Exhibit 99.1
STORE Capital Announces Second Quarter 2016 Operating Results
Raises 2016 Acquisition Volume Guidance; Narrows 2016 AFFO Per Share Guidance Range
SCOTTSDALE, Ariz., August 4, 2016 — STORE Capital Corporation (NYSE: STOR), an internally managed net-lease real estate investment trust (REIT) that invests in Single Tenant Operational Real Estate, today announced operating results for the second quarter and six months ended June 30, 2016.
Highlights
For the quarter ended June 30, 2016:
· Total revenues of $92.0 million
· Net income per share of common stock of $0.21 (basic and diluted)
· AFFO of $59.0 million
· AFFO of $0.40 per common share (basic and diluted)
· Declared a regular quarterly cash dividend per common share of $0.27
· Invested $356.1 million in 115 properties at an initial weighted average cap rate of 7.8%
· In April 2016, closed second offering of investment-grade unsecured ten-year term notes in an aggregate principal amount of $200 million, closed a $100 million five-year unsecured bank term loan and expanded unsecured credit facility to $500 million
· Raised net equity proceeds of $304.6 million in a follow-on offering of 12.4 million common shares
For the six months ended June 30, 2016:
· Total revenues of $177.2 million
· Net income per share of common stock of $0.38 (basic and diluted)
· AFFO of $114.9 million
· AFFO of $0.80 per common share (basic and diluted)
· Declared regular cash dividends per common share aggregating $0.54
· Invested $640.7 million in 188 properties at an initial weighted average cap rate of 7.9%
Management Commentary
“We were really happy with our second quarter, which saw investment activity continue at a pace in excess of $100 million per month,” said Christopher H. Volk, President and Chief Executive Officer of STORE Capital. “We grew our customer base to over 330 individual tenants and expanded our profit center assets by five new industries, serving to reinforce our diversification across customers, concepts and geographies. At the same time, we took deliberate steps to maintain an even more conservative leverage profile, raising more than $300 million in new equity in May.
“Today we are raising our projected 2016 annual real estate acquisition volume, net of property sales, to $1 billion from $900 million based on acquisitions funded year-to-date. We are also narrowing our 2016 AFFO guidance per share range to $1.61 to $1.63, from $1.60 to $1.63. We continued apace with good progress in the first half of the year and are optimistic about our 2016 prospects and our ability to generate continued growth, realize greater capital efficiency and deliver returns to our stockholders.”
Financial Results
Total Revenues
Total revenues were $92.0 million for the second quarter of 2016, an increase of 33.5% from $68.9 million for the second quarter of 2015.
Total revenues for the first half of 2016 were $177.2 million, an increase of 35.9% from $130.4 million for the first half of 2015. The increase was driven primarily by the growth in the size of STORE Capital’s real estate investment portfolio, which grew from $3.5 billion in gross investment amount representing 1,175 property locations at June 30, 2015 to $4.6 billion in gross investment amount representing 1,508 property locations at June 30, 2016.
Net Income
Net income increased to $30.2 million, or $0.21 per basic and diluted share, for the second quarter of 2016 compared to $19.6 million in net income, or $0.17 per basic and diluted share, for the second quarter of 2015. Net income for the second quarter of 2016 includes a $3.1 million gain on the sale of four properties; in comparison, the second quarter of 2015 included a $1.2 million gain on the sale of four properties.
Net income for the six months ended June 30, 2016 was $55.0 million, or $0.38 per basic and diluted share compared to $36.7 million, or $0.31 per basic and diluted share, for the six months ended June 30, 2015. The Company reported an aggregate gain of $2.8 million on the sale of five properties during the first half of 2016 versus $1.2 million in gains on the sale of four properties during the same period in 2015.
Adjusted Funds from Operations (AFFO)
AFFO increased 38.0% to $59.0 million, or $0.40 per basic and diluted share, for the second quarter of 2016, compared to AFFO of $42.8 million, or $0.36 per basic and diluted share, for the second quarter of 2015. The increase in AFFO between years was primarily driven by additional rental revenues and interest income generated by the growth in the Company’s real estate investment portfolio.
