NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
▪ Q3 2016
Supplemental Financial &
Operating Information
THIRD QUARTER ENDED
SEPTEMBER 30, 2016
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
About Spirit
Spirit Realty Capital, Inc. (NYSE:SRC) is a premier net lease real
estate investment trust (REIT) that invests in and manages a
portfolio primarily of single-tenant, operationally essential real
estate assets throughout the United States. Single-tenant,
operationally essential real estate generally refers to free-standing,
commercial real estate facilities where our tenants conduct
business activities that are essential to the generation of their sales
and profits. Our properties are frequently acquired through strategic
sale-leaseback transactions and predominantly leased on a long-
term, triple-net basis to high-quality tenants.
Founded in 2003, we are an established net-lease REIT with a
proven growth strategy and a seasoned management team focused
on producing superior risk adjusted returns. As of September 30,
2016, our undepreciated gross real estate investment portfolio was
approximately $8.4 billion, representing investments in 2,705
properties, including properties securing mortgage loans made by
the Company. Our properties have an occupancy rate of 98.4% and
are leased to approximately 452 tenants who represent 28 diverse
industries across 49 states.
At September 30, 2016, Spirit’s leases had a weighted average
remaining term of 10.5 years. In addition, approximately 46% of
Spirit’s annual rental revenues were derived from master leases
and approximately 89% of Spirit’s single tenant leases provided for
periodic rent increases.
2
CORPORATE OVERVIEW
Corporate Headquarters
2727 N. Harwood St.,
Suite 300
Dallas, Texas 75201
Phone: 972-476-1900
www.spiritrealty.com
Transfer Agent
American Stock Transfer
& Trust Company, LLC
Phone: 866-703-9065
www.amstock.com
Investor Relations
(972) 476-1900
InvestorRelations@spiritrealty.com
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
TABLE OF CONTENTS
3
Portfolio and Financial Overview 4
Condensed Consolidated Statements of Operations 5
Funds and Adjusted Funds From Operations 6
Consolidated Balance Sheets 7
Capitalization and Debt Summary 8
Acquisition Activity 11
Disposition Activity 12
Tenant / Industry / Portfolio Diversification 13
Same Store Performance 16
Occupancy 17
Lease Structure and Expirations 18
Net Asset Value (NAV) Components 19
Analyst Coverage 20
Appendix: 21
Reporting Definitions and Explanations 22
Non-GAAP Reconciliations 26
Forward-Looking Statements and Risk Factors 27
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
PORTFOLIO AND FINANCIAL OVERVIEW
$ in thousands
4
Portfolio Data
Total Real Estate Investments $8,388,494
Properties:
Owned Properties 2,630
Securing Mortgage Loans 75
Total 2,705
Tenants 452
Industries 28
States 49
Weighted Average Remaining Lease Term (Years) 10.5
Occupancy 98.4%
Capitalization
Equity Market Capitalization $6,445,939
Total Debt $3,803,650
Total Market Capitalization $10,249,589
Enterprise Value $10,236,405
Financial Ratios
Adjusted Debt / Enterprise Value 36.8%
Adjusted Debt / Annualized Adjusted EBITDA 6.2x
Fixed Charge Coverage Ratio 3.5x
Unencumbered Assets / Unsecured Debt 3.2x
Top 10 Tenants (1) Properties Percent of NormalizedRevenue
1 Specialty Retail Shops Holding Corp. 120 8.0%
2 84 Properties, LLC 108 2.8%
3 Walgreen Company 50 2.6%
4 Cajun Global, LLC 193 2.1%
5 AB Acqusition, LLC 24 1.8%
Top 5 Total 495 17.3%
6 Alimentation Couche-Tard, Inc. 83 1.8%
7 Academy, LTD 5 1.7%
8 CVS Caremark Corporation 37 1.4%
9 Carmike Cinemas, Inc. 13 1.3%
10 Carmax, Inc. 8 1.3%
Top 10 Total 641 24.8%
Weighted Average Remaining Lease Term (Years)
Weighted Average Unit Level Rent Coverage
Median Unit Level Rent Coverage
11.5
2.7x
2.3x
Corporate Liquidity
Cash and Cash Equivalents $13,184
Availability Under Revolving Credit Facilities 694,721
Availability Under Term Loan —
Total $707,905
Unencumbered Assets Properties Real Estate Investment
Retail 1,345 $4,338,895
Industrial 20 388,665
Office 28 144,173
Total 1,393 $4,871,733
(1) Tenant concentrations are measured by the legal entities for which we received financial statements. Other tenants may operate the same or similar business concepts or brands set forth above.
Net Income Attributable to Common Stockholders
Three Months Ended September 30, 2016 $27,399
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
$ in thousands
5
(Unaudited) THREE MONTHS ENDED SEPTEMBER 30,
NINE MONTHS ENDED
SEPTEMBER 30,
2016 2015(Restated) 2016
2015
(Restated)
Revenues
Rentals $161,765 $159,183 $484,090 $473,308
Interest Income on Loans Receivable 1,042 1,764 4,326 5,216
Earned Income From Direct Financing Leases 660 725 2,082 2,299
Tenant Reimbursement Income 3,469 3,780 10,493 11,903
Other Income and Interest from Real Estate Transactions 5,572 2,973 11,600 5,920
Total Revenues 172,508 168,425 512,591 498,646
Expenses
General and Administrative (G&A) 15,112 12,165 40,611 36,737
Restructuring Charges 3,264 100 5,726 100
Property Costs 6,916 6,496 20,854 20,317
Real Estate Acquisition Costs 1,056 576 2,092 2,122
Interest 47,653 54,673 149,842 168,754
Depreciation and Amortization 65,300 64,493 194,227 195,460
Impairments 15,407 21,027 41,396 56,998
Total Expenses 154,708 159,530 454,748 480,488
Income From Continuing Operations Before Other (Expense) Income and Income Tax Expense 17,800 8,895 57,843 18,158
(Loss) Gain on Debt Extinguishment (8,349) 342 326 2,489
Income From Continuing Operations Before Income Tax Expense 9,451 9,237 58,169 20,647
Income Tax Expense (12) (184) (932) (707)
Income From Continuing Operations 9,439 9,053 57,237 19,940
Discontinued Operations
(Loss) Income from Discontinued Operations — (41) — 680
Income Before Gain on Disposition of Assets 9,439 9,012 57,237 20,620
Gain on Disposition of Assets 17,960 5,991 39,221 66,291
Net Income Attributable to Common Stockholders $27,399 $15,003 $96,458 $86,911
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO)
$ in thousands, except per share amounts
6
(Unaudited) THREE MONTHS ENDED SEPTEMBER 30,
NINE MONTHS ENDED
SEPTEMBER 30,
2016 2015 2016 2015
Net Income Attributable to Common Stockholders (1) $27,399 $15,003 $96,458 $86,911
Portfolio Depreciation and Amortization - Continuing Operations 65,155 64,399 193,892 195,178
Portfolio Impairments - Continuing Operations 15,384 20,629 41,693 56,506
Portfolio Impairments - Discontinued Operations — — — 34
Realized Gain on Sales of Real Estate (2) (17,960) (5,993) (39,221) (66,883)
Funds From Operations $89,978 $94,038 $292,822 $271,746
(Loss) Gain on Debt Extinguishment 8,349 (342) (326) (2,489)
Restructuring Charges 3,264 — 5,726 —
Other Costs in G&A Associated with Headquarters Relocation 1,501 — 3,442 —
Real Estate Acquisition Costs 1,056 576 2,092 2,122
Non-Cash Interest Expense 4,178 2,478 10,144 7,644
Accrued Interest and Fees on Defaulted Loans 853 1,960 3,951 5,412
Swap Termination Costs (included in G&A) — — 1,724 —
Non-Cash Revenues (4,200) (5,396) (16,155) (15,947)
Non-Cash Compensation Expense 3,399 3,469 7,189 10,757
Adjusted Funds From Operations $108,378 $96,783 $310,609 $279,245
Dividends Declared to Common Stockholders $84,606 $75,040 $246,151 $221,225
Net Income Per Share of Common Stock
Basic (4) $0.06 $0.03 $0.21 $0.20
Diluted (3) (4) $0.06 $0.03 $0.21 $0.20
FFO Per Share of Common Stock - Diluted
Diluted (3) (4) $0.19 $0.21 $0.64 $0.63
AFFO Per Share of Common Stock - Diluted
Diluted (3) (4) $0.22 $0.22 $0.68 $0.65
Weighted Average Shares of Common Stock Outstanding:
Basic 479,554,362 440,205,348 457,263,526 429,387,707
Diluted (3) 480,598,610 440,353,965 457,301,623 429,738,776
(2) Realized Gains on Sales of Real Estate include amounts related to discontinued operations.
