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EX-99.2 - EX-99.2 - STORE CAPITAL Corpa17-12390_1ex99d2.htm
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Exhibit 99.1

 

 

STORE Capital Announces First Quarter 2017 Operating Results

 

Affirms 2017 Guidance

 

SCOTTSDALE, Ariz., May 4, 2017 — 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 first quarter ended March 31, 2017.

 

Highlights

 

For the quarter ended March 31, 2017:

 

·                  Total revenues of $108.0 million

·                  Net income of $31.4 million

·                  Net income per share of $0.19 (basic and diluted)

·                  AFFO of $70.0 million

·                  AFFO per share of $0.43 (basic and diluted)

·                  Declared a regular quarterly cash dividend per common share of $0.29

·                  Invested $420.7 million in 95 properties at a weighted average initial cap rate of 7.7%

·                  In March 2017, sold $135 million of A+ rated net-lease mortgage notes under the STORE Master Funding debt program

·                  In March 2017, closed a $100 million two-year unsecured bank term loan which has three one-year extension options

·                  Raised net equity proceeds of $271.1 million representing an aggregate of approximately 12.0 million common shares from the sales of shares under the at-the-market equity program and through a follow-on stock offering completed on March 31, 2017

 

Management Commentary

 

“2017 is off to a great start with strong investment activity and AFFO growth,” said Christopher H. Volk, President and Chief Executive Officer of STORE Capital. “Our pace of acquisitions and large pipeline of investment opportunities reflects broad-based demand for our effective and flexible long-term financing solutions on the part of our target market - established middle market and larger companies with sustainable competitive advantages and strong cash flows.  First quarter acquisitions represent the overall diversity of our portfolio by tenant and transaction size and include 95 new properties and 9 net new customers. Our portfolio remains highly diversified with nearly 370 customers operating across more than 440 concepts, with about 80% of our customers representing less than 1% of our revenues.”

 



 

Financial Results

 

Total Revenues

 

Total revenues were $108.0 million for the first quarter of 2017, an increase of 26.7% from $85.2 million for the first quarter of 2016. The increase was driven primarily by the growth in the size of STORE Capital’s real estate investment portfolio, which grew from $4.3 billion in gross investment amount representing 1,397 property locations at March 31, 2016 to $5.5 billion in gross investment amount representing 1,750 property locations at March 31, 2017.

 

Net Income

 

Net income was $31.4 million, or $0.19 per basic and diluted share, for the first quarter of 2017, an increase of 26.6% from $24.8 million, or $0.18 per basic and diluted share, for the first quarter of 2016.

 

Net income includes such items as gain or loss on dispositions of real estate and the provision for impairment of real estate.  These items can vary from quarter to quarter and impact net income and period-to-period comparisons.

 

Adjusted Funds from Operations (AFFO)

 

AFFO was $70.0 million, or $0.43 per basic and diluted share, for the first quarter of 2017, an increase of 25.3% from $55.8 million, or $0.40 per basic and diluted share, for the first quarter of 2016.  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.

 

Dividend Information

 

As previously announced, STORE Capital declared a regular quarterly cash dividend per common share of $0.29 for the first quarter ended March 31, 2017. This dividend, totaling $49.7 million, was paid on April 17, 2017 to stockholders of record on March 31, 2017.

 

Real Estate Portfolio Highlights

 

Investment Activity

 

The Company originated $420.7 million of gross investments representing 95 property locations during the first quarter of 2017, adding 14 new customers. These investments had a weighted average initial cap rate of 7.7%. The Company defines “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property.

 

Disposition Activity

 

During the quarter ended March 31, 2017, the Company sold five properties and recognized net gains of $3.7 million. The aggregate investment amount of the five properties sold represented approximately 0.3% of the total investment portfolio at the beginning of 2017. During the quarter ended March 31, 2017, the Company also recognized a $4.3 million provision for impairment related to a property sold subsequent to the end of the quarter.

 

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Portfolio

 

At March 31, 2017, STORE Capital’s real estate portfolio totaled $5.5 billion representing 1,750 property locations. 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 loans receivable secured by the tenants’ other assets.  As of March 31, 2017, the portfolio’s annualized base rent and interest (based on rates in effect on March 31, 2017 for all lease and loan contracts) totaled $447.6 million. The weighted average non-cancelable remaining term of the leases at March 31, 2017 was approximately 14 years.

