Supplemental Financial &
Operating Information
SECOND QUARTER ENDED
JUNE 30, 2017
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
About Spirit
Spirit Realty Capital, Inc., (NYSE: SRC) is a premier
net-lease real estate investment trust (REIT) that
primarily invests in high-quality, operationally
essential retail real estate, subject to long-term net
leases. Over the past decade, Spirit has become an
industry leader and owner of income-producing,
strategically located retail, industrial and office
properties providing superior risk-adjusted returns
and steady dividend growth for our shareholders.
As of June 30, 2017, our diversified portfolio was
composed of 2,549 properties, including properties
securing mortgage loans. Our properties, with an
aggregate gross leasable area of approximately 51
million square feet are leased to 432 tenants across
49 states and 30 industries.
2
CORPORATE OVERVIEW
Corporate Headquarters
2727 N. Harwood St.,
Suite 300
Dallas, Texas 75201
Phone: 972-476-1900
www.spiritrealty.com
Transfer Agent
American Stock Transfer
& Trust Company, LLC
Phone: 866-703-9065
www.amstock.com
Investor Relations
(972) 476-1903
InvestorRelations@spirit
realty.com
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
TABLE OF CONTENTS
3
Portfolio and Financial Overview 4
Condensed Consolidated Statements of Operations 5
Funds and Adjusted Funds From Operations 6
Consolidated Balance Sheets 7
Capitalization and Debt Summary 8
Acquisition and Disposition Activity 12
Tenant / Industry / Portfolio Diversification 14
Same Store Performance 17
Occupancy 18
Lease Summary 19
Net Asset Value (NAV) Components 21
Analyst Coverage 22
Appendix: 23
Reporting Definitions and Explanations 24
Non-GAAP Reconciliations 28
Forward-Looking Statements and Risk Factors 29
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
(1) Excludes severance costs for the three months ended June 30, 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Top 10 Tenants Properties Percent of Contractual Rent
1 Specialty Retail Shops Holding Corp. 105 7.9%
2 AMC Entertainment, Inc. 18 2.6%
3 Walgreen Company 44 2.5%
4 Cajun Global, LLC 187 2.2%
5 Academy, LTD 6 1.9%
Top 5 Total 360 17.1%
6 Alimentation Couche-Tard, Inc. 82 1.9%
7 AB Acquisition, LLC 23 1.7%
8 The Home Depot, Inc. 7 1.7%
9 CVS Caremark Corporation 36 1.5%
10 Carmax, Inc. 8 1.5%
Top 10 Total 516 25.4%
Portfolio Weighted Average Remaining Lease Term (Years) 10.3
Portfolio Weighted Average Unit Level Rent Coverage 3.0x
Portfolio Median Unit Level Rent Coverage 2.4x
PORTFOLIO AND FINANCIAL OVERVIEW
$ in thousands
4
Portfolio Data
Total Real Estate Investments $ 8,136,064
Owned Properties 2,475
Properties Securing Mortgage Loans 74
Total Properties 2,549
Tenants 432
Industries 30
States 49
Occupancy 97.9%
Capitalization
Equity Market Capitalization $ 3,393,058
Total Debt $ 3,926,442
Total Market Capitalization $ 7,319,500
Enterprise Value $ 7,255,977
Financial Ratios
Adjusted Debt / Enterprise Value 53.2%
Adjusted Debt / Annualized Adjusted EBITDA 7.1x
Adjusted Debt / Annualized Adjusted EBITDA
excluding severance costs (1) 6.6x
Fixed Charge Coverage Ratio 3.3x
Fixed Charge Coverage Ratio excluding
severance costs (1) 3.6x
Corporate Liquidity
Cash and Cash Equivalents $ 11,246
Master Trust Release and 1031 Accounts $ 52,277
Availability Under Revolving Credit Facility $ 480,000
Availability Under Term Loan $ —
Total $ 543,523
Unencumbered Assets Properties Real Estate Investment
Retail 1,238 $ 4,241,122
Industrial 23 471,364
Office 23 143,831
Total 1,284 $ 4,856,317
Unencumbered Assets / Unsecured Debt 2.7x
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
(Unaudited) Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenues
Rentals $ 160,487 $ 160,506 $ 319,707 $ 322,325
Interest income on loans receivable 874 1,625 1,766 3,284
Earned income from direct financing leases 518 698 1,130 1,422
Tenant reimbursement income 4,480 3,200 8,445 7,024
Other income 2,276 5,697 3,009 6,028
Total revenues 168,635 171,726 334,057 340,083
Expenses
General and administrative (G&A) (1) 22,862 13,850 36,280 25,499
Restructuring charges — 1,813 — 2,462
Transaction costs 485 — 485 —
Property costs 9,632 6,611 18,683 13,938
Real estate acquisition costs 424 979 577 1,036
Interest 46,826 49,172 93,449 102,189
Depreciation and amortization 64,220 64,263 129,214 128,927
Impairments 15,996 13,371 50,372 25,989
Total expenses 160,445 150,059 329,060 300,040
Income from continuing operations before other expense and income tax expense 8,190 21,667 4,997 40,043
Gain (loss) on debt extinguishment 8 14,016 (22) 8,675
Income from continuing operations before income tax expense 8,198 35,683 4,975 48,718
Income tax expense (265) (839) (430) (920)
Income from continuing operations before gain on disposition of assets 7,933 34,844 4,545 47,798
Gain on disposition of assets 15,273 11,115 31,490 21,261
Net income attributable to common stockholders $ 23,206 $ 45,959 $ 36,035 $ 69,059
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
$ in thousands
5
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
(1) 2017 balances include $11.1 million in severance related costs.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
FUNDS AND ADJUSTED FUNDS FROM OPERATIONS (FFO/AFFO)
$ in thousands, except per share amounts
6
(Unaudited) Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Net income attributable to common stockholders (1) (2) $ 23,206 $ 45,959 $ 36,035 $ 69,059
Portfolio depreciation and amortization 64,081 64,166 128,936 128,737
Portfolio impairments 15,996 13,371 50,372 26,309
Realized gain on sales of real estate (15,273) (11,115) (31,490) (21,261)
Funds from operations $ 88,010 $ 112,381 $ 183,853 $ 202,844
Loss on debt extinguishment (8) (14,016) 22 (8,675)
Restructuring charges — 1,813 — 2,462
Other costs in G&A associated with headquarters relocation — 1,129 — 1,941
Transaction costs 485 — 485 —
Real estate acquisition costs 424 979 577 1,036
Non-cash interest expense 5,665 3,010 11,127 5,966
Accrued interest and fees on defaulted loans 899 1,243 1,573 3,098
Swap termination costs (included in G&A) — 1,724 — 1,724
Non-cash revenues, net (5,523) (5,367) (11,914) (11,954)
Non-cash compensation expense (1) 9,194 1,485 11,438 3,790
Adjusted funds from operations $ 99,146 $ 104,381 $ 197,161 $ 202,232
Dividends declared to common stockholders $ 82,422 $ 83,944 $ 169,544 $ 161,545
Net income per share of common stock
Basic (3) $ 0.05 $ 0.10 $ 0.07 $ 0.15
Diluted (3) $ 0.05 $ 0.10 $ 0.07 $ 0.15
FFO per share of common stock
Diluted (3) $ 0.18 $ 0.24 $ 0.38 $ 0.44
AFFO per share of common stock
Diluted (3) $ 0.21 $ 0.22 $ 0.41 $ 0.44
Weighted average shares of common stock outstanding:
Basic 479,102,268 473,161,125 480,845,051 457,263,526
Diluted 479,102,268 473,164,386 480,845,622 457,267,015
(1) Included in 2017 G&A balances is $11.1 million of severance related costs, comprising $4.2 million of cash compensation and $6.9 million of non-cash compensation related to the acceleration of Restricted Stock and Performance Share Awards.
