PHOENIX, May 8, 2019 /PRNewswire/ -- VEREIT, Inc. (NYSE:
VER) ("VEREIT" or the "Company") announced today its operating
results for the three months ending March 31, 2019.
The financial results below reflect continuing operations
only.
First Quarter 2019 Financial and Operating Highlights
- Net income of $71.0 million and
net income per diluted share of $0.05
- Achieved $0.18 AFFO per diluted
share
- Completed $80.7 million of
acquisitions and $70.5 million of
dispositions in the first quarter of 2019 and $125.0 million and $243.5
million year-to-date
- Repaid $750.0 million principal
outstanding related to the 2019 corporate bonds utilizing the
remainder of the $900.0 million
unsecured term loan facility
- Total debt went from $6.09
billion to $6.02 billion; Net
Debt from $6.09 billion to
$6.05 billion, or 39.3% Net Debt to
Gross Real Estate Investments
- Net Debt to Normalized EBITDA ended at 5.7x
- Issued 5.0 million shares year-to-date at a weighted average
price of $8.42 for gross proceeds of
$42.5 million under its "at the
market" equity offering program
- Formed an institutional partnership including six VEREIT
industrial assets totaling approximately $407.0 million expected to close by the end of
May
First Quarter 2019 Financial Results
Rental Revenue
Rental Revenue for the quarter ended
March 31, 2019 increased $1.7
million to $316.8 million as
compared to revenue of $315.1 million
for the same quarter in 2018.
Net Income and Net Income Attributable to Common Stockholders
per Diluted Share
Net income for the quarter ended
March 31, 2019 increased $42.0
million to $71.0 million as
compared to net income of $29.0
million for the same quarter in 2018, and net income per
diluted share increased $0.04 to
$0.05 for the quarter ended
March 31, 2019, as compared to net income per diluted share of
$0.01 for the same quarter in
2018.
Normalized EBITDA
Normalized EBITDA for the quarter
ended March 31, 2019 increased $1.5
million to $263.9 million as
compared to Normalized EBITDA of $262.4
million for the same quarter in 2018.
Funds From Operations Attributable to Common Stockholders and
Limited Partners ("FFO") and FFO per Diluted Share
FFO for
the quarter ended March 31, 2019 increased $25.6 million to $190.3
million, as compared to $164.7
million for the same quarter in 2018, and FFO per diluted
share increased $0.02 to $0.19 for the quarter ended March 31, 2019,
as compared to FFO per diluted share of $0.17 for the same quarter in 2018.
Adjusted FFO Attributable to Common Stockholders and Limited
Partners ("AFFO") and AFFO per Diluted
Share
AFFO for the quarter ended March 31, 2019
decreased $2.5 million to
$178.4 million, as compared to
$180.9 million for the same quarter
in 2018, and AFFO per diluted share remained constant at
$0.18 for the quarter ended
March 31, 2019, as compared to the same quarter in 2018.
Management Commentary
Glenn J.
Rufrano, Chief Executive Officer, stated, "Our portfolio
continues to perform and our team is executing well in the capital
markets. Focus on capital allocation is highlighted
year-to-date by the sale of the El Segundo office property at an
exceptional price, issuing equity at an advantageous spread from
the buyback last year and using internal equity to seed an
institutional partnership providing lower cost capital in a
business growth format."
Common Stock Dividend Information
On May 6, 2019,
the Company's Board of Directors declared a quarterly dividend of
$0.1375 per share for the second
quarter of 2019, representing an annual distribution rate of
$0.55 per share. The dividend will be
paid on July 15, 2019 to common stockholders of record as of
June 28, 2019.
Balance Sheet and Liquidity
As of the end of the
quarter, the Company utilized $195.0
million of its revolving line of credit, leaving
$1.8 billion of capacity available as
of March 31, 2019 on the Company's $2.0
billion revolving line of credit. The Company also had
drawn $900.0 million on its term
loan, which included the use of $750.0
million to repay the principal outstanding related to the
2019 corporate bonds. The Company entered into interest rate
swap agreements with an aggregate $900.0
million notional amount fixing the interest rate at
3.84%. In addition, secured debt was reduced by $2.4 million in the first quarter.
