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




 
Q2 2016 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
June 30, 2016
 
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
Development Projects and Dispositions
Diversification Statistics
 
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
Cole REITs and Other Real Estate Programs
Definitions
 
 
 

See the Definitions section for a description of the Company's non-GAAP and other financial measures.


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended June 30, 2016, unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. Certain balances have been reclassified to conform with the current period’s presentation. 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 sections contained in VEREIT Inc.'s (the "Company", "VEREIT", "us", "our" and "we") Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Reports on Form 10-Q for the three months ended June 30, 2016, March 31, 2016, September 30, 2015, and June 30, 2015.

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 Section 21E of the Securities Exchange Act of 1934, as amended), which reflect VEREIT’s expectations regarding future events and VEREIT's future financial condition, results of operations and business. 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,”“assumes,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions identify 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 the 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 2016 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; risks associated with pending government investigations related to the Audit Committee Investigation and related litigations; the inability of Cole Capital to regain its prior level of capital raise; 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, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as required by law.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.


 
Q2 2016 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 through two business segments, its real estate investment ("REI") segment and its investment management segment, Cole Capital® ("Cole Capital"). Through its REI segment, the Company owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate properties primarily subject to long-term net leases with creditworthy tenants. The Company targets 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 or services. At June 30, 2016, approximately 42.7% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy was 97.7% and the weighted-average lease term was 10.2 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 (the "Cole REITs") and other real estate programs sponsored by Cole Capital on a day-to-day basis. The Company receives compensation and reimbursement for services relating to the Cole REITs and other real estate programs' offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital allows the Company 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 blue sky jurisdictions for such offerings. At the appropriate time, Cole Capital recommends to each of the Cole REIT's respective board of directors an approach for providing investors with liquidity.





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


 
Q2 2016 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 and Chief Financial Officer
 
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 and Chief Operating Officer
 
Mark S. Ordan, Independent Director
 
 
 
William C. Miller, Executive Vice President and Investment Management
 
Eugene A. Pinover, Independent Director
 
 
 
Thomas W. Roberts, Executive Vice President and 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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except per share amounts)
 
 
Q2 2016
 
Q1 2016
 
Q4 2015
 
Q3 2015
 
Q2 2015
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
371,019

 
$
369,020

 
$
383,374

 
$
384,954

 
$
393,721

Net income (loss)
$
3,233

 
$
(116,080
)
 
$
(192,231
)
 
$
8,141

 
$
(108,709
)
Net loss attributable to common stockholders per diluted share
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)
 
$
(0.01
)
 
$
(0.14
)
Normalized EBITDA
$
283,060

 
$
288,607

 
$
286,674

 
$
301,772

 
$
309,306

FFO attributable to common stockholders and limited partners
$
184,174

 
$
196,229

 
$
4,623

 
$
191,562

 
$
193,951

FFO attributable to common stockholders and limited partners per diluted share
$
0.198

 
$
0.211

 
$
0.005

 
$
0.206

 
$
0.209

AFFO attributable to common stockholders and limited partners
$
180,107

 
$
192,675

 
$
183,157

 
$
196,428

 
$
202,338

AFFO attributable to common stockholders and limited partners per diluted share
$
0.193

 
$
0.207

 
$
0.197

 
$
0.211

 
$
0.218

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
—

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
338,533

 
$
337,787

 
$
350,061

 
$
357,408

 
$
367,192

Net income (loss)
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

 
$
(108,267
)
Normalized EBITDA
$
274,683

 
$
282,243

 
$
280,822

 
$
294,743

 
$
303,331

FFO attributable to common stockholders and limited partners
$
183,108

 
$
196,775

 
$
190,893

 
$
192,161

 
$
194,393

FFO attributable to common stockholders and limited partners per diluted share
$
0.197

 
$
0.212

 
$
0.205

 
$
0.207

 
$
0.209

AFFO attributable to common stockholders and limited partners
$
177,599

 
$
185,528

 
$
187,339

 
$
191,419

 
$
195,370

AFFO attributable to common stockholders and limited partners per diluted share
$
0.191

 
$
0.198

 
$
0.202

 
$
0.206

 
$
0.210

Properties owned
4,291

 
4,378

 
4,435

 
4,572

 
4,645

Rentable square feet (in thousands)
98,229

 
99,015

 
99,578

 
100,950

 
101,836

Economic occupancy rate
97.7
%
 
98.6
%
 
98.6
%
 
98.3
%
 
98.4
%
Weighted-average remaining lease term (years)
10.2

 
10.4

 
10.6

 
11.1

 
11.5

Investment-grade tenants (1)
42.7
%
 
42.1
%
 
42.5
%
 
43.5
%
 
47.4
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
32,486

 
$
31,233

 
$
33,313

 
$
27,546

 
$
26,529

Net income (loss)
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 
$
(442
)
Normalized EBITDA
$
8,377

 
$
6,364

 
$
5,852

 
$
7,029

 
$
5,975

FFO attributable to common stockholders and limited partners
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 
$
(442
)
FFO attributable to common stockholders and limited partners per diluted share
$
0.001

 
$
(0.001
)
 
$
(0.200
)
 
$
(0.001
)
 
$
0.000

AFFO attributable to common stockholders and limited partners
$
2,508

 
$
7,147

 
$
(4,182
)
 
$
5,009

 
$
6,968

AFFO attributable to common stockholders and limited partners per diluted share
$
0.003

 
$
0.008

 
$
(0.004
)
 
$
0.005

 
$
0.007

Capital raised on behalf of Cole REITs, excluding DRIP
$
138,655

 
$
144,620

 
$
116,634

 
$
66,603

 
$
58,236

Purchase price of property acquisitions on behalf of Cole REITs
$
211,178

 
$
102,075

 
$
236,398

 
$
315,301

 
$
214,694

Assets Under Management
$
7,005,695

 
$
6,827,885

 
$
6,740,911

 
$
6,561,950

 
$
6,286,402

___________________________________
(1)
The weighted-average credit rating of our investment-grade tenants was A- as of June 30, 2016.


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
78,998

 
$
77,542

 
$
80,349

 
$
83,140

 
$
88,422

Normalized EBITDA
 
283,060

 
288,607

 
286,674

 
301,772

 
309,306

Interest Coverage Ratio
 
3.58x

 
3.72x

 
3.57x

 
3.63x


3.50x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
78,998

 
$
77,542

 
$
80,349

 
$
83,140

 
$
88,422

Secured debt principal amortization
 
5,168

 
8,449

 
5,834

 
6,089

 
8,520

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,972

 
17,974

 
17,973

Total fixed charges
 
102,139

 
103,964

 
104,155

 
107,203

 
114,915

Normalized EBITDA
 
283,060

 
288,607

 
286,674

 
301,772


309,306

Fixed Charge Coverage Ratio
 
2.77
x
 
2.78
x
 
2.75
x
 
2.81
x
 
2.69
x
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
8,514,700

 
$
7,826,603

 
$
8,083,345

 
$
8,928,412

 
$
9,401,839

Less: cash and cash equivalents
 
1,029,620

 
104,450

 
69,103

 
171,659

 
121,651

Net Debt
 
7,485,080

 
7,722,153

 
8,014,242

 
8,756,753

 
9,280,188

Normalized EBITDA annualized
 
1,132,240

 
1,154,428

 
1,146,696

 
1,207,088

 
1,237,224

Net Debt to Normalized EBITDA annualized ratio
 
6.61
x
 
6.69
x
 
6.99
x
 
7.25
x
 
7.50
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
7,485,080

 
$
7,722,153

 
$
8,014,242

 
$
8,756,753

 
$
9,280,188

Gross Real Estate Investments
 
16,085,149

 
16,247,476

 
16,694,977

 
17,392,001

 
17,725,642

Net Debt Leverage Ratio
 
46.5
%
 
47.5
%
 
48.0
%
 
50.3
%
 
52.4
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
10,585,494

 
$
10,612,483

 
$
10,744,554

 
$
11,085,546

 
$
11,360,689

Gross Real Estate Investments
 
16,085,149

 
16,247,476

 
16,694,977

 
17,392,001

 
17,725,642

Unencumbered Asset Ratio
 
65.8
%
 
65.3
%
 
64.4
%
 
63.7
%
 
64.1
%



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

 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



 
 
Common equity
49.6%
 
 
 
 
 
 
Secured debt
15.3%
 
 
 
 
 
 
Corporate bonds
18.6%
 
 
 
 
 
 
Preferred equity
5.6%
 
 
 
 
 
 
Unsecured term loan
5.3%
 
 
 
 
 
 
Convertible notes
5.3%
 
 
 
 
 
 
Revolving credit facility
0.3%

                            

Fixed vs. Variable Rate Debt
Fixed
84.6
%
Swapped to Fixed
14.8
%
Variable
0.6
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)
 
June 30, 2016
Diluted shares outstanding
 
 
 
 
931,205

Stock price
 
 
 
 
$
10.14

Implied Equity Market Capitalization
 
$
9,442,419

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

 
 
 
 
 
 
Mortgage notes payable
4.8
 
5.07%
 
$
2,881,257

Secured term loan
1.5
 
5.81%
 
28,443

Total secured debt
4.8
 
5.08%
 
$
2,909,700

 
 
 
 
 
 
Unsecured term loan (swapped to fixed)
2.0
 
3.30%
 
$
1,000,000

Revolving credit facility
2.0
 
2.36%
 
55,000

Total unsecured credit facility
2.0
 
3.25%
 
$
1,055,000

3-year corporate bonds
0.6
 
2.00%
 
1,300,000

5-year corporate bonds
3.4
 
3.39%
 
1,150,000

5-year convertible notes
2.1
 
3.00%
 
597,500

7-year convertible notes
4.5
 
3.75%
 
402,500

10-year corporate bonds
8.9
 
4.75%
 
1,100,000

Total unsecured debt
3.5
 
3.29%
 
$
5,605,000

 
 
 
 
 
 
Total Debt
3.9
 
3.90%
 
$
8,514,700

 
 
 
 
 
 
Total Capitalization
 
$
19,027,972

Less: Cash and cash equivalents
 
 
 
 
1,029,620

Enterprise Value
 
$
17,998,352

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
41.6
%
Net Debt/Normalized EBITDA Annualized
 
 
 
6.61
x
Net Debt + Preferred/Normalized EBITDA Annualized
 
7.56
x
Fixed Charge Coverage Ratio
 
 
 
 
2.77
x
Liquidity (3)
 
 
 
 
$
3,274,620

___________________________________
(1)Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of June 30, 2016.
(2)Balance represents 42.8 million shares outstanding at June 30, 2016 multiplied by the liquidation preference of $25 per share.
(3)Liquidity represents cash and cash equivalents of $1.0 billion and $2.2 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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$17.4 Billion (1)
 
 
 
Book Value of Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (2)
Restaurants (2)
 
 
A full-service real estate operating company with investment management
capability.
 
2,044 Properties
1,901 Properties
 
 
 
 
 
 
 
 
Industrial & Distribution (2)
Office (2)
 
 
 
 
 
169 Properties
165 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$7.0 Billion
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Open Offerings
 
 
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(3)     l        CCIT II(3)     l       Income NAV(3)
 
 
 
 
 
 
 
 
Closed Offerings
 
 
 
CCPT IV(3)        l        TIC & DST(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(1)
Includes proceeds from the $1 billion bond offering, net of expenses, that closed June 2, 2016. These proceeds were used to fund the redemption of the $1.3 billion aggregate principal amount of our outstanding 2.0% Senior Notes due 2017 on July 5, 2016.
(2)
Excludes 12 properties that consist of billboards, construction in progress, land, and parking lots.
(3)
Defined in the "Program Summary" of the Cole REITs and Other Real Estate Programs section.

