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Section 1: 8-K (8-K)

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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): March 1, 2019
 
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)
 
________________________
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 7.01. Regulation FD Disclosure.
On March 1, 2019, VEREIT, Inc. (the “Company”) made available on the Investor Relations section of its website, http://ir.vereit.com, a presentation describing the Company’s business and real estate portfolio. A copy of the presentation is attached hereto as Exhibit 99.1. The information set forth in this Item 7.01 and in the presentation, attached hereto as Exhibit 99.1, 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 7.01, including Exhibit 99.1, 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
 







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: March 1, 2019







Exhibit Index
Exhibit No.
 
Description
99.1
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

ex991vereitinvestorrevie
Exhibit 99.1 Investor Review Q4 2018 1


 
About the Data INVESTOR REVIEW This data and other information described herein are as of and for the three months ended December 31, 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, 2018. All data is as of December 31, 2018 and based on Annualized Rental Income (“ARI”), unless otherwise noted.   For definitions and reconciliations of the Company's non-GAAP measures and operating metrics, please view the Definitions & Reconciliations section of this presentation. 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 are the trademarks or service marks of their respective companies. 2 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Forward-Looking Statements INVESTOR REVIEW Information set forth herein contains “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations regarding future events and plans, VEREIT's future financial condition, results of operations and business including the liquidity and flexibility of its balance sheet, the diversification of its portfolio, availability under its revolving credit facility, efforts to reduce debt balances and continue to unencumber assets and the Company’s positioning for 2019 (e.g., single-tenant retail advantages). The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words “expects,” “anticipates,” “assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "may," "will," "should," "could," "continues," variations of such words and similar expressions identify forward- looking statements. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, most of which are difficult to predict and many of which are beyond VEREIT’s control. If a change occurs, VEREIT’s business, financial condition, liquidity and results of operations may vary materially from those expressed in or implied by the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; VEREIT’s ability to meet its 2019 guidance; VEREIT’s ability to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all; risks associated with tenant, geographic and industry concentrations with respect to VEREIT's properties; the impact of impairment charges in respect of certain of VEREIT's properties, goodwill and intangible assets and other assets; unexpected costs or liabilities that may arise from potential dispositions, including related to limited partnership, tenant-in-common and Delaware statutory trust real estate programs and VEREIT’s management with respect to such programs; competition in the acquisition and disposition of properties and in the leasing of its properties; the inability to acquire, dispose of, or lease properties on advantageous terms; risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of VEREIT's tenants; risks associated with pending government investigations and litigations related to VEREIT's previously disclosed audit committee investigation, including the expense of such investigations and litigation and any additional potential payments upon resolution; risks associated with VEREIT’s substantial indebtedness, including that such indebtedness may affect VEREIT's ability to pay dividends and the terms and restrictions within the agreements governing VEREIT's indebtedness may restrict its borrowing and operating flexibility; the ability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in VEREIT’s filings with the U.S. Securities and Exchange Commission (the SEC), which are available at the SEC’s website at www.sec.gov. VEREIT disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law. 3 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Contents INVESTOR REVIEW Company Overview 5 Portfolio Metrics & Analysis 11 Key Financial Highlights 23 Highlights & Guidance 27 Contact Information 30 Definitions & Reconciliations 31 4 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Company Overview Q4 2018 a DRAF ‹#› T


 
Company Snapshot COMPANY OVERVIEW VEREIT is an owner and operator of one of the largest and most diversified single-tenant real estate portfolios in the U.S. VEREIT focuses on single-tenant, net-lease real estate • Property types focused on retail, restaurant, office and industrial • Large, diversified platform including approximately $15.4 billion 4,000 properties and 95.0 million square feet Gross Real Estate Investments • Long-term net-lease structure provides stable and predictable rent stream payments Retail1 Restaurants1 • Diverse portfolio across sectors, geographies and 2,112 Properties 1,636 Properties tenants • Provides equity capital to creditworthy corporations Industrial1 Office1 in return for long-term leases on their properties 153 Properties 83 Properties 1) Omits ten properties that consist of billboards, construction in progress, land and parking lots. 6 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
VEREIT Is a Full-Service Real Estate Operating Company COMPANY OVERVIEW 7 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Corporate Governance COMPANY OVERVIEW VEREIT has established best-in-class corporate governance through the reconstitution of its Board of Directors and implementing significant improvements Board of Directors Corporate Governance • Hugh R. Frater - Non-Executive Chairman of VEREIT, Inc. • Opted-out of Maryland anti-takeover statutes ◦ Interim Chief Executive Officer of the Federal National Mortgage Association (Fannie Mae)  • Majority voting for uncontested director elections • Glenn J. Rufrano - Director • Stockholder rights plan limits ◦ Chief Executive Officer, VEREIT, Inc. • Proxy access • David B. Henry - Independent Director ◦ Former Vice Chairman and CEO, Kimco Realty Corporation • Clawback policy for the potential recoupment of officer • Mary Hogan Preusse - Independent Director compensation ◦ Former Managing Director and Co-Head of Americas Real Estate, APG Asset Management US • Richard J. Lieb - Independent Director ◦ Senior Advisor and former Managing Director and Chairman of Real Estate, Greenhill & Co., LLC • Mark S. Ordan - Independent Director ◦ Former Chief Executive Officer, Quality Care Properties, Inc. • Eugene A. Pinover - Independent Director ◦ Partner and Co-Chair of New York Real Estate Practice, DLA Piper • Julie G. Richardson - Independent Director ◦ Former Partner and Managing Director, Providence Equity Partners 8 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
VEREIT Has a Best-in-Class Management Team COMPANY OVERVIEW Glenn J. Rufrano Paul McDowell Chief Executive Officer Executive Vice President and Chief Operating Officer • Since assuming role of CEO on April 1, 2015, has reconstituted Board of • Responsible for VEREIT’s asset management, property Directors, formalized new management team and implemented management, construction management, portfolio management, business plan to guide the Company’s strategy underwriting, credit analysis and leasing • Prior to VEREIT, was Chairman and CEO of O’Connor Capital Partners, a • Also serves on VEREIT investment committee, which reviews each real estate investment firm he co-founded in 1983 asset to ensure alignment with the Company’s objectives • From 2010 to 2013 was President and CEO of Cushman & Wakefield • Previously was founder of CapLease, a formerly publicly traded • Previously held executive leadership roles at Centro Properties Group net-lease REIT, where he served as CEO from 2001-2014 and and New Plan Excel Realty Trust Chairman from 2007-2014 • Previously served on the Boards of General Growth Properties, Trizec Properties and Ventas Thomas W. Roberts Michael J. Bartolotta Executive Vice President and Chief Investment Officer Executive Vice President and Chief Financial Officer • Oversees VEREIT’s real estate transaction activities for single-tenant • Oversees the accounting, external reporting, financial planning & analysis, retail, office and industrial and anchored shopping centers treasury and IT functions at VEREIT including acquisitions, sale-leaseback transactions, build-to-suits • Prior to joining VEREIT, served as EVP and CFO of Cushman & Wakefield and dispositions from 2012 to 2015 • Previously served as President and CEO of Opus West Corporation • Prior to Cushman, was CFO for EXOR, Inc., a leading European investment from 1993 to 2009, where he was responsible for design, company from 1991 to 2012, where he was involved in over 15 U.S. construction and development of more than 50 million square feet acquisitions and divestitures ranging in size from $20mm to $700+mm of commercial real estate • Served on Board of Directors of Cushman & Wakefield • Served as VP, Real Estate Development for Koll Company prior to Opus West Lauren Goldberg Executive Vice President, General Counsel and Secretary • Oversees the Company’s legal and regulatory affairs, compliance and risk management • Prior to joining VEREIT, served as EVP, General Counsel and the Chief Compliance Officer for Revlon, the global cosmetics company, where she was responsible for legal and regulatory affairs, served on senior operating committee and oversaw corporate governance • Previously served as SVP - Law for MacAndrews & Forbes, Inc., Assistant United States Attorney for the Southern District of New York, and as an associate with Stillman & Friedman P.C. and Fried, Frank, Harris, Shriver & Jacobson LLP • Law degree from Columbia Law School and undergraduate degree from the Wharton School, University of Pennsylvania 9 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Key Accomplishments COMPANY OVERVIEW Since April 2015, VEREIT has successfully implemented its business plan, enhanced its portfolio, de-levered its balance sheet and achieved investment-grade ratings • Glenn Rufrano was hired as CEO • Completed $1.14 billion of • Completed $745.6 million of • Completed $500.1 million of acquisitions April 1, 2015 dispositions and $100.2 million of acquisitions and $574.9 million of and $567.4 million of dispositions; • Appointed Deloitte & Touche LLP as acquisitions; Achieved AFFO of $0.78 dispositions; Achieved $0.74 AFFO Achieved $0.72 AFFO per diluted share; VEREIT’s independent registered per diluted share; Reduced debt by per diluted share, Reduced secured debt by $153.9 million; public accountant $1.7 billion; Reduced Net Debt to including $0.70 from continuing Net Debt to Normalized EBITDA ended at • Completed $1.4 billion of Normalized EBITDA from 7.0x to 5.7x operations; Reduced secured debt 5.9x dispositions; Achieved $0.84 AFFO • Raised approximately $702.5 million by $580 million; Net Debt to • Repurchased 7.2 million shares of per diluted share; Reduced debt by in public offering of common stock to Normalized EBITDA ended at 5.7x common stock at an average price of $2.4 billion; Created $1.8 billion of further reduce debt • Received Investment Grade $6.94 capacity on revolving line of credit; • Issued $1.0 billion of senior notes Corporate Ratings from S&P, • Simplified the business by selling Cole Reduced Net Debt to Normalized allowing the Company to refinance Moody’s and Fitch remained at Capital EBITDA from 7.5x to 7.0x February 2017 bonds Investment Grade • Entered into a new $2.9 billion • Remediated all material weaknesses • S&P raised its rating of VEREIT's unsecured credit facility that existed as of December 31, 2014 corporate debt to 'BBB-' • Repaid $597.5 million of principal • Received an investment grade rating outstanding related to the 2018 of ‘BBB-’ with a stable outlook from convertible notes that came due on Fitch Ratings August 1, 2018 • Issued $550.0 million of 4.625% senior notes due 2025 • Settled claims of shareholders representing approximately 33.5% of outstanding shares held at the relevant time for a total of $233.2 million. 10 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Portfolio Metrics & Analysis Q4 2018 a DRAF ‹#› T


