– Continued execution of strategic alternatives –
– Declared special cash dividend of $0.33 per common share payable July
15, 2019 –
DALLAS–(BUSINESS WIRE)–Spirit MTA REIT (NYSE:SMTA) (“SMTA” or the “Company”), a net-lease real
estate investment trust (“REIT”) headquartered in Dallas, Texas, today
reported its financial and operating results for the first quarter ended
March 31, 2019.
Unless otherwise specified, financial and operating information prior to
May 31, 2018 reflects the financial and operating information of SMTA’s
legal predecessor entities.
FIRST QUARTER HIGHLIGHTS
-
Continued to advance the process with the Board and the Company’s
financial advisor to execute strategic alternatives. -
On March 5, 2019, the Board of Trustees declared a special cash
dividend of $0.33 per common share, which was paid on April 15, 2019
to holders of record as of March 29, 2019. - Held $108.9 million in cash and cash equivalents as of March 31, 2019.
-
Had $28.9 million of restricted cash, comprised of the Master Trust
2014 Reserve Account, Master Trust Liquidity Reserve and other
lender-controlled cash. -
Eliminated $157.4 million of CMBS debt by foreclosure of the remaining
85 Shopko assets (83 owned properties and two seller-financed notes on
properties) collateralizing the loan. -
Disposed of three properties for $5.4 million in gross proceeds, two
of which were in the Master Trust 2014 segment and one was in the
Other Properties segment.
CEO COMMENTS
“In keeping with our announcement at the beginning of the quarter, we
have been working closely with our Board and our advisors as we run our
process to explore strategic alternatives for our Company. Our focus
remains on maximizing shareholder value and returning that value to
shareholders. In the meantime, we maintain approximately $145 million in
liquidity as of May 8, 2019 and we are committed to keeping shareholders
updated as and when we have developments we are able to share,” stated
SMTA Chief Executive Officer, President, Chief Financial Officer and
Treasurer Ricardo Rodriguez.
FINANCIAL RESULTS
Total revenues for the Master Trust 2014 and Other Properties segments
were $45.5 million and $10.0 million, respectively, for the three months
ended March 31, 2019, compared to $45.2 million and $14.9 million for
the same period in 2018.
Net loss attributable to common shareholders was $42.2 million, or $0.99
per share, for the three months ended March 31, 2019, compared to net
loss of $7.6 million, or $0.18 per share, for the same period in 2018.
The foreclosure of the Shopko assets securing the CMBS debt resulted in
a loss on debt extinguishment of $21.3 million, which is included in net
loss attributable to common shareholders.
FFO for the three months ended March 31, 2019 was $(17.3) million, or
$(0.41) per diluted share, compared to $19.9 million, or $0.47 per
diluted share for the same period in 2018.
AFFO for the three months ended March 31, 2019 was $8.4 million, or
$0.19 per diluted share, compared to $26.9 million, or $0.63 per diluted
share, for the same period in 2018.
On March 5, 2019, the Board of Trustees declared a special cash dividend
of $0.33 per common share that was paid on April 15, 2019 to holders of
record as of March 29, 2019. The Board of Trustees also declared a cash
dividend of $0.63 per SMTA Preferred Share and a cash dividend of $45.00
per SubREIT Preferred Share, both of which were paid on March 29, 2019
to holders of record as of March 15, 2019. The amount and timing of any
future dividends will be at the discretion of the Board of Trustees and
will depend on many factors, including, but not limited to, maintaining
the Company’s REIT tax status, timing and magnitude of disposition
activities, execution of strategic alternatives and working capital
needs.
PORTFOLIO HIGHLIGHTS
As of March 31, 2019, SMTA’s diversified real estate portfolio,
comprised of 790 owned properties, with 776 and 14 in the Master Trust
2014 and Other Properties segments, respectively, was 97.1% occupied
with a weighted average remaining lease term of 8.7 years.
During the three months ended March 31, 2019, SMTA disposed of three
properties for $5.4 million in gross proceeds. Two of the properties
were within Master Trust 2014 and the other property was within the
Other Properties segment.
