UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 2, 2016
 
VEREIT, INC.
VEREIT OPERATING PARTNERSHIP, L.P.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
 
 
 
 
Maryland
 
001-35263
 
45-2482685
Delaware
 
333-197780
 
45-1255683
(State or other jurisdiction of incorporation)
 
       (Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
 
 
 
2325 E. Camelback Road, Suite 1100
Phoenix, AZ 85016
(Address of principal executive offices, including zip code)
 
 
(800) 606-3610
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 





Item 2.02. Results of Operations and Financial Condition.
On November 2, 2016, VEREIT, Inc. (the “Company”) furnished the following documents: (i) a press release relating to its third quarter 2016 financial results and related matters, attached hereto as Exhibit 99.1; and (ii) quarterly supplemental information for the fiscal quarter ended September 30, 2016, attached hereto as Exhibit 99.2. The information set forth in this Item 2.02 and in the attached Exhibits 99.1 and 99.2 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
 
Description
99.1
 
Press Release issued November 2, 2016 relating to Third Quarter 2016 Financial Results and Related Matters
99.2
 
Quarterly Supplemental Information for the Quarter Ended September 30, 2016





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
VEREIT, INC.
 
 
 
By:
/s/ Michael J. Bartolotta
 
Name:
Michael J. Bartolotta
 
Title:
Executive Vice President and Chief Financial Officer
 
VEREIT OPERATING PARTNERSHIP, L.P.
By: VEREIT, Inc., its sole general partner
 
 
 
By:
/s/ Michael J. Bartolotta
 
Name:
Michael J. Bartolotta
 
Title:
Executive Vice President and Chief Financial Officer

Date: November 1, 2016





Exhibit Index
Exhibit No.
 
Description
99.1
 
Press Release issued November 2, 2016 relating to Third Quarter 2016 Financial Results and Related Matters
99.2
 
Quarterly Supplemental Information for the Quarter Ended September 30, 2016



Exhibit
Exhibit 99.1

vreitlogojpega02.jpg
FOR IMMEDIATE RELEASE

VEREIT® Announces Third Quarter 2016 Operating Results
Completed $702.5 million common stock offering with proceeds used to reduce debt
Surpassed 2016 low-end dispositions goal with $803.3 million year-to-date


Phoenix, AZ, November 2, 2016 -- VEREIT, Inc. (NYSE: VER) (“VEREIT” or the “Company”) announced today its operating results for the three months ending September 30, 2016, as well as progress on its business plan.

Third Quarter 2016 Highlights
•
Net Income of $30.2 million and Net Income per diluted share of $0.01
•
Achieved $0.20 AFFO per diluted share
•
Completed $278.0 million of dispositions at an average cash cap rate of 6.6%
•
Decreased Debt from $8.5 billion to $6.6 billion and Net Debt from $7.5 billion to $6.5 billion
•
Reduced Net Debt to Normalized EBITDA from 6.6x to 5.7x
•
Cole Capital® raised $136.4 million of new equity capital
•
Completed $702.5 million common stock offering
•
S&P raised its corporate credit rating of VEREIT to 'BB+' from 'BB' and the rating on corporate debt to 'BBB-' from ‘BB+’


Third Quarter 2016 Consolidated Financial Results

Revenue
Consolidated revenue for the quarter ended September 30, 2016 decreased $22.1 million to $362.9 million as compared to revenue of $385.0 million for the same quarter in 2015.

Net Income (Loss) and Net Income (Loss) Attributable to Common Stockholders and Limited Partners per Diluted Share
Consolidated net income for the quarter ended September 30, 2016 increased $22.1 million to net income of $30.2 million as compared to net income of $8.1 million for the same quarter in 2015 and net income per diluted share increased $0.02 to $0.01 for the quarter ended September 30, 2016, as compared to a net loss per diluted share of $(0.01) for the same quarter in 2015.

Normalized EBITDA
Consolidated normalized EBITDA for the quarter ended September 30, 2016 decreased $15.9 million to $285.9 million as compared to normalized EBITDA of $301.8 million for the same quarter in 2015.

Funds From Operations Attributable to Common Stockholders and Limited Partners (“FFO”) and FFO per Diluted Share
FFO for the quarter ended September 30, 2016 decreased $12.1 million to $179.5 million, as compared to $191.6 million for the same quarter in 2015 and FFO per diluted share decreased $0.02 to $0.19 for the quarter ended September 30, 2016, as compared to $0.21 for the same quarter in 2015.

Adjusted FFO Attributable to Common Stockholders and Limited Partners (“AFFO”) and AFFO per Diluted Share
AFFO for the quarter ended September 30, 2016 increased $1.7 million to $198.1 million, as compared to $196.4 million for the same quarter in 2015, and AFFO per diluted share decreased $0.01 to $0.20 for the quarter ended September 30, 2016, as compared to $0.21 for the same quarter in 2015.

Common Stock Dividend Information
On November 1, 2016, the Company’s Board of Directors declared a quarterly dividend of $0.1375 per share for the fourth quarter of 2016, representing an annual distribution rate of $0.55 per share. The dividend will be paid on January 17, 2017 to common stockholders of record as of December 30, 2016.

1


Balance Sheet and Liquidity
On July 5, 2016, the Company redeemed $1.3 billion aggregate principal amount of the Company’s outstanding 2.0% senior notes due in February 2017 using proceeds from its debt offerings in the previous quarter.

In August 2016, the Company closed a public offering of common stock. The Company sold a total of 69,000,000 shares of common stock in the offering, which included the full exercise of the underwriters' option to purchase additional shares. The net proceeds to the Company from the offering were approximately $702.5 million. The Company used the net proceeds, and available liquidity, to repay its $300.0 million senior secured term loan, $500.0 million outstanding under its unsecured term loan and $55.0 million outstanding on its revolving line of credit, reducing the amount outstanding on the revolver to zero. The $2.8 billion unsecured credit facility is made up of a $500 million term loan and a revolving line of credit with $2.3 billion of capacity available. During the quarter, secured debt was reduced by $72.8 million.

In September 2016, the Company established a continuous offering program pursuant to which the Company can offer and sell its common stock in “at-the-market” offerings or certain other transactions up to an aggregate $750.0 million from time to time as determined by the Company.

2016 AFFO Guidance
The Company is reaffirming its previously issued 2016 AFFO per diluted share guidance range of $0.75 - $0.78.

Consolidated Financial Statistics
Consolidated Financial Statistics as of the quarter ended September 30, 2016 are as follows: Net Debt to Normalized EBITDA of 5.7x, Fixed Charge Coverage Ratio of 2.9x, Unencumbered Gross Real Estate Assets to Total Gross Assets ratio of 65.7%, Net Debt to Gross Real Estate Assets of 40.9% and Weighted Average Debt Term of 4.5 years.

Management Commentary
Glenn J. Rufrano, Chief Executive Officer, stated, “Through the first three quarters, we have continued to execute on our business plan. We have achieved more than $800 million of dispositions year-to-date, surpassing the low-end of our 2016 guidance. From a balance sheet perspective, the successful $1 billion bond offering in May provides a well-laddered debt maturity schedule and the $700 million stock offering in August allowed us to reach investment grade metrics earlier than expected. The upgrade by S&P, along with our transactional and operational infrastructure; large, stabilized portfolio; and sizable market opportunity within the net-lease sector, provides the ability to acquire assets on a leverage-neutral basis.”

Third Quarter 2016 Real Estate Investment (“REI”) Financial Results
Revenue
REI segment revenue for the quarter ended September 30, 2016 decreased $25.6 million to $331.8 million as compared to revenue of $357.4 million for the same quarter in 2015, mainly due to dispositions since January 1, 2015.

Net Income (Loss)
REI segment net income for the quarter ended September 30, 2016 increased $21.3 million to $30.0 million as compared to $8.7 million for the same quarter in 2015, mainly due to a gain on disposition of real estate for the quarter ended September 30, 2016.

Normalized EBITDA
REI segment normalized EBITDA for the quarter ended September 30, 2016 decreased $17.1 million to $277.6 million as compared to normalized EBITDA of $294.7 million for the same quarter in 2015, mainly due to dispositions since January 1, 2015.

FFO and FFO per Diluted Share
REI segment FFO for the quarter ended September 30, 2016 decreased $13.0 million to $179.2 million, as compared to $192.2 million for the same quarter in 2015, and FFO per diluted share decreased $0.02 to $0.19 for the quarter ended September 30, 2016, as compared to $0.21 for the same quarter in 2015.


2

AFFO and AFFO per Diluted Share
REI segment AFFO for the quarter ended September 30, 2016 decreased $9.0 million to $182.4 million, as compared to $191.4 million for the same quarter in 2015, and AFFO per diluted share decreased $0.02 to $0.19 for the quarter ended September 30, 2016, as compared to $0.21 for the same quarter in 2015.

Real Estate Portfolio Update
As of September 30, 2016, the Company’s portfolio consisted of 4,213 properties with total portfolio occupancy of 98.0%, investment grade tenancy of 41.5% and a weighted-average remaining lease term of 10.0 years.

Same-Store Rent Increases
During the quarter ended September 30, 2016, same-store rents (4,187 properties) increased 0.1% as compared to the same quarter in 2015. Excluding the impact of the bankruptcy filing of Ovation Brands, Inc., same store rental revenue increased 0.8%, during the quarter ended September 30, 2016, as compared to the same quarter in 2015.

Property Development
During the third quarter of 2016, the Company capitalized $0.8 million of development costs and placed $3.5 million of assets into service at an average cash cap rate of 10.6%. As of September 30, 2016, build-to-suits and redevelopment programs included one property with an investment-to-date of $1.1 million and remaining estimated investment of $0.7 million.

Property Dispositions
During the quarter ended September 30, 2016, the Company sold 78 properties for approximately $278.0 million at an average cash cap rate of 6.6%, including $78.1 million in net sales of Red Lobster restaurants. The gain on third quarter sales was approximately $35.8 million, excluding goodwill allocation.

Third Quarter 2016 Cole Capital® Financial Results

Revenue
Cole Capital segment revenue for the quarter ended September 30, 2016 increased $3.6 million to $31.1 million, as compared to revenue of $27.5 million for the same quarter in 2015, primarily due to higher fee and reimbursement revenue associated with higher capital raise and assets under management offset by lower transactional revenue.

Net Income (Loss)
Cole Capital segment net income for the quarter ended September 30, 2016 increased $0.8 million to $0.2 million, as compared to a net loss of $(0.6) million for the same quarter in 2015, mainly due to the increase in net revenue.

Normalized EBITDA
Cole Capital segment normalized EBITDA for the quarter ended September 30, 2016 increased $1.3 million to $8.3 million, as compared to normalized EBITDA of $7.0 million for the same quarter in 2015, mainly due to the increase in net revenue.

FFO and FFO per Diluted Share
Cole Capital segment FFO for the quarter ended September 30, 2016 increased $0.8 million to $0.2 million, as compared to $(0.6) million for the same quarter in 2015, and FFO per diluted share remained the same at $0.00 for the quarters ending September 30, 2016 and September 30, 2015.

AFFO and AFFO per Diluted Share
Cole Capital segment AFFO for the quarter ended September 30, 2016 increased $10.7 million to $15.7 million, as compared to $5.0 million for the same quarter in 2015, and AFFO per diluted share increased $0.01 to $0.02 per diluted share, as compared to $0.01 for the same quarter in 2015.

Investment Management Capital Raise
During the quarter, Cole Capital raised $172.6 million of capital on behalf of its sponsored non-listed REITs (the “Cole REITs”), including $36.2 million through the Cole REITs’ distribution reinvestment plans (“DRIP”), compared to $100.3 million, including $33.7 million of DRIP proceeds, in the third quarter of 2015.

Investment Management Acquisitions
Cole Capital invested $173.9 million in 13 properties on behalf of the Cole REITs in the third quarter of 2016, compared to $315.3 million in 32 properties in the third quarter of 2015.


3

Subsequent Events - Consolidated

Property Dispositions
From October 1, 2016 through October 28, 2016, the Company disposed of nine properties for an aggregate sales price of $54.8 million at an average cash cap rate of 6.9%, including $14.4 million in net sales of Red Lobster restaurants. Dispositions year-to-date through October 28, 2016, totaled $803.3 million at an average cash cap rate of 6.6%.

Cole Capital Equity Raise
In October 2016, Cole Capital raised $35.4 million of capital on behalf of the Cole REITs, including $12.0 million through DRIP.



Audio Webcast Details

The live audio webcast, beginning at 1:00 p.m. ET on Wednesday, November 2, 2016, is available by accessing this link:
http://ir.vereit.com/. Participants should log in 10-15 minutes early.

Following the call, a replay of the webcast will be available at the link above and archived for up to 12 months following the call.

About the Company
VEREIT is a leading, full-service real estate operating company with investment management capability. VEREIT owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate assets with a total asset book value of $16.1 billion including 4,213 properties totaling approximately 96.9 million square feet, located in 49 states, as well as Puerto Rico and Canada. Additionally, VEREIT manages $7.1 billion of gross real estate investments on behalf of the Cole Capital® non-listed REITs. VEREIT is a publicly traded Maryland corporation listed on the New York Stock Exchange.  Additional information about VEREIT can be found on its website at www.VEREIT.com and through social media platforms such as Twitter andLinkedIn.



Media Contacts
Parke Chapman
Rubenstein Associates
212.843.8489 | pchapman@rubenstein.com

John Bacon, Senior Vice President, Corporate Communications
VEREIT
60.778.6057 | JBacon@VEREIT.com

        
Investor Contact
Bonni Rosen, Director, Investor Relations                
VEREIT            
877.405.2653 | BRosen@VEREIT.com

4

Definitions
Descriptions of FFO and AFFO, EBITDA and Normalized EBITDA, Debt Outstanding and Interest Expense, Excluding Non-Cash Amortization are provided below. Refer to pages 9 through 18 for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure and the calculations of our Fixed Charge Coverage Ratio, Net Debt to Normalized EBITDA Annualized Ratio, Net Debt Leverage Ratio and Unencumbered Asset Ratio.
Funds From Operations and Adjusted Funds From Operations
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.
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.
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.

5

Debt Outstanding
Debt Outstanding represents the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. We believe that the presentation of Debt Outstanding, which shows our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Debt Outstanding should not be considered as an alternative to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.
Interest Expense, Excluding Non-Cash Amortization
Interest Expense, Excluding Non-Cash Amortization reflects interest expense incurred on the outstanding principal balance of our debt, which excludes the amortization of deferred financing costs, premiums and discounts, which are reported as interest expense in accordance with GAAP. We believe that the presentation of Interest Expense, Excluding Non-Cash Amortization, which shows the interest expense on our contractual debt obligations, provides useful information to investors to assess our overall solvency and financial flexibility. Interest Expense, Excluding Non-Cash Amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.

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, including VEREIT’s ability to acquire assets on a leverage-neutral basis; and VEREIT’s future financial condition, results of operations and business, including 2016 guidance. 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 VEREIT’s previously disclosed 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.



