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EX-99.3 - EXHIBIT 99.3 - MAY 1, 2018 PRESS RELEASE - SPIRIT REALTY CAPITAL, INC. | may12018pressrelease.htm |
EX-99.1 - EXHIBIT 99.1 - 1Q18 EARNING RELEASE - SPIRIT REALTY CAPITAL, INC. | a2018q1-scearningsrelease.htm |
8-K - 8-K - 1Q 2018 EARNINGS - SPIRIT REALTY CAPITAL, INC. | a2018q1-scform8xk.htm |
Supplemental Financial &
Operating Information
FIRST QUARTER ENDED
MARCH 31, 2018
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
About Spirit
Spirit Realty Capital, Inc., (NYSE: SRC) is a premier
net-lease real estate investment trust (REIT) that
primarily invests in high-quality, operationally
essential retail real estate, subject to long-term net
leases. Over the past decade, Spirit has become an
industry leader and owner of income-producing,
strategically located retail, industrial, office and data
center properties providing superior risk-adjusted
returns and steady dividend growth for our
shareholders.
As of March 31, 2018, our diversified portfolio was
composed of 2,446 properties, including properties
securing mortgage loans. Our properties, with an
aggregate gross leasable area of approximately
48.3 million square feet, are leased to 417 tenants
across 49 states and 32 tenant industries.
2
CORPORATE OVERVIEW
Corporate Headquarters
2727 N. Harwood St.,
Suite 300
Dallas, Texas 75201
Phone: 972-476-1900
www.spiritrealty.com
Transfer Agent
American Stock Transfer
& Trust Company, LLC
Phone: 866-703-9065
www.amstock.com
Investor Relations
(972) 476-1903
InvestorRelations@spirit
realty.com
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
TABLE OF CONTENTS
3
Portfolio and Financial Overview 4
Condensed Consolidated Statements of Operations 5
Funds and Adjusted Funds From Operations 6
Consolidated Balance Sheets 7
Capitalization and Debt Summary 8
Investment and Disposition Activity 11
Tenant / Industry / Portfolio Diversification 13
Same Store Contractual Rent 17
Occupancy 18
Lease Summary 19
Net Asset Value (NAV) Components 20
Analyst Coverage 21
Appendix: 22
Reporting Definitions and Explanations 23
Non-GAAP Reconciliations 27
Forward-Looking Statements and Risk Factors 28
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
(1)
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Top 10 Tenants Properties
Percent of
Contractual
Rent
1 Specialty Retail Shops Holding Corp. 98 7.9%
2 AMC Entertainment, Inc. / Carmike Cinemas 18 2.5%
3 Walgreen Company 42 2.3%
4 Cajun Global, LLC 182 2.2%
5 Academy, LTD 6 2.0%
Top 5 Total 346 16.9%
6 Alimentation Couche-Tard, Inc. 82 1.9%
7 The Home Depot, Inc. 7 1.8%
8 Regal Entertainment Group 15 1.5%
9 Carmax, Inc. 8 1.5%
10 CVS Caremark Corporation 34 1.5%
Top 10 Total 492 25.1%
PORTFOLIO AND FINANCIAL OVERVIEW
$ in thousands
4
Portfolio Data
Total Real Estate Investments $ 7,848,989
Owned Properties 2,364
Properties Securing Mortgage Loans 82
Total Properties 2,446
Tenants 417
Tenant Industries 32
States 49
Weighted Average Remaining Lease Term (Years) 9.9
Occupancy 98.9%
Portfolio Weighted Average Unit Level Rent Coverage 2.6x
Capitalization
Common Market Equity $ 3,371,199
Preferred Share Liquidation Value $ 172,500
Total Capitalization $ 3,543,699
Total Adjusted Debt $ 3,699,773
Enterprise Value $ 7,243,472
Outstanding Shares of Common Stock (1) 434,432,805
(1) Total outstanding shares as of March 31, 2018, less 2.1 million unvested restricted shares.
Financial Ratios
Adjusted Debt / Enterprise Value 51.1%
Adjusted Debt / Annualized Adjusted EBITDAre 6.3x
Adjusted Debt + Preferred / Annualized Adjusted
EBITDAre 6.6x
Fixed Charge Coverage Ratio 3.2x
Unencumbered Assets / Unsecured Debt 3.8x
Corporate Liquidity
Cash and Cash Equivalents $ 10,989
Availability Under Revolving Credit Facility 645,500
Availability Under Term Loan 420,000
Total $ 1,076,489
Unencumbered Assets Properties Real Estate Investment
Retail 1,197 $ 4,008,370
Industrial 20 258,246
Office 24 191,330
Data Centers 3 56,748
Total 1,244 $ 4,514,694
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
(Unaudited) Three Months Ended March 31,
2018 2017
Revenues
Rentals $ 157,612 $ 159,220
Interest income on loans receivable 1,827 892
Earned income from direct financing leases 465 612
Tenant reimbursement income 4,418 3,965
Other income and interest from real estate transactions 956 733
Total revenues 165,278 165,422
Expenses
General and administrative (G&A) 15,885 13,418
Transaction costs 3,932 —
Property costs (including reimbursable) 7,415 9,051
Real estate acquisition costs 48 153
Interest 51,065 46,623
Depreciation and amortization 62,117 64,994
Impairments 14,569 34,376
Total expenses 155,031 168,615
Income (loss) before other income (expense) and income tax expense 10,247 (3,193)
Gain (loss) on debt extinguishment 21,328 (30)
Income (loss) before income tax expense 31,575 (3,223)
Income tax expense (252) (165)
Income (loss) before (loss) gain on disposition of assets 31,323 (3,388)
(Loss) gain on disposition of assets (605) 16,217
Net Income 30,718 12,829
Dividends paid to preferred stockholders (2,588) —
Net income attributable to common stockholders $ 28,130 $ 12,829
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
$ in thousands
5
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO)
$ in thousands, except per share amounts
6
(Unaudited) Three Months Ended March 31,
2018 2017
Net income attributable to common stockholders $ 28,130 $ 12,829
Portfolio depreciation and amortization 61,976 64,857
Portfolio impairments 14,569 34,376
Realized losses (gains) on sales of real estate 605 (16,217)
Funds from operations attributable to Common Stockholders $ 105,280 $ 95,845
(Gain) loss on debt extinguishment (21,328) 30
Real estate acquisition costs 48 153
Transaction costs 3,932 —
Non-cash interest expense 7,541 5,461
Accrued interest and fees on defaulted loans 556 674
Straight-line rent, net of related bad debt expense (4,457) (5,445)
Other amortization and non-cash charges (605) (945)
Non-cash compensation expense (1) 4,366 2,246
Adjusted funds from operations attributable to Common Stockholders $ 95,333 $ 98,019
Dividends declared to common stockholders $ 78,581 $ 87,122
Net income per share of common stock
Basic (2) $ 0.06 $ 0.03
Diluted (2) $ 0.06 $ 0.03
FFO per diluted share of common stock (2) $ 0.24 $ 0.20
AFFO per diluted share of common stock (2) $ 0.21 $ 0.20
AFFO per diluted share of common stock, excluding several charges (1) $ 0.22 $ 0.20
Weighted average shares of common stock outstanding:
Basic 444,875,428 482,607,198
Diluted 445,102,225 482,609,096
(1) Included in G&A balances for the three months ended March 31, 2018 is $3.9 million of severance-related costs, comprised of $2.1 million of cash compensation and $1.8 million of non-cash compensation related to the acceleration of Restricted
Stock and Performance Share Awards in connection with the departure of two executive officers.
