Supplemental Financial &
Operating Information
THIRD QUARTER ENDED
SEPTEMBER 30, 2017
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
About Spirit
Spirit Realty Capital, Inc., (NYSE: SRC) is a premier
net-lease real estate investment trust (REIT) that
primarily invests in high-quality, operationally
essential retail real estate, subject to long-term net
leases. Over the past decade, Spirit has become an
industry leader and owner of income-producing,
strategically located retail, industrial and office
properties providing superior risk-adjusted returns
and steady dividend growth for our shareholders.
As of September 30, 2017, our diversified portfolio
was composed of 2,511 properties, including
properties securing mortgage loans. Our properties,
with an aggregate gross leasable area of
approximately 50 million square feet are leased to
421 tenants across 49 states and 30 industries.
2
CORPORATE OVERVIEW
Corporate Headquarters
2727 N. Harwood St.,
Suite 300
Dallas, Texas 75201
Phone: 972-476-1900
www.spiritrealty.com
Transfer Agent
American Stock Transfer
& Trust Company, LLC
Phone: 866-703-9065
www.amstock.com
Investor Relations
(972) 476-1903
InvestorRelations@spirit
realty.com
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
TABLE OF CONTENTS
3
Portfolio and Financial Overview 4
Condensed Consolidated Statements of Operations 5
Funds and Adjusted Funds From Operations 6
Consolidated Balance Sheets 7
Capitalization and Debt Summary 8
Acquisition and Disposition Activity 12
Tenant / Industry / Portfolio Diversification 14
Same Store Performance 17
Occupancy 18
Lease Summary 19
Net Asset Value (NAV) Components 21
Analyst Coverage 22
Appendix: 23
Reporting Definitions and Explanations 24
Non-GAAP Reconciliations 28
Forward-Looking Statements and Risk Factors 29
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Top 10 Tenants Properties Percent of Contractual Rent
1 Specialty Retail Shops Holding Corp. 101 7.8%
2 AMC Entertainment, Inc. / Carmike Cinemas 18 2.6%
3 Walgreen Company 42 2.4%
4 Cajun Global, LLC 186 2.2%
5 Academy, LTD 6 1.9%
Top 5 Total 353 16.9%
6 Alimentation Couche-Tard, Inc. 82 1.9%
7 AB Acquisition, LLC 23 1.7%
8 The Home Depot, Inc. 7 1.7%
9 CVS Caremark Corporation 36 1.5%
10 Carmax, Inc. 8 1.5%
Top 10 Total 509 25.2%
Portfolio Weighted Average Remaining Lease Term (Years) 10.1
Top 10 Tenant Weighted Average Unit Level Rent Coverage 2.5x
Top 10 Tenant Median Unit Level Rent Coverage 2.2
PORTFOLIO AND FINANCIAL OVERVIEW
$ in thousands
4
Portfolio Data
Total Real Estate Investments $ 8,021,812
Owned Properties 2,423
Properties Securing Mortgage Loans 88
Total Properties 2,511
Tenants 421
Industries 30
States 49
Occupancy 99.1%
Capitalization
Equity Market Capitalization $ 3,907,063
Total Debt $ 3,937,485
Total Market Capitalization $ 7,844,548
Enterprise Value $ 7,736,257
Financial Ratios
Adjusted Debt / Enterprise Value 49.5%
Adjusted Debt / Annualized Adjusted EBITDA 6.5x
Fixed Charge Coverage Ratio 3.4x
Unencumbered Assets / Unsecured Debt 2.6x
Corporate Liquidity
Cash and Cash Equivalents $ 11,947
Restricted Cash Balances Held for Benefit of
Lenders $ 96,344
Availability Under Revolving Credit Facility $ 414,000
Availability Under Term Loan $ —
Total $ 522,291
Unencumbered Assets Properties Real Estate Investment
Retail 1,216 $ 4,184,683
Industrial 24 479,705
Office 26 211,594
Total 1,266 $ 4,875,982
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
(Unaudited) Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues
Rentals $ 159,799 $ 161,765 $ 479,506 $ 484,090
Interest income on loans receivable 1,003 1,042 2,769 4,326
Earned income from direct financing leases 483 660 1,613 2,082
Tenant reimbursement income 4,691 3,469 13,136 10,493
Other income 3,574 5,572 6,583 11,600
Total revenues 169,550 172,508 503,607 512,591
Expenses
General and administrative (G&A) (1) 13,712 15,112 49,992 40,611
Restructuring charges — 3,264 — 5,726
Transaction costs 2,660 — 3,145 —
Property costs 8,080 6,916 26,763 20,854
Real estate acquisition costs 196 1,056 773 2,092
Interest 48,680 47,653 142,129 149,842
Depreciation and amortization 63,673 65,300 192,887 194,227
Impairments 37,737 15,407 88,109 41,396
Total expenses 174,738 154,708 503,798 454,748
(Loss) income before other income (expense) and income tax benefit (expense) (5,188) 17,800 (191) 57,843
Gain (loss) on debt extinguishment 1,792 (8,349) 1,770 326
(Loss) income before income tax benefit (expense) (3,396) 9,451 1,579 58,169
Income tax benefit (expense) 11 (12) (419) (932)
(Loss) income from before gain on disposition of assets (3,385) 9,439 1,160 57,237
Gain on disposition of assets 8,707 17,960 40,197 39,221
Net income attributable to common stockholders $ 5,322 $ 27,399 $ 41,357 $ 96,458
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
$ in thousands
5
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
(1) Nine months ended September 30, 2017, includes $11.1 million in severance related costs.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO)
$ in thousands, except per share amounts
6
(Unaudited) Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to common stockholders (1) (2) $ 5,322 $ 27,399 $ 41,357 $ 96,458
Portfolio depreciation and amortization 63,530 65,155 192,465 193,892
Portfolio impairments 37,737 15,384 88,109 41,693
Realized gain on sales of real estate (8,707) (17,960) (40,197) (39,221)
Funds from operations $ 97,882 $ 89,978 $ 281,734 $ 292,822
(Gain) loss on debt extinguishment (1,792) 8,349 (1,770) (326)
Restructuring charges — 3,264 — 5,726
Other costs in G&A associated with headquarters relocation — 1,501 — 3,442
Transaction costs 2,660 — 3,145 —
Real estate acquisition costs 196 1,056 773 2,092
Non-cash interest expense 5,810 4,178 16,937 10,144
Accrued interest and fees on defaulted loans 1,344 853 2,917 3,951
Swap termination costs (included in G&A) — — — 1,724
Straight-line rent, net of related bad debt expense (4) (3,217) (3,246) (13,427) (14,097)
Other amortization and non-cash charges (743) (954) (2,447) (2,058)
Non-cash compensation expense (1) 2,339 3,399 13,778 7,189
Adjusted funds from operations $ 104,479 $ 108,378 $ 301,640 $ 310,609
Dividends declared to common stockholders $ 82,062 $ 84,606 $ 251,606 $ 246,151
Net income per share of common stock
Basic (3) $ 0.01 $ 0.06 $ 0.09 $ 0.21
Diluted (3) $ 0.01 $ 0.06 $ 0.09 $ 0.21
FFO per share of common stock
Diluted (3) $ 0.21 $ 0.19 $ 0.59 $ 0.64
AFFO per share of common stock
Diluted (3) $ 0.23 $ 0.22 $ 0.64 $ 0.68
Weighted average shares of common stock outstanding:
Basic 456,671,617 479,554,362 472,698,692 457,263,526
Diluted 456,671,617 480,598,610 472,698,692 457,301,623
(1) Nine months ended September 30, 2017, includes $11.1 million of severance related costs, comprising $4.2 million of cash compensation and $6.9 million of non-cash compensation related to the acceleration of Restricted Stock and Performance
Share Awards.
