Press Release

VEREIT™ Announces Second Quarter 2015 Operating Results

Earnings and Portfolio Metrics In-Line with Company Expectations and Introduces Business Plan

Establishes Quarterly Dividend of $0.1375 per Share at an Annualized Rate of $0.55 per Share

Company Release - 8/6/2015 6:01 AM ET

PHOENIX, Aug. 6, 2015 /PRNewswire/ -- VEREIT, Inc. (NYSE: VER) ("VEREIT" or the "Company") announced today its operating results for the three months ended June 30, 2015, details on its business plan and enhancements to its corporate governance.

VEREIT is a leading, full-service real estate operating company with investment management capability that owns and actively manages a diversified portfolio of retail, restaurant, office and industrial assets.

Second Quarter 2015 Consolidated Financial Results

Revenue
Consolidated revenue for the quarter ended June 30, 2015 increased $11.5 million to $393.7 million as compared to revenue of $382.2 million for the same quarter in 2014.

Net Loss
Consolidated net loss for the quarter ended June 30, 2015 increased $52.1 million to $(108.7) million as compared to a net loss of $(56.6) million for the same quarter in 2014.

Normalized EBITDA
Consolidated normalized EBITDA for the quarter ended June 30, 2015 increased $17.6 million to $309.3 million as compared to normalized EBITDA of $291.7 million for the same quarter in 2014.

FFO and FFO per Diluted Common Share
Funds From Operations ("FFO") for the quarter ended June 30, 2015 increased $37.0 million to $194.0 million, as compared to $157.0 million for the same quarter in 2014 and FFO per diluted share increased $0.03 to $0.21 for the quarter ended June 30, 2015, as compared to $0.18 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 June 30, 2015 increased $16.4 million to $202.3 million, as compared to $185.9 million for the same quarter in 2014 and AFFO per diluted share increased $0.01 to $0.22 for the quarter ended June 30, 2015, as compared to $0.21 per diluted share, for the same quarter in 2014.

Consolidated Financial Statistics
Consolidated Financial Statistics as of the quarter ended June 30, 2015 are as follows: Net Debt to Normalized EBITDA of 7.5x, Fixed Charge Coverage Ratio of 2.7x, Unencumbered Gross Real Estate Assets to Total Gross Assets ratio of 64.1% and Weighted Average Debt Term of 4.7 years.

Company Business Plan
VEREIT's business plan establishes the foundation for future growth.  The four key pillars of the business plan focus on enhancing the portfolio, supporting Cole Capital®, achieving balance sheet investment-grade metrics and establishing a sustainable dividend.

Enhanced Portfolio
The Company will enhance the portfolio by further diversifying and providing the proper risk-return relationship. After a detailed review of the portfolio, the Company intends to reduce the portfolio's exposure to non-controlled joint ventures, flat leases, restaurants and non-core assets by $1.8 billion to $2.2 billion by year-end 2016 through strategic dispositions. The expected average cash cap rate of the dispositions is estimated to range from 6.5% to 7.5%. This amount takes into consideration first quarter 2015 dispositions of $271.8 million at an average cash cap rate of 7.1%.

As part of the culling plan, sales completed in the second and third quarters through August 5, 2015 and dispositions under hard contract as of August 5, 2015, totaled approximately $690 million at an average cash cap rate of 6.2%.

Of the $690 million of dispositions, $81 million closed during the quarter at an average cash cap rate of 6.5%, $318 million closed subsequent to the second quarter at an average cash cap rate of 6.2% and an additional $291 million is under hard contract at an average cash cap rate of 6.1%.

Re-establish Cole Capital's Brand Value.
The Company is committed to re-establishing the investment manager's brand value by delivering consistent returns to its investors, while building and managing strong net-lease portfolios.

