Supplemental Financial &
Operating Information
FOURTH QUARTER ENDED
DECEMBER 31, 2016
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
About Spirit
Spirit Realty Capital, Inc. (NYSE:SRC) is a premier
net lease real estate investment trust (REIT) that
primarily invests in high-quality, operationally
essential retail real estate, subject to long-term, net
leases. Over the past decade, Spirit has become an
industry leader and owner of income-producing,
strategically located retail, industrial and office
properties providing superior risk adjusted returns
and steady dividend growth for our shareholders.
As of December 31, 2016, our diversified portfolio
was comprised of 2,615 properties, including
properties securing mortgage loans. Our properties
are leased to 450 tenants across 49 states and 28
industries with an aggregate gross leasable area of
approximately 53 million square feet.
2
CORPORATE OVERVIEW
Corporate Headquarters
2727 North Harwood Street
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
Pierre Revol
Vice President
(972) 476-1908
prevol@spiritrealty.com
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 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 12
Disposition Activity 13
Tenant / Industry / Portfolio Diversification 14
Same Store Performance 17
Occupancy 18
Lease Summary 19
Net Asset Value (NAV) Components 20
Analyst Coverage 21
Appendix: 22
Reporting Definitions and Explanations 23
Non-GAAP Reconciliations 27
Forward-Looking Statements and Risk Factors 28
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
PORTFOLIO AND FINANCIAL OVERVIEW
$ in thousands
4
Portfolio Data
Total Real Estate Investments $8,247,654
Properties:
Owned Properties 2,541
Securing Mortgage Loans 74
Total 2,615
Tenants 450
Industries 28
States 49
Weighted Average Remaining Lease Term (Years) 10.7
Occupancy 98.2%
Capitalization
Equity Market Capitalization $5,252,158
Total Debt $3,754,633
Total Market Capitalization $9,006,791
Enterprise Value $8,996,732
Financial Ratios
Adjusted Debt / Enterprise Value 41.5%
Adjusted Debt / Annualized Adjusted EBITDA 6.2x
Fixed Charge Coverage Ratio 3.6x
Unencumbered Assets / Unsecured Debt 3.1x
Top 10 Tenants (1) Properties Percent of NormalizedRental Revenue
1 Specialty Retail Shops Holding Corp. 116 8.2%
2 Walgreen Company 49 2.7%
3 AMC Entertainment, Inc. 17 2.3%
4 Cajun Global, LLC 192 2.2%
5 AB Acquisition, LLC 23 2.1%
Top 5 Total 397 17.5%
6 Alimentation Couche-Tard, Inc. 83 1.9%
7 Academy, LTD 6 1.9%
8 Regal Entertainment Group 15 1.5%
9 GPM Investments, LLC 105 1.5%
10 CVS Caremark Corporation 36 1.5%
Top 10 Total 642 25.8%
Weighted Average Remaining Lease Term (Years)
Weighted Average Unit Level Rent Coverage
Median Unit Level Rent Coverage
11.8
2.7x
2.1x
Corporate Liquidity
Cash and Cash Equivalents $10,059
Availability Under Revolving Credit Facility 714,000
Availability Under Term Loan —
Total $724,059
Unencumbered Assets Properties Real Estate Investment
Retail 1,265 $4,259,655
Industrial 23 424,709
Office 31 164,517
Total 1,319 $4,848,881
(1) Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
$ in thousands
5
(Unaudited) THREE MONTHS ENDED DECEMBER 31,
YEAR ENDED
DECEMBER 31,
2016 2015 2016 2015
Revenues:
Rentals $164,273 $160,843 $648,363 $634,151
Interest income on loans receivable 927 1,732 5,253 6,948
Earned income from direct financing leases 660 725 2,742 3,024
Tenant reimbursement income 3,632 4,049 14,125 15,952
Other Income and interest from real estate transactions 3,891 1,340 15,491 7,260
Total revenues 173,383 168,689 685,974 667,335
Expenses:
General and administrative 12,004 10,993 52,615 47,730
Restructuring charges 615 6,956 6,341 7,056
Property costs 9,985 7,398 30,839 27,715
Real estate acquisition costs 1,137 617 3,229 2,739
Interest 46,744 54,147 196,586 222,901
Depreciation and amortization 68,049 65,173 262,276 260,633
Impairments 46,879 13,697 88,275 70,695
Total expenses 185,413 158,981 640,161 639,469
(Loss) income from continuing operations before other (expense) income and income tax (expense) benefit (12,030) 9,708 45,813 27,866
(Loss) gain on debt extinguishment (93) (5,651) 233 (3,162)
(Loss) income from continuing operations before income tax (expense) benefit (12,123) 4,057 46,046 24,704
Income tax (expense) benefit (33) 106 (965) (601)
(Loss) income from continuing operations (12,156) 4,163 45,081 24,103
Discontinued operations:
Income from discontinued operations — 8 — 98
Gain on disposition of assets — — — 590
(Loss) income before gain on disposition of assets (12,156) 4,171 45,081 24,791
Gain on disposition of assets 13,144 2,130 52,365 68,421
Net income attributable to common stockholders $988 $6,301 $97,446 $93,212
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO)
$ in thousands, except per share amounts
