Toggle SGML Header (+)


Section 1: 8-K (8-K - 2Q18 EARNINGS)

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 7, 2018

SPIRIT REALTY CAPITAL, INC.
(Exact name of registrant as specified in its charter)

Maryland
(Spirit Realty Capital, Inc.)
 
001-36004
 
20-1676382
(Spirit Realty Capital, Inc.)
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 2727 North Harwood Drive, Suite 300
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (972) 476-1900
Not Applicable
(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 (see General Instruction A.2. below):
 
¬
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¬
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¬
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¬
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
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. o                






ITEM 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 7, 2018, Spirit Realty Capital, Inc. (the "Company"), provided (i) a press release setting forth its results of operations for the quarter ended June 30, 2018 attached hereto as Exhibit 99.1, and (ii) a supplemental report of financial and operating information of the Company for the quarter ended June 30, 2018 (the "Supplemental Report") attached hereto as Exhibit 99.2.
The information set forth in Item 2.02 and in the attached Exhibits 99.1 and 99.2 is being "furnished" and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any of the Company’s filings, whether made before or after the date hereof, regardless of any general incorporation language in any such filing.
Forward-Looking and Cautionary Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as "expect," "plan," "will," "estimate," "project," "intend," "believe," "guidance," and other similar expressions that do not relate to historical matters. These forward-looking statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors, including the risks discussed in the Company's most recent filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2017 . The Company expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
 
 
99.1
99.2









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
SPIRIT REALTY CAPITAL, INC.
 
 
By:
 
/s/ Michael C. Hughes
 
 
Michael C. Hughes
Chief Financial Officer, Executive Vice President and Treasurer (Principal Financial Officer)
 
 
 
Date: August 7, 2018




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 - 2Q18 EARNINGS RELEASE)

Exhibit
    
394549949_spiritrealtylogojpga01.jpg
Press Release
Spirit Realty Capital, Inc. Announces
Second Quarter 2018 Financial and Operating Results
- Successfully completed the Spin-Off of Spirit MTA REIT -
- Over 8 million shares ($63.9 million) of common stock repurchased in the second quarter -
Dallas, TX - August 7, 2018 - Spirit Realty Capital, Inc. (NYSE: SRC) ("Spirit" or the "Company"), a premier net-lease real estate investment trust ("REIT") that primarily invests in single-tenant, operationally essential real estate, today reported its financial and operating results for the second quarter ended June 30, 2018.
SECOND QUARTER 2018 HIGHLIGHTS
Generated Net Income from Continuing Operations of $0.05 versus $0.01 per share, FFO of $0.16 versus $0.18 per share and AFFO of $0.20 versus $0.21 per share, in each case, compared to same quarter in 2017.
Real estate portfolio occupancy was 99.6% as of June 30, 2018.
Repurchased 8.1 million shares of outstanding common stock, prior to the Spin-Off of Spirit MTA REIT, at a weighted average price of $7.93.
Spirit's corporate liquidity was $882.8 million as of June 30, 2018, including availability under its unsecured line of credit, term loan and cash available for investment.
On May 31, 2018, successfully completed the previously announced Spin-Off of Spirit MTA REIT ("SMTA") with the distribution of one share of SMTA common stock for every ten shares of Spirit common stock to all of Spirit's stockholders of record as of May 18, 2018.
CEO COMMENTS
“We are very pleased with our second quarter results and activity, having successfully completed our Spin-Off transaction, which we believe has created meaningful value for investors and significantly improved Spirit’s operating and balance sheet metrics. Spirit now has a portfolio that is 99.6% occupied, with a top 10 tenancy that comprises just 25.5% of contractual rent and an unencumbered asset base that represents approximately 80% of total real estate investments,” stated Jackson Hsieh, President and Chief Executive Officer of Spirit. “We are also excited about the acquisitions pipeline we are building for Spirit as we seek to prudently deploy our well-funded balance sheet toward targeted acquisitions that fit within our heat map strategy. In fact, we have $285 million of acquisitions either under contract or letter of intent. As we look ahead, we believe Spirit offers an attractive combination of stable income and potential earnings growth.”




1



FINANCIAL RESULTS
Total revenues from continuing operations for the three months ended June 30, 2018 were $102.5 million compared to $108.7 million for the same period last year. Total revenues for the six months ended June 30, 2018 were $206.0 million compared to $215.2 million for the same period last year.
Net income attributable to common stockholders was $14.6 million, or $0.03 per diluted share for the three months ended June 30, 2018, compared to $23.2 million, or $0.05 per diluted share, for the same period last year. Net income attributable to common stockholders was $42.7 million, or $0.10 per diluted share for the six months ended June 30, 2018, compared to $36.0 million, or $0.07 per diluted share, for the same period last year.
FFO per diluted share was $0.16 and $0.18 for the three months ended June 30, 2018 and 2017, respectively. FFO per diluted share was $0.40 and $0.38 for the six months ended June 30, 2018 and 2017, respectively.
AFFO was $87.1 million for the three months ended June 30, 2018, compared to $99.1 million for the same period last year. AFFO per diluted share was $0.20 for the three months ended June 30, 2018, compared to $0.21 for the same period last year. AFFO was $182.4 million for the six months ended June 30, 2018, compared to $197.2 million for the same period last year. AFFO per diluted share was $0.42 for the six months ended June 30, 2018, compared to $0.41 for the same period last year.
The Board of Directors declared a quarterly cash dividend of $0.18 per share. The quarterly dividend was paid on July 13, 2018 to stockholders of record as of June 30, 2018.
SECOND QUARTER PORTFOLIO HIGHLIGHTS
During the three months ended June 30, 2018, Spirit invested $15.2 million to acquire four properties and invested $10.8 million in revenue producing capital expenditures related to an additional 25 properties. The acquisitions included two transactions that earn an initial weighted-average cash yield of approximately 8.34% and have an average lease term of 13.5 years. The four newly acquired properties were subsequently transferred to SMTA in conjunction with the Spin-Off. Approximately $1.5 million of the revenue producing capital expenditures were invested in seven properties that were also subsequently transferred to SMTA.
The Company disposed of 11 properties for $29.2 million in gross proceeds, including the sale of five income producing properties for $7.2 million with a weighted average capitalization rate of 7.88%. Two of the remaining properties were transferred to CMBS lenders, resulting in the resolution of $22.4 million in secured debt. Included in the disposals were three properties from the SMTA portfolios, disposed of prior to the Spin-Off, with gross proceeds of $4.7 million and a weighted average capitalization rate of 7.84%.
As of June 30, 2018, Spirit's diversified real estate portfolio, comprised of 1,458 owned properties, was 99.6% occupied with a weighted average remaining lease term of 9.6 years.
FIRST HALF PORTFOLIO HIGHLIGHTS
During the six months ended June 30, 2018, Spirit invested $17.8 million to acquire five properties and invested $18.1 million in revenue producing capital expenditures related to an additional 52 properties. The acquisitions included three transactions which earn an initial weighted-average cash yield of approximately 8.69% and have an average lease term of 13.8 years. Four of the newly acquired properties were subsequently transferred to SMTA in conjunction with the Spin-Off. Approximately $1.7 million of the revenue producing capital expenditures were invested in nine properties that were also subsequently transferred to SMTA.
The Company disposed of 40 properties for $66.9 million in gross proceeds, including the sale of 30 income producing properties for $35.4 million with a weighted average capitalization rate of 11.38%. Six of the remaining properties were transferred to CMBS lenders, resulting in the resolution of $56.0 million in secured

2



debt. Included in the disposals were 22 properties from the SMTA portfolios, disposed of prior to the Spin-Off, with gross proceeds of $24.5 million and a weighted average capitalization rate of 13.23%.
In January 2018, Spirit funded a $35.0 million, B-1 term loan to Shopko as part of a syndicated loan and security agreement. The loan bears interest at 12.0% per annum and matures in June of 2020. The loan is secured by Shopko's assets collateralizing their $784.0 million asset-back lending facility. The loan was subsequently contributed to SMTA in conjunction with the Spin-Off.
BALANCE SHEET, LIQUIDITY & CAPITAL MARKETS
Retired the full $123.1 million of Master Trust 2013 Series 2013-1 Class A notes on May 21, 2018. No make-whole payment was associated with the redemption of these notes.
Unencumbered Assets totaled $3.9 billion as of June 30, 2018, representing approximately 80% of Spirit's total real estate investments.
As of August 6, 2018, Spirit had approximately $25.6 million in cash and cash equivalents and $800 million of available borrowing capacity under its unsecured line of credit.
As of August 6, 2018, Spirit had additional funds available for acquisitions of approximately $7.4 million in its 1031 Exchange and Spirit Master Trust Program release accounts.
As of August 6, 2018, our outstanding common share count is 428,566,702.
Definitions for non-GAAP measures can be found in the supplemental financial and operating report posted on Spirit's website along with this release. A reconciliation of FFO and AFFO to net income attributable to common stockholders is included in this document.
SHARE REPURCHASE PROGRAM
In August 2017, Spirit's Board of Directors authorized a share repurchase program (the "2017 Share Repurchase Program"), under which the Company could repurchase up to $250.0 million of its outstanding common stock. In the second quarter, and prior to the SMTA Spin-Off, the Company repurchased 8.1 million shares of its outstanding common stock at a weighted average price of $7.93 per share. As of May 31, 2018, the Company has fully utilized the authorized capacity under the 2017 Share Repurchase Program, having purchased 30.7 million shares of its common stock at a weighted average price of $8.14.
On May 1, 2018, Spirit's Board of Directors authorized a new share repurchase program, under which the Company may repurchase up to $250.0 million of its outstanding common stock. No shares have been repurchased under this new program.
2018 GUIDANCE
The Company is updating its previously stated full-year guidance for Spirit as a stand-alone entity, pro-forma for the expected distribution of SMTA, as if the distribution had been effected as of January 1, 2018, and is introducing full-year AFFO per share guidance for Spirit, inclusive of its ownership in SMTA from January 1 through May 31, 2018:
AFFO of $0.75 to $0.76 per share (excluding severance charges),
Pro-forma AFFO of $0.67 to $0.68 per share (excluding severance charges),
Capital deployment of $450.0 million to $550.0 million (comprising acquisitions, revenue producing capital expenditures and stock repurchases),
Asset dispositions of $50.0 million to $100.0 million, and
Adjusted Debt to Adjusted EBITDAre of 5.2x to 5.4x.