6



VEREIT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data) (Unaudited)

 
 
September 30,
2016
 
December 31,
2015
ASSETS
 
 
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
2,946,105

 
$
3,120,653

Buildings, fixtures and improvements
 
10,800,316

 
11,445,690

Intangible lease assets
 
2,073,076

 
2,218,378

Total real estate investments, at cost
 
15,819,497

 
16,784,721

Less: accumulated depreciation and amortization
 
2,188,998

 
1,778,597

Total real estate investments, net
 
13,630,499

 
15,006,124

Investment in unconsolidated entities
 
24,711

 
56,824

Investment in direct financing leases, net
 
40,785

 
46,312

Investment securities, at fair value
 
48,098

 
53,304

Mortgage notes receivable, net
 
23,014

 
24,238

Cash and cash equivalents
 
116,618

 
69,103

Restricted cash
 
61,828

 
59,767

Intangible assets, net
 
30,849

 
50,779

Rent and tenant receivables and other assets, net
 
339,529

 
303,637

Goodwill
 
1,602,610

 
1,656,374

Due from affiliates
 
20,883

 
60,633

Real estate assets held for sale, net
 
118,396

 
18,771

Total assets
 
$
16,057,820

 
$
17,405,866

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,861,210

 
$
3,111,985

Corporate bonds, net
 
2,225,157

 
2,536,333

Convertible debt, net
 
970,691

 
962,894

Credit facility, net
 
496,008

 
1,448,590

Below-market lease liabilities, net
 
229,340

 
251,692

Accounts payable and accrued expenses
 
139,150

 
151,877

Deferred rent, derivative and other liabilities
 
89,154

 
87,490

Distributions payable
 
159,415

 
140,816

Due to affiliates
 
—

 
230

Total liabilities
 
7,170,125

 
8,691,907

Commitments and contingencies (Note 15)
 
 
 
 
Preferred stock, $0.01 par value, 100,000,000 shares authorized and 42,834,138 issued and outstanding as of each of September 30, 2016 and December 31, 2015
 
428

 
428

Common stock, $0.01 par value, 1,500,000,000 shares authorized and 974,183,819 and 904,884,394 issued and outstanding as of September 30, 2016 and December 31, 2015, respectively
 
9,742

 
9,049

Additional paid-in-capital
 
12,637,049

 
11,931,768

Accumulated other comprehensive loss
 
(4,687
)
 
(2,025
)
Accumulated deficit
 
(3,933,092
)
 
(3,415,233
)
Total stockholders’ equity
 
8,709,440

 
8,523,987

Non-controlling interests
 
178,255

 
189,972

Total equity
 
8,887,695

 
8,713,959

Total liabilities and equity
 
$
16,057,820

 
$
17,405,866






7


VEREIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Revenues:
 
 
 
 
Rental income
 
$
303,383

 
$
333,766

Direct financing lease income
 
494

 
659

Operating expense reimbursements
 
27,969

 
22,983

Cole Capital revenue
 
31,069

 
27,546

Total revenues
 
362,915

 
384,954

Operating expenses:
 
 
 
 
Cole Capital reallowed fees and commissions
 
5,897

 
3,896

Acquisition related
 
90

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

Property operating
 
34,820

 
31,950

General and administrative
 
29,761

 
32,842

Depreciation and amortization
 
195,173

 
208,542

Impairments
 
6,872

 
—

Total operating expenses
 
277,243

 
287,026

Operating income
 
85,672

 
97,928

Other (expense) income:
 
 
 
 
Interest expense
 
(79,869
)
 
(89,530
)
Loss on extinguishment and forgiveness of debt, net
 
(2,003
)
 
—

Other income, net
 
1,744

 
2,368

Equity in income and gain on disposition of unconsolidated entities
 
212

 
6,837

Loss on derivative instruments, net
 
(2,023
)
 
(1,420
)
Total other expenses, net
 
(81,939
)
 
(81,745
)
Income before taxes and real estate dispositions
 
3,733

 
16,183

Gain (loss) on disposition of real estate, net
 
28,111

 
(6,542
)
Income before taxes
 
31,844

 
9,641

Provision for income taxes
 
(1,598
)
 
(1,500
)
Net income
 
30,246

 
8,141

Net (income) attributable to non-controlling interests
 
(751
)
 
(612
)
Net income attributable to the General Partner
 
$
29,495

 
$
7,529

 
 
 
 
 
Basic and diluted net income (loss) per share attributable to common stockholders and limited partners
 
$
0.01

 
$
(0.01
)
Distributions declared per common share
 
$
0.14

 
$
0.14


8


VEREIT, INC.
CONSOLIDATED ADJUSTED FUNDS FROM OPERATIONS PER DILUTED SHARE - 2016 GUIDANCE
(Unaudited)

The Company is reaffirming its previously issued 2016 AFFO per diluted share guidance range of $0.75 - $0.78.


 
 
Low
 
High
Basic and diluted net loss per share attributable to common stockholders (1)
 
$
(0.20
)
 
$
(0.17
)
Gain on disposition of real estate assets, net (2)(3)
 
(0.06
)
 
(0.06
)
Depreciation and amortization of real estate assets
 
0.79

 
0.79

Impairment of real estate (3)
 
0.18

 
0.18

Effect of incremental dilutive shares (4)
 
0.01

 
0.01

FFO attributable to common stockholders and limited partners per diluted share
 
0.72

 
0.75

Adjustments (5)
 
0.03

 
0.03

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.75

 
$
0.78

_____________________________________
(1) Includes impact of dividends paid to preferred shareholders and excludes the effect of non-controlling interests. Includes the impact of the gain on sale of real estate for the nine months ended September 30, 2016.
(2)  Includes an allocated portion of the Real Estate Investment segment goodwill to the respective sold properties to calculate the GAAP loss.
(3) Reflects actual amounts for the nine months ended September 30, 2016.
(4) Represents impact of limited partnership interests in our operating partnership, unvested restricted shares and unvested restricted stock units that are included in the computation of FFO and AFFO per diluted share but excluded from net loss per share as the effect is antidilutive for such calculation.
(5) Includes (i) non-routine items such as acquisition related costs, litigation and other non-routine costs, gains or losses on sale of investment securities and mortgage note receivables, insurance and legal settlements and extinguishment of debt cost and (ii) certain non-cash items such as impairments of intangible assets and goodwill, straight-line rental revenue, unrealized gains or losses on derivatives, amortization of intangible assets, deferred financing costs and above and below market lease amortization as well as equity-based compensation.

9


VEREIT, INC.
CONSOLIDATED EBITDA AND NORMALIZED EBITDA
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Net income
 
$
30,246

 
$
8,141

 Adjustments:
 
 
 
 
Interest expense
 
79,869

 
89,530

Depreciation and amortization
 
195,173

 
208,542

Provision for income taxes
 
1,598

 
1,500

Proportionate share of adjustments for unconsolidated entities
 
959

 
2,554

 EBITDA
 
$
307,845

 
$
310,267

Gain on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(187
)
Impairments
 
6,872

 
—

Acquisition related expenses
 
90

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

 Gain on investment securities
 
—

 
(4
)
Loss on derivative instruments, net
 
2,023

 
1,420

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,152

Loss on extinguishment and forgiveness of debt, net
 
2,003

 
—

Net direct financing lease adjustments
 
571

 
507

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(21,705
)
Program development costs write-off
 
845

 
—

Other amortization and non-cash charges
 
(139
)
 
(82
)
 Proportionate share of adjustments for unconsolidated entities
 
(36
)
 
608

Normalized EBITDA
 
$
285,906

 
$
301,772





10


VEREIT, INC.
CONSOLIDATED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Net income
 
$
30,246

 
$
8,141

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,974
)
Gain on real estate assets and interest in joint venture, net
 
(28,111
)
 
(187
)
Depreciation and amortization of real estate assets
 
187,898

 
200,159

Impairment of real estate
 
6,872

 
—

Proportionate share of adjustments for unconsolidated entities
 
540

 
1,423

FFO attributable to common stockholders and limited partners
 
$
179,472

 
$
191,562

 
 
 
 
 
Acquisition related expenses
 
90

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

Gain on investment securities
 
—

 
(4
)
Loss on derivative instruments, net
 
2,023

 
1,420

Amortization of net premiums on debt and investments, net
 
(3,553
)
 
(4,920
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,152

Net direct financing lease adjustments
 
571

 
507

Amortization and write off of deferred financing costs
 
6,878

 
11,320

Amortization of management contracts
 
6,240

 
7,510

Deferred tax expense (benefit)
 
6,941

 
(5,701
)
Gain on extinguishment and forgiveness of debt, net
 
2,003

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(21,705
)
Equity-based compensation expense
 
2,588

 
4,016

Other amortization and non-cash charges
 
929

 
781

Proportionate share of adjustments for unconsolidated entities
 
(17
)
 
694

AFFO attributable to common stockholders and limited partners
 
$
198,108

 
$
196,428

 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities
 
25,206,373

 
25,995,886

Weighted-average shares outstanding - diluted
 
968,686,543

 
929,457,209

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.19

 
$
0.21

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.20

 
$
0.21




11


VEREIT, INC.
FINANCIAL AND OPERATIONS STATISTICS AND RATIOS
(Dollars in thousands) (Unaudited)

 
 
Three Months Ended
 
 
September 30,
2016
Interest expense, excluding non-cash amortization
 
$
76,511

Secured debt principal amortization
 
5,734

Dividends attributable to preferred shares 
 
17,973

Total fixed charges
 
100,218

Normalized EBITDA
 
285,906

Fixed charge coverage ratio
 
2.85
x
 
 
 
 
 
September 30,
2016
Debt Outstanding
 
$
6,586,839

Less: cash and cash equivalents
 
116,618

Net Debt
 
6,470,221

Normalized EBITDA annualized
 
1,143,624

Net Debt to Normalized EBITDA annualized ratio
 
5.66
x
 
 
 
Net Debt
 
$
6,470,221

Gross Real Estate Investments
 
15,815,333

Net Debt leverage ratio
 
40.9
%
 
 
 
Unencumbered Gross Real Estate Investments
 
$
10,394,146

Gross Real Estate Investments
 
15,815,333

Unencumbered asset ratio
 
65.7
%
 
 
September 30,
2016
Mortgage notes payable and other debt, net
 
$
2,861,210

Corporate bonds, net
 
2,225,157

Convertible debt, net
 
970,691

Credit facility, net
 
496,008

Mortgage notes payable associated with assets held for sale
 
—

Total debt - as reported
 
6,553,066

Adjustments:
 
 
Deferred financing costs, net
 
59,467

Net premiums
 
(25,694
)
Debt Outstanding
 
$
6,586,839

 
 
Three Months Ended
 
 
September 30,
2016
Interest expense - as reported
 
$
79,869

Adjustments:
 
 
Amortization of deferred financing and issuance costs
 
(7,081
)
Amortization of net premiums
 
3,723

Interest expense, excluding non-cash amortization
 
$
76,511




12


VEREIT, INC.
SEGMENT REPORTING - STATEMENTS OF OPERATIONS
(REI Segment)
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Revenues:
 
 
 
 
Rental income
 
$
303,383

 
$
333,766

Direct financing lease income
 
494

 
659

Operating expense reimbursements
 
27,969

 
22,983

Total real estate investment revenues
 
331,846

 
357,408

Operating expenses:
 
 
 
 
Acquisition related
 
90

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

Property operating
 
34,820

 
31,950

General and administrative
 
12,069

 
15,848

Depreciation and amortization
 
187,897

 
200,158

Impairment of real estate
 
6,872

 
—

Total operating expenses
 
246,378

 
257,678

Operating income
 
85,468

 
99,730

Other (expense) income:
 
 
 
 
Interest expense
 
(79,869
)
 
(89,530
)
Loss on extinguishment and forgiveness of debt, net
 
(2,003
)
 
—

Other income, net
 
1,649

 
1,903

Equity in income and gain on disposition of unconsolidated entities
 
212

 
6,837

Loss on derivative instruments, net
 
(2,023
)
 
(1,420
)
Total other expenses, net
 
(82,034
)
 
(82,210
)
Income before taxes and disposition of real estate
 
3,434

 
17,520

Gain (loss) on disposition of real estate assets, net
 
28,111

 
(6,542
)
Income before income taxes
 
31,545

 
10,978

Provision for income taxes
 
(1,539
)
 
(2,238
)
Net income
 
$
30,006

 
$
8,740



13


VEREIT, INC.
SEGMENT REPORTING - STATEMENTS OF OPERATIONS
(Cole Capital Segment)
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Revenues:
 
 
 
 
Offering-related fees and reimbursements
 
$
9,545

 
$
5,850

 Transaction service fees and reimbursements
 
3,779

 
7,400

 Management fees and reimbursements
 
17,745

 
14,296

Total Cole Capital revenues
 
31,069

 
27,546

Operating Expenses:
 
 
 
 
 Cole Capital reallowed fees and commissions
 
5,897

 
3,896

 Acquisition related
 
—

 
74

 General and administrative
 
17,692

 
16,994

 Depreciation and amortization
 
7,276

 
8,384

 Total operating expenses
 
30,865

 
29,348

Operating income (loss)
 
204

 
(1,802
)
 Total other income, net
 
95

 
465

Income (loss) before taxes
 
299

 
(1,337
)
(Provision for) benefit from income taxes
 
(59
)
 
738

Net income (loss)
 
$
240

 
$
(599
)


14


VEREIT, INC.
SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA
(REI Segment)
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
 Net income
 
$
30,006

 
$
8,740

 Adjustments:
 
 
 
 
Interest expense
 
79,869

 
89,530

Depreciation and amortization
 
187,897

 
200,158

Provision for income taxes
 
1,539

 
2,238

Proportionate share of adjustments for unconsolidated entities
 
959

 
2,554

 EBITDA
 
$
300,270

 
$
303,220

Gain on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(187
)
Impairments of real estate assets
 
6,872

 
—

Acquisition related expenses
 
90

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

Gain on investment securities
 
—

 
(4
)
Loss on derivative instruments, net
 
2,023

 
1,420

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,152

Loss on extinguishment and forgiveness of debt, net
 
2,003

 
—

Net direct financing lease adjustments
 
571

 
507

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(21,705
)
Other amortization and non-cash charges
 
(32
)
 
10

Proportionate share of adjustments for unconsolidated entities
 
(36
)
 
608

Normalized EBITDA
 
$
277,593

 
$
294,743


15


VEREIT, INC.
SEGMENT REPORTING - EBITDA AND NORMALIZED EBITDA
(Cole Capital Segment)
(In thousands, except for per share data) (Unaudited)

 
Three Months Ended September 30,
 
2016
 
2015
Net income (loss)
$
240

 
$
(599
)
Adjustments:
 
 
 
Depreciation and amortization
7,276

 
8,384

Provision for (benefit from) income taxes
59

 
(738
)
EBITDA
$
7,575

 
$
7,047

Management adjustments:
 
 
 
Acquisition related expenses
—

 
74

Program development cost write-off
845

 
—

Other amortization and non-cash charges
(107
)
 
(92
)
Normalized EBITDA
$
8,313

 
$
7,029


16


VEREIT, INC.
SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(REI Segment)
(In thousands, except for per share data) (Unaudited)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
Net income
 
$
30,006

 
$
8,740

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,974
)
Gain on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(187
)
Depreciation and amortization of real estate assets
 
187,898

 
200,159

Impairment of real estate
 
6,872

 
—

Proportionate share of adjustments for unconsolidated entities
 
540

 
1,423

FFO attributable to common stockholders and limited partners
 
$
179,232

 
$
192,161

 
 
 
 
 
Acquisition related expenses
 
90

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
8,032

Gain of investment securities
 
—

 
(4
)
Loss on derivative instruments, net
 
2,023

 
1,420

Amortization of premiums and discounts on debt and investments, net
 
(3,553
)
 
(4,920
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,152

Net direct financing lease adjustments
 
571

 
507

Amortization and write-off of deferred financing costs
 
6,878

 
11,320

Gain on extinguishment and forgiveness of debt, net
 
2,003

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(21,705
)
Equity-based compensation expense
 
1,201

 
1,073

Other amortization and non-cash charges
 
—

 
(1
)
Proportionate share of adjustments for unconsolidated entities
 
(17
)
 
694

AFFO attributable to common stockholders and limited partners
 
$
182,371

 
$
191,419

 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities
 
25,206,373

 
25,995,886

Weighted-average shares outstanding - diluted
 
968,686,543

 
929,457,209

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.19

 
$
0.21

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.19

 
$
0.21



17


VEREIT, INC.
SEGMENT REPORTING - FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(Cole Capital Segment)
(In thousands, except for per share data) (Unaudited)


 
 
Three Months Ended September 30,
 
 
2016
 
2015
Net income (loss)
 
$
240

 
$
(599
)
 FFO attributable to common stockholders and limited partners
 
240

 
(599
)
 
 
 
 
 
Acquisition related expenses
 
—

 
74

Amortization of management contracts
 
6,240

 
7,510

Deferred tax expense (benefit)
 
6,941

 
(5,701
)
Equity-based compensation expense
 
1,387

 
2,943

Other amortization and non-cash charges
 
929

 
782

 AFFO attributable to common stockholders and limited partners
 
$
15,737

 
$
5,009

 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities
 
25,206,373

 
25,995,886

Weighted-average shares outstanding - diluted 
 
968,686,543

 
929,457,209

 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.00

 
$
0.00

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.02

 
$
0.01





18
Exhibit
Exhibit 99.2

coversvereitsuppq32016.jpg



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Q3 2016 SUPPLEMENTAL INFORMATION

VEREIT Supplemental Information
 
September 30, 2016
 
Section
Page
fdbeaveruta02.jpg
 
 
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
cignaoffice.jpg
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
cvskernersville.jpg
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
albertsons.jpg
 
 
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.


vereitlogoa13.jpg
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Q3 2016 SUPPLEMENTAL INFORMATION

 
About the Data
 
This data and other information described herein are as of and for the three months ended September 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 quarters ended September 30, 2016, June 30, 2016, March 31, 2016 and September 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 VEREIT's previously disclosed 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.