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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands)
 
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,992,848

 
$
3,058,879

 
$
3,120,653

 
$
3,257,396

 
$
3,351,303

Buildings, fixtures and improvements
 
10,956,605

 
11,161,327

 
11,445,690

 
11,652,830

 
11,862,554

Intangible lease assets
 
2,102,606

 
2,145,734

 
2,218,378

 
2,313,369

 
2,339,273

Total real estate investments, at cost
 
16,052,059


16,365,940

 
16,784,721

 
17,223,595

 
17,553,130

Less: accumulated depreciation and amortization
 
2,029,121

 
1,865,674

 
1,778,597

 
1,595,667

 
1,401,843

Total real estate investments, net
 
14,022,938


14,500,266

 
15,006,124

 
15,627,928

 
16,151,287

Investment in unconsolidated entities
 
22,435

 
23,445

 
56,824

 
57,247

 
94,502

Investment in direct financing leases, net
 
43,155

 
45,611

 
46,312

 
49,244

 
49,801

Investment securities, at fair value
 
48,347

 
48,162

 
53,304

 
54,455

 
55,802

Loans held for investment, net
 
23,297

 
23,559

 
24,238

 
40,002

 
40,598

Cash and cash equivalents
 
1,029,620

 
104,450

 
69,103

 
171,659

 
121,651

Restricted cash
 
60,837

 
60,132

 
59,767

 
47,775

 
53,336

Intangible assets, net
 
37,088

 
43,327

 
50,779

 
127,835

 
135,340

Rent and tenant receivables and other assets, net
 
333,124

 
313,903

 
303,637

 
318,001

 
325,333

Goodwill
 
1,620,233

 
1,642,858

 
1,656,374

 
1,828,005

 
1,847,295

Due from affiliates
 
8,043

 
11,617

 
60,633

 
66,981

 
53,456

Assets held for sale
 
159,394

 
26,282

 
18,771

 
247,951

 
242,701

Total assets
 
$
17,408,511


$
16,843,612


$
17,405,866

 
$
18,637,083

 
$
19,171,102

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,938,072

 
$
3,029,666

 
$
3,111,985

 
$
3,187,960

 
$
3,470,900

Corporate bonds, net
 
3,522,297

 
2,537,699

 
2,536,333

 
2,534,977

 
2,533,628

Convertible debt, net
 
968,059

 
965,469

 
962,894

 
960,361

 
957,842

Credit facility
 
1,045,872

 
1,269,731

 
1,448,590

 
2,097,400

 
2,286,217

Below-market lease liabilities, net
 
237,403

 
245,093

 
251,692

 
264,232

 
298,102

Accounts payable and accrued expenses
 
163,122

 
118,970

 
151,877

 
164,204

 
168,877

Deferred rent, derivative and other liabilities
 
84,486

 
88,997

 
87,490

 
114,343

 
122,999

Distributions payable
 
146,695

 
143,973

 
140,816

 
137,647

 
9,938

Due to affiliates
 
—

 
—

 
230

 
241

 
268

Mortgage notes payable associated with assets held for sale
 
—

 
—

 
—

 
118,493

 
118,493

Total liabilities
 
9,106,006


8,399,598

 
8,691,907

 
9,579,858

 
9,967,264

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,048

 
9,048

 
9,049

 
9,050

 
9,051

Additional paid-in capital
 
11,934,864

 
11,932,859

 
11,931,768

 
11,928,184

 
11,924,547

Accumulated other comprehensive (loss) income
 
(12,297
)
 
(11,345
)
 
(2,025
)
 
(9,806
)
 
(1,928
)
Accumulated deficit
 
(3,810,341
)
 
(3,671,050
)
 
(3,415,233
)
 
(3,085,906
)
 
(2,951,019
)
Total stockholders' equity
 
8,121,702


8,259,940

 
8,523,987

 
8,841,950

 
8,981,079

Non-controlling interests
 
180,803

 
184,074

 
189,972

 
215,275

 
222,759

Total equity
 
8,302,505


8,444,014


8,713,959

 
9,057,225

 
9,203,838

Total liabilities and equity
 
$
17,408,511


$
16,843,612

 
$
17,405,866

 
$
18,637,083

 
$
19,171,102


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
311,352

 
$
313,971

 
$
322,079

 
$
333,766

 
$
341,183

Direct financing lease income
 
535

 
569

 
623

 
659

 
697

Operating expense reimbursements
 
26,646

 
23,247

 
27,359

 
22,983

 
25,312

Cole Capital revenue
 
32,486

 
31,233

 
33,313

 
27,546

 
26,529

Total revenues
 
371,019


369,020


383,374


384,954


393,721

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
6,975

 
8,068

 
6,558

 
3,896

 
3,710

Acquisition related
 
41

 
242

 
734

 
1,764

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

Property operating
 
38,199

 
34,813

 
35,308

 
31,950

 
32,598

General and administrative
 
33,094

 
29,400

 
49,160

 
32,842

 
33,958

Depreciation and amortization
 
197,345

 
204,308

 
202,415

 
208,542

 
217,513

Impairments
 
8,825

 
160,517

 
219,753

 
—

 
85,341

Total operating expenses
 
287,396

 
432,173

 
506,237

 
287,026

 
391,547

Operating income (loss)
 
83,623

 
(63,153
)
 
(122,863
)
 
97,928

 
2,174

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(82,468
)
 
(80,426
)
 
(82,591
)
 
(89,530
)
 
(90,572
)
Gain (loss) on extinguishment and forgiveness of debt, net
 
252

 
—

 
(490
)
 
—

 
—

Other income (expense), net
 
1,216

 
1,062

 
(3,816
)
 
2,368

 
3,822

Reserve for loan loss
 
—

 
—

 
(15,300
)
 
—

 
—

Equity in income and gain on disposition of unconsolidated entities
 
70

 
10,404

 
752

 
6,837

 
1,480

(Loss) gain on derivative instruments, net
 
(177
)
 
(1,086
)
 
677

 
(1,420
)
 
311

Total other expenses, net
 
(81,107
)
 
(70,046
)
 
(100,768
)
 
(81,745
)
 
(84,959
)
Income (loss) before taxes and real estate dispositions
 
2,516

 
(133,199
)
 
(223,631
)
 
16,183

 
(82,785
)
Gain (loss) on disposition of real estate, net
 
437

 
17,175

 
(9,727
)
 
(6,542
)
 
(24,674
)
Income (loss) before taxes
 
2,953

 
(116,024
)
 
(233,358
)
 
9,641

 
(107,459
)
(Provision for) benefit from income taxes
 
280

 
(56
)
 
41,127

 
(1,500
)
 
(1,250
)
Net income (loss)
 
3,233


(116,080
)

(192,231
)

8,141


(108,709
)
Net (income) loss attributable to non-controlling interests
 
(87
)
 
2,994

 
4,841

 
(612
)
 
2,187

Net income (loss) attributable to the General Partner
 
$
3,146

 
$
(113,086
)
 
$
(187,390
)
 
$
7,529

 
$
(106,522
)
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per share attributable to common stockholders
 
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)
 
$
(0.01
)
 
$
(0.14
)



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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Net income (loss)
 
$
3,233

 
$
(116,080
)
 
$
(192,231
)
 
$
8,141

 
$
(108,709
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,972
)
 
(17,974
)
 
(17,973
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
 
24,674

Depreciation and amortization of real estate assets
 
190,236

 
195,991

 
197,408

 
200,159

 
209,132

Impairment of real estate
 
8,825

 
160,517

 
6,414

 
—

 
85,341

Proportionate share of adjustments for unconsolidated entities
 
290

 
1,147

 
1,277

 
1,423

 
1,486

FFO attributable to common stockholders and limited partners
 
$
184,174

 
$
196,229

 
$
4,623

 
$
191,562

 
$
193,951

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
41

 
242

 
734

 
1,764

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

Impairment of intangible assets
 
—

 
—

 
213,339

 
—

 
—

Reserve for loan loss
 
—

 
—

 
15,300

 
—

 
—

(Gain) loss on investment securities
 
—

 
—

 
—

 
(4
)
 
172

Loss (gain) on derivative instruments, net
 
177

 
1,086

 
(677
)
 
1,420

 
(311
)
Amortization of premiums and discounts on debt and investments, net
 
(4,030
)
 
(4,426
)
 
(5,107
)
 
(4,920
)
 
(5,298
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

Amortization and write-off of deferred financing costs
 
7,461

 
7,307

 
7,321

 
11,320

 
7,428

Amortization of management contracts
 
6,240

 
7,451

 
3,373

 
7,510

 
7,510

Deferred tax benefit(1)
 
(6,417
)
 
(1,457
)
 
(38,695
)
 
(5,701
)
 
(3,874
)
(Gain) loss on extinguishment and forgiveness of debt, net
 
(252
)
 
—

 
490

 
—

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Equity-based compensation expense
 
2,779

 
1,730

 
4,311

 
4,016

 
5,355

Other amortization and non-cash charges
 
751

 
743

 
1,540

 
781

 
766

Proportionate share of adjustments for unconsolidated entities
 
91

 
135

 
42

 
694

 
654

AFFO attributable to common stockholders and limited partners
 
$
180,107

 
$
192,675

 
$
183,157

 
$
196,428

 
$
202,338

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

 
903,339,143

Effect of Limited Partner OP Units and dilutive securities (2)
 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

 
26,348,273

Weighted-average shares outstanding - diluted (3)
 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
929,687,416

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.198

 
$
0.211

 
$
0.005

 
$
0.206

 
$
0.209

AFFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.193

 
$
0.207

 
$
0.197

 
$
0.211

 
$
0.218

___________________________________
(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)
Dilutive securities include unvested restricted shares of common stock and certain unvested restricted stock units.
(3)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.
(4)
Refer to the Consolidated Statements of Operations section for basic and diluted net loss per share attributable to common stockholders.


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 Net income (loss)
 
$
3,233

 
$
(116,080
)
 
$
(192,231
)
 
$
8,141

 
$
(108,709
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
82,468

 
80,426

 
82,591

 
89,530

 
90,572

Depreciation and amortization
 
197,345

 
204,308

 
202,415

 
208,542

 
217,513

Provision for (benefit from) income taxes
 
(280
)
 
56

 
(41,127
)
 
1,500

 
1,250

Proportionate share of adjustments for unconsolidated entities
 
554

 
1,822

 
1,978

 
2,554

 
2,415

 EBITDA
 
$
283,320

 
$
170,532

 
$
53,626

 
$
310,267

 
$
203,041

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
 
24,674

Impairments
 
8,825

 
160,517

 
219,753

 
—

 
85,341

Reserve for loan loss
 
—

 
—

 
15,300

 
—

 
—

Acquisition related expenses
 
41

 
242

 
734

 
1,764

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

(Gain) loss on investment securities
 
—

 
—

 
—

 
(4
)
 
172

Loss (gain) on derivative instruments, net
 
177

 
1,086

 
(677
)
 
1,420

 
(311
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

(Gain) loss on extinguishment and forgiveness of debt, net
 
(252
)
 
—

 
490

 
—

 
—

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Program development costs write-off
 
2,377

 
—

 
11,295

 
—

 
—

Other amortization and non-cash charges
 
(157
)
 
(126
)
 
(122
)
 
(82
)
 
(125
)
 Proportionate share of adjustments for unconsolidated entities
 
74

 
94

 
(15
)
 
608

 
529

Normalized EBITDA
 
$
283,060

 
$
288,607

 
$
286,674

 
$
301,772

 
$
309,306




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



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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
311,352

