Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document
falsefalse8002020-05-208-K2325 E. Camelback Road, 9th FloorPhoenix,85016AZ00015073850001528059606-3610 0001507385 2020-05-20 2020-05-20 0001507385 ver:VEREITOperatingPartnershipL.P.Member 2020-05-20 2020-05-20


 

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 20, 2020
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:

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

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

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

     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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
 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    
Emerging growth company    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
VEREIT, Inc. ¨ VEREIT Operating Partnership, L.P. o
 





Item 2.02. Results of Operations and Financial Condition.
On May 20, 2020, VEREIT, Inc. together with its operating partnership, VEREIT Operating Partnership, L.P. (collectively, the “Company”) furnished the following documents: (i) a press release relating to its first quarter financial results and related matters, attached hereto as Exhibit 99.1; and (ii) supplemental information for the quarter ended March 31, 2020, 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 (the "Securities Act"), as amended, regardless of any general incorporation language in such filing.
Item 7.01 Regulation FD Disclosure.
On May 20, 2020, 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 99.3. The information set forth in this Item 7.01 and in the presentation, attached hereto as Exhibit 99.3, is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. The information set forth in this Item 7.01, including Exhibit 99.3, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act 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
 
99.3
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document).






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 20, 2020



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
404072137_rgbhorzvereitlogo093018a08.jpg
FOR IMMEDIATE RELEASE

VEREIT® Announces First Quarter 2020 Operating Results
Provides COVID-19 Company Update


Phoenix, AZ, May 20, 2020 -- VEREIT, Inc. (NYSE: VER) (“VEREIT” or the “Company”) announced today its operating results for the three months ending March 31, 2020.

First Quarter 2020 Financial and Operating Highlights
Net income of $86.9 million and net income per diluted share of $0.07
Achieved $0.17 AFFO per diluted share
Acquisitions totaled $146.2 million in the first quarter with no transactions subsequent to the quarter
The office partnership acquired a $33.1 million property of which the Company’s cash contribution to the purchase amount was $2.7 million
Dispositions totaled $133.0 million in the first quarter and $187.5 million year-to-date, including the Company’s share of dispositions contributed to the office partnership of $70.2 million
Total debt increased from $5.71 billion to $6.31 billion primarily due to cash drawn on the revolving line of credit as a cautious safeguard; Net Debt increased from $5.79 billion to $5.82 billion, or 39.3% Net Debt to Gross Real Estate Investments
Net Debt to Normalized EBITDA was unchanged from last quarter at 5.7x

First Quarter 2020 Financial Results

Rental Revenue
Rental revenue for the quarter ended March 31, 2020 decreased $18.2 million to $298.6 million as compared to rental revenue of $316.8 million for the same quarter in 2019.

Net Income and Net Income Attributable to Common Stockholders per Diluted Share
Net income for the quarter ended March 31, 2020 increased $15.9 million to $86.9 million as compared to net income of $71.0 million for the same quarter in 2019, and net income per diluted share increased $0.02 to $0.07 for the quarter ended March 31, 2020, as compared to net income per diluted share of $0.05 for the same quarter in 2019.

Normalized EBITDA
Normalized EBITDA for the quarter ended March 31, 2020 decreased $8.4 million to $255.5 million as compared to Normalized EBITDA of $263.9 million for the same quarter in 2019.

Funds From Operations Attributable to Common Stockholders and Limited Partners (“FFO”) and FFO per Diluted Share
FFO for the quarter ended March 31, 2020 decreased $8.5 million to $181.8 million, as compared to $190.3 million for the same quarter in 2019, and FFO per diluted share decreased $0.02 to $0.17 for the quarter ended March 31, 2020, as compared to FFO per diluted share of $0.19 for the same quarter in 2019.

Adjusted FFO Attributable to Common Stockholders and Limited Partners (“AFFO”) and AFFO per Diluted Share
AFFO for the quarter ended March 31, 2020 increased $2.6 million to $181.0 million, as compared to $178.4 million for the same quarter in 2019, and AFFO per diluted share decreased $0.01 to $0.17 for the quarter ended March 31, 2020, as compared $0.18 for the same quarter in 2019.



1


Balance Sheet and Liquidity
As a cautious safeguard, during the first quarter, VEREIT initiated an additional draw, in excess of normal operating requirements, of $600 million on the Company’s revolving line of credit to enhance its cash position. As of the end of the first quarter, the Company had corporate liquidity of approximately $1.23 billion comprised of $600.9 million in cash and cash equivalents and $628.7 million of availability under its credit facility. In addition, secured debt was reduced by $121.3 million.

Consolidated Financial Statistics
Financial Statistics as of the quarter ended March 31, 2020 are as follows: Net Debt to Normalized EBITDA of 5.7x, Fixed Charge Coverage Ratio of 3.3x, Unencumbered Asset Ratio of 81.2%, Net Debt to Gross Real Estate Investments of 39.3%, and Weighted Average Debt Term of 4.4 years.

Common Stock Dividend Information
Due to the economic uncertainty related to COVID-19, on May 18, 2020, the Company’s Board of Directors declared a reduced quarterly dividend for the second quarter of 2020 of $0.077 per share from $0.1375 per share. The dividend will be paid on July 15, 2020 to common stockholders of record as of June 30, 2020. The Board of Directors has not made any decisions with respect to its dividend policy beyond the second quarter and will continue to monitor the current environment.

