FOR FURTHER INFORMATION CONTACT:
Mary C. Jensen
Vice President, Investor Relations
(480) 315-6604
InvestorRelations@spiritrealty.com
PRESS RELEASE
Spirit Realty Capital, Inc. Announces
Fourth Quarter and Full Year 2014 Operating Results
Scottsdale, AZ, February 26, 2015 (BUSINESS WIRE) - Spirit Realty Capital, Inc. ("Spirit") (NYSE: SRC), a real estate investment trust that invests in single-tenant, operationally essential real estate, today announced its operating results for the fourth quarter and year ended December 31, 2014. For the quarter ended December 31, 2014, Spirit had net income attributable to common stockholders of $0.08 per diluted share, compared to $0.12 per diluted share for the quarter ended December 31, 2013. For the year ended December 31, 2014, Spirit had a net loss of $(0.09) per share, compared to break-even earnings per share on net income of $1.7 million for the year ended December 31, 2013.
Highlights
For the fourth quarter ended December 31, 2014, Spirit Realty Capital:
| |
| • | Increased revenues 11.2%, to $154.8 million, from $139.2 million in the fourth quarter of 2013. |
| |
| • | Generated Adjusted Funds from Operations ("AFFO") of $0.21 per diluted share, from $0.19 per diluted share a year ago; and Funds from Operations ("FFO") of $0.20 per diluted share, compared to $0.18 per diluted share in 2013. |
| |
| • | Acquired 120 properties for $398.8 million with an initial cash yield of approximately 7.4% under leases with an average remaining term of 16.7 years. |
| |
| • | Sold 19 properties generating gross sales proceeds of $76.4 million. |
| |
| • | Maintained occupancy above 98%. |
| |
| • | Increased quarterly cash dividend to $0.1700 per common share from $0.16625 per common share, representing a 2.3% increase. The new dividend has an annualized rate of $0.6800 per common share. |
| |
| • | Extended and modified a master lease agreement with Shopko, providing greater flexibility to sell Shopko-leased properties. |
| |
| • | Issued $510.0 million aggregate principal amount of "A+" rated net-lease mortgage notes under its Spirit Master Funding program with a blended coupon rate of 4.42%, and a weighted average life of 9.4 years. |
| |
| • | Sold 12.8 million common shares, resulting in net proceeds of approximately $147.5 million through the at-the-market ("ATM") program. |
For the year ended December 31, 2014, Spirit Realty Capital:
| |
| • | Increased revenues to $602.9 million, compared to $419.5 million for the year ended December 31, 2013. The increase is primarily attributable to the merger with Cole Property Trust II, Inc.("Cole II"), which was completed on July 17, 2013. |
| |
| • | Generated AFFO of $0.82 per diluted share and FFO of $0.61 per diluted share, compared to $0.81 per diluted share and $0.54 per diluted share, respectively, for the year ended December 31, 2013. Per share amounts are based upon 387.6 million and 255.2 million weighted average shares outstanding for the years ended December 31, 2014 and December 31, 2013, respectively. |
| |
| • | Acquired 361 new properties for a gross investment of $968.6 million in 82 transactions with a weighted average initial cash yield of approximately 7.5% and a weighted average lease term of 15.7 years. |
| |
| • | Sold 38 properties generating $121.2 million in gross sales proceeds. |
| |
| • | Issued $402.5 million of 2.875% Convertible Senior Notes due 2019 and $345.0 million of 3.75% Convertible Senior Notes due 2021, resulting in net proceeds of approximately $726.2 million. |
| |
| • | Completed an underwritten public offering of 26.45 million common shares, resulting in net proceeds of approximately $271.2 million. |
| |
| • | Completed an exchange of $912.4 million outstanding principal balance of Spirit Master Funding "A+" rated net-lease mortgage notes on May 20, 2014. The notes have a blended coupon rate of 5.602%, and a weighted average life of 6.5 years. |
| |
| • | Established an ATM program allowing for the periodic sale of Spirit's common stock. During the year, 14.4 million common shares were sold, resulting in net proceeds of $163.8 million. |
| |
| • | Extinguished $583.8 million of debt with a weighted average interest rate of 6.41%. |
CEO Comments
"Spirit had a very strong 2014," said Thomas H. Nolan, Jr. Chairman and Chief Executive Officer of Spirit Realty Capital. "Against a backdrop of a steadily improving economy and an attractive acquisition market, we ended the year with the portfolio well positioned to deliver the predictable and growing cash flows we aim to achieve. We invested almost $1 billion in new acquisitions; maintained a disciplined capital recycling program and took important steps in achieving our portfolio diversification goals. It remains our intention to have no single tenant represent more than 10% of Spirit's total revenues by the end of 2015."
Financial Results
Revenues
Total revenues for the fourth quarter of 2014 increased 11.2%, to $154.8 million, compared to $139.2 million in the fourth quarter of 2013. The increase in total revenues was attributable to new investments throughout the year, as well as contractual rent growth.
Total revenues for the year ended December 31, 2014 increased 43.7%, to $602.9 million compared to $419.5 million for the year ended December 31, 2013. The increase reflects the impact of the Cole II merger, which was completed in July of 2013, as well as contractual rent growth and growth from new investments throughout the year.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders for the fourth quarter of 2014 was $34.1 million, or $0.08 per share based on 400.4 million weighted average shares of common stock outstanding, compared to net income attributable to common stockholders for the fourth quarter of 2013 of $43.6 million, or $0.12 per share based on 369.0 million weighted average shares of common stock outstanding.