 
$
313,971

 
$
322,079

 
$
333,766

 
$
341,183

Direct financing lease income
 
535

 
569

 
623

 
659

 
697

Operating expense reimbursements
 
26,646

 
23,247

 
27,359

 
22,983

 
25,312

Total real estate investment revenues
 
338,533


337,787


350,061


357,408


367,192

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
27

 
217

 
673

 
1,690

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

Property operating
 
38,199

 
34,813

 
35,308

 
31,950

 
32,598

General and administrative
 
13,701

 
12,228

 
16,646

 
15,848

 
16,827

Depreciation and amortization
 
190,236

 
195,991

 
197,409

 
200,158

 
209,122

Impairment of real estate
 
8,825

 
160,517

 
6,414

 
—

 
85,341

Total operating expenses
 
253,905


398,591


248,759

 
257,678

 
362,315

Operating income (loss)
 
84,628


(60,804
)

101,302

 
99,730

 
4,877

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(82,468
)
 
(80,426
)
 
(82,591
)
 
(89,530
)
 
(90,572
)
Gain (loss) on extinguishment and forgiveness of debt
 
252

 
—

 
(490
)
 
—

 
—

Other income, net
 
1,216

 
568

 
(4,226
)
 
1,903

 
3,430

Reserve for loan loss
 
—

 
—

 
(15,300
)
 
—

 
—

Equity in income and gain on disposition of unconsolidated entities
 
70

 
10,404

 
752

 
6,837

 
1,480

(Loss) gain on derivative instruments, net
 
(177
)
 
(1,086
)
 
677

 
(1,420
)
 
311

Total other expenses, net
 
(81,107
)

(70,540
)

(101,178
)
 
(82,210
)
 
(85,351
)
Income (loss) before taxes and real estate dispositions
 
3,521

 
(131,344
)
 
124

 
17,520

 
(80,474
)
Gain (loss) on disposition of real estate, net
 
437

 
17,175

 
(9,727
)
 
(6,542
)
 
(24,674
)
Income (loss) before taxes
 
3,958


(114,169
)

(9,603
)
 
10,978

 
(105,148
)
(Provision for) benefit from income taxes
 
(1,791
)
 
(1,365
)
 
3,642

 
(2,238
)
 
(3,119
)
Net income (loss)
 
$
2,167


$
(115,534
)

$
(5,961
)

$
8,740


$
(108,267
)


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Net income (loss)
 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

 
$
(108,267
)
Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,972
)
 
(17,974
)
 
(17,973
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
 
24,674

Depreciation and amortization of real estate assets
 
190,236

 
195,991

 
197,408

 
200,159

 
209,132

Impairment of real estate
 
8,825

 
160,517

 
6,414

 
—

 
85,341

Proportionate share of adjustments for unconsolidated entities
 
290

 
1,147

 
1,277

 
1,423

 
1,486

FFO attributable to common stockholders and limited partners
 
$
183,108

 
$
196,775

 
$
190,893

 
$
192,161

 
$
194,393

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
27

 
217

 
673

 
1,690

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

Reserve for loan loss
 
—

 
—

 
15,300

 
—

 
—

(Gain) loss on investment securities
 
—

 
—

 
—

 
(4
)
 
172

Loss (gain) on derivative instruments, net
 
177

 
1,086

 
(677
)
 
1,420

 
(311
)
Amortization of premiums and discounts on debt and investments, net
 
(4,030
)
 
(4,426
)
 
(5,107
)
 
(4,920
)
 
(5,298
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

Amortization and write-off of deferred financing costs
 
7,461

 
7,307

 
7,321

 
11,320

 
7,428

Loss (gain) on extinguishment and forgiveness of debt, net
 
(252
)
 
—

 
490

 
—

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Equity-based compensation expense
 
1,925

 
799

 
1,840

 
1,073

 
2,357

Other amortization and non-cash charges
 
—

 
—

 
1

 
(1
)
 
(10
)
Proportionate share of adjustments for unconsolidated entities
 
91

 
135

 
42

 
694

 
654

AFFO attributable to common stockholders and limited partners
 
$
177,599

 
$
185,528

 
$
187,339

 
$
191,419

 
$
195,370

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

 
903,339,143

Effect of Limited Partner OP Units and dilutive securities (1)
 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

 
26,348,273

Weighted-average shares outstanding - diluted (2)
 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
929,687,416

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (3)
 
$
0.197

 
$
0.212

 
$
0.205

 
$
0.207

 
$
0.209

AFFO attributable to common stockholders and limited partners per diluted share (3)
 
$
0.191

 
$
0.198

 
$
0.202

 
$
0.206

 
$
0.210

___________________________________
(1)
Dilutive securities include unvested restricted shares of common stock and certain unvested restricted stock units.
(2)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.
(3)
Refer to the Statements of Operations - REI Segment section for basic and diluted net loss per share attributable to common stockholders.

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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 Net income (loss)
 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

 
$
(108,267
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
82,468

 
80,426

 
82,591

 
89,530

 
90,572

Depreciation and amortization
 
190,236

 
195,991

 
197,409

 
200,158

 
209,122

Provision for (benefit from) income taxes
 
1,791

 
1,365

 
(3,642
)
 
2,238

 
3,119

Proportionate share of adjustments for unconsolidated entities
 
554

 
1,822

 
1,978

 
2,554

 
2,415

 EBITDA
 
$
277,216

 
$
164,070

 
$
272,375

 
$
303,220

 
$
196,961

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
 
24,674

Impairment of real estate assets
 
8,825

 
160,517

 
6,414

 
—

 
85,341

Reserve for loan loss
 
—

 
—

 
15,300

 
—

 
—

Acquisition related expenses
 
27

 
217

 
673

 
1,690

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

(Gain) loss on investment securities
 
—

 
—

 
—

 
(4
)
 
172

Loss (gain) on derivative instruments, net
 
177

 
1,086

 
(677
)
 
1,420

 
(311
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

(Gain) loss on extinguishment and forgiveness of debt, net
 
(252
)
 
—

 
490

 
—

 
—

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Other amortization and non-cash charges
 
(39
)
 
(3
)
 
(28
)
 
10

 
(20
)
 Proportionate share of adjustments for unconsolidated entities
 
74

 
94

 
(15
)
 
608

 
529

Normalized EBITDA
 
$
274,683

 
$
282,243

 
$
280,822

 
$
294,743

 
$
303,331



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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 Rental income - as reported(1)
 
311,352

 
$
313,971

 
$
322,079

 
$
333,766

 
$
341,183

 Direct financing lease income - as reported
 
535

 
569

 
623

 
659

 
697

 Operating expense reimbursements - as reported
 
26,646

 
23,247

 
27,359

 
22,983

 
25,312

 Property operating expense - as reported
 
(38,199
)
 
(34,813
)
 
(35,308
)
 
(31,950
)
 
(32,598
)
NOI
 
300,334


302,974


314,753

 
325,458

 
334,594

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

 Cash NOI
 
$
286,509


$
291,784


$
299,007

 
$
305,412

 
$
312,152

___________________________________
(1)
Rental income includes percentage rent of $1.7 million, $2.5 million, $1.8 million, $2.1 million and $2.1 million for the three months ended June 30, 2016 , March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.

Normalized Cash NOI
 
 
Three Months Ended
 
 
June 30, 2016
Cash NOI
 
$
286,509

Adjustments for intra-quarter dispositions and completed build-to-suit properties(1)
 
(2,018
)
Normalized Cash NOI
 
$
284,491

___________________________________
(1)
For properties acquired or build-to-suits completed during the three months ended June 30, 2016 , the adjustment eliminates Cash NOI for such properties and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. For properties disposed of during the three months ended June 30, 2016, 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

 
 
 
Q2 2016 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 4,257(1) properties, with 96.5 million aggregate square feet, acquired prior to April 1,2015 and owned through June 30, 2016:
 
 
Three Months Ended June 30,
 
Increase/(Decrease)
 
 
2016
 
2015
 
$ Change
 
% Change
Contract Rental Revenue
 
290,993

 
291,045

 
(52
)
 
—
 %
Economic occupancy rate
 
97.7
%
 
98.8
%
 
NA

 
NA

 
 
 
 
Contract Rental Revenue
 
 
 
Number of
 
Three Months Ended June 30,
 
Increase/(Decrease)
 
 
 
Properties
 
2016
 
2015
 
$ Change
 
% Change
 
Single-tenant retail
 
2,001

 
$
101,505

 
$
100,438

 
$
1,067

 
1.1
 %
 
Anchored shopping centers
 
20

 
5,875

 
5,851

 
24

 
0.4
 %
 
Restaurant
 
1,902

 
67,942

 
69,908

 
(1,966
)
 
(2.8
)%
 
Industrial and Distribution
 
161

 
46,952

 
46,105

 
847

 
1.8
 %
 
Office
 
164

 
68,597

 
68,621

 
(24
)
 
—
 %
 
Other(2)
 
9

 
122

 
122

 
—

 
—
 %
 
Total
 
4,257

 
$
290,993

 
$
291,045

 
$
(52
)
 
—
 %
(3) 
___________________________________
(1)
Development and expansion properties are included in the same store population if the placed in service date was prior to April 1,2015.
(2)
Other properties includes billboards, land and parking lots.
(3)
Ovation Brands, Inc. filed for chapter 11 bankruptcy on March 7, 2016. Excluding the impact of Ovation Brands, Inc., same store contract rental revenue increased 0.7%, during the three months ended June 30, 2016, as compared to the same quarter in 2015.

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

 
 
 
Q2 2016 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 June 30, 2016.


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Debt and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
Mortgage notes payable
 
$
2,881,257

 
$
113,550

 
$
412,579

 
$
211,060

 
$
231,497

 
$
284,235

 
$
1,628,336

Unsecured credit facility
 
1,055,000

 
—

 
—

 
1,055,000

 
—

 
—

 
—

Corporate bonds
 
3,550,000

 
—

 
1,300,000

 
—

 
750,000

 
—

 
1,500,000

Convertible notes
 
1,000,000

 
—

 
—

 
597,500

 
—

 
402,500

 
—

Secured term loan
 
28,443

 
7,496

 
7,680

 
13,267

 
—

 
—

 
—

Total
 
$
8,514,700

 
$
121,046

 
$
1,720,259

 
$
1,876,827

 
$
981,497


$
686,735

 
$
3,128,336

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable
 
33.8
%
 
5.07
%
 
4.8

Unsecured credit facility
 
12.4
%
 
3.25
%
 
2.0

Corporate bonds
 
41.7
%
 
3.30
%
 
4.1

Convertible notes
 
11.8
%
 
3.30
%
 
3.0

Secured term loan
 
0.3
%
 
5.81
%
 
1.5

Total
 
100.0
%
 
3.90
%
 
3.9

Debt Type
 
Percentage of Total Debt
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
65.8
%
 
3.29
%
 
3.5

Total secured debt
 
34.2
%
 
5.08
%
 
4.8

Total
 
100.0
%
 
3.90
%
 
3.9

 
 
 
 
 
 
 
Total fixed-rate debt (1)
 
99.4
%
 
3.91
%
 
3.9

Total variable-rate debt
 
0.6
%
 
2.51
%
 
1.7

Total
 
100.0
%
 
3.90
%
 
3.9

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 June 30, 2016 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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


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




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


 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Outstanding Balance As Of June 30, 2016
 
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
 
132,347

 
5.61
%
 
5.61
%
 
P&I
JPMorgan Chase Bank, N.A.
 
9/1/2020
 
100,300

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

 
6.30
%
 
6.38
%
 
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
 
62,841

 
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
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
 
8/11/2029
 
46,071

 
7.23
%
 
7.73
%
 
I/O
Wells Fargo Bank, National Association
 
2/1/2017
 
48,500

 
1mo. Libor + 2.47%

(3)
3.79
%
 
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
 
—

 
6.03
%
 
—
%
 
I/O
People's United Bank
 
4/1/2021
 
42,410

 
5.55
%
 
5.55
%
 
P&I
JPMorgan Chase Bank, N.A.
 