AFFO for the six months ended June 30, 2016 was $114.9 million, or $0.80 per basic and diluted share, compared to $82.3 million, or $0.71 per basic and diluted share, for the six months ended June 30, 2015.
Dividend Information
As previously announced, STORE Capital declared a regular quarterly cash dividend per common share of $0.27 for the second quarter ended June 30, 2016. This dividend, totaling $41.4 million, was paid on July 15, 2016 to stockholders of record on June 30, 2016.
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Real Estate Portfolio Highlights
Investment Activity
The Company originated $356.1 million of gross investments representing 115 property locations during the second quarter of 2016. These investments had an initial weighted average cap rate of 7.8%. Total investment activity for the first half of 2016 was $640.7 million representing 188 property locations with an initial weighted average cap rate of 7.9%. The Company defines “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property.
Portfolio
At June 30, 2016, STORE Capital’s real estate portfolio totaled $4.6 billion representing 1,508 property locations, substantially all of which are profit centers for the Company’s customers. Approximately 95% of the portfolio represents commercial real estate properties subject to long-term leases, 5% represents mortgage loans and direct financing receivables primarily on commercial real estate buildings (located on land the Company owns and leases to its customers) and a nominal amount represents other loans receivable secured by the tenants’ other assets. As of June 30, 2016, the portfolio’s annualized base rent and interest (based on rates in effect on June 30, 2016 for all lease and loan contracts) totaled $382.1 million. The weighted average non-cancelable remaining term of the leases at June 30, 2016 was approximately 14 years.
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The Company’s customers operate their businesses across more than 360 brand names, or concepts, and the largest single concept represented approximately 2.9% of the Company’s annualized base rent and interest as of June 30, 2016.
Portfolio At A Glance — As of June 30, 2016
Investment property locations | | 1,508 |
Customers | | 331 |
Industries in which customers operate | | 95 |
States | | 48 |
Proportion of portfolio from direct origination | | ~75% |
% of investment portfolio subject to STORE preferred contract terms* | | 90% |
Weighted average annual lease escalation(1) | | 1.7% |
Weighted average remaining lease contract term | | ~14 years |
Occupancy(2) | | 99.8% |
# of properties not currently operating but subject to a lease(3) | | 7 |
# of investment locations subject to a ground lease | | 15 |
% of investment portfolio subject to NNN leases* | | 97% |
% of investment portfolio subject to master leases*(4) | | 80% |
Average investment amount/replacement cost (new)(5) | | 82% |
% of investment locations with unit-level financial reporting requirements | | 97% |
Median unit fixed charge coverage ratio (FCCR)/4-Wall coverage ratio(6) | | 2.15x/2.63x |
Proportion of investment contracts rated investment grade(7) | | ~75% |
* Based on annualized base rent and interest.
(1) Represents the weighted average annual escalation rate of the entire portfolio as if all escalations occurred annually. For escalations based on a formula including CPI, assumes the stated fixed percentage in the contract or assumes 1.5% if no fixed percentage is in the contract. For contracts with no escalations remaining in the current lease term, assumes the escalation in the extension term. Calculation excludes contracts representing less than 0.3% of annualized base rent and interest where there are no further escalations remaining in the current lease term and there are no extension options.
(2) The Company defines occupancy as a property being subject to a lease or loan contract. As of June 30, 2016, three of the Company’s properties were vacant and not subject to a contract.
(3) Represents the number of the Company’s investment locations that have been closed by the tenant but remain subject to a lease.
(4) Percentage of investment portfolio in multiple properties with a single customer subject to master leases. Based on annualized base rent and interest, 82% of the investment portfolio involves multiple properties with a single customer, whether or not subject to a master lease.
(5) Represents the ratio of purchase price to replacement cost (new) at acquisition.
(6) STORE Capital calculates a unit’s FCCR generally as the ratio of (i) the unit’s EBITDAR, less a standardized corporate overhead expense based on estimated industry standards, to (ii) the unit’s total fixed charges, which are its lease expense, interest expense and scheduled principal payments on indebtedness. The 4-Wall coverage ratio refers to a unit’s FCCR before taking into account standardized corporate overhead expense.