3



The Company does not provide a reconciliation for its guidance range of AFFO per diluted share to net income available to common stockholders per diluted share, the most directly comparable forward looking GAAP financial measure, due to the inherent variability in timing and/or amount of various items that could impact net income available to common stockholders per diluted share, including, for example, gains on debt extinguishment, impairments and other items that are outside the control of the Company.
EARNINGS WEBCAST AND CONFERENCE CALL TIME
The Company's second quarter 2018 earnings conference call is scheduled for Wednesday, August 8, 2018 at 9:00 a.m. Eastern Time. Interested parties can listen to the call via the following:
Internet:
The webcast link, as well as the dial-in information and other pertinent details relating to the earnings conference call can be located on the investor relations page of the Company's website at www.spiritrealty.com.
Phone:
(888) 349-0136 (Domestic) / (412) 542-4152 (International) / (855) 669-9657 (Canada)
No access code required.
Replay:
Available through August 22, 2018 with access code 10122401
(877) 344-7529 (Domestic) / (412) 317-0088 (International) / (855) 669-9658 (Canada)
SUPPLEMENTAL PACKAGE
A supplemental financial and operating report that contains non-GAAP measures and other defined terms, along with this press release, have been posted to the investor relations page of the Company's website at www.spiritrealty.com.
ABOUT SPIRIT REALTY
Spirit Realty Capital, Inc. (NYSE: SRC) is a premier net-lease REIT that primarily invests in high-quality, operationally essential real estate, subject to long-term, net leases. Over the past decade, Spirit has become an industry leader and owner of income-producing, strategically located retail, industrial, office and data center properties providing superior risk adjusted returns and steady dividend growth for our stockholders.
As of June 30, 2018, our diversified portfolio was comprised of 1,512 properties, including properties securing mortgage loans made by the Company. Our properties, with an aggregate gross leasable area of approximately 27.7 million square feet, are leased to approximately 250 tenants across 49 states and 32 industries. More information about Spirit Realty Capital can be found on the investor relations page of the Company's website at www.spiritrealty.com.
INVESTOR CONTACT
Investor Relations
(972) 476-1403
InvestorRelations@spiritrealty.com

4



FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” “will,” “estimate,” “project,” “intend,” “believe,” “guidance,” and other similar expressions that do not relate to historical matters. These forward-looking statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, Spirit’s continued ability to source new investments, risks associated with using debt to fund Spirit’s business activities (including refinancing and interest rate risks, changes in interest rates and/or credit spreads, changes in the price of our common stock, and conditions of the equity and debt capital markets, generally), unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities, general risks affecting the real estate industry and local real estate markets (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants' financial condition and operating performance, and competition from other developers, owners and operators of real estate), the financial performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers, potential fluctuations in the consumer price index, risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, risks and uncertainties of the impact of the Spin-Off on Spirit's business, and other additional risks discussed in Spirit’s most recent filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
NOTICE REGARDING NON-GAAP FINANCIAL MEASURES
In addition to U.S. GAAP financial measures, this press release and the referenced supplemental financial and operating report and related addenda contain and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Definitions of non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are included in the Appendix of the supplemental financial and operating report, which can be found in the investor relations page of our website.

5




SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
(Unaudited)

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Rentals
$
95,599

 
$
102,918

 
$
193,238

 
$
204,299

Interest income on loans receivable
294

 
754

 
1,289

 
1,527

Earned income from direct financing leases
465

 
518

 
930

 
1,130

Tenant reimbursement income
2,637

 
4,172

 
6,505

 
7,652

Related party fee income
2,219

 

 
2,219

 

Other income
1,245

 
308

 
1,817

 
559

Total revenues
102,459

 
108,670

 
205,998

 
215,167

Expenses:
 
 
 
 
 
 
 
General and administrative
13,520

 
21,868

 
28,810

 
34,044

Property costs (including reimbursable)
4,806

 
7,780

 
10,357

 
14,013

Real estate acquisition costs
70

 
414

 
117

 
674

Interest
23,548

 
28,051

 
46,601

 
55,857

Depreciation and amortization
39,942

 
43,441

 
80,636

 
87,316

Impairments
1,478

 
10,074

 
4,975

 
37,957

Total expenses
83,364

 
111,628

 
171,496

 
229,861

Income (loss) from continuing operations before other income and income tax expense
19,095

 
(2,958
)
 
34,502

 
(14,694
)
Other income:
 
 
 
 
 
 
 
Gain (loss) on debt extinguishment
5,509

 
7

 
27,092

 
(23
)
(Loss) gain on disposition of assets
(860
)
 
6,884

 
391

 
11,897

Preferred dividend income from SMTA
1,250

 

 
1,250

 

Total other income
5,899

 
6,891

 
28,733

 
11,874

Income (loss) from continuing operations before income tax expense
24,994

 
3,933

 
63,235

 
(2,820
)
Income tax expense
(177
)
 
(160
)
 
(340
)
 
(277
)
Income (loss) from continuing operations
24,817

 
3,773

 
62,895

 
(3,097
)
(Loss) income from discontinued operations
(7,653
)
 
19,433

 
(15,013
)
 
39,132

Net income and total comprehensive income
17,164

 
23,206

 
47,882

 
36,035

Dividends paid to preferred stockholders
(2,588
)
 

 
(5,176
)
 

Net income attributable to common stockholders
$
14,576

 
$
23,206

 
$
42,706

 
$
36,035

Net income (loss) per share attributable to common stockholders - diluted
 
 
 
 
 
 
 
Continuing operations
$
0.05

 
$
0.01

 
$
0.13

 
$
(0.01
)
Discontinued operations
(0.02
)
 
0.04

 
(0.03
)
 
0.08

Net income per share attributable to common stockholders - diluted
$
0.03

 
$
0.05

 
$
0.10

 
$
0.07

Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic
428,134,240

 
479,102,268

 
436,458,588

 
480,845,051

Diluted
429,018,934

 
479,102,268

 
437,016,151

 
480,845,051



6



SPIRIT REALTY CAPITAL, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
(Unaudited)
 
June 30,
2018
 
December 31, 2017
Assets
 
 
 
Investments:
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
1,586,288

 
$
1,598,355

Buildings and improvements
2,971,052

 
2,989,451

Total real estate investments
4,557,340

 
4,587,806

Less: accumulated depreciation
(560,600
)
 
(503,568
)
 
3,996,740

 
4,084,238

Loans receivable, net
55,438

 
78,466

Intangible lease assets, net
287,607

 
306,252

Real estate assets under direct financing leases, net
24,828

 
24,865

Real estate assets held for sale, net
18,825

 
20,469

Net investments
4,383,438

 
4,514,290

Cash and cash equivalents
9,289

 
8,792

Deferred costs and other assets, net
107,273

 
121,949

Investment in Master Trust 2014
33,581

 

Preferred equity investment in Spirit MTA REIT
150,000

 

Goodwill
225,600

 
225,600

Assets related to SMTA Spin-Off

 
2,392,880

Total assets
$
4,909,181

 
$
7,263,511

Liabilities and stockholders’ equity
 
 
 
Liabilities:
 
 
 
Revolving Credit Facility
$
346,500

 
$
112,000

Term Loan, net

 

Senior Unsecured Notes, net
295,542

 
295,321

Mortgages and notes payable, net
467,334

 
589,644

Convertible Notes, net
722,756

 
715,881

Total debt, net
1,832,132

 
1,712,846

Intangible lease liabilities, net
125,905

 
130,574

Accounts payable, accrued expenses and other liabilities
121,858

 
131,642

Liabilities related to SMTA Spin-Off

 
1,968,840

Total liabilities
2,079,895

 
3,943,902

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both June 30, 2018 and December 31, 2017
166,193

 
166,193

Common stock, $0.01 par value, 750,000,000 shares authorized: 428,570,110 and 448,868,269 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
4,286

 
4,489

Capital in excess of common stock par value
4,986,719

 
5,193,631

Accumulated deficit
(2,327,912
)
 
(2,044,704
)
Total stockholders’ equity
2,829,286

 
3,319,609

Total liabilities and stockholders’ equity
$
4,909,181

 
$
7,263,511


7




SPIRIT REALTY CAPITAL, INC.
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Share and Per Share Data)
(Unaudited)
FFO and AFFO
 
Month Ended June 30, 2018(1)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Net income attributable to common stockholders
$
2,558

 
$
14,576

 
$
23,206

 
$
42,706

 
$
36,035

Add/(less):
 
 
 
 
 
 
 
 
 
Portfolio depreciation and amortization
13,284

 
53,838

 
64,081

 
115,814

 
128,936

Portfolio impairments
1,476

 
1,349

 
15,996

 
15,918

 
50,372

Realized losses (gains) on sales of real estate
1,018

 
(722
)
 
(15,273
)
 
(117
)
 
(31,490
)
Total adjustments to net income
15,778

 
54,465

 
64,804

 
131,615

 
147,818

FFO attributable to common stockholders
$
18,336

 
$
69,041

 
$
88,010

 
$
174,321

 
$
183,853

Add/(less):
 
 
 
 
 
 
 
 
 
