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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Spirit MTA REIT | NYSE:SMTA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.7676 | 0 | 01:00:00 |
- Completed Spin-Off from Spirit Realty Capital, Inc. -
- Announces Cash Dividends for Common and Preferred Stock -
Spirit MTA REIT (NYSE: SMTA) ("SMTA" or the "Company"), a net-lease real estate investment trust ("REIT") headquartered in Dallas, Texas, today reported its financial and operating results for the second quarter ended June 30, 2018.
Unless otherwise specified, the second quarter 2018 highlights and financial statements that follow include two months of financial and operating information for the Company's predecessor entities (the "Predecessor Entities") and one month of financial and operating results for SMTA as a stand-alone company.
SECOND QUARTER HIGHLIGHTS
CEO COMMENTS
“We are very pleased to report our financial and operating results as a stand-alone Company, having completed our Spin-Off transaction from Spirit Realty Capital, Inc. during the quarter. SMTA provides an attractive and unique opportunity for investors to benefit from the monetization of a portfolio of non-core assets and the growth of our seasoned master funding vehicle. During the second quarter, we completed $26.3 million of dispositions, including three properties leased to Shopko. Together with our highly incentivized asset manager, Spirit Realty Capital, Inc., we intend to allocate our capital in accordance with our proprietary portfolio management tools, which we believe will enhance shareholder value over the long term,” stated SMTA Chief Executive Officer, Chief Financial Officer and Treasurer Ricardo Rodriguez.
FINANCIAL RESULTS
SECOND QUARTER PORTFOLIO HIGHLIGHTS
FIRST HALF PORTFOLIO HIGHLIGHTS
BALANCE SHEET, LIQUIDITY & CAPITAL MARKETS
EARNINGS WEBCAST
The Company has provided pre-recorded comments from management. Interested parties can listen to the presentation via the following:
Internet:The webcast link can be located on the investor relations page of the Company's website at www.spiritmastertrust.com
Telephone: (877) 344-7529 (Domestic) / (412) 317-0088 (International) / (855) 669-9658 (Canada) Access code 10123123ABOUT SPIRIT MTA REIT
Spirit MTA REIT (NYSE: SMTA) is a net-lease REIT headquartered in Dallas, Texas. SMTA owns one of the largest, most diversified and seasoned commercial real estate backed master funding vehicles. Our strategy relies on the disposition of non-core properties, disciplined acquisitions, and proactive portfolio management. SMTA is managed by Spirit Realty Capital, L.P, a wholly-owned subsidiary of Spirit (NYSE: SRC), one of the largest publicly traded triple net-lease REITs.
As of June 30, 2018, our diversified portfolio was comprised of 888 properties, including properties securing mortgage loans made by the Company. Our properties, with an aggregate gross leasable area of approximately 20.0 million square feet, are leased to approximately 205 tenants across 45 states and 23 industries. More information about Spirit MTA REIT can be found on the investor relations page of the Company's website at www.spiritmastertrust.com.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This press release contains forward-looking statements within the meaning of 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 such as "expect," "plan," "will," "estimate," "project," "intend," "believe," "guidance," and other similar expressions that do not relate to historical matters. These forward-looking statements are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, SMTA's ability to realize its asset disposition plan by selling down assets leased to Shopko; SMTA's significant leverage, which may expose it to the risk of default under its debt obligations; risks associated with using debt to fund SMTA's business activities (including its ability to use Master Trust 2014, an asset-backed securitization trust, as its main financing vehicle, changes in interest rates and conditions of the debt capital markets, generally); SMTA's dependence on its external manager, Spirit Realty, L.P., to conduct its business and achieve its investment objectives; SMTA's continued ability to source new investments; unknown liabilities acquired in connection with acquired properties or interests in real-estate related entities; general risks affecting the real estate industry and local real estate markets (including, without limitation, the market value of SMTA's properties, the inability to enter into or renew leases at favorable rates, portfolio occupancy varying from expectations, dependence on tenants' financial condition and operating performance, and competition from other developers, owners and operators of real estate); the financial performance of SMTA's tenants and the demand for traditional retail and restaurant space; potential fluctuations in the consumer price index; risks associated with SMTA's failure to maintain its status as a REIT under the Internal Revenue Code of 1986, as amended, and other additional risks discussed in SMTA's most recent filings with the SEC, including its registration statement on Form 10, as amended. SMTA 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 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 below.
