Exhibit 99.2
 | ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
| VEREIT Supplemental Information | |
| December 31, 2018 | |
| Section | Page |  |
| Company Overview | ||
| Quarterly Financial Summary | ||
| Annual Financial Summary | ||
| Financial and Operations Statistics and Ratios | ||
| Key Balance Sheet Metrics and Capital Structure | ||
| Balance Sheets | ||
| Statements of Operations | ||
| Funds From Operations (FFO) | ||
| Adjusted Funds From Operations (AFFO) | ||
| EBITDA, EBITDAre and Normalized EBITDA |  | |
| Net Operating Income | ||
| Same Store Contract Rental Revenue | ||
| Debt and Preferred Equity Summary | ||
| Mortgage Notes Payable | ||
| Credit Facility and Corporate Bond Covenants | ||
| Acquisitions and Dispositions | ||
| Diversification Statistics | ||
| Top 10 Concentrations | ||
| Tenants Comprising Over 1% of Annualized Rental Income | ||
| Tenant Industry Diversification |  | |
| Property Geographic Diversification | ||
| Lease Expirations | ||
| Lease Summary | ||
| Diversification by Property Type and Occupancy Costs | ||
| Definitions | ||
 | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
| About the Data |
This data and other information described herein are as of and for the three months ended December 31, 2018, unless otherwise indicated. Certain balances have been reclassified to conform with the current period's presentations, including the operating expense reimbursements line item which has been combined into rental revenue for all periods presented. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with the financial statements and the Management's Discussion and Analysis of Financial Condition and Results of Operations sections contained in VEREIT, Inc.'s (the "Company," "VEREIT," "us," "our" and "we") Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Reports on Form 10-Q for the periods ended September 30, 2018, June 30, 2018, and March 31, 2018.
Prior to the fourth quarter of 2017, the Company operated through two business segments, the real estate investment segment and the investment management segment, Cole Capital. On February 1, 2018, the Company completed the sale of Cole Capital. Substantially all of the Cole Capital segment is presented as discontinued operations and the Company's remaining financial results are reported as a single segment for all periods presented. The Company's continuing operations represent primarily those of the real estate investment segment.
Forward-Looking Statements
Information set forth herein contains “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations regarding future events and plans, VEREIT's future financial condition, results of operations and business. The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words “expects,” “anticipates,”“assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "may," "will," "should," "could," "continues," variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, most of which are difficult to predict and many of which are beyond VEREIT’s control. If a change occurs, VEREIT’s business, financial condition, liquidity and results of operations may vary materially from those expressed in or implied by the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; VEREIT’s ability to meet its 2019 guidance; VEREIT’s ability to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all; risks associated with tenant, geographic and industry concentrations with respect to VEREIT's properties; the impact of impairment charges in respect of certain of VEREIT's properties, goodwill and intangible assets and other assets; unexpected costs or liabilities that may arise from potential dispositions, including related to limited partnership, tenant-in-common and Delaware statutory trust real estate programs and VEREIT’s management with respect to such programs; competition in the acquisition and disposition of properties and in the leasing of its properties; the inability to acquire, dispose of, or lease properties on advantageous terms; risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of VEREIT's tenants; risks associated with pending government investigations and litigations related to VEREIT's previously disclosed audit committee investigation, including the expense of such investigations and litigation and any additional potential payments upon resolution; risks associated with VEREIT’s substantial indebtedness, including that such indebtedness may affect VEREIT's ability to pay dividends and the terms and restrictions within the agreements governing VEREIT's indebtedness may restrict its borrowing and operating flexibility; the ability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in VEREIT’s filings with the U.S. Securities and Exchange Commission (the "SEC"), which are available at the SEC’s website at www.sec.gov. VEREIT disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Company Overview (unaudited) |
VEREIT is a real estate company incorporated in Maryland on December 2, 2010, which has elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes. On September 6, 2011, the Company completed its initial public offering.
VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. VEREIT's business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. The Company targets properties that are strategically located and essential to the business operations of the tenant, as well as retail properties that offer necessity- and value-oriented products or services. At December 31, 2018, approximately 41.9% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 98.8% and the Weighted Average Remaining Lease Term was 8.9 years.
Tenants, Trademarks and Logos
VEREIT is not affiliated with, is not endorsed by, does not endorse and is not sponsored by or a sponsor of the products or services pictured or mentioned. The names, logos and all related product and service names, design marks and slogans are the trademarks or service marks of their respective companies.
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
| Company Overview (cont.) |
| Senior Management | Board of Directors | |
| Glenn J. Rufrano, Chief Executive Officer | Hugh R. Frater, Non-Executive Chairman | |
| Michael J. Bartolotta, Executive Vice President and Chief Financial Officer | David B. Henry, Independent Director | |
| Lauren Goldberg, Executive Vice President, General Counsel and Secretary | Mary Hogan Preusse, Independent Director | |
| Paul H. McDowell, Executive Vice President and Chief Operating Officer | Richard J. Lieb, Independent Director | |
| Thomas W. Roberts, Executive Vice President and Chief Investment Officer | Mark S. Ordan, Independent Director | |
| Gavin B. Brandon, Senior Vice President and Chief Accounting Officer | Eugene A. Pinover, Independent Director | |
| Julie G. Richardson, Independent Director | ||
| Glenn J. Rufrano, Chief Executive Officer | ||
Corporate Offices and Contact Information
| 2325 E. Camelback Road, Suite 1100 | 5 Bryant Park, 23rd Floor | |
| Phoenix, AZ 85016 | New York, NY 10018 | |
| 800-606-3610 | 212-413-9100 | |
| www.VEREIT.com | ||
Trading Symbols: VER, VER PRF
Stock Exchange Listing: New York Stock Exchange
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
800-736-3001
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Annual Financial Summary (unaudited, dollars in thousands, except share and per share amounts) |
The following table summarizes the Company's financial results for the years ended December 31, 2018 and 2017, and portfolio metrics as of December 31, 2018 and 2017. Data presented includes both continuing operations, which primarily represent the Company's real estate operations, and discontinued operations, which represent substantially all of Cole Capital, except as otherwise indicated.
| Year Ended December 31, | |||||||
| 2018 | 2017 | ||||||
| Financial Results | |||||||
Rental revenue (1) | $ | 1,257,867 | $ | 1,252,285 | |||
(Loss) income from continuing operations (1) | $ | (91,725 | ) | $ | 51,495 | ||
Income (loss) from discontinued operations (1) | 3,695 | (19,117 | ) | ||||
Net (loss) income (1) (2) | $ | (88,030 | ) | $ | 32,378 | ||
Basic and diluted net loss from continuing operations per share attributable to common stockholders and limited partners (1) | $ | (0.17 | ) | $ | (0.02 | ) | |
Basic and diluted net income (loss) from discontinued operations per share attributable to common stockholders and limited partners (1) | 0.00 | (0.02 | ) | ||||
Basic and diluted net loss per share attributable to common stockholders and limited partners (1) (2) (3) | $ | (0.16 | ) | $ | (0.04 | ) | |
| Normalized EBITDA from continuing operations | $ | 1,040,319 | $ | 1,039,602 | |||
| Normalized EBITDA from discontinued operations | 2,761 | 36,597 | |||||
| Normalized EBITDA | $ | 1,043,080 | $ | 1,076,199 | |||
FFO attributable to common stockholders and limited partners from continuing operations (2) | $ | 434,371 | $ | 672,225 | |||
| FFO attributable to common stockholders and limited partners from discontinued operations | 3,695 | (19,117 | ) | ||||
| FFO attributable to common stockholders and limited partners | $ | 438,066 | $ | 653,108 | |||
FFO attributable to common stockholders and limited partners from continuing operations per diluted share (2) | $ | 0.437 | $ | 0.673 | |||
| FFO attributable to common stockholders and limited partners from discontinued operations per diluted share | 0.004 | (0.019 | ) | ||||
| FFO attributable to common stockholders and limited partners per diluted share | $ | 0.441 | $ | 0.654 | |||
| AFFO attributable to common stockholders and limited partners from continuing operations | $ | 710,688 | $ | 702,556 | |||
| AFFO attributable to common stockholders and limited partners from discontinued operations | 3,202 | 36,213 | |||||
| AFFO attributable to common stockholders and limited partners | $ | 713,890 | $ | 738,769 | |||
| AFFO attributable to common stockholders and limited partners from continuing operations per diluted share | $ | 0.716 | $ | 0.704 | |||
| AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share | 0.003 | 0.036 | |||||
| AFFO attributable to common stockholders and limited partners per diluted share | $ | 0.719 | $ | 0.740 | |||
| Dividends declared per common share | $ | 0.55 | $ | 0.55 | |||
| Weighted-average shares outstanding - diluted | 993,238,143 | 998,157,964 | |||||
| Portfolio Metrics | |||||||
| Operating Properties | 3,994 | 4,091 | |||||
| Rentable Square Feet (in thousands) | 94,953 | 94,418 | |||||
| Economic Occupancy Rate | 98.8 | % | 98.8 | % | |||
| Weighted Average Remaining Lease Term (years) | 8.9 | 9.5 | |||||
| Investment-Grade Tenants | 41.9 | % | 39.6 | % | |||
___________________________________
| (1) | Included in our audited financial statements presented in our Annual Report on Form 10-K. |
| (2) | During the year ended December 31, 2018, the Company expensed litigation settlement costs of $233.2 million. |
| (3) | Amounts may not total due to rounding. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Quarterly Financial Summary (unaudited, dollars in thousands, except share and per share amounts) |
The following table summarizes the Company's quarterly financial results and portfolio metrics. Data presented includes both continuing operations, which primarily represent the Company's real estate operations, and discontinued operations, which represent substantially all of Cole Capital, except as otherwise indicated.
| Three Months Ended | |||||||||||||||||||
| Financial Results | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
| Rental revenue | $ | 313,263 | $ | 313,866 | $ | 315,664 | $ | 315,074 | $ | 316,599 | |||||||||
| Income (loss) from continuing operations | $ | 27,872 | $ | (73,942 | ) | $ | (74,691 | ) | $ | 29,036 | $ | (2,479 | ) | ||||||
| (Loss) income from discontinued operations | (30 | ) | — | 224 | 3,501 | (30,613 | ) | ||||||||||||
Net income (loss) (1) | $ | 27,842 | $ | (73,942 | ) | $ | (74,467 | ) | $ | 32,537 | $ | (33,092 | ) | ||||||
| Basic and diluted income (loss) from continuing operations per share attributable to common stockholders and limited partners | $ | 0.01 | $ | (0.09 | ) | $ | (0.09 | ) | $ | 0.01 | $ | (0.02 | ) | ||||||
| Basic and diluted (loss) income from discontinued operations per share attributable to common stockholders and limited partners | (0.00 | ) | — | 0.00 | 0.00 | (0.03 | ) | ||||||||||||
Basic and diluted net income (loss) per share attributable to common stockholders and limited partners (1) | $ | 0.01 | $ | (0.09 | ) | $ | (0.09 | ) | $ | 0.01 | $ | (0.05 | ) | ||||||
| Normalized EBITDA from continuing operations | $ | 257,486 | $ | 261,084 | $ | 259,387 | $ | 262,362 | $ | 258,578 | |||||||||
| Normalized EBITDA from discontinued operations | — | — | — | 2,761 | 9,132 | ||||||||||||||
| Normalized EBITDA | $ | 257,486 | $ | 261,084 | $ | 259,387 | $ | 265,123 | $ | 267,710 | |||||||||
FFO attributable to common stockholders and limited partners from continuing operations (1) | $ | 154,606 | $ | 38,055 | $ | 77,019 | $ | 164,691 | $ | 164,500 | |||||||||
| FFO attributable to common stockholders and limited partners from discontinued operations | (30 | ) | — | 224 | 3,501 | (30,613 | ) | ||||||||||||
| FFO attributable to common stockholders and limited partners | $ | 154,576 | $ | 38,055 | $ | 77,243 | $ | 168,192 | $ | 133,887 | |||||||||
FFO attributable to common stockholders and limited partners from continuing operations per diluted share (1) | $ | 0.156 | $ | 0.038 | $ | 0.078 | $ | 0.165 | $ | 0.165 | |||||||||
| FFO attributable to common stockholders and limited partners from discontinued operations per diluted share | (0.000 | ) | — | 0.000 | 0.004 | (0.031 | ) | ||||||||||||
| FFO attributable to common stockholders and limited partners per diluted share | $ | 0.156 | $ | 0.038 | $ | 0.078 | $ | 0.169 | $ | 0.134 | |||||||||
| AFFO attributable to common stockholders and limited partners from continuing operations | $ | 172,511 | $ | 178,529 | $ | 178,794 | $ | 180,854 | $ | 175,807 | |||||||||
