Press Release

VEREIT® Announces First Quarter 2016 Operating Results

AFFO Per Diluted Share of $0.21 and Dispositions of $295.2 million

Net Debt to Normalized EBITDA Reduced to 6.7x

Company Release - 5/5/2016 6:52 AM ET

PHOENIX, May 5, 2016 /PRNewswire/ -- VEREIT, Inc. (NYSE: VER) ("VEREIT" or the "Company") announced today its operating results for the three months ending March 31, 2016, as well as progress on its business plan.

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. (PRNewsFoto/VEREIT, Inc.)

First Quarter 2016 Highlights

  • Achieved $0.21 AFFO per diluted share
  • Completed $295.2 million of dispositions at an average cash cap rate of 6.3%
  • Reduced Net Debt to Normalized EBITDA from 7.0x to 6.7x and increased liquidity to $2.1 billion
  • Increased Cole Capital® new equity capital raise 24% quarter-over-quarter
  • Maintained dividend of $0.1375 per share or $0.55 on an annual basis
  • Re-affirming AFFO per diluted share guidance range of $0.75 - $0.80

First Quarter 2016 Consolidated Financial Results

Revenue

Consolidated revenue for the quarter ended March 31, 2016 decreased $25.0 million to $369.0 million as compared to revenue of $394.0 million for the same quarter in 2015.

Net Income (Loss)

Consolidated net loss for the quarter ended March 31, 2016 increased $85.4 million to $(116.1) million as compared to a net loss of $(30.7) million for the same quarter in 2015.

Normalized EBITDA

Consolidated normalized EBITDA for the quarter ended March 31, 2016 decreased $26.6 million to $288.6 million as compared to normalized EBITDA of $315.2 million for the same quarter in 2015.

FFO and FFO per Diluted Common Share

Funds From Operations attributable to common stockholders and limited partners ("FFO") for the quarter ended March 31, 2016 increased $1.2 million to $196.2 million, as compared to $195.0 million for the same quarter in 2015 and FFO per diluted share remained the same at $0.21 for the quarters ended March 31, 2016 and March 31, 2015.

AFFO and AFFO per Diluted Common Share

Adjusted Funds From Operations attributable to common stockholders and limited partners ("AFFO") for the quarter ended March 31, 2016 decreased $7.4 million to $192.7 million, as compared to $200.1 million for the same quarter in 2015, and AFFO per diluted share decreased $0.01 to $0.21 for the quarter ended March 31, 2016, as compared to $0.22 for the same quarter in 2015.

Common Stock Dividend Information

On May 4, 2016 the Company's Board of Directors declared a quarterly dividend of $0.1375 per share for the second quarter of 2016, representing an annual distribution rate of $0.55 per share. The dividend will be paid on July 15, 2016 to common stockholders of record as of June 30, 2016.

Balance Sheet and Liquidity

During the quarter, the Company paid down $180.0 million on its revolving line of credit, reducing the total amount outstanding under the revolving line of credit to $280.0 million, increasing liquidity to $2.1 billion.  The Company's credit facility is made up of its revolving line of credit and a $1.0 billion term loan.

Consolidated Financial Statistics

Consolidated Financial Statistics as of the quarter ended March 31, 2016 are as follows: Net Debt to Normalized EBITDA of 6.7x, Fixed Charge Coverage Ratio of 2.8x, Unencumbered Gross Real Estate Assets to Total Gross Assets ratio of 65.3%, Net Debt to Gross Real Estate Assets of 47.5% and Weighted Average Debt Term of 3.6 years.

Management Commentary

Glenn J. Rufrano, Chief Executive Officer, stated, "VEREIT's first quarter results advanced our operational and business plan objectives. This included achieving AFFO of $0.21 per diluted share, completing nearly $300 million of dispositions at an average cap rate of 6.3 percent and increasing Cole Capital's equity raise 24% quarter-over-quarter. We have also decreased net debt to normalized EBITDA to 6.7 times and moved our balance sheet further towards investment-grade metrics with $2.1 billion of liquidity, creating flexibility and optionality.

"Subsequent to the quarter we completed an additional $48 million of targeted property sales and raised $60.5 million of new equity for Cole during April. Based on the collective accomplishments during the past year, Moody's Investor Service revised VEREIT's outlook upward to stable and S&P Global Ratings revised our outlook upward to positive."


First Quarter 2016 Real Estate Investment ("REI") Financial Results

Revenue

REI segment revenue for the quarter ended March 31, 2016 decreased $28.7 million to $337.8 million as compared to revenue of $366.5 million for the same quarter in 2015, mainly due to dispositions since January 1, 2015.

