Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document



 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 3, 2018
 
VEREIT, INC.
VEREIT OPERATING PARTNERSHIP, L.P.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
 
 
 
 
Maryland
 
001-35263
 
45-2482685
Delaware
 
333-197780
 
45-1255683
(State or other jurisdiction of incorporation)
 
       (Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
 
 
 
2325 E. Camelback Road, Suite 1100
Phoenix, AZ 85016
(Address of principal executive offices, including zip code)
 
 
(800) 606-3610
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
VEREIT, Inc.
 
VEREIT Operating Partnership, L.P.
Emerging growth company     o 

 
Emerging growth company     o 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
VEREIT, Inc. ¨ VEREIT Operating Partnership, L.P. o
 





Item 2.02. Results of Operations and Financial Condition.
On August 3, 2018, VEREIT, Inc. (the “Company”) furnished the following documents: (i) a press release relating to its second quarter 2018 financial results and related matters, attached hereto as Exhibit 99.1; and (ii) quarterly supplemental information for the fiscal quarter ended June 30, 2018, attached hereto as Exhibit 99.2. The information set forth in this Item 2.02 and in the attached Exhibits 99.1 and 99.2 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
 
Description
99.1
 
99.2
 






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
VEREIT, INC.
 
 
 
By:
/s/ Michael J. Bartolotta
 
Name:
Michael J. Bartolotta
 
Title:
Executive Vice President and Chief Financial Officer
 
VEREIT OPERATING PARTNERSHIP, L.P.
By: VEREIT, Inc., its sole general partner
 
 
 
By:
/s/ Michael J. Bartolotta
 
Name:
Michael J. Bartolotta
 
Title:
Executive Vice President and Chief Financial Officer

Date: August 3, 2018






Exhibit Index
Exhibit No.
 
Description
99.1
 
Press Release issued August 3, 2018 relating to Second Quarter 2018 Financial Results and Related Matters
99.2
 
Quarterly Supplemental Information for the Quarter Ended June 30, 2018



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
394501368_vreitlogojpega02.jpg
FOR IMMEDIATE RELEASE

VEREIT® Announces Second Quarter 2018 Operating Results
Strengthened Liquidity With New $2.9 Billion Credit Facility and 74% Unencumbered Assets
Continued Portfolio Diversification



Phoenix, AZ, August 3, 2018 -- VEREIT, Inc. (NYSE: VER) (“VEREIT” or the “Company”) announced today its operating results for the three months ending June 30, 2018.

The financial results below reflect continuing operations only.

Second Quarter 2018 Highlights
Net loss of $(74.7) million and net loss per diluted share of $(0.09)
Achieved $0.18 AFFO per diluted share
Completed $41.0 million of acquisitions and $56.4 million of dispositions
Entered into new $2.9 billion credit facility enhancing liquidity and financial flexibility
Settled pending litigation with Vanguard for $90.0 million
Reaffirming 2018 AFFO per diluted share guidance range of $0.70 and $0.72 (see reconciliation to earnings per share at the end of this release)

Second Quarter 2018 Financial Results

Revenue
Revenue for the quarter ended June 30, 2018 increased $7.4 million to $315.7 million as compared to revenue of $308.2 million for the same quarter in 2017, primarily due to net acquisitions since April 1, 2017.

Net Income (Loss) and Net Income (Loss) Attributable to Common Stockholders per Diluted Share
Net income for the quarter ended June 30, 2018 decreased $104.3 million to a net loss of $(74.7) million as compared to net income of $29.6 million for the same quarter in 2017, and net income per diluted share decreased $0.10 to a net loss per diluted share of $(0.09) for the quarter ended June 30, 2018, as compared to net income per diluted share of $0.01 for the same quarter in 2017. The differences were primarily due to the Vanguard settlement along with a smaller gain on the disposition of real estate partially offset by higher revenue and lower depreciation and amortization and impairment expenses.

Normalized EBITDA
Normalized EBITDA for the quarter ended June 30, 2018 increased $1.6 million to $259.4 million as compared to Normalized EBITDA of $257.8 million for the same quarter in 2017, primarily due to higher revenue, partially offset by higher property operating and G&A expenses along with lower other income and 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 June 30, 2018 decreased $89.8 million to $77.0 million, as compared to $166.8 million for the same quarter in 2017, and FFO per diluted share decreased $0.09 to $0.08 for the quarter ended June 30, 2018, as compared to FFO per diluted share of $0.17 for the same quarter in 2017.


1


Adjusted FFO Attributable to Common Stockholders and Limited Partners (“AFFO”) and AFFO per Diluted Share
AFFO for the quarter ended June 30, 2018 increased $4.1 million to $178.8 million, as compared to $174.7 million for the same quarter in 2017, and AFFO per diluted share remained at $0.18 for the quarter ended June 30, 2018, as compared to the same quarter in 2017.

Management Commentary
Glenn J. Rufrano, Chief Executive Officer, stated, “During the second quarter, VEREIT executed a new $2.9 billion credit facility providing long-term balance sheet flexibility. Our portfolio remains well-diversified with occupancy of 98.8% and a focus to increase unencumbered assets which now approximate 74%. Debt metrics are well within our investment grade rating and we continue to have a great deal of liquidity.”

