Spirit Finance (NYSE:SFC)
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Spirit Finance Corporation (NYSE: SFC), a real estate investment trust
(REIT) focused on single tenant, operationally essential real estate,
today announced results for the third quarter and nine months ended
September 30, 2006.
Third Quarter Financial Highlights
Third quarter 2006 funds from operations (FFO) reached a record
$26.4 million, or $0.27 per diluted share - a 50% per share increase
year over year. Net income increased to $17.0 million, or $0.17 per
diluted share, up 70% on a per share basis from $6.7 million or $0.10
per share in the comparable quarter of 2005. Revenue from continuing
operations increased 141% to $55.8 million as compared to $23.1 million
in the third quarter of 2005. The solid growth in operating results is
primarily attributable to the significant volume of real estate
acquisitions the Company achieved over the past twelve months. A
reconciliation of net income, calculated in accordance with U.S.
generally accepted accounting principles, to FFO is included in the
accompanying tables.
Mr. Christopher H. Volk, President and Chief Executive Officer, stated, “This
year continues to be a momentous one for Spirit. We have continued to
achieve significant quarterly FFO and FFO per share growth, which
excludes an additional 8% per share growth resulting from opportunistic
gains on asset sales. Our portfolio has grown over 100% in the past 12
months by selectively acquiring over $1.3 billion of real estate
investments from approximately $8.0 billion of potential transactions we
reviewed. We have maintained our investment return goals and our
investment discipline and are poised for more growth in the fourth
quarter.”
Nine Month Highlights
Net income for the nine months ended September 30, 2006 increased to
$36.4 million, or $0.42 per diluted share, as compared to net income of
$20.9 million, or $0.31 per share, for the same period in 2005. Revenue
from continuing operations grew appreciably to $131.7 million versus
$54.6 million in 2005. Spirit Finance generated FFO of $62.6 million, or
$0.73 per diluted share - a 46% per share increase as compared to $0.50
per share in 2005.
Portfolio Highlights
Spirit Finance’s real estate investment
portfolio totaled $2.5 billion at September 30, 2006, a 103% increase
over September 30, 2005. The portfolio consisted of 914 owned or
financed properties, including $64.6 million of mortgage loans secured
by real estate and other loans primarily secured by equipment used in
the operation of properties owned by the Company. At September 30, 2006,
90% of the Company’s investment portfolio was
match-funded with long-term debt. Spirit Finance completed $74.3 million
of gross investments in real estate properties and loans related to 34
property locations throughout the U.S. in the third quarter of 2006.
This brings the year-to-date investment activity to more than $1.1
billion.
The Company’s real estate portfolio is
diversified geographically throughout 43 states and among the many
industries in which the Company’s customers
operate. Only two states, Wisconsin (13%) and Texas (11%), accounted for
10% or more of the total dollar value of the real estate investment
portfolio at September 30, 2006. The three largest industries in which
Spirit’s customers operate as a percentage of
the total investment portfolio were general and discount retailers
(33%), restaurants (21%) and specialty retailers (10%). The Company’s
real estate investments also include movie theaters, educational
facilities, automotive dealers, parts and service facilities,
recreational facilities, industrial properties and supermarkets. The
largest individual tenant was ShopKo Stores Operating Co., LLC, at 29%,
with no other individual tenant representing greater than 4% of the
total investment portfolio.
Guidance
Assuming additional real estate transactions are completed during 2006,
the timing of which will determine how much of the acquisitions will
contribute to 2006 FFO, management now expects FFO per diluted share for
2006 to range from $0.99 to $1.02.
Dividend
A third quarter 2006 dividend of $0.21 per common share was paid on
October 25, 2006 to stockholders of record as of October 15, 2006.
Conference Call
Spirit Finance will hold a conference call and webcast to discuss the
Company's third quarter results at 5:00 p.m. (Eastern Time) today.
Hosting the call will be Morton Fleischer, Chairman, Christopher Volk,
President and Chief Executive Officer, and Catherine Long, Chief
Financial Officer.
The call will be webcast live over the Internet at www.spiritfinance.com
under the section entitled “Investors.”
Participants should follow the instructions provided on the website for
the download and installation of audio applications necessary to join
the webcast. The call can also be accessed live over the phone by
dialing (888) 802-2266 or (913) 312-1270 for international callers.
A replay of the call will be available one hour after the call and can
be accessed by dialing (888) 203-1112 or (719) 457-0820 for
international callers; the password is 4949736. The replay will be
available from November 2, 2006 through November 9, 2006 and will be
archived for a limited time on Spirit Finance Corporation’s
website.
