VER - Earnings call transcript Q3 2017

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Operator

Good morning and welcome to the VEREIT Q3 2017 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Bonni Rosen, Director of Investor Relations. ahead. go Please

Bonni Rosen

joining quarter for for VEREIT the Thank call. us third earnings XXXX you today

confirmation Joining X-XXX-XXX-XXXX Glenn Today's PM approximately today in a Bartolotta, for webcast me replay are Dial-in our Eastern the our with and Executive on replay code call There the Chief Time Mike Investor Officer; of Relations of today. Financial will at the XXXXXXXX. X:XX Officer. website call the section. being Rufrano, is is vereit.com our be Chief at beginning

the I in that would differ are may forward-looking. Before cause could SEC earnings statements to like be to call are results factors the including filings, which turn over in materially filed these differences Glenn, from remind quarterly not call, our certain will report actual I historical these facts, everyone detailed today. forward-looking that VEREIT's and this statements

except or law. any In update these addition, VEREIT reports, as disclaims statements, expressly stated SEC more obligation to our in as required intent fully forward-looking by

Let me format call. today's of quickly review the

providing begin remarks. financial followed quarterly update, Mike Glenn then by will operational and our a Glenn up business with presenting will wrap closing results. First, by

today's the questions. let to line turn We by Glenn, over will you. the for call call me conclude opening

Glenn Rufrano

for Thanks, joining Bonni, you and thank all call. our

issued occupancy pleased lease acquisition AFFO of below remaining times, increasing senior for was X XX%, $XXX to the capacities to up from million X.XX% are of X.X renewal Net effects million repay million range AFFO $X.XX. the dispositions. providing debt. million We down was quarter. Same-store with from the per with to due XX.X%. we've guidance slightly to remainder share proceeds office $X.XX-to-$X.XX our We still X.XX% $XXX completed $X.XX-to-$X.XX And for results operations, to certain of excluding of increased Starting pay Year-to-date, diluted times, notes $XXX of we share. quarter per early under the term rent loan, for year. and acquisitions the totaled the debt was the X.X XXX secured or our with are efforts. guidance borrowings EBITDA

we recovery. XX,XXX feet of square branches lease square XXX% feet major of transactions square of quarter, fortunately there renewals included Notable with national hurricanes feet financials. square the of feet XXX,XXX season had lease executed were bank concept. had a industrial three XX,XXX We damage XX,XXX property and early a During which square our and feet that this no is XXX,XXX impacted restaurant major

subsequent the XX XX% purchased Third We quarter of properties pet sporting acquisitions million to and furnishings categories $XX which the represented includes industrial properties four quarter. in service, This such were as supplies, retail. multiple $XXX.X discount with million fitness, automotive home acquisitions. approximately goods,

For acquisitions million. totaled the year, XXX

now the spread stated million totaled year million venture, and XX were for year quarter. dispositions our to XXX quarter active included steadily flat XX.X strategic dispositions subsequent Red moving Dispositions the across goal Both were Third have the throughout category. and XX.X declined office office, joint million. non-core Lobster REIT's leases. exposure and categories towards the with These restaurants,

tighter XXX able for you VEREIT's neutral ample As X%. approximately offering notes completed when EBITDA demonstrates X.X is room spread times you achieved many basis however this net became August improvement points business debt measure debt not providing There're grade, year. can last the healthy in times plan Having basis leverage to accomplishment. Net points and fixed. can We our acquirer investment XXX than year our at is acquisitions at success of XX% offering with we bonds a we quarter. see, XX price million a with were these XXX bond to in May

typically lowest raised During average equity of per Capital XX year. quarter approximately the an for month. new million of in million is the Capital Cole quarter, the raised XX.X third

We continue year, from in its and selling share been has to agreements QX increase X.X% beginning of the to market advisors since the QX. Cole add able sales to of and in X.X%