Net Income (Loss)

REI segment net loss for the quarter ended March 31, 2016 increased $84.9 million to $(115.5) million as compared to a net loss of $(30.6) million for the same quarter in 2015, mainly due to the real estate impairments recognized for the quarter ended March 31, 2016, offset by an increase in gains on dispositions.

Normalized EBITDA

REI segment normalized EBITDA for the quarter ended March 31, 2016 decreased $24.1 million to $282.2 million as compared to normalized EBITDA of $306.3 million for the same quarter in 2015, mainly due to dispositions since January 1, 2015.

FFO and FFO per Diluted Common Share

REI segment FFO for the quarter ended March 31, 2016 increased $1.7 million to $196.8 million, as compared to $195.1 million for the same quarter in 2015, and FFO per diluted share was $0.21 for the quarter ended March 31, 2016, as compared to $0.21 for the same quarter in 2015.

AFFO and AFFO per Diluted Common Share

REI segment AFFO for the quarter ended March 31, 2016 decreased $9.6 million to $185.5 million, as compared to $195.1 million for the same quarter in 2015, and AFFO per diluted share decreased $0.01 to $0.20 for the quarter ended March 31, 2016, as compared to $0.21 for the same quarter in 2015.

Real Estate Portfolio Update

As of March 31, 2016, the Company's portfolio consisted of 4,378 properties with total portfolio occupancy of 98.6%, investment grade tenancy of 42.1% and a weighted-average remaining lease term of 10.4 years.  Due to the pending bankruptcy proceedings for Ovation Brands, Inc., no impact is reflected in occupancy.

Same-Store Rent Increases

During the quarter ended March 31, 2016, same-store rents (4,319 properties) increased 0.5% to $295.7 million, as compared to $294.2 million for the same quarter in 2015.  Excluding the reserve due to the impact of the bankruptcy filing of Ovation Brands, Inc., same store rental revenue increased 1.0%, during the quarter ended March 31, 2016, as compared to the same quarter in 2015.

Property Acquisitions and Development

During the first quarter of 2016, the Company purchased one property which was a 2014 forward commitment in the amount of $20.0 million at a cash cap rate of 7.1%. The Company capitalized $0.9 million of development costs and placed $6.9 million of assets into service at an average cash cap rate of 8.4%.  As of March 31, 2016, build-to-suits and redevelopment programs included 6 properties with an investment to date of $12.7 million and remaining estimated investment of $4.6 million.

Property Dispositions

During the quarter ended March 31, 2016, the Company sold 59 properties for approximately $295.2 million at an average cash cap rate of 6.3%.  The gain on first quarter sales was approximately $40.9 million, excluding goodwill allocation.

First Quarter 2016 Cole Capital® Financial Results

Revenue

Cole Capital segment revenue for the quarter ended March 31, 2016 increased $3.7 million to $31.2 million, as compared to revenue of $27.5 million for the same quarter in 2015, primarily due to higher fee and reimbursement revenue associated with higher capital raise offset by lower transactional revenue.

Net Income (Loss)

Cole Capital segment net loss for the quarter ended March 31, 2016 increased $0.4 million to $(0.5) million, as compared to a net loss of $(0.1) million for the same quarter in 2015, mainly due to the decrease in transactional revenue.

Normalized EBITDA

Cole Capital segment normalized EBITDA for the quarter ended March 31, 2016 decreased $2.4 million to $6.4 million, as compared to normalized EBITDA of $8.8 million for the same quarter in 2015, mainly due to the decrease in transactional revenue.

FFO and FFO per Diluted Common Share

Cole Capital segment FFO for the quarter ended March 31, 2016 decreased $(0.4) million to $(0.5) million, as compared to $(0.1) million for the same quarter in 2015, and FFO per diluted share remained the same at $0.00 for the quarters ending March 31, 2016 and March 31, 2015.

AFFO and AFFO per Diluted Common Share

Cole Capital segment AFFO for the quarter ended March 31, 2016 increased $2.0 million to $7.1 million, as compared to $5.1 million for the same quarter in 2015, and AFFO per diluted share remained the same at $0.01 per diluted share for the quarters ending March 31, 2016 and March 31, 2015.

Investment Management Capital Raise

During the quarter, Cole Capital raised $179.0 million of capital on behalf of its sponsored non-listed REITs (the "Cole REITs"), including $34.4 million through the Cole REITs' distribution reinvestment plans ("DRIP"), compared to $61.9 million, including $32.1 million of DRIP proceeds, in the first quarter of 2015.