About Spirit Finance Corporation
Spirit Finance Corporation provides customized, flexible sale/leaseback
financing solutions for single tenant, operationally essential real
estate assets that are vital to the operations of retail, service and
distribution companies. The Company's core markets include free-standing
automotive dealers, parts and service facilities, drugstores,
educational facilities, movie theaters, restaurants, supermarkets, and
other retail, distribution and service businesses. Additional
information about Spirit Finance Corporation is available on the
Company's website.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not historical
facts are forward-looking statements as the term is defined in the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by the use of words such as “expects,”
“plans,” “estimates,”
“projects,” “intends,”
“believes,” “guidance,”
and similar expressions that do not relate to historical matters. These
forward-looking statements are subject to risks and uncertainties which
can cause actual results to differ materially from those currently
anticipated, due to a number of factors which include, but are not
limited to, continued ability to source new investments, changes in
interest rates and/or credit spreads, changes in the real estate
markets, and other risk factors discussed in Spirit Finance Corporation’s
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other
documents filed by the Company with the Securities and Exchange
Commission from time to time. All forward-looking statements in
this press release are made as of today, based upon information knownto
management as of the date hereof, and the Company assumes no obligations
to update or revise any of its forward-looking statements even if
experience or future changes show that indicated results or events will
not be realized.
Spirit Finance Corporation
Consolidated Statements of Operations
Unaudited
(dollars in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Revenues:
Rentals
$ 53,272
$ 20,938
$ 124,048
$ 49,927
Interest income on loans receivable
1,488
1,028
4,642
2,916
Other interest income
1,045
1,163
2,970
1,792
Total revenues
55,805
23,129
131,660
54,635
Expenses:
General and administrative
4,209
3,174
12,523
8,998
Depreciation and amortization
12,702
5,583
30,559
12,649
Interest
25,770
8,401
59,036
14,265
Total expenses
42,681
17,158
102,118
35,912
Income from continuing operations
13,124
5,971
29,542
18,723
Discontinued operations (a):
Income from discontinued operations
353
239
2,025
1,557
Net gains on sales of real estate
3,572
442
4,839
669
Total discontinued operations
3,925
681
6,864
2,226
Net income
$ 17,049
$ 6,652
$ 36,406
$ 20,949
Net income per common share:
Basic:
Continuing operations
$ 0.13
$ 0.09
$ 0.34
$ 0.28
Discontinued operations
0.04
0.01
0.08
0.03
Net income
$ 0.17
$ 0.10
$ 0.42
$ 0.31
Diluted:
Continuing operations
$ 0.13
$ 0.09
$ 0.34
$ 0.28
Discontinued operations
0.04
0.01
0.08
0.03
Net income
$ 0.17
$ 0.10
$ 0.42
$ 0.31
Weighted average outstanding common shares (b):
Basic
98,442,914
67,310,586
85,680,951
67,216,680
Diluted
98,668,627
67,543,650
85,945,685
67,429,591
Dividends declared per common share
$ 0.21
$ 0.19
$ 0.63
$ 0.57
(a) Periodically, Spirit Finance may sell real estate properties.
The Company considers these occasional sales of real estate
properties to be an integral part of its overall business strategy
in acquiring a diversified real estate investment portfolio.
Proceeds from the sales of real estate investments are reinvested
in real estate properties such that cash flows from ongoing
operations are not negatively affected by sales of individual
properties. Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets,"
requires that gains and losses from any such dispositions of
properties and all operations from these properties be reported as
"discontinued operations." As a result, each time a property is
sold, the operations of such property previously reported as part
of "income from continuing operations" are reclassified into
discontinued operations. This presentation has no impact on net
income.
(b) The increase in the number of weighted average shares
outstanding from 2005 to 2006 is primarily the result of public
stock offerings completed during 2006 totaling approximately 31
million common shares.