(2) For the three and six months ended June 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 June 30, 2016 $ 1.3
Three month of prepaid rent for the 3 stores subsequently sold 0.5
Total included in AFFO $ 1.8
(3) For the three months ended June 30, 2017 and 2016, dividends paid to unvested restricted stockholders of $0.2 million and $0.1 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.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
7
(Unaudited) June 30, December 31,
2017 2016
Assets:
Real estate investments:
Land and improvements $ 2,652,512 $ 2,704,010
Buildings and improvements 4,748,049 4,775,221
Total real estate investments 7,400,561 7,479,231
Less: accumulated depreciation (1,001,057) (940,005)
6,399,504 6,539,226
Loans receivable, net 66,415 66,578
Intangible lease assets, net 457,580 470,276
Real estate assets under direct financing leases, net 27,373 36,005
Real estate assets held for sale, net 133,166 160,570
Net investments 7,084,038 7,272,655
Cash and cash equivalents 11,246 10,059
Deferred costs and other assets, net 169,699 140,917
Goodwill 254,340 254,340
Total Assets $ 7,519,323 $ 7,677,971
Liabilities and Stockholders' Equity
Liabilities:
Revolving Credit Facility $ 320,000 $ 86,000
Term Loan, net 418,880 418,471
Senior Unsecured Notes, net 295,135 295,112
Mortgages and notes payable, net 2,103,425 2,162,403
Convertible Notes, net 709,183 702,642
Total debt, net 3,846,623 3,664,628
Intangible lease liabilities, net 169,831 182,320
Accounts payable, accrued expenses and other liabilities 147,036 148,915
Total liabilities 4,163,490 3,995,863
Stockholders' equity:
Common stock, $0.01 par value, 750,000,000 shares authorized: 457,902,592 and
483,624,120 shares issued and outstanding at June 30, 2017 and December 31, 2016,
respectively.
4,579 4,836
Capital in excess of par value 5,188,514 5,177,086
Accumulated deficit (1,837,260) (1,499,814)
Total stockholders' equity 3,355,833 3,682,108
Total Liabilities and Stockholders' Equity $ 7,519,323 $ 7,677,971
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Enterprise Value
$7,256 Million
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
-$1,000
8
Equity
Shares Outstanding 457,902,592
Share Price $ 7.41
Equity Market
Capitalization $ 3,393,058
Debt PrincipalBalance
Revolving Credit Facility $ 320,000
Term Loan 420,000
Senior Unsecured Notes 300,000
Convertible Notes 747,500
Master Trust Notes 1,662,578
CMBS 476,364
Total Debt $ 3,926,442
CAPITALIZATION
$ in thousands (unless otherwise stated), except per share data
Enterprise Value
Total Market Capitalization $ 7,319,500
Less: Cash and Cash
Equivalents $ (11,246)
Less: Master Trust Release
and 1031 Accounts $ (52,277)
Enterprise Value $ 7,255,977
($ in millions)
CMBS $ 476
Master Trust Notes $ 1,663
Convertible Notes / Revolving Credit Facility /
Term Loan / Senior Unsecured Notes
$ 1,788
Equity $ 3,393
Master Trust Release and 1031 Accounts $ (52)
Cash $ (11)
Debt Type
Unsecured
46%
Secured
54%
Fixed/Floating Rate Debt
Floating
19%
Fixed
81%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017 9
Unsecured Debt(1) Secured Debt(1) Total
Revolving Credit
Facility Term Loan
Senior Unsecured
Notes Convertible Notes Master Trust Notes CMBS Total
Year of Maturity Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
Amount
Weighted
Avg.
Stated
Int. Rate
2017 Remainder $ — $ — $ — $ — $ — $ 138,203 7.25% $ 138,203 7.25%
2018 — 420,000 2.57% — — 125,000 3.89% 58,072 4.27% 603,072 3.00%
2019 320,000 2.41% — — 402,500 2.88% — 10,000 4.61% 732,500 2.70%
2020 — — — — 451,410 4.71% — 451,410 4.71%
2021 — — — 345,000 3.75% 224,511 5.76% — 569,511 4.54%
2022 — — — — 311,581 5.74% 42,400 4.67% 353,981 5.61%
2023 — — — — 190,076 5.27% 220,323 5.47% 410,399 5.37%
2024 — — — — — — —
2025 — — — — — 1,257 6.00% 1,257 6.00%
2026 — — 300,000 4.45% — — — 300,000 4.45%
Thereafter — — — — 360,000 4.63% 6,109 5.80% 366,109 4.65%
Total Debt $ 320,000 $ 420,000 $ 300,000 $ 747,500 $ 1,662,578 $ 476,364 $3,926,442
(Discounts) Premiums,
Net — — (1,737) (28,616) (16,679) 345 (46,687)
Deferred Financing
Costs, Net (3) — (1,120) (3,128) (9,701) (14,832) (4,351) (33,132)
Total Debt, Net $ 320,000 $ 418,880 $ 295,135 $ 709,183 $ 1,631,067 $ 472,358 $3,846,623
Weighted Avg. Stated
Int. Rate 2.41% 2.57% 4.45% 3.28% 5.03% 5.75% 4.26%
Weighted Avg.
