The Necessity Retail REIT (RTL) Risk Analysis

The unaudited pro forma combined financial information included in the Joint Proxy Statement/Prospectus was presented for informational purposes only and is neither indicative of the financial position or results of operations that actually would have occurred had the Proposed Transactions been completed as of the date indicated, nor is it indicative of the future operating results or financial position of us. The unaudited pro forma condensed consolidated financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to our assets and liabilities. The purchase price allocation reflected in the unaudited pro forma condensed consolidated financial information included in the Joint Proxy Statement/Prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of us as of the dates of the completion of the Proposed Transactions. The unaudited pro forma combined financial information does not reflect future events that may occur after the REIT Merger Effective Time, including the costs related to the planned integration of the two companies and any future nonrecurring charges resulting from the Proposed Transactions, and does not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma combined financial information presented in the Joint Proxy Statement/Prospectus is based in part on certain assumptions regarding the Proposed Transactions that we and GNL believe are reasonable under the circumstances. We and GNL cannot assure you that the assumptions will prove to be accurate over time.

There is no assurance that the Proposed Transactions will result in increased net income, FFO and AFFO. The Combined Company will expense all cash and non-cash costs involved in the Proposed Transactions. As a result, the Combined Company's statement of operations and FFO may be negatively impacted, because of the non-cash charges related to the issuance of shares of Common Stock as consideration in each of the REIT Merger and the Internalization Merger and, to a lesser extent, other transaction-related costs. In addition, while the Combined Company will no longer effectively bear the costs of the various fees and expense reimbursements previously paid to Acquired Entities after the Internalization Merger, the Combined Company's expenses will include the compensation and benefits of our officers, employees, and consultants, as well as overhead expenses, previously paid by the Acquired Entities in managing its business and operations. If the expenses of the Combined Company assumed as a result of the Proposed Transactions may be higher than the fees that we and GNL currently pay to the Acquired Entities, or otherwise higher than anticipated, the Combined Company may not realize the anticipated cost savings and other benefits from the Internalization Merger and its net income, FFO and AFFO could decrease.

We cannot guarantee that we will be able to pay dividends on a regular basis on our Class A common stock, Series A Preferred Stock, Series C Preferred Stock, or any other class or series of stock we may issue in the future. Decisions regarding the frequency and amount of any future dividends we pay on our Class A common stock will remain at all times entirely at the discretion of our board of directors, which reserves the right to change our dividend policy at any time and for any reason. Any accrued and unpaid dividends payable with respect to either our Series A or Series C Preferred Stock must be paid upon redemption of the applicable shares. As noted herein, our debt agreements, including the indenture governing the Senior Notes and our Credit Facility, contain various covenants that limit our ability to pay dividends. For example, our Credit Facility, contains provisions restricting our ability to pay distributions, including paying cash dividends on equity securities (including the Series A Preferred Stock and the Series C Preferred Stock). We are generally permitted to pay dividends on these securities and other distributions for any fiscal quarter in an aggregate amount of up to 105% of AFFO (as defined in credit agreement governing the Credit Facility) for a look-back period of four consecutive fiscal quarters but only if, as of the last day of the period, after giving effect to the payment of those dividends and other distributions, we are able to satisfy a maximum leverage ratio and a maximum unsecured leverage ratio and maintain availability for future borrowings under the Credit Facility of not less than $60 million. If these conditions are not satisfied, the applicable threshold percentage of AFFO will be 95% instead of 105%. If applicable, during the continuance of an event of default under the Credit Facility, we may not pay dividends or other distributions in excess of the amount necessary for us to maintain our status as a REIT. Our ability to pay dividends in the future and comply with the restrictions on the payment of dividends depends on our ability to operate profitably and to generate sufficient cash flows from the operations of our existing properties and any properties we may acquire. We have, in the past, entered into amendments to the Credit Facility or obtained waivers from the lenders thereunder that have permitted us to pay dividends or other distributions in excess of the limits at the time of the amendment or waiver and may need to do so in the future. However, there is no assurance that lenders will consent to any additional amendments or waivers. There is no assurance we will generate sufficient cash flow from operations to fund dividend payments. If we need other sources to fund dividends, there can be no assurance that other sources will be available on favorable terms, or at all. Complying with these restriction on paying dividends and other distributions in the agreements governing our debt may limit our ability to incur additional indebtedness and use cash that would otherwise be available to us. Funding dividends or other distributions from borrowings restricts the amount we can borrow for property acquisitions and investments. Using proceeds from the sale of assets or the issuance of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock or other equity securities to fund dividends or other distributions rather than invest in assets will likewise reduce the amount available to invest. Funding dividends from the sale of additional securities could also dilute our stockholders.