| AFFO attributable to common stockholders and limited partners from discontinued operations | — | — | — | 3,202 | 3,913 | ||||||||||||||
| AFFO attributable to common stockholders and limited partners | $ | 172,511 | $ | 178,529 | $ | 178,794 | $ | 184,056 | $ | 179,720 | |||||||||
| AFFO attributable to common stockholders and limited partners from continuing operations per diluted share | $ | 0.174 | $ | 0.180 | $ | 0.180 | $ | 0.182 | $ | 0.176 | |||||||||
| AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share | — | — | — | 0.003 | 0.004 | ||||||||||||||
| AFFO attributable to common stockholders and limited partners per diluted share | $ | 0.174 | $ | 0.180 | $ | 0.180 | $ | 0.185 | $ | 0.180 | |||||||||
| Dividends declared per common share | $ | 0.1375 | $ | 0.1375 | $ | 0.1375 | $ | 0.1375 | $ | 0.1375 | |||||||||
| Weighted-average shares outstanding - diluted | 992,337,959 | 991,924,017 | 992,100,138 | 996,773,442 | 998,513,154 | ||||||||||||||
| Portfolio Metrics | |||||||||||||||||||
| Operating Properties | 3,994 | 4,021 | 4,033 | 4,063 | 4,091 | ||||||||||||||
| Rentable Square Feet (in thousands) | 94,953 | 93,856 | 94,592 | 94,666 | 94,418 | ||||||||||||||
| Economic Occupancy Rate | 98.8 | % | 99.1 | % | 98.8 | % | 98.7 | % | 98.8 | % | |||||||||
| Weighted Average Remaining Lease Term (years) | 8.9 | 8.9 | 9.1 | 9.3 | 9.5 | ||||||||||||||
Investment-Grade Tenants (2) | 41.9 | % | 42.7 | % | 42.7 | % | 42.9 | % | 39.6 | % | |||||||||
___________________________________
| (1) | During the three months ended December 31, 2018, the Company accrued litigation settlement costs of $15.7 million, which were paid during the three months ended March 31, 2019. During the three months ended September 30, 2018, the Company accrued $127.5 million of litigation settlement costs, which were paid during the three months ended December 31, 2018. During the three months ended June 30, 2018, the Company expensed and paid a litigation settlement of $90.0 million. |
| (2) | The weighted-average credit rating of our investment-grade tenants was BBB+ as of December 31, 2018. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Financial and Operations Statistics and Ratios (unaudited, dollars in thousands) |
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Interest Coverage Ratio | ||||||||||||||||||||
Interest Expense, excluding non-cash amortization (1) | $ | 68,314 | $ | 66,445 | $ | 65,202 | $ | 64,741 | $ | 65,097 | ||||||||||
Normalized EBITDA (2) | 257,486 | 261,084 | 259,387 | 265,123 | 267,710 | |||||||||||||||
| Interest Coverage Ratio | 3.77x | 3.93x | 3.98x | 4.10x | 4.11x | |||||||||||||||
| Fixed Charge Coverage Ratio | ||||||||||||||||||||
Interest Expense, excluding non-cash amortization (1) | $ | 68,314 | $ | 66,445 | $ | 65,202 | $ | 64,741 | $ | 65,097 | ||||||||||
| Secured debt principal amortization | 2,424 | 3,007 | 2,457 | 2,676 | 3,257 | |||||||||||||||
Dividends attributable to preferred shares | 17,973 | 17,973 | 17,973 | 17,973 | 17,973 | |||||||||||||||
| Total fixed charges | 88,711 | 87,425 | 85,632 | 85,390 | 86,327 | |||||||||||||||
Normalized EBITDA (2) | 257,486 | 261,084 | 259,387 | 265,123 | 267,710 | |||||||||||||||
| Fixed Charge Coverage Ratio | 2.90 | x | 2.99x | 3.03x | 3.10x | 3.10x | ||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Net Debt Ratios | ||||||||||||||||||||
Adjusted Principal Outstanding (3) | $ | 6,122,632 | $ | 5,975,107 | $ | 6,067,593 | $ | 6,022,255 | $ | 6,089,838 | ||||||||||
| Less: cash and cash equivalents | 30,758 | 25,264 | 18,434 | 28,435 | 34,176 | |||||||||||||||
| Less: cash and cash equivalents related to discontinued operations | — | — | — | — | 2,198 | |||||||||||||||
| Net Debt | 6,091,874 | 5,949,843 | 6,049,159 | 5,993,820 | 6,053,464 | |||||||||||||||
Normalized EBITDA annualized (2) | 1,029,944 | 1,044,336 | 1,037,548 | 1,060,492 | 1,070,840 | |||||||||||||||
| Net Debt to Normalized EBITDA annualized ratio | 5.91 | x | 5.70 | x | 5.83 | x | 5.65 | x | 5.65 | x | ||||||||||
| Net Debt | $ | 6,091,874 | $ | 5,949,843 | $ | 6,049,159 | $ | 5,993,820 | $ | 6,053,464 | ||||||||||
| Gross Real Estate Investments | 15,411,026 | 15,385,925 | 15,477,098 | 15,509,117 | 15,511,683 | |||||||||||||||
| Net Debt Leverage Ratio | 39.5 | % | 38.7 | % | 39.1 | % | 38.6 | % | 39.0 | % | ||||||||||
| Unencumbered Assets/Real Estate Assets | ||||||||||||||||||||
| Unencumbered Gross Real Estate Investments | $ | 11,574,315 | $ | 11,507,837 | $ | 11,376,971 | $ | 11,325,512 | $ | 11,296,918 | ||||||||||
| Gross Real Estate Investments | 15,411,026 | 15,385,925 | 15,477,098 | 15,509,117 | 15,511,683 | |||||||||||||||
| Unencumbered Asset Ratio | 75.1 | % | 74.8 | % | 73.5 | % | 73.0 | % | 72.8 | % | ||||||||||
___________________________________
| (1) | Refer to the Statements of Operations section for interest expense calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure. |
| (2) | Includes continued and discontinued operations. |
| (3) | Refer to the Balance Sheets section for total debt calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Key Balance Sheet Metrics and Capital Structure (unaudited, dollars and shares in thousands, except per share amounts) |
| Common equity | 49.7% | ||
| Corporate bonds | 23.8% | ||
| Secured debt | 13.4% | ||
| Preferred equity | 7.5% | ||
| Convertible notes | 2.8% | ||
| Revolving credit facility | 1.8% | ||
| Credit facility term loan | 1.0% | ||
Fixed vs. Variable Rate Debt (5)
| Fixed | 92.4 | % |
| Swapped to Fixed | 0.8 | % |
| Variable | 6.8 | % |
| VEREIT Capitalization Table | ||||||||
Wtd. Avg. Maturity (Years) | Rate (1) | December 31, 2018 | ||||||
| Diluted shares outstanding | 994,885 | |||||||
| Stock price | $ | 7.15 | ||||||
| Implied Equity Market Capitalization | $ | 7,113,428 | ||||||
Series F Perpetual Preferred (2) | 6.70 | % | $ | 1,073,025 | ||||
| Total secured debt | 3.4 | 4.93 | % | 1,917,132 | ||||
| Revolving credit facility | 3.4 | 3.83 | % | 253,000 | ||||
Credit facility term loan (5) | 4.4 | 3.87 | % | 150,000 | ||||
| Total unsecured credit facility | 3.8 | 3.85 | % | 403,000 | ||||
2019 corporate bonds (5) | 0.1 | 3.00 | % | 750,000 | ||||
| 2020 convertible notes | 2.0 | 3.75 | % | 402,500 | ||||
| 2021 corporate bonds | 2.4 | 4.13 | % | 400,000 | ||||
| 2024 corporate bonds | 5.1 | 4.60 | % | 500,000 | ||||
| 2025 corporate bonds | 6.8 | 4.63 | % | 550,000 | ||||
| 2026 corporate bonds | 7.4 | 4.88 | % | 600,000 | ||||
| 2027 corporate bonds | 8.6 | 3.95 | % | 600,000 | ||||
| Total unsecured debt | 4.6 | 4.07 | % | $ | 4,205,500 | |||
| Total Adjusted Principal Outstanding | 4.2 | 4.34 | % | $ | 6,122,632 | |||
| Total Capitalization | $ | 14,309,085 | ||||||
| Less: Cash and cash equivalents | 30,758 | |||||||
| Enterprise Value | $ | 14,278,327 | ||||||
| Net Debt/Enterprise Value | 42.7 | % | ||||||
Net Debt/Normalized EBITDA Annualized (3) | 5.91 | x | ||||||
Net Debt + Preferred (2)/Normalized EBITDA Annualized (3) | 6.96 | x | ||||||
| Fixed Charge Coverage Ratio | 2.90 | x | ||||||
Liquidity (4) | $ | 2,527,758 | ||||||
(1)Weighted average interest rate for variable rate debt represents the interest rate in effect as of December 31, 2018.
(2)Balance represents 42.8 million shares of Series F Preferred Stock (and 42.8 million corresponding general partner Series F Preferred Units) and 86,874 limited partner Series F Preferred Units outstanding at December 31, 2018, multiplied by the liquidation preference of $25 per share.
(3)Normalized EBITDA annualized includes continued and discontinued operations.
(4)Liquidity represents cash and cash equivalents of $30.8 million, $1.7 billion available capacity on our revolving credit facility and $750.0 million available on our credit facility term loan.
(5)On February 6, 2019, the Company repaid its $750.0 million maturing corporate bonds using funds borrowed under the credit facility term loan, resulting in an outstanding balance on the credit facility term loan of $900.0 million. Additionally, the Company had executed interest rate swap agreements that effectively fixed the interest rate on the credit facility term loan. Assuming these transactions had closed on December 31, 2018, (i) the aggregated fixed and swapped to fixed rate debt would represent 95.6% of Adjusted Principal Outstanding and (ii) liquidity would have been $1.8 billion.
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Balance Sheets (unaudited, in thousands) |
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate investments, at cost: | ||||||||||||||||||||
| Land | $ | 2,843,212 | $ | 2,847,393 | $ | 2,859,265 | $ | 2,871,533 | $ | 2,865,855 | ||||||||||
| Buildings, fixtures and improvements | 10,749,228 | 10,652,578 | 10,714,456 | 10,753,190 | 10,711,845 | |||||||||||||||
| Intangible lease assets | 2,012,399 | 2,019,718 | 2,024,014 | 2,035,004 | 2,037,675 | |||||||||||||||
| Total real estate investments, at cost | 15,604,839 | 15,519,689 | 15,597,735 | 15,659,727 | 15,615,375 | |||||||||||||||
| Less: accumulated depreciation and amortization | 3,436,772 | 3,323,990 | 3,206,336 | 3,059,955 | 2,908,028 | |||||||||||||||
| Total real estate investments, net | 12,168,067 | 12,195,699 | 12,391,399 | 12,599,772 | 12,707,347 | |||||||||||||||
| Investment in unconsolidated entities | 35,289 | 34,293 | 33,972 | 33,736 | 39,520 | |||||||||||||||
| Cash and cash equivalents | 30,758 | 25,264 | 18,434 | 28,435 | 34,176 | |||||||||||||||
| Restricted cash | 22,905 | 27,449 | 27,078 | 28,049 | 27,662 | |||||||||||||||
| Rent and tenant receivables and other assets, net | 366,092 | 412,053 | 423,067 | 408,911 | 389,060 | |||||||||||||||
| Goodwill | 1,337,773 | 1,337,773 | 1,337,773 | 1,337,773 | 1,337,773 | |||||||||||||||
| Due from affiliates, net | — | — | — | — | 6,041 | |||||||||||||||
| Real estate assets held for sale and assets related to discontinued operations, net | 2,609 | 24,349 | 29,884 | 15,113 | 163,999 | |||||||||||||||
| Total assets | $ | 13,963,493 | $ | 14,056,880 | $ | 14,261,607 | $ | 14,451,789 | $ | 14,705,578 | ||||||||||
| Liabilities and Equity | ||||||||||||||||||||
| Mortgage notes payable, net | $ | 1,922,657 | $ | 1,936,586 | $ | 2,031,171 | $ | 2,078,593 | $ | 2,082,692 | ||||||||||
| Corporate bonds, net | 3,368,609 | 2,825,541 | 2,824,176 | 2,822,830 | 2,821,494 | |||||||||||||||
| Convertible debt, net | 394,883 | 393,961 | 989,901 | 987,071 | 984,258 | |||||||||||||||
| Credit facility, net | 401,773 | 793,000 | 195,000 | 120,000 | 185,000 | |||||||||||||||
| Below-market lease liabilities, net | 173,479 | 179,192 | 187,352 | 193,703 | 198,551 | |||||||||||||||
| Accounts payable and accrued expenses | 145,611 | 269,150 | 141,746 | 126,724 | 136,474 | |||||||||||||||
| Deferred rent and other liabilities | 69,714 | 51,663 | 66,123 | 68,718 | 62,985 | |||||||||||||||
| Distributions payable | 186,623 | 183,913 | 180,734 | 177,645 | 175,301 | |||||||||||||||
| Due to affiliates | — | — | — | — | 66 | |||||||||||||||
| Liabilities related to discontinued operations | — | — | — | — | 15,881 | |||||||||||||||
| Total liabilities | 6,663,349 | 6,633,006 | 6,616,203 | 6,575,284 | 6,662,702 | |||||||||||||||
| Series F preferred stock | 428 | 428 | 428 | 428 | 428 | |||||||||||||||
| Common stock | 9,675 | 9,674 | 9,674 | 9,681 | 9,742 | |||||||||||||||
| Additional paid-in capital | 12,615,472 | 12,612,407 | 12,609,145 | 12,611,006 | 12,654,258 | |||||||||||||||
| Accumulated other comprehensive loss | (1,280 | ) | (1,031 | ) | (4,290 | ) | (4,284 | ) | (3,569 | ) | ||||||||||
| Accumulated deficit | (5,467,236 | ) | (5,343,368 | ) | (5,120,240 | ) | (4,896,349 | ) | (4,776,581 | ) | ||||||||||
| Total stockholders' equity | 7,157,059 | 7,278,110 | 7,494,717 | 7,720,482 | 7,884,278 | |||||||||||||||
| Non-controlling interests | 143,085 | 145,764 | 150,687 | 156,023 | 158,598 | |||||||||||||||
| Total equity | 7,300,144 | 7,423,874 | 7,645,404 | 7,876,505 | 8,042,876 | |||||||||||||||
| Total liabilities and equity | $ | 13,963,493 | $ | 14,056,880 | $ | 14,261,607 | $ | 14,451,789 | $ | 14,705,578 | ||||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 10
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Statements of Operations (unaudited, in thousands, except per share data) |
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Rental revenue | $ | 313,263 | $ | 313,866 | $ | 315,664 | $ | 315,074 | $ | 316,599 | ||||||||||
| Operating expenses: | ||||||||||||||||||||
| Acquisition-related | 1,136 | 810 | 909 | 777 | 1,120 | |||||||||||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 23,541 | 138,595 | 107,087 | 21,740 | 11,167 | |||||||||||||||
| Property operating | 32,567 | 31,893 | 31,436 | 30,565 | 32,429 | |||||||||||||||
| General and administrative | 17,220 | 15,186 | 16,287 | 15,240 | 18,274 | |||||||||||||||
| Depreciation and amortization | 153,050 | 157,181 | 164,235 | 166,152 | 175,259 | |||||||||||||||
| Impairments | 18,565 | 18,382 | 11,664 | 6,036 | 19,691 | |||||||||||||||
| Total operating expenses | 246,079 | 362,047 | 331,618 | 240,510 | 257,940 | |||||||||||||||
| Other (expense) income: | ||||||||||||||||||||
| Interest expense | (70,832 | ) | (69,310 | ) | (70,320 | ) | (70,425 | ) | (70,694 | ) | ||||||||||
| Gain (loss) on extinguishment and forgiveness of debt, net | 21 | 90 | 5,249 | — | (318 | ) | ||||||||||||||
| Other income (expense), net | 7,100 | (1,016 | ) | 1,215 | 7,436 | 1,989 | ||||||||||||||
| Equity in income and gain on disposition of unconsolidated entities | 225 | 252 | 327 | 1,065 | 1,958 | |||||||||||||||
| (Loss) gain on derivative instruments, net | (92 | ) | 69 | 105 | 273 | 266 | ||||||||||||||
| Gain on disposition of real estate and held for sale assets, net | 25,880 | 45,295 | 5,821 | 17,335 | 7,104 | |||||||||||||||
| Total other expenses, net | (37,698 | ) | (24,620 | ) | (57,603 | ) | (44,316 | ) | (59,695 | ) | ||||||||||
