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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 March 31, 2022

OR

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 April 29, 2022, there were 134,308,366 shares of common stock, par value $0.05, of Spirit Realty Capital, Inc. outstanding.

 

 


 

INDEX

 

 

 

 

 

 


 

GLOSSARY

2016 ATM Program

At-the-market equity distribution program established in November 2016, which was terminated upon entry into the 2020 ATM Program

2017 Tax Legislation

Tax Cuts and Jobs Act of 2017

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

2020 Term Loans

$400.0 million senior unsecured term facility pursuant to the 2020 Term Loan Agreement

2020 Term Loan Agreement

Term loan agreement between the Operating Partnership and certain lenders dated April 2, 2020, as amended or otherwise modified from time to time

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

2021 Convertible Notes

$345.0 million convertible notes of the Corporation which matured in May 2021

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

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.

AOCL

Accumulated Other Comprehensive Loss

ASC

Accounting Standards Codification

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

Convertible Notes

2021 Convertible Notes

Corporation

Spirit Realty Capital, Inc., a Maryland corporation

CPI

Consumer Price Index

EBITDAre

EBITDAre is a non-GAAP financial measure computed in accordance with standards established by NAREIT. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

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

3


 

NAREIT

National Association of Real Estate Investment Trusts

OP Holdings

Spirit General OP Holdings, LLC

Operating Partnership

Spirit Realty, L.P., a Delaware limited partnership

REIT

Real estate investment trust

S&P

S&P's Global Ratings

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

 

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.

4


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SPIRIT REALTY CAPITAL, INC.

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Data)

(Unaudited)

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Assets

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

Real estate assets held for investment:

 

 

 

 

 

 

 

 

Land and improvements

 

$

2,616,955

 

 

$

2,516,715

 

Buildings and improvements

 

 

5,331,768

 

 

 

4,962,203

 

Less: accumulated depreciation

 

 

(1,090,403

)

 

 

(1,033,391

)

Total real estate assets held for investment, net

 

 

6,858,320

 

 

 

6,445,527

 

Intangible lease assets, net

 

 

439,106

 

 

 

426,972

 

Real estate assets under direct financing leases, net

 

 

7,442

 

 

 

7,442

 

Real estate assets held for sale, net

 

 

9,555

 

 

 

8,264

 

Loans receivable, net

 

 

23,023

 

 

 

10,450

 

Total investments, net

 

 

7,337,446

 

 

 

6,898,655

 

Cash and cash equivalents

 

 

24,229

 

 

 

17,799

 

Deferred costs and other assets, net

 

 

201,826

 

 

 

188,816

 

Goodwill

 

 

225,600

 

 

 

225,600

 

Total assets

 

$

7,789,101

 

 

$

7,330,870

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Revolving credit facilities

 

$

519,500

 

 

$

288,400

 

Senior Unsecured Notes, net

 

 

2,719,597

 

 

 

2,718,641

 

Mortgages payable, net

 

 

5,412

 

 

 

5,551

 

Total debt, net

 

 

3,244,509

 

 

 

3,012,592

 

Intangible lease liabilities, net

 

 

127,329

 

 

 

128,077

 

Accounts payable, accrued expenses and other liabilities

 

 

152,095

 

 

 

190,402

 

Total liabilities

 

 

3,523,933

 

 

 

3,331,071

 

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 March 31, 2022 and December 31, 2021

 

 

166,177

 

 

 

166,177

 

Common stock, $0.05 par value, 350,000,000 shares authorized: 134,306,501 and 127,699,235 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

6,715

 

 

 

6,385

 

Capital in excess of common stock par value

 

 

6,976,901

 

 

 

6,673,440

 

Accumulated deficit

 

 

(2,879,480

)

 

 

(2,840,356

)

Accumulated other comprehensive loss

 

 

(5,145

)

 

 

(5,847

)

Total stockholders’ equity

 

 

4,265,168

 

 

 

3,999,799

 

Total liabilities and stockholders’ equity

 

$

7,789,101

 

 

$

7,330,870

 

 

See accompanying notes.