Under the indenture governing the Senior Notes, which GNL will assume in connection with the REIT Merger, the Combined Company will be required to make an offer to repurchase all outstanding Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest, upon the occurrence of a "Change of Control Triggering Event", which means the occurrence of both (i) a change of control and (ii) a ratings downgrade on the Senior Notes by at least two out of three applicable rating agencies within 60 days following the change of control, as compared to the applicable ratings of the Senior Notes 60 days prior to either the date of the change of control or the date of public notice thereof, in each case subject to certain terms and conditions. We and GNL believe the Proposed Transactions constitute a change of control under the indenture governing the Senior Notes. In the event the Proposed Transactions do in fact constitute a change of control under the indenture, the Combined Company would be required to redeem the Senior Notes at 101% of the principal amount thereof in the event there was a subsequent ratings decline, as described above. If required to make an offer, the Combined Company may not have sufficient funds, or the ability to raise sufficient funds, to redeem the notes at the time it is required to do so. A failure by the Combined Company to redeem the Senior Notes as required under the indenture would constitute an event of default thereunder, which in turn would constitute a default under the Credit Facility.

GNL will assume all of our outstanding indebtedness under our 4.50% Senior Notes due 2028 (the "Senior Notes") and expects to borrow approximately $604.0 million (based on amounts outstanding on the Credit Facility as June 30, 2023) under the GNL Credit Facility to repay all amounts outstanding under our Credit Facility. Taking into account GNL's existing indebtedness, borrowing under the GNL Credit Facility to repay our Credit Facility and the assumption of our other indebtedness, the Combined Company's pro forma consolidated indebtedness as of March 31, 2023, after giving effect to the Proposed Transactions, was approximately $5.3 billion, including $3.1 billion of secured indebtedness, $1.2 billion outstanding under the GNL Credit Facility, $500.0 million of GNL's Senior Notes and $500.0 million of our Senior Notes. There is no assurance that the Combined Company's cash flow will be sufficient to pay principal and interest when due on the Combined Company's consolidated indebtedness. The Combined Company's indebtedness could have important consequences to holders of its common stock, including: - vulnerability to general adverse economic and industry conditions;- limits on the Combined Company's ability to obtain additional financing for uses such as to fund future working capital, capital expenditures, acquisitions, and other general corporate requirements;- requiring the use of a substantial portion of the Combined Company's cash flow from operations to pay principal and interest reducing cash flow available to pay distributions, fund working capital, acquisitions, capital expenditures, and general corporate requirements;- limiting the Combined Company's flexibility in planning for, or reacting to, changes in the real estate market generally or our properties specifically;- requiring the Combined Company to maintain certain debt coverage and other financial ratios at specified levels, thereby reducing our financial flexibility;- exposing the Combined Company to increases in interest rates including to the extent variable rate debt is reset and not otherwise capped by use of a swap or interest rate hedge;- requiring the Combined Company to sell one or more of its properties at disadvantageous prices in order to pay interest or principal on the Combined Company's indebtedness;- increasing the risk of an event of default if the Combined Company fails to comply with the terms of its debt agreements including timely paying principal and interest when due or failing to comply with the financial and other restrictive covenants contained in the agreements governing the debt obligations which could result in acceleration of the debt and foreclosure by lenders on assets securing the debt; and - putting the Combined Company at a disadvantage compared to its competitors with less indebtedness. The Combined Company's ability to make scheduled payments on and to refinance its indebtedness depends on and is subject