| Income (loss) before taxes | 29,486 | (72,801 | ) | (73,557 | ) | 30,248 | (1,036 | ) | ||||||||||||
| Provision for income taxes from continuing operations | (1,614 | ) | (1,141 | ) | (1,134 | ) | (1,212 | ) | (1,443 | ) | ||||||||||
| Income (loss) from continuing operations | 27,872 | (73,942 | ) | (74,691 | ) | 29,036 | (2,479 | ) | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (30 | ) | — | 224 | 3,501 | (30,613 | ) | |||||||||||||
| Net income (loss) | 27,842 | (73,942 | ) | (74,467 | ) | 32,537 | (33,092 | ) | ||||||||||||
| Net (income) loss attributable to non-controlling interests | (624 | ) | 1,825 | 1,797 | (742 | ) | 970 | |||||||||||||
| Net income (loss) attributable to the General Partner | $ | 27,218 | $ | (72,117 | ) | $ | (72,670 | ) | $ | 31,795 | $ | (32,122 | ) | |||||||
| Basic and diluted net income (loss) per share from continuing operations attributable to common stockholders and limited partners | $ | 0.01 | $ | (0.09 | ) | $ | (0.09 | ) | $ | 0.01 | $ | (0.02 | ) | |||||||
| Basic and diluted net (loss) income per share from discontinued operations attributable to common stockholders and limited partners | (0.00 | ) | — | 0.00 | 0.00 | (0.03 | ) | |||||||||||||
| Basic and diluted net income (loss) per share attributable to common stockholders and limited partners | $ | 0.01 | $ | (0.09 | ) | $ | (0.09 | ) | $ | 0.01 | $ | (0.05 | ) | |||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 11
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Funds From Operations (FFO) (unaudited, in thousands, except share and per share data) |
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Net income (loss) | $ | 27,842 | $ | (73,942 | ) | $ | (74,467 | ) | $ | 32,537 | $ | (33,092 | ) | |||||||
| Dividends on non-convertible preferred stock | (17,973 | ) | (17,973 | ) | (17,973 | ) | (17,973 | ) | (17,973 | ) | ||||||||||
| Gain on disposition of real estate assets, including joint ventures, net | (25,951 | ) | (45,226 | ) | (5,821 | ) | (18,036 | ) | (7,104 | ) | ||||||||||
| Depreciation and amortization of real estate assets | 151,837 | 156,527 | 163,551 | 165,182 | 173,829 | |||||||||||||||
| Impairment of real estate | 18,565 | 18,382 | 11,664 | 6,036 | 19,691 | |||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | 256 | 287 | 289 | 446 | (1,464 | ) | ||||||||||||||
| FFO attributable to common stockholders and limited partners | $ | 154,576 | $ | 38,055 | $ | 77,243 | $ | 168,192 | $ | 133,887 | ||||||||||
| FFO attributable to common stockholders and limited partners from continuing operations | 154,606 | 38,055 | 77,019 | 164,691 | 164,500 | |||||||||||||||
| FFO attributable to common stockholders and limited partners from discontinued operations | (30 | ) | — | 224 | 3,501 | (30,613 | ) | |||||||||||||
| Weighted-average shares outstanding - basic | 967,817,245 | 967,798,401 | 968,192,162 | 972,663,193 | 974,212,874 | |||||||||||||||
Limited Partner OP Units and effect of dilutive securities (1) | 24,520,714 | 24,125,616 | 23,907,976 | 24,110,249 | 24,300,280 | |||||||||||||||
Weighted-average shares outstanding - diluted (2) | 992,337,959 | 991,924,017 | 992,100,138 | 996,773,442 | 998,513,154 | |||||||||||||||
FFO attributable to common stockholders and limited partners per diluted share (3) | $ | 0.156 | $ | 0.038 | $ | 0.078 | $ | 0.169 | $ | 0.134 | ||||||||||
FFO attributable to common stockholders and limited partners from continuing operations per diluted share (3) | 0.156 | 0.038 | 0.078 | 0.165 | 0.165 | |||||||||||||||
FFO attributable to common stockholders and limited partners from discontinued operations per diluted share (3) | — | — | — | 0.004 | (0.031 | ) | ||||||||||||||
| (1) | Dilutive securities include unvested restricted shares of Common Stock, unvested restricted stock units and stock options. |
| (2) | Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period. |
| (3) | Refer to the Statements of Operations section for basic and diluted net income (loss) per share attributable to common stockholders and limited partners. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 12
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Adjusted Funds From Operations (AFFO) (unaudited, in thousands, except share and per share data) |
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| FFO attributable to common stockholders and limited partners | $ | 154,576 | $ | 38,055 | $ | 77,243 | $ | 168,192 | $ | 133,887 | ||||||||||
| Acquisition-related expenses | 1,136 | 810 | 909 | 777 | 1,120 | |||||||||||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 23,541 | 138,595 | 107,087 | 21,086 | 14,969 | |||||||||||||||
| Loss on disposition and held for sale loss on discontinued operations | 30 | — | (224 | ) | 2,009 | 20,027 | ||||||||||||||
| Payments received on fully reserved loans | (4,792 | ) | — | — | — | — | ||||||||||||||
| (Gain) loss on investments | (1,790 | ) | 3,336 | — | (5,638 | ) | — | |||||||||||||
| Loss (gain) on derivative instruments, net | 92 | (69 | ) | (105 | ) | (273 | ) | (266 | ) | |||||||||||
| Amortization of premiums and discounts on debt and investments, net | (1,154 | ) | (1,123 | ) | (603 | ) | (606 | ) | (627 | ) | ||||||||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 945 | 1,058 | 688 | 1,487 | 1,148 | |||||||||||||||
| Net direct financing lease adjustments | 498 | 483 | 503 | 539 | 517 | |||||||||||||||
| Amortization and write-off of deferred financing costs | 3,715 | 3,926 | 5,650 | 5,875 | 5,834 | |||||||||||||||
| Amortization of management contracts | — | — | — | — | 2,076 | |||||||||||||||
Deferred and other tax (benefit) expense (1) | — | — | — | (1,855 | ) | 5,063 | ||||||||||||||
| (Gain) loss on extinguishment and forgiveness of debt, net | (21 | ) | (90 | ) | (5,249 | ) | — | 318 | ||||||||||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (8,341 | ) | (8,720 | ) | (11,402 | ) | (11,260 | ) | (11,281 | ) | ||||||||||
| Equity-based compensation | 2,924 | 3,003 | 3,716 | 2,774 | 5,528 | |||||||||||||||
| Other adjustments, net | 1,092 | (726 | ) | 566 | 514 | 566 | ||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | 60 | (9 | ) | (27 | ) | 12 | 277 | |||||||||||||
| Adjustment for Excluded Properties | — | — | 42 | 423 | 564 | |||||||||||||||
| AFFO attributable to common stockholders and limited partners | $ | 172,511 | $ | 178,529 | $ | 178,794 | $ | 184,056 | $ | 179,720 | ||||||||||
| AFFO attributable to common stockholders and limited partners from continuing operations | 172,511 | 178,529 | 178,794 | 180,854 | 175,807 | |||||||||||||||
| AFFO attributable to common stockholders and limited partners from discontinued operations | — | — | — | 3,202 | 3,913 | |||||||||||||||
| Weighted-average shares outstanding - basic | 967,817,245 | 967,798,401 | 968,192,162 | 972,663,193 | 974,212,874 | |||||||||||||||
Limited Partner OP Units and effect of dilutive securities (2) | 24,520,714 | 24,125,616 | 23,907,976 | 24,110,249 | 24,300,280 | |||||||||||||||
Weighted-average shares outstanding - diluted (3) | 992,337,959 | 991,924,017 | 992,100,138 | 996,773,442 | 998,513,154 | |||||||||||||||
AFFO attributable to common stockholders and limited partners per diluted share (4) | $ | 0.174 | $ | 0.180 | $ | 0.180 | $ | 0.185 | $ | 0.180 | ||||||||||
AFFO attributable to common stockholders and limited partners from continuing operations per diluted share (4) | 0.174 | 0.180 | 0.180 | 0.182 | 0.176 | |||||||||||||||
AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share (4) | — | — | — | 0.003 | 0.004 | |||||||||||||||
| (1) | This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO. For the three months ended December 31, 2017, this adjustment is net of an accelerated current tax benefit attributable to the expected change to the Company’s future effective tax rate. |
| (2) | Dilutive securities include unvested restricted shares of Common Stock, unvested restricted stock units and stock options. |
| (3) | Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period. |
| (4) | Refer to the Statements of Operations section for basic and diluted net income (loss) per share attributable to common stockholders and limited partners. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 13
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
EBITDA, EBITDAre and Normalized EBITDA (unaudited, in thousands) |
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Net income (loss) | $ | 27,842 | $ | (73,942 | ) | $ | (74,467 | ) | $ | 32,537 | $ | (33,092 | ) | |||||||
| Adjustments: | ||||||||||||||||||||
| Interest expense | 70,832 | 69,310 | 70,320 | 70,425 | 70,694 | |||||||||||||||
| Depreciation and amortization | 153,050 | 157,181 | 164,235 | 166,152 | 177,329 | |||||||||||||||
| Provision for (benefit from) income taxes | 1,614 | 1,141 | 1,134 | (883 | ) | 11,843 | ||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | 254 | 286 | 289 | 619 | 756 | |||||||||||||||
| EBITDA | $ | 253,592 | $ | 153,976 | $ | 161,511 | $ | 268,850 | $ | 227,530 | ||||||||||
| Gain on disposition of real estate assets, including joint ventures, net | (25,951 | ) | (45,226 | ) | (5,821 | ) | (18,036 | ) | (7,104 | ) | ||||||||||
| Impairment of real estate | 18,565 | 18,382 | 11,664 | 6,036 | 19,691 | |||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | — | — | — | — | (1,970 | ) | ||||||||||||||
| EBITDAre | $ | 246,206 | $ | 127,132 | $ | 167,354 | $ | 256,850 | $ | 238,147 | ||||||||||
| Loss on disposition and held for sale loss on discontinued operations | 30 | — | (224 | ) | 2,009 | 20,027 | ||||||||||||||
| Payments received on fully reserved loans | (4,792 | ) | — | — | — | — | ||||||||||||||
| Acquisition-related expenses | 1,136 | 810 | 909 | 777 | 1,120 | |||||||||||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 23,541 | 138,595 | 107,087 | 21,086 | 14,969 | |||||||||||||||
| (Gain) loss on investments | (1,790 | ) | 3,336 | — | (5,638 | ) | — | |||||||||||||
| Loss (gain) on derivative instruments, net | 92 | (69 | ) | (105 | ) | (273 | ) | (266 | ) | |||||||||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 945 | 1,058 | 688 | 1,487 | 1,148 | |||||||||||||||
| (Gain) loss on extinguishment and forgiveness of debt, net | (21 | ) | (90 | ) | (5,249 | ) | — | 318 | ||||||||||||
| Net direct financing lease adjustments | 498 | 483 | 503 | 539 | 517 | |||||||||||||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (8,341 | ) | (8,720 | ) | (11,402 | ) | (11,260 | ) | (11,281 | ) | ||||||||||
| Program development costs write-off | — | — | — | — | 1,343 | |||||||||||||||
| Other adjustments, net | (78 | ) | (1,442 | ) | (142 | ) | (488 | ) | 1,247 | |||||||||||
| Proportionate share of adjustments for unconsolidated entities | 60 | (9 | ) | (27 | ) | (6 | ) | 249 | ||||||||||||
| Adjustment for Excluded Properties | — | — | (5 | ) | 40 | 172 | ||||||||||||||
| Normalized EBITDA | $ | 257,486 | $ | 261,084 | $ | 259,387 | $ | 265,123 | $ | 267,710 | ||||||||||
| Normalized EBITDA from continuing operations | $ | 257,486 | $ | 261,084 | $ | 259,387 | $ | 262,362 | $ | 258,578 | ||||||||||
| Normalized EBITDA from discontinued operations | $ | — | $ | — | $ | — | $ | 2,761 | $ | 9,132 | ||||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 14
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Net Operating Income (unaudited, dollars in thousands) |
NOI and Cash NOI
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
Rental revenue - as reported (1) | $ | 313,263 | $ | 313,866 | $ | 315,664 | $ | 315,074 | $ | 316,599 | ||||||||||
| Property operating expense - as reported | (32,567 | ) | (31,893 | ) | (31,436 | ) | (30,565 | ) | (32,429 | ) | ||||||||||
| NOI | 280,696 | 281,973 | 284,228 | 284,509 | 284,170 | |||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (8,341 | ) | (8,720 | ) | (11,402 | ) | (11,260 | ) | (11,281 | ) | ||||||||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 945 | 1,058 | 688 | 1,487 | 1,148 | |||||||||||||||
| Net direct financing lease adjustments | 498 | 483 | 503 | 539 | 517 | |||||||||||||||
| Adjustment for Excluded Properties | — | — | 22 | 40 | 172 | |||||||||||||||
| Cash NOI | $ | 273,798 | $ | 274,794 | $ | 274,039 | $ | 275,315 | $ | 274,726 | ||||||||||
| (1) | Rental income includes percentage rent of $1.4 million, $1.2 million, $1.4 million, $1.7 million and $1.3 million for the three months ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, and December 31, 2017, respectively. |
Normalized Cash NOI
| Three Months Ended | ||||
| December 31, 2018 | ||||
| Cash NOI | $ | 273,798 | ||
Adjustments for intra-quarter acquisitions and dispositions (1) | 1,911 | |||
| Normalized Cash NOI | $ | 275,709 | ||
___________________________________
| (1) | The adjustment eliminates Cash NOI for properties acquired during the three months ended December 31, 2018 and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. The adjustment eliminates Cash NOI for properties disposed of during the three months ended December 31, 2018. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 15
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Same Store Contract Rental Revenue (unaudited, dollars in thousands) |
The Company reviews the stabilized operating results from properties that we refer to as "same store." In determining the same store property pool, we include Operating Properties that were owned for the entirety of both the current and prior reporting periods, except for properties that during the current or prior period were under development or redevelopment.
The following tables show the Company's same store portfolio statistics, which for the year ended December 31, 2018 included 3,853(1) Operating Properties with 84.5 million aggregate square feet, acquired prior to January 1, 2017 and owned through December 31, 2018, and for the three months ended December 31, 2018 included 3,919(2) Operating Properties, with 88.4 million aggregate square feet, acquired prior to October 1, 2017 and owned through December 31, 2018.