Common Stock Dividend Information
On August 2, 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 October 15, 2018 to common stockholders of record as of September 28, 2018.

Balance Sheet and Liquidity
On May 23, 2018, the Company closed on a new $2.9 billion unsecured credit facility to replace its previous $2.3 billion revolving credit facility. The new credit facility is comprised of a $2.0 billion unsecured revolving credit facility and a $900.0 million unsecured delayed-draw term loan facility.
During the second quarter, the Company had net draws on its revolving line of credit of $75.0 million, resulting in a balance of $195.0 million and leaving $1.8 billion of capacity available as of June 30, 2018 on the Company’s $2.0 billion revolving line of credit. In addition, secured debt was reduced by $45.9 million.

Share Repurchase Activity
During the second quarter of 2018, the Company repurchased approximately 0.8 million shares of its common stock at an average price of $6.95 per share. Year-to-date the Company has repurchased 7.2 million shares at an average price of $6.94 per share.

Consolidated Financial Statistics
Financial Statistics as of the quarter ended June 30, 2018 are as follows: Net Debt to Normalized EBITDA of 5.8x, Fixed Charge Coverage Ratio of 3.0x, Unencumbered Asset Ratio of 73.5%, Net Debt to Gross Real Estate Investments of 39.1% and Weighted Average Debt Term of 4.0 years.

Vanguard Settlement
On June 11, 2018, the Company announced it entered into a settlement agreement and release to settle its pending litigation with Vanguard for $90.0 million. Vanguard’s holdings accounted for approximately 13.0% of VEREIT’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions. The Company retains the right to pursue any and all claims against the other defendants in the litigation and/or third parties, including claims for contribution for amounts paid in the settlement.

Real Estate Portfolio
As of June 30, 2018, the Company’s portfolio consisted of 4,033 properties with total portfolio occupancy of 98.8%, investment grade tenancy of 42.7% and a weighted-average remaining lease term of 9.1 years. During the quarter ended June 30, 2018, same-store rents (3,942 properties) increased 0.5% 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 1.1%.

Property Acquisitions
During the second quarter of 2018, the Company acquired 7 properties for approximately $41.0 million at an average cash cap rate of 7.2%.

Property Dispositions
During the quarter ended June 30, 2018, the Company disposed of 37 properties for an aggregate sales price of $56.4 million. Of this amount, $28.4 million was used in the total weighted average cash cap rate calculation of 7.4%, including $25.9 million in net sales of Red Lobster restaurants. The gain on second quarter sales was approximately $6.0 million.


2


Subsequent Events

Property Acquisitions
From July 1, 2018 through July 26, 2018, the Company acquired 14 properties for $74.2 million at a cash cap rate of 7.1%.

Property Dispositions
From July 1, 2018 through July 26, 2018, the Company disposed of 10 properties for an aggregate sales price of $39.3 million at an average cash cap rate of 6.8%.

Capital Market Activity
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. The Company is evaluating options for permanent financing, including borrowings on the delayed-draw term loan or the issuance of a senior note offering.



Audio Webcast Details

The live audio webcast, beginning at 1:00 p.m. ET on Friday, August 3, 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 $14.3 billion including approximately 4,000 properties and 94.6 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.



Media Contact
Parke Chapman
Rubenstein Associates
212.843.8489 | pchapman@rubenstein.com


        
Investor Contact
Bonni Rosen, SVP, Investor Relations                
VEREIT            
877.405.2653 | BRosen@VEREIT.com

3


Definitions
Descriptions of FFO and AFFO, EBITDA and Normalized EBITDA, Debt Outstanding and Adjusted Debt 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 June 30, 2017 were two vacant office properties and five industrial properties, two of which were vacant. Excluded Properties at June 30, 2017 were two vacant office properties and one vacant industrial property, comprising an aggregate 991,000 square feet with aggregate Debt Outstanding of $83.9 million. During the three months ended June 30, 2018, the Excluded Property was one vacant industrial property, comprising 307,725 square feet with Debt Outstanding of $16.2 million. At June 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.



4


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.
Debt Outstanding and Adjusted Debt Outstanding
Debt Outstanding and Adjusted Debt 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 Debt Outstanding omits the outstanding principal balance of mortgage notes secured by Excluded Properties. We believe that the presentation of Debt Outstanding and Adjusted Debt Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Debt Outstanding and Adjusted Debt 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 Debt 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 Debt 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.

5


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, investment in direct financing leases, investment securities backed by real estate and loans held for investment, net of gross intangible lease liabilities.
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 strength and liquidity of its balance sheet, permanent financing for the repayment of its 2018 convertible notes, and VEREIT’s focus to increase unencumbered assets in its portfolio. 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 execute on and realize success from its business plan; VEREIT’s ability to meet its 2018 guidance; the unpredictability of the business plans and financial condition of VEREIT's tenants; 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 or other assets; 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 or from tenant defaults generally; risks associated with pending government investigations and litigations related to VEREIT's previously disclosed audit committee investigation; 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.