(3) Assumes the issuance of potentially issuable shares unless the result would be anti-dilutive.
(4) For the three months ended September 30, 2016 and 2015, dividends paid to unvested restricted stockholders of $0.2 million and $0.1 million, respectively, and for the nine months ended September 30, 2016 and 2015, dividends paid to
unvested restricted stockholders of $0.4 million and $0.6 million, respectively, are deducted from Net Income, FFO and AFFO attributable to common stockholders in the computation of per share amounts.
(1) For the three and nine months ended September 30, 2016, Net Income Attributable to Common Stockholders includes compensation for lost rent received from the Haggen Holdings, LLC settlement for 6 rejected stores as follows (in millions):
Contractual rent from date of rejection through either sale or September 30, $ 1.3
Three months of prepaid rent for the 3 stores subsequently sold 0.5
Total included in AFFO $ 1.8
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 7
(Unaudited) September 30, 2016
December 31,
2015 (Restated)
ASSETS
Real Estate Investments:
Land and Improvements $2,769,045 $2,710,888
Buildings and Improvements 4,877,955 4,816,481
Total Real Estate Investments 7,647,000 7,527,369
Less: Accumulated Depreciation (974,859) (860,954)
6,672,141 6,666,415
Loans Receivable, Net 69,218 104,003
Intangible Lease Assets, Net 484,600 526,718
Real Estate Assets Under Direct Financing Leases, Net 36,013 44,324
Real Estate Assets Held for Sale, Net 118,425 84,259
Net Investments 7,380,397 7,425,719
Cash and Cash Equivalents 13,184 21,790
Deferred Costs and Other Assets, Net 160,949 179,180
Goodwill 256,470 264,350
TOTAL ASSETS $7,811,000 $7,891,039
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Revolving Credit Facilities $105,000 $—
Term Loan, Net 368,400 322,902
Senior Unsecured Notes, Net 295,215 —
Mortgages and Notes Payable, Net 2,241,783 3,079,787
Convertible Notes, Net 699,465 690,098
Total Debt, Net 3,709,863 4,092,787
Intangible Lease Liabilities, Net 186,935 193,903
Accounts Payable, Accrued Expenses and Other Liabilities 148,267 142,475
Total Liabilities 4,045,065 4,429,165
Commitments and Contingencies
Stockholders' Equity:
Common Stock, $0.01 Par Value, 750,000,000 Shares Authorized: 483,566,341 and 441,819,964 Shares
Issued and Outstanding at September 30, 2016 and December 31, 2015, Respectively 4,836 4,418
Capital in Excess of Par Value 5,174,706 4,721,323
Accumulated Deficit (1,413,599) (1,262,839)
Accumulated Other Comprehensive Loss (8) (1,028)
Total Stockholders' Equity 3,765,935 3,461,874
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,811,000 $7,891,039
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
Enterprise Value
$10,236 Million
$11,000
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
-$1,000
8
Equity
Shares Outstanding 483,566,341
Share Price $13.33
Equity Market
Capitalization $6,445,939
Debt Type
Secured
Unsecured
Debt
Revolving Credit
Facility $105,000
Term Loan 370,000
Senior Unsecured
Notes 300,000
Convertible Notes 747,500
Master Trust Notes 1,677,660
CMBS Notes 603,490
Total Debt $3,803,650
CAPITALIZATION
$ in thousands (unless otherwise stated), except per share data
Total Market
Capitalization $10,249,589
Less: Cash and
Cash Equivalents ($13,184)
Enterprise Value $10,236,405
($ in millions)
CMBS Notes $603
Master Trust Notes $1,678
Convertible Notes / Revolving Credit Facilities /
Term Loan / Senior Unsecured Notes
$1,523
Equity $6,446
Cash ($13)
($1,000)
Debt Type
Unsecured
40%
Secured
60%
Fixed/Floating Rate Debt
Floating
12%
Fixed
88%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 9
Unsecured Debt(1) Secured Debt(1) Total
2015 Credit Facility Term Loan Senior UnsecuredNotes Convertible Notes Master Trust CMBS
Year of Maturity Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount (2)
Weighted
Avg Stated
Int Rate (3)
Amount
Weighted
Avg Stated
Int Rate
2016 Remainder $ — $ — $ — $ — $ — $ 28,557 9.85% $ 28,557 9.85%
2017 — — — — — 233,992 5.83% 233,992 5.83%
2018 — 370,000 1.88% — — 125,000 3.89% 58,266 4.27% 553,266 2.58%
2019 105,000 1.79% — — 402,500 2.88% — 10,000 4.61% 517,500 2.69%
2020 — — — — 460,059 4.72% — 460,059 4.72%
2021 — — — 345,000 3.75% 227,150 5.76% — 572,150 4.55%
2022 — — — — 311,936 5.74% 42,400 4.67% 354,336 5.61%
2023 — — — — 193,515 5.27% 222,622 5.47% 416,137 5.37%
2024 — — — — — — —
2025 — — — — — 1,340 6.00% 1,340 6.00%
Thereafter — 300,000 4.45% — 360,000 4.63% 6,313 5.80% 666,313 4.56%
Total Debt $ 105,000 $ 370,000 $ 300,000 $ 747,500 $ 1,677,660 $ 603,490 $ 3,803,650
(Discounts) Premiums, Net — — (1,848) (35,813) (19,829) 2,515 (54,975)
Deferred Financing Costs,
Net (4) — (1,600) (2,937) (12,222) (17,138) (4,915) (38,812)
Total Debt, Net $ 105,000 $ 368,400 $ 295,215 $ 699,465 $ 1,640,693 $ 601,090 $ 3,709,863
Weighted Avg Stated Int
Rate 1.79% 1.88% 4.45% 3.28% 5.03% 5.63% 4.34%
Weighted Avg Maturity in
Years 2.5 2.1 10 3.5 6.5 3.7 5.2
Number of Owned and
Financed Properties
Securing Debt
— — — — 1,170 142 1,312
(1) Amounts aggregated by outstanding principal balance of debt by year of maturity. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) 2016 includes $28.6 million (including $8.8 million of capitalized interest) for the acceleration of principal payable under a fixed rate CMBS loan that is in default due to the underperformance of the 3 properties that secure it.