Spirit Finance Corporation
Consolidated Balance Sheets
(dollars in thousands)
September 30,
December 31,
2006
2005
ASSETS
(Unaudited)
Investments:
Real estate investments, net
$ 2,392,683
$ 1,382,853
Loans receivable
64,638
59,008
Net investments
2,457,321
1,441,861
Cash and cash equivalents
61,779
30,536
Lease intangibles, net (a)
21,500
21,395
Other assets
26,306
19,633
Total assets
$ 2,566,906
$ 1,513,425
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt obligations:
Secured credit facilities
$ 3,062
$ 229,855
Mortgages and notes payable
1,611,000
664,929
Total debt obligations
1,614,062
894,784
Dividends payable
20,809
14,209
Other liabilities
29,581
11,639
Total liabilities
1,664,452
920,632
Stockholders' equity
902,454
592,793
Total liabilities and stockholders' equity
$ 2,566,906
$ 1,513,425
(a) Lease intangibles represent the value of in-place leases and
arise from the allocation of the purchase price of the real estate
properties acquired to their tangible and intangible asset values.
Spirit Finance Corporation
Reconciliation of Non-GAAP Financial Measures
Unaudited
(dollars in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Net income
$ 17,049
$ 6,652
$ 36,406
$ 20,949
Add: Portfolio depreciation and amortization expense (a)
12,701
5,661
30,732
13,195
Less: Net gains on sales of real estate held for investment (b)
(3,372)
(442)
(4,503)
(669)
Funds from operations (FFO)
26,378
11,871
62,635
33,475
Less: Straight-line rental revenue, net of allowance
(407)
(299)
(1,166)
(809)
Adjusted funds from operations (AFFO)
$ 25,971
$ 11,572
$ 61,469
$ 32,666
Net income per diluted share
$ 0.17
$ 0.10
$ 0.42
$ 0.31
FFO per diluted share (b)
$ 0.27
$ 0.18
$ 0.73
$ 0.50
AFFO per diluted share (b)
$ 0.26
$ 0.17
$ 0.72
$ 0.48
Weighted average outstanding common shares (diluted)
98,668,627
67,543,650
85,945,685
67,429,591
(a) Includes depreciation and amortization expense related to
discontinued operations.
(b) Reconciliation of net gains on sales of real estate by type:
Total net gains on sales of real estate
$ 3,572
$ 442
$ 4,839
$ 669
Less: Net gains on real estate purchased for development and sale
(included in FFO and AFFO above)
(200)
-
(336)
-
Net gains on sales of real estate held for investment
$ 3,372
$ 442
$ 4,503
$ 669
Net gains on sales of real estate held for investment per diluted
share
(not included in FFO and AFFO above)
$ 0.03
$ 0.01
$ 0.05
$ 0.01
Non-GAAP Financial Measures
Included in this press release are certain "non-GAAP financial
measures," which are measures of the Company's historical or
future financial performance that are different from measures
calculated and presented in accordance with generally accepted
accounting principles (GAAP). Non-GAAP financial measures used in
this press release include funds from operations (FFO) and
adjusted funds from operations (AFFO).
Spirit Finance calculates FFO consistent with the definition used by
the National Association of Real Estate Investment Trusts (NAREIT),
adopted to promote an industry-wide standard measure of REIT
operating performance. Spirit Finance uses FFO as a measure of
performance to adjust for certain non-cash expenses such as
depreciation and amortization because historical cost accounting for
real estate assets implicitly assumes that the value of real estate
assets diminishes predictably over time. FFO also excludes gains (or
includes losses) on dispositions of real estate held for investment.
Spirit Finance further adjusts FFO to remove the effects of
straight-line rental revenue. The Company believes this calculation,
called AFFO, is an appropriate measure that is useful for investors
because it more closely reflects the cash rental payments received
by the Company and provides investors with an understanding of the
Company's ability to pay dividends. Spirit Finance uses FFO and AFFO
as measures to evaluate performance and to facilitate comparisons
between the Company and other REITs, although FFO, AFFO and the
related per share amounts may not be calculated in the same manner
by other REITs and thus may not be directly comparable to those
measures reported by other REITs.
Neither FFO nor AFFO should be considered an alternative to net
income determined in accordance with GAAP as a measure of
profitability, nor should these measures be considered an equivalent
to cash flows provided by operating activities determined in
accordance with GAAP as a measure of liquidity.
Spirit Finance expects FFO per diluted share for 2006 to range from
$0.99 to $1.02. FFO for 2006 is based on an estimated net income per
diluted share range of $0.55 to $0.58, adjusted (in accordance with
NAREIT's definition of FFO) for estimated real estate depreciation
of $0.49 per diluted share and less net gains on sales of real
estate held for investment of $0.05 per diluted share.
Spirit Finance Corporation (NYSE: SFC), a real estate investment
trust (REIT) focused on single tenant, operationally essential real
estate, today announced results for the third quarter and nine months
ended September 30, 2006.