(Gain) loss on debt extinguishment

 
(5,401
)
 
(8
)
 
(26,729
)
 
22

Real estate acquisition costs
23

 
408

 
424

 
456

 
577

Transaction costs
2,676

 
16,033

 
485

 
19,965

 
485

Non-cash interest expense
1,500

 
6,263

 
5,665

 
13,804

 
11,127

Accrued interest and fees on defaulted loans
98

 
295

 
899

 
851

 
1,573

Straight-line rent, net of related bad debt expense
(1,172
)
 
(4,187
)
 
(4,763
)
 
(8,644
)
 
(10,209
)
Other amortization and non-cash charges
(282
)
 
(89
)
 
(760
)
 
(694
)
 
(1,705
)
Non-cash compensation expense
2,617

 
4,739

 
9,194

 
9,105

 
11,438

Total adjustments to FFO
5,460

 
18,061

 
11,136

 
8,114

 
13,308

AFFO attributable to common stockholders
$
23,796

 
$
87,102

 
$
99,146

 
$
182,435

 
$
197,161

Dividends declared to common stockholders
N/A

 
$
77,143

 
$
82,422

 
$
155,724

 
$
169,544

Dividends declared as a percent of AFFO
N/A

 
89
%
 
83
%
 
85
%
 
86
%
Net income per share of common stock
 
 
 
 
 
 
 
 
 
Basic (2)
$
0.01

 
$
0.03

 
$
0.05

 
$
0.10

 
$
0.07

Diluted (2)
$
0.01

 
$
0.03

 
$
0.05

 
$
0.10

 
$
0.07

FFO per diluted share of common stock (2)
$
0.043

 
$
0.16

 
$
0.18

 
$
0.40

 
$
0.38

AFFO per diluted share of common stock (2)
$
0.056

 
$
0.20

 
$
0.21

 
$
0.42

 
$
0.41

Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
Basic
426,580,417
428,134,240
479,102,268
436,458,588
480,845,051
Diluted
427,465,111
429,018,934
479,102,268
437,016,151
480,845,051
(1) Activity for the month ended June 30, 2018 was extracted from the financial records of the Company. Certain adjustments were made to quarterly entries to reflect stand-alone activities for the month.
(2) For the three months ended June 30, 2018 and 2017, dividends paid to unvested restricted stockholders of $0.3 million and $0.2 million, respectively, and for the six months ended June 30, 2018 and 2017, dividends paid to unvested restricted stockholders of $0.7 million and $0.4 million, respectively, are deducted from net income, FFO and AFFO attributable to common stockholders in the computation of per share amounts.


8

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2 - OPERATING SUPPLEMENT)

scq22018os
Supplemental Financial & Operating Information SECOND QUARTER ENDED JUNE 30, 2018


 
CORPORATE OVERVIEW NYSE:SRC About Spirit Spirit Realty Capital, Inc., (NYSE: SRC) is a premier net-lease real estate investment trust (REIT) that primarily invests in high-quality, operationally essential retail real estate, subject to long-term net leases. Over the past decade, Spirit has become an industry leader and owner of income-producing, strategically located retail, industrial, office and data center properties focused on providing superior risk- adjusted returns and steady dividend growth for our stockholders. As of June 30, 2018, our diversified portfolio was composed of 1,512 properties, including properties securing mortgage loans. Our properties, with an aggregate gross leasable area of approximately 27.7 million square feet, are leased to 250 tenants across 49 states and 32 tenant industries. Corporate Headquarters Transfer Agent Investor Relations 2727 N. Harwood St., American Stock Transfer (972) 476-1403 Suite 300 & Trust Company, LLC InvestorRelations@spirit Dallas, Texas 75201 Phone: 866-703-9065 realty.com Phone: 972-476-1900 www.amstock.com www.spiritrealty.com Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 2


 
TABLE OF CONTENTS NYSE:SRC Portfolio and Financial Overview 4 Condensed Consolidated Statements of Operations 5 Funds and Adjusted Funds From Operations 6 Consolidated Balance Sheets 7 Capitalization and Debt Summary 8 Investment and Disposition Activity 11 Tenant / Industry / Portfolio Diversification 14 Same Store Contractual Rent 18 Occupancy 19 Lease Summary 20 Net Asset Value (NAV) Components 21 Analyst Coverage 22 Appendix: 23 Reporting Definitions and Explanations 24 Non-GAAP Reconciliations 28 Forward-Looking Statements and Risk Factors 29 Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 3


 
PORTFOLIO AND FINANCIAL OVERVIEW $ in thousands NYSE:SRC Portfolio Data Percent of Top 10 Tenants Properties Contractual Total Real Estate Investments $ 4,919,071 Rent Owned Properties 1,458 1 Walgreen Company 41 3.8% Properties Securing Mortgage Loans 54 2 Cajun Global, LLC 170 3.5% Total Properties 1,512 3 Alimentation Couche-Tard, Inc. 82 3.2% Tenants 250 4 The Home Depot, Inc. 7 3.0% Tenant Industries 32 5 CVS Caremark Corporation 36 2.6% States 49 Top 5 Total 336 16.1% Weighted Average Remaining Lease Term (Years) 9.6 6 GPM Investments, LLC 105 2.4% Occupancy 99.6% 7 AB Acquisition, LLC 16 2.0% 8 PetSmart, Inc. 4 1.7% Quarter Ended Financial Ratios June 30, 2018 9 Ferguson Enterprises, Inc. 7 1.7% Adjusted Debt / Enterprise Value 33.9% 10 BJ's Wholesale Club, Inc. 4 1.6% Adjusted Debt / Annualized Adjusted EBITDAre 3.6x Top 10 Total 472 25.5% Adjusted Debt + Preferred / Annualized Adjusted EBITDAre 4.0x Fixed Charge Coverage Ratio 3.3x Corporate Liquidity Unencumbered Assets / Unsecured Debt 3.5x Cash and Cash Equivalents $ 9,289 Availability Under Revolving Credit Facility 453,500 Capitalization Availability Under Term Loan 420,000 Total $ 882,789 Common Market Equity $ 3,426,028 Preferred Share Liquidation Value $ 172,500 Unencumbered Assets Properties Real Estate Investment Total Capitalization $ 3,598,528 Retail 1,075 $ 3,389,520 Total Adjusted Debt $ 1,841,988 Industrial 20 246,435 Enterprise Value $ 5,440,280 Office 27 176,526 Outstanding Shares of Common Stock (1) 426,653,492 Data Centers 3 56,748 (1) Total outstanding shares as of June 30, 2018, less 1.9 million unvested restricted shares. Total 1,125 $ 3,869,229 Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 4


 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS $ in thousands NYSE:SRC (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues Rentals $ 95,599 $ 102,918 $ 193,238 $ 204,299 Interest income on loans receivable 294 754 1,289 1,527 Earned income from direct financing leases 465 518 930 1,130 Tenant reimbursement income 2,637 4,172 6,505 7,652 Related party fee income 2,219 — 2,219 — Other income 1,245 308 1,817 559 Total revenues 102,459 108,670 205,998 215,167 Expenses General and administrative (G&A) (1) 13,520 21,868 28,810 34,044 Property costs (including reimbursable) 4,806 7,780 10,357 14,013 Real estate acquisition costs 70 414 117 674 Interest 23,548 28,051 46,601 55,857 Depreciation and amortization 39,942 43,441 80,636 87,316 Impairments 1,478 10,074 4,975 37,957 Total expenses 83,364 111,628 171,496 229,861 Income (loss) from continuing operations before other income and income tax 19,095 (2,958) 34,502 (14,694) expense Other income: Gain (loss) on debt extinguishment 5,509 7 27,092 (23) (Loss) gain on disposition of assets (860) 6,884 391 11,897 Preferred dividend income from SMTA 1,250 — 1,250 — Total other income 5,899 6,891 28,733 11,874 Income (loss) from continuing operations before income tax expense 24,994 3,933 63,235 (2,820) Income tax expense (177) (160) (340) (277) Income (loss) from continuing operations 24,817 3,773 62,895 (3,097) (Loss) income from discontinued operations (7,653) 19,433 (15,013) 39,132 Net income and total comprehensive income 17,164 23,206 47,882 36,035 Dividends paid to preferred stockholders (2,588) — (5,176) — Net income attributable to common stockholders $ 14,576 $ 23,206 $ 42,706 $ 36,035 (1) Included within G&A expenses for the three and six months ended June 31, 2018 is $1.4 million of accelerated stock compensation expense recorded for the early vesting of certain awards in conjunction with the Spin-Off. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 5 Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.