(3) Interest rates include the default interest rate with a weighted average stated interest rate of 9.85% for the fixed-rate CMBS loan mentioned in footnote 2. If the default loan was excluded, the weighted average stated interest rate would be 5.42%
for total CMBS maturities, and the total weighted average stated interest rate would be 4.31%.
(4) Excludes deferred financing costs incurred in connection with Revolving Credit Facilities, which are reported in Deferred Costs and Other Assets, net in the consolidated balance sheet.
DEBT SUMMARY
$ in thousands
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
DEBT MATURITIES BY QUARTER
$ in thousands
Year of Maturity (1) First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter Total
Weighted
Avg Stated
Int Rate (3)
2016 Remainder (2) $— $— $— $28,557 $28,557 9.85%
2017 9,221 75,073 77,762 71,936 233,992 5.83%
2018 24,800 — 9,798 518,668 553,266 2.58%
2019 115,000 402,500 — — 517,500 2.69%
2020 150,000 56,759 253,300 — 460,059 4.72%
Thereafter 899,086 345,000 543,335 222,855 2,010,276 4.91%
Total Debt $1,198,107 $879,332 $884,195 $842,016 $3,803,650 4.34%
(1) Amounts aggregated by outstanding principal balance of debt by year of maturity. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) The fourth quarter of 2016 includes $28.6 million (including $8.8 million of capitalized interest) for the acceleration of principal payable under a fixed rate CMBS loan that is in default due to the underperformance of the 3 properties that
secure it.
(3) Interest rates include the default interest rate for the fixed rate CMBS loan mentioned in footnote 2. If the default loan was excluded, the total weighted average stated interest rate would be 4.31%.
10
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 11
Q3 2016
% of
Gross
Invest
Number of
Transactions
Number of
Properties
Gross
Investment
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg.
Lease Term
(Years)
New Tenants 64.0% 6 49 $138,023 $10,565 1,140,314 7.65% 8.87% 16.9
Existing Tenants 36.0% 7 53 77,890 5,632 355,162 7.23% 7.85% 12.3
Total/Weighted Average 100.0% 13 102 $215,913 $16,197 1,495,476 7.50% 8.50% 15.3
By Asset Type:
Retail 100.0% 13 102 $215,913 $16,197 1,495,476 7.50% 8.50% 15.3
Total/Weighted Average 100.0% 13 102 $215,913 $16,197 1,495,476 7.50% 8.50% 15.3
Of Our Q3 2016 Gross Investment of $215.9 Million:
65.4% Sale-Leaseback Transactions
85.0% Master Leases
ACQUISITION ACTIVITY
$ in thousands
YTD 2016
% of
Gross
Invest
Number of
Transactions
Number of
Properties
Gross
Investment
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg.
Lease Term
(Years)
New Tenants 62.2% 20 129 $280,482 $21,790 1,834,426 7.77% 9.09% 17.8
Existing Tenants 37.8% 16 98 176,013 13,080 690,404 7.43% 8.02% 11.7
Total/Weighted Average 100.0% 36 227 $456,495 $34,870 2,524,830 7.64% 8.68% 15.6
By Asset Type:
Retail 90.6% 29 219 $413,458 $31,617 2,320,791 7.65% 8.66% 15.5
Industrial 1.2% 1 1 5,394 456 136,309 8.45% 10.26% 20.0
Office 8.2% 6 7 37,643 2,797 67,730 7.43% 8.62% 15.4
Total/Weighted Average 100.0% 36 227 $456,495 $34,870 2,524,830 7.64% 8.68% 15.6
Of Our YTD 2016 Gross Investment of $456.5 Million:
65.8% Sale-Leaseback Transactions
71.9% Master Leases
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
DISPOSITION ACTIVITY
$ in thousands
Q3 2016
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate
Wtd. Avg. Remaining
Lease Term
(Years)
Occupied 77.3% 14 $42,219 $58,017 6.18% 14.3
Vacant 7.0% 2 3,833 2,050 — —
Properties transferred to lender (1) 15.7% 1 8,604 8,780 — —
Total/Weighted Average 100.0% 17 $54,656 $68,847 6.18% 14.3
By Asset Type:
Retail 79.8% 15 $43,614 $58,567 6.18% 14.3
Industrial 15.7% 1 8,604 8,780 — —
Office 4.5% 1 2,438 1,500 — —
Total/Weighted Average 100.0% 17 $54,656 $68,847 6.18% 14.3
YTD 2016
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate
Wtd. Avg. Remaining
Lease Term
(Years)
Occupied 68.3% 61 $192,282 $221,582 6.55% 12.6
Vacant 14.4% 14 40,465 32,783 — —
Properties transferred to lender (1) 17.3% 7 48,727 58,922 4.00% 6.6
Total/Weighted Average 100.0% 82 $281,474 $313,287 6.33% 12.1
By Asset Type:
Retail 93.8% 79 $264,182 $297,151 6.31% 12.4
Industrial 5.3% 2 14,854 14,636 6.87% 2.5
Office 0.9% 1 2,438 1,500 — —
Total/Weighted Average 100.0% 82 $281,474 $313,287 6.33% 12.1
(1) The three and nine months ended September 30, 2016 includes the transfer of one and seven real estate properties, respectively, securing certain fixed-rate CMBS loans that were in default in return for full and partial settlement of debt.
Gross sales price represents the principal and interest amount that was extinguished.