5


 

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Data)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

Rental income

 

$

167,075

 

 

$

134,658

 

Interest income on loans receivable

 

 

319

 

 

 

 

Earned income from direct financing leases

 

 

131

 

 

 

131

 

Other operating income

 

 

871

 

 

 

352

 

Total revenues

 

 

168,396

 

 

 

135,141

 

Expenses:

 

 

 

 

 

 

 

 

General and administrative

 

 

14,674

 

 

 

13,046

 

Property costs (including reimbursable)

 

 

8,255

 

 

 

5,452

 

Deal pursuit costs

 

 

365

 

 

 

242

 

Interest

 

 

26,023

 

 

 

26,624

 

Depreciation and amortization

 

 

69,108

 

 

 

57,087

 

Impairments

 

 

127

 

 

 

6,730

 

Total expenses

 

 

118,552

 

 

 

109,181

 

Other income (loss):

 

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

(172

)

 

 

(29,177

)

Gain on disposition of assets

 

 

877

 

 

 

1,836

 

Other income

 

 

5,679

 

 

 

 

Total other income (loss)

 

 

6,384

 

 

 

(27,341

)

Income (loss) before income tax expense

 

 

56,228

 

 

 

(1,381

)

Income tax expense

 

 

(172

)

 

 

(88

)

Net income (loss)

 

 

56,056

 

 

 

(1,469

)

Dividends paid to preferred shareholders

 

 

(2,588

)

 

 

(2,588

)

Net income (loss) attributable to common stockholders

 

$

53,468

 

 

$

(4,057

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.42

 

 

$

(0.04

)

Diluted

 

$

0.42

 

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

127,951,825

 

 

 

114,673,218

 

Diluted

 

 

128,360,431

 

 

 

114,673,218

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share issued

 

$

0.6380

 

 

$

0.6250

 

 

See accompanying notes.

6


 

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

Net income (loss) attributable to common stockholders

 

$

53,468

 

 

$

(4,057

)

Other comprehensive income:

 

 

 

 

 

 

 

 

Net reclassification of amounts from AOCL

 

 

702

 

 

 

702

 

Total comprehensive income (loss)

 

$

54,170

 

 

$

(3,355

)

 

See accompanying notes.

 

7


 

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Stockholders' Equity

(In Thousands, Except Share Data)

(Unaudited)

 

Three Months Ended March 31, 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

 

 

AOCL

 

 

Total

Stockholders’

Equity

 

Balances, December 31, 2021

 

 

6,900,000

 

 

$

166,177

 

 

 

127,699,235

 

 

$

6,385

 

 

$

6,673,440

 

 

$

(2,840,356

)

 

$

(5,847

)

 

$

3,999,799

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,056

 

 

 

 

 

 

56,056

 

Dividends declared on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,588

)

 

 

 

 

 

(2,588

)

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,468

 

 

 

 

 

 

53,468

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

702

 

 

 

702

 

Dividends declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(85,688

)

 

 

 

 

 

(85,688

)

Tax withholdings related to net stock settlements

 

 

 

 

 

 

 

 

(39,028

)

 

 

(2

)

 

 

 

 

 

(6,408

)

 

 

 

 

 

(6,410

)

Issuance of shares of common stock, net

 

 

 

 

 

 

 

 

6,559,406

 

 

 

328

 

 

 

299,440

 

 

 

 

 

 

 

 

 

299,768

 

Stock-based compensation, net

 

 

 

 

 

 

 

 

86,888

 

 

 

4

 

 

 

4,021

 

 

 

(496

)

 

 

 

 

 

3,529

 

Balances, March 31, 2022

 

 

6,900,000

 

 

$

166,177

 

 

 

134,306,501

 

 

$

6,715

 

 

$

6,976,901

 

 

$

(2,879,480

)

 

$

(5,145

)

 

$

4,265,168

 

 

 

 

Three Months Ended March 31, 2021

 

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

 

 

AOCL

 

 

Total

Stockholders’

Equity

 

Balances, December 31, 2020

 

 

6,900,000

 

 

$

166,177

 

 

 

114,812,615

 

 

$

5,741

 

 

$

6,126,503

 

 

