EX-99.2 3 vereitexhibit992quarterlys.htm EXHIBIT 99.2 VEREIT Exhibit 99.2 Quarterly Supplemental Information - 6.30.2015
Exhibit 99.2





 
Q2 2015 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
June 30, 2015
 
Section
Page
 
 
Company Overview
 
 
Financial Information
 
Financial Summary
Financial and Operations Statistics and Ratios
Key Balance Sheet Metrics and Capital Structure
Business Model
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated FFO and AFFO
 
Consolidated EBITDA and Normalized EBITDA
 
 
 
 
Real Estate Investments
 
Statements of Operations
FFO and AFFO
EBITDA and Normalized EBITDA
Net Operating Income
Same Store Contract Rental Revenue
Debt and Preferred Equity Summary
Mortgage Notes Payable
Credit Facility and Corporate Bond Covenants
Acquisitions, Development Projects and Dispositions
Lease Summary
 
Lease Expirations
Top 10 Concentrations
Tenants Comprising Over 1% of Annualized Rental Revenue
Diversification
Unconsolidated Joint Venture Investment Summary
 
 
Cole Capital
 
Statements of Operations
FFO and AFFO
EBITDA and Normalized EBITDA
Program Development Costs
Managed Programs
 
Definitions
 
 
 
 


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with the financial statements and the management's discussion and analysis of financial condition and results of operations section contained in VEREIT's Annual Report on Form 10-K for the year ended December 31, 2014 and Quarterly Reports on Form 10-Q for the three months ended June 30, 2015, March 31, 2015 and September 30, 2014 and Form 10-Q/A for the three months ended June 30, 2014.
 
Forward-Looking Statements
Certain statements contained herein may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). VEREIT intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such statements include, in particular, statements about VEREIT's plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of VEREIT's performance in future periods. Such forward-looking statements can generally be identified by VEREIT's use of forward-looking terminology such as "may," "will," "would," "could," "should," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. VEREIT makes no representation or warranty (express or implied) about the accuracy of any such forward-looking statements contained herein, and does not intend, and undertakes no obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in VEREIT's filings with the U.S. Securities and Exchange Commission including, but not limited to, VEREIT's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and 10-Q/A, as well as its press releases.



 
Q2 2015 SUPPLEMENTAL INFORMATION

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

The Board of Directors authorized amendments to the Company’s Articles of Amendment and Restatement and the Certificate of Limited Partnership of the Company's operating partnership to effect name changes from American Realty Capital Properties, Inc. and ARC Properties Operating Partnership, L.P., to VEREIT, Inc. and VEREIT Operating Partnership, L.P., respectively, effective July 28, 2015. Effective July 31, 2015, VEREIT transferred the listing of its common and preferred stock to the New York Stock Exchange (the “NYSE”) from the NASDAQ Global Select Market . The common and preferred stock now trade under the trading symbols “VER” and “VER PRF”, respectively.

VEREIT is a full service real estate operating company that operates in two business segments, Real Estate Investment ("REI") and Cole Capital®, the Company's investment management segment ("Cole Capital"). Through our REI segment, we own and actively manage a diversified portfolio of retail, restaurant, office and industrial real estate assets primarily subject to long-term net leases with high credit quality tenants. We target properties that are strategically located and essential to the business operations of the tenant, as well as retail properties that offer necessity- and value-oriented products and/or services. At June 30, 2015, approximately 47.4% of our Annualized Rental Income was delivered from investment-grade tenants, our occupancy was 98.4% and our weighted-average lease term was 11.5 years. Cole Capital is contractually responsible for raising capital for, managing the affairs of and identifying and making acquisitions and investments on behalf of non-traded REITs and other real estate programs sponsored by Cole Capital (the "Managed Programs") on a day-to-day basis. We receive compensation and reimbursement for services relating to the Managed Programs' offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital allows us to generate earnings without the corresponding need to invest capital in that business or incur balance sheet debt in order to fund or expand operations. Cole Capital also develops new REIT offerings and coordinates receipt of regulatory approvals from the SEC, the Financial Industry Regulatory Authority, Inc. and various jurisdictions for such offerings. At the appropriate time, Cole Capital recommends to each of the Managed Program's respective board of directors an approach for providing investors with liquidity.





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


 
Q2 2015 SUPPLEMENTAL INFORMATION

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

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

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Financial Summary
(unaudited, dollars in thousands, except per share amounts)
 
 
Q2 2015
 
Q1 2015
 
Q4 2014
 
Q3 2014
 
Q2 2014
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
393,721

 
$
393,968

 
$
418,807

 
$
457,118

 
$
382,178

Net loss
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
 
$
(56,598
)
Normalized EBITDA
$
309,306

 
$
315,161

 
$
323,643

 
$
358,301

 
$
291,664

Funds from operations (FFO)
$
193,951

 
$
195,030

 
$
(58,825
)
 
$
195,798

 
$
156,967

FFO per diluted share
$
0.21

 
$
0.21

 
$
(0.06
)
 
$
0.21

 
$
0.18

Adjusted funds from operations (AFFO)
$
202,338

 
$
200,135

 
$
205,459

 
$
244,549

 
$
185,934

AFFO per diluted share
$
0.22

 
$
0.22

 
$
0.22

 
$
0.26

 
$
0.21

Dividends paid per common share
$
—

 
$
—

 
$
0.25

 
$
0.25

 
$
0.25

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
367,192

 
$
366,474

 
$
366,525

 
$
397,321

 
$
344,956

Net loss
$
(108,267
)
 
$
(30,607
)
 
$
(82,458
)
 
$
(289,133
)
 
$
(46,124
)
Normalized EBITDA
$
303,331

 
$
306,323

 
$
309,791

 
$
331,067

 
$
283,527

FFO
$
194,393

 
$
195,116

 
$
219,144

 
$
194,712

 
$
167,441

FFO per diluted share
$
0.21

 
$
0.21

 
$
0.24

 
$
0.21

 
$
0.19

AFFO
$
195,370

 
$
195,073

 
$
193,934

 
$
214,991

 
$
168,188

AFFO per diluted share
$
0.21

 
$
0.21

 
$
0.21

 
$
0.23

 
$
0.19

Properties owned
4,645

 
4,647

 
4,648

 
4,714

 
3,966

Rentable square feet (in thousands)
101,836

 
102,133

 
103,149

 
113,801

 
106,800

Economic occupancy rate
98.4
%
 
98.4
%
 
99.3
%
 
99.2
%
 
98.8
%
Weighted-average remaining lease term (years)
11.5

 
11.7

 
11.8

 
11.5

 
10.4

Investment-grade tenants (1)
47.4
%
 
47.0
%
 
46.9
%
 
44.8
%
 
49.0
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
26,529

 
$
27,494

 
$
52,282

 
$
59,797

 
$
37,222

Net (loss) income
$
(442
)
 
$
(86
)
 
$
(277,969
)
 
$
1,086

 
$
(10,474
)
Normalized EBITDA
$
5,975

 
$
8,838

 
$
13,853

 
$
27,234

 
$
8,137

FFO
$
(442
)
 
$
(86
)
 
$
(277,969
)
 
$
1,086

 
$
(10,474
)
FFO per diluted share
$
—

 
$
—

 
$
(0.30
)
 
$
—

 
$
(0.01
)
AFFO
$
6,968

 
$
5,062

 
$
11,524

 
$
29,558

 
$
17,746

AFFO per diluted share
$
0.01

 
$
0.01

 
$
0.01

 
$
0.03

 
$
0.02

Capital raised on behalf of Managed Programs, excluding DRIP
$
58,205

 
$
29,770

 
$
128,282

 
$
218,270

 
$
113,241

Purchase price of property acquisitions on behalf of Managed Programs
$
214,694

 
$
225,814

 
$
942,818

 
$
1,111,900

 
$
754,612

Gross Real Estate Investments (2)
$
6,286,402

 
$
6,084,979

 
$
8,563,540

 
$
7,705,703

 
$
6,565,984

_______________________________________________
(1) Reflects the percent of our tenants, including parent companies of our tenants and lease guarantors, with a Standard and Poor's credit rating of BBB- or higher or a Moody's credit rating of Baa3 or higher. The weighted-average credit rating of our investment-grade tenants was BBB+ as of June 30, 2015.
(2) Cole Corporate Income Trust, Inc. ("CCIT") merged with Select Income REIT on January 29, 2015. Prior to the sale, Cole Capital had managed $2.7 billion of assets on behalf of CCIT. As such, June 30, 2015 and March 31, 2015 excludes CCIT's Gross Real Estate Investments.

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
88,422

 
$
91,658

 
$
91,620

 
$
97,333

 
$
97,500

Normalized EBITDA
 
309,306

 
315,161

 
323,643

 
358,301

 
291,664

Interest coverage ratio
 
3.50x

 
3.44x

 
3.53x

 
3.68x

 
2.99x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
88,422

 
$
91,658

 
$
91,620

 
$
97,333

 
$
97,500

Secured debt principal amortization
 
8,520

 
10,999

 
8,993

 
6,938

 
6,789

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
36,282

 
22,016

Total fixed charges
 
114,915

 
120,630

 
118,586

 
140,553

 
126,305

Normalized EBITDA
 
309,306

 
315,161

 
323,643

 
358,301

 
291,664

Fixed charge coverage ratio
 
2.69x

 
2.61x

 
2.73x

 
2.55x

 
2.31x

 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
9,401,839

 
$
10,333,173

 
$
10,469,121

 
$
11,551,644

 
$
9,672,412

Less: cash and cash equivalents
 
121,651

 
788,739

 
416,711

 
145,310

 
195,529

Net Debt
 
9,280,188

 
9,544,434

 
10,052,410

 
11,406,334

 
9,476,883

Normalized EBITDA annualized
 
1,237,224

 
1,260,644

 
1,294,572

 
1,433,204

 
1,166,656

Net Debt to Normalized EBITDA annualized ratio
 
7.50x

 
7.57x

 
7.77x

 
7.96x

 
8.12x

 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
9,280,188

 
$
9,544,434

 
$
10,052,410

 
$
11,406,334

 
$
9,476,883

Gross Real Estate Investments
 
17,725,642

 
17,904,710

 
18,211,712

 
20,369,206

 
18,281,837

Net Debt leverage ratio
 
52.4
%
 
53.3
%
 
55.2
%
 
56.0
%
 
51.8
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,360,689

 
$
11,187,797

 
$
11,570,474

 
$
12,602,273

 
$
10,374,329

Gross Real Estate Investments
 
17,725,642

 
17,904,710

 
18,211,712

 
20,369,206

 
18,281,837

Unencumbered asset ratio
 
64.1
%
 
62.5
%
 
63.5
%
 
61.9
%
 
56.7
%



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


 
Q2 2015 SUPPLEMENTAL INFORMATION


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



 
 
Common equity
41.9
%
 
 
 
 
 
 
Secured debt
19.8
%
 
 
 
 
 
 
Corporate bonds
14.1
%
 
 
 
 
 
 
Revolving credit facility
7.2
%
 
 
 
 
 
 
Preferred equity
6.0
%
 
 
 
 
 
 
Unsecured term loan
5.5
%
 
 
 
 
 
 
Convertible term notes
5.5
%

                            

Fixed vs. Variable Rate Debt
Fixed
72.5
%
Swapped to Fixed
13.7
%
Variable
13.8
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate
 
June 30, 2015
Diluted shares and units outstanding
 
 
 
 
929,697

Stock price
 
 
 
 
$
8.13

Implied Equity Market Capitalization
 
$
7,558,437

 
 
 
 
 
 
Series F Perpetual Preferred
 
6.70%
 
1,070,853

 
 
 
 
 
 
Mortgage notes payable
6.8
 
4.95%
 
3,514,540

KBC secured term loan
2.5
 
5.81%
 
37,299

Total secured debt
6.8
 
4.96%
 
3,551,839

 
 
 
 
 
 
Unsecured term loan (swapped to fixed)
3.0
 
3.30%
 
1,000,000

Revolving credit facility
3.0
 
1.98%
 
1,300,000

Total unsecured credit facility
3.0
 
2.55%
 
2,300,000

3-year corporate bonds
1.6
 
2.00%
 
1,300,000

5-year corporate bonds
3.6
 
3.00%
 
750,000

5-year convertible term notes
3.1
 
3.00%
 
597,500

7-year convertible term notes
5.5
 
3.75%
 
402,500

10-year corporate bonds
8.6
 
4.60%
 
500,000

Total unsecured debt
3.4
 
2.79%
 
5,850,000

 
 
 
 
 
 
Total Debt
4.7
 
3.61%
 
9,401,839

 
 
 
 
 
 
Total Capitalization
 
$
18,031,129

Less: Cash and cash equivalents
 
 
 
 
121,651

Enterprise Value
 
$
17,909,478

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
51.8
%
Net Debt/Normalized EBITDA Annualized
 
 
 
7.50x

Net Debt + Preferred/Normalized EBITDA Annualized
 
8.37
x
Fixed Charge Coverage
 
 
 
 
2.69x

Liquidity (1)
 
 
 
 
$
1,421,651

_____________________________________
(1) Liquidity represents cash and cash equivalents of $121.7 million and $1.3 billion available capacity on credit facility. Subsequent to June 30, 2015, the Company amended the credit agreement and reduced the maximum capacity on the credit facility by $0.3 million.


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 
(1) Not represented are the 24 properties that consist of billboards, construction in progress and parking lots.
(2) Excludes CCIT, as it merged with Select Income REIT on January 29, 2015.