 
Key Portfolio Metrics PORTFOLIO As of 12/31/2018 Portfolio Property Type Office: 19.3% Operating Properties 3,994 Total Rentable Square Feet (in millions) 95.0 Retail: 42.0% Annualized Rental Income $1.2 Billion Industrial: 17.5% Economic Occupancy Rate 98.8% WALT (years) 8.9 Restaurant: 21.2% 3 Investment Grade 1 41.9% Lease Expiration Number of Tenants 661 (Annualized Rental Income Expiring as a % of Total Portfolio) 9.6% Number of Industries 42 9.1% 2 Number of States 49 7.1% 7.2% 7.3% 6.7% 6.7% Top 10 Tenant Concentration 27.2% 5.3% 3.5% Gross Real Estate Investments $15.4 Billion 3.1% 9 0 1 2 3 4 5 6 7 8 1 2 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 1) Investment-grade tenants are those with an S&P credit rating of BBB- or higher or a Moody's credit rating of Baa3 or higher. The ratings may reflect those assigned by S&P or Moody's to the lease guarantor or the parent company, as applicable. 2) The Company’s properties are also located in Puerto Rico (3 properties). 3) Restaurant category includes Casual Dining (12.8%) and Quick Service (8.7%). 12 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Geographically Diverse Portfolio PORTFOLIO Percentages based on Annualized Rental Income. 13 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Portfolio Diversification by Tenant PORTFOLIO Tenant Group % ARI Public /Private Ratings1 Tenant Group % ARI Public /Private Ratings1 • VEREIT owns and actively manages a Red Lobster 5.5% Private B- Bass Pro Shops (Cabela's) 0.8% Private B+ diversified credit portfolio of net-lease real Walgreens 3.4% Public BBB Northrop Grumman 0.8% Public BBB estate assets primarily comprised of Family Dollar 3.3% Public BBB- Academy Sports 0.8% Private CCC+ single-tenant properties Dollar General 3.0% Public BBB Border Holdings, LLC 0.7% Private NR • 48 tenants individually represent 0.5% or FedEx 2.6% Public BBB Graphic Packaging 0.7% Public BB+ greater of ARI, comprising 57.5% of the CVS 2.6% Public BBB Healthnow 0.7% Private BBB total portfolio. The remaining 613 tenants BJ's Wholesale Club 1.8% Private B Apple American Group, LLC 0.7% Private NR comprise 42.5% of the portfolio LA Fitness 1.7% Private B+ Wal-Mart 0.7% Public AA • 24 of the 48 tenants are investment-grade Albertson's 1.7% Private B Bi-Lo, LLC 2 0.7% Private B- rated PetSmart 1.6% Private CCC Talbots 0.6% Private B- • 30 of the 48 tenants are public companies Goodyear 1.5% Public BB GMRI, Inc 0.6% Public BBB Tractor Supply 1.4% Public NR Kohl's 0.6% Public BBB- Citizens Bank 1.3% Public A- RSA Security 0.6% Private BB+ Amazon 1.2% Public AA- TJ Maxx 0.6% Public A+ At Home 1.1% Public B+ Sun Trust Bank 0.6% Public A- Advance Auto Parts 1.0% Public BBB- Rubbermaid 0.6% Public BBB- Home Depot 1.0% Public A Golden Corral 0.6% Private NR Lowe's 1.0% Public BBB+ General Mills 0.6% Public BBB General Service 1.0% Private AA+ Administration Wendab Associates 0.6% Private NR Merrill Lynch 1.0% Private A+ Rolls-Royce 0.6% Public NR AON 0.9% Public A- Hanesbrands 0.5% Public BB Bed Bath & Beyond 0.9% Public BB+ Cigna 0.5% Public A Best Buy 0.9% Public BBB Art Van Furniture 0.5% Private NR 1) Bold indicates investment grade. Ratings may reflect those of the tenant, guarantor or a related parent company. 2) Excludes two Bloomin' Brands 0.8% Public BB DaVita Dialysis 0.5% Public BB properties leased to Bi-Lo, LLC, guaranteed by Koninklijke Ahold, an investment-grade rated entity. 14 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Retail ARI reflects retail properties only and does not include restaurants, office and industrial. PORTFOLIO • Primarily single-tenant, freestanding retail properties with creditworthy tenants • Main retail traffic thoroughfare • Strong trade area demographics • Top 5 MSAs (13.3%): Chicago, IL; Dallas, TX; Detroit, MI; Atlanta, GA; Austin, TX Retail Portfolio 1 Tenant Diversification 2017 (% based on ARI of retail properties) Industry Occupancy Target % 2 Operating Properties 2,112 Cost Walgreens 8.2% 9.9% 8.0 - 10.0% Rentable Square Feet (in thousands) 34,700 Automotive Family Dollar 7.8% 6.0 - 8.0% Discount 6.9% Economic Occupancy Rate 98.4% Dollar General 7.2% 3.0% 2.0 - 4.0% Weighted Average Remaining Lease CVS 5.5% Grocery & Supermarket Term (in years) 9.2 LA Fitness 4.1% 2.0% 2.0 - 4.0% Investment-Grade Tenants 52.2% Home & Garden Albertson's 4.0% 4.9% 4.0 - 6.0% Flat leases 31.5% Pharmacy Tractor Supply 3.4% 3.5% N/A NNN leases 66.2% Other BJ's Wholesale Club 3.3% Annualized Rental Income 42.0% Citizens Bank 2.9% At Home 2.5% 1) Includes 10 anchored shopping centers, representing 1.7% of ARI. 2) Occupancy costs are calculated as rent per the lease terms, divided by property level sales for the year ended December 31, 2017. Property level sales data was collected for 79.6% of retail and restaurant properties required to provide sales reports, representing 41.1% of retail and restaurant properties owned for the entirety of the previous calendar year (percentages based on property count). Property level sales are based on sales reports provided by tenants of retail and restaurant properties. Data presented is for properties owned by the Company and for which the Company received sales data for the entirety of the previous calendar year. 15 www.VEREIT.com | NYSE: VER | © 2018 VEREIT, Inc.