Capital Market Activity
During the quarter and through
April 30, 2019, the Company issued
5.0 million shares at a weighted average price of $8.42 for gross proceeds of $42.5 million under its "at the market" equity
offering program.
Consolidated Financial Statistics
Financial Statistics
as of the quarter ended March 31, 2019 are as follows:
Net Debt to Normalized EBITDA of 5.7x, Fixed Charge Coverage Ratio
of 3.0x, Unencumbered Asset Ratio of 75.1%, Net Debt to Gross Real
Estate Investments of 39.3%, Weighted Average Debt Term of 4.5
years and 96.6% Fixed Rate Debt.
Litigation Settlements
On February 5, 2019, the
Company entered into a series of agreements to settle claims with
shareholders who decided not to participate as class members in the
SDNY Consolidated Class Action for approximately $15.7 million, which was accrued in the fourth
quarter of 2018. Further, between March 31 and April 5, 2019, the Company
entered into a series of agreements to settle claims with
additional shareholders who decided not to participate as class
members in the SDNY Consolidated Class Action for approximately
$12.2 million, which was accrued in
the first quarter of 2019. In total, the Company has now settled
claims of shareholders who held shares of common stock and swaps
referencing common stock representing approximately 35.3% of
VEREIT's outstanding shares of common stock held at the end of the
period covered by the various pending shareholder actions for
approximately $245.4 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.
Insurance Settlement
On January
23, 2019, the Company signed a settlement and release
agreement with certain insurance carriers and subsequently received
$48.4 million of insurance
recoveries.
Real Estate Portfolio
As of March 31, 2019, the
Company's portfolio consisted of 3,980 properties with total
portfolio occupancy of 98.9%, investment grade tenancy of 41.3% and
a weighted-average remaining lease term of 8.7 years. During
the quarter ended March 31, 2019, same-store rents (3,917
properties) increased 0.9% as compared to the same quarter in
2018.
Property Acquisitions
During the first quarter of
2019, the Company acquired eight properties for approximately
$80.7 million at an average cash cap
rate of 6.8%. In addition, the Company invested $4.5 million in one build-to-suit project. As of
March 31, 2019, build-to-suit
programs included one property with an investment to date of
$7.5 million and remaining estimated
investment of $20.3
million.
Property Dispositions
During the quarter ended
March 31, 2019, the Company disposed of 22 properties for an
aggregate sales price of $62.1
million. Of this amount, $58.8
million was used in the total weighted average cash cap rate
calculation of 6.9%, including $25.2
million in net sales of Red Lobster restaurants. The
gain on first quarter sales was approximately $10.8 million. In addition, the Company
sold certain legacy mortgage related investments during the quarter
for an aggregate sales price of $8.3
million.
2019 Guidance
The Company reaffirms its 2019 AFFO per
diluted share to be in a range between $0.68 and $0.70
(see reconciliation to net income per share at the end of this
release).
Institutional Industrial Partnership
Subsequent to the
quarter, the Company has formed an institutional partnership with
the objective of creating an increasing, long term asset base of
investment grade tenants in the U.S. industrial market. The
partnership is expected to close by the end of May, in a
traditional 80/20 structure, and will initially include six VEREIT
assets totaling approximately $407
million at a cap rate just under 6.0%.
Subsequent Events
Property Acquisitions
From April 1, 2019 through May 1, 2019, the
Company acquired three properties for approximately $44.2 million. Acquisitions year-to-date
through May 1, 2019, totaled $125.0
million.
Property Dispositions
From April 1, 2019 through May 1, 2019, the
Company disposed of 14 properties for an aggregate sales price of
$173.0 million. Dispositions
year-to-date through May 1, 2019, totaled $235.2 million. In addition, the Company
sold certain legacy mortgage related investments for an aggregate
sales price of $8.3 million.
