Press Release

American Realty Capital Properties Announces First Quarter 2015 Operating Results

Company Release - 5/7/2015 6:17 AM ET

PHOENIX, May 7, 2015 /PRNewswire/ -- American Realty Capital Properties, Inc. (NASDAQ: ARCP) ("ARCP" or the "Company") announced today its operating results for the three months ended March 31, 2015.

American Reality Capital Properties ("ARCP") is a leading, self-managed commercial real estate investment trust focused on acquiring and owning single tenant freestanding commercial properties subject to net leases with high credit quality tenants.

First Quarter 2015 Consolidated Financial Results

Revenues
Consolidated Revenue for the quarter ended March 31, 2015 increased $72.8 million to $394.0 million as compared to revenue of $321.2 million for the same quarter in 2014.

Net Loss
Consolidated Net Loss for the quarter ended March 31, 2015 decreased $275.1 to ($30.7) million as compared to a net loss of ($305.8) million for the same quarter in 2014.

Normalized EBITDA
Consolidated normalized EBITDA for the quarter ended March 31, 2015 increased $107.2 to $316.1 million as compared to normalized EBITDA of $208.9 million for the same quarter in 2014.

FFO and FFO per Diluted Common Share
Funds From Operations ("FFO") for the quarter ended March 31, 2015 increased $339.8 million to $195.0 million, or $0.21 per diluted share, as compared to ($144.8) million, or ($0.24) per diluted share, for the same quarter in 2014.

AFFO and AFFO per Diluted Common Share
Adjusted Funds From Operations ("AFFO") for the quarter ended March 31, 2015 increased $85.3 million to $200.1 million, or $0.22 per diluted share, as compared to $114.8 million, or $0.19 per diluted share, for the same quarter in 2014.

Financial Statistics
Consolidated Financial Statistics as of the quarter ended March 31, 2015 are as follows: Fixed Charge Coverage Ratio of 2.6x, Net Debt to Normalized EBITDA of 7.6x, Net Debt to Undepreciated Real Estate Assets of 53.3% and Unencumbered Gross Real Estate Assets to Total Gross Assets ratio of 62.5%.

First Quarter 2015 Real Estate Investment Financial Results

Revenues
Real Estate Investment segment revenue for the quarter ended March 31, 2015 increased $99.6 million to $366.5 million as compared to revenue of $266.9 million for the same quarter in 2014, primarily due to the increased size of the real estate portfolio.

Net Loss
Real Estate Investment segment net loss for the quarter ended March 31, 2015 decreased $265.6 million to ($30.6) million as compared to a net loss of ($296.2) million for the same quarter in 2014, primarily due to merger and other non-routine transaction costs that were recorded in the quarter ended March 31, 2014.

Normalized EBITDA
Real Estate Investment segment normalized EBITDA for the quarter ended March 31, 2015 increased $97.8 million to $306.7 million as compared to normalized EBITDA of $208.9 million, for the same quarter in 2014, mainly due to the increased size of the real estate portfolio.

FFO and FFO per Diluted Common Share
Real Estate Investment segment FFO for the quarter ended March 31, 2015 increased $330.3 million to $195.1 million, or $0.21 per diluted share, as compared to ($135.2) million, or ($0.23) per diluted share, for the same quarter in 2014.

AFFO and AFFO per Diluted Common Share
Real Estate Investment segment AFFO for the quarter ended March 31, 2015 increased $86.4 million to $195.1 million, or $0.21 per diluted share, as compared to $108.7 million, or $0.18 per diluted share, for the same quarter in 2014.

Real Estate Portfolio Update
As of March 31, 2015, ARCP's portfolio consisted of 4,647 properties with total portfolio occupancy of 98.4%, investment grade tenancy of 47.0% and a weighted average remaining lease term of 11.7 years.

Same Store Rent Increases
During the quarter ended March 31, 2015, same store rents (2,524 properties) increased 1.0% to $137.5 million as compared to $136.1 million for the same quarter in 2014.

Property Acquisitions
During the first quarter of 2015, the Company acquired four properties for $6.0 million at an average cash cap rate of 6.6%. Additionally, the Company acquired six land parcels for $1.6 million with $8.0 million of budgeted construction costs to complete the build-to-suit development projects at an average cap rate of 7.3% with weighted average anticipated lease terms totaling approximately 15.0 years.  In addition, six build-to-suit properties were completed and placed into service during the quarter with $7.6 million invested by the Company at an average cash cap rate of 7.3%.