(2) For the three months ended March 31, 2018 and 2017, dividends paid to unvested restricted stockholders of $0.4 million and $0.2 million, respectively, are deducted from Net Income, FFO and AFFO attributable to common stockholders in the
computation of per share amounts.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
7
(Unaudited) March 31, December 31,
2018 2017
Assets:
Real estate investments:
Land and improvements $ 2,571,942 $ 2,588,930
Buildings and improvements 4,685,541 4,692,377
Total real estate investments 7,257,483 7,281,307
Less: accumulated depreciation (1,113,804) (1,075,643)
6,143,679 6,205,664
Loans receivable, net 111,062 79,967
Intangible lease assets, net 396,596 409,903
Real estate assets under direct financing leases, net 24,847 24,865
Real estate assets held for sale, net 19,432 48,929
Net investments 6,695,616 6,769,328
Cash and cash equivalents 10,989 8,798
Deferred costs and other assets, net 241,875 231,045
Goodwill 254,340 254,340
Total Assets $ 7,202,820 $ 7,263,511
Liabilities and Stockholders' Equity
Liabilities:
Revolving Credit Facility $ 154,500 $ 112,000
Term Loan, net — —
Senior Unsecured Notes, net 295,431 295,321
Mortgages and notes payable, net 2,571,794 2,516,478
Convertible Notes, net 719,295 715,881
Total debt, net 3,741,020 3,639,680
Intangible lease liabilities, net 151,179 155,303
Accounts payable, accrued expenses and other liabilities 141,898 148,919
Total liabilities 4,034,097 3,943,902
Stockholders' equity:
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at
both March 31, 2018 and December 31, 2017 166,193 166,193
Common stock, $0.01 par value, 750,000,000 shares authorized: 436,561,654 and 448,868,269 shares issued and outstanding at
March 31, 2018 and December 31, 2017, respectively. 4,366 4,489
Capital in excess of par value 5,197,988 5,193,631
Accumulated deficit (2,199,824) (2,044,704)
Total stockholders' equity 3,168,723 3,319,609
Total Liabilities and Stockholders' Equity $ 7,202,820 $ 7,263,511
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Capitalization & Enterprise Value
Common Shares Outstanding (1) 434,432,805
Common Share Price (2) $ 7.76
Common Market Equity $ 3,371,199
Preferred Share Liquidation Value 172,500
Total Capitalization $ 3,543,699
Total Adjusted Debt 3,699,773
Total Enterprise Value $ 7,243,472
(1) Total outstanding shares as of March 31, 2018, less 2.1 million unvested restricted
shares
(2) Share price as of March 31, 2018
Liquidity
Available Borrowing Capacity
Term Loan $ 420,000
Revolver 645,500
Cash & Cash Equivalents 10,989
Total Liquidity $ 1,076,489
CAPITALIZATION
$ in thousands, except per share data
Common
Market Equity
Preferred
Market Equity
Total
Adjusted
Debt
Enterprise Value
$7,243 Million
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Debt Type
Unsecured
31%
Secured
69%
Fixed/Floating Rate Debt
Floating
4%
Fixed
96%
8
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Revolving Credit Facility Senior Unsecured Notes
Convertible Notes Master Trust 2013 Notes
Master Trust 2014 Notes CMBS
Debt Maturity Schedule
1,400
1,200
1,000
800
600
400
200
0
$
(M
illi
on
s)
2018 2019 2020 2021 2022 Thereafter
Year of Maturity
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DEBT SUMMARY
$ in thousands
Revolving Credit
Facility: 4.0%
Senior Unsecured
Notes: 7.8%
Convertible
Notes: 19.5%
Master Trust 2013
Notes: 8.1%
Master Trust 2014
Notes: 50.5%
CMBS: 10.0%
9
(1)
Unsecured Debt Amount Weighted Avg.Stated Int. Rate (2)
Revolving Credit Facility $ 154,500 3.06%
Term Loan (3) — NM
Senior Unsecured Notes 300,000 4.45%
Convertible Notes 747,500 3.28%
Total Unsecured Debt $ 1,202,000 3.54%
Secured Debt
Master Trust 2013 Notes $ 308,456 4.72%
Master Trust 2014 Notes (4) 1,934,754 4.99%
CMBS (4) 382,718 5.56%
Total Secured Debt $ 2,625,928 5.04%
Total Debt $ 3,827,928 4.57%
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect
to scheduled amortization. A significant portion of our secured debt is partially amortizing and
requires a balloon payment at maturity.
(2) The rate for 2018 includes the default interest rates for three separate fixed rate CMBS loans
totaling $31.4 million, including $10.3 million of capitalized interest, that are in default due to
underperformance of the three properties that secure them.
(3) The Term Loan has an initial maturity date of November 2, 2018, which may be extended at the
Company's option pursuant to two one-year extension options.
