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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): May 8, 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, 9th Floor
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
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class:
Trading symbol(s):
Name of each exchange on which registered:
Common Stock, $0.01 par value per share (VEREIT, Inc.)
VER
New York Stock Exchange
6.70% Series F Cumulative Redeemable Preferred Stock, $0.01 par value per share (VEREIT, Inc.)
VER PF
New York Stock Exchange
 





Item 2.02. Results of Operations and Financial Condition.
On May 8, 2019, VEREIT, Inc. (the “Company”) furnished the following documents: (i) a press release relating to its first quarter 2019 financial results and related matters, attached hereto as Exhibit 99.1; and (ii) supplemental information for the quarter ended March 31, 2019, attached hereto as Exhibit 99.2. The information set forth in this Item 2.02 and in the attached Exhibits 99.1 and 99.2 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
 
Description
99.1
 
99.2
 






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

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

Date: May 8, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
397849408_rgbhorzvereitlogo093018a02.jpg
FOR IMMEDIATE RELEASE

VEREIT® Announces First Quarter 2019 Operating Results
Portfolio Continues to Perform
Effective Execution of Capital Allocation Strategy



Phoenix, AZ, May 8, 2019 -- VEREIT, Inc. (NYSE: VER) (“VEREIT” or the “Company”) announced today its operating results for the three months ending March 31, 2019.

The financial results below reflect continuing operations only.

First Quarter 2019 Financial and Operating Highlights
Net income of $71.0 million and net income per diluted share of $0.05
Achieved $0.18 AFFO per diluted share
Completed $80.7 million of acquisitions and $70.5 million of dispositions in the first quarter of 2019 and $125.0 million and $243.5 million year-to-date
Repaid $750.0 million principal outstanding related to the 2019 corporate bonds utilizing the remainder of the $900.0 million unsecured term loan facility
Total debt went from $6.09 billion to $6.02 billion; Net Debt from $6.09 billion to $6.05 billion, or 39.3% Net Debt to Gross Real Estate Investments
Net Debt to Normalized EBITDA ended at 5.7x
Issued 5.0 million shares year-to-date at a weighted average price of $8.42 for gross proceeds of $42.5 million under its “at the market” equity offering program
Formed an institutional partnership including six VEREIT industrial assets totaling approximately $407.0 million expected to close by the end of May


First Quarter 2019 Financial Results

Rental Revenue
Rental Revenue for the quarter ended March 31, 2019 increased $1.7 million to $316.8 million as compared to revenue of $315.1 million for the same quarter in 2018.

Net Income and Net Income Attributable to Common Stockholders per Diluted Share
Net income for the quarter ended March 31, 2019 increased $42.0 million to $71.0 million as compared to net income of $29.0 million for the same quarter in 2018, and net income per diluted share increased $0.04 to $0.05 for the quarter ended March 31, 2019, as compared to net income per diluted share of $0.01 for the same quarter in 2018.

Normalized EBITDA
Normalized EBITDA for the quarter ended March 31, 2019 increased $1.5 million to $263.9 million as compared to Normalized EBITDA of $262.4 million for the same quarter in 2018.

Funds From Operations Attributable to Common Stockholders and Limited Partners (“FFO”) and FFO per Diluted Share
FFO for the quarter ended March 31, 2019 increased $25.6 million to $190.3 million, as compared to $164.7 million for the same quarter in 2018, and FFO per diluted share increased $0.02 to $0.19 for the quarter ended March 31, 2019, as compared to FFO per diluted share of $0.17 for the same quarter in 2018.


1


Adjusted FFO Attributable to Common Stockholders and Limited Partners (“AFFO”) and AFFO per Diluted Share
AFFO for the quarter ended March 31, 2019 decreased $2.5 million to $178.4 million, as compared to $180.9 million for the same quarter in 2018, and AFFO per diluted share remained constant at $0.18 for the quarter ended March 31, 2019, as compared to the same quarter in 2018.

Management Commentary
Glenn J. Rufrano, Chief Executive Officer, stated, “Our portfolio continues to perform and our team is executing well in the capital markets. Focus on capital allocation is highlighted year-to-date by the sale of the El Segundo office property at an exceptional price, issuing equity at an advantageous spread from the buyback last year and using internal equity to seed an institutional partnership providing lower cost capital in a business growth format.”

Common Stock Dividend Information
On May 6, 2019, the Company’s Board of Directors declared a quarterly dividend of $0.1375 per share for the second quarter of 2019, representing an annual distribution rate of $0.55 per share. The dividend will be paid on July 15, 2019 to common stockholders of record as of June 28, 2019.

Balance Sheet and Liquidity
As of the end of the quarter, the Company utilized $195.0 million of its revolving line of credit, leaving $1.8 billion of capacity available as of March 31, 2019 on the Company’s $2.0 billion revolving line of credit. The Company also had drawn $900.0 million on its term loan, which included the use of $750.0 million to repay the principal outstanding related to the 2019 corporate bonds. The Company entered into interest rate swap agreements with an aggregate $900.0 million notional amount fixing the interest rate at 3.84%. In addition, secured debt was reduced by $2.4 million in the first quarter.

Capital Market Activity
During the quarter and through April 30, 2019, the Company issued 5.0 million shares at a weighted average price of $8.42 for gross proceeds of $42.5 million under its “at the market” equity offering program.

Consolidated Financial Statistics
Financial Statistics as of the quarter ended March 31, 2019 are as follows: Net Debt to Normalized EBITDA of 5.7x, Fixed Charge Coverage Ratio of 3.0x, Unencumbered Asset Ratio of 75.1%, Net Debt to Gross Real Estate Investments of 39.3%, Weighted Average Debt Term of 4.5 years and 96.6% Fixed Rate Debt.