(2) For the nine months ended September 30, 2016, net income attributable to common stockholders includes compensation for lost rent received from the Haggen Holdings, LLC settlement for 6 rejected stores as follows (in millions):
Contractual rent from date of rejection through either sale or September 30, 2016 $ 1.3
Three month of prepaid rent for the 3 stores subsequently sold 0.5
Total included in AFFO $ 1.8
(3) For the three months ended September 30, 2017 and 2016, dividends paid to unvested restricted stockholders of $0.3 million and $0.2 million, respectively, are deducted from Net Income, FFO and AFFO attributable to common stockholders in the
computation of per share amounts.
(4) Straight-line bad debt expense totaled $2.4 million and $4.7 million for the three and nine months ended September 30, 2017, respectively.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
7
(Unaudited) September 30, December 31,
2017 2016
Assets:
Real estate investments:
Land and improvements $ 2,600,873 $ 2,704,010
Buildings and improvements 4,702,828 4,775,221
Total real estate investments 7,303,701 7,479,231
Less: accumulated depreciation (1,018,544) (940,005)
6,285,157 6,539,226
Loans receivable, net 76,821 66,578
Intangible lease assets, net 429,857 470,276
Real estate assets under direct financing leases, net 24,883 36,005
Real estate assets held for sale, net 133,382 160,570
Net investments 6,950,100 7,272,655
Cash and cash equivalents 11,947 10,059
Deferred costs and other assets, net 218,400 140,917
Goodwill 254,340 254,340
Total Assets $ 7,434,787 $ 7,677,971
Liabilities and Stockholders' Equity
Liabilities:
Revolving Credit Facility $ 386,000 $ 86,000
Term Loan, net 419,091 418,471
Senior Unsecured Notes, net 295,242 295,112
Mortgages and notes payable, net 2,050,302 2,162,403
Convertible Notes, net 712,510 702,642
Total debt, net 3,863,145 3,664,628
Intangible lease liabilities, net 162,619 182,320
Accounts payable, accrued expenses and other liabilities 149,858 148,915
Total liabilities 4,175,622 3,995,863
Stockholders' equity:
Common stock, $0.01 par value, 750,000,000 shares authorized: 455,900,032 and 483,624,120 shares issued and outstanding at
September 30, 2017 and December 31, 2016, respectively. 4,559 4,836
Capital in excess of par value 5,190,849 5,177,086
Accumulated deficit (1,936,243) (1,499,814)
Total stockholders' equity 3,259,165 3,682,108
Total Liabilities and Stockholders' Equity $ 7,434,787 $ 7,677,971
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Enterprise Value
$7,736 Million
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
-$1,000
8
Equity
Shares Outstanding 455,900,032
Share Price $ 8.57
Equity Market
Capitalization $ 3,907,063
Debt PrincipalBalance
Revolving Credit Facility $ 386,000
Term Loan 420,000
Senior Unsecured Notes 300,000
Convertible Notes 747,500
Master Trust Notes 1,657,402
CMBS 426,583
Total Debt $ 3,937,485
CAPITALIZATION
$ in thousands (unless otherwise stated), except per share data
Enterprise Value
Total Market Capitalization $ 7,844,548
Less: Cash and Cash Equivalents $ (11,947)
Less: Restricted Cash Balances
Held for Benefit of Lenders $ (96,344)
Enterprise Value $ 7,736,257
($ in millions)
CMBS $ 427
Master Trust Notes $ 1,657
Convertible Notes / Revolving Credit Facility /
Term Loan / Senior Unsecured Notes
$ 1,854
Equity $ 3,907
Master Trust Release and 1031 Accounts $ (96)
Cash $ (12)
Debt Type
Unsecured
47%
Secured
53%
Fixed/Floating Rate Debt
Floating
20%
Fixed
80%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017 9
Unsecured Debt(1) Secured Debt(1) Total
Revolving Credit
Facility Term Loan
Senior Unsecured
Notes Convertible Notes Master Trust Notes CMBS Total
Year of Maturity Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
2017 Remainder $ — $ — $ — $ — $ — $ 102,801 8.17% $ 102,801 8.17%
2018 — 420,000 2.59% — — 125,000 3.89% 44,550 4.21% 589,550 2.99%
2019 386,000 2.49% — — 402,500 2.88% — 10,000 4.61% 798,500 2.71%
2020 — — — — 448,441 4.71% — 448,441 4.71%
2021 — — — 345,000 3.75% 223,604 5.76% — 568,604 4.54%
2022 — — — — 311,459 5.74% 42,400 4.67% 353,859 5.61%
2023 — — — — 188,898 5.27% 219,565 5.47% 408,463 5.37%
2024 — — — — — — —
2025 — — — — — 1,228 6.00% 1,228 6.00%
2026 — — 300,000 4.45% — — — 300,000 4.45%
Thereafter — — — — 360,000 4.63% 6,039 5.80% 366,039 4.65%
Total Debt $ 386,000 $ 420,000 $ 300,000 $ 747,500 $ 1,657,402 $ 426,583 $3,937,485
(Discounts) Premiums,
Net — — (1,699) (26,153) (15,613) 138 (43,327)
Deferred Financing
Costs, Net (3) — (909) (3,059) (8,837) (14,050) (4,158) (31,013)
Total Debt, Net $ 386,000 $ 419,091 $ 295,242 $ 712,510 $ 1,627,739 $ 422,563 $3,863,145
Weighted Avg. Stated
Int. Rate 2.49% 2.59% 4.45% 3.28% 5.03% 5.89% 4.24%
Weighted Avg.