Maturity in Years 1.7 1.3 9.2 2.8 5.7 3.7 4.4
Number of Owned and
Financed Properties
Securing Debt
— — — — 1,139 126 1,265
(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 four separate fixed rate CMBS loans totaling $53.6 million, including $10.7 million of capitalized interest, that are in default due to underperformance of the six properties that secure them. The weighted
average stated interest rate for these defaulted loans is 9.13%. If the defaulted loans were excluded, the weighted average stated interest rate for 2017 CMBS maturities would be 5.19%, the weighted average stated interest rate for all CMBS maturities
would be 5.32% and the weighted average stated interest rate for all debt maturities would be 4.18%.
(3) Excludes deferred financing costs incurred in connection with the 2015 Credit Facility, which are reported in Deferred costs and other assets, net in the consolidated balance sheet.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DEBT SUMMARY
$ in thousands
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
(1) Amounts are aggregated by outstanding principal balance of debt by maturity without giving effect to scheduled amortization. A significant portion of our secured debt is partially amortizing and requires a balloon payment at maturity.
(2) Interest rates include the default interest rate for four separate fixed rate CMBS loans which are in default. If the defaulted loans were excluded, the 2017 weighted average stated interest rate would be 5.19% and the total weighted average
stated interest rate for all maturities would be 4.18%.
(3) The third quarter of 2017 includes $53.6 million (including $10.7 million of capitalized interest), for the acceleration of principal payable following an event of default under the four CMBS fixed-rate loans with stated maturities in 2017.
(4) The fourth quarter of 2018 includes a $420 million unsecured Term Loan that is extendible at borrower's option pursuant to two one-year extension options.
(5) The first quarter of 2019 includes a $320 million Revolving Credit Facility that is extendible at borrower's option pursuant to a one-year extension option.
DEBT MATURITIES BY QUARTER
$ in thousands
Year of Maturity (1) First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter Total
Weighted Avg.
Stated Int. Rate (2)
2017 Remainder $ — $ — $ 98,185 (3) $ 40,018 $ 138,203 7.25%
2018 24,800 — 9,657 568,615 (4) 603,072 3.00%
2019 330,000 (5) 402,500 — — 732,500 2.70%
2020 150,000 48,110 253,300 — 451,410 4.71%
2021 224,511 345,000 — — 569,511 4.54%
Thereafter 671,581 — 540,832 219,333 1,431,746 5.02%
Total Debt $ 1,400,892 $ 795,610 $ 901,974 $ 827,966 $ 3,926,442 4.26%
10
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
SENIOR UNSECURED NOTES COVENANT COMPLIANCE
Covenant Requirement June 30, 2017
Total Debt to Total Assets < 60% 46%
Total Secured Debt to Total Assets < 40% 25.5%
Fixed Charge Coverage > 1.5x 3.42x
Total Unencumbered Assets to Total Unsecured Debt > 1.5x 2.72x
Credit Ratings
Fitch Ratings
(stable) BBB-
Moody's Ratings Services
(negative) Baa3
Standard & Poor's Rating
Services
(stable) BBB-
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
11
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
ACQUISITION ACTIVITY
$ in thousands
12
Q2 2017
% of Gross
Investment
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 3.5% 1 1 $ 3,245 $ 240 4,954 7.40% 8.52% 15.0
Existing Tenants 96.5% 6 8 89,577 6,243 435,477 6.97% 8.15% 12.8
Total/Weighted
Average 100.0% 7 9 $ 92,822 $ 6,483 440,431 6.98% 8.17% 12.9
By Asset Type:
Retail 32.2% 5 7 $ 29,931 $ 2,226 26,201 7.44% 8.18% 12.8
Industrial 44.9% 1 1 41,671 2,936 303,485 7.05% 7.23% 14.0
Office 22.9% 1 1 21,220 1,321 110,745 6.22% 9.98% 10.5
Total/Weighted
Average 100.0% 7 9 $ 92,822 $ 6,483 440,431 6.98% 8.17% 12.9
Of Our Q2 2017 Gross Investment of $92.8 Million:
23.6% Sale-Leaseback Transactions
13.4% Master Leases
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 revenue producing capital expenditures.
YTD 2017
% of Gross
Investment
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 20.1% 8 15 $ 48,370 $ 3,564 311,555 7.37% 8.41% 17.7
Existing Tenants 79.9% 14 20 192,395 13,473 912,316 7.00% 7.63% 12.5
Total/Weighted
Average 100.0% 22 35 $ 240,765 $ 17,037 1,223,871 7.08% 7.78% 13.7
By Asset Type:
Retail 73.9% 20 33 $ 177,874 $ 12,780 809,641 7.18% 7.65% 13.9
Industrial 17.3% 1 1 41,671 2,936 303,485 7.05% 7.23% 14.0
Office 8.8% 1 1 21,220 1,321 110,745 6.22% 9.98% 10.5
Total/Weighted
Average 100.0% 22 35 $ 240,765 $ 17,037 1,223,871 7.08% 7.78% 13.7
Of Our YTD 2017 Gross Investment of $240.8 Million:
36.3% Sale-Leaseback Transactions
18.8% Master Leases
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
Q2 2017
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate (1)
Wtd. Avg. Remaining
Lease Term (Yrs)
Occupied 86.0% 33 $89,180 $97,896 7.14% 12.7
Vacant 14.0% 15 14,537 11,708 — —
Total/Weighted Average 100.0% 48 $ 103,717 $ 109,604 7.14% 12.7
By Asset Type:
Retail 83.6% 42 $86,669 $93,601 7.11% 13.0
Industrial 1.5% 2 1,600 1,458 — —
Office 14.9% 4 15,448 14,545 7.39% 10.2
Total/Weighted Average 100.0% 48 $ 103,717 $ 109,604 7.14% 12.7
YTD 2017
% of R/E
Investment
Number of
Properties
Real Estate
Investment
Gross
Sales Price
Capitalization
Rate (1)
Wtd. Avg. Remaining
Lease Term (Yrs)
Occupied 62.8% 51 $173,532 $190,628 7.50% 10.7
Vacant 37.2% 54 102,770 91,598 — —
Total/Weighted Average 100.0% 105 $ 276,302 $ 282,226 7.50% 10.7
By Asset Type:
Retail 91.5% 98 $252,843 $259,023 7.40% 11.2
Industrial 2.9% 3 8,011 8,658 9.92% 1.1
Office 5.6% 4 15,448 14,545 7.39% 10.2
Total/Weighted Average 100.0% 105 $ 276,302 $ 282,226 7.50% 10.7
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
DISPOSITION ACTIVITY
$ in thousands
(1) Capitalization rates are calculated based solely on income producing properties.
