0001308606 src:CStoreIndianapolisINMember 2020-12-31 0001308606 src:ChuckARamaAndGrubSteakMurrayUtMember 2020-12-31 0001308606 src:WalgreensHoustonTXMember srt:MinimumMember 2020-01-01 2020-12-31 0001308606 src:DollarGeneralOrdNEMember srt:MinimumMember 2020-01-01 2020-12-31 0001308606 src:MacPapersDurhamNcMember srt:MinimumMember 2020-01-01 2020-12-31 0001308606 src:InPlaceLeasesMember 2018-01-01 2018-12-31
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934. |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year endedDecember 31, 20182020
Commission File Number 001-36004
|
| | | | | |
| | | Spirit Realty Capital, Inc. | | | | |
| | | | | | |
SPIRIT REALTY CAPITAL, INC.
(Exact name of registrant as specified in its charter)
|
| | | | |
Spirit Realty Capital, Inc. | | | | |
| | | | |
| | | (State or other jurisdiction of incorporation or organization) | | |
| | | 2727 North Harwood Street, Suite 300, Dallas, Texas | | |
| | | (Address of principal executive offices; zip code) | | (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
| | | | Name of exchange on which registered |
Common Stock, $0.05 par value per share | | | | |
6.000% Series A Cumulative Redeemable
Preferred Stock, $0.01 par value per
share | | | | |
Securities registered pursuant to Section 12(g) of the Act:
| | | | | | |
| | | Title of each class: | | Name of exchange on which registered: |
Spirit Realty Capital, Inc. | | Common Stock, $0.05 par value per share | | New York Stock Exchange |
| | | 6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share | | New York Stock Exchange |
Spirit Realty, L.P. | | None | | None |
Securities registered pursuant to Section 12(g) of the Act:
|
| | |
Spirit Realty Capital, Inc. | | None |
Spirit Realty, L.P. | | None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Spirit Realty Capital, Inc. Yes x ☒
No o☐
Spirit Realty, L.P. Yes o ☐
No x☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Spirit Realty Capital, Inc. Yes o ☐
No x☒
Spirit Realty, L.P. Yes x ☒
No o☐
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 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.
Spirit Realty Capital, Inc. Yes x ☒
No o☐
Spirit Realty, L.P. Yes o ☐
No x☒
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).
Spirit Realty Capital, Inc. Yes x ☒
No o☐
Spirit Realty, L.P. Yes x ☒
No o☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
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“emerging growth
company"company” in Rule
12b-2
of the Exchange Act.
Spirit Realty Capital, Inc.
|
| | | | | | | | | | | | | |
| x | ☒ | | Accelerated filer | o | ☐ | | Non-accelerated filer | o | ☐ | | Smaller reporting company | o | ☐ |
| o | ☐ | | | | | | | | | | | | |
Spirit Realty, L.P.
|
| | | | | | | | | | | | | |
| o | ☐ | | Accelerated filer | x | ☐ | | Non-accelerated filer | o | ☒ | | Smaller reporting company | o | ☐ |
| o | ☐ | | | | | | | | | | | | |
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.
Spirit Realty Capital, Inc. o☐
Spirit Realty, L.P. o☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Spirit Realty Capital, Inc. Yes ☒
No ☐
Spirit Realty, L.P. Yes ☒
No ☐
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act).
Spirit Realty Capital, Inc. Yes o ☐
No x☒
Spirit Realty, L.P. Yes o ☐
No x☒
As of June
29, 201830, 2020 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of Spirit Realty Capital, Inc.
's’s shares of common stock, $0.05 par value, held by
non-affiliates
of the Registrant, was
$3.4$3.6 billion based on the last reported sale price of
$40.15$34.86 per share on the New York Stock Exchange on June
29, 2018.30, 2020.There is no public trading market for the common units of limited partnership interest of Spirit Realty, L.P. As a result, the aggregate market value of the common units of limited partnership interest held by
non-affiliates
of Spirit Realty, L.P. cannot be determined.
The number of outstanding shares of Spirit Realty Capital, Inc.'s’s common stock, $0.05 par value, as of February 19, 2019,16, 2021, was 85,918,339114,861,919 shares.
Documents Incorporated by Reference
Certain specific portions of the definitive Proxy Statement for Spirit Realty Capital, Inc.
's 2019’s 2021 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form
10-K.
Only those portions of the Proxy Statement which are specifically incorporated by reference herein shall constitute a part of this Annual Report on Form
10-K.
This report combines the annual reports on Form
10-K
for the year ended December 31,
20182020 of Spirit Realty Capital, Inc., a Maryland corporation, and Spirit Realty, L.P., a Delaware limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” or the “Company” refer to Spirit Realty Capital, Inc. together with its consolidated subsidiaries, including Spirit Realty, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to the “Operating Partnership” refer to Spirit Realty, L.P. together with its consolidated subsidiaries.
Spirit General OP Holdings, LLC
("(“OP
Holdings"Holdings”) is the sole general partner of the Operating Partnership. The Company is a real estate investment trust
("REIT"(“REIT”) and the sole member of OP Holdings, as well as the special limited partner of the Operating Partnership. As sole member of the general partner of our Operating Partnership, our Company has the full, exclusive and complete responsibility for our Operating Partnership’s
management and control.
We believe combining the annual reports on Form
10-K
of our Company and Operating Partnership into a single report results in the following benefits:
enhancing investors’ understanding of our Company and Operating Partnership by enabling investors to view the business as a whole, reflective of how management views and operates the business;
eliminating duplicative disclosure and providing a streamlined presentation as a substantial portion of the disclosures apply to both our Company and Operating Partnership; and
creating time and cost efficiencies by preparing one combined report in lieu of two separate reports.
There are a few differences between our Company and Operating Partnership, which are reflected in the disclosures in this report. We believe it is important to understand these differences in the context of how we operate as an interrelated, consolidated company. Our Company is a REIT, the only material assets of which are the partnership interests in our Operating Partnership. As a result, our Company does not conduct business itself, other than acting as the sole member of the general partner of our Operating Partnership, issuing equity from time to time and guaranteeing certain debt of our Operating Partnership. Our Operating Partnership holds substantially all the assets of our Company. Our Company issued convertible notes and guarantees some of the debt of our Operating Partnership, see Note 4 to the consolidated financial statements herein for further discussion. Our Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from issuance of convertible notes and equity issuances by our Company, which are generally contributed to our Operating Partnership in exchange for partnership units of our Operating Partnership, our Operating Partnership generates the capital required by our Company’s business through our Operating Partnership’s operations or our Operating Partnership’s incurrence of indebtedness.
The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of our Company and those of our Operating Partnership. The partnership units in our Operating Partnership are accounted for as partners’ capital in our Operating Partnership’s consolidated financial statements. There are no
non-controlling
interests in the Company or the Operating Partnership.
To help investors understand the significant differences between our Company and our Operating Partnership, this report presents the consolidated financial statements separately for our Company and our Operating Partnership. All other sections of this report, including “Selected Financial Data,”��� “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk,” are presented together for our Company and our Operating Partnership.
In order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that our Company and Operating Partnership are compliant with Rule
13a-15
or Rule
15d-15
of the Securities Exchange Act of 1934, or the Exchange Act, and 18 U.S.C. §1350, this report also includes separate “Item 9A. Controls and Procedures” sections and separate Exhibit 31 and 32 certifications for each of our Company and our Operating Partnership.
|
| |
| 1031 Exchange | | Tax-deferred like-kind exchange of properties held for business or investment purposes, pursuant to Section 1031 of the Code |
| 2015 Credit Agreement | | Revolving credit facility agreement between the Operating Partnership and certain lenders dated March 31, 2015, as amended or otherwise modified from time to time |
| 2015 Credit Facility | | $800.0 million unsecured credit facility pursuant to the 2015 Credit Agreement |
| 2015 Term Loan | | $420.0 million senior unsecured term facility pursuant to the 2015 Term Loan Agreement |
| 2015 Term Loan Agreement | | Term loan agreement between the Operating Partnership and certain lenders dated November 3, 2015, as amended or otherwise modified from time to time |
| 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 | | $800.0 million unsecured revolving credit facility pursuant to the 2019 Revolving Credit and Term Loan Agreement |
| 2019 Facilities Agreements | | 2019 Revolving Credit and Term Loan Agreement and A-2 Term Loan |
| 2019 Notes | | $402.5 million convertible notes of the Corporation due in 2019 |
| 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, pursuant to which the Corporation may offer and sell registered shares of common stock from time to time |
| 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 Notes | | $345.0 million convertible notes of the Corporation due in 2021 |
| 2026 Senior Notes | | $300.0 million aggregate principal amount of senior notes issued in August 2016 |
| 2027 Senior Notes | | $300.0 million aggregate principal amount of senior notes issued in September 2019 |
| 2029 Senior Notes | | $400.0 million aggregate principal amount of senior notes issued in June 2019 |
| 2030 Senior Notes | | $500.0 million aggregate principal amount of senior notes issued in September 2019 |
| 2031 Senior Notes | | $450.0 million aggregate principal amount of senior notes issued in August 2020 |
| 401(k) Plan | | Defined contribution retirement savings plan qualified under Section 401(k) of the Code |
| | $420.0 million unsecured term loan facility pursuant to the 2019 Revolving Credit and Term Loan Agreement |
| | $400.0 million unsecured term loan facility pursuant to a term loan agreement between the Operating Partnership and certain lenders dated January 14, 2019, as amended or otherwise modified from time to time |
ABS | Asset Backed Securities |
| ACM | | Asbestos-Containing Materials |
| ADA | | Americans with Disabilities Act |
| Adjusted Debt | | Adjusted Debt is a non-GAAP financial measure. See definition in Item 6. Selected7. Management’s Discussion and Analysis of Financial Data.Condition and Results of Operations. |
| | |
| | Adjusted EBITDA re modified to include other adjustments that are not considered to be indicative of on-going operating performance. non-GAAP financial measure. See definition in Item 6. Selected7. Management’s Discussion and Analysis of Financial Data.Condition and Results of Operations. |
| AFFO | | Adjusted Funds From Operations. See definition in Item 6. Selected7. Management’s Discussion and Analysis of Financial Data.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 and earned income from direct financing leases from the final month of the reporting period, adjusted to exclude amounts from properties sold during that period and to include a full month of rental income for properties acquired during that period. The total is then multiplied by 12. We use ABR when calculating certain metrics that are useful to evaluate portfolio credit and diversification and to manage risk. |
| AOCL | | Accumulated Other Comprehensive Loss |
| ASC | | Accounting Standards Codification |
| Asset Management Agreement | | Asset Management Agreement between Spirit Realty, L.P. and Spirit MTA REIT dated May 31, 2018 and subsequently assigned by Spirit Realty, L.P. to Spirit Realty AM Corporation on April 1, 2019 |
| ASU | | Accounting Standards Update |
| ATM Program | At | The 2016 ATM Program or the Market equity distribution program, pursuant2020 ATM Program, as applicable |
| Base Cash Rent | | Represents Base Rent reduced for amounts abated and rent deemed not probable of collection. |
| Base Rent | | Represents contractual rental income for the period, prior to which the Corporation may offerdeferral and sell registered shares of common stock from timeabatement agreements, and excluding contingent rents. We use Base Rent to timemonitor cash collection and to evaluate past due receivables. |
| CMBS | | Commercial Mortgage BackedMortgage-Backed Securities |
| Code | | Internal Revenue Code of 1986, as amended |
Cole II | Cole Credit Property Trust II, Inc. |
| Company | | The Corporation and its consolidated subsidiaries |
|
| |
Contractual Rent | Monthly contractual cash rent and earned income from direct financing leases, excluding percentage rents, from our 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. |
| Convertible Notes | | The 2019 Notes and 2021 Notes, together |
| Corporation | | Spirit Realty Capital, Inc., a Maryland corporation |
| CPI | | |
| EBITDA | | Earnings Before Interest, Taxes, Depreciation and Amortization |
EBITDAR | Earnings Before Interest, Taxes, Depreciation, Amortization and Rent |
| | EBITDA is anon-GAAP financial measure and is computed in accordance with standards established by NAREIT. See definition in Item 6. Selected7. Management’s Discussion and Analysis of Financial Data. |
EDF | Expected Default Frequency |
Excess Cash | Rent received in excessCondition and Results of debt service obligationsOperations. |
| Exchange Act | | Securities Exchange Act of 1934, as amended |
| FASB | | Financial Accounting Standards Board |
| FFO | | Funds From Operations. See definition in Item 6. Selected7. Management’s Discussion and Analysis of Financial Data. |
Fixed Charge Coverage Ratio | RatioCondition and Results of Annualized Adjusted EBITDAre to Fixed Charges. See definition in Item 6. Selected Financial Data.Operations.
|
| GAAP | | Generally Accepted Accounting Principles in the United States |
IASBInterim Management Agreement | International Accounting Standards Board |
IFRS | International Financial Reporting Standards |
IPO | Initial Public Offering |
IRS | Internal Revenue Service |
LIBOR | London Interbank Offered Rate |
Line of Credit | $40.0 million secured revolving credit facility pursuant to the loan agreementInterim Management Agreement between an indirectSpirit Realty AM Corporation, a wholly-owned subsidiary of the CorporationCompany, and a certain lenderSpirit MTA REIT dated March 27, 2013, as amendedJune 2, 2019 and effective September 20, 2019 |
| IPO | | |
| IRS | | |
| LIBOR | | London Interbank Offered Rate |
| Master Trust 2013 | | The asset-backed net-lease mortgage securitization trust established in December 2013 |
| Master Trust 2014 | | The asset-backednet-lease mortgage securitization trust established in 2005 and amended and restated in 2014 |
Master Trust Exchange Costs | Legal, accounting and financial advisory services costs incurred in connection with the May 2014 exchange of the outstanding principal balance of three series of existing net-lease mortgage notes for three series of newly issued 2014 Notes |
| Master Trust Notes | | Master Trust 2013 and Master Trust 2014, together |
| | |
| Master Trust Release | | Proceeds from the sale of assets securing the Master Trust Notes held in restricted accounts until a qualifying substitution is made or until used for principal reduction |
Merger | Acquisition on July 17, 2013 of Cole II by the Company, in which the Company merged with and into the Cole II legal entity |
Merger Exchange Ratio | Merger exchange ratio of 1.9048 |
| MGCL | | Maryland General Corporation Law |
Moody's | Moody's Investor Services |
| NAREIT | | National Association of Real Estate Investment Trusts |
| NYSE | | |
Occupancy | The number of economically yielding owned properties divided by total owned properties |
| OP Holdings | | Spirit General OP Holdings, LLC |
| Operating Partnership | | Spirit Realty, L.P., a Delaware limited partnership |
|
| |
Porter'sPorter’s Five Forces | | An analytical framework used to examine the attractiveness of an industry and potential for disruption in that industry based on: threats of new entrants, threats of substitutes, the bargaining power of customers, the bargaining power of suppliers and industry rivalry |
| Property Management and Servicing Agreement | | Second amended and restated agreement governing the management services and special services provided to Master Trust 2014 by Spirit Realty, L.P., dated as of May 20, 2014, as amended, supplemented, amended and restated or otherwise modified |
Real Estate Investment Value | The gross acquisition cost, including capitalized transaction costs, plus improvements and less impairments, if any |
| REIT | | Real Estate Investment Trustestate investment trust |
| S&P | Standard & Poor's Rating Services | |
| SEC | | Securities and Exchange Commission |
| Securities Act | | Securities Act of 1933, as amended |
| Senior Unsecured Notes | $300 million aggregate principal amount of senior notes issued in August 2016 | 2026 Senior Unsecured Notes, 2027 Senior Unsecured Notes, 2029 Senior Unsecured Notes, 2030 Senior Unsecured Notes and 2031 Senior Unsecured 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. |
| Shopko | | Specialty Retail Shops Holding Corp. and certain of its affiliates |
| SMTA | | Spirit MTA REIT, a Maryland real estate investment trust, or SMTA Liquidating Trust, a Maryland common law trust, as the context dictates. On January 1, 2020, Spirit MTA REIT transferred all of its assets (subject to all of its liabilities) to SMTA Liquidating Trust. |
| | Creation of an independent, publicly traded REIT, SMTA, through our contribution of properties leased to Shopko, assets that collateralize Master Trust 2014 and other additional assets to SMTA followed by the distribution by us to our stockholders of all of the common shares of beneficial interest in SMTA. |
| SubREIT | | Spirit MTA SubREIT, Inc., previously a wholly-owned subsidiary of SMTASMTA. SubREIT was dissolved on October 1, 2019. |
| Spirit Heat Map | | An analysis of industries across Porter’s Five Forces and potential causes of technological disruption to identify tenant industries which Spirit believes to have good fundamentals for future performance |
| Spirit Property Ranking Model | | A proprietary model used annually to rank properties across twelve factors and weightings consisting of both real estate quality scores and credit underwriting criteria, in order to benchmark property quality, identify asset recycling opportunities and to enhance acquisition or disposition decisions |
Total Debt | Principal debt outstanding before discounts, premiums or deferred financing costs |
| TRS | | Taxable REIT Subsidiary,subsidiary, which is a corporation, other than a REIT, in which a REIT directly or indirectly holds stock and that has made a joint election with such REIT to be treated as a taxable REIT subsidiary and meets certain other requirements |
| TSR | | |
U.S. | United States of America |
Vacant | Owned properties which are not economically yielding |
Unless otherwise indicated or unless the context requires otherwise, all references to the "registrant,"“registrant,” the "Company," "Spirit“Company,” “Spirit Realty Capital," "we," "us"” “we,” “us” or "our"“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"“Operating Partnership” refer to Spirit Realty, L.P. and its consolidated subsidiaries.
|
| | | | | | | |
| |
| | Item 1. | | | | | 7 | |
| | Item 1A. | | | | | 13 | |
| | Item 1B. | | | | | 28 | |
| | Item 2. | | | | | 29 | |
| | Item 3. | | | | | 31 | |
| | Item 4. | | | | | 31 | |
| | | |
Item 1. | Business | |
Item 1A. | Risk Factors | |
Item 1B. | Unresolved Staff Comments | |
Item 2. | Properties | |
Item 3. | Legal Proceedings | |
Item 4. | Mine Safety Disclosure | |
| PART II | | | | | | | | |
| | Item 5. | | | | | | 32 | |
| | Item 6. | | | | | | 34 | |
| | Item 7. | | | | | | 35 | |
| | Item 7A. | | | | | | 52 | |
| | Item 8. | | | | | 53 | |
PART III | | | |
| | | | | | | | |
| | Item 9. | | | | | | 110 | |
| | Item 9A. | | | | | | 110 | |
| | Item 9B. | Other Information | | | | 111 | |
| | Item 10. | | | | | | 111 | |
| | Item 11. | Executive Compensation | | | | 111 | |
| | Item 12. | | | | | | 111 | |
| | Item 13. | | | | | | 112 | |
| | Item 14. | | | | | 112 | |
PART IV | | | |
| | | | | | | | |
| | Item 15. | | | | | 113 | |
SIGNATURES | | Item 16. | | | | | 117 | |
| |
| | | 171 | |
PART I
The following discussion relates to our consolidated financialSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form10-K
contains forward-looking statements
within the meaning of Section 27A of the Securities Act and
should be read in conjunction withSection 21E of the
consolidated financial statements and notes thereto appearing elsewhereExchange Act. When used in this Annual Report,
on Form 10-K. Statements contained in Item 7. “Management’s Discussion and Analysisthe words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of
Financial Condition and Results of Operations”these words or similar words or phrases that are
predictions of or indicate future events or trends and which do not
relate solely to historical
facts may bematters are intended to identify forward-looking statements.
SuchYou can also identify forward-looking statements
are subject to certainby discussions of strategy, plans or intentions of management. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those projected. Someset forth or contemplated in the forward-looking statements:
industry and economic conditions;
volatility and uncertainty in the financial markets, including potential fluctuations in the CPI;
our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments;
the financial performance of our retail tenants and the information presented is forward-lookingdemand for retail space, particularly with respect to challenges being experienced by general merchandise retailers;
our ability to diversify our tenant base;
the nature and extent of future competition;
increases in nature, including information concerning projected future occupancyour costs of borrowing as a result of changes in interest rates rental rate increases, property development timing and investment amounts. Althoughother factors;
our ability to access debt and equity capital markets;
our ability to pay down, refinance, restructure and/or extend our indebtedness as it becomes due;
our ability and willingness to renew our leases upon expiration and to reposition our properties on the information is based onsame or better terms upon expiration in the event such properties are not renewed by tenants or we exercise our current expectations, actual results could vary from expectations stated in this report. Numerous factors willrights to replace existing tenants upon default;
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us or our actual results, some of which are beyond major tenants;
our control. These include the breadthability to manage our expanded operations;
our ability and duration of willingness to maintain our qualification as a REIT;
the
current economic environment and its impact on our
business and those of our tenants
from epidemics, pandemics or other outbreaks of illness, disease or virus (such as the
strengthstrain of
commercial coronavirus known asCOVID-19);
and
industrialother risks inherent in the real estate markets, market conditions affecting tenants, competitive market conditions, interest rate levels, volatility in our stock pricebusiness, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and capital market conditions. potential damages from natural disasters.
You are cautioned not to place undue reliance on
this information,forward-looking statements, which
speaksspeak only as of the date of this
report.Annual Report on Form10-K.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We
assume nodisclaim any obligation to
publicly update
publiclyor revise any forward-looking
statement to reflect changes in underlying assumptions or factors, new information,
data or methods, future events or other changes, except as required by law.
We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant, operationally essential real estate assets throughout the United States, which are subsequently leased on a long-term,triple-net
basis to high quality tenants with operations in retail, industrial, office and certain other industries. As of December 31, 2020, Spirit owned a diversified portfolio of 1,860 properties with gross investment in real estate totaling approximately $6.8 billion and within-place
Annualized Base Rent of $509.6 million. See Item 2. “Properties - Our Real Estate Investment Portfolio” for further information on our portfolio diversification. Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners and together own the remaining 99% of the Operating Partnership.
Shares of our common stock are traded on the NYSE under the symbol “SRC.”
Business and Growth Strategies
Our objective is to maximize stockholder value by providing a growing stream of earnings and dividends generated by high quality, diversified commercial real estate. We seek to accomplish this objective by utilizing our proprietary tools and underwriting expertise to invest in and manage a high-quality portfolio of single tenant, operationally essential real estate throughout the United States, which generally consists of free-standing, commercial real estate facilities where our tenants conduct activities essential to the generation of their sales and profits. We then generate revenue
primarily by leasing these properties to tenants we believe possess attractive credit characteristics and operate in stable or growing industries. Our leases are typically structured astriple-net
leases, whereby the tenant is responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Spirit utilizes integrated tools that streamline key processes for acquisitions, tenant monitoring and managing our capital structure, forecasts and records. We believe the effective use of our technology platforms to inform portfolio management decisions provides efficiency, depth and scalability to our processes, allowing us to seamlessly execute our objectives. To enhance our operating systems, we have developed several proprietary tools to minimize risk and maximize returns for our stockholders:
| o | Spirit Property Ranking Model. 5-mile population, (iv) remaining lease term, (v)5-mile house-hold income,(vi) pre-overhead unit coverage,(vii) pre-overhead master lease coverage, (viii) corporate coverage, (ix) U.S. State ranking, (x) rent escalation characteristics, (xi) lease structure and (xii) tenant industry ranking. We believe that the higher the overall score assigned to a property, the lower the risk of a residual loss given a tenant default. Through acquisitions, dispositions, lease renewals andre-lets, we seek to continually improve the weighted-average property ranking of our portfolio. |
| o | The Spirit Heat Map is used to analyze tenant industries across Porter’s Five Forces and for potential causes of technological disruption. The data is then used to predict the long-term future performance of those industries. The Spirit Heat Map is updated regularly to incorporate changes in business and market conditions, changes in technology and other trends. Using this tool, coupled with our intensive credit and real estate analysis, lease structuring and ongoing portfolio management, we seek to achieve superior risk-adjusted returns by focusing our investments within industries that we believe will be healthy and viable prospectively and disposing of properties within industries that have less favorable outlooks. |
| o | Spirit Business Intelligence Tools. |
 | |
We have implemented sound social, human capital management and environmental practices and policies throughout the operation of our business, demonstrating our solid commitment to be responsible and conscientious in everything that we do as we strive to both drive long-term stakeholder value and make the communities in which we operate a better place to live and work. We have documented these commitments in our Social Responsibility and Environmental Sustainability Policy and our Code of Business Conduct and Ethics, each of which can be accessed on the Investor Relations page of our website at www.spiritrealty.com. One of these key pillars is human capital management. We believe attracting, developing and retaining a team of highly talented and motivated employees is critical to reflecting our “all one team” motto and delivering strong financial results:
| o | Talent acquisition and development. |
| process which includes multiple levels of interviews, cultural surveys, and technical skill testing, when appropriate, to ensure candidates will be an appropriate fit. |
| o | We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience, ideas and opinions. Our employee population is very diverse: approximately half of our employees are female, 27% are from racial or ethnic minority groups, and we have well-rounded age diversity. To promote inclusivity, our Diversity and Inclusion Committee is tasked with providing educational and social programming for all affinity groups, as well as directing support to charitable organizations in line with our diversity efforts. Under the Diversity and Inclusion Committee, we have a Women’s Leadership Council, which focuses specifically on empowering the women of Spirit in personal and professional growth. With the support of our Board of Directors, we continue to explore additional diversity and inclusion initiatives. |
| o | The physical and mental well-being of our employees is an important piece of our business and overall success. We have implemented numerous wellness initiatives, including wellness screenings and guided meditation sessions. Our offices were designed with employee health and well-being in mind(sit-stand desks, ergonomic chairs, healthy snack options, maximized natural light in all workspaces, designated creative and collaborative workspaces). In response to theCOVID-19 pandemic, we took a number of actions to ensure the health and safety of our employees, including enabling all employees to work from home, enhancing safety measures in our offices for voluntary return to office (including increasing cleaning and sanitizing procedures, temperature screening upon entering the office, providing personal protective equipment, installing plexiglass wellness screens and initiating social distancing measures), and instituted a specialCOVID-19 pandemic leave policy for illness or caretaking. |
| o | We actively seek to create aworkplace culture through corporate culture workshops and conducting employee surveys. Results of the surveys are communicated to all employees, as well as to our Board of Directors, to provide transparency and continuous improvement. We also seek to acknowledge employee successes through recognition at monthly “Town Hall” meetings. We firmly believe that regular social and team building events for our employees encourage socialization, collaboration, and relationship building – all things that are vital for employee engagement and result in a high performing “all one team” culture. We promote social engagement through our Spirit One Committee (comprised of employees across all levels and departments who collaborate to create social programming), annual company-wide events (including a virtual holiday season party in 2020), and department team building events throughout the year. |
As of December 31, 2020, we had 82 employees, as compared to 85 employees as of December 31, 2019. None of these employees are represented by a labor union.
 | DEFINED AND DISCIPLINED INVESTMENT STRATEGY |
During the year ended December 31, 2020, we purchased 146 properties, representing an aggregate gross investment of $868.2 million, and invested $10.0 million in revenue producing capital expenditures to fund improvements on properties we already owned. During the same period, we sold 38 properties with an undepreciated gross investment of $86.0 million. We selectively make acquisitions and dispositions that we believe will contribute to our business objectives. We believe there will be ample acquisition opportunities in the single-tenant market fitting our underwriting and acquisition criteria.
| o | We believe a multi-channel approach drives acquisition volume and are focused on building and growing partnerships with a diverse base of tenants and brokers. Over time, our target is a balanced mix of opportunities sourced from direct relationships with existing tenants, direct relationships with new tenants and broker relationships. These channels are built through current relationships with key members of our acquisitions and asset management teams, partner appreciation events, attendance at critical conferences and conventions and reliable execution. |
| o | Each acquisition opportunity is evaluated against our acquisition criteria, which includes, but is not limited to: accretive capitalization rate, long-term lease structure containing rent escalations, favorable tenant industries based on the Spirit Heat Map, favorable Spirit property ranking, attractive tenant credit characteristics and overall portfolio diversification impact. As part of our acquisition strategy, we target tenants that are publicly listed, as we believe those tenants possess certain attractive characteristics, including continual access to capital, generally lower leverage, audited financial statements and governance scrutiny. |
| While we consider the foregoing when making investments, we have made investments that do not meet one or more of these criteria, and we may make additional investments that do not meet one or more of these criteria if we believe the opportunity is sufficiently attractive. Acquisition opportunities go through a rigorous evaluation process culminating in review and approval by our Investment Committee. The Investment Committee includes representation from the acquisitions, asset management, credit, legal and finance departments. |
| o | Evaluating tenant credit. |
We believe that portfolio diversification and leases with structures aligned with our business and growth strategies are the cornerstones to managing the inherent risk associated with investing in real estate. The following portfolio qualities help maintain the stability of our rental revenue and maximize our long-term return on our investments:
| o | Diverse and granular portfolio. non-investment grade rated tenants with 51.0% of our ABR from public issuers. See Item 2. “Properties - Our Real Estate Investment Portfolio” for further information on our portfolio composition as of December 31, 2020. |
| o | Leases for operationally essential real estate. |
| o | Leases with contractual rental growth. |
| o | Leases with relatively long terms. non-cancellable initial terms of 10 to 20 years and tenant renewal options for additional terms with attractive rent escalation provisions. As of December 31, 2020, our weighted average remaining lease term based on ABR was 10.1 years. |
| o | Leases with a master lease structure. |
Since our inception, our occupancy has never fallen below 96.1%, despite the economic downturns of 2008 through 2010 and theCOVID-19
pandemic. While the onset in the U.S. of theCOVID-19
pandemic resulted in requests for relief from a number of our tenants, the majority of these requests came in the form of rent deferrals, and we believe the diversity and strength of our portfolio helped to limit the impact of theCOVID-19
pandemic on our 2020 operating results. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness, and hotels. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we expect to
see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range, generally, from one to six months, with an average deferral period of four months and an average repayment period of 12 months. The majority of the relief granted to tenants in 2021 relates to tenants in the movie theater industry. Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who may request future rent relief, we can provide no assurance that such efforts will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period.  | |
Our long-term financing strategy is to maintain a leverage profile that creates operational flexibility and generates superior risk-adjusted returns for our stockholders. We finance our operations and investments using a variety of methods, including available unrestricted cash balances, property operating revenue, proceeds from property dispositions, available borrowings under our credit facilities, common and preferred stock issuances, and debt securities issuances, including mortgage indebtedness and senior unsecured debt. We determine the amount of equity and debt financing to be used when acquiring an asset by evaluating our cost of equity capital, terms available in the credit markets (such as interest rate, repayment provisions and maturity) and our assessment of the particular asset’s risk.
In October 2020, we renewed our shelf registration statement with the SEC, which became immediately effective upon filing and will expire in October 2023, unless renewed before. Under this shelf registration statement, we may offer shares of our common or preferred stock or debt securities in amounts, at prices, and on terms to be announced when, and if, such shares are offered. The specifics of any future offerings, along with the use of proceeds from any such offerings, will be described in detail in a prospectus supplement or other offering materials at the time of such offerings.
| o | Issuance of common stock. |
| o | Issuance of debt securities. |
| o | Cash provided by operations. re-leasing costs, and cash distributions to common and preferred stockholders, primarily through cash provided by operating activities and borrowings under our available credit facilities. |
We anticipate that we will continue to use a number of different sources to finance our acquisitions and operations going forward; however, we cannot assure you that we will have access to the capital and credit markets at times and at terms that are acceptable to us.
We face competition for acquisitions from investors, including traded andnon-traded
public REITs, private equity funds and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently manage. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such. This competition will increase if investments in real estate become more attractive relative to other forms of investment. As a landlord, we compete in the multi-billion dollar commercial real estate market with numerous developers and owners of properties, many of which own properties similar to ours in the same markets in which our properties are located. In operating and managing our portfolio, we compete for tenants based on a number of factors, including
location, rental rates and flexibility. Some of our competitors have greater economies of scale, have lower cost of capital, have access to more resources, and have greater name recognition than we do. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose our tenants or prospective tenants and we may be pressured to reduce our rental rates or to offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options in order to retain tenants when our leases expire.
Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of our properties has the necessary permits and approvals.
AMERICANS WITH DISABILITIES ACT
Pursuant to the ADA, our properties are required to meet federal requirements related to access and use by persons with disabilities. Compliance with the ADA, as well as a number of additional federal, state and local laws and regulations, may require modifications to properties we currently own and any properties we purchase, or may restrict renovations of those properties. Noncompliance with these laws or regulations could result in fines or an award of damages to private litigants, as well as the incurrence of costs to make modifications to attain compliance. Although our tenants are generally responsible for compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with such laws or regulations.
Federal, state and local environmental laws and regulations regulate releases of hazardous or toxic substances into the environment. Some of our properties contain, have contained, or are adjacent to or near properties that contain or have contained storage tanks for petroleum products or other hazardous or toxic substances. Similarly, some of our properties are or were used for commercial or industrial purposes that involve or involved the use of hazardous or toxic substances or are adjacent to or near properties that are of have been used for such purposes. Under certain of these laws and regulations, a current or previous owner, operator or tenant may be required to investigate andclean-up
hazardous or toxic substances or petroleum product releases or threats of releases, and may be held liable to a government entity or third parties for property damage and for investigation,clean-up
and monitoring costs incurred by those parties in connection with actual or threatened contamination. These laws typically imposeclean-up
responsibility and liability without regard to fault, or whether
or not the owner, operator or tenant knew of or caused the contamination. The liability may be joint and several for the full amount of the investigation,clean-up
and monitoring costs incurred or to be incurred or actions to be undertaken, although a party held jointly and severally liable may seek contributions from other identified, solvent, responsible parties for their fair share toward these costs. In addition, strict environmental laws regulate a variety of activities that can occur on a property, including the storage of petroleum products or other hazardous or toxic substances, air emissions and water discharges. Such laws may impose fines or penalties for violations. Environmental laws also govern ACM. Federal regulations require building owners and those exercising control over a building’s management to identify and warn, through signs and labels, of potential hazards posed by workplace exposure to ACM in their building. The regulations also have employee training, record keeping and due diligence requirements pertaining to ACM. Significant fines can be assessed for violation of these regulations and we could be subject to lawsuits if personal injury from exposure to ACM occurs. Federal, state and local laws and regulations also govern the removal, encapsulation, disturbance, handling and/or disposal of ACM when those materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM.
In addition, our properties may contain or develop harmful mold or other airborne contaminants. The presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly
remediation to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. Further, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs.
Before completing an acquisition, we obtain environmental assessments carried out in accordance with the Standard Practice for Environmental Site Assessments as set by ASTM International. These assessments generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property’s chain of title and review of historical aerial photographs and other information on past uses of the property. These assessments are limited in scope, however, if recommended in the initial assessments, we may undertake additional assessments such as soil and/or groundwater samplings, other limited subsurface investigations and ACM or mold surveys. A prior owner or operator of a property or historic operations at our properties may have created a material environmental condition that is not known to us or the independent consultants preparing the site assessments. Generally, our leases provide that the lessee will indemnify us for any loss or expense we incur as a result of new information, future events,the presence, use or otherwise, exceptrelease of hazardous materials on our property. However, if environmental concerns are not satisfactorily resolved in any initial or additional assessments, we may obtain environment insurance policies to insure against potential environmental risk or loss depending on the extenttype of property, the availability and cost of the insurance and various other factors we are requireddeem relevant (i.e., an environmental occurrence affects one of our properties where our lessee may not have the financial capability to do so in connection with our ongoing requirements under federal securities lawshonor its indemnification obligations to disclose material information. For a discussion of important risks related to our business, and related to investing in our securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see Item 1A. “Risk Factors - Special Note Regarding Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report on Form 10-K might not occur.us).
The Corporation's principal executive offices are located at 2727 North Harwood Street, Suite 300, Dallas, Texas 75201. Our
telephone number at that location is 972-476-1900. We maintain a website at www.spiritrealty.com. On the Investor Relations page of our website, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our Annual Report on Form
10-K, our
Quarterly Reports on Form
10-Q,
our Current Reports on Form
8-K,
and the Section 16 filings of our directors and officers, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act. All such filingsAct, are available free of charge on our
Investor Relations page of our website
www.spiritrealty.com as soon as reasonably practicable after they are
availableelectronically filed with or furnished to
be viewed free of charge.the SEC. Also available on our website, free of charge, are
corporate governance documents, including our corporate governance guidelines
the charters of the nominating and corporate governance, audit and compensation committees of our Board of Directors and our code of business conduct and
ethics. We intend to disclose on our website under “Corporate Responsibility—Corporate Governance” any amendment to, or waiver of, any provisions of our code of business conduct and ethics
(which appliesapplicable to
allthe directors
and employees, including our principal executive officer, principal financial officer and principal accounting officer).and/or officers of the Company that would otherwise be required to be disclosed under the rules of the SEC or the NYSE. Information contained on or hyperlinked from our website is not incorporated by reference into, and should not be considered part of, this Annual Report on Form
10-K
or our other filings with the SEC. A copy of this Annual Report on Form
10-K
is
also available without charge upon written request to: Investor Relations, Spirit Realty Capital, Inc., 2727 North Harwood Street, Suite 300, Dallas, Texas 75201.
All reports Set forth below are some (but not all) of the risk factors that could adversely affect our business, financial condition, results of operations, cash flow, liquidity and ability to access the capital markets and satisfy debt service obligations and make distributions to our stockholders (which we filerefer to collectively as “materially and adversely affecting” us or having “a material adverse effect” on us and comparable phrases) and the market price of our securities. Because we operate in a highly competitive and rapidly changing environment, new risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can management assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
RISKS RELATED TO OUR BUSINESS AND PROPERTIES
Risks related to commercial real estate ownership could reduce the value of our properties.
Our core business is the ownership of retail, industrial and office real estate that is leased to companies on atriple-net
basis. Accordingly, our performance is subject to risks inherent to the ownership of commercial real estate, including: inability to collect rent from tenants due to financial hardship, including bankruptcy;
changes in local real estate markets resulting in the lack of availability or demand for single-tenant retail space;
changes in consumer trends and preferences that reduce the demand for products/services of our tenants;
inability to lease or sell properties upon expiration or termination of existing leases;
environmental risks related to the presence of hazardous or toxic substances or materials on our properties;
subjectivity of real estate valuations and changes in such valuations over time;
illiquid nature of real estate compared to most other financial assets;
changes in laws and regulations, including those governing real estate usage and zoning;
changes in interest rates and the availability of financing; and
changes in the general economic and business climate.
The occurrence of any of the risks described above may cause the value of our real estate to decline.
Actual or perceived threats associated with epidemics, pandemics or public health crises, including the ongoingCOVID-19
pandemic, could have a material adverse effect on us. Epidemics, pandemics or other public health crises, including the ongoingCOVID-19
pandemic, that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, may have a material adverse effect on us and our tenants, and may affect our ability as anet-lease
real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due. The ongoingCOVID-19
pandemic and restrictions intended to prevent its spread, has had a significant adverse impact on economic and market conditions in the United States and the markets in which we own properties. Certain of our tenants, especially those in industries considered“non-essential”
under varying state and localandorders and other restrictions on types of business that may continue to operate, have experienced and continue, to experience challenges or even closures as a result of theCOVID-19
pandemic, which has had, and we anticipate will continue to have, a material adverse impact on them. Although some state governments and other authorities were in varying stages of lifting or modifying some of these measures, some have already been forced to, and others may in the future, reinstitute these measures or impose new, more restrictive measures, if the risks, or the perception of the risks, related to theCOVID-19
pandemic worsen at any time. The ongoingCOVID-19
pandemic has directly resulted, and may continue to result, in a reduction in our rental income and/or an increase in our property costs and impairments. In addition, it has resulted, and may continue to result, in an increase in our general and administrative expenses, as we have incurred and may continue to incur costs to negotiate rent deferrals, lease restructures and/or lease terminations and/or enforce our contractual rights (including through litigation), as we deem appropriate on abasis. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of theCOVID-19
pandemic or restrictions intended to prevent its spread, and we are not able to predict whether other epidemics, pandemics or other public health crises will occur in the future that may have similar impacts. Nevertheless, the ongoingCOVID-19
pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to the adverse impacts on us. Such adverse impacts could depend on, among other factors: the financial condition and viability of our tenants – many of which are in retail industries – and their ability or willingness to pay rent in full on a timely basis;
state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent;
our need to restructure leases with our tenants and our ability to do so on favorable terms or at all;
our ability to renew leases orre-lease
available space in our properties on favorable terms or at all in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the
SECreplacement of an existing tenant;
a severe and prolonged disruption and instability in the global financial markets may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or retire, replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities;
a refusal or failure of one or more lenders under the 2019 Revolving Credit and Term Loan Agreement to fund their respective financing commitment to us;
the broader impact of the severe economic contraction due to theCOVID-19
pandemic and restrictions intended to prevent its spread, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are
not timely reversed; disruptions in our tenants’ supply chains or delays in the delivery of products, services or other materials necessary for their operations, which could force our tenants’ to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency;
the further utilization ofe-commerce
in certain industries as a result of the temporary closure of many retail properties, which may lead to the closure of underperforming properties by retailers; our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel (includingon-site
employees) are impacted in significant numbers by theCOVID-19
pandemic and are otherwise not willing, available
freeor allowed to conduct work; and our and our tenants’ ability to ensure business continuity in the event our continuity of
chargeoperations plan is not effective or improperly implemented or deployed during theCOVID-19
pandemic. We may be unable to identify and complete acquisitions of suitable properties, which may impede our growth, or our future acquisitions may not yield the returns we expect.
Our ability to expand through acquisitions requires us to identify and complete investment opportunities on favorable terms that are compatible with our growth strategy. Our ability to acquire properties on favorable terms and successfully operate them may be constrained by the following significant risks:
competition from other real estate investors, including REITs and institutional investment funds, which may be able to accept more risk, including higher acquisition prices, than we can prudently manage;
competition from other real estate investors across our acquisition sourcing channels (including brokers, existing tenant relationships, prospective tenant relationships, etc.) that may significantly reduce our acquisition volume or increase the purchase price for a property we acquire;
financing for an acquisition may not be available on favorable terms or at all for potential acquisitions;
significant costs and management attention diverted to evaluate and negotiate potential acquisitions, including ones that we may not subsequently complete;
acquisition of properties that are not and may not become accretive to our results;
cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to debt used to finance the acquisition of such property;
necessary improvements or renovations to acquired properties may exceed budgeted amounts;
market conditions may result in higher than expected vacancy rates and lower than expected rental rates; or
properties acquired may be subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such asclean-up
of undisclosed environmental contamination or claims by tenants, vendors or other persons dealing with the former owners of the properties. Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
The real estate investments made, and expected to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more of our properties in response to changing economic, financial or investment conditions is limited. We may be unable to dispose of properties by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of the jurisdiction in which a property is located.
In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our
properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.
Dispositions of real estate assets could change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.
We evaluate real estate assets for impairment based on the SEC's websiteprojected cash flow of the asset over our anticipated holding period. If we change our intended holding period due to our intention to sell or otherwise dispose of an asset, we must reevaluate whether that asset is impaired under GAAP. Depending on the carrying value of the property at www.sec.gov. Sharesthe time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results.
In the future, we may choose to acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets.
In the future we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in the Operating Partnership, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
High geographic concentration of our properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition.
As of December 31, 2020, 11.1% of our portfolio (as a percentage of ABR) was located in Texas, representing the highest concentration of our assets. We are susceptible to adverse developments in the economic or regulatory environments of the geographic areas in which we concentrate (or in which we may develop a substantial concentration of assets in the future), such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes or costs of complying with governmental regulations.
Our tenants may fail to successfully operate their businesses, which could adversely affect us.
The success of our investments is materially dependent on the financial stability of our tenants’ financial condition and leasing practices. At any given time, our tenants may experience a downturn in their business, including as a result of adverse economic conditions, that may weaken the operating results and financial condition of individual properties or of their business as whole. We depend on our tenants to operate the properties we own in a manner which generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage and pay real estate taxes and maintain the properties in a manner so as not to jeopardize their operating licenses or regulatory status. Although our occupied properties are generally essential to the tenant’s generation of sales and profits, this does not guarantee that a tenant’s operations at a particular property will be successful or that the tenant will be able to meet all of its obligations to us. As a result, a tenant may delay lease commencement, decline to extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy.
Single-tenant leases involve particular and significant risks related to tenant default.
Our strategy focuses primarily on investing in single-tenanttriple-net
leased properties throughout the United States. The financial failure of, or default in payment by, a single tenant under its lease is likely to cause a significant reduction in, or elimination of, our rental revenue from that property and a reduction in the value of the property. We may also experience difficulty or a significant delay inre-leasing
or selling such property. This risk is magnified in situations where we lease multiple properties to a single tenant under a master lease. The failure or default of a tenant under a master lease could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties. Although the master lease structure may be beneficial to us because it restricts the ability of tenants to individually remove underperforming properties from the portfolio of properties leased from us, there is no guarantee that a tenant will not default in its obligations to us or decline to renew its master lease upon expiration.
The bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and material losses to us.
The bankruptcy or insolvency of any of our tenants could diminish the income we receive from that tenant’s lease or leases. A substantial portion our properties are leased to unrated tenants, which may increase the risk that a tenant bankruptcy or insolvency will occur. If a tenant becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease or leases with us. Any claims against such bankrupt tenant for unpaid future rent would be subject to statutory limitations that would likely result in our receipt of rental revenues that are substantially less than the contractually specified rent we are owed under the lease or leases. In addition, any claim we have for unpaid past rent, if any, may not be paid in full. We may also be unable tore-lease
a terminated or rejected space or tore-lease
it on comparable or more favorable terms. Moreover, tenants who are considering filing for bankruptcy protection may request amendments of their master leases to remove certain of the properties they lease from us under such master leases. We cannot guarantee that we will be able to sell orre-lease
such properties or that lease termination fees, if any, received in exchange for such releases will be sufficient to make up for the rental revenues lost as a result of such lease amendments. We face significant competition for tenants, which may decrease or prevent increases of the occupancy and rental rates of our properties.
We compete with numerous developers, owners and operators of properties, many of which own properties similar to ours in the same markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates or to offer more substantial rent abatements, tenant improvements, early termination rights, below-market renewal options or other lease incentive payments in order to retain tenants when our leases expire. Competition for tenants could decrease or prevent increases of the occupancy and rental rates of our properties.
Decrease in demand for traditional retail and restaurant space may materially and adversely affect us.
As of December 31, 2020, leases representing approximately 30.0% and 12.2% of our ABR were with tenants in traditional retail and restaurant industries, respectively, and we may acquire additional properties in the future leased to traditional retail and restaurant tenants. The market for traditional retail and restaurant space has previously been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retail and restaurant companies, the ongoing consolidation in the traditional retail and restaurant industries, the excess amount of traditional retail and restaurant space in a number of markets and, in the case of the traditional retail industry, increasing consumer purchases over the Internet. To the extent that these conditions continue, they are likely to negatively affect market rents for traditional retail and restaurant space.
We may be unable to renew leases, lease vacant space orre-lease
space as leases expire on favorable terms or at all. Our results of operations depend on our ability to strategically lease space in our properties (by renewing orre-leasing
expiring leases and leasing vacant space), optimize our tenant mix or lease properties on more economically favorable terms. As of December 31, 2020, leases representing approximately 2.6% of our ABR will expire during 2021. As of December 31, 2020, seven of our properties, representing approximately 0.4% of our total properties, were vacant. Current tenants may decline, or may not have the financial resources available, to renew current leases and we cannot guarantee that leases that are renewed will have terms that are as economically favorable to us as the expiring lease terms. If tenants do not renew the leases as they expire, we will have to find new tenants to lease our properties and there is no guarantee that we will be able to find new tenants or that our properties will bere-leased
at rental rates equal to or above the current average rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights, below-market renewal options or other lease incentive payments will not be offered to attract new tenants. Many of the leases we enter into or acquire are for properties that are specially suited to the particular business of our tenants. Because these properties have been designed or physically modified for a particular tenant, in addition to increasing the difficulties described above associated with releasing such space, in the event we are required to sell the property, we may have difficulty selling it to a party other than the tenant due to the special purpose for which the property may have been designed or modified. This potential illiquidity
may limit our ability to quickly modify our portfolio in response to changes in economic or other conditions, including tenant demand. We may experience significant costs in connection with renewing, leasing orre-leasing
a significant number of our properties. Our ability to realize future rent increases will vary depending on changes in the CPI.
As of December 31, 2020, approximately 17.5% of our ABR is subject to rent escalators which increase rent by a multiple of any increases in the CPI or the lesser of (a) 1 to 2 times any increase in the CPI over a specified period, (b) a fixed percentage, or (c) a fixed schedule. If the product of any increase in the CPI multiplied by the applicable factor is less than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on a fixed percentage. Therefore, during periods of low inflation or deflation, small increases or decreases in the CPI subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on fixed percentages or amounts. Conversely, if the product of any increase in the CPI multiplied by the applicable factor is more than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on an increase in CPI. Therefore, periods of high inflation subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on CPI increases.
We may be vulnerable to security breaches or cyber-attacks which could disrupt our operations and have a material adverse effect on our financial performance and operating results.
Security breaches, cyber-attacks, or disruption, of our or our third-party service providers’ physical or information technology infrastructure, networks and related management systems could result in, among other things, a breach of our networks and information technology infrastructure, the misappropriation of our or our tenants’ proprietary or confidential information, interruptions or malfunctions in our or our tenants’ operations, delays or interruptions to our ability to meet tenant needs, breach of our legal, regulatory or contractual obligations, inability to access or rely upon critical business records, unauthorized access to our facilities or other disruptions in our operations. Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware; hardware vulnerabilities such as Meltdown and Spectre; accident or human error by our own personnel or third parties; criminal activity or malfeasance (including by our own personnel); fraud or impersonation scams perpetrated against us or our partners or tenants; or security events impacting our third-party service providers or our partners or tenants. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store an increasing amount of tenant data.
We recognize the increasing volume of cyber-attacks and employ commercially practical efforts to provide reasonable assurance such attacks are appropriately mitigated. We may be required to expend significant financial resources to protect against or respond to such breaches. Techniques used to breach security change frequently and are generally not recognized until launched against a target, so we may not be able to promptly detect that a security breach or unauthorized access has occurred. We also may not be able to implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented. As we provide assurances to our tenants that we provide a high level of security, if an actual or perceived security breach occurs, the market’s perception of our security measures could be harmed and we could lose current and potential tenants, and such a breach could be harmful to our brand and reputation. Any breaches that may occur could expose us to increased risk of lawsuits, material monetary damages, potential violations of applicable privacy and other laws, penalties and fines, harm to our reputation and increases in our security and insurance costs. In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. We cannot guarantee that any backup systems, regular data backups, security protocols, network protection mechanisms and other procedures currently in place, or that may be in place in the future, will be adequate to prevent network and service interruption, system failure, damage to one or more of our systems or data loss in the event of a security breach or attack.
In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States. We may not be able to limit our liability or damages in the event of such a loss. Data protection legislation is becoming increasingly common in the United States at both the federal and state level and may require us to further modify our data processing practices and policies. For example, the California
Consumer Privacy Act of 2018, which took effect on January 1, 2020 and is expected to provide California residents with increased privacy rights and protections with respect to their personal information. Compliance with existing, proposed and recently enacted laws and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against the Company by governmental entities or others, fines and penalties, or damage to our reputation and credibility.
Inflation may materially and adversely affect us and our tenants.
Increased inflation could have a negative impact on variable-rate debt we currently have or that we may incur in the future. Our leases typically contain provisions designed to mitigate the adverse impact of inflation on our results of operations. Because tenants are typically required to pay all property operating expenses, increases in property-level expenses at our leased properties generally do not affect us. However, increased operating expenses at vacant properties and the limited number of properties that are not subject to fulltriple-net
leases could cause us to incur additional operating expenses, which could increase our exposure to inflation. Additionally, the increases in rent provided by many of our leases may not keep up with the rate of inflation. Increased costs may also have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us. The market price and trading volume of shares of our common stock may fluctuate or decline.
The market price and trading volume of our common stock may fluctuate widely due to various factors, including:
broad market fluctuations unrelated to our or our competitors’ operating performances;
actual or anticipated variations in our or our competitors’ quarterly operating results or distributions;
publication of research reports about us, our competitors or the real estate industry;
market reaction to any additional indebtedness we incur or debt or equity securities we issue in the future;
additions or departures of key management personnel;
changes in our credit ratings;
the financial condition, performance and prospects of our tenants;
changes in market interest rates in comparison to the distribution yield on shares of our common stock; and
the realization of any of the other risk factors presented in this Annual Report on Form10-K.
We may issue shares of our common stock or other securities without stockholder approval, including shares issued to satisfy REIT distribution requirements. The Operating Partnership may issue partnership interests to third parties, and such partnership interests would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when partnership interests in the Operating Partnership are issued. Our existing stockholders have no preemptive rights to acquire any of these securities, and any issuance of equity securities by us or the Operating Partnership may dilute stockholder investment.
If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate successfully as a public company. We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Any failure to maintain effective controls or timely effect any necessary improvement of our internal control over financial reporting controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect the listing of our common stock on the NYSE. Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.
Loss of our key personnel could materially impair our ability to operate successfully.
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly our President and Chief Executive Officer, Jackson Hsieh, who has extensive market knowledge and relationships and exercises substantial influence over our operational, financing, acquisition and
disposition activity. Many of our other key executive personnel, particularly our executive and senior vice presidents, also have extensive experience and strong reputations in the real estate industry and have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel and arranging necessary financing. In particular, the extent and nature of the relationships that these individuals have developed with financial institutions and existing and prospective tenants is critically important to the success of our business. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry personnel, which could materially and adversely affect us.
Costs of compliance with, or liabilities related to, environmental laws may materially and adversely affect us.
The properties we own or have owned in the past may subject us to known and unknown environmental liabilities. Under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages, which may be substantial, resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under or migrating from such property, including costs to investigate, clean up such contamination and liability for harm to natural resources. We may face liability regardless of:
| | |
• our knowledge of the contamination; • the timing of the contamination; | | • the cause of the contamination; or • the party responsible for the contamination of the property. |
The presence of hazardous substances on a property may adversely affect our ability to sell, lease or improve the property or to borrow using the property as collateral. In addition, environmental laws may create liens on contaminated properties in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which they may be used or businesses may be operated, and these restrictions may require substantial expenditures.
Although we may obtain insurance for environmental liability for certain properties that are deemed to warrant coverage, our insurance may be insufficient to address any particular environmental situation and we may be unable to continue to obtain insurance for environmental matters, at a reasonable cost or at all, in the future. If our environmental liability insurance is inadequate, we may become subject to material losses for environmental liabilities. Our ability to receive the benefits of any environmental liability insurance policy will depend on the financial stability of our insurance company and the position it takes with respect to our insurance policies.
Insurance on our properties may not cover all losses, which could materially and adversely affect us.
Our tenants are required to maintain liability and property insurance coverage for the properties they lease from us pursuant totriple-net
leases. Pursuant to such leases, our tenants are generally required to name us (and any of our lenders that have a mortgage on the property leased by the tenant) as additional insureds on their liability policies and additional insured and/or loss payee (or mortgagee, in the case of our lenders) on their property policies. All tenants are required to maintain casualty coverage and most carry limits at 100% of replacement cost. Depending on the location of the property, losses of a catastrophic nature, such as those caused by earthquakes and floods, may be covered by insurance policies that are held by our tenant with limitations such as large deductibles orco-payments
that a tenant may not be able to meet. In addition, losses of a catastrophic nature, such as those caused by wind/hail, hurricanes, terrorism or acts of war, may be uninsurable or not economically insurable. In the event there is damage to our properties that is not covered by insurance and such properties are subject to recourse indebtedness, we will continue to be liable for the indebtedness, even if these properties are irreparably damaged. Inflation, changes in building codes and ordinances, environmental considerations, and other factors, including terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed. In that situation, the insurance proceeds received may not be adequate to restore our economic position with respect to the affected real property. Furthermore, in the event we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications without significant capital expenditures which may exceed any amounts received pursuant to insurance policies, as reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements. The loss of our capital investment in or anticipated future returns from our properties due to material uninsured losses could materially and adversely affect us.
Compliance with the ADA and fire, safety and other regulations may require us to make unanticipated expenditures that materially and adversely affect us.
Our properties are subject to the ADA, fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. While our tenants are obligated by law to comply with the ADA and typically obligated under our leases and financing agreements to cover costs associated with compliance, if required changes involve greater expenditures than anticipated or if the changes must be made on a more accelerated basis than anticipated, our tenants’ ability to cover the costs could be adversely affected. We may be required to expend our own funds to comply with the provisions of the ADA. We may be required to make substantial capital expenditures to comply with these requirements and may be required to obtain approvals from various authorities with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. Additionally, failure to comply with any of these requirements could result in the imposition of fines by governmental authorities or awards of damages to private litigants. While we intend to only acquire properties that we believe are currently in substantial compliance with all regulatory requirements, these requirements may change and new requirements may be imposed which would require significant unanticipated expenditures by us.
RISKS RELATED TO OUR CAPITAL STRUCTURE
Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all.
To maintain our qualification as a REIT, we are required to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we are subject to federal corporate income tax to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gain. Because of these distribution requirements, we may not be able to fund future capital needs, including acquisition financing, from operating cash flow and may have to rely on third-party sources. We may not be able to obtain the financing on favorable terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:
general market conditions;
the market’s perception of our growth potential;
our current and expected future earnings;
our cash flow and cash distributions; and
the market price per share of our common stock.
If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
In recent history, we have raised a significant amount of debt through senior unsecured debt securities. We have generally used the proceeds from these financings to repay debt and fund real estate acquisitions. No assurance can be given that we will have access to the capital markets in the future at times and on terms that are acceptable to us, whether to refinance existing debt or to raise additional debt capital.
We have significant indebtedness outstanding, which may expose us to risk of default under our debt obligations, limit our ability to obtain additional financing or affect the market price of our common stock or debt securities.
As of December 31, 2020, the total principal balance outstanding on our indebtedness was approximately $2.5 billion, of which the $178.0 million outstanding under the 2020 Term Loan Agreement incurs interest at a variable rate. We may also incur significant additional debt to finance future investment activities. Payments of principal and interest on borrowings may leave us with insufficient cash resources to meet our cash needs or make the distributions to our common stockholders necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:
our cash flow may be insufficient to meet our required principal and interest payments;
cash interest expense and financial covenants relating to our indebtedness may limit or eliminate our ability to make distributions to our common stockholders;
we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to capitalize upon acquisition opportunities or meet operational needs;
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;
increases in interest rates could increase our interest expense for our variable interest rate debt;
we may be unable to hedge floating rate debt, counterparties may fail to honor their obligations under any hedge agreements we enter into, such agreements may not effectively hedge interest rate fluctuation risk, and, upon the expiration of any hedge agreements we enter into, we would be exposed to then-existing market rates of interest and future interest rate volatility;
we may be forced to dispose of properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;
we may default on our obligations and the lenders may foreclose on our properties or our interests in the entities that own the properties that secure their loans and receive an assignment of rents and leases;
we may be restricted from accessing some of our excess cash flow after debt service if certain of our tenants fail to meet certain financial performance metric thresholds;
we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and
our default under any loan with cross-default provisions could result in a default on other indebtedness.
Changes in our leverage ratios may also negatively impact the market price of our equity or debt securities. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
The agreements governing our indebtedness contain restrictions and covenants which may limit our ability to enter into or obtain funding for certain transactions, operate our business or make distributions to our preferred and common stockholders.
The agreements governing our indebtedness contain restrictions and covenants that limit or will limit our ability to operate our business. These covenants, as well as any additional covenants to which we may be subject in the future because of additional indebtedness, could cause us to forgo investment opportunities, reduce or eliminate distributions to our preferred and common stockholders or obtain financing that is more expensive than financing we could obtain if we were not subject to the covenants. In addition, the agreements may have cross-default provisions, which provide that a default under one of our financing agreements would lead to a default on some or all of our debt financing agreements. The covenants and other restrictions under our debt agreements affect, among other things, our ability to:
sell or substitute assets;
modify certain terms of our leases;
prepay debt with higher interest rates;
manage our cash flows; and
make distributions to equity holders.
Additionally, these restrictions may adversely affect our operating and financial flexibility and may limit our ability to respond to changes in our business or competitive environment, all of which may materially and adversely affect us.
Current market conditions could adversely affect our ability to refinance existing indebtedness or obtain additional financing for growth on acceptable terms or at all.
The credit markets can experience significant price volatility, displacement and liquidity disruptions, including the bankruptcy, insolvency or restructuring of certain financial institutions. These circumstances could materially impact liquidity in the financial markets, making financing terms for borrowers less attractive, and in certain cases, result in the unavailability of various types of debt financing. As a result, we may be unable to obtain debt financing on favorable terms or at all or fully refinance maturing indebtedness with new indebtedness. We primarily use external financing to fund acquisitions and to refinance indebtedness as it matures. Reductions in our available borrowing capacity or inability to obtain credit when required or when business conditions warrant could materially and adversely affect us, and we could be forced to limit our acquisition activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets.
Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. Higher interest rates on newly incurred debt may negatively impact our acquisition yields, earnings per share and cash flow as well. If interest rates increase, our interest costs and overall costs of capital will increase, which could materially and adversely affect us. Total debt service, including scheduled principal maturities and interest, for 2021 and 2022 is $280.7 million and $87.7 million, respectively. Debt service includes the final balloon repayment of $190.4 million for the 2021 Notes in 2021.
Changes in market interest rates may adversely impact our variable debt expenses.
The 2019 Credit Facility incurs interest at a variable rate using LIBOR and, as such, our interest expense will increase with increases in LIBOR. Further, in 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. If LIBOR ceases to exist after 2021, a comparable or successor reference rate as approved under the 2019 Revolving Credit and Term Loan Agreement will apply or such other reference rate as may be agreed by the Company and the lenders under the respective agreements will apply. To the extent these interest rates are less favorable than LIBOR, our interest expense will increase.
Some of our financing arrangements involve balloon payment obligations.
Some of our financings require us to make alump-sum
or “balloon” payment at maturity, including $190.4 million in 2021. Our ability to make any balloon payment is uncertain and may depend on our ability to obtain additional financing or our ability to sell our properties. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell our properties at a price sufficient to make the balloon payment, if at all. If the balloon payment is refinanced at a higher rate, it will reduce or eliminate any income from our properties. In addition, if we are unable to refinance these maturities or otherwise retire the indebtedness, we could be forced to relinquish the related collateral. RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction, even if such a change in control may be in the interest of our stockholders.
Our charter contains certain restrictions on ownership and transfer of our stock.
discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; or
result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
We could increase the number of authorized shares of stock, classify and reclassifyun-issued
stock and issue stock without stockholder approval un-issued
shares of our common stock or preferred stock and to classify or reclassify anyun-issued
shares of our common stock or preferred stock into one or more classes or series of stock and to set the terms of such newly classified or reclassified shares. As a result, we may issue one or more series or classes of common stock or preferred stock with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of our common stockholders. Although our Board of Directors has no such intention at the present time, it could establish a class or series of common stock or preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or
| more of the voting power of our shares or of an affiliate of ours or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within atwo-year period immediately prior to the date in question) or any affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super-majority and stockholder voting requirements on these combinations; and |
“control share” provisions that provide that a holder of “control shares” of our Company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control shares”) has no voting rights with respect to those shares except to the extent approved by our stockholders by the affirmative vote of at leasttwo-thirds
of all the votes entitled to be cast on the matter, excluding all interested shares. As permitted by the MGCL, we have elected, by resolution of our Board of Directors, to opt out of the business combination provisions of the MGCL and, pursuant to a provision in our bylaws, to exempt any acquisition of our stock from the control share provisions of the MGCL. However, our Board of Directors may by resolution elect to repeal the exemption from the business combination provisions of the MGCL and may by amendment to our bylaws opt into the control share provisions of the MGCL at any time in the future, whether before or after an acquisition of control shares.
Certain provisions of the MGCL set forth in Title 3, Subtitle 8 of the MGCL (“Subtitle 8”) permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. These provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could be in the best interests of our stockholders. Our charter contains a provision whereby we have elected, at such time as we became eligible to do so, to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our Board of Directors only by the remaining directors. Our Board of Directors has adopted a resolution prohibiting us from electing to be subject to the provisions of Subtitle 8 relating to a classified board unless such election is first approved by our stockholders by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
As permitted by Maryland law, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:
actual receipt of an improper benefit or profit in money, property or services; or
active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist. Accordingly, in the event that actions taken by any of our directors or officers impede the performance of our company, our stockholders’ and our ability to recover damages from such director or officer may be limited. In addition, our charter authorizes us to obligate our company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those and certain other capacities to the maximum extent permitted by Maryland law.
RISKS RELATED TO TAXES AND OUR STATUS AS A REIT
Failure to qualify as a REIT would materially and adversely affect us and the value of our common stock.
We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2005 and we intend to continue operating in such a manner. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT and the statements in this Annual Report on Form10-K
are not binding on the IRS or any court. Therefore, we cannot guarantee that we have qualified as a REIT or that we will remain qualified as such in the future. If we lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because: we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
we could be subject to the federal alternative minimum tax for tax years prior to 2018 and increased state and local taxes; and
unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In addition, if we fail to qualify as a REIT, we will not be required to make distributions to our stockholders. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could materially and adversely affect the trading price of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, requirements regarding the composition of our assets and requirements regarding the sources of our income. Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.
In addition, legislation, new regulations, administrative interpretations or court decisions may materially and adversely affect our investors, our ability to qualify as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, our TRSs will be subject to income tax as regular corporations in the jurisdictions in which they operate.
If SMTA failed to qualify as a REIT, we could cease to qualify as a REIT and suffer other adverse consequences.
If SMTA failed to qualify as a REIT for any taxable year, such failure to qualify as a REIT could adversely affect our ability to qualify as a REIT. If SMTA failed to qualify as a REIT during the year of theSpin-Off,
the income recognized by us in connection with theSpin-Off
would not have constituted qualifying income for purposes of the 75% gross income test, which could have adversely affected our ability to qualify as a REIT for such year. In addition, if SMTA failed to qualify as a REIT for any period, the SMTA Preferred Stock would not have qualified as a real estate asset for purposes of the REIT asset tests or produced qualifying income for purposes of the REIT 75% gross income test for such period. In such case, our ownership of the SMTA Preferred Stock during such period could adversely affect our ability to qualify as a REIT, unless we are entitled to relief under an applicable cure provision. If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.
We believe the Operating Partnership is currently treated as a partnership for federal income tax purposes. As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, such partner’s share of its income. We cannot assure you that the IRS will not challenge the status of the Operating Partnership or any other subsidiary partnership or limited liability company in which we own an interest as a disregarded entity or partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership or any such other subsidiary partnership or limited liability company as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of the Operating Partnership or any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted onarm’s-length
terms. We own securities in TRSs and may acquire securities in additional TRSs in the future. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary ornon-customary
services to tenants of its parent REIT. A TRS is subject to federal income tax as a regular C corporation. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on anarm’s-length
basis. A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 25% of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% of the value of our total assets may be represented by securities of TRSs. We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that we own will be less than 25% (or 20%, as applicable) of the value of our total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations. In addition, we intend to structure our transactions with any TRSs that we own to ensure that they are entered into onarm’s-length
terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax. The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status or require us to make an unexpected distribution.
The IRS may take the position that specific sale-leaseback transactions that we treat as leases are not true leases for federal income tax purposes but are, instead, financing arrangements or loans. If a sale-leaseback transaction were sore-characterized,
we might fail to satisfy the REIT asset tests, the income tests or distribution requirements and consequently lose our REIT status effective with the year ofre-characterization
unless we elect to make an additional distribution to maintain our REIT status. The primary risk relates to our loss of previously incurred depreciation expenses, which could affect the calculation of our REIT taxable income and could cause us to fail the REIT distribution test that requires a REIT to distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In this circumstance, we may elect to distribute an additional dividend of the increased taxable income so as not to fail the REIT distribution test. This distribution would be paid to all stockholders at the time of declaration rather than the stockholders existing in the taxable year affected by there-characterization.
We may be forced to borrow funds to maintain our REIT status, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could materially and adversely affect us.
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard to the dividends paid deduction and excluding any net capital gains, and we will be subject to regular corporate income taxes on our undistributed taxable income to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. In order to maintain our REIT status and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of cash and recognition of income for federal income tax purposes, or the effect ofnon-deductible
capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distributions to our stockholders, and per share trading price of our common stock.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares.
Dividends treated as “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Under the 2017 Tax Legislation, however, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks ofnon-REIT
corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock. The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the nature and diversification of our assets, the sources of our income and the amounts we distribute to our stockholders. We may be required to liquidate or forgo otherwise attractive investments in order to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Accordingly, satisfying the REIT requirements could materially and adversely affect us. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, or to repay obligations to our lenders, we may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.
If we acquire C corporations in carry-over basis transactions, we may inherit material tax liabilities and other tax attributes from such acquired corporations, and we may be required to distribute earnings and profits.
From time to time, we have and may continue to acquire C corporations in transactions in which the basis of the corporations’ assets in our hands is determined by reference to the basis of the assets in the hands of the acquired corporations, or carry-over basis transactions.
If we acquire any asset from a corporation that is or has been a C corporation in a carry-over basis transaction, and we subsequently recognize gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we will be required to pay tax at the regular corporate tax rate on this gain to the extent of the excess of (1) the fair market value of the asset over (2) our adjusted basis in the asset, in each case determined as of the date on which we acquired the asset. Any taxes we pay as a result of such gain would reduce the amount available for distribution to our stockholders. The imposition of such tax may require us to forgo an otherwise attractive disposition of any assets we acquire from a C corporation in a carry-over basis transaction, and as a result may reduce the liquidity of our portfolio of investments. In addition, in such a carry-over basis transaction, we will succeed to any tax liabilities and earnings and profits of the acquired C corporation. To qualify as a REIT, we must distribute anynon-REIT
earnings and profits by the close of the taxable year in which such transaction occurs. Any adjustments to the acquired
corporation’s income for taxable years ending on or before the date of the transaction, including as a result of an examination of the corporation’s tax returns by the IRS, could affect the calculation of the corporation’s earnings and profits. If the IRS were to determine that we acquirednon-REIT
earnings and profits from a corporation that we failed to distribute prior to the end of the taxable year in which the carry-over basis transaction occurred, we could avoid disqualification as a REIT by paying a “deficiency dividend.” Under these procedures, we generally would be required to distribute any suchnon-REIT
earnings and profits to our stockholders within 90 days of the determination and pay a statutory interest charge at a specified rate to the IRS. Such a distribution would be in addition to the distribution of REIT taxable income necessary to satisfy the REIT distribution requirement and may require that we borrow funds to make the distribution even if the then-prevailing market conditions are not favorable for borrowings. In addition, payment of the statutory interest charge could materially and adversely affect us. Legislative or other actions affecting REITs could have a negative effect on us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
The 2017 Tax Legislation significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. The legislation remains unclear in many respects and has been and may continue to be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and IRS, any of which could lessen or increase the impact of the legislation.
Item 1B. Unresolved Staff Comments
PROPERTY PORTFOLIO DIVERSIFICATION
| | | | | | | | |
| 1,860 | | 99.6% | | 48 | | 301 | | 28 |
| Owned Properties | | Occupancy | | States | | Tenants | | Retail Industries |
Diversification By Tenant
The following table sets forth a summary of tenant concentration for our owned real estate properties as of December 31, 2020:
| | | | | | | | | | | | |
| | | | | | | | | |
| | | |
| | | 7 | | | | 685 | | | | 3.0 | % |
| | | |
| | | 163 | | | | 234 | | | | 2.5 | % |
| | | |
BJ’s Wholesale Club, Inc. | | | 8 | | | | 912 | | | | 2.2 | % |
| | | |
| | | 7 | | | | 848 | | | | 2.2 | % |
| | | |
| | | 13 | | | | 1,597 | | | | 2.2 | % |
| | | |
Alimentation Couche-Tard, Inc. | | | 76 | | | | 230 | | | | 2.1 | % |
| | | |
| | | 34 | | | | 487 | | | | 2.0 | % |
| | | |
| | | 110 | | | | 304 | | | | 2.0 | % |
| | | |
| | | 106 | | | | 927 | | | | 1.9 | % |
| | | |
| | | 33 | | | | 409 | | | | 1.7 | % |
| | | |
| | | 1,296 | | | | 33,405 | | | | 78.2 | % |
| | | |
| | | 7 | | | | 641 | | | | — | |
| | | |
| | | | | | | | | | | | |
| (1) | Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above. |
The following table sets forth a summary of lease expirations for our owned real estate as of December 31, 2020. As of December 31, 2020, the weighted average remainingnon-cancellable
initial term of our leases (based on ABR) was 10.1 years. The information set forth in the table assumes that tenants do not exercise renewal options or any early termination rights: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | |
| | | 47 | | | $ | 13,028 | | | | 1,363 | | | | 2.6 | % |
| | | | |
| | | 40 | | | | 16,548 | | | | 1,599 | | | | 3.2 | % |
| | | | |
| | | 113 | | | | 32,049 | | | | 3,034 | | | | 6.3 | % |
| | | | |
| | | 47 | | | | 17,916 | | | | 1,557 | | | | 3.5 | % |
| | | | |
| | | 52 | | | | 19,334 | | | | 1,517 | | | | 3.8 | % |
| | | | |
| | | 108 | | | | 38,149 | | | | 3,724 | | | | 7.5 | % |
| | | | |
| | | 131 | | | | 40,635 | | | | 2,984 | | | | 8.0 | % |
| | | | |
| | | 106 | | | | 28,727 | | | | 1,798 | | | | 5.6 | % |
| | | | |
| | | 320 | | | | 42,692 | | | | 2,836 | | | | 8.4 | % |
| | | | |
| | | 77 | | | | 22,022 | | | | 2,220 | | | | 4.3 | % |
| | | | |
| | | 812 | | | | 238,516 | | | | 17,406 | | | | 46.8 | % |
| | | | |
| | | 7 | | | | — | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | | | |
| (1) | ABR is not adjusted for the impact of abatements provided as relief due to theCOVID-19 pandemic. As of the date of this report, SRC has agreed to a total of $1.0 million of abatements for the period from January 1, 2021 - December 31, 2021. |
Diversification By Geography
The following table sets forth a summary of geographic concentration for our owned real estate properties as of December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 247 | | | | 4,413 | | | | 11.1 | % | | New Jersey | | | 13 | | | | 717 | | | | 1.3 | % |
| | | 154 | | | | 2,533 | | | | 8.8 | % | | Utah | | | 18 | | | | 333 | | | | 1.2 | % |
| | | 138 | | | | 2,583 | | | | 6.8 | % | | Pennsylvania | | | 20 | | | | 483 | | | | 1.1 | % |
| | | 86 | | | | 2,396 | | | | 5.1 | % | | Alaska | | | 9 | | | | 319 | | | | 1.0 | % |
| | | 23 | | | | 1,199 | | | | 4.2 | % | | New Hampshire | | | 17 | | | | 645 | | | | 1.0 | % |
| | | 107 | | | | 1,846 | | | | 4.0 | % | | Wisconsin | | | 12 | | | | 696 | | | | 0.9 | % |
| | | 86 | | | | 1,700 | | | | 3.9 | % | | Idaho | | | 16 | | | | 273 | | | | 0.9 | % |
| | | 52 | | | | 1,295 | | | | 3.8 | % | | Kansas | | | 17 | | | | 341 | | | | 0.8 | % |
| | | 33 | | | | 1,924 | | | | 3.5 | % | | Connecticut | | | 5 | | | | 686 | | | | 0.7 | % |
| | | 67 | | | | 1,552 | | | | 3.2 | % | | Maine | | | 27 | | | | 85 | | | | 0.5 | % |
| | | 47 | | | | 835 | | | | 2.9 | % | | Washington | | | 7 | | | | 125 | | | | 0.4 | % |
| | | 55 | | | | 852 | | | | 2.9 | % | | West Virginia | | | 13 | | | | 202 | | | | 0.4 | % |
| | | 68 | | | | 1,312 | | | | 2.7 | % | | Delaware | | | 2 | | | | 128 | | | | 0.4 | % |
| | | 94 | | | | 715 | | | | 2.5 | % | | Nebraska | | | 8 | | | | 218 | | | | 0.4 | % |
| | | 44 | | | | 1,335 | | | | 2.5 | % | | Montana | | | 3 | | | | 152 | | | | 0.4 | % |
| | | 10 | | | | 721 | | | | 2.4 | % | | Massachusetts | | | 2 | | | | 131 | | | | 0.4 | % |
| | | 24 | | | | 902 | | | | 2.2 | % | | Iowa | | | 11 | | | | 190 | | | | 0.3 | % |
| | | 27 | | | | 991 | | | | 2.0 | % | | North Dakota | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 54 | | | | 935 | | | | 2.0 | % | | Rhode Island | | | 3 | | | | 95 | | | | 0.3 | % |
| | | 53 | | | | 753 | | | | 2.0 | % | | Oregon | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 39 | | | | 1,517 | | | | 1.9 | % | | South Dakota | | | 2 | | | | 30 | | | | 0.2 | % |
| | | 29 | | | | 622 | | | | 1.8 | % | | Wyoming | | | 1 | | | | 35 | | | | 0.1 | % |
| | | 43 | | | | 538 | | | | 1.6 | % | | U.S. Virgin Islands | | | 1 | | | | 38 | | | | 0.1 | % |
| | | 42 | | | | 637 | | | | 1.4 | % | | Vermont | | | 1 | | | | 2 | | | | * | |
| | | 24 | | | | 439 | | | | 1.4 | % | | | | | | | | | | | | | | |
Diversification By Asset Type and Tenant Industry
The following table sets forth a summary of concentration by asset types and, for retail assets, the tenant industry of our owned properties as of December 31, 2020:
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | Health and Fitness | | | 44 | | | | 2,329 | | | | 7.7 | % |
| | | | |
| | Convenience Stores | | | 329 | | | | 1,046 | | | | 7.6 | % |
| | | | |
| | Restaurants - Quick Service | | | 361 | | | | 791 | | | | 6.4 | % |
| | | | |
| | Restaurants - Casual Dining | | | 134 | | | | 940 | | | | 5.8 | % |
| | | | |
| | Movie Theaters | | | 37 | | | | 1,953 | | | | 5.1 | % |
| | | | |
| | Dealerships | | | 29 | | | | 953 | | | | 4.4 | % |
| | | | |
| | Drug Stores / Pharmacies | | | 77 | | | | 991 | | | | 4.4 | % |
| | | | |
| | Entertainment | | | 24 | | | | 1,022 | | | | 3.4 | % |
| | | | |
| | Car Washes | | | 65 | | | | 308 | | | | 3.2 | % |
| | | | |
| | Dollar Stores | | | 172 | | | | 1,576 | | | | 3.1 | % |
| | | | |
| | Grocery | | | 36 | | | | 1,654 | | | | 3.0 | % |
| | | | |
| | Home Improvement | | | 14 | | | | 1,595 | | | | 2.9 | % |
| | | | |
| | Warehouse Club and Supercenters | | | 14 | | | | 1,543 | | | | 2.8 | % |
| | | | |
| | Home Décor | | | 16 | | | | 2,147 | | | | 2.7 | % |
| | | | |
| | Specialty Retail | | | 53 | | | | 1,142 | | | | 2.3 | % |
| | | | |
| | Sporting Goods | | | 18 | | | | 1,026 | | | | 2.2 | % |
| | | | |
| | Automotive Service | | | 69 | | | | 578 | | | | 2.2 | % |
| | | | |
| | Department Stores | | | 15 | | | | 1,334 | | | | 1.9 | % |
| | | | |
| | Home Furnishings | | | 18 | | | | 783 | | | | 1.7 | % |
| | | | |
| | Early Education | | | 35 | | | | 384 | | | | 1.5 | % |
| | | | |
| | Automotive Parts | | | 55 | | | | 388 | | | | 1.1 | % |
| | | | |
| | Office Supplies | | | 16 | | | | 351 | | | | 0.7 | % |
| | | | |
| | Other | | | 9 | | | | 294 | | | | 0.7 | % |
| | | | |
| | Medical Office | | | 5 | | | | 65 | | | | 0.5 | % |
| | | | |
| | Pet Supplies and Service | | | 4 | | | | 133 | | | | 0.4 | % |
| | | | |
| | Apparel | | | 4 | | | | 92 | | | | 0.2 | % |
| | | | |
| | Vacant | | | 7 | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
Fromwe may be subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
MARKET INFORMATION FOR COMMON STOCK, HOLDERS OF RECORD AND DIVIDEND POLICY
Spirit Realty Capital, Inc.
Our common stock is traded on the NYSE under the symbol “SRC.” As of February 16, 2021, there were approximately 2,139 stockholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
We intend to pay regular quarterly dividends to our stockholders, although all future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant.
Spirit Realty Capital, Inc. directly or indirectly owns all of Spirit Realty, L.P.’s partnership units. Therefore, there is no established trading market for Spirit Realty, L.P.’s partnership units.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
Spirit Realty Capital, Inc.
No sales of unregistered securities. Gross proceeds of $330.2 million from sales of registered securities during the fourth quarter of 2020 were used for funding acquisitions, operating expenses and payment of interest and principal on current debt financings.
ISSUER PURCHASES OF EQUITY SECURITIES
Spirit Realty Capital, Inc.
EQUITY COMPENSATION PLAN INFORMATION
Our equity compensation plan information required by this item will be included in the Proxy Statement to be filed relating to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.
The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of RegulationS-K,
or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act. The following graph shows our cumulative total stockholder return for the five most recent fiscal years, with stock prices retroactively adjusted for theSpin-Off
of SMTA. The graph assumes a $100 investment in each of the indices on December 31, 2015 and the reinvestment of all cash dividends. Our stock price performance shown in the following graph is not indicative of future stock price performance. | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Spirit Realty Capital, Inc. | | $ | 100.00 | | | $ | 115.82 | | | $ | 100.46 | | | $ | 99.82 | | | $ | 147.33 | | | $ | 129.70 | |
| | $ | 100.00 | | | $ | 109.54 | | | $ | 130.81 | | | $ | 122.65 | | | $ | 158.07 | | | $ | 183.77 | |
NAREIT US Equity REIT Index | | $ | 100.00 | | | $ | 108.52 | | | $ | 114.19 | | | $ | 108.91 | | | $ | 137.23 | | | $ | 126.25 | |
Item 1. Business6. Selected Financial Data
THE COMPANYThe following tables set forth, on a historical basis, selected financial and operating data for the Company. The following data should be read in conjunction with our financial statements and notes thereto and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form10-K.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | | | | |
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | | | $ | 424,260 | | | $ | 420,003 | |
| | | 678 | | | | 69,218 | | | | 15,838 | | | | — | | | | — | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | | | | 54,998 | | | | 48,651 | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | | | | 28,487 | | | | 26,045 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | | | | 113,394 | | | | 118,690 | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | | | | 40,428 | | | | 28,638 | |
Net income attributable to common stockholders | | | 16,358 | | | | 164,916 | | | | 121,700 | | | | 74,618 | | | | 97,446 | |
Net income from continuing operations per common share—diluted | | | 0.15 | | | | 1.81 | | | | 1.58 | | | | 0.40 | | | | 0.30 | |
Dividends declared per common share issued (1) | | | 2.50 | | | | 2.50 | | | | 3.05 | | | | 3.60 | | | | 3.53 | |
Weighted average shares of common stock outstanding—diluted (1) | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | | | | 93,588,560 | | | | 93,849,250 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 285,716 | | | $ | 305,052 | | | $ | 322,359 | | | $ | 367,296 | | | $ | 394,952 | |
| | | 309,447 | | | | 341,731 | | | | 346,323 | | | | 398,148 | | | | 412,999 | |
Number of properties at period end | | | 1,860 | | | | 1,795 | | | | 1,514 | | | | 2,480 | | | | 2,615 | |
Owned properties occupancy at period end (based on number of properties) | | | 99.6 | % | | | 99.7 | % | | | 99.7 | % | | | 99.2 | % | | | 98.2 | % |
| (1) | Adjusted for the reverse stock split effected in 2018. |
| (2) | See the definitions and reconciliation ofnon-GAAP measures in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations –Non-GAAP Financial Measures.” |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Gross investments, including related lease intangibles | | $ | 6,805,437 | | | $ | 6,175,703 | | | $ | 5,123,631 | | | $ | 7,903,025 | | | $ | 8,247,654 | |
Net investments, including related lease intangibles | | | 5,821,628 | | | | 5,341,228 | | | | 4,396,098 | | | | 6,614,025 | | | | 7,090,335 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | | | | 14,493 | | | | 8,798 | | | | 10,059 | |
| | | 6,396,786 | | | | 5,832,661 | | | | 5,096,316 | | | | 7,263,511 | | | | 7,677,971 | |
| | | 2,506,341 | | | | 2,153,017 | | | | 2,054,637 | | | | 3,639,680 | | | | 3,664,628 | |
| | | 2,795,666 | | | | 2,419,412 | | | | 2,294,567 | | | | 3,943,902 | | | | 3,995,863 | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | | | | 2,801,749 | | | | 3,319,609 | | | | 3,682,108 | |
| (1) | Balances include assets and liabilities of both continuing operations and discontinued operations. Reference Note 12 to the accompanying consolidated financial statements for additional information. |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol “SRC.” We are a self-administered and self-managed REIT with
in-house
capabilities including
acquisition, credit research, asset management,
acquistion, credit,portfolio management, real estate research,
legal, finance
IT and accounting functions. We primarily invest in single-tenant
operationally essential real estate
assets throughout the
U.S.,United States, which
isare generally acquired through sale-leaseback transactions and subsequently leased on a long-term,
triple-net
basis to
high-qualityhigh quality tenants with business operations within
predominantly retail,
but alsoindustrial, office and
industrial property types. We began operations through a predecessor legal entity in 2003, which became a public company in December 2004other industries. Single tenant, operationally essential real estate consists of properties that are free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and
was subsequently taken private in August 2007 byprofits. Under a
consortium of private investors. On September 25, 2012, we completed our initial public offering and on July 17, 2013, we completedtriple-net
lease, the
acquisition of Cole II through the Merger. The surviving entity, which was renamed Spirit Realty Capital, Inc., began trading on the NYSE under the symbol "SRC." Cole II was the "legal acquirer" in the Mergertenant is typically responsible for
certain legal and regulatory matters and the Corporation was deemed the "accounting acquirer" in the Merger for accounting and financial reporting purposes, including the financial information set forth herein. On May 31, 2018, the Company completed the Spin-Off of SMTA which included all
of the assets that collateralize Master Trust 2014, all of the Company's properties leased to Shopko, and certain other assets.
In conjunction with the Spin-Off, the Company entered into the Asset Management Agreement with SMTA, pursuant to which the Company acts as external asset manager for SMTAimprovements and is entitledcontractually obligated to an annual management fee of $20.0 million per annum.pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs.
As of December 31, 2018,2020, our undepreciated gross investment inowned real estate and loans totaled approximately $5.12 billion, representingrepresented investments in 1,5141,860 properties. Our properties includingare leased to 301 tenants across 48 states and 28 retail industries. As of December 31, 2020, our owned properties securing our mortgage loans. Of this amount, 99.1% consistedwere approximately 99.6% occupied (based on the number of our gross investment in real estate, representing ownership of 1,462 properties, and the remaining 0.9% consisted primarily of commercial mortgage loans receivable secured by 52 real properties. See Item 2. "Properties - Our Real Estate Investment Portfolio" for further information on our properties and tenants.economically yielding properties).
Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners, and together own the remaining 99% of the Operating Partnership.
Although the Operating Partnership is wholly-owned by us, in the future, we may issue partnership interests in the Operating Partnership to third parties in exchange for assetsproperty owned by such third parties. In general, any partnership interests ofin the Operating Partnership issued to third parties would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when such partnership interests in the Operating Partnership are issued.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner.
On May 31, 2018, we completed aSpin-Off
of all our interests in the assets that collateralized Master Trust 2014, our properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, SMTA. In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of $20.0 million. In September 2019, SMTA sold the assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the Interim Management Agreement, we were entitled to receive $1 million during the initialone-year
term and $4 million for any renewalone-year
term to manage and liquidate the remaining SMTA assets. The Interim Management Agreement was terminated effective September 4, 2020 and we have no further continuing involvement with SMTA. Given the onset of theCOVID-19
pandemic in 2020, many of our tenants requested rent deferrals or other forms of relief. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness and hotels. These and other industries may be further impacted in the future depending on various factors, including the duration of theCOVID-19
pandemic, the reinstitution of restrictions intended to prevent its spread or the imposition of new, more restrictive measures. Even after such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk ofCOVID-19
transmission and heightened sensitivity to risks associated with the transmission of other diseases. For the year ended December 31, 2020, we deferred $31.9 million of rent, of which we recognized $26.3 million in rental income (the remaining $5.6 million was deemed not probable of collection), and abated $6.3 million of rent. As of December 31, 2018,2020, we had 89 employees,an accounts receivable balance of $20.2 million related to deferred rent. For the year
ended December 31, 2021, we expect to see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. For rent deferrals, the deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as
well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. Refer to Part I, Item 1A. “Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are determined in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, the collectability of receivables and asset impairment analysis. Set forth below are the more critical accounting policies that require management judgment and estimates in the preparation of our consolidated financial statements. See Notes 2 and 8 to the consolidated financial statements for additional details.
Purchase Accounting and Acquisition of Real Estate; Lease Intangibles
We evaluate a number of factors in estimating fair value of real estate acquisitions, including building age, building location, building condition, rent comparables from similar properties, and terms ofin-place
leases, if any. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above or below-market leases.In-place
lease intangibles are valued based on our estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. We then allocate the purchase price (including acquisition and closing costs) to land, building, improvements and equipment based on their relative fair values. For properties acquired within-place
leases, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values. Above and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and our estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in certain instances, over the renewal period. Rental Income: Cash and Straight-line Rent
We primarily lease real estate to our tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, we assess the terms and conditions of the lease to determine the appropriate lease term and do not include options to extend, terminate or purchase in our evaluation for lease classification purposes or for recognizing rental income unless we are reasonably certain the tenant will exercise the option. Lease classification also requires an estimation of the residual value of the property at the end of the lease term. For acquisitions, we use the estimated tangible fair value of the property at the date of acquisition. For lease modifications, we generally use sales comparables or a direct capitalization approach to determine fair value. Our leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. For leases with contingent rent escalators, increases in rental revenue are recognized when the changes in the rental rates have occurred. Some of our leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized when the change in the factor on which the contingent lease payment is based actually occurs.
In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic, noting that the underlying premise in requiring a modified lease to be accounted for as if it
were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). We made this election and account for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Rental income, including deferred rent, is subject to an evaluation for collectability, which includes our estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. We do not recognize rental income for amounts that are not probable of collection.
We review our real estate investments and related lease intangibles periodically for indicators of impairment including, but not limited to: the asset being held for sale, vacant ornon-operating,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, we then evaluate if its carrying amount may not be recoverable. We consider factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows. Impairment is calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. The fair values of real estate and intangible assets are determined using the following information, depending on availability, in order of preference: signed purchase and sale agreements or letters of intent; broker opinions of value; market prices for comparable properties; estimates of residual value; and expectations for the use of the real estate.
We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT commencing with such taxable year, and we intend to continue operating in such a manner. To maintain our REIT status, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate level federal income tax on the earnings distributed to our stockholders that we derive from our REIT qualifying activities. We are still subject to state and local income and franchise taxes and to federal income and excise tax on our undistributed income. If we fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal corporate tax, including any applicable alternative minimum tax for taxable years beginning before January 1, 2018. Unless entitled to relief under specific statutory provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
In this section, we discuss the results of our operations for the year ended December 31, 2020 compared to
87 employeesthe year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. | | | | | | | | | | | | | | | | |
| | | | |
| (In Thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | $ 479,901 | | | | $ 438,691 | | | | $ 41,210 | | | | 9.4 | % |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | (2,242 | ) | | | (69.2 | )% |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | (668 | ) | | | (53.9 | )% |
| | | 678 | | | | 69,218 | | | | (68,540 | ) | | | (99.0 | )% |
| | | 1,469 | | | | 4,039 | | | | (2,570 | ) | | | (63.6 | )% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | (4,044 | ) | | | (7.7 | )% |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | (12,461 | ) | | | (100.0 | )% |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 5,855 | | | | 31.4 | % |
| | | 2,432 | | | | 844 | | | | 1,588 | | | | NM | |
| | | 104,165 | | | | 101,060 | | | | 3,105 | | | | 3.1 | % |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 37,155 | | | | 21.2 | % |
| | | 81,476 | | | | 24,091 | | | | 57,385 | | | | NM | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loss on debt extinguishment | | | (7,227 | ) | | | (14,330 | ) | | | 7,103 | | | | (49.6 | )% |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | (34,694 | ) | | | (59.0 | )% |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | (10,802 | ) | | | (100.0 | )% |
| | | | | | | | | | | | | | | | |
Income before income tax expense | | | | | | | | | | | | | | | | |
| | | (273 | ) | | | (11,501 | ) | | | 11,228 | | | | (97.6 | )% |
| | | | | | | | | | | | | | | | |
NM - Percentages over 100% are not displayed.
Changes related to operating properties
Rental income; Property costs (including reimbursable); Depreciation and amortization
The components of rental income are summarized below:
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 453,013 | | | $ | 404,720 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | |
Straight-line rent, net of uncollectible reserve | | | 11,876 | | | | 16,924 | |
Amortization of above- and below- market lease intangibles, net | | | 1,836 | | | | 4,310 | |
| | | | | | | | |
The increase in Base Cash Rent, the largest component of rental income, year-over-year was driven by our net acquisitions, which also was the driver for the increase in depreciation and amortization. We acquired 146 properties
during 2020 with a total of $58.4 million of annualin-place
rent (monthly fixed rent at date of transaction multiplied by 12). During the same period, we disposed of 38 properties, 20 of which were vacant and the remaining 18 had annualin-place
rents of $4.5 million. Our acquisition and disposition activity for the year ended December 31, 2020 is summarized below (in thousands): The increase in Base Cash Rent due to net acquisitions was partially offset by an increase in amounts deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic, from a net recovery of $0.4 million for the year ended December 31, 2019 to a net reduction of $10.9 million for the year ended December 31, 2020. A majority of these tenant credit issues relate to tenants in the movie theater industry and we expect movie theater operators to continue to face headwinds in 2021. The increase year-over-year was also reduced by $6.3 million of rent abatements for the year ended December 31, 2020, which were executed as relief due to theCOVID-19
pandemic. Variable cash rent is primarily comprised of tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, less reimbursements we deem not probable of collection. As such, the change in variable cash rent is driven by the change in property costs year-over-year. For the year ended December 31, 2020, property costs included $14.5 million of reimbursable expenses, compared to $14.9 million for 2019. As such, variable cash rent and reimbursable property costs remained relatively flat year-over-year. The remaining $10.0 million of property costs for the year ended December 31, 2020 werenon-reimbursable,
compared to $3.7 million for 2019. The increase innon-reimbursable
costs of $6.3 million was driven by an increase innon-reimbursable
property taxes of $3.7 million due to tenant credit issues from theCOVID-19
pandemic, as well as an increase in carrying costs of vacant properties of $2.2 million due to a decreased average occupancy during 2020 compared to 2019. Non-cash
rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense.Non-cash
rental income decreased period-over-period primarily as a result of a $14.7 million increase in straight-line rental revenue deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic. This was partially offset by an increase in straight-line rental revenue of $9.7 million year-over-year as a result of acquisitions and lease modifications.Impairments increased year-over-year on underperforming properties, with $49.0 million of impairments recorded on 28 properties for the year ended December 31, 2020, compared to $18.6 million of impairments recorded on 27 properties in the comparative year. The increase was driven by multi-tenant properties, as well as single occupant properties with tenants in the health and fitness, casual dining and movie theater industries, all of which were significantly impacted by theCOVID-19
pandemic. Impairments also increased year-over-year on Vacant properties, with $14.2 million of impairments recorded on eight properties for the year ended December 31, 2020, compared to $5.5 million of impairments recorded on seven properties in the comparative year.
Finally, the increase in impairments year-over-year was caused by $18.2 million of impairments recorded on lease intangible assets, primarily as a result of a tenant bankruptcy that had credit issues prior to theCOVID-19
pandemic which resulted in the termination of the lease for four properties, and $0.1 million of credit loss allowance on our direct financing lease during the year ended December 31, 2020, with no comparable impairments recognized in 2019.
Gain on disposition of assets
Gain on disposition of assets decreased year-over-year. During the year ended December 31, 2020, we disposed of 38 properties and recorded net gains totaling $24.2 million. There were $23.2 million in net gains on the sale of 18 active properties and $1.3 million in net gains on the sale of 20 Vacant properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.1 million in other net losses.
During the year ended December 31, 2019, we disposed of 44 properties and recorded net gains totaling $58.9 million. There were $69.1 million in net gains on the sale of 23 active properties and $1.5 million in net gains on the sale of 18 Vacant properties. One property was returned to the lender in conjunction with CMBS debt extinguishment and two properties were leasehold interests that were surrendered to the lessors, which did not result in a gain or loss on disposition. Additionally, one building in a multi-tenant property was sold, resulting in a net loss of $11.7 million, and the remaining stand-alone occupied building of this property was retained.
Interest expense; Loss on debt extinguishment; Termination of interest rate swaps
Our debt as of December 31, 2017. None2019 and 2020 is summarized below (in thousands):
In January 2019, we terminated the 2015 Credit Agreement and the 2015 Term Loan Agreement, resulting in a loss on debt extinguishment of
$0.7 million, and entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility andA-1
Term Loans. We also simultaneously entered into delayed drawA-2
Term Loans, which were drawn in May 2019 to repurchase the 2019 Convertible Notes at their maturity. In June 2019, we issued the 2029 Senior Notes and extinguished the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million. In September 2019, we issued the 2027 Senior Notes and the 2030 Senior Notes. Proceeds from these
employees are representedissuances were primarily utilized to terminate theA-1
Term Loans andA-2
Term Loans, which resulted in a loss on debt extinguishment of $5.3 million. Additionally, during 2019, we extinguished two CMBS loans, resulting in a net gain on debt extinguishment of $6.7 million. During the first half of 2020, we entered into the 2020 Term Loans. In August 2020, we issued $450.0 million of 2031 Senior Notes, which triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that resulted in a loss on debt extinguishment of $1.0 million. Remaining proceeds from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6 million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of $6.2 million. Subsequent to December 31, 2020, we repaid the remaining 2020 Term Loans in full and expect to settle the remaining 2021 Convertible Notes in cash during 2021.
These changes in our debt structure resulted in an overall increase in our total debt outstanding, but with a reduction in our weighted average interest rate from 3.85% at December 31, 2019 to 3.64% at December 31, 2020. As such, we had a slight increase in total interest expense year-over-year:
| | | | | | | | |
| | | | |
| | | | | | |
Interest expense – revolving credit facilities | | $ | 3,686 | | | $ | 5,201 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | |
Interest expense – Convertible Notes | | | 10,728 | | | | 17,245 | |
Interest expense – interest rate swaps | | | — | | | | 972 | |
| | | 12,428 | | | | 14,175 | |
| | | | | | | | |
Finally, in September 2019, we terminated our interest rate swaps, which were entered into as a hedge against our variable-rate debt, in conjunction with the repayment of theA-1
Term Loans andA-2
Term Loans. This termination resulted in a fee of $24.8 million. As we continued to hold variable-rate debt at time of termination, a portion of the hedged transactions remained probable to occur. Therefore, only $12.5 million was initially expensed and the remainder of the termination fee is being amortized over the remaining initial term of the interest rate swaps to interest expense. Related party fee income; Preferred dividend income from SMTA; Income tax expense
In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. We also provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of theSpin-Off.
Upon SMTA’s sale of Master Trust 2014 in September 2019, both the Asset Management Agreement and the Property Management and Servicing Agreement were terminated. We simultaneously entered into the Interim Management Agreement at a reduced annual rate, under which we agreed to manage and liquidate the remaining SMTA assets until its termination effective September 4, 2020. The following table summarizes our related party fee income under these agreements: | | | | | | | | |
| | | | |
| | | | | | |
| | $ | 678 | | | $ | 15,635 | |
Property management and special services fees | | | — | | | | 5,427 | |
Termination fee related to the Asset Management Agreement | | | — | | | | 48,156 | |
Total related party fee income | | | | | | | | |
| (1) | Includes $0.9 million of stock compensation awarded by SMTA to an employee of Spirit for the year ended December 31, 2019, which was fully offset by $0.9 million in general and administrative expenses. |
Related party fee income was earned through a wholly-owned TRS and was subject to federal and state income tax. As such, the termination fee income earned in the third quarter of 2019 resulted in an increased income tax expense for the year ended December 31, 2019.
Additionally, as part of theSpin-Off,
SMTA issued to us 10% Series A preferred shares, which generated $10.8 million of preferred dividend income for the year ended December 31, 2019. In September 2019, in conjunction with SMTA’s sale of Master Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation preference of $150.0 million.
Changes related to general and administrative expenses
Year-over-year general and administrative expenses decreased by $4.0 million, driven by a labor union.
BUSINESS AND GROWTH STRATEGIES
Our objective is to maximize stockholder value by seeking superior risk-adjusted returns with an emphasis on stable rental revenue,decrease in compensation expenses of $4.7 million, primarily by investing inas a result of decreased accruals for market-based and managing a portfolio of single-tenant, operationally essential real estate throughout the U.S. We generate revenue primarily by leasing our properties to our tenants. See Item 2. "Properties" for property information and Item 6. "Selected Financial Data" for additional financial and asset information.
Single-tenant, operationally essential real estate consists of properties that are generally free-standing, commercial real estate facilities where our tenants conduct activities essential to the generation of their sales and profits. Under a triple-net lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. In support of our primary business of owning and leasing real estate, we have also strategically originated or acquired long-term, commercial mortgage and other loans. We view our operations as one reporting segment consisting of net leasing operations. We intend to pursue our objective through the following business and growth strategies:
Enhanced Portfolio Management Using Proprietary Tools
When monitoring existing investments or evaluating new investments, we typically consider three broad categories of risk: (1) tenant financial distress risk, (2) lease renewal risk and (3) suboptimal lease structures. We seek to manage these risks by utilizing our Spirit Heat Map and Spirit Property Ranking Model,merit-based compensation, as well as
our overall internal credita $0.7 million decrease in travel expenses as a result of theCOVID-19
pandemic. Decreases year-over-year were partially offset by $1.7 million of expenses recognized during the year ended December 31, 2020 related to theCOVID-19
pandemic, mainly as a result of increased legal fees for executing rent deferral and abatement agreements.LIQUIDITY AND CAPITAL RESOURCES
In June 2020, we entered into forward sale agreements with certain financial institutions acting as forward purchasers in connection with an offering of 9.2 million shares of common stock at an initial public offering price of $37.35 per share, before underwriting discounts and risk management processes. Since our inception, our Occupancy, a measureoffering expenses. The forward purchasers borrowed and sold an aggregate of portfolio quality, has never fallen below 96.1%, despite9.2 million shares of common stock in the economic downturn of 2008 through 2010.
| |
◦ | Focus on Diversified Assets in Target Industries. Our investment strategy will be to continue to increase our exposure to industries that we determine are attractive based on our proprietary Spirit Heat Map and where we believe we are underweight. On the disposition side, we intend to reduce industry concentration based on the Spirit Heat Map and where we believe we are overweight. The Spirit Heat Map is used to analyze tenant industries across Porter’s Five Forces and potential causes of technological disruption to identify tenant industries that we believe to have good fundamentals for future performance. The Spirit Heat Map is updated regularly to factor for changes in business and market conditions, changes in technology and other trends. Desirable tenants have attractive credit characteristics and stable operating histories. This strategy offers us the opportunity to achieve superior risk-adjusted returns when coupled with our intensive credit and real estate analysis, lease structuring and ongoing portfolio management.
|
offering. We also monitor and managedid not receive any proceeds from the diversificationsale of our real estate investment portfolio in ordershares of common stock by the forward purchasers at the time of the offering. The forward sale price that we received upon physical settlement of the agreements, which was initially $35.856 per share, was subject to reduceadjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the risks associated with adverse developments affecting a particular tenant, property, or region. Our strategy emphasizes a portfolio that (1) derives no more than 10.0%forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of its annual rent from any single tenant and no more than 2.0%the forward sale agreements. As of its annual rent from any single property, (2) is leased to tenants operating in various industries aligned with our Spirit Heat Map and (3) is located across the U.S. without significant
geographic concentration. WhileDecember 31, 2020, we consider the foregoing when making investments, we have made, and may make investments in the future that do not meet one or morehad physically settled all 9.2 million of these criteria,shares for net proceeds of $319.1 million.
In November 2020, the Board of Directors approved a new $500.0 million ATM program, and we may make additional investments that do not meet one or moreterminated the 2016 ATM Program. Sales of these criteria if we believe the opportunity is sufficiently attractive.
| |
◦ | Focus on Active Portfolio Management Decisions. We use our proprietary Spirit Property Ranking Model to rank all properties in our portfolio, across twelve factors and weightings consisting of both real estate quality scores and credit underwriting criteria, in order to benchmark property quality, identify asset recycling opportunities and to enhance acquisition and disposition decisions. The Spirit Property Ranking Model is a key component of both the acquisition and disposition process, as well as the process for identifying asset recycling opportunities.
|
We selectively make acquisitions that we believe will contribute to our business objectives. We believe there will be ample acquisition opportunities in the single-tenant market fitting our underwriting and acquisition criteria. This criteria includes, but is not limited to, evaluation of the rank from our Spirit Property Ranking Model and impact on our portfolio’s tenant, industry and geographic diversification.
We typically retain and manage real estate assets that fit within our investment criteria, which criteria are subject to change without notice to or vote by our stockholders. Additionally, management may elect to dispose of assets when it believes appropriate in view of our business objective, considering criteria including, but not limited to, the Spirit Heat Map, the rank from the Spirit Property Ranking Model, tenant concentration, tenant credit quality, unit financial performance, associated indebtedness, and asset zoning, as well as potential capital appreciation, potential uses of proceeds and tax considerations, among others.
Execute Leases with Optimal Structures
We seek to maintain the stability of our rental revenue and the long-term return on our investments by entering into leases with structures we deem to be aligned with our business and growth strategies:
| |
◦ | Leases for Operationally Essential Real Estate. We seek to own properties that are operationally essential to our tenants, thereby reducing the risk that the tenant would choose not to renew an expiring lease or reject a lease in bankruptcy.
|
| |
◦ | Enhance Our Portfolio through Contractual Rental Growth. Approximately 85.3% of our single-tenant properties (based on Contractual Rent) contain contractual provisions that increase the rental revenue over the term of the lease. Generally, our rent escalators increase rent at specified dates by: (1) a fixed amount; or (2) the lesser of (a) 1 to 2 times any increase in the CPI over a specified period, (b) a fixed percentage, or (c) a fixed schedule.
|
| |
◦ | Leases with Relatively Long Terms. We seek to enter into leases with relatively long terms, typically with non-cancelable initial terms of 15 to 20 years and tenant renewal options for additional terms with attractive rent escalation provisions.
|
| |
◦ | Leases with a Master Lease Structure. Where appropriate, we seek to enter into master leases whereby we lease multiple properties to a single tenant on an “all or none” basis. In a master lease structure, a tenant is responsible for a single lease payment relating to the entire portfolio of leased properties, as opposed to separate lease payments relating to each individually leased property. The master lease structure hinders a tenant's ability to “cherry pick” locations, where it unilaterally gives up underperforming properties while maintaining its leasehold interest in well-performing properties.
|
FINANCING STRATEGY
Our long-term financing strategy is to maintain a leverage profile that creates operational flexibility and generates superior risk-adjusted returns for our stockholders. We finance our operations and investments using a variety of methods, including available unrestricted cash balances, property operating revenue, proceeds from property dispositions, available borrowings under our credit facilities, common and preferred stock issuances, and debt securities issuances, including mortgage indebtedness and senior unsecured debt. We determine the amount of equity and debt financing to be used when acquiring an asset by evaluating our cost of equity capital, terms available in the credit markets (such as interest rate, repayment provisions and maturity) and our assessment of the particular asset’s risk.
We may issue common stock when we believe that our share price is at a level that allows the offering proceeds to be accretively invested into additional properties, to permanently finance properties that were financed by our credit facilities, or to repay outstanding debt at or before maturity.
In September 2017, we filed a shelf registration statement with the SEC, which became immediately effective upon filing and will remain effective for a term of three years with an expiration in September 2020. Under this shelf registration statement, we may offer shares of our common or preferred stock or debt securities from time to timeunder the 2020 ATM Program may be made in amounts, at prices and on termssales deemed to be announced when“at the market offerings” as defined in Rule 415 under the Securities Act.
The 2020 ATM Program contemplates that, in addition to the issuance and ifsale by us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares are offered. The specifics of our common stock to hedge such forward purchaser’s exposure under such forward sale agreement. We will not initially receive any future offerings, along with the use of proceeds from any such offerings, will be described in detail insale of shares of our common stock borrowed by a prospectus supplementforward purchaser and sold through a forward seller.
We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or other offering materials atmore dates specified by us on or prior to the timematurity date of such offerings.
We have issued senior unsecured debt securities and have obtained other senior unsecured debt at the Operating Partnership level. In addition, our debt historically has also consisted of long-term borrowings secured by specific real estate assets or, more typically, pools of real estate assets. These secured borrowings include the issuance of non-recourse net-lease mortgage notes under Master Trust 2013, as well as non-recourse loansforward sale agreement, in which have been securitized into CMBS debt. To the extent practicable,case we expect to maintainreceive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
During the year ended December 31, 2020, 7.1 million shares were sold under the ATM Programs, comprised of 3.6 million under the 2016 ATM Program and 3.5 million sold under the 2020 ATM Program. All of these sales were sold by forward purchasers through agents under the applicable ATM Program and pursuant to forward sales agreements. The forward sale price that we will receive upon physical settlement of the agreements is subject to adjustment for (i) a well-balancedfloating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. During the year ended December 31, 2020, 2.9 million of these shares were physically settled for net proceeds of $109.2 million. As of December 31, 2020, there were 4.1 million shares remaining under open forward sales agreements. Assuming the full physical settlement of those open forward sales agreements, we have remaining capacity of $369.7 million under the 2020 ATM Program as of December 31, 2020.
Short-term liquidity and capital resources
On a short-term basis, our principal demands for funds will be for operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on current and any future debt profile with manageable and balanced maturities.
financings. We expect to fund
our operating expenses and other short-term liquidity requirements, including property acquisitions, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs, and cash distributions to common and preferred stockholders,these demands primarily through cash provided by operating activities, borrowings under
our available credit facilitiesthe 2019 Credit Facility, and,
periodically throughwhen market conditions warrant, issuances of
public securities.equity securities, including shares of our common stock under our 2020 ATM program. As of December 31, 2020, available liquidity was comprised of $70.3 million in cash and cash equivalents, $800.0 million of borrowing capacity under the 2019 Credit Facility and $13.0 million in restricted cash and restricted cash equivalents. Also, as of December 31, 2020, we had $151.5 million of expected proceeds available assuming the full physical settlement of our open forward equity contracts and remaining capacity of $369.7 million under our 2020 ATM Program. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from theCOVID-19
pandemic restrictions intended to prevent its spread. Long-term liquidity and capital resources
We
anticipateplan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and by issuing fixed-rate secured or unsecured notes and bonds. In the future, some of our property acquisitions could be made by issuing partnership interests of our Operating Partnership in exchange for property owned by third parties. These partnership interests would be exchangeable for cash or, at our election, shares of our common stock. We continually evaluate financing alternatives and believe that we
will continue to use a number of different sources to finance our acquisitions and operations going forward; however,can obtain financing on reasonable terms. However, we cannot
assure yoube sure that we will have access to the capital
and credit markets at times and
aton terms that are acceptable to us.
Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. We expect that our primary uses of capital will be for property and other asset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders.RECENT DEVELOPMENTSDescription of certain debt
The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.
As of December 31, 2020, the aggregate gross commitment under the 2019 Credit Facility was $800.0 million, which may be increased up to $1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. The 2019 Credit Facility has a maturity of March 31, 2023 and includes twosix-month
extensions that can be exercised at our option. We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 2019 Credit Facility is unconditionally guaranteed by the Company and material subsidiaries that meet certain conditions (as defined in the 2019 Facilities Agreements). As of December 31, 2020, there were no subsidiaries that met this requirement.
As of December 31, 2020, the 2019 Credit Facility bore interest at1-Month
LIBOR plus 0.90%, with no borrowings outstanding, and a ratings-based facility fee in the amount of 0.20% per annum. As of December 31, 2020, there were no letters of credit outstanding. Amounts available for borrowing under the 2019 Credit Facility remained subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.60:1.00;
Minimum fixed charge coverage ratio (defined as EBITDA of the Company, to fixed charges) of 1.50:1.00;
Maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.50:1:00;
Minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties, to unsecured interest expense) of 1.75:1.00; and
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness of the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00.
In addition to these covenants, the 2019 Credit Agreement also included other customary affirmative and negative covenants, such as (i) limitation on liens and negative pledges; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and sales of all or substantially all assets; (iv) maintenance of status as a REIT and listing on any national securities exchange; and (v) material modifications to organizational documents. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
As of December 31, 2020, $178.0 million was outstanding under the 2020 Term Loan Agreement. On January 4, 2021, we repaid the 2020 Term Loans in full. The 2020 Term Loans had a maturity of April 2, 2022 and bore interest at a rate of LIBOR plus an applicable margin of 1.50% per annum.
As of December 31, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | |
| | | |
| | | | | | | | | |
| | September 15, 2026 | | | 4.45 | % | | $ | 300,000 | |
| | January 15, 2027 | | | 3.20 | % | | $ | 300,000 | |
| | July 15, 2029 | | | 4.00 | % | | $ | 400,000 | |
| | January 15, 2030 | | | 3.40 | % | | $ | 500,000 | |
| | February 15, 2031 | | | 3.20 | % | | $ | 450,000 | |
Total Senior Unsecured Notes | | | | | | | | | | |
Interest on the Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which interest is payable on March 15 and September 15 of each year, and the 2031 Senior Notes, for which interest is payable on February 15 and August 15 of each year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the respective indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed three months or less (or two months or less in the case of the 2027 Senior Notes) prior to their respective maturity dates, the redemption price will not include a make-whole premium.
The indentures governing the Senior Unsecured Notes subject the Corporation and Operating Partnership to certain customary restrictive covenants that limit their ability to incur additional indebtedness, including:
Maximum leverage ratio (defined as consolidated total indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.60:1.00; Minimum unencumbered asset coverage ratio (defined as total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles, to consolidated total unsecured indebtedness) of 1.50:1:00; Maximum secured indebtedness leverage ratio (defined as consolidated total secured indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.40:1.00; and Minimum fixed charge coverage ratio (defined as consolidated income available for debt service, to the annual service charge) of 1.50:1.0.
The indentures governing the Senior Unsecured Notes also include other customary affirmative and negative covenants, including (i) maintenance of the Corporation’s existence; (ii) payment of all taxes, assessments and governmental charges levied against the Corporation; (iii) reporting on financial information; and (iv) maintenance of properties and insurance. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typicalnon-recurring
covenants. As of December 31, 2020, we had five fixed-rate CMBS loans with $214.2 million of aggregate outstanding principal, a weighted-average contractual interest rate of 5.47% and a weighted-average maturity of 2.8 years. Approximately 86.93% of this debt is partially amortizing and requires a balloon payment at maturity. The following table shows the scheduled principal repayments, including amortization, of the CMBS fixed-rate loans as of December 31, 2020 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Weighted
Average Stated
Rate | | | | | | | | | | |
| | | — | | | | — | | | —% | | | — | % | | $ | 4,365 | | | $ | — | | | $ | 4,365 | |
| | | — | | | | — | | | —% | | | — | | | | 4,617 | | | | — | | | | 4,617 | |
| | | 3 | | | | 86 | | | | | | 5.46 | | | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | — | | | | — | | | —% | | | — | | | | 590 | | | | — | | | | 590 | |
| | | 1 | | | | 1 | | | 6.00% | | | 6.00 | | | | 610 | | | | 16 | | | | 626 | |
| | | 1 | | | | 1 | | | 5.80% | | | 5.80 | | | | 3,000 | | | | 53 | | | | 3,053 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020, the Convertible Notes were comprised of $190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.
The conversion rate is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the 2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Future principal payments due on our various types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with respect to our commitments, including acquisitions under contract, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the termination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to fund property acquisitions, for investments in loans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
Financing ActivitiesSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
2019 Facilities AgreementThis Annual Report on Form10-K
On January 14, 2019,contains forward-looking statements within the Operating Partnership entered into a new 2019 Revolving Credit and Term Loan Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders, comprisedmeaning of Section 27A of the 2019 Credit FacilitySecurities Act and Section 21E of the Exchange Act. When used in this Annual Report, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
industry and economic conditions;
volatility and uncertainty in the financial markets, including potential fluctuations in the CPI;
our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments;
the financial performance of our retail tenants and the A-1 Term Loans.demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers;
The 2019 Credit Facility is comprised
our ability to diversify our tenant base;
the nature and extent of $800.0 millionfuture competition;
increases in our costs of aggregate revolving commitments withborrowing as a maturity dateresult of March 31, 2023. The outstanding loans under the 2019 Credit Facility currently bearchanges in interest at LIBOR plus an applicable margin of 1.10% per annumrates and the aggregate revolving commitments incur a facility fee of 0.25% per annum, in each case, based on the Operating Partnership’s credit rating. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $400.0 million of revolving borrowing capacity, subjectother factors;
our ability to the satisfaction of certain requirements and obtaining additional lender commitments.
The A-1 Term Loans have an aggregate borrowing amount of $420.0 million with a maturity date of March 31, 2024. The A-1 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership’s credit rating. The Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $200.0 million of term loans, subject to satisfying certain requirements and obtaining additional lender commitments.
In addition, on January 14, 2019, the Operating Partnership entered into new A-2 Term Loans with Bank of America, N.A., as administrative agent, and various lenders, comprised of $400 million of delayed draw term loans with a maturity date of March 31, 2022. The A-2 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership’s credit rating. In addition, a ticking fee accrues on the unused portion of the commitments at a rate of 0.20% until the earlier of July 12, 2019 and the termination of the commitments. There are currently no borrowings outstanding under the A-2 Term Loans. The A-2 Term Loans include an accordion feature providing for an additional $200.0 million of term loans, subject to the satisfaction of certain requirements and obtaining additional lender commitments.
The 2019 Facilities Agreements replaced the existing 2015 Credit Agreement and 2015 Term Loan Agreement.
See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Description of Certain Debt” for further information on ouraccess debt and equity financings.capital markets;
Real Estate Portfolio Activities
Duringour ability to pay down, refinance, restructure and/or extend our indebtedness as it becomes due;
our ability and willingness to renew our leases upon expiration and to reposition our properties on the month endedsame or better terms upon expiration in the event such properties are not renewed by tenants or we exercise our rights to replace existing tenants upon default;
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us or our major tenants;
our ability to manage our expanded operations;
our ability and willingness to maintain our qualification as a REIT;
the impact on our business and those of our tenants from epidemics, pandemics or other outbreaks of illness, disease or virus (such as the strain of coronavirus known asCOVID-19);
and other risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form10-K.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.
We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant, operationally essential real estate assets throughout the United States, which are subsequently leased on a long-term,triple-net
basis to high quality tenants with operations in retail, industrial, office and certain other industries. As of December 31,
2018, no tenant exceeded 5.0%2020, Spirit owned a diversified portfolio of
our Contractual1,860 properties with gross investment in real estate totaling approximately $6.8 billion and within-place
Annualized Base Rent
and no one single property contributed more than 2.0% of
our Contractual Rent.$509.6 million. See Item 2. “Properties - Our Real Estate Investment
Portfolio"Portfolio” for further information on our
ten largest tenants andportfolio diversification. Our operations are carried out through the compositionOperating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners and together own the remaining 99% of the Operating Partnership.
Shares of our common stock are traded on the NYSE under the symbol “SRC.”
Business and Growth Strategies
Our objective is to maximize stockholder value by providing a growing stream of earnings and dividends generated by high quality, diversified commercial real estate. We seek to accomplish this objective by utilizing our proprietary tools and underwriting expertise to invest in and manage a high-quality portfolio of single tenant, base.operationally essential real estate throughout the United States, which generally consists of free-standing, commercial real estate facilities where our tenants conduct activities essential to the generation of their sales and profits. We then generate revenue
primarily by leasing these properties to tenants we believe possess attractive credit characteristics and
Dispositionsoperate in stable or growing industries. Our leases are typically structured astriple-net
leases, whereby the tenant is responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Spirit utilizes integrated tools that streamline key processes for acquisitions, tenant monitoring and managing our capital structure, forecasts and records. We believe the effective use of our technology platforms to inform portfolio management decisions provides efficiency, depth and scalability to our processes, allowing us to seamlessly execute our objectives. To enhance our operating systems, we have developed several proprietary tools to minimize risk and maximize returns for our stockholders:
| o | Spirit Property Ranking Model. 5-mile population, (iv) remaining lease term, (v)5-mile house-hold income,(vi) pre-overhead unit coverage,(vii) pre-overhead master lease coverage, (viii) corporate coverage, (ix) U.S. State ranking, (x) rent escalation characteristics, (xi) lease structure and (xii) tenant industry ranking. We believe that the higher the overall score assigned to a property, the lower the risk of a residual loss given a tenant default. Through acquisitions, dispositions, lease renewals andre-lets, we seek to continually improve the weighted-average property ranking of our portfolio. |
| o | The Spirit Heat Map is used to analyze tenant industries across Porter’s Five Forces and for potential causes of technological disruption. The data is then used to predict the long-term future performance of those industries. The Spirit Heat Map is updated regularly to incorporate changes in business and market conditions, changes in technology and other trends. Using this tool, coupled with our intensive credit and real estate analysis, lease structuring and ongoing portfolio management, we seek to achieve superior risk-adjusted returns by focusing our investments within industries that we believe will be healthy and viable prospectively and disposing of properties within industries that have less favorable outlooks. |
| o | Spirit Business Intelligence Tools. |
| |
We have implemented sound social, human capital management and environmental practices and policies throughout the operation of our business, demonstrating our solid commitment to be responsible and conscientious in everything that we do as we strive to both drive long-term stakeholder value and make the communities in which we operate a better place to live and work. We have documented these commitments in our Social Responsibility and Environmental Sustainability Policy and our Code of Business Conduct and Ethics, each of which can be accessed on the Investor Relations page of our website at www.spiritrealty.com. One of these key pillars is human capital management. We believe attracting, developing and retaining a team of highly talented and motivated employees is critical to reflecting our “all one team” motto and delivering strong financial results:
| o | Talent acquisition and development. |
| process which includes multiple levels of interviews, cultural surveys, and technical skill testing, when appropriate, to ensure candidates will be an appropriate fit. |
| o | We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience, ideas and opinions. Our employee population is very diverse: approximately half of our employees are female, 27% are from racial or ethnic minority groups, and we have well-rounded age diversity. To promote inclusivity, our Diversity and Inclusion Committee is tasked with providing educational and social programming for all affinity groups, as well as directing support to charitable organizations in line with our diversity efforts. Under the Diversity and Inclusion Committee, we have a Women’s Leadership Council, which focuses specifically on empowering the women of Spirit in personal and professional growth. With the support of our Board of Directors, we continue to explore additional diversity and inclusion initiatives. |
| o | The physical and mental well-being of our employees is an important piece of our business and overall success. We have implemented numerous wellness initiatives, including wellness screenings and guided meditation sessions. Our offices were designed with employee health and well-being in mind(sit-stand desks, ergonomic chairs, healthy snack options, maximized natural light in all workspaces, designated creative and collaborative workspaces). In response to theCOVID-19 pandemic, we took a number of actions to ensure the health and safety of our employees, including enabling all employees to work from home, enhancing safety measures in our offices for voluntary return to office (including increasing cleaning and sanitizing procedures, temperature screening upon entering the office, providing personal protective equipment, installing plexiglass wellness screens and initiating social distancing measures), and instituted a specialCOVID-19 pandemic leave policy for illness or caretaking. |
| o | We actively seek to create aworkplace culture through corporate culture workshops and conducting employee surveys. Results of the surveys are communicated to all employees, as well as to our Board of Directors, to provide transparency and continuous improvement. We also seek to acknowledge employee successes through recognition at monthly “Town Hall” meetings. We firmly believe that regular social and team building events for our employees encourage socialization, collaboration, and relationship building – all things that are vital for employee engagement and result in a high performing “all one team” culture. We promote social engagement through our Spirit One Committee (comprised of employees across all levels and departments who collaborate to create social programming), annual company-wide events (including a virtual holiday season party in 2020), and department team building events throughout the year. |
As of December 31, 2020, we had 82 employees, as compared to 85 employees as of December 31, 2019. None of these employees are represented by a labor union.
| DEFINED AND DISCIPLINED INVESTMENT STRATEGY |
During the year ended December 31, 2018,2020, we purchased 17146 properties, which are included in continuing operations, representing an aggregate gross investment of $250.8$868.2 million, and invested $36.2$10.0 million in revenue producing capital expenditures to fund improvements on properties the Company currently owns.we already owned. During the same period, we sold 2938 properties from continuing operations for $103.3 million inwith an undepreciated gross sales proceeds. See Note 3investment of $86.0 million. We selectively make acquisitions and dispositions that we believe will contribute to our consolidated financial statements includedbusiness objectives. We believe there will be ample acquisition opportunities in this Annual Report on Form 10-K for additional discussionthe single-tenant market fitting our underwriting and acquisition criteria.
| o | We believe a multi-channel approach drives acquisition volume and are focused on building and growing partnerships with a diverse base of tenants and brokers. Over time, our target is a balanced mix of opportunities sourced from direct relationships with existing tenants, direct relationships with new tenants and broker relationships. These channels are built through current relationships with key members of our acquisitions and asset management teams, partner appreciation events, attendance at critical conferences and conventions and reliable execution. |
| o | Each acquisition opportunity is evaluated against our acquisition criteria, which includes, but is not limited to: accretive capitalization rate, long-term lease structure containing rent escalations, favorable tenant industries based on the Spirit Heat Map, favorable Spirit property ranking, attractive tenant credit characteristics and overall portfolio diversification impact. As part of our acquisition strategy, we target tenants that are publicly listed, as we believe those tenants possess certain attractive characteristics, including continual access to capital, generally lower leverage, audited financial statements and governance scrutiny. |
| While we consider the foregoing when making investments, we have made investments that do not meet one or more of these criteria, and we may make additional investments that do not meet one or more of these criteria if we believe the opportunity is sufficiently attractive. Acquisition opportunities go through a rigorous evaluation process culminating in review and approval by our Investment Committee. The Investment Committee includes representation from the acquisitions, asset management, credit, legal and finance departments. |
| o | Evaluating tenant credit. |
We believe that portfolio diversification and leases with structures aligned with our business and growth strategies are the cornerstones to managing the inherent risk associated with investing in real estate. The following portfolio qualities help maintain the stability of our investments.rental revenue and maximize our long-term return on our investments:
| o | Diverse and granular portfolio. non-investment grade rated tenants with 51.0% of our ABR from public issuers. See Item 2. “Properties - Our Real Estate Investment Portfolio” for further information on our portfolio composition as of December 31, 2020. |
| o | Leases for operationally essential real estate. |
In 2015, Haggen Holdings, LLC | o | Leases with contractual rental growth. |
| o | Leases with relatively long terms. non-cancellable initial terms of 10 to 20 years and tenant renewal options for additional terms with attractive rent escalation provisions. As of December 31, 2020, our weighted average remaining lease term based on ABR was 10.1 years. |
| o | Leases with a master lease structure. |
Since our inception, our occupancy has never fallen below 96.1%, despite the economic downturns of 2008 through 2010 and theCOVID-19
pandemic. While the onset in the U.S. of theCOVID-19
pandemic resulted in requests for relief from a number of
our tenants, the majority of these requests came in the form of rent deferrals, and we believe the diversity and strength of our portfolio helped to limit the impact of theCOVID-19
pandemic on our 2020 operating results. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its
affiliates,spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness, and hotels. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we expect to
see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range, generally, from one to six months, with an average deferral period of four months and an average repayment period of 12 months. The majority of the relief granted to tenants in 2021 relates to tenants in the movie theater industry. Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who may request future rent relief, we can provide no assurance that such efforts will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. | |
Our long-term financing strategy is to maintain a leverage profile that creates operational flexibility and generates superior risk-adjusted returns for our stockholders. We finance our operations and investments using a variety of methods, including Haggen Operations Holdings, LLC ("Haggen"), filed petitions for bankruptcy. Atavailable unrestricted cash balances, property operating revenue, proceeds from property dispositions, available borrowings under our credit facilities, common and preferred stock issuances, and debt securities issuances, including mortgage indebtedness and senior unsecured debt. We determine the amount of equity and debt financing to be used when acquiring an asset by evaluating our cost of equity capital, terms available in the credit markets (such as interest rate, repayment provisions and maturity) and our assessment of the particular asset’s risk.
In October 2020, we renewed our shelf registration statement with the SEC, which became immediately effective upon filing and will expire in October 2023, unless renewed before. Under this shelf registration statement, we may offer shares of our common or preferred stock or debt securities in amounts, at prices, and on terms to be announced when, and if, such shares are offered. The specifics of any future offerings, along with the use of proceeds from any such offerings, will be described in detail in a prospectus supplement or other offering materials at the time of the filing, Haggen leased 20 properties fromsuch offerings.
| o | Issuance of common stock. |
| o | Issuance of debt securities. |
| o | Cash provided by operations. re-leasing costs, and cash distributions to common and preferred stockholders, primarily through cash provided by operating activities and borrowings under our available credit facilities. |
We anticipate that we will continue to use a subsidiarynumber of the Company under a master lease. The Companydifferent sources to finance our acquisitions and Haggen restructured the master lease in an initial settlement agreement with approved claims of $21.0 million. In 2016, the Company entered into a second settlement agreement with both Haggen and Albertsons, LLC for $3.4 million and $3.0 million, respectively. Prior to 2018, the Company collected $5.5 million of the total claims. In December 2018, the Company received final settlement proceeds of $19.7 million and no other claims relatedoperations going forward; however, we cannot assure you that we will have access to the Haggen settlement remain outstanding.capital and credit markets at times and at terms that are acceptable to us.
We face competition for acquisitions from investors, including traded and
non-traded
public REITs,
and private equity
funds and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently manage. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such. This competition will increase if investments in real estate become more attractive relative to other forms of investment.
As a landlord, we compete in the multi-billion dollar commercial real estate market with numerous developers and owners of properties, many of which own properties similar to ours in the same markets in which our properties are located. In operating and managing our portfolio, we compete for tenants based on a number of factors, including
location, rental rates and flexibility. Some of our competitors have greater economies of scale, have lower cost of capital, have access to more resources, and have greater name recognition than we do. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose our tenants or prospective tenants and we may be pressured to reduce our rental rates or to offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options in order to retain tenants when our leases expire.
REGULATION
Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of our properties has the necessary permits and approvals.
Americans With Disabilities ActAMERICANS WITH DISABILITIES ACT
Pursuant to the ADA, our properties are required to meet federal requirements related to access and use by persons with disabilities. Compliance with the ADA, as well as a number of additional federal, state and local laws and regulations, may require modifications to properties we currently own and any properties we purchase, or may restrict renovations
of those properties. Noncompliance with these laws or regulations could result in the imposition of fines or an award of damages to private litigants, as well as the incurrence of the costs of makingto make modifications to attain compliance, and future legislation could impose additional financial obligations or restrictions on our properties.compliance. Although our tenants are generally responsible for all maintenance and repair costs pursuant to triple-net leases, including compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with such laws or regulations.
Federal, state and local environmental laws and regulations regulate
and impose liability for, releases of hazardous or toxic substances into the environment.
Some of our properties contain, have contained, or are adjacent to or near properties that contain or have contained storage tanks for petroleum products or other hazardous or toxic substances. Similarly, some of our properties are or were used for commercial or industrial purposes that involve or involved the use of hazardous or toxic substances or are adjacent to or near properties that are of have been used for such purposes. Under
variouscertain of these laws and regulations, a current or previous owner, operator or tenant
of real estate may be required to investigate and
clean up clean-up
hazardous or toxic substances
hazardous wastes or petroleum product releases or threats of releases,
at the property, and may be held liable to a government entity or
to third parties for property damage and for investigation,
clean-up
and monitoring costs incurred by those parties in connection with actual or threatened contamination. These laws typically impose
clean-up
responsibility and liability without regard to fault, or whether or not the owner, operator or tenant knew of or caused the
presence of the contamination. The liability
under these laws may be joint and several for the full amount of the investigation,
clean-up
and monitoring costs incurred or to be incurred or actions to be undertaken, although a party held jointly and severally liable may seek contributions from other identified, solvent, responsible parties for their fair share toward these costs.
These costs may be substantial, and can exceed the value of the property. The presence of contamination, or the failure to properly remediate contamination, on a property may adversely affect the ability of the owner, operator or tenant to sell or rent that property or to borrow using the property as collateral and may adversely impact our investment in that property.Some of our properties contain, have contained, or are adjacent to or near other properties that have contained or currently contain storage tanks for the storage of petroleum products or other hazardous or toxic substances. Similarly, some of our properties are or were used for commercial or industrial purposes that involve or involved the use of petroleum products or other hazardous or toxic substances, or are adjacent to or near properties that have been or are used for similar commercial or industrial purposes. These operations create a potential for the release of petroleum products or other hazardous or toxic substances, and we could potentially be required to pay to clean up any contamination. In addition, strict environmental laws regulate a variety of activities that can occur on a property, including the storage of petroleum products or other hazardous or toxic substances, air emissions and water discharges. Such laws may impose fines or penalties for violations. As a result of the foregoing, we could be materially and adversely affected.
Environmental laws also govern the presence, maintenance and removal of ACM. Federal regulations require building owners and those exercising control over a building’s management to identify and warn, through signs and labels, of potential hazards posed by workplace exposure to installed ACM in their building. The regulations also have employee training, record keeping and due diligence requirements pertaining to ACM. Significant fines can be assessed for violation of these regulations. As a result of these regulations building owners and those exercising control over a building’s management maywe could be subject to an increased risk oflawsuits if personal injury lawsuits by workers and others exposedfrom exposure to ACM. The regulations may affect the value of a building containing ACM in which we have invested.occurs. Federal, state and local laws and regulations also govern the removal, encapsulation, disturbance, handling and/or disposal of ACM when those materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM.
When excessive moisture accumulates in buildingsIn addition, our properties may contain or on building materials,develop harmful mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, theairborne contaminants. The presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly
remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition,Further, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at our properties that have not been previously addressed or remediated by us.
Before completing any propertyan acquisition, we obtain environmental assessments in order to identify potential environmental concerns at the property. These assessments are carried out in accordance with the Standard Practice for Environmental Site Assessments (ASTM Practice E 1527-05) as set by ASTM International, formerly known as the American Society for Testing and Materials, andInternational. These assessments generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property’s chain of title and review of historical aerial photographs and other information on past uses of the property. These assessments are limited in scope, however, if recommended in the initial assessments, we may undertake additional assessments such as soil and/or groundwater samplings, or other limited subsurface investigations and ACM or mold surveys to test for substances of concern.surveys. A prior owner or operator of a property or historic operations at our properties may have created a material environmental condition that is not known to us or the independent consultants preparing the site assessments. Material environmental conditions may have arisen afterGenerally, our leases provide that the review was completedlessee will indemnify us for any loss or may arise inexpense we incur as a result of the future, and future laws, ordinancespresence, use or regulations may impose material additional environmental liability. Ifrelease of hazardous materials on our property. However, if environmental concerns are not satisfactorily resolved in any initial or additional assessments, we may obtain environment insurance policies to insure against potential environmental risk or loss depending on the type of property, the availability and cost of the insurance and various other factors we deem relevant (i.e., an environmental occurrence affects one of our properties where our lessee may not have the financial capability to honor its indemnification obligations to us).
Our Annual Report on Form10-K,
Quarterly Reports on Form10-Q,
our
Current Reports on Form8-K,
and the Section 16 filings of our directors and officers, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website www.spiritrealty.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Also available on our website, free of charge, are corporate governance documents, including our corporate governance guidelines and our code of business conduct and ethics. We intend to disclose on our website under “Corporate Responsibility—Corporate Governance” any amendment to, or waiver of, any provisions of our code of business conduct and ethics applicable to the directors and/or officers of the Company that would otherwise be required to be disclosed under the rules of the SEC or the NYSE. Information contained on or hyperlinked from our website is not incorporated by reference into, and should not be considered part of, this Annual Report on Form10-K
or our other filings with the SEC. A copy of this Annual Report on Form10-K
is also available without charge upon written request to: Investor Relations, Spirit Realty Capital, Inc., 2727 North Harwood Street, Suite 300, Dallas, Texas 75201. Set forth below are some (but not all) of the risk factors that could adversely affect our business, financial condition, results of operations, cash flow, liquidity and ability to access the capital markets and satisfy debt service obligations and make distributions to our stockholders (which we refer to collectively as “materially and adversely affecting” us or having “a material adverse effect” on us and comparable phrases) and the market price of our securities. Because we operate in a highly competitive and rapidly changing environment, new risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can management assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
RISKS RELATED TO OUR BUSINESS AND PROPERTIES
Risks related to commercial real estate ownership could reduce the value of our properties.
Our core business is the ownership of retail, industrial and office real estate that is leased to companies on atriple-net
basis. Accordingly, our performance is subject to risks inherent to the ownership of commercial real estate, including: inability to collect rent from tenants due to financial hardship, including bankruptcy;
changes in local real estate markets resulting in the lack of availability or demand for single-tenant retail space;
changes in consumer trends and preferences that reduce the demand for products/services of our tenants;
inability to lease or sell properties upon expiration or termination of existing leases;
environmental risks related to the presence of hazardous or toxic substances or materials on our properties;
subjectivity of real estate valuations and changes in such valuations over time;
illiquid nature of real estate compared to most other financial assets;
changes in laws and regulations, including those governing real estate usage and zoning;
changes in interest rates and the availability of financing; and
changes in the general economic and business climate.
The occurrence of any of the risks described above may cause the value of our real estate to decline.
Actual or perceived threats associated with epidemics, pandemics or public health crises, including the ongoingCOVID-19
pandemic, could have a material adverse effect on us. Epidemics, pandemics or other public health crises, including the ongoingCOVID-19
pandemic, that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, may have a material adverse effect on us and our tenants, and may affect our ability as anet-lease
real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due. The ongoingCOVID-19
pandemic and restrictions intended to prevent its spread, has had a significant adverse impact on economic and market conditions in the United States and the markets in which we own properties. Certain of our tenants, especially those in industries considered“non-essential”
under varying state and localandorders and other restrictions on types of business that may continue to operate, have experienced and continue, to experience challenges or even closures as a result of theCOVID-19
pandemic, which has had, and we anticipate will continue to have, a material adverse impact on them. Although some state governments and other authorities were in varying stages of lifting or modifying some of these measures, some have already been forced to, and others may in the future, reinstitute these measures or impose new, more restrictive measures, if the risks, or the perception of the risks, related to theCOVID-19
pandemic worsen at any time. The ongoingCOVID-19
pandemic has directly resulted, and may continue to result, in a reduction in our rental income and/or an increase in our property costs and impairments. In addition, it has resulted, and may continue to result, in an increase in our general and administrative expenses, as we have incurred and may continue to incur costs to negotiate rent deferrals, lease restructures and/or lease terminations and/or enforce our contractual rights (including through litigation), as we deem appropriate on abasis. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases
with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide
no assurance that
such efforts or our efforts in future periods will be successful. The rapid development and fluidity of this situation precludes any prediction as to the
lesseeultimate adverse impact of theCOVID-19
pandemic or restrictions intended to prevent its spread, and we are not able to predict whether other epidemics, pandemics or other public health crises will
indemnifyoccur in the future that may have similar impacts. Nevertheless, the ongoingCOVID-19
pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to the adverse impacts on us. Such adverse impacts could depend on, among other factors: the financial condition and viability of our tenants – many of which are in retail industries – and their ability or willingness to pay rent in full on a timely basis;
state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for any lossthe failure to pay rent;
our need to restructure leases with our tenants and our ability to do so on favorable terms or expenseat all;
our ability to renew leases orre-lease
available space in our properties on favorable terms or at all in the event of nonrenewal or in the event we
exercise our right to replace an existing tenant, and obligations we may incur
in connection with the replacement of an existing tenant;
a severe and prolonged disruption and instability in the global financial markets may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or retire, replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities;
a refusal or failure of one or more lenders under the 2019 Revolving Credit and Term Loan Agreement to fund their respective financing commitment to us;
the broader impact of the severe economic contraction due to theCOVID-19
pandemic and restrictions intended to prevent its spread, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed; disruptions in our tenants’ supply chains or delays in the delivery of products, services or other materials necessary for their operations, which could force our tenants’ to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency;
the further utilization ofe-commerce
in certain industries as a result of the
presence, usetemporary closure of many retail properties, which may lead to the closure of underperforming properties by retailers; our and our tenants’ ability to manage our respective businesses to the extent our and their management or
releasepersonnel (includingon-site
employees) are impacted in significant numbers by theCOVID-19
pandemic and are otherwise not willing, available or allowed to conduct work; and our and our tenants’ ability to ensure business continuity in the event our continuity of
hazardous materialsoperations plan is not effective or improperly implemented or deployed during theCOVID-19
pandemic. We may be unable to identify and complete acquisitions of suitable properties, which may impede our growth, or our future acquisitions may not yield the returns we expect.
Our ability to expand through acquisitions requires us to identify and complete investment opportunities on favorable terms that are compatible with our property. However,growth strategy. Our ability to acquire properties on favorable terms and successfully operate them may be constrained by the following significant risks:
competition from other real estate investors, including REITs and institutional investment funds, which may be able to accept more risk, including higher acquisition prices, than we can prudently manage;
competition from other real estate investors across our ultimate liabilityacquisition sourcing channels (including brokers, existing tenant relationships, prospective tenant relationships, etc.) that may significantly reduce our acquisition volume or increase the purchase price for environmentala property we acquire;
financing for an acquisition may not be available on favorable terms or at all for potential acquisitions;
significant costs and management attention diverted to evaluate and negotiate potential acquisitions, including ones that we may not subsequently complete;
acquisition of properties that are not and may not become accretive to our results;
cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to debt used to finance the acquisition of such property;
necessary improvements or renovations to acquired properties may exceed budgeted amounts;
market conditions may exceedresult in higher than expected vacancy rates and lower than expected rental rates; or
properties acquired may be subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such asclean-up
of undisclosed environmental contamination or claims by tenants, vendors or other persons dealing with the
policy limitsformer owners of the properties. Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
The real estate investments made, and expected to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more of our properties in response to changing economic, financial or investment conditions is limited. We may be unable to dispose of properties by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of the jurisdiction in which a property is located.
In addition, the Code imposes restrictions on any environmental insurance policiesa REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we obtain, if any.hold our
properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.
Dispositions of real estate assets could change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.
We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we are unablechange our intended holding period due to enforceour intention to sell or otherwise dispose of an asset, we must reevaluate whether that asset is impaired under GAAP. Depending on the indemnification obligationscarrying value of the property at the time we change our lesseesintention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results.
In the future, we may choose to acquire properties or ifportfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets.
In the future we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in the Operating Partnership, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of environmentaltax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
High geographic concentration of our properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition.
As of December 31, 2020, 11.1% of our portfolio (as a percentage of ABR) was located in Texas, representing the highest concentration of our assets. We are susceptible to adverse developments in the economic or regulatory environments of the geographic areas in which we concentrate (or in which we may develop a substantial concentration of assets in the future), such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes or costs of complying with governmental regulations.
Our tenants may fail to successfully operate their businesses, which could adversely affect us.
The success of our investments is materially dependent on the financial stability of our tenants’ financial condition and leasing practices. At any given time, our tenants may experience a downturn in their business, including as a result of adverse economic conditions, that may weaken the operating results and financial condition of individual properties or of their business as whole. We depend on our tenants to operate the properties we own in a manner which generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage and pay real estate taxes and maintain the properties in a manner so as not to jeopardize their operating licenses or regulatory status. Although our occupied properties are generally essential to the tenant’s generation of sales and profits, this does not guarantee that a tenant’s operations at a particular property will be successful or that the tenant will be able to meet all of its obligations to us. As a result, a tenant may delay lease commencement, decline to extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy.
Single-tenant leases involve particular and significant risks related to tenant default.
Our strategy focuses primarily on investing in single-tenanttriple-net
leased properties throughout the United States. The financial failure of, or default in payment by, a single tenant under its lease is likely to cause a significant reduction in, or elimination of, our rental revenue from that property and a reduction in the value of the property. We may also experience difficulty or a significant delay inre-leasing
or selling such property. This risk is magnified in situations where we
carrylease multiple properties to a single tenant under a master lease. The failure or default of a tenant under a master lease could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties. Although the master lease structure may be beneficial to us because it restricts the ability of tenants to individually remove underperforming properties from the portfolio of properties leased from us, there is
inadequate,no guarantee that a tenant will not default in its obligations to us or decline to renew its master lease upon expiration.
The bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and material losses to us.
The bankruptcy or insolvency of any of our tenants could diminish the income we receive from that tenant’s lease or leases. A substantial portion our properties are leased to unrated tenants, which may increase the risk that a tenant bankruptcy or insolvency will occur. If a tenant becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease or leases with us. Any claims against such bankrupt tenant for unpaid future rent would be subject to statutory limitations that would likely result in our receipt of rental revenues that are substantially less than the contractually specified rent we are owed under the lease or leases. In addition, any claim we have for unpaid past rent, if any, may not be paid in full. We may also be unable tore-lease
a terminated or rejected space or tore-lease
it on comparable or more favorable terms. Moreover, tenants who are considering filing for bankruptcy protection may request amendments of their master leases to remove certain of the properties they lease from us under such master leases. We cannot guarantee that we will be able to sell orre-lease
such properties or that lease termination fees, if any, received in exchange for such releases will be sufficient to make up for the rental revenues lost as a result of such lease amendments. We face significant competition for tenants, which may decrease or prevent increases of the occupancy and rental rates of our properties.
We compete with numerous developers, owners and operators of properties, many of which own properties similar to ours in the same markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates or to offer more substantial rent abatements, tenant improvements, early termination rights, below-market renewal options or other lease incentive payments in order to retain tenants when our leases expire. Competition for tenants could decrease or prevent increases of the occupancy and rental rates of our properties.
Decrease in demand for traditional retail and restaurant space may materially and adversely affect us.
As of December 31, 2020, leases representing approximately 30.0% and 12.2% of our ABR were with tenants in traditional retail and restaurant industries, respectively, and we may acquire additional properties in the future leased to traditional retail and restaurant tenants. The market for traditional retail and restaurant space has previously been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retail and restaurant companies, the ongoing consolidation in the traditional retail and restaurant industries, the excess amount of traditional retail and restaurant space in a number of markets and, in the case of the traditional retail industry, increasing consumer purchases over the Internet. To the extent that these conditions continue, they are likely to negatively affect market rents for traditional retail and restaurant space.
We may be unable to renew leases, lease vacant space orre-lease
space as leases expire on favorable terms or at all. Our results of operations depend on our ability to strategically lease space in our properties (by renewing orre-leasing
expiring leases and leasing vacant space), optimize our tenant mix or lease properties on more economically favorable terms. As of December 31, 2020, leases representing approximately 2.6% of our ABR will expire during 2021. As of December 31, 2020, seven of our properties, representing approximately 0.4% of our total properties, were vacant. Current tenants may decline, or may not have the financial resources available, to renew current leases and we cannot guarantee that leases that are renewed will have terms that are as economically favorable to us as the expiring lease terms. If tenants do not renew the leases as they expire, we will have to find new tenants to lease our properties and there is no guarantee that we will be able to find new tenants or that our properties will bere-leased
at rental rates equal to or above the current average rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights, below-market renewal options or other lease incentive payments will not be offered to attract new tenants. Many of the leases we enter into or acquire are for properties that are specially suited to the particular business of our tenants. Because these properties have been designed or physically modified for a particular tenant, in addition to increasing the difficulties described above associated with releasing such space, in the event we are required to sell the property, we may have difficulty selling it to a party other than the tenant due to the special purpose for which the property may have been designed or modified. This potential illiquidity
may limit our ability to quickly modify our portfolio in response to changes in economic or other conditions, including tenant demand. We may experience significant costs in connection with renewing, leasing orre-leasing
a significant number of our properties. Our ability to realize future rent increases will vary depending on changes in the CPI.
As of December 31, 2020, approximately 17.5% of our ABR is subject to rent escalators which increase rent by a multiple of any increases in the CPI or the lesser of (a) 1 to 2 times any increase in the CPI over a specified period, (b) a fixed percentage, or (c) a fixed schedule. If the product of any increase in the CPI multiplied by the applicable factor is less than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on a fixed percentage. Therefore, during periods of low inflation or deflation, small increases or decreases in the CPI subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on fixed percentages or amounts. Conversely, if the product of any increase in the CPI multiplied by the applicable factor is more than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on an increase in CPI. Therefore, periods of high inflation subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on CPI increases.
We may be vulnerable to security breaches or cyber-attacks which could disrupt our operations and have a material adverse effect on our financial performance and operating results.
Security breaches, cyber-attacks, or disruption, of our or our third-party service providers’ physical or information technology infrastructure, networks and related management systems could result in, among other things, a breach of our networks and information technology infrastructure, the misappropriation of our or our tenants’ proprietary or confidential information, interruptions or malfunctions in our or our tenants’ operations, delays or interruptions to our ability to meet tenant needs, breach of our legal, regulatory or contractual obligations, inability to access or rely upon critical business records, unauthorized access to our facilities or other disruptions in our operations. Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware; hardware vulnerabilities such as Meltdown and Spectre; accident or human error by our own personnel or third parties; criminal activity or malfeasance (including by our own personnel); fraud or impersonation scams perpetrated against us or our partners or tenants; or security events impacting our third-party service providers or our partners or tenants. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store an increasing amount of tenant data.
We recognize the increasing volume of cyber-attacks and employ commercially practical efforts to provide reasonable assurance such attacks are appropriately mitigated. We may be required to expend significant financial resources to protect against or respond to such breaches. Techniques used to breach security change frequently and are generally not recognized until launched against a target, so we may not be able to promptly detect that a security breach or unauthorized access has occurred. We also may not be able to implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented. As we provide assurances to our tenants that we provide a high level of security, if an actual or perceived security breach occurs, the market’s perception of our security measures could be harmed and we could lose current and potential tenants, and such a breach could be harmful to our brand and reputation. Any breaches that may occur could expose us to increased risk of lawsuits, material monetary damages, potential violations of applicable privacy and other laws, penalties and fines, harm to our reputation and increases in our security and insurance costs. In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. We cannot guarantee that any backup systems, regular data backups, security protocols, network protection mechanisms and other procedures currently in place, or that may be in place in the future, will be adequate to prevent network and service interruption, system failure, damage to one or more of our systems or data loss in the event of a security breach or attack.
In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States. We may not be able to limit our liability or damages in the event of such a loss. Data protection legislation is becoming increasingly common in the United States at both the federal and state level and may require us to further modify our data processing practices and policies. For example, the California
Consumer Privacy Act of 2018, which took effect on January 1, 2020 and is expected to provide California residents with increased privacy rights and protections with respect to their personal information. Compliance with existing, proposed and recently enacted laws and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against the Company by governmental entities or others, fines and penalties, or damage to our reputation and credibility.
Inflation may materially and adversely affect us and our tenants.
Increased inflation could have a negative impact on variable-rate debt we currently have or that we may incur in the future. Our leases typically contain provisions designed to mitigate the adverse impact of inflation on our results of
operationsoperations. Because tenants are typically required to pay all property operating expenses, increases in property-level expenses at our leased properties generally do not affect us. However, increased operating expenses at vacant properties and the limited number of properties that are not subject to fulltriple-net
leases could cause us to incur additional operating expenses, which could increase our exposure to inflation. Additionally, the increases in rent provided by many of our leases may not keep up with the rate of inflation. Increased costs may also have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us. The market price and trading volume of shares of our common stock may fluctuate or decline.
The market price and trading volume of our common stock may fluctuate widely due to various factors, including:
broad market fluctuations unrelated to our or our competitors’ operating performances;
actual or anticipated variations in our or our competitors’ quarterly operating results or distributions;
publication of research reports about us, our competitors or the real estate industry;
market reaction to any additional indebtedness we incur or debt or equity securities we issue in the future;
additions or departures of key management personnel;
changes in our credit ratings;
the financial condition, performance and prospects of our tenants;
changes in market interest rates in comparison to the distribution yield on shares of our common stock; and
the realization of any of the other risk factors presented in this Annual Report on Form10-K.
We may issue shares of our common stock or other securities without stockholder approval, including shares issued to satisfy REIT distribution requirements. The Operating Partnership may issue partnership interests to third parties, and such partnership interests would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when partnership interests in the Operating Partnership are issued. Our existing stockholders have no preemptive rights to acquire any of these securities, and any issuance of equity securities by us or the Operating Partnership may dilute stockholder investment.
If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate successfully as a public company. We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Any failure to maintain effective controls or timely effect any necessary improvement of our internal control over financial reporting controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect the listing of our common stock on the NYSE. Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.
Loss of our key personnel could materially impair our ability to operate successfully.
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly our President and Chief Executive Officer, Jackson Hsieh, who has extensive market knowledge and relationships and exercises substantial influence over our operational, financing, acquisition and
disposition activity. Many of our other key executive personnel, particularly our executive and senior vice presidents, also have extensive experience and strong reputations in the real estate industry and have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel and arranging necessary financing. In particular, the extent and nature of the relationships that these individuals have developed with financial institutions and existing and prospective tenants is critically important to the success of our business. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affected.affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry personnel, which could materially and adversely affect us.
INSURANCECosts of compliance with, or liabilities related to, environmental laws may materially and adversely affect us.
The properties we own or have owned in the past may subject us to known and unknown environmental liabilities. Under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages, which may be substantial, resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under or migrating from such property, including costs to investigate, clean up such contamination and liability for harm to natural resources. We may face liability regardless of:
| | |
• our knowledge of the contamination; • the timing of the contamination; | | • the cause of the contamination; or • the party responsible for the contamination of the property. |
The presence of hazardous substances on a property may adversely affect our ability to sell, lease or improve the property or to borrow using the property as collateral. In addition, environmental laws may create liens on contaminated properties in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which they may be used or businesses may be operated, and these restrictions may require substantial expenditures.
Although we may obtain insurance for environmental liability for certain properties that are deemed to warrant coverage, our insurance may be insufficient to address any particular environmental situation and we may be unable to continue to obtain insurance for environmental matters, at a reasonable cost or at all, in the future. If our environmental liability insurance is inadequate, we may become subject to material losses for environmental liabilities. Our ability to receive the benefits of any environmental liability insurance policy will depend on the financial stability of our insurance company and the position it takes with respect to our insurance policies.
Insurance on our properties may not cover all losses, which could materially and adversely affect us.
Our tenants are
generally required to maintain liability and property insurance coverage for the properties they lease from us pursuant to
triple-net
leases.
UnderPursuant to such leases, our tenants are generally required to name us (and any of our lenders that have a mortgage on the property leased by the tenant) as additional insureds on their liability policies and additional insured and/or loss payee (or mortgagee, in the case of our lenders) on their property policies.
TenantsAll tenants are required to maintain casualty coverage and most carry limits at 100% of replacement cost. Depending on the location of the property, losses of a catastrophic nature, such as those caused by earthquakes and floods, may be covered by insurance policies that are held by our tenant with limitations such as large deductibles or
co-payments
that a tenant may not be able to meet. In addition, losses of a catastrophic nature, such as those caused by wind/hail, hurricanes, terrorism or acts of war, may be uninsurable or not economically insurable. In the event there is damage to our properties that is not covered by insurance and such properties are subject to recourse indebtedness, we will continue to be liable for the indebtedness, even if these properties are irreparably damaged.
See Item 1A. “Risk Factors - Risks RelatedInflation, changes in building codes and ordinances, environmental considerations, and other factors, including terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed. In that situation, the insurance proceeds received may not be adequate to restore our economic position with respect to the affected real property. Furthermore, in the event we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications without significant capital expenditures which may exceed any amounts received pursuant to insurance policies, as reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements. The loss of our capital investment in or anticipated future returns from our properties due to material uninsured losses could materially and adversely affect us.
Compliance with the ADA and fire, safety and other regulations may require us to make unanticipated expenditures that materially and adversely affect us.
Our Businessproperties are subject to the ADA, fire and Properties - Insurancesafety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. While our tenants are obligated by law to comply with the ADA and typically obligated under our leases and financing agreements to cover costs associated with compliance, if required changes involve greater expenditures than anticipated or if the changes must be made on a more accelerated basis than anticipated, our tenants’ ability to cover the costs could be adversely affected. We may be required to expend our own funds to comply with the provisions of the ADA. We may be required to make substantial capital expenditures to comply with these requirements and may be required to obtain approvals from various authorities with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. Additionally, failure to comply with any of these requirements could result in the imposition of fines by governmental authorities or awards of damages to private litigants. While we intend to only acquire properties that we believe are currently in substantial compliance with all regulatory requirements, these requirements may change and new requirements may be imposed which would require significant unanticipated expenditures by us.
RISKS RELATED TO OUR CAPITAL STRUCTURE
Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all.
To maintain our qualification as a REIT, we are required to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we are subject to federal corporate income tax to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gain. Because of these distribution requirements, we may not be able to fund future capital needs, including acquisition financing, from operating cash flow and may have to rely on third-party sources. We may not be able to obtain the financing on favorable terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:
general market conditions;
the market’s perception of our growth potential;
our current and expected future earnings;
our cash flow and cash distributions; and
the market price per share of our common stock.
If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
In recent history, we have raised a significant amount of debt through senior unsecured debt securities. We have generally used the proceeds from these financings to repay debt and fund real estate acquisitions. No assurance can be given that we will have access to the capital markets in the future at times and on terms that are acceptable to us, whether to refinance existing debt or to raise additional debt capital.
We have significant indebtedness outstanding, which may expose us to risk of default under our debt obligations, limit our ability to obtain additional financing or affect the market price of our common stock or debt securities.
As of December 31, 2020, the total principal balance outstanding on our indebtedness was approximately $2.5 billion, of which the $178.0 million outstanding under the 2020 Term Loan Agreement incurs interest at a variable rate. We may also incur significant additional debt to finance future investment activities. Payments of principal and interest on borrowings may leave us with insufficient cash resources to meet our cash needs or make the distributions to our common stockholders necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:
our cash flow may be insufficient to meet our required principal and interest payments;
cash interest expense and financial covenants relating to our indebtedness may limit or eliminate our ability to make distributions to our common stockholders;
we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to capitalize upon acquisition opportunities or meet operational needs;
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;
increases in interest rates could increase our interest expense for our variable interest rate debt;
we may be unable to hedge floating rate debt, counterparties may fail to honor their obligations under any hedge agreements we enter into, such agreements may not effectively hedge interest rate fluctuation risk, and, upon the expiration of any hedge agreements we enter into, we would be exposed to then-existing market rates of interest and future interest rate volatility;
we may be forced to dispose of properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;
we may default on our obligations and the lenders may foreclose on our properties or our interests in the entities that own the properties that secure their loans and receive an assignment of rents and leases;
we may be restricted from accessing some of our excess cash flow after debt service if certain of our tenants fail to meet certain financial performance metric thresholds;
we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and
our default under any loan with cross-default provisions could result in a default on other indebtedness.
Changes in our leverage ratios may also negatively impact the market price of our equity or debt securities. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
The agreements governing our indebtedness contain restrictions and covenants which may limit our ability to enter into or obtain funding for certain transactions, operate our business or make distributions to our preferred and common stockholders.
The agreements governing our indebtedness contain restrictions and covenants that limit or will limit our ability to operate our business. These covenants, as well as any additional covenants to which we may be subject in the future because of additional indebtedness, could cause us to forgo investment opportunities, reduce or eliminate distributions to our preferred and common stockholders or obtain financing that is more expensive than financing we could obtain if we were not adequately coversubject to the covenants. In addition, the agreements may have cross-default provisions, which provide that a default under one of our financing agreements would lead to a default on some or all losses,of our debt financing agreements. The covenants and other restrictions under our debt agreements affect, among other things, our ability to:
sell or substitute assets;
modify certain terms of our leases;
prepay debt with higher interest rates;
manage our cash flows; and
make distributions to equity holders.
Additionally, these restrictions may adversely affect our operating and financial flexibility and may limit our ability to respond to changes in our business or competitive environment, all of which may materially and adversely affect us.
Current market conditions could adversely affect our ability to refinance existing indebtedness or obtain additional financing for growth on acceptable terms or at all.
The credit markets can experience significant price volatility, displacement and liquidity disruptions, including the bankruptcy, insolvency or restructuring of certain financial institutions. These circumstances could materially impact liquidity in the financial markets, making financing terms for borrowers less attractive, and in certain cases, result in the unavailability of various types of debt financing. As a result, we may be unable to obtain debt financing on favorable terms or at all or fully refinance maturing indebtedness with new indebtedness. We primarily use external financing to fund acquisitions and to refinance indebtedness as it matures. Reductions in our available borrowing capacity or inability to obtain credit when required or when business conditions warrant could materially and adversely affect us, and we could be forced to limit our acquisition activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets.
Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. Higher interest rates on newly incurred debt may negatively impact our acquisition yields, earnings per share and cash flow as well. If interest rates increase, our interest costs and overall costs of capital will increase, which could materially and adversely affect us. Total debt service, including scheduled principal maturities and interest, for 2021 and 2022 is $280.7 million and $87.7 million, respectively. Debt service includes the final balloon repayment of $190.4 million for the 2021 Notes in 2021.
Changes in market interest rates may adversely impact our variable debt expenses.
The 2019 Credit Facility incurs interest at a variable rate using LIBOR and, as such, our interest expense will increase with increases in LIBOR. Further, in 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. If LIBOR ceases to exist after 2021, a comparable or successor reference rate as approved under the 2019 Revolving Credit and Term Loan Agreement will apply or such other reference rate as may be agreed by the Company and the lenders under the respective agreements will apply. To the extent these interest rates are less favorable than LIBOR, our interest expense will increase.
Some of our financing arrangements involve balloon payment obligations.
Some of our financings require us
to make alump-sum
or “balloon” payment at maturity, including $190.4 million in 2021. Our ability to make any balloon payment is uncertain and may depend on our ability to obtain additional financing or our ability to sell our properties. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell our properties at a price sufficient to make the balloon payment, if at all. If the balloon payment is refinanced at a higher rate, it will reduce or eliminate any income from our properties. In addition, if we are unable to refinance these maturities or otherwise retire the indebtedness, we could be forced to relinquish the related collateral. RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction, even if such a change in control may be in the interest of our stockholders.
Our charter contains certain restrictions on ownership and transfer of our stock.
discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; or
result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
We could increase the number of authorized shares of stock, classify and reclassifyun-issued
stock and issue stock without stockholder approval .
Our Board of Directors, without stockholder approval, has the power under our charter to amend our charter to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue, to authorize us to issue authorized butun-issued
shares of our common stock or preferred stock and to classify or reclassify anyun-issued
shares of our common stock or preferred stock into one or more classes or series of stock and to set the terms of such newly classified or reclassified shares. As a result, we may issue one or more series or classes of common stock or preferred stock with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of our common stockholders. Although our Board of Directors has no such intention at the present time, it could establish a class or series of common stock or preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or
| more of the voting power of our shares or of an affiliate of ours or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within atwo-year period immediately prior to the date in question) or any affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super-majority and stockholder voting requirements on these combinations; and |
“control share” provisions that provide that a holder of “control shares” of our Company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control shares”) has no voting rights with respect to those shares except to the extent approved by our stockholders by the affirmative vote of at leasttwo-thirds
of all the votes entitled to be cast on the matter, excluding all interested shares. As permitted by the MGCL, we have elected, by resolution of our Board of Directors, to opt out of the business combination provisions of the MGCL and, pursuant to a provision in our bylaws, to exempt any acquisition of our stock from the control share provisions of the MGCL. However, our Board of Directors may by resolution elect to repeal the exemption from the business combination provisions of the MGCL and may by amendment to our bylaws opt into the control share provisions of the MGCL at any time in the future, whether before or after an acquisition of control shares.
Certain provisions of the MGCL set forth in Title 3, Subtitle 8 of the MGCL (“Subtitle 8”) permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. These provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could be in the best interests of our stockholders. Our charter contains a provision whereby we have elected, at such time as we became eligible to do so, to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our Board of Directors only by the remaining directors. Our Board of Directors has adopted a resolution prohibiting us from electing to be subject to the provisions of Subtitle 8 relating to a classified board unless such election is first approved by our stockholders by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
As permitted by Maryland law, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:
actual receipt of an improper benefit or profit in money, property or services; or
active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist. Accordingly, in the event that actions taken by any of our directors or officers impede the performance of our company, our stockholders’ and our ability to recover damages from such director or officer may be limited. In addition, our charter authorizes us to obligate our company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those and certain other capacities to the maximum extent permitted by Maryland law.
RISKS RELATED TO TAXES AND OUR STATUS AS A REIT
Failure to qualify as a REIT would materially and adversely affect us and the value of our common stock.
We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2005 and we intend to continue operating in such a manner. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT and the statements in this Annual Report on Form10-K
are not binding on the IRS or any court. Therefore, we cannot guarantee that we have qualified as a REIT or that we will remain qualified as such in the future. If we lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because: we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
we could be subject to the federal alternative minimum tax for tax years prior to 2018 and increased state and local taxes; and
unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In addition, if we fail to qualify as a REIT, we will not be required to make distributions to our stockholders. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could materially and adversely affect the trading price of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, requirements regarding the composition of our assets and requirements regarding the sources of our income. Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.
In addition, legislation, new regulations, administrative interpretations or court decisions may materially and adversely affect our investors, our ability to qualify as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, our TRSs will be subject to income tax as regular corporations in the jurisdictions in which they operate.
If SMTA failed to qualify as a REIT, we could cease to qualify as a REIT and suffer other adverse consequences.
If SMTA failed to qualify as a REIT for any taxable year, such failure to qualify as a REIT could adversely affect our ability to qualify as a REIT. If SMTA failed to qualify as a REIT during the year of theSpin-Off,
the income recognized by us in connection with theSpin-Off
would not have constituted qualifying income for purposes of the 75% gross income test, which could have adversely affected our ability to qualify as a REIT for such year. In addition, if SMTA failed to qualify as a REIT for any period, the SMTA Preferred Stock would not have qualified as a real estate asset for purposes of the REIT asset tests or produced qualifying income for purposes of the REIT 75% gross income test for such period. In such case, our ownership of the SMTA Preferred Stock during such period could adversely affect our ability to qualify as a REIT, unless we are entitled to relief under an applicable cure provision. If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.
We believe the Operating Partnership is currently treated as a partnership for federal income tax purposes. As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, such partner’s share of its income. We cannot assure you that the IRS will not challenge the status of the Operating Partnership or any other subsidiary partnership or limited liability company in which we own an interest as a disregarded entity or partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership or any such other subsidiary partnership or limited liability company as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of the Operating Partnership or any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted onarm’s-length
terms. We own securities in TRSs and may acquire securities in additional TRSs in the future. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary ornon-customary
services to tenants of its parent REIT. A TRS is subject to federal income tax as a regular C corporation. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on anarm’s-length
basis. A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 25% of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% of the value of our total assets may be represented by securities of TRSs. We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that we own will be less than 25% (or 20%, as applicable) of the value of our total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations. In addition, we intend to structure our transactions with any TRSs that we own to ensure that they are entered into onarm’s-length
terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax. The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status or require us to make an unexpected distribution.
The IRS may take the position that specific sale-leaseback transactions that we treat as leases are not true leases for federal income tax purposes but are, instead, financing arrangements or loans. If a sale-leaseback transaction were sore-characterized,
we might fail to satisfy the REIT asset tests, the income tests or distribution requirements and consequently lose our REIT status effective with the year ofre-characterization
unless we elect to make an additional distribution to maintain our REIT status. The primary risk relates to our loss of previously incurred depreciation expenses, which could affect the calculation of our REIT taxable income and could cause us to fail the REIT distribution test that requires a REIT to distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In this circumstance, we may elect to distribute an additional dividend of the increased taxable income so as not to fail the REIT distribution test. This distribution would be paid to all stockholders at the time of declaration rather than the stockholders existing in the taxable year affected by there-characterization.
We may be forced to borrow funds to maintain our REIT status, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could materially and adversely affect us.
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard to the dividends paid deduction and excluding any net capital gains, and we will be subject to regular corporate income taxes on our undistributed taxable income to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. In order to maintain our REIT status and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of cash and recognition of income for federal income tax purposes, or the effect ofnon-deductible
capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distributions to our stockholders, and per share trading price of our common stock.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares.
Dividends treated as “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Under the 2017 Tax Legislation, however, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks ofnon-REIT
corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock. The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the nature and diversification of our assets, the sources of our income and the amounts we distribute to our stockholders. We may be required to liquidate or forgo otherwise attractive investments in order to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Accordingly, satisfying the REIT requirements could materially and adversely affect us. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, or to repay obligations to our lenders, we may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.
If we acquire C corporations in carry-over basis transactions, we may inherit material tax liabilities and other tax attributes from such acquired corporations, and we may be required to distribute earnings and profits.
From time to time, we have and may continue to acquire C corporations in transactions in which the basis of the corporations’ assets in our hands is determined by reference to the basis of the assets in the hands of the acquired corporations, or carry-over basis transactions.
If we acquire any asset from a corporation that is or has been a C corporation in a carry-over basis transaction, and we subsequently recognize gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we will be required to pay tax at the regular corporate tax rate on this gain to the extent of the excess of (1) the fair market value of the asset over (2) our adjusted basis in the asset, in each case determined as of the date on which we acquired the asset. Any taxes we pay as a result of such gain would reduce the amount available for distribution to our stockholders. The imposition of such tax may require us to forgo an otherwise attractive disposition of any assets we acquire from a C corporation in a carry-over basis transaction, and as a result may reduce the liquidity of our portfolio of investments. In addition, in such a carry-over basis transaction, we will succeed to any tax liabilities and earnings and profits of the acquired C corporation. To qualify as a REIT, we must distribute anynon-REIT
earnings and profits by the close of the taxable year in which such transaction occurs. Any adjustments to the acquired
corporation’s income for taxable years ending on or before the date of the transaction, including as a result of an examination of the corporation’s tax returns by the IRS, could affect the calculation of the corporation’s earnings and profits. If the IRS were to determine that we acquirednon-REIT
earnings and profits from a corporation that we failed to distribute prior to the end of the taxable year in which the carry-over basis transaction occurred, we could avoid disqualification as a REIT by paying a “deficiency dividend.”
Under these procedures, we generally would be required to distribute any suchnon-REIT
earnings and profits to our stockholders within 90 days of the determination and pay a statutory interest charge at a specified rate to the IRS. Such a distribution would be in addition to the distribution of REIT taxable income necessary to satisfy the REIT distribution requirement and may require that we borrow funds to make the distribution even if the then-prevailing market conditions are not favorable for borrowings. In addition, payment of the statutory interest charge could materially and adversely affect us. Legislative or other actions affecting REITs could have a negative effect on us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
The 2017 Tax Legislation significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. The legislation remains unclear in many respects and has been and may continue to be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and IRS, any of which could lessen or increase the impact of the legislation.
Item 1B. Unresolved Staff Comments
PROPERTY PORTFOLIO DIVERSIFICATION
| | | | | | | | |
| 1,860 | | 99.6% | | 48 | | 301 | | 28 |
| Owned Properties | | Occupancy | | States | | Tenants | | Retail Industries |
Diversification By Tenant
The following table sets forth a summary of tenant concentration for our owned real estate properties as of December 31, 2020:
| | | | | | | | | | | | |
| | | | | | | | | |
| | | |
| | | 7 | | | | 685 | | | | 3.0 | % |
| | | |
| | | 163 | | | | 234 | | | | 2.5 | % |
| | | |
BJ’s Wholesale Club, Inc. | | | 8 | | | | 912 | | | | 2.2 | % |
| | | |
| | | 7 | | | | 848 | | | | 2.2 | % |
| | | |
| | | 13 | | | | 1,597 | | | | 2.2 | % |
| | | |
Alimentation Couche-Tard, Inc. | | | 76 | | | | 230 | | | | 2.1 | % |
| | | |
| | | 34 | | | | 487 | | | | 2.0 | % |
| | | |
| | | 110 | | | | 304 | | | | 2.0 | % |
| | | |
| | | 106 | | | | 927 | | | | 1.9 | % |
| | | |
| | | 33 | | | | 409 | | | | 1.7 | % |
| | | |
| | | 1,296 | | | | 33,405 | | | | 78.2 | % |
| | | |
| | | 7 | | | | 641 | | | | — | |
| | | |
| | | | | | | | | | | | |
| (1) | Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above. |
The following table sets forth a summary of lease expirations for our owned real estate as of December 31, 2020. As of December 31, 2020, the weighted average remainingnon-cancellable
initial term of our leases (based on ABR) was 10.1 years. The information set forth in the table assumes that tenants do not exercise renewal options or any early termination rights: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | |
| | | 47 | | | $ | 13,028 | | | | 1,363 | | | | 2.6 | % |
| | | | |
| | | 40 | | | | 16,548 | | | | 1,599 | | | | 3.2 | % |
| | | | |
| | | 113 | | | | 32,049 | | | | 3,034 | | | | 6.3 | % |
| | | | |
| | | 47 | | | | 17,916 | | | | 1,557 | | | | 3.5 | % |
| | | | |
| | | 52 | | | | 19,334 | | | | 1,517 | | | | 3.8 | % |
| | | | |
| | | 108 | | | | 38,149 | | | | 3,724 | | | | 7.5 | % |
| | | | |
| | | 131 | | | | 40,635 | | | | 2,984 | | | | 8.0 | % |
| | | | |
| | | 106 | | | | 28,727 | | | | 1,798 | | | | 5.6 | % |
| | | | |
| | | 320 | | | | 42,692 | | | | 2,836 | | | | 8.4 | % |
| | | | |
| | | 77 | | | | 22,022 | | | | 2,220 | | | | 4.3 | % |
| | | | |
| | | 812 | | | | 238,516 | | | | 17,406 | | | | 46.8 | % |
| | | | |
| | | 7 | | | | — | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | | | |
| (1) | ABR is not adjusted for the impact of abatements provided as relief due to theCOVID-19 pandemic. As of the date of this report, SRC has agreed to a total of $1.0 million of abatements for the period from January 1, 2021 - December 31, 2021. |
Diversification By Geography
The following table sets forth a summary of geographic concentration for our owned real estate properties as of December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 247 | | | | 4,413 | | | | 11.1 | % | | New Jersey | | | 13 | | | | 717 | | | | 1.3 | % |
| | | 154 | | | | 2,533 | | | | 8.8 | % | | Utah | | | 18 | | | | 333 | | | | 1.2 | % |
| | | 138 | | | | 2,583 | | | | 6.8 | % | | Pennsylvania | | | 20 | | | | 483 | | | | 1.1 | % |
| | | 86 | | | | 2,396 | | | | 5.1 | % | | Alaska | | | 9 | | | | 319 | | | | 1.0 | % |
| | | 23 | | | | 1,199 | | | | 4.2 | % | | New Hampshire | | | 17 | | | | 645 | | | | 1.0 | % |
| | | 107 | | | | 1,846 | | | | 4.0 | % | | Wisconsin | | | 12 | | | | 696 | | | | 0.9 | % |
| | | 86 | | | | 1,700 | | | | 3.9 | % | | Idaho | | | 16 | | | | 273 | | | | 0.9 | % |
| | | 52 | | | | 1,295 | | | | 3.8 | % | | Kansas | | | 17 | | | | 341 | | | | 0.8 | % |
| | | 33 | | | | 1,924 | | | | 3.5 | % | | Connecticut | | | 5 | | | | 686 | | | | 0.7 | % |
| | | 67 | | | | 1,552 | | | | 3.2 | % | | Maine | | | 27 | | | | 85 | | | | 0.5 | % |
| | | 47 | | | | 835 | | | | 2.9 | % | | Washington | | | 7 | | | | 125 | | | | 0.4 | % |
| | | 55 | | | | 852 | | | | 2.9 | % | | West Virginia | | | 13 | | | | 202 | | | | 0.4 | % |
| | | 68 | | | | 1,312 | | | | 2.7 | % | | Delaware | | | 2 | | | | 128 | | | | 0.4 | % |
| | | 94 | | | | 715 | | | | 2.5 | % | | Nebraska | | | 8 | | | | 218 | | | | 0.4 | % |
| | | 44 | | | | 1,335 | | | | 2.5 | % | | Montana | | | 3 | | | | 152 | | | | 0.4 | % |
| | | 10 | | | | 721 | | | | 2.4 | % | | Massachusetts | | | 2 | | | | 131 | | | | 0.4 | % |
| | | 24 | | | | 902 | | | | 2.2 | % | | Iowa | | | 11 | | | | 190 | | | | 0.3 | % |
| | | 27 | | | | 991 | | | | 2.0 | % | | North Dakota | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 54 | | | | 935 | | | | 2.0 | % | | Rhode Island | | | 3 | | | | 95 | | | | 0.3 | % |
| | | 53 | | | | 753 | | | | 2.0 | % | | Oregon | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 39 | | | | 1,517 | | | | 1.9 | % | | South Dakota | | | 2 | | | | 30 | | | | 0.2 | % |
| | | 29 | | | | 622 | | | | 1.8 | % | | Wyoming | | | 1 | | | | 35 | | | | 0.1 | % |
| | | 43 | | | | 538 | | | | 1.6 | % | | U.S. Virgin Islands | | | 1 | | | | 38 | | | | 0.1 | % |
| | | 42 | | | | 637 | | | | 1.4 | % | | Vermont | | | 1 | | | | 2 | | | | * | |
| | | 24 | | | | 439 | | | | 1.4 | % | | | | | | | | | | | | | | |
Diversification By Asset Type and Tenant Industry
The following table sets forth a summary of concentration by asset types and, for retail assets, the tenant industry of our owned properties as of December 31, 2020:
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | Health and Fitness | | | 44 | | | | 2,329 | | | | 7.7 | % |
| | | | |
| | Convenience Stores | | | 329 | | | | 1,046 | | | | 7.6 | % |
| | | | |
| | Restaurants - Quick Service | | | 361 | | | | 791 | | | | 6.4 | % |
| | | | |
| | Restaurants - Casual Dining | | | 134 | | | | 940 | | | | 5.8 | % |
| | | | |
| | Movie Theaters | | | 37 | | | | 1,953 | | | | 5.1 | % |
| | | | |
| | Dealerships | | | 29 | | | | 953 | | | | 4.4 | % |
| | | | |
| | Drug Stores / Pharmacies | | | 77 | | | | 991 | | | | 4.4 | % |
| | | | |
| | Entertainment | | | 24 | | | | 1,022 | | | | 3.4 | % |
| | | | |
| | Car Washes | | | 65 | | | | 308 | | | | 3.2 | % |
| | | | |
| | Dollar Stores | | | 172 | | | | 1,576 | | | | 3.1 | % |
| | | | |
| | Grocery | | | 36 | | | | 1,654 | | | | 3.0 | % |
| | | | |
| | Home Improvement | | | 14 | | | | 1,595 | | | | 2.9 | % |
| | | | |
| | Warehouse Club and Supercenters | | | 14 | | | | 1,543 | | | | 2.8 | % |
| | | | |
| | Home Décor | | | 16 | | | | 2,147 | | | | 2.7 | % |
| | | | |
| | Specialty Retail | | | 53 | | | | 1,142 | | | | 2.3 | % |
| | | | |
| | Sporting Goods | | | 18 | | | | 1,026 | | | | 2.2 | % |
| | | | |
| | Automotive Service | | | 69 | | | | 578 | | | | 2.2 | % |
| | | | |
| | Department Stores | | | 15 | | | | 1,334 | | | | 1.9 | % |
| | | | |
| | Home Furnishings | | | 18 | | | | 783 | | | | 1.7 | % |
| | | | |
| | Early Education | | | 35 | | | | 384 | | | | 1.5 | % |
| | | | |
| | Automotive Parts | | | 55 | | | | 388 | | | | 1.1 | % |
| | | | |
| | Office Supplies | | | 16 | | | | 351 | | | | 0.7 | % |
| | | | |
| | Other | | | 9 | | | | 294 | | | | 0.7 | % |
| | | | |
| | Medical Office | | | 5 | | | | 65 | | | | 0.5 | % |
| | | | |
| | Pet Supplies and Service | | | 4 | | | | 133 | | | | 0.4 | % |
| | | | |
| | Apparel | | | 4 | | | | 92 | | | | 0.2 | % |
| | | | |
| | Vacant | | | 7 | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
Fromwe may be subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
MARKET INFORMATION FOR COMMON STOCK, HOLDERS OF RECORD AND DIVIDEND POLICY
Spirit Realty Capital, Inc.
Our common stock is traded on the NYSE under the symbol “SRC.” As of February 16, 2021, there were approximately 2,139 stockholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
We intend to pay regular quarterly dividends to our stockholders, although all future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant.
Spirit Realty Capital, Inc. directly or indirectly owns all of Spirit Realty, L.P.’s partnership units. Therefore, there is no established trading market for Spirit Realty, L.P.’s partnership units.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
Spirit Realty Capital, Inc.
No sales of unregistered securities. Gross proceeds of $330.2 million from sales of registered securities during the fourth quarter of 2020 were used for funding acquisitions, operating expenses and payment of interest and principal on current debt financings.
ISSUER PURCHASES OF EQUITY SECURITIES
Spirit Realty Capital, Inc.
EQUITY COMPENSATION PLAN INFORMATION
Our equity compensation plan information required by this item will be included in the Proxy Statement to be filed relating to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.
The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of RegulationS-K,
or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act. The following graph shows our cumulative total stockholder return for the five most recent fiscal years, with stock prices retroactively adjusted for theSpin-Off
of SMTA. The graph assumes a $100 investment in each of the indices on December 31, 2015 and the reinvestment of all cash dividends. Our stock price performance shown in the following graph is not indicative of future stock price performance. | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Spirit Realty Capital, Inc. | | $ | 100.00 | | | $ | 115.82 | | | $ | 100.46 | | | $ | 99.82 | | | $ | 147.33 | | | $ | 129.70 | |
| | $ | 100.00 | | | $ | 109.54 | | | $ | 130.81 | | | $ | 122.65 | | | $ | 158.07 | | | $ | 183.77 | |
NAREIT US Equity REIT Index | | $ | 100.00 | | | $ | 108.52 | | | $ | 114.19 | | | $ | 108.91 | | | $ | 137.23 | | | $ | 126.25 | |
Item 6. Selected Financial Data
The following tables set forth, on a historical basis, selected financial and operating data for the Company. The following data should be read in conjunction with our financial statements and notes thereto and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form10-K.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | | | | |
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | | | $ | 424,260 | | | $ | 420,003 | |
| | | 678 | | | | 69,218 | | | | 15,838 | | | | — | | | | — | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | | | | 54,998 | | | | 48,651 | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | | | | 28,487 | | | | 26,045 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | | | | 113,394 | | | | 118,690 | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | | | | 40,428 | | | | 28,638 | |
Net income attributable to common stockholders | | | 16,358 | | | | 164,916 | | | | 121,700 | | | | 74,618 | | | | 97,446 | |
Net income from continuing operations per common share—diluted | | | 0.15 | | | | 1.81 | | | | 1.58 | | | | 0.40 | | | | 0.30 | |
Dividends declared per common share issued (1) | | | 2.50 | | | | 2.50 | | | | 3.05 | | | | 3.60 | | | | 3.53 | |
Weighted average shares of common stock outstanding—diluted (1) | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | | | | 93,588,560 | | | | 93,849,250 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 285,716 | | | $ | 305,052 | | | $ | 322,359 | | | $ | 367,296 | | | $ | 394,952 | |
| | | 309,447 | | | | 341,731 | | | | 346,323 | | | | 398,148 | | | | 412,999 | |
Number of properties at period end | | | 1,860 | | | | 1,795 | | | | 1,514 | | | | 2,480 | | | | 2,615 | |
Owned properties occupancy at period end (based on number of properties) | | | 99.6 | % | | | 99.7 | % | | | 99.7 | % | | | 99.2 | % | | | 98.2 | % |
| (1) | Adjusted for the reverse stock split effected in 2018. |
| (2) | See the definitions and reconciliation ofnon-GAAP measures in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations –Non-GAAP Financial Measures.” |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Gross investments, including related lease intangibles | | $ | 6,805,437 | | | $ | 6,175,703 | | | $ | 5,123,631 | | | $ | 7,903,025 | | | $ | 8,247,654 | |
Net investments, including related lease intangibles | | | 5,821,628 | | | | 5,341,228 | | | | 4,396,098 | | | | 6,614,025 | | | | 7,090,335 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | | | | 14,493 | | | | 8,798 | | | | 10,059 | |
| | | 6,396,786 | | | | 5,832,661 | | | | 5,096,316 | | | | 7,263,511 | | | | 7,677,971 | |
| | | 2,506,341 | | | | 2,153,017 | | | | 2,054,637 | | | | 3,639,680 | | | | 3,664,628 | |
| | | 2,795,666 | | | | 2,419,412 | | | | 2,294,567 | | | | 3,943,902 | | | | 3,995,863 | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | | | | 2,801,749 | | | | 3,319,609 | | | | 3,682,108 | |
| (1) | Balances include assets and liabilities of both continuing operations and discontinued operations. Reference Note 12 to the accompanying consolidated financial statements for additional information. |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol “SRC.” We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant real estate assets throughout the United States, which are generally acquired through sale-leaseback transactions and subsequently leased on a long-term,triple-net
basis to high quality tenants with business operations within retail, industrial, office and other industries. Single tenant, operationally essential real estate consists of properties that are free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and profits. Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. As of December 31, 2020, our owned real estate represented investments in 1,860 properties. Our properties are leased to 301 tenants across 48 states and 28 retail industries. As of December 31, 2020, our owned properties were approximately 99.6% occupied (based on the number of economically yielding properties).
Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners, and together own the remaining 99% of the Operating Partnership. Although the Operating Partnership is wholly-owned by us, in the future, we may issue partnership interests in the Operating Partnership to third parties in exchange for property owned by such third parties. In general, any partnership interests in the Operating Partnership issued to third parties would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when such partnership interests in the Operating Partnership are issued.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner.
On May 31, 2018, we completed aSpin-Off
of all our interests in the assets that collateralized Master Trust 2014, our properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, SMTA. In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of $20.0 million. In September 2019, SMTA sold the assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the Interim Management Agreement, we were entitled to receive $1 million during the initialone-year
term and $4 million for any renewalone-year
term to manage and liquidate the remaining SMTA assets. The Interim Management Agreement was terminated effective September 4, 2020 and we have no further continuing involvement with SMTA. Given the onset of theCOVID-19
pandemic in 2020, many of our tenants requested rent deferrals or other forms of relief. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness and hotels. These and other industries may be further impacted in the future depending on various factors, including the duration of theCOVID-19
pandemic, the reinstitution of restrictions intended to prevent its spread or the imposition of new, more restrictive measures. Even after such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk ofCOVID-19
transmission and heightened sensitivity to risks associated with the transmission of other diseases. For the year ended December 31, 2020, we deferred $31.9 million of rent, of which we recognized $26.3 million in rental income (the remaining $5.6 million was deemed not probable of collection), and abated $6.3 million of rent. As of December 31, 2020, we had an accounts receivable balance of $20.2 million related to deferred rent. For the year
ended December 31, 2021, we expect to see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. For rent deferrals, the deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. Refer to Part I, Item 1A. “Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are determined in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, the collectability of receivables and asset impairment analysis. Set forth below are the more critical accounting policies that require management judgment and estimates in the preparation of our consolidated financial statements. See Notes 2 and 8 to the consolidated financial statements for additional details.
Purchase Accounting and Acquisition of Real Estate; Lease Intangibles
We evaluate a number of factors in estimating fair value of real estate acquisitions, including building age, building location, building condition, rent comparables from similar properties, and terms ofin-place
leases, if any. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above or below-market leases.In-place
lease intangibles are valued based on our estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. We then allocate the purchase price (including acquisition and closing costs) to land, building, improvements and equipment based on their relative fair values. For properties acquired within-place
leases, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values. Above and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and our estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in certain instances, over the renewal period. Rental Income: Cash and Straight-line Rent
We primarily lease real estate to our tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, we assess the terms and conditions of the lease to determine the appropriate lease term and do not include options to extend, terminate or purchase in our evaluation for lease classification purposes or for recognizing rental income unless we are reasonably certain the tenant will exercise the option. Lease classification also requires an estimation of the residual value of the property at the end of the lease term. For acquisitions, we use the estimated tangible fair value of the property at the date of acquisition. For lease modifications, we generally use sales comparables or a direct capitalization approach to determine fair value. Our leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. For leases with contingent rent escalators, increases in rental revenue are recognized when the changes in the rental rates have occurred. Some of our leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized when the change in the factor on which the contingent lease payment is based actually occurs.
In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic, noting that the underlying premise in requiring a modified lease to be accounted for as if it
were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). We made this election and account for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Rental income, including deferred rent, is subject to an evaluation for collectability, which includes our estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. We do not recognize rental income for amounts that are not probable of collection.
We review our real estate investments and related lease intangibles periodically for indicators of impairment including, but not limited to: the asset being held for sale, vacant ornon-operating,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, we then evaluate if its carrying amount may not be recoverable. We consider factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows. Impairment is calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. The fair values of real estate and intangible assets are determined using the following information, depending on availability, in order of preference: signed purchase and sale agreements or letters of intent; broker opinions of value; market prices for comparable properties; estimates of residual value; and expectations for the use of the real estate.
We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT commencing with such taxable year, and we intend to continue operating in such a manner. To maintain our REIT status, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate level federal income tax on the earnings distributed to our stockholders that we derive from our REIT qualifying activities. We are still subject to state and local income and franchise taxes and to federal income and excise tax on our undistributed income. If we fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal corporate tax, including any applicable alternative minimum tax for taxable years beginning before January 1, 2018. Unless entitled to relief under specific statutory provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
In this section, we discuss the results of our operations for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. | | | | | | | | | | | | | | | | |
| | | | |
| (In Thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | $ 479,901 | | | | $ 438,691 | | | | $ 41,210 | | | | 9.4 | % |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | (2,242 | ) | | | (69.2 | )% |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | (668 | ) | | | (53.9 | )% |
| | | 678 | | | | 69,218 | | | | (68,540 | ) | | | (99.0 | )% |
| | | 1,469 | | | | 4,039 | | | | (2,570 | ) | | | (63.6 | )% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | (4,044 | ) | | | (7.7 | )% |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | (12,461 | ) | | | (100.0 | )% |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 5,855 | | | | 31.4 | % |
| | | 2,432 | | | | 844 | | | | 1,588 | | | | NM | |
| | | 104,165 | | | | 101,060 | | | | 3,105 | | | | 3.1 | % |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 37,155 | | | | 21.2 | % |
| | | 81,476 | | | | 24,091 | | | | 57,385 | | | | NM | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loss on debt extinguishment | | | (7,227 | ) | | | (14,330 | ) | | | 7,103 | | | | (49.6 | )% |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | (34,694 | ) | | | (59.0 | )% |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | (10,802 | ) | | | (100.0 | )% |
| | | | | | | | | | | | | | | | |
Income before income tax expense | | | | | | | | | | | | | | | | |
| | | (273 | ) | | | (11,501 | ) | | | 11,228 | | | | (97.6 | )% |
| | | | | | | | | | | | | | | | |
NM - Percentages over 100% are not displayed.
Changes related to operating properties
Rental income; Property costs (including reimbursable); Depreciation and amortization
The components of rental income are summarized below:
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 453,013 | | | $ | 404,720 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | |
Straight-line rent, net of uncollectible reserve | | | 11,876 | | | | 16,924 | |
Amortization of above- and below- market lease intangibles, net | | | 1,836 | | | | 4,310 | |
| | | | | | | | |
The increase in Base Cash Rent, the largest component of rental income, year-over-year was driven by our net acquisitions, which also was the driver for the increase in depreciation and amortization. We acquired 146 properties
during 2020 with a total of $58.4 million of annualin-place
rent (monthly fixed rent at date of transaction multiplied by 12). During the same period, we disposed of 38 properties, 20 of which were vacant and the remaining 18 had annualin-place
rents of $4.5 million. Our acquisition and disposition activity for the year ended December 31, 2020 is summarized below (in thousands): The increase in Base Cash Rent due to net acquisitions was partially offset by an increase in amounts deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic, from a net recovery of $0.4 million for the year ended December 31, 2019 to a net reduction of $10.9 million for the year ended December 31, 2020. A majority of these tenant credit issues relate to tenants in the movie theater industry and we expect movie theater operators to continue to face headwinds in 2021. The increase year-over-year was also reduced by $6.3 million of rent abatements for the year ended December 31, 2020, which were executed as relief due to theCOVID-19
pandemic. Variable cash rent is primarily comprised of tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, less reimbursements we deem not probable of collection. As such, the change in variable cash rent is driven by the change in property costs year-over-year. For the year ended December 31, 2020, property costs included $14.5 million of reimbursable expenses, compared to $14.9 million for 2019. As such, variable cash rent and reimbursable property costs remained relatively flat year-over-year. The remaining $10.0 million of property costs for the year ended December 31, 2020 werenon-reimbursable,
compared to $3.7 million for 2019. The increase innon-reimbursable
costs of $6.3 million was driven by an increase innon-reimbursable
property taxes of $3.7 million due to tenant credit issues from theCOVID-19
pandemic, as well as an increase in carrying costs of vacant properties of $2.2 million due to a decreased average occupancy during 2020 compared to 2019. Non-cash
rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense.Non-cash
rental income decreased period-over-period primarily as a result of a $14.7 million increase in straight-line rental revenue deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic. This was partially offset by an increase in straight-line rental revenue of $9.7 million year-over-year as a result of acquisitions and lease modifications.Impairments increased year-over-year on underperforming properties, with $49.0 million of impairments recorded on 28 properties for the year ended December 31, 2020, compared to $18.6 million of impairments recorded on 27 properties in the comparative year. The increase was driven by multi-tenant properties, as well as single occupant properties with tenants in the health and fitness, casual dining and movie theater industries, all of which were significantly impacted by theCOVID-19
pandemic. Impairments also increased year-over-year on Vacant properties, with $14.2 million of impairments recorded on eight properties for the year ended December 31, 2020, compared to $5.5 million of impairments recorded on seven properties in the comparative year.
Finally, the increase in impairments year-over-year was caused by $18.2 million of impairments recorded on lease intangible assets, primarily as a result of a tenant bankruptcy that had credit issues prior to theCOVID-19
pandemic which resulted in the termination of the lease for four properties, and $0.1 million of credit loss allowance on our direct financing lease during the year ended December 31, 2020, with no comparable impairments recognized in 2019.
Gain on disposition of assets
Gain on disposition of assets decreased year-over-year. During the year ended December 31, 2020, we disposed of 38 properties and recorded net gains totaling $24.2 million. There were $23.2 million in net gains on the sale of 18 active properties and $1.3 million in net gains on the sale of 20 Vacant properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.1 million in other net losses.
During the year ended December 31, 2019, we disposed of 44 properties and recorded net gains totaling $58.9 million. There were $69.1 million in net gains on the sale of 23 active properties and $1.5 million in net gains on the sale of 18 Vacant properties. One property was returned to the lender in conjunction with CMBS debt extinguishment and two properties were leasehold interests that were surrendered to the lessors, which did not result in a gain or loss on disposition. Additionally, one building in a multi-tenant property was sold, resulting in a net loss of $11.7 million, and the remaining stand-alone occupied building of this property was retained.
Interest expense; Loss on debt extinguishment; Termination of interest rate swaps
Our debt as of December 31, 2019 and 2020 is summarized below (in thousands):
In January 2019, we terminated the 2015 Credit Agreement and the 2015 Term Loan Agreement, resulting in a loss on debt extinguishment of $0.7 million, and entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility andA-1
Term Loans. We also simultaneously entered into delayed drawA-2
Term Loans, which were drawn in May 2019 to repurchase the 2019 Convertible Notes at their maturity. In June 2019, we issued the 2029 Senior Notes and extinguished the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million. In September 2019, we issued the 2027 Senior Notes and the 2030 Senior Notes. Proceeds from these issuances were primarily utilized to terminate theA-1
Term Loans andA-2
Term Loans, which resulted in a loss on debt extinguishment of $5.3 million. Additionally, during 2019, we extinguished two CMBS loans, resulting in a net gain on debt extinguishment of $6.7 million. During the first half of 2020, we entered into the 2020 Term Loans. In August 2020, we issued $450.0 million of 2031 Senior Notes, which triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that resulted in a loss on debt extinguishment of $1.0 million. Remaining proceeds from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6 million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of $6.2 million. Subsequent to December 31, 2020, we repaid the remaining 2020 Term Loans in full and expect to settle the remaining 2021 Convertible Notes in cash during 2021.
These changes in our debt structure resulted in an overall increase in our total debt outstanding, but with a reduction in our weighted average interest rate from 3.85% at December 31, 2019 to 3.64% at December 31, 2020. As such, we had a slight increase in total interest expense year-over-year:
| | | | | | | | |
| | | | |
| | | | | | |
Interest expense – revolving credit facilities | | $ | 3,686 | | | $ | 5,201 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | |
Interest expense – Convertible Notes | | | 10,728 | | | | 17,245 | |
Interest expense – interest rate swaps | | | — | | | | 972 | |
| | | 12,428 | | | | 14,175 | |
| | | | | | | | |
Finally, in September 2019, we terminated our interest rate swaps, which were entered into as a hedge against our variable-rate debt, in conjunction with the repayment of theA-1
Term Loans andA-2
Term Loans. This termination resulted in a fee of $24.8 million. As we continued to hold variable-rate debt at time of termination, a portion of the hedged transactions remained probable to occur. Therefore, only $12.5 million was initially expensed and the remainder of the termination fee is being amortized over the remaining initial term of the interest rate swaps to interest expense. Related party fee income; Preferred dividend income from SMTA; Income tax expense
In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. We also provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of theSpin-Off.
Upon SMTA’s sale of Master Trust 2014 in September 2019, both the Asset Management Agreement and the Property Management and Servicing Agreement were terminated. We simultaneously entered into the Interim Management Agreement at a reduced annual rate, under which we agreed to manage and liquidate the remaining SMTA assets until its termination effective September 4, 2020. The following table summarizes our related party fee income under these agreements: | | | | | | | | |
| | | | |
| | | | | | |
| | $ | 678 | | | $ | 15,635 | |
Property management and special services fees | | | — | | | | 5,427 | |
Termination fee related to the Asset Management Agreement | | | — | | | | 48,156 | |
Total related party fee income | | | | | | | | |
| (1) | Includes $0.9 million of stock compensation awarded by SMTA to an employee of Spirit for the year ended December 31, 2019, which was fully offset by $0.9 million in general and administrative expenses. |
Related party fee income was earned through a wholly-owned TRS and was subject to federal and state income tax. As such, the termination fee income earned in the third quarter of 2019 resulted in an increased income tax expense for the year ended December 31, 2019.
Additionally, as part of theSpin-Off,
SMTA issued to us 10% Series A preferred shares, which generated $10.8 million of preferred dividend income for the year ended December 31, 2019. In September 2019, in conjunction with SMTA’s sale of Master Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation preference of $150.0 million.
Changes related to general and administrative expenses
Year-over-year general and administrative expenses decreased by $4.0 million, driven by a decrease in compensation expenses of $4.7 million, primarily as a result of decreased accruals for market-based and merit-based compensation, as well as a $0.7 million decrease in travel expenses as a result of theCOVID-19
pandemic. Decreases year-over-year were partially offset by $1.7 million of expenses recognized during the year ended December 31, 2020 related to theCOVID-19
pandemic, mainly as a result of increased legal fees for executing rent deferral and abatement agreements. LIQUIDITY AND CAPITAL RESOURCES
In June 2020, we entered into forward sale agreements with certain financial institutions acting as forward purchasers in connection with an offering of 9.2 million shares of common stock at an initial public offering price of $37.35 per share, before underwriting discounts and offering expenses. The forward purchasers borrowed and sold an aggregate of 9.2 million shares of common stock in the offering. We did not receive any proceeds from the sale of our shares of common stock by the forward purchasers at the time of the offering. The forward sale price that we received upon physical settlement of the agreements, which was initially $35.856 per share, was subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. As of December 31, 2020, we had physically settled all 9.2 million of these shares for net proceeds of $319.1 million.
In November 2020, the Board of Directors approved a new $500.0 million ATM program, and we terminated the 2016 ATM Program. Sales of shares of our common stock under the 2020 ATM Program may be made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.
The 2020 ATM Program contemplates that, in addition to the issuance and sale by us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser’s exposure under such forward sale agreement. We will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller.
We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
During the year ended December 31, 2020, 7.1 million shares were sold under the ATM Programs, comprised of 3.6 million under the 2016 ATM Program and 3.5 million sold under the 2020 ATM Program. All of these sales were sold by forward purchasers through agents under the applicable ATM Program and pursuant to forward sales agreements. The forward sale price that we will receive upon physical settlement of the agreements is subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. During the year ended December 31, 2020, 2.9 million of these shares were physically settled for net proceeds of $109.2 million. As of December 31, 2020, there were 4.1 million shares remaining under open forward sales agreements. Assuming the full physical settlement of those open forward sales agreements, we have remaining capacity of $369.7 million under the 2020 ATM Program as of December 31, 2020.
Short-term liquidity and capital resources
On a short-term basis, our principal demands for funds will be for operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on current and any future debt financings. We expect to fund these demands primarily through cash provided by operating activities, borrowings under the 2019 Credit Facility, and, when market conditions warrant, issuances of equity securities, including shares of our common stock under our 2020 ATM program. As of December 31, 2020, available liquidity was comprised of $70.3 million in cash and cash equivalents, $800.0 million of borrowing capacity under the 2019 Credit Facility and $13.0 million in restricted cash and restricted cash equivalents. Also, as of December 31, 2020, we had $151.5 million of expected proceeds available assuming the full physical settlement of our open forward equity contracts and remaining capacity of $369.7 million under our 2020 ATM Program. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from theCOVID-19
pandemic restrictions intended to prevent its spread. Long-term liquidity and capital resources
We plan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and by issuing fixed-rate secured or unsecured notes and bonds. In the future, some of our property acquisitions could be made by issuing partnership interests of our Operating Partnership in exchange for property owned by third parties. These partnership interests would be exchangeable for cash or, at our election, shares of our common stock. We continually evaluate financing alternatives and believe that we can obtain financing on reasonable terms. However, we cannot be sure that we will have access to the capital markets at times and on terms that are acceptable to us. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. We expect that our primary uses of capital will be for property and other asset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders. Description of certain debt
The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.
As of December 31, 2020, the aggregate gross commitment under the 2019 Credit Facility was $800.0 million, which may be increased up to $1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. The 2019 Credit Facility has a maturity of March 31, 2023 and includes twosix-month
extensions that can be exercised at our option. We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 2019 Credit Facility is unconditionally guaranteed by the Company and material subsidiaries that meet certain conditions (as defined in the 2019 Facilities Agreements). As of December 31, 2020, there were no subsidiaries that met this requirement.
As of December 31, 2020, the 2019 Credit Facility bore interest at1-Month
LIBOR plus 0.90%, with no borrowings outstanding, and a ratings-based facility fee in the amount of 0.20% per annum. As of December 31, 2020, there were no letters of credit outstanding. Amounts available for borrowing under the 2019 Credit Facility remained subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.60:1.00;
Minimum fixed charge coverage ratio (defined as EBITDA of the Company, to fixed charges) of 1.50:1.00;
Maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.50:1:00;
Minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties, to unsecured interest expense) of 1.75:1.00; and
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness of the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00.
In addition to being generally namedthese covenants, the 2019 Credit Agreement also included other customary affirmative and negative covenants, such as (i) limitation on liens and negative pledges; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and sales of all or substantially all assets; (iv) maintenance of status as a REIT and listing on any national securities exchange; and (v) material modifications to organizational documents. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
As of December 31, 2020, $178.0 million was outstanding under the 2020 Term Loan Agreement. On January 4, 2021, we repaid the 2020 Term Loans in full. The 2020 Term Loans had a maturity of April 2, 2022 and bore interest at a rate of LIBOR plus an applicable margin of 1.50% per annum.
As of December 31, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | |
| | | |
| | | | | | | | | |
| | September 15, 2026 | | | 4.45 | % | | $ | 300,000 | |
| | January 15, 2027 | | | 3.20 | % | | $ | 300,000 | |
| | July 15, 2029 | | | 4.00 | % | | $ | 400,000 | |
| | January 15, 2030 | | | 3.40 | % | | $ | 500,000 | |
| | February 15, 2031 | | | 3.20 | % | | $ | 450,000 | |
Total Senior Unsecured Notes | | | | | | | | | | |
Interest on the Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which interest is payable on March 15 and September 15 of each year, and the 2031 Senior Notes, for which interest is payable on February 15 and August 15 of each year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the respective indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed three months or less (or two months or less in the case of the 2027 Senior Notes) prior to their respective maturity dates, the redemption price will not include a make-whole premium.
The indentures governing the Senior Unsecured Notes subject the Corporation and Operating Partnership to certain customary restrictive covenants that limit their ability to incur additional insuredsindebtedness, including:
Maximum leverage ratio (defined as consolidated total indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.60:1.00; Minimum unencumbered asset coverage ratio (defined as total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles, to consolidated total unsecured indebtedness) of 1.50:1:00; Maximum secured indebtedness leverage ratio (defined as consolidated total secured indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.40:1.00; and Minimum fixed charge coverage ratio (defined as consolidated income available for debt service, to the annual service charge) of 1.50:1.0.
The indentures governing the Senior Unsecured Notes also include other customary affirmative and negative covenants, including (i) maintenance of the Corporation’s existence; (ii) payment of all taxes, assessments and governmental charges levied against the Corporation; (iii) reporting on financial information; and (iv) maintenance of properties and insurance. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typicalnon-recurring
covenants. As of December 31, 2020, we had five fixed-rate CMBS loans with $214.2 million of aggregate outstanding principal, a weighted-average contractual interest rate of 5.47% and a weighted-average maturity of 2.8 years. Approximately 86.93% of this debt is partially amortizing and requires a balloon payment at maturity. The following table shows the scheduled principal repayments, including amortization, of the CMBS fixed-rate loans as of December 31, 2020 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Weighted
Average Stated
Rate | | | | | | | | | | |
| | | — | | | | — | | | —% | | | — | % | | $ | 4,365 | | | $ | — | | | $ | 4,365 | |
| | | — | | | | — | | | —% | | | — | | | | 4,617 | | | | — | | | | 4,617 | |
| | | 3 | | | | 86 | | | | | | 5.46 | | | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | — | | | | — | | | —% | | | — | | | | 590 | | | | — | | | | 590 | |
| | | 1 | | | | 1 | | | 6.00% | | | 6.00 | | | | 610 | | | | 16 | | | | 626 | |
| | | 1 | | | | 1 | | | 5.80% | | | 5.80 | | | | 3,000 | | | | 53 | | | | 3,053 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020, the Convertible Notes were comprised of $190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.
The conversion rate is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the 2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Future principal payments due on our tenants’ liability policies, we separately maintain commercial general liability coveragevarious types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with limitsrespect to our commitments, including acquisitions under contract, as of $1.0December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for each occurrencetaxable years beginning after December 31, 2017 and $2.0 million general aggregate. before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We also maintain primary property coverage on (i) all unleased properties, (ii) all properties for which such coverage is notare required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be carried byat the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a tenantnumber of factors, including our actual and (iii) allprojected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, for which we obtain such coverage but the costs of which are reimbursed by tenants. In addition, we maintain excess property coverage on all remaining propertiesour operating expenses, our debt service requirements, our capital expenditures, prohibitions and other property coveragelimitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as may be required by our lenders.
Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk
FactorsFactors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the termination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to fund property acquisitions, for investments in loans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form
10-K
contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this Annual Report,
on Form 10-K, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or
imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
industry and economic conditions;
volatility and uncertainty in the financial markets, including potential fluctuations in the CPI;
our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments;
the financial performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers;
our ability to diversify our tenant base;
the nature and extent of future competition;
increases in our costs of borrowing as a result of changes in interest rates and other factors;
our ability to access debt and equity capital markets;
our ability to pay down, refinance, restructure and/or extend our indebtedness as it becomes due;
our ability and willingness to renew our leases upon expiration and to reposition our properties on the same or better terms upon expiration in the event such properties are not renewed by tenants or we exercise our rights to replace existing tenants upon default;
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us or our major tenants;
our ability to manage our expanded operations;
our ability and willingness to maintain our qualification as a REIT;
the impact
on our business and those of
Shopko’s bankruptcy filing on SMTA;our tenants from epidemics, pandemics or other outbreaks of illness, disease or virus (such as the strain of coronavirus known asCOVID-19);
andthe impact of SMTA’s board of trustees’ decision to accelerate its strategic plan, including our ability to collect amounts to which we are contractually entitled under the Asset Management Agreement or SMTA Preferred Stock (defined below) upon a resolution of SMTA and/or a termination of the Asset Management Agreement;
our ability to perform as an external manager for SMTA; andother risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form
10-K.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.