 
Property Type Analysis: Retail ARI reflects retail properties only and does not include restaurants, office and industrial. PORTFOLIO Diversified Retail Portfolio VEREIT's Single-Tenant Retail Advantages Industry Group % ARI • Dominated by off-price and necessity shopping Retail - Discount 7.9% • Approximately 68% of retail revenue derived from public companies Retail - Pharmacy 6.2% • Credit tenants on long-term leases with substantial capital investment (52.2% investment grade) Retail - Grocery & Supermarket 4.0% • Generally, no use restrictions or co-tenancy issues • Ability to target desired tenants and industries Retail - Home & Garden 3.3% Retail - Gas & Convenience 2.7% Finance 2.4% Entertainment & Recreation 2.3% Size, Diversity and Single Tenant Focus Protects Against Disruptors Retail - Motor Vehicle 2.3% VEREIT's strategy of well-positioned single tenant properties in a diversified portfolio - made Retail - Home Furnishings 2.0% optimum by our size - helps protect against a variety of cyclical and secular disruptors. In today's retail environment, one of the key disruptors is the evolution of e-commerce. Retailers who Retail - Sporting Goods 2.0% embrace e-commerce and have the resources to implement omnichannel distribution are Retail - Warehouse Clubs 1.7% proving successful. Fundamentals of retail should not be forgotten. Those who continue to Retail - Medical Services 1.0% provide true retail value - merchandise, price and service - will also thrive. Retail - Pet Supply 0.9% The core retail merchandise groups within our portfolio are dominated by discount; pharmacy; grocery; home and garden and convenience. A full listing is provided herein. Within each Retail - Department Stores 0.7% category, our focus is to create a portfolio that can service both omnichannel distribution while Retail - Electronics & Appliances 0.6% always considering the consumer experience. Rental 0.5% Ultimate credit protection is a function of multi-layer diversification. The prior pages present Retail - Hobby, Books & Music 0.5% information such as geographies, weighted average lease term and tenant margin analysis. The Retail - Specialty (Other) 0.3% following pages provide a deeper look into the retail tenant diversification of the VEREIT portfolio by merchandise category. All Other 1 0.7% Total 42.0% 1) Includes 13 industries that each represent 0.2% or less. 16 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Retail Category by Percent of Portfolio ARI ARI reflects retail properties only and does not include restaurants, office and industrial. PORTFOLIO Retail - Discount Retail - Grocery & Supermarket Retail - Home & Garden Retail - Convenience Investment Investment Investment Investment Tenant % ARI Grade Tenant % ARI Grade Tenant % ARI Grade Tenant % ARI Grade Family Dollar 3.3% ü Albertson's 1.7% Tractor Supply 1.4% Thorntons Oil 0.4% Dollar General 3.0% ü Kroger 0.4% ü Lowe's 1.0% ü 7-Eleven 0.4% ü Wal-Mart 0.7% ü Giant Eagle 0.2% Home Depot 0.4% ü Kum & Go 0.4% Dollar Tree 0.2% ü Harps Grocery 0.2% Floor & Décor 0.3% Stripes 0.4% Ross 0.1% ü Dahl's 0.2% Bed Bath & ü Pantry Gas & Beyond 0.1% Convenience 0.3% Burlington 0.1% Natural Grocers 0.1% Pier 1 Imports <0.1% ü Giant 0.1% ü RaceTrac 0.2% TJ Maxx 0.1% ü ü 1 ü Sherwin- Mad Max 0.2% Marshalls 0.1% Bi-Lo's Grocery 0.1% Williams <0.1% SuperAmerica 0.1% ü DSW 0.1% Publix 0.1% Northern Tool & Irving Oil 0.1% Bob's Stores 0.1% Stop & Shop 0.1% ü Equipment <0.1% Circle K 0.1% ü Big Lots <0.1% ü Trader Joe's 0.1% Lumber Liquidators <0.1% WaWa 0.1% Five Below <0.1% Whole Foods 0.1% ü ü Leslie's Pool & Marshall's Cost Plus <0.1% Food Lion 0.1% Spa <0.1% Convenience Gabe's <0.1% Family Fare Total 3.3% Stores <0.1% Supermarket 0.1% Savers <0.1% Road Ranger <0.1% Sprouts 0.1% Shopko MotoMart <0.1% Hometown <0.1% Fresh Thyme Farmers Market 0.1% GetGo <0.1% Total 7.9% Glen's Market <0.1% Total 2.7% Retail - Pharmacy Price Rite <0.1% Investment The Fresh Tenant % ARI Grade Market <0.1% Walgreens 3.4% ü Hy-Vee <0.1% CVS 2.3% ü Harris Teeter <0.1% ü Rite Aid 0.4% Food 4 Less <0.1% ü Total 6.2% Apple Market <0.1% Safeway Stores <0.1% Total 4.0% NOTE: Amounts may not total due to rounding. 1) Represents two leases guaranteed by Koninklijke Ahold, an investment-grade rated entity. 17 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Retail Category by Percent of Portfolio ARI ARI reflects retail properties only and does not include restaurants, office and industrial. PORTFOLIO Finance Entertainment & Recreation Retail - Sporting Goods Retail - Medical Services Investment Investment Investment Investment Tenant % ARI Grade Tenant % ARI Grade Tenant % ARI Grade Tenant % ARI Grade ü ü Citizens Bank 1.2% LA Fitness 1.7% Bass Pro Shops Fresenius ü (Cabela's) 0.8% Medical Care 0.5% Sun Trust Bank 0.6% Topgolf 0.3% ü Academy DaVita Dialysis 0.3% US Bank 0.2% 24 Hour Fitness 0.1% Sports 0.8% Physicians PLS Check Cashers 0.2% Regal Cinemas 0.1% Dick's Sporting Immediate Care 0.1% ü Goods 0.2% Sovereign Bank <0.1% Chuze Fitness 0.1% Amita ü West Marine 0.2% First Bank <0.1% Anytime Fitness <0.1% Healthcare 0.1% Bank of America <0.1% ü Total 2.0% St. Luke's Total 2.3% Urgent Care <0.1% Synovus Bank <0.1% Physicians PNC Bank <0.1% ü Retail - Motor Vehicle Retail - Home Furnishings Dialysis <0.1% Fifth Third Bank <0.1% ü Investment Investment Dental Dream <0.1% Tenant % ARI Grade Tenant % ARI Grade Huntington ü Aspen Dental <0.1% National Bank <0.1% Advance Auto Parts 1.0% ü At Home 1.1% EyeMart <0.1% Region's Bank <0.1% ü CarMax 0.3% Art Van Furniture 0.5% Castle Dental <0.1% Key Bank <0.1% ü Mister Car Wash 0.2% Mattress Firm 0.4% Cascade Travis Credit Take 5 Oil Change 0.2% Chiropractic <0.1% Union <0.1% Ashley AutoZone 0.1% ü Furniture <0.1% Accelerated TCF National Bank <0.1% ü Rehab <0.1% O'Reilly Auto Parts 0.1% ü Kirklands <0.1% Wells Fargo <0.1% ü Lifetime America's Sleep Train <0.1% TitleMax <0.1% Dentistry of PowerSports, Inc. 0.1% Sleep America <0.1% Chickasha <0.1% Community Bank <0.1% Goodyear 0.1% Total 2.0% Dr. Elie El-Hage, Cashland <0.1% Tire Kingdom <0.1% D.D.S <0.1% Edward Jones <0.1% National Tire & Retail - Warehouse Clubs Total 1.0% ü Battery <0.1% Chase Bank <0.1% Investment Accomplishments Big O Tires <0.1% Tenant % ARI Grade Retail - Pet Supply Through People <0.1% Monro Muffler <0.1% BJ's Wholesale Investment Club 1.4% Total 2.4% Bridgestone Tire <0.1% Tenant % ARI Grade Sam's Club 0.3% ü Tires Plus <0.1% PetSmart 0.9% Total 1.7% Tire Warehouse <0.1% Petco 0.1% Jiffy Lube <0.1% Total 0.9% NOTE: Amounts may not total due to rounding. Total 2.3% 18 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Retail Category by Percent of Portfolio ARI ARI reflects retail properties only and does not include restaurants, office and industrial. PORTFOLIO Retail - Department Stores Rental Retail - Specialty (Other) Investment Investment Investment Tenant % ARI Grade Tenant % ARI Grade Tenant % ARI Grade Kohl's 0.6% ü Aaron's 0.4% Ulta Beauty 0.1% Beall's 0.1% Vanguard Car ü Coborn's Liquor Rental 0.1% Store 0.1% Total 0.7% Sunbelt Rentals <0.1% Binny's Beverage Total 0.5% Depot <0.1% Retail - Electronics & Appliances Retail - Hobby, Books & Music Party City <0.1% Investment Investment BevMo! <0.1% Tenant % ARI Grade Tenant % ARI Grade Lenscrafters <0.1% ü Best Buy 0.6% Hobby Lobby 0.4% The Vitamin CompUSA <0.1% Michael's 0.1% Shoppe <0.1% Conn's <0.1% Jo-Ann's <0.1% Eyeglass World <0.1% Total 0.6% Music & Arts Sally Beauty Center <0.1% Supply <0.1% GameStop <0.1% GNC <0.1% Total 0.5% Austin Custom Winery <0.1% Cigarettes Cheaper <0.1% Total 0.3% NOTE: Amounts may not total due to rounding. 19 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Restaurants PORTFOLIO • Single-tenant quick service, casual and family dining properties • Creditworthy tenants, including franchisors, operating strong national and regional brands • Main retail traffic thoroughfare • Strong trade area demographics • Top 5 MSAs (13.4%): Atlanta, GA; Dallas, TX; Chicago, IL; Houston, TX; Tampa, FL • According to Nation's Restaurant News, which publishes the top industry brands based on system-wide sales, 84% of our casual dining tenants and 79% of our quick service restaurants are ranked in the top 25 of their respective category. Tenant Diversification Restaurant Portfolio 2017 (% based on ARI of restaurant properties) Industry Occupancy Target % Operating Properties 1,636 Cost 1 Red Lobster 26.1% Casual Dining 6.7% 6.75 - 8.0% Rentable Square Feet (in thousands) 7,688 Bloomin' Brands 3.8% Quick Service 7.4% 7.5 - 8.5% Economic Occupancy Rate 96.2% Border Holdings, LLC 3.4% Weighted Average Remaining Lease Apple American Group, LLC 3.1% Term (in years) 12.0 GMRI, Inc 3.0% Investment-Grade Tenants 3.1% Golden Corral 2.7% Flat leases 7.8% Wendab Associates 2.6% NNN leases 99.5% Neighborhood Restaurant 2.3% Partners Florida, LLC Annualized Rental Income 21.2% Cracker Barrel 2.2% Wendy's Company 2.1% 1) Occupancy costs are calculated as rent per the lease terms, divided by property level sales for the year ended December 31, 2017. Property level sales data was collected for 79.6% of retail and restaurant properties required to provide sales reports, representing 41.1% of retail and restaurant properties owned for the entirety of the previous calendar year (percentages based on property count). Property level sales are based on sales reports provided by tenants of retail and restaurant properties. Data presented is for properties owned by the Company and for which the Company received sales data for the entirety of the previous calendar year. 20 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Industrial PORTFOLIO • Property types include single-tenant distribution and warehouse facilities with creditworthy tenants • Essential and strategic locations with 88% dedicated to distribution or warehousing • Close proximity to ports, railways, major freeways and/or interstate highways • Top 5 MSAs (21.8%): Jacksonville, FL; New York, NY; Philadelphia, PA; Columbia, SC; Monroe, LA Industrial Portfolio Tenant Diversification (% based on ARI of industrial properties) Operating Properties 153 FedEx 15.1% Rentable Square Feet (in thousands) 39,815 Goodyear 8.3% Economic Occupancy Rate 100.0% Amazon 7.1% Weighted Average Remaining Lease Term (in years) 8.3 Bed Bath & Beyond 4.8% Investment-Grade Tenants 51.7% Graphic Packaging 4.0% Flat leases 16.7% Bi-Lo, LLC 3.7% Rubbermaid 3.4% NNN leases 53.6% General Mills 3.3% Annualized Rental Income 17.5% Hanesbrands 3.1% TJ Maxx 2.9% 21 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Property Type Analysis: Office PORTFOLIO • Property types include single-tenant corporate headquarters and mission-critical business operations with creditworthy tenants • Strategic location with 34% serving as corporate headquarters and 66% focused on corporate operations • Strong 10-mile demographics and local business environment • Top 5 MSAs (36.5%): Chicago, IL; Dallas, TX; Boston, MA; Washington, DC; Trenton, NJ Office Portfolio Tenant Diversification (% based on ARI of office properties) Operating Properties 83 General Service Administration 5.0% Rentable Square Feet (in thousands) 12,750 Merrill Lynch 5.0% Economic Occupancy Rate 98.0% AON 4.9% Weighted Average Remaining Lease Term (in years) 5.2 Northrop Grumman 4.1% PetSmart 3.9% Investment-Grade Tenants 53.3% Healthnow 3.5% Flat leases 9.7% RSA Security 3.2% NNN leases 21.3% Rolls-Royce 2.9% Annualized Rental Income 19.3% Cigna 2.7% Peraton 2.5% 22 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Key Financial Highlights Q4 2018 a DRAF ‹#› T


