EX-99.2 3 vereitexhibit992quarterlys.htm EXHIBIT 99.2 Exhibit
Exhibit 99.2

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Q4 2016 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
December 31, 2016
 
Section
Page
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Company Overview
 
 
Financial Information
 
Financial Summary
Financial and Operations Statistics and Ratios
Key Balance Sheet Metrics and Capital Structure
Business Model
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated FFO and AFFO
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Consolidated EBITDA and Normalized EBITDA
 
 
Real Estate Investments
 
Statements of Operations
FFO and AFFO
EBITDA and Normalized EBITDA
Net Operating Income
Same Store Contract Rental Revenue
Debt and Preferred Equity Summary
Mortgage Notes Payable
Credit Facility and Corporate Bond Covenants
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Acquisitions and Dispositions
Diversification Statistics
Top 10 Concentrations
Tenants Comprising Over 1% of Annualized Rental Income
Tenant Industry Diversification
Property Geographic Diversification
Lease Expirations
Lease Summary
Diversification by Property Type
Unconsolidated Joint Venture Investment Summary
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Cole Capital
 
Statements of Operations
FFO and AFFO
EBITDA and Normalized EBITDA
Net G&A
Program Development Costs
Cole REITs and Other Real Estate Programs
Definitions
 
 

See the Definitions section for a description of the Company's non-GAAP and other financial measures.


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Q4 2016 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months and fiscal year ended December 31, 2016, unless otherwise indicated. Certain balances have been reclassified to conform with current period's presentations. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with the financial statements and the Management's Discussion and Analysis of Financial Condition and Results of Operations sections contained in VEREIT, Inc.'s (the "Company", "VEREIT", "us", "our" and "we") Annual Report on Form 10-K for the year ended December 31, 2016 and Quarterly Reports on Form 10-Q for three months ended September 30, 2016, June 30, 2016, and March 31, 2016.

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 Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations regarding future events and VEREIT's future financial condition, results of operations and business. 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,”“assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions identify 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 the forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; VEREIT’s ability to execute on and realize success from its business plan; VEREIT’s ability to meet its 2017 guidance; the unpredictability of the business plans and financial condition of VEREIT’s tenants; the impact of impairment charges in respect of certain of VEREIT’s properties or other assets; risks associated with pending government investigations related to VEREIT's previously disclosed audit committee investigation and related litigations; the inability of Cole Capital to regain its prior level of capital raise; the ability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in 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, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Company Overview
(unaudited)
 
VEREIT is a real estate company incorporated in Maryland on December 2, 2010, which has elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes. On September 6, 2011, the Company completed its initial public offering.

VEREIT is a full service real estate operating company that operates through two business segments, its real estate investment ("REI") segment and its investment management segment, Cole Capital® ("Cole Capital"). Through its REI segment, the Company owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate properties primarily subject to long-term net leases with creditworthy tenants. The Company targets properties that are strategically located and essential to the business operations of the tenant, as well as retail properties that offer necessity- and value-oriented products or services. At December 31, 2016, approximately 41.2% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 98.3% and the Weighted-Average Remaining Lease Term was 9.9 years. Cole Capital is contractually responsible for raising capital for, managing the affairs of and identifying and making acquisitions and investments on behalf of non-listed REITs (the "Cole REITs") and other real estate programs sponsored by Cole Capital on a day-to-day basis. The Company receives compensation and reimbursement for services relating to the Cole REITs and other real estate programs' offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital allows the Company to generate earnings without the corresponding need to invest capital in that business or incur balance sheet debt in order to fund or expand operations. Cole Capital also develops new REIT offerings and coordinates receipt of regulatory approvals from the SEC, the Financial Industry Regulatory Authority, Inc. and various blue sky jurisdictions for such offerings. At the appropriate time, Cole Capital recommends to each of the Cole REIT's respective board of directors an approach for providing investors with liquidity.





See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 4


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Company Overview (cont.)
 
Senior Management
 
Board of Directors
 
 
 
Glenn J. Rufrano, Chief Executive Officer
 
Hugh R. Frater, Non-Executive Chairman
 
 
 
Michael J. Bartolotta, Executive Vice President and Chief Financial Officer
 
Bruce D. Frank, Independent Director
 
 
 
Lauren Goldberg, Executive Vice President, General Counsel and Secretary
 
David B. Henry, Independent Director
 
 
 
Paul H. McDowell, Executive Vice President and Chief Operating Officer
 
Mark S. Ordan, Independent Director
 
 
 
William C. Miller, Executive Vice President, Investment Management
 
Eugene A. Pinover, Independent Director
 
 
 
Thomas W. Roberts, Executive Vice President and Chief Investment Officer
 
Julie G. Richardson, Independent Director
 
 
 
Gavin B. Brandon, Senior Vice President and Chief Accounting Officer
 
Glenn J. Rufrano, Chief Executive Officer
 
 
 

Corporate Offices and Contact Information
2325 E. Camelback Road, Suite 1100
 
5 Bryant Park, 23rd Floor
Phoenix, AZ 85016
 
New York, NY 10018
800-606-3610
 
212-413-9100
www.VEREIT.com
 
 
 
Trading Symbols: VER, VER PRF
 
Stock Exchange Listing: New York Stock Exchange
 
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
800-736-3001

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 5


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Annual Financial Summary
(unaudited, dollars in thousands, except share and per share amounts)
 
 
December 31, 2016
 
December 31, 2015
Consolidated Financial Results
 
 
 
Revenue
$
1,454,823

 
$
1,556,017

Net loss
$
(200,824
)
 
$
(323,492
)
Basic and diluted net loss per share attributable to common stockholders and limited partners
$
(0.29
)
 
$
(0.43
)
Normalized EBITDA
$
1,128,941

 
$
1,212,913

FFO attributable to common stockholders and limited partners
$
613,416

 
$
585,166

FFO attributable to common stockholders and limited partners per diluted share
$
0.642

 
$
0.630

AFFO attributable to common stockholders and limited partners
$
741,457

 
$
782,058

AFFO attributable to common stockholders and limited partners per diluted share
$
0.776

 
$
0.841

Dividends declared per common share
$
0.55

 
$
0.275

Weighted-average shares outstanding - diluted
956,049,490

 
929,374,066

 
 
 
 
Real Estate Investments
 
 
 
Revenue
$
1,335,447

 
$
1,441,135

Net loss
$
(69,373
)
 
$
(136,095
)
Normalized EBITDA
$
1,103,465

 
$
1,185,219

FFO attributable to common stockholders and limited partners
$
744,867

 
$
772,563

FFO attributable to common stockholders and limited partners per diluted share
$
0.779

 
$
0.831

AFFO attributable to common stockholders and limited partners
$
725,302

 
$
769,201

AFFO attributable to common stockholders and limited partners per diluted share
$
0.759

 
$
0.828

Properties owned
4,142

 
4,435

Rentable square feet (in thousands)
93,257

 
99,578

Economic occupancy rate
98.3
%
 
98.6
%
Weighted-average remaining lease term (years)
9.9

 
10.6

Investment-grade tenants (1)
41.2
%
 
42.5
%
 
 
 
 
Cole Capital
 
 
 
Revenue
$
119,376

 
$
114,882

Net loss
$
(131,451
)
 
$
(187,397
)
Normalized EBITDA
$
25,476

 
$
27,694

FFO attributable to common stockholders and limited partners
$
(131,451
)
 
$
(187,397
)
FFO attributable to common stockholders and limited partners per diluted share
$
(0.137
)
 
$
(0.202
)
AFFO attributable to common stockholders and limited partners
$
16,155

 
$
12,857

AFFO attributable to common stockholders and limited partners per diluted share
$
0.017

 
$
0.014

Capital raised on behalf of Cole REITs, excluding DRIP
$
487,168

 
$
270,957

Purchase price of property acquisitions on behalf of Cole REITs
$
660,208

 
$
992,207

Assets Under Management
$
7,265,673

 
$
6,740,911

(1) The weighted-average credit rating of our investment-grade tenants was A- as of December 31, 2016.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 6


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except share and per share amounts)
 
 
Q4 2016
 
Q3 2016
 
Q2 2016
 
Q1 2016
 
Q4 2015
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
351,869

 
$
362,915

 
$
371,019

 
$
369,020

 
$
383,374

Net (loss) income
$
(118,223
)
 
$
30,246

 
$
3,233

 
$
(116,080
)
 
$
(192,231
)
Basic and diluted net (loss) income per share attributable to common stockholders and limited partners
$
(0.14
)
 
$
0.01

 
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)
Normalized EBITDA
$
271,368

 
$
285,906

 
$
283,060

 
$
288,607

 
$
286,674

FFO attributable to common stockholders and limited partners
$
53,541

 
$
179,472

 
$
184,174

 
$
196,229

 
$
4,623

FFO attributable to common stockholders and limited partners per diluted share
$
0.054

 
$
0.185

 
$
0.198

 
$
0.211

 
$
0.005

AFFO attributable to common stockholders and limited partners
$
170,567

 
$
198,108

 
$
180,107

 
$
192,675

 
$
183,157

AFFO attributable to common stockholders and limited partners per diluted share
$
0.171

 
$
0.205

 
$
0.193

 
$
0.207

 
$
0.197

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
998,001,219

 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
327,281

 
$
331,846

 
$
338,533

 
$
337,787

 
$
350,061

Net income (loss)
$
13,988

 
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
Normalized EBITDA
$
268,946

 
$
277,593

 
$
274,683

 
$
282,243

 
$
280,822

FFO attributable to common stockholders and limited partners
$
185,752

 
$
179,232

 
$
183,108

 
$
196,775

 
$
190,893

FFO attributable to common stockholders and limited partners per diluted share
$
0.186

 
$
0.185

 
$
0.197

 
$
0.212

 
$
0.205

AFFO attributable to common stockholders and limited partners
$
179,804

 
$
182,371

 
$
177,599

 
$
185,528

 
$
187,339

AFFO attributable to common stockholders and limited partners per diluted share
$
0.180

 
$
0.188

 
$
0.191

 
$
0.199

 
$
0.202

Properties owned
4,142

 
4,213

 
4,291

 
4,378

 
4,435

Rentable square feet (in thousands)
93,257

 
96,885

 
99,229

 
99,015

 
99,578

Economic occupancy rate
98.3
%
 
98.0
%
 
97.7
%
 
98.6
%
 
98.6
%
Weighted-average remaining lease term (years)
9.9

 
10.0

 
10.2

 
10.4

 
10.6

Investment-grade tenants (1)
41.2
%
 
41.5
%
 
42.7
%
 
42.1
%
 
42.5
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
24,588

 
$
31,069

 
$
32,486

 
$
31,233

 
$
33,313

Net (loss) income
$
(132,211
)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
Normalized EBITDA
$
2,422

 
$
8,313

 
$
8,377

 
$
6,364

 
$
5,852

FFO attributable to common stockholders and limited partners
$
(132,211
)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
FFO attributable to common stockholders and limited partners per diluted share
$
(0.132
)
 
$
0.000

 
$
0.001

 
$
(0.001
)
 
$
(0.200
)
AFFO attributable to common stockholders and limited partners
$
(9,237
)
 
$
15,737

 
$
2,508

 
$
7,147

 
$
(4,182
)
AFFO attributable to common stockholders and limited partners per diluted share
$
(0.009
)
 
$
0.016

 
$
0.003

 
$
0.008

 
$
(0.004
)
Capital raised on behalf of Cole REITs, excluding DRIP
$
67,512

 
$
136,381

 
$
138,655

 
$
144,620

 
$
116,634

Purchase price of property acquisitions on behalf of Cole REITs
$
173,086

 
$
173,869

 
$
211,178

 
$
102,075

 
$
236,398

Assets Under Management
$
7,265,673

 
$
7,131,400

 
$
7,005,695

 
$
6,827,885

 
$
6,740,911

___________________________________
(1)
The weighted-average credit rating of our investment-grade tenants was A- as of December 31, 2016.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 7


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense, excluding non-cash amortization (1)
 
$
70,830

 
$
76,511

 
$
78,998

 
$
77,542

 
$
80,349

Normalized EBITDA
 
271,368

 
285,906

 
283,060

 
288,607

 
286,674

Interest Coverage Ratio
 
3.83
x
 
3.74x

 
3.58x

 
3.72x


3.57x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense, excluding non-cash amortization (1)
 
$
70,830

 
$
76,511

 
$
78,998

 
$
77,542

 
$
80,349

Secured debt principal amortization
 
6,076

 
5,734

 
5,168

 
8,449

 
5,834

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
17,973

 
17,972

Total fixed charges
 
94,879

 
100,218

 
102,139

 
103,964

 
104,155

Normalized EBITDA
 
271,368

 
285,906

 
283,060

 
288,607


286,674

Fixed Charge Coverage Ratio
 
2.86
x
 
2.85
x
 
2.77
x
 
2.78
x
 
2.75
x
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Debt Outstanding (2)
 
$
6,400,896

 
$
6,586,839

 
$
8,514,700

 
$
7,826,603

 
$
8,083,345

Less: cash and cash equivalents
 
256,452

 
116,618

 
1,029,620

 
104,450

 
69,103

Net Debt
 
6,144,444

 
6,470,221

 
7,485,080

 
7,722,153

 
8,014,242

Normalized EBITDA annualized
 
1,085,472

 
1,143,624

 
1,132,240

 
1,154,428

 
1,146,696

Net Debt to Normalized EBITDA annualized ratio
 
5.66
x
 
5.66
x
 
6.61
x
 
6.69
x
 
6.99
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
6,144,444

 
$
6,470,221

 
$
7,485,080

 
$
7,722,153

 
$
8,014,242

Gross Real Estate Investments
 
15,507,082

 
15,815,333

 
16,085,149

 
16,247,476

 
16,694,977

Net Debt Leverage Ratio
 
39.6
%
 
40.9
%
 
46.5
%
 
47.5
%
 
48.0
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
10,292,186

 
$
10,394,146

 
$
10,585,494

 
$
10,612,483

 
$
10,744,554

Gross Real Estate Investments
 
15,507,082

 
15,815,333

 
16,085,149

 
16,247,476

 
16,694,977

Unencumbered Asset Ratio
 
66.4
%
 
65.7
%
 
65.8
%
 
65.3
%
 
64.4
%
___________________________________
(1)
Refer to the Consolidated Statements of Operations section for interest expense calculated in accordance with GAAP.
(2)
Refer to the Consolidated Balance Sheets section for total debt calculated in accordance with GAAP.