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands, except per share data)
 
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
3,351,303

 
$
3,434,414

 
$
3,472,298

 
$
3,487,824

 
$
3,343,235

Buildings, fixtures and improvements
 
11,779,450

 
12,081,061

 
12,307,758

 
12,355,029

 
12,420,626

Land and construction in progress
 
83,104

 
83,284

 
77,450

 
86,973

 
62,594

Intangible lease assets
 
2,339,273

 
2,386,904

 
2,435,054

 
2,424,076

 
2,227,393

Total real estate investments, at cost
 
17,553,130

 
17,985,663

 
18,292,560

 
18,353,902

 
18,053,848

Less: accumulated depreciation and amortization
 
1,401,843

 
1,238,320

 
1,034,122

 
828,624

 
660,617

Total real estate investments, net
 
16,151,287

 
16,747,343

 
17,258,438

 
17,525,278

 
17,393,231

Investment in unconsolidated entities
 
94,502

 
95,390

 
98,053

 
100,762

 
102,047

Investment in direct financing leases, net
 
49,801

 
54,822

 
56,076

 
57,441

 
62,094

Investment securities, at fair value
 
55,802

 
56,493

 
58,646

 
59,131

 
219,204

Loans held for investment, net
 
40,598

 
41,357

 
42,106

 
96,981

 
97,587

Cash and cash equivalents
 
121,651

 
788,739

 
416,711

 
145,310

 
195,529

Restricted cash
 
53,336

 
64,578

 
62,651

 
72,754

 
69,544

Intangible assets, net
 
135,340

 
142,851

 
150,359

 
323,332

 
347,618

Deferred costs and other assets, net
 
403,606

 
400,884

 
389,922

 
446,606

 
418,199

Goodwill
 
1,847,295

 
1,871,114

 
1,894,794

 
2,096,450

 
2,293,020

Due from affiliates
 
53,456

 
58,457

 
86,122

 
55,666

 
73,686

Assets held for sale
 
242,701

 
—

 
1,261

 
1,887,872

 
38,737

Total assets
 
$
19,249,375

 
$
20,322,028

 
$
20,515,139

 
$
22,867,583

 
$
21,310,496

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
3,500,144

 
$
3,672,496

 
$
3,805,761

 
$
3,830,994

 
$
4,373,652

Corporate bonds, net
 
2,546,864

 
2,546,701

 
2,546,499

 
2,546,294

 
2,546,089

Convertible debt, net
 
979,852

 
978,769

 
977,521

 
976,251

 
975,003

Credit facility
 
2,300,000

 
3,184,000

 
3,184,000

 
4,259,000

 
1,896,000

Below-market lease liabilities, net
 
298,102

 
304,754

 
317,838

 
318,494

 
281,954

Accounts payable and accrued expenses
 
168,877

 
160,129

 
163,025

 
180,338

 
174,942

Deferred rent, derivative and other liabilities
 
122,999

 
139,241

 
127,611

 
195,256

 
223,419

Distributions payable
 
9,938

 
9,959

 
9,995

 
9,927

 
10,779

Due to affiliates
 
268

 
547

 
559

 
2,757

 
3,184

Mortgage notes payable associated with assets held for sale
 
118,493

 
—

 
—

 
545,382

 
—

Total liabilities
 
10,045,537

 
10,996,596

 
11,132,809

 
12,864,693

 
10,485,022

Series D preferred stock
 
—

 
—

 
—

 
—

 
269,299

Series F preferred stock
 
428

 
428

 
428

 
428

 
427

Common stock
 
9,051

 
9,051

 
9,055

 
9,080

 
9,079

Additional paid-in capital
 
11,924,547

 
11,919,358

 
11,920,253

 
11,905,338

 
11,901,675

Accumulated other comprehensive (loss) income
 
(1,928
)
 
(4,136
)
 
2,728

 
8,600

 
7,058

Accumulated deficit
 
(2,951,019
)
 
(2,826,524
)
 
(2,778,576
)
 
(2,182,731
)
 
(1,639,208
)
Total stockholders' equity
 
8,981,079

 
9,098,177

 
9,153,888

 
9,740,715

 
10,279,031

Non-controlling interests
 
222,759

 
227,255

 
228,442

 
262,175

 
277,144

Total equity
 
9,203,838


9,325,432

 
9,382,330

 
10,002,890

 
10,556,175

Total liabilities and equity
 
$
19,249,375

 
$
20,322,028

 
$
20,515,139

 
$
22,867,583

 
$
21,310,496


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31, 2014
 
September 30, 2014
 
June 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

 
$
314,519

Direct financing lease income
 
697

 
741

 
791

 
625

 
1,181

Operating expense reimbursements
 
25,312

 
22,974

 
18,806

 
30,984

 
29,256

Cole Capital revenue
 
26,529

 
27,494

 
52,282

 
59,797

 
37,222

Total revenues
 
393,721


393,968


418,807


457,118


382,178

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
3,710

 
2,031

 
9,326

 
15,398

 
7,068

Acquisition related
 
1,563

 
2,182

 
4,215

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,162

 
7,632

 
7,422

Property operating
 
32,598

 
30,999

 
27,723

 
40,977

 
39,286

General and administrative
 
33,958

 
33,106

 
44,622

 
30,213

 
37,224

Depreciation and amortization
 
217,513

 
219,141

 
226,272

 
265,150

 
250,739

Impairments
 
85,341

 
—

 
406,136

 
2,299

 
1,556

Total operating expenses
 
391,547

 
303,882

 
743,456

 
375,667

 
350,496

Operating income (loss)
 
2,174

 
90,086

 
(324,649
)
 
81,451

 
31,682

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(90,572
)
 
(95,699
)
 
(126,157
)
 
(101,643
)
 
(103,897
)
Extinguishment of debt, net
 
—

 
429

 
(605
)
 
(5,396
)
 
(6,469
)
Other income, net
 
5,302

 
8,961

 
65,848

 
8,687

 
4,442

Gain (loss) on derivative instruments, net
 
311

 
(1,028
)
 
(172
)
 
(17,484
)
 
14,207

Gain on sale of investments
 
—

 
—

 
—

 
6,357

 
—

Total other expenses, net
 
(84,959
)
 
(87,337
)
 
(61,086
)
 
(109,479
)
 
(91,717
)
Loss before income and franchise taxes and loss on disposition of real estate and held for sale assets
 
(82,785
)
 
2,749

 
(385,735
)
 
(28,028
)
 
(60,035
)
Loss on disposition of real estate and held for sale assets, net
 
(24,674
)
 
(31,368
)
 
(1,263
)
 
(256,894
)
 
(1,269
)
Loss before income and franchise taxes
 
(107,459
)
 
(28,619
)
 
(386,998
)
 
(284,922
)
 
(61,304
)
(Provision for) benefit from income and franchise taxes
 
(1,250
)
 
(2,074
)
 
26,571

 
(3,125
)
 
4,706

Net loss
 
(108,709
)

(30,693
)

(360,427
)

(288,047
)

(56,598
)
Net loss attributable to non-controlling interests
 
2,187

 
723

 
9,804

 
7,649

 
1,878

Net loss attributable to the Company
 
$
(106,522
)
 
$
(29,970
)
 
$
(350,623
)
 
$
(280,398
)
 
$
(54,720
)
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per share attributable to common stockholders
 
$
(0.14
)
 
$
(0.05
)
 
$
(0.41
)
 
$
(0.35
)
 
$
(0.10
)


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Net loss
 
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
 
$
(56,598
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,974
)
 
(17,773
)
Loss on disposition of real estate and held for sale assets, net
 
24,674

 
31,368

 
1,263

 
256,894

 
1,269

Depreciation and amortization of real estate assets
 
209,132

 
210,770

 
219,080

 
240,046

 
225,940

Impairment of real estate assets
 
85,341

 
—

 
96,692

 
2,299

 
1,556

Proportionate share of adjustments for unconsolidated entities
 
1,486

 
1,558

 
2,540

 
2,580

 
2,573

 FFO
 
$
193,951

 
$
195,030

 
$
(58,825
)
 
$
195,798

 
$
156,967

 
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
1,563

 
2,182

 
4,215

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,162

 
7,632

 
7,422

Impairment of intangible assets
 
—

 
—

 
309,444

 
—

 
—

Legal settlements and insurance proceeds
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
 
—

Loss (gain) on sale and unrealized gains of investment securities
 
172

 
(233
)
 
—

 
(6,357
)
 
—

(Gain) loss on derivative instruments, net
 
(311
)
 
1,028

 
172

 
17,484

 
(14,207
)
Amortization of premiums and discounts on debt and investments, net
 
(5,298
)
 
(3,858
)
 
11,461

 
(8,106
)
 
(4,606
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
1,007

 
1,475

 
1,934

 
2,103

Net direct financing lease adjustments
 
491

 
495

 
448

 
620

 
137

Amortization and write-off of deferred financing costs
 
7,428

 
7,929

 
23,475

 
12,486

 
10,985

Amortization of management contracts
 
7,510

 
7,510

 
6,233

 
24,288

 
24,024

Deferred tax benefit(1)
 
(3,874
)
 
(3,972
)
 
(33,324
)
 
—

 
—

Extinguishment of debt and forgiveness of debt, net
 
—

 
(5,302
)
 
605

 
5,396

 
6,469

Straight-line rent
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 
(17,413
)
Equity-based compensation expense, net of forfeiture(2)
 
5,355

 
818

 
(980
)
 
5,541

 
5,690

Other amortization and non-cash charges
 
766

 
753

 
895

 
713

 
698

Proportionate share of adjustments for unconsolidated entities
 
654

 
682

 
1,090

 
1,268

 
464

 AFFO
 
$
202,338

 
$
200,135

 
$
205,459

 
$
244,549

 
$
185,934

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

 
815,406,408

Effect of dilutive securities (3)
 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

 
52,613,117

Weighted-average shares outstanding - diluted(4)
 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
868,019,525

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
0.21

 
$
0.21

 
$
(0.06
)
 
$
0.21

 
$
0.18

AFFO per diluted share
 
$
0.22

 
$
0.22

 
$
0.22

 
$
0.26

 
$
0.21

_______________________________________
(1) This adjustment represents the non-current portion of the provision or benefit in order to show only the current portion of the benefit as an impact to AFFO.
(2) During the three months ended December 31, 2014, the Company reversed certain equity-based compensation amounts previously recorded due to the resignation of certain executives.
(3) Dilutive securities include limited partnership interests in our operating partnership, unvested restricted shares, certain unvested restricted stock units and convertible preferred stock, as applicable.
(4) Weighted-average shares for all periods presented exclude the effect of the convertible debt as the strike price of each convertible debt instrument is greater than the price of the Company’s common stock as of the end of each reporting period presented. In addition, for the three and six months ended June 30, 2015, 1.4 million shares underlying restricted stock units that are contingently issuable have been excluded based on the Company’s level of achievement of certain performance targets through June 30, 2015.

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 Net loss
 
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
 
$
(56,598
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
90,572

 
95,699

 
126,157

 
101,643

 
103,897

Depreciation and amortization
 
217,513

 
219,141

 
226,272

 
265,150

 
250,739

Provision for (benefit from) income and franchise taxes
 
1,250

 
2,074

 
(26,571
)
 
3,125

 
(4,706
)
Proportionate share of adjustments for unconsolidated entities
 
2,415

 
2,661

 
3,402

 
3,433

 
3,453

 EBITDA
 
$
203,041

 
$
288,882

 
$
(31,167
)
 
$
85,304

 
$
296,785

 Management adjustments:
 
 
 
 
 
 
 
 
 
 
Loss on held for sale assets and disposition of real estate, net
 
24,674

 
31,368

 
1,263

 
256,894

 
1,269

Impairments
 
85,341

 
—

 
406,136

 
2,299

 
1,556

Acquisition related
 
1,563

 
2,182

 
4,215

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,162

 
7,632

 
7,422

Loss (gain) on sale and unrealized gains of investment securities
 
172

 
(233
)
 
—

 
(6,357
)
 
—

(Gain) loss on derivative instruments, net
 
(311
)
 
1,028

 
172

 
17,484

 
(14,207
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
1,007

 
1,475

 
1,934

 
2,103

(Gain) loss on early extinguishment of debt and forgiveness of debt, net
 
—

 
(5,302
)
 
605

 
5,396

 
6,469

Net direct financing lease adjustments
 
491

 
495

 
448

 
620

 
137

Straight-line rent
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 
(17,413
)
Legal settlement and insurance proceeds
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
 
—

Other amortization and non-cash charges
 
(125
)
 
(78
)
 
335

 
(33
)
 
(95
)
 Proportionate share of adjustments for unconsolidated entities
 
529

 
(254
)
 
1,086

 
1,276

 
437

Normalized EBITDA
 
$
309,306

 
$
315,161

 
$
323,643

 
$
358,301

 
$
291,664



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




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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

 
$
314,519

Direct financing lease income
 
697

 
741

 
791

 
625

 
1,181

Operating expense reimbursements
 
25,312

 
22,974

 
18,806

 
30,984

 
29,256

Total real estate investment revenues
 
367,192


366,474


366,525


397,321


344,956

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
1,563

 
1,723

 
853

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,139

 
7,613

 
5,999

Property operating
 
32,598

 
30,999

 
27,723

 
40,977

 
39,286

General and administrative
 
16,827

 
15,370

 
13,586

 
12,948

 
15,189

Depreciation and amortization
 
209,122

 
210,788

 
219,222

 
240,073

 
225,965

Impairment of real estate
 
85,341

 
—

 
96,692

 
2,299

 
1,556

Total operating expenses
 
362,315


275,303


383,215

 
317,908

 
295,196

Operating income (loss)
 
4,877


91,171


(16,690
)
 
79,413

 
49,760

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(90,572
)
 
(95,699
)
 
(126,157
)
 
(101,643
)
 
(103,897
)
Extinguishment of debt, net
 
—

 
429

 
(605
)
 
(5,396
)
 
(6,469
)
Other income, net
 
4,910

 
7,742

 
63,837

 
8,508

 
4,332

(Loss) gain on derivative instruments, net
 
311

 
(1,028
)
 
(172
)
 
(17,484
)
 
14,207

Gain on sale of investments
 
—

 
—

 
—

 
6,357

 
—

Total other expenses, net
 
(85,351
)

(88,556
)

(63,097
)
 
(109,658
)
 
(91,827
)
Loss before income and franchise taxes and loss on disposition of real estate and held for sale assets
 
(80,474
)
 
2,615

 
(79,787
)
 
(30,245
)
 
(42,067
)
Loss on disposition of real estate and held for sale assets, net
 
(24,674
)
 
(31,368
)
 
(1,263
)
 
(256,894
)
 
(1,269
)
Loss before income and franchise taxes
 
(105,148
)

(28,753
)

(81,050
)
 
(287,139
)
 
(43,336
)
Provision for income and franchise taxes
 
(3,119
)
 
(1,854
)
 
(1,408
)
 
(1,994
)
 
(2,788
)
Net loss
 
$
(108,267
)

$
(30,607
)

$
(82,458
)

$
(289,133
)

$
(46,124
)


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Net loss
 
$
(108,267
)
 
$
(30,607
)
 
$
(82,458
)
 
$
(289,133
)
 
$
(46,124
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,974
)
 
(17,773
)
Loss on disposition of real estate and held for sale assets, net
 
24,674

 
31,368

 
1,263

 
256,894

 
1,269

Depreciation and amortization of real estate assets
 
209,132

 
210,770

 
219,080

 
240,046

 
225,940

Impairment of real estate
 
85,341

 
—

 
96,692

 
2,299

 
1,556

Proportionate share of adjustments for unconsolidated entities
 
1,486

 
1,558

 
2,540

 
2,580

 
2,573

 FFO
 
$
194,393

 
$
195,116

 
$
219,144

 
$
194,712

 
$
167,441

 
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
1,563

 
1,723

 
853

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,139

 
7,613

 
5,999

Legal settlement and insurance proceeds
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
 