Maturity in Years 1.5 1.1 9.0 2.5 5.5 3.9 4.2
Number of Owned and
Financed Properties
Securing Debt
— — — — 1,110 121 1,231
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect to scheduled amortization. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) Interest rates include the default interest rates for six separate fixed rate CMBS loans totaling $62.9 million, including $11.8 million of capitalized interest, that are in default due to underperformance of the eight properties that secure them. The
weighted average stated interest rate for these defaulted loans is 8.30%. If the defaulted loans were excluded, the weighted average stated interest rate for 2017 CMBS maturities would be 6.52%, the weighted average stated interest rate for all CMBS
maturities would be 5.32% and the weighted average stated interest rate for all debt maturities would be 4.16%.
(3) Excludes deferred financing costs incurred in connection with the Revolving Credit Facility, which are reported in Deferred costs and other assets, net in the consolidated balance sheet.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DEBT SUMMARY
$ in thousands
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect to scheduled amortization. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) Interest rates include the default interest rate for six separate fixed rate CMBS loans which are in default. If the defaulted loans were excluded, the 2017 weighted average stated interest rate would be 6.52% and the total weighted average
stated interest rate for all maturities would be 4.16%.
(3) The fourth quarter of 2017 includes $62.9 million (including $11.8 million of capitalized interest), for the acceleration of principal payable following an event of default under the six CMBS fixed-rate loans with stated maturities in 2017.
(4) The fourth quarter of 2018 includes a $420 million unsecured Term Loan that is extendible at borrower's option pursuant to two one-year extension options.
(5) The first quarter of 2019 includes $386 million in balances related to our Revolving Credit Facility that is extendible at borrower's option pursuant to a one-year extension option.
DEBT MATURITIES BY QUARTER
$ in thousands
Year of Maturity (1) First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter Total
Weighted Avg.
Stated Int. Rate (2)
2017 Remainder $ — $ — $ — 102,801 (3) $ 102,801 8.17%
2018 24,800 — — 564,750 (4) 589,550 2.99%
2019 396,000 (5) 402,500 — — 798,500 2.71%
2020 150,000 45,141 253,300 — 448,441 4.71%
2021 223,604 345,000 — — 568,604 4.54%
Thereafter 671,459 — 540,004 218,126 1,429,589 5.05%
Total Debt $ 1,465,863 $ 792,641 $ 793,304 $ 885,677 $ 3,937,485 4.24%
10
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
SENIOR UNSECURED NOTES COVENANT COMPLIANCE
Covenant Requirement September 30, 2017
Total Debt to Total Assets < 60% 46.6%
Total Secured Debt to Total Assets < 40% 25%
Fixed Charge Coverage > 1.5x 3.4x
Total Unencumbered Assets to Total Unsecured Debt > 1.5x 2.6x
Credit Ratings
Fitch Ratings
(stable) BBB-
Moody's Ratings Services
(negative) Baa3
Standard & Poor's Rating
Services
(stable) BBB-
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
11
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
ACQUISITION ACTIVITY
$ in thousands
12
Q3 2017
% of Gross
Investment
Number of
Transactions
Number of
Properties
Gross
Investment
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg. Lease
Term (Years)
New Tenants 63.4% 1 2 $ 46,543 $ 5,137 395,358 11.04% 11.77% 6.3
Existing Tenants 36.6% 2 2 26,850 2,007 94,458 7.48% 7.96% 15.1
Total/Weighted Average 100.0% 3 4 $ 73,393 $ 7,144 489,816 9.73% 10.37% 7.9
By Asset Type:
Retail 36.6% 2 2 $ 26,850 $ 2,007 94,458 7.48% 7.96% 15.1
Office 63.4% 1 2 46,543 5,137 395,358 11.04% 11.77% 6.3
Total/Weighted Average 100.0% 3 4 $ 73,393 $ 7,144 489,816 9.73% 10.37% 7.9
Of Our Q3 2017 Gross Investment of $73.4 Million:
84.9% Sale-Leaseback Transactions
11.6% Master Leases
YTD 2017
% of Gross
Investment
Number of
Transactions
Number of
Properties
Gross
Investment
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg. Lease
Term (Years)
New Tenants 30.2% 9 17 $ 94,913 $ 8,701 706,913 9.17% 10.06% 11.0
Existing Tenants 69.8% 16 22 219,244 15,480 1,006,774 7.06% 7.67% 12.7
Total/Weighted Average 100.0% 25 39 $ 314,157 $ 24,181 1,713,687 7.70% 8.39% 12.0
By Asset Type:
Retail 65.1% 22 35 $ 204,723 $ 14,787 904,099 7.22% 7.69% 14.0
Industrial 13.3% 1 1 41,671 2,936 303,485 7.05% 7.23% 14.0
Office 21.6% 2 3 67,763 6,458 506,103 9.53% 11.21% 7.2
Total/Weighted Average 100.0% 25 39 $ 314,157 $ 24,181 1,713,687 7.70% 8.39% 12.0
Of Our YTD 2017 Gross Investment of $314.2 Million:
51.1% Sale-Leaseback Transactions
17.1% Master Leases
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Q3 2017
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate (1)
Wtd. Avg. Remaining
Lease Term (Yrs)
Occupied 60.0% 14 $77,906 $77,307 7.12% 10.6
Vacant 40.0% 42 52,018 46,839 — —
Total/Weighted Average 100.0% 56 $ 129,924 $ 124,146 7.12% 10.6
By Asset Type:
Retail 93.7% 54 $121,716 $120,247 7.12% 10.6
Industrial 6.3% 2 8,208 3,899 — —
Total/Weighted Average 100.0% 56 $ 129,924 $ 124,146 7.12% 10.6
YTD 2017
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate (1)
Wtd. Avg. Remaining
Lease Term (Yrs)
Occupied 61.9% 65 $251,438 $267,935 7.39% 10.7
Vacant 38.1% 96 154,787 138,437 — —
Total/Weighted Average 100.0% 161 $ 406,225 $ 406,372 7.39% 10.7
By Asset Type:
Retail 92.2% 152 $374,559 $379,271 7.32% 11.0
Industrial 4.0% 5 16,219 12,556 9.92% 1.1
Office 3.8% 4 15,447 14,545 7.39% 10.2
Total/Weighted Average 100.0% 161 $ 406,225 $ 406,372 7.39% 10.7
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DISPOSITION ACTIVITY
$ in thousands
(1) Capitalization rates are calculated based solely on income producing properties.
