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




 
Q3 2015 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
September 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
Diversification Statistics of the Real Estate Portfolio
 
Top 10 Concentrations
 
Tenants Comprising Over 1% of Annualized Rental Revenue
 
Tenant Industry Diversification
 
Property Geographic Diversification
 
Lease Expirations
Lease Summary
Diversification by Property Type
Unconsolidated Joint Venture Investment Summary
 
 
Cole Capital
 
Statements of Operations
FFO and AFFO
EBITDA and Normalized EBITDA
Net G&A
Program Development Costs
Managed Programs
Definitions
 
 
 


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended September 30, 2015, 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 Inc.'s (the "Company", "VEREIT", "us", "our" and "we") 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 September 30, 2015, June 30, 2015, March 31, 2015 and September 30, 2014.
 
Forward-Looking Statements
Information set forth herein (including information included or incorporated by reference herein) contains “forward-looking statements” (within the meaning of section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations regarding future events. The forward-looking statements involve a number of assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions identify forward-looking statements, and any statements regarding VEREIT’s future financial condition, results of operations and business are also forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, most of which are difficult to predict and many of which are beyond VEREIT’s control. If a change occurs, VEREIT’s business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: VEREIT’s plans, market and other expectations, objectives, intentions and other statements that are not historical facts; the developments disclosed herein; VEREIT’s ability to execute on and realize success from its business plan; VEREIT’s ability to meet its 2015 guidance; the unpredictability of the business plans and financial condition of VEREIT’s tenants; the impact of impairment charges in respect of certain of VEREIT’s properties or other assets; the ability to retain or hire key personnel; and continuation or deterioration of current market conditions. Additional factors that may affect future results are contained in VEREIT’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website at www.sec.gov. VEREIT disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.



 
Q3 2015 SUPPLEMENTAL INFORMATION

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

VEREIT is a full service real estate operating company that operates 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 September 30, 2015, approximately 43.5% of our Annualized Rental Income was delivered from Investment-Grade Tenants, our occupancy was 98.3% and our weighted-average lease term was 11.1 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


 
Q3 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. Bartolotta, Executive Vice President, Chief Financial Officer and Treasurer
 
Bruce D. Frank, Independent Director
 
 
 
Lauren Goldberg, Executive Vice President, General Counsel and Secretary
 
David B. Henry, Independent Director
 
 
 
Paul H. McDowell, Executive Vice President, Chief Operating Officer
 
Mark S. Ordan, Independent Director
 
 
 
William C. Miller, Executive Vice President, Investment Management
 
Eugene A. Pinover, Independent Director
 
 
 
Thomas W. Roberts, Executive Vice President, Chief Investment Officer
 
Julie G. Richardson, 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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Financial Summary
(unaudited, dollars in thousands, except per share amounts)
 
 
Q3 2015
 
Q2 2015
 
Q1 2015
 
Q4 2014
 
Q3 2014
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
384,954

 
$
393,721

 
$
393,968

 
$
418,807

 
$
457,118

Net income (loss)
$
8,141

 
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
Normalized EBITDA
$
301,772

 
$
309,306

 
$
315,161

 
$
336,752

 
$
358,301

Funds from operations (FFO)
$
191,562

 
$
193,951

 
$
195,030

 
$
(58,825
)
 
$
195,798

FFO per diluted share
$
0.206

 
$
0.209

 
$
0.210

 
$
(0.063
)
 
$
0.207

Adjusted funds from operations (AFFO)
$
196,428

 
$
202,338

 
$
200,135

 
$
205,459

 
$
244,549

AFFO per diluted share
$
0.211

 
$
0.218

 
$
0.215

 
$
0.220

 
$
0.258

Dividends declared per common share
$
0.1375

 
$
—

 
$
—

 
$
0.25

 
$
0.25

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
357,408

 
$
367,192

 
$
366,474

 
$
366,525

 
$
397,321

Net income (loss)
$
8,740

 
$
(108,267
)
 
$
(30,607
)
 
$
(82,763
)
 
$
(289,133
)
Normalized EBITDA
$
294,743

 
$
303,331

 
$
306,323

 
$
309,485

 
$
331,067

FFO
$
192,161

 
$
194,393

 
$
195,116

 
$
218,839

 
$
194,712

FFO per diluted share
$
0.207

 
$
0.209

 
$
0.210

 
$
0.235

 
$
0.206

AFFO
$
191,419

 
$
195,370

 
$
195,073

 
$
193,629

 
$
214,991

AFFO per diluted share
$
0.206

 
$
0.210

 
$
0.210

 
$
0.208

 
$
0.227

Properties owned
4,572

 
4,645

 
4,647

 
4,648

 
4,714

Rentable square feet (in thousands)
100,950

 
101,836

 
102,133

 
103,149

 
113,801

Economic occupancy rate
98.3
%
 
98.4
%
 
98.4
%
 
99.3
%
 
99.2
%
Weighted-average remaining lease term (years)
11.1

 
11.5

 
11.7

 
11.8

 
11.5

Investment-grade tenants (1)
43.5
%
 
47.4
%
 
47.0
%
 
46.9
%
 
44.8
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
27,546

 
$
26,529

 
$
27,494

 
$
52,282

 
$
59,797

Net (loss) income
$
(599
)
 
$
(442
)
 
$
(86
)
 
$
(277,664
)
 
$
1,086

Normalized EBITDA
$
7,029

 
$
5,975

 
$
8,838

 
$
27,267

 
$
27,234

FFO
$
(599
)
 
$
(442
)
 
$
(86
)
 
$
(277,664
)
 
$
1,086

FFO per diluted share
$
(0.001
)
 
$
—

 
$
—

 
$
(0.298
)
 
$
0.001

AFFO
$
5,009

 
$
6,968

 
$
5,062

 
$
11,830

 
$
29,558

AFFO per diluted share
$
0.005

 
$
0.007

 
$
0.005

 
$
0.013

 
$
0.031

Capital raised on behalf of Managed Programs, excluding DRIP
$
66,585

 
$
58,205

 
$
29,770

 
$
128,282

 
$
218,270

Purchase price of property acquisitions on behalf of Managed Programs
$
315,301

 
$
214,694

 
$
225,814

 
$
942,818

 
$
1,111,900

Gross Real Estate Investments (2)
$
6,561,950

 
$
6,286,402

 
$
6,084,979

 
$
8,563,540

 
$
7,705,703

_______________________________________________
(1) The weighted-average credit rating of our investment-grade tenants was A- as of September 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.

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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
83,140

 
$
88,422

 
$
91,658

 
$
91,620

 
$
97,333

Normalized EBITDA
 
301,772

 
309,306

 
315,161

 
336,752

 
358,301

Interest coverage ratio
 
3.63x

 
3.50x

 
3.44x

 
3.68x

 
3.68x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
83,140

 
$
88,422

 
$
91,658

 
$
91,620

 
$
97,333

Secured debt principal amortization
 
6,089

 
8,520

 
10,999

 
8,993

 
6,938

Dividends attributable to preferred shares 
 
17,974

 
17,973

 
17,973

 
17,973

 
36,282

Total fixed charges
 
107,203

 
114,915

 
120,630

 
118,586

 
140,553

Normalized EBITDA
 
301,772

 
309,306

 
315,161

 
336,752

 
358,301

Fixed charge coverage ratio
 
2.81x

 
2.69x

 
2.61x

 
2.84x

 
2.55x

 
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
8,928,412

 
$
9,401,839

 
$
10,333,173

 
$
10,469,121

 
$
11,551,644

Less: cash and cash equivalents
 
171,659

 
121,651

 
788,739

 
416,711

 
145,310

Net Debt
 
8,756,753

 
9,280,188

 
9,544,434

 
10,052,410

 
11,406,334

Normalized EBITDA annualized
 
1,207,088

 
1,237,224

 
1,260,644

 
1,347,008

 
1,433,204

Net Debt to Normalized EBITDA annualized ratio
 
7.25x

 
7.50x

 
7.57x

 
7.46x

 
7.96x

 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
8,756,753

 
$
9,280,188

 
$
9,544,434

 
$
10,052,410

 
$
11,406,334

Gross Real Estate Investments
 
17,392,001

 
17,725,642

 
17,904,710

 
18,211,712

 
20,369,206

Net Debt leverage ratio
 
50.3
%
 
52.4
%
 
53.3
%
 
55.2
%
 
56.0
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
11,085,546

 
$
11,360,689

 
$
11,187,797

 
$
11,570,474

 
$
12,602,273

Gross Real Estate Investments
 
17,392,001

 
17,725,642

 
17,904,710

 
18,211,712

 
20,369,206

Unencumbered asset ratio
 
63.7
%
 
64.1
%
 
62.5
%
 
63.5
%
 
61.9
%



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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



 
 
Common equity
41.8%
 
 
 
 
 
 
Secured debt
19.0%
 
 
 
 
 
 
Corporate bonds
14.8%
 
 
 
 
 
 
Revolving credit facility
6.5%
 
 
 
 
 
 
Preferred equity
6.3%
 
 
 
 
 
 
Unsecured term loan
5.8%
 
 
 
 
 
 
Convertible notes
5.8%

                            

Fixed vs. Variable Rate Debt
Fixed
73.1
%
Swapped to Fixed
14.5
%
Variable
12.4
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)
 
September 30, 2015
Diluted shares outstanding
 
 
 
 
929,402

Stock price
 
 
 
 
$
7.72

Implied Equity Market Capitalization
 
$
7,174,983

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

 
 
 
 
 
 
Mortgage notes payable
5.3
 
5.02%
 
$
3,233,275

KBC secured term loan
2.3
 
5.81%
 
35,137

Total secured debt
5.3
 
5.03%
 
$
3,268,412

 
 
 
 
 
 
Unsecured term loan (swapped to fixed)
2.8
 
3.28%
 
$
1,000,000

Revolving credit facility
2.8
 
2.19%
 
1,110,000

Total unsecured credit facility
2.8
 
2.72%
 
$
2,110,000

3-year corporate bonds
1.4
 
2.00%
 
1,300,000

5-year corporate bonds
3.4
 
3.00%
 
750,000

5-year convertible notes
2.8
 
3.00%
 
597,500

7-year convertible notes
5.2
 
3.75%
 
402,500

10-year corporate bonds
8.4
 
4.60%
 
500,000

Total unsecured debt
3.2
 
2.86%
 
$
5,660,000

 
 
 
 
 
 
Total Debt
4.0
 
3.65%
 
$
8,928,412

 
 
 
 
 
 
Total Capitalization
 
$
17,174,248

Less: Cash and cash equivalents
 
 
 
 
171,659

Enterprise Value
 
$
17,002,589

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
51.5
%
Net Debt/Normalized EBITDA Annualized
 
 
 
7.25x

Net Debt + Preferred/Normalized EBITDA Annualized
 
8.14
x
Fixed Charge Coverage
 
 
 
 
2.81x

Liquidity (3)
 
 
 
 
$
1,361,659

_____________________________________
(1) Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of September 30, 2015.
(2) Balance represents 42.8 million shares outstanding at September 30, 2015 multiplied by the liquidation preference of $25 per share.
(3) Liquidity represents cash and cash equivalents of $171.7 million and $1.2 billion available capacity on our revolving credit facility.


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$18.7 Billion
 
 
 
Book Value of Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (1)
Restaurants (1)
 
 
A full-service real estate operating company with investment management
capability.
 
