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

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Q3 2017 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
September 30, 2017
 
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 operating metrics.


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Q3 2017 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended September 30, 2017, unless otherwise indicated. 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 the periods ended September 30, 2017, June 30, 2017, March 31, 2017 and September 30, 2016. Effective January 1, 2017, the Company determined certain non-GAAP measures and operating metrics, which include portfolio metrics, should exclude the impact of properties owned by the Company for the month beginning with the date that (i) the related mortgage loan is in default, and (ii) management decides to transfer the properties to the lender in connection with settling the mortgage note obligation and ending with the disposition date, to better reflect the ongoing operations of the Company. The Company did not update data presented for periods prior to March 31, 2017, and the three months then ended, as the impact on non-GAAP measures, including AFFO and Normalized EBITDA, and operating metrics was immaterial. See the definitions section for a description of the Excluded Properties.

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 and litigations related to VEREIT's previously disclosed audit committee investigation; 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 operating metrics.


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Q3 2017 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 September 30, 2017, approximately 40.1% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy Rate was 99.0% and the Weighted Average Remaining Lease Term was 9.5 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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 4


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Q3 2017 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
 
David B. Henry, Independent Director
 
 
 
Lauren Goldberg, Executive Vice President, General Counsel and Secretary
 
Mary Hogan Preusse, Independent Director
 
 
 
Paul H. McDowell, Executive Vice President and Chief Operating Officer
 
Richard J. Lieb, Independent Director
 
 
 
William C. Miller, Executive Vice President, Investment Management
 
Mark S. Ordan, Independent Director
 
 
 
Thomas W. Roberts, Executive Vice President and Chief Investment Officer
 
Eugene A. Pinover, Independent Director
 
 
 
Gavin B. Brandon, Senior Vice President and Chief Accounting Officer
 
Julie G. Richardson, Independent Director
 
 
 
 
 
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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 5


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Q3 2017 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except share and per share amounts)
 
 
Q3 2017
 
Q2 2017
 
Q1 2017
 
Q4 2016
 
Q3 2016
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
333,728

 
$
336,930

 
$
348,029

 
$
351,869

 
$
362,915

Net income (loss)
$
16,494

 
$
34,186

 
$
14,790

 
$
(118,223
)
 
$
30,246

Basic and diluted net income (loss) per share attributable to common stockholders and limited partners
$
(0.00
)
 
$
0.02

 
$
(0.00
)
 
$
(0.14
)
 
$
0.01

Normalized EBITDA
$
267,119

 
$
268,025

 
$
273,345

 
$
271,368

 
$
285,906

FFO attributable to common stockholders and limited partners
$
177,713

 
$
171,443

 
$
170,065

 
$
53,541

 
$
179,472

FFO attributable to common stockholders and limited partners per diluted share
$
0.178

 
$
0.172

 
$
0.170

 
$
0.054

 
$
0.185

AFFO attributable to common stockholders and limited partners
$
190,860

 
$
180,868

 
$
187,321

 
$
170,567

 
$
198,108

AFFO attributable to common stockholders and limited partners per diluted share
$
0.191

 
$
0.181

 
$
0.188

 
$
0.171

 
$
0.205

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
998,425,771

 
998,129,628

 
998,251,749

 
998,001,219

 
968,686,543

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
306,543

 
$
308,245

 
$
320,898

 
$
327,281

 
$
331,846

Net income
$
13,716

 
$
29,732

 
$
12,780

 
$
13,988

 
$
30,006

Normalized EBITDA
$
258,478

 
$
257,337

 
$
265,411

 
$
268,946

 
$
277,593

FFO attributable to common stockholders and limited partners
$
174,935

 
$
166,989

 
$
168,055

 
$
185,752

 
$
179,232

FFO attributable to common stockholders and limited partners per diluted share
$
0.175

 
$
0.167

 
$
0.168

 
$
0.186

 
$
0.185

AFFO attributable to common stockholders and limited partners
$
175,256

 
$
174,258

 
$
177,437

 
$
179,804

 
$
182,371

AFFO attributable to common stockholders and limited partners per diluted share
$
0.176

 
$
0.175

 
$
0.178

 
$
0.180

 
$
0.188

Operating Properties
4,093

 
4,105

 
4,105

 
4,142

 
4,213

Rentable Square Feet (in thousands)
92,228

 
91,094

 
92,950

 
93,257

 
96,885

Economic Occupancy Rate
99.0
%
 
98.6
%
 
98.4
%
 
98.3
%
 
98.0
%
Weighted Average Remaining Lease Term (years)
9.5

 
9.5

 
9.6

 
9.9

 
10.0

Investment-Grade Tenants (1)
40.1
%
 
40.7
%
 
41.6
%
 
41.2
%
 
41.5
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
27,185

 
$
28,685

 
$
27,131

 
$
24,588

 
$
31,069

Net income (loss)
$
2,778

 
$
4,454

 
$
2,010

 
$
(132,211
)
 
$
240

Normalized EBITDA
$
8,641

 
$
10,688

 
$
7,934

 
$
2,422

 
$
8,313

FFO attributable to common stockholders and limited partners
$
2,778

 
$
4,454

 
$
2,010

 
$
(132,211
)
 
$
240

FFO attributable to common stockholders and limited partners per diluted share
$
0.003

 
$
0.004

 
$
0.002

 
$
(0.132
)
 
$
0.000

AFFO attributable to common stockholders and limited partners
$
15,604

 
$
6,610

 
$
9,884

 
$
(9,237
)
 
$
15,737

AFFO attributable to common stockholders and limited partners per diluted share
$
0.016

 
$
0.007

 
$
0.010

 
$
(0.009
)
 
$
0.016

Capital raised on behalf of Cole REITs, excluding DRIP
$
66,402

 
$
77,953

 
$
66,718

 
$
67,512

 
$
136,381

Purchase price of property acquisitions on behalf of Cole REITs
$
190,024

 
$
276,701

 
$
216,187

 
$
173,086

 
$
173,869

Assets Under Management
$
7,831,697

 
$
7,712,905

 
$
7,481,884

 
$
7,265,673

 
$
7,131,400

___________________________________
(1)
The weighted average credit rating of our Investment-Grade Tenants was BBB+ as of September 30, 2017.


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


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Q3 2017 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
65,821

 
$
66,446

 
$
68,123

 
$
70,830

 
$
76,511

Normalized EBITDA
 
267,119

 
268,025

 
273,345

 
271,368

 
285,906

Interest Coverage Ratio
 
4.06x

 
4.03x

 
4.01x

 
3.83x


3.74x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest Expense, excluding non-cash amortization (1)
 
$
65,821

 
$
66,446

 
$
68,123

 
$
70,830

 
$
76,511

Secured debt principal amortization
 
2,981

 
4,563

 
8,993

 
6,076

 
5,734

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
17,973

 
17,973

Total fixed charges
 
86,775

 
88,982

 
95,089

 
94,879

 
100,218

Normalized EBITDA
 
267,119

 
268,025

 
273,345

 
271,368


285,906

Fixed Charge Coverage Ratio
 
3.08
x
 
3.01
x
 
2.87
x
 
2.86
x
 
2.85
x
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Adjusted Debt Outstanding (2)
 
$
5,936,439

 
$
6,031,589

 
$
6,277,388

 
$
6,400,896

 
$
6,586,839

Less: cash and cash equivalents
 
54,363

 
292,498

 
285,586

 
256,452

 
116,618

Net Debt
 
5,882,076

 
5,739,091

 
5,991,802

 
6,144,444

 
6,470,221

Normalized EBITDA annualized
 
1,068,476

 
1,072,100

 
1,093,380

 
1,085,472

 
1,143,624

Net Debt to Normalized EBITDA annualized ratio
 
5.51
x
 
5.35
x
 
5.48
x
 
5.66
x
 
5.66
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
5,882,076

 
$
5,739,091

 
$
5,991,802

 
$
6,144,444

 
$
6,470,221

Gross Real Estate Investments
 
15,336,016

 
15,157,133

 
15,367,137

 
15,507,082

 
15,815,333

Net Debt Leverage Ratio
 
38.4
%
 
37.9
%
 
39.0
%
 
39.6
%
 
40.9
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,073,165

 
$
10,541,410

 
$
10,319,871

 
$
10,292,186

 
$
10,394,146

Gross Real Estate Investments
 
15,336,016

 
15,157,133

 
15,367,137

 
15,507,082

 
15,815,333

Unencumbered Asset Ratio
 
72.2
%
 
69.5
%
 
67.2
%
 
66.4
%
 
65.7
%
___________________________________
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 7


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Q3 2017 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



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Common equity
54.3%
 
 
 
 
 
 
Corporate bonds
18.6%
 
 
 
 
 
 
Secured debt
13.6%
 
 
 
 
 
 
Preferred equity
7.0%
 
 
 
 
 
 
Convertible notes
6.5%

                            

Fixed vs. Variable Rate Debt
Fixed
98.4
%
Swapped to Fixed
1.3
%
Variable
0.3
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)

 
September 30, 2017
Diluted shares outstanding
 
 
 
 
1,000,634

Stock price
 
 
 
 
$
8.29

Implied Equity Market Capitalization
 
$
8,295,256

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

 
 
 
 
 
 
Mortgage notes payable (3)
4.5
 
4.87
%
 
$
2,072,725

Secured term loan
0.2
 
5.81
%
 
13,714

Total secured debt
4.4
 
4.88
%
 
$
2,086,439

 
 
 
 
 
 
2018 convertible notes
0.8
 
3.00
%
 
597,500

2019 corporate bonds
1.4
 
3.00
%
 
750,000

2020 convertible notes
3.2
 
3.75
%
 
402,500

2021 corporate bonds
3.7
 
4.13
%
 
400,000

2024 corporate bonds
6.4
 
4.60
%
 
500,000

2026 corporate bonds
8.7
 
4.88
%
 
600,000

2027 corporate bonds (4)
9.9
 
3.95
%
 
600,000

Total unsecured debt
4.8
 
3.84
%
 
$
3,850,000

 
 
 
 
 
 
Total Adjusted Debt Outstanding
4.7
 
4.21
%
 
$
5,936,439

 
 
 
 
 
 
Total Capitalization
 
$
15,302,548

Less: Cash and cash equivalents
 
 
 
 
54,363

Enterprise Value
 
$
15,248,185

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
38.6
%
Net Debt/Normalized EBITDA Annualized
 
 
 
5.51
x
Net Debt + Preferred/Normalized EBITDA Annualized
 
6.51
x
Fixed Charge Coverage Ratio
 
 
 
 
3.08
x
Liquidity (5)
 
 
 
 
$
2,354,363

___________________________________
(1)Weighted average interest rate for variable rate debt represents the interest rate in effect as of September 30, 2017.
(2)Balance represents 42.8 million shares outstanding at September 30, 2017 multiplied by the liquidation preference of $25 per share.
(3)Omits one mortgage note payable secured by an Excluded Property with Debt Outstanding of $16.2 million and an interest rate of 9.48%.
(4)On August 11, 2017, the Company closed a senior note offering and subsequently used a portion of the proceeds from the offering to repay borrowings under the credit facility's $500.0 million term loan facility (the "Credit Facility Term Loan").
(5)Liquidity represents cash and cash equivalents of $54.4 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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 8


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Q3 2017 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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$14.7 Billion
 
 
 
Book Value of Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (1)
Restaurants (1)
 
 
A full-service real estate operating company with investment management
capability.
 
