PHOENIX, Nov. 6, 2018 /PRNewswire/ -- VEREIT, Inc. (NYSE:
VER) ("VEREIT" or the "Company") announced today its operating
results for the three months ending September 30, 2018.
The financial results below reflect continuing operations
only.
Third Quarter 2018 Highlights
- Net loss of $(73.9) million and
net loss per diluted share of $(0.09)
- Achieved $0.18 AFFO per diluted
share
- Completed $98.6 million of
acquisitions and $191.0 million of
dispositions
- Decreased Debt from $6.04 billion
to $5.95 billion; Net Debt decreased
from $6.05 billion to $5.95 billion, or 38.7% Net Debt to Gross Real
Estate Investments
- Net Debt to Normalized EBITDA decreased from 5.8x to 5.7x
- Company narrows 2018 AFFO per diluted share guidance range from
$0.70 - $0.72 to $0.71 -
$0.72 (see reconciliation to earnings
per share at the end of this release)
Third Quarter 2018 Financial Results
Revenue
Revenue for the quarter ended September 30, 2018 increased
$7.4 million to $313.9 million as compared to revenue of
$306.5 million for the same quarter
in 2017, primarily due to net acquisitions since July 1, 2017.
Net (Loss) Income and Net (Loss) Attributable to Common
Stockholders per Diluted Share
Net loss for the quarter ended September 30, 2018 increased
$86.4 million to $(73.9) million as compared to net income of
$12.5 million for the same quarter in
2017, and net loss per diluted share increased $0.08 to $(0.09)
for the quarter ended September 30, 2018, as compared to a net
loss per diluted share of $(0.01) for
the same quarter in 2017. The differences were primarily due
to the settlement with twelve opt out plaintiffs along with higher
impairments and a smaller gain on the extinguishment of debt offset
by higher revenue, lower depreciation and amortization, and a net
gain on the disposition of real estate in 2018 versus a net loss in
the same quarter of 2017.
Normalized EBITDA
Normalized EBITDA for the quarter ended September 30, 2018
increased $3.1 million to
$261.1 million as compared to
Normalized EBITDA of $258.0 million
for the same quarter in 2017, primarily due to higher revenue
partially offset by higher property operating and G&A expenses
and a lower contribution from equity in income and unconsolidated
entities.
Funds From Operations Attributable to Common Stockholders and
Limited Partners ("FFO") and FFO per Diluted Share
FFO for the quarter ended September 30, 2018 decreased
$135.6 million to $38.1 million, as compared to $173.7 million for the same quarter in 2017, and
FFO per diluted share decreased $0.13
to $0.04 for the quarter ended
September 30, 2018, as compared to FFO per diluted share of
$0.17 for the same quarter in
2017.
Adjusted FFO Attributable to Common Stockholders and Limited
Partners ("AFFO") and AFFO per Diluted Share
AFFO for the quarter ended September 30, 2018 increased
$3.7 million to $178.5 million, as compared to $174.8 million for the same quarter in 2017, and
AFFO per diluted share remained at $0.18 for the quarter ended September 30,
2018, as compared to the same quarter in 2017.
Management Commentary
Glenn J. Rufrano, Chief Executive
Officer, stated, "The Company has made progress on civil litigation
and we continue to maintain a very liquid and flexible balance
sheet. The successful bond offering in October allowed us to
increase availability on our line of credit and the $900.0 million delayed-draw term loan is
available to pay off the $750.0
million bond coming due in February 2019. This leaves
us with no major maturities until December
2020. We are closely monitoring our debt balances and
continue to unencumber our assets as we are cognizant of the
settlement payments we have been making."
Common Stock Dividend Information
On November 5, 2018, the Company's Board of Directors
declared a quarterly dividend of $0.1375 per share for the third quarter of 2018,
representing an annual distribution rate of $0.55 per share. The dividend will be paid on
January 15, 2019 to common stockholders of record as of
December 31, 2018.
Balance Sheet and Liquidity
On August 1, 2018, the Company
repaid $597.5 million of principal
outstanding related to the 2018 convertible notes, which was
temporarily funded using borrowings under the revolving credit
facility. During the quarter, the Company had net draws
on its revolving line of credit of $598.0
million, resulting in a balance of $793.0 million and leaving $1.2 billion of capacity available as of
September 30, 2018 on the Company's $2.0 billion revolving line of credit. In
addition, secured debt was reduced by $94.6
million. The Company also has full capacity on its
$900.0 million delayed-draw term
loan.
Subsequent to the quarter, the Company completed a $550.0 million bond issuance on October 16,
2018 and used the net proceeds to repay borrowings on the revolving
line of credit.
Consolidated Financial Statistics
Financial Statistics as of the quarter ended September 30,
2018 are as follows: Net Debt to Normalized EBITDA of 5.7x,
Fixed Charge Coverage Ratio of 3.0x, Unencumbered Asset Ratio of
74.8%, Net Debt to Gross Real Estate Investments of 38.7% and
Weighted Average Debt Term of 4.2 years.
Real Estate Portfolio
As of September 30, 2018, the Company's portfolio consisted
of 4,021 properties with total portfolio occupancy of 99.1%,
investment grade tenancy of 42.7% and a weighted-average remaining
lease term of 8.9 years. During the quarter ended
September 30, 2018, same-store rents (3,946 properties)
increased 0.3% as compared to the same quarter in 2017.
