PHOENIX, Aug. 6, 2020 /PRNewswire/ -- VEREIT, Inc.
(NYSE: VER) ("VEREIT" or the "Company") announced today its
operating results for the three months ending June 30,
2020.
Second Quarter 2020 Financial and Operating
Highlights
- Net income of $54.2 million and
net income per diluted share of $0.04
- Achieved $0.15 AFFO per diluted
share
- Rent collection for the quarter of 85% which increased to 91%
for July
- Acquisitions totaled $10.0
million in the second quarter and $156.2 million year-to-date
- Dispositions totaled $66.2
million in the second quarter and $200.3 million year-to-date, including the
Company's share of dispositions contributed to the office
partnership of $70.2 million
- Issued $600.0 million aggregate
principal amount of 3.40% senior notes due 2028 to ultimately
refinance its 3.75% convertible senior notes due December 2020, redeem $150.0 million of VEREIT's 6.7% Series F
preferred stock, and to repay borrowings under the Operating
Partnership's revolving credit facility
- Total debt decreased from $6.31
billion to $5.97 billion; Net
Debt decreased from $5.82 billion to
$5.80 billion, or 39.5% Net Debt to
Gross Real Estate Investments
- Net Debt to Normalized EBITDA ended at 6.1x and includes the
negative effects of portfolio enhancing abatement amendments, which
largely impact second quarter revenue. Excluding this, Net Debt to
Normalized EBITDA would have been 5.8x.
Second Quarter 2020 Financial Results
Rental Revenue
Rental revenue for the quarter ended
June 30, 2020 decreased $33.4
million to $278.6 million as
compared to rental revenue of $312.0
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
June 30, 2020 decreased $238.1
million to $54.2 million as
compared to net income of $292.3
million for the same quarter in 2019, and net income per
diluted share decreased $0.23 to
$0.04 for the quarter ended
June 30, 2020, as compared to net income per diluted share of
$0.27 for the same quarter in
2019.
Normalized EBITDA
Normalized EBITDA for the quarter
ended June 30, 2020 decreased $30.0
million to $238.5 million as
compared to Normalized EBITDA of $268.5
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 June 30, 2020 decreased $23.1 million to $155.9
million, as compared to $179.0
million for the same quarter in 2019, and FFO per diluted
share decreased $0.04 to $0.14 for the quarter ended June 30, 2020,
as compared to FFO per diluted share of $0.18 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 June 30, 2020
decreased $16.0 million to
$161.1 million, as compared to
$177.1 million for the same quarter
in 2019, and AFFO per diluted share decreased $0.03 to $0.15 for
the quarter ended June 30, 2020, as compared to $0.18 for the same quarter in 2019.
Balance Sheet and Liquidity
As of the end of the
second quarter, the Company increased its corporate liquidity from
approximately $1.2 billion to
approximately $1.8 billion, comprised
of $278.9 million in cash and cash
equivalents and the full $1.5 billion
of availability under its credit facility. In addition,
secured debt was reduced by $11.3
million, bringing the total amount reduced for the year to
$132.6 million.
Capital Market Activity
The Company issued
$600.0 million aggregate principal
amount of 3.40% senior notes due 2028 at an issue price of 99.144%
of par value. Proceeds from the senior notes along with borrowings
under the Company's revolving credit facility and cash on hand have
been or will be used to fund the purchase of a portion of or the
repayment at maturity of VEREIT's 3.75% Convertible Senior Notes
due December 2020, of which
$50.2 million was purchased on
June 25, 2020 with $271.6
million principal amount remaining. The Company also
utilized proceeds to fund the partial redemption of $150.0 million of VEREIT's 6.7% Series F
preferred stock on July 22, 2020 and
repay borrowings under the Operating Partnership's revolving credit
facility.