Establish Investment Grade Balance Sheet Metrics
The Company intends to reduce net debt to EBITDA to a range of 6.0x to 7.0x (excluding preferred stock), maintain a fixed charge coverage ratio greater than 2.2x and maintain unencumbered gross real estate assets to total gross assets at a percentage greater than 60% by year-end 2016. Additionally, the Company intends to improve its weighted average debt term to five to six years.

2015 Guidance and Common Stock Dividend Policy
The Company expects its 2015 AFFO per diluted share to be in a range between $0.80 and $0.83, which includes an approximate$0.01 contribution from Cole Capital. This guidance assumes $1.2 billion to $1.4 billion of dispositions for the year 2015, of which approximately $960 million have been completed or are under hard contract at an average cash cap rate of 6.4%.  The guidance also assumes operations consistent with prior quarters.

On August 5, 2015, the Company's Board of Directors declared a quarterly dividend of $0.1375 per share for each of the third and fourth quarters of 2015, representing an annual distribution rate of $0.55 per share. The dividend will be paid on October 15, 2015 and January 15, 2016 to common stockholders of record as of September 30, 2015 and December 31, 2015, respectively.

Credit Facility Modification
To accommodate the execution of the business plan, the Company has amended the terms of its credit facility. The significant elements of the amendment are as follows: the minimum unencumbered asset pool requirement has been reduced from $10.5 billion to $8.0 billion, which will allow greater flexibility in the execution of the Company's property disposition initiatives, and the capacity of the revolving line of credit component of the credit facility has been reduced by $300.0 million to $2.3 billion. This amendment was completed subsequent to the second quarter.

During the quarter, $884.0 million was used to pay down the line of credit, bringing the total amount outstanding under the Company's revolving line of credit to $1.3 billion. Net Debt to Normalized EBITDA was reduced from 7.6x to 7.5x from the previous quarter. The Company also has $1.0 billion outstanding on its term loan.

Corporate Governance
Supporting the Company's business plan and foundation, the following improvements towards establishing best-in-class corporate governance have been made:

  • Opting-out of Maryland Anti-Takeover Statutes: The Board of Directors adopted changes that restrict the Company's ability to make use of three Maryland anti-takeover statutes without the prior approval of stockholders. These include the Maryland Business Combination Act, the Maryland Control Share Acquisition Act and provisions of the Maryland Unsolicited Takeover Act (MUTA).
  • Majority Voting: The Board of Directors has adopted changes to the bylaws that require a majority voting standard in uncontested elections of Directors, beginning with the Company's upcoming annual meeting. This means Director nominees will be elected only if they receive affirmative votes from a majority of the votes cast at the meeting.
  • Stockholder Rights Plan Limits: The Board of Directors has adopted a new policy for inclusion in the Company's corporate governance guidelines that states that any poison pill that the Board might adopt in the future will automatically terminate after 12 months if it is not also approved by stockholders.
  • Proxy Access: The Board of Directors adopted amendments to the Company's bylaws that require the Company to include nominees for the Board submitted by certain stockholders in the Company's proxy statement, beginning with the 2016 annual meeting. Specifically, stockholders holding at least 3% of the Company's outstanding shares for at least three consecutive years will be able to directly nominate up to 25% of the Board of Directors in a given year.

Management Commentary
Glenn J. Rufrano, Chief Executive Officer, stated, "There was a solid base in place when I joined the Company in April with a talented team, good assets and a strong operational infrastructure. Now, we have the opportunity for a fresh start, represented by a new name, culture and business approach. Continuing our momentum, the changes adopted by our Board represent major steps towards establishing 'best-in-class' corporate governance. With the introduction of our business plan, we now have a strategy in place and are rapidly executing."

Second Quarter 2015 Real Estate Investment ("REI") Financial Results

Revenue
REI segment revenue for the quarter ended June 30, 2015 increased $22.2 million to $367.2 million as compared to revenue of $345.0 million for the same quarter in 2014, mainly due to net acquisitions of 679 properties subsequent to June 30, 2014.