Management Commentary
Glenn J. Rufrano, Chief Executive Officer, stated, “To begin, I would like to applaud those in the healthcare profession and all the first responders who have made such a difference in our lives - certainly mine. While we would have normally expected 100% rent receipts for April and May, given current conditions, the actual receipts approximating 80% are a tribute to our quality tenants and portfolio diversification. The Board’s decision to reduce the dividend this quarter is not based generally upon a micro review of our business, but more importantly, on a macro review of an uncertain economy. We chose this base amount on which to build the dividend while protecting against any increase in debt. As more information is available in each of the next two quarters, this decision will be under constant review.”

Real Estate Portfolio
As of March 31, 2020, the Company’s portfolio consisted of 3,853 properties with total portfolio occupancy of 99.1%, investment grade tenancy of 36.7% and a weighted-average remaining lease term of 8.3 years. During the quarter ended March 31, 2020, same-store rents (3,758 properties) increased 0.2% as compared to the same quarter in 2019.

Real Estate Leasing Activity
During the quarter, the Company entered into 53 new and renewal leases on approximately 2.0 million square feet, or 2.3% of the portfolio. Leasing activity included 1.4 million square feet of early renewals.

Property Acquisitions
During the first quarter of 2020, the Company acquired 25 properties for approximately $146.2 million at an average cash cap rate of 6.9%.

Office Partnership
On January 13, 2020, the Company formed an office partnership which allows VEREIT to reduce balance sheet office exposure while utilizing the Company's in-house infrastructure to manage and increase the value of the enterprise. The partnership is a traditional 80/20 structure and will include three VEREIT office assets totaling approximately $137.5 million. Two of the three properties were contributed at the time of closing, totaling $87.7 million, with the last property expected to be added to the partnership mid-year 2020 for $49.8 million. In addition, the partnership closed on an external property acquisition for $33.1 million of which the Company’s cash contribution to the purchase amount was $2.7 million.    

Property Dispositions
During the quarter ended March 31, 2020, the Company disposed of 30 properties for an aggregate sales price of $133.0 million, including the Company’s share of dispositions contributed to the office partnership of $70.2 million. Of the total disposition amount, $122.5 million was used in the total weighted average cash cap rate calculation of 8.0%, including $10.2 million in net sales of Red Lobster restaurants. The gain on first quarter sales was approximately $25.2 million.



2


Subsequent Events

Property Acquisitions
There were no acquisitions subsequent to the quarter end.

Property Dispositions
From April 1, 2020 through May 7, 2020, portfolio dispositions totaled $54.5 million. Dispositions year-to-date through May 7, 2020, totaled $187.5 million, including the Company’s share of dispositions contributed to the office partnership of $70.2 million.

COVID-19 Company Update
As of May 15, 2020, VEREIT had received approximately 81% of April rent and 78% of May rent, which includes approximately 2% to be paid in arrears by a Government agency tenant. VEREIT is in continuing discussions with tenants regarding unpaid rent. The property type breakdown is as follows:
Property Type
April
May
Total Retail
83%
78%
Casual Dining
25%
28%
Quick Service
73%
72%
Total Restaurant
46%
47%
Total Office
97%
96%
Total Industrial
98%
91%

Rent relief requests have been received from tenants representing approximately 34% of rental income on an annualized basis as of May 15, 2020, including some tenants that paid April and May rent. These requests vary in timeframes, but are concentrated within the two to four month range. The property type breakdown is as follows:
Property Type
 
Total Retail
31%
Casual Dining
81%
Quick Service
53%
Total Restaurant
69%
Total Office
8%
Total Industrial
28%

Further rent collection and relief request details can be found in our investor presentation filed today.

Balance Sheet Update
As of May 15, 2020, VEREIT had corporate liquidity of approximately $1.2 billion comprised of $601.4 million in cash and cash equivalents and $588.0 million of availability under its credit facility.

2020 Guidance
As previously stated, given the economic uncertainty and rapidly-evolving circumstances related to COVID-19, the Company has withdrawn its previously issued 2020 guidance and is not providing an updated outlook at this time.



3


Audio Webcast and Call Details
The live audio webcast will be available, beginning at 1:30 p.m. ET on Wednesday, May 20, 2020, on the Company's Investor Relations website at: http://ir.vereit.com/. The dial-in information is as follows: (844) 746-0748 (domestic) or (412) 317-5274 (international).  Participants should log in 10-15 minutes early.

Approximately one hour following the call, a replay of the webcast will be available at the link above and archived for up to 12 months. A telephone replay of the conference call can also be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international), passcode 10143075. The telephone replay will be available until June 3, 2020.

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 $14.8 billion including approximately 3,900 properties and 89.5 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 through social media platforms such as Twitter and LinkedIn.

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

Investor Contact
Bonni Rosen, Senior Vice President, Investor Relations                
VEREIT            
877.405.2653 | [email protected]

4


About the Data
Rent collection percentages disclosed in the COVID-19 Company Update section are based on contractual rent and recoveries paid by tenants to cover estimated tax, insurance and common area maintenance expenses, including the Company's pro rata share of such amounts related to properties owned by unconsolidated joint ventures.
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 the subsequent tables for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure and the calculations of these financial ratios.
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, the National Association of Real Estate Investment Trusts, Inc. (“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, litigation and non-routine costs, net, net revenue or expense earned or incurred that is related to the services agreement associated with a discontinued operation, gains or losses on sale of investment securities or mortgage notes receivable, 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.
Excluded Properties
Excluded Properties are properties for which (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. Certain non-GAAP measures and operating metrics omit the impact of such properties for the month beginning with the date that such criteria are met and ending with the disposition date, in order to better reflect the ongoing operations of the Company.
At and during the three months ended March 31, 2020, December 31, 2019, and March 31, 2019 there were no Excluded Properties.
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.
Fixed Rate Debt
Fixed Rate Debt includes variable rate debt effectively fixed through the use of interest rate swap agreements.
Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)
Due to certain unique operating characteristics of real estate companies, as discussed below, the 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.