Net loss attributable to common stockholders for the year ended December 31, 2014 was $(33.8) million, or $(0.09) per share based on 386.8 million weighted average shares of common stock outstanding, compared to net income attributable to common stockholders for the year ended December 31, 2013 of $1.7 million, or $0.00 per share based on 255.0 million weighted average shares of common stock outstanding. The net loss in 2014 was driven by a loss on debt extinguishment resulting from the early retirement of certain debt, including a CMBS loan related to the Company's Shopko portfolio.
FFO, AFFO, and FAD Attributable to Common Stockholders, Leverage
FFO for the fourth quarter of 2014 totaled $80.2 million, or $0.20 per share, compared to $68.4 million, or $0.18 per share for the fourth quarter of 2013. For the year ended December 31, 2014, FFO totaled $236.5 million, or $0.61 per share, compared to $139.5 million, or $0.54 per share, for the year ended December 31, 2013.
AFFO for the fourth quarter of 2014 totaled $84.4 million, or $0.21 per share, compared to $70.6 million, or $0.19 per share, for the fourth quarter of 2013. For the year ended December 31, 2014, AFFO was $320.8 million, or $0.82 per share, compared to $208.9 million, or $0.81 per share for the year ended December 31, 2013.
Total weighted average shares outstanding for the year ended December 31, 2014 were 386.8 million, compared to 255.0 million during 2013.
For the quarter and year ended December 31, 2014, dividends declared to common stockholders of $69.9 million and $264.1 million, respectively, represented an 84% and 83% payout ratio against funds available for distribution ("FAD") generated during those respective periods.
Leverage at December 31, 2014 was 7.6x compared to 7.3x at December 31, 2013. The increase in Leverage was primarily attributable to the $510 million of net-lease mortgage notes that were issued on November 26, 2014 under the Spirit Master Funding program. The proceeds were used primarily to fund acquisitions in December 2014 and into 2015, which have not provided full quarter contributions to earnings.
The definitions of FFO, AFFO, FAD and Leverage are included on pages 6-7, and a reconciliation of these measures to net income (loss) attributable to common stockholders is provided on pages 10-11.
Portfolio Highlights
Real Estate Transactions
Spirit acquired 120 properties with a gross investment of $399.5 million, including follow-on investments, in 27 separate transactions during the fourth quarter of 2014. These investments had an initial cash yield of approximately 7.4% and were with 9 existing and 18 new tenants. On average, the associated leases have a remaining term of 16.7 years. For the year ended December 31, 2014, Spirit acquired 361 properties with a gross investment of $971.7 million, including follow-on investments, in 82 separate transactions. These investments had an initial cash yield of approximately 7.5% and were with 30 existing and 52 new tenants. On average, the associated leases had a remaining term of 15.7 years.
During the fourth quarter of 2014, Spirit sold 19 properties generating gross sales proceeds of $76.4 million. For the full year ended December 31, 2014, Spirit sold 38 properties generating gross sales proceeds of $121.2 million. Properties sold during the year were closed at an average cash yield of approximately 7.6% and had an average remaining lease term of 9.1 years.
Portfolio
As of December 31, 2014, Spirit's gross investment in real estate and loans totaled $8.0 billion, substantially all of which was invested in 2,509 properties, of which 2,364 are owned properties that were 98.4% occupied. Spirit’s properties are generally leased under long-term, triple net leases, with a weighted average remaining term of approximately 10.8 years. At December 31, 2014, approximately 45% of Spirit's annual revenues are derived from master leases and approximately 89% of our leases provide for annual rent increases.
Spirit's real estate portfolio as of December 31, 2014, was diversified geographically across 49 states and among various industry types. Texas accounted for 12.0% of the annual rent contribution of the real estate portfolio, and no other state contributed more than 6.7%. During the three months ended December 31, 2014, revenue from Shopko, Spirit's largest tenant, represented 14.0% of total revenues, down from 14.8% in the fourth quarter of 2013. During the three months ended December 31, 2014, no other tenant represented more than 3.7% of total revenues. Spirit's three largest industry types (based on annual rent) as of December 31, 2014, were general merchandise (15.9%), casual dining restaurants (9.8%), and quick service restaurants (7.5%).
On December 16, 2014, Spirit announced that it extended and modified its master lease agreement with Shopko, which provides Spirit greater flexibility to sell Shopko-leased properties and sub-portfolios. Additional information on the lease amendment can be found on Spirit's company website at www.spiritrealty.com, under SEC filings and press releases.
2015 Guidance
Spirit Realty Capital affirms its previously announced 2015 AFFO guidance with an expected range of $0.84 to $0.86 per share. This AFFO guidance equates to anticipated net income (excluding non-recurring items that
are not reflective of ongoing operations) of $0.22 to $0.24 per share plus $0.61 per share of expected real estate depreciation and amortization plus approximately $0.01 per share related to non-cash items and real estate transaction costs.