Consolidated Financial Statistics
Financial Statistics
as of the quarter ended June 30, 2020 are as follows:
Net Debt to Normalized EBITDA of 6.1x, Fixed Charge Coverage Ratio
of 3.1x, Unencumbered Asset Ratio of 81.2%, Net Debt to Gross Real
Estate Investments of 39.5%, and Weighted Average Debt Term of 4.8
years. Net Debt to Normalized EBITDA includes the negative
effects of portfolio enhancing abatement amendments, which largely
impact second quarter revenue. In exchange for the
abatements, increased lease term and other economic benefits were
obtained. Excluding this, Net Debt to Normalized EBITDA would
have been 5.8x.
Common Stock Dividend Information
On August 5, 2020, the Company's Board of Directors
declared a quarterly dividend for the third quarter of 2020 of
$0.077 per share consistent with last
quarter's dividend. The dividend will be paid on October 15, 2020 to common stockholders of record
as of September 30, 2020. The
Board of Directors has not made any decisions with respect to its
dividend policy beyond the third quarter and will continue to
monitor the current environment.
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.
Management Commentary
Glenn J.
Rufrano, Chief Executive Officer, stated, "Rent collection
for Q2 was higher at 85% than previously announced and was further
increased to 91% for July. In addition, liquidity improved to
$1.8 billion with the $600.0 million bond issuance, which now finances
our December 2020 convertible debt
maturity and leaves us with no corporate bonds due until
2024. While we have had better than expected results on rent
collections, we chose to maintain capital within the balance sheet,
maximizing value to all stakeholders in the form of liquidity and
future growth. Our board has, therefore, decided to maintain
the current dividend, which at a 51% payout ratio for Q2, is a
solid base on which to grow to a more traditional level."
Real Estate Portfolio
As of June 30, 2020, the
Company's portfolio consisted of 3,836 properties with total
portfolio occupancy of 98.8%, investment grade tenancy of 37.0% and
a weighted-average remaining lease term of 8.5 years, increasing
from 8.3 years.
Real Estate Leasing Activity
During the quarter, the
Company entered into 64 new and renewal leases on approximately 2.1
million square feet, or 2.3% of the portfolio. Leasing
activity included 0.9 million square feet of early renewals.
This activity does not include pandemic related amendments.
Acquisitions
During the quarter ended June 30,
2020, the Company had acquisitions of $10.0
million in the form of a mezzanine position for last-mile
distribution facilities.
Dispositions
During the quarter ended June 30,
2020, the Company disposed of 17 properties for an aggregate sales
price of $66.2 million. Of the total
disposition amount, $14.7 million was
used in the total weighted average cash cap rate calculation of
6.0%, including $4.7 million in net
sales of Red Lobster restaurants. The gain on second quarter
sales was approximately $9.0
million.
COVID-19 Company Update
As of July 27, 2020, VEREIT had
received rent of approximately 86% for April, 85% for May, 86% for
June and 85% for the second quarter. Of the uncollected rent
balance for the second quarter, the Company has entered into rent
relief agreements representing 7.2% of second quarter rents.
In addition, as of July 27, 2020,
VEREIT had received rent of approximately 91% for July. Of
the uncollected rent balance for July, the Company has entered into
rent relief agreements representing 4.2% of July rents.
VEREIT is in continuing discussions with tenants regarding
unpaid rent. The property type breakdown for rent collection
is as follows:
Property
Type
|
April
|
May
|
June
|
July
|
Total
Retail
|
88%
|
87%
|
89%
|
96%
|
Casual
Dining
|
35%
|
39%
|
38%
|
59%
|
Quick
Service
|
82%
|
79%
|
81%
|
80%
|
Total
Restaurant
|
55%
|
56%
|
56%
|
68%
|
Total
Office
|
98%
|
97%
|
97%
|
97%
|
Total
Industrial
|
99%
|
99%
|
94%
|
95%
|
Due to the effects of the COVID-19 pandemic, financial results
include rental revenue of $278.6
million that includes deferred rent of $8.9 million and the negative impact from
$11.2 million of abatement amendments
and $8.4 million of reserved rent
which includes $3.7 million of
straight-line rent receivables. Further rent collection and
relief request details can be found in our investor presentation
filed today.