—

Loss (gain) on sale and unrealized gains of investment securities
 
172

 
(233
)
 
—

 
(6,357
)
 
—

Loss (gain) on derivative instruments, net
 
(311
)
 
1,028

 
172

 
17,484

 
(14,207
)
Amortization of premiums and discounts on debt and investments, net
 
(5,298
)
 
(3,858
)
 
11,461

 
(8,106
)
 
(4,606
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
1,007

 
1,475

 
1,934

 
2,103

Net direct financing lease adjustments
 
491

 
495

 
448

 
620

 
137

Amortization and write-off of deferred financing costs
 
7,428

 
7,929

 
23,475

 
12,486

 
10,985

Extinguishment of debt and forgiveness of debt, net
 
—

 
(5,302
)
 
605

 
5,396

 
6,469

Straight-line rent
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 
(17,413
)
Equity-based compensation expense, net of forfeitures (1)
 
2,357

 
402

 
(3,997
)
 
2,086

 
3,575

Other amortization and non-cash charges
 
(10
)
 
18

 
156

 
3

 
40

Proportionate share of adjustments for unconsolidated entities
 
654

 
682

 
1,090

 
1,268

 
464

 AFFO
 
$
195,370

 
$
195,073

 
$
193,934

 
$
214,991

 
$
168,188

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

 
815,406,408

Effect of dilutive securities (2)
 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

 
52,613,117

Weighted-average shares outstanding - diluted (3)
 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
868,019,525

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
0.21

 
$
0.21

 
$
0.24

 
$
0.21

 
$
0.19

AFFO per diluted share
 
$
0.21

 
$
0.21

 
$
0.21

 
$
0.23

 
$
0.19

_________________________________
(1) During the three months ended December 31, 2014, the Company reversed certain equity-based compensation amounts previously recorded due to the resignation of certain executives.
(2) Dilutive securities include limited partnership interests in our operating partnership, unvested restricted shares, certain unvested restricted stock units and convertible preferred stock, as applicable.
(3) Weighted-average shares for all periods presented exclude the effect of the convertible debt as the strike price of each convertible debt instrument is greater than the price of the Company’s common stock as of the end of each reporting period presented. In addition, for the three and six months ended June 30, 2015, 1.4 million shares underlying restricted stock units that are contingently issuable have been excluded based on the Company’s level of achievement of certain performance targets through June 30, 2015.

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 Net loss
 
$
(108,267
)
 
$
(30,607
)
 
$
(82,458
)
 
$
(289,133
)
 
$
(46,124
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
90,572

 
95,699

 
126,157

 
101,643

 
103,897

Depreciation and amortization
 
209,122

 
210,788

 
219,222

 
240,073

 
225,965

Provision for income and franchise taxes
 
3,119

 
1,854

 
1,408

 
1,994

 
2,788

Proportionate share of adjustments for unconsolidated entities
 
2,415

 
2,661

 
3,402

 
3,433

 
3,453

 EBITDA
 
$
196,961

 
$
280,395

 
$
267,731

 
$
58,010

 
$
289,979

 Management adjustments:
 
 
 
 
 
 
 
 
 
 
Loss on held for sale assets and disposition of real estate, net
 
24,674

 
31,368

 
1,263

 
256,894

 
1,269

Impairments
 
85,341

 
—

 
96,692

 
2,299

 
1,556

Acquisition related
 
1,563

 
1,723

 
853

 
13,998

 
7,201

Merger and other non-routine transactions
 
16,864

 
16,423

 
25,139

 
7,613

 
5,999

Loss (gain) on sale and unrealized gains of investment securities
 
172

 
(233
)
 
—

 
(6,357
)
 
—

(Gain) loss on derivative instruments, net
 
(311
)
 
1,028

 
172

 
17,484

 
(14,207
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
1,007

 
1,475

 
1,934

 
2,103

(Gain) loss on early extinguishment of debt and forgiveness of debt, net
 
—

 
(5,302
)
 
605

 
5,396

 
6,469

Net direct financing lease adjustments
 
491

 
495

 
448

 
620

 
137

Straight-line rent
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 
(17,413
)
Legal settlement and insurance proceeds
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
 
—

Other amortization and non-cash charges
 
(20
)
 
30

 
414

 
46

 
(3
)
 Proportionate share of adjustments for unconsolidated entities
 
529

 
(254
)
 
1,086

 
1,276

 
437

Normalized EBITDA
 
$
303,331

 
$
306,323

 
$
309,791

 
$
331,067

 
$
283,527



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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
 Rental income - as reported(1)
 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

 
$
314,519

 Direct financing lease income - as reported
 
697

 
741

 
791

 
625

 
1,181

 Operating expense reimbursements - as reported
 
25,312

 
22,974

 
18,806

 
30,984

 
29,256

 Property operating expense - as reported
 
(32,598
)
 
(30,999
)
 
(27,723
)
 
(40,977
)
 
(39,286
)
NOI
 
334,594


335,475

 
338,802

 
356,344

 
305,670

 Adjustments:
 
 
 
 
 
 
 
 
 
 
 Straight line rent
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 
(17,413
)
 Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
1,007

 
1,475

 
1,934

 
2,103

Net direct financing lease adjustments
 
491

 
495

 
448

 
620

 
137

 Cash NOI
 
$
312,152


$
317,870

 
$
315,358

 
$
334,027

 
$
290,497

_____________________________________
(1) Rental income includes percentage rent of $2.1 million, $2.6 million, $1.6 million, $1.9 million, and $2.7 million for the three months ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014, respectively.

Normalized Cash NOI
 
 
Three Months Ended
 
 
June 30, 2015
Cash NOI
 
$
312,152

Adjustments for intra-quarter acquisitions and dispositions
 
(1,079
)
Normalized Cash NOI(1)
 
$
311,073

_____________________________________
(1) For properties acquired or build-to-suits completed during the three months ended June 30, 2015, the adjustments for intra-quarter acquisitions and dispositions replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. For properties disposed of during the three months ended June 30, 2015, the adjustment eliminates Cash NOI for the period.

Cash NOI by Property Type
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Properties owned
 
4,645

 
4,647

 
4,648

 
4,714

 
3,966

 
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
$
105,714

 
$
110,742

 
$
105,910

 
$
103,149

 
$
96,338

Multi-tenant retail
 
5,902

 
5,662

 
10,810

 
37,118

 
37,889

Restaurant
 
82,568

 
81,583

 
80,557

 
73,189

 
48,045

Industrial and distribution
 
47,508

 
48,230

 
47,580

 
46,845

 
42,842

Office
 
70,341

 
71,574

 
70,485

 
73,118

 
65,189

Other(1)
 
119

 
79

 
16

 
608

 
194

Total
 
$
312,152


$
317,870


$
315,358


$
334,027


$
290,497

_______________________________________________
(1) Other includes billboards and parking lots.

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Same Store Contract Rental Revenue
(unaudited, dollars in thousands)
 
The Company reviews the stabilized operating results from properties that were refer to as "same store." In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment or had revenues that were reserved for in accordance with GAAP. The following tables show the Company's same store portfolio statistics, which included 3,597(1) properties, with 82.6 million aggregate square feet, acquired prior to April 1, 2014 and owned through June 30, 2015:
 
 
Quarter Ended June 30,
 
Increase/(Decrease)
 
 
2015
 
2014
 
$ Change
 
% Change
Contract Rental Revenue
 
$
248,558

 
$
245,693

 
$
2,865

 
1.2
%
Economic occupancy rate
 
98.2
%
 
98.5
%
 
NA

 
NA

 
 
 
 
Contract Rental Revenue
 
 
Number of
 
Quarter Ended June 30,
 
Increase/(Decrease)
 
 
Properties
 
2015
 
2014
 
$ Change
 
% Change
Single-tenant retail
 
1,779

 
$
93,390

 
$
92,330

 
$
1,060

 
1.1
 %
Multi-tenant retail
 
19

 
5,814

 
5,762

 
52

 
0.9
 %
Restaurant
 
1,551

 
46,646

 
46,652

 
(6
)
 
—
 %
Industrial and Distribution
 
101

 
38,968

 
39,357

 
(389
)
 
(1.0
)%
Office
 
141

 
63,710

 
61,562

 
2,148

 
3.5
 %
Other(2)
 
6

 
30

 
30

 
—

 
—
 %
Total
 
3,597

 
$
248,558

 
$
245,693

 
$
2,865

 
1.2
 %
_______________________________________________
(1) Built-to-suit and expansion properties are included in the same store population if the placed in service date was prior to June 1, 2014.
(2) Other properties includes billboards and parking lots.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Same Store Contract Rental Revenue
 
The following graphs compare the Company's same store Contract Rental Revenue composition to the Company's total portfolio, based on Annualized Rental Income.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Debt and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
Remaining2015
 
2016
 
2017
 
2018
 
2019
 
Thereafter
Mortgage notes payable
 
$
3,514,540

 
$
11,524

 
$
252,235

 
$
457,932

 
$
220,184

 
$
296,006

 
$
2,276,659

Unsecured credit facility
 
2,300,000

 
—

 
—

 
—

 
2,300,000

 
—

 
—

Corporate bonds
 
2,550,000

 
—

 
—

 
1,300,000

 
—

 
750,000

 
500,000

Convertible debt
 
1,000,000

 
—

 
—

 
—

 
597,500

 
—

 
402,500

Other debt
 
37,299

 
3,836

 
12,516

 
7,680

 
13,267

 
—

 
—

Total
 
$
9,401,839

 
$
15,360

 
$
264,751

 
$
1,765,612

 
$
3,130,951

 
$
1,046,006

 
$
3,179,159

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable
 
37.4
%
 
4.95
%
 
6.8

Unsecured credit facility
 
24.5
%
 
2.55
%
 
3.0

Corporate bonds
 
27.1
%
 
2.80
%
 
3.6

Convertible debt
 
10.6
%
 
3.30
%
 
4.0

Other debt
 
0.4
%
 
5.81
%
 
2.5

Total
 
100.0
%
 
3.61
%
 
4.7

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
62.2
%
 
2.79
%
 
3.4

Total secured debt
 
37.8
%
 
4.96
%
 
6.8

Total
 
100.0
%
 
3.61
%
 
4.7

 
 
 
 
 
 
 
Total fixed rate debt (1)
 
86.2
%
 
3.86
%
 
5.0

Total floating rate debt
 
13.8
%
 
2.04
%
 
3.0

Total
 
100.0
%
 
3.61
%
 
4.7

Preferred Equity
 
Amount Outstanding
 
Percent of Total Preferred Equity
 
Dividend Rate
Series F preferred stock
 
$
1,070,853

 
100.00
%
 
6.7
%
_______________________________________________
(1) Includes $1.3 billion of variable-rate debt fixed by way of interest rate swap agreement.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


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




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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Outstanding Balance as of
June 30, 2015
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Cantor Commercial Real Estate Lending, L.P.
 
1/6/2024
 
$
465,000

 
4.97
%
 
4.97
%
 
I/O
Wells Fargo Bank, National Association
 
8/10/2036
 
277,403

 
4.16
%
 
4.16
%
 
P&I
Cantor Commercial Real Estate Lending, L.P.
 
1/6/2024
 
155,000

 
4.97
%
 
4.97
%
 
I/O
Wells Fargo Bank, National Association
 
1/1/2018
 
133,025

 
5.61
%
 
5.61
%
 
I/O through 02/01/2016, then P&I
The Royal Bank of Scotland Plc
 
5/1/2023
 
124,300

 
3.84
%
 
3.84
%
 
I/O
JPMorgan Chase Bank, N.A.
 
9/1/2020
 
102,999

 
5.55
%
 
5.55
%
 
P&I
Bank of America, N.A.
 
1/1/2017
 
94,884

 
6.30
%
 
6.30
%
 
I/O
Wells Fargo Bank, National Association
 
3/1/2023
 
74,250

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

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

 
4.24
%
 
4.24
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
6/6/2020
 
63,600

 
5.73
%
 
5.73
%
 
I/O through 07/06/2015, then P&I
Wells Fargo Bank, National Association
 
5/1/2021
 
60,450

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

 
4.10
%
 
4.10
%
 
I/O
New York State Teachers' Retirement System
 
3/1/2019
 
55,000

 
4.41
%
 
4.41
%
 
I/O
Citigroup Global Markets Realty Corp
 
5/6/2022
 
54,300

 
6.05
%
 
6.05
%
 
I/O
Bank of America, N.A.
 
1/1/2017
 
51,836

 
5.90
%
 
5.90
%
 
I/O
Capital One, N.A.
 
11/20/2019
 
51,400

 
1mo. Libor + 1.95%

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

 
5.25
%
(3)
5.25
%
 
I/O
US Bank National Association
 
11/11/2029
 
50,912

 
7.23
%
 
7.23
%
 
I/O
Wells Fargo Bank, National Association
 
2/1/2017
 
48,500

 
1mo. Libor + 2.47%

(3)
3.75
%
 
I/O
JPMorgan Chase Bank, N.A.
 
5/1/2021
 
46,910

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

 
5.92
%
 
5.92
%
 
I/O
US Bank National Association
 
7/11/2016
 
43,700

 
6.03
%
 
6.03
%
 
I/O
People's United Bank
 
4/1/2021
 
42,500

 
5.55
%
 
5.55
%
 
I/O through 05/01/2016, then P&I
JPMorgan Chase Bank, N.A.
 
