As filed with the Securities and Exchange Commission on July 22, 2010

Registration No. 333-145949

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

PRE-EFFECTIVE AMENDMENT NO. 1 TO
POST-EFFECTIVE AMENDMENT NO. 9 TO
  
FORM S-11
  
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

 

AMERICAN REALTY CAPITAL TRUST, INC.

(Exact Name of Registrant as Specified in Its Governing Instruments)

106 York Road
Jenkintown, Pennsylvania 19046
(215) 887-2189

(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)

 

Nicholas S. Schorsch
AMERICAN REALTY CAPITAL TRUST, INC.
106 York Road
Jenkintown, Pennsylvania 19046
(215) 887-2189

(Name and Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)

 

With a Copy to:

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

 

Approximate Date of Commencement of Proposed Sale to Public: As soon as practicable after the registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check, the following box: 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer o		Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o

This Post-Effective Amendment No. 9 consists of the following:

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AMERICAN REALTY CAPITAL TRUST, INC.
SUPPLEMENT NO. 9 DATED July 22, 2010
TO THE PROSPECTUS DATED November 10, 2009

This prospectus supplement (this “Supplement No. 9”) is part of the prospectus of American Realty Capital Trust, Inc. (“we,” “us,” “our,” the “REIT” or the “Company”), dated November 10, 2009 (the “Prospectus”), and should be read in conjunction with the Prospectus. This Supplement No. 9 supplements, modifies or supersedes certain information contained in our Prospectus. This Supplement No. 9 consolidates, supersedes and replaces all prior Supplements and must be read in conjunction with our Prospectus. Unless otherwise indicated, the information contained herein is current as of the filing date of the prospectus supplement in which the Company initially disclosed such information. This Supplement No. 9 will be delivered with the Prospectus.

The purpose of this Supplement No. 9 is to consolidate the information contained in all previous supplements to the Prospectus and to update the real estate and financial information of the REIT.

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		Supplement No. 9 Page No.				Prospectus Page No.
Summary Risk Factors			2				N/A
Status of the Offering			2				N/A
Shares Currently Outstanding			2				N/A
Annual Meeting of Stockholders			2				N/A
Annual Meeting of Board of Directors			2				N/A
Grant of Stock Options to Independent Directors			2				N/A
Grant of Restricted Shares to Independent Directors			3				N/A
Selected Financial Data			3				N/A
Description of Investments			5				3
Compensation to Advisor and its Affiliates			5				6
Status of Fees Paid and Deferred			5				9
Status of Distributions			6				10, 148
Share Repurchase Program			8				11, 153
Risk Factors			9				13
Restricted Share Plan			9				44
Compliance with Jobs Creation Act			10				45
The Advisory Agreement			10				47
Dealer Manager			11				51
Affiliated Companies			11				49
Management Compensation			11				55
Acquisition and Investment Policies			12				68
Acquisition of Properties from Affiliates			12				82
Section 1031 Exchange Program			13				84
Real Estate Investments Summary			13				87
Real Estate Investments			18				87
Potential Property Investments			31				104
Prior Performance Summary			32				117
Distribution Policy and Distributions			40				148
Incorporation of Certain Information by Reference			40				171
Prior Performance Tables			Appendix C-3-1				Appendix C-3-1

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Summary Risk Factors

Beginning in the tax year ended December 31, 2008, we have qualified as a REIT.

Status of the Offering

We commenced our initial public offering of 150,000,000 shares of common stock on January 25, 2008. As of July 15, 2010, we had issued 31,788,006 shares of common stock, including 339,077 shares issued in connection with an acquisition in March 2008. Total gross proceeds from these issuances were $314,600,000. As of July 15, 2010, the aggregate value of all share issuances and subscriptions outstanding was $317,600,000 million based on a per share value of $10.00 (or $9.50 per share for shares issued under the DRIP). We will offer these shares until January 25, 2011, provided that the offering will be terminated if all of the shares are sold before then.

Shares Currently Outstanding

As of July 15, 2010, there were approximately 118,771,278 shares of our common stock outstanding, excluding shares available under the distribution reinvestment plan.

Annual Meeting of Stockholders

On Monday, May 17, 2010, we held our 2010 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, holders of our common stock voted to re-elect each of Nicholas S. Schorsch, William M. Kahane, Leslie D. Michelson, William G. Stanley and Robert H. Burns as members of our Board of Directors to serve for terms expiring at the 2011 annual meeting of stockholders and until their respective successors have been duly elected and qualified. No other matters were presented to our stockholders for consideration at the Annual Meeting.

Annual Meeting of the Board of Directors

On Monday, May 17, 2010, the Board of Directors held its 2010 Annual Meeting (the “Annual Board Meeting”). At the Annual Board Meeting, the members of the Board of Directors unanimously approved the appointment of the following individuals to the offices set forth opposite their respective names, to hold office, subject to our Bylaws, until the 2011 annual meeting of the Board of Directors or until their successors have been elected:

Name		Title
Nicholas S. Schorsch		Chief Executive Officer
William M. Kahane		President, Chief Operating Officer and Treasurer
Peter M. Budko		Executive Vice President and Chief Investment Officer
Brian S. Block		Executive Vice President and Chief Financial Officer
Michael Weil		Executive Vice President and Secretary

After due and careful consideration, taking into account the following factors, among others: (i) the compensation paid by us to Realty Capital Securities, LLC, our dealer manager, American Realty Capital Properties, LLC, our property manager, and American Realty Capital Advisors, LLC, our advisor; (ii) the size, composition and profitability of our real estate portfolio; (iii) the individual performance of each of our dealer manager, property manager and advisor; and (iv) the rates charged to similarly structured REITs by dealer managers, property managers and advisors performing similar services, each of Leslie D. Michelson, William G. Stanley and Robert H. Burns, our independent directors, approved the renewed retention of each of Realty Capital Securities, LLC, American Realty Capital Properties, LLC and American Realty Capital Advisors, LLC, pursuant to our existing dealer manager agreement, management agreement and advisory agreement, respectively.

Grant of Stock Options to Independent Directors

Our stock option plan provides for the automatic grant of a nonqualified stock option to each of our independent directors, without any further action by our Board of Directors or the stockholders, to purchase 3,000 shares of our common stock on the date of each annual stockholder’s meeting. Accordingly, on May 17,

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2010, the date of the Annual Meeting, each of Leslie D. Michelson, William G. Stanley and Robert H. Burns were granted an option to purchase 3,000 shares of common stock. The exercise price is $10 per share and vest 100% two years after the anniversary.

Grant of Restricted Shares to Independent Directors

Our restricted share plan provides for the automatic grant of 3,000 restricted shares of common stock to each of our independent directors, without any further action by our Board of Directors or the stockholders, on the date of each annual stockholder’s meeting. Accordingly, on May 17, 2010, the date of the Annual Meeting, each of Leslie D. Michelson, William G. Stanley and Robert H. Burns were granted 3,000 restricted shares of common stock. The restricted shares vest over a five year period following the first anniversary of the grant date in increments of 20% per annum.

Selected Financial Data

The selected financial data presented below has been derived from our consolidated financial statements as of the periods indicated:

Balance sheet data (amounts in thousands)

		March 31, 2010				December 31,
						2009				2008				2007
Total real estate investments, at cost		$	419,994			$	338,556			$	164,770			$	—
Total assets			417,239				339,277				164,942				938
Mortgage notes payable			225,118				183,811				112,742				—
Total short-term equity			—				15,878				30,926				—
Other notes payable			13,000				13,000				1,090				—
Intangible lease obligation, net			9,006				9,085				9,400				—
Total liabilities			254,736				228,721				163,183				738
Total stockholders’ equity			162,503				110,556				1,759				200

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Operating data (amounts in thousands except per share data)

		Three Months Ended March 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008				For the Period from August 17, 2007 (date of inception) to December 31, 2007
Total revenue		$	7,428			$	14,964			$	5,546			$	—
Expenses:
Property management fees to affiliate			—				—				4				—
Asset management fees to affiliate			—				145				—				—
Acquisition and transaction related costs			341				506				—				—
General and administrative			224				507				380				1
Depreciation and amortization			3,785				8,315				3,056				—
Total operating expenses			4,350				9,473				3,440				1
Operating income (loss)			3,078				5,491				2,106				(1	)
Other income (expenses):
Interest expense			(3,673	)			(10,353	)			(4,774	)			—
Interest income			11				52				3				—
Gains on sales to noncontrolling interest holders, net			335				—				—				—
Gains (losses) on derivative instruments			(152	)			495				(1,618	)			—
Total other expenses			3,479				(9,805	)			(6,389	)			—
Net loss		$	(401	)		$	(4,315	)		$	(4,283	)		$	(1	)
Other data:
Modified funds from operations(1)(2)		$	3,314			$	3,460			$	477			$	—
Cash flows provided by (used in) operations			2,060				(2,526	)			4,013				(200	)
Cash flows used in investing activities			(81,438	)			(173,786	)			(97,456	)			—
Cash flows provided by financing activities			77,146				180,435				94,330				200
Per share data
Net loss per common share – basic and diluted		$	(0.02	)		$	(0.74	)		$	(6.02	)		$	—
Distributions declared		$	.70			$	.67			$	.65			$	—
Weighted-average number of common shares outstanding, basic and diluted		$	17,845,489				5,768,761				711,524				—

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Description of Investments

The following disclosure is to be added to the section of our Prospectus captioned “Description of Investments” on pages 3 – 4 of the Prospectus.

We employ a focused investment strategy: acquire single-tenant, freestanding properties, net-leased on a long term basis to investment grade and other credit-worthy tenants. From a geographical standpoint, our target properties: (i) enjoy a strong location on “Main Street, USA,” e.g. pharmacies, banks, restaurants, gas/convenience stores; or (ii) are situated along high traffic transit corridors at locations carefully selected by the corporate tenant to support operationally essential corporate distribution/warehouse and logistical facilities.

We believe that American corporations, seeking to reduce the costs of distributing their goods and services, are re-evaluating supply chain management and distribution/warehouse capabilities. We believe that this has led to an increased need for well-located real estate from which corporations may cost efficiently aggregate from suppliers and deploy to their regional retail stores. We consider these two operationally essential categories as complementary to our overall portfolio.

Compensation to Advisor and its Affiliates

The following disclosure is added to the second paragraph of the second column of the table on page 6 of our Prospectus under the section captioned “Compensation to Advisor and its Affiliates.”

“We will not be entitled to the Subordinated Participation in Net Sale Proceeds unless our investors have received a 6% cumulative non-compounded return on their capital contributions.”

The following disclosure is added to the last paragraph of the second column of the table on page 6 of our Prospectus under the section captioned “Compensation to Advisor and its Affiliates.”

“We will not be entitled to the Subordinated Incentive Listing Fee unless our investors have received a 6% cumulative non-compounded return on their capital contributions.”

Status of Fees Paid and Deferred

The following information supersedes and replaces the information under the section of our Prospectus captioned “Status of Fees Paid and Deferred” on page 9 of the Prospectus.