(7) Represents the percentage of the Company’s contracts that have a STORE Score that is investment grade. The Company measures the credit quality of its portfolio on a contract-by-contract basis using the STORE Score, which is a risk measure reflective of both the credit risk of its tenants and the profitability of the operations at the properties. As of June 30, 2016, STORE Capital’s tenants had a median tenant credit profile of approximately ‘Ba1’ as measured by Moody’s Analytics RiskCalc rating scale. Considering the profitability of the operations at each of its properties and STORE’s assessment of the likelihood that each of the tenants will choose to continue to operate at the properties in the event of their insolvency, the credit quality of its contracts, or STORE Score, is enhanced to a median of ‘Baa1’.
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Capital Transactions
During the second quarter, the Company completed a public offering of 12.4 million shares of its common stock sold at a price of $25.60 per share. The offering generated net proceeds to the Company of $304.6 million. The net proceeds from the offering were used to repay amounts outstanding under the Company’s credit facility and to fund real estate acquisitions.
Between February 1, 2016 and April 1, 2016, STORE Holding Company, LLC (“STORE Holding”), the Company’s founding stockholder, which was directly and indirectly owned by certain investment funds managed by Oaktree Capital Management, L.P., completed three public offerings of the Company’s common stock. With the completion of the last offering on April 1, 2016, STORE Holding no longer holds any shares of STORE Capital’s common stock. The Company did not receive any proceeds from these sales of shares of common stock sold by STORE Holding. Pursuant to a registration rights agreement, the Company incurred approximately $0.8 million of expenses, primarily registration fees, legal and accounting costs, during the first quarter of 2016 on behalf of STORE Holding, the selling stockholder, related to its sale of all its holdings of STORE Capital common stock.
In April 2016, the Company incurred $300 million of additional indebtedness in the form of $200 million of unsecured, investment-grade rated 4.73% Senior Notes and a $100 million floating-rate, unsecured five-year term loan. Concurrent with the closing of the floating-rate loan, the Company entered into interest rate swaps that effectively convert the floating rate to a fixed rate. The weighted average term of these borrowings was eight years with a blended interest rate at closing of 4.1%. Also in April, the Company increased the total commitment under its unsecured credit facility to $500 million by accessing $100 million of availability under the accordion feature of that facility.
2016 AFFO Guidance
The Company is increasing its expected 2016 annual real estate acquisition volume, net of projected property sales, to approximately $1.0 billion and expects that 2016 AFFO per share will be in the range of $1.61 to $1.63. AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $0.73 to $0.74 per share, plus $0.78 to $0.79 per share of expected real estate depreciation and amortization, plus approximately $0.10 per share related to noncash items and real estate transaction costs. AFFO per share is sensitive to the timing and amount of real estate acquisitions and capital markets activities during the year, as well as to the spread achieved between the lease rates on new acquisitions and the interest rates on borrowings used to finance those acquisitions.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors will be held later today at 12:00 p.m. Eastern Time / 9:00 a.m. Scottsdale, Arizona Time, to discuss second quarter ended June 30, 2016 operating results and answer questions.
· Live conference call: 855-656-0920 (domestic) or 412-542-4168 (international)
· Conference call replay available through August 18, 2016: 877-344-7529 (domestic) or 412-317-0088 (international)
· Replay access code: 10088751
· Live and archived webcast: http://ir.storecapital.com/webcasts
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About STORE Capital
STORE Capital Corporation is an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is its target market and the inspiration for its name. STORE Capital is one of the largest and fastest growing net-lease REITs and owns a large, well-diversified portfolio that consists of investments in 1,508 property locations, substantially all of which are profit centers, in 48 states. Additional information about STORE Capital can be found on its website at www.storecapital.com.
Forward-Looking Statements
Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for STORE Capital’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. STORE Capital expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in STORE Capital’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.