Audio Webcast Details
The live audio webcast, beginning at 1:30
p.m. ET on Wednesday, May 8, 2019, 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 total real estate investments of $15.6 billion including approximately 4,000
properties and 94.7 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. VEREIT uses, and intends to continue to
use, its Investor Relations website, which can be found at
www.VEREIT.com, as a means of disclosing material nonpublic
information and for complying with its disclosure obligations under
Regulation FD. Additional information about VEREIT can be
found though 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 14 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. During the three months ended and at March 31,
2018, the Excluded Property was one vacant industrial property,
comprising 307,725 square feet with Principal Outstanding of
$16.2 million. At December 31,
2018, and March 31, 2019 there were no Excluded
Properties.
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, adjusted for gains or losses from disposition of
property, depreciation and amortization of real estate assets,
impairment write-downs on real estate, and our pro rata share of
FFO adjustments related to 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, insurance recoveries, net of
litigation and non-routine costs, loss on disposition of
discontinued operations, net revenue or expense earned or incurred
that is related to the services agreement, gains or losses on sale
of investment securities or mortgage notes receivable, legal
settlements and insurance recoveries not in the ordinary course of
business, payments on fully reserved loan receivables and
restructuring expenses. 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"), EBITDA for Real Estate ("EBITDAre") and
Normalized EBITDA
Due to certain unique operating characteristics of real estate
companies, as discussed below, Nareit has promulgated a
supplemental performance measure known as Earnings Before Interest,
Taxes, Depreciation and Amortization for Real Estate ("EBITDAre").
Nareit defines EBITDAre as net income or loss computed in
accordance with GAAP, adjusted for interest expense, income tax
expense (benefit), depreciation and amortization, impairment
write-downs on real estate, gains or losses from disposition of
property and our pro rata share of EBITDAre adjustments related to
unconsolidated partnerships and joint ventures. We calculated
EBITDAre in accordance with Nareit's definition described
above.
In addition to EBITDAre, we use Normalized EBITDA as a non-GAAP
supplemental performance measure to evaluate the operating
performance of the Company. Normalized EBITDA, as defined by the
Company, represents EBITDAre, modified to exclude non-routine items
such as acquisition-related expenses, insurance recoveries, net of
litigation and non-routine costs, loss on disposition of
discontinued operations, net revenue or expense earned or incurred
that is related to the services agreement, gains or losses on
sale of investment securities or mortgage notes receivable, legal
settlements and insurance recoveries not in the ordinary course of
business, payments on fully reserved loan receivables and
restructuring expenses. We also exclude certain non-cash items such
as impairments of goodwill 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 EBITDAre
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, EBITDAre, and Normalized
EBITDA should not be considered as an alternative to net income, as
computed in accordance with GAAP. The Company uses EBITDA,
EBITDAre, and 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.
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 respective 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 mortgage notes receivable, 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, in connection
with Net Debt, 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 the federal securities laws,
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 and projections regarding future
events and plans, VEREIT's future financial condition, results of
operations and business including the performance of its portfolio,
its access to the capital markets, and its focus on and execution
of its capital allocation strategy including the formation and
anticipated closing of an institutional partnership. 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 based on information currently available to us and
are subject to a number of known and unknown risks, uncertainties
and other factors, 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 2019