6




VEREIT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data) (Unaudited)

 
 
June 30,
2018
 
December 31,
2017
ASSETS
 
 
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
2,859,265

 
$
2,865,855

Buildings, fixtures and improvements
 
10,714,456

 
10,711,845

Intangible lease assets
 
2,024,014

 
2,037,675

Total real estate investments, at cost
 
15,597,735

 
15,615,375

Less: accumulated depreciation and amortization
 
3,206,336

 
2,908,028

Total real estate investments, net
 
12,391,399

 
12,707,347

Investment in unconsolidated entities
 
33,972

 
39,520

Investment in direct financing leases, net
 
16,560

 
19,539

Investment securities, at fair value
 
35,489

 
40,974

Mortgage notes receivable, net
 
19,855

 
20,294

Cash and cash equivalents
 
18,434

 
34,176

Restricted cash
 
27,078

 
27,662

Rent and tenant receivables and other assets, net
 
351,163

 
308,253

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
 
29,884

 
163,999

Total assets
 
$
14,261,607

 
$
14,705,578

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
2,031,171

 
$
2,082,692

Corporate bonds, net
 
2,824,176

 
2,821,494

Convertible debt, net
 
989,901

 
984,258

Credit facility
 
195,000

 
185,000

Below-market lease liabilities, net
 
187,352

 
198,551

Accounts payable and accrued expenses
 
141,746

 
136,474

Deferred rent, derivative and other liabilities
 
66,123

 
62,985

Distributions payable
 
180,734

 
175,301

Due to affiliates
 

 
66

Liabilities related to discontinued operations
 

 
15,881

Total liabilities
 
6,616,203

 
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 June 30, 2018 and December 31, 2017
 
428

 
428

Common stock, $0.01 par value, 1,500,000,000 shares authorized and 967,493,795 and 974,208,583 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
 
9,674

 
9,742

Additional paid-in-capital
 
12,609,145

 
12,654,258

Accumulated other comprehensive loss
 
(4,290
)
 
(3,569
)
Accumulated deficit
 
(5,120,240
)
 
(4,776,581
)
Total stockholders’ equity
 
7,494,717

 
7,884,278

Non-controlling interests
 
150,687

 
158,598

Total equity
 
7,645,404

 
8,042,876

Total liabilities and equity
 
$
14,261,607

 
$
14,705,578


7



VEREIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended June 30,
 
 
2018
 
2017
Revenues:
 
 
 
 
Rental income
 
$
290,641

 
$
286,694

Operating expense reimbursements
 
25,023

 
21,551

Total revenues
 
315,664

 
308,245

Operating expenses:
 
 
 
 
Acquisition-related
 
909

 
756

Litigation and other non-routine costs, net of insurance recoveries
 
107,087

 
14,411

Property operating
 
31,436

 
31,627

General and administrative
 
16,287

 
14,429

Depreciation and amortization
 
164,235

 
180,148

Impairments
 
11,664

 
17,769

Total operating expenses
 
331,618

 
259,140

Operating (loss) income
 
(15,954
)
 
49,105

Other (expense) income:
 
 
 
 
Interest expense
 
(70,320
)
 
(73,621
)
Gain on extinguishment and forgiveness of debt, net
 
5,249

 
9,005

Other income, net
 
1,215

 
2,463

Equity in income and gain on disposition of unconsolidated entities
 
327

 
513

Gain on derivative instruments, net
 
105

 
592

Total other expenses, net
 
(63,424
)
 
(61,048
)
Loss before taxes and real estate dispositions
 
(79,378
)
 
(11,943
)
Gain on disposition of real estate and held for sale assets, net
 
5,821

 
42,639

(Loss) income from continuing operations before income taxes
 
(73,557
)
 
30,696

Provision for income taxes
 
(1,134
)
 
(1,146
)
(Loss) income from continuing operations
 
(74,691
)
 
29,550

Income from discontinued operations, net of tax
 
224

 
4,636

Net (loss) income
 
(74,467
)
 
34,186

Net loss (income) attributable to non-controlling interests
 
1,797

 
(778
)
Net (loss) income attributable to the General Partner
 
$
(72,670
)
 
$
33,408

 
 
 
 
 
Basic and diluted net (loss) income 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

 
0.01

Basic and diluted net (loss) income per share attributable to common stockholders
 
$
(0.09
)
 
$
0.02

Distributions declared per common share
 
$
0.1375

 
$
0.1375










8



VEREIT, INC.
CONSOLIDATED EBITDA AND NORMALIZED EBITDA
(In thousands) (Unaudited)

 
 
Three Months Ended June 30,
 
 
2018
 
2017
Net (loss) income
 
$
(74,467
)
 
$
34,186

 Adjustments:
 
 
 
 
Interest expense
 
70,320

 
73,621

Depreciation and amortization of real estate assets
 
164,235

 
184,288

Provision for income taxes
 
1,134

 
2,571

Proportionate share of adjustments for unconsolidated entities
 
289

 
1,023

 EBITDA
 
$
161,511

 
$
295,689

Gain on disposition of real estate assets, net
 
(5,821
)
 
(42,639
)
Impairments
 
11,664

 
17,769

Loss on disposition and held for sale loss on discontinued operations
 
(224
)
 