We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant, operationally essential real estate assets throughout the United States, which are subsequently leased on a long-term,triple-net
basis to high quality tenants with operations in retail, industrial, office and certain other industries. As of December 31, 2020, Spirit owned a diversified portfolio of 1,860 properties with gross investment in real estate totaling approximately $6.8 billion and within-place
Annualized Base Rent of $509.6 million. See Item 2. “Properties - Our Real Estate Investment Portfolio” for further information on our portfolio diversification. Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners and together own the remaining 99% of the Operating Partnership.
Shares of our common stock are traded on the NYSE under the symbol “SRC.”
Business and Growth Strategies
Our objective is to maximize stockholder value by providing a growing stream of earnings and dividends generated by high quality, diversified commercial real estate. We seek to accomplish this objective by utilizing our proprietary tools and underwriting expertise to invest in and manage a high-quality portfolio of single tenant, operationally essential real estate throughout the United States, which generally consists of free-standing, commercial real estate facilities where our tenants conduct activities essential to the generation of their sales and profits. We then generate revenue
primarily by leasing these properties to tenants we believe possess attractive credit characteristics and operate in stable or growing industries. Our leases are typically structured astriple-net
leases, whereby the tenant is responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Spirit utilizes integrated tools that streamline key processes for acquisitions, tenant monitoring and managing our capital structure, forecasts and records. We believe the effective use of our technology platforms to inform portfolio management decisions provides efficiency, depth and scalability to our processes, allowing us to seamlessly execute our objectives. To enhance our operating systems, we have developed several proprietary tools to minimize risk and maximize returns for our stockholders:
| o | Spirit Property Ranking Model. 5-mile population, (iv) remaining lease term, (v)5-mile house-hold income,(vi) pre-overhead unit coverage,(vii) pre-overhead master lease coverage, (viii) corporate coverage, (ix) U.S. State ranking, (x) rent escalation characteristics, (xi) lease structure and (xii) tenant industry ranking. We believe that the higher the overall score assigned to a property, the lower the risk of a residual loss given a tenant default. Through acquisitions, dispositions, lease renewals andre-lets, we seek to continually improve the weighted-average property ranking of our portfolio. |
| o | The Spirit Heat Map is used to analyze tenant industries across Porter’s Five Forces and for potential causes of technological disruption. The data is then used to predict the long-term future performance of those industries. The Spirit Heat Map is updated regularly to incorporate changes in business and market conditions, changes in technology and other trends. Using this tool, coupled with our intensive credit and real estate analysis, lease structuring and ongoing portfolio management, we seek to achieve superior risk-adjusted returns by focusing our investments within industries that we believe will be healthy and viable prospectively and disposing of properties within industries that have less favorable outlooks. |
| o | Spirit Business Intelligence Tools. |
| |
We have implemented sound social, human capital management and environmental practices and policies throughout the operation of our business, demonstrating our solid commitment to be responsible and conscientious in everything that we do as we strive to both drive long-term stakeholder value and make the communities in which we operate a better place to live and work. We have documented these commitments in our Social Responsibility and Environmental Sustainability Policy and our Code of Business Conduct and Ethics, each of which can be accessed on the Investor Relations page of our website at www.spiritrealty.com. One of these key pillars is human capital management. We believe attracting, developing and retaining a team of highly talented and motivated employees is critical to reflecting our “all one team” motto and delivering strong financial results:
| o | Talent acquisition and development. |
| process which includes multiple levels of interviews, cultural surveys, and technical skill testing, when appropriate, to ensure candidates will be an appropriate fit. |
| o | We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience, ideas and opinions. Our employee population is very diverse: approximately half of our employees are female, 27% are from racial or ethnic minority groups, and we have well-rounded age diversity. To promote inclusivity, our Diversity and Inclusion Committee is tasked with providing educational and social programming for all affinity groups, as well as directing support to charitable organizations in line with our diversity efforts. Under the Diversity and Inclusion Committee, we have a Women’s Leadership Council, which focuses specifically on empowering the women of Spirit in personal and professional growth. With the support of our Board of Directors, we continue to explore additional diversity and inclusion initiatives. |
| o | The physical and mental well-being of our employees is an important piece of our business and overall success. We have implemented numerous wellness initiatives, including wellness screenings and guided meditation sessions. Our offices were designed with employee health and well-being in mind(sit-stand desks, ergonomic chairs, healthy snack options, maximized natural light in all workspaces, designated creative and collaborative workspaces). In response to theCOVID-19 pandemic, we took a number of actions to ensure the health and safety of our employees, including enabling all employees to work from home, enhancing safety measures in our offices for voluntary return to office (including increasing cleaning and sanitizing procedures, temperature screening upon entering the office, providing personal protective equipment, installing plexiglass wellness screens and initiating social distancing measures), and instituted a specialCOVID-19 pandemic leave policy for illness or caretaking. |
| o | We actively seek to create aworkplace culture through corporate culture workshops and conducting employee surveys. Results of the surveys are communicated to all employees, as well as to our Board of Directors, to provide transparency and continuous improvement. We also seek to acknowledge employee successes through recognition at monthly “Town Hall” meetings. We firmly believe that regular social and team building events for our employees encourage socialization, collaboration, and relationship building – all things that are vital for employee engagement and result in a high performing “all one team” culture. We promote social engagement through our Spirit One Committee (comprised of employees across all levels and departments who collaborate to create social programming), annual company-wide events (including a virtual holiday season party in 2020), and department team building events throughout the year. |
As of December 31, 2020, we had 82 employees, as compared to 85 employees as of December 31, 2019. None of these employees are represented by a labor union.
| DEFINED AND DISCIPLINED INVESTMENT STRATEGY |
During the year ended December 31, 2020, we purchased 146 properties, representing an aggregate gross investment of $868.2 million, and invested $10.0 million in revenue producing capital expenditures to fund improvements on properties we already owned. During the same period, we sold 38 properties with an undepreciated gross investment of $86.0 million. We selectively make acquisitions and dispositions that we believe will contribute to our business objectives. We believe there will be ample acquisition opportunities in the single-tenant market fitting our underwriting and acquisition criteria.
| o | We believe a multi-channel approach drives acquisition volume and are focused on building and growing partnerships with a diverse base of tenants and brokers. Over time, our target is a balanced mix of opportunities sourced from direct relationships with existing tenants, direct relationships with new tenants and broker relationships. These channels are built through current relationships with key members of our acquisitions and asset management teams, partner appreciation events, attendance at critical conferences and conventions and reliable execution. |
| o | Each acquisition opportunity is evaluated against our acquisition criteria, which includes, but is not limited to: accretive capitalization rate, long-term lease structure containing rent escalations, favorable tenant industries based on the Spirit Heat Map, favorable Spirit property ranking, attractive tenant credit characteristics and overall portfolio diversification impact. As part of our acquisition strategy, we target tenants that are publicly listed, as we believe those tenants possess certain attractive characteristics, including continual access to capital, generally lower leverage, audited financial statements and governance scrutiny. |
| While we consider the foregoing when making investments, we have made investments that do not meet one or more of these criteria, and we may make additional investments that do not meet one or more of these criteria if we believe the opportunity is sufficiently attractive. Acquisition opportunities go through a rigorous evaluation process culminating in review and approval by our Investment Committee. The Investment Committee includes representation from the acquisitions, asset management, credit, legal and finance departments. |
| o | Evaluating tenant credit. |
We believe that portfolio diversification and leases with structures aligned with our business and growth strategies are the cornerstones to managing the inherent risk associated with investing in real estate. The following portfolio qualities help maintain the stability of our rental revenue and maximize our long-term return on our investments:
| o | Diverse and granular portfolio. non-investment grade rated tenants with 51.0% of our ABR from public issuers. See Item 2. “Properties - Our Real Estate Investment Portfolio” for further information on our portfolio composition as of December 31, 2020. |
| o | Leases for operationally essential real estate. |
| o | Leases with contractual rental growth. |
| o | Leases with relatively long terms. non-cancellable initial terms of 10 to 20 years and tenant renewal options for additional terms with attractive rent escalation provisions. As of December 31, 2020, our weighted average remaining lease term based on ABR was 10.1 years. |
| o | Leases with a master lease structure. |
Since our inception, our occupancy has never fallen below 96.1%, despite the economic downturns of 2008 through 2010 and theCOVID-19
pandemic. While the onset in the U.S. of theCOVID-19
pandemic resulted in requests for relief from a number of our tenants, the majority of these requests came in the form of rent deferrals, and we believe the diversity and strength of our portfolio helped to limit the impact of theCOVID-19
pandemic on our 2020 operating results. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness, and hotels. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we expect to
see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range, generally, from one to six months, with an average deferral period of four months and an average repayment period of 12 months. The majority of the relief granted to tenants in 2021 relates to tenants in the movie theater industry. Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who may request future rent relief, we can provide no assurance that such efforts will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. | |
Our long-term financing strategy is to maintain a leverage profile that creates operational flexibility and generates superior risk-adjusted returns for our stockholders. We finance our operations and investments using a variety of methods, including available unrestricted cash balances, property operating revenue, proceeds from property dispositions, available borrowings under our credit facilities, common and preferred stock issuances, and debt securities issuances, including mortgage indebtedness and senior unsecured debt. We determine the amount of equity and debt financing to be used when acquiring an asset by evaluating our cost of equity capital, terms available in the credit markets (such as interest rate, repayment provisions and maturity) and our assessment of the particular asset’s risk.
In October 2020, we renewed our shelf registration statement with the SEC, which became immediately effective upon filing and will expire in October 2023, unless renewed before. Under this shelf registration statement, we may offer shares of our common or preferred stock or debt securities in amounts, at prices, and on terms to be announced when, and if, such shares are offered. The specifics of any future offerings, along with the use of proceeds from any such offerings, will be described in detail in a prospectus supplement or other offering materials at the time of such offerings.
| o | Issuance of common stock. |
| o | Issuance of debt securities. |
| o | Cash provided by operations. re-leasing costs, and cash distributions to common and preferred stockholders, primarily through cash provided by operating activities and borrowings under our available credit facilities. |
We anticipate that we will continue to use a number of different sources to finance our acquisitions and operations going forward; however, we cannot assure you that we will have access to the capital and credit markets at times and at terms that are acceptable to us.
We face competition for acquisitions from investors, including traded andnon-traded
public REITs, private equity funds and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently manage. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such. This competition will increase if investments in real estate become more attractive relative to other forms of investment. As a landlord, we compete in the multi-billion dollar commercial real estate market with numerous developers and owners of properties, many of which own properties similar to ours in the same markets in which our properties are located. In operating and managing our portfolio, we compete for tenants based on a number of factors, including
location, rental rates and flexibility. Some of our competitors have greater economies of scale, have lower cost of capital, have access to more resources, and have greater name recognition than we do. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose our tenants or prospective tenants and we may be pressured to reduce our rental rates or to offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options in order to retain tenants when our leases expire.
Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of our properties has the necessary permits and approvals.
AMERICANS WITH DISABILITIES ACT
Pursuant to the ADA, our properties are required to meet federal requirements related to access and use by persons with disabilities. Compliance with the ADA, as well as a number of additional federal, state and local laws and regulations, may require modifications to properties we currently own and any properties we purchase, or may restrict renovations of those properties. Noncompliance with these laws or regulations could result in fines or an award of damages to private litigants, as well as the incurrence of costs to make modifications to attain compliance. Although our tenants are generally responsible for compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with such laws or regulations.
Federal, state and local environmental laws and regulations regulate releases of hazardous or toxic substances into the environment. Some of our properties contain, have contained, or are adjacent to or near properties that contain or have contained storage tanks for petroleum products or other hazardous or toxic substances. Similarly, some of our properties are or were used for commercial or industrial purposes that involve or involved the use of hazardous or toxic substances or are adjacent to or near properties that are of have been used for such purposes. Under certain of these laws and regulations, a current or previous owner, operator or tenant may be required to investigate andclean-up
hazardous or toxic substances or petroleum product releases or threats of releases, and may be held liable to a government entity or third parties for property damage and for investigation,clean-up
and monitoring costs incurred by those parties in connection with actual or threatened contamination. These laws typically imposeclean-up
responsibility and liability without regard to fault, or whether or not the owner, operator or tenant knew of or caused the contamination. The liability may be joint and several for the full amount of the investigation,clean-up
and monitoring costs incurred or to be incurred or actions to be undertaken, although a party held jointly and severally liable may seek contributions from other identified, solvent, responsible parties for their fair share toward these costs. In addition, strict environmental laws regulate a variety of activities that can occur on a property, including the storage of petroleum products or other hazardous or toxic substances, air emissions and water discharges. Such laws may impose fines or penalties for violations. Environmental laws also govern ACM. Federal regulations require building owners and those exercising control over a building’s management to identify and warn, through signs and labels, of potential hazards posed by workplace exposure to ACM in their building. The regulations also have employee training, record keeping and due diligence requirements pertaining to ACM. Significant fines can be assessed for violation of these regulations and we could be subject to lawsuits if personal injury from exposure to ACM occurs. Federal, state and local laws and regulations also govern the removal, encapsulation, disturbance, handling and/or disposal of ACM when those materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM.
In addition, our properties may contain or develop harmful mold or other airborne contaminants. The presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly
remediation to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. Further, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs.
Before completing an acquisition, we obtain environmental assessments carried out in accordance with the Standard Practice for Environmental Site Assessments as set by ASTM International. These assessments generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property’s chain of title and review of historical aerial photographs and other information on past uses of the property. These assessments are limited in scope, however, if recommended in the initial assessments, we may undertake additional assessments such as soil and/or groundwater samplings, other limited subsurface investigations and ACM or mold surveys. A prior owner or operator of a property or historic operations at our properties may have created a material environmental condition that is not known to us or the independent consultants preparing the site assessments. Generally, our leases provide that the lessee will indemnify us for any loss or expense we incur as a result of the presence, use or release of hazardous materials on our property. However, if environmental concerns are not satisfactorily resolved in any initial or additional assessments, we may obtain environment insurance policies to insure against potential environmental risk or loss depending on the type of property, the availability and cost of the insurance and various other factors we deem relevant (i.e., an environmental occurrence affects one of our properties where our lessee may not have the financial capability to honor its indemnification obligations to us).
Our Annual Report on Form10-K,
Quarterly Reports on Form10-Q,
our Current Reports on Form8-K,
and the Section 16 filings of our directors and officers, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website www.spiritrealty.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Also available on our website, free of charge, are corporate governance documents, including our corporate governance guidelines and our code of business conduct and ethics. We intend to disclose on our website under “Corporate Responsibility—Corporate Governance” any amendment to, or waiver of, any provisions of our code of business conduct and ethics applicable to the directors and/or officers of the Company that would otherwise be required to be disclosed under the rules of the SEC or the NYSE. Information contained on or hyperlinked from our website is not incorporated by reference into, and should not be considered part of, this Annual Report on Form10-K
or our other filings with the SEC. A copy of this Annual Report on Form10-K
is also available without charge upon written request to: Investor Relations, Spirit Realty Capital, Inc., 2727 North Harwood Street, Suite 300, Dallas, Texas 75201. Set forth below are some (but not all) of the risk factors that could adversely affect our business, financial condition, results of operations, cash flow, liquidity and financial performance.ability to access the capital markets and satisfy debt service obligations and make distributions to our stockholders (which we refer to collectively as “materially and adversely affecting” us or having “a material adverse effect” on us and comparable phrases) and the market price of our securities. Because we operate in a highly competitive and rapidly changing environment, new risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can management assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
RISKS RELATED TO OUR BUSINESS AND PROPERTIES
Risks related to commercial real estate ownership could reduce the value of our properties.
Our core business is the ownership of
retail, industrial and office real estate that is leased to
retail, service and distribution companies on a
triple-net
basis. Accordingly, our performance is subject to risks inherent to the ownership of commercial real estate, including:
inability to collect rent from tenants due to financial hardship, including bankruptcy;
changes in local real estate markets resulting in the lack of availability or demand for single-tenant retail space;
changes in consumer trends and preferences that reduce the demand for products/services of our tenants;
inability to lease or sell properties upon expiration or termination of existing leases;
environmental risks related to the presence of hazardous or toxic substances or materials on our properties;
subjectivity of real estate valuations and changes in such valuations over time;
illiquid nature of real estate compared to most other financial assets;
changes in laws and regulations, including those governing real estate usage and zoning;
changes in interest rates and the availability of financing; and
changes in the general economic and business climate.
The occurrence of any of the risks described above may cause the value of our real estate to decline,decline.
Actual or perceived threats associated with epidemics, pandemics or public health crises, including the ongoingCOVID-19
pandemic, could have a material adverse effect on us. Epidemics, pandemics or other public health crises, including the ongoingCOVID-19
pandemic, that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, may have a material adverse effect on us and our tenants, and may affect our ability as anet-lease
real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due. The ongoingCOVID-19
pandemic and restrictions intended to prevent its spread, has had a significant adverse impact on economic and market conditions in the United States and the markets in which we own properties. Certain of our tenants, especially those in industries considered“non-essential”
under varying state and localandorders and other restrictions on types of business that may continue to operate, have experienced and continue, to experience challenges or even closures as a result of theCOVID-19
pandemic, which has had, and we anticipate will continue to have, a material adverse impact on them. Although some state governments and other authorities were in varying stages of lifting or modifying some of these measures, some have already been forced to, and others may in the future, reinstitute these measures or impose new, more restrictive measures, if the risks, or the perception of the risks, related to theCOVID-19
pandemic worsen at any time. The ongoingCOVID-19
pandemic has directly resulted, and may continue to result, in a reduction in our rental income and/or an increase in our property costs and impairments. In addition, it has resulted, and may continue to result, in an increase in our general and administrative expenses, as we have incurred and may continue to incur costs to negotiate rent deferrals, lease restructures and/or lease terminations and/or enforce our contractual rights (including through litigation), as we deem appropriate on abasis. For the year ended December 31, 2020, we deferred $31.9 million of rent and abated $6.3 million of rent. For the year ended December 31, 2021, we have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of theCOVID-19
pandemic or restrictions intended to prevent its spread, and we are not able to predict whether other epidemics, pandemics or other public health crises will occur in the future that may have similar impacts. Nevertheless, the ongoingCOVID-19
pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to the adverse impacts on us. Such adverse impacts could depend on, among other factors: the financial condition and viability of our tenants – many of which are in retail industries – and their ability or willingness to pay rent in full on a timely basis;
state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent;
our need to restructure leases with our tenants and our ability to do so on favorable terms or at all;
our ability to renew leases orre-lease
available space in our properties on favorable terms or at all in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant;
a severe and prolonged disruption and instability in the global financial markets may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or retire, replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities;
a refusal or failure of one or more lenders under the 2019 Revolving Credit and Term Loan Agreement to fund their respective financing commitment to us;
the broader impact of the severe economic contraction due to theCOVID-19
pandemic and restrictions intended to prevent its spread, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed; disruptions in our tenants’ supply chains or delays in the delivery of products, services or other materials necessary for their operations, which could materiallyforce our tenants’ to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency;
the further utilization ofe-commerce
in certain industries as a result of the temporary closure of many retail properties, which may lead to the closure of underperforming properties by retailers; our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel (includingon-site
employees) are impacted in significant numbers by theCOVID-19
pandemic and are otherwise not willing, available or allowed to conduct work; and our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during theCOVID-19
pandemic. We may be unable to identify and complete acquisitions of suitable properties, which may impede our growth, or our future acquisitions may not yield the returns we expect.
Our ability to expand through acquisitions requires us to identify and complete investment opportunities on favorable terms that are compatible with our growth strategy. Our ability to acquire properties on favorable terms and successfully operate them may be constrained by the following significant risks:
competition from other real estate investors, including REITs and institutional investment funds, which may be able to accept more risk, including higher acquisition prices, than we can prudently manage;
competition from other real estate investors across our acquisition sourcing channels (including brokers, existing tenant relationships, prospective tenant relationships, etc.) that may significantly reduce our acquisition volume or increase the purchase price for a property we acquire;
financing for an acquisition may not be available on favorable terms or at all for potential acquisitions;
significant costs and management attention diverted to evaluate and negotiate potential acquisitions, including ones that we may not subsequently complete;
acquisition of properties that are not and may not become accretive to our results;
cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to debt used to finance the acquisition of such property;
necessary improvements or renovations to acquired properties may exceed budgeted amounts;
market conditions may result in higher than expected vacancy rates and lower than expected rental rates; or
properties acquired may be subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such asclean-up
of undisclosed environmental contamination or claims by tenants, vendors or other persons dealing with the former owners of the properties. Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
The real estate investments made, and expected to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more of our properties in response to changing economic, financial or investment conditions is limited. We may be unable to dispose of properties by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of the jurisdiction in which a property is located.
In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our
properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.
Dispositions of real estate assets could change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect us.our financial results.
CreditWe evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period due to our intention to sell or otherwise dispose of an asset, we must reevaluate whether that asset is impaired under GAAP. Depending on the carrying value of the property at the time we change our intention and capital market conditionsthe amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our accessfinancial results.
In the future, we may choose to acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets.
In the future we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in the Operating Partnership, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the costallocation of capital.partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
PeriodsHigh geographic concentration of volatilityour properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition.
As of December 31, 2020, 11.1% of our portfolio (as a percentage of ABR) was located in Texas, representing the highest concentration of our assets. We are susceptible to adverse developments in the credit and capital markets negatively affecteconomic or regulatory environments of the amounts, sources and costgeographic areas in which we concentrate (or in which we may develop a substantial concentration of capital available to us. We primarily use external financing to fund acquisitions and to refinance indebtedness as it matures. If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our acquisition activity and/or to take other actions to fund our business activities and repayment of debt,assets in the future), such as selling assets. To the extent that we access capital at a higher cost (reflectedbusiness layoffs or downsizing, industry slowdowns, relocations of businesses, increases in higher interest rates for debt financingreal estate and other taxes or lower stock price for equity financing), our acquisition yields, earnings per share and cash flow could be adversely affected.costs of complying with governmental regulations.
Our tenants may fail to successfully operate their businesses, which could adversely affect us.
The success of our investments is materially dependent on the financial stability of our tenants’ financial condition and leasing practices. Adverse economic conditions such as high unemployment levels, interest rates, tax rates and fuel and energy costs may have an impact on the results of operations and financial condition of our tenants and result in a decline in rent or an increased incidence of default under existing leases. Such adverse economic conditions may also reduce overall demand for rental space, which could adversely affect our ability to maintain our current tenants and attract new tenants.
At any given time, our tenants may experience a downturn in their business, including as a result of adverse economic conditions, that may weaken the operating results and financial condition of individual properties or of their business as whole. As a result, a tenant may delay lease commencement, decline to extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy. We depend on our tenants to operate the properties we own in a manner which generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage and pay real estate taxes and maintain the properties in a manner so as not to jeopardize their operating licenses or regulatory status. The ability of our tenants to fulfill their obligations under our leases may depend, in part, upon the overall profitability of their operations. Cash flow generated by certain tenant businesses may not be sufficient for a tenant to meet its obligations to us. Although our occupied properties are generally operationally essential to our tenants, meaning the property is essential to the tenant’s generation of sales and profits, this does not guarantee that a tenant’s operations at a particular property will be successful or that the tenant will be able to meet all of its obligations to us. Our tenants’ failureAs a result, a tenant may delay lease commencement, decline to successfully operate their businesses could materially and adversely affect us.extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy.
Single-tenant leases involve particular and significant risks related to tenant default.
Our strategy focuses primarily on investing in single-tenant
triple-net
leased properties throughout the
U.S.United States. The financial failure of, or default in payment by, a single tenant under its lease is likely to cause a significant reduction in, or elimination of, our rental revenue from that property and a reduction in the value of the property. We may also experience difficulty or a significant delay in
re-leasing
or selling such property. This risk is magnified in situations where we lease multiple properties to a single tenant under a master lease. The failure or default of a tenant under a master lease could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties. Although the master lease structure may be beneficial to us because it restricts the ability of tenants to individually remove underperforming properties from the portfolio of properties leased from us, there is no guarantee that a tenant will not default in its obligations to us or decline to renew its master lease upon expiration.
The default
Contents
A substantial portion of our properties are leased to unrated tenants and the tools we use to measure the credit quality of such tenants may not be accurate.
A substantial portion our properties are leased to unrated tenants whom we determine, through our internal underwriting and credit analysis, to be credit worthy. Many of our tenants are required to provide financial information, which includes balance sheet, income statement and cash flow statement data, on a quarterly and/or annual basis, and, as of December 31, 2018, approximately 52.8% of our lease investment portfolio required the tenant to provide property-level performance information, which includes income statement data on a quarterly and/or annual basis. To assist in our determination of a tenant’s credit quality, we license a product from Moody’s Analytics that provides an EDF and a “shadow rating,” and we evaluate a lease’s property-level rent coverage ratio. An EDF is only an estimate of default probability based, in part, on assumptions incorporated into the product. A shadow rating does not constitute a published credit rating and lacks the extensive company participation that is typically involved when a rating agency publishes a rating; accordingly, a shadow rating may not be as indicative of creditworthiness as a rating published by Moody’s, S&P, or another nationally recognized statistical rating organization. Our calculations of EDFs, shadow ratings and rent coverage ratios are based on financial information provided to us by our tenants and prospective tenants without independent verification on our part, and we must assume the appropriateness of estimates and judgments that were made by the party preparing the financial information. If our measurement of credit quality proves to be inaccurate, we may be subject to defaults, and investors may view our cash flows as less stable.
Decrease in demand for retail and restaurant space may materially and adversely affect us.
As of December 31, 2018, leases representing approximately 33.3% and 13.2% of our Contractual Rent were with tenants in the retail and restaurant industries, respectively, and we may acquire additional retail and restaurant properties in the future. Accordingly, decreases in the demand for retail and/or restaurant spaces adversely impact us. The market for retail and restaurant space has previously been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retail and restaurant companies, the ongoing consolidation in the retail and restaurant industries, the excess amount of retail and restaurant space in a number of markets and, in the case of the retail industry, increasing consumer purchases through catalogs or over the Internet. To the extent that these conditions continue, they are likely to negatively affect market rents for retail and restaurant space, which could materially and adversely affect us.
High geographic concentration of our properties could magnify the effects of adverse economic or regulatory developments in such geographic areas on our operations and financial condition.
As of December 31, 2018, 11.9% of our portfolio (as a percentage of Contractual Rent) was located in Texas, representing the highest concentration of our assets. Geographic concentration exposes us to greater economic or regulatory risks than if we owned a more geographically diverse portfolio. We are susceptible to adverse developments in the economic or regulatory environments of the geographic areas in which we concentrate (or in which we may develop a substantial concentration of assets in the future), such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes or costs of complying with governmental regulations.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
Our results of operations depend on our ability to strategically lease space in our properties (by renewing or re-leasing expiring leases and leasing vacant space), optimize our tenant mix or lease properties on more economically favorable terms. As of December 31, 2018, leases representing approximately 1.5% of our rental revenue will expire during 2019. As of December 31, 2018, five of our properties, representing approximately 0.3% of our total economically yielding owned properties, were vacant. Current tenants may decline, or may not have the financial resources available, to renew current leases and we cannot guarantee that leases that are renewed will have terms that are as economically favorable to us as the expiring lease terms. If tenants do not renew the leases as they expire, we will have to find new tenants to lease our properties and there is no guarantee that we will be able to find new tenants or that our properties will be re-leased at rental rates equal to or above the current average rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights, below-market renewal options or other lease incentive payments will not be offered to attract new tenants. We may experience significant costs in connection with renewing, leasing or re-leasing a significant number of our properties, which could materially and adversely affect us.
Our ability to realize future rent increases will vary depending on changes in the CPI.
Most of our leases contain rent escalators, or provisions that periodically increase the base rent payable by the tenant under the lease. Although 66.6% of our rent escalators increase rent at a fixed amount on fixed dates, as of December 31, 2018, approximately 18.7% (excluding leases on multi-tenant properties) of our rent escalators increase rent by a multiple of any increases in the CPI or the lesser of (a) a multiple of any increase in the CPI over a specified period or (b) a fixed percentage. If the product of any increase in the CPI multiplied by the applicable factor is less than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on a fixed percentage. Therefore, during periods of low inflation or deflation, small increases or decreases in the CPI will subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on fixed percentages or amounts. Conversely, if the product of any increase in the CPI multiplied by the applicable factor is more than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on an increase in CPI. Therefore, periods of high inflation will subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on CPI increases.
The bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and material losses to us.
The
occurrence of a tenant bankruptcy or insolvency
of any of our tenants could diminish the income we receive from that tenant’s lease or leases.
In particular,A substantial portion our properties are leased to unrated tenants, which may increase the
retail industry is facing reductions in sales revenues and increased bankruptcies throughout the United States, and revenues generated from retail tenants represented approximately 33.3% of our Contractual Rent for the month ended December 31, 2018.risk that a tenant bankruptcy or insolvency will occur. If a tenant becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease or leases with us. Any claims against such bankrupt tenant for unpaid future rent would be subject to statutory limitations that would likely result in our receipt of rental revenues that are substantially less than the contractually specified rent we are owed under the lease or leases. In addition, any claim we have for unpaid past rent, if any, may not be paid in full. We may also be unable to
re-lease
a terminated or rejected space or to
re-lease
it on comparable or more favorable terms.
Moreover, tenants who are considering filing for bankruptcy protection may request
that we agree to amendments of their master leases to remove certain of the properties they lease from us under such master leases. We cannot guarantee that we will be able to sell or
re-lease
such properties or that lease termination fees, if any, received in exchange for such releases will be sufficient to make up for the rental revenues lost as a result of such lease amendments.
As a result, tenant bankruptcies may materially and adversely affect us.Property vacancies could result in significant capital expenditures and illiquidity.
The loss of a tenant, either through lease expiration or tenant bankruptcy or insolvency, may require us to spend significant amounts of capital to renovate the property before it is suitable for a new tenant. Many of the leases we enter into or acquire are for properties that are specially suited to the particular business of our tenants. Because these properties have been designed or physically modified for a particular tenant, if the current lease is terminated or not renewed, we may be required to renovate the property at substantial costs, decrease the rent we charge or provide other concessions in order to lease the property to another tenant. In the event we are required to sell the property, we may have difficulty selling it to a party other than the tenant due to the special purpose for which the property may have been designed or modified. This potential illiquidity may limit our ability to quickly modify our portfolio in response to changes in economic or other conditions, including tenant demand. These limitations may materially and adversely affect us.
Our future results will suffer if we do not effectively manage our expanded operations.
We may continue to expand our operations through additional acquisitions and other strategic transactions, and modernize our information technology and management systems through new systems implementations, some of which may involve complex challenges. Our future success will depend, in part, upon our ability to manage our expansion opportunities, integrate new operations into our existing business in an efficient and timely manner, successfully monitor our operations, costs and regulatory compliance, and develop and maintain other necessary systems, processes and internal controls. We cannot guarantee that our expansion or acquisition opportunities will
be successful or that we will realize their expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
We may be unable to identify and complete acquisitions of suitable properties, which may impede our growth, or our future acquisitions may not yield the returns we expect.
Our ability to expand through acquisitions requires us to identify and complete acquisitions or investment opportunities that are compatible with our growth strategy and to successfully integrate newly acquired properties into our portfolio. We continually evaluate investment opportunities and may acquire properties when strategic opportunities exist. Our ability to acquire properties on favorable terms and successfully operate them may be constrained by the following significant risks:
we face competition from other real estate investors with significant capital, including REITs and institutional investment funds, which may be able to accept more risk than we can prudently manage, including risks associated with paying higher acquisition prices;
we face competition from other potential acquirers which may significantly increase the purchase price for a property we acquire, which could reduce our growth prospects;
we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete;
we may acquire properties that are not accretive to our results upon acquisition, and we may be unsuccessful in managing and leasing such properties in accordance with our expectations;
our cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to debt used to finance the acquisition of such property;
we may discover unexpected items, such as unknown liabilities, during our due diligence investigation of a potential acquisition or other customary closing conditions may not be satisfied, causing us to abandon an acquisition opportunity after incurring expenses related thereto;
we may fail to obtain financing for an acquisition on favorable terms or at all;
we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;
market conditions may result in higher than expected vacancy rates and lower than expected rental rates; or
we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
If any of these risks are realized, we may be materially and adversely affected.
Any material failure, weakness, interruption or breach in security of our information systems could prevent us from effectively operating our business.
We rely on information systems across our operations and corporate functions, including finance and accounting, and depend on such systems to ensure payment of obligations, collection of cash, data warehousing to support analytics, and other various processes and procedures. Our ability to efficiently manage our business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, or a breach in security of these systems, such as in the event of cyber-attacks, could result in the theft of intellectual property, personal information or personal property, damage to our reputation and third-party claims, as well as reduced efficiency in our operations and in the accuracy in our internal and external financial reporting. The remediation of such problems could result in significant unplanned expenditures.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
The real estate investments made, and expected to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial or investment conditions is limited. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property. We may be unable to realize our investment objective
by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of the jurisdiction in which a property is located.
In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which may materially and adversely affect us.
We face significant competition for tenants, which may decrease or prevent increases of the occupancy and rental rates of our properties, and competition for acquisitions may reduce the number of acquisitions we are able to complete and increase the costs of these acquisitions.properties.
We compete with numerous developers, owners and operators of properties, many of which own properties similar to ours in the same markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates or to offer more substantial rent abatements, tenant improvements, early termination rights, below-market renewal options or other lease incentive payments in order to retain tenants when our leases expire. Competition for tenants could decrease or prevent increases of the occupancy and rental rates of our properties, which couldproperties.
Decrease in demand for traditional retail and restaurant space may materially and adversely affect us.
As of December 31, 2020, leases representing approximately 30.0% and 12.2% of our ABR were with tenants in traditional retail and restaurant industries, respectively, and we may acquire additional properties in the future leased to traditional retail and restaurant tenants. The market for traditional retail and restaurant space has previously been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retail and restaurant companies, the ongoing consolidation in the traditional retail and restaurant industries, the excess amount of traditional retail and restaurant space in a number of markets and, in the case of the traditional retail industry, increasing consumer purchases over the Internet. To the extent that these conditions continue, they are likely to negatively affect market rents for traditional retail and restaurant space.
We
also face competition for acquisitionsmay be unable to renew leases, lease vacant space orre-lease
space as leases expire on favorable terms or at all.Our results of
real property from investors, including tradedoperations depend on our ability to strategically lease space in our properties (by renewing orre-leasing
expiring leases and
non-traded public REITs, private equity investors and institutional investment funds, someleasing vacant space), optimize our tenant mix or lease properties on more economically favorable terms. As of
whichDecember 31, 2020, leases representing approximately 2.6% of our ABR will expire during 2021. As of December 31, 2020, seven of our properties, representing approximately 0.4% of our total properties, were vacant. Current tenants may decline, or may not have
greaterthe financial resources
thanavailable, to renew current leases and we
cannot guarantee that leases that are renewed will have terms that are as economically favorable to us as the expiring lease terms. If tenants do
a greater abilitynot renew the leases as they expire, we will have to
borrow fundsfind new tenants to
acquirelease our properties and
there is no guarantee that we will be able to find new tenants or that our properties will bere-leased
at rental rates equal to or above the
abilitycurrent average rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights, below-market renewal options or other lease incentive payments will not be offered to
accept more risk thanattract new tenants. Many of the leases we
can prudently manage. This competition may increaseenter into or acquire are for properties that are specially suited to the
demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such acquisition properties. This competition will increase if investments in real estate become more attractive relative to other types of investment. Accordingly, competition for the acquisition of real property could materially and adversely affect us. The loss of a borrower or the failure of a borrower to make loan payments on a timely basis will reduce our revenues, which could lead to losses on our investments and reduced returns to our stockholders.
We have originated or acquired long-term, commercial mortgage and other loans. The successparticular business of our loan investments is materially dependent ontenants. Because these properties have been designed or physically modified for a particular tenant, in addition to increasing the financial stability of our borrowers. The success of our borrowers is dependent on each of their individual businesses and their industries, which could be affected by economic conditions in general, changes in consumer trends and preferences and other factors over which neither they nor we have control. A default of a borrower on its loan payments to us that would prevent us from earning interest or receiving a return of the principal of our loan could materially and adversely affect us. In the event of a default, we may also experience delays in enforcing our rights as lender and may incur substantial costs in collecting the amounts owed to us and in liquidating any collateral.
Foreclosure and other similar proceedings used to enforce payment of real estate loans are generally subject to principles of equity, which are designed to relieve the indebted party from the legal effect of that party’s default. Foreclosure and other similar laws may limit our right to obtain a deficiency judgment against the defaulting party after a foreclosure or sale. The application of any of these principles may lead to a loss or delay in the payment on loans we hold, which in turn could reduce the amounts we have available to make distributions. Further,difficulties described above associated with releasing such space, in the event we are required to sell the property, we may have difficulty selling it to foreclose on a property,party other than the amount we receive fromtenant due to the foreclosure sale ofspecial purpose for which the property may be inadequatehave been designed or modified. This potential illiquidity
may limit our ability to
fully payquickly modify our portfolio in response to changes in economic or other conditions, including tenant demand. We may experience significant costs in connection with renewing, leasing orre-leasing
a significant number of our properties. Our ability to realize future rent increases will vary depending on changes in the amounts owedCPI.
As of December 31, 2020, approximately 17.5% of our ABR is subject to usrent escalators which increase rent by a multiple of any increases in the CPI or the lesser of (a) 1 to 2 times any increase in the CPI over a specified period, (b) a fixed percentage, or (c) a fixed schedule. If the product of any increase in the CPI multiplied by the borrower andapplicable factor is less than the fixed percentage, the increased rent we are entitled to receive will be less than what we otherwise would have been entitled to receive if the rent escalator was based solely on a fixed percentage. Therefore, during periods of low inflation or deflation, small increases or decreases in the CPI subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our costs incurredrent escalators were based solely on fixed percentages or amounts. Conversely, if the product of any increase in the CPI multiplied by the applicable factor is more than the fixed percentage, the increased rent we are entitled to foreclose, repossess and sellreceive will be less than what we otherwise would have been entitled to receive if the propertyrent escalator was based solely on an increase in CPI. Therefore, periods of high inflation subject us to the risk of receiving lower rental revenue than we otherwise would have been entitled to receive if our rent escalators were based solely on CPI increases.
We may be vulnerable to security breaches or cyber-attacks which could materiallydisrupt our operations and adversely affect us.have a material adverse effect on our financial performance and operating results.
Security breaches, cyber-attacks, or disruption, of our or our third-party service providers’ physical or information technology infrastructure, networks and related management systems could result in, among other things, a breach of our networks and information technology infrastructure, the misappropriation of our or our tenants’ proprietary or confidential information, interruptions or malfunctions in our or our tenants’ operations, delays or interruptions to our ability to meet tenant needs, breach of our legal, regulatory or contractual obligations, inability to access or rely upon critical business records, unauthorized access to our facilities or other disruptions in our operations. Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware; hardware vulnerabilities such as Meltdown and Spectre; accident or human error by our own personnel or third parties; criminal activity or malfeasance (including by our own personnel); fraud or impersonation scams perpetrated against us or our partners or tenants; or security events impacting our third-party service providers or our partners or tenants. Our investments in mortgage loansexposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store an increasing amount of tenant data.
We recognize the increasing volume of cyber-attacks and employ commercially practical efforts to provide reasonable assurance such attacks are appropriately mitigated. We may be affected by unfavorable real estate market conditions, including interest rate fluctuations, which could decrease the value of those loans.
Our investments in mortgage loansrequired to expend significant financial resources to protect against or respond to such breaches. Techniques used to breach security change frequently and are subject to risk of default by the borrowers and to interest rate risks. To the extent we incur delays in liquidating defaulted mortgage loans,generally not recognized until launched against a target, so we may not be able to obtain all amounts duepromptly detect that a security breach or unauthorized access has occurred. We also may not be able to us
under such loans. Further, we will not know whether the values of the properties securing the mortgage loans will remain at the levels existing on the dates of origination of those mortgage loansimplement security measures in a timely manner or, the dates of our investment in the loans. If the values of the underlying properties decline, the value of the collateral securing our mortgage loans will also declineif and if we were to foreclose on any of the properties securing the mortgage loans,when implemented, we may not be able to selldetermine the extent to which these measures could be circumvented. As we provide assurances to our tenants that we provide a high level of security, if an actual or lease themperceived security breach occurs, the market’s perception of our security measures could be harmed and we could lose current and potential tenants, and such a breach could be harmful to our brand and reputation. Any breaches that may occur could expose us to increased risk of lawsuits, material monetary damages, potential violations of applicable privacy and other laws, penalties and fines, harm to our reputation and increases in our security and insurance costs. In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. We cannot guarantee that any backup systems, regular data backups, security protocols, network protection mechanisms and other procedures currently in place, or that may be in place in the future, will be adequate to prevent network and service interruption, system failure, damage to one or more of our systems or data loss in the event of a security breach or attack.
In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an amount equalevolving area of law with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the unpaid amounts dueUnited States. We may not be able to limit our liability or damages in the event of such a loss. Data protection legislation is becoming increasingly common in the United States at both the federal and state level and may require us underto further modify our data processing practices and policies. For example, the mortgage loans. As such, defaultsCalifornia
Consumer Privacy Act of 2018, which took effect on mortgage loansJanuary 1, 2020 and is expected to provide California residents with increased privacy rights and protections with respect to their personal information. Compliance with existing, proposed and recently enacted laws and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks. Misuse of or failure to secure personal information could also result in which we invest may materiallyviolation of data privacy laws and adversely affect us.regulations, proceedings against the Company by governmental entities or others, fines and penalties, or damage to our reputation and credibility.
Inflation may materially and adversely affect us and our tenants.
Increased inflation could have a negative impact on variable-rate debt we currently have or that we may incur in the future. Our leases typically contain provisions designed to mitigate the adverse impact of inflation on our results of operations. Because tenants are typically required to pay all property operating expenses, increases in property-level expenses at our leased properties generally do not affect us. However, increased operating expenses at vacant properties and the limited number of properties that are not subject to full
triple-net
leases could cause us to incur additional operating expenses, which could increase our exposure to inflation. Additionally, the increases in rent provided by many of our leases may not keep up with the rate of inflation. Increased costs may also have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us.
Changes in market interest rates may adversely impact the value of our common stock.
The market price of shares of our common stock will generally be influenced by the distribution yield on shares of our common stock (as a percentage of the price of shares of our common stock) relative to market interest rates. Further increases in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of shares of our common stock to expect a higher distribution yield. In addition, higher market interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of shares of our common stock to decrease.
The market price and trading volume of shares of our common stock may fluctuate or decline.
The market price and trading volume of our common stock may fluctuate widely due to various factors, including:
broad market fluctuations unrelated to our or our competitors’ operating performances;
actual or anticipated variations in our or our competitors'competitors’ quarterly operating results or distributions;
publication of research reports about us, our competitors or the real estate industry;
adverse
market reaction to any additional indebtedness we incur or debt or equity securities we or the Operating Partnership issue in the future;
additions or departures of key management personnel;
changes in our credit ratings;
the financial condition, performance and prospects of our tenants;
changes in market interest rates in comparison to the distribution yield on shares of our common stock; and
the realization of any of the other risk factors presented in this Annual Report on Form
10-K.
We may issue shares of our common stock or other securities without stockholder approval, including shares issued to satisfy REIT dividend distribution requirements. The Operating Partnership may issue partnership interests to third parties, and such partnership interests would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when partnership interests in the Operating Partnership are issued. Our existing stockholders have no preemptive rights to acquire any of these securities, and any issuance of equity securities by us or the Operating Partnership may dilute stockholder investment.
Broad market fluctuations could negatively impact the market price of shares of our common stock.
The stock market has experienced extreme price and volume fluctuations that have affected the market price of the common equity of many companies in industries similar or related to ours and that have been unrelated to these companies’ operating performances. These broad market fluctuations could reduce the market price of shares of our common stock. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalizations. Either of these factors could lead to a material decline in the market price of our common stock.
If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
As a result of material weaknesses or significant deficiencies that may be identified in our internal control over financial reporting in the future, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require remediation. If we or our independent registered public accounting firm discover any such weaknesses or deficiencies, we will make efforts to further improve our internal control over financial reporting controls. However, there is no assurance that we will be successful. Any failure to maintain effective controls or timely effect any necessary improvement of our internal control over financial reporting controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect the listing of our common stock on the NYSE. Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.
Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all.
In order to maintain our qualification as a REIT, we are required under the Code to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gain. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we may rely on third-party sources to fund our capital needs. We may not be able to obtain the financing on favorable terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:
general market conditions;
the market’s perception of our growth potential;
our current debt levels;
our current and expected future earnings;
our cash flow and cash distributions; and
the market price per share of our common stock.
If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
Historically, we have raised a significant amount of debt capital through our asset-backed securitization program and the CMBS market. We have generally used the proceeds from these financings to repay debt and fund real estate acquisitions. On May 31, 2018, in conjunction with the Spin-Off, we contributed Master Trust 2014 to SMTA. As of December 31, 2018, we had issued notes under our asset-backed securitization program in one class (Series 2013-2 Class A) with an outstanding principal balance of $167.9 million. These Master Trust Notes had a maturity of 5.0 years as of December 31, 2018. In addition, we had CMBS loans with an aggregate outstanding principal balance of $274.8 million and an average maturity of 4.5 years as of December 31, 2018. Our obligations under these loans are generally secured by liens on certain of our properties. No assurance can be given that the CMBS market will be available to us in the future, whether to refinance existing debt or to raise additional debt capital. Moreover, we view our ability to substitute collateral under our asset-backed securitization program favorably, and no assurance can be given that financing facilities offering similar flexibility will be available to us in the future.
Dispositions of real estate assets could change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.
We evaluate real estate assets for impairment based on the projected cash flow of the asset over our anticipated holding period. If we change our intended holding period due to our intention to sell or otherwise dispose of an asset, we must reevaluate whether that asset is impaired under GAAP. Depending on the carrying value of the property at the time we change our intention and the amount that we estimate we would receive on disposal, we may record an impairment loss that would adversely affect our financial results. This loss could be material to our assets in the period that it is recognized.
Loss of our key personnel with long-standing business relationships could materially impair our ability to operate successfully.
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly our President and Chief Executive Officer, Jackson Hsieh, who has extensive market knowledge and relationships and exercises substantial influence over our operational, financing, acquisition and
disposition activity.
Many of our other key executive personnel, particularly our executive and senior vice presidents, also have extensive experience and strong reputations in the real estate industry and have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel and arranging necessary financing. In particular, the extent and nature of the relationships that these individuals have developed with financial institutions and existing and prospective tenants is critically important to the success of our business. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry personnel, which could materially and adversely affect us.
We may become subject to litigation, which could materially and adversely affect us.
In the ordinary course of business, we may become subject to litigation, including claims relating to our operations, security offerings and otherwise. Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against. We generally intend to vigorously defend ourselves. However, we cannot be certain of the ultimate outcomes of any claims that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby materially and adversely affecting us. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could materially and adversely impact us, expose us to increased risks that would be uninsured, and materially and adversely impact our ability to attract directors and officers.
Costs of compliance with, or liabilities related to, environmental laws may materially and adversely affect us.
The properties we own or have owned in the past may subject us to known and unknown environmental liabilities. Under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages, which may be substantial, resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under or migrating from such property, including costs to investigate, clean up such contamination and liability for harm to natural resources. We may face liability regardless of:
| | |
• our knowledge of the contamination; • the timing of the contamination; | | • the cause of the contamination; or • the party responsible for the contamination of the property. |
the timing of the contamination;
the cause of the contamination; or
the party responsible for the contamination of the property.
There may be environmental liabilities associated with our properties of which we are unaware. We obtain Phase I environmental site assessments on all properties we finance or acquire. The Phase I environmental site assessments are limited in scope and therefore may not reveal all environmental conditions affecting a property. Therefore, there could be undiscovered environmental liabilities on the properties we own. Some of our properties use, or may have
used in the past, underground tanks for the storage of petroleum-based products or waste products that could create a potential for release of hazardous substances or penalties if tanks do not comply with legal standards. If environmental contamination exists on our properties, we could be subject to strict, joint and/or several liability for the contamination by virtue of our ownership interest. Some of our properties may contain ACM. Strict environmental laws govern the presence, maintenance and removal of ACM and such laws may impose fines and penalties for failure to comply with these requirements or expose us to third-party liability (e.g., liability for personal injury associated with exposure to asbestos). Strict environmental laws also apply to other activities that can occur on a property, such as air emissions and water discharges, and such laws may impose fines and penalties for violations.
The presence of hazardous substances on a property may adversely affect our ability to sell, lease or improve the property or to borrow using the property as collateral. In addition, environmental laws may create liens on contaminated properties in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which they may be used or businesses may be operated, and these restrictions may require substantial expenditures.
In addition, although our leases generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant’s activities on the property, we could be subject to strict liability by virtue of our ownership interest. We cannot be sure that our tenants will, or will be able to, satisfy their indemnification obligations, if any, under our leases. Furthermore, the discovery of environmental liabilities on any of our properties could lead to significant remediation costs or to other liabilities or obligations attributable to the tenant of that property, which may affect such tenant’s ability to make payments to us, including rental payments and, where applicable, indemnification payments.
Our environmental liabilities may include property damage, personal injury, investigation and clean-up costs. These costs could be substantial. Although we may obtain insurance for environmental liability for certain properties that are deemed to warrant coverage, our insurance may be insufficient to address any particular environmental situation and we may be unable to continue to obtain insurance for environmental matters, at a reasonable cost or at all, in the future. If our environmental liability insurance is inadequate, we may become subject to material losses for environmental liabilities. Our ability to receive the benefits of any environmental liability insurance policy will depend on the financial stability of our insurance company and the position it takes with respect to our insurance policies. If we were to become subject to significant environmental liabilities, we could be materially and adversely affected.
Most of the environmental risks discussed above refer to properties that we own or may acquire in the future. However, each of the risks identified also applies to the owners (and potentially, the lessees) of the properties that secure each of the loans we have made and any loans we may acquire or make in the future. Therefore, the existence of environmental conditions could diminish the value of each of the loans and the abilities of the borrowers to repay the loans and could materially and adversely affect us.
Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediation.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, should our tenants or their employees or customers be exposed to mold at any of our properties we could be required to undertake a costly remediation program to contain or remove the mold from the affected property. In addition, exposure to mold by our tenants or others could subject us to liability if property damage or health concerns arise. If we were to become subject to significant mold-related liabilities, we could be materially and adversely affected.
Insurance on our properties may not adequately cover all losses, which could materially and adversely affect us.
Our tenants are required to maintain liability and property insurance coverage for the properties they lease from us pursuant to
triple-net
leases. Pursuant to such leases, our tenants are generally required to name us (and any of our lenders that have a mortgage on the property leased by the tenant) as additional insureds on their liability policies and additional insured and/or loss payee (or mortgagee, in the case of our lenders) on their property policies. All tenants are required to maintain casualty coverage and most carry limits at 100% of replacement cost. Depending on the location of the property, losses of a catastrophic nature, such as those caused by earthquakes and floods, may be
covered by insurance policies that are held by our tenant with limitations such as large deductibles or
co-payments
that a tenant may not be able to meet. In addition, losses of a catastrophic nature, such as those caused by wind/hail, hurricanes, terrorism or acts of war, may be uninsurable or not economically insurable. In the event there is damage to our properties that is not covered by insurance and such properties are subject to recourse indebtedness, we will continue to be liable for the indebtedness, even if these properties are irreparably damaged.
Inflation, changes in building codes and ordinances, environmental considerations, and other factors, including terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed. In that situation, the insurance proceeds received may not be adequate to restore our economic position with respect to the affected real property. Furthermore, in the event we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications without significant capital expenditures which may exceed any amounts received pursuant to insurance policies, as reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements. The loss of our capital investment in or anticipated future returns from our properties due to material uninsured losses could materially and adversely affect us.
Compliance with the ADA and fire, safety and other regulations may require us to make unanticipated expenditures that materially and adversely affect us.
Our properties are subject to the ADA. Under the ADA, all public accommodations must meet federal requirements relatedfire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to access and use by disabled persons. Compliance with the ADA requirements could require removal of access barriers and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both.our properties. While our tenants are obligated by law to comply with the ADA and typically obligated under our leases and financing agreements to cover costs associated with compliance, if required changes involve greater expenditures than anticipated or if the changes must be made on a more accelerated basis than anticipated, our tenants'tenants’ ability to cover the costs could be adversely affected. We may be required to expend our own funds to comply with the provisions of the ADA, which could materially and adversely affect us.
In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties.ADA. We may be required to make substantial capital expenditures to comply with thosethese requirements and may be required to obtain approvals from various authorities with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. There can be no assurance that existing laws and regulatory policies will not adversely affect us or the timing or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that increase such delays or result in additional costs. Additionally, failure to comply with any of these requirements could result in the imposition of fines by governmental authorities or awards of damages to private litigants. While we intend to only acquire properties that we believe are currently in substantial compliance with all regulatory requirements, these requirements may change and new requirements may be imposed which would require significant unanticipated expenditures by us and could materially and adversely affect us.
Changes in accounting standards may materially and adversely affect us.
From time to time the FASB, and the SEC, who create and interpret appropriate accounting standards, may change the financial accounting and reporting standards or their interpretation and application of these standards that will govern the preparation of our financial statements. These changes could materially and adversely affect our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in restating prior period financial statements. Similarly, these changes could materially and adversely affect our tenants’ reported financial condition or results of operations and affect their preferences regarding leasing real estate.
The SEC is currently considering whether issuers in the U.S. should be required to prepare financial statements in accordance with IFRS instead of GAAP. IFRS is a comprehensive set of accounting standards promulgated by the IASB, which are rapidly gaining worldwide acceptance. The SEC currently has not finalized the time frame it expects that U.S. issuers would first report under the new standards. If IFRS is adopted, the potential changes associated with the adoption or convergence with IFRS, may materially and adversely affect us.
Additionally, the FASB is considering various changes to GAAP, some of which may be significant, as part of a joint effort with the IASB to converge accounting standards. In particular, FASB issued a new accounting standard that
requires companies to capitalize all leases on their balance sheets by recognizing a lessee’s rights and obligations. For public companies, this new standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Many companies that account for certain leases on an “off balance sheet” basis would be required to account for such leases “on balance sheet” upon adoption of this rule. This change removes many of the differences in the way companies account for owned property and leased property, and could have a material effect on various aspects of our tenants’ businesses, including their credit quality and the factors they consider in deciding whether to own or lease properties. Additionally, it could cause companies that lease properties to prefer shorter lease terms in an effort to reduce the leasing liability required to be recorded on the balance sheet. This new standard could also make lease renewal options less attractive, because, under certain circumstances, the rule would require a tenant to assume that a renewal right will be exercised and accrue a liability relating to the longer lease term.
In the future, we may choose to acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets.
In the future we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in the Operating Partnership, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
RISKS RELATED TO OUR RELATIONSHIP WITH SMTACAPITAL STRUCTURE
A substantial numberOur growth depends on external sources of SMTA’s propertiescapital that are leasedoutside of our control and may not be available to one tenant, Shopko, which has filed for bankruptcy protection.us on commercially reasonable terms or at all.
On January 16, 2019, Shopko and its affiliates filed petitions for relief under Chapter 11To maintain our qualification as a REIT, we are required to distribute annually at least 90% of the Bankruptcy Code. SMTA reported that, as of September 30, 2018, it leased 90 properties to Shopko, primarily pursuant to four master leases (relating to 33, 31, 21 and 4 properties, respectively) and one single site lease, under which SMTA received approximately $3.6 million in contractual rent per month. SMTA reported that revenues generated from Shopko represented 18.3% of SMTA’s Contractual Rent for the month ended September 30, 2018, and a significant portion of SMTA’s estimated cash available for distribution is derived from rental revenues received from Shopko. Additionally, in January 2018, Spirit Realty, L.P. extended a senior secured term loan to Shopko in the amount of $35.0 million, which was contributed to SMTA priorour REIT taxable income, determined without regard to the Spin-Off. The senior secured term loan matures in June 2020, bears interest at a rate of 12% per annumdividends paid deduction and requires repayment in consecutive quarterly installments of $583,625, the first of which was paid in the fourth quarter 2018.
SMTA has reported that it does not expectexcluding any net capital gain. In addition, we are subject to receive any additional rent payments from any of the properties leased to Shopko. Furthermore, the senior secured term loan extended to Shopko has been accelerated. Although SMTA intends to exercise and pursue all of its rights and remedies with respectfederal corporate income tax to the senior secured term loan, there can be no assurancesextent that there will be a recovery in whole or in part with respectwe distribute less than 100% of our REIT taxable income, determined without regard to the $34.4 million outstanding balance. As a result, SMTA’s resultsdividends paid deduction and including any net capital gain. Because of operations and financial condition willthese distribution requirements, we may not be significantly impacted by Shopko’s bankruptcy. As of September 30, 2018, SMTA’s Adjusted Debtable to Annualized Adjusted EBITDAre ratio was 9.6x and its Fixed Charge Coverage Ratio was 1.8x. SMTA’s Fixed Charge Coverage Ratio does not reflect the impact of its amortizing debt principal payments. Had Shopko completely defaulted on its payments to SMTA at the beginning of the third quarter 2018, SMTA’s Adjusted Debt to Annualized Adjusted EBITDAre ratio as of September 30, 2018 would have been 12.4x and its Fixed Charge Coverage Ratio would have been 1.4x.
Because a significant portion of SMTA’s estimated cash available for distribution is derivedfund future capital needs, including acquisition financing, from rental revenues received from Shopko, Shopko’s bankruptcy could limit or eliminate SMTA’s ability to make distributions to its common stockholders, which could limit or eliminate SMTA’s obligation and/or ability to make cash payments or distributions to us, as holders of 10% series A preferred shares of beneficial interest of SMTA ("SMTA Preferred Stock"), and could cause us to lose all or a part of the value of our investment in SMTA Preferred Stock. In addition, Shopko’s bankruptcy could limit or eliminate SMTA’s ability to make cash payments to us under the Asset Management Agreement, which could cause us to receive SMTA Preferred Stock in lieu of cash payment of the management fee, which would exacerbate the risks associated with our investment in SMTA Preferred Stock. See “-Under certain circumstances, SMTA may pay us the management fee due under the Asset Management Agreement in SMTA Preferred Stock rather than cash, which
would adversely affect ouroperating cash flow AFFO and AFFO per share, as well as increase the risks relatedmay have to our ownership of SMTA Preferred Stock.”
rely on third-party sources. We may not be able to collect amounts to which we are contractually entitled underobtain the Asset Management Agreement or SMTA Preferred Stock upon a resolution of SMTA and/or a termination of the Asset Management Agreement.
On January 16, 2019, SMTA announced that its board of trustees has elected to accelerate SMTA’s previously announced strategic plan and has engaged advisors to explore strategic alternatives focusedfinancing on maximizing shareholder value, including a sale of SMTA or Master Trust 2014, a merger or other potential alternatives. SMTA has not set a timetable for completion of the process.
There can be no assurance that SMTA’s exploration of strategic alternatives will result in any transaction or other alternative. Additionally, there can be no assurance that we will be able to collect amounts to which we are contractually entitled under the Asset Management Agreement or SMTA Preferred Stock in the event of a resolution of SMTA and/or a termination of the Asset Management Agreement.
Asset Management Agreement.Pursuant to the Asset Management Agreement, we are entitled to a termination fee upon occurrence of certain events and, if applicable thresholds are met, a promote payment in the event that the Asset Management Agreement is terminated (a) by SMTA without cause or (b) by us for cause (including upon a change in control of SMTA). Although SMTA has announced that its board of trustees has elected to accelerate its previously announced strategic plan, we cannot control a decision by SMTA’s board of trustees to terminate the Asset Management Agreement without cause or effect a change of control of SMTA. As a result, such termination could occur at a time when SMTA does not have sufficient cash to pay us the termination fee or a promote that we would otherwise be entitled to or at a time when the SMTA stockholder return threshold for the promote has not been met. Additionally, should the Asset Management Agreement be terminated without cause by us, or for cause by SMTA, we are not entitled to the termination fee or any otherwise applicable promote payment.
SMTA Preferred Stock. Pursuant to the terms of the SMTA Preferred Stock, SMTA must offer to purchase our shares of SMTA Preferred Stock at the liquidation preference, plus any accrued and unpaid dividends to, but not including, the payment date, upon the occurrence of a certain change of control events. However, if a change of control were to occur, SMTA may not have sufficient funds available at such time to pay the purchase price of our shares of SMTA Preferred Stock.Moreover, the payment of accrued dividends on the SMTA Preferred Stock will be subordinated to all of SMTA’s existing and future debt. SMTA reported that, as of September 30, 2018, it had approximately $2.03 billion aggregate principal amount of indebtedness outstanding that would rank senior to the SMTA Preferred Stock. In the event of any liquidation, dissolution or winding up of SMTA, SMTA may have insufficient assets available to make distributions or payments of accrued dividends on the SMTA Preferred Stock. Additionally, SMTA may have insufficient assets to repay our investment in SMTA Preferred Stock.
Furthermore, if SMTA’s business, financial condition, liquidity and results of operations further deteriorate prior to any resolution of SMTA and/or a termination of the Asset Management Agreement, SMTA’s obligation and/or ability to make cash payments or distributions to us, including under the Asset Management Agreement and as holders of SMTA Preferred Stock, may be limited or eliminated and we could lose all or a part of the value of our investment in the SMTA Preferred Stock. See “Our relationship with SMTA involves certain risks and uncertainties, many of which are beyond our control” and the risk factors that follow.
Our relationship with SMTA involves certain risks and uncertainties, many of which are beyond our control.
Our relationship with SMTA involves certain risks and uncertainties, many of which are beyond our control. If any of the following risks, as well as others described in this report (including the risks and uncertainty associated with the reduction in rental revenues received by SMTA from Shopko), occur, SMTA’s business, financial condition, liquidity and results of operations could further deteriorate. As discussed in the risk factors that follow, if this were to happen, SMTA’s obligation and/or ability to make cash payments or distributions to us, including under the Asset Management Agreement and as holders of SMTA Preferred Stock, may be limited or eliminated and we could lose all or a part of the value of our investment in the SMTA Preferred Stock.
SMTA may be unable to maintain sufficient liquidity to meet its obligations to us prior to the consummation of a strategic or alternative transaction, if any.
SMTA’s tenants may fail to successfully operate their businesses, which could adversely affect SMTA.
A substantial portion of SMTA’s properties are leased to unrated tenants, and the tools we, as external manager, use to measure the credit quality of such tenants may not be accurate.
Decrease in demand for retail and restaurant space may materially and adversely affect SMTA.
SMTA faces significant competition for tenants, which may decrease or prevent increases of the occupancy and rental rates of its properties.
SMTA reported that, as of September 30, 2018, it had approximately $2.03 billion aggregate principal amount of indebtedness outstanding, which may expose it to the risk of default under its debt obligations, limit its ability to obtain additional financing and affect the market price of shares of SMTA’s common stock and, consequently, our ability to earn a cash promote payment.
Although SMTA’s board of trustees has elected to accelerate SMTA’s previously announced strategic plan and explore strategic alternatives, it may change that decision without stockholder approval, and SMTA may pursue other objectives, including those that would increase SMTA's leverage, which may increase SMTA's risk of default under its debt obligations.
Although SMTA intends to exercise and pursue all of its rights and remedies with respect to the senior secured term loan extended to Shopko, there can be no assurances that there will be a recovery in whole or in part.
Current market conditions could adversely affect SMTA’s ability to refinance existing indebtedness or obtain additional financing for growth on acceptablefavorable terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:
Failure to maintain SMTA’s qualification as a REIT would have significant adverse consequences to SMTA, general market conditions;
the market’s perception of our growth potential;
our current and expected future earnings;
our cash flow and cash distributions; and
the market price of shares of SMTA’s common stock and, consequently, our ability to earn a cash promote payment.
Under certain circumstances, SMTA may pay us the management fee due under the Asset Management Agreement in SMTA Preferred Stock rather than cash, which would adversely affect our cash flow, AFFO and AFFO per share as well as increase the risks related toof our ownership of SMTA Preferred Stock.common stock.
Pursuant to the Asset Management Agreement, SMTA is required to pay us an annual management fee of $20.0 million, payable in equal monthly installments, in arrears. However, in the event of a “Management Fee PIK Event,” all or a portion of such fee may be paid in SMTA Preferred Stock. A “Management Fee PIK Event” means (i) a good faith determination by SMTA’s board of trustees that forgoing the payment of all or any portion of the monthly installment of the management fee is necessary for SMTA to have sufficient funds to declare and pay dividends required to be paid in cash in order for it to maintain its status as a REIT under the Internal Revenue Code of 1986, as amended, and to avoid incurring income or excise taxes, in which case such necessary portion shall be paid in SMTA Preferred Stock, or (ii) the occurrence and continuation of an “Early Amortization Event,” “Event of Default” or “Sweep Period,” in each case as defined pursuant under the Second Amended and Restated Master Indenture, dated as of May 20, 2014, among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., as amended and supplemented from time to time, in which case our entire monthly installment will be paid in SMTA Preferred Stock. Receiving payment of the management fee in SMTA Preferred Stock, rather than cash, would adversely affect our cash flow, AFFO and AFFO per share, as well as increase the risks related to our ownership of SMTA Preferred Stock.
Many of the factors that could trigger a Management Fee PIK Event are beyond our control, including the ability of SMTA’s tenants to successfully operate their businesses. As is the case with our investments, the success of SMTA’s investments is materially dependent on the financial stability of its tenants’ financial condition and leasing practices. See “-Our tenants may fail to successfully operate their businesses, which could adversely affect us.” At any given time, SMTA’s tenants may experience a downturn in their business that causes them to delay lease commencement, decline to extend a lease upon its expiration, fail to make rental payments when due, become insolvent or declare bankruptcy.
A substantial number of SMTA���s properties are leased to one tenant, Shopko, and rental revenues received from Shopko represent a significant portion of SMTA’s estimated cash available for distribution. See “-A substantial number of SMTA’s properties are leased to one tenant, Shopko, which has filed for bankruptcy protection.” Because a significant portion of SMTA’s estimated cash available for distribution are derived from rental revenues received from Shopko, Shopko’s bankruptcy could limit or eliminate SMTA’s ability to make distributions to its common stockholders, which could trigger a Management Fee PIK Event.
26
Additionally, SMTA has a substantial amount of debt. Payments of principal and cash interest expense and financial covenants relating to SMTA’s indebtedness may limit or eliminate its ability and/or obligation to make cash distributions to us as holders of SMTA Preferred Stock and, if a Management Fee PIK Event is triggered, pay us the asset management fee due under the Asset Management Agreement in cash. See “-SMTA has significant indebtedness outstanding.”
SMTA has significant indebtedness outstanding.
SMTA reported that, as of September 30, 2018, it had approximately $2.03 billion aggregate principal amount of indebtedness outstanding, all of which incurs interest at a fixed rate. SMTA may also incur significant additional debt to finance future investment activities. As of Septtember 31, 2018, SMTA’s Adjusted Debt to Annualized Adjusted EBITDAre ratio was 9.6x and its Fixed Charge Coverage Ratio was 1.8x. SMTA’s Fixed Charge Coverage Ratio does not reflect the impact of its amortizing debt principal payments. As noted above, as a result of Shopko’s bankruptcy filing, SMTA does not expect to receive any additional rent paymentsIf we cannot obtain capital from any of the properties leased to Shopko. Had Shopko completely defaulted on its payments to SMTA at the beginning of the third quarter of 2018, SMTA’s Adjusted Debt to Annualized Adjusted EBITDAre ratio as of September 30, 2018 would have been 12.4x and its Fixed Charge Coverage Ratio would have been 1.4x. Payments of principal and cash interest expense and financial covenants relating to SMTA’s indebtednessthird-party sources, we may limit or eliminate its ability and/or obligation to make cash distributions to us as holders of SMTA Preferred Stock and, if a Management Fee PIK event is triggered, pay us the asset management fee due under the Asset Management Agreement in cash. SMTA’s level of debt and the limitations imposed on SMTA by its debt agreements could have various other significant adverse consequences.
SMTA’s ability to pay dividends is limited by the requirements of Maryland law.
SMTA’s ability to pay dividends on the SMTA Preferred Stock is limited by the laws of Maryland. Under applicable Maryland law, a Maryland real estate investment trust generally may not make a distribution if, after giving effect to the distribution, the trust would not be able to pay its debtsacquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
In recent history, we have raised a significant amount of debt through senior unsecured debt securities. We have generally used the debts become dueproceeds from these financings to repay debt and fund real estate acquisitions. No assurance can be given that we will have access to the capital markets in the usual course of business,future at times and on terms that are acceptable to us, whether to refinance existing debt or the trust's total assets would be less than the sum of its total liabilities plus, unless the trust's declaration of trust provides otherwise, the amount that would be needed, if the trust were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. Accordingly, SMTA generally may not make a distribution on the SMTA Preferred Stock if, after giving effect to the distribution, SMTA would not be able to pay its debts as they become due in the usual course of business or SMTA’s total assets would be less than the sum of its total liabilities plus, unless the terms of such class or series provide otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of any class or series of preferred shares then outstanding, if any, with preferences senior to those of the SMTA Preferred Stock.raise additional debt capital.
In the event of a non-payment of dividends on our SMTA Preferred Stock, we have limited rights and our cash flow, AFFO and AFFO per share would be adversely affected.
Our rights in the event of a non-payment of dividends on our SMTA Preferred Stock are limited to being granted the ability to elect (voting separately as a class together with holders of all classes and series of parity preferred shares upon which like voting rights have been conferred and are exercisable) two additional trustees to SMTA’s board of trustees in the event that six quarterly dividends (whether or not consecutive) payable on the SMTA Preferred Stock are in arrears. In addition, in the event of a non-payment of dividends on our SMTA Preferred Stock, our cash flow, AFFO and AFFO per share would be adversely affected.
The SMTA Preferred Stock is illiquid.
The SMTA Preferred Stock is not traded on any securities exchange or other market, and there is no established public trading market for the SMTA Preferred Stock, nor is there any assurance that one may develop. Therefore, it will be difficult for us to sell our shares of SMTA Preferred Stock promptly, or at all, and if we are able to sell such shares, we may have to sell them at a substantial discount.
We have no history operating as an external manager to another entity, and our inability to do so successfully could impact our business and reputation.
In connection with the Spin-Off, we entered into an Asset Management Agreement with SMTA, pursuant to which we agreed to act as the external manager for SMTA. We have no history operating as an external manger to another entity. SMTA has no employees and is completely reliant on us for the effective operation of its business. The officers and
other individuals who perform services for SMTA are our employees, including certain of our key employees. Such employees may dedicate substantial time to and become distracted by financial or operational developments related to SMTA, including in connection with Shopko’s bankruptcy filing and SMTA’s board of trustees’ decision to accelerate its strategic plan, and we may experience difficulties in appropriately allocating resources between us and SMTA, which could materially and adversely affect our business and our ability to achieve our objectives. Additionally, the base management fee that we receive under the Asset Management Agreement is fixed for the first three years, and such fee may not reflect our actual expenses or time spent externally managing SMTA.
Alternatively, we may dedicate substantial time to and become distracted by financial or operational developments related to our business and activities unrelated to SMTA. Should we fail to allocate sufficient resources to perform our responsibilities to SMTA for any reason, SMTA may be unable to achieve its objectives, which could, among other things, impact our ability to receive fees, including a promote payment, under the Asset Management Agreement.
Any potentially negative matters concerning SMTA could harm our reputation and business and materially and adversely affect the trading price of our common stock.
Under the Asset Management Agreement, SMTA has a license to use the name “Spirit.” Because news coverage of events often fail to appropriately distinguish between legal entities with similar names, investors may impute to us any unfavorable information about SMTA, including financial or operational developments related to SMTA and/or the trading price of SMTA’s common stock that are unrelated to our economic relationship with and interest in SMTA, that could harm our reputation and business and materially and adversely affect the trading price of our common stock.
Following the Spin-Off, we retained certain obligations and liabilities related to assets now owned by SMTA.
Master Trust 2014 Performance Undertaking. Following the Spin-Off, we have agreed to act as the “support provider” under Master Trust 2014, which was contributed to SMTA in connection with the Spin-Off, undertaking contingent financial and other liability, both relating to asset transfers that occurred in the past and to asset transfers that may occur in the future. Pursuant to this performance undertaking, we (i) guarantee the payment and performance of the cure, repurchase, exchange and indemnification obligations of the applicable originators under property transfer agreements, (ii) are deemed to have made the same representations each issuer made on each series closing date with respect to the assets that were in the collateral pool as of such date, (iii) are deemed to make the same representations each issuer is required to make with respect to each transfer of assets from time to time and (iv) agree to perform all covenants, agreements, terms, conditions and indemnities to be performed and observed by each issuer pursuant to the applicable environmental indemnity agreement with respect to environmental violations arising or existing on or prior to the date of the transfer of the relevant property to the collateral pool. In the case of a breach of a deemed representation relating to (ii) or (iii) above, or if there is another defect relating to the affected property (e.g., missing documentation) and such breach or defect materially and adversely affects the value of the related property, we are required to cure such defect or repurchase the property. With respect to the obligations described under (iv), the obligation to remedy any environmental violations are our direct obligations. We have the right to transfer these obligations to an eligible successor support provider, which can include SMTA, two years after the Spin-Off, or upon the occurrence of certain events. Prior to the time of such transfer, SMTA is required to reimburse us for any liability related to these obligations. However, SMTA may not have the resources or cash available to satisfy such indemnification and reimbursement obligations.
Asset Management Agreement. Pursuant to the Asset Management Agreement, we are required, to the full extent lawful, to reimburse, indemnify and hold SMTA, its stockholders, trustees, officers and employees and each other person, if any, controlling SMTA, harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any of our acts or omissions of constituting bad faith, willful misconduct or gross negligence. SMTA must, to the full extent lawful, reimburse, indemnify and hold harmless us, our affiliates, members, managers, officers and employees, sub-advisers and each other person, if any, controlling us, from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of such indemnified party made in good faith in the performance of our duties under the Asset Management Agreement and not constituting such indemnified party’s bad faith, willful misconduct or gross negligence. Additionally, SMTA is required to reimburse us for certain expenses incurred in connection with the performance of our duties under the Asset Management Agreement. However, SMTA may not have the resources or cash available to satisfy such indemnification and reimbursement obligations.
Property Management and Servicing Agreement. Pursuant to the Second Amended and Restated Property Management and Servicing Agreement dated May 20, 2014, by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Midland Loan Services, a division of PNC Bank, National Association (as amended, the “Property Management and Servicing Agreement”) related to the assets under Master Trust 2014, we, as property manager, are required to make certain advances in the case of shortfalls in amounts available to pay principal and interest or with respect to customary out-of-pocket expenses in order to protect the mortgaged properties of the note issuers, such as insurance premiums, tenant eviction costs and expenses necessary to preserve the security interest of the indenture trustee.
We may not continue to receive fees under the Property Management and Servicing Agreement with SMTA.
We provide property and management services and special services for Master Trust 2014. We may be terminated as property manager and special servicer for cause following the occurrence of certain property manager replacement events. Additionally, due to the risks described above, SMTA may be unable to pay our fees.
There are conflicts of interest in our relationship with SMTA.
There are conflicts of interest in our relationship with SMTA insofar as we have investment objectives that overlap with those of SMTA. We have instituted a proprietary Spirit Property Ranking Model that we also apply to SMTA’s portfolio. The Spirit Property Ranking Model is used annually to rank all properties across twelve factors and weightings, consisting of both real estate quality scores and credit underwriting criteria, in order to benchmark property quality, identify asset recycling opportunities and to enhance acquisition or disposition decisions. We also update the Spirit Heat Map that is used for us and SMTA, which analyzes tenant industries across Porter’s Five Forces and potential causes of technological disruption to identify tenant industries which Spirit believes to have good fundamentals for future performance. We use a rotation system when considering potential acquisitions by SMTA and us, subject to available liquidity and certain other criteria. As a result, we may not be presented with certain investment opportunities that may be appropriate for us. Additionally, we own real estate assets in the same geographic regions as SMTA and may compete with it for tenants. This competition may affect our ability to attract and retain tenants and may reduce the rent we are able to charge.
In addition, we may engage (subject to our investment manual and conflicts of interest policy) in material transactions with SMTA, which may present an actual, potential or perceived conflict of interest. It is possible that actual, potential or perceived conflicts of interest could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could materially adversely affect our business in a number of ways, including difficulty in raising additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting risk of litigation and regulatory enforcement actions.
Our interests could be diluted by the issuance of additional preferred shares, including additional SMTA Preferred Stock, and by other transactions.
SMTA may issue additional SMTA Preferred Stock or shares of another class or series of preferred shares ranking on parity with (or, upon the affirmative vote or consent of the holders of at least two-thirds of the outstanding SMTA Preferred Stock and each other class or series of parity preferred shares with which the holders of SMTA Preferred Stock are entitled to vote together as a single class, voting together as a single class, senior to) the SMTA Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up. None of the provisions relating to the SMTA Preferred Stock relate to or limit SMTA’s indebtedness, nor provide us protection, as a holder of the SMTA Preferred Stock, in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all of SMTA’s assets or business, that might adversely affect us as a holders of the SMTA Preferred Stock. These factors may affect the recovery value or market price of the SMTA Preferred Stock.
RISKS RELATED TO OUR INDEBTEDNESS
We have approximately $2.08 billion principal balance ofsignificant indebtedness outstanding, which may expose us to the risk of default under our debt obligations, limit our ability to obtain additional financing or affect the market price of our common stock or debt securities.
As of December 31, 2018,2020, the total principal balance outstanding on our indebtedness was approximately $2.08$2.5 billion, of which the $566.3$178.0 million outstanding under the 2015 Credit Facility and 20152020 Term Loan Agreement incurs interest at a variable rate. We may also incur significant additional debt to finance future investment activities. Payments of principal and interest on borrowings may leave us with insufficient cash resources to meet our cash needs or make the distributions to our common stockholders necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:
our cash flow may be insufficient to meet our required principal and interest payments;
cash interest expense and financial covenants relating to our indebtedness may limit or eliminate our ability to make distributions to our common stockholders;
we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to capitalize upon acquisition opportunities or meet operational needs;
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;
for our variable interest rate debt,
increases in interest rates could increase our interest expense;expense for our variable interest rate debt;
we may be unable to hedge floating rate debt, counterparties may fail to honor their obligations under any hedge agreements we enter into, such agreements may not effectively hedge interest rate fluctuation risk, and, upon the expiration of any hedge agreements we enter into, we would be exposed to then-existing market rates of interest and future interest rate volatility;
we may be forced to dispose of properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;
we may default on our obligations and the lenders or mortgagees may foreclose on our properties or our interests in the entities that own the properties that secure their loans and receive an assignment of rents and leases;
we may be restricted from accessing some of our excess cash flow after debt service if certain of our tenants fail to meet certain financial performance metric thresholds;
we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and
our default under any loan with cross-default provisions could result in a default on other indebtedness.
Changes in our leverage ratios may also negatively impact the market price of our equity or debt securities. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
The agreements governing our indebtedness contain restrictions and covenants which may limit our ability to enter into or obtain funding for certain transactions, operate our business or make distributions to our preferred and common stockholders.
The agreements governing our indebtedness contain restrictions and covenants that limit or will limit our ability to operate our business. These covenants, as well as any additional covenants to which we may be subject in the future because of additional indebtedness, could cause us to forgo investment opportunities, reduce or eliminate distributions to our preferred and common stockholders or obtain financing that is more expensive than financing we could obtain if we were not subject to the covenants. In addition, the agreements may have cross-default provisions, which provide that a default under one of our financing agreements would lead to a default on some or all of our debt financing agreements. The covenants and other restrictions under our debt agreements affect, among other things, our ability to:
sell or substitute assets;
modify certain terms of our leases;
prepay debt with higher interest rates;
manage our cash flows; and
make distributions to equity holders.
Additionally, these restrictions may adversely affect our operating and financial flexibility and may limit our ability to respond to changes in our business or competitive environment, all of which may materially and adversely affect us.
Current market conditions could adversely affect our ability to refinance existing indebtedness or obtain additional financing for growth on acceptable terms or at all.
The credit markets can experience significant price volatility, displacement and liquidity disruptions, including the bankruptcy, insolvency or restructuring of certain financial institutions. These circumstances could materially impact liquidity in the financial markets, making financing terms for borrowers less attractive, and in certain cases, result in the unavailability of various types of debt financing. As a result, we may be unable to obtain debt financing on favorable terms or at all or fully refinance maturing indebtedness with new indebtedness. We primarily use external financing to fund acquisitions and to refinance indebtedness as it matures. Reductions in our available borrowing capacity or inability to obtain credit when required or when business conditions warrant could materially and adversely affect us.us, and we could be forced to limit our acquisition activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets.
Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. Higher interest rates on newly incurred debt may negatively impact usour acquisition yields, earnings per share and cash flow as well. If interest rates increase, our interest costs and overall costs of capital will increase, which could materially and adversely affect us. Total debt service, including scheduled principal maturities and interest, for 20192021 and 20202022 is $1.06 billion$280.7 million and $61.2$87.7 million, respectively. Debt service for 2019 includes $10.1the final balloon repayment of $190.4 million for the acceleration2021 Notes in 2021.
Contents
Changes in market interest rates may adversely impact our variable debt expenses.
30
maturity in 2018. Debt service forThe 2019 also includes principal on the 2015 Credit Facility incurs interest at a variable rate using LIBOR and, 2015as such, our interest expense will increase with increases in LIBOR. Further, in 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. If LIBOR ceases to exist after 2021, a comparable or successor reference rate as approved under the 2019 Revolving Credit and Term Loan which were paid-off in conjunction withAgreement will apply or such other reference rate as may be agreed by the execution ofCompany and the 2019 Facilities Agreement.lenders under the respective agreements will apply. To the extent these interest rates are less favorable than LIBOR, our interest expense will increase.
Some of our financing arrangements involve balloon payment obligations.
Some of our financings require us to make a
lump-sum
or “balloon” payment at
maturity.maturity, including $190.4 million in 2021. Our ability to make any balloon payment is uncertain and may depend on our ability to obtain additional financing or our ability to sell our properties. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell our properties at a price sufficient to make the balloon payment, if at all. If the balloon payment is refinanced at a higher rate, it will reduce or eliminate any income from our properties.
Our inability to meet a balloon payment obligation, through refinancing or sale proceeds, or refinancing on less attractive terms could materially and adversely affect us. We have balloon maturities, excluding debt extendible at our option, of $412.6 million in 2019, including $10.1 million on a defaulted loan, and none in 2020. IfIn addition, if we are unable to refinance these maturities or otherwise retire the indebtedness,
by that time, we
could be materially adversely affected, and could be forced to relinquish the related collateral.
The agreements governing our indebtedness contain restrictions and covenants which may limit our ability to enter into or obtain funding for certain transactions, operate our business or make distributions to our preferred and common stockholders.
The agreements governing our indebtedness contain restrictions and covenants that limit or will limit our ability to operate our business. These covenants, as well as any additional covenants to which we may be subject in the future because of additional indebtedness, could cause us to forgo investment opportunities, reduce or eliminate distributions to our preferred and common stockholders or obtain financing that is more expensive than financing we could obtain if we were not subject to the covenants. In addition, the agreements may have cross default provisions, which provide that a default under one of our financing agreements would lead to a default on some or all of our debt financing agreements.
If an event of default occurs under certain of our CMBS loans, if the master tenants at the properties that secure the CMBS loans fail to maintain certain EBITDAR ratios or if an uncured monetary default exists under the master leases, then a portion of or all of the cash which would otherwise be distributed to us may be restricted by the lenders and unavailable to us until the terms are cured or the debt refinanced. If the financial performance of the collateral for our indebtedness under our asset-backed securitization program fails to achieve certain financial performance criteria, cash from such collateral may be unavailable to us until the terms are cured or the debt refinanced. Such cash sweep triggering events have occurred previously and may be ongoing from time to time. The occurrence of these events limit the amount of cash available to us for use in our business and could limit or eliminate our ability to make distributions to our common stockholders.
The covenants and other restrictions under our debt agreements affect, among other things, our ability to:
incur indebtedness;
create liens on assets;
sell or substitute assets;
modify certain terms of our leases;
prepay debt with higher interest rates;
manage our cash flows; and
make distributions to equity holders.
Additionally, these restrictions may adversely affect our operating and financial flexibility and may limit our ability to respond to changes in our business or competitive environment, all of which may materially and adversely affect us.
RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction, even if such a change in control may be in the interest of our stockholders.
Our charter contains certain restrictions on ownership and transfer of our stock.
take such actions as are necessary or appropriate to preserve our qualification as a REIT. For example, our charter prohibits the actual, beneficial or constructive ownership by any person of more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock or more than 9.8% in value of the aggregate of the outstanding shares of all classes and series of our stock. Our Board of Directors, in its sole and absolute discretion, may exempt a person, prospectively or retroactively, from these ownership limits if certain conditions are satisfied. The restrictions on ownership and transfer of our stock may:
discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; or
result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
We could increase the number of authorized shares of stock, classify and reclassify
un-issued
stock and issue stock without stockholder approval
. Our Board of Directors, without stockholder approval, has the power under our charter to amend our charter to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue, to authorize us to issue authorized but
un-issued
shares of our common stock or preferred stock and to classify or reclassify any
un-issued
shares of our common stock or preferred stock into one or more classes or series of stock and to set the terms of such newly classified or reclassified shares. As a result, we may issue one or more series or classes of common stock or preferred stock with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of our common stockholders. Although our Board of Directors has no such intention at the present time, it could establish a class or series of common stock or preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
“business combination” provisions that, subject to certain limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more
| more of the voting power of our shares or of an affiliate of ours or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within atwo-year period immediately prior to the date in question) or any affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super-majority and stockholder voting requirements on these combinations; and |
“control share” provisions that provide that a holder of “control shares” of our Company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control shares”) has no voting rights with respect to those shares except to the extent approved by our stockholders by the affirmative vote of at least
two-thirds
of all the votes entitled to be cast on the matter, excluding all interested shares.
As permitted by the MGCL, we have elected, by resolution of our Board of Directors, to opt out of the business combination provisions of the MGCL and, pursuant to a provision in our bylaws, to exempt any acquisition of our stock from the control share provisions of the MGCL. However, our Board of Directors may by resolution elect to repeal the exemption from the business combination provisions of the MGCL and may by amendment to our bylaws opt into the control share provisions of the MGCL at any time in the future, whether before or after an acquisition of control shares.
Certain provisions of the MGCL set forth in Title 3, Subtitle 8 of the MGCL (“Subtitle 8”) permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. These provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could be in the best interests of our stockholders. Our
charter contains a provision whereby we elect,have elected, at such time as we becomebecame eligible to do so, to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our Board of Directors.
Termination ofDirectors only by the employment agreements with certain members of our senior management team could be costly and prevent a change in control of our company.
The employment agreements with certain members of our senior management team provide that if their employment with us terminates under certain circumstances (including in connection with a change in control of our company), we may be required to pay them significant amounts of severance compensation, thereby making it costly to terminate their employment. Furthermore, these provisions could delay or prevent a transaction or a change in control of our Company that might involve a premium paid for shares of our common stock or otherwise be in the best interests of our stockholders.
remaining directors. Our Board of Directors may change our investment and financing policies without stockholder approval and we may become more highly leveraged, which may increase our riskhas adopted a resolution prohibiting us from electing to be subject to the provisions of default under our debt obligations.
Our investment and financing policies are exclusively determinedSubtitle 8 relating to a classified board unless such election is first approved by our Boardstockholders by the affirmative vote of Directors. Accordingly, our stockholders do not control these policies. Further, our organizational documents do not limita majority of all the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Directors may alter or eliminate our current policyvotes entitled to be cast on borrowing at any time without stockholder approval. If this policy changed, we could become more highly leveraged, which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. Changes to our policies with regards to the foregoing could materially and adversely affect us.matter.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
As permitted by Maryland law, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:
actual receipt of an improper benefit or profit in money, property or services; or
active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist. Accordingly, in the event that actions taken in good faith by any of our directors or officers impede the performance of our company, our stockholders'stockholders’ and our ability to recover damages from such director or officer willmay be limited. In addition, our charter authorizes us to obligate our company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those and certain other capacities to the maximum extent permitted by Maryland law.
We are a holding company with no direct operations and will rely on funds received from the Operating Partnership to pay liabilities.
We are a holding company and conduct substantially all of our operations through the Operating Partnership. We do not have, apart from an interest in the Operating Partnership, any independent operations. As a result, we rely on distributions from the Operating Partnership to pay any dividends we might declare on shares of our common stock. We also rely on distributions from the Operating Partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from the Operating Partnership. In addition, because we are a holding company, stockholder claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of the Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of the Operating Partnership and its subsidiaries will be able to satisfy the claims of our stockholders only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
We own directly or indirectly 100% of the interests in the Operating Partnership. However, in connection with our future acquisition of properties or otherwise, we may issue partnership interests of the Operating Partnership to third parties. Such issuances would reduce our ownership in the Operating Partnership. Because our stockholders will not directly
own partnership interests of the Operating Partnership, they will not have any voting rights with respect to any such issuances or other partnership level activities of the Operating Partnership.
Conflicts of interest could arise in the future between the interests of our stockholders and the interests of holders of partnership interests in the Operating Partnership, which may impede business decisions that could benefit our stockholders.
Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and the Operating Partnership or any future partner thereof, on the other. Our directors and officers have duties to our company under applicable Maryland law in connection with the management of our company. At the same time, one of our wholly-owned subsidiaries, OP Holdings, as the general partner of the Operating Partnership, has fiduciary duties and obligations to the Operating Partnership and its future limited partners under Delaware law and the partnership agreement of the Operating Partnership in connection with the management of the Operating Partnership. The fiduciary duties and obligations of OP Holdings, as general partner of the Operating Partnership, and its future partners may come into conflict with the duties of the directors and officers of our company.
Under the terms of the partnership agreement of the Operating Partnership, if there is a conflict between the interests of our stockholders on one hand and any future limited partners on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or any future limited partners; provided, however, that for so long as we own a controlling interest in the Operating Partnership, any conflict that cannot be resolved in a manner not adverse to either our stockholders or any future limited partners shall be resolved in favor of our stockholders.
The partnership agreement also provides that the general partner will not be liable to the Operating Partnership, its partners or any other person bound by the partnership agreement for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Operating Partnership or any future limited partner, except for liability for the general partner’s intentional harm or gross negligence. Moreover, the partnership agreement provides that the Operating Partnership is required to indemnify the general partner and its members, managers, managing members, officers, employees, agents and designees from and against any and all claims that relate to the operations of the Operating Partnership, except (1) if the act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active or deliberate dishonesty, (2) for any transaction for which the indemnified party received an improper personal benefit, in money, property or services or otherwise in violation or breach of any provision of the partnership agreement or (3) in the case of a criminal proceeding, if the indemnified person had reasonable cause to believe that the act or omission was unlawful.
RISKS RELATED TO TAXES AND OUR STATUS AS A REIT
Failure to qualify as a REIT would materially and adversely affect us and the value of our common stock.
We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2005 and we intend to continue operating in such a manner. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT and the statements in this Annual Report on Form
10-K
are not binding on the IRS or any court. Therefore, we cannot guarantee that we have qualified as a REIT or that we will remain qualified as such in the future. If we lose our REIT status, we will face significant tax consequences that would substantially reduce our cash available for distribution to our stockholders for each of the years involved because:
we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to regular U.S. federal corporate income tax;
we could be subject to the federal alternative minimum tax for tax years prior to 2018 and increased state and local taxes; and
unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In addition, if we fail to qualify as a REIT, we will not be required to make distributions to our stockholders. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could materially and adversely affect the trading price of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, requirements regarding the composition of our assets and a requirement that at least 95%requirements regarding the sources of our gross income in any year must be derived from qualifying sources, such as “rents from real property.”income. Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.
In addition, legislation, new regulations, administrative interpretations or court decisions may materially and adversely affect our investors, our ability to qualify as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, our TRSs will be subject to income tax as regular corporations in the jurisdictions in which they operate.
If SMTA failsfailed to qualify as a REIT, we could cease to qualify as a REIT and suffer other adverse consequences.
SMTA’sIf SMTA failed to qualify as a REIT for any taxable year, such failure to qualify as a REIT could adversely affect our ability to qualify as a REIT. If SMTA failed to qualify as a REIT during the year of the
Spin-Off,
the income recognized by us in connection with the
Spin-Off
would not have constituted qualifying income for purposes of the 75% gross income test, which could have adversely affected our ability to qualify as a REIT for such year. In addition, if SMTA
did notfailed to qualify as a REIT
or if SMTA's REIT election terminates,for any period, the SMTA Preferred Stock would not
qualifyhave qualified as a real estate asset for purposes of the REIT asset tests or
produceproduced qualifying income for purposes of the REIT 75% gross income
test.test for such period. In such case,
we would need to restructure or otherwise disposeour ownership of
our investment in the SMTA Preferred Stock
during such period could adversely affect our ability to
comply with thequalify as a REIT,
requirements.unless we are entitled to relief under an applicable cure provision.If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.
TheWe believe the Operating Partnership is currently treated as a partnership for federal income tax purposes and, therefore,purposes. As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, such partner’s share of its income. We cannot assure you that the IRS will not challenge the status of the Operating Partnership or any other subsidiary partnership or limited liability company in which we own an interest as a disregarded entity or partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership or any such other subsidiary partnership or limited liability company as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of the Operating Partnership or any subsidiary partnerships or limited liability company to qualify as a disregarded entity or partnership for applicable income tax purposes could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners or members, including us.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on
arm’s-length
terms.
We own securities in TRSs and may acquire securities in additional TRSs in the future. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or
non-customary
services to tenants of its parent REIT. A TRS is subject to federal income tax as a regular C corporation. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on an
arm’s length arm’s-length
basis.
A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 25% of the value of our total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% of the value of our total assets may be represented by securities of TRSs. We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that we own will be less than 25% (or 20%, as applicable) of the value of our total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations. In addition, we intend to structure our transactions with any TRSs that we own to ensure that they are entered into on
arm’s-length
arm’s length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax.
The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status or require us to make an unexpected distribution.
The IRS may take the position that specific sale-leaseback transactions that we treat as leases are not true leases for federal income tax
discussed above.purposes but are, instead, financing arrangements or loans. If a sale-leaseback transaction were sore-characterized,
we might fail to satisfy the REIT asset tests, the income tests or distribution requirements and consequently lose our REIT status effective with the year ofre-characterization
unless we elect to make an additional distribution to maintain our REIT status. The primary risk relates to our loss of previously incurred depreciation expenses, which could affect the calculation of our REIT taxable income and could cause us to fail the REIT distribution test that requires a REIT to distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In this circumstance, we may elect to distribute an additional dividend of the increased taxable income so as not to fail the REIT distribution test. This distribution would be paid to all stockholders at the time of declaration rather than the stockholders existing in the taxable year affected by there-characterization.
We may be forced to borrow funds to maintain our REIT status, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could materially and adversely affect us.
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard to the dividends paid deduction and excluding any net capital gains, and we will be subject to regular corporate income taxes on our undistributed taxable income to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. In order to maintain our REIT status and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of cash and recognition of income for federal income tax purposes, or the effect of
non-deductible
capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could materially and adversely affect
us.The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status or require us to make an unexpected distribution.
The IRS may take the position that specific sale-leaseback transactions that we treat as leases are not true leasesfinancial condition, results of operations, cash flow, cash available for federal income tax purposes but are, instead, financing arrangements or loans. If a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests, the income tests or distribution requirements and consequently lose our REIT status effective with the year of re-characterization unless we elect to make an additional distribution to maintain our REIT status. The primary risk relatesdistributions to our loss of previously incurred depreciation expenses, which could affect the calculationstockholders, and per share trading price of our REIT taxable income and could cause us to fail the REIT distribution test that requires a REIT to distribute at least 90%common stock.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares.
Income fromDividends treated as “qualified
dividends”dividend income” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Under the 2017 Tax Legislation, however, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of
non-REIT
corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the nature and diversification of our assets, the sources of our income and the amounts we distribute to our stockholders. We may be required to liquidate or forgo otherwise attractive investments in order to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Accordingly, satisfying the REIT requirements could materially and adversely affect us. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, or to repay obligations to our lenders, we may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.
As a result of acquiringIf we acquire C corporations in carry-over basis transactions, we may inherit material tax liabilities and other tax attributes from such acquired corporations, and we may be required to distribute earnings and profits.
From time to time, we have and may continue to acquire C corporations in transactions in which the basis of the corporations’ assets in our hands is determined by reference to the basis of the assets in the hands of the acquired corporations, or carry-over basis transactions.
If we acquire any asset from a corporation that is or has been a C corporation in a carry-over basis transaction, and we subsequently recognize gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we will be required to pay tax at the regular corporate tax rate on this gain to the extent of the excess of (1) the fair market value of the asset over (2) our adjusted basis in the asset, in each case determined as of the date on which we acquired the asset. Any taxes we pay as a result of such gain would reduce the amount available for distribution to our stockholders. The imposition of such tax may require us to forgo an otherwise attractive disposition of any assets we acquire from a C corporation in a carry-over basis transaction, and as a result may reduce the liquidity of our portfolio of investments. In addition, in such a carry-over basis transaction, we will succeed to any tax liabilities and earnings and profits of the acquired C corporation. To qualify as a REIT, we must distribute any
non-REIT
earnings and profits by the close of the taxable year in which such transaction occurs. Any adjustments to the acquired
corporation’s income for taxable years ending on or before the date of the transaction, including as a result of an examination of the corporation’s tax returns by the IRS, could affect the calculation of the corporation’s earnings and profits. If the IRS were to determine that we acquired
non-REIT
earnings and profits from a corporation that we failed to distribute prior to the end of the taxable year in which the carry-over basis transaction occurred, we could avoid disqualification as a REIT by paying a “deficiency dividend.” Under these procedures, we generally would be required to distribute any such
non-REIT
earnings and profits to our stockholders within 90 days of the determination and pay a statutory interest charge at a specified rate to the IRS. Such a distribution would be in addition to the distribution of REIT taxable income necessary to satisfy the REIT distribution requirement and may require that we borrow funds to make the distribution even if the then-prevailing market conditions are not favorable for borrowings. In addition, payment of the statutory interest charge could materially and adversely affect us.
Legislative or other actions affecting REITs could have a negative effect on us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect
our investors or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
The 2017 Tax Legislation has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. Changes made by the 2017 Tax Legislation that could affect the Company and its stockholders include:
temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026;
permanently eliminating the progressive corporate tax rate structure, which previously imposed a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%;
permitting a deduction for certain pass-through business income, including dividends received by our stockholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026;
reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
limiting our deduction for net operating losses arising in taxable years beginning after December 31, 2017 to 80% of our REIT taxable income (determined without regard to the dividends paid deduction);
generally limiting the deduction for net business interest expense in excess of 30% of a business’s “adjusted taxable income,” except for taxpayers that engage in certain real estate businesses (including most equity REITs) and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system with longer depreciation periods); and
eliminating the corporate alternative minimum tax.
Many of these changes that are applicable to us are effective with our 2018 taxable year, without any transition periods or grandfathering for existing transactions. The legislation isremains unclear in many respects and couldhas been and may continue to be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and IRS, any of which could lessen or increase the impact of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities.
While some of the changes made by the tax legislation may adversely affect the Company in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. The Company continues to work with its tax advisers and auditors to determine the full impact that the recent tax legislation as a whole will have on the Company.
Item 1B. Unresolved Staff Comments
PROPERTY PORTFOLIO DIVERSIFICATION
|
| | | | |
| 1,462 | 99.7% | 49 | 252 | 32 |
| Properties | Occupancy | States | Tenants | Industries |
| | | | | | | | |
| 1,860 | | 99.6% | | 48 | | 301 | | 28 |
| Owned Properties | | Occupancy | | States | | Tenants | | Retail Industries |
Diversification By Tenant
TenantThe following table sets forth a summary of tenant concentration represents the tenant's contribution to Contractual Rent offor our owned real estate properties as of December 31, 2018:2020:
| | | | | | | | | | | | |
| | | | | | | | | |
| | | |
| | | 7 | | | | 685 | | | | 3.0 | % |
| | | |
| | | 163 | | | | 234 | | | | 2.5 | % |
| | | |
BJ’s Wholesale Club, Inc. | | | 8 | | | | 912 | | | | 2.2 | % |
| | | |
| | | 7 | | | | 848 | | | | 2.2 | % |
| | | |
| | | 13 | | | | 1,597 | | | | 2.2 | % |
| | | |
Alimentation Couche-Tard, Inc. | | | 76 | | | | 230 | | | | 2.1 | % |
| | | |
| | | 34 | | | | 487 | | | | 2.0 | % |
| | | |
| | | 110 | | | | 304 | | | | 2.0 | % |
| | | |
| | | 106 | | | | 927 | | | | 1.9 | % |
| | | |
| | | 33 | | | | 409 | | | | 1.7 | % |
| | | |
| | | 1,296 | | | | 33,405 | | | | 78.2 | % |
| | | |
| | | 7 | | | | 641 | | | | — | |
| | | |
| | | | | | | | | | | | |
|
| | | | | | | | |
Tenant (1) | Number of Properties | | Total Square Feet
(in thousands) | | Percent of Contractual Rent |
| Walgreen Company | 39 |
| | 575 |
| | 3.4 | % |
| Cajun Global, LLC | 170 |
| | 243 |
| | 3.4 |
|
| The Home Depot, Inc. | 7 |
| | 821 |
| | 2.9 |
|
| Alimentation Couche-Tard, Inc. | 77 |
| | 232 |
| | 2.8 |
|
| CVS Caremark Corporation | 34 |
| | 422 |
| | 2.4 |
|
| Life Time Fitness, Inc. | 5 |
| | 588 |
| | 2.3 |
|
| GPM Investments, LLC | 104 |
| | 271 |
| | 2.2 |
|
| Ferguson Enterprises, Inc. | 7 |
| | 1,003 |
| | 1.7 |
|
| PetSmart, Inc. | 4 |
| | 1,016 |
| | 1.7 |
|
| AB Acquisition, LLC | 15 |
| | 686 |
| | 1.6 |
|
| Other | 995 |
| | 21,463 |
| | 75.6 |
|
| Vacant | 5 |
| | 957 |
| | — |
|
| Total | 1,462 |
| | 28,277 |
| | 100.0 | % |
(1) Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above.
Diversification By Asset Type
Asset type concentration represents the type of asset's contribution to Contractual Rent of our owned real estate properties among different asset types as of December 31, 2018:
|
| | | | | |
| Asset Type | Number of Properties | | Total Square Feet (in thousands) |
| Retail | 1,395 |
| | 21,185 |
|
| Industrial | 27 |
| | 5,543 |
|
| Office | 37 |
| | 1,120 |
|
| Data Center | 3 |
| | 429 |
|
| Total | 1,462 |
| | 28,277 |
|
| (1) | Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands as those set forth above. |
Diversification By Industry
Industry concentration represents the industry's contribution to Contractual Rent of our owned real estate properties as of December 31, 2018:
|
| | | | | | | | |
| Industry | Number of Properties | | Total
Square Feet
(in thousands) | | Percent of Contractual Rent |
| Convenience Stores | 306 |
| | 946 |
| | 10.0 | % |
| Health and Fitness | 41 |
| | 2,162 |
| | 8.4 |
|
| Restaurants - Quick Service | 332 |
| | 686 |
| | 7.3 |
|
| Drug Stores / Pharmacies | 85 |
| | 1,156 |
| | 6.8 |
|
| Movie Theaters | 32 |
| | 1,636 |
| | 6.5 |
|
| Restaurants - Casual Dining | 102 |
| | 732 |
| | 5.9 |
|
| Grocery | 40 |
| | 1,839 |
| | 4.8 |
|
| Home Improvement | 14 |
| | 1,653 |
| | 4.3 |
|
| Specialty Retail | 62 |
| | 1,682 |
| | 3.9 |
|
| Medical Office | 36 |
| | 620 |
| | 3.9 |
|
| Home Furnishings | 19 |
| | 1,869 |
| | 3.6 |
|
| Entertainment | 23 |
| | 897 |
| | 3.3 |
|
| Manufacturing | 13 |
| | 1,875 |
| | 2.8 |
|
| Professional Services | 6 |
| | 684 |
| | 2.5 |
|
| Car Washes | 35 |
| | 183 |
| | 2.4 |
|
| Warehouse Club/Supercenters | 9 |
| | 883 |
| | 2.2 |
|
| Automotive Service | 54 |
| | 419 |
| | 2.1 |
|
| Sporting Goods | 13 |
| | 667 |
| | 2.0 |
|
| Building Materials | 9 |
| | 1,047 |
| | 1.9 |
|
| Dollar Stores | 70 |
| | 718 |
| | 1.7 |
|
| Pet Supplies & Service | 4 |
| | 1,016 |
| | 1.7 |
|
| Education | 37 |
| | 390 |
| | 1.6 |
|
| Distribution | 6 |
| | 677 |
| | 1.6 |
|
| Automotive Dealers | 10 |
| | 297 |
| | 1.5 |
|
| Automotive Parts | 54 |
| | 383 |
| | 1.4 |
|
| Discount Department Stores | 7 |
| | 571 |
| | 1.2 |
|
| Office Supplies | 17 |
| | 458 |
| | 1.2 |
|
| Apparel | 5 |
| | 507 |
| | 1.0 |
|
| Travel Plaza | 3 |
| | 48 |
| | 0.8 |
|
| Other | 6 |
| | 243 |
| | 0.8 |
|
| Consumer Electronics | 4 |
| | 188 |
| | 0.6 |
|
| Discount Retailer | 3 |
| | 188 |
| | 0.3 |
|
| Vacant | 5 |
| | 957 |
| | — |
|
| Total | 1,462 |
| | 28,277 |
| | 100.0 | % |
Diversification By Geography
Geographic concentration represents the geographic region's contribution to Contractual Rent of our owned real estate properties as of December 31, 2018:
|
| | | | | | | | | | | | | | | | | | | | |
| Location | | Number of Properties | | Total Square Feet (in thousands) | | Percent of Contractual Rent | | Location | | Number of Properties | | Total Square Feet (in thousands) | | Percent of Contractual Rent |
| Texas | | 230 |
| | 3,116 |
| | 11.9 | % | | Louisiana | | 18 |
| | 244 |
| | 1.3 | % |
| Florida | | 106 |
| | 1,254 |
| | 7.5 | % | | Arkansas | | 33 |
| | 283 |
| | 1.2 | % |
| Georgia | | 106 |
| | 1,484 |
| | 6.6 | % | | Mississippi | | 30 |
| | 295 |
| | 1.2 | % |
| California | | 21 |
| | 1,147 |
| | 5.6 | % | | Nevada | | 2 |
| | 934 |
| | 1.1 | % |
| Ohio | | 73 |
| | 1,119 |
| | 4.9 | % | | Kansas | | 16 |
| | 397 |
| | 1.0 | % |
| Illinois | | 37 |
| | 1,299 |
| | 4.1 | % | | Idaho | | 11 |
| | 236 |
| | 1.0 | % |
| Tennessee | | 52 |
| | 1,240 |
| | 3.9 | % | | Maryland | | 7 |
| | 201 |
| | 1.0 | % |
| Michigan | | 73 |
| | 1,018 |
| | 3.7 | % | | Connecticut | | 5 |
| | 686 |
| | 1.0 | % |
| Arizona | | 40 |
| | 727 |
| | 3.5 | % | | Iowa | | 11 |
| | 186 |
| | 0.8 | % |
| Virginia | | 44 |
| | 1,264 |
| | 3.2 | % | | Utah | | 5 |
| | 568 |
| | 0.7 | % |
| Missouri | | 54 |
| | 939 |
| | 3.0 | % | | North Dakota | | 5 |
| | 234 |
| | 0.7 | % |
| South Carolina | | 28 |
| | 535 |
| | 2.5 | % | | Washington | | 7 |
| | 114 |
| | 0.7 | % |
| Alabama | | 73 |
| | 509 |
| | 2.5 | % | | Maine | | 24 |
| | 63 |
| | 0.6 | % |
| Colorado | | 22 |
| | 851 |
| | 2.4 | % | | Oregon | | 4 |
| | 144 |
| | 0.5 | % |
| North Carolina | | 47 |
| | 850 |
| | 2.4 | % | | Montana | | 3 |
| | 152 |
| | 0.5 | % |
| Minnesota | | 24 |
| | 764 |
| | 2.4 | % | | Massachusetts | | 2 |
| | 131 |
| | 0.5 | % |
| Indiana | | 35 |
| | 501 |
| | 2.0 | % | | Wisconsin | | 7 |
| | 137 |
| | 0.3 | % |
| Kentucky | | 31 |
| | 448 |
| | 1.9 | % | | Rhode Island | | 3 |
| | 95 |
| | 0.3 | % |
| New York | | 24 |
| | 704 |
| | 1.9 | % | | West Virginia | | 10 |
| | 64 |
| | 0.3 | % |
| New Mexico | | 26 |
| | 440 |
| | 1.8 | % | | Nebraska | | 5 |
| | 136 |
| | 0.2 | % |
| New Jersey | | 11 |
| | 590 |
| | 1.5 | % | | U.S. V.I. | | 1 |
| | 38 |
| | 0.2 | % |
| Oklahoma | | 48 |
| | 410 |
| | 1.5 | % | | Wyoming | | 1 |
| | 35 |
| | 0.1 | % |
| Alaska | | 9 |
| | 319 |
| | 1.3 | % | | South Dakota | | 1 |
| | 20 |
| | 0.1 | % |
| New Hampshire | | 16 |
| | 640 |
| | 1.3 | % | | Delaware | | 1 |
| | 5 |
| | 0.1 | % |
| Pennsylvania | | 19 |
| | 709 |
| | 1.3 | % | | Vermont | | 1 |
| | 2 |
| | — |
|
Lease Expirations
The following table sets forth a summary
schedule of
expiration dateslease expirations for
leases in placeour owned real estate as of December 31,
2018.2020. As of December 31,
2018,2020, the weighted average remaining
non-cancelable non-cancellable
initial term of our leases (based on
Contractual Rent)ABR) was
9.610.1 years. The information set forth in the table assumes that tenants do not exercise renewal options or any early termination rights:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | |
| | | 47 | | | $ | 13,028 | | | | 1,363 | | | | 2.6 | % |
| | | | |
| | | 40 | | | | 16,548 | | | | 1,599 | | | | 3.2 | % |
| | | | |
| | | 113 | | | | 32,049 | | | | 3,034 | | | | 6.3 | % |
| | | | |
| | | 47 | | | | 17,916 | | | | 1,557 | | | | 3.5 | % |
| | | | |
| | | 52 | | | | 19,334 | | | | 1,517 | | | | 3.8 | % |
| | | | |
| | | 108 | | | | 38,149 | | | | 3,724 | | | | 7.5 | % |
| | | | |
| | | 131 | | | | 40,635 | | | | 2,984 | | | | 8.0 | % |
| | | | |
| | | 106 | | | | 28,727 | | | | 1,798 | | | | 5.6 | % |
| | | | |
| | | 320 | | | | 42,692 | | | | 2,836 | | | | 8.4 | % |
| | | | |
| | | 77 | | | | 22,022 | | | | 2,220 | | | | 4.3 | % |
| | | | |
| | | 812 | | | | 238,516 | | | | 17,406 | | | | 46.8 | % |
| | | | |
| | | 7 | | | | — | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | | | |
| (1) | ABR is not adjusted for the impact of abatements provided as relief due to theCOVID-19 pandemic. As of the date of this report, SRC has agreed to a total of $1.0 million of abatements for the period from January 1, 2021 - December 31, 2021. |
|
| | | | | | | | | | | | |
| Leases Expiring In: | Number of Properties | | Contractual Rent Annualized
(in thousands) (1) | | Total Square Feet
(in thousands) | | Percent of Contractual Rent |
| 2019 | 15 |
| | $ | 5,914 |
| | 528 |
| | 1.5 | % |
| 2020 | 35 |
| | 12,353 |
| | 1,010 |
| | 3.2 |
|
| 2021 | 115 |
| | 30,072 |
| | 2,312 |
| | 7.9 |
|
| 2022 | 43 |
| | 19,160 |
| | 1,778 |
| | 5.0 |
|
| 2023 | 112 |
| | 38,422 |
| | 3,919 |
| | 10.0 |
|
| 2024 | 33 |
| | 16,924 |
| | 1,484 |
| | 4.4 |
|
| 2025 | 36 |
| | 16,346 |
| | 1,272 |
| | 4.3 |
|
| 2026 | 78 |
| | 22,536 |
| | 1,686 |
| | 5.9 |
|
| 2027 | 112 |
| | 32,572 |
| | 2,225 |
| | 8.5 |
|
| 2028 | 85 |
| | 17,601 |
| | 984 |
| | 4.6 |
|
| Thereafter | 793 |
| | 170,639 |
| | 10,122 |
| | 44.7 |
|
| Vacant | 5 |
| | — |
| | 957 |
| | — |
|
| Total owned properties | 1,462 |
| | 382,539 |
| | 28,277 |
| | 100.0 | % |
29
(1) Contractual Rent
Diversification By Geography
The following table sets forth a summary of geographic concentration for the month endedour owned real estate properties as of December 31, 20182020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 247 | | | | 4,413 | | | | 11.1 | % | | New Jersey | | | 13 | | | | 717 | | | | 1.3 | % |
| | | 154 | | | | 2,533 | | | | 8.8 | % | | Utah | | | 18 | | | | 333 | | | | 1.2 | % |
| | | 138 | | | | 2,583 | | | | 6.8 | % | | Pennsylvania | | | 20 | | | | 483 | | | | 1.1 | % |
| | | 86 | | | | 2,396 | | | | 5.1 | % | | Alaska | | | 9 | | | | 319 | | | | 1.0 | % |
| | | 23 | | | | 1,199 | | | | 4.2 | % | | New Hampshire | | | 17 | | | | 645 | | | | 1.0 | % |
| | | 107 | | | | 1,846 | | | | 4.0 | % | | Wisconsin | | | 12 | | | | 696 | | | | 0.9 | % |
| | | 86 | | | | 1,700 | | | | 3.9 | % | | Idaho | | | 16 | | | | 273 | | | | 0.9 | % |
| | | 52 | | | | 1,295 | | | | 3.8 | % | | Kansas | | | 17 | | | | 341 | | | | 0.8 | % |
| | | 33 | | | | 1,924 | | | | 3.5 | % | | Connecticut | | | 5 | | | | 686 | | | | 0.7 | % |
| | | 67 | | | | 1,552 | | | | 3.2 | % | | Maine | | | 27 | | | | 85 | | | | 0.5 | % |
| | | 47 | | | | 835 | | | | 2.9 | % | | Washington | | | 7 | | | | 125 | | | | 0.4 | % |
| | | 55 | | | | 852 | | | | 2.9 | % | | West Virginia | | | 13 | | | | 202 | | | | 0.4 | % |
| | | 68 | | | | 1,312 | | | | 2.7 | % | | Delaware | | | 2 | | | | 128 | | | | 0.4 | % |
| | | 94 | | | | 715 | | | | 2.5 | % | | Nebraska | | | 8 | | | | 218 | | | | 0.4 | % |
| | | 44 | | | | 1,335 | | | | 2.5 | % | | Montana | | | 3 | | | | 152 | | | | 0.4 | % |
| | | 10 | | | | 721 | | | | 2.4 | % | | Massachusetts | | | 2 | | | | 131 | | | | 0.4 | % |
| | | 24 | | | | 902 | | | | 2.2 | % | | Iowa | | | 11 | | | | 190 | | | | 0.3 | % |
| | | 27 | | | | 991 | | | | 2.0 | % | | North Dakota | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 54 | | | | 935 | | | | 2.0 | % | | Rhode Island | | | 3 | | | | 95 | | | | 0.3 | % |
| | | 53 | | | | 753 | | | | 2.0 | % | | Oregon | | | 3 | | | | 105 | | | | 0.3 | % |
| | | 39 | | | | 1,517 | | | | 1.9 | % | | South Dakota | | | 2 | | | | 30 | | | | 0.2 | % |
| | | 29 | | | | 622 | | | | 1.8 | % | | Wyoming | | | 1 | | | | 35 | | | | 0.1 | % |
| | | 43 | | | | 538 | | | | 1.6 | % | | U.S. Virgin Islands | | | 1 | | | | 38 | | | | 0.1 | % |
| | | 42 | | | | 637 | | | | 1.4 | % | | Vermont | | | 1 | | | | 2 | | | | * | |
| | | 24 | | | | 439 | | | | 1.4 | % | | | | | | | | | | | | | | |
Diversification By Asset Type and Tenant Industry
The following table sets forth a summary of concentration by asset types and, for retail assets, the tenant industry of our owned properties owned atas of December 31, 2018, multiplied by twelve.2020:
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | Health and Fitness | | | 44 | | | | 2,329 | | | | 7.7 | % |
| | | | |
| | Convenience Stores | | | 329 | | | | 1,046 | | | | 7.6 | % |
| | | | |
| | Restaurants - Quick Service | | | 361 | | | | 791 | | | | 6.4 | % |
| | | | |
| | Restaurants - Casual Dining | | | 134 | | | | 940 | | | | 5.8 | % |
| | | | |
| | Movie Theaters | | | 37 | | | | 1,953 | | | | 5.1 | % |
| | | | |
| | Dealerships | | | 29 | | | | 953 | | | | 4.4 | % |
| | | | |
| | Drug Stores / Pharmacies | | | 77 | | | | 991 | | | | 4.4 | % |
| | | | |
| | Entertainment | | | 24 | | | | 1,022 | | | | 3.4 | % |
| | | | |
| | Car Washes | | | 65 | | | | 308 | | | | 3.2 | % |
| | | | |
| | Dollar Stores | | | 172 | | | | 1,576 | | | | 3.1 | % |
| | | | |
| | Grocery | | | 36 | | | | 1,654 | | | | 3.0 | % |
| | | | |
| | Home Improvement | | | 14 | | | | 1,595 | | | | 2.9 | % |
| | | | |
| | Warehouse Club and Supercenters | | | 14 | | | | 1,543 | | | | 2.8 | % |
| | | | |
| | Home Décor | | | 16 | | | | 2,147 | | | | 2.7 | % |
| | | | |
| | Specialty Retail | | | 53 | | | | 1,142 | | | | 2.3 | % |
| | | | |
| | Sporting Goods | | | 18 | | | | 1,026 | | | | 2.2 | % |
| | | | |
| | Automotive Service | | | 69 | | | | 578 | | | | 2.2 | % |
| | | | |
| | Department Stores | | | 15 | | | | 1,334 | | | | 1.9 | % |
| | | | |
| | Home Furnishings | | | 18 | | | | 783 | | | | 1.7 | % |
| | | | |
| | Early Education | | | 35 | | | | 384 | | | | 1.5 | % |
| | | | |
| | Automotive Parts | | | 55 | | | | 388 | | | | 1.1 | % |
| | | | |
| | Office Supplies | | | 16 | | | | 351 | | | | 0.7 | % |
| | | | |
| | Other | | | 9 | | | | 294 | | | | 0.7 | % |
| | | | |
| | Medical Office | | | 5 | | | | 65 | | | | 0.5 | % |
| | | | |
| | Pet Supplies and Service | | | 4 | | | | 133 | | | | 0.4 | % |
| | | | |
| | Apparel | | | 4 | | | | 92 | | | | 0.2 | % |
| | | | |
| | Vacant | | | 7 | | | | 641 | | | | — | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | |
From
we may be subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.
Item 4.Mine Safety Disclosure
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
MARKET INFORMATION FOR COMMON STOCK, HOLDERS OF RECORD AND DIVIDEND POLICY
Spirit Realty Capital, Inc.
Our common stock is traded on the NYSE under the symbol “SRC.” As of February 19, 2019,16, 2021, there were approximately 2,3652,139 stockholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
We intend to pay regular quarterly dividends to our stockholders, although all future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant.
Spirit Realty Capital, Inc. directly or indirectly owns all of Spirit Realty, L.P.'s’s partnership units. Therefore, there is no established trading market for Spirit Realty, L.P.'s’s partnership units.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
Spirit Realty Capital, Inc.
No sales of unregistered securities. Gross proceeds of $3.8$330.2 million from sales of registered securities during the fourth quarter of 2020 were used for funding acquisitions, operating expenses and payment of interest and principal on current debt financings.
ISSUER PURCHASES OF EQUITY SECURITIES
Spirit Realty Capital, Inc.
During the fourth quarter of 2018, the following shares of stock were withheld for state and federal payroll taxes on the vesting of employee stock awards, as permitted under the Amended Incentive Award Plan:
187 shares of stock, at a weighted average price of $39.28, in October 2018;None.
none in November 2018; and
420 shares of stock, at a weighted average price of $38.30, in December 2018.
EQUITY COMPENSATION PLAN INFORMATION
Our equity compensation plan information required by this item will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation
S-K,
or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act.
The following graph shows our cumulative total stockholder return for the
period beginning with the initial listing of our common stock on the NYSE on September 20, 2012 and ending on December 31, 2018,five most recent fiscal years, with stock prices retroactively adjusted for the
Merger Exchange Ratio and the Spin-Off
of SMTA. The graph assumes a $100 investment in each of the indices on
September 20, 2012December 31, 2015 and the reinvestment of all cash dividends. Our stock price performance shown in the following graph is not indicative of future stock price performance.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Period Ended | |
| Index: | 9/20/2012 | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 |
| Spirit Realty Capital, Inc. | $ | 100.00 |
| $ | 121.05 |
| $ | 137.58 |
| $ | 177.78 |
| $ | 161.47 |
| $ | 187.01 |
| $ | 162.21 |
| $ | 161.17 |
|
| S&P 500 | $ | 100.00 |
| $ | 97.67 |
| $ | 126.58 |
| $ | 141.00 |
| $ | 139.97 |
| $ | 153.32 |
| $ | 183.09 |
| $ | 171.68 |
|
| NAREIT US Equity REIT Index | $ | 100.00 |
| $ | 101.10 |
| $ | 103.59 |
| $ | 134.81 |
| $ | 139.12 |
| $ | 150.98 |
| $ | 158.87 |
| $ | 151.12 |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Spirit Realty Capital, Inc. | | $ | 100.00 | | | $ | 115.82 | | | $ | 100.46 | | | $ | 99.82 | | | $ | 147.33 | | | $ | 129.70 | |
| | $ | 100.00 | | | $ | 109.54 | | | $ | 130.81 | | | $ | 122.65 | | | $ | 158.07 | | | $ | 183.77 | |
NAREIT US Equity REIT Index | | $ | 100.00 | | | $ | 108.52 | | | $ | 114.19 | | | $ | 108.91 | | | $ | 137.23 | | | $ | 126.25 | |
Item 6. Selected Financial Data
The following tables set forth, on a historical basis, selected financial and operating data for the Company. The following data should be read in conjunction with our financial statements and notes thereto and Item 7.
"Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form
10-K.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | | | | |
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | | | $ | 424,260 | | | $ | 420,003 | |
| | | 678 | | | | 69,218 | | | | 15,838 | | | | — | | | | — | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | | | | 54,998 | | | | 48,651 | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | | | | 28,487 | | | | 26,045 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | | | | 113,394 | | | | 118,690 | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | | | | 40,428 | | | | 28,638 | |
Net income attributable to common stockholders | | | 16,358 | | | | 164,916 | | | | 121,700 | | | | 74,618 | | | | 97,446 | |
Net income from continuing operations per common share—diluted | | | 0.15 | | | | 1.81 | | | | 1.58 | | | | 0.40 | | | | 0.30 | |
Dividends declared per common share issued (1) | | | 2.50 | | | | 2.50 | | | | 3.05 | | | | 3.60 | | | | 3.53 | |
Weighted average shares of common stock outstanding—diluted (1) | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | | | | 93,588,560 | | | | 93,849,250 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 285,716 | | | $ | 305,052 | | | $ | 322,359 | | | $ | 367,296 | | | $ | 394,952 | |
| | | 309,447 | | | | 341,731 | | | | 346,323 | | | | 398,148 | | | | 412,999 | |
Number of properties at period end | | | 1,860 | | | | 1,795 | | | | 1,514 | | | | 2,480 | | | | 2,615 | |
Owned properties occupancy at period end (based on number of properties) | | | 99.6 | % | | | 99.7 | % | | | 99.7 | % | | | 99.2 | % | | | 98.2 | % |
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| (Dollars in thousands, except share and per share data) | | 2018 | | 2017 | | 2016 | | 2015 | | 2014 |
| Operating Data: | | | | | | | | | | |
| Revenues: | | | | | | | | | | |
| Rental income | | $ | 402,321 |
| | $ | 424,260 |
| | $ | 420,003 |
| | $ | 395,169 |
| | $ | 346,186 |
|
| Interest income on loans receivable | | 3,447 |
| | 3,346 |
| | 3,399 |
| | 3,647 |
| | 3,955 |
|
| Earned income from direct financing leases | | 1,814 |
| | 2,078 |
| | 2,742 |
| | 3,024 |
| | 3,343 |
|
| Related party fee income | | 15,838 |
| | — |
| | — |
| | — |
| | — |
|
| Other income | | 21,705 |
| | 1,574 |
| | 9,196 |
| | 866 |
| | 1,787 |
|
| Total revenues | | $ | 445,125 |
| | $ | 431,258 |
| | $ | 435,340 |
| | $ | 402,706 |
| | $ | 355,271 |
|
| Expenses: | | | | | | | | | | |
| General and administrative | | $ | 52,993 |
| | $ | 54,998 |
| | $ | 48,651 |
| | $ | 45,535 |
| | $ | 39,532 |
|
| Restructuring charges | | — |
| | — |
| | 6,341 |
| | 7,056 |
| | — |
|
| Finance restructuring costs | | — |
| | — |
| | — |
| | — |
| | 214 |
|
| Property costs (including reimbursable) | | 21,066 |
| | 28,487 |
| | 26,045 |
| | 21,507 |
| | 21,531 |
|
| Real estate acquisition costs | | 210 |
| | 1,434 |
| | 2,904 |
| | 2,352 |
| | 2,565 |
|
| Interest | | 97,548 |
| | 113,394 |
| | 118,690 |
| | 139,183 |
| | 139,333 |
|
| Depreciation and amortization | | 162,452 |
| | 173,686 |
| | 173,036 |
| | 166,478 |
| | 155,137 |
|
| Impairments | | 6,725 |
| | 61,597 |
| | 61,395 |
| | 50,381 |
| | 30,651 |
|
| Total expenses | | $ | 340,994 |
| | $ | 433,596 |
| | $ | 437,062 |
| | $ | 432,492 |
| | $ | 388,963 |
|
| Other income (loss): | | | | | | | | | | |
| Gain (loss) on debt extinguishment | | $ | 27,092 |
| | $ | 579 |
| | $ | 1,605 |
| | $ | (2,375 | ) | | $ | (457 | ) |
| Gain (loss) on disposition of assets | | 14,629 |
| | 42,698 |
| | 29,623 |
| | (61 | ) | | 48 |
|
| Preferred dividend income from SMTA | | 8,750 |
| | — |
| | — |
| | — |
| | — |
|
| Other expense | | (5,319 | ) | | — |
| | — |
| | — |
| | — |
|
| Total other income (loss) | | $ | 45,152 |
| | $ | 43,277 |
| | $ | 31,228 |
| | $ | (2,436 | ) | | $ | (409 | ) |
| Income (loss) from continuing operations before income tax expense | | $ | 149,283 |
| | $ | 40,939 |
| | $ | 29,506 |
| | $ | (32,222 | ) | | $ | (34,101 | ) |
| Income tax expense | | (792 | ) | | (511 | ) | | (868 | ) | | (479 | ) | | (673 | ) |
| Income (loss) from continuing operations | | $ | 148,491 |
| | $ | 40,428 |
| | $ | 28,638 |
| | $ | (32,701 | ) | | $ | (34,774 | ) |
(Loss) income from discontinued operations (1) | | (16,439 | ) | | 36,720 |
| | 68,808 |
| | 125,913 |
| | (2,171 | ) |
| Net income (loss) | | $ | 132,052 |
| | $ | 77,148 |
| | $ | 97,446 |
| | $ | 93,212 |
| | $ | (36,945 | ) |
| Less: preferred dividends | | (10,352 | ) | | (2,530 | ) | | — |
| | — |
| | — |
|
| Net income (loss) attributable to common stockholders | | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
| | $ | 93,212 |
| | $ | (36,945 | ) |
| Net income (loss) per share of common stock—basic: | | | | | | | | | | |
| Continuing operations | | $ | 1.59 |
| | $ | 0.40 |
| | $ | 0.30 |
| | $ | (0.39 | ) | | $ | (0.46 | ) |
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
| | 1.46 |
| | (0.03 | ) |
| Net income (loss) per share attributable to common stockholders—basic | | $ | 1.40 |
| | $ | 0.79 |
| | $ | 1.03 |
| | $ | 1.07 |
| | $ | (0.49 | ) |
| Net income (loss) per share of common stock—diluted: | | | | | | | | | | |
| Continuing operations | | $ | 1.58 |
| | $ | 0.40 |
| | $ | 0.30 |
| | $ | (0.39 | ) | | $ | (0.46 | ) |
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
| | 1.46 |
| | (0.03 | ) |
| Net income (loss) per share attributable to common stockholders—diluted | | $ | 1.39 |
| | $ | 0.79 |
| | $ | 1.03 |
| | $ | 1.07 |
| | $ | (0.49 | ) |
| (1) | Adjusted for the reverse stock split effected in 2018. |
| (2) | See the definitions and reconciliation ofnon-GAAP measures in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations –Non-GAAP Financial Measures.” |
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| (Dollars in thousands, except share and per share data) | | 2018 | | 2017 | | 2016 | | 2015 | | 2014 |
| Weighted average shares of common stock outstanding: | | | | | | | | | | |
Basic common shares (2) | | 86,321,268 |
| | 93,586,991 |
| | 93,843,552 |
| | 86,444,333 |
| | 77,361,948 |
|
Diluted common shares (2) | | 86,476,449 |
| | 93,588,560 |
| | 93,849,250 |
| | 86,444,333 |
| | 77,361,948 |
|
Dividends declared per common share issued (3) | | $ | 3.05 |
| | $ | 3.60 |
| | $ | 3.53 |
| | $ | 3.43 |
| | $ | 3.34 |
|
| | | | | | | | | | | |
(1) Includes gains, losses and results of operations from all property dispositions and from properties classified as held for sale at the end of the period for all periods prior to 2014. During 2015 and 2014, only those properties classified as held for sale as of December 31, 2013 were reported as discontinued operations. Additionally, includes gains, losses and results of operations of SMTA, applied retrospectively to all periods presented, as a result of the Spin-Off completed on May 31, 2018. |
(2) Historical weighted average number of shares of common stock outstanding (basic and diluted) have been adjusted for the Merger Exchange Ratio and the reverse stock split effected in 2018. |
(3) Dividends declared per common share issued for the years ended December 31, 2017, 2016, 2015 and 2014 have been adjusted for the reverse stock split effected in 2018. |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Gross investments, including related lease intangibles | | $ | 6,805,437 | | | $ | 6,175,703 | | | $ | 5,123,631 | | | $ | 7,903,025 | | | $ | 8,247,654 | |
Net investments, including related lease intangibles | | | 5,821,628 | | | | 5,341,228 | | | | 4,396,098 | | | | 6,614,025 | | | | 7,090,335 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | | | | 14,493 | | | | 8,798 | | | | 10,059 | |
| | | 6,396,786 | | | | 5,832,661 | | | | 5,096,316 | | | | 7,263,511 | | | | 7,677,971 | |
| | | 2,506,341 | | | | 2,153,017 | | | | 2,054,637 | | | | 3,639,680 | | | | 3,664,628 | |
| | | 2,795,666 | | | | 2,419,412 | | | | 2,294,567 | | | | 3,943,902 | | | | 3,995,863 | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | | | | 2,801,749 | | | | 3,319,609 | | | | 3,682,108 | |
|
| | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (Dollars in thousands) | 2018 | | 2017 (1) | | 2016 (1) | | 2015 (1) | | 2014 (1) |
| Balance Sheet Data (end of period): | | | | | | | | | |
| Gross investments, including related lease intangibles | $ | 5,123,631 |
| | $ | 7,903,025 |
| | $ | 8,247,654 |
| | $ | 8,302,688 |
| | $ | 8,043,497 |
|
| Net investments, including related lease intangibles | 4,396,098 |
| | 6,614,025 |
| | 7,090,335 |
| | 7,231,816 |
| | 7,110,726 |
|
| Cash and cash equivalents | 14,493 |
| | 8,798 |
| | 10,059 |
| | 21,790 |
| | 176,181 |
|
Total assets (2) | 5,096,316 |
| | 7,263,511 |
| | 7,677,971 |
| | 7,891,039 |
| | 7,964,230 |
|
Total debt, net (2) | 2,054,637 |
| | 3,639,680 |
| | 3,664,628 |
| | 4,092,787 |
| | 4,323,302 |
|
Total liabilities (2) | 2,294,567 |
| | 3,943,902 |
| | 3,995,863 |
| | 4,429,165 |
| | 4,652,568 |
|
| Total stockholders' equity | 2,801,749 |
| | 3,319,609 |
| | 3,682,108 |
| | 3,461,874 |
| | 3,311,662 |
|
| | | | | | | | | | |
| Other Data: | | | | | | | | | |
FFO (3) | $ | 322,359 |
| | $ | 367,296 |
| | $ | 394,952 |
| | $ | 354,686 |
| | $ | 238,105 |
|
AFFO (3) | $ | 346,323 |
| | $ | 398,148 |
| | $ | 412,999 |
| | $ | 378,050 |
| | $ | 322,400 |
|
| Number of properties in investment portfolio | 1,514 |
| | 2,480 |
| | 2,615 |
| | 2,629 |
| | 2,509 |
|
| Owned properties occupancy at period end (based on number of properties) | 99.7 | % | | 99.2 | % | | 98.2 | % | | 98.6 | % | | 98.4 | % |
| (1) | (1)Balances include assets and liabilities of both continuing operations and discontinued operations. Reference Note 12 to the accompanying consolidated financial statements for additional information. |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol “SRC.” We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant real estate assets throughout the United States, which are generally acquired through sale-leaseback transactions and subsequently leased on a long-term,triple-net
basis to high quality tenants with business operations within retail, industrial, office and other industries. Single tenant, operationally essential real estate consists of properties that are free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and profits. Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. As of December 31, 2020, our owned real estate represented investments in 1,860 properties. Our properties are leased to 301 tenants across 48 states and 28 retail industries. As of December 31, 2020, our owned properties were approximately 99.6% occupied (based on the number of economically yielding properties).
Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners, and together own the remaining 99% of the Operating Partnership. Although the Operating Partnership is wholly-owned by us, in the future, we may issue partnership interests in the Operating Partnership to third parties in exchange for property owned by such third parties. In general, any partnership interests in the Operating Partnership issued to third parties would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when such partnership interests in the Operating Partnership are issued.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner.
On May 31, 2018, we completed aSpin-Off
of all our interests in the assets that collateralized Master Trust 2014, our properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, SMTA. In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of $20.0 million. In September 2019, SMTA sold the assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the Interim Management Agreement, we were entitled to receive $1 million during the initialone-year
term and $4 million for any renewalone-year
term to manage and liquidate the remaining SMTA assets. The Interim Management Agreement was terminated effective September 4, 2020 and we have no further continuing involvement with SMTA. Given the onset of theCOVID-19
pandemic in 2020, many of our tenants requested rent deferrals or other forms of relief. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness and hotels. These and other industries may be further impacted in the future depending on various factors, including the duration of theCOVID-19
pandemic, the reinstitution of restrictions intended to prevent its spread or the imposition of new, more restrictive measures. Even after such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk ofCOVID-19
transmission and heightened sensitivity to risks associated with the transmission of other diseases. For the year ended December 31, 2020, we deferred $31.9 million of rent, of which we recognized $26.3 million in rental income (the remaining $5.6 million was deemed not probable of collection), and abated $6.3 million of rent. As of December 31, 2020, we had an accounts receivable balance of $20.2 million related to deferred rent. For the year
ended December 31, 2021, we expect to see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. For rent deferrals, the deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. Refer to Part I, Item 1A. “Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are determined in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, the collectability of receivables and asset impairment analysis. Set forth below are the more critical accounting policies that require management judgment and estimates in the preparation of our consolidated financial statements. See Notes 2 and 8 to the consolidated financial statements for additional information.details.
(2) During 2015,Purchase Accounting and Acquisition of Real Estate; Lease Intangibles
We evaluate a number of factors in estimating fair value of real estate acquisitions, including building age, building location, building condition, rent comparables from similar properties, and terms ofin-place
leases, if any. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above or below-market leases.In-place
lease intangibles are valued based on our estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. We then allocate the purchase price (including acquisition and closing costs) to land, building, improvements and equipment based on their relative fair values. For properties acquired within-place
leases, we
allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values. Above and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and our estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in certain instances, over the renewal period. Rental Income: Cash and Straight-line Rent
We primarily lease real estate to our tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, we assess the terms and conditions of the lease to determine the appropriate lease term and do not include options to extend, terminate or purchase in our evaluation for lease classification purposes or for recognizing rental income unless we are reasonably certain the tenant will exercise the option. Lease classification also requires an estimation of the residual value of the property at the end of the lease term. For acquisitions, we use the estimated tangible fair value of the property at the date of acquisition. For lease modifications, we generally use sales comparables or a direct capitalization approach to determine fair value. Our leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. For leases with contingent rent escalators, increases in rental revenue are recognized when the changes in the rental rates have occurred. Some of our leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized when the change in the factor on which the contingent lease payment is based actually occurs.
In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic, noting that the underlying premise in requiring a modified lease to be accounted for as if it
were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). We made this election and account for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Rental income, including deferred rent, is subject to an evaluation for collectability, which includes our estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. We do not recognize rental income for amounts that are not probable of collection.
We review our real estate investments and related lease intangibles periodically for indicators of impairment including, but not limited to: the asset being held for sale, vacant ornon-operating,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, we then evaluate if its carrying amount may not be recoverable. We consider factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows. Impairment is calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. The fair values of real estate and intangible assets are determined using the following information, depending on availability, in order of preference: signed purchase and sale agreements or letters of intent; broker opinions of value; market prices for comparable properties; estimates of residual value; and expectations for the use of the real estate.
We elected to early adopt ASU 2015-03, Simplifyingbe taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT commencing with such taxable year, and we intend to continue operating in such a manner. To maintain our REIT status, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the Presentationdividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of Debt Issuance Costs,stock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate level federal income tax on the earnings distributed to our stockholders that we derive from our REIT qualifying activities. We are still subject to state and local income and franchise taxes and to federal income and excise tax on our undistributed income. If we fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal corporate tax, including any applicable alternative minimum tax for taxable years beginning before January 1, 2018. Unless entitled to relief under specific statutory provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
In this section, we discuss the results of our operations for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. | | | | | | | | | | | | | | | | |
| | | | |
| (In Thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | $ 479,901 | | | | $ 438,691 | | | | $ 41,210 | | | | 9.4 | % |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | (2,242 | ) | | | (69.2 | )% |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | (668 | ) | | | (53.9 | )% |
| | | 678 | | | | 69,218 | | | | (68,540 | ) | | | (99.0 | )% |
| | | 1,469 | | | | 4,039 | | | | (2,570 | ) | | | (63.6 | )% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | (4,044 | ) | | | (7.7 | )% |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | (12,461 | ) | | | (100.0 | )% |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 5,855 | | | | 31.4 | % |
| | | 2,432 | | | | 844 | | | | 1,588 | | | | NM | |
| | | 104,165 | | | | 101,060 | | | | 3,105 | | | | 3.1 | % |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 37,155 | | | | 21.2 | % |
| | | 81,476 | | | | 24,091 | | | | 57,385 | | | | NM | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loss on debt extinguishment | | | (7,227 | ) | | | (14,330 | ) | | | 7,103 | | | | (49.6 | )% |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | (34,694 | ) | | | (59.0 | )% |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | (10,802 | ) | | | (100.0 | )% |
| | | | | | | | | | | | | | | | |
Income before income tax expense | | | | | | | | | | | | | | | | |
| | | (273 | ) | | | (11,501 | ) | | | 11,228 | | | | (97.6 | )% |
| | | | | | | | | | | | | | | | |
NM - Percentages over 100% are not displayed.
Changes related to operating properties
Rental income; Property costs (including reimbursable); Depreciation and amortization
The components of rental income are summarized below:
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 453,013 | | | $ | 404,720 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | |
Straight-line rent, net of uncollectible reserve | | | 11,876 | | | | 16,924 | |
Amortization of above- and below- market lease intangibles, net | | | 1,836 | | | | 4,310 | |
| | | | | | | | |
The increase in Base Cash Rent, the largest component of rental income, year-over-year was driven by our net acquisitions, which also was the driver for the increase in depreciation and amortization. We acquired 146 properties
during 2020 with a total of $58.4 million of annualin-place
rent (monthly fixed rent at date of transaction multiplied by 12). During the same period, we disposed of 38 properties, 20 of which were vacant and the remaining 18 had annualin-place
rents of $4.5 million. Our acquisition and disposition activity for the year ended December 31, 2020 is summarized below (in thousands): The increase in Base Cash Rent due to net acquisitions was partially offset by an increase in amounts deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic, from a net recovery of $0.4 million for the year ended December 31, 2019 to a net reduction of $10.9 million for the year ended December 31, 2020. A majority of these tenant credit issues relate to tenants in the movie theater industry and we expect movie theater operators to continue to face headwinds in 2021. The increase year-over-year was also reduced by $6.3 million of rent abatements for the year ended December 31, 2020, which were executed as relief due to theCOVID-19
pandemic. Variable cash rent is primarily comprised of tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, less reimbursements we deem not probable of collection. As such, the change in variable cash rent is driven by the change in property costs year-over-year. For the year ended December 31, 2020, property costs included $14.5 million of reimbursable expenses, compared to $14.9 million for 2019. As such, variable cash rent and reimbursable property costs remained relatively flat year-over-year. The remaining $10.0 million of property costs for the year ended December 31, 2020 werenon-reimbursable,
compared to $3.7 million for 2019. The increase innon-reimbursable
costs of $6.3 million was driven by an increase innon-reimbursable
property taxes of $3.7 million due to tenant credit issues from theCOVID-19
pandemic, as well as an increase in carrying costs of vacant properties of $2.2 million due to a decreased average occupancy during 2020 compared to 2019. Non-cash
rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense.Non-cash
rental income decreased period-over-period primarily as a result of a $14.7 million increase in straight-line rental revenue deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic. This was partially offset by an increase in straight-line rental revenue of $9.7 million year-over-year as a result of acquisitions and lease modifications.Impairments increased year-over-year on underperforming properties, with $49.0 million of impairments recorded on 28 properties for the year ended December 31, 2020, compared to $18.6 million of impairments recorded on 27 properties in the comparative year. The increase was driven by multi-tenant properties, as well as single occupant properties with tenants in the health and fitness, casual dining and movie theater industries, all of which were significantly impacted by theCOVID-19
pandemic. Impairments also increased year-over-year on Vacant properties, with $14.2 million of impairments recorded on eight properties for the year ended December 31, 2020, compared to $5.5 million of impairments recorded on seven properties in the comparative year.
Finally, the increase in impairments year-over-year was caused by $18.2 million of impairments recorded on lease intangible assets, primarily as a result of a tenant bankruptcy that had credit issues prior to theCOVID-19
pandemic which resulted in the termination of the lease for four properties, and $0.1 million of credit loss allowance on our direct financing lease during the year ended December 31, 2020, with no comparable impairments recognized in 2019.
Gain on disposition of assets
Gain on disposition of assets decreased year-over-year. During the year ended December 31, 2020, we disposed of 38 properties and recorded net gains totaling $24.2 million. There were $23.2 million in net gains on the sale of 18 active properties and $1.3 million in net gains on the sale of 20 Vacant properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.1 million in other net losses.
During the year ended December 31, 2019, we disposed of 44 properties and recorded net gains totaling $58.9 million. There were $69.1 million in net gains on the sale of 23 active properties and $1.5 million in net gains on the sale of 18 Vacant properties. One property was returned to the lender in conjunction with CMBS debt extinguishment and two properties were leasehold interests that were surrendered to the lessors, which did not result in a gain or loss on disposition. Additionally, one building in a multi-tenant property was sold, resulting in a net loss of $11.7 million, and the remaining stand-alone occupied building of this property was retained.
Interest expense; Loss on debt extinguishment; Termination of interest rate swaps
Our debt as of December 31, 2019 and 2020 is summarized below (in thousands):
In January 2019, we terminated the 2015 Credit Agreement and the 2015 Term Loan Agreement, resulting in a loss on debt extinguishment of $0.7 million, and entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility andA-1
Term Loans. We also simultaneously entered into delayed drawA-2
Term Loans, which were drawn in May 2019 to repurchase the 2019 Convertible Notes at their maturity. In June 2019, we issued the 2029 Senior Notes and extinguished the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million. In September 2019, we issued the 2027 Senior Notes and the 2030 Senior Notes. Proceeds from these issuances were primarily utilized to terminate theA-1
Term Loans andA-2
Term Loans, which resulted in a loss on debt extinguishment of $5.3 million. Additionally, during 2019, we extinguished two CMBS loans, resulting in a net gain on debt extinguishment of $6.7 million. During the first half of 2020, we entered into the 2020 Term Loans. In August 2020, we issued $450.0 million of 2031 Senior Notes, which triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that resulted in a loss on debt extinguishment of $1.0 million. Remaining proceeds from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6 million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of $6.2 million. Subsequent to December 31, 2020, we repaid the remaining 2020 Term Loans in full and expect to settle the remaining 2021 Convertible Notes in cash during 2021.
These changes in our debt structure resulted in an overall increase in our total debt outstanding, but with a reduction in our weighted average interest rate from 3.85% at December 31, 2019 to 3.64% at December 31, 2020. As such, we had a slight increase in total interest expense year-over-year:
| | | | | | | | |
| | | | |
| | | | | | |
Interest expense – revolving credit facilities | | $ | 3,686 | | | $ | 5,201 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | |
Interest expense – Convertible Notes | | | 10,728 | | | | 17,245 | |
Interest expense – interest rate swaps | | | — | | | | 972 | |
| | | 12,428 | | | | 14,175 | |
| | | | | | | | |
Finally, in September 2019, we terminated our interest rate swaps, which were entered into as a hedge against our variable-rate debt, in conjunction with the repayment of theA-1
Term Loans andA-2
Term Loans. This termination resulted in a fee of $24.8 million. As we continued to hold variable-rate debt at time of termination, a portion of the hedged transactions remained probable to occur. Therefore, only $12.5 million was initially expensed and the remainder of the termination fee is being amortized over the remaining initial term of the interest rate swaps to interest expense. Related party fee income; Preferred dividend income from SMTA; Income tax expense
In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. We also provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of theSpin-Off.
Upon SMTA’s sale of Master Trust 2014 in September 2019, both the Asset Management Agreement and the Property Management and Servicing Agreement were terminated. We simultaneously entered into the Interim Management Agreement at a reduced annual rate, under which we agreed to manage and liquidate the remaining SMTA assets until its termination effective September 4, 2020. The following table summarizes our related party fee income under these agreements: | | | | | | | | |
| | | | |
| | | | | | |
| | $ | 678 | | | $ | 15,635 | |
Property management and special services fees | | | — | | | | 5,427 | |
Termination fee related to the Asset Management Agreement | | | — | | | | 48,156 | |
Total related party fee income | | | | | | | | |
| (1) | Includes $0.9 million of stock compensation awarded by SMTA to an employee of Spirit for the year ended December 31, 2019, which was fully offset by $0.9 million in general and administrative expenses. |
Related party fee income was earned through a wholly-owned TRS and was subject to federal and state income tax. As such, the termination fee income earned in the third quarter of 2019 resulted in an increased income tax expense for the year ended December 31, 2019.
Additionally, as part of theSpin-Off,
SMTA issued to us 10% Series A preferred shares, which generated $10.8 million of preferred dividend income for the year ended December 31, 2019. In September 2019, in conjunction with SMTA’s sale of Master Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation preference of $150.0 million.
Changes related to general and administrative expenses
Year-over-year general and administrative expenses decreased by $4.0 million, driven by a decrease in compensation expenses of $4.7 million, primarily as a result of decreased accruals for market-based and merit-based compensation, as well as a $0.7 million decrease in travel expenses as a result of theCOVID-19
pandemic. Decreases year-over-year were partially offset by $1.7 million of expenses recognized during the year ended December 31, 2020 related to theCOVID-19
pandemic, mainly as a result of increased legal fees for executing rent deferral and abatement agreements. LIQUIDITY AND CAPITAL RESOURCES
In June 2020, we entered into forward sale agreements with certain financial institutions acting as forward purchasers in connection with an offering of 9.2 million shares of common stock at an initial public offering price of $37.35 per share, before underwriting discounts and offering expenses. The forward purchasers borrowed and sold an aggregate of 9.2 million shares of common stock in the offering. We did not receive any proceeds from the sale of our shares of common stock by the forward purchasers at the time of the offering. The forward sale price that we received upon physical settlement of the agreements, which was initially $35.856 per share, was subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. As of December 31, 2020, we had physically settled all 9.2 million of these shares for net proceeds of $319.1 million.
In November 2020, the Board of Directors approved a new $500.0 million ATM program, and we terminated the 2016 ATM Program. Sales of shares of our common stock under the 2020 ATM Program may be made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.
The 2020 ATM Program contemplates that, in addition to the issuance and sale by us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser’s exposure under such forward sale agreement. We will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller.
We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which capitalized deferred financing costs, previously recordedcase we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in deferredsuch forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
During the year ended December 31, 2020, 7.1 million shares were sold under the ATM Programs, comprised of 3.6 million under the 2016 ATM Program and 3.5 million sold under the 2020 ATM Program. All of these sales were sold by forward purchasers through agents under the applicable ATM Program and pursuant to forward sales agreements. The forward sale price that we will receive upon physical settlement of the agreements is subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. During the year ended December 31, 2020, 2.9 million of these shares were physically settled for net proceeds of $109.2 million. As of December 31, 2020, there were 4.1 million shares remaining under open forward sales agreements. Assuming the full physical settlement of those open forward sales agreements, we have remaining capacity of $369.7 million under the 2020 ATM Program as of December 31, 2020.
Short-term liquidity and capital resources
On a short-term basis, our principal demands for funds will be for operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on current and any future debt financings. We expect to fund these demands primarily through cash provided by operating activities, borrowings under the 2019 Credit Facility, and, when market conditions warrant, issuances of equity securities, including shares of our common stock under our 2020 ATM program. As of December 31, 2020, available liquidity was comprised of $70.3 million in cash and cash equivalents, $800.0 million of borrowing capacity under the 2019 Credit Facility and $13.0 million in restricted cash and restricted cash equivalents. Also, as of December 31, 2020, we had $151.5 million of expected proceeds available assuming the full physical settlement of our open forward equity contracts and remaining capacity of $369.7 million under our 2020 ATM Program. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from theCOVID-19
pandemic restrictions intended to prevent its spread. Long-term liquidity and capital resources
We plan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and by issuing fixed-rate secured or unsecured notes and bonds. In the future, some of our property acquisitions could be made by issuing partnership interests of our Operating Partnership in exchange for property owned by third parties. These partnership interests would be exchangeable for cash or, at our election, shares of our common stock. We continually evaluate financing alternatives and believe that we can obtain financing on reasonable terms. However, we cannot be sure that we will have access to the capital markets at times and on terms that are acceptable to us. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. We expect that our primary uses of capital will be for property and other
assetsasset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders. Description of certain debt
The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.
As of December 31, 2020, the aggregate gross commitment under the 2019 Credit Facility was $800.0 million, which may be increased up to $1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. The 2019 Credit Facility has a maturity of March 31, 2023 and includes twosix-month
extensions that can be exercised at our option. We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 2019 Credit Facility is unconditionally guaranteed by the Company and material subsidiaries that meet certain conditions (as defined in the 2019 Facilities Agreements). As of December 31, 2020, there were no subsidiaries that met this requirement.
As of December 31, 2020, the 2019 Credit Facility bore interest at1-Month
LIBOR plus 0.90%, with no borrowings outstanding, and a ratings-based facility fee in the amount of 0.20% per annum. As of December 31, 2020, there were no letters of credit outstanding. Amounts available for borrowing under the 2019 Credit Facility remained subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.60:1.00;
Minimum fixed charge coverage ratio (defined as EBITDA of the Company, to fixed charges) of 1.50:1.00;
Maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.50:1:00;
Minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties, to unsecured interest expense) of 1.75:1.00; and
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness of the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00.
In addition to these covenants, the 2019 Credit Agreement also included other customary affirmative and negative covenants, such as (i) limitation on liens and negative pledges; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and sales of all or substantially all assets; (iv) maintenance of status as a REIT and listing on any national securities exchange; and (v) material modifications to organizational documents. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
As of December 31, 2020, $178.0 million was outstanding under the 2020 Term Loan Agreement. On January 4, 2021, we repaid the 2020 Term Loans in full. The 2020 Term Loans had a maturity of April 2, 2022 and bore interest at a rate of LIBOR plus an applicable margin of 1.50% per annum.
As of December 31, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | |
| | | |
| | | | | | | | | |
| | September 15, 2026 | | | 4.45 | % | | $ | 300,000 | |
| | January 15, 2027 | | | 3.20 | % | | $ | 300,000 | |
| | July 15, 2029 | | | 4.00 | % | | $ | 400,000 | |
| | January 15, 2030 | | | 3.40 | % | | $ | 500,000 | |
| | February 15, 2031 | | | 3.20 | % | | $ | 450,000 | |
Total Senior Unsecured Notes | | | | | | | | | | |
Interest on the consolidated balance sheets,Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which interest is payable on March 15 and September 15 of each year, and the 2031 Senior Notes, for which interest is payable on February 15 and August 15 of each year. The Senior Unsecured Notes are presented asredeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a direct deduction fromredemption price equal to the carryingsum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the respective indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed three months or less (or two months or less in the case of the 2027 Senior Notes) prior to their respective maturity dates, the redemption price will not include a make-whole premium.
The indentures governing the Senior Unsecured Notes subject the Corporation and Operating Partnership to certain customary restrictive covenants that limit their ability to incur additional indebtedness, including:
Maximum leverage ratio (defined as consolidated total indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.60:1.00; Minimum unencumbered asset coverage ratio (defined as total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles, to consolidated total unsecured indebtedness) of 1.50:1:00; Maximum secured indebtedness leverage ratio (defined as consolidated total secured indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.40:1.00; and Minimum fixed charge coverage ratio (defined as consolidated income available for debt liabilityservice, to the annual service charge) of 1.50:1.0.
The indentures governing the Senior Unsecured Notes also include other customary affirmative and negative covenants, including (i) maintenance of the Corporation’s existence; (ii) payment of all taxes, assessments and governmental charges levied against the Corporation; (iii) reporting on financial information; and (iv) maintenance of properties and insurance. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typicalnon-recurring
covenants. As of December 31, 2020, we had five fixed-rate CMBS loans with $214.2 million of aggregate outstanding principal, a weighted-average contractual interest rate of 5.47% and a weighted-average maturity of 2.8 years. Approximately 86.93% of this debt is partially amortizing and requires a balloon payment at maturity. The following table shows the scheduled principal repayments, including amortization, of the CMBS fixed-rate loans as of December 31, 2020 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Weighted
Average Stated
Rate | | | | | | | | | | |
| | | — | | | | — | | | —% | | | — | % | | $ | 4,365 | | | $ | — | | | $ | 4,365 | |
| | | — | | | | — | | | —% | | | — | | | | 4,617 | | | | — | | | | 4,617 | |
| | | 3 | | | | 86 | | | | | | 5.46 | | | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | — | | | | — | | | —% | | | — | | | | 590 | | | | — | | | | 590 | |
| | | 1 | | | | 1 | | | 6.00% | | | 6.00 | | | | 610 | | | | 16 | | | | 626 | |
| | | 1 | | | | 1 | | | 5.80% | | | 5.80 | | | | 3,000 | | | | 53 | | | | 3,053 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020, the Convertible Notes were comprised of $190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which these costs relate,the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.
The conversion rate is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the 2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Future principal payments due on our various types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with respect to our commitments, including acquisitions under contract, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this
presentation is retrospectively appliedsection, we discuss our cash flows for the year ended December 31, 2020 compared to
prior periods. Capitalized deferred financing costs incurredthe year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the 2015 Credit Facility continuetermination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to be presentedfund property acquisitions, for investments in deferred costsloans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
Generally, our net
cash provided by or used in financing activities is impacted by our borrowings under our revolving credit facilities and term loans, issuances ofnet-lease
mortgage notes, common stock and debt offerings and repurchases and dividend payments on our common and preferred stock. Net cash provided by financing activities during the year ended December 31, 2020 was primarily attributable to borrowings of $445.5 million under senior unsecured notes, net proceeds from the issuance of common stock of $428.3 million and net borrowings of $178.0 million under term loans. These amounts were partially offset by payment of dividends to equity owners of $270.8 million, repayment of $154.6 million on convertible notes, net repayments of $116.5 million on our revolving credit facilities, deferred financing costs of $6.6 million, common stock repurchases for employee tax withholdings totaling $4.4 million, repayment of $4.1 million on mortgages and notes payable and debt extinguishment costs of $4.0 million.
During the same period in 2019, net cash provided by financing activities was primarily attributable to borrowings of $1.2 billion under senior unsecured notes and net proceeds from the issuance of common stock of $677.4 million. These amounts were partially offset by net payments on the consolidated balance sheets as amounts can be drawnconvertible notes, term loans, mortgages and repaid periodically, which is in accordance with ASU 2015-15, Presentationnotes payable, and Subsequent Measurementrevolving credit facilities of Debt Issuance Costs Associated with Line-of-Credit Arrangements.$402.5 million, $420.0 million, $242.0 million, and $29.8 million, respectively. Additionally, there were debt extinguishment costs of $15.3 million and deferred financing costs of $22.1 million during 2019. Payment of dividends to equity owners during 2019 was $236.9 million, and the common stock share repurchase for employee tax withholdings totaled $2.5 million.
(3) See the definition of FFO and AFFO below.
Non-GAAP
Financial Measures
Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol “SRC.” We are a self-administered and self-managed REIT within-house
capabilities including acquisition, credit research, asset management, portfolio management, real estate research, legal, finance and accounting functions. We primarily invest in single-tenant real estate assets throughout the United States, which are generally acquired through sale-leaseback transactions and subsequently leased on a long-term,triple-net
basis to high quality tenants with business operations within retail, industrial, office and other industries. Single tenant, operationally essential real estate consists of properties that are free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and profits. Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. As of December 31, 2020, our owned real estate represented investments in 1,860 properties. Our properties are leased to 301 tenants across 48 states and 28 retail industries. As of December 31, 2020, our owned properties were approximately 99.6% occupied (based on the number of economically yielding properties).
Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners, and together own the remaining 99% of the Operating Partnership. Although the Operating Partnership is wholly-owned by us, in the future, we may issue partnership interests in the Operating Partnership to third parties in exchange for property owned by such third parties. In general, any partnership interests in the Operating Partnership issued to third parties would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when such partnership interests in the Operating Partnership are issued.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner.
On May 31, 2018, we completed aSpin-Off
of all our interests in the assets that collateralized Master Trust 2014, our properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, SMTA. In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of $20.0 million. In September 2019, SMTA sold the assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the Interim Management Agreement, we were entitled to receive $1 million during the initialone-year
term and $4 million for any renewalone-year
term to manage and liquidate the remaining SMTA assets. The Interim Management Agreement was terminated effective September 4, 2020 and we have no further continuing involvement with SMTA. Given the onset of theCOVID-19
pandemic in 2020, many of our tenants requested rent deferrals or other forms of relief. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to prevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness and hotels. These and other industries may be further impacted in the future depending on various factors, including the duration of theCOVID-19
pandemic, the reinstitution of restrictions intended to prevent its spread or the imposition of new, more restrictive measures. Even after such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk ofCOVID-19
transmission and heightened sensitivity to risks associated with the transmission of other diseases. For the year ended December 31, 2020, we deferred $31.9 million of rent, of which we recognized $26.3 million in rental income (the remaining $5.6 million was deemed not probable of collection), and abated $6.3 million of rent. As of December 31, 2020, we had an accounts receivable balance of $20.2 million related to deferred rent. For the year
ended December 31, 2021, we expect to see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. For rent deferrals, the deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. Refer to Part I, Item 1A. “Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. CRITICAL ACCOUNTING POLICIES AND AFFOESTIMATES
We calculate FFOOur accounting policies are determined in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Estimates and assumptions include, among other things, subjective judgments regarding the standards established byfair values and useful lives of our properties for depreciation and lease classification purposes, the National Associationcollectability of receivables and asset impairment analysis. Set forth below are the more critical accounting policies that require management judgment and estimates in the preparation of our consolidated financial statements. See Notes 2 and 8 to the consolidated financial statements for additional details.
Purchase Accounting and Acquisition of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss) attributableEstate; Lease Intangibles
We evaluate a number of factors in estimating fair value of real estate acquisitions, including building age, building location, building condition, rent comparables from similar properties, and terms ofin-place
leases, if any. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above or below-market leases.In-place
lease intangibles are valued based on our estimates of costs related to
common stockholders (computedtenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. We then allocate the purchase price (including acquisition and closing costs) to land, building, improvements and equipment based on their relative fair values. For properties acquired within-place
leases, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values. Above and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and our estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in
accordance with GAAP), excludingcertain instances, over the renewal period. Rental Income: Cash and Straight-line Rent
We primarily lease real
estate-related depreciationestate to our tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, we assess the terms and
amortization, impairment chargesconditions of the lease to determine the appropriate lease term 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
relateinclude options to
extend, terminate or
purchase in our evaluation for lease classification purposes or for recognizing rental income unless we 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. Wereasonably certain the tenant will exercise the option. Lease classification also believe that, as a widely recognized measurerequires an estimation of the performanceresidual value of equity REITs, FFO will be used by investors asthe property at the end of the lease term. For acquisitions, we use the estimated tangible fair value of the property at the date of acquisition. For lease modifications, we generally use sales comparables or a direct capitalization approach to determine fair value.
Our leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to compare our operating performanceproduce a constant periodic rent over the term of the lease. For leases with that of other equity REITs. However, because FFO excludes depreciation and amortization and does not capturecontingent rent escalators, increases in rental revenue are recognized when the changes in the valuerental rates have occurred. Some of our propertiesleases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized when the change in the factor on which the contingent lease payment is based actually occurs.
In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic, noting that
result from use or marketthe underlying premise in requiring a modified lease to be accounted for as if it
were a new lease under ASC 842 is that the modified terms and conditions
allaffect the economics of
which have real economicthe lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects
of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and
could materially impact our results from operations,obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the
utility of FFOconcessions explicitly exist in the contract). We made this election and account for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a
measurelease modification. Rental income, including deferred rent, is subject to an evaluation for collectability, which includes our estimates of our performance is limited. In addition, other equity REITs may not calculate FFO as we do, and, accordingly, our FFO mayamounts that will not be comparable to such other equity REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income (loss) attributable to common stockholders (computed in accordance with GAAP) as a measurerealized based on an assessment of our performance.
AFFO is a non-GAAP financial measure of operating performance used by many companiesthe risks inherent in the REIT industry.portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. We adjust FFO to eliminate the impact of certain itemsdo not recognize rental income for amounts that we believe are not indicativeprobable 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 associated with our Spin-Off, default interest and fees on non-recourse mortgage indebtedness, debt extinguishment gains (losses), transaction costs incurred in connection with the acquisition of real estate investments subject to existing leases, costs associated with performing on a guarantee of a former tenant's debt, 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 stockholders (computed in accordance with GAAP) as a performance measure.collection.
Adjusted Debt represents 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.
EBITDAre
EBITDAre is a non-GAAP financial measure and is computed in accordance with standards established by NAREIT. EBITDAre is defined as net income (loss) (computed in accordance with GAAP), plus interest expense, plus income tax expense (if any), plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated real estate ventures, plus adjustments to reflect the Company's share of EBITDAre of unconsolidated real estate ventures.
Adjusted EBITDAre
Adjusted EBITDAre represents EBITDAre as adjusted for transaction costs, revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter, severance charges, real estate acquisition costs, and debt extinguishment gains (losses). 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, 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) (computed in accordance with GAAP) as a performance measure.
Annualized Adjusted EBITDAre
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.
Adjusted Debtto Annualized Adjusted EBITDAre
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 ofreview our real estate investments and
a proxyrelated lease intangibles periodically for
a measureindicators of impairment including, but not limited to: the asset being held for sale, vacant ornon-operating,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, we
believe is used by many lenders and ratings agencies tothen evaluate
our ability to repay and service our debt obligations over time. We believe the 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,if its carrying amount may not be
recoverable. We consider factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows.Impairment is calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. The fair values of real estate and intangible assets are determined using the following information, depending on availability, in order of preference: signed purchase and sale agreements or letters of intent; broker opinions of value; market prices for comparable properties; estimates of residual value; and expectations for the use of the real estate.
We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT commencing with such taxable year, and we intend to continue operating in such a manner. To maintain our REIT status, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to such other REITs. A reconciliationmatters as operating results, asset holdings, distribution levels and diversity of interest bearing debt (computedstock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate level federal income tax on the earnings distributed to our stockholders that we derive from our REIT qualifying activities. We are still subject to state and local income and franchise taxes and to federal income and excise tax on our undistributed income. If we fail to qualify as a REIT in accordance with GAAP)any taxable year and are unable to Adjusted Debt is includedavail ourselves of certain savings provisions set forth in the financial information accompanyingCode, all of our taxable income would be subject to federal corporate tax, including any applicable alternative minimum tax for taxable years beginning before January 1, 2018. Unless entitled to relief under specific statutory provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this report.statutory relief.
FFO and AFFO
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| (Dollars in thousands) | | 2018 | | 2017 | | 2016 | | 2015 | | 2014 |
Net income attributable to common stockholders (1) | | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
| | $ | 93,212 |
| | $ | (36,945 | ) |
| Add/(less): | | | | | | | | | | |
| Portfolio depreciation and amortization | | 197,346 |
| | 255,454 |
| | 261,799 |
| | 260,257 |
| | 247,587 |
|
| Portfolio impairments | | 17,668 |
| | 102,330 |
| | 88,072 |
| | 70,231 |
| | 38,009 |
|
| Gain on disposition of assets | | (14,355 | ) | | (65,106 | ) | | (52,365 | ) | | (69,014 | ) | | (10,546 | ) |
| FFO attributable to common stockholders | | $ | 322,359 |
| | $ | 367,296 |
| | $ | 394,952 |
| | $ | 354,686 |
| | $ | 238,105 |
|
| Add/(less): | | | | | | | | | | |
| (Gain) loss on debt extinguishment | | (26,729 | ) | | 1,645 |
| | (233 | ) | | 3,162 |
| | 64,750 |
|
| Restructuring charges | | — |
| | — |
| | 6,341 |
| | 7,056 |
| | — |
|
| Other costs in G&A associated with headquarter relocation | | — |
| | — |
| | 3,629 |
| | — |
| | — |
|
| Real estate acquisition costs | | 549 |
| | 1,356 |
| | 3,229 |
| | 2,739 |
| | 3,631 |
|
| Transaction costs | | 21,391 |
| | 6,361 |
| | — |
| | — |
| | — |
|
| Master Trust Exchange Costs | | — |
| | — |
| | — |
| | — |
| | 13,022 |
|
| Non-cash interest expense | | 22,866 |
| | 23,469 |
| | 15,380 |
| | 10,367 |
| | 5,175 |
|
| Accrued interest and fees on defaulted loans | | 1,429 |
| | 4,201 |
| | 4,740 |
| | 7,649 |
| | 3,103 |
|
| Straight-line rent, net of related bad debt expense | | (15,382 | ) | | (19,474 | ) | | (23,496 | ) | | (19,291 | ) | | (12,191 | ) |
| Other amortization and non-cash charges | | (2,434 | ) | | (3,266 | ) | | (2,837 | ) | | (1,639 | ) | | (4,541 | ) |
Swap termination costs (2) | | — |
| | — |
| | 1,724 |
| | — |
| | — |
|
| Non-cash compensation expense | | 15,114 |
| | 16,560 |
| | 9,570 |
| | 13,321 |
| | 11,346 |
|
| Other G&A costs associated with Spin-Off | | 1,841 |
| | — |
| | — |
| | — |
| | — |
|
| Other expense | | 5,319 |
| | — |
| | — |
| | — |
| | — |
|
| AFFO attributable to common stockholders | | $ | 346,323 |
| | $ | 398,148 |
| | $ | 412,999 |
| | $ | 378,050 |
| | $ | 322,400 |
|
| | | | | | | | | | | |
FFO per share of common stock - diluted (3) | | $ | 3.71 |
| | $ | 3.91 |
| | $ | 4.20 |
| | $ | 4.09 |
| | $ | 3.06 |
|
| | | | | | | | | | | |
AFFO per share of common stock - diluted (3) | | $ | 3.99 |
| | $ | 4.24 |
| | $ | 4.39 |
| | $ | 4.36 |
| | $ | 4.14 |
|
| | | | | | | | | | | |
AFFO per share of common stock, excluding Haggen settlement (4) | | $ | 3.78 |
| | 4.24 |
| | 4.38 |
| | 4.36 |
| | 4.14 |
|
| | | | | | | | | | | |
| Weighted average shares of common stock outstanding: | | | | | | | | | | |
| Diluted | | 86,476,449 |
| | 93,588,560 |
| | 93,849,250 |
| | 86,444,333 |
| | 77,361,948 |
|
37
| |
(1)
| Amount is net of distributions paid to preferred stockholders for the years ended December 31, 2018 and 2017. |
| |
(2)
| Included in general and administrative expenses. |
| |
(3)
| Assumes the issuance of potentially issuable shares unless the result would be anti-dilutive. |
| |
(4)
| AFFO attributable to common stockholders, excluding proceeds from the Haggen settlement of $19.1 million for the year ended December 31, 2018 and $1.8 million for the year ended December 31, 2016. |
|
| | | | | | | |
| | December 31, |
| (Dollars in thousands) | 2018 | | 2017 |
| 2015 Credit Facility | $ | 146,300 |
| | $ | 112,000 |
|
| 2015 Term Loan, net | 419,560 |
| | — |
|
| Senior Unsecured Notes, net | 295,767 |
| | 295,321 |
|
| Mortgages and notes payable, net | 463,196 |
| | 2,516,478 |
|
| Convertible Notes, net | 729,814 |
| | 715,881 |
|
| Total debt, net | 2,054,637 |
| | 3,639,680 |
|
| Add / (less): | | | |
| Unamortized debt discount, net | 14,733 |
| | 61,399 |
|
| Unamortized deferred financing costs | 14,932 |
| | 39,572 |
|
| Cash and cash equivalents | (14,493 | ) | | (8,798 | ) |
| Restricted cash balances held for the benefit of lenders | (62,928 | ) | | (105,909 | ) |
| Adjusted Debt | $ | 2,006,881 |
| | $ | 3,625,944 |
|
| | | | |
| | Three Months
Ended December 31, |
| (Dollars in thousands) | 2018 | | 2017 |
| Net income | $ | 54,114 |
| | $ | 35,791 |
|
| Add/(less): | | | |
| Interest | 26,163 |
| | 47,998 |
|
| Depreciation and amortization | 41,437 |
| | 63,132 |
|
| Income tax expense (benefit) | 317 |
| | (25 | ) |
| Realized gain on sales of real estate | (13,802 | ) | | (24,909 | ) |
| Impairments on real estate assets | 471 |
| | 14,221 |
|
EBITDAre | $ | 108,700 |
| | $ | 136,208 |
|
Adjustments to revenue producing acquisitions and dispositions (1) | (168 | ) | | — |
|
| Transaction costs | 460 |
| | 3,216 |
|
| Real estate acquisition costs | 67 |
| | 583 |
|
| Loss on debt extinguishment | — |
| | 3,415 |
|
| Other G&A costs associated with Spin-off | 1,841 |
| | — |
|
| Other expense | 5,319 |
| | — |
|
Adjusted EBITDAre | $ | 116,219 |
| | $ | 143,422 |
|
Other adjustments for Annualized Adjusted EBITDAre (1) (2) | (17,944 | ) | | $ | — |
|
Annualized Adjusted EBITDAre | $ | 393,100 |
| | $ | 573,688 |
|
Adjusted Debt / Annualized Adjusted EBITDAre | 5.1 |
| | 6.3 |
|
| |
(1)
| In 2018 and going forward, the definition of Adjusted EBITDAre was revised to reflect adjustments made for income producing acquisitions and dispositions made during the quarter. The definition of Annualized Adjusted EBITDAre was also revised to reflect adjustments for items where annualization is not appropriate.
|
| |
(2)
| Adjustments for which annualization would not be appropriate are composed of the receipt of the Haggen settlement and write-offs related to certain uncollectible accounts receivable and straight-line rent receivables. |
In this section, we discuss the results of our operations for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7.
Management’s“Management’s Discussion and Analysis of Financial Condition and Results of
OperationsOperations” in our Annual Report on Form10-K
for the year ended December 31, 2019. | | | | | | | | | | | | | | | | |
| | | | |
| (In Thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | $ 479,901 | | | | $ 438,691 | | | | $ 41,210 | | | | 9.4 | % |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | (2,242 | ) | | | (69.2 | )% |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | (668 | ) | | | (53.9 | )% |
| | | 678 | | | | 69,218 | | | | (68,540 | ) | | | (99.0 | )% |
| | | 1,469 | | | | 4,039 | | | | (2,570 | ) | | | (63.6 | )% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | (4,044 | ) | | | (7.7 | )% |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | (12,461 | ) | | | (100.0 | )% |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 5,855 | | | | 31.4 | % |
| | | 2,432 | | | | 844 | | | | 1,588 | | | | NM | |
| | | 104,165 | | | | 101,060 | | | | 3,105 | | | | 3.1 | % |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 37,155 | | | | 21.2 | % |
| | | 81,476 | | | | 24,091 | | | | 57,385 | | | | NM | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loss on debt extinguishment | | | (7,227 | ) | | | (14,330 | ) | | | 7,103 | | | | (49.6 | )% |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | (34,694 | ) | | | (59.0 | )% |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | (10,802 | ) | | | (100.0 | )% |
| | | | | | | | | | | | | | | | |
Income before income tax expense | | | | | | | | | | | | | | | | |
| | | (273 | ) | | | (11,501 | ) | | | 11,228 | | | | (97.6 | )% |
| | | | | | | | | | | | | | | | |
NM - Percentages over 100% are not displayed.
Changes related to operating properties
Rental income; Property costs (including reimbursable); Depreciation and amortization
The components of rental income are summarized below:
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 453,013 | | | $ | 404,720 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | |
Straight-line rent, net of uncollectible reserve | | | 11,876 | | | | 16,924 | |
Amortization of above- and below- market lease intangibles, net | | | 1,836 | | | | 4,310 | |
| | | | | | | | |
The increase in Base Cash Rent, the largest component of rental income, year-over-year was driven by our net acquisitions, which also was the driver for the increase in depreciation and amortization. We acquired 146 properties
during 2020 with a total of $58.4 million of annualin-place
rent (monthly fixed rent at date of transaction multiplied by 12). During the same period, we disposed of 38 properties, 20 of which were vacant and the remaining 18 had annualin-place
rents of $4.5 million. Our acquisition and disposition activity for the year ended December 31, 2020 is summarized below (in thousands): The increase in Base Cash Rent due to net acquisitions was partially offset by an increase in amounts deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic, from a net recovery of $0.4 million for the year ended December 31, 2019 to a net reduction of $10.9 million for the year ended December 31, 2020. A majority of these tenant credit issues relate to tenants in the movie theater industry and we expect movie theater operators to continue to face headwinds in 2021. The increase year-over-year was also reduced by $6.3 million of rent abatements for the year ended December 31, 2020, which were executed as relief due to theCOVID-19
pandemic. Variable cash rent is primarily comprised of tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, less reimbursements we deem not probable of collection. As such, the change in variable cash rent is driven by the change in property costs year-over-year. For the year ended December 31, 2020, property costs included $14.5 million of reimbursable expenses, compared to $14.9 million for 2019. As such, variable cash rent and reimbursable property costs remained relatively flat year-over-year. The remaining $10.0 million of property costs for the year ended December 31, 2020 werenon-reimbursable,
compared to $3.7 million for 2019. The increase innon-reimbursable
costs of $6.3 million was driven by an increase innon-reimbursable
property taxes of $3.7 million due to tenant credit issues from theCOVID-19
pandemic, as well as an increase in carrying costs of vacant properties of $2.2 million due to a decreased average occupancy during 2020 compared to 2019. Non-cash
rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense.Non-cash
rental income decreased period-over-period primarily as a result of a $14.7 million increase in straight-line rental revenue deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic. This was partially offset by an increase in straight-line rental revenue of $9.7 million year-over-year as a result of acquisitions and lease modifications.Impairments increased year-over-year on underperforming properties, with $49.0 million of impairments recorded on 28 properties for the year ended December 31, 2020, compared to $18.6 million of impairments recorded on 27 properties in the comparative year. The increase was driven by multi-tenant properties, as well as single occupant properties with tenants in the health and fitness, casual dining and movie theater industries, all of which were significantly impacted by theCOVID-19
pandemic. Impairments also increased year-over-year on Vacant properties, with $14.2 million of impairments recorded on eight properties for the year ended December 31, 2020, compared to $5.5 million of impairments recorded on seven properties in the comparative year.
Finally, the increase in impairments year-over-year was caused by $18.2 million of impairments recorded on lease intangible assets, primarily as a result of a tenant bankruptcy that had credit issues prior to theCOVID-19
pandemic which resulted in the termination of the lease for four properties, and $0.1 million of credit loss allowance on our direct financing lease during the year ended December 31, 2020, with no comparable impairments recognized in 2019.
Gain on disposition of assets
Gain on disposition of assets decreased year-over-year. During the year ended December 31, 2020, we disposed of 38 properties and recorded net gains totaling $24.2 million. There were $23.2 million in net gains on the sale of 18 active properties and $1.3 million in net gains on the sale of 20 Vacant properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.1 million in other net losses.
During the year ended December 31, 2019, we disposed of 44 properties and recorded net gains totaling $58.9 million. There were $69.1 million in net gains on the sale of 23 active properties and $1.5 million in net gains on the sale of 18 Vacant properties. One property was returned to the lender in conjunction with CMBS debt extinguishment and two properties were leasehold interests that were surrendered to the lessors, which did not result in a gain or loss on disposition. Additionally, one building in a multi-tenant property was sold, resulting in a net loss of $11.7 million, and the remaining stand-alone occupied building of this property was retained.
Interest expense; Loss on debt extinguishment; Termination of interest rate swaps
Our debt as of December 31, 2019 and 2020 is summarized below (in thousands):
In January 2019, we terminated the 2015 Credit Agreement and the 2015 Term Loan Agreement, resulting in a loss on debt extinguishment of $0.7 million, and entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility andA-1
Term Loans. We also simultaneously entered into delayed drawA-2
Term Loans, which were drawn in May 2019 to repurchase the 2019 Convertible Notes at their maturity. In June 2019, we issued the 2029 Senior Notes and extinguished the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million. In September 2019, we issued the 2027 Senior Notes and the 2030 Senior Notes. Proceeds from these issuances were primarily utilized to terminate theA-1
Term Loans andA-2
Term Loans, which resulted in a loss on debt extinguishment of $5.3 million. Additionally, during 2019, we extinguished two CMBS loans, resulting in a net gain on debt extinguishment of $6.7 million. During the first half of 2020, we entered into the 2020 Term Loans. In August 2020, we issued $450.0 million of 2031 Senior Notes, which triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that resulted in a loss on debt extinguishment of $1.0 million. Remaining proceeds from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6 million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of $6.2 million. Subsequent to December 31, 2020, we repaid the remaining 2020 Term Loans in full and expect to settle the remaining 2021 Convertible Notes in cash during 2021.
These changes in our debt structure resulted in an overall increase in our total debt outstanding, but with a reduction in our weighted average interest rate from 3.85% at December 31, 2019 to 3.64% at December 31, 2020. As such, we had a slight increase in total interest expense year-over-year:
| | | | | | | | |
| | | | |
| | | | | | |
Interest expense – revolving credit facilities | | $ | 3,686 | | | $ | 5,201 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | |
Interest expense – Convertible Notes | | | 10,728 | | | | 17,245 | |
Interest expense – interest rate swaps | | | — | | | | 972 | |
| | | 12,428 | | | | 14,175 | |
| | | | | | | | |
Finally, in September 2019, we terminated our interest rate swaps, which were entered into as a hedge against our variable-rate debt, in conjunction with the repayment of theA-1
Term Loans andA-2
Term Loans. This termination resulted in a fee of $24.8 million. As we continued to hold variable-rate debt at time of termination, a portion of the hedged transactions remained probable to occur. Therefore, only $12.5 million was initially expensed and the remainder of the termination fee is being amortized over the remaining initial term of the interest rate swaps to interest expense. Related party fee income; Preferred dividend income from SMTA; Income tax expense
In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. We also provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of theSpin-Off.
Upon SMTA’s sale of Master Trust 2014 in September 2019, both the Asset Management Agreement and the Property Management and Servicing Agreement were terminated. We simultaneously entered into the Interim Management Agreement at a reduced annual rate, under which we agreed to manage and liquidate the remaining SMTA assets until its termination effective September 4, 2020. The following table summarizes our related party fee income under these agreements: | | | | | | | | |
| | | | |
| | | | | | |
| | $ | 678 | | | $ | 15,635 | |
Property management and special services fees | | | — | | | | 5,427 | |
Termination fee related to the Asset Management Agreement | | | — | | | | 48,156 | |
Total related party fee income | | | | | | | | |
| (1) | Includes $0.9 million of stock compensation awarded by SMTA to an employee of Spirit for the year ended December 31, 2019, which was fully offset by $0.9 million in general and administrative expenses. |
Related party fee income was earned through a wholly-owned TRS and was subject to federal and state income tax. As such, the termination fee income earned in the third quarter of 2019 resulted in an increased income tax expense for the year ended December 31, 2019.
Additionally, as part of theSpin-Off,
SMTA issued to us 10% Series A preferred shares, which generated $10.8 million of preferred dividend income for the year ended December 31, 2019. In September 2019, in conjunction with SMTA’s sale of Master Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation preference of $150.0 million.
Changes related to general and administrative expenses
Year-over-year general and administrative expenses decreased by $4.0 million, driven by a decrease in compensation expenses of $4.7 million, primarily as a result of decreased accruals for market-based and merit-based compensation, as well as a $0.7 million decrease in travel expenses as a result of theCOVID-19
pandemic. Decreases year-over-year were partially offset by $1.7 million of expenses recognized during the year ended December 31, 2020 related to theCOVID-19
pandemic, mainly as a result of increased legal fees for executing rent deferral and abatement agreements. LIQUIDITY AND CAPITAL RESOURCES
In June 2020, we entered into forward sale agreements with certain financial institutions acting as forward purchasers in connection with an offering of 9.2 million shares of common stock at an initial public offering price of $37.35 per share, before underwriting discounts and offering expenses. The forward purchasers borrowed and sold an aggregate of 9.2 million shares of common stock in the offering. We did not receive any proceeds from the sale of our shares of common stock by the forward purchasers at the time of the offering. The forward sale price that we received upon physical settlement of the agreements, which was initially $35.856 per share, was subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. As of December 31, 2020, we had physically settled all 9.2 million of these shares for net proceeds of $319.1 million.
In November 2020, the Board of Directors approved a new $500.0 million ATM program, and we terminated the 2016 ATM Program. Sales of shares of our common stock under the 2020 ATM Program may be made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.
The 2020 ATM Program contemplates that, in addition to the issuance and sale by us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser’s exposure under such forward sale agreement. We will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller.
We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
During the year ended December 31, 2020, 7.1 million shares were sold under the ATM Programs, comprised of 3.6 million under the 2016 ATM Program and 3.5 million sold under the 2020 ATM Program. All of these sales were sold by forward purchasers through agents under the applicable ATM Program and pursuant to forward sales agreements. The forward sale price that we will receive upon physical settlement of the agreements is subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. During the year ended December 31, 2020, 2.9 million of these shares were physically settled for net proceeds of $109.2 million. As of December 31, 2020, there were 4.1 million shares remaining under open forward sales agreements. Assuming the full physical settlement of those open forward sales agreements, we have remaining capacity of $369.7 million under the 2020 ATM Program as of December 31, 2020.
Short-term liquidity and capital resources
On a short-term basis, our principal demands for funds will be for operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on current and any future debt financings. We expect to fund these demands primarily through cash provided by operating activities, borrowings under the 2019 Credit Facility, and, when market conditions warrant, issuances of equity securities, including shares of our common stock under our 2020 ATM program. As of December 31, 2020, available liquidity was comprised of $70.3 million in cash and cash equivalents, $800.0 million of borrowing capacity under the 2019 Credit Facility and $13.0 million in restricted cash and restricted cash equivalents. Also, as of December 31, 2020, we had $151.5 million of expected proceeds available assuming the full physical settlement of our open forward equity contracts and remaining capacity of $369.7 million under our 2020 ATM Program. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from theCOVID-19
pandemic restrictions intended to prevent its spread. Long-term liquidity and capital resources
We plan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and by issuing fixed-rate secured or unsecured notes and bonds. In the future, some of our property acquisitions could be made by issuing partnership interests of our Operating Partnership in exchange for property owned by third parties. These partnership interests would be exchangeable for cash or, at our election, shares of our common stock. We continually evaluate financing alternatives and believe that we can obtain financing on reasonable terms. However, we cannot be sure that we will have access to the capital markets at times and on terms that are acceptable to us. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. We expect that our primary uses of capital will be for property and other asset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders. Description of certain debt
The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.
As of December 31, 2020, the aggregate gross commitment under the 2019 Credit Facility was $800.0 million, which may be increased up to $1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. The 2019 Credit Facility has a maturity of March 31, 2023 and includes twosix-month
extensions that can be exercised at our option. We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 2019 Credit Facility is unconditionally guaranteed by the Company and material subsidiaries that meet certain conditions (as defined in the 2019 Facilities Agreements). As of December 31, 2020, there were no subsidiaries that met this requirement.
As of December 31, 2020, the 2019 Credit Facility bore interest at1-Month
LIBOR plus 0.90%, with no borrowings outstanding, and a ratings-based facility fee in the amount of 0.20% per annum. As of December 31, 2020, there were no letters of credit outstanding. Amounts available for borrowing under the 2019 Credit Facility remained subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.60:1.00;
Minimum fixed charge coverage ratio (defined as EBITDA of the Company, to fixed charges) of 1.50:1.00;
Maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.50:1:00;
Minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties, to unsecured interest expense) of 1.75:1.00; and
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness of the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00.
In addition to these covenants, the 2019 Credit Agreement also included other customary affirmative and negative covenants, such as (i) limitation on liens and negative pledges; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and sales of all or substantially all assets; (iv) maintenance of status as a REIT and listing on any national securities exchange; and (v) material modifications to organizational documents. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
As of December 31, 2020, $178.0 million was outstanding under the 2020 Term Loan Agreement. On January 4, 2021, we repaid the 2020 Term Loans in full. The 2020 Term Loans had a maturity of April 2, 2022 and bore interest at a rate of LIBOR plus an applicable margin of 1.50% per annum.
As of December 31, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | |
| | | |
| | | | | | | | | |
| | September 15, 2026 | | | 4.45 | % | | $ | 300,000 | |
| | January 15, 2027 | | | 3.20 | % | | $ | 300,000 | |
| | July 15, 2029 | | | 4.00 | % | | $ | 400,000 | |
| | January 15, 2030 | | | 3.40 | % | | $ | 500,000 | |
| | February 15, 2031 | | | 3.20 | % | | $ | 450,000 | |
Total Senior Unsecured Notes | | | | | | | | | | |
Interest on the Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which interest is payable on March 15 and September 15 of each year, and the 2031 Senior Notes, for which interest is payable on February 15 and August 15 of each year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the respective indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed three months or less (or two months or less in the case of the 2027 Senior Notes) prior to their respective maturity dates, the redemption price will not include a make-whole premium.
The indentures governing the Senior Unsecured Notes subject the Corporation and Operating Partnership to certain customary restrictive covenants that limit their ability to incur additional indebtedness, including:
Maximum leverage ratio (defined as consolidated total indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.60:1.00; Minimum unencumbered asset coverage ratio (defined as total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles, to consolidated total unsecured indebtedness) of 1.50:1:00; Maximum secured indebtedness leverage ratio (defined as consolidated total secured indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.40:1.00; and Minimum fixed charge coverage ratio (defined as consolidated income available for debt service, to the annual service charge) of 1.50:1.0.
The indentures governing the Senior Unsecured Notes also include other customary affirmative and negative covenants, including (i) maintenance of the Corporation’s existence; (ii) payment of all taxes, assessments and governmental charges levied against the Corporation; (iii) reporting on financial information; and (iv) maintenance of properties and insurance. As of December 31, 2020, the Corporation and the Operating Partnership were in compliance with these covenants.
In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typicalnon-recurring
covenants. As of December 31, 2020, we had five fixed-rate CMBS loans with $214.2 million of aggregate outstanding principal, a weighted-average contractual interest rate of 5.47% and a weighted-average maturity of 2.8 years. Approximately 86.93% of this debt is partially amortizing and requires a balloon payment at maturity. The following table shows the scheduled principal repayments, including amortization, of the CMBS fixed-rate loans as of December 31, 2020 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Weighted
Average Stated
Rate | | | | | | | | | | |
| | | — | | | | — | | | —% | | | — | % | | $ | 4,365 | | | $ | — | | | $ | 4,365 | |
| | | — | | | | — | | | —% | | | — | | | | 4,617 | | | | — | | | | 4,617 | |
| | | 3 | | | | 86 | | | | | | 5.46 | | | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | — | | | | — | | | —% | | | — | | | | 590 | | | | — | | | | 590 | |
| | | 1 | | | | 1 | | | 6.00% | | | 6.00 | | | | 610 | | | | 16 | | | | 626 | |
| | | 1 | | | | 1 | | | 5.80% | | | 5.80 | | | | 3,000 | | | | 53 | | | | 3,053 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2020, the Convertible Notes were comprised of $190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.
The conversion rate is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the 2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Future principal payments due on our various types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with respect to our commitments, including acquisitions under contract, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the termination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to fund property acquisitions, for investments in loans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
Generally, our net cash provided by or used in financing activities is impacted by our borrowings under our revolving credit facilities and term loans, issuances ofnet-lease
mortgage notes, common stock and debt offerings and repurchases and dividend payments on our common and preferred stock. Net cash provided by financing activities during the year ended December 31, 2020 was primarily attributable to borrowings of $445.5 million under senior unsecured notes, net proceeds from the issuance of common stock of $428.3 million and net borrowings of $178.0 million under term loans. These amounts were partially offset by payment of dividends to equity owners of $270.8 million, repayment of $154.6 million on convertible notes, net repayments of $116.5 million on our revolving credit facilities, deferred financing costs of $6.6 million, common stock repurchases for employee tax withholdings totaling $4.4 million, repayment of $4.1 million on mortgages and notes payable and debt extinguishment costs of $4.0 million.
During the same period in 2019, net cash provided by financing activities was primarily attributable to borrowings of $1.2 billion under senior unsecured notes and net proceeds from the issuance of common stock of $677.4 million. These amounts were partially offset by net payments on the convertible notes, term loans, mortgages and notes payable, and revolving credit facilities of $402.5 million, $420.0 million, $242.0 million, and $29.8 million, respectively. Additionally, there were debt extinguishment costs of $15.3 million and deferred financing costs of $22.1 million during 2019. Payment of dividends to equity owners during 2019 was $236.9 million, and the common stock share repurchase for employee tax withholdings totaled $2.5 million.
Non-GAAP
Financial MeasuresSpirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol
"SRC."“SRC.” We are a self-administered and self-managed REIT with
in-house
capabilities including acquisition,
portfolio management,credit research, asset management,
credit research,portfolio management, real estate research, legal, finance and accounting
and capital markets.functions. We primarily invest in single-tenant
operationally essential real estate assets throughout the
U.S.,United States, which are generally acquired through
strategic sale-leaseback transactions and subsequently leased on
a long-term,
triple-net
basis to high quality tenants with business operations within
predominantly retail,
but alsoindustrial, office and
industrial property types.other industries. Single tenant, operationally essential real estate consists of properties that are
generally free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and profits.
In support of our primary business of owningUnder atriple-net
lease, the tenant is typically responsible for all improvements and
leasingis contractually obligated to pay all property operating expenses, such as real estate
we have also strategically originated or acquired long-term, commercial mortgagetaxes, insurance premiums and
other loans to provide a range of financing solutions to our tenants.repair and maintenance costs.As of December 31, 2018,2020, our owned real estate represented investments in 1,4621,860 properties. Our properties are leased to 252301 tenants across 4948 states and 3228 retail industries. As of December 31, 2018,2020, our owned properties were approximately 99.7%99.6% occupied (based on the number of economically yielding properties). In addition, our investment in real estate includes commercial mortgage and other loans secured by an additional 52 real estate properties or other related assets.
Our operations are carried out through the Operating Partnership. OP Holdings, one of our wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. We and one of our wholly-owned subsidiaries are the only limited partners, and together own the remaining 99% of the Operating Partnership. Although the Operating Partnership is wholly-owned by us, in the future, we may issue partnership interests in the Operating Partnership to third parties in exchange for property owned by such third parties. In general, any partnership interests in the Operating Partnership issued to third parties would be exchangeable for cash or, at our election, shares of our common stock at specified ratios set when such partnership interests in the Operating Partnership are issued.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner.
On May 31, 2018, we completed a
Spin-Off
of all
of our interests in the assets that
collateralizecollateralized Master Trust 2014, our properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, SMTA.
Upon completionIn conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of
$20.0 million. In September 2019, SMTA sold the
Spin-Off,assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the Interim Management Agreement, we were entitled to receive $1 million during the initialone-year
term and $4 million for any renewalone-year
term to manage and liquidate the remaining SMTA assets. The Interim Management Agreement was terminated effective September 4, 2020 and we have no further continuing involvement with SMTA.Given the onset of theCOVID-19
pandemic in 2020, many of our
stockholders received a distributiontenants requested rent deferrals or other forms of
common shares of beneficial interest in SMTA, which are treated as a taxable distributionrelief. Our discussions with tenants requesting relief substantially focused on industries that have been directly disrupted by theCOVID-19
pandemic and restrictions intended to
them. Beginningprevent its spread, particularly movie theaters, casual dining restaurants, entertainment, health and fitness and hotels. These and other industries may be further impacted in the
second quarterfuture depending on various factors, including the duration of
2018,theCOVID-19
pandemic, the
historicalreinstitution of restrictions intended to prevent its spread or the imposition of new, more restrictive measures. Even after such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk ofCOVID-19
transmission and heightened sensitivity to risks associated with the transmission of other diseases. For the year ended December 31, 2020, we deferred $31.9 million of rent, of which we recognized $26.3 million in rental income (the remaining $5.6 million was deemed not probable of collection), and abated $6.3 million of rent. As of December 31, 2020, we had an accounts receivable balance of $20.2 million related to deferred rent. For the year
ended December 31, 2021, we expect to see significant reductions in the impact ofCOVID-19
and have currently granted additional rent deferrals of $9.2 million and abatements of $1.0 million. For rent deferrals, the deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Of the tenants who we have granted rent deferrals, 19% are public companies and the weighted average remaining lease term of leases with deferrals is 10.2 years (based on Base Rent). Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that theCOVID-19
pandemic and restrictions intended to prevent its spread continue for a prolonged period. Refer to Part I, Item 1A. “Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial
condition, results of
SMTA are reflected inoperations, cash flows, liquidity and ability to satisfy our
consolidated financial statements as discontinued operations for all periods presented. See Note 12debt service obligations and make distributions to
the accompanying consolidated financial statements for further discussion.our stockholders. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are determined in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that are subjective in nature and, as a result, our actual results could differ materially from our estimates. Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, the collectability of receivables and asset impairment analysis. Set forth below are the more critical accounting policies that require management judgment and estimates in the preparation of our consolidated financial statements. See Notes 2 and 8 to the consolidated financial statements for furtheradditional details.
Purchase Accounting and Acquisition of Real Estate; Lease Intangibles
We
useevaluate a number of
sources to estimatefactors in estimating fair value of real estate acquisitions, including building age, building location, building condition, rent comparables from similar properties, and terms of
in-place
leases, if any. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of
in-place
leases and above or below-market leases.
In-place
lease intangibles are valued based on our estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. We then
allocate the purchase price (including acquisition and closing costs) to land, building, improvements and equipment based on their relative fair values. For properties acquired with
in-place
leases, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values. Above and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and our estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the
lease.lease and, in certain instances, over the renewal period.Rental Income: Cash and Straight-line Rent
We primarily lease real estate to our tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, we assess the terms and conditions of the lease to determine the appropriate lease term and do not include options to extend, terminate or purchase in our evaluation for lease classification purposes or for recognizing rental income unless we are reasonably certain the tenant will exercise the option. Lease classification also requires an estimation of the residual value of the property at the end of the lease term. For acquisitions, we use the estimated tangible fair value of the property at the date of acquisition. For lease modifications, we generally use sales comparables or a direct capitalization approach to determine fair value. Our leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. For leases with contingent rent escalators, increases in rental revenue are recognized when the changes in the rental rates have occurred. Some of our leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized when the change in the factor on which the contingent lease payment is based actually occurs.
In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic, noting that the underlying premise in requiring a modified lease to be accounted for as if it
were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). We made this election and account for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Rental income, including deferred rent, is subject to an evaluation for collectability, which includes our estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. We do not recognize rental income for amounts that are not probable of collection.
We review our real estate investments and related lease intangibles periodically for indicators of impairment including,
but not limited to: the asset being held for sale, vacant or
non-operating,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, we then evaluate if its carrying amount may not be recoverable. We consider factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows.
Impairment is then calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, as the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. Key assumptions used in estimating future cash flows andThe fair values include, butof real estate and intangible assets are not limited to, revenue growth rates, interest rates, discount rates, capitalization rates, lease renewal probabilities, tenant vacancy ratesdetermined using the following information, depending on availability, in order of preference: signed purchase and other factors.sale agreements or letters of intent; broker opinions of value; market prices for comparable properties; estimates of residual value; and expectations for the use of the real estate.
We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2005. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT commencing with such taxable year, and we intend to continue operating in such a manner. To maintain our REIT status, we are required to annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate level federal income tax on the earnings distributed to our stockholders that we derive from our REIT qualifying activities. We are still subject to state and local income and franchise taxes and to federal income and excise tax on our undistributed income. If we fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal incomecorporate tax, at regular corporate rates, including any applicable alternative minimum tax for taxable years beginning before January 1, 2018. Unless entitled to relief under specific statutory provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following the year for which we lose our qualification. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.
RESULTS OF OPERATIONS: COMPARISON OF THE YEARS ENDED DECEMBER 31, 2018 AND 2017OPERATIONS
|
| | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In Thousands) | 2018 | | 2017 | | Change | | % Change |
| Revenues: | | | | | | | |
| Rental income | $ | 402,321 |
| | $ | 424,260 |
| | $ | (21,939 | ) | | (5.2 | )% |
| Interest income on loans receivable | 3,447 |
| | 3,346 |
| | 101 |
| | 3.0 | % |
| Earned income from direct financing leases | 1,814 |
| | 2,078 |
| | (264 | ) | | (12.7 | )% |
| Related party fee income | 15,838 |
| | — |
| | 15,838 |
| | 100.0 | % |
| Other income | 21,705 |
| | 1,574 |
| | 20,131 |
| | NM |
|
| Total revenues | 445,125 |
| | 431,258 |
| | 13,867 |
| | 3.2 | % |
| Expenses: | | | | | | | |
| General and administrative | 52,993 |
| | 54,998 |
| | (2,005 | ) | | (3.6 | )% |
| Property costs (including reimbursable) | 21,066 |
| | 28,487 |
| | (7,421 | ) | | (26.1 | )% |
| Real estate acquisition costs | 210 |
| | 1,434 |
| | (1,224 | ) | | (85.4 | )% |
| Interest | 97,548 |
| | 113,394 |
| | (15,846 | ) | | (14.0 | )% |
| Depreciation and amortization | 162,452 |
| | 173,686 |
| | (11,234 | ) | | (6.5 | )% |
| Impairments | 6,725 |
| | 61,597 |
| | (54,872 | ) | | (89.1 | )% |
| Total expenses | 340,994 |
| | 433,596 |
| | (92,602 | ) | | (21.4 | )% |
| Other income: | | | | | | | |
| Gain on debt extinguishment | 27,092 |
| | 579 |
| | 26,513 |
| | NM |
|
| Gain on disposition of assets | 14,629 |
| | 42,698 |
| | (28,069 | ) | | (65.7 | )% |
| Preferred dividend income from SMTA | 8,750 |
| | — |
| | 8,750 |
| | 100.0 | % |
| Other expense | (5,319 | ) | | — |
| | (5,319 | ) | | (100.0 | )% |
| Total other income | 45,152 |
| | 43,277 |
| | 1,875 |
| | 4.3 | % |
| Income from continuing operations before income tax expense | 149,283 |
| | 40,939 |
| | 108,344 |
| | NM |
|
| Income tax expense | (792 | ) | | (511 | ) | | (281 | ) | | (55.0 | )% |
| Income from continuing operations | $ | 148,491 |
| | $ | 40,428 |
| | $ | 108,063 |
| | NM |
|
| | | | | | | | |
| (Loss) income from discontinued operations | $ | (16,439 | ) | | $ | 36,720 |
| | $ | (53,159 | ) | | NM |
|
NM - Percentages over 100% are not displayed.
Revenues
Rental income
WhileIn this section, we were a net acquirerdiscuss the results of income producing real estate for the year ended December 31, 2018, our contractual rental revenue between periods decreased 4.9% as a result of the timing of the acquisition/disposition activity, specifically with the majority of acquisitions closing in the second half of 2018. Included in continuing operations for the year ended December 31, 2018 were acquisitions of 17 properties, with a Real Estate Investment Value of $250.8 million, and dispositions of 29 properties, with a Real Estate Investment Value of $96.4 million.
The decrease in contractual rental revenues year-over-year was partially offset by fewer tenant credit issues from 20172020 compared to 2018. As of December 31, 2018 and 2017, respectively, five and 11 of our properties in continuing operations were vacant and not generating rent, representing approximately 0.3% and 0.7% of our owned properties.
Also included in rental income are tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, and non-cash rental income. Tenant reimbursement income is driven by the tenant reimbursable property costs described below and comprised 3.0% and 3.5% of rental income for the yearsyear ended December 31, 2018 and 2017, respectively. Non-cash rental income primarily consists2019. For a discussion of straight-line rental revenue and amortization of above- and below-market lease intangibles. During the yearsyear ended December 31,
2018 and 2017, non-cash rental income was $20.1 million and $25.0 million, respectively, representing approximately 5.0% and 5.9%, respectively, of total rental income from continuing operations.
Interest income on loans receivable
In conjunction with the Master Trust 2014 Series 2017-1 notes issuance completed in December 2017, the Operating Partnership, as sponsor of the issuance, retained a 5.0% economic interest in the Master Trust 2014 Series 2017-1 notes. Subsequent 2019 compared to the Spin-Off, this holding is reflected as Investment in Master Trust 2014 on the accompanying consolidated balance sheet, and the related interest income resulted in an increase in interest income period-over-period. That increase was offset by a decrease in interest income from mortgage loans during the year ended December 31, 2018, primarily as a resultplease refer to Part II, Item 7. “Management’s Discussion and Analysis of the pay-offFinancial Condition and Results of one $7.5 million mortgage loan collateralized by 26 properties.
Related party fee income
In conjunction with the Spin-Off, we entered into the Asset Management Agreement with SMTA pursuant to which we provide a management team that is responsible for implementing SMTA’s business strategy and performing certain services for SMTA. Under this agreement, we recognized $11.7 million of revenues during the period from the Spin- Off to December 31, 2018.
Additionally, we provide property management services and special services for Master Trust 2014, which was contributed to SMTA as part of the Spin-Off. Therefore, during the period from the Spin-Off to December 31, 2018, we recognized $4.2 millionOperations” in revenue under the terms of the Property Management and Servicing Agreement.
In January 2019, SMTA announced that due to the bankruptcy of its largest tenant, it would be accelerating its timeline for strategic alternatives. This acceleration may result in the early termination of the Asset Management Agreement and/or the Property Management and Servicing Agreement, in which case we would be entitled to a termination fee. See related discussion in Item 1A. Risk Factors "Risks Related to our
Relationship with SMTA."Annual Report on Form10-K
Other income
The driver for the increase in other income was the receipt of the final settlement of $19.7 million in relation to the Company's claim from 20 properties leased to Haggen at the time of Haggen Operations Holdings, LLC's bankruptcy in 2015. As a result of this settlement, $19.1 million of other income was recognized in the year ended December 31, 2018. Additionally, we recognized other income of $1.0 million in the year ended December 31, 2018 for pre-payment penalty income when one of our mortgage loans receivable, which was collateralized by 26 properties, was paid off in 2018 prior to its scheduled maturity.
Expenses
General and administrative
The year-over-year decrease is a result of decreases in legal fees, primarily as a result of fewer tenant credit issues and internalization of certain legal items, and of decreases in consulting fees, primarily as a result of certain expenses incurred in 2017 related to re-branding and executive team transition, as well as internalization of certain marketing activities.
Property costs (including reimbursable)
For the year ended December 31, 2018, property costs excluding bad debt expense were $20.4 million (including $15.6 million of tenant reimbursable expenses) compared to $26.0 million (including $16.8 million of tenant reimbursable expenses) for the year ended December 31, 2017. The non-reimbursable costs decreased year-over-year as a result of fewer vacancies and tenant credit issues, while the decrease in reimbursable property costs resulted from decreases in reimbursable property taxes and certain property maintenance expenses. Bad debt expense for the year ended December 31, 2018 was $0.7 million, which reflects the write-off of straight-line rent receivables deemed to be uncollectible, compared to bad debt expense of $2.5 million for the year ended December 31, 2017.
Interest
The decrease in interest expense is primarily related to the extinguishment of $195.8 million principal outstanding of Master Trust 2013 notes and CMBS debt during the year ended December 31, 2018, with a weighted average interest rate of 5.49%. Additionally, there was a decrease in interest expense for the Term Loan for the year ended December 31, 2018 as the facility was not utilized for the first half of 2018.
The following table summarizes our interest expense on related borrowings:2019.
|
| | | | | | | |
| | Years Ended December 31, |
| (In Thousands) | 2018 | | 2017 |
Interest expense – 2015 Credit Facility (1) | $ | 8,220 |
| | $ | 7,957 |
|
| Interest expense – 2015 Term Loan | 6,594 |
| | 9,793 |
|
| Interest expense – mortgages and notes payable | 26,538 |
| | 40,385 |
|
| Interest expense – Convertible Notes | 24,509 |
| | 24,509 |
|
| Interest expense – Unsecured Senior Notes | 13,350 |
| | 13,351 |
|
| Non-cash interest expense: | | | |
| Amortization of deferred financing costs | 7,864 |
| | 8,416 |
|
| Amortization of debt discount, net | 10,473 |
| | 8,983 |
|
| Total interest expense | $ | 97,548 |
| | $ | 113,394 |
|
(1) Includes facility fees of approximately $2.1 million for both the years ended December 31, 2018 and 2017.
Depreciation and amortization
During the year ended December 31, 2018, we acquired 17 properties with a Real Estate Investment Value of $250.8 million, while disposing 29 properties with a Real Estate Investment Value of $96.4 million. While we were a net acquirer during the period (based on Real Estate Investment Value), depreciation and amortization decreased period-over-period as a result of timing of the acquisition/disposition activity, specifically with the majority of acquisitions closing in the second half of 2018. The following table summarizes our depreciation and amortization expense:
|
| | | | | | | |
| | Years Ended December 31, |
| (In Thousands) | 2018 | | 2017 |
| Depreciation of real estate assets | $ | 133,759 |
| | $ | 140,557 |
|
| Other depreciation | 567 |
| | 563 |
|
| Amortization of lease intangibles | 28,126 |
| | 32,566 |
|
| Total depreciation and amortization | $ | 162,452 |
| | $ | 173,686 |
|
Impairment
Impairment charges for the year ended December 31, 2018 were $6.7 million. $1.9 million of the impairment was recorded on Vacant properties, comprised of $1.3 million recorded on three Vacant held for use properties and $0.6 million recorded on one Vacant held for sale property. The remaining $4.8 million of impairment was recorded on underperforming properties, comprised of $4.4 million recorded on 17 underperforming held for use properties and $0.4 million recorded on two underperforming held for sale properties.
