**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**


(Mark
      One)


**x**  **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**




For
      the
      quarterly period ended September 30, 2008




**OR**




**o**  **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**




For
      the
      transition period from _________ to __________




Commission
      file number: 333-145949




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


(Exact
      name of registrant as specified in its charter)




**Maryland**
            
            **71-1036989**(State
                or other  jurisdiction
              of
                incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**106
                Old York Road**
              **Jenkintown,
                PA******
            
            **19046**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(215)
                887-2189**(Registrant’s
                telephone number, including area
                code)





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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting
      company.  See definition of “large accelerated filer,” “accelerated
      filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
      Act.





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





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





The
      number of outstanding shares of the registrant’s common stock on November 11,
      2008 was 1,204,065 shares.







**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**INDEX**




PART
                I — FINANCIAL INFORMATIONItem 1.
                Financial Statements
            3Consolidated
                Balance Sheets as of September 30, 2008 (Unaudited) and December 31,
                2007
            3Consolidated
                Statement of Operations for the three and nine months ended September
                30,
                2008 (Unaudited)
            4Consolidated
                Statement of Stockholders’ Equity for the nine months ended September 30,
                2008 (Unaudited)
            5Consolidated
                Statement of Cash Flows for the nine months ended September 30, 2008
                (Unaudited)
            6Notes
                to Consolidated Financial Statements (Unaudited)
            7Item 2.
                Management’s Discussion and Analysis of Financial Condition and Results of
                Operations
            18Item 3.
                Quantitative and Qualitative Disclosures About Market Risk
            24PART
                II — OTHER INFORMATION
            25Item 1.
                Legal Proceedings
            25Item
                1A. Risk Factors
            25Item 2.
                Unregistered Sales of Equity Securities and Use of
                Proceeds
            25Item 3.
                Defaults Upon Senior Securities
            25Item 4.
                Submission of Matters to a Vote of Security Holders
            25Item 5.
                Other Information
            25Item 6.
                Exhibits
            25Signatures
            26


2




**PART
      I - Financial Information**




**Item
      1. Financial Statements**




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**CONSOLIDATED
      BALANCE SHEETS**





**September
                30,**
              **2008**
              **(Unaudited)**
            
            **December
                31,**
              **2007****ASSETS**Real
                estate investments, at cost:Land
            
            $
            14,633,064
            
            $
            —Buildings,
                fixtures and improvements
            
            
            82,842,992
            
            
            —Acquired
                intangible lease assets
            
            
            9,443,239
            
            
            —Total
                real estate investments, at cost
            
            
            106,919,295
            
            
            —Less
                accumulated depreciation and amortization
            
            
            (1,765,149
            )
            
            —Total real estate investments, net
            
            
            105,154,146
            
            
            —Cash
                and cash equivalents
            
            
            874,661
            
            
            —Restricted
                cash
            
            
            50,232
            
            
            —Prepaid
                expenses and other assets
            
            
            751,273
            
            
            938,157Fair value
              of
              derivative instruments
            
            
            479,364
            
            
            —Deferred
                financing costs, net
            
            
            974,780
            
            
            —Total
                assets
            
            $
            108,284,456
            
            $
            938,157**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Mortgage
                notes payable
            
            $
            77,067,200
            
            $
            —Related
                party notes payable
            
            
            6,500,000
            
            
            —Short-term
                mezzanine note payable
            
            
            3,953,796
            
            
            —Short-term
                convertible redeemable preferred obligation
            
            
            3,995,000
            
            
            —Related
                party credit facility
            
            
            7,147,587
            
            
            —Accounts
                payable and accrued expenses
            
            
            1,537,643
            
            
            453,832Investor contributions
                held in escrow
            
            
            30,824
            
            
            —Distributions
                payable
            
            
            61,425
            
            
            —Deferred
                rent and other liabilities
            
            
            554,124
            
            
            —Due
                to affiliates
            
            
            555,192
            
            
            284,825Total
                liabilities
            
            
            101,402,791
            
            
            738,657**STOCKHOLDERS’
                EQUITY**Preferred
                stock, $0.01 par value; 10,000,000 shares authorized, none issued
                and
                outstanding
            
            
            —
            
            
            —Common
                stock, $.01 par value; 240,000,000 shares authorized, 1,165,397 and
                20,000
                shares issued and outstanding at September 30, 2008 and December
                31, 2007,
                respectively
            
            
            11,654
            
            
            200Additional
                paid-in capital
            
            
            8,367,997
            
            
            199,800Accumulated
                other comprehensive income
            
            
            459,203
            
            
            —Accumulated
                deficit
            
            
            (1,957,189
            )
            
            (500
            )Total
                stockholders’ equity
            
            
            6,881,665
            
            
            199,500Total
                liabilities and stockholders’ equity
            
            $
            108,284,456
            
            $
            938,157




See
      accompanying notes to consolidated financial statements


3




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(Unaudited)**




**Three****Months
                  Ended**
                **September
                  30,****2008**
              
              **Nine****Months
                  Ended**
                **September
                  30****,****2008**Rental
                  income
              
              $
              1,593,871
              
              $
              3,156,379**Expenses**Property
                  management fees to affiliate
              
              
              -
              
              
              4,230General
                  and administrative
              
              
              19,188
              
              
              291,787Depreciation
                  and amortization
              
              
              857,187
              
              
              1,765,149Total
                  operating expenses
              
              
              876,375
              
              
              2,061,166**Operating
                  income**
              
              
              717,496
              
              
              1,095,213**Other
                  income (expenses)**Interest
                  expense
              
              
              (1,386,655
              )
              
              (2,758,625
              )Interest
                  income
              
              
              691
              
              
              1,907Gains
                  (losses) on derivative instruments
              
              
              (176,656
              )
              
              20,160Total
                  other expenses
              
              
              (1,562,620
              )
              
              (2,736,558
              )**Net
                  loss**
              
              $
              (845,124
              )
              $
              (1,641,345
              )**Basic
                  and diluted weighted average****common
                  shares outstanding**
              
              
              1,101,127
              
              
              699,883**Basic
                  and diluted loss per share**
              
              $
              (.77
              )
              $
              (2.35
              )




See
      accompanying notes to consolidated financial statements


4




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


**NINE
      MONTHS ENDED SEPTEMBER 30, 2008**


**(Unaudited)**


**Common
                  Stock****Number
                  of**
                **Shares**
              
              **Par
                  Value**
              
              **Additional**
                **Paid-In
                  Capital**
              
              **Accumulated**
                **Deficit**
              
              **Accumulated
                  Other Comprehensive Income**
              
              **Total
                  Stockholders’ Equity****Balance,
                  December 31, 2007**
              
              
              20,000
              
              $
              200
              
              $
              199,800
              
              $
              (500
              )
              $
              —
              
              $
              199,500Issuance
                  of common stock
              
              
              1,136,348
              
              
              11,364
              
              
              10,311,980
              
              
              —
              
              
              —
              
              
              10,323,344Offering
                  costs, commissions and dealer manager fees
              
              
              —
              
              
              —
              
              
              (2,229,655
              )
              
              —
              
              
              —
              
              
              (2,229,655
              )Common
                  stock issued through dividend reinvestment program
              
              
              9,049
              
              
              90
              
              
              85,872
              
              
              —
              
              
              —
              
              
              85,962Distributions
                  declared
              
              
              —
              
              
              —
              
              
              —
              
              
              (315,344
              )
              
              —
              
              
              (315,344
              )Accumulated
                  other comprehensive income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              459,203
              
              
              459,203Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,641,345
              )
              
              —
              
              
              (1,641,345
              )Total
                  comprehensive loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,182,142
              )**Balance,
                  September 30, 2008**
              
              
              1,165,397
              
              $
              11,654
              
              $
              8,367,997
              
              $
              (1,957,189
              )
              $
              459,203
              
              $
              6,881,665




See
      accompanying notes to consolidated financial statements


5




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(Unaudited)**




**Cash
                    flows from operating activities:**
                
                **Nine****Months
                    Ended**
                  **September
                    30, 2008**Net
                    loss
                
                $
                (1,641,345
                )Adjustments
                    to reconcile net loss to net cash
                  used
                    in operating activities:Depreciation
                
                
                1,477,951Amortization
                    of intangibles
                
                
                287,198Amortization
                    of deferred finance charges
                
                
                72,761Gains
                    on derivative instruments
                
                
                (20,160
                )Changes
                    in assets and liabilities:Prepaid
                    expenses and other assets
                
                
                (751,274
                )Accounts
                    payable and accrued
                  expenses
                
                
                1,312,062Deferred
                    rent and other liabilities
                
                
                554,124Net
                    cash provided by operating activities
                
                
                1,291,317**Cash
                    flows from investing activities:**Investment
                    in real estate and related assets
                
                
                (49,067,597
                )Net
                    cash used in investing activities
                
                
                (49,067,597
                )**Cash
                    flows from financing activities:**Proceeds
                    from notes payable
                
                
                26,475,000Payments
                    on notes payable
                
                
                (181,065
                )Payments
                    of deferred financing costs
                
                
                (1,047,541
                )Proceeds
                    from related party credit facility
                
                
                7,147,587Proceeds
                    from related party notes payable
                
                
                6,500,000Proceeds
                    from issuance of convertible redeemable preferred
                    obligation
                
                
                3,995,000Proceeds
                    from issuance of common stock, net
                
                
                5,980,149Distributions
                    paid
                
                
                (167,957
                )Restricted
                    cash
                
                
                (50,232
                )Net
                    cash provided by financing activities
                
                
                48,650,941**Net
                    increase in cash and cash equivalents**
                
                
                874,661**Cash
                    and cash equivalents, beginning of**
                  **period**
                
                
                -**Cash
                    and cash equivalents, end of period**
                
                $
                874,661**Supplemental
                    Disclosures of Non-Cash**
                  **Investing
                    and Financing Activities:**Debt
                    assumed in real estate acquisitions
                
                $
                54,727,061Common
                    share issuance in real estate
                  acquisition
                
                $
                3,051,695Investor
                    contributions held in escrow
                
                $
                30,824Non-cash
                    acquisition costs
                
                $
                42,118Common
                    stock issued through dividend reinvestment plan
                
                $
                85,962Reclassification
                    of deferred offering costs
                
                $
                938,157




See
      accompanying notes to consolidated financial statements


6




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




**Note
      1 — Organization**




American
      Realty Capital Trust, Inc. (the “Company”), incorporated on August 17, 2007, is
      a newly formed Maryland corporation that intends to qualify as a real estate
      investment trust (“REIT”) for federal income tax purposes beginning with the
      taxable year that will end December 31, 2008. On January 25, 2008, the
      Company commenced an initial public offering on a “best efforts” basis of up to
      150,000,000 shares of common stock offered at a price of $10.00 per
      share, subject to certain volume and other discounts, pursuant to a Registration
      Statement on Form S-11 filed with the Securities and Exchange Commission
      (the “SEC”) under the Securities Act of 1933, as amended (the “Offering”). The
      Registration Statement also covered up to 25,000,000 shares available
      pursuant to a distribution reinvestment plan (the “DRIP”) under which our
      stockholders may elect to have their distributions reinvested in additional
      shares of the Company’s common stock at the greater of $9.50 per share or
      95% of the estimated value of a share of common stock. The Company sold 20,000
      shares to American Realty Capital II, LLC (the “Sponsor”) on August 17, 2007, at
      $10.00 per share. As
      of
      September 30, 2008, the Company issued 1,165,397 shares of common stock,
      including 339,077 shares issued in connection with an acquisition in March
      2008
      - see Note 3 Real Estate Acquisitions. Total gross proceeds from these issuances
      were $10,523,344. As of September 30, 2008, the aggregate value of all share
      issuances and subscriptions outstanding was $13,667,108 based on a per share
      value of $10,00. This amount includes stock subscriptions of $2,103,628
      which are maintained at the Company’s third-party escrow agent, to be
      released when certain escrow requirements have been achieved.





Substantially
      all of the Company’s business is conducted through American Realty Capital
      Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The
      Company is the sole general partner of and owns a 99.01% partnership interest
      in
      the OP. American Realty Capital Advisors, LLC (the “Advisor”), the Company’s
      affiliated advisor, is the sole limited partner and owner of 0.99% (minority
      interest) of the partnership interests of the OP. In March 2008, the OP issued
      to the Company 20,000 Operating Partnership units in exchange for $200,000.
      Additionally, in April 2008, the Advisor contributed $2,000 to the Operating
      Partnership in exchange for a 0.99% limited partner interest in the Operating
      Partnership. The limited partner interests have the right to convert Operating
      Partnerships units into cash or, at the option of the Company, an equal number
      of common shares of the Company, as allowed by the limited partnership
      agreement. The remaining rights of the limited partner interests are limited,
      however, and do not include the ability to replace the general partner or to
      approve the sale, purchase or refinancing of the Operating Partnership’s
      assets.





The
      Company acquires and operates commercial properties. All such properties may
      be
      acquired and operated by the Company alone or jointly with another party. As
      of
      September 30, 2008, the Company owned 41 properties comprising approximately
      433,000 square feet of freestanding, single tenant commercial space concentrated
      in Pennsylvania and Massachusetts. As of September 30, 2008, these properties
      were 100% occupied. The Company may also acquire mortgages secured by real
      estate, with a view towards acquiring such real estate.





The
      Company is managed by the Advisor and American Realty Capital Properties, LLC,
      which serves as the Company’s property manager (“The Property Manager”). Realty
      Capital Securities, LLC (“The Dealer Manager”), an affiliate of the Sponsor,
      serves as the dealer manager of the Company’s Offering. These related parties
      receive compensation and fees for services related to the Offering and for
      the
      investment and management of the Company’s assets. These entities receive fees
      during the offering, acquisition, operational and liquidation stages. The
      compensation levels during the offering, acquisition and operational stages
      are
      discussed in Note 9 — Related Party Transactions and
      Arrangements.





The
      Company’s stock is not currently listed on a national securities exchange. The
      Company may seek to list its stock for trading on a national securities exchange
      only if a majority of its independent directors believe listing would be in
      the
      best interest of its stockholders. The Company does not intend to list its
      shares at this time. The Company does not anticipate that there would be any
      market for its common stock until its shares are listed for trading. In the
      event it does not obtain listing prior to the tenth anniversary of the
      completion or termination of the Offering, its charter requires that it either:
      (i) seek stockholder approval of an extension or amendment of this listing
      deadline; or (ii) seek stockholder approval to adopt a plan of liquidation
      of the corporation.