New XX% average the equity quarter. run XX.X last rate an for over million, monthly increase October of was

to our another update December on to on me court's brief the order. let petition litigation. motion a the and conference discuss the provide Xth. to to and parties we've Court with a The schedule permission appellate certification granted for Before for Mike and The class reviews seeking the process a held court filed proposed financials, plaintiff's Court Court for directed conference Xst November on discuss The dispositions. schedule a return appeal

filed our litigations pending XX-Q regarding can found details be Additional today. in

Mike. Let me to over call the turn

Michael Bartolotta

in joining Thanks, XXX.X all share. in QX, million incurred was of the to million, revenue which was related lower quarter equity due items quarter, quarter, at down quarter decrease Glenn, of a million XX.X XX last XX.X Net of quarter's the income increased last and expenses combined derivative of mostly amortization, $X.XX, matters instruments $X.XX, and relatively and G&A offset in X.X debt compensation based the quarter-over-quarter million amounts non-reimbursable including arising lower versus $X.X on million fees was of along the capital XX.X FFO $XX.X are just with share difference last higher the expenses, quarter offset million extinguishment for QX. QX. program marketing in for was million for prior impairments was achieving $X.XX the primarily the million. to AFFO approximately was decrease to G&A development in operating is of quarter in following income litigation, quarter, which with XX Legal depreciation interest million you by the interest. good was that of provision XXX.X expenses property a totaling partially in AFFO adjusted quarter, million partially net for other X.X and to and loss litigation due million expense diluted diluted was third normal and million per directors million litigation, to and versus non-routine revenue the offset cost third in QX. $X.XX $X.XX quarter for lower primarily G&A QX. above XX.X the a remains larger our of had from higher the in diluted last partially million quarter. due a gain million XX.X gain mostly in share revenue to million third invested million Coal below the X.X $XX.X quarter by the Consolidated and representing for for million. costs $X.X net per million. on audit thank versus was us We mostly of versus last quarter real-estate quarter-over-quarter of today. million $XX.X for at by The was per year-to-date the The versus advisory property sold income higher G&A This result in annual million investigation, second flat quarter. the current tax from million $XX.X bringing granted the XX.X up the filings due $XX.X prior X.X cost X.X committee included the in a the

the rate of XX X.X%. of purchased real-estate million purchased X% at quarter third XXX quarter at Company for the XX an rates average six to a for the to cap cash and an Company properties cash properties then cap million subsequent the activity, Turning average

average cap property and an rate those an the lease at at During to four disposed joint XX.X X.XX% venture Subsequent sales of cash properties of XX.X loss million. the of rate unconsolidated of an million we've cash for the parcel average Company cap and by average X.X%. a a quarter, million land disposed quarter, X.X owned of an price

continue strengthen maturity schedule. We sheet our to and balance

additional As Proceeds price from to XX.XX% or XX-year bonds redeem laddered this Glenn our maturity par XXX term secured debt. further schedule proceeds to This value. used with we XXX issued mentioned, X.XX% the offering in were our August an of and our million at issue remaining duration. loan of extended million used repay

September of X.X our under had capacity we billion. As XX, facility credit full of

addition, debt. and million cash XX.X floating essentially of we rate no had In

the with debt normalized the With reduced Any remainder as EBITDA from of by is up slightly out due secured During X.X termed the was be million quarter, times. million to we to XXX times, debt XX.X due eventually unsecured our secured X.X net only expected to debt coming year. coming debt.

and charge remains at debt fixed ratio coverage XX%. investment healthy times net to our gross X.X Our was real ratio estate

XX% our average I'll turn was and our to duration X.X back weighted ratio asset increased with encumbered And of to call Glenn. debt it Our that, years. the