2,117 Properties
1,732 Properties
 
 
 
 
 
 
 
 
Industrial & Distribution (1)
Office (1)
 
 
 
 
 
146 Properties
89 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$7.8 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)
Omits one Excluded Property and nine properties that consist of billboards, 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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 9


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Q3 2017 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands)
 
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,866,305

 
$
2,858,662

 
$
2,868,447

 
$
2,895,625

 
$
2,946,105

Buildings, fixtures and improvements
 
10,585,796

 
10,496,710

 
10,630,598

 
10,644,296

 
10,800,316

Intangible lease assets
 
2,027,304

 
2,000,292

 
2,017,739

 
2,044,521

 
2,073,076

Total real estate investments, at cost
 
15,479,405


15,355,664

 
15,516,784

 
15,584,442

 
15,819,497

Less: accumulated depreciation and amortization
 
2,784,481

 
2,623,050

 
2,494,811

 
2,331,643

 
2,188,998

Total real estate investments, net
 
12,694,924


12,732,614

 
13,021,973

 
13,252,799

 
13,630,499

Investment in unconsolidated entities
 
44,101

 
44,931

 
45,145

 
46,077

 
24,711

Investment in direct financing leases, net
 
33,402

 
33,892

 
34,909

 
39,455

 
40,785

Investment securities, at fair value
 
41,677

 
42,250

 
42,630

 
47,215

 
48,098

Mortgage notes receivable, net
 
20,510

 
20,722

 
22,545

 
22,764

 
23,014

Cash and cash equivalents
 
54,363

 
292,498

 
285,586

 
256,452

 
116,618

Restricted cash
 
27,797

 
40,995

 
46,712

 
45,018

 
61,828

Intangible assets, net
 
12,173

 
16,319

 
20,464

 
24,609

 
30,849

Rent and tenant receivables and other assets, net
 
336,938

 
349,013

 
346,898

 
330,705

 
339,529

Goodwill
 
1,462,585

 
1,462,585

 
1,462,585

 
1,462,203

 
1,602,610

Due from affiliates, net
 
6,638

 
8,085

 
15,007

 
21,349

 
20,883

Real estate assets held for sale, net
 
1,625

 
4,136

 
12,081

 
38,928

 
118,396

Total assets
 
$
14,736,733


$
15,048,040


$
15,356,535

 
$
15,587,574

 
$
16,057,820

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,115,633

 
$
2,381,031

 
$
2,586,917

 
$
2,671,106

 
$
2,861,210

Corporate bonds, net
 
2,820,164

 
2,228,422

 
2,227,307

 
2,226,224

 
2,225,157

Convertible debt, net
 
981,490

 
978,738

 
976,031

 
973,340

 
970,691

Credit facility, net
 
—

 
497,718

 
497,148

 
496,578

 
496,008

Below-market lease liabilities, net
 
204,051

 
209,566

 
217,721

 
224,023

 
229,340

Accounts payable and accrued expenses
 
152,413

 
149,309

 
135,817

 
146,137

 
139,150

Deferred rent, derivative and other liabilities
 
63,876

 
70,735

 
68,196

 
68,039

 
89,154

Distributions payable
 
172,129

 
168,953

 
165,765

 
162,578

 
159,415

Due to affiliates
 
8

 
89

 
7

 
16

 
—

Total liabilities
 
6,509,764


6,684,561

 
6,874,909

 
6,968,041

 
7,170,125

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,742

 
9,742

 
9,742

 
9,741

 
9,742

Additional paid-in capital
 
12,648,967

 
12,645,309

 
12,642,099

 
12,640,171

 
12,637,049

Accumulated other comprehensive loss
 
(3,330
)
 
(1,928
)
 
(1,795
)
 
(2,556
)
 
(4,687
)
Accumulated deficit
 
(4,592,533
)
 
(4,456,708
)
 
(4,338,029
)
 
(4,200,423
)
 
(3,933,092
)
Total stockholders' equity
 
8,063,274


8,196,843

 
8,312,445

 
8,447,361

 
8,709,440

Non-controlling interests
 
163,695

 
166,636

 
169,181

 
172,172

 
178,255

Total equity
 
8,226,969


8,363,479


8,481,626

 
8,619,533

 
8,887,695

Total liabilities and equity
 
$
14,736,733


$
15,048,040

 
$
15,356,535

 
$
15,587,574

 
$
16,057,820


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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2017 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
282,341

 
$
286,291

 
$
293,739

 
$
299,231

 
$
303,383

Direct financing lease income
 
376

 
403

 
433

 
457

 
494

Operating expense reimbursements
 
23,826

 
21,551

 
26,726

 
27,593

 
27,969

Cole Capital revenue
 
27,185

 
28,685

 
27,131

 
24,588

 
31,069

Total revenues
 
333,728


336,930


348,029


351,869


362,915

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
2,373

 
2,874

 
2,660

 
2,234

 
5,897

Acquisition-related
 
909

 
756

 
617

 
948

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Property operating
 
30,645

 
31,627

 
34,016

 
36,596

 
34,820

General and administrative
 
29,796

 
29,411

 
29,148

 
44,353

 
29,761

Depreciation and amortization
 
176,523

 
184,288

 
183,152

 
191,360

 
195,173

Impairments
 
6,363

 
17,769

 
6,725

 
127,537

 
6,872

Total operating expenses
 
256,116

 
281,136

 
269,193

 
404,540

 
277,243

Operating income (loss)
 
77,612

 
55,794

 
78,836

 
(52,671
)
 
85,672

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(71,708
)
 
(73,621
)
 
(73,743
)
 
(74,613
)
 
(79,869
)
Gain (loss) on extinguishment and forgiveness of debt, net
 
9,756

 
9,005

 
(70
)
 
980

 
(2,003
)
Other income, net
 
1,907

 
1,835

 
798

 
2,013

 
1,744

Equity in income (loss) of unconsolidated entities
 
374

 
513

 
(82
)
 
(903
)
 
212

Gain (loss) on derivative instruments, net
 
1,294

 
592

 
824

 
2,095

 
(2,023
)
Total other expenses, net
 
(58,377
)
 
(61,676
)
 
(72,273
)
 
(70,428
)
 
(81,939
)
Income (loss) before taxes and real estate dispositions
 
19,235

 
(5,882
)
 
6,563

 
(123,099
)
 
3,733

(Loss) gain on disposition of real estate and held for sale assets, net
 
(688
)
 
42,639

 
12,481

 
(199
)
 
28,111

Income (loss) before taxes
 
18,547

 
36,757

 
19,044

 
(123,298
)
 
31,844

(Provision for) benefit from income taxes
 
(2,053
)
 
(2,571
)
 
(4,254
)
 
5,075

 
(1,598
)
Net income (loss)
 
16,494


34,186


14,790


(118,223
)

30,246

Net (income) loss attributable to non-controlling interests
 
(400
)
 
(778
)
 
(352
)
 
2,805

 
(751
)
Net income (loss) attributable to the General Partner
 
$
16,094

 
$
33,408

 
$
14,438

 
$
(115,418
)
 
$
29,495

 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net (loss) income per share attributable to common stockholders and limited partners
 
$
(0.00
)
 
$
0.02

 
$
(0.00
)
 
$
(0.14
)
 
$
0.01




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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2017 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net income (loss)
 
$
16,494

 
$
34,186

 
$
14,790

 
$
(118,223
)
 
$
30,246

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
Loss (gain) on disposition of real estate assets, net
 
688

 
(42,639
)
 
(12,481
)
 
199

 
(28,111
)
Depreciation and amortization of real estate assets
 
171,576

 
179,433

 
178,295

 
182,190

 
187,898

Impairment of real estate
 
6,363

 
17,769

 
6,725

 
6,606

 
6,872

Proportionate share of adjustments for unconsolidated entities
 
565

 
667

 
709

 
742

 
540

FFO attributable to common stockholders and limited partners
 
$
177,713

 
$
171,443

 
$
170,065

 
$
53,541

 
$
179,472

 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
909

 
756

 
617

 
948

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Impairment of intangible assets
 
—

 
—

 
—

 
120,931

 
—

Gain on investment securities
 
—

 
(65
)
 
—

 
—

 
—

(Gain) loss on derivative instruments, net
 
(1,294
)
 
(592
)
 
(824
)
 
(2,095
)
 
2,023

Amortization of premiums and discounts on debt and investments, net
 
(1,442
)
 
(1,700
)
 
(847
)
 
(2,684
)
 
(3,553
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Amortization and write-off of deferred financing costs
 
6,028

 
6,327

 
6,347

 
6,417

 
6,878

Amortization of management contracts
 
4,146

 
4,146

 
4,146

 
6,240

 
6,240

Deferred tax expense (benefit) (1)
 
6,277

 
(4,318
)
 
1,649

 
(9,203
)
 
6,941

(Gain) loss on extinguishment and forgiveness of debt, net
 
(9,756
)
 
(9,005
)
 
70

 
(980
)
 
2,003

Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Equity-based compensation expense
 
3,664

 
4,448

 
3,111

 
3,631

 
2,588

Other amortization and non-cash charges
 
739

 
627

 
634

 
2,873

 
929

Proportionate share of adjustments for unconsolidated entities
 
(2
)
 
48

 
55

 
835

 
(17
)
Adjustment for Excluded Properties
 
2,625

 
3,045

 
294

 
—

 
—

AFFO attributable to common stockholders and limited partners
 
$
190,860


$
180,868


$
187,321


$
170,567


$
198,108

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
974,167,088

 
974,160,295

 
973,849,610

 
973,681,227

 
943,480,170

Limited Partner OP Units and effect of dilutive securities (2)
 
24,258,683

 
23,969,333

 
24,402,139

 
24,319,992

 
25,206,373

Weighted-average shares outstanding - diluted (3)
 
998,425,771

 
998,129,628

 
998,251,749

 
998,001,219

 
968,686,543

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.178

 
$
0.172

 
$
0.170

 
$
0.054

 
$
0.185

AFFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.191

 
$
0.181

 
$
0.188

 
$
0.171

 
$
0.205

___________________________________
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 12


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2017 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 Net income (loss)
 
$
16,494

 
$
34,186

 
$
14,790

 
$
(118,223
)
 
$
30,246

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
71,708

 
73,621

 
73,743

 
74,613

 
79,869

Depreciation and amortization
 
176,523

 
184,288

 
183,152

 
191,360

 
195,173

Provision for (benefit from) income taxes
 
2,053

 
2,571

 
4,254

 
(5,075
)
 
1,598

Proportionate share of adjustments for unconsolidated entities
 
845

 
1,023

 
1,246

 
1,299

 
959

 EBITDA
 
$
267,623

 
$
295,689

 
$
277,185

 
$
143,974

 
$
307,845

Loss (gain) on disposition of real estate assets, net
 
688

 
(42,639
)
 
(12,481
)
 
199

 
(28,111
)
Impairments
 
6,363

 
17,769

 
6,725

 
127,537

 
6,872

Acquisition-related expenses
 
909

 
756

 
617

 
948

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Gain on investment securities
 
—

 
(65
)
 
—

 
—

 
—

(Gain) loss on derivative instruments, net
 
(1,294
)
 
(592
)
 
(824
)
 
(2,095
)
 
2,023

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

(Gain) loss on extinguishment and forgiveness of debt, net
 
(9,756
)
 
(9,005
)
 
70

 
(980
)
 
2,003

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Program development costs write-off
 
110

 
—

 
—

 
11,054

 
845

Other amortization and non-cash charges
 
(61
)
 
(57
)
 
861

 
(107
)
 
(139
)
 Proportionate share of adjustments for unconsolidated entities
 
(39
)
 
(11
)
 
(48
)
 
725

 
(36
)
Adjustment for Excluded Properties
 
1,323

 
472

 
(764
)
 
—

 
—

Normalized EBITDA
 
$
267,119


$
268,025


$
273,345


$
271,368


$
285,906




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


coversvereitsuppq320172.jpg

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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
282,341

 
$
286,291

 
$
293,739

 
$
299,231

 
$
303,383

Direct financing lease income
 
376

 
403

 
433

 
457

 
494

Operating expense reimbursements
 
23,826

 
21,551

 
26,726

 
27,593

 
27,969

Total real estate investment revenues
 
306,543


308,245


320,898


327,281


331,846

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition-related
 
909

 
720

 
617

 
923

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Property operating
 
30,645

 
31,627

 
34,016

 
36,596

 
34,820

General and administrative
 
13,075

 
14,294

 
12,560

 
13,267

 
12,069

Depreciation and amortization
 
171,576

 
179,433

 
178,297

 
182,190

 
187,897

Impairment of real estate
 
6,363

 
17,769

 
6,725

 
6,606

 
6,872

Total operating expenses
 
232,075


258,254


245,090

 
241,094

 
246,378

Operating income
 
74,468


49,991


75,808

 
86,187

 
85,468

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(71,708
)
 
(73,621
)
 
(73,743
)
 
(74,613
)
 
(79,869
)
Gain (loss) on extinguishment and forgiveness of debt
 
9,756

 
9,005

 
(70
)
 
980

 
(2,003
)
Other income, net
 
1,405

 
1,759

 
670

 
1,856

 
1,649

Equity in income (loss) of unconsolidated entities
 
374

 
513

 
(82
)
 