Investment Management Acquisitions

Cole Capital invested $102.1 million in 13 properties on behalf of the Cole REITs in the first quarter of 2016, compared to $225.8 million in 79 properties in the first quarter of 2015.


Subsequent Events - Consolidated

Credit Ratings

On April 27, 2016, Moody's Investors Service affirmed the Ba1 senior unsecured rating for the Company and revised the rating outlook from negative to stable.   In addition, on May 4, 2016, S&P Global Ratings affirmed the BB corporate credit rating for the Company and revised the rating outlook from stable to positive.

Property Dispositions

From April 1, 2016 through May 3, 2016, the Company disposed of 28 properties for an aggregate gross sales price of $48.2 million at an average cash cap rate of 6.8%.

Cole Capital Equity Raise

In April 2016, Cole Capital raised $72.3 million of capital on behalf of the Cole REITs, including $11.8 million through DRIP.


Audio Webcast Details

The live audio webcast, beginning at 1:00 p.m. ET on Thursday, May 5, 2016, is available by accessing this link: http://ir.vereit.com/.

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 $16.8 billion including 4,378 properties totaling approximately 99.0 million square feet, located in 49 states, as well as the District of Columbia, Puerto Rico and Canada. Additionally, VEREIT manages $6.8 billion of gross real estate investments on behalf of the Cole Capital® non-listed 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 12 through 23 for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure and the calculations of our Fixed Charge Coverage Ratio, Net Debt to Normalized EBITDA Annualized Ratio, Net Debt Leverage Ratio and Unencumbered Asset Ratio.

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 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, litigation and other non-routine transactions costs, gains or losses on sale of investment securities or mortgage notes receivable, insurance recoveries and legal settlements. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rental revenue, unrealized gains or losses on derivatives, reserves for loan loss, gain or loss 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, above-market lease assets and below-market lease liabilities. 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 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 income (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 income (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. 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 used 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 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 assets, straight-line rental revenue, unrealized gains or losses on derivatives, write-off of program development costs, and amortization of intangibles, deferred financing costs, above-market lease assets and below-market lease liabilities. 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 inability to execute on and realize success from its business plan,  including increasing balance sheet liquidity and flexibility; the inability to pay the second quarter dividend with cash from operations; VEREIT's inability to meet its 2016 guidance including but not limited to, for AFFO, dispositions, average occupancy, same store rental growth and Cole Capital acquisitions and capital raise; the inability of VEREIT to achieve  investment grade metrics; VEREIT's inability to maintain a stable dividend; Cole Capital's inability to continue to increase market share; 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.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data) (Unaudited)




March 31,
 2016


December 31,
 2015

ASSETS





Real estate investments, at cost:





Land


$

3,058,879



$

3,120,653


Buildings, fixtures and improvements


11,161,327



11,445,690


Intangible lease assets


2,145,734



2,218,378


Total real estate investments, at cost


16,365,940



16,784,721


Less: accumulated depreciation and amortization


1,865,674



1,778,597


Total real estate investments, net


14,500,266



15,006,124


Investment in unconsolidated entities


23,445



56,824


Investment in direct financing leases, net


45,611



46,312


Investment securities, at fair value


48,162



53,304


Mortgage notes receivable, net


23,559



24,238


Cash and cash equivalents


104,450



69,103


Restricted cash


60,132



59,767


Intangible assets, net


43,327



50,779


Rent and tenant receivables and other assets, net


313,903



303,637


Goodwill


1,642,858



1,656,374


Due from affiliates


11,617



60,633


Real estate assets held for sale, net


26,282



18,771


Total assets


$

16,843,612



$

17,405,866







LIABILITIES AND STOCKHOLDERS' EQUITY





Mortgage notes payable and other debt, net


$

3,029,666



$

3,111,985


Corporate bonds, net


2,537,699



2,536,333


Convertible debt, net


965,469



962,894


Credit facility, net


1,269,731



1,448,590


Below-market lease liabilities, net


245,093



251,692


Accounts payable and accrued expenses


118,970



151,877


Deferred rent, derivative and other liabilities


88,997



87,490


Distributions payable


143,973



140,816


Due to affiliates




230


Total liabilities


8,399,598



8,691,907


Commitments and contingencies (Note 15)





Preferred stock, $0.01 par value, 100,000,000 shares authorized and 42,834,138 issued and outstanding as of each of March 31, 2016 and December 31, 2015