13
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
TENANT DIVERSIFICATION – TOP 20
14
Tenant Number of Properties
Total
Square Feet
(in thousands)
Percent of
Contractual Rent
1 Shopko (Specialty Retail Shops Holding Corp.) 101 6,812 7.8%
2 AMC Entertainment, Inc. / Carmike Cinemas 18 917 2.6%
3 Walgreen Company 42 622 2.4%
4 Church's Chicken (Cajun Global, LLC) 186 264 2.2%
5 Academy Sports + Outdoors (Academy, LTD ) 6 1,805 1.9%
6 Circle K (Alimentation Couche-Tard, Inc.) 82 248 1.9%
7 Albertsons (AB Acquisition, LLC) 23 1,030 1.7%
8 The Home Depot, Inc. 7 821 1.7%
9 CVS Caremark Corporation 36 405 1.5%
10 Carmax, Inc. 8 356 1.5%
11 Regal Entertainment Group 15 656 1.5%
12 FedEx Corporation 6 690 1.4%
13 GPM Investments, LLC 105 272 1.4%
14 Car Wash Partners, Inc. 23 162 1.2%
15 Goodrich Quality Theaters 5 245 1.1%
16 Universal Pool Co., Inc. 14 543 1.1%
17 Ferguson Enterprises, Inc. 7 1,003 1.0%
18 Rite Aid Corp 23 274 1.0%
19 PetSmart, Inc. 6 1,016 1.0%
20 Dollar General Corporation 63 648 1.0%
Other 1,626 28,610 63.1%
Vacant 21 1,763 —
Total 2,423 49,162 100.0%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
INDUSTRY DIVERSIFICATION
Industry Concentration:
Percent of Contractual Rent
Traditional
Retail
33.4%
Service
59.2%
Industrial
5.8%
Other
1.6%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
15
Industry Sub Industry
Number of
Owned
Properties
Total
Square Feet
(in thousands)
Percent of
Contractual
Rent
Traditional Retail General Merchandise 139 8,191 9.4%
Service Restaurants - Casual Dining 306 1,830 8.6%
Service Restaurants - Quick Service 586 1,364 8.1%
Service Movie Theaters 62 3,115 7.4%
Service Convenience Stores 318 1,026 7.0%
Traditional Retail Grocery 64 3,094 5.2%
Service Drug Stores / Pharmacies 102 1,437 4.9%
Service Medical / Other Office 120 1,268 4.8%
Service Health and Fitness 44 1,775 4.1%
Traditional Retail Sporting Goods 18 2,547 3.4%
Traditional Retail Specialty Retail 42 2,175 3.3%
Service Entertainment 26 1,199 3.1%
Traditional Retail Home Improvement 15 1,681 2.7%
Service Education 55 821 2.7%
Service Automotive Services 128 748 2.5%
Traditional Retail Home Furnishings 26 1,638 2.4%
Industrial Building Materials 61 2,169 2.3%
Service Automotive Dealers 23 665 2.3%
Traditional Retail Apparel 13 1,996 2.2%
Industrial Distribution 12 1,239 2.1%
Service Car Washes 41 231 1.9%
Other Other 6 978 1.6%
Industrial Manufacturing 17 2,289 1.4%
Traditional Retail Automotive Parts 61 523 1.2%
Traditional Retail Dollar Stores 77 788 1.2%
Traditional Retail Wholesale Clubs 5 512 1.1%
Service Pet Supplies & Service 6 1,016 1.0%
Service Financial Services 4 342 0.8%
Traditional Retail Office Supplies 18 488 0.8%
Traditional Retail Consumer Electronics 7 254 0.5%
Vacant 21 1,763 —
Total 2,423 49,162 100.0%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
PORTFOLIO DIVERSIFICATION
Over $8 billion in real estate investments solely focused on U.S. markets
16
% of Contractual Rent
Texas 11.9% Wisconsin 3.9% North Carolina 2.4% Kansas 1.6% Massachusetts 1.2% New Hampshire 0.8% West Virginia 0.6% Wyoming 0.2%
Georgia 6.0% Minnesota 3.5% Alabama 2.2% Oklahoma 1.5% Iowa 1.1% Maryland 0.7% Utah 0.5% Alaska 0.1%
Florida 5.7% Arizona 3.0% Pennsylvania 2.0% Kentucky 1.5% New Jersey 1.1% Louisiana 0.7% Nebraska 0.4% U.S. V.I. 0.1%
Illinois 5.7% Tennessee 3.0% Virginia 2.0% Nevada 1.3% Oregon 1.0% South Dakota 0.7% North Dakota 0.4% Delaware —%
Ohio 5.2% Missouri 2.9% Colorado 1.9% Arkansas 1.3% Idaho 1.0% Montana 0.6% Maine 0.4% Vermont —%
California 4.3% Indiana 2.8% New York 1.7% Washington 1.2% Mississippi 0.9% Connecticut 0.6% Rhode Island 0.3% Hawaii —%
Michigan 3.9% South Carolina 2.5% New Mexico 1.7%
Asset Diversification
Retail
84%
Industrial
9%
Office
7%
% of Contractual Rent
0%–1% 1%–2% 2%–3% 3%–4% 4%–5% > 5%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Asset Type
Cash Rents Received
for the Net
Change
% Change
by Industry
Type
% of Total
Industry
Contribution
% Change
from Prior
YearQuarter ended September 30,
2017 2016
Retail $ 111,918 $ 110,505 $ 1,413 1.3% 85.6% 1.1%
Industrial 11,194 11,118 76 0.7% 8.6% 0.1%
Office 7,559 7,450 109 1.5% 5.8% 0.1%
Total $ 130,671 $ 129,073 $ 1,598 1.2% 100.0% 1.2%
SAME STORE PERFORMANCE
$ in thousands
17
Note: Same store performance represents the period-to-period change in contractual rent and percentage rents received, net of reserves for properties included within the defined pool.