Year Ended December 31, 2018:
| Year Ended December 31, | Increase/(Decrease) | ||||||||||||||
| 2018 | 2017 | $ Change | % Change | ||||||||||||
| Contract Rental Revenue | $ | 1,035,257 | $ | 1,030,005 | $ | 5,252 | 0.5 | % | |||||||
| Economic Occupancy Rate | 98.7 | % | 99.0 | % | N/A | N/A | |||||||||
| Contract Rental Revenue | |||||||||||||||||||
| Number of | Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||
| Properties | 2018 | 2017 | $ Change | % Change | |||||||||||||||
| Retail | 2,010 | $ | 428,614 | $ | 429,810 | $ | (1,196 | ) | (0.3 | )% | |||||||||
| Restaurant | 1,614 | 227,815 | 224,429 | 3,386 | 1.5 | % | |||||||||||||
| Industrial | 138 | 162,850 | 160,970 | 1,880 | 1.2 | % | |||||||||||||
| Office | 82 | 215,458 | 214,276 | 1,182 | 0.6 | % | (4) | ||||||||||||
Other (3) | 9 | 520 | 520 | — | — | % | |||||||||||||
| Total | 3,853 | $ | 1,035,257 | $ | 1,030,005 | $ | 5,252 | 0.5 | % | (4) | |||||||||
Three Months Ended December 31, 2018:
| Three Months Ended December 31, | Increase/(Decrease) | ||||||||||||||
| 2018 | 2017 | $ Change | % Change | ||||||||||||
| Contract Rental Revenue | $ | 266,992 | $ | 264,298 | $ | 2,694 | 1.0 | % | |||||||
| Economic Occupancy Rate | 98.7 | % | 99.0 | % | N/A | N/A | |||||||||
| Contract Rental Revenue | |||||||||||||||||||
| Number of | Three Months Ended December 31, | Increase/(Decrease) | |||||||||||||||||
| Properties | 2018 | 2017 | $ Change | % Change | |||||||||||||||
| Retail | 2,050 | $ | 111,342 | $ | 111,342 | $ | — | — | % | ||||||||||
| Restaurant | 1,636 | 58,086 | 56,875 | 1,211 | 2.1 | % | |||||||||||||
| Industrial | 142 | 42,704 | 42,276 | 428 | 1.0 | % | |||||||||||||
| Office | 82 | 54,730 | 53,674 | 1,056 | 2.0 | % | (4) | ||||||||||||
Other (3) | 9 | 130 | 131 | (1 | ) | (0.8 | )% | ||||||||||||
| Total | 3,919 | $ | 266,992 | $ | 264,298 | $ | 2,694 | 1.0 | % | (4) | |||||||||
| (1) | Development and expansion properties are included in the same store population if the placed in service date was prior to January 1, 2017. |
| (2) | Development and expansion properties are included in the same store population if the placed in service date was prior to October 1, 2017. |
| (3) | Other properties include billboards, land and parking lots. |
| (4) | Excluding the impact of an early office lease renewal executed in the fourth quarter of 2017, for the year ended December 31, 2018, office same store rent would have been 3.1% and total same store rent would have been 1.0%, and for the three months ended December 31, 2018, office same store rent would have been 3.3% and total same store rent would have been 1.3%. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 16
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Adjusted Principal Outstanding and Preferred Equity Summary (unaudited, dollars in thousands) |
| Principal Payments Due | Total | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | |||||||||||||||||||||||||||
| Mortgage notes payable | $ | 1,917,132 | $ | 167,279 | $ | 265,189 | $ | 352,768 | $ | 314,898 | $ | 144,843 | $ | 665,196 | $ | 1,078 | $ | 5,881 | ||||||||||||||||||
Credit facility (1) | 403,000 | — | — | — | 253,000 | 150,000 | — | — | — | |||||||||||||||||||||||||||
Corporate bonds (1) | 3,400,000 | 750,000 | — | 400,000 | — | — | 500,000 | 550,000 | 1,200,000 | |||||||||||||||||||||||||||
| Convertible notes | 402,500 | — | 402,500 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Total Adjusted Principal Outstanding | $ | 6,122,632 | $ | 917,279 | $ | 667,689 | $ | 752,768 | $ | 567,898 | $ | 294,843 | $ | 1,165,196 | $ | 551,078 | $ | 1,205,881 | ||||||||||||||||||
| Debt Type | Percentage of Adjusted Principal Outstanding | Weighted-Average Interest Rate | Weighted-Average Years to Maturity | ||||||
| Mortgage notes payable | 31.4 | % | 4.93 | % | 3.4 | ||||
| Unsecured credit facility | 6.6 | % | 3.85 | % | 3.8 | ||||
| Corporate bonds | 55.4 | % | 4.13 | % | 5.0 | ||||
| Convertible notes | 6.6 | % | 3.75 | % | 2.0 | ||||
| Total | 100.0 | % | 4.34 | % | 4.2 | ||||
| Debt Type | Percentage of Adjusted Principal Outstanding | Weighted-Average Interest Rate | Weighted-Average Years to Maturity | ||||||
| Total unsecured debt | 68.6 | % | 4.07 | % | 4.6 | ||||
| Total secured debt | 31.4 | % | 4.93 | % | 3.4 | ||||
| Total | 100.0 | % | 4.34 | % | 4.2 | ||||
Total fixed-rate debt (2) | 93.2 | % | 4.37 | % | 4.3 | ||||
| Total variable-rate debt | 6.8 | % | 3.91 | % | 3.7 | ||||
| Total | 100.0 | % | 4.34 | % | 4.2 | ||||
| Preferred Equity | Balance (3) | Percent of Total Preferred Equity | Dividend Rate | |||||||
| Series F preferred stock | $ | 1,073,025 | 100.0 | % | 6.7 | % | ||||
| (1) | On February 6, 2019, the Company repaid its corporate bonds due 2019 ($750.0 million) using funds borrowed under the credit facility term loan. |
| (2) | Includes $50.7 million of variable rate mortgage notes effectively fixed through the use of interest rate swap agreements. Debt payment obligations in future periods are based on the effective interest rates fixed under the agreements. |
| (3) | Balance represents 42.8 million shares of Series F Preferred Stock (and 42.8 million corresponding general partner Series F Preferred Units) and 86,874 limited partner Series F Preferred Units outstanding at December 31, 2018, multiplied by the liquidation preference of $25 per share. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 17
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Debt and Preferred Equity Summary (cont.) (unaudited, dollars in millions) |
___________________________________
| (1) | On February 6, 2019, the Company repaid its corporate bonds due 2019 ($750.0 million) using funds borrowed under the credit facility term loan. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 18
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Mortgage Notes Payable (unaudited, dollars in thousands) |
| Lender | Maturity | Adjusted Principal Outstanding As Of December 31, 2018 | Coupon Rate | Interest Rate (1) | Payment Terms (2) | |||||||||
| Cantor Commercial Real Estate Lending, L.P. | 01/06/24 | $ | 465,000 | 4.97 | % | 4.97 | % | I/O | ||||||
| Cantor Commercial Real Estate Lending, L.P. | 01/06/24 | 155,000 | 4.97 | % | 4.97 | % | I/O | |||||||
| JPMorgan Chase Bank, N.A. | 09/01/20 | (3) | 92,817 | 5.55 | % | 5.55 | % | P&I | ||||||
| Wells Fargo Bank, National Association | 03/01/23 | (3) | 74,250 | 4.23 | % | 4.23 | % | I/O | ||||||
| Wells Fargo Bank, National Association | 07/01/22 | (3) | 68,110 | 4.54 | % | 4.54 | % | I/O | ||||||
| Goldman Sachs Commercial Mortgage Capital, L.P. | 06/06/20 | 60,717 | 5.73 | % | 5.73 | % | P&I | |||||||
| Wells Fargo Bank, National Association | 05/01/21 | 60,450 | 5.54 | % | 5.54 | % | I/O | |||||||
| Citigroup Global Markets Realty Corp | 05/06/22 | 54,300 | 6.05 | % | 6.05 | % | I/O | |||||||
| American General Life Insurance Company | 11/01/21 | 51,250 | 5.25 | % | 5.25 | % | I/O | |||||||
| Capital One, N.A. | 11/20/19 | 50,685 | 1mo. Libor + 1.95% | (4) | 3.27 | % | P&I | |||||||
| JPMorgan Chase Bank, N.A. | 05/01/21 | 46,910 | 5.53 | % | 5.53 | % | I/O | |||||||
| Goldman Sachs Commercial Mortgage Capital, L.P. | 05/06/21 | (3) | 46,670 | 5.92 | % | 5.92 | % | I/O | ||||||
| Wells Fargo Bank, National Association | 06/01/22 | 41,000 | 4.73 | % | 4.73 | % | P&I | |||||||
| People's United Bank | 04/01/21 | (3) | 40,953 | 5.55 | % | 5.55 | % | I/O | ||||||
| Morgan Stanley Mortgage Capital Holdings LLC | 01/01/23 | 40,800 | 4.46 | % | 4.46 | % | I/O | |||||||
| JPMorgan Chase Bank, N.A. | 06/01/20 | 39,669 | 5.71 | % | 5.71 | % | P&I | |||||||
| JPMorgan Chase Bank, N.A. | 11/01/19 | (3) | 38,500 | 4.10 | % | 4.10 | % | I/O | ||||||
| The Royal Bank of Scotland Plc | 01/01/21 | 33,907 | 5.48 | % | 5.48 | % | I/O | |||||||
| Goldman Sachs Mortgage Company | 12/06/20 | 31,500 | 5.25 | % | 5.25 | % | I/O | |||||||
| Oritani Bank | 05/01/24 | 30,050 | 3.25 | % | 3.25 | % | I/O through 05/01/2019, then P&I | |||||||
| Goldman Sachs Mortgage Company | 12/06/20 | 30,000 | 5.25 | % | 5.25 | % | I/O | |||||||
| German American Capital Corporation | 10/06/22 | (3) | 29,160 | 4.48 | % | 4.48 | % | I/O | ||||||
| German American Capital Corporation | 10/06/22 | (3) | 28,440 | 4.48 | % | 4.48 | % | I/O | ||||||
| PNC Bank, National Association | 06/01/22 | 27,750 | 4.22 | % | 4.22 | % | I/O | |||||||
| GS Commercial Real Estate LP | 08/06/19 | (3) | 27,725 | 4.73 | % | 4.73 | % | I/O | ||||||
| Jackson National Life Insurance Company | 07/01/19 | 27,200 | 3.10 | % | 3.10 | % | I/O | |||||||
| PNC Bank, National Association | 09/01/22 | 26,437 | 4.00 | % | 4.00 | % | P&I | |||||||
| John Hancock Life Insurance Company | 10/03/22 | 22,500 | 4.04 | % | 4.04 | % | I/O | |||||||
| Aviva Life and Annuity Company | 07/01/21 | 19,600 | 5.02 | % | 5.02 | % | I/O through 07/01/2019, then P&I | |||||||
| The Variable Annuity Life Insurance Company | 01/01/23 | 19,525 | 4.00 | % | 4.00 | % | I/O | |||||||
| Morgan Stanley Mortgage Capital Holdings LLC | 05/10/21 | 19,512 | 5.67 | % | 5.67 | % | I/O | |||||||
| Oritani Bank | 05/01/24 | 18,889 | 3.25 | % | 3.25 | % | I/O through 05/01/2019, then P&I | |||||||
| German American Capital Corp | 06/06/22 | 18,370 | 4.60 | % | 4.60 | % | P&I | |||||||
| The Royal Bank of Scotland Plc | 03/01/21 | 18,100 | 5.88 | % | 5.88 | % | I/O | |||||||
| JPMorgan Chase Bank, National Association | 05/01/21 | (3) | 14,883 | 5.54 | % | 5.54 | % | P&I | ||||||
| Amegy Bank, National Association | 08/19/19 | 14,037 | 1mo. Libor + 3.88% | 5.72 | % | P&I | ||||||||
| JPMorgan Chase Bank, N.A. | 07/01/20 | 10,851 | 5.50 | % | 5.50 | % | P&I | |||||||
| Monumental Life Insurance Company | 04/01/23 | 9,107 | 3.95 | % | 3.95 | % | P&I | |||||||
| Transamerica Life Insurance Company | 08/01/30 | 6,354 | 5.57 | % | 5.57 | % | P&I | |||||||
| Transamerica Life Insurance Company | 08/01/30 | 5,655 | 5.32 | % | 5.32 | % | P&I | |||||||
| Transamerica Life Insurance Company | 08/01/30 | 323 | 5.93 | % | 5.93 | % | P&I | |||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 19
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Mortgage Notes Payable (unaudited, dollars in thousands) |
| Lender | Maturity | Adjusted Principal Outstanding As Of December 31, 2018 | Coupon Rate | Interest Rate (1) | Payment Terms (2) | |||||||||
| US Bank National Association | 04/15/19 | $ | 176 | 5.40 | % | 5.40 | % | P&I | ||||||
| $ | 1,917,132 | 4.93 | % | |||||||||||
| (1) | Represents the interest rate in effect at December 31, 2018. For loans subject to interest rate swaps, this represents the all-in fixed interest rate. |
| (2) | I/O means interest only is due monthly with the principal due at maturity. P&I means both principal and interest are due monthly. |
| (3) | The maturity date shown represents the anticipated maturity date of the loan as specified in the loan agreement. Should the loan not be repaid at the anticipated maturity date, the applicable interest rate will increase as specified in the loan agreement. |
| (4) | Variable-rate loan fixed by way of interest rate swap agreement. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 20
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Credit Facility and Corporate Bond Covenants (unaudited) |
The following is a summary of key financial covenants for the Company's unsecured credit facility and corporate bonds, as defined and calculated per the terms of the facility's credit agreement and the bonds' governing documents, respectively. These calculations, which are not based on GAAP measurements, are presented to investors to show that the Company is in compliance with the financial covenants and are not measures of our liquidity or performance. As of December 31, 2018, the Company believes it is in compliance with these covenants based on the covenant limits and calculations in place at that time.
| Unsecured Credit Facility Key Covenants | Required | December 31, 2018 | ||
| Ratio of total indebtedness to total asset value | ≤ 60% | 38.3% | ||
| Ratio of adjusted EBITDA to fixed charges | ≥ 1.5x | 3.00x | ||
| Ratio of secured indebtedness to total asset value | ≤ 45% | 11.9% | ||
| Ratio of unsecured indebtedness to unencumbered asset value | ≤ 60% | 35.3% | ||
| Ratio of unencumbered adjusted NOI to unsecured interest expense | ≥ 1.75x | 4.84x | ||
| Corporate Bond Key Covenants | Required | December 31, 2018 | ||
| Limitation on incurrence of total debt | ≤ 65% | 38.7% | ||
| Limitation on incurrence of secured debt | ≤ 40% | 12.2% | ||
| Debt service coverage | ≥ 1.5x | 3.86x | ||
| Maintenance of total unencumbered assets | ≥ 150% | 280.6% | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 21
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Acquisitions and Dispositions (unaudited, square feet and dollars in thousands) |
Acquisitions
The following table summarizes the Company's property acquisition activity during the three months ended December 31, 2018.
| Property Type | Number of Properties | Square Feet | Weighted Average Lease Term (Years) (1) | Weighted Average Cash Cap Rate | Purchase Price | ||||||||||
| Retail | 7 | 562 | 16.2 | 7.1 | % | $ | 105,373 | ||||||||
| Industrial | 2 | 1,275 | 19.9 | 7.1 | % | 112,894 | |||||||||
Build-to-Suit Land (2) | 1 | — | N/A | N/A | 3,009 | ||||||||||
| Total acquisitions | 10 | 1,837 | 18.1 | 7.1 | % | $ | 221,276 | ||||||||
Dispositions
The following table summarizes the Company's disposition activity and the related gains/losses during the three months ended December 31, 2018.