6
(Unaudited) THREE MONTHS ENDED DECEMBER 31,
YEAR ENDED
DECEMBER 31,
2016 2015 2016 2015
Net Income Attributable to Common Stockholders (1) $ 988 $ 6,301 $ 97,446 $ 93,212
Portfolio Depreciation and Amortization - Continuing Operations 67,909 65,079 261,799 260,257
Portfolio Impairments - Continuing Operations 46,379 13,691 88,072 70,197
Portfolio Impairments - Discontinued Operations — — — 34
Realized Gains on Sales of Real Estate (2) (13,144) (2,130) (52,365) (69,014)
Funds From Operations $ 102,132 $ 82,941 $ 394,952 $ 354,686
Loss (Gain) on Debt Extinguishment 93 5,651 (233) 3,162
Restructuring Charges 615 6,956 6,341 7,056
Other Costs in G&A Associated With Headquarters Relocation 187 — 3,629 —
Real Estate Acquisition Costs 1,137 617 3,229 2,739
Non-Cash Interest Expense 5,236 2,723 15,380 10,367
Accrued Interest and Fees on Defaulted Loans 788 2,237 4,740 7,649
Swap Termination Costs (Included in G&A) — — 1,724 —
Non-Cash Revenues (10,180) (4,983) (26,333) (20,930)
Non-Cash Compensation Expense 2,381 2,564 9,570 13,321
Adjusted Funds From Operations $ 102,389 $ 98,706 $ 412,999 $ 378,050
Dividends Declared to Common Stockholders $ 87,040 $ 77,315 $ 333,180 $ 298,531
Net Income Per Share of Common Stock
Basic (4) $— $0.02 $0.21 $0.21
Diluted (3) (4) $— $0.02 $0.21 $0.21
FFO Per Share of Common Stock - Diluted
Diluted (3) (4) $0.21 $0.19 $0.84 $0.82
AFFO Per Share of Common Stock - Diluted
Diluted (3) (4) $0.21 $0.22 $0.88 $0.87
Weighted Average Shares of Common Stock Outstanding:
Basic 482,529,814 440,636,238 469,217,776 432,222,953
Diluted (3) 482,612,237 440,877,254 469,246,265 432,545,625
(1) For the year ended December 31, 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):
(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 December 31, 2016 and 2015, dividends paid to unvested restricted shareholders of $0.2 million and $0.1 million, respectively, and for the year ended December 31, 2016 and 2015, dividends paid to unvested
restricted shareholders of $0.6 million and $0.7 million, respectively, are deducted from Net Income, FFO and AFFO attributable to common stockholders in the computation of per share amounts.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Contractual rent from date of rejection through either sale or December 31, 2016 $ 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 December 31, 2016Q4 2016 7
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts
(Unaudited) December 31, 2016
December 31,
2015
Assets
Real Estate Investments:
Land and Improvements $2,704,010 $2,710,888
Buildings and Improvements 4,775,221 4,816,481
Total Real Estate Investments 7,479,231 7,527,369
Less: Accumulated Depreciation (940,005) (860,954)
6,539,226 6,666,415
Loans Receivable, Net 66,578 104,003
Intangible Lease Assets, Net 470,276 526,718
Real Estate Assets Under Direct Financing Leases, Net 36,005 44,324
Real Estate Assets Held For Sale, Net 160,570 84,259
Net Investments 7,272,655 7,425,719
Cash and Cash Equivalents 10,059 21,790
Deferred Costs and Other Assets, Net 140,917 179,180
Goodwill 254,340 264,350
Total Assets $7,677,971 $7,891,039
Liabilities and Stockholders’ Equity
Liabilities:
Revolving Credit Facilities $86,000 $—
Term Loan, Net 418,471 322,902
Senior Unsecured Notes 295,112 —
Mortgages and Notes Payable, Net 2,162,403 3,079,787
Convertible Notes, Net 702,642 690,098
Total Debt, Net 3,664,628 4,092,787
Intangible Lease Liabilities, Net 182,320 193,903
Accounts Payable, Accrued Expenses and Other Liabilities 148,915 142,475
Total Liabilities 3,995,863 4,429,165
Commitments and Contingencies
Stockholders’ Equity:
Common stock, $0.01 par value, 750,000,000 shares authorized: 483,624,120 shares and 441,819,964
shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively 4,836 4,418
Capital in Excess of Par Value 5,177,086 4,721,323
Accumulated deficit (1,499,814) (1,262,839)
Accumulated Other Comprehensive Loss — (1,028)
Total Stockholders’ Equity 3,682,108 3,461,874
Total Liabilities and Stockholders’ Equity $7,677,971 $7,891,039
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
Enterprise Value
$8,997 Million
$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 483,624,120
Share Price $10.86
Equity Market
Capitalization $5,252,158
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Debt
Revolving Credit
Facility $86,000
Term Loan 420,000
Senior Unsecured
Notes 300,000
Convertible Notes 747,500
Master Trust Notes 1,672,706
CMBS Notes 528,427
Total Debt $3,754,633
CAPITALIZATION
$ in thousands, except per share data
Total Market
Capitalization $9,006,791
Less: Cash and
Cash Equivalents ($10,059)
Enterprise Value $8,996,732
($ in millions)
CMBS Notes $528
Master Trust Notes $1,673
Convertible Notes/Revolving Credit
Facilities/Term Loan/Senior Notes