Net Loss
REI segment net loss for the quarter ended June 30, 2015 increased $62.2 million to $(108.3) million as compared to a net loss of $(46.1) million for the same quarter in 2014, mainly due to impairments that were recorded in the quarter ended June 30, 2015.

Normalized EBITDA
REI segment normalized EBITDA for the quarter ended June 30, 2015 increased $19.8 million to $303.3 million as compared to normalized EBITDA of $283.5 million, for the same quarter in 2014, mainly due to net acquisitions of 679 properties subsequent to June 30, 2014.

FFO and FFO per Diluted Common Share
REI segment FFO for the quarter ended June 30, 2015 increased $27.0 million to $194.4 million, or $0.21 per diluted share, as compared to $167.4 million, or $0.19 per diluted share, for the same quarter in 2014.

AFFO and AFFO per Diluted Common Share
REI segment AFFO for the quarter ended June 30, 2015 increased $27.2 million to $195.4 million, or $0.21 per diluted share, as compared to $168.2 million, or $0.19 per diluted share, for the same quarter in 2014.

Real Estate Portfolio Update
As of June 30, 2015, the Company's portfolio consisted of 4,645 properties with total portfolio occupancy of 98.4%, investment grade tenancy of 47.4% and a weighted average remaining lease term of 11.5 years.

Same Store Rent Increases
During the quarter ended June 30, 2015, same store rents (3,597 properties) increased 1.2% to $248.6 million as compared to $245.7 million for the same quarter in 2014.

Property Acquisitions and Development
During the second quarter of 2015, the Company acquired one property for $2.1 million at a cash cap rate of 6.7%. The Company also acquired three land parcels for $503,000. In addition, the Company capitalized $14.7 million of development costs and placed $7.5 million of assets into service at an average cap rate of 7.3%. As of June 30, 2015, build-to-suits and redevelopment programs included 24 properties with an investment to date of $67.9 million and remaining estimated investment of $26.2 million.

Property Dispositions
The Company sold four properties and one land parcel for approximately $80.5 million at an average cash cap rate of 6.5% during the quarter ended June 30, 2015. The gain on second quarter sales was approximately $4.3 million, excluding goodwill allocation.

Second Quarter 2015 Cole Capital Financial Results

Revenue
Cole Capital segment revenue for the quarter ended June 30, 2015 decreased $10.7 million to $26.5 million as compared to revenue of $37.2 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 June 30, 2015 decreased $10.1 million to $(0.4) million as compared to a net loss of $(10.5) million for the same quarter in 2014, primarily driven by the decrease in intangible assets which led to lower amortization being recorded in the period ending June 30, 2015.

Normalized EBITDA
Cole Capital segment normalized EBITDA for the quarter ended June 30, 2015 decreased $2.1 million to $6.0 million as compared to normalized EBITDA of $8.1 million for the same quarter in 2014, mainly due to higher transactional fees recorded in the period ending June 30, 2014.

FFO and FFO per Diluted Common Share
Cole Capital segment FFO for the quarter ended June 30, 2015 increased $10.0 million to $(0.4) million, or $0.00 per diluted share, as compared to $(10.5) million, or $(0.01) per diluted share, for the same quarter in 2014.

AFFO and AFFO per Diluted Common Share
Cole Capital segment AFFO for the quarter ended June 30, 2015 decreased $10.7 million to $7.0 million, or $0.01 per diluted share, as compared to $17.7 million, or $0.02 per diluted share, for the same quarter in 2014.

Investment Management Capital Raise
Cole Capital raised $91.3 million of capital on behalf of the non-traded REITs  sponsored by Cole Capital (the "Managed REITs"), including $33.1 million through the Managed REITs' distribution reinvestment plans ("DRIP"), compared to $160.6 million, including $47.4 million of DRIP proceeds, in the second quarter of 2014.