Excluding the effects of an early lease renewal, the increase in
same store rents would have been 0.9%.
Property Acquisitions
During the third quarter of 2018, the Company acquired 23
properties for approximately $98.6
million at an average cash cap rate of 7.4%.
Property Dispositions
During the quarter ended September 30, 2018, the Company
disposed of 35 properties for an aggregate sales price of
$181.1 million. Of this amount,
$174.4 million was used in the total
weighted average cash cap rate calculation of 6.3%, including
$49.1 million in net sales of Red
Lobster restaurants. The gain on third quarter sales was
approximately $46.1 million. In
addition, the Company sold certain legacy CMBS investments during
the quarter for an aggregate sales price of $9.9 million.
Subsequent Events
Property Acquisitions
From October 1, 2018 through
October 29, 2018, the Company
acquired five properties for $66.7
million. Acquisitions year-to-date through
October 29, 2018, totaled
$345.5 million.
Property Dispositions
From October 1, 2018 through
October 29, 2018, the Company
disposed of nine properties for an aggregate sales price of
$41.0 million. Dispositions
year-to-date through October 29,
2018, totaled $414.6 million,
including $98.4 million in net sales
of Red Lobster restaurants. In addition, from October 1, 2018 through October 29, 2018, the Company disposed of certain
legacy investments in mortgage related securities for an aggregate
sales price of $15.4 million and
disposed of $25.2 million
year-to-date through October 29,
2018.
Twelve Opt Out Plaintiff Settlements
The Company entered into a series of agreements dated
September 30 through October 26,
2018, to settle twelve of the thirteen pending opt out
actions. Eight of the settled opt out actions, representing
approximately 11.0% of VEREIT's outstanding shares of common stock
and swaps referencing common stock outstanding at the end of the
period covered by the litigations, were settled for an aggregate
payment of $85.0 million and the
remaining four settled opt out actions, representing approximately
7.0% of VEREIT's outstanding shares of common stock and swaps
referencing common stock, were settled for an aggregate payment of
$42.5 million. Including
the previously announced settlement with Vanguard, the Company has
now settled claims brought by plaintiffs representing approximately
31.0% of VEREIT's outstanding shares of common stock and swaps
referencing common stock held at the end of the period covered by
the various pending shareholder actions for a total of $217.5 million. The Company retains the
right to pursue any and all claims against the other defendants in
the litigations and/or third parties, including claims for
contribution for amounts paid in the settlements.
Capital Market Activity
On October 16, 2018, the Company closed a senior note
offering, consisting of $550.0
million aggregate principal amount of the Operating
Partnership's 4.625% Senior Notes due 2025. Proceeds from the
offering were used to repay borrowings under the revolving credit
facility.
Audio Webcast Details
The live audio webcast, beginning at 10:30 a.m. ET on
Tuesday, November 6, 2018, is
available by accessing this link: http://ir.vereit.com/.
Participants should log in 10-15 minutes early.
Following the call, a replay of the webcast will be
available at the link above and archived for up to 12 months
following the call.
About the Company
VEREIT is a full-service real estate operating company which
owns and manages one of the largest portfolios of single-tenant
commercial properties in the U.S. The Company has a total
asset book value of $14.1 billion
including approximately 4,000 properties and 93.9 million square
feet. VEREIT's business model provides equity capital to
creditworthy corporations in return for long-term leases on their
properties. VEREIT is a publicly traded Maryland corporation listed on the New York
Stock Exchange. Additional information about VEREIT can be found on
its website at www.VEREIT.com and through social media
platforms such as Twitter and LinkedIn.
Definitions
Descriptions of FFO and AFFO, EBITDA and Normalized EBITDA,
Principal Outstanding and Adjusted Principal Outstanding, Net Debt,
Interest Expense, Excluding Non-Cash Amortization, Fixed Charge
Coverage Ratio, Net Debt to Normalized EBITDA Annualized Ratio, Net
Debt Leverage Ratio, and Unencumbered Asset Ratio are provided
below. Refer to pages 7 through 13 for reconciliations of these
non-GAAP financial measures to the most directly comparable GAAP
financial measure and the calculations of these financial
ratios.
We determined that adjusted funds from operations ("AFFO"), a
non-GAAP measure, and our real estate portfolio and economic
metrics should exclude the impact of properties owned by the
Company for the month beginning with the date that (i) the related
mortgage loan is in default, and (ii) management decides to
transfer the properties to the lender in connection with settling
the mortgage note obligation ("Excluded Properties") and ending
with the disposition date, to better reflect our ongoing
operations. Excluded Properties during the three months ended
September 30, 2017 were two vacant
office properties and one vacant industrial property, comprising an
aggregate 991,000 square feet with aggregate Principal Outstanding
of $83.9 million. At
September 30, 2017, the Excluded Property was one vacant
industrial property, comprising 307,725 square feet with Principal
Outstanding of $16.2 million. During
the three months ended September 30,
2018 and at September 30, 2018 there were no Excluded
Properties. The Company did not update data presented for prior
periods as the impact on prior period non-GAAP measures, including
AFFO and Normalized EBITDA, and operating metrics was
immaterial.