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Q3 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 September 30, 2016, approximately 41.5% of the Company's Annualized Rental Income was earned from Investment-Grade Tenants, Economic Occupancy was 98.0% and the weighted-average lease term was 10.0 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


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Q3 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


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Q3 2016 SUPPLEMENTAL INFORMATION

 
Quarterly Financial Summary
(unaudited, dollars in thousands, except per share amounts)
 
 
Q3 2016
 
Q2 2016
 
Q1 2016
 
Q4 2015
 
Q3 2015
Consolidated Financial Results
 
 
 
 
 
 
 
 
 
Revenue
$
362,915

 
$
371,019

 
$
369,020

 
$
383,374

 
$
384,954

Net income (loss)
$
30,246

 
$
3,233

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

Basic and diluted net income (loss) per share attributable to common stockholders and limited partners
$
0.01

 
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)
 
$
(0.01
)
Normalized EBITDA
$
285,906

 
$
283,060

 
$
288,607

 
$
286,674

 
$
301,772

FFO attributable to common stockholders and limited partners
$
179,472

 
$
184,174

 
$
196,229

 
$
4,623

 
$
191,562

FFO attributable to common stockholders and limited partners per diluted share
$
0.185

 
$
0.198

 
$
0.211

 
$
0.005

 
$
0.206

AFFO attributable to common stockholders and limited partners
$
198,108

 
$
180,107

 
$
192,675

 
$
183,157

 
$
196,428

AFFO attributable to common stockholders and limited partners per diluted share
$
0.205

 
$
0.193

 
$
0.207

 
$
0.197

 
$
0.211

Dividends declared per common share
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

 
$
0.1375

Weighted-average shares outstanding - diluted
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
 
 
 
 
 
 
 
 
 
Real Estate Investments
 
 
 
 
 
 
 
 
 
Revenue
$
331,846

 
$
338,533

 
$
337,787

 
$
350,061

 
$
357,408

Net income (loss)
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

Normalized EBITDA
$
277,593

 
$
274,683

 
$
282,243

 
$
280,822

 
$
294,743

FFO attributable to common stockholders and limited partners
$
179,232

 
$
183,108

 
$
196,775

 
$
190,893

 
$
192,161

FFO attributable to common stockholders and limited partners per diluted share
$
0.185

 
$
0.197

 
$
0.212

 
$
0.205

 
$
0.207

AFFO attributable to common stockholders and limited partners
$
182,371

 
$
177,599

 
$
185,528

 
$
187,339

 
$
191,419

AFFO attributable to common stockholders and limited partners per diluted share
$
0.188

 
$
0.191

 
$
0.199

 
$
0.202

 
$
0.206

Properties owned
4,213

 
4,291

 
4,378

 
4,435

 
4,572

Rentable square feet (in thousands)
96,885

 
99,229

 
99,015

 
99,578

 
100,950

Economic occupancy rate
98.0
%
 
97.7
%
 
98.6
%
 
98.6
%
 
98.3
%
Weighted-average remaining lease term (years)
10.0

 
10.2

 
10.4

 
10.6

 
11.1

Investment-grade tenants (1)
41.5
%
 
42.7
%
 
42.1
%
 
42.5
%
 
43.5
%
 
 
 
 
 
 
 
 
 
 
Cole Capital
 
 
 
 
 
 
 
 
 
Revenue
$
31,069

 
$
32,486

 
$
31,233

 
$
33,313

 
$
27,546

Net income (loss)
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
Normalized EBITDA
$
8,313

 
$
8,377

 
$
6,364

 
$
5,852

 
$
7,029

FFO attributable to common stockholders and limited partners
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
FFO attributable to common stockholders and limited partners per diluted share
$
0.000

 
$
0.001

 
$
(0.001
)
 
$
(0.200
)
 
$
(0.001
)
AFFO attributable to common stockholders and limited partners
$
15,737

 
$
2,508

 
$
7,147

 
$
(4,182
)
 
$
5,009

AFFO attributable to common stockholders and limited partners per diluted share
$
0.016

 
$
0.003

 
$
0.008

 
$
(0.004
)
 
$
0.005

Capital raised on behalf of Cole REITs, excluding DRIP
$
136,381

 
$
138,655

 
$
144,620

 
$
116,634

 
$
66,603

Purchase price of property acquisitions on behalf of Cole REITs
$
173,869

 
$
211,178

 
$
102,075

 
$
236,398

 
$
315,301

Assets Under Management
$
7,131,400

 
$
7,005,695

 
$
6,827,885

 
$
6,740,911

 
$
6,561,950

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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Financial and Operations Statistics and Ratios
(unaudited, dollars in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Interest Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense, excluding non-cash amortization (1)
 
$
76,511

 
$
78,998

 
$
77,542

 
$
80,349

 
$
83,140

Normalized EBITDA
 
285,906

 
283,060

 
288,607

 
286,674

 
301,772

Interest Coverage Ratio
 
3.74x

 
3.58x

 
3.72x

 
3.57x


3.63x

 
 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
 
 
 
 
 
 
 
 
 
 
Interest expense, excluding non-cash amortization (1)
 
$
76,511

 
$
78,998

 
$
77,542

 
$
80,349

 
$
83,140

Secured debt principal amortization
 
5,734

 
5,168

 
8,449

 
5,834

 
6,089

Dividends attributable to preferred shares 
 
17,973

 
17,973

 
17,973

 
17,972

 
17,974

Total fixed charges
 
100,218

 
102,139

 
103,964

 
104,155

 
107,203

Normalized EBITDA
 
285,906

 
283,060

 
288,607

 
286,674


301,772

Fixed Charge Coverage Ratio
 
2.85
x
 
2.77
x
 
2.78
x
 
2.75
x
 
2.81
x
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net Debt Ratios
 
 
 
 
 
 
 
 
 
 
Debt Outstanding (2)
 
$
6,586,839

 
$
8,514,700

 
$
7,826,603

 
$
8,083,345

 
$
8,928,412

Less: cash and cash equivalents
 
116,618

 
1,029,620

 
104,450

 
69,103

 
171,659

Net Debt
 
6,470,221

 
7,485,080

 
7,722,153

 
8,014,242

 
8,756,753

Normalized EBITDA annualized
 
1,143,624

 
1,132,240

 
1,154,428

 
1,146,696

 
1,207,088

Net Debt to Normalized EBITDA annualized ratio
 
5.66
x
 
6.61
x
 
6.69
x
 
6.99
x
 
7.25
x
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
6,470,221

 
$
7,485,080

 
$
7,722,153

 
$
8,014,242

 
$
8,756,753

Gross Real Estate Investments
 
15,815,333

 
16,085,149

 
16,247,476

 
16,694,977

 
17,392,001

Net Debt Leverage Ratio
 
40.9
%
 
46.5
%
 
47.5
%
 
48.0
%
 
50.3
%
 
 
 
 
 
 
 
 
 
 
 
Unencumbered Assets/Real Estate Assets
 
 
 
 
 
 
 
 
Unencumbered Gross Real Estate Investments
 
$
10,394,146

 
$
10,585,494

 
$
10,612,483

 
$
10,744,554

 
$
11,085,546

Gross Real Estate Investments
 
15,815,333

 
16,085,149

 
16,247,476

 
16,694,977

 
17,392,001

Unencumbered Asset Ratio
 
65.7
%
 
65.8
%
 
65.3
%
 
64.4
%
 
63.7
%
___________________________________
(1)
Refer to the Consolidated Statements of Operations section for interest expense calculated in accordance with GAAP.
(2)
Refer to the Consolidated Balance Sheets section for total debt calculated in accordance with GAAP.




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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Key Balance Sheet Metrics and Capital Structure
(unaudited, dollars and shares in thousands, except per share amounts)
 



vereitexhibi_chart-25894a01.jpg
 
 
Common equity
57.6%
 
 
 
 
 
 
Secured debt
15.7%
 
 
 
 
 
 
Corporate bonds
12.5%
 
 
 
 
 
 
Preferred equity
5.9%
 
 
 
 
 
 
Convertible notes
5.5%
 
 
 
 
 
 
Unsecured term loan
2.8%

                            

Fixed vs. Variable Rate Debt
Fixed
88.6
%
Swapped to Fixed
11.3
%
Variable
0.1
%

 
VEREIT Capitalization Table
 
 
 
 
Wtd. Avg. Maturity
(Years)
 
Rate (1)
 
September 30, 2016
Diluted shares outstanding
 
 
 
 
1,000,717

Stock price
 
 
 
 
$
10.37

Implied Equity Market Capitalization
 
$
10,377,435

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

 
 
 
 
 
 
Mortgage notes payable
4.6
 
5.01%
 
$
2,813,829

Secured term loan
1.3
 
5.81%
 
23,010

Total secured debt
4.6
 
5.01%
 
$
2,836,839

 
 
 
 
 
 
Unsecured term loan (swapped to fixed)
1.7
 
3.25%
 
$
500,000

2018 convertible notes
1.8
 
3.00%
 
597,500

2019 corporate bonds
2.4
 
3.00%
 
750,000

2020 convertible notes
4.2
 
3.75%
 
402,500

2021 corporate bonds
4.7
 
4.13%
 
400,000

2024 corporate bonds
7.4
 
4.60%
 
500,000

2026 corporate bonds
9.7
 
4.88%
 
600,000

Total unsecured debt
4.5
 
3.75%
 
$
3,750,000

 
 
 
 
 
 
Total Debt Outstanding
4.5
 
4.29%
 
$
6,586,839

 
 
 
 
 
 
Total Capitalization
 
$
18,035,128

Less: Cash and cash equivalents
 
 
 
 
116,618

Enterprise Value
 
$
17,918,510

 
 
 
 
 
 
Net Debt/Enterprise Value
 
 
 
 
36.1
%
Net Debt/Normalized EBITDA Annualized
 
 
 
5.66
x
Net Debt + Preferred/Normalized EBITDA Annualized
 
6.59
x
Fixed Charge Coverage Ratio
 
 
 
 
2.85
x
Liquidity (3)
 
 
 
 
$
2,416,618

___________________________________
(1)Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of September 30, 2016.
(2)Balance represents 42.8 million shares outstanding at September 30, 2016 multiplied by the liquidation preference of $25 per share.
(3)Liquidity represents cash and cash equivalents of $116.6 million and $2.3 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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Business Model
(unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
logobluea02.jpg
 
$16.1 Billion
 
 
 
Book Value of Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (1)
Restaurants (1)
 
 
A full-service real estate operating company with investment management
capability.
 
2,037 Properties
1,837 Properties
 
 
 
 
 
 
 
 
Industrial & Distribution (1)
Office (1)
 
 
 
 
 
166 Properties
161 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$7.1 Billion
 
 
cclogo2a01.jpg
 
 
 
 
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(2)     l     Income NAV(2)     l     CCIT III(2)
 
 
 
 
 
 
 
 
Closed Offerings
 
 
 
CCIT II(2)     l     CCPT IV(2)     l     TIC & DST(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(1)
Excludes 12 properties that consist of billboards, construction in progress, land, and parking lots.
(2)
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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Balance Sheets
(unaudited, in thousands)
 
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Assets
 
 
 
 
 
 
 
 
 
 
Real estate investments, at cost:
 
 
 
 
 
 
 
 
 
 
Land
 
$
2,946,105

 
$
2,992,848

 
$
3,058,879

 
$
3,120,653

 
$
3,257,396

Buildings, fixtures and improvements
 
10,800,316

 
10,956,605

 
11,161,327

 
11,445,690

 
11,652,830

Intangible lease assets
 
2,073,076

 
2,102,606

 
2,145,734

 
2,218,378

 
2,313,369

Total real estate investments, at cost
 
15,819,497


16,052,059

 
16,365,940

 
16,784,721

 
17,223,595

Less: accumulated depreciation and amortization
 
2,188,998

 
2,029,121

 
1,865,674

 
1,778,597

 
1,595,667

Total real estate investments, net
 
13,630,499


14,022,938

 
14,500,266

 
15,006,124

 
15,627,928

Investment in unconsolidated entities
 
24,711

 
22,435

 
23,445

 
56,824

 
57,247

Investment in direct financing leases, net
 
40,785

 
43,155

 
45,611

 
46,312

 
49,244

Investment securities, at fair value
 
48,098

 
48,347

 
48,162

 
53,304

 
54,455

Loans held for investment, net
 
23,014

 
23,297

 
23,559

 
24,238

 
40,002

Cash and cash equivalents
 
116,618

 
1,029,620

 
104,450

 
69,103

 
171,659

Restricted cash
 
61,828

 
60,837

 
60,132

 
59,767

 
47,775

Intangible assets, net
 
30,849

 
37,088

 
43,327

 
50,779

 
127,835

Rent and tenant receivables and other assets, net
 
339,529

 
333,124

 
313,903

 
303,637

 
318,001

Goodwill
 
1,602,610

 
1,620,233

 
1,642,858

 
1,656,374

 
1,828,005

Due from affiliates
 
20,883

 
8,043

 
11,617

 
60,633

 
66,981

Assets held for sale
 
118,396

 
159,394

 
26,282

 
18,771

 
247,951

Total assets
 
$
16,057,820


$
17,408,511


$
16,843,612

 
$
17,405,866

 
$
18,637,083

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
$
2,861,210

 
$
2,938,072

 
$
3,029,666

 
$
3,111,985

 
$
3,187,960

Corporate bonds, net
 
2,225,157

 
3,522,297

 
2,537,699

 
2,536,333

 
2,534,977

Convertible debt, net
 
970,691

 
968,059

 
965,469

 
962,894

 
960,361

Credit facility, net
 
496,008

 
1,045,872

 
1,269,731

 
1,448,590

 
2,097,400

Below-market lease liabilities, net
 
229,340

 
237,403

 
245,093

 
251,692

 
264,232

Accounts payable and accrued expenses
 
139,150

 
163,122

 
118,970

 
151,877

 
164,204

Deferred rent, derivative and other liabilities
 
89,154

 
84,486

 
88,997

 
87,490

 
114,343

Distributions payable
 
159,415

 
146,695

 
143,973

 
140,816

 
137,647

Due to affiliates
 
—

 
—

 
—

 
230

 
241

Mortgage notes payable associated with assets held for sale
 
—

 
—

 
—

 
—

 
118,493

Total liabilities
 
7,170,125


9,106,006

 
8,399,598

 
8,691,907

 
9,579,858

 
 
 
 
 
 
 
 
 
 
 
Series F preferred stock
 
428

 
428

 
428

 
428

 
428

Common stock
 
9,742

 
9,048

 
9,048

 
9,049

 
9,050

Additional paid-in capital
 
12,637,049

 
11,934,864

 
11,932,859

 
11,931,768

 
11,928,184

Accumulated other comprehensive (loss) income
 
(4,687
)
 