12
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
TENANT DIVERSIFICATION – TOP 20
13
Tenant (1) Number of Properties
Total
Square Feet
(in thousands)
Percent of
Normalized
Revenue
1 Specialty Retail Shops Holding Corp. (Shopko) 120 8,113 8.0%
2 84 Properties, LLC 108 3,349 2.8%
3 Walgreen Company 50 737 2.6%
4 Cajun Global, LLC (Church's Chicken) 193 272 2.1%
5 AB Acquisition, LLC (Albertsons) 24 1,063 1.8%
6 Alimentation Couche-Tard, Inc. (Circle K) 83 250 1.8%
7 Academy, LTD (Academy Sports + Outdoors) 5 2,705 1.7%
8 CVS Caremark Corporation 37 415 1.4%
9 Carmike Cinemas, Inc. 13 615 1.3%
10 Carmax, Inc. 8 356 1.3%
11 Regal Entertainment Group 14 601 1.2%
12 Ferguson Enterprises, Inc. 8 1,100 1.1%
13 Dollar General Corporation 71 731 1.0%
14 Car Wash Partners, Inc. 23 142 1.0%
15 The Home Depot, Inc. 4 475 1.0%
16 Universal Pool Co., Inc. 14 543 1.0%
17 Tractor Supply Company 26 660 1.0%
18 Rite Aid Corp 25 296 *
19 PetSmart, Inc. 4 1,016 *
20 Smart & Final, LLC 5 263 *
Other 1,752 29,113 67.9%
Vacant 43 2,209 —
Total 2,630 55,024 100.0%
(1) Tenant concentrations are measured by the legal entities that provide us financial statements and/or are the ultimate obligors under the applicable lease agreements. Other tenants may operate the same or similar business concepts or brands set forth above.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
INDUSTRY DIVERSIFICATION
14
Industry Number ofProperties
Total
Square Feet
(in thousands)
Percent of
Normalized
Rental Revenue
General Merchandise 161 9,692 10.3%
Restaurants - Casual Dining 346 2,171 8.7%
Restaurants - Quick Service 578 1,293 7.7%
Movie Theatres 60 3,006 7.1%
Convenience Stores 347 1,096 6.5%
Grocery 67 3,147 5.9%
Building Materials 172 5,614 5.5%
Drug Stores / Pharmacies 113 1,586 5.3%
Medical / Other Office 118 1,163 4.5%
Sporting Goods 24 4,046 4.0%
Health and Fitness 40 1,617 3.6%
Automotive Parts and Service 184 1,321 3.6%
Home Furnishings 32 1,852 2.8%
Entertainment 22 1,129 2.8%
Education 52 872 2.6%
Apparel 13 2,231 2.5%
Automotive Dealers 26 770 2.4%
Home Improvement 13 1,512 2.1%
Specialty Retail 27 1,176 2.0%
Distribution 11 879 1.4%
Car washes 36 198 1.4%
Manufacturing 17 2,301 1.3%
Dollar Stores 83 857 1.3%
Consumer Electronics 12 576 1.2%
Pet Supplies & Service 4 1,016 *
Wholesale Clubs 4 393 *
Financial Services 4 366 *
Office Supplies 17 400 *
Other 4 535 *
Vacant 43 2,209 —
Total 2,630 55,024 100.0%
*Less than 1%
Industry Concentration
Percent of Normalized Rental Revenue
General Merchandise
10.3%
Restaurants - Casual
Dining
8.7%
Restaurants - Quick
Service
7.7%
Movie Theatres
7.1%
Convenience Stores
6.5%
Grocery
5.9%
Building Materials
5.5%
Drug Stores /
Pharmacies
5.3%
Medical / Other Office
4.5%
Sporting Goods
4.0%
Health and Fitness
3.6%
Automotive Parts and
Service
3.6%
Other
27.3%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
PORTFOLIO DIVERSIFICATION
Over $8 billion in real estate investments solely focused on U.S. Markets
15
State
% of
Normalized
Rental
Revenues
Texas 12.0%
Georgia 6.0%
Florida 6.0%
Illinois 5.9%
Ohio 4.7%
California 4.5%
Wisconsin 4.2%
Minnesota 3.4%
Michigan 3.4%
Tennessee 3.2%
Missouri 2.8%
Indiana 2.8%
North Carolina 2.7%
Alabama 2.6%
South Carolina 2.5%
Virginia 2.2%
Arizona 2.1%
Pennsylvania 2.0%
Colorado 1.9%
Kansas 1.8%
New York 1.8%
New Mexico 1.6%
Kentucky 1.6%
Oklahoma 1.4%
Washington 1.3%
Asset Diversification
Retail
87%
Industrial
7%
Office
6%
State
% of
Normalized
Rental
Revenues
Nevada 1.3%
Oregon 1.1%
Massachusetts 1.1%
Mississippi 1.1%
Iowa 1.0%
Arkansas 0.9%
Louisiana 0.9%
Idaho 0.8%
New Hampshire 0.8%
Nebraska 0.8%
New Jersey 0.7%
Maryland 0.7%
West Virginia 0.7%
Montana 0.6%
South Dakota 0.5%
Utah 0.5%
Connecticut 0.5%
North Dakota 0.4%
Maine 0.4%
Wyoming 0.3%
Rhode Island 0.2%
Delaware 0.1%
Alaska 0.1%
Vermont 0.1%
Hawaii --
% of Normalized Rental Revenue
0%–1% 1%–2% 2%–3% 3%–4% 4%–5% > 5%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
SAME STORE PERFORMANCE
$ in thousands
16
Note: Same store performance represents the period-to-period change in contractual cash rent net of reserves for properties included within the defined pool.
Same Store Results
Number of Properties 2,204
Total Square Feet (in thousands) 44,308
Industry Quarter Ended September 30,
Net
Change
% Change by
Industry Type
% of Total
Industry
Contribution
2016 2015
Convenience stores $7,730 $8,616 ($886) (10.3)% 5.9%
Movie theaters 8,593 8,718 (125) (1.4)% 6.6%
Automotive dealers 3,459 3,236 223 6.9 % 2.6%
General merchandise 15,869 15,649 220 1.4 % 12.1%
Restaurants - casual
dining 13,188 13,039 149 1.1 % 10.1%
Automotive parts and
service 4,814 4,667 147 3.1 % 3.7%
Sporting goods 5,094 4,959 135 2.7 % 3.9%
Apparel 2,944 2,840 104 3.7 % 2.3%
Restaurants - quick
service 10,342 10,254 88 0.9 % 7.9%
Remaining industries 58,641 58,432 209 0.4 % 44.9%
Total $130,674 $130,410 $264 0.2 % 100.0%
Asset Type Quarter Ended September 30,
Net
Change
% Change by
Asset Type
% of Total Asset
Type
Contribution
2016 2015
Retail $111,591 $111,570 $21 —% 85.4%
Industrial 11,047 10,852 195 1.8% 8.5%
Office 8,036 7,988 48 0.6% 6.1%
Total $130,674 $130,410 $264 0.2% 100.0%
Same Store Pool Defined
For purposes of determining the same store rent property pool from which we
measure same store rent changes, we include all properties owned throughout
the measurement period in both the current and prior year, excluding multi-tenant
properties and any properties that were vacant or relet at any point during the
measurement period.