Property Dispositions
As part of its ongoing active portfolio management, during the quarter ended March 31, 2015, the Company sold 11 properties for approximately $271.8 million at an average cash cap rate of approximately 7.1%.  The loss on first quarter sales was approximately $7.5 million, excluding the goodwill allocation.

First Quarter 2015 Cole Capital® Financial Results
Note: The Company completed its acquisition of Cole Capital on February 7, 2014.

Revenues
Cole Capital segment revenue for the quarter ended March 31, 2015 decreased $26.8 million to $27.5 million as compared to revenue of $54.3 million for the same quarter in 2014, as a consequence of reduced capital raise.

Net Loss
Cole Capital segment net loss for the quarter ended March 31, 2015 decreased $9.5 million to ($86,000) as compared to a net loss of ($9.6) million for the same quarter in 2014, primarily due to higher asset management and transactional fees.

Normalized EBITDA
Cole Capital segment normalized EBITDA for the quarter ended March 31, 2015 increased $9.5 million to $9.4 million as compared to normalized EBITDA of ($60,000), for the same quarter in 2014, primarily due to higher asset management and transactional fees.

FFO and FFO per Diluted Common Share
Cole Capital segment FFO for the quarter ended March 31, 2015 increased $9.5 million to ($86,000), or $0.00 per diluted share, as compared to ($9.6) million, or ($0.02) per diluted share, for the same quarter in 2014.

AFFO and AFFO per Diluted Common Share
Cole Capital segment AFFO for the quarter ended March 31, 2015 decreased $1.0 million to $5.1 million, or $0.01 per diluted share, as compared to $6.1 million, or $0.01 per diluted share, for the same quarter in 2014.

Investment Management Capital Raise
Raised $61.9 million of capital on behalf of four publicly registered, non-traded REITs managed by Cole Capital (the "Managed REITs"), including $32.1 million through the Managed REITs' Distribution Reinvestment Plans ("DRIPs"), compared to $461.2 million, including $8.3 million through the Managed REITs' DRIPs, in the first quarter of 2014.

Investment Management Acquisitions
Invested $225.8 million in 79 properties on behalf of the Cole Capital Managed REITs, compared to $235.3 million in 65 properties in the first quarter of 2014.

Sale of CCIT to SIR
On January 29, 2015, Cole Corporate Income Trust, Inc., Cole Capital's first office and industrial-focused REIT, merged into a wholly owned subsidiary of Select Income REIT netting the Company approximately $4.4 million in disposition fees.

Management Commentary

Glenn Rufrano, Chief Executive Officer, stated, "After five weeks, I can make the following observations:  ARCP is a full-service real estate operating company. Our experienced team can buy, sell, finance, asset manage, property manage, and lease, our properties all in-house. Our scale permits us to maintain an integrated and sophisticated real estate team with decades of experience, allowing us to efficiently access all segments of the net lease market: retail, office, industrial, restaurant, build-to-suit and sale-leaseback. We also have a well-respected investment management arm, Cole Capital, a combination of Cole Capital distribution and Cole Capital investment management, the latter a shared resource model with ARCP."

Subsequent Events

Board Reconstitution
On April 1, 2015, the Company announced the appointment of Hugh R. Frater as Non-Executive Chairman of the Board of Directors and the addition of Julie G. Richardson as an Independent Director.  This was done in conjunction with two directors stepping down effective April 1, 2015.  Additionally, Glenn Rufrano joined the Board in conjunction with his appointment as the Company's Chief Executive Officer on April 1, 2015.  The Company expects to announce an additional independent board member in the near term.

Balance Sheet
Subsequent to the first quarter, the Company paid down $590.0 million on its line of credit from available cash, bringing the total amount outstanding under its term loan and revolving credit facility to $2.6 billion.  As a result, floating rate debt as a percentage of total debt decreased to approximately 16% from 21%.