$1,554
Equity $5,252
Cash ($10)
($1,000)
Debt Type
Unsecured
41%
Secured
59%
Fixed/Floating Rate Debt
Floating
13%
Fixed
87%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016 9
Unsecured Debt(1) Secured Debt(1) Total
Revolving Credit
Facility Term Loan
Senior Unsecured
Notes Convertible Notes Master Trust CMBS Total
Year of Maturity Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate
Amount
Weighted
Avg Stated
Int Rate (2)
Amount
Weighted
Avg Stated
Int Rate
2017 $— $— $— $— $— $188,399 6.44% $188,399 6.44%
2018 — 420,000 1.94% — — 125,000 3.89% 58,202 4.27% 603,202 2.67%
2019 86,000 1.89% — — 402,500 2.88% — 10,000 4.61% 498,500 2.76%
2020 — — — — 457,219 4.72% — 457,219 4.72%
2021 — — — 345,000 3.75% 226,283 5.76% — 571,283 4.55%
2022 — — — — 311,820 5.74% 42,400 4.67% 354,220 5.61%
2023 — — — — 192,384 5.27% 221,866 5.47% 414,250 5.37%
2024 — — — — — — —
2025 — — — — — 1,313 6.00% 1,313 6.00%
2026 — — 300,000 4.45% — — — 300,000 4.45%
Thereafter — — — — 360,000 4.63% 6,247 5.80% 366,247 4.65%
Total Debt $86,000 $420,000 $300,000 $747,500 $1,672,706 $528,427 $3,754,633
(Discounts) Premiums, Net — — (1,812) (33,454) (18,787) 1,159 (52,894)
Deferred Financing Costs,
Net (3) — (1,529) (3,076) (11,404) (16,376) (4,726) (37,111)
Total Debt, Net $86,000 $418,471 $295,112 $702,642 $1,637,543 $524,860 $3,664,628
Weighted Avg Stated Int
Rate 1.89% 1.94% 4.45% 3.28% 5.03% 5.61% 4.32%
Weighted Avg Maturity in
Years 2.2 1.8 9.7 3.3 6.2 3.8 5.0
Number of Owned and
Financed Properties
Securing Debt
— — — — 1,162 134 1,296
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect to scheduled amortization. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) Interest rates include the default interest rates for 2 separate fixed rate CMBS loans totaling $26.6 million that are in default due to the underperformance of the 4 properties that secure them. The weighted average stated interest rate for these
defaulted loans is 10.04%. If the defaulted loans were excluded, the weighted average stated interest would be 5.37% for total CMBS maturities, and the total weighted average stated interest rate would be 4.28%.
(3) 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.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DEBT SUMMARY
$ in thousands
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 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 (2)
2017 $26,557 $75,073 $46,470 $40,299 $188,399 6.44%
2018 24,800 — 9,752 568,650 (3) 603,202 2.67%
2019 96,000 402,500 — — 498,500 2.76%
2020 150,000 53,919 253,300 — 457,219 4.72%
2021 226,283 345,000 — — 571,283 4.55%
Thereafter 671,820 — 542,513 221,697 1,436,030 5.06%
Total Debt $1,195,460 $876,492 $852,035 $830,646 $3,754,633 4.32%
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect to scheduled amortization. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) Interest rates include the default interest rates for 2 separate fixed rate CMBS loans which are in default. If the defaulted loans were excluded, the 2017 weighted average stated interest rate would be 5.72% and the total weighted average
stated interest rate would be 4.28%.
(3) Includes $420 million unsecured Term Loan that is extendible at borrower's option pursuant to two one-year extension options.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
10
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
SENIOR UNSECURED NOTES COVENANT COMPLIANCE
11
Covenant Requirement December 31, 2016
Total Debt to Total Assets < 60% 43.4%
Total Secured Debt to Total Assets < 40% 25.9%
Fixed Charge Coverage > 1.5x 3.55x
Total Unencumbered Assets to Total Unsecured Debt > 1.5x 3.16x
Credit Ratings
Fitch Ratings BBB-
Moody's Ratings Services Baa3
Standard & Poor's Rating Services BBB-
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
ACQUISITION ACTIVITY
$ in thousands
12
Q4 2016 % of GrossInvestment
Number of
Transactions
Number of
Properties
Gross
Investment (1)
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg.
Lease Term
(Years)
New Tenants 48.0% 9 19 $119,296 $9,027 1,162,224 7.57% 8.24% 13.9
Existing Tenants 52.0% 14 23 129,099 9,166 831,780 7.10% 8.33% 13.9
Total/Weighted Average 100.0% 23 42 $248,395 $18,193 1,994,004 7.32% 8.28% 13.9
By Asset Type:
Retail 72.0% 18 36 $178,837 $13,006 1,072,986 7.27% 8.41% 14.1
Industrial 22.2% 3 4 55,156 4,113 822,738 7.46% 8.47% 13.3
Office 5.8% 2 2 14,402 1,074 98,280 7.46% 6.24% 13.5
Total/Weighted Average 100.0% 23 42 $248,395 $18,193 1,994,004 7.32% 8.28% 13.9
Of Our Q4 2016 Gross Investment of $248.4 Million:
48.3% Sale-Leaseback Transactions
29.2% Master Leases
YTD 2016 % of GrossInvestment
Number of
Transactions
Number of
Properties
Gross
Investment (1)
Annualized
Rents
Total
Square Feet
Initial
Cash Yield
Economic
Yield
Wtd. Avg.