From January 1, 2008 through December 31, 2008, the Company reimbursed the Advisor $0 for organizational and offering expenses and incurred the following fees:

From January 1, 2009 through December 31, 2009, the Company reimbursed the Advisor $5,617,286 for organizational and offering expenses and incurred the following fees:

From January 1, 2010 through June 30, 2010, the Company reimbursed the Advisor $8.4 million for organizational and offering expenses and incurred the following fees:

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Amounts paid to the advisor include approximately of $9.6 million offering costs incurred by the affiliated Advisor and Dealer Manager that exceeds 1.5% of gross offering proceeds earned cumulatively through June 30, 2010. Any organizational or offering expenses that exceed 1.5% of gross offering proceeds over the term of the offering will be the Advisor’s obligation.

The Company pays the Advisor an annualized asset management fee of up to 1.0% based on the aggregate contract purchase price of all properties. Through June 30, 2010, the Company paid $0.5 million to the Advisor and will determine if such fees will be partially waived in subsequent periods on a quarter-to-quarter basis. Such waived fees cumulatively through June 30, 2010 total approximately $4.3 million.

Status of Distributions

The following information supplements the section of our Prospectus captioned “Distribution Policy and Distributions” on pages 10 and 148 of the Prospectus.

On February 25, 2008, our Board of Directors declared a distribution for each monthly period commencing 30 days subsequent to acquiring our initial portfolio of real estate investments. Our daily dividend commenced accruing on April 5, 2008.

On November 5, 2008, the Board of Directors approved an increase in its annual cash distribution from $.65 to $.67, paid monthly. Based on a $10.00 share price, this 20 basis point increase, effective January 2, 2009, results in an annualized distribution rate of 6.7%.

On October 5, 2009, the Board of Directors approved a special distribution of $0.05 per share payable to shareholders of record on December 31, 2009, in addition to the current 6.7% annualized distribution rate paid monthly. This special distribution was paid on January 19, 2010.

On January 27, 2010, the Board of Directors approved an increase in its annual cash distribution from $.67 to $.70, paid monthly. Based on a $10.00 share price, this 30 basis point increase, effective April 1, 2010, results in an annualized distribution rate of 7.0%.

To date, the Company’s distributions have been paid with a combination of cash flows from operations and the proceeds from the sales of common stock. There can be no assurance that cash flows from operations will be sufficient to pay distributions in future periods.

The following table summarizes the Company’s historical and prospective distribution rate, reflecting the special distribution and increase to the annual rate effective April 1, 2010 noted above:

Period		Annualized Distribution Rate				Number of Months
May 2008(1) to December 2008			6.5	%			8
January 2009 to March 2010			6.7	%			15
Special Distribution – January 2010(2)			0.5	%			—
			7.2%(2)
April 2010 to – June 30, 2010			7.0	%			3

The Company determined distributions paid to shareholders in 2009 will be reported as nondividend distributions on Form 1099 for the applicable period. Accordingly, such distributions are generally not subject to ordinary income tax in the related period. This tax characterization is consistent with distributions paid to shareholders in 2008.

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The portion of the distribution that is not subject to tax in a respective tax year is considered a return of capital for tax purposes and will reduce the tax basis of a shareholder’s investment. This defers a portion of applicable taxes until the investment is sold or the Company is liquidated, at which time the shareholder will be taxed at capital gains rates. However, because each investor’s tax considerations are different, the Company recommends that investors consult with their tax advisor.

The following is a chart of monthly distributions declared and paid since the commencement of the offering:

		Total				Cash				Distribution Reinvestment Plan
2008:
April		$	—			$	—			$	—
May			30,262				22,008				8,254
June			49,638				35,283				14,355
July			55,042				34,788				20,254
August			57,584				36,519				21,065
September			61,395				39,361				22,034
October			61,425				41,078				20,347
November			65,496				43,646				21,850
December			64,442				42,876				21,566
2009:
January		$	69,263			$	46,227			$	23,036
February			76,027				50,214				25,813
March			74,915				49,020				25,895
April			101,282				64,375				36,907
May			128,867				78,604				50,263
June			180,039				106,741				73,298
July			217,325				127,399				89,926
August			290,230				177,620				112,610
September			375,926				220,165				155,761
October			455,051				264,729				190,322
November			563,472				328,555				234,917
December			643,125				374,715				268,410
January 2010(1)			1,498,413				855,282				643,131
February 2010			865,993				484,967				381,026
March 2010			862,117				478,895				383,222
April 2010			1,085,719				600,607				485,112
May 2010			1,262,558				695,838				566,720
June 2010			1,496,075				851,779				674,296

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

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Share Repurchase Program

The following disclosure will be added to the sections of our Prospectus captioned “Share Repurchase Program” on pages 11 – 12 and 153 – 154 of the Prospectus.

For the year ended December 31, 2009, we received requests to redeem 3,000 common shares pursuant to our share repurchase program. We redeemed 100% of the redemption requests at an average price per share of $9.625 per share. We funded share redemptions for the periods noted above from the cumulative proceeds of the sale of our common shares pursuant to our distribution reinvestment plan and from operating funds of the Company.

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Risk Factors

The following disclosure replaces the second risk factor on page 13 of our Prospectus under the section captioned “Risk Factors — Risks Related to an Investment in American Realty Capital Trust, Inc.”

If our advisor loses or is unable to obtain key personnel, our ability to implement our investment strategies could be delayed or hindered, which could adversely affect our ability to make distributions and the value of your investment.

Our success depends to a significant degree upon the contributions of certain of our executive officers and other key personnel of our advisor, including Nicholas S. Schorsch and William M. Kahane, each of whom would be difficult to replace. Our advisor does not have an employment agreement with any of these key personnel and we cannot guarantee that all, or any particular one, will remain affiliated with us and/or our advisor. If any of our key personnel were to cease their affiliation with our advisor, our operating results could suffer. We maintain separate key man life insurance policies on each Nicholas S. Schorsch, William M. Kahane, Brian S. Block, Peter M. Budko and Michael Weil. We believe that our future success depends, in large part, upon our advisor’s ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure you that our advisor will be successful in attracting and retaining such skilled personnel. If our advisor loses or is unable to obtain the services of key personnel, our ability to implement our investment strategies could be delayed or hindered, and the value of your investment may decline.

Restricted Share Plan

The following disclosure is to be added on page 44 of the Prospectus.

Restricted Share Plan

On January 22, 2010, our Board of Directors adopted our employee and director incentive restricted share plan. The Board of Directors adopted the plan to:

Our restricted share plan provides for the automatic grant of 3,000 restricted shares of common stock to each of our independent directors, without any further action by our board of directors or the stockholders, on the date of each annual stockholders’ 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.

Our employee and director incentive restricted share plan provides us with the ability to grant awards of restricted shares to our directors, officers and employees (if we ever have employees), employees of our advisor and its affiliates, employees of entities that provide services to us, directors of the advisor or of entities that provide services to us, certain of our consultants and certain consultants to the advisor and its affiliates or to entities that provide services to us. The total number of common shares reserved for issuance under the employee and director incentive restricted share plan is equal to 1.0% of our authorized shares.

Restricted share awards entitle the recipient to common shares from us 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 us. 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 dividends prior to the time that the restrictions on the restricted shares have lapsed. Any dividends payable in common shares shall be subject to the same restrictions as the underlying restricted shares. As of June 30, 2010, we had issued an aggregate of 9,000 restricted shares to our independent directors.

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Compliance with the American Jobs Creation Act

This section supersedes and replaces the discussion contained in the Prospectus under the section of our Prospectus captioned “Compliance with the American Jobs Creation Act” on page 45.

As part of our strategy for compensating our independent directors, we have issued, and we intend to issue, options to purchase our common stock under our independent directors’ stock option plan, and we intend to issue, restricted share awards under our employee and director incentive restricted share plan, each of which described above. This method of compensating individuals may possibly be considered to be a “nonqualified deferred compensation plan” under Section 409A of the Internal Revenue Code.

Under Section 409A, “nonqualified deferred compensation plans” must meet certain requirements regarding the timing of distributions or payments and the timing of agreements or elections to defer payments, and must also prohibit any possibility of acceleration of distributions or payments, as well as certain other requirements. Stock options with an exercise price that is less than the fair market value of the underlying stock as of the date of grant would be considered a “nonqualified deferred compensation plan.” It is intended that the restricted share awards will not be considered “nonqualified deferred compensation.”

If Section 409A applies to any of the awards issued under the plan, or if Section 409A applies to any other arrangement or agreement that we may make, and if such award, arrangement or agreement does not meet the timing and other requirements of Section 409A, then (a) all amounts deferred for all taxable years under the award, arrangement or agreement would be currently includible in the gross income of the recipient of such award or of such deferred amount to the extent not subject to a substantial risk of forfeiture and not previously included in the gross income of the recipient, (b) interest at the underpayment rate plus 1% would be imposed on the underpayments that would have occurred had the compensation been includible in income when first deferred (or, if later, when not subject to a substantial risk of forfeiture) would be imposed upon the recipient and (c) a 20% additional tax would be imposed on the recipient with respect to the amounts required to be included in the recipient’s income. Furthermore, if the affected individual is our employee, we would be required to withhold federal income taxes on the amount deferred but includible in income due to Section 409A, although there may be no funds currently being paid to the individual from which we could withhold such taxes. We would also be required to report on an appropriate form (W-2 or 1099) amounts which are deferred, whether or not they meet the requirements of Section 409A, and if we fail to do so, penalties could apply.

We do not intend to issue any award, or enter into any agreement or arrangement that would be considered a “nonqualified deferred compensation plan” under Section 409A, unless such award, agreement or arrangement complies with the timing and other requirements of Section 409A. It is our current belief, based upon the statute, the regulations issued under Section 409A and legislative history, the options we have granted and that we currently intend to implement and the restricted share awards that we currently intend to grant will not be subject to taxation under Section 409A because neither the options nor the restricted share awards will be considered a “nonqualified deferred compensation plan.” Nonetheless, there can be no assurances that any options award, agreement or arrangement which we have entered into will not be affected by Section 409A, or that any such award, agreement or arrangement will not be subject to income taxation under Section 409A.

The Advisory Agreement

The following disclosure is is added as: (i) the third full paragraph on page 47 of our Prospectus under the section captioned “The Advisory Agreement”; (ii) the second full paragraph on page 49 of our Prospectus under the section captioned “Affiliated Companies — American Realty Capital II, LLC”; (iii) the second full paragraph under the section “Certain Relationships and Related Transactions — Advisory Agreement” on page 53 of our Prospectus; and supplements footnotes 13 and 14 under the section captioned “Management Compensation” on page 55 of our Prospectus.

On June 2, 2010, we and American Realty Capital Operating Partnership, L.P. entered into an amended and restated advisory agreement with American Realty Capital Advisors, LLC which amended the advisory agreement to provide that in the event our Board of Directors decides to internalize any management services provided by American Realty Capital Advisors, LLC, neither we nor American Realty Capital Operating

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Partnership, L.P. will pay any compensation to American Realty Capital Advisors, LLC or its affiliates in connection with the internalization transaction.

Dealer Manager

The information is to supplement the section of our Prospectus captioned “Dealer Manager” on pages 51 – 52 of the Prospectus.

Effective January 28, 2010, Bradford Watt resigned as Co-President of Realty Capital Securities, LLC.

Louisa Quatro is the President and Secretary of Realty Capital Securities, LLC.