to its future financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond its control. The Combined Company's business may fail to generate sufficient cash flow from operations or future borrowings may be unavailable to it under the GNL Credit Facility or from other sources in an amount sufficient to enable the Combined Company to service its debt, to refinance its debt or to fund its other liquidity needs. If the Combined Company is unable to meet its debt obligations or to fund its other liquidity needs, the Combined Company will need to restructure or refinance all or a portion of its debt. The Combined Company may be unable to refinance any of its debt, including the GNL Credit Facility, the GNL Senior Notes or our Senior Notes, on commercially reasonable terms or at all. If the Combined Company is unable to make payments or refinance its debt or obtain new financing under these circumstances, the Combined Company would have to consider other options, such as asset sales, equity issuances or negotiations with its lenders to restructure the applicable debt. The GNL Credit Facility, the indenture governing the GNL Senior Notes and the indenture governing our Senior Notes restrict, and market or business conditions may limit, the Combined Company's ability to take some or all of these actions. Any restructuring or refinancing of the Combined Company's indebtedness could be at higher interest rates and may require it to comply with more onerous covenants that could further restrict its business operations. In addition, the GNL Credit Facility, the indenture governing the GNL Senior Notes and the indenture governing our Senior Notes permit the Combined Company or its consolidated subsidiaries to incur additional debt, including secured debt, and the amount of additional indebtedness incurred could be substantial. As of March 31, 2023, a total of $538.2 million of the Combined Company's indebtedness matures in calendar year 2023. The indebtedness maturing in calendar year 2023 bears interest at a weighted rate of 3.6% per annum as of March 31, 2023. As of March 31, 2023, a total of $401.6 million of the Combined Company's indebtedness matures in calendar year 2024. The indebtedness maturing in calendar year 2024 bears interest at a weighted rate of 3.8% per annum as of March 31, 2023. Interest rates have increased considerably in the last twelve months and may continue to increase. The interest rate on any indebtedness the Combined Company refinances will likely be higher than the rate on the maturing indebtedness. If the Combined Company needs to repay existing debt during periods of rising interest rates, it may need to post additional collateral or sell one or more of its investments in properties even though it would not otherwise choose to do so. There is no assurance that the Combined Company will be able to refinance any of its indebtedness as it comes due, especially indebtedness secured by mortgages, on favorable terms, or at all. Increases in interest rates or changes in underwriting standards imposed by lenders may require the Combined Company to use either cash on hand or raise additional equity to repay or refinance any indebtedness or for that matter to incur new indebtedness. If the Combined Company is unable to repay or refinance any indebtedness secured by mortgages, it may lose the property secured by the mortgage in a foreclosure action. We and GNL have incurred, and the Combined Company or its consolidated subsidiaries may continue to incur, variable-rate debt. As of March 31, 2023, a total of 24% of the Combined Company's debt bore interest at variable rates which averaged 5.9% on a weighted average basis as of March 31, 2023. Increases in interest rates on the Combined Company's variable-rate debt or any new indebtedness it may incur either as part of a refinancing or a new property acquisition would increase its interest cost. If the Combined Company needs to repay existing debt during periods of rising interest rates, it may need to post additional collateral or sell one or more of its investments in properties even though it would not otherwise choose to do so. We and GNL have historically entered into, and the Combined Company expects to continue to enter into, these types of transactions in order to manage or mitigate its interest rate risk on variable rate debt, but there is no assurance these arrangements will be available on terms and conditions acceptable to us, if at all.