See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 8

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Q4 2016 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



vereitexhibi_chart-46197.jpg
 
 
Common equity
53.1%
 
 
 
 
 
 
Secured debt
16.7%
 
 
 
 
 
 
Corporate bonds
14.1%
 
 
 
 
 
 
Preferred equity
6.7%
 
 
 
 
 
 
Convertible notes
6.3%
 
 
 
 
 
 
Unsecured credit facility
3.1%

                            

Fixed vs. Variable Rate Debt
Fixed
88.2
%
Swapped to Fixed
11.6
%
Variable
0.2
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)
 
December 31, 2016
Diluted shares outstanding
 
 
 
 
999,739

Stock price
 
 
 
 
$
8.46

Implied Equity Market Capitalization
 
$
8,457,792

 
 
 
 
 
 
Series F Perpetual Preferred (2)
 
6.70%
 
$
1,070,853

 
 
 
 
 
 
Mortgage notes payable
4.6
 
4.95%
 
$
2,629,949

Secured term loan
1.0
 
5.81%
 
20,947

Total secured debt
4.6
 
4.95%
 
$
2,650,896

 
 
 
 
 
 
Unsecured credit facility (swapped to fixed)
1.5
 
3.25%
 
$
500,000

2018 convertible notes
1.6
 
3.00%
 
597,500

2019 corporate bonds
2.1
 
3.00%
 
750,000

2020 convertible notes
4.0
 
3.75%
 
402,500

2021 corporate bonds
4.4
 
4.13%
 
400,000

2024 corporate bonds
7.1
 
4.60%
 
500,000

2026 corporate bonds
9.4
 
4.88%
 
600,000

Total unsecured debt
4.2
 
3.75%
 
$
3,750,000

 
 
 
 
 
 
Total Debt Outstanding
4.4
 
4.25%
 
$
6,400,896

 
 
 
 
 
 
Total Capitalization
 
$
15,929,541

Less: Cash and cash equivalents
 
 
 
 
256,452

Enterprise Value
 
$
15,673,089

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
39.2
%
Net Debt/Normalized EBITDA Annualized
 
 
 
5.66
x
Net Debt + Preferred/Normalized EBITDA Annualized
 
6.65
x
Fixed Charge Coverage Ratio
 
 
 
 
2.86
x
Liquidity (3)
 
 
 
 
$
2,556,452

___________________________________
(1)Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of December 31, 2016.
(2)Balance represents 42.8 million shares outstanding at December 31, 2016 multiplied by the liquidation preference of $25 per share.
(3)Liquidity represents cash and cash equivalents of $256.5 million and $2.3 billion available capacity on our revolving credit facility.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 9


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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$15.6 Billion
 
 
 
Book Value of Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (1)
Restaurants (1)
 
 
A full-service real estate operating company with investment management
capability.
 
2,085 Properties
1,793 Properties
 
 
 
 
 
 
 
 
Industrial & Distribution (1)
Office (1)
 
 
 
 
 
152 Properties
100 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$7.3 Billion
 
 
cclogo2a01.jpg
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Open Offerings
 
 
Cole Capital is a combination of Cole Capital
distribution and Cole Capital investment
management. Cole Capital investment
management is a shared resource
model with VEREIT.
 
CCPT V(2)     l     Income NAV(2)     l     CCIT III(2)
 
 
 
 
 
 
 
 
Closed Offerings
 
 
 
CCIT II(2)     l     CCPT IV(2)     l     TIC & DST(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(1)
Excludes 12 properties that consist of billboards, construction in progress, land and parking lots.
(2)
Defined in the "Program Summary" of the Cole REITs and Other Real Estate Programs section.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 10


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands)
 
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,895,625

 
$
2,946,105

 
$
2,992,848

 
$
3,058,879

 
$
3,120,653

Buildings, fixtures and improvements
 
10,644,296

 
10,800,316

 
10,956,605

 
11,161,327

 
11,445,690

Intangible lease assets
 
2,044,521

 
2,073,076

 
2,102,606

 
2,145,734

 
2,218,378

Total real estate investments, at cost
 
15,584,442


15,819,497

 
16,052,059

 
16,365,940

 
16,784,721

Less: accumulated depreciation and amortization
 
2,331,643

 
2,188,998

 
2,029,121

 
1,865,674

 
1,778,597

Total real estate investments, net
 
13,252,799


13,630,499

 
14,022,938

 
14,500,266

 
15,006,124

Investment in unconsolidated entities
 
46,077

 
24,711

 
22,435

 
23,445

 
56,824

Investment in direct financing leases, net
 
39,455

 
40,785

 
43,155

 
45,611

 
46,312

Investment securities, at fair value
 
47,215

 
48,098

 
48,347

 
48,162

 
53,304

Mortgage notes receivable, net
 
22,764

 
23,014

 
23,297

 
23,559

 
24,238

Cash and cash equivalents
 
256,452

 
116,618

 
1,029,620

 
104,450

 
69,103

Restricted cash
 
45,018

 
61,828

 
60,837

 
60,132

 
59,767

Intangible assets, net
 
24,609

 
30,849

 
37,088

 
43,327

 
50,779

Rent and tenant receivables and other assets, net
 
330,705

 
339,529

 
333,124

 
313,903

 
303,637

Goodwill
 
1,462,203

 
1,602,610

 
1,620,233

 
1,642,858

 
1,656,374

Due from affiliates
 
21,349

 
20,883

 
8,043

 
11,617

 
60,633

Real estate assets held for sale, net
 
38,928

 
118,396

 
159,394

 
26,282

 
18,771

Total assets
 
$
15,587,574


$
16,057,820


$
17,408,511

 
$
16,843,612

 
$
17,405,866

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,671,106

 
$
2,861,210

 
$
2,938,072

 
$
3,029,666

 
$
3,111,985

Corporate bonds, net
 
2,226,224

 
2,225,157

 
3,522,297

 
2,537,699

 
2,536,333

Convertible debt, net
 
973,340

 
970,691

 
968,059

 
965,469

 
962,894

Credit facility, net
 
496,578

 
496,008

 
1,045,872

 
1,269,731

 
1,448,590

Below-market lease liabilities, net
 
224,023

 
229,340

 
237,403

 
245,093

 
251,692

Accounts payable and accrued expenses
 
146,137

 
139,150

 
163,122

 
118,970

 
151,877

Deferred rent, derivative and other liabilities
 
68,039

 
89,154

 
84,486

 
88,997

 
87,490

Distributions payable
 
162,578

 
159,415

 
146,695

 
143,973

 
140,816

Due to affiliates
 
16

 
—

 
—

 
—

 
230

Total liabilities
 
6,968,041


7,170,125

 
9,106,006

 
8,399,598

 
8,691,907

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,741

 
9,742

 
9,048

 
9,048

 
9,049

Additional paid-in capital
 
12,640,171

 
12,637,049

 
11,934,864

 
11,932,859

 
11,931,768

Accumulated other comprehensive loss
 
(2,556
)
 
(4,687
)
 
(12,297
)
 
(11,345
)
 
(2,025
)
Accumulated deficit
 
(4,200,423
)
 
(3,933,092
)
 
(3,810,341
)
 
(3,671,050
)
 
(3,415,233
)
Total stockholders' equity
 
8,447,361


8,709,440

 
8,121,702

 
8,259,940

 
8,523,987

Non-controlling interests
 
172,172

 
178,255

 
180,803

 
184,074

 
189,972

Total equity
 
8,619,533


8,887,695


8,302,505

 
8,444,014

 
8,713,959

Total liabilities and equity
 
$
15,587,574


$
16,057,820

 
$
17,408,511

 
$
16,843,612

 
$
17,405,866


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 11


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
299,231

 
$
303,383

 
$
311,352

 
$
313,971

 
$
322,079

Direct financing lease income
 
457

 
494

 
535

 
569

 
623

Operating expense reimbursements
 
27,593

 
27,969

 
26,646

 
23,247

 
27,359

Cole Capital revenue
 
24,588

 
31,069

 
32,486

 
31,233

 
33,313

Total revenues
 
351,869


362,915


371,019


369,020


383,374

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
2,234

 
5,897

 
6,975

 
8,068

 
6,558

Acquisition related
 
948

 
90

 
41

 
242

 
734

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
Property operating
 
36,596

 
34,820

 
38,199

 
34,813

 
35,308

General and administrative
 
44,353

 
29,761

 
33,094

 
29,400

 
49,160

Depreciation and amortization
 
191,360

 
195,173

 
197,345

 
204,308

 
202,415

Impairments
 
127,537

 
6,872

 
8,825

 
160,517

 
219,753

Total operating expenses
 
404,540

 
277,243

 
287,396

 
432,173

 
506,237

Operating (loss) income
 
(52,671
)
 
85,672

 
83,623

 
(63,153
)
 
(122,863
)
Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(74,613
)
 
(79,869
)
 
(82,468
)
 
(80,426
)
 
(82,591
)
Gain (loss) on extinguishment and forgiveness of debt, net
 
980

 
(2,003
)
 
252

 
—

 
(490
)
Other income (expense), net
 
2,013

 
1,744

 
1,216

 
1,062

 
(3,816
)
Reserve for loan loss
 
—

 
—

 
—

 
—

 
(15,300
)
Equity in (loss) income and gain on disposition of unconsolidated entities
 
(903
)
 
212

 
70

 
10,404

 
752

Gain (loss) on derivative instruments, net
 
2,095

 
(2,023
)
 
(177
)
 
(1,086
)
 
677

Total other expenses, net
 
(70,428
)
 
(81,939
)
 
(81,107
)
 
(70,046
)
 
(100,768
)
(Loss) income before taxes and real estate dispositions
 
(123,099
)
 
3,733

 
2,516

 
(133,199
)
 
(223,631
)
(Loss) gain on disposition of real estate and held for sale assets, net
 
(199
)
 
28,111

 
437

 
17,175

 
(9,727
)
(Loss) income before taxes
 
(123,298
)
 
31,844

 
2,953

 
(116,024
)
 
(233,358
)
Benefit (provision for) from income taxes
 
5,075

 
(1,598
)
 
280

 
(56
)
 
41,127

Net (loss) income
 
(118,223
)

30,246


3,233


(116,080
)

(192,231
)
Net loss (income) attributable to non-controlling interests
 
2,805

 
(751
)
 
(87
)
 
2,994

 
4,841

Net (loss) income attributable to the General Partner
 
$
(115,418
)
 
$
29,495

 
$
3,146

 
$
(113,086
)
 
$
(187,390
)
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net (loss) income per share attributable to common stockholders and limited partners
 
$
(0.14
)
 
$
0.01

 
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 12


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Net (loss) income
 
$
(118,223
)
 
$
30,246

 
$
3,233

 
$
(116,080
)
 
$
(192,231
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,972
)
Loss (gain) on real estate assets and interest in joint venture, net
 
199

 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

Depreciation and amortization of real estate assets
 
182,190

 
187,898

 
190,236

 
195,991

 
197,408

Impairment of real estate
 
6,606

 
6,872

 
8,825

 
160,517

 
6,414

Proportionate share of adjustments for unconsolidated entities
 
742

 
540

 
290

 
1,147

 
1,277

FFO attributable to common stockholders and limited partners
 
$
53,541

 
$
179,472

 
$
184,174

 
$
196,229

 
$
4,623

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
948

 
90

 
41

 
242

 
734

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
Impairment of intangible assets
 
120,931

 
—

 
—

 
—

 
213,339

Reserve for loan loss
 
—

 
—

 
—

 
—

 
15,300

(Gain) loss on derivative instruments, net
 
(2,095
)
 
2,023

 
177

 
1,086

 
(677
)
Amortization of premiums and discounts on debt and investments, net
 
(2,684
)
 
(3,553
)
 
(4,030
)
 
(4,426
)
 
(5,107
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

Amortization and write-off of deferred financing costs
 
6,417

 
6,878

 
7,461

 
7,307

 
7,321

Amortization of management contracts
 
6,240

 
6,240

 
6,240

 
7,451

 
3,373

Deferred tax (benefit) expense (1)
 
(9,203
)
 
6,941

 
(6,417
)
 
(1,457
)
 
(38,695
)
(Gain) loss on extinguishment and forgiveness of debt, net
 
(980
)
 
2,003

 
(252
)
 
—

 
490

Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Equity-based compensation expense
 
3,631

 
2,588

 
2,779

 
1,730

 
4,311

Other amortization and non-cash charges
 
2,873

 
929

 
751

 
743

 
1,540

Proportionate share of adjustments for unconsolidated entities
 
835

 
(17
)
 
91

 
135

 
42

AFFO attributable to common stockholders and limited partners
 
$
170,567

 
$
198,108

 
$
180,107

 
$
192,675

 
$
183,157

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
973,681,227

 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

Effect of Limited Partner OP Units and dilutive securities (2)
 
24,319,992

 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

Weighted-average shares outstanding - diluted (3)
 
998,001,219

 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.054

 
$
0.185

 
$
0.198

 
$
0.211

 
$
0.005

AFFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.171

 
$
0.205

 
$
0.193

 
$
0.207

 
$
0.197

___________________________________
(1)
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
(2)
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
(3)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.
(4)
Refer to the Consolidated Statements of Operations section for basic and diluted net loss per share attributable to common stockholders.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 13


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 Net (loss) income
 
$
(118,223
)
 
$
30,246

 
$
3,233

 
$
(116,080
)
 
$
(192,231
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
74,613

 
79,869

 
82,468

 
80,426

 
82,591

Depreciation and amortization
 
191,360

 
195,173

 
197,345

 
204,308

 
202,415

(Benefit from) provision for income taxes
 
(5,075
)
 
1,598

 
(280
)
 
56

 
(41,127
)
Proportionate share of adjustments for unconsolidated entities
 
1,299

 
959

 
554

 
1,822

 
1,978

 EBITDA
 
$
143,974

 
$
307,845

 
$
283,320

 
$
170,532

 
$
53,626

Loss (gain) on disposition of real estate assets, including joint ventures, net
 
199

 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

Impairments
 
127,537

 
6,872

 
8,825

 
160,517

 
219,753

Reserve for loan loss
 
—

 
—

 
—

 
—

 
15,300

Acquisition related expenses
 
948

 
90

 
41

 
242

 
734

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
(Gain) loss on derivative instruments, net
 
(2,095
)
 
2,023

 
177

 
1,086

 
(677
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

(Gain) loss on extinguishment and forgiveness of debt, net
 
(980
)
 
2,003

 
(252
)
 
—

 
490

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Program development costs write-off
 
11,054

 
845

 
2,377

 
—

 
11,295

Other amortization and non-cash charges
 
(107
)
 
(139
)
 
(157
)
 
(126
)
 
(122
)
 Proportionate share of adjustments for unconsolidated entities
 
725

 
(36
)
 
74

 
94

 
(15
)
Normalized EBITDA
 
$
271,368

 
$
285,906

 
$
283,060

 
$
288,607

 
$
286,674




See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 14


coversvereitsuppq420162.jpg

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 15

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
299,231

 
$
303,383

 
$
311,352

 
$
313,971

 
$
322,079

Direct financing lease income
 
457

 
494

 
535

 
569

 
623

Operating expense reimbursements
 
27,593

 
27,969

 
26,646

 
23,247

 
27,359

Total real estate investment revenues
 
327,281


331,846


338,533


337,787


350,061

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
923

 
90

 
27

 
217

 
673

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
Property operating
 
36,596

 
34,820

 
38,199

 
34,813

 
35,308

General and administrative
 
13,267

 
12,069

 
13,701

 
12,228

 
16,646

Depreciation and amortization
 
182,190

 
187,897

 
190,236

 
195,991

 
197,409

Impairment of real estate
 
6,606

 
6,872

 
8,825

 
160,517

 
6,414

Total operating expenses
 
241,094


246,378


253,905

 
398,591

 
248,759

Operating income (loss)
 
86,187


85,468


84,628

 
(60,804
)
 
101,302

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(74,613
)
 
(79,869
)
 
(82,468
)
 
(80,426
)
 
(82,591
)
Gain (loss) on extinguishment and forgiveness of debt
 
980

 
(2,003
)
 
252

 
—

 
(490
)
Other income, net
 
1,856

 
1,649

 
1,216

 
568

 
(4,226
)
Reserve for loan loss
 
—

 
—

 
—

 
—

 
(15,300
)
Equity in (loss) income and gain on disposition of unconsolidated entities
 
(903
)
 
212

 
70

 
10,404

 
752

Gain (loss) on derivative instruments, net
 
2,095

 
(2,023
)
 
(177
)
 
(1,086
)
 
677

Total other expenses, net
 
(70,585
)

(82,034
)

(81,107
)
 
(70,540
)
 
(101,178
)
Income (loss) before taxes and real estate dispositions
 
15,602

 
3,434

 
3,521

 
(131,344
)
 
124

(Loss) gain on disposition of real estate, net
 
(199
)
 
28,111

 
437

 
17,175

 
(9,727
)
Income (loss) before taxes
 
15,403


31,545


3,958

 
(114,169
)
 