(4) Assets to be contributed to Spirit MTA REIT as part of the spin-off include 100% of the Master Trust
2014 Notes and $84.0 million of CMBS debt.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
SENIOR UNSECURED NOTES COVENANT COMPLIANCE
Covenant Requirement March 31, 2018
Total Debt to Total Assets < 60% 46.1%
Total Secured Debt to Total Assets < 40% 32.3%
Fixed Charge Coverage (1) > 1.5x 3.17x
Total Unencumbered Assets to Total Unsecured Debt > 1.5x 3.76x
Credit Ratings
Fitch Ratings BBB-
Moody's Ratings Services Baa3
Standard & Poor's Rating
Services BBB-
(1) Fixed Charge Coverage is calculated per the requirements of the Indenture agreement.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
10
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Investments
Q1 2018
% of Gross
Investment
Number of
Transactions (3)
Number of
Properties
Gross
Investment
Annualized
Rents
Total Square
Feet (3)
Initial
Cash Yield
Wtd. Avg. Lease
Term (Years) (3)
Existing Tenants 26.8% 1 1 $ 2,650 $ 282 17,788 10.63% (4) 15.0
Revenue Producing Capital Expenditures 73.2% — 27 $ 7,252 $ 509 — 7.03% —
Total/Weighted Average 100.0% 1 28 $ 9,902 $ 791 17,788 7.99% 15.0
By Asset Type:
Retail 98.4% 1 26 $ 9,740 $ 777 17,788 7.98% 15.0
Industrial 0.5% — 1 49 4 — 8.00% —
Office 1.1% — 1 113 10 — 8.50% —
Total/Weighted Average 100.0% 1 28 $ 9,902 $ 791 17,788 7.99% 15.0
(1) Capitalization rates are calculated solely on income producing properties.
(2) The gross sales price for properties transferred to lender represents the net book value of the properties at time of transfer.
(3) For revenue producing capital expenditures, the number of transactions, total square feet, economic yield, and weighted average lease term were not included in the Investments disclosure above.
(4) Future fundings for this investment will generate a cash yield of 8.25%.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
INVESTMENT AND DISPOSITION ACTIVITY
$ in thousands
11
Dispositions
Q1 2018
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate (1)
Wtd. Avg. Remaining
Lease Term (Yrs)
Occupied 77.3% 25 $ 35,822 $ 28,228 12.28% 9.9
Transferred to lender (2) 22.7% 4 10,527 9,519 — —
Total/Weighted Average 100.0% 29 $ 46,349 $ 37,747 12.28% 9.9
By Asset Type:
Retail 87.0% 27 $ 40,349 $ 31,688 12.28% 9.9
Industrial 6.2% 1 2,869 3,050 — —
Office 6.8% 1 3,131 3,009 — —
Total/Weighted Average 100.0% 29 $ 46,349 $ 37,747 12.28% 9.9
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
DEVELOPMENT PIPELINE
Anticipated Construction Spend of $74.4 million (Remaining - $24.7 million) and Take-Out Commitments totaling $11.6 million
Concept Location Anticipated Completion Date
Andy's Frozen Custard (1) Naperville, IL completed Q1 2018
Gibsonton Theater (1) Gibsonton, FL Q2 2018
Camping World (1) Multiple Locations Q2 2018
Andy's Frozen Custard (1) Orland Park, IL Q3 2018
Shooters World (1) Orlando, FL Q4 2018
CircusTrix (1)(2) Multiple Locations 2018 - 2019
Andy's Frozen Custard CircusTrix
Multiple Locations Multiple Locations
12
(1) Represents a construction build commitment.
(2) Represents a forward take-out commitment on two CircusTrix properties.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
TENANT DIVERSIFICATION – TOP 100
13
Tenant Concept Number of Properties
Square Feet
(in
thousands)
Percent of
Contractual
Rent
Tenant Concept Number of Properties
Square Feet
(in
thousands)
Percent of
Contractual
Rent
1 Shopko 98 6,669 7.9% 26 C-Store (White Oak Station, LLC) 42 166 0.9%
2 AMC Theatres/Carmike Cinemas 18 917 2.5% 27 Crème de la Crème 9 190 0.9%
3 Walgreens 42 615 2.3% 28 Casual Male 1 756 0.9%
4 Church's Chicken 182 258 2.2% 29 Rite Aid 20 237 0.9%
5 Academy Sports 6 1,805 2.0% 30 Smart & Final 5 263 0.9%
6 Circle K 82 248 1.9% 31 Buehler's Fresh Foods 5 503 0.9%
7 Home Depot 7 821 1.8% 32 IBM 2 395 0.9%
8 Regal Cinemas 15 656 1.5% 33 Red Lobster 27 179 0.8%
9 CarMax 8 356 1.5% 34 FedEx 4 429 0.8%
10 CVS 34 383 1.5% 35 Lowe's 6 806 0.8%
11 Albertsons 22 969 1.5% 36 At Home 7 896 0.8%
12 C-Store (GPM Investments, LLC) 105 272 1.4% 37 Heartland Dental 59 234 0.7%
13 Mister Car Wash 23 162 1.3% 38 Pep Boys 12 250 0.7%
14 The Great Escape 14 543 1.2% 39 Specialists in Urology (21st CenturyOncology Holdings, Inc.) 9 128 0.7%
15 Goodrich Quality Theaters 5 245 1.1% 40 Dave & Buster's 4 132 0.6%
16 Ferguson Enterprises 7 1,003 1.0% 41 Kohl's 6 483 0.6%
17 BJ's Wholesale Club 4 475 1.0% 42 Emagine Theaters 8 452 0.6%
18 PetSmart 6 1,016 1.0% 43 Station Casinos 1 139 0.6%
19 Sportsman's Warehouse 10 476 1.0% 44 Georgia Theatre 4 171 0.6%
20 LA Fitness 7 313 1.0% 45 Express Oil Change 23 84 0.6%
21 Dollar General 61 630 1.0% 46 C-Store (Supermesa Fuel & Merc, LLC) 6 24 0.6%
22 Advance Auto Parts 56 390 1.0% 47 Smokey Bones 13 100 0.6%
23 Main Event 7 441 0.9% 48 Courthouse Athletic Club 5 248 0.5%
24 Applebee's 22 120 0.9% 49 Camping World 8 418 0.5%
25 Tractor Supply 23 608 0.9% 50 B&B Theatres 4 261 0.5%
Top 50 Tenants 1,154 28,335 59.2%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
TENANT DIVERSIFICATION – TOP 100 (continued)
14
Tenant Concept Number of Properties
Square Feet
(in
thousands)
Percent of
Contractual
Rent
Tenant Concept Number of Properties
Square Feet
(in
thousands)
Percent of
Contractual
Rent
51 C-Store (Irving Oil Marketing, Inc.) 37 101 0.5% 76 Universal Tax Systems 1 101 0.3%
52 Flying J Travel Plaza 3 48 0.5% 77 PwC 1 135 0.3%
53 Aaron's 26 266 0.5% 78 High Rise Extreme Air Sports 8 184 0.3%
54 Pine Creek Medical Center 2 86 0.5% 79 Curacao 1 103 0.3%
55 Norms 10 63 0.5% 80 Children's Learning Adventure 3 72 0.3%