Conference Call
Spirit Realty Capital will hold a conference call and webcast to discuss its fourth quarter and year-end 2014 results on Thursday, February 26, 2015 at 5:00 p.m. (Eastern Time). The call can be accessed live over the phone by dialing 888-317-6016 (toll-free domestic), 412-317-6016 (international) or 855-669-9657 (Canada). A live webcast of the conference call will also be available on the Investor Relations section of Spirit Realty Capital’s website at www.spiritrealty.com. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at 877-344-7529 (toll-free domestic), 412-317-0088 (international) or 855-669-9648 (Canada); passcode: 10060037. The webcast will be archived on Spirit Realty Capital’s website for 90 days after the call.
About Spirit Realty Capital
Spirit Realty Capital (NYSE: SRC) is a real estate investment trust (REIT) that invests in single-tenant operationally essential real estate, which refers to generally free-standing, commercial real estate facilities where tenants conduct retail, service or distribution activities that are essential to the generation of their sales and profits. Spirit Realty Capital has an estimated enterprise value of $9.1 billion comprising a diverse portfolio of 2,509 properties across 49 states as of December 31, 2014. Founded in 2003, Spirit completed its initial public offering in September 2012. More information about Spirit Realty Capital can be found at www.spiritrealty.com.
Forward-Looking and Cautionary Statements
This press release contains statements that are not strictly historical and are forward-looking statements under federal securities laws. Any such forward-looking statements are reflections of management’s current operating plans, estimates, beliefs and assumptions based on information currently available to management, and are not guarantees of future performance. These forward-looking statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, Spirit’s continued ability to source new investments, risks associated with using debt to fund Spirit's business activities (including refinancing and interest rate risks, changes in interest rates and/or credit spreads and changes in the capital markets), unknown liabilities assumed in connection with the acquired properties, portfolios of properties, or interests in real-estate related entities, general risks affecting the real estate industry (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate), risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended and additional risks discussed in Spirit's most recent filings with the Securities and Exchange Commission from time to time, including Spirit's Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
FFO, AFFO, and FAD
We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and amortization, impairment charges and net losses (gains) on the disposition of assets. FFO is a supplemental non-GAAP financial measure. We use FFO as a supplemental performance measure because we believe that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate-related depreciation and amortization, gains and losses from property dispositions and impairment charges, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other equity REITs. However, because FFO excludes depreciation and amortization and does not capture the changes in the value of our properties that result from use or market conditions, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO as we do, and, accordingly, our FFO may not be comparable to such other equity REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income (loss) attributable to common stockholders as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP. A reconciliation of net income (loss) (computed in accordance with GAAP) to FFO is included in the financial information accompanying this release.
AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. It adjusts FFO to eliminate the impact of non-recurring items that are not reflective of ongoing operations and certain non-cash items that reduce or increase net income (loss) in accordance with GAAP. Our computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and, therefore, may not be comparable to such other REITs. A reconciliation of net income (loss) (computed in accordance with GAAP) to AFFO is included in the financial information accompanying this release.
FAD is a measure of a REIT's ability to generate cash and to distribute dividends to its stockholders. It reduces AFFO by deducting normalized recurring expenditures that are capitalized by the REIT and then amortized, but which are necessary to maintain a REIT's properties and its revenue stream. Our calculation of FAD may differ from the methodology applied by other equity REITs, and, therefore, may not be comparable to such other REIT’s. FAD is a supplemental non-GAAP financial measure and should not be used as a measure of our liquidity or as a substitute for cash flow from operating activities computed in accordance with GAAP. A reconciliation of net income (loss) attributable to common stockholders (computed in accordance with GAAP) to FAD is included in the financial information accompanying this release.
Adjusted EBITDA and Annualized Adjusted EBITDA
Adjusted EBITDA represents EBITDA, or earnings before interest, taxes, depreciation and amortization, modified to include other adjustments to GAAP net income (loss) attributable to common stockholders for merger costs, real estate acquisition costs, impairment losses, gains/losses from the sale of real estate and debt transactions and other items that are not considered to be indicative of our on-going operating performance. We exclude these items as they are not key drivers in our investment decision making process. We focus our business plans to enable us to sustain increasing shareholder value. Accordingly, we believe that excluding these items, which may cause short-term fluctuations in net income, but are not indicative of overall long-term operating performance, provides a useful supplemental measure to investors and analysts in assessing the net earnings contribution of our real estate portfolio. Because these measures do not represent
net income (loss) that is computed in accordance with GAAP, they should not be considered alternatives to net income (loss) or as an indicator of financial performance.
Annualized Adjusted EBITDA is calculated by multiplying Adjusted EBITDA for the quarter by four. Our computation of Adjusted EBITDA and Annualized Adjusted EBITDA may differ from the methodology used by other equity REITs to calculate these measures, and, therefore, may not be comparable to such other REITs. A reconciliation of net income (loss) attributable to common stockholders (computed in accordance with GAAP) to EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA is included in the financial information accompanying this release.
Adjusted Debt and Leverage
Adjusted Debt represents interest bearing debt (reported in accordance with GAAP) adjusted to include preferred stock and exclude unamortized debt discount, as further reduced for cash and cash equivalents and cash collateral deposits retained by lenders. We believe that including preferred stock in Adjusted Debt is appropriate because it is an equity security that has properties of a debt instrument not possessed by common stock. Additionally, by excluding unamortized debt discounts and premiums, cash and cash equivalents, and cash collateral deposits retained by lenders, the result provides an estimate of the contractual amount of borrowed capital to be repaid which we believe is a beneficial disclosure to investors.