| Real Estate | Number of Properties | Square Feet | Weighted Average Lease Term (Years) (3) | Weighted Average Cash Cap Rate (4) | Sale Price | Gain (Loss) | |||||||||||||
| Retail | 12 | 495 | 12.6 | 6.6 | % | $ | 88,162 | $ | 19,567 | ||||||||||
Red Lobster - GGC Participation (5) | 12 | 86 | 20.1 | 7.6 | % | 47,084 | 5,111 | ||||||||||||
| Red Lobster - Canada | 1 | 7 | 10.8 | 13.2 | % | (6) | 2,000 | (289 | ) | ||||||||||
| Industrial | 1 | 12 | 8.2 | 8.2 | % | 3,200 | 762 | ||||||||||||
| Other restaurants | 2 | 6 | 4.1 | 7.4 | % | 1,690 | 287 | ||||||||||||
Vacant and other (7) | 9 | 57 | N/A | N/A | 5,536 | 442 | |||||||||||||
| Total real estate dispositions | 37 | 663 | 14.9 | 7.1 | % | $ | 147,672 | $ | 25,880 | ||||||||||
| Held for sale assets | — | ||||||||||||||||||
| Total gain on disposition of real estate, net | $ | 25,880 | |||||||||||||||||
| Other | |||||||||||||||||||
Mortgage-related investments (8) | N/A | N/A | N/A | N/A | $ | 36,142 | $ | 1,903 | |||||||||||
| (1) | Represents the remaining lease term from the date of acquisition. |
| (2) | During the three months ended December 31, 2018, we purchased one land parcel for build-to-suit development for $3.0 million. No additional development costs related to the project were capitalized during the three months ended December 31, 2018, and as of December 31, 2018, our estimated remaining investment is $24.9 million. The project is estimated to be completed during the three months ended December 31, 2019, with an estimated cash cap rate of 7.9% and lease term of 25 years. |
| (3) | Represents the remaining lease term from the date of sale. |
| (4) | Excludes certain properties' cash cap rates considered not meaningful due to factors such as physical and economic vacancy or short remaining lease terms. Of the $147.7 million of dispositions, $140.8 million was used in the total weighted average cash cap rate calculation of 7.1%. |
| (5) | The Red Lobster properties were sold under an agreement with the tenant, under which the tenant received a portion of the sales proceeds. The sales price and cash cap rate presented are based on our proceeds after making the participation payment to the tenant. The cash cap rate on the gross sales price of $54.8 million was 6.5%. |
| (6) | The NOI used to calculate Cash Cap Rate for the Red Lobster - Canada property was reduced by the estimated annual Canadian corporate income taxes of $60,000. Excluding the reduction would result in a Cash Cap Rate for the property of 16.2%. |
| (7) | Represents five vacant restaurant properties, including one relinquished to the ground lessor upon termination of the ground lease for no proceeds, three vacant retail properties, and one restaurant property relinquished to the ground lessor upon expiration of the ground lease for no proceeds. Gain (loss) amounts also include partial condemnations or easements related to certain properties and post-closing adjustments. |
| (8) | Represents investments in commercial mortgage backed securities and mortgage notes receivable sold during the three months ended December 31, 2018. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 22
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification Statistics: Real Estate Portfolio (unaudited, percentages based on portfolio Annualized Rental Income) |
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
Statistics (square feet in thousands) | ||||
| Operating Properties | 3,994 | |||
| Rentable Square Feet | 94,953 | |||
| Economic Occupancy Rate | 98.8 | % | ||
| Weighted Average Remaining Lease Term | 8.9 | |||
| Investment-Grade Tenants | 41.9 | % | ||
| Flat leases | 19.7 | % | ||
| NNN leases | 62.4 | % | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 23
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Top 10 Concentrations: Real Estate Portfolio (unaudited, square feet and dollars in thousands) |
| Tenant Concentration | Number of Leases | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | Investment Rating | ||||||||||||
| Red Lobster | 25 | 1,809 | 1.9 | % | $ | 63,744 | 5.5 | % | B- | |||||||||
| Walgreens | 115 | 1,631 | 1.7 | % | 39,658 | 3.4 | % | BBB | ||||||||||
| Family Dollar | 149 | 3,348 | 3.5 | % | 37,628 | 3.3 | % | BBB- | ||||||||||
| Dollar General | 407 | 3,767 | 4.0 | % | 34,691 | 3.0 | % | BBB | ||||||||||
| FedEx | 46 | 3,241 | 3.4 | % | 30,444 | 2.6 | % | BBB | ||||||||||
| CVS | 94 | 1,340 | 1.4 | % | 30,265 | 2.6 | % | BBB | ||||||||||
| BJ's Wholesale Club | 3 | 2,223 | 2.3 | % | 20,228 | 1.8 | % | B | ||||||||||
| LA Fitness | 24 | 1,027 | 1.1 | % | 19,869 | 1.7 | % | B+ | ||||||||||
| Albertson's | 27 | 1,603 | 1.7 | % | 19,554 | 1.7 | % | B | ||||||||||
| PetSmart | 15 | 906 | 1.0 | % | 18,582 | 1.6 | % | CCC | ||||||||||
| Total | 905 | 20,895 | 22.0 | % | $ | 314,663 | 27.2 | % | ||||||||||
| Tenant Industry Concentration | Number of Leases | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| Restaurants - Casual Dining | 320 | 4,204 | 4.4 | % | $ | 147,168 | 12.8 | % | ||||||||
| Manufacturing | 54 | 17,422 | 18.3 | % | 116,052 | 10.1 | % | |||||||||
| Restaurants - Quick Service | 826 | 3,308 | 3.5 | % | 99,942 | 8.7 | % | |||||||||
| Retail - Discount | 603 | 10,367 | 10.9 | % | 96,777 | 8.4 | % | |||||||||
| Retail - Pharmacy | 228 | 3,415 | 3.6 | % | 77,816 | 6.8 | % | |||||||||
| Retail - Home & Garden | 114 | 8,718 | 9.2 | % | 63,179 | 5.5 | % | |||||||||
| Retail - Grocery & Supermarket | 79 | 5,070 | 5.3 | % | 53,225 | 4.6 | % | |||||||||
| Finance | 225 | 2,280 | 2.4 | % | 49,384 | 4.3 | % | |||||||||
| Professional Services | 53 | 3,376 | 3.6 | % | 43,855 | 3.8 | % | |||||||||
| Retail - Motor Vehicle | 184 | 6,006 | 6.3 | % | 42,738 | 3.7 | % | |||||||||
| Total | 2,686 | 64,166 | 67.5 | % | $ | 790,136 | 68.7 | % | ||||||||
| Geographic Concentration | Number of Properties | Rentable Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| Texas | 538 | 10,693 | 11.3 | % | $ | 143,796 | 12.5 | % | ||||||||
| Ohio | 293 | 8,462 | 8.9 | % | 67,517 | 5.9 | % | |||||||||
| Florida | 254 | 4,591 | 4.8 | % | 64,296 | 5.6 | % | |||||||||
| Illinois | 159 | 4,556 | 4.8 | % | 63,556 | 5.5 | % | |||||||||
| Pennsylvania | 144 | 5,593 | 5.9 | % | 52,975 | 4.6 | % | |||||||||
| California | 66 | 3,716 | 3.9 | % | 49,176 | 4.3 | % | |||||||||
| Georgia | 180 | 3,754 | 4.0 | % | 42,161 | 3.7 | % | |||||||||
| Michigan | 181 | 2,280 | 2.4 | % | 39,627 | 3.4 | % | |||||||||
| Indiana | 133 | 4,038 | 4.3 | % | 37,544 | 3.3 | % | |||||||||
| North Carolina | 152 | 3,292 | 3.5 | % | 35,832 | 3.1 | % | |||||||||
| Total | 2,100 | 50,975 | 53.8 | % | $ | 596,480 | 51.9 | % | ||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 24
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Top 10 Concentrations: Real Estate Portfolio (unaudited, square feet and dollars in thousands) |
| Metropolitan Statistical Area (MSA) Concentration | Number of Properties | Rentable Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| Chicago, IL | 101 | 4,087 | 4.3 | % | $ | 54,537 | 4.7 | % | ||||||||
| Dallas, TX | 106 | 3,444 | 3.6 | % | 47,740 | 4.1 | % | |||||||||
| Houston, TX | 89 | 2,574 | 2.7 | % | 27,404 | 2.4 | % | |||||||||
| Atlanta, GA | 83 | 2,699 | 2.8 | % | 26,719 | 2.3 | % | |||||||||
| Philadelphia, PA | 44 | 1,973 | 2.1 | % | 25,894 | 2.2 | % | |||||||||
| Boston, MA | 26 | 1,810 | 1.9 | % | 24,848 | 2.2 | % | |||||||||
| New York, NY | 24 | 1,100 | 1.2 | % | 24,356 | 2.1 | % | |||||||||
| Phoenix, AZ | 48 | 1,306 | 1.4 | % | 23,774 | 2.1 | % | |||||||||
| Cincinnati, OH | 42 | 2,245 | 2.4 | % | 17,910 | 1.6 | % | |||||||||
| Indianapolis, IN | 41 | 1,721 | 1.8 | % | 17,534 | 1.5 | % | |||||||||
| Total | 604 | 22,959 | 24.2 | % | $ | 290,716 | 25.2 | % | ||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 25
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Tenants Comprising Over 1% of Annualized Rental Revenue (unaudited, square feet and dollars in thousands) |
| Tenant | Number of Leases | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | Investment Rating | ||||||||||||
| Red Lobster | 25 | 1,809 | 1.9 | % | $ | 63,744 | 5.5 | % | B- | |||||||||
| Walgreens | 115 | 1,631 | 1.7 | % | 39,658 | 3.4 | % | BBB | ||||||||||
| Family Dollar | 149 | 3,348 | 3.5 | % | 37,628 | 3.3 | % | BBB- | ||||||||||
| Dollar General | 407 | 3,767 | 4.0 | % | 34,691 | 3.0 | % | BBB | ||||||||||
| FedEx | 46 | 3,241 | 3.4 | % | 30,444 | 2.6 | % | BBB | ||||||||||
| CVS | 94 | 1,340 | 1.4 | % | 30,265 | 2.6 | % | BBB | ||||||||||
| BJ's Wholesale Club | 3 | 2,223 | 2.3 | % | 20,228 | 1.8 | % | B | ||||||||||
| LA Fitness | 24 | 1,027 | 1.1 | % | 19,869 | 1.7 | % | B+ | ||||||||||
| Albertson's | 27 | 1,603 | 1.7 | % | 19,554 | 1.7 | % | B | ||||||||||
| PetSmart | 15 | 906 | 1.0 | % | 18,582 | 1.6 | % | CCC | ||||||||||
| Goodyear | 10 | 4,728 | 5.0 | % | 17,417 | 1.5 | % | BB | ||||||||||
| Tractor Supply | 61 | 1,274 | 1.3 | % | 16,502 | 1.4 | % | NR | ||||||||||
| Citizens Bank | 126 | 673 | 0.7 | % | 14,691 | 1.3 | % | A- | ||||||||||
| Amazon | 3 | 3,048 | 3.2 | % | 14,159 | 1.2 | % | AA- | ||||||||||
| At Home | 5 | 1,406 | 1.5 | % | 12,112 | 1.1 | % | B+ | ||||||||||
| Advance Auto Parts | 106 | 736 | 0.8 | % | 12,058 | 1.0 | % | BBB- | ||||||||||
| Home Depot | 11 | 1,695 | 1.8 | % | 11.586 | 1.0 | % | A | ||||||||||
| Total | 1,227 | 34,455 | 36.3 | % | $ | 401,614 | 35.7 | % | ||||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 26
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification: Tenant Industry (unaudited, square feet and dollars in thousands) |
| Industry | Number of Leases | Leased Square Feet | Leased Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| Administration & Support Services | 4 | 427 | 0.4 | % | $ | 4,003 | 0.3 | % | ||||||||
| Agricultural | 2 | 138 | 0.2 | % | 1,245 | 0.1 | % | |||||||||
| Education | 5 | 219 | 0.2 | % | 2,155 | 0.2 | % | |||||||||
| Entertainment & Recreation | 29 | 1,246 | 1.3 | % | 26,247 | 2.3 | % | |||||||||
| Finance | 225 | 2,280 | 2.4 | % | 49,384 | 4.3 | % | |||||||||
| Government & Public Services | 21 | 930 | 1.0 | % | 19,186 | 1.7 | % | |||||||||
| Healthcare | 12 | 1,061 | 1.1 | % | 16,692 | 1.5 | % | |||||||||
| Information & Communication | 10 | 510 | 0.5 | % | 7,371 | 0.6 | % | |||||||||
| Insurance | 12 | 1,310 | 1.4 | % | 25,811 | 2.2 | % | |||||||||
| Logistics | 50 | 4,048 | 4.3 | % | 37,778 | 3.3 | % | |||||||||
| Manufacturing | 54 | 17,422 | 18.3 | % | 116,052 | 10.1 | % | |||||||||
| Mining & Natural Resources | 5 | 418 | 0.4 | % | 6,730 | 0.6 | % | |||||||||
| Other Services | 17 | 484 | 0.5 | % | 3,356 | 0.3 | % | |||||||||
| Professional Services | 53 | 3,376 | 3.6 | % | 43,855 | 3.8 | % | |||||||||
| Rental | 11 | 714 | 0.8 | % | 6,885 | 0.6 | % | |||||||||
| Restaurants - Casual Dining | 320 | 4,204 | 4.4 | % | 147,168 | 12.8 | % | |||||||||
| Restaurants - Quick Service | 826 | 3,308 | 3.6 | % | 99,942 | 8.7 | % | |||||||||
| Retail - Apparel & Jewelry | 14 | 1,326 | 1.4 | % | 15,032 | 1.3 | % | |||||||||
| Retail - Department Stores | 13 | 964 | 1.0 | % | 8,010 | 0.7 | % | |||||||||
| Retail - Discount | 603 | 10,367 | 10.9 | % | 96,777 | 8.4 | % | |||||||||
| Retail - Electronics & Appliances | 18 | 1,566 | 1.6 | % | 10,655 | 0.9 | % | |||||||||
| Retail - Gas & Convenience | 126 | 613 | 0.6 | % | 30,737 | 2.7 | % | |||||||||
| Retail - Grocery & Supermarket | 79 | 5,070 | 5.3 | % | 53,225 | 4.6 | % | |||||||||
| Retail - Hobby, Books & Music | 16 | 1,901 | 2.0 | % | 11,497 | 1.0 | % | |||||||||
| Retail - Home & Garden | 114 | 8,718 | 9.2 | % | 63,179 | 5.5 | % | |||||||||
| Retail - Home Furnishings | 37 | 2,093 | 2.2 | % | 23,227 | 2.0 | % | |||||||||
| Retail - Internet | 3 | 3,048 | 3.3 | % | 14,159 | 1.2 | % | |||||||||
| Retail - Medical Services | 63 | 526 | 0.6 | % | 11,828 | 1.0 | % | |||||||||
| Retail - Motor Vehicle | 184 | 6,005 | 6.3 | % | 42,738 | 3.7 | % | |||||||||
| Retail - Office Supply | 4 | 58 | 0.1 | % | 793 | 0.1 | % | |||||||||
| Retail - Pet Supply | 19 | 963 | 1.0 | % | 19,638 | 1.7 | % | |||||||||
| Retail - Pharmacy | 228 | 3,415 | 3.6 | % | 77,816 | 6.8 | % | |||||||||
| Retail - Specialty (Other) | 22 | 533 | 0.6 | % | 5,700 | 0.5 | % | |||||||||
| Retail - Sporting Goods | 20 | 1,711 | 1.8 | % | 22,630 | 2.0 | % | |||||||||
| Retail - Warehouse Clubs | 6 | 2,596 | 2.7 | % | 23,342 | 2.0 | % | |||||||||
| Other | 21 | 278 | 0.2 | % | 6,269 | 0.5 | % | |||||||||
| Total | 3,246 | 93,846 | 98.8 | % | $ | 1,151,112 | 100.0 | % | ||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 27
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification: Property Geographic (unaudited, square feet and dollars in thousands) |