56 South Carolina Oncology Associates 1 120 0.5% 81 24 Hour Fitness 2 105 0.3%
57 Mealey's Furniture 4 341 0.5% 82 Wal-Mart 4 370 0.3%
58 Taco Bueno 38 106 0.5% 83 Ladybird Academy 6 72 0.3%
59 HOM Furniture 3 325 0.5% 84 Church's Chicken 35 46 0.3%
60 Defined Fitness 5 205 0.5% 85 DOW Emergency 3 41 0.3%
61 America's Auto Auction 6 72 0.4% 86 Gold's Gym 3 118 0.3%
62 Zips Car Wash 13 48 0.4% 87 Old Time Pottery 3 355 0.3%
63 J. Jill 1 390 0.4% 88 Malibu Boats 2 303 0.3%
64 Office Depot 10 214 0.4% 89 Raymour & Flanigan Furniture 2 67 0.3%
65 Mills Fleet Farm 1 218 0.4% 90 Crunch Fitness 4 163 0.3%
66 Hardee's 24 79 0.4% 91 Southern Theatres 2 106 0.3%
67 Best Buy 4 188 0.4% 92 KFC 17 49 0.3%
68 C-Store (Town Star Holdings, LLC) 12 43 0.4% 93 Pike Nursery 5 56 0.3%
69 Childcare Network 20 191 0.4% 94 Food City 3 130 0.3%
70 Arby's 25 77 0.4% 95 Golden Corral 7 69 0.3%
71 Big Al's 2 112 0.4% 96 C-Store (Mountain Express Oil CompanySoutheast, LLC) 13 27 0.3%
72 Big Sandy Furniture 7 299 0.4% 97 Burger King 18 65 0.3%
73 Sunny Delight 1 286 0.4% 98 Brookshire Brothers 12 317 0.3%
74 Martin's 16 42 0.3% 99 Hardee's 18 63 0.3%
75 American Lubefast 29 64 0.3% 100 Gold's Gym 2 98 0.3%
Top 100 Tenants 1,629 35,534 77.5%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
INDUSTRY DIVERSIFICATION
Industry Category Concentration:
Percent of Contractual Rent
Traditional
Retail
39.0%
Service
57.1%
Industrial
3.5%
Other
0.4%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
15
Tenant Industry IndustryCategory
Number of
Owned
Properties
Total Square
Feet
(in thousands)
Percent of
Contractual
Rent
General Merchandise Retail 105 7,191 8.5%
Restaurants - Casual Dining Service 274 1,665 8.2%
Restaurants - Quick Service Service 576 1,304 8.2%
Movie Theaters Service 62 3,115 7.6%
Convenience Stores Service 313 966 6.5%
Grocery Retail 61 2,968 4.9%
Drug Stores / Pharmacies Service 97 1,288 4.8%
Specialty Retail Retail 88 2,754 4.6%
Medical Office Service 111 1,130 4.5%
Health and Fitness Service 44 1,775 4.2%
Home Furnishings Retail 37 2,916 3.9%
Entertainment Service 26 1,151 3.1%
Sporting Goods Retail 17 2,329 3.2%
Education Service 55 821 2.7%
Home Improvement Retail 14 1,653 2.7%
Automotive Services Service 128 748 2.7%
Automotive Dealers Retail 22 630 2.3%
Professional Services Service 12 846 2.2%
Manufacturing Industrial 21 2,735 2.1%
Car Washes Service 41 231 1.9%
Apparel Retail 6 1,449 1.5%
Building Materials Retail 37 1,505 1.5%
Distribution Industrial 9 813 1.4%
Wholesale Clubs / Supercenters Retail 9 883 1.4%
Dollar Stores Retail 75 770 1.2%
Pet Supplies & Service Retail 6 1,016 1.0%
Automotive Parts Retail 60 416 1.0%
Office Supplies Retail 17 458 0.7%
Travel Plazas Service 3 48 0.5%
Other Other 6 147 0.4%
Consumer Electronics Retail 4 188 0.4%
Discount Retailers Retail 2 120 0.2%
Vacant 26 1,732 —
Total 2,364 47,761 100.0%
Tenant Industry determined using the NAICS code of the Tenant.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
* Less than 0.1%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
PORTFOLIO DIVERSIFICATION
16
% of Contractual Rent
Texas 12.0% Michigan 3.7% North Carolina 2.4% Oklahoma 1.5% Iowa 1.1% New Hampshire 0.8% West Virginia 0.6% Wyoming 0.2%
Georgia 6.2% Minnesota 3.6% Alabama 2.2% Kentucky 1.5% Oregon 1.1% Maryland 0.8% Utah 0.5% Alaska 0.1%
Florida 5.8% Arizona 3.2% Virginia 2.0% Nevada 1.4% New Jersey 1.1% Louisiana 0.7% North Dakota 0.4% U.S. V.I. 0.1%
Illinois 5.8% Missouri 3.0% Colorado 1.9% Arkansas 1.3% Idaho 1.0% South Dakota 0.6% Nebraska 0.4% Delaware 0.1%
Ohio 5.0% Indiana 2.9% Pennsylvania 1.8% Kansas 1.3% Mississippi 1.0% Montana 0.6% Maine 0.4% Vermont *
California 4.1% Tennessee 2.8% New Mexico 1.7% Massachusetts 1.2% Washington 0.9% Connecticut 0.6% Rhode Island 0.3% Hawaii —
Wisconsin 3.9% South Carolina 2.7% New York 1.7%
16.7%
43.6%
31.7%
7.9%
KEY
Northeast
Midwest
South
West
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Asset Type
Contractual Rent
for the Net
Change
% Change
by Asset
Type
% of Total
Asset
Contribution
% Change
from Prior
YearMonth ended March 31,
2018 2017
Retail $ 37,041 $ 36,471 $ 570 1.6% 85.9% 1.3%
Industrial 3,777 3,747 30 0.8% 8.8% 0.1%
Office 2,228 2,199 29 1.3% 5.2% 0.1%
Data Centers 58 58 — — 0.1% —
Total $ 43,104 $ 42,475 $ 629 1.5% 100.0% 1.5%
SAME STORE CONTRACTUAL RENT
$ in thousands
17
Same Store Results
Number of Properties 2,158
Total Square Feet (in thousands) 39,414
March 2018 Contractual Rent $ 43,104
March 2017 Contractual Rent $ 42,475
Increase (in dollars) $ 629
Increase (percent) 1.5%
Top Tenant Industry
Contributors
Contractual Rent
for the Net
Change
% Change
by Industry
Type
% of Total
Industry
Contribution
% Change
from Prior
YearMonth ended March 31,
2018 2017
Movie Theaters $ 3,274 $ 3,116 $ 158 5.1% 7.6% 0.4%
Restaurants -
Casual Dining 3,752 3,666 86 2.3% 8.7% 0.2%
Medical Office 2,188 2,117 71 3.4% 5.1% 0.2%
Specialty Retail 2,041 1,979 62 3.1% 4.7% 0.1%
Convenience
Stores 2,978 2,944 34 1.2% 6.9% 0.1%
Restaurants -
Quick Service 3,864 3,836 28 0.7% 9.0% 0.1%
Health and Fitness 1,970 1,942 28 1.4% 4.6% 0.1%
Entertainment 1,016 996 20 2.0% 2.4% —
Remaining Tenant
Categories 22,021 21,879 142 0.6% 51.0% 0.3%
Total $ 43,104 $ 42,475 $ 629 1.5% 100.0% 1.5%
Same Store Pool Defined
We include all properties owned throughout the
measurement period in both the current and prior year
and exclude: multi-tenant properties, properties that
were vacant, renewed or relet at any point during the
measurement period, construction in progress, and
properties where contractual rent was fully or partially