428



428


Common stock, $0.01 par value, 1,500,000,000 shares authorized and 904,757,365 and 904,884,394 issued and outstanding as of March, 31, 2016 and December, 31, 2015, respectively


9,048



9,049


Additional paid-in-capital


11,932,859



11,931,768


Accumulated other comprehensive (loss) income


(11,345)



(2,025)


Accumulated deficit


(3,671,050)



(3,415,233)


Total stockholders' equity


8,259,940



8,523,987


Non-controlling interests


184,074



189,972


Total equity


8,444,014



8,713,959


Total liabilities and equity


$

16,843,612



$

17,405,866


 

VEREIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

Revenues:





Rental income


$

313,971



$

342,759


Direct financing lease income


569



741


Operating expense reimbursements


23,247



22,974


Cole Capital revenue


31,233



27,494


  Total revenues


369,020



393,968


Operating expenses:





Cole Capital reallowed fees and commissions


8,068



2,031


Acquisition related


242



2,182


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Property operating


34,813



30,999


General and administrative


29,400



33,106


Depreciation and amortization


204,308



219,141


Impairments


160,517




  Total operating expenses


432,173



303,882


 Operating (loss) income


(63,153)



90,086


Other (expense) income:





Interest expense, net


(80,426)



(95,699)


Gain on extinguishment and forgiveness of debt, net




5,302


Other income, net


1,062



4,060


Equity in income and gain on disposition of unconsolidated entities


10,404



28


Loss on derivative instruments, net


(1,086)



(1,028)


  Total other expenses, net


(70,046)



(87,337)


(Loss) income before taxes and real estate dispositions


(133,199)



2,749


Gain (loss) on disposition of real estate, net


17,175



(31,368)


Loss before taxes


(116,024)



(28,619)


Provision for income taxes


(56)



(2,074)


Net loss


(116,080)



(30,693)


Net loss attributable to non-controlling interests


2,994



723


Net loss attributable to the General Partner


$

(113,086)



$

(29,970)







Basic and diluted net loss per share attributable to common stockholders


$

(0.15)



$

(0.05)


Distributions declared per common share


$

0.14



$


 

VEREIT, INC.
CONSOLIDATED EBITDA AND NORMALIZED EBITDA
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

 Net loss


$

(116,080)



$

(30,693)


 Adjustments:





    Interest expense


80,426



95,699


    Depreciation and amortization


204,308



219,141


    Provision for income taxes


56



2,074


    Proportionate share of adjustments for unconsolidated entities


1,822



2,661


 EBITDA


$

170,532



$

288,882


(Gain) loss on disposition of real estate assets, including joint ventures, net


(27,373)



31,368


Impairments


160,517




Reserve for loan loss





Acquisition related expenses


242



2,182


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Loss on derivative instruments, net


1,086



1,028


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


1,296



1,007


Gain on extinguishment and forgiveness of debt, net




(5,302)


Net direct financing lease adjustments


559



495


Straight-line rent


(13,045)



(19,107)


Legal settlements




(1,250)


Other amortization and non-cash charges


(126)



(78)


 Proportionate share of adjustments for unconsolidated entities


94



(254)


Normalized EBITDA


$

288,607



$

315,161


 

VEREIT, INC.
CONSOLIDATED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

Net loss


$

(116,080)



$

(30,693)


Dividends on non-convertible preferred stock


(17,973)



(17,973)


Gain (loss) on real estate assets and interest in joint venture, net


(27,373)



31,368


Depreciation and amortization of real estate assets


195,991



210,770


Impairment of real estate


160,517




Proportionate share of adjustments for unconsolidated entities


1,147



1,558


FFO attributable to common stockholders and limited partners


$

196,229



$

195,030







Acquisition related expenses


242



2,182


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Legal settlements




(1,250)


Gain on investment securities




(233)


Loss on derivative instruments, net


1,086



1,028


Amortization of net premiums on debt and investments, net


(4,426)



(3,858)


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


1,296



1,007


Net direct financing lease adjustments


559



495


Amortization and write off of deferred financing costs


7,307



7,929


Amortization of management contracts


7,451



7,510


Deferred tax benefit


(1,457)



(3,972)


Gain on extinguishment and forgiveness of debt, net




(5,302)


Straight-line rent


(13,045)



(19,107)