5


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 calculate FFO in accordance with Nareit’s definition described above.
In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition-related expenses, litigation and non-routine costs, net, net revenue or expense earned or incurred that is related to the services agreement associated with a discontinued operation, gains or losses on sale of investment securities or mortgage notes receivable, 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 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.
Gross Real Estate Investments
Gross Real Estate Investments represent total gross real estate and related assets of Operating Properties, equity investments in the Cole REITs, investment in direct financing leases, investment securities backed by real estate and mortgage notes receivable, and the Company's pro rata share of such amounts related to properties owned by unconsolidated joint ventures, 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.
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 and the Company's pro rata share of the unconsolidated joint ventures' outstanding principal balance. 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.
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.

6


Net Debt, Principal Outstanding and Adjusted Principal Outstanding 
Principal Outstanding is a non-GAAP measure that represents 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 includes the Company's pro rata share of the unconsolidated joint ventures' outstanding principal debt balance and 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 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 is a non-GAAP measure used to show the Company's Adjusted Principal Outstanding, less all cash and cash equivalents and the Company's pro rata share of unconsolidated joint ventures' 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.
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.
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.

7


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 the Company’s expectations and projections regarding future events and plans, the Company’s future financial condition, results of operations, liquidity and business, including acquisitions, rent receipts, rent relief requests, debt levels, the payment of future dividends and the impact of COVID-19 on the Company’s business. Generally, the words “anticipates,” “assumes,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company’s control, that could cause actual events and plans or could cause the Company’s business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collections.
The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the duration and extent of the impact of COVID-19 on our business and the businesses of our tenants (including their ability to timely make rent payments) and the economy generally; federal or state legislation or regulation that could impact the timely payment of rent by tenants in light of COVID-19; the Company’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the Company’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 the Company’s properties; risks accompanying the management of its industrial partnership and office partnership; the impact of impairment charges in respect of certain of the Company’s properties; 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 the Company’s management with respect to such programs; competition in the acquisition and disposition of properties and in the leasing of its properties including that the Company may be unable to acquire, dispose of, or lease properties on advantageous terms or at all; risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of the Company’s tenants, which are heightened as a result of the COVID-19 pandemic; risks associated with the Company’s substantial indebtedness, including that such indebtedness may affect the Company’s ability to pay dividends and that the terms and restrictions within the agreements governing the Company’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 the Company’s filings with the SEC, which are available at the SEC’s website at www.sec.gov. The Company 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.





8



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

 
 
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
2,715,625

 
$
2,738,679

Buildings, fixtures and improvements
 
10,135,933

 
10,200,550

Intangible lease assets
 
1,899,900

 
1,904,641

Total real estate investments, at cost
 
14,751,458

 
14,843,870

Less: accumulated depreciation and amortization
 
3,659,980

 
3,594,247

Total real estate investments, net
 
11,091,478

 
11,249,623

Operating lease right-of-use assets
 
211,187

 
215,227

Investment in unconsolidated entities
 
78,718

 
68,825

Cash and cash equivalents
 
600,945

 
12,921

Restricted cash
 
18,720

 
20,959

Rent and tenant receivables and other assets, net
 
345,103

 
348,395

Goodwill
 
1,337,773

 
1,337,773

Real estate assets held for sale, net
 
88,513

 
26,957

Total assets
 
$
13,772,437

 
$
13,280,680

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
1,405,701

 
$
1,528,134

Corporate bonds, net
 
2,814,474

 
2,813,739

Convertible debt, net
 
319,120

 
318,183

Credit facility, net
 
1,767,306

 
1,045,669

Below-market lease liabilities, net
 
134,410

 
143,583

Accounts payable and accrued expenses
 
125,358

 
126,320

Derivative, deferred rent and other liabilities
 
146,893

 
90,349

Distributions payable
 
150,493

 
150,364

Operating lease liabilities
 
217,567

 
221,061

Total liabilities
 
7,081,322

 
6,437,402

Series F preferred stock
 
309

 
309

Common stock
 
10,778

 
10,768

Additional paid-in capital
 
13,252,447

 
13,251,962

Accumulated other comprehensive loss
 
(104,217
)
 
(27,670
)
Accumulated deficit
 
(6,475,568
)
 
(6,399,626
)
Total stockholders’ equity
 
6,683,749

 
6,835,743

Non-controlling interests
 
7,366

 
7,535

Total equity
 
6,691,115

 
6,843,278

Total liabilities and equity
 
$
13,772,437

 
$
13,280,680


9



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

 
 
Three Months Ended March 31,
 
 
2020
 
2019
Revenues:
 
 
 
 
Rental
 
$
298,586

 
$
316,843

Fees from managed partnerships
 
596

 
37

Total revenues
 
299,182

 
316,880

Operating expenses:
 
 
 
 
Acquisition-related
 
1,523

 
985

Litigation and non-routine costs, net
 
(8,564
)
 
(21,492
)
Property operating
 
30,490

 
32,378

General and administrative
 
15,056

 
14,846

Depreciation and amortization
 
124,080

 
136,555

Impairments
 
8,380

 
11,988

Restructuring
 

 
9,076

Total operating expenses
 
170,965

 
184,336

Other (expense) income:
 
 
 
 
Interest expense
 
(64,696
)
 