Impairment charges for the year ended December 31, 2017 were $61.6 million. $45.7 million of the impairment was recorded on Vacant properties, comprised of $34.5 million recorded on 16 Vacant held for use properties and $11.2 million recorded on 11 Vacant held for sale properties. The remaining $15.9 million of impairment was recorded on underperforming properties, comprised of $14.6 million recorded on 12 underperforming held for use properties and $1.3 million recorded on five underperforming held for sale properties.
Gain on debt extinguishment
During the year ended December 31, 2018, we extinguished $195.8 million of Master Trust 2013 notes and CMBS debt and recognized a gain on debt extinguishment of $27.1 million. The gain was primarily attributable to the extinguishment of $56.2 million of CMBS debt related to six defaulted loans on six underperforming properties, which was partially offset by a loss on the extinguishment of the Master Trust 2013 Series 2013-1 notes and make-whole penalties on early pre-payments of Master Trust 2013 Series 2013-2.
During the year ended December 31, 2017, we extinguished $195.4 million of mortgage debt and recognized a gain on debt extinguishment of $0.6 million. The gain was primarily attributable to the partial extinguishment of one defaulted mortgage loan upon the sale of one of the properties collateralizing the loan to a third party, offset by net losses from the prepayment and defeasance fees on mortgage debt related to 25 properties.
Gain on disposition of assets
During the year ended December 31, 2018, we disposed of 29 properties and recorded gains totaling $14.6 million. There were $15.5 million in net gains on the sale of 19 active properties. These gains were partially offset by $0.7 million in net losses on the sale of four Vacant properties and $0.2 million in net other losses. There were no gains/losses recorded on the transfer of six properties to lenders.
During the year ended December 31, 2017, we disposed of 116 properties and recorded net gains totaling $42.7 million. There were $49.7 million in net gains on the sale of 55 active properties. These gains were partially offset by $6.7 million in net losses on the sale of 61 Vacant properties and $0.3 million in net other losses.
| | | | | | | | | | | | | | | | |
| | | | |
| (In Thousands) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | $ 479,901 | | | | $ 438,691 | | | | $ 41,210 | | | | 9.4 | % |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | (2,242 | ) | | | (69.2 | )% |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | (668 | ) | | | (53.9 | )% |
| | | 678 | | | | 69,218 | | | | (68,540 | ) | | | (99.0 | )% |
| | | 1,469 | | | | 4,039 | | | | (2,570 | ) | | | (63.6 | )% |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | (4,044 | ) | | | (7.7 | )% |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | (12,461 | ) | | | (100.0 | )% |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 5,855 | | | | 31.4 | % |
| | | 2,432 | | | | 844 | | | | 1,588 | | | | NM | |
| | | 104,165 | | | | 101,060 | | | | 3,105 | | | | 3.1 | % |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 37,155 | | | | 21.2 | % |
| | | 81,476 | | | | 24,091 | | | | 57,385 | | | | NM | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Loss on debt extinguishment | | | (7,227 | ) | | | (14,330 | ) | | | 7,103 | | | | (49.6 | )% |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | (34,694 | ) | | | (59.0 | )% |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | (10,802 | ) | | | (100.0 | )% |
As part of the Spin-Off of SMTA, SMTA issued to us 10% Series A preferred shares with an aggregate liquidation preference of $150.0 million. During the period from the Spin-Off to December 31, 2018, we recognized preferred dividend | | | | | | | | | | | | | | | | |
Income before income of $8.8 million from these shares. As noted above, in January 2019, SMTA announced it would be accelerating its timeline for strategic alternatives. This acceleration may result in the early repayment of the Series A preferred shares or other outcomes. See related discussion in Item 1A. Risk Factors "Risks Related to our Relationship with SMTA." Othertax expense
| | We are contingently liable for $5.7 | | | | | | | | | | | | | | |
| | | (273 | ) | | | (11,501 | ) | | | 11,228 | | | | (97.6 | )% |
| | | | | | | | | | | | | | | | |
NM - Percentages over 100% are not displayed.
Changes related to operating properties
Rental income; Property costs (including reimbursable); Depreciation and amortization
The components of rental income are summarized below:
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 453,013 | | | $ | 404,720 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | |
Straight-line rent, net of uncollectible reserve | | | 11,876 | | | | 16,924 | |
Amortization of above- and below- market lease intangibles, net | | | 1,836 | | | | 4,310 | |
| | | | | | | | |
The increase in Base Cash Rent, the largest component of rental income, year-over-year was driven by our net acquisitions, which also was the driver for the increase in depreciation and amortization. We acquired 146 properties
during 2020 with a total of $58.4 million of annualin-place
rent (monthly fixed rent at date of transaction multiplied by 12). During the same period, we disposed of 38 properties, 20 of which were vacant and the remaining 18 had annualin-place
rents of $4.5 million. Our acquisition and disposition activity for the year ended December 31, 2020 is summarized below (in thousands): The increase in Base Cash Rent due to net acquisitions was partially offset by an increase in amounts deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic, from a net recovery of $0.4 million for the year ended December 31, 2019 to a net reduction of $10.9 million for the year ended December 31, 2020. A majority of these tenant credit issues relate to tenants in the movie theater industry and we expect movie theater operators to continue to face headwinds in 2021. The increase year-over-year was also reduced by $6.3 million of rent abatements for the year ended December 31, 2020, which were executed as relief due to theCOVID-19
pandemic. Variable cash rent is primarily comprised of tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, less reimbursements we deem not probable of collection. As such, the change in variable cash rent is driven by the change in property costs year-over-year. For the year ended December 31, 2020, property costs included $14.5 million of reimbursable expenses, compared to $14.9 million for 2019. As such, variable cash rent and reimbursable property costs remained relatively flat year-over-year. The remaining $10.0 million of property costs for the year ended December 31, 2020 werenon-reimbursable,
compared to $3.7 million for 2019. The increase innon-reimbursable
costs of $6.3 million was driven by an increase innon-reimbursable
property taxes of $3.7 million due to tenant credit issues from theCOVID-19
pandemic, as well as an increase in carrying costs of vacant properties of $2.2 million due to a decreased average occupancy during 2020 compared to 2019. Non-cash
rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense.Non-cash
rental income decreased period-over-period primarily as a result of a $14.7 million increase in straight-line rental revenue deemed not probable of collection, driven by tenant credit issues from theCOVID-19
pandemic. This was partially offset by an increase in straight-line rental revenue of $9.7 million year-over-year as a result of acquisitions and lease modifications.Impairments increased year-over-year on underperforming properties, with $49.0 million of impairments recorded on 28 properties for the year ended December 31, 2020, compared to $18.6 million of impairments recorded on 27 properties in the comparative year. The increase was driven by multi-tenant properties, as well as single occupant properties with tenants in the health and fitness, casual dining and movie theater industries, all of which were significantly impacted by theCOVID-19
pandemic. Impairments also increased year-over-year on Vacant properties, with $14.2 million of impairments recorded on eight properties for the year ended December 31, 2020, compared to $5.5 million of impairments recorded on seven properties in the comparative year.
Finally, the increase in impairments year-over-year was caused by $18.2 million of impairments recorded on lease intangible assets, primarily as a result of a tenant bankruptcy that had credit issues prior to theCOVID-19
pandemic which resulted in the termination of the lease for four properties, and $0.1 million of credit loss allowance on our direct financing lease during the year ended December 31, 2020, with no comparable impairments recognized in 2019.
Gain on disposition of assets
Gain on disposition of assets decreased year-over-year. During the year ended December 31, 2020, we disposed of 38 properties and recorded net gains totaling $24.2 million. There were $23.2 million in net gains on the sale of 18 active properties and $1.3 million in net gains on the sale of 20 Vacant properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.1 million in other net losses.
During the year ended December 31, 2019, we disposed of 44 properties and recorded net gains totaling $58.9 million. There were $69.1 million in net gains on the sale of 23 active properties and $1.5 million in net gains on the sale of 18 Vacant properties. One property was returned to the lender in conjunction with CMBS debt extinguishment and two properties were leasehold interests that were surrendered to the lessors, which did not result in a gain or loss on disposition. Additionally, one building in a multi-tenant property was sold, resulting in a net loss of $11.7 million, and the remaining stand-alone occupied building of this property was retained.
Interest expense; Loss on debt extinguishment; Termination of interest rate swaps
Our debt as of December 31, 2019 and 2020 is summarized below (in thousands):
In January 2019, we terminated the 2015 Credit Agreement and the 2015 Term Loan Agreement, resulting in a loss on debt extinguishment of $0.7 million, and entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility andA-1
Term Loans. We also simultaneously entered into delayed drawA-2
Term Loans, which were drawn in May 2019 to repurchase the 2019 Convertible Notes at their maturity. In June 2019, we issued the 2029 Senior Notes and extinguished the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million. In September 2019, we issued the 2027 Senior Notes and the 2030 Senior Notes. Proceeds from these issuances were primarily utilized to terminate theA-1
Term Loans andA-2
Term Loans, which resulted in a loss on debt extinguishment of $5.3 million. Additionally, during 2019, we extinguished two CMBS loans, resulting in a net gain on debt extinguishment of $6.7 million. During the first half of 2020, we entered into the 2020 Term Loans. In August 2020, we issued $450.0 million of 2031 Senior Notes, which triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that resulted in a loss on debt extinguishment of $1.0 million. Remaining proceeds from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6 million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of $6.2 million. Subsequent to December 31, 2020, we repaid the remaining 2020 Term Loans in full and expect to settle the remaining 2021 Convertible Notes in cash during 2021.
These changes in our debt structure resulted in an overall increase in our total debt outstanding, but with a reduction in our weighted average interest rate from 3.85% at December 31, 2019 to 3.64% at December 31, 2020. As such, we had a slight increase in total interest expense year-over-year:
| | | | | | | | |
| | | | |
| | | | | | |
Interest expense – revolving credit facilities | | $ | 3,686 | | | $ | 5,201 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | |
Interest expense – Convertible Notes | | | 10,728 | | | | 17,245 | |
Interest expense – interest rate swaps | | | — | | | | 972 | |
| | | 12,428 | | | | 14,175 | |
| | | | | | | | |
Finally, in September 2019, we terminated our interest rate swaps, which were entered into as a hedge against our variable-rate debt, in conjunction with the repayment of theA-1
Term Loans andA-2
Term Loans. This termination resulted in a fee of $24.8 million. As we continued to hold variable-rate debt at time of termination, a portion of the hedged transactions remained probable to occur. Therefore, only $12.5 million was initially expensed and the remainder of the termination fee is being amortized over the remaining initial term of the interest rate swaps to interest expense. Related party fee income; Preferred dividend income from SMTA; Income tax expense
In conjunction with theSpin-Off,
we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. We also provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of theSpin-Off.
Upon SMTA’s sale of Master Trust 2014 in September 2019, both the Asset Management Agreement and the Property Management and Servicing Agreement were terminated. We simultaneously entered into the Interim Management Agreement at a reduced annual rate, under which we agreed to manage and liquidate the remaining SMTA assets until its termination effective September 4, 2020. The following table summarizes our related party fee income under these agreements: | | | | | | | | |
| | | | |
| | | | | | |
| | $ | 678 | | | $ | 15,635 | |
Property management and special services fees | | | — | | | | 5,427 | |
Termination fee related to the Asset Management Agreement | | | — | | | | 48,156 | |
Total related party fee income | | | | | | | | |
| (1) | Includes $0.9 million of debt owedstock compensation awarded by oneSMTA to an employee of our former tenants. As a result of the former tenant filing for bankruptcy, we recognized $5.3 million of debt guarantee expense in the current period to fully reserve for the contingent liability. (Loss) income from discontinued operations
Subsequent to the completion of the Spin-Off of SMTA on May 31, 2018, the only activity recognized in discontinued operations were transaction costs associated with the Spin-Off. Therefore, the year ended December 31, 2018 only reflects five months of activity for the assets that were included in the Spin-Off. This resulted in a decrease in (loss) income from discontinued operations compared to the year ended December 31, 2017, which reflects a full year of activity for the assets that were included in the Spin-Off.
RESULTS OF OPERATIONS: COMPARISON OF THE YEARS ENDED DECEMBER 31, 2017 AND 2016
| | | | | | | | | | | | | | | | | | Years Ended December 31, | | (In Thousands) | 2017 | | 2016 | | Change | | % Change | | Revenues: | | | | | | | | | Rental income | $ | 424,260 |
| | $ | 420,003 |
| | $ | 4,257 |
| | 1.0 | % | | Interest income on loans receivable | 3,346 |
| | 3,399 |
| | (53 | ) | | (1.6 | )% | | Earned income from direct financing leases | 2,078 |
| | 2,742 |
| | (664 | ) | | (24.2 | )% | | Other income | 1,574 |
| | 9,196 |
| | (7,622 | ) | | (82.9 | )% | | Total revenues | 431,258 |
| | 435,340 |
| | (4,082 | ) | | (0.9 | )% | | Expenses: | | | | | | | | | General and administrative | 54,998 |
| | 48,651 |
| | 6,347 |
| | 13.0 | % | | Restructuring charges | — |
| | 6,341 |
| | (6,341 | ) | | (100.0 | )% | | Property costs (including reimbursable) | 28,487 |
| | 26,045 |
| | 2,442 |
| | 9.4 | % | | Real estate acquisition costs | 1,434 |
| | 2,904 |
| | (1,470 | ) | | (50.6 | )% | | Interest | 113,394 |
| | 118,690 |
| | (5,296 | ) | | (4.5 | )% | | Depreciation and amortization | 173,686 |
| | 173,036 |
| | 650 |
| | 0.4 | % | | Impairment | 61,597 |
| | 61,395 |
| | 202 |
| | 0.3 | % | | Total expenses | 433,596 |
| | 437,062 |
| | (3,466 | ) | | (0.8 | )% | | Other income: | | | | | | | | | Gain on debt extinguishment | 579 |
| | 1,605 |
| | (1,026 | ) | | (63.9 | )% | | Gain on disposition of assets | 42,698 |
| | 29,623 |
| | 13,075 |
| | 44.1 | % | | Total other income | 43,277 |
| | 31,228 |
| | 12,049 |
| | 38.6 | % | | Income from continuing operations before income tax expense | 40,939 |
| | 29,506 |
| | 11,433 |
| | 38.7 | % | | Income tax expense | (511 | ) | | (868 | ) | | (357 | ) | | (41.1 | )% | | Income from continuing operations | $ | 40,428 |
| | $ | 28,638 |
| | $ | 11,790 |
| | 41.2 | % | | | | | | | | | | | Income from discontinued operations | $ | 36,720 |
| | $ | 68,808 |
| | $ | (32,088 | ) | | (46.6 | )% |
Revenues
Rental income
Our contractual rental revenues between periods increased by 0.9% as we were a moderate acquirer of income producing real estate during the year ended December 31, 2017. We acquired 38 properties with a real estate investment value of $270.4 million, included in continuing operations, during the year ended December 31, 2017. This increase was offset by the sale of 116 properties during the same period with a real estate investment value of $381.3 million, of which 58 were income producing properties with a real estate investment value of $254.3 million. This increase in contractual rental revenues was partially offset by tenant credit losses in the first quarter of 2017, where the majority of the non-performing properties were in the convenience store and movie theater industries. As of December 31, 2017 and 2016, respectively, 11 and 28 of our properties in continuing operations were vacant and not generating rent, representing approximately 0.7% and 1.8% of our owned properties.
Also included in rental income are tenant reimbursements, where our tenants are obligated under the lease agreement to reimburse us for certain property costs we incur, and non-cash rental income. Tenant reimbursement income is driven by the tenant reimbursable property costs described below and comprised 3.5% and 2.8% of rental income for the years ended December 31, 2017 and 2016, respectively. Non-cash rental income primarily consists of straight-line rental revenue and amortization of above- and below-market lease intangibles. During the years ended December 31, 2017 and 2016, non-cash rental income was $25.0 million and $26.4 million, respectively, representing approximately 5.9% and 6.3%, respectively, of total rental income from continuing operations.
Interest income on loans receivable
While financed properties increased from 69 at December 31, 2016 to 83 at December 31, 2017, resulting in an increase of 28.9% in the related mortgage loans receivable balances for the comparative period, interest income on loans receivable remained flat as all the newly financed mortgage loans in 2017 were originated in the last four months of the year.
Other income
The year-over-year decrease in other income is primarily due to $5.5 million in fee income associated with the prepayment of certain mortgage loans during the year ended December 31, 2016, and no comparable transactionSpirit for the year ended December 31, 2017. Additionally, lease termination fees collected for the year ended December 31, 2017 were $0.12019, which was fully offset by $0.9 million compared to $1.9 million for the year ended December 31, 2016.
Expenses
General and administrative
The year-over-year increase in general and administrative expenses is primarily due to $11.1 million in severance related costs, comprised of $4.2 million of cash compensation and $6.9 million of non-cash compensation, recorded in the year ended December 31, 2017 following the departure of our chief executive officer. The period-over-period increase was partially offset by a $1.8 million decrease in compensation expenses excluding the severance charges, the $1.7 million loss recognized in the comparable prior period related to termination fees on an interest rate swap, and a $1.0 million decrease in professional and other outside services expenses.
Property costs (including reimbursable)
For the year ended December 31, 2017, property costs excluding bad debt expense were $26.0 million (including $16.8 million of tenant reimbursable expenses) compared to $24.1 million (including $14.7 million of tenant reimbursable expenses) for the year ended December 31, 2016. The non-reimbursable costs remained relatively flat year-over-year, while reimbursable property costs increased by $2.1 million, driven by an increase in reimbursable property taxes. Bad debt expense for the year ended December 31, 2017 was $2.5 million, which reflects the write-off of straight-line rent receivables deemed to be uncollectible, compared to bad debt expense of $1.9 million for the year ended December 31, 2016.
Interest
The decrease in interest expense is primarily due to the extinguishment of $195.4 million of mortgage debt with a weighted average interest rate of 5.5% during the year ended December 31, 2017. This was partially offset by an increase in interest due to increased average borrowings year-over-year under our Revolving Credit Facility and Term Loan, as well as interest on our Senior Unsecured Notes, which were issued in August 2016.
The following table summarizes our interest expense on related borrowings from continuing operations:
|
Related party fee income was earned through a wholly-owned TRS and was subject to federal and state income tax. As such, the termination fee income earned in the third quarter of 2019 resulted in an increased income tax expense for the year ended December 31, 2019.
Additionally, as part of theSpin-Off,
SMTA issued to us 10% Series A preferred shares, which generated $10.8 million of preferred dividend income for the year ended December 31, 2019. In September 2019, in conjunction with SMTA’s sale of Master Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation preference of $150.0 million.
Changes related to general and administrative expenses
Year-over-year general and administrative expenses decreased by $4.0 million, driven by a decrease in compensation expenses of $4.7 million, primarily as a result of decreased accruals for market-based and merit-based compensation, as well as a $0.7 million decrease in travel expenses as a result of theCOVID-19
pandemic. Decreases year-over-year were partially offset by $1.7 million of expenses recognized during the year ended December 31, 2020 related to theCOVID-19
pandemic, mainly as a result of increased legal fees for executing rent deferral and abatement agreements. |
| | | | | | | |
| | Years Ended December 31, |
| (In Thousands) | 2017 | | 2016 |
Interest expense – 2015 Credit Facility (1) | $ | 7,957 |
| | $ | 3,314 |
|
| Interest expense – 2015 Term Loan | 9,793 |
| | 5,218 |
|
| Interest expense – mortgages and notes payable | 40,385 |
| | 70,176 |
|
| Interest expense – Convertible Notes | 24,509 |
| | 24,509 |
|
| Interest expense – Unsecured Senior Notes | 13,351 |
| | 4,932 |
|
| Non-cash interest expense: | | | |
| Amortization of deferred financing costs | 8,416 |
| | 7,785 |
|
| Amortization of net losses related to interest rate swaps | — |
| | 93 |
|
| Amortization of debt discount/(premium), net | 8,983 |
| | 2,663 |
|
| Total interest expense | $ | 113,394 |
| | $ | 118,690 |
|
(1) Includes facility fees of approximately $2.1 million and $2.0 million for the years ended December 31, 2017 and 2016, respectively.
Depreciation and amortization
Depreciation and amortization expense relates primarily to depreciation on the commercial buildings and improvements we own and to amortization of the related lease intangibles. During the year ended December 31, 2017, we acquired 38 properties with a real estate investment value of $270.4 million, while we sold 116 properties with a real estate investment value of $381.3 million. However, of the properties sold during the year ended December 31, 2017, we sold 44 properties with a real estate investment value of $130.2 million that were classified as held for sale. As properties held for sale are no longer depreciated, we were a net acquirer of depreciable property. Further, fewer properties were classified as held for sale in 2017 than in 2016. The increase in depreciation and amortization was partially offset by impairment charges recorded in 2017 on properties that remain in our portfolio. The following table summarizes our depreciation and amortization expense:
|
| | | | | | | |
| | Years Ended December 31, |
| (In Thousands) | 2017 | | 2016 |
| Depreciation of real estate assets | $ | 140,557 |
| | $ | 138,387 |
|
| Other depreciation | 563 |
| | 475 |
|
| Amortization of lease intangibles | 32,566 |
| | 34,174 |
|
| Total depreciation and amortization | $ | 173,686 |
| | $ | 173,036 |
|
Impairment
Impairment charges for the year ended December 31, 2017 were $61.6 million. $45.7 million of the impairment was recorded on Vacant properties, comprised of $34.5 million recorded on 16 Vacant held for use properties and $11.2 million recorded on 11 Vacant held for sale properties. The remaining $15.9 million of impairment was recorded on underperforming properties, comprised of $14.6 million recorded on 12 underperforming held for use properties and $1.3 million recorded on five underperforming held for sale properties.
During the year ended December 31, 2016, we recorded impairment losses of $61.4 million. $32.6 million of the impairment was recorded on Vacant properties, comprised of $24.1 million recorded on 15 Vacant held for use properties and $8.5 million recorded on five Vacant held for sale properties. The remaining $28.8 million of impairment was recorded on underperforming properties, comprised of $23.3 million recorded on 23 underperforming held for use properties and $5.5 million recorded on nine underperforming held for sale properties.
Gain on debt extinguishment
During the year ended December 31, 2017, we extinguished $195.4 million of mortgage debt and recognized a gain on debt extinguishment of $0.6 million. The gain was primarily attributable to the partial extinguishment of one defaulted mortgage loan upon sale of one of the properties collateralizing the loan to a third party, offset by net losses from the prepayment and defeasance fees on mortgage debt related to 25 properties. During the same period in 2016, we extinguished $763.7 million of mortgage debt and recognized a gain on debt extinguishment of $1.6 million. The gain was primarily attributable to the extinguishment of three defaulted mortgage loans and the partial extinguishment of one defaulted mortgage loan upon sale of the properties collateralizing these loans to third parties, offset by net losses from the prepayment and defeasance fees on mortgage debt related to 343 properties.
Gain on disposition of assets
During the year ended December 31, 2017, we disposed of 116 properties and recorded net gains totaling $42.7 million. There were $49.7 million in net gains on the sale of 55 active properties. These gains were partially offset by $6.7 million in net losses on the sale of 61 Vacant properties and $0.3 million in net other losses.
During the year ended December 31, 2016, we disposed of 165 properties and recorded net gains totaling $29.6 million. There were $29.4 million in net gains on the sale of 151 active properties and $0.6 million in net gains on the transfer of seven properties to lenders. These gains were partially offset by $0.3 million in net losses on the sale of seven Vacant properties and $0.1 million in net other losses.
Income from discontinued operations
The decrease in income from discontinued operations is a result of a decrease in revenues year-over-year of $12.9 million, an increase in expenses of $18.2 million, and a decrease in other income of $1.2 million.
The primary driver of the decrease in revenues was a 4.0% decrease in contractual rental revenues. During the year ended December 31, 2017, only one property was acquired within discontinued operations with a real estate investment value of $10.1 million, while 76 properties with a real estate investment value of $154.3 million were disposed. Of the disposals, 32 were income producing with a real estate investment value of $113.1 million. This net disposition activity resulted in the decrease in contractual rental revenue. Additionally, the mortgage loans secured by 66 properties were paid off in mid-2016, also reducing revenue year-over-year.
The increase in expenses was driven by an increase in recognized impairments of $13.9 million. Additionally, all $6.4 million of transaction costs associated with the Spin-Off incurred in 2017 were classified as discontinued operations in accordance with GAAP. The decrease in other income was the result of a $0.9 million increase in losses on debt extinguishment, primarily related to the $1.6 million pre-payment premium paid in conjunction with our voluntary pre-payment of the full outstanding balance of Master Trust 2014 Series 2014-1 Class A1 note of $43.1 million in November 2017.
LIQUIDITY AND CAPITAL RESOURCES
In May 2018, our BoardJune 2020, we entered into forward sale agreements with certain financial institutions acting as forward purchasers in connection with an offering of Directors approved a new9.2 million shares of common stock repurchase program, which authorizesat an initial public offering price of $37.35 per share, before underwriting discounts and offering expenses. The forward purchasers borrowed and sold an aggregate of 9.2 million shares of common stock in the repurchase of up to $250.0 millionoffering. We did not receive any proceeds from the sale of our shares of common stock. These purchases can be made instock by the open market or through private transactions fromforward purchasers at the time of the offering. The forward sale price that we received upon physical settlement of the agreements, which was initially $35.856 per share, was subject to time overadjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the 18-month time period following authorization. Purchase activity will be dependent on various factors, including our capital position, operating results, funds generated by asset sales,forward purchasers’ stock borrowing costs and (iii) scheduled dividends that may be required by those sales, and investment options that may be available, including acquiring new properties or retiring debt. The stock repurchase program does not obligate us to repurchase any specific numberduring the term of shares and may be suspended at any time at our discretion. We intend to fund any repurchases with new proceeds from asset sales, cash flows from operations, existing cash on the balance sheet and other sources, including debt.forward sale agreements. As of December 31, 2018, no shares have been repurchased under this new program.
In August 2017, our Board of Directors approved a stock repurchase program, which authorized the repurchase of up to $250.02020, we had physically settled all 9.2 million of our common stock. These purchases can be made in the open market or through private transactions from time to time over the 18-month time period following authorization. During the year ended December 31, 2018, and prior to the SMTA Spin-Off, 4.2 millionthese shares for net proceeds of our common stock were repurchased in open market transactions under the stock repurchase program at a weighted average price of $39.60 per share. Fees associated with these repurchases of $0.5 million are included in accumulated deficit on the consolidated balance sheets. Since the authorization of the August 2017 stock repurchase program, 6.1 million shares of our common stock were repurchased in open market transactions, at a weighted average price of $40.70 per share, and no additional capacity remains under this stock repurchase program. Total fees associated with repurchases under the August 2017 stock repurchase program were $733.1 thousand.$319.1 million.
In November 2016,2020, the Board of Directors approved a new $500.0 million ATM program, and we terminated the 2016 ATM Program. Since its inceptionSales of shares of our common stock under the 2020 ATM Program may be made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.
The 2020 ATM Program contemplates that, in addition to the issuance and sale by us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser’s exposure under such forward sale agreement. We will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller.
We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
During the year ended December 31, 2018,2020, 7.1 million shares were sold under the CorporationATM Programs, comprised of 3.6 million under the 2016 ATM Program and 3.5 million sold 92.5 thousandunder the 2020 ATM Program. All of these sales were sold by forward purchasers through agents under the applicable ATM Program and pursuant to forward sales agreements. The forward sale price that we will receive upon physical settlement of the agreements is subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. During the year ended December 31, 2020, 2.9 million of these shares of its common stock, at a weighted average share price of $40.57,were physically settled for aggregate grossnet proceeds of $3.8$109.2 million. As of December 31, 2020, there were 4.1 million shares remaining under open forward sales agreements. Assuming the full physical settlement of those open forward sales agreements, we have remaining capacity of $369.7 million under the 2020 ATM Program as of December 31, 2020.
Short-term Liquidityliquidity and Capital Resourcescapital resources
On a short-term basis, our principal demands for funds will be for operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on current and any future debt financings. We expect to fund these demands primarily through cash provided by operating activities,
and borrowings under the 2019 Credit Facility,
A-1 Term Loan and,
A-2 Term Loan (which replaced the 2015 Credit Facility and 2015 Term Loan in their entirety in January 2019).when market conditions warrant, issuances of equity securities, including shares of our common stock under our 2020 ATM program. As of December 31,
2018,2020, available liquidity was comprised of
$653.7$70.3 million in cash and cash equivalents, $800.0 million of borrowing capacity under the
20152019 Credit Facility
$62.9and $13.0 million in restricted cash and
cash equivalents, and $14.5 million in cash andrestricted cash equivalents.
Also, as of December 31, 2020, we had $151.5 million of expected proceeds available assuming the full physical settlement of our open forward equity contracts and remaining capacity of $369.7 million under our 2020 ATM Program. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from theCOVID-19
pandemic restrictions intended to prevent its spread.
Long-term Liquidityliquidity and Capital Resourcescapital resources
We plan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and by issuing fixed-rate secured or unsecured notes and bonds. In the future, some of our property acquisitions could be made by issuing partnership interests of our Operating Partnership in exchange for property owned by third parties. These partnership interests would be exchangeable for cash or, at our election, shares of our common stock.
We continually evaluate
alternative financing
alternatives and believe that we can obtain financing on reasonable terms. However, we cannot be sure that we will have access to the capital markets at times and on terms that are acceptable to us.
Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders. We expect that our primary uses of capital will be for property and other asset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders.
Description of Certain Debtcertain debt
The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.
Revolving2019 Credit FacilitiesFacility
As of December 31,
2018,2020, the aggregate gross commitment under the
20152019 Credit Facility was $800.0 million, which may be increased up to
$1.0$1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. The
20152019 Credit
Agreement also includedFacility has a
$50.0 million sub-limit for swing-line loans and up to $60.0 million available for issuance of letters of credit. Swing-line loans and letters of credit reduce availability under the 2015 Credit Agreement on a dollar-for-dollar basis. The 2015 Credit Agreement had an initial maturity of March 31,
2019.2023 and includes twosix-month
extensions that can be exercised at our option.We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 20152019 Credit Facility is unconditionally guaranteed by the Company and undermaterial subsidiaries that meet certain circumstances, by one or more material subsidiariesconditions (as defined in the 2015 Credit Agreement)2019 Facilities Agreements). As of the Company.December 31, 2020, there were no subsidiaries that met this requirement.
As of December 31,
2018,2020, the
20152019 Credit Facility bore interest at
1-Month
LIBOR plus
1.25%0.90%, with
$146.3 million inno borrowings outstanding, and
incurred a
ratings-based facility fee
in the amount of
0.25%0.20% per annum.
As of December 31, 2020, there were no letters of credit outstanding.Amounts available for borrowing under the 20152019 Credit Facility remained subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.60:1.00;
Minimum fixed charge coverage ratio (defined as EBITDA of the Company, to fixed charges) of 1.50:1.00;
Maximum secured indebtedness leverage ratio (defined as consolidated secured indebtedness of the Company, net of certain cash and cash equivalents, to total asset value) of 0.50:1:00;
Minimum unsecured interest coverage ratio (defined as consolidated net operating income from unencumbered properties, to unsecured interest expense) of 1.75:1.00; and
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness of the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00; and00.
Minimum tangible net worth.
In addition to these covenants, the 20152019 Credit Agreement also included other customary affirmative and negative covenants, such as (i) limitation on liens and negative pledges; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and sales of all or substantially all assets; (iv) maintenance of status as a REIT and listing on any national securities exchange; and (v) material modifications to organizational documents. As of December 31, 2018,2020, the Corporation and the Operating Partnership were in compliance with these covenants.
As of December 31, 2020, $178.0 million was outstanding under the 2020 Term Loan Agreement. On January 14, 2019,4, 2021, we repaid the Operating Partnership entered into2020 Term Loans in full. The 2020 Term Loans had a new 2019 Revolving Creditmaturity of April 2, 2022 and Term Loan Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders, comprised of the 2019 Credit Facility and the A-1 Term Loans.
The outstanding loans under the 2019 Credit Facility currently bearbore interest at a rate of LIBOR plus an applicable margin of 1.10%1.50% per annum and the aggregate revolving commitments incur a facility fee of 0.25% per annum, in each case, based on the Operating Partnership’s credit rating. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $400.0 million of revolving borrowing capacity, subject to the satisfaction of certain requirements and obtaining additional lender commitments.annum.
The A-1 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership’s credit rating. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $200.0 million of term loans, subject to satisfying certain requirements and obtaining additional lender commitments.
Term Loans
As of December 31, 2018,2020, we had the term loan facility underfollowing Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | |
| | | |
| | | | | | | | | |
| | September 15, 2026 | | | 4.45 | % | | $ | 300,000 | |
| | January 15, 2027 | | | 3.20 | % | | $ | 300,000 | |
| | July 15, 2029 | | | 4.00 | % | | $ | 400,000 | |
| | January 15, 2030 | | | 3.40 | % | | $ | 500,000 | |
| | February 15, 2031 | | | 3.20 | % | | $ | 450,000 | |
Total Senior Unsecured Notes | | | | | | | | | | |
Interest on the 2015 Term Loan Agreement was $420.0 million,Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which mayinterest is payable on March 15 and September 15 of each year, and the 2031 Senior Notes, for which interest is payable on February 15 and August 15 of each year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be increasedredeemed plus accrued and unpaid interest and liquidated damages, if any, up to, $600.0 million by exercising an accordion feature, subject tobut not including, the satisfaction of certain requirementsredemption date; and obtaining additional lender commitments. The 2015 Term Loan Agreement had an initial maturity date of November 2, 2018. In November 2018, we exerciseda make-whole premium calculated in accordance with the first of two options to extendrespective indenture. Notwithstanding the maturity dateforegoing, if any of the 2015 Term Loan to November 2, 2019.
PaymentSenior Unsecured Notes are redeemed three months or less (or two months or less in the case of the term loans under2027 Senior Notes) prior to their respective maturity dates, the 2015 Term Loan Agreement was unconditionally guaranteed byredemption price will not include a make-whole premium.
The indentures governing the CompanySenior Unsecured Notes subject the Corporation and under certain circumstances, by one or more material subsidiaries (as defined in the 2015 Term Loan Agreement) of the Company.
As of December 31, 2018, term loans under the 2015 Term Loan Agreement bore interest at 1-Month LIBOR plus 1.35%, with the $420.0 million capacity fully drawn. Amounts available for borrowing under the 2015 Term Loan Agreement remained subjectOperating Partnership to compliance with certain customary restrictive covenants that limit their ability to incur additional indebtedness, including:
Maximum leverage ratio (defined as consolidated total indebtedness,
of the Company, net of certain cash and cash equivalents, to total
asset value)consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of 0.60:
1.00;1.00;Minimum
fixed chargeunencumbered asset coverage ratio (defined as
EBITDAtotal consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles, to consolidated total unsecured indebtedness) of
the Company, to fixed charges) of 1.50:
1.00;1:00;Maximum secured indebtedness leverage ratio (defined as consolidated
total secured indebtedness,
of the Company, net of certain cash and cash equivalents to total
asset value)consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable andnon-real
estate intangibles) of
0.50:1:00;0.40:1.00; andMinimum unsecured interestfixed charge coverage ratio (defined as consolidated net operating income from unencumbered properties,available for debt service, to unsecured interest expense)the annual service charge) of 1.75:1.00;1.50:1.0.
Maximum unencumbered leverage ratio (defined as consolidated unsecured indebtedness
The indentures governing the Company, net of certain cash and cash equivalents, to total unencumbered asset value) of 0.60:1:00; and
Minimum tangible net worth.
In addition, the 2015 Term Loan Agreement includedSenior Unsecured Notes also include other customary affirmative and negative covenants, including (i) limitation on liens and negative pledges;maintenance of the Corporation’s existence; (ii) transactions with affiliates; (iii) limitation on mergers, consolidations and salespayment of all or substantially all assets;taxes, assessments and governmental charges levied against the Corporation; (iii) reporting on financial information; and (iv) maintenance of status as a REITproperties and listing on a national securities exchange; and (v) material modifications to organizational documents. The ability to borrow under the 2015 Term Loan Agreement was subject to continued compliance with all of the covenants described above.insurance. As of December 31, 2018,2020, the CompanyCorporation and the Operating Partnership were in compliance with these financial covenants.
On January 14, 2019, the Operating Partnership entered into a new 2019 Revolving Credit and Term Loan Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders, comprised of the 2019 Credit Facility and the A-1 Term Loans.
The 2019 Credit Facility is comprised of $800.0 million of aggregate revolving commitments with a maturity date of March 31, 2023. The outstanding loans under the 2019 Credit Facility currently bear interest at LIBOR plus an applicable margin of 1.10% per annum and the aggregate revolving commitments incur a facility fee of 0.25% per annum, in each case, based on the Operating Partnership’s credit rating. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $400.0 million of revolving borrowing capacity, subject to the satisfaction of certain requirements and obtaining additional lender commitments.
The A-1 Term Loans have an aggregate borrowing amount of $420.0 million with a maturity date of March 31, 2024. The A-1 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership’s credit rating. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $200.0 million of term loans, subject to satisfying certain requirements and obtaining additional lender commitments.
In addition, on January 14, 2019, the Operating Partnership entered into new A-2 Term Loans with Bank of America, N.A., as administrative agent, and various lenders, comprised of $400 million of delayed draw term loans with a maturity date of March 31, 2022. The A-2 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership’s credit rating. In addition, a ticking fee accrues on the unused portion of
the commitments at a rate of 0.20% until the earlier of July 12, 2019 and the termination of the commitments. There are currently no borrowings outstanding under the A-2 Term Loans. The A-2 Term Loans include an accordion feature providing for an additional $200.0 million of term loans, subject to the satisfaction of certain requirements and obtaining additional lender commitments.
The 2019 Facilities Agreements replaced the existing 2015 Credit Agreement and 2015 Term Loan Agreement.
Master Trust 2013
Master Trust 2013 is an asset-backed securitization platform through which we raise capital by issuing non-recourse net lease mortgage notes collateralized by commercial real estate, net leases and mortgage loans (the "Collateral Pool"). The Collateral Pool is managed by the Company in our capacity as property manager. Rental and mortgage receipts from the Collateral Pool are deposited with the indenture trustee, who first utilizes the funds to satisfy the debt service requirements on the notes and any fees and costs of administration of Mater Trust 2013. The remaining funds are remitted to the issuer on the monthly note payment date.
Upon satisfaction of certain conditions, we may, from time to time, sell or exchange real estate properties or mortgage loans from the Collateral Pool. Proceeds from these sales are held on deposit by the indenture trustee until a qualifying substitution is made or the amounts are distributed as an early repayment of principal. At December 31, 2018, $7.4 million was held on deposit with the indenture trustee and classified as restricted cash within deferred costs and other assets, net in our consolidated balance sheet.
On May 21, 2018, we retired the Series 2013-1 Class A notes. There was no make-whole payment associated with the redemption of these notes. During the year ended December 31, 2018, there were $15.2 million in prepayments on the Series 2013-2 Class A notes, with $934 thousand in associated make-whole payments.
As of December 31, 2018, the Master Trust 2013 notes were secured by 269 owned and financed properties held in one bankruptcy-remote, special purpose entity as issuer, which is an indirect wholly-owned subsidiary of ours. The outstanding series of Master Trust 2013 notes was rated investment grade as of December 31, 2018. Master Trust 2013 is summarized below:
|
| | | | | | | | | | | | |
| | Stated
Rate | | Remaining Term | | December 31,
2018 | | December 31,
2017 |
| | | | (in Years) | | (in Thousands) |
| Series 2013-1 Class A |
|
| |
| | $ | — |
| | $ | 125,000 |
|
| Series 2013-2 Class A | 5.6 | % | | 5.0 | | 167,854 |
| | 187,704 |
|
| Total Master Trust 2013 notes | 5.6 | % | | 5.0 | | $ | 167,854 |
| | $ | 312,704 |
|
| Deferred financing costs, net | | | | | (4,189 | ) | | (6,021 | ) |
| Total Master Trust 2013 notes, net | | | | | $ | 163,665 |
| | $ | 306,683 |
|
CMBS
In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typical
non-recurring
covenants.
As of December 31, 2018,2020, we had sevenfive fixed-rate CMBS loans with $274.8$214.2 million of aggregate outstanding principal, a weighted averageweighted-average contractual interest rate of 5.53%,5.47% and a weighted averageweighted-average maturity of 4.52.8 years. Approximately 70.7%86.93% of this debt is partially amortizing and requires a balloon payment at maturity. These balances include one loan that is in default, discussed further below. The following table shows the scheduled principal repayments, including amortization, of the non-defaulted CMBS fixed-rate loans as of December 31, 20182020 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Weighted
Average Stated
Rate | | | | | | | | | | |
| | | — | | | | — | | | —% | | | — | % | | $ | 4,365 | | | $ | — | | | $ | 4,365 | |
| | | — | | | | — | | | —% | | | — | | | | 4,617 | | | | — | | | | 4,617 | |
| | | 3 | | | | 86 | | | | | | 5.46 | | | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | — | | | | — | | | —% | | | — | | | | 590 | | | | — | | | | 590 | |
| | | 1 | | | | 1 | | | 6.00% | | | 6.00 | | | | 610 | | | | 16 | | | | 626 | |
| | | 1 | | | | 1 | | | 5.80% | | | 5.80 | | | | 3,000 | | | | 53 | | | | 3,053 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Year of Maturity | Number of Loans | | Number of Properties | | Stated Interest Rate Range | | Weighted Average Stated Rate | | Scheduled Principal | | Balloon | | Total |
| 2019 | — |
| | — |
| | — | | — | % | | $ | 3,905 |
| | $ | — |
| | $ | 3,905 |
|
| 2020 | — |
| | — |
| | — | | — |
| | 4,100 |
| | — |
| | 4,100 |
|
| 2021 | — |
| | — |
| | — | | — |
| | 4,365 |
| | — |
| | 4,365 |
|
| 2022 | 1 |
| | 12 |
| | 4.67% | | 4.67 |
| | 4,617 |
| | 42,400 |
| | 47,017 |
|
| 2023 | 3 |
| | 86 |
| | 5.23%-5.50% | | 5.46 |
| | 3,074 |
| | 197,912 |
| | 200,986 |
|
| Thereafter | 2 |
| | 2 |
| | 5.80%-6.00% | | 5.83 |
| | 4,200 |
| | 69 |
| | 4,269 |
|
| Total | 6 |
| | 100 |
| | | | 5.35 | % | | $ | 24,261 |
| | $ | 240,381 |
| | $ | 264,642 |
|
As of December 31, 2018, we are in default on one CMBS fixed-rate loan due to the property securing the loan going vacant. The aggregate outstanding principal balance under the defaulted loan was $10.1 million, including $3.4 million of accrued interest. We believe the value of the property is less than the related debt. The following table provides key elements of the defaulted CMBS loan as of December 31, 2018 (dollars in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Industry | Properties | | Net Book Value | | Monthly Base Rent | | Pre-Default Outstanding Principal | | Capitalized Interest (1) | | Total Debt Outstanding | | Stated Rate | | Default Rate | | Accrued Interest (1) |
| Vacant | 1 | | $ | 673 |
| | $ | — |
| | $ | 6,734 |
| | $ | 3,382 |
| | $ | 10,116 |
| | 5.85 | % | | 9.85 | % | | $ | 86 |
|
(1) Interest capitalized to principal that remains unpaid.
Related Party Notes Payable
Wholly-owned subsidiaries of Spirit are the borrower on four mortgage notes payable held by SMTA and secured by six single-tenant properties. In total, these mortgage notes had outstanding principal of $27.9 million at December 31, 2018, which is included in mortgages and notes payable, net on the consolidated balance sheets. As of December 31, 2018, these mortgage notes have a weighted average stated interest rate of 1.00%, a weighted average remaining term of 9.2 years and are eligible for early repayment without penalty.
Convertible Notes
TheAs of December 31, 2020, the Convertible Notes arewere comprised of two series of notes: (i) $402.5 million aggregate principal amount of 2.875% convertible notes maturing on May 15, 2019 and (ii) $345.0$190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the Convertible2021 Notes is payable semiannuallysemi-annually in arrears on May 15 and November 15 of each year. As of December 31, 2018, the carrying amount of the Convertible Notes was $729.8 million, net of discounts (primarily consisting of the value of the embedded conversion feature) and unamortized deferred financing costs.
Holders may convert notes of either seriesthe 2021 Notes prior to November 15, 2018, in the case of the 2019 Notes, or November 15, 2020 in the case of the 2021 Notes, only under specific circumstances: (1)(i) if the closing price of our common stock for each of at leastthe last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (2)(ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (3)(iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (4)(iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. On or after November 15, 2018, in the case of the 2019 Notes, orFrom November 15, 2020 in the case of the 2021 Notes, untilto the close of business on the second scheduled trading day immediately preceding the maturity date of the Convertible2021 Notes, holders may convert the Convertible2021 Notes of the applicable series at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock.stock, at our election.
The conversion rate for each series of the Convertible Notes is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2018,2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the Convertible Notes2021 Notes’ supplemental indentures)indenture), holders may require
us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of thesuch notes to be repurchased, plusaccrued and unpaid interest.
The Senior Unsecured Notes45
The Senior Unsecured Notes are redeemable in whole, at any time, or in part, from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed on or after June 15, 2026, the redemption price will not include a make-whole premium.
In connection with the issuance of the Senior Unsecured Notes, the Corporation and Operating Partnership remain subject to compliance with certain customary restrictive covenants including:
Maximum leverage ratio (defined as consolidated total indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable and non-real estate intangibles) of 0.60:1.00;
Minimum unencumbered asset coverage ratio (defined as total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable and non-real estate intangibles, to consolidated total unsecured indebtedness) of 1.50:1:00;
Maximum secured indebtedness leverage ratio (defined as consolidated total secured indebtedness, to total consolidated undepreciated real estate assets plus the Company’s other assets, excluding accounts receivable and non-real estate intangibles) of 0.40:1.00; and
Minimum fixed charge coverage ratio (defined as consolidated income available for debt service, to the annual service charge) of 1.50:1.0.
In addition, the Senior Unsecured Notes Agreement includes other customary affirmative and negative covenants, including (i) maintenance of status as a REIT; (ii) payment of all taxes, assessments and governmental charges levied on the REIT; (iii) reporting on financial information; and (iv) maintenance of properties and property insurance. As of December 31, 2018, the Corporation and the Operating Partnership were in compliance with these financial covenants.
Debt Maturities
Future principal payments due on our various types of debt outstanding as of December 31, 20182020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | Thereafter |
2015 Credit Facility (1) | $ | 146,300 |
| | $ | 146,300 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
2015 Term Loan (1) | 420,000 |
| | 420,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Master Trust Notes | 167,854 |
| | 4,788 |
| | 5,055 |
| | 5,333 |
| | 5,629 |
| | 147,049 |
| | — |
|
CMBS (2) | 274,758 |
| | 14,019 |
| | 4,100 |
| | 4,365 |
| | 47,017 |
| | 200,986 |
| | 4,271 |
|
| Related party notes payable | 27,890 |
| | 2,979 |
| | 3,009 |
| | 3,039 |
| | 3,069 |
| | 3,100 |
| | 12,694 |
|
Convertible Notes (1) | 747,500 |
| | 402,500 |
| | — |
| | 345,000 |
| | — |
| | — |
| | — |
|
| Senior Unsecured Notes | 300,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 300,000 |
|
| | $ | 2,084,302 |
| | $ | 990,586 |
| | $ | 12,164 |
| | $ | 357,737 |
| | $ | 55,715 |
| | $ | 351,135 |
| | $ | 316,965 |
|
(1) On January 14, 2019, Spirit entered into a 2019 Facilities Agreement with various lenders, comprised of (i) a 2019 Credit Facility with a four year term and $800.0 million capacity, (ii) an A-1 Term Loan with a five year term and $420.0 million capacity, and (iii) an A-2 Term Loan with a three year term and $400.0 million capacity. The 2019 Facilities Agreement replaces the existing 2015 Credit Facility and 2015 Term Loan in their entirety. The A-2 Term Loan has a delayed draw feature, which Spirit expects to use to retire the 2.875% Convertible Notes upon their maturity in 2019.
(2) The CMBS payment balance in 2019 includes the aggregate principal balance under the one defaulted loan of $10.1 million, which includes $3.4 million of capitalized interest.
The following table provides information with respect to our commitments, as well as potentialincluding acquisitions under contract, as of December 31, 20182020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| Contractual Obligations | | Payment due by period |
| | | Total | | Less than 1 year | | 1-3 years | | 3-5 years | | More than 5 years |
| Debt - Principal | | $ | 2,084,302 |
| | $ | 990,586 |
| | $ | 369,901 |
| | $ | 406,850 |
| | $ | 316,965 |
|
Debt - Interest (1) (2) | | 257,573 |
| | 69,054 |
| | 89,320 |
| | 61,872 |
| | 37,327 |
|
Acquisitions Under Contract (3) | | 47,693 |
| | 47,693 |
| | — |
| | — |
| | — |
|
| Capital Improvements | | 33,003 |
| | 31,568 |
| | 1,435 |
| | — |
| | — |
|
| Operating Lease Obligations | | 18,460 |
| | 2,068 |
| | 4,138 |
| | 3,943 |
| | 8,311 |
|
| Total | | $ | 2,441,031 |
| | $ | 1,140,969 |
| | $ | 464,794 |
| | $ | 472,665 |
| | $ | 362,603 |
|
(1) Excludes interest on defaulted mortgage loans.| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
(2) Debt - Interest has been calculated based on outstanding balances as of December 31, 2018 through their respective maturity dates and excludes unamortized non-cash deferred financing costs of $14.9 million, unamortized debt discount, net of $14.7 million and any interest due on defaulted mortgage loans, including $86 thousand accrued as of December 31, 2018.| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
(3) Contracts contain standard cancellation clauses contingent on results of due diligence.
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally classifiedcharacterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable
lawlaws and such other factors as our Board of Directors deems relevant.
Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
CASH FLOWS: COMPARISON OF THE YEARS ENDED DECEMBERFLOWS
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018,
AND 2017please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 20182020 and 20172019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, | | |
| | 2018 | | 2017 | | Change |
| Net cash provided by operating activities | $ | 336,365 |
| | $ | 393,982 |
| | $ | (57,617 | ) |
| Net cash (used in) provided by investing activities | (220,462 | ) | | 154,236 |
| | (374,698 | ) |
| Net cash used in financing activities | (153,189 | ) | | (470,409 | ) | | 317,220 |
|
| Net (decrease) increase in cash, cash equivalents, and restricted cash | $ | (37,286 | ) | | $ | 77,809 |
| | $ | (115,095 | ) |
As of December 31, 2018,2020, we had $77.4$83.3 million of cash, cash equivalents, and restricted cash as compared to $114.7$26.0 million as of December 31, 2017.2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to:to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the termination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash rental incometaxes paid of $142.3$11.0 million and
an increase in transaction costs of $16.3 million.
This decrease was offset by:
aprimarily driven by the net decrease in generaltaxable income in 2020 and administrative expensessale of $9.8 million,MTA, and
an increase in other income of $15.2 million,
ana net increase in cash
from related party incomerental revenue of
$14.2$30.2 million,
driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. an increase in cash from preferred dividend income of $5.1 million
a decrease in cash interest expense of $45.5 million, and
a decrease in property costs of $12.4 million, primarily due to a reduction in Vacant properties.
Cash (used in) provided byused in investing activities is generally used to fund property acquisitions, for investments in loans receivable and to a limited extent, for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during 2018the year ended December 31, 2020 included funding$867.5 million for the acquisition of 21146 properties and $12.7 million of $257.7 million, capitalized real estate expenditures of $52.4 million, and investment in notes receivable of $35.5 million.expenditures. These outflows were partially offset by $100.6 million in net proceeds of $94.7 million from the disposition of 3338 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases totaling $30.4 million.leases.
During the same period in 2017, net cash provided by investing activities included cash proceeds of $472.5 million from the disposition of 192 properties, offset by $279.9 million to fund the acquisition of 39 properties and capitalized real estate expenditures of $46.1 million. Net cash provided by investing activities also included collections of principal on loans receivable and real estate assets under direct financing leases totaling $12.8 million, partially offset by the investment in notes receivable of $5.0 million.
Generally, our net cash
(used in) provided by
or used in financing activities is impacted by our
net borrowings and common stock offerings, including sales of our common stock under our ATM Program, borrowings under our
2015 Credit Facilityrevolving credit facilities and
2015 Term Loan, andterm loans, issuances of
net-lease
mortgage notes,
under Master Trust 2014.Net cash used in financing activities during 2018 was primarily attributable to the payment of dividends tocommon stock and debt offerings and repurchases and dividend payments on our common and preferred equity owners of $300.6 million, repayments of $170.5 million in mortgages and notes payable, the transfer of $73.1 million in cash, cash equivalents and restricted cash to SMTA in conjunction with the Spin-Off, and the repurchase of 4,302,125 shares of the Company's outstanding common stock for $170.6 million, which were partially offset by drawing of the $420 million 2015 Term Loan, mortgages and notes payable borrowings of $104.2 million, and net borrowings of $34.3 million on the 2015 Credit Facility.
Net cash used in financing activities during 2017 was primarily attributable to the repayment of the $420.0 million Term Loan, the payment of dividends to common and preferred equity owners of $341.7 million, the repurchase of 7,256,055 shares of the Company's outstanding common stock for $286.6 million and repayments of $221.3 million in mortgages and notes payable, offset by the issuance of 6.9 million shares of Class A Preferred Stock for net proceeds of $166.2 million, and debt issuances under our Spirit Master Funding Program of $618.6 million.
CASH FLOWS: COMPARISON OF THE YEARS ENDED DECEMBER 31, 2017 AND 2016
The following table presents a summary of our cash flows for the years ended December 31, 2017 and 2016 (in thousands):stock.
|
| | | | | | | | | | | |
| | Years Ended December 31, | | |
| | 2017 | | 2016 | | Change |
| Net cash provided by operating activities | $ | 393,982 |
| | $ | 387,628 |
| | $ | 6,354 |
|
| Net cash provided by (used in) investing activities | 154,236 |
| | (154,800 | ) | | 309,036 |
|
| Net cash used in financing activities | (470,409 | ) | | (295,365 | ) | | (175,044 | ) |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 77,809 |
| | $ | (62,537 | ) | | $ | 140,346 |
|
As of December 31, 2017, we had $114.7 million of cash, cash equivalents, and restricted cash as compared to $36.9 million as of December 31, 2016.
Operating Activities
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The increase in netNet cash provided by operatingfinancing activities was primarily attributable to a decrease in cash paid for interest of $18.5 million related to the lower level of outstanding mortgage debt and reduced restructuring charge payments of $11.3 million as restructuring activities were finalized in 2016, offset by a decrease in cash revenue of $19.1 million and increases in property costs of $5.8 million related to reimbursable and non-reimbursable property taxes, and general and administrative costs of $3.6 million.
The decrease in revenue was primarily attributable to the disposition of 192 properties, representing a gross investment in real estate during the year ended December 31, 2017 of $510.9 million, partially offset by the acquisition of 39 properties, during the same period, with a real estate investment value totaling $323.0 million.
Investing Activities
Cash (used in) provided by investing activities is generally used to fund property acquisitions, for investments in loans receivable and, to a limited extent, for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash provided by investing activities during 2017 included cash proceeds of $472.5 million from the disposition of 192 properties, offset by $279.9 million to fund the acquisition of 39 properties and capitalized real estate expenditures of $46.1 million. Net cash provided by investing activities also included collections of principal on loans receivable and real estate assets under direct financing leases totaling $12.8 million and the investment in notes receivable of $5.0 million.
During the same period in 2016, net cash used in investing activities included $655.8 million to fund the acquisition of 269 properties and capitalized real estate expenditures of $27.1 million partially offset by cash proceeds of $524.8 million from the disposition of 213 properties. Net cash used in investing activities also included collections of principal on loans receivable and real estate assets under direct financing leases totaling $8.4 million.
Financing Activities
Generally, our net cash (used in) provided by financing activities is impacted by our net borrowings and common stock offerings, including sales of our common stock under our ATM Program, common stock offerings, borrowings under our 2015 Credit Facility and 2015 Term Loan, and issuances of net-lease mortgage notes under Master Trust 2014.
Net cash used in financing activities during 20172020 was primarily attributable to the repaymentborrowings of the $420.0$445.5 million Term Loan, the payment of dividends to common and preferred equity owners of $341.7 million, the repurchase of 7,256,055 shares of the Company's outstanding common stock for $286.6 million and repayments of $221.3 million in mortgages andunder senior unsecured notes, payable, partially offset bynet proceeds from the issuance of 6.9 million sharescommon stock of Class A Preferred Stock for net proceeds of $166.2$428.3 million and debt issuancesnet borrowings of $178.0 million under our Spirit Master Funding Program of $618.6 million.
Net cash used in financing activities during 2016 was primarily attributable to the repayment of our indebtedness of $863.8 million and theterm loans. These amounts were partially offset by payment of dividends to equity owners of $323.6$270.8 million, bothrepayment of which$154.6 million on convertible notes, net repayments of $116.5 million on our revolving credit facilities, deferred financing costs of $6.6 million, common stock repurchases for employee tax withholdings totaling $4.4 million, repayment of $4.1 million on mortgages and notes payable and debt extinguishment costs of $4.0 million.
During the same period in 2019, net cash provided by financing activities was primarily attributable to borrowings of $1.2 billion under senior unsecured notes and net proceeds from the issuance of common stock of $677.4 million. These amounts were primarily funded from our operating cash flows, partially offset by net borrowings under our Revolving Credit Facilitypayments on the convertible notes, term loans, mortgages and Term Loannotes payable, and revolving credit facilities of $86.0$402.5 million, $420.0 million, $242.0 million, and $95.0$29.8 million, respectively,respectively. Additionally, there were debt extinguishment costs of $15.3 million and deferred financing costs of $22.1 million during 2019. Payment of dividends to equity owners during 2019 was $236.9 million, and the common stock share repurchase for employee tax withholdings totaled $2.5 million.
Non-GAAP
Financial MeasuresWe calculate FFO in accordance with the standards established by NAREIT. FFO represents net
proceedsincome (loss) attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and amortization, impairment charges and net (gains) losses from property dispositions. FFO is a supplementalnon-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
$298.1 millionoperating 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. AFFO is anon-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, such as transactions costs associated with ourSpin-Off,
default interest and fees onnon-recourse
mortgage indebtedness, debt extinguishment gains (losses), costs associated with termination of interest rate swaps, costs associated with performing on a guarantee of a former tenant’s debt, and certainnon-cash
items. These certainnon-cash
items includenon-cash
revenues (comprised of straight-line rents net of bad debt expense, amortization of lease intangibles, and amortization of net premium/discount on loans receivable),non-cash
interest expense (comprised of amortization of deferred financing costs and amortization of net debt discount/premium) andnon-cash
compensation expense.
Other equity REITs may not calculate FFO and AFFO as we do, and, accordingly, our FFO and AFFO may not be comparable to such other equity REITs’ FFO and AFFO. FFO and AFFO do not represent cash generated from operating activities determined in accordance with GAAP, are 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 stockholders (computed in accordance with GAAP) as a performance measure.
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 supplementalnon-GAAP
financial disclosure to investors in understanding our financial condition. and Annualized Adjusted EBITDA
EBITDAre is anon-GAAP
financial measure and is computed in accordance with standards established by NAREIT. EBITDAre is computed 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 impairments of depreciated property. Adjusted EBITDAre represents EBITDAre as adjusted for revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter and for certain items that we believe are not indicative of our core operating performance, such as transactions costs associated with ourSpin-Off,
debt extinguishment gains (losses), and costs associated with performing on a guarantee of a former tenant’s debt. 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, 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) (computed in accordance with GAAP) as a performance measure. Annualized Adjusted EBITDAre is calculated as Adjusted EBITDAre for the quarter, adjusted for amounts deemed not probable of collection (recoveries) for straight-line rent related to prior periods and items where annualization would not be appropriate, multiplied by four. Our computation of Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the issuancemethodology used by other equity REITs to calculate these measures and, therefore, may not be comparable to such other REITs.
Adjusted Debt to Annualized Adjusted EBITDA
Adjusted Debt to Annualized Adjusted EBITDAre is a supplementalnon-GAAP
financial measure we use to evaluate the level of
$300.0 million aggregate principal Senior Unsecured Notes andborrowed capital being used to increase the
sale of an aggregate 8.2 million sharespotential return of our
common stockreal 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 the 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. A reconciliation of interest-bearing debt (computed in
an underwritten public offeringaccordance with GAAP) to Adjusted Debt is included in the financial information accompanying this report.
FFO and under our ATM Program, generatingAFFO
| | | | | | | | | | | | |
| | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | |
Net income attributable to common stockholders | | | | | | | | | | | | |
Portfolio depreciation and amortization | | | 212,038 | | | | 174,895 | | | | 197,346 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Gain on disposition of assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
FFO attributable to common stockholders | | | | | | | | | | | | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
| | | 2,432 | | | | 844 | | | | 549 | |
| | | — | | | | — | | | | 21,391 | |
| | | 12,428 | | | | 14,175 | | | | 22,866 | |
Accrued interest and fees on defaulted loans | | | — | | | | 285 | | | | 1,429 | |
Straight-line rent, net of related bad debt expense | | | (11,876 | ) | | | (16,924 | ) | | | (15,382 | ) |
Other amortization and non-cash charges | | | (918 | ) | | | (2,769 | ) | | | (2,434 | ) |
| | | — | | | | 12,461 | | | | — | |
Non-cash compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Other G&A costs associated with Spin-Off | | | — | | | | — | | | | 1,841 | |
| | | — | | | | — | | | | 5,319 | |
Costs related to COVID-19 (1) | | | 1,798 | | | | — | | | | — | |
AFFO attributable to common stockholders (2) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net income per share of common stock - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | |
FFO per share of common stock - diluted (3) | | $ | 2.73 | | | $ | 3.34 | | | $ | 3.71 | |
| | | | | | | | | | | | |
AFFO per share of common stock - diluted (3) | | $ | 2.95 | | | $ | 3.75 | | | $ | 3.99 | |
| | | | | | | | | | | | |
AFFO per share of common stock, excluding AM termination fee and Haggen settlement (3)(4) | | $ | 2.95 | | | $ | 3.34 | | | $ | 3.78 | |
| | | | | | | | | | | | |
Weighted average shares of common stock outstanding - diluted | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | AFFO for the year ended December 31, 2020 includes $26.3 million of deferred rental income recognized in conjunction with the FASB’s relief for deferral agreements extended as a result of theCOVID-19 pandemic. |
| (3) | Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted: |
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| FFO | | $ | 0.8 million | | | $ | 1.2 million | | | $ | 1.4 million | |
| AFFO | | $ | 0.9 million | | | $ | 1.4 million | | | $ | 1.5 million | |
| (4) | AFFO attributable to common stockholders for the year ended December 31, 2019, excluding $48.2 million of termination fee income, net of $11.3 million in income tax expense. The termination fee was received in conjunction with SMTA’s sale of Master Trust 2014 in September 2019 and termination of the Asset Management Agreement on September 20, 2019. AFFO attributable to common stockholders has not been adjusted to exclude the following amounts for the year ended December 31, 2019: (i) asset management fees of $14.7 million; (ii) property management and servicing fees of $5.4 million; (iii) preferred dividend income from SMTA $10.8 million; (iv) interest income on related party notes receivable of $1.1 million and an early repayment premium of $0.9 million; and (v) interest expense on related party loans payable of $0.2 million. |
| AFFO attributable to common stockholders for the year ended December 31, 2018 excludes proceeds from the Haggen settlement of $19.1 million. |
Adjusted Debt, Adjusted EBITDAre and $77.7 million, respectively.Annualized Adjusted EBITDAre
| | | | | | | | |
| | | | |
| | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | 2,506,341 | | | | 2,153,017 | |
Unamortized debt discount, net | | | 7,807 | | | | 9,272 | |
Unamortized deferred financing costs | | | 18,515 | | | | 17,549 | |
Cash and cash equivalents | | | (70,303 | ) | | | (14,492 | ) |
Restricted cash balances held for the benefit of lenders | | | (12,995 | ) | | | (11,531 | ) |
| | | | | | | | |
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 29,170 | | | $ | 4,657 | |
| | | 26,307 | | | | 24,598 | |
Depreciation and amortization | | | 55,054 | | | | 48,867 | |
| | | (133 | ) | | | (229 | ) |
(Gain) loss on disposition of assets | | | (12,347 | ) | | | 11,910 | |
| | | 11,547 | | | | 10,860 | |
| | | | | | | | |
Adjustments to revenue producing acquisitions and dispositions | | | 4,596 | | | | 6,881 | |
| | | 802 | | | | 270 | |
(Gain) loss on debt extinguishment | | | (25 | ) | | | 2,857 | |
Costs related to COVID-19 (1) | | | 358 | | | | — | |
| | | | | | | | |
Adjustments related to straight-line rent (2) | | | (506 | ) | | | — | |
Other adjustments for Annualized Adjusted EBITDA (3) | | | 397 | | | | 58 | |
Annualized Adjusted EBITDA | | | | | | | | |
Adjusted Debt / Annualized Adjusted EBITDA | | | | | | | | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | Adjustment relates to recoveries on straight-line rent receivable balances deemed not probable of collection in previous periods. |
| (3) | Adjustments for the three months ended December 31, 2020 for amounts where annualization would not be appropriate are comprised of certain recoveries related to prior period amounts (rent deemed not probable of collection, abatements, property costs and tax expenses) and certain general and administrative expenses. For the same period in 2019, adjustments are composed of certain other income,write-off of intangibles and other compensation-related adjustments where annualization would not be appropriate. |
| (4) | Adjusted Debt / Annualized Adjusted EBITDAwould be 5.0x if the 4.1 million shares under open forward sales agreements had been settled as of December 31, 2020. |
| Quantitative and Qualitative Disclosures About Market Risk |
We are exposed to financial market risks,
especiallyincluding interest rate risk. Interest rates and other factors, such as occupancy, rental rates and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we generally offer leases that provide for payments of base rent with scheduled increases and, to a lesser extent, contingent rent based on a percentage of the tenant’s gross sales to help mitigate the effect of inflation. Because the properties in our portfolio are generally leased to tenants under
triple-net
leases, our exposure to rising property operating costs due to inflation is mitigated.
Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and global economic and political conditions, which are beyond our control. Our operating results depend heavily on the difference between the revenue from our assets and the interest expense incurred on our borrowings. We may incur additional variable rate debt in the future, including amounts that we may borrow under our 2019 Facilities Agreement.Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments, which may lead to a decrease in the yields on real estate we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire real estate with rental rates high enough to offset the increase in interest rates on our borrowings.
In the event interest rates rise significantly or there is an economic downturn, defaults may increase and result in credit losses, which may adversely affect our liquidity and operating results. In a decreasing interest rate environment, borrowers are generally more likely to prepay their loans in order to obtain financing at lower interest rates. However, the vast majority of our mortgage notes payable have prepayment clauses that make refinancing during a decreasing interest rate environment uneconomical. Investments in our mortgage loans receivable, however, have significant prepayment protection in the form of yield maintenance provisions, which provide us with substantial yield protection in a decreasing interest rate environment with respect to this portion of our investment portfolio.
The objective of our interest rate risk management policy is to match fixed-rate assets with fixed-rate liabilities. As of December 31,
2018,2020, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of the leases). As of December 31,
2018, $1.52020, $2.4 billion of our indebtedness
outstanding was fixed-rate, consisting of our
Master TrustSenior Unsecured Notes,
CMBS loans, related partymortgages and notes payable
Convertible Notes and
Senior UnsecuredConvertible Notes, with a weighted average stated interest rate of
4.07%3.79%, excluding amortization of deferred financing costs and debt discounts/premiums. As of December 31,
2018, $566.32020, $178.0 million of our indebtedness was variable-rate, consisting of our
2015 Credit Facility and 20152020 Term
Loan,Loans with a
weighted average stated interest rate of
3.56%, excluding amortization of deferred financing costs and debt discounts/premiums.1.65%. There were no borrowings outstanding under our 2019 Credit Facility at December 31, 2020. If
one-month
LIBOR as of December 31,
20182020 increased by 12.5 basis points, or 0.125%, the resulting increase in annual interest expense with respect to the
$566.3$178.0 million outstanding under the variable-rate obligations would
decreaseimpact our future earnings and cash flows by
$0.7$0.2 million.
The estimated fair values of our debt instruments have been derived based on market quotes for comparable instruments or discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates and credit spreads. The debt instrument balances as of December 31, 20182020 are as follows (in thousands):
| | | | | | | | |
| | | | | | | |
| | $ | — | | | $ | — | |
| | | 177,309 | | | | 177,884 | |
Senior Unsecured Notes, net (1) | | | 1,927,348 | | | | 2,122,409 | |
Mortgages and notes payable, net (1) | | | 212,582 | | | | 226,240 | |
Convertible Notes, net (1) | | | 189,102 | | | | 194,124 | |
| |
| (1) | The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums. |
|
| | | | | | | |
| | Carrying
Value | | Estimated
Fair Value |
| 2015 Credit Facility | $ | 146,300 |
| | $ | 146,731 |
|
2015 Term Loan, net (1) | 419,560 |
| | 424,670 |
|
Mortgages and notes payable, net (1) | 463,196 |
| | 487,548 |
|
Convertible Notes, net (1) | 729,814 |
| | 740,330 |
|
Senior Unsecured Notes, net (1) | 295,767 |
| | 291,696 |
|
52
(1) The carrying value
| Financial Statements and Supplementary Data |
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
| | | | | |
Financial Statements and Supplemental Data | | | | |
| |
| | |
| | | | | 54 | |
| | |
| | | | | 61 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty Capital, Inc. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 62 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty Capital, Inc. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 63 | |
| | |
| | Consolidated Statements of Stockholders'Stockholders’ Equity of Spirit Realty Capital, Inc. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 64 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty Capital, Inc. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 65 | |
| | |
| | | | | 67 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty, L.P. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 68 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty, L.P. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 70 | |
| | |
| | Consolidated Statements of Partners'Partners’ Capital of Spirit Realty, L.P. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 71 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty, L.P. for the Years Ended December 31, 2018, 20172020, 2019 and 20162018 | | | 72 | |
| | |
| | | | | 74 | |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Spirit Realty Capital, Inc.’s internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Spirit Realty Capital, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 20182020 consolidated financial statements of the Company and our report dated February 21, 201919, 2021 expressed an unqualified opinion thereon.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
February 21, 201919, 2021
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty Capital, Inc. (the Company) as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2018,2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 201919, 2021 expressed an unqualified opinion thereon.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Company’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Company’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Company recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Company evaluates the collectability of lease payments on a regular basis. The Company considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s lease payment collectability process. To test the Company’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Company’s auditor since 2003.
Dallas, Texas
February 21, 201919, 2021
Report of Independent Registered Public Accounting Firm
To the Partners of Spirit Realty, L.P. and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty, L.P. (the Operating Partnership) as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2018,2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility of the Operating Partnership'sPartnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Operating Partnership’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Operating Partnership considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Operating Partnership’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Operating Partnership recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership evaluates the collectability of lease payments on a regular basis. The Operating Partnership considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s lease payment collectability process. To test the Operating Partnership’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Operating Partnership’s auditor since 2016.
Dallas, Texas
February 21, 201919, 2021
SPIRIT REALTY CAPITAL, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320) | | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | — | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and stockholders’ equity | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both December 31, 2020 and December 31, 2019, liquidation preference of $25.00 per share | | | 166,177 | | | | 166,177 | |
Common stock, $0.05 par value, 175,000,000 shares authorized: 114,812,615 and 102,476,152 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | | | 5,741 | | | | 5,124 | |
Capital in excess of common stock par value | | | 6,126,503 | | | | 5,686,247 | |
| | | (2,688,647) | | | | (2,432,838) | |
Accumulated other comprehensive loss | | | (8,654) | | | | (11,461) | |
| | | | | | | | | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
|
| | | | | | | | |
| | | December 31,
2018 | | December 31,
2017 |
| Assets | |
|
|
|
| Investments: | |
|
|
|
| Real estate investments: | |
|
|
|
| Land and improvements | | $ | 1,632,664 |
|
| $ | 1,598,355 |
|
| Buildings and improvements | | 3,125,053 |
|
| 2,989,451 |
|
| Total real estate investments | | 4,757,717 |
|
| 4,587,806 |
|
| Less: accumulated depreciation | | (621,456 | ) |
| (503,568 | ) |
| | 4,136,261 |
|
| 4,084,238 |
|
| Loans receivable, net | | 47,044 |
|
| 78,466 |
|
| Intangible lease assets, net | | 294,463 |
|
| 306,252 |
|
| Real estate assets under direct financing leases, net | | 20,289 |
|
| 24,865 |
|
| Real estate assets held for sale, net | | 18,203 |
|
| 20,469 |
|
| Net investments | | 4,516,260 |
|
| 4,514,290 |
|
| Cash and cash equivalents | | 14,493 |
|
| 8,792 |
|
| Deferred costs and other assets, net | | 156,428 |
|
| 121,949 |
|
| Investment in Master Trust 2014 | | 33,535 |
| | — |
|
| Preferred equity investment in SMTA | | 150,000 |
| | — |
|
| Goodwill | | 225,600 |
|
| 225,600 |
|
| Assets related to SMTA Spin-Off | | — |
| | 2,392,880 |
|
| Total assets | | $ | 5,096,316 |
|
| $ | 7,263,511 |
|
| |
|
|
|
| Liabilities and stockholders’ equity | |
|
|
|
| Liabilities: | |
|
|
|
| 2015 Credit Facility | | $ | 146,300 |
|
| $ | 112,000 |
|
| 2015 Term Loan, net | | 419,560 |
|
| — |
|
| Senior Unsecured Notes, net | | 295,767 |
| | 295,321 |
|
| Mortgages and notes payable, net | | 463,196 |
|
| 589,644 |
|
| Convertible Notes, net | | 729,814 |
|
| 715,881 |
|
| Total debt, net | | 2,054,637 |
|
| 1,712,846 |
|
| Intangible lease liabilities, net | | 120,162 |
|
| 130,574 |
|
| Accounts payable, accrued expenses and other liabilities | | 119,768 |
|
| 131,642 |
|
| Liabilities related to SMTA Spin-Off | | — |
| | 1,968,840 |
|
| Total liabilities | | 2,294,567 |
|
| 3,943,902 |
|
| 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 December 31, 2018 and December 31, 2017, liquidation preference of $25.00 per share | | 166,177 |
| | 166,193 |
|
| Common stock, $0.05 par value, 750,000,000 shares authorized: 85,787,355 shares and 89,774,135 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively | | 4,289 |
|
| 4,489 |
|
| Capital in excess of common stock par value | | 4,995,697 |
|
| 5,193,631 |
|
| Accumulated deficit | | (2,357,255 | ) |
| (2,044,704 | ) |
| Accumulated other comprehensive loss | | (7,159 | ) |
| — |
|
| Total stockholders’ equity | | 2,801,749 |
|
| 3,319,609 |
|
| Total liabilities and stockholders’ equity | | $ | 5,096,316 |
|
| $ | 7,263,511 |
|
See accompanying notes.
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | 8,750 | |
| | | — | | | | — | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
| | | | | | | | | | | | | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | — | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
Dividends paid to preferred stockholders | | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average shares of common stock outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Revenues: | | | | | | |
| Rental income | | $ | 402,321 |
| | $ | 424,260 |
| | $ | 420,003 |
|
| Interest income on loans receivable | | 3,447 |
| | 3,346 |
| | 3,399 |
|
| Earned income from direct financing leases | | 1,814 |
| | 2,078 |
| | 2,742 |
|
| Related party fee income | | 15,838 |
| | — |
| | — |
|
| Other income | | 21,705 |
| | 1,574 |
| | 9,196 |
|
| Total revenues | | 445,125 |
| | 431,258 |
| | 435,340 |
|
| Expenses: | | | | | | |
| General and administrative | | 52,993 |
| | 54,998 |
| | 48,651 |
|
| Restructuring charges | | — |
| | — |
| | 6,341 |
|
| Property costs (including reimbursable) | | 21,066 |
| | 28,487 |
| | 26,045 |
|
| Real estate acquisition costs | | 210 |
| | 1,434 |
| | 2,904 |
|
| Interest | | 97,548 |
| | 113,394 |
| | 118,690 |
|
| Depreciation and amortization | | 162,452 |
| | 173,686 |
| | 173,036 |
|
| Impairments | | 6,725 |
| | 61,597 |
| | 61,395 |
|
| Total expenses | | 340,994 |
| | 433,596 |
| | 437,062 |
|
| Other income: | | | | | | |
| Gain on debt extinguishment | | 27,092 |
| | 579 |
| | 1,605 |
|
| Gain on disposition of assets | | 14,629 |
| | 42,698 |
| | 29,623 |
|
| Preferred dividend income from SMTA | | 8,750 |
| | — |
| | — |
|
| Other expense | | (5,319 | ) | | — |
| | — |
|
| Total other income | | 45,152 |
| | 43,277 |
| | 31,228 |
|
| Income from continuing operations before income tax expense | | 149,283 |
| | 40,939 |
| | 29,506 |
|
| Income tax expense | | (792 | ) | | (511 | ) | | (868 | ) |
| Income from continuing operations | | 148,491 |
| | 40,428 |
| | 28,638 |
|
| (Loss) income from discontinued operations | | (16,439 | ) | | 36,720 |
| | 68,808 |
|
| Net Income | | 132,052 |
| | 77,148 |
| | 97,446 |
|
| Dividends paid to preferred stockholders | | (10,352 | ) | | (2,530 | ) | | — |
|
| Net income attributable to common stockholders | | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
|
| | | | | | | |
| Net income per share attributable to common stockholders - basic: | | | | | | |
| Continuing operations | | $ | 1.59 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per share attributable to common stockholders - basic | | $ | 1.40 |
| | $ | 0.79 |
| | $ | 1.03 |
|
| Net income per share attributable to common stockholders - diluted: | | | | | | |
| Continuing operations | | $ | 1.58 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per share attributable to common stockholders - diluted | | $ | 1.39 |
| | $ | 0.79 |
| | $ | 1.03 |
|
| Weighted average shares of common stock outstanding: | | | | | | |
| Basic | | 86,321,268 |
| | 93,586,991 |
| | 93,843,552 |
|
| Diluted | | 86,476,449 |
| | 93,588,560 |
| | 93,849,250 |
|
See accompanying notes.
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| Net income attributable to common stockholders | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
|
| Other comprehensive (loss) income: | | | | | |
| Change in net unrealized losses on cash flow hedges | (7,159 | ) | | — |
| | (1,137 | ) |
| Net cash flow hedge losses reclassified to operations | — |
| | — |
| | 2,165 |
|
| Total comprehensive income | $ | 114,541 |
| | $ | 74,618 |
| | $ | 98,474 |
|
See accompanying notes.
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Stockholders’ Equity
(In Thousands, Except Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Value and
Capital in
Excess of | | | | | | | | | | | | |
Balances, December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 132,052 | | | | — | | | | 132,052 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | — | | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 121,700 | | | | — | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (7,159 | ) | | | (7,159 | ) |
Cost associated with preferred stock | | | — | | | | (16 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (16 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (262,887 | ) | | | — | | | | (262,887 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (57,679 | ) | | | (3 | ) | | | — | | | | (2,400 | ) | | | — | | | | (2,403 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 92,458 | | | | 5 | | | | 2,967 | | | | — | | | | — | | | | 2,972 | |
Repurchase of common shares | | | — | | | | — | | | | (4,244,446 | ) | | | (212 | ) | | | — | | | | (167,953 | ) | | | — | | | | (168,165 | ) |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | — | | | | — | | | | (216,005 | ) |
Stock-based compensation, net | | | — | | | | — | | | | 222,887 | | | | 10 | | | | 15,104 | | | | (1,011 | ) | | | — | | | | 14,103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 175,266 | | | | — | | | | 175,266 | |
Dividends declared on preferred | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common | | | — | | | | — | | | | — | | | | — | | | | — | | | | 164,916 | | | | — | | | | 164,916 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,302 | ) | | | (4,302 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (236,943 | ) | | | — | | | | (236,943 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (58,445 | ) | | | (3 | ) | | | — | | | | (2,539 | ) | | | — | | | | (2,542 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 16,578,423 | | | | 829 | | | | 676,361 | | | | — | | | | — | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | 168,819 | | | | 9 | | | | 14,268 | | | | (1,017 | ) | | | — | | | | 13,260 | |
| | | — | | | | — | | | | — | | | | — | | | | (79 | ) | | | — | | | | — | | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,708 | | | | — | | | | 26,708 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 16,358 | | | | — | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,807 | | | | 2,807 | |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (266,659 | ) | | | — | | | | (266,659 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (117,543 | ) | | | (6 | ) | | | — | | | | (4,375 | ) | | | — | | | | (4,381 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 12,137,210 | | | | 607 | | | | 427,632 | | | | — | | | | — | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | 316,796 | | | | 16 | | | | 12,624 | | | | (1,133 | ) | | | — | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Preferred Stock | | Common Stock | | Accumulated Deficit | | | | Total Stockholders’ Equity |
| | | Shares | | Par
Value and Capital in Excess of Par Value | | Shares | | Par
Value | | Capital in Excess of Par Value | | | AOCL | |
| Balances, December 31, 2015 | | — |
| | $ | — |
| | 88,364,473 |
| | $ | 4,418 |
| | $ | 4,721,323 |
| | $ | (1,262,839 | ) | | $ | (1,028 | ) | | $ | 3,461,874 |
|
| Net income | | — |
| | — |
| | — |
| | — |
| | — |
| | 97,446 |
| | — |
| | 97,446 |
|
| Other comprehensive income | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,028 |
| | 1,028 |
|
| Dividends declared on common stock | | — |
| | — |
| | — |
| | — |
| | — |
| | (333,180 | ) | | — |
| | (333,180 | ) |
| Tax withholdings related to net stock settlements | | — |
| | — |
| | (14,566 | ) | | (1 | ) | | — |
| | (752 | ) | | — |
| | (753 | ) |
| Issuance of shares of common stock, net | | — |
| | — |
| | 8,167,072 |
| | 408 |
| | 446,205 |
| | — |
| | — |
| | 446,613 |
|
| Stock-based compensation, net | | — |
| | — |
| | 208,326 |
| | 11 |
| | 9,558 |
| | (489 | ) | | — |
| | 9,080 |
|
| Balances, December 31, 2016 | | — |
| | $ | — |
| | 96,725,305 |
| | $ | 4,836 |
| | $ | 5,177,086 |
| | $ | (1,499,814 | ) | | $ | — |
| | $ | 3,682,108 |
|
| Net income | | — |
| | — |
| | — |
| | — |
| | — |
| | 77,148 |
| | — |
| | 77,148 |
|
| Dividends declared on preferred stock | | — |
| | — |
| | — |
| | — |
| | — |
| | (2,530 | ) | | — |
| | (2,530 | ) |
| Net income available to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | 74,618 |
| | — |
| | 74,618 |
|
| Issuance of preferred stock | | 6,900,000 |
| | 166,193 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 166,193 |
|
| Dividends declared on common stock | | — |
| | — |
| | — |
| | — |
| | — |
| | (332,402 | ) | | — |
| | (332,402 | ) |
| Tax withholdings related to net stock settlements | | — |
| | — |
| | (88,062 | ) | | (4 | ) | | — |
| | (3,538 | ) | | — |
| | (3,542 | ) |
| Repurchase of common shares | | — |
| | — |
| | (7,167,993 | ) | | (358 | ) | | — |
| | (282,731 | ) | | — |
| | (283,089 | ) |
| Stock-based compensation, net | | — |
| | — |
| | 304,885 |
| | 15 |
| | 16,545 |
| | (837 | ) | | — |
| | 15,723 |
|
| Balances, December 31, 2017 | | 6,900,000 |
| | $ | 166,193 |
| | 89,774,135 |
| | $ | 4,489 |
| | $ | 5,193,631 |
| | $ | (2,044,704 | ) | | $ | — |
| | $ | 3,319,609 |
|
| Net income | | — |
| | — |
| | — |
| | — |
| | — |
| | 132,052 |
| | — |
| | 132,052 |
|
| Dividends declared on preferred stock | | — |
| | — |
| | — |
| | — |
| | — |
| | (10,352 | ) | | — |
| | (10,352 | ) |
| Net income available to common stockholders | | — |
| | — |
| | — |
| | — |
| | — |
| | 121,700 |
| | — |
| | 121,700 |
|
| Other comprehensive loss | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (7,159 | ) | | (7,159 | ) |
| Cost associated with preferred stock | | — |
| | (16 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (16 | ) |
| Dividends declared on common stock | | — |
| | — |
| | — |
| | — |
| | — |
| | (262,887 | ) | | — |
| | (262,887 | ) |
| Tax withholdings related to net stock settlements | | — |
| | — |
| | (57,679 | ) | | (3 | ) | | — |
| | (2,400 | ) | | — |
| | (2,403 | ) |
| Issuance of shares of common stock, net | | — |
| | — |
| | 92,458 |
| | 5 |
| | 2,967 |
| | — |
| | — |
| | 2,972 |
|
| Repurchase of common shares | | — |
| | — |
| | (4,244,446 | ) | | (212 | ) | | — |
| | (167,953 | ) | | — |
| | (168,165 | ) |
| SMTA dividend distribution | | — |
| | — |
| | — |
| | — |
| | (216,005 | ) | | — |
| | — |
| | (216,005 | ) |
| Stock-based compensation, net | | — |
| | — |
| | 222,887 |
| | 10 |
| | 15,104 |
| | (1,011 | ) | | — |
| | 14,103 |
|
| Balances, December 31, 2018 | | 6,900,000 |
| | $ | 166,177 |
| | 85,787,355 |
| | $ | 4,289 |
| | $ | 4,995,697 |
| | $ | (2,357,255 | ) | | $ | (7,159 | ) | | $ | 2,801,749 |
|
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Operating activities | | | | | | |
| Net Income | | $ | 132,052 |
| | $ | 77,148 |
| | $ | 97,446 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
| Depreciation and amortization | | 197,913 |
| | 256,019 |
| | 262,276 |
|
| Impairments | | 17,668 |
| | 102,330 |
| | 88,275 |
|
| Amortization of deferred financing costs | | 9,306 |
| | 9,896 |
| | 9,070 |
|
| Payments to terminate interest rate swap | | — |
| | — |
| | (1,724 | ) |
| Derivative net settlements, amortization and terminations | | — |
| | — |
| | 1,811 |
|
| Amortization of debt discounts | | 13,560 |
| | 13,572 |
| | 6,217 |
|
| Stock-based compensation expense | | 15,114 |
| | 16,560 |
| | 9,570 |
|
| (Gain) loss on debt extinguishment | | (26,729 | ) | | 1,645 |
| | (233 | ) |
| Gains on dispositions of real estate and other assets | | (14,355 | ) | | (65,106 | ) | | (52,365 | ) |
| Non-cash revenue | | (18,878 | ) | | (28,439 | ) | | (26,333 | ) |
| Bad debt expense and other | | 2,313 |
| | 5,913 |
| | (594 | ) |
| Changes in operating assets and liabilities: | | | | | | |
| Deferred costs and other assets, net | | (1,396 | ) | | 2,866 |
| | (6,561 | ) |
| Accounts payable, accrued expenses and other liabilities | | 9,797 |
| | 1,578 |
| | 6,308 |
|
| Accrued restructuring charges | | — |
| | — |
| | (5,535 | ) |
| Net cash provided by operating activities | | 336,365 |
| | 393,982 |
| | 387,628 |
|
| Investing activities | | | | | | |
| Acquisitions of real estate | | (257,712 | ) | | (279,934 | ) | | (655,835 | ) |
| Capitalized real estate expenditures | | (52,390 | ) | | (46,100 | ) | | (27,078 | ) |
| Investments in loans receivable | | (35,450 | ) | | (4,995 | ) | | (5,073 | ) |
| Collections of principal on loans receivable and real estate assets under direct financing leases | | 30,427 |
| | 12,769 |
| | 8,410 |
|
| Proceeds from dispositions of real estate and other assets | | 94,663 |
| | 472,496 |
| | 524,776 |
|
| Net cash (used in) provided by investing activities | | (220,462 | ) | | 154,236 |
| | (154,800 | ) |
| Financing activities | | | | | | |
| Borrowings under Revolving Credit Facilities | | 826,000 |
| | 940,200 |
| | 1,080,000 |
|
| Repayments under Revolving Credit Facilities | | (791,700 | ) | | (914,200 | ) | | (994,000 | ) |
| Borrowings under mortgages and notes payable | | 104,247 |
| | 618,603 |
| | — |
|
| Repayments under mortgages and notes payable | | (170,519 | ) | | (221,310 | ) | | (863,836 | ) |
| Borrowings under 2015 Term Loan | | 420,000 |
| | — |
| | 796,000 |
|
| Repayments under 2015 Term Loan | | — |
| | (420,000 | ) | | (701,000 | ) |
| Borrowings under Senior Unsecured Notes | | — |
| | — |
| | 298,134 |
|
| Debt extinguishment costs | | (2,968 | ) | | (3,305 | ) | | (28,531 | ) |
| Deferred financing costs | | (1,981 | ) | | (8,255 | ) | | (4,352 | ) |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common stock dividends paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred stock dividends paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | (73,081 | ) | | — |
| | — |
|
| Sale of SubREIT preferred shares | | 5,000 |
| | — |
| | — |
|
| Proceeds from issuance of common stock, net of offering costs | | 2,972 |
| | — |
| | 446,613 |
|
| Proceeds from issuance of preferred stock, net of offering costs | | (16 | ) | | 166,193 |
| | — |
|
| Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | (170,568 | ) | | (286,631 | ) | | (753 | ) |
| Preferred stock dividends paid | | (10,352 | ) | | (2,530 | ) | | — |
|
| Common stock dividends paid | | (290,223 | ) | | (339,174 | ) | | (323,640 | ) |
| Net cash used in financing activities | | (153,189 | ) | | (470,409 | ) | | (295,365 | ) |
| Net (decrease) increase in cash, cash equivalents and restricted cash | | (37,286 | ) | | 77,809 |
| | (62,537 | ) |
| Cash, cash equivalents and restricted cash, beginning of year | | 114,707 |
| | 36,898 |
| | 99,435 |
|
| Cash, cash equivalents and restricted cash, end of year | | $ | 77,421 |
| | $ | 114,707 |
| | $ | 36,898 |
|
The following table presents the supplemental cash flow disclosures (in thousands): |
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Supplemental Disclosures of Non-Cash Activities: | | | | | | |
| Investment in preferred shares | | $ | 150,000 |
| | $ | — |
| | $ | — |
|
| Non-cash distribution to SMTA, net | | 142,924 |
| | — |
| | — |
|
| Relief of debt through sale or foreclosure of real estate properties | | 56,119 |
| | 39,141 |
| | 7,208 |
|
| Financing provided in connection with disposition of assets | | 2,888 |
| | 24,015 |
| | — |
|
| Net real estate and other collateral assets surrendered to lender | | 28,271 |
| | 38,547 |
| | 30,381 |
|
| Reduction of debt in exchange for collateral assets | | — |
| | — |
| | 47,025 |
|
| Real estate acquired in exchange for loans receivable | | — |
| | — |
| | 26,609 |
|
| Reclass of residual value on expired deferred financing lease to operating asset | | 4,455 |
| | 11,088 |
| | — |
|
Accrued interest capitalized to principal (1) | | 1,967 |
| | 3,839 |
| | 4,332 |
|
| Accrued market-based award dividend rights | | 1,011 |
| | 817 |
| | 489 |
|
| Derivative changes in fair value | | 7,159 |
| | — |
| | — |
|
| Distributions declared and unpaid | | 53,617 |
| | 80,792 |
| | 87,055 |
|
| Accrued capitalized costs | | 695 |
| | — |
| | — |
|
| Supplemental Cash Flow Disclosures: | | | | | | |
| Cash paid for interest | | $ | 118,329 |
| | $ | 163,623 |
| | $ | 182,105 |
|
| Cash paid for taxes | | 1,099 |
| | 911 |
| | 914 |
|
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
(1) Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. | | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
Consolidated Balance Sheets
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320 | ) | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | 0 | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and partners’ capital | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | 0 | | | $ | 116,500 | |
| | | 177,309 | | | | 0 | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
Notes Payable to Spirit Realty Capital, Inc., net | | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
General partner’s common capital, 797,644 units issued and outstanding as of both December 31, 2020 and December 31, 2019 | | | 20,505 | | | | 22,389 | |
Limited partners’ preferred capital: 6,900,000 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 166,177 | | | | 166,177 | |
Limited partners’ common capital: 114,014,971 and 101,678,508 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 3,414,438 | | | | 3,224,683 | |
| | | | | | | | | |
| | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and partners’ capital | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
|
| | | | | | | | |
| | | December 31,
2018 | | December 31,
2017 |
| Assets | | | | |
| Investments: | | | | |
| Real estate investments: | | | | |
| Land and improvements | | $ | 1,632,664 |
| | $ | 1,598,355 |
|
| Buildings and improvements | | 3,125,053 |
| | 2,989,451 |
|
| Total real estate investments | | 4,757,717 |
| | 4,587,806 |
|
| Less: accumulated depreciation | | (621,456 | ) | | (503,568 | ) |
| | | 4,136,261 |
| | 4,084,238 |
|
| Loans receivable, net | | 47,044 |
| | 78,466 |
|
| Intangible lease assets, net | | 294,463 |
| | 306,252 |
|
| Real estate assets under direct financing leases, net | | 20,289 |
| | 24,865 |
|
| Real estate assets held for sale, net | | 18,203 |
| | 20,469 |
|
| Net investments | | 4,516,260 |
| | 4,514,290 |
|
| Cash and cash equivalents | | 14,493 |
| | 8,792 |
|
| Deferred costs and other assets, net | | 156,428 |
| | 121,949 |
|
| Investment in Master Trust 2014 | | 33,535 |
| | — |
|
| Preferred equity investment in SMTA | | 150,000 |
| | — |
|
| Goodwill | | 225,600 |
| | 225,600 |
|
| Assets related to SMTA Spin-Off | | — |
| | 2,392,880 |
|
| Total assets | | $ | 5,096,316 |
| | $ | 7,263,511 |
|
| Liabilities and partners' capital | | | | |
| Liabilities: | | | | |
| 2015 Credit Facility | | $ | 146,300 |
| | $ | 112,000 |
|
| 2015 Term Loan, net | | 419,560 |
| | — |
|
| Senior Unsecured Notes, net | | 295,767 |
| | 295,321 |
|
| Mortgages and notes payable, net | | 463,196 |
| | 589,644 |
|
| Notes payable to Spirit Realty Capital, Inc., net | | 729,814 |
| | 715,881 |
|
| Total debt, net | | 2,054,637 |
| | 1,712,846 |
|
| Intangible lease liabilities, net | | 120,162 |
| | 130,574 |
|
| Accounts payable, accrued expenses and other liabilities | | 119,768 |
| | 131,642 |
|
| Liabilities related to SMTA Spin-Off | | — |
| | 1,968,840 |
|
| Total liabilities | | 2,294,567 |
| | 3,943,902 |
|
| Commitments and contingencies (see Note 6) | |
|
| |
|
|
| Partners' Capital | | | | |
| General partner's common capital, 797,644 units issued and outstanding as of both December 31, 2018 and December 31, 2017 | | 23,061 |
| | 24,426 |
|
| Limited partners' preferred capital: 6,900,000 units issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | | 166,177 |
| | 166,193 |
|
| Limited partners' common capital, 84,989,711 and 88,976,491 units issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | | 2,612,511 |
| | 3,128,990 |
|
| Total partners' capital | | 2,801,749 |
| | 3,319,609 |
|
| Total liabilities and partners' capital | | $ | 5,096,316 |
| | $ | 7,263,511 |
|
Consolidated Statements of Operations
(In Thousands, Except ShareUnit and Per ShareUnit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | 0 | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | 0 | | | | 10,802 | | | | 8,750 | |
| | | — | | | | 0 | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | 0 | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
| | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | |
Net income attributable to the general partner: | | | | | | | | | | | | |
| | $ | 125 | | | $ | 1,450 | | | $ | 1,270 | |
| | | — | | | | 0 | | | | (151) | |
| | | | | | | | | | | | | |
Net income attributable to the general partner | | $ | 125 | | | $ | 1,450 | | | $ | 1,119 | |
| | | | |
Net income attributable to the limited partners: | | | | | | | | | | | | |
| | $ | 26,583 | | | $ | 173,816 | | | $ | 147,221 | |
| | | — | | | | 0 | | | | (16,288) | |
| | | | | | | | | | | | | |
Net income attributable to the limited partners | | $ | 26,583 | | | $ | 173,816 | | | $ | 130,933 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Revenues: | | | | | | |
| Rental income | | $ | 402,321 |
| | $ | 424,260 |
| | $ | 420,003 |
|
| Interest income on loans receivable | | 3,447 |
| | 3,346 |
| | 3,399 |
|
| Earned income from direct financing leases | | 1,814 |
| | 2,078 |
| | 2,742 |
|
| Related party fee income | | 15,838 |
| | — |
| | — |
|
| Other income | | 21,705 |
| | 1,574 |
| | 9,196 |
|
| Total revenues | | 445,125 |
| | 431,258 |
| | 435,340 |
|
| Expenses: | | | | | | |
| General and administrative | | 52,993 |
| | 54,998 |
| | 48,651 |
|
| Restructuring charges | | — |
| | — |
| | 6,341 |
|
| Property costs (including reimbursable) | | 21,066 |
| | 28,487 |
| | 26,045 |
|
| Real estate acquisition costs | | 210 |
| | 1,434 |
| | 2,904 |
|
| Interest | | 97,548 |
| | 113,394 |
| | 118,690 |
|
| Depreciation and amortization | | 162,452 |
| | 173,686 |
| | 173,036 |
|
| Impairments | | 6,725 |
| | 61,597 |
| | 61,395 |
|
| Total expenses | | 340,994 |
| | 433,596 |
| | 437,062 |
|
| Other income: | | | | | | |
| Gain on debt extinguishment | | 27,092 |
| | 579 |
| | 1,605 |
|
| Gain on disposition of assets | | 14,629 |
| | 42,698 |
| | 29,623 |
|
| Preferred dividend income from SMTA | | 8,750 |
| | — |
| | — |
|
| Other expense | | (5,319 | ) | | — |
| | — |
|
| Total other income | | 45,152 |
| | 43,277 |
| | 31,228 |
|
| Income from continuing operations before income tax expense | | 149,283 |
| | 40,939 |
| | 29,506 |
|
| Income tax expense | | (792 | ) | | (511 | ) | | (868 | ) |
| Income from continuing operations | | 148,491 |
| | 40,428 |
| | 28,638 |
|
| (Loss) income from discontinued operations | | (16,439 | ) | | 36,720 |
| | 68,808 |
|
| Net income | | 132,052 |
| | 77,148 |
| | 97,446 |
|
| Preferred distributions | | (10,352 | ) | | (2,530 | ) | | — |
|
| Net income after preferred distributions | | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
|
| | | | | | | |
| Net income attributable to general partners | | | | | | |
| Continuing operations | | 1,270 |
| | 353 |
| | 243 |
|
| Discontinued operations | | (151 | ) | | 304 |
| | 582 |
|
| Net income attributable to general partners | | 1,119 |
| | 657 |
| | 825 |
|
| | | | | | | |
| Net income attributable to limited partners | | | | | | |
| Continuing operations | | 147,221 |
| | 40,075 |
| | 28,395 |
|
| Discontinued operations | | (16,288 | ) | | 36,416 |
| | 68,226 |
|
| Net income attributable to limited partners | | 130,933 |
| | 76,491 |
| | 96,621 |
|
| | | | | | | |
| Net income per common partnership unit - basic: | | | | | | |
| Continuing operations | | $ | 1.59 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per common partnership unit - basic | | $ | 1.40 |
| | $ | 0.79 |
| | $ | 1.03 |
|
| | | | | | | |
| Net income per common partnership unit - diluted: | | | | | | |
| Continuing operations | | $ | 1.58 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per common partnership unit —diluted | | $ | 1.39 |
| | $ | 0.79 |
| | $ | 1.03 |
|
| | | | | | | |
| Weighted average common partnership units outstanding: | | | | | | |
| Basic | | 86,321,268 |
| | 93,586,991 |
| | 93,843,552 |
|
| Diluted | | 86,476,449 |
| | 93,588,560 |
| | 93,849,250 |
|
See accompanying notes.
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
Net income per partnership unit - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average partnership units outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| Net income after preferred distributions | $ | 121,700 |
| | $ | 74,618 |
| | $ | 97,446 |
|
| Other comprehensive (loss) income: | | | | | |
| Change in net unrealized losses on cash flow hedges | (7,159 | ) | | — |
| | (1,137 | ) |
| Net cash flow hedge losses reclassified to operations | — |
| | — |
| | 2,165 |
|
| Total comprehensive income | $ | 114,541 |
| | $ | 74,618 |
| | $ | 98,474 |
|
See accompanying notes.
Consolidated Statements of Partners'Partners’ Capital
(In Thousands, Except Unit Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | Limited Partners’ Capital (2) | | General Partner’s Capital (1) | | Limited Partners’ Capital (2) | | |
| | | | | | | | | | | | | | | | | |
Balances, December 31, 2017 | | | 6,900,000 | | | $ | 166,193 | | | | 797,644 | | | $ | 24,426 | | | | 88,976,491 | | | $ | 3,128,990 | | | $ | 3,319,609 | |
| | | — | | | | — | | | | — | | | | 1,119 | | | | — | | | | 130,933 | | | | 132,052 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,119 | | | | | | | | 120,581 | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | (66 | ) | | | — | | | | (7,093 | ) | | | (7,159 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,418 | ) | | | — | | | | (260,469 | ) | | | (262,887 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (57,679 | ) | | | (2,403 | ) | | | (2,403 | ) |
Issuance of common units, net | | | — | | | | (16 | ) | | | — | | | | — | | | | 92,458 | | | | 2,972 | | | | 2,956 | |
Repurchase of common units | | | — | | | | — | | | | — | | | | — | | | | (4,244,446 | ) | | | (168,165 | ) | | | (168,165 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | (216,005 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 222,887 | | | | 14,103 | | | | 14,103 | |
Balances, December 31, 2018 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 23,061 | | | | 84,989,711 | | | $ | 2,612,511 | | | $ | 2,801,749 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | 1,450 | | | | — | | | | 173,816 | | | | 175,266 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,450 | | | | | | | | 163,466 | | | | 164,916 | |
| Other comprehensive loss | | | — | | | | — | | | | — | | | | (38 | ) | | | — | | | | (4,264 | ) | | | (4,302 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,083 | ) | | | — | | | | (234,860 | ) | | | (236,943 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (58,445 | ) | | | (2,542 | ) | | | (2,542 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 16,578,423 | | | | 677,190 | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 168,819 | | | | 13,260 | | | | 13,260 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | (1 | ) | | | — | | | | (78 | ) | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 22,389 | | | | 101,678,508 | | | $ | 3,224,683 | | | $ | 3,413,249 | |
| | | — | | | | — | | | | — | | | | 125 | | | | — | | | | 26,583 | | | | 26,708 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
Net income after preferred distributions | | | | | | | — | | | | | | | | 125 | | | | | | | | 16,233 | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | 21 | | | | — | | | | 2,786 | | | | 2,807 | |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,030 | ) | | | — | | | | (264,629 | ) | | | (266,659 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (117,543 | ) | | | (4,381 | ) | | | (4,381 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 12,137,210 | | | | 428,239 | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 316,796 | | | | 11,507 | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 20,505 | | | | 114,014,971 | | | $ | 3,414,438 | | | $ | 3,601,120 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Units | | Common Units | | Total Partnership Capital |
| | | Limited Partners' Capital (2) | | General Partner's Capital (1) | | Limited Partners' Capital (2) | |
| | | Units | | Amount | | Units | | Amount | | Units | | Amount | |
| Balances, December 31, 2015 | | — |
| | $ | — |
| | 797,644 |
| | $ | 28,574 |
| | 87,566,830 |
| | $ | 3,433,300 |
| | $ | 3,461,874 |
|
| Net income | | — |
| | — |
| | — |
| | 825 |
| | — |
| | 96,621 |
| | 97,446 |
|
| Other comprehensive income | | — |
| | — |
| | — |
| | 9 |
| | — |
| | 1,019 |
| | 1,028 |
|
| Partnership distributions declared | | — |
| | — |
| | — |
| | (2,822 | ) | | — |
| | (330,358 | ) | | (333,180 | ) |
| Tax withholdings related to net settlement of partnership units | | — |
| | — |
| | — |
| | — |
| | (14,567 | ) | | (753 | ) | | (753 | ) |
| Issuance of partnership units, net | | — |
| | — |
| | — |
| | — |
| | 8,167,072 |
| | 446,613 |
| | 446,613 |
|
| Stock-based compensation, net | | — |
| | — |
| | — |
| | — |
| | 208,326 |
| | 9,080 |
| | 9,080 |
|
| Balances, December 31, 2016 | | — |
| | $ | — |
| | 797,644 |
| | $ | 26,586 |
| | 95,927,661 |
| | $ | 3,655,522 |
| | $ | 3,682,108 |
|
| Net income | | — |
| | — |
| | — |
| | 657 |
| | — |
| | 76,491 |
| | 77,148 |
|
| Partnership distributions declared on preferred units | | — |
| | — |
| | — |
| | — |
| | — |
| | (2,530 | ) | | (2,530 | ) |
| Net income after preferred distributions | | | | — |
| | | | 657 |
| | | | 73,961 |
| | 74,618 |
|
| Issuance of preferred partnership units | | 6,900,000 |
| | 166,193 |
| | — |
| | — |
| | — |
| | — |
| | 166,193 |
|
| Partnership distributions declared on common units | | — |
| | — |
| | — |
| | (2,817 | ) | | — |
| | (329,585 | ) | | (332,402 | ) |
| Tax withholdings related to net settlement of partnership units | | — |
| | — |
| | — |
| | — |
| | (88,062 | ) | | (3,542 | ) | | (3,542 | ) |
| Repurchase of partnership units | | — |
| | — |
| | — |
| | — |
| | (7,167,993 | ) | | (283,089 | ) | | (283,089 | ) |
| Stock-based compensation, net | | — |
| | — |
| | — |
| | — |
| | 304,885 |
| | 15,723 |
| | 15,723 |
|
| Balances, December 31, 2017 | | 6,900,000 |
| | $ | 166,193 |
| | 797,644 |
| | $ | 24,426 |
| | 88,976,491 |
| | $ | 3,128,990 |
| | $ | 3,319,609 |
|
| Net income | | — |
| | — |
| | — |
| | $ | 1,119 |
| | — |
| | $ | 130,933 |
| | $ | 132,052 |
|
| Partnership distributions declared on preferred units | | — |
| | — |
| | — |
| | — |
| | — |
| | (10,352 | ) | | (10,352 | ) |
| Net income after preferred distributions | | — |
| | — |
| | — |
| | 1,119 |
| | — |
| | 120,581 |
| | 121,700 |
|
| Other comprehensive loss | | — |
| | — |
| | — |
| | (66 | ) | | — |
| | (7,093 | ) | | (7,159 | ) |
| Partnership distributions declared on common units | | — |
| | — |
| | — |
| | (2,418 | ) | | — |
| | (260,469 | ) | | (262,887 | ) |
| Tax withholdings related to net settlement of partnership units | | — |
| | — |
| | — |
| | — |
| | (57,679 | ) | | (2,403 | ) | | (2,403 | ) |
| Issuance of partnership units | | — |
| | (16 | ) | | — |
| | — |
| | 92,458 |
| | 2,972 |
| | 2,956 |
|
| Repurchase of partnership units | | — |
| | — |
| | — |
| | — |
| | (4,244,446 | ) | | (168,165 | ) | | (168,165 | ) |
| SMTA dividend distribution | | — |
| | — |
| | — |
| | — |
| | — |
| | (216,005 | ) | | (216,005 | ) |
| Stock-based compensation, net | | — |
| | — |
| | — |
| | — |
| | 222,887 |
| | 14,103 |
| | 14,103 |
|
| Balances, December 31, 2018 | | 6,900,000 |
| | $ | 166,177 |
| | 797,644 |
| | $ | 23,061 |
| | 84,989,711 |
| | $ | 2,612,511 |
| | $ | 2,801,749 |
|
(1) Consists of general partnership interests held by Spirit General OP Holdings, LLC.| (1) | Consists of general partnership interests held by Spirit General OP Holdings, LLC. |
(2) Consists of limited partnership interests held by Spirit Realty Capital, Inc. and Spirit Notes Partner, LLC.| (2) | Consists of limited partnership interests held by Spirit Realty Capital, Inc. and Spirit Notes Partner, LLC. |
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes payable | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured Notes | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Operating activities | | | | | | |
| Net Income | | $ | 132,052 |
| | $ | 77,148 |
| | $ | 97,446 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
| Depreciation and amortization | | 197,913 |
| | 256,019 |
| | 262,276 |
|
| Impairments | | 17,668 |
| | 102,330 |
| | 88,275 |
|
| Amortization of deferred financing costs | | 9,306 |
| | 9,896 |
| | 9,070 |
|
| Payments to terminate interest rate swap | | — |
| | — |
| | (1,724 | ) |
| Derivative net settlements, amortization and terminations | | — |
| | — |
| | 1,811 |
|
| Amortization of debt discounts | | 13,560 |
| | 13,572 |
| | 6,217 |
|
| Stock-based compensation expense | | 15,114 |
| | 16,560 |
| | 9,570 |
|
| (Gain) loss on debt extinguishment | | (26,729 | ) | | 1,645 |
| | (233 | ) |
| Gains on dispositions of real estate and other assets | | (14,355 | ) | | (65,106 | ) | | (52,365 | ) |
| Non-cash revenue | | (18,878 | ) | | (28,439 | ) | | (26,333 | ) |
| Bad debt expense and other | | 2,313 |
| | 5,913 |
| | (594 | ) |
| Changes in operating assets and liabilities: | | | | | | |
| Deferred costs and other assets, net | | (1,396 | ) | | 2,866 |
| | (6,561 | ) |
| Accounts payable, accrued expenses and other liabilities | | 9,797 |
| | 1,578 |
| | 6,308 |
|
| Accrued restructuring charges | | — |
| | — |
| | (5,535 | ) |
| Net cash provided by operating activities | | 336,365 |
| | 393,982 |
| | 387,628 |
|
| Investing activities | | | | | | |
| Acquisitions of real estate | | (257,712 | ) | | (279,934 | ) | | (655,835 | ) |
| Capitalized real estate expenditures | | (52,390 | ) | | (46,100 | ) | | (27,078 | ) |
| Investments in loans receivable | | (35,450 | ) | | (4,995 | ) | | (5,073 | ) |
| Collections of principal on loans receivable and real estate assets under direct financing leases | | 30,427 |
| | 12,769 |
| | 8,410 |
|
| Proceeds from dispositions of real estate and other assets | | 94,663 |
| | 472,496 |
| | 524,776 |
|
| Net cash (used in) provided by investing activities | | (220,462 | ) | | 154,236 |
| | (154,800 | ) |
| Financing activities | |
|
| |
|
| |
|
|
| Borrowings under Revolving Credit Facilities | | 826,000 |
| | 940,200 |
| | 1,080,000 |
|
| Repayments under Revolving Credit Facilities | | (791,700 | ) | | (914,200 | ) | | (994,000 | ) |
| Borrowings under mortgages and notes payable | | 104,247 |
| | 618,603 |
| | — |
|
| Repayments under mortgages and notes payable | | (170,519 | ) | | (221,310 | ) | | (863,836 | ) |
| Borrowings under 2015 Term Loan | | 420,000 |
| | — |
| | 796,000 |
|
| Repayments under 2015 Term Loan | | — |
| | (420,000 | ) | | (701,000 | ) |
| Borrowings under Senior Unsecured Notes | | — |
| | — |
| | 298,134 |
|
| Debt extinguishment costs | | (2,968 | ) | | (3,305 | ) | | (28,531 | ) |
| Deferred financing costs | | (1,981 | ) | | (8,255 | ) | | (4,352 | ) |
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common distributions paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred distributions paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | (73,081 | ) | | — |
| | — |
|
| Sale of SubREIT preferred shares | | 5,000 |
| | — |
| | — |
|
| Proceeds from issuance of common stock, net of offering costs | | 2,972 |
| | — |
| | 446,613 |
|
| Proceeds from issuance of preferred stock, net of offering costs | | (16 | ) | | 166,193 |
| | — |
|
| Repurchase of partnership units, including tax withholdings related to net settlement of partnership units | | (170,568 | ) | | (286,631 | ) | | (753 | ) |
| Preferred distributions paid | | (10,352 | ) | | (2,530 | ) | | — |
|
| Common distributions paid | | (290,223 | ) | | (339,174 | ) | | (323,640 | ) |
| Net cash used in financing activities | | (153,189 | ) | | (470,409 | ) | | (295,365 | ) |
| Net (decrease) increase in cash, cash equivalents and restricted cash | | (37,286 | ) | | 77,809 |
| | (62,537 | ) |
| Cash, cash equivalents and restricted cash, beginning of year | | 114,707 |
| | 36,898 |
| | 99,435 |
|
| Cash, cash equivalents and restricted cash, end of year | | $ | 77,421 |
| | $ | 114,707 |
| | $ | 36,898 |
|
The following table presents the supplemental cash flow disclosures (in thousands): |
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2018 | | 2017 | | 2016 |
| Supplemental Disclosures of Non-Cash Activities: | | | | | | |
| Investment in preferred shares | | $ | 150,000 |
| | $ | — |
| | $ | — |
|
| Non-cash distribution to SMTA, net | | 142,924 |
| | — |
| | — |
|
| Relief of debt through sale or foreclosure of real estate properties | | 56,119 |
| | 39,141 |
| | 7,208 |
|
| Financing provided in connection with disposition of assets | | 2,888 |
| | 24,015 |
| | — |
|
| Net real estate and other collateral assets surrendered to lender | | 28,271 |
| | 38,547 |
| | 30,381 |
|
| Reduction of debt in exchange for collateral assets | | — |
| | — |
| | 47,025 |
|
| Real estate acquired in exchange for loans receivable | | — |
| | — |
| | 26,609 |
|
| Reclass of residual value on expired deferred financing lease to operating asset | | 4,455 |
| | 11,088 |
| | — |
|
Accrued interest capitalized to principal (1) | | 1,967 |
| | 3,839 |
| | 4,332 |
|
| Accrued market-based award dividend rights | | 1,011 |
| | 817 |
| | 489 |
|
| Derivative changes in fair value | | 7,159 |
| | — |
| | — |
|
| Distributions declared and unpaid | | 53,617 |
| | 80,792 |
| | 87,055 |
|
| Accrued capitalized costs | | 695 |
| | — |
| | — |
|
| Supplemental Cash Flow Disclosures: | | | | | | |
| Cash paid for interest | | $ | 118,329 |
| | $ | 163,623 |
| | $ | 182,105 |
|
| Cash paid for taxes | | 1,099 |
| | 911 |
| | 914 |
|
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
(1) Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. | | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements
NOTE 1. ORGANIZATION
Organization and Operations
Spirit Realty Capital, Inc. (the
"Corporation"“Corporation” or
"Spirit"“Spirit” or, with its consolidated subsidiaries, the
"Company"“Company”) operates as a self-administered and self-managed REIT that seeks to generate and deliver sustainable and attractive returns for stockholders by primarily investing in and managing a portfolio of single-tenant, operationally essential real estate throughout the
U.S. United States
that is generally leased on a long-term,
triple-net
basis to tenants operating within retail,
industrial, office
industrial and
data centerother property types. Single tenant, operationally essential real estate generally refers to free-standing, commercial real estate facilities where tenants conduct activities that are essential to the generation of their sales and
profits.The Company began operations through a predecessor legal entity in 2003.profits.The Company’s operations are generally carried out through Spirit Realty, L.P. (the "Operating Partnership"“Operating Partnership”) and its subsidiaries. Spirit General OP Holdings, LLC, ("OP Holdings"), one of the Corporation'sCorporation’s wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. The Corporation and a wholly-owned subsidiary ("Spirit(Spirit Notes Partner, LLC")LLC) are the only limited partners and together own the remaining 99% of the Operating Partnership.
On May 31, 2018,
(the "Distribution Date"), the Company completed the
previously announced spin-off (the "Spin-Off"
(the“Spin-Off”)
of the assets that
collateralizecollateralized Master Trust 2014, properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, Spirit MTA REIT
("SMTA"(“SMTA”).
Beginning inFor periods prior to the
second quarter of 2018, Spin-Off,
the historical financial results of SMTA are reflected in our consolidated financial statements as discontinued
operations for all periods presented.Reclassification
Certain reclassifications have been made to prior periods to conform with current reporting on the consolidated statements of operations:
tenant reimbursement income of $14.9 millionoperations. The Company formed Spirit Realty AM Corporation (“SRAM”), a wholly-owned taxable REIT subsidiary. The rights and $11.9 million for the years ended December 31, 2017 and 2016, respectively, has been combined into "rental income" and
bad debt expense of $2.5 million and $2.0 million for the years ended December 31, 2017 and 2016, respectively, has been reclassified from "general and administrative" to "property costs (including reimbursable)".
These reclassifications had no effect on the total reported results of operations.
Reverse Stock Split
On December 12, 2018, the Company completed a one-for-five reverse stock split of its shares of common stock, converting every five sharesobligations of the Company’s issuedAsset Management Agreement were transferred to SRAM on April 1, 2019, which was subsequently terminated and outstanding common stock, $0.01 par value per share, into one share ofsimultaneously replaced by the Company’s stock, $0.05 par value per share. The reverse stock split did not affect the number of the Company’s authorized shares of common stock.Interim Management Agreement between SRAM and SMTA, which was effective from September 20, 2019 through September 4, 2020. The Company has retrospectively adjusted,allocated personnel and other general and administrative costs to SRAM for all periods presented, all share and per share amountsmanagement services provided to reflect the impact of the reverse stock split.SMTA.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The accompanying consolidated financial statements of the Company and the Operating Partnership have been prepared on the accrual basis of accounting, in accordance with GAAP. The consolidated financial statements of the Company include the accounts of the Corporation and its wholly-owned subsidiaries. In the opinion of management, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth therein. The consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company also consolidates aA variable interest entity
("VIE"(“VIE”)
would be consolidated by the Company when the Company is
determined to be the primary beneficiary. Determination of the primary beneficiary,
of a VIEwhich is based on whether
an entitythe Company has
(1)(i)
the power to direct activities that most significantly impact the economic performance of the VIE and
(2)(ii)
the obligation to absorb losses
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company's determinationDetermination of the primary beneficiary of a VIE considers all relationships between the Company and the VIE, including management agreements and other contractual arrangements. The Company evaluated SMTA under ASC 810 Consolidationas a VIE at the time ofSpin-Off
and continues to evaluate quarterly thereafter. As a resultthereafter until the third quarter of this analysis,2019 and concluded the Company concluded that while it haswas not the primary beneficiary. In the third quarter of 2019, the Company no longer had variable interests in SMTA SMTA is not a VIE. Control of SMTA is thereforeand control was evaluated under the voting interest model and does model. The Company concluded SMTAdid
not require consolidation by the Company.Company for any period presented. All expenses incurred by the Company have been allocated to the Operating Partnership in accordance with the Operating Partnership'sPartnership’s first amended and restated agreement of limited partnership, which management determined to be a reasonable method of allocation. Therefore, expenses incurred would not be materially different if the Operating Partnership had operated as an unaffiliated entity.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
These consolidated financial statements include certain special purpose entities that were formed to acquire and hold real estate encumbered by indebtedness (see Note 4). Each special purpose entity is a separate legal entity and is the sole owner of its assets and responsible for its liabilities. The assets of these special purpose entities are not available to pay, or otherwise satisfy obligations to, the creditors of any affiliate or owner of another entity unless the special purpose entities have expressly agreed and are permitted under their governing documents. As of December 31, 20182020 and 2017,2019, net assets totaling $0.90 billion$343.4 million and $2.78 billion,$375.5 million, respectively, were held, and net liabilities totaling $0.48 billion$215.9 million and $2.63 billion,$231.7 million, respectively, were owed by these encumbered special purpose entities and are included in the accompanying consolidated balance sheets.
A discontinued operation represents: (i) a component of an entity or group of components that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will have a major effect on the Company’s operations and financial results or (ii) an acquired business that is classified as held for sale on the date of acquisition. Examples of a strategic shift include disposing of: (i) a separate major line of business, (ii) a separate major geographic area of operations, or (iii) other major parts of the Company. The Company determined that the
Spin- Off Spin-Off
represented a strategic shift that
hashad a major effect on the
Company'sCompany’s results and, therefore,
SMTA'sSMTA’s operations
qualify qualified
as discontinued operations. See Note 12 for further discussion of discontinued operations.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.
The Company views its operations as one1 segment, which consists of net leasing operations. The Company has no other reportable segments.
Purchase Accounting and Acquisition of Real Estate
When acquiring a property, the purchase price (including acquisition and closing costs) is allocated to land, building, improvements and equipment based on their relative fair values. The Company considers several assumptions to estimate the fair value of the components of the tangible property acquired including market assumptions for land, building and improvements. The determination of the intangible assets and liabilities primarily relate to the contractual lease terms, estimates of the fair market rental rates, discount rates, and estimates of costs to carry and obtain a tenant. For properties acquired within-place
leases, the purchase price of real estate is allocated to the tangible and intangible assets and liabilities acquired based on their relative fair values. In making estimates of fair values for this purpose, a number of sources are used, including independent appraisals and information obtained about each property as a result ofpre-acquisition
due diligence, marketing and leasing activities. Carrying Value of Real Estate Investments
The Company’s real estate properties are recorded at cost and depreciated using the straight-line method over the estimated remaining useful lives of the properties, which generally range from 20 to 50 years for buildings and improvements and from 5 to 20 years for land improvements. Portfolio assets classified as “held for sale” are not depreciated. Properties classified as “heldheld for sale”sale are not depreciated. Properties classified as held for sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs.
Purchase Accounting and Acquisition
When acquiring a property, the purchase price (including acquisition and closing costs) is allocated to land, building, improvements and equipment based on their relative fair values. For properties acquired with in-place leases, the purchase price of real estate is allocated to the tangible and intangible assets and liabilities acquired based on their
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
estimated fair values. In making estimatesHeld for Sale
The Company is continually evaluating the portfolio of
fair valuesreal estate assets and may elect to dispose of assets considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, associated indebtedness, asset location, and tenant operation type(e.g., industry, sector, or concept/brand). Real
estate assets held for
this purpose, a number of sourcessale are
used, including independent appraisals and information obtained about each property as a result of pre-acquisition due diligence and marketing and leasing activities.expected to be sold within twelve months. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of
in-place
leases and above- or below-market leases. For real estate acquired subject to existing lease agreements,
in-place
lease intangibles are valued based on the Company’s estimate of costs related to acquiring a tenant and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the
lease.In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and, included in depreciation and amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue. Below-market lease intangibles are amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be amortizedcertain instances, over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. If the Company believes it is likely a lease will terminate early, the unamortized portion of any related lease intangible is immediately recognized in impairments in the Company’s consolidated statements of operations.period.
Investment in Direct Financing Leases
For real estate property leases classified as direct financing leases, the building portion of the lease is accounted for as a direct financing lease, while the land portion is accounted for as an operating lease when certain criteria are met. For direct financing leases, the Company records an asset which represents the net investment that is determined by using the aggregate of the total amount of future minimum lease payments, the estimated residual value of the leased property and deferred incremental direct costs less unearned income. Income is recognized over the life of the lease to approximate a level rate of return on the net investment. Residual values, which are reviewed annually, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased property. Actual residual values realized could differ from these estimates. The Company evaluates the collectability of future minimum lease payments on each direct financing lease primarily through the evaluation of payment history and the underlying creditworthiness of the tenant. There were no amounts past due as of December 31, 2018 and 2017. The Company’s direct financing leases are evaluated individually for the purpose of determining if an allowance is needed. Any write-down of an estimated residual value is recognized as an impairment loss in the current period and earned income adjusted prospectively. The Company's direct financing leases were acquired in connection with the Merger. There were no impairment losses on direct financing leases during the years ended December 31, 2018, 2017 or 2016.
The Company reviews its real estate investments and related lease intangibles periodically for indicators of impairment, including,
but not limited to: the asset being held for sale, vacant
or non-operating, ,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, the Company then evaluates if its carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows.
Impairment is then calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, as the amount by which the carrying value exceeds fair value less costs to sell. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. Key assumptions used in estimating future cash flows and fair values include, but are not limited to: signed purchase and sale agreements or letters of intent; recently quoted bid or ask prices, or market prices for comparable properties; estimates of residual values, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions, expenses based upon market conditions and capitalization rates; and expectations for the use of the real estate.
Gain or Loss on Disposition of Assets
When real estate properties are disposed of, the related net book value of the properties is removed and a gain or loss on disposition is recognized in our consolidated statements of operations as the difference between the proceeds from the disposition, net of any costs to revenue growth rates, interest rates, discount rates, capitalization rates, lease renewal probabilities, tenant vacancy ratessell, and other factors.the net book value. As leasing is the Company’s primary activity, the
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Company determined that its sales of real estate, which are nonfinancial assets, are sold to noncustomers and fall within the scope of ASC610-20.
The full gain or loss on the disposition of real estate properties is recognized at time of sale provided that the Company (i) has no controlling financial interest in the real estate and (ii) has no continuing interest or obligation with respect to the disposed real estate. Rental Income: Cash and Straight-line Rent
The Company primarily leases real estate to its tenants under long-term,
triple-net
leases that are classified as operating leases.
Lease origination feesTo evaluate lease classification, the Company assesses the terms and conditions of the lease to determine the appropriate lease term. The majority of our operating leases include one or more options to extend, typically for a period of five to ten years per renewal option. Excluding Walgreen Co., less than 1% of the Company’s operating leases at December 31, 2020 include an option to terminate. Walgreen Co. leases are
deferred and amortized overgenerally for fifty years or more with several five-year termination periods after an initialnon-cancellable
term. Less than 10% of the
relatedCompany’s operating leases at December 31, 2020 include an option to purchase, where the purchase option is generally determined based on fair market value of the underlying property. The Company does not include options to extend, terminate or purchase in its evaluation for lease
term as an adjustment toclassification purposes or for recognizing rental
revenue. Under a triple-net lease,income unless the Company is reasonably certain the tenant
will exercise the option.Another component of lease classification that requires judgment is
typicallythe residual value of the property at the end of the lease term. For acquisitions, the Company assumes a value that is equal to the tangible value of the property at the date of the assessment. For lease modifications, the Company generally uses sales comparables or a direct capitalization approach to determine fair value. The Company seeks to protect residual value through its underwriting of acquisitions, incorporating the proprietary Spirit Property Ranking Model which is real estate centric. Once a property is acquired, the lessee is responsible for
all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance
costs. Under certain leases, tenant reimbursement revenue, which is comprised of additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, is recognized as revenue in the period in which the related expenses are incurred. Tenant reimbursements are recorded on a gross basis in instances when our tenants reimburse us for property costs which we incur.Tenant receivables are carried net of the allowances for uncollectible amounts.property, including insurance protecting any damage to the property. To further protect residual value, the Company supplements the tenant insurance policy with a master policy covering all properties owned by the Company. As an active manager, the Company will occasionally invest in capital improvements on properties,re-lease
properties to new tenants or extend lease terms to protect residual value. The Company’s leases generally provide for rent escalations throughout the lease terms.term of the lease. For leases that provide for specific contractual escalations,with fixed rent escalators, rental revenueincome is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Accordingly, accrued rental revenue, calculated as the aggregate difference between the rental revenue recognized on a straight-line basis and scheduled rents, represents unbilled rent receivables that the Company will receive only if the tenants make all rent payments required through the expiration of the initial term of the leases. The accrued rental revenue representing this straight-line adjustment is subject to an evaluation for collectability, and the Company records a provision for losses against rental revenues if collectability of these future rents is not reasonably assured.
For leases
that havewith contingent rent escalators,
indexed to futurerental income typically increases
in the CPI, they may adjust overat a
one-year period or over multiple-year periods. Typically, these CPI-based escalators increase rent at the lesser of (a) multiple of any increase in the CPI over a specified period
and may adjust over aone-year
period or
(b) a fixed percentage.over multiple-year periods. Because of the volatility and uncertainty with respect to future changes in the CPI
and the Company’s inability to determine the extent to which any specific future change in the CPI is probable at each rent adjustment date during the entire term of these leases,
and the Company’s view that the multiplier does not represent a significant leverage factor,increases in rental revenue from leases with this type of escalator are recognized
only afterwhen the changes in the rental rates have occurred.
Some of the Company’s leases also provide for contingent rent based on a percentage of the tenant’s gross sales. For contingent rentals that are based on a percentage of the tenant’s gross sales, the Company recognizes contingentwhich is recognized as rental revenueincome when the change in the factor on which the contingent lease payment is based actually occurs.
Rental income is subject to an evaluation for collectability, which includes management’s estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. The Company suspendsdoes not recognize rental income for amounts that are not probable of collection.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Rental Income: Tenant Reimbursement Revenue
Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Certain leases contain additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, which arenon-lease
components. The Company has elected to combine all itsnon-lease
components, which were determined to have the same pattern of transfer as the related operating lease component, into a single combined lease component. Tenant reimbursement revenue
recognitionis variable and is recognized as revenue in the period in which the related expenses are incurred, with the related expenses included in property costs (including reimbursable) on the Company’s consolidated statements of operations. Tenant reimbursements are recorded on a gross basis in instances when our tenants reimburse us for property costs which we incur. Tenant receivables are reduced for amounts that are not probable of collection. Rental Income: Intangible Amortization
Initial direct costs associated with the origination of a lease are deferred and amortized as an adjustment to rental revenue. Above-market and below-market lease intangibles are amortized as a decrease and increase, respectively, to rental revenue.In-place
lease intangibles are amortized on a straight-line basis and included in depreciation and amortization expense. All lease intangibles are amortized over the remaining term of the respective leases, which includes the initial term of the lease and may also include the renewal periods if the
collectabilityCompany believes it is reasonably certain the tenant will exercise the renewal option. If the Company subsequently determines it is reasonably certain that the tenant will not exercise the renewal option, the unamortized portion of
amounts due pursuant to aany related lease
intangible is
not reasonably assured or ifaccelerated over the
tenant’s monthlyremaining initial term of the lease. If the Company believes the intangible balance is no longer recoverable, the unamortized portion of any related lease
payments become more than 60 days past due, whicheverintangible is
earlier.immediately recognized in impairments in the Company’s consolidated statements of operations. Other Income: Lease Termination Fees
Lease termination fees are included in other income on the Company’s consolidated statements of operations and are recognized when there is a signed termination agreement and all of the conditions of the agreement have been met. The Company recorded lease termination fees of $0.3$0.7 million, $5.0$0.4 million and $7.3$0.3 million during the years ended December 31, 2020, 2019 and 2018, 2017respectively.
Loans receivable consists of mortgage loans, net of premium, and
2016, respectively.notes receivables. Interest on loans receivable is recognized using the effective interest rate method. In September 2020, all the Company’s first-priority mortgage loans were fully paid off. A loan is placed onnon-accrual
status when the loan has become 60 days past due, or earlier if management determines that full recovery of the contractually specified payments of principal and interest is doubtful. While onnon-accrual
status, interest income is recognized only when received. No loans receivable were onnon-accrual
status as of December 31, 2019. Delinquent loans receivable are written off against the allowance when all possible means of collection have been exhausted.Allowance for Doubtful Accounts
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. The Company invests cash primarily in money market funds of major financial institutions with fund investments consisting of highly-rated money market instruments and other short-term instruments. Restricted cash is classified within deferred costs and other assets, net in the accompanying consolidated balance sheets. Cash, cash equivalents and restricted cash consisted of the following (in thousands):
| | | | | | | | | | | | |
| | |
| | |
| |
| |
Cash and cash equivalents | | $ | 70,303 | | | $ | 14,492 | | | $ | 14,493 | |
| | | | | | | | | | | | |
| | | 335 | | | | 347 | | | | 351 | |
Tenant improvements, repairs and leasing commissions (2) | | | 12,660 | | | | 10,877 | | | | 9,093 | |
| | | 0 | | | | 0 | | | | 7,412 | |
1031 Exchange proceeds, net | | | 0 | | | | 0 | | | | 45,042 | |
| | | 0 | | | | 307 | | | | 1,030 | |
| | | | | | | | | | | | | |
Total cash, cash equivalents and restricted cash | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
| (1) | Funds held in lender-controlled accounts generally used to meet future debt service or certain property operating expenses. |
| (2) | Deposits held as additional collateral support by lenders to fund improvements, repairs and leasing commissions incurred to secure a new tenant. |
| (3) | Proceeds from the sale of assets pledged as collateral under either Master Trust 2013 or Master Trust 2014, which were held on deposit until a qualifying substitution was made or the funds were applied as prepayment of principal. The Master Trust 2014 notes were included in theSpin-Off to SMTA. The Master Trust 2013 notes were extinguished in June 2019. |
| (4) | Funds held in lender-controlled accounts released after scheduled debt service requirements are met. |
The Company reviews its rent and other tenant receivables for collectability on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area in which the tenant operates. If the collectability of a receivable with respect to any tenant is
in doubt,not probable of collection, a
provision for uncollectible amounts will be established or a direct
write-off
of the specific receivable will be made. The Company
provided for reserves for uncollectible amounts totaling $4.9had accounts receivable balances of $29.5 million and
$12.4$7.7 million at December 31,
20182020 and
2017,2019, respectively,
against accounts receivable balancesafter the impact of
$12.4$13.1 million and
$27.2$3.8 million
respectively.of receivables, respectively, were deemed not probable of collection. Receivables are recorded within deferred cost and other assets, net in the accompanying consolidated balance sheets.
Receivables are written off against the reserves for uncollectible amounts when all possible means of collection have been exhausted.SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
For receivable balances related to the straight-line method of reporting rental revenue, the collectability review includes management’s estimatesis assessed in conjunction with the evaluation of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience.rental income as described above. The Company has a reserve for losseshad straight-line rent receivables of $1.1$93.1 million and $1.8$83.6 million at December 31, 20182020 and 2017,2019, respectively, against straight-line receivablesafter the impact of $69.4$14.5 million and $81.6$0.4 million respectively.of receivables, respectively, were deemed not probable of collection. These receivables are recorded within deferred costs and other assets, net in the accompanying consolidated balance sheets.
Preferred equity investment in SMTA
The Company's preferred equity investment in SMTA is accounted for at cost, less impairments, if any. The Company periodically reviews its preferred equity investment in SMTA for indicators of impairment, which include, but are not limited to: annual dividend declarations less than the contractual dividend rate, payment of the Asset Management Agreement in SMTA preferred stock in lieu of cash, or a significant decline in SMTA's liquidity. As of December 31, 2018, the Company's investment was evaluated for impairment and none was recorded. Dividends from the preferred equity investment in SMTA are recognized when dividends are declared, and are reflected as preferred dividend income from SMTA in the consolidated statements of operations. See Note 11 for further discussion.
Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.
The FASB issued ASU2017-04,
Simplifying the Test for Goodwill Impairment,
Company adopted
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
effective January 1, 2020. ASU2017-04
simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. Instead, an entity should compare the fair value of each reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. No impairment was recorded for the periods presented.
TheSpin-Off
Prior to the Company's adoption of ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, on January 1, 2017 on a prospective basis, when the Company disposed of a real estate asset that constituted a business under GAAP, a portion of goodwill was allocated to the carrying value of the real estate asset considered to be a business to determine the gain or loss on the disposal. The portion of goodwill allocated was derived from the proportionate fair value of the business to the fair value of the Company’s reporting unit. Goodwill related to real estate assets not previously classified as held for sale of $6.3 million was written off during the year ended December 31, 2016. Under the new guidance, the dispositions of properties generally no longer qualify as a disposition of a business and therefore no allocation of goodwill occurs when determining gain or loss on sale. The Spin-Off of SMTA during the year ended December 31, 2018 did qualify as a disposition of a business, resulting in a reduction in goodwill. See Note 12 for additional discussion.
The following table presents a reconciliation of the Company’s goodwill (in thousands):
|
| | | |
| | Consolidated |
| Balance as of December 31, 2015 | $ | 264,350 |
|
| Goodwill allocated to dispositions of a business | (10,010 | ) |
| Balance as of December 31, 2016 | 254,340 |
|
| Goodwill allocated to dispositions of a business | — |
|
| Balance as of December 31, 2017 | 254,340 |
|
| Goodwill allocated to dispositions of a business (Spin-Off of SMTA) | (28,740 | ) |
| Balance as of December 31, 2018 | $ | 225,600 |
|
Loans Receivable
Loans receivable consists of mortgage loans, net of premium, and notes receivables. Interest on loans receivable is recognized using the effective interest rate method.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
| | | | |
| | | |
Balance as of December 31, 2017 | | $ | 254,340 | |
Goodwill allocated to dispositions of a business (Spin-Off of SMTA) | | | (28,740 | ) |
| | | | | |
Balance as of December 31, 2018 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2019 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2020 | | $ | 225,600 | |
| | | | | |
Impairment and Allowance for Loan Losses
The Company periodically evaluates the collectability of its loans receivable, including accrued interest, by analyzing the underlying property-level economics and trends, collateral value and quality, and other relevant factors in determining the adequacy of its allowance for loan losses. A loan is determined to be impaired when, in management’s judgment based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Specific allowances for loan losses are provided for impaired loans on an individual loan basis in the amount by which the carrying value exceeds the estimated fair value of the underlying collateral less disposition costs. Delinquent loans receivable are written off against the allowance when all possible means of collection have been exhausted. As of December 31, 2018, there was no allowance for loan losses and a $0.4 million allowance for loan losses as of December 31, 2017.
A loan is placed on non-accrual status when the loan has become 60 days past due, or earlier if management determines that full recovery of the contractually specified payments of principal and interest is doubtful. While on non-accrual status, interest income is recognized only when received. No mortgage loans were on non-accrual status as of December 31, 2018, compared to five with a balance of $1.5 million as of December 31, 2017. No other notes receivable were on non-accrual status as of December 31, 2018 or December 31, 2017.
Accounting for Derivative Financial Instruments and Hedging Activities
The Company utilizesmay utilize derivative instruments such as interest rate swaps and caps for purposes of hedging exposures to fluctuations in interest rates associated with certain of its financing transactions. At the inception of a hedge transaction, the Company enters into a contractual arrangement with the hedge counterparty and formally documents the relationship between the derivative instrument and the financing transaction being hedged, as well as its risk management objective and strategy for undertaking the hedge transaction. The fair value of the derivative instrument is recorded on the balance sheet as either an asset or liability. At inception and at least quarterly thereafter, a formal assessment is performed to determine whether the derivative instrument has been highly effective in offsetting changes in cash flows of the related financing transaction and whether it is expected to be highly effective in the future. In December 2018, the Company adopted ASU 2017-12, see New Accounting Pronouncements described below.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. The Company invests cash primarily in money market funds of major financial institutions with fund investments consisting of highly-rated money market instruments and other short-term instruments. Restricted cash is classified within deferred costs and other assets, netrecognizes the entire change in the accompanying consolidated balance sheets. Cash,fair value of cash equivalents and restricted cash consisted of the following (in thousands):
|
| | | | | | | | | | | |
| | December 31, 2018 | | December 31, 2017 | | December 31, 2016 |
| Cash and cash equivalents | $ | 14,493 |
| | $ | 8,798 |
| | $ | 10,059 |
|
| Restricted cash: | | | | | |
Collateral deposits (1) | 351 |
| | 1,751 |
| | 2,044 |
|
Tenant improvements, repairs, and leasing commissions (2) | 9,093 |
| | 8,257 |
| | 9,739 |
|
Master Trust Release (3) | 7,412 |
| | 85,703 |
| | 14,412 |
|
Liquidity reserve (4) | — |
| | 5,503 |
| | — |
|
| 1031 Exchange proceeds, net | 45,042 |
| | — |
| | — |
|
Other (5) | 1,030 |
| | 4,695 |
| | 644 |
|
| Total cash, cash equivalents and restricted cash | $ | 77,421 |
| | $ | 114,707 |
| | $ | 36,898 |
|
(1) Funds held in lender controlled accounts generally used to meet future debt service or certain property operating expenses.
(2) Deposits held as additional collateral support by lenders to fund improvements, repairs and leasing commissions incurred to secure a new tenant.
(3) Proceeds from the sale of assets pledged as collateral under either Master Trust 2013 or Master Trust 2014, which are held on deposit until a qualifying substitution is made or the funds are applied as prepayment of principal.
(4) Liquidity reserve cash was placed on deposit for Master Trust 2014 and is held until there is a cashflow shortfall or upon achieving certain performance criteria, as definedflow hedges included in the agreements governing Master Trust 2014, or a liquidationassessment of Master Trust 2014 occurs.hedge effectiveness in other comprehensive (loss) income. The amounts recorded in other comprehensive (loss) income will subsequently be reclassified to earnings when the hedged item affects earnings.
(5) Funds held in lender controlled accounts released after scheduled debt service requirements are met.
The CompanyCorporation has elected to be taxed as a REIT under the Code. As a REIT, the CompanyCorporation generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of itsthe Company’s assets, the amounts distributed to itsthe Corporation’s stockholders and the ownership of CompanyCorporation stock. Management believes the CompanyCorporation has qualified and will continue to qualify as a REIT and, therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Even if the CompanyCorporation qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income.
Taxable income
from non-REIT activities managed throughearned by any of the Company’s taxable REIT subsidiaries,
including fromnon-REIT
activities, is subject to federal, state and local
taxes,taxes. The rights and obligations of the Asset Management Agreement were transferred to SRAM, a wholly-owned taxable REIT subsidiary of Spirit, on April 1, 2019, which
are not material.was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective from September 20, 2019through its termination effective September
4, 2020. Accordingly, all asset management fees earned from April 1, 2019 through September 4, 2020, including the termination fee income earned in September 2019, were subject to income tax. See Note 13 for additional discussion.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Operating Partnership is a partnership for federal income tax purposes. Partnerships are pass-through entities and are not subject to U.S. federal income taxes, therefore no 0
provision has been made for federal income taxes in the accompanying consolidated financial statements. Although most states and cities where the Operating Partnership operates follow the U.S. federal income tax treatment, there are certain jurisdictions such as Texas, Tennessee and Ohio that impose income or franchise taxes on a partnership.
Franchise taxes are included in general and administrative expenses on the accompanying consolidated statements of operations.
On May 31, 2018, the Company completed the Spin-Off of Spirit MTA REIT through a distribution of shares in SMTA to the Company’s shareholders. The distribution resulted in a deemed sale of assets and recognition of taxable gain by the Company, which is entitled to a dividends paid deduction equal to the value of the shares in SMTA that it distributed. The Company believes that its dividends paid deduction for 2018, including the value of the SMTA shares distributed, will equal or exceed its taxable income, including the gain recognized. As a result, the Company does not expect the distribution to result in current tax other than an immaterial amount of state and local tax which has been recognized in the accompanying consolidated financial statements.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Earnings Per Share and Unit
The Company’s unvested restricted common stock, which contains
non-forfeitable
rights to receive dividends, are considered participating securities requiring the
two-class
method of computing earnings per share and unit. Under the
two class two-class
method, earnings attributable to unvested restricted shares are deducted from income from continuing operations in the computation of net income attributable to common stockholders. Under the
two-class
method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the
two-class
method, undistributed earnings are allocated to both common shares and participating securities based on their respective weighted average shares outstanding during the period. Under the terms of the Amended Incentive Award Plan,
and the related restricted stock awards (see Note 9)
, losses are not allocated
to participating securitieslosses, including undistributed losses as a result of dividends declared exceeding net income. The Company uses income or loss from continuing operations as the basis for determining whether potential common shares are dilutive or
anti-dilutive
and undistributed net income or loss as the basis for determining whether undistributed earnings are allocable to participating securities.
Forward Equity Sale Agreements
The Company may enter into forward sale agreements for the sale and issuance of shares of our common stock, either through an underwritten public offering or through our ATM Program. These agreements may be physically settled in stock, settled in cash, or net share settled at the Company’s election. The Company evaluated the forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity. Before any issuance of shares of our common stock to physically settle a forward sale agreement, such forward sale agreement will be reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of our common stock used in diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of our common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of our common stock that could be purchased by us in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to physical settlement or net share settlement of a forward sale agreement, there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the adjusted forward sale price. However, if we decide to physically settle or net share settle such forward sale agreement, delivery of our shares on any physical settlement or net share settlement of the forward sale agreement will result in dilution to our earnings per share.
Unaudited Interim Information
The consolidated quarterly financial data in Note 1514 is unaudited. In the opinion of management, this financial information reflects all adjustments necessary for a fair presentation of the respective interim periods. All such adjustments are of a normal recurring nature.
New Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606. This new guidance establishes a principles-based approach for accounting for revenue from contracts with customers and is effective for annual reporting periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. The Company adopted the new revenue recognition standard effective January 1, 2018 under the modified retrospective method, and elected to apply the standard only to contracts that were not completed as of the date of adoption (i.e., January 1, 2018). In evaluating the impact of this new standard, the Company identified that lease contracts covered by Leases (Topic 840) are excluded from the scope of this new guidance. As such, this ASU had no material impact on the Company's reported revenues, results of operations, financial position or disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. Leases pursuant to which the Company is the lessee consist of its corporate office, ground leases and equipment leases. The amendments in this ASU are effective for the fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified restrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company has elected to use all of the practical expedients available for adoption of this ASU except for the hindsight expedient, which would require the re-evaluation of the lease term on all leases using current facts and circumstances. The Company has evaluated implementation of the ASU and does not anticipate the overall impact of this ASU on its consolidated financial statements to be material. The Company anticipates the recognition of leases on its consolidated balance sheet for lessee contracts will represent less than 1% of total assets and of total liabilities as of December 31, 2018.
In June 2016, the FASB issued ASU2016-13,
Measurement of Credit Losses on Financial Instruments
2016-13
requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
expected to be collected. ASU
2016-13
is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal
years. Early adoption is permitted for fiscal years,
beginning after December 15, 2018, including interim periods within those fiscal years.and as such, the Company adopted ASU2016-13
effectiveJanuary 1, 2020. Per the subsequently issued ASU
2018-19,
receivables arising from operating leases are not within the scope of ASU
2016-13.
The Company reviewed receivables within the scope of ASU2016-13
totaling $40.3 million as of January 1, 2020, which were comprised of loans receivable and real estate assets held under direct financing lease. There were no amounts past due related to these receivables. As such, the Company is currently evaluatingdetermined the impact of this ASU on its consolidated financial statements, but does not expect its impact to be material.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
In August 2016,key credit quality indicator was the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively ascredit rating of the earliest date practicable. The Company adopted ASU 2016-15 effective January 1, 2018 and has applied it retrospectively.borrower, coupled with remaining time to maturity. As a result, ofthe adoption debt prepayment and debt extinguishment costs, previously presented in operating activities, are now presented in financing activitiesASU2016-13
resulted in the consolidated statementsrecognition of cash flows. Therea loss of $0.3 million on January 1, 2020, which was no impactrecorded in impairments on the statementsaccompanying consolidated statement of cash flowsoperations.In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic. The FASB noted that the underlying premise in requiring a modified lease to be accounted for as if it were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the
Company for other typesremainder of
transactions. In November 2016,the lease term. As such, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This guidance requiresstaff clarified that it would be acceptable for entities to include restricted cashmake an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and restricted cash equivalents withinobligations for those concessions existed (regardless of whether those enforceable rights and obligations for the cash and cash equivalents balances presentedconcessions explicitly exist in the statement of cash flows. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and the new guidance is to be applied retrospectively.contract). The Company adopted ASU 2016-18 effective January 1, 2018made this election and applied it retrospectively. Asaccounts for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period, resulting in $26.3 million of deferrals being recognized in rental income for the year ended December 31, 2020. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Lease concessions other than rent deferrals are evaluated to determine if a result, restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconcilingsubstantive change to the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows.In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activitiesconsideration in the financial statements. The Company early adopted ASU 2017-12 effective December 2018,original lease contract has occurred and should be accounted for as a lease modification. Management continues to evaluate any amounts recognized for collectability, regardless of whether accounted for as a lease modification or not, and records a provision for losses against rental income for amounts that are not probable of collection. For lease concessions granted in conjunction with entering into interest rate swaps, see Note 7. As the Company did not have other derivatives outstanding at time of adoption, no prior period adjustments were required. Prior to the adoption of ASU 2017-12, the Company was required to separately measure and reflect the amount by which the hedging instrument did not offset the changes in the cash flows of hedged items, which was referred to as the ineffective amount. The Company assessed hedge effectivenessCOVID-19
pandemic, management reviewed all amounts recognized on a quarterly basis and recorded the gain or loss related to the ineffective portion of derivative instruments, if any, in general and administrative expense in the consolidated statements of operations. Pursuant to the provisions of ASU 2017-12, the Company is no longer required to separately measure and recognize hedge ineffectiveness. Instead, the Company recognizes the entire change in the fair value of cash flow hedges included in the assessment of hedge effectiveness in other comprehensive (loss) income. The amounts recorded in other comprehensive (loss) income will subsequently be reclassified to earnings when the hedged item affects earnings. The adoption of ASU 2017-12 did not have a material impact on our consolidated financial statements.for collectability.As of December 31, 2018,2020, the Company’s gross investment in owned real estate properties and loans totaled approximately $5.12 billion, representing investments in 1,514 properties, including 52 properties or other related assets securing mortgage loans.$6.8 billion. The gross investment is comprised of land, buildings, lease intangible assets and lease intangible liabilities, as adjusted for any impairment, and the carrying amount of loans receivable, real estate assets held under direct financing leases and real estate assets held for sale. The portfolio is geographically dispersed throughout 4948 states with Texas, at 10.7%, as the only one state Texas, with a real estategross investment of 12.0%, accounting for moregreater than 10.0% of the total dollar amountgross investment of the Company’s real estate investmententire portfolio.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
During the years ended December 31, 20182020 and 2017,2019, the Company had the following real estate and loan activity, net of accumulated depreciation and amortization:amortization (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Dollar Amount of Investments |
| | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2018 | | | 1,459 | | | | 3 | | | | 1,462 | | | $ | 5,054,523 | | | $ | 22,064 | | | $ | 5,076,587 | |
Acquisitions/improvements (1) | | | 334 | | | | 0 | | | | 334 | | | | 1,344,843 | | | | 0 | | | | 1,344,843 | |
Dispositions of real estate (2)(3) | | | (16 | ) | | | (28 | ) | | | (44 | ) | | | (98,327 | ) | | | (140,909 | ) | | | (239,236 | ) |
Transfers to Held for Sale | | | (27 | ) | | | 27 | | | | 0 | | | | (128,396 | ) | | | 128,396 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (18,974 | ) | | | (5,117 | ) | | | (24,091 | ) |
Reset of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (12,894 | ) | | | (3,211 | ) | | | (16,105 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2019 | | | 1,750 | | | | 2 | | | | 1,752 | | | | 6,140,775 | | | | 1,223 | | | | 6,141,998 | |
Acquisitions/improvements (1) | | | 146 | | | | 0 | | | | 146 | | | | 880,897 | | | | 0 | | | | 880,897 | |
Dispositions of real estate (2) | | | (20 | ) | | | (18 | ) | | | (38 | ) | | | (53,985 | ) | | | (32,028 | ) | | | (86,013 | ) |
Transfers to Held for Sale | | | (23 | ) | | | 23 | | | | 0 | | | | (72,912 | ) | | | 72,912 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (70,376 | ) | | | (11,100 | ) | | | (81,476 | ) |
Res e t of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (45,386 | ) | | | (3,243 | ) | | | (48,629 | ) |
| | | 0 | | | | 0 | | | | 0 | | | | (1,340 | ) | | | — | | | | (1,340 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2020 | | | 1,853 | | | | 7 | | | | 1,860 | | | $ | 6,777,673 | | | $ | 27,764 | | | $ | 6,805,437 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Accumulated depreciation and amortization | | | | | | | | | | | | | | | (981,866 | ) | | | (1,943 | ) | | | (983,809 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net balance, December 31, 2020 (6) | | | | | | | | | | | | | | $ | 5,795,807 | | | $ | 25,821 | | | $ | 5,821,628 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | Number of Properties | | Dollar Amount of Investments |
| | Owned | | Financed | | Total | | Owned | | Financed | | Total |
| | | | | | |
| | (In Thousands) |
| Gross balance, December 31, 2016 | 2,541 |
| | 74 |
| | 2,615 |
| | $ | 8,181,076 |
| | $ | 66,578 |
| | $ | 8,247,654 |
|
Acquisitions/improvements (1) | 43 |
| | 16 |
| | 59 |
| | 326,766 |
| | 23,300 |
| | 350,066 |
|
Dispositions of real estate (2)(3) | (192 | ) | | — |
| | (192 | ) | | (510,863 | ) | | — |
| | (510,863 | ) |
| Principal payments and payoffs | — |
| | (2 | ) | | (2 | ) | | — |
| | (7,878 | ) | | (7,878 | ) |
| Impairments | — |
| | — |
| | — |
| | (101,941 | ) | | (389 | ) | | (102,330 | ) |
| Write-off of gross lease intangibles | — |
| | — |
| | — |
| | (67,139 | ) | | — |
| | (67,139 | ) |
| Loan premium amortization and other | — |
| | — |
| | — |
| | (4,841 | ) | | (1,644 | ) | | (6,485 | ) |
| Gross balance, December 31, 2017 | 2,392 |
| | 88 |
| | 2,480 |
| | 7,823,058 |
| | 79,967 |
| | 7,903,025 |
|
Acquisitions/improvements (1) | 21 |
| | 2 |
| | 23 |
| | 308,985 |
| | 37,888 |
| | 346,873 |
|
Dispositions of real estate (2)(3) | (52 | ) | | (5 | ) | | (57 | ) | | (126,961 | ) | | — |
| | (126,961 | ) |
| Principal payments and payoffs | — |
| | (31 | ) | | (31 | ) | | — |
| | (30,863 | ) | | (30,863 | ) |
| Impairments | — |
| | — |
| | — |
| | (17,668 | ) | | — |
| | (17,668 | ) |
| Write-off of gross lease intangibles | — |
| | — |
| | — |
| | (54,820 | ) | | — |
| | (54,820 | ) |
| Loan premium amortization and other | — |
| | — |
| | — |
| | (955 | ) | | (2,060 | ) | | (3,015 | ) |
| Spin-off to SMTA | (899 | ) | | (2 | ) | | (901 | ) | | (2,855,052 | ) | | (37,888 | ) | | (2,892,940 | ) |
| Gross balance, December 31, 2018 | 1,462 |
| | 52 |
| | 1,514 |
| | $ | 5,076,587 |
| | $ | 47,044 |
| | $ | 5,123,631 |
|
| Accumulated depreciation and amortization | | | | | | | (727,533 | ) | | — |
| | (727,533 | ) |
| Net balance, December 31, 2018 | | | | | | | $ | 4,349,054 |
| | $ | 47,044 |
| | $ | 4,396,098 |
|
| (1) | |
(1)
| Includes investments of $46.0$10.0 million and $42.6$45.0 million, respectively, in revenue producing capitalized expenditures, as well as $6.3$2.5 million and $3.5$4.6 million, respectively, ofnon-revenue producing capitalized expenditures for the years ended December 31, 20182020 and 2017.2019. |
| (2) | |
(2)
| The total accumulated depreciation and amortization associated with dispositions of real estate was $19.5 million and $57.1 million, respectively, for the years ended December 31, 2018 and 2017. |
| |
(3)
| The total gain on disposal of assets for properties held in use was $1.4$10.2 million, $24.6$26.5 million and $35.8$1.4 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. The total gain on disposal of assets for properties held for sale was $13.0$14.2 million, $40.5$32.4 million and $16.6$13.0 million for the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, respectively. |
| (3) | Includes 1property with a real estate investment of $0.8 million that was transferred to the lender during the year ended December 31, 2019. |
| (4) | Impairments on owned real estate is comprised of real estate and intangible asset impairment and allowance for credit losses on direct financing leases. |
| (5) | Representswrite-off of gross investment balances against the related accumulated depreciation and amortization balances as a result of basis reset due to impairment or intangibles which have been fully amortized. |
| (6) | Reconciliation of total owned investments to the accompanying consolidated balance sheet at December 31, 2020 is as follows: |
| | | | |
| | | 5,943,530 | |
Intangible lease liabilities, net | | | (121,902 | ) |
| | | | |
| | $ | 5,821,628 | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
As of December 31, 2020, 2019, and 2018, the Company held 1,852, 1,745, and 1,453 properties under operating leases, respectively. The following table summarizes the components of rental income recognized on these operating leases in the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | $ | 453,013 | | | $ | 404,720 | | | $ | 466,658 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | | | | 14,931 | |
Straight-line rent, net of uncollectible reserve (2) | | | 11,876 | | | | 16,924 | | | | 16,461 | |
Amortization of above - and below - market lease intangibles, net (3) | | | 1,836 | | | | 4,310 | | | | 4,943 | |
| | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 502,993 | |
| | | | | | | | | | | | | |
| (1) | Includes net impact of (amounts not deemed probable of collection)/amounts recovered of $(10.9) million, $0.4 million, and $( 0.5) million for the years ended December 31, 2020, 2019 and 2018, respectively. |
| (2) | Includes net impact of amounts not deemed probable for collection of $14.9 million, $0.2 million, andfor the years ended December 31, 2020, 2019 and 2018, respectively. As a result of the Company’s adoption of ASU2016-02 on January 1, 2019, the Company reclassified bad debt expense to rental income on a prospective basis. |
| (3) | Excludes amortization of in-place leases of $34.8 million, $29.8 million,and $32.6 million for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. |
Scheduled minimum future contractual rent to be received under the remaining
non-cancelable non-cancellable
term of
thethese operating leases (including
realizedcontractual fixed rent increases occurring
on or after January 1,
2019)2021) at December 31, 2020 are as follows (in thousands):
| | | | |
| | |
|
| | $ | 505,018 | |
| | | 495,232 | |
| | | 477,604 | |
| | | 455,840 | |
| | | 442,818 | |
| | | 3,207,076 | |
| | | | | |
Total future minimum rentals | | $ | 5,583,588 | |
| | | | | |
|
| | | |
| | December 31,
2018 |
| 2019 | $ | 379,353 |
|
| 2020 | 374,010 |
|
| 2021 | 354,562 |
|
| 2022 | 332,489 |
|
| 2023 | 308,001 |
|
| Thereafter | 2,180,140 |
|
| Total future minimum rentals | $ | 3,928,555 |
|
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Because lease renewal periods are exercisable at the option of the lessee,lessees’ options, the preceding table presents future minimum lease payments due during the initial lease term only. In addition, the future minimum rentals do not include any contingent rentals based on a percentage of the lessees’ gross sales or lease escalations based on future changes in the CPI or other stipulated reference rate.CPI.
Loans ReceivableThe following table details loans receivable, net of premiums, discounts and allowance for loan losses (in thousands):
|
| | | | | | | |
| | December 31,
2018 | | December 31,
2017 |
| Mortgage loans - principal | $ | 42,660 |
| | $ | 69,963 |
|
| Mortgage loans - premium, net of amortization | 2,527 |
| | 5,038 |
|
| Allowance for loan losses | — |
| | (389 | ) |
| Mortgage loans, net | 45,187 |
| | 74,612 |
|
| Other note receivables - principal | 2,082 |
| | 5,355 |
|
| Other note receivables - discount, net of amortization | (225 | ) | | — |
|
| Other note receivables | 1,857 |
| | 5,355 |
|
| Total loans receivable, net | $ | 47,044 |
| | $ | 79,967 |
|
As of
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018 and 2017, the Company held a total of 3 and 10, respectively, first-priority mortgage loans (representing loans to three and six borrowers, respectively). The mortgage loans are secured by single-tenant commercial properties and generally have fixed interest rates over the term of the loans. There are two other notes receivable as of December 31, 2018, of which one $0.1 million note is secured by tenant assets and stock and the remaining note is unsecured. As of December 31, 2017, there were three other notes receivable, of which one $3.5 million note was secured by tenant assets and stock and the remaining two notes were unsecured.2020
The following table details lease intangible assets and liabilities, net of accumulated amortization (in thousands):
|
| | | | | | | |
| | December 31,
2018 | | December 31,
2017 |
| In-place leases | $ | 381,143 |
| | $ | 591,551 |
|
| Above-market leases | 62,902 |
| | 89,640 |
|
| Less: accumulated amortization | (149,582 | ) | | (271,288 | ) |
| Intangible lease assets, net | $ | 294,463 |
| | $ | 409,903 |
|
| | | | |
| Below-market leases | $ | 167,527 |
| | $ | 216,642 |
|
| Less: accumulated amortization | (47,365 | ) | | (61,339 | ) |
| Intangible lease liabilities, net | $ | 120,162 |
| | $ | 155,303 |
|
| | | | | | | | |
| | |
| |
|
| | $ | 473,062 | | | $ | 457,616 | |
| | | 83,185 | | | | 95,002 | |
Less: accumulated amortization | | | (188,258 | ) | | | (167,539 | ) |
| | | | | | | | | |
Intangible lease assets, net | | $ | 367,989 | | | $ | 385,079 | |
| | | | | | | | | |
| | | |
| | $ | 178,614 | | | $ | 176,816 | |
Less: accumulated amortization | | | (56,712 | ) | | | (49,481 | ) |
| | | | | | | | | |
Intangible lease liabilities, net | | $ | 121,902 | | | $ | 127,335 | |
| | | | | | | | | |
The amounts amortized as a net increase to rental revenue for capitalized above and below-market leases were $5.5 million, $6.5 million and $6.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. The value of in-place leases amortized and included in depreciation and amortization expense was $32.6 million, $43.3 million and $46.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. The remaining weighted average amortization period for in-place leases, above-market leases, below-market leases and in total was 14.012.8 years, 10.111.0 years, 17.717.4 years and 10.613.7 years, respectively, as of December 31, 2018.2020. The remaining weighted average amortization period for in-place leases, above-market leases, below-market leases and in total was 13.8
13.4 years,
9.510.9 years,
17.518.1 years and
10.6 14.2years, respectively, as of December 31, 2017.2019. During the year ended December 31, 2018,2020, the Company acquired in-place lease intangible assets of $21.7$47.7 million, above-market lease intangible assets of $3.5 million and below-market lease intangible liabilities of $0.4$6.3 million. During the year ended December
31, 2019, the Company acquiredin-place
lease intangible assets of $100.3 million, above-market lease intangible assets of $33.3 million and below-market lease intangible liabilities of $20.9 million.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Based on the balance of intangible assets and liabilities at December 31, 2018,2020, the net aggregate amortization expense for the next five years and thereafter is expected to be as follows (in thousands):
| | | | |
| | | |
| | $ | 32,658 | |
| | | 30,592 | |
| | | 28,936 | |
| | | 26,917 | |
| | | 23,503 | |
| | | 103,481 | |
| | | | | |
Total future minimum amortization | | $ | 246,087 | |
| | | | | |
|
| | | |
| 2019 | $ | 22,538 |
|
| 2020 | 21,650 |
|
| 2021 | 20,034 |
|
| 2022 | 17,658 |
|
| 2023 | 16,472 |
|
| Thereafter | 75,949 |
|
| Total future minimum amortization | $ | 174,301 |
|
The componentsAs of
real estate investmentsDecember 31, 2019, the Company held 2 properties under direct financing leases, which were held in use.During the year ended
December 31, 2020, 1 of the properties was reclassified to an operating lease. For the remaining property held under direct financing leases werelease, the property had
$3.6 million in scheduled minimum future payments to be received under its remainingnon-cancellable
lease term as follows (in thousands):of December 31, 2020. The
Company evaluated the collectability of the amounts receivable under the direct financing lease and recorded a reserve for uncollectible amounts totaling $0.3 million in the first quarter of 2020, primarily as a result of the borrower’s credit rating beingnon-investment
grade and the initial term extending until 2027. The Company reversed $0.2 million of the reserve in the third quarter of 2020 as a result of improvement in the borrower’s credit and, as of December 31, 2020, there was a remaining reserve of $0.1 million against the net investment balance of $7.6 million. |
| | | | | | | |
| | December 31,
2018 | | December 31, 2017 |
| Minimum lease payments receivable | $ | 5,390 |
| | $ | 7,325 |
|
| Estimated residual value of leased assets | 20,097 |
| | 24,552 |
|
| Unearned income | (5,198 | ) | | (7,012 | ) |
| Real estate assets under direct financing leases, net | $ | 20,289 |
| | $ | 24,865 |
|
Real Estate Assets Held for Sale
The Company is continually evaluating the portfolioAs of real estate assets and may elect to dispose of assets considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, associated indebtedness, asset location, and tenant operation type (e.g., industry, sector, or concept/brand). Real estate assets held for sale are expected to be sold within twelve months. The following table shows the activity in real estate assets held for sale, net for the years ended December 31, 20182019, the Company held 2 first-priority mortgage loans. The mortgage loans were secured by single-tenant commercial properties and 2017:had fixed interest rates over the term of the loans. There were 2 other
|
| | | | | | |
| | Number of Properties | | Carrying Value |
| | (In Thousands) |
| Balance, December 31, 2016 | 44 |
| | $ | 160,570 |
|
| Transfers from real estate investments | 82 |
| | 216,502 |
|
| Sales | (91 | ) | | (208,029 | ) |
| Transfers to real estate investments held and used | (20 | ) | | (95,382 | ) |
| Impairments | — |
| | (24,732 | ) |
| Balance, December 31, 2017 | 15 |
| | 48,929 |
|
| Transfers from real estate investments | 9 |
| | 39,488 |
|
| Sales | (9 | ) | | (35,657 | ) |
| Transfers to real estate investments held and used | (7 | ) | | (25,715 | ) |
| Transfers to SMTA | (5 | ) | | (7,853 | ) |
| Impairments | — |
| | (989 | ) |
| Balance, December 31, 2018 | 3 |
| | $ | 18,203 |
|
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Impairmentsnotes receivable as of December 31, 2019. One was secured by tenant assets and stock with a principal outstanding of $37 thousand, and the other was unsecured with a balance of $1.9 million as of December 31,
As of December 31, 2020, all of the Company’s loans receivablewere
fully paid off. The Company had evaluated the collectability of the amounts receivable under the loans receivable and recorded an allowance for loan losses of $0.3 million in the first quarter of 2020, primarily driven by the borrowers’ having investment grade credit ratings and maturities in 2020. The Company reversed $0.2 million of the reserve in the second quarter of 2020 due to the shorter time to maturity and no change in the borrower’s credit ratings. The remaining $0.1 million of the reserve was reversed during the third quarter of 2020 due to the repayment of the remaining loans. During the years ended December 31, 2020 and 2019, the Company had the following loan activity (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | |
Principal, December 31, 2018 | | | 52 | | | $ | 42,660 | | | $ | 2,082 | | | $ | 44,742 | |
Principal payments and payoffs | | | (9 | ) | | | (10,927 | ) | | | (110 | ) | | | (11,037 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2019 | | | 43 | | | | 31,733 | | | | 1,972 | | | | 33,705 | |
Principal payments and payoffs | | | (43 | ) | | | (31,733 | ) | | | (1,972 | ) | | | (33,705 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2020 | | | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | |
Impairments and Allowance for Credit Losses
The following table summarizes total impairments and allowance for credit losses recognized in continuing and discontinued operations on the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | |
Real estate asset impairment | | $ | 59,206 | | | $ | 24,130 | | | $ | 17,193 | |
Intangible asset impairment (recovery) | | | 22,118 | | | | (39 | ) | | | 492 | |
Allowance for credit losses on direct financing leases | | | 152 | | | | 0 | | | | 0 | |
Reversal for credit losses on loans receivable | | | 0 | | | | 0 | | | | (17 | ) |
| | | | | | | | | | | | |
| | $ | 81,476 | | | $ | 24,091 | | | $ | 17,668 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| Real estate and intangible asset impairment | $ | 17,208 |
| | $ | 93,441 |
| | $ | 80,390 |
|
| Write-off of lease intangibles, net | 477 |
| | 8,500 |
| | 7,683 |
|
| Loans receivable (recovery) impairment | (17 | ) | | 389 |
| | 176 |
|
| Total impairments from real estate investment net assets | 17,668 |
| | 102,330 |
| | 88,249 |
|
| Other impairment | — |
| | — |
| | 26 |
|
| Total impairments | $ | 17,668 |
| | $ | 102,330 |
| | $ | 88,275 |
|
Impairments for the twelve months ended
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018 were comprised of $1.0 million on properties classified as held for sale and $16.7 million on properties classified as held and used. Impairments for the year ended December 31, 2017 were comprised of $24.8 million on properties held for sale and $77.2 million on properties classified as held and used. Impairments for the year ended December 31, 2016 were comprised of $20.2 million on properties held for sale and $68.1 million on properties classified as held and used.2020
The debt of the Company and the Operating Partnership are the same, except for the presentation of the Convertible Notes which were issued by the Company. Subsequently, an intercompany note between the Company and the Operating Partnership was executed with terms identical to those of the Convertible Notes. Therefore, in the consolidated balance sheet of the Operating Partnership, the amounts related to the Convertible Notes are reflected as notes payable to Spirit Realty Capital, Inc., net. The Company'sCompany’s debt is summarized below:below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | |
| | |
| | |
Average Remaining Years to Maturity (3) | | |
| | |
| |
Revolving credit facilities | | | 5.12% | | | | — | | | | 2.3 | | | $ | — | | | $ | 116,500 | |
| | | 2.57% | | | | 1.65% | | | | 1.3 | | | | 178,000 | | | | — | |
| | | 3.80% | | | | 3.61% | | | | 8.2 | | | | 1,950,000 | | | | 1,500,000 | |
| | | 5.80% | | | | 5.47% | | | | 2.8 | | | | 214,237 | | | | 218,338 | |
| | | 5.54% | | | | 3.75% | | | | 0.4 | | | | 190,426 | | | | 345,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 4.05% | | | | 3.64% | | | | 6.7 | | | | 2,532,663 | | | | 2,179,838 | |
| | | | | | | | | | | | | | | (7,807 | ) | | | (9,272 | ) |
Deferred financing costs, net (4) | | | | | | | | | | | | | | | (18,515 | ) | | | (17,549 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 2,506,341 | | | $ | 2,153,017 | |
| | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
| | 2018
Weighted Average Effective
Interest Rates(1) | | 2018
Weighted Average Stated Rates (2) | | 2018
Weighted Average Remaining Term (3) | | December 31, 2018 | | December 31, 2017 |
| | | | | | | | (In Thousands) |
| 2015 Credit Facility | 5.19 | % | | 3.34 | % | | 0.2 | | $ | 146,300 |
| | $ | 112,000 |
|
| 2015 Term Loan | 3.83 | % | | 3.63 | % | | 0.8 | | 420,000 |
| | — |
|
| Master Trust Notes | 5.60 | % | | 5.01 | % | | 5.0 | | 167,854 |
| | 2,248,504 |
|
| CMBS | 5.77 | % | | 5.53 | % | | 4.5 | | 274,758 |
| | 332,647 |
|
| Related party notes payable | 1.00 | % | | 1.00 | % | | 9.2 | | 27,890 |
| | — |
|
| Convertible Notes | 5.31 | % | | 3.28 | % | | 1.3 | | 747,500 |
| | 747,500 |
|
| Senior Unsecured Notes | 4.64 | % | | 4.45 | % | | 7.7 | | 300,000 |
| | 300,000 |
|
| Total debt | 5.26 | % | | 4.19 | % | | 2.9 | | 2,084,302 |
| | 3,740,651 |
|
| Debt discount, net | | | | | | | (14,733 | ) | | (61,399 | ) |
Deferred financing costs, net (4) | | | | | | | (14,932 | ) | | (39,572 | ) |
| Total debt, net | | | | | | | $ | 2,054,637 |
| | $ | 3,639,680 |
|
| (1) | (1)The effective interest rates include amortization of debt discount/premium, amortization of deferred financing costs, facility fees, andnon-utilization fees, where applicable, calculated for the year ended December 31, 2020 and based on the average principal balance outstanding during the period. |
| (2) | Represents the weighted average stated interest rate based on the outstanding principal balance as of December 31, 2020. |
| (3) | Represents the weighted average remaining years to maturity based on the outstanding principal balance as of December 31, 2020. |
| (4) | The Company records deferred financing costs for its revolving credit facilities in deferred costs and other assets, net on its consolidated balance sheets. |
Deferred financing costs and offering discount/premium incurred in connection with entering into debt agreements are amortized to interest expense over the initial term of the respective agreements. Both deferred financing costs facility fees, and non-utilization fees, where applicable, calculated foroffering discount/premium are recorded net against the year ended December 31, 2018 and basedprincipal debt balance on the average principalaccompanying consolidated balance outstanding.
(2) Represents the weighted average stated interest rate based on the outstanding principal balance as of December 31, 2018.
(3) Represents the weighted average maturity based on the outstanding principal balance as of December 31, 2018.
(4) The Company recordssheets, except for deferred financing costs for the 2015 Credit Facilityrelated to revolving credit facilities, which are recorded in deferred costs and other assets, net on its consolidated balance sheets.net.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Revolving Credit FacilitiesConvertible Notes
On MarchAs of December 31, 2015,2020, the Operating Partnership,Convertible Notes were comprised of $190.4 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as borrower, entered intodescribed in the 2015 Credit Agreement that establishedConvertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a $600.0 million unsecured revolving credit facility, with an accordion feature to increase the facility size up to $1.0 billion,combination of cash and shares of common stock, at our election.
The conversion rate is subject to satisfying certain requirementsadjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and obtaining additional lender commitments. On April 27, 2016,unpaid interest. As of December 31, 2020, the Operating Partnership expanded the borrowing capacity from $600.0 million to $800.0 million by partially exercising the accordion feature. The 2015 Credit Agreement also includedconversion rate was 17.4458 per $1,000 principal note. If we undergo a $50.0 million sub-limit for swing-line loans and up to $60.0 million available for issuance of letters of credit. Swing-line loans and letters of credit reduce availability under the 2015 Credit Agreement on a dollar-for-dollar basis.
Payment of the 2015 Revolving Credit Agreement was unconditionally guaranteed by the Company and, under certain circumstances, by one or more material subsidiariesfundamental change (as defined in the 2015 Revolving Credit Agreement)2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the Company.principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Borrowings bear interest at a rate equal
Future principal payments due on our various types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with respect to 1-Month LIBOR plus 0.875% to 1.55% per annumour commitments, including acquisitions under contract, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and require a facility fee in an amount equalaccumulated earnings, to the aggregate revolving credit commitments (whetherextent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or not utilized) multiplied byqualified dividend income) received from a rate equalREIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to 0.125%distribute 90% of our taxable income (subject to 0.30% per annum,certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
each case basedour Annual Report on
Form10-K
for the
Company's credit rating. year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2018,2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the 2015 Credit Facility bore interest at 1-Month LIBOR plus 1.25%occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and incurred a facility feethe level of 0.25% per annum.our operating expenses and other general and administrative costs.
Borrowings may be repaid,The decrease in whole or in part, at any time, without premium or penalty, but subject to applicable LIBOR breakage fees, if any. Payment is unconditionally guaranteednet cash provided by the Company and material subsidiaries that meet certain conditions (as defined in the 2015 Credit Agreement). The 2015 Credit Facility is full recourseoperating activities was primarily attributable to the Operating Partnership andfollowing:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the aforementioned guarantors. The 2015 Credit Facility was to mature on March 31, 2019 (extendible at the Operating Partnership's option to March 31, 2020, subject to satisfaction of certain requirements). Subsequent to December 31, 2018, the Operating Partnership entered into the new 2019 Facilities Agreements, which include a new 2019 Credit Facility that replaces the 2015 Credit Agreement$48.2 million termination fee received in its entirety. See Note 16 for further discussion.
In connection with the origination and usetermination of the 2015 Credit Facility,Asset Management Agreement in September 2019, which was replaced by the Company incurredInterim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $4.8 million.$24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to fund property acquisitions, for investments in loans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
Generally, our net cash provided by or used in financing activities is impacted by our borrowings under our revolving credit facilities and term loans, issuances ofnet-lease
mortgage notes, common stock and debt offerings and repurchases and dividend payments on our common and preferred stock. Net cash provided by financing activities during the year ended December 31, 2020 was primarily attributable to borrowings of $445.5 million under senior unsecured notes, net proceeds from the issuance of common stock of $428.3 million and net borrowings of $178.0 million under term loans. These amounts were partially offset by payment of dividends to equity owners of $270.8 million, repayment of $154.6 million on convertible notes, net repayments of $116.5 million on our revolving credit facilities, deferred financing costs are being amortizedof $6.6 million, common stock repurchases for employee tax withholdings totaling $4.4 million, repayment of $4.1 million on mortgages and notes payable and debt extinguishment costs of $4.0 million.
During the same period in 2019, net cash provided by financing activities was primarily attributable to interest expense overborrowings of $1.2 billion under senior unsecured notes and net proceeds from the remaining initialissuance of common stock of $677.4 million. These amounts were partially offset by net payments on the convertible notes, term loans, mortgages and notes payable, and revolving credit facilities of the 2015 Credit Facility. The unamortized$402.5 million, $420.0 million, $242.0 million, and $29.8 million, respectively. Additionally, there were debt extinguishment costs of $15.3 million and deferred financing costs were $0.4of $22.1 million during 2019. Payment of dividends to equity owners during 2019 was $236.9 million, and $1.6 million, at December 31, 2018the common stock share repurchase for employee tax withholdings totaled $2.5 million.
Non-GAAP
Financial MeasuresWe calculate FFO in accordance with the standards established by NAREIT. FFO represents net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and
2017, respectively,amortization, impairment charges and
net (gains) losses from property dispositions. FFO is a supplementalnon-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
recordednot 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. AFFO is anon-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, such as transactions costs associated with ourSpin-Off,
default interest and fees onnon-recourse
mortgage indebtedness, debt extinguishment gains (losses), costs associated with termination of interest rate swaps, costs associated with performing on a guarantee of a former tenant’s debt, and certainnon-cash
items. These certainnon-cash
items includenon-cash
revenues (comprised of straight-line rents net of bad debt expense, amortization of lease intangibles, and amortization of net premium/discount on loans receivable),non-cash
interest expense (comprised of amortization of deferred
financing costs and
amortization of net debt discount/premium) andnon-cash
compensation expense.
Other equity REITs may not calculate FFO and AFFO as we do, and, accordingly, our FFO and AFFO may not be comparable to such other assets,equity REITs’ FFO and AFFO. FFO and AFFO do not represent cash generated from operating activities determined in accordance with GAAP, are 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 stockholders (computed in accordance with GAAP) as a performance measure.
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 supplementalnon-GAAP
financial disclosure to investors in understanding our financial condition. and Annualized Adjusted EBITDA
EBITDAre is anon-GAAP
financial measure and is computed in accordance with standards established by NAREIT. EBITDAre is computed 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 impairments of depreciated property. Adjusted EBITDAre represents EBITDAre as adjusted for revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter and for certain items that we believe are not indicative of our core operating performance, such as transactions costs associated with ourSpin-Off,
debt extinguishment gains (losses), and costs associated with performing on a guarantee of a former tenant’s debt. 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, 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) (computed in accordance with GAAP) as a performance measure. Annualized Adjusted EBITDAre is calculated as Adjusted EBITDAre for the quarter, adjusted for amounts deemed not probable of collection (recoveries) for straight-line rent related to prior periods and 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.
Adjusted Debt to Annualized Adjusted EBITDA
Adjusted Debt to Annualized Adjusted EBITDAre is a supplementalnon-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 the 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. A reconciliation of interest-bearing debt (computed in accordance with GAAP) to Adjusted Debt is included in the financial information accompanying
consolidated balance sheets.this report.
| | | | | | | | | | | | |
| | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | |
Net income attributable to common stockholders | | | | | | | | | | | | |
Portfolio depreciation and amortization | | | 212,038 | | | | 174,895 | | | | 197,346 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Gain on disposition of assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
FFO attributable to common stockholders | | | | | | | | | | | | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
| | | 2,432 | | | | 844 | | | | 549 | |
| | | — | | | | — | | | | 21,391 | |
| | | 12,428 | | | | 14,175 | | | | 22,866 | |
Accrued interest and fees on defaulted loans | | | — | | | | 285 | | | | 1,429 | |
Straight-line rent, net of related bad debt expense | | | (11,876 | ) | | | (16,924 | ) | | | (15,382 | ) |
Other amortization and non-cash charges | | | (918 | ) | | | (2,769 | ) | | | (2,434 | ) |
| | | — | | | | 12,461 | | | | — | |
Non-cash compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Other G&A costs associated with Spin-Off | | | — | | | | — | | | | 1,841 | |
| | | — | | | | — | | | | 5,319 | |
Costs related to COVID-19 (1) | | | 1,798 | | | | — | | | | — | |
AFFO attributable to common stockholders (2) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net income per share of common stock - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | |
FFO per share of common stock - diluted (3) | | $ | 2.73 | | | $ | 3.34 | | | $ | 3.71 | |
| | | | | | | | | | | | |
AFFO per share of common stock - diluted (3) | | $ | 2.95 | | | $ | 3.75 | | | $ | 3.99 | |
| | | | | | | | | | | | |
AFFO per share of common stock, excluding AM termination fee and Haggen settlement (3)(4) | | $ | 2.95 | | | $ | 3.34 | | | $ | 3.78 | |
| | | | | | | | | | | | |
Weighted average shares of common stock outstanding - diluted | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | AFFO for the year ended December 31, 2020 includes $26.3 million of deferred rental income recognized in conjunction with the FASB’s relief for deferral agreements extended as a result of theCOVID-19 pandemic. |
| (3) | Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted: |
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| FFO | | $ | 0.8 million | | | $ | 1.2 million | | | $ | 1.4 million | |
| AFFO | | $ | 0.9 million | | | $ | 1.4 million | | | $ | 1.5 million | |
| (4) | AFFO attributable to common stockholders for the year ended December 31, 2019, excluding $48.2 million of termination fee income, net of $11.3 million in income tax expense. The termination fee was received in conjunction with SMTA’s sale of Master Trust 2014 in September 2019 and termination of the Asset Management Agreement on September 20, 2019. AFFO attributable to common stockholders has not been adjusted to exclude the following amounts for the year ended December 31, 2019: (i) asset management fees of $14.7 million; (ii) property management and servicing fees of $5.4 million; (iii) preferred dividend income from SMTA $10.8 million; (iv) interest income on related party notes receivable of $1.1 million and an early repayment premium of $0.9 million; and (v) interest expense on related party loans payable of $0.2 million. |
| AFFO attributable to common stockholders for the year ended December 31, 2018 excludes proceeds from the Haggen settlement of $19.1 million. |
Adjusted Debt, Adjusted EBITDAre and Annualized Adjusted EBITDAre
| | | | | | | | |
| | | | |
| | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | 2,506,341 | | | | 2,153,017 | |
Unamortized debt discount, net | | | 7,807 | | | | 9,272 | |
Unamortized deferred financing costs | | | 18,515 | | | | 17,549 | |
Cash and cash equivalents | | | (70,303 | ) | | | (14,492 | ) |
Restricted cash balances held for the benefit of lenders | | | (12,995 | ) | | | (11,531 | ) |
| | | | | | | | |
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 29,170 | | | $ | 4,657 | |
| | | 26,307 | | | | 24,598 | |
Depreciation and amortization | | | 55,054 | | | | 48,867 | |
| | | (133 | ) | | | (229 | ) |
(Gain) loss on disposition of assets | | | (12,347 | ) | | | 11,910 | |
| | | 11,547 | | | | 10,860 | |
| | | | | | | | |
Adjustments to revenue producing acquisitions and dispositions | | | 4,596 | | | | 6,881 | |
| | | 802 | | | | 270 | |
(Gain) loss on debt extinguishment | | | (25 | ) | | | 2,857 | |
Costs related to COVID-19 (1) | | | 358 | | | | — | |
| | | | | | | | |
Adjustments related to straight-line rent (2) | | | (506 | ) | | | — | |
Other adjustments for Annualized Adjusted EBITDA (3) | | | 397 | | | | 58 | |
Annualized Adjusted EBITDA | | | | | | | | |
Adjusted Debt / Annualized Adjusted EBITDA | | | | | | | | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | Adjustment relates to recoveries on straight-line rent receivable balances deemed not probable of collection in previous periods. |
| (3) | Adjustments for the three months ended December 31, 2020 for amounts where annualization would not be appropriate are comprised of certain recoveries related to prior period amounts (rent deemed not probable of collection, abatements, property costs and tax expenses) and certain general and administrative expenses. For the same period in 2019, adjustments are composed of certain other income,write-off of intangibles and other compensation-related adjustments where annualization would not be appropriate. |
| (4) | Adjusted Debt / Annualized Adjusted EBITDAwould be 5.0x if the 4.1 million shares under open forward sales agreements had been settled as of December 31, 2020. |
| Quantitative and Qualitative Disclosures About Market Risk |
We are exposed to financial market risks, including interest rate risk. Interest rates and other factors, such as occupancy, rental rates and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we generally offer leases that provide for payments of base rent with scheduled increases and, to a lesser extent, contingent rent based on a percentage of the tenant’s gross sales to help mitigate the effect of inflation. Because the properties in our portfolio are generally leased to tenants undertriple-net
leases, our exposure to rising property operating costs due to inflation is mitigated. Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and global economic and political conditions, which are beyond our control. Our operating results depend heavily on the difference between the revenue from our assets and the interest expense incurred on our borrowings. We may incur additional variable rate debt in the future, including amounts that we may borrow under our 2019 Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments, which may lead to a decrease in the yields on real estate we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire real estate with rental rates high enough to offset the increase in interest rates on our borrowings.
In the event interest rates rise significantly or there is an economic downturn, defaults may increase and result in credit losses, which may adversely affect our liquidity and operating results. In a decreasing interest rate environment, borrowers are generally more likely to prepay their loans in order to obtain financing at lower interest rates. However, the vast majority of our mortgage notes payable have prepayment clauses that make refinancing during a decreasing interest rate environment uneconomical.
As of December 31, 2018, $146.3 million was outstanding, there was $653.7 million2020, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of borrowing capacity available, and no outstanding letters of credit or swing-line loans. The Operating Partnership's ability to borrow under the 2015 Credit Facility is subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants.leases). As of December 31, 2018, the Company2020, $2.4 billion of our indebtedness outstanding was fixed-rate, consisting of our Senior Unsecured Notes, mortgages and the Operating Partnership were in compliancenotes payable and Convertible Notes, with these covenants.
Term Loans
On November 3, 2015, the Operating Partnerhsip, as borrower, entered into the 2015 Term Loan Agreement among the Operating Partnership, as borrower, the Company as guarantora weighted average stated interest rate of 3.79%, excluding amortization of deferred financing costs and various lenders. The 2015 Term Loan Agreement provided for a $325.0 million unsecured term loan facility, with an accordion feature to increase the facility size up to $600.0 million, subject to the satisfaction of certain requirements and obtaining additional lender commitments. During the fourth quarters of 2015 and 2016, the Operating Partnership exercised the accordion feature and increased the facility from $325.0 million to $370.0 million and $420.0 million, respectively.
Borrowings bear interest at a rate equal to 1-Month LIBOR plus 0.90% to 1.75% per annum, based on the Company's credit ratings.debt discounts/premiums. As of December 31,
2018,2020, $178.0 million of our indebtedness was variable-rate, consisting of our 2020 Term Loans with a stated interest rate of 1.65%. There were no borrowings outstanding under our 2019 Credit Facility at December 31, 2020. Ifone-month
LIBOR as of December 31, 2020 increased by 12.5 basis points, or 0.125%, the
2015 Term Loan boreresulting increase in annual interest
at 1-Month LIBOR plus 1.35%.Borrowings may be repaid, in whole or in part, at any time, without premium or penalty, but subject to applicable LIBOR breakage fees. Borrowings may be repaid without premium or penalty, and may be re-borrowed within 30 days upexpense with respect to the then available loan commitment$178.0 million outstanding under the variable-rate obligations would impact our future earnings and subject to occurrence limitations within any twelve-month period. Paymentcash flows by $0.2 million.
The estimated fair values of our debt instruments have been derived based on market quotes for comparable instruments or discounted cash flow analysis using estimates of the 2015 Term Loan is unconditionally guaranteedamount and timing of future cash flows, market rates and credit spreads. The debt instrument balances as of December 31, 2020 are as follows (in thousands):
| | | | | | | | |
| | | | | | | |
| | $ | — | | | $ | — | |
| | | 177,309 | | | | 177,884 | |
Senior Unsecured Notes, net (1) | | | 1,927,348 | | | | 2,122,409 | |
Mortgages and notes payable, net (1) | | | 212,582 | | | | 226,240 | |
Convertible Notes, net (1) | | | 189,102 | | | | 194,124 | |
| |
| (1) | The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums. |
| Financial Statements and Supplementary Data |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | |
Financial Statements and Supplemental Data | | | | |
| |
| | |
| | | | | 54 | |
| | |
| | | | | 61 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 62 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 63 | |
| | |
| | Consolidated Statements of Stockholders’ Equity of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 64 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 65 | |
| | |
| | | | | 67 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 68 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 70 | |
| | |
| | Consolidated Statements of Partners’ Capital of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 71 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 72 | |
| | |
| | | | | 74 | |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Spirit Realty Capital, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Spirit Realty Capital, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company and, under certain circumstances, by one or more material subsidiaries (as defined inAccounting Oversight Board (United States) (PCAOB), the 2015 Term Loan Agreement). The obligations2020 consolidated financial statements of the Company and any guarantor underour report dated February 19, 2021 expressed an unqualified opinion thereon.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the 2015 Term Loaneffectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are full recoursea public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty Capital, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each guarantor. of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 2021 expressed an unqualified opinion thereon.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The 2015 Term Loancritical audit matters communicated below are matters arising from the current period audit of the financial statements that hadwere communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Company’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Company’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Company recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Company evaluates the collectability of lease payments on a regular basis. The Company considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s lease payment collectability process. To test the Company’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Company’s auditor since 2003.
Report of Independent Registered Public Accounting Firm
To the Partners of Spirit Realty, L.P. and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty, L.P. (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Operating Partnership’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Operating Partnership considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Operating Partnership’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Operating Partnership recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership evaluates the collectability of lease payments on a regular basis. The Operating Partnership considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s lease payment collectability process. To test the Operating Partnership’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Operating Partnership’s auditor since 2016.
SPIRIT REALTY CAPITAL, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320) | | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | — | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and stockholders’ equity | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both December 31, 2020 and December 31, 2019, liquidation preference of $25.00 per share | | | 166,177 | | | | 166,177 | |
Common stock, $0.05 par value, 175,000,000 shares authorized: 114,812,615 and 102,476,152 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | | | 5,741 | | | | 5,124 | |
Capital in excess of common stock par value | | | 6,126,503 | | | | 5,686,247 | |
| | | (2,688,647) | | | | (2,432,838) | |
Accumulated other comprehensive loss | | | (8,654) | | | | (11,461) | |
| | | | | | | | | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | 8,750 | |
| | | — | | | | — | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
| | | | | | | | | | | | | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | — | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
Dividends paid to preferred stockholders | | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average shares of common stock outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Stockholders’ Equity
(In Thousands, Except Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Value and
Capital in
Excess of | | | | | | | | | | | | |
Balances, December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 132,052 | | | | — | | | | 132,052 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | — | | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 121,700 | | | | — | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (7,159 | ) | | | (7,159 | ) |
Cost associated with preferred stock | | | — | | | | (16 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (16 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (262,887 | ) | | | — | | | | (262,887 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (57,679 | ) | | | (3 | ) | | | — | | | | (2,400 | ) | | | — | | | | (2,403 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 92,458 | | | | 5 | | | | 2,967 | | | | — | | | | — | | | | 2,972 | |
Repurchase of common shares | | | — | | | | — | | | | (4,244,446 | ) | | | (212 | ) | | | — | | | | (167,953 | ) | | | — | | | | (168,165 | ) |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | — | | | | — | | | | (216,005 | ) |
Stock-based compensation, net | | | — | | | | — | | | | 222,887 | | | | 10 | | | | 15,104 | | | | (1,011 | ) | | | — | | | | 14,103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 175,266 | | | | — | | | | 175,266 | |
Dividends declared on preferred | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common | | | — | | | | — | | | | — | | | | — | | | | — | | | | 164,916 | | | | — | | | | 164,916 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,302 | ) | | | (4,302 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (236,943 | ) | | | — | | | | (236,943 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (58,445 | ) | | | (3 | ) | | | — | | | | (2,539 | ) | | | — | | | | (2,542 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 16,578,423 | | | | 829 | | | | 676,361 | | | | — | | | | — | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | 168,819 | | | | 9 | | | | 14,268 | | | | (1,017 | ) | | | — | | | | 13,260 | |
| | | — | | | | — | | | | — | | | | — | | | | (79 | ) | | | — | | | | — | | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,708 | | | | — | | | | 26,708 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 16,358 | | | | — | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,807 | | | | 2,807 | |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (266,659 | ) | | | — | | | | (266,659 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (117,543 | ) | | | (6 | ) | | | — | | | | (4,375 | ) | | | — | | | | (4,381 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 12,137,210 | | | | 607 | | | | 427,632 | | | | — | | | | — | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | 316,796 | | | | 16 | | | | 12,624 | | | | (1,133 | ) | | | — | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common stock dividends paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred stock dividends paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
The following table presents the supplemental cash flow disclosures (in thousands):
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
| | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
Consolidated Balance Sheets
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320 | ) | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | 0 | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and partners’ capital | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | 0 | | | $ | 116,500 | |
| | | 177,309 | | | | 0 | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
Notes Payable to Spirit Realty Capital, Inc., net | | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
General partner’s common capital, 797,644 units issued and outstanding as of both December 31, 2020 and December 31, 2019 | | | 20,505 | | | | 22,389 | |
Limited partners’ preferred capital: 6,900,000 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 166,177 | | | | 166,177 | |
Limited partners’ common capital: 114,014,971 and 101,678,508 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 3,414,438 | | | | 3,224,683 | |
| | | | | | | | | |
| | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and partners’ capital | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | 0 | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | 0 | | | | 10,802 | | | | 8,750 | |
| | | — | | | | 0 | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | 0 | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
| | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | |
Net income attributable to the general partner: | | | | | | | | | | | | |
| | $ | 125 | | | $ | 1,450 | | | $ | 1,270 | |
| | | — | | | | 0 | | | | (151) | |
| | | | | | | | | | | | | |
Net income attributable to the general partner | | $ | 125 | | | $ | 1,450 | | | $ | 1,119 | |
| | | | |
Net income attributable to the limited partners: | | | | | | | | | | | | |
| | $ | 26,583 | | | $ | 173,816 | | | $ | 147,221 | |
| | | — | | | | 0 | | | | (16,288) | |
| | | | | | | | | | | | | |
Net income attributable to the limited partners | | $ | 26,583 | | | $ | 173,816 | | | $ | 130,933 | |
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
Net income per partnership unit - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average partnership units outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | |
Consolidated Statements of Partners’ Capital
(In Thousands, Except Unit Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | Limited Partners’ Capital (2) | | General Partner’s Capital (1) | | Limited Partners’ Capital (2) | | |
| | | | | | | | | | | | | | | | | |
Balances, December 31, 2017 | | | 6,900,000 | | | $ | 166,193 | | | | 797,644 | | | $ | 24,426 | | | | 88,976,491 | | | $ | 3,128,990 | | | $ | 3,319,609 | |
| | | — | | | | — | | | | — | | | | 1,119 | | | | — | | | | 130,933 | | | | 132,052 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,119 | | | | | | | | 120,581 | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | (66 | ) | | | — | | | | (7,093 | ) | | | (7,159 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,418 | ) | | | — | | | | (260,469 | ) | | | (262,887 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (57,679 | ) | | | (2,403 | ) | | | (2,403 | ) |
Issuance of common units, net | | | — | | | | (16 | ) | | | — | | | | — | | | | 92,458 | | | | 2,972 | | | | 2,956 | |
Repurchase of common units | | | — | | | | — | | | | — | | | | — | | | | (4,244,446 | ) | | | (168,165 | ) | | | (168,165 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | (216,005 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 222,887 | | | | 14,103 | | | | 14,103 | |
Balances, December 31, 2018 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 23,061 | | | | 84,989,711 | | | $ | 2,612,511 | | | $ | 2,801,749 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | 1,450 | | | | — | | | | 173,816 | | | | 175,266 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,450 | | | | | | | | 163,466 | | | | 164,916 | |
| Other comprehensive loss | | | — | | | | — | | | | — | | | | (38 | ) | | | — | | | | (4,264 | ) | | | (4,302 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,083 | ) | | | — | | | | (234,860 | ) | | | (236,943 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (58,445 | ) | | | (2,542 | ) | | | (2,542 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 16,578,423 | | | | 677,190 | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 168,819 | | | | 13,260 | | | | 13,260 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | (1 | ) | | | — | | | | (78 | ) | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 22,389 | | | | 101,678,508 | | | $ | 3,224,683 | | | $ | 3,413,249 | |
| | | — | | | | — | | | | — | | | | 125 | | | | — | | | | 26,583 | | | | 26,708 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
Net income after preferred distributions | | | | | | | — | | | | | | | | 125 | | | | | | | | 16,233 | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | 21 | | | | — | | | | 2,786 | | | | 2,807 | |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,030 | ) | | | — | | | | (264,629 | ) | | | (266,659 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (117,543 | ) | | | (4,381 | ) | | | (4,381 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 12,137,210 | | | | 428,239 | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 316,796 | | | | 11,507 | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 20,505 | | | | 114,014,971 | | | $ | 3,414,438 | | | $ | 3,601,120 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Consists of general partnership interests held by Spirit General OP Holdings, LLC. |
| (2) | Consists of limited partnership interests held by Spirit Realty Capital, Inc. and Spirit Notes Partner, LLC. |
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes payable | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured Notes | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common distributions paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred distributions paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
The following table presents the supplemental cash flow disclosures (in thousands):
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
| | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
initial maturity dateOrganization and Operations
Spirit Realty Capital, Inc. (the “Corporation” or “Spirit” or, with its consolidated subsidiaries, the “Company”) operates as a self-administered and self-managed REIT that seeks to generate and deliver sustainable and attractive returns for stockholders by primarily investing in and managing a portfolio of
November 2, 2018, extendable atsingle-tenant, operationally essential real estate throughout the
Company's option pursuantUnited States
that is generally leased on a long-term,triple-net
basis to
two one-year extension options, subjecttenants operating within retail, industrial, office and other property types. Single tenant, operationally essential real estate generally refers to free-standing, commercial real estate facilities where tenants conduct activities that are essential to the
satisfactiongeneration of
certain conditionstheir sales and
paymentprofits. The Company’s operations are generally carried out through Spirit Realty, L.P. (the “Operating Partnership”) and its subsidiaries. Spirit General OP Holdings, LLC, one of an extension fee.the Corporation’s wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. The Company exercised its first option to extend to November 2, 2019 on November 2, 2018. Subsequent to DecemberCorporation and a wholly-owned subsidiary (Spirit Notes Partner, LLC) are the only limited partners and together own the remaining 99% of the Operating Partnership.
On May 31, 2018, the
Operating Partnership entered into a new 2019 Facilities Agreement, which includes a new A-1 Term Loan that replaceCompany completed the
2015 Term Loan in its entirety and a new A-2 Term Loan, see Note 16 for further discussion.spin-off
(theIn connection with the origination “Spin-Off”)
of the
2015 Term Loan,assets that collateralized Master Trust 2014, properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, Spirit MTA REIT (“SMTA”). For periods prior to theSpin-Off,
the historical financial results of SMTA are reflected in our consolidated financial statements as discontinued operations. The Company formed Spirit Realty AM Corporation (“SRAM”), a wholly-owned taxable REIT subsidiary. The rights and obligations of the Asset Management Agreement were transferred to SRAM on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, which was effective from September 20, 2019 through September 4, 2020. The Company allocated personnel and other general and administrative costs to SRAM for management services provided to SMTA. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The accompanying consolidated financial statements of the Company incurred costs of $2.4 million. These deferred financing costs are being amortized to interest expense over the remaining initial term of the 2015 Term Loan. As of December 31, 2018 and 2017, the unamortized deferred financing costs were $0.4 million and $0.7 million, respectively, and were recorded net against the principal balance of the 2015 Term Loan for 2018 and and mortgages and notes payable for 2017, respectively, on the accompanying consolidated balance sheets.
As of December 31, 2018, there was a $420.0 million outstanding balance and no borrowing capacity available. The Operating Partnership's ability to borrow under the 2015 Term Loan Agreement was subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants. As of December 31, 2018, the Operating Partnership washave been prepared on the accrual basis of accounting, in complianceaccordance with these covenants.
Master Trust Notes
Master Trust 2013 and Master Trust 2014 are asset-backed securitization platforms through which the Company has raised capital through the issuance of non-recourse net-lease mortgage notes collateralized by commercial real estate, net-leases and mortgage loans.
GAAP. The Master Trust Notes are summarized below:
|
| | | | | | | | | | | | |
| | Stated
Rate | | Remaining Term | | December 31,
2018 | | December 31,
2017 |
| | | | (in Years) | | (in Thousands) |
| Series 2014-1 Class A1 |
|
| |
| |
|
| | $ | — |
|
| Series 2014-1 Class A2 |
|
| |
| |
|
| | 252,437 |
|
| Series 2014-2 |
|
| |
| |
|
| | 222,683 |
|
| Series 2014-3 |
|
| |
| |
|
| | 311,336 |
|
| Series 2014-4 Class A1 |
|
| |
| |
|
| | 150,000 |
|
| Series 2014-4 Class A2 |
|
| |
| |
|
| | 358,664 |
|
| Series 2017-1 Class A |
|
| |
| |
|
| | 515,280 |
|
| Series 2017-1 Class B |
|
| |
| |
|
| | 125,400 |
|
| Total Master Trust 2014 notes |
|
| |
| |
|
| | 1,935,800 |
|
| Series 2013-1 Class A |
|
| |
| | $ | — |
| | 125,000 |
|
| Series 2013-2 Class A | 5.60 | % | | 5.0 | | 167,854 |
| | 187,704 |
|
| Total Master Trust 2013 notes | 5.60 | % | | 5.0 | | 167,854 |
| | 312,704 |
|
| Total Master Trust Notes | | | | | 167,854 |
| | 2,248,504 |
|
| Debt discount, net | | | | | — |
| | (36,188 | ) |
| Deferred financing costs, net | | | | | (4,189 | ) | | (24,010 | ) |
| Total Master Trust Notes, net | | | | | $ | 163,665 |
| | $ | 2,188,306 |
|
Master Trust 2013
In December 2013, an indirect wholly-owned subsidiaryconsolidated financial statements of the Company issued $330.0 million aggregate principal amountinclude the accounts of investment grade rated net-lease mortgage notes comprisedthe Corporation and its wholly-owned subsidiaries. In the opinion of (i) $125.0 millionmanagement, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of Series 2013-1 Class the information required to be set forth therein. The consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
A
interest-only notesvariable interest entity (“VIE”) would be consolidated by the Company when the Company is the primary beneficiary, which is based on whether the Company has(i)
the power to direct activities that most significantly impact the economic performance of the VIE and(ii)
the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Determination of the primary beneficiary of a VIE considers all relationships between the Company and the VIE, including management agreements and other contractual arrangements. The Company evaluated SMTA as a VIE at the time ofSpin-Off
and quarterly thereafter until the third quarter of 2019 and concluded the Company was not the primary beneficiary. In the third quarter of 2019, the Company no longer had variable interests in SMTA and control was evaluated under the voting interest model. The Company concluded SMTAdid
not require consolidation by the Company for any period presented.All expenses incurred by the Company have been allocated to the Operating Partnership in accordance with the Operating Partnership’s first amended and restated agreement of limited partnership, which management determined to be a 3.89% interest rate, withreasonable method of allocation. Therefore, expenses incurred would not be materially different if the Operating Partnership had operated as an original expected repayment in December 2018 and (ii) $205.0 millionunaffiliated entity.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
2023. On May 21,These consolidated financial statements include certain special purpose entities that were formed to acquire and hold real estate encumbered by indebtedness (see Note 4). Each special purpose entity is a separate legal entity and is the sole owner of its assets and responsible for its liabilities. The assets of these special purpose entities are not available to pay, or otherwise satisfy obligations to, the creditors of any affiliate or owner of another entity unless the special purpose entities have expressly agreed and are permitted under their governing documents. As of December 31, 2020 and 2019, net assets totaling $343.4 million and $375.5 million, respectively, were held, and net liabilities totaling $215.9 million and $231.7 million, respectively, were owed by these encumbered special purpose entities and are included in the accompanying consolidated balance sheets.
A discontinued operation represents: (i) a component of an entity or group of components that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will have a major effect on the Company’s operations and financial results or (ii) an acquired business that is classified as held for sale on the date of acquisition. Examples of a strategic shift include disposing of: (i) a separate major line of business, (ii) a separate major geographic area of operations, or (iii) other major parts of the Company. The Company determined that theSpin-Off
represented a strategic shift that had a major effect on the Company’s results and, therefore, SMTA’s operationsqualified
as discontinued operations. See Note 12 for further discussion of discontinued operations. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.
The Company views its operations as 1 segment, which consists of net leasing operations. The Company has no other reportable segments.
Purchase Accounting and Acquisition of Real Estate
When acquiring a property, the purchase price (including acquisition and closing costs) is allocated to land, building, improvements and equipment based on their relative fair values. The Company considers several assumptions to estimate the fair value of the components of the tangible property acquired including market assumptions for land, building and improvements. The determination of the intangible assets and liabilities primarily relate to the contractual lease terms, estimates of the fair market rental rates, discount rates, and estimates of costs to carry and obtain a tenant. For properties acquired within-place
leases, the purchase price of real estate is allocated to the tangible and intangible assets and liabilities acquired based on their relative fair values. In making estimates of fair values for this purpose, a number of sources are used, including independent appraisals and information obtained about each property as a result ofpre-acquisition
due diligence, marketing and leasing activities. Carrying Value of Real Estate Investments
The Company’s real estate properties are recorded at cost and depreciated using the straight-line method over the estimated remaining useful lives of the properties, which generally range from 20 to 50 years for buildings and improvements and from 5 to 20 years for land improvements. Properties classified as held for sale are not depreciated. Properties classified as held for sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Company is continually evaluating the portfolio of real estate assets and may elect to dispose of assets considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, associated indebtedness, asset location, and tenant operation type(e.g., industry, sector, or concept/brand). Real
estate assets held for sale are expected to be sold within twelve months. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above- or below-market leases. For real estate acquired subject to existing lease agreements,in-place
lease intangibles are valued based on the Company’s estimate of costs related to acquiring a tenant and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in certain instances, over the renewal period. For real estate property leases classified as direct financing leases, the building portion of the lease is accounted for as a direct financing lease, while the land portion is accounted for as an operating lease when certain criteria are met. For direct financing leases, the Company records an asset which represents the net investment that is determined by using the aggregate of the total amount of future minimum lease payments, the estimated residual value of the leased property and deferred incremental direct costs less unearned income. Income is recognized over the life of the lease to approximate a level rate of return on the net investment. Residual values, which are reviewed annually, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased property. Actual residual values realized could differ from these estimates.
The Company reviews its real estate investments and related lease intangibles periodically for indicators of impairment, including, but not limited to: the asset being held for sale, vacant,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, the Company then evaluates if its carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows. Impairment is then calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, as the amount by which the carrying value exceeds fair value less costs to sell. Estimating fair values is highly subjective and such estimates could differ materially from actual results. Key assumptions used in estimating fair values include, but are not limited to: signed purchase and sale agreements or letters of intent; recently quoted bid or ask prices, or market prices for comparable properties; estimates of residual values, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions, expenses based upon market conditions and capitalization rates; and expectations for the use of the real estate.
Gain or Loss on Disposition of Assets
When real estate properties are disposed of, the related net book value of the properties is removed and a gain or loss on disposition is recognized in our consolidated statements of operations as the difference between the proceeds from the disposition, net of any costs to sell, and the net book value. As leasing is the Company’s primary activity, the
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Company determined that its sales of real estate, which are nonfinancial assets, are sold to noncustomers and fall within the scope of ASC610-20.