Effective March 8, 2010, Nicholas Corvinus resigned as Chief Executive Officer of Realty Capital Securities, LLC and Michael Weil was simultaneously appointed Chief Executive Officer of Realty Capital Securities, LLC to fill the vacancy caused by Mr. Corvinus’ resignation. Effective June 7, 2010, Michael Weil resigned as Chief Executive Officer of Realty Capital Securities, LLC.

Affiliated Companies

The following information is added as the first full paragraph on page 49 of the Prospectus under the section entitled “Affiliated Companies” and also supplements footnotes (13) and (14) under the section of the Prospectus entitled “Management Compensation” on page 55 of the Prospectus.

As agreed with the Ohio Division of Securities in connection with the qualification of the offering in that state, the Advisor and the Company have agreed that any subordinated listing fee or termination payments due to the Advisor will only be paid when assets acquired during the period that the Advisor was entitled to such payments are sold or refinanced. The payment of such subordinated listing fee or termination fee will be paid by the issuance of a non-interest bearing, non-transferable promissory note in the amount of such fee. The note will be payable as the subject assets are sold or refinanced. In the event that the note is not paid in full in three years after issuance and the Company is listed, the note is convertible at the option of the Advisor into shares of the Company’s common stock.

The following disclosure replaces the second paragraph under the subsection “Dealer Manager” on page 51 of the Prospectus.

Realty Capital Securities, LLC provides certain wholesaling, sales, promotional and marketing assistance services to us in connection with the distribution of the shares offered pursuant to this prospectus. It may also sell a limited number of shares at the retail level. The compensation we will pay to Realty Capital Securities, LLC in connection with this offering is described in the section of this prospectus captioned “Management Compensation.” See also “Plan of Distribution — Compensation We Will Pay for the Sale of Our Shares.” In addition, Realty Capital Securities, LLC also serves as the exclusive dealer manager for certain other non-traded REITs that are not affiliated with us.

Management Compensation

The following disclosure is added to the third paragraph of the second column of the table on page 55 of our Prospectus under the section captioned “Management Compensation.”

American Realty Capital II, LLC will not be entitled to the Subordinated Participation in Net Sale Proceeds unless our investors have received a 6% cumulative non-compounded return on their capital contributions.

The following disclosure is added to the fourth paragraph of the second column of the table on page 55 of our Prospectus under the section captioned “Management Compensation.”

American Realty Capital II, LLC will not be entitled to the Subordinated Incentive Listing Fee unless our investors have received a 6% cumulative non-compounded return on their capital contributions

The following disclosure supplements footnotes (13) and (14) under the section of the Prospectus entitled “Management Compensation” on page 55 of the Prospectus.

As agreed with the Ohio Division of Securities in connection with the qualification of the offering in that state, the Advisor and the Company have agreed that any subordinated listing fee or termination payments due

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to the Advisor will only be paid when assets acquired during the period that the Advisor was entitled to such payments are sold or refinanced. The payment of such subordinated listing fee or termination fee will be paid by the issuance of a non-interest bearing, non-transferable promissory note in the amount of such fee. The note will be payable as the subject assets are sold or refinanced. In the event that the note is not paid in full in three years after issuance and the Company is listed, the note is convertible at the option of the Advisor into shares of the Company’s common stock.

Acquisition and Investment Policies

The following disclosure supersedes and replaces the discussion contained in the Prospectus under the section captioned “Acquisition and Investment Policies — Credit Worthy Tenants — Investment Grade” on page 71.

“Investment Grade.” A tenant will be considered “investment grade” when the tenant has a debt rating by Moody’s of Baa3 or better or a credit rating by Standard & Poor’s or Fitch of BBB- or better, or its payments are guaranteed by a company with such rating. In cases where a tenant does not have a Standard & Poor’s, Moody’s or Fitch rating, we will consider a tenant to be “investment grade” if it has received a rating of 1 or 2 by the National Association of Insurance Commissioners (“NAIC”) on a debt private placement or is a wholly owned subsidiary of a parent company, constituting a majority of the parent company’s assets, and the parent company has a debt rating by Moody’s of Baa3 or better or a credit rating by Standard & Poor’s or Fitch of BBB- or better. NAIC 1 is assigned to obligations exhibiting the highest quality. Credit risk is at its lowest and the issuer’s credit profile is stable. NAIC 2 is assigned to obligations of high quality. Credit risk is low but may increase in the intermediate future and the issuer’s credit profile is reasonably stable. Changes in tenant credit ratings, coupled with future acquisition and disposition activity, may increase or decrease our concentration of investment grade tenants in the future.

Moody’s, Standard & Poor’s and Fitch’s ratings are opinions of future relative creditworthiness or expected loss based on an evaluation of franchise value, financial statement analysis and management quality. The rating given to a debt obligation describes the level of risk associated with receiving full and timely payment of principal and interest on that specific debt obligation and how that risk compares with that of all other debt obligations. It is expected that lower rated entities and obligations will default, on average, at a higher frequency than more highly rated entities and obligations.

A Moody’s debt rating of Baa3, which is the lowest investment grade rating given by Moody’s, is assigned to companies with adequate financial security. However, certain protective elements may be lacking or may be unreliable over any given period of time. Standard & Poor’s assigns a credit rating to both companies as a whole and to each issuance or class of a company’s debt. A Standard & Poor’s or Fitch credit rating of BBB-, which is the lowest investment grade rating given by Standard & Poor’s and Fitch, is assigned to companies that exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the company to meet its financial commitments. Thus, investment grade tenants will be judged by Standard & Poor’s and Fitch to have at least adequate protection parameters, and will in some cases have extremely strong financial positions.

The following disclosure supersedes and replaces the discussion contained in the Prospectus under the third paragraph of the section captioned “Acquisition and Investment Policies — Investment Decisions” on page 73.

Our Advisor will consider whether properties are leased by, or have leases guaranteed by, companies that maintain an investment grade rating by Standard & Poor’s, Moody’s Investor Services or Fitch, Inc.. Our advisor also will consider non-rated and non-investment grade rated tenants that we consider creditworthy, as described in “ — Investment Grade and Other Creditworthy Tenants” above.

Acquisition of Properties from Affiliates

The following disclosure is to be added to the section of our Prospectus entitled “Acquisition of Properties from Affiliates” on pages 82 – 84 of the Prospectus.

Effective March 31, 2009, the Board of Directors approved the recommendation of the officers of the Company that the Company not pursue any opportunities to acquire real property from an entity affiliated with its advisor, American Realty Capital Advisor, LLC. It was determined the foregoing recommendation would

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bereviewed annually by the Board of Directors. On March 9, 2010, the Board of Directors of the Company approved the recommendation of the officers of the Company that the Company continue not to pursue any opportunities to acquire real property from an entity affiliated with its advisor. The Board of Directors determined that this practice will remain in effect during the remaining term of the offering.

Section 1031 Exchange Program

The following information is to supplement the section of our Prospectus captioned “Section 1031 Exchange Program” on pages 84 – 85 of the Prospectus.

The Operating Partnership has transferred forty-nine percent (49%) of its ownership interest in the Federal Express Distribution Facility, located in Snowshoe, Pennsylvania, and a PNC Bank branch, located in Palm Coast, Florida (when we acquired this property, it was a National City Bank property; see “Real Property Investments — National City Bank Properties”), to American Realty Capital DST I (the “Trust”), a Section 1031 Exchange Program. Realty Capital Securities, LLC has offered membership interests of up to forty-nine percent (49%), or $2,567,000, in the Trust to investors in a private offering. The remaining interests of no less than 51% will be retained by the Operating Partnership. To date, cash payments of $2,567,000 have been accepted by the Operating Partnership.

The Operating Partnership has transferred forty-nine percent (49%) of its ownership interest in a PNC Bank branch location, located in Pompano Beach, Florida (when we acquired this property, it was a National City Bank property; see “Real Property Investments — National City Bank Properties”), to American Realty Capital DST II (the “Trust II”), a Section 1031 Exchange Program. Realty Capital Securities has offered membership interests of thirty-five and 2/10^th percent (35.2%), or $493,802, in the Trust II to investors in a private offering. The remaining interests of no less than 64.8% will be retained by the Operating Partnership. To date, cash payments of $493,802 have been accepted by the Operating Partnership.

The Operating Partnership has transferred forty-nine percent (49%) of its ownership interest in three CVS properties, located in Smyrna, GA, Chicago, IL and Visalia, CA to American Realty Capital DST III (the “Trust III”), a Section 1031 Exchange Program. Realty Capital Securities has offered membership interests of up to forty-nine percent (49%), or $3,050,000, in the Trust III to investors in a private offering. The remaining interests of no less than fifty-one percent (51%) will be retained by the Operating Partnership. To date, cash payments of $3,050,000 have been accepted by the Operating Partnership.

The Company purchased a Walgreens property in Sealy, TX under a tenant in common arrangement (“TIC”) with a third party investor. Under the TIC arrangement, the third party assumed a forty-four percent (44%) interest in the property at the time of acquisition for an investment of $1,200,000. The remaining interest of fifty-six percent (56%) was retained by the Company. To date cash payments of $1,200,000 have been accepted by the Operating Partnership.

The Operating Partnership has transferred its ownership interest in the Reckitt Benckiser Distribution Facility, located in Tooele, UT, to ARC Cambr RB, LLC a Section 1031 Exchange Program. The Operating Partnership sold a 14.6% interest in the property for $2,500,000. The remaining interests of no less than 85.4% will be retained by the Operating Partnership. To date, cash payments of $2,500,000 have been accepted by the Operating Partnership.

The Operating Partnership shall transfer up to forty-nine percent (49%) of its ownership interest in six Bridgestone Firestone properties, located in Texas and New Mexico to American Realty Capital DST IV (the “Trust IV”), a Section 1031 Exchange Program. Realty Capital Securities has offered membership interests of up to forty-nine percent (49%), or $7,294,000, in the Trust IV to investors in a private offering. The remaining interests of no less than fifty-one percent (51%) will be retained by the Operating Partnership. To date, cash payments of $2,495,000 have been accepted by the Operating Partnership.

Real Estate Investments Summary

The following summary of real estate investments is to supplement the section of our Prospectus captioned “Real Property Investments” on pages 87 – 104 of the Prospectus.