Leverage is a supplemental non-GAAP financial measure we use to evaluate the level of borrowed capital being used to increase the potential return of our real estate investments. We calculate Leverage by dividing Adjusted Debt by Annualized Adjusted EBITDA. The utility of Leverage should be considered as a supplemental measure of the level of risk that stockholder value may be exposed to. Our computation of Leverage may differ from the methodology used by other equity REITs, and, therefore, may not be comparable to such other REITs. A reconciliation of interest bearing debt (reported in accordance with GAAP) to Adjusted Debt is included in the financial information accompanying this release.
SPIRIT REALTY CAPITAL, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | |
| | December 31, |
| | 2014 | | 2013 |
| Assets | | | |
| Investments: | | | |
| Real estate investments: | | | |
| Land and improvements | $ | 2,614,630 |
| | $ | 2,330,510 |
|
| Buildings and improvements | 4,579,166 |
| | 4,188,783 |
|
| Total real estate investments | 7,193,796 |
| | 6,519,293 |
|
| Less: accumulated depreciation | (752,210 | ) | | (590,067 | ) |
| | 6,441,586 |
| | 5,929,226 |
|
| Loans receivable, net | 109,425 |
| | 117,721 |
|
| Intangible lease assets, net | 590,073 |
| | 618,121 |
|
| Real estate assets under direct financing leases, net | 56,564 |
| | 58,760 |
|
| Real estate assets held for sale, net | 119,912 |
| | 19,611 |
|
| Net investments | 7,317,560 |
| | 6,743,439 |
|
| Cash and cash equivalents | 176,181 |
| | 66,588 |
|
| Deferred costs and other assets, net | 231,839 |
| | 129,597 |
|
| Goodwill | 291,421 |
| | 291,421 |
|
| Total assets | $ | 8,017,001 |
| | $ | 7,231,045 |
|
| | | | |
| Liabilities and stockholders’ equity | | | |
| Liabilities: | | | |
| Revolving credit facilities | $ | 15,181 |
| | $ | 35,120 |
|
| Mortgages and notes payable, net | 3,658,496 |
| | 3,743,098 |
|
| Convertible senior notes, net | 695,957 |
| | — |
|
| Intangible lease liabilities, net | 205,968 |
| | 220,114 |
|
| Accounts payable, accrued expenses and other liabilities | 123,298 |
| | 114,679 |
|
| Total liabilities | 4,698,900 |
| | 4,113,011 |
|
| Commitments and contingencies | | | |
| Stockholders’ equity: | | | |
| Common stock, $0.01 par value; 411,824,039 issued shares and 411,350,440 outstanding shares at December 31, 2014 and 370,570,565 issued shares and 370,363,803 outstanding shares at December 31, 2013 | 4,118 |
| | 3,706 |
|
| Capital in excess of par value | 4,361,320 |
| | 3,859,823 |
|
| Accumulated deficit | (1,041,392 | ) | | (742,915 | ) |
| Accumulated other comprehensive loss | (1,083 | ) | | (638 | ) |
| Treasury stock, at cost | (4,862 | ) | | (1,942 | ) |
| Total stockholders’ equity | 3,318,101 |
| | 3,118,034 |
|
| Total liabilities and stockholders’ equity | $ | 8,017,001 |
| | $ | 7,231,045 |
|
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | | | | | | | | | |
| | Three Months
Ended December 31, | | Year Ended December 31, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Revenues: | | | | | | | |
| Rentals | $ | 148,244 |
| | $ | 133,050 |
| | $ | 574,456 |
| | $ | 404,402 |
|
| Interest income on loans receivable | 1,776 |
| | 1,891 |
| | 7,239 |
| | 5,928 |
|
| Earned income from direct financing leases | 822 |
| | 864 |
| | 3,343 |
| | 1,572 |
|
| Tenant reimbursement income | 3,537 |
| | 3,321 |
| | 13,085 |
| | 5,637 |
|
| Interest income and other | 436 |
| | 112 |
| | 4,748 |
| | 1,928 |
|
| Total revenues | 154,815 |
| | 139,238 |
| | 602,871 |
| | 419,467 |
|
| Expenses: | | | | | | | |
| General and administrative | 10,756 |
| | 9,083 |
| | 44,252 |
| | 35,146 |
|
| Finance restructuring charges | — |
| | 717 |
| | 13,022 |
| | 717 |
|
| Merger costs | — |
| | 16 |
| | — |
| | 56,644 |
|
| Property costs | 6,168 |
| | 5,424 |
| | 23,383 |
| | 11,760 |
|
| Real estate acquisition costs | 1,259 |
| | 1,030 |
| | 3,631 |
| | 1,718 |
|
| Interest | 56,144 |
| | 52,890 |
| | 220,070 |
| | 179,267 |
|
| Depreciation and amortization | 63,380 |
| | 59,172 |
| | 247,966 |
| | 164,054 |
|
| Impairments (recoveries) | (6,042 | ) | | — |
| | 36,019 |
| | (185 | ) |
| Total expenses | 131,665 |
| | 128,332 |
| | 588,343 |
| | 449,121 |
|
| Income (loss) from continuing operations before other expense and income tax expense | 23,150 |
| | 10,906 |
| | 14,528 |
| | (29,654 | ) |
| Other expense: | | | | | | | |
| Loss on debt extinguishment | (254 | ) | | (2,405 | ) | | (64,750 | ) | | (2,405 | ) |
| Total other expense | (254 | ) | | (2,405 | ) | | (64,750 | ) | | (2,405 | ) |
| Income (loss) from continuing operations before income tax expense | 22,896 |
| | 8,501 |
| | (50,222 | ) | | (32,059 | ) |
| Income tax expense | 87 |
| | 168 |
| | 673 |
| | 1,113 |
|
| Income (loss) from continuing operations | 22,809 |
| | 8,333 |
| | (50,895 | ) | | (33,172 | ) |