The full gain or loss on the disposition of real estate properties is recognized at time of sale provided that the Company (i) has no controlling financial interest in the real estate and (ii) has no continuing interest or obligation with respect to the disposed real estate. Rental Income: Cash and Straight-line Rent
The Company primarily leases real estate to its tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, the Company assesses the terms and conditions of the lease to determine the appropriate lease term. The majority of our operating leases include one or more options to extend, typically for a period of five to ten years per renewal option. Excluding Walgreen Co., less than 1% of the Company’s operating leases at December 31, 2020 include an option to terminate. Walgreen Co. leases are generally for fifty years or more with several five-year termination periods after an initialnon-cancellable
term. Less than 10% of the Company’s operating leases at December 31, 2020 include an option to purchase, where the purchase option is generally determined based on fair market value of the underlying property. The Company does not include options to extend, terminate or purchase in its evaluation for lease classification purposes or for recognizing rental income unless the Company is reasonably certain the tenant will exercise the option. Another component of lease classification that requires judgment is the residual value of the property at the end of the lease term. For acquisitions, the Company assumes a value that is equal to the tangible value of the property at the date of the assessment. For lease modifications, the Company generally uses sales comparables or a direct capitalization approach to determine fair value. The Company seeks to protect residual value through its underwriting of acquisitions, incorporating the proprietary Spirit Property Ranking Model which is real estate centric. Once a property is acquired, the lessee is responsible for maintenance of the property, including insurance protecting any damage to the property. To further protect residual value, the Company supplements the tenant insurance policy with a master policy covering all properties owned by the Company. As an active manager, the Company will occasionally invest in capital improvements on properties,re-lease
properties to new tenants or extend lease terms to protect residual value. The Company’s leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. Accordingly, accrued rental revenue, calculated as the aggregate difference between the rental revenue recognized on a straight-line basis and scheduled rents, represents unbilled rent receivables that the Company will receive only if the tenants make all rent payments required through the expiration of the initial term of the leases. For leases with contingent rent escalators, rental income typically increases at a multiple of any increase in the CPI over a specified period and may adjust over aone-year
period or over multiple-year periods. Because of the volatility and uncertainty with respect to future changes in the CPI and the Company’s inability to determine the extent to which any specific future change in the CPI is probable at each rent adjustment date during the entire term of these leases, increases in rental revenue from leases with this type of escalator are recognized when the changes in the rental rates have occurred. Some of the Company’s leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized as rental income when the change in the factor on which the contingent lease payment is based actually occurs.
Rental income is subject to an evaluation for collectability, which includes management’s estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. The Company does not recognize rental income for amounts that are not probable of collection.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Rental Income: Tenant Reimbursement Revenue
Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Certain leases contain additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, which arenon-lease
components. The Company has elected to combine all itsnon-lease
components, which were determined to have the same pattern of transfer as the related operating lease component, into a single combined lease component. Tenant reimbursement revenue is variable and is recognized as revenue in the period in which the related expenses are incurred, with the related expenses included in property costs (including reimbursable) on the Company’s consolidated statements of operations. Tenant reimbursements are recorded on a gross basis in instances when our tenants reimburse us for property costs which we incur. Tenant receivables are reduced for amounts that are not probable of collection. Rental Income: Intangible Amortization
Initial direct costs associated with the origination of a lease are deferred and amortized as an adjustment to rental revenue. Above-market and below-market lease intangibles are amortized as a decrease and increase, respectively, to rental revenue.In-place
lease intangibles are amortized on a straight-line basis and included in depreciation and amortization expense. All lease intangibles are amortized over the remaining term of the respective leases, which includes the initial term of the lease and may also include the renewal periods if the Company believes it is reasonably certain the tenant will exercise the renewal option. If the Company subsequently determines it is reasonably certain that the tenant will not exercise the renewal option, the unamortized portion of any related lease intangible is accelerated over the remaining initial term of the lease. If the Company believes the intangible balance is no longer recoverable, the unamortized portion of any related lease intangible is immediately recognized in impairments in the Company’s consolidated statements of operations. Other Income: Lease Termination Fees
Lease termination fees are included in other income on the Company’s consolidated statements of operations and are recognized when there is a signed termination agreement and all of the conditions of the agreement have been met. The Company recorded lease termination fees of $0.7 million, $0.4 million and $0.3 million during the years ended December 31, 2020, 2019 and 2018, respectively.
Loans receivable consists of mortgage loans, net of premium, and notes receivables. Interest on loans receivable is recognized using the effective interest rate method. In September 2020, all the Company’s first-priority mortgage loans were fully paid off. A loan is placed onnon-accrual
status when the loan has become 60 days past due, or earlier if management determines that full recovery of the contractually specified payments of principal and interest is doubtful. While onnon-accrual
status, interest income is recognized only when received. No loans receivable were onnon-accrual
status as of December 31, 2019. Delinquent loans receivable are written off against the allowance when all possible means of collection have been exhausted.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. The Company invests cash primarily in money market funds of major financial institutions with fund investments consisting of highly-rated money market instruments and other short-term instruments. Restricted cash is classified within deferred costs and other assets, net in the accompanying consolidated balance sheets. Cash, cash equivalents and restricted cash consisted of the following (in thousands):
| | | | | | | | | | | | |
| | |
| | |
| |
| |
Cash and cash equivalents | | $ | 70,303 | | | $ | 14,492 | | | $ | 14,493 | |
| | | | | | | | | | | | |
| | | 335 | | | | 347 | | | | 351 | |
Tenant improvements, repairs and leasing commissions (2) | | | 12,660 | | | | 10,877 | | | | 9,093 | |
| | | 0 | | | | 0 | | | | 7,412 | |
1031 Exchange proceeds, net | | | 0 | | | | 0 | | | | 45,042 | |
| | | 0 | | | | 307 | | | | 1,030 | |
| | | | | | | | | | | | | |
Total cash, cash equivalents and restricted cash | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
| (1) | Funds held in lender-controlled accounts generally used to meet future debt service or certain property operating expenses. |
| (2) | Deposits held as additional collateral support by lenders to fund improvements, repairs and leasing commissions incurred to secure a new tenant. |
| (3) | Proceeds from the sale of assets pledged as collateral under either Master Trust 2013 or Master Trust 2014, which were held on deposit until a qualifying substitution was made or the funds were applied as prepayment of principal. The Master Trust 2014 notes were included in theSpin-Off to SMTA. The Master Trust 2013 notes were extinguished in June 2019. |
| (4) | Funds held in lender-controlled accounts released after scheduled debt service requirements are met. |
The Company reviews its rent and other tenant receivables for collectability on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area in which the tenant operates. If the collectability of a receivable with respect to any tenant is not probable of collection, a directwrite-off
of the specific receivable will be made. The Company had accounts receivable balances of $29.5 million and $7.7 million at December 31, 2020 and 2019, respectively, after the impact of $13.1 million and $3.8 million of receivables, respectively, were deemed not probable of collection. Receivables are recorded within deferred cost and other assets, net in the accompanying consolidated balance sheets. For receivable balances related to the straight-line method of reporting rental revenue, the collectability is assessed in conjunction with the evaluation of rental income as described above. The Company had straight-line rent receivables of $93.1 million and $83.6 million at December 31, 2020 and 2019, respectively, after the impact of $14.5 million and $0.4 million of receivables, respectively, were deemed not probable of collection. These receivables are recorded within deferred costs and other assets, net in the accompanying consolidated balance sheets.
Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The FASB issued ASU2017-04,
Simplifying the Test for Goodwill Impairment,
Company adopted
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
effective January 1, 2020. ASU2017-04
simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. Instead, an entity should compare the fair value of each reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. No impairment was recorded for the periods presented. TheSpin-Off
of SMTA did qualify as a disposition of a business, resulting in a reduction in goodwill. The following table presents a reconciliation of the Company’s goodwill (in thousands):
| | | | |
| | | |
Balance as of December 31, 2017 | | $ | 254,340 | |
Goodwill allocated to dispositions of a business (Spin-Off of SMTA) | | | (28,740 | ) |
| | | | | |
Balance as of December 31, 2018 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2019 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2020 | | $ | 225,600 | |
| | | | | |
Accounting for Derivative Financial Instruments and Hedging Activities
The Company may utilize derivative instruments such as interest rate swaps for purposes of hedging exposures to fluctuations in interest rates associated with certain of its financing transactions. At the inception of a hedge transaction, the Company enters into a contractual arrangement with the hedge counterparty and formally documents the relationship between the derivative instrument and the financing transaction being hedged, as well as its risk management objective and strategy for undertaking the hedge transaction. The fair value of the derivative instrument is recorded on the balance sheet as either an asset or liability. At inception and at least quarterly thereafter, a formal assessment is performed to determine whether the derivative instrument has been highly effective in offsetting changes in cash flows of the related financing transaction and whether it is expected to be highly effective in the future. The Company recognizes the entire change in the fair value of cash flow hedges included in the assessment of hedge effectiveness in other comprehensive (loss) income. The amounts recorded in other comprehensive (loss) income will subsequently be reclassified to earnings when the hedged item affects earnings.
The Corporation has elected to be taxed as a REIT under the Code. As a REIT, the Corporation generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of the Company’s assets, the amounts distributed to the Corporation’s stockholders and the ownership of Corporation stock. Management believes the Corporation has qualified and will continue to qualify as a REIT and, therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Even if the Corporation qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income.
Taxable income earned by any of the Company’s taxable REIT subsidiaries, including fromnon-REIT
activities, is subject to federal, state and local taxes. The rights and obligations of the Asset Management Agreement were transferred to SRAM, a wholly-owned taxable REIT subsidiary of Spirit, on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective from September 20, 2019through its termination effective September
4, 2020. Accordingly, all asset management fees earned from April 1, 2019 through September 4, 2020, including the termination fee income earned in September 2019, were subject to income tax. See Note 13 for additional discussion.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Operating Partnership is a partnership for federal income tax purposes. Partnerships are pass-through entities and are not subject to U.S. federal income taxes, therefore 0
provision has been made for federal income taxes in the accompanying financial statements. Although most states and cities where the Operating Partnership operates follow the U.S. federal income tax treatment, there are certain jurisdictions such as Texas, Tennessee and Ohio that impose income or franchise taxes on a partnership. Franchise taxes are included in general and administrative expenses on the accompanying consolidated statements of operations.
Earnings Per Share and Unit
The Company’s unvested restricted common stock, which containsnon-forfeitable
rights to receive dividends, are considered participating securities requiring thetwo-class
method of computing earnings per share and unit. Under thetwo-class
method, earnings attributable to unvested restricted shares are deducted from income from continuing operations in the computation of net income attributable to common stockholders. Under thetwo-class
method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying thetwo-class
method, undistributed earnings are allocated to both common shares and participating securities based on their respective weighted average shares outstanding during the period. Under the terms of the Amended Incentive Award Plan, restricted stock awards (see Note 9) are not allocated losses, including undistributed losses as a result of dividends declared exceeding net income. The Company uses income or loss from continuing operations as the basis for determining whether potential common shares are dilutive oranti-dilutive
and undistributed net income or loss as the basis for determining whether undistributed earnings are allocable to participating securities. Forward Equity Sale Agreements
The Company may enter into forward sale agreements for the sale and issuance of shares of our common stock, either through an underwritten public offering or through our ATM Program. These agreements may be physically settled in stock, settled in cash, or net share settled at the Company’s election. The Company evaluated the forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity. Before any issuance of shares of our common stock to physically settle a forward sale agreement, such forward sale agreement will be reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of our common stock used in diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of our common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of our common stock that could be purchased by us in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to physical settlement or net share settlement of a forward sale agreement, there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the adjusted forward sale price. However, if we decide to physically settle or net share settle such forward sale agreement, delivery of our shares on any physical settlement or net share settlement of the forward sale agreement will result in dilution to our earnings per share.
Unaudited Interim Information
The consolidated quarterly financial data in Note 14 is unaudited. In the opinion of management, this financial information reflects all adjustments necessary for a fair presentation of the respective interim periods. All such adjustments are of a normal recurring nature.
New Accounting Pronouncements
In June 2016, the FASB issued ASU2016-13,
Measurement of Credit Losses on Financial Instruments
2016-13
requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
expected to be collected. ASU2016-13
is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and as such, the Company adopted ASU2016-13
effectiveJanuary 1, 2020. Per the subsequently issued ASU2018-19,
receivables arising from operating leases are not within the scope of ASU2016-13.
The Company reviewed receivables within the scope of ASU2016-13
totaling $40.3 million as of January 1, 2020, which were comprised of loans receivable and real estate assets held under direct financing lease. There were no amounts past due related to these receivables. As such, the Company determined the key credit quality indicator was the credit rating of the borrower, coupled with remaining time to maturity. As a result, the adoption ASU2016-13
resulted in the recognition of a loss of $0.3 million on January 1, 2020, which was recorded in impairments on the accompanying consolidated statement of operations. In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic. The FASB noted that the underlying premise in requiring a modified lease to be accounted for as if it were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). The Company made this election and accounts for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period, resulting in $26.3 million of deferrals being recognized in rental income for the year ended December 31, 2020. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Management continues to evaluate any amounts recognized for collectability, regardless of whether accounted for as a lease modification or not, and records a provision for losses against rental income for amounts that are not probable of collection. For lease concessions granted in conjunction with theCOVID-19
pandemic, management reviewed all amounts recognized on abasis for collectability. As of December 31, 2020, the Company’s gross investment in owned real estate properties totaled approximately $6.8 billion. The gross investment is comprised of land, buildings, lease intangible assets and lease intangible liabilities, as adjusted for any impairment, and real estate assets held under direct financing leases and real estate assets held for sale. The portfolio is geographically dispersed throughout 48 states with Texas, at 10.7%, as the only state with a gross investment greater than 10.0% of the total gross investment of the Company’s entire portfolio.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
During the years ended December 31, 2020 and 2019, the Company had the following real estate activity, net of accumulated depreciation and amortization (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Dollar Amount of Investments |
| | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2018 | | | 1,459 | | | | 3 | | | | 1,462 | | | $ | 5,054,523 | | | $ | 22,064 | | | $ | 5,076,587 | |
Acquisitions/improvements (1) | | | 334 | | | | 0 | | | | 334 | | | | 1,344,843 | | | | 0 | | | | 1,344,843 | |
Dispositions of real estate (2)(3) | | | (16 | ) | | | (28 | ) | | | (44 | ) | | | (98,327 | ) | | | (140,909 | ) | | | (239,236 | ) |
Transfers to Held for Sale | | | (27 | ) | | | 27 | | | | 0 | | | | (128,396 | ) | | | 128,396 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (18,974 | ) | | | (5,117 | ) | | | (24,091 | ) |
Reset of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (12,894 | ) | | | (3,211 | ) | | | (16,105 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2019 | | | 1,750 | | | | 2 | | | | 1,752 | | | | 6,140,775 | | | | 1,223 | | | | 6,141,998 | |
Acquisitions/improvements (1) | | | 146 | | | | 0 | | | | 146 | | | | 880,897 | | | | 0 | | | | 880,897 | |
Dispositions of real estate (2) | | | (20 | ) | | | (18 | ) | | | (38 | ) | | | (53,985 | ) | | | (32,028 | ) | | | (86,013 | ) |
Transfers to Held for Sale | | | (23 | ) | | | 23 | | | | 0 | | | | (72,912 | ) | | | 72,912 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (70,376 | ) | | | (11,100 | ) | | | (81,476 | ) |
Res e t of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (45,386 | ) | | | (3,243 | ) | | | (48,629 | ) |
| | | 0 | | | | 0 | | | | 0 | | | | (1,340 | ) | | | — | | | | (1,340 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2020 | | | 1,853 | | | | 7 | | | | 1,860 | | | $ | 6,777,673 | | | $ | 27,764 | | | $ | 6,805,437 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Accumulated depreciation and amortization | | | | | | | | | | | | | | | (981,866 | ) | | | (1,943 | ) | | | (983,809 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net balance, December 31, 2020 (6) | | | | | | | | | | | | | | $ | 5,795,807 | | | $ | 25,821 | | | $ | 5,821,628 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes investments of $10.0 million and $45.0 million, respectively, in revenue producing capitalized expenditures, as well as $2.5 million and $4.6 million, respectively, ofnon-revenue producing capitalized expenditures for the years ended December 31, 2020 and 2019. |
| (2) | The total gain on disposal of assets for properties held in use was $10.2 million, $26.5 million and $1.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. The total gain on disposal of assets for properties held for sale was $14.2 million, $32.4 million and $13.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
| (3) | Includes 1property with a real estate investment of $0.8 million that was transferred to the lender during the year ended December 31, 2019. |
| (4) | Impairments on owned real estate is comprised of real estate and intangible asset impairment and allowance for credit losses on direct financing leases. |
| (5) | Representswrite-off of gross investment balances against the related accumulated depreciation and amortization balances as a result of basis reset due to impairment or intangibles which have been fully amortized. |
| (6) | Reconciliation of total owned investments to the accompanying consolidated balance sheet at December 31, 2020 is as follows: |
| | | | |
| | | 5,943,530 | |
Intangible lease liabilities, net | | | (121,902 | ) |
| | | | |
| | $ | 5,821,628 | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
As of December 31, 2020, 2019, and 2018, the Company retiredheld 1,852, 1,745, and 1,453 properties under operating leases, respectively. The following table summarizes the components of rental income recognized on these operating leases in the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | $ | 453,013 | | | $ | 404,720 | | | $ | 466,658 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | | | | 14,931 | |
Straight-line rent, net of uncollectible reserve (2) | | | 11,876 | | | | 16,924 | | | | 16,461 | |
Amortization of above - and below - market lease intangibles, net (3) | | | 1,836 | | | | 4,310 | | | | 4,943 | |
| | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 502,993 | |
| | | | | | | | | | | | | |
| (1) | Includes net impact of (amounts not deemed probable of collection)/amounts recovered of $(10.9) million, $0.4 million, and $( 0.5) million for the years ended December 31, 2020, 2019 and 2018, respectively. |
| (2) | Includes net impact of amounts not deemed probable for collection of $14.9 million, $0.2 million, andfor the years ended December 31, 2020, 2019 and 2018, respectively. As a result of the Company’s adoption of ASU2016-02 on January 1, 2019, the Company reclassified bad debt expense to rental income on a prospective basis. |
| (3) | Excludes amortization of in-place leases of $34.8 million, $29.8 million,and $32.6 million for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. |
Scheduled minimum future contractual rent to be received under the remainingnon-cancellable
term of these operating leases (including contractual fixed rent increases occurring on or after January 1, 2021) at December 31, 2020 are as follows (in thousands): | | | | |
| | |
|
| | $ | 505,018 | |
| | | 495,232 | |
| | | 477,604 | |
| | | 455,840 | |
| | | 442,818 | |
| | | 3,207,076 | |
| | | | | |
Total future minimum rentals | | $ | 5,583,588 | |
| | | | | |
Because lease renewal periods are exercisable at the lessees’ options, the preceding table presents future minimum lease payments due during the initial lease term only. In addition, the future minimum rentals do not include any contingent rentals based on a percentage of the lessees’ gross sales or lease escalations based on future changes in the CPI.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The following table details lease intangible assets and liabilities, net of accumulated amortization (in thousands):
| | | | | | | | |
| | |
| |
|
| | $ | 473,062 | | | $ | 457,616 | |
| | | 83,185 | | | | 95,002 | |
Less: accumulated amortization | | | (188,258 | ) | | | (167,539 | ) |
| | | | | | | | | |
Intangible lease assets, net | | $ | 367,989 | | | $ | 385,079 | |
| | | | | | | | | |
| | | |
| | $ | 178,614 | | | $ | 176,816 | |
Less: accumulated amortization | | | (56,712 | ) | | | (49,481 | ) |
| | | | | | | | | |
Intangible lease liabilities, net | | $ | 121,902 | | | $ | 127,335 | |
| | | | | | | | | |
The remaining outstandingweighted average amortization period for in-place leases, above-market leases, below-market leases and in total was 12.8 years, 11.0 years, 17.4 years and 13.7 years, respectively, as of December 31, 2020. The remaining weighted average amortization period for in-place leases, above-market leases, below-market leases and in total was
13.4 years, 10.9 years, 18.1 years and 14.2years, respectively, as of December 31, 2019. During the year ended December 31, 2020, the Company acquired in-place lease intangible assets of $47.7 million, above-market lease intangible assets of $3.5 million and below-market lease intangible liabilities of $6.3 million. During the year ended December
31, 2019, the Company acquiredin-place
lease intangible assets of $100.3 million, above-market lease intangible assets of $33.3 million and below-market lease intangible liabilities of $20.9 million.Based on the balance of Series 2013-1 Class A notes. There was no make-whole payment associated withintangible assets and liabilities at December 31, 2020, the redemption of these notes.net aggregate amortization expense for the next five years and thereafter is expected to be as follows (in thousands):
| | | | |
| | | |
| | $ | 32,658 | |
| | | 30,592 | |
| | | 28,936 | |
| | | 26,917 | |
| | | 23,503 | |
| | | 103,481 | |
| | | | | |
Total future minimum amortization | | $ | 246,087 | |
| | | | | |
As of December 31,
2018,2019, the
Master Trust 2013 Series 2013-2 Class A notesCompany held 2 properties under direct financing leases, which were
secured by 269 owned and financed properties issued by a single indirect wholly-owned subsidiaryheld in use.During the year ended
December 31, 2020, 1 of the Company.properties was reclassified to an operating lease. For the remaining property held under direct financing lease, the property had
$3.6 million in scheduled minimum future payments to be received under its remainingnon-cancellable
Master Trust 2014
Master Trust 2014 consistslease term as of five bankruptcy-remote, special purpose entities as issuers or co-issuersDecember 31, 2020. The
Company evaluated the collectability of the
notes. On November 20, 2017,amounts receivable under the
Company madedirect financing lease and recorded a
voluntary pre-paymentreserve for uncollectible amounts totaling $0.3 million in the first quarter of 2020, primarily as a result of the
full outstanding principalborrower’s credit rating beingnon-investment
grade and the initial term extending until 2027. The Company reversed $0.2 million of the reserve in the third quarter of 2020 as a result of improvement in the borrower’s credit and, as of December 31, 2020, there was a remaining reserve of $0.1 million against the net investment balance of
Master Trust 2014 Series 2014-1 Class A1 notes. In December 2017, Master Trust 2014 completed the issuance of $674.4 million aggregate principal amount of net-lease mortgage notes comprised of (i) $542.4 million of Series 2017-1 Class A, amortizing notes and (ii) $132.0 million of Series 2017-1 Class B, interest-only notes. Both classes of notes have an anticipated repayment date in December 2022. In January 2018, the Company re-priced the private offering of the Series 2017-1 notes, resulting in the interest rate on the Class B Notes reducing from 6.35% to 5.49%, while the other terms of the Class B Notes and all terms of the Class A Notes remained unchanged. In connection with the re-pricing, the Company received $8.2 million in additional proceeds, that reduced the discount on the underlying debt. In conjunction with the issuance of the Series 2017-1 notes, the Operating Partnership retained $27.1 million of Class A Notes and $6.6 million of Class B Notes to satisfy its regulatory risk retention obligations. On February 2, 2018, the Operating Partnership sold its holding of Series 2014-2 notes with a principal balance of $11.6 million to a third-party.$7.6 million.On May 31, 2018, in conjunction with the Spin-Off, the Company contributed Master Trust 2014, which is included in liabilities related to SMTA Spin-Off in our December 31, 2017 consolidated balance sheet.As of December 31, 2018, indirect wholly-owned special purpose entity subsidiaries2019, the Company held 2 first-priority mortgage loans. The mortgage loans were secured by single-tenant commercial properties and had fixed interest rates over the term of the Companyloans. There were borrowers under six fixed-rate non-recourse loans, excluding one defaulted loan, which have been securitized into CMBS2 other
SPIRIT REALTY CAPITAL, INC. and are secured by the borrowers' respective leased properties and related assets. The stated interest ratesSPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
notes receivable as of December 31, 2018 for the non-defaulted loans ranged from 4.67% to 6.00%,2019. One was secured by tenant assets and stock with a weighted average stated rateprincipal outstanding of 5.53%. $37 thousand, and the other was unsecured with a balance of $1.9 million as of December 31,
As of December 31,
2018,2020, all of the
non-defaultedCompany’s loans
receivablewere secured
fully paid off. The Company had evaluated the collectability of the amounts receivable under the loans receivable and recorded an allowance for loan losses of $0.3 million in the first quarter of 2020, primarily driven by
100 properties. Asthe borrowers’ having investment grade credit ratings and maturities in 2020. The Company reversed $0.2 million of
the reserve in the second quarter of 2020 due to the shorter time to maturity and no change in the borrower’s credit ratings. The remaining $0.1 million of the reserve was reversed during the third quarter of 2020 due to the repayment of the remaining loans.During the years ended December 31, 20182020 and 2019, the Company had the following loan activity (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | |
Principal, December 31, 2018 | | | 52 | | | $ | 42,660 | | | $ | 2,082 | | | $ | 44,742 | |
Principal payments and payoffs | | | (9 | ) | | | (10,927 | ) | | | (110 | ) | | | (11,037 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2019 | | | 43 | | | | 31,733 | | | | 1,972 | | | | 33,705 | |
Principal payments and payoffs | | | (43 | ) | | | (31,733 | ) | | | (1,972 | ) | | | (33,705 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2020 | | | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | |
Impairments and Allowance for Credit Losses
The following table summarizes total impairments and allowance for credit losses recognized in continuing and discontinued operations on the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | |
Real estate asset impairment | | $ | 59,206 | | | $ | 24,130 | | | $ | 17,193 | |
Intangible asset impairment (recovery) | | | 22,118 | | | | (39 | ) | | | 492 | |
Allowance for credit losses on direct financing leases | | | 152 | | | | 0 | | | | 0 | |
Reversal for credit losses on loans receivable | | | 0 | | | | 0 | | | | (17 | ) |
| | | | | | | | | | | | |
| | $ | 81,476 | | | $ | 24,091 | | | $ | 17,668 | |
| | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The debt of the unamortizedCompany and the Operating Partnership are the same, except for the presentation of the Convertible Notes which were issued by the Company. Subsequently, an intercompany note between the Company and the Operating Partnership was executed with terms identical to those of the Convertible Notes. Therefore, in the consolidated balance sheet of the Operating Partnership, the amounts related to the Convertible Notes are reflected as notes payable to Spirit Realty Capital, Inc., net. The Company’s debt is summarized below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | |
| | |
| | |
Average Remaining Years to Maturity (3) | | |
| | |
| |
Revolving credit facilities | | | 5.12% | | | | — | | | | 2.3 | | | $ | — | | | $ | 116,500 | |
| | | 2.57% | | | | 1.65% | | | | 1.3 | | | | 178,000 | | | | — | |
| | | 3.80% | | | | 3.61% | | | | 8.2 | | | | 1,950,000 | | | | 1,500,000 | |
| | | 5.80% | | | | 5.47% | | | | 2.8 | | | | 214,237 | | | | 218,338 | |
| | | 5.54% | | | | 3.75% | | | | 0.4 | | | | 190,426 | | | | 345,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 4.05% | | | | 3.64% | | | | 6.7 | | | | 2,532,663 | | | | 2,179,838 | |
| | | | | | | | | | | | | | | (7,807 | ) | | | (9,272 | ) |
Deferred financing costs, net (4) | | | | | | | | | | | | | | | (18,515 | ) | | | (17,549 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 2,506,341 | | | $ | 2,153,017 | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) | The effective interest rates include amortization of debt discount/premium, amortization of deferred financing costs, facility fees, andnon-utilization fees, where applicable, calculated for the year ended December 31, 2020 and based on the average principal balance outstanding during the period. |
| (2) | Represents the weighted average stated interest rate based on the outstanding principal balance as of December 31, 2020. |
| (3) | Represents the weighted average remaining years to maturity based on the outstanding principal balance as of December 31, 2020. |
| (4) | The Company records deferred financing costs for its revolving credit facilities in deferred costs and other assets, net on its consolidated balance sheets. |
Deferred financing costs associatedand offering discount/premium incurred in connection with entering into debt agreements are amortized to interest expense over the CMBS loans were $3.2 million and $3.9 million, respectively, andinitial term of the unamortized net premium was $0.1 million as of both periods.respective agreements. Both unamortized deferred financing costs and offering discount/premium are recorded net against the principal debt balance of the mortgages and notes payable on the accompanying consolidated balance sheets, except for deferred costs related to revolving credit facilities, which are recorded in deferred costs and are being amortized to interest expense over the term of the respective loans.other assets, net.
As of December 31, 2018, a certain borrower remained in default under the loan agreement relating to one CMBS fixed-rate loan, where the one property securing the loan is vacant and no longer generating revenue to pay the scheduled debt service. The default interest rate on this loan is 9.85%. The defaulted borrower is a bankruptcy remote special purpose entity and the sole owner of the collateral securing the loan obligation. As of December 31, 2018, the aggregate principal balance under the defaulted loan was $10.1 million, which includes $3.4 million of interest capitalized to the principal balances.
Related Party Notes Payable
Wholly-owned subsidiaries of Spirit are the borrower on four mortgage notes payable held by SMTA and secured by six single-tenant properties. In total, these mortgage notes had outstanding principal of $27.9 million at December 31, 2018, which is included in mortgages and notes payable, net on the consolidated balance sheets. As of December 31, 2018, these mortgage notes have a weighted average stated interest rate of 1.00%, a weighted average remaining term of 9.2 years and are eligible for early repayment without penalty.
In May 20, 2014,As of December 31, 2020, the Company issued $402.5 million aggregate principal amountConvertible Notes were comprised of 2.875% convertible notes due in 2019 and $345.0$190.4 million aggregate principal amount of 3.75% convertible notes due inmaturing on May 15, 2021. Interest on the Convertible2021 Notes is payable semiannuallysemi-annually in arrears on May 15 and November 15 of each year.
Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (i) if the closing price of our common stock for each of the last 20 trading days (whether or not consecutive) during the last 30 consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (iii) if we call any or all of the Convertible Notes for redemption prior to the redemption date; or (iv) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. From November 15, 2020 to the close of business on the second scheduled trading day immediately preceding the maturity date of the 2021 Notes, holders may convert the 2021 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.
The conversion rate is subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the agreement, but will not be adjusted for any accrued and unpaid interest. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a fundamental change (as defined in the 2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus accrued and unpaid interest.
Future principal payments due on our various types of debt outstanding as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | 178,000 | | | | — | | | | 178,000 | | | | — | | | | — | | | | — | | | | — | |
| | | 1,950,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,950,000 | |
| | | 214,237 | | | | 4,365 | | | | 4,617 | | | | 200,986 | | | | 590 | | | | 626 | | | | 3,053 | |
| | | 190,426 | | | | 190,426 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table provides information with respect to our commitments, including acquisitions under contract, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 2,532,663 | | | $ | 194,791 | | | $ | 383,603 | | | $ | 1,216 | | | $ | 1,953,053 | |
| | | 606,997 | | | | 85,958 | | | | 160,908 | | | | 141,125 | | | | 219,006 | |
Acquisitions Under Contract (2) | | | 47,985 | | | | 47,985 | | | | — | | | | — | | | | — | |
| | | 12,655 | | | | 12,404 | | | | 251 | | | | — | | | | — | |
Operating Lease Obligations | | | 7,818 | | | | 1,301 | | | | 2,457 | | | | 2,476 | | | | 1,584 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Debt - Interest has been calculated based on outstanding balances as of December 31, 2020 through their respective maturity dates and excludes unamortizednon-cash deferred financing costs of $18.5 million and unamortized debt discount, net of $7.8 million. |
| (2) | Contracts contain standard cancellation clauses contingent on results of due diligence. |
Distributions from our current or accumulated earnings are generally classified as ordinary income, whereas distributions in excess of our current and accumulated earnings, to the extent of a stockholder’s federal income tax basis in our common stock, are generally characterized as a return of capital. Under the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.
We are required to distribute 90% of our taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and are required to pay federal income tax at regular corporate rates to the extent we distribute less than 100% of our taxable income (including capital gains).
We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay corporate-level federal income and excise taxes.
Any distributions will be at the sole discretion of our Board of Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our Board of Directors deems relevant. Refer to “Part I, Item 1A. Risk Factors” for additional information about the potential impact of theCOVID-19
pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.
In this section, we discuss our cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019
compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K
for the year ended December 31, 2019. The following table presents a summary of our cash flows for the years ended December 31, 2020 and 2019 (in thousands):
| | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities | | $ | 314,312 | | | $ | 339,053 | | | $ | (24,741 | ) |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | 147,249 | |
Net cash provided by financing activities | | | 490,713 | | | | 504,548 | | | | (13,835 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | | | | | | | | | | |
As of December 31, 2020, we had $83.3 million of cash, cash equivalents, and restricted cash as compared to $26.0 million as of December 31, 2019.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates specified in our leases, the collectability of rent and the level of our operating expenses and other general and administrative costs.
The decrease in net cash provided by operating activities was primarily attributable to the following:
a decrease in related party fee income of $70.5 million, which was primarily attributable to the $48.2 million termination fee received in connection with the termination of the Asset Management Agreement in September 2019, which was replaced by the Interim Management Agreement,
a decrease in preferred dividends received from SMTA of $14.6 million as a result of SMTA repurchasing the preferred shares in September 2019, and
an increase in cash interest paid of $9.4 million driven by the issuance of the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior Notes.
The decrease was partially offset by the following:
termination fee costs of $24.8 million paid for the termination of interest rate swaps in 2019,
a decrease in cash taxes paid of $11.0 million primarily driven by the net decrease in taxable income in 2020 and sale of MTA, and
a net increase in cash rental revenue of $30.2 million, driven by net acquisitions over the trailing twelve month period, partially offset by $26.3 million of rent deferred and $6.3 million of rent abated during the year ended December 31, 2020 as a result of theCOVID-19
pandemic. Cash used in investing activities is generally used to fund property acquisitions, for investments in loans receivable and for capital expenditures. Cash provided by investing activities generally relates to the disposition of real estate and other assets.
Net cash used in investing activities during the year ended December 31, 2020 included $867.5 million for the acquisition of 146 properties and $12.7 million of capitalized real estate expenditures. These outflows were partially offset by $100.6 million in net proceeds from the disposition of 38 properties and the sale of one loan receivable. Additionally, the outflows were further offset by the collection of $31.8 million of principal on loans receivable, which includes $28.7 million for the paydown of the outstanding loan balances.
During the same period in 2019, net cash used in investing activities included $1.3 billion for the acquisition of 334 properties and $47.7 million of capitalized real estate expenditures. These outflows were partially offset by
$253.6 million in net proceeds from the disposition of 44 properties, $150.0 million in proceeds from redemption of preferred equity investment in SMTA, $33.5 million in collections of the Master Trust Notes and $11.0 million in collections of principal on loans receivable and real estate assets under direct financing leases.
Generally, our net cash provided by or used in financing activities is impacted by our borrowings under our revolving credit facilities and term loans, issuances ofnet-lease
mortgage notes, common stock and debt offerings and repurchases and dividend payments on our common and preferred stock. Net cash provided by financing activities during the year ended December 31, 2020 was primarily attributable to borrowings of $445.5 million under senior unsecured notes, net proceeds from the issuance of common stock of $428.3 million and net borrowings of $178.0 million under term loans. These amounts were partially offset by payment of dividends to equity owners of $270.8 million, repayment of $154.6 million on convertible notes, net repayments of $116.5 million on our revolving credit facilities, deferred financing costs of $6.6 million, common stock repurchases for employee tax withholdings totaling $4.4 million, repayment of $4.1 million on mortgages and notes payable and debt extinguishment costs of $4.0 million.
During the same period in 2019, net cash provided by financing activities was primarily attributable to borrowings of $1.2 billion under senior unsecured notes and net proceeds from the issuance of common stock of $677.4 million. These amounts were partially offset by net payments on the convertible notes, term loans, mortgages and notes payable, and revolving credit facilities of $402.5 million, $420.0 million, $242.0 million, and $29.8 million, respectively. Additionally, there were debt extinguishment costs of $15.3 million and deferred financing costs of $22.1 million during 2019. Payment of dividends to equity owners during 2019 was $236.9 million, and the common stock share repurchase for employee tax withholdings totaled $2.5 million.
Non-GAAP
Financial MeasuresWe calculate FFO in accordance with the standards established by NAREIT. FFO represents net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and amortization, impairment charges and net (gains) losses from property dispositions. FFO is a supplementalnon-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
maturebe 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. AFFO is anon-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, such as transactions costs associated with ourSpin-Off,
default interest and fees on
non-recourse
mortgage indebtedness, debt extinguishment gains (losses), costs associated with termination of interest rate swaps, costs associated with performing on a guarantee of a former tenant’s debt, and certainnon-cash
items. These certainnon-cash
items includenon-cash
revenues (comprised of straight-line rents net of bad debt expense, amortization of lease intangibles, and amortization of net premium/discount on loans receivable),non-cash
interest expense (comprised of amortization of deferred financing costs and amortization of net debt discount/premium) andnon-cash
compensation expense.
Other equity REITs may not calculate FFO and AFFO as we do, and, accordingly, our FFO and AFFO may not be comparable to such other equity REITs’ FFO and AFFO. FFO and AFFO do not represent cash generated from operating activities determined in accordance with GAAP, are 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 stockholders (computed in accordance with GAAP) as a performance measure.
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 supplementalnon-GAAP
financial disclosure to investors in understanding our financial condition. and Annualized Adjusted EBITDA
EBITDAre is anon-GAAP
financial measure and is computed in accordance with standards established by NAREIT. EBITDAre is computed 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 impairments of depreciated property. Adjusted EBITDAre represents EBITDAre as adjusted for revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter and for certain items that we believe are not indicative of our core operating performance, such as transactions costs associated with ourSpin-Off,
debt extinguishment gains (losses), and costs associated with performing on a guarantee of a former tenant’s debt. 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, 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) (computed in accordance with GAAP) as a performance measure. Annualized Adjusted EBITDAre is calculated as Adjusted EBITDAre for the quarter, adjusted for amounts deemed not probable of collection (recoveries) for straight-line rent related to prior periods and 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.
Adjusted Debt to Annualized Adjusted EBITDA
Adjusted Debt to Annualized Adjusted EBITDAre is a supplementalnon-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 the 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. A reconciliation of interest-bearing debt (computed in accordance with GAAP) to Adjusted Debt is included in the financial information accompanying this report.
| | | | | | | | | | | | |
| | | | |
(Dollars in thousands, except per share data) | | | | | | | | | | | | |
Net income attributable to common stockholders | | | | | | | | | | | | |
Portfolio depreciation and amortization | | | 212,038 | | | | 174,895 | | | | 197,346 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Gain on disposition of assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
FFO attributable to common stockholders | | | | | | | | | | | | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
| | | 2,432 | | | | 844 | | | | 549 | |
| | | — | | | | — | | | | 21,391 | |
| | | 12,428 | | | | 14,175 | | | | 22,866 | |
Accrued interest and fees on defaulted loans | | | — | | | | 285 | | | | 1,429 | |
Straight-line rent, net of related bad debt expense | | | (11,876 | ) | | | (16,924 | ) | | | (15,382 | ) |
Other amortization and non-cash charges | | | (918 | ) | | | (2,769 | ) | | | (2,434 | ) |
| | | — | | | | 12,461 | | | | — | |
Non-cash compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Other G&A costs associated with Spin-Off | | | — | | | | — | | | | 1,841 | |
| | | — | | | | — | | | | 5,319 | |
Costs related to COVID-19 (1) | | | 1,798 | | | | — | | | | — | |
AFFO attributable to common stockholders (2) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net income per share of common stock - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | |
FFO per share of common stock - diluted (3) | | $ | 2.73 | | | $ | 3.34 | | | $ | 3.71 | |
| | | | | | | | | | | | |
AFFO per share of common stock - diluted (3) | | $ | 2.95 | | | $ | 3.75 | | | $ | 3.99 | |
| | | | | | | | | | | | |
AFFO per share of common stock, excluding AM termination fee and Haggen settlement (3)(4) | | $ | 2.95 | | | $ | 3.34 | | | $ | 3.78 | |
| | | | | | | | | | | | |
Weighted average shares of common stock outstanding - diluted | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | AFFO for the year ended December 31, 2020 includes $26.3 million of deferred rental income recognized in conjunction with the FASB’s relief for deferral agreements extended as a result of theCOVID-19 pandemic. |
| (3) | Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted: |
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| FFO | | $ | 0.8 million | | | $ | 1.2 million | | | $ | 1.4 million | |
| AFFO | | $ | 0.9 million | | | $ | 1.4 million | | | $ | 1.5 million | |
| (4) | AFFO attributable to common stockholders for the year ended December 31, 2019, excluding $48.2 million of termination fee income, net of $11.3 million in income tax expense. The termination fee was received in conjunction with SMTA’s sale of Master Trust 2014 in September 2019 and termination of the Asset Management Agreement on September 20, 2019. AFFO attributable to common stockholders has not been adjusted to exclude the following amounts for the year ended December 31, 2019: (i) asset management fees of $14.7 million; (ii) property management and servicing fees of $5.4 million; (iii) preferred dividend income from SMTA $10.8 million; (iv) interest income on related party notes receivable of $1.1 million and an early repayment premium of $0.9 million; and (v) interest expense on related party loans payable of $0.2 million. |
| AFFO attributable to common stockholders for the year ended December 31, 2018 excludes proceeds from the Haggen settlement of $19.1 million. |
Adjusted Debt, Adjusted EBITDAre and Annualized Adjusted EBITDAre
| | | | | | | | |
| | | | |
| | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | 2,506,341 | | | | 2,153,017 | |
Unamortized debt discount, net | | | 7,807 | | | | 9,272 | |
Unamortized deferred financing costs | | | 18,515 | | | | 17,549 | |
Cash and cash equivalents | | | (70,303 | ) | | | (14,492 | ) |
Restricted cash balances held for the benefit of lenders | | | (12,995 | ) | | | (11,531 | ) |
| | | | | | | | |
| | | | | | | | |
| | | | |
| | | | | | |
| | $ | 29,170 | | | $ | 4,657 | |
| | | 26,307 | | | | 24,598 | |
Depreciation and amortization | | | 55,054 | | | | 48,867 | |
| | | (133 | ) | | | (229 | ) |
(Gain) loss on disposition of assets | | | (12,347 | ) | | | 11,910 | |
| | | 11,547 | | | | 10,860 | |
| | | | | | | | |
Adjustments to revenue producing acquisitions and dispositions | | | 4,596 | | | | 6,881 | |
| | | 802 | | | | 270 | |
(Gain) loss on debt extinguishment | | | (25 | ) | | | 2,857 | |
Costs related to COVID-19 (1) | | | 358 | | | | — | |
| | | | | | | | |
Adjustments related to straight-line rent (2) | | | (506 | ) | | | — | |
Other adjustments for Annualized Adjusted EBITDA (3) | | | 397 | | | | 58 | |
Annualized Adjusted EBITDA | | | | | | | | |
Adjusted Debt / Annualized Adjusted EBITDA | | | | | | | | |
| (1) | Costs related toCOVID-19 are included in general and administrative expense and primarily relate to legal fees for executing rent deferral or abatement agreements. |
| (2) | Adjustment relates to recoveries on straight-line rent receivable balances deemed not probable of collection in previous periods. |
| (3) | Adjustments for the three months ended December 31, 2020 for amounts where annualization would not be appropriate are comprised of certain recoveries related to prior period amounts (rent deemed not probable of collection, abatements, property costs and tax expenses) and certain general and administrative expenses. For the same period in 2019, adjustments are composed of certain other income,write-off of intangibles and other compensation-related adjustments where annualization would not be appropriate. |
| (4) | Adjusted Debt / Annualized Adjusted EBITDAwould be 5.0x if the 4.1 million shares under open forward sales agreements had been settled as of December 31, 2020. |
| Quantitative and Qualitative Disclosures About Market Risk |
We are exposed to financial market risks, including interest rate risk. Interest rates and other factors, such as occupancy, rental rates and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we generally offer leases that provide for payments of base rent with scheduled increases and, to a lesser extent, contingent rent based on a percentage of the tenant’s gross sales to help mitigate the effect of inflation. Because the properties in our portfolio are generally leased to tenants undertriple-net
leases, our exposure to rising property operating costs due to inflation is mitigated. Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and global economic and political conditions, which are beyond our control. Our operating results depend heavily on the difference between the revenue from our assets and the interest expense incurred on our borrowings. We may incur additional variable rate debt in the future, including amounts that we may borrow under our 2019 Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments, which may lead to a decrease in the yields on real estate we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire real estate with rental rates high enough to offset the increase in interest rates on our borrowings.
In the event interest rates rise significantly or there is an economic downturn, defaults may increase and result in credit losses, which may adversely affect our liquidity and operating results. In a decreasing interest rate environment, borrowers are generally more likely to prepay their loans in order to obtain financing at lower interest rates. However, the vast majority of our mortgage notes payable have prepayment clauses that make refinancing during a decreasing interest rate environment uneconomical.
As of December 31, 2020, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of the leases). As of December 31, 2020, $2.4 billion of our indebtedness outstanding was fixed-rate, consisting of our Senior Unsecured Notes, mortgages and notes payable and Convertible Notes, with a weighted average stated interest rate of 3.79%, excluding amortization of deferred financing costs and debt discounts/premiums. As of December 31, 2020, $178.0 million of our indebtedness was variable-rate, consisting of our 2020 Term Loans with a stated interest rate of 1.65%. There were no borrowings outstanding under our 2019 Credit Facility at December 31, 2020. Ifone-month
LIBOR as of December 31, 2020 increased by 12.5 basis points, or 0.125%, the resulting increase in annual interest expense with respect to the $178.0 million outstanding under the variable-rate obligations would impact our future earnings and cash flows by $0.2 million. The estimated fair values of our debt instruments have been derived based on market quotes for comparable instruments or discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates and credit spreads. The debt instrument balances as of December 31, 2020 are as follows (in thousands):
| | | | | | | | |
| | | | | | | |
| | $ | — | | | $ | — | |
| | | 177,309 | | | | 177,884 | |
Senior Unsecured Notes, net (1) | | | 1,927,348 | | | | 2,122,409 | |
Mortgages and notes payable, net (1) | | | 212,582 | | | | 226,240 | |
Convertible Notes, net (1) | | | 189,102 | | | | 194,124 | |
| |
| (1) | The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums. |
| Financial Statements and Supplementary Data |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | |
Financial Statements and Supplemental Data | | | | |
| |
| | |
| | | | | 54 | |
| | |
| | | | | 61 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 62 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 63 | |
| | |
| | Consolidated Statements of Stockholders’ Equity of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 64 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty Capital, Inc. for the Years Ended December 31, 2020, 2019 and 2018 | | | 65 | |
| | |
| | | | | 67 | |
| | |
| | Consolidated Statements of Operations of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 68 | |
| | |
| | Consolidated Statements of Comprehensive Income of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 70 | |
| | |
| | Consolidated Statements of Partners’ Capital of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 71 | |
| | |
| | Consolidated Statements of Cash Flows of Spirit Realty, L.P. for the Years Ended December 31, 2020, 2019 and 2018 | | | 72 | |
| | |
| | | | | 74 | |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Spirit Realty Capital, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Spirit Realty Capital, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 19, 2021 expressed an unqualified opinion thereon.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty Capital, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 2021 expressed an unqualified opinion thereon.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Company’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Company’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Company recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Company evaluates the collectability of lease payments on a regular basis. The Company considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s lease payment collectability process. To test the Company’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Company’s auditor since 2003.
Report of Independent Registered Public Accounting Firm
To the Partners of Spirit Realty, L.P. and the Board of Directors of
Spirit Realty Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spirit Realty, L.P. (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of Impairment on Real Estate Investments Held and Used
| | |
Description of the Matter | | At December 31, 2020, the Operating Partnership’s real estate investments (land, building, and improvements) held and used totaled $5.5 billion. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership reviews its real estate investments held and used periodically for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Operating Partnership considers factors such as expected future undiscounted cash flows, estimated residual value, and market trends (such as the effects of leasing demand and competition) in assessing recoverability of these investments. Key assumptions used in estimating future cash flows and fair values include recently quoted bid or ask prices, market prices of comparable investments, contractual and comparable market rents, leasing assumptions, capitalization rates, and expectations for the use of the asset. A real estate investment held and used is considered impaired if its carrying value exceeds its estimated undiscounted cash flows, and the impairment is calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. |
| |
| | Auditing management’s evaluation of impairment on real estate investments held and used is judgmental due to the estimation required in determining undiscounted cash flows that can be generated from the investment and determining estimated fair value when the investment is not deemed recoverable from those estimated future cash flows. In particular, the impairment evaluation is sensitive to the investment’s estimated residual value that is derived from the key assumptions stated above, which can be affected by expectations about future market or economic conditions, demand, and competition. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s impairment evaluation process. This included controls over management’s review of the key assumptions underlying the undiscounted cash flows and the fair value determination. To test the Operating Partnership’s evaluation of impairment of real estate investments, we performed audit procedures that included, among others, testing the key assumptions used by management in its recoverability analysis and in determining the fair value of investments that were impaired. We compared the key assumptions to observable market transaction information published by independent industry research sources to assess whether the assumptions were market supported. We involved a valuation specialist to assist in evaluating the key assumptions listed above. As part of our evaluation, we assessed the historical accuracy of management’s estimates and performed sensitivity analyses of key assumptions to evaluate the changes in the valuation of certain properties that would result from changes in the assumptions or using alternative valuation techniques. In addition, we performed procedures to evaluate the completeness and accuracy of the data utilized in management’s impairment analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
Collectability of Lease Payments
| | |
Description of the Matter | | The Operating Partnership recorded $479.9 million in rental income for the year ended December 31, 2020. As discussed in Note 2 to the consolidated financial statements, the Operating Partnership evaluates the collectability of lease payments on a regular basis. The Operating Partnership considers certain key factors in assessing collectability, including: tenant’s payment history and financial condition, business conditions in the industry in which the tenant operates, economic conditions of the geographic location in which the tenant operates, as well as other relevant tenant specific circumstances. Auditing management’s evaluation of collectability of lease payments requires judgement as the assessment is based on tenant specific circumstances and expectations of future economic and market conditions. In particular, the longer-term nature of repayments ofCOVID-19 induced deferrals, the absence of cash receipts during the deferral period, and the current market environment requires the judgement of management in evaluating the collectability of billed and unbilled tenant receivables. Given the tenant specific nature of this evaluation and the uncertainty associated with future economic and market conditions, the related reserves against revenue are sensitive to the economic and geographic considerations of individual tenants described above and management’s judgment in evaluating the collectability conclusion. |
| |
| | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Operating Partnership’s lease payment collectability process. To test the Operating Partnership’s assessment of collectability, our audit procedures included, among others, evaluating tenant specific financial information, current and historical tenant payment collection, and changes in the collectability conclusions made during the year. In addition, we tested the completeness and accuracy of the data used in management’s collectability analysis. We also assessed information and events subsequent to the balance sheet date, if any, to corroborate certain of the key assumptions used by management. |
We have served as the Operating Partnership’s auditor since 2016.
SPIRIT REALTY CAPITAL, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320) | | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | — | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and stockholders’ equity | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | — | | | $ | 116,500 | |
| | | 177,309 | | | | — | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
| | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both December 31, 2020 and December 31, 2019, liquidation preference of $25.00 per share | | | 166,177 | | | | 166,177 | |
Common stock, $0.05 par value, 175,000,000 shares authorized: 114,812,615 and 102,476,152 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | | | 5,741 | | | | 5,124 | |
Capital in excess of common stock par value | | | 6,126,503 | | | | 5,686,247 | |
| | | (2,688,647) | | | | (2,432,838) | |
Accumulated other comprehensive loss | | | (8,654) | | | | (11,461) | |
| | | | | | | | | |
Total stockholders’ equity | | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | — | | | | 10,802 | | | | 8,750 | |
| | | — | | | | — | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
| | | | | | | | | | | | | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | — | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
Dividends paid to preferred stockholders | | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | — | | | | (0.19) | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average shares of common stock outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | |
Net income attributable to common stockholders | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Stockholders’ Equity
(In Thousands, Except Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Value and
Capital in
Excess of | | | | | | | | | | | | |
Balances, December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 132,052 | | | | — | | | | 132,052 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | — | | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 121,700 | | | | — | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (7,159 | ) | | | (7,159 | ) |
Cost associated with preferred stock | | | — | | | | (16 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (16 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (262,887 | ) | | | — | | | | (262,887 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (57,679 | ) | | | (3 | ) | | | — | | | | (2,400 | ) | | | — | | | | (2,403 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 92,458 | | | | 5 | | | | 2,967 | | | | — | | | | — | | | | 2,972 | |
Repurchase of common shares | | | — | | | | — | | | | (4,244,446 | ) | | | (212 | ) | | | — | | | | (167,953 | ) | | | — | | | | (168,165 | ) |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | — | | | | — | | | | (216,005 | ) |
Stock-based compensation, net | | | — | | | | — | | | | 222,887 | | | | 10 | | | | 15,104 | | | | (1,011 | ) | | | — | | | | 14,103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 175,266 | | | | — | | | | 175,266 | |
Dividends declared on preferred | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common | | | — | | | | — | | | | — | | | | — | | | | — | | | | 164,916 | | | | — | | | | 164,916 | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,302 | ) | | | (4,302 | ) |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (236,943 | ) | | | — | | | | (236,943 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (58,445 | ) | | | (3 | ) | | | — | | | | (2,539 | ) | | | — | | | | (2,542 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 16,578,423 | | | | 829 | | | | 676,361 | | | | — | | | | — | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | 168,819 | | | | 9 | | | | 14,268 | | | | (1,017 | ) | | | — | | | | 13,260 | |
| | | — | | | | — | | | | — | | | | — | | | | (79 | ) | | | — | | | | — | | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,708 | | | | — | | | | 26,708 | |
Dividends declared on preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | — | | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | 16,358 | | | | — | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,807 | | | | 2,807 | |
Dividends declared on common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | (266,659 | ) | | | — | | | | (266,659 | ) |
Tax withholdings related to net stock settlements | | | — | | | | — | | | | (117,543 | ) | | | (6 | ) | | | — | | | | (4,375 | ) | | | — | | | | (4,381 | ) |
Issuance of shares of common stock, net | | | — | | | | — | | | | 12,137,210 | | | | 607 | | | | 427,632 | | | | — | | | | — | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | 316,796 | | | | 16 | | | | 12,624 | | | | (1,133 | ) | | | — | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
SPIRIT REALTY CAPITAL, INC.
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common stock dividends paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred stock dividends paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
The following table presents the supplemental cash flow disclosures (in thousands):
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
| | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
Consolidated Balance Sheets
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | |
| | |
| | |
| |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | $ | 2,090,592 | | | $ | 1,910,287 | |
Buildings and improvements | | | 4,302,004 | | | | 3,840,220 | |
| | | | | | | | | |
Total real estate investments | | | 6,392,596 | | | | 5,750,507 | |
Less: accumulated depreciation | | | (850,320 | ) | | | (717,097) | |
| | | | | | | | | |
| | | | 5,542,276 | | | | 5,033,410 | |
| | | 0 | | | | 34,465 | |
Intangible lease assets, net | | | 367,989 | | | | 385,079 | |
Real estate assets under direct financing leases, net | | | 7,444 | | | | 14,465 | |
Real estate assets held for sale, net | | | 25,821 | | | | 1,144 | |
| | | | | | | | | |
| | | 5,943,530 | | | | 5,468,563 | |
Cash and cash equivalents | | | 70,303 | | | | 14,492 | |
Deferred costs and other assets, net | | | 157,353 | | | | 124,006 | |
| | | 225,600 | | | | 225,600 | |
| | | | | | | | | |
| | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
| | | |
Liabilities and partners’ capital | | | | | | | | |
| | | | | | | | |
Revolving credit facilities | | $ | 0 | | | $ | 116,500 | |
| | | 177,309 | | | | 0 | |
Senior Unsecured Notes, net | | | 1,927,348 | | | | 1,484,066 | |
Mortgages and notes payable, net | | | 212,582 | | | | 216,049 | |
Notes Payable to Spirit Realty Capital, Inc., net | | | 189,102 | | | | 336,402 | |
| | | | | | | | | |
| | | 2,506,341 | | | | 2,153,017 | |
Intangible lease liabilities, net | | | 121,902 | | | | 127,335 | |
Accounts payable, accrued expenses and other liabilities | | | 167,423 | | | | 139,060 | |
| | | | | | | | | |
| | | 2,795,666 | | | | 2,419,412 | |
Commitments and contingencies (see Note 6) | | | 0 | | | | 0 | |
| | | | | | | | |
General partner’s common capital, 797,644 units issued and outstanding as of both December 31, 2020 and December 31, 2019 | | | 20,505 | | | | 22,389 | |
Limited partners’ preferred capital: 6,900,000 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 166,177 | | | | 166,177 | |
Limited partners’ common capital: 114,014,971 and 101,678,508 units issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | | | 3,414,438 | | | | 3,224,683 | |
| | | | | | | | | |
| | | 3,601,120 | | | | 3,413,249 | |
| | | | | | | | | |
Total liabilities and partners’ capital | | $ | 6,396,786 | | | $ | 5,832,661 | |
| | | | | | | | | |
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 402,321 | |
Interest income on loans receivable | | | 998 | | | | 3,240 | | | | 3,447 | |
Earned income from direct financing leases | | | 571 | | | | 1,239 | | | | 1,814 | |
| | | 678 | | | | 69,218 | | | | 15,838 | |
| | | 1,469 | | | | 4,039 | | | | 21,705 | |
| | | | | | | | | | | | | |
| | | 483,617 | | | | 516,427 | | | | 445,125 | |
| | | | | | | | | | | | |
General and administrative | | | 48,380 | | | | 52,424 | | | | 52,993 | |
Termination of interest rate swaps | | | 0 | | | | 12,461 | | | | — | |
Property costs (including reimbursable) | | | 24,492 | | | | 18,637 | | | | 21,066 | |
| | | 2,432 | | | | 844 | | | | 210 | |
| | | 104,165 | | | | 101,060 | | | | 97,548 | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 162,452 | |
| | | 81,476 | | | | 24,091 | | | | 6,725 | |
| | | | | | | | | | | | | |
| | | 473,565 | | | | 384,982 | | | | 340,994 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
(Loss) gain on debt extinguishment | | | (7,227) | | | | (14,330) | | | | 27,092 | |
Gain on disposition of assets | | | 24,156 | | | | 58,850 | | | | 14,629 | |
Preferred dividend income from SMTA | | | 0 | | | | 10,802 | | | | 8,750 | |
| | | — | | | | 0 | | | | (5,319) | |
| | | | | | | | | | | | | |
| | | 16,929 | | | | 55,322 | | | | 45,152 | |
Income from continuing operations before income tax expense | | | 26,981 | | | | 186,767 | | | | 149,283 | |
| | | (273) | | | | (11,501) | | | | (792) | |
| | | | | | | | | | | | | |
Income from continuing operations | | | 26,708 | | | | 175,266 | | | | 148,491 | |
Loss from discontinued operations | | | — | | | | 0 | | | | (16,439) | |
| | | | | | | | | | | | | |
| | | 26,708 | | | | 175,266 | | | | 132,052 | |
| | | (10,350) | | | | (10,350) | | | | (10,352) | |
| | | | | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
| | | | | | | | | | | | | |
| | | | |
Net income attributable to the general partner: | | | | | | | | | | | | |
| | $ | 125 | | | $ | 1,450 | | | $ | 1,270 | |
| | | — | | | | 0 | | | | (151) | |
| | | | | | | | | | | | | |
Net income attributable to the general partner | | $ | 125 | | | $ | 1,450 | | | $ | 1,119 | |
| | | | |
Net income attributable to the limited partners: | | | | | | | | | | | | |
| | $ | 26,583 | | | $ | 173,816 | | | $ | 147,221 | |
| | | — | | | | 0 | | | | (16,288) | |
| | | | | | | | | | | | | |
Net income attributable to the limited partners | | $ | 26,583 | | | $ | 173,816 | | | $ | 130,933 | |
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Data)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | | |
Net income per partnership unit - basic: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted: | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | 0 | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per partnership unit - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Weighted average partnership units outstanding: | | | | | | | | | | | | |
| | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
Net income after preferred distributions | | $ | 16,358 | | | $ | 164,916 | | | $ | 121,700 | |
Other comprehensive income (loss): | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | | 2,807 | | | | (4,302 | ) | | | (7,159 | ) |
| | | | | | | | | | | | |
Total comprehensive income | | $ | 19,165 | | | $ | 160,614 | | | $ | 114,541 | |
| | | | | | | | | | | | |
Consolidated Statements of Partners’ Capital
(In Thousands, Except Unit Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | Limited Partners’ Capital (2) | | General Partner’s Capital (1) | | Limited Partners’ Capital (2) | | |
| | | | | | | | | | | | | | | | | |
Balances, December 31, 2017 | | | 6,900,000 | | | $ | 166,193 | | | | 797,644 | | | $ | 24,426 | | | | 88,976,491 | | | $ | 3,128,990 | | | $ | 3,319,609 | |
| | | — | | | | — | | | | — | | | | 1,119 | | | | — | | | | 130,933 | | | | 132,052 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,352 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,119 | | | | | | | | 120,581 | | | | 121,700 | |
| | | — | | | | — | | | | — | | | | (66 | ) | | | — | | | | (7,093 | ) | | | (7,159 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,418 | ) | | | — | | | | (260,469 | ) | | | (262,887 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (57,679 | ) | | | (2,403 | ) | | | (2,403 | ) |
Issuance of common units, net | | | — | | | | (16 | ) | | | — | | | | — | | | | 92,458 | | | | 2,972 | | | | 2,956 | |
Repurchase of common units | | | — | | | | — | | | | — | | | | — | | | | (4,244,446 | ) | | | (168,165 | ) | | | (168,165 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SMTA dividend distribution | | | — | | | | — | | | | — | | | | — | | | | — | | | | (216,005 | ) | | | (216,005 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 222,887 | | | | 14,103 | | | | 14,103 | |
Balances, December 31, 2018 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 23,061 | | | | 84,989,711 | | | $ | 2,612,511 | | | $ | 2,801,749 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | 1,450 | | | | — | | | | 173,816 | | | | 175,266 | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income after preferred distributions | | | | | | | — | | | | | | | | 1,450 | | | | | | | | 163,466 | | | | 164,916 | |
| Other comprehensive loss | | | — | | | | — | | | | — | | | | (38 | ) | | | — | | | | (4,264 | ) | | | (4,302 | ) |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,083 | ) | | | — | | | | (234,860 | ) | | | (236,943 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (58,445 | ) | | | (2,542 | ) | | | (2,542 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 16,578,423 | | | | 677,190 | | | | 677,190 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 168,819 | | | | 13,260 | | | | 13,260 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | | — | | | | — | | | | (1 | ) | | | — | | | | (78 | ) | | | (79 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2019 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 22,389 | | | | 101,678,508 | | | $ | 3,224,683 | | | $ | 3,413,249 | |
| | | — | | | | — | | | | — | | | | 125 | | | | — | | | | 26,583 | | | | 26,708 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Partnership distributions declared on preferred units | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,350 | ) | | | (10,350 | ) |
Net income after preferred distributions | | | | | | | — | | | | | | | | 125 | | | | | | | | 16,233 | | | | 16,358 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | 21 | | | | — | | | | 2,786 | | | | 2,807 | |
Partnership distributions declared on common units | | | — | | | | — | | | | — | | | | (2,030 | ) | | | — | | | | (264,629 | ) | | | (266,659 | ) |
Tax withholdings related to net settlement of common units | | | — | | | | — | | | | — | | | | — | | | | (117,543 | ) | | | (4,381 | ) | | | (4,381 | ) |
Issuance of common units, net | | | — | | | | — | | | | — | | | | — | | | | 12,137,210 | | | | 428,239 | | | | 428,239 | |
Stock-based compensation, net | | | — | | | | — | | | | — | | | | — | | | | 316,796 | | | | 11,507 | | | | 11,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances, December 31, 2020 | | | 6,900,000 | | | $ | 166,177 | | | | 797,644 | | | $ | 20,505 | | | | 114,014,971 | | | $ | 3,414,438 | | | $ | 3,601,120 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Consists of general partnership interests held by Spirit General OP Holdings, LLC. |
| (2) | Consists of limited partnership interests held by Spirit Realty Capital, Inc. and Spirit Notes Partner, LLC. |
Consolidated Statements of Cash Flows
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
| | | | | | | | | | | | |
| | $ | 26,708 | | | $ | 175,266 | | | $ | 132,052 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 212,620 | | | | 175,465 | | | | 197,913 | |
| | | 81,476 | | | | 24,091 | | | | 17,668 | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discounts | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of deferred losses on interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
Loss on termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Payment for termination of interest rate swaps | | | — | | | | (24,843 | ) | | | — | |
Stock-based compensation expense | | | 12,640 | | | | 14,277 | | | | 15,114 | |
Loss (gain) on debt extinguishment | | | 7,227 | | | | 14,330 | | | | (26,729 | ) |
Gain on dispositions of real estate and other assets | | | (24,156 | ) | | | (58,850 | ) | | | (14,355 | ) |
| | | (12,996 | ) | | | (19,943 | ) | | | (18,878 | ) |
Bad debt expense and other | | | 221 | | | | 189 | | | | 2,313 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Deferred costs and other assets, net | | | (21,296 | ) | | | 2,953 | | | | (1,396 | ) |
Accounts payable, accrued expenses and other liabilities | | | 19,440 | | | | 9,482 | | | | 9,797 | |
| | | | | | | | | | | | | |
Net cash provided by operating activities | | | 314,312 | | | | 339,053 | | | | 336,365 | |
| | | | | | | | | | | | |
Acquisitions of real estate | | | (867,456 | ) | | | (1,295,545 | ) | | | (257,712 | ) |
Capitalized real estate expenditures | | | (12,659 | ) | | | (47,652 | ) | | | (52,390 | ) |
Investments in loans receivable | | | — | | | | — | | | | (35,450 | ) |
Proceeds from redemption of preferred equity investment | | | — | | | | 150,000 | | | | — | |
Collections from investment in Master Trust 2014 | | | — | | | | 33,535 | | | | — | |
Collections of principal on loans receivable | | | 31,771 | | | | 11,037 | | | | 30,427 | |
Proceeds from dispositions of real estate and other assets, net | | | 100,594 | | | | 253,626 | | | | 94,663 | |
| | | | | | | | | | | | | |
Net cash used in investing activities | | | (747,750 | ) | | | (894,999 | ) | | | (220,462 | ) |
| | | | | | | | | | | | |
Borrowings under revolving credit facilities | | | 1,155,000 | | | | 1,047,200 | | | | 826,000 | |
Repayments under revolving credit facilities | | | (1,271,500 | ) | | | (1,077,000 | ) | | | (791,700 | ) |
Borrowings under mortgages and notes payable | | | — | | | | — | | | | 104,247 | |
Repayments under mortgages and notes payable | | | (4,101 | ) | | | (242,049 | ) | | | (170,519 | ) |
Borrowings under term loans | | | 400,000 | | | | 820,000 | | | | 420,000 | |
Repayments under term loans | | | (222,000 | ) | | | (1,240,000 | ) | | | — | |
Repayments under Convertible Notes | | | (154,574 | ) | | | (402,500 | ) | | | — | |
Borrowings under Senior Unsecured Notes | | | 445,509 | | | | 1,198,264 | | | | — | |
Debt extinguishment costs | | | (4,032 | ) | | | (15,277 | ) | | | (2,968 | ) |
| | | (6,642 | ) | | | (22,105 | ) | | | (1,981 | ) |
Cash, cash equivalents and restricted cash held by SMTA at Spin-Off | | | — | | | | — | | | | (73,081 | ) |
Sale of SubREIT preferred shares | | | — | | | | — | | | | 5,000 | |
Proceeds from issuance of common stock, net of offering costs | | | 428,272 | | | | 677,428 | | | | 2,972 | |
Consolidated Statements of Cash Flows - (continued)
| | | | | | | | | | | | |
| | | For the Year Ended December 31, |
| | | | | | | |
Proceeds from issuance of preferred stock, net of offering costs | | | — | | | | — | | | | (16 | ) |
Repurchase of shares of common stock, including tax withholdings related to net stock settlements | | | (4,381 | ) | | | (2,541 | ) | | | (170,568 | ) |
Common distributions paid | | | (260,488 | ) | | | (226,522 | ) | | | (290,223 | ) |
Preferred distributions paid | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
| | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | 490,713 | | | | 504,548 | | | | (153,189 | ) |
| | | | | | | | | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 57,275 | | | | (51,398 | ) | | | (37,286 | ) |
Cash, cash equivalents and restricted cash, beginning of period | | | 26,023 | | | | 77,421 | | | | 114,707 | |
| | | | | | | | | | | | | |
Cash, cash equivalents and restricted cash, end of period | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
The following table presents the supplemental cash flow disclosures (in thousands):
| | | | | | | | | | | | |
Supplemental Disclosures of Non-Cash Activities: | | For the Year Ended December 31, |
| | | | | | | |
Distributions declared and unpaid | | $ | 71,758 | | | $ | 64,049 | | | $ | 53,617 | |
Relief of debt through sale or foreclosure of real estate properties | | | 0 | | | | 10,368 | | | | 56,119 | |
Net real estate and other collateral assets sold or surrendered to lender | | | 0 | | | | 654 | | | | 28,271 | |
Accrued interest capitalized to principal (1) | | | 0 | | | | 251 | | | | 1,967 | |
Accrued market-based award dividend rights | | | 1,133 | | | | 1,017 | | | | 1,011 | |
Accrued capitalized costs | | | 2,174 | | | | 2,230 | | | | 695 | |
Financing provided in connection with disposition of assets | | | — | | | | 0 | | | | 2,888 | |
| | | 0 | | | | 6,143 | | | | — | |
| | | 0 | | | | 6,143 | | | | — | |
Reclass of residual value from direct financing lease to operating lease | | | 6,831 | | | | 5,841 | | | | 4,455 | |
Investment in preferred shares | | | — | | | | 0 | | | | 150,000 | |
Non-cash distribution to SMTA, net | | | — | | | | 0 | | | | 142,924 | |
Cash flow hedge changes in fair value | | | — | | | | 18,593 | | | | 7,159 | |
Receivable for disposal of real estate property | | | 2,000 | | | | — | | | | — | |
Supplemental Cash Flow Disclosures: | | | | | | | | | | | | |
| | $ | 82,916 | | | $ | 73,530 | | | $ | 118,329 | |
| | | 801 | | | | 11,826 | | | | 1,099 | |
| | Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default. |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements
Organization and Operations
Spirit Realty Capital, Inc. (the “Corporation” or “Spirit” or, with its consolidated subsidiaries, the “Company”) operates as a self-administered and self-managed REIT that seeks to generate and deliver sustainable and attractive returns for stockholders by primarily investing in and managing a portfolio of single-tenant, operationally essential real estate throughout theUnited States
that is generally leased on a long-term,triple-net
basis to tenants operating within retail, industrial, office and other property types. Single tenant, operationally essential real estate generally refers to free-standing, commercial real estate facilities where tenants conduct activities that are essential to the generation of their sales and profits. The Company’s operations are generally carried out through Spirit Realty, L.P. (the “Operating Partnership”) and its subsidiaries. Spirit General OP Holdings, LLC, one of the Corporation’s wholly-owned subsidiaries, is the sole general partner and owns approximately 1% of the Operating Partnership. The Corporation and a wholly-owned subsidiary (Spirit Notes Partner, LLC) are the only limited partners and together own the remaining 99% of the Operating Partnership.
On May 31, 2018, the Company completed thespin-off
(the“Spin-Off”)
of the assets that collateralized Master Trust 2014, properties leased to Shopko, and certain other assets into an independent, publicly traded REIT, Spirit MTA REIT (“SMTA”). For periods prior to theSpin-Off,
the historical financial results of SMTA are reflected in our consolidated financial statements as discontinued operations. The Company formed Spirit Realty AM Corporation (“SRAM”), a wholly-owned taxable REIT subsidiary. The rights and obligations of the Asset Management Agreement were transferred to SRAM on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, which was effective from September 20, 2019 through September 4, 2020. The Company allocated personnel and other general and administrative costs to SRAM for management services provided to SMTA. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The accompanying consolidated financial statements of the Company and the Operating Partnership have been prepared on the accrual basis of accounting, in accordance with GAAP. The consolidated financial statements of the Company include the accounts of the Corporation and its wholly-owned subsidiaries. In the opinion of management, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth therein. The consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
A variable interest entity (“VIE”) would be consolidated by the Company when the Company is the primary beneficiary, which is based on whether the Company has(i)
the power to direct activities that most significantly impact the economic performance of the VIE and(ii)
the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Determination of the primary beneficiary of a VIE considers all relationships between the Company and the VIE, including management agreements and other contractual arrangements. The Company evaluated SMTA as a VIE at the time ofSpin-Off
and quarterly thereafter until the third quarter of 2019 and concluded the Company was not the primary beneficiary. In the third quarter of 2019, the Company no longer had variable interests in SMTA and control was evaluated under the voting interest model. The Company concluded SMTAdid
not require consolidation by the Company for any period presented. All expenses incurred by the Company have been allocated to the Operating Partnership in accordance with the Operating Partnership’s first amended and restated agreement of limited partnership, which management determined to be a reasonable method of allocation. Therefore, expenses incurred would not be materially different if the Operating Partnership had operated as an unaffiliated entity.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
May 15,These consolidated financial statements include certain special purpose entities that were formed to acquire and hold real estate encumbered by indebtedness (see Note 4). Each special purpose entity is a separate legal entity and is the sole owner of its assets and responsible for its liabilities. The assets of these special purpose entities are not available to pay, or otherwise satisfy obligations to, the creditors of any affiliate or owner of another entity unless the special purpose entities have expressly agreed and are permitted under their governing documents. As of December 31, 2020 and 2019, net assets totaling $343.4 million and $375.5 million, respectively, were held, and net liabilities totaling $215.9 million and $231.7 million, respectively, were owed by these encumbered special purpose entities and are included in the accompanying consolidated balance sheets.
A discontinued operation represents: (i) a component of an entity or group of components that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will have a major effect on the Company’s operations and financial results or (ii) an acquired business that is classified as held for sale on the date of acquisition. Examples of a strategic shift include disposing of: (i) a separate major line of business, (ii) a separate major geographic area of operations, or (iii) other major parts of the Company. The Company determined that theSpin-Off
represented a strategic shift that had a major effect on the Company’s results and, therefore, SMTA’s operationsqualified
as discontinued operations. See Note 12 for further discussion of discontinued operations. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.
The Company views its operations as 1 segment, which consists of net leasing operations. The Company has no other reportable segments.
Purchase Accounting and Acquisition of Real Estate
When acquiring a property, the purchase price (including acquisition and closing costs) is allocated to land, building, improvements and equipment based on their relative fair values. The Company considers several assumptions to estimate the fair value of the components of the tangible property acquired including market assumptions for land, building and improvements. The determination of the intangible assets and liabilities primarily relate to the contractual lease terms, estimates of the fair market rental rates, discount rates, and estimates of costs to carry and obtain a tenant. For properties acquired within-place
leases, the purchase price of real estate is allocated to the tangible and intangible assets and liabilities acquired based on their relative fair values. In making estimates of fair values for this purpose, a number of sources are used, including independent appraisals and information obtained about each property as a result ofpre-acquisition
due diligence, marketing and leasing activities. Carrying Value of Real Estate Investments
The Company’s real estate properties are recorded at cost and depreciated using the straight-line method over the estimated remaining useful lives of the properties, which generally range from 20 to 50 years for buildings and improvements and from 5 to 20 years for land improvements. Properties classified as held for sale are not depreciated. Properties classified as held for sale are recorded at the lower of their carrying value or their fair value, less anticipated selling costs.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Company is continually evaluating the portfolio of real estate assets and may elect to dispose of assets considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, associated indebtedness, asset location, and tenant operation type(e.g., industry, sector, or concept/brand). Real
estate assets held for sale are expected to be sold within twelve months. Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value ofin-place
leases and above- or below-market leases. For real estate acquired subject to existing lease agreements,in-place
lease intangibles are valued based on the Company’s estimate of costs related to acquiring a tenant and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above- and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease and, in certain instances, over the renewal period. For real estate property leases classified as direct financing leases, the building portion of the lease is accounted for as a direct financing lease, while the land portion is accounted for as an operating lease when certain criteria are met. For direct financing leases, the Company records an asset which represents the net investment that is determined by using the aggregate of the total amount of future minimum lease payments, the estimated residual value of the leased property and deferred incremental direct costs less unearned income. Income is recognized over the life of the lease to approximate a level rate of return on the net investment. Residual values, which are reviewed annually, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased property. Actual residual values realized could differ from these estimates.
The Company reviews its real estate investments and related lease intangibles periodically for indicators of impairment, including, but not limited to: the asset being held for sale, vacant,
tenant bankruptcy or delinquency, and leases expiring in 60 days or less. For assets with indicators of impairment, the Company then evaluates if its carrying amount may not be recoverable. The Company considers factors such as expected future undiscounted cash flows, estimated residual value, market trends (such as the effects of leasing demand and competition) and other factors in making this assessment. An asset is considered impaired if its carrying value exceeds its estimated undiscounted cash flows. Impairment is then calculated as the amount by which the carrying value exceeds the estimated fair value, or for assets held for sale, as the amount by which the carrying value exceeds fair value less costs to sell. Estimating fair values is highly subjective and such estimates could differ materially from actual results. Key assumptions used in estimating fair values include, but are not limited to: signed purchase and sale agreements or letters of intent; recently quoted bid or ask prices, or market prices for comparable properties; estimates of residual values, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions, expenses based upon market conditions and capitalization rates; and expectations for the use of the real estate.
Gain or Loss on Disposition of Assets
When real estate properties are disposed of, the related net book value of the properties is removed and a gain or loss on disposition is recognized in our consolidated statements of operations as the difference between the proceeds from the disposition, net of any costs to sell, and the net book value. As leasing is the Company’s primary activity, the
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Company determined that its sales of real estate, which are nonfinancial assets, are sold to noncustomers and fall within the scope of ASC610-20.
The full gain or loss on the disposition of real estate properties is recognized at time of sale provided that the Company (i) has no controlling financial interest in the real estate and (ii) has no continuing interest or obligation with respect to the disposed real estate. Rental Income: Cash and Straight-line Rent
The Company primarily leases real estate to its tenants under long-term,triple-net
leases that are classified as operating leases. To evaluate lease classification, the Company assesses the terms and conditions of the lease to determine the appropriate lease term. The majority of our operating leases include one or more options to extend, typically for a period of five to ten years per renewal option. Excluding Walgreen Co., less than 1% of the Company’s operating leases at December 31, 2020 include an option to terminate. Walgreen Co. leases are generally for fifty years or more with several five-year termination periods after an initialnon-cancellable
term. Less than 10% of the Company’s operating leases at December 31, 2020 include an option to purchase, where the purchase option is generally determined based on fair market value of the underlying property. The Company does not include options to extend, terminate or purchase in its evaluation for lease classification purposes or for recognizing rental income unless the Company is reasonably certain the tenant will exercise the option. Another component of lease classification that requires judgment is the residual value of the property at the end of the lease term. For acquisitions, the Company assumes a value that is equal to the tangible value of the property at the date of the assessment. For lease modifications, the Company generally uses sales comparables or a direct capitalization approach to determine fair value. The Company seeks to protect residual value through its underwriting of acquisitions, incorporating the proprietary Spirit Property Ranking Model which is real estate centric. Once a property is acquired, the lessee is responsible for maintenance of the property, including insurance protecting any damage to the property. To further protect residual value, the Company supplements the tenant insurance policy with a master policy covering all properties owned by the Company. As an active manager, the Company will occasionally invest in capital improvements on properties,re-lease
properties to new tenants or extend lease terms to protect residual value. The Company’s leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. Accordingly, accrued rental revenue, calculated as the aggregate difference between the rental revenue recognized on a straight-line basis and scheduled rents, represents unbilled rent receivables that the Company will receive only if the tenants make all rent payments required through the expiration of the initial term of the leases. For leases with contingent rent escalators, rental income typically increases at a multiple of any increase in the CPI over a specified period and may adjust over aone-year
period or over multiple-year periods. Because of the volatility and uncertainty with respect to future changes in the CPI and the Company’s inability to determine the extent to which any specific future change in the CPI is probable at each rent adjustment date during the entire term of these leases, increases in rental revenue from leases with this type of escalator are recognized when the changes in the rental rates have occurred. Some of the Company’s leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which is recognized as rental income when the change in the factor on which the contingent lease payment is based actually occurs.
Rental income is subject to an evaluation for collectability, which includes management’s estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant’s payment history and financial condition. The Company does not recognize rental income for amounts that are not probable of collection.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Rental Income: Tenant Reimbursement Revenue
Under atriple-net
lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Certain leases contain additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, which arenon-lease
components. The Company has elected to combine all itsnon-lease
components, which were determined to have the same pattern of transfer as the related operating lease component, into a single combined lease component. Tenant reimbursement revenue is variable and is recognized as revenue in the period in which the related expenses are incurred, with the related expenses included in property costs (including reimbursable) on the Company’s consolidated statements of operations. Tenant reimbursements are recorded on a gross basis in instances when our tenants reimburse us for property costs which we incur. Tenant receivables are reduced for amounts that are not probable of collection. Rental Income: Intangible Amortization
Initial direct costs associated with the origination of a lease are deferred and amortized as an adjustment to rental revenue. Above-market and below-market lease intangibles are amortized as a decrease and increase, respectively, to rental revenue.In-place
lease intangibles are amortized on a straight-line basis and included in depreciation and amortization expense. All lease intangibles are amortized over the remaining term of the respective leases, which includes the initial term of the lease and may also include the renewal periods if the Company believes it is reasonably certain the tenant will exercise the renewal option. If the Company subsequently determines it is reasonably certain that the tenant will not exercise the renewal option, the unamortized portion of any related lease intangible is accelerated over the remaining initial term of the lease. If the Company believes the intangible balance is no longer recoverable, the unamortized portion of any related lease intangible is immediately recognized in impairments in the Company’s consolidated statements of operations. Other Income: Lease Termination Fees
Lease termination fees are included in other income on the Company’s consolidated statements of operations and are recognized when there is a signed termination agreement and all of the conditions of the agreement have been met. The Company recorded lease termination fees of $0.7 million, $0.4 million and $0.3 million during the years ended December 31, 2020, 2019 and 2018, respectively.
Loans receivable consists of mortgage loans, net of premium, and notes receivables. Interest on loans receivable is recognized using the
2021 effective interest rate method. In September 2020, all the Company’s first-priority mortgage loans were fully paid off. A loan is placed onnon-accrual
status when the loan has become 60 days past due, or earlier if management determines that full recovery of the contractually specified payments of principal and interest is doubtful. While onnon-accrual
status, interest income is recognized only when received. No loans receivable were onnon-accrual
status as of December 31, 2019. Delinquent loans receivable are written off against the allowance when all possible means of collection have been exhausted.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. The Company invests cash primarily in money market funds of major financial institutions with fund investments consisting of highly-rated money market instruments and other short-term instruments. Restricted cash is classified within deferred costs and other assets, net in the accompanying consolidated balance sheets. Cash, cash equivalents and restricted cash consisted of the following (in thousands):
| | | | | | | | | | | | |
| | |
| | |
| |
| |
Cash and cash equivalents | | $ | 70,303 | | | $ | 14,492 | | | $ | 14,493 | |
| | | | | | | | | | | | |
| | | 335 | | | | 347 | | | | 351 | |
Tenant improvements, repairs and leasing commissions (2) | | | 12,660 | | | | 10,877 | | | | 9,093 | |
| | | 0 | | | | 0 | | | | 7,412 | |
1031 Exchange proceeds, net | | | 0 | | | | 0 | | | | 45,042 | |
| | | 0 | | | | 307 | | | | 1,030 | |
| | | | | | | | | | | | | |
Total cash, cash equivalents and restricted cash | | $ | 83,298 | | | $ | 26,023 | | | $ | 77,421 | |
| | | | | | | | | | | | | |
| (1) | Funds held in lender-controlled accounts generally used to meet future debt service or certain property operating expenses. |
| (2) | Deposits held as additional collateral support by lenders to fund improvements, repairs and leasing commissions incurred to secure a new tenant. |
| (3) | Proceeds from the sale of assets pledged as collateral under either Master Trust 2013 or Master Trust 2014, which were held on deposit until a qualifying substitution was made or the funds were applied as prepayment of principal. The Master Trust 2014 notes were included in theSpin-Off to SMTA. The Master Trust 2013 notes were extinguished in June 2019. |
| (4) | Funds held in lender-controlled accounts released after scheduled debt service requirements are met. |
The Company reviews its rent and other tenant receivables for collectability on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area in which the tenant operates. If the collectability of a receivable with respect to any tenant is not probable of collection, a directwrite-off
of the specific receivable will
maturebe made. The Company had accounts receivable balances of $29.5 million and $7.7 million at December 31, 2020 and 2019, respectively, after the impact of $13.1 million and $3.8 million of receivables, respectively, were deemed not probable of collection. Receivables are recorded within deferred cost and other assets, net in the accompanying consolidated balance sheets. For receivable balances related to the straight-line method of reporting rental revenue, the collectability is assessed in conjunction with the evaluation of rental income as described above. The Company had straight-line rent receivables of $93.1 million and $83.6 million at December 31, 2020 and 2019, respectively, after the impact of $14.5 million and $0.4 million of receivables, respectively, were deemed not probable of collection. These receivables are recorded within deferred costs and other assets, net in the accompanying consolidated balance sheets.
Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed. Goodwill is tested for impairment at the reporting unit level on
May 15, 2021. Proceedsan annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The FASB issued ASU2017-04,
Simplifying the Test for Goodwill Impairment,
Company adopted
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
effective January 1, 2020. ASU2017-04
simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. Instead, an entity should compare the fair value of each reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. No impairment was recorded for the periods presented. TheSpin-Off
of SMTA did qualify as a disposition of a business, resulting in a reduction in goodwill. The following table presents a reconciliation of the Company’s goodwill (in thousands):
| | | | |
| | | |
Balance as of December 31, 2017 | | $ | 254,340 | |
Goodwill allocated to dispositions of a business (Spin-Off of SMTA) | | | (28,740 | ) |
| | | | | |
Balance as of December 31, 2018 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2019 | | | 225,600 | |
Goodwill allocated to dispositions of a business | | | 0 | |
| | | | | |
Balance as of December 31, 2020 | | $ | 225,600 | |
| | | | | |
Accounting for Derivative Financial Instruments and Hedging Activities
The Company may utilize derivative instruments such as interest rate swaps for purposes of hedging exposures to fluctuations in interest rates associated with certain of its financing transactions. At the inception of a hedge transaction, the Company enters into a contractual arrangement with the hedge counterparty and formally documents the relationship between the derivative instrument and the financing transaction being hedged, as well as its risk management objective and strategy for undertaking the hedge transaction. The fair value of the derivative instrument is recorded on the balance sheet as either an asset or liability. At inception and at least quarterly thereafter, a formal assessment is performed to determine whether the derivative instrument has been highly effective in offsetting changes in cash flows of the related financing transaction and whether it is expected to be highly effective in the future. The Company recognizes the entire change in the fair value of cash flow hedges included in the assessment of hedge effectiveness in other comprehensive (loss) income. The amounts recorded in other comprehensive (loss) income will subsequently be reclassified to earnings when the hedged item affects earnings.
The Corporation has elected to be taxed as a REIT under the Code. As a REIT, the Corporation generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of the Company’s assets, the amounts distributed to the Corporation’s stockholders and the ownership of Corporation stock. Management believes the Corporation has qualified and will continue to qualify as a REIT and, therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Even if the Corporation qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income.
Taxable income earned by any of the Company’s taxable REIT subsidiaries, including from
non-REIT
activities, is subject to federal, state and local taxes. The rights and obligations of the
issuanceAsset Management Agreement were
contributedtransferred to
SRAM, a wholly-owned taxable REIT subsidiary of Spirit, on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective from September 20, 2019through its termination effective September
4, 2020. Accordingly, all asset management fees earned from April 1, 2019 through September 4, 2020, including the termination fee income earned in September 2019, were subject to income tax. See Note 13 for additional discussion.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Operating Partnership is a partnership for federal income tax purposes. Partnerships are pass-through entities and are not subject to U.S. federal income taxes, therefore 0
provision has been made for federal income taxes in the accompanying financial statements. Although most states and cities where the Operating Partnership operates follow the U.S. federal income tax treatment, there are certain jurisdictions such as Texas, Tennessee and Ohio that impose income or franchise taxes on a partnership. Franchise taxes are recordedincluded in general and administrative expenses on the accompanying consolidated statements of operations.
Earnings Per Share and Unit
The Company’s unvested restricted common stock, which containsnon-forfeitable
rights to receive dividends, are considered participating securities requiring thetwo-class
method of computing earnings per share and unit. Under thetwo-class
method, earnings attributable to unvested restricted shares are deducted from income from continuing operations in the computation of net income attributable to common stockholders. Under thetwo-class
method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying thetwo-class
method, undistributed earnings are allocated to both common shares and participating securities based on their respective weighted average shares outstanding during the period. Under the terms of the Amended Incentive Award Plan, restricted stock awards (see Note 9) are not allocated losses, including undistributed losses as a
result of dividends declared exceeding net income. The Company uses income or loss from continuing operations as the basis for determining whether potential common shares are dilutive oranti-dilutive
and undistributed net income or loss as the basis for determining whether undistributed earnings are allocable to participating securities. Forward Equity Sale Agreements
The Company may enter into forward sale agreements for the sale and issuance of shares of our common stock, either through an underwritten public offering or through our ATM Program. These agreements may be physically settled in stock, settled in cash, or net share settled at the Company’s election. The Company evaluated the forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity. Before any issuance of shares of our common stock to physically settle a forward sale agreement, such forward sale agreement will be reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of our common stock used in diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of our common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of our common stock that could be purchased by us in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to physical settlement or net share settlement of a forward sale agreement, there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the adjusted forward sale price. However, if we decide to physically settle or net share settle such forward sale agreement, delivery of our shares on any physical settlement or net share settlement of the forward sale agreement will result in dilution to our earnings per share.
Unaudited Interim Information
The consolidated quarterly financial data in Note 14 is unaudited. In the opinion of management, this financial information reflects all adjustments necessary for a fair presentation of the respective interim periods. All such adjustments are of a normal recurring nature.
New Accounting Pronouncements
In June 2016, the FASB issued ASU2016-13,
Measurement of Credit Losses on Financial Instruments
2016-13
requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
expected to be collected. ASU2016-13
is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and as such, the Company adopted ASU2016-13
effectiveJanuary 1, 2020. Per the subsequently issued ASU2018-19,
receivables arising from operating leases are not within the scope of ASU2016-13.
The Company reviewed receivables within the scope of ASU2016-13
totaling $40.3 million as of January 1, 2020, which were comprised of loans receivable and real estate assets held under direct financing lease. There were no amounts past due related to these receivables. As such, the Company determined the key credit quality indicator was the credit rating of the borrower, coupled with remaining time to maturity. As a result, the adoption ASU2016-13
resulted in the recognition of a loss of $0.3 million on January 1, 2020, which was recorded in impairments on the accompanying consolidated statement of operations. In April 2020, the FASB released a Staff Q&A regarding the accounting for lease concessions related to the effects of theCOVID-19
pandemic. The FASB noted that the underlying premise in requiring a modified lease to be accounted for as if it were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an election to account for lease concessions related to the effects of theCOVID-19
pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). The Company made this election and accounts for rent deferrals by increasing the rent receivables as receivables accrue and continuing to recognize income during the deferral period, resulting in $26.3 million of deferrals being recognized in rental income for the year ended December 31, 2020. The deferral periods range generally from one to six months, with an average deferral period of four months and an average repayment period of 12 months. Lease concessions other than rent deferrals are evaluated to determine if a substantive change to the consideration in the original lease contract has occurred and should be accounted for as a lease modification. Management continues to evaluate any amounts recognized for collectability, regardless of whether accounted for as a lease modification or not, and records a provision for losses against rental income for amounts that are not probable of collection. For lease concessions granted in conjunction with theCOVID-19
pandemic, management reviewed all amounts recognized on abasis for collectability. As of December 31, 2020, the Company’s gross investment in owned real estate properties totaled approximately $6.8 billion. The gross investment is comprised of land, buildings, lease intangible assets and lease intangible liabilities, as adjusted for any impairment, and real estate assets held under direct financing leases and real estate assets held for sale. The portfolio is geographically dispersed throughout 48 states with Texas, at 10.7%, as the only state with a gross investment greater than 10.0% of the total gross investment of the Company’s entire portfolio.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
During the years ended December 31, 2020 and 2019, the Company had the following real estate activity, net of accumulated depreciation and amortization (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Dollar Amount of Investments |
| | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2018 | | | 1,459 | | | | 3 | | | | 1,462 | | | $ | 5,054,523 | | | $ | 22,064 | | | $ | 5,076,587 | |
Acquisitions/improvements (1) | | | 334 | | | | 0 | | | | 334 | | | | 1,344,843 | | | | 0 | | | | 1,344,843 | |
Dispositions of real estate (2)(3) | | | (16 | ) | | | (28 | ) | | | (44 | ) | | | (98,327 | ) | | | (140,909 | ) | | | (239,236 | ) |
Transfers to Held for Sale | | | (27 | ) | | | 27 | | | | 0 | | | | (128,396 | ) | | | 128,396 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (18,974 | ) | | | (5,117 | ) | | | (24,091 | ) |
Reset of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (12,894 | ) | | | (3,211 | ) | | | (16,105 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2019 | | | 1,750 | | | | 2 | | | | 1,752 | | | | 6,140,775 | | | | 1,223 | | | | 6,141,998 | |
Acquisitions/improvements (1) | | | 146 | | | | 0 | | | | 146 | | | | 880,897 | | | | 0 | | | | 880,897 | |
Dispositions of real estate (2) | | | (20 | ) | | | (18 | ) | | | (38 | ) | | | (53,985 | ) | | | (32,028 | ) | | | (86,013 | ) |
Transfers to Held for Sale | | | (23 | ) | | | 23 | | | | 0 | | | | (72,912 | ) | | | 72,912 | | | | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | (70,376 | ) | | | (11,100 | ) | | | (81,476 | ) |
Res e t of gross balances (5) | | | 0 | | | | 0 | | | | 0 | | | | (45,386 | ) | | | (3,243 | ) | | | (48,629 | ) |
| | | 0 | | | | 0 | | | | 0 | | | | (1,340 | ) | | | — | | | | (1,340 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross balance, December 31, 2020 | | | 1,853 | | | | 7 | | | | 1,860 | | | $ | 6,777,673 | | | $ | 27,764 | | | $ | 6,805,437 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Accumulated depreciation and amortization | | | | | | | | | | | | | | | (981,866 | ) | | | (1,943 | ) | | | (983,809 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net balance, December 31, 2020 (6) | | | | | | | | | | | | | | $ | 5,795,807 | | | $ | 25,821 | | | $ | 5,821,628 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes investments of $10.0 million and $45.0 million, respectively, in revenue producing capitalized expenditures, as well as $2.5 million and $4.6 million, respectively, ofnon-revenue producing capitalized expenditures for the years ended December 31, 2020 and 2019. |
| (2) | The total gain on disposal of assets for properties held in use was $10.2 million, $26.5 million and $1.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. The total gain on disposal of assets for properties held for sale was $14.2 million, $32.4 million and $13.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
| (3) | Includes 1property with a real estate investment of $0.8 million that was transferred to the lender during the year ended December 31, 2019. |
| (4) | Impairments on owned real estate is comprised of real estate and intangible asset impairment and allowance for credit losses on direct financing leases. |
| (5) | Representswrite-off of gross investment balances against the related accumulated depreciation and amortization balances as a result of basis reset due to impairment or intangibles which have been fully amortized. |
| (6) | Reconciliation of total owned investments to the accompanying consolidated balance sheet at December 31, 2020 is as follows: |
| | | | |
| | | 5,943,530 | |
Intangible lease liabilities, net | | | (121,902 | ) |
| | | | |
| | $ | 5,821,628 | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
As of December 31, 2020, 2019, and 2018, the Company held 1,852, 1,745, and 1,453 properties under operating leases, respectively. The following table summarizes the components of rental income recognized on these operating leases in the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | |
| | $ | 453,013 | | | $ | 404,720 | | | $ | 466,658 | |
Variable cash rent (including reimbursables) | | | 13,176 | | | | 12,737 | | | | 14,931 | |
Straight-line rent, net of uncollectible reserve (2) | | | 11,876 | | | | 16,924 | | | | 16,461 | |
Amortization of above - and below - market lease intangibles, net (3) | | | 1,836 | | | | 4,310 | | | | 4,943 | |
| | | | | | | | | | | | | |
| | $ | 479,901 | | | $ | 438,691 | | | $ | 502,993 | |
| | | | | | | | | | | | | |
| (1) | Includes net impact of (amounts not deemed probable of collection)/amounts recovered of $(10.9) million, $0.4 million, and $( 0.5) million for the years ended December 31, 2020, 2019 and 2018, respectively. |
| (2) | Includes net impact of amounts not deemed probable for collection of $14.9 million, $0.2 million, andfor the years ended December 31, 2020, 2019 and 2018, respectively. As a result of the Company’s adoption of ASU2016-02 on January 1, 2019, the Company reclassified bad debt expense to rental income on a prospective basis. |
| (3) | Excludes amortization of in-place leases of $34.8 million, $29.8 million,and $32.6 million for the years ended December 31, 2020, 2019 and 2018, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. |
Scheduled minimum future contractual rent to be received under the remainingnon-cancellable
term of these operating leases (including contractual fixed rent increases occurring on or after January 1, 2021) at December 31, 2020 are as follows (in thousands): | | | | |
| | |
|
| | $ | 505,018 | |
| | | 495,232 | |
| | | 477,604 | |
| | | 455,840 | |
| | | 442,818 | |
| | | 3,207,076 | |
| | | | | |
Total future minimum rentals | | $ | 5,583,588 | |
| | | | | |
Because lease renewal periods are exercisable at the lessees’ options, the preceding table presents future minimum lease payments due during the initial lease term only. In addition, the future minimum rentals do not include any contingent rentals based on a percentage of the lessees’ gross sales or lease escalations based on future changes in the CPI.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The following table details lease intangible assets and liabilities, net of accumulated amortization (in thousands):
| | | | | | | | |
| | |
| |
|
| | $ | 473,062 | | | $ | 457,616 | |
| | | 83,185 | | | | 95,002 | |
Less: accumulated amortization | | | (188,258 | ) | | | (167,539 | ) |
| | | | | | | | | |
Intangible lease assets, net | | $ | 367,989 | | | $ | 385,079 | |
| | | | | | | | | |
| | | |
| | $ | 178,614 | | | $ | 176,816 | |
Less: accumulated amortization | | | (56,712 | ) | | | (49,481 | ) |
| | | | | | | | | |
Intangible lease liabilities, net | | $ | 121,902 | | | $ | 127,335 | |
| | | | | | | | | |
The remaining weighted average amortization period for in-place leases, above-market leases, below-market leases and in total was 12.8 years, 11.0 years, 17.4 years and 13.7 years, respectively, as of December 31, 2020. The remaining weighted average amortization period for in-place leases, above-market leases, below-market leases and in total was
13.4 years, 10.9 years, 18.1 years and 14.2years, respectively, as of December 31, 2019. During the year ended December 31, 2020, the Company acquired in-place lease intangible assets of $47.7 million, above-market lease intangible assets of $3.5 million and below-market lease intangible liabilities of $6.3 million. During the year ended December
31, 2019, the Company acquiredin-place
lease intangible assets of $100.3 million, above-market lease intangible assets of $33.3 million and below-market lease intangible liabilities of $20.9 million.Based on the balance of intangible assets and liabilities at December 31, 2020, the net aggregate amortization expense for the next five years and thereafter is expected to be as follows (in thousands):
| | | | |
| | | |
| | $ | 32,658 | |
| | | 30,592 | |
| | | 28,936 | |
| | | 26,917 | |
| | | 23,503 | |
| | | 103,481 | |
| | | | | |
Total future minimum amortization | | $ | 246,087 | |
| | | | | |
As of December 31, 2019, the Company held 2 properties under direct financing leases, which were held in use.During the year ended
December 31, 2020, 1 of the properties was reclassified to an operating lease. For the remaining property held under direct financing lease, the property had
$3.6 million in scheduled minimum future payments to be received under its remainingnon-cancellable
lease term as of December 31, 2020. The
Company evaluated the collectability of the amounts receivable under the direct financing lease and recorded a reserve for uncollectible amounts totaling $0.3 million in the first quarter of 2020, primarily as a result of the borrower’s credit rating beingnon-investment
grade and the initial term extending until 2027. The Company reversed $0.2 million of the reserve in the third quarter of 2020 as a result of improvement in the borrower’s credit and, as of December 31, 2020, there was a remaining reserve of $0.1 million against the net investment balance of $7.6 million. As of December 31, 2019, the Company held 2 first-priority mortgage loans. The mortgage loans were secured by single-tenant commercial properties and had fixed interest rates over the term of the loans. There were 2 other
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
notes receivable as of December 31, 2019. One was secured by tenant assets and stock with a principal outstanding of $37 thousand, and the other was unsecured with a balance of $1.9 million as of December 31,
As of December 31, 2020, all of the Company’s loans receivablewere
fully paid off. The Company had evaluated the collectability of the amounts receivable under the loans receivable and recorded an allowance for loan losses of $0.3 million in the first quarter of 2020, primarily driven by the borrowers’ having investment grade credit ratings and maturities in 2020. The Company reversed $0.2 million of the reserve in the second quarter of 2020 due to the shorter time to maturity and no change in the borrower’s credit ratings. The remaining $0.1 million of the reserve was reversed during the third quarter of 2020 due to the repayment of the remaining loans. During the years ended December 31, 2020 and 2019, the Company had the following loan activity (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | |
Principal, December 31, 2018 | | | 52 | | | $ | 42,660 | | | $ | 2,082 | | | $ | 44,742 | |
Principal payments and payoffs | | | (9 | ) | | | (10,927 | ) | | | (110 | ) | | | (11,037 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2019 | | | 43 | | | | 31,733 | | | | 1,972 | | | | 33,705 | |
Principal payments and payoffs | | | (43 | ) | | | (31,733 | ) | | | (1,972 | ) | | | (33,705 | ) |
| | | | | | | | | | | | | | | | | |
Principal, December 31, 2020 | | | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | |
Impairments and Allowance for Credit Losses
The following table summarizes total impairments and allowance for credit losses recognized in continuing and discontinued operations on the accompanying consolidated statements of operations (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | |
Real estate asset impairment | | $ | 59,206 | | | $ | 24,130 | | | $ | 17,193 | |
Intangible asset impairment (recovery) | | | 22,118 | | | | (39 | ) | | | 492 | |
Allowance for credit losses on direct financing leases | | | 152 | | | | 0 | | | | 0 | |
Reversal for credit losses on loans receivable | | | 0 | | | | 0 | | | | (17 | ) |
| | | | | | | | | | | | |
| | $ | 81,476 | | | $ | 24,091 | | | $ | 17,668 | |
| | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The debt of the Company and the Operating Partnership are the same, except for the presentation of the Convertible Notes which were issued by the Company. Subsequently, an intercompany note between the Company and the Operating Partnership was executed with terms identical to those of the Convertible Notes. Therefore, in the consolidated balance sheet of the Operating Partnership, the amounts related to the Convertible Notes are reflected as notes payable to Spirit Realty Capital, Inc., net. The Company’s debt is summarized below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | |
| | |
| | |
Average Remaining Years to Maturity (3) | | |
| | |
| |
Revolving credit facilities | | | 5.12% | | | | — | | | | 2.3 | | | $ | — | | | $ | 116,500 | |
| | | 2.57% | | | | 1.65% | | | | 1.3 | | | | 178,000 | | | | — | |
| | | 3.80% | | | | 3.61% | | | | 8.2 | | | | 1,950,000 | | | | 1,500,000 | |
| | | 5.80% | | | | 5.47% | | | | 2.8 | | | | 214,237 | | | | 218,338 | |
| | | 5.54% | | | | 3.75% | | | | 0.4 | | | | 190,426 | | | | 345,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 4.05% | | | | 3.64% | | | | 6.7 | | | | 2,532,663 | | | | 2,179,838 | |
| | | | | | | | | | | | | | | (7,807 | ) | | | (9,272 | ) |
Deferred financing costs, net (4) | | | | | | | | | | | | | | | (18,515 | ) | | | (17,549 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 2,506,341 | | | $ | 2,153,017 | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) | The effective interest rates include amortization of debt discount/premium, amortization of deferred financing costs, facility fees, andnon-utilization fees, where applicable, calculated for the year ended December 31, 2020 and based on the average principal balance outstanding during the period. |
| (2) | Represents the weighted average stated interest rate based on the outstanding principal balance as of December 31, 2020. |
| (3) | Represents the weighted average remaining years to maturity based on the outstanding principal balance as of December 31, 2020. |
| (4) | The Company records deferred financing costs for its revolving credit facilities in deferred costs and other assets, net on its consolidated balance sheets. |
Deferred financing costs and offering discount/premium incurred in connection with entering into debt agreements are amortized to interest expense over the initial term of the respective agreements. Both deferred financing costs and offering discount/premium are recorded net against the principal debt balance on the accompanying consolidated balance sheets, except for deferred costs related to revolving credit facilities, which are recorded in deferred costs and other assets, net.
Revolving Credit Facilities
On January 14, 2019, the Operating Partnership entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the
Operating Partnership.2019 Credit Facility and theA-1
Term Loans, which replaced the 2015 Credit Facility and 2015 Term Loan, respectively. The
Convertible Notes are convertible only during certain periods2019 Credit Facility is comprised of $800.0 million of aggregate revolving commitments with a maturity date of March 31, 2023 and
includes 2six-month
extensions that can be exercised at the Company’s option. The 2019 Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $400.0 million of revolving borrowing capacity, subject to
satisfying certain
circumstances, into cash, shares of the Company's common stock,requirements. Borrowings may be repaid, in whole or
a combination thereof. The initial conversion rate applicable to each series was 15.2727 per $1,000 principal note (equivalent to an initial conversion price of $65.48 per share of common stock, representing a 22.5%in part, at any time, without premium
above the public offering price of the common stock offered concurrently at the time the Convertible Notes were issued). The conversion rate isor penalty, but subject to
adjustment forapplicable LIBOR breakage fees, if any. Payment is unconditionally guaranteed by the Company and material subsidiaries that meet certain
anti-dilution events, including special distributionsconditions. The 2019 Credit Facility is full recourse to the Operating Partnership and
regular quarterly cash dividends exceeding $0.73026 per share. the aforementioned guarantors. As of December 31,
2018,2020, outstanding loans under the
conversion rate was 17.44582019 Credit Facility bore interest at1-Month
LIBOR plus an applicable margin of 0.90% per
$1,000 principal note, which reflects the adjustment for the reverse stock splitannum and the
adjustment fromaggregate revolving commitments incurred a facility fee of 0.20%per annum, in each case, based on the SMTA dividend distribution relatedOperating Partnership’s credit rating, which was upgraded to BBB by S&P in May 2019. Prior to the Spin-Off,upgrade, outstanding loans bore interest at LIBOR plus an applicable margin of 1.10% per annum and the aggregate revolving commitments incurred a facility fee of 0.25% per annum.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
unamortized deferred financing costs were $
2.6 million as of December
31,
2020, compared to $
3.7 million as of December
31,
2019. As of December
31,
2020, the full $
800.0 million of borrowing capacity was available under the
2019Credit Facility and there were
0outstanding letters of credit. The Operating Partnership’s ability to borrow under the
2019Credit Facility is subject to ongoing compliance with a number of customary financial and other affirmative and negative covenants, all of which the Company and the Operating Partnership were in compliance with as of December
31,
2020.
As discussed above, on January 14, 2019, the Operating Partnership entered into the 2019 Revolving Credit and Term Loan Agreement, which included theA-1
Term Loans. TheA-1
Term Loans had an aggregate borrowing amount of $420.0 million, a maturity date of March 31, 2024 and an accordion feature for an additional $200.0 million of term loans, subject to satisfying certain requirements. In addition,
on January 14, 2019, the Operating Partnership entered into theA-2
Term Loans, with an aggregate of $400.0 million of delayed draw term loans, a maturity date of March 31, 2022 and an accordion feature for an additional $200.0 million of term loans, subject to
regular dividends declared duringsatisfying certain requirements. The Company drew on the
lifeA-2
Term Loans to retire the 2.875% Convertible Notes upon their maturity in May 2019. TheA-1
Term Loans andA-2
Term Loans bore interest at LIBOR plus an applicable margin of 1.00% per annum based on the Operating Partnership’s credit rating after the upgrade in May 2019. Prior to the upgrade, they bore interest at LIBOR plus an applicable margin of 1.25%. In addition, a ticking fee accrued on the unused portion of theA-2
Term Loans at a rate of 0.20% until the earlier of July 12, 2019 or the termination of the
Convertible Notes. Earlier conversion may be triggered if shares of the Company's common stock trades higher than the established thresholds, if the Convertible Notes trade below established thresholds, or certain corporate events occur. Incommitments. On September 16, 2019, in connection with the issuance of the
Convertible2027 Senior Unsecured Notes
and 2030 Senior Unsecured Notes described below, the Company
recordedrepaid theA-1
Term Loans andA-2
Term Loans in full.OnApril 2, 2020
, the Operating Partnership entered into the 2020 Term Loan Agreement, which provided for $200.0 million of unsecured term loans with a
discountmaturity date of
$56.7April 2, 2022. The 2020 Term Loan Agreement included an accordion feature, which the Operating Partnership fully exercised in the second quarter of 2020 to borrow an additional $200.0 million
which represents the estimated value of
the embedded conversion feature for each of the Convertible Notes. The discount is being amortized to interest expense using the effective interest method over the term
of each of the 2019 Notes and 2021 Notes.loans. As of December 31,
2018 and December 31, 2017,2020, the
unamortized discount was $13.3 million and $23.7 million, respectively. The discount is shown net against the aggregate outstanding principal balance2020 Term Loans bore interest at LIBOR plus an applicable margin of
the Convertible Notes1.50% per annum, based on the
accompanying consolidated balance sheets. The equity component of the conversion feature is $55.1 million and is recorded in capital in excess of par value in the accompanying consolidated balance sheets, net of financing transaction costs. Operating Partnership’s credit rating. In connection with entering into the offering,2020 Term Loan Agreement, the Company also incurred $19.6$2.5 million in deferred financing costs. This amount has been allocated on a pro-rata basis to each
On August 6, 2020, the issuance of the
Convertible2031 Senior Unsecured Notes
and is being amortized to interest expense overdescribed below triggered a mandatory prepayment under the
term2020 Term Loan Agreement. As such, the Company repaid $222.0 million of
each note. the 2020 Term Loans andwrote-off
$1.0 million of related unamortized deferred financing costs. As of December 31, 2018 and December 31, 2017,2020, the remaining unamortized deferred financing costs relatingwere $0.7 million. The Company and Operating Partnership are subject to ongoing compliance with a number of customary financial and other affirmative and negative covenants in relation to the Convertible borrowings under the 2020 Term Loan Agreement, all of which the Company and the Operating Partnership were in compliance with as of December 31, 2020. On January 4, 2021, the Company repaid the 2020 Term Loans in full.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes was $4.3 million and $8.0 million, respectively, and recorded net against the Convertible Notes principal balance on the accompanying consolidated balance sheets.to Consolidated Financial Statements - (continued)
The Senior Unsecured Notes were issued by the Operating Partnership completedand guaranteed by the Company. The following is a private placementsummary of the Senior Unsecured Notes outstanding (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | |
| |
|
| | | September 15, 2026 | | | | 4.45 | % | | $ | 300,000 | | | $ | 300,000 | |
| | | January 15, 2027 | | | | 3.20 | % | | | 300,000 | | | | 300,000 | |
| | | July 15, 2029 | | | | 4.00 | % | | | 400,000 | | | | 400,000 | |
| | | January 15, 2030 | | | | 3.40 | % | | | 500,000 | | | | 500,000 | |
| | | February 15, 2031 | | | | 3.20 | % | | | 450,000 | | | | — | |
| | | | | | | | | | | | | | | | | |
Total Senior Unsecured Notes | | | | | | | 3.61 | % | | $ | 1,950,000 | | | $ | 1,500,000 | |
| | | | | | | | | | | | | | | | | |
On June 27, 2019, the Operating Partnership issued $400.0 million aggregate principal amount of 2029 Senior Unsecured Notes, resulting in net proceeds of $395.9 million. In connection with the June 2019 offering, the Operating Partnership incurred $3.8 million in deferred financing costs and an offering discount of $0.3 million. On September 16, 2019, the Operating Partnership issued $300.0 million aggregate principal amount of senior notes, which are guaranteed by the Company. The2027 Senior Unsecured Notes, were issued at 99.378% of their principal amount, resulting in net proceeds of $296.2$297.0 million, after deducting transaction fees and expenses. The$500.0 million aggregate principal amount of 2030 Senior Unsecured Notes, accrueresulting in net proceeds of $494.2 million. In connection with the September 2019 offering, the Operating Partnership incurred $7.3 million in deferred financing costs and an offering discount of $1.5 million. On August 6, 2020, the Operating Partnership issued $450.0 million aggregate principal amount of 2031 Senior Notes, resulting in net proceeds of $441.3 million. In connection with the August 2020 offering, the Operating Partnership incurred $4.2 million in deferred financing costs and an offering discount of $4.5 million.
Interest on the Senior Unsecured Notes is payable on January 15 and July 15 of each year, except for the 2026 Senior Notes, for which interest at a rate of 4.450% per annum,is payable on March 15 and September 15 of each year, and mature on September 15, 2026. The Company filed a registration statement with the SEC to exchange the private2031 Senior Unsecured Notes, for registered Senior Unsecured Notes with substantially identical terms, which became effective April 14, 2017. All $300.0 million aggregate principal amountinterest is payable on February 15 and August 15 of private Senior Unsecured Notes were tendered in the exchange for registered Senior Unsecured Notes.
each year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to
100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the indenture. Notwithstanding the foregoing, ifpremium. If any of the Senior Unsecured Notes are redeemed onthree months or after June 15, 2026 (threeless (or two months or less in the case of the 2027 Senior Notes) prior to thetheir respective maturity date of the Senior Unsecured Notes),dates, the redemption price will not include a make-whole premium.
In connection withAs of December 31, 2020 and December 31, 2019, the offering, the Operating Partnership incurred $3.4 million in deferred financing costs. This amount is being amortized to interest expense over the life of the Senior Unsecured Notes. The unamortized deferred financing costs were $2.7$15.6 million and $3.0$12.9 million, as of December 31, 2018 and 2017, respectively, and the unamortized discount was $1.5$7.0 million and $1.7$3.0 million, respectively. Both unamortized deferred financing costs and discount are recorded net against the Senior Unsecured Notes principal balance on the accompanying consolidated balance sheets.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
In connection with the issuance of the Senior Unsecured Notes, the Company and Operating Partnership are subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants. Ascovenants, all of December 31, 2018,which the Company and the Operating Partnership were in compliance with these financial covenants.
Debt Extinguishment
During the year endedas of December 31, 2018,2020.
Indirect wholly-owned special purpose entity subsidiaries of the Company
extinguished a totalare borrowers under five fixed-ratenon-recourse
loans, which have been securitized into CMBS and are secured by the borrowers’ respective leased properties and related assets. The stated interest rates as of
$202.1 million aggregate principal amount of mortgages and notes payable indebtednessDecember 31, 2020 for the loans ranged from 5.23% to 6.00%, with a weighted average
contractual intereststated rate of 5.47%
, and recognized a net gain on debt extinguishment during the year ended December 31, 2018 of approximately $26.7 million. The gain was primarily attributable to the extinguishment of $56.2 million of CMBS debt related to six defaulted loans on six underperforming properties, which was partially offset by a loss on the extinguishment of the Master Trust 2013 Series 2013-1 notes and make-whole penalties on early pre-payments of Master Trust 2013 Series 2013-2. During the year ended December 31, 2017, the Company extinguished a total of $238.5 million aggregate principal amount of indebtedness with a weighted average contractual interest rate of 5.46%. As a result of these transactions, the Company recognized a net loss on debt extinguishment during the year ended December 31, 2017 of approximately $1.6 million. The loss was primarily attributable to the lender make-whole payment associated with the early payoff of the Master Trust 2014 Series 2014-1 Class A1 notes.
Debt Maturities
As of December 31,
2018, scheduled debt maturities2020, thenon-defaulted
loans were secured by 88 properties. As of
December 31, 2020 and 2019, the
Company’s 2015 Credit Facility, 2015 Term Loan, Senior Unsecured Notes, mortgagesunamortized deferred financing costs associated with the CMBS loans were $1.9 million and
notes payable,$2.6 million, respectively, and
Convertible Notes, including balloon payments, are as follows (in thousands):the unamortized net premium was $0.2 million and $0.3 million, |
| | | | | | | | | | | |
| | Scheduled Principal | | Balloon Payment | | Total |
2019 (1) | $ | 11,672 |
| | $ | 978,914 |
| | $ | 990,586 |
|
| 2020 | 12,164 |
| | — |
| | 12,164 |
|
| 2021 | 12,737 |
| | 345,000 |
| | 357,737 |
|
| 2022 | 13,315 |
| | 42,400 |
| | 55,715 |
|
| 2023 | 11,609 |
| | 339,526 |
| | 351,135 |
|
| Thereafter | 16,895 |
| | 300,070 |
| | 316,965 |
|
| Total | $ | 78,392 |
| | $ | 2,005,910 |
| | $ | 2,084,302 |
|
(1) The balloon payment balance in 2019 includes the 2015 Credit Facility and 2015 Term Loan. On January 11, 2019, Spirit entered into a new 2019 Facilities Agreement which replaces the existing 2015 Credit Facility and 2015 Term Loan in their entirety, see Note 16 for further discussion. The balloon payment balance in 2019 also includes $10.1 million,
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
In May 2014, the Company issued $402.5 million aggregate principal amount of 2.875% convertible notes due in 2019 and $345.0 million aggregate principal amount of 3.75% convertible notes due in 2021. Proceeds from the
issuance were contributed to the Operating Partnership and are recorded as a note payable to Spirit Realty Capital, Inc. on the consolidated balance sheets of the Operating Partnership. The 2019 Notes matured on May 15, 2019 and were settled in cash. The 2021 Notes will mature on May 15, 2021 and interest is payable semi-annually in arrears on May 15 and November 15 of each year.
The 2021 Notes are convertible only during certain periods and, subject to certain circumstances, into cash, shares of the Company’s common stock, or a combination thereof. The conversion rate is subject to adjustment for certain anti-dilution events, including special distributions and regular quarterly cash dividends exceeding a current threshold of $0.73026 per share. As of December 31, 2020, the conversion rate was 17.4458 per $1,000 principal note, which reflects the adjustment from the SMTA dividend distribution related to theSpin-Off,
in addition to the other regular dividends declared during the life of the 2021 Notes. Earlier conversion may be triggered if shares of the Company’s common stock trade higher than the established thresholds, if the 2021 Notes trade below established thresholds, or certain corporate events occur. During the year ended December 31, 2020, the Company repurchased $154.6
million of the 2021 Notes in cash. Offering discount and deferred financing costs related to the 2019 Notes were fully amortized in May 2019. As of December 31, 2020 and 2019, the unamortized discount for the 2021 Notes was $1.0 million and $6.5 million, respectively, and the unamortized deferred financing costs were $0.3 million and $2.1 million, respectively. The equity component of the conversion feature was $55.1 million as of both December 31, 2020 and 2019 and is recorded in capital in excess of par value in the accompanying consolidated balance sheets, net of financing transaction costs.
During the year ended December 31, 2020, the Company extinguished a total of $222.0 million of indebtedness under the 2020 Term Loans, resulting in a loss on debt extinguishment of $1.0 million. Additionally, the Company extinguished a total of $154.6 million aggregate principal amount of the 2021 Convertible Notes, resulting in a loss on debt extinguishment of $6.2 million.
During the year ended December 31, 2019, the Company extinguished a total of $2.0 billion aggregate principal amount of indebtedness, comprised of the following:
repayment and termination of $820.0 million of theA-1
Term Loans andA-2
Term Loans, resulting in a loss on debt extinguishment of $5.3 million, termination of the 2015 Credit Agreement and 2015 Term Loan Agreement, with $606.7 million of principal balance, resulting in loss on debt extinguishment of $0.7 million,
extinguishment upon maturity of the 2019 Notes of the $402.5 million principal balance,
retirement of the $165.5 million principal balance of the Master Trust 2013 notes, resulting in a loss on debt extinguishment of $15.0 million, and
extinguishment of $52.8 million principal amount of CMBS indebtedness, resulting in a net gain on debt extinguishment of $6.7 million.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
As of December 31, 2020, scheduled debt maturities, including balloon payments, were as follows (in thousands):
| | | | | | | | | | | | |
| | |
| |
| | |
| | $ | 4,365 | | | $ | 190,426 | | | $ | 194,791 | |
| | | 4,617 | | | | 178,000 | | | | 182,617 | |
| | | 3,074 | | | | 197,912 | | | | 200,986 | |
| | | 590 | | | | — | | | | 590 | |
| | | 610 | | | | 16 | | | | 626 | |
| | | 3,000 | | | | 1,950,053 | | | | 1,953,053 | |
| | | | | | | | | | | | | |
| | $ | 16,256 | | | $ | 2,516,407 | | | $ | 2,532,663 | |
| | | | | | | | | | | | | |
The following table is a summary of the components of interest expense related to the Company'sCompany’s borrowings (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | |
Interest expense – revolving credit facilities (1) | | $ | 3,686 | | | $ | 5,201 | | | $ | 8,220 | |
Interest expense – term loans | | | 3,545 | | | | 15,448 | | | | 6,594 | |
Interest expense – Senior Unsecured Notes | | | 61,750 | | | | 29,286 | | | | 13,350 | |
Interest expense – mortgages and notes payable | | | 12,028 | | | | 18,733 | | | | 68,530 | |
Interest expense – Convertible Notes (2) | | | 10,728 | | | | 17,245 | | | | 24,509 | |
Interest expense – interest rate swaps/other | | | — | | | | 972 | | | | — | |
Non-cash interest expense: | | | | | | | | | | | | |
Amortization of deferred financing costs | | | 5,278 | | | | 6,289 | | | | 9,306 | |
Amortization of debt discount, net | | | 4,343 | | | | 7,028 | | | | 13,560 | |
Amortization of net losses related to interest rate swaps | | | 2,807 | | | | 858 | | | | — | |
| | | | | | | | | | | | | |
| | $ | 104,165 | | | $ | 101,060 | | | $ | 144,069 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
Interest expense – 2015 Credit Facility (1) | $ | 8,220 |
| | $ | 7,957 |
| | $ | 3,314 |
|
| Interest expense – 2015 Term Loan | 6,594 |
|
| 9,793 |
| | 5,218 |
|
| Interest expense – mortgages and notes payable | 68,530 |
| | 111,049 |
| | 143,233 |
|
Interest expense – Convertible Notes (2) | 24,509 |
| | 24,509 |
| | 24,509 |
|
| Interest expense – Unsecured Senior Notes | 13,350 |
| | 13,351 |
| | 4,932 |
|
| Non-cash interest expense: | | | | | |
| Amortization of deferred financing costs | 9,306 |
| | 9,896 |
| | 9,070 |
|
| Amortization of net losses related to interest rate swaps | — |
| | — |
| | 93 |
|
| Amortization of debt discount/(premium), net | 13,560 |
| | 13,572 |
| | 6,217 |
|
| Total interest expense | $ | 144,069 |
| | $ | 190,127 |
| | $ | 196,586 |
|
(1) Includes facility fees of approximately $2.1 million, $2.1 million and $2.0 million for the years ended December 31, 2018, 2017 and 2016, respectively.| (1) | Includes facility fees of approximately $1.6 million, $2.0 million and $2.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
(2) Included in interest expense on the Operating Partnership's consolidated statements of operations are amounts paid to the Corporation by the Operating Partnership related to the notes payable to Spirit Realty Capital, Inc.| (2) | Included in interest expense on the Operating Partnership’s consolidated statements of operations are amounts paid to the Company by the Operating Partnership related to the notes payable to Spirit Realty Capital, Inc. |
NOTE 5. STOCKHOLDERS'STOCKHOLDERS’ EQUITY AND PARTNERS'PARTNERS’ CAPITAL
Issuance of Preferred Stock
On October 3, 2017, the Company completed an underwritten public offering of 6.9 million shares of
6.000% 6.00%Series A Cumulative Redeemable Preferred Stock, including 0.9 million shares sold pursuant to the underwriter's option to purchase additional shares. Gross proceeds raised from the issuance were $172.5 million; net proceeds were approximately $166.2 million after deducting underwriter discounts and offering costs paid by the Company.
Stock. The Series A Preferred Stock pays cumulative
cash dividends at the rate of 6.000%
6.00% per annum on their liquidation preference of $25.00 $
25.00per share (equivalent to $0.375 $
0.375per share on a quarterly basis and $1.50 $
1.50per share on an annual basis). Dividends are payable quarterly in arrears on or about the last day of March, June, September and December of each year, beginning on December 31, 2017. The Series A Preferred Stock trades on the NYSE under the
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
may not redeem the Series A Preferred Stock prior to October 3, 2022, except in limited circumstances to preserve itsthe Corporation’s status as a real estate investment trust, and pursuant to the special optional redemption provision described below. On and after October 3, 2022, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 $
25.00per share, plus any accrued and unpaid dividends up to but excluding the redemption date. In addition, upon the occurrence of a change of control, the Company may, at its option, exercise the special optional redemption provision and redeem the Series A Preferred Stock, in whole or in part within
120
days after the first date on which such change of control occurred, by paying $25.00 $
25.00per share, plus any accrued and unpaid dividends up to, but not including, the date of redemption.
The preferred stock offering resulted in the Operating Partnership concurrently issuing 6.9 million Series A Preferred Units (“Limited Partner Series A Preferred Units”) that have substantially the same terms as the Series A Preferred Stock.
DuringIn May 2019, the year ended December 31, 2018, portionsCompany entered into forward sale agreements in connection with an offering of awards of restricted common stock and performance share awards granted to certain of the Company's officers and other employees vested. The vesting of these awards, granted
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
pursuant to the Amended Incentive Award Plan, resulted in federal and state income tax liabilities for the recipients. As permitted by the terms of the Amended Incentive Award Plan and the award grants, certain executive officers and employees elected to surrender 57.7 thousand11.5 million shares of common stock valued at $2.4an initial gross offering price of $41.00 per share, before underwriting discounts and offering expenses. The forward purchasers borrowed and sold an aggregate of 11.5 million solely to pay the associated statutory tax withholdings during the twelve months ended December 31, 2018. The surrendered shares are included in repurchase of shares of common stock onin the consolidated statementsoffering. The Company did not receive any proceeds from the sale of cash flows.its shares of common stock by the forward purchasers at the time of the offering. All 11.5 million of these shares were settled during 2019, generating gross proceeds of $471.5 million.
On April 15 2016,In June 2020, the Company completedentered into forward sale agreements in connection with an underwritten public offering of 6.99.2 million shares of its common stock at $55.75an initial public offering price of $37.35 per share, including 0.9 million shares sold pursuant to the underwriter’s option to purchase additional shares. Gross proceeds raised were approximately $384.7 million; net proceeds were approximately $368.9 million after deducting underwriterbefore underwriting discounts and offering costs paidexpenses. The Company did not receive any proceeds from the sale of its shares of common stock by the Company.forward purchasers at the time of the
offering. All 9.2 million of these shares were settled during 2020, generating net proceeds of $319.1 million.
In
April 2014,November 2016, the Board of Directors approved a $500.0 million ATM Program and the Corporation
commenced a continuous equity offering under whichterminated its prior program. The agreement provided for the
Corporation may sell up to an aggregate $350.0 million worthoffer and sale of shares of
itsthe Company’s common stock
from timehaving an aggregate gross sales price of up to
time$500.0 million through
broker-dealers in the
ATM Program.agents, as its sales agents or, if applicable, as forward sellers for forward purchasers, or directly to the agents acting as principals. The
Corporation may Companycould
sell
the shares in amounts and at times to be determined by the
Corporation, Company,but hashad no obligation to sell any of the shares in the 2016 ATM Program.
Since inception of the 2016 ATM Program through its termination in November of 2016, the Corporation sold an aggregate total of 5.52020,
8.8 million shares of
itsthe Company’s common stock
athad been sold, of which 3.6 million were sold during the year ended December 31, 2020. Of the total shares sold since inception, 7.0 million were through forward sales agreements, including all 3.6 million shares sold during the year ended December 31, 2020. During the year ended December 31, 2020, 2.9 million of the shares were physically settled, generating net proceeds
of $109.2 million. There were 0.6 million shares remaining under open forward sales agreements as ofDecember 31, 2020, with a weighted average shareforward settlement price of $59.60, for aggregate gross proceeds$36.17 per share and a final settlement date of $325.5 million and aggregate net proceeds of $320.0 million after payment of commissions and other issuance costs of $5.4 million.September 8, 2021.
In November
2016,2020, the Board of Directors approved a new $500.0 million ATM Program, and the Corporation terminated
its existing 2016 ATM
program. Since inception of the
new 2020
ATM Program through December 31,
2018, the Corporation sold 92.5 thousand 2020, 3.5 million shares of itsthe Company’s common stock athave been sold. All
million
of these shares remained under open forward sale agreements as of December 31, 2020, with a weighted average shareforward settlement price of $40.57,$37.02 per share. The final settlement date for aggregate proceeds1.4 million of $3.7the shares is November 9, 2021 and the final settlement date for the remainder is December 2, 2021. Approximately
$369.7 million after paymentremained available under the program as of commissions.December 31, 2020.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Stock Repurchase Programs
In May 2018, the Company's Board of Directors approved a new stock repurchase program, which authorizes the repurchase of up to $250.0 million of the Company's common stock. These purchases can be made in the open market or through private transactions from time to time over the 18-month time period following authorization. Purchase activity will be dependent on various factors, including the Company's capital position, operating results, funds generated by asset sales, dividends that may be required by those sales, and investment options that may be available, including acquiring new properties or retiring debt. The stock repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at the Company's discretion. The Company intends to fund any repurchases with new proceeds from asset sales, cash flows from operations, existing cash on the balance sheet and other sources, including debt. As of December 31, 2018, no shares have been repurchased under this new program.
In August 2017, the Company'sCompany’s Board of Directors approved a stock repurchase program, which authorized the repurchase of up to $250.0 million of the Company'sCompany’s common stock. From August 2017 through April 2018, 6.1 million shares of the Company'sCompany’s common stock were repurchased in open market transactions under this stock repurchase program, at a weighted average price of $40.70 per share, leaving no available capacity. Fees of $0.7 million associated with these repurchases are included in retained earnings.
In February 2016,On May 1, 2018, the
Company'sCompany’s Board of Directors approved a
new
stock repurchase program, which authorized the
Company to repurchase
of up to
$200.0$250.0 million of the
Company'sCompany’s common
stockstock. These purchases could be made in the open market or through private transactions from time to time over the
18-month
time period following
authorization. From February 2016 through June 2017, 5.3 millionauthorization, depending on prevailing market conditions and applicable legal and regulatory requirements. No shares of the
Company'sCompany’s common stock were repurchased
under the program, and the full $250.0 million in
open market transactions under this stockgross repurchase
program, at a weighted average pricecapacity expired unused on
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
In fiscal years 20182020 and 2017,2019, the Company'sCompany’s Board of Directors declared the following preferred and common stock dividends:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 0.3750 | | | | March 13, 2020 | | | $ | 2,588 | | | | March 31, 2020 | |
| | | 0.3750 | | | | June 15, 2020 | | | | 2,588 | | | | June 30, 2020 | |
| | | 0.3750 | | | | September 15, 2020 | | | | 2,587 | | | | September 30, 2020 | |
| | | 0.3750 | | | | December 15, 2020 | | | | 2,587 | | | | December 31, 2020 | |
| | | | | | | | | | | | | | | | | |
| | $ | 1.5000 | | | | | | | $ | 10,350 | | | | | |
| | | | | | | | | | | | | | | | |
| | | 0.6250 | | | | March 31, 2020 | | | $ | 64,338 | | | | April 15, 2020 | |
| | | 0.6250 | | | | June 30, 2020 | | | | 64,402 | | | | July 15, 2020 | |
| | | 0.6250 | | | | September 30, 2020 | | | | 66,171 | | | | October 15, 2020 | |
| | | 0.6250 | | | | December 31, 2020 | | | | 71,748 | | | | January 15, 2021 | |
| | | | | | | | | | | | | | | | | |
| | $ | 2.5000 | | | | | | | $ | 266,659 | | | | | |
| | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | $ | 0.3750 | | | | March 15, 2019 | | | $ | 2,588 | | | | March 29, 2019 | |
| | | 0.3750 | | | | June 14, 2019 | | | | 2,588 | | | | June 28, 2019 | |
| | | 0.3750 | | | | September 13, 2019 | | | | 2,587 | | | | September 30, 2019 | |
| | | 0.3750 | | | | December 13, 2019 | | | | 2,587 | | | | December 31, 2019 | |
| | | | | | | | | | | | | | | | | |
| | $ | 1.5000 | | | | | | | $ | 10,350 | | | | | |
| | | | | | | | | | | | | | | | |
| | | 0.6250 | | | | March 29, 2019 | | | $ | 54,254 | | | | April 15, 2019 | |
| | | 0.6250 | | | | June 28, 2019 | | | | 56,318 | | | | July 15, 2019 | |
| | | 0.6250 | | | | September 30, 2019 | | | | 62,322 | | | | October 15, 2019 | |
| | | 0.6250 | | | | December 31, 2019 | | | | 64,049 | | | | January 15, 2020 | |
| | | | | | | | | | | | | | | | | |
| | $ | 2.5000 | | | | | | | $ | 236,943 | | | | | |
|
| | | | | | | | | | | | |
| Declaration Date | | Dividend Per Share | | Record Date | | Total Amount | | Payment Date |
| | | | | | | (in Thousands) | | |
| 2018 | | | | | | | | |
| Preferred Stock | | | | | | | | |
| March 5, 2018 | | $ | 0.3750 |
| | March 15, 2018 | | $ | 2,588 |
| | March 30, 2018 |
| May 29, 2018 | | 0.3750 |
| | June 15, 2018 | | 2,588 |
| | June 29, 2018 |
| August 27, 2018 | | 0.3750 |
| | September 14, 2018 | | 2,588 |
| | September 28, 2018 |
| December 5, 2018 | | 0.3750 |
| | December 17, 2018 | | 2,588 |
| | December 31, 2018 |
| Total Preferred Dividend | | $ | 1.5000 |
| | | | $ | 10,352 |
| | |
| Common Stock | | | | | | | | |
| March 5, 2018 | | $ | 0.9000 |
| | March 30, 2018 | | $ | 78,581 |
| | April 13, 2018 |
| May 29, 2018 | | 0.9000 |
| | June 29, 2018 | | 77,143 |
| | July 13, 2018 |
| August 27, 2018 | | 0.6250 |
| | September 28, 2018 | | 53,560 |
| | October 15, 2018 |
| December 5, 2018 | | 0.6250 |
| | December 31, 2018 | | 53,617 |
| | January 15, 2019 |
| Total Common Dividend | | $ | 3.0500 |
| | | | $ | 262,901 |
| | |
| | | | | | | | | |
| 2017 | | | | | | | | |
| Preferred Stock | | | | | | | | |
| December 8, 2017 | | $ | 0.3667 |
| | December 19, 2017 | | $ | 2,530 |
| | December 29, 2017 |
| Common Stock | | | | | | | | |
| March 15, 2017 | | $ | 0.9000 |
| | March 31, 2017 | | $ | 87,122 |
| | April 14, 2017 |
| June 15, 2017 | | 0.9000 |
| | June 30, 2017 | | 82,422 |
| | July 14, 2017 |
| September 15, 2017 | | 0.9000 |
| | September 29, 2017 | | 82,062 |
| | October 13, 2017 |
| December 8, 2017 | | 0.9000 |
| | December 29, 2017 | | 80,796 |
| | January 12, 2018 |
| Total Common Dividend | | $ | 3.6000 |
| | | | $ | 332,402 |
| | |
The common stock dividends
declared in December
20182020 were paid in January
2019,2021, and are included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.
NOTE 6. COMMITMENTS AND CONTINGENCIES
The Company is periodically subject to claims or litigation in the ordinary course of business, including claims generated from business conducted by tenants on real estate owned by the Company. In these instances, the Company is typically indemnified by the tenant against any losses that might be suffered, and the Company and/or the tenant are insured against such claims.
In 2015, Haggen Holdings, LLC and a number of its affiliates, including Haggen Operations Holdings, LLC ("Haggen"(“Haggen”), filed petitions for bankruptcy. At the time of the filing, Haggen leased 20 properties from a subsidiary of the
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
a master lease. The Company and Haggen restructured the master lease in an initial settlement agreement with approved claims of $21.0$
21.0 million. In
2016
, the Company entered into an additional settlement agreement with Haggen and Albertsons, LLC for $3.4 $
3.4million and $3.0$
3.0 million, respectively. Prior to
2018
, the Company collected $5.5$
5.5 million of the total claims from both settlement agreements. In
December 2018
, the Company received final settlement proceeds of $19.7$
19.7 million and no other claims related to the Haggen Settlement remain outstanding. $0.6$
0.6 million of the proceeds
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
relieved accruals related to Haggen, and the remaining $19.1$
19.1 million of proceeds is reflected in other income on the accompanying consolidated statement of operations.operations for the year ended December
31,
2018.
AtAs of December 31, 2018,2020, there were no0 outstanding claims against the Company that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
AtAs of December 31,
2018,2020, the Company had commitments totaling
$80.7$60.6 million, of which
$47.7$48.0 million relates to
future acquisitions, with the remainder to fund improvements on properties the Company currently owns. Commitments related to acquisitions contain standard cancellation clauses contingent on the results of due diligence.
$79.3$60.4 million of these
commitments
isare expected to be funded during fiscal year
2019, with the remainder to be funded by 2021.
In addition, the Company is contingently liable for $5.7 million of debt owed by one1 of its former tenants until the maturity of the debt on March 15, 2022 and is indemnified by that former tenant for any payments the Company may be required to make on such debt. During the year ended December 31, 2018, the Company recorded an additional accrual related to this guarantee of $5.3 million, reflected as other expense in the consolidated statement of operations. As a result, the2022. The Company has accrued the full $5.7 million liability in accounts payable, accrued expenses and other liabilities in the consolidated balance sheet as of both December 31, 2018.2020 and December 31, 2019.
The Company estimates future costs for known environmental remediation requirements when it is probable that the Company has incurred a liability and the related costs can be reasonably estimated. The Company considers various factors when estimating its environmental liabilities, and adjustments are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues. When only a wide range of estimated amounts can be reasonably established and no other amount within the range is better than another, the low end of the range is recorded in the consolidated financial statements. As of December 31, 2018, no2020, 0 accruals have been made.
The Company leases its current corporate office space,
which is classified as an operating lease. The corporate office lease contains a variable lease cost related to the lease of parking spaces and
anon-lease
component related to the reimbursement of certain
common area maintenance expenses, both of which are recognized as incurred. The Company elected to use the components expedient for all lessee operating
equipment under non-cancelable agreementsleases, which permits the Company to not separatenon-lease
components from
unrelated third parties. Totallease components if timing and pattern of transfer is the same. As such, total rental expense,
included in general and administrative expenseincluding variable rent, for the corporate office space amounted to
$0.9$1.5 million,
$0.9$1.6 million and
$1.5$0.9 million for the years ended December 31,
2020, 2019 and 2018,
2017respectively, and
2016, respectively.is included in general and administrative expense. The
Company'sCompany’s lease of its
current corporate office space has an initial term that expires on January 31, 2027 and is renewable at the
Company'sCompany’s option for two additional periods of five years each after the initial term.
The Company is also a lessee under
seven long-term,
non-cancelable non-cancellable
ground leases under which it is obligated to pay monthly
rentrent. There were 4 ground leases as of December 31,
2018.2020 and 2019, respectively. Total rental expense included in property costs, including discontinued operations, amounted to
$0.9$0.3 million,
$1.5$0.3 million and
$1.4$0.9 million for each of the years ended December 31,
2020, 2019 and 2018,
2017 and 2016, respectively.
CertainFor all ground
leaseleases, rental expenses are reimbursed by unrelated third parties, and the corresponding rental revenue is recorded in rental income on the accompanying consolidated statements of operations.
The Company’s minimum aggregate rental commitments under all non-cancelable All leases are classified as operating leases asand have a weighted average remaining lease term of December 31, 2018 are as follows (in thousands):6.8 years.
|
| | | | | | | | | | | |
| | Ground Leases | | Office and Equipment Leases | | Total |
| 2019 | $ | 412 |
| | $ | 1,656 |
| | $ | 2,068 |
|
| 2020 | 413 |
| | 1,654 |
| | 2,067 |
|
| 2021 | 415 |
| | 1,656 |
| | 2,071 |
|
| 2022 | 312 |
| | 1,672 |
| | 1,984 |
|
| 2023 | 273 |
| | 1,686 |
| | 1,959 |
|
| Thereafter | 3,016 |
| | 5,295 |
| | 8,311 |
|
| Total | $ | 4,841 |
| | $ | 13,619 |
| | $ | 18,460 |
|
NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Company’s minimum aggregate rental commitments under allnon-cancellable
operating leases as of December 31, 2020 are as follows (in thousands): | | | | | | | | | | | | |
| | | | | | | | | | |
| | $ | 277 | | | $ | 1,024 | | | $ | 1,301 | |
| | | 193 | | | | 1,040 | | | | 1,233 | |
| | | 169 | | | | 1,055 | | | | 1,224 | |
| | | 169 | | | | 1,070 | | | | 1,239 | |
| | | 151 | | | | 1,086 | | | | 1,237 | |
| | | 391 | | | | 1,193 | | | | 1,584 | |
| | | | | | | | | | | | | |
| | | 1,350 | | | | 6,468 | | | | 7,818 | |
| | | (272) | | | | (1,249) | | | | (1,521) | |
| | | | | | | | | | | | | |
Total operating lease liabilities | | $ | 1,078 | | | $ | 5,219 | | | $ | 6,297 | |
| | | | | | | | | | | | | |
Imputed interest was calculated using a weighted-average discount rate of 4.25%. The discount rate is based on our estimated incremental borrowing rate, calculated as the treasury rate for the same period as the underlying lease term, plus a spread determined using factors including the Company’s credit rating and REIT industry performance. The evaluation of the Company’slease asset associated with the corporate office included the unamortized portion of a $1.7 million cash lease incentive paid at inception of the lease. As of December 31, 2020 and 2019, the Company had alease asset balance of $4.6 million and $5.4 million, respectively, which are included in deferred costs and other assets, net and an operating lease liability balance of $6.3 million and $7.4 million, respectively, which are included in accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance sheets
. NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES
The Company
usesmay use interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value.
Prior to the adoption of ASU 2017-12, assessments of hedge effectiveness were performed quarterly using regression analysis, and the measurement of hedge ineffectiveness was based on the hypothetical derivative method. The effective portion of changes in fair value were recorded in AOCL and subsequently reclassified to earnings when the hedged transactions affected earnings. The ineffective portion was recorded immediately in earnings in general and administrative expenses. Subsequent to the adoption of ASU 2017-12, assessmentsAssessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach. The Company recognizes the entire change in the fair value in AOCL and the change is reflected as
derivativecash flow hedge changes in fair value in the supplemental disclosures of
non-cash
investing and financing activities in the consolidated statement of cash flows. Amounts will subsequently be reclassified to earnings when the hedged item affects earnings. The Company does not enter into derivative contracts for speculative or trading purposes. The Company does not have netting arrangements related to its derivatives.
The Company is exposed to credit risk in the event of
non-performance
by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate credit risk, the Company enters into agreements with counterparties it considers credit-worthy, such as large financial institutions with favorable credit ratings.
AsIn December 2018, the Company entered into interest rate swap agreements. In the third quarter of December 31, 2018, 2017,2019, the Company terminated its interest rate swaps and 2016, thereaccelerated the reclassification of a loss of $12.5 million from AOCL to termination of interest rate swaps on the consolidated statement of operations as a result of a portion of the hedged forecasted transactions becoming probable not to occur. There were no events of default related to the interest rate swaps.swaps prior to their termination. Given that a portion of the hedged transactions remained probable to occur, $12.3 million of the loss was deferred in other comprehensive loss and will be amortized over the remaining initial term of the interest rate swaps, which ends March 31, 2024. As of December 31, 2018 and 2017, there were no termination events2020, the unamortized portion of loss in AOCL related to theterminated interest rate swaps. During June 2016, the Company terminated its previously held interest rate swap agreements upon the repayment of eight CMBS variable-rate loans. The Company paid $1.7 million to terminate these interest rate swap agreements and recognized a loss of $1.7 million, which is included in general and administrative expenses. The Company had no outstanding derivatives as of December 31, 2017 or 2016.swaps was $8.7 million.
In December 2018, the Company entered into new interest rate swap agreements. The following table summarizes the notional amount and fair value of these instruments (dollars in thousands), which are recorded in accounts payable, accrued expenses and other liabilities on the Company's balance sheet as of December 31, 2018: |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | Fair Value of Liability | |
| Derivatives Designated as Hedging Instruments | | Notional
Amount | | Fixed Interest
Rate | | Effective
Date | | Maturity
Date | | December 31,
2018 | |
| Interest Rate Swap | | $ | 200,000 |
| | 2.8140 | % | | 02/01/19 | | 02/01/24 | | $ | 3,559 |
| |
| Interest Rate Swap | | $ | 100,000 |
| | 2.8174 | % | | 02/01/19 | | 02/01/24 | | 1,801 |
| |
| Interest Rate Swap | | $ | 100,000 |
| | 2.8180 | % | | 02/01/19 | | 02/01/24 | | 1,799 |
| |
| | | | | | | | | | | $ | 7,159 |
| |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The following tables providetable provides information about the amounts recorded in AOCL, as well as the loss recorded in operations, when reclassified out of AOCL or recognized in earnings immediately for the years ended December 31, 2018, 2017, and 2016, respectively (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | | | |
Gross amount of loss recognized in AOCL on derivatives | | $ | 0 | | | $ | (18,593) | | | $ | (7,159) | |
Amount of loss reclassified from AOCL to termination of interest rate swaps | | | — | | | | 12,461 | | | | — | |
Amount of loss reclassified from AOCL to interest (1) | | | 2,807 | | | | 1,830 | | | | — | |
| | | | | | | | | | | | | |
Net reclassification of amounts from (to) AOCL | | $ | 2,807 | | | $ | (4,302) | | | $ | (7,159) | |
| | | | | | | | | | | | | |
| (1) | Interest expense was $104.2 million, $101.1 million and $144.1 million for the years ended 2020, 2019, and 2018, respectively. |
During the next 12 months, we estimate that approximately $2.8 million will be reclassified as an increase to interest expense related to terminated hedges of existing floating-rate debt.
|
| | | | | | | | | | | | |
| | | Amount of Loss Recognized in AOCL on Derivative (Effective Portion) |
| | | Years Ended December 31, |
| Derivatives in Cash Flow Hedging Relationships | | 2018 | | 2017 | | 2016 |
| Interest rate swaps | | $ | (7,159 | ) | | $ | — |
| | $ | (1,137 | ) |
| | | | | | | |
| | | Amount of Loss Reclassified from AOCL into Operations (Effective Portion) |
| | | Years Ended December 31, |
| Location of Loss Reclassified from AOCL into Operations | | 2018 | | 2017 | | 2016 |
| Interest expense | | $ | — |
| | $ | — |
| | $ | (459 | ) |
| | | | | | | |
| | | Amount of Loss Recognized in Operations on Derivative (Ineffective Portion) |
| | | Years Ended December 31, |
| Location of Loss or Recognized in Operations on Derivatives | | 2018 | | 2017 | | 2016 |
| General and administrative expense | | $ | — |
| | $ | — |
| | $ | (1,706 | ) |
| | | | | | | |
| | | Derivatives Not Designated as Hedging Instruments |
| | | Years Ended December 31, |
| Location of Loss Recognized in Operations on Derivatives | | 2018 | | 2017 | | 2016 |
| General and administrative expense | | $ | — |
| | $ | — |
| | $ | (18 | ) |
NOTE 8. FAIR VALUE MEASUREMENTS
The fair value measurement framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The fair value hierarchy is based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:unobservable:
Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.
Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.data.
Level 3 – Inputs that are unobservable and significant to the overall fair value measurement of the assets or liabilities. These types of inputs include the Company'sCompany’s own assumptions.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Recurring Fair Value Measurements
The Company’s liabilities that are required to be measured at fair value in the accompanying consolidated financial statements are summarized below. The following table sets forth the Company’s financial liabilities that were accounted for at fair value on a recurring basis (in thousands):
|
| | | | | | | | | | | | | | | |
| | | | Fair Value Hierarchy Level |
| Description | Fair Value | | Level 1 | | Level 2 | | Level 3 |
| December 31, 2018 | | | | | | | |
| Derivatives: | | | | | | | |
| Interest rate swaps financial liabilities | $ | 7,159 |
| | $ | — |
| | $ | 7,159 |
| | $ | — |
|
| December 31, 2017 | | | | | | | |
| Derivatives: | | | | | | | |
| Interest rate swaps financial liabilities | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
The interest rate swaps are measured using a market approach, using prices obtained from a nationally recognized pricing service and pricing models with market observable inputs such as interest rates and volatilities. These measurements are classified as Level 2 of the fair value hierarchy.
Nonrecurring Fair Value Measurements
Fair value measurement of an asset on a nonrecurring basis occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable. The following table sets forth the Company’s assets that were accounted for at fair value on a nonrecurring basis as of December 31, 2018 and 2017 (in thousands):
|
| | | | | | | | | | | | | | | |
| | | | Fair Value Hierarchy Level |
| Description | Fair Value | | Level 1 | | Level 2 | | Level 3 |
| December 31, 2018 | | | | | | | |
| Long-lived assets held and used | $ | 14,866 |
| | $ | — |
| | $ | — |
| | $ | 14,866 |
|
| Long-lived assets held for sale | 7,695 |
| | — |
| | — |
| | 7,695 |
|
| | | | | | | | |
| December 31, 2017 | | | | | | | |
| Long-lived assets held and used | $ | 28,312 |
| | $ | — |
| | $ | — |
| | $ | 28,312 |
|
| Long-lived assets held for sale | 42,142 |
| | — |
| | — |
| | 42,142 |
|
Real estate assets and their related intangible assets are evaluated for impairment based on certain indicators including, but not limited to: the asset being held for sale, vacant
or non-operating, ,
tenant bankruptcy or delinquency, and leases expiring in
60
days or less. The fair values of
impaired real estate and intangible assets were determined
by using the following information, depending on availability, in order of preference: signed purchase and sale agreements
(“PSA”) or letters of
intent;intent (“LOI”); broker opinion of value (“BOV”); recently quoted bid or ask prices, or market prices for comparable properties; estimates of
discounted cash
flow,flows, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions,
and expenses based upon market
conditions;conditions and capitalization rates; and expectations for the use of the real estate.
Based on these inputs,The following table sets forth the
Company determinedCompany’s assets that
its valuation of the impaired real estate and intangible assets falls within Level 3 of thewere accounted for at fair value
hierarchy.For the years ended December 31, 2018 and 2017, we determined that eight and 18 long-lived assets held and used, respectively, were impaired. For threeon a nonrecurring basis as of the held and used properties impaired during the year ended December 31, 2018, the buildings were fully impaired due to our non-payment on the related ground leases.their respective measurement dates (in thousands):
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
| | | | | | | | | | | | | | | | |
| | | | | | Fair Value Hierarchy Level | |
| | | | | | | | | | | | |
Assets held at December 31, 2020 | | | | | | | | | | | | | | | | |
Impaired at March 31, 2020 | | $ | 36,491 | | | $ | 0 | | | $ | 0 | | | $ | 36,491 | |
Impaired at June 30, 2020 | | $ | 8,055 | | | $ | 0 | | | $ | 0 | | | $ | 8,055 | |
Impaired at September 30, 2020 | | $ | 10,027 | | | $ | 0 | | | $ | 0 | | | $ | 10,027 | |
Impaired at December 31, 2020 | | $ | 14,259 | | | $ | 0 | | | $ | 0 | | | $ | 14,259 | |
Assets held at December 31, 2019 | | | | | | | | | | | | | | | | |
Impaired at June 30, 2019 | | $ | 1,893 | | | $ | 0 | | | $ | 0 | | | $ | 1,893 | |
Impaired at September 30, 2019 | | $ | 1,093 | | | $ | 0 | | | $ | 0 | | | $ | 1,093 | |
Impaired at December 31, 2019 | | $ | 11,594 | | | $ | 0 | | | $ | 0 | | | $ | 11,594 | |
Notes to Consolidated Financial Statements - (continued)
December 31, 20182020, the Company held
23properties that were impaired during 2020. As of December 31, 2019, the Company held
16properties that were impaired during 2019. For
1
For 17 of the properties held and used properties impaired during the year endedat December 31, 2017,2020, the Company estimated fair value using a capitalization rate of
10.06% based on comparative capitalization rates from market competitors. For
1
of the properties held at December 31, 2019, the Company estimated fair value using a capitalization rate of
9.62% based on comparative capitalization rates from market comparables. For the remaining properties, the Company estimated property fair value using price per square foot offrom unobservable inputs and, for the properties valued using comparable properties. The following table provides information aboutproperties during 2020, the price per square foot includes a discount of comparable properties
to account for the market impact of
COVID-19.
The unobservable inputs
used: |
| | | | | | | | | | | | | | | | |
| | | December 31, 2018 | | December 31, 2017 |
| Description | | Range | | Weighted Average | | Square Footage | | Range | | Weighted Average | | Square Footage |
| Long-lived assets held and used by asset type | | | | | | |
| Retail | | — | | — | | — |
| | $13.66 - $305.05 | | $ | 55.68 |
| | 364,940 |
|
| Industrial | | — | | — | | — |
| | $3.30 - $8.56 | | $ | 5.35 |
| | 370,824 |
|
| Office | | — | | — | | — |
| | $24.82 - $244.86 | | $ | 40.14 |
| | 161,346 |
|
Forfor the remaining five heldproperties are as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Price Per Square Foot
Range | | | Weighted Average Price Per Square Foot | | |
| |
| | | | | | | | | | | | | | | | | | | | |
| | | Retail | | | | 11 | | | | $16.67 - $338.98 | | | | $43.32 | | | | 577,945 | |
| | | Retail | | | | 10 | | | | $4.35 - $282.08 | | | | $57.62 | | | | 431,563 | |
| | | Office | | | | 1 | | | | $79.80 - $103.79 | | | | $89.25 | | | | 28,804 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | Retail | | | | 10 | | | | | | | | $50.71 | | | | 165,773 | |
| | | Office | | | | 1 | | | | $ 99.37 | | | | $99.37 | | | | 4,310 | |
| | | Retail | | | | 4 | | | | | | | | $104.84 | | | | 35,885 | |
SPIRIT REALTY CAPITAL, INC. and used property impaired during the year ended SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018 and one held and used properties impaired during the year ended December 31, 2017, the Company estimated property fair value using price per square foot of the listing price or a broker opinion of value. The following table provides information about the price per square foot of listing price and broker opinion of value inputs used:2020
|
| | | | | | | | | | | | | | | | | | |
| | | December 31, 2018 | | December 31, 2017 |
| Description | | Range | | Weighted Average | | Square Footage | | Range | | Weighted Average | | Square Footage |
| Long-lived assets held and used by asset type | | | | | | |
| Retail | | $185.42 - $638.72 | | $ | 507.11 |
| | 27,302 |
| | $88.89 | | $ | 88.89 |
| | 22,500 |
|
| Office | | $225.04 | | $ | 225.04 |
| | 5,999 |
| | — | | — |
| | — |
|
For the years ended December 31, 2018 and 2017, we determined that one and eight long-lived assets held for sale, respectively, were impaired. The Company estimated property fair value of held for sale properties using price per square foot from the signed purchase and sale agreements. The following table provides information about the price per square foot from signed purchase and sale agreements used:
|
| | | | | | | | | | | | | | | | | | |
| | | December 31, 2018 | | December 31, 2017 |
| Description | | Range | | Weighted Average | | Square Footage | | Range | | Weighted Average | | Square Footage |
| Long-lived assets held for sale by asset type | | | | | | |
| Retail | | $126.73 | | $ | 126.73 |
| | 63,128 |
| | $55.30 - $346.23 | | $ | 230.52 |
| | 150,376 |
|
| Industrial | | — | | — |
| | — |
| | $24.02 - $54.21 | | $ | 37.09 |
| | 223,747 |
|
Estimated Fair Value of Financial
Instruments
Financial assets and liabilities for which the carrying values approximate their fair values include cash and cash equivalents, restricted cash and escrow deposits, and accounts receivable and payable. Generally, these assets and liabilities are short-term in duration and are recorded at cost, which approximates fair value, on the accompanying consolidated balance sheets.
In addition, to the disclosures for assets and liabilities required to be measured at fair value at the balance sheet date, companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair values. The fair values of financial instruments are estimates based upon market conditions and perceived risks at December 31, 2018 and 2017.measurement date. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.
The estimated fair values of the loans receivable, investment in Master Trust 2014, 2015 Credit Facility, 2015 Term Loan, Senior Unsecured Notes, Convertible Notes and the fixed-rate mortgages and notes payablethese financial instruments have been derived either based on (i) market quotes for comparableidentical or similar instruments in markets that are not active or (ii) discounted cash flow analyses using estimates of the amount and timing of future cash flows, market rates and credit spreads. The loans receivable, 2015 Credit Facility, 2015 Term
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
Loan, Senior Unsecured Notes, Convertible Notes and the mortgages and notes payable were measured using a market approach from nationally recognized financial institutions with market observable inputs such as interest rates and credit analytics. These measurements are classified as Level 2 of the fair value hierarchy. The following table discloses fair value information for these financial instruments (in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | | |
| | |
| | |
| | |
| | |
| |
| | $ | — | | | $ | — | | | $ | 34,465 | | | $ | 35,279 | |
| | | — | | | | — | | | | 116,500 | | | | 119,802 | |
| | | 177,309 | | | | 177,884 | | | | — | | | | — | |
Senior Unsecured Notes , net (1) | | | 1,927,348 | | | | 2,122,409 | | | | 1,484,066 | | | | 1,543,919 | |
Mortgages and notes payable, net (1) | | | 212,582 | | | | 226,240 | | | | 216,049 | | | | 235,253 | |
Convertible Notes, net (1) | | | 189,102 | | | | 194,124 | | | | 336,402 | | | | 356,602 | |
|
| | | | | | | | | | | | | | | |
| | December 31, 2018 | | December 31, 2017 |
| | Carrying Value | | Estimated Fair Value | | Carrying Value | | Estimated Fair Value |
| Loans receivable, net | $ | 47,044 |
| | $ | 48,740 |
| | $ | 79,967 |
| | $ | 82,886 |
|
| Investment in Master Trust 2014 | 33,535 |
| | 33,811 |
| | — |
| | — |
|
| 2015 Credit Facility, net | 146,300 |
| | 146,731 |
| | 112,000 |
| | 111,997 |
|
2015 Term Loan, net (2) | 419,560 |
|
| 424,670 |
| | — |
| | — |
|
Senior Unsecured Notes (1) | 295,767 |
| | 291,696 |
| | 295,321 |
| | 299,049 |
|
Convertible Notes, net (1) | 729,814 |
| | 740,330 |
| | 715,881 |
| | 761,440 |
|
Mortgages and notes payable, net (1) | 463,196 |
| | 487,548 |
| | 2,516,478 |
| | 2,657,599 |
|
(1) The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums. | The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums. |
(2) The carrying value of the debt instrument as of December 31, 2018 is net of unamortized deferred financing costs.
NOTE 9. INCENTIVE AWARD PLAN AND EMPLOYEE BENEFIT PLAN
Amended Incentive Award Plan
Under the Amended Incentive Award Plan, the Company may grant equity incentive awards to eligible employees, directors and other service providers. Awards under the Amended Incentive Award Plan may be in the form of stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, performance awards, stock payment awards, market-based awards, LTIPOperating Partnership units and other incentive awards. If an award under the Amended Incentive Award Plan is forfeited, expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the Amended Incentive Award Plan. As of December 31, 2018, 604.1 thousand2020, 2.3 million shares remained available for award under the Amended Incentive Award Plan.
During the years ended December 31, 2018, 2017 and 2016, portionsShares of awards of restricted common stock granted to certain of the Company’s officers and other employees vested. The vesting of these shares,have been granted pursuant to the Amended Incentive Award Plan and, during the periods presented, portions of these awards vested. The vesting of these shares resulted in federal and state income tax liabilities for the recipients. As permitted by the terms of the Amended Incentive Award Plan and the award grants, certain executive officers and employees elected to surrender
117.5 thousand, 58 thousand
88 thousand and
1558 thousand shares of
common stock during the years ended December 31, 2020, 2019 and 2018, respectively, valued
at
$2.4$4.4 million,
, $3.5 $2.5 million and $0.8$2.4 million, respectively, solely to pay the associated minimum statutory tax withholdings, duringwhich do not exceed the years ended December 31, 2018, 2017 and 2016.maximum statutory rate. Common shares repurchased are considered retired under Maryland law, and the cost of the stock repurchased is recorded as a reduction to common stock and accumulated deficit on the consolidatedbalance sheets. The Company has made an accounting policy election to recognize stock-based compensation forfeitures as they occur.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
Restricted Shares of Common Stock
During the year ended December 31, 2018, the CompanyRestricted share awards have been granted 0.2 million restricted shares under the Amended Incentive Award Plan to certain employees, including executive officers, employees and members of the Board of Directors. The requisite service period for the awards is generally three years for employees and one year for members of the Board of Directors. The following table summarizes restricted share activity under the Amended Incentive Award Plan:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Outstanding non-vested shares, beginning of year | | | 321,627 | | | $ | 40.66 | | | | 346,181 | | | $ | 45.48 | | | | 286,917 | | | $ | 53.00 | |
| | | 148,045 | | | | 46.42 | | | | 172,818 | | | | 38.41 | | | | 207,253 | | | | 39.43 | |
| | | (182,653) | | | | 42.04 | | | | (193,373) | | | | 47.33 | | | | (137,292) | | | | 52.11 | |
| | | (7,107) | | | | 45.77 | | | | (3,999) | | | | 38.40 | | | | (10,697) | | | | 45.02 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Outstanding non-vested shares, end of year | | | 279,912 | | | $ | 42.67 | | | | 321,627 | | | $ | 40.66 | | | | 346,181 | | | $ | 45.48 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Based on grant date fair values. |
The Company recorded $6.9 million in deferred stock-based compensation associated with restricted shares granted during the year ended December 31, 2020. The fair value of the restricted stock grants was determined based on the
Company'sCompany’s closing stock price on the date of grant.
The Company recorded $8.2 million in deferred compensation associated with these grants. Deferred compensation forDuring the year ended December 31, 2020, restricted shares
will be recognized in expense overwith an aggregate fair value of $7.8 million vested. The fair value of the
requisite service period, generally which is three years, withvesting was determined based on the Company’s closing stock price on the date of vest. Outstandingnon-vested
awards as of December 31, 2020 have a remaining weighted average recognition period of
0.9 years for all grants under the Amended Incentive Award Plan. During the year ended December 31, 2018, 0.1 million restricted shares vested under the Amended Incentive Award Plan, with an aggregate fair value of $5.6 million based on the Company's closing stock price on the date of vest.0.7 years. In connection with the
Spin-Off
on May 31, 2018, holders of unvested restricted shares of Spirit common stock received unrestricted shares of SMTA common stock on a pro rata basis of
one share of SMTA common stock for every tenSPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
shares of Spirit common stock. The distribution of unrestricted SMTA shares is considered an award modification that did not result in incremental fair value and, therefore, incremental compensation expense was not recognized. However, since the vesting period of the unrestricted SMTA shares was accelerated, $1.4 million of unrecognized stock-based compensation expense was accelerated and is reflected within general and administrative expenses onfor the accompanying consolidated statementsyear ended December 31, 2018.
SPIRIT REALTY CAPITAL, INC. and comprehensive income.SPIRIT REALTY, L.P.
The following table summarizes restricted share activity under the Amended Incentive Award Plan: |
| | | | | | | | | | | | | | | | | | | | |
| | 2018 | | 2017 | | 2016 |
| | Number of Shares | | Weighted Average Price (1) (per share) | | Number of Shares | | Weighted Average Price (1) (per share) | | Number of Shares | | Weighted Average Price (1) (per share) |
| Outstanding non-vested shares, beginning of year | 286,917 |
| | $ | 53.00 |
| | 206,899 |
| | $ | 62.73 |
| | 154,177 |
| | $ | 56.44 |
|
| Shares granted | 207,253 |
| | 39.43 |
| | 220,712 |
| | 46.13 |
| | 189,758 |
| | 62.92 |
|
| Shares vested | (137,292 | ) | | 52.11 |
| | (131,534 | ) | | 56.49 |
| | (112,516 | ) | | 55.51 |
|
| Shares forfeited | (10,697 | ) | | 45.02 |
| | (9,160 | ) | | 58.30 |
| | (24,520 | ) | | 57.79 |
|
| Outstanding non-vested shares, end of year | 346,181 |
| | $ | 45.48 |
| | 286,917 |
| | $ | 53.00 |
| | 206,899 |
| | $ | 62.73 |
|
Notes to Consolidated Financial Statements - (continued)
(1) Based on grant date fair values.The Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, effective January 1, 2017 and made an accounting policy election to recognize stock-based compensation forfeitures as they occur, whereas previously stock-based compensation forfeitures were estimated and recognized based on historical forfeiture rates.Since August 2013, market-based
M
arket-based awards have been granted to executive officers upon approval from the Board of Directors or committee thereof. These awards are granted at a target number of units and represent shares that are potentially issuable in the future. The market-based share awards vest based on the Company’s stock
price, dividend
performance,and dividend performance,
TSR at the end of generally, three-yeartheir respective performance periods relative to a group of industry peers. The performance periods generally begin on January 1st of the year of grant and end after three years on December 31st. Potential
shares of the
Corporation'sCorporation’s common stock that each participant is eligible to receive is based on the initial target number of shares granted multiplied by a percentage range between 0% and
250%300%. The following table summarizes market-based award activity under the Amended Incentive Award Plan:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Outstanding non-vested awards, beginning of year | | | 319,731 | | | $ | 49.49 | | | | | | | | 266,801 | | | $ | 51.19 | | | | | | | | 168,694 | | | $ | 62.25 | |
| Grants at target | | | 87,746 | | | | 67.30 | | | | | | | | 96,543 | | | | 50.95 | | | | | | | | 100,899 | | | | 51.98 | |
| Earned above performance target | | | 83,259 | | | | 54.57 | | | | | | | | 0 | | | | 0 | | | | | | | | 0 | | | | 0 | |
| | | (268,694 | ) | | | 54.57 | | | | | | | | (30,597 | ) | | | 69.54 | | | | | | | | (27,267 | ) | | | 70.24 | |
| Forfeited | | | 0 | | | | — | | | | | | | | (8,662 | ) | | | 72.24 | | | | | | | | (2,168 | ) | | | 80.32 | |
| | | (20,574 | ) | | | N/A | | | | | | | | (4,354 | ) | | | N/A | | | | | | | | 26,643 | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding non-vested awards, end of year | | | 201,468 | | | $ | 58.12 | | | | | | | | 319,731 | | | $ | 49.49 | | | | | | | | 266,801 | | | $ | 51.19 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The number of shares that vested in 2018 includes 27,267 shares released at target in connection with qualifying terminations. Dividend rights of $0.1 million associated with these terminations were paid in cash during 2018. |
| In 2018, in connection with theSpin-Off and in accordance with the rights granted per the Amended Incentive Award Plan, the Board of Directors made an equitable adjustment forall market-based awards outstanding, resulting in incremental shares. During the years ended December 31, 2020 and 2019, 20.6 thousand and 3.4 thousand, respectively, of these incremental shares were earned. 1 thousand of the incremental shares expired unearned during the year ended December 31, 2019.Because the fair value of the outstanding market-based awards the day prior to and the day after the Spin-Off did not materially change, there was no change to unrecognized compensation expense and no incremental compensation expense related to the incremental shares. |
date fair value of the market-based share awards was calculated using the Monte Carlo simulation model, which incorporated stock price volatility
projected dividend yieldsof the Company and each of the Company’s peers and other variables over the time horizons matching the
performance periods. Significant For market-based awards granted in 2020, significant
inputs for the calculation were expected volatility of the Company
ranging from 21.9% to 30.8%,25.2% and expected volatility of the
Company'sCompany’s peers, ranging from
16.3%18.1% to
32.8%. Stock-based compensation expense associated27.3%, with
unvested market-based share awards is recognized onan average volatility of 21.7%and a straight-line basis over the minimum required service period, with a remaining weighted average recognition periodrisk-free interest rate of 1.7 years as of December 31, 2018.1.07%.
In addition, final shares issued under each market-based share award entitle its holder to a cash payment equal to the aggregate declared dividends with record dates during the performance period, beginning on the grant date and ending the day before the awards are released.
The projected shares to be awarded are not considered issued under the Amended Incentive Award Plan until the performance period has ended and the actual number of shares to be released is determined. The market-based shares and dividend rights are subject to forfeiture in the event of a
non-qualifying
termination of a participant prior to the performance period end date. During the year ended December 31,
2018, 27.3 thousand shares vested related to2020, market-based awards with an aggregate fair value of
$1.1$9.6 million
vested. The fair value of the vesting was determined based on the
Company'sCompany’s closing stock price on the date of vest.
Outstandingnon-vested
awards as of December 31, 2020 have a remaining weighted average recognition period of 1.7 years and would have resulted in 0.3 million shares released based on the Corporation’s TSR relative to the specified peer groups through that date.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The following table summarizes market-based award activity under the Amended Incentive Award Plan:
|
| | | | | | | | | | | | | | | | | | | | |
| | 2018 | | 2017 | | 2016 |
| | Number of Target Shares | | Weighted Average Fair Value
(per share) | | Number of Target Shares | | Weighted Average Fair Value
(per share) | | Number of Target Shares | | Weighted Average Fair Value
(per share) |
| Outstanding non-vested awards, beginning of year | 168,694 |
| | $ | 62.25 |
| | 98,859 |
| | $ | 77.79 |
| | 94,542 |
| | $ | 71.38 |
|
Grants at target (1) | 100,899 |
| | 51.98 |
| | 171,642 |
| | 59.38 |
| | 80,158 |
| | 80.30 |
|
Earned (below) above performance target (2) | — |
| | — |
| | — |
| | — |
| | (8,528 | ) | | 67.80 |
|
Vested (3) | (27,267 | ) | | 70.24 |
| | (93,333 | ) | | 72.38 |
| | (43,085 | ) | | 71.80 |
|
| Forfeited | (2,168 | ) | | 80.32 |
| | (8,474 | ) | | 73.90 |
| | (24,228 | ) | | 75.25 |
|
Incremental Shares (4) | 26,643 |
| | N/A |
| | — |
| | N/A |
| | — |
| | N/A |
|
| Outstanding non-vested awards, end of year | 266,801 |
| | $ | 51.19 |
| | 168,694 |
| | $ | 62.25 |
| | 98,859 |
| | $ | 77.79 |
|
(1) TheIn addition, final shares issued under each market-based share award entitle its holder to a cash payment equal to the aggregate dividends declared with record dates during the performance period, forbeginning on the 2018 market-basedgrant date and ending the day before the awards began January 1, 2018 and continues through December 31, 2020. The performance period for the 2017 market-based awards began January 1, 2017 and continues through December 31, 2019. The performance period for the 2016 market-based awards began January 1, 2016 and continues through December 31, 2018.are released.(2) Represents shares that were earned below or in excess of target for the grants whose performance periods ended on December 31, 2018, 2017 and 2016.Approximately $
2.3(3) The number of shares that vested in 2018, 2017 and 2016 includes 27,267, 93,333, and 31,156 shares, respectively, released at target in connection with qualifying terminations. Dividend rights of $0.1 million, $0.5 million and $0.2 million associated with all shares released were paid in cash during 2018, 2017 and 2016, respectively.$
2.7(4) In connection with the Spin-Off and in accordance with the rights granted per the Amended Incentive Award Plan, the Board of Directors made an equitable adjustment for all performance share awards outstanding, resulting in incremental shares. Because the fair value of the outstanding performance awards the day prior to and the day after the Spin-Off did not materially change, there was no change to unrecognized compensation expense and did not result in any incremental compensation expense.
Approximately $1.7 million and $0.8 million in dividend rights have been accrued as of December
31
2018 ,
2020and 2017,
2019, respectively. For outstanding non-vested awards at December 31, 2018, 0.3 million shares would have been released based on the Corporation's TSR relative to the specified peer groups through that date.
Stock-based Compensation Expense
For the years ended December 31,
2018, 20172020, 2019 and
2016,2018, the Company recognized
$15.1$12.6 million,
$16.6$14.3 million and
$9.6$15.1 million, respectively, in stock-based compensation expense, which is included in general and administrative expenses in the accompanying consolidated statements of
operations.
As of December 31, 2018, the remaining unamortized stock-based Stock-based compensation expense totaled $15.5 million, including $8.1 million related to restricted stock awards and $7.4 million related to market-based awards. Amortization is recognized on a straight-line basis over the minimum required service period of each applicable award. As of
December 31, 2020, the remaining unamortized stock-based compensation expense totaled $12.3 million, comprised of $6.4 million related to restricted stock awards and $5.9 million related to market-based awards. As of December 31, 2019, the remaining unamortized stock-based compensation expense totaled $12.6 million, including $6.6 million related to restricted stock awards and $6.0 million related to market-based awards.
The Company has a 401(k) Plan, which is available to full-time employees who have completed at least three monthson the first month following their date of servicehire with the Company. Currently, the Company provides a matching contribution in cash,equal to 100% of elective deferrals up to a maximum of 4% of compensation, which vests immediately.
NOTE 10. INCOME PER SHARE AND PARTNERSHIP UNIT
Income per share
and unit has been
determinedcomputed using the
two-class
method, which is computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares of common stock outstanding for the period. In applying the
two-class
method, undistributed earnings are allocated to both shares of common stock and participating securities based on the weighted average shares outstanding during the period. Classification of the
Company'sCompany’s unvested restricted stock, which contain rights to receive
non-forfeitablenonforfeitable dividends, are deemed participating securities under the
two-class
method. Under the
two-two-class
class method, earnings attributable to unvested restricted shares are deducted from income from continuing operations in the computation of net income attributable to common
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The table below is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per share
and unit computed using the
two-class
method
| | | | | | | | | | | | |
| | | |
| | | | | | | |
Basic and diluted income: | | | | | | | | | | | | |
Income from continuing operations | | $ | 26,708 | | | $ | 175,266 | | | $ | 148,491 | |
Less: dividends paid to preferred stockholders | | | (10,350 | ) | | | (10,350 | ) | | | (10,352 | ) |
Less: dividends attributable to unvested restricted stock | | | (728 | ) | | | (915 | ) | | | (1,149 | ) |
| | | | | | | | | | | | | |
Income used in basic and diluted income per common share from continuing operations | | | 15,630 | | | | 164,001 | | | | 136,990 | |
Loss used in basic and diluted income per share from discontinued operations | | | — | | | | — | | | | (16,439 | ) |
| | | | | | | | | | | | | |
Net income attributable to common stockholders used in basic and diluted income per share | | $ | 15,630 | | | $ | 164,001 | | | $ | 120,551 | |
| | | | | | | | | | | | | |
| | | |
Weighted average shares of common stock outstanding | | | 104,656,242 | | | | 91,005,932 | | | | 86,682,015 | |
Less: unvested weighted average shares of restricted stock | | | (298,582 | ) | | | (384,124 | ) | | | (360,747 | ) |
| | | | | | | | | | | | | |
Basic weighted average shares of common stock outstanding | | | 104,357,660 | | | | 90,621,808 | | | | 86,321,268 | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.59 | |
| | | — | | | | — | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - basic | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.40 | |
| | | | | | | | | | | | | |
| Dilutive shares related to unvested market-based awards | | | 175,952 | | | | 247,504 | | | | 155,181 | |
| | | | | | | | | | | | | |
Dilutive shares related to unsettled forward equity contracts | | | 1,772 | | | | — | | | | — | |
Diluted weighted average shares of common stock outstanding (1) | | | 104,535,384 | | | | 90,869,312 | | | | 86,476,449 | |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted | | | | | | | | | | | | |
| | $ | 0.15 | | | $ | 1.81 | | | $ | 1.58 | |
| | | — | | | | — | | | | (0.19 | ) |
| | | | | | | | | | | | | |
Net income per share attributable to common stockholders - diluted | | $ | 0.15 | | | $ | 1.81 | | | $ | 1.39 | |
| | | | | | | | | | | | | |
Potentially dilutive shares related to unvested restricted stock awards | | | 62,448 | | | | 166,625 | | | | 89,230 | |
| (1) | Assumes the most dilutive issuance of potentially issuable shares between thetwo-class and treasury stock method unless the result would be anti-dilutive. |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| Basic and diluted income: | | | | | |
| Income from continuing operations | $ | 148,491 |
| | $ | 40,428 |
| | $ | 28,638 |
|
| Less: income attributable to unvested restricted stock | (1,149 | ) | | (940 | ) | | (614 | ) |
| Less: dividends paid to preferred stockholders | (10,352 | ) | | (2,530 | ) | | — |
|
| Income used in basic and diluted income per common share from continuing operations | 136,990 |
| | 36,958 |
| | 28,024 |
|
| (Loss) income used in basic and diluted income per share from discontinued operations | (16,439 | ) | | 36,720 |
| | 68,808 |
|
| Net income attributable to common stockholders used in basic and diluted income per share | $ | 120,551 |
| | $ | 73,678 |
| | $ | 96,832 |
|
| | | | | | |
| Basic weighted average shares of common stock outstanding: | | | | | |
| Weighted average shares of common stock outstanding | 86,682,015 |
| | 93,842,510 |
| | 94,004,736 |
|
| Less: unvested weighted average shares of restricted stock | (360,747 | ) | | (255,519 | ) | | (161,184 | ) |
| Weighted average number of common shares outstanding used in basic income per share | 86,321,268 |
| | 93,586,991 |
| | 93,843,552 |
|
| Net income per share attributable to common stockholders - basic | | | | | |
| Continuing operations | $ | 1.59 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per share attributable to common stockholders - basic | $ | 1.40 |
| | $ | 0.79 |
| | $ | 1.03 |
|
Dilutive weighted average shares of common stock (1) | | | | | |
| Stock options | — |
| | — |
| | 767 |
|
| Unvested market-based awards | 155,181 |
| | 1,569 |
| | 4,931 |
|
| Weighted average shares of common stock used in diluted income per share | 86,476,449 |
| | 93,588,560 |
| | 93,849,250 |
|
| Net income per share attributable to common stockholders - diluted | | | | | |
| Continuing operations | $ | 1.58 |
| | $ | 0.40 |
| | $ | 0.30 |
|
| Discontinued operations | (0.19 | ) | | 0.39 |
| | 0.73 |
|
| Net income per share attributable to common stockholders - diluted | $ | 1.39 |
| | $ | 0.79 |
| | $ | 1.03 |
|
| | | | | | |
| Potentially dilutive shares of common stock | | | | | |
| Unvested shares of restricted stock, less shares assumed repurchased at market | 89,230 |
| | 13,097 |
| | 23,931 |
|
| Total | 89,230 |
| | 13,097 |
| | 23,931 |
|
(1) Assumes the most dilutive issuance of potentially issuable shares between the two-class and treasury stock method unless the result would be anti-dilutive.
The Corporation intends to satisfy its exchange obligation for the principal amount of the
2021 Convertible Notes to the note holders entirely in
cash,cash; therefore, the
"if-converted" “if-converted”
method does not apply and the treasury stock method is being used. For the year ended December 31,
2018,2020, the
Corporation'sCorporation’s average stock price was below the conversion price, resulting in
zero0 potentially dilutive shares related to the conversion spread of the
2021
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
NOTE 11. RELATED PARTY TRANSACTIONS
Cost Sharing Arrangements
In conjunction with the
Spin-Off,
the Company and SMTA entered into certain agreements, including the Separation and Distribution Agreement, Tax Matters Agreement, Registration Rights Agreement and Insurance Sharing Agreement. These agreements
provideprovided a framework for the relationship between the Company and SMTA after the
Spin-Off,
by which Spirit
maycould incur certain expenses on behalf of SMTA that
musthad to be reimbursed in a timely manner.
As partThese agreements, except for the Tax Matters Agreement, were terminated in conjunction with the termination of the
Separation and DistributionAsset Management Agreement. The Tax Matters Agreement
Spirit contributed $3.0 million of cash to SMTA atwas terminated in conjunction with the
timetermination of the
Spin-Off. Additionally, in relation to rental payments received by SMTA subsequent to the Spin-Off that relate to rents prior to the Spin-Off, SMTA was required to reimburse $2.0 million to Spirit within 60 days of the Spin-Off. The full $2.0 million was reimbursed to Spirit during the year ended December 31, 2018. As of December 31, 2018 the Company had an accrued receivable balance of $69.0 thousand and an accrued payable balance of $1.8 million in connection with these matters.Interim Management Agreement.Asset Management Agreement and Interim Management Agreement
In conjunction with the
Spin-Off,
the Company entered into the Asset Management Agreement pursuant to which the Operating Partnership
will provideprovided various
management services
subject to
SMTA. On June 2, 2019, concurrently with SMTA’s entry into an agreement to sell Master Trust 2014, the
supervisionCompany entered into a termination agreement of the
SMTA's Board of Trustees, including, but not limited to: (i) performing all of SMTA's day-to-day functions, (ii) sourcing, analyzing and executingAsset Management Agreement, which became effective on
investments and dispositions, (iii) determining investment criteria, (iv) performing investment and liability management duties, including financing and hedging, and (v) performing financial and accounting management. For its services,September 20, 2019, pursuant to which SMTA paid the Company
is entitled to an annual managementa termination fee of
$20.0 million per annum, payable monthly in arrears. Additionally,$48.2 million. On June 2, 2019, the Company
may be entitled to, under certain circumstances, a promoted interest fee based on the total shareholder return of SMTA's common shares during the relevant period, as well as a termination fee. No revenue for the promoted interest fee or termination fee has been recognized as they do not meet the criteria for recognition under ASC 606-10 as of December 31, 2018.and SMTA also entered into an Interim Management Agreement, which became effective September 20, 2019 and was subsequently terminated effective September 4, 2020. Asset management fees of
$0.7 million, $14.7 million, $11.7 million
forwere earned during the
yearyears ended December 31,
2020, 2019, and 2018,
respectively, and are included in related party fee income in the consolidated
statementstatements of operations.
AsAlso, under the terms of
the Asset Management Agreement, the Company recognized related party fee income of $0.9 million, which was fully offset by general and administrative expense, for other compensation awarded by SMTA to an employee of Spirit for the year ended December 31,
2018, the Company had an accrued receivable balance of $1.7 million related to the asset management fees.2019.Property Management and Servicing Agreement
ThePrior to September 20, 2019, the Operating Partnership providesprovided property management services and special services for Master Trust 2014. The propertyProperty management fees accrue daily at 0.25% per annum of the collateral value of the Master Trust 2014 collateral pool less any specially serviced assets,$4.2 million and the special servicing fees accrue daily at 0.75% per annum of $1.2 million were earned for the collateral value of any assets deemed to be specially serviced per the terms of the Property Management and Servicing Agreement dated May 20, 2014.year ended December 31, 2019. Property management fees of $3.7 million and special servicingservices fees of $0.5 million were earned for the year ended December 31, 2018. These fees are included in related party fee income in the consolidated statementstatements of operations. AsIn conjunction with SMTA’s sale of December 31, 2018,Master Trust 2014 on September 20, 2019, the Company had an accrued receivable balance of $0.5 million related tonotes were retired and the property managementProperty Management and special servicing fees.Servicing Agreement was terminated.
Related Party Loans Payable
Wholly-ownedPrior to September 20, 2019, wholly-owned subsidiaries of the Company arewere the borrower on four4 mortgage loans payable to SMTA and secured by six6 single-tenant commercial properties owned by the Company. In total, these mortgage notes had an outstanding principal balance of $27.9 million at December 31, 2018, which is included in mortgages and notes payable, net on the consolidated balance sheet. The notes incurred interest expense of $167 thousand$0.2 million for both the yearyears ended December 31, 2019 and 2018, which is included in interest expense in the consolidated statements of operations. AsIn conjunction with SMTA’s sale of December 31, 2018, these mortgage notes have a weighted-average stated interest rate of 1.0%, a weighted-average term of 9.2 years and are eligible for early repayment without penalty.Master Trust 2014 on September 20, 2019, the Company repaid the related party loans in full.
Related Party Notes Receivable
In conjunction with the Master Trust 2014 Series 2017-1 notes issuance completed in December 2017, theThe Operating Partnership, as sponsor of the issuance, retained a 5.0% economic interest in the Master Trust 2014 Series
2017-1
notes as required by the risk retention rules issued under 17 CFR Part 246. The
principal amount receivable under the notes was $33.5 million at December 31, 2018 and is reflected as investment in Master Trust 2014 on theSPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
consolidated balance sheet. The notes generated interest income of $1.1 million and $0.9 million for the yearyears ended December 31, 2019 and 2018, respectively, which is included in interest income on loans receivable in the consolidated statements of operations. The notes have a weighted-average stated interest rate of 4.6% with a remaining term of four years to maturity as of December 31, 2018. The notes are classified as held-to-maturity and, as of December 31, 2018, the amortized cost basis is equal to carrying value.
Related Party Acquisitions
During the year ended December 31, 2018, the Company acquired a portfolio of properties and assigned three of the acquired properties to SMTA. In conjunction with
SMTA’s sale of Master Trust 2014 on September 20, 2019, the
assignment,Master Trust 2014 notes were redeemed, resulting in the Company
received a $392.5 thousand equalization payment from SMTAreceiving the full outstanding principal balance of $33.5 million, plus an early repayment premium of $0.9
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to ensure a consistent capitalization rate for the acquired properties between the Company and SMTA.Consolidated Financial Statements - (continued)
In conjunction with the
Spin-Off,
SMTA issued to the Operating Partnership and one of its affiliates, both wholly-owned subsidiaries of Spirit, a total of 6.0 million shares of Series A preferred stock with an aggregate liquidation preference of $150.0 million (the
"SMTA“SMTA Preferred
Stock"Stock”). The SMTA Preferred Stock
payspaid cash dividends at the rate of 10.0% per annum on the liquidation preference of
$25$25.00 per
share (equivalent to $0.625 per share on a quarterly basis and $2.50 per share on an annual basis).share. Spirit recognized
$10.8 million and $8.8 million in dividends during the
yearyears ended December 31,
2019 and 2018,
respectively, that are reflected as preferred dividend income from SMTA in the consolidated statements of operations.
Preferred dividend income is recognized when dividends are declared. AsOn September 20, 2019, in conjunction with SMTA’s sale of
December 31, 2018, the Company had an accrued receivable balance of $3.8 million related to the preferred dividends. The carrying value ofMaster Trust 2014, the SMTA Preferred Stock
is $150.0 million as of December 31, 2018, reflected in the consolidated balance sheets and will be accounted for at cost, less impairments, if any.was repurchased by SMTA.Prior to the Spin-Off, the Operating Partnership contributed certain assets to SubREIT in exchange for $5.0 million in SubREIT preferred shares. Then, on the Distribution Date, the Operating Partnership sold the SubREIT preferred shares to a third party for $5.0 million in cash.
NOTE 12. DISCONTINUED OPERATIONS
Effective January 1, 2014, the Company adopted ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, under which only disposals representing a strategic shift in operations of the Company and that have (or will have) a major effect on the Company’s operations and financial results are to be presented as discontinued operations. Previously, only properties that were reported as held for sale as of December 31, 2013, were presented in discontinued operations and net gains or losses from the disposition of these properties were reclassified to discontinued operations.
On May 31, 2018, the Company completed the
Spin-Off
of SMTA by means of a pro rata share distribution. The Company determined that the
Spin-Off
represented a strategic shift that had a major effect on the
Company'sCompany’s results and, therefore,
SMTA'sSMTA’s operations qualified as discontinued operations. Accordingly, the
historical financial resultsoperations of SMTA
are reflected in our consolidated financial statements as discontinued operations for all periods presented.The assets and liabilities relatedprior to
discontinued operations are separately classified on the
consolidated balance sheets as of December 31, 2018 and 2017, and the operations Spin-Off
have been classified as
(loss) incomea loss from discontinued operations on the consolidated statements of operations for the
yearsyear ended December 31,
2018, 2017 and 2016.2018. The consolidated statements of cash flows and all other notes herein include the results of both continuing operations and discontinued
operations.operations, as applicable.Goodwill was allocated to SMTA based on the fair value of SMTA relative to the total fair value of the Company, resulting in a reduction in goodwill of the Company of $28.7 million as a result of the
Spin-Off.
This reduction in the
Company'sCompany’s goodwill is reflected in the SMTA dividend distribution in the accompanying consolidated statement of
stockholders'stockholders’ equity and consolidated statement of
partners'partners’ capital.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The table below summarizes the Company's assets and liabilities related to discontinued operations reported in its consolidated balance sheet:
|
| | | | |
| (in thousands) | | December 31, 2017 |
| Assets | | |
| Investments: | | |
| Real estate investments: | | |
| Land and improvements | | $ | 990,575 |
|
| Buildings and improvements | | 1,702,926 |
|
| Total real estate investments | | 2,693,501 |
|
| Less: accumulated depreciation | | (572,075 | ) |
| | | 2,121,426 |
|
| Loans receivable, net | | 1,501 |
|
| Intangible lease assets, net | | 103,651 |
|
| Real estate asset held for sale, net | | 28,460 |
|
| Net investments | | 2,255,038 |
|
| Cash and cash equivalents | | 6 |
|
| Deferred costs and other assets, net | | 109,096 |
|
| Goodwill | | 28,740 |
|
| Total assets of discontinued operations | | $ | 2,392,880 |
|
| | | |
| Liabilities | | |
| Mortgages and notes payable, net | | $ | 1,926,834 |
|
| Intangible lease liabilities, net | | 24,729 |
|
| Accounts payable, accrued expenses and other liabilities | | 17,277 |
|
| Total liabilities of discontinued operations | | $ | 1,968,840 |
|
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
The table below provides information about income and expenses related to the Company'sCompany’s discontinued operations reported in its consolidated statements of operations.operations:
| | | | |
| | Year Ended
December 31, 2018 |
|
| | | | |
| | $ | 100,672 | |
Interest income on loans receivable | | | 1,495 | |
| | | 776 | |
| | | | |
| | | 102,943 | |
| | | | |
General and administrative | | | 264 | |
| | | 21,391 | |
Property costs (including reimbursable) | | | 3,711 | |
| | | 339 | |
| | | 46,521 | |
Depreciation and amortization | | | 35,461 | |
| | | 10,943 | |
| | | | |
| | | 118,630 | |
| | | | |
| | | | |
Loss on debt extinguishment | | | (363 | ) |
Loss on disposition of assets | | | (274 | ) |
| | | | |
| | | (637 | ) |
| | | | |
Loss from discontinued operations before income tax expense | | | (16,324 | ) |
| | | (115 | ) |
| | | | |
Loss from discontinued operations | | $ | (16,439 | ) |
| | | | |
There were no discontinued operations included in the consolidated statement of operations for the years ended December 31, 2020 and 2019 or for the balance sheets presented herein as of December 31, 2020 and 2019.
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| (in thousands) | 2018 | | 2017 | | 2016 |
| Revenues: | | | | | |
| Rental income | $ | 100,672 |
| | $ | 231,504 |
| | $ | 242,485 |
|
| Interest income on loans receivable | 1,495 |
| | 445 |
| | 1,854 |
|
| Other income | 776 |
| | 5,748 |
| | 6,295 |
|
| Total revenues | 102,943 |
| | 237,697 |
| | 250,634 |
|
| Expenses: | | | | | |
| General and administrative | 264 |
| | 820 |
| | 2,008 |
|
| Transaction costs | 21,391 |
| | 6,361 |
| | — |
|
| Property costs (including reimbursable) | 3,711 |
| | 14,376 |
| | 6,750 |
|
| Real estate acquisition costs | 339 |
| | (78 | ) | | 325 |
|
| Interest | 46,521 |
| | 76,733 |
| | 77,896 |
|
| Depreciation and amortization | 35,461 |
| | 82,333 |
| | 89,240 |
|
| Impairments | 10,943 |
| | 40,733 |
| | 26,880 |
|
| Total expenses | 118,630 |
| | 221,278 |
| | 203,099 |
|
| Other (loss) income: | | | | | |
| Loss on debt extinguishment | (363 | ) | | (2,224 | ) | | (1,372 | ) |
| (Loss) gain on disposition of assets | (274 | ) | | 22,408 |
| | 22,742 |
|
| Total other (loss) income | (637 | ) | | 20,184 |
| | 21,370 |
|
| (Loss) income from discontinued operations before income tax (expense) benefit | (16,324 | ) | | 36,603 |
| | 68,905 |
|
| Income tax (expense) benefit | (115 | ) | | 117 |
| | (97 | ) |
| (Loss) income from discontinued operations | $ | (16,439 | ) | | $ | 36,720 |
| | $ | 68,808 |
|
The table below provides information about operating and investing cash flows related to the Company'sCompany’s discontinued operations reported in its consolidated statements of cash flows.flows:
| | | | |
| | |
| | |
Net cash provided by operating activities | | $ | 35,163 | |
Net cash used in investing activities | | | (31,544 | ) |
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| (in thousands) | 2018 | | 2017 | | 2016 |
| Net cash provided by operating activities | $ | 35,163 |
| | $ | 143,939 |
| | $ | 160,279 |
|
| Net cash (used in) provided by investing activities | (31,544 | ) | | 135,880 |
| | 99,542 |
|
Subsequent toFrom the
Spin-Off
through September 4, 2020, the Company
will havehad continuing involvement with SMTA through
the terms of the Asset Management Agreement and Property Management and Servicing Agreement.related party agreements. See Note 11 for further
detail ondetail. The Company had cash inflows from SMTA of $1.1 million and cash outflows to SMTA of $1.4 million for the
continuing involvement. Subsequentyear ended December 31, 2020. The Company had cash inflows from SMTA of $273.0 million and cash outflows to
SMTA of $49.9 million for the
Spin-Off, theyear ended December 31, 2019. The Company had cash inflows from SMTA of $24.1 million and cash outflows to SMTA of $49.8 million for the
year
ended December 31, 2018.
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
The Company’s total income tax expense was as follows (in thousands):
| | | | | | | | | | | | |
| | | |
| | | | | | | |
| | $ | 128 | | | $ | 1,327 | | | $ | 785 | |
| | | 145 | | | | 10,174 | | | | 122 | |
| | | | | | | | | | | | | |
| | $ | 273 | | | $ | 11,501 | | | $ | 907 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| State income tax | $ | 785 |
| | $ | 394 |
| | $ | 899 |
|
| REIT state built-in gain tax expense | — |
| | — |
| | 47 |
|
| Federal income tax | 122 |
| | — |
| | 19 |
|
| Total income tax expense | $ | 907 |
| | $ | 394 |
| | $ | 965 |
|
The Operating Partnership is a partnership for federal income tax purposes. Partnerships are pass-through entities and are not subject to U.S. federal income taxes, and therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Although most states and cities where the Operating Partnership operates follow the U.S. federal income tax treatment, there are certain jurisdictions such as Texas, Tennessee and Ohio that impose income or franchise taxes on a partnership. The Company’s deferred income tax expense and its ending balance in deferred tax assets and liabilities, which are recorded within accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets, were immaterial at December 31, 2018, 20172020, 2019 and 2016.2018.
The Operating Partnership transferred its rights and obligations under the Asset Management Agreement to SRAM, a wholly-owned taxable REIT subsidiary of Spirit, on April 1, 2019. This agreement was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective from September 20, 2019 through September 4, 2020. Accordingly, all asset management fees earned from April 1, 2019 through September 4, 2020, including the termination fee income earned in September 2019, were subject to income tax.
The Operating Partnership allocated personnel and other general and administrative costs to SRAM for management services provided to SMTA, including services provided in connection with SMTA’s sale of Master Trust 2014 on September 20, 2019. The federal income tax related to SRAM for the year ended December 31, 2019 was $10.2 million and the state income tax for the year ended December 31, 2019 was $0.7 million. Income tax expense for SRAM attributable to income before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate of 21% to income before income taxes. The difference between the statutory rate and reported amount for SRAM is caused bynon-deductible
executive compensation expenses totaling $0.6 million and the impact of state income taxes, net of federal income tax benefit, totaling $0.6 million.To the extent that the Company acquires property that has been owned by a C corporation in a transaction in which the tax basis of the property carries over, and the Company recognizes a gain on the disposition of such property during the subsequent recognition period, it will be required to pay tax at the regular corporate tax rate to the extent of such
built-in
gain. No properties subject to state
built-in
gain tax were sold during
2018.2020 or 2019.The Corporation has federal net operating loss carry-forwards for income tax purposes totaling $66.1 million for each of the years ended December 31, 2018, 20172020, 2019 and 2016.2018. These losses, which begin to expire in 2027 through 2034, are available to reduce future taxable income or distribution requirements, subject to certain ownership change limitations. The Corporation intends to make annual distributions at least equal to its taxable income and thus does not expect to utilize its net operating loss carryforwards in the foreseeable future.
The Company files federal, state and local income tax returns. All federal tax returns for years prior to
20152017 are no longer subject to examination. Additionally, state tax returns for years prior to
20142016 are generally no longer subject to examination. The Company’s policy is to recognize interest related to any underpayment of income taxes as interest
expense and to recognize any penalties as operating expenses. There was
no0 accrual for interest or penalties at December 31,
2018, 20172020, 2019 and
2016.2018. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax law applied to the facts of each
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
For the years ended December 31, 2018, 20172020, 2019 and 2016,2018, common stock dividends paid were characterized for tax as follows (per share):
| | | | | | | | |
| | | | |
| | | | | | | | |
| | $ 1.80 | | $ 1.94 | | | $ 2.63 | |
| | 0.70 | | 0.05 | | | 0.22 | |
| | — | | 0.51 | | | 5.16 | |
| | | | | | | | | |
| | $ 2.50 | | $ 2.50 | | | $ 8.01 | |
| | | | | | | | | |
|
| | | | | | | | | | | |
| | Year Ended December 31, 2018 (1) | | Year Ended December 31, 2017 | | Year Ended December 31, 2016 |
| Ordinary income | $ | 2.63 |
| | $ | 2.45 |
| | $ | 2.60 |
|
| Return of capital | 0.22 |
| | 0.80 |
| | 0.75 |
|
| Capital gain | 5.16 |
| | 0.35 |
| | 0.15 |
|
| Total | $ | 8.01 |
| | $ | 3.60 |
| | $ | 3.50 |
|
(1) Includes stock distribution related to the Spin-Off of SMTA of $4.68 per share.| (1) | Includes stock distribution related to theSpin-Off of SMTA of $4.68 per share. |
NOTE 14. COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES
On November 16, 2015, the Company’s Board of Directors approved the strategic decision to relocate its headquarters from Scottsdale, Arizona to Dallas, Texas. The Company began occupying temporary office space in the new headquarters in the spring of 2016 and finalized the move to the new office space in late September 2016. As a result
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
of moving its corporate headquarters, the Company incurred various restructuring charges, including employee separation and relocation costs. Restructuring charges incurred for the year ended December 31, 2016 were $6.3 million, and are included within restructuring charges on the accompanying consolidated statements of operations. The cumulative restructuring costs associated with the headquarters relocation was $20.5 million, all of which was incurred in 2015 and 2016. There were no restructuring costs incurred for the years ended December 31, 2018 and 2017, respectively.
NOTE 15. CONSOLIDATED QUARTERLY FINANCIAL DATA
The following table sets forth certain unaudited consolidated financial information for each of the four quarters included in the years ended December 31, 20182020 and 20172019 (in thousands, except share and per share data):
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $ | 122,720 | | | $ | 118,524 | | | $ | 113,741 | | | $ | 128,632 | | | $ | 483,617 | |
Depreciation and amortization | | | (52,236) | | | | (53,160) | | | | (52,170) | | | | (55,054) | | | | (212,620) | |
| | | (25,359) | | | | (26,095) | | | | (26,404) | | | | (26,307) | | | | (104,165) | |
| | | (61,360) | | | | (40,340) | | | | (24,880) | | | | (30,473) | | | | (157,053) | |
( Loss ) gain on debt extinguishment | | | — | | | | — | | | | (7,252) | | | | 25 | | | | (7,227) | |
Gain on disposition of assets | | | 388 | | | | 658 | | | | 10,763 | | | | 12,347 | | | | 24,156 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | (15,847) | | | | (413) | | | | 13,798 | | | | 29,170 | | | | 26,708 | |
| | | | | | | | | | | | | | | | | | | | | |
| Dividends paid to preferred stockholders | | | (2,588) | | | | (2,588) | | | | (2,587) | | | | (2,587) | | | | (10,350) | |
| | | | | | | | | | | | | | | | | | | | | |
| Net (loss) income attributable to common stockholders and partners | | $ | (18,435) | | | $ | (3,001) | | | $ | 11,211 | | | $ | 26,583 | | | $ | 16,358 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net (loss) income per share attributable to common stockholders and partners - basic | | $ | (0.18) | | | $ | (0.03) | | | $ | 0.11 | | | $ | 0.24 | | | $ | 0.15 | |
| Net (loss) income per share attributable to common stockholders and partners - diluted | | $ | (0.18) | | | $ | (0.03) | | | $ | 0.11 | | | $ | 0.24 | | | $ | 0.15 | |
| Dividends declared per common share and partnership unit | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 2.500 | |
|
| | | | | | | | | | | | | | | | | | | |
| 2018 | First | | Second | | Third | | Fourth | | |
| (Unaudited) | Quarter | | Quarter | | Quarter | | Quarter | | Year |
| Total revenues | $ | 103,539 |
| | $ | 102,459 |
| | $ | 109,644 |
| | $ | 129,483 |
| | $ | 445,125 |
|
| Depreciation and amortization | (40,694 | ) | | (39,942 | ) | | (40,379 | ) | | (41,437 | ) | | (162,452 | ) |
| Interest | (23,053 | ) | | (23,548 | ) | | (24,784 | ) | | (26,163 | ) | | (97,548 | ) |
| Other expenses | (24,548 | ) | | (20,051 | ) | | (17,645 | ) | | (19,542 | ) | | (81,786 | ) |
| Gain on debt extinguishment | 21,583 |
| | 5,509 |
| | — |
| | — |
| | 27,092 |
|
| Gain (loss) on disposition of assets | 1,251 |
| | (860 | ) | | 436 |
| | 13,802 |
| | 14,629 |
|
| Preferred dividend income from SMTA | — |
| | 1,250 |
| | 3,750 |
| | 3,750 |
| | 8,750 |
|
| Other expense | — |
| | — |
| | — |
| | (5,319 | ) | | (5,319 | ) |
| Income from continuing operations | 38,078 |
| | 24,817 |
| | 31,022 |
| | 54,574 |
| | 148,491 |
|
| Loss from discontinued operations | (7,360 | ) | | (7,653 | ) | | (966 | ) | | (460 | ) | | (16,439 | ) |
| Dividends paid to preferred stockholders | (2,588 | ) | | (2,588 | ) | | (2,588 | ) | | (2,588 | ) | | (10,352 | ) |
| Net income attributable to common stockholders and partners | $ | 28,130 |
| | $ | 14,576 |
| | $ | 27,468 |
| | $ | 51,526 |
| | $ | 121,700 |
|
| | | | | | | | | | |
| Net income per share attributable to common stockholders and partners - diluted: |
| |
| |
| |
| |
|
| Continuing operations | $ | 0.39 |
| | $ | 0.26 |
| | $ | 0.33 |
| | $ | 0.61 |
| | $ | 1.58 |
|
| Discontinued operations | (0.08 | ) | | (0.09 | ) | | (0.01 | ) | | (0.01 | ) | | (0.19 | ) |
| Net income per share attributable to common stockholders and partners - diluted | $ | 0.31 |
| | $ | 0.17 |
| | $ | 0.32 |
| | $ | 0.60 |
| | $ | 1.39 |
|
| | | | | | | | | | |
| Dividends declared per common share and partnership unit | $ | 0.900 |
| | $ | 0.900 |
| | $ | 0.625 |
| | $ | 0.625 |
| | $ | 3.050 |
|
| | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $ | 112,593 | | | $ | 115,745 | | | $ | 166,947 | | | $ | 121,142 | | | $ | 516,427 | |
Depreciation and amortization | | | (41,349) | | | | (41,342) | | | | (43,907) | | | | (48,867) | | | | (175,465) | |
| | | (26,611) | | | | (25,176) | | | | (24,675) | | | | (24,598) | | | | (101,060) | |
| | | (22,318) | | | | (22,340) | | | | (47,047) | | | | (28,253) | | | | (119,958) | |
Gain (loss) on debt extinguishment | | | 8,783 | | | | (14,676) | | | | (5,580) | | | | (2,857) | | | | (14,330) | |
Gain (loss) on disposition of assets | | | 8,730 | | | | 29,776 | | | | 32,254 | | | | (11,910) | | | | 58,850 | |
Preferred dividend income from SMTA | | | 3,750 | | | | 3,750 | | | | 3,302 | | | | — | | | | 10,802 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 43,578 | | | | 45,737 | | | | 81,294 | | | | 4,657 | | | | 175,266 | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends paid to preferred stockholders | | | (2,588) | | | | (2,588) | | | | (2,587) | | | | (2,587) | | | | (10,350) | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income attributable to common stockholders and partners | | $ | 40,990 | | | $ | 43,149 | | | $ | 78,707 | | | $ | 2,070 | | | $ | 164,916 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income per share attributable to common stockholders and partners - basic | | $ | 0.48 | | | $ | 0.49 | | | $ | 0.87 | | | $ | 0.02 | | | $ | 1.81 | |
| Net income per share attributable to common stockholders and partners - diluted | | $ | 0.48 | | | $ | 0.49 | | | $ | 0.87 | | | $ | 0.02 | | | $ | 1.81 | |
| Dividends declared per common share and partnership unit | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 0.6250 | | | $ | 2.500 | |
|
| | | | | | | | | | | | | | | | | | | |
| 2017 | First | | Second | | Third | | Fourth | | |
| (Unaudited) | Quarter | | Quarter | | Quarter | | Quarter | | Year |
| Total revenues | $ | 106,497 |
| | $ | 108,670 |
| | $ | 108,721 |
| | $ | 107,370 |
| | $ | 431,258 |
|
| Depreciation and amortization | (43,875 | ) | | (43,441 | ) | | (43,318 | ) | | (43,052 | ) | | (173,686 | ) |
| Interest | (27,806 | ) | | (28,051 | ) | | (29,948 | ) | | (27,589 | ) | | (113,394 | ) |
| Other expenses | (46,669 | ) | | (40,329 | ) | | (40,514 | ) | | (19,515 | ) | | (147,027 | ) |
| (Loss) gain on debt extinguishment | (30 | ) | | 7 |
| | 1,792 |
| | (1,190 | ) | | 579 |
|
| Gain on disposition of assets | 5,013 |
| | 6,884 |
| | 10,089 |
| | 20,712 |
| | 42,698 |
|
| (Loss) income from continuing operations | (6,870 | ) | | 3,740 |
| | 6,822 |
| | 36,736 |
| | 40,428 |
|
| Income (loss) from discontinued operations | 19,699 |
| | 19,466 |
| | (1,500 | ) | | (945 | ) | | 36,720 |
|
| Dividends paid to preferred stockholders | — |
| | — |
| | — |
| | (2,530 | ) | | (2,530 | ) |
| Net income attributable to common stockholders and partners | $ | 12,829 |
| | $ | 23,206 |
| | $ | 5,322 |
| | $ | 33,261 |
| | $ | 74,618 |
|
| | | | | | | | | | |
| Net income per share attributable to common stockholders and partners - diluted: | | | | | | | | | |
| Continuing operations | $ | (0.07 | ) | | $ | 0.04 |
| | $ | 0.07 |
| | $ | 0.37 |
| | $ | 0.40 |
|
| Discontinued operations | $ | 0.20 |
| | $ | 0.20 |
| | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | 0.39 |
|
| Net income per share attributable to common stockholders and partners - diluted | $ | 0.13 |
| | $ | 0.24 |
| | $ | 0.06 |
| | $ | 0.36 |
| | $ | 0.79 |
|
| | | | | | | | | | |
| Dividends declared per common share and partnership unit | $ | 0.900 |
| | $ | 0.900 |
| | $ | 0.900 |
| | $ | 0.900 |
| | $ | 3.600 |
|
NOTE 16. SUBSEQUENT EVENTS
2019 Facilities Agreement
On January 14, 2019, the Operating Partnership entered into a new 2019 Revolving Credit and Term Loan Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders, comprised of the 2019 Credit Facility and the A-1 Term Loans.
The 2019 Credit Facility is comprised of $800.0 million of aggregate revolving commitments with a maturity date of March 31, 2023. The outstanding loans under the 2019 Credit Facility currently bear interest at LIBOR plus an applicable margin of 1.10% per annum and the aggregate revolving commitments incur a facility fee of 0.25% per annum, in each case, based on the Operating Partnership's credit rating. The 2019 Revolving Credit and Term Loan Agreement includes includes an accordion feature providing for an additional $400.0 million of revolving borrowing capacity, subject to satisfying of certain requirements and obtaining additional lender commitments.
The A-1 Term Loans have an aggregate borrowing amount of $420.0 million with a maturity date of March 31, 2024. The A-1 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership's credit rating. The Revolving Credit and Term Loan Agreement includes an accordion feature providing for an additional $200.0 million of term loans, subject to satisfying certain requirements and obtaining additional lender commitments.