Non-GAAP Financial Measures
FFO and AFFO
STORE Capital’s reported results are presented in accordance with U.S. generally accepted accounting principles, or GAAP. The Company also discloses Funds from Operations, or FFO, and Adjusted Funds from Operations, or AFFO, both of which are non-GAAP measures. Management believes these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or to cash flows from operations as reported on a statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
The Company computes FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income, excluding gains (or losses) from extraordinary items and sales of depreciable property, real estate impairment losses, and depreciation and amortization expense from real estate assets, including the pro rata share of such adjustments of unconsolidated subsidiaries.
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To derive AFFO, the Company modifies the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rents, amortization of deferred financing costs and stock-based compensation. In addition, in deriving AFFO, the Company excludes transaction costs associated with acquiring real estate subject to existing leases and certain other expenses not related to its ongoing operations.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among the Company’s peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude additional non-cash revenues and expenses such as straight-line rents, amortization of deferred financing costs and stock-based compensation as such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. Additionally, in deriving AFFO, the Company excludes transaction costs associated with acquiring real estate subject to existing leases. The Company views transaction costs to be a part of the investment in the real estate it acquires, similar to the treatment of acquisition and closing costs on sale-leaseback transactions, which are capitalized as a part of the investment in the asset. The Company believes that transaction costs are not an ongoing cost of the portfolio in place at the end of each reporting period and, for these reasons, the portion expensed is added back when computing AFFO. Similarly, in 2016 the Company excluded the offering expenses incurred on behalf of its selling stockholder, STORE Holding, when it exited all of its holdings in STORE Capital common stock, as those costs are not related to the Company’s ongoing operations. As a result, the Company believes AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, the Company discloses both FFO and AFFO and reconciles them to the most appropriate GAAP performance metric, which is net income. STORE Capital’s FFO and AFFO may not be comparable to similarly titled measures employed by other companies.
Media and Investor Contacts:
Financial Profiles, Inc.
Moira Conlon, 310-622-8220
Paige Hart, 310-622-8244
STORECapital@finprofiles.com
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STORE Capital Corporation
Condensed Consolidated Statements of Income
(In thousands, except share and per share data)
| | Three months ended
June 30, | | Six months ended
June 30, | |
| | 2016 | | 2015 | | 2016 | | 2015 | |
| | (unaudited) | | (unaudited) | |
Revenues: | | | | | | | | | |
Rental revenues | | $ | 87,140 | | $ | 65,662 | | $ | 167,907 | | $ | 124,500 | |
Interest income on loans and direct financing receivables | | 4,663 | | 3,217 | | 9,078 | | 5,815 | |
Other income | | 167 | | 21 | | 219 | | 44 | |
Total revenues | | 91,970 | | 68,900 | | 177,204 | | 130,359 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Interest | | 25,871 | | 20,637 | | 49,306 | | 37,866 | |
Transaction costs | | 101 | | 607 | | 335 | | 866 | |
Property costs | | 1,226 | | 356 | | 1,712 | | 651 | |
General and administrative | | 8,545 | | 7,210 | | 17,136 | | 13,845 | |
Selling stockholder costs | | — | | — | | 800 | | — | |
Depreciation and amortization | | 29,035 | | 21,568 | | 55,514 | | 40,460 | |
Provision for impairment of real estate | | — | | — | | — | | 1,000 | |
Total expenses | | 64,778 | | 50,378 | | 124,803 | | 94,688 | |
| | | | | | | | | |
Income from operations before income taxes | | 27,192 | | 18,522 | | 52,401 | | 35,671 | |
Income tax expense | | 90 | | 83 | | 159 | | 166 | |
Income before gain on dispositions of real estate | | 27,102 | | 18,439 | | 52,242 | | 35,505 | |
Gain on dispositions of real estate | | 3,147 | | 1,195 | | 2,800 | | 1,195 | |
Net income | | $ | 30,249 | | $ | 19,634 | | $ | 55,042 | | $ | 36,700 | |