Subsequent Events
Dispositions
From July 1, 2020 through
July 22, 2020, dispositions totaled $1.1 million. Dispositions year-to-date through
July 22, 2020, totaled $200.3
million, including the Company's share of dispositions
contributed to the office partnership of $70.2 million.
Partial Redemption of Preferred Stock
On July 22, 2020, the Company redeemed 6.0 million
shares of its 6.7% Series F Cumulative Redeemable Preferred Stock,
representing approximately 19.44%, or $150.0
million, of its approximately 30.9 million shares
outstanding. The shares were redeemed at a redemption price of
$25.00 per share.
Audio Webcast and Call Details
The live audio webcast
will be available, beginning at 1:30 p.m. ET on Thursday, August 6, 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 10146036. The telephone replay will be
available until August 20, 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 $14.7 billion including approximately 3,800
properties and 88.9 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.
About the Data
Rent collection percentages disclosed 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.
Percentages are calculated using a denominator that reflects
pre-COVID-19 rents that has not been adjusted for any rent relief
granted. Amounts exclude any tenants in bankruptcy.
In the second quarter of 2020, the Company updated its
definition of Normalized EBITDA to include the impact of
straight-line rent, in order to be consistent with peer
companies. The Company recast the data presented for prior
periods, including ratios impacted by the change.
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"),
Normalized EBITDA and Normalized EBTIDA Adjusted for Abated
Rent
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 and Normalized
EBITDA Adjusted for Abated Rent as non-GAAP supplemental
performance measures 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, 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 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.
Management also believes that Normalized EBITDA Adjusted for Abated
Rent is useful to investors because the period for which rent is
abated is less than 12 months and therefore should not be
annualized. Therefore, EBITDA, EBITDAre, Normalized EBITDA
and Normalized EBTIDA Adjusted for Abated Rent should not be
considered as an alternative to net income, as computed in
accordance with GAAP. The Company uses Normalized EBITDA as one
measure of its operating performance when formulating corporate
goals and evaluating the effectiveness of the Company's strategies.
EBITDA, EBITDAre, Normalized EBITDA and Normalized EBITDA Adjusted
for Abated Rent 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 June 30, 2020 and
March 31, 2020, there were no Excluded Properties. At and
during the three months ended June 30,
2019, there was one Excluded Property which was an office
property comprising 145,186 square feet, of which 6,926 square feet
was vacant, with Principal Outstanding of $19.5 million.
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.
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.
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 ("Net Debt to
Normalized EBITDA") equals Net Debt divided by the respective
quarter Normalized EBITDA multiplied by four. We believe that the
presentation of Net Debt to Normalized EBITDA Annualized provides
useful information to investors because our management reviews Net
Debt to Normalized EBITDA Annualized as part of its management of
our overall liquidity, financial flexibility, capital structure and
leverage.
Net Debt to Normalized EBITDA Adjusted for Abated Rent
Annualized Ratio
Net Debt to Normalized EBITDA Adjusted for Abated Rent
Annualized equals Net Debt divided by the respective quarter
Normalized EBITDA Adjusted for Abated Rent multiplied by four.
Management believes that Net Debt to Normalized EBITDA Adjusted for
Abated Rent Annualized is useful to investors because the period
for which rent is abated is less than 12 months and therefore
should not be annualized.
Unencumbered Asset Ratio
Unencumbered Asset Ratio equals unencumbered Gross Real Estate
Investments divided by Gross Real Estate Investments. Management
believes that Unencumbered Asset Ratio is a useful supplemental
measure of our overall liquidity and leverage.
Forward-Looking Statements
Information set forth herein contains "forward-looking
statements" 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, and
rent relief granted, debt levels, maturities and refinancings,
liquidity, 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 are 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, state or local legislation or regulation that could impact
the timely payment of rent by tenants in light of COVID-19; 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.