Investment Management Acquisitions
Invested $214.7 million in 21 properties on behalf of the Cole Capital Managed REITs, compared to $754.6 million in 134 properties in the second quarter of 2014.

Subsequent Events - Consolidated

Property Dispositions
On July 10, 2015, the Company disposed of a portfolio of 68 CVS properties for approximately $318.2 million at an average cash cap rate of 6.2%. The gain on sales was approximately $8.5 million, excluding goodwill allocation. The properties had an aggregate outstanding debt balance of $276.7 million at the time of their sale.

Cole Capital Distribution
In July 2015, Cole Capital raised $34.6 million of capital on behalf of the Managed REITs, including $10.9 million through the Managed REITs' DRIPs.

Series F Preferred Stock Dividend
In addition, the Company's Board of Directors declared a monthly dividend to holders of its 6.70% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share ("Series F Preferred Stock"), for September 2015 through December of 2015 in respect of the periods included in the table below.  The corresponding record and payment dates for each month's Series F Preferred Stock dividend are also shown in the table below. The dividend for the Series F Preferred Stock accrues daily on a 360-day annual basis equal to an annualized dividend rate of $1.675 per share, or $0.13958333 per 30-day month.

Period


Record Date


Payment Date

August 15, 2015 - September 14, 2015


September 1, 2015


September 15, 2015

September 15, 2015 - October 14, 2015


October 1, 2015


October 15, 2015

October 15, 2015 - November 14, 2015


November 1, 2015


November 16, 2015

November 15, 2015 - December 14, 2015


December 1, 2015


December 15, 2015

Board Composition

On June 17, 2015, the Company announced the appointment of Mark S. Ordan as an Independent Director and a member of the Audit Committee and the Nominating and Corporate Governance Committee.  More recently, William G. Stanley and Thomas A. Andruskevich notified the Company's Board of Directors that they have decided not to seek re-election to the Board. As such, two new independent directors, David B. Henry, Vice Chairman and Chief Executive Officer, Kimco Realty Corporation, and Eugene A. Pinover, Of Counsel, Willkie Farr & Gallagher LLP, will be up for election at the Annual Meeting of Stockholders on September 29, 2015.

Messrs. Stanley and Andruskevich were integral to stabilizing and operating the Company following the events that transpired late last year. Mr. Stanley served as the Interim Chairman and CEO, and led the organization through the financial restatement, the process of becoming current with SEC periodic reporting and returning to good standing with lenders. Mr. Andruskevich  served as Interim Lead Independent Director and headed the Search Committee for the new CEO and new Independent Board members. He also served as the chairman of our Compensation Committee and the Nominating and Corporate Governance Committee, two very important responsibilities as the Company worked to re-establish its credibility.

Messrs. Stanley and Andruskevich were instrumental in effecting the management and board changes necessary to stabilize the organization and set the Company's course in a new direction, as well as initiating essential changes in the management compensation and corporate governance practices. Because of their contributions, this was a difficult decision for each of them, but they feel now is the appropriate time to step aside as the Company moves forward. The Board thanks Messrs. Stanley and Andruskevich for their leadership and service to the Company.

Audio Webcast Details

The live audio webcast, beginning at 1:00 p.m. ET on Thursday, August 6, 2015, is available by accessing this link: http://services.choruscall.com/links/ver150806

A replay of the webcast will be available at the link above and archived for up to 12 months following the call. Participants should log in 10-15 minutes early.

About the Company
VEREIT is a leading, full-service real estate operating company with investment management capability. VEREIT owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate assets with a total asset book value of $19.2 billion including approximately 4,645 properties totaling 101.8 million square feet. Additionally, VEREIT manages $6.3 billion of gross real estate investments on behalf of the Cole Capital® non-traded REITs. VEREIT is a publicly traded Maryland corporation listed on the New York Stock Exchange. Additional information about VEREIT can be found on its website at www.VEREIT.com. VEREIT may disseminate important information regarding it and its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.