Funds from Operations ("FFO") and Adjusted Funds from
Operations ("AFFO")
Due to certain unique operating characteristics of real estate
companies, as discussed below, the National Association of Real
Estate Investment Trusts, Inc. ("Nareit"), an industry trade group,
has promulgated a supplemental performance measure known as funds
from operations ("FFO"), which we believe to be an appropriate
supplemental performance measure to reflect the operating
performance of a REIT. FFO is not equivalent to our net income or
loss as determined under U.S. GAAP.
Nareit defines FFO as net income or loss computed in accordance
with U.S. GAAP, excluding gains or losses from disposition of
property, depreciation and amortization of real estate assets and
impairment write-downs on depreciable real estate including the pro
rata share of adjustments for unconsolidated partnerships and joint
ventures. We calculated FFO in accordance with Nareit's definition
described above.
In addition to FFO, we use adjusted funds from operations
("AFFO") as a non-GAAP supplemental financial performance measure
to evaluate the operating performance of the Company. AFFO, as
defined by the Company, excludes from FFO non-routine items such as
acquisition-related expenses, litigation and other non-routine
costs, net of insurance recoveries, held for sale loss on
discontinued operations, net revenue or expense earned or incurred
that is related to the services agreement we entered into with Cole
Capital on February 1, 2018, gains or
losses on sale of investment securities or mortgage notes
receivable and legal settlements and insurance recoveries not in
the ordinary course of business. We also exclude certain non-cash
items such as impairments of goodwill and intangible assets,
straight-line rent, net of bad debt expense related to
straight-line rent, net direct financing lease adjustments, gains
or losses on derivatives, reserves for loan loss, gains or losses
on the extinguishment or forgiveness of debt, non-current portion
of the tax benefit or expense, equity-based compensation and
amortization of intangible assets, deferred financing costs,
premiums and discounts on debt and investments, above-market lease
assets and below-market lease liabilities. We omit the impact of
the Excluded Properties and related non-recourse mortgage notes
from FFO to calculate AFFO. Management believes that excluding
these costs from FFO provides investors with supplemental
performance information that is consistent with the performance
models and analysis used by management, and provides investors a
view of the performance of our portfolio over time. AFFO allows for
a comparison of the performance of our operations with other
publicly-traded REITs, as AFFO, or an equivalent measure, is
routinely reported by publicly-traded REITs, and we believe often
used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and AFFO, in addition
to net income (loss), as defined by U.S. GAAP, are helpful
supplemental performance measures and useful in understanding the
various ways in which our management evaluates the performance of
the Company over time. However, not all REITs calculate FFO and
AFFO the same way, so comparisons with other REITs may not be
meaningful. FFO and AFFO should not be considered as alternatives
to net income (loss) and are not intended to be used as a liquidity
measure indicative of cash flow available to fund our cash needs.
Neither the SEC, Nareit, nor any other regulatory body has
evaluated the acceptability of the exclusions used to adjust FFO in
order to calculate AFFO and its use as a non-GAAP financial
performance measure.
Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") and Normalized EBITDA
Normalized EBITDA, as disclosed, represents EBITDA, or earnings
before interest, taxes, depreciation and amortization, modified to
exclude non-routine items such as acquisition-related expenses,
litigation and other non-routine costs, net of insurance
recoveries, gains or losses on disposition of real estate, held for
sale loss on discontinued operations, net revenue or expense earned
or incurred that is related to the services agreement we
entered into with Cole Capital on February
1, 2018, gains or losses on sale of investment securities or
mortgage notes receivable and legal settlements and insurance
recoveries not in the ordinary course of business. We also exclude
certain non-cash items such as impairments of goodwill and real
estate and intangible assets, straight-line rental revenue, gains
or losses on derivatives, gains or losses on the extinguishment or
forgiveness of debt, write-off of program development costs, and
amortization of intangibles, above-market lease assets and
below-market lease liabilities. Normalized EBITDA omits the
Normalized EBITDA impact of Excluded Properties. Management
believes that excluding these costs from EBITDA provides investors
with supplemental performance information that is consistent with
the performance models and analysis used by management, and
provides investors a view of the performance of our portfolio over
time. Therefore, EBITDA and Normalized EBITDA should not be
considered as an alternative to net income, as computed in
accordance with GAAP, or as an indicator of the Company's financial
performance. The Company uses Normalized EBITDA as one measure of
its operating performance when formulating corporate goals and
evaluating the effectiveness of the Company's strategies.
Normalized EBITDA may not be comparable to similarly titled
measures of other companies.
Principal Outstanding and Adjusted Principal
Outstanding
Principal Outstanding and Adjusted Principal Outstanding are
non-GAAP measures that represent the Company's outstanding
principal debt balance, excluding certain GAAP adjustments, such as
premiums and discounts, financing and issuance costs, and related
accumulated amortization. Adjusted Principal Outstanding omits the
outstanding principal balance of mortgage notes secured by Excluded
Properties. We believe that the presentation of Principal
Outstanding and Adjusted Principal Outstanding, which show our
contractual debt obligations, provides useful information to
investors to assess our overall liquidity, financial flexibility,
capital structure and leverage. Principal Outstanding and Adjusted
Principal Outstanding should not be considered as alternatives to
the Company's consolidated debt balance as determined in accordance
with GAAP or any other GAAP financial measures and should only be
considered together with, and as a supplement to, the Company's
financial information prepared in accordance with GAAP.
