 
$
18,775

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows provided by (used in) operations (GAAP basis)
 
$
16,124

 
 
 
$
(16,893
)
 
 
 
$
(769
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (in accordance with GAAP)
 
$
(7,479
)
 
 
 
$
(16,349
)
 
 
 
$
(23,828
)
 
 
______________________________________________________
(1) Excludes distributions on Class B units

38

The following table compares cumulative distributions paid to cumulative net loss (in accordance with GAAP) for the period from July 13, 2011 (date of inception) through June 30, 2014 :
 
 
For the Period from
July 13, 2011
(date of inception) to
(In thousands)
 
June 30, 2014
Distributions paid:
 
 
Common stockholders in cash
 
$
10,315

Common stockholders pursuant to DRIP / offering proceeds
 
11,543

Total distributions paid
 
$
21,858

 
 
 

Reconciliation of net loss:
 
 

Revenues
 
$
25,156

Acquisition and transaction-related expenses
 
(32,733
)
Depreciation and amortization
 
(14,127
)
Other operating expenses
 
(4,082
)
Other non-operating expense
 
(5,460
)
Net loss (in accordance with GAAP) (1)
 
$
(31,246
)
 
 
 
Cash flows used in operations
 
$
(3,889
)
___________________________________________
(1) Net loss as defined by GAAP includes the non-cash impact of depreciation and amortization expense as well as costs incurred relating to acquisitions and related transactions.
Loan Obligations
Our loan obligations require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The loan agreements stipulate compliance with specific reporting covenants. As of June 30, 2014 , we were in compliance with the debt covenants under our loan agreements.
Our Advisor may, with approval from our independent board of directors, seek to borrow short-term capital that, combined with secured mortgage financing, exceeds our targeted leverage ratio. Such short-term borrowings may be obtained from third-parties on a case-by-case basis as acquisition opportunities present themselves simultaneous with our capital raising efforts. We view the use of short-term borrowings as an efficient and accretive means of acquiring real estate in advance of raising equity capital. Accordingly, we can take advantage of buying opportunities as we expand our fund raising activities. As additional equity capital is obtained, these short-term borrowings will be repaid.
Contractual Obligations
The following is a summary of our contractual obligations as of June 30, 2014 :
 
 
 
 
July 1, 2014 — December 31, 2014
 
Years Ended December 31,
 
 
(In thousands)
 
Total
 
 
2015 — 2016
 
2017 — 2018
 
Thereafter
Principal Payments Due:
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable (1)
 
$
179,624

 
$
342

 
$
1,479

 
$
58,897

 
$
118,906

Interest Payments Due:
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable (2)
 
$
35,548

 
$
4,295

 
$
15,263

 
$
12,627

 
$
3,363

_____________________________________________
(1) As of June 30, 2014, the weighted average maturity date was January 16, 2019 .
(2) As of June 30, 2014, the effective interest rate was 4.29% .


39

Election as a REIT  
We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2013. We believe that, commencing with such taxable year, we were organized and operate in such a manner as to qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but no assurance can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. In order to qualify, and continue to qualify, for taxation as a REIT, we must distribute annually at least 90% of our REIT taxable income. REITs are also subject to a number of other organizational and operational requirements. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.
Inflation
We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
Related-Party Transactions and Agreements
We have entered into agreements with affiliates of our Sponsor, whereby we have paid or may in the future pay certain fees or reimbursements to our Advisor or its affiliates and entities under common control with our Advisor in connection with acquisition and financing activities, sales and maintenance of common stock under our offering, transfer agency services, asset and property management services and reimbursement of operating and offering related costs. See Note 10 — Related Party Transactions to our financial statements included in this report for a discussion of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of June 30, 2014 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or rates. Our interest rate risk management objectives with respect to our long-term debt will be to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps and collars in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes. We may also be exposed to foreign currency fluctuations as a result of any investments in foreign operations in Europe and elsewhere internationally.
As of June 30, 2014 , our debt included fixed-rate secured mortgage financing, with a carrying value of $181.0 million and a fair value of $183.0 million . Changes in market interest rates on our fixed-rate debt impact the fair value of the notes, but it has no impact on interest incurred or cash flow. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our obligation to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their June 30, 2014 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $2.1 million . A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $2.0 million .
At June 30, 2014 our debt included a variable-rate revolving credit facility with a carrying and fair value of $71.6 million . Interest rate volatility associated with this variable-rate credit facility affects inter est expense incurred and cash flow. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates at the beginning of the year with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate credit facility would increase or decrease our interest expense by $0.1 million annually.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and, assuming no other changes in our capital structure. As the information presented above includes only those exposures that existed as of June 30, 2014 , it does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

40

Item 4. Controls and Procedures.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures are effective.
No change occurred in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

41

PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
Item 1A. Risk Factors.
Our potential risks and uncertainties are presented in the section entitled "Risk Factors", contained in the prospectus as supplemented and included in our Registration Statement (File No. 333-177563 ), as amended from time to time. There have been no material changes from these risk factors, except for the items described below.
Distributions paid from sources other than our cash flows from operations, particularly from proceeds of our IPO, will result in us having fewer funds available for the acquisition of properties and other real estate-related investments and may dilute your interests in us, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect your overall return.
Distributions paid from sources other than our cash flows from operations, particularly from proceeds of our offering, reduce the funds available for the acquisition of properties and other real estate-related investments and may dilute your interests in us, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect your overall return.
Our cash flows used in operations were $0.8 million for the six months ended June 30, 2014 . During the six months ended June 30, 2014 , we paid distributions of $18.8 million , of which $12.3 million, or 65.3%, was funded from proceeds from the issuance of common stock and proceeds from common stock issued under the DRIP. The remaining $6.5 million, or 34.7%, was funded with cash flows from operations. During the six months ended June 30, 2014 cash flow from operations included an increase in accounts payable and accrued expenses of $5.9 million , as reflected on the statement of cash flows. Accordingly, if these accounts payable and accrued expenses had been paid during the six months ended June 30, 2014 , there would have been $5.9 million less in cash flow from operations available to pay distributions. Using offering proceeds to pay distributions, especially if the distributions are not reinvested through our DRIP, reduces cash available for investment in assets and other purposes and reduces our per share stockholder equity. We may continue to use the net offering proceeds to fund distributions.
We may not generate sufficient cash flows from operations to pay distributions. If we have not generated sufficient cash flows from our operations and other sources, such as from borrowings, the sale of additional securities, advances from our Advisor, and/or our Advisor's deferral, suspension and/or waiver of its fees and expense reimbursements, in order to fund distributions, we may use the proceeds from our IPO. Moreover, our board of directors may change our distribution policy, in its sole discretion, at any time. Distributions made from offering proceeds are a return of capital to stockholders, from which we will have already paid offering expenses in connection with our IPO. We have not established any limit on the amount of proceeds from our IPO that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; (2) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences, if any; or (3) jeopardize our ability to qualify as a REIT.
Funding distributions from borrowings could restrict the amount we can borrow for investments, which may affect our profitability. Funding distributions with the sale of assets or the proceeds of our IPO may affect our ability to generate cash flows. Funding distributions from the sale of additional securities could dilute your interest in us if we sell shares of our common stock or securities that are convertible or exercisable into shares of our common stock to third party investors. Payment of distributions from the mentioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability and/or affect the distributions payable to you upon a liquidity event, any or all of which may have an adverse effect on your investment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.
We did not sell any equity securities that were not registered under the Securities Act of 1933, as amended, during the six months ended June 30, 2014 .
On April 20, 2012, we commenced our IPO on a "reasonable best efforts" basis of up to 150.0 million of common stock, pursuant to the Registration Statement on Form S-11 (File No. 333-177563 ) filed with the SEC under the Securities Act of 1933, as amended.  The Registration Statement also covers up to 25.0 million shares of common stock issuable pursuant the DRIP under which common stockholders may elect to have their distributions reinvested in additional shares of common stock. As of June 30, 2014 , we have issued 172.3 million shares of our common stock, and received $1,711.4 million of offering proceeds from the sale of common stock, including shares issued under the DRIP.