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 liabilities that may
arise from potential dispositions, including related to limited
partnership, 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
additional potential payments upon resolution; risks associated
with VEREIT's substantial indebtedness, including that such
indebtedness may affect VEREIT's ability to pay dividends and the
terms and restrictions within the agreements governing VEREIT's
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)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
Real estate
investments, at cost:
|
|
|
|
|
Land
|
|
$
|
2,824,666
|
|
|
$
|
2,843,212
|
|
Buildings, fixtures
and improvements
|
|
10,741,995
|
|
|
10,749,228
|
|
Intangible lease
assets
|
|
2,003,825
|
|
|
2,012,399
|
|
Total real estate
investments, at cost
|
|
15,570,486
|
|
|
15,604,839
|
|
Less: accumulated
depreciation and amortization
|
|
3,544,252
|
|
|
3,436,772
|
|
Total real estate
investments, net
|
|
12,026,234
|
|
|
12,168,067
|
|
Operating lease
right-of-use assets
|
|
224,859
|
|
|
—
|
|
Investment in
unconsolidated entities
|
|
35,790
|
|
|
35,289
|
|
Cash and cash
equivalents
|
|
12,788
|
|
|
30,758
|
|
Restricted
cash
|
|
18,517
|
|
|
22,905
|
|
Rent and tenant
receivables and other assets, net
|
|
361,641
|
|
|
366,092
|
|
Goodwill
|
|
1,337,773
|
|
|
1,337,773
|
|
Real estate assets
held for sale, net
|
|
36,022
|
|
|
2,609
|
|
Total
assets
|
|
$
|
14,053,624
|
|
|
$
|
13,963,493
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Mortgage notes
payable, net
|
|
$
|
1,918,826
|
|
|
$
|
1,922,657
|
|
Corporate bonds,
net
|
|
2,619,956
|
|
|
3,368,609
|
|
Convertible debt,
net
|
|
395,823
|
|
|
394,883
|
|
Credit facility,
net
|
|
1,089,725
|
|
|
401,773
|
|
Below-market lease
liabilities, net
|
|
166,708
|
|
|
173,479
|
|
Accounts payable and
accrued expenses
|
|
141,126
|
|
|
145,611
|
|
Deferred rent and
other liabilities
|
|
70,220
|
|
|
69,714
|
|
Distributions
payable
|
|
190,246
|
|
|
186,623
|
|
Operating lease
liabilities
|
|
228,120
|
|
|
—
|
|
Total
liabilities
|
|
6,820,750
|
|
|
6,663,349
|
|
Series F preferred
stock
|
|
429
|
|
|
428
|
|
Common
stock
|
|
9,716
|
|
|
9,675
|
|
Additional paid-in
capital
|
|
12,645,148
|
|
|
12,615,472
|
|
Accumulated other
comprehensive loss
|
|
(12,202)
|
|
|
(1,280)
|
|
Accumulated
deficit
|
|
(5,550,574)
|
|
|
(5,467,236)
|
|
Total stockholders'
equity
|
|
7,092,517
|
|
|
7,157,059
|
|
Non-controlling
interests
|
|
140,357
|
|
|
143,085
|
|
Total
equity
|
|
7,232,874
|
|
|
7,300,144
|
|
Total liabilities and
equity
|
|
$
|
14,053,624
|
|
|
$
|
13,963,493
|
|
VEREIT,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except
for per share data) (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Rental
revenue
|
|
$
|
316,843
|
|
|
$
|
315,074
|
|
Operating
expenses:
|
|
|
|
|
Acquisition-related
|
|
985
|
|
|
777
|
|
Insurance recoveries,
net of litigation and non-routine costs
|
|
(21,492)
|
|
|
21,740
|
|
Property
operating
|
|
32,378
|
|
|
30,565
|
|
General and
administrative
|
|
14,846
|
|
|
15,240
|
|
Depreciation and
amortization
|
|
136,555
|
|
|
166,152
|
|
Impairments
|
|
11,988
|
|
|
6,036
|
|
Restructuring
|
|
9,076
|
|
|
—
|
|
Total operating
expenses
|
|
184,336
|
|
|
240,510
|
|
Other (expense)
income:
|
|
|
|
|
Interest
expense
|
|
(71,254)
|
|
|
(70,425)
|
|
Other (loss) income,
net
|
|
(402)
|
|
|
7,709
|
|
Equity in income and
gain on disposition of unconsolidated entities
|
|
500
|
|
|
1,065
|
|
Gain on disposition
of real estate and real estate assets held for sale, net
|
|
10,831
|
|
|
17,335
|
|
Total other expenses,
net
|
|
(60,325)
|
|
|
(44,316)
|
|
Income before
taxes
|
|
72,182
|
|
|
30,248
|
|
Provision for income
taxes from continuing operations
|
|
(1,211)
|
|
|
(1,212)
|
|
Income from
continuing operations
|
|
70,971
|
|
|
29,036
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
3,501
|
|
Net
income
|
|
70,971
|
|
|
32,537
|
|
Net (income)
attributable to non-controlling interests
|
|
(1,667)
|
|
|
(742)
|
|
Net income
attributable to the General Partner
|
|
$
|
69,304
|
|
|
$
|
31,795
|
|
|
|
|
|
|
Basic and diluted net
income per share from continuing operations attributable to common
stockholders
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
Basic and diluted net
income per share from discontinued operations attributable to
common stockholders
|
|
—
|
|
|
0.00
|
|
Basic and diluted net
income per share attributable to common stockholders
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
Distributions
declared per common share
|
|
$
|
0.1375
|
|
|
$
|
0.1375
|
|
VEREIT,
INC.