Third Quarter Financial Highlights
Third quarter 2006 funds from operations (FFO) reached a record
$26.4 million, or $0.27 per diluted share - a 50% per share increase
year over year. Net income increased to $17.0 million, or $0.17 per
diluted share, up 70% on a per share basis from $6.7 million or $0.10
per share in the comparable quarter of 2005. Revenue from continuing
operations increased 141% to $55.8 million as compared to
$23.1 million in the third quarter of 2005. The solid growth in
operating results is primarily attributable to the significant volume
of real estate acquisitions the Company achieved over the past twelve
months. A reconciliation of net income, calculated in accordance with
U.S. generally accepted accounting principles, to FFO is included in
the accompanying tables.
Mr. Christopher H. Volk, President and Chief Executive Officer,
stated, "This year continues to be a momentous one for Spirit. We have
continued to achieve significant quarterly FFO and FFO per share
growth, which excludes an additional 8% per share growth resulting
from opportunistic gains on asset sales. Our portfolio has grown over
100% in the past 12 months by selectively acquiring over $1.3 billion
of real estate investments from approximately $8.0 billion of
potential transactions we reviewed. We have maintained our investment
return goals and our investment discipline and are poised for more
growth in the fourth quarter."
Nine Month Highlights
Net income for the nine months ended September 30, 2006 increased
to $36.4 million, or $0.42 per diluted share, as compared to net
income of $20.9 million, or $0.31 per share, for the same period in
2005. Revenue from continuing operations grew appreciably to $131.7
million versus $54.6 million in 2005. Spirit Finance generated FFO of
$62.6 million, or $0.73 per diluted share - a 46% per share increase
as compared to $0.50 per share in 2005.
Portfolio Highlights
Spirit Finance's real estate investment portfolio totaled $2.5
billion at September 30, 2006, a 103% increase over September 30,
2005. The portfolio consisted of 914 owned or financed properties,
including $64.6 million of mortgage loans secured by real estate and
other loans primarily secured by equipment used in the operation of
properties owned by the Company. At September 30, 2006, 90% of the
Company's investment portfolio was match-funded with long-term debt.
Spirit Finance completed $74.3 million of gross investments in real
estate properties and loans related to 34 property locations
throughout the U.S. in the third quarter of 2006. This brings the
year-to-date investment activity to more than $1.1 billion.
The Company's real estate portfolio is diversified geographically
throughout 43 states and among the many industries in which the
Company's customers operate. Only two states, Wisconsin (13%) and
Texas (11%), accounted for 10% or more of the total dollar value of
the real estate investment portfolio at September 30, 2006. The three
largest industries in which Spirit's customers operate as a percentage
of the total investment portfolio were general and discount retailers
(33%), restaurants (21%) and specialty retailers (10%). The Company's
real estate investments also include movie theaters, educational
facilities, automotive dealers, parts and service facilities,
recreational facilities, industrial properties and supermarkets. The
largest individual tenant was ShopKo Stores Operating Co., LLC, at
29%, with no other individual tenant representing greater than 4% of
the total investment portfolio.
Guidance
Assuming additional real estate transactions are completed during
2006, the timing of which will determine how much of the acquisitions
will contribute to 2006 FFO, management now expects FFO per diluted
share for 2006 to range from $0.99 to $1.02.
Dividend
A third quarter 2006 dividend of $0.21 per common share was paid
on October 25, 2006 to stockholders of record as of October 15, 2006.
Conference Call
Spirit Finance will hold a conference call and webcast to discuss
the Company's third quarter results at 5:00 p.m. (Eastern Time) today.
Hosting the call will be Morton Fleischer, Chairman, Christopher Volk,
President and Chief Executive Officer, and Catherine Long, Chief
Financial Officer.
The call will be webcast live over the Internet at
www.spiritfinance.com under the section entitled "Investors."
Participants should follow the instructions provided on the website
for the download and installation of audio applications necessary to
join the webcast. The call can also be accessed live over the phone by
dialing (888) 802-2266 or (913) 312-1270 for international callers.
A replay of the call will be available one hour after the call and
can be accessed by dialing (888) 203-1112 or (719) 457-0820 for
international callers; the password is 4949736. The replay will be
available from November 2, 2006 through November 9, 2006 and will be
archived for a limited time on Spirit Finance Corporation's website.