(9,603
)
(Provision for) benefit from income taxes
 
(1,415
)
 
(1,539
)
 
(1,791
)
 
(1,365
)
 
3,642

Net income (loss)
 
$
13,988


$
30,006


$
2,167


$
(115,534
)

$
(5,961
)


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 16

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Net income (loss)
 
$
13,988

 
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,972
)
Loss (gain) on real estate assets and interest in joint venture, net
 
199

 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

Depreciation and amortization of real estate assets
 
182,190

 
187,898

 
190,236

 
195,991

 
197,408

Impairment of real estate
 
6,606

 
6,872

 
8,825

 
160,517

 
6,414

Proportionate share of adjustments for unconsolidated entities
 
742

 
540

 
290

 
1,147

 
1,277

FFO attributable to common stockholders and limited partners
 
$
185,752

 
$
179,232

 
$
183,108

 
$
196,775

 
$
190,893

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
923

 
90

 
27

 
217

 
673

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
Reserve for loan loss
 
—

 
—

 
—

 
—

 
15,300

(Gain) loss on derivative instruments, net
 
(2,095
)
 
2,023

 
177

 
1,086

 
(677
)
Amortization of premiums and discounts on debt and investments, net
 
(2,684
)
 
(3,553
)
 
(4,030
)
 
(4,426
)
 
(5,107
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

Amortization and write-off of deferred financing costs
 
6,417

 
6,878

 
7,461

 
7,307

 
7,321

(Gain) loss on extinguishment and forgiveness of debt, net
 
(980
)
 
2,003

 
(252
)
 
—

 
490

Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Equity-based compensation expense
 
1,523

 
1,201

 
1,925

 
799

 
1,840

Other amortization and non-cash charges
 
—

 
—

 
—

 
—

 
1

Proportionate share of adjustments for unconsolidated entities
 
835

 
(17
)
 
91

 
135

 
42

AFFO attributable to common stockholders and limited partners
 
$
179,804

 
$
182,371

 
$
177,599

 
$
185,528

 
$
187,339

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
973,681,227

 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

Effect of Limited Partner OP Units and dilutive securities (1)
 
24,319,992

 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

Weighted-average shares outstanding - diluted (2)
 
998,001,219

 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.186

 
$
0.185

 
$
0.197

 
$
0.212

 
$
0.205

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.180

 
$
0.188

 
$
0.191

 
$
0.199

 
$
0.202

___________________________________
(1)
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
(2)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 17

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 Net income (loss)
 
$
13,988

 
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
74,613

 
79,869

 
82,468

 
80,426

 
82,591

Depreciation and amortization
 
182,190

 
187,897

 
190,236

 
195,991

 
197,409

Provision for (benefit from) income taxes
 
1,415

 
1,539

 
1,791

 
1,365

 
(3,642
)
Proportionate share of adjustments for unconsolidated entities
 
1,299

 
959

 
554

 
1,822

 
1,978

 EBITDA
 
$
273,505

 
$
300,270

 
$
277,216

 
$
164,070

 
$
272,375

Loss (gain) on disposition of real estate assets, including joint ventures, net
 
199

 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

Impairment of real estate assets
 
6,606

 
6,872

 
8,825

 
160,517

 
6,414

Reserve for loan loss
 
—

 
—

 
—

 
—

 
15,300

Acquisition related expenses
 
923

 
90

 
27

 
217

 
673

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
(Gain) loss on derivative instruments, net
 
(2,095
)
 
2,023

 
177

 
1,086

 
(677
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

(Gain) loss on extinguishment and forgiveness of debt, net
 
(980
)
 
2,003

 
(252
)
 
—

 
490

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Other amortization and non-cash charges
 
(50
)
 
(32
)
 
(39
)
 
(3
)
 
(28
)
 Proportionate share of adjustments for unconsolidated entities
 
725

 
(36
)
 
74

 
94

 
(15
)
Normalized EBITDA
 
$
268,946

 
$
277,593

 
$
274,683

 
$
282,243

 
$
280,822



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 18

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 Rental income - as reported(1)
 
$
299,231

 
$
303,383

 
$
311,352

 
$
313,971

 
$
322,079

 Direct financing lease income - as reported
 
457

 
494

 
535

 
569

 
623

 Operating expense reimbursements - as reported
 
27,593

 
27,969

 
26,646

 
23,247

 
27,359

 Property operating expense - as reported
 
(36,596
)
 
(34,820
)
 
(38,199
)
 
(34,813
)
 
(35,308
)
NOI
 
290,685


297,026


300,334

 
302,974

 
314,753

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

 Cash NOI
 
$
279,286


$
286,910


$
286,509

 
$
291,784

 
$
299,007

___________________________________
(1)
Rental income includes percentage rent of $1.3 million, $1.2 million, $1.7 million, $2.5 million and $1.8 million for the three months ended December 31, 2016 , September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.

Normalized Cash NOI
 
 
Three Months Ended
 
 
December 31, 2016
Cash NOI
 
$
279,286

Adjustments for intra-quarter acquisitions and dispositions (1)
 
(280
)
Normalized Cash NOI
 
$
279,006

___________________________________
(1)
For properties acquired during the three months ended December 31, 2016 the adjustment eliminates Cash NOI for such properties and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. For properties disposed of during the three months ended December 31, 2016, the adjustment eliminates Cash NOI for the period.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 19

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Same Store Contract Rental Revenue
(unaudited, dollars in thousands)
 
The Company reviews the stabilized operating results from properties that we refer to as "same store." In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment. The following tables show the Company's same store portfolio statistics, which included 4,119(1) properties, with 92.3 million aggregate square feet, acquired prior to October 1, 2015 and owned through December 31, 2016:
 
 
Three Months Ended December 31,
 
Increase/(Decrease)
 
 
2016
 
2015
 
$ Change
 
% Change
Contract Rental Revenue
 
279,370

 
279,100

 
270

 
0.1
%
Economic Occupancy Rate
 
98.3
%
 
99.2
%
 
N/A

 
N/A

 
 
 
 
Contract Rental Revenue
 
 
 
Number of
 
Three Months Ended December 31,
 
Increase/(Decrease)
 
 
 
Properties
 
2016
 
2015
 
$ Change
 
% Change
 
Retail
 
2,068

 
$
108,885

 
$
108,080

 
$
805

 
0.7
 %
 
Restaurant
 
1,794

 
64,036

 
65,420

 
(1,384
)
 
(2.1
)%
(3) 
Industrial and distribution
 
148

 
43,400

 
42,855

 
545

 
1.3
 %
 
Office
 
99

 
62,918

 
62,614

 
304

 
0.5
 %
 
Other(2)
 
10

 
131

 
131

 
—

 
—
 %
 
Total
 
4,119

 
$
279,370

 
$
279,100

 
$
270

 
0.1
 %
(4) 
___________________________________
(1)
Development and expansion properties are included in the same store population if the placed in service date was prior to October 1, 2015.
(2)
Other properties include billboards, construction in progress, land and parking lots.
(3)
Ovation Brands, Inc. filed for chapter 11 bankruptcy on March 7, 2016. Excluding the impact of Ovation Brands, Inc., restaurant, same store Contract Rental Revenue increased 0.8% during the three months ended December 31, 2016, as compared to the same quarter in 2015.
(4)
Excluding the impact of Ovation Brands, Inc., total same store Contract Rental Revenue increased 0.8% during the three months ended December 31, 2016, as compared to the same quarter in 2015.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 20

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Same Store Contract Rental Revenue
 
The following graphs compare the Company's same store Contract Rental Revenue composition to the Company's total portfolio,
based on Annualized Rental Income, as of December 31, 2016.
vereitexhibi_chart-45593.jpg
vereitexhibi_chart-47050.jpg


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 21

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Debt Outstanding and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
Mortgage notes payable
 
$
2,629,949

 
$
287,094

 
$
209,259

 
$
229,547

 
$
282,223

 
$
383,110

 
$
1,238,716

Unsecured credit facility
 
500,000

 
—

 
500,000

 
—

 
—

 
—

 
—

Corporate bonds
 
2,250,000

 
—

 
—

 
750,000

 
—

 
400,000

 
1,100,000

Convertible notes
 
1,000,000

 
—

 
597,500

 
—

 
402,500

 
—

 
—

Secured term loan
 
20,947

 
7,680

 
13,267

 
—

 
—

 
—

 
—

Total
 
$
6,400,896

 
$
294,774

 
$
1,320,026

 
$
979,547

 
$
684,723


$
783,110

 
$
2,338,716

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable
 
41.1
%
 
4.95
%
 
4.6

Unsecured credit facility
 
7.8
%
 
3.25
%
 
1.5

Corporate bonds
 
35.2
%
 
4.06
%
 
5.6

Convertible notes
 
15.6
%
 
3.30
%
 
2.5

Secured term loan
 
0.3
%
 
5.81
%
 
1.0

Total
 
100.0
%
 
4.25
%
 
4.4

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
58.6
%
 
3.75
%
 
4.2

Total secured debt
 
41.4
%
 
4.95
%
 
4.6

Total
 
100.0
%
 
4.25
%
 
4.4

 
 
 
 
 
 
 
Total fixed-rate debt (1)
 
99.8
%
 
4.25
%
 
4.4

Total variable-rate debt
 
0.2
%
 
3.84
%
 
0.6

Total
 
100.0
%
 
4.25
%
 
4.4

Preferred Equity
 
Balance (2)
 
Percent of Total Preferred Equity
 
Dividend Rate
Series F preferred stock
 
$
1,070,853

 
100.00
%
 
6.7
%
___________________________________
(1)
Includes $742.2 million of variable-rate debt with its interest rate fixed by way of an interest rate swap agreement.
(2)
Balance represents 42.8 million shares outstanding at December 31, 2016 multiplied by the liquidation preference of $25 per share.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 22

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Debt and Preferred Equity Summary (cont.)
(unaudited, dollars in millions)
 

vereitexhibi_chart-46250.jpg



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 23


vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Debt Outstanding As Of December 31, 2016
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Cantor Commercial Real Estate Lending, L.P.
 
1/6/2024
 
$
465,000

 
4.97
%
 
4.97
%
 
I/O
Cantor Commercial Real Estate Lending, L.P.
 
1/6/2024
 
155,000

 
4.97
%
 
4.97
%
 
I/O
Wells Fargo Bank, National Association
 
1/1/2018
 
131,395

 
5.61
%
 
5.61
%
 
P&I
JPMorgan Chase Bank, N.A.
 
9/1/2020
(3) 
98,892

 
5.55
%
 
5.55
%
 
P&I
Wells Fargo Bank, National Association
 
3/1/2023
(3) 
74,250

 
4.23
%
 
4.23
%
 
I/O
Wells Fargo Bank, National Association
 
7/1/2022
(3) 
68,110

 
4.54
%
 
4.54
%
 
I/O
Wells Fargo Bank, National Association
 
1/1/2023
(3) 
66,000

 
4.24
%
 
4.24
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
6/6/2020
 
62,445

 
5.73
%
 
5.73
%
 
P&I
Wells Fargo Bank, National Association
 
5/1/2021
 
60,450

 
5.54
%
 
5.54
%
 
I/O
PNC Bank, National Association
 
1/1/2019
 
59,500

 
4.10
%
 
4.10
%
 
I/O
Citigroup Global Markets Realty Corp
 
5/6/2022
 
54,300

 
6.05
%
 
6.05
%
 
I/O
Capital One, N.A.
 
11/20/2019
 
51,400

 
1mo. Libor + 1.95%

(4) 
5.22
%
 
I/O through 11/01/2017, then P&I
American General Life Insurance Company
 
11/1/2021
 
51,250

 
5.25
%
 
5.25
%
 
I/O
Wells Fargo Bank, National Association
 
2/1/2017
 
48,500

 
1mo. Libor + 2.47%

(4) 
3.79
%
 
I/O
JPMorgan Chase Bank, N.A.
 
5/1/2021
 
46,910

 
5.53
%
 
5.53
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
5/6/2021
(3) 
46,670

 
5.92
%
 
5.92
%
 
I/O
US Bank National Association
 
8/11/2029
(3) 
43,467

 
7.73
%
 
7.73
%
 
P&I
People's United Bank
 
4/1/2021
 
42,135

 
5.55
%
 
5.55
%
 
P&I
Wells Fargo Bank, National Association
 
6/1/2022
(3) 
41,000

 
4.73
%
 
4.73
%
 
I/O
JPMorgan Chase Bank, N.A.
 
6/1/2020
 
40,810

 
5.71
%
 
5.71
%
 
P&I
Morgan Stanley Mortgage Capital Holdings LLC
 
1/1/2023
 
40,800

 
4.46
%
 
4.46
%
 
I/O
JPMorgan Chase Bank, N.A.
 
11/1/2019
(3) 
38,500

 
4.10
%
 
4.10
%
 
I/O
JPMorgan Chase Bank, N.A.
 
11/1/2017
 
38,315

 
6.34
%
 
6.34
%
 
I/O
The Royal Bank of Scotland Plc
 
1/1/2021
 
34,000

 
5.48
%
 
5.48
%
 
I/O
Goldman Sachs Mortgage Company
 
12/6/2020
 
31,500

 
5.25
%
 
5.25
%
 
I/O
Oritani Bank
 
5/1/2024
 
30,050

 
3.25
%
 
3.25
%
 
I/O through 05/01/2019, then P&I
Goldman Sachs Mortgage Company
 
12/6/2020
 
30,000

 
5.25
%
 
5.25
%
 
I/O
Jackson National Life Insurance Company
 
10/1/2021
(3) 
29,450

 
4.25
%
 
4.25
%
 
I/O
German American Capital Corporation
 
10/6/2022
(3) 
29,160

 
4.48
%
 
4.48
%
 
I/O
German American Capital Corporation
 
10/6/2022
(3) 
28,440

 
4.48
%
 
4.48
%
 
I/O
BOKF, NA dba Bank of Oklahoma
 
7/29/2018
 
28,422

 
1mo. Libor + 2.75%

(4) 
4.10
%
 
P&I
BOKF, NA dba Bank of Texas
 
7/31/2017
 
28,350

 
1mo. Libor + 2.20%

(4) 
3.28
%
 
I/O
PNC Bank, National Association
 
6/1/2022
 
27,750

 
4.22
%
 
4.22
%
 
I/O
GS Commercial Real Estate LP
 
8/6/2019
(3) 
27,725

 
4.73
%
 
4.73
%
 
I/O
PNC Bank, National Association
 
9/1/2022
 
27,678

 
4.00
%
 
4.00
%
 
P&I
Jackson National Life Insurance Company
 
7/1/2019
 
27,200

 
3.10
%
 
3.10
%
 
I/O
LaSalle Bank National Association
 
1/1/2017
 
25,620

 
5.81
%
 
5.81
%
 
I/O
Bank of America, N.A.
 