The REIT acquired the following real estate investments:

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The amount of the Year 1 yield based upon the contract purchase price of the acquired properties as compared to the Year 1 total rent is approximately 8.38%, which excludes contractual rent increases occurring in future years. The amounts in the following table are as of June 30, 2010 except for Tractor supply and Dollar general which are as of the acquisition date. (dollars in thousands):

		Purchase Price(1)				Current Mortgage Debt				Effective Interest Rate				Portfolio- Level Leverage				Rent								Base Rent Increase (Year 2)(3)
																		Year 1				Year 2
Federal Express Distribution Center (PA)		$	10,208			$	6,965				6.29	%			68.2	%		$	703			$	703				3.78% and 3.65% in years 6 and 11,  respectively
Harleysville National Bank Portfolio			41,676				31,000				6.59	%			74.4	%			3,004				3,064				—
Rockland Trust Company Portfolio			33,117				23,414				4.92	%			70.7	%			2,306				2,340				1.5% annually
PNC Bank (formerly National City Bank)			6,853				4,375				4.58	%			63.8	%			466				466				10% after 5 years
Rite Aid Portfolio			18,839				12,808				6.97	%			68.0	%			1,404				1,404				—
PNC Bank Portfolio			44,813				32,704				5.25	%			73.0	%			2,960				2,960				10% after 5 years
FedEx Freight Facility (TX)			31,692				16,184				6.033	%			51.1	%			2,580				2,580				1% increase in years 5 and 9
Walgreens Location			3,818				1,550				6.64	%			40.6	%			310				310				—
CVS Pharmacy Portfolio I			40,649				23,587				6.88	%			58.0	%			3,387				3,387				5% increase  every 5 years
CVS Pharmacy Portfolio II			59,788				32,900				6.64	%			55.0	%			4,984				4,984				5% increase  every 5 years
Home Depot Distribution Facility			23,532				12,150				6.25	%			51.6	%			1,806				1,839				2% annually
Bridgestone Firestone Portfolio			15,041				3,832				6.61	%			25.48	%			1,270				1,270				6.25% every 5 years
Advanced Auto Location			1,730				—				—				—				160				160				—

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		Purchase Price(1)				Current Mortgage Debt				Effective Interest Rate				Portfolio- Level Leverage				Rent								Base Rent Increase (Year 2)(3)
																		Year 1				Year 2
Fresenius Portfolio			12,462				6,068				6.72	%			48.7	%			1,023				1,023				Approximately 10% in years  2 and 7
Reckit Benckieser			31,735				14,962				6.23	%			47.2	%			2,279				2,434				2.0% annually
Jack in the Box Portfolio			7,720				4,384				6.45	%			56.8	%			639				639				—
Jack in the Box – Houston			2,290				971				6.26	%			42.4	%
BSFS II Portfolio			26,414				—				—				—				2,150				2,150				6.25% every  5 years
FedEx Sacramento			34,171				15,000				5.57	%			43.9	%			2,761				2,880				Increases every 30 months based on CPI, min 5%/max 10%
Jared Jewelry			5,457				—				—				—				580				580				10% increase  every 5 years
Walgreens II – Byram			5,684				3,000				5.58	%			52.78	%			453				453				—
IHOP			2,445				—				—				—				192				192				5% increase every 5 years
Advance Auto II			3,674				—				—				—				308				308				—
Super Stop & Shop			23,795				—				—				—				1,784				1,784				Increases  approx 7.5%  every 5 yrs
IHOP II			2,300				—				—				—				180				180				10% increase every 5 years
IHOP III			3,319				—				—				—				239				261				10% increase every 5 years
Jared Jewelry II			1,635				—				—				—				174				182				10% increase every 5 years
Jack in the box II			11,396				—				—				—				892				892				Increase every five years based on CPI with max 10%
Walgreens III			5,062				—				—				—				385				385				—
Tractor Supply			2,846				—				—				—				225				225				10% increase every 5 years
Dollar General			1,228				—				—				—				118				118				—
Total Portfolio		$	515,389				245,854				6.11	%			48.1	%			39,722				40,153
Investment Grade Tenants (based on Rent – S&P BBB- or better)											86	%
Average Remaining Lease Term (years)(4)											15.3

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The following is a summary of lease expirations for the next ten years as of June 30, 2010 (dollars in thousands):

Year		Expiring Revenues				Expiring Leases(1)				Square Feet				% of Gross Rev
2009		$	—				—				—				—
2010			—				—				—				—
2011			—				—				—				—
2012			—				—				—				—
2013			—				—				—				—
2014			—				—				—				—
2015			—				—				—				—
2016			242				2				21,476				0.6	%
2017			179				1				12,613				0.4	%
2018			4,896				59				384,201				11.5	%
2019			—				—				—				—
		$	5,317				62	(1)			418,290				12.5	%

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Real Estate Investments

The following disclosure is to be added to supplement the section of our Prospectus captioned “Real Property Investments” on pages 87 – 104 of the Prospectus.

CVS Pharmacy Portfolio II

On November 3, 2009, the REIT’s Board of Directors approved the acquisition of the CVS Properties II. On November 19, 2009, the Company acquired a portfolio of fifteen newly-constructed retail stores (the “CVS Properties II”) directly from CVS Pharmacy, Inc. The CVS Properties II contain an aggregate of approximately 199,000 square feet, located in 11 states — Alabama, Arizona, California, Florida, Georgia, Indiana, Maine, Minnesota, Missouri, North Carolina and Nevada. The aggregate purchase price is approximately $60.0 million, inclusive of all closing costs and fees.

The purchase price was financed by a combination of proceeds from the sale of the Company’s common shares and proceeds received from a five-year non-recourse, fixed-rate first mortgage loan totaling approximately $33.1 million. The fixed interest rate is 6.55% for the term of the loan.

Address

City

State

Total Purchase Price

Compensation to Advisor and Affiliate(1)

5211 Neal Trail Dr.

Walkertown

NC

$

3,705,204

612 N. Main St.

Creedmoor

NC

3,380,699

1888 Ogletree Rd.

Auburn

AL

4,224,431

4145 NW 53rd Ave.

Gainesville

FL

5,968,893

50 Duval Station Rd.

Jacksonville

FL

4,429,342

505 County Road 1100 N

Chesterton

IN

5,925,600

601 Howard Simmons Rd.

East Ellijay

GA

3,825,510

300 S. Commercial

Harrisonville

MO

3,757,909

151 Village Walk Dr.

Holly Springs

NC

3,806,651

384 Elm St.

Biddeford

ME

3,615,565

7996 Brooklyn Blvd.

Brooklyn Park

MN

2,706,251

1905 Marth Berry Blvd.

Rome

GA

3,033,849

1081 Steamboat Pkwy.

Reno

NV

3,036,074

180 N Dobson Rd.

Chandler

AZ

3,883,302

9256 E. Slauson Ave.

Pico Rivera

CA

4,488,682

Total

$

59,787,962

$

910,823

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The CVS Properties II are net leased to CVS Pharmacy, Inc., pursuant to which CVS Pharmacy, Inc. will be required to pay all operating expenses and capital expenditures in addition to base rent, simultaneously with the acquisition of the properties. The weighted average primary lease term under this net lease arrangement is approximately 24.0 years as of July 15, 2010, having commenced simultaneous with closing, and provides for two fixed-rent options of five years each, plus eight fair market value options of five years each. The average annual base rent on a straight-line basis over the initial lease term is approximately $5.4 million. Annual rent is approximately $5.0 million for the first year of the initial lease term, and annual rent will increase by 5% every five years.

Address		City				State				Total Square Feet Leased				Rent Per Square Foot				Year 1 Rent				Initial Lease Term (Years)
5211 Neal Trail Dr.			Walkertown				NC				12,900			$	37.72			$	486,621				25
612 N. Main St.			Creedmoor				NC				12,900				27.91				360,000				25
1888 Ogletree Rd.			Auburn				AL				11,945				23.10				275,894				25
4145 NW 53rd Ave.			Gainesville				FL				13,225				36.78				486,371				25
50 Duval Station Rd.			Jacksonville				FL				13,225				23.19				306,725				25
505 County Road 1100 N			Chesterton				IN				13,225				23.53				311,160				25
601 Howard Simmons Rd.			East Ellijay				GA				13,225				22.89				302,760				25
300 S. Commercial			Harrisonville				MO				13,225				23.60				312,086				25
151 Village Walk Dr.			Holly Springs				NC				12,900				26.70				344,457				25
384 Elm St.			Biddeford				ME				13,013				17.93				233,306				25
7996 Brooklyn Blvd.			Brooklyn Park				MN				13,625				19.25				262,300				25
1905 Marth Berry Blvd.			Rome				GA				13,225				23.70				313,494				20
1081 Steamboat Pkwy.			Reno				NV				15,887				24.55				389,979				24
180 N Dobson Rd.			Chandler				AZ				13,013				25.87				336,617				24
9256 E. Slauson Ave.			Pico Rivera				CA				13,013				20.13				261,900				25
Total											198,546			$	25.10			$	4,983,670				24.7

The Company has secured first mortgage indebtedness from Ladder Capital Finance, LLC. The following table outlines the terms of the debt financing incurred in connection with acquisitions of the CVS Properties II. The non-recourse loan will be secured by a mortgage on all of the CVS Properties II.

Mortgage Debt Amount

Rate

Term

$33,068,100

6.55%(1)

five years

The net leases are guaranteed by CVS Caremark Corporation (“CVS”), a pharmacy services company, which provides prescriptions and related healthcare services in the United States. CVS operates through two segments, Pharmacy Services and Retail Pharmacy. The Pharmacy Service segment provides a range of prescription benefit management services, including mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management, and claims processing. This segment serves primarily employers, insurance companies, unions, government employee groups, managed care organizations and other sponsors of health benefit plans, and individuals. As of December 31, 2008, the Pharmacy Services segment operated 58 retail specialty pharmacy stores, 19 specialty mail order pharmacies, and 7 mail service pharmacies located in 26 states of the United States, Puerto Rico, and the District of Columbia. The Retail Pharmacy Segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, photo finishing, seasonal merchandise, greeting cards, and convenience foods through its pharmacy retail stores, and online. This segment also provides health care services. As of December 31, 2008, this segment operated 6,923 retail drugstores located in 41 states and the District of Columbia; and 560 retail health care clinics in 27 states.

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CVS was founded in 1892 and is headquartered in Woonsocket, Rhode Island. CVS stock is listed on the New York Stock Exchange (NYSE: “CVS”), and has a credit rating of BBB+ by Standard & Poor’s.

CVS currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding CVS are taken from such filings:

(Amounts in millions)		Three Months Ended Mar. 31, 2010				For the Fiscal Year Ended
						Dec. 31, 2009				Dec. 31, 2008				Dec. 29, 2007
Consolidated Statements of Operations
Net revenues		$	23,760			$	98,729			$	87,472			$	76,329
Gross profit			4,746				20,380				18,290				16,108
Net earnings			771				3,696				3,212				2,637

(Amounts in millions)						As of the Fiscal Year Ended
		Mar. 31, 2010				Dec. 31, 2009				Dec. 31, 2008				Dec. 29, 2007
Consolidated Balance Sheets
Total assets		$	61,284			$	61,641			$	60,960			$	54,722
Long-term debt			8,454				8,756				8,057				8,350
Shareholders’ equity			35,694				35,768				34,574				31,322

Home Depot Distribution Facility — Topeka, Kansas

On August 25, 2009, the REIT’s Board of Directors approved the acquisition of the Home Depot Facility. On December 11, 2009, the Company acquired a leasehold interest in a build-to-suit Home Depot Distribution Facility that will service Home Depot stores in the Kansas City region (the “Home Depot Facility”). The Home Depot Facility is a “Rapid Deployment Center” of approximately 465,600 square feet located in Topeka, KS. The aggregate purchase price is approximately $23.5 million, inclusive of all closing costs and fees. The primary lease term under this net lease arrangement is twenty years, with a remaining lease term of 19.5 years at July 15, 2010 having commenced simultaneous with closing, and provides for two extensions of successive five-year terms. The average annual base rent over the initial lease term is approximately $2.2 million.

The purchase price was financed by a combination of proceeds from the sale of common shares and proceeds received from a four-year non-recourse, fixed-rate first mortgage loan totaling approximately $13.7 million. The first three years of the loan are considered the initial term with a fixed interest rate of 6.25%, and the loan includes a one-year extension option at an interest rate of 6.50%.