6/1/2020
 
41,610

 
5.71
%
 
5.71
%
 
I/O through 07/01/2015, then P&I
Wells Fargo Bank, National Association
 
6/1/2022
 
41,000

 
4.73
%
 
4.73
%
 
I/O
Morgan Stanley Mortgage Capital Holdings LLC
 
1/1/2023
 
40,800

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

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

 
6.34
%
 
6.34
%
 
I/O
LaSalle Bank National Association
 
1/1/2016
 
38,051

 
10.68
%
(4)
10.68
%
 
P&I
Wells Fargo Bank, National Association
 
3/1/2017
 
36,600

 
1mo. Libor + 2.50%

 
3.76
%
 
I/O
The Royal Bank of Scotland Plc
 
1/1/2021
 
34,000

 
5.48
%
(3)
5.48
%
 
I/O
Goldman Sachs Mortgage Company
 
12/6/2020
 
31,500

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

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

 
5.25
%
(3)
5.25
%
 
I/O
BOKF, NA dba Bank of Oklahoma
 
7/29/2018
 
29,579

 
1mo. Libor + 2.75%

 
4.10
%
 
I/O
Jackson National Life Insurance Company
 
10/1/2021
 
29,450

 
4.25
%
 
4.25
%
 
I/O through 11/01/2018, then P&I
German American Capital Corporation
 
10/6/2022
 
29,160

 
4.48
%
 
4.48
%
 
I/O

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Outstanding Balance as of
June 30, 2015
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
LaSalle Bank National Association
 
1/1/2016
 
$
28,552

 
5.69
%
 
5.69
%
 
I/O through 02/01/2015, then P&I
PNC Bank, National Association
 
9/1/2022
 
28,539

 
4.00
%
 
4.00
%
 
P&I
German American Capital Corporation
 
10/6/2022
 
28,440

 
4.48
%
 
4.48
%
 
I/O
BOKF, NA dba Bank of Texas
 
7/31/2017
 
28,350

 
1mo. Libor + 2.20%

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

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

 
4.73
%
 
4.73
%
 
I/O
Jackson National Life Insurance Company
 
7/1/2019
 
27,200

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

 
5.81
%
 
5.81
%
 
I/O
Bank of America, N.A.
 
9/1/2017
 
24,624

 
5.28
%
 
5.28
%
 
P&I
John Hancock Life Insurance Company
 
10/1/2022
 
22,500

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

 
1mo. Libor + 1.80%

 
3.57
%
 
I/O
German American Capital Corp
 
6/6/2022
 
19,710

 
4.60
%
(3)
4.60
%
 
P&I
Aviva Life and Annuity Company
 
7/1/2021
 
19,600

 
5.02
%
 
5.02
%
 
I/O through 08/01/2019, then P&I
The Variable Annuity Life Insurance Company
 
1/1/2023
 
19,525

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

 
5.67
%
 
5.67
%
 
I/O
Oritani Bank
 
5/1/2024
 
18,889

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

 
5.88
%
 
5.88
%
 
I/O
US Bank National Association
 
12/11/2016
 
17,500

 
5.55
%
 
5.55
%
 
I/O
BOKF, NA dba Bank of Texas
 
7/31/2017
 
16,555

 
1mo. Libor + 2.20%

 
3.28
%
 
I/O
JPMorgan Chase Bank, National Association
 
5/1/2021
 
16,422

 
5.54
%
 
5.54
%
 
P&I
US Bank National Association
 
1/11/2017
 
16,200

 
5.48
%
(3)
5.48
%
 
I/O
Wachovia Bank, National Association
 
12/11/2016
 
16,043

 
5.63
%
 
5.63
%
 
I/O
Oritani Bank
 
1/1/2023
 
15,000

 
3.75
%
 
3.75
%
 
I/O through 01/01/2018, then P&I
US Bank National Association
 
5/1/2016
 
14,809

 
5.84
%
 
5.84
%
 
P&I
Wells Fargo Bank, National Association
 
3/20/2023
 
14,743

 
3.23
%
 
3.23
%
 
I/O
BOKF, NA dba Bank of Texas
 
12/31/2018
 
14,150

 
1mo. Libor + 1.80%

 
3.57
%
 
I/O
Wells Fargo Bank, National Association
 
3/1/2016
 
13,500

 
5.17
%
(3)
5.17
%
 
I/O
BOKF, NA dba Bank of Texas
 
12/31/2020
 
13,420

 
1mo. Libor + 1.85%

 
4.25
%
 
I/O
US Bank National Association
 
7/1/2016
 
12,937

 
6.05
%
(3)
6.05
%
 
P&I
BOKF, NA dba Bank of Texas
 
7/13/2017
 
12,725

 
1mo. Libor + 2.25%

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

 
3.70
%
(3)
3.70
%
 
I/O
Customers Bank
 
12/1/2016
 
11,850

 
3.75
%
 
3.75
%
 
I/O
JPMorgan Chase Bank, N.A.
 
7/1/2020
 
11,375

 
5.50
%
 
5.50
%
 
I/O through 08/01/2015, then P&I
US Bank National Association
 
2/11/2017
 
10,332

 
5.68
%
 
5.68
%
 
I/O
US Bank National Association
 
11/11/2016
 
10,137

 
5.50
%
 
5.50
%
 
I/O
40/86 Mortgage Capital, Inc.
 
1/1/2019
 
10,050

 
5.00
%
 
5.00
%
 
I/O
Monumental Life Insurance Company
 
4/1/2023
 
9,792

 
3.95
%
 
3.95
%
 
I/O through 05/01/2014, then P&I
Wachovia Bank, National Association
 
6/11/2016
 
8,625

 
6.56
%
 
6.56
%
 
I/O
Amegy Bank, National Association
 
8/31/2016
 
$
8,107

 
1mo. Libor + 2.95%

 
3.13
%
 
I/O

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Outstanding Balance as of
June 30, 2015
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Transamerica Life Insurance Company
 
8/1/2030
 
7,586

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
6,773

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

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

 
3.63
%
 
3.63
%
 
I/O
BOKF, NA dba Bank of Texas
 
10/31/2016
 
5,060

 
1mo. Libor + 2.25%

 
3.70
%
 
I/O
Wells Fargo Bank, National Association
 
3/1/2017
 
4,800

 
1mo. Libor + 2.50%

(3)
3.76
%
 
I/O
Capital Lease Funding, LLC
 
7/15/2018
 
1,812

 
7.20
%
(3)
7.20
%
 
P&I
US Bank National Association
 
4/15/2019
 
1,778

 
5.40
%
 
5.40
%
 
I/O
Bear Stearns Commercial Mortgage, Inc.
 
9/1/2017
 
1,678

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

 
1mo. Libor + 2.45%

 
3.39
%
 
I/O
US Bank National Association
 
12/11/2016
 
1,383

 
6.18
%
 
6.18
%
 
I/O
BOKF, NA dba Bank of Texas
 
4/12/2018
 
562

 
1mo. Libor + 2.45%

(3)
3.39
%
 
I/O
Transamerica Life Insurance Company
 
8/1/2030
 
384

 
5.93
%
 
5.93
%
 
P&I
US Bank National Association
 
12/11/2015
 
341

 
5.83
%
(3)
5.83
%
 
I/O
 
 
 
 
$
3,514,540

 
 
 
4.95
%
 
 
_______________________________________________
(1) Represents interest rate in effect at June 30, 2015. For loans subject to interest rate swaps, this represents the all-in fixed interest rate.
(2) I/O means interest only is due monthly with the principal due at maturity. P&I means both principal and interest are due monthly.
(3) Variable-rate loan fixed by way of interest rate swap agreement.
(4) On March 6, 2015, the Company received a notice of default from the lender due to the Company's failure to pay a reserve payment required per the loan agreement. Due to the default, the Company is currently accruing interest at the default rate of interest of 10.68% per annum. The Company is actively negotiating a restructuring of the loan with the lender.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Credit Facility and Corporate Bond Covenants
(unaudited)
 
The following is a summary of key financial covenants for the Company's unsecured credit facility and corporate bonds, as defined and calculated per the terms of the facility's credit agreement and the bonds' governing documents, respectively. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that the Company is in compliance with the covenants and are not measures of our liquidity or performance. As of June 30, 2015, the Company believes it is in compliance with these covenants based on the covenant limits and calculations in place at that time.
Unsecured Credit Facility Key Covenants
 
Required
 
June 30, 2015
Maximum leverage ratio
 
≤ 60%
 
45.5%
Minimum fixed charge coverage ratio
 
≥ 1.5x
 
2.65x
Secured leverage ratio
 
≤ 45%
 
17.2%
Total unencumbered asset value ratio
 
≤ 60%
 
49.0%
Minimum tangible net worth covenant
 
≥ $5.5 B
 
$8.7 B
Minimum unencumbered interest coverage ratio
 
≥ 1.75x
 
4.72x
Minimum unencumbered asset value(1)
 
≥ 10.5 B
 
$11.9 B

Corporate Bond Key Covenants
 
Required
 
June 30, 2015
Limitation on incurrence of total debt
 
≤ 65%
 
50.6%
Limitation on incurrence of secured debt
 
≤ 40%
 
19.0%
Debt service coverage ratio
 
≥ 1.5x
 
2.67x
Maintenance of total unencumbered assets
 
≥ 150%
 
206.7%
_______________________________________________
(1) Subsequent to June 30, 2015, the Company amended the credit facility and this covenant was reduced from $10.5 billion to $8.0 billion.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Acquisitions and Development Projects
(unaudited, square feet and dollars in thousands)
 
Acquisitions
The following table summarizes the Company's property acquisition activity during the three months ended June 30, 2015. The Company also purchased three land parcels for an aggregate purchase price of $503,000, which is included in the Family Dollar Portfolio investment to date balance in the Development Projects table below.
Property
 
Location
 
Square Feet
 
Purchase Price
 
Cash Cap Rate
 
Remaining Lease Term (Years)(1)
Family Dollar
 
Wilmington, DE
 
8

 
$
2,078

 
6.7
%
 
14.1

_______________________________________________
(1)
Remaining lease term from June 30, 2015.

Development Projects
The following table provides a summary of our development projects at June 30, 2015. During the three months ended June 30, 2015, the Company capitalized $14.7 million of additional development costs and placed $7.5 million of assets into service.
Description
 
Number of Properties
 
Estimated Completion Date
 
Investment to Date
 
Remaining Estimated Investment
 
Cash Cap Rate
Build-to-suits
 
 
 
 
 
 
 
 
 
 
IFM Efector
 
1

 
7/31/2015
 
$
10,699

 
$
3,829

 
7.2
%
Family Dollar Portfolio
 
18

 
Various
 
13,708

 
12,910

 
7.2
%
Redevelopment(1)
 
 
 
 
 
 
 
 
 
 
FedEx Expansions
 
3

 
Various
 
3,351

 
6,770

 
8.7
%
Invensys Systems
 
1

 
7/31/2015
 
39,993

 
1,407

 
7.5
%
Mattress Firm
 
1

 
10/7/2015
 
160

 
1,279

 
10.2
%
Total
 
 
 
 
 
$
67,911

 
$
26,195

 
 
_______________________________________________
(1) Excludes tenant improvement costs incurred in accordance with existing leases. As of June 30, 2015, $10.7 million of tenant improvement costs were included in land and construction in progress in the consolidated financial statements.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Dispositions
(unaudited, square feet and dollars in thousands)
 
Dispositions

The following table shows the four properties and one land parcel that were disposed of during the three months ended June 30, 2015:
Property
 
Location
 
Square Feet
 
Remaining Lease Term (Years)(1)
 
Cash Cap Rate
 
Sale Price
 
Real Estate Gain (Loss)(2)
 
Goodwill Allocation(3)
 
GAAP Gain (Loss)(4)
 
The Commons at Aliso Viejo(5)
 
Aliso Viejo, CA
 
177

 
8.2

 
6.3
%
 
$
59,500

 
$
3,028

 
$
(4,318
)
 
$
(1,290
)
 
Lowe's(6)
 
Denver, CO
 
122

 
14.8

 
6.8
%
 
13,000

 
(356
)
 
(1,031
)
 
(1,387
)
 
Shaw's Supermarket
 
Plymouth, MA
 
60

 
5.7

 
7.8
%
 
6,300

 
1,416

 
(563
)
 
853

 
Famous Dave's
 
Eden Prairie, MN
 
3

 
11.5

 
5.1
%
 
1,649

 
211

 
(104
)
 
107

 
Land parcel
 
Iowa City, IA
 
NA

 
NA
 
NA
 
50

 
43

 
—

 
43

 
Total(7)
 
 
 
362
 
9.2

 
6.5
%
 
$
80,499

 
$
4,342

 
$
(6,016
)
 
$
(1,674
)
(8) 
_______________________________________________
(1) Represents the remaining lease term from the date of sale. For the Commons at Aliso Viejo, the remaining lease term is weighted based on the annualized rental income derived from each respective lease.
(2) Equals sale price less GAAP net book value and selling costs.
(3) In accordance with GAAP, the Company allocated a portion of the Real Estate Investment segment goodwill to the respective sold property to calculate the GAAP gain (loss). See Note 4 – Goodwill and Other Intangibles of our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015 for a further description of our goodwill allocation methodology.
(4) Equals sale price less GAAP net book value, goodwill allocation and selling costs.
(5) This property was owned by a consolidated joint ventures, in which the Company had a 90% interest. Data presented represents the property, not the Company's pro rata share.
(6) This property was leased but unoccupied as of the date of disposition.
(7) Excludes two properties classified as held for sale in accordance with GAAP as of June 30, 2015. The two properties increase GAAP losses by $23.2 million, including a goodwill allocation of $17.8 million.
(8) Loss on dispositions of real estate, net in the consolidated financial statements includes a reduction of $137,000 of a gain on condemnation of real estate assets and $65,000 of real estate disposition credits that are either credits not related to a single property or are adjustments related to prior period dispositions.