 
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO) $ in thousands, except share and per share amounts NYSE:SRC (Unaudited) Three Months Ended June 30, Six Months Ended June 30, Month Ended June 30, 2018(1) 2018 2017 2018 2017 Net income attributable to common stockholders $ 2,558 $ 14,576 $ 23,206 $ 42,706 $ 36,035 Portfolio depreciation and amortization 13,284 53,838 64,081 115,814 128,936 Portfolio impairments 1,476 1,349 15,996 15,918 50,372 Realized losses (gains) on sales of real estate 1,018 (722) (15,273) (117) (31,490) Funds from operations attributable to common stockholders $ 18,336 $ 69,041 $ 88,010 $ 174,321 $ 183,853 (Gain) loss on debt extinguishment — (5,401) (8) (26,729) 22 Real estate acquisition costs 23 408 424 456 577 Transaction costs 2,676 16,033 485 19,965 485 Non-cash interest expense 1,500 6,263 5,665 13,804 11,127 Accrued interest and fees on defaulted loans 98 295 899 851 1,573 Straight-line rent, net of related bad debt expense (1,172) (4,187) (4,763) (8,644) (10,209) Other amortization and non-cash charges (282) (89) (760) (694) (1,705) Non-cash compensation expense 2,617 4,739 9,194 9,105 11,438 Adjusted funds from operations attributable to common stockholders $ 23,796 $ 87,102 $ 99,146 $ 182,435 $ 197,161 Dividends declared to common stockholders N/A $ 77,143 $ 82,422 $ 155,724 $ 169,544 Net income per share of common stock Basic $ 0.01 $ 0.03 $ 0.05 $ 0.10 $ 0.07 Diluted $ 0.01 $ 0.03 $ 0.05 $ 0.10 $ 0.07 FFO per diluted share of common stock (2) $ 0.043 $ 0.16 $ 0.18 $ 0.40 $ 0.38 AFFO per diluted share of common stock (2) $ 0.056 $ 0.20 $ 0.21 $ 0.42 $ 0.41 AFFO per diluted share of common stock, excluding severance charges (3) $ 0.056 $ 0.20 $ 0.21 $ 0.42 $ 0.42 Weighted average shares of common stock outstanding: Basic 426,580,417 428,134,240 479,102,268 436,458,588 480,845,051 Diluted 427,465,111 429,018,934 479,102,268 437,016,151 480,845,051 (1) Activity for the month ended June 30, 2018 was extracted from the financial records of the Company. Certain adjustments were made to quarterly entries to reflect stand-alone activities for the month. (2) For the three months ended June 30, 2018 and 2017, dividends paid to unvested restricted stockholders of $0.3 million and $0.2 million, respectively, and for the six months ended June 30, 2018 and 2017, dividends paid to unvested restricted stockholders of $0.7 million and $0.4 million, respectively, are deducted from Net Income, FFO and AFFO attributable to common stockholders in the computation of per share amounts. (3) Included in G&A balance for the six months ended June 30, 2018 is $3.9 million of severance-related costs, comprised of $2.1 million of cash compensation and $1.8 million of non-cash compensation related to the acceleration of Restricted Stock and Performance Share Awards in connection with the departure of two executive officers. Included in G&A balance for the six months ended    June 30, 2017 is $11.1 million of severance-related costs, comprised of $4.2 million of cash compensation and $6.9 million of non-cash compensation related to the acceleration of Restricted Stock and Performance Share Awards in connection with the departure of an executive officer. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 6


 
CONSOLIDATED BALANCE SHEETS $ in thousands, except per share amounts NYSE:SRC (Unaudited) June 30, December 31, 2018 2017 Assets: Real estate investments: Land and improvements $ 1,586,288 $ 1,598,355 Buildings and improvements 2,971,052 2,989,451 Total real estate investments 4,557,340 4,587,806 Less: accumulated depreciation (560,600) (503,568) 3,996,740 4,084,238 Loans receivable, net 55,438 78,466 Intangible lease assets, net 287,607 306,252 Real estate assets under direct financing leases, net 24,828 24,865 Real estate assets held for sale, net 18,825 20,469 Net investments 4,383,438 4,514,290 Cash and cash equivalents 9,289 8,792 Deferred costs and other assets, net 107,273 121,949 Investment in Master Trust 2014 33,581 — Preferred equity investment in Spirit MTA REIT 150,000 — Goodwill 225,600 225,600 Assets related to SMTA Spin-Off — 2,392,880 Total assets $ 4,909,181 $ 7,263,511 Liabilities and stockholders' equity Liabilities: Revolving Credit Facility $ 346,500 $ 112,000 Term Loan, net — — Senior Unsecured Notes, net 295,542 295,321 Mortgages and notes payable, net 467,334 589,644 Convertible Notes, net 722,756 715,881 Total debt, net 1,832,132 1,712,846 Intangible lease liabilities, net 125,905 130,574 Accounts payable, accrued expenses and other liabilities 121,858 131,642 Liabilities related to SMTA Spin-Off — 1,968,840 Total liabilities 2,079,895 3,943,902 Stockholders' equity: Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both June 30, 2018 166,193 166,193 and December 31, 2017 Common stock, $0.01 par value, 750,000,000 shares authorized: 428,570,110 and 448,868,269 shares issued and outstanding at June 30, 2018 and 4,286 4,489 December 31, 2017, respectively. Capital in excess of par value 4,986,719 5,193,631 Accumulated deficit (2,327,912) (2,044,704) Total stockholders' equity 2,829,286 3,319,609 Total liabilities and stockholders' equity $ 4,909,181 $ 7,263,511 Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 7


 
CAPITALIZATION NYSE:SRC $ in thousands, except share and per share data Enterprise Value $5,441 Million Capitalization & Enterprise Value $6,000 Common Shares Outstanding (1) 426,653,492 Common Share Price (2) $ 8.03 $5,000 Common Common Market Equity $ 3,426,028 $4,000 Market Equity Preferred Share Liquidation Value 172,500 Preferred $3,000 Market Equity Total Capitalization $ 3,598,528 $2,000 Total Total Adjusted Debt 1,841,988 Adjusted Debt $1,000 Total Enterprise Value $ 5,440,516 (1) Total outstanding shares as of June 30, 2018, less 1.9 million unvested restricted shares. $0 (2) Share price as of June 30, 2018. Debt Type Fixed/Floating Rate Debt Liquidity Unsecured Floating 75% Available Borrowing Capacity 19% Term Loan $ 420,000 Revolving Credit Facility 453,500 Cash & Cash Equivalents 9,289 Fixed Total Liquidity $ 882,789 Secured 81% 25% Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 8


 
DEBT SUMMARY $ in thousands as of June 30, 2018 NYSE:SRC % of Total Weighted Average Maturity Date Debt Balance Principal Interest Rate Years to Maturity Credit Facility Revolving Credit Facility (1) March 31, 2019 $ 346,500 18.5% 3.320% 0.8 Unsecured Term Loan Term Loan (2) November 2, 2018 — —% —% 0.3 Unamortized net premiums and deferred financing costs — Carrying amount — Convertible Notes 2.875% Notes due 2019 May 15, 2019 402,500 21.5% 2.875% 0.9 3.750% Notes due 2021 May 15, 2021 345,000 18.5% 3.750% 2.9 Principal amount 747,500 Unamortized net premiums and deferred financing costs (24,744) Carrying amount 722,756 Master Trust 2013 (3) Series 2013-2 Class A Notes December 20, 2023 170,154 9.1% 5.269% 5.5 Unamortized net premiums and deferred financing costs (4,588) Carrying amount 165,566 Senior Unsecured Notes 4.450 % Notes due 2026 September 15, 2026 300,000 16.0% 4.450% 8.2 Unamortized net premiums and deferred financing costs (4,458) Carrying amount 295,542 Mortgages Payable (3) 7 CMBS loans on 101 properties (4) August 2018 - August 2031 276,124 14.8% 5.510% 5.0 4 related party mortgages on 6 properties November 2025 - March 2028 29,368 1.6% 1.000% 9.4 Principal amount 305,492 Unamortized net premiums and deferred financing costs (3,724) Carrying amount 301,768 Total Debt, net $ 1,832,132 100.0% 3.949% 3.6 (1) Principal % of Total Weighted The Revolving Credit Facility has an initial maturity date of March 31, 2019, which may be extended at the Company's option Balance Principal Avg. Stated pursuant to a one-year extension option. Int. Rate (2) The Term Loan has an initial maturity date of November 2, 2018, which may be extended at the Company's option pursuant to two one-year extension options. Total Unsecured Debt $ 1,394,000 74.6% 3.542% (3) (3) A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity. Total Secured Debt 475,646 25.4% 5.141% (4) The weighted average rate includes the default interest rate for one single-asset fixed rate CMBS loan totaling $9.6 million, Total Principal $ 1,869,646 100.0% 3.949% including $2.9 million of capitalized interest, that is in default due to underperformance of the collateral property. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 9


 
SENIOR UNSECURED NOTES COVENANT COMPLIANCE NYSE:SRC Covenant Requirement June 30, 2018 Total Debt to Total Assets < 60% 36.6% Total Secured Debt to Total Assets < 40% 8.7% Fixed Charge Coverage (1) > 1.5x 4.06x Total Unencumbered Assets to Total Unsecured Debt > 1.5x 2.78x Credit Ratings Fitch Ratings BBB- Moody's Ratings Services Baa3 Standard & Poor's Rating Services BBB- (1) Fixed Charge Coverage is calculated per the requirements of the Indenture agreement. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 10


 
INVESTMENT AND DISPOSITION ACTIVITY $ in thousands NYSE:SRC Investments Q2 2018 Number of Properties Gross Investment Total Initial Wtd. Avg. % of Gross Number of Retained Transferred Total Retained Transferred Total Gross Annualized Square Cash Lease Term (1) Investment Transactions by SRC to SMTA Properties by SRC to SMTA Investment Rents Feet Yield (Years) New Tenants 25.1% 1 — 3 3 $ — $ 6,522 $ 6,522 $ 402 10,183 6.16% 20.1 Existing Tenants 33.3 1 — 1 1 — 8,665 8,665 865 89,305 9.98 10.5 Revenue Producing Capital 41.6 — 18 7 25 9,337 1,501 10,838 956 — 8.82 — Expenditures Total/Weighted Average 100.0% 2 18 11 29 $ 9,337 $ 16,688 $ 26,025 $ 2,223 99,488 8.54% 13.5 By Asset Type: Retail 99.8% 2 17 11 28 $ 9,337 $ 16,630 $ 25,967 $ 2,218 99,488 8.54% 13.5 Industrial 0.2 — 1 — 1 — 58 58 5 — 8.00 — Total/Weighted Average 100.0% 2 18 11 29 $ 9,337 $ 16,688 $ 26,025 $ 2,223 99,488 8.54% 13.5 YTD 2018 Number of Properties Gross Investment Total Initial Wtd. Avg. % of Gross Number of Retained Transferred Total Retained Transferred Total Gross Annualized Square Cash Lease Term (1) Investment Transactions by SRC to SMTA Properties by SRC to SMTA Investment Rents Feet Yield (Years) New Tenants 18.2% 1 — 3 3 $ — $ 6,522 $ 6,522 $ 402 10,183 6.16% 20.1 Existing Tenants 31.4 2 1 1 2 2,636 8,665 11,301 1,146 107,093 10.14 11.6 Revenue Producing Capital 50.4 — 43 9 52 16,441 1,663 18,104 1,465 — 8.09 — Expenditures Total/Weighted Average 100.0% 3 44 13 57 $ 19,077 $ 16,850 $ 35,927 $ 3,013 117,276 8.39% 13.8 By Asset Type: Retail 99.4% 3 44 10 54 $ 19,077 $ 16,630 $ 35,707 $ 2,994 117,276 8.39% 13.8 Industrial 0.3 — — 2 2 — 107 107 9 — 8.00 — Office 0.3 — — 1 1 — 113 113 10 — 8.50 — Total/Weighted Average 100.0% 3 44 13 57 $ 19,077 $ 16,850 $ 35,927 $ 3,013 117,276 8.39% 13.8 (1) The total weighted average cash yield for SRC retained properties and SMTA transferred properties was 8.90% and 8.29%, respectively, for the three months ended June 30, 2018, and 8.46% and 8.29%, respectively, for the six months ended June 30, 2018 Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 11