| Discontinued operations: | | | | | | | |
| (Loss) income from discontinued operations | (253 | ) | | (447 | ) | | 3,368 |
| | (2,077 | ) |
| Gain on dispositions of assets | — |
| | 35,700 |
| | 488 |
| | 36,926 |
|
| (Loss) income from discontinued operations | (253 | ) | | 35,253 |
| | 3,856 |
| | 34,849 |
|
| Income (loss) before dispositions of assets | 22,556 |
| | 43,586 |
| | (47,039 | ) | | 1,677 |
|
| Gain on dispositions of assets | 11,557 |
| | — |
| | 13,240 |
| | — |
|
| Net income (loss) attributable to common stockholders | $ | 34,113 |
| | $ | 43,586 |
| | $ | (33,799 | ) | | $ | 1,677 |
|
| Net income (loss) per share of common stock—basic and diluted: | | | | | | | |
| Continuing operations | $ | 0.09 |
| | $ | 0.02 |
| | $ | (0.10 | ) | | $ | (0.14 | ) |
| Discontinued operations | (0.01 | ) | | 0.10 |
| | 0.01 |
| | 0.14 |
|
| Net income (loss) per share attributable to common stockholders - basic and diluted | $ | 0.08 |
| | $ | 0.12 |
| | $ | (0.09 | ) | | $ | 0.00 |
|
| Weighted average common shares outstanding: | | | | | | | |
| Basic | 399,522,442 |
| | 368,586,151 |
| | 386,809,746 |
| | 255,020,565 |
|
| Diluted | 400,400,964 |
| | 369,047,786 |
| | 386,809,746 |
| | 255,020,565 |
|
| |
SPIRIT REALTY CAPITAL, INC.
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Share and Per Share Data)
|
| | | | | | | | | | | | | | | |
| | Three Months
Ended December 31, | | Year Ended December 31, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Net income (loss) attributable to common stockholders | $ | 34,113 |
| | $ | 43,586 |
| | $ | (33,799 | ) | | $ | 1,677 |
|
| Add/(less): | | | | | | | |
| Portfolio depreciation and amortization | | | | | | | |
| Continuing operations | 63,285 |
| | 59,092 |
| | 247,587 |
| | 163,874 |
|
| Discontinued operations | — |
| | 91 |
| | — |
| | 3,545 |
|
| Portfolio impairment | | | | | | | |
| Continuing operations | (6,048 | ) | | — |
| | 36,013 |
| | 183 |
|
| Discontinued operations | 417 |
| | 1,282 |
| | 417 |
| | 7,134 |
|
| Realized gain on sales of real estate | (11,557 | ) | | (35,700 | ) | | (13,728 | ) | | (36,926 | ) |
| Total adjustments | 46,097 |
| | 24,765 |
| | 270,289 |
| | 137,810 |
|
| Funds from operations (FFO) attributable to common stockholders | $ | 80,210 |
| | $ | 68,351 |
| | $ | 236,490 |
| | $ | 139,487 |
|
| Add/(less): | | | | | | | |
| Loss (gain) on debt extinguishment |
|
| |
|
| |
|
| |
|
|
| Continuing operations | 254 |
| | 2,405 |
| | 64,750 |
| | 2,405 |
|
| Discontinued operations | — |
| | — |
| | — |
| | (1,028 | ) |
| Merger related costs | — |
| | 16 |
| | — |
| | 66,700 |
|
| Finance restructuring charges | — |
| | 717 |
| | 13,022 |
| | 717 |
|
| Real estate acquisition costs | 1,259 |
| | 1,030 |
| | 3,631 |
| | 1,718 |
|
| Non-cash interest expense | 1,813 |
| | (192 | ) | | 5,175 |
| | 8,840 |
|
| Accrued interest on defaulted loans | 1,886 |
| | — |
| | 3,103 |
| | — |
|
| Non-cash revenues | (3,855 | ) | | (3,565 | ) | | (16,732 | ) | | (18,755 | ) |
| Non-cash compensation expense | 2,843 |
| | 1,868 |
| | 11,346 |
| | 8,769 |
|
| Total adjustments to FFO | 4,200 |
| | 2,279 |
| | 84,295 |
| | 69,366 |
|
| Adjusted funds from operations (AFFO) attributable to common stockholders | $ | 84,410 |
| | $ | 70,630 |
| | $ | 320,785 |
| | $ | 208,853 |
|
| Less: | | | | | | | |
| Capitalized portfolio maintenance expenditures | (1,136 | ) | | (1,940 | ) | | (1,987 | ) | | (2,924 | ) |
| Funds available for distribution (FAD) | $ | 83,274 |
| | $ | 68,690 |
| | $ | 318,798 |
| | $ | 205,929 |
|
|
| | | | | | | | | | | | | | | |
| Dividends declared to common stockholders | $ | 69,930 |
| | $ | 61,573 |
| | $ | 264,128 |
| | $ | 169,419 |
|
| Dividends declared as percent of FAD | 84 | % | | 90 | % | | 83 | % | | 82 | % |
| Net income (loss) per share of common stock | | | | | | | |
Basic and Diluted (1) (2) | $ | 0.08 |
| | $ | 0.12 |
| | $ | (0.09 | ) | | $ | 0.00 |
|
| FFO per share of common stock | | | | | | | |
Diluted (2) | $ | 0.20 |
| | $ | 0.18 |
| | $ | 0.61 |
| | $ | 0.54 |
|
| AFFO per share of common stock | | | | | | | |
Diluted (2) | $ | 0.21 |
| | $ | 0.19 |
| | $ | 0.82 |
| | $ | 0.81 |
|
| Weighted average shares of common stock outstanding: | | | | | | | |
| Basic | 399,522,442 |
| | 368,586,151 |
| | 386,809,746 |
| | 255,020,565 |
|
| Diluted | 400,400,964 |
| | 369,047,786 |
| | 387,585,580 |
| | 255,210,757 |
|
(1) Assumes the issuance of potentially issuable shares unless the result would be anti-dilutive. |
(2) The computation of FFO and AFFO per share deducts dividends paid to participating stockholders of $253 and $290 for the quarters ended December 31, 2014 and 2013, respectively. For the years ended December 31, 2014 and 2013, the computation deducts dividends paid to participating stockholders of $1,099 and $1,291, respectively. |
SPIRIT REALTY CAPITAL, INC.