6/1/2020
 
41,111

 
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
 
7/1/2016
 
35,601

 
10.68
%
(4)
10.68
%
 
P&I
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
 
28,814

 
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
PNC Bank, National Association
 
9/1/2022
 
27,971

 
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
 
23,969

 
5.28
%
 
5.28
%
 
P&I
John Hancock Life Insurance Company
 
10/3/2022
 
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

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


 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Outstanding Balance As Of June 30, 2016
 
Coupon Rate
 
Effective Rate (1)
 
Payment Terms (2)
Aviva Life and Annuity Company
 
7/1/2021
 
$
19,600

 
5.02
%
 
5.02
%
 
I/O through 08/01/2019, then P&I
German American Capital Corp
 
6/6/2022
 
19,351

 
4.60
%
 
4.60
%
 
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
 
16,014

 
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
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
 
3/20/2023
 
13,265

 
3.23
%
 
3.23
%
 
I/O
BOKF, NA dba Bank of Texas
 
12/31/2020
 
13,420

 
1mo. Libor + 1.85%

(3)
4.25
%
 
I/O
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
 
12/29/2016
 
11,670

 
3.75
%
 
3.75
%
 
I/O
JPMorgan Chase Bank, N.A.
 
7/1/2020
 
11,246

 
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
 
9,606

 
3.95
%
 
3.95
%
 
P&I
Amegy Bank, National Association
 
8/31/2016
 
8,751

 
1mo. Libor + 2.95%

 
3.41
%
 
I/O
Transamerica Life Insurance Company
 
8/1/2030
 
7,258

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
6,475

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

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

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

 
1mo. Libor + 2.25%

(3)
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
 
1,584

 
7.20
%
 
7.20
%
 
P&I
Bear Stearns Commercial Mortgage, Inc.
 
9/1/2017
 
1,678

 
5.88
%
 
5.88
%
 
I/O
US Bank National Association
 
4/15/2019
 
1,367

 
5.40
%
 
5.40
%
 
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
 
1,250

 
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
 
367

 
5.93
%
 
5.93
%
 
P&I
 
 
 
 
$
2,881,257

 
 
 
5.07
%
 
 
___________________________________
(1)
Represents interest rate in effect at June 30, 2016. 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)
The Company was in default under this loan agreement due to the failure to pay a reserve required per the loan agreement. As such, the Company is accruing interest at the default rate of interest of 10.68% per annum. The Company is engaged with the servicer to 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 | 24

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Credit Facility and Corporate Bond Covenants
(unaudited)
 
The following is a summary of key financial covenants for the Company's unsecured credit facility and corporate bonds, as defined and calculated per the terms of the facility's credit agreement and the bonds' governing documents, respectively. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that the Company is in compliance with the covenants and are not measures of our liquidity or performance. As of June 30, 2016, the Company believes it is in compliance with these covenants based on the covenant limits and calculations in place at that time.
Unsecured Credit Facility Key Covenants
 
Required
 
June 30, 2016
Minimum tangible net worth
 
≥ $5.5B
 
$8.7B
Ratio of total indebtedness to total asset value
 
≤ 60%
 
45.7%
Ratio of adjusted EBITDA to fixed charges
 
≥ 1.5x
 
2.77x
Ratio of secured indebtedness to total asset value
 
≤ 45%
 
13.4%
Ratio of unsecured indebtedness to unencumbered asset value
 
≤ 60%
 
42.3%
Ratio of unencumbered adjusted NOI to unsecured interest expense
 
≥ 1.75x
 
4.71x
Minimum unencumbered asset value
 
≥ $8.0B
 
$10.8B

Corporate Bond Key Covenants
 
Required
 
June 30, 2016
Limitation on incurrence of total debt
 
≤ 65%
 
48.3%
Limitation on incurrence of secured debt
 
≤ 40%
 
16.7%
Debt service coverage
 
≥ 1.5x
 
3.34x
Maintenance of total unencumbered assets
 
≥ 150%
 
214.2%



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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


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

The following table provides a summary of our development projects at June 30, 2016. During the three months ended June 30, 2016, the Company capitalized $2.4 million of additional development costs and placed $11.6 million of development projects 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
 
1

 
Q3 2016
 
$
965

 
$
846

 
7.3
%
Redevelopment(2)
 
 
 
 
 
 
 
 
 
 
FedEx Expansions
 
1

 
Q3 2016
 
2,616

 
1,091

 
9.0
%
Total
 
 
 
 
 
$
3,581

 
$
1,937

 
 
___________________________________
(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 improvements and capital expenditures incurred in accordance with existing leases.

Dispositions

The following table shows the 87 properties that were disposed of and the related gains/losses during the three months ended June 30, 2016.
Property
 
Number of Properties
 
Location
 
Square Feet
 
Remaining Lease Term (Years)(1)
 
Cash Cap Rate
 
Sale Price
 
Real Estate Gain (Loss)(2)
 
Goodwill Allocation(3)
 
GAAP Gain (Loss)(4)
Red Lobster (5)
 
23
 
 Various
 
172,986

 
23.2

 
7.1
%
 
$
77,728

 
$
3,508

 
$
(5,236
)
 
$
(1,728
)
FedEx
 
3
 
 Various
 
260,732

 
8.4

 
6.6
%
 
24,244

 
3,520

 
(1,560
)
 
1,960

Walgreens
 
2
 
 Various
 
29,940

 
13.0

 
6.3
%
 
13,317

 
2,178

 
(458
)
 
1,720

CVS
 
3
 
 Various
 
38,739

 
18.7

 
5.5
%
 
20,817

 
4,108

 
(796
)
 
3,312

Restaurants
 
47
 
 Various
 
157,687

 
3.7

 
9.1
%
 
35,996

 
2,817

 
(1,848
)
 
969

Vacant
 
7
 
 Various
 
25,530

 
—

 
N/A

 
3,290

 
601

 
(140
)
 
461

Other (6)
 
2
 
 Various
 
169,108

 
—
 
—

 
—
 
(3,201
)
 
(156
)
 
(3,357
)
Total dispositions
 
87
 
 
 
854,722
 
16.5

 
7.1
%
 
$
175,392

 
$
13,531

 
$
(10,194
)
 
$
3,337

Held for sale assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,900
)
Total gain on disposition of real estate , net
 
 
 
 
 
 
 
 
$
437

___________________________________
(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 REI 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 six months ended June 30, 2016 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)
The Red Lobster properties were sold under an agreement with the tenant, under which the tenant received a portion of the sales proceeds. The sales price and cash cap rate presented are based on our proceeds after making the participation payment to the tenant. The cash cap rate on the gross sales price of $90.0M was 6.1%.
(6)
Includes one property foreclosed upon by the respective lender and one property relinquished to the ground lessor upon expiration of the ground lease.

 

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

 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Diversification Statistics: Real Estate Portfolio
(unaudited, percentages based on portfolio Annualized Rental Income)
 


___________________________________________________
___________________________________________________
 
___________________________________________________
___________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Properties owned
 
4,291

 
Rentable square feet
 
98,229

 
Economic occupancy rate
 
97.7
%
 
Weighted-average remaining lease term (years)
 
10.2

 
Investment-Grade Tenants
 
42.7
%
 
Flat leases
 
21.2
%
 
NNN leases
 
62.1
%
 



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

 
 
 
Q2 2016 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

 
2,842

 
2.9
%
 
$
110,812

 
9.0
%
 
B-
Walgreens
 
116

 
1,682

 
1.7
%
 
41,865

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.5
%
 
38,246

 
3.1
%
 
BB+
FedEx
 
53

 
3,724

 
3.8
%
 
35,606

 
2.9
%
 
BBB
Dollar General
 
404

 
3,741

 
3.8
%
 
34,253

 
2.8
%
 
BBB
CVS
 
102

 
1,436

 
1.5
%
 
33,111

 
2.7
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.0
%
 
23,633

 
1.9
%
 
B+
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,366

 
1.9
%
 
AA+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,698

 
1.7
%
 
A-
BJ's Wholesale Club
 
3

 
2,223

 
2.3
%
 
19,559

 
1.6
%
 
B-
Total
 
1,132

 
22,920

 
23.4
%
 
$
381,149

 
31.0
%
 
 
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
 
379

 
5,584

 
5.7
%
 
$
200,191

 
16.3
%
Manufacturing
 
68

 
19,312

 
19.7
%
 
125,214

 
10.2
%
Restaurants - Quick Service
 
872

 
3,491

 
3.6
%
 
101,794

 
8.3
%
Retail - Discount
 
623

 
10,061

 
10.2
%
 
90,765

 
7.4
%
Retail - Pharmacy
 
258

 
3,825

 
3.9
%
 
88,729

 
7.2
%
Finance
 
305

 
3,052

 
3.1
%
 
66,393

 
5.4
%
Professional Services
 
71

 
4,222

 
4.3
%
 
59,660

 
4.9
%
Retail - Grocery & Supermarket
 
83

 
5,445

 
5.5
%
 
57,092

 
4.6
%
Retail - Home & Garden
 
100

 
7,479

 
7.6
%
 
53,062

 
4.3
%
Logistics
 
60

 
4,788

 
4.9
%
 
43,978

 
3.6
%
Total
 
2,819

 
67,259

 
68.5
%
 
$
886,878

 
72.2
%
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
 
584

 
11,507

 
11.7
%
 
$
163,583

 
13.3
%
Illinois
 
178

 
6,040

 
6.1
%
 
78,794

 
6.4
%
Florida
 
269

 
4,889

 
5.0
%
 
69,984

 
5.7
%
California
 
86

 
4,231

 
4.3
%
 
58,206

 
4.7
%
Pennsylvania
 
172

 
5,808

 
5.9
%
 
56,792

 
4.6
%
Ohio
 
285

 
5,721

 
5.8
%
 
54,213

 
4.4
%
Georgia
 
202

 
3,893

 
4.0
%
 
47,923

 
3.9
%
Indiana
 
138

 
5,900

 
6.0
%
 
44,996

 
3.7
%
North Carolina
 
174

 
3,887

 
4.0
%
 
39,008

 
3.2
%
Michigan
 
186

 
2,467

 
2.5
%
 
36,529

 
3.0
%
Total
 
2,274

 
54,343

 
55.3
%
 
$
650,028

 
52.9
%


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


Metropolitan Statistical Area (MSA) Concentration
 
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
 
116

 
5,661

 
5.8
%
 
$
69,879

 
5.7
%
Dallas, TX
 
113

 
3,756

 
3.8
%
 
56,542

 
4.6
%
Houston, TX
 
96

 
2,862

 
2.9
%
 
31,628

 
2.6
%
Atlanta, GA
 
94

 
2,724

 
2.8
%
 
29,217

 
2.4
%
Philadelphia, PA
 
53

 
2,039

 
2.1
%
 
28,027

 
2.3
%
New York, NY
 
25

 
1,132

 
1.2
%
 
25,709

 
2.1
%
Phoenix, AZ
 
48

 
1,613

 
1.6
%
 
25,129

 
2.0
%
Boston, MA
 
28

 
1,819

 
1.9
%
 
24,953

 
2.0
%
Washington, DC
 
32

 
890

 
0.9
%
 
20,972

 
1.7
%
Indianapolis, IN
 
40

 
2,693

 
2.7
%
 
20,017

 
1.6
%
Total
 
645

 
25,189

 
25.7
%
 
$
332,073

 
27.0
%



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

 
 