 
INVESTMENT AND DISPOSITION ACTIVITY $ in thousands NYSE:SRC Dispositions Q2 2018 Number of Properties Real Estate Investment Gross Sales Price Total Real Wtd. Avg. % of R/E SRC SMTA Total SRC SMTA SRC SMTA Total Gross Capitalization Estate (1) (2) Remaining Portfolios Portfolios Rate Investment Portfolios Portfolios Properties Investment Portfolios Portfolios Sales Price Lease Term (Yrs) Occupied 21.9% 3 2 5 $ 3,544 $ 3,789 $ 7,333 $ 3,369 $ 3,850 $ 7,219 7.88% 13.6 Vacant 24.4 3 1 4 7,561 600 8,161 6,689 875 7,564 — — (3) Transferred to lender 53.7 2 — 2 18,019 — 18,019 14,368 — 14,368 — — Total/Weighted Average 100.0% 8 3 11 $ 29,124 $ 4,389 $ 33,513 $ 24,426 $ 4,725 $ 29,151 7.88% 13.6 By Asset Type: Retail 100.0% 8 3 11 $ 29,124 $ 4,389 $ 33,513 $ 24,426 $ 4,725 $ 29,151 7.88% 13.6 Total/Weighted Average 100.0% 8 3 11 $ 29,124 $ 4,389 $ 33,513 $ 24,426 $ 4,725 $ 29,151 7.88% 13.6 YTD 2018 Number of Properties Real Estate Investment Gross Sales Price Total Real Wtd. Avg. % of R/E SRC SMTA Total SRC SMTA SRC SMTA Total Gross Capitalization Estate (1) (2) Remaining Portfolios Portfolios Rate Investment Portfolios Portfolios Properties Investment Portfolios Portfolios Sales Price Lease Term (Yrs) Occupied 54.0% 9 21 30 $ 11,101 $ 32,054 $ 43,155 $ 11,830 $ 23,617 $ 35,447 11.38% 10.7 Vacant 10.2 3 1 4 7,562 600 8,162 6,689 875 7,564 — — (3) Transferred to lender 35.8 6 — 6 28,545 — 28,545 23,887 — 23,887 — — Total/Weighted Average 100.0% 18 22 40 $ 47,208 $ 32,654 $ 79,862 $ 42,406 $ 24,492 $ 66,898 11.38% 10.7 By Asset Type: Retail 92.5% 16 22 38 $ 41,208 $ 32,654 $ 73,862 $ 36,347 $ 24,492 $ 60,839 11.85% 10.7 Industrial 3.6 1 — 1 2,869 — 2,869 3,050 — 3,050 6.34 — Office 3.9 1 — 1 3,131 — 3,131 3,009 — 3,009 — — Total/Weighted Average 100.0% 18 22 40 $ 47,208 $ 32,654 $ 79,862 $ 42,406 $ 24,492 $ 66,898 11.38% 10.7 (1) Capitalization rates are calculated solely on income producing properties. (2) The weighted average capitalization rate for SRC portfolio properties and SMTA portfolio properties was 7.88% and 7.84%, respectively, for the three months ended June 30, 2018, and 7.73% and 13.23%, respectively, for the six months ended June 30, 2018 (3) The gross sales price for properties transferred to lender represents the net book value of the properties at time of transfer. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 12


 
DEVELOPMENT PIPELINE NYSE:SRC Anticipated Construction Spend of $75.3 million (Remaining - $21.7 million) and Take-Out Commitments totaling $11.6 million Anticipated Completion Concept Number of Properties Location Date Gibsonton Theater (1) 1 Gibsonton, FL Q3 2018 Camping World (1) 3 Multiple Locations Q3 2018 Andy's Frozen Custard (1) 1 Orland Park, IL Q3 2018 Shooters World (1) 1 Orlando, FL Q4 2018 CircusTrix (1)(2) 3 Multiple Locations 2018 - 2019 Camping World CircusTrix Multiple Locations Multiple Locations (1) Represents a construction build commitment. (2) Represents a forward take-out commitment on two CircusTrix properties. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 13


 
TENANT DIVERSIFICATION – TOP 100 NYSE:SRC Percent of Percent of Tenant Concept Number of Square Feet Contractual Tenant Concept Number of Square Feet Contractual Properties (in thousands) Rent Properties (in thousands) Rent 1 Walgreens 41 600 3.8% 26 CarMax 4 155 1.2% 2 Church's Chicken 170 243 3.5% 27 Pep Boys 12 250 1.1% 3 Circle K 82 248 3.2% 28 Specialists in Urology (21st Century 9 128 1.1% Oncology Holdings, Inc.) 4 Home Depot 7 821 3.0% 29 AMC Theatres 4 226 1.1% 5 CVS 36 446 2.6% 30 At Home 6 756 1.1% 6 C-Store (GPM Investments, LLC) 105 272 2.4% 31 Emagine Theaters 8 452 1.1% 7 Albertsons 16 734 2.0% 32 Rite Aid 12 158 1.0% 8 PetSmart 4 1,016 1.7% 33 Kohl's 6 483 1.0% 9 Ferguson Enterprises 7 1,003 1.7% 34 Georgia Theatre 4 171 0.9% 10 BJ's Wholesale Club 4 475 1.6% 35 Smokey Bones Barbecue & Grill 13 100 0.9% 11 Main Event 7 441 1.5% 36 C-Store (Supermesa Fuel & Merc, LLC) 6 24 0.9% 12 Applebee's 22 120 1.5% 37 C-Store (Irving Oil Marketing, Inc.) 37 101 0.9% 13 Sportsman's Warehouse 9 426 1.5% 38 Flying J Travel Plaza 3 48 0.9% 14 Advance Auto Parts 54 377 1.5% 39 Aaron's 26 266 0.8% 15 C-Store (White Oak Station, LLC) 41 163 1.5% 40 South Carolina Oncology Associates 1 120 0.8% 16 Dollar General 58 603 1.5% 41 Defined Fitness 5 205 0.8% 17 Mister Car Wash 17 113 1.5% 42 Zips Car Wash 13 48 0.7% 18 Tractor Supply 22 589 1.4% 43 J. Jill 1 390 0.7% 19 Smart & Final 5 263 1.4% 44 Taco Bueno 35 98 0.7% 20 Regal Cinemas 8 357 1.4% 45 Camping World 6 295 0.7% 21 IBM 2 395 1.4% 46 Office Depot 10 214 0.7% 22 LA Fitness 6 260 1.4% 47 Dave & Buster's 3 80 0.7% 23 Red Lobster 27 184 1.4% 48 Best Buy 4 188 0.6% 24 FedEx 4 429 1.3% 49 C-Store (Town Star Holdings, LLC) 12 43 0.6% 25 Lowe's 6 806 1.3% 50 Childcare Network 20 191 0.6% Top 50 Tenants 1,020 16,574 68.6% Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 14


 
TENANT DIVERSIFICATION – TOP 100 (continued) NYSE:SRC Percent of Percent of Tenant Concept Number of Square Feet Contractual Tenant Concept Number of Square Feet Contractual Properties (in thousands) Rent Properties (in thousands) Rent 51 Sunny Delight 1 286 0.6% 76 Missoula Fresh Market 2 110 0.4% 52 Universal Tax Systems 1 101 0.6% 77 Liberty Oilfield Services 2 85 0.4% 53 High Rise Extreme Air Sports 8 184 0.6% 78 Taco Bell 9 20 0.3% 54 Curacao 1 103 0.6% 79 Faurecia Interior Systems 1 107 0.3% 55 24 Hour Fitness 2 105 0.6% 80 Clean Freak 5 22 0.3% 56 American Lubefast 27 60 0.6% 81 Accel International 2 270 0.3% 57 Malibu Boats 2 303 0.6% 82 Cinemark 1 54 0.3% 58 Walmart 4 370 0.5% 83 Winco Grocery 1 82 0.3% 59 DOW Emergency 3 41 0.5% 84 HOM Furniture 1 122 0.3% 60 Ladybird Academy 6 72 0.5% 85 El Chico 1 19 0.3% 61 Gold's Gym 3 118 0.5% 86 Dollar Tree 11 105 0.3% 62 Academy Sports 4 241 0.5% 87 Brookshire Brothers 7 213 0.3% 63 Old Time Pottery 3 355 0.5% 88 Hobby Lobby 1 141 0.3% 64 Crunch Fitness 4 163 0.5% 89 C-Store (Wawa, Inc.) 3 14 0.3% 65 Southern Theatres 2 106 0.5% 90 Ryan's 5 54 0.3% 66 Food City 3 130 0.5% 91 In-Shape 2 62 0.3% 67 C-Store (Mountain Express Oil Company 13 27 0.4% 92 Milo's 8 25 0.3% Southeast, LLC) 68 Riverview 14 GDX 1 66 0.4% 93 Sonic Drive-In 14 24 0.3% 69 Davis-Standard 2 361 0.4% 94 Childtime 8 63 0.3% 70 KFC 14 40 0.4% 95 Fox Rehabilitation Services 1 90 0.3% 71 Hardee's 17 60 0.4% 96 Bank of America 1 73 0.2% 72 C-Store (Jordan Oil Company of the 8 49 0.4% 97 Studio Movie Grill 4 203 0.2% Carolinas, Inc) 73 Sonny's BBQ 8 48 0.4% 98 La-Z-Boy 2 51 0.2% 74 Staples 6 137 0.4% 99 Sonic Drive-In 10 16 0.2% 75 Jo-Ann's 3 110 0.4% 100 Twin Tiers Eye Care 6 44 0.2% Top 100 Tenants 1,274 22,279 88.1% Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 15