Definitions

Descriptions of FFO, AFFO, EBITDA and Normalized EBITDA are provided below.  Refer to pages 8 through 17 for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure.

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 the 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 the Company. AFFO, as defined by the Company, excludes from FFO non-routine 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 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 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, and above and below market lease amortization. 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.

Forward Looking Statements
Information set forth herein (including information included or incorporated by reference herein) contains "forward-looking statements" (within the meaning of section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT's 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 VEREIT'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 VEREIT's control. If a change occurs, VEREIT's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT's plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; VEREIT's ability to execute on and realize success from its business plan; VEREIT's ability to meet its 2015 guidance; the unpredictability of the business plans and financial condition of VEREIT's tenants; the impact of impairment charges in respect of certain of VEREIT'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 VEREIT's filings with the U.S. Securities and Exchange Commission (the "SEC"), which are available at the SEC's website at www.sec.gov. VEREIT 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.

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

CONSOLIDATED BALANCE SHEETS

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




June 30, 2015


December 31,
2014

ASSETS





Real estate investments, at cost:





Land


$

3,351,303


$

3,472,298

Buildings, fixtures and improvements


11,779,450


12,307,758

Land and construction in progress


83,104


77,450

Intangible lease assets


2,339,273


2,435,054

   Total real estate investments, at cost


17,553,130


18,292,560

   Less: accumulated depreciation and amortization


1,401,843


1,034,122

   Total real estate investments, net


16,151,287


17,258,438

Investment in unconsolidated entities


94,502


98,053

Investment in direct financing leases, net


49,801


56,076

Investment securities, at fair value


55,802


58,646

Loans held for investment, net


40,598


42,106

Cash and cash equivalents


121,651


416,711

Restricted cash


53,336


62,651

Intangible assets, net


135,340


150,359

Deferred costs and other assets, net


403,606


389,922

Goodwill


1,847,295


1,894,794

Due from affiliates


53,456


86,122

Assets held for sale


242,701


1,261

   Total assets


$

19,249,375


$

20,515,139






LIABILITIES AND STOCKHOLDERS' EQUITY





Mortgage notes payable and other debt, net


$

3,500,144


$

3,805,761

Corporate bonds, net


2,546,864


2,546,499

Convertible debt, net


979,852


977,521

Credit facility


2,300,000


3,184,000

Below-market lease liabilities, net


298,102


317,838

Accounts payable and accrued expenses


168,877


163,025

Deferred rent, derivative and other liabilities


122,999


127,611

Distributions payable


9,938


9,995

Due to affiliates


268


559

Mortgage notes payable associated with assets held for sale


118,493


   Total liabilities


10,045,537


11,132,809

Commitments and contingencies



Preferred stock, $0.01 par value, 100,000,000 shares authorized and 42,834,138 issued and outstanding as of each of June 30, 2015 and December 31, 2014


428


428

Common stock, $0.01 par value, 1,500,000,000 shares authorized and 905,062,673 and 905,530,431 issued and outstanding as of each of June 30, 2015 and December 31, 2014, respectively


9,051


9,055

Additional paid-in capital


11,924,547


11,920,253

Accumulated other comprehensive (loss) income


(1,928)


2,728

Accumulated deficit


(2,951,019)


(2,778,576)

   Total stockholders' equity


8,981,079


9,153,888

Non-controlling interests


222,759


228,442

   Total equity


9,203,838


9,382,330

   Total liabilities and equity


$

19,249,375


$

20,515,139

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

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




Three Months Ended



June 30, 2015


June 30, 2014

Revenues:





 Rental income


$

341,183


$

314,519

 Direct financing lease income


697


1,181

 Operating expense reimbursements


25,312


29,256

 Cole Capital revenue


26,529


37,222

   Total revenues


393,721


382,178

Operating expenses:





 Cole Capital reallowed fees and commissions


3,710


7,068

 Acquisition related


1,563


7,201

 Merger and other non-routine transactions


16,864


7,422

 Property operating


32,598


39,286

 General and administrative


33,958


37,224

 Depreciation and amortization


217,513


250,739

 Impairments


85,341


1,556

   Total operating expenses


391,547


350,496

Operating income


2,174


31,682

Other (expense) income:





 Interest expense, net


(90,572)


(103,897)

 Extinguishment of debt, net



(6,469)

 Other income, net


5,302


4,442

 Gain on derivative instruments, net


311


14,207

Total other expenses, net


(84,959)


(91,717)

Loss before income and franchise taxes and loss on disposition of real estate and held for sale assets


(82,785)


(60,035)

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


(24,674)


(1,269)

Loss before income and franchise taxes


(107,459)


(61,304)

(Provision for) benefit from income and franchise taxes


(1,250)


4,706

Net loss


(108,709)


(56,598)

Net loss attributable to non-controlling interests


2,187


1,878

Net loss attributable to the Company


$

(106,522)


$

(54,720)






Basic and diluted net loss per share attributable to common stockholders


$

(0.14)


$

(0.10)

Distributions declared per common share


$


$

0.25

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

CONSOLIDATED EBITDA AND NORMALIZED EBITDA

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




Three Months Ended



June 30, 2015


June 30, 2014

 Net loss


$

(108,709)


$

(56,598)

  Adjustments:





    Interest expense


90,572


103,897

    Depreciation and amortization


217,513


250,739

    Provision for (benefit from) income and franchise taxes


1,250


(4,706)

    Proportionate share of adjustments for unconsolidated entities


2,415


3,453

 EBITDA


$

203,041


$

296,785

  Management adjustments:





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


24,674


1,269

    Impairments


85,341


1,556

    Acquisition related


1,563


7,201

    Merger and other non-routine transactions


16,864


7,422

    Loss (gain) on sale and unrealized gains of investment securities


172


    Gain on derivative instruments, net


(311)


(14,207)

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


1,064


2,103

    Extinguishment of debt, net



6,469

    Net direct financing lease adjustments


491


137

    Straight-line rent


(23,997)


(17,413)

    Other amortization and non-cash charges


(125)


(95)

     Proportionate share of adjustments for unconsolidated entities


529


437

Normalized EBITDA


$

309,306


$

291,664

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

CONSOLIDATED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

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




Three Months Ended



June 30, 2015


June 30, 2014

Net loss


$

(108,709)


$

(56,598)

Dividends on non-convertible preferred stock


(17,973)


(17,773)

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


24,674


1,269

Depreciation and amortization of real estate assets


209,132


225,940

Impairment of real estate


85,341


1,556

Proportionate share of adjustments for unconsolidated entities


1,486


2,573

   FFO


193,951


156,967






Acquisition related


1,563


7,201

Merger and other non-routine transactions


16,864


7,422

Unrealized gain on investment securities


172


Gain on derivative instruments, net


(311)


(14,207)

Amortization of premiums and discounts on debt and investments, net


(5,298)


(4,606)

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


1,064


2,103

Net direct financing lease adjustments


491


137

Amortization and write-off of deferred financing costs


7,428


10,985

Amortization of management contracts


7,510


24,024

Deferred tax benefit


(3,874)


Extinguishment of debt, net



6,469

Straight-line rent


(23,997)


(17,413)

Equity-based compensation


5,355


5,690

Other amortization and non-cash charges


766


698

Proportionate share of adjustments for unconsolidated entities


654


464

   AFFO


$

202,338


$

185,934






Weighted-average shares outstanding - basic


903,339,143


815,406,408

Effect of dilutive securities


26,348,273


52,613,117

Weighted-average shares outstanding - diluted


929,687,416


868,019,525






AFFO per diluted share


$

0.22


$

0.21

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

CONSOLIDATED ADJUSTED FUNDS FROM OPERATIONS PER DILUTED SHARE - 2015 GUIDANCE

(Unaudited)


The Company expects its 2015 FFO to be in a range between $0.78 and $0.81 per share, which includes an approximate ($0.01) per share reduction from Cole Capital. The Company expects its 2015 AFFO to be in a range between $0.80 to $0.83 per share, which includes an approximate $0.01 contribution from Cole Capital.