(12,297
)
 
(11,345
)
 
(2,025
)
 
(9,806
)
Accumulated deficit
 
(3,933,092
)
 
(3,810,341
)
 
(3,671,050
)
 
(3,415,233
)
 
(3,085,906
)
Total stockholders' equity
 
8,709,440


8,121,702

 
8,259,940

 
8,523,987

 
8,841,950

Non-controlling interests
 
178,255

 
180,803

 
184,074

 
189,972

 
215,275

Total equity
 
8,887,695


8,302,505


8,444,014

 
8,713,959

 
9,057,225

Total liabilities and equity
 
$
16,057,820


$
17,408,511

 
$
16,843,612

 
$
17,405,866

 
$
18,637,083


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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
303,383

 
$
311,352

 
$
313,971

 
$
322,079

 
$
333,766

Direct financing lease income
 
494

 
535

 
569

 
623

 
659

Operating expense reimbursements
 
27,969

 
26,646

 
23,247

 
27,359

 
22,983

Cole Capital revenue
 
31,069

 
32,486

 
31,233

 
33,313

 
27,546

Total revenues
 
362,915


371,019


369,020


383,374


384,954

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Cole Capital reallowed fees and commissions
 
5,897

 
6,975

 
8,068

 
6,558

 
3,896

Acquisition related
 
90

 
41

 
242

 
734

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Property operating
 
34,820

 
38,199

 
34,813

 
35,308

 
31,950

General and administrative
 
29,761

 
33,094

 
29,400

 
49,160

 
32,842

Depreciation and amortization
 
195,173

 
197,345

 
204,308

 
202,415

 
208,542

Impairments
 
6,872

 
8,825

 
160,517

 
219,753

 
—

Total operating expenses
 
277,243

 
287,396

 
432,173

 
506,237

 
287,026

Operating income (loss)
 
85,672

 
83,623

 
(63,153
)
 
(122,863
)
 
97,928

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(79,869
)
 
(82,468
)
 
(80,426
)
 
(82,591
)
 
(89,530
)
(Loss) gain on extinguishment and forgiveness of debt, net
 
(2,003
)
 
252

 
—

 
(490
)
 
—

Other income (expense), net
 
1,744

 
1,216

 
1,062

 
(3,816
)
 
2,368

Reserve for loan loss
 
—

 
—

 
—

 
(15,300
)
 
—

Equity in income and gain on disposition of unconsolidated entities
 
212

 
70

 
10,404

 
752

 
6,837

(Loss) gain on derivative instruments, net
 
(2,023
)
 
(177
)
 
(1,086
)
 
677

 
(1,420
)
Total other expenses, net
 
(81,939
)
 
(81,107
)
 
(70,046
)
 
(100,768
)
 
(81,745
)
Income (loss) before taxes and real estate dispositions
 
3,733

 
2,516

 
(133,199
)
 
(223,631
)
 
16,183

Gain (loss) on disposition of real estate, net
 
28,111

 
437

 
17,175

 
(9,727
)
 
(6,542
)
Income (loss) before taxes
 
31,844

 
2,953

 
(116,024
)
 
(233,358
)
 
9,641

(Provision for) benefit from income taxes
 
(1,598
)
 
280

 
(56
)
 
41,127

 
(1,500
)
Net income (loss)
 
30,246


3,233


(116,080
)

(192,231
)

8,141

Net (income) loss attributable to non-controlling interests
 
(751
)
 
(87
)
 
2,994

 
4,841

 
(612
)
Net income (loss) attributable to the General Partner
 
$
29,495

 
$
3,146

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

 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share attributable to common stockholders and limited partners
 
$
0.01

 
$
(0.02
)
 
$
(0.15
)
 
$
(0.23
)
 
$
(0.01
)



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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Consolidated FFO and AFFO
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net income (loss)
 
$
30,246

 
$
3,233

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

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,972
)
 
(17,974
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
Depreciation and amortization of real estate assets
 
187,898

 
190,236

 
195,991

 
197,408

 
200,159

Impairment of real estate
 
6,872

 
8,825

 
160,517

 
6,414

 
—

Proportionate share of adjustments for unconsolidated entities
 
540

 
290

 
1,147

 
1,277

 
1,423

FFO attributable to common stockholders and limited partners
 
$
179,472

 
$
184,174

 
$
196,229

 
$
4,623

 
$
191,562

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
90

 
41

 
242

 
734

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Impairment of intangible assets
 
—

 
—

 
—

 
213,339

 
—

Reserve for loan loss
 
—

 
—

 
—

 
15,300

 
—

Gain on investment securities
 
—

 
—

 
—

 
—

 
(4
)
Loss (gain) on derivative instruments, net
 
2,023

 
177

 
1,086

 
(677
)
 
1,420

Amortization of premiums and discounts on debt and investments, net
 
(3,553
)
 
(4,030
)
 
(4,426
)
 
(5,107
)
 
(4,920
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

Amortization and write-off of deferred financing costs
 
6,878

 
7,461

 
7,307

 
7,321

 
11,320

Amortization of management contracts
 
6,240

 
6,240

 
7,451

 
3,373

 
7,510

Deferred tax expense (benefit)(1)
 
6,941

 
(6,417
)
 
(1,457
)
 
(38,695
)
 
(5,701
)
Loss (gain) on extinguishment and forgiveness of debt, net
 
2,003

 
(252
)
 
—

 
490

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Equity-based compensation expense
 
2,588

 
2,779

 
1,730

 
4,311

 
4,016

Other amortization and non-cash charges
 
929

 
751

 
743

 
1,540

 
781

Proportionate share of adjustments for unconsolidated entities
 
(17
)
 
91

 
135

 
42

 
694

AFFO attributable to common stockholders and limited partners
 
$
198,108

 
$
180,107

 
$
192,675

 
$
183,157

 
$
196,428

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities (2)
 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

Weighted-average shares outstanding - diluted (3)
 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.185

 
$
0.198

 
$
0.211

 
$
0.005

 
$
0.206

AFFO attributable to common stockholders and limited partners per diluted share (4)
 
$
0.205

 
$
0.193

 
$
0.207

 
$
0.197

 
$
0.211

___________________________________
(1)
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
(2)
Dilutive securities include unvested restricted shares of common stock and 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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Consolidated EBITDA and Normalized EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 Net income (loss)
 
$
30,246

 
$
3,233

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

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
79,869

 
82,468

 
80,426

 
82,591

 
89,530

Depreciation and amortization
 
195,173

 
197,345

 
204,308

 
202,415

 
208,542

Provision for (benefit from) income taxes
 
1,598

 
(280
)
 
56

 
(41,127
)
 
1,500

Proportionate share of adjustments for unconsolidated entities
 
959

 
554

 
1,822

 
1,978

 
2,554

 EBITDA
 
$
307,845

 
$
283,320

 
$
170,532

 
$
53,626

 
$
310,267

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
Impairments
 
6,872

 
8,825

 
160,517

 
219,753

 
—

Reserve for loan loss
 
—

 
—

 
—

 
15,300

 
—

Acquisition related expenses
 
90

 
41

 
242

 
734

 
1,764

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Gain on investment securities
 
—

 
—

 
—

 
—

 
(4
)
Loss (gain) on derivative instruments, net
 
2,023

 
177

 
1,086

 
(677
)
 
1,420

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Loss (gain) on extinguishment and forgiveness of debt, net
 
2,003

 
(252
)
 
—

 
490

 
—

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Program development costs write-off
 
845

 
2,377

 
—

 
11,295

 
—

Other amortization and non-cash charges
 
(139
)
 
(157
)
 
(126
)
 
(122
)
 
(82
)
 Proportionate share of adjustments for unconsolidated entities
 
(36
)
 
74

 
94

 
(15
)
 
608

Normalized EBITDA
 
$
285,906

 
$
283,060

 
$
288,607

 
$
286,674

 
$
301,772




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


coversvereitsuppq320162a01.jpg

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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
Statements of Operations - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
303,383

 
$
311,352

 
$
313,971

 
$
322,079

 
$
333,766

Direct financing lease income
 
494

 
535

 
569

 
623

 
659

Operating expense reimbursements
 
27,969

 
26,646

 
23,247

 
27,359

 
22,983

Total real estate investment revenues
 
331,846


338,533


337,787


350,061


357,408

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Acquisition related
 
90

 
27

 
217

 
673

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Property operating
 
34,820

 
38,199

 
34,813

 
35,308

 
31,950

General and administrative
 
12,069

 
13,701

 
12,228

 
16,646

 
15,848

Depreciation and amortization
 
187,897

 
190,236

 
195,991

 
197,409

 
200,158

Impairment of real estate
 
6,872

 
8,825

 
160,517

 
6,414

 
—

Total operating expenses
 
246,378


253,905


398,591

 
248,759

 
257,678

Operating income (loss)
 
85,468


84,628


(60,804
)
 
101,302

 
99,730

Other (expense) income:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(79,869
)
 
(82,468
)
 
(80,426
)
 
(82,591
)
 
(89,530
)
(Loss) gain on extinguishment and forgiveness of debt
 
(2,003
)
 
252

 
—

 
(490
)
 
—

Other income, net
 
1,649

 
1,216

 
568

 
(4,226
)
 
1,903

Reserve for loan loss
 
—

 
—

 
—

 
(15,300
)
 
—

Equity in income and gain on disposition of unconsolidated entities
 
212

 
70

 
10,404

 
752

 
6,837

(Loss) gain on derivative instruments, net
 
(2,023
)
 
(177
)
 
(1,086
)
 
677

 
(1,420
)
Total other expenses, net
 
(82,034
)

(81,107
)

(70,540
)
 
(101,178
)
 
(82,210
)
Income (loss) before taxes and real estate dispositions
 
3,434

 
3,521

 
(131,344
)
 
124

 
17,520

Gain (loss) on disposition of real estate, net
 
28,111

 
437

 
17,175

 
(9,727
)
 
(6,542
)
Income (loss) before taxes
 
31,545


3,958


(114,169
)
 
(9,603
)
 
10,978

(Provision for) benefit from income taxes
 
(1,539
)
 
(1,791
)
 
(1,365
)
 
3,642

 
(2,238
)
Net income (loss)
 
$
30,006


$
2,167


$
(115,534
)

$
(5,961
)

$
8,740



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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
FFO and AFFO - REI Segment
(unaudited, in thousands, except share and per share data)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net income (loss)
 
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

Dividends on non-convertible preferred stock
 
(17,973
)
 
(17,973
)
 
(17,973
)
 
(17,972
)
 
(17,974
)
(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
Depreciation and amortization of real estate assets
 
187,898

 
190,236

 
195,991

 
197,408

 
200,159

Impairment of real estate
 
6,872

 
8,825

 
160,517

 
6,414

 
—

Proportionate share of adjustments for unconsolidated entities
 
540

 
290

 
1,147

 
1,277

 
1,423

FFO attributable to common stockholders and limited partners
 
$
179,232

 
$
183,108

 
$
196,775

 
$
190,893

 
$
192,161

 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
90

 
27

 
217

 
673

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Reserve for loan loss
 
—

 
—

 
—

 
15,300

 
—

Gain on investment securities
 
—

 
—

 
—

 
—

 
(4
)
Loss (gain) on derivative instruments, net
 
2,023

 
177

 
1,086

 
(677
)
 
1,420

Amortization of premiums and discounts on debt and investments, net
 
(3,553
)
 
(4,030
)
 
(4,426
)
 
(5,107
)
 
(4,920
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

Amortization and write-off of deferred financing costs
 
6,878

 
7,461

 
7,307

 
7,321

 
11,320

Loss (gain) on extinguishment and forgiveness of debt, net
 
2,003

 
(252
)
 
—

 
490

 
—

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Equity-based compensation expense
 
1,201

 
1,925

 
799

 
1,840

 
1,073

Other amortization and non-cash charges
 
—

 
—

 
—

 
1

 
(1
)
Proportionate share of adjustments for unconsolidated entities
 
(17
)
 
91

 
135

 
42

 
694

AFFO attributable to common stockholders and limited partners
 
$
182,371

 
$
177,599

 
$
185,528

 
$
187,339

 
$
191,419

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities (1)
 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

Weighted-average shares outstanding - diluted (2)
 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share
 
$
0.185

 
$
0.197

 
$
0.212

 
$
0.205

 
$
0.207

AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.188

 
$
0.191

 
$
0.199

 
$
0.202

 
$
0.206

___________________________________
(1)
Dilutive securities include unvested restricted shares of common stock and 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.


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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
EBITDA and Normalized EBITDA - REI Segment
(unaudited, in thousands)
 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 Net income (loss)
 
$
30,006

 
$
2,167

 
$
(115,534
)
 
$
(5,961
)
 
$
8,740

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
79,869

 
82,468

 
80,426

 
82,591

 
89,530

Depreciation and amortization
 
187,897

 
190,236

 
195,991

 
197,409

 
200,158

Provision for (benefit from) income taxes
 
1,539

 
1,791

 
1,365

 
(3,642
)
 
2,238

Proportionate share of adjustments for unconsolidated entities
 
959

 
554

 
1,822

 
1,978

 
2,554

 EBITDA
 
$
300,270

 
$
277,216

 
$
164,070

 
$
272,375

 
$
303,220

(Gain) loss on disposition of real estate assets, including joint ventures, net
 
(28,111
)
 
(437
)
 
(27,373
)
 
9,727

 
(187
)
Impairment of real estate assets
 
6,872

 
8,825

 
160,517

 
6,414

 
—

Reserve for loan loss
 
—

 
—

 
—

 
15,300

 
—

Acquisition related expenses
 
90

 
27

 
217

 
673

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

Gain on investment securities
 
—

 
—

 
—

 
—

 
(4
)
Loss (gain) on derivative instruments, net
 
2,023

 
177

 
1,086

 
(677
)
 
1,420

Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Loss (gain) on extinguishment and forgiveness of debt, net
 
2,003

 
(252
)
 
—

 
490

 
—

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Other amortization and non-cash charges
 
(32
)
 
(39
)
 
(3
)
 
(28
)
 
10

 Proportionate share of adjustments for unconsolidated entities
 
(36
)
 
74

 
94

 
(15
)
 
608

Normalized EBITDA
 
$
277,593

 
$
274,683

 
$
282,243

 
$
280,822

 
$
294,743



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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
Net Operating Income - REI Segment
(unaudited, dollars in thousands)
 
REI Segment NOI and Cash NOI
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 Rental income - as reported(1)
 
303,383

 
$
311,352

 
$
313,971

 
$
322,079

 
$
333,766

 Direct financing lease income - as reported
 
494

 
535

 
569

 
623

 
659

 Operating expense reimbursements - as reported
 
27,969

 
26,646

 
23,247

 
27,359

 
22,983

 Property operating expense - as reported
 
(34,820
)
 
(38,199
)
 
(34,813
)
 
(35,308
)
 
(31,950
)
NOI
 
297,026


300,334


302,974

 
314,753

 
325,458

 Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

 Cash NOI
 
$
286,910


$
286,509


$
291,784

 
$
299,007

 
$
305,412

___________________________________
(1)
Rental income includes percentage rent of $1.2 million, $1.7 million, $2.5 million, $1.8 million and $2.1 million for the three months ended September 30, 2016 , June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015, respectively.