13
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
TENANT DIVERSIFICATION – TOP 20
14
Tenant Number of Properties
Total
Square Feet
(in thousands)
Percent of
Contractual Rent
1 Shopko (Specialty Retail Shops Holding Corp.) 105 7,115 7.9%
2 AMC Entertainment, Inc. 18 917 2.6%
3 Walgreen Company 44 649 2.5%
4 Church's Chicken (Cajun Global, LLC) 187 265 2.2%
5 Academy Sports + Outdoors (Academy, LTD ) 6 1,805 1.9%
6 Circle K (Alimentation Couche-Tard, Inc.) 82 248 1.9%
7 Albertsons (AB Acquisition, LLC) 23 1,030 1.7%
8 The Home Depot, Inc. 7 821 1.7%
9 CVS Caremark Corporation 36 405 1.5%
10 Carmax, Inc. 8 356 1.5%
11 Regal Entertainment Group 15 656 1.5%
12 GPM Investments, LLC 105 272 1.4%
13 FedEx Corporation 6 690 1.4%
14 Car Wash Partners, Inc. 23 162 1.2%
15 Ferguson Enterprises, Inc. 8 1,100 1.1%
16 Universal Pool Co., Inc. 14 543 1.1%
17 Goodrich Quality Theaters 5 245 1.1%
18 Rite Aid Corp 24 285 1.0%
19 Dollar General Corporation 64 659 1.0%
20 PetSmart, Inc. 6 1,016 1.0%
Other 1,636 28,707 62.8%
Vacant 53 2,725 —
Total 2,475 50,671 100.0%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
INDUSTRY DIVERSIFICATION
Industry Concentration:
Percent of Contractual Rent
Traditional
Retail
34.1%
Service
59.1%
Industrial
5.9%
Other
0.9%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
15
Industry Sub Industry Number ofProperties
Total
Square Feet
(in thousands)
Percent of
Contractual
Rent
Traditional Retail General Merchandise 143 8,494 9.6%
Service Restaurants - Casual Dining 310 1,868 8.7%
Service Restaurants - Quick Service 588 1,369 8.0%
Service Movie Theaters 62 3,115 7.7%
Service Convenience Stores 318 1,026 6.9%
Traditional Retail Grocery 65 3,170 5.3%
Service Drug Stores / Pharmacies 105 1,475 5.1%
Service Medical / Other Office 121 1,288 4.8%
Service Health and Fitness 45 1,800 4.1%
Traditional Retail Sporting Goods 24 2,884 4.1%
Traditional Retail Specialty Retail 42 2,177 3.1%
Service Entertainment 25 1,159 2.8%
Traditional Retail Home Improvement 16 1,777 2.7%
Service Automotive Services 128 748 2.6%
Service Education 55 821 2.5%
Industrial Building Materials 63 2,291 2.5%
Traditional Retail Home Furnishings 26 1,561 2.4%
Service Automotive Dealers 23 665 2.3%
Traditional Retail Apparel 13 1,994 2.2%
Industrial Distribution 12 1,239 2.0%
Service Car Washes 41 231 1.8%
Industrial Manufacturing 17 2,289 1.4%
Traditional Retail Dollar Stores 77 796 1.2%
Traditional Retail Automotive Parts 61 531 1.2%
Traditional Retail Wholesale Clubs 5 513 1.0%
Service Pet Supplies & Service 6 1,015 1.0%
Other Other 5 596 0.9%
Service Financial Services 4 342 0.8%
Traditional Retail Office Supplies 17 488 0.8%
Traditional Retail Consumer Electronics 5 224 0.5%
Vacant 53 2,725 —
Total 2,475 50,671 100.0%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
PORTFOLIO DIVERSIFICATION
Over $8 billion in real estate investments solely focused on U.S. markets
16
% of Contractual Rent
Texas 11.9% Michigan 3.9% Alabama 2.5% Oklahoma 1.5% Massachusetts 1.1% New Hampshire 0.8% Connecticut 0.6% Wyoming 0.3%
Georgia 6.1% Minnesota 3.4% South 2.5% Kentucky 1.4% New Jersey 1.1% Maryland 0.7% West Virginia 0.5% Alaska 0.1%
Illinois 5.7% Indiana 3.0% Virginia 1.9% New York 1.4% Iowa 1.1% Louisiana 0.7% Nebraska 0.5% U.S. Virgin 0.1%
Florida 5.6% Tennessee 3.0% Colorado 1.9% Washington 1.3% Oregon 1.1% Utah 0.7% North Dakota 0.4% Delaware —%
California 4.9% Missouri 2.9% Pennsylvania 1.8% Nevada 1.3% Idaho 1.0% South Dakota 0.7% Maine 0.4% Vermont —%
Ohio 4.6% Arizona 2.8% Kansas 1.7% Arkansas 1.2% Mississippi 0.9% Montana 0.6% Rhode Island 0.3% Hawaii —%
Wisconsin 4.0% North Carolina 2.5% New Mexico 1.6%
Asset Diversification
Retail
85%
Industrial
9%
Office
6%
% of Contractual Rent
0%–1% 1%–2% 2%–3% 3%–4% 4%–5% > 5%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Asset Type
Cash Rents Received
for the Net
Change
% Change
by Industry
Type
% of Total
Industry
Contribution
% Change
from Prior
YearQuarter ended June 30,
2017 2016
Retail $ 111,810 $ 110,598 $ 1,212 1.1% 85.6% 0.9%
Industrial 11,094 10,997 97 0.9% 8.5% 0.1%
Office 7,740 7,632 108 1.4% 5.9% 0.1%
Total $ 130,644 $ 129,227 $ 1,417 1.1% 100.0% 1.1%
SAME STORE PERFORMANCE
$ in thousands
17
Note: Same store performance represents the period-to-period change in contractual rent and percentage rents received, net of reserves for properties included within the defined pool.