Address

City

State

Total Purchase Price

Compensation to Advisor and Affiliate(1)

5200 SW Wenger Street

Topeka

KS

$

23,531,680

$

365,763

The Home Depot Facility is net leased to Home Depot U.S.A., Inc. (“Home Depot”) pursuant to which Home Depot will be required to pay all operating expenses and capital expenditures in addition to base rent, simultaneously with the acquisition of the properties, and have a primary lease term of 20 years. Annual rent is approximately $1.8 million for the first year of the initial lease term, which increases 2% annually.

Address

City

State

Total Square Feet Leased

Rent Per Square Foot

Year 1 Rent

Initial Lease Term (Years)

5200 SW Wenger Street

Topeka

KS

465,600

$

3.88

$

1,805,961

20

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The Company had secured first mortgage indebtedness from the seller of the Home Depot Facility,
HD Topeka, LLC of $13.6 million. This facility was subsequently refinanced with a new first mortgage loan. The following table outlines the terms of the debt financing incurred in connection with the current financing of the Home Depot Facility. The loan will be secured by a mortgage on the Home Depot Facility.

Mortgage Debt Amount

Rate

Maturity Date

$12,150,000

5.95%

July 2020

Home Depot (NYSE: HD), together with its subsidiaries, operates as a home improvement retail company. As of the fiscal year ended February 1, 2009, Home Depot had $41.2 billion in assets, $71.3 billion in annual revenue with $2.3 billion in annual net income. Home Depot operates 2,233 retail stores worldwide. Home Depot was founded in 1978 and is based in Atlanta, Georgia. The company’s Home Depot stores sell building materials, home improvement supplies, and lawn and garden products to do-it-yourself customers, do-it-for-me (“D-I-F-M”) customers, home improvement contractors, trades people, and building maintenance professionals. Its stores also offer various installation services for D-I-F-M customers. These installation programs include products such as carpeting, flooring, cabinets, countertops and water heaters. In addition, the company provides professional installation of various products that are sold through its in-home sales programs, such as generators and heating and central air systems. Home Depot is rated BBB+ by S&P.

Home Depot files its financial statements with the Securities and Exchange Commission. The following financial information is taken from such filings:

(Amounts in millions)		Three Months Ended May 2, 2010				For the Fiscal Year Ended
						Jan. 31, 2010				Feb. 1, 2009				Feb. 3, 2008
Consolidated Statements of Operations
Net sales		$	16,863			$	66,176			$	71,288			$	77,349
Gross profit			5,794				22,412				23,990				25,997
Net earnings			725				2,661				2,260				4,395

(Amounts in millions)						As of the Fiscal Year Ended
		May 2, 2010				Jan. 31, 2010				Feb. 1, 2009				Feb. 3, 2008
Consolidated Balance Sheets
Total assets		$	43,619			$	40,877			$	41,164			$	44,324
Long-term debt			7,676				8,662				9,667				11,383
Shareholders’ equity			19,371				19,393				17,777				17,714

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Bridgestone Portfolio

On November 3, 2009, the REIT’s Board of Directors approved the acquisition of the Bridgestone properties. The REIT acquired a portfolio of six recently-constructed Morgan Tire and Auto (“MTA”) stores in December 2009 and January 2010 (the “Bridgestone Properties”). MTA is a wholly owned subsidiary of the Bridgestone Corporation. MTA operates the stores as Hibdon Tires Plus. Bridgestone Retail Operations, LLC, as further described below, guarantees the leases. The portfolio consists of six build-to-suit, freestanding, fee-simple properties. The purchase price for the Bridgestone Properties is approximately $15.0 million including closing costs and fees paid to the advisor. The purchase price was paid with proceeds from the sale of common shares. The Bridgestone Properties are located in Oklahoma and Florida, with an aggregate of 57,336 of square feet. The current sole tenant of the properties is MTA and will remain the sole tenant on a double-net lease basis. Bridgestone Retail Operations, LLC, which is a wholly owned subsidiary of Bridgestone Americas, Inc., will guarantee the property leases.

Address

City

State

Purchase Price

Approximate Compensation to Advisor and Affiliates

560 Shedeck Parkway

Yukon

OK

$

2,517,019

1032 W. Danforth Road

Edmond

OK

2,533,728

7816 South Olympia Avenue

Tulsa

OK

2,628,549

Highway I-69 & 96th Street

Owasso

OK

2,432,567

13405 N. Pennsylvania Ave

Oklahoma City

OK

2,355,038

1781 Blanding Blvd.

Middleburg

FL

2,576,421

Total

$

15,043,322

$

147,625

The Bridgestone Properties are double-net leased to MTA, pursuant to which the landlord is responsible for maintaining the property’s roof and structure, and the tenant is required to pay all other expenses associated with the property in addition to base rent, simultaneously with the acquisition of the properties. The Bridgestone Properties’ original lease at commencement was 15 years with an average of 13.9 years currently remaining as of July 15, 2010. The double-net leases contain contractual rental escalations of 6.25% every five years, with the landlord responsible for roof and structure. Annual rent is approximately $1.3 million for the first year of the initial lease term, and annual rent will increase by 6.25% every five years. The lease provides for four renewal options at five years each.

Address		City				State				Total Square Feet Leased				Rent Per Square Foot				Year 1 Rent				Lease Term Remaining (Years)
560 Shedeck Parkway			Yukon				OK				10,118			$	21.00			$	212,460
1032 W. Danforth Road			Edmond				OK				10,118				21.14				213,882
7816 South Olympia Avenue			Tulsa				OK				10,118				21.92				221,736
Highway I-69 & 96th Street			Owasso				OK				9,723				21.12				205,311
13405 N. Pennsylvania Ave			Oklahoma City				OK				9,116				21.80				198,743
1781 Blanding Blvd.			Middleburg				FL				8,143				26.71				217,459
Total/Lease Term Remaining Average											57,336			$	21.99			$	1,269,591				13.9

We financed the acquisition post closing with a $3.8 million twenty-year first mortgage loan from Zions First National Bank Capital at an interest rate of 6.519%.

Bridgestone Retail Operations, LLC, the lease guarantor, is a wholly owned subsidiary of Bridgestone Americas, Inc. It consists of more than 2,200 company-owned vehicle service and tire locations across the United States, including Firestone Complete Auto Care, Tires Plus, ExpertTire and Wheel Works store locations. Bridgestone Corp. reports earnings on a consolidated basis and does not provide stand-alone financials on its subsidiaries. For the fiscal year ended December 31, 2008, Bridgestone Corp. posted net sales of $35.5 billion. Bridgestone Corporation is rated “BBB+” by S&P and “A3” by Moody’s.

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Advanced Auto Portfolio

The REIT acquired an Advance Auto store in December 2009. The 7,000 square foot facility in Plainfield, MI. was purchased for approximately $1.7 million and was paid for from the proceeds from the sale of common shares. The remaining lease term on the facility is 11.4 years as of July 15, 2010, with an annual rent of approximately $160,000.

On June 4, 2010, we acquired three build-to-suit free standing, fee simple retail auto parts stores for Advance Auto Parts, Inc. for $3,683,000 inclusive of all closing costs and fees. The properties contain 19,253 square feet of gross leasable area. The properties are located in Harvest, Alabama, Vicksburg, Mississippi and Crystal Springs, Mississippi. The tenant is Advance Co., Inc., which is rated BBB- by Standard & Poor’s.

The primary lease term is 15 years, with an average of 13.0 years currently remaining as of July 15, 2010. The leases do not contain rent escalations during the primary term and are double net whereby the landlord is responsible for roof and structure. The leases provide for three renewal options of 5 years each with 5% rental increase at each option. The average annual base rent for the initial term is approximately $308,000. The lease also provides for the payment of a percentage of sales over certain sales thresholds.

Advance Auto Parts, Inc. (NYSE: AAP) is a specialty retailer of automotive aftermarket parts, accessories, batteries and maintenance items primarily operating within the United States. The company’s stores carry a product line for cars, vans, sport utility vehicles and light trucks. Advance Auto Parts, Inc. operates in two business segments: Advance Auto Parts (“Advance Auto Parts”) and Autopart International (“Autopart International”). As of January 2, 2010, Advance Auto Parts operated 3,264 stores in Northeastern, Southeastern, and Midwestern regions of the United States as well as 26 stores in Puerto Rico and the Virgin Islands, had assets of $3.1 billion. Autopart International operates as an independent, wholly owned subsidiary primarily serving the commercial market.

Fresenius Medical Distribution Portfolio

We acquired two build-to-suit distribution facilities from Fresenius Medical Care North America, a wholly owned subsidiary of Fresenius Medical Care AG & Co. KgaA on January 29, 2010, to be leased by their wholly owned subsidiary Fresenius USA Manufacturing, Inc. (the “Fresenius Properties”). The distribution facilities are each approximately 70,000 square feet, and are located in Apple Valley, CA and Shasta Lake, CA. The aggregate purchase price was approximately $12.5 million, inclusive of all closing costs and fees.

Address

City

State

Purchase Price

Approximate Compensation to Advisor and Affiliates(1)

Navajo Rd and Lafayette Street

Apple Valley

CA

$

6,107,965

3415 Bronze Court

Shasta Lake

CA

6,374,759

Total

$

12,482,724

$

182,733

The Fresenius Properties are double net leased whereby the landlord is responsible for roof and structure and the tenant is required to pay all other expenses. The primary lease term is 15 years, with a remaining lease term of approximately 12.0 years as of July 15, 2010, and provides for contractual rent escalations of 10% every 5 years. The lease will also provide for two 5 year renewal options. The average annual base rent on a straight-line basis over the initial lease term is approximately $1.2 million. The leases will be guaranteed by Fresenius National Medical Care Holdings, Inc. (a wholly owned subsidiary of Fresenius Medical Care AG & Co. KgaA (“Fresenius Medical Care”)) which has a senior unsubordinated rating of BB+ by Standard & Poor’s.

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Address		City				State				Total Square Feet Leased				Rent Per Square Foot				Year 1 Rent				Lease Term Remaining (Years)(1)
Navajo Rd and Lafayette Street			Apple Valley				CA				70,000			$	7.15			$	500,500
3415 Bronze Court			Shasta Lake				CA				70,000				7.47				522,900
Total/Lease Term Remaining Average											140,000			$	7.31			$	1,023,400				12.0

The purchase price was financed by a combination of approximately $6.1 million of proceeds received from a first mortgage loan and proceeds from the sale of common shares.

Mortgage Debt Amount

Rate

Maturity Date

$6,090,000

6.625%

February 11, 2015

Fresenius Medical Services is a kidney dialysis company, operating in both the field of dialysis products and the field of dialysis services operating more than 1,700 outpatient dialysis clinics in the United States. The Renal Therapies Group, which was acquired by Fresenius Medical Services, is responsible for the manufacture and distribution of a variety of dialysis products and equipment, including dialysis machines, dialyzers and other dialysis related supplies.