Glenn Rufrano

projected Mike. or than expectations. are in Thanks better our key our Year-to-date, metrics line

track the million. XXX of acquisitions on guidance XXX million and targets range dispositions to meet are So to our

performing is remains liquid maturity schedule. XX% portfolio sheet grade our increasing balance and to occupancy laddered the well with investment with Our well

share per now call $X.XX increasing our $X.XXX. are Given $X.XX to this approximating AFFO performance, questions. Cole's to to open from $X.XX $X.XX guidance I'll contribution the for we with

Operator

you. Thank

will Green Street first begin go [Operator with Instructions] question Advisors. from question-and-answer Knott the Please now ahead. We session. Our Michael comes

Michael Knott

Glenn, you know of we leaning for fair look than question where maybe acquisitions to 'XX 'XX. you're that balance not and about 'XX think would of I it of and towards acquisitions you're be the into but looking like probably 'XX rather more us guidance, dispositions half would for giving assume the sort dispositions? second

Glenn Rufrano

and how our key for is know, answer the you to back dispositions of improving which our is, front disposition 'XX. both had that And XXX really a I'll then acquisitions, we for by always acquisitions, XXX about has did function dispositions to portfolio. for talk starting as been point. we Michael, ended program ended

Lobster down dispositions with in This us, along million Red improve X.X% acquisitions. million. we're range for year we've XXX for our what year. We're that so that are the this XXX do and portfolio schedule we as well and had now start to going out that see then in which relate you guidance next gotten so we're for meeting of to to to And year, we bringing we can

want sell continually third Red XXX sold to We'll elements acquisitions continue and coming million we we see program. able give in. based upon since be us dispositions. be then office, give we our our the good million how next year to you part will to to XX.X. for the Lobster and at We'll next sense, million continue get non-core Lobster year, then We'll of XX% this part And year. next will those non-core, three we XXX down sell and match an that non-core a acquisitions to of began just to look you will the be XX%. X%. be our beginning of Office disposition in indication between year want of up, XX% to were another disposition where that see because that as to year we guidance see we we're that over item. Red can our was We to will We down guidance ultimately end will major get next of XXX And projections We and properties. dispositions of of component that

So to to I'd to to is program program back to yes, to have and like go has this. acquisition portfolio make improve say, sure disposition improve continue we our the question I but to your our that

Michael Knott

update the any then you're on And the sort strategy. touching about also you NTR also with there on can disposition thinking selling provide of Cole platform? Is front at where

Glenn Rufrano

that and that. We we continue strengthen on a to we've platform make done sure good job

this an bringing you it year that's advisory group strengthened know, have We as our on, Cetera focus. by

Our thinking about any is transaction. secondary focus

in to going on the as and asset always any we're continue optionality. portfolio maintain our we for So, focus

Operator

Sheila McGrath go comes Please question Evercore. from ahead. next Our with

Sheila McGrath

retail how give exposure industrials. might quarter or ago? to specifically, environment? the Could be tenant with a button you view to continues this retail a on more And us watch hot two list quarter compare your your updated Glenn,

Glenn Rufrano

two On by slightly quarter. bankruptcy not happened where that much went I X% just we [indiscernible] this we've quarter the mean much. last were into and above little the watch tenant have increased list, we a

So just we lot year time whole a for the increase. didn’t a merchants. It's have of slide in good change, a

going time the in they're to the lead seeing through You would end of we're that this year hope year, and that. the

We have about XX% retail.

of of part important the our is retail Sheila as about. type exposure, The we talked

have here. restaurants if internet. comfortable very investor and so include every market we retail on and includes you our we that that the retail make our We have that we presentation minimal service XX% given retailer have, the exposure the we to retailers lesser know, our have you with retail. think or As of form exposure in of retail, restaurants, to feel adjustments

feel before our scrutinized. within So about talked about very our we and feel We about as our tenancies. good are we the categories well tenants categories good

a had that some retail continues. we watch have have We are fallout going continue to to portfolio the where our we'll environment in very fallout in retail hope in general. will little our tenants, and We've

Sheila McGrath

actions, that legal repealing? give that you know settlement on could when understand like I in are follow-up. can't you appealing one of ruling. insight the result remarks exactly on us as are one appeal? you if And but any your What the mentioned Just might you discuss the did you you

Glenn Rufrano

that certification That's because in the and repeal number class the on we we believe order judge's it's we just of felt deficient should respects.