 
INDUSTRY DIVERSIFICATION NYSE:SRC Industry Number of Total Square Percent of Tenant Industry Category Owned Feet Contractual Properties (in thousands) Rent Convenience Stores Service 312 963 10.8% Industry Category Concentration: Restaurants - Quick Service Service 332 686 7.6% Percent of Contractual Rent Drug Stores / Pharmacies Service 89 1,204 7.4% Restaurants - Casual Dining Service 101 725 6.2% Movie Theaters Service 32 1,636 5.9% Grocery Retail 42 1,940 5.6% Service Health and Fitness Service 30 1,213 4.8% 59.7% Home Improvement Retail 14 1,653 4.4% Specialty Retail Retail 62 1,682 4.1% Medical Office Service 36 621 4.1% Home Furnishings Retail 19 1,869 3.8% Entertainment Service 21 812 3.1% Manufacturing Industrial 13 1,875 2.9% Professional Services Service 6 685 2.6% Car Washes Service 35 183 2.5% Warehouse Clubs/Supercenters Retail 9 883 2.4% Automotive Services Service 54 419 2.2% Sporting Goods Retail 13 667 2.1% Building Materials Retail 9 1,047 1.8% Dollar Stores Retail 69 707 1.8% Pet Supplies & Services Retail 4 1,016 1.7% Education Service 37 390 1.7% Distribution Industrial 6 675 1.7% Industrial Automotive Dealers Retail 10 308 1.6% Traditional 4.6% Automotive Parts Retail 54 383 1.5% Retail Office Supplies Retail 17 458 1.2% 34.9% General Merchandise Retail 6 483 1.0% Other Apparel Retail 4 477 1.0% 0.8% Travel Plaza Service 3 48 0.8% Other Other 6 244 0.8% Consumer Electronics Retail 4 188 0.6% Discount Retailer Retail 3 166 0.3% Vacant 6 1,008 — Total 1,458 27,314 100.0% Tenant Industry determined using the NAICS code of the Tenant. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 16


 
PORTFOLIO DIVERSIFICATION NYSE:SRC KEY Northeast Midwest South West % of Contractual Rent Texas 12.2% Arizona 3.5% Colorado 2.4% New Jersey 1.5% Kansas 1.1% Utah 0.8% Massachusetts 0.5% Wyoming 0.1% Florida 7.9% Michigan 3.4% Minnesota 2.3% New Hampshire 1.4% Idaho 1.0% Washington 0.7% Wisconsin 0.4% Alaska 0.1% Georgia 6.9% Missouri 3.2% New York 2.0% Pennsylvania 1.3% Louisiana 1.0% North Dakota 0.6% Rhode Island 0.3% South Dakota 0.1% California 5.6% South Carolina 2.7% Kentucky 2.0% Arkansas 1.3% Connecticut 1.0% Maine 0.6% West Virginia 0.3% Delaware 0.1% Ohio 4.8% Virginia 2.7% Indiana 2.0% Mississippi 1.3% Maryland 1.0% Oregon 0.6% Nebraska 0.2% Vermont * Illinois 4.2% Alabama 2.6% New Mexico 1.9% Nevada 1.2% Iowa 0.9% Montana 0.5% U.S. V.I. 0.2% Hawaii — Tennessee 3.6% North Carolina 2.5% Oklahoma 1.5% * Less than 0.1% Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 17


 
SAME STORE CONTRACTUAL RENT $ in thousands NYSE:SRC Same Store Results Contractual Rent % of Total Top Tenant Industry for the Net % Change by Industry Contributors Month ended June 30, Change Industry Type Contribution Number of Properties 1,361 2018 2017 Total Square Feet (in thousands) 21,925 Convenience Stores $ 3,102 $ 3,042 $ 60 2.0% 11.7% June 2018 Contractual Rent $ 26,518 Restaurants - Quick 2,210 2,178 32 1.5% 8.3% Service June 2017 Contractual Rent $ 26,116 Drug Stores / 1,984 1,980 4 0.2% 7.5% Pharmacies Increase (in dollars) $ 402 Restaurants - Casual 1,768 1,766 2 0.1% 6.7% Increase (percent) 1.5% Dining Grocery 1,530 1,517 13 0.9% 5.8% Same Store Pool Defined Health and Fitness 1,421 1,396 25 1.8% 5.4% We include all properties owned throughout the measurement period in both the current and prior year Movie Theaters 1,379 1,323 56 4.2% 5.2% and exclude: multi-tenant properties, properties that were vacant, renewed or relet at any point during the Medical Office 1,215 1,163 52 4.5% 4.6% measurement period, construction in progress, and Remaining Tenant 11,909 11,751 158 1.3% 44.8% properties where contractual rent was fully or partially Categories reserved in either the current or prior measurement Total $ 26,518 $ 26,116 $ 402 1.5% 100.0% period. Contractual Rent % of Total for the Net % Change by Asset Asset Type Month ended June 30, Change Asset Type Contribution 2018 2017 Retail $ 22,890 $ 22,586 $ 304 1.3% 86.3% Industrial 2,296 2,239 57 2.5% 8.7% Office 1,332 1,291 41 3.2% 5.0% Total $ 26,518 $ 26,116 $ 402 1.5% 100.0% Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 18


 
OCCUPANCY NYSE:SRC Owned Properties Change in Vacant Properties Occupied 1,452 Vacant Properties at December 31, 2017 19 Additions 12 Vacant 6 Dispositions (8) Total Owned Properties 1,458 Relets (2) Contributions to SMTA (15) Occupancy Rate 99.6% Vacant Properties at June 30, 2018 6 Historical Occupancy Rates 99.6% 98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4% 98.2% 97.7% 97.9% 99.1% 99.2% 98.9% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 19


 
LEASE STRUCTURE AND EXPIRATIONS $ in thousands NYSE:SRC Lease Expirations as a Percent of Contractual Rent   Number of Total Contractual Rent Owned Square Feet (1) Year Properties (in thousands) Annualized 2018 Remainder 0.8% 2018 Remainder 7 422 $ 3,052 2019 2.1% 2020 3.4% 2019 26 617 7,641 2021 8.5% 2020 35 1,011 12,378 2022 5.6% 2021 116 2,406 30,764 2023 9.9% 2022 44 1,825 20,147 2024 3.5% 2025 2023 110 3,760 36,050 4.7% 2026 6.2% 2024 20 1,113 12,639 2027 9.5% 2025 37 1,258 17,083 Thereafter 45.8% 2026 77 1,683 22,344 2027 120 2,471 34,538 Thereafter 860 9,740 166,310 Lease Escalations as a Percent of Contractual Rent (Excludes Multi-Tenant Properties) Vacant 6 1,008 — Totals 1,458 27,314 $ 362,946 (1) Contractual Rent multiplied by twelve. Annualized Cash Rents were $361.9 million as of June 30, 2018. Flat Based on Contractual Rent: Contractual Fixed 15% Increases 85% of our leases (excluding those on multi-tenant 65% properties) provide for periodic escalations, 38% of our leases are under master lease structures, 42% of our tenants provide unit level financials, and CPI-Related 20% 2.7x FCCR for our reporting tenants Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 20


 
NET ASSET VALUE (NAV) COMPONENTS $ in thousands NYSE:SRC Number of Contractual Rent Owned Real Estate Portfolio Properties Annualized (1) Retail (2) 1,385 $ 308,196 Office 36 18,456 Industrial 26 29,069 Data Centers 3 5,845 Leased Real Estate Properties Held For Sale, Net 2 1,380 Vacant Properties (3) 5 — Properties under Defaulted Loans (4) 1 — Total Owned Real Estate Portfolio 1,458 $ 362,946 Other NAV Components Total Loans Receivable Principal Balance Outstanding: $ 52,306 Investment in Master Trust 2014 Principal Balance Outstanding: $ 33,581 Cash and Cash Equivalents $ 9,289 Restricted Cash 18,369 Contractual Rent Preferred Equity Investment in Spirit MTA REIT 150,000 Annualized (1) Accounts Receivable, Prepaid Assets, and Other Tangible Assets, Net 22,360 Top Ten Tenants $ 92,320 Total Other Tangible Assets Net Book Value: $ 200,018 Top 100 Tenants $ 319,983 (1) June Contractual Rent multiplied by twelve. Total Debt Principal Balance Outstanding: $ 1,869,646 (2) Includes five direct financing lease properties with a Real Estate Investment value of $24.8 million. Annualized Cash Rents include the tenants' current cash obligations of $1.9 million for the lease of these properties. Accounts Payable, Accrued Expenses (3) Includes one property that is held for sale with a net book value of $8.3 (5) Net Book Value: $ 121,858 million. and Other Tangible Liabilities (4) One vacant property, with a net book value of $0.7 million, securing a fixed rate CMBS loan with $9.6 million of outstanding principal payable (including $2.9 million of capitalized interest) that is in default due to the Preferred Shares Liquidation Value: $ 172,500 underperformance of the property. (5) Includes $78.7 million in dividends payable. (6) (6) Total outstanding shares as of June 30, 2018, less 1.9 million unvested Common Shares Outstanding 426,653,492 restricted shares. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 21