Acquisition-related expenses
 
909

 
756

Litigation and other non-routine costs, net of insurance recoveries
 
107,087

 
14,411

Gain on investment securities
 

 
(65
)
Gain on derivative instruments, net
 
(105
)
 
(592
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
688

 
1,703

Gain on extinguishment and forgiveness of debt, net
 
(5,249
)
 
(9,005
)
Net direct financing lease adjustments
 
503

 
464

Straight-line rent, net of bad debt expense related to straight-line rent
 
(11,402
)
 
(10,870
)
Other adjustments, net
 
(142
)
 
(57
)
 Proportionate share of adjustments for unconsolidated entities
 
(27
)
 
(11
)
Adjustment for Excluded Properties
 
(5
)
 
472

Normalized EBITDA
 
$
259,387

 
$
268,025

Normalized EBITDA from continuing operations
 
$
259,387

 
$
257,824

Normalized EBITDA from discontinued operations
 
$

 
$
10,201























9



VEREIT, INC.
CONSOLIDATED FUNDS FROM OPERATIONS
(In thousands, except for share and per share data) (Unaudited)
 
 
Three Months Ended June 30,
 
 
2018
 
2017
Net (loss) income
 
$
(74,467
)
 
$
34,186

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
Gain on disposition of real estate assets, net
 
(5,821
)
 
(42,639
)
Depreciation and amortization of real estate assets
 
163,551

 
179,433

Impairment of real estate
 
11,664

 
17,769

Proportionate share of adjustments for unconsolidated entities
 
289

 
667

FFO attributable to common stockholders and limited partners
 
$
77,243

 
$
171,443

FFO attributable to common stockholders and limited partners from continuing operations
 
77,019

 
166,807

FFO attributable to common stockholders and limited partners from discontinued operations
 
224

 
4,636

 
 
 
 
 
Weighted-average shares outstanding - basic
 
968,192,162

 
974,160,295

Limited Partner OP Units and effect of dilutive securities
 
23,907,976

 
23,969,333

Weighted-average shares outstanding - diluted
 
992,100,138

 
998,129,628

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.078

 
$
0.172

FFO attributable to common stockholders and limited partners from continuing operations per diluted share
 
$
0.078

 
$
0.167

FFO attributable to common stockholders and limited partners from discontinued operations per diluted share
 
$
0.000

 
$
0.005



















10



VEREIT, INC.
CONSOLIDATED ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except for share and per share data) (Unaudited)
 
 
Three Months Ended June 30,
 
 
2018
 
2017
FFO attributable to common stockholders and limited partners
 
$
77,243

 
$
171,443

 
 
 
 
 
Acquisition-related expenses
 
909

 
756

Litigation and other non-routine costs, net of insurance recoveries
 
107,087

 
14,411

Loss on disposition and held for sale loss on discontinued operations
 
(224
)
 

Gain on investments
 

 
(65
)
Gain on derivative instruments, net
 
(105
)
 
(592
)
Amortization of premiums and discounts on debt and investments, net
 
(603
)
 
(1,700
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
688

 
1,703

Net direct financing lease adjustments
 
503

 
464

Amortization and write-off of deferred financing costs
 
5,650

 
6,327

Amortization of management contracts
 

 
4,146

Deferred other tax benefit
 

 
(4,318
)
Gain on extinguishment and forgiveness of debt, net
 
(5,249
)
 
(9,005
)
Straight-line rent, net of bad debt expense related to straight-line rent
 
(11,402
)
 
(10,870
)
Equity-based compensation expense
 
3,716

 
4,448

Other adjustments, net
 
566

 
627

Proportionate share of adjustments for unconsolidated entities
 
(27
)
 
48

Adjustment for Excluded Properties
 
42

 
3,045

AFFO attributable to common stockholders and limited partners
 
$
178,794

 
$
180,868

AFFO attributable to common stockholders and limited partners from continuing operations
 
178,794

 
174,745

AFFO attributable to common stockholders and limited partners from discontinued operations
 

 
6,123

 
 
 
 
 
Weighted-average shares outstanding - basic
 
968,192,162

 
974,160,295

Limited Partner OP Units and effect of dilutive securities
 
23,907,976

 
23,969,333

Weighted-average shares outstanding - diluted
 
992,100,138

 
998,129,628

 
 
 
 
 
AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.180

 
$
0.181

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
 
$

 
$
0.006










11



VEREIT, INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)
 
 
Three Months Ended
 
 
June 30,
2018
Interest expense - as reported
 
$
(70,320
)
Less Adjustments:
 
 
Amortization of deferred financing costs and other non-cash charges
 
(5,705
)
Amortization of net premiums
 
634

Interest Expense, Excluding Non-Cash Amortization - Excluded Properties
 
(47
)
Interest Expense, Excluding Non-Cash Amortization
 
$
(65,202
)

 
 
Three Months Ended
 
 
June 30,
2018
Interest Expense, Excluding Non-Cash Amortization
 
$
65,202

Secured debt principal amortization
 
2,457

Dividends attributable to preferred shares 
 
17,973

Total fixed charges
 
85,632

Normalized EBITDA
 
259,387

Fixed Charge Coverage Ratio
 
3.03
x
 
 
 
 
 