 

The Company’s portfolio of real estate investments is highly diversified across customers, brand names or business concepts, industries and geography. The following table presents a summary of the Company’s portfolio as of March 31, 2017.

 

Portfolio At A Glance - As of March 31, 2017

 

 

 

Investment property locations

 

1,750

 

States

 

48

 

Customers

 

369

 

Industries in which customers operate

 

107

 

Proportion of portfolio from direct origination

 

~80

%

Contracts with STORE-preferred terms*(1)

 

92

%

Weighted average annual lease escalation(2)

 

1.8

%

Weighted average remaining lease contract term

 

~14 years

 

Occupancy(3)

 

99.5

%

Properties not operating but subject to a lease(4)

 

13

 

Investment locations subject to a ground lease

 

18

 

Investment portfolio subject to NNN leases*

 

97

%

Investment portfolio subject to Master Leases*(5)

 

82

%

Average investment amount/replacement cost (new)(6)

 

82

%

Locations subject to unit-level financial reporting

 

97

%

Median unit fixed charge coverage ratio (FCCR)/4-Wall coverage ratio(7)

 

2.1x/2.7

x

Contracts rated investment grade(8)

 

~75

%

 


* Based on annualized base rent and interest.

 

(1)         Represents the percentage of our lease contracts that were created by STORE or contain preferred contract terms such as unit-level financial reporting, triple-net lease provisions and, when applicable, master lease provisions.

(2)         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.

(3)         The Company defines occupancy as a property being subject to a lease or loan contract.  As of March 31, 2017, nine of the Company’s properties were vacant and not subject to a contract.

(4)         Represents the number of the Company’s investment locations that have been closed by the tenant but remain subject to a lease.

(5)         Percentage of investment portfolio in multiple properties with a single customer subject to master leases. Approximately 83% of the investment portfolio involves multiple properties with a single customer, whether or not subject to a master lease.

(6)         Represents the ratio of purchase price to replacement cost (new) at acquisition.

(7)         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,

 

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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.

(8)         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 proprietary risk measure reflective of both the credit risk of the Company’s tenants and the profitability of the operations at the properties.  As of March 31, 2017, STORE Capital’s tenants had a median tenant credit profile of approximately ‘Ba2’ 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 ‘Baa2’.

 

Capital Transactions

 

On March 31, 2017, the Company completed a public offering of 9,947,500 shares of its common stock sold at a price of $23.10 per share.  The offering generated net proceeds to the Company of $220.8 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.

 

In 2016, the Company established an “at the market” equity distribution program, or ATM program, pursuant to which, from time to time, it offers and sells registered shares of common stock up to a maximum amount of $400 million through a group of banks acting as its sales agents.  During the first quarter of 2017, the Company sold approximately 2.0 million shares under the ATM Program and raised approximately $50.3 million in net proceeds after the payment of sales agents’ commissions and offering expenses.  Since the start of the program, the Company has sold approximately 8.1 million shares at a weighted average share price of $26.25, raising $209.6 million in aggregate net proceeds after the payment of sales agents’ commissions and offering expenses.

 

In March 2017, the Company sold $135 million of A+ rated notes under its STORE Master Funding secured debt program.  These notes, which were originally issued in October 2016 and had been retained by the Company for future sale, have an interest rate of 4.32% and a remaining term of approximately 10 years.

 

In March 2017, the Company closed a $100 million floating-rate, unsecured two-year term loan which has three one-year extension options.  Concurrent with the closing of this term loan, the Company entered into an interest rate swap that effectively converts the floating rate to an initial fixed rate of 2.77%.

 

2017 Guidance

 

Affirming its 2017 guidance initially presented in November 2016, the Company currently expects 2017 AFFO per share to be within a range of $1.74 to $1.76, based on projected 2017 annual real estate acquisition volume, net of projected property sales, of approximately $900 million. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $0.78 to $0.79 per share, plus $0.87 to $0.88 per share of expected real estate depreciation and amortization, plus approximately $0.09 per share related to such items as straight-line rent and the amortization of stock-based compensation and deferred financing 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.