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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Summary
(unaudited)
 
Type of Lease Clause
(square feet and dollars in thousands)
 
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Fixed dollar or percent
 
2,284

 
65,624

 
64.4
%
 
$
944,811

 
70.5
%
CPI
 
305

 
8,636

 
8.5
%
 
133,696

 
10.0
%
Flat
 
1,102

 
25,565

 
25.1
%
 
262,144

 
19.5
%
Other(1)
 
98

 
397

 
0.4
%
 
58

 
—
%
Vacant
 
—

 
1,614

 
1.6
%
 
$
—

 
—
%
Total
 
3,789


101,836


100.0
%

$
1,340,709


100
%
_______________________________________________
(1) Represents leases that provide for only percentage and other contingent rent, as well as short-term leases with terms of less than 12 months.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Summary (cont.)
(unaudited)
 
Tenant Expense Obligation
(square feet and dollars in thousands)
 
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
NNN
 
2,766

 
59,474

 
58.3
%
 
$
855,216

 
63.7
%
NN
 
951

 
38,954

 
38.3
%
 
444,592

 
33.2
%
Other (1)
 
72

 
1,794

 
1.8
%
 
40,901

 
3.1
%
Vacant
 
—

 
1,614

 
1.6
%
 
$
—

 
—
%
Total
 
3,789


101,836

 
100
%
 
$
1,340,709

 
100
%
_______________________________________________
(1) Includes gross, modified gross, billboard and month-to-month leases
 


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Expirations
(unaudited, square feet and dollars in thousands)
 
The following tables and graph show lease expirations from July 1, 2015 through December 31, 2024.
Year of Expiration
 
Number of Leases
Expiring
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
Remaining 2015
 
55

 
1,005

 
0.9
%
 
$
10,932

 
0.8
%
2016
 
131

 
3,415

 
3.4
%
 
30,859

 
2.3
%
2017
 
255

 
5,042

 
5.0
%
 
58,637

 
4.4
%
2018
 
245

 
3,096

 
3.1
%
 
40,978

 
3.1
%
2019
 
190

 
3,381

 
3.4
%
 
57,678

 
4.3
%
2020
 
229

 
4,132

 
4.1
%
 
49,855

 
3.7
%
2021
 
162

 
11,005

 
11.0
%
 
84,232

 
6.3
%
2022
 
257

 
9,381

 
9.4
%
 
78,546

 
5.9
%
2023
 
231

 
6,553

 
6.5
%
 
87,370

 
6.5
%
2024
 
176

 
9,933

 
9.9
%
 
122,604

 
9.1
%
Total
 
1,931

 
56,943

 
56.7
%
 
$
621,691

 
46.4
%




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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
Remaining 2015
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
—

 
—

 
—
%
 
$
—

 
—
%
Multi-tenant retail
 
2

 
2

 
—
%
 
71

 
—
%
Restaurant
 
43

 
166

 
0.2
%
 
3,125

 
0.2
%
Industrial & distribution
 
1

 
400

 
0.4
%
 
1,313

 
0.1
%
Office
 
9

 
436

 
0.3
%
 
6,423

 
0.5
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total Remaining 2015
 
55

 
1,005

 
0.9
%
 
$
10,932

 
0.8
%
 
 
 
 
 
 
 
 
 
 
 
2016
 


 


 


 


 


Single-tenant retail
 
12

 
96

 
0.1
%
 
$
1,119

 
0.1
%
Multi-tenant retail
 
19

 
112

 
0.1
%
 
1,556

 
0.1
%
Restaurant
 
79

 
367

 
0.4
%
 
8,642

 
0.6
%
Industrial & distribution
 
7

 
2,244

 
2.2
%
 
9,885

 
0.7
%
Office
 
13

 
597

 
0.6
%
 
9,638

 
0.8
%
Other(1)
 
1

 
—

 
—
%
 
19

 
—
%
Total 2016
 
131

 
3,415

 
3.4
%
 
$
30,859

 
2.3
%
 
 
 
 
 
 
 
 
 
 
 
2017
 


 


 


 


 


Single-tenant retail
 
100

 
591

 
0.6
%
 
$
13,748

 
1.0
%
Multi-tenant retail
 
33

 
158

 
0.2
%
 
2,609

 
0.2
%
Restaurant
 
86

 
596

 
0.6
%
 
10,952

 
0.8
%
Industrial & distribution
 
10

 
2,488

 
2.4
%
 
11,272

 
0.8
%
Office
 
24

 
1,209

 
1.2
%
 
19,974

 
1.5
%
Other(1)
 
2

 
—

 
—
%
 
82

 
0.1
%
Total 2017
 
255

 
5,042

 
5.0
%
 
$
58,637

 
4.4
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Single-tenant retail
 
74

 
965

 
0.9
%
 
$
13,877

 
1.0
%
Multi-tenant retail
 
29

 
303

 
0.3
%
 
4,192

 
0.3
%
Restaurant
 
115

 
423

 
0.5
%
 
10,150

 
0.8
%
Industrial & distribution
 
13

 
1,063

 
1.1
%
 
5,243

 
0.4
%
Office
 
13

 
342

 
0.3
%
 
7,504

 
0.6
%
Other(1)
 
1

 
—

 
—
%
 
12

 
—
%
Total 2018
 
245

 
3,096

 
3.1
%
 
$
40,978

 
3.1
%
 
 
 
 
 
 
 
 
 
 
 
_______________________________________________
(1) Includes billboards and parking lots.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
55

 
1,311

 
1.3
%
 
$
15,295

 
1.1
%
Multi-tenant retail
 
24

 
213

 
0.2
%
 
3,362

 
0.3
%
Restaurant
 
88

 
474

 
0.5
%
 
10,527

 
0.8
%
Industrial & distribution
 
4

 
180

 
0.2
%
 
1,425

 
0.1
%
Office
 
19

 
1,203

 
1.2
%
 
27,069

 
2.0
%
Total 2019
 
190

 
3,381

 
3.4
%
 
$
57,678

 
4.3
%
 
 
 
 
 
 
 
 
 
 
 
2020
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
83

 
1,088

 
1.1
%
 
$
13,760

 
1.0
%
Multi-tenant retail
 
13

 
136

 
0.1
%
 
1,595

 
0.1
%
Restaurant
 
106

 
386

 
0.4
%
 
8,129

 
0.6
%
Industrial & distribution
 
7

 
1,191

 
1.2
%
 
5,143

 
0.4
%
Office
 
19

 
1,323

 
1.3
%
 
21,227

 
1.6
%
Other(1)
 
1

 
8

 
—
%
 
1

 
—
%
Total 2020
 
229

 
4,132

 
4.1
%
 
$
49,855

 
3.7
%
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
64

 
1,276

 
1.3
%
 
$
19,877

 
1.5
%
Multi-tenant retail
 
9

 
118

 
0.1
%
 
1,874

 
0.1
%
Restaurant
 
54

 
204

 
0.2
%
 
5,941

 
0.4
%
Industrial & distribution
 
16

 
7,636

 
7.6
%
 
26,818

 
2.0
%
Office
 
19

 
1,771

 
1.8
%
 
29,722

 
2.3
%
Total 2021
 
162

 
11,005

 
11.0
%
 
$
84,232

 
6.3
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
157

 
2,131

 
2.1
%
 
$
28,422

 
2.1
%
Multi-tenant retail
 
5

 
66

 
0.1
%
 
1,333

 
0.1
%
Restaurant
 
55

 
371

 
0.4
%
 
8,146

 
0.6
%
Industrial & distribution
 
30

 
5,742

 
5.7
%
 
21,127

 
1.6
%
Office
 
10

 
1,071

 
1.1
%
 
19,518

 
1.5
%
Total 2022
 
257

 
9,381

 
9.4
%
 
$
78,546

 
5.9
%
_______________________________________________
(1) Includes billboards and parking lots.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
2023
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
124

 
1,885

 
2.0
%
 
$
23,553

 
1.8
%
Multi-tenant retail
 
8

 
132

 
0.1
%
 
2,699

 
0.2
%
Restaurant
 
57

 
325

 
0.3
%
 
7,194

 
0.5
%
Industrial & distribution
 
16

 
2,526

 
2.5
%
 
17,542

 
1.3
%
Office
 
26

 
1,685

 
1.6
%
 
36,382

 
2.7
%
Total 2023
 
231

 
6,553

 
6.5
%
 
$
87,370

 
6.5
%
 
 
 
 
 
 
 
 
 
 
 
2024
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
86

 
2,111

 
2.1
%
 
$
27,395

 
2.0
%
Multi-tenant retail
 
3

 
14

 
—
%
 
332

 
—
%
Restaurant
 
47

 
192

 
0.2
%
 
5,631

 
0.4
%
Industrial & distribution
 
12

 
3,509

 
3.5
%
 
15,481

 
1.2
%
Office
 
28

 
4,107

 
4.1
%
 
73,765

 
5.5
%
Total 2024
 
176

 
9,933

 
9.9
%
 
$
122,604

 
9.1
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining 2015 - 2024
 
1,931

 
56,943

 
56.7
%
 
$
621,691

 
46.4
%



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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


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

 
3,889

 
3.8
%
 
$
159,625

 
11.9
%
 
 B-
CVS
 
175

 
2,414

 
2.4
%
 
52,096

 
3.9
%
 
 BBB+
Walgreens
 
123

 
1,786

 
1.8
%
 
44,732

 
3.3
%
 
 BBB
Family Dollar
 
195

 
3,343

 
3.3
%
 
36,377

 
2.7
%
 
 BBB-
Dollar General
 
405

 
3,748

 
3.7
%
 
34,289

 
2.6
%
 
 BBB-
FedEx
 
55

 
3,360

 
3.3
%
 
32,854

 
2.5
%
 
 BBB
Albertson's
 
33

 
1,923

 
1.9
%
 
23,633

 
1.8
%
 
 B
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,616

 
1.8
%
 
 AA+
Citizens Bank
 
190

 
973

 
1.0
%
 
22,865

 
1.7
%
 
 A-
AT&T
 
4

 
1,107

 
1.1
%
 
20,092

 
1.5
%
 
 BBB+
Total
 
1,234

 
23,564

 
23.3
%
 
$
450,179

 
33.7
%
 
 




Concentration percentages based on annualized rental income.




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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Top 10 Tenant Industry Concentrations
(unaudited, square feet and dollars in thousands)
 
Tenant Industry Concentration
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Restaurants - Casual Dining
 
410

 
6,788

 
6.7
%
 
$
252,594

 
18.8
%
Manufacturing
 
67

 
18,665

 
18.3
%
 
122,607

 
9.1
%
Restaurants - Quick Service
 
991

 
4,313

 
4.2
%
 
119,111

 
8.9
%
Retail - Pharmacy
 
338

 
4,906

 
4.8
%
 
110,581

 
8.3
%
Retail - Discount
 
628

 
10,423

 
10.2
%
 
94,804

 
7.1
%
Finance
 
310

 
3,108

 
3.1
%
 
66,214

 
4.9
%
Professional Services
 
71

 
4,239

 
4.2
%
 
59,126

 
4.4
%
Retail - Grocery & Supermarket
 
84

 
5,450

 
5.4
%
 
57,086

 
4.3
%
Retail - Home & Garden
 
100

 
7,479

 
7.3
%
 
53,061

 
4.0
%
Logistics
 
63

 
4,814

 
4.7
%
 
41,733

 
3.1
%
Total
 
3,062

 
70,185

 
68.9
%
 
$
976,917

 
72.9
%


Concentration percentages based on annualized rental income.






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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Top 10 Geographic Concentrations
(unaudited, square feet and dollars in thousands)
 
Geographic Concentration
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Texas
 
629

 
11,848

 
11.6
%
 
$
172,597

 
12.9
%
Illinois
 
193

 
6,134

 
6.0
%
 
81,975

 
6.1
%
Florida
 
302

 
5,124

 
5.0
%
 
80,181

 
6.0
%
California
 
101

 
4,851

 
4.8
%
 
71,242

 
5.3
%
Georgia
 
226

 
4,891

 
4.8
%
 
66,980

 
5.0
%
Pennsylvania
 
175

 
5,803

 
5.7
%
 
58,072

 
4.3
%
Ohio
 
301

 
5,828

 
5.7
%
 
56,489

 
4.2
%
Indiana
 
147

 
5,972

 
5.9
%
 
44,412

 
3.3
%
North Carolina
 
187

 
3,966

 
3.9
%
 
43,394

 
3.2
%
Michigan
 
194

 
2,496

 
2.5
%
 
39,114

 
2.9
%
Total
 
2,455

 
56,913

 
55.9
%
 
$
714,456

 
53.2
%




Concentration percentages based on annualized rental income.





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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Top 10 MSA Concentrations
(unaudited, square feet and dollars in thousands)
 
Metropolitan Statistical Area (MSA) Concentration(1)
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Chicago, IL
 
170

 
5,730

 
5.6
%
 
$
72,143

 
5.4
%
Dallas, TX
 
135

 
3,888

 
3.8
%
 
59,396

 
4.4
%
Atlanta, GA
 
102

 
3,559

 
3.5
%
 
46,277

 
3.5
%
Houston, TX
 
109

 
2,891

 
2.8
%
 
32,453

 
2.4
%
Philadelphia, PA
 
56

 
2,012

 
2.0
%
 
27,989

 
2.1
%
New York, NY
 
30

 
1,165

 
1.1
%
 
27,100

 
2.0
%
Phoenix, AZ
 
55

 
1,656

 
1.6
%
 
26,859

 
2.0
%
Boston, MA
 
31

 
1,831

 
1.8
%
 
25,392

 
1.9
%
Washington, DC
 
44

 
890

 
0.9
%
 
20,829

 
1.6
%
Indianapolis, IN
 
45

 
2,705

 
2.7
%
 
20,804

 
1.6
%
Total
 
777

 
26,327

 
25.8
%
 
$
359,242

 
26.9
%
_________________________
(1) MSA locations represent the single nearest major metropolitan area.




Concentration percentages based on annualized rental income.


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


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

 
3,889

 
3.8
%
 
$
159,625

 
11.9
%
 
 B-
CVS
 
175

 
2,414

 
2.4
%
 
52,096

 
3.9
%
 
 BBB+
Walgreens
 
123

 
1,786

 
1.8
%
 
44,732

 
3.3
%
 
 BBB
Family Dollar
 
195

 
3,343

 
3.3
%
 
36,377

 
2.7
%
 
 BBB-
Dollar General
 
405

 
3,748

 
3.7
%
 
34,289

 
2.6
%
 
 BBB-
FedEx
 
55

 
3,360

 
3.3
%
 
32,854

 
2.5
%
 
 BBB
Albertson's
 
33

 
1,923

 
1.9
%
 
23,633

 
1.8
%
 
 B
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,616

 
1.8
%
 
 AA+
Citizens Bank
 
190

 
973

 
1.0
%
 
22,865

 
1.7
%
 
 A-
AT&T
 
4

 
1,107

 
1.1
%
 
20,092

 
1.5
%
 
 BBB+
BJ's Wholesale Club
 
4

 
2,223

 
2.2
%
 
19,254

 
1.4
%
 
 B-
AON
 
8

 
1,203

 
1.2
%
 
18,154

 
1.4
%
 
 A-
Petsmart
 
12

 
858

 
0.8
%
 
17,610

 
1.3
%
 
 B
Goodyear
 
10

 
4,728

 
4.6
%
 
16,550

 
1.2
%
 
 BB
Tractor Supply
 
58

 
1,213

 
1.2
%
 
15,709

 
1.2
%
 
 NR
Wal-Mart
 
9

 
1,944

 
1.9
%
 
14,608

 
1.1
%
 
 AA
Home Depot
 
12

 
2,162

 
2.1
%
 
14,252

 
1.1
%
 
 A
Amazon
 
3

 
3,048

 
3.0
%
 
14,159

 
1.1
%
 
 AA-
Total
 
1,350

 
40,943

 
40.3
%
 
$
580,475

 
43.5
%
 
 


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Diversification: Tenant Industry
(unaudited, square feet and dollars in thousands)
 
Industry (1)
 
Number of Leases
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Administrative & Support Services
 