42
Table of Contents

The following table reflects the offering costs associated with the issuance of common stock:
 
 
For the Period from
July 13, 2011
(date of inception) to
(In thousands)
 
June 30, 2014
Selling commissions and dealer manager fees
 
$
160,583

Other offering costs
 
19,712

Total offering costs
 
$
180,295

The Dealer Manager may reallow the selling commissions and a portion of the dealer manager fees to participating broker-dealers. The following table details the selling commissions incurred and reallowed related to the sale of shares of common stock:
 
 
For the Period from
July 13, 2011
(date of inception) to
(In thousands)
 
June 30, 2014
Total commissions paid to the Dealer Manager
 
$
160,583

Less:
 
 
  Commissions to participating brokers
 
(100,205
)
  Reallowance to participating broker dealers
 
(14,891
)
Net to the Dealer Manager
 
$
45,487

As of June 30, 2014 , cumulative offering costs included $98.0 million of offering cost reimbursements incurred from the Advisor and Dealer Manager. As of June 30, 2014 , we have incurred $180.3 million of total cumulative offering costs in connection with the issuance and distribution of our registered securities. The Advisor has elected to cap cumulative offering costs incurred by us, net of unpaid amounts, to 15% of gross common stock proceeds during the offering period. Cumulative offering costs, net of unpaid amounts, were less than the 15% threshold as of June 30, 2014 . Cumulative offering proceeds from the sale of common stock exceeded cumulative offering costs by $1,531.1 million at June 30, 2014 .
We expect to use substantially all of the net proceeds from our IPO to primarily acquire a diversified portfolio of income producing real estate properties, focusing primarily on acquiring freestanding, single-tenant bank branches, convenience stores, office, industrial and retail properties net leased to investment grade and other creditworthy tenants. We may also originate or acquire first mortgage loans secured by real estate. As of June 30, 2014 , we have used debt financing of approximately $ 251.3 million and the net proceeds from our IPO to purchase 96 properties with an aggregate base purchase price of $794.6 million . We have used and may continue to use net proceeds from our IPO to fund a portion of our distributions. See Distributions in Management's Discussion and Analysis of Financial Condition for further discussion.
We did not repurchase any of our securities during the three months ended June 30, 2014 .
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

43
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
AMERICAN REALTY CAPITAL GLOBAL TRUST, INC.
 
By:
/s/ Nicholas S. Schorsch
 
 
Nicholas S. Schorsch
 
 
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
 
 
 
 
By:
/s/ Patrick J. Goulding
 
 
Patrick J. Goulding
 
 
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

Dated: August 11, 2014

44
EXHIBITS INDEX



The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.
  
Description
10.34 *
 
Agreement for Purchase and Sale of Real Property, dated April 29, 2014, between AR Capital, LLC and Mesa Real Estate Partners, L.P.
10.35 *
 
Third Amendment to Credit Agreement, dated as of June 24, 2014, among American Realty Capital Global Operating Partnership, the Company, ARC Global Holdco, LLC, JPMorgan Chase Bank, N.A. and the other parties named thereto.
31.1 *
 
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *
 
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *
 
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 *
 
XBRL (eXtensible Business Reporting Language). The following materials from American Realty Capital Global Trust, Inc.'s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2014, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information in furnished and not filed for purpose of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Exchange Act.
_________________________________________
*    Filed herewith



45
Exhibit 10.34




















AGREEMENT FOR
PURCHASE AND SALE OF REAL PROPERTY




TABLE OF CONTENTS
 
 
Page
1.
Terms and Definitions
1
2.
Purchase and Sale of the Property
4
3.
Payment of Purchase Price
4
4.
Proration of Expenses and Payment of Costs and Recording Fees
6
5.
Title
7
6.
Examination of Property
7
7.
Risk of Loss/Condemnation
10
8.
Earnest Money Disbursement
10
9.
Default
11
10.
Closing
12
11.
Representations by Seller
14
12.
Representations by Buyer
17
13.
Conditions Precedent to Buyer's Obligations
17
14.
Conditions Precedent to Seller's Obligations
18
15.
Notices
18
16.
Seller Covenants
18
17.
Performance on Business Days
19
18.
Entire Agreement
19
19.
Severability
19
20.
No Representations
19
21.
Applicable Law
20
22.
Tax-Deferred Exchange
21
23.
Broker's Commissions
21
24.
Assignment
21
25.
Attorneys' Fees
22
26.
Time of the Essence
22

i


27.
Counterparts
22
28.
Anti-Terrorism
22
29.
REIT Specific Provisions
22




AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
MESA Industrial Portfolio: 79 Pack
THIS AGREEMENT (" Agreement ") is made and entered into as of the Effective Date by and between AR CAPITAL, LLC (" Buyer "), and MESA REAL ESTATE PARTNERS, L.P. (" Seller ").
BACKGROUND
A. Seller is the fee owner of each of the Properties (hereinafter defined) listed on Exhibit A attached hereto.
B. Buyer desires to purchase the Property and Seller desires to sell the Property to Buyer on the terms and conditions set forth in this Agreement.
In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Terms and Definitions. The terms listed below shall have the respective meaning given them as set forth adjacent to each term.
(a) "Broker" shall mean Jones Lang LaSalle Incorporated, acting as Seller's agent.
(b) "Closing" shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, fifteen (15) days after the last day of the Due Diligence Period (as defined herein) unless the Buyer waives the full Due Diligence Period and elects to close earlier by providing written notice thereof to Seller. The date of Closing is sometimes hereinafter referred to as the " Closing Date ." Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.
Notwithstanding the foregoing, if as of the Closing Date the Tenant with respect to the Lease of a Property described on Exhibit J attached hereto has not accepted possession of such Property and commenced payment of rent pursuant to the Lease (such Properties being herein referred to as the (" Properties Under Construction "), then Closing as to any such Property will occur on the tenth (10th) day following the occurrence of all of the following (collectively, the " Completion of Construction " or " Closing Conditions "): (i) substantial completion of construction of improvements on the Property as evidenced by Seller's delivery to Buyer of a certificate of substantial completion in accordance with the plans and specifications approved by Seller and Tenant from Seller's architect or engineer for such work; (ii) Tenant accepting possession of the Property pursuant to the Lease as evidenced by delivery of Seller's standard commencement letter in the form attached hereto as Exhibit M and Tenant's payment of the first amounts of rent



pursuant to the Lease, (iii) delivery by Seller to Buyer of final lien waivers from the general contractor, and (iv) the issuance and delivery to Buyer (or, as required by the Lease, to Tenant) of any certificate of occupancy (permanent or temporary, as permitted by applicable law) required for the lawful occupancy of the Property by Tenant.
(c) " Due Diligence Period " shall mean the period beginning upon the Effective Date and extending until 11:59 PM EST on the date that is twenty eight (28) days thereafter or the date on which Seller receives written notice of Buyer's waiver of the Due Diligence Period. Seller shall post (or cause Broker to post) to the website previously furnished by Broker to Buyer or box.com established by Buyer (" Website ") all of the Due Diligence Materials within five (5) business days after the Effective Date.
(d) " Earnest Money " shall mean TEN MILLION and NO/100 DOLLARS ($10,000,000.00). The Earnest Money shall be delivered to Escrow Agent within three (3) business days after the Effective Date. The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time the sale is closed, or disbursed as agreed upon in accordance with the terms of this Agreement.
(e) " Effective Date " The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer shall be the "Effective Date" of this Agreement.
(f) " Escrow Agent " shall mean Chicago Title Insurance Company, whose address is Suite 1325, 1515 Market Street, Philadelphia, PA 19102-1930, Attention: Edwin G. Ditlow, Telephone: 215-875-4184; Telecopy: 215-732-1203; E-mail: ditlowE@ctt.com. The parties agree that Veritas Title Partners, attention Robert H. Sheldon, Telephone 713-482- 2807; Telecopy: 713-482-2840; E-mail; rsheldon@veritastitlepartners.com shall be responsible for (x) organizing the issuance of the Commitment and Title Policy. The Escrow Agent shall be responsible for (y) preparation of the closing statement, and (z) collections and disbursement of the funds. Escrow Agent and Veritas shall divide the title premium as set out in the Chicago Title memorandum regarding divisions of premiums,
(g) " Guarantor " shall mean those entities listed on Exhibit K .
(h) " Guaranty " shall mean those certain Guaranty of the Lease listed on Exhibit K and executed by Guarantor.
(i) " Lease " or " Leases " shall mean those certain Leases described on Exhibit A attached hereto and made a part hereof and referred to in Section 6(b)(i) of this Agreement between Seller, as landlord, and the entities listed on Exhibit A as tenant (" Tenant "), as amended.
(j) " Property " shall collectively mean (i) those certain parcels of real property, all of which are listed on Exhibit A, together with all right, title and interest of the Seller, if any, in