Same Store Results
Number of Properties 2,161
Total Square Feet (in thousands) 39,275
Cash Rents Received (excludes accrued percentage rents)
Q3 2017 $ 130,671
Q3 2016 $ 129,073
Increase (in dollars) $ 1,598
Increase (percent) 1.2%
Industry
Cash Rents Received
for the Net
Change
% Change
by Industry
Type
% of Total
Industry
Contribution
% Change
from Prior
YearQuarter ended September 30,
2017 2016
Movie Theaters $ 9,819 $ 9,218 $ 601 6.5 % 7.5% 0.5%
Restaurants -
Casual Dining 11,638 11,490 148 1.3 % 8.9% 0.1%
Consumer
Electronics 754 589 165 28.0 % 0.6% 0.1%
General
Merchandise 13,473 13,345 128 1.0 % 10.3% 0.1%
Convenience
Stores 8,694 8,574 120 1.4 % 6.7% 0.1%
Home
Furnishings 3,265 3,166 99 3.1 % 2.5% 0.1%
Education 3,793 3,876 (83) (2.1)% 2.9% (0.1)%
Entertainment 3,944 4,022 (78) (1.9)% 3.0% (0.1)%
Remaining
Industries 75,291 74,793 498 0.7 % 57.6% 0.4%
Total $ 130,671 $ 129,073 $ 1,598 1.2 % 100.0% 1.2%
Same Store Pool Defined
For purposes of determining the same store rent property pool from
which we measure same store rent changes, we include all properties
owned throughout the measurement period in both the current and prior
year, excluding multi-tenant properties and any properties that were
vacant or relet at any point during the measurement period.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
OCCUPANCY
18
By Property
Occupied 2,402
Vacant 21
Total Owned Properties 2,423
Occupancy Rate 99.1%
Change in Vacant Properties
Vacant Properties at December 31, 2016 46
Additions 76
Dispositions/Relets (101)
Vacant Properties at September 30, 2017 21
Historical Occupancy Rates
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17
98.7% 98.2% 98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4% 98.2% 97.7% 97.9% 99.1%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
LEASE STRUCTURE AND EXPIRATIONS
$ in thousands
Lease Expirations as a Percent of Contractual Rent
2017 Remainder
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter
1.4%
3.7%
3.2%
3.1%
7.3%
5.3%
5.1%
3.7%
5.9%
7.2%
54.1%
19
Year
Number of
Owned
Properties
Total
Square Feet
(in thousands)
Contractual Rent
Annualized (1)
2017 Remainder 29 1,013 $ 8,230
2018 72 1,824 22,295
2019 103 1,758 19,193
2020 73 1,508 18,966
2021 186 3,861 44,525
2022 116 2,849 32,015
2023 107 3,330 31,318
2024 57 1,369 22,306
2025 77 2,078 35,704
2026 192 3,945 43,940
Thereafter 1,390 23,864 330,082
Vacant 21 1,763 —
Totals 2,423 49,162 $ 608,574
Based on Contractual Rent:
89% of our leases (excluding those on multi-tenant
properties) provide for periodic escalations,
44% of our leases are under Master Lease structures,
82% of our tenants are under Triple Net Leases and
95% of tenants report financial information.
Lease Escalations as a Percent of Contractual Rent
(Excludes Multi-Tenant Properties)
Contractual Fixed
Increases
53%
Flat
11%
CPI-Related
36%
(1) Contractual Rent multiplied by twelve.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
LEASE ACTIVITY
20
Q3 2017
Renewals with
an existing
tenant
Relet to a new
tenant after a
period of
vacancy
Relet to a new
tenant with no
period of
vacancy
Re-leasing
Totals
Prior Monthly Contractual
Rent 65,389 66,662 528,071 660,122
New Monthly Contractual
Rent 67,550 44,418 420,141 532,109
Recapture Rate 103.3% 66.6% 79.6% 80.6%
Number of Leases 5 3 2 10
Average Months Vacant 3.4
Additional Invested Capital — 450,000 8,000,000 8,450,000
Incremental Yield —% 5.48%
Renewed Did not renew
Expiring Leases in Q3 2017
83.3%
16.7%
YTD 2017
Renewals with
an existing
tenant
Relet to a new
tenant after a
period of
vacancy
Relet to a new
tenant with no
period of
vacancy
Re-leasing
Totals
Prior Monthly Contractual
Rent 519,318 96,024 528,071 1,143,413
New Monthly Contractual
Rent 525,849 62,951 420,141 1,008,941
Recapture Rate 101.3% 65.6% 79.6% 88.2%
Number of Leases 31 5 2 38
Average Months Vacant 6.7
Additional Invested Capital — 450,000 8,000,000 8,450,000
Incremental Yield —% 5.48%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
(1) Includes five direct financing lease properties with a Real Estate Investment value of $24.9 million. Annualized Cash Rents include the tenants' current cash obligations of $1.9 million for the lease of these properties.
(2) Represents Real Estate Investment value net of accumulated depreciation as of September 30, 2017.
(3) Includes 3 properties that are held for sale with a net book value of $15.5 million.
(4) Includes six vacant properties (none of which were held for sale) and two active properties that are held for sale with a net book value of $2.9 million. These eight properties were acquired between 2006 and 2013.
(5) Includes $82.8 million in dividends payable.
(6) Includes $62.9 million (including $11.8 million of capitalized interest) of outstanding principal payable under six fixed rate CMBS loans that are in default due to the underperformance of the eight properties that secure them with a net book value of $29.3
million.
Net Book Value
Tangible Assets
Cash and Cash Equivalents $ 11,947
Restricted Cash 96,344
Accounts Receivable, Prepaid Assets, and Other Tangible Assets, Net 24,138
Total Other Assets $ 132,429
21
Owned Real Estate Portfolio Number of Properties
Real Estate
Investment
Net Book
Value (2)
Annualized
Cash Rents
Wtd. Avg. Lease
Term (Years)
Retail (1) 2,182 $ 6,542,018 $ 5,497,831 $ 497,177 10.3
Office 116 507,820 446,537 42,653 8.6
Industrial 68 665,372 555,509 53,121 8.4
Leased Real Estate Properties Held For Sale, Net 34 122,975 115,351 10,423 N/M
Vacant Properties (3) 15 73,267 66,110 — N/A
Properties under Defaulted Loans (4) 8 33,539 29,322 1,536 N/A
Total Owned Real Estate Portfolio 2,423 $ 7,944,991 $ 6,710,660 $ 604,910 10.1
Wtd. Avg. Stated
Int. Rate
Wtd. Avg. Maturity
(Years)
Principal Balance
Outstanding
Revolving Credit Facility 2.49% 1.5 $ 386,000
Term Loan 2.59% 1.1 $ 420,000
Senior Unsecured Notes 4.45% 9.0 $ 300,000
Master Trust Notes 5.03% 5.5 $ 1,657,402
CMBS Notes (6) 5.89% 3.9 $ 426,583
Convertible Notes 3.28% 2.5 $ 747,500
Total Debt 4.24% 4.2 $ 3,937,485
NET ASSET VALUE (NAV) COMPONENTS
$ in thousands
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Net Book Value
Other Liabilities
Accounts Payable, Accrued Expenses, and Other Tangible Liabilities (5) $ 149,858
Total Other Liabilities $ 149,858
Number of
Properties
Wtd. Avg. Stated
Int. Rate
Wtd. Avg. Maturity
(Years)
Principal Balance
Outstanding
Total Loans Receivable 88 8.62% 3.1 $ 67,725
Shares Outstanding
Common Stock 455,900,032
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
ANALYST COVERAGE
22
BofA Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681
BTIG Michael Gorman mgorman@btig.com 212.738.6138
Capital One Securities Chris Lucas christopher.lucas@capitalone.com 571.633.8151
Deutsche Bank
Vincent Chao vincent.chao@db.com 212.250.6799
Shivani Sood shivani.sood@db.com 212.250.4617
FBR Capital Markets & Co.