Same Store Results
Number of Properties 2,071
Total Square Feet (in thousands) 39,607
Cash Rents Received (excludes accrued percentage rents)
Q2 2017 $ 130,644
Q2 2016 $ 129,227
Increase (in dollars) $ 1,417
Increase (percent) 1.1%
Industry
Cash Rents Received
for the Net
Change
% Change
by Industry
Type
% of Total
Industry
Contribution
% Change
from Prior
YearQuarter ended June 30,
2017 2016
Movie Theatres $ 10,644 $ 10,208 $ 436 4.3 % 8.1% 0.3%
Restaurants -
Casual Dining 11,990 11,728 262 2.2 % 9.2% 0.2%
Consumer
Electronics 754 587 167 28.4 % 0.6% 0.1%
Home Furnishings 3,250 3,110 140 4.5 % 2.5% 0.1%
Sporting Goods 5,079 4,948 131 2.6 % 3.9% 0.1%
Grocery 7,122 7,249 (127) (1.8)% 5.5% (0.1)%
Restaurants - Quick
Service 11,420 11,304 116 1.0 % 8.7% 0.1%
General
Merchandise 13,917 13,819 98 0.7 % 10.7% 0.1%
Remaining
Industries 66,468 66,274 194 0.3 % 50.8% 0.2%
Total $ 130,644 $ 129,227 $ 1,417 1.1 % 100.0% 1.1%
Same Store Pool Defined
For purposes of determining the same store rent property pool from
which we measure same store rent changes, we include all properties
owned throughout the measurement period in both the current and prior
year, excluding multi-tenant properties and any properties that were
vacant or relet at any point during the measurement period.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
OCCUPANCY
18
By Property
Occupied 2,422
Vacant 53
Total Owned Properties 2,475
Occupancy Rate 97.9%
Change in Vacant Properties
Vacant Properties at December 31, 2016 46
Additions 63
Dispositions/Relets (56)
Vacant Properties at June 30, 2017 53
Historical Occupancy Rates
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17
98.7% 98.2% 98.4% 98.3% 98.7% 98.5% 98.6% 98.7% 98.3% 98.4% 98.2% 97.7% 97.9%
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Unit Level Coverage*
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17
2.8x 2.8x 2.8x 2.8x 2.8x
2.9x 2.9x 2.9x
3.0x 3.0x 3.0x 3.0x 3.0x
*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 June 30, 2017. Spirit does not independently verify financial information
provided by its tenants.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
LEASE STRUCTURE AND EXPIRATIONS
$ in thousands
Lease Expirations as a Percent of Contractual Rent
2017 Remainder
2018
2019
2020
2021
2022
2023
2024
2025
2026
Thereafter
1.5%
3.6%
3.4%
3.3%
7.4%
4.8%
5.4%
3.1%
5.8%
7.2%
54.5%
19
Year
Number of
Properties
Total
Square Feet
(in thousands)
Contractual Rent
Annualized (1)
2017 Remainder 35 1,124 $ 9,064
2018 71 1,796 22,093
2019 105 1,911 20,829
2020 73 1,540 20,136
2021 187 3,894 45,264
2022 113 2,664 29,539
2023 108 3,535 33,004
2024 55 1,150 19,106
2025 77 2,080 35,661
2026 194 4,023 44,492
Thereafter 1,404 24,229 336,137
Vacant 53 2,725 —
Totals 2,475 50,671 $ 615,325
Based on Contractual Rent:
89% of our leases (excluding those on multi-tenant
properties) provide for periodic escalations,
44% of our leases are under Master Lease structures,
82% of our tenants are under Triple Net Leases and
95% of tenants report financial information.
Lease Escalations as a Percent of Contractual Rent
(Excludes Multi-Tenant Properties)
Contractual Fixed
Increases
53%
Flat
11%
CPI-Related
36%
(1) Contractual Rent multiplied by twelve.
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
LEASE ACTIVITY
$ in thousands
20
Q2 2017 Renewals with anexisting tenant
Relet to a new tenant
after a period of
vacancy
Re-leasing Totals
Prior Contractual Rent 89,058 — 89,058
New Contractual Rent 84,382 — 84,382
Recapture Rate 94.7% 94.7%
Number of Leases 6 — 6
Average Months Vacant — — —
Additional Invested Capital — — —
Incremental Yield —% —% —%
Renewed Did not renew
Expiring Leases in Q2 2017
75.0%
25.0%
YTD 2017 Renewals with anexisting tenant
Relet to a new tenant
after a period of
vacancy
Re-leasing Totals
Prior Contractual Rent 453,929 29,362 483,291
New Contractual Rent 458,299 18,533 476,832
Recapture Rate 101.0% 63.1% 98.7%
Number of Leases 21 2 23
Average Months Vacant 17.5 2.1
Additional Invested Capital — — —
Incremental Yield —% —% —%
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
(1) Includes six direct financing lease properties with a Real Estate Investment value of $27.4 million. Annualized Cash Rents include the tenants' current cash obligations of $2.1 million for the lease of these properties.
(2) Represents Real Estate Investment value net of accumulated depreciation as of June 30, 2017.
(3) Includes 27 properties that are held for sale with a net book value of $44.5 million.
(4) Includes four vacant properties (one held for sale with a net book value of $3.4 million) and two active property that is held for sale with a net book value of $2.9 million. These six properties were acquired between 2006 and 2013.
(5) Includes $82.8 million in dividends payable.
(6) Includes $53.6 million (including $10.7 million of capitalized interest) of outstanding principal payable under four fixed rate CMBS loans that are in default due to the underperformance of the six properties that secure them with a net book value of $27.6
million.