7




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**





**Note
      2 — Summary of Significant Accounting Policies**




***Basis
      of Presentation***




Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America have been condensed or consolidated pursuant to the
      rules and regulations of the Securities and Exchange Commission. Management
      believes, however, that the disclosures are adequate to make the information
      presented not misleading. The unaudited interim consolidated financial
      statements should be read in conjunction with the audited financial statements
      and the notes thereto included in the Company’s annual report on Form S-11 for
      the period from August 17, 2007 (date of inception) to December 31, 2007.
      In management’s opinion, all adjustments, consisting only of normal recurring
      adjustments, necessary to present fairly the consolidated financial position
      of
      the Company and the consolidated results of its operations and its cash flows,
      are included. The results of operations for such interim periods are not
      necessarily indicative of the results for the full year.





***Basis
      of Accounting***





The
      accompanying consolidated financial statements of the Company are prepared
      on
      the accrual basis of accounting in accordance with accounting principles
      generally accepted in the United States of America.





***Principles
      of Consolidation and Basis of Presentation***




The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries. All significant intercompany accounts and
      transactions have been eliminated in consolidation.





***Use
      of Estimates***





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.
      Management makes significant estimates regarding revenue recognition,
      investments in real estate, purchase price allocations and derivative financial
      instruments and hedging activities, as applicable.





***Real
      Estate Investments***





The
      Company records acquired real estate at cost and makes assessments as to the
      useful lives of depreciable assets. The Company considers the period of future
      benefit of the asset to determine the appropriate useful lives. Depreciation
      is
      computed using a straightline method over the estimated useful life of 40 years
      for buildings, five to ten years for building fixtures and improvements and
      the
      remaining lease term for acquired intangible lease assets.





***Allocation
      of Purchase Price of Acquired Assets***





Upon
      the
      acquisition of real properties, it is the Company’s policy to allocate the
      purchase price of properties to acquired tangible assets, consisting of land,
      building, fixtures and improvements, and identified intangible lease assets
      and
      liabilities, consisting of the value of above-market and below-market leases,
      as
      applicable, other value of in-place leases and value of tenant relationships,
      based in each case on their fair values. The Company utilizes independent
      appraisals and information management obtained on each property as a result
      of
      pre-acquisition due diligence, as well as subsequent marketing and leasing
      activities, as applicable, to determine the fair values of the tangible assets
      of an acquired property (which includes land and building), amongst other market
      data.





The
      fair
      values of above-market and below-market in-place lease values are recorded
      based
      on the present value (using an interest rate which reflects the risks associated
      with the leases acquired) of the difference between (a) the contractual amounts
      to be paid pursuant to the in-place leases and (b) an estimate of fair market
      lease rates for the corresponding in-place leases, which is generally obtained
      from independent appraisals, measured over a period equal to the remaining
      non-cancelable term of the lease. The above-market and below-market lease values
      are capitalized as intangible lease assets or liabilities and amortized as
      an
      adjustment of rental income over the remaining terms of the respective
      leases.




The
      fair
      values of in-place leases include direct costs associated with obtaining a
      new
      tenant, opportunity costs associated with lost rentals which are avoided by
      acquiring an in-place lease, and tenant relationships. Direct costs associated
      with obtaining a new tenant include commissions, tenant improvements, and other
      direct costs and are estimated based on independent appraisals and management’s
      consideration of current market costs to execute a similar lease. These direct
      costs are included in acquired intangible lease assets in the accompanying
      consolidated balance sheets and are amortized to expense over the remaining
      terms of the respective leases. The value of opportunity costs is calculated
      using the contractual amounts to be paid pursuant to the in-place leases over
      a
      market absorption period for a similar lease. Customer relationships are valued
      based on expected renewal of a lease or the likelihood of obtaining a particular
      tenant for other locations. These intangibles will be included in intangible
      lease assets in the balance sheet and are amortized to expense over the
      remaining term of the respective leases.


8




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**





The
      determination of the fair values of the assets and liabilities acquired requires
      the use of significant assumptions with regard to the current market rental
      rates, rental growth rates, discount rates and other variables. The use of
      inappropriate estimates would result in an incorrect assessment of the purchase
      price allocations, which could impact the amount of the Company’s reported net
      income. Initial purchase price allocations are subject to change until all
      information is finalized, which is generally within one year of the acquisition
      date.





As
      of
      September 30, 2008, acquired lease intangible assets consist only of in-place
      lease intangibles totaling $9,443,239 with accumulated amortization of
      $287,198.




***Derivative
      Instruments***




The
      Company may use derivative financial instruments to hedge all or a portion
      of
      the interest rate risk associated with its borrowings. Certain of the techniques
      used to hedge exposure to interest rate fluctuations may also be used to protect
      against declines in the market value of assets that result from general trends
      in debt markets. The principal objective of such agreements is to minimize
      the
      risks and/or costs associated with the Company’s operating and financial
      structure as well as to hedge specific anticipated transactions.




In
      accordance with Statement of Financial Accounting Standards (“SFAS”)
      No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as
      amended and interpreted (“SFAS No. 133”), the Company measures each
      derivative instrument (including certain derivative instruments embedded in
      other contracts) at fair value and records such amounts in its consolidated
      balance sheets as either an asset or liability. The accounting for changes
      in
      the fair value of derivatives depends on the intended use of the derivative
      and
      the resulting designation.   Derivatives used to hedge the exposure to
      changes in the fair value of an asset, liability, or firm commitment
      attributable to a particular risk, such as interest rate risk, are considered
      fair value hedges. Derivatives used to hedge the exposure to variability in
      expected future cash flows, or other types of forecasted transactions, are
      considered cash flow hedges.   For derivatives designated as fair value
      hedges or for derivatives not designated as hedges, the changes in fair value
      of
      both the derivative instrument and the hedged item are recorded in earnings.
      For
      derivatives designated as cash flow hedges, the changes in the fair value of
      the
      effective portions of the derivative are reported in other comprehensive income
      and subsequently reclassified to earnings when the hedged transaction affects
      earnings. The ineffective portion of the changes in fair value of the derivative
      is recorded in earnings immediately.




***Impairment
      of Long Lived Assets***





The
      Company follows SFAS No.144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets,” which establishes a single accounting model for the
      impairment or disposal of long-lived assets. SFAS No.144 requires that the
      operations related to properties that have been sold or properties that are
      intended to be sold be presented as discontinued operations in the statement
      of
      operations for all periods presented, and properties intended to be sold to
      be
      designated as “held for sale” on the balance sheet.





When
      circumstances indicate the carrying value of a property may not be recoverable,
      the Company reviews the asset for impairment. This review is based on an
      estimate of the future undiscounted cash flows, excluding interest charges,
      expected to result from the property’s use and eventual disposition. These
      estimates consider factors such as expected future operating income, market
      and
      other applicable trends and residual value, as well as the effects of leasing
      demand, competition and other factors. If impairment exists, due to the
      inability to recover the carrying value of a property, an impairment loss is
      recorded to the extent that the carrying value exceeds the estimated fair value
      of the property for properties to be held and used. For properties held for
      sale, the impairment loss is the adjustment to fair value less estimated cost
      to
      dispose of the asset. These assessments have a direct impact on net income
      because recording an impairment loss results in an immediate negative adjustment
      to net income.





***Investor
      contributions held in Escrow***




The
      Company is currently engaged in a public offering of its common stock. Included
      in investor contributions held in escrow on the accompanying balance sheets
      is
      $30,824 of offering proceeds for which shares of common stock had not been
      issued as of September 30, 2008.




***Revenue
      Recognition***





Upon
      the
      acquisition of real estate, certain properties will have leases where minimum
      rent payments increase during the term of the lease. The Company will record
      rental revenue for the full term of each lease on a straightline basis. When
      the
      Company acquires a property, the term of existing leases is considered to
      commence as of the acquisition date for the purposes of this calculation. In
      accordance with Staff Accounting Bulletin No. 101, “Revenue Recognition in
      Financial Statements,” the Company will defer the recognition of contingent
      rental income, such as percentage rents, until the specific target that triggers
      the contingent rental income is achieved. Cost recoveries from tenants are
      included in tenant reimbursement income in the period the related costs are
      incurred, as applicable.




The
      Companies’ revenues, which are derived primarily from rental income, include
      rents that each tenant pays in accordance with the terms of each lease reported
      on a straightline basis over the initial term of the lease. Since many of the
      leases provide for rental increases at specified intervals, straightline basis
      accounting requires the Company to record a receivable, and include in revenues,
      unbilled rent receivables that the Company will only receive if the tenant
      makes
      all rent payments required through the expiration of the initial term of the
      lease.




The
      Company continually reviews receivables related to rent and unbilled rent
      receivables and determines collectability by taking into consideration the
      tenant’s payment history, the financial condition of the tenant, business
      conditions in the industry in which the tenant operates and economic conditions
      in the area in which the property is located. In the event that the
      collectability of a receivable is in doubt, the Company will record an increase
      in the allowance for uncollectible accounts or record a direct write-off of
      the
      receivable in the consolidated statements of operations.




***Organization,
      Offering, and Related Costs***




Organization
      and offering costs (other than selling commissions and the dealer manager fee)
      of the Company may be paid by the Advisor, the Dealer Manager or their
      affiliates on behalf of the Company. Such organization and offering costs
      include all expenses to be paid by the Company in connection with the Offering,
      including but not limited to (i) legal, accounting, printing, mailing, and
      filing fees; (ii)  escrow related fees; (iii) reimbursement of the
      Dealer Manager for amounts it may pay to reimburse the bona fide diligence
      expenses of broker-dealers; and (iv) reimbursement to the Advisor for the
      salaries of its employees and other costs in connection with preparing
      supplemental sales materials. Pursuant to the Advisory Agreement and the Dealer
      Manager Agreement, the Company is obligated to reimburse the Advisor or its
      affiliates, as applicable, for organization and offering costs paid by them
      on
      behalf of the Company, provided that the Advisor is obligated to reimburse
      the
      Company to the extent organization and offering costs (excluding selling
      commissions, the dealer manager fee and bonafide due diligence cost
      reimbursements) incurred by the Company in the Offering exceed 1.5% of
      gross offering proceeds.


9




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




As
      a
      result, these costs are only a liability of the Company to the extent selling
      commissions, the dealer manager fee and other organization and offering costs
      do
      not exceed 15% of the gross proceeds of the Offering. Through
      September 30, 2008, the Company issued 1,165,397 shares of common stock,
      including 339,077 shares issued in connection with an acquisition in March
      2008
      - see Note 3 Real Estate Acquisitions. Total gross proceeds from these issuances
      were $10,523,344. As of September 30, 2008, the aggregate value of all share
      issuances and subscriptions outstanding was $13,667,108 based on a per share
      value of $10.00. This amount includes stock subscriptions of $2,103,628
      which are maintained at the Company’s third-party escrow agent, to be
      released when certain escrow requirements have been achieved.The Company
      recorded offering costs of $2,136,453 and selling commissions and
      dealer manager fees of $93,202 through September, 30, 2008. Organization costs
      are expensed as incurred within general and administrative expenses, and
      offering costs, which include selling commissions and dealer manager fees,
      are
      charged to stockholders’ equity as such amounts are reimbursed from the gross
      proceeds of the Offering.





***Reportable
      Segments***




The
      Financial Accounting Standards Board (“FASB”) issued SFAS No. 131,
“Disclosures about Segments of an Enterprise and Related Information,” (“SFAS
      No. 131”), which establishes standards for reporting financial and descriptive
      information about an enterprise’s reportable segments. The Company determined
      that it has one reportable segment, with activities related to investing in
      real
      estate. The Company’s investments in real estate generate rental revenue and
      other income through the leasing of properties, which comprised 100% of our
      total consolidated revenues for the nine-month period ended September 30, 2008.
      Although the Company’s investments in real estate will be geographically
      diversified throughout the United States, management evaluates operating
      performance on an individual property level. The Company’s properties have been
      aggregated into one reportable segment.





***Recent
      Accounting Pronouncements***




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
(“SFAS No. 157”), which addresses how companies should measure fair value
      when they are required to use a fair value measure for recognition or disclosure
      purposes under Generally Accepted Accounting Principles (“GAAP”). As a result of
      SFAS No. 157 there is now a common definition of fair value to be used
      throughout GAAP. The FASB believes that the new standard will make the
      measurement of fair value more consistent and comparable and improve disclosures
      about those measures. The effective date of SFAS No. 157 is delayed for one
      year for certain nonfinancial assets and nonfinancial liabilities, except those
      that are recognized or disclosed at fair value in the financial statements
      on a
      recurring basis (at least annually). Certain provisions of SFAS No. 157 are
      effective for the Company beginning in the first quarter of 2008. The adoption
      of SFAS No. 157 for financial assets and liabilities in the first quarter
      of 2008 did not have a material effect on the Company’s results of operations
      and financial position. The Company is currently evaluating the impact of
      adoption SFAS No. 157 for nonfinancial assets and liabilities, on its
      results of operations and financial position.





In
      February 2007, the FASB issued SFAS No. 159, “Fair Value Option for
      Financial Assets and Financial Liabilities,” (“SFAS No. 159”), which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value that are not currently required to be measured at
      fair
      value. The objective of SFAS No. 159 is to improve financial reporting by
      providing entities with the opportunity to mitigate volatility in reported
      earnings caused by measuring related assets and liabilities differently without
      having to apply complex hedge accounting provisions. SFAS No. 159 was
      effective for the Company beginning in the first quarter of 2008. The adoption
      of SFAS No. 159 did not have a material impact on the Company’s financial
      position, results of operations or cash flows in the first quarter of
      2008.