$

(2,688,647

)

 

$

(8,654

)

 

$

3,601,120

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,469

)

 

 

 

 

 

(1,469

)

Dividends declared on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,588

)

 

 

 

 

 

(2,588

)

Net loss attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,057

)

 

 

 

 

 

(4,057

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

702

 

 

 

702

 

Dividends declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(71,837

)

 

 

 

 

 

(71,837

)

Tax withholdings related to net stock settlements

 

 

 

 

 

 

 

 

(98,413

)

 

 

(6

)

 

 

 

 

 

(3,837

)

 

 

 

 

 

(3,843

)

Stock-based compensation, net

 

 

 

 

 

 

 

 

233,784

 

 

 

12

 

 

 

3,366

 

 

 

(407

)

 

 

 

 

 

2,971

 

Balances, March 31, 2021

 

 

6,900,000

 

 

$

166,177

 

 

 

114,947,986

 

 

$

5,747

 

 

$

6,129,869

 

 

$

(2,768,785

)

 

$

(7,952

)

 

$

3,525,056

 

 

See accompanying notes.

 

8


 

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

56,056

 

 

$

(1,469

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

69,108

 

 

 

57,087

 

Impairments

 

 

127

 

 

 

6,730

 

Amortization of deferred financing costs

 

 

922

 

 

 

1,111

 

Amortization of debt discounts

 

 

313

 

 

 

886

 

Amortization of deferred losses on interest rate swaps

 

 

702

 

 

 

702

 

Stock-based compensation expense

 

 

4,025

 

 

 

3,378

 

Loss on debt extinguishment

 

 

172

 

 

 

29,177

 

Gain on dispositions of real estate and other assets

 

 

(877

)

 

 

(1,836

)

Non-cash revenue

 

 

(9,222

)

 

 

(6,447

)

Other

 

 

 

 

 

5

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Deferred costs and other assets, net

 

 

(92

)

 

 

2,005

 

Accounts payable, accrued expenses and other liabilities

 

 

(42,963

)

 

 

(26,898

)

Net cash provided by operating activities

 

 

78,271

 

 

 

64,431

 

Investing activities

 

 

 

 

 

 

 

 

Acquisitions of real estate

 

 

(474,404

)

 

 

(194,161

)

Capitalized real estate expenditures

 

 

(23,387

)

 

 

(1,638

)

Investments in loans receivable

 

 

(12,700

)

 

 

 

Proceeds from dispositions of real estate and other assets, net

 

 

10,941

 

 

 

14,545

 

Net cash used in investing activities

 

 

(499,550

)

 

 

(181,254

)

Financing activities

 

 

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

630,100

 

 

 

279,000

 

Repayments under revolving credit facilities

 

 

(399,000

)

 

 

(279,000

)

Repayments under mortgages payable

 

 

(128

)

 

 

(208,515

)

Repayments under term loans

 

 

 

 

 

(178,000

)

Borrowings under Senior Unsecured Notes

 

 

 

 

 

794,842

 

Debt extinguishment costs

 

 

 

 

 

(26,685

)

Deferred financing costs

 

 

(8,478

)

 

 

(6,866

)

Proceeds from issuance of common stock, net of offering costs

 

 

299,755

 

 

 

 

Repurchase of shares of common stock, including tax withholdings related to net stock settlements

 

 

(6,410

)

 

 

(3,843

)

Common stock dividends paid

 

 

(83,195

)

 

 

(72,931

)

Preferred stock dividends paid

 

 

(2,588

)

 

 

(2,588

)

Net cash provided by financing activities

 

 

430,056

 

 

 

295,414

 

Net increase in cash, cash equivalents and restricted cash

 

 

8,777

 

 

 

178,591

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

17,799

 

 

 

83,298

 

Cash, cash equivalents and restricted cash, end of period

 

$

26,576

 

 

$

261,889

 

 

 

 

 

 

 

 

 

 

Cash paid for interest, net of interest capitalized

 

$

46,895

 

 

$

39,589

 

Interest capitalized

 

 

126

 

 

 

 

Cash paid for income taxes

 

 

67

 

 

 

37

 

9