SPIRIT REALTY CAPITAL, INC. [SRC] Filings

10-Q 1 src-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission file number		001-36004

SPIRIT REALTY CAPITAL, INC.

(Exact name of registrant as specified in its charter)


Maryland		20-1676382

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2727 North Harwood Street, Suite 300, Dallas, Texas 75201		(972) 476-1900
(Address of principal executive offices; zip code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.05 per share	SRC	New York Stock Exchange
6.000% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share	SRC-A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐


Smaller reporting company ☐		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2023, there were 141,331,218 shares of common stock, par value $0.05, of Spirit Realty Capital, Inc. outstanding.

INDEX


Glossary			3
PART I — FINANCIAL INFORMATION			5
	Item 1.	Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4.	Controls and Procedures	45
PART II — OTHER INFORMATION			46
	Item 1.	Legal Proceedings	46
	Item 1A.	Risk Factors	46
	Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	46
	Item 3.	Defaults Upon Senior Securities	46
	Item 4.	Mine Safety Disclosures	46
	Item 5.	Other Information	46
	Item 6.	Exhibits	47
		Signatures	48

GLOSSARY


2019 Credit Facility	$800 million unsecured revolving credit facility, expanded to $1.2 billion in March 2022, pursuant to the 2019 Revolving Credit and Term Loan Agreement
2019 Revolving Credit and Term Loan Agreement	Revolving credit and term loan agreement between the Operating Partnership and certain lenders dated January 14, 2019, as amended or otherwise modified from time to time
2020 ATM Program	At-the-market equity distribution program established in November 2020, which was terminated upon entry into the 2021 ATM Program
2021 ATM Program	At-the-market equity distribution program established in November 2021, pursuant to which the Corporation may offer and sell registered shares of common stock from time to time
2022 Term Loans	$800.0 million senior unsecured term facility pursuant to the 2022 Term Loan Agreement
2022 Term Loan Agreement	Term loan agreement between the Operating Partnership and certain lenders dated August 22, 2022, as amended or otherwise modified from time to time
2023 Term Loans	$500.0 million senior unsecured term facility pursuant to the 2023 Term Loan Agreement
2023 Term Loan Agreement	Term loan agreement between the Operating Partnership and certain lenders dated November 17, 2022, as amended or otherwise modified from time to time
2026 Senior Notes	$300.0 million principal amount senior notes issued in August 2016
2027 Senior Notes	$300.0 million principal amount senior notes issued in September 2019
2028 Senior Notes	$450.0 million principal amount senior notes issued in March 2021
2029 Senior Notes	$400.0 million principal amount senior notes issued in June 2019
2030 Senior Notes	$500.0 million principal amount senior notes issued in September 2019
2031 Senior Notes	$450.0 million principal amount senior notes issued in August 2020
2032 Senior Notes	$350.0 million principal amount senior notes issued in March 2021
Adjusted Debt	Adjusted Debt is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
Adjusted EBITDAre	Adjusted EBITDAre is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
AFFO	Adjusted Funds From Operations is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
Amended Incentive Award Plan	Second Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, as amended
Annualized Base Rent (ABR)	Represents Base Rent plus earned income from direct financing leases and deferred revenue from development deals for the final month of the reporting period. It is adjusted to reflect acquisitions and dispositions for that month as if such acquisitions and dispositions had occurred as of the beginning of the month. The total is then multiplied by 12. ABR is used when calculating certain metrics to evaluate portfolio credit and diversification and to manage risk.
AOCIL	Accumulated Other Comprehensive Income / (Loss)
ASU	Accounting Standards Update
Base Cash Rent	Represents Base Rent adjusted for contractual rental income abated, deemed not probable of collection, or recovered from prior period reserves
Base Rent	Represents contractual rental income for the period, prior to deferral or abatement agreements, and excluding contingent rents.
CMBS	Commercial Mortgage-Backed Securities
Code	Internal Revenue Code of 1986, as amended
Company	The Corporation and its consolidated subsidiaries
Corporation	Spirit Realty Capital, Inc., a Maryland corporation
CPI	Consumer Price Index
EBITDAre	EBITDAre is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations


Exchange Act	Securities Exchange Act of 1934, as amended
FFO	Funds From Operations is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
GAAP	Generally Accepted Accounting Principles in the United States
LIBOR	London Interbank Offered Rate
NAREIT	National Association of Real Estate Investment Trusts
NYSE	New York Stock Exchange
OP Holdings	Spirit General OP Holdings, LLC
Operating Partnership	Spirit Realty, L.P., a Delaware limited partnership
REIT	Real estate investment trust
SEC	Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
Senior Unsecured Notes	2026 Senior Notes, 2027 Senior Notes, 2028 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, 2031 Senior Notes, and 2032 Senior Notes, collectively
Series A Preferred Stock	6,900,000 shares of 6.000% Cumulative Redeemable Preferred Stock issued October 3, 2017, with a liquidation preference of $25.00 per share
SOFR	Secured Overnight Financing Rate
TSR	Total Shareholder Return

