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SPIRIT REALTY CAPITAL, INC.

(SRC)
  Report
Real-time Estimate Cboe BZX  -  03:14 2022-09-26 pm EDT
37.44 USD   -2.35%
08/30JPMorgan Adjusts Spirit Realty Capital's Price Target to $52 from $50, Maintains Overweight Rating
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08/22Spirit Realty Capital, Inc. : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K)
AQ
08/22Spirit Realty Capital Details $800 Million Unsecured Term Loan Facility
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Spirit Realty Capital, Inc. Announces Second Quarter of 2022 Financial and Operating Results

08/03/2022 | 04:09pm EDT

– Generated Net Income per Share of $0.60, FFO per Share of $0.92 and AFFO per Share of $0.90 –

– Invested $416.6 Million in Acquisitions and Revenue-Producing Capital Expenditures –

– Generated $103.3 Million in Gross Proceeds from Dispositions –

Spirit Realty Capital, Inc. (NYSE: SRC) ("Spirit" or the "Company"), a net-lease real estate investment trust ("REIT") that invests in single-tenant, operationally essential real estate, today reported its financial and operating results for the second quarter ended June 30, 2022.

HIGHLIGHTS

  • Generated net income of $0.60 vs $0.74 per diluted share, FFO per share of $0.92 vs $1.00 and AFFO per share of $0.90 vs $0.86, compared to the same quarter in 2021.
  • Invested $416.6 million in the second quarter at a Cash Capitalization Rate of 6.37%, including the acquisition of 56 properties across 38 transactions with a weighted average lease term of 14.4 years.
  • Generated $103.3 million in gross proceeds from the disposition of 17 properties, including 10 occupied properties at a Disposition Capitalization Rate of 4.38%.
  • Issued 2.0 million shares of common stock to settle certain forward contracts, generating net proceeds of $90.0 million. As of June 30, 2022, Spirit had unsettled forward contracts for 1.1 million shares of common stock.
  • Maintained strong operational performance, with occupancy of 99.8%, Lost Rent of 0.03% and Unreimbursed Property Costs of 1.3%.
  • Had Adjusted Debt to Annualized Adjusted EBITDAre of 5.2x as of June 30, 2022.
  • Held Corporate Liquidity of $594.3 million as of June 30, 2022, comprised of availability under the 2019 Credit Facility, cash and cash equivalents, restricted cash, and available proceeds from unsettled forward equity contracts.
  • Subsequent to June 30, 2022, the Company received commitments for $800 million of term loans comprised of a $500 million five-year term loan and $300 million three-year term loan. Additionally, the Company entered into interest rate swap agreements to swap one-month SOFR to a fixed payment for five years for a notional amount of $500 million and for three years for a notional amount of $300 million. The interest rate swaps would result in an average effective rate of 3.45% for the five-year term loan and 3.59% for the three-year term loan.

CEO COMMENTS

“We are very pleased with our second quarter capital deployment of $416.6 million, including the acquisition of 56 properties, and the continued excellent performance metrics produced by our portfolio. During the quarter, we further validated our investment approach through accretive dispositions, which we expect will continue through the back half of the year. As we look forward, we are seeing better investment opportunities and are excited about our ability to generate attractive risk adjusted returns for our investors,” stated Jackson Hsieh, President and Chief Executive Officer.

DIVIDEND

For the second quarter of 2022, the Board of Directors declared a quarterly cash dividend of $0.638 per share of common stock, representing an annualized rate of $2.552 per share. The Board of Directors also declared a quarterly cash dividend of $0.375 per preferred share. The quarterly common dividend was paid on July 15, 2022 to stockholders of record as of June 30, 2022, and the preferred dividend was paid on June 30, 2022 to stockholders of record as of June 15, 2022.

2022 GUIDANCE

The Company maintained its previously announced guidance for fiscal year 2022:

  • AFFO per share of $3.52 to $3.58
  • Capital deployment of approximately $1.5 billion (comprised of acquisitions and revenue producing capital expenditures)
  • Dispositions of approximately $200 million to $300 million

The Company does not provide a reconciliation for its guidance range of AFFO per diluted share to net income available to common stockholders per diluted share, the most directly comparable forward looking GAAP financial measure, due to the inherent variability in timing and/or amount of various items that could impact net income available to common stockholders per diluted share, including, for example, gains/losses on debt extinguishment, impairments and other items that are outside the control of the Company.