VEREIT,
INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
|
|
|
|
June 30,
2020
|
|
March 31,
2020
|
ASSETS
|
|
|
|
|
Real estate
investments, at cost:
|
|
|
|
|
Land
|
|
$
|
2,705,149
|
|
|
$
|
2,715,625
|
|
Buildings, fixtures
and improvements
|
|
10,117,636
|
|
|
10,135,933
|
|
Intangible lease
assets
|
|
1,891,831
|
|
|
1,899,900
|
|
Total real estate
investments, at cost
|
|
14,714,616
|
|
|
14,751,458
|
|
Less: accumulated
depreciation and amortization
|
|
3,756,132
|
|
|
3,659,980
|
|
Total real estate
investments, net
|
|
10,958,484
|
|
|
11,091,478
|
|
Operating lease
right-of-use assets
|
|
208,037
|
|
|
211,187
|
|
Investment in
unconsolidated entities
|
|
86,300
|
|
|
78,718
|
|
Cash and cash
equivalents
|
|
278,883
|
|
|
600,945
|
|
Restricted
cash
|
|
21,203
|
|
|
18,720
|
|
Rent and tenant
receivables and other assets, net
|
|
382,409
|
|
|
345,103
|
|
Goodwill
|
|
1,337,773
|
|
|
1,337,773
|
|
Real estate assets
held for sale, net
|
|
48,093
|
|
|
88,513
|
|
Total
assets
|
|
$
|
13,321,182
|
|
|
$
|
13,772,437
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Mortgage notes
payable, net
|
|
$
|
1,393,652
|
|
|
$
|
1,405,701
|
|
Corporate bonds,
net
|
|
3,404,935
|
|
|
2,814,474
|
|
Convertible debt,
net
|
|
270,152
|
|
|
319,120
|
|
Credit facility,
net
|
|
896,314
|
|
|
1,767,306
|
|
Below-market lease
liabilities, net
|
|
130,208
|
|
|
134,410
|
|
Accounts payable and
accrued expenses
|
|
112,551
|
|
|
125,358
|
|
Derivative, deferred
rent and other liabilities
|
|
161,538
|
|
|
146,893
|
|
Distributions
payable
|
|
85,231
|
|
|
150,493
|
|
Operating lease
liabilities
|
|
215,322
|
|
|
217,567
|
|
Total
liabilities
|
|
6,669,903
|
|
|
7,081,322
|
|
Series F preferred
stock
|
|
309
|
|
|
309
|
|
Common
stock
|
|
10,779
|
|
|
10,778
|
|
Additional paid-in
capital
|
|
13,256,288
|
|
|
13,252,447
|
|
Accumulated other
comprehensive loss
|
|
(106,109)
|
|
|
(104,217)
|
|
Accumulated
deficit
|
|
(6,517,303)
|
|
|
(6,475,568)
|
|
Total stockholders'
equity
|
|
6,643,964
|
|
|
6,683,749
|
|
Non-controlling
interests
|
|
7,315
|
|
|
7,366
|
|
Total
equity
|
|
6,651,279
|
|
|
6,691,115
|
|
Total liabilities and
equity
|
|
$
|
13,321,182
|
|
|
$
|
13,772,437
|
|
VEREIT,
INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
Rental
|
|
$
|
278,576
|
|
|
$
|
312,043
|
|
Fees from managed
partnerships
|
|
421
|
|
|
145
|
|
Total
revenues
|
|
278,997
|
|
|
312,188
|
|
Operating
expenses:
|
|
|
|
|
Acquisition-related
|
|
1,169
|
|
|
985
|
|
Litigation and
non-routine costs, net
|
|
(118)
|
|
|
(3,769)
|
|
Property
operating
|
|
29,098
|
|
|
32,503
|
|
General and
administrative
|
|
16,120
|
|
|
16,416
|
|
Depreciation and
amortization
|
|
110,599
|
|
|
118,022
|
|
Impairments
|
|
12,094
|
|
|
8,308
|
|
Restructuring
|
|
—
|
|
|
290
|
|
Total operating
expenses
|
|
168,962
|
|
|
172,755
|
|
Other (expense)
income:
|
|
|
|
|
Interest
expense
|
|
(65,613)
|
|
|
(69,803)
|
|
Loss on
extinguishment and forgiveness of debt, net
|
|
(200)
|
|
|
(1,472)
|
|
Other income,
net
|
|
778
|
|
|
3,030
|
|
Equity in income of
unconsolidated entities
|
|
1,497
|
|
|
505
|
|
Gain on disposition
of real estate and real estate assets held for sale, net
|
|
8,795
|
|
|
221,755
|
|
Total other expenses,
net
|
|
(54,743)
|
|
|
154,015
|
|
Income before
taxes
|
|
55,292
|
|
|
293,448
|
|
Provision for income
taxes
|
|
(1,053)
|
|
|
(1,164)
|
|
Net
income
|
|
54,239
|
|
|
292,284
|
|
Net income
attributable to non-controlling interests
|
|
(31)
|
|
|
(6,626)
|
|
Net income
attributable to the General Partner
|
|
$
|
54,208
|
|
|
$
|
285,658
|
|
|
|
|
|
|
Basic and diluted net
income per share attributable to common stockholders
|
|
$
|
0.04
|
|
|
$
|
0.27
|
|
Distributions
declared per common share
|
|
$
|
0.0770
|
|
|
$
|
0.1375
|
|
VEREIT,
INC.