(903
)
 
212

Gain (loss) on derivative instruments, net
 
1,294

 
592

 
824

 
2,095

 
(2,023
)
Total other expenses, net
 
(58,879
)

(61,752
)

(72,401
)
 
(70,585
)
 
(82,034
)
Income (loss) before taxes and real estate dispositions
 
15,589

 
(11,761
)
 
3,407

 
15,602

 
3,434

(Loss) gain on disposition of real estate and held for sale assets, net
 
(688
)
 
42,639

 
12,481

 
(199
)
 
28,111

Income before taxes
 
14,901


30,878


15,888

 
15,403

 
31,545

Provision for income taxes
 
(1,185
)
 
(1,146
)
 
(3,108
)
 
(1,415
)
 
(1,539
)
Net income
 
$
13,716


$
29,732


$
12,780


$
13,988


$
30,006



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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net income
 
$
13,716

 
$
29,732

 
$
12,780

 
$
13,988

 
$
30,006

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
Loss (gain) on disposition of real estate assets, net
 
688

 
(42,639
)
 
(12,481
)
 
199

 
(28,111
)
Depreciation and amortization of real estate assets
 
171,576

 
179,433

 
178,295

 
182,190

 
187,898

Impairment of real estate
 
6,363

 
17,769

 
6,725

 
6,606

 
6,872

Proportionate share of adjustments for unconsolidated entities
 
565

 
667

 
709

 
742

 
540

FFO attributable to common stockholders and limited partners
 
$
174,935

 
$
166,989

 
$
168,055

 
$
185,752

 
$
179,232

 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
909

 
720

 
617

 
923

 
90

Litigation and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Gain on investment securities
 
—

 
(65
)
 
—

 
—

 
—

(Gain) loss on derivative instruments, net
 
(1,294
)
 
(592
)
 
(824
)
 
(2,095
)
 
2,023

Amortization of premiums and discounts on debt and investments, net
 
(1,442
)
 
(1,700
)
 
(847
)
 
(2,684
)
 
(3,553
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Amortization and write-off of deferred financing costs
 
6,028

 
6,327

 
6,347

 
6,417

 
6,878

(Gain) loss on extinguishment and forgiveness of debt, net
 
(9,756
)
 
(9,005
)
 
70

 
(980
)
 
2,003

Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Equity-based compensation expense
 
2,000

 
2,783

 
1,664

 
1,523

 
1,201

Other amortization and non-cash charges
 
—

 
—

 
2

 
—

 
—

Proportionate share of adjustments for unconsolidated entities
 
(2
)
 
48

 
55

 
835

 
(17
)
Adjustment for Excluded Properties
 
2,625

 
3,045

 
294

 
—

 
—

AFFO attributable to common stockholders and limited partners
 
$
175,256


$
174,258


$
177,437


$
179,804


$
182,371

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
974,167,088

 
974,160,295

 
973,849,610

 
973,681,227

 
943,480,170

Limited Partner OP Units and effect of dilutive securities (1)
 
24,258,683

 
23,969,333

 
24,402,139

 
24,319,992

 
25,206,373

Weighted-average shares outstanding - diluted (2)
 
998,425,771

 
998,129,628

 
998,251,749

 
998,001,219

 
968,686,543

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.175

 
$
0.167

 
$
0.168

 
$
0.186

 
$
0.185

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.176

 
$
0.175

 
$
0.178

 
$
0.180

 
$
0.188

___________________________________
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 16

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 Net income
 
$
13,716

 
$
29,732

 
$
12,780

 
$
13,988

 
$
30,006

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
71,708

 
73,621

 
73,743

 
74,613

 
79,869

Depreciation and amortization
 
171,576

 
179,433

 
178,297

 
182,190

 
187,897

Provision for income taxes
 
1,185

 
1,146

 
3,108

 
1,415

 
1,539

Proportionate share of adjustments for unconsolidated entities
 
845

 
1,023

 
1,246

 
1,299

 
959

 EBITDA
 
$
259,030

 
$
284,955

 
$
269,174

 
$
273,505

 
$
300,270

Loss (gain) on disposition of real estate assets, net
 
688

 
(42,639
)
 
(12,481
)
 
199

 
(28,111
)
Impairment of real estate assets
 
6,363

 
17,769

 
6,725

 
6,606

 
6,872

Acquisition-related expenses
 
909

 
720

 
617

 
923

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

Gain on investment securities
 
—

 
(65
)
 
—

 
—

 
—

(Gain) loss on derivative instruments, net
 
(1,294
)
 
(592
)
 
(824
)
 
(2,095
)
 
2,023

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

(Gain) loss on extinguishment and forgiveness of debt, net
 
(9,756
)
 
(9,005
)
 
70

 
(980
)
 
2,003

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Other amortization and non-cash charges
 
1

 
25

 
938

 
(50
)
 
(32
)
 Proportionate share of adjustments for unconsolidated entities
 
(39
)
 
(11
)
 
(48
)
 
725

 
(36
)
Adjustment for Excluded Properties
 
1,323

 
472

 
(764
)
 
—

 
—

Normalized EBITDA
 
$
258,478


$
257,337


$
265,411


$
268,946


$
277,593



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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 Rental income - as reported (1)
 
$
282,341

 
$
286,291

 
$
293,739

 
$
299,231

 
$
303,383

 Direct financing lease income - as reported
 
376

 
403

 
433

 
457

 
494

 Operating expense reimbursements - as reported
 
23,826

 
21,551

 
26,726

 
27,593

 
27,969

 Property operating expense - as reported
 
(30,645
)
 
(31,627
)
 
(34,016
)
 
(36,596
)
 
(34,820
)
NOI
 
275,898


276,618


286,882

 
290,685

 
297,026

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Adjustment for Excluded Properties
 
1,323

 
447

 
(780
)
 
—

 
—

 Cash NOI
 
$
268,967


$
268,362


$
275,231


$
279,286


$
286,910

___________________________________
(1)
Rental income includes percentage rent of $1.6 million, $1.2 million, $2.0 million, $1.3 million and $1.2 million for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.

Normalized Cash NOI
 
 
Three Months Ended
 
 
September 30, 2017
Cash NOI
 
$
268,967

Adjustments for intra-quarter acquisitions and dispositions (1)
 
1,207

Normalized Cash NOI
 
$
270,174

___________________________________
(1)
For properties acquired during the three months ended September 30, 2017, 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 September 30, 2017, the adjustment eliminates Cash NOI for the period.


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

 
vereitlogoa13.jpg
 
 
Q3 2017 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 Operating Properties that were owned for the entirety of both the current and prior reporting periods, except for properties that during the current or prior year were under development or redevelopment. The following tables show the Company's same store portfolio statistics, which included 4,019(1) Operating Properties, with 87.7 million aggregate square feet, acquired prior to July 1, 2016 and owned through September 30, 2017:

 
 
Three Months Ended September 30,
 
Increase/(Decrease)
 
 
2017
 
2016
 
$ Change
 
% Change
Contract Rental Revenue
 
$
268,844

 
$
268,702

 
$
142

 
0.1
%
Economic Occupancy Rate
 
98.9
%
 
99.2
%
 
N/A

 
N/A

 
 
 
 
Contract Rental Revenue
 
 
 
Number of
 
Three Months Ended September 30,
 
Increase/(Decrease)
 
 
 
Properties
 
2017
 
2016
 
$ Change
 
% Change
 
Retail
 
2,070

 
$
109,579

 
$
109,891

 
$
(312
)
 
(0.3
)%
 
Restaurant
 
1,710

 
59,724

 
59,763

 
(39
)
 
(0.1
)%
 
Industrial and distribution
 
141

 
42,599

 
42,271

 
328

 
0.8
 %
 
Office
 
89

 
56,811

 
56,649

 
162

 
0.3
 %
(3) 
Other (2)
 
9

 
131

 
128

 
3

 
2.3
 %
 
Total
 
4,019

 
$
268,844

 
$
268,702

 
$
142

 
0.1
 %
(3) 
___________________________________
(1)
Development and expansion properties are included in the same store population if the placed in service date was prior to July 1, 2016.
(2)
Other properties include billboards, land and parking lots.
(3)
Excluding the impact of certain early office lease renewal efforts, office same store rent increased 1.3% and total same store rent increased 0.3% during the three months ended September 30, 2017, as compared to the same quarter in 2016.

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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Debt Outstanding and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
Remaining 2017
 
2018
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
Mortgage notes payable (1)
 
$
2,072,725

 
$
17,781

 
$
67,603

 
$
223,171

 
$
265,582

 
$
353,274

 
$
315,266

 
$
157,887

 
$
672,161

Credit Facility
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Corporate bonds (2)
 
2,850,000

 
—

 
—

 
750,000

 
—

 
400,000

 
—

 
—

 
1,700,000

Convertible notes
 
1,000,000

 
—

 
597,500

 
—

 
402,500

 
—

 
—

 
—

 
—

Secured term loan
 
13,714

 
—

 
13,714

 
—

 
—

 
—

 
—

 
—

 
—

Total Adjusted Debt Outstanding
 
$
5,936,439

 
$
17,781

 
$
678,817

 
$
973,171

 
$
668,082


$
753,274


$
315,266


$
157,887

 
$
2,372,161

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable (1)
 
34.9
%
 
4.87
%
 
4.5

Corporate bonds
 
48.0
%
 
4.03
%
 
5.9

Convertible notes
 
16.9
%
 
3.30
%
 
1.8

Secured term loan
 
0.2
%
 
5.81
%
 
0.2

Total
 
100.0
%
 
4.21
%
 
4.7

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
64.9
%
 
3.84
%
 
4.8

Total secured debt
 
35.1
%
 
4.88
%
 
4.4

Total
 
100.0
%
 
4.21
%
 
4.7

 
 
 
 
 
 
 
Total fixed-rate debt (3)
 
99.7
%
 
4.21
%
 
4.7

Total variable-rate debt
 
0.3
%
 
4.54
%
 
—

Total
 
100.0
%
 
4.21
%
 
4.7

Preferred Equity
 
Balance (4)
 
Percent of Total Preferred Equity
 
Dividend Rate
Series F preferred stock
 
$
1,070,853

 
100.00
%
 
6.7
%
___________________________________
(1)
Omits one mortgage note payable secured by an Excluded Property with Debt Outstanding of $16.2 million and an interest rate of 9.48%.
(2)
On August 11, 2017, the Company closed a senior note offering, consisting of $600.0 million aggregate principal amount of the Operating Partnership’s 3.950% Senior Notes due 2027. The Company subsequently used a portion of the proceeds from the offering to repay borrowings under its $500.0 million Credit Facility Term Loan.
(3)
Includes $79.2 million of variable-rate debt with its interest rate fixed by way of an interest rate swap agreement.
(4)
Balance represents 42.8 million shares outstanding at September 30, 2017 multiplied by the liquidation preference of $25 per share.









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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


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

vereitexhibi_chart-01247.jpg
___________________________________
(1)
Omits one mortgage note payable secured by an Excluded Property with Debt Outstanding of $16.2 million and an interest rate of 9.48%.
(2)
On August 11, 2017, the Company closed a senior note offering, consisting of $600.0 million aggregate principal amount of the Operating Partnership’s 3.950% Senior Notes due 2027. The Company subsequently used a portion of the proceeds from the offering to repay borrowings under its $500.0 million Credit Facility Term Loan.


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


vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Adjusted Debt Outstanding As Of September 30, 2017
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Cantor Commercial Real Estate Lending, L.P.
 
01/06/24
 
$
465,000

 
4.97
%
 
4.97
%
 
I/O
Cantor Commercial Real Estate Lending, L.P.
 
01/06/24
 
155,000

 
4.97
%
 
4.97
%
 
I/O
JPMorgan Chase Bank, N.A.
 
09/01/20
(3) 
96,697

 
5.55
%
 
5.55
%
 
P&I
Wells Fargo Bank, National Association
 
03/01/23
(3) 
74,250

 
4.23
%
 
4.23
%
 
I/O
Wells Fargo Bank, National Association
 
07/01/22
(3) 
68,110

 
4.54
%
 
4.54
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
06/06/20
 
61,823

 
5.73
%
 
5.73
%
 
P&I
Wells Fargo Bank, National Association
 
05/01/21
 
60,450

 
5.54
%
 
5.54
%
 
I/O
PNC Bank, National Association
 
01/01/19
 
59,500

 
4.10
%
 
4.10
%
 
I/O
Citigroup Global Markets Realty Corp
 
05/06/22
 
54,300

 
6.05
%
 
6.05
%
 
I/O
Capital One, N.A.
 