About Spirit Finance Corporation
Spirit Finance Corporation provides customized, flexible
sale/leaseback financing solutions for single tenant, operationally
essential real estate assets that are vital to the operations of
retail, service and distribution companies. The Company's core markets
include free-standing automotive dealers, parts and service
facilities, drugstores, educational facilities, movie theaters,
restaurants, supermarkets, and other retail, distribution and service
businesses. Additional information about Spirit Finance Corporation is
available on the Company's website.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not
historical facts are forward-looking statements as the term is defined
in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by the use of words such
as "expects," "plans," "estimates," "projects," "intends," "believes,"
"guidance," and similar expressions that do not relate to historical
matters. These forward-looking statements are subject to risks and
uncertainties which can cause actual results to differ materially from
those currently anticipated, due to a number of factors which include,
but are not limited to, continued ability to source new investments,
changes in interest rates and/or credit spreads, changes in the real
estate markets, and other risk factors discussed in Spirit Finance
Corporation's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and other documents filed by the Company with the Securities and
Exchange Commission from time to time. All forward-looking statements
in this press release are made as of today, based upon information
knownto management as of the date hereof, and the Company assumes no
obligations to update or revise any of its forward-looking statements
even if experience or future changes show that indicated results or
events will not be realized.
-0-
*T
Spirit Finance Corporation
Consolidated Statements of Operations
Unaudited
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues:
Rentals $53,272 $20,938 $124,048 $49,927
Interest income on
loans receivable 1,488 1,028 4,642 2,916
Other interest
income 1,045 1,163 2,970 1,792
----------- ----------- ----------- -----------
Total revenues 55,805 23,129 131,660 54,635
----------- ----------- ----------- -----------
Expenses:
General and
administrative 4,209 3,174 12,523 8,998
Depreciation and
amortization 12,702 5,583 30,559 12,649
Interest 25,770 8,401 59,036 14,265
----------- ----------- ----------- -----------
Total expenses 42,681 17,158 102,118 35,912
----------- ----------- ----------- -----------
Income from
continuing
operations 13,124 5,971 29,542 18,723
Discontinued
operations (a):
Income from
discontinued
operations 353 239 2,025 1,557
Net gains on sales
of real estate 3,572 442 4,839 669
----------- ----------- ----------- -----------
Total discontinued
operations 3,925 681 6,864 2,226
----------- ----------- ----------- -----------
Net income $17,049 $6,652 $36,406 $20,949
=========== =========== =========== ===========
Net income per common
share:
Basic:
Continuing
operations $0.13 $0.09 $0.34 $0.28
Discontinued
operations 0.04 0.01 0.08 0.03
----------- ----------- ----------- -----------
Net income $0.17 $0.10 $0.42 $0.31
=========== =========== =========== ===========
Diluted:
Continuing
operations $0.13 $0.09 $0.34 $0.28
Discontinued
operations 0.04 0.01 0.08 0.03
----------- ----------- ----------- -----------
Net income $0.17 $0.10 $0.42 $0.31
=========== =========== =========== ===========
Weighted average
outstanding common
shares (b):
Basic 98,442,914 67,310,586 85,680,951 67,216,680
Diluted 98,668,627 67,543,650 85,945,685 67,429,591
Dividends declared
per common share $0.21 $0.19 $0.63 $0.57
(a) Periodically, Spirit Finance may sell real estate properties. The
Company considers these occasional sales of real estate properties to
be an integral part of its overall business strategy in acquiring a
diversified real estate investment portfolio. Proceeds from the sales
of real estate investments are reinvested in real estate properties
such that cash flows from ongoing operations are not negatively
affected by sales of individual properties. Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," requires that gains and losses from
any such dispositions of properties and all operations from these
properties be reported as "discontinued operations." As a result,
each time a property is sold, the operations of such property
previously reported as part of "income from continuing operations"
are reclassified into discontinued operations. This presentation has
no impact on net income.
(b) The increase in the number of weighted average shares outstanding
from 2005 to 2006 is primarily the result of public stock offerings
completed during 2006 totaling approximately 31 million common
shares.