reserved in either the current or prior measurement
period.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
OCCUPANCY
18
Owned Properties
Occupied 2,338
Vacant 26
Total Owned Properties 2,364
Occupancy Rate 98.9%
Change in Vacant Properties
Vacant Properties at December 31, 2017 19
Additions 12
Dispositions/Relets (5)
Vacant Properties at March 31, 2018 26
Historical Occupancy Rates
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4% 98.2% 97.7% 97.9% 99.1% 99.2% 98.9%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
LEASE STRUCTURE AND EXPIRATIONS
$ in thousands
Lease Expirations as a Percent of Contractual Rent
2018 Remainder
2019
2020
2021
2022
2023
2024
2025
2026
2027
Thereafter
1.8%
3.2%
3.2%
7.4%
5.7%
6.5%
3.7%
5.6%
7.0%
12.2%
43.7%
19
Year
Number of
Owned
Properties
Total
Square Feet
(in thousands)
Contractual Rent
Annualized (1)
2018 Remainder 31 800 $ 10,643
2019 100 1,625 18,907
2020 73 1,483 18,971
2021 179 3,669 43,955
2022 122 3,022 34,077
2023 131 3,986 38,599
2024 55 1,355 22,310
2025 75 2,029 33,284
2026 186 3,614 41,648
2027 183 5,868 72,758
Thereafter 1,203 18,578 260,983
Vacant 26 1,732 —
Totals 2,364 47,761 $ 596,135
Based on Contractual Rent:
89% of our leases (excluding those on multi-tenant
properties) provide for periodic escalations and
45% of our leases are under Master Lease structures.
Lease Escalations as a Percent of Contractual Rent
(Excludes Multi-Tenant Properties)
Contractual Fixed
Increases
53%
Flat
11%
CPI-Related
36%
(1) Contractual Rent multiplied by twelve. Annualized Cash Rents were $593.3 million as of March 31, 2018.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
(1) Contractual Rent multiplied by twelve.
(2) Includes five direct financing lease properties with a Real Estate Investment
value of $24.8 million. Annualized Cash Rents include the tenants' current
cash obligations of $1.9 million for the lease of these properties.
(3) Includes one property that is held for sale with a net book value of $8.3
million.
(4) Includes two vacant properties (neither of which was held for sale) and one
active property. These three properties were acquired between 2006 and
2013. These properties, with a net book value of $19.3 million, secure three
fixed rate CMBS loans with $31.4 million of outstanding principal payable
(including $10.3 million of capitalized interest) that are in default due to the
underperformance of the three properties.
(5) Includes $79.6 million in dividends payable.
(6) Total outstanding shares as of March 31, 2018, less 2.1 million unvested
restricted shares.
NET ASSET VALUE (NAV) COMPONENTS
$ in thousands
Other NAV Components
Total Loans Receivable Principal Balance Outstanding: $ 106,325
Cash and Cash Equivalents $ 10,989
Restricted Cash 117,165
Accounts Receivable, Prepaid Assets,
and Other Tangible Assets, Net 20,658
Total Other Tangible Assets Net Book Value: $ 148,812
Total Debt Principal Balance Outstanding: $ 3,827,928
Accounts Payable, Accrued Expenses
and Other Tangible Liabilities(5)
Net Book Value: $ 141,898
Preferred Shares Liquidation Value: $ 172,500
Common Shares Outstanding(6) 434,432,805
20
Owned Real Estate Portfolio
Number of
Properties
Contractual Rent
Annualized (1)
Retail (2) 2,147 $ 500,278
Office 113 37,981
Industrial 66 49,574
Data Centers 3 5,828
Leased Real Estate Properties Held For Sale, Net 8 1,333
Vacant Properties (3) 24 —
Properties under Defaulted Loans (4) 3 1,141
Total Owned Real Estate Portfolio 2,364 $ 596,135
Contractual Rent
Annualized (1)
Top Ten Tenants $ 150,256
Top 100 Tenants $ 462,474
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
ANALYST COVERAGE
21
BofA Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681
BTIG Michael Gorman mgorman@btig.com 212.738.6138
Capital One Securities Chris Lucas christopher.lucas@capitalone.com 571.633.8151
Deutsche Bank
Vincent Chao vincent.chao@db.com 212.250.6799
Shivani Sood shivani.sood@db.com 212.250.4617
Green Street Advisors Michael Knott mknott@greenstreetadvisors.com 949.640.8780
Janney Montgomery Scott
Robert Stevenson robstevenson@janney.com 646.840.3217
Venkat Kommineni vkommineni@janney.com 646.840.3219
J.P. Morgan Anthony Paolone anthony.paolone@jpmorgan.com 212.622.6682
Ladenburg Thalman & Co. John Massocca jmassocca@ladenburg.com 212.409.2543
Mizuho Securities
Haendel St. Juste haendel.st.juste@us.mizuho-sc.com 212.205.7860
Jieren Huang jieren.huang@us.mizuho-sc.com 212.205.7862
Morgan Stanley
Vikram Malhotra vikram.malhotra@morganstanley.com 212.761.7064
Kevin Egan kevin.egan@morganstanley.com 212.761.5028
Raymond James
Collin Mings collin.mings@raymondjames.com 727.567.2585
Marnie Georges marnie.georges@raymondjames.com 727.567.2538
RBC Capital Markets
Michael Carroll michael.carroll@rbccm.com 440.715.2649
Neil Malkin neil.malkin@rbccm.com 440.715.2653
RW Baird
RJ Milligan rjmilligan@rwbaird.com 813.273.8252
Will Harman wharman@rwbaird.com 414.298.2337
Sun Trust Robinson Humphrey
Ki Bin Kim kibin.kim@suntrust.com 212.303.4124
Ian Gaule ian.gaule@suntrust.com 212.590.0948
UBS Frank Lee frank-a.lee@ubs.com 415.352.5679
The aforementioned security analysts currently provide opinions, estimates and forecasts, which are their own and are not promoted or endorsed by Spirit or its management team. Therefore, their opinions, estimates or forecasts are their own and
should not be interpreted as Spirit’s opinions, estimates or forecasts. Any reference or distribution by Spirit expressly disclaims any endorsement of or concurrent with any information, estimates, forecasts, opinions, conclusions or recommendations
provided by analysts.