 
Q2 2016 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

 
2,842

 
2.9
%
 
$
110,812

 
9.0
%
 
B-
Walgreens
 
116

 
1,682

 
1.7
%
 
41,865

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.5
%
 
38,246

 
3.1
%
 
BB+
FedEx
 
53

 
3,724

 
3.8
%
 
35,606

 
2.9
%
 
BBB
Dollar General
 
404

 
3,741

 
3.8
%
 
34,253

 
2.8
%
 
BBB
CVS
 
102

 
1,436

 
1.5
%
 
33,111

 
2.7
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.0
%
 
23,633

 
1.9
%
 
B+
General Service Administration
 
23

 
1,021

 
1.0
%
 
23,366

 
1.9
%
 
AA+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,698

 
1.7
%
 
A-
BJ's Wholesale Club
 
3

 
2,223

 
2.3
%
 
19,559

 
1.6
%
 
B-
AON
 
8

 
1,203

 
1.2
%
 
18,154

 
1.5
%
 
A-
Petsmart
 
12

 
858

 
0.9
%
 
17,619

 
1.4
%
 
B+
Goodyear
 
10

 
4,728

 
4.8
%
 
16,550

 
1.3
%
 
BB
Tractor Supply
 
58

 
1,213

 
1.2
%
 
15,709

 
1.3
%
 
NR
Home Depot
 
12

 
2,162

 
2.2
%
 
14,253

 
1.2
%
 
A
Amazon
 
3

 
3,048

 
3.1
%
 
14,159

 
1.2
%
 
AA-
L.A. Fitness
 
15

 
656

 
0.7
%
 
12,723

 
1.0
%
 
B
Total
 
1,250

 
36,788

 
37.5
%
 
$
490,316

 
39.9
%
 
 


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


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

 
430

 
0.4
%
 
$
4,054

 
0.3
%
Agricultural
 
2

 
138

 
0.2
%
 
1,245

 
0.1
%
Education
 
4

 
1,288

 
1.3
%
 
5,812

 
0.5
%
Entertainment & Recreation
 
21

 
848

 
0.9
%
 
15,997

 
1.3
%
Finance
 
305

 
3,052

 
3.1
%
 
66,393

 
5.4
%
Government & Public Services
 
31

 
1,280

 
1.3
%
 
30,691

 
2.5
%
Healthcare
 
84

 
1,700

 
1.7
%
 
30,669

 
2.5
%
Information & Communication
 
15

 
508

 
0.5
%
 
8,252

 
0.7
%
Insurance
 
15

 
1,693

 
1.7
%
 
33,627

 
2.7
%
Logistics
 
60

 
4,788

 
4.9
%
 
43,978

 
3.6
%
Manufacturing
 
68

 
19,312

 
19.7
%
 
125,214

 
10.2
%
Mining & Natural Resources
 
16

 
745

 
0.8
%
 
14,735

 
1.2
%
Other Services
 
31

 
5,217

 
5.3
%
 
18,908

 
1.5
%
Professional Services
 
71

 
4,222

 
4.3
%
 
59,660

 
4.9
%
Real Estate
 
5

 
63

 
0.1
%
 
978

 
0.1
%
Rental
 
11

 
719

 
0.7
%
 
6,783

 
0.6
%
Restaurants - Casual Dining
 
379

 
5,584

 
5.7
%
 
200,191

 
16.3
%
Restaurants - Quick Service
 
872

 
3,491

 
3.6
%
 
101,794

 
8.3
%
Retail - Apparel & Jewelry
 
14

 
1,401

 
1.4
%
 
15,268

 
1.2
%
Retail - Department Stores
 
13

 
965

 
1.0
%
 
8,015

 
0.7
%
Retail - Discount
 
623

 
10,061

 
10.2
%
 
90,765

 
7.4
%
Retail - Electronics & Appliances
 
22

 
676

 
0.7
%
 
9,202

 
0.7
%
Retail - Gas & Convenience
 
127

 
527

 
0.5
%
 
27,375

 
2.2
%
Retail - Grocery & Supermarket
 
83

 
5,445

 
5.5
%
 
57,092

 
4.6
%
Retail - Hobby, Books & Music
 
9

 
340

 
0.3
%
 
2,978

 
0.2
%
Retail - Home & Garden
 
100

 
7,479

 
7.6
%
 
53,062

 
4.3
%
Retail - Home Furnishings
 
40

 
492

 
0.5
%
 
7,837

 
0.6
%
Retail - Internet
 
3

 
3,048

 
3.1
%
 
14,159

 
1.2
%
Retail - Motor Vehicle
 
166

 
1,190

 
1.2
%
 
21,976

 
1.8
%
Retail - Office Supply
 
4

 
76

 
0.1
%
 
1,155

 
0.1
%
Retail - Pet Supply
 
15

 
903

 
0.9
%
 
18,453

 
1.5
%
Retail - Pharmacy
 
258

 
3,825

 
3.9
%
 
88,729

 
7.2
%
Retail - Specialty (Other)
 
23

 
561

 
0.6
%
 
6,156

 
0.5
%
Retail - Sporting Goods
 
20

 
1,186

 
1.2
%
 
14,246

 
1.2
%
Retail - Warehouse Clubs
 
7

 
2,631

 
2.7
%
 
22,673

 
1.8
%
Other
 
13

 
71

 
0.1
%
 
1,370

 
0.1
%
Total
 
3,535

 
95,955

 
97.7
%
 
$
1,229,492

 
100.0
%


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

 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic
(unaudited, square feet and dollars in thousands)
 


Location
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
United States
 
 
 
 
 
 
 
 
 
 
Alabama
 
151

 
1,731

 
1.8
%
 
$
28,639

 
2.3
%
Alaska
 
3

 
25

 
—
%
 
774

 
0.1
%
Arizona
 
77

 
2,319

 
2.4
%
 
35,381

 
2.9
%
Arkansas
 
98

 
1,010

 
1.0
%
 
12,589

 
1.0
%
California
 
86

 
4,231

 
4.3
%
 
58,206

 
4.7
%
Colorado
 
50

 
1,754

 
1.8
%
 
27,494

 
2.2
%
Connecticut
 
19

 
91

 
0.1
%
 
2,290

 
0.2
%
Delaware
 
11

 
93

 
0.1
%
 
2,025

 
0.2
%
District of Columbia
 
1

 
3

 
—
%
 
—

 
—
%
Florida
 
269

 
4,889

 
5.0
%
 
69,984

 
5.7
%
Georgia
 
202

 
3,893

 
4.0
%
 
47,923

 
3.9
%
Idaho
 
18

 
138

 
0.1
%
 
3,361

 
0.3
%
Illinois
 
178

 
6,040

 
6.2
%
 
78,794

 
6.4
%
Indiana
 
138

 
5,900

 
6.0
%
 
44,996

 
3.7
%
Iowa
 
53

 
1,602

 
1.6
%
 
14,037

 
1.1
%
Kansas
 
45

 
2,416

 
2.5
%
 
14,403

 
1.2
%
Kentucky
 
85

 
2,169

 
2.2
%
 
23,898

 
1.9
%
Louisiana
 
98

 
1,625

 
1.7
%
 
21,802

 
1.8
%
Maine
 
25

 
648

 
0.7
%
 
8,544

 
0.7
%
Maryland
 
31

 
854

 
0.9
%
 
16,628

 
1.4
%
Massachusetts
 
39

 
2,579

 
2.6
%
 
30,170

 
2.5
%
Michigan
 
186

 
2,467

 
2.5
%
 
36,529

 
3.0
%
Minnesota
 
43

 
553

 
0.6
%
 
7,406

 
0.6
%
Mississippi
 
78

 
1,845

 
1.9
%
 
15,468

 
1.3
%
Missouri
 
161

 
1,842

 
1.9
%
 
24,646

 
2.0
%
Montana
 
10

 
124

 
0.1
%
 
2,129

 
0.2
%
Nebraska
 
22

 
766

 
0.8
%
 
11,404

 
0.9
%
Nevada
 
28

 
717

 
0.7
%
 
8,240

 
0.7
%
New Hampshire
 
20

 
254

 
0.3
%
 
4,402

 
0.4
%
New Jersey
 
35

 
1,668

 
1.7
%
 
36,134

 
2.9
%
New Mexico
 
51

 
942

 
1.0
%
 
13,030

 
1.1
%
New York
 
88

 
1,755

 
1.8
%
 
32,454

 
2.7
%
North Carolina
 
174

 
3,887

 
4.0
%
 
39,008

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,277

 
0.4
%
Ohio
 
285

 
5,721

 
5.8
%
 
54,213

 
4.4
%
Oklahoma
 
81

 
2,078

 
2.1
%
 
25,516

 
2.1
%
Oregon
 
15

 
309

 
0.3
%
 
5,160

 
0.4
%
Pennsylvania
 
172

 
5,808

 
5.9
%
 
56,792

 
4.6
%
Rhode Island
 
14

 
215

 
0.2
%
 
3,226

 
0.3
%
South Carolina
 
120

 
3,352

 
3.4
%
 
29,593

 
2.4
%
South Dakota
 
12

 
180

 
0.2
%
 
2,169

 
0.2
%
Tennessee
 
114

 
3,345

 
3.4
%
 
30,234

 
2.5
%
Texas
 
584

 
11,507

 
11.7
%
 
163,583

 
13.3
%
Utah
 
11

 
108

 
0.1
%
 
2,413

 
0.2
%
Vermont
 
7

 
23

 
—
%
 
472

 
—
%
Virginia
 
113

 
1,903

 
1.9
%
 
33,652

 
2.7
%
Washington
 
23

 
459

 
0.5
%
 
9,162

 
0.8
%

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

 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Diversification: Property Geographic (cont.)
(unaudited, square feet and dollars in thousands)

 

Location
 
Number of Properties
 
Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
West Virginia
 
38

 
237

 
0.2
%
 
5,673

 
0.5
%
Wisconsin
 
85

 
1,659

 
1.7
%
 
18,696

 
1.5
%
Wyoming
 
10

 
65

 
0.1
%
 
1,668

 
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
 
4,291

 
98,229

 
100.0
%
 
$
1,229,492

 
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 | 33

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
Remaining 2016
 
62

 
2,104

 
2.0
%
 
$
17,142

 
1.4
%
2017
 
186

 
4,411

 
4.3
%
 
45,219

 
3.7
%
2018
 
222

 
3,691

 
3.8
%
 
40,628

 
3.3
%
2019
 
181

 
3,224

 
3.3
%
 
54,962

 
4.5
%
2020
 
243

 
4,627

 
4.7
%
 
52,682

 
4.3
%
2021
 
185

 
11,129

 
11.4
%
 
86,611

 
7.1
%
2022
 
248

 
9,538

 
9.7
%
 
80,145

 
6.5
%
2023
 
221

 
6,309

 
6.3
%
 
82,674

 
6.7
%
2024
 
179

 
9,215

 
9.6
%
 
107,547

 
8.7
%
2025
 
276

 
4,401

 
4.6
%
 
62,883

 
5.1
%
Thereafter
 
1,532

 
37,306

 
38.0
%
 
598,999

 
48.7
%
Total
 
3,535

 
95,955

 
97.7
%
 
$
1,229,492

 
100.0
%

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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
Remaining 2016
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
4

 
32

 
—
%
 
$
459

 
—
%
Anchored shopping centers
 
9

 
34

 
—
%
 
425

 
—
%
Restaurant
 
36

 
227

 
0.2
%
 
2,831

 
0.2
%
Industrial & Distribution
 
3

 
1,497

 
1.5
%
 
6,946

 
0.6
%
Office
 
8

 
314

 
0.3
%
 
6,481

 
0.6
%
Other(1)
 
2

 
—

 
—
%
 
—

 
—
%
Total Remaining 2016
 
62

 
2,104

 
2.0
%
 
$
17,142

 
1.4
%
 
 
 
 
 
 
 
 
 
 
 
2017
 


 


 


 


 