June 30,
2018
Adjusted Debt Outstanding
 
$
6,067,593

Less: cash and cash equivalents
 
18,434

Net Debt
 
6,049,159

Normalized EBITDA annualized
 
1,037,548

Net Debt to Normalized EBITDA Annualized Ratio
 
5.83
x
 
 
 
Net Debt
 
$
6,049,159

Gross Real Estate Investments
 
15,477,098

Net Debt Leverage Ratio
 
39.1
%
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,376,971

Gross Real Estate Investments
 
15,477,098

Unencumbered asset ratio
 
73.5
%
 
 
June 30,
2018
Mortgage notes payable, net
 
$
2,031,171

Corporate bonds, net
 
2,824,176

Convertible debt, net
 
989,901

Credit facility
 
195,000

Total debt - as reported
 
6,040,248

Adjustments:
 
 
Deferred financing costs, net
 
41,672

Net premiums
 
(14,327
)
Debt Outstanding
 
6,067,593

Debt Outstanding - Excluded Properties
 

Adjusted Debt Outstanding
 
$
6,067,593


12



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 $0.70 and $0.72. This guidance assumes dispositions totaling $300 million to $500 million at an average cash cap rate of 6.5% to 7.5% and acquisitions of $200 million to $300 million in excess of dispositions within the same cash cap rate range. 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 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 loss per share attributable to common stockholders and limited partners (1) (2)
 
$
(0.09
)
 
$
(0.07
)
Gain on disposition of real estate assets, net  (2)
 
(0.02
)
 
(0.02
)
Depreciation and amortization of real estate assets (2)
 
0.64

 
0.64

Impairment of real estate (2)
 
0.02

 
0.02

FFO attributable to common stockholders and limited partners per diluted share
 
0.55

 
0.57

Adjustments (3)
 
0.15

 
0.15

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.70

 
$
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 six months ended June 30, 2018.
(2) Includes actual amounts for the six months ended June 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.

13
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

394501368_a2018q2supplementcover.jpg




394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
June 30, 2018
 
Section
Page
394501368_fdbeaveruta02.jpg
 
 
Company Overview
Financial Summary
Financial and Operations Statistics and Ratios
Key Balance Sheet Metrics and Capital Structure
Balance Sheets
Statements of Operations
Funds From Operations (FFO)
Adjusted Funds From Operations (AFFO)
EBITDA and Normalized EBITDA
Net Operating Income
394501368_cignaoffice.jpg
Same Store Contract Rental Revenue
Debt and Preferred Equity Summary
Mortgage Notes Payable
Credit Facility and Corporate Bond Covenants
Acquisitions and Dispositions
Diversification Statistics
Top 10 Concentrations
Tenants Comprising Over 1% of Annualized Rental Income
Tenant Industry Diversification
Property Geographic Diversification
394501368_cvskernersville.jpg
Lease Expirations
Lease Summary
Diversification by Property Type
Definitions
 
 
 
 
 
 
 
 
 
 
 
 
394501368_tjxphiladelphiapadistirb04.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 2



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended June 30, 2018, unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with the financial statements and the Management's Discussion and Analysis of Financial Condition and Results of Operations sections contained in VEREIT, Inc.'s (the "Company," "VEREIT," "us," "our" and "we") Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Reports on Form 10-Q for the periods ended June 30, 2018, March 31, 2018, September 30, 2017, and June 30, 2017.

Prior to the fourth quarter of 2017, the Company operated through two business segments, the real estate investment segment and the investment management segment, Cole Capital. On February 1, 2018, the Company completed the sale of Cole Capital. Substantially all of the Cole Capital segment is presented as discontinued operations and the Company's remaining financial results are reported as a single segment for all periods presented. The Company's continuing operations represent primarily those of the real estate investment segment.

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. 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 execute on and realize success from its business plan; VEREIT’s ability to meet its 2018 guidance; the unpredictability of the business plans and financial condition of VEREIT's tenants; 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 or other assets; 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 or from tenant defaults generally; risks associated with pending government investigations and litigations related to VEREIT's previously disclosed audit committee investigation; 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.


See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 3



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Company Overview
(unaudited)
 
VEREIT is a real estate company incorporated in Maryland on December 2, 2010, which has elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes. On September 6, 2011, the Company completed its initial public offering.

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. VEREIT's business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. The Company targets properties that are strategically located and essential to the business operations of the tenant, as well as retail properties that offer necessity- and value-oriented products or services. At June 30, 2018, approximately 42.7% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 98.8% and the Weighted Average Remaining Lease Term was 9.1 years.

Tenants, Trademarks and Logos
VEREIT is not affiliated with, is not endorsed by, does not endorse and is not sponsored by or a sponsor of the products or services pictured or mentioned. The names, logos and all related product and service names, design marks and slogans of other companies are the trademarks or service marks of such companies.





See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 4



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Company Overview (cont.)
 