Cole Capital Distribution
The major clearing firms, including Charles Schwab, Fidelity, Pershing and TD Ameritrade, have all resumed processing trades of Cole Capital sponsored REITs on behalf of independent broker-dealers. Currently, there are 201 broker-dealer and RIA's able to sell Cole Capital sponsored REITs, which represents approximately 42% of 2014 gross capital raise.  2014 gross capital raise is based on full year capital raise for Cole Capital, which excludes DRIP and redemptions, but does include the time period before ARCP acquired Cole Capital on February 7, 2014.

During April 2015, Cole Capital raised $30.1 million of capital on behalf of the Managed REITs, including $11.1 million through the Managed REITs' DRIPs.

Dividend
The Board expects to be able to provide its dividend policy, along with the business plan, in August 2015, in conjunction with the release of Q2 2015 earnings.

Audio Webcast Details
The live audio webcast, beginning at 10:00 a.m. ET on Thursday, May 7, 2015, is available by accessing this link:
http://services.choruscall.com/links/arcp150507.html
*Participants should log in 10-15 minutes early.

Shortly after the live webcast, a replay of the webcast will be available in the Investor Relations section of our website.

About the Company
ARCP is a leading, self-managed commercial real estate investment trust ("REIT") focused on investing in single tenant freestanding commercial properties subject to net leases with high credit quality tenants. ARCP owns approximately 4,650 properties totaling 102 million square feet of leasable space in 49 states, as well as Washington D.C., Puerto Rico and Canada. Additionally, ARCP acquires and manages assets on behalf of the Cole Capital® non-traded REITs. ARCP is a publicly traded Maryland corporation listed on The NASDAQ Global Select Market. Additional information about ARCP can be found on its website at www.arcpreit.com. ARCP may disseminate important information regarding it and its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.

Terms and Definitions

Description of Funds From Operations and Adjusted Funds From Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO, a non-GAAP supplemental financial performance measure, is recommended by the REIT industry as a supplemental performance measure. 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, excluding gains or losses from disposition of property, depreciation and amortization of real estate assets and impairment write-downs on real estate including pro rata share of adjustments for unconsolidated partnerships and joint ventures. Our FFO calculation complies with NAREIT's policy 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 our company. AFFO, as defined by our Company, excludes from FFO one time items such as acquisition related costs, merger and other non-routine transactions costs, gains or losses on sale of investments, insurance and litigation settlements and extinguishment of debt cost. We also exclude certain non-cash items such as impairments of intangible, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangibles, deferred financing costs, above and below market lease amortization as well as equity based compensation. 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, including after we cease to acquire properties on a frequent and regular basis. AFFO also allows for a comparison of the performance of our operations with other traded REITs that are not currently engaging in acquisitions and mergers, as well as a comparison of our performance with that of other traded REITs, as AFFO, or an equivalent measure, is routinely reported by 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 loss and cash flows from operating activities, as defined by GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of our 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 loss or to cash flows from operating activities, and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs.

AFFO may provide investors with a view of our future performance and future dividend policy. However, because AFFO excludes items that are an important component in an analysis of the historical performance of a property, AFFO should not be construed as a historic performance measure. Neither the SEC, NAREIT, nor any other regulatory body has evaluated the acceptability of the exclusions contemplated to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.

EBITDA and Normalized EBITDA
Normalized EBITDA as disclosed represents EBITDA, or earnings before interest, taxes, depreciation and amortization, modified to exclude one time items such as acquisition related costs, merger and other non-routine transactions costs, gains or losses on sale of investments, insurance and litigation settlements and extinguishment of debt cost. We also exclude certain non-cash items such as impairments of intangible, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangibles, deferred financing costs, above and below market lease amortization as well as equity based compensation. Management believes that excluding these costs from EBITDA 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.  The Company believes that Normalized EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of the Company's business segments, although it does not represent net income that is computed in accordance with GAAP. Therefore, Normalized EBITDA should not be considered as an alternative to net income or as an indicator of the Company's financial performance. 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. Normalized EBITDA may not be comparable to similarly titled measures of other companies.

Gross Real Estate and Related Assets represent total gross real estate and related assets, including net investments in unconsolidated entities, investment in direct financing leases, investment securities and loans held for investment, net of gross intangible lease liabilities.

Fixed Charge Coverage Ratio is the sum of (i)interest expense incurred on the outstanding principal balance of our debt, excluding certain GAAP adjustments reported as interest expense, such as amortization of of deferred financing costs, premiums and discounts, (ii) secured debt principal amortization and (iii) dividends attributable to preferred shares divided by Normalized EBITDA.