Reconciliation of Non-GAAP Financial Measures
(In Thousands)
|
| | | | | | | | |
| | | December 31, |
| | | 2014 | | 2013 |
| Revolving credit facilities | | $ | 15,181 |
| | $ | 35,120 |
|
| Mortgages and notes payable, net | | 3,658,496 |
| | 3,743,098 |
|
| Convertible Notes | | 695,957 |
| | — |
|
| | | 4,369,634 |
| | 3,778,218 |
|
| Add/(less): | | | | |
| Preferred stock | | — |
| | — |
|
| Unamortized debt discount/(premium) | | 51,586 |
| | (1,669 | ) |
| Cash and cash equivalents | | (176,181 | ) | | (66,588 | ) |
| Cash collateral deposits for the benefit of lenders classified as other assets | | (29,483 | ) | | (16,927 | ) |
| Total adjustments | | (154,078 | ) | | (85,184 | ) |
| Adjusted Debt | | $ | 4,215,556 |
| | $ | 3,693,034 |
|
| | | | | |
| | | Three Months
Ended December 31, |
| | | 2014 | | 2013 |
| Net income attributable to common stockholders | | $ | 34,113 |
| | $ | 43,586 |
|
| Add/(less): | | | | |
| Interest | | 56,144 |
| | 52,890 |
|
| Depreciation and amortization | | 63,380 |
| | 59,263 |
|
| Income tax expense | | 87 |
| | 168 |
|
| Total adjustments | | 119,611 |
| | 112,321 |
|
| Earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA") | | $ | 153,724 |
| | $ | 155,907 |
|
Add/(less): (1) | | | | |
| Merger related costs | | — |
| | 16 |
|
| Finance restructuring charges | | — |
| | 717 |
|
| Real estate acquisition costs | | 1,259 |
| | 1,030 |
|
| Impairments | | (5,631 | ) | | 1,282 |
|
| Gains on sales of assets | | (11,557 | ) | | (35,700 | ) |
| Losses on debt extinguishment | | 254 |
| | 2,405 |
|
| Total adjustments to EBITDA | | (15,675 | ) | | (30,250 | ) |
| Adjusted EBITDA | | $ | 138,049 |
| | $ | 125,657 |
|
Annualized Adjusted EBITDA (2) | | $ | 552,196 |
| | $ | 502,628 |
|
| | | | | |
| Leverage (Adjusted Debt / Annualized Adjusted EBITDA) | | 7.6 |
| | 7.3 |
|
| | | | | |
(1) Adjustments include all amounts charged to continuing and discontinued operations. |
(2) Adjusted EBITDA multiplied by 4. |
SPIRIT REALTY CAPITAL, INC.