Sheila McGrath

And might hear or then, -- take can't about? when you it to long does how you predict

Glenn Rufrano

at early not. know as I December. have if be Unpredictable in something visiting by -- mentioned again this then know another Court we'll the time, we or I don’t we'll

Operator

next Our with from go question Please comes Germain ahead. Securities. Mitch JMP

Mitchell Germain

I appreciate on bucket? it would curious, the non-core for a on and I'm Glenn, year. you put how sell kind that the at of of into much the assets the percentage you're perspective strategy next looking way portfolio basis

Glenn Rufrano

last it. do would X% lot as of we we the X% our It's time number. We & of Mitch, it's years, expect a at each and as come this it's you rolling And we somewhere B the last over rate ranges year, assets the looked couple non-core, in as down sold actually A, it. to C

Mitchell Germain

And of separate that's and -- so and rest really the portfolio? this looking and/or the that we would really thinking just office those unconsolidated or or JVs include are at is

Glenn Rufrano

anybody cure The tenant out non-controlled the way ourselves. a these portfolio JVs. about where fully to kind it some percentage could a to on physical cost, portfolio. of of for would we it's can return think carve going we percentage be rest such. normal would It itself. at impediment the include related capital for the the But It of -- And are non-core, the percentage, but don’t or be adequate we have we on the assets the location that's as risk

specific definition include is capital, a So, forms estate industrial. retail you office, real could see which which could on we very of return have or other as

Mitchell Germain

maturity a good one expiring this but notes the from in I year. credit pretty just job year, next next you of last and the guys profile, then mean done reducing I leverage know And terms I'm curious me. have extending expires facility convertible

can So, some you of provide for the course perspective maybe the just kind of on if sheet strategy talk, XXXX? balance

Michael Bartolotta

selling to that to the I'll to not guidance with through At moment, It's take giving the a the we're we're Obviously, it. going 'XX XX, extendable significant amount facility to are and as cost at we've Mitch, it. is us credit Mike. do what prepay. so price would but money optionality still converts a of

a believe we it's closer get now we before gone but this watch the do and the bit there more the successfully moment they with it the very all at but And more we so, due at can market -- price. get we and to time, facility And moment pad. date believe little better if to we credit very-very other we've the patient a some obviously, twice, good to recently way have the be

one year So we line don't comfort. issue any and of believe significant that plenty the us gives extension we have on

Operator

St. next Our comes Haendel from question

ahead. go Mizuho. Please with Juste

Haendel St. Juste

I'm of dining here, casual XX% revenue. on guess your I restaurant you're like still looks curious about Glenn, about thoughts

bought the think during you've Cabela's quarter. I

I Red and what might new what guess about I am there, next year? see we subsector Lobster exposure So to thinking you're beyond curious, that

Glenn Rufrano

So, I the was restaurants. think there on question

everything XX% Border have Lobster Garden else X.X, the dining. is If it, that's the some in X.X, through We X.X, casual small. is Red about Applebee percentage we X.X%, On the go Olive moving rest The of down. becomes

take diversified non-national down the take as we're percentage We'll calling been Lobster of down, and within restaurants. So our that has of Red continue we sector very sector. some to that with

that non-national exerted been quarters we've will on focus selling, noticed then restaurants. each an been some you our -- restaurants been we've have If it's and of

of come diversification. our over So as time part down will that

that's like now something Cabela's, Is you'd mentioned to about different also talk a category. that Haendel? You've