Equity-based compensation expense


1,730



818


Other amortization and non-cash charges


743



753


Proportionate share of adjustments for unconsolidated entities


135



682


AFFO attributable to common stockholders and limited partners


$

192,675



$

200,135







Weighted-average shares outstanding - basic


903,825,726



902,996,270


Effect of dilutive securities


26,354,148



26,157,663


Weighted-average shares outstanding - diluted


930,179,874



929,153,933







FFO attributable to common stockholders and limited partners per diluted share


$

0.211



$

0.210


AFFO attributable to common stockholders and limited partners per diluted share


$

0.207



$

0.215


 

VEREIT, INC.
CONSOLIDATED ADJUSTED FUNDS FROM OPERATIONS PER DILUTED SHARE  - 2016 GUIDANCE
(Unaudited)


We reaffirm our AFFO per diluted share guidance range of $0.75 - $0.80, as previously disclosed in our Q4 2015 earnings release.




Low


High

Basic and diluted net loss per share attributable to common stockholders (1)


$

(0.11)



$

(0.06)


Depreciation and amortization of real estate assets


0.83



0.83


FFO attributable to common stockholders and limited partners per diluted share


0.72



0.77


Adjustments (2)


0.03



0.03


AFFO attributable to common stockholders and limited partners per diluted share


$

0.75



$

0.80










(1)

Includes impact of dividends paid to preferred shareholders and excludes the effect of non-controlling interests.   Excludes impact of gain or loss on sale of real estate.



(2)

Includes (i) non-routine items such as acquisition related costs, litigation and other non-routine transactions costs, gains or losses on sale of investment securities and mortgage note receivables, insurance and legal settlements and extinguishment of debt cost and (ii) certain non-cash items such as impairments of intangible assets and goodwill, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangible assets, deferred financing costs, above and below market lease amortization as well as equity-based compensation.

 

VEREIT, INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)




Three Months Ended



March 31,
 2016

Interest expense


$

77,542


Secured debt principal amortization


8,449


Dividends attributable to preferred shares


17,973


Total fixed charges


103,964


Normalized EBITDA


288,607


Fixed charge coverage ratio


2.78

x






March 31,
 2016

Total Debt


$

7,826,603


Less: cash and cash equivalents


104,450


Net Debt


7,722,153


Normalized EBITDA annualized


1,154,428


Net Debt to Normalized EBITDA annualized ratio


6.69

x




Net Debt


$

7,722,153


Gross Real Estate Investments


16,247,476


Net Debt leverage ratio


47.5

%




Unencumbered Gross Real Estate Investments


$

10,612,483


Gross Real Estate Investments


16,247,476


Unencumbered asset ratio


65.3

%

 

VEREIT, INC.
SEGMENT REPORTING - STATEMENTS OF OPERATIONS
(REI Segment)
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

Revenues:





Rental income


$

313,971



$

342,759


Direct financing lease income


569



741


Operating expense reimbursements


23,247



22,974


   Total real estate investment revenues


337,787



366,474


Operating expenses:





Acquisition related


217



1,723


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Property operating


34,813



30,999


General and administrative


12,228



15,370


Depreciation and amortization


195,991



210,788


Impairment of real estate


160,517




   Total operating expenses


398,591



275,303


Operating (loss) income


(60,804)



91,171


Other (expense) income:





Interest expense


(80,426)



(95,699)


Gain on extinguishment and forgiveness of debt, net




5,302


Other income, net


568



2,841


Equity in income and gain on disposition of unconsolidated entities


10,404



28


Gain (loss) on derivative instruments, net


(1,086)



(1,028)


   Total other expenses, net


(70,540)



(88,556)


(Loss) income before taxes and disposition of real estate


(131,344)



2,615


Gain (loss) on disposition of real estate assets, net


17,175



(31,368)


Loss before income taxes


(114,169)



(28,753)


Provision for income taxes


(1,365)



(1,854)


Net Loss


$

(115,534)



$

(30,607)


 

VEREIT, INC.
SEGMENT REPORTING - STATEMENTS OF OPERATIONS
(Cole Capital Segment)
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

Revenues:





Offering-related fees and reimbursements


$

12,391



$

3,117


 Transaction service fees and reimbursements


2,384



10,260


 Management fees and reimbursements


16,458



14,117


  Total Cole Capital revenues


31,233



27,494


Operating Expenses:





 Cole Capital reallowed fees and commissions


8,068



2,031


 Acquisition related


25



459


 General and administrative


17,172



17,736


 Depreciation and amortization


8,317



8,353


   Total operating expenses


33,582



28,579


  Operating loss


(2,349)



(1,085)