Contractual Cash Rent (excludes accrued percentage
rents)
Q3 2016 $130,674
Q3 2015 $130,410
Decrease (in dollars) $264
Decrease (percent) 0.2%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
OCCUPANCY
17
*Unit Level Rent Coverage is derived from the most recent data of tenants who provide unit level financial reporting representing approximately 51% of our rental revenues as of 9/30/2016. Spirit does not independently verify financial information
provided by its tenants.
By Property
Occupied 2,587
Vacant 43
Total Owned Properties 2,630
Occupancy Rate 98.4%
Change in Vacant Properties
Vacant Properties at 12/31/15 36
Additions 28
Dispositions/Relets (21)
Vacant Properties at 9/30/2016 43
Unit Level Coverage*
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16
2.8x
2.9x
2.8x 2.8x 2.8x 2.8x 2.8x
2.9x 2.9x 2.9x
3.0x 3.0x
Historical Occupancy Rates
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16
99.0% 98.9% 98.7% 98.2% 98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 18
Year
Number of
Properties
Total
Square Feet
(in thousands)
Normalized
Rental
Revenue
Annualized (1)
2016 Remainder 16 969 $7,603
2017 67 2,173 19,999
2018 70 1,749 22,353
2019 109 1,966 22,547
2020 76 1,728 21,493
2021 186 3,899 45,538
2022 98 2,061 25,976
2023 109 3,438 34,746
2024 68 1,325 22,148
2025 80 2,168 37,940
Thereafter 1,708 31,339 391,019
Vacant 43 2,209 —
Totals 2,630 55,024 $651,362
Based on Normalized Rental Revenue,
89% of our leases provide for periodic escalations; and
46% of our leases are under Master Lease structures.
LEASE STRUCTURE AND EXPIRATIONS
$ in thousands
Lease Escalations as a Percent of Normalized Rental
Revenue (Excludes Multi-Tenant Properties)
Contractual Fixed
Increases
52%
Flat
11%
CPI-Related
37%
Lease Expirations as a Percent of
Normalized Rental Revenue
2016 Remainder
2017
2018
2019
2020
2021
2022
2023
2024
2025
Thereafter
1.2%
3.1%
3.4%
3.5%
3.3%
7.0%
4.0%
5.3%
3.4%
5.8%
60.0%
(1) Normalized Rental Revenue multiplied by twelve.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 19
Owned Real Estate Portfolio Number of Properties
Real Estate
Investment
Net Book
Value (2)
Annualized
Cash Rents
Wtd. Avg.
Lease Term (Years)
Retail (1) 2,384 $7,063,171 $— $531,944 10.8
Office 118 441,138 — 36,248 9.3
Industrial 60 553,644 — 44,235 7.4
Leased Real Estate Properties Held For Sale, Net 24 — 90,304 7,843 N/M
Vacant Properties (3) 41 — 112,176 — N/A
Properties under Defaulted Loans (4) 3 — 11,757 193 N/A
Total Owned Real Estate Portfolio 2,630 $8,057,953 $214,237 $620,463 10.5
Loans Receivable Number ofProperties
Principal Balance
Outstanding
Wtd. Avg. Stated
Int. Rate
Wtd. Avg.
Maturity (Years)
Total Loans Receivable 75 $61,444 9.78% 4.5
NET ASSET VALUE (NAV) COMPONENTS
$ in thousands
Tangible Assets Net Book Value
Cash and Cash Equivalents $13,184
Restricted Cash 39,037
Accounts Receivable, Prepaid Assets, and Other
Tangible Assets, Net 31,062
Total Other Assets $83,283
Debt Principal BalanceOutstanding
Wtd. Avg. Stated
Int. Rate
Wtd. Avg.
Maturity (Years)
Revolving Credit Facilities $105,000 1.79% 2.5
Term Loan 370,000 1.88% 2.1
Senior Unsecured Notes 300,000 4.45% 10.0
Convertible Notes 747,500 3.28% 3.5
Master Trust Notes 1,677,660 5.03% 6.5
CMBS Notes (5) 603,490 5.63% 3.7
Total Debt $3,803,650 4.34% 5.2
Other Liabilities Net Book Value
Accounts Payable, Accrued Expenses, and Other
Tangible Liabilities (6) $148,267
Total Other Liabilities $148,267
Shares Outstanding
Common Stock 483,566,341
(1) Includes 7 direct financing lease properties with a Real Estate Investment value of $36.0 million. Annualized Cash Rents include the tenants' current cash obligations of $2.7 million for the lease of these properties.
(2) Represents Real Estate Investment value net of accumulated depreciation as of September 30, 2016.
(3) Includes 10 properties that are held for sale with a net book value of $18.5 million.
(4) Includes 2 vacant properties (1 held for sale with a net book value of $4.7 million) and 1 active property that ia held for sale with a net book value of $2.9 million). These 3 properties were acquired between 2006 and 2013.
(5) Includes $28.6 million (including $8.8 million of capitalized interest) for the acceleration of principal payable under a fixed rate CMBS loan that is in default due to the underperformance of the 3 properties that secure it with a net book value of $11.8 million.
(6) Includes $85 million in dividends payable.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
ANALYST COVERAGE
20
Bank of America Merrill Lynch
Juan Sanabria juan.sanabria@baml.com 646.855.1589
Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681
BTIG Michael Gorman mgorman@btif.com 212.738.6138
Capital One
Chris Lucas christopher.lucas@capitalone.com 571.633.8151
Vineet Khanna vineet.khanna@capitalone.com 571.835.7013
Deutsche Bank
Vincent Chao vincent.chao@db.com 212.250.6799
Greg Schweitzer greg.schweitzer@bd.com 212.250.9194
Green Street Advisors
Cedrik Lachance clachance@greenstreetadvisors.com 949.640.8780
Tyler Grant tgrant@greenstreetadvisors.com 949.640.8780
Janney Robert Stevenson robstevenson@janney.com 646.840.3217
Ladenburg Thalman & Co.
Dan Donlan ddonlan@Ladenburg.com 212.409.2056
John Massocca jmassocca@Ladenburg.com 212.409.2543
Mizuho
Haendel St. Juste haendel.st.juste@us.mizuho-sc.com 212.205.7860
Jieren Huang jieren.huang@us.mizuho-sc.com 212.205.7862
Morgan Stanley
Vikram Malhotra vikram.malhotra@morganstanley.com 212.761.7064
Landon Park landon.park@morganstanley.com 212.761.6368
Oppenheimer & Co.