Haendel St. Juste

guys and because really Maybe implemented then late few helped. calls, guess I more What's the before exposure the I certainly successfully you've last but times, we've curious the restaurants, missed curious your you've strategic am broadly from question quarters, 'XX. few about. discussed a Obviously, I on about facing to just you few this And that plan so next? a more been --

priorities; four to but in diverse strategic a three, of the you've some having you've and past said equally the smaller years that merit curious perhaps next seen Just two, portfolio.

hand So portfolio. inversely, see on of you merit you size the but small one can liked the the also

there maybe got So some strategic the years? curious for few on next updated and any thinking guidepost

Glenn Rufrano

out start the our with is I'll Haendel, place. we've business really that plan model put the which in basis for

capital As their a start with sell their for we've have to makes the they discussed, provide fact the is this business running their sense should can and for better we to internally, that should That's can of most executed that model capital It they're because run that of believe to is do. it. what large of housing, -- America that it's corporate the with -- trades cost That's gets we housing corporate help our business, what diversified. there's believe for for out diversification business we for lot we long-term And they the of have be couple It business secure our capital their large the America of portfolio freeze continue a capital if capital. cost to do we model of business. will efficiently, things and the us of long-term.

see year basis price XXX come points one down rates can our to in how our in You portfolio. have because large debt of

to so in the We type. of product the providing can large capital only to diversified important we for search where to position like other don’t provide corporate is We property want opportunities. types optionality anyone are in we The in variety of partners that property portfolio to be on the sourcing. providing capital

just are we there. business create about business our whole and So land to was a model

business for four years. to will the So, three that's we're that model drive that us next excited about that and

Haendel St. Juste

some operators of you type to troubles recent of thoughts to outdoor exposure camping then some going supports in that the back the Cabela's, on And light of provide subsector? in could

Glenn Rufrano

about Academy we X.X have in and Well, X.X Dick's. in

we of Bass went combinations is good think destinations, higher The good spent and XX% and running destinations XX are we good provide Jim there serve. and Cabela his in drop strong experience only of X.X and a and they Bass create miles market And strong great So we spend very CEO across They marine is XX Cabela's South Pro They really in added Southeast. the their spend in top very There of synergies. handle as and Pro now We've a client Bass their well, in very the They sports, fishing really time X.X two of about country. right The just Northeast, the million. of one spend on Cabela synergies, in end amount so with terms the end. Cabela great very a amount marine, strong a like merchandize. hunting stores. transaction with XX% and and lower a time the X%. and of is XX% have good total a Bass apparels, Pro, we Cabela's a very Hagale, $XXX have is West a in of one hunting which in people and of We've that purveyors are strong one about with is who plan. for fishing. from Pro not the when on XX% the hours was

a strong product you lot very online look provide advertise private If some a marine products. label They they online. minimum get huge have combination, program hunting resistance. of and which price they also cannot you not are program, their Their online have at

investment. we the at what and combination make to relative looked future we their of resistance, when business, the and the the So saw we this online like we business

Haendel St. Juste

mention think like bit number So EBIT you it I incremental like that would more? expect you we more X% sounds a to grow exposure, exposure like sounds a should

Glenn Rufrano

sure. not No, sure. I'm I am not

talking about a We exposure. lot more are little

are buying this are really point We at like. only category we in this that we businesses

Operator

Street from Advisors. follow-up Please ahead. go a Michael with Knott have Green We question

Michael Knott

there to wanted pharmacy Walgreens, on obviously top Glenn, your exposure your have thoughts tenants. get CVS know you business. some just I among

given business the what bricks-and-mortar to jumping that wanted be Just appeal could essentially business, on that for have you there and would any the that long-term of thoughts mean side of prospects, Amazon appreciated? get thoughts your in of

Glenn Rufrano

Walgreens more and CVS is our so a little certainly X%, do about than X.X% we care them. is about income of

have their In were we sales sales statistics good note, this really about comps been the fourth As sales quarter, pretty year. of at and had those, that comparable think just up couple we've X.X. looking a we Walgreens