Single-tenant retail
 
57

 
343

 
0.3
%
 
$
7,412

 
0.6
%
Anchored shopping centers
 
32

 
132

 
0.1
%
 
2,446

 
0.2
%
Restaurant
 
64

 
517

 
0.5
%
 
8,643

 
0.7
%
Industrial & Distribution
 
10

 
2,488

 
2.5
%
 
11,237

 
0.9
%
Office
 
21

 
931

 
0.9
%
 
15,399

 
1.3
%
Other(1)
 
2

 
—

 
—
%
 
82

 
—
%
Total 2017
 
186

 
4,411

 
4.3
%
 
$
45,219

 
3.7
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Single-tenant retail
 
72

 
944

 
1.0
%
 
$
13,631

 
1.1
%
Anchored shopping centers
 
30

 
304

 
0.3
%
 
4,213

 
0.3
%
Restaurant
 
93

 
351

 
0.4
%
 
8,272

 
0.7
%
Industrial & Distribution
 
12

 
1,751

 
1.8
%
 
7,008

 
0.6
%
Office
 
13

 
341

 
0.3
%
 
7,486

 
0.6
%
Other(1)
 
2

 
—

 
—
%
 
18

 
—
%
Total 2018
 
222

 
3,691

 
3.8
%
 
$
40,628

 
3.3
%
 
 
 
 
 
 
 
 
 
 
 
2019
 


 


 


 


 


Single-tenant retail
 
54

 
1,303

 
1.3
%
 
$
15,259

 
1.2
%
Anchored shopping centers
 
28

 
245

 
0.3
%
 
3,665

 
0.3
%
Restaurant
 
75

 
314

 
0.4
%
 
7,320

 
0.6
%
Industrial & Distribution
 
3

 
137

 
0.1
%
 
1,275

 
0.1
%
Office
 
21

 
1,225

 
1.2
%
 
27,443

 
2.3
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2019
 
181

 
3,224

 
3.3
%
 
$
54,962

 
4.5
%
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(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 | 35

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
 
 
 
 
 
 
 
 
 
 
 
2020
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
84

 
1,083

 
1.1
%
 
$
13,611

 
1.1
%
Anchored shopping centers
 
15

 
138

 
0.1
%
 
1,771

 
0.1
%
Restaurant
 
111

 
451

 
0.5
%
 
9,150

 
0.8
%
Industrial & distribution
 
8

 
1,591

 
1.6
%
 
6,319

 
0.5
%
Office
 
24

 
1,364

 
1.4
%
 
21,830

 
1.8
%
Other(1)
 
1

 
—

 
—
%
 
1

 
—
%
Total 2020
 
243

 
4,627

 
4.7
%
 
$
52,682

 
4.3
%
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
64

 
1,228

 
1.2
%
 
$
18,886

 
1.6
%
Anchored shopping centers
 
15

 
163

 
0.2
%
 
2,496

 
0.2
%
Restaurant
 
65

 
276

 
0.4
%
 
7,721

 
0.6
%
Industrial & distribution
 
17

 
7,673

 
7.8
%
 
27,390

 
2.2
%
Office
 
24

 
1,789

 
1.8
%
 
30,118

 
2.5
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2021
 
185

 
11,129

 
11.4
%
 
$
86,611

 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
160

 
2,145

 
2.2
%
 
$
28,590

 
2.3
%
Anchored shopping centers
 
6

 
86

 
0.1
%
 
1,553

 
0.1
%
Restaurant
 
41

 
184

 
0.2
%
 
4,161

 
0.3
%
Industrial & distribution
 
25

 
5,622

 
5.7
%
 
20,141

 
1.7
%
Office
 
15

 
1,501

 
1.5
%
 
25,685

 
2.1
%
Other(1)
 
1

 
—

 
—
%
 
15

 
—
%
Total 2022
 
248

 
9,538

 
9.7
%
 
$
80,145

 
6.5
%
 
 
 
 
 
 
 
 
 
 
 
2023
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
124

 
1,878

 
1.9
%
 
$
23,152

 
1.9
%
Anchored shopping centers
 
7

 
130

 
0.1
%
 
2,653

 
0.2
%
Restaurant
 
49

 
214

 
0.2
%
 
5,158

 
0.4
%
Industrial & distribution
 
16

 
2,590

 
2.6
%
 
18,060

 
1.5
%
Office
 
25

 
1,497

 
1.5
%
 
33,651

 
2.7
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2023
 
221

 
6,309

 
6.3
%
 
$
82,674

 
6.7
%
___________________________________
(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 | 36

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Expirations (cont.)
(unaudited, square feet and dollars in thousands)
 
Year of Expiration
 
Number of Leases
Expiring
 
Leased Square Feet
 
Square Feet as a % of Total Portfolio
 
Annualized Rental Income Expiring
 
Annualized Rental Income Expiring as a % of Total Portfolio
2024
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
87

 
2,119

 
2.2
%
 
$
27,434

 
2.2
%
Anchored shopping centers
 
3

 
14

 
—
%
 
332

 
—
%
Restaurant
 
48

 
253

 
0.4
%
 
6,657

 
0.5
%
Industrial & Distribution
 
12

 
3,509

 
3.6
%
 
15,482

 
1.3
%
Office
 
28

 
3,320

 
3.4
%
 
57,603

 
4.7
%
Other(1)
 
1

 
—

 
—
%
 
39

 
—
%
Total 2024
 
179

 
9,215

 
9.6
%
 
$
107,547

 
8.7
%
 
 
 
 
 
 
 
 
 
 
 
2025
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
178

 
1,730

 
1.8
%
 
$
30,671

 
2.5
%
Anchored shopping centers
 
2

 
10

 
—
%
 
160

 
—
%
Restaurant
 
63

 
271

 
0.3
%
 
8,001

 
0.6
%
Industrial & Distribution
 
12

 
1,844

 
1.9
%
 
14,157

 
1.2
%
Office
 
21

 
546

 
0.6
%
 
9,894

 
0.8
%
Total 2025
 
276

 
4,401

 
4.6
%
 
$
62,883

 
5.1
%
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
875

 
16,949

 
17.3
%
 
$
240,947

 
19.6
%
Anchored shopping centers
 
16

 
423

 
0.4
%
 
4,142

 
0.3
%
Restaurant
 
558

 
5,860

 
6.0
%
 
230,771

 
18.8
%
Industrial & distribution
 
46

 
11,493

 
11.7
%
 
73,112

 
5.9
%
Office
 
36

 
2,581

 
2.6
%
 
49,612

 
4.1
%
Other(1)
 
1

 
—

 
—
%
 
415

 
—
%
Total Thereafter
 
1,532

 
37,306

 
38.0
%
 
$
598,999

 
48.7
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining Lease Expirations
 
3,535

 
95,955

 
97.7
%
 
$
1,229,492

 
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 | 37

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Summary
(unaudited)
 
Rent Escalations
(square feet and dollars in thousands)
 
 
Number of Leases
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
Fixed dollar or percent increase
 
2,191

 
61,906

 
63.0
%
 
$
847,316

 
68.9
%
CPI
 
252

 
7,888

 
8.1
%
 
121,326

 
9.9
%
Flat
 
1,092

 
26,161

 
26.6
%
 
260,850

 
21.2
%
Total
 
3,535


95,955


97.7
%

$
1,229,492


100.0
%


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Lease Summary (cont.)
(unaudited)
 
Tenant Expense Obligation
(square feet and dollars in thousands)
 
 
Number of Leases
 
Leased
Square Feet
 
Leased Square Feet as a % of Total Portfolio
 
Annualized Rental Income
 
Annualized Rental Income as a % of Total Portfolio
NNN
 
2,522

 
56,435

 
57.5
%
 
$
763,071

 
62.1
%
NN
 
955

 
37,649

 
38.3
%
 
418,805

 
34.0
%
Other (1)
 
58

 
1,872

 
1.9
%
 
47,616

 
3.9
%
Total
 
3,535


95,956

 
97.7
%
 
$
1,229,492

 
100.0
%
___________________________________
(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 | 39

 
 
 
Q2 2016 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
 
2,024

 
29,814

 
30.3
%
 
$
420,052

 
34.1
%
Anchored shopping centers
 
20

 
1,725

 
1.8
%
 
23,856

 
1.9
%
Restaurant
 
1,901

 
9,512

 
9.7
%
 
298,685

 
24.3
%
Industrial & Distribution
 
169

 
40,878

 
41.6
%
 
201,127

 
16.5
%
Office
 
165

 
16,299

 
16.6
%
 
285,202

 
23.2
%
Other(1)
 
12

 
—

 
—
%
 
570

 
—
%
Total
 
4,291


98,229


100.0
%

$
1,229,492


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 | 40

 
 
Q2 2016 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
 
2,024

 
Rentable square feet
 
29,814

 
Economic occupancy rate
 
99.8
%
 
Weighted-average remaining lease term
 
10.5

 
Investment grade tenants
 
49.4
%
 
Flat leases
 
36.6
%
 
NNN leases
 
70.7
%
 



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

 
 
Q2 2016 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 centers
 
20

 
Rentable square feet
 
1,725

 
Economic occupancy rate
 
97.5
%
 
Weighted-average remaining lease term
 
5.3

 
Investment grade tenants
 
32.8
%
 
Flat leases
 
48.0
%
 
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 | 42

 
 
Q2 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


____________________________________________________
______________________________________________________
 
_________________________________________________
_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of restaurant properties
 
1,901

 
Rentable square feet
 
9,512

 
Economic occupancy rate
 
93.7
%
 
Weighted-average remaining lease term
 
14.6

 
Investment grade tenants
 
3.2
%
 
Flat leases
 
6.7
%
 
NNN leases
 
99.4
%
 


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

 
 
Q2 2016 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 and distribution properties
 
169

 
Rentable square feet
 
40,878

 
Economic occupancy rate
 
98.3
%
 
Weighted-average remaining lease term
 
8.2

 
Investment grade tenants
 
56.2
%
 
Flat leases
 
24.6
%
 
NNN leases
 
51.1
%
 


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

 
 
Q2 2016 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
 
165

 
Rentable square feet
 
16,299

 
Economic occupancy rate
 
94.5
%
 
Weighted-average remaining lease term
 
6.6

 
Investment grade tenants
 
65.3
%
 
Flat leases
 
9.2
%
 
NNN leases
 
22.5
%
 


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

 
 
 
Q2 2016 SUPPLEMENTAL INFORMATION


 
Unconsolidated Joint Venture Investment Summary
(unaudited, square feet and dollars in thousands)
 
The following table shows certain information regarding the Company's interests in unconsolidated joint ventures as of June 30, 2016:
 Joint Venture
 
 Partner
 
Ownership % (1)
 
Pro rata Share of Purchase Price
 
 Rentable Square Feet (2)
 
 Annualized Rental Income (2)
 
 Debt (2) (3)
 
 Major Tenants
Cole/Mosaic JV South Elgin IL, LLC
 
Affiliate of Mosaic Properties and Development, LLC
 
50%
 
$
17,000

 
232

 
$
3,007

 
$
20,400

 
Home Depot, Best Buy
Cole/Faison JV Bethlehem GA, LLC
 
Faison-Winder Investors, LLC
 
90%
 
33,429

 
280

 
3,233

 
25,841

 
Publix, Belk
Total
 
 
 
$
50,429

 
512


6,240


46,241

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
4,413

 
$
33,457

 
 
___________________________________
(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 2.85% to 5.20% and maturities ranging from October 2016 to July 2021, with a weighted-average interest rate of 3.89% as of June 30, 2016 and a weighted-average years to maturity of 2.4 years as of June 30, 2016.

