Spirit Realty Capital Inc.

11/02/2021 | Press release | Distributed by Public on 11/02/2021 14:03

Generated Net Income of $0.32 per Share, FFO of $0.87 per Share and AFFO of $0.84 per Share - Form 8-K

- Generated Net Income of$0.32 per Share, FFO of$0.87per Share and AFFO of$0.84per Share -

- Invested $294.2 Million in Acquisitions and Revenue-Producing Capital Expenditures -

- Issued 4.2 Million Shares for Net Proceeds of $190.9 Million -

Dallas, TX- November 2, 2021-Spirit Realty Capital, Inc. (NYSE: SRC) ("Spirit" or the "Company"), a net-lease real estate investment trust ("REIT") that invests in single-tenant, operationally essential real estate, today reported its financial and operating results for the third quarter endedSeptember 30, 2021.

HIGHLIGHTS

•

Generated net income of$0.32vs $0.11per diluted share, FFO of$0.87vs$0.59per share and AFFO of $0.84 vs $0.72 per share, compared to the same quarter in 2020.

•

Invested$294.2 millionin the third quarter, including the acquisition of31properties for $291.8 million with an initial weighted average cash yield of 7.27% and an economic yield of 8.62%.

•

Generated $7.6 million in gross proceeds from the disposition of three vacant properties.

•

Entered into new forward contracts to issue 3.9 million shares of common stock at an initial weighted average forward price of $48.72 and issued 4.2 million shares of common stock to settle certain forward contracts, generating net proceeds of $190.9 million. As of September 30, 2021, Spirit had unsettled forward contracts for 1.6 million shares of common stock with a current weighted average forward price of $48.64.

•

Adjusted Debt to Annualized Adjusted EBITDAre of 5.0x or 4.9x assuming the settlement of the 1.6 million open forward equity contracts.

•

Produced strong operational performance, with occupancy of 99.7%, Lost Rent of 0.1% and Unreimbursed Property Costs of 1.4%.

•

Had Corporate Liquidity of$843.5 millionas ofSeptember 30, 2021, comprised of availability under the 2019 Credit Facility, cash and cash equivalents and available proceeds from unsettled forward equity contracts.

•

Received a credit rating upgrade from Moody's Investors Service on October 29, 2021 from Baa3 to Baa2.

CEO COMMENTS

"Our portfolio performance, driven by our high-quality mix of tenants, industries and asset types, coupled with accretive acquisitions, drove AFFO per share growth in the third quarter. We look forward to continuing our momentum into year-end as we execute our business strategy and capitalize on opportunities with our tenants and business partners," stated Jackson Hsieh, President and Chief Executive Officer.

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DIVIDEND

For the third quarter of 2021, the Board of Directors declared a quarterly cash dividend of$0.638per share of common stock, representing an annualized rate of$2.552per share. The Board of Directors also declared a quarterly cash dividend of$0.375per preferred share. The quarterly common dividend was paid onOctober 15, 2021to stockholders of record as ofSeptember 30, 2021,and the preferred dividend was paid onSeptember 30, 2021to stockholders of record as ofSeptember 15, 2021.

2021 GUIDANCE

The Company updated its guidance for fiscal year 2021:

•

AFFO of $3.29 to $3.30 per share and

•

Net capital deployment of $0.9 billion to $1.1 billion (comprising acquisitions, revenue producing capital expenditures and development deals, net of dispositions).

EARNINGS WEBCAST AND CONFERENCE CALL TIME

The Company's third quarter2021earnings conference call is scheduled for Wednesday, November 3, 2021 at 9:30am Eastern Time. Interested parties can listen to the call via the following:

Internet:

Go to www.spiritrealty.com and select the investor relations page at least 15 minutes prior to the start time of the call to register, download and install any necessary audio software.

Phone:

No access code required.

(877) 407-9208 (Domestic) / (201) 493-6784 (International)

Replay:

Available through November 17, 2021 with access code 13723286.

(844) 512-2921 (Domestic) / (412) 317-6671 (International)

SUPPLEMENTAL PACKAGES

A supplemental financial and operating report and associated addenda that contain non-GAAP measures and other defined terms, along with this press release, have been posted to the investor relations page of the Company's website atwww.spiritrealty.com.

ABOUT SPIRIT REALTY

Spirit Realty Capital, Inc. (NYSE: SRC) is a premier net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets, subject to long-term leases.

As ofSeptember 30, 2021,our diverse portfolio consisted of 1,915 ownedproperties across 48 states, with an aggregate leasable area of 46.7 million square feet within retail, industrial and other buildings. Our properties were leased to 312 tenants operating in over 35 industries. More information about Spirit Realty Capital can be found on the investor relations page of the Company's website atwww.spiritrealty.com.