Real Estate Portfolio
Diversification By Tenant
The following table lists the top 10 tenants of our owned real estate properties as of December 31, 2014:
|
| | | | | | | | | |
| Tenant (2) | | Number of Properties | | Total Square Footage (in thousands) | | Percent of Total Revenue (1) | |
| Specialty Retail Shops Holding Corp. (Shopko) | | 181 |
| | 13,502 |
| | 14.0 | % |
| Walgreen Company | | 67 |
| | 969 |
| | 3.7 | |
| 84 Properties, LLC | | 109 |
| | 4,118 |
| | 3.1 | |
| Cajun Global, LLC (Church's Chicken) | | 201 |
| | 257 |
| | 2.3 | |
| Academy Sports + Outdoors | | 8 |
| | 1,852 |
| | 2.0 | |
| Alimentation Couche-Tard, Inc. (Circle K) | | 83 |
| | 251 |
| | 2.0 | |
| CVS Caremark | | 37 |
| | 413 |
| | 1.6 | |
| CarMax, Inc. | | 9 |
| | 368 |
| | 1.4 | |
| Carmike Cinemas, Inc. | | 13 |
| | 625 |
| | 1.3 | |
| Rite Aid Corp | | 30 |
| | 357 |
| | 1.3 | |
| Other | | 1,626 |
| | 34,249 |
| | 67.3 | |
| Total | | 2,364 |
| | 56,961 |
| | 100.0 | % |
| | | | | | | | |
| (1) Total revenue for the quarter ended December 31, 2014. | | | | | |
| (2) Tenants represent legal entities ultimately responsible for obligations under the lease agreements. Other tenants may operate certain of the same business concepts or brands set forth above, but represent distinct tenant credits. | |
Diversification By Industry
The following table sets forth information regarding the diversification of our owned real estate properties among different industries as of December 31, 2014:
|
| | | | | | | | | | |
| Industry | | Number of Properties | | Total Square Footage (in thousands) | | Percent of Total Rent (1) | |
| General Merchandise | | 228 |
| | 14,841 |
| | 15.9 |
| % |
| Restaurants - Casual Dining | | 389 |
| | 2,505 |
| | 9.8 |
| |
| Restaurants - Quick Service | | 546 |
| | 1,473 |
| | 7.5 |
| |
| Drug Stores / Pharmacies | | 134 |
| | 1,739 |
| | 6.8 |
| |
| Convenience Stores / Car Washes | | 210 |
| | 743 |
| | 6.5 |
| |
| Building Materials | | 177 |
| | 5,750 |
| | 5.6 |
| |
| Movie Theatres | | 44 |
| | 2,178 |
| | 5.1 |
| |
| Medical / Other Office | | 98 |
| | 1,071 |
| | 3.9 |
| |
| Distribution | | 17 |
| | 4,077 |
| | 3.8 |
| |
| Automotive Parts & Service | | 151 |
| | 1,280 |
| | 3.2 |
| |
| Grocery | | 49 |
| | 1,846 |
| | 3.1 |
| |
| Apparel | | 11 |
| | 2,261 |
| | 2.9 |
| |
| Home Furnishings | | 31 |
| | 1,922 |
| | 2.6 |
| |
| Health & Fitness | | 24 |
| | 933 |
| | 2.5 |
| |
| Education | | 41 |
| | 1,054 |
| | 2.4 |
| |
| Home Improvement | | 10 |
| | 1,492 |
| | 2.3 |
| |
| Sporting Goods | | 23 |
| | 1,223 |
| | 2.3 |
| |
| Automotive Dealers | | 22 |
| | 657 |
| | 2.3 |
| |
| Entertainment | | 10 |
| | 661 |
| | 1.9 |
| |
| Manufacturing | | 27 |
| | 4,094 |
| | 1.7 |
| |
| Specialty Retail | | 23 |
| | 870 |
| | 1.7 |
| |
| Consumer Electronics | | 16 |
| | 1,270 |
| | 1.5 |
| |
| Pet Supplies & Service | | 5 |
| | 1,126 |
| | 1.0 |
| |
| Office Supplies | | 20 |
| | 546 |
| | 1.0 |
| |
| Financial Services | | 4 |
| | 422 |
| | * |
| |
| Wholesale Clubs | | 3 |
| | 355 |
| | * |
| |
| Dollar Stores | | 41 |
| | 449 |
| | * |
| |
| Other | | 10 |
| | 123 |
| | * |
| |
| Total | | 2,364 |
| | 56,961 |
| | 100.0 |
| % |
| | | | | | | | |
| * Less than 1% | | | | | | | |
| (1) Total rental revenue for the month ended December 31, 2014 for properties owned at December 31, 2014. |
SPIRIT REALTY CAPITAL, INC.
Real Estate Portfolio
Diversification By Asset Type
The following table sets forth information regarding the diversification of our owned real estate properties among different asset types as of December 31, 2014:
|
| | | | | | | | | |
| Asset Type | | Number of Properties | | Total Square Footage (in thousands) | | Percent of Total Rent (1) | |
| Retail | | 2,170 |
| | 43,426 |
| | 85.7 | % |
| Industrial | | 80 |
| | 11,376 |
| | 8.2 | |
| Office | | 114 |
| | 2,159 |
| | 6.1 | |
| Total | | 2,364 |
| | 56,961 |
| | 100.0 | % |
| | | | | | | | |
(1) Total rental revenue for the month ended December 31, 2014 for properties owned at December 31, 2014. |
SPIRIT REALTY CAPITAL, INC.