Litigation Settlements
On February 5, 2019, the Company entered into a series of agreements to settle claims with shareholders who decided not to participate as class members in the SDNY Consolidated Class Action for approximately $15.7 million, which was accrued in the fourth quarter of 2018. Further, between March 31 and April 5, 2019, the Company entered into a series of agreements to settle claims with additional shareholders who decided not to participate as class members in the SDNY Consolidated Class Action for approximately $12.2 million, which was accrued in the first quarter of 2019. In total, the Company has now settled claims of shareholders who held shares of common stock and swaps referencing common stock representing approximately 35.3% of VEREIT’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions for approximately $245.4 million. The Company retains the right to pursue any and all claims against the other defendants in the litigations and/or third parties, including claims for contribution for amounts paid in the settlements.
    
Insurance Settlement
On January 23, 2019, the Company signed a settlement and release agreement with certain insurance carriers and subsequently received $48.4 million of insurance recoveries.

Real Estate Portfolio
As of March 31, 2019, the Company’s portfolio consisted of 3,980 properties with total portfolio occupancy of 98.9%, investment grade tenancy of 41.3% and a weighted-average remaining lease term of 8.7 years. During the quarter ended March 31, 2019, same-store rents (3,917 properties) increased 0.9% as compared to the same quarter in 2018.

Property Acquisitions
During the first quarter of 2019, the Company acquired eight properties for approximately $80.7 million at an average cash cap rate of 6.8%. In addition, the Company invested $4.5 million in one build-to-suit project. As of March 31, 2019, build-to-suit programs included one property with an investment to date of $7.5 million and remaining estimated investment of $20.3 million.


2


Property Dispositions
During the quarter ended March 31, 2019, the Company disposed of 22 properties for an aggregate sales price of $62.1 million. Of this amount, $58.8 million was used in the total weighted average cash cap rate calculation of 6.9%, including $25.2 million in net sales of Red Lobster restaurants. The gain on first quarter sales was approximately $10.8 million. In addition, the Company sold certain legacy mortgage related investments during the quarter for an aggregate sales price of $8.3 million.

2019 Guidance
The Company reaffirms its 2019 AFFO per diluted share to be in a range between $0.68 and $0.70 (see reconciliation to net income per share at the end of this release).

Institutional Industrial Partnership
Subsequent to the quarter, the Company has formed an institutional partnership with the objective of creating an increasing, long term asset base of investment grade tenants in the U.S. industrial market. The partnership is expected to close by the end of May, in a traditional 80/20 structure, and will initially include six VEREIT assets totaling approximately $407 million at a cap rate just under 6.0%.


Subsequent Events

Property Acquisitions
From April 1, 2019 through May 1, 2019, the Company acquired three properties for approximately $44.2 million. Acquisitions year-to-date through May 1, 2019, totaled $125.0 million.

Property Dispositions
From April 1, 2019 through May 1, 2019, the Company disposed of 14 properties for an aggregate sales price of $173.0 million. Dispositions year-to-date through May 1, 2019, totaled $235.2 million. In addition, the Company sold certain legacy mortgage related investments for an aggregate sales price of $8.3 million.


Audio Webcast Details

The live audio webcast, beginning at 1:30 p.m. ET on Wednesday, May 8, 2019, is available by accessing this link:
http://ir.vereit.com/. Participants should log in 10-15 minutes early.

Following the call, a replay of the webcast will be available at the link above and archived for up to 12 months following the call.

About the Company
VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. The Company has total real estate investments of $15.6 billion including approximately 4,000 properties and 94.7 million square feet. VEREIT’s business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. VEREIT is a publicly traded Maryland corporation listed on the New York Stock Exchange. VEREIT uses, and intends to continue to use, its Investor Relations website, which can be found at www.VEREIT.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Additional information about VEREIT can be found though social media platforms such as Twitter and LinkedIn.


Media Contact
Parke Chapman
Rubenstein Associates
212.843.8489 | [email protected]

    
Investor Contact
Bonni Rosen, SVP, Investor Relations                
VEREIT            
877.405.2653 | [email protected]

3


Definitions
Descriptions of FFO and AFFO, EBITDA and Normalized EBITDA, Principal Outstanding and Adjusted Principal Outstanding, Net Debt, Interest Expense, Excluding Non-Cash Amortization, Fixed Charge Coverage Ratio, Net Debt to Normalized EBITDA Annualized Ratio, Net Debt Leverage Ratio, and Unencumbered Asset Ratio are provided below. Refer to pages 7 through 14 for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure and the calculations of these financial ratios.
We determined that adjusted funds from operations (“AFFO”), a non-GAAP measure, and our real estate portfolio and economic metrics should exclude the impact of properties owned by the Company for the month beginning with the date that (i) the related mortgage loan is in default, and (ii) management decides to transfer the properties to the lender in connection with settling the mortgage note obligation ("Excluded Properties") and ending with the disposition date, to better reflect our ongoing operations. During the three months ended and at March 31, 2018, the Excluded Property was one vacant industrial property, comprising 307,725 square feet with Principal Outstanding of $16.2 million. At December 31, 2018, and March 31, 2019 there were no Excluded Properties.
Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("Nareit"), an industry trade group, has promulgated a supplemental performance measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.
Nareit defines FFO as net income or loss computed in accordance with U.S. GAAP, adjusted for gains or losses from disposition of property, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments related to unconsolidated partnerships and joint ventures. We calculated FFO in accordance with Nareit's definition described above.
In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition-related expenses, insurance recoveries, net of litigation and non-routine costs, loss on disposition of discontinued operations, net revenue or expense earned or incurred that is related to the services agreement, gains or losses on sale of investment securities or mortgage notes receivable, legal settlements and insurance recoveries not in the ordinary course of business, payments on fully reserved loan receivables and restructuring expenses. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rent, net of bad debt expense related to straight-line rent, net direct financing lease adjustments, gains or losses on derivatives, reserves for loan loss, gains or losses on the extinguishment or forgiveness of debt, non-current portion of the tax benefit or expense, equity-based compensation and amortization of intangible assets, deferred financing costs, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities. We omit the impact of the Excluded Properties and related non-recourse mortgage notes from FFO to calculate AFFO. Management believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. AFFO allows for a comparison of the performance of our operations with other publicly-traded REITs, as AFFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as defined by U.S. GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.