APPENDIX
22
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
REPORTING DEFINITIONS AND EXPLANATIONS
23
Funds from Operations (FFO) and
Adjusted Funds from Operations (AFFO)
We calculate FFO in accordance with the standards
established by the National Association of Real
Estate Investment Trusts (NAREIT). FFO represents
net income (loss) attributable to common
stockholders (computed in accordance with GAAP),
excluding real estate-related depreciation and
amortization, impairment charges and net (gains)
losses from property dispositions. FFO is a
supplemental non-GAAP financial measure. We use
FFO as a supplemental performance measure
because we believe that FFO is beneficial to
investors as a starting point in measuring our
operational performance. Specifically, in excluding
real estate-related depreciation and amortization,
gains and losses from property dispositions and
impairment charges, which do not relate to or are not
indicative of operating performance, FFO provides a
performance measure that, when compared year
over year, captures trends in occupancy rates, rental
rates and operating costs. We also believe that, as a
widely recognized measure of the performance of
equity REITs, FFO will be used by investors as a
basis to compare our operating performance with that
of other equity REITs. However, because FFO
excludes depreciation and amortization and does not
capture the changes in the value of our properties
that result from use or market conditions, all of which
have real economic effects and could materially
impact our results from operations, the utility of FFO
as a measure of our performance is limited. In
addition, other equity REITs may not calculate FFO
as we do, and, accordingly, our FFO may not be
comparable to such other equity REITs’ FFO.
Accordingly, FFO should be considered only as a
supplement to net income (loss) attributable to
common stockholders as a measure of our
performance.
AFFO is a non-GAAP financial measure of operating
performance used by many companies in the REIT
industry. We adjust FFO to eliminate the impact of
certain items that we believe are not indicative of our
core operating performance, including restructuring
and divestiture costs, other G&A costs associated
with relocation of the Company's headquarters,
transactions costs associated with our proposed spin-
off, default interest and fees on non-recourse
mortgage indebtedness, debt extinguishment gains
(losses), transaction costs incurred in connection with
the acquisition of real estate investments subject to
existing leases and certain non-cash items. These
certain non-cash items include non-cash revenues
(comprised of straight-line rents, amortization of
above and below market rent on our leases,
amortization of lease incentives, amortization of net
premium (discount) on loans receivable, provision for
bad debts and amortization of capitalized lease
transaction costs), non-cash interest expense
(comprised of amortization of deferred financing
costs and amortization of net debt discount/premium)
and non-cash compensation expense (stock-based
compensation expense). In addition, other equity
REITs may not calculate AFFO as we do, and,
accordingly, our AFFO may not be
comparable to such other equity REITs’ AFFO. AFFO
does not represent cash generated from operating
activities determined in accordance with GAAP, is not
necessarily indicative of cash available to fund cash
needs and should not be considered as an alternative
to net income (determined in accordance with GAAP)
as a performance measure.
Adjusted EBITDAre represents EBITDAre, or
earnings before interest, taxes, depreciation and
amortization for real estate, modified to include other
adjustments to GAAP net income (loss) for
transaction costs, severance charges, real estate
acquisition costs, and debt transactions and other
items that we do not consider to be indicative of our
on-going operating performance. We focus our
business plans to enable us to sustain increasing
shareholder value. Accordingly, we believe that
excluding these items, which are not key drivers of
our investment decisions and may cause short-term
fluctuations in net income, provides a useful
supplemental measure to investors and analysts in
assessing the net earnings contribution of our real
estate portfolio. Because these measures do not
represent net income (loss) that is computed in
accordance with GAAP, they should not be
considered alternatives to net income (loss) or as an
indicator of financial performance. A reconciliation of
net income (loss) attributable to common
stockholders (computed in accordance with GAAP) to
EBITDAre and Adjusted EBITDAre is included in the
Appendix found at the end of this presentation.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
REPORTING DEFINITIONS AND EXPLANATIONS
24
Annualized Adjusted EBITDAre is calculated by
multiplying Adjusted EBITDAre of a quarter by four.
Our computation of Adjusted EBITDAre and
Annualized Adjusted EBITDAre may differ from the
methodology used by other equity REITs to calculate
these measures and, therefore, may not be
comparable to such other REITs. A reconciliation of
Annualized Adjusted EBITDAre is included in the
Appendix found at the end of this presentation.
Adjusted Debt represents interest bearing debt
(reported in accordance with GAAP) adjusted to
exclude unamortized debt discount/premium,
deferred financing costs, cash and cash equivalents
and cash reserves on deposit with lenders as
additional security. By excluding these amounts, the
result provides an estimate of the contractual amount
of borrowed capital to be repaid, net of cash available
to repay it. We believe this calculation constitutes a
beneficial supplemental non-GAAP financial
disclosure to investors in understanding our financial
condition. A reconciliation of interest bearing debt
(reported in accordance with GAAP) to Adjusted Debt
is included in the Appendix found at the end of this
presentation.