2,047 Properties
2,165 Properties
 
 
 
 
 
 
 
 
Industrial & Distribution (1)
Office (1)
 
 
 
 
 
172 Properties
168 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$6.6 Billion
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Open Funds
 
 
Cole Capital is a combination of Cole Capital
distribution and Cole Capital investment
management. Cole Capital investment
management is a shared resource
model with VEREIT.
 
CCPT V(2)     l        CCIT II(2)     l       Income NAV(2)
 
 
 
 
 
 
 
 
Closed Funds
 
 
 
CCPT IV(2)        l        TIC & DST(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Excludes the 20 properties that consist of billboards, construction in progress, land, and parking lots.
(2) Defined in the "Program Summary" of the Managed Programs section on page 55.


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands)
 
 
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
3,257,396

 
$
3,351,303

 
$
3,434,414

 
$
3,472,298

 
$
3,487,824

Buildings, fixtures and improvements
 
11,615,474

 
11,779,450

 
12,081,061

 
12,307,758

 
12,355,029

Land and construction in progress
 
37,356

 
83,104

 
83,284

 
77,450

 
86,973

Intangible lease assets
 
2,313,369

 
2,339,273

 
2,386,904

 
2,435,054

 
2,424,076

Total real estate investments, at cost
 
17,223,595

 
17,553,130

 
17,985,663

 
18,292,560

 
18,353,902

Less: accumulated depreciation and amortization
 
1,595,667

 
1,401,843

 
1,238,320

 
1,034,122

 
828,624

Total real estate investments, net
 
15,627,928

 
16,151,287

 
16,747,343

 
17,258,438

 
17,525,278

Investment in unconsolidated entities
 
57,247

 
94,502

 
95,390

 
98,053

 
100,762

Investment in direct financing leases, net
 
49,244

 
49,801

 
54,822

 
56,076

 
57,441

Investment securities, at fair value
 
54,455

 
55,802

 
56,493

 
58,646

 
59,131

Loans held for investment, net
 
40,002

 
40,598

 
41,357

 
42,106

 
96,981

Cash and cash equivalents
 
171,659

 
121,651

 
788,739

 
416,711

 
145,310

Restricted cash
 
47,775

 
53,336

 
64,578

 
62,651

 
72,754

Intangible assets, net
 
127,835

 
135,340

 
142,851

 
150,359

 
323,332

Deferred costs and other assets, net
 
385,806

 
403,606

 
400,884

 
389,922

 
446,606

Goodwill
 
1,828,005

 
1,847,295

 
1,871,114

 
1,894,794

 
2,096,450

Due from affiliates
 
66,981

 
53,456

 
58,457

 
86,122

 
55,666

Assets held for sale
 
247,951

 
242,701

 
—

 
1,261

 
1,887,872

Total assets
 
$
18,704,888

 
$
19,249,375

 
$
20,322,028

 
$
20,515,139

 
$
22,867,583

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
3,210,413

 
$
3,500,144

 
$
3,672,496

 
$
3,805,761

 
$
3,830,994

Corporate bonds, net
 
2,547,059

 
2,546,864

 
2,546,701

 
2,546,499

 
2,546,294

Convertible debt, net
 
981,031

 
979,852

 
978,769

 
977,521

 
976,251

Credit facility
 
2,110,000

 
2,300,000

 
3,184,000

 
3,184,000

 
4,259,000

Below-market lease liabilities, net
 
264,232

 
298,102

 
304,754

 
317,838

 
318,494

Accounts payable and accrued expenses
 
164,204

 
168,877

 
160,129

 
163,025

 
180,338

Deferred rent, derivative and other liabilities
 
114,343

 
122,999

 
139,241

 
127,611

 
195,256

Distributions payable
 
137,647

 
9,938

 
9,959

 
9,995

 
9,927

Due to affiliates
 
241

 
268

 
547

 
559

 
2,757

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

 
118,493

 
—

 
—

 
545,382

Total liabilities
 
9,647,663

 
10,045,537

 
10,996,596

 
11,132,809

 
12,864,693

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,050

 
9,051

 
9,051

 
9,055

 
9,080

Additional paid-in capital
 
11,928,184

 
11,924,547

 
11,919,358

 
11,920,253

 
11,905,338

Accumulated other comprehensive (loss) income
 
(9,806
)
 
(1,928
)
 
(4,136
)
 
2,728

 
8,600

Accumulated deficit
 
(3,085,906
)
 
(2,951,019
)
 
(2,826,524
)
 
(2,778,576
)
 
(2,182,731
)
Total stockholders' equity
 
8,841,950

 
8,981,079

 
9,098,177

 
9,153,888

 
9,740,715

Non-controlling interests
 
215,275

 
222,759

 
227,255

 
228,442

 
262,175

Total equity
 
9,057,225


9,203,838

 
9,325,432

 
9,382,330

 
10,002,890

Total liabilities and equity
 
$
18,704,888

 
$
19,249,375

 
$
20,322,028

 
$
20,515,139

 
$
22,867,583


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
333,766

 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

Direct financing lease income
 
659

 
697

 
741

 
791

 
625

Operating expense reimbursements
 
22,983

 
25,312

 
22,974

 
18,806

 
30,984

Cole Capital revenue
 
27,546

 
26,529

 
27,494

 
52,282

 
59,797

Total revenues
 
384,954


393,721


393,968


418,807


457,118

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
3,896

 
3,710

 
2,031

 
9,326

 
15,398

Acquisition related
 
1,764

 
1,563

 
2,182

 
4,215

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,162

 
7,632

Property operating
 
31,950

 
32,598

 
30,999

 
27,723

 
40,977

General and administrative
 
32,842

 
33,958

 
33,106

 
44,622

 
30,213

Depreciation and amortization
 
208,542

 
217,513

 
219,141

 
226,272

 
265,150

Impairments
 
—

 
85,341

 
—

 
406,136

 
2,299

Total operating expenses
 
287,951

 
391,547

 
303,882

 
743,456

 
375,667

Operating income (loss)
 
97,003

 
2,174

 
90,086

 
(324,649
)
 
81,451

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(89,530
)
 
(90,572
)
 
(95,699
)
 
(126,157
)
 
(101,643
)
Extinguishment and forgiveness of debt, net
 
—

 
—

 
5,302

 
(605
)
 
(5,396
)
Other income, net
 
3,401

 
5,302

 
4,088

 
65,848

 
8,687

Gain on disposition of joint venture interest
 
6,729

 
—

 
—

 
—

 
—

(Loss) gain on derivative instruments, net
 
(1,420
)
 
311

 
(1,028
)
 
(172
)
 
(17,484
)
Gain on sale of investments
 
—

 
—

 
—

 
—

 
6,357

Total other expenses, net
 
(80,820
)
 
(84,959
)
 
(87,337
)
 
(61,086
)
 
(109,479
)
Income (loss) before income and franchise taxes and loss on disposition of real estate and held for sale assets
 
16,183

 
(82,785
)
 
2,749

 
(385,735
)
 
(28,028
)
Loss on disposition of real estate and held for sale assets, net
 
(6,542
)
 
(24,674
)
 
(31,368
)
 
(1,263
)
 
(256,894
)
Income (loss) before income and franchise taxes
 
9,641

 
(107,459
)
 
(28,619
)
 
(386,998
)
 
(284,922
)
(Provision for) benefit from income and franchise taxes
 
(1,500
)
 
(1,250
)
 
(2,074
)
 
26,571

 
(3,125
)
Net income (loss)
 
8,141


(108,709
)

(30,693
)

(360,427
)

(288,047
)
Net (income) loss attributable to non-controlling interests
 
(612
)
 
2,187

 
723

 
9,804

 
7,649

Net income (loss) attributable to the Company
 
$
7,529

 
$
(106,522
)
 
$
(29,970
)
 
$
(350,623
)
 
$
(280,398
)
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per share attributable to common stockholders
 
$
(0.01
)
 
$
(0.14
)
 
$
(0.05
)
 
$
(0.41
)
 
$
(0.35
)


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Net income (loss)
 
$
8,141

 
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
Dividends on non-convertible preferred stock
 
(17,974
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,974
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(187
)
 
24,674

 
31,368

 
1,263

 
256,894

Depreciation and amortization of real estate assets
 
200,159

 
209,132

 
210,770

 
219,080

 
240,046

Impairment of real estate assets
 
—

 
85,341

 
—

 
96,692

 
2,299

Proportionate share of adjustments for unconsolidated entities
 
1,423

 
1,486

 
1,558

 
2,540

 
2,580

 FFO
 
$
191,562

 
$
193,951

 
$
195,030

 
$
(58,825
)
 
$
195,798

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
1,764

 
1,563

 
2,182

 
4,215

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,162

 
7,632

Impairment of intangible assets
 
—

 
—

 
—

 
309,444

 
—

Legal settlements and insurance proceeds
 
(925
)
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
(Gain) loss on sale and unrealized gains of investment securities
 
(4
)
 
172

 
(233
)
 
—

 
(6,357
)
Loss (gain) on derivative instruments, net
 
1,420

 
(311
)
 
1,028

 
172

 
17,484

Amortization of premiums and discounts on debt and investments, net
 
(4,920
)
 
(5,298
)
 
(3,858
)
 
11,461

 
(8,106
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,064

 
1,007

 
1,475

 
1,934

Net direct financing lease adjustments
 
507

 
491

 
495

 
448

 
620

Amortization and write-off of deferred financing costs
 
11,320

 
7,428

 
7,929

 
23,475

 
12,486

Amortization of management contracts
 
7,510

 
7,510

 
7,510

 
6,233

 
24,288

Deferred tax benefit(1)
 
(5,701
)
 
(3,874
)
 
(3,972
)
 
(33,324
)
 
—

Extinguishment of debt and forgiveness of debt, net
 
—

 
—

 
(5,302
)
 
605

 
5,396

Straight-line rent
 
(21,705
)
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
Equity-based compensation expense, net of forfeiture(2)
 
4,016

 
5,355

 
818

 
(980
)
 
5,541

Other amortization and non-cash charges
 
781

 
766

 
753

 
895

 
713

Proportionate share of adjustments for unconsolidated entities
 
694

 
654

 
682

 
1,090

 
1,268

 AFFO
 
$
196,428

 
$
202,338

 
$
200,135

 
$
205,459

 
$
244,549

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,461,323

 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

Effect of dilutive securities (3)
 
25,995,886

 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

Weighted-average shares outstanding - diluted(4)
 
929,457,209

 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
0.206

 
$
0.209

 
$
0.210

 
$
(0.063
)
 
$
0.207

AFFO per diluted share
 
$
0.211

 
$
0.218

 
$
0.215

 
$
0.220

 
$
0.258

_______________________________________
(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 nine months ended September 30, 2015, 1.5 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 September 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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 Net income (loss)
 
$
8,141

 
$
(108,709
)
 
$
(30,693
)
 
$
(360,427
)
 
$
(288,047
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
89,530

 
90,572

 
95,699

 
126,157

 
101,643

Depreciation and amortization
 
208,542

 
217,513

 
219,141

 
226,272

 
265,150

Provision for (benefit from) income and franchise taxes
 
1,500

 
1,250

 
2,074

 
(26,571
)
 
3,125

Proportionate share of adjustments for unconsolidated entities
 
2,554

 
2,415

 
2,661

 
3,402

 
3,433

 EBITDA
 
$
310,267

 
$
203,041

 
$
288,882

 
$
(31,167
)
 
$
85,304

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(187
)
 
