Item 1.01. Entry into
a Material Definitive Agreement.
On October
7, 2021, American Finance Trust, Inc. (the “Company”) and American Finance Operating Partnership, L.P., the Company’s
operating partnership subsidiary (the “Operating Partnership” and, together with the Company, the “Issuers”),
issued $500.0 million aggregate principal amount of 4.500% Senior Notes due 2028 (the “Notes”). In connection with the closing
of the offering of the Notes, the Issuers and the subsidiaries of the Issuers that will guarantee the Notes (the “Guarantors”)
entered into an Indenture (the “Indenture”) with U.S. Bank National Association, as trustee (the “Trustee”). At
closing, the Issuers used the net proceeds from the issuance of Notes, after deducting the initial purchasers’ discounts
and offering fees and expenses, to repay amounts borrowed under the Operating Partnership’s revolving unsecured credit facility
(the “Credit Facility”) of approximately $186.2 million and to repay $125 million of certain mortgage notes. The Issuers intend
to use the remaining proceeds to fund future property acquisitions and for other general corporate purposes.
The Notes have not been, and will not be, registered under the Securities
Act of 1933, as amended (the Securities Act”), or the securities laws of any other jurisdiction. The Notes may not be offered or
sold within the United States or to U.S. persons, except to persons reasonably believed to be qualified institutional buyers in reliance
on the exemption from registration provided by Rule 144A and to certain persons in offshore transactions in reliance on Regulation S.
The Notes will mature on September 30, 2028. The Notes accrue interest
at a rate of 4.500% per year. Interest on the Notes is payable semi-annually in arrears on March 30 and September 30 of each year, beginning
on March 30, 2022. Interest will accrue from October 7, 2021. The Notes were issued at par.
The Notes are fully and unconditionally guaranteed (the “Note
Guarantees”) on a joint and several basis by the subsidiaries of each Issuer that are guarantors under the Credit Facility. Subject
to certain exceptions, each future subsidiary of each Issuer that subsequently guarantees indebtedness under the Credit Facility, any
other syndicated loan facility or any capital markets indebtedness, in each case, of the Issuers or a Guarantor will be required to execute
a Note Guarantee. Under certain circumstances, the Guarantors may be automatically released from their Note Guarantees without the consent
of the holders of Notes.
The Notes and the Note Guarantees are senior unsecured obligations
of the Issuers and each Guarantor and are equal in right of payment with all of the other existing and future senior unsecured indebtedness
of the Issuers and each Guarantor, including their obligations under the Credit Facility, senior in right of payment to any indebtedness
that by its terms is expressly subordinated to the Notes and the Note Guarantees, effectively subordinated to all of the existing and
future secured indebtedness of the Issuers and each Guarantor to the extent of the value of the collateral securing such debt and structurally
subordinated to all existing and future indebtedness and other liabilities, including trade payables, of any subsidiary of the Issuers
that do not guarantee the Notes.
The Notes are redeemable at the option of the Issuers, in whole at
any time or in part from time to time, in each case prior to June 30, 2028, for cash, at a redemption price equal to the greater of (i)
101% of the principal amount of the Notes to be redeemed or (ii) an amount equal to the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed that would be due if the Notes matured on June 30, 2028 (exclusive of unpaid
interest accrued to, but not including, the date of redemption) discounted to the date of redemption on a semi-annual basis at the treasury
rate plus 50 basis points, plus, in each case, unpaid interest, if any, accrued to, but not including, the date of redemption. In addition,
at any time on or after June 30, 2028, the Notes will be redeemable, at the option of the Issuers, in whole at any time or in part from
time to time, for cash, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus unpaid interest,
if any, accrued to, but not including, the date of redemption.
If a Change of Control
Triggering Event (as defined in the Indenture) occurs, the Issuers will be required to make an offer to purchase the Notes at a price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the purchase date.
If the Issuers or any of their restricted subsidiaries sell assets,
under certain circumstances the Issuers will be required to make an offer to purchase the Notes at a price equal to 100% of the principal
amount, plus accrued interest and unpaid interest, if any, up to, but excluding, the purchase date.
The Indenture contains covenants that, among other things, limit the
ability of the Issuers and their restricted subsidiaries to (1) incur additional indebtedness, (2) pay dividends and make distributions
on the capital stock of the Company and each Issuer’s restricted subsidiaries, (3) make investments or other restricted payments,
(4) create liens on their assets, (5) enter into transactions with affiliates, (6) merge or consolidate or sell all or substantially all
of their assets, (7) sell assets and (8) create restrictions on the ability of their restricted subsidiaries to pay dividends or other
amounts to them. These covenants are subject to important exceptions and qualifications. In addition, if the Notes are rated investment
grade by any two of Moody’s Investors Service, Inc., Fitch Ratings Inc. and Standard & Poor’s Ratings Services, and at
such time no default or event of default under the Indenture has occurred and is continuing, many of the covenants in the Indenture will
be suspended or become more lenient and may not go back into effect.
The Indenture contains customary events of default which could, subject
to certain conditions, cause the Notes to become immediately due and payable.
The above descriptions
of the Indenture and the Notes are summaries and are qualified in their entirety by the terms of the Indentures and the Notes. A copy
of the Indenture (including the form of Notes) is attached as Exhibit 4.1 hereto and incorporated by reference herein.