Fresenius Medical Care AG & Co. KGaA (NYSE: FMS) is the world’s largest integrated provider of products and services for individuals with chronic kidney failure, a condition that affects more than 1.77 million individuals worldwide. Through its network of 2,509 dialysis clinics in North America, Europe, Latin America and Asia/Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 193,000 patients around the globe. Fresenius Medical Care is also the world’s largest provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. In the United States, it also performs clinical laboratory testing and provides inpatient dialysis services and other services under contract to hospitals. During the year ended December 31, 2008, it provided 27.9 million dialysis treatments. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).

(Amounts in millions)		Three Months Ended Mar. 31, 2010				For the Fiscal Year Ended
						Dec. 31, 2009				Dec. 31, 2008				Dec. 29, 2007
Consolidated Statements of Operations
Net revenues		$	2,882			$	11,247			$	10,612			$	9,720
Net income			211				891				818				717

(Amounts in millions)						As of the Fiscal Year Ended
		Mar. 31, 2010				Dec. 31, 2009				Dec. 31, 2008				Dec. 29, 2007
Consolidated Balance Sheets
Total assets		$	15,873			$	15,821			$	14,920			$	14,170
Shareholders’ equity			7,127				6,821				5,962				5,575

Reckitt Benckiser Warehouse Facility — Tooele, UT

On February 16, 2010, we acquired a build-to-suit warehouse facility for Reckitt Benckiser. The warehouse facility is approximately 574,000 square feet, located in Tooele, Utah, near Salt Lake City. The aggregate purchase price was approximately $32.0 million, inclusive of all closing costs and fees. The primary lease term under this net lease arrangement, pursuant to which Reckitt Benckiser will be required to pay all operating expenses and capital expenditures in addition to base rent, is 12.3 years, with a remaining lease term

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of approximately 11.6 years as of July 15, 2010, and provides for annual rent escalations of 2% each year. The lease also provides for three 5 year renewal options. The average annual base rent on a straight-line basis over the initial lease term is approximately $2.7 million.

The purchase price is 50% financed by proceeds from the sale of common shares and 50% from proceeds received from a first mortgage loan totaling approximately $15.0 million.

Address

City

State

Purchase Price

Compensation to Advisor and Affiliates(1)

3226 Sheep Lane North

Tooele

UT

$

31,748,538

$

461,000

Address

City

State

Total Square Feet Leased

Rent Per Square Foot

Year 1 Rent

Initial Lease Term (Years)

3226 Sheep Lane North

Tooele

UT

574,106

$

4.16

$

2,385,866

12.3

The Company has secured a seven-year non-recourse first mortgage loan from Bank of Texas. The following table outlines the terms of the debt financing incurred in connection with acquisition of the warehouse facility. The loan will be secured by a mortgage on the warehouse facility.

Mortgage Debt Amount

Rate

Maturity Date

$15,000,000

6.145%(1)

February 2017

Reckitt Benckiser is a world leader in manufacturing and marketing household, health and personal care products. Reckitt Benckiser is a multinational corporation with operations in over 60 countries, manufacturing facilities in over 40 countries and sales of its products in over 180 countries.

Reckitt Benckiser has a strong portfolio led by 17 global Powerbrands which are: Finish, Lysol, Dettol, Vanish, Woolite, Calgon, Airwick, Harpic, Bang, Mortein, Veet, Nurofen, Clearasil, Strepsils Gaviscon, Mucinex and French’s. The 17 Powerbrands account for over two-thirds of Reckitt Benckiser’s net revenue. Reckitt Benckiser has an investment grade rating of A+ by Standard and Poor’s.

Reckitt Benckiser is a U.K. listed company and is part of the top 25 of the FTSE 100, with a market cap exceeding £20bn. The following financial information comes from information published by Reckitt Benckiser.

(Amounts in millions)(1)		Year Ended
		Dec. 31, 2009				Dec. 31, 2008				Dec. 31, 2007
Profit and Loss Account
Total operating income		$	12,141			$	12,214			$	10,580
Operating profit			2,961				2,791				2,468
Retained profit			2,220				1,259				1,161

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		As of
		Dec. 31, 2009				Dec. 31, 2008				Dec. 31, 2007
Balance Sheets
Total assets		$	13,795			$	13,423			$	11,644
Long-term debt			6				6				10
Shareholders’ equity			6,393				4,815				4,733

Jack in the Box Property Portfolio

On February 24, 2010, we acquired 4 recently-constructed restaurants for Jack In the Box, Inc. (“Jack”) for $8.3 million, inclusive of all closing costs and fees. The properties contain an aggregate 9,892 square feet of gross leasable area. The properties are located in Desloge, Missouri, The Dalles, Oregon, Vancouver, Washington and Corpus Christi, Texas.

The primary lease term is 20 years, having commenced simultaneous with closing with a remaining lease term of 19.6 years as of July 15, 2010. The leases contain contractual rental escalations every 5 years at the lesser of accumulated Consumer Price Index over the prior 5 year period or 10%. The leases provide for 4 renewal options of 5 years each and are triple-net, whereby Jack is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, including the cost of all capital expenditures in addition to base rent. The average annual base rent for the initial term is approximately $639,000.

The purchase price was financed by a combination of the proceeds from the sale of the Company’s common stock and proceeds from a first mortgage loan. The Company has secured a 5 year mortgage from Wells Fargo Bank, N.A. The following table outlines the terms of the debt financing incurred in connection with the acquisition of the Jack in the Box Portfolio. The loan will be secured by a mortgage on the properties.

Mortgage Debt Amount

Rate

Term

$4,394,500

6.36% (fixed for term)

5 Years (matures March 2015)

On April 22, 2010, we acquired another recently-constructed restaurant for Jack located in Houston, Texas, for a purchase price of $1,816,000, inclusive of all closing costs and fees. The property contains 2,038 square feet of gross leasable area.

The property has a primary lease term of 20 years, having commenced simultaneous with closing with a remaining lease term of 19.6 years as of July 15, 2010. The lease contains a contractual rental escalation every 5 years at the lesser of accumulated Consumer Price Index over the prior 5 year period or 10%. The lease provides for 4 renewal options of 5 years each and is triple-net, whereby Jack is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $142,000.

We acquired the property with proceeds from the sale of our common stock.

On May 10, 2010, we secured a 5 year mortgage from Wells Fargo Bank, N.A. The following table outlines the terms of the debt financing incurred in connection with the financing of the property. The loan is secured by a mortgage on the Jack Property.

Mortgage Debt Amount

Effective Rate

Maturity Date

$970,760

6.17%

5 years (matures June 2015)

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On June 29, 2010, we purchased six restaurants for Jack for $11,462,450, inclusive of all closing costs and fees. The properties contain an aggregate 14,975 square feet of gross leasable area. The properties are located in South Houston, TX, Victoria, TX, Beaumont, TX, Ferris, TX and Forney, TX.

The primary lease term is 20 years, having commenced simultaneous with closing. The leases contain contractual rental escalations every 5 years at the lesser of accumulated Consumer Price Index over the prior 5 year period with a maximum increase of 10%. The leases provide for 4 renewal options of 5 years each and are triple-net, whereby Jack is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, including the cost of all capital expenditures in addition to base rent. The average annual base rent for the initial term is approximately $892,000.

Jack in the Box, Inc. (NASDAQ: JACK) is an American fast-food restaurant company founded in 1951 in San Diego, California. Jack in the Box, Inc. (S&P: BB-) operates and franchises Jack in the Box restaurants, one of the nation’s largest fast food hamburger chains. The Jack in the Box restaurants are primarily located on the West Coast of the United States. During the fiscal year ended September 27, 2009, Jack in the Box, Inc. had 2,212 restaurants in 18 states, of which 1,190 were company-operated and the remaining 1,022 were franchise-operated. Jack in the Box has approximately 43,000 employees. The company reported revenue of $2.47 billion, net income of $118 million, had assets of $1.45 billion and a net worth of more than $524 million for the fiscal year ended September 27, 2009.

Bridgestone Firestone II Portfolio

We acquired 12 Bridgestone Firestone properties in three separate transactions, on February 26, 2010 (2 locations), March 15, 2010 (4 locations) and March 31, 2010 (6 locations) for $16.9 million, inclusive of all closing costs and fees (the BSFS II Portfolio). The BSFS II Portfolio consists of 12 recently constructed Bridgestone Firestone retail facilities. The properties contain an aggregate of 93,581 square feet and are located in Alburqueque, NM, Rockwell, TX Weatherford, TX, League City, TX, Crowley, TX, Allen, TX Pearland, TX, Austin, TX, Grand Junction, CO, Benton, AR, Wichita, KS and Baton Roach, LA. The BSFS II Portfolio properties are 100% double net leased to Bridgestone Retail Operations, LLC, a wholly owned subsidiary of the Bridgestone Corporation (S&P: BBB+). The stores operate as Firestone Complete Auto Care. The primary lease term under this net lease arrangement, pursuant to which BSFS will be required to pay all operating expenses and capital expenditures in addition to base rent, is 15 years, with a remaining lease term of approximately 13.5 years as of July 15, 2010. The leases contain contractual rental escalations of 6.25% every five years, and provide for 5 renewal options of 5 years each. The leases are double net whereby Bridgestone Operations, LLC is required to pay substantially all operating expenses, with the exception of costs to maintain and repair the roof and structure of the building. The average annual base rent on a straight-line basis over the initial lease term is approximately $2.3 million.

The acquisition of the BSFS II Properties was financed with the proceeds from the sale of common stock.

Bridgestone Retail Operations, LLC is a wholly owned subsidiary of Bridgestone Americas, Inc. It consists of more than 2,200 company-owned vehicle service and tire locations across the United States, including Firestone Complete Auto Care, Tires Plus, Expert Tire and Wheel Works store locations. Bridgestone Americas, Inc. is the U.S. subsidiary of Bridgestone Corporation, which is headquartered in Tokyo, Japan and the largest tire producer in the world. Bridgestone Corporation had assets of $30.2 billion and posted net sales of $27.9 billion for the fiscal year ended December 31, 2009.

Bridgestone Corporation is a multinational corporation with 179 production facilities in 25 countries and has one of the largest sales networks in the world, selling its products in over 150 countries. In addition to being the largest tire producer in the world, Bridgestone Corporation has diversified business segments offering various services and products including chemical and industrial products, sporting goods and bicycles.

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Federal Express Property

On April 30, 2010, we acquired one build-to-suit, free standing, fee simple distribution facility located in West Sacramento, California (the “FedEx Property”) for FedEx Freight West, Inc. (“FedEx Freight West”) for $34,212,000, inclusive of all closing costs and fees. The FedEx Property contains 118,796 square feet of gross leasable area. FedEx Freight West is a wholly owned subsidiary of the FedEx Corporation (NYSE: “FDX”), the lease guarantor.

The original lease term at commencement was 15 years with 10.9 years currently remaining as of July 15, 2010. The lease contains rental escalations equivalent to the cumulative increase in the Consumer Price Index over the previous 30 months, with a minimum increase of 5% and a maximum increase of 10%. The next rent escalation will occur on June 22, 2011. The lease provides for 3 renewal options of 5 years each followed by one renewal option of 4 years. The lease is double net with the landlord responsible for roof and structure. The average annual base rent for the initial term is approximately $3,087,000.