Net Book Value
Tangible Assets
Cash and Cash Equivalents $ 11,246
Restricted Cash 52,277
Accounts Receivable, Prepaid Assets, and Other Tangible Assets, Net 22,471
Total Other Assets $ 85,994
21
Owned Real Estate Portfolio Number of Properties
Real Estate
Investment
Net Book
Value (2)
Annualized
Cash Rents
Wtd. Avg. Lease
Term (Years)
Retail (1) 2,213 $ 6,744,320 $ 5,707,562 $ 514,230 10.5
Office 114 451,296 392,528 36,422 9.1
Industrial 67 660,121 556,077 53,472 8.6
Leased Real Estate Properties Held For Sale, Net 26 91,028 82,322 5,038 N/M
Vacant Properties (3) 49 87,951 81,675 — N/A
Properties under Defaulted Loans (4) 6 34,934 27,629 1,530 N/A
Total Owned Real Estate Portfolio 2,475 $ 8,069,650 $ 6,847,793 $ 610,692 10.3
Wtd. Avg. Stated
Int. Rate
Wtd. Avg. Maturity
(Years)
Principal Balance
Outstanding
Revolving Credit Facility 2.41% 1.7 $ 320,000
Term Loan 2.57% 1.3 $ 420,000
Senior Unsecured Notes 4.45% 9.2 $ 300,000
Master Trust Notes 5.03% 5.7 $ 1,662,578
CMBS Notes (6) 5.75% 3.7 $ 476,364
Convertible Notes 3.28% 2.8 $ 747,500
Total Debt 4.26% 4.4 $ 3,926,442
NET ASSET VALUE (NAV) COMPONENTS
$ in thousands
Please see Appendix at the back of this supplement for Reporting Definitions and Explanations, Non-GAAP Reconciliations and a disclosure regarding Forward-Looking Statements.
Net Book Value
Other Liabilities
Accounts Payable, Accrued Expenses, and Other Tangible Liabilities (5) $ 147,036
Total Other Liabilities $ 147,036
Number of
Properties
Wtd. Avg. Stated
Int. Rate
Wtd. Avg. Maturity
(Years)
Principal Balance
Outstanding
Total Loans Receivable 74 9.55% 3.7 $ 60,289
Shares Outstanding
Common Stock 457,902,592
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
ANALYST COVERAGE
22
BofA Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com 646.855.1681
BTIG Michael Gorman mgorman@btig.com 212.738.6138
Capital One Securities Chris Lucas christopher.lucas@capitalone.com 571.633.8151
Deutsche Bank
Vincent Chao vincent.chao@db.com 212.250.6799
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 Advisors
Michael Knott mknott@greenstreetadvisors.com 949.640.8780
Andrew Suh asuh@greenstreetadvisors.com 949.640.8780
Janney Montgomery Scott
Robert Stevenson robstevenson@janney.com 646.840.3217
Venkat Kommineni vkommineni@janney.com 646.840.3219
J.P. Morgan
Anthony Paolone anthony.paolone@jpmorgan.com 212.622.6682
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
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
Brian Hawthorne brian.hawthorne@rbccm.com 440.715.2653
RW Baird
RJ Milligan rjmilligan@rwbaird.com 813.273.8252
Will Harman wharman@rwbaird.com 414.298.2337
Sandler O’Neill & Partners, LP
Alex Goldfarb agoldfarb@sandleroneill.com 212.466.7937
Daniel Santos dsantos@sandleroneill.com 212.466.7927
Sun Trust Robinson Humphrey
Ki Bin Kim kibin.kim@suntrust.com 212.303.4124
Ian Gaule ian.gaule@suntrust.com 212.590.0948
UBS
Frank Lee frank-a.lee@ubs.com 415.352.5679
Nick Yulico nick.yulico@ubs.com 212.713.3402
The aforementioned security analysts currently provide opinions, estimates and forecasts, which are their own and are not promoted or endorsed by Spirit or its management team. Therefore, their opinions, estimates or forecasts are their own and
should not be interpreted as Spirit’s opinions, estimates or forecasts. Any reference or distribution by Spirit expressly disclaims any endorsement of or concurrent with any information, estimates, forecasts, opinions, conclusions or recommendations
provided by analysts.
APPENDIX
23
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
REPORTING DEFINITIONS AND EXPLANATIONS
24
Funds from Operations (FFO) and
Adjusted Funds from Operations (AFFO)
We calculate FFO in accordance with the standards
established by the National Association of Real
Estate Investment Trusts (NAREIT). FFO represents
net income (loss) attributable to common
stockholders (computed in accordance with GAAP),
excluding real estate-related depreciation and
amortization, impairment charges and net (gains)
losses from property dispositions. FFO is a
supplemental non-GAAP financial measure. We use
FFO as a supplemental performance measure
because we believe that FFO is beneficial to
investors as a starting point in measuring our
operational performance. Specifically, in excluding
real estate-related depreciation and amortization,
gains and losses from property dispositions and
impairment charges, which do not relate to or are not
indicative of operating performance, FFO provides a
performance measure that, when compared year
over year, captures trends in occupancy rates, rental
rates and operating costs. We also believe that, as a
widely recognized measure of the performance of
equity REITs, FFO will be used by investors as a
basis to compare our operating performance with that
of other equity REITs. However, because FFO
excludes depreciation and amortization and does not
capture the changes in the value of our properties
that result from use or market conditions, all of which
have real economic effects and could materially
impact our results from operations, the utility of FFO
as a measure of our performance is limited. In
addition, other equity REITs may not calculate FFO
as we do, and, accordingly, our FFO may not be
comparable to such other equity REITs’ FFO.
Accordingly, FFO should be considered only as a
supplement to net income (loss) attributable to
common stockholders as a measure of our
performance.
AFFO is a non-GAAP financial measure of operating
performance used by many companies in the REIT
industry. We adjust FFO to eliminate the impact of
certain items that we believe are not indicative of our
core operating performance, including restructuring
and divestiture costs, other G&A costs associated
with relocation of the Company's headquarters,
transactions costs associated with our proposed spin-
off, default interest and fees on non-recourse
mortgage indebtedness, debt extinguishment gains
(losses), transaction costs incurred in connection with
the acquisition of real estate investments subject to
existing leases and certain non-cash items. These
certain non-cash items include non-cash revenues
(comprised of straight-line rents, amortization of
above and below market rent on our leases,
amortization of lease incentives, amortization of net
premium (discount) on loans receivable, provision for
bad debts and amortization of capitalized lease
transaction costs), non-cash interest expense
(comprised of amortization of deferred financing
costs and amortization of net debt discount/premium)
and non-cash compensation expense (stock-based
compensation expense). In addition, other equity
REITs may not calculate AFFO as we do, and,
accordingly, our AFFO may not be
comparable to such other equity REITs’ AFFO. AFFO
does not represent cash generated from operating
activities determined in accordance with GAAP, is not
necessarily indicative of cash available to fund cash
needs and should not be considered as an alternative
to net income (determined in accordance with GAAP)
as a performance measure.