4


Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), EBITDA for Real Estate (“EBITDAre”) and Normalized EBITDA
Due to certain unique operating characteristics of real estate companies, as discussed below, Nareit has promulgated a supplemental performance measure known as Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre"). Nareit defines EBITDAre as net income or loss computed in accordance with GAAP, adjusted for interest expense, income tax expense (benefit), depreciation and amortization, impairment write-downs on real estate, gains or losses from disposition of property and our pro rata share of EBITDAre adjustments related to unconsolidated partnerships and joint ventures. We calculated EBITDAre in accordance with Nareit's definition described above.
In addition to EBITDAre, we use Normalized EBITDA as a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Normalized EBITDA, as defined by the Company, represents EBITDAre, modified to exclude non-routine items such as acquisition-related expenses, insurance recoveries, net of litigation and non-routine costs, loss on disposition of discontinued operations, net revenue or expense earned or incurred that is related to the services agreement, gains or losses on sale of investment securities or mortgage notes receivable, legal settlements and insurance recoveries not in the ordinary course of business, payments on fully reserved loan receivables and restructuring expenses. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rental revenue, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, write-off of program development costs, and amortization of intangibles, above-market lease assets and below-market lease liabilities. Normalized EBITDA omits the Normalized EBITDA impact of Excluded Properties. Management believes that excluding these costs from EBITDAre provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. Therefore, EBITDA, EBITDAre, and Normalized EBITDA should not be considered as an alternative to net income, as computed in accordance with GAAP. The Company uses EBITDA, EBITDAre, and Normalized EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the effectiveness of the Company's strategies. Normalized EBITDA may not be comparable to similarly titled measures of other companies.
Principal Outstanding and Adjusted Principal Outstanding
Principal Outstanding and Adjusted Principal Outstanding are non-GAAP measures that represent the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. Adjusted Principal Outstanding omits the outstanding principal balance of mortgage notes secured by Excluded Properties. We believe that the presentation of Principal Outstanding and Adjusted Principal Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Principal Outstanding and Adjusted Principal Outstanding should not be considered as alternatives to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
Net Debt
Net Debt is a non-GAAP measure used to show the Company's Adjusted Principal Outstanding, less all cash and cash equivalents. We believe that the presentation of Net Debt provides useful information to investors because our management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Interest Expense, Excluding Non-Cash Amortization
Interest Expense, excluding non-cash amortization is a non-GAAP measure that represents interest expense incurred on the outstanding principal balance of our debt. This measure excludes (i) the amortization of deferred financing costs, premiums and discounts, which is included in interest expense in accordance with GAAP, and (ii) the impact of Excluded Properties and related non-recourse mortgage notes. We believe that the presentation of Interest Expense, excluding non-cash amortization, which shows the interest expense on our contractual debt obligations, provides useful information to investors to assess our overall solvency and financial flexibility. Interest Expense, excluding non-cash amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.
Fixed Charge Coverage Ratio
Fixed Charge Coverage Ratio is the sum of (i) Interest Expense, excluding non-cash amortization, (ii) secured debt principal amortization on Adjusted Principal Outstanding and (iii) dividends attributable to preferred shares divided by Normalized EBITDA. Management believes that Fixed Charge Coverage Ratio is a useful supplemental measure of our ability to satisfy fixed financing obligations.

5


Net Debt to Normalized EBITDA Annualized Ratio
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the respective quarter Normalized EBITDA multiplied by four. We believe that the presentation of Net Debt to Normalized EBITDA Annualized provides useful information to investors because our management reviews Net Debt to Normalized EBITDA Annualized as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments. We believe that the presentation of Net Debt Leverage Ratio provides useful information to investors because our management reviews Net Debt Leverage Ratio as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Gross Real Estate Investments
Gross Real Estate Investments represent total gross real estate and related assets of Operating Properties, including net investments in unconsolidated entities and equity investments in the Cole REITs, investment in direct financing leases, investment securities backed by real estate and mortgage notes receivable, net of gross intangible lease liabilities. We believe that the presentation of Gross Real Estate Investments, which shows our total investments in real estate and related assets, in connection with Net Debt, provides useful information to investors to assess our overall financial flexibility, capital structure and leverage. Gross Real Estate Investments should not be considered as an alternative to the Company's real estate investments balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
Unencumbered Asset Ratio
Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is a useful supplemental measure of our overall liquidity and leverage.
Forward-Looking Statements
Information set forth herein contains “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations and projections regarding future events and plans, VEREIT's future financial condition, results of operations and business including the performance of its portfolio, its access to the capital markets, and its focus on and execution of its capital allocation strategy including the formation and anticipated closing of an institutional partnership. The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words “expects,” “anticipates,” “assumes,” “targets,”“goals,”“projects,”“intends,”“plans,”“believes,” “seeks,” “estimates,” "may," "will," "should," "could," "continues," variations of such words and similar expressions identify forward- looking statements. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond VEREIT’s control. If a change occurs, VEREIT’s business, financial condition, liquidity and results of operations may vary materially from those expressed in or implied by the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; VEREIT’s ability to meet its 2019 guidance; VEREIT’s ability to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all; risks associated with tenant, geographic and industry concentrations with respect to VEREIT's properties; the impact of impairment charges in respect of certain of VEREIT's properties, goodwill and intangible assets and other assets; unexpected costs or liabilities that may arise from potential dispositions, including related to limited partnership, tenant-in-common and Delaware statutory trust real estate programs and VEREIT’s management with respect to such programs; competition in the acquisition and disposition of properties and in the leasing of its properties; the inability to acquire, dispose of, or lease properties on advantageous terms; risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of VEREIT's tenants; risks associated with pending government investigations and litigations related to VEREIT's previously disclosed audit committee investigation, including the expense of such investigations and litigation and any additional potential payments upon resolution; risks associated with VEREIT’s substantial indebtedness, including that such indebtedness may affect VEREIT’s ability to pay dividends and the terms and restrictions within the agreements governing VEREIT’s indebtedness may restrict its borrowing and operating flexibility; the ability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in VEREIT’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website at www.sec.gov. VEREIT disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.