Net Debt
Net Debt is a non-GAAP measure used to show the Company's
Adjusted Principal Outstanding, less all cash and cash equivalents,
including those related to discontinued operations. We believe that
the presentation of Net Debt provides useful information to
investors because our management reviews Net Debt as part of its
management of our overall liquidity, financial flexibility, capital
structure and leverage.
Interest Expense, Excluding Non-Cash Amortization
Interest Expense, excluding non-cash amortization is a non-GAAP
measure that represents interest expense incurred on the
outstanding principal balance of our debt. This measure
excludes (i) the amortization of deferred financing costs, premiums
and discounts, which is included in interest expense in accordance
with GAAP, and (ii) the impact of Excluded Properties and related
non-recourse mortgage notes. We believe that the presentation of
Interest Expense, excluding non-cash amortization, which shows the
interest expense on our contractual debt obligations, provides
useful information to investors to assess our overall solvency and
financial flexibility. Interest Expense, excluding non-cash
amortization should not be considered as an alternative to the
Company's interest expense as determined in accordance with GAAP or
any other GAAP financial measures and should only be considered
together with and as a supplement to the Company's financial
information prepared in accordance with GAAP.
Fixed Charge Coverage Ratio
Fixed Charge Coverage Ratio is the sum of (i) Interest Expense,
excluding non-cash amortization, (ii) secured debt principal
amortization on Adjusted Principal Outstanding and (iii) dividends
attributable to preferred shares divided by Normalized EBITDA.
Management believes that Fixed Charge Coverage Ratio is a useful
supplemental measure of our ability to satisfy fixed financing
obligations.
Net Debt to Normalized EBITDA Annualized Ratio
Net Debt to Normalized EBITDA Annualized equals Net Debt divided
by the current quarter Normalized EBITDA multiplied by four. We
believe that the presentation of Net Debt to Normalized EBITDA
Annualized provides useful information to investors because our
management reviews Net Debt to Normalized EBITDA Annualized as part
of its management of our overall liquidity, financial flexibility,
capital structure and leverage.
Net Debt Leverage Ratio
Net Debt Leverage Ratio equals Net Debt divided by Gross Real
Estate Investments. We believe that the presentation of Net Debt
Leverage Ratio provides useful information to investors because our
management reviews Net Debt Leverage Ratio as part of its
management of our overall liquidity, financial flexibility, capital
structure and leverage.
Gross Real Estate Investments
Gross Real Estate Investments represent total gross real estate
and related assets of Operating Properties, including net
investments in unconsolidated entities and equity investments in
the Cole REITs, investment in direct financing leases, investment
securities backed by real estate and loans held for investment, net
of gross intangible lease liabilities. We believe that the
presentation of Gross Real Estate Investments, which shows our
total investments in real estate and related assets, provides
useful information to investors to assess our overall financial
flexibility, capital structure and leverage. Gross Real Estate
Investments should not be considered as an alternative to the
Company's real estate investments balance as determined in
accordance with GAAP or any other GAAP financial measures and
should only be considered together with, and as a supplement to,
the Company's financial information prepared in accordance with
GAAP.
Unencumbered Asset Ratio
Unencumbered Asset Ratio equals unencumbered Gross Real Estate
Investments divided by Gross Real Estate Investments. Management
believes that Unencumbered Asset Ratio is a useful supplemental
measure of our overall liquidity and leverage.
Forward-Looking Statements
Information set forth herein contains "forward-looking
statements" (within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended), which reflect VEREIT's expectations
regarding future events and plans, VEREIT's future financial
condition, results of operations and business including the
liquidity and flexibility of its balance sheet, the repayment in
February 2019 of $750.0 million of its 3.000% Senior Notes due
2019, the availability under its revolving credit facility and
delayed-draw term loan facility, its debt balances and efforts to
continue to unencumber its assets. The forward-looking statements
involve a number of assumptions, risks, uncertainties and other
factors that could cause actual results to differ materially from
those contained in the forward-looking statements. Generally, the
words "expects," "anticipates," "assumes," "targets," "goals,"
"projects," "intends," "plans," "believes," "seeks," "estimates,"
"may," "will," "should," "could," "continues," variations of such
words and similar expressions identify forward- looking statements.
These forward-looking statements are subject to a number of known
and unknown risks, uncertainties and assumptions, most of which are
difficult to predict and many of which are beyond VEREIT's control.
If a change occurs, VEREIT's business, financial condition,
liquidity and results of operations may vary materially from those
expressed in or implied by the forward-looking statements.