 

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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 first quarter ended March 31, 2017 operating results and answer questions.

 

·                  Live conference call: 855-656-0920 (domestic) or 412-542-4168 (international)

·                  Conference call replay available through May 18, 2017: 877-344-7529 (domestic) or 412-317-0088 (international)

·                  Replay access code: 10104005

·                  Live and archived webcast: http://ir.storecapital.com/webcasts

 

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 1,750 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

 

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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.

 

To derive AFFO, the Company modifies the NAREIT computation of FFO to include other adjustments to GAAP net income related to certain non-cash revenues and expenses that have no impact on the Company’s long-term operating performance, such as straight-line rents, amortization of deferred financing costs and stock-based compensation. In addition, in deriving AFFO, the Company excludes certain other costs not related to its ongoing operations such as the amortization of lease-related intangibles and, historically, transaction costs associated with acquiring real estate subject to existing leases.

 

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 certain 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 long-term operating performance. Additionally, in deriving AFFO, the Company excludes certain other costs, such as the amortization of lease-related intangibles and, historically, transaction costs associated with acquiring real estate subject to existing leases. The Company believes that these 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.

 

Investor and Media Contacts:

 

Financial Profiles, Inc.

Moira Conlon, 310-622-8220

Tricia Ross, 310-622-8226

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
March 31,

 

 

 

2017

 

2016

 

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

Rental revenues

 

$

101,905

 

$

80,767

 

Interest income on loans and direct financing receivables

 

5,780

 

4,415

 

Other income

 

286

 

52

 

Total revenues

 

107,971

 

85,234

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Interest

 

29,640

 

23,435

 

Transaction costs

 

 

234

 

Property costs

 

806

 

486

 

General and administrative

 

10,243

 

8,591

 

Selling stockholder costs

 

 

800

 

Depreciation and amortization

 

35,215

 

26,479

 

Provision for impairment of real estate

 

4,270

 

 

Total expenses

 

80,174

 

60,025

 

 

 

 

 

 

 

Income from operations before income taxes

 

27,797

 

25,209

 

Income tax expense

 

106

 

69

 

Income before gain (loss) on dispositions of real estate

 

27,691

 

25,140

 

Gain (loss) on dispositions of real estate

 

3,699

 

(347

)

Net income

 

$

31,390

 

$

24,793

 

 

 

 

 

 

 

Net income per share of common stock - basic and diluted:

 

$

0.19

 

$

0.18

 

 

 

 

 

 

 

Weighted average common shares outstanding:

Basic

 

160,810,455

 

140,354,143

 

 

Diluted

 

160,810,455

 

140,564,379

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.29

 

$

0.27

 

 

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STORE Capital Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

 

 

 

March 31,
2017

 

December 31,
2016

 

 

 

(unaudited)

 

(audited)

 

Assets

 

 

 

 

 

Investments:

 

 

 

 

 

Real estate investments:

 

 

 

 

 

Land and improvements

 

$

1,632,788

 

$

1,536,178

 

Buildings and improvements

 

3,522,747

 

3,226,791

 

Intangible lease assets

 

92,397

 

92,337

 

Total real estate investments

 

5,247,932

 

4,855,306

 

Less accumulated depreciation and amortization

 

(333,043

)

(298,984

)

 

 

4,914,889

 

4,556,322

 

Loans and direct financing receivables

 

262,584

 

269,210

 

Net investments

 

5,177,473

 

4,825,532

 

Cash and cash equivalents

 

103,301

 

54,200

 

Other assets, net

 

91,455

 

61,936

 

Total assets

 

$

5,372,229

 

$

4,941,668

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Liabilities:

 

 

 

 

 

Credit facility

 

$

 

$

48,000

 

Unsecured notes and term loans payable, net

 

569,938

 

470,190

 

Non-recourse debt obligations of consolidated special purpose entities, net

 

1,958,426

 

1,833,481

 

Dividends payable

 

49,700

 

46,209

 

Accounts payable, accrued expenses and other liabilities

 

57,186

 

60,533

 

Total liabilities

 

2,635,250

 

2,458,413

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value per share, 375,000,000 shares authorized, 171,378,139 and 159,341,955 shares issued and outstanding, respectively

 

1,714

 