EARNINGS WEBCAST AND CONFERENCE CALL TIME

The Company's second quarter 2022 earnings conference call is scheduled for Thursday, August 4, 2022 at 9:30am Eastern Time. Interested parties can listen to the call via the following:

Internet:

Go to www.spiritrealty.com and select the corporate information page under investor relations at least 15 minutes prior to the start time of the call to register, download and install any necessary audio software.

 

 

Phone:

No access code required.

(855) 327-6837 (Domestic) / (631) 891-4304 (International)

 

Replay:

Available through Thursday, August 18, 2022 with access code 10019653.

(844) 512-2921 (Domestic) / (412) 317-6671 (International)

SUPPLEMENTAL PACKAGES

A supplemental financial and operating report and associated addenda that contain non-GAAP measures and other defined terms, along with this press release, have been posted to the investor relations page of the Company's website at www.spiritrealty.com.

ABOUT SPIRIT REALTY

Spirit Realty Capital, Inc. (NYSE: SRC) is a premier net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets, subject to long-term leases.

As of June 30, 2022, our diverse portfolio consisted of 2,078 retail, industrial and other properties across 49 states, which were leased to 342 tenants operating in 35 industries. As of June 30, 2022, our properties were approximately 99.8% occupied. More information about Spirit Realty Capital can be found on the investor relations page of the Company's website at www.spiritrealty.com.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words and phrases such as “preliminary,” “expect,” “plan,” “will,” “estimate,” “project,” “intend,” “believe,” “guidance,” “approximately,” “anticipate,” “may,” “should,” “seek,” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate to historical matters but are meant to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. These forward-looking statements are subject to known and unknown risks and uncertainties that you should not rely on as predictions of future events. Forward-looking statements depend on assumptions, data and/or methods which may be incorrect or imprecise, and Spirit may not be able to realize them. Spirit does not guarantee that the events described will happen as described (or that they will happen at all). The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: industry and economic conditions; volatility and uncertainty in the financial markets, including potential fluctuations in the Consumer Price Index; Spirit's success in implementing its business strategy and its ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments; the financial performance of Spirit's retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers; Spirit's ability to diversify its tenant base; the nature and extent of future competition; increases in Spirit's costs of borrowing as a result of changes in interest rates and other factors; Spirit's ability to access debt and equity capital markets; Spirit's ability to pay down, refinance, restructure and/or extend its indebtedness as it becomes due; Spirit's ability and willingness to renew its leases upon expiration and to reposition its properties on the same or better terms upon expiration in the event such properties are not renewed by tenants or Spirit exercises its rights to replace existing tenants upon default; the impact of any financial, accounting, legal or regulatory issues or litigation that may affect Spirit or its major tenants; Spirit's ability to manage its expanded operations; Spirit's ability and willingness to maintain its qualification as a REIT under the Internal Revenue Code of 1986, as amended; the impact on Spirit’s business and those of its tenants from epidemics, pandemics or other outbreaks of illness, disease or virus (such as the strain of coronavirus known as COVID-19); and other risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters discussed in Spirit's most recent filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. You are cautioned not to place undue reliance on forward-looking statements which are based on information that was available, and speak only, as of the date on which they were made. While forward-looking statements reflect Spirit's good faith beliefs, they are not guarantees of future performance. Spirit expressly disclaims any responsibility to update or revise forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

NOTICE REGARDING NON-GAAP FINANCIAL MEASURES

In addition to U.S. GAAP financial measures, this press release and the referenced supplemental financial and operating report and related addenda contain and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Definitions of non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are included in the supplemental financial and operating report, which can be found in the investor relations page of our website.

(SRC:ER)

SPIRIT REALTY CAPITAL, INC.