9/1/2017
 
23,628

 
5.28
%
 
5.28
%
 
P&I
John Hancock Life Insurance Company
 
10/3/2022
 
22,500

 
4.04
%
 
4.04
%
 
I/O
BOKF, NA dba Bank of Texas
 
12/31/2018
 
21,766

 
1mo. Libor + 1.80%

(4) 
3.57
%
 
I/O

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 24


vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Debt Outstanding As Of December 31, 2016
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Aviva Life and Annuity Company
 
7/1/2021
 
$
19,600

 
5.02
%
 
5.02
%
 
I/O through 07/01/2019, then P&I
The Variable Annuity Life Insurance Company
 
1/1/2023
 
$
19,525

 
4.00
%
 
4.00
%
 
I/O
Morgan Stanley Mortgage Capital Holdings LLC
 
5/10/2021
 
19,513

 
5.67
%
 
5.67
%
 
I/O
German American Capital Corp
 
6/6/2022
 
19,165

 
4.60
%
 
4.60
%
 
P&I
Oritani Bank
 
5/1/2024
 
18,889

 
3.25
%
 
3.25
%
 
I/O through 05/01/2019, then P&I
The Royal Bank of Scotland Plc
 
3/1/2021
 
18,100

 
5.88
%
 
5.88
%
 
I/O
BOKF, NA dba Bank of Texas
 
7/31/2017
 
16,555

 
1mo. Libor + 2.20%

(4) 
3.28
%
 
I/O
US Bank National Association
 
1/11/2017
 
16,200

 
5.48
%
 
5.48
%
 
I/O
JPMorgan Chase Bank, National Association
 
5/1/2021
(3) 
15,802

 
5.54
%
 
5.54
%
 
P&I
Oritani Bank
 
1/1/2023
 
15,000

 
3.75
%
 
3.75
%
 
I/O through 01/01/2018, then P&I
BOKF, NA dba Bank of Texas
 
12/31/2018
 
14,150

 
1mo. Libor + 1.80%

(4) 
3.57
%
 
I/O
BOKF, NA dba Bank of Texas
 
12/31/2020
 
13,420

 
1mo. Libor + 1.85%

(4) 
4.25
%
 
I/O
BOKF, NA dba Bank of Texas
 
7/13/2017
 
12,725

 
1mo. Libor + 2.25%

(4) 
3.43
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
9/6/2017
 
12,270

 
3.70
%
 
3.70
%
 
I/O
Customers Bank
 
12/29/2016
(5) 
11,595

 
7.75
%
 
7.75
%
 
P&I
Amegy Bank, National Association
 
8/19/2017
 
11,297

 
1mo. Libor + 2.95%

(4) 
3.79
%
 
P&I
JPMorgan Chase Bank, N.A.
 
7/1/2020
 
11,172

 
5.50
%
 
5.50
%
 
P&I
US Bank National Association
 
2/11/2017
 
10,332

 
5.68
%
 
5.68
%
 
I/O
40/86 Mortgage Capital, Inc.
 
1/1/2019
 
10,050

 
5.00
%
 
5.00
%
 
I/O
Monumental Life Insurance Company
 
4/1/2023
 
9,510

 
3.95
%
 
3.95
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
7,087

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
6,319

 
5.32
%
 
5.32
%
 
P&I
US Bank National Association
 
5/11/2017
 
6,262

 
5.45
%
 
5.45
%
 
I/O
Customers Bank
 
8/16/2017
 
5,500

 
3.63
%
 
3.63
%
 
I/O
Wells Fargo Bank, National Association
 
3/1/2017
 
4,800

 
1mo. Libor + 2.50%

(4) 
3.76
%
 
I/O
Bear Stearns Commercial Mortgage, Inc.
 
9/1/2017
 
1,678

 
5.88
%
 
5.88
%
 
I/O
BOKF, NA dba Bank of Texas
 
4/12/2018
 
1,562

 
1mo. Libor + 2.45%

(4) 
3.39
%
 
I/O
Capital Lease Funding, LLC
 
7/15/2018
 
1,465

 
7.20
%
 
7.20
%
 
P&I
US Bank National Association
 
4/15/2019
 
1,147

 
5.40
%
 
5.40
%
 
P&I
BOKF, NA dba Bank of Texas
 
4/12/2018
 
562

 
1mo. Libor + 2.45%

(4) 
3.39
%
 
I/O
Transamerica Life Insurance Company
 
8/1/2030
 
359

 
5.93
%
 
5.93
%
 
P&I
 
 
 
 
$
2,629,949

 
 
 
4.95
%
 
 
___________________________________
(1)
Represents interest rate in effect at December 31, 2016. For loans subject to interest rate swaps, this represents the all-in fixed interest rate.
(2)
I/O means interest only is due monthly with the principal due at maturity. P&I means both principal and interest are due monthly.
(3)
The maturity date shown represents the anticipated maturity date of the loan as specified in the loan agreement. Should the loan not be repaid at the anticipated maturity date, the applicable interest rate will increase as specified in the loan agreement.
(4)
Variable-rate loan fixed by way of interest rate swap agreement.
(5)
On December 30, 2016, the Company received a notice of default from the lender of the Customers Bank loan, which had an outstanding balance of $11.6 million on the notice date, due to the Company’s non-repayment of the respective loan balance at maturity. The Company and the lender are assessing options in relation to the default.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 25

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Credit Facility and Corporate Bond Covenants
(unaudited)
 
The following is a summary of key financial covenants for the Company's unsecured credit facility and corporate bonds, as defined and calculated per the terms of the facility's credit agreement and the bonds' governing documents, respectively. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that the Company is in compliance with the financial covenants and are not measures of our liquidity or performance. As of December 31, 2016, the Company believes it is in compliance with these covenants based on the covenant limits and calculations in place at that time.
Unsecured Credit Facility Key Covenants
 
Required
 
December 31, 2016
Minimum tangible net worth
 
≥ $5.5B
 
$9.5B
Ratio of total indebtedness to total asset value
 
≤ 60%
 
38.2%
Ratio of adjusted EBITDA to fixed charges
 
≥ 1.5x
 
2.80x
Ratio of secured indebtedness to total asset value
 
≤ 45%
 
14.9%
Ratio of unsecured indebtedness to unencumbered asset value
 
≤ 60%
 
35.0%
Ratio of unencumbered adjusted NOI to unsecured interest expense
 
≥ 1.75x
 
4.70x
Minimum unencumbered asset value
 
≥ $8.0B
 
$10.0B

Corporate Bond Key Covenants
 
Required
 
December 31, 2016
Limitation on incurrence of total debt
 
≤ 65%
 
39.4%
Limitation on incurrence of secured debt
 
≤ 40%
 
16.5%
Debt service coverage
 
≥ 1.5x
 
3.93x
Maintenance of total unencumbered assets
 
≥ 150%
 
291.6%



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 26

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Acquisitions and Dispositions
(unaudited, square feet and dollars in thousands)
 
Acquisitions
The following table summarizes the Company's property acquisition activity during the three months ended December 31, 2016.
Property Type
 
Number of Properties
 
Square Feet
 
Weighted Average Lease Term (Years) (1)
 
Weighted Average Cash Cap Rate
 
Purchase Price
Retail
 
7
 
466

 
13.7

 
6.7
%
 
$
80,242



Dispositions
The following table shows the 78 properties that were disposed of and the related gains/losses during the three months ended December 31, 2016.
Property
 
Number of Properties
 
Square Feet
 
Weighted Average Remaining Lease Term (Years)(2)
 
Weighted Average Cash Cap Rate (3)
 
Sale Price
 
Real Estate Gain (Loss)(4)
 
Goodwill Allocation(5)
 
GAAP Gain (Loss)(6)
Retail
 
14
 
226

 
12.7

 
6.7
%
 
$
61,678

 
$
7,009

 
$
(2,848
)
 
$
4,161

Office
 
5
 
512

 
4.9

 
7.1
%
 
103,038

 
5,914

 
(5,191
)
 
723

Industrial and Distribution
 
11
 
1,771

 
7.6

 
8.1
%
 
115,595

 
12,324

 
(2,736
)
 
9,588

Red Lobster (7)
 
23
 
168

 
22.5

 
7.0
%
 
86,878

 
9,238

 
(5,337
)
 
3,901

Other Restaurants
 
10
 
36

 
6.0

 
7.4
%
 
9,870

 
370

 
(616
)
 
(246
)
Vacant (8)
 
10
 
1,332

 
N/A

 
N/A

 
17,853

 
(16,151
)
 
(1,063
)
 
(17,214
)
Other (9)
 
5
 
51

 
N/A

 
N/A

 
—

 
(984
)
 
—

 
(984
)
Total dispositions
 
78
 
4,096
 
11.7

 
7.4
%
 
$
394,912

 
$
17,720

 
$
(17,791
)
 
$
(71
)
Held for sale assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(128
)
Total loss on disposition of real estate, net
 
 
 
 
 
 
 
 
$
(199
)
___________________________________
(1)
Represents the lease term from date of acquisition.
(2)
Represents the remaining lease term from the date of sale.
(3)
Excludes certain properties' cash cap rates considered not meaningful due to factors such as physical and economic vacancy or short remaining lease terms.
(4)
Equals sale price less GAAP net book value and selling costs.
(5)
In accordance with GAAP, the Company allocates a portion of the REI segment goodwill to a respective property when it is classified as held for sale or when it is disposed of to calculate the GAAP gain (loss). The goodwill allocation presented excludes any amounts allocated to properties classified as held for sale in prior periods. See Note 4 – Goodwill and Other Intangibles of our Annual Report on Form 10-K for the year ended December 31, 2016 for a further description of our goodwill allocation methodology.
(6)
Equals sale price less GAAP net book value, including goodwill allocation, and selling costs.
(7)
The Red Lobster properties were sold under an agreement with the tenant, under which the tenant received a portion of the sales proceeds. The sales price and cash cap rate presented are based on our proceeds after making the participation payment to the tenant. The cash cap rate on the gross sales price of $101.3M was 6.0%.
(8)
Includes six restaurant properties, three industrial properties, and one retail property.
(9)
Represents five properties relinquished to the ground lessor upon expiration or termination of the ground lease. Gain (loss) amounts also include partial condemnations or easements related to certain properties, and post-closing adjustments.



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 27

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification Statistics: Real Estate Portfolio
(unaudited, percentages based on portfolio Annualized Rental Income)
 


vereitexhibi_chart-45407.jpg
___________________________________________________
vereitexhibi_chart-46427.jpg
___________________________________________________
vereitexhibi_chart-47304.jpg
 
vereitexhibi_chart-48276.jpg
___________________________________________________
vereitexhibi_chart-49324.jpg
___________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Properties owned
 
4,142

 
Rentable square feet
 
93,257

 
Economic occupancy rate
 
98.3
%
 
Weighted-average remaining lease term (years)
 
9.9

 
Investment-Grade Tenants
 
41.2
%
 
Flat leases
 
21.6
%
 
NNN leases
 
62.2
%
 



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 28

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Top 10 Concentrations: Real Estate Portfolio
(unaudited, square feet and dollars in thousands)
 
Tenant Concentration
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
 
Investment Rating
Red Lobster
 
31

 
2,510

 
2.7
%
 
$
96,719

 
8.2
%
 
B-
Walgreens
 
109

 
1,581

 
1.7
%
 
39,431

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.7
%
 
38,247

 
3.3
%
 
BB+
Dollar General
 
404

 
3,741

 
4.0
%
 
34,246

 
2.9
%
 
BBB
FedEx
 
48

 
3,383

 
3.6
%
 
32,729

 
2.8
%
 
BBB
CVS
 
97

 
1,378

 
1.5
%
 
31,157

 
2.7
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.1
%
 
23,633

 
2.0
%
 
B+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,686

 
1.8
%
 
A-
BJ's Wholesale Club
 
3

 
2,223

 
2.4
%
 
19,585

 
1.7
%
 
B-
AON
 
8

 
1,203

 
1.3
%
 
18,154

 
1.4
%
 
A-
Total
 
1,100

 
22,270

 
23.9
%
 
$
354,587

 
30.2
%
 
 
Tenant Industry Concentration
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Restaurants - Casual Dining
 
363

 
5,173

 
5.6
%
 
$
183,262

 
15.6
%
Manufacturing
 
62

 
18,181

 
19.5
%
 
118,902

 
10.1
%
Restaurants - Quick Service
 
850

 
3,399

 
3.6
%
 
100,300

 
8.5
%
Retail - Discount
 
623

 
10,109

 
10.8
%
 
91,193

 
7.8
%
Retail - Pharmacy
 
246

 
3,666

 
3.9
%
 
84,341

 
7.2
%
Finance
 
299

 
2,905

 
3.1
%
 
63,959

 
5.4
%
Professional Services
 
70

 
4,123

 
4.4
%
 
57,913

 
4.9
%
Retail - Grocery & Supermarket
 
83

 
5,445

 
5.8
%
 
57,092

 
4.9
%
Retail - Home & Garden
 
101

 
7,191

 
7.7
%
 
51,708

 
4.4
%
Logistics
 
52

 
4,204

 
4.5
%
 
40,259

 
3.4
%
Total
 
2,749

 
64,396

 
68.9
%
 
$
848,929

 
72.2
%
Geographic Concentration
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Texas
 
567

 
11,208

 
12.0
%
 
$
158,951

 
13.5
%
Illinois
 
168

 
5,225

 
5.6
%
 
72,645

 
6.2
%
Florida
 
259

 
4,903

 
5.3
%
 
66,065

 
5.6
%
Pennsylvania
 
161

 
5,526

 
5.9
%
 
56,190

 
4.8
%
California
 
78

 
4,072

 
4.4
%
 
54,425

 
4.6
%
Ohio
 
279

 
5,673

 
6.1
%
 
53,783

 
4.6
%
Georgia
 
194

 
3,868

 
4.1
%
 
45,742

 
3.9
%
Indiana
 
136

 
4,835

 
5.2
%
 
41,140

 
3.5
%
North Carolina
 
168

 
3,655

 
3.9
%
 
37,786

 
3.2
%
Michigan
 
180

 
2,465

 
2.6
%
 
36,611

 
3.1
%
Total
 
2,190

 
51,430

 
55.1
%
 
$
623,338

 
53.0
%


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 29

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


Metropolitan Statistical Area (MSA) Concentration
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Chicago, IL
 
108

 
4,731

 
5.1
%
 
$
63,706

 
5.4
%
Dallas, TX
 
114

 
3,801

 
4.1
%
 
56,849

 
4.8
%
Houston, TX
 
92

 
2,606

 
2.8
%
 
30,084

 
2.6
%
Atlanta, GA
 
92

 
2,779

 
3.0
%
 
28,922

 
2.5
%
Philadelphia, PA
 
50

 
2,007

 
2.2
%
 
27,935

 
2.4
%
New York, NY
 
25

 
1,132

 
1.2
%
 
25,575

 
2.2
%
Boston, MA
 
28

 
1,819

 
2.0
%
 
24,980

 
2.1
%
Phoenix, AZ
 
46

 
1,133

 
1.2
%
 
21,748

 
1.9
%
Washington, DC
 
26

 
632

 
0.7
%
 
18,207

 
1.6
%
Detroit, MI
 
74

 
681

 
0.7
%
 
16,084

 
1.4
%
Total
 
655

 
21,321

 
23.0
%
 
$
314,090

 
26.9
%



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 30

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Tenants Comprising Over 1% of Annualized Rental Income
(unaudited, square feet and dollars in thousands)
 
Tenant
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
 
Investment Rating
Red Lobster
 
31

 
2,510

 
2.7
%
 
$
96,719

 
8.2
%
 
B-
Walgreens
 
109

 
1,581

 
1.7
%
 
39,431

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.7
%
 
38,247

 
3.3
%
 
BB+
Dollar General
 
404

 
3,741

 
4.0
%
 
34,246

 
2.9
%
 
BBB
FedEx
 
48

 
3,383

 
3.6
%
 
32,729

 
2.8
%
 
BBB
CVS
 
97

 
1,378

 
1.5
%
 
31,157

 
2.7
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.1
%
 
23,633

 
2.0
%
 
B+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,686

 
1.8
%
 
A-
BJ's Wholesale Club
 
3

 
2,223

 
2.4
%
 
19,585

 
1.7
%
 
B-
AON
 
8

 
1,203

 
1.3
%
 
18,154

 
1.5
%
 
A-
Petsmart
 
12

 
858

 
0.9
%
 
17,619

 
1.5
%
 
B+
Goodyear
 
10

 
4,728

 
5.1
%
 
16,550

 
1.4
%
 
BB
L.A. Fitness
 
19

 
826

 
0.9
%
 
15,991

 
1.4
%
 
B+
Tractor Supply
 
58

 
1,213

 
1.3
%
 
15,709

 
1.3
%
 
NR
Amazon
 
3

 
3,048

 
3.3
%
 
14,159

 
1.2
%
 
AA-
General Service Administration
 
18

 
719

 
0.8
%
 
12,668

 
1.1
%
 
AA+
Advance Auto Parts
 
106

 
736

 
0.8
%
 
12,099

 
1.0
%
 
BBB-
Total
 
1,326

 
34,398

 
37.0
%
 
$
459,382

 
39.2
%
 
 