11/20/19
 
51,400

 
1mo. Libor + 1.95%

(4) 
3.27
%
 
I/O through 11/01/2017, then P&I
American General Life Insurance Company
 
11/01/21
 
51,250

 
5.25
%
 
5.25
%
 
I/O
JPMorgan Chase Bank, N.A.
 
05/01/21
 
46,910

 
5.53
%
 
5.53
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
05/06/21
(3) 
46,670

 
5.92
%
 
5.92
%
 
I/O
People's United Bank
 
04/01/21
 
41,704

 
5.55
%
 
5.55
%
 
P&I
Wells Fargo Bank, National Association
 
06/01/22
(3) 
41,000

 
4.73
%
 
4.73
%
 
I/O
Morgan Stanley Mortgage Capital Holdings LLC
 
01/01/23
 
40,800

 
4.46
%
 
4.46
%
 
I/O
JPMorgan Chase Bank, N.A.
 
06/01/20
 
40,393

 
5.71
%
 
5.71
%
 
P&I
JPMorgan Chase Bank, N.A.
 
11/01/19
(3) 
38,500

 
4.10
%
 
4.10
%
 
I/O
The Royal Bank of Scotland Plc
 
01/01/21
 
34,000

 
5.48
%
 
5.48
%
 
I/O
Goldman Sachs Mortgage Company
 
12/06/20
 
31,500

 
5.25
%
 
5.25
%
 
I/O
Oritani Bank
 
05/01/24
 
30,050

 
3.25
%
 
3.25
%
 
I/O through 05/01/2019, then P&I
Goldman Sachs Mortgage Company
 
12/06/20
 
30,000

 
5.25
%
 
5.25
%
 
I/O
Jackson National Life Insurance Company
 
10/01/18
(3) 
29,450

 
4.25
%
 
4.25
%
 
I/O
German American Capital Corporation
 
10/06/22
(3) 
29,160

 
4.48
%
 
4.48
%
 
I/O
German American Capital Corporation
 
10/06/22
(3) 
28,440

 
4.48
%
 
4.48
%
 
I/O
BOKF, NA dba Bank of Oklahoma
 
07/29/18
 
27,807

 
1mo. Libor + 2.75%

(4) 
4.10
%
 
P&I
PNC Bank, National Association
 
06/01/22
 
27,750

 
4.22
%
 
4.22
%
 
I/O
GS Commercial Real Estate LP
 
08/06/19
(3) 
27,725

 
4.73
%
 
4.73
%
 
I/O
Jackson National Life Insurance Company
 
07/01/19
 
27,200

 
3.10
%
 
3.10
%
 
I/O
PNC Bank, National Association
 
09/01/22
 
27,173

 
4.00
%
 
4.00
%
 
P&I
John Hancock Life Insurance Company
 
10/03/22
 
22,500

 
4.04
%
 
4.04
%
 
I/O
Aviva Life and Annuity Company
 
07/01/21
 
19,600

 
5.02
%
 
5.02
%
 
I/O through 07/01/2019, then P&I
The Variable Annuity Life Insurance Company
 
01/01/23
 
19,525

 
4.00
%
 
4.00
%
 
I/O
Morgan Stanley Mortgage Capital Holdings LLC
 
05/10/21
 
19,513

 
5.67
%
 
5.67
%
 
I/O
Oritani Bank
 
05/01/24
 
18,889

 
3.25
%
 
3.25
%
 
I/O through 05/01/2019, then P&I
German American Capital Corp
 
06/06/22
 
18,877

 
4.60
%
 
4.60
%
 
P&I
The Royal Bank of Scotland Plc
 
03/01/21
 
18,100

 
5.88
%
 
5.88
%
 
I/O
JPMorgan Chase Bank, National Association
 
05/01/21
(3) 
15,470

 
5.54
%
 
5.54
%
 
P&I
Amegy Bank, National Association
 
10/18/17
 
15,444

 
1mo. Libor + 2.95%

 
3.79
%
 
P&I
Oritani Bank
 
01/01/23
 
15,000

 
3.75
%
 
3.75
%
 
I/O through 01/01/2018, then P&I
JPMorgan Chase Bank, N.A.
 
07/01/20
 
11,056

 
5.50
%
 
5.50
%
 
P&I

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


vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Adjusted Debt Outstanding As Of September 30, 2017
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
40/86 Mortgage Capital, Inc.
 
01/01/19
 
$
10,050

 
5.00
%
 
5.00
%
 
I/O
Monumental Life Insurance Company
 
04/01/23
 
9,363

 
3.95
%
 
3.95
%
 
P&I
Transamerica Life Insurance Company
 
08/01/30
 
6,822

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
08/01/30
 
6,078

 
5.32
%
 
5.32
%
 
P&I
Capital Lease Funding, LLC
 
07/15/18
 
1,279

 
7.20
%
 
7.20
%
 
P&I
US Bank National Association
 
04/15/19
 
801

 
5.40
%
 
5.40
%
 
P&I
Transamerica Life Insurance Company
 
08/01/30
 
346

 
5.93
%
 
5.93
%
 
P&I
 
 
 
 
$
2,072,725

(5) 
 
 
4.87
%
 
 
___________________________________
(1)
Represents interest rate in effect at September 30, 2017. 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)
Omits one mortgage note payable secured by an Excluded Property with Debt Outstanding of $16.2 million and an interest rate of 9.48%.

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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 September 30, 2017, 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
 
September 30, 2017
Minimum tangible net worth
 
≥ $5.5B
 
$9.5B
Ratio of total indebtedness to total asset value
 
≤ 60%
 
37.8%
Ratio of adjusted EBITDA to fixed charges
 
≥ 1.5x
 
2.88x
Ratio of secured indebtedness to total asset value
 
≤ 45%
 
13.2%
Ratio of unsecured indebtedness to unencumbered asset value
 
≤ 60%
 
33.3%
Ratio of unencumbered adjusted NOI to unsecured interest expense
 
≥ 1.75x
 
5.28x
Minimum unencumbered asset value
 
≥ $8.0B
 
$11.4B

Corporate Bond Key Covenants
 
Required
 
September 30, 2017
Limitation on incurrence of total debt
 
≤ 65%
 
37.6%
Limitation on incurrence of secured debt
 
≤ 40%
 
13.4%
Debt service coverage
 
≥ 1.5x
 
4.15x
Maintenance of total unencumbered assets
 
≥ 150%
 
297.7%



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

 
vereitlogoa13.jpg
 
 
Q3 2017 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 September 30, 2017.
Property Type
 
Number of Properties
 
Square Feet
 
Weighted Average Lease Term (Years) (1)
 
Weighted Average Cash Cap Rate
 
Purchase Price
Industrial
 
3
 
1,813

 
14.9

 
6.4
%
 
$
100,800

Retail
 
8
 
691

 
19.9

 
7.4
%
 
148,107

Total acquisitions
 
11
 
2,504

 
17.9

 
7.0
%
 
$
248,907


Dispositions
The following table summarizes the Company's property disposition activity and the related gains/losses during the three months ended September 30, 2017.
Property Type
 
Number of Properties
 
Square Feet
 
Weighted Average Lease Term (Years) (2)
 
Weighted Average Cash Cap Rate (3)
 
Sale Price
 
Gain (Loss)
 
Office
 
1
 
86

 
10.1

 
N/A

 
$
4,920

 
$
277

 
Industrial
 
2
 
890

 
2.7

 
8.9
%
 
24,000

 
(3,004
)
 
Red Lobster - GGC Participation (4)
 
4
 
29

 
20.8

 
7.0
%
 
17,336

 
1,782

 
Other restaurants
 
8
 
42

 
7.2

 
7.8
%
 
6,460

 
219

 
Vacant (5)
 
6
 
306

 
 N/A

 
N/A

 
12,490

 
(749
)
 
Other (6)
 
4
 
692

 
5.1

 
N/A

 
150

 
787

(7) 
Total dispositions
 
25
 
2,045
 
9.9

 
7.6
%
 
$
65,356

 
$
(688
)
 
Held for sale assets
 
 
 
 
 
 
 
 
 
 
—

 
Total loss on disposition of real estate, net
 
 
 
 
$
(688
)
 
___________________________________
(1)
Represents the remaining lease term from the 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. Of the $65.4 million of dispositions, the total weighted average cash cap rate of 7.6% represents $28.1 million.
(4)
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 $20.3 million was 5.9%.
(5)
Represents one office, one industrial, one retail, and three restaurant properties.
(6)
Includes two former Excluded Properties, each transferred to the lender for no proceeds, to satisfy the related mortgage loans, and one restaurant property relinquished to the ground lessor upon termination of the ground lease, and one land property. Gain (loss) amounts also include partial condemnations or easements related to certain properties and post-closing adjustments.
(7)
Excludes the aggregate gain relating to the properties transferred to the lender of $11.5 million, which is included in gain (loss) on extinguishment and forgiveness of debt, net in the Consolidated Statements of Operations.


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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification Statistics: Real Estate Portfolio
(unaudited, percentages based on portfolio Annualized Rental Income)
 


vereitexhibi_chart-00617.jpg
___________________________________________________
vereitexhibi_chart-02128.jpg
___________________________________________________
vereitexhibi_chart-03287.jpg
 
vereitexhibi_chart-04452.jpg
___________________________________________________
vereitexhibi_chart-05820.jpg
___________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Operating Properties
 
4,093

 
Rentable Square Feet
 
92,228

 
Economic Occupancy Rate
 
99.0
%
 
Weighted Average Remaining Lease Term
 
9.5

 
Investment-Grade Tenants
 
40.1
%
 
Flat leases
 
21.4
%
 
NNN leases
 
63.1
%
 


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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Top 10 Concentrations: Real Estate Portfolio
(unaudited, square feet and dollars in thousands)
 
Tenant Concentration
 
Number of Leases
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
 
Investment Rating
Red Lobster
 
26

 
2,115

 
2.3
%
 
$
77,549

 
6.8
%
 
B-
Walgreens
 
104

 
1,506

 
1.6
%
 
37,881

 
3.3
%
 
BBB
Family Dollar
 
151

 
3,372

 
3.7
%
 
36,869

 
3.2
%
 
BB+
Dollar General
 
406

 
3,758

 
4.1
%
 
34,552

 
3.0
%
 
BBB
CVS
 
97

 
1,378

 
1.5
%
 
31,165

 
2.7
%
 
BBB+
FedEx
 
47

 
3,299

 
3.6
%
 
30,943

 
2.7
%
 
BBB
Albertson's
 
33

 
1,923

 
2.1
%
 
23,633

 
2.1
%
 
B+
BJ's Wholesale Club
 
3

 
2,223

 
2.4
%
 
19,563

 
1.7
%
 
B-
Citizens Bank
 
166

 
802

 
0.9
%
 
19,482

 
1.7
%
 
A-
Petsmart
 
13

 
870

 
0.9
%
 
17,888

 
1.6
%
 
B
Total
 
1,046

 
21,246

 
23.1
%
 
$
329,525

 
28.8
%
 
 
Tenant Industry Concentration
 
Number of Leases
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Restaurants - Casual Dining
 