The following factors, among others, could cause actual results
to differ from those set forth in the forward-looking statements:
VEREIT's plans, market and other expectations, objectives,
intentions and other statements that are not historical facts; the
developments disclosed herein; VEREIT's ability to meet its updated
2018 guidance; VEREIT's ability to renew leases, lease vacant space
or re-lease space as leases expire on favorable terms or at all;
risks associated with tenant, geographic and industry
concentrations with respect to VEREIT's properties; the impact of
impairment charges in respect of certain of VEREIT's properties,
goodwill and intangible assets and other assets; unexpected costs
or unexpected liabilities that may arise from potential
dispositions, including related to tenant-in-common and
Delaware statutory trust real
estate programs and VEREIT's management with respect to such
programs; competition in the acquisition and disposition of
properties and in the leasing of its properties; the inability to
acquire, dispose of, or lease properties on advantageous terms;
risks associated with bankruptcies or insolvencies of tenants, from
tenant defaults generally or from the unpredictability of the
business plans and financial condition of VEREIT's tenants; risks
associated with pending government investigations and litigations
related to VEREIT's previously disclosed audit committee
investigation, including the expense of such investigations and
litigation and any potential payments upon resolution; risks
associated with VEREIT's substantial indebtedness, including that
it may affect its ability to pay dividends and the terms and
restrictions within the agreements governing its indebtedness may
restrict its borrowing and operating flexibility; the ability to
retain or hire key personnel; and continuation or deterioration of
current market conditions. Additional factors that may affect
future results are contained in VEREIT's filings with the U.S.
Securities and Exchange Commission (the SEC), which are available
at the SEC's website at www.sec.gov. VEREIT disclaims any
obligation to publicly update or revise any forward-looking
statements, whether as a result of changes in underlying
assumptions or factors, new information, future events or
otherwise, except as required by law.
VEREIT,
INC.
CONSOLIDATED
BALANCE SHEETS
(In thousands, except
for share and per share data) (Unaudited)
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Real estate
investments, at cost:
|
|
|
|
|
Land
|
|
$
|
2,847,393
|
|
|
$
|
2,865,855
|
|
Buildings, fixtures
and improvements
|
|
10,652,578
|
|
|
10,711,845
|
|
Intangible lease
assets
|
|
2,019,718
|
|
|
2,037,675
|
|
Total real estate
investments, at cost
|
|
15,519,689
|
|
|
15,615,375
|
|
Less: accumulated
depreciation and amortization
|
|
3,323,990
|
|
|
2,908,028
|
|
Total real estate
investments, net
|
|
12,195,699
|
|
|
12,707,347
|
|
Investment in
unconsolidated entities
|
|
34,293
|
|
|
39,520
|
|
Cash and cash
equivalents
|
|
25,264
|
|
|
34,176
|
|
Restricted
cash
|
|
27,449
|
|
|
27,662
|
|
Rent and tenant
receivables and other assets, net
|
|
412,053
|
|
|
389,060
|
|
Goodwill
|
|
1,337,773
|
|
|
1,337,773
|
|
Due from affiliates,
net
|
|
—
|
|
|
6,041
|
|
Assets related to
real estate assets held for sale and discontinued operations,
net
|
|
24,349
|
|
|
163,999
|
|
Total
assets
|
|
$
|
14,056,880
|
|
|
$
|
14,705,578
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Mortgage notes
payable, net
|
|
$
|
1,936,586
|
|
|
$
|
2,082,692
|
|
Corporate bonds,
net
|
|
2,825,541
|
|
|
2,821,494
|
|
Convertible debt,
net
|
|
393,961
|
|
|
984,258
|
|
Credit
facility
|
|
793,000
|
|
|
185,000
|
|
Below-market lease
liabilities, net
|
|
179,192
|
|
|
198,551
|
|
Accounts payable and
accrued expenses
|
|
269,150
|
|
|
136,474
|
|
Deferred rent,
derivative and other liabilities
|
|
51,663
|
|
|
62,985
|
|
Distributions
payable
|
|
183,913
|
|
|
175,301
|
|
Due to
affiliates
|
|
—
|
|
|
66
|
|
Liabilities related
to discontinued operations
|
|
—
|
|
|
15,881
|
|
Total
liabilities
|
|
6,633,006
|
|
|
6,662,702
|
|
Commitments and
contingencies
|
|
|
|
|
Preferred stock,
$0.01 par value, 100,000,000 shares authorized and 42,834,138
issued and outstanding as of each of September 30, 2018 and
December 31, 2017
|
|
428
|
|
|
428
|
|
Common stock, $0.01
par value, 1,500,000,000 shares authorized and 967,522,113 and