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 31

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Diversification: Tenant Industry
(unaudited, square feet and dollars in thousands)
 
Industry
 
Number of Leases
 
Leased Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Administration & Support Services
 
5

 
430

 
0.5
%
 
$
4,054

 
0.3
%
Agricultural
 
2

 
138

 
0.1
%
 
1,245

 
0.1
%
Education
 
5

 
219

 
0.2
%
 
2,152

 
0.2
%
Entertainment & Recreation
 
22

 
916

 
1.0
%
 
17,981

 
1.5
%
Finance
 
299

 
2,905

 
3.1
%
 
63,959

 
5.4
%
Government & Public Services
 
26

 
978

 
1.0
%
 
20,105

 
1.7
%
Healthcare
 
11

 
1,167

 
1.3
%
 
17,607

 
1.5
%
Information & Communication
 
12

 
508

 
0.5
%
 
7,748

 
0.7
%
Insurance
 
15

 
1,625

 
1.8
%
 
30,055

 
2.6
%
Logistics
 
52

 
4,204

 
4.5
%
 
40,259

 
3.4
%
Manufacturing
 
62

 
18,181

 
19.5
%
 
118,902

 
10.1
%
Mining & Natural Resources
 
4

 
703

 
0.8
%
 
14,200

 
1.2
%
Other Services
 
30

 
5,217

 
5.6
%
 
18,982

 
1.6
%
Professional Services
 
70

 
4,123

 
4.4
%
 
57,913

 
4.9
%
Real Estate
 
5

 
63

 
0.1
%
 
978

 
0.1
%
Rental
 
11

 
719

 
0.8
%
 
6,784

 
0.6
%
Restaurants - Casual Dining
 
363

 
5,173

 
5.5
%
 
183,262

 
15.6
%
Restaurants - Quick Service
 
850

 
3,399

 
3.6
%
 
100,300

 
8.5
%
Retail - Apparel & Jewelry
 
14

 
1,401

 
1.5
%
 
15,268

 
1.3
%
Retail - Department Stores
 
13

 
965

 
1.0
%
 
8,010

 
0.7
%
Retail - Discount
 
623

 
10,109

 
10.8
%
 
91,193

 
7.8
%
Retail - Electronics & Appliances
 
22

 
676

 
0.7
%
 
9,202

 
0.8
%
Retail - Gas & Convenience
 
127

 
527

 
0.6
%
 
27,404

 
2.3
%
Retail - Grocery & Supermarket
 
83

 
5,445

 
5.8
%
 
57,092

 
4.9
%
Retail - Hobby, Books & Music
 
9

 
340

 
0.4
%
 
2,978

 
0.3
%
Retail - Home & Garden
 
101

 
7,191

 
7.7
%
 
51,708

 
4.4
%
Retail - Home Furnishings
 
39

 
453

 
0.5
%
 
7,560

 
0.6
%
Retail - Internet
 
3

 
3,048

 
3.3
%
 
14,159

 
1.2
%
Retail - Medical Services
 
64

 
471

 
0.5
%
 
11,238

 
1.0
%
Retail - Motor Vehicle
 
166

 
1,190

 
1.3
%
 
21,994

 
1.9
%
Retail - Office Supply
 
4

 
76

 
0.1
%
 
1,155

 
0.1
%
Retail - Pet Supply
 
15

 
903

 
1.0
%
 
18,453

 
1.6
%
Retail - Pharmacy
 
246

 
3,666

 
3.9
%
 
84,341

 
7.2
%
Retail - Specialty (Other)
 
23

 
561

 
0.6
%
 
6,162

 
0.5
%
Retail - Sporting Goods
 
21

 
1,249

 
1.4
%
 
14,903

 
1.3
%
Retail - Warehouse Clubs
 
7

 
2,631

 
2.8
%
 
22,699

 
1.9
%
Other
 
17

 
110

 
0.1
%
 
1,778

 
0.2
%
Total
 
3,441

 
91,680

 
98.3
%
 
$
1,173,783

 
100.0
%


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 32

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic
(unaudited, square feet and dollars in thousands)
 


Location
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
United States
 
 
 
 
 
 
 
 
 
 
Alabama
 
146

 
1,580

 
1.7
%
 
$
23,524

 
2.0
%
Alaska
 
3

 
25

 
—
%
 
774

 
0.1
%
Arizona
 
74

 
1,832

 
2.0
%
 
31,687

 
2.7
%
Arkansas
 
96

 
1,004

 
1.1
%
 
12,562

 
1.1
%
California
 
78

 
4,072

 
4.4
%
 
54,425

 
4.6
%
Colorado
 
48

 
1,734

 
1.8
%
 
25,490

 
2.2
%
Connecticut
 
18

 
89

 
0.1
%
 
2,496

 
0.2
%
Delaware
 
11

 
92

 
0.1
%
 
2,025

 
0.2
%
Florida
 
259

 
4,903

 
5.3
%
 
66,065

 
5.6
%
Georgia
 
194

 
3,868

 
4.2
%
 
45,742

 
3.9
%
Idaho
 
17

 
135

 
0.1
%
 
3,361

 
0.3
%
Illinois
 
168

 
5,225

 
5.6
%
 
72,645

 
6.2
%
Indiana
 
136

 
4,835

 
5.2
%
 
41,140

 
3.5
%
Iowa
 
51

 
1,476

 
1.6
%
 
13,497

 
1.1
%
Kansas
 
42

 
2,149

 
2.3
%
 
10,426

 
0.9
%
Kentucky
 
81

 
2,306

 
2.5
%
 
24,385

 
2.1
%
Louisiana
 
96

 
1,617

 
1.7
%
 
21,564

 
1.8
%
Maine
 
25

 
648

 
0.7
%
 
8,562

 
0.7
%
Maryland
 
29

 
616

 
0.6
%
 
14,790

 
1.3
%
Massachusetts
 
39

 
2,579

 
2.8
%
 
30,244

 
2.6
%
Michigan
 
180

 
2,465

 
2.6
%
 
36,611

 
3.1
%
Minnesota
 
41

 
505

 
0.5
%
 
7,158

 
0.6
%
Mississippi
 
76

 
1,833

 
2.0
%
 
14,841

 
1.2
%
Missouri
 
159

 
1,824

 
2.0
%
 
24,567

 
2.1
%
Montana
 
10

 
124

 
0.1
%
 
2,129

 
0.2
%
Nebraska
 
21

 
759

 
0.8
%
 
11,355

 
1.0
%
Nevada
 
28

 
717

 
0.8
%
 
8,240

 
0.7
%
New Hampshire
 
20

 
254

 
0.3
%
 
4,429

 
0.4
%
New Jersey
 
35

 
1,668

 
1.8
%
 
36,155

 
3.1
%
New Mexico
 
50

 
937

 
1.0
%
 
12,954

 
1.1
%
New York
 
83

 
1,529

 
1.6
%
 
28,361

 
2.4
%
North Carolina
 
168

 
3,655

 
3.9
%
 
37,786

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,277

 
0.4
%
Ohio
 
279

 
5,673

 
6.1
%
 
53,783

 
4.6
%
Oklahoma
 
79

 
2,057

 
2.2
%
 
24,933

 
2.1
%
Oregon
 
14

 
300

 
0.3
%
 
4,912

 
0.4
%
Pennsylvania
 
161

 
5,526

 
5.9
%
 
56,190

 
4.8
%
Rhode Island
 
14

 
215

 
0.2
%
 
3,226

 
0.3
%
South Carolina
 
118

 
3,342

 
3.6
%
 
29,203

 
2.5
%
South Dakota
 
12

 
180

 
0.2
%
 
2,169

 
0.2
%
Tennessee
 
111

 
3,386

 
3.6
%
 
29,529

 
2.4
%
Texas
 
567

 
11,208

 
12.0
%
 
158,951

 
13.5
%
Utah
 
8

 
91

 
0.1
%
 
1,639

 
0.1
%
Vermont
 
7

 
23

 
—
%
 
472

 
—
%
Virginia
 
106

 
1,820

 
2.0
%
 
31,585

 
2.7
%
Washington
 
23

 
459

 
0.5
%
 
9,247

 
0.8
%
West Virginia
 
38

 
237

 
0.3
%
 
5,678

 
0.5
%

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 33

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic (cont.)
(unaudited, square feet and dollars in thousands)

 

Location
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Wisconsin
 
80

 
1,195

 
1.3
%
 
16,337

 
1.4
%
Wyoming
 
9

 
58

 
0.1
%
 
1,552

 
0.1
%
Territories
 
 
 
 
 
 
 
 
 
 
Puerto Rico
 
3

 
88

 
0.1
%
 
2,335

 
0.2
%
Canadian Provinces
 
 
 
 
 
 
 
 
 
 
Alberta
 
4

 
32

 
—
%
 
1,912

 
0.2
%
Manitoba
 
2

 
16

 
—
%
 
827

 
0.1
%
Ontario
 
11

 
78

 
0.1
%
 
4,208

 
0.4
%
Saskatchewan
 
2

 
17

 
—
%
 
828

 
0.1
%
Total
 
4,142

 
93,257

 
100.0
%
 
$
1,173,783

 
100.0
%
Percentages based on annualized rental income.



Number of Properties by Region
usmapregionaldiversity123116.jpg

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 34

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
2017
 
126

 
1,973

 
2.1
%
 
$
27,663

 
2.4
%
2018
 
213

 
3,368

 
3.6
%
 
37,029

 
3.1
%
2019
 
184

 
3,242

 
3.5
%
 
55,142

 
4.7
%
2020
 
231

 
4,203

 
4.6
%
 
46,299

 
3.9
%
2021
 
194

 
11,046

 
11.8
%
 
87,378

 
7.4
%
2022
 
276

 
9,638

 
10.4
%
 
84,589

 
7.3
%
2023
 
212

 
5,935

 
6.3
%
 
72,330

 
6.2
%
2024
 
177

 
9,158

 
9.9
%
 
106,982

 
9.1
%
2025
 
266

 
4,233

 
4.5
%
 
61,111

 
5.2
%
2026
 
247

 
7,832

 
8.4
%
 
82,723

 
7.1
%
Thereafter
 
1,315

 
31,052

 
33.2
%
 
512,537

 
43.6
%
Total
 
3,441

 
91,680

 
98.3
%
 
$
1,173,783

 
100.0
%

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 35

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
Retail
 
65

 
359

 
0.4
%
 
$
7,768

 
0.7
%
Restaurant
 
38

 
391

 
0.4
%
 
4,642

 
0.4
%
Industrial & distribution
 
5

 
391

 
0.4
%
 
2,008

 
0.2
%
Office
 
17

 
832

 
0.9
%
 
13,230

 
1.1
%
Other(1)
 
1

 
—

 
—
%
 
15

 
—
%
Total 2017
 
126

 
1,973

 
2.1
%
 
$
27,663

 
2.4
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Retail
 
105

 
1,244

 
1.3
%
 
$
18,015

 
1.5
%
Restaurant
 
87

 
327

 
0.4
%
 
7,636

 
0.7
%
Industrial & distribution
 
11

 
1,576

 
1.7
%
 
6,337

 
0.5
%
Office
 
8

 
221

 
0.2
%
 
5,023

 
0.4
%
Other(1)
 
2

 
—

 
—
%
 
18

 
—
%
Total 2018
 
213

 
3,368

 
3.6
%
 
$
37,029

 
3.1
%
 
 
 
 
 
 
 
 
 
 
 
2019
 


 


 


 


 


Retail
 
88

 
1,597

 
1.7
%
 
$
19,872

 
1.7
%
Restaurant
 
75

 
310

 
0.3
%
 
7,201

 
0.6
%
Industrial & distribution
 
3

 
137

 
0.2
%
 
1,275

 
0.1
%
Office
 
18

 
1,198

 
1.3
%
 
26,794

 
2.3
%
Total 2019
 
184

 
3,242

 
3.5
%
 
$
55,142

 
4.7
%
 
 
 
 
 
 
 
 
 
 
 
2020
 


 


 


 


 


Retail
 
100

 
1,219

 
1.3
%
 
$
15,801

 
1.4
%
Restaurant
 
105

 
429

 
0.5
%
 
8,695

 
0.7
%
Industrial & distribution
 
8

 
1,352

 
1.5
%
 
5,222

 
0.4
%
Office
 
17

 
1,203

 
1.3
%
 
16,580

 
1.4
%
Other(1)
 
1

 
—

 
—
%
 
1

 
—
%
Total 2020
 
231

 
4,203

 
4.6
%
 
$
46,299

 
3.9
%
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Retail
 
86

 
1,431

 
1.5
%
 
22,086

 
1.9
%
Restaurant
 
68

 
354

 
0.4
%
 
9,129

 
0.8
%
Industrial & distribution
 
15

 
7,498

 
8.0
%
 
26,513

 
2.2
%
Office
 
24

 
1,763

 
1.9
%
 
29,627

 
2.5
%
Other(1)
 
1

 
—

 
—
%
 
23

 
—
%
Total 2021
 
194

 
11,046

 
11.8
%
 
$
87,378

 
7.4
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Retail
 
184

 
2,343

 
2.5
%
 
$
31,890

 
2.7
%
Restaurant
 
50

 
257

 
0.3
%
 
$
6,426

 
0.6
%
Industrial & distribution
 
25

 
5,478

 
5.9
%
 
$
19,791

 
1.7
%
Office
 
15

 
1,560

 
1.7
%
 
26,394

 
2.3
%
Other(1)
 
2

 
—

 
—
%
 
88

 
—
%
Total 2022
 
276

 
9,638

 
10.4
%
 
$
84,589

 
7.3
%
(1)
Includes billboards, land and parking lots.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 36

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
2023
 
 
 
 
 
 
 
 
 
 
Retail
 
143

 
2,068

 
2.2
%
 
$
27,771

 
2.4
%
Restaurant
 
46

 
205

 
0.2
%
 
4,940

 
0.4
%
Industrial & distribution
 
14

 
2,465

 
2.6
%
 
16,180

 
1.4
%
Office
 
9

 
1,197

 
1.3
%
 
23,439

 
2.0
%
Total 2023
 
212

 
5,935

 
6.3
%
 
$
72,330

 
6.2
%
 
 
 
 
 
 
 
 
 
 
 
2024
 
 
 
 
 
 
 
 
 
 
Retail
 
101

 
2,213

 
2.4
%
 
$
29,819

 
2.5
%
Restaurant
 
48

 
249

 
0.3
%
 
6,614

 
0.6
%
Industrial & distribution
 
11

 
3,458

 
3.7
%
 
15,018

 
1.3
%
Office
 
16

 
3,238

 
3.5
%
 
55,492

 
4.7
%
Other(1)
 
1

 
—

 
—
%
 
39

 
—
%
Total 2024
 
177

 
9,158

 
9.9
%
 
$
106,982

 
9.1
%
 
 
 
 
 
 
 
 
 
 
 
2025
 
 
 
 
 
 
 
 
 