 
Enhanced Balance Sheet and Credit Metrics KEY FINANCIALS Credit Metric Summary 12/31/2018 Principal Outstanding ($bn) 6.1 Net Debt to Normalized EBITDA Annualized 5.91x Fixed Charge Coverage Ratio 2.90x Interest Coverage Ratio 3.77x Net Debt Leverage Ratio 39.5% Unencumbered Asset Ratio 75.1% Secured Debt Ratio 12.4% Total Unencumbered Assets ($bn) 11.6 24 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Capital Structure Overview Shares and dollars in thousands, expect per share values KEY FINANCIALS Q4-2018 Capitalization Capitalization Table Wtd. Avg. Maturity December 31, (Years) Rate (1) 2018 Diluted shares outstanding 994,885 Stock price $ 7.15 Implied Equity Market Capitalization $ 7,113,428 Series F Perpetual Preferred (2) 6.70% $ 1,073,025 Total secured debt 3.4 4.93% $ 1,917,132 Revolving credit facility 3.4 3.83% $ 253,000 Credit facility term loan (5) 4.4 3.87% 150,000 Total Unsecured Credit Facility 3.8 3.85% 403,000 2019 corporate bonds (5) 0.1 3.00% 750,000 2020 convertible notes 2.0 3.75% 402,500 2021 corporate bonds 2.4 4.13% 400,000 2024 corporate bonds 5.1 4.60% 500,000 2025 corporate bonds 6.8 4.63% 550,000 2026 corporate bonds 7.4 4.88% 600,000 12/31/2018 2027 corporate bonds 8.6 3.95% 600,000 Common equity 49.7% Total unsecured debt 4.6 4.07% $ 4,205,500 Corporate bonds 23.8% Total Adjusted Principal Outstanding 4.2 4.34% $ 6,122,632 Total Capitalization $ 14,309,085 Secured debt 13.4% Less: Cash and cash equivalents 30,758 Preferred equity 7.5% Enterprise Value $ 14,278,327 Net Debt / Enterprise Value 42.7% Convertible notes 2.8% Net Debt/Normalized EBITDA Annualized (3) 5.91x (2) (3) Revolving credit facility 1.8% Net Debt + Preferred /Normalized EBITDA Annualized 6.96x Fixed Charge Coverage Ratio 2.90x Credit facility term loan 1.0% Liquidity (4) (5) $ 2,527,758 1) Weighted average interest rate for variable rate debt represents the interest rate in effect as of December 31, 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 (5) 86,874 limited partner Series F Preferred Units outstanding at December 31, 2018, multiplied by the liquidation preference of $25 per share. Fixed Rate 92.4% 3) Normalized EBITDA annualized includes continued and discontinued operations. 4) Liquidity represents cash and cash equivalents of $30.8 million, $1.7 billion available capacity on our revolving credit facility and $750.0 million (5) Swapped to Fixed Rate 0.8% available on our credit facility term loan. 5) On February 6, 2019, the Company repaid its $750.0 million maturing corporate bonds using funds borrowed under the credit facility term loan, (5) Variable Rate 6.8% resulting in an outstanding balance on the credit facility term loan of $900.0 million. Additionally, the Company had executed interest rate swap agreements that effectively fixed the interest rate on the credit facility term loan. Assuming these transactions had closed on December 31, 2018, (i) the aggregated fixed and swapped to fixed rate debt would represent 95.6% of Adjusted Principal Outstanding and (ii) liquidity would have been $1.8 billion. 25 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Debt Maturity Profile Dollars in millions KEY FINANCIALS • Weighted average debt term is 4.2 years $2,500 • Weighted average interest rate is 4.34% $2,000 $1,500 $1,165 $1,000 $917 $753 $668 $568 $551 $601 $601 $500 $295 $4 $0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Thereafter Mortgage Notes Payable Unsecured Credit Facility (1) Corporate Bonds (1) Convertible Notes 25% 19.0% 20% 15.0% 15% 12.3% 10.9% 9.3% 9.0% 9.8% 9.8% 10% 4.8% 5% —% 0.1% 0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Thereafter (1) On February 6, 2019, the Company repaid its corporate bonds due 2019 ($750.0 million) using funds borrowed under the credit facility term loan. 26 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Highlights & Guidance Q4 2018 a DRAF ‹#› T