2


and to the land lying in the bed of any street or highway in front of or adjoining such real property, and all appurtenances and all the estate and rights of the Seller, if any, in and appurtenant to such parcels of real property, including, without limitation, all appurtenant easements and rights-of-way, and Buildings (as hereinafter defined) and all other improvements thereon, and all air and subsurface rights of Seller appurtenant to such parcels of real property, as the case may be (such parcels of real property, together with all such rights and appurtenances, being collectively referred to herein as the " Land "); (ii) all of the buildings (each individually called a " Building ." and collectively called the " Buildings "), facilities and other improvements situated on the Land or required to be constructed under the respective Leases (collectively, the " Improvements "); (iii) all right, title and interest of the Seller, if any, in and to the lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems used in connection with the Land and the Buildings, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Land together with all personal property (other than furniture, equipment not necessary to operate the Buildings or building systems and not permanently affixed to the Buildings or Land, trade fixtures and inventory) owned by the Seller and located on the Land or on and/or in the Buildings (collectively, the " Personal Property "); (iv) all right, title and interest of the Seller in and to all plans and specifications, architectural drawings, building permits and other permits issued in connection with the construction, operation, use or occupancy of the Improvements, and all warranties and guaranties respecting the Buildings and Personal Property; (v) to the extent not otherwise described in subsection (i), all right, title and interest of the Seller in and to all leases respecting the Buildings and Personal Property, including, without limitation, all prepaid rent or security or other deposits thereunder and all right, title and interest of the Seller under the Guaranties; (vi) all right, title and interest of the Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Land and the Buildings, to the extent they exist and are transferable and assignable; and (vii) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Land. Any references to "Property" in the singular, such as references to "a Property" or "each Property", refer to an individual parcel of Land and all matters described in (ii)-(vii) in connection with such Land.
(k) " Purchase Price " shall mean TWO HUNDRED NINETY FIVE MILLION EIGHT HUNDRED EIGHTY FOUR THOUSAND FORTY EIGHT and 03/100 DOLLARS ($295,884,048.03) which amount represents the deal capitalization rate of 8.3583% applied to the rents set forth on Exhibit A. If the rents on the Closing Date are not the same as set forth on Exhibit A, the Purchase Price shall be adjusted accordingly.
(I)    Seller and Buyer's Notice address
(i)    " Seller's Notice Address " shall be as follows, except as same may be changed pursuant to the Notice section herein:




MESA REAL ESTATE PARTNERS, L.P.,
1900 Saint James Place, Suite 110
Houston, Texas 77056
Attention; Timothy Horan, Jr.
713-580 2718 — Telephone
713-580 2990 — Facsimile
E-mail address: horan@mesare.biz

And to:
Winstead PC,
600 Travis, Suite 1100
Houston, Texas 77002
Attention: K. Gregory Erwin
713-650-2781 — Telephone
713-650-2400 — Facsimile
E-mail address: gerwin@winstead.corn
(ii)    " Buyer's Notice Address " shall be as follows, except as same may
be changed pursuant to the Notice section herein:
Michael Well
AR Capital, LLC
405 Park Avenue, 15th Floor
New York, NY 10022
Tel. No.: 212.415,6505
Fax No.: 857.207.3397
Email: mweil@arlcap.com
And to:
Jesse Galloway
AR Capital, LLC
405 Park Avenue, 15th Floor
New York, NY 10022
Tel. No.: 212.415.6516
Fax No.: 646.861.7751
Email: jgalloway@arlcap.corn
2. Purchase and Sale of the Property. Subject to the terms of this Agreement,
Seller agrees to sell to Buyer the Property for the Purchase Price set forth above. Subject to the terms of this Agreement, Buyer agrees to purchase from Seller the Property for the Purchase Price set forth above.


3. Payment of Purchase Price. The Purchase Price to be paid by Buyer to Seller
shall be paid by wire transfer of immediately available funds in the amount of the Purchase Price plus or minus prorations, credits and adjustments as provided in Section 4 and elsewhere in this Agreement to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.
(a)    In the event this Agreement is terminated for any " Permitted Reason " (as
hereinafter defined) pursuant to the terms hereof with respect to one or more Properties, up to a maximum of ten (10) properties, (" Dropped Properties ") this Agreement shall continue in full force and effect with respect to the remaining Properties, the Purchase Price shall be reduced by the Purchase Price calculated in accordance with Section 1(i) with respect to such terminated

Property or Properties, and the Earnest Money shall be refunded to Buyer in the amount shown on Exhibit A with respect to such terminated Property or Properties.
(b)    For purposes hereof the term " Permitted Reason " shall mean one of the
following with respect to a Property:
(i) A "material" Objection during the Due Diligence Period or New
Objection to title to such Property;
(ii) A "material" environmental issue with respect to such Property
during the Due Diligence Period;
(iii) The bankruptcy, as of the time of Closing, of the Tenant of such
Property; or
(iv) If the Tenant leasing a Property, as of the Closing Date, has not
paid all Base Annual Rent due under its Lease through the month prior to the Closing Date pursuant to its Lease or the Tenant, or Tenant's subtenant, is not occupying the Property..
For purposes of clause (i) preceding an Objection or New Objection shall be considered "material" if the fair market value of the Property as encumbered by such Objection or New Objection is less than ninety-nine percent (99%) of the Purchase Price allocable to such Property, For purposes of clause (ii) preceding, an environmental issue shall be considered "material" if the fair market value of the Property with such environmental issue is less than ninety-nine percent (99%) of the Purchase Price allocable to such Property. If Buyer believes that a Permitted Reason to terminate this Agreement as to a Property exists, Buyer shall promptly give thereof notice to Seller accompanied by evidence reasonably supporting such belief. If Seller disagrees with Buyer's assertion that a Permitted Reason exists, Seller shall give notice thereof to Buyer accompanied by evidence reasonably supporting Seller's position within five (5) business days after receipt of Buyer's notice. If Seller and Buyer are unable to resolve such issue within five (5) business days after delivery to Buyer of Seller's notice, If a dispute arises with respect to the existence of a Permitted


Reason, either Seller or Buyer may require that such dispute be resolved by binding arbitration before a single arbitrator. Arbitration shall be commenced by filing a petition with, and in accordance with the arbitration rules of AAA. Buyer shall submit its brief to the arbitrator within five (5) days after the appointment of the arbitrator. Upon receipt of Buyer's brief, Seller shall have five (5) days to file a reply brief. The arbitration hearing shall be concluded within three (3) days after the receipt of Seller's reply brief, if any. The arbitrator is relieved from judicial formalities, and shall make its award with a view toward affecting the general intent of this Agreement. The decision of the arbitrator shall be in writing and signed by such arbitrator and shall be final and binding upon the parties. The non-prevailing party shall be responsible for paying the fees and expenses relating to the arbitration, including, without limitation, compensation for the arbitrator. Venue for the arbitration proceeding shall be in the location where the Property is located. This arbitration provision shall survive any termination, amendment, or expiration of this Lease. If the terms of this provision vary from the rules of AAA, this arbitration provision shall control.



In no event shall the mere presence of injection wells on the following Properties constitute a material environmental issue:
Select Energy Services — 175 Private Road 73373, DeBerry, TX; Select Energy Services — 15386 Highway 85 West, Big Wells, TX; Superior Energy Services — 650 South Main Street, Jacksboro, TX.
4.     Proration of Expenses and Payment of Costs and Recording Fees.
(a) All unpaid real estate taxes, rollback taxes, personal property taxes, water
and sewer use charges, and any other charges and assessments constituting a lien on the Property (collectively " Taxes and Assessments ") due and payable on or before the Closing Date shall be remitted to the collecting authorities or to the Escrow Agent by Seller or the applicable Tenant prior to or at Closing. At Closing, Seller shall assign to Buyer all escrows for Taxes and Assessments (as well as insurance premiums, if applicable) which Tenant has remitted to Seller, if any, pursuant to the Lease, and which relate to Taxes and Assessments (and insurance premiums, if applicable) due and payable after the Closing Date. At Closing the Property shall be conveyed to Buyer subject to Taxes and Assessments for the year of Closing, not yet due and payable on the Closing Date.
(b) Rents (excluding security deposits, which shall be assigned or credited to
Buyer at Closing) payable under the Tenant Leases (collectively, the " Rents ") for the Property or portions thereof shall be prorated as of 12:01 a.m., central standard time on the Closing Date, Seller shall receive the Rents for the month that the Closing Date occurs (the "Clo sing Month's Rents ") and give Buyer a credit for Buyer's portion of the Closing Month's Rents. Buyer shall have no liability to Seller for the Closing Month's Rents, except to the extent actually collected by Buyer, and Buyer agrees to use commercially reasonable efforts to collect such Rents (but shall in no event have any obligation to institute legal action in connection with such efforts). If any Closing Month's Rents remain uncollected sixty (60) or more days following the Closing Date, Seller shall have the right to pursue collection of any outstanding Closing Month's Rents; provided, however, that Seller shall not have the right to institute eviction proceedings or otherwise disturb the possessory rights of any tenants. Amounts collected by Buyer from tenants owing the Closing Month's Rents shall be applied first to current amounts owed by such tenant and accruing on or after the Closing Date, then to any Closing Month's Rents. Any such amounts applicable to Closing Month's Rents received by Buyer shall be promptly forwarded to Seller. All security deposits received by Seller from any tenant under an existing Tenant Lease shall be paid over to Buyer.
(e)    Seller shall pay or be charged with the following costs and expenses in
connection with this transaction which costs shall be referred to as " Seller's Closing Costs ":
(i) 100% of all basic Title Policy premiums, including search costs, but excluding any premiums for endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any. Seller and Buyer shall reasonably cooperate to minimize the cost of the Title Policy premiums. Buyer agrees to limit the