BALANCE SHEET, LIQUIDITY & CAPITAL MARKETS
-
As of March 31, 2019, net investments for the Master Trust 2014 and
Other Properties segments were $1.70 billion and $0.16 billion,
respectively. -
As of March 31, 2019, total cash was $108.9 million and restricted
cash for the Master Trust 2014 and Other Properties segments was $27.8
million and $1.1 million, respectively. -
As of March 31, 2019, debt for the Master Trust 2014 and Other
Properties segments was $1.90 billion and $81.7 million, respectively. -
Adjusted Debt to Annualized Adjusted EBITDAre was 13.2x as of
March 31, 2019, based on the three months ended March 31, 2019. -
On May 1, 2019, the Board of Trustees declared a special cash dividend
of $0.33 per common share, which will be paid on July 15, 2019 to
holders of record as of June 28, 2019. -
As of May 8, 2019, total cash was $96.7 million and borrowing capacity
under the Master Trust 2014 variable funding notes was $48.4 million,
providing total liquidity of $145.1 million. -
As of May 8, 2019, the Company held $40.2 million in restricted cash,
comprised of the Master Trust 2014 Reserve Account, Master Trust
Liquidity Reserve and other lender-controlled cash.
EARNINGS WEBCAST
The Company has provided pre-recorded comments from management.
Interested parties can listen to the presentation via the following:
| Internet: |
The webcast link can be located on the investor relations page of |
||
| Telephone: | (844) 512-2921 (Domestic) / (412) 317-6671 (International) | ||
| Available through May 23, 2019 with access code 1134003 | |||
ABOUT SPIRIT MTA REIT
Spirit MTA REIT (NYSE: SMTA) is a net-lease REIT headquartered in
Dallas, Texas. SMTA owns one of the largest, most diversified and
seasoned commercial real estate backed master funding vehicles. SMTA is
managed by Spirit Realty, L.P., a wholly-owned subsidiary of Spirit
(NYSE: SRC), one of the largest publicly traded triple net-lease REITs.
As of March 31, 2019, our diversified portfolio was comprised of 796
properties, including properties securing mortgage loans made by the
Company. Our owned properties, with an aggregate gross leasable area of
approximately 13.9 million square feet, are leased to approximately 203
tenants across 43 states and 24 industries. More information about
Spirit MTA REIT can be found on the investor relations page of the
Company’s website at www.spiritmastertrust.com.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
other federal securities laws. These forward-looking statements can be
identified by the use of words such as “expect,” “plan,” “will,”
“estimate,” “project,” “intend,” “believe,” “guidance,” “approximately,”
“anticipate,” “may,” “should,” “seek” or the negative of these words and
phrases or similar words or phrases that are predictions of or indicate
future events or trends and that do not relate to historical matters.
You can also identify forward-looking statements by discussions of
strategy, plans or intentions of management. These forward-looking
statements are subject to known and unknown risks and uncertainties that
you should not rely on as predictions of future events. Forward-looking
statements depend on assumptions, data and/or methods which may be
incorrect or imprecise and we may not be able to realize them. The
following risks and uncertainties, among others, could cause actual
results to differ materially from those currently anticipated due to a
number of factors, which include, but are not limited to: industry and
economic conditions; SMTA’s ability to succeed in its strategic plan;
SMTA’s ability to realize its asset disposition plan; SMTA’s significant
leverage which may expose it to the risk of default under its debt
obligations; risks associated with using debt to fund SMTA’s business
activities (including its ability to use Master Trust 2014, an
asset-backed securitization trust, as its main financing vehicle,
changes in interest rates and conditions of the debt capital markets,
generally); SMTA’s dependence on its external manager, Spirit Realty,
L.P., to conduct its business and achieve its investment objectives;
SMTA’s continued ability to source new investments; unknown liabilities
acquired in connection with acquired properties or interests in
real-estate related entities; general risks affecting the real estate
industry and local real estate markets (including, without limitation,
the market value of SMTA’s properties, the inability to enter into or
renew leases at favorable rates, portfolio occupancy varying from SMTA’s
expectations, dependence on tenants’ financial condition and operating
performance, competition from other developers, owners and operators of
real estate tenant defaults, potential liability relating to
environmental matters, potential illiquidity of real estate investments,
condemnations, and potential damage from natural disasters); the
financial performance of SMTA’s tenants and the demand for traditional
retail and restaurant space particularly with respect to challenges
being experienced by general merchandise retailers; SMTA’s ability to
pay down, refinance, restructure and/or extend its indebtedness as it
becomes due; SMTA’s or its manager’s ability to identify, underwrite,
finance, consummate, integrate and manage diversifying acquisitions or
investments; SMTA’s ability to diversify its tenant base; the impact of
any financial, accounting, legal or regulatory issues or litigation that
may affect SMTA or its major tenants; volatility and uncertainty in the
financial markets, including potential fluctuations in the consumer
price index; risks associated with its failure or unwillingness to
maintain SMTA’s status as a REIT under the Internal Revenue Code of
1986, as amended, and other additional risks discussed in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2018. SMTA
expressly disclaims any responsibility to update or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
NOTICE REGARDING NON-GAAP FINANCIAL MEASURES
This press release may refer to certain non-GAAP financial measures.