For the fiscal they were X.X. year,

was However, segment X% down is been pharmacy same CVS. we're good. retail quarter thing a out that strong. Pharmacy The parsing business fine. holds very for true for have so is sales has the in sales down, have very it service been which X% been year, the They have pharmacy and

in which considering there prepared their for will is sense over against pharmacy they're whether change What competition Amazon So it is, we and includes will. my we're and total time retail that. pretty think environment

clearly may question in see owned We what On ours what their progress the this that be going and CVS Boots. enough provider their very to their product. over That's client think I When In were mentioned is part was, care ultra-type previous healthcare call a & by for my more really and note. Europe, strong days, of units someone sure asked going pharmacy. about they emergency of Wakefield Cushman was CVS forward. retail, to a we they're of with doing, as our Walgreens going Walgreens, work in we're

companies healthy So confidence and around. we but of we directions, they're over different be change strong, and in believe time will they'll they're both do these change probably have

Michael Knott

ability over And be the then curious ticking earnest your topic? on sort next for thoughts expirations. management was handle that related in years, to of begin your just and They few platform anything able to on to be and curious up of that would me lease the about thoughts the asset last one from of just on just you topic

Glenn Rufrano

but an me and of We've of this to year, the in First exerted talk handle in doing about of always effort to I've renewals. renewals, each in program quarter is importantly asset early a front lease get calls think place year, we we're job. renewals the each made management heard Michael, it, early you've talked good more about all this but pretty

this quarter, leased If renewals. feet, XXX,XXX that were of XXX,XXX we you square look just square feet but at early

minimize are time fully at expirations very expect we and percentage. the focused of So extent on we that those to

Operator

Paolone ahead. Our with Morgan. JP go Anthony Please next question comes from

Anthony Paolone

aside Cole capital that make you EBITDA or Is of decision AUM you optimal, see the if being either or out extract more you when a a strategic putting On level there. have raising that or to business there as of if vary platform?

Glenn Rufrano

to Anthony, of some we grow We've followed the increasing. The happen this, to getting push could market the That the rule, discuss it's just been money be. is will we and DOL it's finally filled are a fully expect that Cole's is are the us. our because together will what that confident of or of rule settle should a that DOL in the deregulation the conclusion to business bad not overtime. fine. share but issue provision had clearly raise, come The not marketplace as some hiccups we going in SEC Cole. will that here in DOL And and heard they help has Washington the fiduciary view. that also

this to up like -- and for we pick code. market costs will we to absolutely up see pick a that expect up So pick

Anthony Paolone

certain Is size. to outlook because about the the backdrop a opposed way matter that a at of making the to just of regulatory as bit more the it? clear to needs [Indiscernible] little think be been

Glenn Rufrano

consideration effective then background Anthony. currently in we and a give think I this the The way. chicken regulatory along will it's will new egg,

Anthony Paolone

that just to conference, And you then question in that can describe means or -- some at terms the another what be December think of kind you is Xth the is of topic just address point? what

Glenn Rufrano

but few topic main be our depositions. will Look, a there maybe topics,

Anthony Paolone

Okay. was And there? so play discovery from out then into understanding, then how you that my the depositions does and I what guess go -- largely done

Glenn Rufrano

two discovery. predominantly in The preparation depositions discovery be the be get December done, that is document and second proposed and and will that's is which will scheduling started, up some part and the will second components, discovery is is it one of part there that of distribution

Anthony Paolone

How long does take? that typically

Glenn Rufrano

that now. more of occur. those scheduling as meetings unsure We're know We'll

Operator

the concludes remarks. Rufrano any would like for This over Glenn question-and-answer to I our to turn session. closing conference back

Glenn Rufrano

Thanks everybody for joining us today.

We end Bye happy the we look are quarter of now. talking to the with year. forward the at you certainly and

Operator

conference is attending today's presentation. Thank The now concluded. for you

may disconnect. now You

VEREIT (VER) 8 Nov 172017 Q3 Earnings call transcript