REPORTING DEFINITIONS AND EXPLANATIONS
Adjusted Funds from Operations (AFFO) AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. We adjust FFO to eliminate the impact of certain items that we believe are not indicative of our core operating performance, including restructuring and divestiture costs, other G&A costs associated with relocation of the Company's headquarters, transactions costs associated with our proposed Spin-Off, default interest and fees on non-recourse mortgage indebtedness, debt extinguishment gains (losses), transaction costs incurred in connection with the acquisition of real estate investments subject to existing leases and certain non-cash items. These certain non-cash items include non-cash revenues (comprised of straight-line rents, amortization of above and below market rent on our leases, amortization of lease incentives, amortization of net premium (discount) on loans receivable, provision for bad debts and amortization of capitalized lease transaction costs), non-cash interest expense (comprised of amortization of deferred financing costs and amortization of net debt discount/premium) and non-cash compensation expense (stock-based compensation expense). In addition, other equity REITs may not calculate AFFO as we do, and, accordingly, our AFFO may not be comparable to such other equity REITs’ AFFO. AFFO does not represent cash generated from Operating activities determined in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income (loss) (determined in accordance with GAAP) as a performance measure.
Adjusted EBITDAre represents EBITDAre, or earnings before interest, taxes, depreciation and amortization for real estate, modified to include other adjustments to GAAP net income (loss) for transaction costs, severance charges, real estate acquisition costs, debt transactions and other items that we do not consider to be indicative of our on-going operating performance. We focus our business plans to enable us to sustain increasing shareholder value. Accordingly, we believe that excluding these items, which are not key drivers of our investment decisions and may cause short-term fluctuations in net income (loss), provides a useful supplemental measure to investors and analysts in assessing the net earnings contribution of our real estate portfolio. Because these measures do not represent net income (loss) that is computed in accordance with GAAP, they should not be considered alternatives to net income (loss) or as an indicator of financial performance. A reconciliation of net income (loss) attributable to common stockholders (computed in accordance with GAAP) to EBITDAre and Adjusted EBITDAre is included at the end of this release.
Annualized Adjusted EBITDAre is calculated by multiplying Adjusted EBITDAre of a quarter by four. Our computation of Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the methodology used by other equity REITs to calculate these measures and, therefore, may not be comparable to such other REITs. A reconciliation of Annualized Adjusted EBITDAre is included at the end of this release.
Adjusted Debt represents interest bearing debt (reported in accordance with GAAP) adjusted to exclude unamortized debt discount/premium, deferred financing costs, cash and cash equivalents and cash reserves on deposit with lenders as additional security. By excluding these amounts, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. A reconciliation of interest bearing debt (reported in accordance with GAAP) to Adjusted Debt is included at the end of this release.
Adjusted Debt to Annualized Adjusted EBITDAre is a supplemental non-GAAP financial measure we use to evaluate the level of borrowed capital being used to increase the potential return of our real estate investments and a proxy for a measure we believe is used by many lenders and ratings agencies to evaluate our ability to repay and service our debt obligations over time. We believe this ratio is a beneficial disclosure to investors as a supplemental means of evaluating our ability to meet obligations senior to those of our equity holders. Our computation of this ratio may differ from the methodology used by other equity REITs and, therefore, may not be comparable to such other REITs.
EBITDAre is a non-GAAP financial measure and is computed in accordance with standards established by NAREIT. EBITDAre is defined as net income (loss) (computed in accordance with GAAP), plus interest expense, plus income tax expense (if any), plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated real estate ventures, plus adjustments to reflect the Company's share of EBITDAre of unconsolidated real estate ventures.
Encumbered Assets represent the assets in our portfolio that are subject to mortgage indebtedness, through Master Trust 2014 or CMBS debt. The asset value attributed to these assets is the Real Estate Investment.
Funds from Operations (FFO) We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss) attributable to common stockholders (computed in accordance with GAAP) excluding real estate-related depreciation and amortization, impairment charges and net (gains) losses from property dispositions. FFO is a supplemental non-GAAP financial measure. We use FFO as a supplemental performance measure because we believe that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate-related depreciation and amortization, gains and losses from property dispositions and impairment charges, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other equity REITs. However, because FFO excludes depreciation and amortization and does not capture the changes in the value of our properties that result from use or market conditions, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO as we do, and, accordingly, our FFO may not be comparable to such other equity REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income (loss) attributable to common stockholders as a measure of our performance.
Master Trust 2014 is an asset-backed securitization trust established in 2005, and amended and restated in 2014, which issues non-recourse notes collateralized by commercial real estate, net-leases and mortgage loans from time to time. This liability is discussed in greater detail in our financial statements and the notes thereto included in our periodic reports filed with the SEC.
Occupancy is calculated by dividing the number of economically yielding Owned Properties in the portfolio as of the measurement date by the number of total Owned Properties on said date.
Owned Properties refers to properties owned fee-simple or ground leased by Company subsidiaries as lessee.
Real Estate Investment represents the Gross Investment plus improvements less impairment charges.
Unencumbered Assets represent the assets in our portfolio that are not subject to mortgage indebtedness, which we use to evaluate our potential access to capital and in our management of financial risk. The asset value attributed to these assets is the Real Estate Investment.