974,208,583 issued and outstanding as of September 30, 2018 and
December 31, 2017, respectively
|
|
9,674
|
|
|
9,742
|
|
Additional
paid-in-capital
|
|
12,612,407
|
|
|
12,654,258
|
|
Accumulated other
comprehensive loss
|
|
(1,031)
|
|
|
(3,569)
|
|
Accumulated
deficit
|
|
(5,343,368)
|
|
|
(4,776,581)
|
|
Total stockholders'
equity
|
|
7,278,110
|
|
|
7,884,278
|
|
Non-controlling
interests
|
|
145,764
|
|
|
158,598
|
|
Total
equity
|
|
7,423,874
|
|
|
8,042,876
|
|
Total liabilities and
equity
|
|
$
|
14,056,880
|
|
|
$
|
14,705,578
|
|
VEREIT,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except
for per share data) (Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
Rental
income
|
|
$
|
289,033
|
|
|
$
|
282,717
|
|
Operating expense
reimbursements
|
|
24,833
|
|
|
23,826
|
|
Total
revenues
|
|
313,866
|
|
|
306,543
|
|
Operating
expenses:
|
|
|
|
|
Acquisition-related
|
|
810
|
|
|
909
|
|
Litigation and other
non-routine costs, net of insurance recoveries
|
|
138,595
|
|
|
9,507
|
|
Property
operating
|
|
31,893
|
|
|
30,645
|
|
General and
administrative
|
|
15,186
|
|
|
13,221
|
|
Depreciation and
amortization
|
|
157,181
|
|
|
172,383
|
|
Impairments
|
|
18,382
|
|
|
6,363
|
|
Total operating
expenses
|
|
362,047
|
|
|
233,028
|
|
Operating (loss)
income
|
|
(48,181)
|
|
|
73,515
|
|
Other (expense)
income:
|
|
|
|
|
Interest
expense
|
|
(69,310)
|
|
|
(71,708)
|
|
Gain on
extinguishment and forgiveness of debt, net
|
|
90
|
|
|
9,756
|
|
Other (expense)
income, net
|
|
(1,016)
|
|
|
1,131
|
|
Equity in income and
gain on disposition of unconsolidated entities
|
|
252
|
|
|
374
|
|
Gain on derivative
instruments, net
|
|
69
|
|
|
1,294
|
|
Gain on disposition
of real estate and held for sale assets, net
|
|
45,295
|
|
|
(688)
|
|
Total other expenses,
net
|
|
(24,620)
|
|
|
(59,841)
|
|
(Loss) income from
continuing operations before income taxes
|
|
(72,801)
|
|
|
13,674
|
|
Provision for income
taxes
|
|
(1,141)
|
|
|
(1,185)
|
|
(Loss) income from
continuing operations
|
|
(73,942)
|
|
|
12,489
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
4,005
|
|
Net (loss)
income
|
|
(73,942)
|
|
|
16,494
|
|
Net loss (income)
attributable to non-controlling interests
|
|
1,825
|
|
|
(400)
|
|
Net (loss) income
attributable to the General Partner
|
|
$
|
(72,117)
|
|
|
$
|
16,094
|
|
|
|
|
|
|
Basic and diluted net
loss per share from continuing operations attributable to common
stockholders
|
|
$
|
(0.09)
|
|
|
$
|
(0.01)
|
|
Basic and diluted net
income per share from discontinued operations attributable to
common stockholders
|
|
—
|
|
|
0.00
|
|
Basic and diluted net
loss per share attributable to common stockholders
|
|
$
|
(0.09)
|
|
|
$
|
(0.00)
|
|
Distributions
declared per common share
|
|
$
|
0.1375
|
|
|
$
|
0.1375
|
|
VEREIT,
INC.
CONSOLIDATED
EBITDA AND NORMALIZED EBITDA
(In thousands)
(Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
2018
|
|
2017
|
Net (loss)
income
|
|
$
|
(73,942)
|
|
|
$
|
16,494
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
|
69,310
|
|
|
71,708
|
|
Depreciation and
amortization of real estate assets
|
|
157,181
|
|
|
176,523
|
|
Provision for income
taxes
|
|
1,141
|
|
|
2,053
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
286
|
|
|
845
|
|
EBITDA
|
|
$
|
153,976
|
|
|
$
|
267,623
|
|
(Gain) loss on
disposition of real estate assets, net
|
|
(45,226)
|
|
|
688
|
|
Impairments
|
|
18,382
|
|
|
6,363
|
|
Acquisition-related
expenses
|
|
810
|
|
|
909
|
|
Litigation and other
non-routine costs, net of insurance recoveries
|
|
138,595
|
|
|
9,507
|
|
Loss on
investments
|
|
3,336
|
|
|
—
|
|
Gain on derivative
instruments, net
|
|
(69)
|
|
|
(1,294)
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
1,058
|
|
|
1,210
|
|
Gain on
extinguishment and forgiveness of debt, net
|
|
(90)
|
|
|
(9,756)
|
|
Net direct financing
lease adjustments
|
|
483
|
|
|
491
|
|
Straight-line rent,
net of bad debt expense related to straight-line rent
|
|
(8,720)
|
|
|
(9,955)
|
|
Program development
costs write-off
|
|
—
|
|
|
110
|
|
Other adjustments,
net
|
|
(1,442)
|
|
|
(61)
|
|
Proportionate
share of adjustments for unconsolidated entities
|
|
(9)
|
|
|
(39)
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
1,323
|
|
Normalized
EBITDA
|
|
$
|
261,084
|
|
|
$
|
267,119
|
|
Normalized EBITDA
from continuing operations
|
|
$
|
261,084
|
|
|
$
|
257,996
|
|
Normalized EBITDA
from discontinued operations
|
|
$
|
—
|
|
|
$
|
9,123
|
|
VEREIT,
INC.