Adjusted EBITDA represents EBITDA, or earnings
before interest, taxes, depreciation and amortization,
modified to include other adjustments to GAAP net
income (loss) attributable to common stockholders for
real estate acquisition costs, impairment losses,
gains/losses from the sale of real estate and debt
transactions and other items that we do not consider
to be indicative of our on-going operating
performance. We focus our business plans to enable
us to sustain increasing shareholder value.
Accordingly, we believe that excluding these items,
which are not key drivers of our investment decisions
and may cause short-term fluctuations in net income,
provides a useful supplemental measure to investors
and analysts in assessing the net earnings
contribution of our real estate portfolio. Because
these measures do not represent net income (loss)
that is computed in accordance with GAAP, they
should not be considered alternatives to net income
(loss) or as an indicator of financial performance. A
reconciliation of net income (loss) attributable to
common stockholders (computed in accordance with
GAAP) to EBITDA and Adjusted EBITDA is included
in the Appendix found at the end of this presentation.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
REPORTING DEFINITIONS AND EXPLANATIONS
25
Annualized Adjusted EBITDA is calculated by
multiplying Adjusted EBITDA of a quarter by four. Our
computation of Adjusted EBITDA and Annualized
Adjusted EBITDA may differ from the methodology
used by other equity REITs to calculate these
measures and, therefore, may not be comparable to
such other REITs. A reconciliation of Annualized
Adjusted EBITDA is included in the Appendix found at
the end of this presentation.
Adjusted Debt represents interest bearing debt
(reported in accordance with GAAP) adjusted to
exclude unamortized debt discount/premium,
deferred financing costs, cash and cash equivalents
and cash reserves on deposit with lenders as
additional security. By excluding these amounts, the
result provides an estimate of the contractual amount
of borrowed capital to be repaid, net of cash available
to repay it. We believe this calculation constitutes a
beneficial supplemental non-GAAP financial
disclosure to investors in understanding our financial
condition. A reconciliation of interest bearing debt
(reported in accordance with GAAP) to Adjusted Debt
is included in the Appendix found at the end of this
presentation.
Adjusted Debt to Annualized Adjusted EBITDA is
a supplemental non-GAAP financial measure we use
to evaluate the level of borrowed capital being used
to increase the potential return of our real estate
investments and a proxy for a measure we believe is
used by many lenders and ratings agencies to
evaluate our ability to repay and service our debt
obligations over time.
We believe this ratio is a beneficial disclosure to
investors as a supplemental means of evaluating our
ability to meet obligations senior to those of our
equity holders. Our computation of this ratio may
differ from the methodology used by other equity
REITs and, therefore, may not be comparable to such
other REITs.
Annualized Cash Rents represents the annualized
monthly Contractual Rent, less any rent reserved for,
multiplied by twelve.
Capitalization Rate represents the Annualized Cash
Rents on the date of a property disposition divided by
the gross sales price. For Multi-Tenant properties,
non-reimbursable property costs are deducted from
the Annualized Cash Rents prior to computing the
disposition Capitalization Rate.
CMBS are those notes secured by commercial real
estate and rents therefrom under which certain
indirect wholly-owned special purpose entity
subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Contractual Rent represents monthly contractual
cash rent and earned income from direct financing
leases, excluding percentage rents, from our Owned
Properties recognized during the final month of the
reporting period, adjusted to exclude amounts
received from properties sold during that period and
adjusted to include a full month of contractual rent for
properties acquired during that period. We use
Contractual Rent when calculating certain metrics
that are useful to evaluate portfolio credit, asset type,
industry and geographic diversity and to manage risk.
Convertible Notes are the $402.5 million convertible
notes of the Company due in 2019 and the $345.0
million convertible notes of the Company due in
2021, together. These liabilities are discussed in
greater detail in our financial statements and the
notes thereto included in our periodic reports filed
with the SEC.
Economic Yield is calculated by dividing the
contractual cash rent, including fixed rent escalations
and/or cash increases determined by CPI (increases
calculated using a month to month historical CPI
index) by the initial lease term, expressed as a
percentage of the Gross Investment.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
REPORTING DEFINITIONS AND EXPLANATIONS
26
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 2013 and Master Trust 2014
(collectively Master Trust Notes) are net-lease
mortgage notes issued under the Spirit Master
Funding Program and the securitization trusts
established thereunder. Indirect special purpose
entity subsidiaries of the Company are the borrowers.
These liabilities are discussed in greater detail in our
financial statements and the notes thereto included in
our periodic reports filed with the SEC.
Net Asset Value (NAV) We believe disclosing
information frequently used in the calculation of NAV
is useful to investors and because it enables and
facilitates calculation of a metric frequently used by
our management as one method to estimate the fair
value of our business. The assessment of the fair
value of our business is subjective in that it involves
estimates and assumptions and can be calculated
using various methods. Therefore, we have
presented certain information regarding our financial
and operating results, as well as our assets and
liabilities that we believe are important in calculating
our NAV, but have not presented any specific
methodology nor provided any guidance on the
assumptions or estimates that should be used in the
calculation of NAV. The components of NAV do not
consider the potential changes in the value of assets,
the collectability of rents or other receivable
obligations, or the value associated with our
operating platform.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
REPORTING DEFINITIONS AND EXPLANATIONS
27
Net Book Value represents the Real Estate
Investment value net of accumulated depreciation.
Occupancy is calculated by dividing the number of
economically yielding Owned Properties in the
portfolio as of the measurement date by the number
of total Owned Properties on said date.
Owned Properties refers to properties owned fee-
simple or ground leased by Company subsidiaries as
lessee.
Real Estate Investment represents the Gross
Investment plus improvements less impairment
charges.
Revolving Credit Facility refers to the $800 million
unsecured credit facility which matures on March 31,
2019. The 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 the 2015 Credit Facility is subject to
the ongoing compliance with customary financial
covenants.
Senior Unsecured Notes refers to the $300 million
aggregate principal amount of 4.450% senior
unsecured notes due 2026.