In
      December 2007, the FASB issued SFAS No. 141, (revised 2007), “Business
      Combinations,” (“SFAS No. 141(R)”), which continues the evolution toward
      fair value reporting and significantly changes the accounting for acquisitions
      that close beginning in 2009, both at the acquisition date and in subsequent
      periods. SFAS No. 141(R) introduces new accounting concepts and valuation
      complexities, and many of the changes have the potential to generate greater
      earnings volatility after the acquisition. SFAS No. 141(R) applies to
      acquisitions on or after January 1, 2009 and will impact the Company’s
      reporting prospectively only by requiring acquisition costs to be expensed
      rather than capitalized.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of Accounting Research Bulletin
      No. 51,” (“SFAS No. 160”), which requires companies to measure an
      acquisition of noncontrolling (minority) interest at fair value in the equity
      section of the acquiring entity’s balance sheet. The objective of SFAS
      No. 160 is to improve the comparability and transparency of financial data
      as well as to help prevent manipulation of earnings. The changes introduced
      by
      the new standards are likely to affect the planning and execution, as well
      as
      the accounting and disclosure, of merger transactions. The effective date to
      adopt SFAS No. 160 for the Company is January 1, 2009. The adoption of
      SFAS No. 160 is not expected to have a material effect on its results of
      operations and financial position.




In
      March 2008, the FASB issued SFAS No. 161, “Disclosures about
      Derivative Instruments and Hedging Activities,” an amendment of FASB Statement
      No. 133 “Accounting for Derivative Instruments and Hedging Activities”
(“SFAS No. 161”) requires entities to provide greater transparency about
      how and why an entity uses derivative instruments, how derivative instruments
      and related hedged items are accounted for under SFAS No. 133, and how
      derivative instruments and related hedged items affect an entity’s financial
      position, results of operations, and cash flows. The statement is effective
      for
      financial statements issues for fiscal years and interim periods beginning
      after
      November 15, 2008, and is not expected to have a significant impact on the
      Company’s results of operations, financial condition or liquidity .





In
      April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3,
      which amends the factors that must be considered in developing renewal or
      extension assumptions used to determine the useful life over which to amortize
      the cost of a recognized intangible asset under SFAS No. 142, “Goodwill and
      Other Intangible Assets.” The FSP requires an entity to consider its own
      assumptions about renewal or extension of the term of the arrangement,
      consistent with its expected use of the asset, and is an attempt to improve
      consistency between the useful life of a recognized intangible asset under
      SFAS
      No. 142 and the period of expected cash flows used to measure the fair
      value of the asset under SFAS No. 141, “Business Combinations.” The FSP is
      effective for fiscal years beginning after December 15, 2008, and the
      guidance for determining the useful life of a recognized intangible asset must
      be applied prospectively to intangible assets acquired after the effective
      date.
      The FSP is not expected to have a significant impact on the Company’s results of
      operations, financial condition or liquidity.





In
      May 2008, the FASB issued SFAS No. 162, “The Hierarchy of
      Generally Accepted Accounting Principles” (“SFAS No. 162”). The statement is
      intended to improve financial reporting by identifying a consistent hierarchy
      for selecting accounting principles to be used in preparing financial statements
      that are prepared in conformance with generally accepted accounting principles.
      Unlike Statement on Auditing Standards (“SAS”) No. 69, “The Meaning of
      Present in Conformity With GAAP,” SFAS No. 162 is directed to the entity
      rather than the auditor. The statement is effective 60 days following the
      SEC’s approval of the Public Company Accounting Oversight Board
      (“PCAOB”) amendments to AU Section 411, “The Meaning of Present Fairly
      in Conformity with GAAP,” and is not expected to have any impact on the
      Company’s results of operations, financial condition or liquidity.





In
      June 2008, the FASB issued FSP Emerging Issues Task Force
      (EITF) No. 03-6-1, “Determining Whether Instruments Granted in
      Share-Based Payment Transactions Are Participating Securities.” Under the FSP,
      unvested share-based payment awards that contain rights to receive
      nonforfeitable dividends (whether paid or unpaid) are participating securities,
      and should be included in the two-class method of computing EPS. The FSP is
      effective for fiscal years beginning after December 15, 2008, and interim
      periods within those years, and is not expected to have a significant impact
      on
      the Company’s results of operations, financial condition or
      liquidity.


10




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




**Note
      3 — Real Estate Acquisitions**




During
      the three months and nine months ended September 30, 2008, the Company acquired
      7 and 41 properties, respectively. The following table presents the allocation
      of the assets acquired and liabilities assumed during the period:




**Three
                  Months Ended**
                **September
                  30, **2008****
              
              **Nine
                  Months Ended September 30, **2008****Real
                  estate investments, at cost:Land
              
              $
              2,991,519
              
              
              14,633,064Buildings,
                  fixtures and improvements
              
              
              16,951,939
              
              
              82,842,99219,943,458
              
              
              97,476,056Intangibles
                  and other assets:In-place
                  leases
              
              
              1,980,324
              
              
              9,443,239Total
                  assets acquired
              
              
              21,923,782
              
              
              106,919,295Liabilities
                  assumed:Mortgage
                  notes
              
              
              (12,808,265
              )
              
              (50,773,265
              )Mezzanine
                  financing
              
              
              —
              
              
              (3,953,796
              )Investor
                  contributions held in escrow
              
              
              441,724
              
              
              (30,824
              )Other
                  liabilities
              
              
              34,182
              
              
              (42,118
              )Total
                  liabilities assumed:
              
              
              (12,332,359
              )
              
              (54,800,003
              )Issuance
                  of common shares
              
              
              (441,724
              )
              
              (3,051,695
              )Cash
                  paid
              
              $
              9,149,699
              
              $
              49,067,597


11




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




During
      the nine months ended September 30, 2008, the Company acquired the following
      properties:


**Seller
                  / Property Name**
              
              **Acquisition
                  Date**
              
              **No.
                  of Buildings**
              
              **Square
                  Feet**
              
              **Remaining
                  Lease Term (1)**
              
              **Net
                  Operating Income
                  (2)**
              
              **Base
                  Purchase Price
                  (3)**
              
              **Capitalization
                  Rate (4)**
              
              **Purchase
                  Price
                  (5)**Federal
                  Express Distribution Center
              
              March
                  2008
              
              1
              
              55,440
              
              10.5
              
              $
              729,245
              
              $
              9,694,179
              
              7.52%
              
              $
              10,198,996Harleysville
                  National Bank Portfolio
              
              March
                  2008
              
              15
              
              177,774
              
              14.3
              
              
              3,003,838
              
              
              40,976,218
              
              7.33%
              
              
              41,663,221Rockland
                  Trust Company Portfolio
              
              May
                  2008
              
              18
              
              121,057
              
              12.8
              
              
              2,529,665
              
              
              32,188,000
              
              7.86%
              
              
              33,133,296National
                  City Bank
              
              September
                  2008
              
              1
              
              3,740
              
              20.4
              
              
              250,085
              
              
              3,000,000
              
              8.34%
              
              
              3,089,391Rite
                  Aid
              
              September
                  2008
              
              6
              
              74,919
              
              14.8
              
              
              1,446,843
              
              
              18,575,727
              
              7.79%
              
              
              18,834,391Total
              
              
              
              41
              
              432,930
              
              13.74
              
              $
              7,959,676
              
              $
              104,434,124
              
              7.62%
              
              $
              106,919,295


________________________





(1)
            -Remaining
                lease term as of September 30, 2008, in years. If the portfolio has
                multiple locations with varying lease expirations, remaining lease
                term is
                calculated on a weighted-average basis.(2)
            -Annualized
                2008 rental income less property operating expenses, as
                applicable.(3)
            -Contract
                purchase price excluding acquisition related costs.(4)
            -Net
                operating income divided by base purchase price.(5)
            -Base
                purchase price plus all acquisition related
                costs.




In
      March
      2008, the Company acquired a Federal Express Distribution center located in
      Pennsylvania from a related party - see Note 9. In connection with this
      transaction, the Company assumed a mortgage note obligation of $6,965,000,
      which
      bears interest at a fixed rate of 6.29%. This note is interest only through
      September 1, 2014 and then amortizes through September 1, 2037, with a final
      balloon payment due on such date.  This property was acquired in exchange
      for 342,502 shares of common stock valued at approximately $3,083,000, of which,
      339,077 shares were issued and outstanding as of September 30, 2008. The
      remainder of the shares was recorded as investor contributions held in escrow
      on
      the accompanying balance sheets and are expected to be issued within the next
      twelve months. The lease expires on November 30, 2018 and includes renewal
      options.




In
      March
      2008, the Company acquired a fifteen building portfolio 100% leased to
      Harleysville National Bank from a related party - see Note 9. These properties
      are all located in Pennsylvania. In connection with this transaction, the
      Company assumed a mortgage note obligation of $31,000,000, which bears interest
      at a fixed effective rate of 6.59%. This note is interest only through January
      1, 2011 and then amortizes through January 1, 2018, with a final balloon payment
      due on such date. In addition, the Company assumed a mezzanine financing
      obligation of approximately $3,954,000. This obligation bears interest at a
      fixed effective rate of 12.49% and matures in January 2009. The Company
      borrowed $4,000,000 from a principal of the Advisor in connection with this
      acquisition- see Note 4. The initial term of the master lease expires on
      December 31, 2022 and includes renewal options.





In
      May
      2008, the Company acquired an eighteen building portfolio 100% leased to
      Rockland Trust Company. Independent Bank Corp. operates as the holding company
      for Rockland Trust Company. These properties are all located throughout
      Southeastern Massachusetts and Cape Cod. In connection with this transaction,
      the Company financed a portion of the purchase price with a mortgage note
      obligation of $24,412,500, which bears interest at 30 day LIBOR plus 1.375%.
      The
      Company entered into a rate lock agreement to limit its interest rate exposure.
      The LIBOR floor and cap are 3.54% and 4.125% (initial year), respectively.
      This
      note amortizes through May 1, 2013 on a 25-year schedule, with a final balloon
      payment due on such date. In addition, the Company funded a portion of the
      acquisition with a short-term convertible redeemable preferred obligation of
      $3,995,000. This obligation bears interest at a fixed effective rate of
      14.27% and matures in April, 2009. The Company also borrowed $2,500,000 from
      two
      principals of the Advisor in connection with this acquisition - see Note 4.
      The
      lease expiration varies on a per property basis, expiring either on April 30,
      2018 or April 30, 2023, with a weighted average initial term of 12.8 years,
      excluding renewal options.




In
      September 2008, the Company acquired a National City Bank branch located in
      Florida from a related party - see Note 9. In connection with this transaction,
      the Company financed a portion of the purchase price with a mortgage note
      obligation of $2,062,500, which bears interest at 30 day LIBOR plus 1.5%. The
      Company entered into a rate lock agreement to limit its interest rate exposure
      on a total of loan obligations of $4,500,000. The Company has closed on
      $2,062,500 of this obligation - see Note 13 - Subsequent Events, with respect
      to
      closing of the remaining $2,437,500 under this loan obligation. The LIBOR floor
      and cap are 3.37% and 4.45% (initial year), respectively for a notional contract
      amount of $4,115,000 and a fixed rate of 3.565% on a notional contract amount
      of
      $385,000. This note amortizes through September 16, 2013 on a 27-year schedule,
      with a final balloon payment due on such date. The Company borrowed
      approximately $1,040,000 from a related party under an unsecured credit facility
      in connection with this acquisition - see Note 4. The lease expires January
      31,
      2029, excluding renewal options.





In
      September 2008, the Company acquired a six building portfolio 100% leased to
      Rite Aid from a related party - see Note 9. These properties are located in
      Ohio
      and Pennsylvania. In connection with this transaction, the Company assumed
      a
      mortgage note obligation of $12,808,265, which bears interest at a fixed
      effective rate of 6.97%. This note is interest only through November 6, 2012
      and
      then amortizes through September 7, 2017, with a final balloon payment due
      on
      such date. The Company borrowed approximately $6,108,000 from a related party
      under an unsecured credit facility in connection with this acquisition - see
      Note 4. The lease expiration varies on a per property basis, expiring between
      December 2016 and October 2027, with a weighted average initial term of 14.8
      years, excluding renewal options.




**Note
      4 — Mortgage and Other Notes Payable**




As
      of
      September 30, 2008, the Company had total mortgage and other notes payable
      outstanding of $85,015,996. During the nine months ended September 30, 2008,
      the
      Company incurred, or assumed, the following mortgage notes payable in connection
      with the real estate acquisitions described in Note 3 above:





**Property**
            
            **Encumbered
                Properties**
            
            **Outstanding**
              **Loan
                Amount**
            
            **Effective
                Interest Rate**
            
            
            
            **Interest
                Rate**
            
            **Maturity****Federal
                Express Distribution Center**
            
            
            1Mortgage
            
            
            
            
            $
            6,965,000
            
            
            6.29
            %
            
            
            
            
            Fixed
            
            
            September
                2037**Harleysville
                National Bank Portfolio**
            
            
            15Mortgage
            
            
            
            
            
            31,000,000
            
            
            6.59
            %
            
            (1
                )
            
            
            Fixed
            
            
            January
                2018Mezzanine
                  financing
            
            
            
            
            
            3,953,796
            
            
            12.49
            %
            
            
            
            
            Fixed
            
            
            January
                2009**Rockland
                Trust Company Portfolio**
            
            
            18Mortgage
            
            
            
            
            
            24,231,435
            
            
            3.92
            %
            
            (2
                )
            
            
            Variable
            
            
            May
                2013Mezzanine
                  financing
            
            
            
            
            
            3,995,000
            
            
            14.27
            %
            
            
            
            
            Fixed
            
            
            April
                2009**National
                City Bank Portfolio**
            
            
            1Mortgage
            
            
            
            
            
            2,062,500
            
            
            4.04
            %
            
            (3
                )
            
            
            Variable
            
            
            September
                2013**Rite
                Aid**
            
            
            6Mortgage
            
            
            
            
            
            12,808,265
            
            
            6.97
            %
            
            
            
            
            Fixed
            
            
            September
                2017**Total**
            
            
            
            
            $
            85,015,996


________________________




(1) 
                -
            
            The
                effective interest rate resets at the end of year five to the then
                current
                5-year Treasury rate plus 2.25%, but in no event will be less than
                6.5%.(2) 
                -
            
            The
                Company limited its interest rate exposure by entering into a rate
                lock
                agreement with a LIBOR floor and cap of 3.54% and 4.125% (initial
                year),
                respectively.(3) 
                -
            
            The
                Company limited its interest rate exposure by entering into a rate
                lock
                agreement with a LIBOR floor and cap of 3.37% and 4.45% (initial
                year),
                respectively for a notional contract amount of approximately $4,115,000
                and a fixed rate of 3.565% on a notional contract amount of approximately
                $385,000. For the period ended September 30, 2008, the Company had
                closed
                on $2,062,500 of this debt
                obligation.