CONSOLIDATED FUNDS
FROM OPERATIONS
(In thousands, except
for share and per share data) (Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
2018
|
|
2017
|
Net (loss)
income
|
|
$
|
(73,942)
|
|
|
$
|
16,494
|
|
Dividends on
non-convertible preferred stock
|
|
(17,973)
|
|
|
(17,973)
|
|
(Gain) loss on
disposition of real estate assets, net
|
|
(45,226)
|
|
|
688
|
|
Depreciation and
amortization of real estate assets
|
|
156,527
|
|
|
171,576
|
|
Impairment of real
estate
|
|
18,382
|
|
|
6,363
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
287
|
|
|
565
|
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
38,055
|
|
|
$
|
177,713
|
|
FFO attributable to
common stockholders and limited partners from continuing
operations
|
|
38,055
|
|
|
173,708
|
|
FFO attributable to
common stockholders and limited partners from discontinued
operations
|
|
—
|
|
|
4,005
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
967,798,401
|
|
|
974,167,088
|
|
Limited Partner OP
Units and effect of dilutive securities
|
|
24,125,616
|
|
|
24,258,683
|
|
Weighted-average
shares outstanding - diluted
|
|
991,924,017
|
|
|
998,425,771
|
|
|
|
|
|
|
FFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.038
|
|
|
$
|
0.178
|
|
FFO attributable to
common stockholders and limited partners from continuing operations
per diluted share
|
|
$
|
0.038
|
|
|
$
|
0.174
|
|
FFO attributable to
common stockholders and limited partners from discontinued
operations per diluted share
|
|
$
|
—
|
|
|
$
|
0.004
|
|
VEREIT,
INC.
CONSOLIDATED
ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except
for share and per share data) (Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
2018
|
|
2017
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
38,055
|
|
|
$
|
177,713
|
|
|
|
|
|
|
Acquisition-related
expenses
|
|
810
|
|
|
909
|
|
Litigation and other
non-routine costs, net of insurance recoveries
|
|
138,595
|
|
|
9,507
|
|
Loss on
investments
|
|
3,336
|
|
|
—
|
|
Gain on derivative
instruments, net
|
|
(69)
|
|
|
(1,294)
|
|
Amortization of
premiums and discounts on debt and investments, net
|
|
(1,123)
|
|
|
(1,442)
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
1,058
|
|
|
1,210
|
|
Net direct financing
lease adjustments
|
|
483
|
|
|
491
|
|
Amortization and
write-off of deferred financing costs
|
|
3,926
|
|
|
6,028
|
|
Amortization of
management contracts
|
|
—
|
|
|
4,146
|
|
Deferred other tax
expense
|
|
—
|
|
|
6,277
|
|
Gain on
extinguishment and forgiveness of debt, net
|
|
(90)
|
|
|
(9,756)
|
|
Straight-line rent,
net of bad debt expense related to straight-line rent
|
|
(8,720)
|
|
|
(9,955)
|
|
Equity-based
compensation expense
|
|
3,003
|
|
|
3,664
|
|
Other adjustments,
net
|
|
(726)
|
|
|
739
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
(9)
|
|
|
(2)
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
2,625
|
|
AFFO attributable
to common stockholders and limited partners
|
|
$
|
178,529
|
|
|
$
|
190,860
|
|
AFFO attributable to
common stockholders and limited partners from continuing
operations
|
|
178,529
|
|
|
174,774
|
|
AFFO attributable to
common stockholders and limited partners from discontinued
operations
|
|
—
|
|
|
16,086
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
967,798,401
|
|
|
974,167,088
|
|
Limited Partner OP
Units and effect of dilutive securities
|
|
24,125,616
|
|
|
24,258,683
|
|
Weighted-average
shares outstanding - diluted
|
|
991,924,017
|
|
|
998,425,771
|
|
|
|
|
|
|
AFFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.180
|
|
|
$
|
0.191
|
|
AFFO attributable to
common stockholder and limited partners from continuing operations
per diluted share
|
|
$
|
0.180
|
|
|
$
|
0.175
|
|
AFFO attributable to
common stockholders and limited partners from discontinued
operations per diluted share
|
|
$
|
—
|
|
|
$
|
0.016
|
|
VEREIT,
INC.