number of policies obtained by combining Properties and insureds in a title policy if it is commercially reasonable to do so
(ii)     Transfer taxes and conveyance fees on the sale and transfer of the Property;
(iii) Broker's commission payments (for both leasing and sales
commissions earned but excluding leasing commission with respect to options or renewals exercisable after the Closing Date); and
(iv) All fees relating to the granting, executing and recording of the
Deed for each Property (to the extent local custom and practice so provide, otherwise such amounts to be paid by Buyer) and for any costs incurred in connection with the release of existing debt, including, but not limited to, prepayment penalty fees and recording fees for documents providing for the release of the applicable Property from the existing debt.
(d)    Buyer shall pay or be charged with the following costs and expenses in
connection with this transaction, which costs shall be referred to as “ Buyer's Closing Costs ”:
(i) Title Policy premiums for any endorsements issued in connection
with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;
(ii) all costs and expenses in connection with Buyer's financing,
including appraisal, points, commitment fees and the like and costs for the filing of all documents necessary to complete such financing and related documentary stamp tax and intangibles tax; and
(iii) Buyer shall pay for the cost of its own survey, Phase 1
environmental study and due diligence investigations.
(e)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
(f)    Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent,
5. Title. At Closing, Seller agrees to convey to Buyer indefeasible fee simple title
with respect to those Properties located in Texas and fee simple marketable title to each other Property by special warranty deed (or local equivalent), free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).
6. Examination of Property. Seller and Buyer hereby agree as follows:
(a)    Buyer shall order a title commitment (the " Title Commitment ") from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof. All


matters shown in the Title Commitment, survey or zoning report (" Title Matters ") with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed " Permitted Exceptions ". Any objection by Buyer to a Title Matter is herein referred to as an " Objection ". However, Permitted Exceptions shall not include any mechanic's lien or any monetary lien, or any deeds of trust, mortgage, or other loan documents secured by the Property created by Seller or asserted by parties claiming by, through or under Seller (collectively, " Liens "). Seller shall be required to cure or remove all Liens [by payment (which may be from the proceeds to be paid by Buyer at Closing) bond deposit or indemnity reasonably acceptable to Escrow Agent]. Except for Liens as aforesaid, Seller shall have no obligation to cure any Title Matter objected to, except as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Buyer's objections. Failure of Seller to timely deliver such notice shall be deemed an election by Seller not to cure any such Objections other than Liens. In the event that Seller refuses to remove or cure any Objections, Buyer shall have the right, as Buyer's sole remedy at law or in equity, to terminate this Agreement as to a specific Property or Properties (if such Objection is a Permitted Reason and subject to the provisions of Sections 3(a) and (b) by labeling them as Dropped Properties, subject to Sections 3(a) and (b), or to terminate this Agreement in whole upon written notice to Seller given within five (5) business days after receipt of Seller's notice, upon which termination the Earnest Money shall be returned, either in whole or as set forth on Exhibit A for the Dropped Properties, to Buyer and neither party shall have any further obligation hereunder for such Properties, except as otherwise expressly set forth herein. Failure by Buyer to timely elect to terminate this Agreement as to a Property or all Properties shall constitute a waiver by Buyer of its right to do so. If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent which new matter constitutes a material Objection to title and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) ten (10) days after the Buyer's receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the date of Closing, to provide Seller with written notice of its objection to any such new title exception (a " New Objection "). If Seller does not remove or cure such New Objection prior to the date of Closing, Buyer may, as Buyer's sole remedy at law or in equity, terminate this Agreement for that Property or Properties without it counting towards the limit of Dropped Properties, in which case the Earnest Money shall be returned to Buyer and neither party shall have any further obligation hereunder for such Property or Properties, except as otherwise expressly set forth herein.
(b)    Within five (5) days following the Effective Date, Seller shall post (or
cause Broker to post) on the Website copies of the following documents and materials pertaining to each Property to the extent within Seller's possession or reasonably obtainable by Seller or Seller's counsel: (1) a complete copy of all leases affecting the Property (unless the same have previously been provided to Buyer) and all amendments thereto and of all material correspondence relating thereto and all related lease guaranties; (ii) a copy of all surveys and site plans of the Property, including without limitation any as-built survey obtained or delivered to tenants of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings and contracts for improvements located on the Property; (iv) a copy of Seller's title insurance policies relating to the Property; (v) a copy of the certificate of occupancy (or local


equivalent) and zoning reports for the Property; and of all governmental permits/approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) copies of the Property's real estate tax bills for the current and prior two (2) tax years or, if the Property has been owned by Seller for less than two (2) tax years, for the period of ownership; (viii) reserved; (ix) reserved; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any structural slab or roof warranties; and (xii) a written inventory of all items of personal property to be conveyed to Buyer, if any (the " Due Diligence Materials "). Seller shall deliver any other documents relating to each Property reasonably requested by Buyer, to the extent within Seller's possession or reasonably obtainable by Seller or Seller's counsel, within three (3) business days following such request. Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property nor interfere with construction on the Property or the conduct of business by Tenant under the Lease; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and. Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement. Seller shall reasonably cooperate with the efforts of Buyer and the Buyer's representatives to inspect the Property. Upon signing this agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits. Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property. Buyer shall have (i) the unconditional right, for any reason or no reason, to terminate this Agreement in whole or (ii) for any Permitted Reason (and only for a Permitted Reason) to terminate this Agreement with respect to any individual Property, in which case the Property or Properties terminated will be considered Dropped Properties under and subject to Sections 3(a) and (b), by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void as to such Dropped Properties or all Properties if terminated in whole, Buyer shall receive a refund of the Earnest Money apportioned to the Dropped Properties or in whole, and all rights, liabilities and obligations of the parties under this Agreement for the Dropped Properties or all Properties if terminated in whole shall expire, except as otherwise expressly set forth herein.
(c)    Within two (2) days following the Effective Date, Seller shall request
Estoppel Certificates certified to the following: "AR Capital, LLC, ARC GBLMESA001, LLC, Cole Real Estate Investments, Inc., American Realty Capital Properties, Inc., and their lender, successors and assigns" (and simultaneously provide Buyer with a copy of such request) and a waiver of Tenant's right of first refusal or first offer. It shall be a condition of Closing that Seller shall have obtained an estoppel certificate from the " Required Tenant's " in the form attached hereto as Exhibit F or the form required under such Tenant's Lease for each Property (the " Tenant


Estoppel Certificate "), and, if the applicable guaranty requires the Guarantor to deliver same, an estoppel certificate from the " Required Guarantors " in the form attached hereto as Exhibit G or such other form as may be required under the applicable Lease or Guaranty (the " Guarantor Estoppel Certificate ") and Seller shall use good faith efforts to obtain the same (but failure to do so shall not be a default by Seller hereunder). Seller shall promptly deliver to Buyer photocopies or pdf files of the executed estoppel certificate when Seller receives the same. For purposes hereof, the term " Required Tenants " shall mean ninety percent (90%) of the number of Tenants who lease the Property (other than any Dropped Properties or Properties as to which Buyer shall have terminated this Agreement pursuant to Section 7 hereof) but must include within such number of Tenant Estoppel Certificates, Tenant Estoppel Certificates from each of the ten (10) Tenants who's Leases produce the highest net operating income (the " Highest NOI Tenants "). The term " Required Guarantors " shall mean the Guarantors of the Leases of the ten (10) Highest NOI Tenants (to the extent, and only to the extent that such Guarantors are required pursuant to their Guaranty to deliver a Guarantor's Estoppel Certificate).
(d) Reserved.
(e) Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer (but failure to do so shall not be a default by Seller hereunder).
7. Risk of Loss/Condemnation. Upon an occurrence of a casualty, condemnation or taking with respect to any Property, Seller shall notify Buyer in writing of same. Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller. In the event all or any portion of any Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that the Tenant has a right of termination or abatement of rent under the Lease for such Property as a result of such casualty or condemnation and such Tenant does not waive such right of termination or abatement in writing prior to Closing, then, Buyer may elect to terminate this Agreement with respect to each such Property, without it counting as a Dropped Property, by providing written notice of such termination to Seller within ten (10) business days after Buyer's receipt of notice of such condemnation, taking or damage, upon which termination a proportionate part of the Earnest Money shall be returned to the Buyer in accordance with the Purchase Price as calculated according to Section 1(i) and neither party hereto shall have any further rights, obligations or liabilities under this Agreement with respect to such Property, except as otherwise expressly set forth herein. With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards. With respect to a casualty, if Buyer does not elect to terminate this Agreement with respect to any such Property or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing the rights of Seller to the proceeds under Seller's insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and Buyer shall receive a credit against the Purchase Price in the amount of any


deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.
8. Earnest Money Disbursement. The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:
(a)    If the Closing occurs, the Earnest Money shall be applied as part payment
of the Purchase Price. If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a). If for any reason the Closing does not occur and either party makes a written demand (the " Demand ") upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one business day after receipt of the Demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand. If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court.
(b)    The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys' fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent's mistake of law respecting Escrow Agent scope or nature of its duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys' fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent's duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.
9.     Default
(a)    In the event that Seller is ready, willing and able to close in accordance
with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled to, as its sole and exclusive remedy to either: (i) waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller's sole remedy. Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein. Seller and Buyer agree that (a) actual damages due to Buyer's default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty


and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing. Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative, exemplary, special or consequential damages.