INVESTOR CONTACT

Investor Relations

(972) 476-1403

[email protected]

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FORWARD-LOOKING AND CAUTIONARY STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. When used in this press release, the words "estimate," "anticipate," "expect," "believe," "intend," "may," "will," "should," "seek," "approximately" or "plan," or the negative of these words or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise, and Spirit may not be able to realize them. Spirit does not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: industry and economic conditions; volatility and uncertainty in the financial markets, including potential fluctuations in the CPI; Spirit's success in implementing its business strategy and its ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments; the financial performance of Spirit's retail tenants and the demand for retail space; Spirit's ability to diversify its tenant base; the nature and extent of future competition; increases in Spirit's costs of borrowing as a result of changes in interest rates and other factors; Spirit's ability to access debt and equity capital markets; Spirit's ability to pay down, refinance, restructure and/or extend its indebtedness as it becomes due; Spirit's ability and willingness to renew its leases upon expiration and to reposition its properties on the same or better terms upon expiration in the event such properties are not renewed by tenants or Spirit exercises its rights to replace existing tenants upon default; the impact of any financial, accounting, legal or regulatory issues or litigation that may affect Spirit or its major tenants; Spirit's ability to manage its expanded operations; Spirit's ability and willingness to maintain its qualification as a REIT under the Internal Revenue Code of 1986, as amended; the impact on Spirit's business and those of its tenants from epidemics, pandemics or other outbreaks of illness, disease or virus (such as the strain of coronavirus known as COVID-19); and other risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters discussed in Spirit's most recent filings with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Quarterly Reports on Form 10-Q. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. While forward-looking statements reflect Spirit's good faith beliefs, they are not guarantees of future performance. Spirit disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.

NOTICE REGARDING NON-GAAP FINANCIAL MEASURES

In addition to U.S. GAAP financial measures, this press release and the referenced supplemental financial and operating report and related addenda contain and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Definitions of non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are included in the supplemental financial and operating report, which can be found in the investor relations page of our website.

(SRC:ER)

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SPIRIT REALTY CAPITAL, INC.

Reconciliation of Non-GAAP Financial Measures

(In Thousands, Except Share and Per Share Data)

(Unaudited)

FFO and AFFO

(Unaudited)

Three Months Ended September 30,

2021

2020

Net income attributable to common stockholders

$

38,291

$

11,211

Portfolio depreciation and amortization

62,919

52,024

Portfolio impairments

4,435

8,106

Gain on disposition of assets

(453)

(10,763

)

FFO attributable to common stockholders

$

105,192

$

60,578

(Gain) loss on debt extinguishment

(1)

7,252

Deal pursuit costs

361

597

Non-cash interest expense

1,919

3,190

Straight-line rent, net of uncollectible reserve

(8,840)

(899

)

Other amortization and non-cash charges

(714)

(383

)

Non-cash compensation expense

3,504

2,967

Costs related to COVID-19(1)

46

702

AFFO attributable to common stockholders(2)

$

101,467

$

74,004

Dividends declared to common stockholders

$

78,674

$

66,171

Dividends declared as a percent of AFFO

78%

89%

Net income per share of common stock - Basic

$

0.32

$

0.11

Net income per share of common stock - Diluted

$

0.32

$

0.11

FFO per share of common stock - Diluted(3)

$

0.87

$

0.59

AFFO per share of common stock - Diluted(3)

$

0.84

$

0.72

Weighted average shares of common stock outstanding - Basic

119,775,871

102,750,120

Weighted average shares of common stock outstanding - Diluted

120,302,158

102,938,860

(1)

Costs related to COVID-19are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements.

(2)

AFFO for the three months ended September 30, 2021 and 2020 includes $1.0 million and $1.8 million, respectively, of deferred rental income recognized in conjunction with the FASB's relief for deferral agreements extended as a result of the COVID-19 pandemic.

(3)

Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted:

Three Months Ended September 30,

2021

2020

FFO

$0.2 million

$0.2 million

AFFO

$0.2 million

$0.2 million

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SPIRIT REALTY CAPITAL, INC.

Reconciliation of Non-GAAP Financial Measures

(In Thousands, Except Share and Per Share Data)

(Unaudited)

Adjusted Debt, EBITDAre and Adjusted EBITDAre

Adjusted Debt

September 30, 2021

2019 Credit Facility

$

49,300

Senior Unsecured Notes, net

2,717,693

Mortgages payable, net

5,687

Total debt, net

2,772,680

Unamortized debt discount, net

11,134

Unamortized deferred financing costs

20,962

Cash and cash equivalents

(15,564)

Adjusted Debt

2,789,212

Preferred Stock at liquidation value

172,500

Adjusted Debt + Preferred Stock

$

2,961,712

Annualized Adjusted EBITDAre

Quarter Ended

September 30, 2021

Net income

$

40,878

Interest

25,078

Depreciation and amortization

63,061

Income tax expense

244

Gain on disposition of assets

(453)

Portfolio impairments

4,435

EBITDAre

133,243

Adjustments to revenue producing acquisitions and dispositions

1,820

Deal pursuit costs

361

Gain on debt extinguishment

(1)

Costs related to COVID-19(1)

46

Non-cash compensation expense

3,504

Adjusted EBITDAre

138,973

Adjustments related to straight-line rent(2)

(233)

Other adjustments for Annualized EBITDAre(3)

(164)

Annualized Adjusted EBITDAre

$

554,304

Adjusted Debt / Annualized Adjusted EBITDAre(4)

5.0

x

Adjusted Debt + Preferred / Annualized Adjusted EBITDAre

5.3

x

(1)

Costs related to COVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements.

(2)

Adjustment relates to prior period straight-line rent recognized in the current period.

(3)

Adjustment is comprised of certain other property costs, general and administrative expenses and non-recurring revenue recognized in other income.

(4)

Adjusted Debt / Annualized Adjusted EBITDAre would be 4.9x and Adjusted Debt + Preferred / Annualized Adjusted EBITDAre would be 5.2x if all 1.6 million shares under open forward sales agreements had been settled on September 30, 2021.

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