Unless otherwise indicated or unless the context requires otherwise, all references to the “registrant, the "Company," "Spirit Realty Capital," "we," "us" or "our" refer to the Corporation and its consolidated subsidiaries, including the Operating Partnership. Unless otherwise indicated or unless the context requires otherwise, all references to the "Operating Partnership" refer to Spirit Realty, L.P. and its consolidated subsidiaries.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SPIRIT REALTY CAPITAL, INC.

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Data)

(Unaudited)


	September 30, 2023			December 31, 2022
Assets
Investments:
Real estate assets held for investment:
Land and improvements	$	2,742,072		$	2,740,250
Buildings and improvements		6,081,378			5,892,117
Less: accumulated depreciation		(1,354,807	)		(1,211,061	)
Total real estate assets held for investment, net		7,468,643			7,421,306
Intangible lease assets, net		389,100			423,870
Real estate assets under direct financing leases, net		7,404			7,427
Real estate assets held for sale, net		61,545			49,148
Loans receivable, net		52,949			23,023
Total investments, net		7,979,641			7,924,774
Cash and cash equivalents		134,166			8,770
Deferred costs and other assets, net		310,801			313,722
Goodwill		225,600			225,600
Total assets	$	8,650,208		$	8,472,866

Liabilities and stockholders’ equity
Liabilities:
Revolving credit facilities	$	—		$	55,500
Term loans, net		1,090,198			792,309
Senior Unsecured Notes, net		2,725,505			2,722,514
Mortgages payable, net		4,545			4,986
Total debt, net		3,820,248			3,575,309
Intangible lease liabilities, net		106,814			118,077
Accounts payable, accrued expenses and other liabilities		230,353			218,164
Total liabilities		4,157,415			3,911,550
Commitments and contingencies (see Note 6)
Stockholders’ equity:
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both September 30, 2023 and December 31, 2022		166,177			166,177
Common stock, $0.05 par value, 350,000,000 shares authorized: 141,331,218 and 141,231,219 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		7,067			7,062
Capital in excess of common stock par value		7,300,728			7,285,629
Accumulated deficit		(3,036,475	)		(2,931,640	)
Accumulated other comprehensive income		55,296			34,088
Total stockholders’ equity		4,492,793			4,561,316
Total liabilities and stockholders’ equity	$	8,650,208		$	8,472,866

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Rental income	$	188,205		$	180,296		$	561,765		$	520,930
Interest income on loans receivable		1,506			521			3,919			1,362
Earned income from direct financing leases		131			131			393			393
Other operating income		3,533			1,956			4,888			3,550
Total revenues		193,375			182,904			570,965			526,235
Expenses:
General and administrative		14,062			14,313			45,016			42,408
Property costs (including reimbursable)		8,382			7,395			24,077			22,600
Deal pursuit costs		342			470			1,174			1,490
Interest		36,919			30,956			104,993			84,573
Depreciation and amortization		79,370			74,600			236,527			216,606
Impairments		19,258			1,571			36,052			11,096
Total expenses		158,333			129,305			447,839			378,773
Other income:
Loss on debt extinguishment		—			—			—			(172	)
Gain on disposition of assets		3,661			23,302			66,450			63,107
Other income		—			—			—			5,679
Total other income		3,661			23,302			66,450			68,614
Income before income tax expense		38,703			76,901			189,576			216,076
Income tax expense		(235	)		(261	)		(754	)		(640	)
Net income		38,468			76,640			188,822			215,436
Dividends paid to preferred shareholders		(2,587	)		(2,587	)		(7,763	)		(7,763	)
Net income attributable to common stockholders	$	35,881		$	74,053		$	181,059		$	207,673

Net income per share attributable to common stockholders:
Basic	$	0.25		$	0.54		$	1.28		$	1.56
Diluted	$	0.25		$	0.54		$	1.28		$	1.56

Weighted average shares of common stock outstanding:
Basic		141,124,401			136,314,369			141,094,907			132,835,210
Diluted		141,149,865			136,314,369			141,103,395			132,965,297

Dividends declared per common share issued	$	0.6696		$	0.6630		$	1.9956		$	1.9390

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Comprehensive Income

(In Thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income attributable to common stockholders	$	35,881	$	74,053	$	181,059	$	207,673
Other comprehensive income:
Net reclassification of amounts from AOCIL		8,260		40,204		21,208		41,608
Total comprehensive income	$	44,141	$	114,257	$	202,267	$	249,281