EBITDA, EBITDAre
AND NORMALIZED EBITDA
(In thousands)
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Net
income
|
|
$
|
70,971
|
|
|
$
|
32,537
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
|
71,254
|
|
|
70,425
|
|
Depreciation and
amortization of real estate assets
|
|
136,555
|
|
|
166,152
|
|
Provision for income
taxes
|
|
1,211
|
|
|
(883)
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
288
|
|
|
619
|
|
EBITDA
|
|
$
|
280,279
|
|
|
$
|
268,850
|
|
Gain on disposition
of real estate assets, including joint ventures, net
|
|
(10,831)
|
|
|
(18,036)
|
|
Impairments of real
estate
|
|
11,988
|
|
|
6,036
|
|
EBITDAre
|
|
$
|
281,436
|
|
|
$
|
256,850
|
|
Loss on disposition
of discontinued operations
|
|
—
|
|
|
2,009
|
|
Acquisition-related
expenses
|
|
985
|
|
|
777
|
|
(Insurance
recoveries), net of litigation and non-routine costs
|
|
(21,492)
|
|
|
21,086
|
|
Gain on
investments
|
|
470
|
|
|
(5,638)
|
|
Loss (gain) on
derivative instruments, net
|
|
34
|
|
|
(273)
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
731
|
|
|
1,487
|
|
Net direct financing
lease adjustments
|
|
409
|
|
|
539
|
|
Straight-line rent,
net of bad debt expense related to straight-line rent
|
|
(7,412)
|
|
|
(11,260)
|
|
Restructuring
expenses
|
|
9,076
|
|
|
—
|
|
Other adjustments,
net
|
|
(113)
|
|
|
(488)
|
|
Proportionate
share of adjustments for unconsolidated entities
|
|
(188)
|
|
|
(6)
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
40
|
|
Normalized
EBITDA
|
|
$
|
263,936
|
|
|
$
|
265,123
|
|
Normalized EBITDA
from continuing operations
|
|
$
|
263,936
|
|
|
$
|
262,362
|
|
Normalized EBITDA
from discontinued operations
|
|
$
|
—
|
|
|
$
|
2,761
|
|
VEREIT,
INC.
FUNDS FROM
OPERATIONS
(In thousands, except
for share and per share data) (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Net
income
|
|
$
|
70,971
|
|
|
$
|
32,537
|
|
Dividends on
non-convertible preferred stock
|
|
(17,973)
|
|
|
(17,973)
|
|
Gain on disposition
of real estate assets, including joint ventures, net
|
|
(10,831)
|
|
|
(18,036)
|
|
Depreciation and
amortization of real estate assets
|
|
135,861
|
|
|
165,182
|
|
Impairment of real
estate
|
|
11,988
|
|
|
6,036
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
288
|
|
|
446
|
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
190,304
|
|
|
$
|
168,192
|
|
FFO attributable to
common stockholders and limited partners from continuing
operations
|
|
190,304
|
|
|
164,691
|
|
FFO attributable to
common stockholders and limited partners from discontinued
operations
|
|
—
|
|
|
3,501
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
968,460,296
|
|
|
972,663,193
|
|
Limited Partner OP
Units and effect of dilutive securities
|
|
24,838,018
|
|
|
24,110,249
|
|
Weighted-average
shares outstanding - diluted
|
|
993,298,314
|
|
|
996,773,442
|
|
|
|
|
|
|
FFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.192
|
|
|
$
|
0.169
|
|
FFO attributable to
common stockholders and limited partners from continuing operations
per diluted share
|
|
$
|
0.192
|
|
|
$
|
0.165
|
|
FFO attributable to
common stockholders and limited partners from discontinued
operations per diluted share
|
|
$
|
—
|
|
|
$
|
0.004
|
|
VEREIT,
INC.