(71,254
)
Loss on extinguishment and forgiveness of debt, net
 
(1,280
)
 

Other income (loss), net
 
175

 
(439
)
Equity in income of unconsolidated entities
 
246

 
500

Gain on disposition of real estate and real estate assets held for sale, net
 
25,249

 
10,831

Total other expenses, net
 
(40,306
)
 
(60,362
)
Income before taxes
 
87,911

 
72,182

Provision for income taxes
 
(1,048
)
 
(1,211
)
Net income
 
86,863

 
70,971

Net income attributable to non-controlling interests
 
(55
)
 
(1,667
)
Net income attributable to the General Partner
 
$
86,808

 
$
69,304

 
 
 
 
 
Basic and diluted net income per share attributable to common stockholders
 
$
0.07

 
$
0.05

Distributions declared per common share
 
$
0.1375

 
$
0.1375






10



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

 
 
Three Months Ended
 
 
March 31,
2020
 
December 31,
2019
 
March 31,
2019
Net income
 
$
86,863

 
$
71,168

 
$
70,971

 Adjustments:
 
 
 
 
 
 
Interest expense
 
64,696

 
69,628

 
71,254

Depreciation and amortization
 
124,080

 
112,307

 
136,555

Provision for income taxes
 
1,048

 
719

 
1,211

Proportionate share of adjustments for unconsolidated entities
 
1,761

 
1,603

 
288

 EBITDA
 
$
278,448

 
$
255,425

 
$
280,279

Gain on disposition of real estate assets, net
 
(25,249
)
 
(41,541
)
 
(10,831
)
Impairments of real estate
 
8,380

 
22,851

 
11,988

EBITDAre
 
$
261,579

 
$
236,735

 
$
281,436

Payments received on fully reserved loans
 

 
(133
)
 

Acquisition-related expenses
 
1,523

 
1,168

 
985

Litigation and non-routine costs, net
 
(8,564
)
 
8,659

 
(21,492
)
Loss on investments
 
541

 

 
470

Loss on derivative instruments, net
 

 

 
34

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
748

 
504

 
731

Loss on extinguishment and forgiveness of debt, net
 
1,280

 
17,413

 

Net direct financing lease adjustments
 
365

 
387

 
409

Straight-line rent
 
(2,054
)
 
(7,107
)
 
(7,412
)
Restructuring expenses
 

 
356

 
9,076

Other adjustments, net
 
(205
)
 
(3,511
)
 
(113
)
 Proportionate share of adjustments for unconsolidated entities
 
268

 
(559
)
 
(188
)
Adjustment for Excluded Properties
 

 
3

 

Normalized EBITDA
 
$
255,481

 
$
253,915

 
$
263,936

Normalized EBITDA annualized
 
$
1,021,924

 
$
1,015,660

 
$
1,055,744




















11



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

 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net income
 
$
86,863

 
$
70,971

Dividends on non-convertible preferred stock
 
(12,948
)
 
(17,973
)
Gain on disposition of real estate assets, net
 
(25,249
)
 
(10,831
)
Depreciation and amortization of real estate assets
 
123,645

 
135,861

Impairment of real estate
 
8,380

 
11,988

Proportionate share of adjustments for unconsolidated entities
 
1,131

 
288

FFO attributable to common stockholders and limited partners
 
$
181,822

 
$
190,304

 
 
 
 
 
Weighted-average shares outstanding - basic
 
1,077,937,799

 
968,460,296

Effect of weighted-average Limited Partner OP Units and dilutive securities
 
1,813,441

 
24,838,018

Weighted-average shares outstanding - diluted
 
1,079,751,240

 
993,298,314

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.168

 
$
0.192





















12



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

 
 
Three Months Ended March 31,
 
 
2020
 
2019
FFO attributable to common stockholders and limited partners
 
$
181,822

 
$
190,304

 
 
 
 
 
Acquisition-related expenses
 
1,523

 
985

Litigation and non-routine costs, net
 
(8,564
)
 
(21,492
)
Loss on investments
 
541

 
470

Loss on derivative instruments, net
 

 
34

Amortization of premiums and discounts on debt and investments, net
 
(689
)
 
(1,264
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
748

 
731

Net direct financing lease adjustments
 
365

 
409

Amortization and write-off of deferred financing costs
 
2,841

 
3,494

Loss on extinguishment and forgiveness of debt, net
 
1,280

 

Straight-line rent
 
(2,054
)
 
(7,412
)
Equity-based compensation
 
2,602

 
2,687

Restructuring expenses
 

 
9,076

Other adjustments, net
 
228

 
569

Proportionate share of adjustments for unconsolidated entities
 
331

 
(188
)
AFFO attributable to common stockholders and limited partners
 
$
180,974

 
$
178,403

 
 
 
 
 
Weighted-average shares outstanding - basic
 
1,077,937,799

 
968,460,296

Effect of weighted-average Limited Partner OP Units and dilutive securities
 
1,813,441

 
24,838,018

Weighted-average shares outstanding - diluted
 
1,079,751,240

 
993,298,314

 
 
 
 
 
AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.168

 
$
0.180















13



VEREIT, INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)
 
 
Three Months Ended
 
 
March 31,
2020
Interest expense - as reported
 
$
(64,696
)
Adjustments:
 
 
Amortization of deferred financing costs and other non-cash charges
 
(2,924
)
Amortization of net premiums
 
772

Unconsolidated joint ventures’ pro rata share
 
(579
)
Interest Expense, Excluding Non-Cash Amortization
 
$
(63,123
)

 
 