EBITDA, EBITDAre AND NORMALIZED EBITDA
(In thousands) (Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
Net
income
|
|
$
|
54,239
|
|
|
$
|
86,863
|
|
|
$
|
292,284
|
|
Adjustments:
|
|
|
|
|
|
|
Interest
expense
|
|
65,613
|
|
|
64,696
|
|
|
69,803
|
|
Depreciation and
amortization
|
|
110,599
|
|
|
124,080
|
|
|
118,022
|
|
Provision for income
taxes
|
|
1,053
|
|
|
1,048
|
|
|
1,164
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
1,775
|
|
|
1,761
|
|
|
738
|
|
EBITDA
|
|
$
|
233,279
|
|
|
$
|
278,448
|
|
|
$
|
482,011
|
|
Gain on disposition
of real estate assets, net
|
|
(8,795)
|
|
|
(25,249)
|
|
|
(221,762)
|
|
Impairments of real
estate
|
|
12,094
|
|
|
8,380
|
|
|
8,308
|
|
EBITDAre
|
|
$
|
236,578
|
|
|
$
|
261,579
|
|
|
$
|
268,557
|
|
Payments received on
fully reserved loans
|
|
—
|
|
|
—
|
|
|
—
|
|
Acquisition-related
expenses
|
|
1,169
|
|
|
1,523
|
|
|
985
|
|
Litigation and
non-routine costs, net
|
|
(118)
|
|
|
(8,564)
|
|
|
(3,769)
|
|
Loss (gain) on
investments
|
|
142
|
|
|
541
|
|
|
(5)
|
|
Loss on derivative
instruments, net
|
|
—
|
|
|
—
|
|
|
24
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
788
|
|
|
748
|
|
|
611
|
|
Loss on
extinguishment and forgiveness of debt, net
|
|
200
|
|
|
1,280
|
|
|
1,472
|
|
Net direct financing
lease adjustments
|
|
372
|
|
|
365
|
|
|
410
|
|
Restructuring
expenses
|
|
—
|
|
|
—
|
|
|
290
|
|
Other adjustments,
net
|
|
54
|
|
|
(205)
|
|
|
214
|
|
Proportionate
share of adjustments for unconsolidated entities
|
|
(706)
|
|
|
(36)
|
|
|
(100)
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
—
|
|
|
(203)
|
|
Normalized
EBITDA
|
|
$
|
238,479
|
|
|
$
|
257,231
|
|
|
$
|
268,486
|
|
Abated
rent
|
|
11,184
|
|
|
—
|
|
|
—
|
|
Normalized EBITDA
Adjusted for Abated Rent
|
|
$
|
249,663
|
|
|
$
|
257,231
|
|
|
$
|
268,486
|
|
|
|
|
|
|
|
|
Normalized EBITDA
annualized
|
|
$
|
953,916
|
|
|
$
|
1,028,924
|
|
|
$
|
1,073,944
|
|
Normalized EBITDA
Adjusted for Abated Rent annualized
|
|
$
|
998,652
|
|
|
$
|
1,028,924
|
|
|
$
|
1,073,944
|
|
VEREIT,
INC.