Senior Management
 
Board of Directors
 
 
 
Glenn J. Rufrano, Chief Executive Officer
 
Hugh R. Frater, Non-Executive Chairman
 
 
 
Michael J. Bartolotta, Executive Vice President and Chief Financial Officer
 
David B. Henry, Independent Director
 
 
 
Lauren Goldberg, Executive Vice President, General Counsel and Secretary
 
Mary Hogan Preusse, Independent Director
 
 
 
Paul H. McDowell, Executive Vice President and Chief Operating Officer
 
Richard J. Lieb, Independent Director
 
 
 
Thomas W. Roberts, Executive Vice President and Chief Investment Officer
 
Mark S. Ordan, Independent Director
 
 
 
Gavin B. Brandon, Senior Vice President and Chief Accounting Officer
 
Eugene A. Pinover, Independent Director
 
 
 
 
 
Julie G. Richardson, Independent Director
 
 
 
 
 
Glenn J. Rufrano, Chief Executive Officer

Corporate Offices and Contact Information
2325 E. Camelback Road, Suite 1100
 
5 Bryant Park, 23rd Floor
Phoenix, AZ 85016
 
New York, NY 10018
800-606-3610
 
212-413-9100
www.VEREIT.com
 
 
 
Trading Symbols: VER, VER PRF
 
Stock Exchange Listing: New York Stock Exchange
 
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
800-736-3001

See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 5



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except share and per share amounts)
 
The following table summarizes the Company's quarterly financial results and portfolio metrics. Data presented includes both continuing operations, which primarily represent the Company's real estate operations, and discontinued operations, which represent substantially all of Cole Capital, except as otherwise indicated.
 
Three Months Ended
Financial Results
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
Revenue (1)
$
315,664

 
$
315,074

 
$
316,599

 
$
306,543

 
$
308,245

(Loss) income from continuing operations
$
(74,691
)
 
$
29,036

 
$
(2,479
)
 
$
12,489

 
$
29,550

Income (loss) from discontinued operations
224

 
3,501

 
(30,613
)
 
4,005

 
4,636

Net (loss) income
$
(74,467
)
 
$
32,537

 
$
(33,092
)
 
$
16,494

 
$
34,186

Basic and diluted (loss) income from continuing operations per share attributable to common stockholders and limited partners
$
(0.09
)
 
$
0.01

 
$
(0.02
)
 
$
(0.01
)
 
$
0.01

Basic and diluted income (loss) from discontinued operations per share attributable to common stockholders and limited partners
0.00

 
0.00

 
(0.03
)
 
0.00

 
0.01

Basic and diluted net (loss) income per share attributable to common stockholders and limited partners
$
(0.09
)
 
$
0.01

 
$
(0.05
)
 
$
(0.00
)
 
$
0.02

Normalized EBITDA from continuing operations
$
259,387

 
$
262,362

 
$
258,578

 
$
257,996

 
$
257,824

Normalized EBITDA from discontinued operations

 
2,761

 
9,132

 
9,123

 
10,201

Normalized EBITDA
$
259,387

 
$
265,123

 
$
267,710

 
$
267,119

 
$
268,025

FFO attributable to common stockholders and limited partners from continuing operations
$
77,019

 
$
164,691

 
$
164,500

 
$
173,708

 
$
166,807

FFO attributable to common stockholders and limited partners from discontinued operations
224

 
3,501

 
(30,613
)
 
4,005

 
4,636

FFO attributable to common stockholders and limited partners
$
77,243

 
$
168,192

 
$
133,887

 
$
177,713

 
$
171,443

FFO attributable to common stockholders and limited partners from continuing operations per diluted share
$
0.078

 
$
0.165

 
$
0.165

 
$
0.174

 
$
0.167

FFO attributable to common stockholders and limited partners from discontinued operations per diluted share
0.000

 
0.004

 
(0.031
)
 
0.004

 
0.005

FFO attributable to common stockholders and limited partners per diluted share
$
0.078

 
$
0.169

 
$
0.134

 
$
0.178

 
$
0.172

AFFO attributable to common stockholders and limited partners from continuing operations
$
178,794

 
$
180,854

 
$
175,807

 
$
174,774

 
$
174,745

AFFO attributable to common stockholders and limited partners from discontinued operations

 
3,202

 
3,913

 
16,086

 
6,123

AFFO attributable to common stockholders and limited partners
$
178,794

 
$
184,056

 
$
179,720

 
$
190,860

 
$
180,868

AFFO attributable to common stockholders and limited partners from continuing operations per diluted share
$
0.180

 
$
0.182

 
$
0.176

 
$
0.175

 
$
0.175

AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share

 
0.003

 
0.004

 
0.016

 
0.006

AFFO attributable to common stockholders and limited partners per diluted share
$
0.180

 
$
0.185

 
$
0.180

 
$
0.191

 
$
0.181

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
992,100,138

 
996,773,442

 
998,513,154

 
998,425,771

 
998,129,628

 
 
 
 
 
 
 
 
 
 
Portfolio Metrics
 
 
 
 
 
 
 
 
 
Operating Properties
4,033

 
4,063

 
4,091

 
4,093

 
4,105

Rentable Square Feet (in thousands)
94,592

 
94,666

 
94,418

 
92,228

 
91,094

Economic Occupancy Rate
98.8
%
 
98.7
%
 
98.8
%
 
99.0
%
 
98.6
%
Weighted Average Remaining Lease Term (years)
9.1

 
9.3

 
9.5

 
9.5

 
9.5

Investment-Grade Tenants (2)
42.7
%
 
42.9
%
 
39.6
%
 
40.1
%
 
40.7
%
(1)
Represents revenue from continuing operations as presented on the statement of operations in accordance with GAAP. There was no revenue from discontinued operations for the three months ended June 30, 2018. Revenue from discontinued operations was $7.8 million, $25.0 million, $27.0 million, and $27.5 million, for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.
(2)
The weighted-average credit rating of our investment-grade tenants was BBB+ as of June 30, 2018.