Adjusted Debt to Annualized Adjusted EBITDAre
is a supplemental non-GAAP financial measure we
use to evaluate the level of borrowed capital being
used to increase the potential return of our real estate
investments and a proxy for a measure we believe is
used by many lenders and ratings agencies to
evaluate our ability to repay and service our debt
obligations over time.
We believe this ratio is a beneficial disclosure to
investors as a supplemental means of evaluating our
ability to meet obligations senior to those of our
equity holders. Our computation of this ratio may
differ from the methodology used by other equity
REITs and, therefore, may not be comparable to such
other REITs.
Annualized Cash Rents represents the annualized
monthly Contractual Rent, less any rent reserved for,
multiplied by twelve.
Capitalization Rate represents the Annualized Cash
Rents on the date of a property disposition divided by
the gross sales price. For Multi-Tenant properties,
non-reimbursable property costs are deducted from
the Annualized Cash Rents prior to computing the
disposition Capitalization Rate.
CMBS are those notes secured by commercial real
estate and rents therefrom under which certain
indirect wholly-owned special purpose entity
subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Convertible Notes are the $402.5 million convertible
notes of the Company due in 2019 and the $345.0
million convertible notes of the Company due in
2021, together. These liabilities are discussed in
greater detail in our financial statements and the
notes thereto included in our periodic reports filed
with the SEC.
Contractual Rent represents monthly contractual
cash rent and earned income from direct financing
leases, excluding percentage rents, from our Owned
Properties recognized during the final month of the
reporting period, adjusted to exclude amounts
received from properties sold during that period and
adjusted to include a full month of contractual rent for
properties acquired during that period. We use
Contractual Rent when calculating certain metrics
that are useful to evaluate portfolio credit, asset type,
industry and geographic diversity and to manage risk.
EBITDAre is a non-GAAP financial measure and is
computed in accordance with standards established
by NAREIT. EBITDAre is defined as net income (loss)
(computed in accordance with GAAP), plus interest
expense, plus income tax expense (if any), plus
depreciation and amortization, plus (minus) losses
and gains on the disposition of depreciated property,
plus impairment write-downs of depreciated property
and investments in unconsolidated real estate
ventures, plus adjustments to reflect the Company's
share of EBITDAre of unconsolidated real estate
ventures.
Economic Yield is calculated by dividing the
contractual cash rent, including fixed rent escalations
and/or cash increases determined by CPI (increases
calculated using a month to month historical CPI
index) by the initial lease term, expressed as a
percentage of the Gross Investment.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
REPORTING DEFINITIONS AND EXPLANATIONS
25
Enterprise Value represents Total Market
Capitalization less cash and cash equivalents and
reserves on deposit with lenders as of the date
indicated.
Equity Market Capitalization is calculated by
multiplying the number of shares outstanding by the
closing share price of the Company’s common stock
as of the date indicated.
Fixed Charge Coverage Ratio (FCCR) is the ratio of
Annualized Adjusted EBITDA to Annualized Fixed
Charges, a ratio derived from non-GAAP measures
that we use to evaluate our liquidity and ability to
obtain financing. Fixed charges consist of interest
expense, reported in accordance with GAAP, less
non-cash interest expense. Annualized Fixed
Charges is calculated by multiplying fixed charges for
the quarter by four.
GAAP are the Generally Accepted Accounting
Principles in the United States.
Gross Investment represents the gross acquisition
cost including the contracted purchase price and
related capitalized transaction costs.
Initial Cash Yield from properties is calculated by
dividing the first twelve months of contractual cash
rent (excluding any future rent escalations provided
subsequently in the lease and percentage rent) by
the Gross Investment in the related properties. Initial
Cash Yield is a measure (expressed as a
percentage) of the contractual cash rent expected to
be earned on an acquired property in the first year.
Because it excludes any future rent increases or
additional rent that may be contractually provided for
in the lease, as well as any other income or fees that
may be earned from lease modifications or asset
dispositions, Initial Cash Yield does not represent the
annualized investment rate of return of our acquired
properties. Additionally, actual contractual cash rent
earned from the properties acquired may differ from
the Initial Cash Yield based on other factors,
including difficulties collecting anticipated rental
revenues and unanticipated expenses at these
properties that we cannot pass on to tenants, as well
as the risk factors set forth in our Annual Report on
Form 10-K for the year ended December 31, 2016.
Lease Expiration is the end of the initial term under
a lease and does not account for extension periods
under the lease.
Master Trust 2013 and Master Trust 2014
(collectively Master Trust Notes) are net-lease
mortgage notes issued under the Spirit Master
Funding Program and the securitization trusts
established thereunder. Indirect special purpose
entity subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Net Asset Value (NAV) We believe disclosing
information frequently used in the calculation of NAV
is useful to investors and because it enables and
facilitates calculation of a metric frequently used by
our management as one method to estimate the fair
value of our business. The assessment of the fair
value of our business is subjective in that it involves
estimates and assumptions and can be calculated
using various methods. Therefore, we have
presented certain information regarding our financial
and operating results, as well as our assets and
liabilities that we believe are important in calculating
our NAV, but have not presented any specific
methodology nor provided any guidance on the
assumptions or estimates that should be used in the
calculation of NAV. The components of NAV do not
consider the potential changes in the value of assets,
the collectability of rents or other receivable
obligations, or the value associated with our
operating platform.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
REPORTING DEFINITIONS AND EXPLANATIONS
26
Net Book Value represents the Real Estate
Investment value net of accumulated depreciation.
Occupancy is calculated by dividing the number of
economically yielding Owned Properties in the
portfolio as of the measurement date by the number
of total Owned Properties on said date.
Owned Properties refers to properties owned fee-
simple or ground leased by Company subsidiaries as
lessee.
Real Estate Investment represents the Gross
Investment plus improvements less impairment
charges.
Revolving Credit Facility refers to the $800 million
unsecured credit facility which matures on March 31,
2019. The Revolving Credit Facility includes sublimits
for swingline loans and letter of credit issuances.
Swingline loans and letters of credit reduce
availability under the Revolving Credit Facility. The
ability to borrow under the Revolving Credit Facility is
subject to the ongoing compliance with customary
financial covenants.
Senior Unsecured Notes refers to the $300 million
aggregate principal amount of 4.450% senior
unsecured notes due 2026.