5

 
430

 
0.4
%
 
$
4,054

 
0.3
%
Agricultural
 
2

 
138

 
0.1
%
 
1,246

 
0.1
%
Education
 
4

 
1,288

 
1.3
%
 
5,813

 
0.4
%
Entertainment & Recreation
 
21

 
848

 
0.8
%
 
15,803

 
1.2
%
Finance
 
310

 
3,108

 
3.1
%
 
66,210

 
4.9
%
Government & Public Services
 
31

 
1,280

 
1.3
%
 
30,502

 
2.3
%
Healthcare
 
81

 
1,661

 
1.6
%
 
30,310

 
2.3
%
Information & Communications
 
16

 
1,302

 
1.3
%
 
24,509

 
1.8
%
Insurance
 
19

 
2,170

 
2.1
%
 
39,503

 
2.9
%
Logistics
 
63

 
4,814

 
4.7
%
 
41,735

 
3.1
%
Manufacturing
 
67

 
18,665

 
18.3
%
 
122,609

 
9.1
%
Mining & Natural Resources
 
16

 
745

 
0.7
%
 
14,763

 
1.1
%
Other Services
 
31

 
5,217

 
5.1
%
 
18,963

 
1.4
%
Professional Services
 
71

 
4,239

 
4.2
%
 
59,123

 
4.4
%
Real Estate
 
4

 
59

 
0.1
%
 
935

 
0.1
%
Rental
 
9

 
713

 
0.7
%
 
6,734

 
0.5
%
Restaurant - Casual Dining
 
410

 
6,788

 
6.7
%
 
252,588

 
18.8
%
Restaurants - Quick Service
 
991

 
4,313

 
4.2
%
 
119,118

 
8.9
%
Retail - Apparel & Jewelry
 
15

 
1,403

 
1.4
%
 
15,313

 
1.1
%
Retail - Automotive
 
167

 
1,197

 
1.2
%
 
21,993

 
1.6
%
Retail - Department Stores
 
13

 
965

 
1.0
%
 
8,015

 
0.6
%
Retail - Discount
 
628

 
10,423

 
10.2
%
 
95,159

 
7.1
%
Retail - Electronics & Appliances
 
22

 
676

 
0.7
%
 
9,222

 
0.7
%
Retail - Gas & Convenience
 
127

 
527

 
0.5
%
 
27,183

 
2.0
%
Retail - Grocery & Supermarket
 
84

 
5,450

 
5.4
%
 
57,086

 
4.3
%
Retail - Hobby, Books & Music
 
9

 
340

 
0.3
%
 
2,979

 
0.2
%
Retail - Home & Garden
 
100

 
7,479

 
7.3
%
 
53,061

 
4.0
%
Retail - Home Furnishings
 
40

 
492

 
0.5
%
 
7,686

 
0.6
%
Retail - Internet
 
3

 
3,048

 
3.0
%
 
14,159

 
1.1
%
Retail - Office Supply
 
4

 
76

 
0.1
%
 
1,155

 
0.1
%
Retail - Pet Supply
 
15

 
903

 
0.9
%
 
18,446

 
1.4
%
Retail - Pharmacy
 
338

 
4,906

 
4.8
%
 
110,580

 
8.2
%
Retail - Specialty (Other)
 
23

 
561

 
0.6
%
 
6,161

 
0.5
%
Retail - Sporting Goods
 
21

 
1,229

 
1.2
%
 
14,279

 
1.1
%
Retail - Warehouse Clubs
 
8

 
2,631

 
2.6
%
 
22,369

 
1.7
%
Utilities
 
2

 
37

 
—
%
 
813

 
0.1
%
Other(2)
 
19

 
101

 
0.1
%
 
532

 
—
%
Vacant
 
—

 
1,614

 
1.6
%
 
—

 
—
%
Total
 
3,789

 
101,836

 
100
%
 
$
1,340,709

 
100
%
_______________________________________________
(1) Industry classifications are based on the North American Industry Classification System.
(2) Includes billboard, construction in progress, license agreements and parking lots.

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic
(unaudited, square feet and dollars in thousands)
 


Location
 
Number of Properties
 
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
United States
 
 
 
 
 
 
 
 
 
 
Alabama
 
158

 
1,772

 
1.7
%
 
$
32,773

 
2.4
%
Alaska
 
3

 
25

 
—
%
 
775

 
0.1
%
Arizona
 
87

 
2,410

 
2.4
%
 
38,153

 
2.8
%
Arkansas
 
103

 
1,028

 
1.0
%
 
13,071

 
1.0
%
California
 
101

 
4,851

 
4.8
%
 
71,242

 
5.3
%
Colorado
 
58

 
1,813

 
1.8
%
 
28,186

 
2.1
%
Connecticut
 
20

 
100

 
0.1
%
 
2,840

 
0.2
%
Delaware
 
13

 
115

 
0.1
%
 
2,709

 
0.2
%
District of Columbia
 
1

 
3

 
—
%
 
44

 
—
%
Florida
 
302

 
5,124

 
5.0
%
 
80,181

 
6.0
%
Georgia
 
226

 
4,891

 
4.8
%
 
66,980

 
5.0
%
Idaho
 
20

 
148

 
0.1
%
 
4,440

 
0.3
%
Illinois
 
193

 
6,134

 
6.0
%
 
81,975

 
6.1
%
Indiana
 
147

 
5,972

 
5.9
%
 
44,412

 
3.3
%
Iowa
 
54

 
1,621

 
1.6
%
 
14,094

 
1.1
%
Kansas
 
52

 
2,324

 
2.3
%
 
15,988

 
1.2
%
Kentucky
 
95

 
2,247

 
2.2
%
 
27,199

 
2.0
%
Louisiana
 
103

 
1,686

 
1.7
%
 
23,927

 
1.8
%
Maine
 
25

 
648

 
0.6
%
 
8,547

 
0.6
%
Maryland
 
35

 
869

 
0.9
%
 
17,446

 
1.3
%
Massachusetts
 
40

 
2,591

 
2.5
%
 
30,604

 
2.3
%
Michigan
 
194

 
2,496

 
2.5
%
 
39,114

 
2.9
%
Minnesota
 
47

 
583

 
0.6
%
 
9,188

 
0.7
%
Mississippi
 
81

 
1,843

 
1.8
%
 
16,482

 
1.2
%
Missouri
 
173

 
1,955

 
1.9
%
 
27,900

 
2.1
%
Montana
 
10

 
115

 
0.1
%
 
2,015

 
0.2
%
Nebraska
 
23

 
779

 
0.8
%
 
11,407

 
0.9
%
Nevada
 
33

 
753

 
0.7
%
 
9,708

 
0.7
%
New Hampshire
 
20

 
254

 
0.3
%
 
4,397

 
0.3
%
New Jersey
 
39

 
1,693

 
1.7
%
 
37,346

 
2.8
%
New Mexico
 
60

 
959

 
0.9
%
 
14,585

 
1.1
%
New York
 
95

 
1,822

 
1.8
%
 
34,379

 
2.6
%
North Carolina
 
187

 
3,966

 
3.9
%
 
43,394

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,252

 
0.3
%
Ohio
 
301

 
5,828

 
5.7
%
 
56,489

 
4.2
%
Oklahoma
 
91

 
2,151

 
2.1
%
 
27,560

 
2.1
%
Oregon
 
17

 
320

 
0.3
%
 
4,431

 
0.3
%
Pennsylvania
 
175

 
5,803

 
5.7
%
 
58,072

 
4.3
%
Rhode Island
 
14

 
214

 
0.2
%
 
3,649

 
0.3
%
South Carolina
 
128

 
3,397

 
3.3
%
 
30,893

 
2.3
%
South Dakota
 
12

 
141

 
0.1
%
 
1,610

 
0.1
%
Tennessee
 
135

 
3,481

 
3.4
%
 
34,398

 
2.6
%
Texas
 
629

 
11,848

 
11.6
%
 
172,597

 
12.9
%
Utah
 
14

 
143

 
0.2
%
 
3,179

 
0.2
%
Vermont
 
8

 
37

 
—
%
 
734

 
0.1
%
Virginia
 
120

 
2,134

 
2.1
%
 
$
38,223

 
2.8
%

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic (cont.)
(unaudited, square feet and dollars in thousands)

 



Location
 
Number of Properties
 
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Washington
 
27

 
492

 
0.5
%
 
11,836

 
0.9
%
West Virginia
 
44

 
272

 
0.3
%
 
6,880

 
0.5
%
Wisconsin
 
87

 
1,483

 
1.5
%
 
18,498

 
1.4
%
Wyoming
 
11

 
70

 
0.1
%
 
1,702

 
0.1
%
Territories
 
 
 
 
 
 
 
 
 
 
Puerto Rico
 
3

 
88

 
0.1
%
 
2,430

 
0.2
%
Canadian Providences
 
 
 
 
 
 
 
 
 
 
Alberta
 
4

 
32

 
—
%
 
1,911

 
0.1
%
Manitoba
 
2

 
16

 
—
%
 
827

 
0.1
%
Ontario
 
11

 
78

 
0.1
%
 
4,209

 
0.3
%
Saskatchewan
 
2

 
17

 
—
%
 
828

 
0.1
%
Total
 
4,645

 
101,836

 
100.0
%
 
$
1,340,709

 
100.0
%
Percentages based on annualized rental income.

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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Diversification: Property Building Type
(unaudited, square feet and dollars in thousands)
 
Property Type
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Single-tenant retail
 
2,089

 
30,767

 
30.2
%
 
$
439,563

 
32.8
%
Multi-tenant retail
 
20

 
1,726

 
1.7
%
 
23,749

 
1.8
%
Restaurant
 
2,170

 
11,057

 
10.9
%
 
368,701

 
27.5
%
Industrial and Distribution
 
174

 
41,016

 
40.3
%
 
204,313

 
15.2
%
Office
 
168

 
17,251

 
16.9
%
 
304,271

 
22.7
%
Other(1)
 
24

 
19

 
—
%
 
112

 
—
%
Total
 
4,645


101,836


100.0
%

$
1,340,709


100.0
%
_______________________________________________
(1) Includes billboard, construction in progress, land and parking lots.

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

 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Single-Tenant Retail
(unaudited, percentages based on Annualized Rental Income of the single-tenant retail properties)
 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Number of single-tenant retail properties
 
2,089

 
Square footage
 
30,767

 
Weight-average remaining lease term (years)
 
11.9

 
Percent investment-grade
 
59.4
%
 
Percent flat leases
 
32.8
%
 
Percent NNN leases
 
72.1
%
 
 
 
 
 



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

 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Multi-Tenant Retail
(unaudited, percentages based on Annualized Rental Income of the multi-tenant retail properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Number of multi-tenant retail properties
 
20

 
Square footage
 
1,726

 
Weight-average remaining lease term (years)
 
6.0

 
Percent investment-grade
 
30.8
%
 
Percent flat leases
 
50.1
%
 
Percent NNN leases
 
6.5
%
 
 
 
 
 


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

 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Number of restaurant properties
 
2,170

 
Square footage
 
11,057

 
Weight-average remaining lease term (years)
 
16.1

 
Percent investment-grade
 
2.7
%
 
Percent flat leases
 
7.9
%
 
Percent NNN leases
 
99.6
%
 
 
 
 
 


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

 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Industrial and Distribution
(unaudited, percentages based on Annualized Rental Income of the industrial and distribution properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Number of industrial properties
 
174

 
Square footage
 
41,016

 
Weight-average remaining lease term (years)
 
9.2

 
Percent investment-grade
 
59.9
%
 
Percent flat leases
 
27.3
%
 
Percent NNN leases
 
49.4
%
 
 
 
 
 


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

 
 
Q2 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Office
(unaudited, percentages based on Annualized Rental Income of the office properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Number of office properties
 
168

 
Square footage
 
17,251

 
Weight-average remaining lease term (years)
 
7.4

 
Percent investment-grade
 
72.9
%
 
Percent flat leases
 
7.0
%
 
Percent NNN leases
 
22.5
%
 
 
 
 
 


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


 
 
Q2 2015 SUPPLEMENTAL INFORMATION


 
Unconsolidated Joint Venture Investment Summary
(unaudited, square feet and dollars in thousands)
 
The following table shows certain information regarding the Company's interests in unconsolidated joint ventures as of June 30, 2015:
 Joint Venture
 
 Partner
 
Ownership %
 
Pro rata Share of Purchase Price
 
 Rentable Square Feet (1)
 
 Annualized Rental Income (1)
 
 Debt (1) (2)
 
 Major Tenants
Cole/Mosaic JV South Elgin IL, LLC
 
Affiliate of Mosaic Properties and Development, LLC
 
50%
 
$
17,000

 
232

 
$
2,958

 
$
20,400

 
Home Depot, Best Buy
SanTan Festival, LLC
 
Propstra Chandler Trust & RED Development, LLC
 
45%(3)
 
27,878

 
360

 
5,371

 
28,322

 
Nordstrom Rack, Buy Buy Baby, Ross, TJ Maxx
Chandler Village Center, LLC
 
Propstra Chandler Trust & RED Development, LLC
 
45%(3)
 
13,316

 
130

 
2,453

 
20,370

(4 
) 
Sports Authority, Bed Bath & Beyond, DSW
Cole/LBA JV OF Pleasanton CA, LLC
 
Affiliate of LBA Realty
 
90%
 
86,850

 
343

 
6,518

 
57,000

 
Clorox Companies
Chandler Gateway Partners, LLC
 
Propstra Chandler Trust & RED Development, LLC
 
45%(3)
 
12,884

 
260

 
2,318

 
18,023

 
Hobby Lobby,
Wal-Mart
Cole/Faison JV Bethlehem GA, LLC
 
Faison-Winder Investors, LLC
 
90%
 
33,429

 
280

 
3,193

 
26,000

 
Publix, Belk
Total
 
 
 
$
191,357

 
1,605

 
$
22,811

 
$
170,115

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
14,783

 
$
114,922

 
 
_______________________________________________
(1) Rentable square feet, annualized rental income and debt represent information for the total unconsolidated joint venture.
(2) Debt represents secured fixed and variable rates ranging from 2.05% to 6.15% and maturities ranging from September 2015 to July 2021, with a weighted-average interest rate of 3.69% as of June 30, 2015 and a weighted-average years to maturity of 1.5 years as of June 30, 2015.
(3) Represents the Company's 90% interest in a consolidated joint venture, whose only assets are 50% interests in the respective unconsolidated joint ventures.
(4) $5.1 million is recourse to the Company.