349

 
4,691

 
5.1
%
 
$
163,318

 
14.3
%
Manufacturing
 
55

 
17,460

 
18.9
%
 
116,434

 
10.2
%
Restaurants - Quick Service
 
836

 
3,370

 
3.7
%
 
100,966

 
8.8
%
Retail - Discount
 
595

 
10,165

 
11.0
%
 
91,997

 
8.1
%
Retail - Pharmacy
 
241

 
3,592

 
3.9
%
 
82,809

 
7.3
%
Retail - Grocery & Supermarket
 
87

 
5,518

 
6.0
%
 
59,009

 
5.2
%
Finance
 
284

 
2,667

 
2.9
%
 
58,502

 
5.1
%
Retail - Home & Garden
 
102

 
7,249

 
7.9
%
 
52,243

 
4.6
%
Professional Services
 
56

 
3,612

 
3.9
%
 
47,874

 
4.2
%
Retail - Motor Vehicle
 
180

 
5,979

 
6.5
%
 
40,520

 
3.5
%
Total
 
2,785

 
64,303

 
69.8
%
 
$
813,672

 
71.3
%
Geographic Concentration
 
Number of Properties
 
Rentable Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Texas
 
557

 
10,790

 
11.7
%
 
$
147,384

 
12.9
%
Florida
 
255

 
4,565

 
4.9
%
 
64,767

 
5.7
%
Ohio
 
295

 
8,207

 
8.9
%
 
64,464

 
5.6
%
Illinois
 
161

 
4,533

 
4.9
%
 
62,154

 
5.4
%
Pennsylvania
 
161

 
5,512

 
6.0
%
 
54,647

 
4.8
%
California
 
76

 
3,789

 
4.1
%
 
50,620

 
4.4
%
Georgia
 
190

 
3,833

 
4.2
%
 
44,795

 
3.9
%
Michigan
 
185

 
2,196

 
2.4
%
 
39,279

 
3.4
%
Indiana
 
135

 
4,101

 
4.4
%
 
38,015

 
3.3
%
North Carolina
 
163

 
3,233

 
3.5
%
 
36,313

 
3.2
%
Total
 
2,178

 
50,759

 
55.0
%
 
$
602,438

 
52.6
%


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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


Metropolitan Statistical Area (MSA) Concentration
 
Number of Properties
 
Rentable Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Chicago, IL
 
101

 
3,994

 
4.3
%
 
$
52,157

 
4.6
%
Dallas, TX
 
113

 
3,461

 
3.8
%
 
48,701

 
4.3
%
Houston, TX
 
91

 
2,598

 
2.8
%
 
28,305

 
2.5
%
Atlanta, GA
 
89

 
2,752

 
3.0
%
 
28,153

 
2.5
%
Philadelphia, PA
 
50

 
2,005

 
2.2
%
 
26,778

 
2.3
%
New York, NY
 
25

 
1,132

 
1.2
%
 
25,585

 
2.2
%
Boston, MA
 
28

 
1,819

 
2.0
%
 
24,940

 
2.2
%
Phoenix, AZ
 
46

 
1,147

 
1.2
%
 
22,007

 
1.9
%
Cincinnati, OH
 
43

 
2,252

 
2.4
%
 
18,095

 
1.6
%
Washington, DC
 
23

 
613

 
0.7
%
 
17,161

 
1.5
%
Total
 
609

 
21,773

 
23.6
%
 
$
291,882

 
25.6
%



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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Tenants Comprising Over 1% of Annualized Rental Revenue
(unaudited, square feet and dollars in thousands)
 
Tenant
 
Number of Leases
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
 
Investment Rating
Red Lobster
 
26

 
2,115

 
2.3
%
 
$
77,549

 
6.8
%
 
B-
Walgreens
 
104

 
1,506

 
1.6
%
 
37,881

 
3.3
%
 
BBB
Family Dollar
 
151

 
3,372

 
3.7
%
 
36,869

 
3.2
%
 
BB+
Dollar General
 
406

 
3,758

 
4.1
%
 
34,552

 
3.0
%
 
BBB
CVS
 
97

 
1,378

 
1.5
%
 
31,165

 
2.7
%
 
BBB+
FedEx
 
47

 
3,299

 
3.6
%
 
30,943

 
2.7
%
 
BBB
Albertson's
 
33

 
1,923

 
2.1
%
 
23,633

 
2.1
%
 
B+
BJ's Wholesale Club
 
3

 
2,223

 
2.4
%
 
19,563

 
1.7
%
 
B-
Citizens Bank
 
166

 
802

 
0.9
%
 
19,482

 
1.7
%
 
A-
Petsmart
 
13

 
870

 
0.9
%
 
17,888

 
1.6
%
 
B
L.A. Fitness
 
21

 
906

 
1.0
%
 
17,444

 
1.5
%
 
B+
Goodyear
 
10

 
4,728

 
5.1
%
 
16,550

 
1.5
%
 
BB
Tractor Supply
 
59

 
1,235

 
1.3
%
 
16,005

 
1.4
%
 
NR
Amazon
 
3

 
3,048

 
3.3
%
 
14,159

 
1.2
%
 
AA-
Advance Auto Parts
 
106

 
736

 
0.8
%
 
12,099

 
1.1
%
 
BBB-
Home Depot
 
11

 
1,695

 
1.8
%
 
11,463

 
1.0
%
 
A
Total
 
1,256

 
33,594

 
36.4
%
 
$
417,245

 
36.5
%
 
 


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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
 
4

 
426

 
0.5
%
 
$
4,003

 
0.4
%
Agricultural
 
2

 
137

 
0.1
%
 
1,245

 
0.1
%
Education
 
5

 
218

 
0.2
%
 
2,155

 
0.2
%
Entertainment & Recreation
 
23

 
955

 
1.0
%
 
18,833

 
1.7
%
Finance
 
284

 
2,667

 
2.9
%
 
58,502

 
5.1
%
Government & Public Services
 
21

 
899

 
1.0
%
 
18,684

 
1.6
%
Healthcare
 
10

 
1,055

 
1.1
%
 
16,485

 
1.4
%
Information & Communication
 
12

 
507

 
0.6
%
 
7,767

 
0.7
%
Insurance
 
11

 
1,309

 
1.4
%
 
25,647

 
2.2
%
Logistics
 
51

 
4,120

 
4.5
%
 
38,473

 
3.4
%
Manufacturing
 
55

 
17,460

 
18.9
%
 
116,434

 
10.2
%
Mining & Natural Resources
 
4

 
412

 
0.4
%
 
6,641

 
0.6
%
Other Services
 
17

 
476

 
0.5
%
 
2,137

 
0.2
%
Professional Services
 
56

 
3,612

 
3.9
%
 
47,874

 
4.2
%
Rental
 
11

 
719

 
0.8
%
 
6,784

 
0.6
%
Restaurants - Casual Dining
 
349

 
4,691

 
5.1
%
 
163,318

 
14.3
%
Restaurants - Quick Service
 
836

 
3,370

 
3.7
%
 
100,966

 
8.8
%
Retail - Apparel & Jewelry
 
12

 
1,393

 
1.5
%
 
15,130

 
1.3
%
Retail - Department Stores
 
13

 
965

 
1.0
%
 
8,010

 
0.7
%
Retail - Discount
 
595

 
10,165

 
11.0
%
 
91,997

 
8.1
%
Retail - Electronics & Appliances
 
16

 
1,493

 
1.6
%
 
9,688

 
0.8
%
Retail - Gas & Convenience
 
128

 
579

 
0.6
%
 
29,135

 
2.6
%
Retail - Grocery & Supermarket
 
87

 
5,518

 
6.0
%
 
59,009

 
5.2
%
Retail - Hobby, Books & Music
 
12

 
1,004

 
1.1
%
 
6,842

 
0.6
%
Retail - Home & Garden
 
102

 
7,249

 
7.9
%
 
52,243

 
4.6
%
Retail - Home Furnishings
 
40

 
421

 
0.5
%
 
7,520

 
0.7
%
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
 
180

 
5,979

 
6.5
%
 
40,520

 
3.5
%
Retail - Office Supply
 
3

 
56

 
0.1
%
 
888

 
0.1
%
Retail - Pet Supply
 
16

 
915

 
1.0
%
 
18,722

 
1.6
%
Retail - Pharmacy
 
241

 
3,592

 
3.9
%
 
82,809

 
7.3
%
Retail - Specialty (Other)
 
22

 
561

 
0.6
%
 
6,155

 
0.5
%
Retail - Sporting Goods
 
21

 
1,716

 
1.9
%
 
22,752

 
2.0
%
Retail - Warehouse Clubs
 
7

 
2,631

 
2.9
%
 
22,677

 
2.0
%
Other
 
27

 
513

 
0.5
%
 
6,278

 
0.5
%
Total
 
3,340

 
91,302

 
99.0
%
 
$
1,141,720

 
100.0
%


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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic
(unaudited, square feet and dollars in thousands)
 


Location
 
Number of Properties
 
Rentable 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
%
 
$
23,672

 
2.1
%
Alaska
 
3

 
25

 
—
%
 
777

 
0.1
%
Arizona
 
74

 
1,841

 
2.0
%
 
32,023

 
2.8
%
Arkansas
 
96

 
1,101

 
1.2
%
 
14,064

 
1.2
%
California
 
76

 
3,789

 
4.1
%
 
50,620

 
4.4
%
Colorado
 
48

 
1,777

 
1.9
%
 
25,967

 
2.3
%
Connecticut
 
18

 
89

 
0.1
%
 
2,478

 
0.2
%
Delaware
 
12

 
99

 
0.1
%
 
2,103

 
0.2
%
Florida
 
255

 
4,565

 
5.0
%
 
64,767

 
5.7
%
Georgia
 
190

 
3,833

 
4.2
%
 
44,795

 
3.9
%
Idaho
 
16

 
130

 
0.1
%
 
3,232

 
0.3
%
Illinois
 
161

 
4,533

 
4.9
%
 
62,154

 
5.4
%
Indiana
 
135

 
4,101

 
4.5
%
 
38,015

 
3.3
%
Iowa
 
50

 
1,461

 
1.5
%
 
13,040

 
1.1
%
Kansas
 
41

 
2,134

 
2.3
%
 
10,124

 
0.9
%
Kentucky
 
85

 
2,303

 
2.5
%
 
24,683

 
2.2
%
Louisiana
 
94

 
1,612

 
1.8
%
 
21,468

 
1.9
%
Maine
 
25

 
648

 
0.7
%
 
8,572

 
0.8
%
Maryland
 
28

 
610

 
0.7
%
 
14,507

 
1.3
%
Massachusetts
 
39

 
2,579

 
2.8
%
 
30,204

 
2.7
%
Michigan
 
185

 
2,196

 
2.4
%
 
39,279

 
3.4
%
Minnesota
 
51

 
543

 
0.6
%
 
8,151

 
0.7
%
Mississippi
 
76

 
1,833

 
2.0
%
 
14,995

 
1.3
%
Missouri
 
155

 
1,707

 
1.9
%
 
22,593

 
2.0
%
Montana
 
9

 
115

 
0.1
%
 
1,698

 
0.2
%
Nebraska
 
19

 
464

 
0.5
%
 
8,708

 
0.8
%
Nevada
 
28

 
717

 
0.7
%
 
8,363

 
0.7
%
New Hampshire
 
20

 
254

 
0.3
%
 
4,419

 
0.4
%
New Jersey
 
34

 
1,660

 
1.8
%
 
35,801

 
3.1
%
New Mexico
 
47

 
924

 
0.9
%
 
12,625

 
1.0
%
New York
 
79

 
1,527

 
1.7
%
 
27,678

 
2.4
%
North Carolina
 
163

 
3,233

 
3.5
%
 
36,313

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,268

 
0.4
%
Ohio
 
295

 
8,207

 
8.9
%
 
64,464

 
5.7
%
Oklahoma
 
77

 
2,021

 
2.2
%
 
24,882

 
2.2
%
Oregon
 
14

 
300

 
0.3
%
 
5,364

 
0.5
%
Pennsylvania
 
161

 
5,512

 
6.0
%
 
54,647

 
4.8
%
Rhode Island
 
13

 
171

 
0.2
%
 
3,226

 
0.3
%
South Carolina
 
117

 
3,327

 
3.6
%
 
28,292

 
2.5
%
South Dakota
 
12

 
180

 
0.2
%
 
2,169

 
0.2
%
Tennessee
 
109

 
3,455

 
3.8
%
 
29,667

 
2.6
%
Texas
 
557

 
10,790

 
11.7
%
 
147,384

 
12.9
%
Utah
 
7

 
86

 
0.1
%
 
1,376

 
0.1
%
Vermont
 
7

 
23

 
—
%
 
292

 
—
%
Virginia
 
100

 
1,777

 
1.9
%
 
29,826

 
2.6
%
Washington
 
24

 
641

 
0.7
%
 
11,380

 
0.9
%
West Virginia
 
38

 
237

 
0.3
%
 
5,794

 
0.5
%

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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic (cont.)
(unaudited, square feet and dollars in thousands)

 

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

 
1,168

 
1.2
%
 
16,685

 
1.5
%
Wyoming
 
8

 
54

 
0.1
%
 
1,436

 
0.1
%
Territories
 
 
 
 
 
 
 
 
 