Steve Manaker stephen.manaker@opco.com 212.667.5950
Amit Nihalani Amit.Nihalani@opco.com 212.667.8204
Raymond James
Collin Mings collin.mings@raymondjames.com 727.567.2585
Paul Puryear paul.puryear@raymondjames.com 727.567.2253
Daniel Mannix daniel.mannix@raymondjames.com 727.567.2619
RBC Capital Markets
Michael Carroll michael.carroll@rbccm.com 440.715.2649
Wes Gollady wes.gollady@rbccm.com 440.715.2650
James Bambrick james.bambrick@rbccm.com 440.715.2654
RW Baird RJ Milligan rjmilligan@rwbaird.com 813.273.8252
Sandler O’Neill & Partners, LP
Alex Goldfarb agoldfarb@sandleroneill.com 212.466.7937
Daniel Santos dsantos@sandleroneill.com 212.466.7927
Suntrust Robinson Humphrey
Ki Bin Kim kibin.kim@suntrust.com 212.303.4124
Anthony Hau anthony.hau@suntrust.com 212.303.4176
Ian Gaule ian.gaule@suntrust.com 212.590.0948
UBS
Jeremy Metz jeremy.metz@ubs.com 212.713.2429
Frank Lee frank-a.lee@ubs.com 212.352.5679
Wunderlich Securities, Inc. Craig Kucera ckucera@wunderlich.com 540.277.3366
The aforementioned security analysts currently provide opinions, estimates and forecasts, which are their own and are not promoted or endorsed by Spirit or its management team. Therefore, their opinions, estimates or forecasts are their own and
should not be interpreted as Spirit’s opinions, estimates or forecasts. Any reference or distribution by Spirit expressly disclaims any endorsement of or concurrent with any information, estimates, forecasts, opinions, conclusions or recommendations
provided by analysts.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
Appendix
21
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
REPORTING DEFINITIONS AND EXPLANATIONS
22
Funds from Operations (FFO) and
Adjusted Funds from Operations (AFFO)
We calculate FFO in accordance with the standards
established by the National Association of Real
Estate Investment Trusts, or NAREIT. FFO
represents net income (loss) attributable to common
stockholders (computed in accordance with GAAP),
excluding real estate-related depreciation and
amortization, impairment charges and net (gains)
losses from property dispositions. FFO is a
supplemental non-GAAP financial measure. We use
FFO as a supplemental performance measure
because we believe that FFO is beneficial to
investors as a starting point in measuring our
operational performance. Specifically, in excluding
real estate-related depreciation and amortization,
gains and losses from property dispositions and
impairment charges, which do not relate to or are
not indicative of operating performance, FFO
provides a performance measure that, when
compared year over year, captures trends in
occupancy rates, rental rates and operating costs.
We also believe that, as a widely recognized
measure of the performance of equity REITs, FFO
will be used by investors as a basis to compare our
operating performance with that of other equity
REITs. However, because FFO excludes
depreciation and amortization and does not capture
the changes in the value of our properties that result
from use or market conditions, all of which have real
economic effects and could materially impact our
results from operations, the utility of FFO as a
measure of our performance is limited. In addition,
other equity REITs may not calculate FFO as we do,
and, accordingly, our FFO may not be comparable
to such other equity REITs’ FFO. Accordingly, FFO
should be considered only as a supplement to net
income (loss) attributable to common stockholders
as a measure of our performance.
AFFO is a non-GAAP financial measure of operating
performance used by many companies in the REIT
industry. We adjust FFO to eliminate the impact of
certain items that we believe are not indicative of
our core operating performance, including
restructuring costs, other G&A costs associated with
relocation of the Company's headquarters, default
interest and fees on non-recourse mortgage
indebtedness, debt extinguishment gains (losses),
costs associated with swap terminations,
transaction costs incurred in connection with the
acquisition of real estate investments subject to
existing leases and certain non-cash items. These
certain non-cash items include non-cash revenues
(comprised of straight-line rents, amortization of
above and below market rent on our leases,
amortization of lease incentives, amortization of net
premium (discount) on loans receivable and
amortization of capitalized lease transaction costs),
non-cash interest expense (comprised of
amortization of deferred financing costs and
amortization of net debt discount/premium) and non-
cash compensation expense (stock-based
compensation expense). In addition, other equity
REITs may not calculate AFFO as we do, and,
accordingly, our AFFO may not be comparable to
such other equity REITs’ AFFO. AFFO does not
represent cash generated from operating activities
determined in accordance with GAAP, is not
necessarily indicative of cash available to fund cash
needs and should not be considered as an
alternative to net income (determined in accordance
with GAAP) as a performance measure.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
Adjusted EBITDA represents EBITDA, or earnings
before interest, taxes, depreciation and
amortization, modified to include other adjustments
to GAAP net income (loss) attributable to common
stockholders for real estate acquisition costs,
impairment losses, gains/losses from the sale of
real estate and debt transactions and other items
that we do not consider to be indicative of our on-
going operating performance. We focus our
business plans to enable us to sustain increasing
shareholder value. Accordingly, we believe that
excluding these items, which are not key drivers of
our investment decisions and may cause short-term
fluctuations in net income, provides a useful
supplemental measure to investors and analysts in
assessing the net earnings contribution of our real
estate portfolio. Because these measures do not
represent net income (loss) that is computed in
accordance with GAAP, they should not be
considered alternatives to net income (loss) or as an
indicator of financial performance. A reconciliation of
net income (loss) attributable to common
stockholders (computed in accordance with GAAP)
to EBITDA and Adjusted EBITDA is included in the
Appendix found at the end of this presentation.
Annualized Adjusted EBITDA is calculated by
multiplying Adjusted EBITDA of a quarter by four.
Our computation of Adjusted EBITDA and
Annualized Adjusted EBITDA may differ from the
methodology used by other equity REITs to
calculate these measures, and, therefore, may not
be comparable to such other REITs. A reconciliation
of Annualized Adjusted EBITDA is included in the
Appendix found at the end of this presentation.
Adjusted Debt represents interest bearing debt
(reported in accordance with GAAP) adjusted to
exclude unamortized debt discount/premium and
deferred financing costs, as further reduced by cash
and cash equivalents as well as cash reserves on
deposit with lenders as additional security. By
excluding unamortized debt discount/premium and
deferred financing costs, cash and cash
equivalents, and cash reserves on deposit with
lenders as additional security, the result provides an
estimate of the contractual amount of borrowed
capital to be repaid, net of cash available to repay it.
We believe this calculation constitutes a beneficial
supplemental non-GAAP financial disclosure to
investors in understanding our financial condition. A
reconciliation of interest bearing debt (reported in
accordance with GAAP) to Adjusted Debt is
included in the Appendix found at the end of this
presentation.