 
2018 Highlights HIGHLIGHTS & GUIDANCE Total Capital Activity of $11 Billion Since 2015 Providing: Diversified Portfolio Through Targeted Acquisitions and Dispositions and Liquid Balance Sheet With an Improved Debt Maturity Schedule 2018 Highlights • Net loss of $(91.7) million and net loss per diluted share of $(0.17) • Achieved $0.72 AFFO per diluted share • Completed $500.1 million of acquisitions and $567.4 million of dispositions • Repurchased 7.2 million shares of common stock at an average price of $6.94 • Entered into a new $2.9 billion credit facility enhancing liquidity and financial flexibility • Issued $550.0 million aggregate principal amount of 4.625% senior notes due 2025 and repaid $597.5 million principal outstanding 2018 convertible notes • Total debt went from $6.07 billion to $6.09 billion; Net Debt from $6.05 billion to $6.09 billion, or 39.5% Net Debt to Gross Real Estate Investments • Net Debt to Normalized EBITDA ended at 5.9x • Closed the sale of Cole Capital, simplifying the business • Settled claims of shareholders representing approximately 33.5% of VEREIT’s outstanding shares held at the relevant time for a total of $233.2 million. 28 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
2019 Guidance Adjusted Funds From Operations per Diluted Share (Unaudited) HIGHLIGHTS & GUIDANCE Key Guidance Assumptions: • AFFO per diluted share guidance range between $0.68 and $0.70 • Assumes dispositions totaling $350 million to $500 million at an average cash cap rate of 6.5% to 7.5% and acquisitions totaling $250 million to $500 million within the same cap rate range. • Real estate operations: ◦ Average occupancy above 98.0% ◦ Same-store rental growth in a range of 0.3% to 1.0% • Net debt to Normalized EBITDA at approximately 6.0x 2019 Per Share Low High Diluted net income per share attributable to common stockholders and limited partners (1) $ 0.16 $ 0.18 Depreciation and amortization of real estate assets 0.48 0.48 FFO attributable to common stockholders and limited partners per diluted share $ 0.64 $ 0.66 Adjustments (2) 0.04 0.04 AFFO attributable to common stockholders and limited partners per diluted share $ 0.68 $ 0.70 Notes: 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. (1) Includes impact of dividends to be paid to preferred shareholders and excludes the effect of non-controlling interests, impairments, gains or losses on the extinguishment of debt and sale of real estate or mortgage notes receivable. (2) Includes (i) non-routine items such as acquisition-related expenses, litigation and other non-routine costs, net of insurance recoveries, legal settlements and insurance recoveries not in the ordinary course of business, and (ii) certain non-cash items such as straight-line rent, net of bad debt expense related to straight-line rent, net direct financing lease adjustments, 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. 29 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Contact Us CONTACT 800.606.3610 Registered Stockholders Follow Us Computershare (Transfer Agent) LinkedIn Phoenix P.O. Box 43078 www.linkedin.com/company/vereit 2325 East Camelback Road Providence, RI 02940 Suite 1100 Twitter Phoenix, AZ 85016 By overnight delivery twitter.com/vereitinc 602.778.6000 Computershare 250 Royal Street YouTube New York City Canton, MA 02021 https://www.youtube.com/channel/ 5 Bryant Park UCUNu7AUOolITuwpNhr2JEGg 23rd Floor Telephone inquiries New York, NY 10018 TFN 855.866.0787 Flickr 212.413.9100 (US, CA, Puerto Rico) https://www.flickr.com/ photos/[email protected]/ TN 781.575.3100 Investor Relations (non-US) 877.405.2653 [email protected] Email [email protected] 30 www.VEREIT.com | NYSE: VER | © 2018 VEREIT, Inc.