Normalized Cash NOI
 
 
Three Months Ended
 
 
September 30, 2016
Cash NOI
 
$
286,910

Adjustments for intra-quarter dispositions and completed build-to-suit properties(1)
 
(1,374
)
Normalized Cash NOI
 
$
285,536

___________________________________
(1)
For properties acquired or build-to-suits completed during the three months ended September 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 September 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

 
vereitlogoa12.jpg
 
 
Q3 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 4,187(1) properties, with 95.9 million aggregate square feet, acquired prior to July 1, 2015 and owned through September 30, 2016:
 
 
Three Months Ended September 30,
 
Increase/(Decrease)
 
 
2016
 
2015
 
$ Change
 
% Change
Contract Rental Revenue
 
287,382

 
287,069

 
313

 
0.1
%
Economic occupancy rate
 
98.0
%
 
98.3
%
 
NA

 
NA

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

 
$
101,128

 
$
100,077

 
$
1,051

 
1.1
 %
 
Anchored shopping centers
 
20

 
5,900

 
5,852

 
48

 
0.8
 %
 
Restaurant
 
1,837

 
66,127

 
68,047

 
(1,920
)
 
(2.8
)%
(3) 
Industrial and Distribution
 
160

 
47,366

 
46,717

 
649

 
1.4
 %
 
Office
 
159

 
66,730

 
66,245

 
485

 
0.7
 %
 
Other(2)
 
10

 
131

 
131

 
—

 
—
 %
 
Total
 
4,187

 
$
287,382

 
$
287,069

 
$
313

 
0.1
 %
(4) 
___________________________________
(1)
Development and expansion properties are included in the same store population if the placed in service date was prior to July 1, 2015.
(2)
Other properties include 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., restaurant same store contract rental revenue was flat during the three months ended September 30, 2016, as compared to the same quarter in 2015.
(4)
Excluding the impact of Ovation Brands, Inc., total same store contract rental revenue increased 0.8% during the three months ended September 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

 
vereitlogoa12.jpg
 
 
Q3 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 September 30, 2016.
vereitexhibi_chart-25884a01.jpg
vereitexhibi_chart-27301a01.jpg


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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
Debt Outstanding and Preferred Equity Summary
(unaudited, dollars in thousands)
 
Principal Payments Due
 
Total
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
Mortgage notes payable
 
$
2,813,829

 
$
49,767

 
$
420,662

 
$
209,229

 
$
229,516

 
$
282,190

 
$
1,622,465

Unsecured credit facility
 
500,000

 
—

 
—

 
500,000

 
—

 
—

 
—

Corporate bonds
 
2,250,000

 
—

 
—

 
—

 
750,000

 
—

 
1,500,000

Convertible notes
 
1,000,000

 
—

 
—

 
597,500

 
—

 
402,500

 
—

Secured term loan
 
23,010

 
2,063

 
7,680

 
13,267

 
—

 
—

 
—

Total
 
$
6,586,839

 
$
51,830

 
$
428,342

 
$
1,319,996

 
$
979,516


$
684,690

 
$
3,122,465

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Mortgage notes payable
 
42.7
%
 
5.01
%
 
4.6

Unsecured credit facility
 
7.6
%
 
3.25
%
 
1.7

Corporate bonds
 
34.2
%
 
4.06
%
 
5.8

Convertible notes
 
15.2
%
 
3.30
%
 
2.8

Secured term loan
 
0.3
%
 
5.81
%
 
1.3

Total
 
100.0
%
 
4.29
%
 
4.5

Debt Type
 
Percentage of Debt Outstanding
 
Weighted-Average Effective Interest Rate
 
Weighted-Average Years to Maturity
Total unsecured debt
 
56.9
%
 
3.75
%
 
4.5

Total secured debt
 
43.1
%
 
5.01
%
 
4.6

Total
 
100.0
%
 
4.29
%
 
4.5

 
 
 
 
 
 
 
Total fixed-rate debt (1)
 
99.9
%
 
4.29
%
 
4.5

Total variable-rate debt
 
0.1
%
 
3.84
%
 
0.9

Total
 
100.0
%
 
4.29
%
 
4.5

Preferred Equity
 
Balance (2)
 
Percent of Total Preferred Equity
 
Dividend Rate
Series F preferred stock
 
$
1,070,853

 
100.00
%
 
6.7
%
___________________________________
(1)
Includes $742.4 million of variable-rate debt with its interest rate fixed by way of an interest rate swap agreement.
(2)
Balance represents 42.8 million shares outstanding at September 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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


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

vereitexhibi_chart-25841a01.jpg



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


vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable
(unaudited, dollars in thousands)
 

Lender
 
Maturity
 
Debt Outstanding As Of September 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
 
131,801

 
5.61
%
 
5.61
%
 
P&I
JPMorgan Chase Bank, N.A.
 
9/1/2020
 
99,608

 
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
 
62,649

 
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
 
44,676

 
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
People's United Bank
 
4/1/2021
 
42,277

 
5.55
%
 
5.55
%
 
P&I
JPMorgan Chase Bank, N.A.
 
6/1/2020
 
40,939

 
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
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
 
28,625

 
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
 
27,827

 
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
 
23,801

 
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


vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Mortgage Notes Payable (cont.)
(unaudited, dollars in thousands)
 



Lender
 
Maturity
 
Debt Outstanding As Of September 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
 
19,260

 
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
 
15,910

 
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
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
 
11,625

 
3.75
%
 
3.75
%
 
I/O
JPMorgan Chase Bank, N.A.
 
7/1/2020
 
11,196

 
5.50
%
 
5.50
%
 
P&I
US Bank National Association
 
2/11/2017
 
10,332

 
5.68
%
 
5.68
%
 
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
 
9,558

 
3.95
%
 
3.95
%
 
P&I
Amegy Bank, National Association
 
8/19/2017
 
9,687

 
1mo. Libor + 2.95%

 
3.79
%
 
I/O
Transamerica Life Insurance Company
 
8/1/2030
 
7,173

 
5.57
%
 
5.57
%
 
P&I
Transamerica Life Insurance Company
 
8/1/2030
 
6,397

 
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
Wells Fargo Bank, National Association
 
3/1/2017
 
4,800

 
1mo. Libor + 2.50%

(3) 
3.76
%
 
I/O
Bear Stearns Commercial Mortgage, Inc.
 
9/1/2017
 
1,678

 
5.88
%
 
5.88
%
 
I/O
BOKF, NA dba Bank of Texas
 
4/12/2018
 
1,562

 
1mo. Libor + 2.45%

(3) 
3.39
%
 
I/O
Capital Lease Funding, LLC
 
7/15/2018
 
1,525

 
7.20
%
 
7.20
%
 
P&I
US Bank National Association
 
4/15/2019
 
1,258

 
5.40
%
 
5.40
%
 
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
 
365

 
5.93
%
 
5.93
%
 
P&I
 
 
 
 
$
2,813,829

 
 
 
5.01
%
 
 
___________________________________
(1)
Represents interest rate in effect at September 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.

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

 
vereitlogoa12.jpg
 
 
Q3 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 September 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
 
September 30, 2016
Minimum tangible net worth
 
≥ $5.5B
 
$9.4B
Ratio of total indebtedness to total asset value
 
≤ 60%
 
39.5%
Ratio of adjusted EBITDA to fixed charges
 
≥ 1.5x
 
2.78x
Ratio of secured indebtedness to total asset value
 
≤ 45%
 
16.7%
Ratio of unsecured indebtedness to unencumbered asset value
 
≤ 60%
 
34.0%
Ratio of unencumbered adjusted NOI to unsecured interest expense
 
≥ 1.75x
 
4.69x
Minimum unencumbered asset value
 
≥ $8.0B
 
$10.7B

Corporate Bond Key Covenants
 
Required
 
September 30, 2016
Limitation on incurrence of total debt
 
≤ 65%
 
40.1%
Limitation on incurrence of secured debt
 
≤ 40%
 
17.5%
Debt service coverage
 
≥ 1.5x
 
3.84x
Maintenance of total unencumbered assets
 
≥ 150%
 
291.3%



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

 
vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION


 
Development Projects and Dispositions
(unaudited, square feet and dollars in thousands)
 
Development Projects
During the three months ended September 30, 2016, the Company capitalized $0.8 million of additional development costs related to two projects, and placed one project into service at $3.5 million.
As of September 30, 2016, there is one Family Dollar build-to-suit property under development and estimated to be completed during Q1 2017, with $1.1 million invested to date and an estimated remaining investment of $0.7 million, and an estimated cash cap rate of 7.3%.

Dispositions
The following table shows the 78 properties that were disposed of and the related gains/losses during the three months ended September 30, 2016.
Property
 
Number of Properties
 
Square Feet
 
Weighted Average Remaining Lease Term (Years)(1)
 
Cash Cap Rate
 
Sale Price
 
Real Estate Gain (Loss)(2)
 
Goodwill Allocation(3)
 
GAAP Gain (Loss)(4)
Single-tenant retail
 
7
 
110

 
15.8

 
6.3
%
 
$
39,526

 
$
6,885

 
$
(1,879
)
 
$
5,006

Office
 
3
 
204

 
5.2

 
6.8
%
 
77,403

 
7,512

 
—

 
7,512

Industrial and Distribution
 
3
 
494

 
13.3

 
5.3
%
 
52,584

 
11,922

 
(185
)
 
11,737

Red Lobster(5)
 
23
 
164

 
23.0

 
6.9
%
 
78,134

 
6,082

 
(3,871
)
 
2,211

Other Restaurants
 
24
 
93

 
2.8

 
8.2
%
 
24,606

 
3,096

 
(1,124
)
 
1,972

Vacant
 
10
 
38

 
N/A

 
N/A

 
5,740

 
818

 
(241
)
 
577

Other (6)
 
8
 
267

 
N/A

 
N/A

 
—

 
(503
)
 
—

 
(503
)
Total dispositions
 
78
 
1,370
 
12.7

 
6.6
%
 
$
277,993

 
$
35,812

 
$
(7,300
)
 
$
28,512

Held for sale assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(401
)
Total gain on disposition of real estate , net
 
 
 
 
 
 
 
 
$
28,111

___________________________________
(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 allocates a portion of the REI segment goodwill to a respective property when it is classified as held for sale or when it is disposed of to calculate the GAAP gain (loss). The goodwill allocation presented excludes any amounts allocated to properties classified as held for sale in prior periods. See Note 4 – Goodwill and Other Intangibles of our Quarterly Report on Form 10-Q for the nine months ended September 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 $91.3M was 5.9%.
(6)
Includes one property foreclosed upon by the respective lender and seven properties relinquished to the ground lessor upon termination of the ground lease. The gain relating to the property foreclosed upon is included in (loss) gain on extinguishment and forgiveness of debt, net in the Consolidated Statements of Operations.



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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification Statistics: Real Estate Portfolio
(unaudited, percentages based on portfolio Annualized Rental Income)
 


vereitexhibi_chart-25737a01.jpg
___________________________________________________
vereitexhibi_chart-26866a01.jpg
___________________________________________________
vereitexhibi_chart-27982a01.jpg
 
vereitexhibi_chart-29050a01.jpg
___________________________________________________
vereitexhibi_chart-30086a01.jpg
___________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Properties owned
 
4,213

 
Rentable square feet
 
96,885

 
Economic occupancy rate
 
98.0
%
 
Weighted-average remaining lease term (years)
 
10.0

 
Investment-Grade Tenants
 
41.5
%
 
Flat leases
 
21.7
%
 
NNN leases
 
62.0
%
 



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

 
vereitlogoa12.jpg
 
 
Q3 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

 
2,678

 
2.8
%
 
$
104,180

 
8.6
%
 
B-
Walgreens
 
115

 
1,668

 
1.7
%
 
41,408

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.6
%
 
38,247

 
3.2
%
 
BB+
FedEx
 
51

 
3,734

 
3.9
%
 
35,657

 
3.0
%
 
BBB
Dollar General
 
404

 
3,741

 
3.9
%
 
34,246

 
2.8
%
 
BBB
CVS
 
98

 
1,388

 
1.4
%
 
31,343

 
2.6
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.0
%
 
23,633

 
2.0
%
 
B+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,686

 
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-
Total
 
1,110

 
22,886

 
23.7
%
 
$
367,113

 
30.4
%
 
 
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
 
368

 
5,362

 
5.5
%
 
$
192,272

 
15.9
%
Manufacturing
 
68

 
19,312

 
19.9
%
 
122,663

 
10.2
%
Restaurants - Quick Service
 
856

 
3,449

 
3.6
%
 
101,129

 
8.4
%
Retail - Discount
 
622

 
10,054

 
10.4
%
 
90,759

 
7.5
%
Retail - Pharmacy
 
253

 
3,763

 
3.9
%
 
86,504

 
7.2
%
Finance
 
304

 
3,050

 
3.2
%
 
66,392

 
5.5
%
Professional Services
 
71

 
4,222

 
4.4
%
 
59,644

 
4.9
%
Retail - Grocery & Supermarket
 
83

 
5,445

 
5.6
%
 
57,092

 
4.7
%
Retail - Home & Garden
 
99

 
7,012

 
7.2
%
 
50,240

 
4.2
%
Logistics
 
57

 
4,798

 
5.0
%
 
44,050

 
3.7
%
Total
 
2,781

 
66,467

 
68.7
%
 
$
870,745

 
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
 
574

 
11,440

 
11.8
%
 
$
161,699

 
13.4
%
Illinois
 
177

 
6,028

 
6.2
%
 
78,078

 
6.5
%
Florida
 
267

 
4,870

 
5.0
%
 
67,137

 
5.6
%
California
 
83

 
4,204

 
4.3
%
 
58,286

 
4.8
%
Pennsylvania
 
167

 
5,749

 
5.9
%
 
56,289

 
4.7
%
Ohio
 
282

 
5,702

 
5.9
%
 
54,526

 
4.5
%
Georgia
 
199

 
3,877

 
4.0
%
 
47,157

 
3.9
%
Indiana
 
137

 
5,926

 
6.1
%
 
45,172

 
3.7
%
North Carolina
 
171

 
3,688

 
3.8
%
 
38,818

 
3.2
%
Michigan
 
180

 
2,436

 
2.5
%
 
36,184

 
3.0
%
Total
 
2,237

 
53,920

 
55.5
%
 
$
643,346

 
53.3
%


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

 
vereitlogoa12.jpg
 
 
Q3 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
 
115

 
5,649

 
5.8
%
 
$
69,175

 
5.7
%
Dallas, TX
 
113

 
3,756

 
3.9
%
 
56,577

 
4.7
%
Houston, TX
 
96

 
2,867

 
3.0
%
 
31,711

 
2.6
%
Atlanta, GA
 
93

 
2,719

 
2.8
%
 
28,846

 
2.4
%
Philadelphia, PA
 
52

 
2,028

 
2.1
%
 
27,956

 
2.3
%
New York, NY
 
25

 
1,132

 
1.2
%
 
25,709

 
2.1
%
Boston, MA
 
28

 
1,819

 
1.9
%
 
24,953

 
2.1
%
Phoenix, AZ
 
46

 
1,133

 
1.2
%
 
21,748

 
1.8
%
Washington, DC
 
28

 
870

 
0.9
%
 
20,137

 
1.7
%
Indianapolis, IN
 
40

 
2,693

 
2.8
%
 
20,058

 
1.7
%
Total
 
636

 
24,666

 
25.6
%
 
$
326,870

 
27.1
%



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

 
vereitlogoa12.jpg
 
 
Q3 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

 
2,678

 
2.8
%
 
$
104,180

 
8.6
%
 
B-
Walgreens
 
115

 
1,668

 
1.7
%
 
41,408

 
3.4
%
 
BBB
Family Dollar
 
191

 
3,477

 
3.6
%
 
38,247

 
3.2
%
 
BB+
FedEx
 
51

 
3,734

 
3.9
%
 
35,657

 
3.0
%
 
BBB
Dollar General
 
404

 
3,741

 
3.9
%
 
34,246

 
2.8
%
 
BBB
CVS
 
98

 
1,388

 
1.4
%
 
31,343

 
2.6
%
 
BBB+
Albertson's
 
33

 
1,923

 
2.0
%
 
23,633

 
2.0
%
 
B+
Citizens Bank
 
176

 
851

 
0.9
%
 
20,686

 
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

 
1.5
%
 
B+
Goodyear
 
10

 
4,728

 
4.9
%
 
16,550

 
1.4
%
 
BB
General Service Administration
 
20

 
817

 
0.8
%
 
15,714

 
1.3
%
 
AA+
Tractor Supply
 
58

 
1,213

 
1.3
%
 
15,709

 
1.3
%
 
NR
Amazon
 
3

 
3,048

 
3.2
%
 
14,159

 
1.2
%
 
AA-
L.A. Fitness
 
15

 
656

 
0.7
%
 
12,723

 
1.1
%
 
B
Advance Auto Parts
 
106

 
736

 
0.8
%
 
12,099

 
1.0
%
 
BBB-
Total
 
1,334

 
34,942

 
36.3
%
 
$
471,686

 
39.2
%
 
 