Lease Term
(Years)
New Tenants 56.7% 29 148 $399,779 $30,817 2,996,650 7.71% 8.83% 16.7
Existing Tenants 43.3% 30 121 305,112 22,246 1,522,184 7.29% 8.13% 12.5
Total/Weighted Average 100.0% 59 269 $704,891 $53,063 4,518,834 7.53% 8.55% 15.0
By Asset Type:
Retail 84.0% 47 255 $592,296 $44,623 3,393,777 7.53% 8.60% 15.1
Industrial 8.6% 4 5 60,550 4,569 959,047 7.55% 8.63% 14.0
Office 7.4% 8 9 52,045 3,871 166,010 7.44% 7.96% 14.9
Total/Weighted Average 100.0% 59 269 $704,891 $53,063 4,518,834 7.53% 8.55% 15.0
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Of Our YTD 2016 Gross Investment of $704.9 Million:
59.2% Sale-Leaseback Transactions
56.4% Master Leases
(1) Includes revenue producing capital expenditures.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016 13
YTD 2016 % of R/EInvestment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate
Wtd. Avg. Remaining
Lease Term (Years)
Occupied 42.4% 79 $254,800 $282,816 6.65% 12.6
Occupied - 84 Properties, LLC 41.9 108 251,593 205,700 8.71 10.5
Vacant 7.6 19 45,844 37,498 — —
Properties Transferred to Lender (1) 8.1 7 48,727 58,922 n/a n/a
Total/Weighted Average 100.0% 213 $600,964 $584,936 7.38% 11.5
By Asset Type:
Retail 96.9% 209 $582,310 $567,700 7.38% 11.6
Industrial 2.7 3 16,216 15,736 6.87 2.48
Office 0.4 1 2,438 1,500 — —
Total/Weighted Average 100.0% 213 $600,964 $584,936 7.38% 11.5
DISPOSITION ACTIVITY
$ in thousands
(1) The twelve months ended December 31, 2016 include the transfer of seven real estate properties, 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.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Q4 2016 % of R/EInvestment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate
Wtd. Avg. Remaining
Lease Term (Years)
Occupied 19.5% 18 $62,486 $61,233 7.05% 12.6
Occupied - 84 Properties, LLC 78.7 108 251,593 205,700 8.71 10.5
Vacant 1.8 5 5,626 4,715 — —
Total/Weighted Average 100.0% 131 $319,705 $271,648 8.33% 11.0
By Asset Type:
Retail 99.6% 130 $318,343 $270,548 8.33% 11.0
Industrial 0.4 1 1,362 1,100 — —
Total/Weighted Average 100.0% 131 $319,705 $271,648 8.33% 11.0
(1) Cap rates are calculated based solely on income producing properties (This includes 9 of 13 properties for Shopko, 2 of 5 properties for Haggen and 108 of 108 properties for 84 Properties, LLC).
(2) Sales price includes a $5.0 million early termination fee which is excluded from AFFO.
Select Significant Tenant Dispositions
YTD 2016 Number of Properties Sales Price Cap Rate (1)
Shopko 13 $78,031 7.54%
Haggen 5 52,134 4.46%
84 Properties, LLC (2) 108 205,700 8.71%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
Tenant (1) Number of Properties
Total
Square Feet
(in thousands)
Percent of
Normalized
Rental Revenue
1 Shopko (Specialty Retail Shops Holding Corp.) 116 7,798 8.2%
2 Walgreen Company 49 722 2.7%
3 AMC Entertainment, Inc. 17 862 2.3%
4 Church's Chicken (Cajun Global, LLC) 192 271 2.2%
5 Albertsons (AB Acquisition, LLC) 23 1,030 2.1%
6 Circle K (Alimentation Couche-Tard, Inc.) 83 250 1.9%
7 Academy Sports + Outdoors (Academy, LTD) 6 2,769 1.9%
8 Regal Entertainment Group 15 656 1.5%
9 GPM Investments, LLC 105 272 1.5%
10 CVS Caremark Corporation 36 405 1.5%
11 CarMax, Inc. 8 356 1.4%
12 Car Wash Partners, Inc. 24 162 1.1%
13 Ferguson Enterprises, Inc. 8 1,100 1.1%
14 Dollar General Corporation 70 722 1.0%
15 Universal Pool Co., Inc. 14 543 1.0%
16 Tractor Supply Company 26 660 1.0%
17 The Home Depot, Inc. 4 475 1.0%
18 Advanced Auto Parts, Inc. 56 390 1.0%
19 Rite Aid Corp 25 296 1.0%
20 Red Lobster Intermediate Holdings, LLC 29 193 0.9%
Other 1,589 30,926 63.7%
Vacant 46 2,029 —
Total 2,541 52,887 100.0%
TENANT DIVERSIFICATION – TOP 20
14
(1) Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
INDUSTRY DIVERSIFICATION
15
Industry Number ofProperties
Total
Square Feet
(in thousands)
Percent of
Normalized
Rental Revenue
General Merchandise 156 9,224 9.9%
Restaurants - Casual Dining 339 2,041 8.9%
Restaurants - Quick Service 588 1,359 8.1%
Movie Theaters 60 3,012 7.4%
Convenience Stores 347 1,100 7.0%
Grocery 66 3,127 6.2%
Drug Stores / Pharmacies 111 1,560 5.3%
Medical / Other Office 122 1,293 4.8%
Sporting Goods 29 4,209 4.2%
Health and Fitness 45 1,800 4.0%
Automotive Parts and Service 185 1,338 3.7%
Entertainment 23 1,129 2.9%
Home Furnishings 33 2,305 2.8%
Education 54 821 2.6%
Building Materials 64 2,291 2.5%
Apparel 13 2,321 2.5%