Three Months Ended
 
 
March 31,
2020
Interest Expense, Excluding Non-Cash Amortization
 
$
63,123

Secured debt principal amortization
 
1,071

Dividends attributable to preferred shares 
 
12,948

Total fixed charges
 
77,142

Normalized EBITDA
 
255,481

Fixed Charge Coverage Ratio
 
3.31
x

 
 
March 31,
2020
 
December 31,
2019
Mortgage notes payable, net
 
$
1,405,701

 
$
1,528,134

Corporate bonds, net
 
2,814,474

 
2,813,739

Convertible debt, net
 
319,120

 
318,183

Credit facility, net
 
1,767,306

 
1,045,669

Total debt - as reported
 
6,306,601

 
5,705,725

Deferred financing costs, net
 
37,896

 
39,721

Net discounts (premiums)
 
6,389

 
5,413

Principal Outstanding
 
6,350,886

 
5,750,859

Unconsolidated joint ventures’ pro rata share
 
68,360

 
53,850

Adjusted Principal Outstanding
 
$
6,419,246

 
$
5,804,709

Cash and cash equivalents
 
(600,945
)
 
(12,921
)
Pro rata share of unconsolidated joint ventures’ cash and cash equivalents
 
(2,567
)
 
(1,480
)
Net Debt
 
$
5,815,734

 
$
5,790,308


14



 
 
March 31,
2020
Total real estate investments, at cost - as reported
 
$
14,751,458

Adjustments:
 
 
Investment in Cole REITs
 
7,009

Gross assets held for sale
 
104,064

Investment in direct financing leases, net
 
8,951

Gross below market leases
 
(236,378
)
Unconsolidated joint ventures' pro rata share
 
146,852

Gross Real Estate Investments
 
$
14,781,956


 
 
March 31,
2020
 
December 31,
2019
Net Debt
 
$
5,815,734

 
$
5,790,308

Normalized EBITDA annualized
 
1,021,924

 
1,015,660

Net Debt to Normalized EBITDA Annualized Ratio
 
5.69
x
 
5.70
x

 
 
March 31,
2020
Net Debt
 
$
5,815,734

Gross Real Estate Investments
 
14,781,956

Net Debt Leverage Ratio
 
39.3
%
 
 
 
Unencumbered Gross Real Estate Investments
 
$
12,005,190

Gross Real Estate Investments
 
14,781,956

Unencumbered asset ratio
 
81.2
%


15
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

404072137_coververeitsupp2020q1.jpg




404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
March 31, 2020
 
Section
Page
404072137_walmart.jpg
 
 
Company Overview
Quarterly 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
404072137_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
404072137_cvskernersvillea21.jpg
Lease Summary
Property Type Diversification and Rent Coverage
Unconsolidated Joint Venture Investment Summary
Definitions
 
 
 
 
 
 
 
 
 
 
 
 
404072137_bestbuy.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended March 31, 2020, unless otherwise indicated. Certain balances have been reclassified to conform with the current period's presentations, including partnership fees earned from services provided to our unconsolidated joint ventures, which were previously included in other income, net. 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, 2019 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2020, September 30, 2019, June 30, 2019, and March 31, 2019.

The novel coronavirus (“COVID-19”) pandemic has negatively affected the Company’s business, financial condition, results of operations and liquidity, has had repercussions across local, national and global economies and has resulted in stock market volatility. As of March 31, 2020, the impact of COVID-19 on the Company’s business had not been significant, but the Company is closely monitoring the pandemic and its effects and continues to review receivables related to rent, straight-line rent and property operating expense reimbursements for collectability and changes in circumstances that could indicate the carrying value of its real estate assets or goodwill may not be recoverable.

In the third quarter of 2019, the Company entered into agreements to settle certain outstanding litigation, including the pending class action litigation, In re American Realty Capital Properties, Inc. Litigation, No. 1:15-mc-00040 (AKH) (the “Class Action”). In accordance with the terms of the stipulation of settlement and settlement contemplated therein for the Class Action (the "Class Action Settlement"), certain defendants agreed to pay in the aggregate $1.025 billion, comprised of contributions from the Company’s former external manager and its principals (together, the “Former Manager”) totaling $225.0 million, $12.5 million from the Company’s former Chief Financial Officer (the “Former CFO”), $49.0 million from the Company’s former auditor, and the balance of $738.5 million from the Company. The contribution from the Company’s Former Manager and Former CFO was satisfied with a combination of (i) limited partner OP Units held by the Former Manager and Former CFO, (ii) amounts due related to dividends on certain of such limited partner OP Units previously withheld from distribution, (iii) the value of substantially all of the limited partner OP Units and dividends surrendered to the Company in July 2019 as a result of a settlement by the Former Manager with the U.S. Securities and Exchange Commission (the "SEC"), and (iv) cash paid by the Former Manager and Former CFO. Pursuant to the Class Action Settlement, on October 15, 2019, the Company funded $966.3 million in connection therewith, which includes the Company's contribution of $738.5 million and cash contributed by the Company to the Class Action Settlement fund for the surrendered limited partner OP Units and amounts due related to the previously withheld dividends. The Company determined that Net Debt (as defined herein) as of September 30, 2019 should include the amounts payable in cash pursuant to the Class Action Settlement. Management believes that including the impact of the payables in Net Debt provides useful information to investors to assess our liquidity, financial flexibility, capital structure and leverage, as the Company maintained a high cash balance at September 30, 2019 with the intent to use the cash to fund the Class Action Settlement. The Company also entered into settlement agreements and releases to settle the remaining opt out actions and paid $27.0 million during the three months ended September 30, 2019 in connection therewith, which when aggregated with the Company's contribution to the Class Action Settlement is a total cost to the Company of approximately $765.5 million in the third quarter of 2019.