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

 
vereitlogoa12.jpg
 
 
Q3 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

 
0.5
%
 
$
4,054

 
0.3
%
Agricultural
 
2

 
137

 
0.1
%
 
1,245

 
0.1
%
Education
 
4

 
1,287

 
1.3
%
 
5,812

 
0.5
%
Entertainment & Recreation
 
20

 
803

 
0.8
%
 
15,784

 
1.3
%
Finance
 
304

 
3,050

 
3.1
%
 
66,392

 
5.5
%
Government & Public Services
 
28

 
1,076

 
1.1
%
 
23,243

 
1.9
%
Healthcare
 
84

 
1,711

 
1.8
%
 
30,793

 
2.5
%
Information & Communication
 
15

 
507

 
0.5
%
 
7,766

 
0.6
%
Insurance
 
16

 
1,725

 
1.8
%
 
34,288

 
2.8
%
Logistics
 
57

 
4,798

 
5.0
%
 
44,050

 
3.7
%
Manufacturing
 
68

 
19,312

 
19.9
%
 
122,663

 
10.2
%
Mining & Natural Resources
 
16

 
731

 
0.8
%
 
14,735

 
1.2
%
Other Services
 
31

 
5,217

 
5.4
%
 
18,978

 
1.6
%
Professional Services
 
71

 
4,222

 
4.4
%
 
59,644

 
4.9
%
Real Estate
 
5

 
63

 
0.1
%
 
978

 
0.1
%
Rental
 
11

 
719

 
0.8
%
 
6,784

 
0.6
%
Restaurants - Casual Dining
 
368

 
5,362

 
5.5
%
 
192,272

 
15.9
%
Restaurants - Quick Service
 
856

 
3,449

 
3.6
%
 
101,129

 
8.4
%
Retail - Apparel & Jewelry
 
14

 
1,400

 
1.4
%
 
15,268

 
1.3
%
Retail - Department Stores
 
13

 
964

 
1.0
%
 
8,010

 
0.7
%
Retail - Discount
 
622

 
10,054

 
10.4
%
 
90,759

 
7.5
%
Retail - Electronics & Appliances
 
22

 
676

 
0.7
%
 
9,202

 
0.8
%
Retail - Gas & Convenience
 
127

 
526

 
0.5
%
 
27,375

 
2.3
%
Retail - Grocery & Supermarket
 
83

 
5,444

 
5.6
%
 
57,092

 
4.7
%
Retail - Hobby, Books & Music
 
9

 
340

 
0.4
%
 
2,978

 
0.2
%
Retail - Home & Garden
 
99

 
7,012

 
7.2
%
 
50,240

 
4.2
%
Retail - Home Furnishings
 
40

 
492

 
0.5
%
 
7,837

 
0.7
%
Retail - Internet
 
3

 
3,048

 
3.2
%
 
14,159

 
1.2
%
Retail - Motor Vehicle
 
166

 
1,190

 
1.2
%
 
21,994

 
1.8
%
Retail - Office Supply
 
4

 
76

 
0.1
%
 
1,155

 
0.1
%
Retail - Pet Supply
 
15

 
902

 
0.9
%
 
18,453

 
1.5
%
Retail - Pharmacy
 
253

 
3,763

 
3.9
%
 
86,504

 
7.2
%
Retail - Specialty (Other)
 
23

 
561

 
0.6
%
 
6,160

 
0.5
%
Retail - Sporting Goods
 
20

 
1,186

 
1.2
%
 
14,246

 
1.2
%
Retail - Warehouse Clubs
 
7

 
2,631

 
2.7
%
 
22,673

 
1.9
%
Other
 
11

 
70

 
—
%
 
1,371

 
0.1
%
Total
 
3,492

 
94,934

 
98.0
%
 
$
1,206,086

 
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

vereitlogoa12.jpg
 
 
Q3 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
 
147

 
1,583

 
1.6
%
 
$
23,715

 
2.0
%
Alaska
 
3

 
25

 
—
%
 
774

 
0.1
%
Arizona
 
74

 
1,832

 
1.9
%
 
31,774

 
2.6
%
Arkansas
 
96

 
1,004

 
1.0
%
 
12,591

 
1.0
%
California
 
83

 
4,204

 
4.3
%
 
58,286

 
4.8
%
Colorado
 
49

 
1,749

 
1.8
%
 
27,283

 
2.3
%
Connecticut
 
18

 
89

 
0.1
%
 
2,496

 
0.2
%
Delaware
 
11

 
93

 
0.1
%
 
2,025

 
0.2
%
Florida
 
267

 
4,870

 
5.0
%
 
67,137

 
5.6
%
Georgia
 
199

 
3,877

 
4.0
%
 
47,157

 
3.9
%
Idaho
 
18

 
138

 
0.1
%
 
3,361

 
0.3
%
Illinois
 
177

 
6,028

 
6.2
%
 
78,078

 
6.5
%
Indiana
 
137

 
5,926

 
6.1
%
 
45,172

 
3.7
%
Iowa
 
52

 
1,597

 
1.7
%
 
13,773

 
1.1
%
Kansas
 
44

 
2,344

 
2.4
%
 
11,343

 
0.9
%
Kentucky
 
81

 
2,153

 
2.2
%
 
23,616

 
1.9
%
Louisiana
 
96

 
1,617

 
1.7
%
 
21,560

 
1.8
%
Maine
 
25

 
649

 
0.7
%
 
8,544

 
0.7
%
Maryland
 
30

 
846

 
0.9
%
 
16,209

 
1.3
%
Massachusetts
 
39

 
2,579

 
2.7
%
 
30,170

 
2.5
%
Michigan
 
180

 
2,436

 
2.5
%
 
36,184

 
3.0
%
Minnesota
 
41

 
505

 
0.5
%
 
7,154

 
0.6
%
Mississippi
 
76

 
1,833

 
1.9
%
 
15,027

 
1.2
%
Missouri
 
160

 
1,831

 
1.9
%
 
24,681

 
2.0
%
Montana
 
10

 
124

 
0.1
%
 
2,129

 
0.1
%
Nebraska
 
21

 
759

 
0.8
%
 
11,171

 
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

 
3.0
%
New Mexico
 
50

 
937

 
1.0
%
 
13,030

 
1.1
%
New York
 
87

 
1,750

 
1.8
%
 
32,350

 
2.7
%
North Carolina
 
171

 
3,688

 
3.8
%
 
38,818

 
3.2
%
North Dakota
 
12

 
201

 
0.2
%
 
4,277

 
0.4
%
Ohio
 
282

 
5,702

 
5.9
%
 
54,526

 
4.5
%
Oklahoma
 
80

 
2,063

 
2.1
%
 
25,244

 
2.1
%
Oregon
 
15

 
309

 
0.3
%
 
5,137

 
0.4
%
Pennsylvania
 
167

 
5,749

 
5.9
%
 
56,289

 
4.7
%
Rhode Island
 
14

 
215

 
0.2
%
 
3,226

 
0.3
%
South Carolina
 
118

 
3,342

 
3.5
%
 
29,203

 
2.4
%
South Dakota
 
12

 
180

 
0.2
%
 
2,169

 
0.2
%
Tennessee
 
112

 
3,332

 
3.5
%
 
29,408

 
2.4
%
Texas
 
574

 
11,440

 
11.8
%
 
161,699

 
13.4
%
Utah
 
8

 
91

 
0.1
%
 
1,650

 
0.1
%
Vermont
 
7

 
23

 
—
%
 
472

 
—
%
Virginia
 
111

 
1,893

 
2.0
%
 
33,243

 
2.8
%
Washington
 
23

 
459

 
0.5
%
 
9,247

 
0.8
%
West Virginia
 
38

 
237

 
0.3
%
 
5,673

 
0.5
%

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

vereitlogoa12.jpg
 
 
Q3 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
Wisconsin
 
84

 
1,655

 
1.7
%
 
18,482

 
1.6
%
Wyoming
 
9

 
58

 
0.1
%
 
1,552

 
0.1
%
Territories
 
 
 
 
 
 
 
 
 
 
Puerto Rico
 
3

 
88

 
0.1
%
 
2,430

 
0.2
%
Canadian Provinces
 
 
 
 
 
 
 
 
 
 
Alberta
 
4

 
32

 
—
%
 
1,912

 
0.2
%
Manitoba
 
2

 
16

 
—
%
 
827

 
0.1
%
Ontario
 
11

 
78

 
0.1
%
 
4,208

 
0.4
%
Saskatchewan
 
2

 
17

 
—
%
 
828

 
0.1
%
Total
 
4,213

 
96,885

 
100.0
%
 
$
1,206,086

 
100.0
%
Percentages based on annualized rental income.


usmapregionaldiversitya11.jpg

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

 
vereitlogoa12.jpg
 
 
Q3 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
 
36

 
1,821

 
1.8
%
 
$
11,000

 
0.9
%
2017
 
146

 
4,026

 
4.2
%
 
39,173

 
3.2
%
2018
 
217

 
3,670

 
3.8
%
 
40,051

 
3.3
%
2019
 
185

 
3,263

 
3.4
%
 
55,731

 
4.6
%
2020
 
235

 
4,512

 
4.7
%
 
48,046

 
4.0
%
2021
 
193

 
11,221

 
11.6
%
 
88,290

 
7.3
%
2022
 
264

 
9,890

 
10.2
%
 
83,668

 
6.9
%
2023
 
216

 
6,176

 
6.4
%
 
79,099

 
6.5
%
2024
 
179

 
9,214

 
9.5
%
 
107,559

 
9.0
%
2025
 
279

 
4,428

 
4.6
%
 
63,020

 
5.3
%
Thereafter
 
1,542

 
36,713

 
37.8
%
 
590,449

 
49.0
%
Total
 
3,492

 
94,934

 
98.0
%
 
$
1,206,086

 
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

 
vereitlogoa12.jpg
 
 
Q3 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
 
 
 
 
 
 
 
 
 
 
Anchored shopping centers
 
4

 
19

 
—
%
 
280

 
—
%
Restaurant
 
23

 
119

 
0.1
%
 
969

 
0.1
%
Industrial & Distribution
 
2

 
1,399

 
1.4
%
 
4,061

 
0.3
%
Office
 
5

 
284

 
0.3
%
 
5,690

 
0.5
%
Other(1)
 
2

 
—

 
—
%
 
—

 
—
%
Total Remaining 2016
 
36

 
1,821

 
1.8
%
 
$
11,000

 
0.9
%
 
 
 
 
 
 
 
 
 
 
 
2017
 


 


 


 


 


Single-tenant retail
 
46

 
282

 
0.3
%
 
$
6,105

 
0.5
%
Anchored shopping centers
 
25

 
101

 
0.1
%
 
2,004

 
0.2
%
Restaurant
 
45

 
452

 
0.5
%
 
6,959

 
0.6
%
Industrial & Distribution
 
9

 
2,329

 
2.4
%
 
10,209

 
0.8
%
Office
 
20

 
862

 
0.9
%
 
13,881

 
1.1
%
Other(1)
 
1

 
—

 
—
%
 
15

 
—
%
Total 2017
 
146

 
4,026

 
4.2
%
 
$
39,173

 
3.2
%
 
 
 
 
 
 
 
 
 
 
 
2018
 


 


 


 


 


Single-tenant retail
 
72

 
944

 
1.0
%
 
$
13,631

 
1.1
%
Anchored shopping centers
 
30

 
304

 
0.3
%
 
4,213

 
0.4
%
Restaurant
 
88

 
330

 
0.3
%
 
7,695

 
0.6
%
Industrial & Distribution
 
12

 
1,751

 
1.8
%
 
7,008

 
0.6
%
Office
 
13

 
341

 
0.4
%
 
7,486

 
0.6
%
Other(1)
 
2

 
—

 
—
%
 
18

 
—
%
Total 2018
 
217

 
3,670

 
3.8
%
 
$
40,051

 
3.3
%
 
 
 
 
 
 
 
 
 
 
 
2019
 


 


 


 


 


Single-tenant retail
 
54

 
1,315

 
1.4
%
 
$
15,510

 
1.3
%
Anchored shopping centers
 
30

 
250

 
0.3
%
 
3,725

 
0.3
%
Restaurant
 
76

 
313

 
0.3
%
 
7,317

 
0.6
%
Industrial & Distribution
 
3

 
137

 
0.1
%
 
1,275

 
0.1
%
Office
 
22

 
1,248

 
1.3
%
 
27,904

 
2.3
%
Total 2019
 
185

 
3,263

 
3.4
%
 
$
55,731

 
4.6
%
 
 
 
 
 
 
 
 
 
 
 
___________________________________
(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

 
vereitlogoa12.jpg
 
 
Q3 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
 
81

 
1,056

 
1.1
%
 
$
13,452

 
1.1
%
Anchored shopping centers
 
16

 
140

 
0.1
%
 
1,825

 
0.2
%
Restaurant
 
106

 
432

 
0.5
%
 
8,761

 
0.7
%
Industrial & distribution
 
9

 
1,651

 
1.7
%
 
6,435

 
0.5
%
Office
 
22

 
1,233

 
1.3
%
 
17,572

 
1.5
%
Other(1)
 
1

 
—

 
—
%
 
1

 
—
%
Total 2020
 
235

 
4,512

 
4.7
%
 
$
48,046

 
4.0
%
 
 
 
 
 
 
 
 
 
 
 
2021
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
67

 
1,259

 
1.3
%
 
$
19,224

 
1.6
%
Anchored shopping centers
 
17

 
162

 
0.2
%
 
2,599

 
0.2
%
Restaurant
 
68

 
354

 
0.3
%
 
9,130

 
0.8
%
Industrial & distribution
 
16

 
7,653

 
7.9
%
 
27,171

 
2.2
%
Office
 
25

 
1,793

 
1.9
%
 
30,166

 
2.5
%
Other(1)
 
—

 
—

 
—
%
 
—

 
—
%
Total 2021
 
193

 
11,221

 
11.6
%
 
$
88,290

 
7.3
%
 
 
 
 
 
 
 
 
 
 
 
2022
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
166

 
2,180

 
2.3
%
 
$
29,085

 
2.4
%
Anchored shopping centers
 
10

 
118

 
0.1
%
 
1,820

 
0.1
%
Restaurant
 
45

 
203

 
0.2
%
 
4,550

 
0.4
%
Industrial & distribution
 
26

 
5,819

 
6.0
%
 
21,386

 
1.8
%
Office
 
15

 
1,570

 
1.6
%
 
26,739

 
2.2
%
Other(1)
 
2

 
—

 
—
%
 
88

 
—
%
Total 2022
 
264

 
9,890

 
10.2
%
 
$
83,668

 
6.9
%
 
 
 
 
 
 
 
 
 
 
 