FINANCIAL AND
OPERATIONS STATISTICS AND RATIOS
(Dollars in
thousands) (Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2018
|
Interest expense - as
reported
|
|
$
|
(69,310)
|
|
Less
Adjustments:
|
|
|
Amortization of
deferred financing costs and other non-cash charges
|
|
(4,003)
|
|
Amortization of net
premiums
|
|
1,138
|
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
$
|
(66,445)
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2018
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
$
|
66,445
|
|
Secured debt
principal amortization
|
|
3,007
|
|
Dividends
attributable to preferred shares
|
|
17,973
|
|
Total fixed
charges
|
|
87,425
|
|
Normalized
EBITDA
|
|
261,084
|
|
Fixed Charge Coverage
Ratio
|
|
2.99x
|
|
|
|
|
|
September 30,
2018
|
|
June 30,
2018
|
Mortgage notes
payable, net
|
|
$
|
1,936,586
|
|
|
$
|
2,031,171
|
|
Corporate bonds,
net
|
|
2,825,541
|
|
|
2,824,176
|
|
Convertible debt,
net
|
|
393,961
|
|
|
989,901
|
|
Credit
facility
|
|
793,000
|
|
|
195,000
|
|
Total debt - as
reported
|
|
5,949,088
|
|
|
6,040,248
|
|
Adjustments:
|
|
|
|
|
Deferred financing
costs, net
|
|
39,085
|
|
|
41,672
|
|
Net
premiums
|
|
(13,066)
|
|
|
(14,327)
|
|
Principal
Outstanding
|
|
5,975,107
|
|
|
6,067,593
|
|
Principal Outstanding
- Excluded Properties
|
|
—
|
|
|
—
|
|
Adjusted Principal
Outstanding
|
|
$
|
5,975,107
|
|
|
$
|
6,067,593
|
|
|
|
|
|
|
Adjusted Principal
Outstanding
|
|
$
|
5,975,107
|
|
|
$
|
6,067,593
|
|
Less: cash and cash
equivalents
|
|
25,264
|
|
|
18,434
|
|
Net Debt
|
|
$
|
5,949,843
|
|
|
$
|
6,049,159
|
|
|
|
|
|
September 30,
2018
|
Total real estate
investments, at cost - as reported
|
|
$
|
15,519,689
|
|
Adjustments:
|
|
|
Investment in
unconsolidated entities
|
|
34,293
|
|
Investment in Cole
REITs
|
|
7,844
|
|
Gross assets held for
sale
|
|
30,014
|
|
Investment in direct
financing leases, net
|
|
14,082
|
|
Investment
securities, at fair value
|
|
26,282
|
|
Mortgage notes
receivable
|
|
18,757
|
|
Gross below market
leases
|
|
(265,036)
|
|
Gross Real Estate
Investments
|
|
$
|
15,385,925
|
|
|
|
|
|
September 30,
2018
|
Net Debt
|
|
$
|
5,949,843
|
|
Normalized EBITDA
annualized
|
|
1,044,336
|
|
Net Debt to
Normalized EBITDA Annualized Ratio
|
|
5.70x
|
|
|
|
|
Net Debt
|
|
$
|
5,949,843
|
|
Gross Real Estate
Investments
|
|
15,385,925
|
|
Net Debt Leverage
Ratio
|
|
38.7%
|
|
|
|
|
Unencumbered Gross
Real Estate Investments
|
|
$
|
11,507,837
|
|
Gross Real Estate
Investments
|
|
15,385,925
|
|
Unencumbered asset
ratio
|
|
74.8%
|
|
VEREIT, INC.
CONSOLIDATED ADJUSTED
FUNDS FROM OPERATIONS PER DILUTED SHARE - 2018
GUIDANCE
(Unaudited)
The Company expects its 2018 AFFO per diluted share to be in a
range between $0.71 and $0.72. This guidance assumes acquisitions
and dispositions each totaling $300
million to $500 million at an
average cash cap rate of 6.5% to 7.5%. Acquisitions will be
funded through a combination of internal equity, debt capacity
within our Net Debt to Normalized EBITDA target, and proceeds from
the sale of Cole Capital. Guidance also assumes real estate
operations with average occupancy above 98.0% and same-store rental
growth in a range of 0.3% to 1.0%. The Company also expects
to target balance sheet Net Debt to Normalized EBITDA at
approximately 6.0x. The estimated net loss per diluted share is not
a projection and is provided solely to satisfy the disclosure
requirements of the U.S. Securities and Exchange Commission.
|
|
Low
|
|
High
|
Diluted net loss per
share attributable to common stockholders and limited partners
(1) (2)
|
|
$
|
(0.17)
|
|
|
$
|
(0.16)
|
|
Gain on disposition
of real estate assets, net (2)
|
|
(0.07)
|
|
|
(0.07)
|
|
Depreciation and
amortization of real estate assets (2)
|
|
0.64
|
|
|
0.64
|
|
Impairment of real
estate (2)
|
|
0.04
|
|
|
0.04
|
|
FFO attributable to
common stockholders and limited partners per diluted
share
|
|
0.44
|
|
|
0.45
|
|
Adjustments
(3)
|
|
0.27
|
|
|
0.27
|
|
AFFO attributable to
common stockholders and limited partners per diluted
share
|
|
$
|
0.71
|
|
|
$
|
0.72
|
|
_____________________________________
(1)
|
Includes impact of
dividends to be paid to preferred shareholders and excludes the
effect of non-controlling interests and gains or losses on the
extinguishment of debt. Includes the impacts of discontinued
operations, impairments and gains or losses on the sale of real
estate assets and interests in unconsolidated joint ventures for
the nine months ended September 30, 2018.
|
(2)
|
Includes actual
amounts for the nine months ended September 30, 2018.
|
(3)
|
Includes (i)
non-routine items such as acquisition-related expenses, litigation
and other non-routine costs, net of insurance recoveries, gains or
losses on sale of investment securities or mortgage note
receivables, legal settlements and insurance recoveries not in the
ordinary course of business, (ii) certain non-cash items such as
impairments of goodwill, straight-line rent, net of bad debt
expense related to straight-line rent, net direct financing lease
adjustments, gains or losses on derivatives, gains or losses on the
extinguishment or forgiveness of debt, reserves for loan loss,
equity-based compensation and amortization of intangible assets,
deferred financing costs, premiums and discounts on debt and
investments, above-market lease assets and below-market lease
liabilities and (iii) the AFFO impact of Excluded Properties and
related non-recourse mortgage notes.
|
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SOURCE VEREIT, Inc.