In addition, on January 14, 2019, the Operating Partnership entered into new A-2 Term Loans with Bank of America, N.A. as administrative agent and various lenders, comprised of $400.0 million of delayed draw term loans with a maturity date of March 31, 2022. The A-2 Term Loans currently bear interest at LIBOR plus an applicable margin of 1.25% per annum based on the Operating Partnership's credit rating. In addition, a ticking fee accrues on the unused portion of the commitments at a rate of 0.20% until the earlier of July 12, 2019 and the termination of the commitments. There are currently no borrowings outstanding under the A-2 Term Loans. The A-2 Term Loans include an accordion feature providing for an additional $200.0 million of term loans, subject to satisfying certain requirements and obtaining additional
SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.
Notes to Consolidated Financial Statements - (continued)
December 31, 2018
lender commitments. The Company expects to use the A-2 Term Loans to retire the 2.875% Convertible Notes upon their maturity in 2019.
The 2019 Facilities Agreements replaced the existing 2015 Credit Agreement and 2015 Term Loan Agreement.
PART III
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
SPIRIT REALTY CAPITAL, INC.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of Spirit Realty Capital, Inc.
's’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness as of December 31,
20182020 of the design and operation of Spirit Realty Capital, Inc.
's’s disclosure controls and procedures as defined in Rule
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded, as of December 31,
2018,2020, that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.
Management'sManagement’s Report on Internal Control over Financial Reporting
Management, including the Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting for Spirit Realty Capital, Inc. Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - 2013 Integrated Framework to assess the effectiveness of Spirit Realty Capital, Inc.'s’s internal control over financial reporting. Based upon the assessments, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2018,2020, internal control over financial reporting was effective.effective at the reasonable assurance level.
Ernst & Young LLP, Spirit Realty Capital, Inc.
's’s independent registered public accounting firm, audited Spirit Realty Capital, Inc.
's’s financial statements included in this Annual Report on Form
10-K
and has issued an attestation report on Spirit Realty Capital, Inc.
's’s effectiveness of internal control over financial reporting, which appears in this Annual Report on Form
10-K.
Changes in Internal Control over Financial Reporting
There were no changes to Spirit Realty Capital, Inc.
's’s internal control over financial reporting (as defined in Rule
13a-15(e)
and
15d-15(e)
under the Exchange Act) that occurred during the quarter ended December 31,
20182020 that have materially affected, or are reasonably likely to materially affect, Spirit Realty Capital, Inc.
's’s internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of Spirit Realty, L.P.
's’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness as of December 31,
20182020 of the design and operation of Spirit Realty, L.P.
's’s disclosure controls and procedures as defined in Rule
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded, as of December 31,
2018,2020, that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.
Management'sManagement’s Report on Internal Control over Financial Reporting
Management, including the Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting for Spirit Realty, L.P. Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - 2013
Integrated Framework to assess the effectiveness of Spirit Realty, L.P.'s’s internal control over financial reporting. Based upon the assessments, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2018,2020, internal control over financial reporting was effective.effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes to Spirit Realty, L.P.
's’s internal control over financial reporting (as defined in Rule
13a-15(e)
and
15d-15(e)
under the Exchange Act) that occurred during the quarter ended December 31,
20182020 that have materially affected, or are reasonably likely to materially affect, Spirit Realty, L.P.
's’s internal control over financial reporting.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Item 9B. Other Information
Item 10. Directors, Executive Officers and Corporate Governance
The information concerning our directors and executive officers required by Item 10 will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The information concerning our executive compensation required by Item 11 will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information concerning our security ownership of certain beneficial owners and management and related stockholder matters (including equity compensation plan information) required by Item 12 will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information concerning certain relationships, related transactions and director independence required by Item 13 will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information concerning our principal accounting fees and services required by Item 14 will be included in the Proxy Statement to be filed relating to our 20192021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 15. Exhibits, Financial Statement Schedules
Financial Statements and Schedules
Reports of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets as of December 31, 20182020 and 2017.2019.
Consolidated Statements of Operations for the Years Ended December 31, 2018, 20172020, 2019 and 2016.2018.
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 2016.2018.
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2018, 20172020, 2019 and 2016.2018.
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 2016.2018.
Notes to Consolidated Financial Statements.
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2018.2020.
Schedule IV - Mortgage Loans on Real Estate as of December 31, 2018.2020.
All other schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and the notes thereto.
(b) Exhibits.
| | |
| | |
| |
Exhibit No.
| Description
|
| 2.1 | | Agreement and Plan of Merger by and among Spirit Realty Capital, Inc., Spirit Realty, L.P., Cole Credit Property Trust II, Inc., and Cole Operating Partnership II, LP, dated January 22, 2013, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K on January 24, 2013 and incorporated herein by reference. |
| |
| 2.2 | | First Amendment to Agreement and Plan of Merger by and among Spirit Realty Capital, Inc., Spirit Realty, L.P., Cole Credit Property Trust II, Inc., and Cole Operating Partnership II, LP, dated May 8, 2013, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K on May 9, 2013 and incorporated herein by reference. |
| |
| 2.3 | | Articles of Merger by and between Spirit Realty Capital, Inc. and Spirit Realty Capital, Inc. and the Amended and Restated Charter of Spirit Realty Capital, Inc. attached thereto as Exhibit A filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on July 18, 2013 and incorporated herein by reference. |
| |
| 2.4 | | Separation and Distribution Agreement by and between Spirit Realty Capital, Inc. and Spirit MTA REIT, dated May 21, 2018, filed as Exhibit 2.1 to the Company'sCompany’s Current Report on Form 8-K on May 24, 2018 and incorporated herein by reference. |
| |
| 3.1 | | Articles of Restatement of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company'sCompany’s Registration Statement on Form S-3 on November 8, 2013 and incorporated herein by reference. |
| |
| 3.2 | | Articles of Amendment of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company's Current Report onCompany’s Form 8-K on May 13, 2014 and incorporated herein by reference. |
| |
| 3.3 | |
| | |
3.4 | |
|
| |
Exhibit No.
3.4 | Description
|
| | |
3.5 | |
| |
| 3.5 | |
3.6 | |
| |
| 3.6 | |
3.7 | |
| |
| 3.7 | | Certificate of Limited Partnership of Spirit Realty, L.P. dated September 25, 2012, filed as Exhibit 4.5 to the Company’s Form S-4 on March 20, 2017 and incorporated herein by reference. |
| |
| 3.8 | | Articles of Amendment of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company’s Form 8-K on April 29, 2019 and incorporated herein by reference. |
| |
| 4.1 | | Form of Certificate for Common Stock of Spirit Realty Capital, Inc. filed as Exhibit 4.1 to the Company'sCompany’s Registration Statement on Form S-4/A on March 29, 2013 and incorporated herein by reference. |
| |
| 4.2 | | Form of Certificate for Spirit Realty Capital, Inc.'s’s 6.000% Series A Cumulative Redeemable Preferred Stock filed as Exhibit 3.6 to the Company'sCompany’s Registration Statement on Form 8-A on October 2, 2017 and incorporated herein by reference. |
| |
4.3 | Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 20, 2014, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K on May 21, 2014 and incorporated herein by reference. |
| |
4.4 | Amendment No. 1 to the Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated November 26, 2014, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K on December 1, 2014 and incorporated herein by reference. |
| |
4.5 | Series 2014-1 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 20, 2014, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K on May 21, 2014 and incorporated herein by reference. |
| |
4.6 | Series 2014-2 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 20, 2014, filed as Exhibit 4.3 to the Company's Current Report on Form 8-K on May 21, 2014 and incorporated herein by reference. |
| |
4.7 | Series 2014-3 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 20, 2014, filed as Exhibit 4.4 to the Company's Current Report on Form 8-K on May 21, 2014 and incorporated herein by reference. |
| |
4.8 | Series 2014-4 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated November 26, 2014, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K on December 1, 2014 and incorporated herein by reference. |
| |
4.9 | Amendment No. 2 to Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated December 14, 2017, filed as Exhibit 4.18 to the Company's Annual Report on Form 10-K on February 23, 2018 and incorporated herein by reference. |
| |
4.10 | Amendment No. 3 to Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated January 29, 2018, filed as Exhibit 4.19 to the Company's Annual Report on Form 10-K on February 23, 2018 and incorporated herein by reference. |
| |
4.11 | Series 2017-1 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated December 14, 2017, filed as Exhibit 4.20 to the Company's Annual Report on Form 10-K on February 23, 2018 and incorporated herein by reference. |
| |
|
| |
Exhibit No.
4.3 | Description
|
4.12 | Amendment No. 1 to Series 2017-1 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated January 30, 2018, filed as Exhibit 4.21 to the Company's Annual Report on Form 10-K on February 23, 2018 and incorporated herein by reference. |
| | |
4.13 | |
| |
4.14 | |
| |
4.15 | |
| |
4.16 | |
| |
| 4.4 | |
4.17 | |
| |
4.18 | |
| |
| 4.5 | |
4.19 | |
| | |
| | |
| |
| 4.6 | |
4.20 | |
| |
| 4.7 | |
4.21 | Registration Rights AgreementSecond Supplemental Indenture among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor and J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith IncorporatedU.S. Bank National Association, as trustee, including the form of the Notes and Morgan Stanley & Co. LLC,the guarantee, dated August 18, 2016,as of June 27, 2019, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on June 27, 2019 and incorporated herein by reference. |
| |
| 4.8 | | Third Supplemental Indenture among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor and U.S. Bank National Association, as trustee, dated as of September 16, 2019, including the form of the Notes and the guarantee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on September 16, 2019 and incorporated herein by reference. |
| |
| 4.9 | | Fourth Supplemental Indenture among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor and U.S. Bank National Association, as trustee, dated as of September 16, 2019, including the form of the Notes and the guarantee, filed as Exhibit 4.3 to the Company'sCompany’s Current Report on Form 8-K on August 19, 2016September 16, 2019 and incorporated herein by reference. |
| |
| 4.10 | | Fifth Supplemental Indenture, dated as of August 6, 2020, among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor and U.S. Bank National Association, as trustee, including the form of the Notes and the Guarantee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on August 6, 2020 and incorporated herein by reference. |
| |
| 4.11 | | Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, filed as Exhibit 4.11 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference. |
| |
| 10.1 # | | Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan filed as Appendix A within the Company'sCompany’s Definitive Proxy Statement on Schedule 14A on April 11, 2016 and incorporated herein by reference. |
| |
| 10.2 # | | Amendment to the Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, dated March 2, 2017, filed as Exhibit 10.1 to the Company'sCompany’s Current Report on Form 8-K on March 3, 2017 and incorporated herein by reference. |
| |
| 10.3 # | | Second Amendment to the Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, dated March 2, 2017, filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference. |
| |
| 10.4 # | | Third Amendment to the Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, dated May 20, 2019, filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference. |
| |
| 10.5 # | | Form of 2012 Incentive Award Plan Restricted Stock Award Grant Notice and Agreement filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K on July 18, 2013 and incorporated herein by reference. |
| |
| 10.6 # | |
10.4 | |
| |
| 10.7 # | |
10.5 | |
| |
10.6 | |
|
| |
| 10.8 Exhibit No.
# | Description
|
| | |
10.7 | |
| |
10.8 | |
| |
10.9 | |
| |
10.10 | |
| |
| 10.9 # | |
10.11 | |
| | |
| | |
| |
| 10.10 # | |
10.12 | |
| |
| 10.11 # | |
10.13 | |
| |
| 10.12 # | | Amendment to Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Michael Hughes, filed as Exhibit 10.2 to the Company’s Form 8-K on March 2, 2020 and incorporated herein by reference. |
| |
| 10.13 # | | Restricted Stock Award Agreement between Spirit Realty Capital, Inc. and Michael Hughes dated March 29, 2018, filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference. |
| |
| 10.14 # | | Performance Share Award Agreement between Spirit Realty Capital, Inc. and Michael Hughes dated March 29, 2018, filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K on February 25, 2020 and incorporated herein by reference. |
| |
| 10.15 # | | Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Jay Young, dated April 3, 2018, filed as Exhibit 10.1 to the Company'sCompany’s Current Report on Form 8-K on April 6, 2018 and incorporated herein by reference. |
| |
| 10.16 # | | Amendment to Amended and Restated Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Jay Young, filed as Exhibit 10.3 to the Company’s Form 8-K on March 2, 2020 and incorporated herein by reference. |
10.15 | |
| 10.17 # | | Employment Agreement among Spirit Realty Capital, Inc. and Kenneth Heimlich dated April 3, 2018, filed as Exhibit 10.2 to the Company'sCompany’s Current Report on Form 8-K on April 6, 2018 and incorporated herein by reference. |
| |
| 10.18 # | | Amendment to Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Kenneth Heimlich, filed as Exhibit 10.4 to the Company’s Form 10-K on March 2, 2020 and incorporated herein by reference. |
10.16 | |
| 10.19 | | Director Compensation Program of Spirit Realty Capital, Inc. dated August 16, 2018 filed as Exhibit 10.1 to the Company'sCompany’s Current Report on Form 8-K on August 22, 2018 and incorporated herein by reference. |
| |
10.17 | |
| |
10.18 | |
| |
10.19 | |
| |
10.20 | |
| |
10.21 | Second Amendment to the Credit Agreement among Spirit Realty, L.P., various financial institutions, as lenders, and Wells Fargo Bank, National Association, as the administrative agent, dated April 28, 2017, filed as Exhibit 10.40 to the Company's Quarterly Report on Form 10-Q on May 3, 2017 and incorporated herein by reference. |
| |
|
| |
Exhibit No.
10.20 | Description
|
10.22 | |
| |
| 10.21 | |
10.23 | |
| |
| 10.22 | |
10.24 | Term Loan Agreement among Spirit Realty, L.P., JPMorgan Chase Bank, of America, N.A., as administrative agent and the financial institutions party thereto as lenders from time to time, dated January 14, 2019,April 2, 2020, filed as Exhibit 10.310.1 to the Company'sCompany’s Current Report on Form 8-K on January 14, 2019April 7, 2020 and incorporated herein by reference. |
| |
| 10.23 | |
10.25 | Guaranty between Spirit Realty Capital, Inc. and JPMorgan Chase Bank, of America, N.A, and acknowledged by Spirit Realty, L.P., dated January 14, 2019,April 2, 2020, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K on April 7, 2020 and incorporated herein by reference. |
| |
| 10.24 | | Amendment No. 1 to Term Loan Agreement among Spirit Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent and the financial institutions party thereto as lenders from time to time, dated May 5, 2020, filed as Exhibit 10.3 to the Company’s Form 10-Q on July 31, 2020 and incorporated herein by reference. |
| | |
| | |
| |
| 10.25 | | Amendment No. 2 to Term Loan Agreement among Spirit Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent and the financial institutions party thereto as lenders from time to time, dated May 5, 2020, filed as Exhibit 10.4 to the Company's Current ReportCompany’s Form 10-Q on Form 8-K on January 14, 2019July 31, 2020 and incorporated herein by reference. |
| |
| 10.26 | | Amendment No. 3 to Term Loan Agreement among Spirit Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent and the financial institutions party thereto as lenders from time to time, dated May 5, 2020, filed as Exhibit 10.4 to the Company’s Form 10-Q on July 31, 2020 and incorporated herein by reference. |
| |
| 10.27 | | Loan Agreement, between German American Capital Corporation and Spirit SPE Loan Portfolio 2013-2, LLC, dated July 17, 2013, filed as Exhibit 10.410.5 to the Company’s Current Report on Form 8-K on July 18, 2013 and incorporated herein by reference. |
| |
| 10.28 | |
10.27 | |
| |
| 10.29 | |
10.28 | |
| |
| 10.31 | |
10.29 | |
| |
10.30 | Second Amended and Restated Property Management and Servicing Agreement by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Midland Loan Services, a division of PNC Bank, National Association, dated May 20, 2014, filed as Exhibit 1.1 to the Company's Current Report on Form 8-K on May 21, 2014 and incorporated herein by reference. |
| |
10.31 | Amendment No. 1 to the Second Amended and Restated Property Management and Servicing Agreement by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Midland Loan Services, a division of PNC Bank, National Association, dated November 26, 2014, filed as Exhibit 1.2 to the Company's Current Report on Form 8-K on December 1, 2014 and incorporated herein by reference.
|
| |
10.32 | Amendment No. 2 to the Second Amended and Restated Property Management and Servicing Agreement by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Midland Loan Services, a division of PNC Bank, National Association, dated December 14, 2017, as Exhibit 10.41 to the Company's Annual Report on Form 10-K on February 23, 2018 and incorporated herein by reference. |
| |
10.33* | Amendment No. 3 to the Second Amended and Restated Property Management and Servicing Agreement by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Midland Loan Services, a division of PNC Bank, National Association, dated November 1, 2018. |
| |
10.34 | |
| |
10.35 | |
| |
|
| |
Exhibit No.
21.1* | Description
|
10.36 | |
| | |
10.37 | |
| |
10.38 | |
| |
10.39 | |
| |
10.40 | |
| |
10.41 | |
| |
10.42 | |
| |
14.1* | |
| |
21.1* | |
| |
| 23.1* | | Consent of Ernst & Young LLP, Spirit Realty Capital, Inc.'s’s Independent Registered Accounting Firm. |
| |
| 23.2* | | Consent of Ernst & Young LLP, Spirit Realty L.P.'s’s Independent Registered Accounting Firm. |
| |
| 31.1* | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc. |
| |
| 31.2* | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc. |
| |
| 31.3* | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P. |
| |
| 31.4* | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P. |
| |
| 32.1* | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc. |
| |
| 32.2* | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P. |
| |
|
| |
Exhibit No.
101.1* | Description
|
101.1** | The following financial information from Spirit Realty Capital, Inc.'s’s Annual Report on Form10-K for the year ended December 31, 2018,2020, formatted in inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders'Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements. |
| |
| 104.1* | | Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
| |
| * | | Filed herewith. |
| |
**# | Pursuant to applicable securities laws and regulations, these interactive data files are deemed not filed | Management contract or part of a registration statementcompensatory plan or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act and otherwise are not subject to liability under these sections.arrangement. |
Item 16. Form 10-K Summary
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 24 Hour Fitness | | Lancaster, CA | | (b) | | | 6,982 | | | | 9,255 | | | | (3,817 | ) | | | (5,674 | ) | | | 3,165 | | | | 3,581 | | | | 6,746 | | | | (150 | ) | | 1987 | | 5/7/2015 | | 4 to 25 Years |
| Aaron’s | | Okeechobee, FL | | (b) | | | 409 | | | | 1,298 | | | | 0 | | | | 0 | | | | 409 | | | | 1,298 | | | | 1,707 | | | | (292 | ) | | 2006 | | 7/17/2013 | | 10 to 47 Years |
| Aaron’s | | Navasota, TX | | (b) | | | 322 | | | | 868 | | | | 0 | | | | 0 | | | | 322 | | | | 868 | | | | 1,190 | | | | (246 | ) | | 2007 | | 7/17/2013 | | 10 to 44 Years |
| Aaron’s | | Essex, MD | | (b) | | | 294 | | | | 1,973 | | | | 0 | | | | 0 | | | | 294 | | | | 1,973 | | | | 2,267 | | | | (372 | ) | | 1998 | | 7/17/2013 | | 10 to 45 Years |
| Aaron’s | | Clanton, AL | | (b) | | | 350 | | | | 816 | | | | 0 | | | | 0 | | | | 350 | | | | 816 | | | | 1,166 | | | | (213 | ) | | 2007 | | 7/17/2013 | | 10 to 46 Years |
| Aaron’s | | Griffin, GA | | (b) | | | 459 | | | | 1,322 | | | | 0 | | | | 0 | | | | 459 | | | | 1,322 | | | | 1,781 | | | | (307 | ) | | 2007 | | 7/17/2013 | | 10 to 49 Years |
| Aaron’s | | Beeville, TX | | (b) | | | 101 | | | | 1,814 | | | | 0 | | | | 0 | | | | 101 | | | | 1,814 | | | | 1,915 | | | | (331 | ) | | 2004 | | 7/17/2013 | | 10 to 45 Years |
| Aaron’s | | Mineral Wells, TX | | (b) | | | 448 | | | | 878 | | | | 0 | | | | 0 | | | | 448 | | | | 878 | | | | 1,326 | | | | (248 | ) | | 2008 | | 7/17/2013 | | 10 to 42 Years |
| Aaron’s | | Largo, FL | | (b) | | | 758 | | | | 1,025 | | | | 0 | | | | 0 | | | | 758 | | | | 1,025 | | | | 1,783 | | | | (272 | ) | | 1999 | | 7/17/2013 | | 9 to 36 Years |
| Aaron’s | | Mansfield, TX | | (b) | | | 859 | | | | 599 | | | | 0 | | | | 0 | | | | 859 | | | | 599 | | | | 1,458 | | | | (231 | ) | | 2007 | | 7/17/2013 | | 10 to 34 Years |
| Aaron’s | | Charlotte, NC | | (b) | | | 371 | | | | 598 | | | | 0 | | | | 0 | | | | 371 | | | | 598 | | | | 969 | | | | (266 | ) | | 1957 | | 7/17/2013 | | 8 to 25 Years |
| Aaron’s | | Alamogordo, NM | | (b) | | | 476 | | | | 560 | | | | 0 | | | | 0 | | | | 476 | | | | 560 | | | | 1,036 | | | | (240 | ) | | 2006 | | 7/17/2013 | | 8 to 40 Years |
| Aaron’s | | Wichita, KS | | (b) | | | 236 | | | | 741 | | | | 0 | | | | 0 | | | | 236 | | | | 741 | | | | 977 | | | | (176 | ) | | 1990 | | 7/17/2013 | | 10 to 42 Years |
| Aaron’s | | Grovetown, GA | | (b) | | | 425 | | | | 933 | | | | 0 | | | | 0 | | | | 425 | | | | 933 | | | | 1,358 | | | | (250 | ) | | 2007 | | 7/17/2013 | | 10 to 45 Years |
| Aaron’s | | Calumet City, IL | | (b) | | | 393 | | | | 949 | | | | 0 | | | | 0 | | | | 393 | | | | 949 | | | | 1,342 | | | | (295 | ) | | 1977 | | 7/17/2013 | | 9 to 32 Years |
| Aaron’s | | Harrisonville, MO | | (b) | | | 316 | | | | 466 | | | | 0 | | | | 0 | | | | 316 | | | | 466 | | | | 782 | | | | (218 | ) | | 1996 | | 7/17/2013 | | 8 to 33 Years |
| Aaron’s | | Chiefland, FL | | (b) | | | 376 | | | | 1,206 | | | | 0 | | | | 0 | | | | 376 | | | | 1,206 | | | | 1,582 | | | | (306 | ) | | 2007 | | 7/17/2013 | | 10 to 47 Years |
| Aaron’s | | Sandersville, GA | | (b) | | | 503 | | | | 751 | | | | 0 | | | | 0 | | | | 503 | | | | 751 | | | | 1,254 | | | | (230 | ) | | 2006 | | 7/17/2013 | | 10 to 45 Years |
| Aaron’s | | Shreveport, LA | | (b) | | | 374 | | | | 490 | | | | 0 | | | | 0 | | | | 374 | | | | 490 | | | | 864 | | | | (269 | ) | | 2001 | | 7/17/2013 | | 10 to 31 Years |
| Aaron’s | | Baton Rouge, LA | | (b) | | | 328 | | | | 996 | | | | 0 | | | | 0 | | | | 328 | | | | 996 | | | | 1,324 | | | | (276 | ) | | 1999 | | 7/17/2013 | | 10 to 40 Years |
| Aaron’s | | Sweetwater, TX | | (b) | | | 415 | | | | 1,097 | | | | 0 | | | | 0 | | | | 415 | | | | 1,097 | | | | 1,512 | | | | (277 | ) | | 2006 | | 7/17/2013 | | 10 to 47 Years |
| Aaron’s | | Anderson, SC | | (b) | | | 351 | | | | 966 | | | | 0 | | | | 0 | | | | 351 | | | | 966 | | | | 1,317 | | | | (234 | ) | | 1992 | | 7/17/2013 | | 10 to 41 Years |
| Aaron’s | | Rome, NY | | (b) | | | 436 | | | | 699 | | | | 0 | | | | 0 | | | | 436 | | | | 699 | | | | 1,135 | | | | (275 | ) | | 1996 | | 7/17/2013 | | 10 to 28 Years |
| Aaron’s | | Hartsville, SC | | (b) | | | 536 | | | | 813 | | | | 0 | | | | 0 | | | | 536 | | | | 813 | | | | 1,349 | | | | (348 | ) | | 2007 | | 7/17/2013 | | 10 to 37 Years |
| Aaron’s | | Forrest City, AR | | (b) | | | 331 | | | | 860 | | | | 0 | | | | 0 | | | | 331 | | | | 860 | | | | 1,191 | | | | (206 | ) | | 2002 | | 7/17/2013 | | 10 to 45 Years |
| Aaron’s | | Wilton, NY | | (b) | | | 1,348 | | | | 2,165 | | | | 0 | | | | 0 | | | | 1,348 | | | | 2,165 | | | | 3,513 | | | | (1,150 | ) | | 2000 | | 7/17/2013 | | 8 to 27 Years |
| Academy Sports + Outdoors | | Lufkin, TX | | (a) | | | 1,922 | | | | 2,735 | | | | 0 | | | | 0 | | | | 1,922 | | | | 2,735 | | | | 4,657 | | | | (1,046 | ) | | 2003 | | 7/17/2013 | | 9 to 30 Years |
| Academy Sports + Outdoors | | North Richland Hills, TX | | (b) | | | 1,950 | | | | 5,451 | | | | 0 | | | | 0 | | | | 1,950 | | | | 5,451 | | | | 7,401 | | | | (833 | ) | | 1996 | | 7/17/2013 | | 30 to 30 Years |
| Academy Sports + Outdoors | | Macon, GA | | (b) | | | 1,921 | | | | 4,890 | | | | 0 | | | | 0 | | | | 1,921 | | | | 4,890 | | | | 6,811 | | | | (1,725 | ) | | 2005 | | 7/17/2013 | | 10 to 30 Years |
| Academy Sports + Outdoors | | Clarksville, TN | | (b) | | | 2,134 | | | | 5,871 | | | | 0 | | | | 0 | | | | 2,134 | | | | 5,871 | | | | 8,005 | | | | 0 | | | 2014 | | 12/16/2020 | | 11 to 36 Years |
| Academy Sports + Outdoors | | Douglasville, GA | | (b) | | | 1,527 | | | | 7,313 | | | | 0 | | | | 0 | | | | 1,527 | | | | 7,313 | | | | 8,840 | | | | 0 | | | 2014 | | 12/16/2020 | | 11 to 36 Years |
| Academy Sports + Outdoors | | Flowood, MS | | (b) | | | 1,349 | | | | 7,085 | | | | 0 | | | | 0 | | | | 1,349 | | | | 7,085 | | | | 8,434 | | | | 0 | | | 2014 | | 12/16/2020 | | 11 to 36 Years |
| Academy Sports + Outdoors | | Lake Charles, LA | | (b) | | | 1,748 | | | | 6,480 | | | | 0 | | | | 0 | | | | 1,748 | | | | 6,480 | | | | 8,228 | | | | 0 | | | 2015 | | 12/29/2020 | | 13 to 32 Years |
| Accel International | | Meridian, CT | | (b) | | | 1,766 | | | | 7,848 | | | | 0 | | | | 0 | | | | 1,766 | | | | 7,848 | | | | 9,614 | | | | (1,911 | ) | | 1997 | | 12/17/2014 | | 15 to 30 Years |
| Accel International | | Avila, IN | | (b) | | | 642 | | | | 4,958 | | | | 0 | | | | 0 | | | | 642 | | | | 4,958 | | | | 5,600 | | | | (1,140 | ) | | 1990 | | 12/17/2014 | | 15 to 30 Years |
| Advance Auto Parts | | Holland Charter Township, MI | | (b) | | | 493 | | | | 1,212 | | | | 0 | | | | 0 | | | | 493 | | | | 1,212 | | | | 1,705 | | | | (267 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 24 Hour Fitness | Aurora, CO | | (d) | | 1,452 |
| | 4,413 |
| | — |
| | 252 |
| | 1,452 |
| | 4,665 |
| | 6,117 |
| | (897 | ) | | 1995 | | 07/17/13 | | 11 to 35 Years |
| 24 Hour Fitness | Lancaster, CA | | (d) | | 6,982 |
| | 9,255 |
| | — |
| | — |
| | 6,982 |
| | 9,255 |
| | 16,237 |
| | (1,537 | ) | | 1987 | | 05/07/15 | | 9 to 30 Years |
| Aaron's | Okeechobee, FL | | (b) | | 409 |
| | 1,298 |
| | — |
| | — |
| | 409 |
| | 1,298 |
| | 1,707 |
| | (213 | ) | | 2006 | | 07/17/13 | | 10 to 47 Years |
| Aaron's | Navasota, TX | | (b) | | 322 |
| | 868 |
| | — |
| | — |
| | 322 |
| | 868 |
| | 1,190 |
| | (180 | ) | | 2007 | | 07/17/13 | | 10 to 44 Years |
| Aaron's | Essex, MD | | (b) | | 294 |
| | 1,973 |
| | — |
| | — |
| | 294 |
| | 1,973 |
| | 2,267 |
| | (272 | ) | | 1998 | | 07/17/13 | | 10 to 45 Years |
| Aaron's | Clanton, AL | | (b) | | 350 |
| | 816 |
| | — |
| | — |
| | 350 |
| | 816 |
| | 1,166 |
| | (155 | ) | | 2007 | | 07/17/13 | | 10 to 46 Years |
| Aaron's | Griffin, GA | | (b) | | 459 |
| | 1,322 |
| | — |
| | — |
| | 459 |
| | 1,322 |
| | 1,781 |
| | (224 | ) | | 2007 | | 07/17/13 | | 10 to 49 Years |
| Aaron's | Beeville, TX | | (b) | | 101 |
| | 1,814 |
| | — |
| | — |
| | 101 |
| | 1,814 |
| | 1,915 |
| | (241 | ) | | 2004 | | 07/17/13 | | 10 to 45 Years |
| Aaron's | Mineral Wells, TX | | (b) | | 448 |
| | 878 |
| | — |
| | — |
| | 448 |
| | 878 |
| | 1,326 |
| | (181 | ) | | 2008 | | 07/17/13 | | 10 to 42 Years |
| Aaron's | Largo, FL | | (b) | | 758 |
| | 1,025 |
| | — |
| | — |
| | 758 |
| | 1,025 |
| | 1,783 |
| | (199 | ) | | 1999 | | 07/17/13 | | 9 to 36 Years |
| Aaron's | Mansfield, TX | | (b) | | 859 |
| | 599 |
| | — |
| | — |
| | 859 |
| | 599 |
| | 1,458 |
| | (169 | ) | | 2007 | | 07/17/13 | | 10 to 34 Years |
| Aaron's | Charlotte, NC | | (b) | | 371 |
| | 598 |
| | — |
| | — |
| | 371 |
| | 598 |
| | 969 |
| | (194 | ) | | 1957 | | 07/17/13 | | 8 to 25 Years |
| Aaron's | Alamogordo, NM | | (b) | | 476 |
| | 560 |
| | — |
| | — |
| | 476 |
| | 560 |
| | 1,036 |
| | (175 | ) | | 2006 | | 07/17/13 | | 8 to 40 Years |
| Aaron's | Wichita, KS | | (b) | | 236 |
| | 741 |
| | — |
| | — |
| | 236 |
| | 741 |
| | 977 |
| | (129 | ) | | 1990 | | 07/17/13 | | 10 to 42 Years |
| Aaron's | Grovetown, GA | | (b) | | 425 |
| | 933 |
| | — |
| | — |
| | 425 |
| | 933 |
| | 1,358 |
| | (183 | ) | | 2007 | | 07/17/13 | | 10 to 45 Years |
| Aaron's | Calumet City, IL | | (b) | | 393 |
| | 949 |
| | — |
| | — |
| | 393 |
| | 949 |
| | 1,342 |
| | (216 | ) | | 1977 | | 07/17/13 | | 9 to 32 Years |
| Aaron's | Harrisonville, MO | | (b) | | 316 |
| | 466 |
| | — |
| | — |
| | 316 |
| | 466 |
| | 782 |
| | (159 | ) | | 1996 | | 07/17/13 | | 8 to 33 Years |
| Aaron's | Chiefland, FL | | (b) | | 376 |
| | 1,206 |
| | — |
| | — |
| | 376 |
| | 1,206 |
| | 1,582 |
| | (224 | ) | | 2007 | | 07/17/13 | | 10 to 47 Years |
| Aaron's | Sandersville, GA | | (b) | | 503 |
| | 751 |
| | — |
| | — |
| | 503 |
| | 751 |
| | 1,254 |
| | (168 | ) | | 2006 | | 07/17/13 | | 10 to 45 Years |
| Aaron's | Shreveport, LA | | (b) | | 374 |
| | 490 |
| | — |
| | — |
| | 374 |
| | 490 |
| | 864 |
| | (197 | ) | | 2001 | | 07/17/13 | | 10 to 31 Years |
| Aaron's | Baton Rouge, LA | | (b) | | 328 |
| | 996 |
| | — |
| | — |
| | 328 |
| | 996 |
| | 1,324 |
| | (201 | ) | | 1999 | | 07/17/13 | | 10 to 40 Years |
| Aaron's | Sweetwater, TX | | (b) | | 415 |
| | 1,097 |
| | — |
| | — |
| | 415 |
| | 1,097 |
| | 1,512 |
| | (202 | ) | | 2006 | | 07/17/13 | | 10 to 47 Years |
| Aaron's | Anderson, SC | | (b) | | 351 |
| | 966 |
| | — |
| | — |
| | 351 |
| | 966 |
| | 1,317 |
| | (171 | ) | | 1992 | | 07/17/13 | | 10 to 41 Years |
| Aaron's | Rome, NY | | (b) | | 436 |
| | 699 |
| | — |
| | — |
| | 436 |
| | 699 |
| | 1,135 |
| | (201 | ) | | 1996 | | 07/17/13 | | 10 to 28 Years |
| Aaron's | Hartsville, SC | | (b) | | 536 |
| | 813 |
| | — |
| | — |
| | 536 |
| | 813 |
| | 1,349 |
| | (254 | ) | | 2007 | | 07/17/13 | | 10 to 37 Years |
| Aaron's | Forrest City, AR | | (b) | | 331 |
| | 860 |
| | — |
| | — |
| | 331 |
| | 860 |
| | 1,191 |
| | (151 | ) | | 2002 | | 07/17/13 | | 10 to 45 Years |
| Aaron's | Wilton, NY | | (b) | | 1,348 |
| | 2,165 |
| | — |
| | — |
| | 1,348 |
| | 2,165 |
| | 3,513 |
| | (840 | ) | | 2000 | | 07/17/13 | | 8 to 27 Years |
| Academy Sports + Outdoors | Lufkin, TX | | (c) | | 1,922 |
| | 2,735 |
| | — |
| | — |
| | 1,922 |
| | 2,735 |
| | 4,657 |
| | (764 | ) | | 2003 | | 07/17/13 | | 9 to 30 Years |
| Academy Sports + Outdoors | North Richland Hills, TX | | (d) | | 1,950 |
| | 5,451 |
| | — |
| | — |
| | 1,950 |
| | 5,451 |
| | 7,401 |
| | (469 | ) | | 1996 | | 07/17/13 | | 30 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advance Auto Parts | | Holland, MI | | (b) | | | 542 | | | | 1,384 | | | | 0 | | | | 0 | | | | 542 | | | | 1,384 | | | | 1,926 | | | | (320 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Zeeland, MI | | (b) | | | 490 | | | | 1,136 | | | | 0 | | | | 0 | | | | 490 | | | | 1,136 | | | | 1,626 | | | | (271 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Columbia Heights, MN | | (b) | | | 510 | | | | 1,314 | | | | 0 | | | | 0 | | | | 510 | | | | 1,314 | | | | 1,824 | | | | (312 | ) | | 2006 | | 7/17/2013 | | 7 to 43 Years |
| Advance Auto Parts | | Duluth, MN | | (b) | | | 207 | | | | 1,462 | | | | 0 | | | | 0 | | | | 207 | | | | 1,462 | | | | 1,669 | | | | (282 | ) | | 2006 | | 7/17/2013 | | 7 to 48 Years |
| Advance Auto Parts | | Rainsville, AL | | (b) | | | 251 | | | | 1,073 | | | | 0 | | | | 0 | | | | 251 | | | | 1,073 | | | | 1,324 | | | | (289 | ) | | 2005 | | 7/17/2013 | | 7 to 42 Years |
| Advance Auto Parts | | Grand Bay, AL | | (b) | | | 226 | | | | 1,242 | | | | 0 | | | | 0 | | | | 226 | | | | 1,242 | | | | 1,468 | | | | (271 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Hurley, MS | | (b) | | | 265 | | | | 1,052 | | | | 0 | | | | 0 | | | | 265 | | | | 1,052 | | | | 1,317 | | | | (272 | ) | | 2006 | | 7/17/2013 | | 7 to 45 Years |
| Advance Auto Parts | | Ashland, KY | | (b) | | | 613 | | | | 1,284 | | | | 0 | | | | 0 | | | | 613 | | | | 1,284 | | | | 1,897 | | | | (326 | ) | | 2006 | | 7/17/2013 | | 8 to 48 Years |
| Advance Auto Parts | | Jackson, OH | | (b) | | | 397 | | | | 1,251 | | | | 0 | | | | 0 | | | | 397 | | | | 1,251 | | | | 1,648 | | | | (302 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | New Boston, OH | | (b) | | | 345 | | | | 1,538 | | | | 0 | | | | 0 | | | | 345 | | | | 1,538 | | | | 1,883 | | | | (320 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Maryland Heights, MO | | (b) | | | 522 | | | | 1,155 | | | | 0 | | | | 0 | | | | 522 | | | | 1,155 | | | | 1,677 | | | | (287 | ) | | 2005 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Scottsburg, IN | | (b) | | | 238 | | | | 665 | | | | 0 | | | | 0 | | | | 238 | | | | 665 | | | | 903 | | | | (180 | ) | | 2006 | | 7/17/2013 | | 8 to 43 Years |
| Advance Auto Parts | | Charlotte, NC | | (b) | | | 403 | | | | 1,146 | | | | 0 | | | | 0 | | | | 403 | | | | 1,146 | | | | 1,549 | | | | (327 | ) | | 2008 | | 7/17/2013 | | 12 to 43 Years |
| Advance Auto Parts | | Irvington, NJ | | (b) | | | 1,605 | | | | 1,912 | | | | 0 | | | | 0 | | | | 1,605 | | | | 1,912 | | | | 3,517 | | | | (466 | ) | | 2006 | | 7/17/2013 | | 7 to 47 Years |
| Advance Auto Parts | | Midwest City, OK | | (b) | | | 353 | | | | 815 | | | | 0 | | | | 0 | | | | 353 | | | | 815 | | | | 1,168 | | | | (233 | ) | | 2007 | | 7/17/2013 | | 9 to 44 Years |
| Advance Auto Parts | | Penns Grove, NJ | | (b) | | | 612 | | | | 1,564 | | | | 0 | | | | 0 | | | | 612 | | | | 1,564 | | | | 2,176 | | | | (361 | ) | | 2006 | | 7/17/2013 | | 8 to 47 Years |
| Advance Auto Parts | | St. Francis, WI | | (b) | | | 532 | | | | 1,557 | | | | 0 | | | | 0 | | | | 532 | | | | 1,557 | | | | 2,089 | | | | (395 | ) | | 2006 | | 7/17/2013 | | 8 to 48 Years |
| Advance Auto Parts | | Willingboro, NJ | | (b) | | | 784 | | | | 1,369 | | | | 0 | | | | 0 | | | | 784 | | | | 1,369 | | | | 2,153 | | | | (388 | ) | | 2007 | | 7/17/2013 | | 9 to 47 Years |
| Advance Auto Parts | | Dunellen, NJ | | (b) | | | 1,177 | | | | 1,973 | | | | 0 | | | | 0 | | | | 1,177 | | | | 1,973 | | | | 3,150 | | | | (408 | ) | | 2008 | | 7/17/2013 | | 10 to 48 Years |
| Advance Auto Parts | | Natchez, MS | | (b) | | | 509 | | | | 754 | | | | 0 | | | | 0 | | | | 509 | | | | 754 | | | | 1,263 | | | | (122 | ) | | 1998 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Burlington, IA | | (b) | | | 467 | | | | 737 | | | | 0 | | | | 0 | | | | 467 | | | | 737 | | | | 1,204 | | | | (121 | ) | | 1989 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Denmark, SC | | (b) | | | 439 | | | | 504 | | | | 0 | | | | 0 | | | | 439 | | | | 504 | | | | 943 | | | | (125 | ) | | 1996 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Griffin, GA | | (b) | | | 441 | | | | 1,142 | | | | 0 | | | | 0 | | | | 441 | | | | 1,142 | | | | 1,583 | | | | (172 | ) | | 1998 | | 7/22/2016 | | 7 to 50 Years |
| Advance Auto Parts | | Waynesboro, GA | | (b) | | | 330 | | | | 1,015 | | | | 0 | | | | 0 | | | | 330 | | | | 1,015 | | | | 1,345 | | | | (149 | ) | | 1995 | | 7/22/2016 | | 7 to 50 Years |
| Advance Auto Parts | | Wiggins, MS | | (b) | | | 279 | | | | 630 | | | | 0 | | | | 0 | | | | 279 | | | | 630 | | | | 909 | | | | (128 | ) | | 1965 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Blakeley, GA | | (b) | | | 169 | | | | 887 | | | | 0 | | | | 0 | | | | 169 | | | | 887 | | | | 1,056 | | | | (121 | ) | | 1995 | | 7/22/2016 | | 7 to 50 Years |
| Advance Auto Parts | | Theodore, AL | | (b) | | | 549 | | | | 755 | | | | 0 | | | | 0 | | | | 549 | | | | 755 | | | | 1,304 | | | | (142 | ) | | 1996 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Margate, FL | | (b) | | | 480 | | | | 507 | | | | 0 | | | | 0 | | | | 480 | | | | 507 | | | | 987 | | | | (99 | ) | | 1991 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Atmore, AL | | (b) | | | 417 | | | | 444 | | | | 0 | | | | 0 | | | | 417 | | | | 444 | | | | 861 | | | | (120 | ) | | 1995 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Clinton, MS | | (b) | | | 569 | | | | 693 | | | | 0 | | | | 0 | | | | 569 | | | | 693 | | | | 1,262 | | | | (153 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Richmond Hill, GA | | (b) | | | 418 | | | | 701 | | | | 0 | | | | 0 | | | | 418 | | | | 701 | | | | 1,119 | | | | (150 | ) | | 1995 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Alton, IL | | (b) | | | 346 | | | | 553 | | | | 0 | | | | 0 | | | | 346 | | | | 553 | | | | 899 | | | | (132 | ) | | 1997 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Kingsland, GA | | (b) | | | 1,037 | | | | 997 | | | | 0 | | | | 0 | | | | 1,037 | | | | 997 | | | | 2,034 | | | | (166 | ) | | 1998 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Dayton, OH | | (b) | | | 317 | | | | 572 | | | | 0 | | | | 0 | | | | 317 | | | | 572 | | | | 889 | | | | (119 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Camilla, GA | | (b) | | | 419 | | | | 412 | | | | 0 | | | | 0 | | | | 419 | | | | 412 | | | | 831 | | | | (99 | ) | | 1995 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | St. Louis, MO | | (b) | | | 607 | | | | 505 | | | | 0 | | | | 0 | | | | 607 | | | | 505 | | | | 1,112 | | | | (130 | ) | | 1997 | | 7/22/2016 | | 7 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Academy Sports + Outdoors | Macon, GA | | (d) | | 1,921 |
| | 4,890 |
| | — |
| | — |
| | 1,921 |
| | 4,890 |
| | 6,811 |
| | (1,260 | ) | | 2005 | | 07/17/13 | | 10 to 30 Years |
| Accel International | Meridian, CT | | (d) | | 1,766 |
| | 7,848 |
| | — |
| | — |
| | 1,766 |
| | 7,848 |
| | 9,614 |
| | (1,274 | ) | | 1997 | | 12/17/14 | | 15 to 30 Years |
| Accel International | Avila, IN | | (d) | | 642 |
| | 4,958 |
| | — |
| | — |
| | 642 |
| | 4,958 |
| | 5,600 |
| | (760 | ) | | 1990 | | 12/17/14 | | 15 to 30 Years |
| Advance Auto Parts | Columbia Heights, MN | | (d) | | 510 |
| | 1,314 |
| | — |
| | — |
| | 510 |
| | 1,314 |
| | 1,824 |
| | (228 | ) | | 2006 | | 07/17/13 | | 7 to 43 Years |
| Advance Auto Parts | Duluth, MN | | (d) | | 207 |
| | 1,462 |
| | — |
| | — |
| | 207 |
| | 1,462 |
| | 1,669 |
| | (206 | ) | | 2006 | | 07/17/13 | | 7 to 48 Years |
| Advance Auto Parts | Grand Forks, ND | | (d) | | 287 |
| | 1,132 |
| | — |
| | — |
| | 287 |
| | 1,132 |
| | 1,419 |
| | (224 | ) | | 2005 | | 07/17/13 | | 7 to 45 Years |
| Advance Auto Parts | Fergus Falls, MN | | (d) | | 294 |
| | 978 |
| | — |
| | — |
| | 294 |
| | 978 |
| | 1,272 |
| | (173 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Holland Charter Township, MI | | (d) | | 493 |
| | 1,212 |
| | — |
| | — |
| | 493 |
| | 1,212 |
| | 1,705 |
| | (195 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Holland, MI | | (d) | | 542 |
| | 1,384 |
| | — |
| | — |
| | 542 |
| | 1,384 |
| | 1,926 |
| | (234 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Zeeland, MI | | (d) | | 490 |
| | 1,136 |
| | — |
| | — |
| | 490 |
| | 1,136 |
| | 1,626 |
| | (198 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Atmore, AL | | (d) | | 417 |
| | 444 |
| | — |
| | — |
| | 417 |
| | 444 |
| | 861 |
| | (66 | ) | | 1995 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Rainsville, AL | | (b) | | 251 |
| | 1,073 |
| | — |
| | — |
| | 251 |
| | 1,073 |
| | 1,324 |
| | (211 | ) | | 2005 | | 07/17/13 | | 7 to 42 Years |
| Advance Auto Parts | Theodore, AL | | (d) | | 549 |
| | 755 |
| | — |
| | — |
| | 549 |
| | 755 |
| | 1,304 |
| | (78 | ) | | 1996 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Hialeah, FL | | (d) | | 682 |
| | 1,054 |
| | — |
| | — |
| | 682 |
| | 1,054 |
| | 1,736 |
| | (98 | ) | | 1998 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | New Smyrna Beach, FL | | (d) | | 774 |
| | 818 |
| | — |
| | — |
| | 774 |
| | 818 |
| | 1,592 |
| | (78 | ) | | 1999 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Margate, FL | | (d) | | 480 |
| | 507 |
| | — |
| | — |
| | 480 |
| | 507 |
| | 987 |
| | (54 | ) | | 1991 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Fort Lauderdale, FL | | (d) | | 772 |
| | 1,005 |
| | — |
| | — |
| | 772 |
| | 1,005 |
| | 1,777 |
| | (102 | ) | | 1996 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Tampa, FL | | (d) | | 721 |
| | 1,055 |
| | — |
| | — |
| | 721 |
| | 1,055 |
| | 1,776 |
| | (96 | ) | | 1997 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Gibsonton, FL | | (d) | | 526 |
| | 448 |
| | — |
| | — |
| | 526 |
| | 448 |
| | 974 |
| | (77 | ) | | 1999 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Dayton, OH | | (d) | | 317 |
| | 572 |
| | — |
| | — |
| | 317 |
| | 572 |
| | 889 |
| | (65 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Castle Shannon, PA | | (d) | | 620 |
| | 732 |
| | — |
| | — |
| | 620 |
| | 732 |
| | 1,352 |
| | (92 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Burlington, IA | | (d) | | 467 |
| | 737 |
| | — |
| | — |
| | 467 |
| | 737 |
| | 1,204 |
| | (66 | ) | | 1989 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Camilla, GA | | (d) | | 419 |
| | 412 |
| | — |
| | — |
| | 419 |
| | 412 |
| | 831 |
| | (54 | ) | | 1995 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Savannah, GA | | (d) | | 688 |
| | 492 |
| | — |
| | — |
| | 688 |
| | 492 |
| | 1,180 |
| | (66 | ) | | 1995 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Columbus, GA | | (d) | | 628 |
| | 769 |
| | — |
| | — |
| | 628 |
| | 769 |
| | 1,397 |
| | (82 | ) | | 1998 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Waynesboro, GA | | (d) | | 330 |
| | 1,015 |
| | — |
| | — |
| | 330 |
| | 1,015 |
| | 1,345 |
| | (82 | ) | | 1995 | | 07/22/16 | | 7 to 50 Years |
| Advance Auto Parts | Blakeley, GA | | (d) | | 169 |
| | 887 |
| | — |
| | — |
| | 169 |
| | 887 |
| | 1,056 |
| | (66 | ) | | 1995 | | 07/22/16 | | 7 to 50 Years |
| Advance Auto Parts | Richmond Hill, GA | | (d) | | 418 |
| | 701 |
| | — |
| | — |
| | 418 |
| | 701 |
| | 1,119 |
| | (82 | ) | | 1995 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Augusta, GA | | (d) | | 482 |
| | 750 |
| | — |
| | — |
| | 482 |
| | 750 |
| | 1,232 |
| | (78 | ) | | 1998 | | 07/22/16 | | 7 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advance Auto Parts | | Covington, LA | | (b) | | | 507 | | | | 426 | | | | 0 | | | | 0 | | | | 507 | | | | 426 | | | | 933 | | | | (117 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Columbus, GA | | (b) | | | 628 | | | | 769 | | | | 0 | | | | 0 | | | | 628 | | | | 769 | | | | 1,397 | | | | (149 | ) | | 1998 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Newton, MS | | (b) | | | 336 | | | | 443 | | | | 0 | | | | 0 | | | | 336 | | | | 443 | | | | 779 | | | | (100 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Augusta, GA | | (b) | | | 482 | | | | 750 | | | | 0 | | | | — | | | | 482 | | | | 750 | | | | 1,232 | | | | (142 | ) | | 1998 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Tampa, FL | | (b) | | | 721 | | | | 1,055 | | | | 0 | | | | 0 | | | | 721 | | | | 1,055 | | | | 1,776 | | | | (176 | ) | | 1997 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | New Smyrna Beach, FL | | (b) | | | 774 | | | | 818 | | | | 0 | | | | 0 | | | | 774 | | | | 818 | | | | 1,592 | | | | (142 | ) | | 1999 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Fort Lauderdale, FL | | (b) | | | 772 | | | | 1,005 | | | | 0 | | | | 0 | | | | 772 | | | | 1,005 | | | | 1,777 | | | | (186 | ) | | 1996 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Jackson, MS | | (b) | | | 396 | | | | 423 | | | | 0 | | | | 0 | | | | 396 | | | | 423 | | | | 819 | | | | (93 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Castle Shannon, PA | | (b) | | | 620 | | | | 732 | | | | 0 | | | | 0 | | | | 620 | | | | 732 | | | | 1,352 | | | | (167 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Savannah, GA | | (b) | | | 688 | | | | 492 | | | | 0 | | | | 0 | | | | 688 | | | | 492 | | | | 1,180 | | | | (121 | ) | | 1995 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | College Park, GA | | (b) | | | 386 | | | | 506 | | | | 0 | | | | 0 | | | | 386 | | | | 506 | | | | 892 | | | | (129 | ) | | 1998 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Hattiesburg, MS | | (b) | | | 452 | | | | 821 | | | | 0 | | | | 0 | | | | 452 | | | | 821 | | | | 1,273 | | | | (122 | ) | | 1997 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Gibsonton, FL | | (b) | | | 526 | | | | 448 | | | | 0 | | | | 0 | | | | 526 | | | | 448 | | | | 974 | | | | (140 | ) | | 1999 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Hialeah, FL | | (b) | | | 682 | | | | 1,054 | | | | 0 | | | | 0 | | | | 682 | | | | 1,054 | | | | 1,736 | | | | (180 | ) | | 1998 | | 7/22/2016 | | 7 to 40 Years |
| Advance Auto Parts | | Montgomery, AL | | (b) | | | 435 | | | | 494 | | | | 0 | | | | 0 | | | | 435 | | | | 494 | | | | 929 | | | | (159 | ) | | 1999 | | 7/22/2016 | | 7 to 30 Years |
| Advance Auto Parts | | Greenfield, IN | | (b) | | | 502 | | | | 1,070 | | | | 0 | | | | 0 | | | | 502 | | | | 1,070 | | | | 1,572 | | | | (50 | ) | | 2003 | | 11/25/2019 | | 4 to 36 Years |
| Advance Auto Parts | | Trenton, OH | | (b) | | | 345 | | | | 702 | | | | 0 | | | | 0 | | | | 345 | | | | 702 | | | | 1,047 | | | | (42 | ) | | 2003 | | 11/25/2019 | | 4 to 35 Years |
| Alabama Clinics | | Dothan, AL | | (b) | | | 695 | | | | 1,707 | | | | 0 | | | | 20 | | | | 695 | | | | 1,727 | | | | 2,422 | | | | (371 | ) | | 2012 | | 12/21/2016 | | 1 to 40 Years |
| Alaska Club | | Anchorage, AK | | (b) | | | 1,054 | | | | 4,756 | | | | 0 | | | | 0 | | | | 1,054 | | | | 4,756 | | | | 5,810 | | | | (424 | ) | | 2006 | | 8/15/2018 | | 10 to 38 Years |
| Alaska Club | | Anchorage, AK | | (b) | | | 2,864 | | | | 8,258 | | | | 0 | | | | 0 | | | | 2,864 | | | | 8,258 | | | | 11,122 | | | | (832 | ) | | 1972 | | 8/15/2018 | | 11 to 43 Years |
| Alaska Club | | Fairbanks, AK | | (b) | | | 2,012 | | | | 9,941 | | | | 0 | | | | 0 | | | | 2,012 | | | | 9,941 | | | | 11,953 | | | | (1,114 | ) | | 1976 | | 8/15/2018 | | 10 to 39 Years |
| Alaska Club | | Wasilla, AK | | (b) | | | 2,864 | | | | 8,769 | | | | 0 | | | | 0 | | | | 2,864 | | | | 8,769 | | | | 11,633 | | | | (948 | ) | | 1984 | | 8/15/2018 | | 10 to 31 Years |
| Alaska Club | | Anchorage, AK | | (b) | | | 5,366 | | | | 15,115 | | | | 0 | | | | 0 | | | | 5,366 | | | | 15,115 | | | | 20,481 | | | | (1,509 | ) | | 1977 | | 8/15/2018 | | 11 to 32 Years |
| Albertsons | | Tigard, OR | | (b) | | | 5,515 | | | | 4,279 | | | | 0 | | | | 0 | | | | 5,515 | | | | 4,279 | | | | 9,794 | | | | (1,007 | ) | | 1998 | | 4/1/2015 | | 15 to 30 Years |
| Albertsons | | Boise, ID | | (b) | | | 1,470 | | | | 2,280 | | | | 0 | | | | 0 | | | | 1,470 | | | | 2,280 | | | | 3,750 | | | | (969 | ) | | 1982 | | 12/17/2013 | | 4 to 20 Years |
| Albertsons | | Las Cruces, NM | | (b) | | | 1,132 | | | | 2,765 | | | | 0 | | | | 0 | | | | 1,132 | | | | 2,765 | | | | 3,897 | | | | (853 | ) | | 1983 | | 12/17/2013 | | 5 to 30 Years |
| Albertsons | | Midland, TX | | (b) | | | 1,498 | | | | 3,096 | | | | 0 | | | | 0 | | | | 1,498 | | | | 3,096 | | | | 4,594 | | | | (1,305 | ) | | 1983 | | 12/17/2013 | | 5 to 20 Years |
| Aldi | | Tupelo, MS | | (b) | | | 1,131 | | | | 1,176 | | | | (372 | ) | | | (435 | ) | | | 759 | | | | 741 | | | | 1,500 | | | | (191 | ) | | 1995 | | 7/17/2013 | | 4 to 22 Years |
| Allstate Insurance Company | | Yuma, AZ | | (a) | | | 2,583 | | | | 5,221 | | | | (1,704 | ) | | | (3,561 | ) | | | 879 | | | | 1,660 | | | | 2,539 | | | | 0 | | | 2007 | | 7/17/2013 | | 2 to 38 Years |
| AMC Theatres | | Covina, CA | | (b) | | | 5,566 | | | | 26,922 | | | | 0 | | | | 0 | | | | 5,566 | | | | 26,922 | | | | 32,488 | | | | (9,587 | ) | | 1997 | | 6/23/2004 | | 13 to 40 Years |
| AMC Theatres | | Missoula, MT | | (b) | | | 2,333 | | | | 3,406 | | | | 0 | | | | 0 | | | | 2,333 | | | | 3,406 | | | | 5,739 | | | | (1,670 | ) | | 1998 | | 6/23/2004 | | 15 to 40 Years |
| AMC Theatres | | Johnston, IA | | (a) | | | 3,046 | | | | 10,213 | | | | (2,405 | ) | | | (8,798 | ) | | | 641 | | | | 1,415 | | | | 2,056 | | | | (8 | ) | | 1998 | | 6/23/2004 | | 2 to 17 Years |
| AMC Theatres | | Yukon, OK | | (a) | | | 1,082 | | | | 3,538 | | | | 0 | | | | 1,600 | | | | 1,082 | | | | 5,138 | | | | 6,220 | | | | (1,201 | ) | | 2007 | | 7/17/2013 | | 8 to 33 Years |
| America’s Service Station | | Dacula, GA | | (b) | | | 1,198 | | | | 1,212 | | | | 0 | | | | 0 | | | | 1,198 | | | | 1,212 | | | | 2,410 | | | | (58 | ) | | 2000 | | 11/25/2019 | | 10 to 29 Years |
| America’s Service Station | | Farragut, TN | | (b) | | | 959 | | | | 1,613 | | | | 0 | | | | 0 | | | | 959 | | | | 1,613 | | | | 2,572 | | | | (56 | ) | | 2011 | | 11/25/2019 | | 13 to 42 Years |
| Amigos United | | Plainview, TX | | (b) | | | 620 | | | | 5,415 | | | | 0 | | | | 0 | | | | 620 | | | | 5,415 | | | | 6,035 | | | | (1,920 | ) | | 2000 | | 8/25/2005 | | 14 to 40 Years |
| Amware Fulfillment | | Morrow, GA | | (b) | | | 1,731 | | | | 12,990 | | | | 0 | | | | 0 | | | | 1,731 | | | | 12,990 | | | | 14,721 | | | | (107 | ) | | 1969 | | 11/10/2020 | | 8 to 25 Years |
| Andy’s Frozen Custard | | Naperville, IL | | (b) | | | 976 | | | | 0 | | | | 27 | | | | 983 | | | | 1,003 | | | | 983 | | | | 1,986 | | | | (78 | ) | | 2016 | | 6/30/2016 | | 39 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advance Auto Parts | Kingsland, GA | | (d) | | 1,037 |
| | 997 |
| | — |
| | — |
| | 1,037 |
| | 997 |
| | 2,034 |
| | (91 | ) | | 1998 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Griffin, GA | | (d) | | 441 |
| | 1,142 |
| | — |
| | — |
| | 441 |
| | 1,142 |
| | 1,583 |
| | (94 | ) | | 1998 | | 07/22/16 | | 7 to 50 Years |
| Advance Auto Parts | College Park, GA | | (d) | | 386 |
| | 506 |
| | — |
| | — |
| | 386 |
| | 506 |
| | 892 |
| | (71 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Leesburg, GA | | (d) | | 435 |
| | 494 |
| | — |
| | — |
| | 435 |
| | 494 |
| | 929 |
| | (87 | ) | | 1999 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Covington, LA | | (d) | | 507 |
| | 426 |
| | — |
| | — |
| | 507 |
| | 426 |
| | 933 |
| | (64 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Alton, IL | | (d) | | 346 |
| | 553 |
| | — |
| | — |
| | 346 |
| | 553 |
| | 899 |
| | (72 | ) | | 1997 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | St. Louis, MO | | (d) | | 607 |
| | 505 |
| | — |
| | — |
| | 607 |
| | 505 |
| | 1,112 |
| | (71 | ) | | 1997 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Hattiesburg, MS | | (d) | | 452 |
| | 821 |
| | — |
| | — |
| | 452 |
| | 821 |
| | 1,273 |
| | (67 | ) | | 1997 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Clinton, MS | | (d) | | 569 |
| | 693 |
| | — |
| | — |
| | 569 |
| | 693 |
| | 1,262 |
| | (84 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Jackson, MS | | (d) | | 396 |
| | 423 |
| | — |
| | — |
| | 396 |
| | 423 |
| | 819 |
| | (51 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Natchez, MS | | (d) | | 509 |
| | 754 |
| | — |
| | — |
| | 509 |
| | 754 |
| | 1,263 |
| | (67 | ) | | 1998 | | 07/22/16 | | 7 to 40 Years |
| Advance Auto Parts | Newton, MS | | (d) | | 336 |
| | 443 |
| | — |
| | — |
| | 336 |
| | 443 |
| | 779 |
| | (55 | ) | | 1998 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Wiggins, MS | | (d) | | 279 |
| | 630 |
| | — |
| | — |
| | 279 |
| | 630 |
| | 909 |
| | (70 | ) | | 1965 | | 07/22/16 | | 7 to 30 Years |
| Advance Auto Parts | Denmark, SC | | (d) | | 439 |
| | 504 |
| | — |
| | — |
| | 439 |
| | 504 |
| | 943 |
| | (68 | ) | | 1996 | | 07/22/16 | | 7 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advance Auto Parts | Grand Bay, AL | | (b) | | 226 |
| | 1,242 |
| | — |
| | — |
| | 226 |
| | 1,242 |
| | 1,468 |
| | (198 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Hurley, MS | | (b) | | 265 |
| | 1,052 |
| | — |
| | — |
| | 265 |
| | 1,052 |
| | 1,317 |
| | (199 | ) | | 2006 | | 07/17/13 | | 7 to 45 Years |
| Advance Auto Parts | Ashland, KY | | (b) | | 613 |
| | 1,284 |
| | — |
| | — |
| | 613 |
| | 1,284 |
| | 1,897 |
| | (238 | ) | | 2006 | | 07/17/13 | | 8 to 48 Years |
| Advance Auto Parts | Jackson, OH | | (b) | | 397 |
| | 1,251 |
| | — |
| | — |
| | 397 |
| | 1,251 |
| | 1,648 |
| | (220 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | New Boston, OH | | (b) | | 345 |
| | 1,538 |
| | — |
| | — |
| | 345 |
| | 1,538 |
| | 1,883 |
| | (234 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Maryland Heights, MO | | (b) | | 522 |
| | 1,155 |
| | — |
| | — |
| | 522 |
| | 1,155 |
| | 1,677 |
| | (210 | ) | | 2005 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Scottsburg, IN | | (b) | | 238 |
| | 665 |
| | — |
| | — |
| | 238 |
| | 665 |
| | 903 |
| | (132 | ) | | 2006 | | 07/17/13 | | 8 to 43 Years |
| Advance Auto Parts | Charlotte, NC | | (b) | | 403 |
| | 1,146 |
| | — |
| | — |
| | 403 |
| | 1,146 |
| | 1,549 |
| | (239 | ) | | 2008 | | 07/17/13 | | 12 to 43 Years |
| Advance Auto Parts | Irvington, NJ | | (b) | | 1,605 |
| | 1,912 |
| | — |
| | — |
| | 1,605 |
| | 1,912 |
| | 3,517 |
| | (340 | ) | | 2006 | | 07/17/13 | | 7 to 47 Years |
| Advance Auto Parts | Midwest City, OK | | (b) | | 353 |
| | 815 |
| | — |
| | — |
| | 353 |
| | 815 |
| | 1,168 |
| | (170 | ) | | 2007 | | 07/17/13 | | 9 to 44 Years |
| Advance Auto Parts | Penns Grove, NJ | | (b) | | 612 |
| | 1,564 |
| | — |
| | — |
| | 612 |
| | 1,564 |
| | 2,176 |
| | (264 | ) | | 2006 | | 07/17/13 | | 8 to 47 Years |
| Advance Auto Parts | St. Francis, WI | | (b) | | 532 |
| | 1,557 |
| | — |
| | — |
| | 532 |
| | 1,557 |
| | 2,089 |
| | (289 | ) | | 2006 | | 07/17/13 | | 8 to 48 Years |
| Advance Auto Parts | Willingboro, NJ | | (b) | | 784 |
| | 1,369 |
| | — |
| | — |
| | 784 |
| | 1,369 |
| | 2,153 |
| | (283 | ) | | 2007 | | 07/17/13 | | 9 to 47 Years |
| Advance Auto Parts | Dunellen, NJ | | (b) | | 1,177 |
| | 1,973 |
| | — |
| | — |
| | 1,177 |
| | 1,973 |
| | 3,150 |
| | (298 | ) | | 2008 | | 07/17/13 | | 10 to 48 Years |
| Alabama Clinics | Dothan, AL | | (d) | | 695 |
| | 1,707 |
| | — |
| | 20 |
| | 695 |
| | 1,727 |
| | 2,422 |
| | (285 | ) | | 2012 | | 12/21/16 | | 1 to 40 Years |
| Alaska Club | Anchorage, AK | | (d) | | 1,054 |
| | 4,756 |
| | — |
| | — |
| | 1,054 |
| | 4,756 |
| | 5,810 |
| | (60 | ) | | 2006 | | 08/15/18 | | 10 to 38 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Andy’s Frozen Custard | | Rogers, AR | | (b) | | | 334 | | | | 884 | | | | 0 | | | | 0 | | | | 334 | | | | 884 | | | | 1,218 | | | | (215 | ) | | 2005 | | 9/30/2014 | | 15 to 30 Years |
| Andy’s Frozen Custard | | Orland Park, IL | | (b) | | | 999 | | | | 0 | | | | 290 | | | | 1,299 | | | | 1,289 | | | | 1,299 | | | | 2,588 | | | | (79 | ) | | 2019 | | 9/12/2016 | | 13 to 35 Years |
| Andy’s Frozen Custard | | Kansas City, MO | | (b) | | | 772 | | | | 18 | | | | 0 | | | | 916 | | | | 772 | | | | 934 | | | | 1,706 | | | | (117 | ) | | 1995 | | 9/19/2014 | | 40 to 40 Years |
| Applebee’s | | Augusta, GA | | (b) | | | 1,494 | | | | 2,019 | | | | 0 | | | | 0 | | | | 1,494 | | | | 2,019 | | | | 3,513 | | | | (506 | ) | | 2005 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Aurora, CO | | (b) | | | 1,017 | | | | 1,743 | | | | 0 | | | | 0 | | | | 1,017 | | | | 1,743 | | | | 2,760 | | | | (461 | ) | | 1998 | | 7/17/2013 | | 13 to 35 Years |
| Applebee’s | | Colorado Springs, CO | | (b) | | | 937 | | | | 1,120 | | | | 0 | | | | 0 | | | | 937 | | | | 1,120 | | | | 2,057 | | | | (467 | ) | | 1998 | | 7/17/2013 | | 8 to 25 Years |
| Applebee’s | | Albany, OR | | (b) | | | 913 | | | | 1,951 | | | | 0 | | | | 0 | | | | 913 | | | | 1,951 | | | | 2,864 | | | | (538 | ) | | 2005 | | 7/17/2013 | | 12 to 35 Years |
| Applebee’s | | Macon, GA | | (b) | | | 838 | | | | 1,723 | | | | 0 | | | | 0 | | | | 838 | | | | 1,723 | | | | 2,561 | | | | (436 | ) | | 1995 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Walla Walla, WA | | (b) | | | 665 | | | | 2,072 | | | | 0 | | | | 0 | | | | 665 | | | | 2,072 | | | | 2,737 | | | | (603 | ) | | 2005 | | 7/17/2013 | | 11 to 35 Years |
| Applebee’s | | Santa Fe, NM | | (b) | | | 2,120 | | | | 2,033 | | | | 0 | | | | 0 | | | | 2,120 | | | | 2,033 | | | | 4,153 | | | | (513 | ) | | 1997 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Columbus, GA | | (b) | | | 1,199 | | | | 1,911 | | | | 0 | | | | 0 | | | | 1,199 | | | | 1,911 | | | | 3,110 | | | | (496 | ) | | 2005 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Warner Robins, GA | | (b) | | | 1,228 | | | | 1,714 | | | | 0 | | | | 0 | | | | 1,228 | | | | 1,714 | | | | 2,942 | | | | (459 | ) | | 1994 | | 7/17/2013 | | 11 to 40 Years |
| Applebee’s | | Loveland, CO | | (b) | | | 602 | | | | 1,913 | | | | 0 | | | | 0 | | | | 602 | | | | 1,913 | | | | 2,515 | | | | (428 | ) | | 1997 | | 7/17/2013 | | 12 to 40 Years |
| Applebee’s | | Littleton, CO | | (b) | | | 696 | | | | 1,943 | | | | 0 | | | | 0 | | | | 696 | | | | 1,943 | | | | 2,639 | | | | (474 | ) | | 1990 | | 7/17/2013 | | 11 to 40 Years |
| Applebee’s | | Union Gap, WA | | (b) | | | 522 | | | | 2,218 | | | | 0 | | | | 0 | | | | 522 | | | | 2,218 | | | | 2,740 | | | | (477 | ) | | 2004 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Gallup, NM | | (b) | | | 937 | | | | 2,277 | | | | 0 | | | | 0 | | | | 937 | | | | 2,277 | | | | 3,214 | | | | (583 | ) | | 2004 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Savannah, GA | | (b) | | | 1,112 | | | | 1,727 | | | | 0 | | | | 0 | | | | 1,112 | | | | 1,727 | | | | 2,839 | | | | (448 | ) | | 1993 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Columbus, GA | | (b) | | | 2,102 | | | | 1,717 | | | | 0 | | | | 0 | | | | 2,102 | | | | 1,717 | | | | 3,819 | | | | (407 | ) | | 1993 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Macon, GA | | (b) | | | 874 | | | | 1,712 | | | | 0 | | | | 0 | | | | 874 | | | | 1,712 | | | | 2,586 | | | | (451 | ) | | 1995 | | 7/17/2013 | | 11 to 40 Years |
| Applebee’s | | Fountain, CO | | (b) | | | 861 | | | | 2,226 | | | | 0 | | | | 0 | | | | 861 | | | | 2,226 | | | | 3,087 | | | | (539 | ) | | 2005 | | 7/17/2013 | | 12 to 38 Years |
| Applebee’s | | Aurora, CO | | (b) | | | 1,521 | | | | 1,498 | | | | 0 | | | | 0 | | | | 1,521 | | | | 1,498 | | | | 3,019 | | | | (487 | ) | | 1992 | | 7/17/2013 | | 9 to 32 Years |
| Applebee’s | | Clovis, NM | | (b) | | | 861 | | | | 2,172 | | | | 0 | | | | 0 | | | | 861 | | | | 2,172 | | | | 3,033 | | | | (582 | ) | | 2005 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Grand Junction, CO | | (b) | | | 1,363 | | | | 1,990 | | | | 0 | | | | 0 | | | | 1,363 | | | | 1,990 | | | | 3,353 | | | | (524 | ) | | 1995 | | 7/17/2013 | | 10 to 40 Years |
| Applebee’s | | Garden City, GA | | (b) | | | 1,184 | | | | 1,465 | | | | 0 | | | | 0 | | | | 1,184 | | | | 1,465 | | | | 2,649 | | | | (400 | ) | | 1998 | | 7/17/2013 | | 9 to 40 Years |
| Applebee’s | | Longview, WA | | (b) | | | 870 | | | | 2,855 | | | | 0 | | | | 0 | | | | 870 | | | | 2,855 | | | | 3,725 | | | | (662 | ) | | 2004 | | 7/17/2013 | | 13 to 40 Years |
| Applebee’s | | Chicago, IL | | (b) | | | 1,452 | | | | 1,960 | | | | 0 | | | | 0 | | | | 1,452 | | | | 1,960 | | | | 3,412 | | | | (109 | ) | | 1999 | | 11/25/2019 | | 9 to 23 Years |
| Arby’s | | New Castle, PA | | (b) | | | 573 | | | | 1,042 | | | | 0 | | | | 0 | | | | 573 | | | | 1,042 | | | | 1,615 | | | | (481 | ) | | 1999 | | 7/17/2013 | | 7 to 25 Years |
| Arby’s | | Jacksonville, FL | | (b) | | | 368 | | | | 739 | | | | 0 | | | | 0 | | | | 368 | | | | 739 | | | | 1,107 | | | | (79 | ) | | 1998 | | 11/25/2019 | | 3 to 13 Years |
| Arby’s | | Indianapolis, IN | | (b) | | | 604 | | | | 342 | | | | 0 | | | | 0 | | | | 604 | | | | 342 | | | | 946 | | | | (39 | ) | | 1998 | | 11/25/2019 | | 3 to 15 Years |
| Arby’s | | North Canton, OH | | (b) | | | 327 | | | | 706 | | | | 12 | | | | 25 | | | | 339 | | | | 731 | | | | 1,070 | | | | (46 | ) | | 1989 | | 11/25/2019 | | 4 to 26 Years |
| Arby’s | | Moncks Corner, SC | | (b) | | | 569 | | | | 826 | | | | 0 | | | | 0 | | | | 569 | | | | 826 | | | | 1,395 | | | | (87 | ) | | 1998 | | 11/25/2019 | | 7 to 13 Years |
| Arby’s | | Martinsburg, WV | | (b) | | | 594 | | | | 1,256 | | | | 0 | | | | 0 | | | | 594 | | | | 1,256 | | | | 1,850 | | | | (117 | ) | | 1999 | | 11/25/2019 | | 8 to 14 Years |
| Arby’s | | Champlin, MN | | (b) | | | 710 | | | | 408 | | | | 0 | | | | 0 | | | | 710 | | | | 408 | | | | 1,118 | | | | (200 | ) | | 2004 | | 3/20/2015 | | 8 to 20 Years |
| Arby’s | | Sun City, AZ | | (b) | | | 594 | | | | 926 | | | | 5 | | | | (38 | ) | | | 599 | | | | 888 | | | | 1,487 | | | | (60 | ) | | 1986 | | 11/25/2019 | | 8 to 21 Years |
| Arby’s | | Tyler, TX | | (b) | | | 355 | | | | 663 | | | | 0 | | | | 0 | | | | 355 | | | | 663 | | | | 1,018 | | | | (142 | ) | | 1980 | | 12/29/2015 | | 15 to 30 Years |
| Arby’s | | Odessa, TX | | (b) | | | 499 | | | | 941 | | | | 0 | | | | 0 | | | | 499 | | | | 941 | | | | 1,440 | | | | (192 | ) | | 1982 | | 12/29/2015 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Alaska Club | Anchorage, AK | | (d) | | 2,864 |
| | 8,258 |
| | — |
| | — |
| | 2,864 |
| | 8,258 |
| | 11,122 |
| | (119 | ) | | 1972 | | 08/15/18 | | 11 to 43 Years |
| Alaska Club | Fairbanks, AK | | (d) | | 2,012 |
| | 9,941 |
| | — |
| | — |
| | 2,012 |
| | 9,941 |
| | 11,953 |
| | (159 | ) | | 1976 | | 08/15/18 | | 10 to 39 Years |
| Alaska Club | Wasilla, AK | | (d) | | 2,864 |
| | 8,769 |
| | — |
| | — |
| | 2,864 |
| | 8,769 |
| | 11,633 |
| | (135 | ) | | 1984 | | 08/15/18 | | 10 to 31 Years |
| Alaska Club | Anchorage, AK | | (d) | | 5,366 |
| | 15,115 |
| | — |
| | — |
| | 5,366 |
| | 15,115 |
| | 20,481 |
| | (215 | ) | | 1977 | | 08/15/18 | | 11 to 32 Years |
| Albertsons | Tigard, OR | | (d) | | 5,515 |
| | 4,279 |
| | — |
| | — |
| | 5,515 |
| | 4,279 |
| | 9,794 |
| | (657 | ) | | 1998 | | 04/01/15 | | 15 to 30 Years |
| Albertsons | Lake Oswego, OR | | (d) | | 4,257 |
| | 5,891 |
| | — |
| | — |
| | 4,257 |
| | 5,891 |
| | 10,148 |
| | (641 | ) | | 1965 | | 03/18/15 | | 15 to 40 Years |
| Albertsons | Walla Walla, WA | | (d) | | 1,964 |
| | 8,420 |
| | — |
| | — |
| | 1,964 |
| | 8,420 |
| | 10,384 |
| | (973 | ) | | 1972 | | 03/02/15 | | 15 to 40 Years |
| Albertsons | Boise, ID | | (d) | | 1,470 |
| | 2,280 |
| | — |
| | — |
| | 1,470 |
| | 2,280 |
| | 3,750 |
| | (705 | ) | | 1982 | | 12/17/13 | | 4 to 20 Years |
| Albertsons | Las Cruces, NM | | (d) | | 1,132 |
| | 2,765 |
| | — |
| | — |
| | 1,132 |
| | 2,765 |
| | 3,897 |
| | (624 | ) | | 1983 | | 12/17/13 | | 5 to 30 Years |
| Albertsons | Midland, TX | | (d) | | 1,498 |
| | 3,096 |
| | — |
| | — |
| | 1,498 |
| | 3,096 |
| | 4,594 |
| | (955 | ) | | 1983 | | 12/17/13 | | 5 to 20 Years |
| Aldi | Tupelo, MS | | (b) | | 1,131 |
| | 1,176 |
| | (372 | ) | | (435 | ) | | 759 |
| | 741 |
| | 1,500 |
| | (95 | ) | | 1995 | | 07/17/13 | | 22 to 22 Years |
| Allstate Insurance Company | Yuma, AZ | | (c) | | 2,583 |
| | 5,221 |
| | — |
| | — |
| | 2,583 |
| | 5,221 |
| | 7,804 |
| | (1,204 | ) | | 2007 | | 07/17/13 | | 4 to 46 Years |
| AMC Theatres | Covina, CA | | (d) | | 5,566 |
| | 26,922 |
| | — |
| | — |
| | 5,566 |
| | 26,922 |
| | 32,488 |
| | (8,246 | ) | | 1997 | | 06/23/04 | | 13 to 40 Years |
| AMC Theatres | Missoula, MT | | (b) | | 2,333 |
| | 3,406 |
| | — |
| | — |
| | 2,333 |
| | 3,406 |
| | 5,739 |
| | (1,435 | ) | | 1998 | | 06/23/04 | | 15 to 40 Years |
| AMC Theatres | Johnston, IA | | (c) | | 3,046 |
| | 10,213 |
| | — |
| | — |
| | 3,046 |
| | 10,213 |
| | 13,259 |
| | (4,586 | ) | | 1998 | | 06/23/04 | | 15 to 30 Years |
| AMC Theatres | Yukon, OK | | (c) | | 1,082 |
| | 3,538 |
| | — |
| | — |
| | 1,082 |
| | 3,538 |
| | 4,620 |
| | (821 | ) | | 2007 | | 07/17/13 | | 8 to 33 Years |
| American Lubefast | Moultrie, GA | | (b) | | 179 |
| | 271 |
| | — |
| | — |
| | 179 |
| | 271 |
| | 450 |
| | (204 | ) | | 1983 | | 09/07/07 | | 15 to 20 Years |
| American Lubefast | Spanish Fort, AL | | (b) | | 563 |
| | 607 |
| | — |
| | — |
| | 563 |
| | 607 |
| | 1,170 |
| | (370 | ) | | 1993 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Montgomery, AL | | (b) | | 241 |
| | 628 |
| | — |
| | — |
| | 241 |
| | 628 |
| | 869 |
| | (288 | ) | | 1997 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Pensacola, FL | | (b) | | 238 |
| | 564 |
| | — |
| | — |
| | 238 |
| | 564 |
| | 802 |
| | (262 | ) | | 1994 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Montgomery, AL | | (b) | | 303 |
| | 636 |
| | — |
| | — |
| | 303 |
| | 636 |
| | 939 |
| | (300 | ) | | 1996 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Pensacola, FL | | (b) | | 148 |
| | 459 |
| | — |
| | — |
| | 148 |
| | 459 |
| | 607 |
| | (209 | ) | | 1972 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Marianna, FL | | (b) | | 283 |
| | 452 |
| | — |
| | — |
| | 283 |
| | 452 |
| | 735 |
| | (204 | ) | | 1994 | | 09/07/07 | | 15 to 40 Years |
| American Lubefast | Albany, GA | | (b) | | 242 |
| | 572 |
| | — |
| | — |
| | 242 |
| | 572 |
| | 814 |
| | (206 | ) | | 1982 | | 09/07/07 | | 15 to 40 Years |
| American Lubefast | Pensacola, FL | | (b) | | 104 |
| | 333 |
| | — |
| | — |
| | 104 |
| | 333 |
| | 437 |
| | (166 | ) | | 1968 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Mobile, AL | | (b) | | 89 |
| | 501 |
| | — |
| | — |
| | 89 |
| | 501 |
| | 590 |
| | (221 | ) | | 1982 | | 11/30/07 | | 15 to 30 Years |
| American Lubefast | Albany, GA | | (b) | | 281 |
| | 575 |
| | — |
| | — |
| | 281 |
| | 575 |
| | 856 |
| | (299 | ) | | 1997 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Gulf Breeze, FL | | (b) | | 296 |
| | 457 |
| | — |
| | — |
| | 296 |
| | 457 |
| | 753 |
| | (212 | ) | | 1993 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Valdosta, GA | | (b) | | 376 |
| | 576 |
| | — |
| | — |
| | 376 |
| | 576 |
| | 952 |
| | (288 | ) | | 1996 | | 11/30/07 | | 15 to 30 Years |
| American Lubefast | Montgomery, AL | | (b) | | 275 |
| | 528 |
| | — |
| | — |
| | 275 |
| | 528 |
| | 803 |
| | (269 | ) | | 1988 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Pensacola, FL | | (b) | | 195 |
| | 569 |
| | — |
| | — |
| | 195 |
| | 569 |
| | 764 |
| | (270 | ) | | 1983 | | 09/07/07 | | 15 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arby’s | | Midland, TX | | (b) | | | 768 | | | | 893 | | | | 0 | | | | 0 | | | | 768 | | | | 893 | | | | 1,661 | | | | (187 | ) | | 1982 | | 12/29/2015 | | 15 to 30 Years |
| Arby’s | | Amarillo, TX | | (b) | | | 304 | | | | 943 | | | | 0 | | | | 0 | | | | 304 | | | | 943 | | | | 1,247 | | | | (77 | ) | | 1985 | | 11/25/2019 | | 4 to 16 Years |
| Armacell | | Yukon, OK | | (b) | | | 1,318 | | | | 17,900 | | | | 0 | | | | 0 | | | | 1,318 | | | | 17,900 | | | | 19,218 | | | | (124 | ) | | 2005 | | 11/10/2020 | | 6 to 30 Years |
| Ashley Furniture | | Anderson, SC | | (a) | | | 870 | | | | 1,909 | | | | 0 | | | | 0 | | | | 870 | | | | 1,909 | | | | 2,779 | | | | (596 | ) | | 2006 | | 7/17/2013 | | 8 to 40 Years |
| Ashley Furniture | | Amarillo, TX | | (b) | | | 1,481 | | | | 4,999 | | | | (1,099 | ) | | | (3,441 | ) | | | 382 | | | | 1,558 | | | | 1,940 | | | | (62 | ) | | 2001 | | 7/17/2013 | | 3 to 29 Years |
| Ashley Furniture | | Mount Juliet, TN | | (b) | | | 2,049 | | | | 4,604 | | | | 0 | | | | 264 | | | | 2,049 | | | | 4,868 | | | | 6,917 | | | | (1,131 | ) | | 2008 | | 7/17/2013 | | 10 to 45 Years |
| Ashley Furniture | | El Paso, TX | | (b) | | | 2,602 | | | | 5,092 | | | | 0 | | | | 12 | | | | 2,602 | | | | 5,104 | | | | 7,706 | | | | (268 | ) | | 1973 | | 11/25/2019 | | 9 to 30 Years |
| Ashley Furniture (f) | | Maple Shade, NJ | | (b) | | | 1,942 | | | | 3,792 | | | | 371 | | | | (67 | ) | | | 2,313 | | | | 3,725 | | | | 6,038 | | | | (2,174 | ) | | 1998 | | 7/17/2013 | | 3 to 25 Years |
| At Home | | Mesa, AZ | | (b) | | | 4,067 | | | | 4,321 | | | | 0 | | | | 13 | | | | 4,067 | | | | 4,334 | | | | 8,401 | | | | (1,354 | ) | | 2002 | | 12/20/2016 | | 10 to 20 Years |
| At Home | | Louisville, KY | | (b) | | | 4,726 | | | | 5,210 | | | | 0 | | | | 13 | | | | 4,726 | | | | 5,223 | | | | 9,949 | | | | (1,437 | ) | | 1984 | | 12/20/2016 | | 9 to 20 Years |
| At Home | | Corpus Christi, TX | | (b) | | | 3,734 | | | | 4,949 | | | | 0 | | | | 0 | | | | 3,734 | | | | 4,949 | | | | 8,683 | | | | (1,753 | ) | | 1986 | | 8/1/2016 | | 8 to 20 Years |
| At Home | | Jenison, MI | | (b) | | | 2,303 | | | | 5,743 | | | | 0 | | | | 88 | | | | 2,303 | | | | 5,831 | | | | 8,134 | | | | (1,259 | ) | | 1989 | | 8/1/2016 | | 8 to 30 Years |
| At Home | | Buford, GA | | (b) | | | 1,940 | | | | 4,704 | | | | 0 | | | | 0 | | | | 1,940 | | | | 4,704 | | | | 6,644 | | | | (979 | ) | | 1984 | | 8/1/2016 | | 8 to 30 Years |
| At Home | | Broomfield, CO | | (b) | | | 4,538 | | | | 4,675 | | | | 0 | | | | 0 | | | | 4,538 | | | | 4,675 | | | | 9,213 | | | | (1,494 | ) | | 1995 | | 8/1/2016 | | 9 to 20 Years |
| At Home | | Lubbock, TX | | (b) | | | 2,129 | | | | 7,926 | | | | 0 | | | | 12 | | | | 2,129 | | | | 7,938 | | | | 10,067 | | | | (474 | ) | | 1985 | | 11/25/2019 | | 7 to 29 Years |
| At Home | | Lutz, FL | | (b) | | | 9,058 | | | | 6,196 | | | | 0 | | | | 0 | | | | 9,058 | | | | 6,196 | | | | 15,254 | | | | (122 | ) | | 2018 | | 7/24/2020 | | 13 to 34 Years |
| At Home | | Whitehall, PA | | (b) | | | 3,354 | | | | 7,088 | | | | 0 | | | | 0 | | | | 3,354 | | | | 7,088 | | | | 10,442 | | | | (614 | ) | | 2018 | | 3/28/2019 | | 10 to 30 Years |
| At Home | | Plano, TX | | (b) | | | 4,481 | | | | 11,495 | | | | 0 | | | | 0 | | | | 4,481 | | | | 11,495 | | | | 15,976 | | | | (650 | ) | | 2018 | | 3/28/2019 | | 16 to 40 Years |
| At Home | | Frederick, MD | | (b) | | | 8,060 | | | | 9,177 | | | | 0 | | | | 8 | | | | 8,060 | | | | 9,185 | | | | 17,245 | | | | (841 | ) | | 2018 | | 3/28/2019 | | 12 to 31 Years |
| At Home | | Live Oak, TX | | (b) | | | 6,554 | | | | 12,444 | | | | 0 | | | | 0 | | | | 6,554 | | | | 12,444 | | | | 18,998 | | | | (739 | ) | | 2014 | | 3/28/2019 | | 16 to 38 Years |
| At Home | | Mansfield, TX | | (b) | | | 2,839 | | | | 9,324 | | | | 0 | | | | 0 | | | | 2,839 | | | | 9,324 | | | | 12,163 | | | | (625 | ) | | 2018 | | 3/28/2019 | | 15 to 35 Years |
| AT&T | | Santa Clara, CA | | (b) | | | 2,873 | | | | 8,252 | | | | 0 | | | | 0 | | | | 2,873 | | | | 8,252 | | | | 11,125 | | | | (1,732 | ) | | 2002 | | 7/17/2013 | | 5 to 48 Years |
| ATC Fitness | | Southaven, MS | | (b) | | | 1,187 | | | | 1,817 | | | | 0 | | | | 0 | | | | 1,187 | | | | 1,817 | | | | 3,004 | | | | (466 | ) | | 2014 | | 9/17/2014 | | 15 to 40 Years |
| Auria St. Clair | | St Clair, MI | | (b) | | | 1,511 | | | | 6,379 | | | | 0 | | | | 0 | | | | 1,511 | | | | 6,379 | | | | 7,890 | | | | (360 | ) | | 1991 | | 1/9/2020 | | 9 to 26 Years |
| Avalon Flooring | | Rio Grande, NJ | | (b) | | | 753 | | | | 3,299 | | | | 0 | | | | 0 | | | | 753 | | | | 3,299 | | | | 4,052 | | | | (641 | ) | | 2006 | | 3/31/2015 | | 11 to 40 Years |
| Bagger Dave’s Burger Tavern | | Berkley, MI | | (b) | | | 410 | | | | 329 | | | | 0 | | | | 0 | | | | 410 | | | | 329 | | | | 739 | | | | (28 | ) | | 1927 | | 11/25/2019 | | 8 to 27 Years |
| Bagger Dave’s Burger Tavern | | Grand Rapids, MI | | (b) | | | 659 | | | | 100 | | | | 0 | | | | 0 | | | | 659 | | | | 100 | | | | 759 | | | | (24 | ) | | 1985 | | 11/25/2019 | | 6 to 27 Years |
| Bank of America | | Delray Beach, FL | | (a) | | | 3,831 | | | | 16,789 | | | | 0 | | | | 0 | | | | 3,831 | | | | 16,789 | | | | 20,620 | | | | (3,099 | ) | | 1975 | | 7/17/2013 | | 8 to 50 Years |
| Bank of America | | Hunt Valley, MD | | (b) | | | 13,131 | | | | 74,628 | | | | 0 | | | | 0 | | | | 13,131 | | | | 74,628 | | | | 87,759 | | | | (3,029 | ) | | 1974 | | 9/26/2019 | | 9 to 52 Years |
| Best Buy | | Wichita, KS | | (b) | | | 3,368 | | | | 6,312 | | | | 0 | | | | 0 | | | | 3,368 | | | | 6,312 | | | | 9,680 | | | | (2,270 | ) | | 1984 | | 7/17/2013 | | 7 to 29 Years |
| Best Buy | | Fayetteville, NC | | (a) | | | 1,560 | | | | 6,893 | | | | 0 | | | | 0 | | | | 1,560 | | | | 6,893 | | | | 8,453 | | | | (1,685 | ) | | 1999 | | 7/17/2013 | | 6 to 41 Years |
| Best Buy | | Evanston, IL | | (b) | | | 3,275 | | | | 5,338 | | | | 0 | | | | 0 | | | | 3,275 | | | | 5,338 | | | | 8,613 | | | | (667 | ) | | 1993 | | 7/17/2013 | | 30 to 30 Years |
| Best Buy | | Las Cruces, NM | | (b) | | | 1,328 | | | | 2,616 | | | | 0 | | | | 0 | | | | 1,328 | | | | 2,616 | | | | 3,944 | | | | (701 | ) | | 2002 | | 7/17/2013 | | 8 to 41 Years |
| Big Lots (f) | | Whiteville, NC | | (b) | | | 1,119 | | | | 1,676 | | | | 0 | | | | 0 | | | | 1,119 | | | | 1,676 | | | | 2,795 | | | | (1,209 | ) | | 1988 | | 7/17/2013 | | 7 to 30 Years |
| Big Sandy Furniture | | South Point, OH | | (b) | | | 1,030 | | | | 3,123 | | | | 0 | | | | 12 | | | | 1,030 | | | | 3,135 | | | | 4,165 | | | | (255 | ) | | 1990 | | 11/25/2019 | | 6 to 15 Years |
| Big Sandy Furniture | | Parkersburg, WV | | (b) | | | 1,021 | | | | 4,403 | | | | 0 | | | | 12 | | | | 1,021 | | | | 4,415 | | | | 5,436 | | | | (541 | ) | | 1976 | | 11/25/2019 | | 3 to 10 Years |
| Big Sandy Furniture | | Portsmouth, OH | | (b) | | | 368 | | | | 1,936 | | | | 0 | | | | 0 | | | | 368 | | | | 1,936 | | | | 2,304 | | | | (110 | ) | | 1988 | | 11/25/2019 | | 7 to 23 Years |
| Big Sandy Furniture | | Ashland, KY | | (b) | | | 696 | | | | 767 | | | | 0 | | | | 0 | | | | 696 | | | | 767 | | | | 1,463 | | | | (85 | ) | | 1993 | | 11/25/2019 | | 6 to 15 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| American Lubefast | Opelika, AL | | (b) | | 503 |
| | 628 |
| | — |
| | — |
| | 503 |
| | 628 |
| | 1,131 |
| | (333 | ) | | 1995 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Auburn, AL | | (b) | | 676 |
| | 647 |
| | — |
| | — |
| | 676 |
| | 647 |
| | 1,323 |
| | (355 | ) | | 1995 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Ocean Springs, MS | | (b) | | 145 |
| | 186 |
| | — |
| | — |
| | 145 |
| | 186 |
| | 331 |
| | (49 | ) | | 1988 | | 07/17/13 | | 15 to 30 Years |
| American Lubefast | Montgomery, AL | | (b) | | 398 |
| | 626 |
| | — |
| | — |
| | 398 |
| | 626 |
| | 1,024 |
| | (315 | ) | | 1997 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Niceville, FL | | (b) | | 458 |
| | 454 |
| | — |
| | — |
| | 458 |
| | 454 |
| | 912 |
| | (183 | ) | | 1996 | | 09/07/07 | | 15 to 40 Years |
| American Lubefast | Montgomery, AL | | (b) | | 422 |
| | 857 |
| | — |
| | — |
| | 422 |
| | 857 |
| | 1,279 |
| | (396 | ) | | 1992 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Mobile, AL | | (b) | | 157 |
| | 508 |
| | — |
| | — |
| | 157 |
| | 508 |
| | 665 |
| | (234 | ) | | 1982 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Dothan, AL | | (b) | | 162 |
| | 659 |
| | — |
| | — |
| | 162 |
| | 659 |
| | 821 |
| | (294 | ) | | 1996 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Pensacola, FL | | (b) | | 150 |
| | 575 |
| | — |
| | — |
| | 150 |
| | 575 |
| | 725 |
| | (269 | ) | | 1986 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Crestview, FL | | (b) | | 544 |
| | 743 |
| | — |
| | — |
| | 544 |
| | 743 |
| | 1,287 |
| | (338 | ) | | 1975 | | 09/07/07 | | 15 to 30 Years |
| American Lubefast | Panama City, FL | | (b) | | 378 |
| | 252 |
| | — |
| | — |
| | 378 |
| | 252 |
| | 630 |
| | (84 | ) | | 1997 | | 07/17/13 | | 15 to 30 Years |
| American Lubefast | Milton, FL | | (b) | | 137 |
| | 577 |
| | — |
| | — |
| | 137 |
| | 577 |
| | 714 |
| | (260 | ) | | 1986 | | 09/07/07 | | 15 to 30 Years |
| Andy's Frozen Custard | Naperville, IL | | (d) | | 976 |
| | — |
| | 27 |
| | 983 |
| | 1,003 |
| | 983 |
| | 1,986 |
| | (29 | ) | | 2016 | | 06/30/16 | | 39 to 40 Years |
| Andy's Frozen Custard | Rogers, AR | | (d) | | 334 |
| | 884 |
| | — |
| | — |
| | 334 |
| | 884 |
| | 1,218 |
| | (146 | ) | | 2005 | | 09/30/14 | | 15 to 30 Years |
| Andy's Frozen Custard | Orland Park, IL | | (d) | | 999 |
| | — |
| | — |
| | — |
| | 999 |
| | — |
| | 999 |
| | — |
| | (f) | | 09/12/16 | | (f) |
| Andy's Frozen Custard | Kansas City, MO | | (d) | | 772 |
| | 18 |
| | — |
| | 916 |
| | 772 |
| | 934 |
| | 1,706 |
| | (70 | ) | | 1995 | | 09/19/14 | | 40 to 40 Years |
| Applebee's | Augusta, GA | | (d) | | 1,494 |
| | 2,019 |
| | — |
| | — |
| | 1,494 |
| | 2,019 |
| | 3,513 |
| | (370 | ) | | 2005 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Aurora, CO | | (d) | | 1,017 |
| | 1,743 |
| | — |
| | — |
| | 1,017 |
| | 1,743 |
| | 2,760 |
| | (336 | ) | | 1998 | | 07/17/13 | | 13 to 35 Years |
| Applebee's | Colorado Springs, CO | | (d) | | 937 |
| | 1,120 |
| | — |
| | — |
| | 937 |
| | 1,120 |
| | 2,057 |
| | (341 | ) | | 1998 | | 07/17/13 | | 8 to 25 Years |
| Applebee's | Albany, OR | | (d) | | 913 |
| | 1,951 |
| | — |
| | — |
| | 913 |
| | 1,951 |
| | 2,864 |
| | (393 | ) | | 2005 | | 07/17/13 | | 12 to 35 Years |
| Applebee's | Macon, GA | | (d) | | 838 |
| | 1,723 |
| | — |
| | — |
| | 838 |
| | 1,723 |
| | 2,561 |
| | (318 | ) | | 1995 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Walla Walla, WA | | (d) | | 665 |
| | 2,072 |
| | — |
| | — |
| | 665 |
| | 2,072 |
| | 2,737 |
| | (441 | ) | | 2005 | | 07/17/13 | | 11 to 35 Years |
| Applebee's | Santa Fe, NM | | (d) | | 2,120 |
| | 2,033 |
| | — |
| | — |
| | 2,120 |
| | 2,033 |
| | 4,153 |
| | (375 | ) | | 1997 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Columbus, GA | | (d) | | 1,199 |
| | 1,911 |
| | — |
| | — |
| | 1,199 |
| | 1,911 |
| | 3,110 |
| | (362 | ) | | 2005 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Warner Robins, GA | | (d) | | 1,228 |
| | 1,714 |
| | — |
| | — |
| | 1,228 |
| | 1,714 |
| | 2,942 |
| | (335 | ) | | 1994 | | 07/17/13 | | 11 to 40 Years |
| Applebee's | Loveland, CO | | (d) | | 602 |
| | 1,913 |
| | — |
| | — |
| | 602 |
| | 1,913 |
| | 2,515 |
| | (312 | ) | | 1997 | | 07/17/13 | | 12 to 40 Years |
| Applebee's | Littleton, CO | | (d) | | 696 |
| | 1,943 |
| | — |
| | — |
| | 696 |
| | 1,943 |
| | 2,639 |
| | (346 | ) | | 1990 | | 07/17/13 | | 11 to 40 Years |
| Applebee's | Union Gap, WA | | (d) | | 522 |
| | 2,218 |
| | — |
| | — |
| | 522 |
| | 2,218 |
| | 2,740 |
| | (348 | ) | | 2004 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Gallup, NM | | (d) | | 937 |
| | 2,277 |
| | — |
| | — |
| | 937 |
| | 2,277 |
| | 3,214 |
| | (426 | ) | | 2004 | | 07/17/13 | | 13 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Big Sandy Furniture | | Chillicothe, OH | | (b) | | | 511 | | | | 2,614 | | | | 0 | | | | 0 | | | | 511 | | | | 2,614 | | | | 3,125 | | | | (143 | ) | | 1995 | | 11/25/2019 | | 7 to 25 Years |
| Big Sandy Furniture | | Ashland, KY | | (b) | | | 739 | | | | 2,316 | | | | 0 | | | | 0 | | | | 739 | | | | 2,316 | | | | 3,055 | | | | (169 | ) | | 1990 | | 11/25/2019 | | 7 to 19 Years |
| Big Sandy Furniture | | Hurricane, WV | | (b) | | | 962 | | | | 3,093 | | | | 0 | | | | 0 | | | | 962 | | | | 3,093 | | | | 4,055 | | | | (143 | ) | | 1998 | | 11/25/2019 | | 7 to 34 Years |
| Bi-Lo | | Hartsville, SC | | (b) | | | 696 | | | | 5,402 | | | | 0 | | | | 0 | | | | 696 | | | | 5,402 | | | | 6,098 | | | | (1,170 | ) | | 1988 | | 9/30/2014 | | 10 to 40 Years |
| BJ’s Wholesale Club | | Fort Lauderdale, FL | | (b) | | | 6,775 | | | | 18,649 | | | | 0 | | | | 0 | | | | 6,775 | | | | 18,649 | | | | 25,424 | | | | (4,822 | ) | | 2007 | | 7/17/2013 | | 12 to 37 Years |
| BJ’s Wholesale Club | | Woodstock, GA | | (a) | | | 4,383 | | | | 16,588 | | | | 0 | | | | 0 | | | | 4,383 | | | | 16,588 | | | | 20,971 | | | | (5,064 | ) | | 2001 | | 7/17/2013 | | 8 to 33 Years |
| BJ’s Wholesale Club | | Haverhill, MA | | (b) | | | 3,192 | | | | 15,353 | | | | 0 | | | | 0 | | | | 3,192 | | | | 15,353 | | | | 18,545 | | | | (4,584 | ) | | 2007 | | 7/17/2013 | | 11 to 32 Years |
| BJ’s Wholesale Club | | Tampa, FL | | (b) | | | 4,810 | | | | 10,220 | | | | 0 | | | | 35 | | | | 4,810 | | | | 10,255 | | | | 15,065 | | | | (1,904 | ) | | 1993 | | 1/10/2017 | | 10 to 30 Years |
| BJ’s Wholesale Club | | Taylor, MI | | (b) | | | 4,275 | | | | 17,672 | | | | 0 | | | | 109 | | | | 4,275 | | | | 17,781 | | | | 22,056 | | | | (496 | ) | | 2019 | | 12/12/2019 | | 14 to 50 Years |
| BJ’s Wholesale Club | | Pineville, NC | | (b) | | | 2,034 | | | | 9,305 | | | | 0 | | | | 0 | | | | 2,034 | | | | 9,305 | | | | 11,339 | | | | (208 | ) | | 1999 | | 1/31/2020 | | 9 to 43 Years |
| BJ’s Wholesale Club | | Chesterfield, MI | | (b) | | | 7,286 | | | | 14,971 | | | | 0 | | | | 0 | | | | 7,286 | | | | 14,971 | | | | 22,257 | | | | (147 | ) | | 2020 | | 9/15/2020 | | 15 to 50 Years |
| BJ’s Wholesale Club | | Millsboro, DE | | (b) | | | 8,394 | | | | 16,153 | | | | 0 | | | | 0 | | | | 8,394 | | | | 16,153 | | | | 24,547 | | | | 0 | | | 2008 | | 12/15/2020 | | 10 to 40 Years |
| Bojangles’ | | Hickory, NC | | (b) | | | 598 | | | | 1,893 | | | | 0 | | | | 0 | | | | 598 | | | | 1,893 | | | | 2,491 | | | | (230 | ) | | 1995 | | 11/25/2019 | | 5 to 10 Years |
| Books-A-Million | | Rapid City, SD | | (b) | | | 575 | | | | 2,568 | | | | 0 | | | | 0 | | | | 575 | | | | 2,568 | | | | 3,143 | | | | (700 | ) | | 2001 | | 7/17/2013 | | 2 to 45 Years |
| Boscovs | | Voorhees, NJ | | (b) | | | 1,803 | | | | 4,314 | | | | 0 | | | | 0 | | | | 1,803 | | | | 4,314 | | | | 6,117 | | | | (438 | ) | | 1970 | | 11/25/2019 | | 3 to 25 Years |
| Brookshire Brothers | | Cleveland, TX | | (b) | | | 465 | | | | 2,867 | | | | 0 | | | | 0 | | | | 465 | | | | 2,867 | | | | 3,332 | | | | (2,234 | ) | | 1991 | | 12/1/2005 | | 15 to 20 Years |
| Brookshire Brothers | | Corrigan, TX | | (b) | | | 395 | | | | 630 | | | | 0 | | | | 0 | | | | 395 | | | | 630 | | | | 1,025 | | | | (569 | ) | | 1971 | | 12/1/2005 | | 15 to 20 Years |
| Brookshire Brothers | | Diboll, TX | | (b) | | | 775 | | | | 872 | | | | 0 | | | | 0 | | | | 775 | | | | 872 | | | | 1,647 | | | | (806 | ) | | 1974 | | 12/1/2005 | | 15 to 20 Years |
| Brookshire Brothers | | Lufkin, TX | | (b) | | | 1,178 | | | | 352 | | | | 0 | | | | 0 | | | | 1,178 | | | | 352 | | | | 1,530 | | | | (427 | ) | | 1977 | | 12/1/2005 | | 15 to 20 Years |
| Brookshire Brothers | | Navasota, TX | | (b) | | | 781 | | | | 1,499 | | | | 0 | | | | 0 | | | | 781 | | | | 1,499 | | | | 2,280 | | | | (904 | ) | | 1992 | | 12/1/2005 | | 15 to 30 Years |
| Brookshire Brothers | | Timpson, TX | | (b) | | | 253 | | | | 312 | | | | 0 | | | | 0 | | | | 253 | | | | 312 | | | | 565 | | | | (309 | ) | | 1978 | | 12/1/2005 | | 15 to 20 Years |
| Brookshire Brothers | | Hallettsville, TX | | (b) | | | 550 | | | | 1,545 | | | | 0 | | | | 0 | | | | 550 | | | | 1,545 | | | | 2,095 | | | | (525 | ) | | 2004 | | 3/31/2014 | | 10 to 30 Years |
| Buffalo Wild Wings | | Gaylord, MI | | (b) | | | 1,023 | | | | 1,125 | | | | 0 | | | | 0 | | | | 1,023 | | | | 1,125 | | | | 2,148 | | | | (88 | ) | | 2014 | | 11/25/2019 | | 9 to 33 Years |
| Buffalo Wild Wings | | Wesley Chapel, FL | | (b) | | | 2,672 | | | | 1,725 | | | | 0 | | | | 0 | | | | 2,672 | | | | 1,725 | | | | 4,397 | | | | (377 | ) | | 2015 | | 8/18/2015 | | 14 to 40 Years |
| Buffalo Wild Wings | | Birch Run, MI | | (b) | | | 1,852 | | | | 1,290 | | | | 0 | | | | 0 | | | | 1,852 | | | | 1,290 | | | | 3,142 | | | | (595 | ) | | 2014 | | 12/24/2014 | | 14 to 30 Years |
| Buffalo Wild Wings | | Clinton Township, MI | | (b) | | | 1,377 | | | | 911 | | | | 0 | | | | 0 | | | | 1,377 | | | | 911 | | | | 2,288 | | | | (307 | ) | | 2003 | | 11/5/2014 | | 14 to 30 Years |
| Buffalo Wild Wings | | Brandon, FL | | (b) | | | 1,358 | | | | 614 | | | | 0 | | | | 0 | | | | 1,358 | | | | 614 | | | | 1,972 | | | | (336 | ) | | 2004 | | 11/5/2014 | | 14 to 20 Years |
| Burger King | | Saint Ann, MO | | (b) | | | 470 | | | | 1,800 | | | | 0 | | | | 0 | | | | 470 | | | | 1,800 | | | | 2,270 | | | | (77 | ) | | 1985 | | 11/25/2019 | | 10 to 34 Years |
| Burger King | | Garner, NC | | (b) | | | 600 | | | | 765 | | | | 0 | | | | 0 | | | | 600 | | | | 765 | | | | 1,365 | | | | (508 | ) | | 1995 | | 9/29/2006 | | 15 to 30 Years |
| Burger King | | Fayetteville, NC | | (b) | | | 607 | | | | 1,020 | | | | 0 | | | | 0 | | | | 607 | | | | 1,020 | | | | 1,627 | | | | (699 | ) | | 1996 | | 9/29/2006 | | 15 to 30 Years |
| Burger King | | Springfield, IL | | (b) | | | 693 | | | | 472 | | | | 0 | | | | 0 | | | | 693 | | | | 472 | | | | 1,165 | | | | (53 | ) | | 1988 | | 11/25/2019 | | 8 to 20 Years |
| Burger King | | Louisville, KY | | (b) | | | 829 | | | | 684 | | | | 0 | | | | 0 | | | | 829 | | | | 684 | | | | 1,513 | | | | (72 | ) | | 1994 | | 11/25/2019 | | 4 to 18 Years |
| Burger King | | Buffalo, NY | | (b) | | | 761 | | | | 298 | | | | 0 | | | | 0 | | | | 761 | | | | 298 | | | | 1,059 | | | | (67 | ) | | 1993 | | 11/25/2019 | | 5 to 17 Years |
| Burger King | | Buffalo, NY | | (b) | | | 83 | | | | 806 | | | | 0 | | | | 0 | | | | 83 | | | | 806 | | | | 889 | | | | (126 | ) | | 1976 | | 11/25/2019 | | 5 to 12 Years |
| Burger King | | Springville, NY | | (b) | | | 313 | | | | 614 | | | | 0 | | | | 0 | | | | 313 | | | | 614 | | | | 927 | | | | (89 | ) | | 1988 | | 11/25/2019 | | 5 to 19 Years |
| Burger King | | Cheektowaga, NY | | (b) | | | 484 | | | | 310 | | | | 0 | | | | 0 | | | | 484 | | | | 310 | | | | 794 | | | | (76 | ) | | 1985 | | 11/25/2019 | | 5 to 18 Years |
| Burger King | | Fayetteville, NC | | (b) | | | 612 | | | | 739 | | | | 0 | | | | 0 | | | | 612 | | | | 739 | | | | 1,351 | | | | (77 | ) | | 1987 | | 11/25/2019 | | 7 to 14 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Applebee's | Savannah, GA | | (d) | | 1,112 |
| | 1,727 |
| | — |
| | — |
| | 1,112 |
| | 1,727 |
| | 2,839 |
| | (327 | ) | | 1993 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Columbus, GA | | (d) | | 2,102 |
| | 1,717 |
| | — |
| | — |
| | 2,102 |
| | 1,717 |
| | 3,819 |
| | (297 | ) | | 1993 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Macon, GA | | (d) | | 874 |
| | 1,712 |
| | — |
| | — |
| | 874 |
| | 1,712 |
| | 2,586 |
| | (329 | ) | | 1995 | | 07/17/13 | | 11 to 40 Years |
| Applebee's | Fountain, CO | | (d) | | 861 |
| | 2,226 |
| | — |
| | — |
| | 861 |
| | 2,226 |
| | 3,087 |
| | (393 | ) | | 2005 | | 07/17/13 | | 12 to 38 Years |
| Applebee's | Aurora, CO | | (d) | | 1,521 |
| | 1,498 |
| | — |
| | — |
| | 1,521 |
| | 1,498 |
| | 3,019 |
| | (356 | ) | | 1992 | | 07/17/13 | | 9 to 32 Years |
| Applebee's | Clovis, NM | | (d) | | 861 |
| | 2,172 |
| | — |
| | — |
| | 861 |
| | 2,172 |
| | 3,033 |
| | (425 | ) | | 2005 | | 07/17/13 | | 13 to 40 Years |
| Applebee's | Grand Junction, CO | | (d) | | 1,363 |
| | 1,990 |
| | — |
| | — |
| | 1,363 |
| | 1,990 |
| | 3,353 |
| | (383 | ) | | 1995 | | 07/17/13 | | 10 to 40 Years |
| Applebee's | Garden City, GA | | (d) | | 1,184 |
| | 1,465 |
| | — |
| | — |
| | 1,184 |
| | 1,465 |
| | 2,649 |
| | (292 | ) | | 1998 | | 07/17/13 | | 9 to 40 Years |
| Applebee's | Longview, WA | | (d) | | 870 |
| | 2,855 |
| | — |
| | — |
| | 870 |
| | 2,855 |
| | 3,725 |
| | (484 | ) | | 2004 | | 07/17/13 | | 13 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Arby's | New Castle, PA | | (b) | | 573 |
| | 1,042 |
| | — |
| | — |
| | 573 |
| | 1,042 |
| | 1,615 |
| | (351 | ) | | 1999 | | 07/17/13 | | 7 to 25 Years |
| Arby's | Champlin, MN | | (d) | | 710 |
| | 408 |
| | — |
| | — |
| | 710 |
| | 408 |
| | 1,118 |
| | (130 | ) | | 2004 | | 03/20/15 | | 8 to 20 Years |
| Arby's | Tyler, TX | | (d) | | 355 |
| | 663 |
| | — |
| | — |
| | 355 |
| | 663 |
| | 1,018 |
| | (85 | ) | | 1980 | | 12/29/15 | | 15 to 30 Years |
| Arby's | Odessa, TX | | (d) | | 499 |
| | 941 |
| | — |
| | — |
| | 499 |
| | 941 |
| | 1,440 |
| | (115 | ) | | 1982 | | 12/29/15 | | 15 to 30 Years |
| Arby's | Midland, TX | | (d) | | 768 |
| | 893 |
| | — |
| | — |
| | 768 |
| | 893 |
| | 1,661 |
| | (112 | ) | | 1982 | | 12/29/15 | | 15 to 30 Years |
| Ashley Furniture | Amarillo, TX | | (d) | | 1,481 |
| | 4,999 |
| | — |
| | — |
| | 1,481 |
| | 4,999 |
| | 6,480 |
| | (1,161 | ) | | 2001 | | 07/17/13 | | 9 to 36 Years |
| Ashley Furniture | Anderson, SC | | (c) | | 870 |
| | 1,909 |
| | — |
| | — |
| | 870 |
| | 1,909 |
| | 2,779 |
| | (435 | ) | | 2006 | | 07/17/13 | | 8 to 40 Years |
| Ashley Furniture | Mount Juliet, TN | | (d) | | 2,049 |
| | 4,604 |
| | — |
| | 232 |
| | 2,049 |
| | 4,836 |
| | 6,885 |
| | (819 | ) | | 2008 | | 07/17/13 | | 10 to 45 Years |
| At Home | Broomfield, CO | | (d) | | 4,538 |
| | 4,675 |
| | — |
| | — |
| | 4,538 |
| | 4,675 |
| | 9,213 |
| | (817 | ) | | 1995 | | 08/01/16 | | 9 to 20 Years |
| At Home | Corpus Christi, TX | | (d) | | 3,734 |
| | 4,949 |
| | — |
| | — |
| | 3,734 |
| | 4,949 |
| | 8,683 |
| | (959 | ) | | 1986 | | 08/01/16 | | 8 to 20 Years |
| At Home | Jenison, MI | | (d) | | 2,303 |
| | 5,743 |
| | — |
| | 88 |
| | 2,303 |
| | 5,831 |
| | 8,134 |
| | (689 | ) | | 1989 | | 08/01/16 | | 8 to 30 Years |
| At Home | Buford, GA | | (d) | | 1,940 |
| | 4,704 |
| | — |
| | — |
| | 1,940 |
| | 4,704 |
| | 6,644 |
| | (536 | ) | | 1984 | | 08/01/16 | | 8 to 30 Years |
| At Home | Louisville, KY | | (d) | | 4,726 |
| | 5,210 |
| | — |
| | 13 |
| | 4,726 |
| | 5,223 |
| | 9,949 |
| | (720 | ) | | 1984 | | 12/20/16 | | 9 to 20 Years |
| At Home | Mesa, AZ | | (d) | | 4,067 |
| | 4,321 |
| | — |
| | 13 |
| | 4,067 |
| | 4,334 |
| | 8,401 |
| | (678 | ) | | 2002 | | 12/20/16 | | 10 to 20 Years |
| AT&T | Santa Clara, CA | | (d) | | 2,873 |
| | 8,252 |
| | — |
| | — |
| | 2,873 |
| | 8,252 |
| | 11,125 |
| | (1,373 | ) | | 2002 | | 07/17/13 | | 5 to 48 Years |
| ATC Fitness | Southaven, MS | | (d) | | 1,187 |
| | 1,817 |
| | — |
| | — |
| | 1,187 |
| | 1,817 |
| | 3,004 |
| | (317 | ) | | 2014 | | 09/17/14 | | 15 to 40 Years |
| AutoStart | Kansas City, MO | | (d) | | 1,310 |
| | 1,824 |
| | — |
| | 6 |
| | 1,310 |
| | 1,830 |
| | 3,140 |
| | (374 | ) | | 2001 | | 12/18/15 | | 15 to 20 Years |
| AutoStart | Kansas City, MO | | (d) | | 620 |
| | 1,280 |
| | — |
| | — |
| | 620 |
| | 1,280 |
| | 1,900 |
| | (277 | ) | | 1978 | | 12/31/15 | | 15 to 20 Years |
| AutoStart | Overland Park, KS | | (d) | | 1,390 |
| | 320 |
| | — |
| | — |
| | 1,390 |
| | 320 |
| | 1,710 |
| | (102 | ) | | 1967 | | 03/11/16 | | 7 to 20 Years |
| Avalon Flooring | Rio Grande, NJ | | (d) | | 753 |
| | 3,299 |
| | — |
| | — |
| | 753 |
| | 3,299 |
| | 4,052 |
| | (418 | ) | | 2006 | | 03/31/15 | | 11 to 40 Years |
| Bank of America | Delray Beach, FL | | (c) | | 3,831 |
| | 16,789 |
| | — |
| | — |
| | 3,831 |
| | 16,789 |
| | 20,620 |
| | (2,263 | ) | | 1975 | | 07/17/13 | | 8 to 50 Years |
| BE Aerospace | Winston-Salem, NC | | (c) | | 927 |
| | 3,455 |
| | — |
| | — |
| | 927 |
| | 3,455 |
| | 4,382 |
| | (947 | ) | | 1987 | | 07/17/13 | | 5 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Burger King | | Lillington, NC | | (b) | | | 367 | | | | 771 | | | | 6 | | | | (6 | ) | | | 373 | | | | 765 | | | | 1,138 | | | | (122 | ) | | 1992 | | 11/25/2019 | | 3 to 8 Years |
| Burger King | | Decatur, IL | | (b) | | | 474 | | | | 468 | | | | 0 | | | | 0 | | | | 474 | | | | 468 | | | | 942 | | | | (50 | ) | | 1992 | | 11/25/2019 | | 10 to 18 Years |
| Burger King | | Durham, NC | | (b) | | | 1,253 | | | | 0 | | | | 0 | | | | 0 | | | | 1,253 | | | | 0 | | | | 1,253 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| Burger King | | Mebane, NC | | (b) | | | 846 | | | | 682 | | | | 0 | | | | 0 | | | | 846 | | | | 682 | | | | 1,528 | | | | (413 | ) | | 1993 | | 9/29/2006 | | 15 to 30 Years |
| Burger King | | Apopka, FL | | (b) | | | 778 | | | | 670 | | | | 0 | | | | 0 | | | | 778 | | | | 670 | | | | 1,448 | | | | (61 | ) | | 1977 | | 11/25/2019 | | 9 to 24 Years |
| Burger King | | Orlando, FL | | (b) | | | 1,175 | | | | 515 | | | | 0 | | | | 0 | | | | 1,175 | | | | 515 | | | | 1,690 | | | | (52 | ) | | 1985 | | 11/25/2019 | | 9 to 20 Years |
| Burger King | | Gilman, IL | | (b) | | | 363 | | | | 337 | | | | 0 | | | | 0 | | | | 363 | | | | 337 | | | | 700 | | | | (72 | ) | | 1998 | | 11/25/2019 | | 3 to 12 Years |
| Caliber Collision | | Suwanee, GA | | (b) | | | 442 | | | | 1,612 | | | | 0 | | | | 0 | | | | 442 | | | | 1,612 | | | | 2,054 | | | | (233 | ) | | 1986 | | 11/25/2019 | | 4 to 8 Years |
| Caliber Collision | | Conroe, TX | | (b) | | | 2,056 | | | | 2,306 | | | | 0 | | | | 32 | | | | 2,056 | | | | 2,338 | | | | 4,394 | | | | (362 | ) | | 2016 | | 12/28/2016 | | 14 to 50 Years |
| Caliber Collision | | Houston, TX | | (b) | | | 2,089 | | | | 2,332 | | | | 0 | | | | 33 | | | | 2,089 | | | | 2,365 | | | | 4,454 | | | | (335 | ) | | 2016 | | 3/16/2017 | | 14 to 50 Years |
| Camping World | | Poteau, OK | | (b) | | | 2,210 | | | | 3,839 | | | | 0 | | | | 17 | | | | 2,210 | | | | 3,856 | | | | 6,066 | | | | (824 | ) | | 2015 | | 3/22/2017 | | 15 to 30 Years |
| Camping World | | Wentzville, MO | | (b) | | | 2,040 | | | | 5,133 | | | | 0 | | | | 1,264 | | | | 2,040 | | | | 6,397 | | | | 8,437 | | | | (801 | ) | | 2015 | | 3/27/2015 | | 39 to 40 Years |
| Camping World | | Tulsa, OK | | (b) | | | 4,569 | | | | 88 | | | | 0 | | | | 6,944 | | | | 4,569 | | | | 7,032 | | | | 11,601 | | | | (1,365 | ) | | 2016 | | 12/15/2016 | | 11 to 40 Years |
| Camping World | | Summerfield, FL | | (b) | | | 3,059 | | | | 3,949 | | | | 0 | | | | 0 | | | | 3,059 | | | | 3,949 | | | | 7,008 | | | | (1,234 | ) | | 2004 | | 8/29/2016 | | 10 to 30 Years |
| Camping World | | Monticello, MN | | (b) | | | 3,873 | | | | 769 | | | | 0 | | | | 1,386 | | | | 3,873 | | | | 2,155 | | | | 6,028 | | | | (963 | ) | | 2016 | | 12/29/2016 | | 9 to 30 Years |
| Camping World | | Biloxi, MS | | (b) | | | 3,274 | | | | 627 | | | | 0 | | | | 6,334 | | | | 3,274 | | | | 6,961 | | | | 10,235 | | | | (818 | ) | | 2016 | | 12/22/2016 | | 15 to 40 Years |
| Camping World | | Kenosha, WI | | (b) | | | 3,522 | | | | 1,896 | | | | 0 | | | | 12 | | | | 3,522 | | | | 1,908 | | | | 5,430 | | | | (190 | ) | | 2004 | | 11/25/2019 | | 9 to 40 Years |
| Camping World | | Saukville, WI | | (b) | | | 3,073 | | | | 3,724 | | | | 0 | | | | 12 | | | | 3,073 | | | | 3,736 | | | | 6,809 | | | | (253 | ) | | 2014 | | 11/25/2019 | | 8 to 40 Years |
| Car Wash USA Express | | Van Buren, AR | | (b) | | | 370 | | | | 1,537 | | | | 0 | | | | 0 | | | | 370 | | | | 1,537 | | | | 1,907 | | | | (63 | ) | | 2018 | | 9/27/2019 | | 14 to 38 Years |
| Car Wash USA Express | | Oneonta, AL | | (b) | | | 500 | | | | 1,368 | | | | 0 | | | | 0 | | | | 500 | | | | 1,368 | | | | 1,868 | | | | (64 | ) | | 2013 | | 9/27/2019 | | 12 to 35 Years |
| Car Wash USA Express | | Chillicothe, OH | | (b) | | | 644 | | | | 3,918 | | | | 0 | | | | 0 | | | | 644 | | | | 3,918 | | | | 4,562 | | | | (146 | ) | | 2017 | | 9/27/2019 | | 14 to 39 Years |
| Car Wash USA Express | | Memphis, TN | | (b) | | | 103 | | | | 466 | | | | 0 | | | | 0 | | | | 103 | | | | 466 | | | | 569 | | | | (27 | ) | | 2014 | | 9/27/2019 | | 9 to 35 Years |
| Car Wash USA Express | | Birmingham, AL | | (b) | | | 776 | | | | 3,031 | | | | 0 | | | | 0 | | | | 776 | | | | 3,031 | | | | 3,807 | | | | (142 | ) | | 2004 | | 9/27/2019 | | 11 to 32 Years |
| Car Wash USA Express | | Hernando, MS | | (b) | | | 892 | | | | 3,073 | | | | 0 | | | | 0 | | | | 892 | | | | 3,073 | | | | 3,965 | | | | (125 | ) | | 2015 | | 9/27/2019 | | 14 to 38 Years |
| Car Wash USA Express | | Fort Smith, AR | | (b) | | | 431 | | | | 2,014 | | | | 0 | | | | 0 | | | | 431 | | | | 2,014 | | | | 2,445 | | | | (90 | ) | | 2017 | | 9/27/2019 | | 11 to 34 Years |
| Car Wash USA Express | | Boaz, AL | | (b) | | | 155 | | | | 781 | | | | 0 | | | | 0 | | | | 155 | | | | 781 | | | | 936 | | | | (38 | ) | | 2011 | | 9/27/2019 | | 10 to 32 Years |
| Car Wash USA Express | | Corinth, MS | | (b) | | | 402 | | | | 4,509 | | | | 0 | | | | 0 | | | | 402 | | | | 4,509 | | | | 4,911 | | | | (177 | ) | | 2011 | | 9/27/2019 | | 14 to 35 Years |
| Car Wash USA Express | | Madisonville, KY | | (b) | | | 421 | | | | 1,565 | | | | 0 | | | | 0 | | | | 421 | | | | 1,565 | | | | 1,986 | | | | (65 | ) | | 2018 | | 9/27/2019 | | 13 to 39 Years |
| Car Wash USA Express | | Sylacauga, AL | | (b) | | | 360 | | | | 2,227 | | | | 0 | | | | 0 | | | | 360 | | | | 2,227 | | | | 2,587 | | | | (90 | ) | | 2017 | | 9/27/2019 | | 13 to 39 Years |
| Car Wash USA Express | | Springfield, OH | | (b) | | | 673 | | | | 3,330 | | | | 0 | | | | 0 | | | | 673 | | | | 3,330 | | | | 4,003 | | | | (139 | ) | | 2014 | | 9/27/2019 | | 13 to 36 Years |
| Car Wash USA Express | | Dothan, AL | | (b) | | | 816 | | | | 3,586 | | | | 0 | | | | 0 | | | | 816 | | | | 3,586 | | | | 4,402 | | | | (148 | ) | | 2008 | | 9/27/2019 | | 11 to 35 Years |
| Car Wash USA Express | | Oakland, TN | | (b) | | | 503 | | | | 2,671 | | | | 0 | | | | 0 | | | | 503 | | | | 2,671 | | | | 3,174 | | | | (101 | ) | | 2017 | | 9/27/2019 | | 15 to 38 Years |
| Car Wash USA Express | | Rainbow City, AL | | (b) | | | 301 | | | | 1,875 | | | | 0 | | | | 0 | | | | 301 | | | | 1,875 | | | | 2,176 | | | | (84 | ) | | 1998 | | 9/27/2019 | | 12 to 34 Years |
| Car Wash USA Express | | Birmingham, AL | | (b) | | | 458 | | | | 2,319 | | | | 0 | | | | 0 | | | | 458 | | | | 2,319 | | | | 2,777 | | | | (112 | ) | | 2006 | | 9/27/2019 | | 12 to 33 Years |
| Car Wash USA Express | | Rome, GA | | (b) | | | 290 | | | | 1,398 | | | | 0 | | | | 0 | | | | 290 | | | | 1,398 | | | | 1,688 | | | | (68 | ) | | 2007 | | 9/27/2019 | | 12 to 33 Years |
| Car Wash USA Express | | Conway, AR | | (b) | | | 306 | | | | 762 | | | | 0 | | | | 0 | | | | 306 | | | | 762 | | | | 1,068 | | | | (35 | ) | | 2018 | | 9/27/2019 | | 14 to 38 Years |
| Car Wash USA Express | | Warner Robins, GA | | (b) | | | 568 | | | | 2,558 | | | | 0 | | | | 0 | | | | 568 | | | | 2,558 | | | | 3,126 | | | | (113 | ) | | 2013 | | 9/27/2019 | | 14 to 36 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bellefonte Primary Care | Grayson, KY | | (d) | | 658 |
| | 3,171 |
| | — |
| | — |
| | 658 |
| | 3,171 |
| | 3,829 |
| | (515 | ) | | 2013 | | 08/18/14 | | 9 to 40 Years |
| Best Buy | Fayetteville, NC | | (c) | | 1,560 |
| | 6,893 |
| | — |
| | — |
| | 1,560 |
| | 6,893 |
| | 8,453 |
| | (1,238 | ) | | 1999 | | 07/17/13 | | 6 to 41 Years |
| Best Buy | Wichita, KS | | (d) | | 3,368 |
| | 6,312 |
| | — |
| | — |
| | 3,368 |
| | 6,312 |
| | 9,680 |
| | (1,658 | ) | | 1984 | | 07/17/13 | | 7 to 29 Years |
| Best Buy | Evanston, IL | | (d) | | 3,275 |
| | 5,338 |
| | — |
| | — |
| | 3,275 |
| | 5,338 |
| | 8,613 |
| | (311 | ) | | 1993 | | 07/17/13 | | 30 to 30 Years |
| Best Buy | Las Cruces, NM | | (d) | | 1,328 |
| | 2,616 |
| | — |
| | — |
| | 1,328 |
| | 2,616 |
| | 3,944 |
| | (512 | ) | | 2002 | | 07/17/13 | | 8 to 41 Years |
| Bi-Lo | Hartsville, SC | | (d) | | 696 |
| | 5,402 |
| | — |
| | — |
| | 696 |
| | 5,402 |
| | 6,098 |
| | (796 | ) | | 1988 | | 09/30/14 | | 10 to 40 Years |
| BJ's Wholesale Club | Haverhill, MA | | (d) | | 3,192 |
| | 15,353 |
| | — |
| | — |
| | 3,192 |
| | 15,353 |
| | 18,545 |
| | (3,348 | ) | | 2007 | | 07/17/13 | | 11 to 32 Years |
| BJ's Wholesale Club | Fort Lauderdale, FL | | (d) | | 6,775 |
| | 18,649 |
| | — |
| | — |
| | 6,775 |
| | 18,649 |
| | 25,424 |
| | (3,521 | ) | | 2007 | | 07/17/13 | | 12 to 37 Years |
| BJ's Wholesale Club | Woodstock, GA | | (c) | | 4,383 |
| | 16,588 |
| | — |
| | — |
| | 4,383 |
| | 16,588 |
| | 20,971 |
| | (3,699 | ) | | 2001 | | 07/17/13 | | 8 to 33 Years |
| BJ's Wholesale Club | Tampa, FL | | (d) | | 4,810 |
| | 10,220 |
| | — |
| | 35 |
| | 4,810 |
| | 10,255 |
| | 15,065 |
| | (952 | ) | | 1993 | | 01/10/17 | | 10 to 30 Years |
| Books-A-Million | Rapid City, SD | | (d) | | 575 |
| | 2,568 |
| | — |
| | — |
| | 575 |
| | 2,568 |
| | 3,143 |
| | (513 | ) | | 2001 | | 07/17/13 | | 2 to 45 Years |
| Brookshire Brothers | Cleveland, TX | | (d) | | 465 |
| | 2,867 |
| | — |
| | — |
| | 465 |
| | 2,867 |
| | 3,332 |
| | (1,901 | ) | | 1991 | | 12/01/05 | | 15 to 20 Years |
| Brookshire Brothers | Corrigan, TX | | (d) | | 395 |
| | 630 |
| | — |
| | — |
| | 395 |
| | 630 |
| | 1,025 |
| | (484 | ) | | 1971 | | 12/01/05 | | 15 to 20 Years |
| Brookshire Brothers | Diboll, TX | | (d) | | 775 |
| | 872 |
| | — |
| | — |
| | 775 |
| | 872 |
| | 1,647 |
| | (686 | ) | | 1974 | | 12/01/05 | | 15 to 20 Years |
| Brookshire Brothers | Lufkin, TX | | (d) | | 1,178 |
| | 352 |
| | — |
| | — |
| | 1,178 |
| | 352 |
| | 1,530 |
| | (363 | ) | | 1977 | | 12/01/05 | | 15 to 20 Years |
| Brookshire Brothers | Navasota, TX | | (d) | | 781 |
| | 1,499 |
| | — |
| | — |
| | 781 |
| | 1,499 |
| | 2,280 |
| | (769 | ) | | 1992 | | 12/01/05 | | 15 to 30 Years |
| Brookshire Brothers | Timpson, TX | | (d) | | 253 |
| | 312 |
| | — |
| | — |
| | 253 |
| | 312 |
| | 565 |
| | (263 | ) | | 1978 | | 12/01/05 | | 15 to 20 Years |
| Brookshire Brothers | Hallettsville, TX | | (d) | | 550 |
| | 1,545 |
| | — |
| | — |
| | 550 |
| | 1,545 |
| | 2,095 |
| | (369 | ) | | 2004 | | 03/31/14 | | 10 to 30 Years |
| Buffalo Wild Wings | Clinton Township, MI | | (d) | | 1,377 |
| | 911 |
| | — |
| | — |
| | 1,377 |
| | 911 |
| | 2,288 |
| | (208 | ) | | 2003 | | 11/05/14 | | 14 to 30 Years |
| Buffalo Wild Wings | Brandon, FL | | (d) | | 1,358 |
| | 614 |
| | — |
| | — |
| | 1,358 |
| | 614 |
| | 1,972 |
| | (227 | ) | | 2004 | | 11/05/14 | | 14 to 20 Years |
| Buffalo Wild Wings | Birch Run, MI | | (d) | | 1,852 |
| | 1,290 |
| | — |
| | — |
| | 1,852 |
| | 1,290 |
| | 3,142 |
| | (397 | ) | | 2014 | | 12/24/14 | | 14 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Buffalo Wild Wings | Wesley Chapel, FL | | (d) | | 2,672 |
| | 1,725 |
| | — |
| | — |
| | 2,672 |
| | 1,725 |
| | 4,397 |
| | (236 | ) | | 2015 | | 08/18/15 | | 14 to 40 Years |
| Burger King | Durham, NC | | (b) | | 1,253 |
| | — |
| | — |
| | — |
| | 1,253 |
| | — |
| | 1,253 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Burger King | Mebane, NC | | (a) | | 846 |
| | 682 |
| | — |
| | — |
| | 846 |
| | 682 |
| | 1,528 |
| | (352 | ) | | 1993 | | 09/29/06 | | 15 to 30 Years |
| Burger King | Garner, NC | | (a) | | 600 |
| | 765 |
| | — |
| | — |
| | 600 |
| | 765 |
| | 1,365 |
| | (432 | ) | | 1995 | | 09/29/06 | | 15 to 30 Years |
| Burger King | Fayetteville, NC | | (a) | | 607 |
| | 1,020 |
| | — |
| | — |
| | 607 |
| | 1,020 |
| | 1,627 |
| | (594 | ) | | 1996 | | 09/29/06 | | 15 to 30 Years |
| Caliber Collision | Conroe, TX | | (d) | | 2,056 |
| | 2,306 |
| | — |
| | 32 |
| | 2,056 |
| | 2,338 |
| | 4,394 |
| | (181 | ) | | 2016 | | 12/28/16 | | 14 to 50 Years |
| Caliber Collision | Houston, TX | | (d) | | 2,089 |
| | 2,332 |
| | — |
| | 33 |
| | 2,089 |
| | 2,365 |
| | 4,454 |
| | (156 | ) | | 2016 | | 03/16/17 | | 14 to 50 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Car Wash USA Express | | Douglas, GA | | (b) | | | 582 | | | | 2,987 | | | | 0 | | | | 0 | | | | 582 | | | | 2,987 | | | | 3,569 | | | | (112 | ) | | 2011 | | 9/27/2019 | | 14 to 39 Years |
| Car Wash USA Express | | Olive Branch, MS | | (b) | | | 1,071 | | | | 3,515 | | | | 0 | | | | 0 | | | | 1,071 | | | | 3,515 | | | | 4,586 | | | | (164 | ) | | 2006 | | 9/27/2019 | | 13 to 33 Years |
| Car Wash USA Express | | Orem, UT | | (b) | | | 2,703 | | | | 15,522 | | | | 0 | | | | 0 | | | | 2,703 | | | | 15,522 | | | | 18,225 | | | | (609 | ) | | 2005 | | 9/27/2019 | | 13 to 36 Years |
| Car Wash USA Express | | Memphis, TN | | (b) | | | 380 | | | | 640 | | | | 0 | | | | 0 | | | | 380 | | | | 640 | | | | 1,020 | | | | (55 | ) | | 2008 | | 9/27/2019 | | 9 to 29 Years |
| Car Wash USA Express | | Centre, AL | | (b) | | | 156 | | | | 771 | | | | 0 | | | | 0 | | | | 156 | | | | 771 | | | | 927 | | | | (39 | ) | | 2012 | | 9/27/2019 | | 11 to 33 Years |
| CarMax | | Ontario, CA | | (b) | | | 7,981 | | | | 6,937 | | | | 0 | | | | (90 | ) | | | 7,981 | | | | 6,847 | | | | 14,828 | | | | (2,297 | ) | | 2005 | | 6/30/2005 | | 40 to 40 Years |
| CarMax | | Pompano Beach, FL | | (b) | | | 6,153 | | | | 5,010 | | | | 0 | | | | (91 | ) | | | 6,153 | | | | 4,919 | | | | 11,072 | | | | (1,650 | ) | | 2004 | | 6/30/2005 | | 40 to 40 Years |
| CarMax | | Midlothian, VA | | (b) | | | 4,775 | | | | 6,056 | | | | 0 | | | | (100 | ) | | | 4,775 | | | | 5,956 | | | | 10,731 | | | | (1,998 | ) | | 2004 | | 6/30/2005 | | 40 to 40 Years |
| CarMax | | Pineville, NC | | (a) | | | 4,865 | | | | 1,902 | | | | 0 | | | | 0 | | | | 4,865 | | | | 1,902 | | | | 6,767 | | | | (1,009 | ) | | 2002 | | 7/17/2013 | | 10 to 30 Years |
| CarMax | | Greenville, SC | | (b) | | | 4,947 | | | | 20,682 | | | | 0 | | | | 12 | | | | 4,947 | | | | 20,694 | | | | 25,641 | | | | (867 | ) | | 1999 | | 11/25/2019 | | 6 to 35 Years |
| CarMax | | Kennesaw, GA | | (b) | | | 10,920 | | | | 3,192 | | | | 0 | | | | 13 | | | | 10,920 | | | | 3,205 | | | | 14,125 | | | | (312 | ) | | 1995 | | 11/25/2019 | | 7 to 38 Years |
| CarMax | | Raleigh, NC | | (b) | | | 5,603 | | | | 5,063 | | | | 0 | | | | 12 | | | | 5,603 | | | | 5,075 | | | | 10,678 | | | | (405 | ) | | 1994 | | 11/25/2019 | | 8 to 30 Years |
| Carrington College | | Mesquite, TX | | (b) | | | 2,534 | | | | 1,780 | | | | (886 | ) | | | (403 | ) | | | 1,648 | | | | 1,377 | | | | 3,025 | | | | 0 | | | 1996 | | 7/17/2013 | | 3 to 15 Years |
| Chapala | | Boise, ID | | (b) | | | 477 | | | | 139 | | | | 0 | | | | 0 | | | | 477 | | | | 139 | | | | 616 | | | | (19 | ) | | 1998 | | 11/25/2019 | | 3 to 20 Years |
| Charleston’s Restaurant | | Norman, OK | | (b) | | | 1,328 | | | | 3,380 | | | | 0 | | | | 12 | | | | 1,328 | | | | 3,392 | | | | 4,720 | | | | (277 | ) | | 1992 | | 11/25/2019 | | 2 to 15 Years |
| Charleston’s Restaurant | | Tulsa, OK | | (b) | | | 1,292 | | | | 3,075 | | | | 0 | | | | 0 | | | | 1,292 | | | | 3,075 | | | | 4,367 | | | | (191 | ) | | 2002 | | 11/25/2019 | | 2 to 20 Years |
| Chick-Fil-A | | Carrollton, GA | | (b) | | | 985 | | | | 725 | | | | 0 | | | | 0 | | | | 985 | | | | 725 | | | | 1,710 | | | | (283 | ) | | 1995 | | 7/17/2013 | | 11 to 33 Years |
| Childcare Network | | East Point, GA | | (b) | | | 411 | | | | 1,279 | | | | 0 | | | | 0 | | | | 411 | | | | 1,279 | | | | 1,690 | | | | (186 | ) | | 2016 | | 12/13/2016 | | 14 to 40 Years |
| Childcare Network | | Elon, NC | | (b) | | | 486 | | | | 846 | | | | 0 | | | | 0 | | | | 486 | | | | 846 | | | | 1,332 | | | | (244 | ) | | 1998 | | 12/2/2016 | | 4 to 30 Years |
| Childcare Network | | Winston-Salem, NC | | (b) | | | 541 | | | | 659 | | | | 0 | | | | 0 | | | | 541 | | | | 659 | | | | 1,200 | | | | (154 | ) | | 1993 | | 12/2/2016 | | 5 to 30 Years |
| Childcare Network | | Greensboro, NC | | (b) | | | 360 | | | | 540 | | | | 0 | | | | 0 | | | | 360 | | | | 540 | | | | 900 | | | | (96 | ) | | 1949 | | 12/2/2016 | | 9 to 30 Years |
| Childcare Network | | Burlington, NC | | (b) | | | 306 | | | | 533 | | | | 0 | | | | 0 | | | | 306 | | | | 533 | | | | 839 | | | | (137 | ) | | 1971 | | 12/13/2016 | | 7 to20 Years |
| Childcare Network | | Grand Prairie, TX | | (b) | | | 1,057 | | | | 2,350 | | | | 0 | | | | 0 | | | | 1,057 | | | | 2,350 | | | | 3,407 | | | | (626 | ) | | 2007 | | 7/17/2015 | | 15 to 30 Years |
| Childcare Network | | Denton, TX | | (b) | | | 626 | | | | 1,909 | | | | 0 | | | | 0 | | | | 626 | | | | 1,909 | | | | 2,535 | | | | (444 | ) | | 2000 | | 7/17/2015 | | 15 to 30 Years |
| Childcare Network | | Fort Worth, TX | | (b) | | | 392 | | | | 871 | | | | 0 | | | | 0 | | | | 392 | | | | 871 | | | | 1,263 | | | | (249 | ) | | 2006 | | 7/17/2015 | | 15 to 30 Years |
| Childcare Network | | Columbus, GA | | (b) | | | 342 | | | | 1,096 | | | | 0 | | | | 30 | | | | 342 | | | | 1,126 | | | | 1,468 | | | | (219 | ) | | 2015 | | 12/22/2015 | | 15 to 40 Years |
| Childcare Network | | High Point, NC | | (b) | | | 205 | | | | 978 | | | | 0 | | | | 0 | | | | 205 | | | | 978 | | | | 1,183 | | | | (196 | ) | | 1981 | | 12/22/2015 | | 15 to 30 Years |
| Childcare Network | | Hampton, GA | | (b) | | | 391 | | | | 460 | | | | 0 | | | | 0 | | | | 391 | | | | 460 | | | | 851 | | | | (142 | ) | | 2005 | | 12/22/2015 | | 15 to 30 Years |
| Childcare Network | | Warner Robins, GA | | (b) | | | 431 | | | | 620 | | | | 0 | | | | 0 | | | | 431 | | | | 620 | | | | 1,051 | | | | (220 | ) | | 1995 | | 2/27/2015 | | 15 to 20 Years |
| Childcare Network | | Fort Walton Beach, FL | | (b) | | | 200 | | | | 491 | | | | 0 | | | | 0 | | | | 200 | | | | 491 | | | | 691 | | | | (119 | ) | | 1977 | | 2/27/2015 | | 15 to 30 Years |
| Childcare Network | | Sanford, NC | | (b) | | | 200 | | | | 611 | | | | 0 | | | | 0 | | | | 200 | | | | 611 | | | | 811 | | | | (146 | ) | | 2002 | | 2/27/2015 | | 15 to 30 Years |
| Childcare Network | | Norcross, GA | | (b) | | | 831 | | | | 624 | | | | 0 | | | | 0 | | | | 831 | | | | 624 | | | | 1,455 | | | | (246 | ) | | 1985 | | 3/30/2015 | | 15 to 20 Years |
| Childcare Network | | Evans, GA | | (b) | | | 508 | | | | 640 | | | | 0 | | | | 0 | | | | 508 | | | | 640 | | | | 1,148 | | | | (182 | ) | | 2003 | | 11/14/2014 | | 15 to 30 Years |
| Childcare Network | | Stockbridge, GA | | (b) | | | 533 | | | | 1,236 | | | | 0 | | | | (16 | ) | | | 533 | | | | 1,220 | | | | 1,753 | | | | (344 | ) | | 2000 | | 10/31/2014 | | 15 to 30 Years |
| Childcare Network | | Marietta, GA | | (b) | | | 538 | | | | 792 | | | | 0 | | | | 11 | | | | 538 | | | | 803 | | | | 1,341 | | | | (174 | ) | | 2009 | | 9/28/2016 | | 11 to 30 Years |
| Childcare Network | | Chattanooga, TN | | (b) | | | 684 | | | | 841 | | | | 0 | | | | 11 | | | | 684 | | | | 852 | | | | 1,536 | | | | (171 | ) | | 1999 | | 9/28/2016 | | 10 to 30 Years |
| Childcare Network | | Pensacola, FL | | (b) | | | 390 | | | | 1,360 | | | | 0 | | | | 0 | | | | 390 | | | | 1,360 | | | | 1,750 | | | | (140 | ) | | 2016 | | 2/23/2017 | | 15 to 50 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Camping World | Poteau, OK | | (b) | | 2,210 |
| | 3,839 |
| | — |
| | 17 |
| | 2,210 |
| | 3,856 |
| | 6,066 |
| | (384 | ) | | 2015 | | 03/22/17 | | 15 to 30 Years |
| Camping World | Wentzville, MO | | (d) | | 2,040 |
| | 5,133 |
| | — |
| | 1,264 |
| | 2,040 |
| | 6,397 |
| | 8,437 |
| | (481 | ) | | 2015 | | 03/27/15 | | 39 to 40 Years |
| Camping World | Summerfield, FL | | (d) | | 3,059 |
| | 3,949 |
| | — |
| | — |
| | 3,059 |
| | 3,949 |
| | 7,008 |
| | (665 | ) | | 2004 | | 08/29/16 | | 10 to 30 Years |
| Camping World | Tulsa, OK | | (d) | | 4,569 |
| | 88 |
| | — |
| | 5,259 |
| | 4,569 |
| | 5,347 |
| | 9,916 |
| | (588 | ) | | 2016 | | 12/15/16 | | 11 to 40 Years |
| Camping World | Monticello, MN | | (d) | | 3,873 |
| | 769 |
| | — |
| | 1,386 |
| | 3,873 |
| | 2,155 |
| | 6,028 |
| | (450 | ) | | 2016 | | 12/29/16 | | 9 to 30 Years |
| Camping World | Biloxi, MS | | (d) | | 3,274 |
| | 627 |
| | — |
| | 6,107 |
| | 3,274 |
| | 6,734 |
| | 10,008 |
| | (339 | ) | | 2016 | | 12/22/16 | | 15 to 40 Years |
| CarMax | Pompano Beach, FL | | (d) | | 6,153 |
| | 5,010 |
| | — |
| | — |
| | 6,153 |
| | 5,010 |
| | 11,163 |
| | (1,485 | ) | | 2004 | | 06/30/05 | | 15 to 40 Years |
| CarMax | Ontario, CA | | (d) | | 7,981 |
| | 6,937 |
| | — |
| | — |
| | 7,981 |
| | 6,937 |
| | 14,918 |
| | (2,034 | ) | | 2005 | | 06/30/05 | | 15 to 40 Years |
| CarMax | Midlothian, VA | | (d) | | 4,775 |
| | 6,056 |
| | — |
| | — |
| | 4,775 |
| | 6,056 |
| | 10,831 |
| | (1,789 | ) | | 2004 | | 06/30/05 | | 15 to 40 Years |
| CarMax | Pineville, NC | | (c) | | 4,865 |
| | 1,902 |
| | — |
| | — |
| | 4,865 |
| | 1,902 |
| | 6,767 |
| | (737 | ) | | 2002 | | 07/17/13 | | 10 to 30 Years |
| Carrington College | Mesquite, TX | | (d) | | 2,534 |
| | 1,780 |
| | — |
| | 656 |
| | 2,534 |
| | 2,436 |
| | 4,970 |
| | (777 | ) | | 1996 | | 07/17/13 | | 8 to 23 Years |
| Chick-Fil-A | Carrollton, GA | | (b) | | 985 |
| | 725 |
| | — |
| | — |
| | 985 |
| | 725 |
| | 1,710 |
| | (207 | ) | | 1995 | | 07/17/13 | | 11 to 33 Years |
| Childcare Network | Evans, GA | | (d) | | 508 |
| | 640 |
| | — |
| | — |
| | 508 |
| | 640 |
| | 1,148 |
| | (123 | ) | | 2003 | | 11/14/14 | | 15 to 30 Years |
| Childcare Network | Stockbridge, GA | | (d) | | 533 |
| | 1,236 |
| | — |
| | (16 | ) | | 533 |
| | 1,220 |
| | 1,753 |
| | (233 | ) | | 2000 | | 10/31/14 | | 15 to 30 Years |
| Childcare Network | Warner Robins, GA | | (d) | | 431 |
| | 620 |
| | — |
| | — |
| | 431 |
| | 620 |
| | 1,051 |
| | (144 | ) | | 1995 | | 02/27/15 | | 15 to 20 Years |
| Childcare Network | Fort Walton Beach, FL | | (d) | | 200 |
| | 491 |
| | — |
| | — |
| | 200 |
| | 491 |
| | 691 |
| | (78 | ) | | 1977 | | 02/27/15 | | 15 to 30 Years |
| Childcare Network | Sanford, NC | | (d) | | 200 |
| | 611 |
| | — |
| | — |
| | 200 |
| | 611 |
| | 811 |
| | (96 | ) | | 2002 | | 02/27/15 | | 15 to 30 Years |
| Childcare Network | Norcross, GA | | (d) | | 831 |
| | 624 |
| | — |
| | — |
| | 831 |
| | 624 |
| | 1,455 |
| | (161 | ) | | 1985 | | 03/30/15 | | 15 to 20 Years |
| Childcare Network | Grand Prairie, TX | | (d) | | 1,057 |
| | 2,350 |
| | — |
| | — |
| | 1,057 |
| | 2,350 |
| | 3,407 |
| | (395 | ) | | 2007 | | 07/17/15 | | 15 to 30 Years |
| Childcare Network | Denton, TX | | (d) | | 626 |
| | 1,909 |
| | — |
| | — |
| | 626 |
| | 1,909 |
| | 2,535 |
| | (280 | ) | | 2000 | | 07/17/15 | | 15 to 30 Years |
| Childcare Network | Fort Worth, TX | | (d) | | 392 |
| | 871 |
| | — |
| | — |
| | 392 |
| | 871 |
| | 1,263 |
| | (157 | ) | | 2006 | | 07/17/15 | | 15 to 30 Years |
| Childcare Network | Columbus, GA | | (d) | | 342 |
| | 1,096 |
| | — |
| | 30 |
| | 342 |
| | 1,126 |
| | 1,468 |
| | (131 | ) | | 2015 | | 12/22/15 | | 15 to 40 Years |
| Childcare Network | High Point, NC | | (d) | | 205 |
| | 978 |
| | — |
| | — |
| | 205 |
| | 978 |
| | 1,183 |
| | (117 | ) | | 1981 | | 12/22/15 | | 15 to 30 Years |
| Childcare Network | Hampton, GA | | (d) | | 391 |
| | 460 |
| | — |
| | — |
| | 391 |
| | 460 |
| | 851 |
| | (85 | ) | | 2005 | | 12/22/15 | | 15 to 30 Years |
| Childcare Network | Marietta, GA | | (b) | | 538 |
| | 792 |
| | — |
| | 11 |
| | 538 |
| | 803 |
| | 1,341 |
| | (92 | ) | | 2009 | | 09/28/16 | | 11 to 30 Years |
| Childcare Network | Chattanooga, TN | | (b) | | 684 |
| | 841 |
| | — |
| | 11 |
| | 684 |
| | 852 |
| | 1,536 |
| | (90 | ) | | 1999 | | 09/28/16 | | 10 to 30 Years |
| Childcare Network | Elon, NC | | (d) | | 486 |
| | 846 |
| | — |
| | — |
| | 486 |
| | 846 |
| | 1,332 |
| | (126 | ) | | 1998 | | 12/02/16 | | 4 to 30 Years |
| Childcare Network | Winston-Salem, NC | | (d) | | 541 |
| | 659 |
| | — |
| | — |
| | 541 |
| | 659 |
| | 1,200 |
| | (79 | ) | | 1993 | | 12/02/16 | | 5 to 30 Years |
| Childcare Network | Greensboro, NC | | (d) | | 360 |
| | 540 |
| | — |
| | — |
| | 360 |
| | 540 |
| | 900 |
| | (49 | ) | | 1949 | | 12/02/16 | | 9 to 30 Years |
| Childcare Network | East Point, GA | | (d) | | 411 |
| | 1,279 |
| | — |
| | — |
| | 411 |
| | 1,279 |
| | 1,690 |
| | (95 | ) | | 2016 | | 12/13/16 | | 14 to 40 Years |
| Childcare Network | Burlington, NC | | (d) | | 306 |
| | 533 |
| | — |
| | — |
| | 306 |
| | 533 |
| | 839 |
| | (70 | ) | | 1971 | | 12/13/16 | | 7 to 20 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Childtime | | Cuyahoga Falls, OH | | (b) | | | 279 | | | | 727 | | | | 0 | | | | 0 | | | | 279 | | | | 727 | | | | 1,006 | | | | (343 | ) | | 1974 | | 7/17/2013 | | 8 to 25 Years |
| Childtime | | Arlington, TX | | (b) | | | 365 | | | | 532 | | | | 0 | | | | 0 | | | | 365 | | | | 532 | | | | 897 | | | | (274 | ) | | 2006 | | 7/17/2013 | | 10 to 33 Years |
| Childtime | | Oklahoma City, OK | | (b) | | | 290 | | | | 341 | | | | 0 | | | | 0 | | | | 290 | | | | 341 | | | | 631 | | | | (195 | ) | | 1985 | | 7/17/2013 | | 11 to 19 Years |
| Childtime | | Rochester, NY | | (b) | | | 242 | | | | 539 | | | | 0 | | | | 0 | | | | 242 | | | | 539 | | | | 781 | | | | (219 | ) | | 1981 | | 7/17/2013 | | 8 to 28 Years |
| Childtime | | Modesto, CA | | (b) | | | 386 | | | | 664 | | | | 0 | | | | 0 | | | | 386 | | | | 664 | | | | 1,050 | | | | (308 | ) | | 1986 | | 7/17/2013 | | 9 to 22 Years |
| Childtime | | Morrisville, NC | | (b) | | | 544 | | | | 1,378 | | | | 0 | | | | 0 | | | | 544 | | | | 1,378 | | | | 1,922 | | | | (305 | ) | | 2010 | | 2/19/2015 | | 15 to 40 Years |
| Chili’s | | Paris, TX | | (b) | | | 552 | | | | 1,821 | | | | 0 | | | | 0 | | | | 552 | | | | 1,821 | | | | 2,373 | | | | (523 | ) | | 1999 | | 7/17/2013 | | 11 to 35 Years |
| Chili’s | | Tilton, NH | | (b) | | | 1,565 | | | | 0 | | | | 0 | | | | 0 | | | | 1,565 | | | | 0 | | | | 1,565 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| Chili’s | | Fredericksburg, TX | | (b) | | | 511 | | | | 1,516 | | | | 0 | | | | 0 | | | | 511 | | | | 1,516 | | | | 2,027 | | | | (486 | ) | | 1985 | | 7/17/2013 | | 11 to 30 Years |
| Chuck-A-Rama and Grub Steak | | Ogden, UT | | (b) | | | 610 | | | | 1,648 | | | | 0 | | | | 0 | | | | 610 | | | | 1,648 | | | | 2,258 | | | | (159 | ) | | 1998 | | 1/22/2019 | | 10 to 28 Years |
| Chuck-A-Rama and Grub Steak | | Orem, UT | | (b) | | | 803 | | | | 1,141 | | | | 0 | | | | 0 | | | | 803 | | | | 1,141 | | | | 1,944 | | | | (130 | ) | | 1991 | | 1/22/2019 | | 7 to 22 Years |
| Chuck-A-Rama and Grub Steak | | Lehi, UT | | (b) | | | 830 | | | | 2,141 | | | | 0 | | | | 0 | | | | 830 | | | | 2,141 | | | | 2,971 | | | | (171 | ) | | 2011 | | 1/22/2019 | | 10 to 37 Years |
| Chuck-A-Rama and Grub Steak | | Ammon, ID | | (b) | | | 503 | | | | 2,315 | | | | 0 | | | | 0 | | | | 503 | | | | 2,315 | | | | 2,818 | | | | (193 | ) | | 2003 | | 1/22/2019 | | 10 to 32 Years |
| Chuck-A-Rama and Grub Steak | | Park City, UT | | (b) | | | 205 | | | | 2,501 | | | | 0 | | | | 0 | | | | 205 | | | | 2,501 | | | | 2,706 | | | | (156 | ) | | 1978 | | 1/22/2019 | | 11 to 34 Years |
| Chuck-A-Rama and Grub Steak | | Bountiful, UT | | (b) | | | 871 | | | | 1,406 | | | | 0 | | | | 0 | | | | 871 | | | | 1,406 | | | | 2,277 | | | | (139 | ) | | 1995 | | 1/22/2019 | | 10 to 25 Years |
| Chuck-A-Rama and Grub Steak | | Boise, ID | | (b) | | | 673 | | | | 2,071 | | | | 0 | | | | 0 | | | | 673 | | | | 2,071 | | | | 2,744 | | | | (179 | ) | | 1998 | | 1/22/2019 | | 11 to 28 Years |
| Chuck-A-Rama and Grub Steak | | Provo, UT | | (b) | | | 723 | | | | 1,549 | | | | 0 | | | | 0 | | | | 723 | | | | 1,549 | | | | 2,272 | | | | (168 | ) | | 1990 | | 1/22/2019 | | 10 to 22 Years |
| Chuck-A-Rama and Grub Steak | | Draper, UT | | (b) | | | 943 | | | | 1,876 | | | | 0 | | | | 0 | | | | 943 | | | | 1,876 | | | | 2,819 | | | | (174 | ) | | 2004 | | 1/22/2019 | | 11 to 32 Years |
| Chuck-A-Rama and Grub Steak | | St. George, UT | | (b) | | | 708 | | | | 2,036 | | | | 0 | | | | 0 | | | | 708 | | | | 2,036 | | | | 2,744 | | | | (183 | ) | | 1995 | | 1/22/2019 | | 10 to 26 Years |
| Chuck-A-Rama and Grub Steak | | Murray, UT | | (b) | | | 512 | | | | 1,328 | | | | 0 | | | | 0 | | | | 512 | | | | 1,328 | | | | 1,840 | | | | (129 | ) | | 1996 | | 1/22/2019 | | 10 to 26 Years |
| Chuck-A-Rama and Grub Steak | | Salt Lake City, UT | | (b) | | | 1,552 | | | | 1,747 | | | | 0 | | | | 0 | | | | 1,552 | | | | 1,747 | | | | 3,299 | | | | (197 | ) | | 1964 | | 1/22/2019 | | 9 to 22 Years |
| Chuck-A-Rama and Grub Steak | | Logan, UT | | (b) | | | 276 | | | | 2,696 | | | | 0 | | | | 0 | | | | 276 | | | | 2,696 | | | | 2,972 | | | | (169 | ) | | 2011 | | 1/22/2019 | | 13 to 37 Years |
| Church’s Chicken | | Balch Springs, TX | | (b) | | | 329 | | | | 576 | | | | 0 | | | | 0 | | | | 329 | | | | 576 | | | | 905 | | | | (247 | ) | | 1986 | | 7/17/2013 | | 11 to 31 Years |
| Church’s Chicken | | Rio Grand City, TX | | (b) | | | 1,746 | | | | 554 | | | | 0 | | | | 0 | | | | 1,746 | | | | 554 | | | | 2,300 | | | | (171 | ) | | 1984 | | 7/17/2013 | | 12 to 35 Years |
| Church’s Chicken | | Fort Worth, TX | | (b) | | | 164 | | | | 573 | | | | 0 | | | | 0 | | | | 164 | | | | 573 | | | | 737 | | | | (206 | ) | | 1965 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Midland, TX | | (b) | | | 195 | | | | 432 | | | | 0 | | | | 0 | | | | 195 | | | | 432 | | | | 627 | | | | (130 | ) | | 1972 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Columbus, GA | | (b) | | | 640 | | | | 403 | | | | 0 | | | | 0 | | | | 640 | | | | 403 | | | | 1,043 | | | | (220 | ) | | 1983 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Carrolton, TX | | (b) | | | 361 | | | | 415 | | | | 0 | | | | 0 | | | | 361 | | | | 415 | | | | 776 | | | | (214 | ) | | 1997 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 384 | | | | 528 | | | | 0 | | | | 0 | | | | 384 | | | | 528 | | | | 912 | | | | (196 | ) | | 1974 | | 7/17/2013 | | 11 to 27 Years |
| Church’s Chicken | | Tucson, AZ | | (b) | | | 191 | | | | 552 | | | | 0 | | | | 0 | | | | 191 | | | | 552 | | | | 743 | | | | (156 | ) | | 1981 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 667 | | | | 785 | | | | 0 | | | | 0 | | | | 667 | | | | 785 | | | | 1,452 | | | | (216 | ) | | 1985 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Abilene, TX | | (b) | | | 198 | | | | 311 | | | | 0 | | | | 0 | | | | 198 | | | | 311 | | | | 509 | | | | (130 | ) | | 1975 | | 7/17/2013 | | 10 to 26 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 685 | | | | 257 | | | | 0 | | | | 0 | | | | 685 | | | | 257 | | | | 942 | | | | (96 | ) | | 1976 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 592 | | | | 336 | | | | 0 | | | | 0 | | | | 592 | | | | 336 | | | | 928 | | | | (121 | ) | | 1968 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Montgomery, AL | | (b) | | | 247 | | | | 376 | | | | 0 | | | | 0 | | | | 247 | | | | 376 | | | | 623 | | | | (209 | ) | | 1999 | | 7/17/2013 | | 10 to 24 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 462 | | | | 673 | | | | 0 | | | | 0 | | | | 462 | | | | 673 | | | | 1,135 | | | | (207 | ) | | 1996 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Port Lavaca, TX | | (b) | | | 339 | | | | 594 | | | | 0 | | | | 0 | | | | 339 | | | | 594 | | | | 933 | | | | (211 | ) | | 1985 | | 7/17/2013 | | 11 to 28 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Childcare Network | Pensacola, FL | | (d) | | 390 |
| | 1,360 |
| | — |
| | — |
| | 390 |
| | 1,360 |
| | 1,750 |
| | (67 | ) | | 2016 | | 02/23/17 | | 15 to 50 Years |
| Childtime | Cuyahoga Falls, OH | | (b) | | 279 |
| | 727 |
| | — |
| | — |
| | 279 |
| | 727 |
| | 1,006 |
| | (251 | ) | | 1974 | | 07/17/13 | | 8 to 25 Years |
| Childtime | Arlington, TX | | (b) | | 365 |
| | 532 |
| | — |
| | — |
| | 365 |
| | 532 |
| | 897 |
| | (200 | ) | | 2006 | | 07/17/13 | | 10 to 33 Years |
| Childtime | Oklahoma City, OK | | (b) | | 290 |
| | 341 |
| | — |
| | — |
| | 290 |
| | 341 |
| | 631 |
| | (142 | ) | | 1985 | | 07/17/13 | | 11 to 19 Years |
| Childtime | Rochester, NY | | (b) | | 242 |
| | 539 |
| | — |
| | — |
| | 242 |
| | 539 |
| | 781 |
| | (160 | ) | | 1981 | | 07/17/13 | | 8 to 28 Years |
| Childtime | Modesto, CA | | (b) | | 386 |
| | 664 |
| | — |
| | — |
| | 386 |
| | 664 |
| | 1,050 |
| | (225 | ) | | 1986 | | 07/17/13 | | 9 to 22 Years |
| Childtime | Morrisville, NC | | (d) | | 544 |
| | 1,378 |
| | — |
| | — |
| | 544 |
| | 1,378 |
| | 1,922 |
| | (200 | ) | | 2010 | | 02/19/15 | | 15 to 40 Years |
| Chili's | Paris, TX | | (d) | | 552 |
| | 1,821 |
| | — |
| | — |
| | 552 |
| | 1,821 |
| | 2,373 |
| | (382 | ) | | 1999 | | 07/17/13 | | 11 to 35 Years |
| Chili's | Tilton, NH | | (d) | | 1,565 |
| | — |
| | — |
| | — |
| | 1,565 |
| | — |
| | 1,565 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Church's Chicken | Birmingham, AL | | (d) | | 192 |
| | 656 |
| | — |
| | — |
| | 192 |
| | 656 |
| | 848 |
| | (238 | ) | | 1981 | | 07/17/13 | | 7 to 19 Years |
| Church's Chicken | Birmingham, AL | | (d) | | 107 |
| | 508 |
| | — |
| | — |
| | 107 |
| | 508 |
| | 615 |
| | (176 | ) | | 1983 | | 07/17/13 | | 7 to 19 Years |
| Church's Chicken | Birmingham, AL | | (d) | | 131 |
| | 526 |
| | — |
| | — |
| | 131 |
| | 526 |
| | 657 |
| | (188 | ) | | 1984 | | 07/17/13 | | 7 to 19 Years |
| Church's Chicken | Greensboro, AL | | (d) | | 100 |
| | 663 |
| | — |
| | — |
| | 100 |
| | 663 |
| | 763 |
| | (149 | ) | | 1986 | | 07/17/13 | | 7 to 35 Years |
| Church's Chicken | Montgomery, AL | | (d) | | 288 |
| | 623 |
| | — |
| | — |
| | 288 |
| | 623 |
| | 911 |
| | (133 | ) | | 1998 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Montgomery, AL | | (d) | | 177 |
| | 516 |
| | — |
| | — |
| | 177 |
| | 516 |
| | 693 |
| | (208 | ) | | 1984 | | 07/17/13 | | 9 to 19 Years |
| Church's Chicken | Montgomery, AL | | (d) | | 247 |
| | 376 |
| | — |
| | — |
| | 247 |
| | 376 |
| | 623 |
| | (153 | ) | | 1999 | | 07/17/13 | | 10 to 24 Years |
| Church's Chicken | Montgomery, AL | | (d) | | 455 |
| | 579 |
| | — |
| | — |
| | 455 |
| | 579 |
| | 1,034 |
| | (160 | ) | | 1972 | | 07/17/13 | | 11 to 33 Years |
| Church's Chicken | Montgomery, AL | | (d) | | 313 |
| | 601 |
| | — |
| | — |
| | 313 |
| | 601 |
| | 914 |
| | (210 | ) | | 1999 | | 07/17/13 | | 10 to 27 Years |
| Church's Chicken | Phenix City, AL | | (d) | | 493 |
| | 497 |
| | — |
| | — |
| | 493 |
| | 497 |
| | 990 |
| | (99 | ) | | 1978 | | 07/17/13 | | 8 to 35 Years |
| Church's Chicken | Talladega, AL | | (d) | | 247 |
| | 245 |
| | — |
| | — |
| | 247 |
| | 245 |
| | 492 |
| | (144 | ) | | 1998 | | 07/17/13 | | 11 to 21 Years |
| Church's Chicken | Little Rock, AR | | (d) | | 99 |
| | 500 |
| | — |
| | — |
| | 99 |
| | 500 |
| | 599 |
| | (122 | ) | | 1970 | | 07/17/13 | | 8 to 30 Years |
| Church's Chicken | Little Rock, AR | | (d) | | 332 |
| | 432 |
| | — |
| | — |
| | 332 |
| | 432 |
| | 764 |
| | (96 | ) | | 1971 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Little Rock, AR | | (d) | | 263 |
| | 492 |
| | — |
| | — |
| | 263 |
| | 492 |
| | 755 |
| | (113 | ) | | 1975 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | North Little Rock, AR | | (d) | | 128 |
| | 351 |
| | — |
| | — |
| | 128 |
| | 351 |
| | 479 |
| | (105 | ) | | 1999 | | 07/17/13 | | 10 to 28 Years |
| Church's Chicken | Pine Bluff, AR | | (d) | | 854 |
| | 431 |
| | — |
| | — |
| | 854 |
| | 431 |
| | 1,285 |
| | (92 | ) | | 1971 | | 07/17/13 | | 7 to 35 Years |
| Church's Chicken | Nogales, AZ | | (d) | | 207 |
| | 448 |
| | — |
| | — |
| | 207 |
| | 448 |
| | 655 |
| | (136 | ) | | 1976 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 523 |
| | 97 |
| | — |
| | — |
| | 523 |
| | 97 |
| | 620 |
| | (73 | ) | | 1976 | | 07/17/13 | | 9 to 16 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 321 |
| | 276 |
| | — |
| | — |
| | 321 |
| | 276 |
| | 597 |
| | (117 | ) | | 1975 | | 07/17/13 | | 10 to 20 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 384 |
| | 528 |
| | — |
| | — |
| | 384 |
| | 528 |
| | 912 |
| | (143 | ) | | 1974 | | 07/17/13 | | 11 to 27 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 368 |
| | 267 |
| | — |
| | — |
| | 368 |
| | 267 |
| | 635 |
| | (89 | ) | | 1974 | | 07/17/13 | | 11 to 23 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church’s Chicken | | Dallas, TX | | (b) | | | 164 | | | | 431 | | | | 0 | | | | 0 | | | | 164 | | | | 431 | | | | 595 | | | | (214 | ) | | 1968 | | 7/17/2013 | | 10 to 18 Years |
| Church’s Chicken | | Oro Valley, AZ | | (b) | | | 262 | | | | 193 | | | | 0 | | | | 0 | | | | 262 | | | | 193 | | | | 455 | | | | (133 | ) | | 1983 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | McAllen, TX | | (b) | | | 601 | | | | 539 | | | | 0 | | | | 0 | | | | 601 | | | | 539 | | | | 1,140 | | | | (173 | ) | | 1985 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 156 | | | | 351 | | | | 0 | | | | 0 | | | | 156 | | | | 351 | | | | 507 | | | | (164 | ) | | 1971 | | 7/17/2013 | | 7 to 25 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 189 | | | | 837 | | | | 0 | | | | 0 | | | | 189 | | | | 837 | | | | 1,026 | | | | (313 | ) | | 1996 | | 7/17/2013 | | 9 to 25 Years |
| Church’s Chicken | | Edinburg, TX | | (b) | | | 624 | | | | 888 | | | | 0 | | | | 0 | | | | 624 | | | | 888 | | | | 1,512 | | | | (250 | ) | | 1985 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | North Little Rock, AR | | (b) | | | 128 | | | | 351 | | | | 0 | | | | 0 | | | | 128 | | | | 351 | | | | 479 | | | | (143 | ) | | 1999 | | 7/17/2013 | | 10 to 28 Years |
| Church’s Chicken | | Grand Prairie, TX | | (b) | | | 147 | | | | 535 | | | | 0 | | | | 0 | | | | 147 | | | | 535 | | | | 682 | | | | (186 | ) | | 1985 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 400 | | | | 120 | | | | 0 | | | | 0 | | | | 400 | | | | 120 | | | | 520 | | | | (109 | ) | | 1977 | | 7/17/2013 | | 11 to 13 Years |
| Church’s Chicken | | Pine Bluff, AR | | (b) | | | 854 | | | | 431 | | | | 0 | | | | 0 | | | | 854 | | | | 431 | | | | 1,285 | | | | (126 | ) | | 1971 | | 7/17/2013 | | 7 to 35 Years |
| Church’s Chicken | | Oklahoma City, OK | | (b) | | | 223 | | | | 469 | | | | 0 | | | | 0 | | | | 223 | | | | 469 | | | | 692 | | | | (239 | ) | | 1998 | | 7/17/2013 | | 8 to 22 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 375 | | | | 282 | | | | 0 | | | | 0 | | | | 375 | | | | 282 | | | | 657 | | | | (156 | ) | | 1965 | | 7/17/2013 | | 9 to 21 Years |
| Church’s Chicken | | Jackson, MS | | (b) | | | 195 | | | | 582 | | | | 0 | | | | 0 | | | | 195 | | | | 582 | | | | 777 | | | | (193 | ) | | 2000 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Victoria, TX | | (b) | | | 129 | | | | 490 | | | | 0 | | | | 0 | | | | 129 | | | | 490 | | | | 619 | | | | (189 | ) | | 1985 | | 7/17/2013 | | 11 to 28 Years |
| Church’s Chicken | | Richland Hills, TX | | (b) | | | 229 | | | | 199 | | | | 0 | | | | 0 | | | | 229 | | | | 199 | | | | 428 | | | | (103 | ) | | 1999 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 267 | | | | 652 | | | | 0 | | | | 0 | | | | 267 | | | | 652 | | | | 919 | | | | (177 | ) | | 2000 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Tulsa, OK | | (b) | | | 767 | | | | 466 | | | | 0 | | | | 0 | | | | 767 | | | | 466 | | | | 1,233 | | | | (161 | ) | | 1976 | | 7/17/2013 | | 8 to 35 Years |
| Church’s Chicken | | Dallas, TX | | (b) | | | 249 | | | | 431 | | | | 0 | | | | 0 | | | | 249 | | | | 431 | | | | 680 | | | | (136 | ) | | 1985 | | 7/17/2013 | | 9 to 33 Years |
| Church’s Chicken | | Pleasanton, TX | | (b) | | | 230 | | | | 1,052 | | | | 0 | | | | 0 | | | | 230 | | | | 1,052 | | | | 1,282 | | | | (296 | ) | | 1985 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Tyler, TX | | (b) | | | 227 | | | | 527 | | | | 0 | | | | 0 | | | | 227 | | | | 527 | | | | 754 | | | | (154 | ) | | 1976 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Oklahoma City, OK | | (b) | | | 200 | | | | 428 | | | | 0 | | | | 0 | | | | 200 | | | | 428 | | | | 628 | | | | (184 | ) | | 1971 | | 7/17/2013 | | 9 to 25 Years |
| Church’s Chicken | | Laurel, MS | | (b) | | | 690 | | | | 290 | | | | 0 | | | | 0 | | | | 690 | | | | 290 | | | | 980 | | | | (161 | ) | | 1971 | | 7/17/2013 | | 11 to 24 Years |
| Church’s Chicken | | Atlanta, GA | | (b) | | | 336 | | | | 346 | | | | 0 | | | | 0 | | | | 336 | | | | 346 | | | | 682 | | | | (222 | ) | | 1981 | | 7/17/2013 | | 11 to 22 Years |
| Church’s Chicken | | Garland, TX | | (b) | | | 141 | | | | 455 | | | | 0 | | | | 0 | | | | 141 | | | | 455 | | | | 596 | | | | (180 | ) | | 1986 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | LaGrange, GA | | (b) | | | 555 | | | | 44 | | | | 0 | | | | 0 | | | | 555 | | | | 44 | | | | 599 | | | | (294 | ) | | 1978 | | 7/17/2013 | | 7 to 30 Years |
| Church’s Chicken | | McAllen, TX | | (b) | | | 747 | | | | 408 | | | | 0 | | | | 0 | | | | 747 | | | | 408 | | | | 1,155 | | | | (125 | ) | | 1992 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Decatur, GA | | (b) | | | 566 | | | | 49 | | | | 0 | | | | 0 | | | | 566 | | | | 49 | | | | 615 | | | | (106 | ) | | 1979 | | 7/17/2013 | | 3 to 11 Years |
| Church’s Chicken | | East Point, GA | | (b) | | | 429 | | | | 245 | | | | 0 | | | | 0 | | | | 429 | | | | 245 | | | | 674 | | | | (211 | ) | | 1977 | | 7/17/2013 | | 11 to 19 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 571 | | | | 930 | | | | 0 | | | | 0 | | | | 571 | | | | 930 | | | | 1,501 | | | | (304 | ) | | 2002 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Macon, GA | | (b) | | | 291 | | | | 628 | | | | 0 | | | | 0 | | | | 291 | | | | 628 | | | | 919 | | | | (185 | ) | | 1983 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Kingsville, TX | | (b) | | | 263 | | | | 461 | | | | 0 | | | | 0 | | | | 263 | | | | 461 | | | | 724 | | | | (145 | ) | | 1977 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Atlanta, GA | | (b) | | | 554 | | | | 258 | | | | 0 | | | | 0 | | | | 554 | | | | 258 | | | | 812 | | | | (182 | ) | | 1980 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Victoria, TX | | (b) | | | 367 | | | | 182 | | | | 0 | | | | 0 | | | | 367 | | | | 182 | | | | 549 | | | | (104 | ) | | 1984 | | 7/17/2013 | | 11 to 22 Years |
| Church’s Chicken | | Norfolk, VA | | (b) | | | 373 | | | | 517 | | | | 0 | | | | 0 | | | | 373 | | | | 517 | | | | 890 | | | | (284 | ) | | 1988 | | 7/17/2013 | | 7 to 20 Years |
| Church’s Chicken | | Dallas, TX | | (b) | | | 315 | | | | 209 | | | | 0 | | | | 0 | | | | 315 | | | | 209 | | | | 524 | | | | (107 | ) | | 1999 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Austin, TX | | (b) | | | 904 | | | | 477 | | | | 0 | | | | 0 | | | | 904 | | | | 477 | | | | 1,381 | | | | (148 | ) | | 1976 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Atlanta, GA | | (b) | | | 394 | | | | 268 | | | | 0 | | | | 0 | | | | 394 | | | | 268 | | | | 662 | | | | (228 | ) | | 1975 | | 7/17/2013 | | 11 to 16 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Phoenix, AZ | | (d) | | 415 |
| | 403 |
| | — |
| | — |
| | 415 |
| | 403 |
| | 818 |
| | (110 | ) | | 1975 | | 07/17/13 | | 8 to 27 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 599 |
| | 412 |
| | — |
| | — |
| | 599 |
| | 412 |
| | 1,011 |
| | (106 | ) | | 1980 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Phoenix, AZ | | (d) | | 400 |
| | 120 |
| | — |
| | — |
| | 400 |
| | 120 |
| | 520 |
| | (80 | ) | | 1977 | | 07/17/13 | | 11 to 13 Years |
| Church's Chicken | Oro Valley, AZ | | (d) | | 262 |
| | 193 |
| | — |
| | — |
| | 262 |
| | 193 |
| | 455 |
| | (97 | ) | | 1983 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Tucson, AZ | | (d) | | 191 |
| | 552 |
| | — |
| | — |
| | 191 |
| | 552 |
| | 743 |
| | (114 | ) | | 1981 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Tucson, AZ | | (d) | | 349 |
| | 479 |
| | — |
| | — |
| | 349 |
| | 479 |
| | 828 |
| | (114 | ) | | 1976 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Tucson, AZ | | (d) | | 221 |
| | 434 |
| | — |
| | — |
| | 221 |
| | 434 |
| | 655 |
| | (115 | ) | | 1980 | | 07/17/13 | | 11 to 27 Years |
| Church's Chicken | Americus, GA | | (d) | | 282 |
| | 406 |
| | — |
| | — |
| | 282 |
| | 406 |
| | 688 |
| | (156 | ) | | 1978 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Atlanta, GA | | (d) | | 336 |
| | 346 |
| | — |
| | — |
| | 336 |
| | 346 |
| | 682 |
| | (162 | ) | | 1981 | | 07/17/13 | | 11 to 22 Years |
| Church's Chicken | Atlanta, GA | | (d) | | 554 |
| | 258 |
| | — |
| | — |
| | 554 |
| | 258 |
| | 812 |
| | (133 | ) | | 1980 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Atlanta, GA | | (d) | | 683 |
| | 5 |
| | — |
| | — |
| | 683 |
| | 5 |
| | 688 |
| | (78 | ) | | 1975 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Atlanta, GA | | (d) | | 394 |
| | 268 |
| | — |
| | — |
| | 394 |
| | 268 |
| | 662 |
| | (167 | ) | | 1975 | | 07/17/13 | | 11 to 16 Years |
| Church's Chicken | Columbus, GA | | (d) | | 640 |
| | 403 |
| | — |
| | — |
| | 640 |
| | 403 |
| | 1,043 |
| | (160 | ) | | 1983 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Columbus, GA | | (d) | | 342 |
| | 49 |
| | — |
| | — |
| | 342 |
| | 49 |
| | 391 |
| | (85 | ) | | 1978 | | 07/17/13 | | 9 to 23 Years |
| Church's Chicken | Cordele, GA | | (d) | | 459 |
| | 181 |
| | — |
| | — |
| | 459 |
| | 181 |
| | 640 |
| | (83 | ) | | 1980 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Decatur, GA | | (d) | | 459 |
| | 133 |
| | — |
| | — |
| | 459 |
| | 133 |
| | 592 |
| | (86 | ) | | 1974 | | 07/17/13 | | 11 to 20 Years |
| Church's Chicken | Decatur, GA | | (d) | | 566 |
| | 49 |
| | — |
| | — |
| | 566 |
| | 49 |
| | 615 |
| | (106 | ) | | 1979 | | 07/17/13 | | 3 to 11 Years |
| Church's Chicken | Decatur, GA | | (d) | | 570 |
| | 30 |
| | — |
| | — |
| | 570 |
| | 30 |
| | 600 |
| | (75 | ) | | 1981 | | 07/17/13 | | 7 to 25 Years |
| Church's Chicken | East Point, GA | | (d) | | 429 |
| | 245 |
| | — |
| | — |
| | 429 |
| | 245 |
| | 674 |
| | (154 | ) | | 1977 | | 07/17/13 | | 11 to 19 Years |
| Church's Chicken | Fort Valley, GA | | (d) | | 353 |
| | 379 |
| | (87 | ) | | — |
| | 266 |
| | 379 |
| | 645 |
| | (150 | ) | | 1985 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Griffin, GA | | (d) | | 215 |
| | 492 |
| | — |
| | — |
| | 215 |
| | 492 |
| | 707 |
| | (155 | ) | | 1978 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | LaGrange, GA | | (d) | | 555 |
| | 44 |
| | — |
| | — |
| | 555 |
| | 44 |
| | 599 |
| | (215 | ) | | 1978 | | 07/17/13 | | 7 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Macon, GA | | (d) | | 291 |
| | 628 |
| | — |
| | — |
| | 291 |
| | 628 |
| | 919 |
| | (135 | ) | | 1983 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Macon, GA | | (d) | | 185 |
| | 553 |
| | — |
| | — |
| | 185 |
| | 553 |
| | 738 |
| | (141 | ) | | 1980 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Marietta, GA | | (d) | | 350 |
| | 173 |
| | — |
| | — |
| | 350 |
| | 173 |
| | 523 |
| | (105 | ) | | 1976 | | 07/17/13 | | 11 to 20 Years |
| Church's Chicken | Kansas City, MO | | (d) | | 312 |
| | 574 |
| | — |
| | — |
| | 312 |
| | 574 |
| | 886 |
| | (144 | ) | | 1996 | | 07/17/13 | | 10 to 30 Years |
| Church's Chicken | Kansas City, MO | | (d) | | 462 |
| | 673 |
| | — |
| | — |
| | 462 |
| | 673 |
| | 1,135 |
| | (151 | ) | | 1996 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Kansas City, MO | | (d) | | 348 |
| | 730 |
| | — |
| | — |
| | 348 |
| | 730 |
| | 1,078 |
| | (161 | ) | | 1996 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Kansas City, MO | | (d) | | 135 |
| | 616 |
| | — |
| | — |
| | 135 |
| | 616 |
| | 751 |
| | (168 | ) | | 1996 | | 07/17/13 | | 10 to 25 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church’s Chicken | | Donna, TX | | (b) | | | 1,091 | | | | 540 | | | | 0 | | | | 0 | | | | 1,091 | | | | 540 | | | | 1,631 | | | | (174 | ) | | 1984 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Montgomery, AL | | (b) | | | 313 | | | | 601 | | | | 0 | | | | 0 | | | | 313 | | | | 601 | | | | 914 | | | | (288 | ) | | 1999 | | 7/17/2013 | | 10 to 27 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 599 | | | | 412 | | | | 0 | | | | 0 | | | | 599 | | | | 412 | | | | 1,011 | | | | (146 | ) | | 1980 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 795 | | | | 556 | | | | 0 | | | | 0 | | | | 795 | | | | 556 | | | | 1,351 | | | | (157 | ) | | 1977 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 523 | | | | 97 | | | | 0 | | | | 0 | | | | 523 | | | | 97 | | | | 620 | | | | (100 | ) | | 1976 | | 7/17/2013 | | 9 to 16 Years |
| Church’s Chicken | | Elsa, TX | | (b) | | | 1,159 | | | | 141 | | | | 0 | | | | 0 | | | | 1,159 | | | | 141 | | | | 1,300 | | | | (90 | ) | | 1984 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Birmingham, AL | | (b) | | | 107 | | | | 508 | | | | 0 | | | | 0 | | | | 107 | | | | 508 | | | | 615 | | | | (238 | ) | | 1983 | | 7/17/2013 | | 7 to 19 Years |
| Church’s Chicken | | Marietta, GA | | (b) | | | 350 | | | | 173 | | | | 0 | | | | 0 | | | | 350 | | | | 173 | | | | 523 | | | | (144 | ) | | 1976 | | 7/17/2013 | | 11 to 20 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 264 | | | | 592 | | | | 0 | | | | 0 | | | | 264 | | | | 592 | | | | 856 | | | | (193 | ) | | 1971 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Copperas Cove, TX | | (b) | | | 186 | | | | 249 | | | | 0 | | | | 0 | | | �� | 186 | | | | 249 | | | | 435 | | | | (118 | ) | | 1973 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Irving, TX | | (b) | | | 463 | | | | 338 | | | | 0 | | | | 0 | | | | 463 | | | | 338 | | | | 801 | | | | (103 | ) | | 1967 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | New Braunfels, TX | | (b) | | | 302 | | | | 526 | | | | 0 | | | | 0 | | | | 302 | | | | 526 | | | | 828 | | | | (211 | ) | | 1973 | | 7/17/2013 | | 10 to 27 Years |
| Church’s Chicken | | Kirby, TX | | (b) | | | 224 | | | | 262 | | | | 0 | | | | 0 | | | | 224 | | | | 262 | | | | 486 | | | | (149 | ) | | 1985 | | 7/17/2013 | | 9 to 18 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 163 | | | | 295 | | | | 0 | | | | 0 | | | | 163 | | | | 295 | | | | 458 | | | | (141 | ) | | 1979 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Hobbs, NM | | (b) | | | 706 | | | | 534 | | | | 0 | | | | 0 | | | | 706 | | | | 534 | | | | 1,240 | | | | (197 | ) | | 1974 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 544 | | | | 521 | | | | 0 | | | | 0 | | | | 544 | | | | 521 | | | | 1,065 | | | | (168 | ) | | 1967 | | 7/17/2013 | | 11 to 33 Years |
| Church’s Chicken | | Little Rock, AR | | (b) | | | 332 | | | | 432 | | | | 0 | | | | 0 | | | | 332 | | | | 432 | | | | 764 | | | | (132 | ) | | 1971 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Greenville, TX | | (b) | | | 325 | | | | 441 | | | | 0 | | | | 0 | | | | 325 | | | | 441 | | | | 766 | | | | (133 | ) | | 1972 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Columbus, GA | | (b) | | | 342 | | | | 49 | | | | 0 | | | | 0 | | | | 342 | | | | 49 | | | | 391 | | | | (116 | ) | | 1978 | | 7/17/2013 | | 9 to 23 Years |
| Church’s Chicken | | Portsmouth, VA | | (b) | | | 574 | | | | 419 | | | | 0 | | | | 0 | | | | 574 | | | | 419 | | | | 993 | | | | (202 | ) | | 1988 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Jackson, MS | | (b) | | | 996 | | | | 610 | | | | 0 | | | | 0 | | | | 996 | | | | 610 | | | | 1,606 | | | | (211 | ) | | 1978 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 368 | | | | 267 | | | | 0 | | | | 0 | | | | 368 | | | | 267 | | | | 635 | | | | (122 | ) | | 1974 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Floresville, TX | | (b) | | | 109 | | | | 555 | | | | 0 | | | | 0 | | | | 109 | | | | 555 | | | | 664 | | | | (220 | ) | | 1985 | | 7/17/2013 | | 9 to 25 Years |
| Church’s Chicken | | Montgomery, AL | | (b) | | | 288 | | | | 623 | | | | 0 | | | | 0 | | | | 288 | | | | 623 | | | | 911 | | | | (182 | ) | | 1998 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Alamo, TX | | (b) | | | 1,745 | | | | 715 | | | | 0 | | | | 0 | | | | 1,745 | | | | 715 | | | | 2,460 | | | | (190 | ) | | 1984 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Mission, TX | | (b) | | | 577 | | | | 598 | | | | 0 | | | | 0 | | | | 577 | | | | 598 | | | | 1,175 | | | | (185 | ) | | 1981 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 312 | | | | 574 | | | | 0 | | | | 0 | | | | 312 | | | | 574 | | | | 886 | | | | (197 | ) | | 1996 | | 7/17/2013 | | 10 to 30 Years |
| Church’s Chicken | | Cleburne, TX | | (b) | | | 129 | | | | 482 | | | | 0 | | | | 0 | | | | 129 | | | | 482 | | | | 611 | | | | (199 | ) | | 1997 | | 7/17/2013 | | 9 to 25 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 430 | | | | 656 | | | | 0 | | | | 0 | | | | 430 | | | | 656 | | | | 1,086 | | | | (288 | ) | | 1985 | | 7/17/2013 | | 11 to 29 Years |
| Church’s Chicken | | Decatur, GA | | (b) | | | 570 | | | | 30 | | | | 0 | | | | 0 | | | | 570 | | | | 30 | | | | 600 | | | | (102 | ) | | 1981 | | 7/17/2013 | | 7 to 25 Years |
| Church’s Chicken | | Odessa, TX | | (b) | | | 670 | | | | 563 | | | | 0 | | | | 0 | | | | 670 | | | | 563 | | | | 1,233 | | | | (182 | ) | | 1972 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 212 | | | | 245 | | | | 0 | | | | 0 | | | | 212 | | | | 245 | | | | 457 | | | | (160 | ) | | 1971 | | 7/17/2013 | | 7 to 25 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 135 | | | | 616 | | | | 0 | | | | 0 | | | | 135 | | | | 616 | | | | 751 | | | | (230 | ) | | 1996 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 415 | | | | 403 | | | | 0 | | | | 0 | | | | 415 | | | | 403 | | | | 818 | | | | (150 | ) | | 1975 | | 7/17/2013 | | 8 to 27 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 310 | | | | 580 | | | | 0 | | | | 0 | | | | 310 | | | | 580 | | | | 890 | | | | (199 | ) | | 1996 | | 7/17/2013 | | 10 to 31 Years |
| Church’s Chicken | | Eagle Pass, TX | | (b) | | | 597 | | | | 385 | | | | 0 | | | | 0 | | | | 597 | | | | 385 | | | | 982 | | | | (141 | ) | | 1977 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Phenix City, AL | | (b) | | | 493 | | | | 497 | | | | 0 | | | | 0 | | | | 493 | | | | 497 | | | | 990 | | | | (135 | ) | | 1978 | | 7/17/2013 | | 8 to 35 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Kansas City, MO | | (d) | | 310 |
| | 580 |
| | — |
| | — |
| | 310 |
| | 580 |
| | 890 |
| | (145 | ) | | 1996 | | 07/17/13 | | 10 to 31 Years |
| Church's Chicken | Kansas City, MO | | (d) | | 189 |
| | 837 |
| | — |
| | — |
| | 189 |
| | 837 |
| | 1,026 |
| | (229 | ) | | 1996 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Fort Worth, TX | | (d) | | 157 |
| | 263 |
| | — |
| | — |
| | 157 |
| | 263 |
| | 420 |
| | (113 | ) | | 1965 | | 07/17/13 | | 11 to 20 Years |
| Church's Chicken | Gulfport, MS | | (d) | | 540 |
| | 429 |
| | — |
| | — |
| | 540 |
| | 429 |
| | 969 |
| | (89 | ) | | 1971 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Jackson, MS | | (d) | | 215 |
| | 476 |
| | — |
| | — |
| | 215 |
| | 476 |
| | 691 |
| | (140 | ) | | 1977 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Jackson, MS | | (d) | | 996 |
| | 610 |
| | — |
| | — |
| | 996 |
| | 610 |
| | 1,606 |
| | (154 | ) | | 1978 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Jackson, MS | | (d) | | 195 |
| | 582 |
| | — |
| | — |
| | 195 |
| | 582 |
| | 777 |
| | (141 | ) | | 2000 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Jackson, MS | | (d) | | 447 |
| | 555 |
| | — |
| | — |
| | 447 |
| | 555 |
| | 1,002 |
| | (151 | ) | | 1998 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Laurel, MS | | (d) | | 690 |
| | 290 |
| | — |
| | — |
| | 690 |
| | 290 |
| | 980 |
| | (117 | ) | | 1971 | | 07/17/13 | | 11 to 24 Years |
| Church's Chicken | Vicksburg, MS | | (d) | | 278 |
| | 333 |
| | — |
| | — |
| | 278 |
| | 333 |
| | 611 |
| | (121 | ) | | 1972 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Albuquerque, NM | | (d) | | 265 |
| | 575 |
| | — |
| | — |
| | 265 |
| | 575 |
| | 840 |
| | (191 | ) | | 1980 | | 07/17/13 | | 11 to 26 Years |
| Church's Chicken | Albuquerque, NM | | (d) | | 466 |
| | 591 |
| | — |
| | — |
| | 466 |
| | 591 |
| | 1,057 |
| | (148 | ) | | 1976 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Albuquerque, NM | | (d) | | 267 |
| | 439 |
| | — |
| | — |
| | 267 |
| | 439 |
| | 706 |
| | (165 | ) | | 1975 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Albuquerque, NM | | (d) | | 293 |
| | 300 |
| | — |
| | — |
| | 293 |
| | 300 |
| | 593 |
| | (140 | ) | | 1976 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Hobbs, NM | | (d) | | 706 |
| | 534 |
| | — |
| | — |
| | 706 |
| | 534 |
| | 1,240 |
| | (144 | ) | | 1974 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Roswell, NM | | (d) | | 343 |
| | 321 |
| | — |
| | — |
| | 343 |
| | 321 |
| | 664 |
| | (151 | ) | | 1974 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Altus, OK | | (d) | | 70 |
| | 413 |
| | — |
| | — |
| | 70 |
| | 413 |
| | 483 |
| | (119 | ) | | 1980 | | 07/17/13 | | 7 to 25 Years |
| Church's Chicken | Oklahoma City, OK | | (d) | | 223 |
| | 469 |
| | — |
| | — |
| | 223 |
| | 469 |
| | 692 |
| | (175 | ) | | 1998 | | 07/17/13 | | 8 to 22 Years |
| Church's Chicken | Midwest City, OK | | (d) | | 318 |
| | 623 |
| | — |
| | — |
| | 318 |
| | 623 |
| | 941 |
| | (138 | ) | | 1985 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Oklahoma City, OK | | (d) | | 200 |
| | 428 |
| | — |
| | — |
| | 200 |
| | 428 |
| | 628 |
| | (134 | ) | | 1971 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Tulsa, OK | | (d) | | 767 |
| | 466 |
| | — |
| | — |
| | 767 |
| | 466 |
| | 1,233 |
| | (118 | ) | | 1976 | | 07/17/13 | | 8 to 35 Years |
| Church's Chicken | Tulsa, OK | | (d) | | 315 |
| | 717 |
| | — |
| | — |
| | 315 |
| | 717 |
| | 1,032 |
| | (151 | ) | | 1976 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | The Village, OK | | (d) | | 211 |
| | 650 |
| | — |
| | — |
| | 211 |
| | 650 |
| | 861 |
| | (132 | ) | | 1978 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Memphis, TN | | (d) | | 128 |
| | 232 |
| | — |
| | — |
| | 128 |
| | 232 |
| | 360 |
| | (96 | ) | | 1971 | | 07/17/13 | | 8 to 20 Years |
| Church's Chicken | Memphis, TN | | (d) | | 156 |
| | 351 |
| | — |
| | — |
| | 156 |
| | 351 |
| | 507 |
| | (120 | ) | | 1971 | | 07/17/13 | | 7 to 25 Years |
| Church's Chicken | Memphis, TN | | (d) | | 288 |
| | 278 |
| | — |
| | — |
| | 288 |
| | 278 |
| | 566 |
| | (141 | ) | | 1976 | | 07/17/13 | | 6 to 20 Years |
| Church's Chicken | Memphis, TN | | (d) | | 163 |
| | 295 |
| | — |
| | — |
| | 163 |
| | 295 |
| | 458 |
| | (103 | ) | | 1979 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | Memphis, TN | | (d) | | 206 |
| | 471 |
| | — |
| | — |
| | 206 |
| | 471 |
| | 677 |
| | (142 | ) | | 1979 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | Memphis, TN | | (d) | | 212 |
| | 245 |
| | — |
| | — |
| | 212 |
| | 245 |
| | 457 |
| | (118 | ) | | 1971 | | 07/17/13 | | 7 to 25 Years |
| Church's Chicken | Memphis, TN | | (d) | | 180 |
| | 316 |
| | — |
| | — |
| | 180 |
| | 316 |
| | 496 |
| | (121 | ) | | 1971 | | 07/17/13 | | 7 to 20 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church’s Chicken | | Mercedes, TX | | (b) | | | 535 | | | | 575 | | | | 0 | | | | 0 | | | | 535 | | | | 575 | | | | 1,110 | | | | (177 | ) | | 1982 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Tucson, AZ | | (b) | | | 221 | | | | 434 | | | | 0 | | | | 0 | | | | 221 | | | | 434 | | | | 655 | | | | (157 | ) | | 1980 | | 7/17/2013 | | 11 to 27 Years |
| Church’s Chicken | | Dallas, TX | | (b) | | | 174 | | | | 450 | | | | 0 | | | | 0 | | | | 174 | | | | 450 | | | | 624 | | | | (180 | ) | | 1969 | | 7/17/2013 | | 10 to 26 Years |
| Church’s Chicken | | Raymondville, TX | | (b) | | | 660 | | | | 455 | | | | 0 | | | | 0 | | | | 660 | | | | 455 | | | | 1,115 | | | | (175 | ) | | 1984 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Temple, TX | | (b) | | | 705 | | | | 493 | | | | 0 | | | | 0 | | | | 705 | | | | 493 | | | | 1,198 | | | | (145 | ) | | 1983 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Pharr, TX | | (b) | | | 694 | | | | 441 | | | | 0 | | | | 0 | | | | 694 | | | | 441 | | | | 1,135 | | | | (196 | ) | | 1997 | | 7/17/2013 | | 10 to 26 Years |
| Church’s Chicken | | Midwest City, OK | | (b) | | | 318 | | | | 623 | | | | 0 | | | | 0 | | | | 318 | | | | 623 | | | | 941 | | | | (188 | ) | | 1985 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 283 | | | | 573 | | | | 0 | | | | 0 | | | | 283 | | | | 573 | | | | 856 | | | | (232 | ) | | 1971 | | 7/17/2013 | | 11 to 33 Years |