(b)    In the event that Buyer is ready, willing and able to close in accordance
with the terms and provisions hereof, and Seller defaults in the obligations herein taken by Seller, with respect to any or all of the Properties, Buyer may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof without reduction in the Purchase Price; (ii) terminate this Agreement with respect to any or all Properties by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money shall be refunded to Buyer, Seller shall pay to Buyer all of the reasonable out-of-pocket third party costs and expenses incurred by Buyer as to such Property or Properties in connection with this Agreement (not to exceed $15,000 per Property), which return and payment shall operate as liquidated damages and to terminate this Agreement and release Seller and Buyer from any and all rights, obligations and liability hereunder, except those which are specifically stated herein to survive any termination hereof; or (iii) enforce specific performance of Seller's obligations hereunder. Any such suit for specific performance must be commenced within thirty (30) days after the Closing Date or be forever barred. Failure of Buyer to timely elect one of the aforesaid two alternatives shall be deemed an election of clause (i) aforesaid.
Notwithstanding the foregoing, in the event of a willful or intentional default of Seller hereunder that renders the remedy of specific performance unavailable to Buyer, Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all actual damages suffered by Buyer as a result thereof; provided, however, in no event shall Seller be liable to Buyer for any punitive, speculative, exemplary, special or consequential damages.
10.     Closing. The Closing shall consist of the execution and delivery of documents by
Seller and Buyer, with respect to each Property as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement. Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents for each Property (as well as the additional items listed in the second paragraph of Section 1(b) for the properties on Exhibit J):
(a) A Special Warranty Deed in the form attached hereto as Exhibit B or local equivalent;
(b) An Assignment and Assumption of Lease and Security Deposits, in the form attached hereto as Exhibit C;
(c)    A Bill of Sale for the personal property, if any, in the form attached hereto


as Exhibit D;
(d) An Assignment of Contracts, Permits, Licenses and Warranties in the form of Exhibit E;
(e) An original Tenant Estoppel Certificate from the Required Tenants dated no earlier than the Effective Date, In addition, the business terms of the Tenant Estoppel Certificate must be in accordance with and not contradict the Lease. If the Lease and any amendments, bearing the original signatures of the landlord and Tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Tenant Estoppel;
(f) An original Guarantor Estoppel Certificate from the Required Guarantors dated no earlier than the Effective Date;
(g) A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;
(h) All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the deed;
(i) Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;
(j) Originals of the warranties contained in the Due Diligence Materials and with respect to the Properties Under Construction from, the general contractor warranty received under the applicable general construction contract;
(k) A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller;
(1)    An owner's title affidavit as to mechanics' liens and possession in
customary form reasonably acceptable to Seller, Buyer and Escrow Agent;
(m)    An Assignment and Assumption of Seller's Warranty Rights under the
construction contract with the general contractor for and Properties Under Construction in the form of Exhibit J1;
(n) Reserved;
(o) Letter to Tenant in form of Exhibit H attached hereto (or local equivalent);
(p) Reserved;


(q) Reserved;
(r) Copies of certificates of insurance (either of Seller's master policy or the policies maintained by the Tenant under its Lease) or other evidence reasonably satisfactory to Buyer memorializing and confirming that Landlord or Tenant is then maintaining policies of insurance of the types and in the amounts required by the Lease (provided, however, posting of such certificates to the Website shall constitute delivery thereof); and
(s) Reserved.
(t) Such other instruments as are reasonably and customarily required by
Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof in form and substance reasonably satisfactory to Seller.
At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money to Seller which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (a) through (d), (g) and (in) above. Buyer shall have the right to advance the Closing upon five (5) days prior written notice to Seller; provided that all conditions precedent to both Buyer's and Seller's respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party's obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party). Buyer shall have a onetime right to extend the Closing for up to fifteen (15) business days upon written notice to Seller to be received by Seller on or prior to the date scheduled for the Closing. If Buyer timely exercises this right to extend, any document that Seller is obligated to provide that is "time sensitive" does not need to be provided again by Seller. The Closing shall be held through the mail by delivery of the closing documents to the Escrow Agent on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.
11.     Representations by Seller. For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date with respect to the Property:
(a) Seller is duly organized (or formed), validly existing and in good standing
under the laws of its state of organization, and to the extent required by law, the State in which the Property is located. Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller's obligations hereunder and thereunder. Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound;
(b) Except for any tax appeals and/or contests initiated by Seller and/or
Tenant, if any, or as otherwise set forth in the Due Diligence Materials, Seller has not received any


written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation, condemnation proceeding or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property and Seller has no knowledge that the Property may be rezoned;
(c) Except as set forth in the Due Diligence Materials, Seller has not entered
into any contracts, subcontracts or agreements affecting the Property which will be binding upon Buyer after the Closing other than the Lease;
(d) Except as set forth in the Due Diligence Materials, and except for violations cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) (i) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations and (ii) any third party that the Property or the current use thereof violates any private covenant, restriction, easement or encumbrance and Seller does not have any knowledge of any such violation;
(e) Seller will be the sole owner of the entire lessor's interest in the Lease;
(f) With respect to the Leases: (1) the Leases are true, correct and complete copies of the Leases; (ii) to Seller's knowledge, the Leases are in full force and effect and there is no default or dispute thereunder; (iii) except as set forth in the Due Diligence Materials, no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Leases or any extension or renewal thereof; (iv) except with respect to Properties Under Construction, Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; and (v) the rent for each Property is as set forth on Exhibit A . With respect to the Guaranty, (i) the Guaranty forwarded to Buyer under Section 6(b)(i) is a true, correct and complete copy of the Guaranty; (ii) to Seller's knowledge the Guaranty is in full force and effect and there is no default or dispute thereunder; and (iii) Seller has not entered into any modification, amendment, termination or surrender of the Guaranty.
(g) There are no occupancy rights, leases or tenancies affecting the Property other than the Leases. Except as set forth in the Due Diligence Materials, neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any first right of refusal or other purchase right in favor of any other person or entity that has not or will not be waived as to this transaction; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;
(h) Reserved;
(i) To Seller's knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer or received by Buyer as part of its due diligence examinations:


(i) no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, " Environmental Laws ");
(ii) Seller has not received any written notice from (nor delivered any
notice to) any federal, state, county, municipal or other governmental department, agency or authority concerning any petroleum product or other hazardous substance discharge or seepage; and
(iii) There are no underground storage tanks located on the Property.
(iv) For purposes of this Subsection, "hazardous substances" shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws.
(j) The Due Diligence Materials contain true, correct and complete copies of all warranties in effect for the Property (the " Warranties ").
(k) Seller has not released any of the Tenants listed on Exhibit A from liability under its Lease. This is true for all Properties, including any Tenants listed on Exhibit A that have subleased the Property to a subtenant. Seller also has no actual knowledge that any Tenant is released from liability under the terms of the Lease. If Buyer discovers a Tenant listed on Exhibit A has been released from liability under its Lease at any time before the Closing Date, Buyer shall have the right to remove the Property from this Agreement, and have no further obligation to close on that Property, without it counting as a Dropped Property. If Buyer choses to remove the Property from the Agreement, the Earnest Money apportioned to that Property shall be refunded by the Escrow Agent.
The representations and warranties contained of Seller shall survive the Closing for a twelve (12) month period (the "Limitation Period"). Buyer shall provide actual written notice to Seller of any pre-Closing breach of any of Seller's warranties or representations as set forth in this Section 11 of which Buyer acquires knowledge, through any means, at any time after the Closing Date but prior to the expiration of the Limitation Period, and Buyer may bring an action at law for damages as a consequence thereof; which must be commenced, if at all, prior to the expiration of the Limitation Period, Notwithstanding anything in this Section 11 to the contrary, (i) Buyer shall not be entitled to make a claim against Seller for a violation of the representations, warranties, and covenants in this Section 11 unless the amount of damages to Buyer equals or exceeds Fifty Thousand and No/100 Dollars ($50,000.00) in the aggregate of all such claims and (ii) the cumulative, maximum amount of liability that Seller shall have to Buyer for breaches of the representations, warranties and covenants under this Section 11 of this Agreement shall not exceed one percent (1%) of the Purchase Price (" Cap Amount "), The Cap Amount shall not be applicable in the event that a court of competent jurisdiction renders a final decree finding that the breach of Seller's warranties and representations constituted fraud. The Cap Amount shall not limit Buyer's right to recover attorneys' fees or interest awarded to it by a court of competent jurisdiction. The acceptance of the Deed by Buyer at Closing in accordance with this Agreement shall from and after the Limitation Period