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



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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Offering-related fees and reimbursements
 
$
10,914

 
$
12,391

 
$
9,927

 
$
5,850

 
$
5,516

 Transaction service fees and reimbursements
 
4,476

 
2,384

 
5,413

 
7,400

 
7,036

 Management fees and reimbursements
 
17,096

 
16,458

 
17,973

 
14,296

 
13,977

Total Cole Capital revenues
 
32,486


31,233

 
33,313

 
27,546

 
26,529

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
6,975

 
8,068

 
6,558

 
3,896

 
3,710

 Acquisition related
 
14

 
25

 
61

 
74

 
—

 General and administrative
 
19,393

 
17,172

 
32,514

 
16,994

 
17,131

 Depreciation and amortization
 
7,109

 
8,317

 
5,006

 
8,384

 
8,391

 Impairment of intangible assets
 
—

 
—

 
213,339

 
—

 
—

 Total operating expenses
 
33,491

 
33,582

 
257,478

 
29,348

 
29,232

Operating (loss) income
 
(1,005
)
 
(2,349
)
 
(224,165
)
 
(1,802
)
 
(2,703
)
 Total other income, net
 
—

 
494

 
410

 
465

 
392

(Loss) income before taxes
 
(1,005
)

(1,855
)
 
(223,755
)
 
(1,337
)
 
(2,311
)
 Benefit from income taxes
 
2,071

 
1,309

 
37,485

 
738

 
1,869

 Net income (loss)
 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 
$
(442
)


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

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

 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Net income (loss)
 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 
$
(442
)
FFO attributable to common stockholders and limited partners
 
1,066

 
(546
)
 
(186,270
)
 
(599
)
 
(442
)
 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
14

 
25

 
61

 
74

 
—

 Impairment of intangible assets
 
—

 
—

 
213,339

 
—

 
—

 Amortization of management contracts
 
6,240

 
7,451

 
3,373

 
7,510

 
7,510

 Deferred tax benefit (1)
 
(6,417
)
 
(1,457
)
 
(38,695
)
 
(5,701
)
 
(3,874
)
Equity-based compensation expense
 
854

 
931

 
2,471

 
2,943

 
2,998

Other amortization and non-cash charges
 
751

 
743

 
1,539

 
782

 
776

AFFO attributable to common stockholders and limited partners
 
$
2,508

 
$
7,147

 
$
(4,182
)
 
$
5,009

 
$
6,968

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

 
903,339,143

Effect of Limited Partner OP Units and dilutive securities (2)
 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

 
26,348,273

Weighted-average shares outstanding - diluted (3)
 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
929,687,416

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.001

 
$
(0.001
)
 
$
(0.200
)
 
$
(0.001
)
 
$
0.000

AFFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.003

 
$
0.008

 
$
(0.004
)
 
$
0.005

 
$
0.007

___________________________________
(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)
Dilutive securities include unvested restricted shares of common stock and certain unvested restricted stock units.
(3)
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt in cash and any shares underlying restricted stock units that are contingently issuable which are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.
(4)
Refer to the Statements of Operations - Cole Capital Segment section for basic and diluted net loss per share attributable to common stockholders.


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

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

 
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Net income (loss)
 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 
$
(442
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
7,109

 
8,317

 
5,006

 
8,384

 
8,391

Benefit from income taxes
 
(2,071
)
 
(1,309
)
 
(37,485
)
 
(738
)
 
(1,869
)
 EBITDA
 
$
6,104

 
$
6,462

 
$
(218,749
)
 
$
7,047

 
$
6,080

Impairment of intangible assets
 
—

 
—

 
213,339

 
—

 
—

Acquisition related expenses
 
14

 
25

 
61

 
74

 
—

Program development costs write-off
 
2,377

 
—

 
11,295

 
—

 
—

Other amortization and non-cash charges
 
(118
)
 
(123
)
 
(94
)
 
(92
)
 
(105
)
Normalized EBITDA
 
$
8,377

 
$
6,364

 
$
5,852

 
$
7,029

 
$
5,975


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Net G&A
(unaudited, dollars in thousands)

 
In its capacity as advisor to the Cole REITs, Cole Capital incurs certain costs on behalf of the Cole REITs, 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 Cole REITs.
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Cole Capital revenue, net of reallowed fees and commissions
 
$
25,511

 
$
23,165

 
$
26,755

 
$
23,650

 
$
22,819

Less: Expense reimbursements from Cole REITs recorded as revenue
 
7,342

 
7,515

 
8,094

 
4,549

 
4,828

Net Cole Capital Revenue
 
18,169


15,650

 
18,661

 
19,101

 
17,991

Other income
 
—

 
494

 
410

 
465

 
392

Net Cole Capital Revenue and other income
 
$
18,169


$
16,144

 
$
19,071

 
$
19,566

 
$
18,383

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
33,094

 
$
29,400

 
$
49,160

 
$
32,842

 
$
33,958

Less: REI segment general and administrative expenses
 
13,701

 
12,228

 
16,646

 
15,848

 
16,827

Cole Capital general and administrative expenses
 
19,393


17,172

 
32,514

 
16,994

 
17,131

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Cole REITs
 
7,342

 
7,515

 
8,094

 
4,549

 
4,828

Net Cole Capital G&A expense
 
12,051


9,657

 
24,420

 
12,445

 
12,303

Expenses incurred recorded as program development costs
 
973

 
3,433

 
(5,840
)
 
3,002

 
3,728

Normalized Net Cole Capital G&A expense
 
$
13,024


$
13,090

 
$
18,580

 
$
15,447

 
$
16,031

 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Margin
 
46.1
%

39.4
%
 
30.7
%
 
35.9
%
 
32.5
%
Normalized Net Cole Capital G&A expense as percent of Net Cole Capital Revenue and other income
 
71.7
%

81.1
%
 
97.4
%
 
78.9
%
 
87.2
%


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


 
Q2 2016 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 Cole REITs. The reimbursement of these expenses by the Cole REITs 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 Cole REITs in excess of these limits that are expected to be collected as the Cole REITs raise additional funds are recorded as program development costs, which are included in rent and tenant receivables and other assets, net 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 Cole REITs' respective offerings, and reserves for any balances considered not collectible.
The following table presents a rollforward of the program development costs balance:
 
 
Program Development Costs(1) for the Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
Beginning Balance
 
$
13,578

 
$
12,855

 
$
20,878

 
$
19,006

 
$
16,322

 
Expenses incurred
 
6,993

 
6,474

 
8,802

 
5,054

 
6,033

 
Offering-related reimbursement revenue
 
(2,436
)
 
(2,710
)
 
(2,183
)
 
(1,130
)
 
(1,044
)
 
Reserve for uncollectible amounts and write-offs(2)
 
(6,020
)
 
(3,041
)
 
(14,642
)
 
(2,052
)
 
(2,305
)
 
Ending Balance
 
$
12,115


$
13,578

 
$
12,855

 
$
20,878

 
$
19,006

 
___________________________________
(1)
Excludes INAV (as defined in the "Program Summary" of the Cole REITs and Other Real Estate Programs section), as expenses are recorded as incurred and revenue is recorded when reimbursement is received.
(2)
The Company assesses the collectability of the program development costs and records monthly reserves for the portion that is not expected to be collected. Certain triggering events, such as impairment evaluations of the Cole Capital segment and the closing of a Cole REIT's offering, may result in a write-off of additional program development costs. Reserves for uncollectible amounts and write-offs are recorded as a general and administrative expense in the respective period.

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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs
(unaudited, dollars in thousands)
 
Program Summary
The following table shows the Cole REITs and other real estate programs' cumulative activity summary information from each respective program's offering commencement date through or as of June 30, 2016:
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")
 
$
269,548

 
$
12,263

 
116

 
$
499,093

 
$
276,850

Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
260,277

 
8,810

 
90

 
307,919

 
120,769

Cole Office & Industrial REIT (CCIT II), Inc. ("CCIT II")
 
573,840

 
21,594

 
32

 
1,036,223

 
538,565

Total Open Programs
 
1,103,665

 
42,667

 
238

 
1,843,235

 
936,184

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

 
299,188

 
878

 
4,757,496

 
2,172,584

Other Programs(4)
 
—

 
—

 
37

 
404,964

 
179,932

Total Closed Programs
 
2,915,961

 
299,188

 
915

 
5,162,460

 
2,352,516

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
4,019,626

 
$
341,855

 
1,153

 
$
7,005,695

 
$
3,288,700

___________________________________
(1)
Represents gross proceeds, excluding DRIP shares issued.
(2)
Represents the value of shares issued under each respective program's distribution reinvestment plan.
(3)
Includes properties owned through consolidated and unconsolidated joint ventures.
(4)
Includes 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 | 53


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
 
Offering Summary
The following table shows offering summary information for the Cole REITs and other real estate programs as of June 30, 2016:
Program
 
Primary
Investment
Strategy
 
Offering
Commencement
 Date
 
NAV per Share
 
Offering
 Price
 
Annualized
Distribution
CCPT V
 
 
 
 
 
 
 
 



A Shares
 
Retail
 
3/17/2014
 
$
24.00

(1) 
$
26.37

 
(2) 

T Shares (3)
 
Retail
 
4/29/2016
 
$
24.00

(1) 
$
25.26

 
(2) 

 
 
 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
 
 
 
W Shares
 
Diversified
 
12/6/2011
 
$
18.31

(4) 
$
18.31

 
5.34
%
A Shares
 
Diversified
 
10/10/13
 
$
18.21

(4) 
$
18.92

 
5.34
%
I Shares
 
Diversified
 
11/19/13
 
$
18.42

(4) 
$
18.42

 
5.34
%
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
 
 
 
 
 
 
 
 


A Shares
 
Office and Industrial
 
9/17/2013
 
$
10.00

(1) 
$
10.99

 
(5) 

T Shares (3)
 
Office and Industrial
 
4/29/2016
 
$
10.00

(1) 
$
10.53

 
(5) 

 
 
 
 
 
 
 
 
 
 
 
Closed Programs (6)
 
Various
 
Prior to 2012
 
Various

 
Various

 
Various

___________________________________
(1)
Represents the estimated net asset value per share calculated by the Company as of February 29, 2016.
(2)
As of June 30, 2016, CCPT V pays a dividend of $1.575 per share, on an annual basis.
(3)
During the three months ended June 30, 2016, CCPT V and CCIT II designated existing shares of their respective common stock that were sold prior to such date to be Class A shares ("A Shares") and registered a new class of common stock, Class T shares, that were first issued on April 29, 2016.
(4)
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 and expenses and debt service costs and fees.
(5)
As of June 30, 2016, CCIT II pays a dividend of $0.63 per share, on an annual basis.
(6)
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 | 54


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited)

 
Fee Summary

The following table shows the summary of the fee information relating to the offering of the Cole REITs as of June 30, 2016.
Program
 
Selling
Commissions (1)
 
Dealer
Manager Fees (2)
 
Distribution and Stockholder Servicing Fees (2)
 
CCPT V
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
0.8
%
(3) 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
W Shares
 
—

 
0.55
%
(3) 
—

 
A Shares
 
up to 3.75%

 
0.55
%
(3) 
0.50
%
(3) 
I Shares
 
—

 
0.25
%
(3) 
—

 
 
 
 
 
 
 
 
 
CCIT II
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
0.8
%
(3) 
___________________________________
(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 or distribution and stockholder servicing fee to participating broker-dealers as a marketing and due diligence expense reimbursement.
(3)
Fees are calculated on a daily basis and payable monthly in arrears.

The following table shows the summary of the fee information relating to transactions and portfolio management for the Cole REITs and other real estate programs as of June 30, 2016.
 