Net Debt is a calculation to show the Company's outstanding principal balance, excluding certain GAAP adjustments, such as premiums and discounts, less all cash and cash equivalents.

Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Assets.

Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four.

Forward Looking Statements
Information set forth herein (including information included or incorporated by reference herein) contains "forward-looking statements" (as defined in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect American Realty Capital Properties, Inc.'s ("ARCP," the "Company," "us," "our" and "we") expectations regarding future events. The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions identify forward-looking statements, and any statements regarding ARCP's future financial condition, results of operations and business are also forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, most of which are difficult to predict and many of which are beyond ARCP's control.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: ARCP's plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; ARCP's ability to reestablish the financial network that supports Cole Capital®; ARCP's ability to regain the prior transaction and capital raising volume of Cole Capital prior to the filing of ARCP's Current Report on Form 8-K on October 29, 2014; the timing and expense of the remediation of ARCP's material weaknesses in disclosure controls and procedures and internal control over financial reporting; the impact and outcome of litigation and regulatory investigations related to the recent Audit Committee investigation and restatement of ARCP's financial statements; ARCP's ability to regain compliance with the requirements of the NASDAQ Stock Market; the impact of ARCP's debt documents on ARCP's overall borrowing flexibility; the level and frequency of the dividend to be established by ARCP's Board of Directors compared to the level and frequency of the dividend ARCP previously paid; ARCP's ability to establish a timely financial reporting schedule; the impact of the recent downgrade in ARCP's credit rating to below investment-grade; the unpredictability of the business plans and financial condition of ARCP's tenants; the impact of impairment charges in respect of certain of ARCP's properties or other assets; the inability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in ARCP's filings with the SEC, which are available at the SEC's website at www.sec.gov.

The forward-looking statements contained herein reflect ARCP's beliefs, assumptions and expectations regarding ARCP's future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to ARCP. If a change occurs, ARCP's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. ARCP disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except for share and per share data)




March 31, 2015


December 31, 2014

ASSETS





Real estate investments, at cost:





Land


$

3,434,414


$

3,472,298

Buildings, fixtures and improvements


12,081,061


12,307,758

Land and construction in progress


83,284


77,450

Intangible lease assets


2,386,904


2,435,054

   Total real estate investments, at cost


17,985,663


18,292,560

   Less: accumulated depreciation and amortization


1,238,320


1,034,122

   Total real estate investments, net


16,747,343


17,258,438

Investment in unconsolidated entities


95,390


98,053

Investment in direct financing leases, net


54,822


56,076

Investment securities, at fair value


56,493


58,646

Loans held for investment, net


41,357


42,106

Cash and cash equivalents


788,739


416,711

Restricted cash


64,578


62,651

Intangible assets, net


142,851


150,359

Deferred costs and other assets, net


400,884


389,922

Goodwill


1,871,114


1,894,794

Due from affiliates


58,457


86,122

Assets held for sale



1,261

   Total assets


$

20,322,028


$

20,515,139






LIABILITIES AND STOCKHOLDERS' EQUITY





Mortgage notes payable and other debt, net


$

3,672,496


$

3,805,761

Corporate bonds, net


2,546,701


2,546,499

Convertible debt, net


978,769


977,521

Credit facility


3,184,000


3,184,000

Below-market lease liabilities, net


304,754


317,838

Accounts payable and accrued expenses


160,129


163,025

Deferred rent, derivative and other liabilities


139,241


127,611

Distributions payable


9,959


9,995

Due to affiliates


547


559

   Total liabilities


10,996,596


11,132,809

Commitments and contingencies (Note 13)





Preferred stock, $0.01 par value, 100,000,000 shares authorized and 42,834,138 issued and outstanding as of March 31, 2015 and December 31, 2014, respectively


428


428

Common stock, $0.01 par value, 1,500,000,000 shares authorized and 905,134,719 and 905,530,431 issued and outstanding as of March 31, 2015 and December 31, 2014, respectively


9,051


9,055

Additional paid-in capital


11,919,358


11,920,253

Accumulated other comprehensive (loss) income


(4,136)


2,728

Accumulated deficit


(2,826,524)


(2,778,576)