Real Estate Portfolio
Diversification By Geography
The following table sets forth information regarding the geographic diversification of our owned real estate properties as of December 31, 2014:
|
| | | | | | | | | | |
| Location | | Number of Properties | | Total Square Footage (in thousands) | | Percent of Total Rent (1) | |
| Texas | | 270 |
| | 6,101 |
| | 12.0 |
| % |
| Illinois | | 126 |
| | 3,694 |
| | 6.7 |
| |
| Wisconsin | | 63 |
| | 5,047 |
| | 5.5 |
| |
| Georgia | | 167 |
| | 1,944 |
| | 4.9 |
| |
| Florida | | 136 |
| | 2,195 |
| | 4.9 |
| |
| Ohio | | 127 |
| | 2,144 |
| | 4.3 |
| |
| California | | 49 |
| | 1,065 |
| | 3.5 |
| |
| Missouri | | 74 |
| | 1,272 |
| | 3.0 |
| |
| Minnesota | | 52 |
| | 1,704 |
| | 2.9 |
| |
| Tennessee | | 118 |
| | 1,772 |
| | 2.9 |
| |
| Indiana | | 80 |
| | 1,493 |
| | 2.8 |
| |
| North Carolina | | 66 |
| | 1,517 |
| | 2.7 |
| |
| South Carolina | | 47 |
| | 1,024 |
| | 2.7 |
| |
| Michigan | | 82 |
| | 1,759 |
| | 2.6 |
| |
| Alabama | | 103 |
| | 818 |
| | 2.5 |
| |
| Nebraska | | 21 |
| | 1,972 |
| | 2.4 |
| |
| Pennsylvania | | 71 |
| | 1,657 |
| | 2.3 |
| |
| Arizona | | 51 |
| | 799 |
| | 2.2 |
| |
| Kansas | | 40 |
| | 973 |
| | 2.1 |
| |
| Virginia | | 47 |
| | 1,546 |
| | 2.0 |
| |
| Colorado | | 29 |
| | 774 |
| | 1.6 |
| |
| Utah | | 16 |
| | 1,494 |
| | 1.5 |
| |
| Oklahoma | | 53 |
| | 536 |
| | 1.5 |
| |
| Idaho | | 17 |
| | 1,235 |
| | 1.5 |
| |
| New York | | 45 |
| | 945 |
| | 1.4 |
| |
| Washington | | 22 |
| | 950 |
| | 1.4 |
| |
| Massachusetts | | 8 |
| | 1,390 |
| | 1.3 |
| |
| Nevada | | 5 |
| | 1,039 |
| | 1.3 |
| |
| New Mexico | | 33 |
| | 330 |
| | 1.2 |
| |
| Iowa | | 39 |
| | 732 |
| | 1.2 |
| |
| Kentucky | | 45 |
| | 952 |
| | 1.2 |
| |
| Oregon | | 13 |
| | 364 |
| | 1.0 |
| |
| Mississippi | | 34 |
| | 410 |
| | * |
| |
| Arkansas | | 35 |
| | 643 |
| | * |
| |
| Louisiana | | 30 |
| | 315 |
| | * |
| |
| New Hampshire | | 16 |
| | 852 |
| | * |
| |
| South Dakota | | 11 |
| | 522 |
| | * |
| |
| West Virginia | | 28 |
| | 568 |
| | * |
| |
| Maryland | | 22 |
| | 409 |
| | * |
| |
| New Jersey | | 13 |
| | 463 |
| | * |
| |
| Montana | | 7 |
| | 512 |
| | * |
| |
| North Dakota | | 5 |
| | 250 |
| | * |
| |
| Maine | | 26 |
| | 79 |
| | * |
| |
| Rhode Island | | 4 |
| | 128 |
| | * |
| |
| Connecticut | | 2 |
| | 171 |
| | * |
| |
| Wyoming | | 9 |
| | 186 |
| | * |
| |
| Delaware | | 3 |
| | 86 |
| | * |
| |
| Vermont | | 2 |
| | 42 |
| | * |
| |
| Virgin Islands | | 1 |
| | 38 |
| | * |
| |
| Alaska | | 1 |
| | 50 |
| | * |
| |
| Total properties owned | | 2,364 |
| | 56,961 |
| | 100.0 |
| % |
| | | | | | | | |
| * Less than 1% | | | | | | | |
| (1) Total rental revenue for the month ended December 31, 2014 for properties owned at December 31, 2014. |
SPIRIT REALTY CAPITAL, INC.
Real Estate Portfolio
Lease Expirations
The following table sets forth a summary schedule of expiration dates expirations for leases in place as of December 31, 2014. As of December 31, 2014, the weighted average remaining non-cancelable initial term of our leases (based on total rent) was 10.8 years. The information set forth in the table assumes that tenants do not exercise any renewal options and/or early termination rights:
|
| | | | | | | | | | | | | |
| Leases Expiring In: | | Number of Properties | | Expiring Annual Rent (in thousands) (1) | | Total Square Footage (in thousands) | | Percent of Total Expiring Annual Rent | |
| 2015 | | 47 |
| | $ | 14,194 |
| | 2,439 |
| | 2.4 | % |
| 2016 | | 47 |
| | 22,746 |
| | 2,390 |
| | 3.8 | |
| 2017 | | 63 |
| | 19,515 |
| | 2,021 |
| | 3.3 | |
| 2018 | | 77 |
| | 24,271 |
| | 2,141 |
| | 4.0 | |
| 2019 | | 117 |
| | 22,900 |
| | 2,376 |
| | 3.8 | |
| 2020 | | 74 |
| | 25,957 |
| | 1,685 |
| | 4.3 | |
| 2021 | | 193 |
| | 43,345 |
| | 4,839 |
| | 7.2 | |
| 2022 | | 103 |
| | 25,163 |
| | 1,997 |
| | 4.2 | |
| 2023 | | 89 |
| | 34,832 |
| | 3,274 |
| | 5.8 | |
| 2024 | | 64 |
| | 18,795 |
| | 874 |
| | 3.1 | |
| 2025 and thereafter | | 1,453 |
| | 347,633 |
| | 30,978 |
| | 58.1 | |
| Vacant | | 37 |
| | — |
| | 1,947 |
| | — | |
| Total owned properties | | 2,364 |
| | $ | 599,351 |
| | 56,961 |
| | 100.0 | % |
| | | | | | | | | | |
(1) Total rental revenue for the month ended December 31, 2014 for properties owned at December 31, 2014 multiplied by twelve. |