 
Definitions & Reconciliations Q4 2018 a DRAF ‹#› T


 
Definitions INVESTOR REVIEW Annualized Rental Income is rental revenue under our leases on Operating Properties on Normalized EBITDA omits the Normalized EBITDA impact of Excluded Properties. a straight-line basis, which includes the effect of rent escalations and any tenant concessions, Management believes that excluding these costs from EBITDAre provides investors with such as free rent, and excludes any bad debt allowances and any contingent rent, such as supplemental performance information that is consistent with the performance models percentage rent, and operating expense reimbursements. Management uses Annualized and analysis used by management, and provides investors a view of the performance Rental Income as a basis for tenant, industry and geographic concentrations and other of our portfolio over time. Therefore, EBITDA, EBITDAre and Normalized EBITDA should metrics within the portfolio. Annualized Rental Income is not indicative of future not be considered as an alternative to net income, as computed in accordance with performance. GAAP. The Company uses EBITDA, EBITDAre and Normalized EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA effectiveness of the Company's strategies. Normalized EBITDA may not be comparable for Real Estate ("EBITDAre") and Normalized EBITDA to similarly titled measures of other companies. Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("Nareit"), an Economic Occupancy Rate equals the sum of square feet leased (including month-to- industry trade group, has promulgated a supplemental performance measure known as month agreements) divided by Rentable Square Feet. Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate. Nareit Excluded Properties are properties for which (i) the related mortgage loan is in default, defines EBITDAre as net income or loss computed in accordance with GAAP, adjusted for and (ii) management decides to transfer the properties to the lender in connection with interest expense, income tax expense (benefit), depreciation and amortization, settling the mortgage note obligation. impairment write-downs on real estate, gains or losses from disposition of property and our pro rata share of EBITDAre adjustments related to unconsolidated partnerships and During the three months ended December 31, 2018 and at December 31, 2018 there joint ventures. We calculated EBITDAre in accordance with Nareit's definition described were no Excluded Properties. above. Fixed Charge Coverage Ratio is the sum of (i) Interest Expense, excluding non-cash In addition to EBITDAre, we use Normalized EBITDA as a non-GAAP supplemental amortization, (ii) secured debt principal amortization on Adjusted Principal performance measure to evaluate the operating performance of the Company. Outstanding and (iii) dividends attributable to preferred shares divided by Normalized Normalized EBITDA, as defined by the Company, represents EBITDAre, modified to EBITDA. Management believes that Fixed Charge Coverage Ratio is a useful exclude non-routine items such as acquisition-related expenses, litigation and other non- supplemental measure of our ability to satisfy fixed financing obligations. 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, legal settlements and insurance recoveries not in the ordinary course of business and payments received on fully reserved loan receivables. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rental revenue, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, write-off of program development costs, and amortization of intangibles, above-market lease assets and below-market lease liabilities. 32 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Definitions INVESTOR REVIEW Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") We omit the impact of the Excluded Properties and related non-recourse mortgage notes Due to certain unique operating characteristics of real estate companies, as discussed from FFO to calculate AFFO. Management believes that excluding these costs from FFO below, Nareit has promulgated a supplemental performance measure known as FFO, provides investors with supplemental performance information that is consistent with which we believe to be an appropriate supplemental performance measure to reflect the the performance models and analysis used by management, and provides investors a operating performance of a REIT. FFO is not equivalent to our net income or loss as view of the performance of our portfolio over time. AFFO allows for a comparison of the determined under GAAP. 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 Nareit defines FFO as net income or loss computed in accordance with GAAP adjusted for used by analysts and investors for comparison purposes. gains or losses from disposition of property, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as related to unconsolidated partnerships and joint ventures. We calculated FFO in defined by GAAP, are helpful supplemental performance measures and useful in accordance with Nareit's definition described above. 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 In addition to FFO, we use AFFO as a non-GAAP supplemental financial performance comparisons with other REITs may not be meaningful. FFO and AFFO should not be measure to evaluate the operating performance of the Company. AFFO, as defined by the considered as alternatives to net income (loss) and are not intended to be used as a Company, excludes from FFO non-routine items such as acquisition-related expenses, liquidity measure indicative of cash flow available to fund our cash needs. Neither the litigation, merger and other non-routine costs, net of insurance recoveries, held for sale SEC, Nareit, nor any other regulatory body has evaluated the acceptability of the loss on discontinued operations, net revenue or expense earned or incurred that is exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP related to the services agreement we entered into with Cole Capital on February 1, 2018, financial performance measure. gains or losses on sale of investment securities or mortgage notes receivable, legal settlements and insurance recoveries not in the ordinary course of business and Gross Real Estate Investments represent total gross real estate and related assets of payments received on fully reserved loan receivables. We also exclude certain non-cash Operating Properties, including net investments in unconsolidated entities and equity items such as impairments of goodwill and intangible assets, straight-line rent, net of bad investments in the Cole REITs, investment in direct financing leases, investment securities debt expense related to straight line rent, net direct financing lease adjustments, gains or backed by real estate and mortgage notes receivable, net of gross intangible lease liabilities. losses on derivatives, reserves for loan loss, gains or losses on the extinguishment or We believe that the presentation of Gross Real Estate Investments, which shows our total forgiveness of debt, non-current portion of the tax benefit or expense, equity-based investments in real estate and related assets, in connection with Net Debt provides useful compensation and amortization of intangible assets, deferred financing costs, premiums information to investors to assess our overall financial flexibility, capital structure and and discounts on debt and investments, above-market lease assets and below-market leverage. Gross Real Estate Investments should not be considered as an alternative to the lease liabilities. Company's real estate investments balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP. Interest Coverage Ratio equals Normalized EBITDA divided by Interest Expense, excluding non-cash amortization. Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations. 33 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Definitions INVESTOR REVIEW Interest Expense, excluding non-cash amortization is a non-GAAP measure that Principal Outstanding and Adjusted Principal Outstanding are non-GAAP measures that represents interest expense incurred on the outstanding principal balance of our debt. This represent the Company's outstanding principal debt balance, excluding certain GAAP measure excludes (i) the amortization of deferred financing costs, premiums and discounts, adjustments, such as premiums and discounts, financing and issuance costs, and related which is included in interest expense in accordance with GAAP, and (ii)the impact of accumulated amortization. Adjusted Principal Outstanding omits the outstanding principal Excluded Properties and related non-recourse mortgage notes. We believe that the balance of mortgage notes secured by Excluded Properties. We believe that the presentation presentation of Interest Expense, excluding non-cash amortization, which shows the of Principal Outstanding and Adjusted Principal Outstanding, which show our contractual interest expense on our contractual debt obligations, provides useful information to debt obligations, provides useful information to investors to assess our overall liquidity, investors to assess our overall solvency and financial flexibility. Interest Expense, excluding financial flexibility, capital structure and leverage. Principal Outstanding and Adjusted non-cash amortization should not be considered as an alternative to the Company's interest Principal Outstanding should not be considered as alternatives to the Company's expense as determined in accordance with GAAP or any other GAAP financial measures and consolidated debt balance as determined in accordance with GAAP or any other GAAP should only be considered together with and as a supplement to the Company's financial financial measures and should only be considered together with, and as a supplement to, information prepared in accordance with GAAP. the Company's financial information prepared in accordance with GAAP. Net Debt is a non-GAAP measure used to show the Company's Adjusted Principal Rentable Square Feet is leasable square feet of Operating Properties. Outstanding, less all cash and cash equivalents, including those related to discontinued Secured Debt Ratio equals secured Adjusted Principal Outstanding divided by Gross Real operations. We believe that the presentation of Net Debt provides useful information to Estate Investments. investors because our management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments. We a useful supplemental measure of our overall liquidity and leverage. 