 
Retail
 
187

 
1,809

 
1.9
%
 
$
32,035

 
2.7
%
Restaurant
 
63

 
271

 
0.3
%
 
8,001

 
0.7
%
Industrial & distribution
 
11

 
1,663

 
1.8
%
 
13,433

 
1.1
%
Office
 
5

 
490

 
0.5
%
 
7,642

 
0.7
%
Total 2025
 
266

 
4,233

 
4.5
%
 
$
61,111

 
5.2
%
 
 
 
 
 
 
 
 
 
 
 
2026
 
 
 
 
 
 
 
 
 
 
Retail
 
88

 
1,962

 
2.1
%
 
$
21,755

 
1.9
%
Restaurant
 
134

 
591

 
0.6
%
 
21,543

 
1.8
%
Industrial & distribution
 
16

 
4,489

 
4.8
%
 
23,231

 
2.0
%
Office
 
9

 
790

 
0.9
%
 
16,194

 
1.4
%
Total 2026
 
247

 
7,832

 
8.4
%
 
$
82,723

 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
 
 
 
 
 
 
Retail
 
814

 
15,767

 
16.8
%
 
$
226,996

 
19.3
%
Restaurant
 
451

 
5,030

 
5.4
%
 
195,394

 
16.6
%
Industrial & distribution
 
30

 
8,371

 
9.0
%
 
53,753

 
4.6
%
Office
 
18

 
1,884

 
2.0
%
 
35,979

 
3.1
%
Other(1)
 
2

 
—

 
—
%
 
415

 
—
%
Total Thereafter
 
1,315

 
31,052

 
33.2
%
 
$
512,537

 
43.6
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining Lease Expirations
 
3,441

 
91,680

 
98.3
%
 
$
1,173,783

 
100.0
%
 
(1)
Includes billboards, land and parking lots.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 37

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Lease Summary
(unaudited)
 
Rent Escalations
(square feet and dollars in thousands)
 
 
Number of Leases
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Fixed dollar or percent increase
 
2,122

 
60,022

 
64.4
%
 
$
814,501

 
69.4
%
CPI
 
237

 
7,011

 
7.5
%
 
105,691

 
9.0
%
Flat
 
1,082

 
24,647

 
26.4
%
 
253,591

 
21.6
%
Total
 
3,441


91,680


98.3
%

$
1,173,783


100.0
%

vereitexhibi_chart-45808.jpg

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 38

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Lease Summary (cont.)
(unaudited)
 
Tenant Expense Obligation
(square feet and dollars in thousands)
 
 
Number of Leases
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
NNN
 
2,466

 
54,534

 
58.5
%
 
$
730,447

 
62.2
%
NN
 
927

 
35,553

 
38.1
%
 
405,626

 
34.6
%
Other (1)
 
48

 
1,593

 
1.7
%
 
37,710

 
3.2
%
Total
 
3,441


91,680

 
98.3
%
 
$
1,173,783

 
100.0
%
___________________________________
(1)
Includes gross, modified gross, and billboard.
 
vereitexhibi_chart-50245.jpg

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 39

 
vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION


 
Property Type Diversification and Occupancy Costs
(unaudited, square feet and dollars in thousands)
 
Property Type Diversification
Property Type
 
Number of Properties (1)
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Retail  (2)
 
2,085

 
32,108

 
34.4
%
 
$
453,808

 
38.7
%
Restaurant
 
1,793

 
8,871

 
9.5
%
 
280,221

 
23.9
%
Industrial and distribution
 
152

 
37,343

 
40.1
%
 
182,761

 
15.6
%
Office
 
100

 
14,935

 
16.0
%
 
256,394

 
21.8
%
Other (3)
 
12

 
—

 
—
%
 
599

 
—
%
Total
 
4,142


93,257


100.0
%

$
1,173,783


100.0
%
___________________________________
(1) During the quarter ended December 31, 2016, 56 medical services properties were reclassified from office to retail.
(2) Includes 10 anchored shopping centers, representing 1.7% of Annualized Rental Income.
(3) Includes billboard, construction in progress, land and parking lots.


Occupancy Costs
The following tables show occupancy costs for retail and restaurant properties calculated as rent per the lease terms, divided by property level sales for the year ended December 31, 2015.
Retail
 
Number of Properties (1)
 
2015 Occupancy Cost
 
Target Percentage
Discount
 
268

 
6.8
%
 
6.0 - 8.0%
Grocery & Supermarket
 
38

 
2.7
%
 
2.0 - 4.0%
Home & Garden
 
3

 
2.1
%
 
2.0 - 4.0%
Motor Vehicle
 
53

 
8.6
%
 
8.0 - 10.0%
Pharmacy
 
106

 
5.3
%
 
4.0 - 6.0%
Other
 
44

 
3.9
%
 
N/A

Restaurant
 
Number of Properties (1)
 
2015 Occupancy Cost
 
Target Percentage
Casual Dining
 
516

 
6.5
%
 
6.75 - 8.0%
Quick Service
 
516

 
7.3
%
 
7.5 - 8.5%

__________________________________
(1)
Property level sales data was collected for 67.9% of retail and restaurant properties required to provide sales reports, representing 40.0% of retail and restaurant properties owned for the entirety of the previous calendar year (percentages based on property count).


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 40

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Retail
(unaudited, percentages based on Annualized Rental Income of the retail properties)
 


vereitexhibi_chart-45822.jpg____________________________________________________
vereitexhibi_chart-47005.jpg______________________________________________________
vereitexhibi_chart-48317.jpg
 
vereitexhibi_chart-49546.jpg_________________________________________________
vereitexhibi_chart-50665.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of retail properties
 
2,085

 
Rentable square feet
 
32,108

 
Economic occupancy rate
 
99.7
%
 
Weighted-average remaining lease term
 
9.7

 
Investment grade tenants
 
47.4
%
 
Flat leases
 
35.8
%
 
NNN leases
 
65.9
%
 



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 41

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


vereitexhibi_chart-45465.jpg
____________________________________________________
vereitexhibi_chart-46378.jpg______________________________________________________
vereitexhibi_chart-47522.jpg
 
vereitexhibi_chart-48799.jpg
_________________________________________________
vereitexhibi_chart-49742.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of restaurant properties
 
1,793

 
Rentable square feet
 
8,871

 
Economic occupancy rate
 
94.9
%
 
Weighted-average remaining lease term
 
14.0

 
Investment grade tenants
 
3.0
%
 
Flat leases
 
8.2
%
 
NNN leases
 
99.4
%
 


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 42

vereitlogoa12.jpg
 
 
Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Industrial and Distribution
(unaudited, percentages based on Annualized Rental Income of the industrial & distribution properties)

 


vereitexhibi_chart-45587.jpg____________________________________________________
vereitexhibi_chart-46795.jpg______________________________________________________
vereitexhibi_chart-47778.jpg
 
vereitexhibi_chart-48836.jpg_________________________________________________
vereitexhibi_chart-49837.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of industrial and distribution properties
 
152

 
Rentable square feet
 
37,343

 
Economic occupancy rate
 
98.8
%
 
Weighted-average remaining lease term
 
8.6

 
Investment grade tenants
 
55.9
%
 
Flat leases
 
23.7
%
 
NNN leases
 
52.1
%
 


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 43

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Q4 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Office
(unaudited, percentages based on Annualized Rental Income of the office properties)

 


vereitexhibi_chart-45698.jpg____________________________________________________
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Statistics
(square feet in thousands)
 
 
 
 
Number of office properties
 
100

 
Rentable square feet
 
14,935

 
Economic occupancy rate
 
96.3
%
 
Weighted-average remaining lease term
 
6.5

 
Investment grade tenants
 
61.5
%
 
Flat leases
 
9.7
%
 
NNN leases
 
22.3
%
 


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 44

 
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Q4 2016 SUPPLEMENTAL INFORMATION


 
Unconsolidated Joint Venture Investment Summary
(unaudited, square feet and dollars in thousands)
 
The following table shows certain information regarding the Company's interests in unconsolidated joint ventures as of December 31, 2016:
 Joint Venture
 
 Partner
 
Ownership % (1)
 
Pro rata Share of Purchase Price
 
 Rentable Square Feet (2)
 
 Annualized Rental Income (2)
 
 Debt (2) (3)
 
 Major Tenants
Cole/Mosaic JV South Elgin IL, LLC
 
Affiliate of Mosaic Properties and Development, LLC
 
50%
 
$
17,000

 
232

 
$
3,027

 
$
20,400

 
Home Depot, Best Buy
Cole/Faison JV Bethlehem GA, LLC
 
Faison-Winder Investors, LLC
 
90%
 
33,429

 
280

 
3,269

 
—

 
Publix, Belk
Total
 
 
 
$
50,429

 
512


6,296


20,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
4,455

 
$
10,200

 
 
___________________________________
(1)
The Company's ownership interest reflects its legal ownership interest. Legal ownership may, at times, not equal the Company's economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company's actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.
(2)
Represents information for the total unconsolidated joint venture.
(3)
Represents a secured loan with a fixed interest rate of 5.20% and a maturity date of July 2021.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 45


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See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 46


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Offering-related fees and reimbursements
 
$
3,683

 
$
9,545

 
$
10,914

 
$
12,391

 
$
9,927

 Transaction service fees and reimbursements
 
2,320

 
3,779

 
4,476

 
2,384

 
5,413

 Management fees and reimbursements
 
18,585

 
17,745

 
17,096

 
16,458

 
17,973

Total Cole Capital revenues
 
24,588


31,069

 
32,486

 
31,233

 
33,313

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
2,234

 
5,897

 
6,975

 
8,068

 
6,558

 Acquisition related
 
25

 
—

 
14

 
25

 
61

 General and administrative
 
31,086

 
17,692

 
19,393

 
17,172

 
32,514

 Depreciation and amortization
 
9,170

 
7,276

 
7,109

 
8,317

 
5,006

 Impairment of intangible assets
 
120,931

 
—

 
—

 
—

 
213,339

 Total operating expenses
 
163,446

 
30,865

 
33,491

 
33,582

 
257,478

Operating (loss) income
 
(138,858
)
 
204

 
(1,005
)
 
(2,349
)
 
(224,165
)
Total other income, net
 
157

 
95

 
—

 
494

 
410

(Loss) income before taxes
 
(138,701
)

299

 
(1,005
)
 
(1,855
)
 
(223,755
)
Benefit from (provision for) income taxes
 
6,490

 
(59
)
 
2,071

 
1,309

 
37,485

Net (loss) income
 
$
(132,211
)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 47


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Q4 2016 SUPPLEMENTAL INFORMATION

 
FFO and AFFO - Cole Capital
(unaudited, in thousands, except share and per share data)
 

 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Net (loss) income
 
$
(132,211
)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
FFO attributable to common stockholders and limited partners
 
(132,211
)
 
240

 
1,066

 
(546
)
 
(186,270
)
 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
25

 
—

 
14

 
25

 
61

Impairment of intangible assets
 
120,931

 
—

 
—

 
—

 
213,339

Amortization of management contracts
 
6,240

 
6,240

 
6,240

 
7,451

 
3,373

Deferred tax (benefit) expense (1)
 
(9,203
)
 
6,941

 
(6,417
)
 
(1,457
)
 
(38,695
)
Equity-based compensation expense
 
2,108

 
1,387

 
854

 
931

 
2,471

Other amortization and non-cash charges
 
2,873

 
929

 
751

 
743

 
1,539

AFFO attributable to common stockholders and limited partners
 
$
(9,237
)
 
$
15,737

 
$
2,508

 
$
7,147

 
$
(4,182
)
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
973,681,227

 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

Effect of Limited Partner OP Units and dilutive securities (2)
 
24,319,992

 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

Weighted-average shares outstanding - diluted (3)
 
998,001,219

 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share 
 
$
(0.132
)
 
$
0.000

 
$
0.001

 
$
(0.001
)
 
$
(0.200
)
AFFO attributable to common stockholders and limited partners per diluted share
 
$
(0.009
)
 
$
0.016

 
$
0.003

 
$
0.008

 
$
(0.004
)
___________________________________
(1)
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
(2)
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
(3)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 48


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Q4 2016 SUPPLEMENTAL INFORMATION

 
EBITDA and Normalized EBITDA - Cole Capital
(unaudited, in thousands)

 
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Net (loss) income
 
$
(132,211
)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
9,170

 
7,276

 
7,109

 
8,317

 
5,006

(Benefit from) provision for income taxes
 
(6,490
)
 
59

 
(2,071
)
 
(1,309
)
 
(37,485
)
 EBITDA
 
$
(129,531
)
 
$
7,575

 
$
6,104

 
$
6,462

 
$
(218,749
)
Impairment of intangible assets
 
120,931

 
—

 
—

 
—

 
213,339

Acquisition related expenses
 
25

 
—

 
14

 
25

 
61

Program development costs write-off
 
11,054

 
845

 
2,377

 
—

 
11,295

Other amortization and non-cash charges
 
(57
)
 
(107
)
 
(118
)
 
(123
)
 
(94
)
Normalized EBITDA
 
$
2,422

 
$
8,313

 
$
8,377

 
$
6,364

 
$
5,852


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 49


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Net G&A
(unaudited, dollars in thousands)

 
In its capacity as advisor to the Cole REITs, Cole Capital incurs certain costs on behalf of the Cole REITs, which are reimbursable. In accordance with GAAP, the Company records these costs as general and administrative expenses and the reimbursements as revenue in the same period. The following table presents the Cole Capital segment revenue and general and administrative expenses, each net of reimbursements from the Cole REITs.
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Cole Capital revenue, net of reallowed fees and commissions
 
$
22,354

 
$
25,172

 
$
25,511

 
$
23,165

 
$
26,755

Less: Expense reimbursements from Cole REITs recorded as revenue
 
6,395

 
7,416

 
7,342

 
7,515

 
8,094

Net Cole Capital Revenue
 
15,959


17,756

 
18,169

 
15,650

 
18,661

Other income
 
157

 
95

 
—

 
494

 
410

Net Cole Capital Revenue and other income
 
$
16,116


$
17,851

 
$
18,169

 
$
16,144

 
$
19,071

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
44,353

 
$
29,761

 
$
33,094

 
$
29,400

 
$
49,160

Less: REI segment general and administrative expenses
 
13,267

 
12,069

 
13,701

 
12,228

 
16,646

Cole Capital general and administrative expenses
 
31,086


17,692

 
19,393

 
17,172

 
32,514

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Cole REITs
 
6,395

 
7,416

 
7,342

 
7,515

 
8,094

Net Cole Capital G&A expense
 
24,691


10,276

 
12,051

 
9,657

 
24,420

Expenses incurred recorded as program development costs
 
(8,268
)
 
2,452

 
973

 
3,433

 
(5,840
)
Normalized Net Cole Capital G&A expense
 
$
16,423


$
12,728

 
$
13,024

 
$
13,090

 
$
18,580

 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Margin
 
15.0
%

46.6
%
 
46.1
%
 
39.4
%
 
30.7
%
Normalized Net Cole Capital G&A expense as percent of Net Cole Capital Revenue and other income
 
101.9
%

71.3
%
 
71.7
%
 
81.1
%
 
97.4
%


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 50


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Program Development Costs
(unaudited, in thousands)
 
Cole Capital pays for organization, registration and offering expenses associated with the sale of common stock of the Cole REITs. The reimbursement of these expenses by the Cole REITs is limited to a certain percentage of the proceeds raised from their offerings, in accordance with their respective advisory agreements and charters. Such expenses paid by the Company on behalf of the Cole REITs in excess of these limits that are expected to be collected as the Cole REITs raise additional funds are recorded as program development costs, which are included in rent and tenant receivables and other assets, net on the balance sheet. The Company assesses the collectability of the program development costs, considering the offering period and historical and forecasted sales of shares under the Cole REITs' respective offerings, and reserves for any balances considered not collectible.
The following table presents a rollforward of the program development costs balance:
 
 
Program Development Costs(1) for the Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
Beginning Balance
 