24,674

 
31,368

 
1,263

 
256,894

Impairments
 
—

 
85,341

 
—

 
406,136

 
2,299

Acquisition related expenses
 
1,764

 
1,563

 
2,182

 
4,215

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,162

 
7,632

(Gain) loss on sale and unrealized gains of investment securities
 
(4
)
 
172

 
(233
)
 
—

 
(6,357
)
Loss (gain) on derivative instruments, net
 
1,420

 
(311
)
 
1,028

 
172

 
17,484

Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,064

 
1,007

 
1,475

 
1,934

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

 
—

 
(5,302
)
 
605

 
5,396

Net direct financing lease adjustments
 
507

 
491

 
495

 
448

 
620

Straight-line rent
 
(21,705
)
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
Legal settlement and insurance proceeds
 
(925
)
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
Program development costs write-off
 
—

 
—

 
—

 
13,109

 
—

Other amortization and non-cash charges
 
(82
)
 
(125
)
 
(78
)
 
335

 
(33
)
 Proportionate share of adjustments for unconsolidated entities
 
608

 
529

 
(254
)
 
1,086

 
1,276

Normalized EBITDA
 
$
301,772

 
$
309,306

 
$
315,161

 
$
336,752

 
$
358,301




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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
333,766

 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

Direct financing lease income
 
659

 
697

 
741

 
791

 
625

Operating expense reimbursements
 
22,983

 
25,312

 
22,974

 
18,806

 
30,984

Total real estate investment revenues
 
357,408


367,192


366,474


366,525


397,321

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
1,690

 
1,563

 
1,723

 
853

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,139

 
7,613

Property operating
 
31,950

 
32,598

 
30,999

 
27,723

 
40,977

General and administrative
 
15,848

 
16,827

 
15,370

 
13,586

 
12,948

Depreciation and amortization
 
200,158

 
209,122

 
210,788

 
219,222

 
240,073

Impairment of real estate
 
—

 
85,341

 
—

 
96,692

 
2,299

Total operating expenses
 
258,603


362,315


275,303

 
383,215

 
317,908

Operating income (loss)
 
98,805


4,877


91,171

 
(16,690
)
 
79,413

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(89,530
)
 
(90,572
)
 
(95,699
)
 
(126,157
)
 
(101,643
)
Extinguishment and forgiveness of debt, net
 
—

 
—

 
5,302

 
(605
)
 
(5,396
)
Other income, net
 
2,936

 
4,910

 
2,869

 
63,532

 
8,508

Gain on disposition of joint venture interest
 
6,729

 
—

 
 
 
—

 
—

(Loss) gain on derivative instruments, net
 
(1,420
)
 
311

 
(1,028
)
 
(172
)
 
(17,484
)
Gain on sale of investments
 
—

 
—

 
—

 
—

 
6,357

Total other expenses, net
 
(81,285
)

(85,351
)

(88,556
)
 
(63,402
)
 
(109,658
)
Income (loss) before income and franchise taxes and loss on disposition of real estate and held for sale assets
 
17,520

 
(80,474
)
 
2,615

 
(80,092
)
 
(30,245
)
Loss on disposition of real estate and held for sale assets, net
 
(6,542
)
 
(24,674
)
 
(31,368
)
 
(1,263
)
 
(256,894
)
Income (loss) before income and franchise taxes
 
10,978


(105,148
)

(28,753
)
 
(81,355
)
 
(287,139
)
Provision for income and franchise taxes
 
(2,238
)
 
(3,119
)
 
(1,854
)
 
(1,408
)
 
(1,994
)
Net income (loss)
 
$
8,740


$
(108,267
)

$
(30,607
)

$
(82,763
)

$
(289,133
)


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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Net income (loss)
 
$
8,740

 
$
(108,267
)
 
$
(30,607
)
 
$
(82,763
)
 
$
(289,133
)
Dividends on non-convertible preferred stock
 
(17,974
)
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,974
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(187
)
 
24,674

 
31,368

 
1,263

 
256,894

Depreciation and amortization of real estate assets
 
200,159

 
209,132

 
210,770

 
219,080

 
240,046

Impairment of real estate
 
—

 
85,341

 
—

 
96,692

 
2,299

Proportionate share of adjustments for unconsolidated entities
 
1,423

 
1,486

 
1,558

 
2,540

 
2,580

 FFO
 
$
192,161

 
$
194,393

 
$
195,116

 
$
218,839

 
$
194,712

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
1,690

 
1,563

 
1,723

 
853

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,139

 
7,613

Legal settlement and insurance proceeds
 
(925
)
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
(Gain) loss on sale and unrealized gains of investment securities
 
(4
)
 
172

 
(233
)
 
—

 
(6,357
)
Loss (gain) on derivative instruments, net
 
1,420

 
(311
)
 
1,028

 
172

 
17,484

Amortization of premiums and discounts on debt and investments, net
 
(4,920
)
 
(5,298
)
 
(3,858
)
 
11,461

 
(8,106
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,064

 
1,007

 
1,475

 
1,934

Net direct financing lease adjustments
 
507

 
491

 
495

 
448

 
620

Amortization and write-off of deferred financing costs
 
11,320

 
7,428

 
7,929

 
23,475

 
12,486

Extinguishment of debt and forgiveness of debt, net
 
—

 
—

 
(5,302
)
 
605

 
5,396

Straight-line rent
 
(21,705
)
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
Equity-based compensation expense, net of forfeitures (1)
 
1,073

 
2,357

 
402

 
(3,997
)
 
2,086

Other amortization and non-cash charges
 
(1
)
 
(10
)
 
18

 
156

 
3

Proportionate share of adjustments for unconsolidated entities
 
694

 
654

 
682

 
1,090

 
1,268

 AFFO
 
$
191,419

 
$
195,370

 
$
195,073

 
$
193,629

 
$
214,991

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,461,323

 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

Effect of dilutive securities (2)
 
25,995,886

 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

Weighted-average shares outstanding - diluted (3)
 
929,457,209

 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
0.207

 
$
0.209

 
$
0.210

 
$
0.235

 
$
0.206

AFFO per diluted share
 
$
0.206

 
$
0.210

 
$
0.210

 
$
0.208

 
$
0.227

_________________________________
(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 nine months ended September 30, 2015, 1.5 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 September 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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 Net income (loss)
 
$
8,740

 
$
(108,267
)
 
$
(30,607
)
 
$
(82,763
)
 
$
(289,133
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
89,530

 
90,572

 
95,699

 
126,157

 
101,643

Depreciation and amortization
 
200,158

 
209,122

 
210,788

 
219,222

 
240,073

Provision for income and franchise taxes
 
2,238

 
3,119

 
1,854

 
1,408

 
1,994

Proportionate share of adjustments for unconsolidated entities
 
2,554

 
2,415

 
2,661

 
3,402

 
3,433

 EBITDA
 
$
303,220

 
$
196,961

 
$
280,395

 
$
267,426

 
$
58,010

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(187
)
 
24,674

 
31,368

 
1,263

 
256,894

Impairment of real estate assets
 
—

 
85,341

 
—

 
96,692

 
2,299

Acquisition related expenses
 
1,690

 
1,563

 
1,723

 
853

 
13,998

Merger and other non-routine transactions
 
8,957

 
16,864

 
16,423

 
25,139

 
7,613

(Gain) loss on sale and unrealized gains of investment securities
 
(4
)
 
172

 
(233
)
 
—

 
(6,357
)
Loss (gain) on derivative instruments, net
 
1,420

 
(311
)
 
1,028

 
172

 
17,484

Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,064

 
1,007

 
1,475

 
1,934

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

 
—

 
(5,302
)
 
605

 
5,396

Net direct financing lease adjustments
 
507

 
491

 
495

 
448

 
620

Straight-line rent
 
(21,705
)
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
Legal settlement and insurance proceeds
 
(925
)
 
—

 
(1,250
)
 
(60,720
)
 
(3,275
)
Other amortization and non-cash charges
 
10

 
(20
)
 
30

 
413

 
46

 Proportionate share of adjustments for unconsolidated entities
 
608

 
529

 
(254
)
 
1,086

 
1,276

Normalized EBITDA
 
$
294,743

 
$
303,331

 
$
306,323

 
$
309,485

 
$
331,067



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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 Rental income - as reported(1)
 
$
333,766

 
$
341,183

 
$
342,759

 
$
346,928

 
$
365,712

 Direct financing lease income - as reported
 
659

 
697

 
741

 
791

 
625

 Operating expense reimbursements - as reported
 
22,983

 
25,312

 
22,974

 
18,806

 
30,984

 Property operating expense - as reported
 
(31,950
)
 
(32,598
)
 
(30,999
)
 
(27,723
)
 
(40,977
)
NOI
 
325,458


334,594

 
335,475

 
338,802

 
356,344

 Adjustments:
 
 
 
 
 
 
 
 
 
 
 Straight line rent
 
(21,705
)
 
(23,997
)
 
(19,107
)
 
(25,367
)
 
(24,871
)
 Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,064

 
1,007

 
1,475

 
1,934

Net direct financing lease adjustments
 
507

 
491

 
495

 
448

 
620

 Cash NOI
 
$
305,412


$
312,152

 
$
317,870

 
$
315,358

 
$
334,027

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

Normalized Cash NOI
 
 
Three Months Ended
 
 
September 30, 2015
Cash NOI
 
$
305,412

Adjustments for intra-quarter dispositions(1)
 
(533
)
Normalized Cash NOI
 
$
304,879

_____________________________________
(1) For properties disposed of during the three months ended September 30, 2015 , the adjustment eliminates Cash NOI for the period.


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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Same Store Contract Rental Revenue
(unaudited, dollars in thousands)
 
The Company reviews the stabilized operating results from properties that we refer to as "same store." In determining the same store property pool, we include 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. The following tables show the Company's same store portfolio statistics, which included 3,777(1) properties, with 83.7 million aggregate square feet, acquired prior to July 1, 2014 and owned through September 30, 2015:
 
 
Three Months Ended September 30,
 
Increase/(Decrease)
 
 
2015
 
2014
 
$ Change
 
% Change
Contract Rental Revenue
 
$
248,446

 
$
246,206

 
$
2,240

 
0.9
%
Economic occupancy rate
 
98.3
%
 
99.2
%
 
NA

 
NA

 
 
 
 
Contract Rental Revenue
 
 
Number of
 
Three Months Ended September 30,
 
Increase/(Decrease)
 
 
Properties
 
2015
 
2014
 
$ Change
 
% Change
Single-tenant retail
 
1,864

 
$
98,617

 
$
97,670

 
$
947

 
1.0
 %
Anchored shopping centers
 
19

 
5,815

 
5,727

 
88

 
1.5
 %
Restaurant
 
1,596

 
48,187

 
47,516

 
671

 
1.4
 %
Industrial and Distribution
 
154

 
42,393

 
42,591

 
(198
)
 
(0.5
)%
Office
 
136

 
53,405

 
52,673

 
732

 
1.4
 %
Other(2)
 
8

 
29

 
29

 
—

 
—
 %
Total
 
3,777

 
$
248,446

 
$
246,206

 
$
2,240

 
0.9
 %
_______________________________________________
(1) Built-to-suit and expansion properties are included in the same store population if the placed in service date was prior to July 1, 2014.
(2) Other properties includes billboards, 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 | 19


 
 
Q3 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, as of September 30, 2015.