Reconciliation of Non-GAAP Financial Measures

(In Thousands, Except Share and Per Share Data)

(Unaudited)

 

FFO and AFFO

(Unaudited)

Three Months Ended June 30,

2022

2021

Net income attributable to common stockholders1

$

80,152

 

$

85,336

 

Portfolio depreciation and amortization

72,755

 

59,933

 

Portfolio impairments

9,398

7,800

 

Gain on disposition of assets

(38,928

)

(37,507

)

FFO attributable to common stockholders

$

123,377

 

$

115,562

 

Loss on debt extinguishment

10

Deal pursuit costs

655

257

Non-cash interest expense, excluding capitalized interest

2,258

2,344

Straight-line rent, net of uncollectible reserve

(9,015)

(21,428

)

Other amortization and non-cash charges

(578)

(761

)

Non-cash compensation expense

4,387

3,614

Costs related to COVID-192

 

 

 

274

 

AFFO attributable to common stockholders

$

121,084

 

$

99,872

 

 

 

Dividends declared to common stockholders

$

86,987

$

74,436

Dividends declared as a percent of AFFO

72%

75%

 

 

 

 

 

 

 

Net income per share of common stock – Basic

$

0.60

$

0.74

Net income per share of common stock – Diluted

$

0.60

$

0.74

FFO per share of common stock – Diluted3

$

0.92

$

1.00

AFFO per share of common stock – Diluted3

$

0.90

 

$

0.86

 

 

 

 

 

 

Weighted average shares of common stock outstanding – Basic

134,147,541

 

115,005,740

Weighted average shares of common stock outstanding – Diluted

134,219,450

 

115,557,555

 

1

Net Income for the three months ended June 30, 2021 includes $7.0 million of recoveries related to prior period base cash rent not deemed probable of collection.

2

Costs related to COVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements.

3

Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted:

 

Three Months Ended June 30,


2022

2021

FFO

$0.2 million

$0.2 million

AFFO

$0.2 million

$0.2 million

SPIRIT REALTY CAPITAL, INC.

Reconciliation of Non-GAAP Financial Measures

(In Thousands, Except Share and Per Share Data)

(Unaudited)

 

Adjusted Debt, EBITDAre and Adjusted EBITDAre

Adjusted Debt

June 30, 2022

2019 Credit Facility

$

694,500

Senior Unsecured Notes, net

2,720,562

Mortgages payable, net

5,271

Total debt, net

3,420,333

Unamortized debt discount, net

10,196

 

Unamortized deferred financing costs

19,062

 

Cash and cash equivalents

(5,444

)

Restricted cash

 

(31,517

)

Adjusted Debt

3,412,630

Preferred Stock at liquidation value

172,500

Adjusted Debt + Preferred Stock

$

3,585,130

Annualized Adjusted EBITDAre

Quarter Ended
June 30, 2022

Net income

$

82,740

 

 

Interest

27,594

 

 

Depreciation and amortization

72,898

 

 

Income tax expense

207

 

 

Gain on disposition of assets

(38,928

)

 

Portfolio impairments

9,398

 

 

EBITDAre

153,909

 

 

Adjustments to revenue producing acquisitions and dispositions

3,408

 

 

Construction rent collected, not yet recognized in earnings

640

 

 

Deal pursuit costs

 

655

 

 

Non-cash compensation expense

 

4,387

 

 

Adjusted EBITDAre

162,999

 

 

Other adjustments for Annualized EBITDAre1

(157

)

 

Annualized Adjusted EBITDAre

$

651,368

 

 

Adjusted Debt / Annualized Adjusted EBITDAre2

 

5.2x

Adjusted Debt + Preferred / Annualized Adjusted EBITDAre3

 

5.5x

1

Adjustment relates to current period recoveries related to prior period rent deemed not probable of collection, prior period rental income, and prior period property costs.

2

Adjusted Debt / Annualized Adjusted EBITDAre would be 5.2x and Adjusted Debt + Preferred / Annualized Adjusted EBITDAre would be 5.4x if the 1.1 million shares under open forward sales agreements had been settled as of June 30, 2022.

 


© Business Wire 2022
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Financials (USD)
Sales 2022 702 M - -
Net income 2022 238 M - -
Net Debt 2022 3 583 M - -
P/E ratio 2022 21,8x
Yield 2022 6,73%
Capitalization 5 227 M 5 227 M -
EV / Sales 2022 12,5x
EV / Sales 2023 11,4x
Nbr of Employees -
Free-Float 94,6%
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Number of Analysts 19
Last Close Price 38,34 $
Average target price 48,54 $
Spread / Average Target 26,6%
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Managers and Directors
Jackson Hsieh President, Chief Executive Officer & Director
Michael C. Hughes Chief Financial Officer & Executive Vice President
Richard I. Gilchrist Chairman
Kenneth Heimlich Chief Investment Officer & Executive VP
Jay A. Young Executive VP, Chief Administrative & Legal Officer
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