ADJUSTED FUNDS
FROM OPERATIONS
(In thousands, except
for share and per share data) (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
190,304
|
|
|
$
|
168,192
|
|
|
|
|
|
|
Acquisition-related
expenses
|
|
985
|
|
|
777
|
|
(Insurance
recoveries), net of litigation and non-routine costs
|
|
(21,492)
|
|
|
21,086
|
|
Loss on disposition
of discontinued operations
|
|
—
|
|
|
2,009
|
|
Gain on
investments
|
|
470
|
|
|
(5,638)
|
|
Loss (gain) on
derivative instruments, net
|
|
34
|
|
|
(273)
|
|
Amortization of
premiums and discounts on debt and investments, net
|
|
(1,264)
|
|
|
(606)
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
731
|
|
|
1,487
|
|
Net direct financing
lease adjustments
|
|
409
|
|
|
539
|
|
Amortization and
write-off of deferred financing costs
|
|
3,494
|
|
|
5,875
|
|
Deferred and other
tax expense
|
|
—
|
|
|
(1,855)
|
|
Straight-line rent,
net of bad debt expense related to straight-line rent
|
|
(7,412)
|
|
|
(11,260)
|
|
Equity-based
compensation
|
|
2,687
|
|
|
2,774
|
|
Restructuring
expenses
|
|
9,076
|
|
|
—
|
|
Other adjustments,
net
|
|
569
|
|
|
514
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
(188)
|
|
|
12
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
423
|
|
AFFO attributable
to common stockholders and limited partners
|
|
$
|
178,403
|
|
|
$
|
184,056
|
|
AFFO attributable to
common stockholders and limited partners from continuing
operations
|
|
178,403
|
|
|
180,854
|
|
AFFO attributable to
common stockholders and limited partners from discontinued
operations
|
|
—
|
|
|
3,202
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
968,460,296
|
|
|
972,663,193
|
|
Limited Partner OP
Units and effect of dilutive securities
|
|
24,838,018
|
|
|
24,110,249
|
|
Weighted-average
shares outstanding - diluted
|
|
993,298,314
|
|
|
996,773,442
|
|
|
|
|
|
|
AFFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.180
|
|
|
$
|
0.185
|
|
AFFO attributable to
common stockholder and limited partners from continuing operations
per diluted share
|
|
$
|
0.180
|
|
|
$
|
0.182
|
|
AFFO attributable to
common stockholders and limited partners from discontinued
operations per diluted share
|
|
$
|
—
|
|
|
$
|
0.003
|
|
VEREIT,
INC.
FINANCIAL AND
OPERATIONS STATISTICS AND RATIOS
(Dollars in
thousands) (Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
2019
|
Interest expense - as
reported
|
|
|
|
|
|
$
|
(71,254)
|
|
Less
Adjustments:
|
|
|
|
|
|
|
Amortization of
deferred financing costs and other non-cash charges
|
|
|
|
|
|
(3,546)
|
|
Amortization of net
premiums
|
|
|
|
|
|
1,328
|
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
|
|
|
|
$
|
(69,036)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
2019
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
|
|
|
|
$
|
69,036
|
|
Secured debt
principal amortization
|
|
|
|
|
|
2,430
|
|
Dividends
attributable to preferred shares
|
|
|
|
|
|
17,973
|
|
Total fixed
charges
|
|
|
|
|
|
89,439
|
|
Normalized
EBITDA
|
|
|
|
|
|
263,936
|
|
Fixed Charge Coverage
Ratio
|
|
|
|
|
|
2.95x
|
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
Mortgage notes
payable, net
|
|
$
|
1,918,826
|
|
|
$
|
1,922,657
|
|
Corporate bonds,
net
|
|
2,619,956
|
|
|
3,368,609
|
|
Convertible debt,
net
|
|
395,823
|
|
|
394,883
|
|
Credit facility,
net
|
|
1,089,725
|
|
|
401,773
|
|
Total debt - as
reported
|
|
6,024,330
|
|
|
6,087,922
|
|
Adjustments:
|
|
|
|
|
Deferred financing
costs, net
|
|
44,602
|
|
|
42,763
|
|
Net
premiums
|
|
(6,726)
|
|
|
(8,053)
|
|
Principal