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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Debt and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
Remaining
2015
 
2016
 
2017
 
2018
 
2019
 
Thereafter
Mortgage notes payable
 
$
3,233,275

 
$
3,738

 
$
243,978

 
$
449,073

 
$
210,948

 
$
286,379

 
$
2,039,159

Unsecured credit facility
 
2,110,000

 
—

 
—

 
—

 
2,110,000

 
—

 
—

Corporate bonds
 
2,550,000

 
—

 
—

 
1,300,000

 
—

 
750,000

 
500,000

Convertible notes
 
1,000,000

 
—

 
—

 
—

 
597,500

 
—

 
402,500

Other debt
 
35,137

 
1,674

 
12,516

 
7,680

 
13,267

 
—

 
—

Total
 
$
8,928,412

 
$
5,412

 
$
256,494

 
$
1,756,753

 
$
2,931,715

 
$
1,036,379

 
$
2,941,659

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable
 
36.2
%
 
5.02
%
 
5.3

Unsecured credit facility
 
23.6
%
 
2.72
%
 
2.8

Corporate bonds
 
28.6
%
 
2.80
%
 
3.3

Convertible notes
 
11.2
%
 
3.30
%
 
3.8

Other debt
 
0.4
%
 
5.81
%
 
2.3

Total
 
100.0
%
 
3.65
%
 
4.0

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
63.4
%
 
2.86
%
 
3.2

Total secured debt
 
36.6
%
 
5.03
%
 
5.3

Total
 
100.0
%
 
3.65
%
 
4.0

 
 
 
 
 
 
 
Total fixed-rate debt (1)
 
87.6
%
 
3.85
%
 
4.1

Total variable-rate debt
 
12.4
%
 
2.25
%
 
2.7

Total
 
100.0
%
 
3.65
%
 
4.0

Preferred Equity
 
Balance (2)
 
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.
(2) Balance represents 42.8 million shares outstanding at at September 30, 2015 multiplied by the liquidation preference of $25 per share.



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


 
 
Q3 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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Outstanding Balance As Of September 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
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
 
102,346

 
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
 
63,419

 
5.73
%
 
5.73
%
 
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
%
 
5.91
%
 
I/O
Capital One, N.A.
 
11/20/2019
 
51,400

 
1mo. Libor + 1.95%

(3)
5.22
%
 
I/O through 11/01/2017, then P&I
American General Life Insurance Company
 
11/1/2021
 
51,250

 
5.25
%
 
5.25
%
 
I/O
US Bank National Association
 
11/11/2029
 
49,866

 
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
 
41,491

 
5.71
%
 
5.71
%
 
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)
3.76
%
 
I/O
The Royal Bank of Scotland Plc
 
1/1/2021
 
34,000

 
5.48
%
 
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
%
 
5.25
%
 
I/O
BOKF, NA dba Bank of Oklahoma
 
7/29/2018
 
29,392

 
1mo. Libor + 2.75%

(3)
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
LaSalle Bank National Association
 
1/1/2016
 
28,449

 
5.69
%
 
5.69
%
 
P&I

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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Outstanding Balance As Of September 30, 2015
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
PNC Bank, National Association
 
9/1/2022
 
$
28,401

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

 
4.22
%
 
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
 
24,466

 
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)
3.57
%
 
I/O
German American Capital Corp
 
6/6/2022
 
19,623

 
4.60
%
 
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)
3.28
%
 
I/O
JPMorgan Chase Bank, National Association
 
5/1/2021
 
16,324

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

 
5.48
%
 
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
 
14,746

 
5.84
%
 
5.84
%
 
P&I
Wells Fargo Bank, National Association
 
3/20/2023
 
14,378

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

 
1mo. Libor + 1.80%

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

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

 
1mo. Libor + 1.85%

(3)
4.25
%
 
I/O
US Bank National Association
 
7/1/2016
 
12,868

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

 
1mo. Libor + 2.25%

(3)
3.43
%
 
I/O
Goldman Sachs Commercial Mortgage Capital, L.P.
 
9/6/2017
 
12,270

 
3.70
%
 
3.70
%
 
I/O
Customers Bank
 
12/1/2016
 
11,805

 
3.75
%
 
3.75
%
 
I/O
JPMorgan Chase Bank, N.A.
 
7/1/2020
 
11,354

 
5.50
%
 
5.50
%
 
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
 
9,746

 
3.95
%
 
3.95
%
 
P&I
Wachovia Bank, National Association
 
6/11/2016
 
8,625

 
6.56
%
 
6.56
%
 
I/O
Amegy Bank, National Association
 
8/31/2016
 
8,173

 
1mo. Libor + 2.95%

 
3.15
%
 
I/O
Transamerica Life Insurance Company
 
8/1/2030
 
7,506

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
6,700

 
5.32
%
 
5.32
%
 
P&I

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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Outstanding Balance As Of September 30, 2015
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
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)
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
 
1,754

 
7.20
%
 
7.20
%
 
P&I
US Bank National Association
 
4/15/2019
 
1,678

 
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)
3.39
%
 
I/O
US Bank National Association
 
12/11/2016
 
1,317

 
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
 
380

 
5.93
%
 
5.93
%
 
P&I
US Bank National Association
 
12/11/2015
 
173

 
5.83
%
 
5.83
%
 
I/O
 
 
 
 
$
3,233,275

 
 
 
5.02
%
 
 
_______________________________________________
(1) Represents interest rate in effect at September 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 of a non-recourse loan, with a principal balance of $38.1 million as of September 30, 2015, 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 with the servicer to either restructure the loan or complete foreclosure proceedings.



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


 
 
Q3 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 September 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
 
September 30, 2015
Maximum leverage ratio
 
≤ 60%
 
43.9%
Minimum fixed charge coverage ratio
 
≥ 1.5x
 
2.70x
Secured leverage ratio
 
≤ 45%
 
15.8%
Total unencumbered asset value ratio
 
≤ 60%
 
42.8%
Minimum tangible net worth covenant
 
≥ $5.5 B
 
$8.8B
Minimum unencumbered interest coverage ratio
 
≥ 1.75x
 
4.78x
Minimum unencumbered asset value
 
≥ $8.0 B
 
$13.2B

Corporate Bond Key Covenants
 
Required
 
September 30, 2015
Limitation on incurrence of total debt
 
≤ 65%
 
49.9%
Limitation on incurrence of secured debt
 
≤ 40%
 
18.5%
Debt service coverage ratio
 
≥ 1.5x
 
3.12x
Maintenance of total unencumbered assets
 
≥ 150%
 
204.7%



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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Acquisitions and Development Projects
(unaudited, square feet and dollars in thousands)
 
Acquisitions
There was no acquisitions activity during the three months ended September 30, 2015.

Development Projects
The following table provides a summary of our development projects at September 30, 2015. During the three months ended September 30, 2015, the Company capitalized $6.2 million of additional development costs and placed $68.7 million of assets into service.
Description
 
Number of Properties
 
Estimated Completion Date
 
Investment to Date
 
Remaining Estimated Investment
 
Estimated Cash Cap Rate (1)
Build-to-suits
 
 
 
 
 
 
 
 
 
 
Family Dollar Portfolio
 
10

 
Various
 
$
9,470

 
$
4,084

 
7.3
%
Redevelopment(2)
 
 
 
 
 
 
 
 
 
 
FedEx Expansions
 
3

 
Various
 
8,036

 
2,084

 
8.7
%
Mattress Firm
 
1

 
2/1/2016
 
160

 
1,279

 
10.2
%
Total
 
 
 
 
 
$
17,666

 
$
7,447

 
 
_______________________________________________
(1) Rent will commence in accordance with the respective lease agreement. In general, rent commences upon delivery of the space to the tenant.
(2) Excludes tenant improvement costs incurred in accordance with existing leases. As of September 30, 2015, $16.7 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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


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

The following table shows the 77 properties that were disposed of during the three months ended September 30, 2015.
Property
 
Number of Properties
 
Location
 
Square Feet
 
Remaining Lease Term (Years)(1)
 
Cash Cap Rate
 
Sale Price
 
Real Estate Gain (2)
 
Goodwill Allocation(3)
 
GAAP Gain (Loss)(4)
CVS portfolio
 
68
 
Various
 
907

 
24.5

 
6.2
%
 
$
318,229

 
$
9,997

 
$
(18,453
)
 
$
(8,456
)
Hash House A Go Go
 
1
 
Las Vegas, NV
 
6

 
0.1

 
7.7
%
 
2,325

 
540

 
(178
)
 
362

Golden Corral
 
1
 
Jacksonville, FL
 
10

 
2.0

 
7.8
%
 
1,050

 
33

 
(86
)
 
(53
)
Dragon China
 
1
 
Carlsbad, NM
 
7

 
5.0

 
7.0
%
 
585

 
233

 
(45
)
 
188

Vacant properties
 
3
 
Various
 
16

 
—

 
—
%
 
710

 
24

 
—

 
24

Other (5)
 
—
 
 
 
—

 
—

 
—

 
771

 
1,393

 
—

 
1,393

Consolidated Joint Venture (6)
 
3
 
Chandler, AZ
 
752
 
5.7

 
6.6
%
 
69,750

 
6,729

 
—

 
6,729

Total
 
77
 
 
 
1,698
 
20.9

 
6.3
%
 
$
393,420

 
$
18,949

 
$
(18,762
)
 
$
187

_______________________________________________
(1) Represents the remaining lease term from the date of sale.
(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 nine months ended September 30, 2015 for a further description of our goodwill allocation methodology.
(4) Equals sale price less GAAP net book value, including goodwill allocation, and selling costs.
(5) Represents proceeds received and net GAAP gains/losses recorded for condemnations, easements, held for sale assets and post-close adjustments.
(6) The Company disposed of its interest in one consolidated joint venture, whose only assets were investments in three unconsolidated joint ventures, for an aggregate gross sales price of $77.5 million, of which the Company's share was $69.8 million, resulting in proceeds of $43.0 million, after debt repayment and closing costs. The Company's proceeds after distribution to the joint venture partner were $35.8 million. Number of properties, square feet and cash cap rate represent the total amount related to the three anchored shopping centers owned by the three unconsolidated joint ventures, not the Company's share. The sale price, real estate gain and GAAP gain (loss) represent the Company's share.