1,593

 

Capital in excess of par value

 

2,903,774

 

2,631,845

 

Distributions in excess of retained earnings

 

(170,314

)

(151,592

)

Accumulated other comprehensive income

 

1,805

 

1,409

 

Total stockholders’ equity

 

2,736,979

 

2,483,255

 

Total liabilities and stockholders’ equity

 

$

5,372,229

 

$

4,941,668

 

 

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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
March 31,

 

 

 

2017

 

2016

 

 

 

(unaudited)

 

 

 

 

 

 

 

Net income

 

$

31,390

 

$

24,793

 

Depreciation and amortization of real estate assets

 

35,074

 

26,372

 

Provision for impairment of real estate

 

4,270

 

 

(Gain) loss on dispositions of real estate

 

(3,699

)

347

 

Funds from Operations

 

67,035

 

51,512

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

Straight-line rental revenue, net

 

(1,155

)

(470

)

Transaction costs

 

 

234

 

Amortization of:

 

 

 

 

 

Equity-based compensation

 

1,874

 

1,661

 

Deferred financing costs and other noncash interest expense

 

2,009

 

1,696

 

Lease-related intangibles and costs

 

195

 

414

 

Selling stockholder costs

 

 

800

 

Adjusted Funds from Operations

 

$

69,958

 

$

55,847

 

 

 

 

 

 

 

Dividends declared to common stockholders

 

$

49,700

 

$

38,037

 

 

 

 

 

 

 

Net income per share of common stock:

 

 

 

 

 

Basic and Diluted (1)

 

$

0.19

 

$

0.18

 

FFO per share of common stock:

 

 

 

 

 

Basic and Diluted (1)

 

$

0.42

 

$

0.37

 

AFFO per share of common stock:

 

 

 

 

 

Basic and Diluted (1)

 

$

0.43

 

$

0.40

 

 


(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

March 31, 2017

 

Real Estate Portfolio Information

 

As of March 31, 2017, STORE Capital’s total investment in real estate and loans approximated $5.5 billion, representing investments in 1,750 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 March 31, 2017, 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 March 31, 2017, the Company’s 1,750 property locations were operated by nearly 370 customers. The largest single customer represented 3.1% of annualized base rent and interest and the top ten customers totaled 17.7% of annualized base rent and interest. The following table identifies STORE Capital’s ten largest customers as of March 31, 2017:

 

Customer

 

% of
Annualized
Base Rent and
Interest

 

Number of
Properties

 

AVF Parent, LLC (Art Van Furniture)

 

3.1

%

17

 

American Multi-Cinema, Inc. (Starplex/Carmike/Showplex/AMC)

 

2.4

 

15

 

Cadence Education, Inc. (Early childhood/elementary education)

 

2.1

 

32

 

Gander Mountain Company

 

2.0

 

13

 

Mills Fleet Farm Group, LLC

 

2.0

 

6

 

RMH Franchise Holdings, Inc. (Applebee’s)

 

1.5

 

33

 

O’Charley’s LLC

 

1.3

 

30

 

Automotive Remarketing Group, Inc.

 

1.1

 

6

 

Dufresne Spencer Group Holdings, LLC (Ashley Furniture HomeStore)

 

1.1

 

11

 

FreedomRoads, LLC (Camping World)

 

1.1

 

8

 

All other (359 customers)

 

82.3

 

1,579

 

Total

 

100.0

%

1,750

 

 

10



 

STORE Capital Corporation

Investment Portfolio

March 31, 2017

 

Diversification by Concept

 

STORE Capital’s customers operate their businesses under a wide range of brand names or business concepts. Of the more than 440 concepts represented in the Company’s investment portfolio as of March 31, 2017, the largest single concept represented 3.1% of annualized base rent and interest and the top ten concepts totaled 18.5% of annualized base rent and interest. The following table identifies the top ten customer business concepts as of March 31, 2017:

 

Customer Business Concept

 

% of
Annualized
Base Rent and
Interest

 

Number of
Properties

 

Art Van Furniture

 

3.1

%

17

 

Ashley Furniture HomeStore

 

3.0

 

25

 

Applebee’s

 

2.1

 

48

 

Gander Mountain

 

2.0

 

13

 