 
ANALYST COVERAGE NYSE:SRC BofA Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681 BTIG Michael Gorman mgorman@btig.com 212.738.6138 Capital One Securities Chris Lucas christopher.lucas@capitalone.com 571.633.8151 Derek Johnston derek.johnston@db.com 904.520.4973 Deutsche Bank Shivani Sood shivani.sood@db.com 212.250.4617 Green Street Advisors Spencer Allaway sallaway@greenst.com 949.640.8780 Robert Stevenson robstevenson@janney.com 646.840.3217 Janney Montgomery Scott Venkat Kommineni vkommineni@janney.com 646.840.3219 Anthony Paolone anthony.paolone@jpmorgan.com 212.622.6682 J.P. Morgan Nikita Bely nikita.bely@jpmorgan.com 212.622.0695 Ladenburg Thalman & Co. John Massocca jmassocca@ladenburg.com 212.409.2543 Haendel St. Juste haendel.st.juste@us.mizuho-sc.com 212.205.7860 Mizuho Securities Jieren Huang jieren.huang@us.mizuho-sc.com 212.205.7862 Vikram Malhotra vikram.malhotra@morganstanley.com 212.761.7064 Morgan Stanley Kevin Egan kevin.egan@morganstanley.com 212.761.5028 Collin Mings collin.mings@raymondjames.com 727.567.2585 Raymond James Marnie Georges marnie.georges@raymondjames.com 727.567.2538 Wes Golladay wes.golladay@rbccm.com 440.715.2650 RBC Capital Markets Brian Hawthorne brian.hawthorne@rbccm.com 440.715.2653 RJ Milligan rjmilligan@rwbaird.com 813.273.8252 RW Baird Will Harman wharman@rwbaird.com 414.298.2337 Ki Bin Kim kibin.kim@suntrust.com 212.303.4124 Sun Trust Robinson Humphrey Ian Gaule ian.gaule@suntrust.com 212.590.0948 The aforementioned security analysts currently provide opinions, estimates and forecasts, which are their own and are not promoted or endorsed by Spirit or its management team. Therefore, their opinions, estimates or forecasts are their own and should not be interpreted as Spirit’s opinions, estimates or forecasts. Any reference or distribution by Spirit expressly disclaims any endorsement of or concurrent with any information, estimates, forecasts, opinions, conclusions or recommendations provided by analysts. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 22


 
APPENDIX 23


 
REPORTING DEFINITIONS AND EXPLANATIONS NYSE:SRC Funds from Operations (FFO) and addition, other equity REITs may not calculate FFO comparable to such other equity REITs’ AFFO. AFFO Adjusted Funds from Operations (AFFO) as we do, and, accordingly, our FFO may not be does not represent cash generated from operating We calculate FFO in accordance with the standards comparable to such other equity REITs’ FFO. activities determined in accordance with GAAP, is not established by the National Association of Real Accordingly, FFO should be considered only as a necessarily indicative of cash available to fund cash Estate Investment Trusts (NAREIT). FFO represents supplement to net income (loss) attributable to needs and should not be considered as an alternative net income (loss) attributable to common common stockholders as a measure of our to net income (determined in accordance with GAAP) stockholders (computed in accordance with GAAP), performance. as a performance measure. excluding real estate-related depreciation and amortization, impairment charges and net (gains) AFFO is a non-GAAP financial measure of operating Adjusted EBITDAre represents EBITDAre, or losses from property dispositions. FFO is a performance used by many companies in the REIT earnings before interest, taxes, depreciation and supplemental non-GAAP financial measure. We use industry. We adjust FFO to eliminate the impact of amortization for real estate, modified to include other FFO as a supplemental performance measure certain items that we believe are not indicative of our adjustments to GAAP net income (loss) for because we believe that FFO is beneficial to core operating performance, including restructuring transaction costs, severance charges, real estate investors as a starting point in measuring our and divestiture costs, other G&A costs associated acquisition costs, and debt transactions and other operational performance. Specifically, in excluding with relocation of the Company's headquarters, items that we do not consider to be indicative of our real estate-related depreciation and amortization, transactions costs associated with our proposed spin- on-going operating performance. We focus our gains and losses from property dispositions and off, default interest and fees on non-recourse business plans to enable us to sustain increasing impairment charges, which do not relate to or are not mortgage indebtedness, debt extinguishment gains shareholder value. Accordingly, we believe that indicative of operating performance, FFO provides a (losses), transaction costs incurred in connection with excluding these items, which are not key drivers of performance measure that, when compared year the acquisition of real estate investments subject to our investment decisions and may cause short-term over year, captures trends in occupancy rates, rental existing leases and certain non-cash items. These fluctuations in net income, provides a useful rates and operating costs. We also believe that, as a certain non-cash items include non-cash revenues supplemental measure to investors and analysts in widely recognized measure of the performance of (comprised of straight-line rents, amortization of assessing the net earnings contribution of our real equity REITs, FFO will be used by investors as a above and below market rent on our leases, estate portfolio. Because these measures do not basis to compare our operating performance with that amortization of lease incentives, amortization of net represent net income (loss) that is computed in of other equity REITs. However, because FFO premium (discount) on loans receivable, provision for accordance with GAAP, they should not be excludes depreciation and amortization and does not bad debts and amortization of capitalized lease considered alternatives to net income (loss) or as an capture the changes in the value of our properties transaction costs), non-cash interest expense indicator of financial performance. A reconciliation of that result from use or market conditions, all of which (comprised of amortization of deferred financing net income (loss) attributable to common have real economic effects and could materially costs and amortization of net debt discount/premium) stockholders (computed in accordance with GAAP) to impact our results from operations, the utility of FFO and non-cash compensation expense (stock-based EBITDAre and Adjusted EBITDAre is included in the as a measure of our performance is limited. In compensation expense). In addition, other equity Appendix found at the end of this presentation. REITs may not calculate AFFO as we do, and, accordingly, our AFFO may not be Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 24


 
REPORTING DEFINITIONS AND EXPLANATIONS NYSE:SRC Annualized Adjusted EBITDAre is calculated by We believe this ratio is a beneficial disclosure to Contractual Rent represents monthly contractual multiplying Adjusted EBITDAre of a quarter by four. investors as a supplemental means of evaluating our cash rent and earned income from direct financing Our computation of Adjusted EBITDAre and ability to meet obligations senior to those of our leases, excluding percentage rents, from our Owned Annualized Adjusted EBITDAre may differ from the equity holders. Our computation of this ratio may Properties recognized during the final month of the methodology used by other equity REITs to calculate differ from the methodology used by other equity reporting period, adjusted to exclude amounts these measures and, therefore, may not be REITs and, therefore, may not be comparable to such received from properties sold during that period and comparable to such other REITs. A reconciliation of other REITs. adjusted to include a full month of contractual rent for Annualized Adjusted EBITDAre is included in the properties acquired during that period. We use Annualized Cash Rents represents the annualized Appendix found at the end of this presentation. Contractual Rent when calculating certain metrics monthly Contractual Rent, less any rent reserved for, that are useful to evaluate portfolio credit, asset type, Adjusted Debt represents interest bearing debt multiplied by twelve. industry and geographic diversity and to manage risk. (reported in accordance with GAAP) adjusted to Capitalization Rate represents the Annualized Cash exclude unamortized debt discount/premium, EBITDAre is a non-GAAP financial measure and is Rents on the date of a property disposition divided by deferred financing costs, cash and cash equivalents computed in accordance with standards established the gross sales price. For multi-tenant properties, and cash reserves on deposit with lenders as by NAREIT. EBITDAre is defined as net income (loss) non-reimbursable property costs are deducted from additional security. By excluding these amounts, the (computed in accordance with GAAP), plus interest the Annualized Cash Rents prior to computing the result provides an estimate of the contractual amount expense, plus income tax expense (if any), plus disposition Capitalization Rate. of borrowed capital to be repaid, net of cash available depreciation and amortization, plus (minus) losses to repay it. We believe this calculation constitutes a CMBS are those notes secured by commercial real and gains on the disposition of depreciated property, beneficial supplemental non-GAAP financial estate and rents therefrom under which certain plus impairment write-downs of depreciated property disclosure to investors in understanding our financial indirect wholly-owned special purpose entity and investments in unconsolidated real estate condition. A reconciliation of interest bearing debt subsidiaries of the Company are the borrowers. ventures, plus adjustments to reflect the Company's (reported in accordance with GAAP) to Adjusted Debt These liabilities are discussed in greater detail in our share of EBITDAre of unconsolidated real estate is included in the Appendix found at the end of this financial statements and the notes thereto included in ventures. presentation. our periodic reports filed with the SEC. Economic Yield is calculated by dividing the Adjusted Debt to Annualized Adjusted EBITDAre Convertible Notes are the $402.5 million convertible contractual cash rent, including fixed rent escalations is a supplemental non-GAAP financial measure we notes of the Company due in 2019 and the $345.0 and/or cash increases determined by CPI (increases use to evaluate the level of borrowed capital being million convertible notes of the Company due in calculated using a month to month historical CPI used to increase the potential return of our real estate 2021, together. These liabilities are discussed in index) by the initial lease term, expressed as a investments and a proxy for a measure we believe is greater detail in our financial statements and the percentage of the Gross Investment. used by many lenders and ratings agencies to notes thereto included in our periodic reports filed evaluate our ability to repay and service our debt with the SEC. obligations over time. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 25