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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Diversification Statistics: Real Estate Portfolio
(unaudited, percentages based on portfolio Annualized Rental Income)
 


___________________________________________________
___________________________________________________
 
___________________________________________________
___________________________________________________

Statistics
(square feet and dollars in thousands)
 
 
 
 
Properties owned
 
4,572

 
Rentable square feet
 
100,950

 
Economic occupancy rate
 
98.3
%
 
Weighted-average remaining lease term (years)
 
11.1

 
Investment-Grade Tenants
 
43.5
%
 
Flat leases
 
21.5
%
 
NNN leases
 
63.4
%
 



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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Top 10 Concentrations: Real Estate Portfolio
(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

 
3.9
%
 
$
159,625

 
12.0
%
 
B-
Walgreens
 
123

 
1,786

 
1.8
%
 
44,732

 
3.4
%
 
BBB
Family Dollar
 
203

 
3,401

 
3.4
%
 
37,217

 
2.8
%
 
BB
CVS
 
107

 
1,503

 
1.5
%
 
35,069

 
2.6
%
 
BBB+
Dollar General
 
405

 
3,748

 
3.7
%
 
34,289

 
2.6
%
 
BBB-
FedEx
 
56

 
3,383

 
3.4
%
 
33,263

 
2.5
%
 
BBB
Albertson's
 
33

 
1,923

 
1.9
%
 
23,633

 
1.8
%
 
B
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,602

 
1.8
%
 
AA+
Citizens Bank
 
177

 
894

 
0.9
%
 
21,126

 
1.6
%
 
A-
AT&T
 
4

 
1,107

 
1.1
%
 
20,092

 
1.5
%
 
BBB+
Total
 
1,162

 
22,655

 
22.6
%
 
$
432,648

 
32.6
%
 
 
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
 
405

 
6,776

 
6.7
%
 
$
252,478

 
19.0
%
Manufacturing
 
68

 
18,710

 
18.5
%
 
123,668

 
9.3
%
Restaurants - Quick Service
 
984

 
4,270

 
4.2
%
 
119,238

 
9.0
%
Retail - Discount
 
635

 
10,464

 
10.4
%
 
95,644

 
7.2
%
Retail - Pharmacy
 
270

 
3,996

 
4.0
%
 
93,554

 
7.1
%
Finance
 
307

 
3,096

 
3.1
%
 
66,089

 
5.0
%
Professional Services
 
70

 
4,232

 
4.2
%
 
59,889

 
4.5
%
Retail - Grocery & Supermarket
 
84

 
5,450

 
5.4
%
 
57,086

 
4.3
%
Retail - Home & Garden
 
100

 
7,479

 
7.4
%
 
53,061

 
4.0
%
Logistics
 
63

 
4,832

 
4.8
%
 
42,052

 
3.2
%
Total
 
2,986

 
69,305

 
68.7
%
 
$
962,759

 
72.6
%
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
 
621

 
11,718

 
11.6
%
 
$
171,032

 
12.9
%
Illinois
 
190

 
6,094

 
6.0
%
 
81,185

 
6.1
%
Florida
 
301

 
5,114

 
5.1
%
 
80,110

 
6.0
%
California
 
98

 
4,809

 
4.8
%
 
70,580

 
5.3
%
Georgia
 
223

 
4,851

 
4.8
%
 
67,422

 
5.1
%
Pennsylvania
 
174

 
5,827

 
5.8
%
 
59,535

 
4.5
%
Ohio
 
297

 
5,775

 
5.7
%
 
56,204

 
4.2
%
Indiana
 
145

 
5,945

 
5.9
%
 
44,091

 
3.3
%
North Carolina
 
185

 
3,940

 
3.9
%
 
43,163

 
3.3
%
Michigan
 
193

 
2,493

 
2.5
%
 
39,255

 
3.0
%
Total
 
2,427

 
56,566

 
56.1
%
 
$
712,577

 
53.7
%


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


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


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
 
127

 
5,717

 
5.7
%
 
$
72,055

 
5.4
%
Dallas, TX
 
129

 
3,813

 
3.8
%
 
59,078

 
4.5
%
Atlanta, GA
 
101

 
3,546

 
3.5
%
 
46,087

 
3.5
%
Houston, TX
 
102

 
2,899

 
2.9
%
 
32,149

 
2.4
%
Philadelphia, PA
 
55

 
2,058

 
2.0
%
 
29,233

 
2.2
%
New York, NY
 
30

 
1,165

 
1.2
%
 
27,100

 
2.0
%
Phoenix, AZ
 
52

 
1,643

 
1.6
%
 
26,565

 
2.0
%
Boston, MA
 
28

 
1,819

 
1.8
%
 
24,946

 
1.9
%
Indianapolis, IN
 
42

 
2,705

 
2.7
%
 
20,490

 
1.5
%
Washington, DC
 
32

 
890

 
0.9
%
 
19,937

 
1.5
%
Total
 
698

 
26,255

 
26.1
%
 
$
357,640

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



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


 
 
Q3 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

 
3.9
%
 
$
159,625

 
12.0
%
 
B-
Walgreens
 
123

 
1,786

 
1.8
%
 
44,732

 
3.4
%
 
BBB
Family Dollar
 
203

 
3,401

 
3.4
%
 
37,217

 
2.8
%
 
BB
CVS
 
107

 
1,503

 
1.5
%
 
35,069

 
2.6
%
 
BBB+
Dollar General
 
405

 
3,748

 
3.7
%
 
34,289

 
2.6
%
 
BBB-
FedEx
 
56

 
3,383

 
3.4
%
 
33,263

 
2.5
%
 
BBB
Albertson's
 
33

 
1,923

 
1.9
%
 
23,633

 
1.8
%
 
B
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,602

 
1.8
%
 
AA+
Citizens Bank
 
177

 
894

 
0.9
%
 
21,126

 
1.6
%
 
A-
AT&T
 
4

 
1,107

 
1.1
%
 
20,092

 
1.5
%
 
BBB+
BJ's Wholesale Club
 
4

 
2,223

 
2.2
%
 
19,254

 
1.5
%
 
B-
AON
 
8

 
1,203

 
1.2
%
 
18,154

 
1.4
%
 
A-
PetSmart
 
12

 
858

 
0.9
%
 
17,610

 
1.3
%
 
B
Goodyear
 
10

 
4,728

 
4.7
%
 
16,550

 
1.3
%
 
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
 
1,278

 
40,034

 
39.8
%
 
$
562,944

 
42.6
%
 
 


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


 
 
Q3 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
%
 
1,245

 
0.1
%
Education
 
4

 
1,288

 
1.3
%
 
5,812

 
0.4
%
Entertainment & Recreation
 
21

 
848

 
0.8
%
 
15,861

 
1.2
%
Finance
 
307

 
3,096

 
3.1
%
 
66,089

 
5.0
%
Government & Public Services
 
31

 
1,280

 
1.3
%
 
30,927

 
2.3
%
Healthcare
 
81

 
1,661

 
1.7
%
 
29,490

 
2.2
%
Information & Communication
 
16

 
1,302

 
1.3
%
 
24,511

 
1.8
%
Insurance
 
19

 
2,171

 
2.2
%
 
39,532

 
3.0
%
Logistics
 
63

 
4,832

 
4.8
%
 
42,052

 
3.2
%
Manufacturing
 
68

 
18,710

 
18.5
%
 
123,668

 
9.3
%
Mining & Natural Resources
 
16

 
745

 
0.7
%
 
14,760

 
1.1
%
Other Services
 
31

 
5,217

 
5.2
%
 
18,921

 
1.4
%
Professional Services
 
70

 
4,232

 
4.2
%
 
59,889

 
4.5
%
Real Estate
 
4

 
59

 
0.1
%
 
936

 
0.1
%
Rental
 
9

 
713

 
0.7
%
 
6,734

 
0.5
%
Restaurants - Casual Dining
 
405

 
6,776

 
6.7
%
 
252,478

 
19.0
%
Restaurants - Quick Service
 
984

 
4,270

 
4.2
%
 
119,238

 
9.0
%
Retail - Apparel & Jewelry
 
15

 
1,403

 
1.4
%
 
15,311

 
1.2
%
Retail - Department Stores
 
13

 
964

 
0.9
%
 
8,015

 
0.6
%
Retail - Discount
 
636

 
10,489

 
10.4
%
 
96,005

 
7.2
%
Retail - Electronics & Appliances
 
22

 
676

 
0.7
%
 
9,222

 
0.7
%
Retail - Gas & Convenience
 
127

 
527

 
0.5
%
 
27,193

 
2.1
%
Retail - Grocery & Supermarket
 
84

 
5,450

 
5.4
%
 
57,086

 
4.3
%
Retail - Hobby, Books & Music
 
9

 
340

 
0.3
%
 
2,978

 
0.2
%
Retail - Home & Garden
 
100

 
7,479

 
7.4
%
 
53,061

 
4.0
%
Retail - Home Furnishings
 
40

 
492

 
0.5
%
 
7,823

 
0.6
%
Retail - Internet
 
3

 
3,048

 
3.0
%
 
14,159

 
1.1
%
Retail - Motor Vehicle
 
167

 
1,197

 
1.2
%
 
22,014

 
1.7
%
Retail - Office Supply
 
4

 
76

 
0.1
%
 
1,155

 
0.1
%
Retail - Pet Supply
 
15

 
903

 
0.9
%
 
18,444

 
1.4
%
Retail - Pharmacy
 
270

 
3,996

 
4.0
%
 
93,554

 
7.0
%
Retail - Specialty (Other)
 
23

 
561

 
0.5
%
 
6,168

 
0.5
%
Retail - Sporting Goods
 
20

 
1,186

 
1.2
%
 
14,254

 
1.1
%
Retail - Warehouse Clubs
 
8

 
2,631

 
2.6
%
 
22,368

 
1.7
%
Other
 
15

 
89

 
—
%
 
1,345

 
0.1
%
Total
 
3,707

 
99,275

 
98.3
%
 
$
1,326,352

 
100.0
%
_______________________________________________
(1) Industry classifications are based on the North American Industry Classification System.

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

 
 
Q3 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
 
156

 
1,745

 
1.7
%
 
$
30,896

 
2.3
%
Alaska
 
3

 
25

 
—
%
 
774

 
0.1
%
Arizona
 
84

 
2,369

 
2.3
%
 
37,366

 
2.8
%
Arkansas
 
103

 
1,027

 
1.0
%
 
13,044

 
1.0
%
California
 
98

 
4,809

 
4.8
%
 
70,580

 
5.3
%
Colorado
 
58

 
1,813

 
1.8
%
 
30,248

 
2.3
%
Connecticut
 
20

 
100

 
0.1
%
 
2,842

 
0.2
%
Delaware
 
12

 
102

 
0.1
%
 
2,382

 
0.2
%
District of Columbia
 
1

 
3

 
—
%
 
44

 
—
%
Florida
 
301

 
5,114

 
5.1
%
 
80,110

 
6.0
%
Georgia
 
223

 
4,851

 
4.8
%
 
67,422

 
5.1
%
Idaho
 
20

 
148

 
0.1
%
 
3,723

 
0.3
%
Illinois
 
190

 
6,094

 
6.0
%
 
81,185

 
6.1
%
Indiana
 
145

 
5,945

 
5.9
%
 
44,091

 
3.3
%
Iowa
 
53

 
1,609

 
1.6
%
 
14,081

 
1.1
%
Kansas
 
49

 
2,278

 
2.3
%
 
15,409

 
1.2
%
Kentucky
 
94

 
2,233

 
2.2
%
 
26,395

 
2.0
%
Louisiana
 
99

 
1,633

 
1.6
%
 
22,459

 
1.7
%
Maine
 
25

 
648

 
0.6
%
 
8,547

 
0.6
%
Maryland
 
33

 
869

 
0.9
%
 
16,335

 
1.2
%
Massachusetts
 
39

 
2,579

 
2.6
%
 
30,157

 
2.3
%
Michigan
 
193

 
2,493

 
2.5
%
 
39,255

 
3.0
%
Minnesota
 
47

 
583

 
0.6
%
 
9,187

 
0.7
%
Mississippi
 
80

 
1,830

 
1.8
%
 
16,155

 
1.2
%
Missouri
 
166

 
1,862

 
1.8
%
 
26,210

 
2.0
%
Montana
 
10

 
116

 
0.1
%
 
2,020

 
0.2
%
Nebraska
 
22

 
766

 
0.8
%
 
11,689

 
0.9
%
Nevada
 
32

 
747

 
0.7
%
 
9,544

 
0.7
%
New Hampshire
 
20

 
254

 
0.3
%
 
4,398

 
0.3
%
New Jersey
 
39

 
1,693

 
1.7
%
 
37,347

 
2.8
%
New Mexico
 
59

 
961

 
1.0
%
 
13,886

 
1.0
%
New York
 
92

 
1,786

 
1.8
%
 
33,948

 
2.6
%
North Carolina
 
185

 
3,940

 
3.9
%
 
43,163

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,251

 
0.3
%
Ohio
 
297

 
5,775

 
5.7
%
 
56,204

 
4.2
%
Oklahoma
 
85

 
2,096

 
2.1
%
 
26,432

 
2.0
%
Oregon
 
17

 
320

 
0.3
%
 
5,609

 
0.4
%
Pennsylvania
 
174

 
5,827

 
5.8
%
 
59,535

 
4.5
%
Rhode Island
 
14

 
214

 
0.2
%
 
3,632

 
0.3
%
South Carolina
 
127

 
3,385

 
3.4
%
 
30,679

 
2.3
%
South Dakota
 
12

 
141

 
0.1
%
 
1,614

 
0.1
%
Tennessee
 
133

 
3,455

 
3.4
%
 
33,948

 
2.6
%
Texas
 
621

 
11,718

 
11.6
%
 
171,032

 
12.9
%
Utah
 
12

 
115

 
0.1
%
 
2,628

 
0.2
%
Vermont
 
7

 
24

 
—
%
 
472

 
—
%
Virginia
 
120

 
2,121

 
2.1
%
 
38,085

 
2.9
%
Washington
 
27

 
492

 
0.5
%
 
$
10,572

 
0.8
%

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

 
 