Adjusted Debt to Annualized Adjusted EBITDA is
a supplemental non-GAAP financial measure we
use to evaluate the level of borrowed capital being
used to increase the potential return of our real
estate investments, and a proxy for a measure we
believe is used by many lenders and ratings
agencies to evaluate our ability to repay and service
our debt obligations over time. We believe this ratio
is a beneficial disclosure to investors as a
supplemental means of evaluating our ability to
meet obligations senior to those of our equity
holders. Our computation of this ratio may differ
from the methodology used by other equity REITs,
and, therefore, may not be comparable to such
other REITs.
Annualized Cash Rents represents the annualized
monthly contractual cash rent of a lease at a
specified period.
Capitalization Rate represents the Annualized
Cash Rents on the date of a property disposition
divided by the gross sales price. For Multi-Tenant
properties, non-reimbursable property costs are
deducted from the Annualized Cash Rents prior to
computing the disposition Capitalization Rate.
CMBS are those notes secured by commercial real
estate and rents therefrom under which certain
indirect wholly-owned special purpose entity
subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in
our financial statements and the notes thereto
included in our periodic reports filed with the SEC.
Convertible Notes are those $402.5 million
convertible notes of the Company due in 2019 and
the $345.0 million convertible notes of the Company
due in 2021, together. These liabilities are discussed
in greater detail in our financial statements and the
notes thereto included in our periodic reports filed
with the SEC.
REPORTING DEFINITIONS AND EXPLANATIONS
23
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
REPORTING DEFINITIONS AND EXPLANATIONS
24
Economic Yield is calculated by dividing the
contractual cash rent, including fixed rent
escalations and/or cash increases determined by
CPI (assumes a prevailing 1.5% annual increase)
by the initial lease term, expressed as a percentage
of the Gross Investment.
Enterprise Value represents Total Market
Capitalization less cash and cash equivalents as of
the date indicated.
Equity Market Capitalization is calculated by
multiplying the number of shares outstanding by the
closing share price of the Company’s common stock
as of the date indicated.
Fixed Charge Coverage Ratio (FCCR) is the ratio
of Annualized Adjusted EBITDA to Annualized Fixed
Charges, a ratio derived from non-GAAP measures
that we use to evaluate our liquidity and ability to
obtain financing. Fixed charges consist of interest
expense, reported in accordance with GAAP, less
non-cash interest expense. Annualized Fixed
Charges is calculated by multiplying fixed charges
for the quarter by four.
GAAP - Generally Accepted Accounting Principles
in the United States.
Gross Investment represents the gross acquisition
cost including the contracted purchase price and
related capitalized transaction costs.
Initial Cash Yield from properties is calculated by
dividing the first twelve months of contractual cash
rent (excluding any future rent escalations provided
subsequently in the lease and contingent rent) by
the Gross Investment in the related properties. Initial
cash yield is a measure (expressed as a
percentage) of the contractual cash rent expected to
be earned on an acquired property in the first year.
Because it excludes any future rent increases or
additional rent that may be contractually provided
for in the lease, as well as any other income or fees
that may be earned from lease modifications or
asset dispositions, Initial Cash Yield does not
represent the annualized investment rate of return
of our acquired properties. Additionally, actual
contractual cash rent earned from the properties
acquired may differ from the Initial Cash Yield based
on other factors, including difficulties collecting
anticipated rental revenues and unanticipated
expenses at these properties that we cannot pass
on to tenants, as well as the risk factors set forth in
our most recent Annual Report on Form 10-K.
Lease Expiration is the end of the initial term under
a lease and does not account for extension periods
under the lease.
Master Trust Notes are those net-lease mortgage
notes issued under the Spirit Master Funding
Program and the securitization trusts established
thereunder. Indirect special purpose entity
subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in
our financial statements and the notes thereto
included in our periodic reports filed with the SEC.
Net Asset Value (NAV)
We believe disclosing information frequently used in
the calculation of NAV is useful to investors and
because it enables and facilitates calculation of a
metric frequently used by our management as one
method to estimate the fair value of our business.
The assessment of the fair value of our business is
subjective in that it involves estimates and
assumptions and can be calculated using various
methods. Therefore, we have presented certain
information regarding our financial and operating
results, as well as our assets and liabilities that we
believe are important in calculating our NAV, but
have not presented any specific methodology nor
provided any guidance on the assumptions or
estimates that should be used in the calculation of
NAV. The components of NAV do not consider the
potential changes in the value of assets, the
collectability of rents or other receivable obligations,
or the value associated with our operating platform.
Net Book Value represents the Real Estate
Investment value net of accumulated depreciation.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
REPORTING DEFINITIONS AND EXPLANATIONS
25
Normalized Revenue represents current period
quarterly GAAP total revenues as reported in the
Consolidated Statement of Operations, adjusted to
exclude total revenues contributed from properties
sold during that period. We use Normalized
Revenue to calculate tenant concentration
percentages. A tenant concentration percentage is
computed by dividing the current period quarterly
GAAP total revenues contributed by a respective
tenant’s owned properties at the end of the period
by Normalized Revenue.
Normalized Rental Revenue represents monthly
GAAP rentals and earned income from direct
financing leases from our owned properties
recognized during the final month of the reporting
period, adjusted to exclude GAAP rentals and
earned income from direct financing leases
contributed from properties sold during that period.
We use Normalized Rental Revenue when
calculating certain metrics that are useful to
evaluate portfolio credit, asset type, industry and
geographic diversity and to manage risk.
Occupancy is calculated by dividing the number of
occupied, owned properties in the portfolio as of the
measurement date by the number of total owned
properties on said date.
Owned Properties refers to properties owned in fee
or ground leased by Company subsidiaries as
lessee.
Real Estate Investment represents the Gross
Investment plus improvements less impairment
charges.
Revolving Credit Facilities includes the $800
million unsecured credit facility which matures on
March 31, 2019 (“2015 Credit Facility”). The 2015
Credit Facility includes sublimits for swingline loans
and letter of credit issuances. Swingline loans and
letters of credit reduce availability under the 2015
Credit Facility. The ability to borrow under these
Revolving Credit Facilities is subject to the ongoing
compliance with customary financial covenants.
Senior Unsecured Notes refers to the $300 million
aggregate principal amount of 4.450% senior
unsecured notes due 2026.
Term Loan refers to a $370.0 million unsecured
term facility which includes an accordion feature
which allows the facility to be increased to up to
$600.0 million, subject to obtaining additional lender
commitments. Borrowings may be repaid without
premium or penalty, and may be reborrowed within
30 days up to the then available loan commitment.
Total Market Capitalization represents Equity
Market Capitalization plus Total Debt as of the date
indicated.
Total Debt represents the sum of the principal
balances outstanding on interest-bearing debt on
the Company’s balance sheet as of the date
indicated.
Unencumbered Assets represents the assets in
our portfolio that are not subject to mortgage
indebtedness, which we use to evaluate our
potential access to capital and in our management
of financial risk. The asset value attributed to these
assets is the Real Estate Investment.