These non-GAAP financial measures are in addition to, not a substitute
for or superior to, measures of financial performance prepared in
accordance with GAAP. These non-GAAP financial measures should not be
considered replacements for, and should be read together with, the most
comparable GAAP financial measures. Definitions of non-GAAP financial
measures, reconciliations to the most directly comparable GAAP financial
measures and statements of why management believes these measures are
useful to investors are included below.
REPORTING DEFINITIONS AND EXPLANATIONS
|
Adjusted Debt represents interest bearing debt (reported in accordance with GAAP) adjusted to exclude unamortized debt discount/premium, deferred financing costs, and reduced by cash and cash equivalents and cash reserves on deposit with lenders as additional security. By excluding these amounts, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. A reconciliation of interest bearing debt (reported in accordance with GAAP) to Adjusted Debt is included in this release. |
|
Adjusted Debt to Annualized Adjusted EBITDAre is a supplemental non-GAAP financial measure we use to evaluate the level of borrowed capital being used to increase the potential return of our real estate investments and a proxy for a measure we believe is used by many lenders and ratings agencies to evaluate our ability to repay and service our debt obligations over time. We believe this ratio is a beneficial disclosure to investors as a supplemental means of evaluating our ability to meet obligations senior to those of our equity holders. Our computation of this ratio may differ from the methodology used by other equity REITs and, therefore, may not be comparable to such other REITs. |
|
Adjusted EBITDAre represents EBITDAre adjusted for transaction costs, real estate acquisition costs, dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter, revenue producing acquisitions, impairments and loan losses related to the Shopko loan, debt extinguishment gains (losses), and amortization (recovery) of the promote fee. We focus our business plans to enable us to sustain increasing shareholder value. Accordingly, we believe that excluding these items, which are not key drivers of our investment decisions and may cause short-term fluctuations in net income (loss), provides a useful supplemental measure to investors and analysts in assessing the net earnings contribution of our real estate portfolio. Because these measures do not represent net income (loss) that is computed in accordance with GAAP, they should only be considered a supplement, and not an alternative, to net income (loss) attributable to common shareholders (computed in accordance with GAAP) as a performance measure. A reconciliation of net income (loss) attributable to common shareholders (computed in accordance with GAAP) to EBITDAre and Adjusted EBITDAre is included in this release. |
|
Adjusted Funds from Operations (AFFO) AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. We adjust FFO to eliminate the impact of certain items that we believe are not indicative of our core operating performance, including restructuring and divestiture costs, other general and administrative costs associated with relocation of the Company’s headquarters, transactions costs, default interest and fees on non-recourse mortgage indebtedness, debt extinguishment gains (losses), transaction costs incurred in connection with the acquisition of real estate investments subject to existing leases, amortization of the promote fee and certain non-cash items. These certain non-cash items include non-cash revenues (comprised of straight-line rents, amortization of above- and below-market rent on our leases, amortization of lease incentives, amortization of net premium/discount on loans receivable, bad debt expense and amortization of capitalized lease transaction costs), non-cash interest expense (comprised of amortization of deferred financing costs and amortization of net debt discount/premium) and non-cash compensation expense (stock-based compensation expense). In addition, other equity REITs may not calculate AFFO as we do, and, accordingly, our AFFO may not be comparable to such other equity REITs’ AFFO. AFFO does not represent cash generated from operating activities determined in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should only be considered a supplement, and not an alternative, to net income (loss) attributable to common shareholders (computed in accordance with GAAP) as a performance measure. |