Q3 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
West Virginia
 
43

 
257

 
0.3
%
 
6,513

 
0.5
%
Wisconsin
 
87

 
1,483

 
1.4
%
 
18,348

 
1.4
%
Wyoming
 
11

 
70

 
0.1
%
 
1,701

 
0.1
%
Territories
 
 
 
 
 
 
 
 
 
 
Puerto Rico
 
3

 
88

 
0.1
%
 
2,430

 
0.2
%
Canadian Provinces
 
 
 
 
 
 
 
 
 
 
Alberta
 
4

 
32

 
—
%
 
1,912

 
0.1
%
Manitoba
 
2

 
16

 
—
%
 
827

 
0.1
%
Ontario
 
11

 
78

 
0.1
%
 
4,208

 
0.3
%
Saskatchewan
 
2

 
17

 
—
%
 
828

 
0.1
%
Total
 
4,572

 
100,950

 
100.0
%
 
$
1,326,352

 
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 | 35


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Lease Expirations
(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
 
61

 
713

 
0.7
%
 
$
8,356

 
0.6
%
2016
 
128

 
3,557

 
3.5
%
 
33,835

 
2.6
%
2017
 
252

 
5,022

 
5.0
%
 
58,536

 
4.4
%
2018
 
244

 
3,044

 
3.0
%
 
41,004

 
3.1
%
2019
 
188

 
3,360

 
3.3
%
 
57,552

 
4.3
%
2020
 
244

 
4,604

 
4.5
%
 
52,662

 
4.0
%
2021
 
163

 
10,984

 
10.9
%
 
84,214

 
6.3
%
2022
 
257

 
9,380

 
9.3
%
 
78,546

 
5.9
%
2023
 
233

 
6,561

 
6.5
%
 
87,601

 
6.6
%
2024
 
176

 
9,969

 
9.9
%
 
123,235

 
9.3
%
Thereafter
 
1,761

 
42,081

 
41.7
%
 
700,811

 
52.9
%
Total
 
3,707

 
99,275

 
98.3
%
 
$
1,326,352

 
100.0
%

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


 
 
Q3 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
 
—

 
—

 
—
%
 
$
—

 
—
%
Anchored shopping centers
 
3

 
9

 
—
%
 
41

 
—
%
Restaurant
 
43

 
161

 
0.2
%
 
1,587

 
0.1
%
Industrial & Distribution
 
—

 
—

 
—
%
 
—

 
—
%
Office
 
14

 
543

 
0.5
%
 
6,728

 
0.5
%
Other(1)
 
1

 
—

 
—
%
 
—

 
—
%
Total Remaining 2015
 
61

 
713

 
0.7
%
 
$
8,356

 
0.6
%
 
 
 
 
 
 
 
 
 
 
 
2016
 


 


 


 


 


Single-tenant retail
 
13

 
139

 
0.1
%
 
$
1,552

 
0.1
%
Anchored shopping centers
 
15

 
75

 
0.1
%
 
1,138

 
0.1
%
Restaurant
 
79

 
358

 
0.4
%
 
8,450

 
0.6
%
Industrial & Distribution
 
7

 
2,244

 
2.2
%
 
9,885

 
0.7
%
Office
 
13

 
741

 
0.7
%
 
12,791

 
1.1
%
Other(1)
 
1

 
—

 
—
%
 
19

 
—
%
Total 2016
 
128

 
3,557

 
3.5
%
 
$
33,835

 
2.6
%
 
 
 
 
 
 
 
 
 
 
 
2017
 


 


 


 


 


Single-tenant retail
 
100

 
591

 
0.6
%
 
$
13,748

 
1.0
%
Anchored shopping centers
 
32

 
152

 
0.1
%
 
2,656

 
0.2
%
Restaurant
 
85

 
586

 
0.6
%
 
10,874

 
0.8
%
Industrial & Distribution
 
10

 
2,488

 
2.5
%
 
11,272

 
0.8
%
Office
 
23

 
1,205

 
1.2
%
 
19,904

 
1.5
%
Other(1)
 
2

 
—

 
—
%
 
82

 
0.1
%
Total 2017
 
252

 
5,022

 
5.0
%
 
$
58,536

 
4.4
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Single-tenant retail
 
74

 
965

 
1.0
%
 
$
13,877

 
1.0
%
Anchored shopping centers
 
29

 
303

 
0.3
%
 
4,192

 
0.3
%
Restaurant
 
115

 
422

 
0.4
%
 
10,203

 
0.8
%
Industrial & Distribution
 
12

 
1,013

 
1.0
%
 
5,237

 
0.4
%
Office
 
12

 
341

 
0.3
%
 
7,477

 
0.6
%
Other(1)
 
2

 
—

 
—
%
 
18

 
—
%
Total 2018
 
244

 
3,044

 
3.0
%
 
$
41,004

 
3.1
%
 
 
 
 
 
 
 
 
 
 
 
_______________________________________________
(1) Includes billboards, 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 | 37


 
 
Q3 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
%
Anchored shopping centers
 
25

 
242

 
0.2
%
 
3,586

 
0.3
%
Restaurant
 
86

 
467

 
0.5
%
 
10,341

 
0.8
%
Industrial & distribution
 
3

 
137

 
0.1
%
 
1,275

 
0.1
%
Office
 
19

 
1,203

 
1.2
%
 
27,055

 
2.0
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2019
 
188

 
3,360

 
3.3
%
 
$
57,552

 
4.3
%
 
 
 
 
 
 
 
 
 
 
 
2020
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
84

 
1,098

 
1.1
%
 
$
13,821

 
1.0
%
Anchored shopping centers
 
14

 
137

 
0.1
%
 
1,729

 
0.2
%
Restaurant
 
116

 
443

 
0.4
%
 
9,499

 
0.7
%
Industrial & distribution
 
8

 
1,591

 
1.6
%
 
6,319

 
0.5
%
Office
 
21

 
1,335

 
1.3
%
 
21,293

 
1.6
%
Other(1)
 
1

 
—

 
—
%
 
1

 
—
%
Total 2020
 
244

 
4,604

 
4.5
%
 
$
52,662

 
4.0
%
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
63

 
1,232

 
1.2
%
 
$
19,427

 
1.5
%
Anchored shopping centers
 
10

 
120

 
0.1
%
 
1,904

 
0.1
%
Restaurant
 
55

 
207

 
0.2
%
 
6,011

 
0.5
%
Industrial & distribution
 
16

 
7,654

 
7.6
%
 
27,150

 
2.0
%
Office
 
19

 
1,771

 
1.8
%
 
29,722

 
2.2
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2021
 
163

 
10,984

 
10.9
%
 
$
84,214

 
6.3
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
157

 
2,131

 
2.1
%
 
$
28,422

 
2.1
%
Anchored shopping centers
 
5

 
66

 
0.1
%
 
1,333

 
0.1
%
Restaurant
 
55

 
371

 
0.4
%
 
8,146

 
0.6
%
Industrial & distribution
 
30

 
5,741

 
5.7
%
 
21,127

 
1.6
%
Office
 
10

 
1,071

 
1.0
%
 
19,518

 
1.5
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2022
 
257

 
9,380

 
9.3
%
 
$
78,546

 
5.9
%
_______________________________________________
(1) Includes billboards, 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 | 38


 
 
Q3 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
2023
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
124

 
1,885

 
1.9
%
 
$
23,553

 
1.8
%
Anchored shopping centers
 
8

 
132

 
0.1
%
 
2,699

 
0.2
%
Restaurant
 
59

 
333

 
0.3
%
 
7,425

 
0.6
%
Industrial & Distribution
 
16

 
2,526

 
2.5
%
 
17,542

 
1.3
%
Office
 
26

 
1,685

 
1.7
%
 
36,382

 
2.7
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2023
 
233

 
6,561

 
6.5
%
 
$
87,601

 
6.6
%
 
 
 
 
 
 
 
 
 
 
 
2024
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
86

 
2,111

 
2.1
%
 
$
27,396

 
2.1
%
Anchored shopping centers
 
3

 
14

 
—
%
 
332

 
—
%
Restaurant
 
47

 
228

 
0.2
%
 
6,261

 
0.5
%
Industrial & Distribution
 
12

 
3,509

 
3.5
%
 
15,481

 
1.2
%
Office
 
28

 
4,107

 
4.1
%
 
73,765

 
5.5
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2024
 
176

 
9,969

 
9.9
%
 
$
123,235

 
9.3
%
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
1,032

 
18,450

 
18.3
%
 
$
266,201

 
20.2
%
Anchored shopping centers
 
18

 
433

 
0.4
%
 
4,297

 
0.3
%
Restaurant
 
606

 
7,324

 
7.3
%
 
289,790

 
21.9
%
Industrial & distribution
 
55

 
13,273

 
13.1
%
 
89,294

 
6.7
%
Office
 
49

 
2,601

 
2.6
%
 
50,814

 
3.8
%
Other(1)
 
1

 
—

 
—
%
 
415

 
—
%
Total Thereafter
 
1,761

 
42,082

 
41.7
%
 
$
700,811

 
52.9
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining Lease Expirations
 
3,707

 
99,275

 
98.3
%
 
$
1,326,352

 
100.0
%
_______________________________________________
(1) Includes billboards, 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 | 39


 
 
Q3 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
 
2,189

 
63,206

 
62.6
%
 
$
908,988

 
68.6
%
CPI
 
281

 
8,443

 
8.4
%
 
131,640

 
9.9
%
Flat
 
1,237

 
27,626

 
27.3
%
 
285,724

 
21.5
%
Total
 
3,707


99,275


98.3
%

$
1,326,352


100.0
%


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


 
 
Q3 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
 
2,693

 
58,942

 
58.4
%
 
$
840,762

 
63.4
%
NN
 
955

 
38,613

 
38.2
%
 
445,415

 
33.6
%
Other (1)
 
59

 
1,720

 
1.7
%
 
40,175

 
3.0
%
Total
 
3,707


99,275

 
98.3
%
 
$
1,326,352

 
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 | 41


 
 