We and our consolidated subsidiaries are parties to certain debt agreements that give the counterparty certain rights following a "change in control" or a prohibited transfer, including in some cases the right to terminate the agreement or to require us or our applicable subsidiaries (or GNL following the close of the Proposed Transactions) to offer to redeem or to repay certain or all outstanding indebtedness under the applicable debt facility of ours or our consolidated subsidiaries. The Credit Facility will be paid off concurrently with the closing of the REIT Merger as required under the terms of the Credit Facility. Prior to the close of the Proposed Transactions, we intend to seek and obtain lender consents to the extent necessary or desirable, with respect to the applicable terms of the Loan Agreement, dated as of July 24, 2020, by and among the entities listed on Schedule I thereto, as borrowers, and Column Financial, Inc., as lender, as amended to date and the Loan Agreement, dated as of December 8, 2017, among Société Générale and UBS AG, as lenders, and certain subsidiaries of the OP, as borrowers, as amended to date. Under such agreements, the REIT Merger may constitute a change in control or a prohibited transfer, and therefore, without the required consent from the counterparty to such agreements, the counterparty may exercise certain rights under the agreement upon the closing of the REIT Merger, which could result in an acceleration of the obligation to repay such debt obligations by our applicable subsidiaries. Any such counterparty may request modifications of their respective agreements as a condition to granting a waiver or consent under their agreement. There can be no assurances that such counterparties will not exercise their rights under these agreements, including termination rights or rights to require the repayment of our indebtedness where available, or that the exercise of any such rights under, or modification of, these agreements will not adversely affect the Combined Company.

We have entered and may continue to enter into sale-leaseback transactions, whereby we purchase a property and then lease the same property back to the person from whom we purchased it. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If this plan were confirmed by the bankruptcy court, we would be bound by the new terms. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property.

As of December 31, 2022, we had total gross outstanding indebtedness of approximately $2.8 billion. We may incur additional indebtedness in the future for various purposes. The amount of this indebtedness could have material adverse consequences for us, including: - hindering our ability to adjust to changing market, industry or economic conditions;- limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends or for other corporate purposes;- limiting the amount of free cash flow available for future operations, acquisitions, distributions, stock repurchases or other uses; and - making us more vulnerable to economic or industry downturns, including interest rate increases. As noted above, our ability to reduce our leverage depends, in part, on selling certain properties and raising additional equity. Nevertheless, in most instances, we acquire real properties by either utilizing existing financing or borrowing new funds. We may incur debt and pledge the underlying property as security for that debt to obtain funds to acquire additional properties or for other corporate purposes. We may also borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT. If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on a property, then we must identify other sources to fund the payment or risk defaulting on the indebtedness. In addition, incurring mortgage debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In this event, we may be unable to pay the amount of distributions required in order to maintain our REIT status. We may also fully or partially guarantee mortgage debt incurred by the subsidiary entities that own our properties. If we provide a guaranty on behalf of a subsidiary entity that owns one of our properties, we will be responsible to the lender for repaying the debt if it is not paid by the entity. In the case of mortgages containing cross-collateralization or cross-default provisions, a default on a single mortgage could affect multiple properties. We may not be able to reduce the amount of our indebtedness in an effective or time efficient manner. Further, we may increase our leverage depending on debt financing market conditions. During the year ended December 31, 2021, we completed an offering of Senior Notes and may issue additional Senior Notes or similar securities in the future. We assumed fixed-rate mortgage debt in the CIM Portfolio Acquisition during the year ended December 31, 2022, which had an aggregate principal balance of $351.2 million as of December 31, 2022. We anticipate the need to refinance $287.2 million of this debt in the year ending December 31, 2023. Additionally, during the year ended December 31, 2022, we borrowed $533.0 million under our Credit Facility to partially finance the CIM Portfolio Acquisition, of which $458.0 million was outstanding as of December 31, 2022. Borrowings under our Credit Facility bore interest at a weighted-average annual rate of 4.03% and 2.71% during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the annual interest rate on our Credit Facility was 6.51%.