Specialty Retail 30 1,630 2.4%
Automotive Dealers 23 665 2.3%
Home Improvement 13 1,656 2.0%
Distribution 13 1,372 1.9%
Car Washes 37 217 1.6%
Manufacturing 19 2,662 1.4%
Dollar Stores 83 859 1.3%
Consumer Electronics 10 529 1.1%
Pet Supplies and Service 4 1,016 *
Wholesale Clubs 4 393 *
Office Supplies 17 400 *
Financial Services 4 372 *
Other 3 157 *
Vacant 46 2,029 —
Total 2,541 52,887 100.0%
*Less than 1%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Industry Concentration
Percent of Normalized Rental Revenue
General Merchandise
9.9%
Restaurants - Casual
Dining
8.9%
Restaurants - Quick
Service
8.1%
Movie Theaters
7.4%
Convenience Stores
7.0%
Grocery
6.2%
Drug Stores /
Pharmacies
5.3%
Medical / Other Office
4.8%
Sporting Goods
4.2%
Health and Fitness
4.0%
Automotive Parts and
Service
3.7%
Other
30.5%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
PORTFOLIO DIVERSIFICATION
Over $8 billion in real estate investments solely focused on U.S. Markets
16
* Less than 0.1%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
State
% of
Normalized
Rental
Revenue
Texas 12.5%
Georgia 6.3%
Illinois 5.8%
Florida 5.3%
California 5.2%
Ohio 4.6%
Wisconsin 4.1%
Minnesota 3.4%
Michigan 3.4%
Tennessee 2.9%
Indiana 2.7%
Missouri 2.7%
North Carolina 2.7%
Alabama 2.5%
Arizona 2.5%
South Carolina 2.1%
Virginia 2.0%
Colorado 1.9%
Pennsylvania 1.8%
Kansas 1.7%
Nevada 1.6%
New Mexico 1.6%
Oklahoma 1.5%
New York 1.5%
Kentucky 1.5%
State
% of
Normalized
Rental
Revenue
Washington 1.5%
Arkansas 1.2%
New Jersey 1.2%
Massachusetts 1.1%
Oregon 1.1%
Idaho 1.1%
Iowa 1.0%
Mississippi 1.0%
New Hampshire 0.8%
Louisiana 0.7%
Maryland 0.7%
Nebraska 0.7%
Connecticut 0.6%
South Dakota 0.6%
Montana 0.6%
West Virginia 0.5%
Utah 0.5%
North Dakota 0.4%
Maine 0.4%
Wyoming 0.3%
Rhode Island 0.2%
Alaska *
Delaware *
Vermont *
Hawaii
% of Normalized Rental Revenue
0%–1% 1%–2% 2%–3% 3%–4% 4%–5% > 5%
Asset Diversification
Retail
86%
Industrial
8%
Office
6%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
SAME STORE PERFORMANCE
$ in thousands
17
(1) The decrease in Convenience Stores is primarily attributable to a lease restructuring for one tenant comprising 34 properties that were in default. Our total same store performance excluding the impact of this tenant would have resulted in a 1.2%
increase between the comparable periods compared to 0.0%.
Note: Same store performance represents the period-to-period change in Contractual Cash Rent net of reserves for properties included within the defined pool.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Same Store Results
Number of Properties 2,125
Total Square Feet (in thousands) 40,870
Asset Type
Contractual Cash Rent
(excludes accrued percentage
rents) for the
Quarters Ended December 31,
Net
Change
% Change by
Asset Type
% of Total
Asset Type
Contribution
% Change
from Prior
Year
2016 2015
Retail $107,866 $108,112 ($246) (0.2)% 84.9% (0.2)%
Industrial 11,058 10,973 85 0.8 % 8.7% 0.1 %
Office 8,110 7,970 140 1.8 % 6.4% 0.1 %
Total $127,034 $127,055 ($21) 0.0 % 100.0% 0.0 %
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 entire measurement period in both the current and prior quarter, 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)
Q4 2016 $127,034
Q4 2015 $127,055
Decrease (in dollars) ($21)
Decrease (percent) 0.0 %
Industry
Contractual Cash Rent
(excludes accrued percentage
rents) for the
Quarters Ended December 31,
Net
Change
% Change by
Industry
Type (1)
% of Total
Industry
Contribution
% Change
from Prior
Year (1)
2016 2015
Convenience Stores $7,222 $8,624 ($1,402) (16.3)% 5.7% (1.1)%
Sporting Goods 5,352 5,026 326 6.5 % 4.2% 0.3 %
Movie Theaters 9,547 9,101 446 4.9 % 7.5% 0.3 %
Automotive Parts and
Service 4,842 4,674 168 3.6 % 3.8% 0.1 %
Restaurants - Quick
Service 11,272 11,128 144 1.3 % 8.9% 0.1 %
Apparel 2,956 2,852 104 3.6 % 2.3% 0.1 %
General Merchandise 15,004 15,108 (104) (0.7)% 11.8% (0.1)%
Medical / Other Office 6,081 5,983 98 1.6 % 4.8% 0.1 %
Remaining Industries 64,758 64,559 199 0.3 % 51.0% 0.2 %
Total $127,034 $127,055 ($21) 0.0 % 100.0% 0.0 %
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
OCCUPANCY
18
*Unit Level Rent Coverage is derived from the most recent data of tenants who provide unit level financial reporting representing approximately 50% of our rental revenues as of December 31, 2016. Spirit does not independently verify financial