David Corak dcorak@fbr.com 703.312.1610
Matt Boone mboone@fbr.com 703.312.1848
Green Street Advisors
Michael Knott mknott@greenstreetadvisors.com 949.640.8780
Andrew Suh asuh@greenstreetadvisors.com 949.640.8780
Janney Montgomery Scott
Robert Stevenson robstevenson@janney.com 646.840.3217
Venkat Kommineni vkommineni@janney.com 646.840.3219
J.P. Morgan Anthony Paolone anthony.paolone@jpmorgan.com 212.622.6682
Ladenburg Thalman & Co.
Dan Donlan ddonlan@ladenburg.com 212.409.2056
John Massocca jmassocca@ladenburg.com 212.409.2543
Mizuho Securities
Haendel St. Juste haendel.st.juste@us.mizuho-sc.com 212.205.7860
Jieren Huang jieren.huang@us.mizuho-sc.com 212.205.7862
Morgan Stanley
Vikram Malhotra vikram.malhotra@morganstanley.com 212.761.7064
Kevin Egan kevin.egan@morganstanley.com 212.761.5028
Raymond James
Collin Mings collin.mings@raymondjames.com 727.567.2585
Marnie Georges marnie.georges@raymondjames.com 727.567.2538
RBC Capital Markets
Michael Carroll michael.carroll@rbccm.com 440.715.2649
Brian Hawthorne brian.hawthorne@rbccm.com 440.715.2653
RW Baird
RJ Milligan rjmilligan@rwbaird.com 813.273.8252
Will Harman wharman@rwbaird.com 414.298.2337
Sandler O’Neill & Partners, LP
Alex Goldfarb agoldfarb@sandleroneill.com 212.466.7937
Daniel Santos dsantos@sandleroneill.com 212.466.7927
Sun Trust Robinson Humphrey
Ki Bin Kim kibin.kim@suntrust.com 212.303.4124
Ian Gaule ian.gaule@suntrust.com 212.590.0948
UBS
Frank Lee frank-a.lee@ubs.com 415.352.5679
Nick Yulico nick.yulico@ubs.com 212.713.3402
The aforementioned security analysts currently provide opinions, estimates and forecasts, which are their own and are not promoted or endorsed by Spirit or its management team. Therefore, their opinions, estimates or forecasts are their own and
should not be interpreted as Spirit’s opinions, estimates or forecasts. Any reference or distribution by Spirit expressly disclaims any endorsement of or concurrent with any information, estimates, forecasts, opinions, conclusions or recommendations
provided by analysts.
APPENDIX
23
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
REPORTING DEFINITIONS AND EXPLANATIONS
24
Funds from Operations (FFO) and
Adjusted Funds from Operations (AFFO)
We calculate FFO in accordance with the standards
established by the National Association of Real
Estate Investment Trusts (NAREIT). FFO represents
net income (loss) attributable to common
stockholders (computed in accordance with GAAP),
excluding real estate-related depreciation and
amortization, impairment charges and net (gains)
losses from property dispositions. FFO is a
supplemental non-GAAP financial measure. We use
FFO as a supplemental performance measure
because we believe that FFO is beneficial to
investors as a starting point in measuring our
operational performance. Specifically, in excluding
real estate-related depreciation and amortization,
gains and losses from property dispositions and
impairment charges, which do not relate to or are not
indicative of operating performance, FFO provides a
performance measure that, when compared year
over year, captures trends in occupancy rates, rental
rates and operating costs. We also believe that, as a
widely recognized measure of the performance of
equity REITs, FFO will be used by investors as a
basis to compare our operating performance with that
of other equity REITs. However, because FFO
excludes depreciation and amortization and does not
capture the changes in the value of our properties
that result from use or market conditions, all of which
have real economic effects and could materially
impact our results from operations, the utility of FFO
as a measure of our performance is limited. In
addition, other equity REITs may not calculate FFO
as we do, and, accordingly, our FFO may not be
comparable to such other equity REITs’ FFO.
Accordingly, FFO should be considered only as a
supplement to net income (loss) attributable to
common stockholders as a measure of our
performance.
AFFO is a non-GAAP financial measure of operating
performance used by many companies in the REIT
industry. We adjust FFO to eliminate the impact of
certain items that we believe are not indicative of our
core operating performance, including restructuring
and divestiture costs, other G&A costs associated
with relocation of the Company's headquarters,
transactions costs associated with our proposed spin-
off, default interest and fees on non-recourse
mortgage indebtedness, debt extinguishment gains
(losses), transaction costs incurred in connection with
the acquisition of real estate investments subject to
existing leases and certain non-cash items. These
certain non-cash items include non-cash revenues
(comprised of straight-line rents, amortization of
above and below market rent on our leases,
amortization of lease incentives, amortization of net
premium (discount) on loans receivable, provision for
bad debts and amortization of capitalized lease
transaction costs), non-cash interest expense
(comprised of amortization of deferred financing
costs and amortization of net debt discount/premium)
and non-cash compensation expense (stock-based
compensation expense). In addition, other equity
REITs may not calculate AFFO as we do, and,
accordingly, our AFFO may not be
comparable to such other equity REITs’ AFFO. AFFO
does not represent cash generated from operating
activities determined in accordance with GAAP, is not
necessarily indicative of cash available to fund cash
needs and should not be considered as an alternative
to net income (determined in accordance with GAAP)
as a performance measure.
Adjusted EBITDA represents EBITDA, or earnings
before interest, taxes, depreciation and amortization,
modified to include other adjustments to GAAP net
income (loss) attributable to common stockholders for
real estate acquisition costs, impairment losses,
gains/losses from the sale of real estate and debt
transactions and other items that we do not consider
to be indicative of our on-going operating
performance. We focus our business plans to enable
us to sustain increasing shareholder value.