| Church’s Chicken | | Vicksburg, MS | | (b) | | | 278 | | | | 333 | | | | 0 | | | | 0 | | | | 278 | | | | 333 | | | | 611 | | | | (166 | ) | | 1972 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Lewisville, TX | | (b) | | | 913 | | | | 470 | | | | 0 | | | | 0 | | | | 913 | | | | 470 | | | | 1,383 | | | | (183 | ) | | 1976 | | 7/17/2013 | | 8 to 35 Years |
| Church’s Chicken | | Nogales, AZ | | (b) | | | 207 | | | | 448 | | | | 0 | | | | 0 | | | | 207 | | | | 448 | | | | 655 | | | | (186 | ) | | 1976 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Roma, TX | | (b) | | | 478 | | | | 855 | | | | 0 | | | | 0 | | | | 478 | | | | 855 | | | | 1,333 | | | | (268 | ) | | 1985 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Little Rock, AR | | (b) | | | 263 | | | | 492 | | | | 0 | | | | 0 | | | | 263 | | | | 492 | | | | 755 | | | | (154 | ) | | 1975 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Jackson, MS | | (b) | | | 215 | | | | 476 | | | | 0 | | | | 0 | | | | 215 | | | | 476 | | | | 691 | | | | (191 | ) | | 1977 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Montgomery, AL | | (b) | | | 455 | | | | 579 | | | | 0 | | | | 0 | | | | 455 | | | | 579 | | | | 1,034 | | | | (219 | ) | | 1972 | | 7/17/2013 | | 11 to 33 Years |
| Church’s Chicken | | Roswell, NM | | (b) | | | 343 | | | | 321 | | | | 0 | | | | 0 | | | | 343 | | | | 321 | | | | 664 | | | | (207 | ) | | 1974 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Haltom City, TX | | (b) | | | 571 | | | | 425 | | | | 0 | | | | 0 | | | | 571 | | | | 425 | | | | 996 | | | | (144 | ) | | 2007 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Tulsa, OK | | (b) | | | 315 | | | | 717 | | | | 0 | | | | 0 | | | | 315 | | | | 717 | | | | 1,032 | | | | (207 | ) | | 1976 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | San Benito, TX | | (b) | | | 1,641 | | | | 688 | | | | 0 | | | | 0 | | | | 1,641 | | | | 688 | | | | 2,329 | | | | (190 | ) | | 1977 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Americus, GA | | (b) | | | 282 | | | | 406 | | | | 0 | | | | 0 | | | | 282 | | | | 406 | | | | 688 | | | | (214 | ) | | 1978 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Altus, OK | | (b) | | | 70 | | | | 413 | | | | 0 | | | | 0 | | | | 70 | | | | 413 | | | | 483 | | | | (163 | ) | | 1980 | | 7/17/2013 | | 7 to 25 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 288 | | | | 278 | | | | 0 | | | | 0 | | | | 288 | | | | 278 | | | | 566 | | | | (186 | ) | | 1976 | | 7/17/2013 | | 6 to 20 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 397 | | | | 700 | | | | 0 | | | | 0 | | | | 397 | | | | 700 | | | | 1,097 | | | | (213 | ) | | 1984 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Lubbock, TX | | (b) | | | 325 | | | | 794 | | | | 0 | | | | 0 | | | | 325 | | | | 794 | | | | 1,119 | | | | (247 | ) | | 2004 | | 7/17/2013 | | 11 to 34 Years |
| Church’s Chicken | | Harlingen, TX | | (b) | | | 226 | | | | 519 | | | | 0 | | | | 0 | | | | 226 | | | | 519 | | | | 745 | | | | (193 | ) | | 1973 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Kansas City, MO | | (b) | | | 348 | | | | 730 | | | | 0 | | | | 0 | | | | 348 | | | | 730 | | | | 1,078 | | | | (220 | ) | | 1996 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Fort Worth, TX | | (b) | | | 157 | | | | 263 | | | | 0 | | | | 0 | | | | 157 | | | | 263 | | | | 420 | | | | (154 | ) | | 1965 | | 7/17/2013 | | 11 to 20 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 205 | | | | 1,042 | | | | (82 | ) | | | (1,042 | ) | | | 123 | | | | 0 | | | | 123 | | | | 0 | | | 1976 | | 7/17/2013 | | (g) |
| Church’s Chicken | | Fort Worth, TX | | (b) | | | 200 | | | | 643 | | | | 0 | | | | 0 | | | | 200 | | | | 643 | | | | 843 | | | | (222 | ) | | 1979 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 180 | | | | 316 | | | | 0 | | | | 0 | | | | 180 | | | | 316 | | | | 496 | | | | (165 | ) | | 1971 | | 7/17/2013 | | 7 to 20 Years |
| Church’s Chicken | | Birmingham, AL | | (b) | | | 192 | | | | 656 | | | | 0 | | | | 0 | | | | 192 | | | | 656 | | | | 848 | | | | (327 | ) | | 1981 | | 7/17/2013 | | 7 to 19 Years |
| Church’s Chicken | | Brownsville, TX | | (b) | | | 369 | | | | 679 | | | | 0 | | | | 0 | | | | 369 | | | | 679 | | | | 1,048 | | | | (210 | ) | | 1972 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Macon, GA | | (b) | | | 185 | | | | 553 | | | | 0 | | | | 0 | | | | 185 | | | | 553 | | | | 738 | | | | (193 | ) | | 1980 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Mesquite, TX | | (b) | | | 234 | | | | 459 | | | | 0 | | | | 0 | | | | 234 | | | | 459 | | | | 693 | | | | (193 | ) | | 2001 | | 7/17/2013 | | 11 to 28 Years |
| Church’s Chicken | | Tucson, AZ | | (b) | | | 349 | | | | 479 | | | | 0 | | | | 0 | | | | 349 | | | | 479 | | | | 828 | | | | (157 | ) | | 1976 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Phoenix, AZ | | (b) | | | 321 | | | | 276 | | | | 0 | | | | 0 | | | | 321 | | | | 276 | | | | 597 | | | | (160 | ) | | 1975 | | 7/17/2013 | | 10 to 20 Years |
| Church’s Chicken | | Decatur, GA | | (b) | | | 459 | | | | 133 | | | | 0 | | | | 0 | | | | 459 | | | | 133 | | | | 592 | | | | (118 | ) | | 1974 | | 7/17/2013 | | 11 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Memphis, TN | | (d) | | 264 |
| | 592 |
| | — |
| | — |
| | 264 |
| | 592 |
| | 856 |
| | (141 | ) | | 1971 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Memphis, TN | | (d) | | 426 |
| | 608 |
| | — |
| | — |
| | 426 |
| | 608 |
| | 1,034 |
| | (159 | ) | | 1971 | | 07/17/13 | | 11 to 32 Years |
| Church's Chicken | Abilene, TX | | (d) | | 198 |
| | 311 |
| | — |
| | — |
| | 198 |
| | 311 |
| | 509 |
| | (95 | ) | | 1975 | | 07/17/13 | | 10 to 26 Years |
| Church's Chicken | Alamo, TX | | (d) | | 1,745 |
| | 715 |
| | — |
| | — |
| | 1,745 |
| | 715 |
| | 2,460 |
| | (139 | ) | | 1984 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Austin, TX | | (d) | | 531 |
| | 794 |
| | — |
| | — |
| | 531 |
| | 794 |
| | 1,325 |
| | (169 | ) | | 1967 | | 07/17/13 | | 11 to 32 Years |
| Church's Chicken | Austin, TX | | (d) | | 904 |
| | 477 |
| | — |
| | — |
| | 904 |
| | 477 |
| | 1,381 |
| | (108 | ) | | 1976 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Austin, TX | | (d) | | 418 |
| | 872 |
| | — |
| | — |
| | 418 |
| | 872 |
| | 1,290 |
| | (172 | ) | | 1986 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Austin, TX | | (d) | | 689 |
| | 634 |
| | — |
| | — |
| | 689 |
| | 634 |
| | 1,323 |
| | (171 | ) | | 2003 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Balch Springs, TX | | (d) | | 329 |
| | 576 |
| | — |
| | — |
| | 329 |
| | 576 |
| | 905 |
| | (180 | ) | | 1986 | | 07/17/13 | | 11 to 31 Years |
| Church's Chicken | Beeville, TX | | (d) | | 120 |
| | 488 |
| | — |
| | — |
| | 120 |
| | 488 |
| | 608 |
| | (151 | ) | | 1972 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 795 |
| | 556 |
| | — |
| | — |
| | 795 |
| | 556 |
| | 1,351 |
| | (114 | ) | | 1977 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 667 |
| | 785 |
| | — |
| | — |
| | 667 |
| | 785 |
| | 1,452 |
| | (158 | ) | | 1985 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 369 |
| | 679 |
| | — |
| | — |
| | 369 |
| | 679 |
| | 1,048 |
| | (154 | ) | | 1972 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 267 |
| | 652 |
| | — |
| | — |
| | 267 |
| | 652 |
| | 919 |
| | (129 | ) | | 2000 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 430 |
| | 656 |
| | — |
| | — |
| | 430 |
| | 656 |
| | 1,086 |
| | (210 | ) | | 1985 | | 07/17/13 | | 11 to 29 Years |
| Church's Chicken | Brownsville, TX | | (d) | | 571 |
| | 930 |
| | — |
| | — |
| | 571 |
| | 930 |
| | 1,501 |
| | (222 | ) | | 2002 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Bryan, TX | | (d) | | 441 |
| | 766 |
| | — |
| | — |
| | 441 |
| | 766 |
| | 1,207 |
| | (142 | ) | | 1972 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Carrolton, TX | | (d) | | 361 |
| | 415 |
| | — |
| | — |
| | 361 |
| | 415 |
| | 776 |
| | (157 | ) | | 1997 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Cleburne, TX | | (d) | | 129 |
| | 482 |
| | — |
| | — |
| | 129 |
| | 482 |
| | 611 |
| | (145 | ) | | 1997 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Copperas Cove, TX | | (d) | | 186 |
| | 249 |
| | — |
| | — |
| | 186 |
| | 249 |
| | 435 |
| | (86 | ) | | 1973 | | 07/17/13 | | 11 to 23 Years |
| Church's Chicken | Dallas, TX | | (d) | | 88 |
| | 215 |
| | — |
| | — |
| | 88 |
| | 215 |
| | 303 |
| | (95 | ) | | 1980 | | 07/17/13 | | 9 to 19 Years |
| Church's Chicken | Dallas, TX | | (d) | | 249 |
| | 431 |
| | — |
| | — |
| | 249 |
| | 431 |
| | 680 |
| | (99 | ) | | 1985 | | 07/17/13 | | 9 to 33 Years |
| Church's Chicken | Dallas, TX | | (d) | | 164 |
| | 431 |
| | — |
| | — |
| | 164 |
| | 431 |
| | 595 |
| | (156 | ) | | 1968 | | 07/17/13 | | 10 to 18 Years |
| Church's Chicken | Dallas, TX | | (d) | | 174 |
| | 450 |
| | — |
| | — |
| | 174 |
| | 450 |
| | 624 |
| | (132 | ) | | 1969 | | 07/17/13 | | 10 to 26 Years |
| Church's Chicken | Dallas, TX | | (d) | | 315 |
| | 209 |
| | — |
| | — |
| | 315 |
| | 209 |
| | 524 |
| | (78 | ) | | 1999 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | Dallas, TX | | (d) | | 392 |
| | 501 |
| | — |
| | — |
| | 392 |
| | 501 |
| | 893 |
| | (133 | ) | | 1985 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Donna, TX | | (d) | | 1,091 |
| | 540 |
| | — |
| | — |
| | 1,091 |
| | 540 |
| | 1,631 |
| | (127 | ) | | 1984 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Eagle Pass, TX | | (d) | | 597 |
| | 385 |
| | — |
| | — |
| | 597 |
| | 385 |
| | 982 |
| | (103 | ) | | 1977 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Edinburg, TX | | (d) | | 624 |
| | 888 |
| | — |
| | — |
| | 624 |
| | 888 |
| | 1,512 |
| | (183 | ) | | 1985 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Elsa, TX | | (d) | | 1,159 |
| | 141 |
| | — |
| | — |
| | 1,159 |
| | 141 |
| | 1,300 |
| | (66 | ) | | 1984 | | 07/17/13 | | 11 to 35 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church’s Chicken | | Albuquerque, NM | | (b) | | | 466 | | | | 591 | | | | 0 | | | | 0 | | | | 466 | | | | 591 | | | | 1,057 | | | | (203 | ) | | 1976 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 128 | | | | 232 | | | | 0 | | | | 0 | | | | 128 | | | | 232 | | | | 360 | | | | (131 | ) | | 1971 | | 7/17/2013 | | 8 to 20 Years |
| Church’s Chicken | | Waco, TX | | (b) | | | 365 | | | | 542 | | | | 0 | | | | 0 | | | | 365 | | | | 542 | | | | 907 | | | | (145 | ) | | 1969 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Bryan, TX | | (b) | | | 441 | | | | 766 | | | | 0 | | | | 0 | | | | 441 | | | | 766 | | | | 1,207 | | | | (194 | ) | | 1972 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Grand Prairie, TX | | (b) | | | 335 | | | | 527 | | | | 0 | | | | 0 | | | | 335 | | | | 527 | | | | 862 | | | | (169 | ) | | 1980 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Talladega, AL | | (b) | | | 247 | | | | 245 | | | | 0 | | | | 0 | | | | 247 | | | | 245 | | | | 492 | | | | (197 | ) | | 1998 | | 7/17/2013 | | 11 to 21 Years |
| Church’s Chicken | | Laredo, TX | | (b) | | | 272 | | | | 713 | | | | 0 | | | | 0 | | | | 272 | | | | 713 | | | | 985 | | | | (185 | ) | | 1966 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Birmingham, AL | | (b) | | | 131 | | | | 526 | | | | 0 | | | | 0 | | | | 131 | | | | 526 | | | | 657 | | | | (256 | ) | | 1984 | | 7/17/2013 | | 7 to 19 Years |
| Church’s Chicken | | Jackson, MS | | (b) | | | 447 | | | | 555 | | | | 0 | | | | 0 | | | | 447 | | | | 555 | | | | 1,002 | | | | (207 | ) | | 1998 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | La Feria, TX | | (b) | | | 369 | | | | 941 | | | | 0 | | | | 0 | | | | 369 | | | | 941 | | | | 1,310 | | | | (257 | ) | | 2003 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Port Isabel, TX | | (b) | | | 348 | | | | 672 | | | | 0 | | | | 0 | | | | 348 | | | | 672 | | | | 1,020 | | | | (222 | ) | | 2004 | | 7/17/2013 | | 11 to 31 Years |
| Church’s Chicken | | Hidalgo, TX | | (b) | | | 352 | | | | 1,043 | | | | 0 | | | | 0 | | | | 352 | | | | 1,043 | | | | 1,395 | | | | (307 | ) | | 2001 | | 7/17/2013 | | 10 to 31 Years |
| Church’s Chicken | | Weslaco, TX | | (b) | | | 860 | | | | 513 | | | | 0 | | | | 0 | | | | 860 | | | | 513 | | | | 1,373 | | | | (157 | ) | | 1990 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Universal City, TX | | (b) | | | 408 | | | | 369 | | | | 0 | | | | 0 | | | | 408 | | | | 369 | | | | 777 | | | | (182 | ) | | 1989 | | 7/17/2013 | | 9 to 25 Years |
| Church’s Chicken | | Montgomery, AL | | (b) | | | 177 | | | | 516 | | | | 0 | | | | 0 | | | | 177 | | | | 516 | | | | 693 | | | | (285 | ) | | 1984 | | 7/17/2013 | | 9 to 19 Years |
| Church’s Chicken | | Atlanta, GA | | (b) | | | 683 | | | | 5 | | | | 0 | | | | 0 | | | | 683 | | | | 5 | | | | 688 | | | | (106 | ) | | 1975 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Albuquerque, NM | | (b) | | | 293 | | | | 300 | | | | 0 | | | | 0 | | | | 293 | | | | 300 | | | | 593 | | | | (192 | ) | | 1976 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Albuquerque, NM | | (b) | | | 267 | | | | 439 | | | | 0 | | | | 0 | | | | 267 | | | | 439 | | | | 706 | | | | (226 | ) | | 1975 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 206 | | | | 471 | | | | 0 | | | | 0 | | | | 206 | | | | 471 | | | | 677 | | | | (194 | ) | | 1979 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Fort Valley, GA | | (b) | | | 353 | | | | 379 | | | | (87 | ) | | | 0 | | | | 266 | | | | 379 | | | | 645 | | | | (208 | ) | | 1985 | | 7/17/2013 | | 11 to 23 Years |
| Church’s Chicken | | Little Rock, AR | | (b) | | | 99 | | | | 500 | | | | 0 | | | | 0 | | | | 99 | | | | 500 | | | | 599 | | | | (168 | ) | | 1970 | | 7/17/2013 | | 8 to 30 Years |
| Church’s Chicken | | Austin, TX | | (b) | | | 418 | | | | 872 | | | | 0 | | | | 0 | | | | 418 | | | | 872 | | | | 1,290 | | | | (236 | ) | | 1986 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Albuquerque, NM | | (b) | | | 265 | | | | 575 | | | | 0 | | | | 0 | | | | 265 | | | | 575 | | | | 840 | | | | (262 | ) | | 1980 | | 7/17/2013 | | 11 to 26 Years |
| Church’s Chicken | | Laredo, TX | | (b) | | | 727 | | | | 698 | | | | 0 | | | | 0 | | | | 727 | | | | 698 | | | | 1,425 | | | | (191 | ) | | 1968 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Griffin, GA | | (b) | | | 215 | | | | 492 | | | | 0 | | | | 0 | | | | 215 | | | | 492 | | | | 707 | | | | (212 | ) | | 1978 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 369 | | | | 226 | | | | 0 | | | | 0 | | | | 369 | | | | 226 | | | | 595 | | | | (103 | ) | | 1986 | | 7/17/2013 | | 10 to 25 Years |
| Church’s Chicken | | Odessa, TX | | (b) | | | 597 | | | | 443 | | | | 0 | | | | 0 | | | | 597 | | | | 443 | | | | 1,040 | | | | (155 | ) | | 1979 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Memphis, TN | | (b) | | | 426 | | | | 608 | | | | 0 | | | | 0 | | | | 426 | | | | 608 | | | | 1,034 | | | | (217 | ) | | 1971 | | 7/17/2013 | | 11 to 32 Years |
| Church’s Chicken | | San Antonio, TX | | (b) | | | 395 | | | | 414 | | | | 0 | | | | 0 | | | | 395 | | | | 414 | | | | 809 | | | | (186 | ) | | 1984 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Harlingen, TX | | (b) | | | 923 | | | | 753 | | | | 0 | | | | 0 | | | | 923 | | | | 753 | | | | 1,676 | | | | (202 | ) | | 1985 | | 7/17/2013 | | 10 to 35 Years |
| Church’s Chicken | | Weslaco, TX | | (b) | | | 291 | | | | 786 | | | | 0 | | | | 0 | | | | 291 | | | | 786 | | | | 1,077 | | | | (289 | ) | | 1970 | | 7/17/2013 | | 11 to 25 Years |
| Church’s Chicken | | Killeen, TX | | (b) | | | 289 | | | | 513 | | | | 0 | | | | 0 | | | | 289 | | | | 513 | | | | 802 | | | | (157 | ) | | 1974 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | The Village, OK | | (b) | | | 211 | | | | 650 | | | | 0 | | | | 0 | | | | 211 | | | | 650 | | | | 861 | | | | (181 | ) | | 1978 | | 7/17/2013 | | 9 to 35 Years |
| Church’s Chicken | | Gulfport, MS | | (b) | | | 540 | | | | 429 | | | | 0 | | | | 0 | | | | 540 | | | | 429 | | | | 969 | | | | (122 | ) | | 1971 | | 7/17/2013 | | 11 to 35 Years |
| Church’s Chicken | | Dallas, TX | | (b) | | | 392 | | | | 501 | | | | 0 | | | | 0 | | | | 392 | | | | 501 | | | | 893 | | | | (182 | ) | | 1985 | | 7/17/2013 | | 11 to 30 Years |
| Church’s Chicken | | Greensboro, AL | | (b) | | | 100 | | | | 663 | | | | 0 | | | | 0 | | | | 100 | | | | 663 | | | | 763 | | | | (202 | ) | | 1986 | | 7/17/2013 | | 7 to 35 Years |
| Church’s Chicken | | Beeville, TX | | (b) | | | 120 | | | | 488 | | | | 0 | | | | 0 | | | | 120 | | | | 488 | | | | 608 | | | | (206 | ) | | 1972 | | 7/17/2013 | | 9 to 25 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Floresville, TX | | (d) | | 109 |
| | 555 |
| | — |
| | — |
| | 109 |
| | 555 |
| | 664 |
| | (161 | ) | | 1985 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Fort Worth, TX | | (d) | | 164 |
| | 573 |
| | — |
| | — |
| | 164 |
| | 573 |
| | 737 |
| | (150 | ) | | 1965 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Fort Worth, TX | | (d) | | 200 |
| | 643 |
| | — |
| | — |
| | 200 |
| | 643 |
| | 843 |
| | (162 | ) | | 1979 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Fort Worth, TX | | (d) | | 356 |
| | 572 |
| | — |
| | — |
| | 356 |
| | 572 |
| | 928 |
| | (136 | ) | | 1970 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Garland, TX | | (d) | | 141 |
| | 455 |
| | — |
| | — |
| | 141 |
| | 455 |
| | 596 |
| | (131 | ) | | 1986 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | Grand Prairie, TX | | (d) | | 335 |
| | 527 |
| | — |
| | — |
| | 335 |
| | 527 |
| | 862 |
| | (123 | ) | | 1980 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Grand Prairie, TX | | (d) | | 147 |
| | 535 |
| | — |
| | — |
| | 147 |
| | 535 |
| | 682 |
| | (136 | ) | | 1985 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Greenville, TX | | (d) | | 325 |
| | 441 |
| | — |
| | — |
| | 325 |
| | 441 |
| | 766 |
| | (97 | ) | | 1972 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Haltom City, TX | | (d) | | 571 |
| | 425 |
| | — |
| | — |
| | 571 |
| | 425 |
| | 996 |
| | (105 | ) | | 2007 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Harlingen, TX | | (d) | | 923 |
| | 753 |
| | — |
| | — |
| | 923 |
| | 753 |
| | 1,676 |
| | (148 | ) | | 1985 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Harlingen, TX | | (d) | | 226 |
| | 519 |
| | — |
| | — |
| | 226 |
| | 519 |
| | 745 |
| | (141 | ) | | 1973 | | 07/17/13 | | 11 to 30 Years |
| Church's Chicken | Hidalgo, TX | | (d) | | 352 |
| | 1,043 |
| | — |
| | — |
| | 352 |
| | 1,043 |
| | 1,395 |
| | (224 | ) | | 2001 | | 07/17/13 | | 10 to 31 Years |
| Church's Chicken | Irving, TX | | (d) | | 463 |
| | 338 |
| | — |
| | — |
| | 463 |
| | 338 |
| | 801 |
| | (75 | ) | | 1967 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Killeen, TX | | (d) | | 289 |
| | 513 |
| | — |
| | — |
| | 289 |
| | 513 |
| | 802 |
| | (114 | ) | | 1974 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Kingsville, TX | | (d) | | 263 |
| | 461 |
| | — |
| | — |
| | 263 |
| | 461 |
| | 724 |
| | (106 | ) | | 1977 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Kirby, TX | | (d) | | 224 |
| | 262 |
| | — |
| | — |
| | 224 |
| | 262 |
| | 486 |
| | (109 | ) | | 1985 | | 07/17/13 | | 9 to 18 Years |
| Church's Chicken | La Feria, TX | | (d) | | 369 |
| | 941 |
| | — |
| | — |
| | 369 |
| | 941 |
| | 1,310 |
| | (188 | ) | | 2003 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Laredo, TX | | (d) | | 272 |
| | 713 |
| | — |
| | — |
| | 272 |
| | 713 |
| | 985 |
| | (135 | ) | | 1966 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Laredo, TX | | (d) | | 727 |
| | 698 |
| | — |
| | — |
| | 727 |
| | 698 |
| | 1,425 |
| | (140 | ) | | 1968 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Lewisville, TX | | (d) | | 913 |
| | 470 |
| | — |
| | — |
| | 913 |
| | 470 |
| | 1,383 |
| | (134 | ) | | 1976 | | 07/17/13 | | 8 to 35 Years |
| Church's Chicken | Lubbock, TX | | (d) | | 325 |
| | 794 |
| | — |
| | — |
| | 325 |
| | 794 |
| | 1,119 |
| | (181 | ) | | 2004 | | 07/17/13 | | 11 to 34 Years |
| Church's Chicken | McAllen, TX | | (d) | | 747 |
| | 408 |
| | — |
| | — |
| | 747 |
| | 408 |
| | 1,155 |
| | (91 | ) | | 1992 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | McAllen, TX | | (d) | | 601 |
| | 539 |
| | — |
| | — |
| | 601 |
| | 539 |
| | 1,140 |
| | (126 | ) | | 1985 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Mercedes, TX | | (d) | | 535 |
| | 575 |
| | — |
| | — |
| | 535 |
| | 575 |
| | 1,110 |
| | (129 | ) | | 1982 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Mesquite, TX | | (d) | | 234 |
| | 459 |
| | — |
| | — |
| | 234 |
| | 459 |
| | 693 |
| | (141 | ) | | 2001 | | 07/17/13 | | 11 to 28 Years |
| Church's Chicken | Midland, TX | | (d) | | 195 |
| | 432 |
| | — |
| | — |
| | 195 |
| | 432 |
| | 627 |
| | (95 | ) | | 1972 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Mission, TX | | (d) | | 577 |
| | 598 |
| | — |
| | — |
| | 577 |
| | 598 |
| | 1,175 |
| | (135 | ) | | 1981 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | New Braunfels, TX | | (d) | | 302 |
| | 526 |
| | — |
| | — |
| | 302 |
| | 526 |
| | 828 |
| | (154 | ) | | 1973 | | 07/17/13 | | 10 to 27 Years |
| Church's Chicken | Odessa, TX | | (d) | | 597 |
| | 443 |
| | — |
| | — |
| | 597 |
| | 443 |
| | 1,040 |
| | (113 | ) | | 1979 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Odessa, TX | | (d) | | 670 |
| | 563 |
| | — |
| | — |
| | 670 |
| | 563 |
| | 1,233 |
| | (133 | ) | | 1972 | | 07/17/13 | | 10 to 35 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cinemark | | Tucson, AZ | | (b) | | | 4,023 | | | | 10,346 | | | | 0 | | | | 52 | | | | 4,023 | | | | 10,398 | | | | 14,421 | | | | (1,270 | ) | | 2016 | | 2/21/2017 | | 15 to 50 Years |
| Circle K | | Akron, OH | | (b) | | | 424 | | | | 1,139 | | | | 0 | | | | 0 | | | | 424 | | | | 1,139 | | | | 1,563 | | | | (408 | ) | | 1995 | | 7/17/2013 | | 13 to 30 Years |
| Circle K | | Cuyahoga Falls, OH | | (b) | | | 657 | | | | 1,018 | | | | 0 | | | | 0 | | | | 657 | | | | 1,018 | | | | 1,675 | | | | (449 | ) | | 1995 | | 7/17/2013 | | 13 to 30 Years |
| Circle K | | Cleveland, OH | | (b) | | | 804 | | | | 1,513 | | | | 0 | | | | 0 | | | | 804 | | | | 1,513 | | | | 2,317 | | | | (514 | ) | | 2002 | | 7/17/2013 | | 13 to 35 Years |
| Circle K | | Akron, OH | | (b) | | | 587 | | | | 1,073 | | | | 0 | | | | 0 | | | | 587 | | | | 1,073 | | | | 1,660 | | | | (428 | ) | | 1998 | | 7/17/2013 | | 13 to 32 Years |
| Circle K | | Augusta, GA | | (b) | | | 400 | | | | 1,540 | | | | 0 | | | | 0 | | | | 400 | | | | 1,540 | | | | 1,940 | | | | (472 | ) | | 1981 | | 7/17/2013 | | 13 to 30 Years |
| Circle K | | Auburn, AL | | (b) | | | 757 | | | | 1,199 | | | | 0 | | | | 0 | | | | 757 | | | | 1,199 | | | | 1,956 | | | | (527 | ) | | 1990 | | 7/17/2013 | | 10 to 25 Years |
| Circle K | | El Paso, TX | | (b) | | | 1,143 | | | | 1,029 | | | | 0 | | | | 0 | | | | 1,143 | | | | 1,029 | | | | 2,172 | | | | (674 | ) | | 2000 | | 7/17/2013 | | 4 to 27 Years |
| Circle K | | Fort Mill, SC | | (b) | | | 1,589 | | | | 1,356 | | | | 0 | | | | 0 | | | | 1,589 | | | | 1,356 | | | | 2,945 | | | | (462 | ) | | 1999 | | 7/17/2013 | | 10 to 33 Years |
| Circle K | | Mount Pleasant, SC | | (b) | | | 1,328 | | | | 1,073 | | | | 0 | | | | 0 | | | | 1,328 | | | | 1,073 | | | | 2,401 | | | | (369 | ) | | 1978 | | 7/17/2013 | | 7 to 30 Years |
| Circle K | | Goose Creek, SC | | (b) | | | 682 | | | | 1,571 | | | | 0 | | | | 0 | | | | 682 | | | | 1,571 | | | | 2,253 | | | | (714 | ) | | 1983 | | 7/17/2013 | | 7 to 20 Years |
| Circle K | | Akron, OH | | (b) | | | 500 | | | | 2,058 | | | | 0 | | | | 0 | | | | 500 | | | | 2,058 | | | | 2,558 | | | | (603 | ) | | 1999 | | 7/17/2013 | | 15 to 33 Years |
| Circle K | | Akron, OH | | (b) | | | 337 | | | | 1,149 | | | | 0 | | | | 0 | | | | 337 | | | | 1,149 | | | | 1,486 | | | | (347 | ) | | 2001 | | 7/17/2013 | | 15 to 35 Years |
| Circle K | | Parma, OH | | (b) | | | 437 | | | | 1,166 | | | | 0 | | | | 0 | | | | 437 | | | | 1,166 | | | | 1,603 | | | | (346 | ) | | 2002 | | 7/17/2013 | | 15 to 35 Years |
| Circle K | | Twinsburg, OH | | (b) | | | 556 | | | | 1,317 | | | | 0 | | | | 0 | | | | 556 | | | | 1,317 | | | | 1,873 | | | | (415 | ) | | 2005 | | 7/17/2013 | | 15 to 37 Years |
| Circle K | | Savannah, GA | | (b) | | | 1,001 | | | | 847 | | | | 0 | | | | 0 | | | | 1,001 | | | | 847 | | | | 1,848 | | | | (445 | ) | | 1997 | | 7/17/2013 | | 8 to 37 Years |
| Circle K | | Phenix City, AL | | (b) | | | 554 | | | | 1,392 | | | | 0 | | | | 0 | | | | 554 | | | | 1,392 | | | | 1,946 | | | | (496 | ) | | 1999 | | 7/17/2013 | | 13 to 33 Years |
| Circle K | | Macon, GA | | (b) | | | 470 | | | | 1,226 | | | | 0 | | | | 0 | | | | 470 | | | | 1,226 | | | | 1,696 | | | | (529 | ) | | 1974 | | 7/17/2013 | | 7 to 35 Years |
| Circle K | | Lanett, AL | | (b) | | | 299 | | | | 844 | | | | 0 | | | | 0 | | | | 299 | | | | 844 | | | | 1,143 | | | | (341 | ) | | 1974 | | 7/17/2013 | | 10 to 25 Years |
| Circle K | | Monroe, LA | | (b) | | | 517 | | | | 1,455 | | | | 0 | | | | 0 | | | | 517 | | | | 1,455 | | | | 1,972 | | | | (645 | ) | | 1986 | | 7/17/2013 | | 6 to 28 Years |
| Circle K | | Akron, OH | | (b) | | | 595 | | | | 1,031 | | | | 0 | | | | 0 | | | | 595 | | | | 1,031 | | | | 1,626 | | | | (409 | ) | | 1995 | | 7/17/2013 | | 14 to 30 Years |
| Circle K | | Akron, OH | | (b) | | | 554 | | | | 824 | | | | 0 | | | | 0 | | | | 554 | | | | 824 | | | | 1,378 | | | | (295 | ) | | 1969 | | 7/17/2013 | | 14 to 38 Years |
| Circle K | | Akron, OH | | (b) | | | 517 | | | | 1,122 | | | | 0 | | | | 0 | | | | 517 | | | | 1,122 | | | | 1,639 | | | | (432 | ) | | 1994 | | 7/17/2013 | | 13 to 29 Years |
| Circle K | | Barberton, OH | | (b) | | | 255 | | | | 1,244 | | | | 0 | | | | 0 | | | | 255 | | | | 1,244 | | | | 1,499 | | | | (445 | ) | | 1991 | | 7/17/2013 | | 12 to 26 Years |
| Circle K | | Charlotte, NC | | (b) | | | 1,442 | | | | 789 | | | | 0 | | | | 0 | | | | 1,442 | | | | 789 | | | | 2,231 | | | | (442 | ) | | 1997 | | 7/17/2013 | | 8 to 35 Years |
| Circle K | | Savannah, GA | | (b) | | | 831 | | | | 869 | | | | 0 | | | | 0 | | | | 831 | | | | 869 | | | | 1,700 | | | | (368 | ) | | 1990 | | 7/17/2013 | | 14 to 30 Years |
| Circle K | | Columbus, GA | | (b) | | | 574 | | | | 1,039 | | | | 0 | | | | 0 | | | | 574 | | | | 1,039 | | | | 1,613 | | | | (354 | ) | | 1984 | | 7/17/2013 | | 13 to 32 Years |
| Circle K | | Opelika, AL | | (b) | | | 960 | | | | 1,716 | | | | 0 | | | | 0 | | | | 960 | | | | 1,716 | | | | 2,676 | | | | (787 | ) | | 1988 | | 7/17/2013 | | 10 to 25 Years |
| Circle K | | Baton Rouge, LA | | (b) | | | 260 | | | | 859 | | | | 0 | | | | 0 | | | | 260 | | | | 859 | | | | 1,119 | | | | (346 | ) | | 1976 | | 7/17/2013 | | 7 to 25 Years |
| Circle K | | West Monroe, LA | | (b) | | | 686 | | | | 981 | | | | 0 | | | | 0 | | | | 686 | | | | 981 | | | | 1,667 | | | | (723 | ) | | 1983 | | 7/17/2013 | | 5 to 25 Years |
| Circle K | | Copley, OH | | (b) | | | 379 | | | | 999 | | | | 0 | | | | 0 | | | | 379 | | | | 999 | | | | 1,378 | | | | (396 | ) | | 1993 | | 7/17/2013 | | 12 to 28 Years |
| Circle K | | Akron, OH | | (b) | | | 283 | | | | 1,160 | | | | 0 | | | | 0 | | | | 283 | | | | 1,160 | | | | 1,443 | | | | (365 | ) | | 1997 | | 7/17/2013 | | 14 to 32 Years |
| Circle K | | Akron, OH | | (b) | | | 434 | | | | 1,198 | | | | 0 | | | | 0 | | | | 434 | | | | 1,198 | | | | 1,632 | | | | (446 | ) | | 1994 | | 7/17/2013 | | 14 to 29 Years |
| Circle K | | Huntersville, NC | | (b) | | | 1,539 | | | | 924 | | | | 0 | | | | 0 | | | | 1,539 | | | | 924 | | | | 2,463 | | | | (578 | ) | | 1996 | | 7/17/2013 | | 8 to 35 Years |
| Circle K | | Springdale, SC | | (b) | | | 794 | | | | 767 | | | | 0 | | | | 0 | | | | 794 | | | | 767 | | | | 1,561 | | | | (291 | ) | | 1999 | | 7/17/2013 | | 13 to 33 Years |
| Circle K | | Charleston, SC | | (b) | | | 1,547 | | | | 1,242 | | | | 0 | | | | 0 | | | | 1,547 | | | | 1,242 | | | | 2,789 | | | | (677 | ) | | 1987 | | 7/17/2013 | | 7 to 20 Years |
| Circle K | | Port Wentworth, GA | | (b) | | | 1,627 | | | | 1,131 | | | | 0 | | | | 0 | | | | 1,627 | | | | 1,131 | | | | 2,758 | | | | (791 | ) | | 1991 | | 7/17/2013 | | 4 to 35 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Pharr, TX | | (d) | | 694 |
| | 441 |
| | — |
| | — |
| | 694 |
| | 441 |
| | 1,135 |
| | (143 | ) | | 1997 | | 07/17/13 | | 10 to 26 Years |
| Church's Chicken | Pleasanton, TX | | (d) | | 230 |
| | 1,052 |
| | — |
| | — |
| | 230 |
| | 1,052 |
| | 1,282 |
| | (216 | ) | | 1985 | | 07/17/13 | | 11 to 35 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Church's Chicken | Port Isabel, TX | | (d) | | 348 |
| | 672 |
| | — |
| | — |
| | 348 |
| | 672 |
| | 1,020 |
| | (162 | ) | | 2004 | | 07/17/13 | | 11 to 31 Years |
| Church's Chicken | Port Lavaca, TX | | (d) | | 339 |
| | 594 |
| | — |
| | — |
| | 339 |
| | 594 |
| | 933 |
| | (154 | ) | | 1985 | | 07/17/13 | | 11 to 28 Years |
| Church's Chicken | Raymondville, TX | | (d) | | 660 |
| | 455 |
| | — |
| | — |
| | 660 |
| | 455 |
| | 1,115 |
| | (128 | ) | | 1984 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Richland Hills, TX | | (d) | | 229 |
| | 199 |
| | — |
| | — |
| | 229 |
| | 199 |
| | 428 |
| | (75 | ) | | 1999 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | Rio Grand City, TX | | (d) | | 1,746 |
| | 554 |
| | — |
| | — |
| | 1,746 |
| | 554 |
| | 2,300 |
| | (125 | ) | | 1984 | | 07/17/13 | | 12 to 35 Years |
| Church's Chicken | Roma, TX | | (d) | | 478 |
| | 855 |
| | — |
| | — |
| | 478 |
| | 855 |
| | 1,333 |
| | (195 | ) | | 1985 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 205 |
| | 1,042 |
| | — |
| | — |
| | 205 |
| | 1,042 |
| | 1,247 |
| | (325 | ) | | 1976 | | 07/17/13 | | 10 to 20 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 685 |
| | 257 |
| | — |
| | — |
| | 685 |
| | 257 |
| | 942 |
| | (70 | ) | | 1976 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 592 |
| | 336 |
| | — |
| | — |
| | 592 |
| | 336 |
| | 928 |
| | (88 | ) | | 1968 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 79 |
| | 347 |
| | — |
| | — |
| | 79 |
| | 347 |
| | 426 |
| | (75 | ) | | 1977 | | 07/17/13 | | 9 to 33 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 395 |
| | 414 |
| | — |
| | — |
| | 395 |
| | 414 |
| | 809 |
| | (136 | ) | | 1984 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 544 |
| | 521 |
| | — |
| | — |
| | 544 |
| | 521 |
| | 1,065 |
| | (123 | ) | | 1967 | | 07/17/13 | | 11 to 33 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 375 |
| | 282 |
| | — |
| | — |
| | 375 |
| | 282 |
| | 657 |
| | (114 | ) | | 1965 | | 07/17/13 | | 9 to 21 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 283 |
| | 573 |
| | — |
| | — |
| | 283 |
| | 573 |
| | 856 |
| | (170 | ) | | 1971 | | 07/17/13 | | 11 to 33 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 369 |
| | 226 |
| | — |
| | — |
| | 369 |
| | 226 |
| | 595 |
| | (75 | ) | | 1986 | | 07/17/13 | | 10 to 25 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 397 |
| | 700 |
| | — |
| | — |
| | 397 |
| | 700 |
| | 1,097 |
| | (155 | ) | | 1984 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | San Antonio, TX | | (d) | | 279 |
| | 261 |
| | — |
| | — |
| | 279 |
| | 261 |
| | 540 |
| | (86 | ) | | 1976 | | 07/17/13 | | 11 to 32 Years |
| Church's Chicken | San Benito, TX | | (d) | | 1,641 |
| | 688 |
| | — |
| | — |
| | 1,641 |
| | 688 |
| | 2,329 |
| | (139 | ) | | 1977 | | 07/17/13 | | 9 to 35 Years |
| Church's Chicken | Temple, TX | | (d) | | 705 |
| | 493 |
| | — |
| | — |
| | 705 |
| | 493 |
| | 1,198 |
| | (106 | ) | | 1983 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Tyler, TX | | (d) | | 227 |
| | 527 |
| | — |
| | — |
| | 227 |
| | 527 |
| | 754 |
| | (113 | ) | | 1976 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Universal City, TX | | (d) | | 408 |
| | 369 |
| | — |
| | — |
| | 408 |
| | 369 |
| | 777 |
| | (133 | ) | | 1989 | | 07/17/13 | | 9 to 25 Years |
| Church's Chicken | Victoria, TX | | (d) | | 129 |
| | 490 |
| | — |
| | — |
| | 129 |
| | 490 |
| | 619 |
| | (138 | ) | | 1985 | | 07/17/13 | | 11 to 28 Years |
| Church's Chicken | Victoria, TX | | (d) | | 367 |
| | 182 |
| | — |
| | — |
| | 367 |
| | 182 |
| | 549 |
| | (76 | ) | | 1984 | | 07/17/13 | | 11 to 22 Years |
| Church's Chicken | Waco, TX | | (d) | | 365 |
| | 542 |
| | — |
| | — |
| | 365 |
| | 542 |
| | 907 |
| | (106 | ) | | 1969 | | 07/17/13 | | 10 to 35 Years |
| Church's Chicken | Weslaco, TX | | (d) | | 860 |
| | 513 |
| | — |
| | — |
| | 860 |
| | 513 |
| | 1,373 |
| | (114 | ) | | 1990 | | 07/17/13 | | 11 to 35 Years |
| Church's Chicken | Weslaco, TX | | (d) | | 291 |
| | 786 |
| | — |
| | — |
| | 291 |
| | 786 |
| | 1,077 |
| | (211 | ) | | 1970 | | 07/17/13 | | 11 to 25 Years |
| Church's Chicken | Norfolk, VA | | (d) | | 373 |
| | 517 |
| | — |
| | — |
| | 373 |
| | 517 |
| | 890 |
| | (207 | ) | | 1988 | | 07/17/13 | | 7 to 20 Years |
| Church's Chicken | Portsmouth, VA | | (d) | | 574 |
| | 419 |
| | — |
| | — |
| | 574 |
| | 419 |
| | 993 |
| | (148 | ) | | 1988 | | 07/17/13 | | 10 to 25 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Circle K | | Columbus, GA | | (b) | | | 867 | | | | 2,299 | | | | 0 | | | | 0 | | | | 867 | | | | 2,299 | | | | 3,166 | | | | (741 | ) | | 1978 | | 7/17/2013 | | 13 to 30 Years |
| Circle K | | Baton Rouge, LA | | (b) | | | 330 | | | | 997 | | | | 0 | | | | 0 | | | | 330 | | | | 997 | | | | 1,327 | | | | (346 | ) | | 1970 | | 7/17/2013 | | 8 to 30 Years |
| Circle K | | Cuyahoga Falls, OH | | (b) | | | 342 | | | | 806 | | | | 0 | | | | 0 | | | | 342 | | | | 806 | | | | 1,148 | | | | (334 | ) | | 1972 | | 7/17/2013 | | 12 to 26 Years |
| Circle K | | Akron, OH | | (b) | | | 343 | | | | 1,193 | | | | 0 | | | | 0 | | | | 343 | | | | 1,193 | | | | 1,536 | | | | (397 | ) | | 1991 | | 7/17/2013 | | 15 to 31 Years |
| Circle K | | Akron, OH | | (b) | | | 513 | | | | 1,251 | | | | 0 | | | | 0 | | | | 513 | | | | 1,251 | | | | 1,764 | | | | (432 | ) | | 1996 | | 7/17/2013 | | 15 to 31 Years |
| Circle K | | Bedford, OH | | (b) | | | 750 | | | | 680 | | | | 0 | | | | 0 | | | | 750 | | | | 680 | | | | 1,430 | | | | (321 | ) | | 2000 | | 7/17/2013 | | 15 to 33 Years |
| Circle K | | El Paso, TX | | (b) | | | 987 | | | | 558 | | | | 0 | | | | 0 | | | | 987 | | | | 558 | | | | 1,545 | | | | (290 | ) | | 1999 | | 7/17/2013 | | 3 to 26 Years |
| Circle K | | Valley, AL | | (b) | | | 754 | | | | 804 | | | | 0 | | | | 0 | | | | 754 | | | | 804 | | | | 1,558 | | | | (359 | ) | | 1974 | | 7/17/2013 | | 9 to 25 Years |
| Circle K | | Midland, GA | | (b) | | | 637 | | | | 2,136 | | | | 0 | | | | 0 | | | | 637 | | | | 2,136 | | | | 2,773 | | | | (576 | ) | | 1995 | | 7/17/2013 | | 9 to 35 Years |
| Circle K | | Columbus, GA | | (b) | | | 1,465 | | | | 2,088 | | | | 0 | | | | 0 | | | | 1,465 | | | | 2,088 | | | | 3,553 | | | | (729 | ) | | 1995 | | 7/17/2013 | | 11 to 34 Years |
| Circle K | | Baton Rouge, LA | | (b) | | | 481 | | | | 913 | | | | 0 | | | | 0 | | | | 481 | | | | 913 | | | | 1,394 | | | | (374 | ) | | 1977 | | 7/17/2013 | | 8 to 30 Years |
| Circle K | | Akron, OH | | (b) | | | 321 | | | | 1,179 | | | | 0 | | | | 0 | | | | 321 | | | | 1,179 | | | | 1,500 | | | | (401 | ) | | 1994 | | 7/17/2013 | | 13 to 29 Years |
| Circle K | | Barberton, OH | | (b) | | | 884 | | | | 1,885 | | | | 0 | | | | 0 | | | | 884 | | | | 1,885 | | | | 2,769 | | | | (653 | ) | | 1981 | | 7/17/2013 | | 13 to 34 Years |
| Circle K | | Norton, OH | | (b) | | | 581 | | | | 1,460 | | | | 0 | | | | 0 | | | | 581 | | | | 1,460 | | | | 2,041 | | | | (478 | ) | | 1984 | | 7/17/2013 | | 13 to 35 Years |
| Circle K | | Willoughby, OH | | (b) | | | 477 | | | | 1,167 | | | | 0 | | | | 0 | | | | 477 | | | | 1,167 | | | | 1,644 | | | | (397 | ) | | 1986 | | 7/17/2013 | | 13 to 32 Years |
| Circle K | | Columbia, SC | | (b) | | | 1,261 | | | | 985 | | | | 0 | | | | 0 | | | | 1,261 | | | | 985 | | | | 2,246 | | | | (422 | ) | | 1993 | | 7/17/2013 | | 10 to 28 Years |
| Circle K | | El Paso, TX | | (b) | | | 1,090 | | | | 1,203 | | | | 0 | | | | 0 | | | | 1,090 | | | | 1,203 | | | | 2,293 | | | | (654 | ) | | 1999 | | 7/17/2013 | | 6 to 35 Years |
| Circle K | | Martinez, GA | | (b) | | | 626 | | | | 996 | | | | 0 | | | | 0 | | | | 626 | | | | 996 | | | | 1,622 | | | | (574 | ) | | 1985 | | 7/17/2013 | | 3 to 35 Years |
| Circle K | | Pine Mountain, GA | | (b) | | | 454 | | | | 1,627 | | | | 0 | | | | 0 | | | | 454 | | | | 1,627 | | | | 2,081 | | | | (518 | ) | | 1999 | | 7/17/2013 | | 10 to 37 Years |
| Circle K | | Beaufort, SC | | (b) | | | 850 | | | | 1,337 | | | | 0 | | | | 0 | | | | 850 | | | | 1,337 | | | | 2,187 | | | | (494 | ) | | 1997 | | 7/17/2013 | | 12 to 34 Years |
| Circle K | | West Monroe, LA | | (b) | | | 425 | | | | 1,558 | | | | 0 | | | | 0 | | | | 425 | | | | 1,558 | | | | 1,983 | | | | (618 | ) | | 1999 | | 7/17/2013 | | 3 to 35 Years |
| Circle K | | Akron, OH | | (b) | | | 402 | | | | 1,263 | | | | 0 | | | | 0 | | | | 402 | | | | 1,263 | | | | 1,665 | | | | (383 | ) | | 2000 | | 7/17/2013 | | 13 to 34 Years |
| Circle K | | Akron, OH | | (b) | | | 291 | | | | 1,230 | | | | 0 | | | | 0 | | | | 291 | | | | 1,230 | | | | 1,521 | | | | (467 | ) | | 1950 | | 7/17/2013 | | 12 to 25 Years |
| Circle K | | Canton, OH | | (b) | | | 362 | | | | 1,159 | | | | 0 | | | | 0 | | | | 362 | | | | 1,159 | | | | 1,521 | | | | (444 | ) | | 1990 | | 7/17/2013 | | 12 to 26 Years |
| Circle K | | Maple Heights, OH | | (b) | | | 747 | | | | 917 | | | | 0 | | | | 0 | | | | 747 | | | | 917 | | | | 1,664 | | | | (389 | ) | | 1998 | | 7/17/2013 | | 13 to 32 Years |
| Circle K | | Brookpark, OH | | (b) | | | 623 | | | | 978 | | | | 0 | | | | 0 | | | | 623 | | | | 978 | | | | 1,601 | | | | (374 | ) | | 1998 | | 7/17/2013 | | 13 to 32 Years |
| Circle K | | Charlotte, NC | | (b) | | | 1,392 | | | | 563 | | | | 0 | | | | 0 | | | | 1,392 | | | | 563 | | | | 1,955 | | | | (482 | ) | | 1991 | | 7/17/2013 | | 6 to 32 Years |
| Circle K | | Mobile, AL | | (b) | | | 552 | | | | 1,664 | | | | 0 | | | | 0 | | | | 552 | | | | 1,664 | | | | 2,216 | | | | (684 | ) | | 1987 | | 7/17/2013 | | 11 to 24 Years |
| Circle K | | Bluffton, SC | | (b) | | | 1,531 | | | | 645 | | | | 0 | | | | 0 | | | | 1,531 | | | | 645 | | | | 2,176 | | | | (344 | ) | | 1997 | | 7/17/2013 | | 10 to 32 Years |
| Circle K | | Macon, GA | | (b) | | | 471 | | | | 1,066 | | | | 0 | | | | 0 | | | | 471 | | | | 1,066 | | | | 1,537 | | | | (496 | ) | | 1993 | | 7/17/2013 | | 5 to 35 Years |
| Circle K | | Mobile, AL | | (b) | | | 939 | | | | 878 | | | | 0 | | | | 0 | | | | 939 | | | | 878 | | | | 1,817 | | | | (470 | ) | | 1988 | | 7/17/2013 | | 13 to 25 Years |
| Circle K | | Shreveport, LA | | (b) | | | 369 | | | | 1,183 | | | | 0 | | | | 0 | | | | 369 | | | | 1,183 | | | | 1,552 | | | | (463 | ) | | 1988 | | 7/17/2013 | | 4 to 25 Years |
| Circle K | | Seville, OH | | (b) | | | 1,141 | | | | 2,604 | | | | 0 | | | | 0 | | | | 1,141 | | | | 2,604 | | | | 3,745 | | | | (844 | ) | | 2003 | | 7/17/2013 | | 15 to 36 Years |
| Circle K | | Barberton, OH | | (b) | | | 321 | | | | 1,219 | | | | 0 | | | | 0 | | | | 321 | | | | 1,219 | | | | 1,540 | | | | (390 | ) | | 1983 | | 7/17/2013 | | 14 to 31 Years |
| Circle K | | Fairlawn, OH | | (b) | | | 616 | | | | 1,064 | | | | 0 | | | | 0 | | | | 616 | | | | 1,064 | | | | 1,680 | | | | (440 | ) | | 1993 | | 7/17/2013 | | 13 to 28 Years |
| Circle K | | Northfield, OH | | (b) | | | 873 | | | | 1,633 | | | | 0 | | | | 0 | | | | 873 | | | | 1,633 | | | | 2,506 | | | | (594 | ) | | 1983 | | 7/17/2013 | | 15 to 35 Years |
| Circle K | | Columbus, GA | | (b) | | | 730 | | | | 1,317 | | | | 0 | | | | 0 | | | | 730 | | | | 1,317 | | | | 2,047 | | | | (495 | ) | | 1978 | | 7/17/2013 | | 13 to 28 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cinemark | Tucson, AZ | | (d) | | 4,023 |
| | 10,346 |
| | — |
| | 52 |
| | 4,023 |
| | 10,398 |
| | 14,421 |
| | (610 | ) | | 2016 | | 02/21/17 | | 15 to 50 Years |
| Circle K | Akron, OH | | (d) | | 424 |
| | 1,139 |
| | — |
| | — |
| | 424 |
| | 1,139 |
| | 1,563 |
| | (298 | ) | | 1995 | | 07/17/13 | | 13 to 30 Years |
| Circle K | Cuyahoga Falls, OH | | (d) | | 657 |
| | 1,018 |
| | — |
| | — |
| | 657 |
| | 1,018 |
| | 1,675 |
| | (328 | ) | | 1995 | | 07/17/13 | | 13 to 30 Years |
| Circle K | Cleveland, OH | | (d) | | 804 |
| | 1,513 |
| | — |
| | — |
| | 804 |
| | 1,513 |
| | 2,317 |
| | (375 | ) | | 2002 | | 07/17/13 | | 13 to 35 Years |
| Circle K | Akron, OH | | (d) | | 587 |
| | 1,073 |
| | — |
| | — |
| | 587 |
| | 1,073 |
| | 1,660 |
| | (312 | ) | | 1998 | | 07/17/13 | | 13 to 32 Years |
| Circle K | Augusta, GA | | (d) | | 400 |
| | 1,540 |
| | — |
| | — |
| | 400 |
| | 1,540 |
| | 1,940 |
| | (345 | ) | | 1981 | | 07/17/13 | | 13 to 30 Years |
| Circle K | Auburn, AL | | (d) | | 757 |
| | 1,199 |
| | — |
| | — |
| | 757 |
| | 1,199 |
| | 1,956 |
| | (385 | ) | | 1990 | | 07/17/13 | | 10 to 25 Years |
| Circle K | El Paso, TX | | (d) | | 1,143 |
| | 1,029 |
| | — |
| | — |
| | 1,143 |
| | 1,029 |
| | 2,172 |
| | (597 | ) | | 2000 | | 07/17/13 | | 4 to 27 Years |
| Circle K | Fort Mill, SC | | (d) | | 1,589 |
| | 1,356 |
| | — |
| | — |
| | 1,589 |
| | 1,356 |
| | 2,945 |
| | (337 | ) | | 1999 | | 07/17/13 | | 10 to 33 Years |
| Circle K | Mount Pleasant, SC | | (d) | | 1,328 |
| | 1,073 |
| | — |
| | — |
| | 1,328 |
| | 1,073 |
| | 2,401 |
| | (270 | ) | | 1978 | | 07/17/13 | | 7 to 30 Years |
| Circle K | Goose Creek, SC | | (d) | | 682 |
| | 1,571 |
| | — |
| | — |
| | 682 |
| | 1,571 |
| | 2,253 |
| | (521 | ) | | 1983 | | 07/17/13 | | 7 to 20 Years |
| Circle K | Akron, OH | | (d) | | 500 |
| | 2,058 |
| | — |
| | — |
| | 500 |
| | 2,058 |
| | 2,558 |
| | (440 | ) | | 1999 | | 07/17/13 | | 15 to 33 Years |
| Circle K | Akron, OH | | (d) | | 337 |
| | 1,149 |
| | — |
| | — |
| | 337 |
| | 1,149 |
| | 1,486 |
| | (254 | ) | | 2001 | | 07/17/13 | | 15 to 35 Years |
| Circle K | Parma, OH | | (d) | | 437 |
| | 1,166 |
| | — |
| | — |
| | 437 |
| | 1,166 |
| | 1,603 |
| | (253 | ) | | 2002 | | 07/17/13 | | 15 to 35 Years |
| Circle K | Twinsburg, OH | | (d) | | 556 |
| | 1,317 |
| | — |
| | — |
| | 556 |
| | 1,317 |
| | 1,873 |
| | (303 | ) | | 2005 | | 07/17/13 | | 15 to 37 Years |
| Circle K | Savannah, GA | | (d) | | 1,001 |
| | 847 |
| | — |
| | — |
| | 1,001 |
| | 847 |
| | 1,848 |
| | (325 | ) | | 1997 | | 07/17/13 | | 8 to 37 Years |
| Circle K | Phenix City, AL | | (d) | | 554 |
| | 1,392 |
| | — |
| | — |
| | 554 |
| | 1,392 |
| | 1,946 |
| | (362 | ) | | 1999 | | 07/17/13 | | 13 to 33 Years |
| Circle K | Macon, GA | | (d) | | 470 |
| | 1,226 |
| | — |
| | — |
| | 470 |
| | 1,226 |
| | 1,696 |
| | (398 | ) | | 1974 | | 07/17/13 | | 7 to 35 Years |
| Circle K | Lanett, AL | | (d) | | 299 |
| | 844 |
| | — |
| | — |
| | 299 |
| | 844 |
| | 1,143 |
| | (249 | ) | | 1974 | | 07/17/13 | | 10 to 25 Years |
| Circle K | Monroe, LA | | (d) | | 517 |
| | 1,455 |
| | — |
| | — |
| | 517 |
| | 1,455 |
| | 1,972 |
| | (502 | ) | | 1986 | | 07/17/13 | | 6 to 28 Years |
| Circle K | Akron, OH | | (d) | | 595 |
| | 1,031 |
| | — |
| | — |
| | 595 |
| | 1,031 |
| | 1,626 |
| | (298 | ) | | 1995 | | 07/17/13 | | 14 to 30 Years |
| Circle K | Akron, OH | | (d) | | 554 |
| | 824 |
| | — |
| | — |
| | 554 |
| | 824 |
| | 1,378 |
| | (215 | ) | | 1969 | | 07/17/13 | | 14 to 38 Years |
| Circle K | Akron, OH | | (d) | | 517 |
| | 1,122 |
| | — |
| | — |
| | 517 |
| | 1,122 |
| | 1,639 |
| | (315 | ) | | 1994 | | 07/17/13 | | 13 to 29 Years |
| Circle K | Barberton, OH | | (d) | | 255 |
| | 1,244 |
| | — |
| | — |
| | 255 |
| | 1,244 |
| | 1,499 |
| | (325 | ) | | 1991 | | 07/17/13 | | 12 to 26 Years |
| Circle K | Charlotte, NC | | (d) | | 1,442 |
| | 789 |
| | — |
| | — |
| | 1,442 |
| | 789 |
| | 2,231 |
| | (323 | ) | | 1997 | | 07/17/13 | | 8 to 35 Years |
| Circle K | Savannah, GA | | (d) | | 831 |
| | 869 |
| | — |
| | — |
| | 831 |
| | 869 |
| | 1,700 |
| | (269 | ) | | 1990 | | 07/17/13 | | 14 to 30 Years |
| Circle K | Columbus, GA | | (d) | | 711 |
| | 943 |
| | — |
| | — |
| | 711 |
| | 943 |
| | 1,654 |
| | (255 | ) | | 1990 | | 07/17/13 | | 13 to 32 Years |
| Circle K | Columbus, GA | | (d) | | 574 |
| | 1,039 |
| | — |
| | — |
| | 574 |
| | 1,039 |
| | 1,613 |
| | (258 | ) | | 1984 | | 07/17/13 | | 13 to 32 Years |
| Circle K | Opelika, AL | | (d) | | 960 |
| | 1,716 |
| | — |
| | — |
| | 960 |
| | 1,716 |
| | 2,676 |
| | (575 | ) | | 1988 | | 07/17/13 | | 10 to 25 Years |
| Circle K | Baton Rouge, LA | | (d) | | 260 |
| | 859 |
| | — |
| | — |
| | 260 |
| | 859 |
| | 1,119 |
| | (252 | ) | | 1976 | | 07/17/13 | | 7 to 25 Years |
| Circle K | West Monroe, LA | | (d) | | 686 |
| | 981 |
| | — |
| | — |
| | 686 |
| | 981 |
| | 1,667 |
| | (644 | ) | | 1983 | | 07/17/13 | | 5 to 25 Years |
| Circle K | Copley, OH | | (d) | | 379 |
| | 999 |
| | — |
| | — |
| | 379 |
| | 999 |
| | 1,378 |
| | (289 | ) | | 1993 | | 07/17/13 | | 12 to 28 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Circle K | | Albuquerque, NM | | (b) | | | 699 | | | | 777 | | | | 0 | | | | 0 | | | | 699 | | | | 777 | | | | 1,476 | | | | (522 | ) | | 1994 | | 7/17/2013 | | 9 to 35 Years |
| Circle K | | North Augusta, SC | | (b) | | | 1,065 | | | | 894 | | | | 0 | | | | 0 | | | | 1,065 | | | | 894 | | | | 1,959 | | | | (318 | ) | | 1999 | | 7/17/2013 | | 12 to 33 Years |
| Circle K | | Bossier City, LA | | (b) | | | 565 | | | | 1,051 | | | | (21 | ) | | | 0 | | | | 544 | | | | 1,051 | | | | 1,595 | | | | (418 | ) | | 1987 | | 7/17/2013 | | 9 to 25 Years |
| City Electric Supply | | Albany, GA | | (b) | | | 253 | | | | 919 | | | | 0 | | | | 0 | | | | 253 | | | | 919 | | | | 1,172 | | | | (6 | ) | | 1975 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Boynton Beach, FL | | (b) | | | 222 | | | | 613 | | | | 0 | | | | 0 | | | | 222 | | | | 613 | | | | 835 | | | | (3 | ) | | 1963 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Brunswick, GA | | (b) | | | 282 | | | | 1,019 | | | | 0 | | | | 0 | | | | 282 | | | | 1,019 | | | | 1,301 | | | | (6 | ) | | 1991 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Calhoun, GA | | (b) | | | 779 | | | | 462 | | | | 0 | | | | 0 | | | | 779 | | | | 462 | | | | 1,241 | | | | (3 | ) | | 1994 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Alcoa, TN | | (b) | | | 264 | | | | 790 | | | | 0 | | | | 0 | | | | 264 | | | | 790 | | | | 1,054 | | | | (5 | ) | | 1955 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Conway, SC | | (b) | | | 224 | | | | 1,102 | | | | 0 | | | | 0 | | | | 224 | | | | 1,102 | | | | 1,326 | | | | (3 | ) | | 2008 | | 11/30/2020 | | 11 to 41 Years |
| City Electric Supply | | Fernandina Beach, FL | | (b) | | | 352 | | | | 868 | | | | 0 | | | | 0 | | | | 352 | | | | 868 | | | | 1,220 | | | | (5 | ) | | 1976 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Franklin, NC | | (b) | | | 301 | | | | 1,352 | | | | 0 | | | | 0 | | | | 301 | | | | 1,352 | | | | 1,653 | | | | (9 | ) | | 2001 | | 11/30/2020 | | 10 to 36 Years |
| City Electric Supply | | Kenwood Estates, FL | | (b) | | | 359 | | | | 695 | | | | 0 | | | | 0 | | | | 359 | | | | 695 | | | | 1,054 | | | | (4 | ) | | 1995 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Doral, FL | | (b) | | | 163 | | | | 604 | | | | 0 | | | | 0 | | | | 163 | | | | 604 | | | | 767 | | | | (1 | ) | | 1983 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Marble Falls, TX | | (b) | | | 383 | | | | 1,682 | | | | 0 | | | | 0 | | | | 383 | | | | 1,682 | | | | 2,065 | | | | (9 | ) | | 2007 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Chattanooga, TN | | (b) | | | 150 | | | | 1,241 | | | | 0 | | | | 0 | | | | 150 | | | | 1,241 | | | | 1,391 | | | | (3 | ) | | 1957 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Greenville, SC | | (b) | | | 754 | | | | 1,178 | | | | 0 | | | | 0 | | | | 754 | | | | 1,178 | | | | 1,932 | | | | (4 | ) | | 1955 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Griffin, GA | | (b) | | | 595 | | | | 955 | | | | 0 | | | | 0 | | | | 595 | | | | 955 | | | | 1,550 | | | | (7 | ) | | 2004 | | 11/30/2020 | | 12 to 42 Years |
| City Electric Supply | | Jacksonville Beach, FL | | (b) | | | 184 | | | | 642 | | | | 0 | | | | 0 | | | | 184 | | | | 642 | | | | 826 | | | | (4 | ) | | 1999 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Jacksonville, FL | | (b) | | | 239 | | | | 691 | | | | 0 | | | | 0 | | | | 239 | | | | 691 | | | | 930 | | | | (4 | ) | | 1995 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Lake City, FL | | (b) | | | 237 | | | | 598 | | | | 0 | | | | 0 | | | | 237 | | | | 598 | | | | 835 | | | | (4 | ) | | 1986 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Greeley, CO | | (b) | | | 66 | | | | 832 | | | | 0 | | | | 0 | | | | 66 | | | | 832 | | | | 898 | | | | (2 | ) | | 1999 | | 11/30/2020 | | 41 to 41 Years |
| City Electric Supply | | Lancaster, SC | | (b) | | | 755 | | | | 756 | | | | 0 | | | | 0 | | | | 755 | | | | 756 | | | | 1,511 | | | | (5 | ) | | 1978 | | 11/30/2020 | | 5 to 35 Years |
| City Electric Supply | | Lawrenceville, GA | | (b) | | | 430 | | | | 1,098 | | | | 0 | | | | 0 | | | | 430 | | | | 1,098 | | | | 1,528 | | | | (7 | ) | | 2001 | | 11/30/2020 | | 10 to 42 Years |
| City Electric Supply | | Lexington, SC | | (b) | | | 570 | | | | 2,077 | | | | 0 | | | | 0 | | | | 570 | | | | 2,077 | | | | 2,647 | | | | (8 | ) | | 1992 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Cumberland, MD | | (b) | | | 414 | | | | 1,076 | | | | 0 | | | | 0 | | | | 414 | | | | 1,076 | | | | 1,490 | | | | (5 | ) | | 1935 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Brandon, FL | | (b) | | | 212 | | | | 842 | | | | 0 | | | | 0 | | | | 212 | | | | 842 | | | | 1,054 | | | | (5 | ) | | 1985 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Mesa, AZ | | (b) | | | 84 | | | | 1,341 | | | | 0 | | | | 0 | | | | 84 | | | | 1,341 | | | | 1,425 | | | | (2 | ) | | 2005 | | 11/30/2020 | | 45 to 45 Years |
| City Electric Supply | | Kannapolis, NC | | (b) | | | 254 | | | | 2,795 | | | | 0 | | | | 0 | | | | 254 | | | | 2,795 | | | | 3,049 | | | | (12 | ) | | 1942 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Clearwater, FL | | (b) | | | 322 | | | | 401 | | | | 0 | | | | 0 | | | | 322 | | | | 401 | | | | 723 | | | | (2 | ) | | 1987 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Clermont, FL | | (b) | | | 160 | | | | 921 | | | | 0 | | | | 0 | | | | 160 | | | | 921 | | | | 1,081 | | | | (2 | ) | | 1997 | | 11/30/2020 | | 35 to 35 Years |
| City Electric Supply | | Milton, FL | | (b) | | | 511 | | | | 524 | | | | 0 | | | | 0 | | | | 511 | | | | 524 | | | | 1,035 | | | | (3 | ) | | 2014 | | 11/30/2020 | | 13 to 43 Years |
| City Electric Supply | | Lincolnton, NC | | (b) | | | 882 | | | | 1,102 | | | | 0 | | | | 0 | | | | 882 | | | | 1,102 | | | | 1,984 | | | | (8 | ) | | 2001 | | 11/30/2020 | | 10 to 36 Years |
| City Electric Supply | | West Deland, FL | | (b) | | | 376 | | | | 761 | | | | 0 | | | | 0 | | | | 376 | | | | 761 | | | | 1,137 | | | | (5 | ) | | 1988 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Derry, NH | | (b) | | | 110 | | | | 921 | | | | 0 | | | | 0 | | | | 110 | | | | 921 | | | | 1,031 | | | | (2 | ) | | 2007 | | 11/30/2020 | | 40 to 40 Years |
| City Electric Supply | | Phoenix, AZ | | (b) | | | 79 | | | | 899 | | | | 0 | | | | 0 | | | | 79 | | | | 899 | | | | 978 | | | | (2 | ) | | 2004 | | 11/30/2020 | | 45 to 45 Years |
| City Electric Supply | | Moultrie, GA | | (b) | | | 339 | | | | 591 | | | | 0 | | | | 0 | | | | 339 | | | | 591 | | | | 930 | | | | (5 | ) | | 1997 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Myrtle Beach, SC | | (b) | | | 357 | | | | 1,636 | | | | 0 | | | | 0 | | | | 357 | | | | 1,636 | | | | 1,993 | | | | (4 | ) | | 1977 | | 11/30/2020 | | 10 to 37 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Circle K | Akron, OH | | (d) | | 283 |
| | 1,160 |
| | — |
| | — |
| | 283 |
| | 1,160 |
| | 1,443 |
| | (267 | ) | | 1997 | | 07/17/13 | | 14 to 32 Years |
| Circle K | Akron, OH | | (d) | | 434 |
| | 1,198 |
| | — |
| | — |
| | 434 |
| | 1,198 |
| | 1,632 |
| | (326 | ) | | 1994 | | 07/17/13 | | 14 to 29 Years |
| Circle K | Huntersville, NC | | (d) | | 1,539 |
| | 924 |
| | — |
| | — |
| | 1,539 |
| | 924 |
| | 2,463 |
| | (422 | ) | | 1996 | | 07/17/13 | | 8 to 35 Years |
| Circle K | Springdale, SC | | (d) | | 794 |
| | 767 |
| | — |
| | — |
| | 794 |
| | 767 |
| | 1,561 |
| | (213 | ) | | 1999 | | 07/17/13 | | 13 to 33 Years |
| Circle K | Charleston, SC | | (d) | | 1,547 |
| | 1,242 |
| | — |
| | — |
| | 1,547 |
| | 1,242 |
| | 2,789 |
| | (494 | ) | | 1987 | | 07/17/13 | | 7 to 20 Years |
| Circle K | Port Wentworth, GA | | (d) | | 1,627 |
| | 1,131 |
| | — |
| | — |
| | 1,627 |
| | 1,131 |
| | 2,758 |
| | (725 | ) | | 1991 | | 07/17/13 | | 4 to 35 Years |
| Circle K | Columbus, GA | | (d) | | 867 |
| | 2,299 |
| | — |
| | — |
| | 867 |
| | 2,299 |
| | 3,166 |
| | (542 | ) | | 1978 | | 07/17/13 | | 13 to 30 Years |
| Circle K | Baton Rouge, LA | | (d) | | 330 |
| | 997 |
| | — |
| | — |
| | 330 |
| | 997 |
| | 1,327 |
| | (253 | ) | | 1970 | | 07/17/13 | | 8 to 30 Years |
| Circle K | Cuyahoga Falls, OH | | (d) | | 342 |
| | 806 |
| | — |
| | — |
| | 342 |
| | 806 |
| | 1,148 |
| | (244 | ) | | 1972 | | 07/17/13 | | 12 to 26 Years |
| Circle K | Akron, OH | | (d) | | 343 |
| | 1,193 |
| | — |
| | — |
| | 343 |
| | 1,193 |
| | 1,536 |
| | (290 | ) | | 1991 | | 07/17/13 | | 15 to 31 Years |
| Circle K | Akron, OH | | (d) | | 513 |
| | 1,251 |
| | — |
| | — |
| | 513 |
| | 1,251 |
| | 1,764 |
| | (315 | ) | | 1996 | | 07/17/13 | | 15 to 31 Years |
| Circle K | Bedford, OH | | (d) | | 750 |
| | 680 |
| | — |
| | — |
| | 750 |
| | 680 |
| | 1,430 |
| | (235 | ) | | 2000 | | 07/17/13 | | 15 to 33 Years |
| Circle K | El Paso, TX | | (d) | | 987 |
| | 558 |
| | — |
| | — |
| | 987 |
| | 558 |
| | 1,545 |
| | (246 | ) | | 1999 | | 07/17/13 | | 3 to 26 Years |
| Circle K | Valley, AL | | (d) | | 754 |
| | 804 |
| | — |
| | — |
| | 754 |
| | 804 |
| | 1,558 |
| | (262 | ) | | 1974 | | 07/17/13 | | 9 to 25 Years |
| Circle K | Midland, GA | | (d) | | 637 |
| | 2,136 |
| | — |
| | — |
| | 637 |
| | 2,136 |
| | 2,773 |
| | (421 | ) | | 1995 | | 07/17/13 | | 9 to 35 Years |
| Circle K | Columbus, GA | | (d) | | 1,465 |
| | 2,088 |
| | — |
| | — |
| | 1,465 |
| | 2,088 |
| | 3,553 |
| | (532 | ) | | 1995 | | 07/17/13 | | 11 to 34 Years |
| Circle K | Baton Rouge, LA | | (d) | | 481 |
| | 913 |
| | — |
| | — |
| | 481 |
| | 913 |
| | 1,394 |
| | (273 | ) | | 1977 | | 07/17/13 | | 8 to 30 Years |
| Circle K | Akron, OH | | (d) | | 321 |
| | 1,179 |
| | — |
| | — |
| | 321 |
| | 1,179 |
| | 1,500 |
| | (293 | ) | | 1994 | | 07/17/13 | | 13 to 29 Years |
| Circle K | Barberton, OH | | (d) | | 884 |
| | 1,885 |
| | — |
| | — |
| | 884 |
| | 1,885 |
| | 2,769 |
| | (477 | ) | | 1981 | | 07/17/13 | | 13 to 34 Years |
| Circle K | Norton, OH | | (d) | | 581 |
| | 1,460 |
| | — |
| | — |
| | 581 |
| | 1,460 |
| | 2,041 |
| | (349 | ) | | 1984 | | 07/17/13 | | 13 to 35 Years |
| Circle K | Willoughby, OH | | (d) | | 477 |
| | 1,167 |
| | — |
| | — |
| | 477 |
| | 1,167 |
| | 1,644 |
| | (290 | ) | | 1986 | | 07/17/13 | | 13 to 32 Years |
| Circle K | Columbia, SC | | (d) | | 1,261 |
| | 985 |
| | — |
| | — |
| | 1,261 |
| | 985 |
| | 2,246 |
| | (308 | ) | | 1993 | | 07/17/13 | | 10 to 28 Years |
| Circle K | El Paso, TX | | (d) | | 1,090 |
| | 1,203 |
| | — |
| | — |
| | 1,090 |
| | 1,203 |
| | 2,293 |
| | (523 | ) | | 1999 | | 07/17/13 | | 6 to 35 Years |
| Circle K | Martinez, GA | | (d) | | 626 |
| | 996 |
| | — |
| | — |
| | 626 |
| | 996 |
| | 1,622 |
| | (516 | ) | | 1985 | | 07/17/13 | | 3 to 35 Years |
| Circle K | Pine Mountain, GA | | (d) | | 454 |
| | 1,627 |
| | — |
| | — |
| | 454 |
| | 1,627 |
| | 2,081 |
| | (379 | ) | | 1999 | | 07/17/13 | | 10 to 37 Years |
| Circle K | Beaufort, SC | | (d) | | 850 |
| | 1,337 |
| | — |
| | — |
| | 850 |
| | 1,337 |
| | 2,187 |
| | (361 | ) | | 1997 | | 07/17/13 | | 12 to 34 Years |
| Circle K | West Monroe, LA | | (d) | | 425 |
| | 1,558 |
| | — |
| | — |
| | 425 |
| | 1,558 |
| | 1,983 |
| | (528 | ) | | 1999 | | 07/17/13 | | 3 to 35 Years |
| Circle K | Akron, OH | | (d) | | 402 |
| | 1,263 |
| | — |
| | — |
| | 402 |
| | 1,263 |
| | 1,665 |
| | (280 | ) | | 2000 | | 07/17/13 | | 13 to 34 Years |
| Circle K | Akron, OH | | (d) | | 291 |
| | 1,230 |
| | — |
| | — |
| | 291 |
| | 1,230 |
| | 1,521 |
| | (341 | ) | | 1950 | | 07/17/13 | | 12 to 25 Years |
| Circle K | Canton, OH | | (d) | | 362 |
| | 1,159 |
| | — |
| | — |
| | 362 |
| | 1,159 |
| | 1,521 |
| | (325 | ) | | 1990 | | 07/17/13 | | 12 to 26 Years |
| Circle K | Maple Heights, OH | | (d) | | 747 |
| | 917 |
| | — |
| | — |
| | 747 |
| | 917 |
| | 1,664 |
| | (284 | ) | | 1998 | | 07/17/13 | | 13 to 32 Years |
| Circle K | Brookpark, OH | | (d) | | 623 |
| | 978 |
| | — |
| | — |
| | 623 |
| | 978 |
| | 1,601 |
| | (273 | ) | | 1998 | | 07/17/13 | | 13 to 32 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| City Electric Supply | | Palatka, FL | | (b) | | | 377 | | | | 399 | | | | 0 | | | | 0 | | | | 377 | | | | 399 | | | | 776 | | | | (3 | ) | | 1995 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Lynwood, IL | | (b) | | | 181 | | | | 1,059 | | | | 0 | | | | 0 | | | | 181 | | | | 1,059 | | | | 1,240 | | | | (6 | ) | | 2000 | | 11/30/2020 | | 10 to 42 Years |
| City Electric Supply | | Monroe, NC | | (b) | | | 323 | | | | 1,744 | | | | 0 | | | | 0 | | | | 323 | | | | 1,744 | | | | 2,067 | | | | (9 | ) | | 1996 | | 11/30/2020 | | 11 to 41 Years |
| City Electric Supply | | Okeechobee, FL | | (b) | | | 234 | | | | 386 | | | | 0 | | | | 0 | | | | 234 | | | | 386 | | | | 620 | | | | (3 | ) | | 1981 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Palm Bay, FL | | (b) | | | 460 | | | | 687 | | | | 0 | | | | 0 | | | | 460 | | | | 687 | | | | 1,147 | | | | (3 | ) | | 2000 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Port St Lucie, FL | | (b) | | | 397 | | | | 708 | | | | 0 | | | | 0 | | | | 397 | | | | 708 | | | | 1,105 | | | | (5 | ) | | 1997 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Salisbury, NC | | (b) | | | 440 | | | | 799 | | | | 0 | | | | 0 | | | | 440 | | | | 799 | | | | 1,239 | | | | (5 | ) | | 2012 | | 11/30/2020 | | 12 to 42 Years |
| City Electric Supply | | Rock Hill, SC | | (b) | | | 316 | | | | 1,254 | | | | 0 | | | | 0 | | | | 316 | | | | 1,254 | | | | 1,570 | | | | (8 | ) | | 2009 | | 11/30/2020 | | 11 to 41 Years |
| City Electric Supply | | New Bern, NC | | (b) | | | 300 | | | | 2,017 | | | | 0 | | | | 0 | | | | 300 | | | | 2,017 | | | | 2,317 | | | | (10 | ) | | 1962 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Rome, GA | | (b) | | | 706 | | | | 1,375 | | | | 0 | | | | 0 | | | | 706 | | | | 1,375 | | | | 2,081 | | | | (5 | ) | | 2002 | | 11/30/2020 | | 10 to 37 Years |
| City Electric Supply | | Rockledge, FL | | (b) | | | 319 | | | | 405 | | | | 0 | | | | 0 | | | | 319 | | | | 405 | | | | 724 | | | | (3 | ) | | 1992 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Garden City, GA | | (b) | | | 412 | | | | 949 | | | | 0 | | | | 0 | | | | 412 | | | | 949 | | | | 1,361 | | | | (6 | ) | | 1986 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Spartanburg, SC | | (b) | | | 324 | | | | 916 | | | | 0 | | | | 0 | | | | 324 | | | | 916 | | | | 1,240 | | | | (6 | ) | | 1986 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Port Orange, FL | | (b) | | | 318 | | | | 818 | | | | 0 | | | | 0 | | | | 318 | | | | 818 | | | | 1,136 | | | | (5 | ) | | 1990 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Summerfield, FL | | (b) | | | 414 | | | | 249 | | | | 0 | | | | 0 | | | | 414 | | | | 249 | | | | 663 | | | | (2 | ) | | 2005 | | 11/30/2020 | | 10 to 39 Years |
| City Electric Supply | | Stuart, FL | | (b) | | | 243 | | | | 519 | | | | 0 | | | | 0 | | | | 243 | | | | 519 | | | | 762 | | | | (3 | ) | | 1966 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Eastanollee, GA | | (b) | | | 441 | | | | 807 | | | | 0 | | | | 0 | | | | 441 | | | | 807 | | | | 1,248 | | | | (3 | ) | | 2001 | | 11/30/2020 | | 10 to 37 Years |
| City Electric Supply | | Tampa, FL | | (b) | | | 226 | | | | 836 | | | | 0 | | | | 0 | | | | 226 | | | | 836 | | | | 1,062 | | | | (4 | ) | | 1982 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Titusville, FL | | (b) | | | 122 | | | | 705 | | | | 0 | | | | 0 | | | | 122 | | | | 705 | | | | 827 | | | | (3 | ) | | 1978 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Walterboro, SC | | (b) | | | 191 | | | | 812 | | | | 0 | | | | 0 | | | | 191 | | | | 812 | | | | 1,003 | | | | (4 | ) | | 1957 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Warner Robins, GA | | (b) | | | 418 | | | | 822 | | | | 0 | | | | 0 | | | | 418 | | | | 822 | | | | 1,240 | | | | (6 | ) | | 2003 | | 11/30/2020 | | 10 to 43 Years |
| City Electric Supply | | Waycross, GA | | (b) | | | 558 | | | | 445 | | | | 0 | | | | 0 | | | | 558 | | | | 445 | | | | 1,003 | | | | (2 | ) | | 1998 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | West Palm Beach, FL | | (b) | | | 213 | | | | 404 | | | | 0 | | | | 0 | | | | 213 | | | | 404 | | | | 617 | | | | (1 | ) | | 1962 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Winston Salem, NC | | (b) | | | 839 | | | | 1,309 | | | | 0 | | | | 0 | | | | 839 | | | | 1,309 | | | | 2,148 | | | | (4 | ) | | 1961 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Valdosta, GA | | (b) | | | 147 | | | | 886 | | | | 0 | | | | 0 | | | | 147 | | | | 886 | | | | 1,033 | | | | (4 | ) | | 2013 | | 11/30/2020 | | 13 to 48 Years |
| City Electric Supply | | Beaufort, SC | | (b) | | | 326 | | | | 717 | | | | 0 | | | | 0 | | | | 326 | | | | 717 | | | | 1,043 | | | | (2 | ) | | 2017 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Jupiter, FL | | (b) | | | 369 | | | | 664 | | | | 0 | | | | 0 | | | | 369 | | | | 664 | | | | 1,033 | | | | (3 | ) | | 1967 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Fort Myers, FL | | (b) | | | 707 | | | | 2,730 | | | | 0 | | | | 0 | | | | 707 | | | | 2,730 | | | | 3,437 | | | | (17 | ) | | 1998 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Gainesville, FL | | (b) | | | 354 | | | | 796 | | | | 0 | | | | 0 | | | | 354 | | | | 796 | | | | 1,150 | | | | (5 | ) | | 1971 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | Concord, NC | | (b) | | | 263 | | | | 1,455 | | | | 0 | | | | 0 | | | | 263 | | | | 1,455 | | | | 1,718 | | | | (8 | ) | | 2006 | | 11/30/2020 | | 10 to 39 Years |
| City Electric Supply | | Denver, CO | | (b) | | | 568 | | | | 1,139 | | | | 0 | | | | 0 | | | | 568 | | | | 1,139 | | | | 1,707 | | | | (5 | ) | | 1967 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Loganville, GA | | (b) | | | 684 | | | | 558 | | | | 0 | | | | 0 | | | | 684 | | | | 558 | | | | 1,242 | | | | (4 | ) | | 2017 | | 11/30/2020 | | 14 to 44 Years |
| City Electric Supply | | Pascagoula, MS | | (b) | | | 635 | | | | 1,855 | | | | 0 | | | | 0 | | | | 635 | | | | 1,855 | | | | 2,490 | | | | (14 | ) | | 1967 | | 11/30/2020 | | 10 to 35 Years |
| City Electric Supply | | South Sumter, SC | | (b) | | | 522 | | | | 409 | | | | 0 | | | | 0 | | | | 522 | | | | 409 | | | | 931 | | | | (3 | ) | | 2015 | | 11/30/2020 | | 13 to 43 Years |
| City Electric Supply | | Miami, FL | | (b) | | | 330 | | | | 437 | | | | 0 | | | | 0 | | | | 330 | | | | 437 | | | | 767 | | | | (1 | ) | | 2008 | | 11/30/2020 | | 12 to 47 Years |
| City Electric Supply | | West Columbia, SC | | (b) | | | 552 | | | | 895 | | | | 0 | | | | 0 | | | | 552 | | | | 895 | | | | 1,447 | | | | (5 | ) | | 2015 | | 11/30/2020 | | 13 to 43 Years |
| City Electric Supply | | Raleigh, NC | | (b) | | | 382 | | | | 974 | | | | 0 | | | | 0 | | | | 382 | | | | 974 | | | | 1,356 | | | | (5 | ) | | 1992 | | 11/30/2020 | | 13 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Circle K | Charlotte, NC | | (d) | | 1,392 |
| | 563 |
| | — |
| | — |
| | 1,392 |
| | 563 |
| | 1,955 |
| | (388 | ) | | 1991 | | 07/17/13 | | 6 to 32 Years |
| Circle K | Mobile, AL | | (d) | | 552 |
| | 1,664 |
| | — |
| | — |
| | 552 |
| | 1,664 |
| | 2,216 |
| | (500 | ) | | 1987 | | 07/17/13 | | 11 to 24 Years |
| Circle K | Bluffton, SC | | (d) | | 1,531 |
| | 645 |
| | — |
| | — |
| | 1,531 |
| | 645 |
| | 2,176 |
| | (252 | ) | | 1997 | | 07/17/13 | | 10 to 32 Years |
| Circle K | Macon, GA | | (d) | | 471 |
| | 1,066 |
| | — |
| | — |
| | 471 |
| | 1,066 |
| | 1,537 |
| | (430 | ) | | 1993 | | 07/17/13 | | 5 to 35 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Circle K | Mobile, AL | | (d) | | 939 |
| | 878 |
| | — |
| | — |
| | 939 |
| | 878 |
| | 1,817 |
| | (343 | ) | | 1988 | | 07/17/13 | | 13 to 25 Years |
| Circle K | Shreveport, LA | | (d) | | 369 |
| | 1,183 |
| | — |
| | — |
| | 369 |
| | 1,183 |
| | 1,552 |
| | (368 | ) | | 1988 | | 07/17/13 | | 4 to 25 Years |
| Circle K | Seville, OH | | (d) | | 1,141 |
| | 2,604 |
| | — |
| | — |
| | 1,141 |
| | 2,604 |
| | 3,745 |
| | (616 | ) | | 2003 | | 07/17/13 | | 15 to 36 Years |
| Circle K | Barberton, OH | | (d) | | 321 |
| | 1,219 |
| | — |
| | — |
| | 321 |
| | 1,219 |
| | 1,540 |
| | (285 | ) | | 1983 | | 07/17/13 | | 14 to 31 Years |
| Circle K | Fairlawn, OH | | (d) | | 616 |
| | 1,064 |
| | — |
| | — |
| | 616 |
| | 1,064 |
| | 1,680 |
| | (321 | ) | | 1993 | | 07/17/13 | | 13 to 28 Years |
| Circle K | Northfield, OH | | (d) | | 873 |
| | 1,633 |
| | — |
| | — |
| | 873 |
| | 1,633 |
| | 2,506 |
| | (434 | ) | | 1983 | | 07/17/13 | | 15 to 35 Years |
| Circle K | Columbus, GA | | (d) | | 730 |
| | 1,317 |
| | — |
| | — |
| | 730 |
| | 1,317 |
| | 2,047 |
| | (361 | ) | | 1978 | | 07/17/13 | | 13 to 28 Years |
| Circle K | Albuquerque, NM | | (d) | | 699 |
| | 777 |
| | — |
| | — |
| | 699 |
| | 777 |
| | 1,476 |
| | (381 | ) | | 1994 | | 07/17/13 | | 9 to 35 Years |
| Circle K | North Augusta, SC | | (d) | | 1,065 |
| | 894 |
| | — |
| | — |
| | 1,065 |
| | 894 |
| | 1,959 |
| | (232 | ) | | 1999 | | 07/17/13 | | 12 to 33 Years |
| Circle K | Bossier City, LA | | (d) | | 565 |
| | 1,051 |
| | (21 | ) | | — |
| | 544 |
| | 1,051 |
| | 1,595 |
| | (305 | ) | | 1987 | | 07/17/13 | | 9 to 25 Years |
| CircusTrix | Little Rock, AR | | (d) | | 1,489 |
| | 3,888 |
| | — |
| | 11 |
| | 1,489 |
| | 3,899 |
| | 5,388 |
| | (150 | ) | | 2017 | | 09/29/17 | | 15 to 40 Years |
| CircusTrix | Indianapolis, IN | | (d) | | 861 |
| | 4,222 |
| | — |
| | — |
| | 861 |
| | 4,222 |
| | 5,083 |
| | (41 | ) | | 2018 | | 08/31/18 | | 16 to 40 Years |
| CircusTrix | Wilmington, NC | | (d) | | 837 |
| | 1,429 |
| | — |
| | — |
| | 837 |
| | 1,429 |
| | 2,266 |
| | (328 | ) | | 2006 | | 09/30/15 | | 9 to 20 Years |
| CircusTrix | Baton Rouge, LA | | (d) | | 1,076 |
| | 2,289 |
| | — |
| | — |
| | 1,076 |
| | 2,289 |
| | 3,365 |
| | (271 | ) | | 2015 | | 11/13/15 | | 10 to 40 Years |
| CircusTrix | Flowood, MS | | (d) | | 900 |
| | 1,137 |
| | — |
| | — |
| | 900 |
| | 1,137 |
| | 2,037 |
| | (244 | ) | | 1995 | | 11/13/15 | | 9 to 20 Years |
| CircusTrix | Augusta, GA | | (d) | | 1,081 |
| | 1,488 |
| | — |
| | — |
| | 1,081 |
| | 1,488 |
| | 2,569 |
| | (415 | ) | | 1998 | | 09/30/15 | | 10 to 20 Years |
| CircusTrix | Brentwood, TN | | (d) | | 2,292 |
| | 2,273 |
| | — |
| | 2 |
| | 2,292 |
| | 2,275 |
| | 4,567 |
| | (489 | ) | | 1970 | | 09/30/15 | | 9 to 20 Years |
| CircusTrix | Clovis, CA | | (d) | | 1,117 |
| | 26 |
| | — |
| | 3,277 |
| | 1,117 |
| | 3,303 |
| | 4,420 |
| | (5 | ) | | 2017 | | 12/06/16 | | 10 to 10 Years |
| CircusTrix | Rogers, AR | | (d) | | 635 |
| | 2,376 |
| | — |
| | — |
| | 635 |
| | 2,376 |
| | 3,011 |
| | (301 | ) | | 2014 | | 09/30/15 | | 9 to 40 Years |
| Clean Freak | Phoenix, AZ | | (d) | | 2,066 |
| | 1,581 |
| | — |
| | — |
| | 2,066 |
| | 1,581 |
| | 3,647 |
| | (199 | ) | | 2009 | | 09/29/16 | | 21 to 30 Years |
| Clean Freak | Phoenix, AZ | | (d) | | 1,143 |
| | 439 |
| | — |
| | — |
| | 1,143 |
| | 439 |
| | 1,582 |
| | (74 | ) | | 1970 | | 09/29/16 | | 21 to 30 Years |
| Clean Freak | Chandler, AZ | | (d) | | 1,293 |
| | 1,951 |
| | — |
| | — |
| | 1,293 |
| | 1,951 |
| | 3,244 |
| | (208 | ) | | 2006 | | 09/29/16 | | 21 to 30 Years |
| Clean Freak | Phoenix, AZ | | (d) | | 1,835 |
| | 2,332 |
| | — |
| | 54 |
| | 1,835 |
| | 2,386 |
| | 4,221 |
| | (258 | ) | | 1974 | | 09/29/16 | | 21 to 30 Years |
| Clean Freak | Glendale, AZ | | (d) | | 1,524 |
| | 854 |
| | — |
| | — |
| | 1,524 |
| | 854 |
| | 2,378 |
| | (140 | ) | | 1988 | | 09/29/16 | | 21 to 30 Years |
| Columbus Fish Market | Grandview, OH | | (b) | | 2,164 |
| | 1,165 |
| | — |
| | — |
| | 2,164 |
| | 1,165 |
| | 3,329 |
| | (487 | ) | | 1960 | | 07/17/13 | | 9 to 23 Years |
| Convergys | Las Cruces, NM | | (d) | | 808 |
| | 6,045 |
| | — |
| | — |
| | 808 |
| | 6,045 |
| | 6,853 |
| | (1,067 | ) | | 2008 | | 07/17/13 | | 4 to 52 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| City Electric Supply | | Sebring, FL | | (b) | | | 235 | | | | 1,996 | | | | 0 | | | | 0 | | | | 235 | | | | 1,996 | | | | 2,231 | | | | (10 | ) | | 2003 | | 11/30/2020 | | 10 to 38 Years |
| City Electric Supply | | Altamonte Springs, FL | | (b) | | | 580 | | | | 1,953 | | | | 0 | | | | 0 | | | | 580 | | | | 1,953 | | | | 2,533 | | | | (11 | ) | | 1989 | | 11/30/2020 | | 10 to 40 Years |
| City Electric Supply | | Ocala, FL | | (b) | | | 480 | | | | 2,412 | | | | 0 | | | | 0 | | | | 480 | | | | 2,412 | | | | 2,892 | | | | (14 | ) | | 2001 | | 11/30/2020 | | 10 to 36 Years |
| Clean Freak | | Phoenix, AZ | | (b) | | | 1,143 | | | | 439 | | | | 0 | | | | 0 | | | | 1,143 | | | | 439 | | | | 1,582 | | | | (139 | ) | | 1970 | | 9/29/2016 | | 21 to 30 Years |
| Clean Freak | | Phoenix, AZ | | (b) | | | 2,066 | | | | 1,581 | | | | 0 | | | | 0 | | | | 2,066 | | | | 1,581 | | | | 3,647 | | | | (376 | ) | | 2009 | | 9/29/2016 | | 21 to 30 Years |
| Clean Freak | | Glendale, AZ | | (b) | | | 1,524 | | | | 854 | | | | 0 | | | | 0 | | | | 1,524 | | | | 854 | | | | 2,378 | | | | (264 | ) | | 1988 | | 9/29/2016 | | 21 to 30 Years |
| Clean Freak | | Phoenix, AZ | | (b) | | | 1,835 | | | | 2,332 | | | | 0 | | | | 54 | | | | 1,835 | | | | 2,386 | | | | 4,221 | | | | (487 | ) | | 1974 | | 9/29/2016 | | 21 to 30 Years |
| Clean Freak | | Chandler, AZ | | (b) | | | 1,293 | | | | 1,951 | | | | 0 | | | | 0 | | | | 1,293 | | | | 1,951 | | | | 3,244 | | | | (393 | ) | | 2006 | | 9/29/2016 | | 21 to 30 Years |
| Clean Freak | | Springfield, IL | | (b) | | | 548 | | | | 1,008 | | | | 0 | | | | 0 | | | | 548 | | | | 1,008 | | | | 1,556 | | | | (40 | ) | | 2016 | | 1/16/2020 | | 15 to 37 Years |
| Clean Freak | | Normal, IL | | (b) | | | 1,141 | | | | 2,072 | | | | 0 | | | | 0 | | | | 1,141 | | | | 2,072 | | | | 3,213 | | | | (74 | ) | | 2016 | | 1/16/2020 | | 15 to 37 Years |
| Clean Freak | | Champaign, IL | | (b) | | | 1,886 | | | | 3,356 | | | | 0 | | | | 0 | | | | 1,886 | | | | 3,356 | | | | 5,242 | | | | (123 | ) | | 2015 | | 1/16/2020 | | 15 to 37 Years |
| Columbus Fish Market | | Grandview, OH | | (b) | | | 2,164 | | | | 1,165 | | | | 0 | | | | 0 | | | | 2,164 | | | | 1,165 | | | | 3,329 | | | | (667 | ) | | 1960 | | 7/17/2013 | | 9 to 23 Years |
| Conney Safety | | Madison, WI | | (b) | | | 1,189 | | | | 11,451 | | | | 0 | | | | 0 | | | | 1,189 | | | | 11,451 | | | | 12,640 | | | | (479 | ) | | 1986 | | 1/9/2020 | | 9 to 28 Years |
| Convergys | | Las Cruces, NM | | (b) | | | 808 | | | | 6,045 | | | | 0 | | | | 0 | | | | 808 | | | | 6,045 | | | | 6,853 | | | | (1,337 | ) | | 2008 | | 7/17/2013 | | 4 to 52 Years |
| Cost-U-Less | | St. Croix, VI | | (b) | | | 2,132 | | | | 5,992 | | | | 0 | | | | 0 | | | | 2,132 | | | | 5,992 | | | | 8,124 | | | | (1,683 | ) | | 2005 | | 7/17/2013 | | 8 to 37 Years |
| CoxHealth | | Springfield, MO | | (b) | | | 2,025 | | | | 3,911 | | | | 0 | | | | 0 | | | | 2,025 | | | | 3,911 | | | | 5,936 | | | | (1,265 | ) | | 1990 | | 9/23/2014 | | 7 to 30 Years |
| Crème de la Crème | | Duluth, GA | | (b) | | | 1,872 | | | | 3,338 | | | | 0 | | | | 13 | | | | 1,872 | | | | 3,351 | | | | 5,223 | | | | (128 | ) | | 2007 | | 11/25/2019 | | 7 to 41 Years |
| Crème de la Crème | | Romeoville, IL | | (b) | | | 2,239 | | | | 3,748 | | | | 0 | | | | 12 | | | | 2,239 | | | | 3,760 | | | | 5,999 | | | | (188 | ) | | 2008 | | 11/25/2019 | | 7 to 36 Years |
| Crème de la Crème | | Mount Laurel, NJ | | (b) | | | 2,378 | | | | 4,433 | | | | 0 | | | | 12 | | | | 2,378 | | | | 4,445 | | | | 6,823 | | | | (183 | ) | | 2007 | | 11/25/2019 | | 7 to 39 Years |
| Crème de la Crème | | Barrington, IL | | (b) | | | 1,729 | | | | 2,474 | | | | 0 | | | | 12 | | | | 1,729 | | | | 2,486 | | | | 4,215 | | | | (111 | ) | | 2008 | | 11/25/2019 | | 14 to 38 Years |
| Crème de la Crème | | Chicago, IL | | (b) | | | 2,320 | | | | 4,962 | | | | 0 | | | | 12 | | | | 2,320 | | | | 4,974 | | | | 7,294 | | | | (170 | ) | | 2009 | | 11/25/2019 | | 12 to 38 Years |
| Crunch Fitness | | Aurora, IL | | (b) | | | 668 | | | | 2,615 | | | | 0 | | | | 23 | | | | 668 | | | | 2,638 | | | | 3,306 | | | | (496 | ) | | 2006 | | 11/29/2016 | | 9 to 30 Years |
| Crunch Fitness | | Lawrenceville, GA | | (b) | | | 2,330 | | | | 2,604 | | | | 0 | | | | 13 | | | | 2,330 | | | | 2,617 | | | | 4,947 | | | | (124 | ) | | 2017 | | 11/25/2019 | | 10 to 44 Years |
| Crunch Fitness | | Boise, ID | | (b) | | | 823 | | | | 3,178 | | | | 0 | | | | 545 | | | | 823 | | | | 3,723 | | | | 4,546 | | | | (452 | ) | | 2003 | | 12/28/2016 | | 10 to 40 Years |
| Crunch Fitness | | Meridian, ID | | (b) | | | 840 | | | | 2,950 | | | | 0 | | | | 1,028 | | | | 840 | | | | 3,978 | | | | 4,818 | | | | (550 | ) | | 1993 | | 12/28/2016 | | 8 to 30 Years |
| Crunch Fitness | | Eagle, ID | | (b) | | | 1,428 | | | | 5,591 | | | | 0 | | | | 866 | | | | 1,428 | | | | 6,457 | | | | 7,885 | | | | (995 | ) | | 1999 | | 12/28/2016 | | 10 to 30 Years |
| Crunch Fitness | | Boise, ID | | (b) | | | 1,335 | | | | 4,982 | | | | 0 | | | | 561 | | | | 1,335 | | | | 5,543 | | | | 6,878 | | | | (881 | ) | | 2001 | | 12/28/2016 | | 8 to 30 Years |
| C-Store | | Charlotte, MI | | (b) | | | 224 | | | | 157 | | | | 0 | | | | 0 | | | | 224 | | | | 157 | | | | 381 | | | | (75 | ) | | 1968 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Jackson, MI | | (b) | | | 908 | | | | 1,132 | | | | 0 | | | | 0 | | | | 908 | | | | 1,132 | | | | 2,040 | | | | (310 | ) | | 1969 | | 5/19/2016 | | 21 to 30 Years |
| C-Store | | Alma, MI | | (b) | | | 235 | | | | 437 | | | | 0 | | | | 0 | | | | 235 | | | | 437 | | | | 672 | | | | (109 | ) | | 2006 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Scottville, MI | | (b) | | | 235 | | | | 404 | | | | 0 | | | | 0 | | | | 235 | | | | 404 | | | | 639 | | | | (119 | ) | | 1959 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Allegan, MI | | (b) | | | 392 | | | | 224 | | | | 0 | | | | 0 | | | | 392 | | | | 224 | | | | 616 | | | | (113 | ) | | 1965 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Edmore, MI | | (b) | | | 729 | | | | 774 | | | | 0 | | | | 0 | | | | 729 | | | | 774 | | | | 1,503 | | | | (255 | ) | | 1999 | | 5/19/2016 | | 17 to 40 Years |
| C-Store | | Wyoming, MI | | (b) | | | 314 | | | | 448 | | | | 0 | | | | 0 | | | | 314 | | | | 448 | | | | 762 | | | | (111 | ) | | 1958 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Hastings, MI | | (b) | | | 392 | | | | 437 | | | | 0 | | | | 190 | | | | 392 | | | | 627 | | | | 1,019 | | | | (165 | ) | | 1964 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Plainwell, MI | | (b) | | | 785 | | | | 235 | | | | 0 | | | | 0 | | | | 785 | | | | 235 | | | | 1,020 | | | | (163 | ) | | 1998 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Ithaca, MI | | (b) | | | 538 | | | | 381 | | | | 0 | | | | 0 | | | | 538 | | | | 381 | | | | 919 | | | | (152 | ) | | 1994 | | 5/19/2016 | | 17 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost-U-Less | St. Croix, VI | | (d) | | 2,132 |
| | 5,992 |
| | — |
| | — |
| | 2,132 |
| | 5,992 |
| | 8,124 |
| | (1,229 | ) | | 2005 | | 07/17/13 | | 8 to 37 Years |
| CoxHealth | Springfield, MO | | (d) | | 2,025 |
| | 3,911 |
| | — |
| | — |
| | 2,025 |
| | 3,911 |
| | 5,936 |
| | (862 | ) | | 1990 | | 09/23/14 | | 7 to 30 Years |
| Crunch Fitness | Aurora, IL | | (b) | | 668 |
| | 2,615 |
| | — |
| | 23 |
| | 668 |
| | 2,638 |
| | 3,306 |
| | (254 | ) | | 2006 | | 11/29/16 | | 9 to 30 Years |
| Crunch Fitness | Eagle, ID | | (d) | | 1,428 |
| | 5,591 |
| | — |
| | 866 |
| | 1,428 |
| | 6,457 |
| | 7,885 |
| | (463 | ) | | 1999 | | 12/28/16 | | 10 to 30 Years |
| Crunch Fitness | Boise, ID | | (d) | | 1,335 |
| | 4,982 |
| | — |
| | 561 |
| | 1,335 |
| | 5,543 |
| | 6,878 |
| | (418 | ) | | 2001 | | 12/28/16 | | 8 to 30 Years |
| Crunch Fitness | Boise, ID | | (d) | | 823 |
| | 3,178 |
| | — |
| | 545 |
| | 823 |
| | 3,723 |
| | 4,546 |
| | (209 | ) | | 2003 | | 12/28/16 | | 10 to 40 Years |
| Crunch Fitness | Meridian, ID | | (d) | | 840 |
| | 2,950 |
| | — |
| | 1,028 |
| | 840 |
| | 3,978 |
| | 4,818 |
| | (241 | ) | | 1993 | | 12/28/16 | | 8 to 30 Years |
| C-Store | Daleville, VA | | (d) | | 467 |
| | 616 |
| | — |
| | — |
| | 467 |
| | 616 |
| | 1,083 |
| | (111 | ) | | 1989 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Forest, VA | | (d) | | 248 |
| | 834 |
| | — |
| | — |
| | 248 |
| | 834 |
| | 1,082 |
| | (125 | ) | | 1995 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Rustburg, VA | | (d) | | 526 |
| | 775 |
| | — |
| | — |
| | 526 |
| | 775 |
| | 1,301 |
| | (148 | ) | | 1990 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Madison Heights, VA | | (d) | | 268 |
| | 417 |
| | — |
| | — |
| | 268 |
| | 417 |
| | 685 |
| | (72 | ) | | 1983 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Lynchburg, VA | | (d) | | 467 |
| | 1,391 |
| | — |
| | — |
| | 467 |
| | 1,391 |
| | 1,858 |
| | (199 | ) | | 2006 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Altavista, VA | | (d) | | 358 |
| | 1,401 |
| | — |
| | — |
| | 358 |
| | 1,401 |
| | 1,759 |
| | (196 | ) | | 1981 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Altavista, VA | | (d) | | 467 |
| | 745 |
| | — |
| | — |
| | 467 |
| | 745 |
| | 1,212 |
| | (126 | ) | | 1984 | | 06/30/15 | | 15 to 30 Years |
| C-Store | South Boston, VA | | (d) | | 377 |
| | 705 |
| | — |
| | — |
| | 377 |
| | 705 |
| | 1,082 |
| | (105 | ) | | 1988 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Blairs, VA | | (d) | | 318 |
| | 636 |
| | — |
| | — |
| | 318 |
| | 636 |
| | 954 |
| | (97 | ) | | 1987 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Beattyville, KY | | (d) | | 278 |
| | 795 |
| | — |
| | — |
| | 278 |
| | 795 |
| | 1,073 |
| | (118 | ) | | 1981 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Winchester, KY | | (d) | | 755 |
| | 775 |
| | — |
| | — |
| | 755 |
| | 775 |
| | 1,530 |
| | (146 | ) | | 1981 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Irvine, KY | | (d) | | 219 |
| | 666 |
| | — |
| | — |
| | 219 |
| | 666 |
| | 885 |
| | (112 | ) | | 1987 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Paris, KY | | (d) | | 129 |
| | 636 |
| | — |
| | — |
| | 129 |
| | 636 |
| | 765 |
| | (90 | ) | | 1988 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Carlisle, KY | | (d) | | 209 |
| | 586 |
| | — |
| | — |
| | 209 |
| | 586 |
| | 795 |
| | (94 | ) | | 1989 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Georgetown, KY | | (d) | | 725 |
| | 805 |
| | — |
| | — |
| | 725 |
| | 805 |
| | 1,530 |
| | (145 | ) | | 1989 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Georgetown, KY | | (d) | | 815 |
| | 934 |
| | — |
| | — |
| | 815 |
| | 934 |
| | 1,749 |
| | (162 | ) | | 1998 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Mount Sterling, KY | | (d) | | 1,103 |
| | 1,103 |
| | — |
| | — |
| | 1,103 |
| | 1,103 |
| | 2,206 |
| | (210 | ) | | 2000 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Harrodsburg, KY | | (d) | | 228 |
| | 824 |
| | — |
| | — |
| | 228 |
| | 824 |
| | 1,052 |
| | (124 | ) | | 1973 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Carlisle, KY | | (d) | | 298 |
| | 874 |
| | — |
| | — |
| | 298 |
| | 874 |
| | 1,172 |
| | (141 | ) | | 2005 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Salem, VA | | (d) | | 209 |
| | 576 |
| | — |
| | — |
| | 209 |
| | 576 |
| | 785 |
| | (93 | ) | | 1970 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Salem, VA | | (d) | | 646 |
| | 517 |
| | — |
| | — |
| | 646 |
| | 517 |
| | 1,163 |
| | (102 | ) | | 1987 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Roanoke, VA | | (d) | | 616 |
| | 534 |
| | — |
| | — |
| | 616 |
| | 534 |
| | 1,150 |
| | (106 | ) | | 1988 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Roanoke, VA | | (d) | | 238 |
| | 497 |
| | — |
| | — |
| | 238 |
| | 497 |
| | 735 |
| | (74 | ) | | 1988 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Bedford, VA | | (d) | | 258 |
| | 818 |
| | — |
| | — |
| | 258 |
| | 818 |
| | 1,076 |
| | (123 | ) | | 1997 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Lynchburg, VA | | (d) | | 278 |
| | 699 |
| | — |
| | — |
| | 278 |
| | 699 |
| | 977 |
| | (98 | ) | | 1967 | | 06/30/15 | | 15 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Midland, MI | | (b) | | | 191 | | | | 67 | | | | 0 | | | | 0 | | | | 191 | | | | 67 | | | | 258 | | | | (47 | ) | | 1962 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Indianapolis, IN | | (b) | | | 426 | | | | 191 | | | | 0 | | | | 0 | | | | 426 | | | | 191 | | | | 617 | | | | (90 | ) | | 1973 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Traverse City, MI | | (b) | | | 482 | | | | 179 | | | | 0 | | | | 0 | | | | 482 | | | | 179 | | | | 661 | | | | (70 | ) | | 1971 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Burton, MI | | (b) | | | 336 | | | | 1,323 | | | | 0 | | | | 0 | | | | 336 | | | | 1,323 | | | | 1,659 | | | | (260 | ) | | 1969 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Holland, MI | | (b) | | | 235 | | | | 325 | | | | 0 | | | | 0 | | | | 235 | | | | 325 | | | | 560 | | | | (89 | ) | | 1957 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Norton Shores, MI | | (b) | | | 325 | | | | 291 | | | | 0 | | | | 0 | | | | 325 | | | | 291 | | | | 616 | | | | (114 | ) | | 1962 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Rushville, IN | | (b) | | | 179 | | | | 112 | | | | 0 | | | | 0 | | | | 179 | | | | 112 | | | | 291 | | | | (50 | ) | | 1978 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Coldwater, MI | | (b) | | | 258 | | | | 135 | | | | 0 | | | | 0 | | | | 258 | | | | 135 | | | | 393 | | | | (66 | ) | | 1960 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Fremont, MI | | (b) | | | 269 | | | | 269 | | | | 0 | | | | 0 | | | | 269 | | | | 269 | | | | 538 | | | | (99 | ) | | 1971 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Marquette, MI | | (b) | | | 404 | | | | 146 | | | | 0 | | | | 0 | | | | 404 | | | | 146 | | | | 550 | | | | (68 | ) | | 1968 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | St Johns, MI | | (b) | | | 460 | | | | 706 | | | | (122 | ) | | | (155 | ) | | | 338 | | | | 551 | | | | 889 | | | | (24 | ) | | 2011 | | 5/19/2016 | | 12 to 25 Years |
| C-Store | | Mason, MI | | (b) | | | 258 | | | | 157 | | | | 0 | | | | 0 | | | | 258 | | | | 157 | | | | 415 | | | | (78 | ) | | 1971 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Freeland, MI | | (b) | | | 336 | | | | 437 | | | | 0 | | | | 0 | | | | 336 | | | | 437 | | | | 773 | | | | (127 | ) | | 1962 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Menominee, MI | | (b) | | | 235 | | | | 179 | | | | 0 | | | | 0 | | | | 235 | | | | 179 | | | | 414 | | | | (73 | ) | | 1966 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Merrillville, IN | | (b) | | | 303 | | | | 247 | | | | 0 | | | | 0 | | | | 303 | | | | 247 | | | | 550 | | | | (95 | ) | | 1973 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Eaton Rapids, MI | | (b) | | | 291 | | | | 448 | | | | 0 | | | | 0 | | | | 291 | | | | 448 | | | | 739 | | | | (135 | ) | | 1945 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Muncie, IN | | (b) | | | 448 | | | | 135 | | | | 0 | | | | 0 | | | | 448 | | | | 135 | | | | 583 | | | | (90 | ) | | 1983 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Indianapolis, IN | | (b) | | | 325 | | | | 157 | | | | 0 | | | | 0 | | | | 325 | | | | 157 | | | | 482 | | | | (66 | ) | | 1945 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Jackson, MI | | (b) | | | 684 | | | | 1,188 | | | | 0 | | | | 0 | | | | 684 | | | | 1,188 | | | | 1,872 | | | | (290 | ) | | 1963 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Grayling, MI | | (b) | | | 2,052 | | | | 549 | | | | 0 | | | | 0 | | | | 2,052 | | | | 549 | | | | 2,601 | | | | (296 | ) | | 1988 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Alpena, MI | | (b) | | | 471 | | | | 561 | | | | 0 | | | | 0 | | | | 471 | | | | 561 | | | | 1,032 | | | | (140 | ) | | 1999 | | 5/19/2016 | | 17 to 40 Years |
| C-Store | | Midland, MI | | (b) | | | 314 | | | | 135 | | | | 0 | | | | 0 | | | | 314 | | | | 135 | | | | 449 | | | | (75 | ) | | 1960 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Stevensville, MI | | (b) | | | 482 | | | | 191 | | | | 0 | | | | 0 | | | | 482 | | | | 191 | | | | 673 | | | | (120 | ) | | 1960 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Alpena, MI | | (b) | | | 392 | | | | 336 | | | | 0 | | | | 0 | | | | 392 | | | | 336 | | | | 728 | | | | (108 | ) | | 1998 | | 5/19/2016 | | 17 to 40 Years |
| C-Store | | Greenville, MI | | (b) | | | 437 | | | | 628 | | | | 0 | | | | 194 | | | | 437 | | | | 822 | | | | 1,259 | | | | (174 | ) | | 1968 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Lansing, MI | | (b) | | | 269 | | | | 179 | | | | 0 | | | | 0 | | | | 269 | | | | 179 | | | | 448 | | | | (79 | ) | | 1965 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Swartz Creek, MI | | (b) | | | 213 | | | | 460 | | | | 0 | | | | 0 | | | | 213 | | | | 460 | | | | 673 | | | | (113 | ) | | 1952 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Spring Lake, MI | | (b) | | | 247 | | | | 325 | | | | 0 | | | | 190 | | | | 247 | | | | 515 | | | | 762 | | | | (124 | ) | | 1964 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Sault Ste Marie, MI | | (b) | | | 1,760 | | | | 561 | | | | 0 | | | | 0 | | | | 1,760 | | | | 561 | | | | 2,321 | | | | (267 | ) | | 1993 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Coopersville, MI | | (b) | | | 998 | | | | 572 | | | | 0 | | | | 0 | | | | 998 | | | | 572 | | | | 1,570 | | | | (205 | ) | | 1968 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Cedar Springs, MI | | (b) | | | 191 | | | | 348 | | | | 0 | | | | 0 | | | | 191 | | | | 348 | | | | 539 | | | | (89 | ) | | 1965 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Saginaw, MI | | (b) | | | 1,177 | | | | 594 | | | | 0 | | | | 0 | | | | 1,177 | | | | 594 | | | | 1,771 | | | | (236 | ) | | 1989 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Saginaw, MI | | (b) | | | 359 | | | | 191 | | | | 0 | | | | 0 | | | | 359 | | | | 191 | | | | 550 | | | | (65 | ) | | 1969 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Three Rivers, MI | | (b) | | | 1,256 | | | | 1,401 | | | | 0 | | | | 0 | | | | 1,256 | | | | 1,401 | | | | 2,657 | | | | (386 | ) | | 1982 | | 5/19/2016 | | 20 to 30 Years |
| C-Store | | Saginaw, MI | | (b) | | | 224 | | | | 135 | | | | 0 | | | | 0 | | | | 224 | | | | 135 | | | | 359 | | | | (63 | ) | | 1960 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Grand Haven, MI | | (b) | | | 661 | | | | 628 | | | | 0 | | | | 0 | | | | 661 | | | | 628 | | | | 1,289 | | | | (184 | ) | | 1992 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Jackson, MI | | (b) | | | 247 | | | | 179 | | | | 0 | | | | 0 | | | | 247 | | | | 179 | | | | 426 | | | | (82 | ) | | 1965 | | 5/19/2016 | | 17 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Gretna, VA | | (d) | | 268 |
| | 798 |
| | — |
| | — |
| | 268 |
| | 798 |
| | 1,066 |
| | (130 | ) | | 1978 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Lynchburg, VA | | (d) | | 517 |
| | 1,142 |
| | — |
| | — |
| | 517 |
| | 1,142 |
| | 1,659 |
| | (180 | ) | | 2000 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Moneta, VA | | (d) | | 437 |
| | 934 |
| | — |
| | — |
| | 437 |
| | 934 |
| | 1,371 |
| | (165 | ) | | 1999 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Hurt, VA | | (d) | | 685 |
| | 1,023 |
| | — |
| | — |
| | 685 |
| | 1,023 |
| | 1,708 |
| | (187 | ) | | 1973 | | 06/30/15 | | 15 to 30 Years |
| C-Store | South Boston, VA | | (d) | | 407 |
| | 834 |
| | — |
| | — |
| | 407 |
| | 834 |
| | 1,241 |
| | (125 | ) | | 1983 | | 06/30/15 | | 15 to 30 Years |
| C-Store | South Boston, VA | | (d) | | 894 |
| | 1,232 |
| | — |
| | — |
| | 894 |
| | 1,232 |
| | 2,126 |
| | (206 | ) | | 1997 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Gretna, VA | | (d) | | 159 |
| | 1,083 |
| | — |
| | — |
| | 159 |
| | 1,083 |
| | 1,242 |
| | (152 | ) | | 1996 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Danville, VA | | (d) | | 348 |
| | 477 |
| | — |
| | — |
| | 348 |
| | 477 |
| | 825 |
| | (86 | ) | | 1989 | | 06/30/15 | | 15 to 30 Years |
| C-Store | South Boston, VA | | (d) | | 368 |
| | 517 |
| | — |
| | — |
| | 368 |
| | 517 |
| | 885 |
| | (100 | ) | | 1997 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Jackson, KY | | (d) | | 417 |
| | 765 |
| | — |
| | — |
| | 417 |
| | 765 |
| | 1,182 |
| | (124 | ) | | 1982 | | 06/30/15 | | 15 to 30 Years |
| C-Store | McKee, KY | | (d) | | 119 |
| | 973 |
| | — |
| | — |
| | 119 |
| | 973 |
| | 1,092 |
| | (127 | ) | | 1983 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Paris, KY | | (d) | | 209 |
| | 576 |
| | — |
| | — |
| | 209 |
| | 576 |
| | 785 |
| | (93 | ) | | 1992 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Cynthiana, KY | | (d) | | 119 |
| | 596 |
| | — |
| | — |
| | 119 |
| | 596 |
| | 715 |
| | (86 | ) | | 1985 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Campton, KY | | (d) | | 189 |
| | 735 |
| | — |
| | — |
| | 189 |
| | 735 |
| | 924 |
| | (109 | ) | | 1996 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Flemingsburg, KY | | (d) | | 1,073 |
| | 1,212 |
| | — |
| | — |
| | 1,073 |
| | 1,212 |
| | 2,285 |
| | (225 | ) | | 1997 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Clay City, KY | | (d) | | 397 |
| | 884 |
| | — |
| | — |
| | 397 |
| | 884 |
| | 1,281 |
| | (168 | ) | | 2002 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Hazard, KY | | (d) | | 288 |
| | 805 |
| | — |
| | — |
| | 288 |
| | 805 |
| | 1,093 |
| | (122 | ) | | 1991 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Roanoke, VA | | (d) | | 397 |
| | 785 |
| | — |
| | — |
| | 397 |
| | 785 |
| | 1,182 |
| | (126 | ) | | 1986 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Salem, VA | | (d) | | 387 |
| | 1,172 |
| | — |
| | — |
| | 387 |
| | 1,172 |
| | 1,559 |
| | (174 | ) | | 1973 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Roanoke, VA | | (d) | | 397 |
| | 685 |
| | — |
| | — |
| | 397 |
| | 685 |
| | 1,082 |
| | (115 | ) | | 1997 | | 06/30/15 | | 15 to 30 Years |
| C-Store | Greenville, MI | | (d) | | 437 |
| | 628 |
| | — |
| | 194 |
| | 437 |
| | 822 |
| | 1,259 |
| | (98 | ) | | 1968 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Spring Lake, MI | | (d) | | 247 |
| | 325 |
| | — |
| | 190 |
| | 247 |
| | 515 |
| | 762 |
| | (70 | ) | | 1964 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Hastings, MI | | (d) | | 392 |
| | 437 |
| | — |
| | 190 |
| | 392 |
| | 627 |
| | 1,019 |
| | (93 | ) | | 1964 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Zeeland, MI | | (d) | | 213 |
| | 426 |
| | — |
| | — |
| | 213 |
| | 426 |
| | 639 |
| | (57 | ) | | 1989 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Holland, MI | | (d) | | 235 |
| | 325 |
| | — |
| | — |
| | 235 |
| | 325 |
| | 560 |
| | (50 | ) | | 1957 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Eaton Rapids, MI | | (d) | | 291 |
| | 448 |
| | — |
| | — |
| | 291 |
| | 448 |
| | 739 |
| | (76 | ) | | 1945 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Fremont, MI | | (d) | | 269 |
| | 269 |
| | — |
| | — |
| | 269 |
| | 269 |
| | 538 |
| | (56 | ) | | 1971 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Sparta, MI | | (d) | | 291 |
| | 650 |
| | — |
| | — |
| | 291 |
| | 650 |
| | 941 |
| | (87 | ) | | 1993 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Three Rivers, MI | | (d) | | 1,256 |
| | 1,401 |
| | — |
| | — |
| | 1,256 |
| | 1,401 |
| | 2,657 |
| | (218 | ) | | 1982 | | 05/19/16 | | 20 to 30 Years |
| C-Store | Jackson, MI | | (d) | | 684 |
| | 1,188 |
| | — |
| | — |
| | 684 |
| | 1,188 |
| | 1,872 |
| | (164 | ) | | 1963 | | 05/19/16 | | 17 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Jackson, MI | | (d) | | 908 |
| | 1,132 |
| | — |
| | — |
| | 908 |
| | 1,132 |
| | 2,040 |
| | (175 | ) | | 1969 | | 05/19/16 | | 21 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Hillsdale, MI | | (b) | | | 325 | | | | 157 | | | | 0 | | | | 0 | | | | 325 | | | | 157 | | | | 482 | | | | (72 | ) | | 1968 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Muskegon, MI | | (b) | | | 291 | | | | 471 | | | | 0 | | | | 0 | | | | 291 | | | | 471 | | | | 762 | | | | (138 | ) | | 1964 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Zeeland, MI | | (b) | | | 213 | | | | 426 | | | | 0 | | | | 0 | | | | 213 | | | | 426 | | | | 639 | | | | (101 | ) | | 1989 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Sparta, MI | | (b) | | | 291 | | | | 650 | | | | 0 | | | | 0 | | | | 291 | | | | 650 | | | | 941 | | | | (154 | ) | | 1993 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Lansing, MI | | (b) | | | 336 | | | | 168 | | | | 0 | | | | 0 | | | | 336 | | | | 168 | | | | 504 | | | | (95 | ) | | 1978 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Muskegon, MI | | (b) | | | 605 | | | | 650 | | | | 0 | | | | 0 | | | | 605 | | | | 650 | | | | 1,255 | | | | (190 | ) | | 1959 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Cadillac, MI | | (b) | | | 370 | | | | 404 | | | | 0 | | | | 0 | | | | 370 | | | | 404 | | | | 774 | | | | (125 | ) | | 1971 | | 5/19/2016 | | 17 to 30 Years |
| C-Store | | Cynthiana, KY | | (b) | | | 119 | | | | 596 | | | | 0 | | | | 0 | | | | 119 | | | | 596 | | | | 715 | | | | (135 | ) | | 1985 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Carlisle, KY | | (b) | | | 209 | | | | 586 | | | | 0 | | | | 0 | | | | 209 | | | | 586 | | | | 795 | | | | (148 | ) | | 1989 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Georgetown, KY | | (b) | | | 815 | | | | 934 | | | | 0 | | | | 0 | | | | 815 | | | | 934 | | | | 1,749 | | | | (255 | ) | | 1998 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Clay City, KY | | (b) | | | 397 | | | | 884 | | | | 0 | | | | 0 | | | | 397 | | | | 884 | | | | 1,281 | | | | (264 | ) | | 2002 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Winchester, KY | | (b) | | | 755 | | | | 775 | | | | 0 | | | | 0 | | | | 755 | | | | 775 | | | | 1,530 | | | | (229 | ) | | 1981 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Paris, KY | | (b) | | | 209 | | | | 576 | | | | 0 | | | | 0 | | | | 209 | | | | 576 | | | | 785 | | | | (146 | ) | | 1992 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Georgetown, KY | | (b) | | | 725 | | | | 805 | | | | 0 | | | | 0 | | | | 725 | | | | 805 | | | | 1,530 | | | | (228 | ) | | 1989 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Mount Sterling, KY | | (b) | | | 1,103 | | | | 1,103 | | | | 0 | | | | 0 | | | | 1,103 | | | | 1,103 | | | | 2,206 | | | | (330 | ) | | 2000 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Irvine, KY | | (b) | | | 219 | | | | 666 | | | | 0 | | | | 0 | | | | 219 | | | | 666 | | | | 885 | | | | (177 | ) | | 1987 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | McKee, KY | | (b) | | | 119 | | | | 973 | | | | 0 | | | | 0 | | | | 119 | | | | 973 | | | | 1,092 | | | | (200 | ) | | 1983 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Hazard, KY | | (b) | | | 288 | | | | 805 | | | | 0 | | | | 0 | | | | 288 | | | | 805 | | | | 1,093 | | | | (191 | ) | | 1991 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Campton, KY | | (b) | | | 189 | | | | 735 | | | | 0 | | | | 0 | | | | 189 | | | | 735 | | | | 924 | | | | (171 | ) | | 1996 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Flemingsburg, KY | | (b) | | | 1,073 | | | | 1,212 | | | | 0 | | | | 0 | | | | 1,073 | | | | 1,212 | | | | 2,285 | | | | (353 | ) | | 1997 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Jackson, KY | | (b) | | | 417 | | | | 765 | | | | 0 | | | | 0 | | | | 417 | | | | 765 | | | | 1,182 | | | | (195 | ) | | 1982 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Paris, KY | | (b) | | | 129 | | | | 636 | | | | 0 | | | | 0 | | | | 129 | | | | 636 | | | | 765 | | | | (142 | ) | | 1988 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Carlisle, KY | | (b) | | | 298 | | | | 874 | | | | 0 | | | | 0 | | | | 298 | | | | 874 | | | | 1,172 | | | | (222 | ) | | 2005 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Beattyville, KY | | (b) | | | 278 | | | | 795 | | | | 0 | | | | 0 | | | | 278 | | | | 795 | | | | 1,073 | | | | (186 | ) | | 1981 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Harrodsburg, KY | | (b) | | | 228 | | | | 824 | | | | 0 | | | | 0 | | | | 228 | | | | 824 | | | | 1,052 | | | | (195 | ) | | 1973 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Moneta, VA | | (b) | | | 437 | | | | 934 | | | | 0 | | | | 0 | | | | 437 | | | | 934 | | | | 1,371 | | | | (259 | ) | | 1999 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | South Boston, VA | | (b) | | | 407 | | | | 834 | | | | 0 | | | | 0 | | | | 407 | | | | 834 | | | | 1,241 | | | | (197 | ) | | 1983 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Rustburg, VA | | (b) | | | 526 | | | | 775 | | | | 0 | | | | 0 | | | | 526 | | | | 775 | | | | 1,301 | | | | (233 | ) | | 1990 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Roanoke, VA | | (b) | | | 616 | | | | 534 | | | | 0 | | | | 0 | | | | 616 | | | | 534 | | | | 1,150 | | | | (167 | ) | | 1988 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | South Boston, VA | | (b) | | | 894 | | | | 1,232 | | | | 0 | | | | 0 | | | | 894 | | | | 1,232 | | | | 2,126 | | | | (324 | ) | | 1997 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Lynchburg, VA | | (b) | | | 467 | | | | 1,391 | | | | 0 | | | | 0 | | | | 467 | | | | 1,391 | | | | 1,858 | | | | (313 | ) | | 2006 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Gretna, VA | | (b) | | | 268 | | | | 798 | | | | 0 | | | | 0 | | | | 268 | | | | 798 | | | | 1,066 | | | | (205 | ) | | 1978 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Gretna, VA | | (b) | | | 159 | | | | 1,083 | | | | 0 | | | | 0 | | | | 159 | | | | 1,083 | | | | 1,242 | | | | (239 | ) | | 1996 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | South Boston, VA | | (b) | | | 368 | | | | 517 | | | | 0 | | | | 0 | | | | 368 | | | | 517 | | | | 885 | | | | (157 | ) | | 1997 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Roanoke, VA | | (b) | | | 238 | | | | 497 | | | | 0 | | | | 0 | | | | 238 | | | | 497 | | | | 735 | | | | (117 | ) | | 1988 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Madison Heights, VA | | (b) | | | 268 | | | | 417 | | | | 0 | | | | 0 | | | | 268 | | | | 417 | | | | 685 | | | | (113 | ) | | 1983 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Lynchburg, VA | | (b) | | | 517 | | | | 1,142 | | | | 0 | | | | 0 | | | | 517 | | | | 1,142 | | | | 1,659 | | | | (282 | ) | | 2000 | | 6/30/2015 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Cedar Springs, MI | | (d) | | 191 |
| | 348 |
| | — |
| | — |
| | 191 |
| | 348 |
| | 539 |
| | (50 | ) | | 1965 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Burton, MI | | (d) | | 336 |
| | 1,323 |
| | — |
| | — |
| | 336 |
| | 1,323 |
| | 1,659 |
| | (146 | ) | | 1969 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Cadillac, MI | | (d) | | 370 |
| | 404 |
| | — |
| | — |
| | 370 |
| | 404 |
| | 774 |
| | (71 | ) | | 1971 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Swartz Creek, MI | | (d) | | 213 |
| | 460 |
| | — |
| | — |
| | 213 |
| | 460 |
| | 673 |
| | (63 | ) | | 1952 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Grayling, MI | | (d) | | 2,052 |
| | 549 |
| | — |
| | — |
| | 2,052 |
| | 549 |
| | 2,601 |
| | (167 | ) | | 1988 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Plainwell, MI | | (d) | | 785 |
| | 235 |
| | — |
| | — |
| | 785 |
| | 235 |
| | 1,020 |
| | (92 | ) | | 1998 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Lansing, MI | | (d) | | 336 |
| | 168 |
| | — |
| | — |
| | 336 |
| | 168 |
| | 504 |
| | (54 | ) | | 1978 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Menominee, MI | | (d) | | 235 |
| | 179 |
| | — |
| | — |
| | 235 |
| | 179 |
| | 414 |
| | (41 | ) | | 1966 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Marquette, MI | | (d) | | 404 |
| | 146 |
| | — |
| | — |
| | 404 |
| | 146 |
| | 550 |
| | (38 | ) | | 1968 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Scottville, MI | | (d) | | 235 |
| | 404 |
| | — |
| | — |
| | 235 |
| | 404 |
| | 639 |
| | (67 | ) | | 1959 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Saginaw, MI | | (d) | | 1,177 |
| | 594 |
| | — |
| | — |
| | 1,177 |
| | 594 |
| | 1,771 |
| | (133 | ) | | 1989 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Sault Ste Marie, MI | | (d) | | 1,760 |
| | 561 |
| | — |
| | — |
| | 1,760 |
| | 561 |
| | 2,321 |
| | (150 | ) | | 1993 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Lansing, MI | | (d) | | 269 |
| | 179 |
| | — |
| | — |
| | 269 |
| | 179 |
| | 448 |
| | (44 | ) | | 1965 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Merrillville, IN | | (d) | | 303 |
| | 247 |
| | — |
| | — |
| | 303 |
| | 247 |
| | 550 |
| | (54 | ) | | 1973 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Stevensville, MI | | (d) | | 482 |
| | 191 |
| | — |
| | — |
| | 482 |
| | 191 |
| | 673 |
| | (68 | ) | | 1960 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Charlotte, MI | | (d) | | 224 |
| | 157 |
| | — |
| | — |
| | 224 |
| | 157 |
| | 381 |
| | (42 | ) | | 1968 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Franklin, IN | | (d) | | 303 |
| | 213 |
| | — |
| | — |
| | 303 |
| | 213 |
| | 516 |
| | (47 | ) | | 1969 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Muncie, IN | | (d) | | 448 |
| | 135 |
| | — |
| | — |
| | 448 |
| | 135 |
| | 583 |
| | (51 | ) | | 1983 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Freeland, MI | | (d) | | 336 |
| | 437 |
| | — |
| | — |
| | 336 |
| | 437 |
| | 773 |
| | (72 | ) | | 1962 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Midland, MI | | (d) | | 314 |
| | 135 |
| | — |
| | — |
| | 314 |
| | 135 |
| | 449 |
| | (42 | ) | | 1960 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Saginaw, MI | | (d) | | 224 |
| | 135 |
| | — |
| | — |
| | 224 |
| | 135 |
| | 359 |
| | (35 | ) | | 1960 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Coldwater, MI | | (d) | | 258 |
| | 135 |
| | — |
| | — |
| | 258 |
| | 135 |
| | 393 |
| | (37 | ) | | 1960 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Jackson, MI | | (d) | | 247 |
| | 179 |
| | — |
| | — |
| | 247 |
| | 179 |
| | 426 |
| | (46 | ) | | 1965 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Midland, MI | | (d) | | 191 |
| | 67 |
| | — |
| | — |
| | 191 |
| | 67 |
| | 258 |
| | (26 | ) | | 1962 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Hillsdale, MI | | (d) | | 325 |
| | 157 |
| | — |
| | — |
| | 325 |
| | 157 |
| | 482 |
| | (41 | ) | | 1968 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Mason, MI | | (d) | | 258 |
| | 157 |
| | — |
| | — |
| | 258 |
| | 157 |
| | 415 |
| | (44 | ) | | 1971 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Allegan, MI | | (d) | | 392 |
| | 224 |
| | — |
| | — |
| | 392 |
| | 224 |
| | 616 |
| | (64 | ) | | 1965 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Connersville, IN | | (d) | | 336 |
| | 179 |
| | — |
| | — |
| | 336 |
| | 179 |
| | 515 |
| | (41 | ) | | 1993 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Indianapolis, IN | | (d) | | 426 |
| | 191 |
| | — |
| | — |
| | 426 |
| | 191 |
| | 617 |
| | (50 | ) | | 1973 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Monticello, IN | | (d) | | 235 |
| | 202 |
| | — |
| | — |
| | 235 |
| | 202 |
| | 437 |
| | (46 | ) | | 1970 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Grand Rapids, MI | | (d) | | 224 |
| | 123 |
| | — |
| | — |
| | 224 |
| | 123 |
| | 347 |
| | (28 | ) | | 1957 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Grand Haven, MI | | (d) | | 661 |
| | 628 |
| | — |
| | — |
| | 661 |
| | 628 |
| | 1,289 |
| | (103 | ) | | 1992 | | 05/19/16 | | 17 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | South Boston, VA | | (b) | | | 377 | | | | 705 | | | | 0 | | | | 0 | | | | 377 | | | | 705 | | | | 1,082 | | | | (166 | ) | | 1988 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Blairs, VA | | (b) | | | 318 | | | | 636 | | | | 0 | | | | 0 | | | | 318 | | | | 636 | | | | 954 | | | | (153 | ) | | 1987 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Daleville, VA | | (b) | | | 467 | | | | 616 | | | | 0 | | | | 0 | | | | 467 | | | | 616 | | | | 1,083 | | | | (175 | ) | | 1989 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Hurt, VA | | (b) | | | 685 | | | | 1,023 | | | | 0 | | | | 0 | | | | 685 | | | | 1,023 | | | | 1,708 | | | | (293 | ) | | 1973 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Bedford, VA | | (b) | | | 258 | | | | 818 | | | | 0 | | | | 0 | | | | 258 | | | | 818 | | | | 1,076 | | | | (194 | ) | | 1997 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Salem, VA | | (b) | | | 209 | | | | 576 | | | | 0 | | | | 0 | | | | 209 | | | | 576 | | | | 785 | | | | (146 | ) | | 1970 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Roanoke, VA | | (b) | | | 397 | | | | 685 | | | | 0 | | | | 0 | | | | 397 | | | | 685 | | | | 1,082 | | | | (180 | ) | | 1997 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Forest, VA | | (b) | | | 248 | | | | 834 | | | | 0 | | | | 0 | | | | 248 | | | | 834 | | | | 1,082 | | | | (197 | ) | | 1995 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Danville, VA | | (b) | | | 348 | | | | 477 | | | | 0 | | | | 0 | | | | 348 | | | | 477 | | | | 825 | | | | (135 | ) | | 1989 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Altavista, VA | | (b) | | | 358 | | | | 1,401 | | | | 0 | | | | 0 | | | | 358 | | | | 1,401 | | | | 1,759 | | | | (308 | ) | | 1981 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Roanoke, VA | | (b) | | | 397 | | | | 785 | | | | 0 | | | | 0 | | | | 397 | | | | 785 | | | | 1,182 | | | | (198 | ) | | 1986 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Salem, VA | | (b) | | | 387 | | | | 1,172 | | | | 0 | | | | 0 | | | | 387 | | | | 1,172 | | | | 1,559 | | | | (273 | ) | | 1973 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Salem, VA | | (b) | | | 646 | | | | 517 | | | | 0 | | | | 0 | | | | 646 | | | | 517 | | | | 1,163 | | | | (160 | ) | | 1987 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Altavista, VA | | (b) | | | 467 | | | | 745 | | | | 0 | | | | 0 | | | | 467 | | | | 745 | | | | 1,212 | | | | (198 | ) | | 1984 | | 6/30/2015 | | 15 to 30 Years |
| C-Store | | Jacksonville, FL | | (b) | | | 2,285 | | | | 1,537 | | | | 0 | | | | 50 | | | | 2,285 | | | | 1,587 | | | | 3,872 | | | | (705 | ) | | 2010 | | 10/28/2015 | | 15 to 40 Years |
| C-Store | | Apopka, FL | | (b) | | | 1,357 | | | | 748 | | | | 0 | | | | 55 | | | | 1,357 | | | | 803 | | | | 2,160 | | | | (439 | ) | | 1997 | | 10/28/2015 | | 15 to 30 Years |
| C-Store | | Belle Isle, FL | | (b) | | | 908 | | | | 738 | | | | 0 | | | | 168 | | | | 908 | | | | 906 | | | | 1,814 | | | | (299 | ) | | 1996 | | 10/27/2015 | | 15 to 30 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,397 | | | | 1,028 | | | | 0 | | | | 127 | | | | 1,397 | | | | 1,155 | | | | 2,552 | | | | (489 | ) | | 1990 | | 10/29/2015 | | 15 to 30 Years |
| C-Store | | Okeechobee, FL | | (b) | | | 468 | | | | 936 | | | | 0 | | | | 0 | | | | 468 | | | | 936 | | | | 1,404 | | | | (249 | ) | | 1976 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Fort Pierce, FL | | (b) | | | 681 | | | | 1,404 | | | | 0 | | | | 0 | | | | 681 | | | | 1,404 | | | | 2,085 | | | | (356 | ) | | 1989 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Okeechobee, FL | | (b) | | | 808 | | | | 1,191 | | | | 0 | | | | 0 | | | | 808 | | | | 1,191 | | | | 1,999 | | | | (367 | ) | | 1984 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Fort Pierce, FL | | (b) | | | 1,064 | | | | 1,659 | | | | 0 | | | | 0 | | | | 1,064 | | | | 1,659 | | | | 2,723 | | | | (466 | ) | | 1977 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Okeechobee, FL | | (b) | | | 386 | | | | 1,764 | | | | 0 | | | | 0 | | | | 386 | | | | 1,764 | | | | 2,150 | | | | (366 | ) | | 1975 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Okeechobee, FL | | (b) | | | 558 | | | | 1,024 | | | | 0 | | | | 0 | | | | 558 | | | | 1,024 | | | | 1,582 | | | | (265 | ) | | 1986 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Belle Glade, FL | | (b) | | | 978 | | | | 1,184 | | | | 0 | | | | 0 | | | | 978 | | | | 1,184 | | | | 2,162 | | | | (288 | ) | | 1960 | | 10/30/2014 | | 15 to 40 Years |
| C-Store | | Yarmouth, ME | | (b) | | | 950 | | | | 278 | | | | 0 | | | | 0 | | | | 950 | | | | 278 | | | | 1,228 | | | | (186 | ) | | 1990 | | 1/24/2014 | | 14 to 40 Years |
| C-Store | | Waldoboro, ME | | (b) | | | 1,450 | | | | 834 | | | | 0 | | | | 0 | | | | 1,450 | | | | 834 | | | | 2,284 | | | | (372 | ) | | 1996 | | 1/24/2014 | | 14 to 40 Years |
| C-Store | | Wiscasset, ME | | (b) | | | 1,305 | | | | 538 | | | | 0 | | | | 0 | | | | 1,305 | | | | 538 | | | | 1,843 | | | | (380 | ) | | 1992 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | South Portland, ME | | (b) | | | 448 | | | | 593 | | | | 0 | | | | 0 | | | | 448 | | | | 593 | | | | 1,041 | | | | (193 | ) | | 1970 | | 1/24/2014 | | 14 to 40 Years |
| C-Store | | Hampden, ME | | (b) | | | 987 | | | | 424 | | | | 0 | | | | 0 | | | | 987 | | | | 424 | | | | 1,411 | | | | (328 | ) | | 1997 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Presque Isle, ME | | (b) | | | 708 | | | | 390 | | | | 0 | | | | 0 | | | | 708 | | | | 390 | | | | 1,098 | | | | (255 | ) | | 1995 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Bucksport, ME | | (b) | | | 1,203 | | | | 587 | | | | 0 | | | | 0 | | | | 1,203 | | | | 587 | | | | 1,790 | | | | (248 | ) | | 1995 | | 1/24/2014 | | 14 to 40 Years |
| C-Store | | Belmont, NH | | (b) | | | 315 | | | | 218 | | | | 0 | | | | 0 | | | | 315 | | | | 218 | | | | 533 | | | | (107 | ) | | 1969 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Laconia, NH | | (b) | | | 411 | | | | 770 | | | | 0 | | | | 0 | | | | 411 | | | | 770 | | | | 1,181 | | | | (278 | ) | | 1998 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Raymond, NH | | (b) | | | 1,722 | | | | 430 | | | | 0 | | | | 0 | | | | 1,722 | | | | 430 | | | | 2,152 | �� | | | (379 | ) | | 1986 | | 1/24/2014 | | 14 to 20 Years |
| C-Store | | Grandtham, NH | | (b) | | | 576 | | | | 394 | | | | 0 | | | | 0 | | | | 576 | | | | 394 | | | | 970 | | | | (190 | ) | | 1989 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Belmont, NH | | (b) | | | 524 | | | | 879 | | | | 0 | | | | 0 | | | | 524 | | | | 879 | | | | 1,403 | | | | (341 | ) | | 2002 | | 1/24/2014 | | 14 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Indianapolis, IN | | (d) | | 325 |
| | 157 |
| | — |
| | — |
| | 325 |
| | 157 |
| | 482 |
| | (37 | ) | | 1945 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Indianapolis, IN | | (d) | | 247 |
| | 146 |
| | — |
| | — |
| | 247 |
| | 146 |
| | 393 |
| | (33 | ) | | 1972 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Alpena, MI | | (d) | | 392 |
| | 336 |
| | — |
| | — |
| | 392 |
| | 336 |
| | 728 |
| | (61 | ) | | 1998 | | 05/19/16 | | 17 to 40 Years |
| C-Store | Alpena, MI | | (d) | | 471 |
| | 561 |
| | — |
| | — |
| | 471 |
| | 561 |
| | 1,032 |
| | (79 | ) | | 1999 | | 05/19/16 | | 17 to 40 Years |
| C-Store | Alma, MI | | (d) | | 235 |
| | 437 |
| | — |
| | — |
| | 235 |
| | 437 |
| | 672 |
| | (62 | ) | | 2006 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Edmore, MI | | (d) | | 729 |
| | 774 |
| | — |
| | — |
| | 729 |
| | 774 |
| | 1,503 |
| | (144 | ) | | 1999 | | 05/19/16 | | 17 to 40 Years |
| C-Store | Ithaca, MI | | (d) | | 538 |
| | 381 |
| | — |
| | — |
| | 538 |
| | 381 |
| | 919 |
| | (86 | ) | | 1994 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Saginaw, MI | | (d) | | 359 |
| | 191 |
| | — |
| | — |
| | 359 |
| | 191 |
| | 550 |
| | (37 | ) | | 1969 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Traverse City, MI | | (d) | | 482 |
| | 179 |
| | — |
| | — |
| | 482 |
| | 179 |
| | 661 |
| | (39 | ) | | 1971 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Norton Shores, MI | | (d) | | 325 |
| | 291 |
| | — |
| | — |
| | 325 |
| | 291 |
| | 616 |
| | (64 | ) | | 1962 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Coopersville, MI | | (d) | | 998 |
| | 572 |
| | — |
| | — |
| | 998 |
| | 572 |
| | 1,570 |
| | (116 | ) | | 1968 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Muskegon, MI | | (d) | | 605 |
| | 650 |
| | — |
| | — |
| | 605 |
| | 650 |
| | 1,255 |
| | (107 | ) | | 1959 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Muskegon, MI | | (d) | | 291 |
| | 471 |
| | — |
| | — |
| | 291 |
| | 471 |
| | 762 |
| | (78 | ) | | 1964 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Rushville, IN | | (d) | | 179 |
| | 112 |
| | — |
| | — |
| | 179 |
| | 112 |
| | 291 |
| | (28 | ) | | 1978 | | 05/19/16 | | 17 to 30 Years |
| C-Store | St Johns, MI | | (d) | | 460 |
| | 706 |
| | — |
| | — |
| | 460 |
| | 706 |
| | 1,166 |
| | (115 | ) | | 2011 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Wyoming, MI | | (d) | | 314 |
| | 448 |
| | — |
| | — |
| | 314 |
| | 448 |
| | 762 |
| | (62 | ) | | 1958 | | 05/19/16 | | 17 to 30 Years |
| C-Store | Sherman Mills, ME | | (d) | | 259 |
| | 163 |
| | — |
| | — |
| | 259 |
| | 163 |
| | 422 |
| | (91 | ) | | 1974 | | 06/28/12 | | 15 to 20 Years |
| C-Store | Bangor, ME | | (d) | | 327 |
| | 141 |
| | — |
| | — |
| | 327 |
| | 141 |
| | 468 |
| | (108 | ) | | 1973 | | 06/28/12 | | 15 to 15 Years |
| C-Store | Calais, ME | | (d) | | 187 |
| | 213 |
| | — |
| | — |
| | 187 |
| | 213 |
| | 400 |
| | (98 | ) | | 1968 | | 06/28/12 | | 15 to 20 Years |
| C-Store | Brewer, ME | | (d) | | 238 |
| | 260 |
| | — |
| | — |
| | 238 |
| | 260 |
| | 498 |
| | (106 | ) | | 1967 | | 06/28/12 | | 15 to 25 Years |
| C-Store | Harrington, ME | | (d) | | 331 |
| | 459 |
| | — |
| | — |
| | 331 |
| | 459 |
| | 790 |
| | (163 | ) | | 1992 | | 06/28/12 | | 15 to 32 Years |
| C-Store | Lewiston, ME | | (d) | | 460 |
| | 341 |
| | — |
| | — |
| | 460 |
| | 341 |
| | 801 |
| | (140 | ) | | 1994 | | 06/28/12 | | 15 to 28 Years |
| C-Store | Rockland, ME | | (d) | | 211 |
| | 303 |
| | — |
| | — |
| | 211 |
| | 303 |
| | 514 |
| | (97 | ) | | 1984 | | 06/28/12 | | 15 to 28 Years |
| C-Store | Oakfield, ME | | (d) | | 273 |
| | 229 |
| | — |
| | — |
| | 273 |
| | 229 |
| | 502 |
| | (113 | ) | | 1993 | | 06/28/12 | | 15 to 25 Years |
| C-Store | Ashland, NH | | (d) | | 398 |
| | 157 |
| | — |
| | — |
| | 398 |
| | 157 |
| | 555 |
| | (76 | ) | | 1970 | | 06/28/12 | | 15 to 20 Years |
| C-Store | Berlin, NH | | (d) | | 387 |
| | 317 |
| | — |
| | — |
| | 387 |
| | 317 |
| | 704 |
| | (140 | ) | | 1991 | | 06/28/12 | | 15 to 22 Years |
| C-Store | Paris, ME | | (d) | | 139 |
| | 153 |
| | — |
| | — |
| | 139 |
| | 153 |
| | 292 |
| | (80 | ) | | 1954 | | 06/28/12 | | 15 to 17 Years |
| C-Store | Madison, ME | | (d) | | 130 |
| | 410 |
| | — |
| | — |
| | 130 |
| | 410 |
| | 540 |
| | (128 | ) | | 1988 | | 06/28/12 | | 15 to 25 Years |
| C-Store | Bartlett, NH | | (d) | | 325 |
| | 399 |
| | — |
| | — |
| | 325 |
| | 399 |
| | 724 |
| | (122 | ) | | 1998 | | 06/28/12 | | 15 to 32 Years |
| C-Store | Auburn, ME | | (d) | | 371 |
| | 444 |
| | — |
| | — |
| | 371 |
| | 444 |
| | 815 |
| | (136 | ) | | 1996 | | 06/28/12 | | 15 to 30 Years |
| C-Store | Auburn, ME | | (d) | | 287 |
| | 222 |
| | — |
| | — |
| | 287 |
| | 222 |
| | 509 |
| | (97 | ) | | 1968 | | 06/28/12 | | 15 to 20 Years |
| C-Store | South Portland, ME | | (d) | | 661 |
| | 194 |
| | — |
| | — |
| | 661 |
| | 194 |
| | 855 |
| | (132 | ) | | 1970 | | 06/28/12 | | 15 to 15 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Keene, NH | | (b) | | | 553 | | | | 289 | | | | 0 | | | | 0 | | | | 553 | | | | 289 | | | | 842 | | | | (142 | ) | | 1960 | | 1/24/2014 | | 14 to 30 Years |
| C-Store | | Barton, VT | | (b) | | | 307 | | | | 609 | | | | 0 | | | | 0 | | | | 307 | | | | 609 | | | | 916 | | | | (164 | ) | | 1975 | | 1/24/2014 | | 14 to 40 Years |
| C-Store | | Sherman Mills, ME | | (b) | | | 259 | | | | 163 | | | | 0 | | | | 0 | | | | 259 | | | | 163 | | | | 422 | | | | (120 | ) | | 1974 | | 6/28/2012 | | 15 to 20 Years |
| C-Store | | Bangor, ME | | (b) | | | 327 | | | | 141 | | | | 0 | | | | 0 | | | | 327 | | | | 141 | | | | 468 | | | | (141 | ) | | 1973 | | 6/28/2012 | | 15 to 15 Years |
| C-Store | | Calais, ME | | (b) | | | 187 | | | | 213 | | | | 0 | | | | 0 | | | | 187 | | | | 213 | | | | 400 | | | | (128 | ) | | 1968 | | 6/28/2012 | | 15 to 20 Years |
| C-Store | | Brewer, ME | | (b) | | | 238 | | | | 260 | | | | 0 | | | | 0 | | | | 238 | | | | 260 | | | | 498 | | | | (138 | ) | | 1967 | | 6/28/2012 | | 15 to 25 Years |
| C-Store | | Harrington, ME | | (b) | | | 331 | | | | 459 | | | | 0 | | | | 0 | | | | 331 | | | | 459 | | | | 790 | | | | (213 | ) | | 1992 | | 6/28/2012 | | 15 to 32 Years |
| C-Store | | Lewiston, ME | | (b) | | | 460 | | | | 341 | | | | 0 | | | | 0 | | | | 460 | | | | 341 | | | | 801 | | | | (183 | ) | | 1994 | | 6/28/2012 | | 15 to 28 Years |
| C-Store | | Rockland, ME | | (b) | | | 211 | | | | 303 | | | | 0 | | | | 0 | | | | 211 | | | | 303 | | | | 514 | | | | (126 | ) | | 1984 | | 6/28/2012 | | 15 to 28 Years |
| C-Store | | Oakfield, ME | | (b) | | | 273 | | | | 229 | | | | 0 | | | | 0 | | | | 273 | | | | 229 | | | | 502 | | | | (147 | ) | | 1993 | | 6/28/2012 | | 15 to 25 Years |
| C-Store | | Ashland, NH | | (b) | | | 398 | | | | 157 | | | | 0 | | | | 0 | | | | 398 | | | | 157 | | | | 555 | | | | (100 | ) | | 1970 | | 6/28/2012 | | 15 to 20 Years |
| C-Store | | Berlin, NH | | (b) | | | 387 | | | | 317 | | | | 0 | | | | 0 | | | | 387 | | | | 317 | | | | 704 | | | | (183 | ) | | 1991 | | 6/28/2012 | | 15 to 22 Years |
| C-Store | | Paris, ME | | (b) | | | 139 | | | | 153 | | | | 0 | | | | 0 | | | | 139 | | | | 153 | | | | 292 | | | | (104 | ) | | 1954 | | 6/28/2012 | | 15 to 17 Years |
| C-Store | | Madison, ME | | (b) | | | 130 | | | | 410 | | | | 0 | | | | 0 | | | | 130 | | | | 410 | | | | 540 | | | | (168 | ) | | 1988 | | 6/28/2012 | | 15 to 25 Years |
| C-Store | | Bartlett, NH | | (b) | | | 325 | | | | 399 | | | | 0 | | | | 0 | | | | 325 | | | | 399 | | | | 724 | | | | (160 | ) | | 1998 | | 6/28/2012 | | 15 to 32 Years |
| C-Store | | Auburn, ME | | (b) | | | 371 | | | | 444 | | | | 0 | | | | 0 | | | | 371 | | | | 444 | | | | 815 | | | | (177 | ) | | 1996 | | 6/28/2012 | | 15 to 30 Years |
| C-Store | | Auburn, ME | | (b) | | | 287 | | | | 222 | | | | 0 | | | | 0 | | | | 287 | | | | 222 | | | | 509 | | | | (127 | ) | | 1968 | | 6/28/2012 | | 15 to 20 Years |
| C-Store | | South Portland, ME | | (b) | | | 661 | | | | 194 | | | | 0 | | | | 0 | | | | 661 | | | | 194 | | | | 855 | | | | (173 | ) | | 1970 | | 6/28/2012 | | 15 to 15 Years |
| C-Store | | Freeport, ME | | (b) | | | 503 | | | | 343 | | | | 0 | | | | 0 | | | | 503 | | | | 343 | | | | 846 | | | | (159 | ) | | 1991 | | 6/28/2012 | | 15 to 26 Years |
| C-Store | | Sanford, ME | | (b) | | | 807 | | | | 579 | | | | 0 | | | | 0 | | | | 807 | | | | 579 | | | | 1,386 | | | | (230 | ) | | 1997 | | 6/28/2012 | | 15 to 28 Years |
| C-Store | | Gorham, NH | | (b) | | | 723 | | | | 358 | | | | 0 | | | | 0 | | | | 723 | | | | 358 | | | | 1,081 | | | | (239 | ) | | 1975 | | 6/28/2012 | | 15 to 18 Years |
| C-Store | | Manchester, ME | | (b) | | | 279 | | | | 285 | | | | 0 | | | | 0 | | | | 279 | | | | 285 | | | | 564 | | | | (166 | ) | | 1990 | | 6/28/2012 | | 15 to 20 Years |
| C-Store | | Augusta, ME | | (b) | | | 318 | | | | 322 | | | | 0 | | | | 0 | | | | 318 | | | | 322 | | | | 640 | | | | (131 | ) | | 1997 | | 6/28/2012 | | 15 to 28 Years |
| C-Store | | Concord, NH | | (b) | | | 260 | | | | 330 | | | | 0 | | | | 0 | | | | 260 | | | | 330 | | | | 590 | | | | (147 | ) | | 1988 | | 6/28/2012 | | 15 to 25 Years |
| C-Store | | Newport, NH | | (b) | | | 519 | | | | 581 | | | | 0 | | | | 0 | | | | 519 | | | | 581 | | | | 1,100 | | | | (249 | ) | | 1998 | | 6/28/2012 | | 15 to 30 Years |
| C-Store | | Youngstown, FL | | (b) | | | 1,449 | | | | 1,763 | | | | 0 | | | | 33 | | | | 1,449 | | | | 1,796 | | | | 3,245 | | | | (523 | ) | | 1999 | | 4/26/2017 | | 15 to 30 Years |
| C-Store | | Roebuck, SC | | (b) | | | 708 | | | | 818 | | | | 0 | | | | 150 | | | | 708 | | | | 968 | | | | 1,676 | | | | (502 | ) | | 1992 | | 1/1/2014 | | 8 to 29 Years |
| C-Store | | Honea Path, SC | | (b) | | | 1,269 | | | | 1,134 | | | | (1 | ) | | | 174 | | | | 1,268 | | | | 1,308 | | | | 2,576 | | | | (765 | ) | | 1996 | | 1/1/2014 | | 8 to 29 Years |
| C-Store | | Laurens, SC | | (b) | | | 504 | | | | 622 | | | | 1 | | | | 116 | | | | 505 | | | | 738 | | | | 1,243 | | | | (371 | ) | | 1992 | | 1/1/2014 | | 8 to 29 Years |
| C-Store | | Asheville, NC | | (b) | | | 278 | | | | 776 | | | | 0 | | | | 167 | | | | 278 | | | | 943 | | | | 1,221 | | | | (375 | ) | | 2000 | | 1/1/2014 | | 8 to 29 Years |
| C-Store | | Inman, SC | | (b) | | | 2,183 | | | | 897 | | | | 0 | | | | 163 | | | | 2,183 | | | | 1,060 | | | | 3,243 | | | | (1,100 | ) | | 1994 | | 5/8/2013 | | 8 to 29 Years |
| C-Store | | Summerville, SC | | (b) | | | 1,317 | | | | 1,459 | | | | (151 | ) | | | 206 | | | | 1,166 | | | | 1,665 | | | | 2,831 | | | | (644 | ) | | 2001 | | 5/8/2013 | | 8 to 29 Years |
| C-Store | | Murphy, NC | | (b) | | | 489 | | | | 297 | | | | 0 | | | | 50 | | | | 489 | | | | 347 | | | | 836 | | | | (196 | ) | | 1965 | | 5/8/2013 | | 8 to 19 Years |
| C-Store | | Asheville, NC | | (b) | | | 247 | | | | 497 | | | | 0 | | | | 86 | | | | 247 | | | | 583 | | | | 830 | | | | (253 | ) | | 1986 | | 1/1/2014 | | 8 to 29 Years |
| C-Store | | Harriman, TN | | (b) | | | 400 | | | | 0 | | | | 0 | | | | 0 | | | | 400 | | | | 0 | | | | 400 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Maynardville, TN | | (b) | | | 830 | | | | 0 | | | | 0 | | | | 0 | | | | 830 | | | | 0 | | | | 830 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Athens, TN | | (b) | | | 1,140 | | | | 0 | | | | 0 | | | | 0 | | | | 1,140 | | | | 0 | | | | 1,140 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Freeport, ME | | (d) | | 503 |
| | 343 |
| | — |
| | — |
| | 503 |
| | 343 |
| | 846 |
| | (122 | ) | | 1991 | | 06/28/12 | | 15 to 26 Years |
| C-Store | Sanford, ME | | (d) | | 807 |
| | 579 |
| | — |
| | — |
| | 807 |
| | 579 |
| | 1,386 |
| | (176 | ) | | 1997 | | 06/28/12 | | 15 to 28 Years |
| C-Store | Gorham, NH | | (d) | | 723 |
| | 358 |
| | — |
| | — |
| | 723 |
| | 358 |
| | 1,081 |
| | (182 | ) | | 1975 | | 06/28/12 | | 15 to 18 Years |
| C-Store | Manchester, ME | | (d) | | 279 |
| | 285 |
| | — |
| | — |
| | 279 |
| | 285 |
| | 564 |
| | (127 | ) | | 1990 | | 06/28/12 | | 15 to 20 Years |
| C-Store | Augusta, ME | | (d) | | 318 |
| | 322 |
| | — |
| | — |
| | 318 |
| | 322 |
| | 640 |
| | (100 | ) | | 1997 | | 06/28/12 | | 15 to 28 Years |
| C-Store | Concord, NH | | (d) | | 260 |
| | 330 |
| | — |
| | — |
| | 260 |
| | 330 |
| | 590 |
| | (112 | ) | | 1988 | | 06/28/12 | | 15 to 25 Years |
| C-Store | Newport, NH | | (d) | | 519 |
| | 581 |
| | — |
| | — |
| | 519 |
| | 581 |
| | 1,100 |
| | (191 | ) | | 1998 | | 06/28/12 | | 15 to 30 Years |
| C-Store | Yarmouth, ME | | (d) | | 950 |
| | 278 |
| | — |
| | — |
| | 950 |
| | 278 |
| | 1,228 |
| | (132 | ) | | 1990 | | 01/24/14 | | 14 to 40 Years |
| C-Store | Waldoboro, ME | | (d) | | 1,450 |
| | 834 |
| | — |
| | — |
| | 1,450 |
| | 834 |
| | 2,284 |
| | (264 | ) | | 1996 | | 01/24/14 | | 14 to 40 Years |
| C-Store | Wiscasset, ME | | (d) | | 1,305 |
| | 538 |
| | — |
| | — |
| | 1,305 |
| | 538 |
| | 1,843 |
| | (270 | ) | | 1992 | | 01/24/14 | | 14 to 30 Years |
| C-Store | South Portland, ME | | (d) | | 448 |
| | 593 |
| | — |
| | — |
| | 448 |
| | 593 |
| | 1,041 |
| | (137 | ) | | 1970 | | 01/24/14 | | 14 to 40 Years |
| C-Store | Hampden, ME | | (d) | | 987 |
| | 424 |
| | — |
| | — |
| | 987 |
| | 424 |
| | 1,411 |
| | (234 | ) | | 1997 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Presque Isle, ME | | (d) | | 708 |
| | 390 |
| | — |
| | — |
| | 708 |
| | 390 |
| | 1,098 |
| | (181 | ) | | 1995 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Bucksport, ME | | (d) | | 1,203 |
| | 587 |
| | — |
| | — |
| | 1,203 |
| | 587 |
| | 1,790 |
| | (177 | ) | | 1995 | | 01/24/14 | | 14 to 40 Years |
| C-Store | Belmont, NH | | (d) | | 315 |
| | 218 |
| | — |
| | — |
| | 315 |
| | 218 |
| | 533 |
| | (76 | ) | | 1969 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Laconia, NH | | (d) | | 411 |
| | 770 |
| | — |
| | — |
| | 411 |
| | 770 |
| | 1,181 |
| | (198 | ) | | 1998 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Raymond, NH | | (d) | | 1,722 |
| | 430 |
| | — |
| | — |
| | 1,722 |
| | 430 |
| | 2,152 |
| | (269 | ) | | 1986 | | 01/24/14 | | 14 to 20 Years |
| C-Store | Grandtham, NH | | (d) | | 576 |
| | 394 |
| | — |
| | — |
| | 576 |
| | 394 |
| | 970 |
| | (135 | ) | | 1989 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Belmont, NH | | (d) | | 524 |
| | 879 |
| | — |
| | — |
| | 524 |
| | 879 |
| | 1,403 |
| | (242 | ) | | 2002 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Keene, NH | | (d) | | 553 |
| | 289 |
| | — |
| | — |
| | 553 |
| | 289 |
| | 842 |
| | (101 | ) | | 1960 | | 01/24/14 | | 14 to 30 Years |
| C-Store | Barton, VT | | (d) | | 307 |
| | 609 |
| | — |
| | — |
| | 307 |
| | 609 |
| | 916 |
| | (116 | ) | | 1975 | | 01/24/14 | | 14 to 40 Years |
| C-Store | Youngstown, FL | | (d) | | 1,449 |
| | 1,763 |
| | — |
| | 33 |
| | 1,449 |
| | 1,796 |
| | 3,245 |
| | (238 | ) | | 1999 | | 04/26/17 | | 15 to 30 Years |
| C-Store | Murphy, NC | | (a) | | 489 |
| | 297 |
| | — |
| | 50 |
| | 489 |
| | 347 |
| | 836 |
| | (145 | ) | | 1965 | | 05/08/13 | | 8 to 19 Years |
| C-Store | Roebuck, SC | | (a) | | 708 |
| | 818 |
| | — |
| | 150 |
| | 708 |
| | 968 |
| | 1,676 |
| | (371 | ) | | 1992 | | 01/01/14 | | 8 to 29 Years |
| C-Store | Laurens, SC | | (a) | | 504 |
| | 622 |
| | 1 |
| | 116 |
| | 505 |
| | 738 |
| | 1,243 |
| | (274 | ) | | 1992 | | 01/01/14 | | 8 to 29 Years |
| C-Store | Asheville, NC | | (a) | | 278 |
| | 776 |
| | — |
| | 167 |
| | 278 |
| | 943 |
| | 1,221 |
| | (277 | ) | | 2000 | | 01/01/14 | | 8 to 29 Years |
| C-Store | Asheville, NC | | (a) | | 247 |
| | 497 |
| | — |
| | 86 |
| | 247 |
| | 583 |
| | 830 |
| | (187 | ) | | 1986 | | 01/01/14 | | 8 to 29 Years |
| C-Store | Honea Path, SC | | (a) | | 1,269 |
| | 1,134 |
| | (1 | ) | | 174 |
| | 1,268 |
| | 1,308 |
| | 2,576 |
| | (565 | ) | | 1996 | | 01/01/14 | | 8 to 29 Years |
| C-Store | Inman, SC | | (a) | | 2,183 |
| | 897 |
| | — |
| | 163 |
| | 2,183 |
| | 1,060 |
| | 3,243 |
| | (812 | ) | | 1994 | | 05/08/13 | | 8 to 29 Years |
| C-Store | Summerville, SC | | (a) | | 1,317 |
| | 1,459 |
| | (151 | ) | | 206 |
| | 1,166 |
| | 1,665 |
| | 2,831 |
| | (475 | ) | | 2001 | | 05/08/13 | | 8 to 29 Years |
| C-Store | Auburn, AL | | (d) | | 2,188 |
| | 945 |
| | — |
| | 85 |
| | 2,188 |
| | 1,030 |
| | 3,218 |
| | (186 | ) | | 2001 | | 07/11/16 | | 22 to 40 Years |
| C-Store | Montgomery, AL | | (d) | | 648 |
| | 228 |
| | — |
| | — |
| | 648 |
| | 228 |
| | 876 |
| | (81 | ) | | 1965 | | 07/11/16 | | 15 to 20 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Vonore, TN | | (b) | | | 930 | | | | 0 | | | | 0 | | | | 0 | | | | 930 | | | | 0 | | | | 930 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Loudon, TN | | (b) | | | 1,283 | | | | 0 | | | | 0 | | | | 0 | | | | 1,283 | | | | 0 | | | | 1,283 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Wartburg, TN | | (b) | | | 520 | | | | 0 | | | | 0 | | | | 0 | | | | 520 | | | | 0 | | | | 520 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Kingston, TN | | (b) | | | 483 | | | | 0 | | | | 0 | | | | 0 | | | | 483 | | | | 0 | | | | 483 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Harriman, TN | | (b) | | | 709 | | | | 0 | | | | 0 | | | | 0 | | | | 709 | | | | 0 | | | | 709 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Dandridge, TN | | (b) | | | 959 | | | | 0 | | | | 0 | | | | 0 | | | | 959 | | | | 0 | | | | 959 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Rockwood, TN | | (b) | | | 358 | | | | 0 | | | | 0 | | | | 0 | | | | 358 | | | | 0 | | | | 358 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Jellico, TN | | (b) | | | 1,874 | | | | 0 | | | | 0 | | | | 0 | | | | 1,874 | | | | 0 | | | | 1,874 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Cleveland, TN | | (b) | | | 359 | | | | 0 | | | | 0 | | | | 0 | | | | 359 | | | | 0 | | | | 359 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Spring City, TN | | (b) | | | 1,634 | | | | 0 | | | | 0 | | | | 0 | | | | 1,634 | | | | 0 | | | | 1,634 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Cleveland, TN | | (b) | | | 1,228 | | | | 0 | | | | 0 | | | | 0 | | | | 1,228 | | | | 0 | | | | 1,228 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Powell, TN | | (b) | | | 868 | | | | 0 | | | | 0 | | | | 0 | | | | 868 | | | | 0 | | | | 868 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Oak Ridge, TN | | (b) | | | 1,807 | | | | 0 | | | | 0 | | | | 0 | | | | 1,807 | | | | 0 | | | | 1,807 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Jellico, TN | | (b) | | | 1,148 | | | | 0 | | | | 0 | | | | 0 | | | | 1,148 | | | | 0 | | | | 1,148 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Clinton, TN | | (b) | | | 868 | | | | 0 | | | | 0 | | | | 0 | | | | 868 | | | | 0 | | | | 868 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Clinton, TN | | (b) | | | 939 | | | | 0 | | | | 0 | | | | 0 | | | | 939 | | | | 0 | | | | 939 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Harriman, TN | | (b) | | | 1,048 | | | | 0 | | | | 0 | | | | 0 | | | | 1,048 | | | | 0 | | | | 1,048 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Athens, TN | | (b) | | | 620 | | | | 0 | | | | 0 | | | | 0 | | | | 620 | | | | 0 | | | | 620 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Harriman, TN | | (b) | | | 780 | | | | 0 | | | | 0 | | | | 0 | | | | 780 | | | | 0 | | | | 780 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Knoxville, TN | | (b) | | | 650 | | | | 0 | | | | 0 | | | | 0 | | | | 650 | | | | 0 | | | | 650 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Lenoir City, TN | | (b) | | | 830 | | | | 0 | | | | 0 | | | | 0 | | | | 830 | | | | 0 | | | | 830 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Oak Ridge, TN | | (b) | | | 880 | | | | 0 | | | | 0 | | | | 0 | | | | 880 | | | | 0 | | | | 880 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Kingston, TN | | (b) | | | 1,299 | | | | 0 | | | | 0 | | | | 0 | | | | 1,299 | | | | 0 | | | | 1,299 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Rockwood, TN | | (b) | | | 910 | | | | 0 | | | | 0 | | | | 0 | | | | 910 | | | | 0 | | | | 910 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Knoxville, TN | | (b) | | | 1,441 | | | | 0 | | | | 0 | | | | 0 | | | | 1,441 | | | | 0 | | | | 1,441 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Cleveland, TN | | (b) | | | 771 | | | | 0 | | | | 0 | | | | 0 | | | | 771 | | | | 0 | | | | 771 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Kingston, TN | | (b) | | | 499 | | | | 0 | | | | 0 | | | | 0 | | | | 499 | | | | 0 | | | | 499 | | | | 0 | | | (e) | | 6/28/2019 | | (e) |
| C-Store | | Sumiton, AL | | (b) | | | 1,138 | | | | 420 | | | | 0 | | | | 0 | | | | 1,138 | | | | 420 | | | | 1,558 | | | | (324 | ) | | 1970 | | 7/11/2016 | | 11 to 20 Years |
| C-Store | | Sylacauga, AL | | (b) | | | 560 | | | | 438 | | | | 0 | | | | 0 | | | | 560 | | | | 438 | | | | 998 | | | | (182 | ) | | 1948 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Anniston, AL | | (b) | | | 490 | | | | 210 | | | | 0 | | | | 0 | | | | 490 | | | | 210 | | | | 700 | | | | (131 | ) | | 1960 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Ragland, AL | | (b) | | | 385 | | | | 595 | | | | 0 | | | | 0 | | | | 385 | | | | 595 | | | | 980 | | | | (142 | ) | | 1986 | | 7/11/2016 | | 15 to 30 Years |
| C-Store | | Lagrange, GA | | (b) | | | 1,033 | | | | 368 | | | | 0 | | | | 0 | | | | 1,033 | | | | 368 | | | | 1,401 | | | | (203 | ) | | 1972 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Auburn, AL | | (b) | | | 2,188 | | | | 945 | | | | 0 | | | | 85 | | | | 2,188 | | | | 1,030 | | | | 3,218 | | | | (334 | ) | | 2001 | | 7/11/2016 | | 22 to 40 Years |
| C-Store | | Greenville, AL | | (b) | | | 1,278 | | | | 490 | | | | 0 | | | | 0 | | | | 1,278 | | | | 490 | | | | 1,768 | | | | (268 | ) | | 1991 | | 7/11/2016 | | 19 to 30 Years |
| C-Store | | Lanett, AL | | (b) | | | 788 | | | | 350 | | | | 0 | | | | 0 | | | | 788 | | | | 350 | | | | 1,138 | | | | (205 | ) | | 1975 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Lincoln, AL | | (b) | | | 1,785 | | | | 1,312 | | | | 0 | | | | 2 | | | | 1,785 | | | | 1,314 | | | | 3,099 | | | | (370 | ) | | 2001 | | 7/11/2016 | | 22 to 40 Years |
| C-Store | | Montgomery, AL | | (b) | | | 648 | | | | 228 | | | | 0 | | | | 0 | | | | 648 | | | | 228 | | | | 876 | | | | (146 | ) | | 1965 | | 7/11/2016 | | 15 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Anniston, AL | | (d) | | 490 |
| | 210 |
| | — |
| | — |
| | 490 |
| | 210 |
| | 700 |
| | (73 | ) | | 1960 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Lincoln, AL | | (d) | | 1,785 |
| | 1,312 |
| | — |
| | 2 |
| | 1,785 |
| | 1,314 |
| | 3,099 |
| | (205 | ) | | 2001 | | 07/11/16 | | 22 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Lagrange, GA | | (d) | | 1,033 |
| | 368 |
| | — |
| | — |
| | 1,033 |
| | 368 |
| | 1,401 |
| | (113 | ) | | 1972 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Panama City, FL | | (d) | | 630 |
| | 298 |
| | — |
| | — |
| | 630 |
| | 298 |
| | 928 |
| | (87 | ) | | 1951 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Prattville, AL | | (d) | | 1,978 |
| | 735 |
| | — |
| | — |
| | 1,978 |
| | 735 |
| | 2,713 |
| | (158 | ) | | 1995 | | 07/11/16 | | 19 to 30 Years |
| C-Store | Greenville, AL | | (d) | | 1,278 |
| | 490 |
| | — |
| | — |
| | 1,278 |
| | 490 |
| | 1,768 |
| | (149 | ) | | 1991 | | 07/11/16 | | 19 to 30 Years |
| C-Store | Lanett, AL | | (d) | | 788 |
| | 350 |
| | — |
| | — |
| | 788 |
| | 350 |
| | 1,138 |
| | (114 | ) | | 1975 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Sumiton, AL | | (d) | | 1,138 |
| | 420 |
| | — |
| | — |
| | 1,138 |
| | 420 |
| | 1,558 |
| | (180 | ) | | 1970 | | 07/11/16 | | 11 to 20 Years |
| C-Store | Ragland, AL | | (d) | | 385 |
| | 595 |
| | — |
| | — |
| | 385 |
| | 595 |
| | 980 |
| | (79 | ) | | 1986 | | 07/11/16 | | 15 to 30 Years |
| C-Store | Valley, AL | | (d) | | 280 |
| | 368 |
| | — |
| | — |
| | 280 |
| | 368 |
| | 648 |
| | (69 | ) | | 1955 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Sylacauga, AL | | (d) | | 560 |
| | 438 |
| | — |
| | — |
| | 560 |
| | 438 |
| | 998 |
| | (101 | ) | | 1948 | | 07/11/16 | | 15 to 20 Years |
| C-Store | Springfield, MO | | (d) | | 431 |
| | 732 |
| | — |
| | 141 |
| | 431 |
| | 873 |
| | 1,304 |
| | (116 | ) | | 1988 | | 03/31/16 | | 18 to 30 Years |
| C-Store | Springfield, MO | | (d) | | 562 |
| | 1,007 |
| | — |
| | 47 |
| | 562 |
| | 1,054 |
| | 1,616 |
| | (147 | ) | | 1989 | | 03/31/16 | | 18 to 30 Years |
| C-Store | Marshfield, MO | | (d) | | 615 |
| | 811 |
| | — |
| | 32 |
| | 615 |
| | 843 |
| | 1,458 |
| | (125 | ) | | 1987 | | 03/31/16 | | 18 to 30 Years |
| C-Store | Springfield, MO | | (d) | | 327 |
| | 732 |
| | — |
| | 41 |
| | 327 |
| | 773 |
| | 1,100 |
| | (102 | ) | | 1987 | | 03/31/16 | | 18 to 30 Years |
| C-Store | Kansas City, MO | | (d) | | 925 |
| | 1,027 |
| | — |
| | — |
| | 925 |
| | 1,027 |
| | 1,952 |
| | (212 | ) | | 1996 | | 11/18/14 | | 15 to 30 Years |
| C-Store | Kearney, MO | | (d) | | 529 |
| | 925 |
| | — |
| | — |
| | 529 |
| | 925 |
| | 1,454 |
| | (178 | ) | | 2001 | | 11/18/14 | | 15 to 30 Years |
| C-Store | Cleveland, MO | | (d) | | 701 |
| | 894 |
| | — |
| | — |
| | 701 |
| | 894 |
| | 1,595 |
| | (260 | ) | | 1994 | | 11/18/14 | | 15 to 20 Years |
| C-Store | Lebo, KS | | (d) | | 1,951 |
| | 762 |
| | — |
| | — |
| | 1,951 |
| | 762 |
| | 2,713 |
| | (283 | ) | | 1976 | | 11/18/14 | | 15 to 20 Years |
| C-Store | Phoenix, AZ | | (d) | | 2,243 |
| | 4,243 |
| | — |
| | — |
| | 2,243 |
| | 4,243 |
| | 6,486 |
| | (1,965 | ) | | 2001 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Scottsdale, AZ | | (d) | | 4,416 |
| | 2,384 |
| | — |
| | — |
| | 4,416 |
| | 2,384 |
| | 6,800 |
| | (1,328 | ) | | 2000 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Cave Creek, AZ | | (d) | | 2,711 |
| | 2,201 |
| | — |
| | — |
| | 2,711 |
| | 2,201 |
| | 4,912 |
| | (1,123 | ) | | 1998 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Scottsdale, AZ | | (d) | | 2,765 |
| | 2,196 |
| | — |
| | — |
| | 2,765 |
| | 2,196 |
| | 4,961 |
| | (1,220 | ) | | 1995 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Scottsdale, AZ | | (d) | | 5,123 |
| | 2,683 |
| | — |
| | — |
| | 5,123 |
| | 2,683 |
| | 7,806 |
| | (1,895 | ) | | 1991 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Scottsdale, AZ | | (d) | | 3,437 |
| | 2,373 |
| | — |
| | — |
| | 3,437 |
| | 2,373 |
| | 5,810 |
| | (1,677 | ) | | 1996 | | 07/02/07 | | 15 to 40 Years |
| C-Store | Fort Pierce, FL | | (d) | | 1,064 |
| | 1,659 |
| | — |
| | — |
| | 1,064 |
| | 1,659 |
| | 2,723 |
| | (315 | ) | | 1977 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Fort Pierce, FL | | (d) | | 681 |
| | 1,404 |
| | — |
| | — |
| | 681 |
| | 1,404 |
| | 2,085 |
| | (241 | ) | | 1989 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Okeechobee, FL | | (d) | | 468 |
| | 936 |
| | — |
| | — |
| | 468 |
| | 936 |
| | 1,404 |
| | (168 | ) | | 1976 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Okeechobee, FL | | (d) | | 808 |
| | 1,191 |
| | — |
| | — |
| | 808 |
| | 1,191 |
| | 1,999 |
| | (248 | ) | | 1984 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Okeechobee, FL | | (d) | | 386 |
| | 1,764 |
| | — |
| | — |
| | 386 |
| | 1,764 |
| | 2,150 |
| | (247 | ) | | 1975 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Okeechobee, FL | | (d) | | 558 |
| | 1,024 |
| | — |
| | — |
| | 558 |
| | 1,024 |
| | 1,582 |
| | (179 | ) | | 1986 | | 10/30/14 | | 15 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Prattville, AL | | (b) | | | 1,978 | | | | 735 | | | | 0 | | | | 0 | | | | 1,978 | | | | 735 | | | | 2,713 | | | | (284 | ) | | 1995 | | 7/11/2016 | | 19 to 30 Years |
| C-Store | | Panama City, FL | | (b) | | | 630 | | | | 298 | | | | 0 | | | | 0 | | | | 630 | | | | 298 | | | | 928 | | | | (156 | ) | | 1951 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Valley, AL | | (b) | | | 280 | | | | 368 | | | | 0 | | | | 0 | | | | 280 | | | | 368 | | | | 648 | | | | (125 | ) | | 1955 | | 7/11/2016 | | 15 to 20 Years |
| C-Store | | Lebo, KS | | (b) | | | 1,951 | | | | 762 | | | | 0 | | | | 0 | | | | 1,951 | | | | 762 | | | | 2,713 | | | | (421 | ) | | 1976 | | 11/18/2014 | | 15 to 20 Years |
| C-Store | | Kearney, MO | | (b) | | | 529 | | | | 925 | | | | 0 | | | | 0 | | | | 529 | | | | 925 | | | | 1,454 | | | | (266 | ) | | 2001 | | 11/18/2014 | | 15 to 30 Years |
| C-Store | | Cleveland, MO | | (b) | | | 701 | | | | 894 | | | | 0 | | | | 0 | | | | 701 | | | | 894 | | | | 1,595 | | | | (387 | ) | | 1994 | | 11/18/2014 | | 15 to 20 Years |
| C-Store | | Kansas City, MO | | (b) | | | 925 | | | | 1,027 | | | | 0 | | | | 0 | | | | 925 | | | | 1,027 | | | | 1,952 | | | | (315 | ) | | 1996 | | 11/18/2014 | | 15 to 30 Years |
| C-Store | | Scottsdale, AZ | | (b) | | | 4,416 | | | | 2,384 | | | | 0 | | | | 0 | | | | 4,416 | | | | 2,384 | | | | 6,800 | | | | (1,561 | ) | | 2000 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Scottsdale, AZ | | (b) | | | 5,123 | | | | 2,683 | | | | 0 | | | | 0 | | | | 5,123 | | | | 2,683 | | | | 7,806 | | | | (2,227 | ) | | 1991 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Cave Creek, AZ | | (b) | | | 2,711 | | | | 2,201 | | | | 0 | | | | 0 | | | | 2,711 | | | | 2,201 | | | | 4,912 | | | | (1,320 | ) | | 1998 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Scottsdale, AZ | | (b) | | | 3,437 | | | | 2,373 | | | | 0 | | | | 0 | | | | 3,437 | | | | 2,373 | | | | 5,810 | | | | (1,971 | ) | | 1996 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Phoenix, AZ | | (b) | | | 2,243 | | | | 4,243 | | | | 0 | | | | 0 | | | | 2,243 | | | | 4,243 | | | | 6,486 | | | | (2,310 | ) | | 2001 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Scottsdale, AZ | | (b) | | | 2,765 | | | | 2,196 | | | | 0 | | | | 0 | | | | 2,765 | | | | 2,196 | | | | 4,961 | | | | (1,433 | ) | | 1995 | | 7/2/2007 | | 15 to 40 Years |
| C-Store | | Oakland, FL | | (b) | | | 1,303 | | | | 1,109 | | | | 0 | | | | 0 | | | | 1,303 | | | | 1,109 | | | | 2,412 | | | | (617 | ) | | 2002 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Huntsville, AR | | (b) | | | 359 | | | | 504 | | | | 0 | | | | 65 | | | | 359 | | | | 569 | | | | 928 | | | | (141 | ) | | 2003 | | 9/30/2016 | | 15 to 40 Years |
| C-Store | | Butler, MO | | (b) | | | 919 | | | | 1,076 | | | | 0 | | | | 113 | | | | 919 | | | | 1,189 | | | | 2,108 | | | | (346 | ) | | 1996 | | 9/30/2016 | | 15 to 30 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,644 | | | | 1,829 | | | | 0 | | | | 0 | | | | 1,644 | | | | 1,829 | | | | 3,473 | | | | (615 | ) | | 2000 | | 12/19/2013 | | 15 to 40 Years |
| C-Store | | Joplin, MO | | (b) | | | 352 | | | | 434 | | | | 0 | | | | 28 | | | | 352 | | | | 462 | | | | 814 | | | | (85 | ) | | 2008 | | 5/5/2017 | | 15 to 40 Years |
| C-Store | | Clinton, MO | | (b) | | | 291 | | | | 404 | | | | 0 | | | | 0 | | | | 291 | | | | 404 | | | | 695 | | | | (111 | ) | | 1960 | | 9/30/2016 | | 15 to 30 Years |
| C-Store | | Kimberling City, MO | | (b) | | | 173 | | | | 474 | | | | 0 | | | | 98 | | | | 173 | | | | 572 | | | | 745 | | | | (84 | ) | | 1950 | | 3/23/2017 | | 15 to 30 Years |
| C-Store | | Orlando, FL | | (b) | | | 973 | | | | 350 | | | | 0 | | | | 0 | | | | 973 | | | | 350 | | | | 1,323 | | | | (277 | ) | | 1991 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Bergman, AR | | (b) | | | 404 | | | | 549 | | | | 0 | | | | 0 | | | | 404 | | | | 549 | | | | 953 | | | | (154 | ) | | 1996 | | 9/30/2016 | | 14 to 40 Years |
| C-Store | | Fayetteville, AR | | (b) | | | 1,760 | | | | 953 | | | | 0 | | | | 80 | | | | 1,760 | | | | 1,033 | | | | 2,793 | | | | (250 | ) | | 1996 | | 9/30/2016 | | 16 to 40 Years |
| C-Store | | Richland, MO | | (b) | | | 2,657 | | | | 1,181 | | | | 0 | | | | 0 | | | | 2,657 | | | | 1,181 | | | | 3,838 | | | | (796 | ) | | 1984 | | 5/5/2017 | | 10 to 20 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,128 | | | | 496 | | | | 0 | | | | 0 | | | | 1,128 | | | | 496 | | | | 1,624 | | | | (325 | ) | | 1995 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Berryville, AR | | (b) | | | 314 | | | | 381 | | | | 0 | | | | 0 | | | | 314 | | | | 381 | | | | 695 | | | | (105 | ) | | 1996 | | 9/30/2016 | | 14 to 40 Years |
| C-Store | | Holiday Island, AR | | (b) | | | 222 | | | | 357 | | | | 0 | | | | 0 | | | | 222 | | | | 357 | | | | 579 | | | | (93 | ) | | 2000 | | 5/5/2017 | | 10 to 30 Years |
| C-Store | | Apopka, FL | | (b) | | | 477 | | | | 389 | | | | 0 | | | | 0 | | | | 477 | | | | 389 | | | | 866 | | | | (177 | ) | | 1989 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Branson, MO | | (b) | | | 1,781 | | | | 2,864 | | | | 0 | | | | 80 | | | | 1,781 | | | | 2,944 | | | | 4,725 | | | | (637 | ) | | 1992 | | 3/23/2017 | | 15 to 30 Years |
| C-Store | | Harrison, AR | | (b) | | | 594 | | | | 482 | | | | 0 | | | | 66 | | | | 594 | | | | 548 | | | | 1,142 | | | | (135 | ) | | 1981 | | 9/30/2016 | | 16 to 40 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,303 | | | | 496 | | | | 0 | | | | 0 | | | | 1,303 | | | | 496 | | | | 1,799 | | | | (311 | ) | | 1994 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Branson, MO | | (b) | | | 1,177 | | | | 1,199 | | | | 0 | | | | 53 | | | | 1,177 | | | | 1,252 | | | | 2,429 | | | | (345 | ) | | 1999 | | 9/30/2016 | | 12 to 40 Years |
| C-Store | | Springfield, MO | | (b) | | | 431 | | | | 732 | | | | 0 | | | | 141 | | | | 431 | | | | 873 | | | | 1,304 | | | | (204 | ) | | 1988 | | 3/31/2016 | | 18 to 30 Years |
| C-Store | | Springdale, AR | | (b) | | | 2,119 | | | | 1,401 | | | | 0 | | | | 157 | | | | 2,119 | | | | 1,558 | | | | 3,677 | | | | (421 | ) | | 2010 | | 9/30/2016 | | 17 to 40 Years |
| C-Store | | Harrison, AR | | (b) | | | 2,309 | | | | 2,040 | | | | 0 | | | | 0 | | | | 2,309 | | | | 2,040 | | | | 4,349 | | | | (926 | ) | | 1996 | | 9/30/2016 | | 11 to 30 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,167 | | | | 982 | | | | 0 | | | | 0 | | | | 1,167 | | | | 982 | | | | 2,149 | | | | (493 | ) | | 2001 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Springfield, MO | | (b) | | | 327 | | | | 732 | | | | 0 | | | | 41 | | | | 327 | | | | 773 | | | | 1,100 | | | | (178 | ) | | 1987 | | 3/31/2016 | | 18 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Belle Glade, FL | | (d) | | 978 |
| | 1,184 |
| | — |
| | — |
| | 978 |
| | 1,184 |
| | 2,162 |
| | (195 | ) | | 1960 | | 10/30/14 | | 15 to 40 Years |
| C-Store | Jacksonville, FL | | (d) | | 2,285 |
| | 1,537 |
| | — |
| | — |
| | 2,285 |
| | 1,537 |
| | 3,822 |
| | (431 | ) | | 2010 | | 10/28/15 | | 15 to 40 Years |
| C-Store | Kissimmee, FL | | (d) | | 2,115 |
| | 1,602 |
| | — |
| | — |
| | 2,115 |
| | 1,602 |
| | 3,717 |
| | (304 | ) | | 2006 | | 10/27/15 | | 15 to 40 Years |
| C-Store | Orlando, FL | | (d) | | 1,397 |
| | 1,028 |
| | — |
| | — |
| | 1,397 |
| | 1,028 |
| | 2,425 |
| | (298 | ) | | 1990 | | 10/29/15 | | 15 to 30 Years |
| C-Store | Belle Isle, FL | | (d) | | 908 |
| | 738 |
| | — |
| | — |
| | 908 |
| | 738 |
| | 1,646 |
| | (181 | ) | | 1996 | | 10/27/15 | | 15 to 30 Years |
| C-Store | Apopka, FL | | (d) | | 1,357 |
| | 748 |
| | — |
| | — |
| | 1,357 |
| | 748 |
| | 2,105 |
| | (269 | ) | | 1997 | | 10/28/15 | | 15 to 30 Years |
| C-Store | Narberth, PA | | (d) | | 1,812 |
| | 3,163 |
| | — |
| | — |
| | 1,812 |
| | 3,163 |
| | 4,975 |
| | (494 | ) | | 2006 | | 07/17/13 | | 8 to 46 Years |
| C-Store | Hockessin, DE | | (d) | | 1,921 |
| | 2,477 |
| | — |
| | — |
| | 1,921 |
| | 2,477 |
| | 4,398 |
| | (549 | ) | | 2001 | | 07/17/13 | | 8 to 46 Years |
| C-Store | Manahawkin, NJ | | (d) | | 3,258 |
| | 1,954 |
| | — |
| | — |
| | 3,258 |
| | 1,954 |
| | 5,212 |
| | (930 | ) | | 2001 | | 07/17/13 | | 8 to 46 Years |
| C-Store | Mountain Home, AR | | (d) | | 224 |
| | 493 |
| | — |
| | 90 |
| | 224 |
| | 583 |
| | 807 |
| | (60 | ) | | 1991 | | 09/30/16 | | 12 to 40 Years |
| C-Store | Harrison, AR | | (d) | | 2,309 |
| | 2,040 |
| | — |
| | — |
| | 2,309 |
| | 2,040 |
| | 4,349 |
| | (490 | ) | | 1996 | | 09/30/16 | | 11 to 30 Years |
| C-Store | Harrison, AR | | (d) | | 235 |
| | 202 |
| | — |
| | 123 |
| | 235 |
| | 325 |
| | 560 |
| | (41 | ) | | 1971 | | 09/30/16 | | 17 to 30 Years |
| C-Store | Yellville, AR | | (d) | | 269 |
| | 740 |
| | — |
| | 87 |
| | 269 |
| | 827 |
| | 1,096 |
| | (96 | ) | | 1984 | | 09/30/16 | | 13 to 30 Years |
| C-Store | Harrison, AR | | (d) | | 224 |
| | 717 |
| | — |
| | 60 |
| | 224 |
| | 777 |
| | 1,001 |
| | (83 | ) | | 1980 | | 09/30/16 | | 12 to 30 Years |
| C-Store | Huntsville, AR | | (d) | | 359 |
| | 504 |
| | — |
| | 65 |
| | 359 |
| | 569 |
| | 928 |
| | (73 | ) | | 2003 | | 09/30/16 | | 15 to 40 Years |
| C-Store | Kimberling City, MO | | (d) | | 173 |
| | 474 |
| | — |
| | 98 |
| | 173 |
| | 572 |
| | 745 |
| | (38 | ) | | 1950 | | 03/23/17 | | 15 to 30 Years |
| C-Store | Lead Hill, AR | | (d) | �� | 258 |
| | 1,054 |
| | — |
| | 78 |
| | 258 |
| | 1,132 |
| | 1,390 |
| | (108 | ) | | 1974 | | 09/30/16 | | 15 to 30 Years |
| C-Store | Harrison, AR | | (d) | | 673 |
| | 471 |
| | — |
| | 73 |
| | 673 |
| | 544 |
| | 1,217 |
| | (72 | ) | | 1985 | | 09/30/16 | | 14 to 30 Years |
| C-Store | Branson, MO | | (d) | | 1,781 |
| | 2,864 |
| | — |
| | 80 |
| | 1,781 |
| | 2,944 |
| | 4,725 |
| | (296 | ) | | 1992 | | 03/23/17 | | 15 to 30 Years |
| C-Store | Branson, MO | | (d) | | 605 |
| | 818 |
| | — |
| | 7 |
| | 605 |
| | 825 |
| | 1,430 |
| | (119 | ) | | 1993 | | 09/30/16 | | 15 to 30 Years |
| C-Store | Fayetteville, AR | | (d) | | 986 |
| | 897 |
| | — |
| | 128 |
| | 986 |
| | 1,025 |
| | 2,011 |
| | (140 | ) | | 1996 | | 09/30/16 | | 15 to 30 Years |
| C-Store | Harrison, AR | | (d) | | 392 |
| | 336 |
| | — |
| | 161 |
| | 392 |
| | 497 |
| | 889 |
| | (76 | ) | | 1982 | | 09/30/16 | | 12 to 30 Years |
| C-Store | Branson, MO | | (d) | | 1,177 |
| | 1,199 |
| | — |
| | 53 |
| | 1,177 |
| | 1,252 |
| | 2,429 |
| | (181 | ) | | 1999 | | 09/30/16 | | 12 to 40 Years |
| C-Store | Ridgedale, MO | | (d) | | 1,199 |
| | 1,177 |
| | — |
| | 58 |
| | 1,199 |
| | 1,235 |
| | 2,434 |
| | (184 | ) | | 1995 | | 09/30/16 | | 13 to 30 Years |
| C-Store | Neosho, MO | | (d) | | 504 |
| | 628 |
| | — |
| | 43 |
| | 504 |
| | 671 |
| | 1,175 |
| | (88 | ) | | 2002 | | 09/30/16 | | 14 to 40 Years |
| C-Store | Bergman, AR | | (d) | | 404 |
| | 549 |
| | — |
| | — |
| | 404 |
| | 549 |
| | 953 |
| | (81 | ) | | 1996 | | 09/30/16 | | 14 to 40 Years |
| C-Store | Harrison, AR | | (d) | | 594 |
| | 482 |
| | — |
| | 66 |
| | 594 |
| | 548 |
| | 1,142 |
| | (70 | ) | | 1981 | | 09/30/16 | | 16 to 40 Years |
| C-Store | Berryville, AR | | (d) | | 314 |
| | 381 |
| | — |
| | — |
| | 314 |
| | 381 |
| | 695 |
| | (56 | ) | | 1996 | | 09/30/16 | | 14 to 40 Years |
| C-Store | Fayetteville, AR | | (d) | | 1,760 |
| | 953 |
| | — |
| | 80 |
| | 1,760 |
| | 1,033 |
| | 2,793 |
| | (131 | ) | | 1996 | | 09/30/16 | | 16 to 40 Years |
| C-Store | Springdale, AR | | (d) | | 2,119 |
| | 1,401 |
| | — |
| | 157 |
| | 2,119 |
| | 1,558 |
| | 3,677 |
| | (223 | ) | | 2010 | | 09/30/16 | | 17 to 40 Years |
| C-Store | Clinton, MO | | (d) | | 291 |
| | 404 |
| | — |
| | — |
| | 291 |
| | 404 |
| | 695 |
| | (59 | ) | | 1960 | | 09/30/16 | | 15 to 30 Years |
| C-Store | Butler, MO | | (d) | | 919 |
| | 1,076 |
| | — |
| | 113 |
| | 919 |
| | 1,189 |
| | 2,108 |
| | (179 | ) | | 1996 | | 09/30/16 | | 15 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | | Springfield, MO | | (b) | | | 562 | | | | 1,007 | | | | 0 | | | | 47 | | | | 562 | | | | 1,054 | | | | 1,616 | | | | (257 | ) | | 1989 | | 3/31/2016 | | 18 to 30 Years |
| C-Store | | Neosho, MO | | (b) | | | 504 | | | | 628 | | | | 0 | | | | 43 | | | | 504 | | | | 671 | | | | 1,175 | | | | (168 | ) | | 2002 | | 9/30/2016 | | 14 to 40 Years |
| C-Store | | Harrison, AR | | (b) | | | 235 | | | | 202 | | | | 0 | | | | 123 | | | | 235 | | | | 325 | | | | 560 | | | | (83 | ) | | 1971 | | 9/30/2016 | | 17 to 30 Years |
| C-Store | | Kissimmee, FL | | (b) | | | 759 | | | | 1,061 | | | | 0 | | | | 13 | | | | 759 | | | | 1,074 | | | | 1,833 | | | | (490 | ) | | 2005 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Ridgedale, MO | | (b) | | | 1,199 | | | | 1,177 | | | | 0 | | | | 58 | | | | 1,199 | | | | 1,235 | | | | 2,434 | | | | (351 | ) | | 1995 | | 9/30/2016 | | 13 to 30 Years |
| C-Store | | Harrison, AR | | (b) | | | 224 | | | | 717 | | | | 0 | | | | 60 | | | | 224 | | | | 777 | | | | 1,001 | | | | (159 | ) | | 1980 | | 9/30/2016 | | 12 to 30 Years |
| C-Store | | Orlando, FL | | (b) | | | 1,080 | | | | 798 | | | | 0 | | | | 0 | | | | 1,080 | | | | 798 | | | | 1,878 | | | | (368 | ) | | 2001 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Forsyth, MO | | (b) | | | 370 | | | | 572 | | | | 0 | | | | 0 | | | | 370 | | | | 572 | | | | 942 | | | | (156 | ) | | 1950 | | 9/30/2016 | | 14 to 30 Years |
| C-Store | | Harrison, AR | | (b) | | | 392 | | | | 336 | | | | 0 | | | | 161 | | | | 392 | | | | 497 | | | | 889 | | | | (151 | ) | | 1982 | | 9/30/2016 | | 12 to 30 Years |
| C-Store | | Fayetteville, AR | | (b) | | | 986 | | | | 897 | | | | 0 | | | | 128 | | | | 986 | | | | 1,025 | | | | 2,011 | | | | (271 | ) | | 1996 | | 9/30/2016 | | 15 to 30 Years |