information provided by its tenants.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
By Property
Occupied 2,495
Vacant 46
Total Owned Properties 2,541
Occupancy Rate 98.2%
Change in Vacant Properties
Vacant Properties at 12/31/2015 36
Additions 37
Dispositions / Relets (27)
Vacant Properties at 12/31/2016 46
Unit Level Coverage*
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
2.9x
2.8x 2.8x 2.8x 2.8x 2.8x
2.9x 2.9x 2.9x
3.0x 3.0x 3.0x
Historical Occupancy Rates
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
98.9% 98.7% 98.2% 98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4% 98.2%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016 19
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Year
Number of
Properties
Total
Square Feet
(in thousands)
Normalized
Rental
Revenue
Annualized (1)
2017 69 3,052 $23,501
2018 70 1,885 22,184
2019 106 1,920 19,868
2020 74 1,674 20,669
2021 188 3,905 47,012
2022 97 2,148 26,296
2023 109 3,440 34,444
2024 58 1,207 21,106
2025 78 2,116 37,254
2026 200 5,311 47,094
Thereafter 1,446 24,200 346,502
Vacant 46 2,029 —
Totals 2,541 52,887 $645,930
Based on Normalized Rental Revenue,
89% of our leases provide for periodic escalations; and
45% of our leases are under Master Lease structures.
LEASE STRUCTURE AND EXPIRATIONS
$ in thousands
Lease Expirations as a Percent of
Normalized Rental Revenue
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter
3.6%
3.4%
3.1%
3.2%
7.3%
4.1%
5.3%
3.3%
5.8%
7.3%
53.6%
Lease Escalations as a Percent of Normalized Rental
Revenue (Excludes Multi-Tenant Properties)
Contractual Fixed
Increases
53%
Flat
11%
CPI-Related
36%
(1) Normalized Rental Revenue multiplied by twelve.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016 20
Owned Real Estate Portfolio Number ofProperties
Real Estate
Investment
Net Book
Value (2)
Annualized
Cash Rents
Wtd. Avg.
Lease Term (Years)
Retail (1) 2,276 $6,830,181 $— $515,052 10.8
Office 120 465,143 — 37,843 8.9
Industrial 65 614,601 — 47,774 9.2
Leased Real Estate Properties Held For Sale, Net 33 — 129,845 11,034 N/M
Properties Under Defaulted Loans (4) 4 — 14,683 — N/A
Vacant Properties (3) 43 — 88,266 — N/A
Total Owned Real Estate Portfolio 2,541 $7,909,925 $232,794 $611,703 10.5
Loans Receivable Number ofProperties
Principal Balance
Outstanding
Wtd. Avg. Stated
Int. Rate
Wtd. Avg.
Maturity (Years)
Total Loans Receivable 74 $59,363 9.79% 4.3
NET ASSET VALUE (NAV) COMPONENTS
$ in thousands
Tangible Assets Net Book Value
Cash and Cash Equivalents $10,059
Restricted Cash 26,839
Accounts Receivable, Prepaid Assets, and Other Tangible Assets, Net 28,108
Total Other Assets $65,006
Debt
Principal Balance
Outstanding
Wtd. Avg. Stated
Int. Rate
Wtd. Avg.
Maturity (Years)
Revolving Credit Facility $ 86,000 1.89% 2.2
Term Loan 420,000 1.94% 1.8
Senior Unsecured Notes 300,000 4.45% 9.7
Convertible Notes 747,500 3.28% 3.3
Master Trust Notes 1,672,706 5.03% 6.2
CMBS Notes (5) 528,427 5.61% 3.8
Total Debt $ 3,754,633 4.32% 5.0
Other Liabilities Net Book Value
Accounts Payable, Accrued Expenses, and Other Tangible Liabilities (6) $148,915
Total Other Liabilities $148,915
Shares Outstanding
Common Stock 483,624,120
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
(1) 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 $2.6 million for the lease of these properties.
(2) Represents Real Estate Investment value net of accumulated depreciation as of December 31, 2016.
(3) Includes 9 properties that are held for sale with a net book value of $21.8 million.
(4) Includes 3 vacant properties (one of which is held for sale with a net book value of $4.7 million) and 1 active property (which is held for sale with a net book value of $2.9 million). These 4 properties were acquired between 2006 and 2013.
(5) Includes $26.6 million (including $9.5 million of capitalized interest) of outstanding principal payable under 2 separate fixed rate CMBS loans that are in default due to the underperformance of the 4 properties that secure them with a net book
value of $17.1 million.
(6) Includes $87.54 million in dividends payable.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
ANALYST COVERAGE
21
BofA Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681
BTIG Michael Gorman mgorman@btig.com 212.738.6138
Capital One Southcoast, Inc.
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@db.com 212.250.9194
FBR Capital Markets & Co.