Q3 2015 SUPPLEMENTAL INFORMATION


 
Diversification: Property 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
 
2,027

 
29,916

 
29.7
%
 
$
423,292

 
32.0
%
Anchored shopping centers
 
20

 
1,726

 
1.7
%
 
23,907

 
1.8
%
Restaurant
 
2,165

 
11,028

 
10.9
%
 
368,587

 
27.8
%
Industrial & Distribution
 
172

 
40,984

 
40.6
%
 
204,567

 
15.4
%
Office
 
168

 
17,296

 
17.1
%
 
305,449

 
23.0
%
Other(1)
 
20

 
—

 
—
%
 
550

 
—
%
Total
 
4,572


100,950


100.0
%

$
1,326,352


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 | 42

 
 
Q3 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 in thousands)
 
 
 
 
Number of single-tenant retail properties
 
2,027

 
Rentable square feet
 
29,916

 
Economic occupancy rate
 
100.0
%
 
Weighted-average remaining lease term (years)
 
11.2

 
Investment-Grade Tenants
 
50.1
%
 
Flat leases
 
38.2
%
 
NNN leases
 
70.9
%
 



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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Anchored Shopping Centers
(unaudited, percentages based on Annualized Rental Income of the anchored shopping center properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of anchored shopping center properties
 
20

 
Rentable square feet
 
1,726

 
Economic occupancy rate
 
97.4%

 
Weighted-average remaining lease term (years)
 
5.8

 
Investment-Grade Tenants
 
33.4
%
 
Flat leases
 
51.8
%
 
NNN leases
 
6.9
%
 


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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet and in thousands)
 
 
 
 
Number of restaurant properties
 
2,165

 
Rentable square feet
 
11,028

 
Economic occupancy rate
 
98.8
%
 
Weighted-average remaining lease term
 
15.8

 
Investment-Grade Tenants
 
2.6
%
 
Flat leases
 
7.3
%
 
NNN leases
 
99.5
%
 


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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Industrial and Distribution
(unaudited, percentages based on Annualized Rental Income of the industrial & distribution properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of industrial & distribution properties
 
172

 
Rentable square feet
 
40,984

 
Economic occupancy rate
 
98.0%

 
Weighted-average remaining lease term (years)
 
9.0

 
Investment-Grade Tenants
 
58
%
 
Flat leases
 
27.5
%
 
NNN leases
 
50.1
%
 


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

 
 
Q3 2015 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Office
(unaudited, percentages based on Annualized Rental Income of the office properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

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

 
Rentable square feet
 
17,296

 
Economic occupancy rate
 
96.0%

 
Weighted-average remaining lease term (years)
 
7.1

 
Investment-Grade Tenants
 
74.8
%
 
Flat leases
 
9.4
%
 
NNN leases
 
22.6
%
 


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


 
 
Q3 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 September 30, 2015:
 Joint Venture
 
 Partner
 
Ownership % (1)
 
Pro rata Share of Purchase Price
 
 Rentable Square Feet (2)
 
 Annualized Rental Income (1)
 
 Debt (2) (3)
 
 Major Tenants
Cole/Mosaic JV South Elgin IL, LLC
 
Affiliate of Mosaic Properties and Development, LLC
 
50%
 
$
17,000

 
232

 
$
2,942

 
$
20,400

 
Home Depot, Best Buy
Cole/LBA JV OF Pleasanton CA, LLC
 
Affiliate of LBA Realty
 
90%
 
86,850

 
343

 
6,517

 
57,000

 
Clorox Companies
Cole/Faison JV Bethlehem GA, LLC
 
Faison-Winder Investors, LLC
 
90%
 
33,429

 
280

 
3,061

 
26,000

 
Publix, Belk
Total
 
 
 
$
137,279

 
855

 
$
12,520

 
$
103,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
10,091

 
$
84,900

 
 
_______________________________________________
(1) The Company's ownership interest reflects its legal ownership interest. Legal ownership may, at times, not equal the Company's economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company's actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.
(2) Represents information for the total unconsolidated joint venture.
(3) Debt represents secured fixed and variable rates ranging from 2.10% to 5.2% and maturities ranging from October 2015 to July 2021, with a weighted-average interest rate of 2.84% as of September 30, 2015 and a weighted-average years to maturity of 2.03 years as of September 30, 2015.

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



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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Revenues:
 
 
 
 
 
 
 
 
 
 
Offering-related fees and reimbursements
 
$
5,850

 
$
5,516

 
$
3,117

 
$
13,152

 
$
21,535

 Transaction service fees and reimbursements
 
7,400

 
7,036

 
10,260

 
20,550

 
24,423

 Management fees and reimbursements
 
14,296

 
13,977

 
14,117

 
18,580

 
13,839

Total Cole Capital revenues
 
27,546


26,529

 
27,494

 
52,282

 
59,797

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
3,896

 
3,710

 
2,031

 
9,326

 
15,398

 Acquisition related
 
74

 
—

 
459

 
3,362

 
—

 Merger and other non-routine transaction related
 
—

 
—

 
—

 
23

 
19

 General and administrative
 
16,994

 
17,131

 
17,736

 
31,036

 
17,265

 Depreciation and amortization
 
8,384

 
8,391

 
8,353

 
7,050

 
25,077

 Impairments
 
—

 
—

 
—

 
309,444

 
—

 Total operating expenses
 
29,348

 
29,232

 
28,579

 
360,241

 
57,759

Operating (loss) income
 
(1,802
)
 
(2,703
)
 
(1,085
)
 
(307,959
)
 
2,038

 Total other income, net
 
465

 
392

 
1,219

 
2,316

 
179

(Loss) income before income and franchise taxes
 
(1,337
)

(2,311
)
 
134

 
(305,643
)
 
2,217

 Benefit from (provision for) income and franchise taxes
 
738

 
1,869

 
(220
)
 
27,979

 
(1,131
)
 Net (loss) income
 
$
(599
)
 
$
(442
)
 
$
(86
)
 
$
(277,664
)
 
$
1,086



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


 
Q3 2015 SUPPLEMENTAL INFORMATION

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

 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Net (loss) income
 
$
(599
)
 
$
(442
)
 
$
(86
)
 
$
(277,664
)
 
$
1,086

 FFO
 
(599
)
 
(442
)
 
(86
)
 
(277,664
)
 
1,086

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
74

 
—

 
459

 
3,362

 
—

Merger and other non-routine transactions
 
—

 
—

 
—

 
23

 
19

 Impairment of intangible assets
 
—

 
—

 
—

 
309,444

 
—

 Amortization of management contracts
 
7,510

 
7,510

 
7,510

 
6,233

 
24,288

 Deferred tax benefit (1)
 
(5,701
)
 
(3,874
)
 
(3,972
)
 
(33,324
)
 
—

Equity-based compensation expense, net of forfeitures (2)
 
2,943

 
2,998

 
416

 
3,017

 
3,455

Other amortization and non-cash charges
 
782

 
776

 
735

 
739

 
710

 AFFO
 
$
5,009

 
$
6,968

 
$
5,062

 
$
11,830

 
$
29,558

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
903,461,323

 
903,339,143

 
902,996,270

 
902,528,136

 
902,096,102

Effect of dilutive securities (3)
 
25,995,886

 
26,348,273

 
26,157,663

 
29,629,740

 
44,970,255

Weighted-average shares outstanding - diluted (4)
 
929,457,209

 
929,687,416

 
929,153,933

 
932,157,876

 
947,066,357

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
 
$
(0.001
)
 
$
—

 
$
—

 
$
(0.298
)
 
$
0.001

AFFO per diluted share
 
$
0.005

 
$
0.007

 
$
0.005

 
$
0.013

 
$
0.031

_________________________________
(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 September 30, 2015, 1.5 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 September 30, 2015.


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

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

 
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 Net (loss) income
 
$
(599
)
 
$
(442
)
 
$
(86
)
 
$
(277,664
)
 
$
1,086

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
8,384

 
8,391

 
8,353

 
7,050

 
25,077

(Benefit from) provision for income taxes
 
(738
)
 
(1,869
)
 
220

 
(27,979
)
 
1,131

 EBITDA
 
$
7,047

 
$
6,080

 
$
8,487

 
$
(298,593
)
 
$
27,294

Impairment of intangible assets
 
—

 
—

 
—

 
309,444

 
—

Acquisition related expenses
 
74

 
—

 
459

 
3,362

 
—

Merger and other non-routine transactions
 
—

 
—

 
—

 
23

 
19

Program development costs write-off
 
—

 
—

 
—

 
13,109

 
—

Other amortization and non-cash charges
 
(92
)
 
(105
)
 
(108
)
 
(78
)
 
(79
)
Normalized EBITDA
 
$
7,029

 
$
5,975

 
$
8,838

 
$
27,267

 
$
27,234







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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Net G&A
(unaudited, dollars in thousands)

 
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
 
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
Cole Capital revenue, net of reallowed fees and commissions
 
$
23,650

 
$
22,819

 
$
25,463

 
$
42,956

 
$
44,399

Less: Expense reimbursements from Managed Programs recorded as revenue
 
4,549

 
4,828

 
3,715

 
7,807

 
7,718

Net Cole Capital Revenue
 
19,101

 
17,991

 
21,748

 
35,149

 
36,681

Other income
 
465

 
392

 
1,219

 
2,316

 
179

Net Cole Capital Revenue and other income
 
$
19,566

 
$
18,383

 
$
22,967

 
$
37,465

 
$
36,860

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
32,842

 
$
33,958

 
$
33,106

 
$
44,622

 
$
30,213

Less: REI segment general and administrative expenses
 
15,848

 
16,827

 
15,370

 
13,586

 
12,948

Cole Capital general and administrative expenses
 
16,994

 
17,131

 
17,736

 
31,036

 
17,265

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Managed Programs
 
4,549

 
4,828

 
3,715

 
7,807

 
7,718

Net Cole Capital G&A expense
 
12,445

 
12,303

 
14,021

 
23,229

 
9,547

Expenses incurred recorded as program development costs
 
3,002

 
3,728

 
4,042

 
(2,936
)
 
15,191

Normalized Net Cole Capital G&A expense
 
$
15,447

 
$
16,031

 
$
18,063

 
$
20,293

 
$
24,738

 
 
 
 
 
 
 
 
 
 
 
EBITDA Margin
 
35.9
%
 
32.5
%
 
38.5
%
 
72.8
%
 
73.9
%
Normalized Net Cole Capital G&A expense as percent of Net Cole Capital Revenue and other income
 
78.9
%
 
87.2
%
 
78.6
%
 
54.2
%
 
67.1
%


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


 
Q3 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 as the Managed Programs raise additional funds, 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
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Beginning Balance
 
$
19,006

 
$
16,322

 
$
12,871

 
$
18,029

 
$
6,984

Expenses incurred in excess of limits
 
5,054

 
6,033

 
6,732

 
10,173

 
15,191

Offering-related reimbursement revenue
 
(1,130
)
 
(1,044
)
 
(591
)
 
(2,222
)
 
(4,146
)
Reserve for uncollectible amounts and write-offs(2)
 
(2,052
)
 
(2,305
)
 
(2,690
)
 
(13,109
)
(3) 
—

Ending Balance
 
$
20,878

 
$
19,006

 
$
16,322

 
$
12,871

 
$
18,029

_______________________________________________
(1) Excludes INAV (as defined in the "Program Summary" of the Managed Programs section on page 55), 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.
(3) Write-off recorded in connection with the impairment of the management and advisory contracts with 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 | 54


 
Q3 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 September 30, 2015:
Program
 
Capital Raised (1)
 
DRIP (2)
 
Number of Investments (3)
 
Assets Under Management
 
Debt Outstanding 
 
Open Programs:
 
 
 
 
 
 
 
 
 
 
 
Cole Credit Property Trust V, Inc. ("CCPT V")
 
$
204,915

 
$
6,362

 
111

 
$
469,426

 
$
310,860

(4) 
Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
162,605

 
5,324

 
73

 
221,282

 
100,254

 
Cole Office & Industrial REIT (CCIT II), Inc. ("CCIT II")
 
335,594

 
10,273

 
26

 
830,515

 
535,485

(5) 
Total Open Programs
 
703,114

 
21,959

 
210

 
1,521,223

 
946,599

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

 
216,176

 
855

 
4,534,501

 
1,940,424

 
Other Programs(6)
 
372,617

 
—

 
49

 
506,226

 
253,930

 
Total Closed Programs
 
3,288,578

 
216,176

 
904

 
5,040,727

 
2,194,354

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
3,991,692

 
$
238,135

 
1,114

 
$
6,561,950

 
$
3,140,953

 
_______________________________________________
(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 and build-to-suit development projects.
(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").