In the second quarter of 2019, the Company sold six consolidated properties to two newly-formed unconsolidated joint ventures (the "Industrial Partnership"), and in the first quarter of 2020, the Company sold two consolidated properties to a newly-formed joint venture (the "Office Partnership"). The Company exercises significant influence, but not control, over the underlying joint ventures. Under GAAP, the Company accounts for its investments in the Industrial Partnership, the Office Partnership and one previously existing joint venture under the equity method of accounting and does not consolidate the financial results and position of the underlying joint ventures. The Company determined that effective April 1, 2019, certain non-GAAP measures and operating metrics should include the Company's pro rata share of such measures and metrics from the Company's unconsolidated joint ventures, based upon the Company's legal ownership percentage, which may, at times, not equal the Company's economic interest because of various provisions in the joint venture agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. Management believes that including the Company's pro rata share in certain non-GAAP measures and operating metrics is helpful in understanding the financial condition and performance and operating metrics of the Company. The Company did not update data presented for prior periods as the impact on prior period non-GAAP measures and operating metrics was immaterial. The Company does not adjust non-GAAP measures and operating metrics for the partner's pro rata share of the Company's consolidated joint venture as the impact is immaterial.

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



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

 
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 the Company's expectations and projections regarding future events and plans, the Company's future financial condition, results of operations, liquidity and business, including acquisitions, rent receipts, rent relief requests, debt levels, the payment of future dividends and the impact of COVID-19 on the Company's business. Generally, the words "anticipates," "assumes," "believes," "continues," "could," "estimates," "expects," "goals," "intends," "may," "plans," "projects," "seeks," "should," "targets," "will," variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company's control, that could cause actual events and plans or could cause the Company's business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collections.

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the duration and extent of the impact of COVID-19 on our business and the businesses of our tenants (including their ability to timely make rent payments) and the economy generally; federal or state legislation or regulation that could impact the timely payment of rent by tenants in light of COVID-19; the Company's plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the Company'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 the Company's properties; risks accompanying the management of its Industrial Partnership and Office Partnership; the impact of impairment charges in respect of certain of the Company's properties; 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 the Company's management with respect to such programs; competition in the acquisition and disposition of properties and in the leasing of its properties including that the Company may be unable to acquire, dispose of, or lease properties on advantageous terms or at all; risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of the Company's tenants, which are heightened as a result of the COVID-19 pandemic; risks associated with the Company's substantial indebtedness, including that such indebtedness may affect the Company's ability to pay dividends and that the terms and restrictions within the agreements governing the Company'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 the Company's filings with the SEC, which are available at the SEC’s website at www.sec.gov. The Company 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 | 4



404072137_vereitlogoa60.jpg
 
 
Q1 2020 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.

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, 2020, approximately 36.7% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 99.1% and the Weighted Average Remaining Lease Term was 8.3 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 | 5



404072137_vereitlogoa60.jpg
 
 
Q1 2020 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 and Director

Corporate Offices and Contact Information
2325 E. Camelback Road, 9th Floor
 
19 West 44th Street, Suite 1401
Phoenix, AZ 85016
 
New York, NY 10036
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 | 6



404072137_vereitlogoa60.jpg
 
 
Q1 2020 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,
2020
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
Total revenues
$
299,182

 
$
305,685

 
$
303,301

 
$
312,188

 
$
316,880

Income (loss) from continuing operations 
$
86,863

 
$
71,168

 
$
(741,529
)
 
$
292,284

 
$
70,971

Basic and diluted income (loss) from continuing operations per share attributable to common stockholders and limited partners 
$
0.07

 
$
0.05

 
$
(0.76
)
 
$
0.27

 
$
0.05

Normalized EBITDA
$
255,481

 
$
253,915

 
$
258,625

 
$
260,345

 
$
263,936

FFO attributable to common stockholders and limited partners from continuing operations 
$
181,822

 
$
149,433

 
$
(657,147
)
 
$
179,038

 
$
190,304

FFO attributable to common stockholders and limited partners from continuing operations per diluted share 
$
0.168

 
$
0.139

 
$
(0.655
)
 
$
0.179

 
$
0.192

AFFO attributable to common stockholders and limited partners
$
180,974

 
$
173,853

 
$
177,580

 
$
177,099

 
$
178,403

AFFO attributable to common stockholders and limited partners per diluted share
$
0.168

 
$
0.161

 
$
0.177

 
$
0.177

 
$
0.180

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
1,079,751,240

 
1,077,647,052

 
1,002,899,652

 
999,777,735

 
993,298,314

 
 
 
 
 
 
 
 
 
 
Portfolio Metrics
 
 
 
 
 
 
 
 
 
Operating Properties
3,853

 
3,858

 
3,926

 
3,950

 
3,980

Rentable Square Feet (in thousands)
89,539

 
89,491

 
90,704

 
90,631

 
94,742

Economic Occupancy Rate
99.1
%
 
99.1
%
 
99.0
%
 
99.0
%
 
98.9
%
Weighted Average Remaining Lease Term (years)
8.3

 
8.3

 
8.4

 
8.6

 
8.7

Investment-Grade Tenants (1)
36.7
%
 
38.6
%
 
39.5
%
 
39.6
%
 
41.3
%
___________________________________
(1)
The weighted-average credit rating of our investment-grade tenants was BBB+ as of March 31, 2020.