We financed the acquisition of the FedEx Property with a 5-year first mortgage loan from Ladder Capital Finance, LLC, proceeds from the sale of our common stock and a $3,000,000 investment from an unrelated third party. The loan from Ladder Capital Finance, LLC will be secured by a mortgage on the FedEx Property. The following table outlines the terms of the debt financing incurred in connection with the acquisition of the FedEx Property:

Mortgage Debt Amount		Effective Rate				Maturity Date
$15,000,000			5.49	%			5 years

FedEx Freight West provides regional less-than-truckload transportation services in the western United States. The company transports general commodities and also provides online shipping transactions services. FedEx Freight West was founded in 1966 as Viking Delivery Service, Inc. and changed its name to Viking Freight System, Inc. in 1974 and then to Viking Freight, Inc. in 1996. It further changed its name to FedEx Freight West, Inc. in 2002. The company is based in San Jose, California. As of February 12, 2001, FedEx Freight West was acquired by FedEx Corporation.

Jared the Galleria of Jewelry Portfolio

On May 6, 2010, we acquired three build-to-suit properties from Jared the Galleria of Jewelry (“Jared”) for $5,474,000, inclusive of all closing costs and fees. The properties contain 19,534 square feet of gross leasable area and are located in Amherst, New York, Lake Grove, New York and Watchung, New Jersey.

The original leases at commencement were 20 years with 18.6 years currently remaining as of July 15, 2010. The leases provides for 4 renewal options of 5 years each and are triple net whereby Jared is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $679,000.

We acquired the properties with proceeds from the sale of our common stock.

On June 29, 2010, we acquired one build-to-suit property from Jared for $1,641,489, inclusive of all closing costs and fees. The property contains 6,157 square feet of gross leasable area and is located in Plymouth, New York.

The original lease at commencement was 20 years and four months with 16.6 years currently remaining as of July 15, 2010. The leases provides for 4 renewal options of 5 years each and are triple net whereby Jared is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $209,000.

We acquired the property with proceeds from the sale of our common stock. We may finance the acquisition post closing, however, there is no guarantee that we will be able to obtain financing on terms that we believe are favorable or at all.

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Jared the Galleria of Jewelry is a division of Sterling Jewelers Inc., a wholly owned subsidiary of Signet Jewelers Limited (Signet Group plc prior to September 2008, NYSE: SIG, LSE: SIG), the world’s largest specialty retail jeweler. Jared stores are free standing single point destinations. The stores retain a large selection of loose diamonds, and sell a number of exclusive ranges such as the Leo Diamond, the Leo Artisan, and the Peerless. All stores offer a large selection of prestige Swiss watch brands including Omega, Tag Heuer, MontBlanc, Movado, Baume & Mercier, Raymond Weil, Tissot, and Swiss Army. Several locations are also authorized Rolex dealers.

Walgreens Portfolio

On May 17, 2010, we acquired a build-to-suit, freestanding, fee-simple pharmacy for Walgreen Co. (“Walgreens) located in Byram, Mississippi for $5,687,000, inclusive of all closing costs and fees. The property contains 14,820 square feet of gross leaseable area. We previously purchased a Walgreens pharmacy in Sealey, Texas in July 2009.

The original lease term at commencement was 25 years with 22.7 years currently remaining as of July 15, 2010. The lease does not contain rental escalations during the primary term, consistent with all newer Walgreen leases. The lease is triple net whereby Walgreens is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is $453,000.

We acquired the property with proceeds from the sale of our common stock. We have financed the acquisition post closing with a $3.0 million five year first mortgage from Loews Corporation, LLC (Continental Casualty Company), at an interest rate of 5.5%.

On June 30, 2010, we acquired a build-to-suit, freestanding, fee-simple pharmacy for Walgreens located in LeRoy, New York for $5,068,958, inclusive of all closing costs and fees. The Walgreens Property contains 13,386 square feet of gross leaseable area.

The original lease term at commencement was 25 years with 23.8 years currently remaining as of July 15, 2010. The lease does not contain rental escalations during the primary term, consistent with all newer Walgreen leases. The lease is triple net whereby Walgreens is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is $385,000.

We acquired the property with proceeds from the sale of our common stock. We may finance the acquisition post closing, however, there is no guarantee that we will be able to obtain financing on terms that we believe are favorable or at all.

Walgreen Co. (NYSE: WAG) was founded in 1901 and is the nation’s largest drugstore chain based on sales. As of February 29, 2010, Walgreens operated 7,680 locations in 49 states, Washington D.C., Puerto Rico and Guam. The company has approximately 311,000 employees. Prescription sales account for about 65% of Walgreens total sales, with nearly all payments made directly by third-parties such as managed care organizations and government and private insurance companies. Approximately 5.3 million shoppers visit a Walgreens store daily.

International House of Pancakes Portfolio

On May 21, 2010, we acquired a build-to-suit, freestanding, fee-simple restaurant for International House of Pancakes (“IHOP”) located in Hilton Head, South Carolina for a purchase price of $2,449,000, inclusive of closing costs and fees. The restaurant contains 5,172 square feet of gross leaseable area. The tenant of the restaurant is IHOP Properties, Inc. and the lease is guaranteed by IHOP Corp. (now known as DineEquity, Inc.).

The original lease term at commencement was 25 years with 15.7 years currently remaining as of July 15, 2010. The lease contains contractual rental escalations of 5% every 5 years and provides three renewal options of 5 years each. The lease is triple net whereby IHOP Properties, Inc. is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $201,000.

We acquired the IHOP restaurant with proceeds from the sale of our common stock.

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On June 25, 2010, we acquired a build-to-suit, freestanding, fee-simple restaurant for IHOP located in Buford, Georgia for a purchase price of $2,312,779, inclusive of closing costs and fees. The restaurant contains 4,139 square feet of gross leaseable area. The tenant of the restaurant is IHOP Properties, Inc. and the lease is guaranteed by IHOP Corp. (now known as DineEquity, Inc.).

The original lease term at commencement was 20 years with 11.7 years currently remaining as of July 15, 2010. The lease contains contractual rental escalations of 10% every 5 years and provides three renewal options of 5 years each. The lease is triple net whereby IHOP Properties, Inc. is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $204,000.

We acquired the IHOP restaurant with proceeds from the sale of our common stock. We may finance the acquisition post closing, however, there is no guarantee that we will be able to obtain financing on terms that we believe are favorable or at all.

On June 29, 2010, we acquired a build-to-suit, freestanding, fee-simple restaurant for IHOP located in Cincinnati, Ohio for a purchase price of $3,318,685, inclusive of closing costs and fees. The restaurant contains 5,111 square feet of gross leaseable area. The tenant of the restaurant is IHOP Properties, Inc. and the lease is guaranteed by IHOP Corp. (now known as DineEquity, Inc.).

The original lease term at commencement was 25 years with 21.1 years currently remaining as of July 15, 2010. The lease contains contractual rental escalations of 10% every 5 years and provides three renewal options of 5 years each. The lease is triple net whereby IHOP Properties, Inc. is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is approximately $303,000.

We acquired the IHOP restaurant with proceeds from the sale of our common stock. We may finance the acquisition post closing, however, there is no guarantee that we will be able to obtain financing on terms that we believe are favorable or at all.

IHOP was founded in 1958 in the Los Angeles suburb of Toluca Lake, California and is a wholly owned subsidiary of DineEquity, Inc. (NYSE: DIN). IHOP restaurants feature moderately priced, high quality food and beverage items served in an attractive and comfortable atmosphere. Although IHOP is known for its pancakes and omelets, other breakfast specialties are popular menu options with patrons in the early morning hours. IHOP restaurants are open throughout the day and evening and offer a broad array of lunch, dinner and snack favorites. As of December 31, 2009, there were 1,456 IHOP restaurants located in 50 states, Canada, Mexico, Puerto Rico and the U.S. Virgin Islands.

Super Stop & Shop Property

On June 4, 2010, we acquired a free standing, fee simple supermarket for a Super Stop & Shop (the “Stop & Shop Property”) in Nanuet, New York for $23,807,000, inclusive of all closing costs and fees. The Stop & Shop Property contains 59,032 square feet of gross leasable area. The tenant of the Stop & Shop Property is The Stop & Shop Supermarket Company (“Stop & Shop,” formerly known as “Stop & Shop, Inc.”), successor in interest to Shaw’s Supermarket, Inc. The lease is guaranteed by J. Sainsbury, plc and Koninklijke Ahold N.V. (S&P: BBB).

The original lease term at commencement was 25.5 years with 12.6 years currently remaining as of July 15, 2010. The lease contains contractual rental escalations of approximately 7.5% every 5 years and provides two renewal options of 10 years and 1 option of 4 years 3 months. The lease is triple net whereby Stop & Shop is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent on a straight line basis for the initial term is approximately $1,946,000.

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Stop & Shop operates over 375 stores throughout the following 6 states: Massachusetts, Rhode Island, Connecticut, New Hampshire, New York, and New Jersey. The supermarket chain employs 59,000 associates from the communities where the stores are located. Stop & Shop was founded in 1914 in Somerville, Massachusetts by the Rabinowitz family as the Economy Grocery Stores Company. By 1947, Economy Grocery Stores had grown into a chain of 86 supermarkets and the name of the company was changed to Stop & Shop, Inc. In 1996, Koninklijke Ahold N.V. (“Royal Ahold”) acquired Stop & Shop, Inc. Royal Ahold is a public limited liability company registered in the Netherlands and listed on Euronext’s Amsterdam Stock Exchange. Royal Ahold is is one of the largest, international food retailing groups in the world operating leading supermarket companies in Europe and the United States.

We acquired the Stop & Shop Property with proceeds from the sale of our common stock. We have financed the acquisition post closing with a $10.8 million five year first mortgage loan from Ladder Capital at an interest rate of 5.25%.

Tractor Supply Property

On July 1, 2010, we acquired a build-to-suit, freestanding, fee-simple retail property located in DuBois, PA for $2,846,000, inclusive of all closing costs and fees. The property contains 19,097 square feet of gross leaseable area.

The original lease term at commencement was 15 years with 14.8 years currently remaining. The lease contains rental escalations of 10% every five years during the primary term, and contains three renewal options of five years each. The lease is triple net whereby Tractor Supply is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is $248,000.

We acquired the property with proceeds from the sale of our common stock.

Dollar General Property

On July 15, 2010, we acquired a build-to-suit, freestanding, fee-simple retail property located in Jacksonville, FL for $1,228,000, inclusive of all closing costs and fees. The property contains 8,988 square feet of gross leaseable area.

The original lease term at commencement was 15 years with 14.5 years currently remaining. The lease does not contain rental escalations during the primary term, but contains four renewal options of five years each. The lease is triple net whereby Dollar General is required to pay substantially all operating expenses, including all costs to maintain and repair the roof and structure of the building, and the cost of all capital expenditures, in addition to base rent. The average annual base rent for the initial term is $118,000.

We acquired the property with proceeds from the sale of our common stock.

Potential Property Investments

The following disclosure supersedes and replaces the section of our Prospectus captioned “Potential Property Investments” on pages 104 – 106 of the Prospectus.

The acquisition of each property is subject to a number of conditions. A significant condition to acquiring any one of these potential acquisitions is our ability to raise sufficient proceeds in this offering to pay a portion of the purchase price. An additional condition to acquiring these properties will be our securing debt financing to pay the balance of the purchase price. Such financing may not be available on acceptable terms or at all.