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 Weighted Average Remaining Lease Term is the number of years remaining on each management of our overall liquidity, financial flexibility, capital structure and leverage. respective lease, weighted based on Annualized Rental Income of Operating Properties. Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the respective quarter Normalized EBITDA multiplied by four. We believe that the presentation of Net Debt to Normalized EBITDA Annualized provides useful information to investors because our management reviews Net Debt to Normalized EBITDA Annualized as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. Normalized EBITDA Annualized equals Normalized EBITDA, for the respective quarter, multiplied by four. Operating Properties refers to all properties owned by the Company except Excluded Properties as of the reporting date. 34 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Reconciliations (in thousands, except share and per share data) INVESTOR REVIEW FFO Year Ended December 31, Three Months Ended December 31, 2018 2017 2016 2015 Net income (loss) $ 27,842 $ 32,378 $ (200,824) $ (323,492) Dividends on non-convertible preferred stock (17,973) (71,892) (71,892) (71,892) (Gain) loss on disposition of real estate assets, including joint ventures, net (25,951) (61,536) (55,722) 65,582 Depreciation and amortization of real estate assets 151,837 703,133 756,315 817,469 Impairment of real estate 18,565 50,548 182,820 91,755 Proportionate share of adjustments for unconsolidated entities 256 477 2,719 5,744 FFO attributable to common stockholders and limited partners $ 154,576 $ 653,108 $ 613,416 $ 585,166 FFO attributable to common stockholders and limited partners from continuing operations 154,606 672,225 737,353 769,666 FFO attributable to common stockholders and limited partners from discontinued operations (30) (19,117) (123,937) (184,500) 35 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Reconciliations (in thousands, except share and per share data) INVESTOR REVIEW AFFO Year Ended December 31, Three Months Ended December 31, 2018 2017 2016 2015 FFO attributable to common stockholders and limited partners $ 154,576 $ 653,108 $ 613,416 $ 585,166 Acquisition-related expenses 1,136 3,402 1,321 6,243 Litigation, merger and other non-routine costs, net of insurance recoveries 23,541 51,762 3,884 33,628 Impairment of goodwill and intangible assets — — 120,931 213,339 Loss on disposition and held for sale loss on discontinued operations 30 20,027 — — (Reversal) reserve for loan loss (4,792) — — 15,300 Legal settlements — — — (1,250) Gain on investments (1,790) (65) — (65) Loss (gain) on derivative instruments, net 92 (2,976) 1,191 1,460 Amortization of premiums and discounts on debt and investments, net (1,154) (4,616) (14,693) (19,183) Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities 945 5,366 5,396 4,522 Net direct financing lease adjustments 498 2,093 2,264 2,037 Amortization and write-off of deferred financing costs 3,715 24,536 28,063 33,998 Amortization of management contracts — 14,514 26,171 25,903 Deferred and other tax (benefit) expense — 8,671 (10,136) (52,242) (Gain) loss on extinguishment and forgiveness of debt, net (21) (18,373) 771 (4,812) Straight-line rent, net of bad debt expense related to straight-line rent (8,341) (44,903) (54,190) (82,398) Equity-based compensation 2,924 16,751 10,728 14,500 Other adjustments, net 1,092 2,566 5,296 3,840 Proportionate share of adjustments for unconsolidated entities 60 378 1,044 2,072 Adjustment for Excluded Properties — 6,528 — — AFFO attributable to common stockholders and limited partners $ 172,511 $ 738,769 $ 741,457 $ 782,058 AFFO attributable to common stockholders and limited partners from continuing operations 172,511 702,556 723,354 770,567 AFFO attributable to common stockholders and limited partners from discontinued operations — 36,213 18,103 11,491 Weighted-average shares outstanding - basic 967,817,245 974,098,652 931,422,844 903,360,763 Limited Partner OP Units and effect of dilutive securities 24,520,714 24,059,312 24,626,646 26,013,303 Weighted-average shares outstanding - diluted 992,337,959 998,157,964 956,049,490 929,374,066 AFFO attributable to common stockholders and limited partners per diluted share $ 0.174 $ 0.740 $ 0.776 $ 0.841 AFFO attributable to common stockholders and limited partners from continuing operations per diluted share 0.174 0.704 0.757 0.829 AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share — 0.036 0.019 0.012 36 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Reconciliations (dollars in thousands) INVESTOR REVIEW EBITDA and Normalized EBITDA Three Months Ended December 31, 2018 December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2014 Net income (loss) $ 27,842 $ (33,092) $ (118,223) $ (192,231) $ (360,427) Adjustments: Interest expense 70,832 70,694 74,613 82,591 126,157 Depreciation and amortization 153,050 177,329 191,360 202,415 226,272 Provision for (benefit from) income taxes 1,614 11,843 (5,075) (41,127) (26,571) Proportionate share of adjustments for unconsolidated entities 254 756 1,299 1,978 3,402 EBITDA $ 253,592 $ 227,530 $ 143,974 $ 53,626 $ (31,167) (Gain) loss on disposition of real estate assets, including joint ventures, net (25,951) (7,104) 199 9,727 1,263 Impairment of real estate 18,565 19,691 6,606 6,414 96,692 Proportionate share of adjustments for unconsolidated entities — (1,970) — — — EBITDAre $ 246,206 $ 238,147 $ 150,779 $ 69,767 $ 66,788 Non-real estate impairment — — 120,931 213,339 309,444 Held for sale loss on discontinued operations 30 20,027 — — — (Reversal) reserve for loan loss (4,792) — — 15,300 — Acquisition-related expenses 1,136 1,120 948 734 4,324 Litigation, merger and other non-routine costs, net of insurance recoveries 23,541 14,969 1,512 (7,691) 24,333 Loss on investments (1,790) — — — — Loss (gain) on derivative instruments, net 92 (266) (2,095) (677) 172 Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities 945 1,148 1,220 1,299 1,475 (Gain) loss on extinguishment and forgiveness of debt, net (21) 318 (980) 490 605 Net direct financing lease adjustments 498 517 544 544 448 Straight-line rent, net of bad debt expense related to straight-line rent (8,341) (11,281) (13,163) (17,589) (25,367) Legal settlements — — — — (60,000) Program development costs write-off — 1,343 11,054 11,295 13,109 Other adjustments, net (78) 1,247 (107) (122) 335 Proportionate share of adjustments for unconsolidated entities 60 249 725 (15) 1,086 Adjustment for Excluded Properties — 172 — — — Normalized EBITDA $ 257,486 $ 267,710 $ 271,368 $ 286,674 $ 336,752 Normalized EBITDA Annualized $ 1,029,944 $ 1,070,840 $ 1,085,472 $ 1,146,696 $ 1,347,008 37 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Reconciliations (dollars in thousands) INVESTOR REVIEW Debt and Net Debt to Normalized EBITDA December 31, 2018 December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2014 Mortgage notes payable and other debt, net $ 1,922,657 $ 2,082,692 $ 2,671,106 $ 3,111,985 $ 3,773,922 Corporate bonds, net 3,368,609 2,821,494 2,226,224 2,536,333 2,531,081 Convertible debt, net 394,883 984,258 973,340 962,894 952,856 Credit facility, net 401,773 185,000 496,578 1,448,590 3,167,919 Total debt - as reported $ 6,087,922 $ 6,073,444 $ 6,367,248 $ 8,059,802 $ 10,425,778 Adjustments: Deferred financing costs, net 42,763 48,232 55,660 62,674 88,002 Net premiums (8,053) (15,638) (22,012) (39,131) (44,659) Principal Outstanding $ 6,122,632 $ 6,106,038 $ 6,400,896 $ 8,083,345 $ 10,469,121 Principal Outstanding - Excluded Properties — (16,200) — — — Adjusted Principal Outstanding $ 6,122,632 $ 6,089,838 $ 6,400,896 $ 8,083,345 $ 10,469,121 Less: cash and cash equivalents 30,758 36,374 256,452 69,103 416,711 Net Debt $ 6,091,874 $ 6,053,464 $ 6,144,444 $ 8,014,242 $ 10,052,410 Normalized EBITDA annualized 1,029,944 1,070,840 1,085,472 1,146,696 1,347,008 Net Debt to Normalized EBITDA annualized ratio 5.91x 5.65x 5.66x 6.99x 7.46x 38 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
Reconciliations (dollars in thousands) INVESTOR REVIEW Interest Three Months Ended December 31, December 31, 2018 2018 Interest expense - as reported $ (70,832) Net Debt $ 6,091,874 Less Adjustments: Gross Real Estate Investments 15,411,026 Amortization of deferred financing costs and other non-cash Net Debt Leverage Ratio 39.5% charges (3,813) Amortization of net premiums 1,295 Unencumbered Gross Real Estate Investments $ 11,574,315 Interest Expense, excluding non-cash amortization $ (68,314) Gross Real Estate Investments 15,411,026 Unencumbered Asset Ratio 75.1% Secured Principal Outstanding $ 1,917,132 Gross Real Estate Investments 15,411,026 Secured Debt Ratio 12.4% Financial and Operations Statistics and Ratios Three Months Ended December 31, December 31, 2018 2018 Interest Expense, excluding non-cash amortization $ 68,314 Total real estate investments, at cost - as reported $ 15,604,839 Normalized EBITDA 257,486 Adjustments: Investment in unconsolidated entities 35,289 Interest Coverage Ratio 3.77x Investment in Cole REITs 7,844 Interest Expense, excluding non-cash amortization $ 68,314 Gross assets held for sale 3,020 Investment in direct financing leases, net 13,254 Secured debt principal amortization 2,424 Mortgage notes receivable, net 10,164 Dividends attributable to preferred shares 17,973 Gross below market leases (263,384) Total fixed charges 88,711 Gross Real Estate Investments $ 15,411,026 Normalized EBITDA 257,486 Fixed Charge Coverage Ratio 2.90x 39 www.VEREIT.com | NYSE: VER | © 2019 VEREIT, Inc.


 
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