| | | | | | | | | |
Net income per share of common stock - basic and diluted: | | $ | 0.21 | | $ | 0.17 | | $ | 0.38 | | $ | 0.31 | |
| | | | | | | | | |
Weighted average common shares outstanding: Basic | | 145,903,881 | | 117,507,861 | | 143,129,012 | | 116,078,522 | |
Diluted | | 146,116,422 | | 117,507,861 | | 143,348,134 | | 116,078,522 | |
| | | | | | | | | |
Dividends declared per common share | | $ | 0.27 | | $ | 0.25 | | $ | 0.54 | | $ | 0.50 | |
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STORE Capital Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| | June 30,
2016 | | December 31,
2015 | |
| | (unaudited) | | (audited) | |
Assets | | | | | |
Investments: | | | | | |
Real estate investments: | | | | | |
Land and improvements | | $ | 1,382,852 | | $ | 1,187,482 | |
Buildings and improvements | | 2,893,910 | | 2,490,394 | |
Intangible lease assets | | 90,530 | | 88,724 | |
Total real estate investments | | 4,367,292 | | 3,766,600 | |
Less accumulated depreciation and amortization | | (238,846 | ) | (184,182 | ) |
| | 4,128,446 | | 3,582,418 | |
Loans and direct financing receivables | | 235,936 | | 213,342 | |
Net investments | | 4,364,382 | | 3,795,760 | |
Cash and cash equivalents | | 118,521 | | 67,115 | |
Other assets | | 62,187 | | 48,513 | |
Total assets | | $ | 4,545,090 | | $ | 3,911,388 | |
| | | | | |
Liabilities and stockholders’ equity | | | | | |
Liabilities: | | | | | |
Credit facility | | $ | — | | $ | — | |
Unsecured notes and term loan payable, net | | 469,853 | | 172,442 | |
Non-recourse debt obligations of consolidated special purpose entities, net | | 1,650,532 | | 1,597,505 | |
Dividends payable | | 41,379 | | 38,032 | |
Accounts payable and accrued expenses | | 32,703 | | 36,196 | |
Other liabilities | | 10,896 | | 7,420 | |
Total liabilities | | 2,205,363 | | 1,851,595 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock, $0.01 par value per share, 375,000,000 shares authorized, 153,254,710 and 140,858,765 shares issued and outstanding, respectively | | 1,533 | | 1,409 | |
Capital in excess of par value | | 2,469,038 | | 2,162,130 | |
Distributions in excess of retained earnings | | (128,496 | ) | (103,453 | ) |
Accumulated other comprehensive loss | | (2,348 | ) | (293 | ) |
Total stockholders’ equity | | 2,339,727 | | 2,059,793 | |
Total liabilities and stockholders’ equity | | $ | 4,545,090 | | $ | 3,911,388 | |
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STORE Capital Corporation
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share data)
Funds from Operations and Adjusted Funds from Operations
| | Three months ended
June 30, | | Six months ended
June 30, | |
| | 2016 | | 2015 | | 2016 | | 2015 | |
| | (unaudited) | | (unaudited) | |
| | | | | | | | | |
Net income | | $ | 30,249 | | $ | 19,634 | | $ | 55,042 | | $ | 36,700 | |
Depreciation and amortization of real estate assets | | 28,908 | | 21,483 | | 55,280 | | 40,293 | |
Provision for impairment of real estate | | — | | — | | — | | 1,000 | |
Gain on dispositions of real estate | | (3,147 | ) | (1,195 | ) | (2,800 | ) | (1,195 | ) |
Funds from Operations | | 56,010 | | 39,922 | | 107,522 | | 76,798 | |
| | | | | | | | | |
Adjustments: | | | | | | | | | |
Straight-line rental revenue, net | | (1,115 | ) | (991 | ) | (1,585 | ) | (1,099 | ) |
Transaction costs | | 101 | | 607 | | 335 | | 866 | |
Non-cash equity-based compensation | | 1,762 | | 1,263 | | 3,423 | | 2,160 | |
Non-cash interest expense | | 1,791 | | 1,654 | | 3,487 | | 3,051 | |
Amortization of lease-related intangibles and costs | | 489 | | 335 | | 903 | | 555 | |
Selling stockholder costs | | — | | — | | 800 | | — | |
Adjusted Funds from Operations | | $ | 59,038 | | $ | 42,790 | | $ | 114,885 | | $ | 82,331 | |
| | | | | | | | | |
Dividends declared to common stockholders | | $ | 41,379 | | $ | 31,715 | | $ | 79,416 | | $ | 60,537 | |
| | | | | | | | | |
Net income per share of common stock: | | | | | | | | | |
Basic and Diluted (1) | | $ | 0.21 | | $ | 0.17 | | $ | 0.38 | | $ | 0.31 | |
FFO per share of common stock: | | | | | | | | | |
Basic and Diluted (1) | | $ | 0.38 | | $ | 0.34 | | $ | 0.75 | | $ | 0.66 | |
AFFO per share of common stock: | | | | | | | | | |
Basic and Diluted (1) | | $ | 0.40 | | $ | 0.36 | | $ | 0.80 | | $ | 0.71 | |
(1) Under the two-class method, earnings attributable to unvested restricted stock are deducted from earnings in the computation of per share amounts where applicable.