(except as to actions properly asserted during the Limitation Period) be deemed to be a full performance and discharge of every representation, warranty and covenant made by Seller in this Section 11 and every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Section 11.
Whenever set forth in this Agreement, the phrases "knowledge" or "actual knowledge" or any similar such phrase relating to Seller shall be deemed to mean only the actual current knowledge of Timothy Horan, Jr. as President of Mesa Real Estate Partners GP, LLC, a Delaware limited liability company, General Partner of Seller (who shall have no personal liability with respect to such matters), without any requirement of making an inquiry or investigation. With reference to warranties and representations made subject to Seller's actual knowledge (or words of similar import), in no event shall Seller be liable for the inaccuracy of the underlying warranty or representation if Seller had no actual knowledge of the inaccuracy at the time of making the warranty or representation.
12. Representations by Buyer. Buyer represents and warrants to, and covenants
with, Seller as of the date hereof and as of the Closing Date as follows:
(a)    Buyer is duly formed, validly existing and in good standing under the laws
of Delaware, and on the Closing Date, to the extent required by law, the State in which the Property is located, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power and authority to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer's obligations hereunder and thereunder. This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.
The representations and warranties of Buyer shall survive Closing for a period of one (1) year.
13. Conditions Precedent to Buyer's Obligations. Buyer's obligation to pay the
Purchase Price, and to accept title to the Property, shall be subject to the following conditions precedent for each Property on and as of the date of Closing (as well as the additional items listed in the second paragraph of Section 1(b) for the properties on Exhibit 3):
(a) Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above (other than the originals of the Warranties, which will be delivered to Buyer, together with originals of the Leases, within three (3) business days after Closing);


(b) Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner's form of title insurance policy (TLTA form of policy in Texas and local equivalent in other states if ALTA forms are not available), or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property (to the extent available) in the amount of the Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer's good and marketable title in fee simple to the Land (or indefeasible fee simple title with respect to Texas Properties) and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the " Title Policy ");

(c) Reserved;

(d) Tenant shall be paying full and unabated rent under the Leases and Tenant shall not have assigned or sublet any of the Property and been released by Seller of any liability under such Lease in connection with such sublease or assignment;
(e) The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing; and
(f) Seller shall have delivered to Buyer a written waiver by any party of any right of first refusal, right of first offer or other purchase option that Tenant or any other such party has pursuant to the Leases or otherwise to purchase the Property from Seller.
(g) Reserved.
In the event that the foregoing conditions precedent have not been satisfied as of Closing, Buyer shall have the rights and remedies set forth in Section 9(b)(i) and (ii) of this Agreement.
14.     Conditions Precedent to Seller's Obligations. Seller's obligation to deliver title
to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:
(a) Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 2 hereof, and
(b) The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and


conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.
15.     Notices. Unless otherwise provided herein, all notices and other communications
which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith. Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.
16.     Seller Covenants. Seller agrees that it: (a) shall continue to operate and manage each Property in the same manner in which Seller has previously operated and managed such Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain each Property in the same (or better) condition as exists on the date hereof; and (c) except as set forth in Exhibit I hereof, shall not, without Buyer's prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer's sole discretion: (i) amend the Leases in any manner, nor enter into any new lease, license agreement or other occupancy agreement with respect to any Property; (ii) consent to an assignment of the Leases or a sublease of the premises demised thereunder or a termination or surrender thereof; (ill) terminate the Leases nor release any guarantor of or security for the Leases unless required by the express terms of the Leases; and/or (iv) cause, permit or consent to an alteration of the premises demised thereunder (unless such consent is non-discretionary). Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of any Property, whether insured or not
17. Performance on Business Days. A "business day" is a day which is not a
Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.
18. Entire Agreement. This Agreement constitutes the sole and entire agreement
among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto. No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof



19. Severability. If any provision of this Agreement, or the application thereof to
any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.
(6) No Representations. Buyer acknowledges that Buyer will have the opportunity to
independently and personally inspect the Property and that Buyer has entered into this Agreement based upon its ability to make such examination and inspection. The Property and improvements thereon are to be sold to and accepted by Buyer at closing in their then present condition, " AS IS, WITH ALL FAULTS, AND WITHOUT ANY WARRANTY WHATSOEVER, EXPRESS OR IMPLIED ", except for the express representations and warranties of Seller contained in this Agreement. Notwithstanding anything contained herein to the contrary, it is understood and agreed that, except for the express representations and warranties of Seller contained in this Agreement, Seller and Seller's agents or employees have not made and are not now making, and they specifically disclaim, any warranties, representations or guaranties of any kind or character, express or implied, oral or written, past, present or future, with respect to the Property and the improvements located thereon, including, but not limited to, warranties, representations or guaranties as to: (1) matters of title (other than Seller's warranty of title set forth in the deed to be delivered at dosing); (2) environmental matters of any kind relating to the Property, the improvements located thereon, or any portion thereof (including the condition of the soil or groundwater beneath the Property or Improvements); (3) geological conditions, including, without limitation, subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water and earthquake faults and the resulting damage of past and/or future earthquakes; (4) whether, and to the extent to which the Property or any portion thereof is affected by any stream (surface or underground), body of water, flood prone area, flood plain, floodway or special flood hazard; (5) drainage; (6) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any under shoring; (7) zoning to which the Property, the improvements thereon, or any portion thereof may be subject; (8) the availability of any utilities to the Property, the improvements thereon, or any portion thereof, including, without limitation, water, sewage, gas and electric; (9) usages of adjoining property; (10) access to the Property or any portion thereof; (11) the value, compliance with the plans and specifications, size, location, age, use, design, quality, description, suitability, structural integrity, operation, title to, or physical or financial condition of the Property, the improvements thereon, or any portion thereof, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to the Property, the improvements thereon, or any part thereat (12) the presence of hazardous substances in or on, under or in the vicinity of the Property or the improvements thereon; (13) the condition or use of the Property or the improvements thereon or compliance of the Property or improvements thereon with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building, fire or zoning ordinances, codes or other similar laws; (14) the existence or non-existence of underground storage tanks; (15) any other matter affecting the stability or integrity of the Property and improvements thereon; (16) the potential for further development of the Property; (17) the existence of vested land use, zoning or building entitlements affecting the Property or improvements thereon; (18) the merchantability of the Property or improvements thereon or fitness of the Property or improvements thereon for any


particular purpose (Buyer affirming that Buyer has not relied on Seller's or Seller's agents' or employees' skill or judgment to select or furnish the Property or improvements thereon for any particular purpose, and that Seller makes no warranty that the Property or improvements thereon are fit for any particular purpose); (19) tax consequences. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND TO BUYER, INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE PROPERTY AND ANY IMPROVEMENTS LOCATED THEREON, OR THEIR SUITABILITY FOR ANY PARTICULAR PURPOSE OR OF MERCHANTABHATY. BUYER SHALL RELY ON ITS INVESTIGATIONS OF THE PROPERTY IN DETERMINING WHETHER TO ACQUIRE IT. THE PROVISIONS OF THIS SECTION 18 ARE A MATERIAL PART OF THE CONSIDERATION FOR SELLER'S ENTERING INTO THIS AGREEMENT AND SHALL SURVIVE CLOSING.
21.     Applicable Law. This Agreement shall be construed under the laws of the State
or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles. if a non-property specific dispute arises under this Agreement and in the reasonable judgment of both Seller and Buyer the laws of the Commonwealth or State in which the properties are located is not relevant, then the laws of the State of Texas shall be used.
22. Tax-Deferred Exchange. Buyer and Seller respectively acknowledge that the
purchase and sale of the Property contemplated hereby may be part of a separate exchange (an " Exchange ") being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto. In the event that either party (the " Exchanging Party ") desires to effectuate such an exchange, then the other party (the " Non-Exchanging Party ") agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange. The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (1) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.