Low


High

Net loss per basic and diluted share (1)


$

(0.35)


$

(0.31)

Loss on disposition of real estate assets, net (2)


0.14


0.13

Depreciation and amortization of real estate assets


0.89


0.89

Impairment of real estate assets


0.09


0.09

Effect of incremental dilutive shares (3)


0.01


0.01

FFO per diluted share


0.78


0.81

Adjustments (4)


0.02


0.02

AFFO per diluted share


$

0.80


$

0.83














(1)

Includes impact of dividends paid to preferred shareholders and excludes the effect of non-controlling interests.

(2)

Includes an allocated portion of the Real Estate Investment segment goodwill to the respective sold properties to calculate the GAAP loss.

(3)

Represents impact of limited partnership interests in our operating partnership, unvested restricted shares and unvested restricted stock units that are included in the computation of FFO and AFFO per diluted share but excluded from net loss per share as the effect is antidilutive for such calculation.

(4)

Includes (i) non-routine 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 and (ii) certain non-cash items such as impairments of intangibles, 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.

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - STATEMENTS OF OPERATIONS

(REI Segment)

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




Three Months Ended



June 30, 2015


June 30, 2014

Revenues:





   Rental income


$

341,183


$

314,519

   Direct financing lease income


697


1,181

   Operating expense reimbursements


25,312


29,256

      Total real estate investment revenues


367,192


344,956

Operating expenses:





   Acquisition related


1,563


7,201

   Merger and other non-routine transactions


16,864


5,999

   Property operating


32,598


39,286

   General and administrative


16,827


15,189

   Depreciation and amortization


209,122


225,965

   Impairment of real estate


85,341


1,556

      Total operating expenses


362,315


295,196

Operating income


4,877


49,760

   Other (expense) income:





   Interest expense, net


(90,572)


(103,897)

   Extinguishment of debt, net



(6,469)

   Other income, net


4,910


4,332

   Gain on derivative instruments, net


311


14,207

      Total other expenses, net


(85,351)


(91,827)

Loss before income and franchise taxes and loss on disposition of real estate and held for sale assets


(80,474)


(42,067)

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


(24,674)


(1,269)

Loss before income and franchise  taxes


(105,148)


(43,336)

Provision for income and franchise taxes


(3,119)


(2,788)

Net loss


$

(108,267)


$

(46,124)

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - STATEMENTS OF OPERATIONS

(Cole Capital Segment)

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


Three Months Ended



June 30, 2015


June 30, 2014

Revenues:





 Dealer manager and distribution fees, selling commissions and offering reimbursements


$

5,516


$

9,969

  Transaction service fees and reimbursements


7,036


15,116

  Management fees and reimbursements


13,977


12,137

     Total Cole Capital revenues


26,529


37,222

Operating Expenses:





  Cole Capital reallowed fees and commissions


3,710


7,068

  Merger and other non-routine transaction related



1,423

  General and administrative


17,131


22,035

  Depreciation and amortization


8,391


24,774

   Total operating expenses


29,232


55,300

      Operating (loss) income


(2,703)


(18,078)

Total other income, net


392


110

(Loss) income before income and franchise taxes


(2,311)


(17,968)

Benefit from income and franchise taxes


1,869


7,494

Net loss


$

(442)


$

(10,474)

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA

(REI Segment)

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




Three Months Ended



June 30, 2015


June 30, 2014

 Net loss


$

(108,267)


$

(46,124)

  Adjustments:





   Interest expense


90,572


103,897

   Depreciation and amortization


209,122


225,965

   Provision for income and franchise taxes


3,119


2,788

   Proportionate share of adjustments for unconsolidated entities


2,415


3,453

 EBITDA


$

196,961


$

289,979

  Management adjustments:





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


24,674


1,269

   Impairments


85,341


1,556

   Acquisition related


1,563


7,201

   Merger and other non-routine transactions


16,864


5,999

   Loss on sale and unrealized gains of investment securities


172


   Gain on derivative instruments, net


(311)


(14,207)

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


1,064


2,103

   Extinguishment of debt, net



6,469

   Net direct financing lease adjustments


491


137

   Straight-line rent


(23,997)


(17,413)

   Other amortization and non-cash charges


(20)


(3)

    Proportionate share of adjustments for unconsolidated entities


529


437

Normalized EBITDA


$

303,331


$

283,527

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA

(Cole Capital Segment)

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






Three Months Ended



June 30, 2015


June 30, 2014

 Net loss


$

(442)


$

(10,474)

  Adjustments:





   Depreciation and amortization


8,391


24,774

   (Benefit from) provision for income and franchise taxes


(1,869)


(7,494)

 EBITDA


$

6,080


$

6,806

  Management adjustments:





   Merger and other non-routine transactions



1,423

   Other amortization and non-cash charges


(105)


(92)

Normalized EBITDA


$

5,975


$

8,137

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(REI Segment)

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




Three Months Ended



June 30, 2015


June 30, 2014

Net loss


$

(108,267)


$

(46,124)

Dividends on non-convertible preferred stock


(17,973)


(17,773)

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


24,674


1,269

Depreciation and amortization of real estate assets


209,132


225,940

Impairment of real estate


85,341


1,556

Proportionate share of adjustments for unconsolidated entities


1,486


2,573

    FFO


$

194,393


$

167,441






Acquisition related


1,563


7,201

Merger and other non-routine transactions


16,864


5,999

Loss on sale and unrealized gains of investment securities


172


Gain on derivative instruments, net


(311)


(14,207)

Amortization of premiums and discounts on debt and investments, net


(5,298)


(4,606)

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


1,064


2,103

Net direct financing lease adjustments


491


137

Amortization and write-off of deferred financing costs


7,428


10,985

Extinguishment of debt, net



6,469

Straight-line rent


(23,997)


(17,413)

Equity-based compensation


2,357


3,575

Other amortization and non-cash charges


(10)


40

Proportionate share of adjustments for unconsolidated entities


654


464

    AFFO


$

195,370


$

168,188






Weighted-average shares outstanding - basic


903,339,143


815,406,408

Effect of dilutive securities


26,348,273


52,613,117

Weighted-average shares outstanding - diluted


929,687,416


868,019,525






FFO per diluted share


$

0.21


$

0.19

AFFO per diluted share


$

0.21


$

0.19

 

VEREIT, INC.

(F/K/A AMERICAN REALTY CAPITAL PROPERTIES, INC.)

SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(Cole Capital Segment)

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





Three Months Ended



June 30, 2015


June 30, 2014

Net loss


$

(442)


$

(10,474)

    FFO


(442)


(10,474)






Merger and other non-routine transactions



1,423

 Amortization of management contracts


7,510


24,024

 Deferred tax benefit


(3,874)


Equity-based compensation


2,998


2,115

Other amortization and non-cash charges


776


658

    AFFO


$

6,968


$

17,746






Weighted-average shares outstanding - basic


903,339,143


815,406,408

Effect of dilutive securities


26,348,273


52,613,117

Weighted-average shares outstanding - diluted


929,687,416


868,019,525






FFO per diluted share


$


$

(0.01)

AFFO per diluted share


$

0.01


$

0.02

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/vereit-announces-second-quarter-2015-operating-results-300124711.html

SOURCE VEREIT, Inc.

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