Mills Fleet Farm

 

2.0

 

6

 

Popeyes Louisiana Kitchen

 

1.5

 

63

 

Starplex Cinemas

 

1.3

 

8

 

O’Charley’s

 

1.3

 

30

 

Captain D’s

 

1.1

 

73

 

Sonic Drive-In

 

1.1

 

56

 

All other (436 concepts)

 

81.5

 

1,411

 

Total

 

100.0

%

1,750

 

 

11



 

STORE Capital Corporation

Investment Portfolio

March 31, 2017

 

Diversification by Industry

 

The business concepts of STORE Capital’s customers are diversified across more than 100 industries within the service, retail and manufacturing sectors of the U.S. economy.  The following table summarizes those industries as of March 31, 2017:

 

Customer Industry

 

% of
Annualized
Base Rent and
Interest

 

Number of
Properties

 

Building
Square
Footage
(in thousands)

 

Service:

 

 

 

 

 

 

 

Restaurants — full service

 

13.4

%

335

 

2,325

 

Restaurants — limited service

 

8.0

 

395

 

1,045

 

Early childhood education centers

 

7.0

 

169

 

1,843

 

Movie theaters

 

6.5

 

38

 

1,824

 

Health clubs

 

5.8

 

62

 

1,727

 

Automotive repair and maintenance facilities

 

2.8

 

85

 

406

 

Colleges and professional schools

 

1.8

 

6

 

488

 

All other service (44 industries)

 

22.1

 

338

 

9,523

 

Total service

 

67.4

 

1,428

 

19,181

 

Retail:

 

 

 

 

 

 

 

Furniture stores

 

6.7

 

48

 

3,096

 

Lawn and garden equipment and supply stores

 

3.1

 

22

 

1,859

 

Sporting goods and hobby stores

 

2.4

 

16

 

1,050

 

All other retail (12 industries)

 

5.5

 

76

 

3,031

 

Total retail

 

17.7

 

162

 

9,036

 

Manufacturing:

 

 

 

 

 

 

 

Total manufacturing (41 industries)

 

14.9

 

160

 

15,982

 

Total

 

100.0

%

1,750

 

44,199

 

 

12



 

STORE Capital Corporation

Investment Portfolio

March 31, 2017

 

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 March 31, 2017:

 

State

 

% of
Annualized
Base Rent and
Interest

 

Number of
Properties

 

Texas

 

12.1

%

177

 

Illinois

 

7.8

 

123

 

Florida

 

6.0

 

104

 

Ohio

 

6.0

 

104

 

Georgia

 

5.6

 

115

 

Tennessee

 

4.6

 

85

 

Michigan

 

4.2

 

64

 

California

 

4.0

 

24

 

Arizona

 

4.0

 

71

 

Minnesota

 

3.2

 

53

 

All other (38 states) (1)

 

42.5

 

830

 

Total

 

100.0

%

1,750

 

 


(1)                   Includes two properties in Ontario, Canada which represent 0.2% of annualized base rent and interest.

 

13



 

STORE Capital Corporation

Investment Portfolio

March 31, 2017

 

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 March 31, 2017, 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, 82% of this portion of the investment portfolio was subject to a master lease. Leases and loans representing approximately 11% of the annualized base rent and interest will expire in the next ten years (before 2027). The following table sets forth the schedule of lease, loan and direct financing receivable expirations as of March 31, 2017:

 

Year of Lease Expiration or Loan Maturity (1)

 

% of
Annualized
Base Rent and
Interest

 

Number of
Properties (2)

 

Remainder of 2017

 

0.5

%

13

 

2018

 

0.3

 

2

 

2019

 

0.7

 

8

 

2020

 

0.7

 

7

 

2021

 

1.0

 

8

 

2022

 

0.3

 

5

 

2023

 

1.6

 

34

 

2024

 

1.1

 

18

 

2025

 

2.0

 

22

 

2026

 

2.9

 

59

 

Thereafter

 

88.9

 

1,565

 

Total

 

100.0

%

1,741

 

 


(1)           Expiration year of contracts in place as of March 31, 2017, excluding any tenant renewal option periods.

 

(2)                                 Excludes nine properties which were vacant and not subject to a lease as of March 31, 2017.

 

14