   Total stockholders' equity


9,098,177


9,153,888

Non-controlling interests


227,255


228,442

   Total equity


9,325,432


9,382,330

   Total liabilities and equity


$

20,322,028


$

20,515,139

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except for per share data)




Three Months Ended March 31,



2015


2014

Revenues:





  Rental income


$

342,759


$

244,415

  Direct financing lease income


741


1,006

  Operating expense reimbursements


22,974


21,476

  Cole Capital revenue


27,494


54,257

     Total revenues


393,968


321,154

Operating expenses:





  Cole Capital reallowed fees and commissions


2,031


34,436

  Acquisition related (including $0 and $1,539 to affiliates, respectively)


2,182


13,417

  Merger and other non-routine transactions (including $0 and $137,738 to affiliates, respectively)


16,423


160,298

  Property operating


30,999


29,755

  Management fees to affiliates



13,888

  General and administrative (including $0 and $15,592 to affiliates, respectively)


33,106


55,369

  Depreciation and amortization


219,141


173,842

     Total operating expenses


303,882


481,005

Operating income (loss)


90,086


(159,851)

Other (expense) income:





  Interest expense, net


(95,699)


(120,951)

  Extinguishment of debt, net


429


(9,399)

  Other income, net


8,961


3,975

  Loss on derivative instruments, net


(1,028)


(7,121)

  Loss on disposition of real estate, net


(31,368)


(17,605)

     Total other expenses, net


(118,705)


(151,101)

Loss before income and franchise taxes


(28,619)


(310,952)

(Provision for) benefit from income and franchise taxes


(2,074)


5,112

Net loss


(30,693)


(305,840)

Net loss attributable to non-controlling interests


723


14,396

Net loss attributable to the Company


$

(29,970)


$

(291,444)






Basic and diluted net loss per share attributable to common stockholders


$

(0.05)


$

(0.58)

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

RECONCILIATION OF CONSOLIDATED GAAP NET LOSS TO NORMALIZED EBITDA

(Unaudited, in thousands, except for share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

Total revenues


$

393,968


$

418,807


$

457,118


$

382,178


$

321,154

Less: total operating expenses


303,882


743,456


375,667


350,496


481,005

Operating income (loss)


90,086


(324,649)


81,451


31,682


(159,851)

Total other (expenses), net


(118,705)


(62,349)


(366,373)


(92,986)


(151,101)

Loss before income and franchise taxes


(28,619)


(386,998)


(284,922)


(61,304)


(310,952)

(Provision for) benefit from income and franchise taxes


(2,074)


26,571


(3,125)


4,706


5,112

 Net loss


(30,693)


(360,427)


(288,047)


(56,598)


(305,840)

   Adjustments:











     Interest expense


95,699


126,157


101,643


103,897


120,951

     Depreciation and amortization


219,141


226,272


265,150


250,739


173,842

     Provision for (benefit from) income and franchise taxes


2,074


(26,571)


3,125


(4,706)


(5,112)

      Proportionate share of adjustments for unconsolidated entities


2,661


3,402


3,433


3,453


2,096

 EBITDA


$

288,882


$

(31,167)


$

85,304


$

296,785


$

(14,063)

   Management adjustments:











     Loss on held for sale assets and disposition of real estate, net


31,368


1,263


256,894


1,269


17,605

     Impairments



406,136


2,299


1,556


     Acquisition related


2,182


4,215


13,998


7,201


13,417

     Merger and other non-routine transactions


16,423


25,162


7,632


7,422


160,298

     Equity-based compensation


818


(980)


5,541


5,690


21,574

     Gain on sale and unrealized gains of investment securities


(233)



(6,357)



     Loss (gain) on derivative instruments, net


1,028


172


17,484


(14,207)


7,121

     Amortization of below-market lease liabilities, net of amortization of above-market lease assets


1,007


1,475


1,934


2,103


388

     (Gain) loss on early extinguishment of debt and forgiveness of debt, net


(5,302)


605


5,396


6,469


9,399

     Net direct financing lease adjustments


495


448


620


137


390

     Straight-line rent


(19,107)


(25,367)


(24,871)


(17,413)


(7,520)

     Legal settlement and insurance proceeds


(1,250)


(60,720)


(3,275)



     Proportionate share of adjustments for unconsolidated entities


(254)