In some instances, we may sell our properties by providing financing to purchasers. In these cases, we will bear the risk that the purchaser may default, which could negatively impact our cash flow. Even in the absence of a purchaser default, the proceeds from the sale will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years. If any purchaser defaults under a financing arrangement with us, it could negatively impact our cash flow.

We have incurred, and may continue to incur, indebtedness, including indebtedness secured by our properties. We anticipate the need to repay or refinance $289.8 million of our total indebtedness during the year ending December 31, 2023, which includes a portion of the indebtedness noted above which we assumed in the CIM Portfolio Acquisition. The indebtedness maturing in the year ending December 31, 2023 bears interest at a weighted-average effective annual rate of 3.9%. Interest rates increased considerably in the year ended December 31, 2022 and may continue to increase. The interest rates on any indebtedness we refinance will likely be at higher rates than on maturing indebtedness. There is no assurance that we will be able to refinance any of our maturing indebtedness as it comes due, especially indebtedness secured by mortgaged properties, on favorable terms, or at all. Increases to market interest rates or changes to underwriting standards imposed by lenders may require us to use cash on hand or raise additional equity to repay or refinance any indebtedness. If we are unable to repay or refinance any indebtedness secured by mortgaged properties, we could lose any such properties in foreclosure action.

We have incurred, and may continue to incur, variable-rate debt. Increases in interest rates on our variable-rate debt would increase our interest cost. If we need to repay existing debt during periods of rising interest rates, we may need to post additional collateral or sell properties even though we would not otherwise choose to do so. As of December 31, 2022, approximately 16.4% of our $2.8 billion in total gross outstanding debt was variable-rate debt indexed to London Interbank Offered Rate ("LIBOR"). To the extent we do not hedge our variable rate exposure for borrowings under our Credit Facility, we would be exposed to interest rate volatility with respect to LIBOR and rising rates in general. The Financial Conduct Authority has ceased publishing the one-week and two month USD LIBOR settings, and intends to cease publishing the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023. The Federal Reserve Board and the Federal Reserve Bank of New York has organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to LIBOR in derivatives and other financial contracts. We are monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR could also be impacted when LIBOR is limited or discontinued and contracts must be transitioned to a new alternative rate. In some instances, transitioning to an alternative rate may require negotiation with lenders and other counterparties and could present challenges. The consequences of these developments cannot be entirely predicted and could include an increase in the cost of our variable rate indebtedness. We expect LIBOR to be available in substantially its current form until at least June 30, 2023. Nevertheless, a sufficient number of banks may decline to make submissions to the LIBOR administrator prior to June 30, 2023. In that case, the risks associated with the transition to an alternative reference rate would be accelerated or magnified. Any of these events, as well as the other uncertainty surrounding changes in LIBOR, could adversely affect us. The Credit Facility contains terms governing the establishment of a replacement index to serve as an alternative to LIBOR.

The domestic and international commercial real estate debt markets are subject to volatility, resulting in, from time to me, the tightening of underwriting standards by lenders and credit rating agencies and reductions in the availability of financing. In addition, interest rates have been increasing as a result of actions taken by the Federal Reserve Board. Increases in borrowing costs impact our ability to incur further debt and the returns that we project or earn on future acquisitions or the price we receive in connection with property sales. Likewise, higher rates increase the servicing costs associated with our variable-rate indebtedness, and will cause servicing costs on any refinanced fixed-rate indebtedness to increase, thereby decreasing our returns. If we are unable to borrow monies on terms and conditions that we find acceptable, our ability to purchase properties or meet other capital requirements may be limited, and the return on the properties we purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance maturing indebtedness. The state of the debt markets could have an impact on the overall amount of capital being invested in real estate, which may result in price or value decreases of real estate assets which could negatively impact the value of our assets and the ability to sell properties the proceeds of which may be used to reduce our total debt.