12




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**





In
      addition, during the nine months ended September 30, 2008, the OP entered into
      an agreement with the principals of the Advisor whereby the OP can borrow
      from the principals up to $10 million from time to time as needed to
      provide short-term financing relating to property acquisitions. Such borrowings
      need to be repaid within a six month period and will accrue interest at a
      commercially reasonable rate. In November 2008, the board approved an extension
      of the repayment period of an additional six months. In connection with the
      acquisition of the Harleysville National Bank and the Rockland Trust Company
      portfolios outlined in Note 3, the Company borrowed $4.0 and $2.5 million
      respectively, accruing interest at an annual rate of 8.0% and can be paid off
      without penalty.





During
      the nine months ended September 30, 2008, the REIT entered into an unsecured
      credit facility with a related party, American Realty Capital Bridge, LLC (“ARC
      Bridge”), whereby the REIT can borrow up to $10,000,000 from time to time as
      needed to provide short-term financing relating to property acquisitions -
      see
      Note 9 — Related-Party Transactions and Arrangements.





The
      following table summarizes the scheduled aggregate principal repayments for
      the
      five years subsequent to September 30, 2008:




**Mortgage
                  Notes**
              
              **Short-Term
                  Mezzanine Notes**
              
              **Short-Term
                  Convertible Redeemable Preferred Obligation**
              
              **Related
                  Party Notes Payable**
              
              **Related
                  Party Credit Facility**
              
              **Total**2008
              
              $
              125,988
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              125,9882009
              
              
              522,875
              
              
              3,953,796
              
              
              3,995,000
              
              
              6,500,000
              
              
              7,147,587
              
              
              22,119,2582010
              
              
              555,077
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              555,0772011
              
              
              1,370,820
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,370,8202012
              
              
              1,478,597
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,478,5972003
                  and thereafter
              
              
              73,013,843
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              73,013,843-
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Total
              
              $
              77,067,200
              
              $
              3,953,796
              
              $
              3,995,000
              
              $
              6,500,000
              
              $
              7,147,587
              
              $
              98,663,583




As
      of
      September 30, 2008, the Company was in compliance with the debt covenants under
      theloan agreements.





**Note
      5 — Interest Rate Risk And Derivative Instruments**





The
      primary market risk to the Company is interest rate risk.  Interest
      rates are highly sensitive to many factors, including governmental monetary
      and
      tax policies, domestic and international economic and political considerations
      and other factors beyond the Company’s control.  Changes in the
      general level of interest rates can affect net interest income, which is the
      difference between the interest income earned on interest-earning assets and
      the
      interest expense incurred in connection with the interest-bearing liabilities,
      by affecting the spread between the interest-earning assets and interest-bearing
      liabilities.  Changes in the level of interest rates also can affect
      the value of the Company’s interest-earning assets and the Company’s ability to
      realize gains from the sale of these assets.  A decline in the value
      of the Company’s interest-earning assets pledged as collateral for borrowings
      under repurchase agreements could result in the counterparties demanding
      additional collateral pledges or liquidation of some of the existing collateral
      to reduce borrowing levels.




The
      Company seeks to manage the extent to which net income changes as a function
      of
      changes in interest rates by matching adjustable-rate assets with variable-rate
      borrowings.  During periods of changing interest rates, interest rate
      mismatches could negatively impact the Company’s consolidated financial
      condition, consolidated results of operations and consolidated cash
      flows.  In addition, the Company mitigates the potential impact on net
      income of periodic and lifetime coupon adjustment restrictions in its investment
      portfolio by entering into interest rate hedging agreements such as interest
      rate collars and swaps.





At
      September 30, 2008, the Company had two interest rate collar contracts
      outstanding whereby the Company’s exposure to variable interest rates is limited
      by locking in a ceiling and floor for the underlying variable interest rate,
      one-month LIBOR. The first contract established the ceiling and floor for the
      underlying rate at 4.125% and 3.54%, respectively. The aggregate notional amount
      of this contract was approximately $24,200,000 at September 30, 2008. The second
      contract set the ceiling and floor for the underlying rate at 4.45% and 3.37%,
      respectively. The aggregate notional amount of this contract was approximately
      $4,100,000 at September 30, 2008.




The
      Company had two swap contracts outstanding at September 30, 2008. The first
      contract swaps the variable rate of one-month LIBOR for a fixed rate of 3.565%.
      The aggregate notional amount of this contract was approximately $385,000 as
      of
      September 30, 2008. The second contract swaps one-month LIBOR for a fixed rate
      of 3.60%. The aggregate notional amount of this contract was approximately
      $33,300,000 at September 30, 2008. This contract relates to an acquisition
      of
      bank branches which the Company expects to close in November 2008.





The
      estimated fair value of the Company’s derivative instruments was $479,364 as of
      September 30, 2008.





**Note
      6 — Fair Value of Financial Instruments**





Effective
      January 1, 2008, the Company adopted the provisions of SFAS No. 157 which did
      not have a material effect on the Company’s consolidated financial
      statements.  SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value, and expands disclosures about fair value measurements.
      The
      SFAS No. 157 framework for measuring fair value requires an entity to maximize
      the use of observable inputs and minimize the use of unobservable inputs when
      measuring fair value. The Company determines fair value based on quoted prices
      when available or through the use of alternative approaches, such as discounting
      the expected cash flows using market interest rates commensurate with the credit
      quality and duration of the investment.  This alternative approach
      also reflects the contractual terms of the derivatives, including the period
      to
      maturity, and uses observable market-based inputs, including interest rate
      curves, and implied volatilities. SFAS No. 157’s hierarchy defines three levels
      of inputs that may be used to measure fair value:





*Level
      1* - Quoted
      prices in active markets for identical assets and liabilities that the reporting
      entity has the ability to access at the measurement date.




*Level
      2* - Inputs
      other than quoted prices included within Level 1 that are observable for the
      asset and liability or can be corroborated with observable market data for
      substantially the entire contractual term of the asset or
      liability.





*Level
      3* -
      Unobservable inputs that reflect the entity’s own assumptions about the
      assumptions that market participants would use in the pricing of the asset
      or
      liability and are consequently not based on market activity, but rather through
      particular valuation techniques.





The
      determination of where an asset or liability falls in the hierarchy requires
      significant judgment and considers factors specific to the asset or
      liability.   In instances where the determination of the fair value
      measurement is based on inputs from different levels of the fair value
      hierarchy, the level in the fair value hierarchy within which the entire fair
      value measurement falls is based on the lowest level input that is significant
      to the fair value measurement in its entirety. The Company evaluates its
      hierarchy disclosures each quarter; and depending on various factors, it is
      possible that an asset or liability may be classified differently from quarter
      to quarter.  However, the Company expects that changes in
      classifications between levels will be rare.





Although
      the Company has determined that the majority of the inputs used to value its
      derivatives fall within Level 2 of the fair value hierarchy, the credit
      valuation adjustments associated with those derivatives utilize Level 3
      inputs, such as estimates of current credit spreads to evaluate the likelihood
      of default by the Company and its counterparties.  However, as of
      September 30, 2008, the Company has assessed the significance of the impact
      of
      the credit valuation adjustments on the overall valuation of its derivative
      positions and has determined that the credit valuation adjustments are not
      significant to the overall valuation of the Company’s derivatives.  As
      a result, the Company has determined that its derivative valuations in their
      entirety are classified in Level 2 of the fair value
      hierarchy.





The
      following table presents information about the Company’s assets (including
      derivatives that are presented net) measured at fair value on a recurring basis
      as of September 30, 2008, aggregated by the level in the fair value hierarchy
      within with those instruments fall:




**Quoted
                  Prices in**
                **Active
                  Markets**
                **Level
                  1**
              
              **Significant
                  Other Observable Inputs**
                **Level
                  2**
              
              **Significant**
                **Unobservable
                  Inputs**
                **Level
                  3**
              
              **Balance
                  as of**
                **September
                  30, 2008**Total
                  derivatives, net
              
              $
              —
              
              $
              479,364
              
              $
              —
              
              $
              479,364




**Note 7
      — Derivative Financial Instruments**




The
      Company may use derivative financial instruments, including interest rate swaps,
      caps, options, floors and other interest rate derivative contracts, to hedge
      all
      or a portion of the interest rate risk associated with our borrowings. The
      principal objective of such arrangements is to minimize the risks and/or costs
      associated with the Company’s operating and financial structure as well as to
      hedge specific anticipated transactions. The Company does not intend to utilize
      derivatives for speculative or others purposes other than interest rate risk
      management. The use of derivative financial instruments carries certain risks,
      including the risk that the counterparties to these contractual arrangements
      are
      not able to perform under the agreements. To mitigate this risk, the Company
      only enters into derivative financial instruments with counterparties with
      high
      credit ratings and with major financial institutions with which the Company
      and
      its affiliates may also have other financial relationships. The Company does
      not
      anticipate that any of the counterparties will fail to meet their
      obligations.




As
      of
      September 30, 2008, the Company had several interest rate derivative contracts
      used to hedge interest rate exposure on its indebtedness. The Company had two
      interest rate collar contracts outstanding at September 30, 2008. At inception,
      there was no premium exchanged for these contracts and they effectively had
      a
      fair value equal to zero. The first collar contract, with an aggregate notional
      amount of $24,200,000 at September 30, 2008, was not able to be designated
      under
      SFAS No. 133 as it does not qualify for hedge accounting based on the results
      of
      the net written option test. As such, all changes in the fair value of the
      interest rate collar have been included in the Company’s statement of operations
      for the quarter ended September 30, 2008. The second collar contract with a
      notional amount of $4,100,000 does qualify for hedge accounting and is expected
      to be a highly effective cash flow hedge. As such, all fair value adjustments
      for the effective portion of the hedge will be reflected in accumulated other
      comprehensive income and the amount of ineffectiveness, if any, will be recorded
      in the statement of operations.





As
      of
      September 30, 2008 the Company had two interest rate swap contracts. Both
      contracts, with aggregate notional amounts of $385,000 and $33,300,000, qualify
      as effective cash flow hedges under SFAS No. 133. The fair value of these
      contracts is recorded on the balance sheet with the effective portion of the
      hedge recorded in other comprehensive income, and the amount of ineffectiveness,
      if any, is recorded in the statement of operations. Amounts reported in
      accumulated other comprehensive income related to derivatives will be
      reclassified to interest expense as interest payments are made on the Company’s
      variable rate debt. During the next twelve months, the Company estimates that
      $133,000 will be reclassified as a reduction to interest expense.





The
      table
      below summarizes the aggregate notional amount and estimated net fair value
      of
      our derivative instruments as of September 30, 2008:





**As
                  of September 30, 2008****Notional**
              
              **Fair Value****Derivatives:**Interest
                  rate swaps
              
              $
              33,684,732
              
              $
              451,269Interest
                  rate collar
              
              
              28,346,703
              
              
              28,095Total
              
              $
              62,031,435
              
              $
              479,364





The
      following table summarizes by derivative instrument type the effect on income
      for the following periods:




**For the Quarter Ended**
              **September 30, 2008****Type
                of Derivative**
            
            **Amounts Reclassified**
              **to
                Earnings for**
              **Effective
                Hedges -**
              **Gains
                (Losses)**
            
            **Amounts**
              **Reclassified
                to**
              **Earnings
                for**
              **Hedge**
              **Ineffectiveness -**
              **Gains
                (Losses)**Interest
                rate collar, not designated
            
            $
            —
            
            $
            (244,572
            )Interest
                rate collar and swap, designated cash flow hedges
            
            
            —
            
            
            1,202Total
            
            $
            —
            
            $
            (243,370
            )




Amounts
      reclassified to earnings associated with ineffective cash flow hedges are
      reported in other income and the fair value of these hedge agreements is
      included in prepaid expenses and other assets.




**Note 8
      — Commitments and Contingencies**




***Litigation***




In
      the
      ordinary course of business, the Company may become subject to litigation or
      claims. There are no material legal proceedings pending or known to be
      contemplated against us.




***Environmental
      Matters***




In
      connection with the ownership and operation of real estate, the Company may
      potentially be liable for costs and damages related to environmental matters.
      The Company has not been notified by any governmental authority of any
      non-compliance, liability or other claim, and the Company is not aware of any
      other environmental condition that it believes will have a material adverse
      effect on the consolidated results of operations.


13




**Note 9
      — Related-Party Transactions and Arrangements**




Certain
      affiliates of the Company receive, and will continue to receive, fees and
      compensation in connection with the sale of the Company’s common stock, and the
      acquisition, management and sale of the assets of the Company. The Dealer
      Manager receives, and will continue to receive, a selling commission of up
      to
      7.0% of gross offering proceeds before reallowance of commissions earned by
      participating broker-dealers. The Dealer Manager reallows, and intends to
      continue to reallow, 100% of commissions earned to participating broker-dealers.
      In addition, the Dealer Manager will receive up to 3.0% of the gross proceeds
      from the Offering, before reallowance to participating broker-dealers, as a
      dealer-manager fee. The Dealer Manager, in its sole discretion, may reallow
      all
      or a portion of its dealer-manager fee to such participating broker-dealers,
      based on such factors as the volume of shares sold by such participating
      broker-dealers and marketing support incurred as compared to those of other
      participating broker-dealers. No selling commissions or dealer-manager fees
      are
      paid to the Dealer Manager in respect of shares sold under the DRIP. During
      the
      three and nine months ended September 30, 2008, the Company paid $55,996 and
      $93,202, respectively, to the Dealer Manager for commissions and dealer manager
      fees, of which $2,385 was reallowed to participating
      broker-dealers.