$
12,268

 
$
12,115

 
$
13,578

 
$
12,855

 
$
20,878

 
Expenses incurred
 
4,618

 
7,010

 
6,993

 
6,474

 
8,802

 
Offering-related reimbursement revenue
 
(839
)
 
(2,299
)
 
(2,436
)
 
(2,710
)
 
(2,183
)
 
Reserve for uncollectible amounts and write-offs(2)
 
(12,886
)
 
(4,558
)
 
(6,020
)
 
(3,041
)
 
(14,642
)
 
Ending Balance
 
$
3,161


$
12,268

 
$
12,115

 
$
13,578

 
$
12,855

 
___________________________________
(1)
Excludes INAV (as defined in the "Program Summary" of the Cole REITs and Other Real Estate Programs section), as expenses are recorded as incurred and revenue is recorded when reimbursement is received.
(2)
The Company assesses the collectability of the program development costs and records monthly reserves for the portion that is not expected to be collected. Certain triggering events, such as impairment evaluations of the Cole Capital segment and the closing of a Cole REIT's offering, may result in a write-off of additional program development costs. Reserves for uncollectible amounts and write-offs are recorded as a general and administrative expense in the respective period.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 51


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs
(unaudited, dollars in thousands)
 
Program Summary
The following table shows the Cole REITs and other real estate programs' cumulative activity summary information from each respective program's offering commencement date through or as of December 31, 2016:
Program
 
Capital Raised (1)
 
DRIP (2)
 
Number of Investments (3)
 
Assets Under Management
 
Debt Outstanding 
Open Programs:
 
 
 
 
 
 
 
 
 
 
Cole Credit Property Trust V, Inc. ("CCPT V")
 
$
304,874

 
$
16,768

 
116

 
$
499,188

 
$
255,350

Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
348,686

 
12,280

 
108

 
452,683

 
161,169

Cole Office & Industrial REIT (CCIT III), Inc. ("CCIT III")
 
2,935

(4) 
—

 
1

 
32,750

 
32,300

Total Open Programs
 
656,495

 
29,048

 
225

 
984,621

 
448,819

 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
Cole Office & Industrial REIT (CCIT II), Inc. ("CCIT II")
 
650,973

 
32,246

 
34

 
1,090,140

 
503,545

Cole Credit Property Trust IV, Inc. ("CCPT IV")
 
2,915,961

 
353,254

 
882

 
4,851,462

 
2,257,788

Other Programs (5)
 
—

 
—

 
30

 
339,450

 
156,752

Total Closed Programs
 
3,566,934

 
385,500

 
946

 
6,281,052

 
2,918,085

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
4,223,429

 
$
414,548

 
1,171

 
$
7,265,673

 
$
3,366,904

___________________________________
(1)
Represents gross proceeds, excluding DRIP shares issued.
(2)
Represents the value of shares issued under each respective program's distribution reinvestment plan.
(3)
Includes properties owned through consolidated and unconsolidated joint ventures.
(4)
Includes a $2.5 million investment made by VEREIT in order for CCIT III to break escrow and commence operations.
(5)
Includes tenant-in-common programs ("TIC"), Delaware statutory trust programs ("DST") and Cole Growth Opportunity Fund I, L.P. ("GOP").



See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 52


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
 
Offering Summary
The following table shows offering summary information for the Cole REITs in offering as of December 31, 2016:
Program
 
Primary
Investment
Strategy
 
Offering
Commencement
 Date
 
NAV per Share
 
Offering
 Price per Share
 
Annualized
Distribution per Share (1) 
 
CCPT V
 
 
 
 
 
 
 
 



 
A Shares
 
Retail
 
3/17/2014
 
$
24.00

(2) 
$
26.37

 
$
1.58

(4) 
T Shares
 
Retail
 
4/29/2016
 
$
24.00

(2) 
$
25.26

 
$
1.58

(4) 
 
 
 
 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
 
 
 
 
W Shares
 
Diversified
 
12/6/2011
 
$
18.15

(3) 
$
18.15

 
$
0.98

(5) 
A Shares
 
Diversified
 
10/10/2013
 
$
18.01

(3) 
$
18.71

 
$
0.98

(5) 
I Shares
 
Diversified
 
11/19/2013
 
$
18.29

(3) 
$
18.29

 
$
0.99

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
CCIT III
 
 
 
 
 
 
 
 
 
 
 
A Shares
 
Office and Industrial
 
9/22/2016
 
N/A

 
$
10.00

 
$
0.60

(4) 
T Shares
 
Office and Industrial
 
9/22/2016
 
N/A

 
$
9.57

 
$
0.60

(4) 
___________________________________
(1)
The annualized distribution does not include the effect of any fees paid monthly in arrears subsequent to the share purchase date.
(2)
Represents the estimated net asset value per share as of February 29, 2016, as determined by CCPT V's board of directors on April 8, 2016.
(3)
The NAV per share for each share class is calculated daily as of the close of business using a process that reflects (i) estimated values of each of INAV's commercial real estate assets, related liabilities and notes receivable secured by real estate provided periodically by INAV's independent valuation expert in individual appraisal reports, (ii) daily updates in the price of liquid assets for which third party market quotes are available, (iii) accruals of INAV's daily distributions and (iv) estimates of daily accruals, on a net basis, of operating revenues and expenses and debt service costs and fees.
(4)
Represents the daily distribution rate at December 31, 2016, annualized.
(5)
Represents the sum of daily distribution rates for each day in 2016.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 53


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited)

 
Fee Summary

The following table shows the summary of the fee information relating to the offering of the Cole REITs as of December 31, 2016.
Program
 
Selling
Commissions (1)
 
Dealer
Manager Fees (2)
 
Annual Distribution and Stockholder Servicing Fees (2)
 
CCPT V
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
1.0
%
(3) 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
W Shares
 
—

 
0.55
%
(4) 
—

 
A Shares
 
up to 3.75%

 
0.55
%
(4) 
0.50
%
(4) 
I Shares
 
—

 
0.25
%
(4) 
—

 
 
 
 
 
 
 
 
 
CCIT III
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
1.0
%
(3) 


The following table shows the summary of the fee information relating to transactions and portfolio management for the Cole REITs and other real estate programs as of December 31, 2016.
 
 
Transaction Fees
 
Management Fees
 
Program
 
Acquisition
Fees (5)
 
Disposition
Fees
 
Liquidation Performance Fees
 
Financing Coordination Fee
 
Asset Management / Advisory Fees
 
Performance Fees
 
Open Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
2
%
 
1
%
 
15
%
(6) 
—

 
0.65% - 0.75%

(8) 
—


INAV
 
—

 
—

 
N/A

 
—

 
0.90
%
(9) 
25
%
(10) 
CCIT III
 
2
%
 
1
%
 
15
%
(6) 
1
%
(7) 
0.65% - 0.75%

(8) 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
2
%
 
1
%
 
15
%
(6) 
—

 
0.65% - 0.75%

(8) 
—

 
CCPT IV
 
2
%
 
1
%
 
15
%
(6) 
—

 
0.65% - 0.75%

(8) 
—


Other Programs
 
Various

 
Various

 
—

 
—

 
Various

 
Various

 
___________________________________
(1)
The Company reallows 100% of selling commissions earned to participating broker-dealers.
(2)
The Company may reallow all or a portion of its dealer manager or distribution and stockholder servicing fee to participating broker-dealers as a marketing and due diligence expense reimbursement. Fees are calculated on a daily basis and payable monthly in arrears.
(3)
Fees are calculated on a daily basis in the amount of 1/365th of 1.0% of the per share NAV of the Class T shares sold in the primary portion of the respective offering. The maximum amount of the distribution and stockholder servicing fee with respect to sales of Class T shares is 4.0% of the gross offering proceeds.
(4)
Fees are calculated on a daily basis in the amount of 1/365th of the amount indicated in the table above for each class of common stock and are paid monthly in arrears.
(5)
Percent taken on gross purchase price.
(6)
Paid only under the following circumstances: (i) if shares are listed on a national securities exchange; (ii) if the respective program is sold or the assets are liquidated; or (iii) upon termination of the advisory agreement. In connection with such events, the performance fee will only be earned upon the return to investors of their net capital invested and a 6% annual cumulative, non-compounded return (8% in the case of CCIT II and CCPT IV).
(7)
Financing coordination fee payable for services in connection with the origination, assumption, or refinancing for any debt (other than loans advanced by the Company) to acquire properties or make other permitted investments.
(8)
Annualized fee based on the average monthly invested assets.
(9)
Annualized fee based on the average daily NAV.
(10)
Paid on the amount by which the total return on stockholders' capital exceeds 6% per annum on a calendar year basis.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 54


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
Program Activity Summary
The following table shows the Cole REITs and other real estate programs' activity summary information for the three months ended December 31, 2016 :
Program
 
Capital Raised (1)
 
DRIP (2)
 
Number of Investments Acquired (3)
 
Purchase Price of Acquisitions (4)
 
Number of Investments Sold
 
Sales Price of Dispositions
Open Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
$
21,765

 
$
2,280

 
—

 
$
—

 
—

 
$
—

INAV
 
45,312

 
1,880

 
12

 
99,860

 
—

 
—

CCIT III
 
435

 
—

 
—

 
—

 
—

 
—

Total Open Programs
 
67,512

 
4,160

 
12

 
99,860

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
—

 
5,554

 
2

 
53,600

 
—

 
—

CCPT IV
 
—

 
26,781

 
1

 
19,626

 
1

 
5,000

Other Programs (5)
 
—

 
—

 
—

 
—

 
5

 
25,105

Total Closed Programs
 
—

 
32,335

 
3

 
73,226

 
6

 
30,105

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
67,512

 
$
36,495

 
15

 
$
173,086

 
6

 
$
30,105

___________________________________
(1)
Represents gross proceeds, excluding DRIP shares issued.
(2)
Represents the value of shares issued under each respective program's distribution reinvestment plan.
(3)
Number of investments acquired includes properties owned through consolidated joint ventures.
(4)
Includes any GAAP adjustments, such as fair value adjustments of assumed notes payable and earn-out provisions. Purchase price of acquisitions includes pro rata share for consolidated joint ventures.
(5)
Includes TIC and DST programs and GOP.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 55


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
Revenue Summary
The following table shows revenue earned from the Cole REITs and other real estate programs for the three months ended December 31, 2016 by activity type (dollars in thousands):
Program
 
Offering-Related Fees and Reimbursements
 
Transaction Service Revenue and Reimbursements
 
Management Service Revenue and Reimbursements
 
Total Revenue and Reimbursements
Open Programs:
 
 
 
 
 
 
 
 
CCPT V
 
$
2,110

 
$
—

 
$
1,782

 
$
3,892

INAV
 
1,498

 
521

 
1,511

 
3,530

CCIT III
 
34

 
11

 
256

 
301

Gross revenue - Open Programs
 
3,642

 
532

 
3,549

 
7,723

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
2,193

 
—

 
—

 
2,193

Reimbursements
 
837

 
659

 
4,194

 
5,690

Net Cole Capital Revenue - Open Programs
 
612

 
(127
)
 
(645
)
 
(160
)
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCIT II
 
41

(1) 
1,189

 
2,747

 
3,977

CCPT IV
 
—

 
515

 
11,964

 
12,479

Other Programs
 
—

 
84

 
325

 
409

Gross revenue - Closed Programs
 
41

 
1,788

 
15,036

 
16,865

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
41

(1) 
—

 
—

 
41

Reimbursements
 
—

 
117

 
588

 
705

Net Cole Capital Revenue - Closed Programs
 
—

 
1,671

 
14,448

 
16,119

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
612

 
$
1,544

 
$
13,803

 
$
15,959

_______________________________________________
(1) Represents distribution and stockholder servicing fees. The Company reallowed 100% of such fees to participating broker-dealers.











See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 56


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
The following tables present the primary revenue drivers and Net Cole Capital Revenue earned by activity type for the Cole REITs and other real estate programs:
Offering-related fees and reimbursements
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Capital raised (excluding DRIP)
 
$
67,512

 
$
136,381

 
$
138,655

 
$
144,620

 
$
116,634

 
 
 
 
 
 
 
 
 
 
 
Securities commissions
 
1,831

 
5,008

 
6,063

 
7,041

 
5,756

Dealer manager and distribution fees
 
1,015

 
2,237

 
2,415

 
2,640

 
1,988

Reimbursement revenue
 
837

 
2,300

 
2,436

 
2,710

 
2,183

Gross offering-related revenue
 
3,683


9,545

 
10,914

 
12,391

 
9,927

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
1,831

 
5,008

 
6,063

 
7,041

 
5,756

Reallowed dealer manager and distribution fees
 
403

 
889

 
912

 
1,027

 
802

Reimbursement revenue
 
837

 
2,300

 
2,436

 
2,710

 
2,183

Net offering-related revenue
 
$
612


$
1,348

 
$
1,503

 
$
1,613

 
$
1,186


Transaction service revenue
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Purchase price of acquisitions (1)
 
$
173,086

 
$
173,869

 
$
211,178

 
$
102,075

 
$
236,398

 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
1,460

 
2,813

 
3,758

 
1,702

 
3,829

Disposition fees
 
84

 
280

 
62

 
—

 
1,013

Reimbursement revenue
 
776

 
686

 
656

 
682

 
571

Gross transaction service revenue
 
2,320


3,779

 
4,476

 
2,384

 
5,413

Less: Reimbursement revenue
 
776

 
686

 
656

 
682

 
571

Net transaction service revenue
 
$
1,544


$
3,093

 
$
3,820

 
$
1,702

 
$
4,842


Management service revenue
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Assets under management
 
$
7,265,673

 
$
7,131,400

 
$
7,005,695

 
$
6,827,885

 
$
6,740,911

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
325

 
304

 
286

 
285

 
359

Advisory and performance fee revenue
 
13,478

 
13,011

 
12,560

 
12,050

 
12,274

Reimbursement revenue
 
4,782

 
4,430

 
4,250

 
4,123

 
5,340

Gross management service revenue
 
18,585


17,745

 
17,096

 
16,458

 
17,973

Less: Reimbursement revenue
 
4,782

 
4,430

 
4,250

 
4,123

 
5,340

Net management service revenue

$
13,803


$
13,315

 
$
12,846

 
$
12,335

 
$
12,633


_______________________________________________
(1)
Purchase price of acquisitions includes any GAAP adjustments, such as fair value adjustments of assumed notes payable and earn-out provisions. Purchase price of acquisitions includes pro rata share for consolidated joint ventures.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 57


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Q4 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited)

 
The following table shows the capital raised on behalf of programs managed by Cole Capital since 2009:
vereitexhibi_chart-46272.jpg_______________________________________________
(1) Includes a $2.5 million investment made by VEREIT in order for CCIT III to break escrow and commence operations.



Source: Robert A. Stanger & Co., Inc.; Represents aggregate capital raised, excluding DRIP, on behalf of programs managed by Cole Capital.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 58



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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions
 








Annualized Rental Income is rental revenue under our leases on operating properties owned at the respective reporting date on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any bad debt allowances and any contingent rent, such as percentage rent. Management uses Annualized Rental Income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized Rental Income is not indicative of future performance.

Assets Under Management represents the Cole REITs and other real estate programs' total gross real estate assets, including net investments in unconsolidated entities, net of gross intangible lease liabilities.

Cash Cap Rate equals the estimated future 12-month Cash NOI, excluding any rent concessions or abatements, at acquisition or disposition divided by the purchase or sale price. For properties acquired or disposed of as a portfolio, the amount presented represents the portfolio cash cap rate. For development projects, Cash Cap Rate equals the estimated future 12-month NOI from the date rent commences divided by the total estimated investment. For certain properties, the Cash Cap Rate is equal to future 12-month Contract Rental Revenue, excluding any rent concessions or abatements, divided by the purchase price or sale price, as the majority of the Company's properties are subject to Triple Net Leases.