Our debt agreements, including the indenture governing the Senior Notes and the credit agreement governing the Credit Facility, contain various covenants that limit our ability and the ability of our subsidiaries to engage in various transactions including, as applicable: - incurring or guaranteeing additional secured and unsecured debt;- creating liens on our assets;- making investments or other restricted payments;- entering into transactions with affiliates;- creating restrictions on the ability of our subsidiaries to pay dividends or other amounts to us;- selling assets;- making optional prepayments of indebtedness during a payment default or an event of default under the Credit Facility;- effecting a consolidation or merger or selling all or substantially all of our assets; and - amending certain material agreements, including material leases and debt agreements. These covenants limit our operating flexibility and could prevent us from taking advantage of business opportunities as they arise, growing our business or competing effectively. In addition, the Credit Facility requires us to comply with financial maintenance covenants, including, among other things, a maximum consolidated leverage ratio, a minimum fixed charge coverage ratio, a maximum secured recourse indebtedness to total asset value ratio and a minimum net worth test. We are restricted from using proceeds from borrowings under the Credit Facility to accumulate or maintain cash or cash equivalents in excess of amounts necessary to meet current working capital requirements, as determined in good faith by us. In addition, we may not fund share repurchases, unless we satisfy, after giving effect to the payments, a maximum unsecured leverage ratio and a maximum leverage ratio and also have availability for future borrowings under the Credit Facility of not less than $60 million. We are also required to maintain total unencumbered assets of at least 150% of our unsecured indebtedness under the indenture governing the Senior Notes. Our ability to meet these requirements may be affected by events beyond our control, and we may not meet these requirements. We may be unable to maintain compliance with these covenants and, if we fail to do so, we may be unable to obtain waivers from the lenders or indenture trustee, as applicable, or amend the covenants. A breach of any of the covenants or other provisions in our debt agreements could result in an event of default, which if not cured or waived, could result in such debt becoming due and payable, either automatically or after an election to accelerate by the required percentage of the holders of the indebtedness or by an agent for the holders of the indebtedness. This, in turn, could cause our other debt, including the Senior Notes and the Credit Facility, to become due and payable as a result of cross-default or cross-acceleration provisions contained in the agreements governing such other debt and permit certain of our lenders to foreclose on our assets, if any, that secure this debt. In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance our debt. The agreements governing our indebtedness, including the Credit Facility (as defined herein) and the indenture governing the Senior Notes also contain various covenants, including a restricted payments covenant that limits our ability to declare or pay dividends or other distributions on, or to purchase or redeem, any of our equity interests, with certain permitted exceptions as well as covenants restricting, among other things, the incurrence of liens, investments, fundamental changes, agreements with affiliates and changes in the nature of our business.

The rating assigned to the Company was recently downgraded by Fitch from BB+ to BB. Any rating assigned to debt securities that we or our OP issues could be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any lowering of the ratings likely would make it more difficult or more expensive for us to obtain additional debt financing. Further, a rating decline occurring within 60 days of a notice of a "Change of Control" event under the indenture governing the Senior Notes would trigger the repurchase obligation described above.

Based on annualized rental income on a straight-line basis as of December 31, 2022, 46.2% of our single-tenant portfolio and 62.8% of our anchor tenants in our multi-tenant portfolio are not evaluated or ranked by credit rating agencies, or are ranked below "investment grade," which, for our purposes includes both actual investment grade ratings of the tenant and "implied investment grade" ratings which includes ratings of the tenant's parent (regardless of whether or not the parent has guaranteed the tenant's obligation under the lease) or lease guarantor. "Implied investment grade" ratings are also determined using a proprietary Moody's analytical tool, which compares the risk metrics of the non-rated company to those of a company with an actual rating. Of our "investment grade" tenants for our single-tenant portfolio, 41.1% have actual investment grade ratings and 12.7% have "implied investment grade" ratings. Of our "investment grade" tenants for our anchor tenants in the multi-tenant portfolio, 30.5% have actual investment grade ratings and 6.7% have "implied investment grade" ratings. Leases with tenants that are not investment grade may pose a higher risk of default than leases with tenants who are rated investment grade.