Tenant represents the legal entity ultimately
responsible for obligations under the lease
agreement or an affiliated entity. Other tenants may
operate the same or similar business concept or
brand.
Term Loan refers to a $420.0 million unsecured term
facility which includes an accordion feature which
allows the facility to be increased to up to $600.0
million, subject to obtaining additional lender
commitments. Borrowings may be repaid without
premium or penalty, and may be re-borrowed within
30 days up to the then available loan commitment.
Total Market Capitalization represents Equity
Market Capitalization plus Total Debt as of the date
indicated.
Total Debt represents the sum of the principal
balances outstanding on interest-bearing debt on the
Company’s balance sheet as of the date indicated.
Unencumbered Assets represents the assets in our
portfolio that are not subject to mortgage
indebtedness, which we use to evaluate our
potential access to capital and in our management of
financial risk. The asset value attributed to these
assets is the Real Estate Investment.
Unsecured Debt represents components of Total
Debt that are not secured by liens, mortgages or
deeds of trust on Company assets.
Unit Level Rent Coverage is used as an indicator of
individual asset profitability, as well as signaling the
property’s importance to our tenants’ financial
viability. We calculate this ratio by dividing our
reporting tenants’ trailing 12-month EBITDAR
(earnings before interest, tax, depreciation,
amortization and rent) by annual contractual rent.
Weighted Average Remaining Lease Term is
calculated by dividing the sum product of (a) a stated
revenue or sales price component and (b) the lease
term for each lease by (c) the sum of the total
revenue or sale price components for all leases
within the sample.
Weighted Average Stated Interest Rate is
calculated by dividing the sum product of (a) coupon
interest rate of each note and (b) the principal
balance outstanding of each note by (c) the sum of
the total principal balances outstanding for all notes
in the sample.
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017 28
Unencumbered Assets to Unsecured Debt
Q2 2017
Unsecured debt:
Revolving Credit Facility $ 320,000
Term Loan 420,000
Senior Unsecured Notes 300,000
Convertible Notes 747,500
Total Unsecured Debt $ 1,787,500
Unencumbered Assets $ 4,856,317
Unencumbered Assets / Unsecured Debt 2.7x
NON-GAAP RECONCILIATIONS
$ in thousands
Notice Regarding Non-GAAP Financial Measures
In addition to U.S. GAAP financial measures, this presentation
contains and may refer to certain non-GAAP financial measures.
These non-GAAP financial measures are in addition to, not a
substitute for or superior to, measures of financial performance
prepared in accordance with GAAP. These non-GAAP financial
measures should not be considered replacements for, and should
be read together with, the most comparable GAAP financial
measures. Reconciliations to the most directly comparable GAAP
financial measures and statements of why management believes
these measures are useful to investors are included in this
Appendix if the reconciliation is not presented on the page in which
the measure is published.
Adjusted Debt, Adjusted EBITDA, Annualized Adjusted EBITDA
Q2 2017
Revolving Credit Facility $320,000
Term Loan, net 418,880
Senior Unsecured Notes, net 295,135
Mortgages and notes payable, net 2,103,425
Convertible Notes, net 709,183
Total debt, net 3,846,623
Add / (less):
Unamortized debt discount, net 46,686
Unamortized deferred financing costs 33,132
Cash and cash equivalents (11,246)
Restricted cash balances held for the benefit of lenders (52,277)
Total adjustments 16,295
Adjusted Debt $3,862,918
Net income attributable to common stockholders $23,206
Add / (less):
Interest 46,826
Depreciation and amortization 64,220
Income tax expense 265
Total adjustments 111,311
EBITDA 134,517
Add / (less):
Transaction costs 485
Real estate acquisition costs 424
Impairments on real estate assets 15,996
Realized gain on sales of real estate assets (15,273)
Loss on debt extinguishment (8)
Total Adjustments 1,624
Adjusted EBITDA $136,141
Annualized Adjusted EBITDA $544,564
Adjusted Debt / Annualized Adjusted EBITDA 7.1x
Adjusted Debt / Annualized Adjusted EBITDA excluding severance costs (1) 6.6x
Enterprise value $7,255,977
Adjusted Debt / Enterprise Value 53.2%
Fixed Charge Coverage Ratio (FCCR)
Q2 2017 Q2 2017 (1)
Annualized Adjusted EBITDA $ 544,564 $ 588,964
Interest expense 46,826 46,826
Less: Non-cash interest (5,665) (5,665)
Fixed charges $ 41,161 $ 41,161
Annualized fixed charges $ 164,644 $ 164,644
Fixed Charge Coverage Ratio 3.3x 3.6x
(1) Excludes severance costs of $11.1 million for the three months
ended June 30, 2017
NYSE:SRC
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION | As of June 30, 2017 Q2 2017
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
29
The information in this supplemental report should be read in conjunction with the accompanying earnings press release, as well as the
Company's Quarterly Report on Form 10-Q, Annual Report on Form 10-K and other information filed with the Securities and Exchange
Commission. This supplemental report is not incorporated into such filings.
This document is not an offer to sell or a solicitation to buy securities of Spirit Realty Capital, Inc. Any offer or solicitation shall be made
only by means of a prospectus approved for that purpose.
Forward-Looking and Cautionary Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other
federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” "will," “estimate,”
“project,” “intend,” “believe,” “guidance,” and other similar expressions that do not relate to historical matters. These forward-looking
statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, Spirit’s continued ability to source new investments, risks
associated with using debt and equity financing to fund Spirit’s business activities (including refinancing and interest rate risks, changes
in interest rates and/or credit spreads, changes in the price of our common stock, and conditions of the equity and debt capital markets,
generally), unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities, general risks
affecting the real estate industry and local real estate markets (including, without limitation, the market value of our properties, the inability
to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants’ financial
condition and operating performance, and competition from other developers, owners and operators of real estate), the financial
performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general
merchandise retailers, potential fluctuations in the consumer price index, risks associated with our failure to maintain our status as a
REIT under the Internal Revenue Code of 1986, as amended, risks and uncertainties related to the completion and timing of Spirit's
proposed spin-off of properties leased to Shopko and assets that collateralize Master Trust 2014 and the impact of the spin-off on Spirit's
business, and other additional risks discussed in Spirit’s most recent filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K. Spirit expressly disclaims any responsibility to update or revise forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