|
Annualized Adjusted EBITDAre is calculated as Adjusted EBITDAre for the quarter, adjusted for items where annualization would not be appropriate, multiplied by four. Our computation of Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the methodology used by other equity REITs to calculate these measures and, therefore, may not be comparable to such other REITs. A reconciliation of Annualized Adjusted EBITDAre is included in this release. |
|
Annualized Cash Rent represents Annualized Contractual Rent, less any rent reserved for. |
|
Annualized Contractual Rent represents the monthly Contractual Rent multiplied by twelve. |
|
Cash Available for Distribution (CAD) is defined as AFFO less non-revenue producing capital expenditures and any other scheduled principal payments or receipts. |
|
Contractual Rent represents monthly contractual cash rent, excluding percentage rents, from properties owned fee-simple or ground leased, recognized during the final month of the reporting period, adjusted to exclude amounts received from properties sold during that period and adjusted to include a full month of contractual rent for properties acquired during that period. We use Contractual Rent when calculating certain metrics that are useful to evaluate portfolio credit, asset type, industry and geographic diversity and to manage risk. |
|
EBITDAre is a non-GAAP financial measure and is computed in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT). EBITDAre is defined as net income (loss) (computed in accordance with GAAP), plus interest expense, plus income tax expense (if any), plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated real estate ventures, plus adjustments to reflect the Company’s share of EBITDAre of unconsolidated real estate ventures. |
|
Funds from Operations (FFO) We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss) attributable to common shareholders (computed in accordance with GAAP) excluding real estate-related depreciation and amortization, impairment charges and net (gains) losses from property dispositions. FFO is a supplemental non-GAAP financial measure. We use FFO as a supplemental performance measure because we believe that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate-related depreciation and amortization, gains and losses from property dispositions and impairment charges, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other equity REITs. However, because FFO excludes depreciation and amortization and does not capture the changes in the value of our properties that result from use or market conditions, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO as we do, and, accordingly, our FFO may not be comparable to such other equity REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income (loss) attributable to common shareholders (computed in accordance with GAAP) as a measure of our performance. |
|
Gross Investment represents the gross acquisition cost including the contracted purchase price and related capitalized transaction costs. |
|
Liquidity Reserve represents cash held on deposit until there is a cashflow shortfall as defined in the Master Trust 2014 agreements or a liquidation of Master Trust 2014 occurs. |
|
Master Trust 2014 is an asset-backed securitization trust established in 2005, and amended and restated in 2014, which issues non-recourse notes collateralized by commercial real estate, net-leases and mortgage loans from time to time. Indirect special purpose entity subsidiaries of the Company are the borrowers. This liability is discussed in greater detail in our financial statements and the notes thereto included in our periodic reports filed with the SEC. |
|
Occupancy is calculated by dividing the number of economically yielding Owned Properties in the portfolio as of the measurement date by the number of total Owned Properties on said date. |
|
Other Properties are all properties not included in the Master Trust 2014. |
|
Owned Properties refers to properties owned fee-simple or ground leased by Company subsidiaries as lessee. |
|
Real Estate Investment represents the Gross Investment plus improvements less impairment charges. |