6




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

 
 
March 31,
2019
 
December 31,
2018
ASSETS
 
 
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
2,824,666

 
$
2,843,212

Buildings, fixtures and improvements
 
10,741,995

 
10,749,228

Intangible lease assets
 
2,003,825

 
2,012,399

Total real estate investments, at cost
 
15,570,486

 
15,604,839

Less: accumulated depreciation and amortization
 
3,544,252

 
3,436,772

Total real estate investments, net
 
12,026,234

 
12,168,067

Operating lease right-of-use assets
 
224,859

 

Investment in unconsolidated entities
 
35,790

 
35,289

Cash and cash equivalents
 
12,788

 
30,758

Restricted cash
 
18,517

 
22,905

Rent and tenant receivables and other assets, net
 
361,641

 
366,092

Goodwill
 
1,337,773

 
1,337,773

Real estate assets held for sale, net
 
36,022

 
2,609

Total assets
 
$
14,053,624

 
$
13,963,493

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
1,918,826

 
$
1,922,657

Corporate bonds, net
 
2,619,956

 
3,368,609

Convertible debt, net
 
395,823

 
394,883

Credit facility, net
 
1,089,725

 
401,773

Below-market lease liabilities, net
 
166,708

 
173,479

Accounts payable and accrued expenses
 
141,126

 
145,611

Deferred rent and other liabilities
 
70,220

 
69,714

Distributions payable
 
190,246

 
186,623

Operating lease liabilities
 
228,120

 

Total liabilities
 
6,820,750

 
6,663,349

Series F preferred stock
 
429

 
428

Common stock
 
9,716

 
9,675

Additional paid-in capital
 
12,645,148

 
12,615,472

Accumulated other comprehensive loss
 
(12,202
)
 
(1,280
)
Accumulated deficit
 
(5,550,574
)
 
(5,467,236
)
Total stockholders’ equity
 
7,092,517

 
7,157,059

Non-controlling interests
 
140,357

 
143,085

Total equity
 
7,232,874

 
7,300,144

Total liabilities and equity
 
$
14,053,624

 
$
13,963,493


7



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

 
 
Three Months Ended March 31,
 
 
2019
 
2018
Rental revenue
 
$
316,843

 
$
315,074

Operating expenses:
 
 
 
 
Acquisition-related
 
985

 
777

Insurance recoveries, net of litigation and non-routine costs
 
(21,492
)
 
21,740

Property operating
 
32,378

 
30,565

General and administrative
 
14,846

 
15,240

Depreciation and amortization
 
136,555

 
166,152

Impairments
 
11,988

 
6,036

Restructuring
 
9,076

 

Total operating expenses
 
184,336

 
240,510

Other (expense) income:
 
 
 
 
Interest expense
 
(71,254
)
 
(70,425
)
Other (loss) income, net
 
(402
)
 
7,709

Equity in income and gain on disposition of unconsolidated entities
 
500

 
1,065

Gain on disposition of real estate and real estate assets held for sale, net
 
10,831

 
17,335

Total other expenses, net
 
(60,325
)
 
(44,316
)
Income before taxes
 
72,182

 
30,248

Provision for income taxes from continuing operations
 
(1,211
)
 
(1,212
)
Income from continuing operations
 
70,971

 
29,036

Income from discontinued operations, net of tax
 

 
3,501

Net income
 
70,971

 
32,537

Net (income) attributable to non-controlling interests
 
(1,667
)
 
(742
)
Net income attributable to the General Partner
 
$
69,304

 
$
31,795

 
 
 
 
 
Basic and diluted net income per share from continuing operations attributable to common stockholders
 
$
0.05

 
$
0.01

Basic and diluted net income per share from discontinued operations attributable to common stockholders
 

 
0.00

Basic and diluted net income per share attributable to common stockholders
 
$
0.05

 
$
0.01

Distributions declared per common share
 
$
0.1375

 
$
0.1375




8



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

 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net income
 
$
70,971

 
$
32,537

 Adjustments:
 
 
 
 
Interest expense
 
71,254

 
70,425

Depreciation and amortization of real estate assets
 
136,555

 
166,152

Provision for income taxes
 
1,211

 
(883
)
Proportionate share of adjustments for unconsolidated entities
 
288

 
619

 EBITDA
 
$
280,279

 
$
268,850

Gain on disposition of real estate assets, including joint ventures, net
 
(10,831
)
 
(18,036
)
Impairments of real estate
 
11,988

 
6,036

EBITDAre
 
$
281,436

 
$
256,850

Loss on disposition of discontinued operations
 

 
2,009

Acquisition-related expenses
 
985

 
777

(Insurance recoveries), net of litigation and non-routine costs
 
(21,492
)
 
21,086

Gain on investments
 
470

 
(5,638
)
Loss (gain) on derivative instruments, net
 
34

 
(273
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
731

 
1,487

Net direct financing lease adjustments
 
409

 
539

Straight-line rent, net of bad debt expense related to straight-line rent
 
(7,412
)
 
(11,260
)
Restructuring expenses
 
9,076

 

Other adjustments, net
 
(113
)
 
(488
)
 Proportionate share of adjustments for unconsolidated entities
 
(188
)
 