FUNDS FROM OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
|
2020
|
|
2019
|
Net
income
|
|
$
|
54,239
|
|
|
$
|
292,284
|
|
Dividends on
non-convertible preferred stock
|
|
(12,948)
|
|
|
(17,973)
|
|
Gain on disposition
of real estate assets, net
|
|
(8,795)
|
|
|
(221,762)
|
|
Depreciation and
amortization of real estate assets
|
|
110,207
|
|
|
117,616
|
|
Impairment of real
estate
|
|
12,094
|
|
|
8,308
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
1,146
|
|
|
565
|
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
155,943
|
|
|
$
|
179,038
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
1,078,366,566
|
|
|
973,723,139
|
|
Effect of
weighted-average Limited Partner OP Units and dilutive
securities
|
|
1,186,500
|
|
|
26,054,596
|
|
Weighted-average
shares outstanding - diluted
|
|
1,079,553,066
|
|
|
999,777,735
|
|
|
|
|
|
|
FFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.144
|
|
|
$
|
0.179
|
|
VEREIT,
INC.
ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
|
2020
|
|
2019
|
FFO attributable
to common stockholders and limited partners
|
|
$
|
155,943
|
|
|
$
|
179,038
|
|
|
|
|
|
|
Acquisition-related
expenses
|
|
1,169
|
|
|
985
|
|
Litigation and
non-routine costs, net
|
|
(118)
|
|
|
(3,769)
|
|
Loss on
investments
|
|
142
|
|
|
(5)
|
|
Loss on derivative
instruments, net
|
|
—
|
|
|
24
|
|
Amortization of
premiums and discounts on debt and investments, net
|
|
(362)
|
|
|
(1,392)
|
|
Amortization of
above-market lease assets and deferred lease incentives, net of
amortization of below-market lease liabilities
|
|
788
|
|
|
611
|
|
Net direct financing
lease adjustments
|
|
372
|
|
|
410
|
|
Amortization and
write-off of deferred financing costs
|
|
2,898
|
|
|
3,346
|
|
Loss on
extinguishment and forgiveness of debt, net
|
|
200
|
|
|
1,472
|
|
Straight-line
rent
|
|
(3,404)
|
|
|
(8,043)
|
|
Equity-based
compensation
|
|
3,857
|
|
|
3,706
|
|
Restructuring
expenses
|
|
—
|
|
|
290
|
|
Other adjustments,
net
|
|
441
|
|
|
617
|
|
Proportionate share
of adjustments for unconsolidated entities
|
|
(843)
|
|
|
(196)
|
|
Adjustment for
Excluded Properties
|
|
—
|
|
|
5
|
|
AFFO attributable
to common stockholders and limited partners
|
|
$
|
161,083
|
|
|
$
|
177,099
|
|
|
|
|
|
|
Weighted-average
shares outstanding - basic
|
|
1,078,366,566
|
|
|
973,723,139
|
|
Effect of
weighted-average Limited Partner OP Units and dilutive
securities
|
|
1,186,500
|
|
|
26,054,596
|
|
Weighted-average
shares outstanding - diluted
|
|
1,079,553,066
|
|
|
999,777,735
|
|
|
|
|
|
|
AFFO attributable
to common stockholders and limited partners per diluted
share
|
|
$
|
0.149
|
|
|
$
|
0.177
|
|
VEREIT,
INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
June 30,
2020
|
Interest expense - as
reported
|
|
|
|
|
|
$
|
(65,613)
|
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
deferred financing costs and other non-cash charges
|
|
|
|
|
|
(2,995)