All
      organization and offering expenses associated with the sale of the Company’s
      common stock (excluding selling commissions and the dealer-manager fee) are
      paid
      for by the Advisor or its affiliates and are reimbursed by the Company up to
      1.5% of gross offering proceeds. The Advisor receives an acquisition and
      advisory fee of 1.0% of the contract purchase price of each acquired property
      and will be reimbursed for acquisition costs incurred in the process of
      acquiring properties, but not to exceed 0.5% of the contract purchase price.
      In
      no event will the total of all fees and acquisition expenses payable with
      respect to a particular property or investment exceed 4.0% of the contract
      purchase price. During the three months ended September 30, 2008, the Company
      reimbursed the Advisor $0 and $215,757 for organizational and offering expenses
      and acquisition costs, respectively. Organization and offering expenses were
      waived by the Advisor during the three months ended September 30, 2008. During
      the nine months ended September 30, 2008, the Company reimbursed the Advisor
      $59,207 and $1,047,874 for organizational and offering expenses and acquisition
      costs, respectively. The $59,207 of offering and organizational expenses
      reimbursed by the Company is net of $60,000 refunded by the Advisor to the
      Company during the three months ended September 30, 2008, to improve the
      Company’s overall working capital position. The Company incurred and capitalized
      acquisition advisory fees of $215,757 and $1,047,874 during the three and nine
      months ended September 30, 2008, all of which were paid as of September 30,
      2008.


14




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




The
      Advisor receives a financing coordination fee equal to 1.0% of the amount
      available under such financing. During the three and nine months ended September
      30, 2008, the Company incurred finance coordination fees of $187,212 and
      $810,987, respectively, paid to its affiliated Advisor.




The
      Company pays its affiliated Property Manager fees for the management and leasing
      of the Company’s properties. Such fees equal 2.0% of gross revenues from the
      Company’s single tenant properties and 4.0% of the gross revenues from its
      multi-tenant properties, plus reimbursement of the Property Managers’ costs of
      managing the properties. In the event that the Property Manager assists a tenant
      with tenant improvements, a separate fee may be charged to the tenant by the
      Property Manager at a fee not to exceed 5.0% of the cost of such tenant
      improvements. The Property Manager will be paid leasing commissions at
      prevailing market rates and may also receive a fee for the initial leasing
      of
      newly constructed properties, which generally would equal one month’s rent. The
      aggregate of all property management and leasing fees paid to affiliates plus
      all payments to third parties will not exceed the amount that other
      nonaffiliated management and leasing companies generally charge for similar
      services in the same geographic location. The Property Manager may subcontract
      its duties for a fee that may be less than the fee provided for in the property
      management agreement. During the three and nine months ended September 30,
      2008,
      the Company paid the Property Manager $0 and $4,230 for property management
      fees, respectively. The Property Manager has elected to waive its management
      fee
      for the three months ended September 30, 2008.




The
      Company pays the Advisor an annualized asset management fee of 1.0% based on
      the
      aggregate contract purchase price of all properties. The asset management fee
      is
      payable quarterly in advance on the first day of the month following the end
      of
      each calendar quarter end. The Advisor has elected to waive its asset management
      fee for the nine months ended September 30, 2008.




If
      the
      Advisor or its affiliates provides a substantial amount of services, as
      determined by the Company’s independent directors, in connection with the sale
      of property, the Company will pay the Advisor a brokerage commission not to
      exceed the lesser of one-half of a reasonable, customary and competitive real
      estate commission or 3.0% of the contract price for the property sold, inclusive
      of any commission paid to outside brokers provided, however, in no event may
      the
      real estate commissions paid to the Advisor, its affiliates or unaffiliated
      third-parties exceed 6% of the contract price. In addition, after investors
      have
      received a return of their net capital contributions and a 6.0% annual
      cumulative, non-compounded return, then the Advisor is entitled to receive
      15.0%
      of remaining net sale proceeds. During the nine months ended September 30,
      2008,
      the Company did not pay any fees or amounts to the Advisor relating to the
      sale
      of properties.




In
      the
      event the Company’s common stock is listed in the future on a national
      securities exchange, a subordinated incentive listing fee equal to 15.0% of
      the
      amount by which the market value of the Company’s outstanding stock plus all
      distributions paid by the Company prior to listing, exceeds the sum of the
      total
      amount of capital raised from investors plus an amount equal to a 6.0% annual
      cumulative, non-compounded return to investors will be paid to the
      Advisor.




In
      the
      event that the advisory agreement with the Advisor is terminated upon a change
      of control of the Company, by the Company without cause, or by the Advisor
      for
      good reason (as such terms may be defined in the definitive agreement
      memorializing the engagement of the Advisor by the Company), the Company shall
      pay the Advisor a termination fee not to exceed 15.0% of the amount, if any,
      by
      which the appraised value of the properties owned by the Company on the date
      of
      such termination, less amounts of all indebtedness secured by such properties
      exceeds the dollar amount equal to the sum of a 6.0% cumulative non-compound
      return on the Company's stockholders' net investment plus the amount of such
      investment.





The
      Company may reimburse the Advisor for all expenses it paid or incurred in
      connection with the services provided to the Company, subject to the limitation
      that the Company does not reimburse for any amount by which its operating
      expenses (including the asset management fee) at the end of the four preceding
      fiscal quarters exceeds the greater of (i) 2.0% of average invested assets,
      or (ii) 25% of net income other than any additions to reserves for depreciation,
      bad debts or other similar non-cash reserves and excluding any gain from the
      sale of assets for that period. The Company will not reimburse for personnel
      costs in connection with services for which the Advisor receives acquisition
      fees or real estate commissions. During the nine months ended September 30,
      2008, the Company did not reimburse the Advisor for any such costs.





During
      the nine months ended September 30, 2008, the OP entered into an agreement
      with
      the principals of the Advisor whereby the OP can borrow from the principals
      up to $10,000,000 from time to time as needed to provide short-term
      financing relating to property acquisitions. Such borrowings need to be repaid
      within a six month period and will accrue interest at a commercially reasonable
      rate. In November 2008, the board approved an extension of the repayment period
      of an additional six months. In connection with the acquisition of the
      Harleysville National Bank and the Rockland Trust Company portfolios outlined
      in
      Note 3, the Company borrowed $4,000,000 and $2,500,000 million respectively,
      accruing interest at an annual rate of 8.0%. Such borrowings can be paid off,
      at
      any time, without penalty. During the three and nine months ended September
      30,
      2008, the Company incurred related party interest expense of $131,069 and
      $261,261, respectively. As of September 30, 2008, $42,739 remained unpaid and
      is
      included in due to affiliates in the accompanying balance sheets.




During
      the three months ended September 30, 2008, the REIT entered into an unsecured
      credit facility with a related party, American Realty Capital Bridge, LLC (“ARC
      Bridge”), whereby the REIT can borrow up to $10,000,000 from time to time as
      needed to provide short-term financing relating to property acquisitions. ARC
      Bridge is a 50% joint venture between the Sponsor and an unrelated third party.
      Borrowings on this facility accrue interest at an annual rate of 30 day LIBOR
      plus 5% with a floor of 8%. This facility was used for two acquisitions during
      the three months ended September 30, 2008. The borrowings relating to the
      National City Bank and Rite Aid acquisitions were $1,039,648 and 6,107,939,
      respectively. These borrowings are due one year from the borrowing date and
      can
      be repaid at any time without penalty. The related interest rates on these
      borrowings were 8.11% and 8.83% for the National City Bank and Rite Aid
      acquisitions, respectively, as of September 30, 2008. The Company incurred
      interest expense on these borrowings of $6,651 for the period ended September
      30, 2008. As of September 30, 2008, $6,651 remained unpaid and is included
      in
      due to affiliates in the accompanying balance sheets.


15




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**




At
      September 30, 2008 and December 31, 2007, the Company had approximately $555,000
      and $285,000, respectively, due to affiliates, which is included in due to
      affiliates in the accompanying consolidated balance sheets and is payable
      primarily to the Advisor. Such amounts consisted primarily of a $490,000 rate
      lock deposit related to the financing of a future transaction as well as accrued
      interest.




The
      Company acquired 23 properties in four separate transactions during the nine
      months ended September 30, 2008 from related parties. A Federal Express
      distribution center was acquired on March 5, 2008. A sale leaseback transaction
      involving 15 properties 100% occupied by Harleysville National Bank occurred
      on
      March 12, 2008. A National City Bank branch and a portfolio of six Rite Aid
      locations were acquired on September 16, 2008 and September 29, 2008,
      respectively. These acquisitions were approved by the Company’s Board of
      Trustees; with two inside directors abstaining because the acquisition was
      an
      affiliated transaction. The Company acquired these assets at sellers’ cost,
      which did not exceed the fair market value of the properties as determined
      by a
      qualified independent appraiser.




**Note 10
      — Economic Dependency**




Under
      various agreements, the Company has engaged or will engage the Advisor and
      its
      affiliates to provide certain services that are essential to the Company,
      including asset management services, supervision of the management and leasing
      of properties owned by the Company, asset acquisition and disposition decisions,
      the sale of shares of the Company’s common stock available for issue, as well as
      other administrative responsibilities for the Company including accounting
      services and investor relations.




As
      a
      result of these relationships, the Company is dependent upon the Advisor and
      its
      affiliates. In the event that these companies were unable to provide the Company
      with the respective services, the Company would be required to find alternative
      providers of these services.





**Note 11
      — Independent Directors’ Stock Option Plan**




The
      Company has a stock option plan (the “Plan”), which authorizes the grant of
      nonqualified stock options to the Company’s independent directors, subject to
      the absolute discretion of the board of directors and the applicable limitations
      of the Plan. The Company intends to grant options under the Plan to each
      qualifying director annually. The exercise price for all stock options granted
      under the Plan will be fixed at $10.00 per share until the termination of our
      initial public offering, and thereafter the exercise price for stock options
      granted to our independent directors will be equal to the fair market value
      of a
      share on the last business day preceding the annual meeting of stockholders.
      As
      of September 30, 2008, the Company had granted options to purchase 9,000 shares
      at $10.00 per share, each with a two year vesting period. A total of 1,000,000
      shares have been authorized and reserved for issuance under the Plan. The
      Company accounts for the issuance of stock options under SFAS No. 123R,
“Share-Based Payment,” which requires the measurement and recognition of
      compensation expense for all share-based payment awards made to employees and
      directors, including stock options related to the Plan, based on estimated
      fair
      values.




During
      the nine months ended September 30, 2008, 9,000 were granted and no options
      were
      forfeited, became vested, or were exercised. As of September 30, 2008, unvested
      options to purchase 9,000 shares at $10.00 per share remained outstanding with
      a
      weighted average contractual remaining life of approximately 9.5 years. The
      total compensation charge relating to these option grants under SFAS No. 123R
      is
      immaterial.





**Note 12
      — Net Income (Loss) Per Share**





The
      following is a reconciliation of the numerator and denominator of the basic
      and
      diluted net income (loss) per share computation for the three and nine months
      ended September 30, 2008:




**Basic
                  and Diluted**
                **Three**
                **Months
                  Ended**
                **September
                  30, 2008**
              
              
              **Basic
                  and Diluted**
                **Nine**
                **Months
                  Ended**
                **September
                  30, 2008**Net
                  loss
              
              $
              (845,124
              )
              $
              (1,641,345
              )Total
                  weighted average common shares outstanding
              
              
              1,101,127
              
              
              699,883Loss
                  per share
              
              $
              (0.77
              )
              $
              (2.35
              )


16




**AMERICAN
      REALTY CAPITAL TRUST, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2008**


**(Unaudited)**





**Note
      13 — Subsequent Events**




***Sale
      of Shares of Common Stock***




As
        of
        November 11, 2008, the Company had issued 1,204,065 shares of common stock,
        including 339,077 shares issued in connection with an acquisition in March
        2008
        - see Note 3 Real Estate Acquisitions. Total gross proceeds from these issuances
        were $11,905,737. As of November 11, 2008, the aggregate value of all share
        issuances and subscriptions outstanding was $14,009,358 based on a per share
        value of $10.00. This amount includes stock subscriptions of $2,103,628
        which are maintained at the Company’s third-party escrow agent, to be
        released when certain escrow requirements have been achieved. As of November
        11,
        2008, approximately $1.24 billion (124 million shares) remained available
        for
        sale to the public under the Offering, exclusive of shares available under
        the
        DRIP.




***Real
      Estate Acquisitions***




The
                Company acquired the following properties subsequent to September
                30,
                2008:




**Property**
            **Acquisition
                Date**
            **No.
                Of Buildings**
            **Square
                Feet**
            **Purchase
                Price (1)**National
                City Bank
            October
                2008
            1
            4,633
            
            $
            $
                3,764,028




(1)
            Includes
                all acquisition costs, the value of acquired intangible lease assets
                and
                assumed liabilities.





On
      October 23, 2008, the Company acquired a National City Bank branch for a total
      purchase price of approximately $3.8 million, inclusive of closing costs and
      an
      acquisition fee, from a related party. The property is leased on a triple-net
      basis, with an initial lease term of 20.4 years, exclusive of certain lease
      extension provisions.





***Mortgage
      Notes Payable and other obligations***




Subsequent
      to September 30, 2008, the Company incurred or assumed the following mortgage
      notes payable in connection with the real estate acquisitions described
      above:





**Mortgage
                Debt**
            
            **Type**
            
            **Rate**
            
            **Maturity
                Date**$
                2,437,500
            
            Variable
            
            30
                Day LIBOR + 1.50% (1)
            
            October
                2013


(1)
            The
                Company entered into a rate lock agreement to limit its interest
                rate
                exposure. The LIBOR floor and cap on the amortizing portion of the
                debt
                are 3.37% and 4.45% (initial year), respectively. In addition, the
                Company
                swapped the variable interest rate for a fixed rate of 3.565% on
                the
                balloon payment due in October 2013.