| Location | Number of Properties | Rentable Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| United States | ||||||||||||||||
| Alabama | 148 | 1,712 | 1.8 | % | $ | 26,019 | 2.3 | % | ||||||||
| Alaska | 3 | 25 | — | % | 794 | 0.1 | % | |||||||||
| Arizona | 76 | 2,054 | 2.2 | % | 34,739 | 3.0 | % | |||||||||
| Arkansas | 93 | 1,172 | 1.2 | % | 14,257 | 1.2 | % | |||||||||
| California | 66 | 3,716 | 3.9 | % | 49,176 | 4.3 | % | |||||||||
| Colorado | 46 | 1,693 | 1.8 | % | 25,799 | 2.2 | % | |||||||||
| Connecticut | 16 | 83 | 0.1 | % | 2,272 | 0.2 | % | |||||||||
| Delaware | 9 | 83 | 0.1 | % | 1,595 | 0.1 | % | |||||||||
| Florida | 254 | 4,591 | 4.8 | % | 64,296 | 5.6 | % | |||||||||
| Georgia | 180 | 3,754 | 4.0 | % | 42,161 | 3.7 | % | |||||||||
| Idaho | 16 | 130 | 0.1 | % | 2,924 | 0.3 | % | |||||||||
| Illinois | 159 | 4,556 | 4.8 | % | 63,556 | 5.6 | % | |||||||||
| Indiana | 133 | 4,038 | 4.3 | % | 37,544 | 3.3 | % | |||||||||
| Iowa | 47 | 881 | 0.9 | % | 9,658 | 0.8 | % | |||||||||
| Kansas | 41 | 2,207 | 2.3 | % | 10,481 | 0.9 | % | |||||||||
| Kentucky | 80 | 2,214 | 2.3 | % | 23,512 | 2.0 | % | |||||||||
| Louisiana | 93 | 2,870 | 3.0 | % | 28,628 | 2.5 | % | |||||||||
| Maine | 26 | 703 | 0.7 | % | 9,019 | 0.8 | % | |||||||||
| Maryland | 28 | 610 | 0.6 | % | 14,620 | 1.3 | % | |||||||||
| Massachusetts | 36 | 2,568 | 2.7 | % | 30,094 | 2.6 | % | |||||||||
| Michigan | 181 | 2,280 | 2.4 | % | 39,627 | 3.4 | % | |||||||||
| Minnesota | 51 | 733 | 0.8 | % | 11,775 | 1.0 | % | |||||||||
| Mississippi | 73 | 1,933 | 2.0 | % | 14,926 | 1.3 | % | |||||||||
| Missouri | 155 | 1,726 | 1.8 | % | 22,831 | 2.0 | % | |||||||||
| Montana | 9 | 115 | 0.1 | % | 1,965 | 0.2 | % | |||||||||
| Nebraska | 19 | 321 | 0.3 | % | 5,399 | 0.5 | % | |||||||||
| Nevada | 28 | 718 | 0.8 | % | 8,491 | 0.7 | % | |||||||||
| New Hampshire | 19 | 253 | 0.3 | % | 4,473 | 0.4 | % | |||||||||
| New Jersey | 31 | 1,614 | 1.7 | % | 34,714 | 3.0 | % | |||||||||
| New Mexico | 43 | 771 | 0.8 | % | 10,609 | 0.9 | % | |||||||||
| New York | 75 | 1,505 | 1.6 | % | 26,794 | 2.3 | % | |||||||||
| North Carolina | 152 | 3,292 | 3.5 | % | 35,832 | 3.1 | % | |||||||||
| North Dakota | 12 | 209 | 0.2 | % | 4,348 | 0.4 | % | |||||||||
| Ohio | 293 | 8,462 | 8.9 | % | 67,517 | 5.9 | % | |||||||||
| Oklahoma | 77 | 2,077 | 2.2 | % | 25,647 | 2.2 | % | |||||||||
| Oregon | 13 | 88 | 0.1 | % | 2,070 | 0.2 | % | |||||||||
| Pennsylvania | 144 | 5,593 | 5.9 | % | 52,975 | 4.6 | % | |||||||||
| Rhode Island | 13 | 171 | 0.2 | % | 3,226 | 0.3 | % | |||||||||
| South Carolina | 112 | 3,302 | 3.5 | % | 27,828 | 2.4 | % | |||||||||
| South Dakota | 12 | 180 | 0.2 | % | 2,169 | 0.2 | % | |||||||||
| Tennessee | 109 | 3,563 | 3.8 | % | 31,218 | 2.7 | % | |||||||||
| Texas | 538 | 10,693 | 11.3 | % | 143,796 | 12.5 | % | |||||||||
| Utah | 11 | 515 | 0.5 | % | 5,744 | 0.5 | % | |||||||||
| Vermont | 6 | 19 | — | % | 292 | — | % | |||||||||
| Virginia | 99 | 2,837 | 3.0 | % | 35,048 | 3.0 | % | |||||||||
| Washington | 25 | 710 | 0.7 | % | 12,473 | 1.1 | % | |||||||||
| West Virginia | 38 | 243 | 0.3 | % | 5,704 | 0.5 | % | |||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 28
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification: Property Geographic (cont.) (unaudited, square feet and dollars in thousands) |
| Location | Number of Properties | Rentable Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
| Wisconsin | 95 | 1,228 | 1.3 | % | 18,706 | 1.6 | % | |||||||||
| Wyoming | 8 | 54 | 0.1 | % | 1,436 | 0.1 | % | |||||||||
| Territories | ||||||||||||||||
| Puerto Rico | 3 | 88 | 0.1 | % | 2,335 | 0.2 | % | |||||||||
| Total | 3,994 | 94,953 | 100.0 | % | $ | 1,151,112 | 100.0 | % | ||||||||
Percentages based on Annualized Rental Income.
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 29
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Expirations (unaudited, square feet and dollars in thousands) |
| Year of Expiration | Number of Leases Expiring | Leased Square Feet | Leased Square Feet as a % of Total Portfolio | Annualized Rental Income Expiring | Annualized Rental Income Expiring as a % of Total Portfolio | |||||||||||
| 2019 | 139 | 2,331 | 2.4 | % | $ | 35,949 | 3.1 | % | ||||||||
| 2020 | 207 | 3,526 | 3.5 | % | 40,754 | 3.5 | % | |||||||||
| 2021 | 192 | 8,491 | 8.9 | % | 76,624 | 6.7 | % | |||||||||
| 2022 | 262 | 9,365 | 9.9 | % | 81,816 | 7.1 | % | |||||||||
| 2023 | 316 | 6,593 | 7.0 | % | 82,859 | 7.2 | % | |||||||||
| 2024 | 194 | 9,334 | 9.9 | % | 110,212 | 9.6 | % | |||||||||
| 2025 | 271 | 4,324 | 4.7 | % | 60,665 | 5.3 | % | |||||||||
| 2026 | 222 | 9,654 | 10.2 | % | 84,105 | 7.3 | % | |||||||||
| 2027 | 360 | 7,939 | 8.3 | % | 104,748 | 9.1 | % | |||||||||
| 2028 | 317 | 6,275 | 6.6 | % | 77,301 | 6.7 | % | |||||||||
| Thereafter | 766 | 26,014 | 27.4 | % | 396,079 | 34.4 | % | |||||||||
| Total | 3,246 | 93,846 | 98.8 | % | $ | 1,151,112 | 100.0 | % | ||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 30
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Expirations (cont.) (unaudited, square feet and dollars in thousands) |
| Year of Expiration | Number of Leases Expiring | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income Expiring | Annualized Rental Income Expiring as a % of Total Portfolio | |||||||||||
| 2019 | ||||||||||||||||
| Retail | 58 | 1,089 | 1.1 | % | $ | 11,416 | 1.0 | % | ||||||||
| Restaurant | 65 | 279 | 0.3 | % | 6,131 | 0.5 | % | |||||||||
| Industrial | 3 | 88 | 0.1 | % | 633 | 0.1 | % | |||||||||
| Office | 13 | 875 | 0.9 | % | 17,769 | 1.5 | % | |||||||||
| Total 2019 | 139 | 2,331 | 2.4 | % | $ | 35,949 | 3.1 | % | ||||||||
| 2020 | ||||||||||||||||
| Retail | 94 | 1,138 | 1.2 | % | $ | 14,999 | 1.3 | % | ||||||||
| Restaurant | 94 | 412 | 0.4 | % | 7,646 | 0.7 | % | |||||||||
| Industrial | 7 | 1,084 | 1.1 | % | 4,142 | 0.4 | % | |||||||||
| Office | 11 | 892 | 0.8 | % | 13,966 | 1.1 | % | |||||||||
Other (1) | 1 | — | — | % | 1 | — | % | |||||||||
| Total 2020 | 207 | 3,526 | 3.5 | % | $ | 40,754 | 3.5 | % | ||||||||
| 2021 | ||||||||||||||||
| Retail | 85 | 1,315 | 1.4 | % | $ | 20,802 | 1.8 | % | ||||||||
| Restaurant | 73 | 361 | 0.4 | % | 9,115 | 0.8 | % | |||||||||
| Industrial | 15 | 5,158 | 5.4 | % | 19,058 | 1.7 | % | |||||||||
| Office | 18 | 1,657 | 1.7 | % | 27,626 | 2.4 | % | |||||||||
Other (1) | 1 | — | — | % | 23 | — | % | |||||||||
| Total 2021 | 192 | 8,491 | 8.9 | % | $ | 76,624 | 6.7 | % | ||||||||
| 2022 | ||||||||||||||||
| Retail | 166 | 2,224 | 2.3 | % | $ | 30,043 | 2.6 | % | ||||||||
| Restaurant | 55 | 275 | 0.3 | % | 7,236 | 0.6 | % | |||||||||
| Industrial | 26 | 5,474 | 5.8 | % | 19,268 | 1.7 | % | |||||||||
| Office | 14 | 1,392 | 1.5 | % | 25,196 | 2.2 | % | |||||||||
Other (1) | 1 | — | — | % | 73 | — | % | |||||||||
| Total 2022 | 262 | 9,365 | 9.9 | % | $ | 81,816 | 7.1 | % | ||||||||
| (1) | Includes billboards, land and parking lots. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 31
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Expirations (cont.) (unaudited, square feet and dollars in thousands) |
| Year of Expiration | Number of Leases Expiring | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income Expiring | Annualized Rental Income Expiring as a % of Total Portfolio | |||||||||||
| 2023 | ||||||||||||||||
| Retail | 203 | 2,647 | 2.8 | % | $ | 35,370 | 3.1 | % | ||||||||
| Restaurant | 76 | 305 | 0.3 | % | 7,932 | 0.7 | % | |||||||||
| Industrial | 17 | 2,448 | 2.6 | % | 16,289 | 1.4 | % | |||||||||
| Office | 17 | 1,193 | 1.3 | % | 23,245 | 2.0 | % | |||||||||
Other (1) | 3 | — | — | % | 23 | — | % | |||||||||
| Total 2023 | 316 | 6,593 | 7.0 | % | $ | 82,859 | 7.2 | % | ||||||||
| 2024 | ||||||||||||||||
| Retail | 118 | 2,388 | 2.5 | % | $ | 32,850 | 3.0 | % | ||||||||
| Restaurant | 46 | 242 | 0.3 | % | 6,107 | 0.5 | % | |||||||||
| Industrial | 10 | 3,374 | 3.6 | % | 14,281 | 1.2 | % | |||||||||
| Office | 19 | 3,330 | 3.5 | % | 56,935 | 4.9 | % | |||||||||
Other (1) | 1 | — | — | % | 39 | — | % | |||||||||
| Total 2024 | 194 | 9,334 | 9.9 | % | $ | 110,212 | 9.6 | % | ||||||||
| 2025 | ||||||||||||||||
| Retail | 197 | 1,954 | 2.1 | % | $ | 33,186 | 2.9 | % | ||||||||
| Restaurant | 59 | 251 | 0.3 | % | 6,987 | 0.6 | % | |||||||||
| Industrial | 11 | 1,645 | 1.7 | % | 13,217 | 1.1 | % | |||||||||
| Office | 4 | 474 | 0.6 | % | 7,275 | 0.7 | % | |||||||||
| Total 2025 | 271 | 4,324 | 4.7 | % | $ | 60,665 | 5.3 | % | ||||||||
| 2026 | ||||||||||||||||
| Retail | 91 | 1,993 | 2.1 | % | $ | 22,212 | 1.9 | % | ||||||||
| Restaurant | 108 | 490 | 0.5 | % | 17,523 | 1.6 | % | |||||||||
| Industrial | 16 | 6,430 | 6.8 | % | 29,027 | 2.5 | % | |||||||||
| Office | 7 | 741 | 0.8 | % | 15,343 | 1.3 | % | |||||||||
| Total 2026 | 222 | 9,654 | 10.2 | % | $ | 84,105 | 7.3 | % | ||||||||
___________________________________
| (1) | Includes billboards, land and parking lots. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 32
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Expirations (cont.) (unaudited, square feet and dollars in thousands) |
| Year of Expiration | Number of Leases Expiring | Leased Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income Expiring | Annualized Rental Income Expiring as a % of Total Portfolio | |||||||||||
| 2027 | ||||||||||||||||
| Retail | 250 | 3,898 | 4.1 | % | $ | 52,227 | 4.5 | % | ||||||||
| Restaurant | 96 | 857 | 0.9 | % | 27,705 | 2.4 | % | |||||||||
| Industrial | 11 | 2,650 | 2.8 | % | 17,412 | 1.6 | % | |||||||||
| Office | 3 | 534 | 0.5 | % | 7,404 | 0.6 | % | |||||||||
| Total 2027 | 360 | 7,939 | 8.3 | % | $ | 104,748 | 9.1 | % | ||||||||
| 2028 | ||||||||||||||||
| Retail | 199 | 3,147 | 3.3 | % | $ | 41,273 | 3.6 | % | ||||||||
| Restaurant | 91 | 322 | 0.3 | % | 11,356 | 0.9 | % | |||||||||
| Industrial | 19 | 2,166 | 2.3 | % | 14,524 | 1.3 | % | |||||||||
| Office | 8 | 640 | 0.7 | % | 10,148 | 0.9 | % | |||||||||
| Total 2028 | 317 | 6,275 | 6.6 | % | $ | 77,301 | 6.7 | % | ||||||||
| Thereafter | ||||||||||||||||
| Retail | 396 | 12,354 | 13.0 | % | $ | 188,668 | 16.4 | % | ||||||||
| Restaurant | 345 | 3,601 | 3.8 | % | 136,571 | 11.9 | % | |||||||||
| Industrial | 18 | 9,296 | 9.8 | % | 52,841 | 4.6 | % | |||||||||
| Office | 5 | 763 | 0.8 | % | 17,584 | 1.5 | % | |||||||||
Other (1) | 2 | — | — | % | 415 | — | % | |||||||||
| Total Thereafter | 766 | 26,014 | 27.4 | % | $ | 396,079 | 34.4 | % | ||||||||
| Total Remaining Lease Expirations | 3,246 | 93,846 | 98.8 | % | $ | 1,151,112 | 100.0 | % | ||||||||
___________________________________
| (1) | Includes billboards, land and parking lots. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 33
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Summary (unaudited) |
Rent Escalations
(square feet and dollars in thousands)
| Number of Leases | Leased Square Feet | Leased Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | ||||||||||||
| Fixed dollar or percent increase | 2,075 | 64,708 | 68.1 | % | $ | 809,377 | 70.3 | % | ||||||||
| CPI | 188 | 8,383 | 8.8 | % | 115,182 | 10.0 | % | |||||||||
| Flat | 983 | 20,755 | 21.9 | % | 226,553 | 19.7 | % | |||||||||
| Total | 3,246 | 93,846 | 98.8 | % | $ | 1,151,112 | 100.0 | % | ||||||||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 34
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Lease Summary (cont.) (unaudited) |
Tenant Expense Obligation
(square feet and dollars in thousands)
| Number of Leases | Leased Square Feet | Leased Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | ||||||||||||
| NNN | 2,288 | 56,467 | 59.5 | % | $ | 718,662 | 62.4 | % | ||||||||
| NN | 928 | 36,196 | 38.1 | % | 403,582 | 35.1 | % | |||||||||
Other (1) | 30 | 1,183 | 1.2 | % | 28,868 | 2.5 | % | |||||||||
| Total | 3,246 | 93,846 | 98.8 | % | $ | 1,151,112 | 100.0 | % | ||||||||
| (1) | Includes gross, modified gross and billboard. |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 35
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Property Type Diversification and Occupancy Costs (unaudited, square feet and dollars in thousands) |
Property Type Diversification
| Property Type | Number of Properties (1) | Rentable Square Feet | Square Feet as a % of Total Portfolio | Annualized Rental Income | Annualized Rental Income as a % of Total Portfolio | |||||||||||
Retail (1) | 2,112 | 34,700 | 36.5 | % | $ | 483,046 | 42.0 | % | ||||||||
| Restaurant | 1,636 | 7,688 | 8.1 | % | 244,309 | 21.2 | % | |||||||||
| Industrial | 153 | 39,815 | 41.9 | % | 200,692 | 17.5 | % | |||||||||
| Office | 83 | 12,750 | 13.5 | % | 222,491 | 19.3 | % | |||||||||
Other (2) | 10 | — | — | % | 574 | — | % | |||||||||
| Total | 3,994 | 94,953 | 100.0 | % | $ | 1,151,112 | 100.0 | % | ||||||||
(1) Includes 10 anchored shopping centers, representing 1.7% of Annualized Rental Income.