(6
)
Adjustment for Excluded Properties
 

 
40

Normalized EBITDA
 
$
263,936

 
$
265,123

Normalized EBITDA from continuing operations
 
$
263,936

 
$
262,362

Normalized EBITDA from discontinued operations
 
$

 
$
2,761



















9



VEREIT, INC.
FUNDS FROM OPERATIONS
(In thousands, except for share and per share data) (Unaudited)

 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net income
 
$
70,971

 
$
32,537

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
Gain on disposition of real estate assets, including joint ventures, net
 
(10,831
)
 
(18,036
)
Depreciation and amortization of real estate assets
 
135,861

 
165,182

Impairment of real estate
 
11,988

 
6,036

Proportionate share of adjustments for unconsolidated entities
 
288

 
446

FFO attributable to common stockholders and limited partners
 
$
190,304

 
$
168,192

FFO attributable to common stockholders and limited partners from continuing operations
 
190,304

 
164,691

FFO attributable to common stockholders and limited partners from discontinued operations
 

 
3,501

 
 
 
 
 
Weighted-average shares outstanding - basic
 
968,460,296

 
972,663,193

Limited Partner OP Units and effect of dilutive securities
 
24,838,018

 
24,110,249

Weighted-average shares outstanding - diluted
 
993,298,314

 
996,773,442

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.192

 
$
0.169

FFO attributable to common stockholders and limited partners from continuing operations per diluted share
 
$
0.192

 
$
0.165

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

 
$
0.004



















10



VEREIT, INC.
ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except for share and per share data) (Unaudited)

 
 
Three Months Ended March 31,
 
 
2019
 
2018
FFO attributable to common stockholders and limited partners
 
$
190,304

 
$
168,192

 
 
 
 
 
Acquisition-related expenses
 
985

 
777

(Insurance recoveries), net of litigation and non-routine costs
 
(21,492
)
 
21,086

Loss on disposition of discontinued operations
 

 
2,009

Gain on investments
 
470

 
(5,638
)
Loss (gain) on derivative instruments, net
 
34

 
(273
)
Amortization of premiums and discounts on debt and investments, net
 
(1,264
)
 
(606
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
731

 
1,487

Net direct financing lease adjustments
 
409

 
539

Amortization and write-off of deferred financing costs
 
3,494

 
5,875

Deferred and other tax expense
 

 
(1,855
)
Straight-line rent, net of bad debt expense related to straight-line rent
 
(7,412
)
 
(11,260
)
Equity-based compensation
 
2,687

 
2,774

Restructuring expenses
 
9,076

 

Other adjustments, net
 
569

 
514

Proportionate share of adjustments for unconsolidated entities
 
(188
)
 
12

Adjustment for Excluded Properties
 

 
423

AFFO attributable to common stockholders and limited partners
 
$
178,403

 
$
184,056

AFFO attributable to common stockholders and limited partners from continuing operations
 
178,403

 
180,854

AFFO attributable to common stockholders and limited partners from discontinued operations
 

 
3,202

 
 
 
 
 
Weighted-average shares outstanding - basic
 
968,460,296

 
972,663,193

Limited Partner OP Units and effect of dilutive securities
 
24,838,018

 
24,110,249

Weighted-average shares outstanding - diluted
 
993,298,314

 
996,773,442

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

 
$
0.185

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

 
$
0.182

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

 
$
0.003














11



VEREIT, INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)
 
 
Three Months Ended
 
 
March 31,
2019
Interest expense - as reported
 
$
(71,254
)
Less Adjustments:
 
 
Amortization of deferred financing costs and other non-cash charges
 
(3,546
)
Amortization of net premiums
 
1,328

Interest Expense, Excluding Non-Cash Amortization
 
$
(69,036
)

 
 
Three Months Ended
 
 
March 31,
2019
Interest Expense, Excluding Non-Cash Amortization
 
$
69,036

Secured debt principal amortization
 
2,430

Dividends attributable to preferred shares 
 
17,973

Total fixed charges
 
89,439

Normalized EBITDA
 
263,936

Fixed Charge Coverage Ratio
 
2.95
x

 
 
March 31,
2019
 
December 31,
2018
Mortgage notes payable, net
 
$
1,918,826

 
$
1,922,657

Corporate bonds, net
 
2,619,956

 
3,368,609

Convertible debt, net
 
395,823

 
394,883

Credit facility, net
 
1,089,725

 
401,773

Total debt - as reported
 
6,024,330

 
6,087,922

Adjustments:
 
 
 
 
Deferred financing costs, net
 
44,602

 
42,763

Net premiums
 
(6,726
)
 
(8,053
)
Principal Outstanding
 
6,062,206

 
6,122,632

Principal Outstanding - Excluded Properties
 

 

Adjusted Principal Outstanding
 
$
6,062,206

 
$
6,122,632

 
 
 
 
 
Adjusted Principal Outstanding
 
$
6,062,206

 
$
6,122,632

Less: cash and cash equivalents
 
12,788

 
30,758

Net Debt
 
$
6,049,418

 
$
6,091,874


12



 
 
March 31,
2019
Total real estate investments, at cost - as reported
 
$
15,570,486

Adjustments:
 
 
Investment in unconsolidated entities
 
35,790

Investment in Cole REITs
 
7,552

Gross assets held for sale
 
45,064

Investment in direct financing leases, net
 
10,735

Mortgage notes receivable, net
 
1,713

Gross below market leases
 
(259,976
)
Gross Real Estate Investments
 
$
15,411,364


 
 
March 31,
2019
Net Debt
 
$
6,049,418

Normalized EBITDA annualized
 
1,055,744

Net Debt to Normalized EBITDA Annualized Ratio
 
5.73
x
 
 
 
Net Debt
 
$
6,049,418

Gross Real Estate Investments
 
15,411,364

Net Debt Leverage Ratio
 
39.3
%
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,577,487

Gross Real Estate Investments
 
15,411,364

Unencumbered asset ratio
 
75.1
%


13



VEREIT, INC.
ADJUSTED FUNDS FROM OPERATIONS PER DILUTED SHARE - 2019 GUIDANCE
(Unaudited)

The Company expects its 2019 AFFO per diluted share to be in a range between $0.68 and $0.70. This guidance assumes acquisitions totaling $250 million to $500 million at an average cash cap rate of 6.5% to 7.5%, dispositions totaling $350 million to $500 million within the same cap rate range, along with the anticipated closing of a $407 million industrial partnership. Guidance also assumes real estate operations with average occupancy above 98.0%, same-store rental growth in a range of 0.3% to 1.0% and Net Debt to Normalized EBITDA between 5.7x and 6.0x. The estimated net income per diluted share is not a projection and is provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission.
 