*T
-0-
*T
Spirit Finance Corporation
Consolidated Balance Sheets
(dollars in thousands)
September 30, December 31,
2006 2005
-------------- -------------
ASSETS (Unaudited)
Investments:
Real estate investments, net $2,392,683 $1,382,853
Loans receivable 64,638 59,008
-------------- -------------
Net investments 2,457,321 1,441,861
Cash and cash equivalents 61,779 30,536
Lease intangibles, net (a) 21,500 21,395
Other assets 26,306 19,633
-------------- -------------
Total assets $2,566,906 $1,513,425
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Debt obligations:
Secured credit facilities $3,062 $229,855
Mortgages and notes payable 1,611,000 664,929
-------------- -------------
Total debt obligations 1,614,062 894,784
Dividends payable 20,809 14,209
Other liabilities 29,581 11,639
-------------- -------------
Total liabilities 1,664,452 920,632
Stockholders' equity 902,454 592,793
-------------- -------------
Total liabilities and stockholders'
equity $2,566,906 $1,513,425
============== =============
(a) Lease intangibles represent the value of in-place leases and arise
from the allocation of the purchase price of the real estate
properties acquired to their tangible and intangible asset values.
*T
-0-
*T
Spirit Finance Corporation
Reconciliation of Non-GAAP Financial Measures
Unaudited
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net income $17,049 $6,652 $36,406 $20,949
Add: Portfolio
depreciation and
amortization expense
(a) 12,701 5,661 30,732 13,195
Less: Net gains on
sales of real estate
held for investment
(b) (3,372) (442) (4,503) (669)
----------- ----------- ----------- -----------
Funds from operations
(FFO) 26,378 11,871 62,635 33,475
Less: Straight-line
rental revenue, net of
allowance (407) (299) (1,166) (809)
----------- ----------- ----------- -----------
Adjusted funds from
operations (AFFO) $25,971 $11,572 $61,469 $32,666
=========== =========== =========== ===========
Net income per diluted
share $0.17 $0.10 $0.42 $0.31
FFO per diluted share
(b) $0.27 $0.18 $0.73 $0.50
AFFO per diluted share
(b) $0.26 $0.17 $0.72 $0.48
Weighted average
outstanding common
shares (diluted) 98,668,627 67,543,650 85,945,685 67,429,591
(a) Includes depreciation and amortization expense related to
discontinued operations.
(b) Reconciliation of net gains on sales of real estate by type:
Total net gains on
sales of real estate $3,572 $442 $4,839 $669
Less: Net gains on real
estate purchased for
development and sale
(included in FFO and
AFFO above) (200) - (336) -
-----------------------------------------------
Net gains on sales of
real estate held for
investment $3,372 $442 $4,503 $669
=========== =========== =========== ===========
Net gains on sales of
real estate held for
investment per diluted
share
(not included in FFO
and AFFO above) $0.03 $0.01 $0.05 $0.01
=========== =========== =========== ===========
Non-GAAP Financial Measures
Included in this press release are certain "non-GAAP financial
measures," which are measures of the Company's historical or future
financial performance that are different from measures calculated and
presented in accordance with generally accepted accounting principles
(GAAP). Non-GAAP financial measures used in this press release
include funds from operations (FFO) and adjusted funds from
operations (AFFO).
Spirit Finance calculates FFO consistent with the definition used by
the National Association of Real Estate Investment Trusts (NAREIT),
adopted to promote an industry-wide standard measure of REIT
operating performance. Spirit Finance uses FFO as a measure of
performance to adjust for certain non-cash expenses such as
depreciation and amortization because historical cost accounting for
real estate assets implicitly assumes that the value of real estate
assets diminishes predictably over time. FFO also excludes gains (or
includes losses) on dispositions of real estate held for investment.
Spirit Finance further adjusts FFO to remove the effects of straight-
line rental revenue. The Company believes this calculation, called
AFFO, is an appropriate measure that is useful for investors because
it more closely reflects the cash rental payments received by the
Company and provides investors with an understanding of the Company's
ability to pay dividends. Spirit Finance uses FFO and AFFO as
measures to evaluate performance and to facilitate comparisons
between the Company and other REITs, although FFO, AFFO and the
related per share amounts may not be calculated in the same manner by
other REITs and thus may not be directly comparable to those measures
reported by other REITs.
Neither FFO nor AFFO should be considered an alternative to net income
determined in accordance with GAAP as a measure of profitability, nor
should these measures be considered an equivalent to cash flows
provided by operating activities determined in accordance with GAAP
as a measure of liquidity.
Spirit Finance expects FFO per diluted share for 2006 to range from
$0.99 to $1.02. FFO for 2006 is based on an estimated net income per
diluted share range of $0.55 to $0.58, adjusted (in accordance with
NAREIT's definition of FFO) for estimated real estate depreciation of
$0.49 per diluted share and less net gains on sales of real estate
held for investment of $0.05 per diluted share.
*T