Exhibit 10.16


 


September
6, 2016


 


American Finance Trust, Inc.

American Realty Capital – Retail Centers of America, Inc.


American Realty Capital Retail Operating Partnership, L.P.


c/o 405 Park Avenue


New York, NY 10022


 


Ladies and Gentlemen:


 


Reference is made to
the Second Amended and Restated Agreement of Limited Partnership of American Realty Capital Retail Operating Partnership, L.P.
dated as of October 24, 2014, as amended by the First Amendment thereto dated as of April 15, 2015 and by the Second Amendment
thereto dated as of June 30, 2015 (collectively, the “RCA Partnership Agreement”). Terms used in this letter
agreement and not defined herein have the meanings given to them in the RCA Partnership Agreement.


 


On the date of this
letter agreement, American Finance Trust, Inc., Genie Acquisition, LLC, American Finance Operating Partnership, L.P., American
Realty Capital – Retail Centers of America, Inc. (“RCA”) and American Realty Capital Retail Operating
Partnership, L.P. (“RCA OP”) have executed and delivered the Agreement and Plan of Merger (the “Merger
Agreement”).


 


The undersigned, American
Realty Capital Retail Advisor, LLC (the “RCA Advisor”), is the sole record and beneficial owner of (i) the Special
Limited Partner Interest and (ii) 479,802 Class B Units, in each case, which it holds free and clear of encumbrances other than
restrictions on transfer or other encumbrances provided for under the RCA Partnership Agreement or restrictions on transfer under
applicable securities laws.


 


The RCA Advisor hereby
acknowledges that, in accordance with the terms and conditions set forth in the Merger Agreement, subject to, and at, the Effective
Time (as defined in the Merger Agreement), (x) the Special Limited Partner Interest shall be redeemed in full in exchange for a
payment equal to the Computed Amount and (y) each of the Class B Units issued and outstanding immediately prior to the Effective
Time shall be converted into the Partnership OP Merger Consideration (as defined in the Merger Agreement). The term “Computed
Amount” means an amount, computed in accordance with the methodology used on Exhibit A to this letter Agreement,
that depicts the redemption price for the Special Limited Partner Interest as if the Effective Time occurred on June 30, 2016.


 


The RCA Advisor hereby
acknowledges that a portion of the amount payable to it in redemption of the Special Limited Partner Interest will be subsequently
remitted to Lincoln Retail REIT Services, LLC (“Lincoln”) in accordance with the terms of the service agreement
between the RCA Advisor and Lincoln in effect immediately prior to the Effective Time.


 




    			



     


    

 


The RCA Advisor hereby
acknowledges that, subject to, and at, the Effective Time, the Company Advisory Agreement (as defined in the Merger Agreement)
shall automatically terminate, and, for all purposes of the Company Advisory Agreement, such termination will constitute a Termination
(as defined in the Company Advisory Agreement) and the date on which the Effective Time occurs shall constitute the Termination
Date (as defined in the Company Advisory Agreement).


 


For the avoidance of
doubt, the Special Limited Partner Interest and the Class B Units referred to in this letter agreement are the only interests (whether
in the profits or capital) owned (of record or beneficially) by the RCA Advisor, and persons claiming through the RCA Advisor,
in RCA OP.


 


In the event that the
Merger Agreement is terminated in accordance with its terms, this letter agreement shall terminate automatically without any liability
to any party hereunder.


 


[Remainder of Page Intentionally Left
Blank]


 




    			



     


    

 


Intending to be legally
bound, the undersigned have cause this letter agreement to be executed and delivered as of the date first set forth above. 





 


	 	American Realty Capital Retail Advisor, LLC
	 	 	 
	 	By:	/s/ Jesse C. Galloway
	 	 	Name: Jesse C. Galloway
	 	 	Title: Authorized Signatory


 


Agreed:


 


American Finance Trust, Inc.


 


	By:	/s/ Edward M. Weil, Jr.	 
	 	Name: Edward M. Weil, Jr.	 
	 	Title: Chief Executive Officer	 


 


American Realty Capital – Retail Centers of America, Inc.


 


	By:	/s/ Katie P. Kurtz	 
	 	Name: Katie P. Kurtz	 
	 	Title: Chief Financial Officer	 


 


American Realty Capital Retail Operating Partnership, L.P.


 


	By:	American Realty Capital – Retail Centers of America, Inc.,
	 	its sole general partner


 


	 	By:	/s/ Katie P. Kurtz	 
	 	 	Name: Katie P. Kurtz	 
	 	 	Title: Chief Financial Officer	 


 




    			



     


    

 


Exhibit A


 


Computed Amount Methodology


 


See attached


 




    			



     


    

 


Retail


Promote Calculation


6/30/2016


 


	 	 	 	 	 	Common Shares	 	 	 	 	 	 	 	 	Retail	 
	 	 	Amount	 	 	Outstanding	 	 	Per Share	 	 		 	 	Share Price	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash proceeds received	 	$	978,327,164	 	 	 	98,650,335	 	 	$	9.917	 	 	 		 	 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proposed Transaction:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares outstanding	 	 	98,650,335	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Estimated price per share	 	$	10.255450	 	 	 	 	 	 	 	 	 	 	 	Est	 	 	 	10.255450	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Estimated Transaction Value	 	$	1,011,703,583	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Distributions (inception to date):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At 6.4% rate	 	$	126,713,496	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At hurdle rate of 7.0% rate	 	 	138,349,297	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Difference	 	 	(11,635,801	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Estimate of distributions above (below) hurdle rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total	 	$	(11,635,801	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and stock proceeds	 	 	1,011,703,583	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Return of principal to common shareholders	 	 	(978,327,164	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds, net	 	 	33,376,419	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Distributions above (below) hurdle	 	 	(11,635,801	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total return to shareholders	 	$	21,740,618	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Allocation of profit above hurdle:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	85% to shareholders	 	$	18,479,526	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	15% to sponsor	 	 	3,261,093	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	$	21,740,618	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Estimated Transaction Value	 	 	1,011,703,583	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity Raised	 	 	(978,327,164	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net	 	 	33,376,419	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Priority Allocations of RCA Operating Partnership	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reverse any special allocation of depreciation to the Advisor —	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2012	 	 	(826,965	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2013	 	 	(3,146,998	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Class B Units (required allocation assuming $10 per unit)	 	 	(4,798,020	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Estimated Promote	 	 	(3,261,093	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	21,343,344