1,086


1,276


437


266

Normalized EBITDA


$

316,057


$

322,328


$

363,875


$

297,449


$

208,875

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(Unaudited, in thousands, except share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

 Net loss


$

(30,693)


$

(360,427)


$

(288,047)


$

(56,598)


$

(305,840)

 Dividends on non-convertible preferred stock


(17,973)


(17,973)


(17,974)


(17,773)


(17,374)

 Loss on held for sale assets and disposition of real estate assets, net


31,368


1,263


256,894


1,269


17,605

 Depreciation and amortization of real estate assets


210,770


219,080


240,046


225,940


159,461

 Impairment of real estate assets



96,692


2,299


1,556


 Proportionate share of adjustments for unconsolidated entities


1,558


2,540


2,580


2,573


1,344

    FFO


$

195,030


$

(58,825)


$

195,798


$

156,967


$

(144,804)












 Acquisition related


2,182


4,215


13,998


7,201


13,417

Merger and other non-routine transactions


16,423


25,162


7,632


7,422


160,298

 Impairment of intangible assets



309,444




 Legal settlements and insurance proceeds


(1,250)


(60,720)


(3,275)



 Gain on sale and unrealized gains of investment securities


(233)



(6,357)



 Loss (gain) on derivative instruments, net


1,028


172


17,484


(14,207)


7,121

 Amortization of net premiums on debt and investments


(3,858)


11,461


(8,106)


(4,606)


(5,198)

 Amortization of below-market lease liabilities, net of amortization of above-market lease assets


1,007


1,475


1,934


2,103


388

 Net direct financing lease adjustments


495


448


620


137


390

 Amortization and write off of deferred financing costs


7,929


23,475


12,486


10,985


44,976

 Amortization of management contracts


7,510


6,233


24,288


24,024


13,992

 Deferred tax benefit


(3,972)


(33,324)




 (Gain) loss on early extinguishment of debt and forgiveness of debt, net


(5,302)


605


5,396


6,469


9,399

 Straight-line rent


(19,107)


(25,367)


(24,871)


(17,413)


(7,520)

 Equity-based compensation expense, net of forfeiture


818


(980)


5,541


5,690


21,574

 Other amortization and non-cash charges


753


895


713


698


421

 Proportionate share of adjustments for unconsolidated entities


682


1,090


1,268


464


318

    AFFO


$

200,135


$

205,459


$

244,549


$

185,934


$

114,772












Weighted-average shares outstanding - basic


902,996,270


902,528,136


902,096,102


815,406,408


547,470,457

Effect of dilutive securities


26,157,663


29,629,740


44,970,255


52,613,117


51,151,928

Weighted-average shares outstanding - diluted


929,153,933


932,157,876


947,066,357


868,019,525


598,622,385












FFO per diluted share


$

0.21


$

(0.06)


$

0.21


$

0.18


$

(0.24)

AFFO per diluted share


$

0.22


$

0.22


$

0.26


$

0.21


$

0.19

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - STATEMENTS OF OPERATIONS

(REI Segment)

(Unaudited, in thousands, except for share and per share data)



Three Months Ended March 31,


2015


2014

REI segment:




Revenues:




Rental income

$

342,759


$

244,415

Direct financing lease income

741


1,006

Operating expense reimbursements

22,974


21,476

   Total real estate investment revenues

366,474


266,897

Operating expenses:




Acquisition related

1,723


13,417

Merger and other non-routine transactions

16,423


159,794

Property operating

30,999


29,755

Management fees to affiliates


13,888

General and administrative

15,370


34,538

Depreciation and amortization

210,788


159,483

Impairment of real estate


   Total operating expenses

275,303


410,875

Operating income (loss)

91,171


(143,978)

Other (expense) income:




Interest expense, net

(95,699)


(120,951)

Extinguishment of debt, net

429


(9,399)

Other income, net

7,742


3,959

Loss on derivative instruments, net

(1,028)


(7,121)

Loss on disposition of real estate, net

(31,368)


(17,605)

Loss on sale of investments in affiliates


Gain (loss) on sale of investments


   Total other expenses, net

(119,924)


(151,117)

Loss before income and franchise taxes

(28,753)


(295,095)

Provision for income and franchise taxes

(1,854)


(1,123)

Net loss

$

(30,607)


$

(296,218)





 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - STATEMENTS OF OPERATIONS

(Cole Capital Segment)