Accordingly, we believe that excluding these items,
which are not key drivers of our investment decisions
and may cause short-term fluctuations in net income,
provides a useful supplemental measure to investors
and analysts in assessing the net earnings
contribution of our real estate portfolio. Because
these measures do not represent net income (loss)
that is computed in accordance with GAAP, they
should not be considered alternatives to net income
(loss) or as an indicator of financial performance. A
reconciliation of net income (loss) attributable to
common stockholders (computed in accordance with
GAAP) to EBITDA and Adjusted EBITDA is included
in the Appendix found at the end of this presentation.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
REPORTING DEFINITIONS AND EXPLANATIONS
25
Annualized Adjusted EBITDA is calculated by
multiplying Adjusted EBITDA of a quarter by four. Our
computation of Adjusted EBITDA and Annualized
Adjusted EBITDA may differ from the methodology
used by other equity REITs to calculate these
measures and, therefore, may not be comparable to
such other REITs. A reconciliation of Annualized
Adjusted EBITDA is included in the Appendix found at
the end of this presentation.
Adjusted Debt represents interest bearing debt
(reported in accordance with GAAP) adjusted to
exclude unamortized debt discount/premium,
deferred financing costs, cash and cash equivalents
and cash reserves on deposit with lenders as
additional security. By excluding these amounts, the
result provides an estimate of the contractual amount
of borrowed capital to be repaid, net of cash available
to repay it. We believe this calculation constitutes a
beneficial supplemental non-GAAP financial
disclosure to investors in understanding our financial
condition. A reconciliation of interest bearing debt
(reported in accordance with GAAP) to Adjusted Debt
is included in the Appendix found at the end of this
presentation.
Adjusted Debt to Annualized Adjusted EBITDA is
a supplemental non-GAAP financial measure we use
to evaluate the level of borrowed capital being used
to increase the potential return of our real estate
investments and a proxy for a measure we believe is
used by many lenders and ratings agencies to
evaluate our ability to repay and service our debt
obligations over time.
We believe this ratio is a beneficial disclosure to
investors as a supplemental means of evaluating our
ability to meet obligations senior to those of our
equity holders. Our computation of this ratio may
differ from the methodology used by other equity
REITs and, therefore, may not be comparable to such
other REITs.
Annualized Cash Rents represents the annualized
monthly Contractual Rent, less any rent reserved for,
multiplied by twelve.
Capitalization Rate represents the Annualized Cash
Rents on the date of a property disposition divided by
the gross sales price. For Multi-Tenant properties,
non-reimbursable property costs are deducted from
the Annualized Cash Rents prior to computing the
disposition Capitalization Rate.
CMBS are those notes secured by commercial real
estate and rents therefrom under which certain
indirect wholly-owned special purpose entity
subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Contractual Rent represents monthly contractual
cash rent and earned income from direct financing
leases, excluding percentage rents, from our Owned
Properties recognized during the final month of the
reporting period, adjusted to exclude amounts
received from properties sold during that period and
adjusted to include a full month of contractual rent for
properties acquired during that period. We use
Contractual Rent when calculating certain metrics
that are useful to evaluate portfolio credit, asset type,
industry and geographic diversity and to manage risk.
Convertible Notes are the $402.5 million convertible
notes of the Company due in 2019 and the $345.0
million convertible notes of the Company due in
2021, together. These liabilities are discussed in
greater detail in our financial statements and the
notes thereto included in our periodic reports filed
with the SEC.
Economic Yield is calculated by dividing the
contractual cash rent, including fixed rent escalations
and/or cash increases determined by CPI (increases
calculated using a month to month historical CPI
index) by the initial lease term, expressed as a
percentage of the Gross Investment.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
REPORTING DEFINITIONS AND EXPLANATIONS
26
Enterprise Value represents Total Market
Capitalization less cash and cash equivalents and
reserves on deposit with lenders as of the date
indicated.
Equity Market Capitalization is calculated by
multiplying the number of shares outstanding by the
closing share price of the Company’s common stock
as of the date indicated.
Fixed Charge Coverage Ratio (FCCR) is the ratio of
Annualized Adjusted EBITDA to Annualized Fixed
Charges, a ratio derived from non-GAAP measures
that we use to evaluate our liquidity and ability to
obtain financing. Fixed charges consist of interest
expense, reported in accordance with GAAP, less
non-cash interest expense. Annualized Fixed
Charges is calculated by multiplying fixed charges for
the quarter by four.
GAAP are the Generally Accepted Accounting
Principles in the United States.
Gross Investment represents the gross acquisition
cost including the contracted purchase price and
related capitalized transaction costs.
Initial Cash Yield from properties is calculated by
dividing the first twelve months of contractual cash
rent (excluding any future rent escalations provided
subsequently in the lease and percentage rent) by
the Gross Investment in the related properties. Initial
Cash Yield is a measure (expressed as a
percentage) of the contractual cash rent expected to
be earned on an acquired property in the first year.
Because it excludes any future rent increases or
additional rent that may be contractually provided for
in the lease, as well as any other income or fees that
may be earned from lease modifications or asset
dispositions, Initial Cash Yield does not represent the
annualized investment rate of return of our acquired
properties. Additionally, actual contractual cash rent
earned from the properties acquired may differ from
the Initial Cash Yield based on other factors,
including difficulties collecting anticipated rental
revenues and unanticipated expenses at these
properties that we cannot pass on to tenants, as well
as the risk factors set forth in our Annual Report on
Form 10-K for the year ended December 31, 2016.
Lease Expiration is the end of the initial term under
a lease and does not account for extension periods
under the lease.
Master Trust 2013 and Master Trust 2014
(collectively Master Trust Notes) are net-lease
mortgage notes issued under the Spirit Master
Funding Program and the securitization trusts
established thereunder. Indirect special purpose
entity subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Net Asset Value (NAV) We believe disclosing
information frequently used in the calculation of NAV
is useful to investors and because it enables and
facilitates calculation of a metric frequently used by
our management as one method to estimate the fair
value of our business. The assessment of the fair
value of our business is subjective in that it involves
estimates and assumptions and can be calculated
using various methods. Therefore, we have
presented certain information regarding our financial
and operating results, as well as our assets and
liabilities that we believe are important in calculating
our NAV, but have not presented any specific
methodology nor provided any guidance on the
assumptions or estimates that should be used in the
calculation of NAV. The components of NAV do not
consider the potential changes in the value of assets,
the collectability of rents or other receivable
obligations, or the value associated with our
operating platform.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
REPORTING DEFINITIONS AND EXPLANATIONS
27
Net Book Value represents the Real Estate
Investment value net of accumulated depreciation.
Occupancy is calculated by dividing the number of
economically yielding Owned Properties in the
portfolio as of the measurement date by the number
of total Owned Properties on said date.