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STORE Capital Corporation
Investment Portfolio
June 30, 2016
Real Estate Portfolio Information
As of June 30, 2016, STORE Capital’s total investment in real estate and loans approximated $4.6 billion, representing investments in 1,508 property locations, substantially all of which are profit centers for its customers. The Company’s real estate portfolio is highly diversified. The following tables summarize the diversification of the real estate portfolio based on the percentage of base rent and interest, annualized based on rates in effect on June 30, 2016, for all leases, loans and direct financing receivables in place as of that date.
Diversification by Customer
STORE Capital has a diverse customer base. At June 30, 2016, the Company’s 1,508 property locations were operated by over 330 customers. No single customer represented more than 2.4% of annualized base rent and interest and the top ten customers totaled 16.6% of annualized base rent and interest. The following table identifies STORE Capital’s ten largest customers as of June 30, 2016:
Customer | | % of
Annualized
Base Rent and
Interest | | Number of
Properties | |
Gander Mountain Company | | 2.4 | % | 13 | |
Cadence Education, Inc. | | 2.2 | | 28 | |
Mills Fleet Farm Group, LLC | | 2.1 | | 5 | |
American Multi-Cinema, Inc. (Starplex/Showplex/AMC) | | 1.8 | | 10 | |
RMH Franchise Holdings, Inc. (Applebee’s) | | 1.7 | | 33 | |
O’Charley’s LLC | | 1.5 | | 30 | |
At Home Stores LLC | | 1.3 | | 5 | |
FreedomRoads, LLC (Camping World) | | 1.2 | | 8 | |
Sailormen, Inc. (Popeyes Louisiana Kitchen) | | 1.2 | | 41 | |
Rainbow Early Education Holding, LLC | | 1.2 | | 36 | |
All other (321 customers) | | 83.4 | | 1,299 | |
Total | | 100.0 | % | 1,508 | |
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STORE Capital Corporation
Investment Portfolio
June 30, 2016
Diversification by Concept
STORE Capital’s customers operate their businesses under a wide range of brand names or business concepts. Of the more than 360 concepts represented in the Company’s investment portfolio as of June 30, 2016, the largest single concept represented approximately 2.9% of annualized base rent and interest and the top ten concepts totaled 18% of annualized base rent and interest. The following table identifies the top ten customer business concepts as of June 30, 2016:
Customer Business Concept | | % of
Annualized
Base Rent and
Interest | | Number of
Properties | |
Ashley Furniture HomeStore | | 2.9 | % | 20 | |
Gander Mountain | | 2.4 | | 13 | |
Applebee’s | | 2.1 | | 42 | |
Mills Fleet Farm | | 2.1 | | 5 | |
Popeyes Louisiana Kitchen | | 1.7 | | 64 | |
Starplex Cinemas | | 1.6 | | 8 | |
O’Charley’s | | 1.5 | | 30 | |
At Home | | 1.3 | | 5 | |
Camping World | | 1.2 | | 8 | |
Captain D’s | | 1.2 | | 67 | |
All other (351 concepts) | | 82.0 | | 1,246 | |
| | 100.0 | % | 1,508 | |
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STORE Capital Corporation
Investment Portfolio
June 30, 2016
Diversification by Industry
The business concepts of STORE Capital’s customers are diversified across 95 industries within the service, retail and industrial sectors of the U.S. economy. The following table summarizes those industries as of June 30, 2016:
Customer Industry | | % of
Annualized
Base Rent and
Interest | | Number of
Properties | | Building
Square
Footage
(in thousands) | |