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



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
March 31,
2020
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
63,123

 
$
66,292

 
$
66,223

 
$
67,815

 
$
69,036

Normalized EBITDA (2)
 
255,481

 
253,915

 
258,625

 
260,345

 
263,936

Interest Coverage Ratio
 
4.05x

 
3.83x

 
3.91x

 
3.84x


3.82x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
63,123

 
$
66,292

 
$
66,223

 
$
67,815

 
$
69,036

Secured debt principal amortization
 
1,071

 
2,360

 
2,326

 
2,256

 
2,430

Dividends attributable to preferred shares 
 
12,948

 
15,964

 
16,578

 
17,973

 
17,973

Total fixed charges
 
77,142

 
84,616

 
85,127

 
88,044

 
89,439

Normalized EBITDA (2)
 
255,481

 
253,915

 
258,625

 
260,345


263,936

Fixed Charge Coverage Ratio
 
3.31
x
 
3.00x

 
3.04x

 
2.96x

 
2.95x

 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
2020
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Net Debt (3)
 
$
5,815,734

 
$
5,790,308

 
$
5,658,503

 
$
5,514,805

 
$
6,049,418

Normalized EBITDA annualized
 
1,021,924

 
1,015,660

 
1,034,500

 
1,041,380

 
1,055,744

Net Debt to Normalized EBITDA annualized ratio
 
5.69
x
 
5.70
x
 
5.47
x
 
5.30
x
 
5.73
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt (3)
 
$
5,815,734

 
$
5,790,308

 
$
5,658,503

 
$
5,514,805

 
$
6,049,418

Gross Real Estate Investments (3)
 
14,781,956

 
14,775,948

 
14,911,108

 
14,950,309

 
15,411,364

Net Debt Leverage Ratio
 
39.3
%
 
39.2
%
 
37.9
%
 
36.9
%
 
39.3
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
12,005,190

 
$
11,681,648

 
$
11,374,138

 
$
11,361,522

 
$
11,577,487

Gross Real Estate Investments (3)
 
14,781,956

 
14,775,948

 
14,911,108

 
14,950,309

 
15,411,364

Unencumbered Asset Ratio
 
81.2
%
 
79.1
%
 
76.3
%
 
76.0
%
 
75.1
%
___________________________________
(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)
Refer to the Statements of Operations section for net income calculated in accordance with GAAP and to the EBITDA, EBITDAre and Normalized EBITDA section for the required reconciliation to the most directly comparable GAAP financial measure.
(3)
Refer to the Balance Sheets section for total debt and real estate investments, at cost calculated in accordance with GAAP and to the Definitions section for the required reconciliation to the most directly comparable GAAP financial measure. As discussed in the About the Data section, Net Debt as of September 30, 2019 includes the amounts payable in cash pursuant to the Class Action Settlement paid on October 15, 2019.




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



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



404072137_chart-823f727c0d5955a7bb6.jpg
 
 
Common equity
42.4%
 
 
 

 
 
Corporate bonds
22.8%
 
 
 

 
 
Mortgage notes payable
11.3%
 
 
 

 
 
Credit facility term loan
7.2%
 
 
 

 
 
Revolving credit facility
7.0%
 
 
 
 
 
 
Preferred equity
6.2%
 
 
 

 
 
Convertible notes
2.6%
 
 
 

 
 
Unconsolidated joint ventures' pro rata share
0.5%
 
 

                            

Fixed vs. Variable Rate Debt
Fixed
72.0
%
Swapped to Fixed
14.0
%
Variable (4)
14.0
%

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

 
March 31, 2020
Diluted shares outstanding
 
 
 
1,081,109

Stock price
 
 
 
 
$
4.89

Implied Equity Market Capitalization
 
$
5,286,623

 
 
 
 
 
 
Series F Perpetual Preferred (2)
 
6.70
%
 
$
773,025

 
 
 
 
 
 
Mortgage notes payable
2.7
 
5.02
%
 
1,407,771

Unconsolidated joint ventures' pro rata share
3.9
 
3.34
%
 
68,360

Total secured debt
2.8
 
4.94
%
 
$
1,476,131

 
 
 
 
 
 
Revolving credit facility
2.1
 
1.92
%
 
871,313

Credit facility term loan
3.1
 
3.59
%
 
900,000

Total unsecured credit facility
2.7
 
2.77
%
 
$
1,771,313

 
 
 
 
 
 
2020 convertible notes
0.7
 
3.75
%
 
321,802

2024 corporate bonds
3.9
 
4.60
%
 
500,000

2025 corporate bonds
5.6
 
4.63
%
 
550,000

2026 corporate bonds
6.2
 
4.88
%
 
600,000

2027 corporate bonds
7.4
 
3.95
%
 
600,000

2029 corporate bonds
9.7
 
3.10
%
 
600,000

Total unsecured debt
4.8
 
3.66
%
 
$
4,943,115

 
 
 
 
 
 
Total Adjusted Principal Outstanding
4.4
 
3.96
%
 
$
6,419,246

 
 
 
 
 
 
Total Capitalization
 
$
12,478,894

Less: Cash and cash equivalents
 
600,945

Less: Pro rata share of unconsolidated joint ventures' cash and cash equivalents
 
2,567

Enterprise Value
 
$
11,875,382

 
 
 
 
 
 
Net Debt/Enterprise Value
 
49.0
%
Net Debt/Normalized EBITDA Annualized
 
5.69
x
Net Debt + Preferred (2)/Normalized EBITDA Annualized
 
6.45
x
Fixed Charge Coverage Ratio
 
3.31
x
Liquidity (3)
 
 
 
 
$
1,229,632

___________________________________
(1)Weighted average interest rate for variable rate debt represents the interest rate in effect as of March 31, 2020.
(2)Balance represents 30.9 million shares of Series F Preferred Stock (and 30.9 million corresponding general partner Series F Preferred Units) and 49,766 limited partner Series F Preferred Units outstanding at March 31, 2020, multiplied by the liquidation preference of $25 per share.
(3)Liquidity represents cash and cash equivalents of $600.9 million and $628.7 million available capacity on our $1.5 billion revolving credit facility.
(4)Includes $559.3 million, which was received as of March 31, 2020, of the $600.0 million additional draw on our Revolving Credit Facility in excess of normal operating requirements to enhance our cash position that was initiated during the three months ended March 31, 2020. Excluding the $559.3 million, variable rate debt would be 5.8%.