If a tenant does not renew its lease or otherwise vacate its space, we will likely be required to expend substantial funds to improve and refurbish the vacated space. In addition, we are responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops at all of our properties. Accordingly, if we need additional capital in the future to improve or maintain our properties or for any other reason, we may have to obtain financing from sources such as borrowings, property sales or future equity offerings, to fund these capital requirements. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both.

Lock-out provisions, such as the provisions contained in certain mortgage loans we have entered into, could materially restrict our ability to sell or otherwise dispose of or refinance properties, including by requiring a yield maintenance premium to be paid in connection with the required prepaying of principal upon a sale or disposition. Lock-out provisions may also prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could also impair our ability to take other actions during the lock-out period that may otherwise be in the best interests of our stockholders. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control. Payment yield maintenance premiums in connection with dispositions or refinancings could adversely affect our cash flow.

We may enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments). We may not, however, exercise sole decision-making authority. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions, or may have economic or other business interests or goals which end up being inconsistent with our business interests or goals. A venture partner may be in a position to take actions contrary to our objectives or goals. Investing through a joint venture also subject to the potential risk of impasses on decisions, such as a sale, if neither we nor the co-venturer would have full control over the particular decisions. Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. In addition, we may in certain circumstances be liable for the actions of our co-venturers.

We may enter into joint ventures with other entities advised by affiliates of AR Global. Our Advisor may have conflicts of interest in determining which entity advised by affiliates of AR Global enters into any particular joint venture agreement. The co-venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. In addition, our Advisor may face a conflict in structuring the terms of the relationship between our interests and the interest of the affiliated co-venturer and in managing the joint venture. Due to the role of our Advisor and its affiliates, agreements and transactions between the co-venturers with respect to any joint venture will not have the benefit of arm's-length negotiation of the type normally conducted between unrelated co-venturers, which may result in the co-venturer receiving benefits greater than the benefits that we receive. In addition, we may assume liabilities related to the joint venture that exceeds the percentage of our investment in the joint venture.

The Combined Company's board of directors will not be fully declassified until 2025. Having a partially classified board of directors may have the effect of delaying, deferring or preventing a change in control of the Combined Company, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for its stockholders.

We continue to seek growth through acquiring additional properties, but pursuing this objective exposes us to numerous risks, including: - competition from other real estate investors with significant capital resources;- we may acquire properties that are not accretive;- we may not successfully integrate, manage and lease the properties we acquire in a fashion that meets our expectations or market conditions may result in future vacancies and lower-than expected rental rates;- we may be unable to assume existing debt financing or obtain debt financing or raise equity required to fund acquisitions on favorable terms, or at all;- we may spend more than expected amounts to improve or renovate acquired properties;- agreements to acquire properties are typically subject to customary conditions to closing that may or may not be completed, and we may spend significant time and money on potential acquisitions that we do not consummate;- the process of acquiring or pursuing the acquisition of a new property may divert the attention of our management team from our existing operations; and - we may acquire properties without recourse, or with only limited recourse, for liabilities, whether known or unknown. We rely upon our Advisor and the real estate professionals employed by affiliates of our Advisor to identify suitable investments. There can be no assurance that our Advisor will be successful in doing so on financially attractive terms or that our objectives will be achieved.