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Stockholders' Equity

(In Thousands, Except Share Data)

(Unaudited)


Nine Months Ended September 30, 2023	Preferred Stock				Common Stock
	Shares		Par Value and Capital in Excess of Par Value		Shares			Par Value			Capital in Excess of Par Value		Accumulated Deficit			AOCIL			Total Stockholders’ Equity
Balances, December 31, 2022		6,900,000	$	166,177		141,231,219		$	7,062		$	7,285,629	$	(2,931,640	)	$	34,088		$	4,561,316
Net income		—		—		—			—			—		96,173			—			96,173
Dividends declared on preferred stock		—		—		—			—			—		(2,588	)		—			(2,588	)
Net income attributable to common stockholders				—					—			—		93,585			—			93,585
Other comprehensive loss		—		—		—			—			—		—			(10,586	)		(10,586	)
Dividends declared on common stock		—		—		—			—			—		(93,675	)		—			(93,675	)
Tax withholdings related to net stock settlements		—		—		(30,279	)		(2	)		—		(1,310	)		—			(1,312	)
Stock-based compensation, net		—		—		98,982			5			5,225		(659	)		—			4,571
Balances, March 31, 2023		6,900,000	$	166,177		141,299,922		$	7,065		$	7,290,854	$	(2,933,699	)	$	23,502		$	4,553,899
Net income		—		—		—			—			—		54,181			—			54,181
Dividends declared on preferred stock		—		—		—			—			—		(2,588	)		—			(2,588	)
Net income attributable to common stockholders				—					—			—		51,593			—			51,593
Other comprehensive income		—		—		—			—			—		—			23,534			23,534
Dividends declared on common stock		—		—		—			—			—		(93,700	)		—			(93,700	)
Tax withholdings related to net stock settlements		—		—		(3,825	)		—			—		(145	)		—			(145	)
Stock-based compensation, net		—		—		35,261			2			4,968		311			—			5,281
Balances, June 30, 2023		6,900,000	$	166,177		141,331,358		$	7,067		$	7,295,822	$	(2,975,640	)	$	47,036		$	4,540,462
Net income		—		—		—			—			—		38,468			—			38,468
Dividends declared on preferred stock		—		—		—			—			—		(2,587	)		—			(2,587	)
Net income available to common stockholders				—					—			—		35,881			—			35,881
Other comprehensive income		—		—		—			—			—		—			8,260			8,260
Dividends declared on common stock		—		—		—			—			—		(94,635	)		—			(94,635	)
Stock-based compensation, net		—		—		(140	)		—			4,906		(2,081	)		—			2,825
Balances, September 30, 2023		6,900,000	$	166,177		141,331,218		$	7,067		$	7,300,728	$	(3,036,475	)	$	55,296		$	4,492,793

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Stockholders' Equity

(In Thousands, Except Share Data)

(Unaudited)

Nine Months Ended September 30, 2022

Preferred Stock

Common Stock

Shares

Par Value and 
Capital in Excess 
of Par Value

Shares

Par 
Value

Capital in
Excess of
Par Value

Accumulated
Deficit

AOCIL

SPIRIT REALTY CAPITAL, INC. [SRC] Filings
SPIRIT REALTY CAPITAL, INC. [SRC-PA] Filings
10-Q	[2023-11-02]
10-Q	[2023-08-07]
10-Q	[2023-05-03]
10-K	[2023-02-28]
10-Q	[2022-11-08]
10-Q	[2022-08-03]
10-Q	[2022-05-03]
10-K	[2022-02-14]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-05]
10-K	[2021-02-19]
10-Q	[2020-11-02]
10-Q	[2020-07-31]
10-Q	[2020-05-05]
10-K	[2020-02-25]
10-Q	[2019-11-05]
10-Q	[2019-08-07]
10-Q	[2019-05-02]
10-K	[2019-02-21]
10-Q	[2018-11-09]
10-Q	[2018-08-09]
10-Q	[2018-05-03]
10-K	[2018-02-23]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-03]
10-K	[2017-02-24]
10-Q	[2016-11-09]
10-Q	[2016-08-05]
10-Q	[2016-05-05]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-05]
10-Q	[2014-08-06]
10-Q	[2014-05-09]
10-K	[2014-03-04]
10-Q	[2013-11-12]
10-Q	[2013-08-09]
10-Q	[2013-05-14]
10-K	[2013-03-07]
10-Q	[2012-11-09]
10-Q	[2012-08-14]
10-Q	[2012-05-15]
10-K	[2012-03-30]

SPIRIT REALTY CAPITAL, INC. [SRC] Filings

SPIRIT REALTY CAPITAL, INC. [SRC-PA] Filings