***Share
        Repurchase Program***
 
 On
        November 12, 2008, the Company’s board of directors modified the Share
        Repurchase Program (“SRP”) to fund purchases under the SRP not only from the
        DRIP but also operating funds of the Company. Accordingly, purchases under
        the
        SRP, subject to the terms of the SRP, may be funded from the proceeds from
        the
        sale of shares under the DRIP, from proceeds of the sale of shares in a public
        offering, together with other available allocated operating funds. However,
        purchases under the SRP by the Company will be limited in any calendar year
        to
        5% of the weighted average number of shares outstanding during the prior
        year.
        Purchases under the SRP will continue to be restricted by the availability
        of
        such proceeds and available allocated operating funds, as well as the share
        repurchase limit. The terms and conditions of the SRP remain unchanged.
  In
        addition, the SRP provides existing stockholders with limited, interim liquidity
        by enabling them to sell shares back to us, subject to certain restrictions.
        The
        purchase price has been modified as follows:
  One
        year
        from the purchase date - 96.25% of the amount paid for each share (increased
        from 95%);
  Two
        years
        from the purchase date - 97.75% of the amount paid for each share (increased
        from 96.25%);
  Three
        years from the purchase date - 100% of the amount paid for each share (increased
        from 97.5%).
  The
        Company makes repurchases under the SRP, if requested, at least once quarterly
        on a first-come, first-served basis.  Subject to funds being available, The
        Company limits the number of shares repurchased during any calendar year
        to five
        percent (5%) of the weighted average number of shares outstanding during
        the
        prior calendar year.  Funding for the SRP comes exclusively from proceeds
        that we receive from the sale of shares under the DRIP and other such operating
        funds, if any, as the board of directors, at its sole discretion, may reserve
        for this purpose.
  The
        Company cannot guarantee that the funds set aside for the SRP will be sufficient
        to accommodate all requests made each year.  If no funds are available for
        the SRP when repurchase is requested, the stockholder may: (i) withdraw the
        request; or (ii) ask that we honor the request at such time, if any, when
        funds
        are available.  Such pending requests will be honored on a first-come,
        first-served basis.
  The
        board
        of directors, at its sole discretion, may choose to terminate the SRP, or
        reduce
        the number of shares purchased under the SRP, if it determines that the funds
        allocated to the SRP are needed for other purposes, such as the acquisition,
        maintenance or repair of properties, or for use in making a declared
        distribution.
  There
        is
        no requirement that stockholders sell their shares to the Company. The SRP
        is
        only intended to provide interim liquidity for stockholders until a liquidity
        event occurs, such as the listing of the shares on a national securities
        exchange, inclusion of the shares for quotation on a national market system,
        or
        a merger with a listed company.  No assurance can be given that any such
        liquidity event will occur.
  Shares
        purchased by the Company under the SRP will be canceled and will have the
        status
        of authorized but unissued shares.  Shares acquired through the SRP will
        not be re-issued unless they are first registered with the SEC under the
        Securities Act of 1933 and under appropriate state securities laws, or otherwise
        issued in compliance with such laws.


17




**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**




The
      following discussion and analysis should be read in conjunction with the
      accompanying financial statements of American Realty Capital Trust, Inc. and
      the
      notes thereto. As used herein, the terms “we,” “our” and “us” refer to American
      Realty Capital Trust, Inc., a Maryland corporation, and, as required by context,
      American Realty Capital Operating Partnership, L.P., a Delaware limited
      partnership, which we refer to as the “Operating Partnership” and to their
      subsidiaries. American Realty Capital Trust, Inc. is externally managed by
      the
      American Realty Capital Advisors, LLC (a Delaware limited liability company)
      or
      the “Advisor.”




**Forward-Looking
      Statements**




Certain
      statements included in this quarterly report on Form 10-Q are forward-looking
      statements. Those statements include statements regarding the intent, belief
      or
      current expectations of American Realty Capital Trust, Inc. and members of
      our
      management team, as well as the assumptions on which such statements are based,
      and generally are identified by the use of words such as “may,” “will,” “seeks,”
“anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should”
or similar expressions. Actual results may differ materially from those
      contemplated by such forward-looking statements. Further, forward-looking
      statements speak only as of the date they are made, and we undertake no
      obligation to update or revise forward-looking statements to reflect changed
      assumptions, the occurrence of unanticipated events or changes to future
      operating results over time, unless required by law.




Following
      are some of the risks and uncertainties, although not all risks and
      uncertainties, that could cause our actual results to differ materially from
      those presented in our forward-looking statements:




•
            
            Neither
                we nor our Advisor have a prior operating history and our Advisor
                does not
                have any experience operating a public company. This inexperience
                makes
                our future performance difficult to
                predict.




•
            
            All
                of our executive officers are also officers, managers and/or holders
                of a
                direct or indirect controlling interest in our Advisor, our dealer
                manager
                and other affiliated entities. As a result, our executive officers,
                our
                Advisor and its affiliates face conflicts of interest, including
                significant conflicts created by our Advisor’s compensation arrangements
                with us and other investors advised by American Realty Capital affiliates
                and conflicts in allocating time among us and these other investors.
                These
                conflicts could result in unanticipated
                actions.




•
            
            Because
                investment opportunities that are suitable for us may also be suitable
                for
                other American Realty Capital-advised investors, our Advisor and
                its
                affiliates face conflicts of interest relating to the purchase of
                properties and such conflicts may not be resolved in our favor, meaning
                that we could invest in less attractive properties, which could reduce
                the
                investment return to our
                stockholders.




•
            
            If
                we raise substantially less than the maximum offering in our ongoing
                initial public offering, we may not be able to invest in a diverse
                portfolio of real estate assets and the value of an investment in
                us may
                vary more widely with the performance of specific
                assets.




•
            
            While
                we are raising capital and investing the proceeds of our ongoing
                initial
                public offering, the high demand for the type of properties we desire
                to
                acquire may cause our distributions and the long-term returns of
                our
                investors to be lower than they otherwise
                would.




•
            
            We
                depend on tenants for our revenue, and, accordingly, our revenue
                is
                dependent upon the success and economic viability of our
                tenants.




•
            
            Increases
                in interest rates could increase the amount of our debt payments
                and limit
                our ability to pay distributions to our
                stockholders.




All
      forward-looking statements should be read in light of the risks identified
      in
      our Registration Statement on Form S-11 for the period from August 17, 2007
      (dated of inception) to December 31, 2007, filed with the SEC and the risks
      identified in this quarterly report.





**Overview**




We
      are a
      Maryland corporation that will elect to be taxed as a real estate investment
      trust, or REIT, beginning with the taxable year ending December 31, 2008.
      On September 10, 2007, we filed a registration statement on Form S-11 with
      the
      SEC to offer a minimum of 750,000 shares and a maximum of 150,000,000 shares
      of
      common stock for sale to the public. The SEC declared the registration statement
      effective on January 25, 2008, at which time we launched our ongoing initial
      public offering. On March 11, 2008, we broke escrow in our ongoing initial
      public offering and then commenced our real estate operations. As
      of
      September 30, 2008, the we issued 1,165,397 shares of common stock, including
      339,077 shares issued in connection with an acquisition in March 2008 - see
      Note
      3 Real Estate Acquisitions. Total gross proceeds from these issuances were
      $10,523,344. As of September 30, 2008, the aggregate value of all share
      issuances and subscriptions outstanding was $13,667,108 based on a per share
      value of $10.00. This amount includes stock subscriptions of $2,103,628
      which are maintained at the our third-party escrow agent, to be released
      when certain escrow requirements have been achieved.As of September 30,
      2008, we had not redeemed any shares sold in our ongoing initial public offering
      pursuant to our share repurchase program. We are dependent upon the net proceeds
      from the offering to conduct our proposed operations.




18




We
      intend
      to use the proceeds of our ongoing initial public offering to acquire and manage
      a diverse portfolio of real estate properties consisting primarily of
      freestanding, single-tenant properties net leased to investment grade and other
      creditworthy tenants throughout the United States and Puerto Rico as well as
      certain other real-estate related investments. We plan to own substantially
      all
      of our assets and conduct our operations through our Operating Partnership,
      of
      which we are the sole general partner. We have no paid employees. Our advisor,
      American Realty Capital Advisors, LLC, conducts our operations and manages
      our
      portfolio of real estate investments.




As
      of
      September 30, 2008, we owned 41 properties compromising approximately 433,000
      square feet, 100% leased with an initial weighted average remaining lease term
      of 13.7 years. In constructing our portfolio, we intend to target and derive
      approximately 50% to 60% of our revenues from investment-grade tenants.
      Additionally, we intend to target approximately 50% of our revenues from
      financial institutions.




We
      intend
      to continue our strategy of acquiring high quality, single tenant properties
      through sale leaseback transactions and marketed transactions with in-place
      long-term leases, and to finance our acquisitions with a combination of equity
      and debt. We expect to arrange long-term financing on both a secured and
      unsecured fixed rate basis. We intend to continue to grow our existing
      relationships and develop new relationships throughout various markets we serve,
      which we expect will lead to further acquisition opportunities.




Real
        estate-related investments are higher-yield and higher-risk investments that
        our
        advisor will actively manage, if we elect to acquire such investments. The
        real
        estate-related investments in which we may invest include: (i) mortgage
        loans; (ii) equity securities such as common stocks, preferred stocks and
        convertible preferred securities of real estate companies; (iii) debt
        securities, such as mortgage-backed securities, commercial mortgages, mortgage
        loan participations and debt securities issued by other real estate companies;
        and (iv) certain types of illiquid securities, such as mezzanine loans and
        bridge loans. While we may invest in any of these real estate-related
        investments, our advisor, with the support of our Board of Trustees, has
        elected
        to suspend all activities relating to acquiring real estate-related investments
        for an indefinite period based on the current adverse climate affecting the
        capital markets. Since our inception, we have not acquired any real
        estate-related investments.




**Significant
      Accounting Estimates and Critical Accounting Policies**




Set
      forth
      below is a summary of the significant accounting estimates and critical
      accounting policies that management believes are important to the preparation
      of
      our consolidated financial statements. Certain of our accounting estimates
      are
      particularly important for an understanding of our financial position and
      results of operations and require the application of significant judgment by
      our
      management. As a result, these estimates are subject to a degree of uncertainty.
      These significant accounting estimates include:




***Revenue
      Recognition***




Our
      revenues, which are derived primarily from rental income, include rents that
      each tenant pays in accordance with the terms of each lease reported on a
      straightline basis over the initial term of the lease. Since many of our leases
      provide for rental increases at specified intervals, straightline basis
      accounting requires us to record a receivable, and include in revenues, unbilled
      rent receivables that we will only receive if the tenant makes all rent payments
      required through the expiration of the initial term of the lease.




We
      continually review receivables related to rent and unbilled rent receivables
      and
      determine collectibility by taking into consideration the tenant’s payment
      history, the financial condition of the tenant, business conditions in the
      industry in which the tenant operates and economic conditions in the area in
      which the property is located. In the event that the collectibility of a
      receivable is in doubt, we record an increase in our allowance for uncollectible
      accounts or record a direct write-off of the receivable in our consolidated
      statements of operations.




***Investments
      in Real Estate***




Investments
      in real estate are recorded at cost. Improvements and replacements are
      capitalized when they extend the useful life of the asset. Costs of repairs
      and
      maintenance are expensed as incurred. Depreciation is computed using the
      straightline method over the estimated useful life of up to 40 years for
      buildings and improvements, five to ten years for fixtures and improvements
      and
      the shorter of the useful life or the remaining lease term for tenant
      improvements and leasehold interests.




We
      are
      required to make subjective assessments as to the useful lives of our properties
      for purposes of determining the amount of depreciation to record on an annual
      basis with respect to our investments in real estate. These assessments have
      a
      direct impact on our net income because if we were to shorten the expected
      useful lives of our investments in real estate, we would depreciate these
      investments over fewer years, resulting in more depreciation expense and lower
      net income on an annual basis.




We
      follow
      Statement of Financial Accounting Standards (SFAS) No.144, “Accounting for
      the Impairment or Disposal of Long-Lived Assets,” which established a single
      accounting model for the impairment or disposal of long-lived assets including
      discontinued operations. SFAS No.144 requires that the operations related to
      properties that have been sold or properties that are intended to be sold be
      presented as discontinued operations in the statement of operations for all
      periods presented, and properties intended to be sold to be designated as “held
      for sale” on the balance sheet.




Long-lived
      assets are carried at cost and evaluated for impairment when events or changes
      in circumstances indicate such an evaluation is warranted or when they are
      designated as held for sale. Valuation of real estate is considered a “critical
      accounting estimate” because the evaluation of impairment and the determination
      of fair values involve a number of management assumptions relating to future
      economic events that could materially affect the determination of the ultimate
      value, and therefore, the carrying amounts of our real estate. Additionally,
      decisions regarding when a property should be classified as held for sale are
      also highly subjective and require significant management judgment.


19


Events
      or
      changes in circumstances that could cause an evaluation for impairment include
      the following:





**•**
            
            a
                significant decrease in the market price of a long-lived
                asset;**•**
            
            a
                significant adverse change in the extent or manner in which a long-lived
                asset is being used or in its physical condition;**•**
            
            a
                significant adverse change in legal factors or in the business climate
                that could affect the value of a long-lived asset, including an adverse
                action or assessment by a regulator;**•**
            
            an
                accumulation of costs significantly in excess of the amount originally
                expected for the acquisition or construction of a long-lived asset;
                and**•**
            
            a
                current-period operating or cash flow loss combined with a history
                of
                operating or cash flow losses or a projection or forecast that
                demonstrates continuing losses associated with the use of a long-lived
                asset.




We
      review
      our portfolio on an on-going basis to evaluate the existence of any of the
      aforementioned events or changes in circumstances that would require us to
      test
      for recoverability. In general, our review of recoverability is based on an
      estimate of the future undiscounted cash flows, excluding interest charges,
      expected to result from the property’s use and eventual disposition. These
      estimates consider factors such as expected future operating income, market
      and
      other applicable trends and residual value expected, as well as the effects
      of
      leasing demand, competition and other factors. If impairment exists due to
      the
      inability to recover the carrying value of a property, an impairment loss is
      recorded to the extent that the carrying value exceeds the estimated fair value
      of the property. We are required to make subjective assessments as to whether
      there are impairments in the values of our investments in real estate. These
      assessments have a direct impact on our net income because recording an
      impairment loss results in an immediate negative adjustment to net
      income.




***Purchase
      Price Allocation***




Pursuant
      to SFAS No.141, “Business Combinations,” we follow the purchase method of
      accounting for all business combinations. To ensure that intangible assets
      acquired and liabilities assumed in a purchase method business combination
      can
      be recognized and reported apart from goodwill, we ensure that the applicable
      criteria specified in SFAS No.141 are met.