| C-Store | | Yellville, AR | | (b) | | | 269 | | | | 740 | | | | 0 | | | | 87 | | | | 269 | | | | 827 | | | | 1,096 | | | | (182 | ) | | 1984 | | 9/30/2016 | | 13 to 30 Years |
| C-Store | | Harrison, AR | | (b) | | | 673 | | | | 471 | | | | 0 | | | | 73 | | | | 673 | | | | 544 | | | | 1,217 | | | | (139 | ) | | 1985 | | 9/30/2016 | | 14 to 30 Years |
| C-Store | | Lead Hill, AR | | (b) | | | 258 | | | | 1,054 | | | | 0 | | | | 78 | | | | 258 | | | | 1,132 | | | | 1,390 | | | | (208 | ) | | 1974 | | 9/30/2016 | | 15 to 30 Years |
| C-Store | | Oviedo, FL | | (b) | | | 973 | | | | 798 | | | | 0 | | | | 0 | | | | 973 | | | | 798 | | | | 1,771 | | | | (409 | ) | | 1995 | | 12/19/2013 | | 15 to 30 Years |
| C-Store | | Branson, MO | | (b) | | | 605 | | | | 818 | | | | 0 | | | | 7 | | | | 605 | | | | 825 | | | | 1,430 | | | | (224 | ) | | 1993 | | 9/30/2016 | | 15 to 30 Years |
| C-Store | | Mountain Home, AR | | (b) | | | 224 | | | | 493 | | | | 0 | | | | 90 | | | | 224 | | | | 583 | | | | 807 | | | | (113 | ) | | 1991 | | 9/30/2016 | | 12 to 40 Years |
| C-Store | | Marshfield, MO | | (b) | | | 615 | | | | 811 | | | | 0 | | | | 32 | | | | 615 | | | | 843 | | | | 1,458 | | | | (218 | ) | | 1987 | | 3/31/2016 | | 18 to 30 Years |
| Curacao (f) | | Fountain Valley, CA | | (b) | | | 9,470 | | | | 13,326 | | | | (2,049 | ) | | | (5,007 | ) | | | 7,421 | | | | 8,319 | | | | 15,740 | | | | (345 | ) | | 1968 | | 12/30/2014 | | 6 to 24 Years |
| Curt Manufacturing | | Altoona, WI | | (b) | | | 3,184 | | | | 5,766 | | | | 0 | | | | 0 | | | | 3,184 | | | | 5,766 | | | | 8,950 | | | | (79 | ) | | 2009 | | 11/13/2020 | | 10 to 29 Years |
| Curt Manufacturing | | Altoona, WI | | (b) | | | 1,398 | | | | 7,278 | | | | 0 | | | | 0 | | | | 1,398 | | | | 7,278 | | | | 8,676 | | | | (63 | ) | | 2010 | | 11/13/2020 | | 9 to 29 Years |
| CVS | | St. John, MO | | (b) | | | 1,733 | | | | 3,095 | | | | 91 | | | | 365 | | | | 1,824 | | | | 3,460 | | | | 5,284 | | | | (1,482 | ) | | 1996 | | 7/17/2013 | | 1 to 43 Years |
| CVS | | Glenville Scotia, NY | | (b) | | | 1,314 | | | | 3,964 | | | | 0 | | | | 0 | | | | 1,314 | | | | 3,964 | | | | 5,278 | | | | (936 | ) | | 2006 | | 7/17/2013 | | 12 to 43 Years |
| CVS | | Clinton, NY | | (b) | | | 1,050 | | | | 2,090 | | | | 0 | | | | 0 | | | | 1,050 | | | | 2,090 | | | | 3,140 | | | | (584 | ) | | 2005 | | 7/17/2013 | | 11 to 42 Years |
| CVS | | Mechanicville, NY | | (b) | | | 654 | | | | 3,120 | | | | 0 | | | | 0 | | | | 654 | | | | 3,120 | | | | 3,774 | | | | (734 | ) | | 1997 | | 7/17/2013 | | 4 to 38 Years |
| CVS | | Dallas, TX | | (b) | | | 945 | | | | 1,967 | | | | 0 | | | | 0 | | | | 945 | | | | 1,967 | | | | 2,912 | | | | (473 | ) | | 1995 | | 7/17/2013 | | 1 to 39 Years |
| CVS | | Maynard, MA | | (b) | | | 1,683 | | | | 3,984 | | | | 0 | | | | 0 | | | | 1,683 | | | | 3,984 | | | | 5,667 | | | | (831 | ) | | 2004 | | 7/17/2013 | | 14 to 42 Years |
| CVS | | Lake Worth, TX | | (b) | | | 1,044 | | | | 1,817 | | | | 0 | | | | 0 | | | | 1,044 | | | | 1,817 | | | | 2,861 | | | | (609 | ) | | 1996 | | 7/17/2013 | | 2 to 30 Years |
| CVS | | Richardson, TX | | (a) | | | 803 | | | | 2,575 | | | | 0 | | | | 0 | | | | 803 | | | | 2,575 | | | | 3,378 | | | | (584 | ) | | 1996 | | 7/17/2013 | | 3 to 40 Years |
| CVS | | River Oaks, TX | | (a) | | | 829 | | | | 2,871 | | | | 0 | | | | 0 | | | | 829 | | | | 2,871 | | | | 3,700 | | | | (711 | ) | | 1996 | | 7/17/2013 | | 3 to 40 Years |
| CVS | | The Colony, TX | | (b) | | | 1,028 | | | | 1,769 | | | | 0 | | | | 0 | | | | 1,028 | | | | 1,769 | | | | 2,797 | | | | (437 | ) | | 1996 | | 7/17/2013 | | 1 to 40 Years |
| CVS | | Wichita Falls, TX | | (b) | | | 503 | | | | 2,530 | | | | 0 | | | | 0 | | | | 503 | | | | 2,530 | | | | 3,033 | | | | (612 | ) | | 1995 | | 7/17/2013 | | 2 to 40 Years |
| CVS | | Wichita Falls, TX | | (b) | | | 528 | | | | 2,022 | | | | 0 | | | | 0 | | | | 528 | | | | 2,022 | | | | 2,550 | | | | (472 | ) | | 1995 | | 7/17/2013 | | 1 to 40 Years |
| CVS | | Amarillo, TX | | (b) | | | 916 | | | | 2,747 | | | | 0 | | | | 0 | | | | 916 | | | | 2,747 | | | | 3,663 | | | | (824 | ) | | 1994 | | 7/17/2013 | | 20 to 20 Years |
| CVS | | Richland Hills, TX | | (a) | | | 997 | | | | 2,951 | | | | 0 | | | | 0 | | | | 997 | | | | 2,951 | | | | 3,948 | | | | (682 | ) | | 1997 | | 7/17/2013 | | 4 to 40 Years |
| CVS | | Alpharetta, GA | | (a) | | | 968 | | | | 2,614 | | | | 0 | | | | 0 | | | | 968 | | | | 2,614 | | | | 3,582 | | | | (648 | ) | | 1998 | | 7/17/2013 | | 5 to 40 Years |
| CVS | | Atlanta, GA | | (a) | | | 1,316 | | | | 2,266 | | | | 0 | | | | 0 | | | | 1,316 | | | | 2,266 | | | | 3,582 | | | | (600 | ) | | 2006 | | 7/17/2013 | | 14 to 42 Years |
| CVS | | Lincoln, IL | | (a) | | | 444 | | | | 3,043 | | | | 0 | | | | 0 | | | | 444 | | | | 3,043 | | | | 3,487 | | | | (725 | ) | | 2007 | | 7/17/2013 | | 11 to 43 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| C-Store | Forsyth, MO | | (d) | | 370 |
| | 572 |
| | — |
| | — |
| | 370 |
| | 572 |
| | 942 |
| | (83 | ) | | 1950 | | 09/30/16 | | 14 to 30 Years |
| C-Store | Joplin, MO | | (d) | | 352 |
| | 434 |
| | — |
| | 28 |
| | 352 |
| | 462 |
| | 814 |
| | (39 | ) | | 2008 | | 05/05/17 | | 15 to 40 Years |
| C-Store | Richland, MO | | (d) | | 2,657 |
| | 1,181 |
| | — |
| | — |
| | 2,657 |
| | 1,181 |
| | 3,838 |
| | (360 | ) | | 1984 | | 05/05/17 | | 10 to 20 Years |
| C-Store | Holiday Island, AR | | (d) | | 222 |
| | 357 |
| | — |
| | — |
| | 222 |
| | 357 |
| | 579 |
| | (42 | ) | | 2000 | | 05/05/17 | | 10 to 30 Years |
| C-Store | Kissimmee, FL | | (d) | | 759 |
| | 1,061 |
| | — |
| | 13 |
| | 759 |
| | 1,074 |
| | 1,833 |
| | (350 | ) | | 2005 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Apopka, FL | | (d) | | 477 |
| | 389 |
| | — |
| | — |
| | 477 |
| | 389 |
| | 866 |
| | (126 | ) | | 1989 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 1,167 |
| | 982 |
| | — |
| | — |
| | 1,167 |
| | 982 |
| | 2,149 |
| | (352 | ) | | 2001 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 1,080 |
| | 798 |
| | — |
| | — |
| | 1,080 |
| | 798 |
| | 1,878 |
| | (263 | ) | | 2001 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 1,303 |
| | 496 |
| | — |
| | — |
| | 1,303 |
| | 496 |
| | 1,799 |
| | (222 | ) | | 1994 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 973 |
| | 350 |
| | — |
| | — |
| | 973 |
| | 350 |
| | 1,323 |
| | (198 | ) | | 1991 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 1,128 |
| | 496 |
| | — |
| | — |
| | 1,128 |
| | 496 |
| | 1,624 |
| | (232 | ) | | 1995 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Oakland, FL | | (d) | | 1,303 |
| | 1,109 |
| | — |
| | — |
| | 1,303 |
| | 1,109 |
| | 2,412 |
| | (441 | ) | | 2002 | | 12/19/13 | | 15 to 30 Years |
| C-Store | Orlando, FL | | (d) | | 1,644 |
| | 1,829 |
| | — |
| | — |
| | 1,644 |
| | 1,829 |
| | 3,473 |
| | (439 | ) | | 2000 | | 12/19/13 | | 15 to 40 Years |
| C-Store | Oviedo, FL | | (d) | | 973 |
| | 798 |
| | — |
| | — |
| | 973 |
| | 798 |
| | 1,771 |
| | (292 | ) | | 1995 | | 12/19/13 | | 15 to 30 Years |
| CVS | Alpharetta, GA | | (c) | | 968 |
| | 2,614 |
| | — |
| | — |
| | 968 |
| | 2,614 |
| | 3,582 |
| | (475 | ) | | 1998 | | 07/17/13 | | 5 to 40 Years |
| CVS | Richland Hills, TX | | (c) | | 997 |
| | 2,951 |
| | — |
| | — |
| | 997 |
| | 2,951 |
| | 3,948 |
| | (500 | ) | | 1997 | | 07/17/13 | | 4 to 40 Years |
| CVS | Portsmouth, OH | | (d) | | 354 |
| | 1,953 |
| | (276 | ) | | (1,514 | ) | | 78 |
| | 439 |
| | 517 |
| | (20 | ) | | 1997 | | 07/17/13 | | 0 to 33 Years |
| CVS | Madison, MS | | (d) | | 745 |
| | 3,323 |
| | — |
| | — |
| | 745 |
| | 3,323 |
| | 4,068 |
| | (567 | ) | | 2004 | | 07/17/13 | | 11 to 40 Years |
| CVS | Okeechobee, FL | | (d) | | 674 |
| | 5,088 |
| | — |
| | — |
| | 674 |
| | 5,088 |
| | 5,762 |
| | (1,048 | ) | | 2001 | | 07/17/13 | | 9 to 30 Years |
| CVS | Orlando, FL | | (d) | | 781 |
| | 3,799 |
| | — |
| | — |
| | 781 |
| | 3,799 |
| | 4,580 |
| | (792 | ) | | 2005 | | 07/17/13 | | 10 to 30 Years |
| CVS | Gulfport, MS | | (d) | | 441 |
| | 4,208 |
| | — |
| | — |
| | 441 |
| | 4,208 |
| | 4,649 |
| | (661 | ) | | 2000 | | 07/17/13 | | 12 to 40 Years |
| CVS | Clinton, NY | | (d) | | 1,050 |
| | 2,090 |
| | — |
| | — |
| | 1,050 |
| | 2,090 |
| | 3,140 |
| | (427 | ) | | 2005 | | 07/17/13 | | 11 to 42 Years |
| CVS | Glenville Scotia, NY | | (d) | | 1,314 |
| | 3,964 |
| | — |
| | — |
| | 1,314 |
| | 3,964 |
| | 5,278 |
| | (684 | ) | | 2006 | | 07/17/13 | | 12 to 43 Years |
| CVS | St. John, MO | | (d) | | 1,733 |
| | 3,095 |
| | 91 |
| | 365 |
| | 1,824 |
| | 3,460 |
| | 5,284 |
| | (1,041 | ) | | 1996 | | 07/17/13 | | 1 to 43 Years |
| CVS | Florence, SC | | (d) | | 744 |
| | 2,070 |
| | — |
| | — |
| | 744 |
| | 2,070 |
| | 2,814 |
| | (375 | ) | | 1998 | | 07/17/13 | | 5 to 39 Years |
| CVS | Del City, OK | | (d) | | 1,027 |
| | 3,428 |
| | — |
| | — |
| | 1,027 |
| | 3,428 |
| | 4,455 |
| | — |
| | 1998 | | 07/17/13 | | 33 to 33 Years |
| CVS | Amarillo, TX | | (d) | | 916 |
| | 2,747 |
| | — |
| | — |
| | 916 |
| | 2,747 |
| | 3,663 |
| | (549 | ) | | 1994 | | 07/17/13 | | 20 to 20 Years |
| CVS | Indianapolis, IN | | (c) | | 860 |
| | 2,754 |
| | — |
| | — |
| | 860 |
| | 2,754 |
| | 3,614 |
| | (520 | ) | | 1998 | | 07/17/13 | | 10 to 40 Years |
| CVS | Onley, VA | | (d) | | 2,530 |
| | 2,296 |
| | — |
| | — |
| | 2,530 |
| | 2,296 |
| | 4,826 |
| | (491 | ) | | 2007 | | 07/17/13 | | 12 to 43 Years |
| CVS | Columbia, TN | | (d) | | 842 |
| | 1,864 |
| | — |
| | — |
| | 842 |
| | 1,864 |
| | 2,706 |
| | (372 | ) | | 1997 | | 07/17/13 | | 4 to 37 Years |
| CVS | Hamilton, OH | | (d) | | 738 |
| | 2,429 |
| | — |
| | — |
| | 738 |
| | 2,429 |
| | 3,167 |
| | (457 | ) | | 1998 | | 07/17/13 | | 5 to 39 Years |
| CVS | Mechanicville, NY | | (d) | | 654 |
| | 3,120 |
| | — |
| | — |
| | 654 |
| | 3,120 |
| | 3,774 |
| | (538 | ) | | 1997 | | 07/17/13 | | 4 to 38 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CVS | | Okeechobee, FL | | (b) | | | 674 | | | | 5,088 | | | | 0 | | | | 0 | | | | 674 | | | | 5,088 | | | | 5,762 | | | | (1,435 | ) | | 2001 | | 7/17/2013 | | 9 to 30 Years |
| CVS | | Orlando, FL | | (b) | | | 781 | | | | 3,799 | | | | 0 | | | | 0 | | | | 781 | | | | 3,799 | | | | 4,580 | | | | (1,085 | ) | | 2005 | | 7/17/2013 | | 10 to 30 Years |
| CVS | | Kissimmee, FL | | (b) | | | 1,508 | | | | 2,153 | | | | 0 | | | | 0 | | | | 1,508 | | | | 2,153 | | | | 3,661 | | | | (562 | ) | | 1995 | | 7/17/2013 | | 2 to 40 Years |
| CVS | | Indianapolis, IN | | (a) | | | 733 | | | | 2,882 | | | | 0 | | | | 0 | | | | 733 | | | | 2,882 | | | | 3,615 | | | | (723 | ) | | 1997 | | 7/17/2013 | | 10 to 38 Years |
| CVS | | Indianapolis, IN | | (a) | | | 860 | | | | 2,754 | | | | 0 | | | | 0 | | | | 860 | | | | 2,754 | | | | 3,614 | | | | (711 | ) | | 1998 | | 7/17/2013 | | 10 to 40 Years |
| CVS | | Gulfport, MS | | (b) | | | 441 | | | | 4,208 | | | | 0 | | | | 0 | | | | 441 | | | | 4,208 | | | | 4,649 | | | | (905 | ) | | 2000 | | 7/17/2013 | | 12 to 40 Years |
| CVS | | Madison, MS | | (b) | | | 745 | | | | 3,323 | | | | 0 | | | | 0 | | | | 745 | | | | 3,323 | | | | 4,068 | | | | (777 | ) | | 2004 | | 7/17/2013 | | 11 to 40 Years |
| CVS | | Waynesville, NC | | (b) | | | 1,495 | | | | 2,365 | | | | 0 | | | | 0 | | | | 1,495 | | | | 2,365 | | | | 3,860 | | | | (583 | ) | | 2005 | | 7/17/2013 | | 12 to 42 Years |
| CVS | | Hamilton, OH | | (b) | | | 738 | | | | 2,429 | | | | 0 | | | | 0 | | | | 738 | | | | 2,429 | | | | 3,167 | | | | (623 | ) | | 1998 | | 7/17/2013 | | 5 to 39 Years |
| CVS | | Portsmouth, OH | | (b) | | | 354 | | | | 1,953 | | | | (276 | ) | | | (1,514 | ) | | | 78 | | | | 439 | | | | 517 | | | | (52 | ) | | 1997 | | 7/17/2013 | | 7 to 33 Years |
| CVS | | Del City, OK | | (b) | | | 1,027 | | | | 3,428 | | | | 0 | | | | 0 | | | | 1,027 | | | | 3,428 | | | | 4,455 | | | | (208 | ) | | 1998 | | 7/17/2013 | | 33 to 33 Years |
| CVS | | New Cumberland, PA | | (b) | | | 794 | | | | 2,663 | | | | 0 | | | | 0 | | | | 794 | | | | 2,663 | | | | 3,457 | | | | (633 | ) | | 2007 | | 7/17/2013 | | 12 to 43 Years |
| CVS | | Myrtle Beach, SC | | (b) | | | 828 | | | | 4,024 | | | | 0 | | | | 0 | | | | 828 | | | | 4,024 | | | | 4,852 | | | | (899 | ) | | 2004 | | 7/17/2013 | | 12 to 42 Years |
| CVS | | Florence, SC | | (b) | | | 744 | | | | 2,070 | | | | 0 | | | | 0 | | | | 744 | | | | 2,070 | | | | 2,814 | | | | (512 | ) | | 1998 | | 7/17/2013 | | 5 to 39 Years |
| CVS | | Columbia, TN | | (b) | | | 842 | | | | 1,864 | | | | 0 | | | | 0 | | | | 842 | | | | 1,864 | | | | 2,706 | | | | (507 | ) | | 1997 | | 7/17/2013 | | 4 to 37 Years |
| CVS | | Onley, VA | | (b) | | | 2,530 | | | | 2,296 | | | | 0 | | | | 0 | | | | 2,530 | | | | 2,296 | | | | 4,826 | | | | (672 | ) | | 2007 | | 7/17/2013 | | 12 to 43 Years |
| Dairy Queen | | Anchorage, AK | | (b) | | | 1,150 | | | | 1,262 | | | | 0 | | | | 0 | | | | 1,150 | | | | 1,262 | | | | 2,412 | | | | (170 | ) | | 2007 | | 2/16/2017 | | 15 to 40 Years |
| Dairy Queen | | Anchorage, AK | | (b) | | | 333 | | | | 461 | | | | 0 | | | | 0 | | | | 333 | | | | 461 | | | | 794 | | | | (65 | ) | | 2010 | | 2/16/2017 | | 10 to 40 Years |
| Dairy Queen | | Wasilla, AK | | (b) | | | 577 | | | | 1,260 | | | | 0 | | | | 0 | | | | 577 | | | | 1,260 | | | | 1,837 | | | | (356 | ) | | 1984 | | 2/16/2017 | | 5 to 20 Years |
| Dairy Queen | | Palmer, AK | | (b) | | | 510 | | | | 1,350 | | | | 0 | | | | 90 | | | | 510 | | | | 1,440 | | | | 1,950 | | | | (249 | ) | | 2000 | | 2/16/2017 | | 10 to 30 Years |
| Dave & Buster’s | | Westlake, OH | | (b) | | | 2,856 | | | | 1 | | | | 0 | | | | 44 | | | | 2,856 | | | | 45 | | | | 2,901 | | | | (16 | ) | | 2016 | | 5/18/2017 | | 10 to 10 Years |
| Dave & Buster’s | | Addison, IL | | (b) | | | 4,690 | | | | 6,692 | | | | 0 | | | | 0 | | | | 4,690 | | | | 6,692 | | | | 11,382 | | | | (3,513 | ) | | 1995 | | 7/17/2013 | | 7 to 24 Years |
| Dave & Buster’s | | Tucson, AZ | | (b) | | | 2,874 | | | | 5,655 | | | | 0 | | | | 43 | | | | 2,874 | | | | 5,698 | | | | 8,572 | | | | (730 | ) | | 2017 | | 3/31/2017 | | 15 to 50 Years |
| David’s Bridal | | Lenexa, KS | | (b) | | | 919 | | | | 2,476 | | | | 0 | | | | 0 | | | | 919 | | | | 2,476 | | | | 3,395 | | | | (579 | ) | | 2005 | | 7/17/2013 | | 2 to 47 Years |
| David’s Bridal (f) | | Topeka, KS | | (b) | | | 542 | | | | 2,251 | | | | 0 | | | | (15 | ) | | | 542 | | | | 2,236 | | | | 2,778 | | | | (438 | ) | | 2006 | | 7/17/2013 | | 12 to 48 Years |
| Davis-Standard | | Pawcatuck, CT | | (b) | | | 2,736 | | | | 9,218 | | | | 0 | | | | 36 | | | | 2,736 | | | | 9,254 | | | | 11,990 | | | | (1,597 | ) | | 1969 | | 10/27/2016 | | 7 to 40 Years |
| Davis-Standard | | Fulton, NY | | (b) | | | 445 | | | | 6,113 | | | | 0 | | | | 35 | | | | 445 | | | | 6,148 | | | | 6,593 | | | | (849 | ) | | 1983 | | 10/27/2016 | | 5 to 40 Years |
| Defined Fitness | | Farmington, NM | | (b) | | | 2,242 | | | | 6,696 | | | | 0 | | | | 0 | | | | 2,242 | | | | 6,696 | | | | 8,938 | | | | (1,158 | ) | | 1999 | | 4/23/2015 | | 15 to 40 Years |
| Defined Fitness | | Albuquerque, NM | | (b) | | | 2,391 | | | | 4,008 | | | | 0 | | | | 0 | | | | 2,391 | | | | 4,008 | | | | 6,399 | | | | (918 | ) | | 2001 | | 4/23/2015 | | 15 to 30 Years |
| Defined Fitness | | Albuquerque, NM | | (b) | | | 4,732 | | | | 6,845 | | | | 0 | | | | 0 | | | | 4,732 | | | | 6,845 | | | | 11,577 | | | | (1,341 | ) | | 1972 | | 4/23/2015 | | 15 to 40 Years |
| Defined Fitness | | Albuquerque, NM | | (b) | | | 1,914 | | | | 3,724 | | | | 0 | | | | 0 | | | | 1,914 | | | | 3,724 | | | | 5,638 | | | | (827 | ) | | 1995 | | 4/23/2015 | | 15 to 30 Years |
| Defined Fitness | | Rio Rancho, NM | | (b) | | | 1,448 | | | | 2,172 | | | | 0 | | | | 0 | | | | 1,448 | | | | 2,172 | | | | 3,620 | | | | (515 | ) | | 1997 | | 4/23/2015 | | 15 to 30 Years |
| Defined Fitness | | Albuquerque, NM | | (b) | | | 1,891 | | | | 6,042 | | | | 0 | | | | 6 | | | | 1,891 | | | | 6,048 | | | | 7,939 | | | | (203 | ) | | 2020 | | 12/27/2019 | | 14 to 45 Years |
| Defined Fitness | | Rio Rancho, NM | | (b) | | | 1,569 | | | | 5,793 | | | | 0 | | | | 0 | | | | 1,569 | | | | 5,793 | | | | 7,362 | | | | (17 | ) | | 2020 | | 11/24/2020 | | 14 to 40 Years |
| Defy Trampoline Park | | Little Rock, AR | | (b) | | | 1,489 | | | | 3,888 | | | | 0 | | | | 11 | | | | 1,489 | | | | 3,899 | | | | 5,388 | | | | (391 | ) | | 2017 | | 9/29/2017 | | 15 to 40 Years |
| Defy Trampoline Park | | Indianapolis, IN | | (b) | | | 861 | | | | 4,222 | | | | 0 | | | | 0 | | | | 861 | | | | 4,222 | | | | 5,083 | | | | (291 | ) | | 2018 | | 8/31/2018 | | 16 to 40 Years |
| Defy Trampoline Park | | Wilmington, NC | | (b) | | | 837 | | | | 1,429 | | | | 0 | | | | 0 | | | | 837 | | | | 1,429 | | | | 2,266 | | | | (529 | ) | | 2006 | | 9/30/2015 | | 9 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CVS | Atlanta, GA | | (c) | | 1,316 |
| | 2,266 |
| | — |
| | — |
| | 1,316 |
| | 2,266 |
| | 3,582 |
| | (438 | ) | | 2006 | | 07/17/13 | | 14 to 42 Years |
| CVS | Carrolton, TX | | (d) | | 945 |
| | 1,967 |
| | — |
| | — |
| | 945 |
| | 1,967 |
| | 2,912 |
| | (346 | ) | | 1995 | | 07/17/13 | | 1 to 39 Years |
| CVS | Kissimmee, FL | | (d) | | 1,508 |
| | 2,153 |
| | — |
| | — |
| | 1,508 |
| | 2,153 |
| | 3,661 |
| | (423 | ) | | 1995 | | 07/17/13 | | 2 to 40 Years |
| CVS | Lake Worth, TX | | (d) | | 1,044 |
| | 1,817 |
| | — |
| | — |
| | 1,044 |
| | 1,817 |
| | 2,861 |
| | (446 | ) | | 1996 | | 07/17/13 | | 2 to 30 Years |
| CVS | Richardson, TX | | (c) | | 803 |
| | 2,575 |
| | — |
| | — |
| | 803 |
| | 2,575 |
| | 3,378 |
| | (429 | ) | | 1996 | | 07/17/13 | | 3 to 40 Years |
| CVS | River Oaks, TX | | (c) | | 829 |
| | 2,871 |
| | — |
| | — |
| | 829 |
| | 2,871 |
| | 3,700 |
| | (521 | ) | | 1996 | | 07/17/13 | | 3 to 40 Years |
| CVS | The Colony, TX | | (d) | | 1,028 |
| | 1,769 |
| | — |
| | — |
| | 1,028 |
| | 1,769 |
| | 2,797 |
| | (319 | ) | | 1996 | | 07/17/13 | | 1 to 40 Years |
| CVS | Wichita Falls, TX | | (d) | | 503 |
| | 2,530 |
| | — |
| | — |
| | 503 |
| | 2,530 |
| | 3,033 |
| | (448 | ) | | 1995 | | 07/17/13 | | 2 to 40 Years |
| CVS | Wichita Falls, TX | | (d) | | 528 |
| | 2,022 |
| | — |
| | — |
| | 528 |
| | 2,022 |
| | 2,550 |
| | (345 | ) | | 1995 | | 07/17/13 | | 1 to 40 Years |
| CVS | Maynard, MA | | (d) | | 1,683 |
| | 3,984 |
| | — |
| | — |
| | 1,683 |
| | 3,984 |
| | 5,667 |
| | (607 | ) | | 2004 | | 07/17/13 | | 14 to 42 Years |
| CVS | Myrtle Beach, SC | | (d) | | 828 |
| | 4,024 |
| | — |
| | — |
| | 828 |
| | 4,024 |
| | 4,852 |
| | (657 | ) | | 2004 | | 07/17/13 | | 12 to 42 Years |
| CVS | Waynesville, NC | | (d) | | 1,495 |
| | 2,365 |
| | — |
| | — |
| | 1,495 |
| | 2,365 |
| | 3,860 |
| | (426 | ) | | 2005 | | 07/17/13 | | 12 to 42 Years |
| CVS | Indianapolis, IN | | (c) | | 733 |
| | 2,882 |
| | — |
| | — |
| | 733 |
| | 2,882 |
| | 3,615 |
| | (528 | ) | | 1997 | | 07/17/13 | | 10 to 38 Years |
| CVS | Lincoln, IL | | (c) | | 444 |
| | 3,043 |
| | — |
| | — |
| | 444 |
| | 3,043 |
| | 3,487 |
| | (529 | ) | | 2007 | | 07/17/13 | | 11 to 43 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CVS | Azle, TX | | (c) | | 1,213 |
| | 3,504 |
| | — |
| | — |
| | 1,213 |
| | 3,504 |
| | 4,717 |
| | (538 | ) | | 2008 | | 07/17/13 | | 15 to 43 Years |
| CVS | New Cumberland, PA | | (c) | | 794 |
| | 2,663 |
| | — |
| | — |
| | 794 |
| | 2,663 |
| | 3,457 |
| | (462 | ) | | 2007 | | 07/17/13 | | 12 to 43 Years |
| Dairy Queen | Palmer, AK | | (d) | | 510 |
| | 1,350 |
| | — |
| | 90 |
| | 510 |
| | 1,440 |
| | 1,950 |
| | (119 | ) | | 2000 | | 02/16/17 | | 10 to 30 Years |
| Dairy Queen | Anchorage, AK | | (d) | | 1,150 |
| | 1,262 |
| | — |
| | — |
| | 1,150 |
| | 1,262 |
| | 2,412 |
| | (81 | ) | | 2007 | | 02/16/17 | | 15 to 40 Years |
| Dairy Queen | Anchorage, AK | | (d) | | 333 |
| | 461 |
| | — |
| | — |
| | 333 |
| | 461 |
| | 794 |
| | (31 | ) | | 2010 | | 02/16/17 | | 10 to 40 Years |
| Dairy Queen | Wasilla, AK | | (d) | | 577 |
| | 1,260 |
| | — |
| | — |
| | 577 |
| | 1,260 |
| | 1,837 |
| | (170 | ) | | 1984 | | 02/16/17 | | 5 to 20 Years |
| Dave & Buster's | Addison, IL | | (d) | | 4,690 |
| | 6,692 |
| | — |
| | — |
| | 4,690 |
| | 6,692 |
| | 11,382 |
| | (2,565 | ) | | 1995 | | 07/17/13 | | 7 to 24 Years |
| Dave & Buster's | Tucson, AZ | | (d) | | 2,874 |
| | 5,655 |
| | — |
| | 43 |
| | 2,874 |
| | 5,698 |
| | 8,572 |
| | (341 | ) | | 2017 | | 03/31/17 | | 15 to 50 Years |
| Dave & Buster's | Westlake, OH | | (d) | | 2,856 |
| | 1 |
| | — |
| | 44 |
| | 2,856 |
| | 45 |
| | 2,901 |
| | (7 | ) | | 2016 | | 05/18/17 | | 10 to 10 Years |
| David's Bridal | Lenexa, KS | | (d) | | 919 |
| | 2,476 |
| | — |
| | — |
| | 919 |
| | 2,476 |
| | 3,395 |
| | (425 | ) | | 2005 | | 07/17/13 | | 2 to 47 Years |
| Davis-Standard | Pawcatuck, CT | | (d) | | 2,736 |
| | 9,218 |
| | — |
| | 36 |
| | 2,736 |
| | 9,254 |
| | 11,990 |
| | (830 | ) | | 1969 | | 10/27/16 | | 7 to 40 Years |
| Davis-Standard | Fulton, NY | | (d) | | 445 |
| | 6,113 |
| | — |
| | 35 |
| | 445 |
| | 6,148 |
| | 6,593 |
| | (441 | ) | | 1983 | | 10/27/16 | | 5 to 40 Years |
| Defined Fitness | Albuquerque, NM | | (d) | | 1,914 |
| | 3,724 |
| | — |
| | — |
| | 1,914 |
| | 3,724 |
| | 5,638 |
| | (535 | ) | | 1995 | | 04/23/15 | | 15 to 30 Years |
| Defined Fitness | Rio Rancho, NM | | (d) | | 1,448 |
| | 2,172 |
| | — |
| | — |
| | 1,448 |
| | 2,172 |
| | 3,620 |
| | (333 | ) | | 1997 | | 04/23/15 | | 15 to 30 Years |
| Defined Fitness | Albuquerque, NM | | (d) | | 2,391 |
| | 4,008 |
| | — |
| | — |
| | 2,391 |
| | 4,008 |
| | 6,399 |
| | (594 | ) | | 2001 | | 04/23/15 | | 15 to 30 Years |
| Defined Fitness | Albuquerque, NM | | (d) | | 4,732 |
| | 6,845 |
| | — |
| | — |
| | 4,732 |
| | 6,845 |
| | 11,577 |
| | (867 | ) | | 1972 | | 04/23/15 | | 15 to 40 Years |
| Defined Fitness | Farmington, NM | | (d) | | 2,242 |
| | 6,696 |
| | — |
| | — |
| | 2,242 |
| | 6,696 |
| | 8,938 |
| | (750 | ) | | 1999 | | 04/23/15 | | 15 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defy Trampoline Park | | Baton Rouge, LA | | (b) | | | 1,076 | | | | 2,289 | | | | 0 | | | | 0 | | | | 1,076 | | | | 2,289 | | | | 3,365 | | | | (443 | ) | | 2015 | | 11/13/2015 | | 10 to 40 Years |
| Defy Trampoline Park | | Flowood, MS | | (b) | | | 900 | | | | 1,137 | | | | 0 | | | | 0 | | | | 900 | | | | 1,137 | | | | 2,037 | | | | (398 | ) | | 1995 | | 11/13/2015 | | 9 to 20 Years |
| Defy Trampoline Park | | Augusta, GA | | (b) | | | 1,081 | | | | 1,488 | | | | 0 | | | | 0 | | | | 1,081 | | | | 1,488 | | | | 2,569 | | | | (668 | ) | | 1998 | | 9/30/2015 | | 10 to 20 Years |
| Defy Trampoline Park | | Brentwood, TN | | (b) | | | 2,292 | | | | 2,273 | | | | 0 | | | | 2 | | | | 2,292 | | | | 2,275 | | | | 4,567 | | | | (788 | ) | | 1970 | | 9/30/2015 | | 9 to 20 Years |
| Defy Trampoline Park | | Clovis, CA | | (b) | | | 1,117 | | | | 26 | | | | 600 | | | | 3,745 | | | | 1,717 | | | | 3,771 | | | | 5,488 | | | | (263 | ) | | 2017 | | 12/6/2016 | | 10 to 35 Years |
| Defy Trampoline Park | | Rogers, AR | | (b) | | | 635 | | | | 2,376 | | | | 0 | | | | 0 | | | | 635 | | | | 2,376 | | | | 3,011 | | | | (485 | ) | | 2014 | | 9/30/2015 | | 9 to 40 Years |
| Defy Trampoline Park (f) | | Louisville, KY | | (b) | | | 2,205 | | | | 3,551 | | | | 0 | | | | 0 | | | | 2,205 | | | | 3,551 | | | | 5,756 | | | | (1,235 | ) | | 1995 | | 11/2/2015 | | 9 to 20 Years |
| Denny’s | | Benson, AZ | | (b) | | | 313 | | | | 336 | | | | 0 | | | | 0 | | | | 313 | | | | 336 | | | | 649 | | | | (143 | ) | | 1996 | | 3/20/2015 | | 15 to 20 Years |
| Denny’s | | Fountain Hills, AZ | | (b) | | | 684 | | | | 1,073 | | | | (24 | ) | | | 25 | | | | 660 | | | | 1,098 | | | | 1,758 | | | | (81 | ) | | 1995 | | 11/25/2019 | | 8 to 20 Years |
| Dillon Tire | | Lincoln, NE | | (b) | | | 1,144 | | | | 2,935 | | | | 0 | | | | 0 | | | | 1,144 | | | | 2,935 | | | | 4,079 | | | | (434 | ) | | 1972 | | 11/25/2019 | | 2 to 10 Years |
| Direct Shot Distributing | | Franklin, IN | | (b) | | | 6,447 | | | | 20,390 | | | | 0 | | | | 0 | | | | 6,447 | | | | 20,390 | | | | 26,837 | | | | (144 | ) | | 2020 | | 11/10/2020 | | 6 to 34 Years |
| Dollar General | | Creal Springs, IL | | (b) | | | 261 | | | | 653 | | | | 0 | | | | 0 | | | | 261 | | | | 653 | | | | 914 | | | | (173 | ) | | 2014 | | 4/27/2015 | | 14 to 40 Years |
| Dollar General | | Fruita, CO | | (a) | | | 255 | | | | 1,025 | | | | 0 | | | | 0 | | | | 255 | | | | 1,025 | | | | 1,280 | | | | (239 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | De Soto, KS | | (a) | | | 301 | | | | 1,049 | | | | 0 | | | | 0 | | | | 301 | | | | 1,049 | | | | 1,350 | | | | (277 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | La Cygne, KS | | (a) | | | 120 | | | | 833 | | | | 0 | | | | 0 | | | | 120 | | | | 833 | | | | 953 | | | | (195 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Topeka, KS | | (a) | | | 313 | | | | 882 | | | | 0 | | | | 0 | | | | 313 | | | | 882 | | | | 1,195 | | | | (223 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Emporia, KS | | (a) | | | 292 | | | | 1,176 | | | | 0 | | | | 0 | | | | 292 | | | | 1,176 | | | | 1,468 | | | | (281 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Hill City, KS | | (a) | | | 243 | | | | 815 | | | | 0 | | | | 0 | | | | 243 | | | | 815 | | | | 1,058 | | | | (221 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Pagosa Springs, CO | | (a) | | | 253 | | | | 1,031 | | | | 0 | | | | 0 | | | | 253 | | | | 1,031 | | | | 1,284 | | | | (230 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Silt, CO | | (a) | | | 334 | | | | 894 | | | | 0 | | | | 0 | | | | 334 | | | | 894 | | | | 1,228 | | | | (201 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Tornillo, TX | | (a) | | | 255 | | | | 818 | | | | 0 | | | | 0 | | | | 255 | | | | 818 | | | | 1,073 | | | | (217 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Crystal City, TX | | (a) | | | 295 | | | | 939 | | | | 0 | | | | 0 | | | | 295 | | | | 939 | | | | 1,234 | | | | (209 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Temple, TX | | (a) | | | 414 | | | | 897 | | | | 0 | | | | 0 | | | | 414 | | | | 897 | | | | 1,311 | | | | (221 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Gore, OK | | (a) | | | 182 | | | | 924 | | | | 0 | | | | 0 | | | | 182 | | | | 924 | | | | 1,106 | | | | (221 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Stigler, OK | | (a) | | | 610 | | | | 809 | | | | 0 | | | | 0 | | | | 610 | | | | 809 | | | | 1,419 | | | | (225 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Okay, OK | | (a) | | | 200 | | | | 901 | | | | 0 | | | | 0 | | | | 200 | | | | 901 | | | | 1,101 | | | | (211 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Hobart, OK | | (a) | | | 230 | | | | 910 | | | | 0 | | | | 0 | | | | 230 | | | | 910 | | | | 1,140 | | | | (223 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Atoka, OK | | (a) | | | 466 | | | | 1,304 | | | | 0 | | | | 0 | | | | 466 | | | | 1,304 | | | | 1,770 | | | | (295 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Claremore, OK | | (a) | | | 243 | | | | 928 | | | | 0 | | | | 0 | | | | 243 | | | | 928 | | | | 1,171 | | | | (207 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Adair, OK | | (a) | | | 264 | | | | 855 | | | | 0 | | | | 0 | | | | 264 | | | | 855 | | | | 1,119 | | | | (199 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Altus, OK | | (a) | | | 315 | | | | 918 | | | | 0 | | | | 0 | | | | 315 | | | | 918 | | | | 1,233 | | | | (205 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Ketchum, OK | | (a) | | | 297 | | | | 760 | | | | 0 | | | | 0 | | | | 297 | | | | 760 | | | | 1,057 | | | | (217 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Spiro, OK | | (a) | | | 263 | | | | 1,099 | | | | 0 | | | | 0 | | | | 263 | | | | 1,099 | | | | 1,362 | | | | (282 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Walters, OK | | (a) | | | 173 | | | | 1,042 | | | | 0 | | | | 0 | | | | 173 | | | | 1,042 | | | | 1,215 | | | | (238 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Sand Springs, OK | | (a) | | | 396 | | | | 1,039 | | | | 0 | | | | 0 | | | | 396 | | | | 1,039 | | | | 1,435 | | | | (247 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Ord, NE | | (a) | | | 222 | | | | 1,010 | | | | 0 | | | | 0 | | | | 222 | | | | 1,010 | | | | 1,232 | | | | (241 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Las Cruces, NM | | (a) | | | 452 | | | | 900 | | | | 0 | | | | 0 | | | | 452 | | | | 900 | | | | 1,352 | | | | (235 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Denny's | Benson, AZ | | (d) | | 313 |
| | 336 |
| | — |
| | — |
| | 313 |
| | 336 |
| | 649 |
| | (93 | ) | | 1996 | | 03/20/15 | | 15 to 20 Years |
| Dollar General | Crossville, TN | | (d) | | 1,041 |
| | 1,871 |
| | — |
| | — |
| | 1,041 |
| | 1,871 |
| | 2,912 |
| | (478 | ) | | 2006 | | 07/17/13 | | 7 to 40 Years |
| Dollar General | Ardmore, TN | | (d) | | 950 |
| | 1,847 |
| | — |
| | — |
| | 950 |
| | 1,847 |
| | 2,797 |
| | (481 | ) | | 2005 | | 07/17/13 | | 8 to 40 Years |
| Dollar General | Livingston, TN | | (d) | | 1,073 |
| | 1,889 |
| | — |
| | — |
| | 1,073 |
| | 1,889 |
| | 2,962 |
| | (528 | ) | | 2006 | | 07/17/13 | | 7 to 40 Years |
| Dollar General | Wetumpka, AL | | (c) | | 303 |
| | 784 |
| | — |
| | — |
| | 303 |
| | 784 |
| | 1,087 |
| | (140 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Orrville, AL | | (c) | | 192 |
| | 826 |
| | — |
| | — |
| | 192 |
| | 826 |
| | 1,018 |
| | (153 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Rehobeth, AL | | (c) | | 259 |
| | 774 |
| | — |
| | — |
| | 259 |
| | 774 |
| | 1,033 |
| | (132 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Tallassee, AL | | (c) | | 141 |
| | 895 |
| | — |
| | — |
| | 141 |
| | 895 |
| | 1,036 |
| | (141 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Jasper, AL | | (c) | | 365 |
| | 1,052 |
| | — |
| | — |
| | 365 |
| | 1,052 |
| | 1,417 |
| | (178 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Cowarts, AL | | (c) | | 396 |
| | 836 |
| | — |
| | — |
| | 396 |
| | 836 |
| | 1,232 |
| | (144 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Centre, AL | | (c) | | 233 |
| | 767 |
| | — |
| | — |
| | 233 |
| | 767 |
| | 1,000 |
| | (134 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Crossville, TN | | (c) | | 264 |
| | 849 |
| | — |
| | — |
| | 264 |
| | 849 |
| | 1,113 |
| | (146 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Eastaboga, AL | | (c) | | 223 |
| | 937 |
| | — |
| | — |
| | 223 |
| | 937 |
| | 1,160 |
| | (157 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Enterprise, AL | | (c) | | 255 |
| | 803 |
| | — |
| | — |
| | 255 |
| | 803 |
| | 1,058 |
| | (136 | ) | | 2011 | | 09/17/13 | | 12 to 40 Years |
| Dollar General | Tornillo, TX | | (c) | | 255 |
| | 818 |
| | — |
| | — |
| | 255 |
| | 818 |
| | 1,073 |
| | (156 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Crystal City, TX | | (c) | | 295 |
| | 939 |
| | — |
| | — |
| | 295 |
| | 939 |
| | 1,234 |
| | (151 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Temple, TX | | (c) | | 414 |
| | 897 |
| | — |
| | — |
| | 414 |
| | 897 |
| | 1,311 |
| | (159 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Fruita, CO | | (c) | | 255 |
| | 1,025 |
| | — |
| | — |
| | 255 |
| | 1,025 |
| | 1,280 |
| | (173 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | De Soto, KS | | (c) | | 301 |
| | 1,049 |
| | — |
| | — |
| | 301 |
| | 1,049 |
| | 1,350 |
| | (200 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | La Cygne, KS | | (c) | | 120 |
| | 833 |
| | — |
| | — |
| | 120 |
| | 833 |
| | 953 |
| | (140 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Topeka, KS | | (c) | | 313 |
| | 882 |
| | — |
| | — |
| | 313 |
| | 882 |
| | 1,195 |
| | (161 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Emporia, KS | | (c) | | 292 |
| | 1,176 |
| | — |
| | — |
| | 292 |
| | 1,176 |
| | 1,468 |
| | (202 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Hill City, KS | | (c) | | 243 |
| | 815 |
| | — |
| | — |
| | 243 |
| | 815 |
| | 1,058 |
| | (159 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Pagosa Springs, CO | | (c) | | 253 |
| | 1,031 |
| | — |
| | — |
| | 253 |
| | 1,031 |
| | 1,284 |
| | (166 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Silt, CO | | (c) | | 334 |
| | 894 |
| | — |
| | — |
| | 334 |
| | 894 |
| | 1,228 |
| | (145 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Gore, OK | | (c) | | 182 |
| | 924 |
| | — |
| | — |
| | 182 |
| | 924 |
| | 1,106 |
| | (159 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Stigler, OK | | (c) | | 610 |
| | 809 |
| | — |
| | — |
| | 610 |
| | 809 |
| | 1,419 |
| | (162 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Okay, OK | | (c) | | 200 |
| | 901 |
| | — |
| | — |
| | 200 |
| | 901 |
| | 1,101 |
| | (152 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Hobart, OK | | (c) | | 230 |
| | 910 |
| | — |
| | — |
| | 230 |
| | 910 |
| | 1,140 |
| | (161 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Atoka, OK | | (c) | | 466 |
| | 1,304 |
| | — |
| | — |
| | 466 |
| | 1,304 |
| | 1,770 |
| | (212 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Claremore, OK | | (c) | | 243 |
| | 928 |
| | — |
| | — |
| | 243 |
| | 928 |
| | 1,171 |
| | (149 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Adair, OK | | (c) | | 264 |
| | 855 |
| | — |
| | — |
| | 264 |
| | 855 |
| | 1,119 |
| | (144 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dollar General | | Hobbs, NM | | (a) | | | 405 | | | | 949 | | | | 0 | | | | 0 | | | | 405 | | | | 949 | | | | 1,354 | | | | (255 | ) | | 2012 | | 10/29/2013 | | 13 to 40 Years |
| Dollar General | | Wetumpka, AL | | (a) | | | 303 | | | | 784 | | | | 0 | | | | 0 | | | | 303 | | | | 784 | | | | 1,087 | | | | (194 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Orrville, AL | | (a) | | | 192 | | | | 826 | | | | 0 | | | | 0 | | | | 192 | | | | 826 | | | | 1,018 | | | | (211 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Rehobeth, AL | | (a) | | | 259 | | | | 774 | | | | 0 | | | | 0 | | | | 259 | | | | 774 | | | | 1,033 | | | | (182 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Tallassee, AL | | (a) | | | 141 | | | | 895 | | | | 0 | | | | 0 | | | | 141 | | | | 895 | | | | 1,036 | | | | (195 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Jasper, AL | | (a) | | | 365 | | | | 1,052 | | | | 0 | | | | 0 | | | | 365 | | | | 1,052 | | | | 1,417 | | | | (245 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Cowarts, AL | | (a) | | | 396 | | | | 836 | | | | 0 | | | | 0 | | | | 396 | | | | 836 | | | | 1,232 | | | | (199 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Centre, AL | | (a) | | | 233 | | | | 767 | | | | 0 | | | | 0 | | | | 233 | | | | 767 | | | | 1,000 | | | | (185 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Crossville, TN | | (a) | | | 264 | | | | 849 | | | | 0 | | | | 0 | | | | 264 | | | | 849 | | | | 1,113 | | | | (201 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Eastaboga, AL | | (a) | | | 223 | | | | 937 | | | | 0 | | | | 0 | | | | 223 | | | | 937 | | | | 1,160 | | | | (217 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Enterprise, AL | | (a) | | | 255 | | | | 803 | | | | 0 | | | | 0 | | | | 255 | | | | 803 | | | | 1,058 | | | | (188 | ) | | 2011 | | 9/17/2013 | | 12 to 40 Years |
| Dollar General | | Western Grove, AR | | (b) | | | 391 | | | | 595 | | | | 0 | | | | 0 | | | | 391 | | | | 595 | | | | 986 | | | | (182 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Quinton, OK | | (b) | | | 245 | | | | 683 | | | | 0 | | | | 0 | | | | 245 | | | | 683 | | | | 928 | | | | (152 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Alpena, AR | | (b) | | | 359 | | | | 600 | | | | 0 | | | | 0 | | | | 359 | | | | 600 | | | | 959 | | | | (179 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Keota, OK | | (b) | | | 215 | | | | 687 | | | | 0 | | | | 0 | | | | 215 | | | | 687 | | | | 902 | | | | (161 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Cameron, OK | | (b) | | | 312 | | | | 710 | | | | 0 | | | | 0 | | | | 312 | | | | 710 | | | | 1,022 | | | | (152 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Center Ridge, AR | | (b) | | | 313 | | | | 595 | | | | 0 | | | | 0 | | | | 313 | | | | 595 | | | | 908 | | | | (178 | ) | | 2014 | | 12/15/2014 | | 14 to 40 Years |
| Dollar General | | Lakeview, IA | | (b) | | | 251 | | | | 568 | | | | 0 | | | | 0 | | | | 251 | | | | 568 | | | | 819 | | | | (142 | ) | | 2015 | | 4/27/2015 | | 14 to 40 Years |
| Dollar General | | Pleasant Hope, MO | | (b) | | | 263 | | | | 650 | | | | 0 | | | | 0 | | | | 263 | | | | 650 | | | | 913 | | | | (165 | ) | | 2014 | | 5/14/2015 | | 14 to 40 Years |
| Dollar General | | Los Lunas, NM | | (b) | | | 281 | | | | 740 | | | | 0 | | | | 0 | | | | 281 | | | | 740 | | | | 1,021 | | | | (195 | ) | | 2015 | | 5/14/2015 | | 14 to 40 Years |
| Dollar General | | Bloomfield, NM | | (b) | | | 409 | | | | 663 | | | | 0 | | | | 0 | | | | 409 | | | | 663 | | | | 1,072 | | | | (157 | ) | | 2015 | | 5/14/2015 | | 14 to 40 Years |
| Dollar General | | Drexel, MO | | (b) | | | 184 | | | | 727 | | | | 0 | | | | 0 | | | | 184 | | | | 727 | | | | 911 | | | | (165 | ) | | 2015 | | 5/14/2015 | | 14 to 40 Years |
| Dollar General | | La Plata, MO | | (b) | | | 283 | | | | 653 | | | | 0 | | | | 0 | | | | 283 | | | | 653 | | | | 936 | | | | (173 | ) | | 2014 | | 4/27/2015 | | 14 to 40 Years |
| Dollar General | | Pineville, MO | | (b) | | | 253 | | | | 699 | | | | 0 | | | | 0 | | | | 253 | | | | 699 | | | | 952 | | | | (190 | ) | | 2014 | | 3/31/2015 | | 14 to 40 Years |
| Dollar General | | Aztec, NM | | (b) | | | 548 | | | | 623 | | | | 0 | | | | 0 | | | | 548 | | | | 623 | | | | 1,171 | | | | (175 | ) | | 2014 | | 3/31/2015 | | 14 to 40 Years |
| Dollar General | | Bentonia, MS | | (b) | | | 227 | | | | 745 | | | | 0 | | | | 0 | | | | 227 | | | | 745 | | | | 972 | | | | (156 | ) | | 2014 | | 6/22/2015 | | 13 to 40 Years |
| Dollar General | | Ardmore, TN | | (b) | | | 950 | | | | 1,847 | | | | 0 | | | | 31 | | | | 950 | | | | 1,878 | | | | 2,828 | | | | (659 | ) | | 2005 | | 7/17/2013 | | 8 to 40 Years |
| Dollar General | | Byng, OK | | (b) | | | 205 | | | | 646 | | | | 0 | | | | 0 | | | | 205 | | | | 646 | | | | 851 | | | | (136 | ) | | 2015 | | 7/14/2015 | | 14 to 40 Years |
| Dollar General | | Maben, MS | | (b) | | | 263 | | | | 734 | | | | 0 | | | | 0 | | | | 263 | | | | 734 | | | | 997 | | | | (171 | ) | | 2014 | | 9/24/2015 | | 13 to 40 Years |
| Dollar General | | Laurel, MS | | (b) | | | 683 | | | | 421 | | | | 0 | | | | 0 | | | | 683 | | | | 421 | | | | 1,104 | | | | (37 | ) | | 2012 | | 11/25/2019 | | 7 to 31 Years |
| Dollar General | | Emmalena, KY | | (b) | | | 336 | | | | 812 | | | | 0 | | | | 0 | | | | 336 | | | | 812 | | | | 1,148 | | | | (10 | ) | | 2018 | | 9/30/2020 | | 12 to 33 Years |
| Dollar General | | Grethel, KY | | (b) | | | 326 | | | | 792 | | | | 0 | | | | 0 | | | | 326 | | | | 792 | | | | 1,118 | | | | (10 | ) | | 2018 | | 9/30/2020 | | 13 to 34 Years |
| Dollar General | | Wooten, KY | | (b) | | | 468 | | | | 537 | | | | 0 | | | | 0 | | | | 468 | | | | 537 | | | | 1,005 | | | | (9 | ) | | 2018 | | 9/30/2020 | | 13 to 33 Years |
| Dollar General | | Salyersville, KY | | (b) | | | 234 | | | | 823 | | | | 0 | | | | 0 | | | | 234 | | | | 823 | | | | 1,057 | | | | (9 | ) | | 2019 | | 9/30/2020 | | 13 to 34 Years |
| Dollar General | | Salyersville, KY | | (b) | | | 326 | | | | 732 | | | | 0 | | | | 0 | | | | 326 | | | | 732 | | | | 1,058 | | | | (9 | ) | | 2019 | | 9/30/2020 | | 13 to 34 Years |
| Dollar General | | Tyner, KY | | (b) | | | 458 | | | | 569 | | | | 0 | | | | 0 | | | | 458 | | | | 569 | | | | 1,027 | | | | (8 | ) | | 2019 | | 9/30/2020 | | 13 to 44 Years |
| Dollar General | | Spencer, NY | | (b) | | | 810 | | | | 569 | | | | 0 | | | | 0 | | | | 810 | | | | 569 | | | | 1,379 | | | | 0 | | | 2019 | | 12/22/2020 | | 13 to 34 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dollar General | Altus, OK | | (c) | | 315 |
| | 918 |
| | — |
| | — |
| | 315 |
| | 918 |
| | 1,233 |
| | (148 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Ketchum, OK | | (c) | | 297 |
| | 760 |
| | — |
| | — |
| | 297 |
| | 760 |
| | 1,057 |
| | (156 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Spiro, OK | | (c) | | 263 |
| | 1,099 |
| | — |
| | — |
| | 263 |
| | 1,099 |
| | 1,362 |
| | (204 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Walters, OK | | (c) | | 173 |
| | 1,042 |
| | — |
| | — |
| | 173 |
| | 1,042 |
| | 1,215 |
| | (172 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Sand Springs, OK | | (c) | | 396 |
| | 1,039 |
| | — |
| | — |
| | 396 |
| | 1,039 |
| | 1,435 |
| | (178 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Ord, NE | | (c) | | 222 |
| | 1,010 |
| | — |
| | — |
| | 222 |
| | 1,010 |
| | 1,232 |
| | (174 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Las Cruces, NM | | (c) | | 452 |
| | 900 |
| | — |
| | — |
| | 452 |
| | 900 |
| | 1,352 |
| | (170 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Hobbs, NM | | (c) | | 405 |
| | 949 |
| | — |
| | — |
| | 405 |
| | 949 |
| | 1,354 |
| | (184 | ) | | 2012 | | 10/29/13 | | 13 to 40 Years |
| Dollar General | Western Grove, AR | | (d) | | 391 |
| | 595 |
| | — |
| | — |
| | 391 |
| | 595 |
| | 986 |
| | (122 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Quinton, OK | | (d) | | 245 |
| | 683 |
| | — |
| | — |
| | 245 |
| | 683 |
| | 928 |
| | (102 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Alpena, AR | | (d) | | 359 |
| | 600 |
| | — |
| | — |
| | 359 |
| | 600 |
| | 959 |
| | (120 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Keota, OK | | (d) | | 215 |
| | 687 |
| | — |
| | — |
| | 215 |
| | 687 |
| | 902 |
| | (108 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Cameron, OK | | (d) | | 312 |
| | 710 |
| | — |
| | — |
| | 312 |
| | 710 |
| | 1,022 |
| | (102 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Center Ridge, AR | | (d) | | 313 |
| | 595 |
| | — |
| | — |
| | 313 |
| | 595 |
| | 908 |
| | (120 | ) | | 2014 | | 12/15/14 | | 14 to 40 Years |
| Dollar General | Byng, OK | | (b) | | 205 |
| | 646 |
| | — |
| | — |
| | 205 |
| | 646 |
| | 851 |
| | (87 | ) | | 2015 | | 07/14/15 | | 14 to 40 Years |
| Dollar General | La Plata, MO | | (d) | | 283 |
| | 653 |
| | — |
| | — |
| | 283 |
| | 653 |
| | 936 |
| | (112 | ) | | 2014 | | 04/27/15 | | 14 to 40 Years |
| Dollar General | Birch Tree, MO | | (d) | | 252 |
| | 659 |
| | — |
| | — |
| | 252 |
| | 659 |
| | 911 |
| | (117 | ) | | 2014 | | 03/31/15 | | 14 to 40 Years |
| Dollar General | Pineville, MO | | (d) | | 253 |
| | 699 |
| | — |
| | — |
| | 253 |
| | 699 |
| | 952 |
| | (124 | ) | | 2014 | | 03/31/15 | | 14 to 40 Years |
| Dollar General | Aztec, NM | | (d) | | 548 |
| | 623 |
| | — |
| | — |
| | 548 |
| | 623 |
| | 1,171 |
| | (114 | ) | | 2014 | | 03/31/15 | | 14 to 40 Years |
| Dollar General | Creal Springs, IL | | (d) | | 261 |
| | 653 |
| | — |
| | — |
| | 261 |
| | 653 |
| | 914 |
| | (112 | ) | | 2014 | | 04/27/15 | | 14 to 40 Years |
| Dollar General | Lakeview, IA | | (d) | | 251 |
| | 568 |
| | — |
| | — |
| | 251 |
| | 568 |
| | 819 |
| | (92 | ) | | 2015 | | 04/27/15 | | 14 to 40 Years |
| Dollar General | Pleasant Hope, MO | | (d) | | 263 |
| | 650 |
| | — |
| | — |
| | 263 |
| | 650 |
| | 913 |
| | (107 | ) | | 2014 | | 05/14/15 | | 14 to 40 Years |
| Dollar General | Los Lunas, NM | | (d) | | 281 |
| | 740 |
| | — |
| | — |
| | 281 |
| | 740 |
| | 1,021 |
| | (126 | ) | | 2015 | | 05/14/15 | | 14 to 40 Years |
| Dollar General | Bloomfield, NM | | (d) | | 409 |
| | 663 |
| | — |
| | — |
| | 409 |
| | 663 |
| | 1,072 |
| | (102 | ) | | 2015 | | 05/14/15 | | 14 to 40 Years |
| Dollar General | Drexel, MO | | (d) | | 184 |
| | 727 |
| | — |
| | — |
| | 184 |
| | 727 |
| | 911 |
| | (107 | ) | | 2015 | | 05/14/15 | | 14 to 40 Years |
| Dollar General | Bentonia, MS | | (b) | | 227 |
| | 745 |
| | — |
| | — |
| | 227 |
| | 745 |
| | 972 |
| | (100 | ) | | 2014 | | 06/22/15 | | 13 to 40 Years |
| Dollar General | Maben, MS | | (d) | | 263 |
| | 734 |
| | — |
| | — |
| | 263 |
| | 734 |
| | 997 |
| | (106 | ) | | 2014 | | 09/24/15 | | 13 to 40 Years |
| Dollar Tree | Portsmouth, OH | | (c) | | 219 |
| | 2,049 |
| | (165 | ) | | (1,330 | ) | | 54 |
| | 719 |
| | 773 |
| | (27 | ) | | 1997 | | 07/17/13 | | 0 to 34 Years |
| Dollar Tree | Alliance, OH | | (d) | | 556 |
| | 1,317 |
| | (423 | ) | | (810 | ) | | 133 |
| | 507 |
| | 640 |
| | (66 | ) | | 1996 | | 07/17/13 | | 0 to 27 Years |
| DOW Emergency | Livingston, TX | | (d) | | 1,505 |
| | 7,616 |
| | — |
| | 1,032 |
| | 1,505 |
| | 8,648 |
| | 10,153 |
| | (599 | ) | | 2014 | | 03/30/16 | | 16 to 40 Years |
| Drive Time | Independence, MO | | (d) | | 1,058 |
| | 1,297 |
| | — |
| | — |
| | 1,058 |
| | 1,297 |
| | 2,355 |
| | (629 | ) | | 1968 | | 11/25/14 | | 4 to 15 Years |
| Drive Time | Gladstone, MO | | (d) | | 1,100 |
| | 774 |
| | — |
| | — |
| | 1,100 |
| | 774 |
| | 1,874 |
| | (190 | ) | | 2005 | | 03/11/15 | | 4 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dollar General | | Munnsville, NY | | (b) | | | 370 | | | | 739 | | | | 0 | | | | 0 | | | | 370 | | | | 739 | | | | 1,109 | | | | 0 | | | 2019 | | 12/22/2020 | | 13 to 34 Years |
| Dollar General | | Washburn, ME | | (b) | | | 330 | | | | 880 | | | | 0 | | | | 0 | | | | 330 | | | | 880 | | | | 1,210 | | | | 0 | | | 2018 | | 12/22/2020 | | 12 to 33 Years |
| Dollar General | | Andover, NY | | (b) | | | 340 | | | | 800 | | | | 0 | | | | 0 | | | | 340 | | | | 800 | | | | 1,140 | | | | 0 | | | 2019 | | 12/22/2020 | | 13 to 34 Years |
| Dollar Tree / Family Dollar | | Portsmouth, OH | | (a) | | | 219 | | | | 2,049 | | | | (165 | ) | | | (1,330 | ) | | | 54 | | | | 719 | | | | 773 | | | | (72 | ) | | 1997 | | 7/17/2013 | | 7 to 34 Years |
| Dollar Tree / Family Dollar | | Alliance, OH | | (b) | | | 556 | | | | 1,317 | | | | (423 | ) | | | (810 | ) | | | 133 | | | | 507 | | | | 640 | | | | (156 | ) | | 1996 | | 7/17/2013 | | 5 to 27 Years |
| Dollar Tree / Family Dollar | | Mesa, AZ | | (b) | | | 734 | | | | 2 | | | | 102 | | | | 630 | | | | 836 | | | | 632 | | | | 1,468 | | | | (131 | ) | | 1955 | | 11/13/2014 | | 10 to 50 Years |
| Dollar Tree / Family Dollar | | Kincheloe, MI | | (b) | | | 317 | | | | 626 | | | | 0 | | | | 0 | | | | 317 | | | | 626 | | | | 943 | | | | (176 | ) | | 2014 | | 3/20/2015 | | 14 to 40 Years |
Dollar Tree / Family Dollar | | Mansfield, OH | | (b) | | | 288 | | | | 825 | | | | 0 | | | | 59 | | | | 288 | | | | 884 | | | | 1,172 | | | | (176 | ) | | 2014 | | 4/28/2015 | | 9 to 40 Years |
Dollar Tree / Family Dollar | | Des Moines, IA | | (b) | | | 354 | | | | 807 | | | | 0 | | | | 0 | | | | 354 | | | | 807 | | | | 1,161 | | | | (199 | ) | | 2014 | | 3/20/2015 | | 8 to 40 Years |
Dollar Tree / Family Dollar | | Otter Tail, MN | | (b) | | | 338 | | | | 791 | | | | 0 | | | | 0 | | | | 338 | | | | 791 | | | | 1,129 | | | | (172 | ) | | 2014 | | 3/20/2015 | | 14 to 40 Years |
Dollar Tree / Family Dollar | | Evart, MI | | (b) | | | 306 | | | | 703 | | | | 0 | | | | 0 | | | | 306 | | | | 703 | | | | 1,009 | | | | (168 | ) | | 2014 | | 3/20/2015 | | 14 to 40 Years |
Dollar Tree / Family Dollar | | Anderson, IN | | (b) | | | 359 | | | | 781 | | | | 0 | | | | 0 | | | | 359 | | | | 781 | | | | 1,140 | | | | (180 | ) | | 2015 | | 3/20/2015 | | 14 to 40 Years |
Dollar Tree / Family Dollar | | Bulls Gap, TN | | (b) | | | 466 | | | | 762 | | | | 0 | | | | 0 | | | | 466 | | | | 762 | | | | 1,228 | | | | (179 | ) | | 2014 | | 3/20/2015 | | 14 to 40 Years |
Dollar Tree / Family Dollar | | Duluth, MN | | (b) | | | 422 | | | | 869 | | | | 0 | | | | 0 | | | | 422 | | | | 869 | | | | 1,291 | | | | (201 | ) | | 2015 | | 5/12/2015 | | 9 to 40 Years |
Dollar Tree / Family Dollar | | Buena Vista, GA | | (b) | | | 431 | | | | 769 | | | | 0 | | | | 0 | | | | 431 | | | | 769 | | | | 1,200 | | | | (62 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Montgomery, AL | | (b) | | | 426 | | | | 657 | | | | 0 | | | | 0 | | | | 426 | | | | 657 | | | | 1,083 | | | | (52 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Clarksville, TN | | (b) | | | 460 | | | | 965 | | | | 0 | | | | 0 | | | | 460 | | | | 965 | | | | 1,425 | | | | (56 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Standish, ME | | (b) | | | 265 | | | | 978 | | | | 0 | | | | 0 | | | | 265 | | | | 978 | | | | 1,243 | | | | (64 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Prattville, AL | | (b) | | | 815 | | | | 476 | | | | 0 | | | | 0 | | | | 815 | | | | 476 | | | | 1,291 | | | | (56 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Southaven, MS | | (b) | | | 443 | | | | 1,209 | | | | 0 | | | | 0 | | | | 443 | | | | 1,209 | | | | 1,652 | | | | (67 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Prichard, AL | | (b) | | | 735 | | | | 436 | | | | 0 | | | | 0 | | | | 735 | | | | 436 | | | | 1,171 | | | | (40 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Marion, MS | | (b) | | | 431 | | | | 600 | | | | 0 | | | | 0 | | | | 431 | | | | 600 | | | | 1,031 | | | | (46 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Ridgeland, MS | | (b) | | | 671 | | | | 734 | | | | 0 | | | | 0 | | | | 671 | | | | 734 | | | | 1,405 | | | | (52 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Brownsville, TN | | (b) | | | 251 | | | | 774 | | | | 0 | | | | 0 | | | | 251 | | | | 774 | | | | 1,025 | | | | (48 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Big Sandy, TN | | (b) | | | 270 | | | | 585 | | | | 0 | | | | 0 | | | | 270 | | | | 585 | | | | 855 | | | | (42 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Brundidge, AL | | (b) | | | 341 | | | | 601 | | | | 0 | | | | 0 | | | | 341 | | | | 601 | | | | 942 | | | | (48 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Oakdale, LA | | (b) | | | 236 | | | | 884 | | | | 0 | | | | 0 | | | | 236 | | | | 884 | | | | 1,120 | | | | (55 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | North Little Rock, AR | | (b) | | | 295 | | | | 811 | | | | 0 | | | | 0 | | | | 295 | | | | 811 | | | | 1,106 | | | | (53 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Quinlan, TX | | (b) | | | 205 | | | | 729 | | | | 0 | | | | 0 | | | | 205 | | | | 729 | | | | 934 | | | | (52 | ) | | 2014 | | 9/19/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Boling-Iago, TX | | (b) | | | 256 | | | | 687 | | | | 0 | | | | 0 | | | | 256 | | | | 687 | | | | 943 | | | | (49 | ) | | 2013 | | 9/19/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Rising Star, TX | | (b) | | | 155 | | | | 736 | | | | 0 | | | | 0 | | | | 155 | | | | 736 | | | | 891 | | | | (49 | ) | | 2014 | | 9/19/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Lake Charles, LA | | (b) | | | 358 | | | | 825 | | | | 0 | | | | 0 | | | | 358 | | | | 825 | | | | 1,183 | | | | (55 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Marsing, ID | | (b) | | | 340 | | | | 811 | | | | 0 | | | | 0 | | | | 340 | | | | 811 | | | | 1,151 | | | | (57 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Calvert, TX | | (b) | | | 178 | | | | 891 | | | | 0 | | | | 0 | | | | 178 | | | | 891 | | | | 1,069 | | | | (54 | ) | | 2014 | | 9/19/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Hillsboro, TX | | (b) | | | 214 | | | | 758 | | | | 0 | | | | 0 | | | | 214 | | | | 758 | | | | 972 | | | | (44 | ) | | 2014 | | 9/19/2019 | | 10 to 32 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Duluth Trading Co. | Greensboro, NC | | (c) | | 2,776 |
| | 3,990 |
| | — |
| | — |
| | 2,776 |
| | 3,990 |
| | 6,766 |
| | (699 | ) | | 2007 | | 07/17/13 | | 10 to 47 Years |
| Emagine Theaters | Lakeville, MN | | (d) | | 2,843 |
| | 2,843 |
| | (419 | ) | | 3,070 |
| | 2,424 |
| | 5,913 |
| | 8,337 |
| | (591 | ) | | 1998 | | 07/29/16 | | 7 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Emagine Theaters | Rogers, MN | | (d) | | 2,337 |
| | 2,384 |
| | — |
| | 1,983 |
| | 2,337 |
| | 4,367 |
| | 6,704 |
| | (526 | ) | | 2006 | | 07/29/16 | | 5 to 30 Years |
| Emagine Theaters | White Bear Township, MN | | (d) | | 2,773 |
| | 5,476 |
| | — |
| | 4,164 |
| | 2,773 |
| | 9,640 |
| | 12,413 |
| | (889 | ) | | 1995 | | 07/29/16 | | 5 to 20 Years |
| Emagine Theaters | Monticello, MN | | (d) | | 1,161 |
| | 3,155 |
| | — |
| | 1,479 |
| | 1,161 |
| | 4,634 |
| | 5,795 |
| | (464 | ) | | 2004 | | 07/29/16 | | 7 to 30 Years |
| Emagine Theaters | Plymouth, MN | | (d) | | 2,516 |
| | 4,089 |
| | — |
| | 2,450 |
| | 2,516 |
| | 6,539 |
| | 9,055 |
| | (571 | ) | | 1988 | | 07/29/16 | | 4 to 30 Years |
| Emagine Theaters | Waconia, MN | | (d) | | 249 |
| | 1,464 |
| | — |
| | 1,731 |
| | 249 |
| | 3,195 |
| | 3,444 |
| | (180 | ) | | 1989 | | 07/29/16 | | 6 to 20 Years |
| Emagine Theaters | East Bethel, MN | | (d) | | 545 |
| | 1,768 |
| | — |
| | 2,160 |
| | 545 |
| | 3,928 |
| | 4,473 |
| | (327 | ) | | 1990 | | 07/29/16 | | 5 to 20 Years |
| Emagine Theaters | Delano, MN | | (d) | | 397 |
| | 1,052 |
| | — |
| | — |
| | 397 |
| | 1,052 |
| | 1,449 |
| | (209 | ) | | 1984 | | 07/29/16 | | 3 to 20 Years |
| Exceptional Emergency Center | Garland, TX | | (d) | | 1,256 |
| | 4,516 |
| | — |
| | — |
| | 1,256 |
| | 4,516 |
| | 5,772 |
| | (319 | ) | | 2016 | | 03/30/16 | | 17 to 50 Years |
| Exceptional Emergency Center | Harlingen, TX | | (d) | | 1,734 |
| | 520 |
| | — |
| | 5,616 |
| | 1,734 |
| | 6,136 |
| | 7,870 |
| | (246 | ) | | 2016 | | 12/01/16 | | 49 to 50 Years |
| Family Dollar Stores | Mesa, AZ | | (d) | | 734 |
| | 2 |
| | 102 |
| | 630 |
| | 836 |
| | 632 |
| | 1,468 |
| | (85 | ) | | 1955 | | 11/13/14 | | 10 to 50 Years |
| Family Dollar Stores | Kincheloe, MI | | (d) | | 317 |
| | 626 |
| | — |
| | — |
| | 317 |
| | 626 |
| | 943 |
| | (115 | ) | | 2014 | | 03/20/15 | | 14 to 40 Years |
| Family Dollar Stores | Mansfield, OH | | (d) | | 288 |
| | 825 |
| | — |
| | — |
| | 288 |
| | 825 |
| | 1,113 |
| | (113 | ) | | 2014 | | 04/28/15 | | 9 to 40 Years |
| Family Dollar Stores | Des Moines, IA | | (d) | | 354 |
| | 807 |
| | — |
| | — |
| | 354 |
| | 807 |
| | 1,161 |
| | (130 | ) | | 2014 | | 03/20/15 | | 8 to 40 Years |
| Family Dollar Stores | Otter Tail, MN | | (d) | | 338 |
| | 791 |
| | — |
| | — |
| | 338 |
| | 791 |
| | 1,129 |
| | (112 | ) | | 2014 | | 03/20/15 | | 14 to 40 Years |
| Family Dollar Stores | Evart, MI | | (d) | | 306 |
| | 703 |
| | — |
| | — |
| | 306 |
| | 703 |
| | 1,009 |
| | (109 | ) | | 2014 | | 03/20/15 | | 14 to 40 Years |
| Family Dollar Stores | Anderson, IN | | (d) | | 359 |
| | 781 |
| | — |
| | — |
| | 359 |
| | 781 |
| | 1,140 |
| | (117 | ) | | 2015 | | 03/20/15 | | 14 to 40 Years |
| Family Dollar Stores | Bulls Gap, TN | | (d) | | 466 |
| | 762 |
| | — |
| | — |
| | 466 |
| | 762 |
| | 1,228 |
| | (117 | ) | | 2014 | | 03/20/15 | | 14 to 40 Years |
| Family Dollar Stores | Duluth, MN | | (d) | | 422 |
| | 869 |
| | — |
| | — |
| | 422 |
| | 869 |
| | 1,291 |
| | (130 | ) | | 2015 | | 05/12/15 | | 9 to 40 Years |
| Family Fare Supermarket | Omaha, NE | | (d) | | 2,198 |
| | 3,328 |
| | — |
| | — |
| | 2,198 |
| | 3,328 |
| | 5,526 |
| | (1,119 | ) | | 1982 | | 12/17/13 | | 4 to 20 Years |
| Family Medical Center | Jacksonville, FL | | (d) | | 815 |
| | 1,606 |
| | — |
| | — |
| | 815 |
| | 1,606 |
| | 2,421 |
| | (313 | ) | | 1977 | | 08/18/14 | | 6 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dollar Tree / Family Dollar | | Monticello, UT | | (b) | | | 289 | | | | 865 | | | | 0 | | | | 0 | | | | 289 | | | | 865 | | | | 1,154 | | | | (61 | ) | | 2013 | | 9/19/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Bonifay, FL | | (b) | | | 509 | | | | 493 | | | | 0 | | | | 0 | | | | 509 | | | | 493 | | | | 1,002 | | | | (45 | ) | | 2014 | | 6/28/2019 | | 12 to 26 Years |
Dollar Tree / Family Dollar | | Monticello, FL | | (b) | | | 413 | | | | 762 | | | | 0 | | | | 0 | | | | 413 | | | | 762 | | | | 1,175 | | | | (54 | ) | | 2014 | | 6/28/2019 | | 13 to 33 Years |
Dollar Tree / Family Dollar | | Lakeland, FL | | (b) | | | 634 | | | | 687 | | | | 0 | | | | 0 | | | | 634 | | | | 687 | | | | 1,321 | | | | (63 | ) | | 2014 | | 6/28/2019 | | 12 to 27 Years |
Dollar Tree / Family Dollar | | Sanford, NC | | (b) | | | 634 | | | | 656 | | | | 0 | | | | 0 | | | | 634 | | | | 656 | | | | 1,290 | | | | (62 | ) | | 2014 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Lansing, MI | | (b) | | | 702 | | | | 584 | | | | 0 | | | | 0 | | | | 702 | | | | 584 | | | | 1,286 | | | | (70 | ) | | 2013 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Laurens, SC | | (b) | | | 543 | | | | 586 | | | | 0 | | | | 0 | | | | 543 | | | | 586 | | | | 1,129 | | | | (53 | ) | | 2014 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Chocowinity, NC | | (b) | | | 487 | | | | 526 | | | | 0 | | | | 0 | | | | 487 | | | | 526 | | | | 1,013 | | | | (52 | ) | | 2014 | | 6/28/2019 | | 11 to 26 Years |
Dollar Tree / Family Dollar | | Hubert, NC | | (b) | | | 665 | | | | 761 | | | | 0 | | | | 0 | | | | 665 | | | | 761 | | | | 1,426 | | | | (58 | ) | | 2014 | | 6/28/2019 | | 13 to 33 Years |
Dollar Tree / Family Dollar | | St. Petersburg, FL | | (b) | | | 961 | | | | 545 | | | | 0 | | | | 0 | | | | 961 | | | | 545 | | | | 1,506 | | | | (54 | ) | | 2014 | | 6/28/2019 | | 10 to 31 Years |
Dollar Tree / Family Dollar | | Fort Mill, SC | | (b) | | | 553 | | | | 847 | | | | 0 | | | | 0 | | | | 553 | | | | 847 | | | | 1,400 | | | | (55 | ) | | 2014 | | 6/28/2019 | | 10 to 36 Years |
Dollar Tree / Family Dollar | | Port St. Lucie, FL | | (b) | | | 796 | | | | 745 | | | | 0 | | | | 0 | | | | 796 | | | | 745 | | | | 1,541 | | | | (58 | ) | | 2014 | | 6/28/2019 | | 13 to 31 Years |
Dollar Tree / Family Dollar | | Orlando, FL | | (b) | | | 916 | | | | 542 | | | | 0 | | | | 0 | | | | 916 | | | | 542 | | | | 1,458 | | | | (49 | ) | | 2014 | | 6/28/2019 | | 10 to 31 Years |
Dollar Tree / Family Dollar | | Mobile, AL | | (b) | | | 375 | | | | 848 | | | | 0 | | | | 0 | | | | 375 | | | | 848 | | | | 1,223 | | | | (47 | ) | | 2013 | | 6/28/2019 | | 12 to 35 Years |
Dollar Tree / Family Dollar | | Bossier City, LA | | (b) | | | 543 | | | | 536 | | | | 0 | | | | 0 | | | | 543 | | | | 536 | | | | 1,079 | | | | (50 | ) | | 2013 | | 6/28/2019 | | 11 to 26 Years |
Dollar Tree / Family Dollar | | Lillian, AL | | (b) | | | 362 | | | | 687 | | | | 0 | | | | 0 | | | | 362 | | | | 687 | | | | 1,049 | | | | (62 | ) | | 2013 | | 6/28/2019 | | 10 to 31 Years |
Dollar Tree / Family Dollar | | Alapaha, GA | | (b) | | | 301 | | | | 513 | | | | 0 | | | | 0 | | | | 301 | | | | 513 | | | | 814 | | | | (50 | ) | | 2013 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Church Point, LA | | (b) | | | 434 | | | | 687 | | | | 0 | | | | 0 | | | | 434 | | | | 687 | | | | 1,121 | | | | (52 | ) | | 2013 | | 6/28/2019 | | 13 to 30 Years |
Dollar Tree / Family Dollar | | Griffin, GA | | (b) | | | 487 | | | | 809 | | | | 0 | | | | 0 | | | | 487 | | | | 809 | | | | 1,296 | | | | (61 | ) | | 1976 | | 6/28/2019 | | 8 to 29 Years |
Dollar Tree / Family Dollar | | Atlanta, GA | | (b) | | | 929 | | | | 630 | | | | 0 | | | | 0 | | | | 929 | | | | 630 | | | | 1,559 | | | | (57 | ) | | 1968 | | 6/28/2019 | | 9 to 23 Years |
Dollar Tree / Family Dollar | | Abbeville, AL | | (b) | | | 245 | | | | 670 | | | | 0 | | | | 0 | | | | 245 | | | | 670 | | | | 915 | | | | (58 | ) | | 2013 | | 6/28/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | Anniston, AL | | (b) | | | 492 | | | | 510 | | | | 0 | | | | 0 | | | | 492 | | | | 510 | | | | 1,002 | | | | (63 | ) | | 2013 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Doerun, GA | | (b) | | | 210 | | | | 586 | | | | 0 | | | | 0 | | | | 210 | | | | 586 | | | | 796 | | | | (55 | ) | | 2014 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Danville, VA | | (b) | | | 346 | | | | 570 | | | | 0 | | | | 0 | | | | 346 | | | | 570 | | | | 916 | | | | (57 | ) | | 2013 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Nampa, ID | | (b) | | | 418 | | | | 940 | | | | 0 | | | | 0 | | | | 418 | | | | 940 | | | | 1,358 | | | | (65 | ) | | 2002 | | 6/28/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Hastings, NE | | (b) | | | 293 | | | | 623 | | | | 0 | | | | 0 | | | | 293 | | | | 623 | | | | 916 | | | | (53 | ) | | 2002 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Detroit, MI | | (b) | | | 269 | | | | 897 | | | | 0 | | | | 0 | | | | 269 | | | | 897 | | | | 1,166 | | | | (59 | ) | | 1932 | | 6/28/2019 | | 11 to 28 Years |
Dollar Tree / Family Dollar | | Rockford, IL | | (b) | | | 436 | | | | 1,031 | | | | 0 | | | | 0 | | | | 436 | | | | 1,031 | | | | 1,467 | | | | (69 | ) | | 1988 | | 6/28/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Newberry, MI | | (b) | | | 711 | | | | 1,081 | | | | 0 | | | | 0 | | | | 711 | | | | 1,081 | | | | 1,792 | | | | (76 | ) | | 2010 | | 6/28/2019 | | 10 to 32 Years |
Dollar Tree / Family Dollar | | Mohave Valley, AZ | | (b) | | | 327 | | | | 666 | | | | 0 | | | | 0 | | | | 327 | | | | 666 | | | | 993 | | | | (69 | ) | | 1974 | | 6/28/2019 | | 10 to 22 Years |
Dollar Tree / Family Dollar | | Fort Madison, IA | | (b) | | | 179 | | | | 274 | | | | 0 | | | | 0 | | | | 179 | | | | 274 | | | | 453 | | | | (42 | ) | | 2003 | | 6/28/2019 | | 7 to 18 Years |
Dollar Tree / Family Dollar | | Paulden, AZ | | (b) | | | 343 | | | | 821 | | | | 0 | | | | 0 | | | | 343 | | | | 821 | | | | 1,164 | | | | (65 | ) | | 2013 | | 6/28/2019 | | 12 to 30 Years |
Dollar Tree / Family Dollar | | N. Platte, NE | | (b) | | | 208 | | | | 285 | | | | 0 | | | | 0 | | | | 208 | | | | 285 | | | | 493 | | | | (49 | ) | | 2002 | | 6/28/2019 | | 6 to 14 Years |
Dollar Tree / Family Dollar | | St. Louis, MO | | (b) | | | 171 | | | | 1,509 | | | | 0 | | | | 0 | | | | 171 | | | | 1,509 | | | | 1,680 | | | | (106 | ) | | 2004 | | 9/19/2019 | | 7 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Family Medical Center | Middleburg, FL | | (d) | | 521 |
| | 2,589 |
| | — |
| | 65 |
| | 521 |
| | 2,654 |
| | 3,175 |
| | (515 | ) | | 1988 | | 08/18/14 | | 7 to 30 Years |
| Fazoli's | Blue Springs, MO | | (d) | | 688 |
| | 119 |
| | 101 |
| | (119 | ) | | 789 |
| | — |
| | 789 |
| | — |
| | (f) | | 08/27/09 | | (f) |
| FedEx | Peoria, IL | | (d) | | 953 |
| | 1,917 |
| | — |
| | 172 |
| | 953 |
| | 2,089 |
| | 3,042 |
| | (628 | ) | | 1996 | | 07/17/13 | | 3 to 30 Years |
| FedEx | Huntsville, AL | | (c) | | 5,115 |
| | 6,701 |
| | — |
| | — |
| | 5,115 |
| | 6,701 |
| | 11,816 |
| | (2,517 | ) | | 2008 | | 07/17/13 | | 10 to 38 Years |
| FedEx | Baton Rouge, LA | | (c) | | 2,898 |
| | 8,024 |
| | — |
| | — |
| | 2,898 |
| | 8,024 |
| | 10,922 |
| | (1,678 | ) | | 2008 | | 07/17/13 | | 9 to 43 Years |
| FedEx | Oak Park, MI | | (d) | | 16,713 |
| | 19,718 |
| | — |
| | 38 |
| | 16,713 |
| | 19,756 |
| | 36,469 |
| | (1,525 | ) | | 2016 | | 06/26/17 | | 14 to 40 Years |
| Ferguson Enterprises | Shallotte, NC | | (c) | | 705 |
| | 1,794 |
| | — |
| | — |
| | 705 |
| | 1,794 |
| | 2,499 |
| | (523 | ) | | 2006 | | 07/17/13 | | 10 to 30 Years |
| Ferguson Enterprises | Salisbury, MD | | (d) | | 4,210 |
| | 6,613 |
| | — |
| | — |
| | 4,210 |
| | 6,613 |
| | 10,823 |
| | (2,645 | ) | | 2007 | | 07/17/13 | | 10 to 27 Years |
| Ferguson Enterprises | Powhatan, VA | | (d) | | 4,342 |
| | 2,963 |
| | — |
| | — |
| | 4,342 |
| | 2,963 |
| | 7,305 |
| | (1,998 | ) | | 2007 | | 07/17/13 | | 10 to 31 Years |
| Ferguson Enterprises | Ocala, FL | | (d) | | 2,260 |
| | 4,709 |
| | — |
| | — |
| | 2,260 |
| | 4,709 |
| | 6,969 |
| | (1,323 | ) | | 2006 | | 07/17/13 | | 8 to 46 Years |
| Ferguson Enterprises | Front Royal, VA | | (c) | | 7,257 |
| | 35,711 |
| | — |
| | — |
| | 7,257 |
| | 35,711 |
| | 42,968 |
| | (9,415 | ) | | 2007 | | 07/17/13 | | 9 to 34 Years |
| Ferguson Enterprises | Cohasset, MN | | (c) | | 334 |
| | 1,134 |
| | — |
| | — |
| | 334 |
| | 1,134 |
| | 1,468 |
| | (374 | ) | | 2007 | | 07/17/13 | | 10 to 26 Years |
| Ferguson Enterprises | Auburn, AL | | (c) | | 884 |
| | 1,530 |
| | — |
| | — |
| | 884 |
| | 1,530 |
| | 2,414 |
| | (435 | ) | | 2007 | | 07/17/13 | | 10 to 32 Years |
| Flying J Travel Plaza | Saint Augustine, FL | | (a) | | 9,556 |
| | 2,543 |
| | — |
| | — |
| | 9,556 |
| | 2,543 |
| | 12,099 |
| | (3,413 | ) | | 2005 | | 07/01/05 | | 13 to 40 Years |
| Flying J Travel Plaza | Spiceland, IN | | (a) | | 9,649 |
| | 3,063 |
| | — |
| | — |
| | 9,649 |
| | 3,063 |
| | 12,712 |
| | (4,275 | ) | | 2005 | | 07/01/05 | | 13 to 40 Years |
| Flying J Travel Plaza | Catlettsburg, KY | | (a) | | 9,344 |
| | 3,989 |
| | — |
| | — |
| | 9,344 |
| | 3,989 |
| | 13,333 |
| | (4,905 | ) | | 2001 | | 07/01/05 | | 13 to 40 Years |
| Food City | Blairsville, GA | | (d) | | 1,652 |
| | 3,102 |
| | — |
| | — |
| | 1,652 |
| | 3,102 |
| | 4,754 |
| | (675 | ) | | 2001 | | 09/30/14 | | 10 to 30 Years |
| Food City | Chattanooga, TN | | (d) | | 1,817 |
| | 5,281 |
| | — |
| | — |
| | 1,817 |
| | 5,281 |
| | 7,098 |
| | (992 | ) | | 1969 | | 09/30/14 | | 10 to 30 Years |
| Food City | Dayton, TN | | (d) | | 1,122 |
| | 6,767 |
| | — |
| | — |
| | 1,122 |
| | 6,767 |
| | 7,889 |
| | (967 | ) | | 1999 | | 09/30/14 | | 10 to 40 Years |
| Fox and Hound | Richmond, VA | | (d) | | 993 |
| | 922 |
| | — |
| | — |
| | 993 |
| | 922 |
| | 1,915 |
| | (210 | ) | | 2003 | | 03/20/15 | | 13 to 20 Years |
| Fox Rehabilitation Services | Cherry Hill, NJ | | (d) | | 4,078 |
| | 6,076 |
| | — |
| | — |
| | 4,078 |
| | 6,076 |
| | 10,154 |
| | (693 | ) | | 1998 | | 11/23/16 | | 9 to 30 Years |
| Fresenius Medical Care | Elizabethton, TN | | (d) | | 482 |
| | 1,139 |
| | — |
| | — |
| | 482 |
| | 1,139 |
| | 1,621 |
| | (254 | ) | | 2008 | | 08/18/14 | | 6 to 30 Years |
| Fresenius Medical Care | Fairlea, WV | | (d) | | 298 |
| | 1,280 |
| | — |
| | — |
| | 298 |
| | 1,280 |
| | 1,578 |
| | (255 | ) | | 2009 | | 08/18/14 | | 10 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dollar Tree / Family Dollar | | Grenada, MS | | (b) | | | 198 | | | | 678 | | | | 0 | | | | 0 | | | | 198 | | | | 678 | | | | 876 | | | | (47 | ) | | 2013 | | 9/19/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Union, MS | | (b) | | | 196 | | | | 629 | | | | 0 | | | | 0 | | | | 196 | | | | 629 | | | | 825 | | | | (49 | ) | | 2013 | | 9/19/2019 | | 10 to 24 Years |
Dollar Tree / Family Dollar | | Mendenhall, MS | | (b) | | | 239 | | | | 686 | | | | 0 | | | | 0 | | | | 239 | | | | 686 | | | | 925 | | | | (53 | ) | | 2014 | | 9/19/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Oklahoma City, OK | | (b) | | | 221 | | | | 1,332 | | | | 0 | | | | 0 | | | | 221 | | | | 1,332 | | | | 1,553 | | | | (79 | ) | | 1991 | | 9/19/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Kansas City, MO | | (b) | | | 148 | | | | 1,007 | | | | 0 | | | | 0 | | | | 148 | | | | 1,007 | | | | 1,155 | | | | (104 | ) | | 2003 | | 9/19/2019 | | 7 to 14 Years |
Dollar Tree / Family Dollar | | Diamond Head, MS | | (b) | | | 200 | | | | 905 | | | | 0 | | | | 0 | | | | 200 | | | | 905 | | | | 1,105 | | | | (55 | ) | | 2013 | | 9/19/2019 | | 10 to 29 Years |
Dollar Tree / Family Dollar | | Columbus, MS | | (b) | | | 139 | | | | 410 | | | | 0 | | | | 0 | | | | 139 | | | | 410 | | | | 549 | | | | (48 | ) | | 1986 | | 9/19/2019 | | 6 to 15 Years |
Dollar Tree / Family Dollar | | Caledonia, MS | | (b) | | | 252 | | | | 463 | | | | 0 | | | | 0 | | | | 252 | | | | 463 | | | | 715 | | | | (45 | ) | | 2013 | | 9/19/2019 | | 10 to 24 Years |
Dollar Tree / Family Dollar | | Louisville, MS | | (b) | | | 142 | | | | 673 | | | | 0 | | | | 0 | | | | 142 | | | | 673 | | | | 815 | | | | (46 | ) | | 2014 | | 9/19/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Madisonville, KY | | (b) | | | 538 | | | | 700 | | | | 0 | | | | 0 | | | | 538 | | | | 700 | | | | 1,238 | | | | (52 | ) | | 2013 | | 6/28/2019 | | 9 to 30 Years |
Dollar Tree / Family Dollar | | Fayetteville, NC | | (b) | | | 245 | | | | 471 | | | | 0 | | | | 0 | | | | 245 | | | | 471 | | | | 716 | | | | (40 | ) | | 1973 | | 6/28/2019 | | 10 to 28 Years |
Dollar Tree / Family Dollar | | Old Hickory, TN | | (b) | | | 749 | | | | 846 | | | | 0 | | | | 0 | | | | 749 | | | | 846 | | | | 1,595 | | | | (54 | ) | | 2013 | | 6/28/2019 | | 11 to 36 Years |
Dollar Tree / Family Dollar | | Haw River, NC | | (b) | | | 431 | | | | 569 | | | | 0 | | | | 0 | | | | 431 | | | | 569 | | | | 1,000 | | | | (54 | ) | | 2013 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Louisville, KY | | (b) | | | 746 | | | | 569 | | | | 0 | | | | 0 | | | | 746 | | | | 569 | | | | 1,315 | | | | (55 | ) | | 2013 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | Memphis, TN | | (b) | | | 197 | | | | 368 | | | | 0 | | | | 0 | | | | 197 | | | | 368 | | | | 565 | | | | (53 | ) | | 2005 | | 6/28/2019 | | 10 to 17 Years |
Dollar Tree / Family Dollar | | Brandenburg, KY | | (b) | | | 527 | | | | 594 | | | | 0 | | | | 0 | | | | 527 | | | | 594 | | | | 1,121 | | | | (51 | ) | | 2013 | | 6/28/2019 | | 10 to 30 Years |
Dollar Tree / Family Dollar | | Knoxville, TN | | (b) | | | 276 | | | | 652 | | | | 0 | | | | 0 | | | | 276 | | | | 652 | | | | 928 | | | | (44 | ) | | 1986 | | 6/28/2019 | | 8 to 30 Years |
Dollar Tree / Family Dollar | | Memphis, TN | | (b) | | | 551 | | | | 624 | | | | 0 | | | | 0 | | | | 551 | | | | 624 | | | | 1,175 | | | | (45 | ) | | 2013 | | 6/28/2019 | | 12 to 31 Years |
Dollar Tree / Family Dollar | | Memphis, TN | | (b) | | | 315 | | | | 336 | | | | 0 | | | | 0 | | | | 315 | | | | 336 | | | | 651 | | | | (45 | ) | | 2003 | | 6/28/2019 | | 8 to 25 Years |
Dollar Tree / Family Dollar | | Aiken, SC | | (b) | | | 335 | | | | 808 | | | | 0 | | | | 0 | | | | 335 | | | | 808 | | | | 1,143 | | | | (55 | ) | | 2013 | | 6/28/2019 | | 11 to 36 Years |
Dollar Tree / Family Dollar | | Lancaster, SC | | (b) | | | 620 | | | | 571 | | | | 0 | | | | 0 | | | | 620 | | | | 571 | | | | 1,191 | | | | (53 | ) | | 2013 | | 6/28/2019 | | 11 to 26 Years |
Dollar Tree / Family Dollar | | Hardeeville, SC | | (b) | | | 236 | | | | 652 | | | | 0 | | | | 0 | | | | 236 | | | | 652 | | | | 888 | | | | (43 | ) | | 2013 | | 6/28/2019 | | 11 to 32 Years |
Dollar Tree / Family Dollar | | Williamston, SC | | (b) | | | 373 | | | | 581 | | | | 0 | | | | 0 | | | | 373 | | | | 581 | | | | 954 | | | | (51 | ) | | 2013 | | 6/28/2019 | | 10 to 27 Years |
Dollar Tree / Family Dollar | | N. Charleston, SC | | (b) | | | 682 | | | | 573 | | | | 0 | | | | 0 | | | | 682 | | | | 573 | | | | 1,255 | | | | (61 | ) | | 2013 | | 6/28/2019 | | 8 to 30 Years |
Dollar Tree / Family Dollar | | Greenwood, SC | | (b) | | | 569 | | | | 742 | | | | 0 | | | | 0 | | | | 569 | | | | 742 | | | | 1,311 | | | | (71 | ) | | 1975 | | 6/28/2019 | | 7 to 23 Years |
Dollar Tree / Family Dollar | | Columbia, SC | | (b) | | | 551 | | | | 534 | | | | 0 | | | | 0 | | | | 551 | | | | 534 | | | | 1,085 | | | | (51 | ) | | 2013 | | 6/28/2019 | | 11 to 25 Years |
Dollar Tree / Family Dollar | | Roebuck, SC | | (b) | | | 494 | | | | 418 | | | | 0 | | | | 0 | | | | 494 | | | | 418 | | | | 912 | | | | (51 | ) | | 2013 | | 6/28/2019 | | 10 to 25 Years |
Dollar Tree / Family Dollar | | Camden, SC | | (b) | | | 222 | | | | 745 | | | | 0 | | | | 0 | | | | 222 | | | | 745 | | | | 967 | | | | (47 | ) | | 2013 | | 6/28/2019 | | 11 to 36 Years |
Dollar Tree / Family Dollar | | N. Charleston, SC | | (b) | | | 552 | | | | 600 | | | | 0 | | | | 0 | | | | 552 | | | | 600 | | | | 1,152 | | | | (48 | ) | | 2013 | | 6/28/2019 | | 10 to 30 Years |
Dollar Tree / Family Dollar | | Tyler, TX | | (b) | | | 416 | | | | 609 | | | | 0 | | | | 0 | | | | 416 | | | | 609 | | | | 1,025 | | | | (54 | ) | | 2003 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar | | La Feria, TX | | (b) | | | 601 | | | | 647 | | | | 0 | | | | 0 | | | | 601 | | | | 647 | | | | 1,248 | | | | (52 | ) | | 2001 | | 6/28/2019 | | 10 to 29 Years |
Dollar Tree / Family Dollar | | Falfurrias, TX | | (b) | | | 117 | | | | 916 | | | | 0 | | | | 0 | | | | 117 | | | | 916 | | | | 1,033 | | | | (83 | ) | | 1995 | | 6/28/2019 | | 7 to 22 Years |
Dollar Tree / Family Dollar | | Olmito, TX | | (b) | | | 271 | | | | 841 | | | | 0 | | | | 0 | | | | 271 | | | | 841 | | | | 1,112 | | | | (54 | ) | | 2013 | | 6/28/2019 | | 14 to 32 Years |
Dollar Tree / Family Dollar | | Fort Davis, TX | | (b) | | | 202 | | | | 785 | | | | 0 | | | | 0 | | | | 202 | | | | 785 | | | | 987 | | | | (54 | ) | | 2014 | | 6/28/2019 | | 12 to 33 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gardner School | Nashville, TN | | (d) | | 2,461 |
| | 1,427 |
| | — |
| | — |
| | 2,461 |
| | 1,427 |
| | 3,888 |
| | (190 | ) | | 1976 | | 03/27/15 | | 15 to 40 Years |
| Georgia Theatre | Danville, VA | | (d) | | 1,349 |
| | 6,406 |
| | — |
| | — |
| | 1,349 |
| | 6,406 |
| | 7,755 |
| | (819 | ) | | 2002 | | 12/30/14 | | 15 to 40 Years |
| Georgia Theatre | Hinesville, GA | | (d) | | 2,049 |
| | 5,216 |
| | — |
| | — |
| | 2,049 |
| | 5,216 |
| | 7,265 |
| | (684 | ) | | 2001 | | 12/30/14 | | 15 to 40 Years |
| Georgia Theatre | Valdosta, GA | | (d) | | 3,038 |
| | 13,801 |
| | — |
| | — |
| | 3,038 |
| | 13,801 |
| | 16,839 |
| | (1,633 | ) | | 2001 | | 12/30/14 | | 15 to 40 Years |
| Georgia Theatre | Warner Robins, GA | | (d) | | 2,598 |
| | 8,324 |
| | — |
| | — |
| | 2,598 |
| | 8,324 |
| | 10,922 |
| | (1,062 | ) | | 2010 | | 12/30/14 | | 15 to 40 Years |
| Golden Chick | Weatherford, TX | | (d) | | 260 |
| | 886 |
| | — |
| | 21 |
| | 260 |
| | 907 |
| | 1,167 |
| | (95 | ) | | 2015 | | 07/28/16 | | 18 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Golden Corral | Albuquerque, NM | | (b) | | 1,473 |
| | 2,947 |
| | — |
| | — |
| | 1,473 |
| | 2,947 |
| | 4,420 |
| | (904 | ) | | 2011 | | 07/17/13 | | 10 to 33 Years |
| Golden Corral | Decatur, AL | | (b) | | 1,157 |
| | 1,725 |
| | — |
| | — |
| | 1,157 |
| | 1,725 |
| | 2,882 |
| | (478 | ) | | 2004 | | 07/17/13 | | 10 to 30 Years |
| Golden Corral | Florence, AL | | (b) | | 794 |
| | 1,742 |
| | — |
| | — |
| | 794 |
| | 1,742 |
| | 2,536 |
| | (462 | ) | | 1995 | | 07/17/13 | | 8 to 27 Years |
| Gold's Gym | O'Fallon, IL | | (d) | | 2,243 |
| | 5,002 |
| | — |
| | — |
| | 2,243 |
| | 5,002 |
| | 7,245 |
| | (1,081 | ) | | 2005 | | 07/17/13 | | 6 to 37 Years |
| Gold's Gym | O' Fallon, MO | | (d) | | 1,669 |
| | 6,054 |
| | — |
| | — |
| | 1,669 |
| | 6,054 |
| | 7,723 |
| | (1,220 | ) | | 2007 | | 07/17/13 | | 9 to 34 Years |
| Gold's Gym | St. Peters, MO | | (d) | | 1,814 |
| | 5,810 |
| | — |
| | — |
| | 1,814 |
| | 5,810 |
| | 7,624 |
| | (1,312 | ) | | 2007 | | 07/17/13 | | 9 to 34 Years |
| Gordmans | Peoria, IL | | (d) | | 2,407 |
| | 5,452 |
| | (1,490 | ) | | (3,404 | ) | | 917 |
| | 2,048 |
| | 2,965 |
| | (137 | ) | | 2006 | | 07/17/13 | | 2 to 36 Years |
| H&E Equipment Services | Corpus Christi, TX | | (d) | | 1,790 |
| | 1,267 |
| | — |
| | — |
| | 1,790 |
| | 1,267 |
| | 3,057 |
| | (492 | ) | | 2014 | | 09/30/14 | | 11 to 30 Years |
| Hardee's | Johnson City, TN | | (b) | | 718 |
| | 450 |
| | — |
| | — |
| | 718 |
| | 450 |
| | 1,168 |
| | (247 | ) | | 1983 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Buckhannon, WV | | (b) | | 438 |
| | 529 |
| | — |
| | — |
| | 438 |
| | 529 |
| | 967 |
| | (212 | ) | | 1978 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Bristol, VA | | (b) | | 369 |
| | 564 |
| | — |
| | — |
| | 369 |
| | 564 |
| | 933 |
| | (228 | ) | | 1991 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Mount Carmel, TN | | (b) | | 499 |
| | 536 |
| | — |
| | — |
| | 499 |
| | 536 |
| | 1,035 |
| | (195 | ) | | 1988 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | Waynesburg, PA | | (b) | | 323 |
| | 918 |
| | — |
| | — |
| | 323 |
| | 918 |
| | 1,241 |
| | (265 | ) | | 1982 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | Bristol, VA | | (b) | | 492 |
| | 366 |
| | — |
| | — |
| | 492 |
| | 366 |
| | 858 |
| | (203 | ) | | 1982 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Rogersville, TN | | (b) | | 384 |
| | 964 |
| | — |
| | — |
| | 384 |
| | 964 |
| | 1,348 |
| | (274 | ) | | 1986 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | South Charleston, WV | | (b) | | 524 |
| | 541 |
| | — |
| | — |
| | 524 |
| | 541 |
| | 1,065 |
| | (201 | ) | | 1993 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | So. Parkersburg, WV | | (b) | | 383 |
| | 404 |
| | — |
| | — |
| | 383 |
| | 404 |
| | 787 |
| | (166 | ) | | 1986 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Weston, WV | | (b) | | 158 |
| | 695 |
| | — |
| | — |
| | 158 |
| | 695 |
| | 853 |
| | (178 | ) | | 1981 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | Kingwood, WV | | (b) | | 618 |
| | 677 |
| | — |
| | — |
| | 618 |
| | 677 |
| | 1,295 |
| | (275 | ) | | 1979 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Kingsport, TN | | (b) | | 384 |
| | 877 |
| | — |
| | — |
| | 384 |
| | 877 |
| | 1,261 |
| | (252 | ) | | 1992 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | Bristol, TN | | (b) | | 474 |
| | 282 |
| | — |
| | — |
| | 474 |
| | 282 |
| | 756 |
| | (214 | ) | | 1985 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Elizabethton, TN | | (b) | | 735 |
| | 278 |
| | — |
| | — |
| | 735 |
| | 278 |
| | 1,013 |
| | (152 | ) | | 1971 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Jonesborough, TN | | (b) | | 576 |
| | 329 |
| | — |
| | — |
| | 576 |
| | 329 |
| | 905 |
| | (163 | ) | | 1987 | | 12/21/12 | | 15 to 20 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dollar Tree / Family Dollar | | Poteet, TX | | (b) | | | 253 | | | | 376 | | | | 0 | | | | 0 | | | | 253 | | | | 376 | | | | 629 | | | | (69 | ) | | 1995 | | 6/28/2019 | | 3 to 25 Years |
Dollar Tree / Family Dollar | | Camp Wood, TX | | (b) | | | 207 | | | | 781 | | | | 0 | | | | 0 | | | | 207 | | | | 781 | | | | 988 | | | | (52 | ) | | 2014 | | 6/28/2019 | | 15 to 33 Years |
Dollar Tree / Family Dollar | | Hallsville, TX | | (b) | | | 154 | | | | 334 | | | | 0 | | | | 0 | | | | 154 | | | | 334 | | | | 488 | | | | (42 | ) | | 2000 | | 6/28/2019 | | 7 to 25 Years |
Dollar Tree / Family Dollar | | San Angelo, TX | | (b) | | | 116 | | | | 621 | | | | 0 | | | | 0 | | | | 116 | | | | 621 | | | | 737 | | | | (53 | ) | | 2000 | | 6/28/2019 | | 8 to 25 Years |
Dollar Tree / Family Dollar | | Brownfield, TX | | (b) | | | 205 | | | | 613 | | | | 0 | | | | 0 | | | | 205 | | | | 613 | | | | 818 | | | | (51 | ) | | 2001 | | 6/28/2019 | | 10 to 26 Years |
Dollar Tree / Family Dollar (f) | | Lakewood, OH | | (b) | | | 522 | | | | 2,053 | | | | 0 | | | | (20 | ) | | | 522 | | | | 2,033 | | | | 2,555 | | | | (502 | ) | | 1996 | | 7/17/2013 | | 9 to 35 Years |
| | Independence, MO | | (b) | | | 1,058 | | | | 1,297 | | | | 0 | | | | 0 | | | | 1,058 | | | | 1,297 | | | | 2,355 | | | | (928 | ) | | 1968 | | 11/25/2014 | | 4 to 15 Years |
| | Gladstone, MO | | (b) | | | 1,100 | | | | 774 | | | | 0 | | | | 0 | | | | 1,100 | | | | 774 | | | | 1,874 | | | | (285 | ) | | 2005 | | 3/11/2015 | | 4 to 40 Years |
| | Greensboro, NC | | (a) | | | 2,776 | | | | 3,990 | | | | 0 | | | | 367 | | | | 2,776 | | | | 4,357 | | | | 7,133 | | | | (973 | ) | | 2007 | | 7/17/2013 | | 10 to 47 Years |
| | Burr Ridge, IL | | (b) | | | 1,184 | | | | 2,776 | | | | (885 | ) | | | (2,079 | ) | | | 299 | | | | 697 | | | | 996 | | | | (29 | ) | | 1997 | | 11/25/2019 | | 6 to 22 Years |
| | Tulsa, OK | | (b) | | | 1,337 | | | | 61 | | | | (844 | ) | | | (39 | ) | | | 493 | | | | 22 | | | | 515 | | | | (8 | ) | | 1976 | | 11/25/2019 | | 6 to 14 Years |
| | Lakeville, MN | | (b) | | | 2,843 | | | | 2,843 | | | | (419 | ) | | | 3,070 | | | | 2,424 | | | | 5,913 | | | | 8,337 | | | | (1,152 | ) | | 1998 | | 7/29/2016 | | 7 to 30 Years |
| | Rogers, MN | | (b) | | | 2,337 | | | | 2,384 | | | | 0 | | | | 1,983 | | | | 2,337 | | | | 4,367 | | | | 6,704 | | | | (1,007 | ) | | 2006 | | 7/29/2016 | | 5 to 30 Years |
| | White Bear Township, MN | | (b) | | | 2,773 | | | | 5,476 | | | | 0 | | | | 4,164 | | | | 2,773 | | | | 9,640 | | | | 12,413 | | | | (2,104 | ) | | 1995 | | 7/29/2016 | | 5 to 20 Years |
| | Monticello, MN | | (b) | | | 1,161 | | | | 3,155 | | | | 0 | | | | 3,368 | | | | 1,161 | | | | 6,523 | | | | 7,684 | | | | (1,087 | ) | | 2004 | | 7/29/2016 | | 7 to 30 Years |
| | Plymouth, MN | | (b) | | | 2,516 | | | | 4,089 | | | | 0 | | | | 2,450 | | | | 2,516 | | | | 6,539 | | | | 9,055 | | | | (1,082 | ) | | 1988 | | 7/29/2016 | | 4 to 30 Years |
| | Waconia, MN | | (b) | | | 249 | | | | 1,464 | | | | 0 | | | | 1,731 | | | | 249 | | | | 3,195 | | | | 3,444 | | | | (504 | ) | | 1989 | | 7/29/2016 | | 6 to 20 Years |
| | East Bethel, MN | | (b) | | | 545 | | | | 1,768 | | | | 0 | | | | 2,445 | | | | 545 | | | | 4,213 | | | | 4,758 | | | | (844 | ) | | 1990 | | 7/29/2016 | | 5 to 20 Years |
| | Delano, MN | | (b) | | | 397 | | | | 1,052 | | | | 0 | | | | 0 | | | | 397 | | | | 1,052 | | | | 1,449 | | | | (333 | ) | | 1984 | | 7/29/2016 | | 3 to 20 Years |
| | Eagan, MN | | (b) | | | 3,106 | | | | 4,963 | | | | 0 | | | | 4,000 | | | | 3,106 | | | | 8,963 | | | | 12,069 | | | | (622 | ) | | 1998 | | 5/1/2019 | | 10 to 36 Years |
| | Saginaw, MI | | (b) | | | 2,167 | | | | 3,122 | | | | 0 | | | | 12 | | | | 2,167 | | | | 3,134 | | | | 5,301 | | | | (252 | ) | | 2013 | | 11/25/2019 | | 9 to 36 Years |
| | Batavia, IL | | (b) | | | 5,127 | | | | 836 | | | | 0 | | | | 12 | | | | 5,127 | | | | 848 | | | | 5,975 | | | | (245 | ) | | 1995 | | 11/25/2019 | | 5 to 25 Years |
| | Noblesville, IN | | (b) | | | 2,523 | | | | 4,184 | | | | 0 | | | | 13 | | | | 2,523 | | | | 4,197 | | | | 6,720 | | | | (219 | ) | | 2008 | | 11/25/2019 | | 7 to 33 Years |
| | Portage, IN | | (b) | | | 5,385 | | | | 1,088 | | | | 0 | | | | 12 | | | | 5,385 | | | | 1,100 | | | | 6,485 | | | | (306 | ) | | 2007 | | 11/25/2019 | | 6 to 32 Years |
| | Livingston, TX | | (b) | | | 1,505 | | | | 7,616 | | | | 0 | | | | 1,032 | | | | 1,505 | | | | 8,648 | | | | 10,153 | | | | (1,072 | ) | | 2014 | | 3/30/2016 | | 16 to 40 Years |
| | Garland, TX | | (b) | | | 1,256 | | | | 4,516 | | | | 0 | | | | 0 | | | | 1,256 | | | | 4,516 | | | | 5,772 | | | | (552 | ) | | 2016 | | 3/30/2016 | | 17 to 50 Years |
| | Harlingen, TX | | (b) | | | 1,734 | | | | 520 | | | | 0 | | | | 5,616 | | | | 1,734 | | | | 6,136 | | | | 7,870 | | | | (492 | ) | | 2016 | | 12/1/2016 | | 49 to 50 Years |
| | Omaha, NE | | (b) | | | 2,198 | | | | 3,328 | | | | 0 | | | | 0 | | | | 2,198 | | | | 3,328 | | | | 5,526 | | | | (1,540 | ) | | 1982 | | 12/17/2013 | | 4 to 20 Years |
| | Jacksonville, FL | | (b) | | | 815 | | | | 1,606 | | | | 0 | | | | 0 | | | | 815 | | | | 1,606 | | | | 2,421 | | | | (457 | ) | | 1977 | | 8/18/2014 | | 6 to 30 Years |
| | Middleburg, FL | | (b) | | | 521 | | | | 2,589 | | | | 0 | | | | 65 | | | | 521 | | | | 2,654 | | | | 3,175 | | | | (753 | ) | | 1988 | | 8/18/2014 | | 7 to 30 Years |
| | Blue Springs, MO | | (b) | | | 688 | | | | 119 | | | | 101 | | | | (119 | ) | | | 789 | | | | 0 | | | | 789 | | | | 0 | | | (e) | | 8/27/2009 | | (e) |
| | Lees Summit, MO | | (b) | | | 628 | | | | 0 | | | | 0 | | | | 0 | | | | 628 | | | | 0 | | | | 628 | | | | 0 | | | (e) | | 11/25/2019 | | (e) |
| | Fort Wayne, IN | | (b) | | | 769 | | | | 136 | | | | 0 | | | | 0 | | | | 769 | | | | 136 | | | | 905 | | | | (27 | ) | | 1982 | | 11/25/2019 | | 7 to 18 Years |
| | Peoria, IL | | (b) | | | 953 | | | | 1,917 | | | | 596 | | | | 182 | | | | 1,549 | | | | 2,099 | | | | 3,648 | | | | (898 | ) | | 1996 | | 7/17/2013 | | 3 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Hardee's | Parkersburg, WV | | (b) | | 457 |
| | 309 |
| | — |
| | — |
| | 457 |
| | 309 |
| | 766 |
| | (245 | ) | | 1999 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Philippi, WV | | (b) | | 405 |
| | 232 |
| | — |
| | — |
| | 405 |
| | 232 |
| | 637 |
| | (200 | ) | | 1986 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Normal, IL | | (b) | | 394 |
| | 240 |
| | — |
| | — |
| | 394 |
| | 240 |
| | 634 |
| | (183 | ) | | 1980 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Peoria, IL | | (b) | | 383 |
| | 270 |
| | — |
| | — |
| | 383 |
| | 270 |
| | 653 |
| | (211 | ) | | 1980 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Peoria, IL | | (b) | | 282 |
| | 435 |
| | — |
| | — |
| | 282 |
| | 435 |
| | 717 |
| | (184 | ) | | 1980 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Havana, IL | | (b) | | 439 |
| | 297 |
| | — |
| | — |
| | 439 |
| | 297 |
| | 736 |
| | (276 | ) | | 1980 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Eureka, IL | | (b) | | 307 |
| | 338 |
| | — |
| | — |
| | 307 |
| | 338 |
| | 645 |
| | (286 | ) | | 1980 | | 12/21/12 | | 10 to 15 Years |
| Hardee's | Fort Madison, IA | | (b) | | 191 |
| | 620 |
| | — |
| | — |
| | 191 |
| | 620 |
| | 811 |
| | (172 | ) | | 1980 | | 12/21/12 | | 15 to 30 Years |
| Hardee's | Washington, IL | | (b) | | 264 |
| | 460 |
| | — |
| | — |
| | 264 |
| | 460 |
| | 724 |
| | (191 | ) | | 1980 | | 12/21/12 | | 15 to 20 Years |
| Hardee's | Bartonville, IL | | (b) | | 410 |
| | 856 |
| | — |
| | — |
| | 410 |
| | 856 |
| | 1,266 |
| | (268 | ) | | 1980 | | 12/21/12 | | 15 to 30 Years |
| Hartford Provision Company | South Windsor, CT | | (d) | | 1,590 |
| | 6,774 |
| | — |
| | 540 |
| | 1,590 |
| | 7,314 |
| | 8,904 |
| | (1,416 | ) | | 1982 | | 05/05/15 | | 7 to 20 Years |
| Havana Farm and Home Supply | Havana, IL | | (d) | | 526 |
| | 813 |
| | — |
| | 14 |
| | 526 |
| | 827 |
| | 1,353 |
| | (488 | ) | | 2000 | | 05/31/06 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Health Point Family Medicine | Franklin, TX | | (d) | | 159 |
| | 1,124 |
| | — |
| | 29 |
| | 159 |
| | 1,153 |
| | 1,312 |
| | (204 | ) | | 2012 | | 08/18/14 | | 4 to 40 Years |
| HOM Furniture | Fargo, ND | | (d) | | 2,095 |
| | 8,525 |
| | — |
| | — |
| | 2,095 |
| | 8,525 |
| | 10,620 |
| | (1,688 | ) | | 2005 | | 07/17/13 | | 8 to 32 Years |
| Home Depot | Lakewood, CO | | (c) | | 3,822 |
| | — |
| | — |
| | — |
| | 3,822 |
| | — |
| | 3,822 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Home Depot | Colma, CA | | (d) | | 21,065 |
| | 13,597 |
| | — |
| | 481 |
| | 21,065 |
| | 14,078 |
| | 35,143 |
| | (2,924 | ) | | 1995 | | 07/17/13 | | 2 to 33 Years |
| Home Depot | Memphis, TN | | (d) | | 3,777 |
| | 10,303 |
| | — |
| | 43 |
| | 3,777 |
| | 10,346 |
| | 14,123 |
| | (854 | ) | | 1996 | | 02/28/17 | | 9 to 30 Years |
| Home Depot | Highland Heights, OH | | (d) | | 4,897 |
| | 11,272 |
| | — |
| | 43 |
| | 4,897 |
| | 11,315 |
| | 16,212 |
| | (934 | ) | | 1995 | | 02/21/17 | | 3 to 30 Years |
| Home Depot | Tempe, AZ | | (d) | | 7,417 |
| | 9,795 |
| | — |
| | 173 |
| | 7,417 |
| | 9,968 |
| | 17,385 |
| | (978 | ) | | 1978 | | 05/12/17 | | 10 to 30 Years |
| IBM | Greece, NY | | (d) | | 1,419 |
| | 20,548 |
| | — |
| | (11,004 | ) | | 1,419 |
| | 9,544 |
| | 10,963 |
| | (421 | ) | | 1989 | | 08/02/17 | | 10 to 40 Years |
| IBM | Columbus, OH | | (d) | | 3,154 |
| | 19,715 |
| | — |
| | 12,816 |
| | 3,154 |
| | 32,531 |
| | 35,685 |
| | (1,968 | ) | | 1989 | | 08/02/17 | | 5 to 30 Years |
| III Forks | Dallas, TX | | (b) | | 2,965 |
| | 9,066 |
| | (236 | ) | | (1,572 | ) | | 2,729 |
| | 7,494 |
| | 10,223 |
| | (71 | ) | | 1998 | | 07/17/13 | | 6 to 29 Years |
| In-Shape | Manteca, CA | | (d) | | 796 |
| | 2,062 |
| | — |
| | 2,244 |
| | 796 |
| | 4,306 |
| | 5,102 |
| | (278 | ) | | 2001 | | 09/04/15 | | 15 to 30 Years |
| In-Shape | Modesto, CA | | (d) | | 2,350 |
| | 5,923 |
| | — |
| | — |
| | 2,350 |
| | 5,923 |
| | 8,273 |
| | (1,139 | ) | | 1964 | | 12/05/14 | | 10 to 30 Years |
| Insurance Auto Auction | Fargo, ND | | (d) | | 3,006 |
| | 184 |
| | — |
| | — |
| | 3,006 |
| | 184 |
| | 3,190 |
| | (5 | ) | | 2012 | | 09/11/18 | | 11 to 22 Years |
| Interstate Resources | New Castle, PA | | (d) | | 1,084 |
| | 5,507 |
| | — |
| | — |
| | 1,084 |
| | 5,507 |
| | 6,591 |
| | (1,524 | ) | | 1999 | | 07/17/13 | | 8 to 26 Years |
| J. Jill | Tilton, NH | | (c) | | 7,420 |
| | 19,608 |
| | — |
| | — |
| | 7,420 |
| | 19,608 |
| | 27,028 |
| | (6,760 | ) | | 1998 | | 07/17/13 | | 8 to 25 Years |
| Jiffy Lube | Sarasota, FL | | (b) | | 386 |
| | 312 |
| | — |
| | 141 |
| | 386 |
| | 453 |
| | 839 |
| | (165 | ) | | 1987 | | 03/19/13 | | 10 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Madison, AL | | (a) | | | 5,115 | | | | 6,701 | | | | 0 | | | | 0 | | | | 5,115 | | | | 6,701 | | | | 11,816 | | | | (3,446 | ) | | 2008 | | 7/17/2013 | | 10 to 38 Years |
| | Baton Rouge, LA | | (b) | | | 2,898 | | | | 8,024 | | | | 0 | | | | 0 | | | | 2,898 | | | | 8,024 | | | | 10,922 | | | | (2,298 | ) | | 2008 | | 7/17/2013 | | 9 to 43 Years |
| | Oak Park, MI | | (b) | | | 16,713 | | | | 19,718 | | | | 0 | | | | 38 | | | | 16,713 | | | | 19,756 | | | | 36,469 | | | | (3,552 | ) | | 2016 | | 6/26/2017 | | 14 to 40 Years |
| | Anniston, AL | | (b) | | | 2,345 | | | | 10,239 | | | | 0 | | | | 0 | | | | 2,345 | | | | 10,239 | | | | 12,584 | | | | (97 | ) | | 2014 | | 9/25/2020 | | 8 to 44 Years |
| | Pearl, MS | | (b) | | | 5,307 | | | | 21,063 | | | | 0 | | | | 0 | | | | 5,307 | | | | 21,063 | | | | 26,370 | | | | (213 | ) | | 2017 | | 9/29/2020 | | 6 to 44 Years |
| | Shallotte, NC | | (a) | | | 705 | | | | 1,794 | | | | 0 | | | | 0 | | | | 705 | | | | 1,794 | | | | 2,499 | | | | (716 | ) | | 2006 | | 7/17/2013 | | 10 to 30 Years |
| | Salisbury, MD | | (b) | | | 4,210 | | | | 6,613 | | | | 0 | | | | 0 | | | | 4,210 | | | | 6,613 | | | | 10,823 | | | | (3,622 | ) | | 2007 | | 7/17/2013 | | 10 to 27 Years |
| | Powhatan, VA | | (b) | | | 4,342 | | | | 2,963 | | | | 0 | | | | 0 | | | | 4,342 | | | | 2,963 | | | | 7,305 | | | | (2,736 | ) | | 2007 | | 7/17/2013 | | 10 to 31 Years |
| | Ocala, FL | | (b) | | | 2,260 | | | | 4,709 | | | | 0 | | | | 0 | | | | 2,260 | | | | 4,709 | | | | 6,969 | | | | (1,812 | ) | | 2006 | | 7/17/2013 | | 8 to 46 Years |
| | Front Royal, VA | | (a) | | | 7,257 | | | | 35,711 | | | | 0 | | | | 0 | | | | 7,257 | | | | 35,711 | | | | 42,968 | | | | (12,891 | ) | | 2007 | | 7/17/2013 | | 9 to 34 Years |
| | Cohasset, MN | | (a) | | | 334 | | | | 1,134 | | | | 0 | | | | 0 | | | | 334 | | | | 1,134 | | | | 1,468 | | | | (511 | ) | | 2007 | | 7/17/2013 | | 10 to 26 Years |
| | Auburn, AL | | (a) | | | 884 | | | | 1,530 | | | | 0 | | | | 0 | | | | 884 | | | | 1,530 | | | | 2,414 | | | | (596 | ) | | 2007 | | 7/17/2013 | | 10 to 32 Years |
| | Fruita, CO | | (b) | | | 1,596 | | | | 9,361 | | | | 0 | | | | 11 | | | | 1,596 | | | | 9,372 | | | | 10,968 | | | | (413 | ) | | 2019 | | 6/28/2019 | | 12 to 45 Years |
| | Fruita, CO | | (b) | | | 1,640 | | | | 4,920 | | | | 0 | | | | 0 | | | | 1,640 | | | | 4,920 | | | | 6,560 | | | | (291 | ) | | 2007 | | 6/28/2019 | | 10 to 36 Years |
| | Dallas, TX | | (b) | | | 3,975 | | | | 0 | | | | 0 | | | | 0 | | | | 3,975 | | | | 0 | | | | 3,975 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| | New Albany, IN | | (b) | | | 941 | | | | 5,078 | | | | 0 | | | | 65 | | | | 941 | | | | 5,143 | | | | 6,084 | | | | (582 | ) | | 1977 | | 12/20/2019 | | 8 to 30 Years |
| | Blairsville, GA | | (b) | | | 1,652 | | | | 3,102 | | | | 0 | | | | 0 | | | | 1,652 | | | | 3,102 | | | | 4,754 | | | | (992 | ) | | 2001 | | 9/30/2014 | | 10 to 30 Years |
| | Chattanooga, TN | | (b) | | | 1,817 | | | | 5,281 | | | | 0 | | | | 0 | | | | 1,817 | | | | 5,281 | | | | 7,098 | | | | (1,458 | ) | | 1969 | | 9/30/2014 | | 10 to 30 Years |
| | Dayton, TN | | (b) | | | 1,122 | | | | 6,767 | | | | 0 | | | | 0 | | | | 1,122 | | | | 6,767 | | | | 7,889 | | | | (1,420 | ) | | 1999 | | 9/30/2014 | | 10 to 40 Years |
Fox Rehabilitation Services | | Cherry Hill, NJ | | (b) | | | 4,078 | | | | 6,076 | | | | 0 | | | | 0 | | | | 4,078 | | | | 6,076 | | | | 10,154 | | | | (1,356 | ) | | 1998 | | 11/23/2016 | | 9 to 30 Years |
Freddy’s Frozen Custard & Steakburgers | | Sedalia, MO | | (b) | | | 594 | | | | 1,196 | | | | 0 | | | | 0 | | | | 594 | | | | 1,196 | | | | 1,790 | | | | (85 | ) | | 2016 | | 6/28/2019 | | 8 to 34 Years |
| | Elizabethton, TN | | (b) | | | 482 | | | | 1,139 | | | | 0 | | | | 0 | | | | 482 | | | | 1,139 | | | | 1,621 | | | | (366 | ) | | 2008 | | 8/18/2014 | | 6 to 30 Years |
| | Fairlea, WV | | (b) | | | 298 | | | | 1,280 | | | | 0 | | | | 0 | | | | 298 | | | | 1,280 | | | | 1,578 | | | | (372 | ) | | 2009 | | 8/18/2014 | | 10 to 40 Years |
| | Nashville, TN | | (b) | | | 2,461 | | | | 1,427 | | | | 0 | | | | 0 | | | | 2,461 | | | | 1,427 | | | | 3,888 | | | | (292 | ) | | 1976 | | 3/27/2015 | | 15 to 40 Years |
| | Danville, VA | | (b) | | | 1,349 | | | | 6,406 | | | | 0 | | | | 0 | | | | 1,349 | | | | 6,406 | | | | 7,755 | | | | (1,229 | ) | | 2002 | | 12/30/2014 | | 15 to 40 Years |
| | Hinesville, GA | | (b) | | | 2,049 | | | | 5,216 | | | | 0 | | | | 0 | | | | 2,049 | | | | 5,216 | | | | 7,265 | | | | (1,026 | ) | | 2001 | | 12/30/2014 | | 15 to 40 Years |
| | Valdosta, GA | | (b) | | | 3,038 | | | | 13,801 | | | | 0 | | | | 0 | | | | 3,038 | | | | 13,801 | | | | 16,839 | | | | (2,450 | ) | | 2001 | | 12/30/2014 | | 15 to 40 Years |
| | Warner Robins, GA | | (b) | | | 2,598 | | | | 8,324 | | | | 0 | | | | 0 | | | | 2,598 | | | | 8,324 | | | | 10,922 | | | | (1,592 | ) | | 2010 | | 12/30/2014 | | 15 to 40 Years |
| | Albuquerque, NM | | (b) | | | 1,473 | | | | 2,947 | | | | 0 | | | | 0 | | | | 1,473 | | | | 2,947 | | | | 4,420 | | | | (1,237 | ) | | 2011 | | 7/17/2013 | | 10 to 33 Years |
| | Decatur, AL | | (b) | | | 1,157 | | | | 1,725 | | | | 0 | | | | 0 | | | | 1,157 | | | | 1,725 | | | | 2,882 | | | | (655 | ) | | 2004 | | 7/17/2013 | | 10 to 30 Years |
| | Florence, AL | | (b) | | | 794 | | | | 1,742 | | | | 0 | | | | 0 | | | | 794 | | | | 1,742 | | | | 2,536 | | | | (633 | ) | | 1995 | | 7/17/2013 | | 8 to 27 Years |
| | Fort Smith, AR | | (b) | | | 667 | | | | 2,862 | | | | 0 | | | | 0 | | | | 667 | | | | 2,862 | | | | 3,529 | | | | (206 | ) | | 1993 | | 11/25/2019 | | 5 to 20 Years |
| | Branson, MO | | (b) | | | 1,182 | | | | 2,668 | | | | 0 | | | | 0 | | | | 1,182 | | | | 2,668 | | | | 3,850 | | | | (172 | ) | | 1994 | | 11/25/2019 | | 5 to 25 Years |
| | Springfield, MO | | (b) | | | 2,499 | | | | 1,239 | | | | 0 | | | | 0 | | | | 2,499 | | | | 1,239 | | | | 3,738 | | | | (108 | ) | | 1993 | | 11/25/2019 | | 5 to 25 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jiffy Lube | Largo, FL | | (b) | | 416 |
| | 493 |
| | — |
| | 111 |
| | 416 |
| | 604 |
| | 1,020 |
| | (194 | ) | | 1989 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Bonita Springs, FL | | (b) | | 582 |
| | 312 |
| | — |
| | 101 |
| | 582 |
| | 413 |
| | 995 |
| | (152 | ) | | 1990 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Clearwater, FL | | (b) | | 463 |
| | 443 |
| | — |
| | 131 |
| | 463 |
| | 574 |
| | 1,037 |
| | (191 | ) | | 1989 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Naples, FL | | (b) | | 333 |
| | 302 |
| | — |
| | 121 |
| | 333 |
| | 423 |
| | 756 |
| | (147 | ) | | 1990 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Sarasota, FL | | (b) | | 278 |
| | 312 |
| | — |
| | 131 |
| | 278 |
| | 443 |
| | 721 |
| | (149 | ) | | 1987 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Bradenton, FL | | (b) | | 594 |
| | 493 |
| | — |
| | 222 |
| | 594 |
| | 715 |
| | 1,309 |
| | (272 | ) | | 1988 | | 03/19/13 | | 10 to 30 Years |
| Jiffy Lube | Fort Myers, FL | | (b) | | 555 |
| | 312 |
| | — |
| | 131 |
| | 555 |
| | 443 |
| | 998 |
| | (170 | ) | | 1990 | | 03/19/13 | | 10 to 30 Years |
| Jo-Ann's | Reading, PA | | (d) | | 449 |
| | 3,222 |
| | — |
| | — |
| | 449 |
| | 3,222 |
| | 3,671 |
| | (449 | ) | | 1998 | | 07/17/13 | | 8 to 40 Years |
| Jo-Ann's | Alpharetta, GA | | (d) | | 2,819 |
| | 3,139 |
| | — |
| | — |
| | 2,819 |
| | 3,139 |
| | 5,958 |
| | (583 | ) | | 2000 | | 07/17/13 | | 5 to 43 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| K-Bob's Steakhouse | Fredericksburg, TX | | (d) | | 511 |
| | 1,516 |
| | — |
| | — |
| | 511 |
| | 1,516 |
| | 2,027 |
| | (355 | ) | | 1985 | | 07/17/13 | | 11 to 30 Years |
| KFC | Milan, IL | | (b) | | 161 |
| | 533 |
| | — |
| | — |
| | 161 |
| | 533 |
| | 694 |
| | (148 | ) | | 1997 | | 10/03/11 | | 15 to 30 Years |
| KFC | Davenport, IA | | (b) | | 441 |
| | 646 |
| | — |
| | — |
| | 441 |
| | 646 |
| | 1,087 |
| | (228 | ) | | 2002 | | 10/03/11 | | 15 to 30 Years |
| KFC | Independence, MO | | (b) | | 396 |
| | 1,074 |
| | — |
| | — |
| | 396 |
| | 1,074 |
| | 1,470 |
| | (331 | ) | | 1984 | | 10/03/11 | | 15 to 30 Years |
| KFC | Kansas City, KS | | (b) | | 594 |
| | 904 |
| | — |
| | — |
| | 594 |
| | 904 |
| | 1,498 |
| | (295 | ) | | 1999 | | 10/03/11 | | 15 to 30 Years |
| KFC | La Vista, NE | | (b) | | 499 |
| | 664 |
| | — |
| | — |
| | 499 |
| | 664 |
| | 1,163 |
| | (199 | ) | | 1992 | | 10/03/11 | | 15 to 30 Years |
| KFC | Omaha, NE | | (b) | | 539 |
| | 380 |
| | — |
| | — |
| | 539 |
| | 380 |
| | 919 |
| | (85 | ) | | 2006 | | 10/03/11 | | 15 to 40 Years |
| KFC | Calhoun, GA | | (b) | | 503 |
| | 713 |
| | — |
| | — |
| | 503 |
| | 713 |
| | 1,216 |
| | (209 | ) | | 1988 | | 02/02/12 | | 15 to 30 Years |
| KFC | Covington, GA | | (b) | | 526 |
| | 665 |
| | — |
| | — |
| | 526 |
| | 665 |
| | 1,191 |
| | (184 | ) | | 2001 | | 02/02/12 | | 15 to 30 Years |
| KFC | Decatur, GA | | (b) | | 677 |
| | 539 |
| | — |
| | — |
| | 677 |
| | 539 |
| | 1,216 |
| | (154 | ) | | 1989 | | 02/02/12 | | 15 to 30 Years |
| KFC | Hampton, GA | | (b) | | 568 |
| | 648 |
| | — |
| | — |
| | 568 |
| | 648 |
| | 1,216 |
| | (181 | ) | | 2002 | | 02/02/12 | | 15 to 30 Years |
| KFC | Jackson, GA | | (b) | | 467 |
| | 729 |
| | — |
| | — |
| | 467 |
| | 729 |
| | 1,196 |
| | (237 | ) | | 1992 | | 02/02/12 | | 15 to 30 Years |
| KFC | Morrow, GA | | (b) | | 530 |
| | 568 |
| | — |
| | — |
| | 530 |
| | 568 |
| | 1,098 |
| | (140 | ) | | 2006 | | 02/02/12 | | 15 to 40 Years |
| KFC | Stockbridge, GA | | (b) | | 388 |
| | 353 |
| | — |
| | — |
| | 388 |
| | 353 |
| | 741 |
| | (102 | ) | | 2001 | | 02/02/12 | | 15 to 30 Years |
| KFC | Stone Mountain, GA | | (b) | | 379 |
| | 487 |
| | — |
| | — |
| | 379 |
| | 487 |
| | 866 |
| | (134 | ) | | 1986 | | 02/02/12 | | 15 to 30 Years |
| KFC | Kingston, PA | | (d) | | 521 |
| | 635 |
| | — |
| | — |
| | 521 |
| | 635 |
| | 1,156 |
| | (109 | ) | | 1978 | | 11/18/14 | | 15 to 30 Years |
| KFC | Bloomsburg, PA | | (d) | | 698 |
| | 823 |
| | — |
| | — |
| | 698 |
| | 823 |
| | 1,521 |
| | (157 | ) | | 1993 | | 11/18/14 | | 15 to 30 Years |
| KFC | Williamsport, PA | | (d) | | 864 |
| | 979 |
| | — |
| | — |
| | 864 |
| | 979 |
| | 1,843 |
| | (170 | ) | | 1966 | | 11/18/14 | | 15 to 30 Years |
| Kohl's | Wichita, KS | | (d) | | 2,163 |
| | 7,036 |
| | — |
| | 242 |
| | 2,163 |
| | 7,278 |
| | 9,441 |
| | (1,615 | ) | | 1996 | | 07/17/13 | | 8 to 36 Years |
| Kohl's | Lake Zurich, IL | | (d) | | 4,860 |
| | 6,935 |
| | — |
| | — |
| | 4,860 |
| | 6,935 |
| | 11,795 |
| | (2,021 | ) | | 2000 | | 07/17/13 | | 7 to 32 Years |
| Kohl's | Grand Forks, ND | | (d) | | 1,516 |
| | 10,008 |
| | — |
| | — |
| | 1,516 |
| | 10,008 |
| | 11,524 |
| | (1,558 | ) | | 2006 | | 07/17/13 | | 9 to 46 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | North Little Rock, AR | | (b) | | | 1,166 | | | | 2,138 | | | | 0 | | | | 0 | | | | 1,166 | | | | 2,138 | | | | 3,304 | | | | (141 | ) | | 1993 | | 11/25/2019 | | 5 to 25 Years |
| | Los Angeles, CA | | (b) | | | 4,099 | | | | 5,354 | | | | 0 | | | | 0 | | | | 4,099 | | | | 5,354 | | | | 9,453 | | | | (279 | ) | | 1958 | | 10/11/2019 | | 8 to 26 Years |
| | Hayward, CA | | (b) | | | 2,125 | | | | 3,015 | | | | 0 | | | | 0 | | | | 2,125 | | | | 3,015 | | | | 5,140 | | | | (112 | ) | | 1986 | | 10/11/2019 | | 12 to 35 Years |
| | Gibsonton, FL | | (b) | | | 4,970 | | | | 4,014 | | | | 0 | | | | 8,907 | | | | 4,970 | | | | 12,921 | | | | 17,891 | | | | (1,511 | ) | | 2016 | | 11/5/2015 | | 12 to 50 Years |
| | Moultrie, GA | | (b) | | | 179 | | | | 271 | | | | 0 | | | | 0 | | | | 179 | | | | 271 | | | | 450 | | | | (240 | ) | | 1983 | | 9/7/2007 | | 15 to 20 Years |
| | Spanish Fort, AL | | (b) | | | 563 | | | | 607 | | | | 0 | | | | 0 | | | | 563 | | | | 607 | | | | 1,170 | | | | (435 | ) | | 1993 | | 9/7/2007 | | 15 to 30 Years |
| | Montgomery, AL | | (b) | | | 241 | | | | 628 | | | | 0 | | | | 0 | | | | 241 | | | | 628 | | | | 869 | | | | (339 | ) | | 1997 | | 9/7/2007 | | 15 to 30 Years |
| | Pensacola, FL | | (b) | | | 238 | | | | 564 | | | | 0 | | | | 0 | | | | 238 | | | | 564 | | | | 802 | | | | (308 | ) | | 1994 | | 9/7/2007 | | 15 to 30 Years |
| | Montgomery, AL | | (b) | | | 303 | | | | 636 | | | | 0 | | | | 0 | | | | 303 | | | | 636 | | | | 939 | | | | (353 | ) | | 1996 | | 9/7/2007 | | 15 to 30 Years |
| | Pensacola, FL | | (b) | | | 148 | | | | 459 | | | | 0 | | | | 0 | | | | 148 | | | | 459 | | | | 607 | | | | (245 | ) | | 1972 | | 9/7/2007 | | 15 to 30 Years |
| | Marianna, FL | | (b) | | | 283 | | | | 452 | | | | 0 | | | | 0 | | | | 283 | | | | 452 | | | | 735 | | | | (240 | ) | | 1994 | | 9/7/2007 | | 15 to 40 Years |
| | Albany, GA | | (b) | | | 242 | | | | 572 | | | | 0 | | | | 0 | | | | 242 | | | | 572 | | | | 814 | | | | (243 | ) | | 1982 | | 9/7/2007 | | 15 to 40 Years |
| | Pensacola, FL | | (b) | | | 104 | | | | 333 | | | | 0 | | | | 0 | | | | 104 | | | | 333 | | | | 437 | | | | (195 | ) | | 1968 | | 9/7/2007 | | 15 to 30 Years |
| | Mobile, AL | | (b) | | | 89 | | | | 501 | | | | 0 | | | | 0 | | | | 89 | | | | 501 | | | | 590 | | | | (261 | ) | | 1982 | | 11/30/2007 | | 15 to 30 Years |
| | Albany, GA | | (b) | | | 281 | | | | 575 | | | | 0 | | | | 0 | | | | 281 | | | | 575 | | | | 856 | | | | (351 | ) | | 1997 | | 9/7/2007 | | 15 to 30 Years |
| | Gulf Breeze, FL | | (b) | | | 296 | | | | 457 | | | | 0 | | | | 0 | | | | 296 | | | | 457 | | | | 753 | | | | (249 | ) | | 1993 | | 9/7/2007 | | 15 to 30 Years |
| | Valdosta, GA | | (b) | | | 376 | | | | 576 | | | | 0 | | | | 0 | | | | 376 | | | | 576 | | | | 952 | | | | (340 | ) | | 1996 | | 11/30/2007 | | 15 to 30 Years |
| | Montgomery, AL | | (b) | | | 275 | | | | 528 | | | | 0 | | | | 0 | | | | 275 | | | | 528 | | | | 803 | | | | (317 | ) | | 1988 | | 9/7/2007 | | 15 to 30 Years |
| | Pensacola, FL | | (b) | | | 195 | | | | 569 | | | | 0 | | | | 0 | | | | 195 | | | | 569 | | | | 764 | | | | (318 | ) | | 1983 | | 9/7/2007 | | 15 to 30 Years |
| | Opelika, AL | | (b) | | | 503 | | | | 628 | | | | 0 | | | | 0 | | | | 503 | | | | 628 | | | | 1,131 | | | | (392 | ) | | 1995 | | 9/7/2007 | | 15 to 30 Years |
| | Auburn, AL | | (b) | | | 676 | | | | 647 | | | | 0 | | | | 0 | | | | 676 | | | | 647 | | | | 1,323 | | | | (418 | ) | | 1995 | | 9/7/2007 | | 15 to 30 Years |
| | Ocean Springs, MS | | (b) | | | 145 | | | | 186 | | | | 0 | | | | 0 | | | | 145 | | | | 186 | | | | 331 | | | | (67 | ) | | 1988 | | 7/17/2013 | | 15 to 30 Years |
| | Montgomery, AL | | (b) | | | 398 | | | | 626 | | | | 0 | | | | 0 | | | | 398 | | | | 626 | | | | 1,024 | | | | (370 | ) | | 1997 | | 9/7/2007 | | 15 to 30 Years |
| | Niceville, FL | | (b) | | | 458 | | | | 454 | | | | 0 | | | | 0 | | | | 458 | | | | 454 | | | | 912 | | | | (215 | ) | | 1996 | | 9/7/2007 | | 15 to 40 Years |
| | Montgomery, AL | | (b) | | | 422 | | | | 857 | | | | 0 | | | | 0 | | | | 422 | | | | 857 | | | | 1,279 | | | | (466 | ) | | 1992 | | 9/7/2007 | | 15 to 30 Years |
| | Mobile, AL | | (b) | | | 157 | | | | 508 | | | | 0 | | | | 0 | | | | 157 | | | | 508 | | | | 665 | | | | (275 | ) | | 1982 | | 9/7/2007 | | 15 to 30 Years |
| | Dothan, AL | | (b) | | | 162 | | | | 659 | | | | 0 | | | | 0 | | | | 162 | | | | 659 | | | | 821 | | | | (346 | ) | | 1996 | | 9/7/2007 | | 15 to 30 Years |
| | Pensacola, FL | | (b) | | | 150 | | | | 575 | | | | 0 | | | | 0 | | | | 150 | | | | 575 | | | | 725 | | | | (317 | ) | | 1986 | | 9/7/2007 | | 15 to 30 Years |
| | Crestview, FL | | (b) | | | 544 | | | | 743 | | | | 0 | | | | 0 | | | | 544 | | | | 743 | | | | 1,287 | | | | (398 | ) | | 1975 | | 9/7/2007 | | 15 to 30 Years |
| | Panama City, FL | | (b) | | | 378 | | | | 252 | | | | 0 | | | | 0 | | | | 378 | | | | 252 | | | | 630 | | | | (115 | ) | | 1997 | | 7/17/2013 | | 15 to 30 Years |
| | Milton, FL | | (b) | | | 137 | | | | 577 | | | | 0 | | | | 0 | | | | 137 | | | | 577 | | | | 714 | | | | (306 | ) | | 1986 | | 9/7/2007 | | 15 to 30 Years |
| | Wetumpka, AL | | (b) | | | 224 | | | | 437 | | | | 0 | | | | 0 | | | | 224 | | | | 437 | | | | 661 | | | | (35 | ) | | 1995 | | 11/25/2019 | | 6 to 17 Years |
| | Waycross, GA | | (b) | | | 207 | | | | 499 | | | | 0 | | | | 0 | | | | 207 | | | | 499 | | | | 706 | | | | (33 | ) | | 1998 | | 11/25/2019 | | 10 to 20 Years |
| | Corpus Christi, TX | | (b) | | | 1,790 | | | | 1,267 | | | | 0 | | | | 0 | | | | 1,790 | | | | 1,267 | | | | 3,057 | | | | (723 | ) | | 2014 | | 9/30/2014 | | 11 to 30 Years |
| | Paxton, IL | | (b) | | | 319 | | | | 529 | | | | 0 | | | | 0 | | | | 319 | | | | 529 | | | | 848 | | | | (66 | ) | | 1986 | | 11/25/2019 | | 8 to 15 Years |
| | Mayfield, KY | | (b) | | | 266 | | | | 918 | | | | 0 | | | | 0 | | | | 266 | | | | 918 | | | | 1,184 | | | | (81 | ) | | 1986 | | 11/25/2019 | | 7 to 15 Years |
| | Kansas City, MO | | (b) | | | 482 | | | | 640 | | | | 0 | | | | 0 | | | | 482 | | | | 640 | | | | 1,122 | | | | (64 | ) | | 1979 | | 11/25/2019 | | 5 to 15 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Kohl's | Tilton, NH | | (d) | | 3,959 |
| | — |
| | — |
| | — |
| | 3,959 |
| | — |
| | 3,959 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Kohl's | Olathe, KS | | (d) | | 3,505 |
| | 5,847 |
| | — |
| | 322 |
| | 3,505 |
| | 6,169 |
| | 9,674 |
| | (1,601 | ) | | 1995 | | 07/17/13 | | 9 to 35 Years |
| Kohl's | Sherwood, AR | | (d) | | 2,300 |
| | 5,995 |
| | — |
| | — |
| | 2,300 |
| | 5,995 |
| | 8,295 |
| | (1,196 | ) | | 2003 | | 02/23/15 | | 8 to 30 Years |
| Kohl's | Gilbert, AZ | | (d) | | 4,936 |
| | 4,318 |
| | — |
| | — |
| | 4,936 |
| | 4,318 |
| | 9,254 |
| | (108 | ) | | 2004 | | 08/06/18 | | 5 to 24 Years |
| Kroger | LaGrange, GA | | (c) | | 972 |
| | 8,435 |
| | — |
| | — |
| | 972 |
| | 8,435 |
| | 9,407 |
| | (2,127 | ) | | 1998 | | 07/17/13 | | 4 to 25 Years |
| LA Fitness | Brooklyn Park, MN | | (d) | | 3,176 |
| | 7,771 |
| | — |
| | — |
| | 3,176 |
| | 7,771 |
| | 10,947 |
| | (1,722 | ) | | 2008 | | 07/17/13 | | 10 to 35 Years |
| LA Fitness | Matteson, IL | | (d) | | 4,587 |
| | 6,328 |
| | 244 |
| | — |
| | 4,831 |
| | 6,328 |
| | 11,159 |
| | (1,421 | ) | | 2007 | | 07/17/13 | | 5 to 34 Years |
| LA Fitness | Greenwood, IN | | (c) | | 1,973 |
| | 9,764 |
| | — |
| | — |
| | 1,973 |
| | 9,764 |
| | 11,737 |
| | (1,595 | ) | | 2007 | | 07/17/13 | | 10 to 42 Years |
| LA Fitness | League City, TX | | (c) | | 2,514 |
| | 6,767 |
| | — |
| | — |
| | 2,514 |
| | 6,767 |
| | 9,281 |
| | (1,224 | ) | | 2008 | | 07/17/13 | | 10 to 42 Years |
| LA Fitness | Naperville, IL | | (c) | | 5,015 |
| | 6,946 |
| | — |
| | — |
| | 5,015 |
| | 6,946 |
| | 11,961 |
| | (1,407 | ) | | 2007 | | 07/17/13 | | 9 to 38 Years |
| LA Fitness | West Chester, OH | | (c) | | 606 |
| | 9,832 |
| | — |
| | — |
| | 606 |
| | 9,832 |
| | 10,438 |
| | (1,412 | ) | | 2009 | | 07/17/13 | | 7 to 43 Years |
| Ladybird Academy | Lake Mary, FL | | (d) | | 1,209 |
| | 1,733 |
| | — |
| | 851 |
| | 1,209 |
| | 2,584 |
| | 3,793 |
| | (368 | ) | | 2005 | | 09/19/14 | | 15 to 40 Years |
| Ladybird Academy | Sanford, FL | | (d) | | 1,028 |
| | 1,310 |
| | — |
| | — |
| | 1,028 |
| | 1,310 |
| | 2,338 |
| | (265 | ) | | 2003 | | 09/19/14 | | 15 to 40 Years |
| Ladybird Academy | Orlando, FL | | (d) | | 1,925 |
| | 2,529 |
| | — |
| | — |
| | 1,925 |
| | 2,529 |
| | 4,454 |
| | (417 | ) | | 2007 | | 09/19/14 | | 15 to 40 Years |
| Ladybird Academy | Windermere, FL | | (d) | | 2,912 |
| | 2,670 |
| | — |
| | — |
| | 2,912 |
| | 2,670 |
| | 5,582 |
| | (475 | ) | | 2011 | | 09/19/14 | | 15 to 40 Years |
| Ladybird Academy | Winter Springs, FL | | (d) | | 534 |
| | 746 |
| | — |
| | — |
| | 534 |
| | 746 |
| | 1,280 |
| | (177 | ) | | 1987 | | 09/19/14 | | 15 to 30 Years |
| Ladybird Academy | McKinney, TX | | (d) | | 1,056 |
| | 6,696 |
| | — |
| | 31 |
| | 1,056 |
| | 6,727 |
| | 7,783 |
| | (464 | ) | | 2015 | | 01/29/16 | | 17 to 50 Years |
| La-Z-Boy | Glendale, AZ | | (d) | | 1,395 |
| | 4,242 |
| | — |
| | — |
| | 1,395 |
| | 4,242 |
| | 5,637 |
| | (782 | ) | | 2001 | | 07/17/13 | | 2 to 45 Years |
| La-Z-Boy | Newington, CT | | (c) | | 1,778 |
| | 4,496 |
| | — |
| | — |
| | 1,778 |
| | 4,496 |
| | 6,274 |
| | (731 | ) | | 2006 | | 07/17/13 | | 8 to 45 Years |
| La-Z-Boy | Kentwood, MI | | (d) | | 1,145 |
| | 4,085 |
| | — |
| | — |
| | 1,145 |
| | 4,085 |
| | 5,230 |
| | (714 | ) | | 1987 | | 07/17/13 | | 4 to 38 Years |
| Lee's Famous Recipe Chicken | Xenia, OH | | (d) | | 384 |
| | 288 |
| | — |
| | — |
| | 384 |
| | 288 |
| | 672 |
| | (66 | ) | | 1985 | | 08/21/15 | | 15 to 20 Years |
| Lee's Famous Recipe Chicken | Dayton, OH | | (d) | | 467 |
| | 237 |
| | — |
| | — |
| | 467 |
| | 237 |
| | 704 |
| | (53 | ) | | 1984 | | 08/21/15 | | 15 to 20 Years |
| Lee's Famous Recipe Chicken | Miamisburg, OH | | (d) | | 139 |
| | 262 |
| | — |
| | — |
| | 139 |
| | 262 |
| | 401 |
| | (55 | ) | | 1970 | | 08/21/15 | | 15 to 20 Years |
| Lee's Famous Recipe Chicken | Englewood, OH | | (d) | | 235 |
| | 345 |
| | — |
| | — |
| | 235 |
| | 345 |
| | 580 |
| | (54 | ) | | 1988 | | 08/21/15 | | 15 to 30 Years |
| Lee's Famous Recipe Chicken | Trotwood, OH | | (d) | | 281 |
| | 220 |
| | — |
| | — |
| | 281 |
| | 220 |
| | 501 |
| | (56 | ) | | 1971 | | 08/21/15 | | 15 to 20 Years |
| Liberty Oilfield Services | Gillette, WY | | (d) | | 1,520 |
| | 4,561 |
| | — |
| | — |
| | 1,520 |
| | 4,561 |
| | 6,081 |
| | (736 | ) | | 2001 | | 12/30/14 | | 15 to 40 Years |
| Liberty Oilfield Services | Henderson, CO | | (d) | | 3,240 |
| | 5,720 |
| | — |
| | — |
| | 3,240 |
| | 5,720 |
| | 8,960 |
| | (850 | ) | | 1977 | | 12/30/14 | | 15 to 50 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Kansas City, KS | | (b) | | | 208 | | | | 803 | | | | 0 | | | | 0 | | | | 208 | | | | 803 | | | | 1,011 | | | | (73 | ) | | 1980 | | 11/25/2019 | | 7 to 15 Years |
| | Columbia, MO | | (b) | | | 714 | | | | 345 | | | | 0 | | | | 0 | | | | 714 | | | | 345 | | | | 1,059 | | | | (37 | ) | | 1985 | | 11/25/2019 | | 10 to 15 Years |
| | Trenton, MO | | (b) | | | 229 | | | | 931 | | | | 0 | | | | 0 | | | | 229 | | | | 931 | | | | 1,160 | | | | (75 | ) | | 1976 | | 11/25/2019 | | 10 to 15 Years |
| | Independence, MO | | (b) | | | 321 | | | | 607 | | | | 0 | | | | 0 | | | | 321 | | | | 607 | | | | 928 | | | | (58 | ) | | 1979 | | 11/25/2019 | | 7 to 15 Years |
| | Emporia, KS | | (b) | | | 296 | | | | 1,015 | | | | 0 | | | | 0 | | | | 296 | | | | 1,015 | | | | 1,311 | | | | (93 | ) | | 1969 | | 11/25/2019 | | 7 to 15 Years |
| | Lees Summit, MO | | (b) | | | 459 | | | | 705 | | | | 0 | | | | 0 | | | | 459 | | | | 705 | | | | 1,164 | | | | (66 | ) | | 1985 | | 11/25/2019 | | 11 to 15 Years |
| | Harrisonville, MO | | (b) | | | 268 | | | | 769 | | | | (180 | ) | | | (521 | ) | | | 88 | | | | 248 | | | | 336 | | | | (6 | ) | | 1981 | | 11/25/2019 | | 7 to 14 Years |
| | Rolla, MO | | (b) | | | 336 | | | | 654 | | | | 0 | | | | 0 | | | | 336 | | | | 654 | | | | 990 | | | | (60 | ) | | 1978 | | 11/25/2019 | | 7 to 15 Years |
| | Johnson City, TN | | (b) | | | 718 | | | | 450 | | | | 0 | | | | 0 | | | | 718 | | | | 450 | | | | 1,168 | | | | (329 | ) | | 1983 | | 12/21/2012 | | 15 to 20 Years |
| | Buckhannon, WV | | (b) | | | 438 | | | | 529 | | | | 0 | | | | 0 | | | | 438 | | | | 529 | | | | 967 | | | | (283 | ) | | 1978 | | 12/21/2012 | | 15 to 20 Years |
| | Bristol, VA | | (b) | | | 369 | | | | 564 | | | | 0 | | | | 0 | | | | 369 | | | | 564 | | | | 933 | | | | (304 | ) | | 1991 | | 12/21/2012 | | 15 to 20 Years |
| | Mount Carmel, TN | | (b) | | | 499 | | | | 536 | | | | 0 | | | | 0 | | | | 499 | | | | 536 | | | | 1,035 | | | | (260 | ) | | 1988 | | 12/21/2012 | | 15 to 30 Years |
| | Waynesburg, PA | | (b) | | | 323 | | | | 918 | | | | 0 | | | | 0 | | | | 323 | | | | 918 | | | | 1,241 | | | | (353 | ) | | 1982 | | 12/21/2012 | | 15 to 30 Years |
| | Bristol, VA | | (b) | | | 492 | | | | 366 | | | | 0 | | | | 0 | | | | 492 | | | | 366 | | | | 858 | | | | (271 | ) | | 1982 | | 12/21/2012 | | 15 to 20 Years |
| | Rogersville, TN | | (b) | | | 384 | | | | 964 | | | | 0 | | | | 0 | | | | 384 | | | | 964 | | | | 1,348 | | | | (366 | ) | | 1986 | | 12/21/2012 | | 15 to 30 Years |
| | South Charleston, WV | | (b) | | | 524 | | | | 541 | | | | 0 | | | | 0 | | | | 524 | | | | 541 | | | | 1,065 | | | | (268 | ) | | 1993 | | 12/21/2012 | | 15 to 20 Years |
| | So. Parkersburg, WV | | (b) | | | 383 | | | | 404 | | | | 0 | | | | 0 | | | | 383 | | | | 404 | | | | 787 | | | | (221 | ) | | 1986 | | 12/21/2012 | | 15 to 20 Years |
| | Weston, WV | | (b) | | | 158 | | | | 695 | | | | 0 | | | | 0 | | | | 158 | | | | 695 | | | | 853 | | | | (237 | ) | | 1981 | | 12/21/2012 | | 15 to 30 Years |
| | Kingwood, WV | | (b) | | | 618 | | | | 677 | | | | 0 | | | | 0 | | | | 618 | | | | 677 | | | | 1,295 | | | | (366 | ) | | 1979 | | 12/21/2012 | | 15 to 20 Years |
| | Kingsport, TN | | (b) | | | 384 | | | | 877 | | | | 0 | | | | 0 | | | | 384 | | | | 877 | | | | 1,261 | | | | (336 | ) | | 1992 | | 12/21/2012 | | 15 to 30 Years |
| | Bristol, TN | | (b) | | | 474 | | | | 282 | | | | 0 | | | | 0 | | | | 474 | | | | 282 | | | | 756 | | | | (285 | ) | | 1985 | | 12/21/2012 | | 10 to 15 Years |
| | Elizabethton, TN | | (b) | | | 735 | | | | 278 | | | | 0 | | | | 0 | | | | 735 | | | | 278 | | | | 1,013 | | | | (203 | ) | | 1971 | | 12/21/2012 | | 15 to 20 Years |
| | Jonesborough, TN | | (b) | | | 576 | | | | 329 | | | | 0 | | | | 0 | | | | 576 | | | | 329 | | | | 905 | | | | (217 | ) | | 1987 | | 12/21/2012 | | 15 to 20 Years |
| | Parkersburg, WV | | (b) | | | 457 | | | | 309 | | | | 0 | | | | 0 | | | | 457 | | | | 309 | | | | 766 | | | | (326 | ) | | 1999 | | 12/21/2012 | | 10 to 15 Years |
| | Philippi, WV | | (b) | | | 405 | | | | 232 | | | | 0 | | | | 0 | | | | 405 | | | | 232 | | | | 637 | | | | (266 | ) | | 1986 | | 12/21/2012 | | 10 to 15 Years |
| | Normal, IL | | (b) | | | 394 | | | | 240 | | | | 0 | | | | 0 | | | | 394 | | | | 240 | | | | 634 | | | | (244 | ) | | 1980 | | 12/21/2012 | | 10 to 15 Years |
| | Peoria, IL | | (b) | | | 383 | | | | 270 | | | | 0 | | | | 0 | | | | 383 | | | | 270 | | | | 653 | | | | (282 | ) | | 1980 | | 12/21/2012 | | 10 to 15 Years |
| | Peoria, IL | | (b) | | | 282 | | | | 435 | | | | 0 | | | | 0 | | | | 282 | | | | 435 | | | | 717 | | | | (246 | ) | | 1980 | | 12/21/2012 | | 15 to 20 Years |
| | Havana, IL | | (b) | | | 439 | | | | 297 | | | | 0 | | | | 0 | | | | 439 | | | | 297 | | | | 736 | | | | (368 | ) | | 1980 | | 12/21/2012 | | 10 to 15 Years |
| | Eureka, IL | | (b) | | | 307 | | | | 338 | | | | 0 | | | | 0 | | | | 307 | | | | 338 | | | | 645 | | | | (382 | ) | | 1980 | | 12/21/2012 | | 10 to 15 Years |
| | Fort Madison, IA | | (b) | | | 191 | | | | 620 | | | | 0 | | | | 0 | | | | 191 | | | | 620 | | | | 811 | | | | (229 | ) | | 1980 | | 12/21/2012 | | 15 to 30 Years |
| | Washington, IL | | (b) | | | 264 | | | | 460 | | | | 0 | | | | 0 | | | | 264 | | | | 460 | | | | 724 | | | | (255 | ) | | 1980 | | 12/21/2012 | | 15 to 20 Years |
| | Bartonville, IL | | (b) | | | 410 | | | | 856 | | | | 0 | | | | 0 | | | | 410 | | | | 856 | | | | 1,266 | | | | (357 | ) | | 1980 | | 12/21/2012 | | 15 to 30 Years |
Hartford Provision Company | | South Windsor, CT | | (b) | | | 1,590 | | | | 6,774 | | | | 0 | | | | 632 | | | | 1,590 | | | | 7,406 | | | | 8,996 | | | | (2,229 | ) | | 1982 | | 5/5/2015 | | 7 to 20 Years |
| | Chelsea, MI | | (b) | | | 858 | | | | 1,999 | | | | 0 | | | | 0 | | | | 858 | | | | 1,999 | | | | 2,857 | | | | (213 | ) | | 1975 | | 6/17/2019 | | 6 to 21 Years |
| | Spring Arbor, MI | | (b) | | | 338 | | | | 1,385 | | | | 0 | | | | 0 | | | | 338 | | | | 1,385 | | | | 1,723 | | | | (115 | ) | | 2001 | | 6/17/2019 | | 6 to 25 Years |
| | Chelsea, MI | | (b) | | | 1,215 | | | | 6,321 | | | | 0 | | | | 0 | | | | 1,215 | | | | 6,321 | | | | 7,536 | | | | (531 | ) | | 1990 | | 6/17/2019 | | 8 to 22 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Life Time Fitness | Reston, VA | | (d) | | 9,259 |
| | 21,308 |
| | — |
| | — |
| | 9,259 |
| | 21,308 |
| �� | 30,567 |
| | (318 | ) | | 2003 | | 08/30/18 | | 6 to 40 Years |
| Life Time Fitness | Mansfield, TX | | (d) | | 3,999 |
| | 19,432 |
| | — |
| | — |
| | 3,999 |
| | 19,432 |
| | 23,431 |
| | (283 | ) | | 2008 | | 08/30/18 | | 7 to 39 Years |
| Life Time Fitness | Canton, MI | | (d) | | 4,674 |
| | 18,514 |
| | — |
| | — |
| | 4,674 |
| | 18,514 |
| | 23,188 |
| | (322 | ) | | 2002 | | 08/30/18 | | 6 to 33 Years |
| Life Time Fitness | Collierville, TN | | (d) | | 5,101 |
| | 18,546 |
| | — |
| | — |
| | 5,101 |
| | 18,546 |
| | 23,647 |
| | (255 | ) | | 2009 | | 08/30/18 | | 7 to 44 Years |
| Life Time Fitness | Deerfield Township, OH | | (d) | | 9,259 |
| | 12,262 |
| | — |
| | — |
| | 9,259 |
| | 12,262 |
| | 21,521 |
| | (287 | ) | | 2007 | | 08/30/18 | | 8 to 32 Years |
| Logan's Roadhouse | Johnson City, TN | | (d) | | 1,331 |
| | 2,304 |
| | — |
| | — |
| | 1,331 |
| | 2,304 |
| | 3,635 |
| | (603 | ) | | 1996 | | 07/17/13 | | 12 to 30 Years |
| Logan's Roadhouse | Trussville, AL | | (c) | | 1,222 |
| | 1,770 |
| | (1,029 | ) | | (1,499 | ) | | 193 |
| | 271 |
| | 464 |
| | (26 | ) | | 2007 | | 07/17/13 | | 9 to 34 Years |
| Long John Silver's / A&W | Houston, TX | | (b) | | 1,329 |
| | — |
| | — |
| | — |
| | 1,329 |
| | — |
| | 1,329 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Lowe's | Midland, TX | | (d) | | 5,826 |
| | 6,633 |
| | — |
| | 366 |
| | 5,826 |
| | 6,999 |
| | 12,825 |
| | (1,893 | ) | | 1996 | | 07/17/13 | | 2 to 35 Years |
| Lowe's | Lubbock, TX | | (d) | | 2,644 |
| | 10,009 |
| | — |
| | 480 |
| | 2,644 |
| | 10,489 |
| | 13,133 |
| | (2,438 | ) | | 1996 | | 07/17/13 | | 0 to 36 Years |
| Lowe's | Cincinnati, OH | | (d) | | 6,086 |
| | 10,984 |
| | — |
| | 250 |
| | 6,086 |
| | 11,234 |
| | 17,320 |
| | (3,283 | ) | | 1998 | | 07/17/13 | | 4 to 28 Years |
| Lowe's | Chester, NY | | (d) | | 6,432 |
| | — |
| | — |
| | — |
| | 6,432 |
| | — |
| | 6,432 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Lowe's | Tilton, NH | | (d) | | 13,185 |
| | — |
| | — |
| | — |
| | 13,185 |
| | — |
| | 13,185 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Lutheran Health Physicians | Warren, IN | | (d) | | 220 |
| | 278 |
| | 68 |
| | — |
| | 288 |
| | 278 |
| | 566 |
| | (102 | ) | | 2007 | | 08/18/14 | | 4 to 20 Years |
| MAACO | Phoenix, AZ | | (d) | | 834 |
| | 1,206 |
| | — |
| | 87 |
| | 834 |
| | 1,293 |
| | 2,127 |
| | (110 | ) | | 1989 | | 03/31/17 | | 10 to 30 Years |
| MAACO | Kingman, AZ | | (d) | | 265 |
| | 588 |
| | — |
| | — |
| | 265 |
| | 588 |
| | 853 |
| | (62 | ) | | 1977 | | 03/31/17 | | 10 to 30 Years |
| MAACO | Houston, TX | | (d) | | 1,334 |
| | 579 |
| | — |
| | — |
| | 1,334 |
| | 579 |
| | 1,913 |
| | (49 | ) | | 1950 | | 03/31/17 | | 10 to 30 Years |
| MAACO | Tuscon, AZ | | (d) | | 333 |
| | 1,030 |
| | — |
| | — |
| | 333 |
| | 1,030 |
| | 1,363 |
| | (86 | ) | | 1999 | | 03/31/17 | | 10 to 30 Years |
| MAACO | Dallas, TX | | (d) | | 265 |
| | 814 |
| | — |
| | — |
| | 265 |
| | 814 |
| | 1,079 |
| | (68 | ) | | 1987 | | 03/31/17 | | 10 to 30 Years |
| Main Event | Fort Worth, TX | | (d) | | 2,468 |
| | 5,418 |
| | — |
| | — |
| | 2,468 |
| | 5,418 |
| | 7,886 |
| | (2,086 | ) | | 2003 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Conroe, TX | | (d) | | 2,886 |
| | 5,763 |
| | — |
| | — |
| | 2,886 |
| | 5,763 |
| | 8,649 |
| | (2,203 | ) | | 2004 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Austin, TX | | (d) | | 4,425 |
| | 8,142 |
| | — |
| | — |
| | 4,425 |
| | 8,142 |
| | 12,567 |
| | (3,303 | ) | | 2005 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Lewisville, TX | | (d) | | 2,130 |
| | 4,630 |
| | — |
| | — |
| | 2,130 |
| | 4,630 |
| | 6,760 |
| | (1,809 | ) | | 1998 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Grapevine, TX | | (d) | | 2,554 |
| | 5,377 |
| | — |
| | — |
| | 2,554 |
| | 5,377 |
| | 7,931 |
| | (2,091 | ) | | 2000 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Plano, TX | | (d) | | 3,225 |
| | 6,302 |
| | — |
| | — |
| | 3,225 |
| | 6,302 |
| | 9,527 |
| | (2,388 | ) | | 2001 | | 09/30/05 | | 15 to 40 Years |
| Main Event | Pittsburgh, PA | | (d) | | 3,099 |
| | 5,285 |
| | — |
| | 2,002 |
| | 3,099 |
| | 7,287 |
| | 10,386 |
| | (369 | ) | | 2003 | | 07/07/17 | | 10 to 40 Years |
| Malibu Boats | Merced, CA | | (d) | | 3,456 |
| | 9,007 |
| | — |
| | — |
| | 3,456 |
| | 9,007 |
| | 12,463 |
| | (3,738 | ) | | 1998 | | 03/31/08 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Malibu Boats | Loudon, TN | | (d) | | 1,188 |
| | 4,904 |
| | — |
| | — |
| | 1,188 |
| | 4,904 |
| | 6,092 |
| | (2,374 | ) | | 1992 | | 03/31/08 | | 15 to 30 Years |
| Mattress Firm | Columbia, SC | | (d) | | 596 |
| | 872 |
| | — |
| | 216 |
| | 596 |
| | 1,088 |
| | 1,684 |
| | (253 | ) | | 1998 | | 07/17/13 | | 0 to 45 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Havana Farm and Home Supply | | Havana, IL | | (b) | | | 526 | | | | 813 | | | | 0 | | | | 94 | | | | 526 | | | | 907 | | | | 1,433 | | | | (577 | ) | | 2000 | | 5/31/2006 | | 15 to 30 Years |
Health Point Family Medicine | | Franklin, TX | | (b) | | | 159 | | | | 1,124 | | | | 0 | | | | 29 | | | | 159 | | | | 1,153 | | | | 1,312 | | | | (273 | ) | | 2012 | | 8/18/2014 | | 4 to 40 Years |
| | Douglasville, GA | | (b) | | | 2,612 | | | | 4,840 | | | | 0 | | | | 99 | | | | 2,612 | | | | 4,939 | | | | 7,551 | | | | (2,233 | ) | | 2006 | | 7/17/2013 | | 4 to 39 Years |
| | Lakewood, CO | | (a) | | | 3,822 | | | | 0 | | | | 0 | | | | 0 | | | | 3,822 | | | | 0 | | | | 3,822 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| | Colma, CA | | (b) | | | 21,065 | | | | 13,597 | | | | 0 | | | | 481 | | | | 21,065 | | | | 14,078 | | | | 35,143 | | | | (4,020 | ) | | 1995 | | 7/17/2013 | | 2 to 33 Years |
| | Memphis, TN | | (b) | | | 3,777 | | | | 10,303 | | | | 0 | | | | 43 | | | | 3,777 | | | | 10,346 | | | | 14,123 | | | | (1,782 | ) | | 1996 | | 2/28/2017 | | 9 to 30 Years |
| | Highland Heights, OH | | (b) | | | 4,897 | | | | 11,272 | | | | 0 | | | | 43 | | | | 4,897 | | | | 11,315 | | | | 16,212 | | | | (1,942 | ) | | 1995 | | 2/21/2017 | | 3 to 30 Years |
| | Tempe, AZ | | (b) | | | 7,417 | | | | 9,795 | | | | 0 | | | | 173 | | | | 7,417 | | | | 9,968 | | | | 17,385 | | | | (2,162 | ) | | 1978 | | 5/12/2017 | | 10 to 30 Years |
| | Broadview, IL | | (b) | | | 4,904 | | | | 7,316 | | | | 0 | | | | 0 | | | | 4,904 | | | | 7,316 | | | | 12,220 | | | | (2,828 | ) | | 1994 | | 7/17/2013 | | 9 t o 30 Years |
| | Bedford Park, IL | | (a) | | | 10,242 | | | | 11,839 | | | | 0 | | | | 0 | | | | 10,242 | | | | 11,839 | | | | 22,081 | | | | (5,978 | ) | | 1993 | | 7/17/2013 | | 7 to 20 Years |
| | Bethany, MO | | (b) | | | 648 | | | | 379 | | | | 0 | | | | 0 | | | | 648 | | | | 379 | | | | 1,027 | | | | (455 | ) | | 1974 | | 5/31/2006 | | 15 to 20 Years |
| | Greece, NY | | (b) | | | 1,419 | | | | 20,548 | | | | 0 | | | | (11,004 | ) | | | 1,419 | | | | 9,544 | | | | 10,963 | | | | (1,014 | ) | | 1989 | | 8/2/2017 | | 10 to 40 Years |
| | Columbus, OH | | (b) | | | 3,154 | | | | 19,715 | | | | 0 | | | | 12,816 | | | | 3,154 | | | | 32,531 | | | | 35,685 | | | | (4,748 | ) | | 1989 | | 8/2/2017 | | 5 to 30 Years |
| | Manteca, CA | | (b) | | | 796 | | | | 2,062 | | | | 0 | | | | 2,244 | | | | 796 | | | | 4,306 | | | | 5,102 | | | | (604 | ) | | 2001 | | 9/4/2015 | | 15 to 30 Years |
| | Modesto, CA | | (b) | | | 2,350 | | | | 5,923 | | | | 0 | | | | 0 | | | | 2,350 | | | | 5,923 | | | | 8,273 | | | | (1,697 | ) | | 1964 | | 12/5/2014 | | 10 to 30 Years |
| | Fargo, ND | | (b) | | | 3,006 | | | | 184 | | | | 0 | | | | 0 | | | | 3,006 | | | | 184 | | | | 3,190 | | | | (47 | ) | | 2012 | | 9/11/2018 | | 11 to 22 Years |
| | Springfield, NE | | (b) | | | 6,801 | | | | 1,102 | | | | 0 | | | | 0 | | | | 6,801 | | | | 1,102 | | | | 7,903 | | | | (727 | ) | | 2012 | | 3/5/2020 | | 7 to 32 Years |
| | Lennox, SD | | (b) | | | 5,934 | | | | 1,876 | | | | 0 | | | | 0 | | | | 5,934 | | | | 1,876 | | | | 7,810 | | | | (43 | ) | | 2020 | | 11/30/2020 | | 9 to 35 Years |
| | New Castle, PA | | (b) | | | 1,084 | | | | 5,507 | | | | 0 | | | | 0 | | | | 1,084 | | | | 5,507 | | | | 6,591 | | | | (2,087 | ) | | 1999 | | 7/17/2013 | | 8 to 26 Years |
| | Tilton, NH | | (a) | | | 7,420 | | | | 19,608 | | | | 0 | | | | 0 | | | | 7,420 | | | | 19,608 | | | | 27,028 | | | | (9,256 | ) | | 1998 | | 7/17/2013 | | 8 to 25 Years |
| | Sarasota, FL | | (b) | | | 386 | | | | 312 | | | | 0 | | | | 141 | | | | 386 | | | | 453 | | | | 839 | | | | (223 | ) | | 1987 | | 3/19/2013 | | 10 to 30 Years |
| | Largo, FL | | (b) | | | 416 | | | | 493 | | | | 0 | | | | 111 | | | | 416 | | | | 604 | | | | 1,020 | | | | (262 | ) | | 1989 | | 3/19/2013 | | 10 to 30 Years |
| | Bonita Springs, FL | | (b) | | | 582 | | | | 312 | | | | 0 | | | | 101 | | | | 582 | | | | 413 | | | | 995 | | | | (205 | ) | | 1990 | | 3/19/2013 | | 10 to 30 Years |
| | Clearwater, FL | | (b) | | | 463 | | | | 443 | | | | 0 | | | | 131 | | | | 463 | | | | 574 | | | | 1,037 | | | | (258 | ) | | 1989 | | 3/19/2013 | | 10 to 30 Years |
| | Naples, FL | | (b) | | | 333 | | | | 302 | | | | 0 | | | | 121 | | | | 333 | | | | 423 | | | | 756 | | | | (198 | ) | | 1990 | | 3/19/2013 | | 10 to 30 Years |
| | Sarasota, FL | | (b) | | | 278 | | | | 312 | | | | 0 | | | | 131 | | | | 278 | | | | 443 | | | | 721 | | | | (201 | ) | | 1987 | | 3/19/2013 | | 10 to 30 Years |
| | Bradenton, FL | | (b) | | | 594 | | | | 493 | | | | 0 | | | | 222 | | | | 594 | | | | 715 | | | | 1,309 | | | | (367 | ) | | 1988 | | 3/19/2013 | | 10 to 30 Years |
| | Fort Myers, FL | | (b) | | | 555 | | | | 312 | | | | 0 | | | | 131 | | | | 555 | | | | 443 | | | | 998 | | | | (230 | ) | | 1990 | | 3/19/2013 | | 10 to 30 Years |
| | Reading, PA | | (b) | | | 449 | | | | 3,222 | | | | 0 | | | | 0 | | | | 449 | | | | 3,222 | | | | 3,671 | | | | (615 | ) | | 1998 | | 7/17/2013 | | 8 to 40 Years |
| | Alpharetta, GA | | (b) | | | 2,819 | | | | 3,139 | | | | 0 | | | | 0 | | | | 2,819 | | | | 3,139 | | | | 5,958 | | | | (792 | ) | | 2000 | | 7/17/2013 | | 5 to 43 Years |
| | Independence, MO | | (a) | | | 2,157 | | | | 2,597 | | | | 0 | | | | 0 | | | | 2,157 | | | | 2,597 | | | | 4,754 | | | | (1,375 | ) | | 1999 | | 7/17/2013 | | 7 to 21 Years |
| | Colorado Springs, CO | | (b) | | | 882 | | | | 612 | | | | 0 | | | | 0 | | | | 882 | | | | 612 | | | | 1,494 | | | | (54 | ) | | 1989 | | 11/25/2019 | | 3 to 20 Years |
| | Milan, IL | | (b) | | | 161 | | | | 533 | | | | 0 | | | | 0 | | | | 161 | | | | 533 | | | | 694 | | | | (189 | ) | | 1997 | | 10/3/2011 | | 15 to 30 Years |
| | Davenport, IA | | (b) | | | 441 | | | | 646 | | | | 0 | | | | 0 | | | | 441 | | | | 646 | | | | 1,087 | | | | (291 | ) | | 2002 | | 10/3/2011 | | 15 to 30 Years |
| | Independence, MO | | (b) | | | 396 | | | | 1,074 | | | | 0 | | | | 0 | | | | 396 | | | | 1,074 | | | | 1,470 | | | | (422 | ) | | 1984 | | 10/3/2011 | | 15 to 30 Years |
| | Kansas City, KS | | (b) | | | 594 | | | | 904 | | | | 0 | | | | 0 | | | | 594 | | | | 904 | | | | 1,498 | | | | (376 | ) | | 1999 | | 10/3/2011 | | 15 to 30 Years |
| | La Vista, NE | | (b) | | | 499 | | | | 664 | | | | 0 | | | | 0 | | | | 499 | | | | 664 | | | | 1,163 | | | | (254 | ) | | 1992 | | 10/3/2011 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Memphis Contract Packaging | Somerville, TN | | (d) | | 345 |
| | 537 |
| | — |
| | 12 |
| | 345 |
| | 549 |
| | 894 |
| | (360 | ) | | 2000 | | 05/31/06 | | 15 to 30 Years |
| Milo's | Gardendale, AL | | (b) | | 438 |
| | 841 |
| | — |
| | 55 |
| | 438 |
| | 896 |
| | 1,334 |
| | (232 | ) | | 1996 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Bessemer, AL | | (b) | | 622 |
| | 983 |
| | — |
| | 62 |
| | 622 |
| | 1,045 |
| | 1,667 |
| | (272 | ) | | 2002 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Birmingham, AL | | (b) | | 512 |
| | 983 |
| | — |
| | 63 |
| | 512 |
| | 1,046 |
| | 1,558 |
| | (273 | ) | | 2002 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Birmingham, AL | | (b) | | 321 |
| | 740 |
| | — |
| | 48 |
| | 321 |
| | 788 |
| | 1,109 |
| | (202 | ) | | 1977 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Moody, AL | | (b) | | 518 |
| | 800 |
| | — |
| | 56 |
| | 518 |
| | 856 |
| | 1,374 |
| | (231 | ) | | 1997 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Pelham, AL | | (b) | | 605 |
| | 923 |
| | — |
| | 54 |
| | 605 |
| | 977 |
| | 1,582 |
| | (257 | ) | | 1998 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Trussville, AL | | (b) | | 909 |
| | 892 |
| | — |
| | 55 |
| | 909 |
| | 947 |
| | 1,856 |
| | (282 | ) | | 2000 | | 03/29/13 | | 8 to 29 Years |
| Milo's | Calera, AL | | (b) | | 560 |
| | 912 |
| | — |
| | 82 |
| | 560 |
| | 994 |
| | 1,554 |
| | (278 | ) | | 2008 | | 03/29/13 | | 8 to 29 Years |
| Missoula Fresh Market | Missoula, MT | | (d) | | 2,510 |
| | 4,714 |
| | — |
| | — |
| | 2,510 |
| | 4,714 |
| | 7,224 |
| | (723 | ) | | 1999 | | 03/11/15 | | 15 to 30 Years |
| Missoula Fresh Market | Missoula, MT | | (d) | | 3,008 |
| | 5,168 |
| | — |
| | — |
| | 3,008 |
| | 5,168 |
| | 8,176 |
| | (765 | ) | | 2008 | | 03/12/15 | | 15 to 30 Years |
| Mister Car Wash | Meridian, ID | | (b) | | 1,923 |
| | 2,170 |
| | 536 |
| | 20 |
| | 2,459 |
| | 2,190 |
| | 4,649 |
| | (796 | ) | | 2006 | | 05/15/13 | | 15 to 30 Years |
| Mister Car Wash | Boise, ID | | (b) | | 2,155 |
| | 2,488 |
| | — |
| | — |
| | 2,155 |
| | 2,488 |
| | 4,643 |
| | (852 | ) | | 2004 | | 05/15/13 | | 15 to 30 Years |
| Mister Car Wash | Boise, ID | | (b) | | 217 |
| | — |
| | — |
| | — |
| | 217 |
| | — |
| | 217 |
| | (11 | ) | | (f) | | 05/15/13 | | (f) |
| Mister Car Wash | Nampa, ID | | (b) | | 3,240 |
| | 2,343 |
| | — |
| | — |
| | 3,240 |
| | 2,343 |
| | 5,583 |
| | (923 | ) | | 2010 | | 05/15/13 | | 15 to 30 Years |
| Mister Car Wash | Millersville, MD | | (d) | | 2,250 |
| | 1,636 |
| | — |
| | — |
| | 2,250 |
| | 1,636 |
| | 3,886 |
| | (297 | ) | | 2007 | | 01/21/15 | | 15 to 30 Years |
| Mister Car Wash | Edgewater, MD | | (d) | | 4,720 |
| | 1,460 |
| | — |
| | — |
| | 4,720 |
| | 1,460 |
| | 6,180 |
| | (331 | ) | | 2005 | | 01/21/15 | | 15 to 30 Years |
| Mister Car Wash | Abilene, TX | | (d) | | 2,733 |
| | 3,080 |
| | — |
| | — |
| | 2,733 |
| | 3,080 |
| | 5,813 |
| | (526 | ) | | 1993 | | 04/07/15 | | 15 to 30 Years |
| Mister Car Wash | Madison, WI | | (d) | | 564 |
| | 1,623 |
| | — |
| | — |
| | 564 |
| | 1,623 |
| | 2,187 |
| | (214 | ) | | 1956 | | 06/30/15 | | 15 to 30 Years |
| Mister Car Wash | Madison, WI | | (d) | | 611 |
| | 1,775 |
| | — |
| | — |
| | 611 |
| | 1,775 |
| | 2,386 |
| | (278 | ) | | 1958 | | 06/30/15 | | 15 to 30 Years |
| Mister Car Wash | Madison, WI | | (d) | | 905 |
| | 2,728 |
| | — |
| | — |
| | 905 |
| | 2,728 |
| | 3,633 |
| | (390 | ) | | 1961 | | 06/30/15 | | 15 to 30 Years |
| Mister Car Wash | Rockford, IL | | (d) | | 705 |
| | 2,669 |
| | — |
| | — |
| | 705 |
| | 2,669 |
| | 3,374 |
| | (353 | ) | | 1959 | | 06/30/15 | | 15 to 30 Years |
| Mister Car Wash | Round Rock, TX | | (d) | | 1,167 |
| | 1,549 |
| | — |
| | — |
| | 1,167 |
| | 1,549 |
| | 2,716 |
| | (270 | ) | | 2009 | | 05/07/15 | | 15 to 30 Years |
| Mister Car Wash | Orlando, FL | | (d) | | 2,709 |
| | 2,728 |
| | — |
| | 45 |
| | 2,709 |
| | 2,773 |
| | 5,482 |
| | (389 | ) | | 2001 | | 02/09/16 | | 13 to 30 Years |
| Mister Car Wash | Orlando, FL | | (d) | | 1,629 |
| | 1,895 |
| | — |
| | — |
| | 1,629 |
| | 1,895 |
| | 3,524 |
| | (286 | ) | | 2005 | | 02/09/16 | | 13 to 30 Years |
| Mister Car Wash | Casselberry, FL | | (d) | | 1,042 |
| | 2,406 |
| | — |
| | — |
| | 1,042 |
| | 2,406 |
| | 3,448 |
| | (298 | ) | | 1988 | | 02/09/16 | | 13 to 30 Years |
| Mister Car Wash | Ocoee, FL | | (d) | | 2,128 |
| | 1,775 |
| | — |
| | 18 |
| | 2,128 |
| | 1,793 |
| | 3,921 |
| | (239 | ) | | 2009 | | 05/03/16 | | 17 to 30 Years |
| Mister Car Wash | Saint Paul, MN | | (d) | | 5,274 |
| | 136 |
| | — |
| | 67 |
| | 5,274 |
| | 203 |
| | 5,477 |
| | (814 | ) | | 1966 | | 12/13/16 | | 12 to 30 Years |
| Mojo Grill | Leesburg, FL | | (d) | | 619 |
| | 236 |
| | — |
| | — |
| | 619 |
| | 236 |
| | 855 |
| | (4 | ) | | 1996 | | 10/26/18 | | 8 to 23 Years |
| Multi-tenant | Littleton, CO | | (d) | | 7,839 |
| | 9,299 |
| | — |
| | — |
| | 7,839 |
| | 9,299 |
| | 17,138 |
| | (4,369 | ) | | 1991 | | 07/17/13 | | 5 to 17 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Calhoun, GA | | (b) | | | 503 | | | | 713 | | | | 0 | | | | 0 | | | | 503 | | | | 713 | | | | 1,216 | | | | (270 | ) | | 1988 | | 2/2/2012 | | 15 to 30 Years |
| | Covington, GA | | (b) | | | 526 | | | | 665 | | | | 0 | | | | 0 | | | | 526 | | | | 665 | | | | 1,191 | | | | (238 | ) | | 2001 | | 2/2/2012 | | 15 to 30 Years |
| | Decatur, GA | | (b) | | | 677 | | | | 539 | | | | 0 | | | | 0 | | | | 677 | | | | 539 | | | | 1,216 | | | | (199 | ) | | 1989 | | 2/2/2012 | | 15 to 30 Years |
| | Hampton, GA | | (b) | | | 568 | | | | 648 | | | | 0 | | | | 0 | | | | 568 | | | | 648 | | | | 1,216 | | | | (233 | ) | | 2002 | | 2/2/2012 | | 15 to 30 Years |
| | Jackson, GA | | (b) | | | 467 | | | | 729 | | | | 0 | | | | 0 | | | | 467 | | | | 729 | | | | 1,196 | | | | (306 | ) | | 1992 | | 2/2/2012 | | 15 to 30 Years |
| | Morrow, GA | | (b) | | | 530 | | | | 568 | | | | 0 | | | | 0 | | | | 530 | | | | 568 | | | | 1,098 | | | | (181 | ) | | 2006 | | 2/2/2012 | | 15 to 40 Years |
| | Stockbridge, GA | | (b) | | | 388 | | | | 353 | | | | 0 | | | | 0 | | | | 388 | | | | 353 | | | | 741 | | | | (132 | ) | | 2001 | | 2/2/2012 | | 15 to 30 Years |
| | Stone Mountain, GA | | (b) | | | 379 | | | | 487 | | | | 0 | | | | 0 | | | | 379 | | | | 487 | | | | 866 | | | | (173 | ) | | 1986 | | 2/2/2012 | | 15 to 30 Years |
| | Roswell, GA | | (b) | | | 755 | | | | 683 | | | | 0 | | | | 0 | | | | 755 | | | | 683 | | | | 1,438 | | | | (47 | ) | | 2006 | | 11/25/2019 | | 10 to 22 Years |
| | Kingston, PA | | (b) | | | 521 | | | | 635 | | | | 0 | | | | 0 | | | | 521 | | | | 635 | | | | 1,156 | | | | (163 | ) | | 1978 | | 11/18/2014 | | 15 to 30 Years |
| | Bloomsburg, PA | | (b) | | | 698 | | | | 823 | | | | 0 | | | | 0 | | | | 698 | | | | 823 | | | | 1,521 | | | | (234 | ) | | 1993 | | 11/18/2014 | | 15 to 30 Years |
| | Williamsport, PA | | (b) | | | 864 | | | | 979 | | | | 0 | | | | 0 | | | | 864 | | | | 979 | | | | 1,843 | | | | (253 | ) | | 1966 | | 11/18/2014 | | 15 to 30 Years |
| | O’Fallon, MO | | (b) | | | 539 | | | | 380 | | | | 265 | | | | (55 | ) | | | 804 | | | | 325 | | | | 1,129 | | | | 0 | | | 2016 | | 12/23/2020 | | 12 to 32 Years |
King’s Daughters Medical Center | | Grayson, KY | | (b) | | | 658 | | | | 3,171 | | | | — | | | | 0 | | | | 658 | | | | 3,171 | | | | 3,829 | | | | (752 | ) | | 2013 | | 8/18/2014 | | 9 to 40 Years |
| | San Antonio, TX | | (b) | | | 1,324 | | | | 1,837 | | | | 0 | | | | 0 | | | | 1,324 | | | | 1,837 | | | | 3,161 | | | | (53 | ) | | 2004 | | 5/7/2020 | | 8 to 30 Years |
| | San Antonio, TX | | (b) | | | 2,764 | | | | 7,268 | | | | 0 | | | | 0 | | | | 2,764 | | | | 7,268 | | | | 10,032 | | | | (181 | ) | | 2007 | | 5/7/2020 | | 8 to 29 Years |
| | Wichita, KS | | (b) | | | 2,163 | | | | 7,036 | | | | 0 | | | | 242 | | | | 2,163 | | | | 7,278 | | | | 9,441 | | | | (2,223 | ) | | 1996 | | 7/17/2013 | | 8 to 36 Years |
| | Lake Zurich, IL | | (b) | | | 4,860 | | | | 6,935 | | | | 0 | | | | 0 | | | | 4,860 | | | | 6,935 | | | | 11,795 | | | | (2,767 | ) | | 2000 | | 7/17/2013 | | 7 to 32 Years |
| | Grand Forks, ND | | (b) | | | 1,516 | | | | 10,008 | | | | 0 | | | | 0 | | | | 1,516 | | | | 10,008 | | | | 11,524 | | | | (2,134 | ) | | 2006 | | 7/17/2013 | | 9 to 46 Years |
| | Tilton, NH | | (b) | | | 3,959 | | | | 0 | | | | 0 | | | | 0 | | | | 3,959 | | | | 0 | | | | 3,959 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| | Olathe, KS | | (b) | | | 3,505 | | | | 5,847 | | | | 0 | | | | 322 | | | | 3,505 | | | | 6,169 | | | | 9,674 | | | | (2,197 | ) | | 1995 | | 7/17/2013 | | 9 to 35 Years |
| | Sherwood, AR | | (b) | | | 2,300 | | | | 5,995 | | | | 0 | | | | 0 | | | | 2,300 | | | | 5,995 | | | | 8,295 | | | | (1,815 | ) | | 2003 | | 2/23/2015 | | 8 to 30 Years |
| | Gilbert, AZ | | (b) | | | 4,936 | | | | 4,318 | | | | 0 | | | | 2 | | | | 4,936 | | | | 4,320 | | | | 9,256 | | | | (757 | ) | | 2004 | | 8/6/2018 | | 5 to 24 Years |
| | Findlay, OH | | (b) | | | 2,030 | | | | 4,971 | | | | 0 | | | | 0 | | | | 2,030 | | | | 4,971 | | | | 7,001 | | | | (458 | ) | | 1995 | | 6/19/2019 | | 5 to 26 Years |
| | Noblesville, IN | | (b) | | | 1,674 | | | | 5,073 | | | | 0 | | | | 0 | | | | 1,674 | | | | 5,073 | | | | 6,747 | | | | (397 | ) | | 2002 | | 9/20/2019 | | 6 to 25 Years |
| | Chillicothe, OH | | (b) | | | 1,118 | | | | 4,922 | | | | 200 | | | | 0 | | | | 1,318 | | | | 4,922 | | | | 6,240 | | | | (350 | ) | | 2002 | | 9/20/2019 | | 5 to 24 Years |
| | Dayton, OH | | (b) | | | 3,468 | | | | 4,582 | | | | 0 | | | | 0 | | | | 3,468 | | | | 4,582 | | | | 8,050 | | | | (412 | ) | | 1994 | | 9/20/2019 | | 5 to 20 Years |
| | Lansing, MI | | (b) | | | 3,484 | | | | 3,826 | | | | 0 | | | | 0 | | | | 3,484 | | | | 3,826 | | | | 7,310 | | | | 0 | | | 1999 | | 12/18/2020 | | 6 to 23 Years |
| | LaGrange, GA | | (a) | | | 972 | | | | 8,435 | | | | 0 | | | | 0 | | | | 972 | | | | 8,435 | | | | 9,407 | | | | (2,902 | ) | | 1998 | | 7/17/2013 | | 4 to 25 Years |
| | Brooklyn Park, MN | | (b) | | | 3,176 | | | | 7,771 | | | | 0 | | | | 0 | | | | 3,176 | | | | 7,771 | | | | 10,947 | | | | (2,357 | ) | | 2008 | | 7/17/2013 | | 10 to 35 Years |
| | Matteson, IL | | (b) | | | 4,587 | | | | 6,328 | | | | 244 | | | | 0 | | | | 4,831 | | | | 6,328 | | | | 11,159 | | | | (2,032 | ) | | 2007 | | 7/17/2013 | | 5 to 34 Years |
| | Greenwood, IN | | (a) | | | 1,973 | | | | 9,764 | | | | 40 | | | | 0 | | | | 2,013 | | | | 9,764 | | | | 11,777 | | | | (2,190 | ) | | 2007 | | 7/17/2013 | | 5 to 42 Years |
| | League City, TX | | (a) | | | 2,514 | | | | 6,767 | | | | 0 | | | | 0 | | | | 2,514 | | | | 6,767 | | | | 9,281 | | | | (1,676 | ) | | 2008 | | 7/17/2013 | | 10 to 42 Years |
| | Naperville, IL | | (a) | | | 5,015 | | | | 6,946 | | | | 0 | | | | 0 | | | | 5,015 | | | | 6,946 | | | | 11,961 | | | | (1,926 | ) | | 2007 | | 7/17/2013 | | 9 to 38 Years |
| | West Chester, OH | | (b) | | | 606 | | | | 9,832 | | | | 0 | | | | 0 | | | | 606 | | | | 9,832 | | | | 10,438 | | | | (1,934 | ) | | 2009 | | 7/17/2013 | | 7 to 43 Years |
| | Fort Washington, PA | | (b) | | | 2,120 | | | | 5,963 | | | | 0 | | | | 0 | | | | 2,120 | | | | 5,963 | | | | 8,083 | | | | (503 | ) | | 2003 | | 6/26/2019 | | 9 to 34 Years |
| | Clinton Township, MI | | (b) | | | 3,894 | | | | 4,957 | | | | 0 | | | | 13 | | | | 3,894 | | | | 4,970 | | | | 8,864 | | | | (322 | ) | | 1999 | | 11/25/2019 | | 8 to 38 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Multi-tenant | Lakewood, OH | | (d) | | 522 |
| | 2,053 |
| | — |
| | — |
| | 522 |
| | 2,053 |
| | 2,575 |
| | (387 | ) | | 1996 | | 07/17/13 | | 3 to 35 Years |
| Multi-tenant | Topeka, KS | | (d) | | 542 |
| | 2,251 |
| | — |
| | — |
| | 542 |
| | 2,251 |
| | 2,793 |
| | (334 | ) | | 2006 | | 07/17/13 | | 3 to 48 Years |
| Multi-tenant | Victoria, TX | | (d) | | 2,631 |
| | 7,710 |
| | — |
| | 20 |
| | 2,631 |
| | 7,730 |
| | 10,361 |
| | (1,760 | ) | | 2006 | | 07/17/13 | | 3 to 43 Years |
| Multi-tenant | Dallas, TX | | (d) | | 3,975 |
| | — |
| | — |
| | — |
| | 3,975 |
| | — |
| | 3,975 |
| | — |
| | (f) | | 07/17/13 | | (f) |
| Multi-tenant | Collierville, TN | | (d) | | 2,217 |
| | 14,205 |
| | — |
| | 8 |
| | 2,217 |
| | 14,213 |
| | 16,430 |
| | (2,650 | ) | | 2002 | | 07/17/13 | | 3 to 45 Years |
| Multi-tenant | Maple Shade, NJ | | (d) | | 1,942 |
| | 3,792 |
| | 371 |
| | — |
| | 2,313 |
| | 3,792 |
| | 6,105 |
| | (1,487 | ) | | 1998 | | 07/17/13 | | 3 to 25 Years |
| Multi-tenant | Broadview, IL | | (d) | | 12,392 |
| | 32,193 |
| | — |
| | 1,225 |
| | 12,392 |
| | 33,418 |
| | 45,810 |
| | (8,574 | ) | | 1994 | | 07/17/13 | | 2 to 30 Years |
| Multi-tenant | Bedford Park, IL | | (c) | | 10,242 |
| | 11,839 |
| | — |
| | — |
| | 10,242 |
| | 11,839 |
| | 22,081 |
| | (4,366 | ) | | 1993 | | 07/17/13 | | 7 to 20 Years |
| Multi-tenant | Whiteville, NC | | (d) | | 1,119 |
| | 1,676 |
| | — |
| | — |
| | 1,119 |
| | 1,676 |
| | 2,795 |
| | (886 | ) | | 1988 | | 07/17/13 | | 7 to 30 Years |
| Multi-tenant | Kennesaw, GA | | (d) | | 3,560 |
| | 23,583 |
| | — |
| | 33 |
| | 3,560 |
| | 23,616 |
| | 27,176 |
| | (3,626 | ) | | 1996 | | 07/17/13 | | 8 to 45 Years |
| Multi-tenant | Alcoa, TN | | (d) | | 918 |
| | 3,170 |
| | — |
| | — |
| | 918 |
| | 3,170 |
| | 4,088 |
| | (554 | ) | | 1999 | | 07/17/13 | | 8 to 40 Years |
| Multi-tenant | Bridgeton, MO | | (d) | | 11,464 |
| | 9,907 |
| | — |
| | — |
| | 11,464 |
| | 9,907 |
| | 21,371 |
| | (4,046 | ) | | 1991 | | 07/17/13 | | 7 to 25 Years |
| Multi-tenant | Staunton, VA | | (d) | | 578 |
| | 2,063 |
| | — |
| | 358 |
| | 578 |
| | 2,421 |
| | 2,999 |
| | (899 | ) | | 1988 | | 07/17/13 | | 5 to 20 Years |
| Multi-tenant | Independence, MO | | (c) | | 2,157 |
| | 2,597 |
| | — |
| | — |
| | 2,157 |
| | 2,597 |
| | 4,754 |
| | (1,004 | ) | | 1999 | | 07/17/13 | | 7 to 21 Years |
| Multi-tenant | Douglasville, GA | | (d) | | 2,612 |
| | 4,840 |
| | — |
| | 87 |
| | 2,612 |
| | 4,927 |
| | 7,539 |
| | (1,653 | ) | | 2006 | | 07/17/13 | | 4 to 39 Years |
| Multi-tenant | Collierville, TN | | (d) | | 1,114 |
| | 6,726 |
| | — |
| | — |
| | 1,114 |
| | 6,726 |
| | 7,840 |
| | (1,597 | ) | | 2002 | | 07/17/13 | | 9 to 49 Years |
| Multi-tenant | Fountain Valley, CA | | (d) | | 9,470 |
| | 13,326 |
| | — |
| | — |
| | 9,470 |
| | 13,326 |
| | 22,796 |
| | (2,322 | ) | | 1968 | | 12/30/14 | | 11 to 30 Years |
| Multi-tenant | Louisville, KY | | (d) | | 2,205 |
| | 3,551 |
| | — |
| | — |
| | 2,205 |
| | 3,551 |
| | 5,756 |
| | (757 | ) | | 1995 | | 11/02/15 | | 9 to 20 Years |
| Multi-tenant | Salt Lake City, UT | | (d) | | 4,955 |
| | 18,250 |
| | (3,205 | ) | | (11,738 | ) | | 1,750 |
| | 6,512 |
| | 8,262 |
| | (2,162 | ) | | 1989 | | 07/17/13 | | 3 to 40 Years |
| Multi-tenant | Bay City, TX | | (d) | | 1,192 |
| | 3,249 |
| | — |
| | (9 | ) | | 1,192 |
| | 3,240 |
| | 4,432 |
| | (1,371 | ) | | 1990 | | 07/17/13 | | 7 to 20 Years |
| Multi-tenant | Bethany, MO | | (d) | | 648 |
| | 379 |
| | — |
| | — |
| | 648 |
| | 379 |
| | 1,027 |
| | (387 | ) | | 1974 | | 05/31/06 | | 15 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NextCare Urgent Care | Round Rock, TX | | (d) | | 271 |
| | 728 |
| | — |
| | — |
| | 271 |
| | 728 |
| | 999 |
| | (115 | ) | | 1985 | | 08/18/14 | | 8 to 40 Years |
| Northern Tool & Equipment | Blaine, MN | | (d) | | 1,728 |
| | 3,437 |
| | — |
| | — |
| | 1,728 |
| | 3,437 |
| | 5,165 |
| | (644 | ) | | 2006 | | 07/17/13 | | 8 to 43 Years |
| Office Depot | Dayton, OH | | (d) | | 710 |
| | 2,417 |
| | — |
| | — |
| | 710 |
| | 2,417 |
| | 3,127 |
| | (406 | ) | | 2005 | | 07/17/13 | | 8 to 47 Years |
| Office Depot | Greenville, MS | | (d) | | 583 |
| | 2,315 |
| | — |
| | — |
| | 583 |
| | 2,315 |
| | 2,898 |
| | (454 | ) | | 2000 | | 07/17/13 | | 1 to 35 Years |
| Office Depot | Oxford, MS | | (d) | | 1,625 |
| | 1,024 |
| | — |
| | — |
| | 1,625 |
| | 1,024 |
| | 2,649 |
| | (301 | ) | | 2006 | | 07/17/13 | | 9 to 33 Years |
| Office Depot | Enterprise, AL | | (d) | | 675 |
| | 2,239 |
| | — |
| | — |
| | 675 |
| | 2,239 |
| | 2,914 |
| | (409 | ) | | 2006 | | 07/17/13 | | 8 to 43 Years |
| Office Depot | Benton, AR | | (d) | | 1,236 |
| | 1,926 |
| | — |
| | — |
| | 1,236 |
| | 1,926 |
| | 3,162 |
| | (409 | ) | | 2001 | | 07/17/13 | | 3 to 38 Years |
| Office Depot | Laurel, MS | | (d) | | 401 |
| | 2,164 |
| | — |
| | 300 |
| | 401 |
| | 2,464 |
| | 2,865 |
| | (440 | ) | | 2002 | | 07/17/13 | | 3 to 35 Years |
| Office Depot | Morrisville, NC | | (d) | | 408 |
| | 2,732 |
| | — |
| | — |
| | 408 |
| | 2,732 |
| | 3,140 |
| | (434 | ) | | 2008 | | 07/17/13 | | 11 to 47 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Hemet, CA | | (b) | | | 1,509 | | | | 2,019 | | | | 0 | | | | 0 | | | | 1,509 | | | | 2,019 | | | | 3,528 | | | | (90 | ) | | 1975 | | 9/27/2019 | | 10 to 33 Years |
| | Austin, TX | | (b) | | | 1,334 | | | | 1,030 | | | | 0 | | | | 0 | | | | 1,334 | | | | 1,030 | | | | 2,364 | | | | (51 | ) | | 2009 | | 9/27/2019 | | 15 to 36 Years |
| | San Marcos, TX | | (b) | | | 853 | | | | 595 | | | | 0 | | | | 0 | | | | 853 | | | | 595 | | | | 1,448 | | | | (34 | ) | | 2012 | | 9/27/2019 | | 13 to 34 Years |
| | Moreno Valley, CA | | (b) | | | 639 | | | | 967 | | | | 0 | | | | 0 | | | | 639 | | | | 967 | | | | 1,606 | | | | (46 | ) | | 1987 | | 9/27/2019 | | 13 to 33 Years |
| | Austin, TX | | (b) | | | 1,263 | | | | 613 | | | | 0 | | | | 0 | | | | 1,263 | | | | 613 | | | | 1,876 | | | | (30 | ) | | 2006 | | 9/27/2019 | | 12 to 36 Years |
| | Round Rock, TX | | (b) | | | 1,975 | | | | 1,375 | | | | 0 | | | | 0 | | | | 1,975 | | | | 1,375 | | | | 3,350 | | | | (84 | ) | | 2010 | | 9/27/2019 | | 13 to 37 Years |
| | Glendale, AZ | | (b) | | | 1,395 | | | | 4,242 | | | | 0 | | | | 0 | | | | 1,395 | | | | 4,242 | | | | 5,637 | | | | (1,030 | ) | | 2001 | | 7/17/2013 | | 2 to 45 Years |
| | Newington, CT | | (b) | | | 1,778 | | | | 4,496 | | | | 0 | | | | 0 | | | | 1,778 | | | | 4,496 | | | | 6,274 | | | | (1,001 | ) | | 2006 | | 7/17/2013 | | 8 to 45 Years |
| | Kentwood, MI | | (b) | | | 1,145 | | | | 4,085 | | | | 0 | | | | 850 | | | | 1,145 | | | | 4,935 | | | | 6,080 | | | | (1,025 | ) | | 1987 | | 7/17/2013 | | 4 to 38 Years |
Lee’s Famous Recipe Chicken | | Xenia, OH | | (b) | | | 384 | | | | 288 | | | | 0 | | | | 0 | | | | 384 | | | | 288 | | | | 672 | | | | (105 | ) | | 1985 | | 8/21/2015 | | 15 to 20 Years |
Lee’s Famous Recipe Chicken | | Dayton, OH | | (b) | | | 467 | | | | 237 | | | | 0 | | | | 0 | | | | 467 | | | | 237 | | | | 704 | | | | (85 | ) | | 1984 | | 8/21/2015 | | 15 to 20 Years |
Lee’s Famous Recipe Chicken | | Miamisburg, OH | | (b) | | | 139 | | | | 262 | | | | 0 | | | | 0 | | | | 139 | | | | 262 | | | | 401 | | | | (88 | ) | | 1970 | | 8/21/2015 | | 15 to 20 Years |
Lee’s Famous Recipe Chicken | | Englewood, OH | | (b) | | | 235 | | | | 345 | | | | 0 | | | | 0 | | | | 235 | | | | 345 | | | | 580 | | | | (87 | ) | | 1988 | | 8/21/2015 | | 15 to 30 Years |
Lee’s Famous Recipe Chicken | | Trotwood, OH | | (b) | | | 281 | | | | 220 | | | | 0 | | | | 0 | | | | 281 | | | | 220 | | | | 501 | | | | (90 | ) | | 1971 | | 8/21/2015 | | 15 to 20 Years |
Liberty Oilfield Services | | Gillette, WY | | (b) | | | 1,520 | | | | 4,561 | | | | 0 | | | | 0 | | | | 1,520 | | | | 4,561 | | | | 6,081 | | | | (1,104 | ) | | 2001 | | 12/30/2014 | | 15 to 40 Years |
Liberty Oilfield Services | | Henderson, CO | | (b) | | | 3,240 | | | | 5,720 | | | | 0 | | | | 0 | | | | 3,240 | | | | 5,720 | | | | 8,960 | | | | (1,274 | ) | | 1977 | | 12/30/2014 | | 15 to 50 Years |
| | Reston, VA | | (b) | | | 9,259 | | | | 21,308 | | | | 0 | | | | 0 | | | | 9,259 | | | | 21,308 | | | | 30,567 | | | | (2,229 | ) | | 2003 | | 8/30/2018 | | 6 to 40 Years |
| | Mansfield, TX | | (b) | | | 3,999 | | | | 19,432 | | | | 0 | | | | 0 | | | | 3,999 | | | | 19,432 | | | | 23,431 | | | | (1,980 | ) | | 2008 | | 8/30/2018 | | 7 to 39 Years |
| | Canton, MI | | (b) | | | 4,674 | | | | 18,514 | | | | 0 | | | | 0 | | | | 4,674 | | | | 18,514 | | | | 23,188 | | | | (2,255 | ) | | 2002 | | 8/30/2018 | | 6 to 33 Years |
| | Collierville, TN | | (b) | | | 5,101 | | | | 18,546 | | | | 0 | | | | 0 | | | | 5,101 | | | | 18,546 | | | | 23,647 | | | | (1,789 | ) | | 2009 | | 8/30/2018 | | 7 to 44 Years |
| | Deerfield Township, OH | | (b) | | | 9,259 | | | | 12,262 | | | | 0 | | | | 0 | | | | 9,259 | | | | 12,262 | | | | 21,521 | | | | (2,009 | ) | | 2007 | | 8/30/2018 | | 8 to 32 Years |
| | St. Louis, MO | | (b) | | | 9,054 | | | | 26,952 | | | | 0 | | | | 0 | | | | 9,054 | | | | 26,952 | | | | 36,006 | | | | 0 | | | 2019 | | 12/17/2020 | | 14 to 55 Years |
| | Northbrook, IL | | (b) | | | 10,703 | | | | 29,304 | | | | 0 | | | | 0 | | | | 10,703 | | | | 29,304 | | | | 40,007 | | | | 0 | | | 2019 | | 12/17/2020 | | 15 to 55 Years |
| | Johnson City, TN | | (b) | | | 1,331 | | | | 2,304 | | | | (793 | ) | | | (1,442 | ) | | | 538 | | | | 862 | | | | 1,400 | | | | (40 | ) | | 1996 | | 7/17/2013 | | 5 to 23 Years |
| | Trussville, AL | | (a) | | | 1,222 | | | | 1,770 | | | | (1,029 | ) | | | (1,499 | ) | | | 193 | | | | 271 | | | | 464 | | | | (50 | ) | | 2007 | | 7/17/2013 | | 9 to 34 Years |
| | Houston, TX | | (b) | | | 1,329 | | | | 0 | | | | 0 | | | | 0 | | | | 1,329 | | | | 0 | | | | 1,329 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| | Midland, TX | | (b) | | | 5,826 | | | | 6,633 | | | | 0 | | | | 366 | | | | 5,826 | | | | 6,999 | | | | 12,825 | | | | (2,586 | ) | | 1996 | | 7/17/2013 | | 2 to 35 Years |
| | Lubbock, TX | | (b) | | | 2,644 | | | | 10,009 | | | | 0 | | | | 480 | | | | 2,644 | | | | 10,489 | | | | 13,133 | | | | (3,293 | ) | | 1996 | | 7/17/2013 | | 2 to 36 Years |
| | Cincinnati, OH | | (b) | | | 6,086 | | | | 10,984 | | | | 0 | | | | 250 | | | | 6,086 | | | | 11,234 | | | | 17,320 | | | | (4,498 | ) | | 1998 | | 7/17/2013 | | 4 to 28 Years |
| | Chester, NY | | (b) | | | 6,432 | | | | 0 | | | | 0 | | | | 0 | | | | 6,432 | | | | 0 | | | | 6,432 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
| | Tilton, NH | | (b) | | | 13,185 | | | | 0 | | | | 0 | | | | 0 | | | | 13,185 | | | | 0 | | | | 13,185 | | | | 0 | | | (e) | | 7/17/2013 | | (e) |
Lutheran Health Physicians | | Warren, IN | | (b) | | | 220 | | | | 278 | | | | 68 | | | | 0 | | | | 288 | | | | 278 | | | | 566 | | | | (151 | ) | | 2007 | | 8/18/2014 | | 4 to 20 Years |
| | Phoenix, AZ | | (b) | | | 834 | | | | 1,206 | | | | 0 | | | | 291 | | | | 834 | | | | 1,497 | | | | 2,331 | | | | (237 | ) | | 1989 | | 3/31/2017 | | 10 to 30 Years |
| | Houston, TX | | (b) | | | 1,334 | | | | 579 | | | | (759 | ) | | | (354 | ) | | | 575 | | | | 225 | | | | 800 | | | | (3 | ) | | 1950 | | 3/31/2017 | | 6 to 26 Years |
| | Tuscon, AZ | | (b) | | | 333 | | | | 1,030 | | | | 0 | | | | 0 | | | | 333 | | | | 1,030 | | | | 1,363 | | | | (184 | ) | | 1999 | | 3/31/2017 | | 10 to 30 Years |
| | Jacksonville, FL | | (b) | | | 873 | | | | 7,095 | | | | 0 | | | | 0 | | | | 873 | | | | 7,095 | | | | 7,968 | | | | (162 | ) | | 1990 | | 3/12/2020 | | 9 to 41 Years |
| | Jacksonville, FL | | (b) | | | 873 | | | | 3,938 | | | | 0 | | | | 0 | | | | 873 | | | | 3,938 | | | | 4,811 | | | | (119 | ) | | 1956 | | 3/12/2020 | | 7 to 32 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Office Depot | Balcones Heights, TX | | (c) | | 1,888 |
| | 2,117 |
| | — |
| | — |
| | 1,888 |
| | 2,117 |
| | 4,005 |
| | (402 | ) | | 2009 | | 07/17/13 | | 11 to 46 Years |
| OfficeMax | Orangeburg, SC | | (d) | | 621 |
| | 2,208 |
| | — |
| | — |
| | 621 |
| | 2,208 |
| | 2,829 |
| | (378 | ) | | 1999 | | 07/17/13 | | 0 to 45 Years |
| Ogden Clinic | Ogden, UT | | (d) | | 597 |
| | 2,331 |
| | — |
| | — |
| | 597 |
| | 2,331 |
| | 2,928 |
| | (490 | ) | | 1985 | | 08/18/14 | | 7 to 30 Years |
| Ojos Locos Sports Cantina | El Paso, TX | | (d) | | 1,725 |
| | 1,470 |
| | — |
| | — |
| | 1,725 |
| | 1,470 |
| | 3,195 |
| | (257 | ) | | 2014 | | 04/15/15 | | 15 to 30 Years |
| Old Time Pottery | Fairview Heights, IL | | (d) | | 1,418 |
| | 2,383 |
| | — |
| | 521 |
| | 1,418 |
| | 2,904 |
| | 4,322 |
| | (1,772 | ) | | 1990 | | 07/17/13 | | 0 to 10 Years |
| Old Time Pottery | Foley, AL | | (d) | | 1,240 |
| | 2,983 |
| | — |
| | — |
| | 1,240 |
| | 2,983 |
| | 4,223 |
| | (679 | ) | | 1994 | | 05/08/15 | | 9 to 20 Years |
| Old Time Pottery | Murfreesboro, TN | | (d) | | 3,413 |
| | 6,727 |
| | — |
| | — |
| | 3,413 |
| | 6,727 |
| | 10,140 |
| | (1,461 | ) | | 1985 | | 02/25/15 | | 9 to 20 Years |
| Pawn I | Caldwell, ID | | (d) | | 470 |
| | 1,739 |
| | — |
| | — |
| | 470 |
| | 1,739 |
| | 2,209 |
| | (153 | ) | | 2009 | | 07/31/15 | | 15 to 50 Years |
| Pawn I | Spokane, WA | | (d) | | 970 |
| | 1,945 |
| | — |
| | — |
| | 970 |
| | 1,945 |
| | 2,915 |
| | (200 | ) | | 1994 | | 07/31/15 | | 15 to 40 Years |
| Pep Boys | West Warwick, RI | | (b) | | 1,323 |
| | 2,917 |
| | — |
| | — |
| | 1,323 |
| | 2,917 |
| | 4,240 |
| | (586 | ) | | 1993 | | 07/17/13 | | 9 to 41 Years |
| Pep Boys | Tamarac, FL | | (b) | | 1,407 |
| | 2,660 |
| | — |
| | — |
| | 1,407 |
| | 2,660 |
| | 4,067 |
| | (502 | ) | | 1997 | | 07/17/13 | | 7 to 39 Years |
| Pep Boys | Lakeland, FL | | (b) | | 1,204 |
| | 1,917 |
| | — |
| | — |
| | 1,204 |
| | 1,917 |
| | 3,121 |
| | (409 | ) | | 1991 | | 07/17/13 | | 7 to 38 Years |
| Pep Boys | El Centro, CA | | (b) | | 1,295 |
| | 1,504 |
| | — |
| | — |
| | 1,295 |
| | 1,504 |
| | 2,799 |
| | (404 | ) | | 1998 | | 07/17/13 | | 9 to 33 Years |