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited)

 
Offering Summary
The following table shows offering summary information for the Managed Programs as of September 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
 
1.39
%
 
$
25.00

 
6.30
%
INAV
 
Diversified
 
12/6/2011(1)
 
0.16
%
 
(2) (3) 

 
(3) 

CCIT II
 
Office and industrial
 
9/17/2013
 
0.85
%
 
$
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 September 30, 2015:
Share Class
 
Date of Offering
 
NAV Per Share
 
Daily Distribution Rate
 
Annualized Distribution
W Shares
 
12/6/2011
 
$
18.16

 
$
0.002678164

 
5.38
%
A Shares
 
10/10/13
 
$
18.12

 
$
0.002672244

 
5.38
%
I Shares
 
11/19/13
 
$
18.23

 
$
0.002688001

 
5.38
%
(4) Includes CCPT IV, TIC programs, 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 | 56


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited)

 
Fee Summary
The following table shows fee summary information for the Managed Programs as of September 30, 2015:
 
 
Offering Fees
 
Transaction Fees
 
Management Fees
 
Program
 
Selling
Commissions (1)
 
Dealer
Manager and Distribution
Fees (2)
 
Acquisition Transactional
Fees (3)
 
Disposition
Fees
 
Liquidation Performance Fees
 
Asset Management / Advisory Fees
 
Performance Fees
 
Open Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
7
%
 
2
%
 
2
%
 
1
%
 
15
%
(6) 
0.65% - 0.75%

(5) 
—
%

INAV
 
(4) 

 
(4) 

 
—
%
 
—
%
 
N/A

 
0.90
%
 
25
%
(7) 
CCIT II
 
7
%
 
2
%
 
2
%
 
1
%
 
15
%
(6) 
0.65% - 0.75%

(5) 
—
%

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

(5) 
—
%

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 circumstances: (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 | 57


 
Q3 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 September 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
 
$
14,105

 
$
1,734

 
2

 
$
13,971

 
—

 
$
—

INAV
 
14,585

 
848

 
2

 
6,455

 
1

 
4,080

CCIT II
 
37,895

 
2,843

 
3

 
178,458

 
—

 
—

Total Open Programs
 
66,585


5,425


7

 
198,884

 
1

 
4,080

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
28,297

 
25

 
116,417

 
—

 
—

Other Programs(5)
 
—

 
—

 
—

 
—

 
9

 
64,761

Total Closed Programs
 
—

 
28,297

 
25

 
116,417

 
9

 
64,761

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
66,585

 
$
33,722

 
32

 
$
315,301

 
10

 
$
68,841

_______________________________________________
(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 | 58


 
Q3 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 September 30, 2015 by activity type (dollars in thousands):
Program
 
Offering-Related Fees and Reimbursements
 
Transaction Service Revenue and Reimbursements
 
Management Service Revenue and Reimbursements
 
Total Managed Programs Revenue and Reimbursements
Open Programs:
 
 
 
 
 
 
 
 
CCPT V
 
$
1,496

 
$
349

 
$
1,378

 
$
3,223

INAV
 
351

 
100

 
692

 
1,143

CCIT II
 
4,003

 
3,646

 
1,910

 
9,559

Gross revenue - Open Programs
 
5,850

 
4,095

 
3,980

 
13,925

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
3,896

 
—

 
—

 
3,896

Reimbursements
 
1,264

 
192

 
1,065

 
2,521

Net Cole Capital Revenue - Open Programs
 
690

 
3,903

 
2,915

 
7,508

 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
2,541

 
9,900

 
12,441

Other Programs
 
—

 
764

 
416

 
1,180

Gross revenue - Closed Programs
 
—

 
3,305

 
10,316

 
13,621

Less:
 
 
 
 
 
 
 
 
Reimbursements
 
—

 
211

 
1,817

 
2,028

Net Cole Capital Revenue - Closed Programs
 
—

 
3,094

 
8,499

 
11,593

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
690

 
$
6,997

 
$
11,414

 
$
19,101















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


 
Q3 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:
Offering-related fees and reimbursements
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Capital raised (excluding DRIP)
 
$
66,585

 
$
58,205

 
$
29,770

 
$
128,282

 
$
218,270

 
 
 
 
 
 
 
 
 
 
 
Securities commissions
 
3,328

 
3,243

 
1,774

 
8,030

 
13,369

Dealer manager fees
 
1,258

 
1,168

 
717

 
2,569

 
4,099

Reimbursement revenue
 
1,264

 
1,105

 
626

 
2,553

 
4,067

Gross offering-related revenue
 
5,850

 
5,516

 
3,117

 
13,152

 
21,535

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
3,328

 
3,243

 
1,774

 
8,030

 
13,369

Reallowed dealer manager and distribution fees
 
568

 
467

 
257

 
1,296

 
2,029

Reimbursement revenue
 
1,264

 
1,105

 
626

 
2,553

 
4,067

Net offering-related revenue
 
$
690

 
$
701

 
$
460

 
$
1,273

 
$
2,070

Transaction service revenue
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Purchase price of acquisitions(1)
 
$
315,301


$
214,694


$
225,814


$
942,818


$
1,111,900

 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
6,233

 
4,192

 
4,488

 
18,558

 
22,897

Performance fees
 
—

 
—

 
—

 
—

 
—

Disposition fees
 
764

 
2,224

 
5,201

 
172

 
74

Reimbursement revenue
 
403

 
620

 
571

 
1,820

 
1,452

Gross transaction service revenue
 
7,400

 
7,036

 
10,260

 
20,550

 
24,423

Less: Reimbursement revenue
 
403

 
620

 
571

 
1,820

 
1,452

Net transaction service revenue
 
$
6,997

 
$
6,416

 
$
9,689

 
$
18,730

 
$
22,971

Management service revenue
 
 
Three Months Ended
 
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Gross real estate investments
 
$
6,561,950

 
$
6,286,402

 
$
6,084,979

 
$
8,563,540

 
$
7,705,703

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
416

 
371

 
426

 
374

 
428

Advisory and performance fee revenue
 
10,998

 
10,503

 
11,173

 
14,772

 
11,212

Reimbursement revenue
 
2,882

 
3,103

 
2,518

 
3,434

 
2,199

Gross management service revenue
 
14,296

 
13,977

 
14,117

 
18,580

 
13,839

Less: Reimbursement revenue
 
2,882

 
3,103

 
2,518

 
3,434

 
2,199

Net management service revenue
 
$
11,414

 
$
10,874

 
$
11,599

 
$
15,146

 
$
11,640

_______________________________________________
(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 | 60


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Managed Programs (cont.)
(unaudited, in thousands)
 
The following table shows the capital raised on behalf of programs managed by Cole Capital since 2009:
Source: Robert A. Stanger & Co., Inc.; Represents aggregate capital raised, excluding DRIP, on behalf of programs managed by Cole Capital.


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


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Definitions
 
Annualized Rental Income is rental revenue under our leases on operating properties 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.

Assets under Management represents the Managed Programs' total gross real estate, including net investments in unconsolidated entities, net of gross intangible lease liabilities.

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 September 30, 2015 and 2014 (dollar amounts in thousands):
 
 
Three Months Ended September 30,
 
 
2015
 
2014
 Rental income - as reported
 
$
333,766

 
$
365,712

 Direct financing lease income - as reported
 
659

 
625

Adjustments:
 
 
 
 
Straight line rent
 
(21,705
)
 
(24,871
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,152

 
1,934

Net direct financing lease adjustments
 
507

 
620

Other non-contract rental revenue
 
(73
)
 
(497
)
Contract Rental Revenue
 
$
314,306

 
$
343,523


CPI is a lease in which base rent is adjusted based on changes in a consumer price index.

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 | 62


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Normalized EBITDA
Normalized EBITDA as disclosed represents EBITDA, or earnings before interest, taxes, depreciation and amortization, modified to exclude non-routine items such as acquisition related 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 assets, straight-line rental revenue, unrealized gains or losses on derivatives, write-off of program development costs, and amortization of intangibles, deferred financing costs, above-market lease assets and below-market lease liabilities. 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. See pages 13, 17 and 52 for the consolidated, REI segment and Cole Capital segment reconciliations, respectively, of EBITDA and Normalized EBITDA to net income (loss).
EBITDA Margin is a measurement of a company's operating profitability. It is equal to Normalized EBITDA divided by Net Cole Capital Revenue and other income.
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.
Flat Lease is a lease that requires equal rent payments, with no increases, throughout the initial term of the lease agreement. A Flat Lease may include a period of free rent at the beginning or end of the lease.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), an industry trade group, has promulgated a measure known as 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 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 intangibles, straight-line rental revenue, unrealized gains or losses on derivatives, equity based compensation and amortization of intangibles, deferred financing costs, above-market lease assets and below-market lease liabilities. Management believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. AFFO 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 | 63


 
Q3 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. See pages 12, 16 and 51 for the consolidated, REI segment and Cole Capital segment reconciliations, respectively, of FFO and AFFO to net income (loss).
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 Lease is a lease under which the landlord is responsible for all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs).
Gross Real Estate Investments represent total gross real estate and related assets, 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 July 31, 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 those with a Standard & Poor’s credit rating of BBB- or higher or a Moody’s credit rating of Baa3 or higher.  The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.
Modified Gross Lease is a lease under which the landlord is responsible for most expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs), but passes through some operating expenses to the tenant.
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 Cole Capital G&A Expense is a helpful supplemental measure in determining the effective cost to the Company, eliminating any gross up presentation required by GAAP. Refer to page 53 for the reconciliation of Net Cole Capital G&A Expense to total G&A expense.
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. Refer to pages 53 and 59 for calculations of Net Cole Capital Revenue.
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. Refer to page 7 for the calculation of Net Debt.
Net Debt Leverage Ratio equals Net Debt divided by 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 | 64


 
Q3 2015 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four.
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. Refer to page 18 for the calculations of NOI and Cash NOI.
Non-Cash Rent represents rent adjustments related to straight-line rent and above- and below- market lease amortization.
Normalized EBITDA Annualized equals Normalized EBITDA, for the respective quarter, multiplied by four.
Normalized Net Cole Capital G&A Expense equals Net Cole Capital G&A Expense adjusted for the net change in program development costs, as described on page 54. We believe Normalized Net G&A Expense is a helpful supplemental measure in determining the effective cost to the Company, eliminating any gross up presentation required by GAAP and adjusting to include costs incurred and recorded as program development costs on the balance sheet. Refer to page 53 for the reconciliation of Net Cole Capital G&A Expense to total G&A expense.
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 | 65