Owned Properties refers to properties owned fee-
simple or ground leased by Company subsidiaries as
lessee.
Real Estate Investment represents the Gross
Investment plus improvements less impairment
charges.
Revolving Credit Facility refers to the $800 million
unsecured credit facility which matures on March 31,
2019. The Revolving Credit Facility includes sublimits
for swingline loans and letter of credit issuances.
Swingline loans and letters of credit reduce
availability under the Revolving Credit Facility. The
ability to borrow under the Revolving Credit Facility is
subject to the ongoing compliance with customary
financial covenants.
Senior Unsecured Notes refers to the $300 million
aggregate principal amount of 4.450% senior
unsecured notes due 2026.
Tenant represents the legal entity ultimately
responsible for obligations under the lease
agreement or an affiliated entity. Other tenants may
operate the same or similar business concept or
brand.
Term Loan refers to a $420.0 million unsecured term
facility which includes an accordion feature which
allows the facility to be increased to up to $600.0
million, subject to obtaining additional lender
commitments. Borrowings may be repaid without
premium or penalty, and may be re-borrowed within
30 days up to the then available loan commitment.
Total Market Capitalization represents Equity
Market Capitalization plus Total Debt as of the date
indicated.
Total Debt represents the sum of the principal
balances outstanding on interest-bearing debt on the
Company’s balance sheet as of the date indicated.
Unencumbered Assets represents the assets in our
portfolio that are not subject to mortgage
indebtedness, which we use to evaluate our
potential access to capital and in our management of
financial risk. The asset value attributed to these
assets is the Real Estate Investment.
Unsecured Debt represents components of Total
Debt that are not secured by liens, mortgages or
deeds of trust on Company assets.
Unit Level Rent Coverage is used as an indicator of
individual asset profitability, as well as signaling the
property’s importance to our tenants’ financial
viability. We calculate this ratio by dividing our
reporting tenants’ trailing 12-month EBITDAR
(earnings before interest, tax, depreciation,
amortization and rent) by annual contractual rent.
Weighted Average Remaining Lease Term is
calculated by dividing the sum product of (a) a stated
revenue or sales price component and (b) the lease
term for each lease by (c) the sum of the total
revenue or sale price components for all leases
within the sample.
Weighted Average Stated Interest Rate is
calculated by dividing the sum product of (a) coupon
interest rate of each note and (b) the principal
balance outstanding of each note by (c) the sum of
the total principal balances outstanding for all notes
in the sample.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
Fixed Charge Coverage Ratio (FCCR)
Q3 2017
Annualized Adjusted EBITDA $ 591,032
Interest expense 48,680
Less: Non-cash interest (5,810)
Fixed charges $ 42,870
Annualized fixed charges $ 171,480
Fixed Charge Coverage Ratio 3.4x
28
Unencumbered Assets to Unsecured Debt
Q3 2017
Unsecured debt:
Revolving Credit Facility $ 386,000
Term Loan 420,000
Senior Unsecured Notes 300,000
Convertible Notes 747,500
Total Unsecured Debt $ 1,853,500
Unencumbered Assets $ 4,875,982
Unencumbered Assets / Unsecured Debt 2.6x
NON-GAAP RECONCILIATIONS
$ in thousands
Notice Regarding Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this
presentation contains and may refer to certain non-GAAP
financial measures. These non-GAAP financial measures are
in addition to, not a substitute for or superior to, measures of
financial performance prepared in accordance with GAAP.
These non-GAAP financial measures should not be
considered replacements for, and should be read together
with, the most comparable GAAP financial measures.
Reconciliations to the most directly comparable GAAP
financial measures and statements of why management
believes these measures are useful to investors are included
in this Appendix if the reconciliation is not presented on the
page in which the measure is published.
Adjusted Debt, Adjusted EBITDA, Annualized Adjusted EBITDA
Q3 2017
Revolving Credit Facility $386,000
Term Loan, net 419,091
Senior Unsecured Notes, net 295,242
Mortgages and notes payable, net 2,050,302
Convertible Notes, net 712,510
Total debt, net 3,863,145
Add / (less):
Unamortized debt discount, net 43,327
Unamortized deferred financing costs 31,013
Cash and cash equivalents (11,947)
Restricted cash balances held for the benefit of lenders (96,344)
Total adjustments (33,951)
Adjusted Debt $3,829,194
Net income attributable to common stockholders $5,322
Add / (less):
Interest 48,680
Depreciation and amortization 63,673
Income tax expense (11)
Total adjustments 112,342
EBITDA 117,664
Add / (less):
Transaction costs 2,660
Real estate acquisition costs 196
Impairments on real estate assets 37,737
Realized gain on sales of real estate assets (8,707)
Gain on debt extinguishment (1,792)
Total Adjustments 30,094
Adjusted EBITDA $147,758
Annualized Adjusted EBITDA $591,032
Adjusted Debt / Annualized Adjusted EBITDA 6.5x
Adjusted Debt / Annualized Adjusted EBITDA excluding severance costs (1)
Enterprise value $7,736,257
Adjusted Debt / Enterprise Value 49.5%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2017 Q3 2017
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
29
The information in this supplemental report should be read in conjunction with the accompanying earnings press release, as well as the
Company's Quarterly Report on Form 10-Q, Annual Report on Form 10-K and other information filed with the Securities and Exchange
Commission. This supplemental report is not incorporated into such filings.
This document is not an offer to sell or a solicitation to buy securities of Spirit Realty Capital, Inc. Any offer or solicitation shall be made
only by means of a prospectus approved for that purpose.
Forward-Looking and Cautionary Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other
federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” "will," “estimate,”
“project,” “intend,” “believe,” “guidance,” and other similar expressions that do not relate to historical matters. These forward-looking
statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, Spirit’s continued ability to source new investments, risks
associated with using debt and equity financing to fund Spirit’s business activities (including refinancing and interest rate risks, changes
in interest rates and/or credit spreads, changes in the price of our common stock, and conditions of the equity and debt capital markets,
generally), unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities, general risks
affecting the real estate industry and local real estate markets (including, without limitation, the market value of our properties, the inability
to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants’ financial
condition and operating performance, and competition from other developers, owners and operators of real estate), the financial
performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general
merchandise retailers, potential fluctuations in the consumer price index, risks associated with our failure to maintain our status as a
REIT under the Internal Revenue Code of 1986, as amended, risks and uncertainties related to the completion and timing of Spirit's
proposed spin-off of properties leased to Shopko and assets that collateralize Master Trust 2014 and the impact of the spin-off on Spirit's
business, and other additional risks discussed in Spirit’s most recent filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update or revise forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