(2) Includes billboards, construction in progress, land and parking lots.
Occupancy Costs
The following tables show occupancy costs for retail and restaurant properties calculated as rent per the lease terms, divided by property level sales for the year ended December 31, 2017.
| Retail | Number of Properties (1) | 2017 Occupancy Cost | Target Percentage | |||||
| Automotive | 75 | 9.9 | % | 8.0 - 10.0% | ||||
| Discount | 286 | 6.9 | % | 6.0 - 8.0% | ||||
| Grocery & Supermarket | 37 | 3.0 | % | 2.0 - 4.0% | ||||
| Home & Garden | 3 | 2.0 | % | 2.0 - 4.0% | ||||
| Pharmacy | 101 | 4.9 | % | 4.0 - 6.0% | ||||
| Other | 25 | 3.5 | % | N/A | ||||
| Restaurant | Number of Properties (1) | 2017 Occupancy Cost | Target Percentage | |||||
| Casual Dining | 440 | 6.7 | % | 6.75 - 8.0% | ||||
| Quick Service | 562 | 7.4 | % | 7.5 - 8.5% | ||||
__________________________________
| (1) | Property level sales data was collected for 79.6% of retail and restaurant properties required to provide sales reports (excluding dark properties), representing 41.1% of retail and restaurant properties owned for the entirety of the previous calendar year (percentages based on property count). |
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 36
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification by Property Type: Retail (unaudited, percentages based on Annualized Rental Income of the retail properties) |
____________________________________________________
______________________________________________________
_________________________________________________
_________________________________________________Statistics (square feet in thousands) | ||||
| Operating Properties | 2,112 | |||
| Rentable Square Feet | 34,700 | |||
| Economic Occupancy Rate | 98.4 | % | ||
| Weighted Average Remaining Lease Term | 9.2 | |||
| Investment-Grade Tenants | 52.2 | % | ||
| Flat leases | 31.5 | % | ||
| NNN leases | 66.2 | % | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 37
| ||
| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification by Property Type: Restaurants (unaudited, percentages based on Annualized Rental Income of the restaurant properties) |
____________________________________________________
______________________________________________________
_________________________________________________
_________________________________________________Statistics (square feet in thousands) | ||||
| Operating Properties | 1,636 | |||
| Rentable Square Feet | 7,688 | |||
| Economic Occupancy Rate | 96.2 | % | ||
| Weighted Average Remaining Lease Term | 12.0 | |||
| Investment-Grade Tenants | 3.1 | % | ||
| Flat leases | 7.8 | % | ||
| NNN leases | 99.5 | % | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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Diversification by Property Type: Industrial (unaudited, percentages based on Annualized Rental Income of the industrial properties) |
____________________________________________________
______________________________________________________
_________________________________________________
_________________________________________________Statistics (square feet in thousands) | ||||
| Operating Properties | 153 | |||
| Rentable Square Feet | 39,815 | |||
| Economic Occupancy Rate | 100.0 | % | ||
| Weighted Average Remaining Lease Term | 8.3 | |||
| Investment-Grade Tenants | 51.7 | % | ||
| Flat leases | 16.7 | % | ||
| NNN leases | 53.6 | % | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
Diversification by Property Type: Office (unaudited, percentages based on Annualized Rental Income of the office properties) |
____________________________________________________
______________________________________________________
_________________________________________________
_________________________________________________Statistics (square feet in thousands) | ||||
| Operating Properties | 83 | |||
| Rentable Square Feet | 12,750 | |||
| Economic Occupancy Rate | 98.0 | % | ||
| Weighted Average Remaining Lease Term | 5.2 | |||
| Investment-Grade Tenants | 53.3 | % | ||
| Flat leases | 9.7 | % | ||
| NNN leases | 21.3 | % | ||
See the Definitions section for a description of the Company's non-GAAP and operating metrics.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
| Definitions |
Annualized Rental Income is rental revenue under our leases on Operating Properties on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any bad debt allowances and any contingent rent, such as percentage rent, and operating expense reimbursements. Management uses Annualized Rental Income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized Rental Income is not indicative of future performance.
Cash Cap Rate equals the estimated future 12-month Cash NOI, excluding any rent concessions or abatements, at acquisition or disposition divided by the purchase or sale price. For properties acquired or disposed of as a portfolio, the amount presented represents the portfolio cash cap rate. For development projects, Cash Cap Rate equals the estimated future 12-month NOI from the date rent commences divided by the total estimated investment. For certain properties, the Cash Cap Rate is equal to future 12-month Contract Rental Revenue, excluding any rent concessions or abatements, divided by the purchase price or sale price, as the majority of the Company's properties are subject to Triple Net Leases.
Contract Rental Revenue includes minimum rent, percentage rent and other contingent consideration, and rental revenue from parking and storage space and excludes GAAP adjustments, such as straight-line rent and amortization of above-market lease assets and below-market lease liabilities. Contract Rental Revenue includes such revenues from properties subject to a direct financing lease, and omits the Contract Rental Revenue related to Excluded Properties. The Company believes that Contract Rental Revenue is a useful non-GAAP supplemental measure to investors and analysts for assessing performance. However, Contract Rental Revenue should not be considered as an alternative to revenue, as computed in accordance with GAAP, or as an indicator of the Company's financial performance. Contract Rental Revenue may not be comparable to similarly titled measures of other companies.
The following table shows the calculation of Contract Rental Revenue for the three months ended December 31, 2018 and 2017 (dollar amounts in thousands):
| Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Rental revenue - as reported | $ | 1,257,867 | $ | 1,252,285 | $ | 313,263 | $ | 316,599 | |||||||
| Adjustments: | |||||||||||||||
| Operating expense reimbursements | (99,732 | ) | (98,138 | ) | (25,433 | ) | (26,035 | ) | |||||||
| Straight-line rent | (39,773 | ) | (46,968 | ) | (8,605 | ) | (11,850 | ) | |||||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 4,178 | 5,366 | 945 | 1,148 | |||||||||||
| Net direct financing lease adjustments | 2,023 | 2,093 | 498 | 517 | |||||||||||
| Other non-contract rental revenue | (1,813 | ) | (3,027 | ) | (349 | ) | (2,484 | ) | |||||||
| Contract Rental Revenue - Excluded Properties | — | (1,647 | ) | — | (53 | ) | |||||||||
| Contract Rental Revenue | $ | 1,122,750 | $ | 1,109,964 | $ | 280,319 | $ | 277,842 | |||||||
CPI is a lease in which base rent is adjusted based on changes in a consumer price index.
Direct Financing Lease is a lease that requires specific treatment due to the significance of the lease payments from the inception of the lease compared to the fair value of the property, term of the lease, a transfer of ownership, or a bargain purchase option. These leases are recorded as a net asset on the balance sheet. The amount booked is calculated as the fair value of the remaining lease payments on the leases and the estimated fair value of any expected residual property value at the end of the lease term.
Double Net Lease ("NN") is a lease under which the tenant agrees to pay all operating expenses associated with the property (e.g., real estate taxes, insurance, maintenance), but excludes some or all major repairs (e.g., roof, structure, parking lot).
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| Definitions (cont.) |
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre") and Normalized EBITDA
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("Nareit"), an industry trade group, has promulgated a supplemental performance measure known as Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate. Nareit defines EBITDAre as net income or loss computed in accordance with GAAP, adjusted for interest expense, income tax expense (benefit), depreciation and amortization, impairment write-downs on real estate, gains or losses from disposition of property and our pro rata share of EBITDAre adjustments related to unconsolidated partnerships and joint ventures. We calculated EBITDAre in accordance with Nareit's definition described above.
In addition to EBITDAre, we use Normalized EBITDA as a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Normalized EBITDA, as defined by the Company, represents EBITDAre, modified to exclude non-routine items such as acquisition-related expenses, litigation and other non-routine costs, net of insurance recoveries, held for sale loss on discontinued operations, net revenue or expense earned or incurred that is related to the services agreement we entered into with Cole Capital on February 1, 2018, gains or losses on sale of investment securities or mortgage notes receivable, legal settlements and insurance recoveries not in the ordinary course of business and payments received on fully reserved loan receivables. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rental revenue, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, write-off of program development costs, and amortization of intangibles, above-market lease assets and below-market lease liabilities. Normalized EBITDA omits the Normalized EBITDA impact of Excluded Properties. Management believes that excluding these costs from EBITDAre provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. Therefore, EBITDA, EBITDAre and Normalized EBITDA should not be considered as an alternative to net income, as computed in accordance with GAAP. The Company uses EBITDA, EBITDAre and Normalized EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the effectiveness of the Company's strategies. Normalized EBITDA may not be comparable to similarly titled measures of other companies.
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| Definitions (cont.) |
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Net (loss) income | $ | (88,030 | ) | $ | 32,378 | |||
| Adjustments: | ||||||||
| Interest expense | 280,887 | 289,766 | ||||||
| Depreciation and amortization | 640,618 | 721,292 | ||||||
| Provision for income taxes | 3,006 | 20,721 | ||||||
| Proportionate share of adjustments for unconsolidated entities | 1,448 | 3,870 | ||||||
| EBITDA | $ | 837,929 | $ | 1,068,027 | ||||
| Gain on disposition of real estate assets, net | (95,034 | ) | (61,536 | ) | ||||
| Impairment of real estate | 54,647 | 50,548 | ||||||
| Proportionate share of adjustments for unconsolidated entities | — | (1,970 | ) | |||||
| EBITDAre | $ | 797,542 | $ | 1,055,069 | ||||
| Held for sale loss on discontinued operations | 1,815 | 20,027 | ||||||
| Payments received on fully reserved loans | (4,792 | ) | — | |||||
| Acquisition related expenses | 3,632 | 3,402 | ||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 290,309 | 51,762 | ||||||
| Gain on investment securities and mortgage notes receivable | (4,092 | ) | (65 | ) | ||||
| Gain on derivative instruments, net | (355 | ) | (2,976 | ) | ||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 4,178 | 5,366 | ||||||
| Gain on extinguishment and forgiveness of debt, net | (5,360 | ) | (18,373 | ) | ||||
| Net direct financing lease adjustments | 2,023 | 2,093 | ||||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (39,723 | ) | (44,903 | ) | ||||
| Program development costs write-off | — | 1,453 | ||||||
| Other amortization and non-cash charges | (2,150 | ) | 1,990 | |||||
| Proportionate share of adjustments for unconsolidated entities | 18 | 151 | ||||||
| Adjustment for Excluded Properties | 35 | 1,203 | ||||||
| Normalized EBITDA | $ | 1,043,080 | $ | 1,076,199 | ||||
Economic Occupancy Rate equals the sum of square feet leased (including month-to-month agreements) divided by Rentable Square Feet.
Enterprise Value equals the sum of the Implied Equity Market Capitalization, preferred stock and Net Debt.
Excluded Properties are properties for which (i) the related mortgage loan is in default, and (ii) management decides to transfer the properties to the lender in connection with settling the mortgage note obligation.
Excluded Properties during the year ended December 31, 2017 were two vacant office properties and five industrial properties, two of which were vacant, comprising an aggregate2.1 million square feet with aggregate Principal Outstanding of $116.6 million. At December 31, 2017, the Excluded Property was one vacant industrial property, comprising 307,725 square feet with Principal Outstanding of $16.2 million. At March 31, 2018, June 30, 2018, September, 30, 2018, and December 31, 2018 there were no Excluded Properties.