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




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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Dealer manager and distribution fees, selling commissions and offering reimbursements
 
$
5,516

 
$
3,117

 
$
13,152

 
$
21,535

 
$
9,969

 Transaction service fees and reimbursements
 
7,036

 
10,260

 
20,550

 
24,423

 
15,116

 Management fees and reimbursements
 
13,977

 
14,117

 
18,580

 
13,839

 
12,137

Total Cole Capital revenues
 
26,529


27,494

 
52,282

 
59,797

 
37,222

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
3,710

 
2,031

 
9,326

 
15,398

 
7,068

 Acquisition related
 
—

 
459

 
3,362

 
—

 
—

 Merger and other non-routine transaction related
 
—

 
—

 
23

 
19

 
1,423

 General and administrative
 
17,131

 
17,736

 
31,036

 
17,265

 
22,035

 Depreciation and amortization
 
8,391

 
8,353

 
7,050

 
25,077

 
24,774

 Impairments
 
—

 
—

 
309,444

 
—

 
—

 Total operating expenses
 
29,232

 
28,579

 
360,241

 
57,759

 
55,300

Operating (loss) income
 
(2,703
)
 
(1,085
)
 
(307,959
)
 
2,038

 
(18,078
)
 Total other income, net
 
392

 
1,219

 
2,011

 
179

 
110

(Loss) income before income and franchise taxes
 
(2,311
)

134

 
(305,948
)
 
2,217

 
(17,968
)
 Benefit from (provision for) income and franchise taxes
 
1,869

 
(220
)
 
27,979

 
(1,131
)
 
7,494

 Net (loss) income
 
$
(442
)
 
$
(86
)
 
$
(277,969
)
 
$
1,086

 
$
(10,474
)


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

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

 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Net (loss) income
 
$
(442
)
 
$
(86
)
 
$
(277,969
)
 
$
1,086

 
$
(10,474
)
 FFO
 
(442
)
 
(86
)
 
(277,969
)
 
1,086

 
(10,474
)
 
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
—

 
459

 
3,362

 
—

 
—

Merger and other non-routine transactions
 
—

 
—

 
23

 
19

 
1,423

 Impairment of intangible assets
 
—

 
—

 
309,444

 
—

 
—

 Amortization of management contracts
 
7,510

 
7,510

 
6,233

 
24,288

 
24,024

 Deferred tax benefit (1)
 
(3,874
)
 
(3,972
)
 
(33,324
)
 
—

 
—

Equity-based compensation expense, net of forfeitures (2)
 
2,998

 
416

 
3,017

 
3,455

 
2,115

Other amortization and non-cash charges
 
776

 
735

 
739

 
710

 
658

 AFFO
 
$
6,968

 
$
5,062

 
$
11,525

 
$
29,558

 
$
17,746

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

 
815,406,408

Effect of dilutive securities (3)
 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

 
52,613,117

Weighted-average shares outstanding - diluted (4)
 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
868,019,525

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
—

 
$
—

 
$
(0.30
)
 
$
—

 
$
(0.01
)
AFFO per diluted share
 
$
0.01

 
$
0.01

 
$
0.01

 
$
0.03

 
$
0.02

_________________________________
(1) This adjustment represents the non-current portion of the tax benefit recognized in net loss in order to show only the current portion of the benefit or provision as an impact to AFFO.
(2) During the three months ended December 31, 2014, the Company reversed certain equity-based compensation amounts previously recorded due to the resignation of certain executives.
(3) Dilutive securities include limited partnership interests in our operating partnership, unvested restricted shares, certain unvested restricted stock units and convertible preferred stock, as applicable.
(4) Weighted-average shares for all periods presented exclude the effect of the convertible debt as the strike price of each convertible debt instrument is greater than the price of the Company’s common stock as of the end of each reporting period presented. In addition, for the three months ended June 30, 2015, 1.4 million of shares underlying restricted stock units that are contingently issuable have been excluded based on the Company’s level of achievement of certain performance targets through June 30, 2015.


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

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

 
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 Net loss
 
$
(442
)
 
$
(86
)
 
$
(277,970
)
 
$
1,086

 
$
(10,474
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
8,391

 
8,353

 
7,050

 
25,077

 
24,774

(Benefit from) provision for income and franchise taxes
 
(1,869
)
 
220

 
(27,978
)
 
1,131

 
(7,494
)
 EBITDA
 
$
6,080

 
$
8,487

 
$
(298,898
)
 
$
27,294

 
$
6,806

 Management adjustments:
 
 
 
 
 
 
 
 
 
 
Impairments
 
—

 
—

 
309,444

 
—

 
—

Acquisition related
 
—

 
459

 
3,362

 
—

 
—

Merger and other non-routine transactions
 
—

 
—

 
23

 
19

 
1,423

Other amortization and non-cash charges
 
(105
)
 
(108
)
 
(78
)
 
(79
)
 
(92
)
Normalized EBITDA
 
$
5,975

 
$
8,838

 
$
13,853

 
$
27,234

 
$
8,137





















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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Net G&A
(unaudited, in thousands, except share and per share data)

 
In its capacity as advisor to the Managed Programs, Cole Capital incurs certain costs on behalf of the Managed Programs, which are reimbursable. In accordance with GAAP, the Company records these costs as general and administrative expenses and the reimbursements as revenue in the same period. The following table presents the Cole Capital segment revenue and general and administrative expenses, each net of reimbursements from the Managed Programs:
 
 
Three Months Ended
 
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
Cole Capital revenue, net of reallowed fees and commissions
 
$
22,819

 
$
25,463

 
$
42,956

 
$
44,399

 
$
30,154

Less: Expense reimbursements from Managed Programs recorded as revenue
 
4,828

 
3,715

 
7,807

 
7,718

 
4,623

Net Cole Capital Revenue
 
17,991

 
21,748

 
35,149

 
36,681

 
25,531

Other income
 
392

 
1,219

 
2,011

 
179

 
110

Net Cole Capital Revenue and other income
 
$
18,383

 
$
22,967

 
$
37,160

 
$
36,860

 
$
25,641

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
33,958

 
$
33,106

 
$
44,622

 
$
30,213

 
$
37,224

Less: REI segment general and administrative expenses
 
16,827

 
15,370

 
13,586

 
12,948

 
15,189

Cole Capital general and administrative expenses
 
17,131

 
17,736

 
31,036

 
17,265

 
22,035

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Managed Programs
 
4,828

 
3,715

 
7,807

 
7,718

 
4,623

Net Cole Capital G&A expense
 
12,303

 
14,021

 
23,229

 
9,547

 
17,412

Increase (decrease) in program development costs
 
2,684

 
3,451

 
(5,158
)
 
11,045

 
3,431

Normalized Net Cole Capital G&A expense
 
$
14,987

 
$
17,472

 
$
18,071

 
$
20,592

 
$
20,843

 
 
 
 
 
 
 
 
 
 
 
EBITDA Margin
 
32.5
%
 
38.5
%
 
37.3
%
 
73.9
%
 
31.7
%
Normalized Net Cole Capital G&A expense as percent of Net Cole Capital Revenue and other income
 
81.5
%
 
76.1
%
 
48.6
%
 
55.9
%
 
81.3
%

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Program Development Costs
(unaudited, in thousands)
 
Cole Capital pays for organization, registration and offering expenses associated with the sale of common stock of the Managed Programs. The reimbursement of these expenses by the Managed Programs is limited to a certain percentage of the proceeds raised from their offerings, in accordance with their respective advisory agreements and charters. Such expenses paid by the Company on behalf of the Managed Programs in excess of these limits that are expected to be collected are recorded as program development costs on the balance sheet. The Company assesses the collectability of the program development costs, considering the offering period and historical and forecasted sales of shares under the Managed Programs' respective offerings and reserves for any balances considered not collectible.
The following table presents a rollforward of the program development costs balance:
 
 
Program Development Costs(1) for the Three Months Ended
 
 
June 30,
2015
 
March 31, 2015
 
December 31, 2014
 
September 30,
2014
 
June 30,
2014
Beginning Balance
 
$
16,322

 
$
12,871

 
$
18,029

 
$
6,984

 
$
3,553

Expenses incurred in excess of limits
 
6,033

 
6,732

 
10,173

 
15,191

 
5,218

Offering-related reimbursement revenue
 
(1,044
)
 
(591
)
 
(2,222
)
 
(4,146
)
 
(1,787
)
Reserve for uncollectible amounts(2)
 
(2,305
)
 
(2,690
)
 
(13,109
)
 
—

 
—

Ending Balance
 
$
19,006

 
$
16,322

 
$
12,871

 
$
18,029

 
$
6,984

_______________________________________________
(1) Excludes INAV (as defined in the "Program Summary" of the Managed Programs section below), as expenses are recorded as incurred and revenue is recorded when reimbursement is received.
(2) Reserves for estimated uncollectible amounts are recorded as a general and administrative expense in the respective period.

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs
(unaudited, dollars in thousands)
 
Program Summary
The following table shows the Managed Programs' cumulative activity summary information from each respective program's offering commencement date through or as of June 30, 2015:
Program
 
Capital Raised (1)
 
DRIP (2)
 
Number of Investments (3)
 
Gross Real Estate Investments
 
Total Debt Outstanding 
 
Open Programs:
 
 
 
 
 
 
 
 
 
 
 
Cole Credit Property Trust V, Inc. ("CCPT V")
 
$
190,810

 
$
4,628

 
109

 
$
455,455

 
$
302,457

(4) 
Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
148,020

 
4,476

 
72

 
217,499

 
109,254

 
Cole Office & Industrial REIT (CCIT II), Inc. ("CCIT II")
 
297,699

 
7,430

 
23

 
647,507

 
400,523

(5) 
Total Open Programs
 
636,529

 
16,534

 
204

 
1,320,461

 
812,234

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

 
187,879

 
828

 
4,397,078

 
1,822,675

 
Other Programs(6)
 
372,617

 
—

 
58

 
568,863

 
290,987

 
Total Closed Programs(7)
 
3,288,578

 
187,879

 
886

 
4,965,941

 
2,113,662

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
3,925,107

 
$
204,413

 
1,090

 
$
6,286,402

 
$
2,925,896

 
_______________________________________________
(1) Represents gross proceeds, excluding DRIP shares issued.
(2) DRIP represents the value of shares issued under each respective program's distribution reinvestment plan.
(3) Number of investments includes properties owned through consolidated and unconsolidated joint ventures, as well as CMBS and notes receivable.
(4) Includes $20.0 million outstanding to the Company on a revolving line of credit.
(5) Includes $30.0 million outstanding to the Company on a revolving line of credit.
(6) Other Programs include tenant-in-common programs ("TIC"), Delaware statutory trust programs ("DST") and Cole Growth Opportunity Fund I, L.P. ("GOP").
(7) Exclusive of Cole Corporate Income Trust, Inc. ("CCIT") which merged with Select Income REIT on January 29, 2015 . Prior to the sale, Cole Capital had raised gross proceeds of $2.0 billion including $82.0 million of DRIP, and managed $2.7 billion of assets on behalf of CCIT.

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited)

 
Offering Summary
The following table shows offering summary information for the Managed Programs as of June 30, 2015:
Program
 
Primary
Investment
Strategy
 
Offering
Commencement
 Date
 
% of Outstanding
Shares Owned
by VEREIT
 
Offering
 Price/NAV
 
Annualized
Distribution
CCPT V
 
Retail
 
3/17/2014
 
1.50
%
 
$
25.00

 
6.30
%
INAV
 
Diversified
 
12/6/2011(1)
 
0.17
%
 
(2) (3) 

 
(3) 

CCIT II
 
Office and industrial
 
9/17/2013
 
0.96
%
 
$
10.00

 
6.30
%
Closed Programs(4)
 
Various
 
Prior to 2012
 
less than 0.01%

 
Various

 
Various

_______________________________________________
(1) On August 26, 2013, INAV designated the existing shares of INAV's common stock that were sold prior to such date to be Wrap Class shares (“W Shares”) of common stock and registered two new classes of INAV common stock, Advisor Class shares (“A Shares”) and Institutional Class shares (“I Shares”). As the existing class of common stock, W Shares were first issued on December 6, 2011, A Shares were first issued on October 10, 2013 and I Shares were first issued on November 19, 2013.
(2) The Net Asset Value for each share class ("NAV per share") is calculated daily as of the close of business using a process that reflects (i) estimated values of each of INAV's commercial real estate assets, related liabilities and notes receivable secured by real estate provided periodically by INAV's independent valuation expert in individual appraisal reports, (ii) daily updates in the price of liquid assets for which third party market quotes are available, (iii) accruals of INAV's daily distributions and (iv) estimates of daily accruals, on a net basis, of operating revenues, expenses, debt service costs and fees.
(3) Calculated using a daily distribution rate per share and NAV per share, for each share class, as of the close of business on June 30, 2015:
Share Class
 
Date of Offering
 
NAV Per Share
 
Daily Distribution Rate
 
Annualized Distribution
W Shares
 
12/6/2011
(3) 
$
18.18

 
$
0.002677953

 
5.38
%
A Shares
 
10/10/13
(3) 
$
18.16

 
$
0.002674908

 
5.38
%
I Shares
 
11/19/13
(3) 
$
18.25

 
$
0.002687481

 
5.37
%
(4) Includes CCPT IV, TIC programs, DST programs and GOP and excludes CCIT, as it merged with Select Income REIT on January 29, 2015.


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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited)

 
Fee Summary
The following table shows fee summary information for Cole Capital for certain of the Managed Programs as of June 30, 2015:
 
 
Offering Fees
 
Transaction Fees
 
Management Fees
 
Program
 
Selling
Commissions (1)
 
Dealer
Manager and Distribution
Fees (2)
 
Acquisition Transactional
Fees (3)
 
Disposition
Fees
 
Asset Management / Advisory Fees
 
Performance Fees
 
Open Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
7
%
 
2
%
 
2
%
 
1
%
 
0.65% - 0.75%

(5) 
15
%
(6) 
INAV
 
(4) 

 
(4) 

 
—
%
 
—
%
 
0.90
%
 
25
%
(7) 
CCIT II
 
7
%
 
2
%
 
2
%
 
1
%
 
0.65% - 0.75%

(5) 
15
%
(6) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPT IV
 
7
%
 
2
%
 
2
%
 
1
%
 
0.65% - 0.75%

(5) 
15
%
(6) 
Other Programs
 
N/A

 
N/A

 
Various

 
Various

 
Various

 
Various

 
_______________________________________________
(1) The Company reallows 100% of selling commissions earned to participating broker-dealers.
(2) The Company may reallow all or a portion of its dealer manager fee or applicable distribution fee to participating broker-dealers as a marketing and due diligence expense reimbursement.
(3) Percent taken on gross purchase price.
(4) In connection with the INAV offering, the Company will receive selling commissions, an asset-based dealer manager fee and/or an asset-based distribution fee, as summarized in the table below for each class of common stock:
Share Class
 
Selling Commission (1)
 
Dealer Manager Fee (2)
 
Distribution Fee (2)
W Shares
 
—

 
0.55
%
 
—

A Shares
 
up to 3.75%

 
0.55
%
 
0.50
%
I Shares
 
—

 
0.25
%
 
—

(5) Annualized fee based on the average monthly invested assets.
(6) Performance fee paid only under the following events: (i) if shares are listed on a national securities exchange; (ii) if the respective Managed Program is sold or the assets are liquidated; or (iii) upon termination of the advisory agreement. In connection with such events, the performance fee will only be earned upon the return to investors of their net capital invested and an 8% annual cumulative, non-compounded return (6% in the case of CCPT V).
(7) Performance fee paid for any year in which the total return on stockholders' capital exceeds 6% per annum on a calendar year basis.