Our evaluation of a property as a potential acquisition, including the appropriate purchase price, will include our consideration of a property condition report; unit-level store performance; property location, visibility and access; age of the property, physical condition and curb appeal; neighboring property uses; local market conditions, including vacancy rates; area demographics, including trade area population and average household income; neighborhood growth patterns and economic conditions; and the presence of demand generators.

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We will decide whether to acquire properties generally based upon:

Our advisor has identified the properties described below as potential suitable investments for us. The acquisition of the properties is subject to a number of conditions. A significant condition to acquiring the potential acquisition is our ability to raise sufficient proceeds in this offering to pay all or a portion of the purchase price.

Prior Performance Summary

This section supersedes and replaces the discussion contained in the Prospectus under the section of our Prospectus captioned “Prior Performance Summary” on pages 117 through 123.

Prior Investment Programs

The information presented in this section represents the historical experience of the real estate programs managed over the last ten years by Messrs. Schorsch and Kahane. Investors should not assume that they will experience returns, if any, comparable to those experienced by investors in such prior real estate programs.

We intend to conduct this offering in conjunction with future offerings by one or more public and private real estate entities sponsored by American Realty Capital and their affiliates. American Realty Capital New York Recovery REIT, Inc. (“NY Recovery REIT”) and Phillips Edison — ARC Shopping Center REIT, Inc. (“Phillips Edison — ARC Shopping Center REIT”) are two American Realty Capital sponsored programs currently in registration with the U.S. Securities and Exchange Commission (the “SEC”). All of our executive officers and directors are also executive officers and directors of New York Recovery REIT. Mr. Kahane is also a director of Phillips Edison — ARC Shopping Center REIT. To the extent that these entities or others have the same or similar objectives as ours or involve similar or nearby properties, they may be in competition with the properties acquired by us. See the section entitled “Conflicts of Interest” in this prospectus for additional information.

Private Note Programs

ARC Income Properties, LLC implemented a note program that raised aggregate gross proceeds of $19.5 million. The net proceeds were used to acquire, and pay related expenses in connection with, a portfolio of 65 bank branch properties triple-net leased to RBS Citizens, N.A. and Citizens Bank of Pennsylvania. The purchase price for those bank branch properties also was funded with proceeds received from mortgage loans, as well as equity capital invested by American Realty Capital II, LLC. Such properties contain approximately 323,000 square feet with a purchase price of approximately $98.8 million. The properties are triple-net leased for a primary term of five years and include extension provisions. The notes issued under this note program by ARC Income Properties, LLC were sold by Realty Capital Securities through participating broker-dealers.

ARC Income Properties II, LLC implemented a note program that raised aggregate gross proceeds of $13.0 million. The net proceeds were used to acquire, and pay related expenses in connection with, a portfolio of 50 bank branch properties triple-net leased to PNC Bank. The purchase price for those bank branch properties also was funded with proceeds received from a mortgage loan, as well as equity capital raised by American Realty Capital Trust, Inc. in connection with its public offering of equity securities. The properties are triple-net leased with primary term of ten years with a 10% rent increase after 5 years. The notes issued under this note program by ARC Income Properties II, LLC were sold by Realty Capital Securities through participating broker-dealers. Please see the Prior Performance Tables set forth on Appendix C-3.

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ARC Income Properties III, LLC implemented a note program that raised aggregate gross proceeds of $11.2 million. The net proceeds were used to acquire, and pay related expenses in connection with the acquisition of a distribution facility triple-net leased to Home Depot. The purchase price for the property was also funded with proceeds received from a mortgage loan. The property has a primary lease term of twenty years which commenced on January 30, 2010 with a 2% escalation each year. The notes issued under this note program by ARC Income Properties III, LLC were sold by Realty Capital Securities through participating broker-dealers. Please see the Prior Performance Tables set forth on Appendix C-3.

ARC Growth Partnership, LP

ARC Growth Partnership, LP is a non-public real estate program formed to acquire vacant bank branch properties and opportunistically sell such properties, either vacant or subsequent to leasing the bank branch to a financial institution or other third-party tenant. Total gross proceeds of approximately $7.9 million were used to acquire, and pay related expenses in connection with, a portfolio of vacant bank branches. The purchase price of the properties also was funded with proceeds received from a one-year revolving warehouse facility. The purchase price for each bank branch is derived from a formulated price contract entered into with a financial institution. During the period from July 2008 to January 2009, ARC Growth Partnership acquired 54 vacant bank branches from Wachovia Bank, N.A., under nine separate transactions. Such properties contain approximately 230,000 square feet with a gross purchase price of approximately $63.6 million. As of September 30, 2009, 52 properties were sold, 28 of which were acquired and simultaneously sold, resulting in an aggregate gain of approximately $5.6 million. ARC Growth Partnership, LP mutually terminated the contractual agreement with Wachovia Bank, N.A. in March 2009, and has not acquired any vacant bank branches following this termination. ARC Growth Partnership, LP is currently in the process of selling its remaining assets. Please see the Prior Performance Tables set forth on Appendix C-3.

American Realty Capital, LLC

American Realty Capital, LLC began acquiring properties in December 2006. During the period of December 1, 2006 to December 31, 2007 American Realty Capital, LLC acquired 73 properties, totaling just over 1,767,000 square feet for an aggregate purchase price of approximately $407.5 Million. These properties included five Hy Vee supermarkets, one CVS distribution center, three CVS drug stores, ten Rite Aids, sixteen Walgreens drug stores, 15 Harleysville bank branches, a portfolio of fifteen Logan’s Roadhouse Restaurants, six Tractor Supply Company stores, one Shop N Save supermarket, and one Fed Ex cross dock facility. The underlying leases within these acquisitions ranged from 10 to 25 years before any tenant termination rights, with a dollar weighted average lease term of approximately 21 years based on rental revenue. American Realty Capital, LLC acquired no properties after December 31, 2007.

American Realty Capital, LLC has operated in three (3) capacities; joint-venture partner, or JV, sole investor and advisor.

No money was raised from investors in connection with the properties acquired by American Realty Capital, LLC. All American Realty Capital, LLC transactions were done with the equity of the principals or joint-venture partners of American Realty Capital, LLC.

In instances where American Realty Capital, LLC was not an investor in the transaction, but rather an advisor, American Realty Capital, LLC typically performed the following advisory services:

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Information on properties and leasehold interests acquired by American Realty Capital, LLC during the twelve months ended December 31, 2007 (dollar amounts in thousands):

Tenant – Location		Investment Structure				Date				Number of Buildings				Gross Leasable Space				Mortgage Financing				Purchase Price(1)
Hy Vee – Cedar Rapids, IA			ARC-JV				December-06				1				86,240			$	11,622			$	13,167
Hy Vee – W. Des Moines, IA			ARC-JV				December-06				1				79,634				10,375				11,777
Hy Vee – W. Des Moines, IA			ARC-JV				December-06				1				80,194				12,085				13,669
Hy Vee – Columbus, NE			ARC-JV				December-06				1				77,667				9,243				10,506
Hy Vee – Olathe, KS			ARC-JV				December-06				1				71,312				11,203				12,698
Walgreens – Natchez, MS			ARC-JV				December-06				1				14,820				3,910				4,568
CVS – Vero Beach, FL			ARC-JV				December-06				1				413,747				29,750				33,891
Walgreens – Loganville, GA			ARC-JV				December-06				1				14,490				5,610				6,563
CVS – Chester, NY			ARC-JV				December-06				1				15,521				6,029				7,015
Rite Aid – Shelby Township, MI			ARC-ADVISOR				December-06				1				11,180				3,086				3,928
Rite Aid – Coldwater, MI			ARC-ADVISOR				December-06				1				11,180				2,657				3,308
Walgreens – New Castle, PA			ARC-JV				January-07				1				14,280				4,780				5,476
Walgreens – Holland, MI			ARC-JV				January-07				1				14,658				5,968				6,939
Walgreens – Guynabo, PR			ARC-ADVISOR				January-07				1				15,750				9,700				11,145
Eckerd – McDonough, GA			ARC-ADVISOR				January-07				1				13,824				3,500				4,466
Rite Aid – New Philadelphia, OH			ARC-JV				February-07				1				11,157				4,528				5,553
Walgreens – Clarence, NY			ARC-JV				February-07				1				14,820				4,114				4,639
Walgreens – Carolina, PR			ARC-ADVISOR				March-07				1				15,660				8,100				9,409
Logan’s Roadhouse Portfolio – Various Locations			ARC-JV				April-07				15				119,331				45,200				58,788
Walgreens – Windham, ME			ARC-JV				April-07				1				14,820				6,596				7,392
Tractor Supply Co. – Carthage, TX			ARC-JV				May-07				1				19,097				2,192				2,657
CVS – Douglasville, GA			ARC-JV				May-07				1				14,574				4,420				5,008
Rite Aid – Flatwoods, KY			ARC-JV				June-07				1				11,154				3,600				4,380
Shop N Save – Moline Acres, MO			ARC-JV				June-07				1				51,538				5,675				6,840
CVS – Haverhill, MA			ARC-JV				June-07				1				15,214				6,664				7,812
Tractor Supply Co. – Granbury, TX			ARC-JV				June-07				1				24,764				2,586				3,275
Tractor Supply Co. – Lubbock, TX			ARC-JV				June-07				1				29,954				3,153				3,981
Tractor Supply Co. – Odessa, TX			ARC-JV				July-07				1				22,670				2,871				3,624
Walgreens & Petco – North Andover, MA			ARC-JV				July-07				2				29,512				13,390				15,304
Rite Aid – New Salisbury, IN			ARC-JV				July-07				1				14,703				2,954				3,588
Walgreens – Hampstead, NH			ARC-JV				July-07				1				14,820				5,804				6,601
Tractor Supply Co. – Shreveport, LA			ARC-JV				August-07				1				19,097				3,078				3,769
Bridgestone Firestone – St. Peters, MO			ARC-ADVISOR				August-07				1				7,654				1,290				1,841
Dollar General – Independence, KY			ARC-ADVISOR				August-07				1				9,014				580				870
Dollar General – Florence, KY			ARC-ADVISOR				August-07				1				9,014				566				870
Dollar General – Lancaster, OH			ARC-ADVISOR				August-07				1				9,014				590				888
Fed Ex – Snow Shoe, PA(2)			ARC-JV				August-07				1				53,675				6,965				10,067
Rite Aid – Salem, OH			ARC-JV				August-07				1				14,654				4,928				6,003
Rite Aid – Cadiz, OH(2)			ARC				August-07				1				11,335				1,240				1,695
Rite Aid – Carrollton, OH(2)			ARC				August-07				1				12,613				1,730				2,342
Rite Aid – Lisbon, OH(2)			ARC				August-07				1				10,141				1,090				1,493
Rite Aid – Liverpool, OH(2)			ARC				August-07				1				11,362				1,630				2,217
Walgreens – New Bedford, MA(3)			ARC-JV				August-07				1				15,272				6,564				7,960
Walgreens – South Yarmouth, MA(3)			ARC-JV				August-07				1				9,996				6,355				7,206
Walgreens – Derry, NH(3)			ARC-JV				August-07				1				14,820				6,660				7,514
Walgreens – Staten Island, NY(3)			ARC-JV				August-07				1				11,056