Spirit Realty Capital, Inc. Announces First Quarter of 2020 Financial and Operating Results

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 first quarter ended March 31, 2020.

FIRST QUARTER 2020 HIGHLIGHTS

• Invested $213.4 million, including $205.9 million for the acquisition of 27 properties with an initial weighted average cash yield of 6.47% and an economic yield of 7.41%.

• Generated net loss of $(0.18) vs net income of $0.48 per diluted share, FFO of $0.72 vs $0.90 per share and AFFO of $0.78 vs $0.86 per share, compared to the same quarter in 2019.

• Collected approximately 70% of April 2020 Contractual Rent of $39.3 million as of May 1, 2020.

• Issued 0.4 million shares of common stock, generating gross proceeds of $17.9 million and net proceeds of $17.6 million, under the Company’s At-the-Market Program.

• Generated $15.7 million in gross proceeds from the sale of seven properties, of which three were vacant.

• Maintained strong operational performance, with occupancy of 99.4%, Lost Rent of 0.6% and Property Cost Leakage of 2.4%.

• Adjusted Debt to Annualized Adjusted EBITDAre of 5.3x.

• Had corporate liquidity of $782.7 million as of May 1, 2020, comprised of availability under the 2019 Credit Facility and cash and cash equivalents.

DIVIDEND

The Board of Directors declared a quarterly cash dividend of $0.625 per share of common stock, representing an annualized rate of $2.50 per share. The Board of Directors also declared a quarterly cash dividend of $0.375 per preferred share. The quarterly common dividend was paid on April 15, 2020 to stockholders of record as of March 31, 2020 and the preferred dividend was paid on March 31, 2020 to stockholders of record as of March 13, 2020.

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 at www.spiritrealty.com.

EARNINGS WEBCAST AND CONFERENCE CALL TIME

The Company's first quarter 2020 earnings conference call is scheduled for Tuesday, May 5, 2020 at 5:30pm 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 in order to register, download and install any necessary audio software.
Phone:				No access code required.
				[phone] (Domestic) / [phone] (International)
Replay:				Available through May 19, 2020 with access code 3088655.
				[phone] (Domestic) / [phone] (International)

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 of March 31, 2020, our diversified portfolio was comprised of 1,772 owned properties and 43 properties securing mortgage loans. Our owned properties, with an aggregate gross leasable area of 36.1 million square feet, are leased to 298 tenants across 48 states and 28 retail industries. More information about Spirit Realty Capital can be found on the investor relations page of the Company's website at www.spiritrealty.com.

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, particularly with respect to challenges being experienced by general merchandise retailers; 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; Spirit's ability to manage and liquidate the remaining SMTA Liquidating Trust assets; 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, 2019 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)

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 March 31,
			2020			2019
Net (loss) income attributable to common stockholders		$	(18,435	)	$	40,990
Portfolio depreciation and amortization			52,091			41,207
Portfolio impairments			40,774			3,692
Gain on disposition of assets			(388	)		(8,730	)
FFO attributable to common stockholders		$	74,042		$	77,159
Gain on debt extinguishment			—			(8,783	)
Deal pursuit costs			1,019			71
Non-cash interest expense			3,068			4,737
Accrued interest and fees on defaulted loans			—			285
Straight-line rent, net of related bad debt expense			(1,094	)		(2,907	)
Other amortization and non-cash charges			37			(325	)
Non-cash compensation expense			3,451			3,578
AFFO attributable to common stockholders		$	80,523		$	73,815
Dividends declared to common stockholders		$	64,338		$	54,257
Dividends declared as a percent of AFFO			80%			74%
Net (loss) income per share of common stock – Basic		$	(0.18	)	$	0.48
Net (loss) income per share of common stock – Diluted		$	(0.18	)	$	0.48
FFO per share of common stock – Diluted (1)		$	0.72		$	0.90
AFFO per share of common stock – Diluted (1)		$	0.78		$	0.86
Weighted average shares of common stock outstanding – Basic			102,230,147			85,497,093
Weighted average shares of common stock outstanding – Diluted			102,230,147			85,504,897
Weighted average shares of common stock outstanding for non-GAAP measures – Diluted			102,607,596			85,504,897

⁽¹⁾ Weighted average shares of common stock for non-GAAP measures includes unvested market-based awards for the three months ended March 31, 2020, which are dilutive for the non-GAAP calculations. Dividends paid and undistributed earnings allocated to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted:

		3 Mo. Ended 3/31/2020		3 Mo. Ended 3/31/2019
FFO		$0.2 million		$0.3 million
AFFO		$0.3 million		$0.4 million

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	March 31, 2020
2019 Credit Facility	$	500,000
Senior Unsecured Notes, net		1,484,473
Mortgages and notes payable, net		215,186
Convertible Notes, net		337,921
Total debt, net		2,537,580
Unamortized debt discount, net		8,047
Unamortized deferred financing costs		16,693
Cash and cash equivalents		(216,692	)
Restricted cash balances held for the benefit of lenders		(11,705	)
Adjusted Debt		2,333,923
Preferred Stock at liquidation value		172,500
Adjusted Debt + Preferred Stock	$	2,506,423

Annualized Adjusted EBITDAre	Quarter Ended March 31, 2020
Net loss	$	(15,847	)
Interest		25,359
Depreciation and amortization		52,236
Income tax expense		141
Gain on disposition of assets		(388	)
Portfolio impairments		40,774
EBITDAre		102,275
Adjustments to revenue producing acquisitions and dispositions		1,967
Deal pursuit costs		1,019
Adjusted EBITDAre		105,261
Adjustments for bad debt expense related to straight-line rent (1)		4,006
Other adjustments for Annualized EBITDAre (2)		907
Annualized Adjusted EBITDAre	$	440,696

Adjusted Debt / Annualized Adjusted EBITDAre		5.3	X
Adjusted Debt + Preferred / Annualized Adjusted EBITDAre		5.7	X

⁽¹⁾ Adjustment relates to $4.2 million of bad debt expense on straight-line rent receivable balances, where only $0.2 million of the expense relates to straight-line rent that would have been recognized during the three months ended March 31, 2020. As such, annualization of the $4.0 million of bad debt expense related to straight-line rental revenue recognized in previous periods would not be appropriate.
⁽²⁾ Adjustments are comprised of certain other income and other expenses where annualization would not be appropriate.

 

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