Unsecured Debt represents components of Total
Debt that are not secured by liens, mortgages or
deeds of trust on Company assets.
Unit Level Rent Coverage is used as an indicator
of individual asset profitability, as well as signaling
the property’s importance to our tenants’ financial
viability. We calculate this ratio by dividing our
reporting tenants’ trailing 12-month EBITDAR
(earnings before interest, tax, depreciation,
amortization and rent) by annual contractual rent.
Weighted Average Remaining Lease Term is
calculated by dividing the sum product of (a) a
stated revenue or sales price component and (b) the
lease term for each lease by (c) the sum of the total
revenue or sale price components for all leases
within the sample.
Weighted Average Stated Interest Rate is
calculated by dividing the sum product of (a) coupon
interest rate of each note and (b) the principal
balance outstanding of each note by (c) the sum of
the total principal balances outstanding for all notes
in the sample.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016 26
Adjusted Debt, Adjusted EBITDA, Annualized Adjusted EBITDA
Q1 2016 Q2 2016 Q3 2016
Revolving Credit Facilities $24,000 $— $105,000
Term Loan, net 332,019 368,207 368,400
Senior Unsecured Notes, net — — 295,215
Mortgages and notes payable, net 2,969,893 2,571,844 2,241,783
Convertible Notes, net 693,173 696,290 699,465
Total Debt, net 4,019,085 3,636,341 3,709,863
Add / (less):
Preferred stock — — —
Unamortized debt discount (premium), net 51,707 51,783 54,975
Unamortized deferred financing costs 39,779 37,848 38,812
Cash and cash equivalents (8,992) (29,410) (13,184)
Cash reserves on deposit with lenders as additional
security classified as other assets (23,789) (21,704) (22,225)
Total Adjustments 58,705 38,517 58,378
Adjusted Debt $4,077,790 $3,674,858 $3,768,241
Net income attributable to common stockholders $23,100 $45,959 $27,399
Add / (less):
Interest 53,017 49,172 47,653
Depreciation and amortization 64,664 64,263 65,300
Income tax expense 81 839 12
Total Adjustments 117,762 114,274 112,965
EBITDA 140,862 160,233 140,364
Add / (less):
Restructuring charges 649 1,813 3,264
Other costs in G&A associated with headquarters relocation 812 1,129 1,501
Real estate acquisition costs 57 979 1,056
Impairments on real estate assets 12,938 13,371 15,384
Swap termination costs (included in G&A) — 1,724 —
Realized gain on sales of real estate assets (10,146) (11,115) (17,960)
Loss on debt extinguishment 5,341 (14,016) 8,349
Total Adjustments 9,651 (6,115) 11,594
Adjusted EBITDA $150,513 $154,118 151,958
Annualized Adjusted EBITDA $602,052 $616,472 $607,832
Adjusted Debt / Annualized Adjusted EBITDA 6.8x 6.0x 6.2x
Enterprise Value $9,090,229 $9,822,051 $10,236,405
Adjusted Debt / Enterprise Value 44.9% 37.4% 36.8%
Fixed Charge Coverage Ratio (FCCR)
Q1 2016 Q2 2016 Q3 2016
Annualized Adjusted
EBITDA $602,052 $616,472 $607,832
Interest Expense 53,017 49,172 47,653
Less: Non-cash interest (2,956) (3,010) (4,178)
Fixed charges $50,061 $46,162 $43,475
Annualized Fixed Charges $200,244 $184,648 $173,900
Fixed Charge Coverage
Ratio 3.0x 3.3x 3.5x
Unencumbered Assets to Unsecured Debt
Q1 2016 Q2 2016 Q3 2016
Unsecured Debt:
Revolving Credit Facilities $24,000 $— $105,000
Senior Notes — — 300,000
Term Loan 334,000 370,000 370,000
Convertible Notes 747,500 747,500 747,500
Total Unsecured Debt $1,105,500 $1,117,500 $1,522,500
Unencumbered Assets $3,345,953 $4,151,995 $4,871,733
Unencumbered Assets /
Unsecured Debt 3.0x 3.7x 3.2x
NON-GAAP RECONCILIATIONS
$ in thousands
Notice Regarding Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this presentation contains and may
refer to certain non-GAAP financial measures. These non-GAAP financial
measures are in addition to, not a substitute for or superior to, measures of financial
performance prepared in accordance with GAAP. These non-GAAP financial
measures should not be considered replacements for, and should be read together
with, the most comparable GAAP financial measures. Reconciliations to the most
directly comparable GAAP financial measures and statements of why
management believes these measures are useful to investors are included in this
Appendix if the reconciliation is not presented on the page in which the measure
is published.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of September 30, 2016 ▪ Q3 2016
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
27
The information in this supplemental report
should be read in conjunction with the
accompanying earnings press release, as well
as the Company's Quarterly Report on Form
10-Q, Annual Report on Form 10-K and other
information filed with the Securities and
Exchange Commission. This supplemental
report is not incorporated into such filings.
This document is not an offer to sell or a
solicitation to buy securities of Spirit Realty
Capital, Inc. Any offer or solicitation shall be
made only by means of a prospectus approved
for that purpose.
Forward-Looking and Cautionary
Statements
This document contains forward-looking
statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and
other federal securities laws. These forward-
looking statements can be identified by the use
of words such as “expects,” “plans,”
“estimates,” “projects,” “intends,” “believes,”
“guidance,” and other similar expressions that
do not relate to historical matters. These
forward-looking statements are subject to
known and unknown risks and uncertainties
that can cause actual results to differ materially
from those currently anticipated due to a
number of factors, which include, but are not
limited to, Spirit’s continued ability to source
new investments, risks associated with using
debt and equity financing to fund Spirit’s
business activities (including refinancing and
interest rate risks, changes in interest rates
and/or credit spreads, changes in the price of
our common stock, and conditions of the
equity and debt capital markets, generally),
unknown liabilities acquired in connection with
acquired properties or interests in real-estate
related entities, risks related to the relocation
of our corporate headquarters to Dallas, Texas,
general risks affecting the real estate industry
and local real estate markets (including,
without limitation, the market value of our
properties, the inability to enter into or renew
leases at favorable rates, portfolio occupancy
varying from our expectations, dependence on
tenants’ financial condition and operating
performance, and competition from other
developers, owners and operators of real
estate), potential fluctuations in the consumer
price index, risks associated with our failure to
maintain our status as a REIT under the
Internal Revenue Code of 1986, as amended,
and other additional risks discussed in Spirit’s
most recent filings with the Securities and
Exchange Commission, including its Annual
Report on Form 10-K. Spirit expressly
disclaims any responsibility to update or revise
forward-looking statements, whether as a
result of new information, future events or
otherwise, except as required by law.