Contract Rental Revenue includes minimum rent, percentage rent and other contingent consideration, and rental revenue from parking and storage space and excludes GAAP adjustments, such as straight-line rent and amortization of above-market lease assets and below-market lease liabilities. Contract Rental Revenue includes such revenues from properties subject to a direct financing lease. The Company believes that Contract Rental Revenue is a useful non-GAAP supplemental measure to investors and analysts for assessing the performance of the Company's REI segment. Contract Rental Revenue should not be considered as an alternative to revenue, as computed in accordance with GAAP, or as an indicator of the Company's financial performance. Contract Rental Revenue may not be comparable to similarly titled measures of other companies.

The following table shows the calculation of the REI segment Contract Rental Revenue for the three months ended December 31, 2016 and 2015 (dollar amounts in thousands):
 
 
Three Months Ended December 31,
 
 
2016
 
2015
 Rental income - as reported
 
$
299,231

 
$
322,079

 Direct financing lease income - as reported
 
457

 
623

Adjustments:
 
 
 
 
Straight-line rent
 
(13,190
)
 
(17,589
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,299

Net direct financing lease adjustments
 
544

 
544

Other non-contract rental revenue
 
(36
)
 
(34
)
Contract Rental Revenue
 
$
288,226

 
$
306,922


CPI is a lease in which base rent is adjusted based on changes in a consumer price index.
Debt Outstanding is a non-GAAP measure that represents the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. We believe that the presentation of Debt Outstanding, which shows our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Debt Outstanding should not be considered as an alternative to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


The following table shows a reconciliation of Debt Outstanding to the amounts presented in accordance with GAAP on the balance sheet for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Mortgage notes payable and other debt, net
 
$
2,671,106

 
$
2,861,210

 
$
2,938,072

 
$
3,029,666

 
$
3,111,985

Corporate bonds, net
 
2,226,224

 
2,225,157

 
3,522,297

 
2,537,699

 
2,536,333

Convertible debt, net
 
973,340

 
970,691

 
968,059

 
965,469

 
962,894

Credit facility, net
 
496,578

 
496,008

 
1,045,872

 
1,269,731

 
1,448,590

Mortgage notes payable associated with assets held for sale
 
—

 
—

 
—

 
—

 
—

Total debt - as reported
 
6,367,248

 
6,553,066

 
8,474,300

 
7,802,565

 
8,059,802

Adjustments:
 
 
 
 
 
 
 
 
 
 
Deferred financing costs, net
 
55,660

 
59,467

 
69,719

 
57,652

 
62,674

Net premiums
 
(22,012
)
 
(25,694
)
 
(29,319
)
 
(33,614
)
 
(39,131
)
Debt Outstanding
 
$
6,400,896

 
$
6,586,839

 
$
8,514,700

 
$
7,826,603

 
$
8,083,345


Direct Financing Lease is a lease that requires specific treatment due to the significance of the lease payments from the inception of the lease compared to the fair value of the property, term of the lease, a transfer of ownership, or a bargain purchase option. These leases are recorded as a net asset on the balance sheet. The amount booked is calculated as the fair value of the remaining lease payments on the leases and the estimated fair value of any expected residual property value at the end of the lease term.

Double Net Lease ("NN") is a lease under which the tenant agrees to pay all operating expenses associated with the property (e.g., real estate taxes, insurance, maintenance), but excludes some or all major repairs (e.g. roof, structure, parking lot).

Earnings Before Interest, Taxes, Depreciation and Amortization ("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 expenses, merger and other non-routine transactions costs, gains or losses on sale of investments, legal settlements and insurance recoveries not in the ordinary course of business 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 non-GAAP supplemental measure to investors and analysts for assessing the performance of the Company's business segments. Normalized EBITDA should not be considered as an alternative to net income, as computed in accordance with GAAP, 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.










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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


The following table presents Consolidated EBITDA and Normalized EBITDA for the years ended December 31, 2016 and 2015 (unaudited, in thousands):
 
 
Year Ended December 31,
 
 
2016
 
2015
 Net loss
 
$
(200,824
)
 
$
(323,492
)
 Adjustments:
 
 
 
 
Interest expense
 
317,376

 
358,392

Depreciation and amortization
 
788,186

 
847,611

Benefit from income taxes
 
(3,701
)
 
(36,303
)
Proportionate share of adjustments for unconsolidated entities
 
4,634

 
9,608

 EBITDA
 
$
905,671

 
$
855,816

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(55,722
)
 
65,582

Impairments
 
303,751

 
305,094

Reserve for loan loss
 
—

 
15,300

Acquisition related expenses
 
1,321

 
6,243

Litigation, merger and other non-routine costs, net of insurance recoveries
 
3,884

 
33,628

Gain on sale and unrealized gains of investment securities
 
—

 
(65
)
Loss on derivative instruments, net
 
1,191

 
1,460

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
5,396

 
4,522

Loss (gain) on extinguishment and forgiveness of debt, net
 
771

 
(4,812
)
Net direct financing lease adjustments
 
2,264

 
2,037

Straight-line rent, net of bad debt expense related to straight-line rent
 
(54,190
)
 
(82,398
)
Legal settlements
 
—

 
(1,250
)
Program development costs write-off
 
14,276

 
11,295

Other amortization and non-cash charges
 
(529
)
 
(407
)
 Proportionate share of adjustments for unconsolidated entities
 
857

 
868

Normalized EBITDA
 
$
1,128,941

 
$
1,212,913

Economic Occupancy Rate equals the sum of square feet leased (including month-to-month agreements) divided by total square feet.
Enterprise Value equals the sum of the Implied Equity Market Capitalization, preferred stock and Net Debt.
Fixed Charge Coverage Ratio is the sum of (i)interest expense incurred on the outstanding principal balance of our debt, excluding certain GAAP adjustments reported as interest expense, such as amortization of deferred financing costs, premiums and discounts, (ii) secured debt principal amortization and (iii) dividends attributable to preferred shares divided by Normalized EBITDA.
Flat Lease is a lease that requires equal rent payments, with no increases, throughout the initial term of the lease agreement. A Flat Lease may include a period of free rent at the beginning or end of the lease.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
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 supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


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. We calculated FFO in accordance with NAREIT's definition described above.
In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition related expenses, litigation and other non-routine costs, gains or losses on sale of investment securities or mortgage notes receivable and legal settlements and insurance recoveries not in the ordinary course of business. 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, gains or losses on the extinguishment or forgiveness of debt, non-current portion of the tax benefit or expense, equity-based compensation and amortization of intangible assets, deferred financing costs, 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 publicly-traded REITs, as AFFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as defined by GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, NAREIT, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


The following table presents Consolidated FFO and AFFO for the years ended December 31, 2016 and 2015 (unaudited, in thousands except share and per share data):
 
 
Year Ended December 31,
 
 
2016
 
2015
Net loss
 
$
(200,824
)
 
$
(323,492
)
Dividends on non-convertible preferred stock
 
(71,892
)
 
(71,892
)
(Gain) loss on real estate assets and interest in joint venture, net
 
(55,722
)
 
65,582

Depreciation and amortization of real estate assets
 
756,315

 
817,469

Impairment of real estate
 
182,820

 
91,755

Proportionate share of adjustments for unconsolidated entities
 
2,719

 
5,744

FFO attributable to common stockholders and limited partners
 
$
613,416

 
$
585,166

Acquisition related expenses
 
1,321

 
6,243

Litigation, merger and other non-routine costs, net of insurance recoveries
 
3,884

 
33,628

Impairment of intangible assets
 
120,931

 
213,339

Reserve for loan loss
 
—

 
15,300

Legal settlements
 
—

 
(1,250
)
Gain on investment securities
 
—

 
(65
)
Loss on derivative instruments, net
 
1,191

 
1,460

Amortization of premiums and discounts on debt and investments, net
 
(14,693
)
 
(19,183
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
5,396

 
4,522

Net direct financing lease adjustments
 
2,264

 
2,037

Amortization and write-off of deferred financing costs
 
28,063

 
33,998

Amortization of management contracts
 
26,171

 
25,903

Deferred tax benefit
 
(10,136
)
 
(52,242
)
Loss (gain) on extinguishment and forgiveness of debt, net
 
771

 
(4,812
)
Straight-line rent, net of bad debt expense related to straight-line rent
 
(54,190
)
 
(82,398
)
Equity-based compensation
 
10,728

 
14,500

Other amortization and non-cash charges
 
5,296

 
3,840

Proportionate share of adjustments for unconsolidated entities
 
1,044

 
2,072

AFFO attributable to common stockholders and limited partners
 
$
741,457

 
$
782,058

 
 
 
 
 
Weighted-average shares of common stock outstanding - basic
 
931,422,844

 
903,360,763

Effect of Limited Partner OP Units and dilutive securities
 
24,626,646

 
26,013,303

Weighted-average shares of common stock outstanding - diluted
 
956,049,490

 
929,374,066

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.642

 
$
0.630

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.776

 
$
0.841


Gross Lease is a lease under which the landlord is responsible for all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Gross Real Estate Investments represent total gross real estate and related assets, including net investments in unconsolidated entities, investment in direct financing leases, investment securities backed by real estate and loans held for investment, net of gross intangible lease liabilities.


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


Implied Equity Market Capitalization equals shares of common stock outstanding, including restricted stock awards, multiplied by the closing sale price of the Company's stock as reported on the New York Stock Exchange.
Industry is derived from the North American Industry Classification System, NAICS, which is a system used by Federal statistical agencies to classify business establishments, for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.
Interest Coverage Ratio reflects interest expense incurred on the outstanding principal balance of our debt, excluding certain GAAP adjustments reported as interest expense, such as amortization of deferred financing costs, premiums and discounts divided by Normalized EBITDA.
Interest Expense, Excluding Non-Cash Amortization is a non-GAAP measure that represents interest expense incurred on the outstanding principal balance of our debt, which excludes the amortization of deferred financing costs, premiums and discounts, which are reported as interest expense in accordance with GAAP. We believe that the presentation of Interest Expense, Excluding Non-Cash Amortization, which shows the interest expense on our contractual debt obligations, provides useful information to investors to assess our overall solvency and financial flexibility. Interest Expense, Excluding Non-Cash Amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.
The following table shows a reconciliation of interest expense, excluding non-cash amortization to interest expense presented in accordance with GAAP on the statements of operations for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Interest expense - as reported
 
$
74,613

 
$
79,869

 
$
82,468

 
$
80,426

 
$
82,591

Adjustments:
 
 
 
 
 
 
 
 
 
 
Amortization of deferred financing and issuance costs
 
(6,514
)
 
(7,081
)
 
`

 
(7,307
)
 
(7,321
)
Amortization of net premiums
 
2,731

 
3,723

 
4,000

 
4,423

 
5,079

Interest expense, excluding non-cash amortization
 
$
70,830

 
$
76,511

 
$
86,468

 
$
77,542

 
$
80,349

Investment-Grade Tenants are those with a Standard & Poor’s credit rating of BBB- or higher or a Moody’s credit rating of Baa3 or higher.  The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.
Metropolitan Statistical Area (MSA) is a large metropolitan area represented by a large group of zip codes, as defined by Real Capital Analytics.
Modified Gross Lease is a lease under which the landlord is responsible for most expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs), but passes through some operating expenses to the tenant.
NAV per share represents the net asset value of the respective share class.
Net Cole Capital G&A Expense
Cole Capital incurs certain costs on behalf of the Cole REITs, which are reimbursable. In accordance with GAAP, the Company records these costs as general and administrative expenses and the subsequent reimbursements as revenue. We believe Net Cole Capital G&A Expense is a helpful non-GAAP supplemental measure in determining the effective cost to the Company, eliminating any gross up presentation required by GAAP.
Net Cole Capital Revenue
Cole Capital incurs certain costs on behalf of the Cole REITs, which are reimbursable. In accordance with GAAP, Cole Capital records the reimbursement of these costs as fee and commission revenue and as reimbursement revenue and records the expense in reallowed fees and commissions and general and administrative expenses. We believe Net Revenue is a helpful non-GAAP supplemental measure in determining the effective revenue earned by the Company, eliminating any gross up presentation required by GAAP.


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


Net Debt is a non-GAAP measure used to show the Company's Debt Outstanding, less all cash and cash equivalents. We believe that the presentation of net debt provides useful information to investors because our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments.
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four.
Net Operating Income ("NOI") and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents rental and other property income and tenant reimbursement income less property operating expenses. NOI excludes depreciation and amortization, general and administrative expenses, acquisition related expenses and litigation and other non-routine costs. Cash NOI excludes the impact of certain GAAP adjustments to rental revenue, such as straight-line rent adjustments and amortization of above-market intangible lease assets and below-market lease intangible liabilities. It is management's view that NOI and Cash NOI provide investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. NOI and Cash NOI should not be considered as an alternative to operating income. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.
The following table shows the calculation of the REI segment NOI and Cash NOI for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
December 31,
2016
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
Operating income (loss) - as reported
 
$
86,187

 
$
85,468

 
$
84,628

 
$
(60,804
)
 
$
101,302

Acquisition related
 
923

 
90

 
27

 
217

 
673

Litigation, merger and other non-routine costs, net of insurance recoveries
 
1,512

 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
General and administrative
 
13,267

 
12,069

 
13,701

 
12,228

 
16,646

Depreciation and amortization
 
182,190

 
187,897

 
190,236

 
195,991

 
197,409

Impairment of real estate
 
6,606

 
6,872

 
8,825

 
160,517

 
6,414

NOI
 
290,685

 
297,026

 
300,334

 
302,974

 
314,753

Straight-line rent, net of bad debt expense related to straight-line rent
 
(13,163
)
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,220

 
1,632

 
1,248

 
1,296

 
1,299

Net direct financing lease adjustments
 
544

 
571

 
590

 
559

 
544

 Cash NOI
 
$
279,286

 
$
286,910

 
$
286,509

 
$
291,784

 
$
299,007

Normalized Cash NOI equals our Cash NOI for our most recently reported quarter and eliminates the Cash NOI for properties acquired or developments completed during the most recently reported quarter and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. Additionally, Normalized Cash NOI eliminates the Cash NOI contributed by properties disposed of during the most recently reported period. It is management's view that Normalized Cash NOI provides investors relevant and useful information because it reflects only the Cash NOI of properties owned as of the most recent reporting period. Normalized Cash NOI should not be considered as an alternative to operating income.
Normalized EBITDA Annualized equals Normalized EBITDA, for the respective quarter, multiplied by four.
Normalized EBITDA Margin is a measurement of a company's operating profitability. It is equal to Normalized EBITDA divided by Net Cole Capital Revenue and other income.
Normalized Net Cole Capital G&A Expense equals Net Cole Capital G&A Expense adjusted for the net change in program development costs. We believe Normalized Net G&A Expense is a helpful supplemental measure in determining the effective cost to


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Q4 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


the Company, eliminating any gross up presentation required by GAAP and adjusting to include costs incurred and recorded as program development costs on the balance sheet.
Occupancy Cost is calculated as rent per the lease terms, divided by property level sales for the previous calendar year. Property level sales are based on sales reports provided by tenants of retail and restaurant properties. Data presented is for properties owned by the Company and for which the Company received sales data for the entirety of the previous calendar year.
Property Operating Expense includes reimbursable and non-reimbursable costs to operate a property, including real estate taxes, utilities, insurance, repairs, maintenance, legal, property management fees, etc.
Triple Net Lease ("NNN") is a lease under which the tenant agrees to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Weighted Average Remaining Lease Term is the number of years remaining on each respective lease, weighted based on Annualized Rental Income.


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