 
Puerto Rico
 
3

 
88

 
0.1
%
 
2,335

 
0.2
%
Canadian Provinces
 
 
 
 
 
 
 
 
 
 
Ontario
 
1

 
7

 
—
%
 
345

 
—
%
Total
 
4,093

 
92,228

 
100.0
%
 
$
1,141,720

 
100.0
%





Percentages based on Annualized Rental Income.
regionaldiversity01.jpg

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
Remaining 2017
 
43

 
467

 
0.5
%
 
$
4,011

 
0.4
%
2018
 
174

 
2,300

 
2.5
%
 
29,796

 
2.6
%
2019
 
174

 
3,038

 
3.3
%
 
52,429

 
4.6
%
2020
 
214

 
3,877

 
4.2
%
 
41,801

 
3.7
%
2021
 
189

 
10,501

 
11.4
%
 
83,909

 
7.3
%
2022
 
287

 
9,463

 
10.3
%
 
81,551

 
7.1
%
2023
 
233

 
5,960

 
6.5
%
 
73,762

 
6.5
%
2024
 
173

 
9,029

 
9.8
%
 
105,231

 
9.2
%
2025
 
267

 
4,439

 
4.8
%
 
63,564

 
5.6
%
2026
 
246

 
8,773

 
9.5
%
 
84,265

 
7.4
%
Thereafter
 
1,340

 
33,455

 
36.2
%
 
521,401

 
45.6
%
Total
 
3,340

 
91,302

 
99.0
%
 
$
1,141,720

 
100.0
%

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
 
 
 
 
 
 
 
 
 
 
 
Remaining 2017
 
 
 
 
 
 
 
 
 
 
Retail
 
33

 
396

 
0.4
%
 
$
3,284

 
0.3
%
Restaurant
 
9

 
46

 
0.1
%
 
481

 
0.1
%
Industrial & distribution
 
1

 
25

 
—
%
 
246

 
—
%
Total Remaining 2017
 
43

 
467

 
0.5
%
 
$
4,011

 
0.4
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Retail
 
89

 
1,061

 
1.1
%
 
$
15,097

 
1.3
%
Restaurant
 
69

 
267

 
0.3
%
 
6,652

 
0.6
%
Industrial & distribution
 
9

 
799

 
0.9
%
 
4,155

 
0.4
%
Office
 
5

 
173

 
0.2
%
 
3,874

 
0.3
%
Other (1)
 
2

 
—

 
—
%
 
18

 
—
%
Total 2018
 
174

 
2,300

 
2.5
%
 
$
29,796

 
2.6
%
 
 
 
 
 
 
 
 
 
 
 
2019
 


 


 


 


 


Retail
 
83

 
1,427

 
1.6
%
 
$
17,707

 
1.6
%
Restaurant
 
74

 
307

 
0.3
%
 
7,164

 
0.6
%
Industrial & distribution
 
3

 
137

 
0.1
%
 
1,275

 
0.1
%
Office
 
14

 
1,167

 
1.3
%
 
26,283

 
2.3
%
Total 2019
 
174

 
3,038

 
3.3
%
 
$
52,429

 
4.6
%
 
 
 
 
 
 
 
 
 
 
 
2020
 


 


 


 


 


Retail
 
98

 
1,200

 
1.3
%
 
$
15,668

 
1.4
%
Restaurant
 
96

 
388

 
0.4
%
 
7,698

 
0.7
%
Industrial & distribution
 
8

 
1,352

 
1.5
%
 
5,222

 
0.5
%
Office
 
11

 
937

 
1.0
%
 
13,212

 
1.1
%
Other (1)
 
1

 
—

 
—
%
 
1

 
—
%
Total 2020
 
214

 
3,877

 
4.2
%
 
$
41,801

 
3.7
%
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(1)
Includes billboards, land and parking lots.


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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Retail
 
84

 
1,352

 
1.5
%
 
$
21,157

 
1.9
%
Restaurant
 
69

 
362

 
0.4
%
 
9,253

 
0.8
%
Industrial & distribution
 
14

 
7,098

 
7.7
%
 
25,386

 
2.2
%
Office
 
21

 
1,689

 
1.8
%
 
28,090

 
2.4
%
Other (1)
 
1

 
—

 
—
%
 
23

 
—
%
Total 2021
 
189

 
10,501

 
11.4
%
 
$
83,909

 
7.3
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Retail
 
195

 
2,356

 
2.6
%
 
$
32,396

 
2.8
%
Restaurant
 
51

 
260

 
0.3
%
 
6,726

 
0.6
%
Industrial & distribution
 
26

 
5,474

 
5.9
%
 
19,180

 
1.7
%
Office
 
14

 
1,373

 
1.5
%
 
23,176

 
2.0
%
Other (1)
 
1

 
—

 
—
%
 
73

 
—
%
Total 2022
 
287

 
9,463

 
10.3
%
 
$
81,551

 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
2023
 
 
 
 
 
 
 
 
 
 
Retail
 
158

 
2,189

 
2.4
%
 
$
29,344

 
2.6
%
Restaurant
 
52

 
223

 
0.2
%
 
5,460

 
0.5
%
Industrial & distribution
 
14

 
2,351

 
2.6
%
 
15,467

 
1.3
%
Office
 
9

 
1,197

 
1.3
%
 
23,491

 
2.1
%
Total 2023
 
233

 
5,960

 
6.5
%
 
$
73,762

 
6.5
%
 
 
 
 
 
 
 
 
 
 
 
2024
 
 
 
 
 
 
 
 
 
 
Retail
 
101

 
2,177

 
2.4
%
 
$
29,149

 
2.6
%
Restaurant
 
44

 
230

 
0.2
%
 
6,042

 
0.5
%
Industrial & distribution
 
10

 
3,374

 
3.7
%
 
14,281

 
1.3
%
Office
 
17

 
3,248

 
3.5
%
 
55,720

 
4.8
%
Other (1)
 
1

 
—

 
—
%
 
39

 
—
%
Total 2024
 
173

 
9,029

 
9.8
%
 
$
105,231

 
9.2
%
___________________________________
(1)
Includes billboards, land and parking lots.

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
2025
 
 
 
 
 
 
 
 
 
 
Retail
 
188

 
1,818

 
2.0
%
 
$
32,077

 
2.8
%
Restaurant
 
63

 
272

 
0.3
%
 
7,681

 
0.7
%
Industrial & distribution
 
11

 
1,663

 
1.8
%
 
13,433

 
1.2
%
Office
 
5

 
686

 
0.7
%
 
10,373

 
0.9
%
Total 2025
 
267

 
4,439

 
4.8
%
 
$
63,564

 
5.6
%
 
 
 
 
 
 
 
 
 
 
 
2026
 
 
 
 
 
 
 
 
 
 
Retail
 
90

 
1,979

 
2.2
%
 
$
22,127

 
1.9
%
Restaurant
 
133

 
558

 
0.5
%
 
20,290

 
1.8
%
Industrial & distribution
 
17

 
5,498

 
6.0
%
 
26,562

 
2.4
%
Office
 
6

 
738

 
0.8
%
 
15,286

 
1.3
%
Total 2026
 
246

 
8,773

 
9.5
%
 
$
84,265

 
7.4
%
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
 
 
 
 
 
 
Retail
 
802

 
16,794

 
18.2
%
 
$
245,838

 
21.6
%
Restaurant
 
485

 
5,026

 
5.4
%
 
184,027

 
16.1
%
Industrial & distribution
 
32

 
9,877

 
10.7
%
 
59,905

 
5.2
%
Office
 
18

 
1,758

 
1.9
%
 
31,216

 
2.7
%
Other (1)
 
3

 
—

 
—
%
 
415

 
—
%
Total Thereafter
 
1,340

 
33,455

 
36.2
%
 
$
521,401

 
45.6
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining Lease Expirations
 
3,340

 
91,302

 
99.0
%
 
$
1,141,720

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

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
 
2,106

 
59,926

 
65.0
%
 
$
784,771

 
68.7
%
CPI
 
201

 
7,432

 
8.1
%
 
112,702

 
9.9
%
Flat
 
1,033

 
23,944

 
25.9
%
 
244,247

 
21.4
%
Total
 
3,340


91,302


99.0
%

$
1,141,720


100.0
%

vereitexhibi_chart-00560.jpg

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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
 
2,397

 
54,835

 
59.5
%
 
$
720,811

 
63.1
%
NN
 
902

 
34,849

 
37.8
%
 
387,293

 
33.9
%
Other (1)
 
41

 
1,618

 
1.7
%
 
33,616

 
3.0
%
Total
 
3,340


91,302

 
99.0
%
 
$
1,141,720

 
100.0
%
___________________________________
(1)
Includes gross, modified gross and billboard.
 
vereitexhibi_chart-05661.jpg

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

 
vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION


 
Diversification: Property Type
(unaudited, square feet and dollars in thousands)
 
Property Type
 
Number of Properties (1)
 
Rentable Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Retail (1)
 
2,117

 
32,941

 
35.7
%
 
$
463,844

 
40.6
%
Restaurant
 
1,732

 
8,328

 
9.0
%
 
261,474

 
22.9
%
Industrial and distribution
 
146

 
37,649

 
40.8
%
 
185,112

 
16.2
%
Office
 
89

 
13,310

 
14.5
%
 
230,721

 
20.3
%
Other (2)
 
9

 
—

 
—
%
 
569

 
—
%
Total
 
4,093


92,228


100.0
%

$
1,141,720


100.0
%
___________________________________
(1) Includes 10 anchored shopping centers, representing 1.7% of Annualized Rental Income.
(2) Includes billboards, land and parking lots.




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


vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Retail
(unaudited, percentages based on Annualized Rental Income of the retail properties)
 


vereitexhibi_chart-00976.jpg____________________________________________________
vereitexhibi_chart-02280.jpg______________________________________________________
vereitexhibi_chart-03728.jpg
 
vereitexhibi_chart-05323.jpg_________________________________________________
vereitexhibi_chart-06698.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Operating Properties
 
2,117

 
Rentable Square Feet
 
32,941

 
Economic Occupancy Rate
 
99.4
%
 
Weighted Average Remaining Lease Term
 
9.5

 
Investment-Grade Tenants
 
45.6
%
 
Flat leases
 
34.3
%
 
NNN leases
 
67.3
%
 


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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


vereitexhibi_chart-00595.jpg
____________________________________________________
vereitexhibi_chart-01934.jpg______________________________________________________
vereitexhibi_chart-03052.jpg
 
vereitexhibi_chart-04524.jpg
_________________________________________________
vereitexhibi_chart-05772.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Operating Properties
 
1,732

 
Rentable Square Feet
 
8,328

 
Economic Occupancy Rate
 
95.3
%
 
Weighted Average Remaining Lease Term
 
13.2

 
Investment-Grade Tenants
 
2.8
%
 
Flat leases
 
7.4
%
 
NNN leases
 
99.4
%
 

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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Industrial and Distribution
(unaudited, percentages based on Annualized Rental Income of the industrial & distribution properties)

 


vereitexhibi_chart-00727.jpg____________________________________________________
vereitexhibi_chart-02443.jpg______________________________________________________
vereitexhibi_chart-03877.jpg
 
vereitexhibi_chart-05184.jpg_________________________________________________
vereitexhibi_chart-06355.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Operating Properties
 
146

 
Rentable Square Feet
 
37,649

 
Economic Occupancy Rate
 
100.0
%
 
Weighted Average Remaining Lease Term
 
8.3

 
Investment-Grade Tenants
 
55.3
%
 
Flat leases
 
23.0
%
 
NNN leases
 
53.2
%
 

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

vereitlogoa13.jpg
 
 
Q3 2017 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Office
(unaudited, percentages based on Annualized Rental Income of the office properties)

 


vereitexhibi_chart-01091.jpg____________________________________________________
vereitexhibi_chart-02361.jpg______________________________________________________
vereitexhibi_chart-03896.jpg
 
vereitexhibi_chart-05433.jpg_________________________________________________
vereitexhibi_chart-06929.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Operating Properties
 
89

 
Rentable Square Feet
 
13,310

 
Economic Occupancy Rate
 
97.4
%
 
Weighted Average Remaining Lease Term
 
6.2

 
Investment-Grade Tenants
 
59.0
%
 
Flat leases
 
10.0
%
 
NNN leases
 
21.6
%
 

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

 
vereitlogoa13.jpg
 
 
Q3 2017 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 September 30, 2017:
 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