 
REPORTING DEFINITIONS AND EXPLANATIONS NYSE:SRC Enterprise Value represents Total Market Initial Cash Yield from properties is calculated by Master Trust 2013 Notes are net-lease mortgage Capitalization less cash and cash equivalents and dividing the first twelve months of contractual cash notes issued under the Spirit Master Funding reserves on deposit with lenders as of the date rent (excluding any future rent escalations provided Program and the securitization trusts established indicated. subsequently in the lease and percentage rent) by thereunder. Indirect special purpose entity the Gross Investment in the related properties. Initial subsidiaries of the Company are the borrowers. Equity Market Capitalization is calculated by Cash Yield is a measure (expressed as a These liabilities are discussed in greater detail in our multiplying the number of shares outstanding by the percentage) of the contractual cash rent expected to financial statements and the notes thereto included in closing share price of the Company’s common stock be earned on an acquired property in the first year. our periodic reports filed with the SEC. as of the date indicated. Because it excludes any future rent increases or additional rent that may be contractually provided for Net Asset Value (NAV) We believe disclosing Fixed Charge Coverage Ratio (FCCR) is the ratio of in the lease, as well as any other income or fees that information frequently used in the calculation of NAV Annualized Adjusted EBITDA to Annualized Fixed may be earned from lease modifications or asset is useful to investors and because it enables and Charges, a ratio derived from non-GAAP measures dispositions, Initial Cash Yield does not represent the facilitates calculation of a metric frequently used by that we use to evaluate our liquidity and ability to annualized investment rate of return of our acquired our management as one method to estimate the fair obtain financing. Fixed charges consist of interest properties. Additionally, actual contractual cash rent value of our business. The assessment of the fair expense, reported in accordance with GAAP, less earned from the properties acquired may differ from value of our business is subjective in that it involves non-cash interest expense. Annualized Fixed the Initial Cash Yield based on other factors, estimates and assumptions and can be calculated Charges is calculated by multiplying fixed charges for including difficulties collecting anticipated rental using various methods. Therefore, we have the quarter by four. revenues and unanticipated expenses at these presented certain information regarding our financial properties that we cannot pass on to tenants, as well and operating results, as well as our assets and GAAP are the Generally Accepted Accounting as the risk factors set forth in our Annual Report on liabilities that we believe are important in calculating Principles in the United States. Form 10-K for the year ended December 31, 2017. our NAV, but have not presented any specific methodology nor provided any guidance on the Gross Investment represents the gross acquisition Lease Expiration is the end of the initial term under assumptions or estimates that should be used in the cost including the contracted purchase price and a lease and does not account for extension periods calculation of NAV. The components of NAV do not related capitalized transaction costs. under the lease. consider the potential changes in the value of assets, the collectability of rents or other receivable obligations, or the value associated with our operating platform. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 26


 
REPORTING DEFINITIONS AND EXPLANATIONS NYSE:SRC Net Book Value represents the Real Estate Tenant represents the legal entity ultimately Weighted Average Remaining Lease Term is Investment value net of accumulated depreciation. responsible for obligations under the lease calculated by dividing the sum product of (a) a stated agreement or an affiliated entity. Other tenants may revenue or sales price component and (b) the lease Occupancy is calculated by dividing the number of operate the same or similar business concept or term for each lease by (c) the sum of the total economically yielding Owned Properties in the brand. revenue or sale price components for all leases portfolio as of the measurement date by the number within the sample. of total Owned Properties on said date. Term Loan refers to a $420.0 million unsecured term facility which includes an accordion feature which Weighted Average Stated Interest Rate is Owned Properties refers to properties owned fee- allows the facility to be increased to up to $600.0 calculated by dividing the sum product of (a) coupon simple or ground leased by Company subsidiaries as million, subject to obtaining additional lender interest rate of each note and (b) the principal lessee. commitments. Borrowings may be repaid without balance outstanding of each note by (c) the sum of premium or penalty, and may be re-borrowed within the total principal balances outstanding for all notes Real Estate Investment represents the Gross 30 days up to the then available loan commitment. in the sample. Investment plus improvements less impairment charges. Total Market Capitalization represents Equity Weighted Average Unit Level Rent Coverage is Market Capitalization plus Total Debt as of the date used as an indicator of individual asset profitability, as Revolving Credit Facility refers to the $800 million indicated. well as signaling the property’s importance to our unsecured credit facility which matures on March 31, tenants’ financial viability. We calculate Unit Level 2019. The Revolving Credit Facility includes sublimits Total Debt represents the sum of the principal Rent Coverage by dividing our reporting tenants’ for swingline loans and letter of credit issuances. balances outstanding on interest-bearing debt on the trailing 12-month EBITDAR (earnings before interest, Swingline loans and letters of credit reduce Company’s balance sheet as of the date indicated. tax, depreciation, amortization and rent) by annual availability under the Revolving Credit Facility.  The contractual rent. These are then weighted based on ability to borrow under the Revolving Credit Facility is Unencumbered Assets represents the assets in our the tenant's Contractual Rent. Tenants in the subject to the ongoing compliance with customary portfolio that are not subject to mortgage manufacturing industry are excluded from the financial covenants. indebtedness, which we use to evaluate our calculation. potential access to capital and in our management of Senior Unsecured Notes refers to the $300 million financial risk. The asset value attributed to these aggregate principal amount of 4.450% senior assets is the Real Estate Investment. unsecured notes due 2026. Unsecured Debt represents components of Total Debt that are not secured by liens, mortgages or deeds of trust on Company assets. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 27


 
NON-GAAP RECONCILIATIONS $ in thousands NYSE:SRC Adjusted Debt, Adjusted EBITDAre, Annualized Adjusted EBITDAre Q2 2018 Fixed Charge Coverage Ratio (FCCR) Q2 2018 Revolving Credit Facility $ 346,500 Annualized Adjusted EBITDAre $ 505,848 Term Loan, net — Senior Unsecured Notes, net 295,542 Interest expense 42,056 Mortgages and notes payable, net 467,334 Less: Non-cash interest (6,262) Convertible Notes, net 722,756 Preferred Stock dividends 2,588 Total debt, net 1,832,132 Fixed charges $ 38,382 Add / (less): Annualized fixed charges $ 153,528 Unamortized debt discount, net 20,042 Fixed Charge Coverage Ratio 3.3x Unamortized deferred financing costs 17,472 Adjusted Debt to Enterprise Value Cash and cash equivalents (9,289) Q2 2018 Restricted cash balances held for the benefit of lenders (18,369) Adjusted Debt $ 1,841,988 Total adjustments 9,856 Enterprise value 5,440,516 Adjusted Debt $ 1,841,988 Adjusted Debt / Enterprise Value 33.9% Preferred Stock at liquidation value 172,500 Adjusted Debt + Preferred Stock $ 2,014,488 Unencumbered Assets to Unsecured Debt Net Income $ 17,164 Q2 2018 Add / (less): Unsecured debt: Interest 42,056 Revolving Credit Facility $ 346,500 Depreciation and amortization 53,980 Term Loan — Income tax expense 203 Senior Unsecured Notes 300,000 Realized losses (gains) on sales of real estate assets (722) Convertible Notes 747,500 Impairments on real estate assets 1,349 Total Unsecured Debt $ 1,394,000 Total adjustments 96,866 Unencumbered Assets $ 3,869,229 EBITDAre $ 114,030 Add / (less): Unencumbered Assets / Unsecured Debt 3.5x Other costs in G&A associated with Spin-Off 1,392 Notice Regarding Non-GAAP Financial Measures Transaction costs 16,033 In addition to U.S. GAAP financial measures, this presentation contains and may Real estate acquisition costs 408 refer to certain non-GAAP financial measures. These non-GAAP financial Gain on debt extinguishment (5,401) measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial Total adjustments 12,432 measures should not be considered replacements for, and should be read together Adjusted EBITDAre $ 126,462 with, the most comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures and statements of why Annualized Adjusted EBITDAre $ 505,848 management believes these measures are useful to investors are included in this Adjusted Debt / Annualized Adjusted EBITDAre 3.6x Appendix if the reconciliation is not presented on the page in which the measure Adjusted Debt + Preferred / Annualized EBITDAre 4.0x is published. Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 28


 
FORWARD-LOOKING STATEMENTS AND RISK FACTORS NYSE:SRC The information in this supplemental report should be read in conjunction with the accompanying earnings press release, as well as the Company's Quarterly Report on Form 10-Q, Annual Report on Form 10-K and other information filed with the Securities and Exchange Commission. This supplemental report is not incorporated into such filings. This document is not an offer to sell or a solicitation to buy securities of Spirit Realty Capital, Inc. Any offer or solicitation shall be made only by means of a prospectus approved for that purpose. Forward-Looking and Cautionary Statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” "will," “estimate,” “project,” “intend,” “believe,” “guidance,” and other similar expressions that do not relate to historical matters. These forward-looking statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, Spirit’s continued ability to source new investments, risks associated with using debt and equity financing to fund Spirit’s business activities (including refinancing and interest rate risks, changes in interest rates and/or credit spreads, changes in the price of our common stock, and conditions of the equity and debt capital markets, generally), unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities, general risks affecting the real estate industry and local real estate markets (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants’ financial condition and operating performance, and competition from other developers, owners and operators of real estate), the financial performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers, potential fluctuations in the consumer price index, risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, the impact of the spin-off on Spirit's business, and other additional risks discussed in Spirit’s most recent filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Q2 2018 SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2018 29


 
(Back To Top)