Fixed Charge Coverage Ratio is the sum of (i) Interest Expense, excluding non-cash amortization, (ii) secured debt principal amortization on Adjusted Principal Outstanding and (iii) dividends attributable to preferred shares divided by Normalized EBITDA. Management believes that Fixed Charge Coverage Ratio is a useful supplemental measure of our ability to satisfy fixed financing obligations.
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| Definitions (cont.) |
Flat Lease is a lease that requires equal rent payments, with no increases, throughout the initial term of the lease agreement. A Flat Lease may include a period of free rent at the beginning or end of the lease.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
Due to certain unique operating characteristics of real estate companies, as discussed below, Nareit has promulgated a supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income or loss as determined under GAAP.
Nareit defines FFO as net income or loss computed in accordance with GAAP adjusted for gains or losses from disposition of property, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments related to unconsolidated partnerships and joint ventures. We calculated FFO in accordance with Nareit's definition described above.
In addition to FFO, we use AFFO as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition-related expenses, litigation, merger and other non-routine costs, net of insurance recoveries, held for sale loss on discontinued operations, net revenue or expense earned or incurred that is related to the services agreement we entered into with Cole Capital on February 1, 2018, gains or losses on sale of investment securities or mortgage notes receivable, legal settlements and insurance recoveries not in the ordinary course of business and payments received on fully reserved loan receivables. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rent, net of bad debt expense related to straight line rent, net direct financing lease adjustments, gains or losses on derivatives, reserves for loan loss, gains or losses on the extinguishment or forgiveness of debt, non-current portion of the tax benefit or expense, equity-based compensation and amortization of intangible assets, deferred financing costs, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities. We omit the impact of the Excluded Properties and related non-recourse mortgage notes from FFO to calculate AFFO. Management believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. AFFO allows for a comparison of the performance of our operations with other publicly-traded REITs, as AFFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as defined by GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.
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| Q4 2018 SUPPLEMENTAL INFORMATION | ||
| Definitions (cont.) |
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Net (loss) income | $ | (88,030 | ) | $ | 32,378 | |||
| Dividends on non-convertible preferred stock | (71,892 | ) | (71,892 | ) | ||||
| Gain on disposition of real estate assets and interest in joint venture, net | (95,034 | ) | (61,536 | ) | ||||
| Depreciation and amortization of real estate assets | 637,097 | 703,133 | ||||||
| Impairment of real estate | 54,647 | 50,548 | ||||||
| Proportionate share of adjustments for unconsolidated entities | 1,278 | 477 | ||||||
| FFO attributable to common stockholders and limited partners | $ | 438,066 | $ | 653,108 | ||||
| Acquisition-related expenses | 3,632 | 3,402 | ||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 290,309 | 51,762 | ||||||
| Loss on disposition and held for sale loss on discontinued operations | 1,815 | 20,027 | ||||||
| Payments received on fully reserved loans | (4,792 | ) | — | |||||
| Gain on investment securities and mortgage notes receivable | (4,092 | ) | (65 | ) | ||||
| Gain on derivative instruments, net | (355 | ) | (2,976 | ) | ||||
| Amortization of premiums and discounts on debt and investments, net | (3,486 | ) | (4,616 | ) | ||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 4,178 | 5,366 | ||||||
| Net direct financing lease adjustments | 2,023 | 2,093 | ||||||
| Amortization and write-off of deferred financing costs | 19,166 | 24,536 | ||||||
| Amortization of management contracts | — | 14,514 | ||||||
| Deferred and other tax (benefit) expense | (1,855 | ) | 8,671 | |||||
| Gain on extinguishment and forgiveness of debt, net | (5,360 | ) | (18,373 | ) | ||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (39,723 | ) | (44,903 | ) | ||||
| Equity-based compensation | 12,417 | 16,751 | ||||||
| Other amortization and non-cash charges | 1,446 | 2,566 | ||||||
| Proportionate share of adjustments for unconsolidated entities | 36 | 378 | ||||||
| Adjustment for Excluded Properties | 465 | 6,528 | ||||||
| AFFO attributable to common stockholders and limited partners | $ | 713,890 | $ | 738,769 | ||||
GAAP is an abbreviation for generally accepted accounting principles in the United States.
Gross Lease is a lease under which the landlord is responsible for all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Gross Real Estate Investments represent total gross real estate and related assets of Operating Properties, including net investments in unconsolidated entities and equity investments in the Cole REITs, investment in direct financing leases, investment securities backed by real estate and mortgage notes receivable, net of gross intangible lease liabilities. We believe that the presentation of Gross Real Estate Investments, which shows our total investments in real estate and related assets, in connection with Net Debt provides useful information to investors to assess our overall financial flexibility, capital structure and leverage. Gross Real Estate Investments should not be considered as an alternative to the Company's real estate investments balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
The following table shows a reconciliation of Gross Real Estate Investments to the amounts presented in accordance with GAAP on the balance sheet for the periods presented (dollar amounts in thousands):
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| Definitions (cont.) |
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Total real estate investments, at cost - as reported | $ | 15,604,839 | $ | 15,519,689 | $ | 15,597,735 | $ | 15,659,727 | $ | 15,615,375 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Investment in unconsolidated entities | 35,289 | 34,293 | 33,972 | 33,736 | 39,520 | |||||||||||||||
| Investment in Cole REITs | 7,844 | 7,844 | 7,844 | 7,844 | 3,264 | |||||||||||||||
| Gross assets held for sale | 3,020 | 30,014 | 35,819 | 17,617 | 55,839 | |||||||||||||||
| Investment in direct financing leases, net | 13,254 | 14,082 | 16,560 | 17,476 | 19,539 | |||||||||||||||
| Investment securities, at fair value | — | 26,282 | 35,489 | 35,741 | 40,974 | |||||||||||||||
| Mortgage notes receivable, net | 10,164 | 18,757 | 19,855 | 20,072 | 20,294 | |||||||||||||||
| Gross below market leases | (263,384 | ) | (265,036 | ) | (270,176 | ) | (272,441 | ) | (272,467 | ) | ||||||||||
| Gross Real Estate Investments - Excluded Properties | — | — | — | (10,655 | ) | (10,655 | ) | |||||||||||||
| Gross Real Estate Investments | $ | 15,411,026 | $ | 15,385,925 | $ | 15,477,098 | $ | 15,509,117 | $ | 15,511,683 | ||||||||||
Implied Equity Market Capitalization equals shares of common stock outstanding, including restricted stock awards, multiplied by the closing sale price of the Company's stock as reported on the New York Stock Exchange.
Industry is derived from the North American Industry Classification System, NAICS, which is a system used by federal statistical agencies to classify business establishments, for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.
Interest Coverage Ratio equals Normalized EBITDA divided by Interest Expense, excluding non-cash amortization. Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations.
Interest Expense, excluding non-cash amortization is a non-GAAP measure that represents interest expense incurred on the outstanding principal balance of our debt. This measure excludes (i) the amortization of deferred financing costs, premiums and discounts, which is included in interest expense in accordance with GAAP, and (ii)the impact of Excluded Properties and related non-recourse mortgage notes. We believe that the presentation of Interest Expense, excluding non-cash amortization, which shows the interest expense on our contractual debt obligations, provides useful information to investors to assess our overall solvency and financial flexibility. Interest Expense, excluding non-cash amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.
The following table shows a reconciliation of Interest Expense, excluding non-cash amortization to interest expense presented in accordance with GAAP on the statements of operations for the periods presented (dollar amounts in thousands):
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Interest expense - as reported | $ | (70,832 | ) | $ | (69,310 | ) | $ | (70,320 | ) | $ | (70,425 | ) | $ | (70,694 | ) | |||||
| Less Adjustments: | ||||||||||||||||||||
| Amortization of deferred financing costs and other non-cash charges | (3,813 | ) | (4,003 | ) | (5,705 | ) | (5,927 | ) | (5,886 | ) | ||||||||||
| Amortization of net premiums | 1,295 | 1,138 | 634 | 626 | 681 | |||||||||||||||
| Interest Expense, excluding non-cash amortization - Excluded Properties | — | — | (47 | ) | (383 | ) | (392 | ) | ||||||||||||
| Interest Expense, excluding non-cash amortization | $ | (68,314 | ) | $ | (66,445 | ) | $ | (65,202 | ) | $ | (64,741 | ) | $ | (65,097 | ) | |||||
Investment-Grade Tenants are those with a Standard & Poor’s credit rating of BBB- or higher or a Moody’s credit rating of Baa3 or higher. The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.
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| Definitions (cont.) |
Metropolitan Statistical Area (MSA) is a large metropolitan area represented by a large group of zip codes, as defined by Real Capital Analytics.
Modified Gross Lease is a lease under which the landlord is responsible for most expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs), but passes through some operating expenses to the tenant.
Net Debt is a non-GAAP measure used to show the Company's Adjusted Principal Outstanding, less all cash and cash equivalents, including those related to discontinued operations. We believe that the presentation of Net Debt provides useful information to investors because our management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments. We believe that the presentation of Net Debt Leverage Ratio provides useful information to investors because our management reviews Net Debt Leverage Ratio as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the respective quarter Normalized EBITDA multiplied by four. We believe that the presentation of Net Debt to Normalized EBITDA Annualized provides useful information to investors because our management reviews Net Debt to Normalized EBITDA Annualized as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Operating Income ("NOI") and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents rental and other property income and tenant reimbursement income less property operating expenses. NOI excludes impairment, depreciation and amortization, general and administrative expenses, acquisition-related expenses and litigation and other non-routine costs. Cash NOI excludes the impact of certain GAAP adjustments to rental revenue, such as straight-line rent adjustments and amortization of above-market intangible lease assets and below-market lease intangible liabilities. Cash NOI omits the Cash NOI impact of Excluded Properties. It is management's view that NOI and Cash NOI provide investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. NOI and Cash NOI should not be considered as an alternative to operating income. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.
The following table shows the calculation of NOI and Cash NOI for the periods presented (dollar amounts in thousands):
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Rental revenue | $ | 313,263 | $ | 313,866 | $ | 315,664 | $ | 315,074 | $ | 316,599 | ||||||||||
| Less total operating expenses | (246,079 | ) | (362,047 | ) | (331,618 | ) | (240,510 | ) | (257,940 | ) | ||||||||||
| Acquisition-related expenses | 1,136 | 810 | 909 | 777 | 1,120 | |||||||||||||||
| Litigation, merger and other non-routine costs, net of insurance recoveries | 23,541 | 138,595 | 107,087 | 21,740 | 11,167 | |||||||||||||||
| General and administrative | 17,220 | 15,186 | 16,287 | 15,240 | 18,274 | |||||||||||||||
| Depreciation and amortization | 153,050 | 157,181 | 164,235 | 166,152 | 175,259 | |||||||||||||||
| Impairment of real estate | 18,565 | 18,382 | 11,664 | 6,036 | 19,691 | |||||||||||||||
| NOI | 280,696 | 281,973 | 284,228 | 284,509 | 284,170 | |||||||||||||||
| Straight-line rent, net of bad debt expense related to straight-line rent | (8,341 | ) | (8,720 | ) | (11,402 | ) | (11,260 | ) | (11,281 | ) | ||||||||||
| Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities | 945 | 1,058 | 688 | 1,487 | 1,148 | |||||||||||||||
| Net direct financing lease adjustments | 498 | 483 | 503 | 539 | 517 | |||||||||||||||
| Cash NOI - Excluded Properties | — | — | 22 | 40 | 172 | |||||||||||||||
| Cash NOI | $ | 273,798 | $ | 274,794 | $ | 274,039 | $ | 275,315 | $ | 274,726 | ||||||||||
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| Definitions (cont.) |
Normalized Cash NOI equals our Cash NOI for our most recently reported quarter and eliminates the Cash NOI for properties acquired or developments completed during the most recently reported quarter and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. Additionally, Normalized Cash NOI eliminates the Cash NOI contributed by properties disposed of during the most recently reported period. It is management's view that Normalized Cash NOI provides investors relevant and useful information because it reflects only the Cash NOI of properties owned as of the most recent reporting period. Normalized Cash NOI should not be considered as an alternative to operating income.
Normalized EBITDA Annualized equals Normalized EBITDA, for the respective quarter, multiplied by four.
Operating Properties refers to all properties owned by the Company except Excluded Properties as of the reporting date.
Principal Outstanding and Adjusted Principal Outstanding are non-GAAP measures that represent the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. Adjusted Principal Outstanding omits the outstanding principal balance of mortgage notes secured by Excluded Properties. We believe that the presentation of Principal Outstanding and Adjusted Principal Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Principal Outstanding and Adjusted Principal Outstanding should not be considered as alternatives to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
The following table shows a reconciliation of Principal Outstanding and Adjusted Principal Outstanding to the amounts presented in accordance with GAAP on the balance sheet for the periods presented (dollar amounts in thousands):
| December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
| Mortgage notes payable, net | $ | 1,922,657 | $ | 1,936,586 | $ | 2,031,171 | $ | 2,078,593 | $ | 2,082,692 | ||||||||||
| Corporate bonds, net | 3,368,609 | 2,825,541 | 2,824,176 | 2,822,830 | 2,821,494 | |||||||||||||||
| Convertible debt, net | 394,883 | 393,961 | 989,901 | 987,071 | 984,258 | |||||||||||||||
| Credit facility, net | 401,773 | 793,000 | 195,000 | 120,000 | 185,000 | |||||||||||||||
| Total debt - as reported | 6,087,922 | 5,949,088 | 6,040,248 | 6,008,494 | 6,073,444 | |||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Deferred financing costs, net | 42,763 | 39,085 | 41,672 | 44,969 | 48,232 | |||||||||||||||
| Net premiums | (8,053 | ) | (13,066 | ) | (14,327 | ) | (15,008 | ) | (15,638 | ) | ||||||||||
| Principal Outstanding | 6,122,632 | 5,975,107 | 6,067,593 | 6,038,455 | 6,106,038 | |||||||||||||||
| Principal Outstanding - Excluded Properties | — | — | — | (16,200 | ) | (16,200 | ) | |||||||||||||
| Adjusted Principal Outstanding | $ | 6,122,632 | $ | 5,975,107 | $ | 6,067,593 | $ | 6,022,255 | $ | 6,089,838 | ||||||||||
Property Operating Expense includes reimbursable and non-reimbursable costs to operate a property, including real estate taxes, utilities, insurance, repairs, maintenance, legal, property management fees, etc.
Rentable Square Feet is leasable square feet of Operating Properties.
Triple Net Lease ("NNN") is a lease under which the tenant agrees to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is a useful supplemental measure of our overall liquidity and leverage.
Weighted Average Remaining Lease Term is the number of years remaining on each respective lease, weighted based on Annualized Rental Income of Operating Properties.
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