 
$
3,047

 
$
20,400

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

 
280

 
3,287

 
—

 
Publix, Belk
Total
 
 
 
$
50,429

 
512


6,334


20,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
4,482

 
$
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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 44


coversvereitsuppq320173a01.jpg

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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2017 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Revenues:
 
 
 
 
 
 
 
 
 
 
Offering-related fees and reimbursements
 
$
3,882

 
$
4,523

 
$
4,316

 
$
3,683

 
$
9,545

 Transaction service fees and reimbursements
 
4,000

 
5,062

 
4,097

 
2,320

 
3,779

 Management fees and reimbursements
 
19,303

 
19,100

 
18,718

 
18,585

 
17,745

Total Cole Capital revenues
 
27,185


28,685

 
27,131

 
24,588

 
31,069

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
2,373

 
2,874

 
2,660

 
2,234

 
5,897

 Acquisition-related
 
—

 
36

 
—

 
25

 
—

 General and administrative
 
16,721

 
15,117

 
16,588

 
31,086

 
17,692

 Depreciation and amortization
 
4,947

 
4,855

 
4,855

 
9,170

 
7,276

 Impairment of intangible assets
 
—

 
—

 
—

 
120,931

 
—

 Total operating expenses
 
24,041

 
22,882

 
24,103

 
163,446

 
30,865

Operating income (loss)
 
3,144

 
5,803

 
3,028

 
(138,858
)
 
204

Total other income, net
 
502

 
76

 
128

 
157

 
95

Income (loss) before taxes
 
3,646


5,879

 
3,156

 
(138,701
)
 
299

(Provision for) benefit from income taxes
 
(868
)
 
(1,425
)
 
(1,146
)
 
6,490

 
(59
)
Net income (loss)
 
$
2,778

 
$
4,454

 
$
2,010

 
$
(132,211
)
 
$
240



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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2017 SUPPLEMENTAL INFORMATION

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

 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net income (loss)
 
$
2,778

 
$
4,454

 
$
2,010

 
$
(132,211
)
 
$
240

FFO attributable to common stockholders and limited partners
 
2,778

 
4,454

 
2,010

 
(132,211
)
 
240

 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
—

 
36

 
—

 
25

 
—

 Impairment of intangible assets
 
—

 
—

 
—

 
120,931

 
—

 Amortization of management contracts
 
4,146

 
4,146

 
4,146

 
6,240

 
6,240

 Deferred tax expense (benefit) (1)
 
6,277

 
(4,318
)
 
1,649

 
(9,203
)
 
6,941

Equity-based compensation expense
 
1,664

 
1,665

 
1,447

 
2,108

 
1,387

Other amortization and non-cash charges
 
739

 
627

 
632

 
2,873

 
929

AFFO attributable to common stockholders and limited partners
 
$
15,604

 
$
6,610

 
$
9,884

 
$
(9,237
)
 
$
15,737

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
974,167,088

 
974,160,295

 
973,849,610

 
973,681,227

 
943,480,170

Limited Partner OP Units and effect of dilutive securities (2)
 
24,258,683

 
23,969,333

 
24,402,139

 
24,319,992

 
25,206,373

Weighted-average shares outstanding - diluted (3)
 
998,425,771

 
998,129,628

 
998,251,749

 
998,001,219

 
968,686,543

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share 
 
$
0.003

 
$
0.004

 
$
0.002

 
$
(0.132
)
 
$
0.000

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.016

 
$
0.007

 
$
0.010

 
$
(0.009
)
 
$
0.016

___________________________________
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 47


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Q3 2017 SUPPLEMENTAL INFORMATION

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

 
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net income (loss)
 
$
2,778

 
$
4,454

 
$
2,010

 
$
(132,211
)
 
$
240

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
4,947

 
4,855

 
4,855

 
9,170

 
7,276

Provision for (benefit from) income taxes
 
868

 
1,425

 
1,146

 
(6,490
)
 
59

 EBITDA
 
$
8,593

 
$
10,734

 
$
8,011

 
$
(129,531
)
 
$
7,575

Impairment of intangible assets
 
—

 
—

 
—

 
120,931

 
—

Acquisition-related expenses
 
—

 
36

 
—

 
25

 
—

Program development costs write-off
 
110

 
—

 
—

 
11,054

 
845

Other amortization and non-cash charges
 
(62
)
 
(82
)
 
(77
)
 
(57
)
 
(107
)
Normalized EBITDA
 
$
8,641

 
$
10,688

 
$
7,934

 
$
2,422

 
$
8,313


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


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Q3 2017 SUPPLEMENTAL INFORMATION

 
Net G&A
(unaudited, dollars in thousands)

 
Cole Capital generally receives a selling commission, dealer manager fee and/or a distribution and stockholder servicing fee based on the gross offering proceeds related to the sale of shares of the Cole REITs’ common stock. Cole Capital reallows all or a portion of these fees to participating broker-dealers and records the expense in the same period that it recognizes the related revenue. 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, Cole Capital 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 fees reallowed to participating broker-dealers and reimbursements from the Cole REITs.
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Cole Capital revenue, net of reallowed fees and commissions
 
$
24,812

 
$
25,811

 
$
24,471

 
$
22,354

 
$
25,172

Less: Expense reimbursements from Cole REITs recorded as revenue
 
6,052

 
6,395

 
6,387

 
6,395

 
7,416

Net Cole Capital Revenue
 
18,760


19,416

 
18,084

 
15,959

 
17,756

Other income
 
502

 
76

 
128

 
157

 
95

Net Cole Capital Revenue and other income
 
$
19,262


$
19,492

 
$
18,212

 
$
16,116

 
$
17,851

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
29,796

 
$
29,411

 
$
29,148

 
$
44,353

 
$
29,761

Less: REI segment general and administrative expenses
 
13,075

 
14,294

 
12,560

 
13,267

 
12,069

Cole Capital general and administrative expenses
 
16,721


15,117

 
16,588

 
31,086

 
17,692

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Cole REITs
 
6,052

 
6,395

 
6,387

 
6,395

 
7,416

Net Cole Capital G&A Expense
 
10,669


8,722

 
10,201

 
24,691

 
10,276

Expenses incurred recorded as program development costs
 
319

 
1,165

 
905

 
(8,268
)
 
2,452

Normalized Net Cole Capital G&A Expense
 
$
10,988


$
9,887

 
$
11,106

 
$
16,423

 
$
12,728

 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Margin
 
44.9
%

54.8
%
 
43.6
%
 
15.0
%
 
46.6
%
Normalized Net Cole Capital G&A Expense as percent of Net Cole Capital Revenue and other income
 
57.0
%

50.7
%
 
61.0
%
 
101.9
%
 
71.3
%


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


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Q3 2017 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
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
Beginning Balance
 
$
3,797

 
$
3,182

 
$
3,161

 
$
12,268

 
$
12,115

 
Expenses incurred
 
2,978

 
2,824

 
3,063

 
4,618

 
7,010

 
Offering-related reimbursement revenue
 
(288
)
 
(550
)
 
(884
)
 
(839
)
 
(2,299
)
 
Reserve for uncollectible amounts and write-offs(2)
 
(2,659
)
 
(1,659
)
 
(2,158
)
 
(12,886
)
 
(4,558
)
 
Ending Balance
 
$
3,828


$
3,797

 
$
3,182

 
$
3,161

 
$
12,268

 
___________________________________
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 50


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Q3 2017 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 September 30, 2017:
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")
 
$
369,433

 
$
24,650

 
131

 
$
602,798

 
$
283,600

Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
481,562

 
19,626

 
135

 
653,578

 
262,234

Cole Office & Industrial REIT (CCIT III), Inc. ("CCIT III")
 
16,573

(4) 
93

 
1

 
32,750

 
20,275

Total Open Programs
 
867,568

 
44,369

 
267

 
1,289,126

 
566,109

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

 
48,906

 
36

 
1,194,421

 
592,545

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

 
430,105

 
908

 
5,069,802

 
2,472,493

Other Programs (5)
 
—

 
—

 
24

 
278,348

 
124,029

Total Closed Programs
 
3,566,934

 
479,011

 
968

 
6,542,571

 
3,189,067

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
4,434,502

 
$
523,380

 
1,235

 
$
7,831,697

 
$
3,755,176

___________________________________
(1)
Represents gross proceeds, excluding DRIP shares and redemptions.
(2)
Represents the value of shares issued under each respective program's distribution reinvestment plan.
(3)
Includes properties owned through consolidated 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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 51


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Q3 2017 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 September 30, 2017:
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

 
$
1.57

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

(2) 
$
25.26

 
$
1.57

(4) 
 
 
 
 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
 
 
 
 
W Shares
 
Diversified
 
12/6/2011
 
$
18.13

(3) 
$
18.13

 
$
0.96

(5) 
A Shares
 
Diversified
 
10/10/2013
 
$
17.92

(3) 
$
18.62

 
$
0.96

(5) 
I Shares
 
Diversified
 
11/19/2013
 
$
18.30

(3) 
$
18.30

 
$
0.97

(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 December 31, 2016, as determined by CCPT V's board of directors on March 24, 2017.
(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 September 30, 2017, annualized.
(5)
Represents the sum of daily distribution rates for each day in the previous twelve months.

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


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Q3 2017 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 September 30, 2017.
 
 
Selling
Commissions (1)
 
Dealer
Manager Fees (2)
 
Annual Distribution and Stockholder Servicing Fees (2)
 
Open Programs (3)
 
 
 
 
 
 
 
CCPT V
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
1
%
(3) 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
W Shares
 
—

 
0.55
%
(4) 
—

 
A Shares
 
up to 3.75%

 
0.55
%
(4) 
0.5
%
(4) 
I Shares
 
—

 
0.25
%
(4) 
—

 
 
 
 
 
 
 
 
 
CCIT III
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
1
%
(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 September 30, 2017.
 
 
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.
(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. Distribution and stockholder servicing fees continue to be paid after the offering closes if the 4.0% maximum has not been met.
(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 or average assets, as defined in the respective agreements.
(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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 53


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Q3 2017 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 September 30, 2017:
Program
 
Capital Raised (1)
 
DRIP (2)
 
Number of Investments Acquired 
 
Purchase Price of Acquisitions
 
Number of Investments Sold
 
Sales Price of Dispositions
Open Programs
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
$
16,059

 
$
2,799

 
4

 
$
45,326

 
—

 
$
—

INAV
 
45,017

 
2,757

 
2

 
33,342

 
—

 
—

CCIT III
 
5,326

 
55

 
—

 
—

 
—

 
—

Total Open Programs
 
66,402

 
5,611

 
6

 
78,668

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs
 
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
—

 
5,574

 
—

 
—

 
—

 
—

CCPT IV
 
—

 
25,178

 
13

 
111,356

 
3

 
80,942

Other Programs (3)
 
—

 
—

 
—

 
—

 
1

 
3,600

Total Closed Programs
 
—

 
30,752

 
13

 
111,356

 
4

 
84,542

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
66,402

 
$
36,363

 
19

 
$
190,024

 
4

 
$
84,542

___________________________________
(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 TIC and DST programs and GOP.

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


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Q3 2017 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 September 30, 2017 by activity type:
Program
 
Offering-Related Fees and Reimbursements
 
Transaction Service Revenue and Reimbursements
 
Management Service Revenue and Reimbursements
 
Total Revenue and Reimbursements
Open Programs:
 
 
 
 
 
 
 
 
CCPT V
 
$
1,596

 
$
1,137

 
$
1,916

 
$
4,649

INAV
 
1,837

 
315

 
1,772

 
3,924

CCIT III
 
399

 
24

 
244

 
667

Gross revenue - Open Programs
 
3,832

 
1,476

 
3,932

 
9,240

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
2,323

 
—

 
—

 
2,323

Reimbursements
 
788

 
566

 
1,751

 
3,105

Net Cole Capital Revenue - Open Programs
 
721

 
910

 
2,181

 
3,812

 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCIT II (1)
 