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


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited, dollars in thousands)

 
Program Activity Summary
The following table shows the Managed Programs' activity summary information for the three months ended June 30, 2015:
Program
 
Capital Raised (1)
 
DRIP(2)
 
Number of Investments Acquired (3)
 
Purchase Price of Acquisitions (4)
 
Number of Investments Sold
 
Sales Price of Dispositions
Open Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
$
10,270

 
$
1,626

 
6

 
$
22,642

 
—

 
$
—

INAV
 
9,910

 
775

 
1

 
865

 
4

 
17,774

CCIT II
 
38,025

 
2,436

 
—

 
—

 
—

 
—

Total Open Programs
 
58,205


4,837


7

 
23,507

 
4

 
17,774

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
28,303

 
14

 
191,187

 
—

 
—

Other Programs(5)
 
—

 
—

 
—

 
—

 
8

 
112,078

Total Closed Programs
 
—

 
28,303

 
14

 
191,187

 
8

 
112,078

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
58,205

 
$
33,140

 
21

 
$
214,694

 
12

 
$
129,852

_______________________________________________
(1) Capital raised represents gross proceeds, excluding DRIP shares issued.
(2) DRIP represents the value of shares issued under each respective program's distribution reinvestment plan.
(3) Number of investments acquired includes properties owned through consolidated joint ventures.
(4) Purchase price of acquisitions includes pro rata share of the purchase price of any investments purchased by consolidated and unconsolidated joint ventures, as well as CMBS and notes receivable, including GAAP adjustments, such as earn-out provisions.
(5) Includes TIC and DST programs and GOP.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 59


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited, dollars in thousands)

 
Revenue Summary
The following table shows revenue earned from the Managed Programs for the three months ended June 30, 2015 by activity type (dollars in thousands):
Program
 
Offering Related Revenue and Reimbursements
 
Transaction Service Revenue and Reimbursements
 
Management Service Revenue and Reimbursements
 
Total Managed Programs Revenue and Reimbursements
Open Programs:
 
 
 
 
 
 
 
 
CCPT V
 
$
1,110

 
$
536

 
$
1,374

 
$
3,020

INAV
 
312

 
78

 
709

 
1,099

CCIT II
 
4,094

 
109

 
1,815

 
6,018

Gross revenue - Open Programs
 
5,516

 
723

 
3,898

 
10,137

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
3,710

 
—

 
—

 
3,710

Reimbursements
 
1,105

 
345

 
1,159

 
2,609

Net Cole Capital Revenue - Open Programs
 
701

 
378

 
2,739

 
3,818

 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
4,095

 
9,722

 
13,817

Other Programs(1)
 
—

 
2,224

 
371

 
2,595

Gross revenue - Closed Programs
 
—

 
6,319

 
10,093

 
16,412

Less:
 
 
 
 
 
 
 
 
Reimbursements(1)
 
—

 
281

 
1,958

 
2,239

Net Cole Capital Revenue - Closed Programs
 
—

 
6,038

 
8,135

 
14,173

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
701

 
$
6,416

 
$
10,874

 
$
17,991

____________________________    
(1) CCIT merged with Select Income REIT on January 29, 2015. These amounts exclude any CCIT post-close adjustments recorded during the three months ended June 30, 2015.













See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 60


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited, dollars in thousands)
 
The following tables present the primary revenue drivers and Net Revenue earned by activity type for the Managed Programs and CCIT:
Offering-related revenue
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Capital raised (excluding DRIP)
 
$
58,205

 
$
29,770

 
$
128,282

 
$
218,270

 
$
113,241

 
 
 
 
 
 
 
 
 
 
 
Securities commissions
 
3,243

 
1,775

 
8,030

 
13,369

 
6,108

Dealer manager fees
 
1,147

 
696

 
2,551

 
4,086

 
1,909

Distribution fees
 
21

 
20

 
18

 
13

 
3

Reimbursement revenue
 
1,105

 
626

 
2,553

 
4,067

 
1,949

Gross offering-related revenue
 
5,516

 
3,117

 
13,152

 
21,535

 
9,969

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
3,243

 
1,775

 
8,030

 
13,369

 
6,108

Reallowed dealer manager and distribution fees
 
467

 
256

 
1,296

 
2,029

 
960

Reimbursement revenue
 
1,105

 
626

 
2,553

 
4,067

 
1,949

Net offering-related revenue
 
$
701

 
$
460

 
$
1,273

 
$
2,070

 
$
952

Transaction service revenue
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Purchase price of acquisitions(1)
 
$
214,694


$
225,814


$
942,818


$
1,111,900


$
754,612

 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
4,192

 
4,488

 
18,558

 
22,897

 
14,412

Disposition fees
 
2,224

 
5,201

 
172

 
74

 
—

Reimbursement revenue
 
620

 
571

 
1,820

 
1,452

 
704

Gross transaction service revenue
 
7,036

 
10,260

 
20,550

 
24,423

 
15,116

Less: Reimbursement revenue
 
620

 
571

 
1,820

 
1,452

 
704

Net transaction service revenue
 
$
6,416

 
$
9,689

 
$
18,730

 
$
22,971

 
$
14,412

Management service revenue
 
 
Three Months Ended
 
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Gross real estate investments
 
$
6,286,402

 
$
6,084,979

 
$
8,563,540

 
$
7,705,703

 
$
6,565,984

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
371

 
426

 
374

 
428

 
538

Advisory and performance fee revenue
 
10,503

 
11,173

 
14,772

 
11,212

 
9,628

Reimbursement revenue
 
3,103

 
2,518

 
3,434

 
2,199

 
1,971

Gross management service revenue
 
13,977

 
14,117

 
18,580

 
13,839

 
12,137

Less: Reimbursement revenue
 
3,103

 
2,518

 
3,434

 
2,199

 
1,971

Net management service revenue
 
$
10,874

 
$
11,599

 
$
15,146

 
$
11,640

 
$
10,166

_______________________________________________
(1) Purchase price of acquisitions includes pro rata share of the purchase price of any investments purchased by consolidated and unconsolidated joint ventures, as well as CMBS and notes receivable, and excludes any GAAP adjustments, such as fair value adjustments of assumed notes payable and earn-out provisions.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 61


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited, in thousands)
 
The following tables show the activity performed on behalf of the Managed Programs since 2009:
Source: Robert A. Stanger & Co., Inc.; Represents aggregate capital raised, excluding DRIP, on behalf of the Managed Programs.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 62


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Definitions
 
Annualized Rental Income is rental revenue under our leases reflecting straight-line rent adjustments associated with contractual rent increases in the leases as required by GAAP, which includes the effect of any tenant concessions, such as free rent, and excludes any contingent rent, such as percentage rent.

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

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

The following table shows the calculation of Contract Rental Revenue for the three months ended June 30, 2015 and 2014 (dollar amounts in thousands):
 
 
Three Months Ended June 30,
 
 
June 30, 2015
 
June 30, 2014
 Rental income - as reported
 
$
341,183

 
$
314,519

 Direct financing lease income - as reported
 
697

 
1,181

Adjustments:
 
 
 
 
Straight line rent
 
(23,997
)
 
(17,413
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,064

 
2,103

Net direct financing lease adjustments
 
491

 
137

Other non-contract rental revenue
 
—

 
(488
)
Contract Rental Revenue (1)
 
$
319,438

 
$
300,039


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

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


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 63


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
EBITDA and Normalized EBITDA
Normalized EBITDA as disclosed represents EBITDA, or earnings before interest, taxes, depreciation and amortization, modified to exclude one-time items such as acquisition related costs, merger and other non-routine transactions costs, gains or losses on sale of investments, insurance and litigation settlements and extinguishment of debt cost. We also exclude certain non-cash items such as impairments of intangible, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangibles, deferred financing costs, and above and below market lease amortization. Management believes that excluding these costs from EBITDA provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. The Company believes that Normalized EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of the Company's business segments, although it does not represent net income that is computed in accordance with GAAP. Therefore, Normalized EBITDA should not be considered as an alternative to net income or as an indicator of the Company's financial performance. The Company uses Normalized EBITDA as one measure of its operating performance when formulating corporate goals and evaluating the effectiveness of the Company's strategies. Normalized EBITDA may not be comparable to similarly titled measures of other companies.
EBITDA Margin is a measurement of a company's operating profitability. It is equal to earnings before interest, tax, depreciation and amortization (EBITDA) adjusted for non-recurring expenses or revenue (Normalized EBITDA), divided by Net Cole Capital Revenue and other income.
Enterprise Value equals the sum of the Implied Equity Market Capitalization, preferred stock and Net Debt.
Fixed Charge Coverage Ratio is the sum of (i)interest expense incurred on the outstanding principal balance of our debt, excluding certain GAAP adjustments reported as interest expense, such as amortization of deferred financing costs, premiums and discounts, (ii) secured debt principal amortization and (iii) dividends attributable to preferred shares divided by Normalized EBITDA.
Funds from Operations and Adjusted Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO, a non-GAAP supplemental financial performance measure, is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.
NAREIT defines FFO as net income or loss computed in accordance with U.S. GAAP, excluding gains or losses from disposition of property, depreciation and amortization of real estate assets and impairment write-downs on real estate including the pro rata share of adjustments for unconsolidated partnerships and joint ventures. Our FFO calculation complies with NAREIT's policy described above.
In addition to FFO, we use Adjusted Funds From Operations ("AFFO") as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition related costs, merger and other non-routine transactions costs, gains or losses on sale of investments, insurance and litigation settlements and extinguishment of debt cost. We also exclude certain non-cash items such as impairments of intangible, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangibles, deferred financing costs, above and below market lease amortization as well as equity-based compensation. Management believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time, including after we cease to acquire properties on a frequent and regular basis. AFFO also allows for a comparison of the performance of our operations with other traded REITs that are not currently engaging in acquisitions and mergers, as well as a comparison of our performance with that of other traded REITs, as AFFO, or an equivalent measure, is routinely reported by traded REITs, and we believe often used by analysts and investors for comparison purposes.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 64


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
For all of these reasons, we believe FFO and AFFO, in addition to net loss and cash flows from operating activities, as defined by GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net loss or to cash flows from operating activities, and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs.
AFFO may provide investors with a view of our future performance and future dividend policy. However, because AFFO excludes items that are an important component in an analysis of the historical performance of a property, AFFO should not be construed as a historic performance measure. Neither the SEC, NAREIT, nor any other regulatory body has evaluated the acceptability of the exclusions contemplated to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.
Gross Real Estate Investments represent total gross real estate and related assets, including net investments in unconsolidated entities, investment in direct financing leases, investment securities backed by real estate, such as CMBS, and loans held for investment, net of gross intangible lease liabilities.
Implied Equity Market Capitalization equals shares of common stock outstanding, including restricted stock awards, multiplied by the closing sale price of the Company's stock as reported on the New York Stock Exchange (we traded on such exchange as of June 30, 2015). 
Interest Coverage Ratio reflects interest expense incurred on the outstanding principal balance of our debt, excluding certain GAAP adjustments reported as interest expense, such as amortization of deferred financing costs, premiums and discounts divided by Normalized EBITDA.
Investment-Grade Tenants are tenants, which, for these purposes, include the parent company of the tenant or lease guarantor, with an investment-grade credit rating from one of the major rating agencies.
Net Cole Capital G&A Expense
Cole Capital incurs certain costs on behalf of the Managed Programs, which are reimbursable. In accordance with GAAP, the Company records these costs as general and administrative expenses and the subsequent reimbursements as revenue. We believe Net G&A Expense is a helpful supplemental measure in determining the effective cost to the Company, eliminating any gross up presentation required by GAAP.
Net Cole Capital Revenue
Cole Capital incurs certain costs on behalf of the Managed Programs, which are reimbursable. In accordance with GAAP, Cole Capital records the reimbursement of these costs as fee and commission revenue and as reimbursement revenue and records the expense in reallowed fees and commissions and general and administrative expenses. We believe Net Revenue is a helpful supplemental measure in determining the effective revenue earned by the Company, eliminating any gross up presentation required by GAAP.
Net Debt is a calculation to show the Company's outstanding principal balance, excluding certain GAAP adjustments, such as premiums and discounts, less all cash and cash equivalents. We believe that the presentation of net debt provides useful information to investors because our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments.
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 65


 
Q2 2015 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
Net Operating Income (NOI) and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents rental and other property income and tenant reimbursement income less property operating expenses. NOI excludes income from discontinued operations, interest expense, depreciation and amortization, general and administrative expenses, merger related compensation and merger and acquisition related expenses. Cash NOI excludes the impact of certain GAAP adjustments to rental revenue, such as straight-line rent adjustments and amortization of above-market intangible lease assets and below-market lease intangible liabilities. It is management's view that NOI and Cash NOI provide investors relevant and useful information because it reflects only income and operating expense items that are incurred at the property level and presents them on an unleveraged basis. NOI and Cash NOI should not be considered as an alternative to net income. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.
Non-Cash Rent represents rent adjustments related to straight-line rent and above- and below- market lease amortization.
Normalized EBITDA includes full-year real estate activities adjusted for mid-period acquisitions and normalized full-year activity for Cole Capital, less cash, general and administrative expenses and property operating expenses
Operating Expense Ratio is calculated by dividing operating expense by gross operating income.
Property Operating Expense includes reimbursable and non-reimbursable costs to operate a property, including real estate taxes, utilities, insurance, repairs, maintenance, legal, property management fees, etc.
Total Debt is the Company's outstanding principal balance, excluding certain GAAP adjustments, such as premiums and discounts.
Triple Net Lease (NNN) is a lease under which the tenant agrees to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).




See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 66