2023
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
123

 
1,832

 
1.9
%
 
$
22,928

 
1.9
%
Anchored shopping centers
 
7

 
130

 
0.1
%
 
2,653

 
0.2
%
Restaurant
 
48

 
212

 
0.2
%
 
5,113

 
0.4
%
Industrial & distribution
 
15

 
2,583

 
2.7
%
 
17,944

 
1.5
%
Office
 
23

 
1,419

 
1.5
%
 
30,461

 
2.5
%
Total 2023
 
216

 
6,176

 
6.4
%
 
$
79,099

 
6.5
%
___________________________________
(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 | 36

 
vereitlogoa12.jpg
 
 
Q3 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
%
 
$
27,446

 
2.3
%
Anchored shopping centers
 
3

 
14

 
—
%
 
332

 
—
%
Restaurant
 
48

 
253

 
0.3
%
 
6,657

 
0.6
%
Industrial & Distribution
 
12

 
3,509

 
3.6
%
 
15,482

 
1.3
%
Office
 
28

 
3,319

 
3.4
%
 
57,603

 
4.8
%
Other(1)
 
1

 
—

 
—
%
 
39

 
—
%
Total 2024
 
179

 
9,214

 
9.5
%
 
$
107,559

 
9.0
%
 
 
 
 
 
 
 
 
 
 
 
2025
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
181

 
1,757

 
1.8
%
 
$
30,830

 
2.6
%
Anchored shopping centers
 
2

 
10

 
—
%
 
160

 
—
%
Restaurant
 
63

 
271

 
0.3
%
 
8,001

 
0.7
%
Industrial & Distribution
 
12

 
1,844

 
1.9
%
 
14,154

 
1.2
%
Office
 
21

 
546

 
0.6
%
 
9,875

 
0.8
%
Total 2025
 
279

 
4,428

 
4.6
%
 
$
63,020

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
 
 
 
 
 
 
Single-tenant retail
 
873

 
16,898

 
17.4
%
 
$
239,406

 
19.9
%
Anchored shopping centers
 
18

 
426

 
0.4
%
 
4,287

 
0.4
%
Restaurant
 
567

 
5,717

 
5.9
%
 
224,946

 
18.7
%
Industrial & distribution
 
45

 
11,063

 
11.4
%
 
70,711

 
5.8
%
Office
 
38

 
2,609

 
2.7
%
 
50,684

 
4.2
%
Other(1)
 
1

 
—

 
—
%
 
415

 
—
%
Total Thereafter
 
1,542

 
36,713

 
37.8
%
 
$
590,449

 
49.0
%
 
 
 
 
 
 
 
 
 
 
 
Total Remaining Lease Expirations
 
3,492

 
94,934

 
98.0
%
 
$
1,206,086

 
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

 
vereitlogoa12.jpg
 
 
Q3 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
 
2,143

 
61,175

 
63.1
%
 
$
830,751

 
68.9
%
CPI
 
250

 
7,687

 
7.9
%
 
113,904

 
9.4
%
Flat
 
1,099

 
26,072

 
27.0
%
 
261,431

 
21.7
%
Total
 
3,492


94,934


98.0
%

$
1,206,086


100.0
%

vereitexhibi_chart-26040a01.jpg

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

 
vereitlogoa12.jpg
 
 
Q3 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
 
2,488

 
55,600

 
57.4
%
 
$
747,168

 
62.0
%
NN
 
951

 
37,643

 
38.9
%
 
418,069

 
34.6
%
Other (1)
 
53

 
1,691

 
1.7
%
 
40,849

 
3.4
%
Total
 
3,492


94,934

 
98.0
%
 
$
1,206,086

 
100.0
%
___________________________________
(1)
Includes gross, modified gross, and billboard.
 
vereitexhibi_chart-30184a01.jpg

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 39

 
vereitlogoa12.jpg
 
 
Q3 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
 
2,017

 
29,704

 
30.7
%
 
$
417,617

 
34.6
%
Anchored shopping centers
 
20

 
1,723

 
1.8
%
 
23,898

 
2.0
%
Restaurant
 
1,837

 
9,143

 
9.4
%
 
290,098

 
24.0
%
Industrial & Distribution
 
166

 
40,422

 
41.7
%
 
195,836

 
16.3
%
Office(1)
 
161

 
15,893

 
16.4
%
 
278,061

 
23.1
%
Other(2)
 
12

 
—

 
—
%
 
576

 
—
%
Total
 
4,213


96,885


100.0
%

$
1,206,086


100.0
%
___________________________________
(1) The office portfolio is comprised of the following sub-categories:
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
Corporate headquarters
 
84

 
11,433

 
11.8
%
 
$
190,057

 
15.8
%
Corporate operations
 
21

 
4,013

 
4.1
%
 
77,392

 
6.4
%
Medical retail services
 
56

 
447

 
0.5
%
 
10,612

 
0.9
%
Total
 
161

 
15,893

 
16.4
%
 
$
278,061

 
23.1
%

(2) 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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Single-Tenant Retail
(unaudited, percentages based on Annualized Rental Income of the single-tenant retail properties)
 


vereitexhibi_chart-25966a01.jpg____________________________________________________
vereitexhibi_chart-27044a01.jpg______________________________________________________
vereitexhibi_chart-28096a01.jpg
 
vereitexhibi_chart-29258a01.jpg_________________________________________________
vereitexhibi_chart-30486a01.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of single-tenant retail properties
 
2,017

 
Rentable square feet
 
29,704

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

 
Investment grade tenants
 
49.1
%
 
Flat leases
 
36.3
%
 
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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Anchored Shopping Centers
(unaudited, percentages based on Annualized Rental Income of the anchored shopping center properties)

 


vereitexhibi_chart-26232a01.jpg____________________________________________________
vereitexhibi_chart-27477a01.jpg______________________________________________________
vereitexhibi_chart-28548a01.jpg
 
vereitexhibi_chart-29636a01.jpg_________________________________________________
vereitexhibi_chart-30634a01.jpg_________________________________________________

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

 
Rentable square feet
 
1,723

 
Economic occupancy rate
 
97.1
%
 
Weighted-average remaining lease term
 
5.5

 
Investment grade tenants
 
32.6
%
 
Flat leases
 
52.0
%
 
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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Restaurants
(unaudited, percentages based on Annualized Rental Income of the restaurant properties)

 


vereitexhibi_chart-25670a01.jpg
____________________________________________________
vereitexhibi_chart-26734a01.jpg______________________________________________________
vereitexhibi_chart-27673a01.jpg
 
vereitexhibi_chart-28559a01.jpg
_________________________________________________
vereitexhibi_chart-29529a01.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of restaurant properties
 
1,837

 
Rentable square feet
 
9,143

 
Economic occupancy rate
 
94.7
%
 
Weighted-average remaining lease term
 
14.5

 
Investment grade tenants
 
2.9
%
 
Flat leases
 
7.7
%
 
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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Industrial and Distribution
(unaudited, percentages based on Annualized Rental Income of the industrial & distribution properties)

 


vereitexhibi_chart-25724a01.jpg____________________________________________________
vereitexhibi_chart-26793a01.jpg______________________________________________________
vereitexhibi_chart-27863a01.jpg
 
vereitexhibi_chart-28780a01.jpg_________________________________________________
vereitexhibi_chart-29765a01.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of industrial and distribution properties
 
166

 
Rentable square feet
 
40,422

 
Economic occupancy rate
 
98.3
%
 
Weighted-average remaining lease term
 
8.3

 
Investment grade tenants
 
54.5
%
 
Flat leases
 
24.8
%
 
NNN leases
 
49.8
%
 


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

vereitlogoa12.jpg
 
 
Q3 2016 SUPPLEMENTAL INFORMATION
 
Diversification by Property Type: Office
(unaudited, percentages based on Annualized Rental Income of the office properties)

 


vereitexhibi_chart-26225a01.jpg____________________________________________________
vereitexhibi_chart-27334a01.jpg______________________________________________________
vereitexhibi_chart-28296a01.jpg
 
vereitexhibi_chart-29320a01.jpg_________________________________________________
vereitexhibi_chart-30279a01.jpg_________________________________________________

Statistics
(square feet in thousands)
 
 
 
 
Number of office properties
 
161

 
Rentable square feet
 
15,893

 
Economic occupancy rate
 
95.8
%
 
Weighted-average remaining lease term
 
6.7

 
Investment grade tenants
 
64.3
%
 
Flat leases
 
9.6
%
 
NNN leases
 
23.0
%
 


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

 
vereitlogoa12.jpg
 
 
Q3 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 September 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

 
$
3,011

 
$
20,400

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

 
280

 
3,240

 
25,788

 
Publix, Belk
Total
 
 
 
$
50,429

 
512


6,251


46,188

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's aggregate interest
 
 
 
 
 
 
 
$
4,421

 
$
33,409

 
 
___________________________________
(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 2.93% to 5.20% and maturities ranging from October 2016 to July 2021, with a weighted-average interest rate of 3.93% as of September 30, 2016 and a weighted-average years to maturity of 2.1 years as of September 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


coversvereitsuppq320163.jpg

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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

 
Statements of Operations - Cole Capital
(unaudited, in thousands)
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
Offering-related fees and reimbursements
 
$
9,545

 
$
10,914

 
$
12,391

 
$
9,927

 
$
5,850

 Transaction service fees and reimbursements
 
3,779

 
4,476

 
2,384

 
5,413

 
7,400

 Management fees and reimbursements
 
17,745

 
17,096

 
16,458

 
17,973

 
14,296

Total Cole Capital revenues
 
31,069


32,486

 
31,233

 
33,313

 
27,546

Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 Cole Capital reallowed fees and commissions
 
5,897

 
6,975

 
8,068

 
6,558

 
3,896

 Acquisition related
 
—

 
14

 
25

 
61

 
74

 General and administrative
 
17,692

 
19,393

 
17,172

 
32,514

 
16,994

 Depreciation and amortization
 
7,276

 
7,109

 
8,317

 
5,006

 
8,384

 Impairment of intangible assets
 
—

 
—

 
—

 
213,339

 
—

 Total operating expenses
 
30,865

 
33,491

 
33,582

 
257,478

 
29,348

Operating income (loss)
 
204

 
(1,005
)
 
(2,349
)
 
(224,165
)
 
(1,802
)
Total other income, net
 
95

 
—

 
494

 
410

 
465

Income (loss) before taxes
 
299


(1,005
)
 
(1,855
)
 
(223,755
)
 
(1,337
)
(Provision for) benefit from income taxes
 
(59
)
 
2,071

 
1,309

 
37,485

 
738

Net income (loss)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)


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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

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

 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net income (loss)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
FFO attributable to common stockholders and limited partners
 
240

 
1,066

 
(546
)
 
(186,270
)
 
(599
)
 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
—

 
14

 
25

 
61

 
74

 Impairment of intangible assets
 
—

 
—

 
—

 
213,339

 
—

 Amortization of management contracts
 
6,240

 
6,240

 
7,451

 
3,373

 
7,510

 Deferred tax expense (benefit) (1)
 
6,941

 
(6,417
)
 
(1,457
)
 
(38,695
)
 
(5,701
)
Equity-based compensation expense
 
1,387

 
854

 
931

 
2,471

 
2,943

Other amortization and non-cash charges
 
929

 
751

 
743

 
1,539

 
782

AFFO attributable to common stockholders and limited partners
 
$
15,737

 
$
2,508

 
$
7,147

 
$
(4,182
)
 
$
5,009

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - basic
 
943,480,170

 
904,107,378

 
903,825,726

 
903,638,159

 
903,461,323

Effect of Limited Partner OP Units and dilutive securities (2)
 
25,206,373

 
27,144,667

 
26,354,148

 
25,729,149

 
25,995,886

Weighted-average shares outstanding - diluted (3)
 
968,686,543

 
931,252,045

 
930,179,874

 
929,367,308

 
929,457,209

 
 
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders and limited partners per diluted share 
 
$
0.000

 
$
0.001

 
$
(0.001
)
 
$
(0.200
)
 
$
(0.001
)
AFFO attributable to common stockholders and limited partners per diluted share
 
$
0.016

 
$
0.003

 
$
0.008

 
$
(0.004
)
 
$
0.005

___________________________________
(1)
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
(2)
Dilutive securities include unvested restricted shares of common stock and 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.



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


vereitlogoa13.jpg
colecapgreya01.jpg
 
Q3 2016 SUPPLEMENTAL INFORMATION

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

 
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net income (loss)
 
$
240

 
$
1,066

 
$
(546
)
 
$
(186,270
)
 
$
(599
)
 Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
7,276

 
7,109

 
8,317

 
5,006

 
8,384

Provision for (benefit from) income taxes
 
59

 
(2,071
)
 
(1,309
)
 
(37,485
)
 
(738
)
 EBITDA
 
$
7,575

 
$
6,104

 
$
6,462

 
$
(218,749
)
 
$
7,047

Impairment of intangible assets
 
—

 
—

 
—

 
213,339

 
—

Acquisition related expenses
 
—

 
14

 
25

 
61

 
74

Program development costs write-off
 
845

 
2,377

 
—

 
11,295

 
—

Other amortization and non-cash charges
 
(107
)
 
(118
)
 
(123
)
 
(94
)
 
(92
)
Normalized EBITDA
 
$
8,313

 
$
8,377

 
$
6,364

 
$
5,852

 
$
7,029


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


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Q3 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
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Cole Capital revenue, net of reallowed fees and commissions
 
$
25,172

 
$
25,511

 
$
23,165

 
$
26,755

 
$
23,650

Less: Expense reimbursements from Cole REITs recorded as revenue
 
7,416

 
7,342

 
7,515

 
8,094

 
4,549

Net Cole Capital Revenue
 
17,756


18,169

 
15,650

 
18,661

 
19,101

Other income
 
95

 
—

 
494

 
410

 
465

Net Cole Capital Revenue and other income
 
$
17,851


$
18,169

 
$
16,144

 
$
19,071

 
$
19,566

 
 
 
 
 
 
 
 
 
 
 
Total consolidated general and administrative expenses
 
$
29,761

 
$
33,094

 
$
29,400

 
$
49,160

 
$
32,842

Less: REI segment general and administrative expenses
 
12,069

 
13,701

 
12,228

 
16,646

 
15,848

Cole Capital general and administrative expenses
 
17,692


19,393

 
17,172

 
32,514

 
16,994

Less:
 
 
 
 
 
 
 
 
 
 
Expenses reimbursed from Cole REITs
 
7,416

 
7,342

 
7,515

 
8,094

 
4,549

Net Cole Capital G&A expense
 
10,276


12,051

 
9,657

 
24,420

 
12,445

Expenses incurred recorded as program development costs
 
2,452

 
973

 
3,433

 
(5,840
)
 
3,002

Normalized Net Cole Capital G&A expense
 
$
12,728


$
13,024

 
$
13,090

 
$
18,580

 
$
15,447

 
 
 
 
 
 
 
 
 
 
 
Normalized EBITDA Margin
 
46.6
%

46.1
%
 
39.4
%
 
30.7
%
 
35.9
%
Normalized Net Cole Capital G&A expense as percent of Net Cole Capital Revenue and other income
 
71.3
%

71.7
%
 
81.1
%
 
97.4
%
 
78.9
%


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


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Q3 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
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
Beginning Balance
 
$
12,115

 
$
13,578

 
$
12,855

 
$
20,878

 
$
19,006

 
Expenses incurred
 
7,010

 
6,993

 
6,474

 
8,802

 
5,054

 
Offering-related reimbursement revenue
 
(2,299
)
 
(2,436
)
 
(2,710
)
 
(2,183
)
 
(1,130
)
 
Reserve for uncollectible amounts and write-offs(2)
 
(4,558
)
 
(6,020
)
 
(3,041
)
 
(14,642
)
 
(2,052
)
 
Ending Balance
 
$
12,268


$
12,115

 
$
13,578

 
$
12,855

 
$
20,878

 
___________________________________
(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


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Q3 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 September 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")
 
$
283,109

 
$
14,488

 
116

 
$
499,188

 
$
257,349

Cole Real Estate Income Strategy (Daily NAV), Inc. ("INAV")
 
303,374

 
10,400

 
96

 
352,030

 
120,769

Cole Office & Industrial REIT (CCIT III), Inc. ("CCIT III")
 
2,500

(4) 
—

 
1

 
32,750

 
32,300

Total Open Programs
 
588,983

 
24,888

 
213

 
883,968

 
410,418

 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
Cole Office & Industrial REIT (CCIT II), Inc. ("CCIT II")
 
651,063

 
26,692

 
32

 
1,036,254

 
495,542

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

 
326,473

 
882

 
4,840,078

 
2,239,899

Other Programs (5)
 
—

 
—

 
35

 
371,100

 
173,752

Total Closed Programs
 
3,567,024

 
353,165

 
949

 
6,247,432

 
2,909,193

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
4,156,007

 
$
378,053

 
1,162

 
$
7,131,400

 
$
3,319,611

___________________________________
(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)
Represents an investment made by VEREIT in order for CCIT III to break escrow and commence operations.
(5)
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


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Q3 2016 SUPPLEMENTAL INFORMATION

 
Cole REITs and Other Real Estate Programs (cont.)
 