 
Low
 
High
Diluted net income per share attributable to common stockholders and limited partners (1) (2)
 
$
0.14

 
$
0.16

Gain on disposition of real estate assets, net (2)
 
(0.01
)
 
(0.01
)
Depreciation and amortization of real estate assets (2)
 
0.48

 
0.48

Impairment of real estate (2)
 
0.01

 
0.01

FFO attributable to common stockholders and limited partners per diluted share
 
0.62

 
0.64

Adjustments (3)
 
0.06

 
0.06

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.68

 
$
0.70

_____________________________________
(1) Includes impact of dividends to be paid to preferred shareholders.
(2) Includes actual amounts for the three months ended March 31, 2019.
(3) Includes (i) non-routine items such as acquisition-related expenses, litigation and other non-routine costs, net of insurance recoveries, restructuring expenses, legal settlements and insurance recoveries not in the ordinary course of business, and (ii) certain non-cash items such as straight-line rent, net direct financing lease adjustments, gains or losses on derivatives, equity-based compensation and amortization of intangible assets, deferred financing costs, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities.

14
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

397849408_coververeitsupp2019q1.jpg




397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
March 31, 2019
 
Section
Page
397849408_walmart.jpg
 
 
Company Overview
Financial Summary
Financial and Operations Statistics and Ratios
Key Balance Sheet Metrics and Capital Structure
Balance Sheets
Statements of Operations
Funds From Operations (FFO)
Adjusted Funds From Operations (AFFO)
EBITDA, EBITDAre and Normalized EBITDA
Net Operating Income
397849408_aaasupplemental.jpg
Same Store Contract Rental Revenue
Debt and Preferred Equity Summary
Credit Facility and Corporate Bond Covenants
Acquisitions and Dispositions
Diversification Statistics
Top 10 Concentrations
Tenants Comprising Over 1% of Annualized Rental Income
Tenant Industry Diversification
Property Geographic Diversification
Lease Expirations
397849408_cvskernersvillea04.jpg
Lease Summary
Property Type Diversification
Definitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
397849408_tjxphiladelphiapadistirb07.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended March 31, 2019, unless otherwise indicated. Certain balances have been reclassified to conform with the current period's presentations, including the operating expense reimbursements line item which has been combined into rental revenue for all periods presented. 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 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2019, September 30, 2018, June 30, 2018, and March 31, 2018.

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

Forward-Looking Statements
Information set forth herein contains “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations and projections regarding future events and plans, VEREIT's future financial condition, results of operations and business. The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words “expects,” “anticipates,”“assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "may," "will," "should," "could," "continues," variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond VEREIT’s control. If a change occurs, VEREIT’s business, financial condition, liquidity and results of operations may vary materially from those expressed in or implied by the forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; 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.


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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

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

VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. VEREIT's business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. The Company targets properties that are strategically located and essential to the business operations of the tenant, as well as retail properties that offer necessity- and value-oriented products or services. At March 31, 2019, approximately 41.3% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 98.9% and the Weighted Average Remaining Lease Term was 8.7 years.

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





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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

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

Corporate Offices and Contact Information
2325 E. Camelback Road, 9th Floor
 
5 Bryant Park, 23rd Floor
Phoenix, AZ 85016
 
New York, NY 10018
800-606-3610
 
212-413-9100
www.VEREIT.com
 
 
 
Trading Symbols: VER, VER PF
 
Stock Exchange Listing: New York Stock Exchange
 
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
800-736-3001

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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except share and per share amounts)
 
The following table summarizes the Company's quarterly financial results and portfolio metrics. Data presented represents continuing operations.
 
Three Months Ended
Financial Results
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Rental revenue
$
316,843

 
$
313,263

 
$
313,866

 
$
315,664

 
$
315,074

Income (loss) from continuing operations (1)
$
70,971

 
$
27,872

 
$
(73,942
)
 
$
(74,691
)
 
$
29,036

Basic and diluted income (loss) from continuing operations per share attributable to common stockholders and limited partners (1)
$
0.05

 
$
0.01

 
$
(0.09
)
 
$
(0.09
)
 
$
0.01

Normalized EBITDA from continuing operations
$
263,936

 
$
257,486

 
$
261,084

 
$
259,387

 
$
262,362

FFO attributable to common stockholders and limited partners from continuing operations (1)
$
190,304

 
$
154,606

 
$
38,055

 
$
77,019

 
$
164,691

FFO attributable to common stockholders and limited partners from continuing operations per diluted share (1)
$
0.192

 
$
0.156

 
$
0.038

 
$
0.078

 
$
0.165

AFFO attributable to common stockholders and limited partners from continuing operations
$
178,403

 
$
172,511

 
$
178,529

 
$
178,794

 
$
180,854

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

 
$
0.174

 
$
0.180

 
$
0.180

 
$
0.182

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
993,298,314

 
992,337,959

 
991,924,017

 
992,100,138

 
996,773,442

 
 
 
 
 
 
 
 
 
 
Portfolio Metrics
 
 
 