We
      allocate the purchase price of acquired properties to tangible and identifiable
      intangible assets acquired based on their respective fair values. Tangible
      assets include land, buildings, equipment and tenant improvements on an as-if
      vacant basis. We utilize various estimates, processes and information to
      determine the as-if vacant property value. Estimates of value are made using
      customary methods, including data from appraisals, comparable sales, discounted
      cash flow analysis and other methods. Identifiable intangible assets include
      amounts allocated to acquired leases for above- and below-market lease rates,
      the value of in-place leases, and the value of customer
      relationships.




Amounts
      allocated to land, buildings, equipment and fixtures are based on cost
      segregation studies performed by independent third-parties or on our analysis
      of
      comparable properties in our portfolio. Depreciation is computed using the
      straightline method over the estimated life of 40 years for buildings, five
      to
      ten years for building equipment and fixtures, and the lesser of the useful
      life
      or the remaining lease term for tenant improvements.




Above-market
      and below-market in-place lease values for owned properties are recorded based
      on the present value (using an interest rate which reflects the risks associated
      with the leases acquired) of the difference between the contractual amounts
      to
      be paid pursuant to the in-place leases and management’s estimate of fair market
      lease rates for the corresponding in-place leases, measured over a period equal
      to the remaining non-cancelable term of the lease. The capitalized above-market
      lease values are amortized as a reduction of rental income over the remaining
      non-cancelable terms of the respective leases. The capitalized below-market
      lease values are amortized as an increase to rental income over the initial
      term
      and any fixed-rate renewal periods in the respective leases. The aggregate
      value
      of intangible assets related to in-place leases is primarily the difference
      between the property valued with existing in-place leases adjusted to market
      rental rates and the property valued as if vacant. Factors considered by us
      in
      our analysis of the in-place lease intangibles include an estimate of carrying
      costs during the expected lease-up period for each property, taking into account
      current market conditions and costs to execute similar leases. In estimating
      carrying costs, we include real estate taxes, insurance and other operating
      expenses and estimates of lost rentals at market rates during the expected
      lease-up period, which typically ranges from six to 18 months. We also
      estimate costs to execute similar leases including leasing commissions, legal
      and other related expenses.




The
      aggregate value of intangibles assets related to customer relationship is
      measured based on our evaluation of the specific characteristics of each
      tenant’s lease and our overall relationship with the tenant. Characteristics
      considered by us in determining these values include the nature and extent
      of
      our existing business relationships with the tenant, growth prospects for
      developing new business with the tenant, the tenant’s credit quality and
      expectations of lease renewals, among other factors.




The
      value
      of in-place leases is amortized to expense over the initial term of the
      respective leases, which range primarily from 2 to 20 years. The value of
      customer relationship intangibles is amortized to expense over the initial
      term
      and any renewal periods in the respective leases, but in no event does the
      amortization period for intangible assets exceed the remaining depreciable
      life
      of the building. If a tenant terminates its lease, the unamortized portion
      of
      the in-place lease value and customer relationship intangibles is charged to
      expense.


20




In
      making
      estimates of fair values for purposes of allocating purchase price, we utilize
      a
      number of sources, including independent appraisals that may be obtained in
      connection with the acquisition or financing of the respective property and
      other market data. We also consider information obtained about each property
      as
      a result of our pre-acquisition due diligence, as well as subsequent marketing
      and leasing activities, in estimating the fair value of the tangible and
      intangible assets acquired and intangible liabilities assumed. The allocations
      presented in the accompanying consolidated balance sheets are substantially
      complete; however, there are certain items that we will finalize once we receive
      additional information. Accordingly, these allocations are subject to revision
      when final information is available, although we do not expect future revisions
      to have a significant impact on our financial position or results of
      operations.




**Results
      of Operations**




***Three
      Months Ended September 30, 2008***




As
      of
      September 30, 2008, the Company owned 41 properties which are 100% leased.
      The
      Company acquired 7 properties in two separate transactions during the quarter
      ended September 30, 2008. A National City Bank location was acquired on
      September 16, 2008. A transaction involving 6 properties 100% occupied by Rite
      Aid occurred on September 29, 2008. The property operating results outlined
      below include the partial period we owned these investment assets during the
      period.





*Rental
      Income*





Rental
      income of approximately $1,594,000 was recognized during the three months ended
      September 30, 2008. This rental income includes a partial quarter of revenue
      derived from the properties we acquired in September 2008.





*Property
      Management Fees to Affiliate*





American
      Realty Capital Properties, LLC has elected to waive the property management
      fees
      for the three months ended September 30, 2008. Such fees represent amounts
      paid
      to our affiliated property manager, American Realty Capital Properties, LLC,
      to
      manage and lease our properties.





*General
      and Administrative Expenses*





General
      and administrative expenses of approximately $19,000 were incurred during the
      three months ended September 30, 2008. The majority of such expenses included
      $48,000 of insurance expense amortization of our directors and officers’
insurance policy, $20,000 of board member compensation and $11,000 of
      professional fees. These expenses are offset by a $60,000 reimbursement of
      various organizational and offering costs by the Advisor.





*Depreciation
      and Amortization Expense*





Depreciation
      and amortization expense of approximately $857,000 was recognized during the
      three months ended September 30, 2008. This expense includes a partial quarter
      of depreciation and amortization incurred from the properties we acquired in
      September 2008.





*Interest
      Expense*





Interest
      expense of approximately $1,387,000 was recognized during the three months
      ended
      September 30, 2008. Such amount includes a partial quarter of interest expense
      relating to the debt incurred to fund a portion of the properties we acquired
      in
      September 2008.





Our
      property acquisitions during the three months ended September 30, 2008 were
      financed in part with short-term and long-term obligations as discussed in
      Note
      4 to our consolidated financial statements. Our interest expense in future
      periods will vary based on our level of future borrowings, which will depend
      on
      the level of proceeds raised in the Offering, the cost of borrowings, and the
      opportunity to acquire real estate assets which meet our investment
      objectives.





*Other
      Income*





During
      the three months ended September 30, 2008, the Company recorded $177,000 of
      losses related to marking its derivative instruments to market.




*Funds
      From Operations*




We
      consider funds from operations (“FFO”) a useful indicator of the performance of
      a REIT. Because FFO calculations exclude such factors as depreciation and
      amortization of real estate assets and gains or losses from sales of operating
      real estate assets (which can vary among owners of identical assets in similar
      conditions based on historical cost accounting and useful-life estimates),
      they
      facilitate comparisons of operating performance between periods and between
      other REITs in our peer group. Accounting for real estate assets in accordance
      with generally accepted accounting principles in the United States (“GAAP”)
      implicitly assumes that the value of real estate assets diminishes
      predictability over time. Since real estate values have historically risen
      or
      fallen with market conditions, many industry investors and analysts have
      considered the presentation of operating results for real estate companies
      that
      use historical cost accounting to be insufficient by themselves. As a result,
      we
      believe that the use of FFO, together with the required GAAP presentations,
      provide a more complete understanding of our performance relative to our peers
      and a more informed and appropriate basis on which to make decisions involving
      operating, financing, and investing activities. Other REITs may not define
      FFO
      in accordance with the current National Association of Real Estate Investment
      Trust’s (“NAREIT”) definition (as we do) or may interpret the current NAREIT
      definition differently than we do. Consequently, our presentation of FFO may
      not
      be comparable to other similarly titled measures presented by other
      REITs.


FFO
      is a
      non-GAAP financial measure and does not represent net income as defined by
      GAAP.
      FFO does not represent cash flows from operations as defined by U.S. GAAP,
      it is
      not indicative of cash available to fund all cash flow needs and liquidity,
      including our ability to pay distributions and should not be considered as
      an
      alternative to net income, as determined in accordance with U.S. GAAP, for
      purposes of evaluating our operating performance.





FFO
      is
      presented in the following table for the periods ended as indicated:




**Three
                        Months Ended****June
                      30, 2008**
              
              **Three
                    Months Ended****September
                  30, 2008**Net
                  loss
              
              $
              (454,369
              )
              $
              (845,124
              )Add:Depreciation
                  of real estate assets
              
              
              616,517
              
              
              717,410Amortization
                  of intangible lease assets
              
              
              119,966
              
              
              139,777Mark-to-market
                  adjustment (1)
              
              
              (196,816
              )
              
              176,656FFO
              
              $
              85,298
              
              $
              188,719Dividends
                  paid (2)
              
              $
              79,899
              
              $
              174,021FFO
                  coverage ratio
              
              
              106.8
              %
              
              108.5
              %FFO
                  payout ratio
              
              
              93.7
              %
              
              92.2
              %


___________________________


(1) 
                -
            the
                Company excludes non-cash mark-to-market adjustments relating to
                its
                hedging activities from its FFO calculation.(2)
                 -
            includes
                shares issued under the DRIP.(3) 
                -
            FFO
                is not applicable for the three months ended March 31, 2008, as no
                dividend were paid during such period.


21




***Nine
      Months Ended September 30, 2008***




As
      of
      September 30, 2008, the Company owned 41 properties which are 100% leased.
      We
      acquired a Federal Express distribution center on March 5, 2008. A sale
      leaseback transaction involving 15 properties 100% occupied by Harleysville
      National Bank occurred on March 12, 2008. A sale leaseback transaction involving
      18 properties 100% occupied by Rockland Trust Company occurred on May 2, 2008.
      A
      National City Bank location was acquired on September 16, 2008. A transaction
      involving 6 properties 100% occupied by Rite Aid occurred on September 29,
      2008.
      The property operating results outlined below relate to the partial period
      we
      owned these investment assets during the period.





*Rental
      Income*





Rental
      income of approximately $3,156,000 was recognized during the nine months ended
      September 30, 2008. This rental income is derived from the leased properties
      we
      acquired in March, May and September 2008.





*Property
      Management Fees to Affiliate*





Property
      management fees to affiliate of approximately $4,000 were incurred during the
      nine months ended September 30, 2008. Such fees represent amounts paid to our
      affiliated property manager, American Realty Capital Properties, LLC, to manage
      and lease our properties. American Realty Capital Properties, LLC has elected
      to
      waive the property management fees for the nine months ended September 30,
      2008.





*General
      and Administrative Expenses*





General
      and administrative expenses of approximately $292,000 were incurred during
      the
      nine months ended September 30, 2008. The majority of such expenses includes
      approximately $59,000 reimbursed to the Advisor relating to various
      organizational and offering costs, which is net of the $60,000 refunded from
      the
      Advisor in the third quarter of 2008, $127,000 of insurance expense amortization
      of our directors and officers’ insurance policy, $59,000 of board member
      compensation and $35,000 of professional fees.





*Depreciation
      and Amortization Expense*





Depreciation
      and amortization expense of approximately $1,765,000 was recognized during
      the
      nine months ended September 30, 2008. This expense relates to depreciation
      and
      amortization incurred from the properties we acquired in March, May and
      September 2008.





*Interest
      Expense*





Interest
      expense of approximately $2,759,000 was recognized during the nine months ended
      September 30, 2008. Such amount relates to interest expense incurred on debt
      obligations assumed and/or borrowed to fund a portion of the properties we
      acquired in March, May and September 2008.





Our
      property acquisitions during the nine months ended September 30, 2008 were
      financed in part with short-term and long-term obligations as discussed in
      Note
      4 to our consolidated financial statements. Our interest expense in future
      periods will vary based on our level of future borrowings, which will depend
      on
      the level of proceeds raised in the Offering, the cost of borrowings, and the
      opportunity to acquire real estate assets which meet our investment
      objectives.





*Other
      Income*





During
      the nine months ended September 30, 2008, the Company recorded $20,000 of gains
      related to marking its derivative instruments to market.





**Cash
      Flows for the Nine Months Ended September 30, 2008**





During
      the nine months ended September 30, 2008, net cash provided by operating
      activities was approximately $1,291,000. The level of cash flows provided by
      operating activities is affected by both the timing of interest payments and
      amount of borrowings outstanding during the period. It is also affected by
      the
      receipt of scheduled rent payments and disbursement of deposits required in
      connection with property acquisitions. Prepaid expenses and other assets
      increased by approximately $751,000 principally resulting from a deposit paid
      to
      secure financing on a portfolio expected to close in the fourth quarter of
      2008
      and the partial pre-funding of our Directors and Officers’ insurance policy.
      This amount is offset by the increase in accounts payable and accrued expenses
      of approximately $1,312,000, the majority of which relates to professional
      fees,
      accrued interest and finance coordination fees, as well as an increase in
      deferred rent and liabilities of approximately $554,000, primarily representing
      rent payments received in advance of the respective due date.




Net
      cash
      used in investing activities during the nine months ended September 30, 2008
      totaled approximately $49,068,000 relating to investment properties acquired
      during the period.





Net
      cash
      provided by financing activities totaled approximately $48,651,000 during the
      nine months ended September 30, 2008. Such amount consisted primarily of net
      proceeds from mortgage notes payable, issuance of a convertible redeemable
      preferred obligation, our related party credit facility, and our related party
      notes payable of approximately $26,294,000, $3,995,000, $7,148,000 and
      $6,500,000, respectively. During the period, we issued 1,145,397 shares of
      common stock which generated approximately $7,272,000 of gross proceeds, reduced
      by approximately $1,292,000 of related offering costs and commissions. Net
      cash
      of approximately $168,000 was used for shareholder dividends. Net cash was
      reduced by approximately $50,000 related to restricted cash.




**Liquidity
      and Capital Resources**




We
      expect
      to continue to raise capital through the sale of our common stock and to utilize
      the net proceeds from the sale of our common stock and proceeds from secured
      financings to complete future property acquisitions. As
      of
      September 30, 2008, we issued 1,165,397 shares of common stock, including
      339,077 shares issued in connection with an acquisition in March 2008 - see
      Note
      3 Real Estate Acquisitions. Total gross proceeds from these issuances were
      $10,523,344. As of September 30, 2008, the aggregate value of all share
      issuances and subscriptions outstanding was $13,667,108 based on a per share
      value of $10.00. This amount includes stock subscriptions of $2,103,628 which
      are maintained at our third-party escrow agent, to be released when certain
      escrow requirements have been achieved.