(Unaudited, in thousands, except for share and per share data)



Three Months Ended March 31,


2015


2014

Cole Capital segment:




Revenues:




Dealer manager and distribution fees, selling commissions and offering reimbursements

$

3,117


$

42,453

Transaction service fees and reimbursements

10,260


4,867

Management fees and reimbursements

14,117


6,937

   Total Cole Capital revenues

27,494


54,257

Operating expenses:




Cole Capital reallowed fees and commissions

2,031


34,436

Acquisition related

459


Merger and other non-routine transactions


504

General and administrative expenses

17,736


20,831

Depreciation and amortization

8,353


14,359

Impairments of intangible assets


   Total operating expenses

28,579


70,130

Operating loss

(1,085)


(15,873)

Total other income

1,219


16

Income (loss) before income and franchise taxes

134


(15,857)

(Provision for) benefit from income and franchise taxes

(220)


6,235

Net loss

$

(86)


$

(9,622)





Total Company:




Total revenues

$

393,968


$

321,154

Total operating expenses

$

303,882


$

481,005

Total other expense

$

(118,705)


$

(151,101)

Net loss

$

(30,693)


$

(305,840)

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA

(REI Segment)

(Unaudited, in thousands, except for share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

 Net loss


$

(30,607)


$

(82,458)


$

(289,133)


$

(46,124)


$

(296,218)

   Adjustments:











     Interest expense


95,699


126,157


101,643


103,897


120,951

     Depreciation and amortization


210,788


219,222


240,073


225,965


159,483

     Provision for income and franchise taxes


1,854


1,408


1,994


2,788


1,123

      Proportionate share of adjustments for unconsolidated entities


2,661


3,402


3,433


3,453


2,096

 EBITDA


$

280,395


$

267,731


$

58,010


$

289,979


$

(12,565)

   Management adjustments:











     Loss on held for sale assets and disposition of real estate, net


31,368


1,263


256,894


1,269


17,605

     Impairments



96,692


2,299


1,556


     Acquisition related


1,723


853


13,998


7,201


13,417

     Merger and other non-routine transactions


16,423


25,139


7,613


5,999


159,794

     Equity-based compensation


402


(3,997)


2,086


3,575


20,640

     Gain on sale and unrealized gains of investment securities


(233)



(6,357)



     Loss (gain) on derivative instruments, net


1,028


172


17,484


(14,207)


7,121

     Amortization of below-market lease liabilities, net of amortization of above-market lease assets


1,007


1,475


1,934


2,103


388

     (Gain) loss on early extinguishment of debt and forgiveness of debt, net


(5,302)


605


5,396


6,469


9,399

     Net direct financing lease adjustments


495


448


620


137


390

     Straight-line rent


(19,107)


(25,367)


(24,871)


(17,413)


(7,520)

     Legal settlement and insurance proceeds


(1,250)


(60,720)


(3,275)



      Proportionate share of adjustments for unconsolidated entities


(254)


1,086


1,276


437


266

Normalized EBITDA


$

306,695


$

305,380


$

333,107


$

287,105


$

208,935

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA

(Cole Capital Segment)

(Unaudited, in thousands, except for share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

Revenue


$

27,494


$

52,282


$

59,797


$

37,222


$

54,257

Less: total operating expenses


28,579


360,241


57,759


55,300


70,130

Operating (loss) income


(1,085)


(307,959)


2,038


(18,078)


(15,873)

Total other income


1,219


2,011


179


110


16

Income (loss) before income and franchise taxes


134


(305,948)


2,217


(17,968)


(15,857)

(Provision for) benefit from income and franchise taxes


(220)


27,979


(1,131)


7,494


6,235

 Net (loss) income


(86)


(277,969)


1,086


(10,474)


(9,622)

   Adjustments:











    Depreciation and amortization


8,353


7,050


25,077


24,774


14,359

   Provision for (benefit from) income taxes


220


(27,979)


1,131


(7,494)


(6,235)

 EBITDA


8,487


(298,898)


27,294


6,806


(1,498)

   Management adjustments:











    Impairments



309,444




    Acquisition related


459


3,362




    Merger and other non-routine transactions



23


19


1,423


504

    Equity-based compensation


416


3,017


3,455


2,115


934

 Normalized EBITDA


$

9,362


$

16,948


$

30,768


$

10,344


$

(60)