Weighted Average Remaining Lease Term is calculated by dividing the sum product of (a) a stated revenue or sales price component and (b) the lease term for each lease by (c) the sum of the total revenue or sales price components for all leases within the sample.
Spirit MTA REIT
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
(Unaudited)
June 30, 2018 December 31, 2017 Assets Investments: Real estate investments: Land and improvements $ 955,446 $ 973,231 Buildings and improvements 1,665,483 1,658,023 Total real estate investments 2,620,929 2,631,254 Less: accumulated depreciation (574,519 ) (557,948 ) 2,046,410 2,073,306 Loans receivable, net 67,752 32,307 Intangible lease assets, net 93,756 102,262 Real estate assets held for sale, net 36,060 28,460 Net investments 2,243,978 2,236,335 Cash and cash equivalents 37,356 6 Deferred costs and other assets, net 105,901 107,770 Goodwill 13,549 13,549 Total assets $ 2,400,784 $ 2,357,660 Liabilities and equity Liabilities: Mortgages and notes payable, net $ 1,999,748 $ 1,926,835 Intangible lease liabilities, net 22,850 23,847 Accounts payable, accrued expenses and other liabilities 20,861 16,060 Total liabilities 2,043,459 1,966,742 Redeemable preferred equity:SMTA Preferred Stock, $0.01 par value, $25 per share liquidationpreference, 20,000,000 shares authorized: 6,000,000 and 0 sharesissued and outstanding at June 30, 2018 and December 31, 2017, respectively
150,000 —SubREIT Preferred Stock, $0.01 par value, $1,000 per shareliquidation preference, 50,000,000 shares authorized: 5,000 and 0shares issued and outstanding at June 30, 2018 and December 31,2017, respectively
5,000 — Total redeemable preferred equity 155,000 — Stockholders' equity and parent company equity: Net parent investment — 390,918Common stock, $0.01 par value, 750,000,000 shares authorized;42,851,010 and 10,000 shares issued and outstanding at June 30, 2018and December 31, 2017, respectively
429 — Capital in excess of common stock par value 199,998 — Accumulated earnings 1,898 — Total stockholders' equity and parent company equity 202,325 390,918 Total liabilities and equity $ 2,400,784 $ 2,357,660Spirit MTA REIT
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
One MonthEnded June30, 2018
Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Rentals $ 19,641 $ 59,240 $ 56,003 $ 118,271 $ 112,388 Interest income on loans receivable 369 752 202 833 405 Tenant reimbursement income 114 404 372 981 1,150 Other income 171 562 668 941 1,150 Total revenues 20,295 60,958 57,245 121,026 115,093 Expenses: General and administrative 552 3,775 8,462 9,426 13,731 Related party fees 2,219 3,351 1,385 5,081 2,739 Transaction costs 65 5,525 367 8,542 367 Property costs (including reimbursable) 692 2,047 1,565 3,460 4,021 Interest 9,234 27,743 18,775 55,755 37,591 Depreciation and amortization 7,175 21,109 20,275 42,102 40,885 Impairments 480 1,247 5,419 6,072 11,912 Total expenses 20,417 64,797 56,248 130,438 111,246 (Loss) income before other income and income tax expense (122 ) (3,839 ) 997 (9,412 ) 3,847 Other income (expense): (Loss) gain on debt extinguishment — (108 ) 1 (363 ) 1 Gain on disposition of real estate assets 3,367 4,948 8,389 3,254 19,578 Total other income 3,367 4,840 8,390 2,891 19,579 Income (loss) before income tax expense 3,245 1,001 9,387 (6,521 ) 23,426 Income tax expense (22 ) (22 ) (45 ) (79 ) (90 ) Net income (loss) and total comprehensive income (loss) $ 3,223 $ 979 $ 9,342 $ (6,600 ) $ 23,336 Preferred dividends (1,325 ) (1,325 ) — (1,325 ) — Net income (loss) attributable to common stockholders $ 1,898 $ (346 ) $ 9,342 $ (7,925 ) $ 23,336 Net income (loss) per share attributable to common stockholders Basic $ 0.04 $ (0.01 ) $ 0.22 $ (0.18 ) $ 0.54 Diluted $ 0.04 $ (0.01 ) $ 0.22 $ (0.18 ) $ 0.54 Weighted average shares of common stock outstanding: Basic 42,851,010 42,851,010 42,851,010 42,851,010 42,851,010 Diluted 42,851,010 42,851,010 42,851,010 42,851,010 42,851,010Spirit MTA REIT
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Share and Per Share Data)
(Unaudited)