Service: | | | | | | | |
Restaurants — full service | | 14.5 | % | 315 | | 2,188 | |
Restaurants — limited service | | 9.0 | | 389 | | 1,030 | |
Early childhood education centers | | 7.6 | | 159 | | 1,724 | |
Movie theaters | | 7.2 | | 37 | | 1,467 | |
Health clubs | | 6.2 | | 53 | | 1,636 | |
Automotive repair and maintenance facilities | | 2.2 | | 59 | | 230 | |
Colleges and professional schools | | 2.1 | | 6 | | 488 | |
All other service (40 industries) | | 20.8 | | 232 | | 7,106 | |
Total service | | 69.6 | | 1,250 | | 15,869 | |
Retail: | | | | | | | |
Furniture stores | | 4.0 | | 28 | | 1,665 | |
Lawn and garden equipment and supply stores | | 3.3 | | 20 | | 1,799 | |
Sporting goods and hobby stores | | 2.8 | | 16 | | 1,050 | |
All other retail (11 industries) | | 6.8 | | 72 | | 3,268 | |
Total retail | | 16.9 | | 136 | | 7,782 | |
Industrial: | | | | | | | |
Total industrial (34 industries) | | 13.5 | | 122 | | 12,455 | |
Total | | 100.0 | % | 1,508 | | 36,106 | |
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STORE Capital Corporation
Investment Portfolio
June 30, 2016
Diversification by Geography
STORE Capital’s portfolio is also highly diversified by geography, as the Company’s property locations can be found in 48 of the 50 states (excluding Delaware and Rhode Island). The following table details the top ten geographical locations of the properties as of June 30, 2016:
State | | % of
Annualized
Base Rent and
Interest | | Number of
Properties | |
Texas | | 12.6 | % | 156 | |
Illinois | | 8.2 | | 119 | |
Georgia | | 6.2 | | 108 | |
Tennessee | | 5.1 | | 82 | |
Ohio | | 5.1 | | 88 | |
Florida | | 4.8 | | 73 | |
California | | 4.4 | | 23 | |
Arizona | | 3.7 | | 47 | |
Pennsylvania | | 3.6 | | 34 | |
Colorado | | 3.4 | | 25 | |
All other (38 states) (1) | | 42.9 | | 753 | |
| | 100.0 | % | 1,508 | |
(1) Includes one property in Ontario, Canada which represents 0.1% of annualized base rent and interest.
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STORE Capital Corporation
Investment Portfolio
June 30, 2016
Contracts and Expirations
The Company focuses on long-term, triple-net leases with built-in lease escalators and uses master leases, where appropriate. As of June 30, 2016, 97% of the Company’s investment portfolio was subject to a triple-net lease. Where the Company owns multiple properties leased to a single customer, 80% of this portion of the investment portfolio was subject to a master lease. Leases and loans representing less than 11% of the annualized base rent and interest will expire in the next ten years (before 2026). The following table sets forth the schedule of lease, loan and direct financing receivable expirations as of June 30, 2016:
Year of Lease Expiration or Loan Maturity (1) | | % of
Annualized
Base Rent and
Interest | | Number of
Properties (2) | |
Remainder of 2016 | | — | % | — | |
2017 | | 0.4 | | 10 | |
2018 | | 0.3 | | 2 | |
2019 | | 0.7 | | 8 | |
2020 | | 0.6 | | 5 | |
2021 | | 1.1 | | 8 | |
2022 | | 0.4 | | 5 | |
2023 | | 2.2 | | 36 | |
2024 | | 2.0 | | 23 | |
2025 | | 2.5 | | 22 | |
Thereafter | | 89.8 | | 1,386 | |
Total | | 100.0 | % | 1,505 | |
(1) Expiration year of contracts in place as of June 30, 2016 and excludes any tenant renewal option periods.
(2) Excludes three properties which were vacant and not subject to a lease as of June 30, 2016.
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