23. Broker's Commissions. Buyer and Seller each hereby represent that, except for
the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction. Seller shall be responsible for payment of commissions to the Broker pursuant to a separate written agreement executed by Seller. Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker). The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.
24. Assignment. Except as set forth in this Section 24, Buyer shall not sell, assign or
transfer all or any part of its interest in and to this Agreement without the prior written consent of Seller, which consent may be granted or withheld in Seller's sole and absolute discretion. Notwithstanding the foregoing, Buyer may assign all or a portion of its rights under this Agreement to any combination of the following: (1) ARC GBLMESA001, LLC, (ii) a subsidiary of Cole Real Estate Investments, Inc., American Realty Capital Properties, Inc., or AR Capital, LLC, or (iii) another entity receiving advisory services from Cole Real Estate
Investments, Inc., American Realty Capital Properties, Inc., or AR Capital, LLC or any of their subsidiaries (each, an " Approved Assignee " and collectively, the " Approved Assignees "). The notice address for the Approved Assignees is 106 York Road, Jenkintown, PA 19046. No such assignment shall relieve Buyer of any of its obligations hereunder.
25. Attorneys' Fees. In any action between Buyer and Seller as a result of failure to
perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party's attorneys' fees and disbursements and court costs incurred in such action.
26. Time of the Essence. Time is of the essence with respect to each of Buyer's and
Seller's obligations hereunder.
27. Counterparts. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party. Signatures on this Agreement which are transmitted by electronically shall be valid for all purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.
28. Anti-Terrorism. Neither Buyer or Seller, nor any of their affiliates, are in
violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. " Anti-Terrorism Laws " shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and


Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).
29. REIT Specific Provisions. Upon Buyer's request, for a period of one (1) year
after Closing, Seller shall make any and all books, records, correspondence, financial data, leases, delinquency reports and all other documents and matters routinely maintained by Seller or its agents and relating to (and only to the extent relating to) the operation and ownership of the Properties for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the " Records ") available to Buyer and/or its auditors for inspection, copying and audit by Buyer's designated accountants, and at Buyer's expense, and to the extent such aforementioned Records may be in Seller's possession. For avoidance of doubt, the Records shall not include any materials relating to Seller, as an entity (including, without limitation, any financial statements, balance sheets, income statements, equity statements, cash flow statements or the like). Seller understands and acknowledges that Buyer may be required to file audited financial statements related to the Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any Records to the Buyer's auditors, on a timely basis to facilitate Buyer's timely submission of such audited financial statements.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
BUYER:
AR CAPITAL, LLC


By: /s/ Edward M. Weil, Jr.            
Name: Edward M. Weil, Jr.
Title: President
Date: 4/28/14    




MESA REAL ESTATE PARTNERS, LP., a Delaware limited partnership
By: Mesa Real Estate Partners GP, LLC, a Delaware limited liability company, its general partner

By: /s/ Timothy Horan, Jr.        
Timothy Horan, Jr., President
Date: 4/28/14    



THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.
ESCROW AGENT:
CHICAGO TITLE INSURANCE COMPANY / FIDELITY TITLE INSURANCE COMPANY

By: /s/ Edwin G. Ditlow            
Name: Edwin G. Ditlow            
Title: Vice President            
Date: April 28, 2014            

Exhibit 10.35

THIRD AMENDMENT TO CREDIT AGREEMENT
THIRD AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) dated as of June 24, 2014, among AMERICAN REALTY CAPITAL GLOBAL OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“Borrower”), AMERICAN REALTY CAPITAL GLOBAL TRUST, INC., a Maryland corporation (“Parent”), ARC GLOBAL HOLDCO, LLC, a Delaware limited liability company (“International Holdco”), the SUBSIDIARY GUARANTORS party hereto (the “Subsidiary Guarantors”; Parent, International Holdco and each of the Subsidiary Guarantors, individually, a “Guarantor Party” and, collectively, the “Guarantor Parties”), the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (together with its successors and assigns in such capacity, the “Administrative Agent”).
RECITALS:
A. Borrower, the Administrative Agent and certain lenders (together with their respective successors and assigns, the “Lenders”) are parties to that certain Credit Agreement dated as of July 25, 2013, as amended by that certain First Amendment to Credit Agreement dated as of November 22, 2013, that certain letter agreement regarding updated schedules dated as of November 22, 2013, that certain letter agreement regarding updated schedules dated as of December 20, 2013, that certain letter agreement regarding updated schedules dated as of January 15, 2014, that certain Omnibus Amendment to Loan Documents dated as of March 26, 2014, and that certain letter agreement regarding updated schedules dated as of April 17, 2014 (as so amended, the “Credit Agreement”; and except as otherwise herein expressly provided, each initially capitalized term used herein has the meaning assigned to such term in the Credit Agreement, as amended by this Agreement).
B. Pursuant to Section 2.21 of the Credit Agreement, Borrower has requested, among other things, an increase in the Commitments by $230,000,000, and JPMorgan Chase Bank, N.A., Regions Bank, RBS Citizens N.A. and Comerica Bank (each an “Electing Lender” and collectively, the “Electing Lenders”) have agreed to provide such increase.
C. The parties hereto desire to amend the Credit Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Section 1.     Amendment of Credit Agreement. Effective as of the Effective Date (defined below), the Credit Agreement is hereby amended as follows:
(a) The cover page to the Credit Agreement is hereby deleted in its entirety and replaced with the cover page attached hereto as Annex A.
(b) The definition of “Arranger” set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
““ Arrangers ” means, collectively, J.P. Morgan Securities LLC, Regions Capital Markets and RBS Citizens N.A.; each of the Arrangers is individually an “ Arranger ”.”
(c) The definition of “Borrowing Base” set forth in Section 1.01 of the Credit agreement is hereby deleted in its entirety and replaced with the following:
““ Borrowing Base ” means, as of any date of determination, an amount equal to sixty percent (60%) of the aggregate Determined Borrowing Base Value of the Borrowing Base Properties.”
(d) The definition of “Consolidated Net Income” set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“ Consolidated Net Income ” means, for any Person for any period, the consolidated net income (or loss) of such Person for such period, determined on a consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net Income of the REIT for any period (a) there shall be excluded (i) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the REIT or any of its subsidiaries, (ii) the income (or deficit) of any Person (other than a Loan Party) in which any Loan Party has an ownership interest, except to the extent that any such income is actually received by such Loan Party in the form of dividends or similar distributions, (iii) the undistributed earnings of any subsidiary of any Loan Party to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Applicable Law and (iv) any interest expense in respect of any convertible Indebtedness in excess of the cash coupon on such convertible Indebtedness and (b) expenses shall include a capital expenditures reserve for each Real Property that is leased by a Borrower Group Entity to a tenant pursuant to a lease under which such tenant is not responsible for all maintenance and repairs to such Real Property, which reserve shall equal $0.20 per square foot of such Real Property.”
(e) Subparagraph (k) of the definition of “Eligible Property” set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“Such Real Property must be 100% occupied by a single tenant pursuant to a Net Lease with a remaining term of at least 5 years (at the time of initial qualification as a Borrowing Base Property) and, in the case of an International Real Property, such tenant must be an Investment Grade Tenant.”
(f) The phrase “plus any non-cash charges” is hereby added between the word “Indebtedness” and the period at the end of the definition of “FFO” set forth in Section 1.01 of the Credit Agreement.
(g) The following definition of “Net Lease” is hereby added to Section 1.01 of the Credit Agreement:
““ Net Lease ” means a net lease pursuant to which the tenant is responsible for all operating costs and expenses in connection with the property; provided, however, in the event that such lease does not make such tenant responsible for insurance premiums and/or maintenance and/or repair of such property, the same shall not disqualify such lease from being a Net Lease.”
(h) The definition of “Net Operating Income” set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
““ Net Operating Income ” means, with respect to any Real Property for any period, property rental and other income (as determined by GAAP) attributable to such Real Property accruing for such period (adjusted to eliminate the straight lining of rents and adjusted for amortization of intangible lease assets) minus the sum of (a) the amount of all expenses (as determined in accordance with GAAP) incurred in connection with and directly attributable to the ownership and operation of such Real Property for such period, including, without limitation, management fees and amounts accrued for the payment of real estate taxes and insurance premiums, but excluding any general and administrative expenses related to the operation of Borrower or the other Loan Parties, any interest expense or other debt service charges and any non-cash charges such as depreciation or amortization of financing costs plus (b) if such Real Property is leased by a Borrower Group Entity to a tenant pursuant to a lease under which such tenant is not responsible for all maintenance and repairs to such Real Property, a capital expenditures reserve for such Real Property equal to $0.20 per square foot of such Real Property.”
(i) The definition of “Triple Net Lease” set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety.
(j) The following paragraph is hereby added to the end of Section 1.05 of the Credit Agreement.
“In connection with calculating any financial covenant in Section 6.07, all Foreign Currency shall be converted to its Dollar Equivalent as of the date of determination for such financial covenant. For purposes of this paragraph, “Dollar Equivalent” means, with respect to any number denominated in a Foreign Currency, the amount of Dollars that would be required to purchase the amount of such Foreign Currency on the applicable date of determination, based upon the spot selling rate at which JPMorgan Chase Bank, N.A. offers to sell such Foreign Currency for Dollars in the London foreign exchange market at approximately 11:00 a.m. London time on such date of determination; provided, however, that if, at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may use any method (including obtaining quotes from two (2) or more market makers for the applicable Foreign Currency) as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.”
(k) Section 2.05(b)(x) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“(x)    A copy of the Net Lease for such Eligible Property, together with, to the extent the tenant under such Net Lease is not rated and its financials are not publicly available, financials for such tenant for its prior 12 months of operations;”
(l) The phrase “a Triple Net Lease” set forth in clause (7) of section 2.05(d) of the Credit Agreement is hereby deleted in its entirety and replaced with the phrase “a Net Lease”.
(m) The word “and” at the end of Section 2.05(f)(iv) of the Credit Agreement is hereby deleted.
(n) The period at the end of Section 2.05(f)(v) of the Credit Agreement is hereby deleted and replaced with “; and”.
(o) The following is hereby added to the end of Section 2.05(f) of the Credit Agreement as new subsection (vi) thereof:
“(vi)    the then aggregate Determined Borrowing Base Value attributable to International Real Properties shall not exceed thirty percent (30%) of the then aggregate Determined Borrowing Base Value of all Borrowing Base Properties.”
(p) The lead in language to Section 2.21 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“Borrower shall have the right from time to time to cause the Administrative Agent to increase the total Commitments by up to $700,000,000, subject to the following:”
(q) The dollar amount “$25,000,000” set forth in Section 2.21(a) of the Credit Agreement is hereby deleted and replaced with the dollar amount “$10,000,000”.
(r) Clause (a) of Section 5.08 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“(a) to purchase or lease Real Property or other assets pursuant to investment guidelines of the REIT,”
(s) The text of Section 6.07(b) of the Credit Agreement is hereby deleted in its entirety and replaced with the text “[Reserved]”.
(t) Section 6.07(e) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
“(e)     Maximum Consolidated Secured Debt Ratio. The Consolidated Secured Debt Ratio shall not exceed forty percent (40%).”
(u)    Schedule 2.01 of the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 2.01 attached hereto.
Section 2.     Commitments. RBS Citizens N.A. and Comerica Bank each agrees that, as of the Effective Date, it shall be a Lender for all purposes under the Loan Documents and each agrees to be bound by all of its obligations thereunder. Each Electing Lender agrees that its respective Commitment shall be equal to the amount set forth on Schedule 2.01 attached hereto.
Section 3.     Effective Date. The “Effective Date” shall be the date on which all of the following have been satisfied:
(a) the Administrative Agent shall have received the Electing Lenders’, Borrower’s, Parent’s, International Holdco’s and the Subsidiary Guarantors’ signed counterparts of this Agreement;
(b) each Electing Lender shall have received a Note executed by Borrower in the principal amount equal to such Electing Lender’s Commitment as set forth on Schedule 2.01 attached hereto; and
(c) the Administrative Agent shall have been paid all reasonable out-of-pocket expenses, including reasonable legal fees for the Administrative Agent’s outside counsel, due to it pursuant to the transaction contemplated herein and all reasonable outstanding out-of-pocket fees and expenses, if any, that have been invoiced to Borrower to date.
Section 4.     Borrower’s Representations.     Borrower hereby represents and warrants to the Administrative Agent and the Lenders, as follows:
(a) each of the representations and warranties of Borrower contained or incorporated in the Credit Agreement, as amended by this Agreement, or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);
(b) as of the date hereof and immediately after giving effect to this Agreement, no Default and no Event of Default has occurred and is continuing;
(c) Borrower has all necessary limited partnership power and authority to execute, deliver and perform its obligations under this Agreement; Borrower has been duly authorized by all necessary limited partnership action on its part; and this Agreement has been duly and validly executed and delivered by Borrower and constitutes Borrower’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and
(d) Borrower’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Borrower or any order of any governmental authority and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon Borrower or any of its assets.
Section 5.     Guarantor Parties’ Representations. Each Guarantor Party hereby represents and warrants to the Administrative Agent and the Lenders, as follows:
(a)    each of the representations and warranties of such Guarantor Party contained or incorporated in the Guaranty or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);
(b) as of the date hereof and immediately after giving effect to this Agreement, such Guarantor Party is in compliance with its obligations under the Guaranty and each of the other Loan Documents to which it is a party;
(c) such Guarantor Party has all necessary corporate or limited liability company, as applicable, power and authority to execute, deliver and perform its obligations under this Agreement; such Guarantor Party has been duly authorized by all necessary corporate or limited liability company, as applicable, action on its part; and this Agreement has been duly and validly executed and delivered by such Guarantor Party and constitutes such Guarantor Party’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and
(d) such Guarantor Party’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such Guarantor Party or any order of any governmental authority and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon such Guarantor Party or any of its assets.
Section 6.     Ratification.
(a) Borrower hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Credit Agreement (as amended hereby) and the other Loan Documents to which it is a party and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Credit Agreement (as amended hereby) and the other Loan Documents and all of Borrower’s obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.
(b) Each Guarantor Party hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Guaranty and the other Loan Documents to which it is a party and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Guaranty and the other Loan Documents and all of its obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.
Section 7.     Miscellaneous.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) Amendments, Etc. The terms of this Agreement may be waived, modified and amended only by an instrument in writing duly executed by the party hereto against whom enforcement of such waiver, modification or amendment is sought (provided that, subject to the terms of the Credit Agreement, the Administrative Agent may execute any such waiver, modification or amendment on behalf of the Lenders). Any such waiver, modification or amendment shall be binding upon Borrower, the Guarantors, the Electing Lenders, the Administrative Agent and the Lenders.
(c) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of Borrower, the Guarantor Parties, the Electing Lenders, the Administrative Agent and the Lenders.
(d) Captions.     The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.
(e) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by facsimile or email transmission shall be effective as manual delivery of an executed counterpart hereof.