| Pep Boys | Frederick, MD | | (b) | | 1,571 |
| | 2,529 |
| | — |
| | — |
| | 1,571 |
| | 2,529 |
| | 4,100 |
| | (507 | ) | | 1987 | | 07/17/13 | | 9 to 40 Years |
| Pep Boys | Clarksville, IN | | (b) | | 1,055 |
| | 1,758 |
| | — |
| | — |
| | 1,055 |
| | 1,758 |
| | 2,813 |
| | (457 | ) | | 1993 | | 07/17/13 | | 8 to 30 Years |
| Pep Boys | Orem, UT | | (b) | | 1,224 |
| | 2,132 |
| | — |
| | — |
| | 1,224 |
| | 2,132 |
| | 3,356 |
| | (441 | ) | | 1990 | | 07/17/13 | | 9 to 40 Years |
| Pep Boys | Pasadena, TX | | (b) | | 1,224 |
| | 4,263 |
| | — |
| | — |
| | 1,224 |
| | 4,263 |
| | 5,487 |
| | (774 | ) | | 1995 | | 07/17/13 | | 9 to 40 Years |
| Pep Boys | Hampton, VA | | (b) | | 1,662 |
| | 2,974 |
| | — |
| | — |
| | 1,662 |
| | 2,974 |
| | 4,636 |
| | (710 | ) | | 1993 | | 07/17/13 | | 9 to 35 Years |
| Pep Boys | Arlington Heights, IL | | (b) | | 1,530 |
| | 5,354 |
| | — |
| | — |
| | 1,530 |
| | 5,354 |
| | 6,884 |
| | (983 | ) | | 1995 | | 07/17/13 | | 9 to 36 Years |
| Pep Boys | Albuquerque, NM | | (b) | | 885 |
| | 2,998 |
| | — |
| | — |
| | 885 |
| | 2,998 |
| | 3,883 |
| | (556 | ) | | 1990 | | 07/17/13 | | 7 to 35 Years |
| Pep Boys | Colorado Springs, CO | | (b) | | 1,335 |
| | 1,587 |
| | — |
| | — |
| | 1,335 |
| | 1,587 |
| | 2,922 |
| | (584 | ) | | 1994 | | 07/17/13 | | 7 to 26 Years |
| PetSmart | McCarran, NV | | (d) | | 8,333 |
| | 37,763 |
| | — |
| | — |
| | 8,333 |
| | 37,763 |
| | 46,096 |
| | (7,993 | ) | | 2008 | | 07/17/13 | | 8 to 40 Years |
| PetSmart | Chattanooga, TN | | (c) | | 1,689 |
| | 2,837 |
| | — |
| | — |
| | 1,689 |
| | 2,837 |
| | 4,526 |
| | (544 | ) | | 1996 | | 07/17/13 | | 8 to 40 Years |
| PetSmart | Daytona Beach, FL | | (c) | | 775 |
| | 3,880 |
| | — |
| | — |
| | 775 |
| | 3,880 |
| | 4,655 |
| | (635 | ) | | 1996 | | 07/17/13 | | 8 to 42 Years |
| PetSmart | Fredericksburg, VA | | (c) | | 1,783 |
| | 3,491 |
| | — |
| | — |
| | 1,783 |
| | 3,491 |
| | 5,274 |
| | (628 | ) | | 1997 | | 07/17/13 | | 8 to 44 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Jacksonville, FL | | (b) | | | 1,805 | | | | 9,488 | | | | 0 | | | | 0 | | | | 1,805 | | | | 9,488 | | | | 11,293 | | | | (300 | ) | | 1970 | | 3/12/2020 | | 9 to 31 Years |
| | Miami, FL | | (b) | | | 3,471 | | | | 11,279 | | | | 0 | | | | 0 | | | | 3,471 | | | | 11,279 | | | | 14,750 | | | | (300 | ) | | 1998 | | 3/12/2020 | | 9 to 34 Years |
| | Midway, FL | | (b) | | | 350 | | | | 3,028 | | | | 0 | | | | 0 | | | | 350 | | | | 3,028 | | | | 3,378 | | | | (94 | ) | | 1999 | | 3/12/2020 | | 9 to 32 Years |
| | Orlando, FL | | (b) | | | 1,885 | | | | 7,373 | | | | 0 | | | | 0 | | | | 1,885 | | | | 7,373 | | | | 9,258 | | | | (226 | ) | | 1999 | | 3/12/2020 | | 9 to 32 Years |
| | Riviera Beach, FL | | (b) | | | 1,184 | | | | 3,263 | | | | 0 | | | | 0 | | | | 1,184 | | | | 3,263 | | | | 4,447 | | | | (101 | ) | | 1994 | | 3/12/2020 | | 9 to 34 Years |
| | Tampa, FL | | (b) | | | 1,845 | | | | 4,838 | | | | 0 | | | | 0 | | | | 1,845 | | | | 4,838 | | | | 6,683 | | | | (175 | ) | | 2009 | | 3/12/2020 | | 10 to 34 Years |
| | Lithia Springs, GA | | (b) | | | 1,175 | | | | 8,732 | | | | 0 | | | | 0 | | | | 1,175 | | | | 8,732 | | | | 9,907 | | | | (240 | ) | | 2007 | | 3/12/2020 | | 8 to 37 Years |
| | Harahan, LA | | (b) | | | 874 | | | | 5,430 | | | | 0 | | | | 0 | | | | 874 | | | | 5,430 | | | | 6,304 | | | | (179 | ) | | 1971 | | 3/12/2020 | | 8 to 28 Years |
| | Durham, NC | | (b) | | | 1,205 | | | | 5,961 | | | | 0 | | | | 0 | | | | 1,205 | | | | 5,961 | | | | 7,166 | | | | (141 | ) | | 2004 | | 3/12/2020 | | 12 to 43 Years |
| | Antioch, TN | | (b) | | | 1,877 | | | | 8,127 | | | | 0 | | | | 0 | | | | 1,877 | | | | 8,127 | | | | 10,004 | | | | (179 | ) | | 2016 | | 3/12/2020 | | 13 to 46 Years |
| | Chattanooga, TN | | (b) | | | 691 | | | | 1,865 | | | | 0 | | | | 0 | | | | 691 | | | | 1,865 | | | | 2,556 | | | | (70 | ) | | 2000 | | 3/12/2020 | | 8 to 30 Years |
| | Memphis, TN | | (b) | | | 341 | | | | 1,654 | | | | 0 | | | | 0 | | | | 341 | | | | 1,654 | | | | 1,995 | | | | (55 | ) | | 2003 | | 3/12/2020 | | 9 to 33 Years |
| | Arden, NC | | (b) | | | 1,788 | | | | 2,255 | | | | 0 | | | | 0 | | | | 1,788 | | | | 2,255 | | | | 4,043 | | | | (56 | ) | | 1999 | | 8/7/2020 | | 6 to 35 Years |
| | Greenville, SC | | (b) | | | 719 | | | | 1,995 | | | | 0 | | | | 0 | | | | 719 | | | | 1,995 | | | | 2,714 | | | | (43 | ) | | 1998 | | 8/7/2020 | | 6 to 34 Years |
| | Charlotte, NC | | (b) | | | 847 | | | | 2,050 | | | | 0 | | | | 0 | | | | 847 | | | | 2,050 | | | | 2,897 | | | | (56 | ) | | 1986 | | 8/7/2020 | | 6 to 22 Years |
| | West Columbia, SC | | (b) | | | 828 | | | | 1,472 | | | | 0 | | | | 0 | | | | 828 | | | | 1,472 | | | | 2,300 | | | | (53 | ) | | 1986 | | 8/7/2020 | | 6 to 22 Years |
| | Fort Worth, TX | | (b) | | | 2,468 | | | | 5,418 | | | | 0 | | | | 0 | | | | 2,468 | | | | 5,418 | | | | 7,886 | | | | (2,452 | ) | | 2003 | | 9/30/2005 | | 15 to 40 Years |
| | Shenandoah, TX | | (b) | | | 2,886 | | | | 5,763 | | | | 0 | | | | 0 | | | | 2,886 | | | | 5,763 | | | | 8,649 | | | | (2,589 | ) | | 2004 | | 9/30/2005 | | 15 to 40 Years |
| | Austin, TX | | (b) | | | 4,425 | | | | 8,142 | | | | 0 | | | | 0 | | | | 4,425 | | | | 8,142 | | | | 12,567 | | | | (3,881 | ) | | 2005 | | 9/30/2005 | | 15 to 40 Years |
| | Lewisville, TX | | (b) | | | 2,130 | | | | 4,630 | | | | 0 | | | | 0 | | | | 2,130 | | | | 4,630 | | | | 6,760 | | | | (2,125 | ) | | 1998 | | 9/30/2005 | | 15 to 40 Years |
| | Grapevine, TX | | (b) | | | 2,554 | | | | 5,377 | | | | 0 | | | | 0 | | | | 2,554 | | | | 5,377 | | | | 7,931 | | | | (2,458 | ) | | 2000 | | 9/30/2005 | | 15 to 40 Years |
| | Plano, TX | | (b) | | | 3,225 | | | | 6,302 | | | | 0 | | | | 0 | | | | 3,225 | | | | 6,302 | | | | 9,527 | | | | (2,806 | ) | | 2001 | | 9/30/2005 | | 15 to 40 Years |
| | Grand Prairie, TX | | (b) | | | 1,712 | | | | 0 | | | | 655 | | | | 8,460 | | | | 2,367 | | | | 8,460 | | | | 10,827 | | | | (197 | ) | | (h) | | 3/11/2019 | | (h) |
| | Lutz, FL | | (b) | | | 2,919 | | | | 289 | | | | 872 | | | | 7,956 | | | | 3,791 | | | | 8,245 | | | | 12,036 | | | | (179 | ) | | 2019 | | 7/18/2019 | | 10 to 45 Years |
| | Merced, CA | | (b) | | | 3,456 | | | | 9,007 | | | | 0 | | | | 0 | | | | 3,456 | | | | 9,007 | | | | 12,463 | | | | (4,434 | ) | | 1998 | | 3/31/2008 | | 15 to 30 Years |
| | Loudon, TN | | (b) | | | 1,188 | | | | 4,904 | | | | 0 | | | | 0 | | | | 1,188 | | | | 4,904 | | | | 6,092 | | | | (2,816 | ) | | 1992 | | 3/31/2008 | | 15 to 30 Years |
| | Amarillo, TX | | (b) | | | 3,559 | | | | 4,575 | | | | 0 | | | | 0 | | | | 3,559 | | | | 4,575 | | | | 8,134 | | | | (1,748 | ) | | 1999 | | 5/23/2005 | | 14 to 40 Years |
| | Wichita Falls, TX | | (b) | | | 0 | | | | 6,259 | | | | 0 | | | | 0 | | | | 0 | | | | 6,259 | | | | 6,259 | | | | (4,348 | ) | | 1997 | | 5/23/2005 | | 13 to 20 Years |
| | Columbia, SC | | (b) | | | 596 | | | | 872 | | | | 0 | | | | 216 | | | | 596 | | | | 1,088 | | | | 1,684 | | | | (357 | ) | | 1998 | | 7/17/2013 | | 9 to 45 Years |
| | Collierville, TN | | (b) | | | 1,114 | | | | 6,726 | | | | 0 | | | | 0 | | | | 1,114 | | | | 6,726 | | | | 7,840 | | | | (2,186 | ) | | 2002 | | 7/17/2013 | | 9 to 49 Years |
| | Gardendale, AL | | (b) | | | 438 | | | | 841 | | | | 0 | | | | 55 | | | | 438 | | | | 896 | | | | 1,334 | | | | (313 | ) | | 1996 | | 3/29/2013 | | 8 to 29 Years |
| | Bessemer, AL | | (b) | | | 622 | | | | 983 | | | | 0 | | | | 62 | | | | 622 | | | | 1,045 | | | | 1,667 | | | | (367 | ) | | 2002 | | 3/29/2013 | | 8 to 29 Years |
| | Birmingham, AL | | (b) | | | 512 | | | | 983 | | | | 0 | | | | 63 | | | | 512 | | | | 1,046 | | | | 1,558 | | | | (368 | ) | | 2002 | | 3/29/2013 | | 8 to 29 Years |
| | Birmingham, AL | | (b) | | | 321 | | | | 740 | | | | 0 | | | | 48 | | | | 321 | | | | 788 | | | | 1,109 | | | | (273 | ) | | 1977 | | 3/29/2013 | | 8 to 29 Years |
| | Moody, AL | | (b) | | | 518 | | | | 800 | | | | 0 | | | | 56 | | | | 518 | | | | 856 | | | | 1,374 | | | | (312 | ) | | 1997 | | 3/29/2013 | | 8 to 29 Years |
| | Pelham, AL | | (b) | | | 605 | | | | 923 | | | | 0 | | | | 54 | | | | 605 | | | | 977 | | | | 1,582 | | | | (347 | ) | | 1998 | | 3/29/2013 | | 8 to 29 Years |
| | Trussville, AL | | (b) | | | 909 | | | | 892 | | | | 0 | | | | 55 | | | | 909 | | | | 947 | | | | 1,856 | | | | (381 | ) | | 2000 | | 3/29/2013 | | 8 to 29 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Planet Fitness | Phoenix, AZ | | (d) | | 642 |
| | 2,245 |
| | — |
| | — |
| | 642 |
| | 2,245 |
| | 2,887 |
| | (378 | ) | | 1988 | | 09/30/14 | | 14 to 30 Years |
| Planet Fitness | Mesquite, TX | | (d) | | 601 |
| | 1,770 |
| | — |
| | — |
| | 601 |
| | 1,770 |
| | 2,371 |
| | (287 | ) | | 1986 | | 01/15/16 | | 8 to 30 Years |
| Planet Fitness | Burnsville, MN | | (b) | | 1,461 |
| | 1,597 |
| | — |
| | 22 |
| | 1,461 |
| | 1,619 |
| | 3,080 |
| | (306 | ) | | 1978 | | 04/15/16 | | 8 to 20 Years |
| PriMed Physicians | Beavercreek, OH | | (d) | | 559 |
| | 1,420 |
| | 63 |
| | — |
| | 622 |
| | 1,420 |
| | 2,042 |
| | (283 | ) | | 1985 | | 08/18/14 | | 7 to 40 Years |
| Progressive Medical Center | Dunwoody, GA | | (d) | | 1,061 |
| | 4,556 |
| | — |
| | 22 |
| | 1,061 |
| | 4,578 |
| | 5,639 |
| | (448 | ) | | 1988 | | 10/27/16 | | 2 to 40 Years |
| Promedica Physicians Eyecare | Monroe, MI | | (d) | | 728 |
| | 3,440 |
| | — |
| | — |
| | 728 |
| | 3,440 |
| | 4,168 |
| | (746 | ) | | 2002 | | 08/18/14 | | 9 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Red Lobster | Albany, GA | | (d) | | 744 |
| | 1,340 |
| | — |
| | — |
| | 744 |
| | 1,340 |
| | 2,084 |
| | (241 | ) | | 1971 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Columbus, GA | | (d) | | 876 |
| | 1,243 |
| | — |
| | — |
| | 876 |
| | 1,243 |
| | 2,119 |
| | (231 | ) | | 2003 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Aurora, CO | | (d) | | 1,151 |
| | 1,742 |
| | — |
| | — |
| | 1,151 |
| | 1,742 |
| | 2,893 |
| | (253 | ) | | 1974 | | 12/23/14 | | 15 to 40 Years |
| Red Lobster | Bloomington, IL | | (d) | | 662 |
| | 1,029 |
| | — |
| | — |
| | 662 |
| | 1,029 |
| | 1,691 |
| | (189 | ) | | 1975 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Durham, NC | | (d) | | 1,477 |
| | 1,661 |
| | — |
| | — |
| | 1,477 |
| | 1,661 |
| | 3,138 |
| | (314 | ) | | 1978 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Beachwood, OH | | (d) | | 1,080 |
| | 1,773 |
| | — |
| | — |
| | 1,080 |
| | 1,773 |
| | 2,853 |
| | (264 | ) | | 1977 | | 12/23/14 | | 15 to 40 Years |
| Red Lobster | Syracuse, NY | | (d) | | 734 |
| | 1,518 |
| | — |
| | — |
| | 734 |
| | 1,518 |
| | 2,252 |
| | (292 | ) | | 1981 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Bradley, IL | | (d) | | 1,610 |
| | 1,783 |
| | — |
| | — |
| | 1,610 |
| | 1,783 |
| | 3,393 |
| | (357 | ) | | 1991 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Meadville, PA | | (d) | | 652 |
| | 1,284 |
| | — |
| | — |
| | 652 |
| | 1,284 |
| | 1,936 |
| | (264 | ) | | 1991 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Oxford, AL | | (d) | | 489 |
| | 1,212 |
| | — |
| | — |
| | 489 |
| | 1,212 |
| | 1,701 |
| | (224 | ) | | 1991 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Findlay, OH | | (d) | | 958 |
| | 1,029 |
| | — |
| | — |
| | 958 |
| | 1,029 |
| | 1,987 |
| | (205 | ) | | 1991 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Adrian, MI | | (d) | | 652 |
| | 1,233 |
| | — |
| | — |
| | 652 |
| | 1,233 |
| | 1,885 |
| | (221 | ) | | 1991 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Salina, KS | | (d) | | 764 |
| | 1,100 |
| | — |
| | — |
| | 764 |
| | 1,100 |
| | 1,864 |
| | (223 | ) | | 1994 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Tifton, GA | | (d) | | 642 |
| | 1,009 |
| | — |
| | — |
| | 642 |
| | 1,009 |
| | 1,651 |
| | (161 | ) | | 1995 | | 12/23/14 | | 15 to 40 Years |
| Red Lobster | Council Bluffs, IA | | (d) | | 1,070 |
| | 703 |
| | — |
| | — |
| | 1,070 |
| | 703 |
| | 1,773 |
| | (154 | ) | | 1995 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Stillwater, OK | | (d) | | 611 |
| | 1,447 |
| | — |
| | — |
| | 611 |
| | 1,447 |
| | 2,058 |
| | (217 | ) | | 1995 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Monroe, MI | | (d) | | 927 |
| | 897 |
| | — |
| | — |
| | 927 |
| | 897 |
| | 1,824 |
| | (212 | ) | | 1996 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Tullahoma, TN | | (d) | | 520 |
| | 886 |
| | — |
| | — |
| | 520 |
| | 886 |
| | 1,406 |
| | (148 | ) | | 1996 | | 12/23/14 | | 15 to 40 Years |
| Red Lobster | Lewiston, ID | | (d) | | 1,080 |
| | 866 |
| | — |
| | — |
| | 1,080 |
| | 866 |
| | 1,946 |
| | (194 | ) | | 1996 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Indianapolis, IN | | (d) | | 418 |
| | 1,223 |
| | — |
| | — |
| | 418 |
| | 1,223 |
| | 1,641 |
| | (177 | ) | | 1992 | | 12/23/14 | | 15 to 30 Years |
| Red Lobster | Waterford, MI | | (d) | | 761 |
| | 1,958 |
| | — |
| | — |
| | 761 |
| | 1,958 |
| | 2,719 |
| | (265 | ) | | 1997 | | 02/10/15 | | 15 to 40 Years |
| Red Lobster | Paducah, KY | | (d) | | 1,485 |
| | 2,407 |
| | — |
| | 69 |
| | 1,485 |
| | 2,476 |
| | 3,961 |
| | (192 | ) | | 2013 | | 12/22/16 | | 13 to 40 Years |
| Red Lobster | Winston-Salem, NC | | (d) | | 1,707 |
| | 1,873 |
| | — |
| | — |
| | 1,707 |
| | 1,873 |
| | 3,580 |
| | (149 | ) | | 1998 | | 12/22/16 | | 13 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Calera, AL | | (b) | | | 560 | | | | 912 | | | | 0 | | | | 82 | | | | 560 | | | | 994 | | | | 1,554 | | | | (375 | ) | | 2008 | | 3/29/2013 | | 8 to 29 Years |
| | Homewood, AL | | (b) | | | 775 | | | | 0 | | | | 0 | | | | 0 | | | | 775 | | | | 0 | | | | 775 | | | | 0 | | | (e) | | 11/25/2019 | | (e) |
| | Missoula, MT | | (b) | | | 2,510 | | | | 4,714 | | | | 0 | | | | 0 | | | | 2,510 | | | | 4,714 | | | | 7,224 | | | | (1,100 | ) | | 1999 | | 3/11/2015 | | 15 to 30 Years |
| | Missoula, MT | | (b) | | | 3,008 | | | | 5,168 | | | | 0 | | | | 0 | | | | 3,008 | | | | 5,168 | | | | 8,176 | | | | (1,164 | ) | | 2008 | | 3/12/2015 | | 15 to 30 Years |
| | Abilene, TX | | (b) | | | 2,733 | | | | 3,080 | | | | 0 | | | | 0 | | | | 2,733 | | | | 3,080 | | | | 5,813 | | | | (807 | ) | | 1993 | | 4/7/2015 | | 15 to 30 Years |
| | Casselberry, FL | | (b) | | | 1,042 | | | | 2,406 | | | | 0 | | | | 0 | | | | 1,042 | | | | 2,406 | | | | 3,448 | | | | (502 | ) | | 1988 | | 2/9/2016 | | 13 to 30 Years |
| | Ocoee, FL | | (b) | | | 2,128 | | | | 1,775 | | | | 0 | | | | 18 | | | | 2,128 | | | | 1,793 | | | | 3,921 | | | | (419 | ) | | 2009 | | 5/3/2016 | | 17 to 30 Years |
| | Orlando, FL | | (b) | | | 1,629 | | | | 1,895 | | | | 0 | | | | 0 | | | | 1,629 | | | | 1,895 | | | | 3,524 | | | | (482 | ) | | 2005 | | 2/9/2016 | | 13 to 30 Years |
| | Orlando, FL | | (b) | | | 2,709 | | | | 2,728 | | | | 0 | | | | 45 | | | | 2,709 | | | | 2,773 | | | | 5,482 | | | | (655 | ) | | 2001 | | 2/9/2016 | | 13 to 30 Years |
| | Madison, WI | | (b) | | | 611 | | | | 1,775 | | | | 0 | | | | 0 | | | | 611 | | | | 1,775 | | | | 2,386 | | | | (438 | ) | | 1958 | | 6/30/2015 | | 15 to 30 Years |
| | Madison, WI | | (b) | | | 905 | | | | 2,728 | | | | 0 | | | | 0 | | | | 905 | | | | 2,728 | | | | 3,633 | | | | (612 | ) | | 1961 | | 6/30/2015 | | 15 to 30 Years |
| | Madison, WI | | (b) | | | 564 | | | | 1,623 | | | | 0 | | | | 0 | | | | 564 | | | | 1,623 | | | | 2,187 | | | | (336 | ) | | 1956 | | 6/30/2015 | | 15 to 30 Years |
| | Rockford, IL | | (b) | | | 705 | | | | 2,669 | | | | 0 | | | | 0 | | | | 705 | | | | 2,669 | | | | 3,374 | | | | (554 | ) | | 1959 | | 6/30/2015 | | 15 to 30 Years |
| | Saint Paul, MN | | (b) | | | 5,274 | | | | 136 | | | | 0 | | | | 67 | | | | 5,274 | | | | 203 | | | | 5,477 | | | | (1,596 | ) | | 1966 | | 12/13/2016 | | 12 to 30 Years |
| | Edgewater, MD | | (b) | | | 4,720 | | | | 1,460 | | | | 0 | | | | 0 | | | | 4,720 | | | | 1,460 | | | | 6,180 | | | | (500 | ) | | 2005 | | 1/21/2015 | | 15 to 30 Years |
| | Millersville, MD | | (b) | | | 2,250 | | | | 1,636 | | | | 0 | | | | 0 | | | | 2,250 | | | | 1,636 | | | | 3,886 | | | | (448 | ) | | 2007 | | 1/21/2015 | | 15 to 30 Years |
| | Nampa, ID | | (b) | | | 3,240 | | | | 2,343 | | | | 0 | | | | 0 | | | | 3,240 | | | | 2,343 | | | | 5,583 | | | | (1,249 | ) | | 2010 | | 5/15/2013 | | 15 to 30 Years |
| | Meridian, ID | | (b) | | | 1,923 | | | | 2,170 | | | | 536 | | | | 20 | | | | 2,459 | | | | 2,190 | | | | 4,649 | | | | (1,077 | ) | | 2006 | | 5/15/2013 | | 15 to 30 Years |
| | Boise, ID | | (b) | | | 217 | | | | 0 | | | | 0 | | | | 0 | | | | 217 | | | | 0 | | | | 217 | | | | (15 | ) | | (e) | | 5/15/2013 | | (e) |
| | Boise, ID | | (b) | | | 2,155 | | | | 2,488 | | | | 0 | | | | 0 | | | | 2,155 | | | | 2,488 | | | | 4,643 | | | | (1,153 | ) | | 2004 | | 5/15/2013 | | 15 to 30 Years |
| | Round Rock, TX | | (b) | | | 1,167 | | | | 1,549 | | | | 0 | | | | 0 | | | | 1,167 | | | | 1,549 | | | | 2,716 | | | | (417 | ) | | 2009 | | 5/7/2015 | | 15 to 30 Years |
| | Houston, TX | | (b) | | | 1,081 | | | | 2,450 | | | | 0 | | | | 0 | | | | 1,081 | | | | 2,450 | | | | 3,531 | | | | (181 | ) | | 1991 | | 11/25/2019 | | 3 to 16 Years |
| | Leesburg, FL | | (b) | | | 619 | | | | 236 | | | | 0 | | | | 500 | | | | 619 | | | | 736 | | | | 1,355 | | | | (87 | ) | | 1996 | | 10/26/2018 | | 8 to 23 Years |
| | Bryan, TX | | (b) | | | 818 | | | | 670 | | | | 0 | | | | 0 | | | | 818 | | | | 670 | | | | 1,488 | | | | (52 | ) | | 1988 | | 11/25/2019 | | 3 to 23 Years |
| | Chandler, AZ | | (b) | | | 1,687 | | | | 2,935 | | | | 0 | | | | 12 | | | | 1,687 | | | | 2,947 | | | | 4,634 | | | | (142 | ) | | 2002 | | 11/25/2019 | | 3 to 35 Years |
| | Lawrenceville, GA | | (b) | | | 2,315 | | | | 1,670 | | | | 0 | | | | 0 | | | | 2,315 | | | | 1,670 | | | | 3,985 | | | | (112 | ) | | 1996 | | 9/11/2019 | | 10 to 30 Years |
| | Canton, GA | | (b) | | | 2,649 | | | | 1,681 | | | | 0 | | | | 0 | | | | 2,649 | | | | 1,681 | | | | 4,330 | | | | (106 | ) | | 1998 | | 9/11/2019 | | 11 to 30 Years |
| | Round Rock, TX | | (b) | | | 271 | | | | 728 | | | | 0 | | | | 0 | | | | 271 | | | | 728 | | | | 999 | | | | (167 | ) | | 1985 | | 8/18/2014 | | 8 to 40 Years |
Northern Tool & Equipment | | Blaine, MN | | (b) | | | 1,728 | | | | 3,437 | | | | 0 | | | | 0 | | | | 1,728 | | | | 3,437 | | | | 5,165 | | | | (882 | ) | | 2006 | | 7/17/2013 | | 8 to 43 Years |
| | West Palm Beach, FL | | (b) | | | 12,511 | | | | 9,751 | | | | 0 | | | | 0 | | | | 12,511 | | | | 9,751 | | | | 22,262 | | | | (148 | ) | | 2016 | | 9/9/2020 | | 17 to 43 Years |
| | North Lauderdale, FL | | (b) | | | 21,733 | | | | 8,680 | | | | 0 | | | | 0 | | | | 21,733 | | | | 8,680 | | | | 30,413 | | | | (211 | ) | | 1988 | | 9/9/2020 | | 14 to 38 Years |
| | Orlando, FL | | (b) | | | 16,901 | | | | 10,864 | | | | 0 | | | | 0 | | | | 16,901 | | | | 10,864 | | | | 27,765 | | | | (249 | ) | | 2019 | | 9/9/2020 | | 18 to 44 Years |
| | Dayton, OH | | (b) | | | 710 | | | | 2,417 | | | | 0 | | | | 0 | | | | 710 | | | | 2,417 | | | | 3,127 | | | | (556 | ) | | 2005 | | 7/17/2013 | | 8 to 47 Years |
| | Greenville, MS | | (b) | | | 583 | | | | 2,315 | | | | 0 | | | | 43 | | | | 583 | | | | 2,358 | | | | 2,941 | | | | (621 | ) | | 2000 | | 7/17/2013 | | 1 to 35 Years |
| | Oxford, MS | | (b) | | | 1,625 | | | | 1,024 | | | | 0 | | | | 0 | | | | 1,625 | | | | 1,024 | | | | 2,649 | | | | (412 | ) | | 2006 | | 7/17/2013 | | 9 to 33 Years |
| | Enterprise, AL | | (b) | | | 675 | | | | 2,239 | | | | 0 | | | | 0 | | | | 675 | | | | 2,239 | | | | 2,914 | | | | (560 | ) | | 2006 | | 7/17/2013 | | 8 to 43 Years |
| | Benton, AR | | (b) | | | 1,236 | | | | 1,926 | | | | 0 | | | | 0 | | | | 1,236 | | | | 1,926 | | | | 3,162 | | | | (558 | ) | | 2001 | | 7/17/2013 | | 3 to 38 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Red Lobster | Rockford, IL | | (d) | | 1,348 |
| | 2,842 |
| | — |
| | — |
| | 1,348 |
| | 2,842 |
| | 4,190 |
| | (219 | ) | | 1977 | | 12/22/16 | | 13 to 40 Years |
| Red Lobster | Zanesville, OH | | (d) | | 1,088 |
| | 2,218 |
| | — |
| | — |
| | 1,088 |
| | 2,218 |
| | 3,306 |
| | (225 | ) | | 1992 | | 12/22/16 | | 11 to 30 Years |
| Red Lobster | Monroeville, PA | | (d) | | 1,677 |
| | 3,508 |
| | — |
| | — |
| | 1,677 |
| | 3,508 |
| | 5,185 |
| | (318 | ) | | 2009 | | 12/22/16 | | 12 to 30 Years |
| Red Lobster | Duluth, GA | | (d) | | 1,913 |
| | 4,576 |
| | — |
| | — |
| | 1,913 |
| | 4,576 |
| | 6,489 |
| | (301 | ) | | 1984 | | 12/22/16 | | 13 to 40 Years |
| Red Mesa Grill | Traverse City, MI | | (d) | | 651 |
| | 1,255 |
| | — |
| | — |
| | 651 |
| | 1,255 |
| | 1,906 |
| | (174 | ) | | 2004 | | 11/09/15 | | 15 to 30 Years |
| Red Mesa Grill | Boyne City, MI | | (d) | | 69 |
| | 938 |
| | — |
| | — |
| | 69 |
| | 938 |
| | 1,007 |
| | (101 | ) | | 1997 | | 11/09/15 | | 15 to 30 Years |
| Red Mesa Grill | Elk Rapids, MI | | (d) | | 227 |
| | 947 |
| | — |
| | — |
| | 227 |
| | 947 |
| | 1,174 |
| | (110 | ) | | 1998 | | 11/09/15 | | 15 to 30 Years |
| Regal Cinemas | Carrollton, GA | | (d) | | 1,879 |
| | 5,868 |
| | — |
| | — |
| | 1,879 |
| | 5,868 |
| | 7,747 |
| | (808 | ) | | 2005 | | 12/30/14 | | 15 to 40 Years |
| Regal Cinemas | Dawsonville, GA | | (d) | | 1,859 |
| | 4,207 |
| | — |
| | — |
| | 1,859 |
| | 4,207 |
| | 6,066 |
| | (626 | ) | | 2005 | | 12/30/14 | | 15 to 40 Years |
| Regal Cinemas | Gainesville, GA | | (d) | | 2,278 |
| | 8,684 |
| | — |
| | — |
| | 2,278 |
| | 8,684 |
| | 10,962 |
| | (1,076 | ) | | 1996 | | 12/30/14 | | 15 to 40 Years |
| Regal Cinemas | Woodstock, GA | | (d) | | 2,798 |
| | 5,057 |
| | — |
| | 2,800 |
| | 2,798 |
| | 7,857 |
| | 10,655 |
| | (904 | ) | | 1997 | | 12/30/14 | | 15 to 30 Years |
| Regal Cinemas | Griffin, GA | | (d) | | 1,239 |
| | 3,188 |
| | — |
| | — |
| | 1,239 |
| | 3,188 |
| | 4,427 |
| | (606 | ) | | 2005 | | 12/30/14 | | 15 to 30 Years |
| Regal Cinemas | Omaha, NE | | (d) | | 2,254 |
| | 4,249 |
| | — |
| | — |
| | 2,254 |
| | 4,249 |
| | 6,503 |
| | (788 | ) | | 2006 | | 03/26/15 | | 12 to 30 Years |
| Regal Cinemas | Avon, IN | | (d) | | 3,388 |
| | 2,967 |
| | — |
| | 3,651 |
| | 3,388 |
| | 6,618 |
| | 10,006 |
| | (1,404 | ) | | 1995 | | 03/01/16 | | 4 to 30 Years |
| Regal Cinemas | Bowie, MD | | (d) | | 7,138 |
| | 5,936 |
| | — |
| | 23 |
| | 7,138 |
| | 5,959 |
| | 13,097 |
| | (700 | ) | | 1998 | | 11/23/16 | | 8 to 40 Years |
| Rite Aid | Wauseon, OH | | (d) | | 1,000 |
| | 2,034 |
| | — |
| | — |
| | 1,000 |
| | 2,034 |
| | 3,034 |
| | (443 | ) | | 2005 | | 07/17/13 | | 12 to 37 Years |
| Rite Aid | Fremont, OH | | (d) | | 504 |
| | 1,405 |
| | (378 | ) | | (1,053 | ) | | 126 |
| | 352 |
| | 478 |
| | (32 | ) | | 1998 | | 07/17/13 | | 4 to 27 Years |
| Rite Aid | Cleveland, OH | | (d) | | 776 |
| | 1,158 |
| | — |
| | — |
| | 776 |
| | 1,158 |
| | 1,934 |
| | (293 | ) | | 1998 | | 07/17/13 | | 5 to 30 Years |
| Rite Aid | Defiance, OH | | (d) | | 645 |
| | 2,452 |
| | — |
| | — |
| | 645 |
| | 2,452 |
| | 3,097 |
| | (500 | ) | | 2005 | | 07/17/13 | | 11 to 38 Years |
| Rite Aid | Lansing, MI | | (d) | | 196 |
| | 1,487 |
| | — |
| | — |
| | 196 |
| | 1,487 |
| | 1,683 |
| | (314 | ) | | 1996 | | 07/17/13 | | 3 to 31 Years |
| Rite Aid | Glassport, PA | | (d) | | 550 |
| | 2,471 |
| | — |
| | — |
| | 550 |
| | 2,471 |
| | 3,021 |
| | (516 | ) | | 2006 | | 07/17/13 | | 11 to 37 Years |
| Rite Aid | Easton, PA | | (d) | | 1,028 |
| | 3,996 |
| | — |
| | — |
| | 1,028 |
| | 3,996 |
| | 5,024 |
| | (711 | ) | | 2006 | | 07/17/13 | | 12 to 41 Years |
| Rite Aid | Plains, PA | | (d) | | 1,502 |
| | 2,611 |
| | — |
| | — |
| | 1,502 |
| | 2,611 |
| | 4,113 |
| | (547 | ) | | 2006 | | 07/17/13 | | 12 to 37 Years |
| Rite Aid | Lima, OH | | (d) | | 568 |
| | 3,221 |
| | — |
| | — |
| | 568 |
| | 3,221 |
| | 3,789 |
| | (555 | ) | | 2005 | | 07/17/13 | | 12 to 43 Years |
| Rite Aid | Fredericksburg, VA | | (d) | | 1,426 |
| | 2,077 |
| | — |
| | — |
| | 1,426 |
| | 2,077 |
| | 3,503 |
| | (443 | ) | | 2006 | | 07/17/13 | | 14 to 37 Years |
| Riverview 14 GDX | Gibsonton, FL | | (d) | | 4,970 |
| | 4,014 |
| | — |
| | 8,907 |
| | 4,970 |
| | 12,921 |
| | 17,891 |
| | (754 | ) | | 2016 | | 11/05/15 | | 12 to 50 Years |
| Ruth's Chris Steakhouse | Sarasota, FL | | (b) | | 2,758 |
| | 412 |
| | — |
| | — |
| | 2,758 |
| | 412 |
| | 3,170 |
| | (216 | ) | | 2000 | | 07/17/13 | | 12 to 25 Years |
| Ruth's Chris Steakhouse | Metairie, LA | | (c) | | 800 |
| | 3,016 |
| | — |
| | — |
| | 800 |
| | 3,016 |
| | 3,816 |
| | (582 | ) | | 1964 | | 07/17/13 | | 10 to 30 Years |
| Ryan's | Bowling Green, KY | | (b) | | 934 |
| | 3,135 |
| | (579 | ) | | (1,940 | ) | | 355 |
| | 1,195 |
| | 1,550 |
| | (114 | ) | | 1997 | | 07/17/13 | | 10 to 34 Years |
| Ryan's | Lake Charles, LA | | (b) | | 1,619 |
| | 1,349 |
| | — |
| | — |
| | 1,619 |
| | 1,349 |
| | 2,968 |
| | (477 | ) | | 1987 | | 07/17/13 | | 10 to 24 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Laurel, MS | | (b) | | | 401 | | | | 2,164 | | | | 0 | | | | 300 | | | | 401 | | | | 2,464 | | | | 2,865 | | | | (615 | ) | | 2002 | | 7/17/2013 | | 3 to 35 Years |
| | Morrisville, NC | | (b) | | | 408 | | | | 2,732 | | | | 0 | | | | 0 | | | | 408 | | | | 2,732 | | | | 3,140 | | | | (594 | ) | | 2008 | | 7/17/2013 | | 11 to 47 Years |
| | Balcones Heights, TX | | (b) | | | 1,888 | | | | 2,117 | | | | 0 | | | | 0 | | | | 1,888 | | | | 2,117 | | | | 4,005 | | | | (551 | ) | | 2009 | | 7/17/2013 | | 11 to 46 Years |
| | Alcoa, TN | | (b) | | | 918 | | | | 3,170 | | | | 0 | | | | 0 | | | | 918 | | | | 3,170 | | | | 4,088 | | | | (759 | ) | | 1999 | | 7/17/2013 | | 8 to 40 Years |
| | Orangeburg, SC | | (b) | | | 621 | | | | 2,208 | | | | 0 | | | | 0 | | | | 621 | | | | 2,208 | | | | 2,829 | | | | (517 | ) | | 1999 | | 7/17/2013 | | 12 to 45 Years |
| | Ogden, UT | | (b) | | | 597 | | | | 2,331 | | | | 0 | | | | 0 | | | | 597 | | | | 2,331 | | | | 2,928 | | | | (716 | ) | | 1985 | | 8/18/2014 | | 7 to 30 Years |
Ojos Locos Sports Cantina | | El Paso, TX | | (b) | | | 1,725 | | | | 1,470 | | | | 0 | | | | 0 | | | | 1,725 | | | | 1,470 | | | | 3,195 | | | | (394 | ) | | 2014 | | 4/15/2015 | | 15 to 30 Years |
| | Fairview Heights, IL | | (b) | | | 1,418 | | | | 2,383 | | | | (506 | ) | | | (1,516 | ) | | | 912 | | | | 867 | | | | 1,779 | | | | (195 | ) | | 1990 | | 7/17/2013 | | 3 to 3 Years |
| | Foley, AL | | (b) | | | 1,240 | | | | 2,983 | | | | 0 | | | | 0 | | | | 1,240 | | | | 2,983 | | | | 4,223 | | | | (1,049 | ) | | 1994 | | 5/8/2015 | | 9 to 20 Years |
| | Murfreesboro, TN | | (b) | | | 3,413 | | | | 6,727 | | | | 0 | | | | 0 | | | | 3,413 | | | | 6,727 | | | | 10,140 | | | | (2,221 | ) | | 1985 | | 2/25/2015 | | 9 to 20 Years |
| | Pea Ridge, AR | | (b) | | | 161 | | | | 0 | | | | 0 | | | | 0 | | | | 161 | | | | 0 | | | | 161 | | | | 0 | | | (e) | | 11/25/2019 | | (e) |
| | Spartanburg, SC | | (b) | | | 1,196 | | | | 1,671 | | | | 0 | | | | 0 | | | | 1,196 | | | | 1,671 | | | | 2,867 | | | | (498 | ) | | 1999 | | 7/17/2013 | | 5 to 34 Years |
| | Eden Prairie, MN | | (b) | | | 3,174 | | | | 10,118 | | | | 0 | | | | 0 | | | | 3,174 | | | | 10,118 | | | | 13,292 | | | | (598 | ) | | 1991 | | 6/28/2019 | | 9 to 33 Years |
| | Los Lunas, NM | | (b) | | | 2,890 | | | | 9,461 | | | | 0 | | | | 0 | | | | 2,890 | | | | 9,461 | | | | 12,351 | | | | (475 | ) | | 2015 | | 6/28/2019 | | 14 to 38 Years |
| | Chester, NY | | (b) | | | 5,785 | | | | 97,090 | | | | 0 | | | | 0 | | | | 5,785 | | | | 97,090 | | | | 102,875 | | | | (3,697 | ) | | 2006 | | 6/28/2019 | | 11 to 42 Years |
| | Caldwell, ID | | (b) | | | 470 | | | | 1,739 | | | | 0 | | | | 0 | | | | 470 | | | | 1,739 | | | | 2,209 | | | | (243 | ) | | 2009 | | 7/31/2015 | | 15 to 50 Years |
| | Spokane, WA | | (b) | | | 970 | | | | 1,945 | | | | 0 | | | | 0 | | | | 970 | | | | 1,945 | | | | 2,915 | | | | (317 | ) | | 1994 | | 7/31/2015 | | 15 to 40 Years |
| | West Warwick, RI | | (b) | | | 1,323 | | | | 2,917 | | | | 0 | | | | 0 | | | | 1,323 | | | | 2,917 | | | | 4,240 | | | | (802 | ) | | 1993 | | 7/17/2013 | | 9 to 41 Years |
| | Tamarac, FL | | (b) | | | 1,407 | | | | 2,660 | | | | 0 | | | | 0 | | | | 1,407 | | | | 2,660 | | | | 4,067 | | | | (687 | ) | | 1997 | | 7/17/2013 | | 7 to 39 Years |
| | Lakeland, FL | | (b) | | | 1,204 | | | | 1,917 | | | | 0 | | | | 0 | | | | 1,204 | | | | 1,917 | | | | 3,121 | | | | (556 | ) | | 1991 | | 7/17/2013 | | 7 to 38 Years |
| | El Centro, CA | | (b) | | | 1,295 | | | | 1,504 | | | | 0 | | | | 0 | | | | 1,295 | | | | 1,504 | | | | 2,799 | | | | (554 | ) | | 1998 | | 7/17/2013 | | 9 to 33 Years |
| | Frederick, MD | | (b) | | | 1,571 | | | | 2,529 | | | | 0 | | | | 0 | | | | 1,571 | | | | 2,529 | | | | 4,100 | | | | (694 | ) | | 1987 | | 7/17/2013 | | 9 to 40 Years |
| | Clarksville, IN | | (b) | | | 1,055 | | | | 1,758 | | | | 0 | | | | 0 | | | | 1,055 | | | | 1,758 | | | | 2,813 | | | | (626 | ) | | 1993 | | 7/17/2013 | | 8 to 30 Years |
| | Orem, UT | | (b) | | | 1,224 | | | | 2,132 | | | | 0 | | | | 0 | | | | 1,224 | | | | 2,132 | | | | 3,356 | | | | (603 | ) | | 1990 | | 7/17/2013 | | 9 to 40 Years |
| | Pasadena, TX | | (b) | | | 1,224 | | | | 4,263 | | | | 0 | | | | 0 | | | | 1,224 | | | | 4,263 | | | | 5,487 | | | | (1,060 | ) | | 1995 | | 7/17/2013 | | 9 to 40 Years |
| | Hampton, VA | | (b) | | | 1,662 | | | | 2,974 | | | | 0 | | | | 0 | | | | 1,662 | | | | 2,974 | | | | 4,636 | | | | (972 | ) | | 1993 | | 7/17/2013 | | 9 to 35 Years |
| | Arlington Heights, IL | | (b) | | | 1,530 | | | | 5,354 | | | | 0 | | | | 0 | | | | 1,530 | | | | 5,354 | | | | 6,884 | | | | (1,346 | ) | | 1995 | | 7/17/2013 | | 9 to 36 Years |
| | Albuquerque, NM | | (b) | | | 885 | | | | 2,998 | | | | 0 | | | | 0 | | | | 885 | | | | 2,998 | | | | 3,883 | | | | (761 | ) | | 1990 | | 7/17/2013 | | 7 to 35 Years |
| | Colorado Springs, CO | | (b) | | | 1,335 | | | | 1,587 | | | | 0 | | | | 0 | | | | 1,335 | | | | 1,587 | | | | 2,922 | | | | (788 | ) | | 1994 | | 7/17/2013 | | 7 to 26 Years |
| | Chattanooga, TN | | (a) | | | 1,689 | | | | 2,837 | | | | 0 | | | | 0 | | | | 1,689 | | | | 2,837 | | | | 4,526 | | | | (745 | ) | | 1996 | | 7/17/2013 | | 8 to 40 Years |
| | Daytona Beach, FL | | (a) | | | 775 | | | | 3,880 | | | | 0 | | | | 0 | | | | 775 | | | | 3,880 | | | | 4,655 | | | | (869 | ) | | 1996 | | 7/17/2013 | | 8 to 42 Years |
| | Fredericksburg, VA | | (a) | | | 1,783 | | | | 3,491 | | | | 0 | | | | 0 | | | | 1,783 | | | | 3,491 | | | | 5,274 | | | | (860 | ) | | 1997 | | 7/17/2013 | | 8 to 44 Years |
PetSuites Pet Resort & Spa | | Bradenton, FL | | (b) | | | 1,563 | | | | 2,679 | | | | 0 | | | | 0 | | | | 1,563 | | | | 2,679 | | | | 4,242 | | | | (174 | ) | | 2018 | | 3/29/2019 | | 19 to 35 Years |
| | Maxton, NC | | (b) | | | 870 | | | | 6,961 | | | | 0 | | | | 29 | | | | 870 | | | | 6,990 | | | | 7,860 | | | | (912 | ) | | 2016 | | 12/16/2016 | | 9 to 40 Years |
| | Mesquite, TX | | (b) | | | 601 | | | | 1,770 | | | | 0 | | | | 0 | | | | 601 | | | | 1,770 | | | | 2,371 | | | | (478 | ) | | 1986 | | 1/15/2016 | | 8 to 30 Years |
| | Phoenix, AZ | | (b) | | | 642 | | | | 2,245 | | | | 0 | | | | 0 | | | | 642 | | | | 2,245 | | | | 2,887 | | | | (556 | ) | | 1988 | | 9/30/2014 | | 14 to 30 Years |
| | Burnsville, MN | | (b) | | | 1,461 | | | | 1,597 | | | | 0 | | | | 22 | | | | 1,461 | | | | 1,619 | | | | 3,080 | | | | (529 | ) | | 1978 | | 4/15/2016 | | 8 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ryan's | Picayune, MS | | (b) | | 1,250 |
| | 1,409 |
| | — |
| | — |
| | 1,250 |
| | 1,409 |
| | 2,659 |
| | (408 | ) | | 1999 | | 07/17/13 | | 7 to 29 Years |
| Ryan's | Conroe, TX | | (b) | | 942 |
| | 3,274 |
| | (575 | ) | | (2,006 | ) | | 367 |
| | 1,268 |
| | 1,635 |
| | (127 | ) | | 1993 | | 07/17/13 | | 11 to 32 Years |
| Ryan's | Princeton, WV | | (b) | | 948 |
| | 2,212 |
| | — |
| | — |
| | 948 |
| | 2,212 |
| | 3,160 |
| | (660 | ) | | 2001 | | 07/17/13 | | 11 to 25 Years |
| Saisaki Asian Bistro and Sushi | Newport News, VA | | (d) | | 1,184 |
| | 311 |
| | — |
| | — |
| | 1,184 |
| | 311 |
| | 1,495 |
| | (348 | ) | | 1995 | | 06/25/04 | | 10 to 25 Years |
| Same Day Delivery | Walker, MI | | (c) | | 2,287 |
| | 4,469 |
| | (1,369 | ) | | (2,277 | ) | | 918 |
| | 2,192 |
| | 3,110 |
| | (276 | ) | | 2001 | | 07/17/13 | | 4 to 30 Years |
| Serrano's Mexican Restaurant | Mesa, AZ | | (d) | | 422 |
| | 1,002 |
| | — |
| | — |
| | 422 |
| | 1,002 |
| | 1,424 |
| | (198 | ) | | 1990 | | 06/14/13 | | 15 to 40 Years |
| Serrano's Mexican Restaurant | Queen Creek, AZ | | (d) | | 609 |
| | 1,159 |
| | — |
| | — |
| | 609 |
| | 1,159 |
| | 1,768 |
| | (253 | ) | | 2004 | | 06/14/13 | | 15 to 40 Years |
| Sheffield Pharmaceuticals | Norwich, CT | | (d) | | 627 |
| | 4,767 |
| | — |
| | 27 |
| | 627 |
| | 4,794 |
| | 5,421 |
| | (480 | ) | | 1975 | | 06/30/16 | | 4 to 30 Years |
| Shooters World | Orlando, FL | | (d) | | 2,650 |
| | 9,512 |
| | — |
| | — |
| | 2,650 |
| | 9,512 |
| | 12,162 |
| | (2 | ) | | 2018 | | 01/26/18 | | 29 to 29 Years |
| Shooters World | Tampa, FL | | (d) | | 1,588 |
| | 6,134 |
| | — |
| | — |
| | 1,588 |
| | 6,134 |
| | 7,722 |
| | (656 | ) | | 1990 | | 06/05/15 | | 15 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Slim Chickens | Stillwater, OK | | (d) | | 1,314 |
| | 1,111 |
| | — |
| | — |
| | 1,314 |
| | 1,111 |
| | 2,425 |
| | (182 | ) | | 2015 | | 03/31/15 | | 15 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Smart & Final | Chula Vista, CA | | (d) | | 3,801 |
| | 5,718 |
| | — |
| | — |
| | 3,801 |
| | 5,718 |
| | 9,519 |
| | (868 | ) | | 1986 | | 03/20/15 | | 15 to 30 Years |
| Smart & Final | El Cajon, CA | | (d) | | 7,323 |
| | 10,056 |
| | — |
| | — |
| | 7,323 |
| | 10,056 |
| | 17,379 |
| | (1,610 | ) | | 1997 | | 03/16/15 | | 15 to 30 Years |
| Smart & Final | Palmdale, CA | | (d) | | 3,849 |
| | 9,803 |
| | — |
| | — |
| | 3,849 |
| | 9,803 |
| | 13,652 |
| | (1,220 | ) | | 2005 | | 03/23/15 | | 15 to 40 Years |
| Smart & Final | Atascadero, CA | | (d) | | 3,677 |
| | 8,920 |
| | — |
| | — |
| | 3,677 |
| | 8,920 |
| | 12,597 |
| | (1,373 | ) | | 2000 | | 04/06/15 | | 15 to 30 Years |
| Smokey Bones Barbecue & Grill | Orlando, FL | | (b) | | 2,006 |
| | 571 |
| | — |
| | — |
| | 2,006 |
| | 571 |
| | 2,577 |
| | (363 | ) | | 2002 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Fairview Heights, IL | | (b) | | 1,020 |
| | 826 |
| | — |
| | — |
| | 1,020 |
| | 826 |
| | 1,846 |
| | (575 | ) | | 1972 | | 12/31/07 | | 15 to 30 Years |
| Smokey Bones Barbecue & Grill | Springfield, IL | | (b) | | 1,115 |
| | 772 |
| | — |
| | — |
| | 1,115 |
| | 772 |
| | 1,887 |
| | (445 | ) | | 1996 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Warwick, RI | | (b) | | 1,593 |
| | 1,314 |
| | — |
| | — |
| | 1,593 |
| | 1,314 |
| | 2,907 |
| | (662 | ) | | 1990 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Mentor, OH | | (b) | | 873 |
| | 790 |
| | — |
| | — |
| | 873 |
| | 790 |
| | 1,663 |
| | (471 | ) | | 2003 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Bowie, MD | | (b) | | 1,501 |
| | 615 |
| | — |
| | — |
| | 1,501 |
| | 615 |
| | 2,116 |
| | (368 | ) | | 2004 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Melbourne, FL | | (b) | | 2,005 |
| | 794 |
| | — |
| | — |
| | 2,005 |
| | 794 |
| | 2,799 |
| | (523 | ) | | 1986 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Fort Wayne, IN | | (b) | | 1,110 |
| | 817 |
| | — |
| | — |
| | 1,110 |
| | 817 |
| | 1,927 |
| | (528 | ) | | 2003 | | 12/31/07 | | 15 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Popeye’s Chicken & Biscuits | | Bartlett, TN | | (b) | | | 788 | | | | 1,160 | | | | 0 | | | | 0 | | | | 788 | | | | 1,160 | | | | 1,948 | | | | (128 | ) | | 1985 | | 11/25/2019 | | 5 to 12 Years |
Popeye’s Chicken & Biscuits | | Memphis, TN | | (b) | | | 814 | | | | 903 | | | | 0 | | | | 0 | | | | 814 | | | | 903 | | | | 1,717 | | | | (68 | ) | | 2004 | | 11/25/2019 | | 6 to 19 Years |
Popeye’s Chicken & Biscuits | | Holly Springs, MS | | (b) | | | 225 | | | | 249 | | | | 0 | | | | 0 | | | | 225 | | | | 249 | | | | 474 | | | | (31 | ) | | 1998 | | 11/25/2019 | | 6 to 13 Years |
Popeye’s Chicken & Biscuits | | Collierville, TN | | (b) | | | 670 | | | | 672 | | | | 0 | | | | 0 | | | | 670 | | | | 672 | | | | 1,342 | | | | (61 | ) | | 2000 | | 11/25/2019 | | 6 to 15 Years |
Popeye’s Chicken & Biscuits | | Nashville, TN | | (b) | | | 455 | | | | 613 | | | | 0 | | | | 0 | | | | 455 | | | | 613 | | | | 1,068 | | | | (65 | ) | | 1975 | | 11/25/2019 | | 6 to 12 Years |
Popeye’s Chicken & Biscuits | | Horn Lake, MS | | (b) | | | 217 | | | | 1,061 | | | | 0 | | | | 0 | | | | 217 | | | | 1,061 | | | | 1,278 | | | | (142 | ) | | 1994 | | 11/25/2019 | | 4 to 9 Years |
Popeye’s Chicken & Biscuits | | Nashville, TN | | (b) | | | 624 | | | | 837 | | | | 0 | | | | 0 | | | | 624 | | | | 837 | | | | 1,461 | | | | (88 | ) | | 1988 | | 11/25/2019 | | 6 to 12 Years |
| | Beavercreek, OH | | (b) | | | 559 | | | | 1,420 | | | | 63 | | | | 29 | | | | 622 | | | | 1,449 | | | | 2,071 | | | | (424 | ) | | 1985 | | 8/18/2014 | | 7 to 40 Years |
Progressive Medical Center | | Dunwoody, GA | | (b) | | | 1,061 | | | | 4,556 | | | | 0 | | | | 22 | | | | 1,061 | | | | 4,578 | | | | 5,639 | | | | (677 | ) | | 1988 | | 10/27/2016 | | 2 to 40 Years |
| | Marion, IN | | (b) | | | 160 | | | | 693 | | | | (1 | ) | | | (4 | ) | | | 159 | | | | 689 | | | | 848 | | | | (73 | ) | | 1990 | | 11/25/2019 | | 6 to 12 Years |
Raymour & Flanigan Furniture | | Horseheads, NY | | (b) | | | 1,395 | | | | 10,923 | | | | 0 | | | | 12 | | | | 1,395 | | | | 10,935 | | | | 12,330 | | | | (333 | ) | | 2005 | | 11/25/2019 | | 7 to 43 Years |
Raymour & Flanigan Furniture | | Johnson City, NY | | (b) | | | 1,430 | | | | 8,372 | | | | 0 | | | | 13 | | | | 1,430 | | | | 8,385 | | | | 9,815 | | | | (378 | ) | | 1978 | | 11/25/2019 | | 7 to 30 Years |
| | Winston-Salem, NC | | (b) | | | 1,707 | | | | 1,873 | | | | 0 | | | | 0 | | | | 1,707 | | | | 1,873 | | | | 3,580 | | | | (298 | ) | | 1998 | | 12/22/2016 | | 13 to 40 Years |
| | Paducah, KY | | (b) | | | 1,485 | | | | 2,407 | | | | 0 | | | | 69 | | | | 1,485 | | | | 2,476 | | | | 3,961 | | | | (384 | ) | | 2013 | | 12/22/2016 | | 13 to 40 Years |
| | Monroeville, PA | | (b) | | | 1,677 | | | | 3,508 | | | | 0 | | | | 0 | | | | 1,677 | | | | 3,508 | | | | 5,185 | | | | (637 | ) | | 2009 | | 12/22/2016 | | 12 to 30 Years |
| | Rockford, IL | | (b) | | | 1,348 | | | | 2,842 | | | | 0 | | | | 0 | | | | 1,348 | | | | 2,842 | | | | 4,190 | | | | (437 | ) | | 1977 | | 12/22/2016 | | 13 to 40 Years |
| | Zanesville, OH | | (b) | | | 1,088 | | | | 2,218 | | | | 0 | | | | 0 | | | | 1,088 | | | | 2,218 | | | | 3,306 | | | | (449 | ) | | 1992 | | 12/22/2016 | | 11 to 30 Years |
| | Duluth, GA | | (b) | | | 1,913 | | | | 4,576 | | | | 0 | | | | 0 | | | | 1,913 | | | | 4,576 | | | | 6,489 | | | | (602 | ) | | 1984 | | 12/22/2016 | | 13 to 40 Years |
| | Stillwater, OK | | (b) | | | 611 | | | | 1,447 | | | | 0 | | | | 0 | | | | 611 | | | | 1,447 | | | | 2,058 | | | | (326 | ) | | 1995 | | 12/23/2014 | | 15 to 30 Years |
| | Salina, KS | | (b) | | | 764 | | | | 1,100 | | | | 0 | | | | 0 | | | | 764 | | | | 1,100 | | | | 1,864 | | | | (334 | ) | | 1994 | | 12/23/2014 | | 15 to 30 Years |
| | Albany, GA | | (b) | | | 744 | | | | 1,340 | | | | 0 | | | | 0 | | | | 744 | | | | 1,340 | | | | 2,084 | | | | (362 | ) | | 1971 | | 12/23/2014 | | 15 to 30 Years |
| | Meadville, PA | | (b) | | | 652 | | | | 1,284 | | | | 0 | | | | 0 | | | | 652 | | | | 1,284 | | | | 1,936 | | | | (395 | ) | | 1991 | | 12/23/2014 | | 15 to 30 Years |
| | Aurora, CO | | (b) | | | 1,151 | | | | 1,742 | | | | 0 | | | | 0 | | | | 1,151 | | | | 1,742 | | | | 2,893 | | | | (380 | ) | | 1974 | | 12/23/2014 | | 15 to 40 Years |
| | Tullahoma, TN | | (b) | | | 520 | | | | 886 | | | | 0 | | | | 0 | | | | 520 | | | | 886 | | | | 1,406 | | | | (223 | ) | | 1996 | | 12/23/2014 | | 15 to 40 Years |
| | Bradley, IL | | (b) | | | 1,610 | | | | 1,783 | | | | 0 | | | | 0 | | | | 1,610 | | | | 1,783 | | | | 3,393 | | | | (536 | ) | | 1991 | | 12/23/2014 | | 15 to 30 Years |
| | Bloomington, IL | | (b) | | | 662 | | | | 1,029 | | | | 0 | | | | 0 | | | | 662 | | | | 1,029 | | | | 1,691 | | | | (283 | ) | | 1975 | | 12/23/2014 | | 15 to 30 Years |
| | Monroe, MI | | (b) | | | 927 | | | | 897 | | | | 0 | | | | 0 | | | | 927 | | | | 897 | | | | 1,824 | | | | (318 | ) | | 1996 | | 12/23/2014 | | 15 to 30 Years |
| | Tifton, GA | | (b) | | | 642 | | | | 1,009 | | | | 0 | | | | 0 | | | | 642 | | | | 1,009 | | | | 1,651 | | | | (242 | ) | | 1995 | | 12/23/2014 | | 15 to 40 Years |
| | Adrian, MI | | (b) | | | 652 | | | | 1,233 | | | | 0 | | | | 0 | | | | 652 | | | | 1,233 | | | | 1,885 | | | | (332 | ) | | 1991 | | 12/23/2014 | | 15 to 30 Years |
| | Lewiston, ID | | (b) | | | 1,080 | | | | 866 | | | | 0 | | | | 0 | | | | 1,080 | | | | 866 | | | | 1,946 | | | | (291 | ) | | 1996 | | 12/23/2014 | | 15 to 30 Years |
| | Findlay, OH | | (b) | | | 958 | | | | 1,029 | | | | 0 | | | | 0 | | | | 958 | | | | 1,029 | | | | 1,987 | | | | (308 | ) | | 1991 | | 12/23/2014 | | 15 to 30 Years |
| | Council Bluffs, IA | | (b) | | | 1,070 | | | | 703 | | | | 0 | | | | 0 | | | | 1,070 | | | | 703 | | | | 1,773 | | | | (230 | ) | | 1995 | | 12/23/2014 | | 15 to 30 Years |
| | Columbus, GA | | (b) | | | 876 | | | | 1,243 | | | | 0 | | | | 0 | | | | 876 | | | | 1,243 | | | | 2,119 | | | | (346 | ) | | 2003 | | 12/23/2014 | | 15 to 30 Years |
| | Indianapolis, IN | | (b) | | | 418 | | | | 1,223 | | | | 0 | | | | 0 | | | | 418 | | | | 1,223 | | | | 1,641 | | | | (265 | ) | | 1992 | | 12/23/2014 | | 15 to 30 Years |
| | Oxford, AL | | (b) | | | 489 | | | | 1,212 | | | | 0 | | | | 0 | | | | 489 | | | | 1,212 | | | | 1,701 | | | | (336 | ) | | 1991 | | 12/23/2014 | | 15 to 30 Years |
| | Waterford, MI | | (b) | | | 761 | | | | 1,958 | | | | 0 | | | | 0 | | | | 761 | | | | 1,958 | | | | 2,719 | | | | (400 | ) | | 1997 | | 2/10/2015 | | 15 to 40 Years |
| | Traverse City, MI | | (b) | | | 651 | | | | 1,255 | | | | 0 | | | | 0 | | | | 651 | | | | 1,255 | | | | 1,906 | | | | (284 | ) | | 2004 | | 11/9/2015 | | 15 to 30 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Smokey Bones Barbecue & Grill | Greensboro, NC | | (b) | | 1,009 |
| | 444 |
| | — |
| | — |
| | 1,009 |
| | 444 |
| | 1,453 |
| | (372 | ) | | 2003 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Dayton, OH | | (b) | | 1,026 |
| | 907 |
| | — |
| | — |
| | 1,026 |
| | 907 |
| | 1,933 |
| | (526 | ) | | 2002 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Pittsburgh, PA | | (b) | | 1,481 |
| | 676 |
| | — |
| | — |
| | 1,481 |
| | 676 |
| | 2,157 |
| | (434 | ) | | 2006 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Colonie, NY | | (b) | | 1,322 |
| | 991 |
| | (350 | ) | | (261 | ) | | 972 |
| | 730 |
| | 1,702 |
| | (486 | ) | | 1994 | | 12/31/07 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | Clearwater, FL | | (b) | | 2,226 |
| | 858 |
| | — |
| | — |
| | 2,226 |
| | 858 |
| | 3,084 |
| | (460 | ) | | 2004 | | 12/31/07 | | 15 to 40 Years |
| Smoothie King | Memphis, TN | | (d) | | 208 |
| | 302 |
| | — |
| | — |
| | 208 |
| | 302 |
| | 510 |
| | (103 | ) | | 2007 | | 07/17/13 | | 3 to 24 Years |
| Sonic Drive-In | Pilot Point, TX | | (d) | | 446 |
| | 436 |
| | — |
| | — |
| | 446 |
| | 436 |
| | 882 |
| | (88 | ) | | 2000 | | 07/25/16 | | 13 to 30 Years |
| Sonic Drive-In | Little Elm, TX | | (d) | | 620 |
| | 244 |
| | — |
| | — |
| | 620 |
| | 244 |
| | 864 |
| | (76 | ) | | 2001 | | 07/25/16 | | 13 to 20 Years |
| Sonic Drive-In | Celina, TX | | (d) | | 411 |
| | 199 |
| | — |
| | — |
| | 411 |
| | 199 |
| | 610 |
| | (65 | ) | | 2003 | | 07/25/16 | | 13 to 20 Years |
| Sonic Drive-In | St. Paul, TX | | (d) | | 509 |
| | 192 |
| | — |
| | — |
| | 509 |
| | 192 |
| | 701 |
| | (72 | ) | | 2003 | | 07/25/16 | | 13 to 20 Years |
| Sonic Drive-In | Lavon, TX | | (d) | | 404 |
| | 212 |
| | — |
| | — |
| | 404 |
| | 212 |
| | 616 |
| | (70 | ) | | 2003 | | 07/25/16 | | 13 to 20 Years |
| Sonic Drive-In | Melissa, TX | | (d) | | 715 |
| | 609 |
| | — |
| | — |
| | 715 |
| | 609 |
| | 1,324 |
| | (108 | ) | | 2004 | | 07/25/16 | | 13 to 30 Years |
| Sonic Drive-In | Prosper, TX | | (d) | | 990 |
| | 435 |
| | — |
| | — |
| | 990 |
| | 435 |
| | 1,425 |
| | (99 | ) | | 2004 | | 07/25/16 | | 13 to 30 Years |
| Sonic Drive-In | Gunter, TX | | (d) | | 248 |
| | 250 |
| | — |
| | — |
| | 248 |
| | 250 |
| | 498 |
| | (59 | ) | | 2004 | | 07/25/16 | | 13 to 20 Years |
| Sonic Drive-In | Leonard, TX | | (d) | | 323 |
| | 465 |
| | — |
| | — |
| | 323 |
| | 465 |
| | 788 |
| | (81 | ) | | 2005 | | 07/25/16 | | 13 to 30 Years |
| Sonic Drive-In | Keene, TX | | (d) | | 343 |
| | 260 |
| | — |
| | — |
| | 343 |
| | 260 |
| | 603 |
| | (61 | ) | | 2005 | | 07/25/16 | | 13 to 30 Years |
| Sonic Drive-In | Beaumont, TX | | (d) | | 580 |
| | 284 |
| | — |
| | — |
| | 580 |
| | 284 |
| | 864 |
| | (113 | ) | | 2001 | | 08/31/15 | | 15 to 20 Years |
| Sonic Drive-In | Port Arthur, TX | | (d) | | 187 |
| | 256 |
| | — |
| | — |
| | 187 |
| | 256 |
| | 443 |
| | (69 | ) | | 1976 | | 08/31/15 | | 15 to 20 Years |
| Sonic Drive-In | Port Arthur, TX | | (d) | | 384 |
| | 266 |
| | — |
| | — |
| | 384 |
| | 266 |
| | 650 |
| | (103 | ) | | 2002 | | 08/31/15 | | 15 to 20 Years |
| Sonic Drive-In | Beaumont, TX | | (d) | | 777 |
| | 246 |
| | — |
| | — |
| | 777 |
| | 246 |
| | 1,023 |
| | (115 | ) | | 2000 | | 08/31/15 | | 15 to 20 Years |
| Sonic Drive-In | Port Arthur, TX | | (d) | | 403 |
| | 344 |
| | — |
| | — |
| | 403 |
| | 344 |
| | 747 |
| | (114 | ) | | 2004 | | 08/31/15 | | 15 to 20 Years |
| Sonic Drive-In | Beaumont, TX | | (d) | | 758 |
| | 325 |
| | — |
| | — |
| | 758 |
| | 325 |
| | 1,083 |
| | (121 | ) | | 2007 | | 08/31/15 | | 15 to 30 Years |
| Sonic Drive-In | Orange, TX | | (d) | | 541 |
| | 335 |
| | — |
| | — |
| | 541 |
| | 335 |
| | 876 |
| | (107 | ) | | 2007 | | 08/31/15 | | 15 to 30 Years |
| Sonic Drive-In | Raleigh, NC | | (b) | | 639 |
| | 320 |
| | — |
| | — |
| | 639 |
| | 320 |
| | 959 |
| | (125 | ) | | 2008 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Concord, NC | | (b) | | 244 |
| | 310 |
| | — |
| | — |
| | 244 |
| | 310 |
| | 554 |
| | (74 | ) | | 1993 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Rolesville, NC | | (b) | | 526 |
| | 320 |
| | — |
| | — |
| | 526 |
| | 320 |
| | 846 |
| | (118 | ) | | 2007 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Albermarle, NC | | (b) | | 639 |
| | 310 |
| | — |
| | — |
| | 639 |
| | 310 |
| | 949 |
| | (81 | ) | | 1993 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Salisbury, NC | | (b) | | 357 |
| | 338 |
| | — |
| | — |
| | 357 |
| | 338 |
| | 695 |
| | (95 | ) | | 2002 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Rockwell, NC | | (b) | | 385 |
| | 385 |
| | — |
| | — |
| | 385 |
| | 385 |
| | 770 |
| | (143 | ) | | 2006 | | 09/17/13 | | 15 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Boyne City, MI | | (b) | | | 69 | | | | 938 | | | | 0 | | | | 0 | | | | 69 | | | | 938 | | | | 1,007 | | | | (165 | ) | | 1997 | | 11/9/2015 | | 15 to 30 Years |
| | Elk Rapids, MI | | (b) | | | 227 | | | | 947 | | | | 0 | | | | 0 | | | | 227 | | | | 947 | | | | 1,174 | | | | (180 | ) | | 1998 | | 11/9/2015 | | 15 to 30 Years |
| | Carrollton, GA | | (b) | | | 1,879 | | | | 5,868 | | | | 0 | | | | 0 | | | | 1,879 | | | | 5,868 | | | | 7,747 | | | | (1,212 | ) | | 2005 | | 12/30/2014 | | 15 to 40 Years |
| | Dawsonville, GA | | (b) | | | 1,859 | | | | 4,207 | | | | 0 | | | | 0 | | | | 1,859 | | | | 4,207 | | | | 6,066 | | | | (939 | ) | | 2005 | | 12/30/2014 | | 15 to 40 Years |
| | Gainesville, GA | | (b) | | | 2,278 | | | | 8,684 | | | | 0 | | | | 0 | | | | 2,278 | | | | 8,684 | | | | 10,962 | | | | (1,614 | ) | | 1996 | | 12/30/2014 | | 15 to 40 Years |
| | Woodstock, GA | | (b) | | | 2,798 | | | | 5,057 | | | | 0 | | | | 2,800 | | | | 2,798 | | | | 7,857 | | | | 10,655 | | | | (1,535 | ) | | 1997 | | 12/30/2014 | | 15 to 30 Years |
| | Griffin, GA | | (b) | | | 1,239 | | | | 3,188 | | | | 0 | | | | 0 | | | | 1,239 | | | | 3,188 | | | | 4,427 | | | | (909 | ) | | 2005 | | 12/30/2014 | | 15 to 30 Years |
| | Omaha, NE | | (b) | | | 2,254 | | | | 4,249 | | | | 0 | | | | 0 | | | | 2,254 | | | | 4,249 | | | | 6,503 | | | | (1,207 | ) | | 2006 | | 3/26/2015 | | 12 to 30 Years |
| | Avon, IN | | (b) | | | 3,388 | | | | 2,967 | | | | 0 | | | | 3,651 | | | | 3,388 | | | | 6,618 | | | | 10,006 | | | | (2,226 | ) | | 1995 | | 3/1/2016 | | 4 to 30 Years |
| | Bowie, MD | | (b) | | | 7,138 | | | | 5,936 | | | | 0 | | | | 23 | | | | 7,138 | | | | 5,959 | | | | 13,097 | | | | (1,362 | ) | | 1998 | | 11/23/2016 | | 8 to 40 Years |
| | Houston, TX | | (b) | | | 3,203 | | | | 8,089 | | | | 0 | | | | 324 | | | | 3,203 | | | | 8,413 | | | | 11,616 | | | | (328 | ) | | 2016 | | 12/3/2019 | | 11 to 38 Years |
| | Port Orange, FL | | (b) | | | 574 | | | | 1,349 | | | | 0 | | | | 0 | | | | 574 | | | | 1,349 | | | | 1,923 | | | | (69 | ) | | 1997 | | 11/25/2019 | | 10 to 25 Years |
Residence Inn by Marriott | | Cape Canaveral, FL | | (b) | | | 4,627 | | | | 28,368 | | | | 0 | | | | 4,729 | | | | 4,627 | | | | 33,097 | | | | 37,724 | | | | (1,523 | ) | | 2006 | | 3/28/2019 | | 11 to 40 Years |
| | Wauseon, OH | | (b) | | | 1,000 | | | | 2,034 | | | | 0 | | | | 0 | | | | 1,000 | | | | 2,034 | | | | 3,034 | | | | (607 | ) | | 2005 | | 7/17/2013 | | 12 to 37 Years |
| | Fremont, OH | | (b) | | | 504 | | | | 1,405 | | | | (378 | ) | | | (1,053 | ) | | | 126 | | | | 352 | | | | 478 | | | | (67 | ) | | 1998 | | 7/17/2013 | | 4 to 27 Years |
| | Defiance, OH | | (b) | | | 645 | | | | 2,452 | | | | 0 | | | | 0 | | | | 645 | | | | 2,452 | | | | 3,097 | | | | (684 | ) | | 2005 | | 7/17/2013 | | 11 to 38 Years |
| | Glassport, PA | | (b) | | | 550 | | | | 2,471 | | | | 0 | | | | 0 | | | | 550 | | | | 2,471 | | | | 3,021 | | | | (706 | ) | | 2006 | | 7/17/2013 | | 11 to 37 Years |
| | Easton, PA | | (b) | | | 1,028 | | | | 3,996 | | | | 0 | | | | 0 | | | | 1,028 | | | | 3,996 | | | | 5,024 | | | | (974 | ) | | 2006 | | 7/17/2013 | | 12 to 41 Years |
| | Plains, PA | | (b) | | | 1,502 | | | | 2,611 | | | | 0 | | | | 0 | | | | 1,502 | | | | 2,611 | | | | 4,113 | | | | (749 | ) | | 2006 | | 7/17/2013 | | 12 to 37 Years |
| | Lima, OH | | (b) | | | 568 | | | | 3,221 | | | | 0 | | | | 0 | | | | 568 | | | | 3,221 | | | | 3,789 | | | | (760 | ) | | 2005 | | 7/17/2013 | | 12 to 43 Years |
| | Fredericksburg, VA | | (b) | | | 1,426 | | | | 2,077 | | | | 0 | | | | 0 | | | | 1,426 | | | | 2,077 | | | | 3,503 | | | | (607 | ) | | 2006 | | 7/17/2013 | | 14 to 37 Years |
| | Vineland, NJ | | (b) | | | 1,194 | | | | 2,766 | | | | 0 | | | | 0 | | | | 1,194 | | | | 2,766 | | | | 3,960 | | | | (121 | ) | | 1997 | | 7/17/2013 | | 36 to 36 Years |
| | Mantua, NJ | | (b) | | | 502 | | | | 1,379 | | | | 0 | | | | 0 | | | | 502 | | | | 1,379 | | | | 1,881 | | | | (59 | ) | | 1993 | | 7/17/2013 | | 33 to 33 Years |
| | Victoria, TX | | (b) | | | 2,631 | | | | 7,710 | | | | 0 | | | | (326 | ) | | | 2,631 | | | | 7,384 | | | | 10,015 | | | | (1,937 | ) | | 2006 | | 7/17/2013 | | 5 to 43 Years |
| | Sarasota, FL | | (b) | | | 2,758 | | | | 412 | | | | 0 | | | | 0 | | | | 2,758 | | | | 412 | | | | 3,170 | | | | (295 | ) | | 2000 | | 7/17/2013 | | 12 to 25 Years |
| | Metairie, LA | | (a) | | | 800 | | | | 3,016 | | | | 0 | | | | 0 | | | | 800 | | | | 3,016 | | | | 3,816 | | | | (796 | ) | | 1964 | | 7/17/2013 | | 10 to 30 Years |
| | Bowling Green, KY | | (b) | | | 934 | | | | 3,135 | | | | (579 | ) | | | (1,940 | ) | | | 355 | | | | 1,195 | | | | 1,550 | | | | (203 | ) | | 1997 | | 7/17/2013 | | 10 to 34 Years |
| | Lake Charles, LA | | (b) | | | 1,619 | | | | 1,349 | | | | 0 | | | | 0 | | | | 1,619 | | | | 1,349 | | | | 2,968 | | | | (653 | ) | | 1987 | | 7/17/2013 | | 10 to 24 Years |
| | Picayune, MS | | (b) | | | 1,250 | | | | 1,409 | | | | 0 | | | | 0 | | | | 1,250 | | | | 1,409 | | | | 2,659 | | | | (558 | ) | | 1999 | | 7/17/2013 | | 7 to 29 Years |
| | Little Rock, AR | | (b) | | | 2,393 | | | | 11,864 | | | | 0 | | | | 31 | | | | 2,393 | | | | 11,895 | | | | 14,288 | | | | (663 | ) | | 1994 | | 12/20/2019 | | 9 to 23 Years |
| | Lancaster, NY | | (b) | | | 2,524 | | | | 12,996 | | | | (245 | ) | | | 276 | | | | 2,279 | | | | 13,272 | | | | 15,551 | | | | (865 | ) | | 2002 | | 12/20/2019 | | 7 to 17 Years |
| | Lavonia, GA | | (b) | | | 1,649 | | | | 4,659 | | | | 100 | | | | (67 | ) | | | 1,749 | | | | 4,592 | | | | 6,341 | | | | (378 | ) | | 1960 | | 12/20/2019 | | 6 to 21 Years |
| | Carrollton, TX | | (b) | | | 1,931 | | | | 5,557 | | | | 0 | | | | 31 | | | | 1,931 | | | | 5,588 | | | | 7,519 | | | | (371 | ) | | 1981 | | 12/20/2019 | | 6 to 18 Years |
| | Hilliard, OH | | (b) | | | 1,310 | | | | 3,378 | | | | 0 | | | | 32 | | | | 1,310 | | | | 3,410 | | | | 4,720 | | | | (190 | ) | | 1973 | | 12/20/2019 | | 8 to 27 Years |
| | Pounding Mill, VA | | (b) | | | 519 | | | | 2,785 | | | | (33 | ) | | | 64 | | | | 486 | | | | 2,849 | | | | 3,335 | | | | (199 | ) | | 1982 | | 12/20/2019 | | 6 to 17 Years |
| | Spokane, WA | | (b) | | | 954 | | | | 3,738 | | | | 0 | | | | 31 | | | | 954 | | | | 3,769 | | | | 4,723 | | | | (255 | ) | | 1949 | | 12/20/2019 | | 6 to 17 Years |
| | Phoenix, AZ | | (b) | | | 2,394 | | | | 1,426 | | | | 38 | | | | (7 | ) | | | 2,432 | | | | 1,419 | | | | 3,851 | | | | (225 | ) | | 1935 | | 12/20/2019 | | 4 to 18 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sonic Drive-In | South Hill, VA | | (b) | | 564 |
| | 320 |
| | — |
| | — |
| | 564 |
| | 320 |
| | 884 |
| | (132 | ) | | 2007 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Zebulon, NC | | (b) | | 780 |
| | 395 |
| | — |
| | — |
| | 780 |
| | 395 |
| | 1,175 |
| | (148 | ) | | 2006 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Siler City, NC | | (b) | | 686 |
| | 385 |
| | — |
| | — |
| | 686 |
| | 385 |
| | 1,071 |
| | (160 | ) | | 2005 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Creedmoor, NC | | (b) | | 451 |
| | 367 |
| | — |
| | — |
| | 451 |
| | 367 |
| | 818 |
| | (130 | ) | | 2006 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Kannapolis, NC | | (b) | | 244 |
| | 291 |
| | — |
| | — |
| | 244 |
| | 291 |
| | 535 |
| | (87 | ) | | 2001 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Harrisburg, NC | | (b) | | 489 |
| | 291 |
| | — |
| | — |
| | 489 |
| | 291 |
| | 780 |
| | (97 | ) | | 2004 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Concord, NC | | (b) | | 855 |
| | 348 |
| | — |
| | — |
| | 855 |
| | 348 |
| | 1,203 |
| | (107 | ) | | 2004 | | 09/17/13 | | 15 to 30 Years |
| Sonic Drive-In | Aberdeen, NC | | (b) | | 564 |
| | 338 |
| | — |
| | — |
| | 564 |
| | 338 |
| | 902 |
| | (82 | ) | | 1994 | | 09/17/13 | | 15 to 30 Years |
| Sonny's BBQ | Gainesville, FL | | (d) | | 1,489 |
| | 1,241 |
| | — |
| | 104 |
| | 1,489 |
| | 1,345 |
| | 2,834 |
| | (105 | ) | | 2000 | | 12/28/16 | | 6 to 40 Years |
| Sonny's BBQ | Gainesville, FL | | (d) | | 1,534 |
| | 883 |
| | — |
| | — |
| | 1,534 |
| | 883 |
| | 2,417 |
| | (89 | ) | | 1984 | | 12/28/16 | | 6 to 30 Years |
| Sonny's BBQ | Orlando, FL | | (d) | | 1,351 |
| | 1,404 |
| | — |
| | — |
| | 1,351 |
| | 1,404 |
| | 2,755 |
| | (94 | ) | | 2002 | | 12/28/16 | | 8 to 40 Years |
| Sonny's BBQ | Orlando, FL | | (d) | | 1,484 |
| | 1,415 |
| | — |
| | — |
| | 1,484 |
| | 1,415 |
| | 2,899 |
| | (110 | ) | | 1998 | | 12/28/16 | | 6 to 40 Years |
| Sonny's BBQ | Orlando, FL | | (d) | | 1,319 |
| | 1,424 |
| | — |
| | 57 |
| | 1,319 |
| | 1,481 |
| | 2,800 |
| | (95 | ) | | 1997 | | 12/28/16 | | 7 to 40 Years |
| Sonny's BBQ | Oviedo, FL | | (d) | | 1,499 |
| | 1,449 |
| | — |
| | 264 |
| | 1,499 |
| | 1,713 |
| | 3,212 |
| | (118 | ) | | 2006 | | 12/28/16 | | 7 to 40 Years |
| Sonny's BBQ | Sanford, FL | | (d) | | 1,405 |
| | 1,191 |
| | — |
| | — |
| | 1,405 |
| | 1,191 |
| | 2,596 |
| | (113 | ) | | 1987 | | 12/28/16 | | 6 to 30 Years |
| Sonny's BBQ | Inverness, FL | | (d) | | 584 |
| | 503 |
| | — |
| | 151 |
| | 584 |
| | 654 |
| | 1,238 |
| | (49 | ) | | 1998 | | 06/09/17 | | 10 to 30 Years |
| South Carolina Oncology Associates | Columbia, SC | | (d) | | 3,378 |
| | 35,153 |
| | — |
| | — |
| | 3,378 |
| | 35,153 |
| | 38,531 |
| | (4,634 | ) | | 2003 | | 12/31/13 | | 15 to 40 Years |
| Southern Theatres | Mooresville, NC | | (d) | | 5,087 |
| | 6,800 |
| | — |
| | — |
| | 5,087 |
| | 6,800 |
| | 11,887 |
| | (1,203 | ) | | 1999 | | 09/25/14 | | 15 to 30 Years |
| Southern Theatres | Anderson, SC | | (d) | | 5,248 |
| | 6,437 |
| | — |
| | — |
| | 5,248 |
| | 6,437 |
| | 11,685 |
| | (1,486 | ) | | 2000 | | 09/25/14 | | 15 to 30 Years |
| Spartan Logistics | Maxton, NC | | (d) | | 870 |
| | 6,961 |
| | — |
| | 29 |
| | 870 |
| | 6,990 |
| | 7,860 |
| | (457 | ) | | 2016 | | 12/16/16 | | 9 to 40 Years |
| Specialists in Urology | Bonita Springs, FL | | (b) | | 376 |
| | 940 |
| | — |
| | — |
| | 376 |
| | 940 |
| | 1,316 |
| | (216 | ) | | 2006 | | 08/30/12 | | 15 to 50 Years |
| Specialists in Urology | Naples, FL | | (b) | | 1,829 |
| | 4,522 |
| | — |
| | — |
| | 1,829 |
| | 4,522 |
| | 6,351 |
| | (981 | ) | | 1978 | | 08/30/12 | | 15 to 40 Years |
| Specialists in Urology | Bonita Springs, FL | | (b) | | 738 |
| | 4,022 |
| | — |
| | — |
| | 738 |
| | 4,022 |
| | 4,760 |
| | (764 | ) | | 2006 | | 08/30/12 | | 15 to 50 Years |
| Specialists in Urology | Naples, FL | | (b) | | 1,057 |
| | 3,845 |
| | — |
| | — |
| | 1,057 |
| | 3,845 |
| | 4,902 |
| | (727 | ) | | 2012 | | 10/31/12 | | 15 to 50 Years |
| Specialists in Urology | Fort Myers, FL | | (b) | | 903 |
| | 6,445 |
| | — |
| | — |
| | 903 |
| | 6,445 |
| | 7,348 |
| | (1,172 | ) | | 1989 | | 08/30/12 | | 15 to 50 Years |
| Specialists in Urology | Naples, FL | | (b) | | 1,351 |
| | 5,368 |
| | — |
| | — |
| | 1,351 |
| | 5,368 |
| | 6,719 |
| | (973 | ) | | 2002 | | 08/30/12 | | 15 to 50 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strongsville, OH | | (b) | | | 1,114 | | | | 1,903 | | | | 0 | | | | 32 | | | | 1,114 | | | | 1,935 | | | | 3,049 | | | | (119 | ) | | 1990 | | 12/20/2019 | | 11 to 25 Years |
| | Tulsa, OK | | (b) | | | 795 | | | | 614 | | | | 0 | | | | 0 | | | | 795 | | | | 614 | | | | 1,409 | | | | (4 | ) | | 1987 | | 11/23/2020 | | 7 to 21 Years |
| | Tulsa, OK | | (b) | | | 719 | | | | 4,145 | | | | 0 | | | | 0 | | | | 719 | | | | 4,145 | | | | 4,864 | | | | (18 | ) | | 1993 | | 11/23/2020 | | 7 to 23 Years |
Saisaki Asian Bistro and Sushi | | Newport News, VA | | (b) | | | 1,184 | | | | 311 | | | | 0 | | | | 0 | | | | 1,184 | | | | 311 | | | | 1,495 | | | | (409 | ) | | 1995 | | 6/25/2004 | | 10 to 25 Years |
| | Plano, TX | | (b) | | | 1,934 | | | | 1,456 | | | | 0 | | | | 0 | | | | 1,934 | | | | 1,456 | | | | 3,390 | | | | (110 | ) | | 1998 | | 11/25/2019 | | 7 to 20 Years |
| | Walker, MI | | (a) | | | 2,287 | | | | 4,469 | | | | (1,369 | ) | | | (2,277 | ) | | | 918 | | | | 2,192 | | | | 3,110 | | | | (532 | ) | | 2001 | | 7/17/2013 | | 4 to 30 Years |
| | Anderson, SC | | (b) | | | 4,770 | | | | 6,883 | | | | 0 | | | | 0 | | | | 4,770 | | | | 6,883 | | | | 11,653 | | | | (4,608 | ) | | 1993 | | 7/17/2013 | | 7 to 21 Years |
| | Littleton, CO | | (b) | | | 7,839 | | | | 9,299 | | | | 0 | | | | 0 | | | | 7,839 | | | | 9,299 | | | | 17,138 | | | | (5,625 | ) | | 1991 | | 7/17/2013 | | 5 to 17 Years |
Serrano’s Mexican Restaurant | | Mesa, AZ | | (b) | | | 422 | | | | 1,002 | | | | 0 | | | | 0 | | | | 422 | | | | 1,002 | | | | 1,424 | | | | (269 | ) | | 1990 | | 6/14/2013 | | 15 to 40 Years |
Serrano’s Mexican Restaurant | | Queen Creek, AZ | | (b) | | | 609 | | | | 1,159 | | | | 0 | | | | 0 | | | | 609 | | | | 1,159 | | | | 1,768 | | | | (344 | ) | | 2004 | | 6/14/2013 | | 15 to 40 Years |
| | Clarksville, TN | | (b) | | | 795 | | | | 1,446 | | | | 0 | | | | 0 | | | | 795 | | | | 1,446 | | | | 2,241 | | | | (90 | ) | | 2000 | | 11/25/2019 | | 7 to 22 Years |
| | Madison, TN | | (b) | | | 664 | | | | 1,911 | | | | 0 | | | | 0 | | | | 664 | | | | 1,911 | | | | 2,575 | | | | (109 | ) | | 2000 | | 11/25/2019 | | 8 to 23 Years |
| | Nashville, TN | | (b) | | | 931 | | | | 1,673 | | | | 0 | | | | 0 | | | | 931 | | | | 1,673 | | | | 2,604 | | | | (104 | ) | | 2000 | | 11/25/2019 | | 8 to 23 Years |
Sheffield Pharmaceuticals | | Norwich, CT | | (b) | | | 627 | | | | 4,767 | | | | 0 | | | | 27 | | | | 627 | | | | 4,794 | | | | 5,421 | | | | (849 | ) | | 1975 | | 6/30/2016 | | 4 to 30 Years |
| | Orlando, FL | | (b) | | | 2,650 | | | | 9,512 | | | | 390 | | | | 5,508 | | | | 3,040 | | | | 15,020 | | | | 18,060 | | | | (605 | ) | | 2018 | | 1/26/2018 | | 13 to 45 Years |
| | Tampa, FL | | (b) | | | 1,588 | | | | 6,134 | | | | 0 | | | | 0 | | | | 1,588 | | | | 6,134 | | | | 7,722 | | | | (1,022 | ) | | 1990 | | 6/5/2015 | | 15 to 40 Years |
| Shutterfly | | Plano, TX | | (b) | | | 7,867 | | | | 24,085 | | | | 0 | | | | 0 | | | | 7,867 | | | | 24,085 | | | | 31,952 | | | | (264 | ) | | 2020 | | 9/15/2020 | | 10 to 45 Years |
| Skyline Chili | | Fairborn, OH | | (b) | | | 701 | | | | 800 | | | | 0 | | | | 0 | | | | 701 | | | | 800 | | | | 1,501 | | | | (67 | ) | | 1998 | | 11/25/2019 | | 8 to 18 Years |
| Skyline Chili | | Lewis Center, OH | | (b) | | | 736 | | | | 273 | | | | 0 | | | | 0 | | | | 736 | | | | 273 | | | | 1,009 | | | | (31 | ) | | 1998 | | 11/25/2019 | | 8 to 18 Years |
| Slim Chickens | | Texarkana, TX | | (b) | | | 373 | | | | 1,011 | | | | 0 | | | | 0 | | | | 373 | | | | 1,011 | | | | 1,384 | | | | (43 | ) | | 2013 | | 11/25/2019 | | 7 to 32 Years |
| Slim Chickens | | Stillwater, OK | | (b) | | | 1,314 | | | | 1,111 | | | | 0 | | | | 0 | | | | 1,314 | | | | 1,111 | | | | 2,425 | | | | (279 | ) | | 2015 | | 3/31/2015 | | 15 to 40 Years |
| Smart & Final | | El Cajon, CA | | (b) | | | 7,323 | | | | 10,056 | | | | 0 | | | | 0 | | | | 7,323 | | | | 10,056 | | | | 17,379 | | | | (2,468 | ) | | 1997 | | 3/16/2015 | | 15 to 30 Years |
| Smart & Final | | Palmdale, CA | | (b) | | | 3,849 | | | | 9,803 | | | | 0 | | | | 0 | | | | 3,849 | | | | 9,803 | | | | 13,652 | | | | (1,870 | ) | | 2005 | | 3/23/2015 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Orlando, FL | | (b) | | | 2,006 | | | | 571 | | | | 0 | | | | 0 | | | | 2,006 | | | | 571 | | | | 2,577 | | | | (429 | ) | | 2002 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Fairview Heights, IL | | (b) | | | 1,020 | | | | 826 | | | | 0 | | | | 0 | | | | 1,020 | | | | 826 | | | | 1,846 | | | | (679 | ) | | 1972 | | 12/31/2007 | | 15 to 30 Years |
| Smokey Bones Barbecue & Grill | | Springfield, IL | | (b) | | | 1,115 | | | | 772 | | | | 0 | | | | 0 | | | | 1,115 | | | | 772 | | | | 1,887 | | | | (526 | ) | | 1996 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Warwick, RI | | (b) | | | 1,593 | | | | 1,314 | | | | 0 | | | | 0 | | | | 1,593 | | | | 1,314 | | | | 2,907 | | | | (782 | ) | | 1990 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Mentor, OH | | (b) | | | 873 | | | | 790 | | | | 0 | | | | 0 | | | | 873 | | | | 790 | | | | 1,663 | | | | (557 | ) | | 2003 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Bowie, MD | | (b) | | | 1,501 | | | | 615 | | | | 0 | | | | 0 | | | | 1,501 | | | | 615 | | | | 2,116 | | | | (434 | ) | | 2004 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Melbourne, FL | | (b) | | | 2,005 | | | | 794 | | | | 0 | | | | 0 | | | | 2,005 | | | | 794 | | | | 2,799 | | | | (619 | ) | | 1986 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Fort Wayne, IN | | (b) | | | 1,110 | | | | 817 | | | | 0 | | | | 0 | | | | 1,110 | | | | 817 | | | | 1,927 | | | | (624 | ) | | 2003 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Greensboro, NC | | (b) | | | 1,009 | | | | 444 | | | | 0 | | | | 0 | | | | 1,009 | | | | 444 | | | | 1,453 | | | | (439 | ) | | 2003 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Dayton, OH | | (b) | | | 1,026 | | | | 907 | | | | 0 | | | | 0 | | | | 1,026 | | | | 907 | | | | 1,933 | | | | (622 | ) | | 2002 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Pittsburgh, PA | | (b) | | | 1,481 | | | | 676 | | | | 0 | | | | 0 | | | | 1,481 | | | | 676 | | | | 2,157 | | | | (513 | ) | | 2006 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Colonie, NY | | (b) | | | 1,322 | | | | 991 | | | | (350 | ) | | | (261 | ) | | | 972 | | | | 730 | | | | 1,702 | | | | (570 | ) | | 1994 | | 12/31/2007 | | 15 to 40 Years |
| Smokey Bones Barbecue & Grill | | Clearwater, FL | | (b) | | | 2,226 | | | | 858 | | | | 0 | | | | 0 | | | | 2,226 | | | | 858 | | | | 3,084 | | | | (543 | ) | | 2004 | | 12/31/2007 | | 15 to 40 Years |
| Smoothie King | | Memphis, TN | | (b) | | | 208 | | | | 302 | | | | 0 | | | | 0 | | | | 208 | | | | 302 | | | | 510 | | | | (140 | ) | | 2007 | | 7/17/2013 | | 3 to 24 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Specialists in Urology | Bonita Springs, FL | | (b) | | 317 |
| | 1,619 |
| | — |
| | — |
| | 317 |
| | 1,619 |
| | 1,936 |
| | (318 | ) | | 2003 | | 08/30/12 | | 15 to 50 Years |
| Specialists in Urology | Cape Coral, FL | | (b) | | 545 |
| | 1,716 |
| | (199 | ) | | (684 | ) | | 346 |
| | 1,032 |
| | 1,378 |
| | (25 | ) | | 2011 | | 08/30/12 | | 14 to 90 Years |
| Specialists in Urology | Kennewick, WA | | (d) | | 353 |
| | 4,248 |
| | — |
| | — |
| | 353 |
| | 4,248 |
| | 4,601 |
| | (371 | ) | | 2011 | | 03/31/16 | | 13 to 40 Years |
| Sportsman's Warehouse | Thornton, CO | | (d) | | 2,836 |
| | 5,069 |
| | — |
| | — |
| | 2,836 |
| | 5,069 |
| | 7,905 |
| | (1,399 | ) | | 2003 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Ankeny, IA | | (d) | | 3,913 |
| | 3,671 |
| | — |
| | — |
| | 3,913 |
| | 3,671 |
| | 7,584 |
| | (1,080 | ) | | 2003 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Midvale, UT | | (d) | | 2,931 |
| | 4,844 |
| | — |
| | — |
| | 2,931 |
| | 4,844 |
| | 7,775 |
| | (1,242 | ) | | 2002 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Mesa, AZ | | (d) | | 2,040 |
| | 5,696 |
| | — |
| | — |
| | 2,040 |
| | 5,696 |
| | 7,736 |
| | (1,421 | ) | | 2005 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Phoenix, AZ | | (d) | | 2,098 |
| | 5,338 |
| | — |
| | — |
| | 2,098 |
| | 5,338 |
| | 7,436 |
| | (1,358 | ) | | 2003 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Loveland, CO | | (d) | | 2,329 |
| | 4,750 |
| | — |
| | — |
| | 2,329 |
| | 4,750 |
| | 7,079 |
| | (1,180 | ) | | 2001 | | 10/15/12 | | 15 to 30 Years |
| Sportsman's Warehouse | Colorado Springs, CO | | (d) | | 2,568 |
| | 4,842 |
| | — |
| | — |
| | 2,568 |
| | 4,842 |
| | 7,410 |
| | (513 | ) | | 2005 | | 08/31/16 | | 10 to 40 Years |
| Sportsman's Warehouse | Bend, OR | | (b) | | 1,516 |
| | 4,850 |
| | — |
| | — |
| | 1,516 |
| | 4,850 |
| | 6,366 |
| | (768 | ) | | 2000 | | 08/15/13 | | 10 to 50 Years |
| Sportsman's Warehouse | Williston, ND | | (d) | | 2,190 |
| | 4,132 |
| | — |
| | — |
| | 2,190 |
| | 4,132 |
| | 6,322 |
| | (418 | ) | | 2015 | | 08/24/15 | | 15 to 50 Years |
| StaFit | Saint Cloud, MN | | (b) | | 912 |
| | 1,427 |
| | — |
| | — |
| | 912 |
| | 1,427 |
| | 2,339 |
| | (359 | ) | | 1989 | | 12/16/14 | | 15 to 20 Years |
| StaFit | Sartell, MN | | (b) | | 3,092 |
| | 3,765 |
| | — |
| | 390 |
| | 3,092 |
| | 4,155 |
| | 7,247 |
| | (930 | ) | | 2001 | | 12/16/14 | | 15 to 30 Years |
| Staples | Crossville, TN | | (d) | | 668 |
| | 2,705 |
| | — |
| | — |
| | 668 |
| | 2,705 |
| | 3,373 |
| | (454 | ) | | 2001 | | 07/17/13 | | 3 to 46 Years |
| Staples | Peru, IL | | (d) | | 963 |
| | 2,033 |
| | — |
| | — |
| | 963 |
| | 2,033 |
| | 2,996 |
| | (462 | ) | | 1998 | | 07/17/13 | | 1 to 35 Years |
| Staples | Clarksville, IN | | (d) | | 991 |
| | 3,161 |
| | — |
| | — |
| | 991 |
| | 3,161 |
| | 4,152 |
| | (475 | ) | | 2006 | | 07/17/13 | | 3 to 48 Years |
| Staples | Greenville, SC | | (d) | | 742 |
| | 3,026 |
| | — |
| | — |
| | 742 |
| | 3,026 |
| | 3,768 |
| | (421 | ) | | 2006 | | 07/17/13 | | 3 to 48 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Staples | Warsaw, IN | | (d) | | 590 |
| | 2,504 |
| | — |
| | — |
| | 590 |
| | 2,504 |
| | 3,094 |
| | (443 | ) | | 1998 | | 07/17/13 | | 0 to 44 Years |
| Staples | Guntersville, AL | | (d) | | 1,039 |
| | 2,535 |
| | — |
| | — |
| | 1,039 |
| | 2,535 |
| | 3,574 |
| | (422 | ) | | 2001 | | 07/17/13 | | 2 to 46 Years |
| Starbucks | Kingsport, TN | | (d) | | 307 |
| | 766 |
| | — |
| | — |
| | 307 |
| | 766 |
| | 1,073 |
| | (179 | ) | | 2007 | | 07/17/13 | | 4 to 32 Years |
| Starbucks | Bowling Green, KY | | (d) | | 756 |
| | 205 |
| | — |
| | — |
| | 756 |
| | 205 |
| | 961 |
| | (102 | ) | | 2007 | | 07/17/13 | | 4 to 39 Years |
| Starbucks | Stillwater, OK | | (d) | | 218 |
| | 1,262 |
| | — |
| | — |
| | 218 |
| | 1,262 |
| | 1,480 |
| | (253 | ) | | 2007 | | 07/17/13 | | 4 to 32 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sonic Drive-In | | Concord, NC | | (b) | | | 855 | | | | 348 | | | | 0 | | | | 0 | | | | 855 | | | | 348 | | | | 1,203 | | | | (148 | ) | | 2004 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Creedmoor, NC | | (b) | | | 451 | | | | 367 | | | | 0 | | | | 0 | | | | 451 | | | | 367 | | | | 818 | | | | (179 | ) | | 2006 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Zebulon, NC | | (b) | | | 780 | | | | 395 | | | | 0 | | | | 0 | | | | 780 | | | | 395 | | | | 1,175 | | | | (204 | ) | | 2006 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Salisbury, NC | | (b) | | | 357 | | | | 338 | | | | 0 | | | | 0 | | | | 357 | | | | 338 | | | | 695 | | | | (132 | ) | | 2002 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Concord, NC | | (b) | | | 244 | | | | 310 | | | | 0 | | | | 0 | | | | 244 | | | | 310 | | | | 554 | | | | (102 | ) | | 1993 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Kannapolis, NC | | (b) | | | 244 | | | | 291 | | | | 0 | | | | 0 | | | | 244 | | | | 291 | | | | 535 | | | | (120 | ) | | 2001 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Harrisburg, NC | | (b) | | | 489 | | | | 291 | | | | 0 | | | | 0 | | | | 489 | | | | 291 | | | | 780 | | | | (134 | ) | | 2004 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Albermarle, NC | | (b) | | | 639 | | | | 310 | | | | 0 | | | | 0 | | | | 639 | | | | 310 | | | | 949 | | | | (111 | ) | | 1993 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Siler City, NC | | (b) | | | 686 | | | | 385 | | | | 0 | | | | 0 | | | | 686 | | | | 385 | | | | 1,071 | | | | (220 | ) | | 2005 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Raleigh, NC | | (b) | | | 639 | | | | 320 | | | | 0 | | | | 0 | | | | 639 | | | | 320 | | | | 959 | | | | (173 | ) | | 2008 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Rolesville, NC | | (b) | | | 526 | | | | 320 | | | | 0 | | | | 0 | | | | 526 | | | | 320 | | | | 846 | | | | (164 | ) | | 2007 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | South Hill, VA | | (b) | | | 564 | | | | 320 | | | | 0 | | | | 0 | | | | 564 | | | | 320 | | | | 884 | | | | (182 | ) | | 2007 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Rockwell, NC | | (b) | | | 385 | | | | 385 | | | | 0 | | | | 0 | | | | 385 | | | | 385 | | | | 770 | | | | (198 | ) | | 2006 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | Aberdeen, NC | | (b) | | | 564 | | | | 338 | | | | 0 | | | | 0 | | | | 564 | | | | 338 | | | | 902 | | | | (114 | ) | | 1994 | | 9/17/2013 | | 15 to 30 Years |
| Sonic Drive-In | | D’Iberville, MS | | (b) | | | 604 | | | | 1,171 | | | | 0 | | | | 0 | | | | 604 | | | | 1,171 | | | | 1,775 | | | | (76 | ) | | 2005 | | 11/25/2019 | | 9 to 20 Years |
| Sonic Drive-In | | Hattiesburg, MS | | (b) | | | 839 | | | | 1,109 | | | | 0 | | | | 0 | | | | 839 | | | | 1,109 | | | | 1,948 | | | | (67 | ) | | 2010 | | 11/25/2019 | | 9 to 25 Years |
| Sonic Drive-In | | Laurel, MS | | (b) | | | 549 | | | | 803 | | | | 0 | | | | 0 | | | | 549 | | | | 803 | | | | 1,352 | | | | (79 | ) | | 1993 | | 11/25/2019 | | 7 to 14 Years |
| Sonic Drive-In | | Bay Minette, AL | | (b) | | | 551 | | | | 850 | | | | 0 | | | | 0 | | | | 551 | | | | 850 | | | | 1,401 | | | | (78 | ) | | 2000 | | 11/25/2019 | | 8 to 15 Years |
| Sonic Drive-In | | Flowood, MS | | (b) | | | 340 | | | | 868 | | | | 0 | | | | 0 | | | | 340 | | | | 868 | | | | 1,208 | | | | (75 | ) | | 1994 | | 11/25/2019 | | 8 to 14 Years |
| Sonic Drive-In | | Knoxville, TN | | (b) | | | 335 | | | | 155 | | | | 0 | | | | 0 | | | | 335 | | | | 155 | | | | 490 | | | | (39 | ) | | 1987 | | 11/25/2019 | | 2 to 6 Years |
| Sonic Drive-In | | Celina, TX | | (b) | | | 411 | | | | 199 | | | | 0 | | | | 0 | | | | 411 | | | | 199 | | | | 610 | | | | (119 | ) | | 2003 | | 7/25/2016 | | 13 to 20 Years |
| Sonic Drive-In | | Gunter, TX | | (b) | | | 248 | | | | 250 | | | | 0 | | | | 0 | | | | 248 | | | | 250 | | | | 498 | | | | (107 | ) | | 2004 | | 7/25/2016 | | 13 to 20 Years |
| Sonic Drive-In | | Keene, TX | | (b) | | | 343 | | | | 260 | | | | 0 | | | | 0 | | | | 343 | | | | 260 | | | | 603 | | | | (112 | ) | | 2005 | | 7/25/2016 | | 13 to 30 Years |
| Sonic Drive-In | | Lavon, TX | | (b) | | | 404 | | | | 212 | | | | 0 | | | | 0 | | | | 404 | | | | 212 | | | | 616 | | | | (127 | ) | | 2003 | | 7/25/2016 | | 13 to 20 Years |
| Sonic Drive-In | | Leonard, TX | | (b) | | | 323 | | | | 465 | | | | 0 | | | | 0 | | | | 323 | | | | 465 | | | | 788 | | | | (149 | ) | | 2005 | | 7/25/2016 | | 13 to 30 Years |
| Sonic Drive-In | | Little Elm, TX | | (b) | | | 620 | | | | 244 | | | | 0 | | | | 0 | | | | 620 | | | | 244 | | | | 864 | | | | (139 | ) | | 2001 | | 7/25/2016 | | 13 to 20 Years |
| Sonic Drive-In | | Melissa, TX | | (b) | | | 715 | | | | 609 | | | | 0 | | | | 0 | | | | 715 | | | | 609 | | | | 1,324 | | | | (198 | ) | | 2004 | | 7/25/2016 | | 13 to 30 Years |
| Sonic Drive-In | | Pilot Point, TX | | (b) | | | 446 | | | | 436 | | | | 0 | | | | 0 | | | | 446 | | | | 436 | | | | 882 | | | | (160 | ) | | 2000 | | 7/25/2016 | | 13 to 30 Years |
| Sonic Drive-In | | Prosper, TX | | (b) | | | 990 | | | | 435 | | | | 0 | | | | 0 | | | | 990 | | | | 435 | | | | 1,425 | | | | (181 | ) | | 2004 | | 7/25/2016 | | 13 to 30 Years |
| Sonic Drive-In | | St. Paul, TX | | (b) | | | 509 | | | | 192 | | | | 0 | | | | 0 | | | | 509 | | | | 192 | | | | 701 | | | | (132 | ) | | 2003 | | 7/25/2016 | | 13 to 20 Years |
| Sonic Drive-In | | Beaumont, TX | | (b) | | | 580 | | | | 284 | | | | 0 | | | | 0 | | | | 580 | | | | 284 | | | | 864 | | | | (181 | ) | | 2001 | | 8/31/2015 | | 15 to 20 Years |
| Sonic Drive-In | | Port Arthur, TX | | (b) | | | 384 | | | | 266 | | | | 0 | | | | 0 | | | | 384 | | | | 266 | | | | 650 | | | | (165 | ) | | 2002 | | 8/31/2015 | | 15 to 20 Years |
| Sonic Drive-In | | Beaumont, TX | | (b) | | | 777 | | | | 246 | | | | 0 | | | | 0 | | | | 777 | | | | 246 | | | | 1,023 | | | | (185 | ) | | 2000 | | 8/31/2015 | | 15 to 20 Years |
| Sonic Drive-In | | Port Arthur, TX | | (b) | | | 187 | | | | 256 | | | | 0 | | | | 0 | | | | 187 | | | | 256 | | | | 443 | | | | (110 | ) | | 1976 | | 8/31/2015 | | 15 to 20 Years |
| Sonic Drive-In | | Beaumont, TX | | (b) | | | 758 | | | | 325 | | | | 0 | | | | 0 | | | | 758 | | | | 325 | | | | 1,083 | | | | (194 | ) | | 2007 | | 8/31/2015 | | 15 to 30 Years |
| Sonic Drive-In | | Orange, TX | | (b) | | | 541 | | | | 335 | | | | 0 | | | | 0 | | | | 541 | | | | 335 | | | | 876 | | | | (171 | ) | | 2007 | | 8/31/2015 | | 15 to 30 Years |
| Sonic Drive-In | | Port Arthur, TX | | (b) | | | 403 | | | | 344 | | | | 0 | | | | 0 | | | | 403 | | | | 344 | | | | 747 | | | | (183 | ) | | 2004 | | 8/31/2015 | | 15 to 20 Years |
| Sonny’s BBQ | | Orlando, FL | | (b) | | | 1,319 | | | | 1,424 | | | | 0 | | | | 598 | | | | 1,319 | | | | 2,022 | | | | 3,341 | | | | (216 | ) | | 1997 | | 12/28/2016 | | 7 to 40 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Starbucks | Powell, TN | | (d) | | 411 |
| | 353 |
| | — |
| | — |
| | 411 |
| | 353 |
| | 764 |
| | (129 | ) | | 2007 | | 07/17/13 | | 4 to 26 Years |
| Stater Bros. Markets | Lancaster, CA | | (d) | | 1,569 |
| | 4,271 |
| | — |
| | — |
| | 1,569 |
| | 4,271 |
| | 5,840 |
| | (934 | ) | | 1983 | | 12/17/13 | | 5 to 30 Years |
| Studio Movie Grill | Downey, CA | | (d) | | 1,767 |
| | 12,172 |
| | — |
| | 2,666 |
| | 1,767 |
| | 14,838 |
| | 16,605 |
| | (1,468 | ) | | 1997 | | 09/30/15 | | 15 to 30 Years |
| Studio Movie Grill | Monrovia, CA | | (d) | | 2,448 |
| | 17,849 |
| | — |
| | 2,666 |
| | 2,448 |
| | 20,515 |
| | 22,963 |
| | (2,051 | ) | | 2000 | | 09/30/15 | | 15 to 30 Years |
| Studio Movie Grill | Redlands, CA | | (d) | | 4,442 |
| | 17,859 |
| | — |
| | 2,666 |
| | 4,442 |
| | 20,525 |
| | 24,967 |
| | (2,170 | ) | | 1997 | | 09/30/15 | | 15 to 30 Years |
| Studio Movie Grill | Marietta, GA | | (d) | | 2,930 |
| | 7,616 |
| | — |
| | 67 |
| | 2,930 |
| | 7,683 |
| | 10,613 |
| | (461 | ) | | 1987 | | 03/15/17 | | 10 to 40 Years |
| Sunny Delight | Dayton, NJ | | (d) | | 12,701 |
| | 10,723 |
| | — |
| | — |
| | 12,701 |
| | 10,723 |
| | 23,424 |
| | (1,434 | ) | | 1975 | | 10/27/16 | | 7 to 30 Years |
| Taco Bell | Moultrie, GA | | (b) | | 437 |
| | 563 |
| | — |
| | — |
| | 437 |
| | 563 |
| | 1,000 |
| | (161 | ) | | 2012 | | 03/29/13 | | 15 to 30 Years |
| Taco Bell | Greenville, TN | | (b) | | 735 |
| | 517 |
| | — |
| | — |
| | 735 |
| | 517 |
| | 1,252 |
| | (160 | ) | | 2010 | | 03/29/13 | | 15 to 30 Years |
| Taco Bell | Anderson, IN | | (b) | | 363 |
| | 700 |
| | — |
| | — |
| | 363 |
| | 700 |
| | 1,063 |
| | (291 | ) | | 1995 | | 07/17/13 | | 8 to 17 Years |
| Taco Bell | Brazil, IN | | (b) | | 391 |
| | 903 |
| | — |
| | — |
| | 391 |
| | 903 |
| | 1,294 |
| | (225 | ) | | 1996 | | 07/17/13 | | 8 to 33 Years |
| Taco Bell | Henderson, KY | | (b) | | 656 |
| | 1,058 |
| | — |
| | — |
| | 656 |
| | 1,058 |
| | 1,714 |
| | (214 | ) | | 1992 | | 07/17/13 | | 7 to 35 Years |
| Taco Bell | Martinsville, IN | | (b) | | 940 |
| | 1,128 |
| | — |
| | — |
| | 940 |
| | 1,128 |
| | 2,068 |
| | (252 | ) | | 1986 | | 07/17/13 | | 4 to 35 Years |
| Taco Bell | Princeton, IN | | (b) | | 340 |
| | 906 |
| | — |
| | — |
| | 340 |
| | 906 |
| | 1,246 |
| | (415 | ) | | 1992 | | 07/17/13 | | 7 to 15 Years |
| Taco Bell | Robinson, IL | | (b) | | 250 |
| | 1,021 |
| | — |
| | — |
| | 250 |
| | 1,021 |
| | 1,271 |
| | (248 | ) | | 1994 | | 07/17/13 | | 7 to 33 Years |
| Taco Bell | Washington, IN | | (b) | | 272 |
| | 949 |
| | — |
| | — |
| | 272 |
| | 949 |
| | 1,221 |
| | (240 | ) | | 1995 | | 07/17/13 | | 8 to 33 Years |
| Taco Bell / KFC | Vincennes, IN | | (b) | | 389 |
| | 1,425 |
| | — |
| | — |
| | 389 |
| | 1,425 |
| | 1,814 |
| | (328 | ) | | 2000 | | 07/17/13 | | 8 to 30 Years |
| Taco Bell / KFC | Spencer, IN | | (b) | | 136 |
| | 1,040 |
| | — |
| | — |
| | 136 |
| | 1,040 |
| | 1,176 |
| | (296 | ) | | 1999 | | 07/17/13 | | 8 to 22 Years |
| Taco Bueno | Hurst, TX | | (d) | | 505 |
| | 66 |
| | — |
| | — |
| | 505 |
| | 66 |
| | 571 |
| | (31 | ) | | 1978 | | 06/30/16 | | 5 to 10 Years |
| Taco Bueno | Arlington, TX | | (d) | | 449 |
| | 128 |
| | — |
| | — |
| | 449 |
| | 128 |
| | 577 |
| | (70 | ) | | 1978 | | 06/30/16 | | 4 to 10 Years |
| Taco Bueno | Fort Worth, TX | | (d) | | 331 |
| | 450 |
| | — |
| | — |
| | 331 |
| | 450 |
| | 781 |
| | (74 | ) | | 1977 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Bedford, TX | | (d) | | 694 |
| | 516 |
| | — |
| | — |
| | 694 |
| | 516 |
| | 1,210 |
| | (93 | ) | | 1977 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Tulsa, OK | | (d) | | 835 |
| | 967 |
| | — |
| | — |
| | 835 |
| | 967 |
| | 1,802 |
| | (107 | ) | | 1978 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Fort Worth, TX | | (d) | | 377 |
| | 193 |
| | — |
| | — |
| | 377 |
| | 193 |
| | 570 |
| | (80 | ) | | 1978 | | 06/30/16 | | 4 to 10 Years |
| Taco Bueno | Euless, TX | | (d) | | 674 |
| | 277 |
| | — |
| | — |
| | 674 |
| | 277 |
| | 951 |
| | (71 | ) | | 1979 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Abilene, TX | | (d) | | 1,132 |
| | 1,292 |
| | — |
| | (10 | ) | | 1,132 |
| | 1,282 |
| | 2,414 |
| | (154 | ) | | 1979 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Arlington, TX | | (d) | | 540 |
| | 1,205 |
| | — |
| | — |
| | 540 |
| | 1,205 |
| | 1,745 |
| | (129 | ) | | 1981 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Denton, TX | | (d) | | 693 |
| | 884 |
| | — |
| | — |
| | 693 |
| | 884 |
| | 1,577 |
| | (111 | ) | | 1995 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Lake Worth, TX | | (d) | | 427 |
| | 872 |
| | — |
| | — |
| | 427 |
| | 872 |
| | 1,299 |
| | (93 | ) | | 1983 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Tulsa, OK | | (d) | | 760 |
| | 381 |
| | (341 | ) | | (192 | ) | | 419 |
| | 189 |
| | 608 |
| | — |
| | 1984 | | 06/30/16 | | 2 to 17 Years |
| Taco Bueno | Garland, TX | | (d) | | 532 |
| | 442 |
| | — |
| | — |
| | 532 |
| | 442 |
| | 974 |
| | (57 | ) | | 1979 | | 06/30/16 | | 5 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sonny’s BBQ | | Inverness, FL | | (b) | | | 584 | | | | 503 | | | | 0 | | | | 151 | | | | 584 | | | | 654 | | | | 1,238 | | | | (125 | ) | | 1998 | | 6/9/2017 | | 10 to 30 Years |
| Sonny’s BBQ | | Orlando, FL | | (b) | | | 1,484 | | | | 1,415 | | | | 0 | | | | 0 | | | | 1,484 | | | | 1,415 | | | | 2,899 | | | | (220 | ) | | 1998 | | 12/28/2016 | | 6 to 40 Years |
| Sonny’s BBQ | | Gainesville, FL | | (b) | | | 1,489 | | | | 1,241 | | | | 0 | | | | 104 | | | | 1,489 | | | | 1,345 | | | | 2,834 | | | | (211 | ) | | 2000 | | 12/28/2016 | | 6 to 40 Years |
| Sonny’s BBQ | | Orlando, FL | | (b) | | | 1,351 | | | | 1,404 | | | | 0 | | | | 0 | | | | 1,351 | | | | 1,404 | | | | 2,755 | | | | (187 | ) | | 2002 | | 12/28/2016 | | 8 to 40 Years |
| Sonny’s BBQ | | Gainesville, FL | | (b) | | | 1,534 | | | | 883 | | | | 0 | | | | 0 | | | | 1,534 | | | | 883 | | | | 2,417 | | | | (177 | ) | | 1984 | | 12/28/2016 | | 6 to 30 Years |
| Sonny’s BBQ | | Oviedo, FL | | (b) | | | 1,499 | | | | 1,449 | | | | 0 | | | | 264 | | | | 1,499 | | | | 1,713 | | | | 3,212 | | | | (244 | ) | | 2006 | | 12/28/2016 | | 7 to 40 Years |
| Sonny’s BBQ | | Sanford, FL | | (b) | | | 1,405 | | | | 1,191 | | | | 0 | | | | 0 | | | | 1,405 | | | | 1,191 | | | | 2,596 | | | | (226 | ) | | 1987 | | 12/28/2016 | | 6 to 30 Years |
| South Carolina Oncology Associates | | Columbia, SC | | (b) | | | 3,378 | | | | 35,153 | | | | 0 | | | | 0 | | | | 3,378 | | | | 35,153 | | | | 38,531 | | | | (6,488 | ) | | 2003 | | 12/31/2013 | | 15 to 40 Years |
| Southern Theatres | | Mooresville, NC | | (b) | | | 5,087 | | | | 6,800 | | | | 0 | | | | 1,250 | | | | 5,087 | | | | 8,050 | | | | 13,137 | | | | (1,819 | ) | | 1999 | | 9/25/2014 | | 15 to 30 Years |
| Southern Theatres | | Anderson, SC | | (b) | | | 5,248 | | | | 6,437 | | | | 0 | | | | 1,250 | | | | 5,248 | | | | 7,687 | | | | 12,935 | | | | (2,236 | ) | | 2000 | | 9/25/2014 | | 15 to 30 Years |
| Specialists in Urology | | Bonita Springs, FL | | (b) | | | 376 | | | | 940 | | | | 0 | | | | 0 | | | | 376 | | | | 940 | | | | 1,316 | | | | (285 | ) | | 2006 | | 8/30/2012 | | 15 to 50 Years |
| Specialists in Urology | | Naples, FL | | (b) | | | 1,829 | | | | 4,522 | | | | 0 | | | | 0 | | | | 1,829 | | | | 4,522 | | | | 6,351 | | | | (1,294 | ) | | 1978 | | 8/30/2012 | | 15 to 40 Years |
| Specialists in Urology | | Bonita Springs, FL | | (b) | | | 738 | | | | 4,022 | | | | 0 | | | | 0 | | | | 738 | | | | 4,022 | | | | 4,760 | | | | (1,008 | ) | | 2006 | | 8/30/2012 | | 15 to 50 Years |
| Specialists in Urology | | Naples, FL | | (b) | | | 1,057 | | | | 3,845 | | | | 0 | | | | 0 | | | | 1,057 | | | | 3,845 | | | | 4,902 | | | | (965 | ) | | 2012 | | 10/31/2012 | | 15 to 50 Years |
| Specialists in Urology | | Fort Myers, FL | | (b) | | | 903 | | | | 6,445 | | | | 0 | | | | 0 | | | | 903 | | | | 6,445 | | | | 7,348 | | | | (1,546 | ) | | 1989 | | 8/30/2012 | | 15 to 50 Years |
| Specialists in Urology | | Naples, FL | | (b) | | | 1,351 | | | | 5,368 | | | | 0 | | | | 0 | | | | 1,351 | | | | 5,368 | | | | 6,719 | | | | (1,283 | ) | | 2002 | | 8/30/2012 | | 15 to 50 Years |
| Specialists in Urology | | Bonita Springs, FL | | (b) | | | 317 | | | | 1,619 | | | | 0 | | | | 0 | | | | 317 | | | | 1,619 | | | | 1,936 | | | | (420 | ) | | 2003 | | 8/30/2012 | | 15 to 50 Years |
| Specialists in Urology | | Cape Coral, FL | | (b) | | | 545 | | | | 1,716 | | | | (231 | ) | | | (680 | ) | | | 314 | | | | 1,036 | | | | 1,350 | | | | (92 | ) | | 2011 | | 8/30/2012 | | 14 to 90 Years |
| Specialists in Urology | | Kennewick, WA | | (b) | | | 353 | | | | 4,248 | | | | 0 | | | | 0 | | | | 353 | | | | 4,248 | | | | 4,601 | | | | (638 | ) | | 2011 | | 3/31/2016 | | 13 to 40 Years |
| Sportsman’s Warehouse | | Thornton, CO | | (b) | | | 2,836 | | | | 5,069 | | | | 0 | | | | 0 | | | | 2,836 | | | | 5,069 | | | | 7,905 | | | | (1,849 | ) | | 2003 | | 10/15/2012 | | 15 to 30 Years |
| Sportsman’s Warehouse | | Midvale, UT | | (b) | | | 2,931 | | | | 4,844 | | | | 0 | | | | 0 | | | | 2,931 | | | | 4,844 | | | | 7,775 | | | | (1,643 | ) | | 2002 | | 10/15/2012 | | 15 to 30 Years |
| Sportsman’s Warehouse | | Mesa, AZ | | (b) | | | 2,040 | | | | 5,696 | | | | 0 | | | | 0 | | | | 2,040 | | | | 5,696 | | | | 7,736 | | | | (1,879 | ) | | 2005 | | 10/15/2012 | | 15 to 30 Years |
| Sportsman’s Warehouse | | Phoenix, AZ | | (b) | | | 2,098 | | | | 5,338 | | | | 0 | | | | 0 | | | | 2,098 | | | | 5,338 | | | | 7,436 | | | | (1,795 | ) | | 2003 | | 10/15/2012 | | 15 to 30 Years |
| Sportsman’s Warehouse | | Loveland, CO | | (b) | | | 2,329 | | | | 4,750 | | | | 0 | | | | 0 | | | | 2,329 | | | | 4,750 | | | | 7,079 | | | | (1,559 | ) | | 2001 | | 10/15/2012 | | 15 to 30 Years |
| Sportsman’s Warehouse | | Colorado Springs, CO | | (b) | | | 2,568 | | | | 4,842 | | | | 0 | | | | 0 | | | | 2,568 | | | | 4,842 | | | | 7,410 | | | | (953 | ) | | 2005 | | 8/31/2016 | | 10 to 40 Years |
| Sportsman’s Warehouse | | Williston, ND | | (b) | | | 2,190 | | | | 4,132 | | | | 0 | | | | 0 | | | | 2,190 | | | | 4,132 | | | | 6,322 | | | | (668 | ) | | 2015 | | 8/24/2015 | | 15 to 50 Years |
| Sportsman’s Warehouse | | Bend, OR | | (b) | | | 1,516 | | | | 4,850 | | | | 0 | | | | 0 | | | | 1,516 | | | | 4,850 | | | | 6,366 | | | | (1,051 | ) | | 2000 | | 8/15/2013 | | 10 to 50 Years |
| Sportsman’s Warehouse | | West Jordan, UT | | (b) | | | 3,055 | | | | 7,493 | | | | 0 | | | | 7 | | | | 3,055 | | | | 7,500 | | | | 10,555 | | | | (227 | ) | | 2019 | | 12/20/2019 | | 12 to 40 Years |
| Staples | | Crossville, TN | | (b) | | | 668 | | | | 2,705 | | | | 0 | | | | 0 | | | | 668 | | | | 2,705 | | | | 3,373 | | | | (620 | ) | | 2001 | | 7/17/2013 | | 3 to 46 Years |
| Staples | | Peru, IL | | (b) | | | 963 | | | | 2,033 | | | | 0 | | | | 0 | | | | 963 | | | | 2,033 | | | | 2,996 | | | | (632 | ) | | 1998 | | 7/17/2013 | | 1 to 35 Years |
| Staples | | Clarksville, IN | | (b) | | | 991 | | | | 3,161 | | | | 0 | | | | 0 | | | | 991 | | | | 3,161 | | | | 4,152 | | | | (648 | ) | | 2006 | | 7/17/2013 | | 3 to 48 Years |
| Staples | | Greenville, SC | | (b) | | | 742 | | | | 3,026 | | | | 0 | | | | 0 | | | | 742 | | | | 3,026 | | | | 3,768 | | | | (572 | ) | | 2006 | | 7/17/2013 | | 3 to 48 Years |
| Staples | | Warsaw, IN | | (b) | | | 590 | | | | 2,504 | | | | 0 | | | | 0 | | | | 590 | | | | 2,504 | | | | 3,094 | | | | (606 | ) | | 1998 | | 7/17/2013 | | 11 to 44 Years |
| Staples | | Guntersville, AL | | (b) | | | 1,039 | | | | 2,535 | | | | 0 | | | | 11 | | | | 1,039 | | | | 2,546 | | | | 3,585 | | | | (576 | ) | | 2001 | | 7/17/2013 | | 2 to 46 Years |
| Starbucks | | Kingsport, TN | | (b) | | | 307 | | | | 766 | | | | 0 | | | | 0 | | | | 307 | | | | 766 | | | | 1,073 | | | | (243 | ) | | 2007 | | 7/17/2013 | | 4 to 32 Years |
| Starbucks | | Bowling Green, KY | | (b) | | | 756 | | | | 205 | | | | 0 | | | | 0 | | | | 756 | | | | 205 | | | | 961 | | | | (139 | ) | | 2007 | | 7/17/2013 | | 4 to 39 Years |
| Starbucks | | Stillwater, OK | | (b) | | | 218 | | | | 1,262 | | | | 0 | | | | 0 | | | | 218 | | | | 1,262 | | | | 1,480 | | | | (344 | ) | | 2007 | | 7/17/2013 | | 4 to 32 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Taco Bueno | Grapevine, TX | | (d) | | 636 |
| | 414 |
| | — |
| | — |
| | 636 |
| | 414 |
| | 1,050 |
| | (72 | ) | | 1979 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Muskogee, OK | | (d) | | 853 |
| | 767 |
| | — |
| | — |
| | 853 |
| | 767 |
| | 1,620 |
| | (98 | ) | | 1985 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Oklahoma City, OK | | (d) | | 474 |
| | 516 |
| | — |
| | — |
| | 474 |
| | 516 |
| | 990 |
| | (93 | ) | | 1984 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Fort Worth, TX | | (d) | | 335 |
| | 257 |
| | — |
| | — |
| | 335 |
| | 257 |
| | 592 |
| | (58 | ) | | 1985 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Claremore, OK | | (d) | | 903 |
| | 932 |
| | — |
| | — |
| | 903 |
| | 932 |
| | 1,835 |
| | (115 | ) | | 1985 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Oklahoma City, OK | | (d) | | 467 |
| | 273 |
| | (65 | ) | | (87 | ) | | 402 |
| | 186 |
| | 588 |
| | (7 | ) | | 1986 | | 06/30/16 | | 2 to 7 Years |
| Taco Bueno | Broken Arrow, OK | | (d) | | 849 |
| | 1,020 |
| | — |
| | — |
| | 849 |
| | 1,020 |
| | 1,869 |
| | (111 | ) | | 1986 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Dallas, TX | | (d) | | 526 |
| | 203 |
| | — |
| | — |
| | 526 |
| | 203 |
| | 729 |
| | (68 | ) | | 1987 | | 06/30/16 | | 5 to 10 Years |
| Taco Bueno | Sapulpa, OK | | (d) | | 855 |
| | 1,030 |
| | — |
| | — |
| | 855 |
| | 1,030 |
| | 1,885 |
| | (126 | ) | | 1987 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Abilene, TX | | (d) | | 510 |
| | 818 |
| | — |
| | — |
| | 510 |
| | 818 |
| | 1,328 |
| | (100 | ) | | 1977 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Oklahoma City, OK | | (d) | | 375 |
| | 605 |
| | — |
| | — |
| | 375 |
| | 605 |
| | 980 |
| | (71 | ) | | 1986 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Greenville, TX | | (d) | | 429 |
| | 919 |
| | — |
| | — |
| | 429 |
| | 919 |
| | 1,348 |
| | (97 | ) | | 1985 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Irving, TX | | (d) | | 481 |
| | 358 |
| | (29 | ) | | (52 | ) | | 452 |
| | 306 |
| | 758 |
| | — |
| | 1978 | | 06/30/16 | | 2 to 17 Years |
| Taco Bueno | Haltom City, TX | | (d) | | 689 |
| | 804 |
| | — |
| | — |
| | 689 |
| | 804 |
| | 1,493 |
| | (104 | ) | | 1998 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Grapevine, TX | | (d) | | 755 |
| | 677 |
| | — |
| | — |
| | 755 |
| | 677 |
| | 1,432 |
| | (125 | ) | | 1999 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Fort Worth, TX | | (d) | | 681 |
| | 928 |
| | — |
| | — |
| | 681 |
| | 928 |
| | 1,609 |
| | (118 | ) | | 1999 | | 06/30/16 | | 5 to 30 Years |
| Taco Bueno | Forest Hill, TX | | (d) | | 784 |
| | 294 |
| | — |
| | — |
| | 784 |
| | 294 |
| | 1,078 |
| | (82 | ) | | 1999 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | McKinney, TX | | (d) | | 1,289 |
| | 467 |
| | — |
| | — |
| | 1,289 |
| | 467 |
| | 1,756 |
| | (113 | ) | | 2000 | | 06/30/16 | | 5 to 20 Years |
| Taco Bueno | Tulsa, OK | | (d) | | — |
| | 20 |
| | — |
| | (20 | ) | | — |
| | — |
| | — |
| | — |
| | 1982 | | 06/30/16 | | 10 to 10 Years |
| Taco Bueno | Enid, OK | | (d) | | 40 |
| | 55 |
| | (40 | ) | | (55 | ) | | — |
| | — |
| | — |
| | — |
| | 1985 | | 06/30/16 | | 0 to 7 Years |
| Taco Bueno | Southlake, TX | | (d) | | 30 |
| | 58 |
| | (30 | ) | | (58 | ) | | — |
| | — |
| | — |
| | — |
| | 1999 | | 06/30/16 | | 0 to 7 Years |
| Terra Mulch Products | Hickory, NC | | (d) | | 1,356 |
| | 5,406 |
| | — |
| | — |
| | 1,356 |
| | 5,406 |
| | 6,762 |
| | (939 | ) | | 2006 | | 05/11/15 | | 10 to 30 Years |
| Texas Corral | Shelbyville, IN | | (d) | | 549 |
| | 752 |
| | — |
| | — |
| | 549 |
| | 752 |
| | 1,301 |
| | (316 | ) | | 2006 | | 12/21/07 | | 15 to 50 Years |
| The Children's Courtyard | Frederick, CO | | (d) | | 334 |
| | 2,146 |
| | — |
| | 37 |
| | 334 |
| | 2,183 |
| | 2,517 |
| | (133 | ) | | 2003 | | 03/31/17 | | 15 to 30 Years |
| Topgolf | Baton Rouge, LA | | (d) | | 3,734 |
| | 9,595 |
| | — |
| | — |
| | 3,734 |
| | 9,595 |
| | 13,329 |
| | — |
| | 2018 | | 12/10/18 | | N/A |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tractor Supply | Parkersburg, WV | | (d) | | 966 |
| | 1,843 |
| | — |
| | — |
| | 966 |
| | 1,843 |
| | 2,809 |
| | (505 | ) | | 2005 | | 07/17/13 | | 7 to 37 Years |
| Tractor Supply | Ankeny, IA | | (d) | | 687 |
| | 2,162 |
| | — |
| | — |
| | 687 |
| | 2,162 |
| | 2,849 |
| | (457 | ) | | 2006 | | 07/17/13 | | 8 to 43 Years |
| Tractor Supply | Marinette, WI | | (d) | | 1,236 |
| | 1,611 |
| | — |
| | — |
| | 1,236 |
| | 1,611 |
| | 2,847 |
| | (487 | ) | | 2006 | | 07/17/13 | | 8 to 38 Years |
| Tractor Supply | Paw Paw, MI | | (d) | | 1,517 |
| | 1,619 |
| | — |
| | — |
| | 1,517 |
| | 1,619 |
| | 3,136 |
| | (577 | ) | | 2006 | | 07/17/13 | | 8 to 33 Years |
| Tractor Supply | Rockford, MN | | (d) | | 1,298 |
| | 2,652 |
| | — |
| | — |
| | 1,298 |
| | 2,652 |
| | 3,950 |
| | (641 | ) | | 2007 | | 07/17/13 | | 9 to 43 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Starbucks | | Powell, TN | | (b) | | | 411 | | | | 353 | | | | 0 | | | | 0 | | | | 411 | | | | 353 | | | | 764 | | | | (176 | ) | | 2007 | | 7/17/2013 | | 4 to 26 Years |
| Stater Bros. Markets | | Lancaster, CA | | (b) | | | 1,569 | | | | 4,271 | | | | 0 | | | | 0 | | | | 1,569 | | | | 4,271 | | | | 5,840 | | | | (1,286 | ) | | 1983 | | 12/17/2013 | | 5 to 30 Years |
| Studio Movie Grill | | Downey, CA | | (b) | | | 1,767 | | | | 12,172 | | | | 0 | | | | 2,966 | | | | 1,767 | | | | 15,138 | | | | 16,905 | | | | (2,514 | ) | | 1997 | | 9/30/2015 | | 15 to 30 Years |
| Studio Movie Grill | | Monrovia, CA | | (b) | | | 2,448 | | | | 17,849 | | | | 0 | | | | 2,966 | | | | 2,448 | | | | 20,815 | | | | 23,263 | | | | (3,456 | ) | | 2000 | | 9/30/2015 | | 15 to 30 Years |
| Studio Movie Grill | | Redlands, CA | | (b) | | | 4,442 | | | | 17,859 | | | | 0 | | | | 2,966 | | | | 4,442 | | | | 20,825 | | | | 25,267 | | | | (3,648 | ) | | 1997 | | 9/30/2015 | | 15 to 30 Years |
| Studio Movie Grill | | Marietta, GA | | (b) | | | 2,930 | | | | 7,616 | | | | 0 | | | | 67 | | | | 2,930 | | | | 7,683 | | | | 10,613 | | | | (1,102 | ) | | 1987 | | 3/15/2017 | | 10 to 40 Years |
| Sunny Delight | | Dayton, NJ | | (b) | | | 12,701 | | | | 10,723 | | | | 0 | | | | 0 | | | | 12,701 | | | | 10,723 | | | | 23,424 | | | | (2,753 | ) | | 1975 | | 10/27/2016 | | 7 to 30 Years |
| SuperValu | | Warwick, RI | | (b) | | | 3,331 | | | | 3,500 | | | | 0 | | | | 0 | | | | 3,331 | | | | 3,500 | | | | 6,831 | | | | (214 | ) | | 1992 | | 7/17/2013 | | 15 to15 Years |
| Taco Bell | | Anderson, IN | | (b) | | | 363 | | | | 700 | | | | 0 | | | | 0 | | | | 363 | | | | 700 | | | | 1,063 | | | | (398 | ) | | 1995 | | 7/17/2013 | | 8 to 17 Years |
| Taco Bell | | Brazil, IN | | (b) | | | 391 | | | | 903 | | | | 0 | | | | 0 | | | | 391 | | | | 903 | | | | 1,294 | | | | (308 | ) | | 1996 | | 7/17/2013 | | 8 to 33 Years |
| Taco Bell | | Henderson, KY | | (b) | | | 656 | | | | 1,058 | | | | 0 | | | | 0 | | | | 656 | | | | 1,058 | | | | 1,714 | | | | (292 | ) | | 1992 | | 7/17/2013 | | 7 to 35 Years |
| Taco Bell | | Martinsville, IN | | (b) | | | 940 | | | | 1,128 | | | | 0 | | | | 0 | | | | 940 | | | | 1,128 | | | | 2,068 | | | | (318 | ) | | 1986 | | 7/17/2013 | | 4 to 35 Years |
| Taco Bell | | Princeton, IN | | (b) | | | 340 | | | | 906 | | | | 0 | | | | 0 | | | | 340 | | | | 906 | | | | 1,246 | | | | (563 | ) | | 1992 | | 7/17/2013 | | 7 to 15 Years |
| Taco Bell | | Robinson, IL | | (b) | | | 250 | | | | 1,021 | | | | 0 | | | | 0 | | | | 250 | | | | 1,021 | | | | 1,271 | | | | (340 | ) | | 1994 | | 7/17/2013 | | 7 to 33 Years |
| | Washington, IN | | (b) | | | 272 | | | | 949 | | | | 0 | | | | 0 | | | | 272 | | | | 949 | | | | 1,221 | | | | (328 | ) | | 1995 | | 7/17/2013 | | 8 to 33 Years |
| | Moultrie, GA | | (b) | | | 437 | | | | 563 | | | | 0 | | | | 0 | | | | 437 | | | | 563 | | | | 1,000 | | | | (217 | ) | | 2012 | | 3/29/2013 | | 15 to 30 Years |
| | Greenville, TN | | (b) | | | 735 | | | | 517 | | | | 0 | | | | 0 | | | | 735 | | | | 517 | | | | 1,252 | | | | (216 | ) | | 2010 | | 3/29/2013 | | 15 to 30 Years |
| | Vincennes, IN | | (b) | | | 389 | | | | 1,425 | | | | 0 | | | | 0 | | | | 389 | | | | 1,425 | | | | 1,814 | | | | (449 | ) | | 2000 | | 7/17/2013 | | 8 to 30 Years |
| | Haltom City, TX | | (b) | | | 689 | | | | 804 | | | | 0 | | | | 0 | | | | 689 | | | | 804 | | | | 1,493 | | | | (188 | ) | | 1998 | | 6/30/2016 | | 5 to 30 Years |
| | Tulsa, OK | | (b) | | | 835 | | | | 967 | | | | 0 | | | | 0 | | | | 835 | | | | 967 | | | | 1,802 | | | | (192 | ) | | 1978 | | 6/30/2016 | | 5 to 30 Years |
| | Abilene, TX | | (b) | | | 510 | | | | 818 | | | | 0 | | | | 0 | | | | 510 | | | | 818 | | | | 1,328 | | | | (180 | ) | | 1977 | | 6/30/2016 | | 5 to 30 Years |
| | Denton, TX | | (b) | | | 693 | | | | 884 | | | | 0 | | | | 0 | | | | 693 | | | | 884 | | | | 1,577 | | | | (200 | ) | | 1995 | | 6/30/2016 | | 5 to 30 Years |
| | Fort Worth, TX | | (b) | | | 681 | | | | 928 | | | | 0 | | | | 0 | | | | 681 | | | | 928 | | | | 1,609 | | | | (212 | ) | | 1999 | | 6/30/2016 | | 5 to 30 Years |
| | Greenville, TX | | (b) | | | 429 | | | | 919 | | | | 0 | | | | 0 | | | | 429 | | | | 919 | | | | 1,348 | | | | (175 | ) | | 1985 | | 6/30/2016 | | 5 to 30 Years |
| | Muskogee, OK | | (b) | | | 853 | | | | 767 | | | | 0 | | | | 0 | | | | 853 | | | | 767 | | | | 1,620 | | | | (176 | ) | | 1985 | | 6/30/2016 | | 5 to 30 Years |
| | Broken Arrow, OK | | (b) | | | 849 | | | | 1,020 | | | | 0 | | | | 0 | | | | 849 | | | | 1,020 | | | | 1,869 | | | | (200 | ) | | 1986 | | 6/30/2016 | | 5 to 30 Years |
| | Tulsa, OK | | (b) | | | 0 | | | | 20 | | | | 0 | | | | (20 | ) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | 1982 | | 6/30/2016 | | (g) |
| | Abilene, TX | | (b) | | | 1,132 | | | | 1,292 | | | | 0 | | | | (10 | ) | | | 1,132 | | | | 1,282 | | | | 2,414 | | | | (276 | ) | | 1979 | | 6/30/2016 | | 5 to 30 Years |
| | Claremore, OK | | (b) | | | 903 | | | | 932 | | | | 0 | | | | 0 | | | | 903 | | | | 932 | | | | 1,835 | | | | (207 | ) | | 1985 | | 6/30/2016 | | 5 to 30 Years |
| | Lake Worth, TX | | (b) | | | 427 | | | | 872 | | | | 0 | | | | 0 | | | | 427 | | | | 872 | | | | 1,299 | | | | (168 | ) | | 1983 | | 6/30/2016 | | 5 to 30 Years |
| | Grapevine, TX | | (b) | | | 755 | | | | 677 | | | | 0 | | | | 0 | | | | 755 | | | | 677 | | | | 1,432 | | | | (225 | ) | | 1999 | | 6/30/2016 | | 5 to 20 Years |
| | Bedford, TX | | (b) | | | 694 | | | | 516 | | | | 0 | | | | 0 | | | | 694 | | | | 516 | | | | 1,210 | | | | (168 | ) | | 1977 | | 6/30/2016 | | 5 to 20 Years |
| | McKinney, TX | | (b) | | | 1,289 | | | | 467 | | | | 0 | | | | 0 | | | | 1,289 | | | | 467 | | | | 1,756 | | | | (203 | ) | | 2000 | | 6/30/2016 | | 5 to 20 Years |
| | Sapulpa, OK | | (b) | | | 855 | | | | 1,030 | | | | 0 | | | | 0 | | | | 855 | | | | 1,030 | | | | 1,885 | | | | (227 | ) | | 1987 | | 6/30/2016 | | 5 to 30 Years |
| | Arlington, TX | | (b) | | | 540 | | | | 1,205 | | | | 0 | | | | 0 | | | | 540 | | | | 1,205 | | | | 1,745 | | | | (232 | ) | | 1981 | | 6/30/2016 | | 5 to 30 Years |
| | Oklahoma City, OK | | (b) | | | 474 | | | | 516 | | | | (62 | ) | | | (128 | ) | | | 412 | | | | 388 | | | | 800 | | | | 0 | | | 1984 | | 6/30/2016 | | 4 to 15 Years |
| | Cedar Hill, TX | | (b) | | | 655 | | | | 708 | | | | 0 | | | | 0 | | | | 655 | | | | 708 | | | | 1,363 | | | | (51 | ) | | 2005 | | 11/25/2019 | | 8 to 20 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tractor Supply | Navasota, TX | | (d) | | 1,013 |
| | 1,772 |
| | — |
| | — |
| | 1,013 |
| | 1,772 |
| | 2,785 |
| | (528 | ) | | 2006 | | 07/17/13 | | 8 to 41 Years |
| Tractor Supply | Fredericksburg, TX | | (d) | | 1,194 |
| | 1,636 |
| | — |
| | — |
| | 1,194 |
| | 1,636 |
| | 2,830 |
| | (476 | ) | | 2007 | | 07/17/13 | | 8 to 42 Years |
| Tractor Supply | Fairview, TN | | (d) | | 975 |
| | 2,274 |
| | — |
| | — |
| | 975 |
| | 2,274 |
| | 3,249 |
| | (504 | ) | | 2007 | | 07/17/13 | | 8 to 47 Years |
| Tractor Supply | Baytown, TX | | (d) | | 1,440 |
| | 1,712 |
| | — |
| | — |
| | 1,440 |
| | 1,712 |
| | 3,152 |
| | (464 | ) | | 2007 | | 07/17/13 | | 9 to 39 Years |
| Tractor Supply | Prior Lake, MN | | (d) | | 1,998 |
| | 2,454 |
| | — |
| | — |
| | 1,998 |
| | 2,454 |
| | 4,452 |
| | (791 | ) | | 1991 | | 07/17/13 | | 7 to 26 Years |
| Tractor Supply | Rome, NY | | (d) | | 1,326 |
| | 1,110 |
| | — |
| | — |
| | 1,326 |
| | 1,110 |
| | 2,436 |
| | (415 | ) | | 2007 | | 07/17/13 | | 9 to 34 Years |
| Tractor Supply | Carroll, OH | | (d) | | 1,144 |
| | 4,557 |
| | — |
| | — |
| | 1,144 |
| | 4,557 |
| | 5,701 |
| | (1,313 | ) | | 1976 | | 07/17/13 | | 3 to 30 Years |
| Tractor Supply | Baldwinsville, NY | | (c) | | 1,105 |
| | 2,008 |
| | — |
| | — |
| | 1,105 |
| | 2,008 |
| | 3,113 |
| | (646 | ) | | 2005 | | 07/17/13 | | 11 to 37 Years |
| Tractor Supply | La Grange, KY | | (c) | | 1,524 |
| | 1,871 |
| | — |
| | — |
| | 1,524 |
| | 1,871 |
| | 3,395 |
| | (441 | ) | | 2008 | | 07/17/13 | | 10 to 48 Years |
| Tractor Supply | Lowville, NY | | (c) | | 791 |
| | 1,659 |
| | — |
| | — |
| | 791 |
| | 1,659 |
| | 2,450 |
| | (406 | ) | | 2010 | | 07/17/13 | | 12 to 42 Years |
| Tractor Supply | Malone, NY | | (c) | | 793 |
| | 1,677 |
| | — |
| | — |
| | 793 |
| | 1,677 |
| | 2,470 |
| | (462 | ) | | 2010 | | 07/17/13 | | 11 to 42 Years |
| Tractor Supply | Ellettsville, IN | | (c) | | 894 |
| | 1,872 |
| | — |
| | — |
| | 894 |
| | 1,872 |
| | 2,766 |
| | (479 | ) | | 2010 | | 07/17/13 | | 11 to 47 Years |
| Tractor Supply | Mount Sterling, KY | | (d) | | 1,785 |
| | 1,051 |
| | — |
| | — |
| | 1,785 |
| | 1,051 |
| | 2,836 |
| | (463 | ) | | 2011 | | 07/17/13 | | 12 to 38 Years |
| Tractor Supply | Ashland, WI | | (d) | | 462 |
| | 637 |
| | — |
| | — |
| | 462 |
| | 637 |
| | 1,099 |
| | (488 | ) | | 1975 | | 11/13/15 | | 15 to 20 Years |
| Tractor Supply | Munfordville, KY | | (d) | | 672 |
| | 766 |
| | — |
| | — |
| | 672 |
| | 766 |
| | 1,438 |
| | (517 | ) | | 2000 | | 11/13/15 | | 15 to 30 Years |
| Tractor Supply | Liberty, KY | | (d) | | 474 |
| | 945 |
| | — |
| | — |
| | 474 |
| | 945 |
| | 1,419 |
| | (529 | ) | | 2000 | | 11/13/15 | | 15 to 30 Years |
| Tutor Time | Grand Rapids, MI | | (d) | | 393 |
| | 1,363 |
| | — |
| | — |
| | 393 |
| | 1,363 |
| | 1,756 |
| | (229 | ) | | 2001 | | 03/20/15 | | 5 to 30 Years |
| Tutor Time | Pittsburgh, PA | | (b) | | 457 |
| | 693 |
| | — |
| | — |
| | 457 |
| | 693 |
| | 1,150 |
| | (350 | ) | | 1985 | | 07/17/13 | | 5 to 15 Years |
| Twin Tiers Eye Care | Elmira, NY | | (d) | | 184 |
| | 3,902 |
| | — |
| | — |
| | 184 |
| | 3,902 |
| | 4,086 |
| | (507 | ) | | 1985 | | 04/30/15 | | 15 to 30 Years |
| Twin Tiers Eye Care | Binghamton, NY | | (d) | | 328 |
| | 2,214 |
| | — |
| | — |
| | 328 |
| | 2,214 |
| | 2,542 |
| | (293 | ) | | 1985 | | 04/30/15 | | 15 to 30 Years |
| Twin Tiers Eye Care | Bath, NY | | (d) | | 72 |
| | 707 |
| | — |
| | — |
| | 72 |
| | 707 |
| | 779 |
| | (99 | ) | | 1970 | | 04/30/15 | | 15 to 30 Years |
| Twin Tiers Eye Care | Corning, NY | | (d) | | 123 |
| | 1,261 |
| | — |
| | — |
| | 123 |
| | 1,261 |
| | 1,384 |
| | (172 | ) | | 1999 | | 04/30/15 | | 15 to 30 Years |
| Twin Tiers Eye Care | Endicott, NY | | (d) | | 92 |
| | 348 |
| | — |
| | — |
| | 92 |
| | 348 |
| | 440 |
| | (60 | ) | | 2001 | | 04/30/15 | | 15 to 30 Years |
| Twin Tiers Eye Care | Watkins Glen, NY | | (d) | | 113 |
| | 318 |
| | — |
| | — |
| | 113 |
| | 318 |
| | 431 |
| | (59 | ) | | 2002 | | 04/30/15 | | 15 to 30 Years |
| United Supermarkets | Childress, TX | | (d) | | 747 |
| | 934 |
| | — |
| | — |
| | 747 |
| | 934 |
| | 1,681 |
| | (332 | ) | | 1997 | | 05/23/05 | | 7 to 40 Years |
| United Supermarkets | Amarillo, TX | | (d) | | 3,559 |
| | 4,575 |
| | — |
| | — |
| | 3,559 |
| | 4,575 |
| | 8,134 |
| | (1,509 | ) | | 1999 | | 05/23/05 | | 14 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Tulsa, OK | | (b) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | 1986 | | 6/30/2016 | | (g) |
| | Broken Arrow, OK | | (b) | | | 1,390 | | | | 2,169 | | | | 0 | | | | 0 | | | | 1,390 | | | | 2,169 | | | | 3,559 | | | | (158 | ) | | 2006 | | 11/25/2019 | | 7 to 20 Years |
| | Tulsa, OK | | (b) | | | 1,578 | | | | 2,385 | | | | 0 | | | | 0 | | | | 1,578 | | | | 2,385 | | | | 3,963 | | | | (162 | ) | | 2013 | | 11/25/2019 | | 7 to 20 Years |
| | Hickory, NC | | (b) | | | 1,356 | | | | 5,406 | | | | 0 | | | | 0 | | | | 1,356 | | | | 5,406 | | | | 6,762 | | | | (1,451 | ) | | 2006 | | 5/11/2015 | | 10 to 30 Years |
| | Maplewood, MN | | (b) | | | 1,893 | | | | 6,154 | | | | 0 | | | | 0 | | | | 1,893 | | | | 6,154 | | | | 8,047 | | | | 0 | | | 1980 | | 12/22/2020 | | 10 to 35 Years |
| | Shelbyville, IN | | (b) | | | 549 | | | | 752 | | | | 0 | | | | 0 | | | | 549 | | | | 752 | | | | 1,301 | | | | (373 | ) | | 2006 | | 12/21/2007 | | 15 to 50 Years |
| | Memphis, TN | | (b) | | | 1,214 | | | | 1,412 | | | | 0 | | | | 0 | | | | 1,214 | | | | 1,412 | | | | 2,626 | | | | (74 | ) | | 2005 | | 11/25/2019 | | 5 to 33 Years |
| | Frederick, CO | | (b) | | | 334 | | | | 2,146 | | | | 0 | | | | 12 | | | | 334 | | | | 2,158 | | | | 2,492 | | | | (285 | ) | | 2003 | | 3/31/2017 | | 15 to 30 Years |
| | Monroe, MI | | (b) | | | 728 | | | | 3,440 | | | | 0 | | | | 0 | | | | 728 | | | | 3,440 | | | | 4,168 | | | | (1,088 | ) | | 2002 | | 8/18/2014 | | 9 to 30 Years |
| | Lavonia, GA | | (b) | | | 3,939 | | | | 7,950 | | | | 0 | | | | 0 | | | | 3,939 | | | | 7,950 | | | | 11,889 | | | | (47 | ) | | 2005 | | 11/19/2020 | | 9 to 32 Years |
| | Portland, ME | | (b) | | | 695 | | | | 944 | | | | 0 | | | | 12 | | | | 695 | | | | 956 | | | | 1,651 | | | | (66 | ) | | 1993 | | 11/25/2019 | | 5 to 22 Years |
| | Staunton, VA | | (b) | | | 578 | | | | 2,063 | | | | 0 | | | | 358 | | | | 578 | | | | 2,421 | | | | 2,999 | | | | (1,188 | ) | | 1988 | | 7/17/2013 | | 5 to 20 Years |
| | Baton Rouge, LA | | (b) | | | 3,734 | | | | 9,595 | | | | 3,450 | | | | 6,104 | | | | 7,184 | | | | 15,699 | | | | 22,883 | | | | (1,148 | ) | | 2018 | | 12/10/2018 | | 11 to 45 Years |
| | Bellevue, OH | | (b) | | | 5,344 | | | | 28,900 | | | | 0 | | | | 0 | | | | 5,344 | | | | 28,900 | | | | 34,244 | | | | (1,254 | ) | | 1990 | | 1/28/2020 | | 9 to 30 Years |
| | Paw Paw, MI | | (b) | | | 1,517 | | | | 1,619 | | | | 77 | | | | 0 | | | | 1,594 | | | | 1,619 | | | | 3,213 | | | | (798 | ) | | 2006 | | 7/17/2013 | | 4 to 33 Years |
| | Navasota, TX | | (b) | | | 1,013 | | | | 1,772 | | | | 0 | | | | 0 | | | | 1,013 | | | | 1,772 | | | | 2,785 | | | | (723 | ) | | 2006 | | 7/17/2013 | | 8 to 41 Years |
| | Baytown, TX | | (b) | | | 1,440 | | | | 1,712 | | | | 0 | | | | 0 | | | | 1,440 | | | | 1,712 | | | | 3,152 | | | | (635 | ) | | 2007 | | 7/17/2013 | | 9 to 39 Years |
| | Fredericksburg, TX | | (b) | | | 1,194 | | | | 1,636 | | | | 0 | | | | 0 | | | | 1,194 | | | | 1,636 | | | | 2,830 | | | | (652 | ) | | 2007 | | 7/17/2013 | | 8 to 42 Years |
| | Ashland, WI | | (b) | | | 462 | | | | 637 | | | | 0 | | | | 0 | | | | 462 | | | | 637 | | | | 1,099 | | | | (573 | ) | | 1975 | | 11/13/2015 | | 15 to 20 Years |
| | Liberty, KY | | (b) | | | 474 | | | | 945 | | | | 0 | | | | 0 | | | | 474 | | | | 945 | | | | 1,419 | | | | (620 | ) | | 2000 | | 11/13/2015 | | 15 to 30 Years |
| | La Grange, KY | | (a) | | | 1,524 | | | | 1,871 | | | | 0 | | | | 0 | | | | 1,524 | | | | 1,871 | | | | 3,395 | | | | (604 | ) | | 2008 | | 7/17/2013 | | 10 to 48 Years |
| | Baldwinsville, NY | | (a) | | | 1,105 | | | | 2,008 | | | | 0 | | | | 0 | | | | 1,105 | | | | 2,008 | | | | 3,113 | | | | (884 | ) | | 2005 | | 7/17/2013 | | 11 to 37 Years |
| | Carroll, OH | | (b) | | | 1,144 | | | | 4,557 | | | | 0 | | | | 0 | | | | 1,144 | | | | 4,557 | | | | 5,701 | | | | (1,764 | ) | | 1976 | | 7/17/2013 | | 3 to 30 Years |
| | Mount Sterling, KY | | (b) | | | 1,785 | | | | 1,051 | | | | 0 | | | | 0 | | | | 1,785 | | | | 1,051 | | | | 2,836 | | | | (634 | ) | | 2011 | | 7/17/2013 | | 12 to 38 Years |
| | Ellettsville, IN | | (a) | | | 894 | | | | 1,872 | | | | 0 | | | | 0 | | | | 894 | | | | 1,872 | | | | 2,766 | | | | (656 | ) | | 2010 | | 7/17/2013 | | 11 to 47 Years |
| | Lowville, NY | | (a) | | | 791 | | | | 1,659 | | | | 0 | | | | 0 | | | | 791 | | | | 1,659 | | | | 2,450 | | | | (555 | ) | | 2010 | | 7/17/2013 | | 12 to 42 Years |
| | Malone, NY | | (a) | | | 793 | | | | 1,677 | | | | 0 | | | | 0 | | | | 793 | | | | 1,677 | | | | 2,470 | | | | (632 | ) | | 2010 | | 7/17/2013 | | 11 to 42 Years |
| | Ankeny, IA | | (b) | | | 687 | | | | 2,162 | | | | 116 | | | | 0 | | | | 803 | | | | 2,162 | | | | 2,965 | | | | (626 | ) | | 2006 | | 7/17/2013 | | 4 to 43 Years |
| | Marinette, WI | | (b) | | | 1,236 | | | | 1,611 | | | | 0 | | | | 0 | | | | 1,236 | | | | 1,611 | | | | 2,847 | | | | (666 | ) | | 2006 | | 7/17/2013 | | 8 to 38 Years |
| | Prior Lake, MN | | (b) | | | 1,998 | | | | 2,454 | | | | 0 | | | | 0 | | | | 1,998 | | | | 2,454 | | | | 4,452 | | | | (1,083 | ) | | 1991 | | 7/17/2013 | | 7 to 26 Years |
| | Fairview, TN | | (b) | | | 975 | | | | 2,274 | | | | 0 | | | | 0 | | | | 975 | | | | 2,274 | | | | 3,249 | | | | (690 | ) | | 2007 | | 7/17/2013 | | 8 to 47 Years |
| | Rockford, MN | | (b) | | | 1,298 | | | | 2,652 | | | | 0 | | | | 60 | | | | 1,298 | | | | 2,712 | | | | 4,010 | | | | (878 | ) | | 2007 | | 7/17/2013 | | 9 to 43 Years |
| Tractor Supply | | Rome, NY | | (b) | | | 1,326 | | | | 1,110 | | | | 0 | | | | 0 | | | | 1,326 | | | | 1,110 | | | | 2,436 | | | | (568 | ) | | 2007 | | 7/17/2013 | | 9 to 34 Years |
| Tractor Supply | | Parkersburg, WV | | (b) | | | 966 | | | | 1,843 | | | | 0 | | | | 0 | | | | 966 | | | | 1,843 | | | | 2,809 | | | | (691 | ) | | 2005 | | 7/17/2013 | | 7 to 37 Years |
| Tutor Time | | Grand Rapids, MI | | (b) | | | 393 | | | | 1,363 | | | | 0 | | | | 0 | | | | 393 | | | | 1,363 | | | | 1,756 | | | | (351 | ) | | 2001 | | 3/20/2015 | | 5 to 30 Years |
| Tutor Time | | Pittsburgh, PA | | (b) | | | 457 | | | | 693 | | | | 0 | | | | 0 | | | | 457 | | | | 693 | | | | 1,150 | | | | (443 | ) | | 1985 | | 7/17/2013 | | 5 to 15 Years |
| Twin Peaks | | Little Rock, AR | | (b) | | | 1,112 | | | | 0 | | | | 0 | | | | 0 | | | | 1,112 | | | | 0 | | | | 1,112 | | | | 0 | | | (e) | | 11/25/2019 | | (e) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| United Supermarkets | Levelland, TX | | (d) | | 1,651 |
| | 2,158 |
| | — |
| | — |
| | 1,651 |
| | 2,158 |
| | 3,809 |
| | (725 | ) | | 1997 | | 05/23/05 | | 11 to 40 Years |
| United Supermarkets | Amarillo, TX | | (d) | | 1,828 |
| | 1,292 |
| | — |
| | — |
| | 1,828 |
| | 1,292 |
| | 3,120 |
| | (561 | ) | | 1988 | | 05/23/05 | | 9 to 30 Years |
| United Supermarkets | Snyder, TX | | (d) | | 2,062 |
| | 2,963 |
| | — |
| | — |
| | 2,062 |
| | 2,963 |
| | 5,025 |
| | (981 | ) | | 1999 | | 05/23/05 | | 14 to 40 Years |
| United Supermarkets | Amarillo, TX | | (d) | | 1,573 |
| | 1,586 |
| | — |
| | — |
| | 1,573 |
| | 1,586 |
| | 3,159 |
| | (686 | ) | | 1989 | | 05/23/05 | | 9 to 30 Years |
| United Supermarkets | Wichita Falls, TX | | (d) | | — |
| | 6,259 |
| | — |
| | — |
| | — |
| | 6,259 |
| | 6,259 |
| | (3,768 | ) | | 1997 | | 05/23/05 | | 13 to 20 Years |
| United Supermarkets | Plainview, TX | | (d) | | 620 |
| | 5,415 |
| | — |
| | — |
| | 620 |
| | 5,415 |
| | 6,035 |
| | (1,639 | ) | | 2000 | | 08/25/05 | | 14 to 40 Years |
| United Supermarkets | Muleshoe, TX | | (c) | | 471 |
| | 1,770 |
| | — |
| | — |
| | 471 |
| | 1,770 |
| | 2,241 |
| | (451 | ) | | 1999 | | 08/29/11 | | 15 to 40 Years |
| Unity Point Clinic | Oelwein, IA | | (d) | | 226 |
| | 681 |
| | — |
| | — |
| | 226 |
| | 681 |
| | 907 |
| | (153 | ) | | 1995 | | 08/18/14 | | 5 to 30 Years |
| Vacant | Scottdale, PA | | (c) | | 607 |
| | 11,008 |
| | (524 | ) | | (10,341 | ) | | 83 |
| | 667 |
| | 750 |
| | (76 | ) | | 1959 | | 12/28/06 | | 3 to 9 Years |
| Vacant | Brooklyn, OH | | (d) | | 1,226 |
| | 672 |
| | (152 | ) | | (672 | ) | | 1,074 |
| | — |
| | 1,074 |
| | — |
| | (f) | | 02/06/07 | | (f) |
| Vacant | Spartanburg, SC | | (d) | | 1,196 |
| | 1,671 |
| | — |
| | — |
| | 1,196 |
| | 1,671 |
| | 2,867 |
| | (367 | ) | | 1999 | | 07/17/13 | | 5 to 34 Years |
| Vacant | Grove City, OH | | (c) | | 2,050 |
| | 3,288 |
| | (1,202 | ) | | (1,981 | ) | | 848 |
| | 1,307 |
| | 2,155 |
| | (97 | ) | | 2008 | | 07/17/13 | | 6 to 34 Years |
| Valley Surgical Center | Steubenville, OH | | (d) | | 363 |
| | 3,726 |
| | — |
| | — |
| | 363 |
| | 3,726 |
| | 4,089 |
| | (488 | ) | | 2009 | | 08/18/14 | | 14 to 40 Years |
| VASA Fitness | Westminster, CO | | (d) | | 3,264 |
| | 5,593 |
| | — |
| | — |
| | 3,264 |
| | 5,593 |
| | 8,857 |
| | (49 | ) | | 2000 | | 11/15/18 | | 8 to 30 Years |
| VASA Fitness | Taylorsville, UT | | (d) | | 1,496 |
| | 3,593 |
| | — |
| | — |
| | 1,496 |
| | 3,593 |
| | 5,089 |
| | (642 | ) | | 1988 | | 11/20/15 | | 12 to 20 Years |
| Verizon | Covington, TN | | (d) | | 343 |
| | 152 |
| | — |
| | — |
| | 343 |
| | 152 |
| | 495 |
| | (107 | ) | | 2007 | | 07/17/13 | | 3 to 24 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Walgreens | Olivette, MO | | (c) | | 1,816 |
| | 5,917 |
| | — |
| | — |
| | 1,816 |
| | 5,917 |
| | 7,733 |
| | (991 | ) | | 2001 | | 07/17/13 | | 11 to 42 Years |
| Walgreens | Columbia, MO | | (c) | | 1,047 |
| | 5,242 |
| | — |
| | — |
| | 1,047 |
| | 5,242 |
| | 6,289 |
| | (739 | ) | | 2002 | | 07/17/13 | | 9 to 44 Years |
| Walgreens | Enterprise, AL | | (d) | | 1,163 |
| | 1,612 |
| | — |
| | — |
| | 1,163 |
| | 1,612 |
| | 2,775 |
| | (377 | ) | | 2006 | | 07/17/13 | | 11 to 37 Years |
| Walgreens | Knoxville, TN | | (d) | | 2,107 |
| | 3,334 |
| | — |
| | — |
| | 2,107 |
| | 3,334 |
| | 5,441 |
| | (618 | ) | | 2000 | | 07/17/13 | | 6 to 40 Years |
| Walgreens | Picayune, MS | | (d) | | 954 |
| | 3,132 |
| | — |
| | — |
| | 954 |
| | 3,132 |
| | 4,086 |
| | (498 | ) | | 2006 | | 07/17/13 | | 10 to 42 Years |
| Walgreens | Madeira, OH | | (d) | | 951 |
| | 3,978 |
| | — |
| | 60 |
| | 951 |
| | 4,038 |
| | 4,989 |
| | (620 | ) | | 1998 | | 07/17/13 | | 5 to 44 Years |
| Walgreens | Shreveport, LA | | (d) | | 1,461 |
| | 3,605 |
| | — |
| | — |
| | 1,461 |
| | 3,605 |
| | 5,066 |
| | (633 | ) | | 1999 | | 07/17/13 | | 6 to 40 Years |
| Walgreens | Gainesville, FL | | (d) | | 922 |
| | 2,705 |
| | — |
| | — |
| | 922 |
| | 2,705 |
| | 3,627 |
| | (466 | ) | | 1998 | | 07/17/13 | | 4 to 40 Years |
| Walgreens | Bridgetown, OH | | (d) | | 1,015 |
| | 3,769 |
| | — |
| | — |
| | 1,015 |
| | 3,769 |
| | 4,784 |
| | (617 | ) | | 1999 | | 07/17/13 | | 5 to 43 Years |
| Walgreens | Dallas, TX | | (d) | | 735 |
| | 3,328 |
| | — |
| | — |
| | 735 |
| | 3,328 |
| | 4,063 |
| | (538 | ) | | 1996 | | 07/17/13 | | 3 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Twin Tiers Eye Care | | Elmira, NY | | (b) | | | 184 | | | | 3,902 | | | | 0 | | | | 0 | | | | 184 | | | | 3,902 | | | | 4,086 | | | | (784 | ) | | 1985 | | 4/30/2015 | | 15 to 30 Years |
| Twin Tiers Eye Care | | Binghamton, NY | | (b) | | | 328 | | | | 2,214 | | | | 0 | | | | 0 | | | | 328 | | | | 2,214 | | | | 2,542 | | | | (453 | ) | | 1985 | | 4/30/2015 | | 15 to 30 Years |
| Twin Tiers Eye Care | | Bath, NY | | (b) | | | 72 | | | | 707 | | | | 0 | | | | 0 | | | | 72 | | | | 707 | | | | 779 | | | | (153 | ) | | 1970 | | 4/30/2015 | | 15 to 30 Years |
| Twin Tiers Eye Care | | Corning, NY | | (b) | | | 123 | | | | 1,261 | | | | 0 | | | | 0 | | | | 123 | | | | 1,261 | | | | 1,384 | | | | (265 | ) | | 1999 | | 4/30/2015 | | 15 to 30 Years |
| Twin Tiers Eye Care | | Endicott, NY | | (b) | | | 92 | | | | 348 | | | | 0 | | | | 0 | | | | 92 | | | | 348 | | | | 440 | | | | (93 | ) | | 2001 | | 4/30/2015 | | 15 to 30 Years |
| Twin Tiers Eye Care | | Watkins Glen, NY | | (b) | | | 113 | | | | 318 | | | | 0 | | | | 0 | | | | 113 | | | | 318 | | | | 431 | | | | (91 | ) | | 2002 | | 4/30/2015 | | 15 to 30 Years |
| United Ag & Turf | | Rhome, TX | | (b) | | | 782 | | | | 1,543 | | | | 0 | | | | 0 | | | | 782 | | | | 1,543 | | | | 2,325 | | | | (48 | ) | | 2006 | | 1/28/2020 | | 8 to 40 Years |
| United Ag & Turf | | Mineola, TX | | (b) | | | 251 | | | | 731 | | | | 0 | | | | 0 | | | | 251 | | | | 731 | | | | 982 | | | | (57 | ) | | 1981 | | 1/28/2020 | | 6 to 15 Years |
| United Ag & Turf | | Sulphur Springs, TX | | (b) | | | 621 | | | | 2,722 | | | | 0 | | | | 0 | | | | 621 | | | | 2,722 | | | | 3,343 | | | | (113 | ) | | 2003 | | 1/28/2020 | | 7 to 38 Years |
| United Ag & Turf | | Terrel, TX | | (b) | | | 219 | | | | 1,800 | | | | 0 | | | | 0 | | | | 219 | | | | 1,800 | | | | 2,019 | | | | (124 | ) | | 1981 | | 1/28/2020 | | 7 to 15 Years |
| United Ag & Turf | | Mount Pleasant, TX | | (b) | | | 168 | | | | 2,159 | | | | 0 | | | | 0 | | | | 168 | | | | 2,159 | | | | 2,327 | | | | (76 | ) | | 1993 | | 1/28/2020 | | 8 to 30 Years |
| United Supermarkets | | Childress, TX | | (b) | | | 747 | | | | 934 | | | | 0 | | | | 0 | | | | 747 | | | | 934 | | | | 1,681 | | | | (374 | ) | | 1997 | | 5/23/2005 | | 7 to 40 Years |
| United Supermarkets | | Levelland, TX | | (b) | | | 1,651 | | | | 2,158 | | | | 0 | | | | 0 | | | | 1,651 | | | | 2,158 | | | | 3,809 | | | | (825 | ) | | 1997 | | 5/23/2005 | | 11 to 40 Years |
| United Supermarkets | | Amarillo, TX | | (b) | | | 1,828 | | | | 1,292 | | | | 0 | | | | 0 | | | | 1,828 | | | | 1,292 | | | | 3,120 | | | | (640 | ) | | 1988 | | 5/23/2005 | | 9 to 30 Years |
| United Supermarkets | | Snyder, TX | | (b) | | | 2,062 | | | | 2,963 | | | | 0 | | | | 0 | | | | 2,062 | | | | 2,963 | | | | 5,025 | | | | (1,131 | ) | | 1999 | | 5/23/2005 | | 14 to 40 Years |
| United Supermarkets | | Amarillo, TX | | (b) | | | 1,573 | | | | 1,586 | | | | 0 | | | | 0 | | | | 1,573 | | | | 1,586 | | | | 3,159 | | | | (783 | ) | | 1989 | | 5/23/2005 | | 9 to 30 Years |
| United Supermarkets | | Muleshoe, TX | | (a) | | | 471 | | | | 1,770 | | | | 0 | | | | 0 | | | | 471 | | | | 1,770 | | | | 2,241 | | | | (574 | ) | | 1999 | | 8/29/2011 | | 15 to 40 Years |
| United Technologies Corporation | | Winston-Salem, NC | | (a) | | | 927 | | | | 3,455 | | | | 0 | | | | 0 | | | | 927 | | | | 3,455 | | | | 4,382 | | | | (1,202 | ) | | 1987 | | 7/17/2013 | | 5 to 40 Years |
| Universal Tax Systems (f) | | Kennesaw, GA | | (b) | | | 3,560 | | | | 23,583 | | | | 0 | | | | 33 | | | | 3,560 | | | | 23,616 | | | | 27,176 | | | | (4,966 | ) | | 1996 | | 7/17/2013 | | 8 to 45 Years |
| Vacant | | St. Peters, MO | | (b) | | | 1,814 | | | | 5,810 | | | | (1,166 | ) | | | (3,568 | ) | | | 648 | | | | 2,242 | | | | 2,890 | | | | 0 | | | 2007 | | 7/17/2013 | | 1 to 26 Years |
| Vacant | | Peoria, IL | | (b) | | | 2,407 | | | | 5,452 | | | | (1,629 | ) | | | (3,735 | ) | | | 778 | | | | 1,717 | | | | 2,495 | | | | (54 | ) | | 2006 | | 7/17/2013 | | 3 to 33 Years |
| Vacant | | Conroe, TX | | (b) | | | 942 | | | | 3,274 | | | | (575 | ) | | | (2,006 | ) | | | 367 | | | | 1,268 | | | | 1,635 | | | | (225 | ) | | 1993 | | 7/17/2013 | | 11 to 32 Years |
| Vacant | | Princeton, WV | | (b) | | | 948 | | | | 2,212 | | | | (807 | ) | | | (1,902 | ) | | | 141 | | | | 310 | | | | 451 | | | | (18 | ) | | 2001 | | 7/17/2013 | | 4 to 18 Years |
| Valley Surgical Center | | Steubenville, OH | | (b) | | | 363 | | | | 3,726 | | | | 0 | | | | 0 | | | | 363 | | | | 3,726 | | | | 4,089 | | | | (713 | ) | | 2009 | | 8/18/2014 | | 14 to 40 Years |
| VASA Fitness | | Westminster, CO | | (b) | | | 3,264 | | | | 5,593 | | | | 0 | | | | 42 | | | | 3,264 | | | | 5,635 | | | | 8,899 | | | | (637 | ) | | 2000 | | 11/15/2018 | | 8 to 30 Years |
| VASA Fitness | | Taylorsville, UT | | (b) | | | 1,496 | | | | 3,593 | | | | 0 | | | | 0 | | | | 1,496 | | | | 3,593 | | | | 5,089 | | | | (1,057 | ) | | 1988 | | 11/20/2015 | | 12 to 20 Years |
| VASA Fitness | | Oklahoma City, OK | | (b) | | | 1,289 | | | | 6,616 | | | | 0 | | | | 0 | | | | 1,289 | | | | 6,616 | | | | 7,905 | | | | 0 | | | 1988 | | 12/30/2020 | | 13 to 39 Years |
| Verizon | | Covington, TN | | (b) | | | 343 | | | | 152 | | | | 0 | | | | 0 | | | | 343 | | | | 152 | | | | 495 | | | | (146 | ) | | 2007 | | 7/17/2013 | | 3 to 24 Years |
| Walgreens | | Albany, GA | | (b) | | | 961 | | | | 3,314 | | | | 0 | | | | 0 | | | | 961 | | | | 3,314 | | | | 4,275 | | | | (743 | ) | | 2008 | | 7/17/2013 | | 12 to 43 Years |
| Walgreens | | Columbus, MS | | (b) | | | 769 | | | | 3,475 | | | | 0 | | | | 0 | | | | 769 | | | | 3,475 | | | | 4,244 | | | | (745 | ) | | 2004 | | 7/17/2013 | | 11 to 41 Years |
| Walgreens | | Seattle, WA | | (b) | | | 2,589 | | | | 4,245 | | | | 0 | | | | 0 | | | | 2,589 | | | | 4,245 | | | | 6,834 | | | | (938 | ) | | 2002 | | 7/17/2013 | | 9 to 43 Years |
| Walgreens | | Crossville, TN | | (b) | | | 1,890 | | | | 3,680 | | | | 0 | | | | 0 | | | | 1,890 | | | | 3,680 | | | | 5,570 | | | | (837 | ) | | 2001 | | 7/17/2013 | | 7 to 41 Years |
| Walgreens | | Jacksonville, FL | | (b) | | | 521 | | | | 4,365 | | | | 0 | | | | 0 | | | | 521 | | | | 4,365 | | | | 4,886 | | | | (941 | ) | | 2000 | | 7/17/2013 | | 7 to 40 Years |
| Walgreens | | LaMarque, TX | | (a) | | | 464 | | | | 3,139 | | | | 0 | | | | 0 | | | | 464 | | | | 3,139 | | | | 3,603 | | | | (783 | ) | | 2000 | | 7/17/2013 | | 7 to 40 Years |
| Walgreens | | Tulsa, OK | | (b) | | | 741 | | | | 3,179 | | | | 0 | | | | 0 | | | | 741 | | | | 3,179 | | | | 3,920 | | | | (734 | ) | | 1994 | | 7/17/2013 | | 1 to 35 Years |
| Walgreens | | Newton, IA | | (a) | | | 365 | | | | 4,475 | | | | 0 | | | | 0 | | | | 365 | | | | 4,475 | | | | 4,840 | | | | (929 | ) | | 2001 | | 7/17/2013 | | 7 to 44 Years |
| Walgreens | | Evansville, IN | | (a) | | | 1,249 | | | | 3,924 | | | | 0 | | | | 0 | | | | 1,249 | | | | 3,924 | | | | 5,173 | | | | (887 | ) | | 2007 | | 7/17/2013 | | 12 to 44 Years |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Walgreens | Houston, TX | | (d) | | 1,079 |
| | 3,582 |
| | — |
| | — |
| | 1,079 |
| | 3,582 |
| | 4,661 |
| | (571 | ) | | 2001 | | 07/17/13 | | 6 to 40 Years |
| Walgreens | Bryan, TX | | (d) | | 1,049 |
| | 5,633 |
| | — |
| | — |
| | 1,049 |
| | 5,633 |
| | 6,682 |
| | (862 | ) | | 2001 | | 07/17/13 | | 6 to 40 Years |
| Walgreens | Fort Worth, TX | | (d) | | 1,601 |
| | 1,894 |
| | — |
| | — |
| | 1,601 |
| | 1,894 |
| | 3,495 |
| | (390 | ) | | 1999 | | 07/17/13 | | 6 to 39 Years |
| Walgreens | Hixson, TN | | (d) | | 450 |
| | 2,025 |
| | — |
| | — |
| | 450 |
| | 2,025 |
| | 2,475 |
| | (72 | ) | | 1997 | | 07/17/13 | | 40 to 40 Years |
| Walgreens | Kansas City, MO | | (d) | | 634 |
| | 4,341 |
| | — |
| | — |
| | 634 |
| | 4,341 |
| | 4,975 |
| | (698 | ) | | 1997 | | 07/17/13 | | 4 to 43 Years |
| Walgreens | Kansas City, MO | | (d) | | 532 |
| | 3,549 |
| | — |
| | — |
| | 532 |
| | 3,549 |
| | 4,081 |
| | (630 | ) | | 1998 | | 07/17/13 | | 4 to 39 Years |
| Walgreens | Kansas City, MO | | (d) | | 862 |
| | 4,367 |
| | — |
| | — |
| | 862 |
| | 4,367 |
| | 5,229 |
| | (700 | ) | | 2000 | | 07/17/13 | | 6 to 42 Years |
| Walgreens | Kansas City, MO | | (d) | | 518 |
| | 4,234 |
| | — |
| | — |
| | 518 |
| | 4,234 |
| | 4,752 |
| | (680 | ) | | 1999 | | 07/17/13 | | 6 to 43 Years |
| Walgreens | Topeka, KS | | (d) | | 912 |
| | 2,681 |
| | — |
| | — |
| | 912 |
| | 2,681 |
| | 3,593 |
| | (519 | ) | | 1999 | | 07/17/13 | | 6 to 38 Years |
| Walgreens | DeSoto, TX | | (c) | | 1,007 |
| | 2,313 |
| | — |
| | — |
| | 1,007 |
| | 2,313 |
| | 3,320 |
| | (443 | ) | | 1997 | | 07/17/13 | | 5 to 40 Years |
| Walgreens | Cincinnati, OH | | (c) | | 1,527 |
| | 4,307 |
| | — |
| | — |
| | 1,527 |
| | 4,307 |
| | 5,834 |
| | (700 | ) | | 2000 | | 07/17/13 | | 7 to 42 Years |
| Walgreens | Batesville, MS | | (c) | | 421 |
| | 3,932 |
| | — |
| | — |
| | 421 |
| | 3,932 |
| | 4,353 |
| | (589 | ) | | 2007 | | 07/17/13 | | 10 to 42 Years |
| Walgreens | Elmira, NY | | (d) | | 1,066 |
| | 4,230 |
| | — |
| | — |
| | 1,066 |
| | 4,230 |
| | 5,296 |
| | (690 | ) | | 2007 | | 07/17/13 | | 12 to 43 Years |
| Walgreens | Albany, GA | | (d) | | 961 |
| | 3,314 |
| | — |
| | — |
| | 961 |
| | 3,314 |
| | 4,275 |
| | (543 | ) | | 2008 | | 07/17/13 | | 12 to 43 Years |
| Walgreens | Rome, NY | | (d) | | 1,135 |
| | 3,104 |
| | — |
| | — |
| | 1,135 |
| | 3,104 |
| | 4,239 |
| | (509 | ) | | 2007 | | 07/17/13 | | 13 to 43 Years |
| Walgreens | Columbus, MS | | (c) | | 769 |
| | 3,475 |
| | — |
| | — |
| | 769 |
| | 3,475 |
| | 4,244 |
| | (544 | ) | | 2004 | | 07/17/13 | | 11 to 41 Years |
| Walgreens | Crossville, TN | | (c) | | 1,890 |
| | 3,680 |
| | — |
| | — |
| | 1,890 |
| | 3,680 |
| | 5,570 |
| | (611 | ) | | 2001 | | 07/17/13 | | 7 to 41 Years |
| Walgreens | Jacksonville, FL | | (c) | | 521 |
| | 4,365 |
| | — |
| | — |
| | 521 |
| | 4,365 |
| | 4,886 |
| | (687 | ) | | 2000 | | 07/17/13 | | 7 to 40 Years |
| Walgreens | LaMarque, TX | | (c) | | 464 |
| | 3,139 |
| | — |
| | — |
| | 464 |
| | 3,139 |
| | 3,603 |
| | (572 | ) | | 2000 | | 07/17/13 | | 7 to 40 Years |
| Walgreens | Tulsa, OK | | (d) | | 741 |
| | 3,179 |
| | — |
| | — |
| | 741 |
| | 3,179 |
| | 3,920 |
| | (536 | ) | | 1994 | | 07/17/13 | | 1 to 35 Years |
| Walgreens | Newton, IA | | (c) | | 365 |
| | 4,475 |
| | — |
| | — |
| | 365 |
| | 4,475 |
| | 4,840 |
| | (678 | ) | | 2001 | | 07/17/13 | | 7 to 44 Years |
| Walgreens | Seattle, WA | | (c) | | 2,589 |
| | 4,245 |
| | — |
| | — |
| | 2,589 |
| | 4,245 |
| | 6,834 |
| | (685 | ) | | 2002 | | 07/17/13 | | 9 to 43 Years |
| Walgreens | Evansville, IN | | (c) | | 1,249 |
| | 3,924 |
| | — |
| | — |
| | 1,249 |
| | 3,924 |
| | 5,173 |
| | (648 | ) | | 2007 | | 07/17/13 | | 12 to 44 Years |
| Walgreens | Canton, IL | | (d) | | 703 |
| | 4,098 |
| | — |
| | — |
| | 703 |
| | 4,098 |
| | 4,801 |
| | (656 | ) | | 2006 | | 07/17/13 | | 12 to 43 Years |
| Walgreens | Memphis, TN | | (d) | | 961 |
| | 5,389 |
| | — |
| | — |
| | 961 |
| | 5,389 |
| | 6,350 |
| | (809 | ) | | 2002 | | 07/17/13 | | 12 to 43 Years |
| Walgreens | Parkville, MO | | (d) | | 1,854 |
| | 2,568 |
| | — |
| | — |
| | 1,854 |
| | 2,568 |
| | 4,422 |
| | (541 | ) | | 2006 | | 07/17/13 | | 11 to 38 Years |
| Walgreens | San Antonio, TX | | (d) | | 841 |
| | 3,909 |
| | — |
| | — |
| | 841 |
| | 3,909 |
| | 4,750 |
| | (606 | ) | | 2004 | | 07/17/13 | | 14 to 40 Years |
| Walgreens | Mount Pleasant, TX | | (d) | | 1,192 |
| | 4,578 |
| | — |
| | — |
| | 1,192 |
| | 4,578 |
| | 5,770 |
| | (769 | ) | | 2009 | | 07/17/13 | | 14 to 43 Years |
| Wal-Mart | Anderson, SC | | (d) | | 4,770 |
| | 6,883 |
| | — |
| | — |
| | 4,770 |
| | 6,883 |
| | 11,653 |
| | (3,366 | ) | | 1993 | | 07/17/13 | | 0 to 21 Years |
| Wal-Mart | Spencer, IN | | (d) | | 971 |
| | 2,483 |
| | — |
| | — |
| | 971 |
| | 2,483 |
| | 3,454 |
| | (906 | ) | | 1987 | | 07/17/13 | | 4 to 22 Years |
| Wal-Mart | New London, WI | | (d) | | 1,008 |
| | 2,094 |
| | — |
| | — |
| | 1,008 |
| | 2,094 |
| | 3,102 |
| | (1,125 | ) | | 1991 | | 07/17/13 | | 3 to 18 Years |
| Winco Foods | Eureka, CA | | (d) | | 3,108 |
| | 12,817 |
| | — |
| | — |
| | 3,108 |
| | 12,817 |
| | 15,925 |
| | (2,178 | ) | | 1960 | | 07/17/13 | | 3 to 40 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Walgreens | | San Antonio, TX | | (b) | | | 841 | | | | 3,909 | | | | 0 | | | | 0 | | | | 841 | | | | 3,909 | | | | 4,750 | | | | (830 | ) | | 2004 | | 7/17/2013 | | 14 to 40 Years |
| Walgreens | | Canton, IL | | (b) | | | 703 | | | | 4,098 | | | | 0 | | | | 0 | | | | 703 | | | | 4,098 | | | | 4,801 | | | | (898 | ) | | 2006 | | 7/17/2013 | | 12 to 43 Years |
| Walgreens | | Memphis, TN | | (b) | | | 961 | | | | 5,389 | | | | 0 | | | | 0 | | | | 961 | | | | 5,389 | | | | 6,350 | | | | (1,107 | ) | | 2002 | | 7/17/2013 | | 12 to 43 Years |
| Walgreens | | Parkville, MO | | (b) | | | 1,854 | | | | 2,568 | | | | 0 | | | | 0 | | | | 1,854 | | | | 2,568 | | | | 4,422 | | | | (740 | ) | | 2006 | | 7/17/2013 | | 11 to 38 Years |
| Walgreens | | DeSoto, TX | | (a) | | | 1,007 | | | | 2,313 | | | | 0 | | | | 0 | | | | 1,007 | | | | 2,313 | | | | 3,320 | | | | (604 | ) | | 1997 | | 7/17/2013 | | 5 to 40 Years |
| Walgreens | | Batesville, MS | | (a) | | | 421 | | | | 3,932 | | | | 0 | | | | 0 | | | | 421 | | | | 3,932 | | | | 4,353 | | | | (806 | ) | | 2007 | | 7/17/2013 | | 10 to 42 Years |
| Walgreens | | Cincinnati, OH | | (a) | | | 1,527 | | | | 4,307 | | | | 0 | | | | 0 | | | | 1,527 | | | | 4,307 | | | | 5,834 | | | | (959 | ) | | 2000 | | 7/17/2013 | | 7 to 42 Years |
| Walgreens | | Gainesville, FL | | (b) | | | 922 | | | | 2,705 | | | | 0 | | | | 0 | | | | 922 | | | | 2,705 | | | | 3,627 | | | | (636 | ) | | 1998 | | 7/17/2013 | | 4 to 40 Years |
| Walgreens | | Madeira, OH | | (b) | | | 951 | | | | 3,978 | | | | 0 | | | | 67 | | | | 951 | | | | 4,045 | | | | 4,996 | | | | (848 | ) | | 1998 | | 7/17/2013 | | 5 to 44 Years |
| Walgreens | | Houston, TX | | (b) | | | 1,079 | | | | 3,582 | | | | (480 | ) | | | (1,781 | ) | | | 599 | | | | 1,801 | | | | 2,400 | | | | (37 | ) | | 2001 | | 7/17/2013 | | 4 to 33 Years |
| Walgreens | | Dallas, TX | | (b) | | | 735 | | | | 3,328 | | | | 0 | | | | 0 | | | | 735 | | | | 3,328 | | | | 4,063 | | | | (735 | ) | | 1996 | | 7/17/2013 | | 3 to 40 Years |
| Walgreens | | Hixson, TN | | (b) | | | 450 | | | | 2,025 | | | | 0 | | | | 0 | | | | 450 | | | | 2,025 | | | | 2,475 | | | | (173 | ) | | 1997 | | 7/17/2013 | | 40 to 40 Years |
| Walgreens | | Kansas City, MO | | (b) | | | 634 | | | | 4,341 | | | | 0 | | | | 0 | | | | 634 | | | | 4,341 | | | | 4,975 | | | | (952 | ) | | 1997 | | 7/17/2013 | | 4 to 43 Years |
| Walgreens | | Kansas City, MO | | (b) | | | 532 | | | | 3,549 | | | | 0 | | | | 0 | | | | 532 | | | | 3,549 | | | | 4,081 | | | | (859 | ) | | 1998 | | 7/17/2013 | | 4 to 39 Years |
| Walgreens | | Kansas City, MO | | (b) | | | 862 | | | | 4,367 | | | | 0 | | | | 0 | | | | 862 | | | | 4,367 | | | | 5,229 | | | | (957 | ) | | 2000 | | 7/17/2013 | | 6 to 42 Years |
| Walgreens | | Kansas City, MO | | (b) | | | 518 | | | | 4,234 | | | | 0 | | | | 0 | | | | 518 | | | | 4,234 | | | | 4,752 | | | | (929 | ) | | 1999 | | 7/17/2013 | | 6 to 43 Years |
| Walgreens | | Knoxville, TN | | (b) | | | 2,107 | | | | 3,334 | | | | 0 | | | | 0 | | | | 2,107 | | | | 3,334 | | | | 5,441 | | | | (845 | ) | | 2000 | | 7/17/2013 | | 6 to 40 Years |
| Walgreens | | Picayune, MS | | (b) | | | 954 | | | | 3,132 | | | | 0 | | | | 0 | | | | 954 | | | | 3,132 | | | | 4,086 | | | | (682 | ) | | 2006 | | 7/17/2013 | | 10 to 42 Years |
| Walgreens | | Olivette, MO | | (b) | | | 1,816 | | | | 5,917 | | | | 0 | | | | 0 | | | | 1,816 | | | | 5,917 | | | | 7,733 | | | | (1,357 | ) | | 2001 | | 7/17/2013 | | 11 to 42 Years |
| Walgreens | | Columbia, MO | | (b) | | | 1,047 | | | | 5,242 | | | | 0 | | | | 0 | | | | 1,047 | | | | 5,242 | | | | 6,289 | | | | (1,012 | ) | | 2002 | | 7/17/2013 | | 9 to 44 Years |
| Walgreens | | Enterprise, AL | | (b) | | | 1,163 | | | | 1,612 | | | | 0 | | | | 0 | | | | 1,163 | | | | 1,612 | | | | 2,775 | | | | (517 | ) | | 2006 | | 7/17/2013 | | 11 to 37 Years |
| Walgreens | | Rome, NY | | (b) | | | 1,135 | | | | 3,104 | | | | 0 | | | | 0 | | | | 1,135 | | | | 3,104 | | | | 4,239 | | | | (697 | ) | | 2007 | | 7/17/2013 | | 13 to 43 Years |
| Walgreens | | Elmira, NY | | (b) | | | 1,066 | | | | 4,230 | | | | 0 | | | | 0 | | | | 1,066 | | | | 4,230 | | | | 5,296 | | | | (945 | ) | | 2007 | | 7/17/2013 | | 12 to 43 Years |
| Walgreens | | Shreveport, LA | | (b) | | | 1,461 | | | | 3,605 | | | | 0 | | | | 0 | | | | 1,461 | | | | 3,605 | | | | 5,066 | | | | (865 | ) | | 1999 | | 7/17/2013 | | 6 to 40 Years |
| Walgreens (f) | | Collierville, TN | | (b) | | | 2,217 | | | | 14,205 | | | | 0 | | | | (295 | ) | | | 2,217 | | | | 13,910 | | | | 16,127 | | | | (3,136 | ) | | 2002 | | 7/17/2013 | | 3 to 45 Years |
| Walmart | | Spencer, IN | | (b) | | | 971 | | | | 2,483 | | | | 0 | | | | 0 | | | | 971 | | | | 2,483 | | | | 3,454 | | | | (1,238 | ) | | 1987 | | 7/17/2013 | | 4 to 22 Years |
| Walmart | | New London, WI | | (b) | | | 1,008 | | | | 2,094 | | | | 0 | | | | 0 | | | | 1,008 | | | | 2,094 | | | | 3,102 | | | | (1,515 | ) | | 1991 | | 7/17/2013 | | 3 to 18 Years |
| Walmart | | Sidney, OH | | (b) | | | 1,961 | | | | 69 | | | | 0 | | | | 0 | | | | 1,961 | | | | 69 | | | | 2,030 | | | | (16 | ) | | 2001 | | 1/8/2019 | | 7 to 7 Years |
| Wawa | | Narberth, PA | | (b) | | | 1,812 | | | | 3,163 | | | | 0 | | | | 0 | | | | 1,812 | | | | 3,163 | | | | 4,975 | | | | (677 | ) | | 2006 | | 7/17/2013 | | 8 to 46 Years |
| Wawa | | Manahawkin, NJ | | (b) | | | 3,258 | | | | 1,954 | | | | 0 | | | | 0 | | | | 3,258 | | | | 1,954 | | | | 5,212 | | | | (1,273 | ) | | 2001 | | 7/17/2013 | | 8 to 46 Years |
| Wawa | | Hockessin, DE | | (b) | | | 1,921 | | | | 2,477 | | | | 0 | | | | 0 | | | | 1,921 | | | | 2,477 | | | | 4,398 | | | | (752 | ) | | 2001 | | 7/17/2013 | | 8 to 46 Years |
| Wendy’s | | Greenville, TX | | (b) | | | 336 | | | | 773 | | | | 0 | | | | 0 | | | | 336 | | | | 773 | | | | 1,109 | | | | (49 | ) | | 1985 | | 11/25/2019 | | 9 to 21 Years |
| Whirlpool | | Bridgeton, MO | | (b) | | | 10,183 | | | | 23,664 | | | | 0 | | | | 0 | | | | 10,183 | | | | 23,664 | | | | 33,847 | | | | (188 | ) | | 2020 | | 11/10/2020 | | 5 to 31 Years |
| Winco Foods | | Eureka, CA | | (b) | | | 3,108 | | | | 12,817 | | | | 0 | | | | 0 | | | | 3,108 | | | | 12,817 | | | | 15,925 | | | | (2,976 | ) | | 1960 | | 7/17/2013 | | 3 to 40 Years |
| Winsteads | | Overland Park, KS | | (b) | | | 607 | | | | 123 | | | | 0 | | | | 0 | | | | 607 | | | | 123 | | | | 730 | | | | (23 | ) | | 2009 | | 11/25/2019 | | 7 to 21 Years |
| Yard House | | Cincinnati, OH | | (b) | | | 1,370 | | | | 8,260 | | | | (29 | ) | | | 21 | | | | 1,341 | | | | 8,281 | | | | 9,622 | | | | (285 | ) | | 2013 | | 11/25/2019 | | 3 to 35 Years |
| Zaxby’s | | Jonesboro, GA | | (b) | | | 679 | | | | 1,736 | | | | (69 | ) | | | 0 | | | | 610 | | | | 1,736 | | | | 2,346 | | | | (368 | ) | | 2006 | | 7/1/2015 | | 15 to 30 Years |
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Cost Capitalized Subsequent to | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Zaxby’s | | College Park, GA | | (b) | | | 839 | | | | 1,439 | | | | 0 | | | | 0 | | | | 839 | | | | 1,439 | | | | 2,278 | | | | (333 | ) | | 2007 | | 7/1/2015 | | 15 to 30 Years |
| Zaxby’s | | Riverdale, GA | | (b) | | | 741 | | | | 1,789 | | | | 0 | | | | 0 | | | | 741 | | | | 1,789 | | | | 2,530 | | | | (382 | ) | | 2010 | | 9/17/2015 | | 15 to 30 Years |
| Zips Car Wash | | Springdale, AR | | (b) | | | 520 | | | | 2,032 | | | | 0 | | | | 0 | | | | 520 | | | | 2,032 | | | | 2,552 | | | | (421 | ) | | 2005 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | San Antonio, TX | | (b) | | | 1,422 | | | | 1,108 | | | | 0 | | | | 110 | | | | 1,422 | | | | 1,218 | | | | 2,640 | | | | (255 | ) | | 2010 | | 3/29/2017 | | 10 to 30 Years |
| Zips Car Wash | | Edmond, OK | | (b) | | | 644 | | | | 1,896 | | | | 0 | | | | 0 | | | | 644 | | | | 1,896 | | | | 2,540 | | | | (393 | ) | | 2005 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Sherwood, AR | | (b) | | | 1,128 | | | | 1,388 | | | | 0 | | | | 0 | | | | 1,128 | | | | 1,388 | | | | 2,516 | | | | (382 | ) | | 2010 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Siloam Springs, AR | | (b) | | | 991 | | | | 1,884 | | | | 0 | | | | 0 | | | | 991 | | | | 1,884 | | | | 2,875 | | | | (425 | ) | | 2005 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | New Braunfels, TX | | (b) | | | 1,261 | | | | 1,571 | | | | 0 | | | | 110 | | | | 1,261 | | | | 1,681 | | | | 2,942 | | | | (287 | ) | | 2010 | | 3/29/2017 | | 10 to 30 Years |
| Zips Car Wash | | Oklahoma City, OK | | (b) | | | 1,004 | | | | 1,933 | | | | 0 | | | | 0 | | | | 1,004 | | | | 1,933 | | | | 2,937 | | | | (447 | ) | | 2005 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Arlington, TN | | (b) | | | 867 | | | | 1,487 | | | | 0 | | | | 0 | | | | 867 | | | | 1,487 | | | | 2,354 | | | | (347 | ) | | 2010 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Oklahoma City, OK | | (b) | | | 545 | | | | 1,995 | | | | 0 | | | | 0 | | | | 545 | | | | 1,995 | | | | 2,540 | | | | (406 | ) | | 2005 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Texarkana, TX | | (b) | | | 483 | | | | 1,400 | | | | 0 | | | | 0 | | | | 483 | | | | 1,400 | | | | 1,883 | | | | (293 | ) | | 2010 | | 9/30/2015 | | 15 to 30 Years |
| Zips Car Wash | | Universal City, TX | | (b) | | | 1,167 | | | | 1,440 | | | | 0 | | | | 123 | | | | 1,167 | | | | 1,563 | | | | 2,730 | | | | (286 | ) | | 2011 | | 6/30/2017 | | 15 to 30 Years |
| Zips Car Wash | | Converse, TX | | (b) | | | 1,253 | | | | 1,493 | | | | 0 | | | | 199 | | | | 1,253 | | | | 1,692 | | | | 2,945 | | | | (381 | ) | | 2011 | | 3/29/2017 | | 10 to 30 Years |
| Zips Car Wash | | Seguin, TX | | (b) | | | 621 | | | | 1,264 | | | | 0 | | | | 110 | | | | 621 | | | | 1,374 | | | | 1,995 | | | | (283 | ) | | 2010 | | 3/29/2017 | | 10 to 30 Years |
| Vacant | | Grove City, OH | | (a) | | | 2,050 | | | | 3,288 | | | | (1,202 | ) | | | (1,981 | ) | | | 848 | | | | 1,307 | | | | 2,155 | | | | (208 | ) | | 2008 | | 7/17/2013 | | 6 to 34 Years |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | 2,109,580 | | | | 4,225,347 | | | | (18,988 | ) | | | 76,657 | | | | 2,090,592 | | | | 4,302,004 | | | | 6,392,596 | | | | (850,320 | ) | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| (a) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost to Company | | Cost Capitalized Subsequent to Acquisition including impairment | | Gross Amount at December 31, 2018 (g) | | | | | | | | |
Concept | City, State | | Encumbrances (e) | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Land and Improvements | | Buildings and Improvements | | Total | | Final Accumulated Depreciation | | Date of Construction | | Date Acquired | | Life in which depreciation in latest Statement of Operations is computed |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Zaxby's | Jonesboro, GA | | (d) | | 679 |
| | 1,736 |
| | — |
| | — |
| | 679 |
| | 1,736 |
| | 2,415 |
| | (237 | ) | | 2006 | | 07/01/15 | | 15 to 30 Years |
| Zaxby's | College Park, GA | | (d) | | 839 |
| | 1,439 |
| | — |
| | — |
| | 839 |
| | 1,439 |
| | 2,278 |
| | (212 | ) | | 2007 | | 07/01/15 | | 15 to 30 Years |
| Zaxby's | Riverdale, GA | | (d) | | 741 |
| | 1,789 |
| | — |
| | — |
| | 741 |
| | 1,789 |
| | 2,530 |
| | (237 | ) | | 2010 | | 09/17/15 | | 15 to 30 Years |
| Zips Car Wash | Arlington, TN | | (d) | | 867 |
| | 1,487 |
| | — |
| | — |
| | 867 |
| | 1,487 |
| | 2,354 |
| | (215 | ) | | 2010 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Edmond, OK | | (d) | | 644 |
| | 1,896 |
| | — |
| | — |
| | 644 |
| | 1,896 |
| | 2,540 |
| | (243 | ) | | 2005 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Oklahoma City, OK | | (d) | | 1,004 |
| | 1,933 |
| | — |
| | — |
| | 1,004 |
| | 1,933 |
| | 2,937 |
| | (277 | ) | | 2005 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Oklahoma City, OK | | (d) | | 545 |
| | 1,995 |
| | — |
| | — |
| | 545 |
| | 1,995 |
| | 2,540 |
| | (251 | ) | | 2005 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Sherwood, AR | | (d) | | 1,128 |
| | 1,388 |
| | — |
| | — |
| | 1,128 |
| | 1,388 |
| | 2,516 |
| | (236 | ) | | 2010 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Siloam Springs, AR | | (d) | | 991 |
| | 1,884 |
| | — |
| | — |
| | 991 |
| | 1,884 |
| | 2,875 |
| | (263 | ) | | 2005 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Springdale, AR | | (d) | | 520 |
| | 2,032 |
| | — |
| | — |
| | 520 |
| | 2,032 |
| | 2,552 |
| | (260 | ) | | 2005 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | Texarkana, TX | | (d) | | 483 |
| | 1,400 |
| | — |
| | — |
| | 483 |
| | 1,400 |
| | 1,883 |
| | (181 | ) | | 2010 | | 09/30/15 | | 15 to 30 Years |
| Zips Car Wash | San Antonio, TX | | (d) | | 1,422 |
| | 1,108 |
| | — |
| | 110 |
| | 1,422 |
| | 1,218 |
| | 2,640 |
| | (119 | ) | | 2010 | | 03/29/17 | | 10 to 30 Years |
| Zips Car Wash | Converse, TX | | (d) | | 1,253 |
| | 1,493 |
| | — |
| | 199 |
| | 1,253 |
| | 1,692 |
| | 2,945 |
| | (177 | ) | | 2011 | | 03/29/17 | | 10 to 30 Years |
| Zips Car Wash | Universal City, TX | | (d) | | 1,167 |
| | 1,440 |
| | — |
| | 123 |
| | 1,167 |
| | 1,563 |
| | 2,730 |
| | (122 | ) | | 2011 | | 06/30/17 | | 15 to 30 Years |
| Zips Car Wash | New Braunfels, TX | | (d) | | 1,261 |
| | 1,571 |
| | — |
| | 110 |
| | 1,261 |
| | 1,681 |
| | 2,942 |
| | (133 | ) | | 2010 | | 03/29/17 | | 10 to 30 Years |
| Zips Car Wash | Seguin, TX | | (d) | | 621 |
| | 1,264 |
| | — |
| | 111 |
| | 621 |
| | 1,375 |
| | 1,996 |
| | (137 | ) | | 2010 | | 03/29/17 | | 10 to 30 Years |
| | | | | | 1,644,768 |
| | 3,076,618 |
| | (12,104 | ) | | 48,435 |
| | 1,632,664 |
| | 3,125,053 |
| | 4,757,717 |
| | (621,456 | ) | | | | | | |
|
| |
(a) | Represents properties collateralized with four related party loans owed by Spirit and payable to SMTA. See Note 11 for further details. |
(b) | Represents properties collateralized with Master Trust 2013 debt. See Note 4 for further details. |
(c) | Represents properties collateralized with fixed CMBS debt. See Note 4 for further details. |
(d)(b) | Represents unencumbered properties. |
(e)(c) | The aggregate cost of properties for federal income tax purposes is approximately $4.09$5.9 billion at December 31, 2018.2020. |
(f)(d) | Represents land only properties with no depreciation and therefore date of construction and estimated life for depreciation not applicable. |
(g) | As of December 31, 2018,2020, the Company held certain direct finance lease and held for sale properties, which are not included in the table above. |
| (e) | Represents land only properties with no depreciation and therefore date of construction and estimated life for depreciation not applicable. |
| (f) | Represents the anchor tenant by rent in a multi-tenant property. |
| (g) | Represents properties that have been fully written down and therefore estimated life for depreciation not applicable. |
| (h) | Represents one property that is under construction and therefore date of construction and estimated life for depreciation not applicable. |
|
| | | | | | | | | | | |
| | 2018 | | 2017 | | 2016 |
| | | | | | |
| Land, buildings, and improvements | | | | | |
| Balance at the beginning of the year | $ | 7,281,307 |
| | $ | 7,479,231 |
| | $ | 7,527,369 |
|
| Additions: | | | | | |
| Acquisitions, capital expenditures, and reclassifications from held for sale and deferred financing leases | 315,324 |
| | 337,497 |
| | 691,332 |
|
| Deductions: | | | | | |
| Dispositions of land, buildings, and improvements and other adjustments | (112,430 | ) | | (422,653 | ) | | (508,961 | ) |
| Reclassifications to held for sale | (11,670 | ) | | (34,813 | ) | | (150,529 | ) |
| Impairments | (26,263 | ) | | (77,955 | ) | | (79,980 | ) |
| SMTA Spin-off | (2,688,551 | ) | | — |
| | — |
|
| Gross Real Estate Balance at close of the year | $ | 4,757,717 |
| | $ | 7,281,307 |
| | $ | 7,479,231 |
|
| | | | | | |
| Accumulated depreciation and amortization | | | | | |
| Balance at the beginning of the year | $ | (1,075,643 | ) | | $ | (940,005 | ) | | $ | (860,954 | ) |
| Additions: | | | | | |
| Depreciation expense and reclassifications from held for sale | (165,898 | ) | | (219,803 | ) | | (221,993 | ) |
| Deductions: | | | | | |
| Dispositions of land, buildings, and improvements and other adjustments | 30,381 |
| | 82,156 |
| | 127,787 |
|
| Reclassifications to held for sale | 2,372 |
| | 2,009 |
| | 15,155 |
|
| SMTA Spin-off | 587,332 |
| | — |
| | — |
|
| Balance at close of the year | $ | (621,456 | ) | | $ | (1,075,643 | ) | | $ | (940,005 | ) |
| | | | | | |
| Net Real Estate Investment | $ | 4,136,261 |
| | $ | 6,205,664 |
| | $ | 6,539,226 |
|
SPIRIT REALTY CAPITAL, INC.
Schedule III Real Estate and
| | | | | | | | | | | | |
| | | | | | | | | | |
Land, buildings, and improvements | | | | | | | | | | | | |
Balance at the beginning of the year | | $ | 5,750,507 | | | $ | 4,757,717 | | | $ | 7,281,307 | |
| | | | | | | | | | | | |
Acquisitions, capital expenditures, and reclassifications from held for sale and deferred financing leases | | | 842,891 | | | | 1,238,020 | | | | 315,324 | |
| | | | | | | | | | | | |
Dispositions of land, buildings, and improvements | | | (50,853) | | | | (98,445) | | | | (112,430) | |
Reclassifications to held for sale | | | (69,573) | | | | (119,449) | | | | (11,670) | |
Impairments, basis reset due to impairment and other adjustments | | | (80,376) | | | | (27,336) | | | | (26,263) | |
| | | 0 | | | | 0 | | | | (2,688,551) | |
| | | | | | | | | | | | | |
Gross Real Estate Balance at close of the year | | $ | 6,392,596 | | | $ | 5,750,507 | | | $ | 4,757,717 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Accumulated depreciation and amortization | | | | | | | | | | | | |
Balance at the beginning of the year | | $ | (717,097) | | | $ | (621,456) | | | $ | (1,075,643) | |
| | | | | | | | | | | | |
Depreciation expense and reclassifications from held for sale | | | (177,268) | | | | (145,104) | | | | (165,898) | |
| | | | | | | | | | | | |
Dispositions of land, buildings, and improvements and other adjustments | | | 38,723 | | | | 32,678 | | | | 30,381 | |
Reclassifications to held for sale | | | 5,322 | | | | 16,785 | | | | 2,372 | |
| | | 0 | | | | 0 | | | | 587,332 | |
| | | | | | | | | | | | | |
Balance at close of the year | | $ | (850,320) | | | $ | (717,097) | | | $ | (621,456) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Net Real Estate Investment | | $ | 5,542,276 | | | $ | 5,033,410 | | | $ | 4,136,261 | |
| | | | | | | | | | | | | |
SPIRIT REALTY CAPITAL, INC.
Mortgage Loans on Real Estate
As of December 31, 20182020
| | | | | | | | | | | | |
| | | | | | | | | | |
Reconciliation of Mortgage Loans on Real Estate | | | | | | | | | | | | |
| | $ | 32,654 | | | $ | 45,187 | | | $ | 74,612 | |
| | | | | | | | | | | | |
| | | — | | | | — | | | | 2,888 | |
| | | | | | | | | | | | |
| | | (31,733) | | | | (10,927) | | | | (26,978) | |
| | | — | | | | — | | | | (2,888) | |
| | | (921) | | | | (1,606) | | | | (2,510) | |
| | | | | | | | | | | | | |
Mortgage loans receivable December 31, | | | — | | | | 32,654 | | | | 45,124 | |
| | | | | | | | | | | | | |
Mortgage loan loss provisions | | | — | | | | — | | | | 63 | |
| | | | | | | | | | | | | |
| | | | — | | | | 32,654 | | | | 45,187 | |
Equipment and other loans receivable | | | — | | | | 1,811 | | | | 1,857 | |
| | $ | — | | | $ | 34,465 | | | $ | 47,044 | |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Description | | Location(s) | | Stated Interest Rate | | Final Maturity Date (1) | | Periodic Payment Terms | | Prior Liens | | Face Amount of Mortgages | | Carrying Amount of Mortgages (2) | | Principal Amount of Loans Subject to Delinquent Principal or Interest |
| Restaurants - Casual Dining | | AL, AR, AZ (3), GA, KS, KY, LA, MA, MD, MI, NC (2), NJ, OK, PA, SC (2), TN, TX (2), WV | | 9.84% | | 8/1/2020 | | Principal & Interest (3) | | $ | — |
| | $ | 37,939 |
| | $ | 27,954 |
| | $ | — |
|
| Restaurants - Quick Service | | AZ (2), CA, FL (6), GA (3), MA, MD, MI (2), NC, VA (3) | | 10.47% | | 10/1/2020 | | Principal & Interest (4) | | — |
| | 17,711 |
| | 11,650 |
| | — |
|
| Restaurants - Casual Dining | | CO (2), IL, KS, MI, OH, OK, SD, TN | | 4.00% - 9.00% | | 9/25/2020 | | Mixed (5) | | — |
| | 13,125 |
| | 5,583 |
| | — |
|
| Total | | | | | | | | | | | | $ | — |
| | $ | 68,775 |
| | $ | 45,187 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | |
(1) Reflects current maturity of the investment and does not consider any options to extend beyond the current maturity | | | | | | | | |
(2) The aggregate tax basis of the mortgage loans outstanding on December 31, 2018 was $42.7 million. | | | | | | | | | |
(3) Balloon payment of $21.5 million due at maturity | | | | | | | | | |
(4) Balloon payments of $7.2 million due at maturity | | | | | | | | | |
(5) Deferred interest (4.0%) year 1, Interest only (4.0%) year 2, Principal and interest (9.0%) year 3, Balloon payment of $5.3 million due at maturity |
170
SPIRIT REALTY CAPITAL, INC.SIGNATURES
Schedule IV
Mortgage Loans on Real Estate
As of December 31, 2018
(In thousands)
|
| | | | | | | | | | | |
| | 2018 | | 2017 | | 2016 |
| | | | | | |
| Reconciliation of Mortgage Loans on Real Estate | | | | | |
| Balance January 1, | $ | 74,612 |
| | $ | 62,604 |
| | $ | 100,082 |
|
| Additions during period | | | | | |
| New mortgage loans | 2,888 |
| | 24,015 |
| | — |
|
| Deductions during period | | | | | |
| Collections of principal (inclusive of loans receivable exchanged for real estate acquired) | (26,978 | ) | | (9,462 | ) | | (34,686 | ) |
| Sales | — |
| | — |
| | — |
|
| Spin-Off to SMTA | (2,888 | ) | | — |
| | — |
|
| Amortization of premium | (2,510 | ) | | (2,156 | ) | | (2,792 | ) |
| Mortgage loans receivable December 31, | 45,124 |
| | 75,001 |
| | 62,604 |
|
| Mortgage loan loss provisions | 63 |
| | (389 | ) | | — |
|
| | 45,187 |
| | 74,612 |
| | 62,604 |
|
| Equipment and other loans receivable | 1,857 |
| | 5,355 |
| | 4,474 |
|
| Provision for other loan loss | — |
| | — |
| | (500 | ) |
| | 1,857 |
| | 5,355 |
| | 3,974 |
|
| Total loans receivable | $ | 47,044 |
| | $ | 79,967 |
| | $ | 66,578 |
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | |
| SPIRIT REALTY CAPITAL, INC. (Registrant)
|
| | |
| |
| By: | | /s/ Prakash J. Parag |
| Name: | Name: | Prakash J. Parag |
| Title: | | Chief Accounting Officer and Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) |
Date: February 21, 201919, 2021
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Jackson Hsieh, Michael Hughes,
Prakash J. Parag and Jay Young, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form
10-K
filed herewith and any and all amendments to said Form
10-K,
and generally to do all such things in our names and in our capacities as officers and directors to enable Spirit Realty Capital, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission in connection therewith, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form
10-K
and any and all amendments thereto.
Pursuant to the requirements of the Securities and Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | |
| | | | | | |
| | |
Name | Title | Date |
| | President, Chief Executive Officer and Director(Principal Executive Officer) | February 21, 2019 |
| | | | |
| | | |
| | Chief Financial Officer and Executive Vice President and Chief Financial Officer(Principal Financial Officer) | February 21, 2019 |
| | | | |
| | | |
| | Chief Accounting Officer and Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) | February 21, 2019 |
| | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | | | | | February 21, 201919, 2021 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | |
| SPIRIT REALTY, L.P. (Registrant)
|
|
| |
| | |
| By: | Spirit Realty Capital, Inc., in its capacity as sole member of Spirit General Holdings, LLC, as sole general partner and on behalf of Spirit Realty, L.P. |
| By: | By: | /s/ Prakash J. Parag |
| Name: | Name: | Prakash J. Parag |
| Title: | | Chief Accounting Officer and Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) |
Date: February 21, 201919, 2021
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Jackson Hsieh, Michael Hughes,
Prakash J. Parag and Jay Young, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form
10-K
filed herewith and any and all amendments to said Form
10-K,
and generally to do all such things in our names and in our capacities as officers and directors to enable Spirit Realty Capital, Inc., in its capacity as sole member of Spirit General Holdings, LLC, as sole general partner and on behalf of Spirit Realty, L.P., to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission in connection therewith, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form
10-K
and any and all amendments thereto.
Pursuant to the requirements of the Securities and Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | |
| | | | | | |
| | |
Name | Title | Date |
| | President, Chief Executive Officer and Director(Principal Executive Officer) | February 21, 2019 |
| | | | |
| | | |
| | Chief Financial Officer and Executive Vice President and Chief Financial Officer(Principal Financial Officer) | | | | February 21, 201919, 2021 |
| | | |
| | Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | | |
| | | | | | |
| | | | | | |
| | | | | |
/s/ Prakash J. Parag | Chief Accounting Officer and Senior Vice President (Principal Accounting Officer) | February 21, 2019 |
| | | |
/s/ Kevin M. Charlton | Director | February 21, 2019 |
| | |
/s/ Todd A. Dunn | Director | February 21, 2019 |
| | |
/s/ Richard I. Gilchrist | Director | February 21, 2019 |
| | |
/s/ Diana Laing | Director | February 21, 2019 |
| | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | February 21, 2019 |
| | | | | | |
| | | |
| Director | | | | | February 21, 201919, 2021 |