|
SMTA Preferred Stock refers to the 10% Series A Cumulative Redeemable Preferred Stock. |
|
Weighted Average Remaining Lease Term is calculated by dividing the sum product of (a) a stated revenue or sales price component and (b) the lease term for each lease by (c) the sum of the total revenue or sales price components for all leases within the sample. |
|
Workout Assets include tenants or properties that are targeted for potential future dispositions or other lease restructurings. |
|
Spirit MTA REIT Consolidated Balance Sheets (In Thousands, Except Share and Per Share Data) (Unaudited) |
||||||||||
| March 31, 2019 | December 31, 2018 | |||||||||
| Assets | ||||||||||
| Investments: | ||||||||||
| Real estate investments: | ||||||||||
| Land and improvements | $ | 774,527 | $ | 870,549 | ||||||
| Buildings and improvements | 1,432,458 | 1,526,933 | ||||||||
| Total real estate investments | 2,206,985 | 2,397,482 | ||||||||
| Less: accumulated depreciation | (463,528 | ) | (459,615 | ) | ||||||
| 1,743,457 | 1,937,867 | |||||||||
| Loans receivable, net | 27,148 | 30,093 | ||||||||
| Intangible lease assets, net | 75,722 | 79,314 | ||||||||
| Real estate assets held for sale, net | 15,603 | 7,263 | ||||||||
| Net investments | 1,861,930 | 2,054,537 | ||||||||
| Cash and cash equivalents | 108,883 | 161,013 | ||||||||
| Deferred costs and other assets, net | 66,710 | 83,087 | ||||||||
| Goodwill | 7,012 | 7,012 | ||||||||
| Total assets | $ | 2,044,535 | $ | 2,305,649 | ||||||
| Liabilities and deficit | ||||||||||
| Liabilities: | ||||||||||
| Mortgages and notes payable, net | $ | 1,980,939 | $ | 2,138,804 | ||||||
| Intangible lease liabilities, net | 16,428 | 17,676 | ||||||||
| Accounts payable, accrued expenses and other liabilities | 37,367 | 83,629 | ||||||||
| Total liabilities | 2,034,734 | 2,240,109 | ||||||||
| Redeemable preferred equity: | ||||||||||
|
SMTA Preferred Shares, $0.01 par value, $25 per share liquidation |
150,000 | 150,000 | ||||||||
|
SubREIT Preferred Shares, $0.01 par value, $1,000 per share |
5,125 | 5,125 | ||||||||
| Total redeemable preferred equity | 155,125 | 155,125 | ||||||||
| Shareholders’ deficit: | ||||||||||
|
Common shares, $0.01 par value, 750,000,000 shares authorized; |
431 | 430 | ||||||||
| Capital in excess of common share par value | 201,824 | 201,056 | ||||||||
| Accumulated deficit | (347,579 | ) | (291,071 | ) | ||||||
| Total shareholders’ deficit | (145,324 | ) | (89,585 | ) | ||||||
| Total liabilities and deficit | $ | 2,044,535 | $ | 2,305,649 | ||||||
|
Spirit MTA REIT
Consolidated Statements of Operations and Comprehensive Income (In Thousands, Except Share and Per Share Data) (Unaudited) |
||||||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenues: | ||||||||||
| Rental income | $ | 53,052 | $ | 59,608 | ||||||
| Interest income on loans receivable | 1,236 | 81 | ||||||||
| Other income | 1,193 | 379 | ||||||||
| Total revenues | 55,481 | 60,068 | ||||||||
| Expenses: | ||||||||||
| General and administrative | 6,052 | 5,651 | ||||||||
| Related party fees | 6,950 | 1,730 | ||||||||
| Transaction costs | 606 | 3,017 | ||||||||
| Property costs (including reimbursable) | 1,573 | 1,413 | ||||||||
| Interest | 32,335 | 28,012 | ||||||||
| Depreciation and amortization | 19,375 | 20,993 | ||||||||
| Impairment and allowance for loan losses | 6,037 | 4,825 | ||||||||
| Total expenses | 72,928 | 65,641 | ||||||||
| Other loss: | ||||||||||
| Loss on debt extinguishment | (21,267 | ) | (255 | ) | ||||||
| Gain (loss) on disposition of real estate assets | 478 | (1,694 | ) | |||||||
| Total other loss | (20,789 | ) | (1,949 | ) | ||||||
| Loss before income tax expense | (38,236 | ) | (7,522 | ) | ||||||
| Income tax expense | (34 | ) | (57 | ) | ||||||
| Net loss and total comprehensive loss | (38,270 | ) | (7,579 | ) | ||||||
| Preferred dividends | (3,975 | ) | — | |||||||
| Net loss attributable to common shareholders | $ | (42,245 | ) | $ | (7,579 | ) | ||||
| Net loss per share attributable to common shareholders | ||||||||||
| Basic | $ | (0.99 | ) | $ | (0.18 | ) | ||||
| Diluted | $ | (0.99 | ) | $ | (0.18 | ) | ||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 42,860,427 | 42,851,010 | ||||||||
| Diluted | 42,860,427 | 42,851,010 | ||||||||
Contacts
INVESTORS
Investor Relations
(972) 476-1409
[email protected]