(f)     Severability. Any provision hereof which is held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
[remainder of page intentionally left blank]


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

BORROWER :

AMERICAN REALTY CAPITAL GLOBAL OPERATING                                 PARTNERSHIP, L.P., a Delaware limited partnership

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory

PARENT :

AMERICAN REALTY CAPITAL GLOBAL TRUST, INC., a Maryland
corporation,

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory

INTERNATIONAL HOLDCO:

ARC GLOBAL HOLDCO, LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory



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SUBSIDIARY GUARANTORS:

ARC KSFTWPA001, LLC, a Delaware limited liability company

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory

ARC PPHHTKY001, LLC, a Delaware limited liability company

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWARANE001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWGRDMI001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWRVTIL001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory



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ARC CWSALKS001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWUVLOH LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWVININ001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC CWWPKMN001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory



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ARC WWHWCMI001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC GEGRDMI001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC GSFRNTN001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory


ARC TFDPTIA001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory



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ARC NOWILND001 LLC, a Delaware limited liability company

By: American Realty Capital Global Operating Partnership, L.P., a
Delaware limited partnership, its sole member

By: American Realty Capital Global Trust, Inc., a Maryland
corporation, its general partner

By: /s/ Jesse C. Galloway                
Name: Jesse C. Galloway
Title: Authorized Signatory



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ADMINISTRATIVE AGENT:

JPMORGAN CHASE BANK, N.A.

By: /s/ Rita Lai                    
Name: Rita Lai    
Title: Senior Credit Banker


LENDERS:

JPMORGAN CHASE BANK, N.A.

By: /s/ Rita Lai                    
Name: Rita Lai
Title: Senior Credit Banker



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REGIONS BANK

By: /s/ Michael R. Mellott                
Name: Michael R. Mellott
Title: Director



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RBS CITIZENS N.A.

By: /s/ Donald Woods                
Name: Donald Woods
Title: SVP



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COMERCIA BANK

By: /s/ Charles Weddell                
Name: Charles Weddell
Title: Vice President


[end of signatures]
ANNEX A – REPLACEMENT COVER PAGE [see attached]

Execution Version
J.P. Morgan
CREDIT AGREEMENT
dated as of
July 25, 2013
among
AMERICAN REALTY CAPITAL GLOBAL OPERATING PARTNERSHIP, L.P.
THE LENDERS PARTY HERETO
and
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
J.P. MORGAN SECURITIES LLC, REGIONS CAPITAL MARKETS and RBS CITIZENS N.A.,
as Joint Bookrunners and Joint Lead Arrangers
REGIONS BANK,
as Syndication Agent

SCHEDULE 2.01 – COMMITMENTS
Lender
Commitment
JPMorgan Chase Bank, N.A.
$100,000,000
Regions Bank
$100,000,000
RBS Citizens N.A.
$100,000,000
Comerica Bank
$30,000,000
Total Commitments
$330,000,000



Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Nicholas S. Schorsch, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of American Realty Capital Global Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 11th day of August, 2014
 
/s/ Nicholas S. Schorsch
 
 
Nicholas S. Schorsch
 
 
Chief Executive Officer and Chairman of the Board of Directors
 
 
(Principal Executive Officer)



Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Patrick J. Goulding, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of American Realty Capital Global Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 11th day of August, 2014
 
/s/ Patrick J. Goulding
 
 
Patrick J. Goulding
 
 
Chief Financial Officer
 
 
(Principal Financial Officer and Principal Accounting Officer)



Exhibit 32
SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended.
The undersigned, who are the Chief Executive Officer and Chief Financial Officer of American Realty Capital Global Trust, Inc. (the “Company”), each hereby certify as follows:
The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated this 11th day of August, 2014
 
/s/ Nicholas S. Schorsch
 
Nicholas S. Schorsch
 
Chief Executive Officer and Chairman of the
Board of Directors
 
(Principal Executive Officer)
 
 
 
/s/ Patrick J. Goulding
 
Patrick J. Goulding
 
Chief Financial Officer
 
(Principal Financial Officer and Principal Accounting Officer)