50

(2) 
188

 
2,966

 
3,204

CCPT IV
 
—

 
2,300

 
12,254

 
14,554

Other Programs
 
—

 
36

 
151

 
187

Gross revenue - Closed Programs
 
50

 
2,524

 
15,371

 
17,945

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
50

(2) 
—

 
—

 
50

Reimbursements
 
—

 
78

 
2,869

 
2,947

Net Cole Capital Revenue - Closed Programs
 
—

 
2,446

 
12,502

 
14,948

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
721

 
$
3,356

 
$
14,683

 
$
18,760

___________________________________
(1)
CCIT II closed its offering on September 17, 2016. The program’s fee structure was similar to that of CCPT V.
(2)
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 operating metrics.
VEREIT, Inc. | WWW.VEREIT.COM | 55


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Q3 2017 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
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Capital raised (excluding DRIP)
 
$
66,402

 
$
77,953

 
$
66,718

 
$
67,512

 
$
136,381

 
 
 
 
 
 
 
 
 
 
 
Selling commissions
 
1,816

 
2,343

 
2,177

 
1,831

 
5,008

Dealer manager and distribution fees
 
1,278

 
1,235

 
1,253

 
1,015

 
2,237

Reimbursement revenue
 
788

 
945

 
886

 
837

 
2,300

Gross offering-related revenue
 
3,882


4,523

 
4,316

 
3,683

 
9,545

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
1,816

 
2,343

 
2,177

 
1,831

 
5,008

Reallowed dealer manager and distribution fees
 
557

 
531

 
483

 
403

 
889

Reimbursable expenses
 
788

 
945

 
886

 
837

 
2,300

Net offering-related revenue
 
$
721


$
704

 
$
770

 
$
612

 
$
1,348

 
Transaction service revenue
 
 
Three Months Ended
 
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
Purchase price of acquisitions 
 
$
190,024

 
$
276,701

 
$
216,187

 
$
173,086

 
$
173,869

 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
3,320

 
3,373

 
3,272

 
1,460

 
2,593

 
Finance coordination fee
 
—

 
—

 
—

 
—

 
220

 
Disposition fees
 
36

 
922

 
91

 
84

 
280

 
Reimbursement revenue
 
644

 
767

 
734

 
776

 
686

 
Gross transaction service revenue
 
4,000


5,062

 
4,097

 
2,320

 
3,779

 
Less: Reimbursable expenses
 
644

 
767

 
734

 
776

 
686

 
Net transaction service revenue
 
$
3,356


$
4,295

 
$
3,363

 
$
1,544

 
$
3,093

 
 
Management service revenue
 
 
Three Months Ended
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Assets under management
 
$
7,831,697

 
$
7,712,905

 
$
7,481,884

 
$
7,265,673

 
$
7,131,400

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
151

 
255

 
327

 
325

 
304

Advisory and performance fee revenue
 
14,532

 
14,162

 
13,624

 
13,478

 
13,011

Reimbursement revenue
 
4,620

 
4,683

 
4,767

 
4,782

 
4,430

Gross management service revenue
 
19,303


19,100

 
18,718

 
18,585

 
17,745

Less: Reimbursable expenses
 
4,620

 
4,683

 
4,767

 
4,782

 
4,430

Net management service revenue

$
14,683


$
14,417

 
$
13,951

 
$
13,803

 
$
13,315



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


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Q3 2017 SUPPLEMENTAL INFORMATION

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

 
The following table shows the capital raised on behalf of programs managed by Cole Capital since 2009:
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(1) Includes a $2.5 million investment made by VEREIT in order for CCIT III to break escrow and commence operations.
(2) Represents capital raised on behalf of Cole REITs for the nine months ended September 30, 2017.



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 operating metrics.
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Q3 2017 SUPPLEMENTAL INFORMATION
 
Definitions
 








Annualized Rental Income is rental revenue under our leases on Operating Properties 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, and beginning in 2017, omits the Contract Rental Revenue related to Excluded Properties. 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. Therefore, 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 September 30, 2017 and 2016 (dollar amounts in thousands):
 
 
Three Months Ended September 30,
 
 
2017
 
2016
 Rental income - as reported
 
$
282,341

 
$
303,383

 Direct financing lease income - as reported
 
376

 
494

Adjustments:
 
 
 
 
Straight-line rent
 
(10,257
)
 
(12,454
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,632

Net direct financing lease adjustments
 
491

 
571

Contract Rental Revenue - Excluded Properties
 
8

 
—

Contract Rental Revenue
 
$
274,169

 
$
293,626


CPI is a lease in which base rent is adjusted based on changes in a consumer price index.
Debt Outstanding and Adjusted Debt Outstanding are non-GAAP measures that represent the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. Beginning in 2017, Adjusted Debt Outstanding omits the outstanding principal balance of mortgage notes secured by Excluded Properties. We believe that the presentation of Debt Outstanding and Adjusted Debt Outstanding, which show our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Debt Outstanding and Adjusted Debt Outstanding should not be considered as alternatives 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.
The following table shows a reconciliation of Debt Outstanding and Adjusted Debt Outstanding to the amounts presented in accordance with GAAP on the balance sheet for the periods presented (dollar amounts in thousands):


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Q3 2017 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Mortgage notes payable and other debt, net
 
$
2,115,633

 
$
2,381,031

 
$
2,586,917

 
$
2,671,106

 
$
2,861,210

Corporate bonds, net
 
2,820,164

 
2,228,422

 
2,227,307

 
2,226,224

 
2,225,157

Convertible debt, net
 
981,490

 
978,738

 
976,031

 
973,340

 
970,691

Credit facility, net
 
—

 
497,718

 
497,148

 
496,578

 
496,008

Total debt - as reported
 
5,917,287

 
6,085,909

 
6,287,403

 
6,367,248

 
6,553,066

Adjustments:
 
 
 
 
 
 
 
 
 
 
Deferred financing costs, net
 
51,687

 
48,135

 
51,936

 
55,660

 
59,467

Net premiums
 
(16,335
)
 
(18,599
)
 
(20,131
)
 
(22,012
)
 
(25,694
)
Debt Outstanding
 
5,952,639


6,115,445


6,319,208


6,400,896


6,586,839

Debt Outstanding - Excluded Properties
 
(16,200
)
 
(83,856
)
 
(41,820
)
 
—

 
—

Adjusted Debt Outstanding
 
$
5,936,439

 
$
6,031,589

 
$
6,277,388

 
$
6,400,896

 
$
6,586,839


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, litigation, merger and other non-routine transactions costs, net of insurance recoveries, 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 real estate and intangible assets, straight-line rental revenue, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, write-off of program development costs, and amortization of intangibles, above-market lease assets and below-market lease liabilities. Beginning in 2017, Normalized EBITDA omits the Normalized EBITDA impact of Excluded Properties. 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. Therefore, 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.
Economic Occupancy Rate equals the sum of square feet leased (including month-to-month agreements) divided by Rentable Square Feet.
Enterprise Value equals the sum of the Implied Equity Market Capitalization, preferred stock and Net Debt.

Excluded Properties are properties for which (i) the related mortgage loan is in default, and (ii) management decides to transfer the properties to the lender in connection with settling the mortgage note obligation.

Excluded Properties during the three months ended and at March 31, 2017, were one vacant office property and one vacant industrial property, comprising an aggregate of 578,000 square feet with aggregate Debt Outstanding of $41.8 million. Excluded


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Q3 2017 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


Properties during the three months ended June 30, 2017, were two vacant office properties and five industrial properties, two of which were vacant. Excluded Properties at June 30, 2017, and during the three months ended September 30, 2017, were two vacant office properties and one vacant industrial property, comprising an aggregate 991,000 square feet with aggregate Debt Outstanding of $83.9 million. At September 30, 2017, the Excluded Property was one vacant industrial property, comprising 307,275 square feet with Debt Outstanding of $16.2 million.
Fixed Charge Coverage Ratio is the sum of (i) Interest Expense, excluding non-cash amortization, (ii) secured debt principal amortization on Adjusted Debt Outstanding and (iii) dividends attributable to preferred shares divided by Normalized EBITDA. Management believes that Fixed Charge Coverage Ratio is a useful supplemental measure of our ability to satisfy fixed financing obligations.
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 GAAP.
NAREIT defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from disposition of property, depreciation and amortization of real estate assets and impairment write-downs on depreciable 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 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, merger and other non-routine costs, net of insurance recoveries, 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, 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, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities. Effective January 1, 2017, we determined to omit the impact of the Excluded Properties and related non-recourse mortgage notes from FFO to calculate AFFO. 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.
GAAP is an abbreviation for generally accepted accounting principles in the United States.
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 of Operating Properties, 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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Q3 2017 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 Expense, excluding non-cash amortization is a non-GAAP measure that represents interest expense incurred on the outstanding principal balance of our debt. This measure excludes (i) the amortization of deferred financing costs, premiums and discounts, which is included in interest expense in accordance with GAAP, and (ii)the impact of Excluded Properties and related non-recourse mortgage notes. 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
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Interest expense - as reported
 
$
(71,708
)
 
$
(73,621
)
 
$
(73,743
)
 
$
(74,613
)
 
$
(79,869
)
Less Adjustments:
 
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs and other non-cash charges
 
(6,063
)
 
(6,399
)
 
(6,443
)
 
(6,514
)
 
(7,081
)
Amortization of net premiums
 
1,478

 
1,797

 
1,881

 
2,731

 
3,723

Interest Expense, excluding non-cash amortization - Excluded Properties
 
(1,302
)
 
(2,573
)
 
(1,058
)
 
—

 
—

Interest Expense, excluding non-cash amortization
 
$
(65,821
)
 
$
(66,446
)
 
$
(68,123
)
 
$
(70,830
)
 
$
(76,511
)
Interest Coverage Ratio equals Normalized EBITDA divided by Interest Expense, excluding non-cash amortization. Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations.
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
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, Cole Capital records these costs as general and administrative expenses and the reimbursements as revenue in the same period. 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 generally receives a selling commission, dealer manager fee and/or a distribution and stockholder servicing fee based on the gross offering proceeds related to the sale of shares of the Cole REITs’ common stock. The Company reallows all or a portion of these fees to participating broker-dealers and records the expense at the same time it recognizes the related revenue. In


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Q3 2017 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


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, Cole Capital records these costs as general and administrative expenses and the reimbursements as revenue in the same period. We believe Net Cole Capital 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.
Net Debt is a non-GAAP measure used to show the Company's Adjusted 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. We believe that the presentation of Net Debt Leverage Ratio provides useful information to investors because our management reviews Net Debt Leverage Ratio as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four. We believe that the presentation of Net Debt to Normalized EBITDA Annualized provides useful information to investors because our management reviews Net Debt to Normalized EBITDA Annualized as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
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. Beginning in 2017, Cash NOI omits the Cash NOI impact of Excluded Properties. 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
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Operating income
 
$
74,468

 
$
49,991

 
$
75,808

 
$
86,187

 
$
85,468

Acquisition-related expenses
 
909

 
720

 
617

 
923

 
90

Litigation, merger and other non-routine costs, net of insurance recoveries
 
9,507

 
14,411

 
12,875

 
1,512

 
4,630

General and administrative
 
13,075

 
14,294

 
12,560

 
13,267

 
12,069

Depreciation and amortization
 
171,576

 
179,433

 
178,297

 
182,190

 
187,897

Impairment of real estate
 
6,363

 
17,769

 
6,725

 
6,606

 
6,872

NOI
 
275,898

 
276,618

 
286,882

 
290,685

 
297,026

Straight-line rent, net of bad debt expense related to straight-line rent
 
(9,955
)
 
(10,870
)
 
(12,797
)
 
(13,163
)
 
(12,319
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,210

 
1,703

 
1,305

 
1,220

 
1,632

Net direct financing lease adjustments
 
491

 
464

 
621

 
544

 
571

Cash NOI - Excluded Properties
 
1,323

 
447

 
(780
)
 
—

 
—

 Cash NOI
 
$
268,967


$
268,362


$
275,231


$
279,286


$
286,910



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Q3 2017 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


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. Management believes that Normalized EBITDA Margin is a useful supplemental measure of our operating profitability.
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 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.
Operating Properties refers to all properties owned by the Company and beginning in 2017, it omits Excluded Properties owned by the Company as of the reporting date.
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.
Rentable Square Feet is leasable square feet of Operating Properties.
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).
Unencumbered Asset Ratio equals unencumbered Gross Real Estate Investments divided by Gross Real Estate Investments. Management believes that Unencumbered Asset Ratio is a useful supplemental measure of our overall liquidity and leverage.
Weighted Average Remaining Lease Term is the number of years remaining on each respective lease, weighted based on Annualized Rental Income of Operating Properties.


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