See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 6



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
65,202

 
$
64,741

 
$
65,097

 
$
65,821

 
$
66,446

Normalized EBITDA (2)
 
259,387

 
265,123

 
267,710

 
267,119

 
268,025

Interest Coverage Ratio
 
3.98x

 
4.10x

 
4.11x

 
4.06x


4.03x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
65,202

 
$
64,741

 
$
65,097

 
$
65,821

 
$
66,446

Secured debt principal amortization
 
2,457

 
2,676

 
3,257

 
2,981

 
4,563

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
17,973

 
17,973

Total fixed charges
 
85,632

 
85,390

 
86,327

 
86,775

 
88,982

Normalized EBITDA (2)
 
259,387

 
265,123

 
267,710

 
267,119


268,025

Fixed Charge Coverage Ratio
 
3.03
x
 
3.10
x
 
3.10
x
 
3.08
x
 
3.01
x
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Adjusted Debt Outstanding (3)
 
$
6,067,593

 
$
6,022,255

 
$
6,089,838

 
$
5,936,439

 
$
6,031,589

Less: cash and cash equivalents
 
18,434

 
28,435

 
34,176

 
51,891

 
289,960

Less: cash and cash equivalents related to discontinued operations
 

 

 
2,198

 
2,472

 
2,538

Net Debt
 
6,049,159

 
5,993,820

 
6,053,464

 
5,882,076

 
5,739,091

Normalized EBITDA annualized (2)
 
1,037,548

 
1,060,492

 
1,070,840

 
1,068,476

 
1,072,100

Net Debt to Normalized EBITDA annualized ratio
 
5.83
x
 
5.65
x
 
5.65
x
 
5.51
x
 
5.35
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
6,049,159

 
$
5,993,820

 
$
6,053,464

 
$
5,882,076

 
$
5,739,091

Gross Real Estate Investments
 
15,477,098

 
15,509,117

 
15,511,683

 
15,336,016

 
15,157,133

Net Debt Leverage Ratio
 
39.1
%
 
38.6
%
 
39.0
%
 
38.4
%
 
37.9
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,376,971

 
$
11,325,512

 
$
11,296,918

 
$
11,073,165

 
$
10,541,410

Gross Real Estate Investments
 
15,477,098

 
15,509,117

 
15,511,683

 
15,336,016

 
15,157,133

Unencumbered Asset Ratio
 
73.5
%
 
73.0
%
 
72.8
%
 
72.2
%
 
69.5
%
___________________________________
(1)
Refer to the Statements of Operations section for interest expense calculated in accordance with GAAP.
(2)
Includes continued and discontinued operations.
(3)
Refer to the Balance Sheets section for total debt calculated in accordance with GAAP.




See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 7



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



394501368_chart-9f34a5cae9115e60989.jpg
 
 
Common equity
51.0%
 
 
 
 
 
 
Corporate bonds
19.5%
 
 
 
 
 
 
Secured debt
13.9%
 
 
 
 
 
 
Preferred equity
7.4%
 
 
 
 
 
 
Convertible notes
6.9%
 
 
 
 
 
 
Revolving credit facility
1.3%

                            

Fixed vs. Variable Rate Debt
Fixed
95.7
%
Swapped to Fixed
0.8
%
Variable
3.5
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)

 
June 30, 2018
Diluted shares outstanding
 
 
 
 
995,062

Stock price
 
 
 
 
$
7.44

Implied Equity Market Capitalization
 
$
7,403,261

 
 
 
 
 
 
Series F Perpetual Preferred (2)
 
6.70
%
 
$
1,073,025

 
 
 
 
 
 
Total secured debt
3.8
 
4.89
%
 
$
2,022,593

 
 
 
 
 
 
Revolving credit facility
3.9
 
3.29
%
 
$
195,000

2018 convertible notes
0.1
 
3.00
%
 
597,500

2019 corporate bonds
0.6
 
3.00
%
 
750,000

2020 convertible notes
2.5
 
3.75
%
 
402,500

2021 corporate bonds
2.9
 
4.13
%
 
400,000

2024 corporate bonds
5.6
 
4.60
%
 
500,000

2026 corporate bonds
7.9
 
4.88
%
 
600,000

2027 corporate bonds
9.1
 
3.95
%
 
600,000

Total unsecured debt
4.1
 
3.82
%
 
$
4,045,000

 
 
 
 
 
 
Total Adjusted Debt Outstanding
4.0
 
4.18
%
 
$
6,067,593

 
 
 
 
 
 
Total Capitalization
 
$
14,543,879

Less: Cash and cash equivalents
 
 
 