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



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

 
Balance Sheets
(unaudited, in thousands)
 
 
 
March 31,
2020
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,715,625

 
$
2,738,679

 
$
2,728,560

 
$
2,763,348

 
$
2,824,666

Buildings, fixtures and improvements
 
10,135,933

 
10,200,550

 
10,287,047

 
10,352,928

 
10,741,995

Intangible lease assets
 
1,899,900

 
1,904,641

 
1,909,932

 
1,927,699

 
2,003,825

Total real estate investments, at cost
 
14,751,458


14,843,870

 
14,925,539

 
15,043,975

 
15,570,486

Less: accumulated depreciation and amortization
 
3,659,980

 
3,594,247

 
3,559,403

 
3,488,838

 
3,544,252

Total real estate investments, net
 
11,091,478


11,249,623

 
11,366,136

 
11,555,137

 
12,026,234

Operating lease right-of-use assets
 
211,187

 
215,227

 
218,393

 
221,798

 
224,859

Investment in unconsolidated entities
 
78,718

 
68,825

 
69,025

 
68,633

 
35,790

Cash and cash equivalents
 
600,945

 
12,921

 
1,029,315

 
211,510

 
12,788

Restricted cash
 
18,720

 
20,959

 
20,742

 
20,692

 
18,517

Rent and tenant receivables and other assets, net
 
345,103

 
348,395

 
347,455

 
343,788

 
361,641

Goodwill
 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

 
1,337,773

Real estate assets held for sale, net
 
88,513

 
26,957

 
66,684

 
22,553

 
36,022

Total assets
 
$
13,772,437


$
13,280,680


$
14,455,523

 
$
13,781,884

 
$
14,053,624

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable, net
 
$
1,405,701

 
$
1,528,134

 
$
1,717,817

 
$
1,745,331

 
$
1,918,826

Corporate bonds, net
 
2,814,474

 
2,813,739

 
2,622,320

 
2,621,130

 
2,619,956

Convertible debt, net
 
319,120

 
318,183

 
397,726

 
396,766

 
395,823

Credit facility, net
 
1,767,306

 
1,045,669

 
895,351

 
895,033

 
1,089,725

Below-market lease liabilities, net
 
134,410

 
143,583

 
147,997

 
152,654

 
166,708

Accounts payable and accrued expenses
 
125,358

 
126,320

 
1,125,703

 
127,799

 
141,126

Derivative, deferred rent and other liabilities
 
146,893

 
90,349

 
101,828

 
77,713

 
70,220

Distributions payable
 
150,493

 
150,364

 
201,451

 
187,359

 
190,246

Operating lease liabilities
 
217,567

 
221,061

 
223,288

 
225,972

 
228,120

Total liabilities
 
7,081,322


6,437,402

 
7,433,481

 
6,429,757

 
6,820,750

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
309

 
309

 
389

 
429

 
429

Common stock
 
10,778

 
10,768

 
10,677

 
9,734

 
9,716

Additional paid-in capital
 
13,252,447

 
13,251,962

 
13,360,675

 
12,655,018

 
12,645,148

Accumulated other comprehensive loss
 
(104,217
)
 
(27,670
)
 
(47,886
)
 
(28,026
)
 
(12,202
)
Accumulated deficit
 
(6,475,568
)
 
(6,399,626
)
 
(6,306,590
)
 
(5,416,759
)
 
(5,550,574
)
Total stockholders' equity
 
6,683,749


6,835,743

 
7,017,265

 
7,220,396

 
7,092,517

Non-controlling interests
 
7,366

 
7,535

 
4,777

 
131,731

 
140,357

Total equity
 
6,691,115


6,843,278


7,022,042

 
7,352,127

 
7,232,874

Total liabilities and equity
 
$
13,772,437


$
13,280,680

 
$
14,455,523

 
$
13,781,884

 
$
14,053,624



See the Definitions section for a description of the Company's non-GAAP and operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 10



404072137_vereitlogoa60.jpg
 
 
Q1 2020 SUPPLEMENTAL INFORMATION

 
Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
March 31,
2020
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental
 
$
298,586

 
$
305,363

 
$
302,985

 
$
312,043

 
$
316,843

Fees from managed partnerships
 
596

 
322

 
316

 
145

 
37

Total revenues
 
299,182


305,685


303,301


312,188


316,880

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition-related
 
1,523

 
1,168

 
1,199

 
985

 
985

Litigation and non-routine costs, net
 
(8,564
)
 
8,659

 
832,024

 
(3,769
)
 
(21,492
)
Property operating
 
30,490

 
34,066

 
30,822

 
32,503

 
32,378

General and administrative
 
15,056

 
16,966

 
14,483

 
16,416

 
14,846

Depreciation and amortization
 
124,080

 
112,307

 
115,111