 Total other income, net


494



1,219


Loss before taxes


(1,855)



134


 Benefit from (provision for) income taxes


1,309



(220)


Net loss


$

(546)



$

(86)


 

VEREIT, INC.
SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA
(REI Segment)
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

 Net loss


$

(115,534)



$

(30,607)


 Adjustments:





   Interest expense


80,426



95,699


   Depreciation and amortization


195,991



210,788


   Provision for income taxes


1,365



1,854


   Proportionate share of adjustments for unconsolidated entities


1,822



2,661


 EBITDA


$

164,070



$

280,395


Gain (loss) on disposition of real estate assets, including joint ventures, net


(27,373)



31,368


Impairments of real estate assets


160,517




Acquisition related expenses


217



1,723


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Unrealized gains of investment securities




(233)


Loss on derivative instruments, net


1,086



1,028


Amortization of above- and below- market lease assets and liabilities


1,296



1,007


Gain on extinguishment and forgiveness of debt, net




(5,302)


Net direct financing lease adjustments


559



495


Straight-line rent


(13,045)



(19,107)


Legal settlements




(1,250)


Other amortization and non-cash charges


(3)



30


Proportionate share of adjustments for unconsolidated entities


94



(254)


Normalized EBITDA


$

282,243



$

306,323


 

VEREIT, INC.
SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA
(Cole Capital Segment)
(In thousands, except for per share data) (Unaudited)



Three Months Ended March 31,


2016


2015

Net loss

(546)



(86)


Adjustments:




  Depreciation and amortization

8,317



8,353


  (Benefit from) provision for income taxes

(1,309)



220


EBITDA

$

6,462



$

8,487


   Management adjustments:




   Acquisition related expenses

25



459


   Other amortization and non-cash charges

(123)



(108)


Normalized EBITDA

$

6,364



$

8,838


 

VEREIT, INC.
SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(REI Segment)
(In thousands, except for per share data) (Unaudited)




Three Months Ended March 31,



2016


2015

Net loss


$

(115,534)



$

(30,607)


Dividends on non-convertible preferred stock


(17,973)



(17,973)


(Gain) loss on disposition of real estate assets, including joint ventures, net


(27,373)



31,368


Depreciation and amortization of real estate assets


195,991



210,770


Impairment of real estate


160,517




Proportionate share of adjustments for unconsolidated entities


1,147



1,558


FFO attributable to common stockholders and limited partners


$

196,775



$

195,116







Acquisition related expenses


217



1,723


Litigation and other non-routine, net of insurance recoveries


(5,175)



16,423


Legal settlements




(1,250)


Unrealized gains of investment securities




(233)


Loss on derivative instruments, net


1,086



1,028


Amortization of premiums and discounts on debt and investments, net


(4,426)



(3,858)


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


1,296



1,007


Net direct financing lease adjustments


559



495


Amortization and write-off of deferred financing costs


7,307



7,929


Gain on extinguishment and forgiveness of debt, net




(5,302)


Straight-line rent


(13,045)



(19,107)


Equity-based compensation expense


799



402


Other amortization and non-cash charges




18


Proportionate share of adjustments for unconsolidated entities


135



682


AFFO attributable to common stockholders and limited partners


$

185,528



$

195,073







Weighted-average shares outstanding - basic


903,825,726



902,996,270


Effect of dilutive securities


26,354,148



26,157,663


Weighted-average shares outstanding - diluted


930,179,874



929,153,933







FFO attributable to common stockholders and limited partners per diluted share


$

0.212



$

0.210


AFFO attributable to common stockholders and limited partners per diluted share


$

0.199



$

0.210


 

VEREIT, 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 March 31,



2016


2015

Net loss


$

(546)



$

(86)


 FFO attributable to common stockholders and limited partners


(546)



(86)







Acquisition related expenses


25



459


 Amortization of management contracts


7,451



7,510


 Deferred tax benefit


(1,457)



(3,972)


Equity-based compensation expense


931



416


Other amortization and non-cash charges


743



735


 AFFO attributable to common stockholders and limited partners


$

7,147



$

5,062







Weighted-average shares outstanding - basic


903,825,726



902,996,270


Effect of dilutive securities


26,354,148



26,157,663


Weighted-average shares outstanding - diluted


930,179,874



929,153,933







FFO attributable to common stockholders and limited partners per diluted share


$

(0.001)



$


AFFO attributable to common stockholders and limited partners per diluted share


$

0.008



$

0.005


 

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SOURCE VEREIT, Inc.

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