|
|
Amortization of net
premiums
|
|
|
|
|
|
459
|
|
Unconsolidated joint
ventures' pro rata share
|
|
|
|
|
|
(559)
|
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
|
|
|
|
$
|
63,636
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
June 30,
2020
|
Interest Expense,
Excluding Non-Cash Amortization
|
|
|
|
|
|
$
|
63,636
|
|
Secured debt
principal amortization
|
|
|
|
|
|
861
|
|
Dividends
attributable to preferred shares
|
|
|
|
|
|
12,948
|
|
Total fixed
charges
|
|
|
|
|
|
77,445
|
|
Normalized
EBITDA
|
|
|
|
|
|
238,479
|
|
Fixed Charge Coverage
Ratio
|
|
|
|
|
|
3.08
|
x
|
|
|
|
|
June 30,
2020
|
|
March 31,
2020
|
Mortgage notes
payable, net
|
|
$
|
1,393,652
|
|
|
$
|
1,405,701
|
|
Corporate bonds,
net
|
|
3,404,935
|
|
|
2,814,474
|
|
Convertible debt,
net
|
|
270,152
|
|
|
319,120
|
|
Credit facility,
net
|
|
896,314
|
|
|
1,767,306
|
|
Total debt - as
reported
|
|
5,965,053
|
|
|
6,306,601
|
|
Deferred financing
costs, net
|
|
41,152
|
|
|
37,896
|
|
Net discounts
(premiums)
|
|
11,860
|
|
|
6,389
|
|
Principal
Outstanding
|
|
6,018,065
|
|
|
6,350,886
|
|
Unconsolidated joint
ventures' pro rata share
|
|
68,360
|
|
|
68,360
|
|
Adjusted Principal
Outstanding
|
|
$
|
6,086,425
|
|
|
$
|
6,419,246
|
|
Cash and cash
equivalents
|
|
(278,883)
|
|
|
(600,945)
|
|
Pro rata share of
unconsolidated joint ventures' cash and cash equivalents
|
|
(3,433)
|
|
|
(2,567)
|
|
Net Debt
|
|
$
|
5,804,109
|
|
|
$
|
5,815,734
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
Total real estate
investments, at cost - as reported
|
|
|
|
|
|
$
|
14,714,616
|
|
Adjustments:
|
|
|
|
|
|
|
Investment in Cole
REITs
|
|
|
|
|
|
6,867
|
|
Gross assets held for
sale
|
|
|
|
|
|
54,046
|
|
Investment in direct
financing leases, net
|
|
|
|
|
|
8,579
|
|
Mortgage notes
receivable, net
|
|
|
|
|
|
9,959
|
|
Gross below market
leases
|
|
|
|
|
|
(236,324)
|
|
Unconsolidated joint
ventures' pro rata share
|
|
|
|
|
|
146,886
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
$
|
14,704,629
|
|
|
|
|
|
June 30,
2020
|
|
March 31,
2020
|
Net Debt
|
|
$
|
5,804,109
|
|
|
$
|
5,815,734
|
|
Normalized EBITDA
Annualized
|
|
953,916
|
|
|
1,028,924
|
|
Net Debt to
Normalized EBITDA Annualized Ratio
|
|
6.08
|
x
|
|
5.65
|
x
|
|
|
|
|
|
|
|
|
Net Debt
|
|
|
|
|
|
$
|
5,804,109
|
|
Normalized EBITDA
Adjusted for Abated Rent Annualized
|
|
|
|
|
|
998,652
|
|
Net Debt to
Normalized EBITDA Adjusted for Abated Rent Annualized
Ratio
|
|
|
|
|
|
5.81
|
x
|
|
|
|
|
|
|
|
|
June 30,
2020
|
Net Debt
|
|
|
|
|
|
$
|
5,804,109
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
14,704,629
|
|
Net Debt Leverage
Ratio
|
|
|
|
|
|
39.5
|
%
|
|
|
|
|
|
|
|
Unencumbered Gross
Real Estate Investments
|
|
|
|
|
|
$
|
11,933,717
|
|
Gross Real Estate
Investments
|
|
|
|
|
|
14,704,629
|
|
Unencumbered asset
ratio
|
|
|
|
|
|
81.2
|
%
|
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SOURCE VEREIT, Inc.