FFO and AFFO
One MonthEnded June30, 2018
Three Months Ended June 30, Six Months Ended June 30, 2018 (1) 2017 (2) 2018 (3) 2017 (2) Net income (loss) attributable to common stockholders $ 1,898 $ (346 ) $ 9,342 $ (7,925 ) $ 23,336 Add/(less): Portfolio depreciation and amortization 7,175 21,109 20,275 42,102 40,885 Portfolio impairments 480 1,247 5,419 6,072 11,912 Gain on disposition of real estate assets (3,367 ) (4,948 ) (8,389 ) (3,254 ) (19,578 ) Total adjustments to net income 4,288 17,408 17,305 44,920 33,219 FFO $ 6,186 $ 17,062 $ 26,647 $ 36,995 $ 56,555 Add/(less): Loss (gain) on debt extinguishment — 108 (1 ) 363 (1 ) Transaction costs 65 5,525 367 8,542 367 Real Estate Acquisition Costs — 218 10 219 10 Non-cash interest expense 831 2,486 1,397 5,361 2,783 Straight-line rent, net of related bad debt expense 25 (587 ) (466 ) (1,434 ) (859 ) Other amortization and non-cash charges 52 133 192 223 324 Non-cash compensation expense — 818 3,404 2,424 4,235 Total adjustments to FFO 973 8,701 4,903 15,698 6,859 AFFO $ 7,159 $ 25,763 $ 31,550 $ 52,693 $ 63,414 Dividends declared to common stockholders $ — $ — N/A $ — N/A Net income (loss) per share of common stock Basic $ 0.04 $ (0.01 ) $ 0.22 $ (0.18 ) $ 0.54 Diluted $ 0.04 $ (0.01 ) $ 0.22 $ (0.18 ) $ 0.54 FFO per share of common stock Diluted $ 0.144 $ 0.40 $ 0.62 $ 0.86 $ 1.32 AFFO per share of common stock Diluted $ 0.167 $ 0.60 $ 0.74 $ 1.23 $ 1.48 Weighted average shares of common stock outstanding: Basic 42,851,010 42,851,010 42,851,010 42,851,010 42,851,010 Diluted 42,851,010 42,851,010 42,851,010 42,851,010 42,851,010 (1) Amounts for the three months ended June 30, 2018 include two months of income and expense items based on the Predecessor Entities and one month of actual results from SMTA operations as a stand-alone company. (2) Amounts for the three and six months ended June 30, 2017 are based entirely on results of the Predecessor Entities. (3) Amounts for the six months ended June 30, 2018 include five months of income and expense items based on the Predecessor Entities and one month of actual results from SMTA operations as a stand alone company.Spirit MTA REIT
Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Adjusted Debt, Adjusted EBITDAre, Annualized Adjusted EBITDAre
One MonthEnded June 30,2018
Second Quarter (Unaudited, In Thousands) 2018 2017 Master Trust 2014, net $ 1,917,244 $ 1,917,244 $ 1,337,074 CMBS, net 82,504 82,504 — Total debt, net 1,999,748 1,999,748 1,337,074 Add/(less): Unamortized debt discount 24,491 24,491 17,924 Unamortized deferred financing costs 17,678 17,678 8,231 Cash and cash equivalents (37,356 ) (37,356 ) (6 )Cash reserves on deposit with lenders asadditional security classified as other assets
(60,303 ) (60,303 ) (23,864 ) Total adjustments (55,490 ) (55,490 ) 2,285 Adjusted Debt $ 1,944,258 $ 1,944,258 $ 1,339,359 Preferred Stock at liquidation value 155,000 155,000 — Adjusted Debt + Preferred Stock $ 2,099,258 $ 2,099,258 $ 1,339,359 Net income $ 3,223 $ 979 $ 9,342 Add/(less): Interest 9,234 27,743 18,775 Depreciation and amortization 7,175 21,109 20,275 Income tax expense 22 22 45 Gain on disposition of real estate assets (3,367 ) (4,948 ) (8,389 ) Impairments on real estate assets 480 1,247 5,419 Total adjustments 13,544 45,173 36,125 EBITDAre $ 16,767 $ 46,152 $ 45,467 Add/(less): Transaction costs 65 5,525 367 Real estate acquisition costs — 218 10 Loss (gain) on debt extinguishment — 108 (1 ) Total adjustments 65 5,851 376 Adjusted EBITDAre $ 16,832 $ 52,003 $ 45,843 Annualized Adjusted EBITDAre (1) $ 201,984 $ 208,012 $ 183,372 Adjusted Debt / Annualized Adjusted EBITDAre 9.6x 9.3x 7.3x Adjusted Debt + Preferred / Adjusted EBITDAre 10.4x 10.1x N/A (1) For one month ended June 31, 2018, Adjusted EBITDAre multiplied by 12, for the quarters ended June 30, 2018 and 2017, Adjusted EBITDAre multiplied by 4
View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005182/en/
Spirit MTA REITInvestor Relations972-476-1409SMTAInvestorRelations@SpiritRealty.com
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