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(REI Segment)

(Unaudited, in thousands, except for share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

Net loss


$

(30,607)


$

(82,458)


$

(289,133)


$

(46,124)


$

(296,218)

Dividends on non-convertible preferred stock


(17,973)


(17,973)


(17,974)


(17,773)


(17,374)

Loss on held for sale assets and disposition of real estate, net


31,368


1,263


256,894


1,269


17,605

Depreciation and amortization of real estate assets


210,770


219,080


240,046


225,940


159,461

Impairment of real estate



96,692


2,299


1,556


Proportionate share of adjustments for unconsolidated entities


1,558


2,540


2,580


2,573


1,344

    FFO


$

195,116


$

219,144


$

194,712


$

167,441


$

(135,182)












Acquisition related


1,723


853


13,998


7,201


13,417

Merger and other non-routine transactions


16,423


25,139


7,613


5,999


159,794

Legal settlement and insurance proceeds


(1,250)


(60,720)


(3,275)



Gain on sale and unrealized gains of investment securities


(233)



(6,357)



Loss (gain) on derivative instruments, net


1,028


172


17,484


(14,207)


7,121

Amortization of premiums and discounts on debt and investments


(3,858)


11,461


(8,106)


(4,606)


(5,198)

Amortization of below-market lease liabilities, net of amortization of above-market lease assets


1,007


1,475


1,934


2,103


388

Net direct financing lease adjustments


495


448


620


137


390

Amortization and write off of deferred financing costs


7,929


23,475


12,486


10,985


44,976

(Gain) loss on early extinguishment of debt and forgiveness of debt, net


(5,302)


605


5,396


6,469


9,399

Straight-line rent


(19,107)


(25,367)


(24,871)


(17,413)


(7,520)

  Equity-based compensation expense, net of forfeitures


402


(3,997)


2,086


3,575


20,640

Other amortization and non-cash charges


18


156


3


40


121

Proportionate share of adjustments for unconsolidated entities


682


1,090


1,268


464


318

    AFFO


$

195,073


$

193,934


$

214,991


$

168,188


$

108,664












Weighted-average shares outstanding - basic


902,996,270


902,528,136


902,096,102


815,406,408


547,470,457

Effect of dilutive securities


26,157,663


29,629,740


44,970,255


52,613,117


51,151,928

Weighted-average shares outstanding - diluted


929,153,933


932,157,876


947,066,357


868,019,525


598,622,385























FFO per diluted share


$

0.21


$

0.24


$

0.21


$

0.19


$

(0.23)

AFFO per diluted share


$

0.21


$

0.21


$

0.23


$

0.19


$

0.18

 

AMERICAN REALTY CAPITAL PROPERTIES, INC.

SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(Cole Capital Segment)

(Unaudited, in thousands, except for share and per share data)




Three Months Ended



March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014


March 31,

2014

Net (loss) income


$

(86)


$

(277,969)


$

1,086


$

(10,474)


$

(9,622)

    FFO


(86)


(277,969)


1,086


(10,474)


(9,622)












Acquisition related


459


3,362




Merger and other non-routine transactions



23


19


1,423


504

  Impairment of intangible assets



309,444




  Amortization of management contracts


7,510


6,233


24,288


24,024


13,992

  Deferred tax benefit


(3,972)


(33,324)




Equity-based compensation expense, net of forfeitures


416


3,017


3,455


2,115


934

Other amortization and non-cash charges


735


739


710


658


300

    AFFO


$

5,062


$

11,525


$

29,558


$

17,746


$

6,108












Weighted-average shares outstanding - basic


902,996,270


902,528,136


902,096,102


815,406,408


547,470,457

Effect of dilutive securities


26,157,663


29,629,740


44,970,255


52,613,117


51,151,928

Weighted-average shares outstanding - diluted


929,153,933


932,157,876


947,066,357


868,019,525


598,622,385












FFO per diluted share


$


$

(0.30)


$


$

(0.01)


$

(0.02)

AFFO per diluted share


$

0.01


$

0.01


$

0.03


$

0.02


$

0.01

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/american-realty-capital-properties-announces-first-quarter-2015-operating-results-300079440.html

SOURCE American Realty Capital Properties, Inc.

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