Outstanding
|
|
6,062,206
|
|
|
6,122,632
|
|
Principal Outstanding
- Excluded Properties
|
|
—
|
|
|
—
|
|
Adjusted Principal
Outstanding
|
|
$
|
6,062,206
|
|
|
$
|
6,122,632
|
|
|
|
|
|
|
Adjusted Principal
Outstanding
|
|
$
|
6,062,206
|
|
|
$
|
6,122,632
|
|
Less: cash and cash
equivalents
|
|
12,788
|
|
|
30,758
|
|
Net Debt
|
|
$
|
6,049,418
|
|
|
$
|
6,091,874
|
|
|
|
|
|
|
|
|
March 31,
2019
|
Total real estate
investments, at cost - as reported
|
|
|
|
|
|
$
|
15,570,486
|
|
Adjustments:
|
|
|
|
|
|
|
Investment in
unconsolidated entities
|
|
|
|
|
|
35,790
|
|
Investment in Cole
REITs
|
|
|
|
|
|
7,552
|
|
Gross assets held for
sale
|
|
|
|
|
|
45,064
|
|
Investment in direct
financing leases, net
|
|
|
|
|
|
10,735
|
|
Mortgage notes
receivable, net
|
|
|
|
|
|
1,713
|
|
Gross below market
leases
|
|
|
|
|
|
(259,976)
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
$
|
15,411,364
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
Net Debt
|
|
|
|
|
|
$
|
6,049,418
|
|
Normalized EBITDA
annualized
|
|
|
|
|
|
1,055,744
|
|
Net Debt to
Normalized EBITDA Annualized Ratio
|
|
|
|
|
|
5.73x
|
|
|
|
|
|
|
|
|
Net Debt
|
|
|
|
|
|
$
|
6,049,418
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
15,411,364
|
|
Net Debt Leverage
Ratio
|
|
|
|
|
|
39.3%
|
|
|
|
|
|
|
|
|
Unencumbered Gross
Real Estate Investments
|
|
|
|
|
|
$
|
11,577,487
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
15,411,364
|
|
Unencumbered asset
ratio
|
|
|
|
|
|
75.1%
|
|
VEREIT, INC.
ADJUSTED FUNDS FROM
OPERATIONS PER DILUTED SHARE - 2019
GUIDANCE
(Unaudited)
The Company expects its 2019 AFFO per diluted share to be in a
range between $0.68 and $0.70. This guidance assumes acquisitions
totaling $250 million to $500 million at an average cash cap rate of 6.5%
to 7.5%, dispositions totaling $350
million to $500 million within
the same cap rate range, along with the anticipated closing of a
$407 million industrial
partnership. Guidance also assumes real estate operations
with average occupancy above 98.0%, same-store rental growth in a
range of 0.3% to 1.0% and Net Debt to Normalized EBITDA between
5.7x and 6.0x. The estimated net income 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 income
per share attributable to common stockholders and limited partners
(1) (2)
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
Gain on disposition
of real estate assets, net (2)
|
|
(0.01)
|
|
|
(0.01)
|
|
Depreciation and
amortization of real estate assets (2)
|
|
0.48
|
|
|
0.48
|
|
Impairment of real
estate (2)
|
|
0.01
|
|
|
0.01
|
|
FFO attributable to
common stockholders and limited partners per diluted
share
|
|
0.62
|
|
|
0.64
|
|
Adjustments
(3)
|
|
0.06
|
|
|
0.06
|
|
AFFO attributable to
common stockholders and limited partners per diluted
share
|
|
$
|
0.68
|
|
|
$
|
0.70
|
|
_______________________________
|
(1)
|
Includes impact of
dividends to be paid to preferred shareholders.
|
(2)
|
Includes actual
amounts for the three months ended March 31, 2019.
|
(3)
|
Includes (i)
non-routine items such as acquisition-related expenses, litigation
and other non-routine costs, net of insurance recoveries,
restructuring expenses, legal settlements and insurance recoveries
not in the ordinary course of business, and (ii) certain non-cash
items such as straight-line rent, net direct financing lease
adjustments, gains or losses on derivatives, 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.
|
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SOURCE VEREIT, Inc.