Tenant represents the legal entity ultimately
responsible for obligations under the lease
agreement or an affiliated entity. Other tenants may
operate the same or similar business concept or
brand.
Term Loan refers to a $420.0 million unsecured term
facility which includes an accordion feature which
allows the facility to be increased to up to $600.0
million, subject to obtaining additional lender
commitments. Borrowings may be repaid without
premium or penalty, and may be re-borrowed within
30 days up to the then available loan commitment.
Total Market Capitalization represents Equity
Market Capitalization plus Total Debt as of the date
indicated.
Total Debt represents the sum of the principal
balances outstanding on interest-bearing debt on the
Company’s balance sheet as of the date indicated.
Unencumbered Assets represents the assets in our
portfolio that are not subject to mortgage
indebtedness, which we use to evaluate our
potential access to capital and in our management of
financial risk. The asset value attributed to these
assets is the Real Estate Investment.
Unsecured Debt represents components of Total
Debt that are not secured by liens, mortgages or
deeds of trust on Company assets.
Weighted Average Remaining Lease Term is
calculated by dividing the sum product of (a) a stated
revenue or sales price component and (b) the lease
term for each lease by (c) the sum of the total
revenue or sale price components for all leases
within the sample.
Weighted Average Stated Interest Rate is
calculated by dividing the sum product of (a) coupon
interest rate of each note and (b) the principal
balance outstanding of each note by (c) the sum of
the total principal balances outstanding for all notes
in the sample.
Weighted Average Unit Level Rent Coverage is
used as an indicator of individual asset profitability, as
well as signaling the property’s importance to our
tenants’ financial viability. We calculate Unit Level
Rent Coverage by dividing our reporting tenants’
trailing 12-month EBITDAR (earnings before interest,
tax, depreciation, amortization and rent) by annual
contractual rent. These are then weighted based on
the tenant's Contractual Rent. Tenants in the
manufacturing industry are excluded from the
calculation.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
Fixed Charge Coverage Ratio (FCCR)
Q1 2018
Annualized Adjusted EBITDAre $ 583,484
Interest expense 51,065
Less: Non-cash interest (7,541)
Preferred Stock dividends 2,588
Fixed charges $ 46,112
Annualized fixed charges $ 184,448
Fixed Charge Coverage Ratio 3.2x
27
Unencumbered Assets to Unsecured Debt
Q1 2018
Unsecured debt:
Revolving Credit Facility $ 154,500
Term Loan —
Senior Unsecured Notes 300,000
Convertible Notes 747,500
Total Unsecured Debt $ 1,202,000
Unencumbered Assets $ 4,514,694
Unencumbered Assets / Unsecured Debt 3.8x
NON-GAAP RECONCILIATIONS
$ in thousands
Notice Regarding Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this presentation contains and may
refer to certain non-GAAP financial measures. These non-GAAP financial measures
are in addition to, not a substitute for or superior to, measures of financial
performance prepared in accordance with GAAP. These non-GAAP financial
measures should not be considered replacements for, and should be read together
with, the most comparable GAAP financial measures. Reconciliations to the most
directly comparable GAAP financial measures and statements of why management
believes these measures are useful to investors are included in this Appendix if the
reconciliation is not presented on the page in which the measure is published.
Adjusted Debt, Adjusted EBITDAre, Annualized Adjusted EBITDAre Q1 2018
Revolving Credit Facility $ 154,500
Term Loan, net —
Senior Unsecured Notes, net 295,431
Mortgages and notes payable, net 2,571,794
Convertible Notes, net 719,295
Total debt, net 3,741,020
Add / (less):
Unamortized debt discount, net 48,770
Unamortized deferred financing costs 38,140
Cash and cash equivalents (10,989)
Restricted cash balances held for the benefit of lenders (117,166)
Total adjustments (41,245)
Adjusted Debt $ 3,699,775
Preferred Stock at liquidation value 172,500
Adjusted Debt + Preferred Stock $ 3,872,275
Net Income $ 30,718
Add / (less):
Interest 51,065
Depreciation and amortization 62,117
Income tax expense 252
Realized gain on sales of real estate assets 605
Impairments on real estate assets 14,569
Total adjustments 128,608
EBITDAre $ 159,326
Add / (less):
Transaction costs 3,932
Real estate acquisition costs 48
Gain on debt extinguishment (21,328)
Severance costs 3,893
Total Adjustments (13,455)
Adjusted EBITDAre $ 145,871
Annualized Adjusted EBITDAre $ 583,484
Adjusted Debt / Annualized Adjusted EBITDAre 6.3x
Adjusted Debt + Preferred / Annualized EBITDAre 6.6x
Adjusted Debt to Enterprise Value
Q1 2018
Adjusted Debt $ 3,699,775
Enterprise value 7,243,472
Adjusted Debt / Enterprise Value 51.1%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of March 31, 2018 Q1 2018
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
28
The information in this supplemental report should be read in conjunction with the accompanying earnings press release, as well as the
Company's Quarterly Report on Form 10-Q, Annual Report on Form 10-K and other information filed with the Securities and Exchange
Commission. This supplemental report is not incorporated into such filings.
This document is not an offer to sell or a solicitation to buy securities of Spirit Realty Capital, Inc. Any offer or solicitation shall be made
only by means of a prospectus approved for that purpose.
Forward-Looking and Cautionary Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other
federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” "will," “estimate,”
“project,” “intend,” “believe,” “guidance,” and other similar expressions that do not relate to historical matters. These forward-looking
statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, Spirit’s continued ability to source new investments, risks
associated with using debt and equity financing to fund Spirit’s business activities (including refinancing and interest rate risks, changes
in interest rates and/or credit spreads, changes in the price of our common stock, and conditions of the equity and debt capital markets,
generally), unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities, general risks
affecting the real estate industry and local real estate markets (including, without limitation, the market value of our properties, the inability
to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants’ financial
condition and operating performance, and competition from other developers, owners and operators of real estate), the financial
performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general
merchandise retailers, potential fluctuations in the consumer price index, risks associated with our failure to maintain our status as a
REIT under the Internal Revenue Code of 1986, as amended, risks and uncertainties related to the completion and timing of Spirit's
proposed spin-off of almost all of the properties leased to Shopko, the assets that collateralize Master Trust 2014 and certain additional
assets, and the impact of the spin-off on Spirit's business, and other additional risks discussed in Spirit’s most recent filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update
or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.