 
 
 
 
 
 
Operating Properties
3,980

 
3,994

 
4,021

 
4,033

 
4,063

Rentable Square Feet (in thousands)
94,742

 
94,953

 
93,856

 
94,592

 
94,666

Economic Occupancy Rate
98.9
%
 
98.8
%
 
99.1
%
 
98.8
%
 
98.7
%
Weighted Average Remaining Lease Term (years)
8.7

 
8.9

 
8.9

 
9.1

 
9.3

Investment-Grade Tenants (2)
41.3
%
 
41.9
%
 
42.7
%
 
42.7
%
 
42.9
%
___________________________________
(1)
During the three months ended March 31, 2019, the Company accrued litigation settlement costs of $12.2 million, which were paid during the three months ended June 30, 2019. During the three months ended December 31, 2018, the Company accrued litigation settlement costs of $15.7 million, which were paid during the three months ended March 31, 2019. During the three months ended September 30, 2018, the Company accrued $127.5 million of litigation settlement costs, which were paid during the three months ended December 31, 2018. During the three months ended June 30, 2018, the Company expensed and paid a litigation settlement of $90.0 million.
(2)
The weighted-average credit rating of our investment-grade tenants was BBB+ as of March 31, 2019.

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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
69,036

 
$
68,314

 
$
66,445

 
$
65,202

 
$
64,741

Normalized EBITDA (2)
 
263,936

 
257,486

 
261,084

 
259,387

 
265,123

Interest Coverage Ratio
 
3.82x

 
3.77x

 
3.93x

 
3.98x


4.10x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
69,036

 
$
68,314

 
$
66,445

 
$
65,202

 
$
64,741

Secured debt principal amortization
 
2,430

 
2,424

 
3,007

 
2,457

 
2,676

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
17,973

 
17,973

Total fixed charges
 
89,439

 
88,711

 
87,425

 
85,632

 
85,390

Normalized EBITDA (2)
 
263,936

 
257,486

 
261,084

 
259,387


265,123

Fixed Charge Coverage Ratio
 
2.95
x
 
2.90x

 
2.99x

 
3.03x

 
3.10x

 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Adjusted Principal Outstanding (3)
 
$
6,062,206

 
$
6,122,632

 
$
5,975,107

 
$
6,067,593

 
$
6,022,255

Less: cash and cash equivalents
 
12,788

 
30,758

 
25,264

 
18,434

 
28,435

Net Debt
 
6,049,418

 
6,091,874

 
5,949,843

 
6,049,159

 
5,993,820

Normalized EBITDA annualized (2)
 
1,055,744

 
1,029,944

 
1,044,336

 
1,037,548

 
1,060,492

Net Debt to Normalized EBITDA annualized ratio
 
5.73
x
 
5.91
x
 
5.70
x
 
5.83
x
 
5.65
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
6,049,418

 
$
6,091,874

 
$
5,949,843

 
$
6,049,159

 
$
5,993,820

Gross Real Estate Investments
 
15,411,364

 
15,411,026

 
15,385,925

 
15,477,098

 
15,509,117

Net Debt Leverage Ratio
 
39.3
%
 
39.5
%
 
38.7
%
 
39.1
%
 
38.6
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,577,487

 
$
11,574,315

 
$
11,507,837

 
$
11,376,971

 
$
11,325,512

Gross Real Estate Investments
 
15,411,364

 
15,411,026

 
15,385,925

 
15,477,098

 
15,509,117

Unencumbered Asset Ratio
 
75.1
%
 
75.1
%
 
74.8
%
 
73.5
%
 
73.0
%
___________________________________
(1)
Refer to the Statements of Operations section for interest expense calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure.
(2)
Includes continuing and discontinued operations.
(3)
Refer to the Balance Sheets section for total debt calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure.




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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



397849408_chart-e6f274db9c685e7ca84.jpg
 
 
Common equity
54.0%
 
 
 
 
 
 
Corporate bonds
17.1%
 
 
 
 
 
 
Secured debt
12.4%
 
 
 
 
 
 
Preferred equity
6.9%
 
 
 
 
 
 
Credit facility term loan
5.8%
 
 
 
 
 
 
Convertible notes
2.6%
 
 
 
 
 
 
Revolving credit facility
1.2%

                            

Fixed vs. Variable Rate Debt
Fixed
80.9
%
Swapped to Fixed
15.7
%
Variable
3.4
%

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

 
March 31, 2019
Diluted shares outstanding
 
 
 
 
999,397

Stock price
 
 
 
 
$
8.37

Implied Equity Market Capitalization
 
$
8,364,953

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

 
 
 
 
 
 
Total secured debt
3.2
 
4.93
%
 
1,914,706

 
 
 
 
 
 
Revolving credit facility
3.1
 
3.70
%
 
195,000

Credit facility term loan
4.1
 
3.84
%
 
900,000

Total unsecured credit facility
4.0
 
3.81
%
 
1,095,000

 
 
 
 
 
 
2020 convertible notes
1.7
 
3.75
%
 
402,500

2021 corporate bonds
2.2
 
4.13
%
 
400,000

2024 corporate bonds
4.9
 
4.60
%
 
500,000

2025 corporate bonds
6.6
 
4.63
%
 
550,000

2026 corporate bonds
7.2
 
4.88
%
 
600,000

2027 corporate bonds
8.4
 
3.95
%
 
600,000

Total unsecured debt
5.1
 
4.21
%
 
$
4,147,500

 
 
 
 
 
 
Total Adjusted Principal Outstanding
4.5
 
4.44
%
 
$
6,062,206

 
 
 
 
 
 
Total Capitalization
 
$
15,500,184

Less: Cash and cash equivalents
 
 
 
 
12,788

Enterprise Value
 
$
15,487,396

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
39.1
%
Net Debt/Normalized EBITDA Annualized (3)
 
 
 