 
18,434

Enterprise Value
 
$
14,525,445

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
41.6
%
Net Debt/Normalized EBITDA Annualized (3)
 
 
 
5.83
x
Net Debt + Preferred/Normalized EBITDA Annualized (3)
 
6.86
x
Fixed Charge Coverage Ratio
 
 
 
 
3.03
x
Liquidity (4)
 
 
 
 
$
2,723,434

___________________________________
(1)Weighted average interest rate for variable rate debt represents the interest rate in effect as of June 30, 2018.
(2)Balance represents 42.8 million shares of Series F Preferred Stock (and 42.8 million corresponding general partner Series F Preferred Units) and 86,874 limited partner Series F Preferred Units outstanding at June 30, 2018, multiplied by the liquidation preference of $25 per share.
(3)Normalized EBITDA annualized includes continued and discontinued operations.
(4)Liquidity represents cash and cash equivalents of $18.4 million, $1.8 billion available capacity on our revolving credit facility and $900.0 million available on our delayed-draw term loan.

See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 8



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Balance Sheets
(unaudited, in thousands)
 
 
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,859,265

 
$
2,871,533

 
$
2,865,855

 
$
2,866,305

 
$
2,858,662

Buildings, fixtures and improvements
 
10,714,456

 
10,753,190

 
10,711,845

 
10,585,796

 
10,496,710

Intangible lease assets
 
2,024,014

 
2,035,004

 
2,037,675

 
2,027,304

 
2,000,292

Total real estate investments, at cost
 
15,597,735


15,659,727

 
15,615,375

 
15,479,405

 
15,355,664

Less: accumulated depreciation and amortization
 
3,206,336

 
3,059,955

 
2,908,028

 
2,784,481

 
2,623,050

Total real estate investments, net
 
12,391,399


12,599,772

 
12,707,347

 
12,694,924

 
12,732,614

Investment in unconsolidated entities
 
33,972

 
33,736

 
39,520

 
40,311

 
40,952

Investment in direct financing leases, net
 
16,560

 
17,476

 
19,539

 
33,402

 
33,892

Investment securities, at fair value
 
35,489

 
35,741

 
40,974

 
41,677

 
42,250

Mortgage notes receivable, net
 
19,855

 
20,072

 
20,294

 
20,510

 
20,722

Cash and cash equivalents
 
18,434

 
28,435

 
34,176

 
51,891

 
289,960

Restricted cash
 
27,078

 
28,049

 
27,662

 
27,797

 
40,995

Rent and tenant receivables and other assets, net
 
351,163

 
335,622

 
308,253

 
325,098

 
333,242

Goodwill
 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

Due from affiliates, net
 

 

 
6,041

 
5,884

 
7,512

Assets related to discontinued operations and real estate assets held for sale, net
 
29,884

 
15,113

 
163,999

 
157,466

 
168,128

Total assets
 
$
14,261,607


$
14,451,789


$
14,705,578

 
$
14,736,733

 
$
15,048,040

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,031,171

 
$
2,078,593

 
$
2,082,692

 
$
2,115,633

 
$
2,381,031

Corporate bonds, net
 
2,824,176

 
2,822,830

 
2,821,494

 
2,820,164

 
2,228,422

Convertible debt, net
 
989,901

 
987,071

 
984,258

 
981,490

 
978,738

Credit facility, net
 
195,000

 
120,000

 
185,000

 

 
497,718

Below-market lease liabilities, net
 
187,352

 
193,703

 
198,551

 
204,051

 
209,566

Accounts payable and accrued expenses
 
141,746

 
126,724

 
136,474

 
143,735

 
137,344

Deferred rent and other liabilities
 
66,123

 
68,718

 
62,985

 
63,876

 
70,735

Distributions payable
 
180,734

 
177,645

 
175,301

 
172,129

 
168,953

Due to affiliates
 

 

 
66

 
8

 

Liabilities related to discontinued operations
 

 

 
15,881

 
8,678

 
12,054

Total liabilities
 
6,616,203


6,575,284

 
6,662,702

 
6,509,764

 
6,684,561

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,674

 
9,681

 
9,742

 
9,742

 
9,742

Additional paid-in capital
 
12,609,145

 
12,611,006

 
12,654,258

 
12,648,967

 
12,645,309

Accumulated other comprehensive loss
 
(4,290
)
 
(4,284
)
 
(3,569
)
 
(3,330
)
 
(1,928
)
Accumulated deficit
 
(5,120,240
)
 
(4,896,349
)
 
(4,776,581
)
 
(4,592,533
)
 
(4,456,708
)
Total stockholders' equity
 
7,494,717


7,720,482

 
7,884,278

 
8,063,274

 
8,196,843

Non-controlling interests
 
150,687

 
156,023

 
158,598

 
163,695

 
166,636

Total equity
 
7,645,404


7,876,505


8,042,876

 
8,226,969

 
8,363,479

Total liabilities and equity
 
$
14,261,607


$
14,451,789

 
$
14,705,578

 
$
14,736,733

 
$
15,048,040



See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 9



394501368_vereitlogoa13.jpg
 
 
Q2 2018 SUPPLEMENTAL INFORMATION

 
Statements of Operations
(unaudited, in thousands, except per share data)