David Corak dcorak@fbr.com 703.312.1610
Matt Boone mboone@fbr.com 703.312.1848
Green Street Tyler Grant tgrant@greenstreetadvisors.com 949.640.8780
Janney Montgomery Scott
Robert Stevenson robstevenson@janney.com 646.840.3217
Venkat Kommineni vkommineni@janney.com 646.840.3219
J.P. Morgan
Anthony Paolone anthony.paolone@jpmorgan.com 212.622.6682
Gene Nusinzon gene.nusinzon@jpmorgan.com 212.622.1041
Ladenburg Thalman & Co.
Dan Donlan ddonlan@ladenburg.com 212.409.2056
John Massocca jmassocca@ladenburg.com 212.409.2543
Mizuho Securities
Haendel St. Juste haendel.st.juste@us.mizuho-sc.com 212.205.7860
Jieren Huang jieren.huang@us.mizuho-sc.com 212.205.7862
Morgan Stanley
Vikram Malhotra vikram.malhotra@morganstanley.com 212.761.7064
Landon Park landon.park@morganstanley.com 212.761.6368
Oppenheimer
Stephen 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
Marnie Georges marnie.georges@raymondjames.com 727.567.2658
RBC Capital Markets
Michael Carroll michael.carroll@rbccm.com 440.715.2649
Neil Malkin neil.malkin@rbccm.com 440.715.2651
RW Baird
RJ Milligan rjmilligan@rwbaird.com 813.273.8252
Will Harman wharman@rwbaird.com 414.298.2337
Sandler O’Neill & Partners, LP
Alex Goldfarb agoldfarb@sandleroneill.com 212.466.7937
Daniel Santos dsantos@sandleroneill.com 212.466.7927
Sun Trust Robinson Humphrey
Ki Bin Kim kibin.kim@suntrust.com 212.303.4124
Ian Gaule ian.gaule@suntrust.com 212.590.0948
UBS
Frank Lee frank-a.lee@ubs.com 415.352.5679
Jeremy Metz jeremy.metz@ubs.com 212.713.2429
Wunderlich Securities, Inc. Craig Kucera ckucera@wundernet.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.
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016▪ Q4 2016
Appendix
22
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
REPORTING DEFINITIONS AND EXPLANATIONS
23
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, provision
for bad debts and amortization of capitalized lease
transaction costs), non-cash interest expense
(comprised of amortization of deferred financing
costs and amortization of net debt discount/
premium) and non-cash compensation expense
(stock-based compensation expense). In addition,
other equity REITs may not calculate AFFO as we
do, and, accordingly, our AFFO may not be
comparable to such other equity REITs’ AFFO.
AFFO does not represent cash generated from
operating activities determined in accordance with
GAAP, is not necessarily indicative of cash available
to fund cash needs and should not be considered as
an alternative to net income (determined in
accordance with GAAP) as a performance measure.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 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, excluding percentage rents.
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 the $402.5 million
convertible notes of the Company due in 2019 and
the $345.0 million convertible notes of the Company
due in 2021, together. These liabilities are discussed
in greater detail in our financial statements and the
notes thereto included in our periodic reports filed
with the SEC.
REPORTING DEFINITIONS AND EXPLANATIONS
24
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016
REPORTING DEFINITIONS AND EXPLANATIONS
25
Economic Yield is calculated by dividing the
contractual cash rent, including fixed rent
escalations and/or cash increases determined by
CPI (increases calculated using a month to month
historical CPI index) by the initial lease term,
expressed as a percentage of the Gross
Investment.
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 are the Generally Accepted Accounting
Principles in the United States.
Gross Investment represents the gross acquisition
cost including the contracted purchase price and
related capitalized transaction costs.
Initial Cash Yield from properties is calculated by
dividing the first twelve months of contractual cash
rent (excluding any future rent escalations provided
subsequently in the lease and percentage rent) by
the Gross Investment in the related properties. Initial
Cash Yield is a measure (expressed as a
percentage) of the contractual cash rent expected to
be earned on an acquired property in the first year.
Because it excludes any future rent increases or
additional rent that may be contractually provided
for in the lease, as well as any other income or fees
that may be earned from lease modifications or
asset dispositions, Initial Cash Yield does not
represent the annualized investment rate of return
of our acquired properties. Additionally, actual
contractual cash rent earned from the properties
acquired may differ from the Initial Cash Yield based
on other factors, including difficulties collecting
anticipated rental revenues and unanticipated
expenses at these properties that we cannot pass
on to tenants, as well as the risk factors set forth in
our Annual Report on Form 10-K for the year ended
December 31, 2016.
Lease Expiration is the end of the initial term under
a lease and does not account for extension periods
under the lease.
Master Trust 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 December 31, 2016Q4 2016
REPORTING DEFINITIONS AND EXPLANATIONS
26
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
and adjusted to include a full month of GAAP rentals
for properties acquired 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 fee-
simple or ground leased by Company subsidiaries
as lessee.
Real Estate Investment represents the Gross
Investment plus improvements less impairment
charges.
Revolving Credit Facility refers to the $800 million
unsecured credit facility which matures on March
31, 2019 (“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 $420.0 million unsecured
term facility which includes an accordion feature
which allows the facility to be increased to up to
$600.0 million, subject to obtaining additional lender
commitments. Borrowings may be repaid without
premium or penalty, and may be re-borrowed within
30 days up to the then available loan commitment.
Total Market Capitalization represents Equity
Market Capitalization plus Total Debt as of the date
indicated.
Total Debt represents the sum of the principal
balances outstanding on interest-bearing debt on
the Company’s balance sheet as of the date
indicated.