5.73
x
Net Debt + Preferred (2)/Normalized EBITDA Annualized (3)
 
6.75
x
Fixed Charge Coverage Ratio
 
 
 
 
2.95
x
Liquidity (4)
 
 
 
 
$
1,813,888

___________________________________
(1)Weighted average interest rate for variable rate debt represents the interest rate in effect as of March 31, 2019.
(2)Balance represents 42.9 million shares of Series F Preferred Stock (and 42.9 million corresponding general partner Series F Preferred Units) and 49,766 limited partner Series F Preferred Units outstanding at March 31, 2019, multiplied by the liquidation preference of $25 per share.
(3)Normalized EBITDA annualized includes continued and discontinued operations.
(4)Liquidity represents cash and cash equivalents of $12.8 million, $1.8 billion available capacity on our revolving credit facility. Available capacity on our revolving credit facility is reduced by letters of credit outstanding of $3.9 million at March 31, 2019.

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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

 
Balance Sheets
(unaudited, in thousands)
 
 
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,824,666

 
$
2,843,212

 
$
2,847,393

 
$
2,859,265

 
$
2,871,533

Buildings, fixtures and improvements
 
10,741,995

 
10,749,228

 
10,652,578

 
10,714,456

 
10,753,190

Intangible lease assets
 
2,003,825

 
2,012,399

 
2,019,718

 
2,024,014

 
2,035,004

Total real estate investments, at cost
 
15,570,486


15,604,839

 
15,519,689

 
15,597,735

 
15,659,727

Less: accumulated depreciation and amortization
 
3,544,252

 
3,436,772

 
3,323,990

 
3,206,336

 
3,059,955

Total real estate investments, net
 
12,026,234


12,168,067

 
12,195,699

 
12,391,399

 
12,599,772

Operating lease right-of-use assets
 
224,859

 

 

 

 

Investment in unconsolidated entities
 
35,790

 
35,289

 
34,293

 
33,972

 
33,736

Cash and cash equivalents
 
12,788

 
30,758

 
25,264

 
18,434

 
28,435

Restricted cash
 
18,517

 
22,905

 
27,449

 
27,078

 
28,049

Rent and tenant receivables and other assets, net
 
361,641

 
366,092

 
412,053

 
423,067

 
408,911

Goodwill
 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

Real estate assets held for sale, net
 
36,022

 
2,609

 
24,349

 
29,884

 
15,113

Total assets
 
$
14,053,624


$
13,963,493


$
14,056,880

 
$
14,261,607

 
$
14,451,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable, net
 
$
1,918,826

 
$
1,922,657

 
$
1,936,586

 
$
2,031,171

 
$
2,078,593

Corporate bonds, net
 
2,619,956

 
3,368,609

 
2,825,541

 
2,824,176

 
2,822,830

Convertible debt, net
 
395,823

 
394,883

 
393,961

 
989,901

 
987,071

Credit facility, net
 
1,089,725

 
401,773

 
793,000

 
195,000

 
120,000

Below-market lease liabilities, net
 
166,708

 
173,479

 
179,192

 
187,352

 
193,703

Accounts payable and accrued expenses
 
141,126

 
145,611

 
269,150

 
141,746

 
126,724

Deferred rent and other liabilities
 
70,220

 
69,714

 
51,663

 
66,123

 
68,718

Distributions payable
 
190,246

 
186,623

 
183,913

 
180,734

 
177,645

Operating lease liabilities
 
228,120

 

 

 

 

Total liabilities
 
6,820,750


6,663,349

 
6,633,006

 
6,616,203

 
6,575,284

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
429

 
428

 
428

 
428

 
428

Common stock
 
9,716

 
9,675

 
9,674

 
9,674

 
9,681

Additional paid-in capital
 
12,645,148

 
12,615,472

 
12,612,407

 
12,609,145

 
12,611,006

Accumulated other comprehensive loss
 
(12,202
)
 
(1,280
)
 
(1,031
)
 
(4,290
)
 
(4,284
)
Accumulated deficit
 
(5,550,574
)
 
(5,467,236
)
 
(5,343,368
)
 
(5,120,240
)
 
(4,896,349
)
Total stockholders' equity
 
7,092,517


7,157,059

 
7,278,110

 
7,494,717

 
7,720,482

Non-controlling interests
 
140,357

 
143,085

 
145,764

 
150,687

 
156,023

Total equity
 
7,232,874


7,300,144


7,423,874

 
7,645,404

 
7,876,505

Total liabilities and equity
 
$
14,053,624


$
13,963,493

 
$
14,056,880

 
$
14,261,607

 
$
14,451,789



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



397849408_vereitlogoa39.jpg
 
 
Q1 2019 SUPPLEMENTAL INFORMATION

 
Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Rental revenue
 
$
316,843

 
$
313,263

 
$
313,866

 
$
315,664

 
$
315,074

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition-related
 
985

 
1,136

 
810

 
909

 
777

Insurance recoveries, net of litigation and non-routine costs
 
(21,492
)
 
23,541

 
138,595

 
107,087

 
21,740

Property operating
 
32,378

 
32,567

 
31,893

 
31,436

 
30,565

General and administrative
 
14,846

 
17,220

 
15,186

 
16,287

 
15,240

Depreciation and amortization
 
136,555

 
153,050

 
157,181

 
164,235

 
166,152

Impairments
 
11,988

 
18,565

 
18,382

 
11,664

 
6,036

Restructuring
 
9,076

 

 

 

 

Total operating expenses
 
184,336

 
246,079

 
362,047

 
331,618

 
240,510

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(71,254
)
 
(70,832
)
 
(69,310
)
 
(70,320
)
 
(70,425
)
Gain on extinguishment and forgiveness of debt, net
 

 
21

 
90

 
5,249

 

Other (loss) income, net
 
(402
)
 
7,008

 
(947
)
 
1,320