Pursuant to the REIT Merger Agreement, we agreed not to (i) solicit proposals relating to certain alternative business combination transactions, (ii) engage in discussions or negotiations or provide non-public information in connection with any proposal for an alternative business combination transaction with a third party or (iii) approve or enter into any agreements providing for any such alternative business combination transaction, in each case, subject to certain exceptions to permit members of our board of directors to comply with their duties under applicable law. Notwithstanding these "no-shop" restrictions, prior to obtaining our stockholder approval or GNL's stockholder approval, as applicable, under specified circumstances our board of directors or GNL's board of directors, respectively, may change their recommendation with respect to the Proposed Transactions, and we may also terminate the REIT Merger Agreement to accept a Superior Proposal (as defined in the REIT Merger Agreement) upon payment of the termination fee described below. The REIT Merger Agreement provides, that if the REIT Merger Agreement is terminated under certain circumstances specified in the REIT Merger Agreement, we may be required to pay GNL a termination fee of $40.0 million and reimburse GNL's transaction expenses up to an amount equal to $3.0 million. Pursuant to the Internalization Merger Agreement, if a termination fee is paid pursuant to the REIT Merger Agreement, we may also be required to reimburse AR Global for up to $1.5 million in out-of-pocket expenses related to the Internalization Merger Agreement. These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing an acquisition, even if the potential competing acquirer was prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the Proposed Transactions, or might result in a potential competing acquirer proposing to pay a lower per share value than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the REIT Merger Agreement. If the REIT Merger Agreement and Internalization Merger Agreement are terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Proposed Transactions contemplated by the REIT Merger Agreement and Internalization Merger Agreement.

Prior to the REIT Merger Effective Time and the Internalization Merger Effective Time, some our vendors or tenants may delay or defer decisions or rental payments, which could negatively affect our or GNL's revenues, earnings, cash flows, and expenses, regardless of whether the Proposed Transactions are completed. In addition, due to operating restrictions in the REIT Merger Agreement, subject to certain exclusions, we may be unable, during the pendency of the REIT Merger, to undertake significant capital projects, undertake certain significant financing transactions, and otherwise pursue other actions, even if such actions would prove beneficial.

The Internalization Merger was negotiated with AR Global, which is affiliated with certain of our and GNL's officers and directors. As a result, those officers and directors may have different interests than us or GNL as a whole. In addition, during the pendency of the Proposed Transactions, we and GNL will continue to be parties to advisory and property management agreements with the Internalization Parties and will continue to rely upon the Internalization Parties for key advisory and property management functions, while continuing to pay AR Global for the services provided by the Internalization Parties. These potential conflicts would not exist in the case of a transaction negotiated with unaffiliated third parties. Moreover, if AR Global or any of its affiliates breaches any of the representations, warranties or covenants made by it in the Internalization Merger Agreement, we may choose not to enforce, or to enforce less vigorously, our rights under the Internalization Merger Agreement because of our desire to maintain our ongoing relationship with AR Global and the Internalization Parties and the interests of certain of our directors and officers. Moreover, the representations, warranties, covenants and indemnities in the Internalization Merger Agreement are subject to limitations and qualifiers, which may also limit our ability to enforce any remedy under the Internalization Merger Agreement.

Our ability to internalize management under the Advisory Agreement is subject to the payment of certain fees and other conditions, which would make our internalization independent of the Internalization Merger Agreement expensive and cumbersome. The Advisory Agreement provides us with the right to internalize the services provided by our Advisor, subject to two-thirds approval of the independent directors of our board of directors, a nine months' notice period, and the payment of cash fees equaling an amount equal to (i) $15.0 million, plus (ii) 4.5 multiplied by the annualized management and services fees (including variable management fees), plus (iii) 1% multiplied by the amount paid for the purchase, development or construction of any property acquired after the end of the fiscal quarter in which the internalization notice is provided. In addition, the Advisory Agreement provides limited cooperation covenants on the part of AR Global and does not include any cooperation with respect to hiring personnel. Further, the Advisory Agreement does not provide us the right to solicit persons employed by AR Global or its affiliates (including all the person presently providing services to us) to become our employees. AR Global would also be under no obligation to transfer any assets or licenses that we may need to internalize their respective management functions. Lastly, some of the loan agreements governing the indebtedness of our subsidiaries require lender consents to replace the property manager. There is no assurance the applicable parties would consent.