 
Transaction Fees
 
Management Fees
 
Program
 
Acquisition
Fees (1)
 
Disposition
Fees
 
Liquidation Performance Fees
 
Asset Management / Advisory Fees
 
Performance Fees
 
Open Programs
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
2
%
 
1
%
 
15
%
(2) 
0.65% - 0.75%

(3) 
—


INAV
 
—

 
—

 
N/A

 
0.90
%
 
25
%
(4) 
CCIT II
 
2
%
 
1
%
 
15
%
(2) 
0.65% - 0.75%

(3) 
—


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

(3) 
—


Other Programs
 
Various

 
Various

 
 
 
Various

 
Various

 
___________________________________
(1)
Percent taken on gross purchase price.
(2)
Paid only under the following circumstances: (i) if shares are listed on a national securities exchange; (ii) if the respective 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).
(3)
Annualized fee based on the average monthly invested assets.
(4)
Paid on the amount by 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 | 55


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
Program Activity Summary
The following table shows the Cole REITs and other real estate programs' activity summary information for the three months ended June 30, 2016 :
Program
 
Capital Raised (1)
 
DRIP(2)
 
Number of Investments Acquired
 
Purchase Price of Acquisitions (3)
 
Number of Investments Sold
 
Sales Price of Dispositions
Open Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
$
20,007

 
$
2,153

 
—

 
$
—

 
—

 
$
—

INAV
 
35,868

 
1,354

 
11

 
23,948

 
—

 
—

CCIT II
 
82,780

 
4,492

 
2

 
144,069

 
—

 
—

Total Open Programs
 
138,655


7,999


13

 
168,017

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
27,492

 
1

 
43,161

 
2

 
10,187

Other Programs(4)
 
—

 
—

 
—

 
—

 
5

 
21,463

Total Closed Programs
 
—

 
27,492

 
1

 
43,161

 
7

 
31,650

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
138,655

 
$
35,491

 
14

 
$
211,178

 
7

 
$
31,650

___________________________________
(1)
Represents gross proceeds, excluding DRIP shares issued.
(2)
Represents the value of shares issued under each respective program's distribution reinvestment plan.
(3)
Includes any GAAP adjustments, such as fair value adjustments of assumed notes payable and earn-out provisions.
(4)
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 | 56


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
Revenue Summary
The following table shows revenue earned from the Cole REITs and other real estate programs for the three months ended June 30, 2016 by activity type (dollars in thousands):
Program
 
Offering-Related Fees and Reimbursements
 
Transaction Service Revenue and Reimbursements
 
Management Service Revenue and Reimbursements
 
Total Revenue and Reimbursements
Open Programs:
 
 
 
 
 
 
 
 
CCPT V
 
$
2,016

 
$
—

 
$
1,704

 
$
3,720

INAV
 
1,040

 
373

 
1,098

 
2,511

CCIT II
 
7,858

 
3,010

 
2,638

 
13,506

Gross revenue - Open Programs
 
10,914

 
3,383

 
5,440

 
19,737

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
6,975

 
—

 
—

 
6,975

Reimbursements
 
2,436

 
508

 
2,118

 
5,062

Net Cole Capital Revenue - Open Programs
 
1,503

 
2,875

 
3,322

 
7,700

 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCPT IV
 
—

 
1,031

 
11,370

 
12,401

Other Programs
 
—

 
62

 
286

 
348

Gross revenue - Closed Programs
 
—

 
1,093

 
11,656

 
12,749

Less:
 
 
 
 
 
 
 
 
Reimbursements
 
—

 
148

 
2,132

 
2,280

Net Cole Capital Revenue - Closed Programs
 
—

 
945

 
9,524

 
10,469

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
1,503

 
$
3,820

 
$
12,846

 
$
18,169















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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
The following tables present the primary revenue drivers and Net Cole Capital Revenue earned by activity type for the Cole REITs and other real estate programs:
Offering-related fees and reimbursements
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Capital raised (excluding DRIP)
 
$
138,655

 
$
144,620

 
$
116,634

 
$
66,603

 
$
58,236

 
 
 
 
 
 
 
 
 
 
 
Securities commissions
 
6,063

 
7,041

 
5,756

 
3,328

 
3,243

Dealer manager and distribution fees
 
2,415

 
2,640

 
1,988

 
1,258

 
1,168

Reimbursement revenue
 
2,436

 
2,710

 
2,183

 
1,264

 
1,105

Gross offering-related revenue
 
10,914


12,391

 
9,927

 
5,850

 
5,516

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
6,063

 
7,041

 
5,756

 
3,328

 
3,243

Reallowed dealer manager and distribution fees
 
912

 
1,027

 
802

 
568

 
467

Reimbursement revenue
 
2,436

 
2,710

 
2,183

 
1,264

 
1,105

Net offering-related revenue
 
$
1,503


$
1,613

 
$
1,186

 
$
690

 
$
701

Transaction service revenue
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Purchase price of acquisitions(1)
 
$
211,178

 
$
102,075

 
$
236,398

 
$
315,301

 
$
214,694

 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
3,758

 
1,702

 
3,829

 
6,233

 
4,192

Performance fees
 
—

 
—

 
—

 
—

 
—

Disposition fees
 
62

 
—

 
1,013

 
764

 
2,224

Reimbursement revenue
 
656

 
682

 
571

 
403

 
620

Gross transaction service revenue
 
4,476


2,384

 
5,413

 
7,400

 
7,036

Less: Reimbursement revenue
 
656

 
682

 
571

 
403

 
620

Net transaction service revenue
 
$
3,820


$
1,702

 
$
4,842

 
$
6,997

 
$
6,416

_______________________________________________
(1) Purchase price of acquisitions includes any GAAP adjustments, such as fair value adjustments of assumed notes payable and earn-out provisions.

Management service revenue
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Assets under management
 
$
7,005,695

 
$
6,827,885

 
$
6,740,911

 
$
6,561,950

 
$
6,286,402

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
286

 
285

 
359

 
416

 
371

Advisory and performance fee revenue
 
12,560

 
12,050

 
12,274

 
10,998

 
10,503

Reimbursement revenue
 
4,250

 
4,123

 
5,340

 
2,882

 
3,103

Gross management service revenue
 
17,096


16,458

 
17,973

 
14,296

 
13,977

Less: Reimbursement revenue
 
4,250

 
4,123

 
5,340

 
2,882

 
3,103

Net management service revenue

$
12,846


$
12,335

 
$
12,633

 
$
11,414

 
$
10,874


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


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
(unaudited, dollars in thousands)

 
The following table shows the capital raised on behalf of programs managed by Cole Capital since 2009:
_______________________________________________
(1) Represents capital raised on behalf of Cole REITs for six months ended June 30, 2016.



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 | 59


 
Q2 2016 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 Cole REITs and other real estate programs' total gross real estate assets, including net investments in unconsolidated entities, net of gross intangible lease liabilities.

Cash Cap Rate equals the estimated future 12-month Cash 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 the REI segment Contract Rental Revenue for the three months ended June 30, 2016 and 2015 (dollar amounts in thousands):
 
 
Three Months Ended June 30,
 
 
2016
 
2015
 Rental income - as reported
 
$
311,352

 
$
341,183

 Direct financing lease income - as reported
 
535

 
697

Adjustments:
 
 
 
 
Straight line rent
 
(16,252
)
 
(23,997
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,064

Net direct financing lease adjustments
 
590

 
491

Contract Rental Revenue
 
$
297,473

 
$
319,438


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 as a net asset on the balance sheet. 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).



VEREIT, Inc. | WWW.VEREIT.COM | 60


 
Q2 2016 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.
Economic Occupancy equals the sum of square feet leased (including month-to-month agreements) divided by total square feet.
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 supplemental performance measure known as FFO, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. 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. We calculated FFO in accordance with NAREIT's definition described above.
In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition related costs, litigation and other non-routine costs, gains or losses on sale of investment securities or loans held for investment, insurance recoveries and legal settlements. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rental revenue, unrealized gains or losses on derivatives, reserves for loan loss, gain or loss on the extinguishment or forgiveness of debt, non-current portion of the tax benefit or expense, equity-based compensation and amortization of intangible assets, 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 allows for a comparison of the performance of our operations with 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.


VEREIT, Inc. | WWW.VEREIT.COM | 61


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), 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 income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, NAREIT, nor any other regulatory body has evaluated the acceptability of the exclusions used 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 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.
Industry is derived from the North American Industry Classification System, NAICS, which is a system used by Federal statistical agencies to classify business establishments, for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.
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.
Metropolitan Statistical Area (MSA) is a large metropolitan area represented by a large group of zip codes, as defined by Real Capital Analytics.
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 Cole REITs, 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.
Net Cole Capital Revenue
Cole Capital incurs certain costs on behalf of the Cole REITs, which are reimbursable. In accordance with GAAP, Cole Capital records the reimbursement of these costs as fee and commission revenue and as reimbursement revenue and records the expense in reallowed fees and commissions and general and administrative expenses. We believe Net Revenue is a helpful supplemental measure in determining the effective revenue earned by the Company, eliminating any gross up presentation required by GAAP.
Net Debt is a non-GAAP measure used to show the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, less all cash and cash equivalents. We believe that the presentation of net debt provides useful information to investors because our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage.
Net Debt Leverage Ratio equals Net Debt divided by Gross Real Estate Investments.
Net Debt to Normalized EBITDA Annualized equals Net Debt divided by the current quarter Normalized EBITDA multiplied by four.


VEREIT, Inc. | WWW.VEREIT.COM | 62


 
Q2 2016 SUPPLEMENTAL INFORMATION

 
Definitions (cont.)
 
Net Operating Income ("NOI") and Cash NOI
NOI is a non-GAAP performance measure used to evaluate the operating performance of a real estate company. NOI represents rental and other property income and tenant reimbursement income less property operating expenses. NOI excludes depreciation and amortization, general and administrative expenses, acquisition related expenses and litigation and other non-routine costs. 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 operating income. Further, NOI and Cash NOI may not be comparable to similarly titled measures of other companies.
The following table shows the calculation of the REI segment NOI and Cash NOI for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Operating income (loss)
 
84,628

 
$
(60,804
)
 
$
101,302

 
$
99,730

 
$
4,877

Acquisition related
 
27

 
217

 
673

 
1,690

 
1,563

Litigation and other non-routine costs, net of insurance recoveries
 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

 
16,864

General and administrative
 
13,701

 
12,228

 
16,646

 
15,848

 
16,827

Depreciation and amortization
 
190,236

 
195,991

 
197,409

 
200,158

 
209,122

Impairment of real estate
 
8,825

 
160,517

 
6,414

 
—

 
85,341

NOI
 
300,334

 
302,974

 
314,753

 
325,458

 
334,594

Straight-line rent, net of bad debt expense related to straight-line rent
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
 
(23,997
)
Amortization of below-market lease liabilities, net of amortization of above-market lease assets
 
1,248

 
1,296

 
1,299

 
1,152

 
1,064

Net direct financing lease adjustments
 
590

 
559

 
544

 
507

 
491

 Cash NOI
 
$
286,509

 
$
291,784

 
$
299,007

 
$
305,412

 
$
312,152

Normalized Cash NOI equals our Cash NOI for our most recently reported quarter and eliminates the Cash NOI for properties acquired or developments completed during the most recently reported quarter and replaces Cash NOI for the partial period with an amount estimated to be equivalent to Cash NOI for the full period. Additionally, Normalized Cash NOI eliminates the Cash NOI contributed by properties disposed of during the most recently reported period. It is management's view that Normalized Cash NOI provides investors relevant and useful information because it reflects only the Cash NOI of properties owned as of the most recent reporting period. Normalized Cash NOI should not be considered as an alternative to operating income.
Normalized EBITDA Annualized equals Normalized EBITDA, for the respective quarter, multiplied by four.
Normalized 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.
Normalized Net Cole Capital G&A Expense equals Net Cole Capital G&A Expense adjusted for the net change in program development costs. 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.
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 debt balance, excluding certain GAAP adjustments, such as premiums, discounts and deferred financing costs.
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).


VEREIT, Inc. | WWW.VEREIT.COM | 63