The
      amount of distributions payable to our stockholders is determined by our board
      of directors and is dependent on a number of factors, including funds available
      for distribution, financial condition, capital expenditure requirements, as
      applicable and annual distribution requirements needed to qualify and maintain
      our status as a REIT under the Code. Operating cash flows are expected to
      increase as additional properties are acquired in our investment
      portfolio.




Our
      principal demands for funds will continue to be for property acquisitions,
      either directly or through investment interests, for the payment of operating
      expenses and distributions, and for the payment of interest on our outstanding
      indebtedness and other investments. Generally, cash needs for items other than
      property acquisitions are expected to be met from operations, and cash needs
      for
      property acquisitions are expected to be met from the public offering of our
      shares. However, there may be a delay between the sale of our shares and our
      purchase of properties, which could result in a delay in the benefits to our
      stockholders, if any, of returns generated from our operations. Our Advisor
      evaluates potential acquisitions of real estate and real estate related assets
      and engages in negotiations with sellers and borrowers on our behalf. Investors
      should be aware that after a purchase contract is executed that contains
      specific terms, the property will not be purchased until the successful
      completion of due diligence and negotiation of final binding agreements. During
      this period, we may decide to temporarily invest any unused proceeds from the
      Offering in certain investments that could yield lower returns than the
      properties. These lower returns may affect our ability to make
      distributions.




We
      expect
      to meet our future short-term operating liquidity requirements through net
      cash
      provided by our current property operations and the operations of properties
      to
      be acquired in the future. Management also expects that our properties will
      generate sufficient cash flow to cover operating expenses and the payment of
      a
      monthly distribution. Other potential future sources of capital include proceeds
      from secured or unsecured financings from banks or other lenders, proceeds
      from
      the sale of properties and undistributed funds from operations.




In
      February 2008, the Board of Directors declared a dividend for each monthly
      period commencing 30 days subsequent to acquiring our initial portfolio of
      real
      estate investments, payable in cash on the 21st day following each month end
      to
      stockholders of record at the close of business each day during the applicable
      period. The dividend will be calculated based on stockholders of record each
      day
      during the applicable period at a rate of $0.00178082191 per day, and will
      equal
      a daily amount that, if paid each day for a 365-day period, would equal a 6.5%
      annualized rate based on the share price of $10.00. In August 2008, the Board
      of
      Directors modified the dividend payment date to the second business day of
      the
      following month.





The
      Company, our Board of Directors and Advisor share a similar philosophy with
      respect to paying our dividend. The dividend should principally be derived
      from
      cash flows generated from real estate operations. During the nine months ended
      September 30, 2008, dividends paid totaled $253,919, inclusive of $85,962 of
      common shares issued under the DRIP. Our related party Advisor has agreed to
      waive certain fees during the current period which resulted in the Company’s FFO
      fully covering the dividends that were paid out during such period. These waived
      fees included asset management and property management of $212,489 and $30,557,
      respectively. In addition, the Advisor waived reimbursement it was entitled
      to
      during the period for organizational and offering expenses which totaled
      $11,306. The fees and reimbursement that were waived relating to the activity
      during the three months ended September 30, 2008 are not deferrals and
      accordingly, will not be paid by the Company.





The
      payment terms of our loan obligations vary. In general, principal and interest
      is payable monthly with all unpaid principal and interest due at maturity.
      Certain of our mortgage loans have initial payments of interest only but require
      principal repayment in subsequent years. Our loan agreements stipulate that
      we
      comply with specific reporting and financial covenants. As of September 30,
      2008, we were in compliance with the debt covenants under our loan
      agreements.





Our
      Advisor may, with approval from our independent board of directors, seek to
      borrow short-term capital that, combined with secured mortgage financing,
      exceeds our targeted leverage ratio. Such short-term borrowings may be derived
      from the $10.0 million revolving credit facility established between principals
      of the Advisor and the O.P. or the $10.0 million unsecured credit facility
      established between ARC Bridge and the REIT as described in Note 9 of our
      financial statements— Related-Party Transactions and Arrangements. In addition,
      short-term borrowings may be obtained from third-parties on a case-by-case
      basis
      as acquisition opportunities present themselves simultaneous with our capital
      raising efforts. We view the use of short-term borrowings as an efficient and
      accretive means of acquiring real estate in advance of raising equity capital.
      Accordingly, we can take advantage of buying opportunities as we expand our
      fund
      raising activities. As additional equity capital is obtained, these short-term
      borrowings will be repaid. As of September 30, 2008, we had $6.5 million of
      notes due to two principals of the Advisor outstanding, borrowing of
      approximately $7.1 million under our related party unsecured credit facility,
      approximately $4.0 million of mezzanine notes payable, and approximately $4.0
      million of convertible redeemable preferred equity. Excluding such short-term
      borrowings, our leverage ratio approximated 72% (secured mortgage notes payable
      as a percentage of total real estate investments, at cost) as of September
      30,
      2008.


22




As
      of
      September 30, 2008, we had cash and cash equivalents of approximately $875,000,
      which we expect to be used primarily to invest in additional real estate, pay
      operating expenses and pay stockholder distributions.




**Contractual
      Obligations**




The
      following is a summary of our contractual obligations as of September 30,
      2008:




**Payments
                  Due During the Years Ending December 31****Contractual
                  Obligations**
              
              **Total**
              
              **Remainder of 2008**
              
              **2009-2010**
              
              **2011-2012**
              
              **Thereafter**Mortgage
                  notes payable (1)
              
              $
              77,067,200
              
              $
              125,988
              
              $
              1,077,952
              
              $
              2,856,749
              
              $
              73,006,511Short-term
                  mezzanine notes payable (1)
              
              
              3,953,796
              
              
              —
              
              
              3,953,796
              
              
              —
              
              
              —Short-term
                  convertible redeemable preferred obligations
              
              
              
              
              
              
              
              
              3,995,000Related
                  party notes payable (1)(3)
              
              
              6,500,000
              
              
              —
              
              
              6,500,000
              
              
              —
              
              
              —Related
                  party credit facility (1)
              
              
              7,147,587
              
              
              
              
              
              7,147,587Purchase
                  obligations (2)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —$
              98,663,583
              
              $
              125,988
              
              $
              22,674,335
              
              $
              2,856,749
              
              $
              73,006,511
 ___________________________




(1)
            Amounts
                include principal payments only. We incurred interest expense of
                approximately $2,686,000, excluding amortization of deferred financing
                costs, during the nine months ended September 30, 2008, and expect
                to
                incur interest in future periods on outstanding debt
                obligations.(2)
            The
                Company has agreed to purchase a portfolio of 50 PNC bank branches
                located
                in Pennsylvania. The transaction is expected to close in the fourth
                quarter of 2008.(3)
            In November
              2008,
              the related party approved an extension of the repayment period
              of an additional six months.





**Election
      as a REIT**




We
      will
      elect to be taxed as a REIT under Sections 856 through 860 of the Internal
      Revenue Code commencing with our taxable year ending December 31, 2008. If
      we qualify for taxation as a REIT, we generally will not be subject to federal
      corporate income tax to the extent we distribute our REIT taxable income to
      our
      stockholders, and so long as we distribute at least 90% of our REIT taxable
      income. REITs are subject to a number of other organizational and operational
      requirements. Even if we qualify for taxation as a REIT, we may be subject
      to
      certain state and local taxes on our income and property, and federal income
      and
      excise taxes on our undistributed income. We believe we are organized and
      operating in such a manner as to qualify to be taxed as a REIT for the taxable
      year ending December 31, 2008.




**Inflation**





Some
      of
      our leases contain provisions designed to mitigate the adverse impact of
      inflation. These provisions generally increase rental rates during the terms
      of
      the leases either at fixed rates or indexed escalations (based on the Consumer
      Price Index or other measures). We may be adversely impacted by inflation on
      the
      leases that do not contain indexed escalation provisions. In addition, our
      net
      leases require the tenant to pay its allocable share of operating expenses,
      including common area maintenance costs, real estate taxes and insurance. This
      may reduce our exposure to increases in costs and operating expenses resulting
      from inflation.




**Related-Party
      Transactions and Agreements**




We
      have
      entered into agreements with American Realty Capital II, LLC and its
      wholly-owned affiliates, whereby we pay certain fees or reimbursements to our
      Advisor or its affiliates for acquisition fees and expenses, organization and
      offering costs, sales commissions, dealer manager fees, asset and property
      management fees and reimbursement of operating costs. See Note 9 to our
      consolidated financial statements included in this report for a discussion
      of
      the various related-party transactions, agreements and fees.





**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements that are reasonably likely to have a current
      or future effect on our financial condition, changes in financial condition,
      revenues or expenses, results of operations, liquidity, capital expenditures
      or
      capital resources.


23




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**




We
      are
      exposed to interest rate changes primarily as a result of long-term debt used
      to
      acquire properties.  Our interest rate risk management objectives are to
      limit the impact of interest rate changes on earnings and cash flows and to
      lower overall borrowing costs. To achieve these objectives, we may borrow at
      fixed rates or variable rates with the lowest margins available and in some
      cases, the ability to convert variable rates to fixed rates. With regard to
      variable rate financing, we will assess interest rate cash flow risk by
      continually identifying and monitoring changes in interest rate exposures that
      may adversely impact expected future cash flows and by evaluating hedging
      opportunities.  At September 30, 2008, our interest rate exposure was
      mitigated by various hedging instruments - See Note 5 and Note 7.





We
      do not
      have any foreign operations and thus we are not exposed to foreign currency
      fluctuations.


24




**PART
      II**


**OTHER
      INFORMATION**





**Item
      1. Legal Proceedings**




We
      are
      not a party to, and none of our properties are subject to, any material pending
      legal proceedings.





**Item
      1A. Risk Factors**




There
      have been no material changes from the risk factors set forth in our Annual
      Report on Form S-11 for period from August 17, 2007 (date of inception)
      to September 30, 2008.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




**Share
      Redemption Program**




Our
      board
      of directors has adopted a share repurchase program that enables our
      stockholders to sell their shares to us in limited circumstances. In order
      to
      provide stockholders with the benefit of interim liquidity, stockholders who
      have held their shares for at least one year and who purchased their shares
      from
      us or received the shares through a non-cash transaction, not in the secondary
      market, may present all or a portion of the holder’s shares to us for
      repurchase. At that time, we may, subject to the conditions and limitations,
      redeem the shares presented for repurchase for cash to the extent that we have
      sufficient funds available to us to fund such repurchase. Upon the death or
      disability of a stockholder, upon request, we will waive the one-year holding
      requirement. Shares repurchased in connection with the death or disability
      of a
      stockholder will be repurchased at a purchase price equal to the price actually
      paid for the shares during the offering, or if not engaged in the offering,
      the
      current net asset value of the shares if higher. During any calendar year,
      the
      number of shares we will repurchase will be limited to the proceeds in the
      distribution reinvestment plan; provided, however, that shares subject to a
      repurchase requested upon the death or disability of a stockholder will not
      be
      subject to this cap. The cash available for repurchase of our shares will be
      limited to the proceeds from the sale of shares pursuant to our distribution
      reinvestment plan legally available for the repurchase of our
      stock.





No
      shares
      were redeemed under this program during the quarter ended September 30,
      2008.





**Item
      3. Defaults Upon Senior Securities**




None





**Item
      4. Submission of Matters to a Vote of Security Holders**




None





**Item**  **5.
      Other Information**




None





**Item**  **6.
      Exhibits**




The
      exhibits listed on the Exhibit Index (following the signatures section of
      this report) are included, or incorporated by reference, in this quarterly
      report.


25




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned thereunto duly authorized.




American
                Realty Capital Trust, Inc.
              *(Registrant)*By:
            
            /s/
                Nicholas S. SchorschNicholas
                S. Schorsch*Chief
                Executive Officer and President*By:
            
            /s/
                Brian S. BlockBrian
                S. Block*Senior
                Vice President and Chief Financial Officer*




Date:
      November 14, 2008


26




EXHIBIT
      INDEX




The
      following exhibits are included, or incorporated by reference, in this Quarterly
      Report on Form 10-Q for the quarter ended September 30, 2008 (and are numbered
      in accordance with Item 601 of Regulation S-K).





Exhibit
                No.
            Description31.1
            Certification
                of the Principal Executive Officer of the Company pursuant to Securities
                Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002 (filed herewith).31.2
            Certification
                of the Principal Financial Officer of the Company pursuant to Securities
                Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002 (filed herewith).32
            Written
                statements of the Principal Executive Officer and Principal Financial
                Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.10.8(a)
            Agreement
                for Transfer of Membership Interest between ARC Growth Fund I, LLC,
                and
                American Realty Capital Operating Partnership, L.P., dated September
                16,
                2008. (Transfer to the Operating Partnership of an indirect interest
                in
                National City portfolio. Amends exhibit previously filed as exhibit
                10.8
                to the Post-Effective Amendment No. 2 to Form S-11, dated September
                3,
                2008.)10.8(b)
            Agreement
                for Transfer of Membership Interests between ARC Growth Fund I, LLC,
                and
                American Realty Capital Operating Partnership, L.P., dated September
                16,
                2008. (Transfer to the Operating Partnership of an indirect interest
                in
                National City portfolio. Amends exhibit previously filed as exhibit
                10.8
                to the Post-Effective Amendment No. 2 to Form S-11, dated September
                3,
                2008.)10.9(a)
            Agreement
                of Assignment of Membership Interests by and among Milestone Partners
                Limited, and American Realty Capital Holdings, LLC, and American
                Realty
                Capital Operating Partnership, L.P., dated September 29, 2008. (Transfer
                to the Operating Partnership of an indirect interest in the Rite
                Aid
                portfolio.)10.9(b)
            Consent
                to Transfer Agreement among ARC RACADOH001, LLC, ARC RACAROH001,
                LLC, ARC
                RAELPOH001, LLC, ARC RALISOH001, LLC, ARC RACARPA001, LP, ARC RAPITPA001,
                LP, American Realty Capital Holdings, LLC, Milestone Partners Limited,
                American Realty Capital Operating Partnership, L.P., and Wells Fargo
                Bank,
                N.A., dates September 29, 2008. (Transfer of mortgage to Operating
                Partnership in the Rite Aid
                portfolio.)






27