Unencumbered Assets represents the assets in
our portfolio that are not subject to mortgage
indebtedness, which we use to evaluate our
potential access to capital and in our management
of financial risk. The asset value attributed to these
assets is the Real Estate Investment.
Unsecured Debt represents components of Total
Debt that are not secured by liens, mortgages or
deeds of trust on Company assets.
Unit Level Rent Coverage is used as an indicator
of individual asset profitability, as well as signaling
the property’s importance to our tenants’ financial
viability. We calculate this ratio by dividing our
reporting tenants’ trailing 12-month EBITDAR
(earnings before interest, tax, depreciation,
amortization and rent) by annual contractual rent.
Weighted Average Remaining Lease Term is
calculated by dividing the sum product of (a) a
stated revenue or sales price component and (b) the
lease term for each lease by (c) the sum of the total
revenue or sale price components for all leases
within the sample.
Weighted Average Stated Interest Rate is
calculated by dividing the sum product of (a) coupon
interest rate of each note and (b) the principal
balance outstanding of each note by (c) the sum of
the total principal balances outstanding for all notes
in the sample.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of December 31, 2016Q4 2016 27
Adjusted Debt, Adjusted EBITDA, Annualized Adjusted EBITDA
Q1 2016 Q2 2016 Q3 2016 Q4 2016
Revolving Credit Facilities, Net $24,000 $— $105,000 $86,000
Term Loan, Net 332,019 368,207 368,400 418,471
Senior Unsecured Notes — — 295,215 295,112
Mortgage and notes payable, Net 2,969,893 2,571,844 2,241,783 2,162,403
Convertible Notes, Net 693,173 696,290 699,465 702,642
Total Debt, net 4,019,085 3,636,341 3,709,863 3,664,628
Add / (less):
Unamortized Debt Discount, Net 51,707 51,783 54,975 52,894
Unamortized Deferred Financing Costs 39,779 37,848 38,812 37,111
Cash and Cash Equivalents (8,992) (29,410) (13,184) (10,059)
Cash Reserves on Deposit With Lenders as
Additional Security Classified as Other Assets (23,789) (21,704) (22,225) (11,757)
Total Adjustments 58,705 38,517 58,378 68,189
Adjusted Debt $4,077,790 $3,674,858 $3,768,241 $3,732,817
Net income attributable to common
stockholders $23,100 $45,959 $27,399 $988
Add / (Less):
Interest 53,017 49,172 47,653 46,744
Depreciation and Amortization 64,664 64,263 65,300 68,049
Income Tax Expense 81 839 12 33
Total Adjustments 117,762 114,274 112,965 114,826
EBITDA 140,862 160,233 140,364 115,814
Add / (Less):
Restructuring Charges 649 1,813 3,264 615
Other Costs in G&A Associated With
Headquarters Relocation 812 1,129 1,501 187
Real Estate Acquisition Costs 57 979 1,056 1,137
Impairments on Real Estate Assets 12,938 13,371 15,384 46,379
Swap Termination Costs (Included in G&A) — 1,724 — —
Realized Gains on Sales of Real Estate Assets (10,146) (11,115) (17,960) (13,144)
Losses (Gains) on Debt Extinguishment 5,341 (14,016) 8,349 93
Total Adjustments 9,651 (6,115) 11,594 35,267
Adjusted EBITDA 150,513 154,118 151,958 151,081
Annualized Adjusted EBITDA $602,052 $616,472 $607,832 $604,324
Adjusted Debt / Annualized Adjusted EBITDA 6.8x 6.0x 6.2x 6.2x
Enterprise Value $9,090,229 $9,822,051 $10,236,405 $8,996,732
Adjusted Debt / Enterprise Value 44.9% 37.4% 36.8% 41.5%
Fixed Charge Coverage Ratio (FCCR)
Q1 2016 Q2 2016 Q3 2016 Q4 2016
Annualized Adjusted
EBITDA $602,052 $616,472 $607,832 $604,324
Interest Expense 53,017 49,172 47,653 46,744
Less: Non-Cash Interest (2,956) (3,010) (4,178) (5,236)
Fixed Charges $50,061 $46,162 $43,475 $41,508
Annualized Fixed
Charges $200,244 $184,648 $173,900 $166,032
Fixed Charge Coverage
Ratio 3.0x 3.3x 3.5x 3.6x
Unencumbered Assets to Unsecured Debt
Q1 2016 Q2 2016 Q3 2016 Q4 2016
Unsecured Debt:
Credit Facilities $ 24,000 $ — $ 105,000 $ 86,000
Term Loan 334,000 370,000 370,000 420,000
Senior Unsecured Notes — — 300,000 300,000
Convertible Notes 747,500 747,500 747,500 747,500
Total Unsecured Debt $ 1,105,500 $ 1,117,500 $ 1,522,500 $ 1,553,500
Unencumbered Assets $ 3,345,953 $ 4,151,995 $ 4,871,733 $ 4,848,881
Unencumbered Assets /
Unsecured Debt 3.0x 3.7x 3.2x 3.1x
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 December 31, 2016Q4 2016
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
28
The information in this supplemental report
should be read in conjunction with the
accompanying earnings press release, as well
as the Company's 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, general risks affecting the real
estate industry (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), risks associated with
our failure to maintain our status as a REIT
under the Internal Revenue Code of 1986, as
amended, risks associated with our relocation
and transition to our new corporate
headquarters in Dallas Texas 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.