Offering Summary
The following table shows offering summary information for the Cole REITs in offering as of September 30, 2016:
Program
 
Primary
Investment
Strategy
 
Offering
Commencement
 Date
 
NAV per Share
 
Offering
 Price per Share
 
Annualized
Distribution per Share (2) 
 
CCPT V
 
 
 
 
 
 
 
 



 
A Shares
 
Retail
 
3/17/2014
 
$
24.00

(1) 
$
26.37

 
$
1.58

 
T Shares
 
Retail
 
4/29/2016
 
$
24.00

(1) 
$
25.26

 
$
1.58

 
 
 
 
 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
 
 
 
 
W Shares
 
Diversified
 
12/6/2011
 
$
18.25

(3) 
$
18.25

 
$
0.98

 
A Shares
 
Diversified
 
10/10/2013
 
$
18.13

(3) 
$
18.84

 
$
0.97

 
I Shares
 
Diversified
 
11/19/2013
 
$
18.37

(3) 
$
18.37

 
$
0.99

 
 
 
 
 
 
 
 
 
 
 
 
 
CCIT III
 
 
 
 
 
 
 
 
 
 
 
A Shares
 
Office and Industrial
 
9/22/2016
 
N/A

 
$
10.00

 
$
0.60

 
T Shares
 
Office and Industrial
 
9/22/2016
 
N/A

 
$
9.57

 
$
0.60

 
___________________________________
(1)
Represents the estimated net asset value per share determined by CCPT V's board of directors as of February 29, 2016.
(2)
The annualized distribution does not include the effect of any trailing fees.
(3)
The NAV per share for each share class 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.


See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 54


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Q3 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 September 30, 2016.
Program
 
Selling
Commissions (1)
 
Dealer
Manager Fees (2)
 
Annual Distribution and Stockholder Servicing Fees (2)
 
CCPT V
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
0.8
%
(3)(5) 
 
 
 
 
 
 
 
 
INAV
 
 
 
 
 
 
 
W Shares
 
—

 
0.55
%
(4) 
—

 
A Shares
 
up to 3.75%

 
0.55
%
(4) 
0.50
%
(4) 
I Shares
 
—

 
0.25
%
(4) 
—

 
 
 
 
 
 
 
 
 
CCIT III
 
 
 
 
 
 
 
A Shares
 
7
%
 
2
%
 
—

 
T Shares
 
3
%
 
2
%
 
1.0
%
(5) 
___________________________________
(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. Fees are calculated on a daily basis and payable monthly in arrears.
(3)
Subsequent to September 30, 2016, the distribution and stockholder servicing fee was changed to be 1.0%.
(4)
Fees are calculated on a daily basis and payable monthly in arrears.
(5)
The maximum amount of the distribution and stockholder servicing fee with respect to sales of Class T shares is 4.0% of the gross offering proceeds.

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 September 30, 2016.
 
 
Transaction Fees
 
Management Fees
 
Program
 
Acquisition
Fees (1)
 
Disposition
Fees
 
Liquidation Performance Fees
 
Financing Coordination Fee
 
Asset Management / Advisory Fees
 
Performance Fees
 
Open Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPT V
 
2
%
 
1
%
 
15
%
(2) 
—

 
0.65% - 0.75%

(4) 
—


INAV
 
—

 
—

 
N/A

 
—

 
0.90
%
(5) 
25
%
(6) 
CCIT III
 
2
%
 
1
%
 
15
%
(2) 
1
%
(3) 
0.65% - 0.75%

(4) 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
2
%
 
1
%
 
15
%
(2) 
—

 
0.65% - 0.75%

(4) 
—

 
CCPT IV
 
2
%
 
1
%
 
15
%
(2) 
—

 
0.65% - 0.75%

(4) 
—


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 a 6% annual cumulative, non-compounded return (8% in the case of CCIT II and CCPT IV).
(3)
Financing coordination fee payable for services in connection with the origination, assumption, or refinancing for any debt (other than loans advanced by the Company) to acquire properties or make other permitted investments.
(4)
Annualized fee based on the average monthly invested assets.
(5)
Annualized fee based on the average daily NAV.
(6)
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


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Q3 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 September 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
 
$
13,561

 
$
2,225

 
—

 
$
—

 
—

 
$
—

INAV
 
43,097

 
1,590

 
6

 
44,033

 
—

 
—

CCIT III
 
2,500

(4) 
—

 
1

 
32,750

 
—

 
—

Total Open Programs
 
59,158

 
3,815

 
7

 
76,783

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
 
 
 
 
CCIT II
 
77,223

 
5,098

 
—

 
—

 
—

 
—

CCPT IV
 
—

 
27,285

 
6

 
97,086

 
2

 
16,413

Other Programs(5)
 
—

 
—

 
—

 
—

 
2

 
34,400

Total Closed Programs
 
77,223

 
32,383

 
6

 
97,086

 
4

 
50,813

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
136,381

 
$
36,198

 
13

 
$
173,869

 
4

 
$
50,813

___________________________________
(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)
Represents an investment made by VEREIT in order for CCIT III to break escrow and commence operations.
(5)
Includes TIC and DST programs and GOP.

See the Definitions section for a description of the Company's non-GAAP and other financial measures.
VEREIT, Inc. | WWW.VEREIT.COM | 56


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Q3 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 September 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
 
$
1,316

 
$
—

 
$
1,769

 
$
3,085

INAV
 
1,430

 
460

 
1,219

 
3,109

CCIT III
 
27

 
875

 
5

 
907

Gross revenue - Open Programs
 
2,773

 
1,335

 
2,993

 
7,101

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
1,611

 
—

 
—

 
1,611

Reimbursements
 
680

 
584

 
3,742

 
5,006

Net Cole Capital Revenue - Open Programs
 
482

 
751

 
(749
)
 
484

 
 
 
 
 
 
 
 
 
Closed Programs:
 
 
 
 
 
 
 
 
CCIT II
 
6,772

 
102

 
2,789

 
9,663

CCPT IV
 
—

 
2,062

 
11,659

 
13,721

Other Programs
 
—

 
280

 
304

 
584

Gross revenue - Closed Programs
 
6,772

 
2,444

 
14,752

 
23,968

Less:
 
 
 
 
 
 
 
 
Reallowed revenues
 
4,286

 
—

 
—

 
4,286

Reimbursements
 
1,620

 
102

 
688

 
2,410

Net Cole Capital Revenue - Closed Programs
 
866

 
2,342

 
14,064

 
17,272

 
 
 
 
 
 
 
 
 
Total Net Cole Capital Revenue
 
$
1,348

 
$
3,093

 
$
13,315

 
$
17,756















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


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Q3 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
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Capital raised (excluding DRIP)
 
$
136,381

 
$
138,655

 
$
144,620

 
$
116,634

 
$
66,603

 
 
 
 
 
 
 
 
 
 
 
Securities commissions
 
5,008

 
6,063

 
7,041

 
5,756

 
3,328

Dealer manager and distribution fees
 
2,237

 
2,415

 
2,640

 
1,988

 
1,258

Reimbursement revenue
 
2,300

 
2,436

 
2,710

 
2,183

 
1,264

Gross offering-related revenue
 
9,545


10,914

 
12,391

 
9,927

 
5,850

Less:
 
 
 
 
 
 
 
 
 
 
Reallowed securities commissions
 
5,008

 
6,063

 
7,041

 
5,756

 
3,328

Reallowed dealer manager and distribution fees
 
889

 
912

 
1,027

 
802

 
568

Reimbursement revenue
 
2,300

 
2,436

 
2,710

 
2,183

 
1,264

Net offering-related revenue
 
$
1,348


$
1,503

 
$
1,613

 
$
1,186

 
$
690

Transaction service revenue
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Purchase price of acquisitions(1)
 
$
173,869

 
$
211,178

 
$
102,075

 
$
236,398

 
$
315,301

 
 
 
 
 
 
 
 
 
 
 
Acquisition fees
 
2,813

 
3,758

 
1,702

 
3,829

 
6,233

Performance fees
 
—

 
—

 
—

 
—

 
—

Disposition fees
 
280

 
62

 
—

 
1,013

 
764

Reimbursement revenue
 
686

 
656

 
682

 
571

 
403

Gross transaction service revenue
 
3,779


4,476

 
2,384

 
5,413

 
7,400

Less: Reimbursement revenue
 
686

 
656

 
682

 
571

 
403

Net transaction service revenue
 
$
3,093


$
3,820

 
$
1,702

 
$
4,842

 
$
6,997

_______________________________________________
(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
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Assets under management
 
$
7,131,400

 
$
7,005,695

 
$
6,827,885

 
$
6,740,911

 
$
6,561,950

 
 
 
 
 
 
 
 
 
 
 
Asset and property management and leasing fees
 
304

 
286

 
285

 
359

 
416

Advisory and performance fee revenue
 
13,011

 
12,560

 
12,050

 
12,274

 
10,998

Reimbursement revenue
 
4,430

 
4,250

 
4,123

 
5,340

 
2,882

Gross management service revenue
 
17,745


17,096

 
16,458

 
17,973

 
14,296

Less: Reimbursement revenue
 
4,430

 
4,250

 
4,123

 
5,340

 
2,882

Net management service revenue

$
13,315


$
12,846

 
$
12,335

 
$
12,633

 
$
11,414


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


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Q3 2016 SUPPLEMENTAL INFORMATION

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

 
The following table shows the capital raised on behalf of programs managed by Cole Capital since 2009:
vereitexhibi_chart-26789a01.jpg_______________________________________________
(1) Represents capital raised on behalf of Cole REITs for nine months ended September 30, 2016. Includes a $2.5 million investment made by VEREIT in order for CCIT III to break escrow and commence operations.



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



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Q3 2016 SUPPLEMENTAL INFORMATION
 
Definitions
 








Annualized Rental Income is rental revenue under our leases on operating properties owned at the respective reporting date on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any bad debt allowances and any contingent rent, such as percentage rent. Management uses Annualized Rental Income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized Rental Income is not indicative of future performance.

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 September 30, 2016 and 2015 (dollar amounts in thousands):
 
 
Three Months Ended September 30,
 
 
2016
 
2015
 Rental income - as reported
 
$
303,383

 
$
333,766

 Direct financing lease income - as reported
 
494

 
659

Adjustments:
 
 
 
 
Straight-line rent
 
(12,454
)
 
(21,705
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,152

Net direct financing lease adjustments
 
571

 
507

Other non-contract rental revenue
 
—

 
(73
)
Contract Rental Revenue
 
$
293,626

 
$
314,306


CPI is a lease in which base rent is adjusted based on changes in a consumer price index.
Debt Outstanding represents the Company's outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums and discounts, financing and issuance costs, and related accumulated amortization. We believe that the presentation of Debt Outstanding, which shows our contractual debt obligations, provides useful information to investors to assess our overall liquidity, financial flexibility, capital structure and leverage. Debt Outstanding should not be considered as an alternative to the Company's consolidated debt balance as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with, and as a supplement to, the Company's financial information prepared in accordance with GAAP.


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Q3 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


The following table shows a reconciliation of Debt Outstanding to the amounts presented in accordance with GAAP on the balance sheet for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Mortgage notes payable and other debt, net
 
$
2,861,210

 
$
2,938,072

 
$
3,029,666

 
$
3,111,985

 
$
3,187,960

Corporate bonds, net
 
2,225,157

 
3,522,297

 
2,537,699

 
2,536,333

 
2,534,977

Convertible debt, net
 
970,691

 
968,059

 
965,469

 
962,894

 
960,361

Credit facility, net
 
496,008

 
1,045,872

 
1,269,731

 
1,448,590

 
2,097,400

Mortgage notes payable associated with assets held for sale
 
—

 
—

 
—

 
—

 
118,493

Total debt - as reported
 
6,553,066

 
8,474,300

 
7,802,565

 
8,059,802

 
8,899,191

Adjustments:
 
 
 
 
 
 
 
 
 
 
Deferred financing costs, net
 
59,467

 
69,719

 
57,652

 
62,674

 
67,804

Net premiums
 
(25,694
)
 
(29,319
)
 
(33,614
)
 
(39,131
)
 
(38,583
)
Debt Outstanding
 
$
6,586,839

 
$
8,514,700

 
$
7,826,603

 
$
8,083,345

 
$
8,928,412


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).

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.


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Q3 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


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.
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.


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Q3 2016 SUPPLEMENTAL INFORMATION
 
Definitions (cont.)
 


Interest Expense, Excluding Non-Cash Amortization reflects interest expense incurred on the outstanding principal balance of our debt, which excludes the amortization of deferred financing costs, premiums and discounts, which are reported as interest expense in accordance with GAAP. We believe that the presentation of Interest Expense, Excluding Non-Cash Amortization, which shows the interest expense on our contractual debt obligations, provides useful information to investors to assess our overall solvency and financial flexibility. Interest Expense, Excluding Non-Cash Amortization should not be considered as an alternative to the Company's interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company's financial information prepared in accordance with GAAP.
The following table shows a reconciliation of interest expense, excluding non-cash amortization to interest expense presented in accordance with GAAP on the statements of operations for the periods presented (dollar amounts in thousands):
 
 
Three Months Ended
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Interest expense - as reported
 
$
79,869

 
$
82,468

 
$
80,426

 
$
82,591

 
$
89,530

Adjustments:
 
 
 
 
 
 
 
 
 
 
Amortization of deferred financing and issuance costs
 
(7,081
)
 
(7,470
)
 
(7,307
)
 
(7,321
)
 
(11,320
)
Amortization of net premiums
 
3,723

 
4,000

 
4,423

 
5,079

 
4,930

Interest expense, excluding non-cash amortization
 
$
76,511

 
$
78,998

 
$
77,542

 
$
80,349

 
$
83,140

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.
NAV per share represents the net asset value of the respective share class.
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 Debt Outstanding, 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.


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Q3 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
 
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Operating income (loss)
 
85,468

 
$
84,628

 
$
(60,804
)
 
$
101,302

 
$
99,730

Acquisition related
 
90

 
27

 
217

 
673

 
1,690

Litigation and other non-routine costs, net of insurance recoveries
 
4,630

 
2,917

 
(5,175
)
 
(7,691
)
 
8,032

General and administrative
 
12,069

 
13,701

 
12,228

 
16,646

 
15,848

Depreciation and amortization
 
187,897

 
190,236

 
195,991

 
197,409

 
200,158

Impairment of real estate
 
6,872

 
8,825

 
160,517

 
6,414

 
—

NOI
 
297,026

 
300,334

 
302,974

 
314,753

 
325,458

Straight-line rent, net of bad debt expense related to straight-line rent
 
(12,319
)
 
(15,663
)
 
(13,045
)
 
(17,589
)
 
(21,705
)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
 
1,632

 
1,248

 
1,296

 
1,299

 
1,152

Net direct financing lease adjustments
 
571

 
590

 
559

 
544

 
507

 Cash NOI
 
$
286,910

 
$
286,509

 
$
291,784

 
$
299,007

 
$
305,412

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.
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).
Weighted Average Remaining Lease Term is the number of years remaining on each respective lease, weighted based on Annualized Rental Income.


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