x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _________ to __________
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VEREIT, Inc.
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VEREIT Operating Partnership, L.P.
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(Exact name of registrant as specified in its charter)
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Maryland (VEREIT, Inc.)
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45-2482685
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Delaware (VEREIT Operating Partnership, L.P.)
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45-1255683
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2325 E. Camelback Road, Suite 1100, Phoenix, AZ
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85016
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(Address of principal executive offices)
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(Zip Code)
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(800) 606-3610
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(Registrant’s telephone number, including area code)
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VEREIT, Inc.
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
(Do not check if a smaller reporting company)
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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VEREIT Operating Partnership, L.P.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
(Do not check if a smaller reporting company)
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x
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Smaller reporting company
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o
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Emerging growth company
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o
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•
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enhancing investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
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•
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eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
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•
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creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.
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Page
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March 31, 2017
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December 31, 2016
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||||
ASSETS
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||||
Real estate investments, at cost:
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Land
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$
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2,868,447
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$
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2,895,625
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Buildings, fixtures and improvements
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10,630,598
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10,644,296
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Intangible lease assets
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2,017,739
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2,044,521
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Total real estate investments, at cost
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15,516,784
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15,584,442
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Less: accumulated depreciation and amortization
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2,494,811
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2,331,643
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Total real estate investments, net
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13,021,973
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13,252,799
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Investment in unconsolidated entities
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45,145
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46,077
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Investment in direct financing leases, net
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34,909
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39,455
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Investment securities, at fair value
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42,630
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47,215
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Mortgage notes receivable, net
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22,545
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22,764
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Cash and cash equivalents
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285,586
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256,452
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Restricted cash
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46,712
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45,018
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Intangible assets, net
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20,464
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24,609
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Rent and tenant receivables and other assets, net
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346,898
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330,705
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Goodwill
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1,462,585
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1,462,203
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Due from affiliates
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15,007
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21,349
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Real estate assets held for sale, net
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12,081
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38,928
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Total assets
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$
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15,356,535
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$
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15,587,574
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||||
LIABILITIES AND EQUITY
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Mortgage notes payable and other debt, net
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$
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2,586,917
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$
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2,671,106
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Corporate bonds, net
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2,227,307
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2,226,224
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Convertible debt, net
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976,031
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973,340
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Credit facility, net
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497,148
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496,578
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Below-market lease liabilities, net
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217,721
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224,023
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Accounts payable and accrued expenses
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135,817
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146,137
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Deferred rent, derivative and other liabilities
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68,196
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68,039
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Distributions payable
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165,765
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162,578
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Due to affiliates
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7
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16
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Total liabilities
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6,874,909
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6,968,041
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Commitments and contingencies (Note 14)
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Preferred stock, $0.01 par value, 100,000,000 shares authorized and 42,834,138 issued and outstanding as of each of March 31, 2017 and December 31, 2016
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428
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428
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Common stock, $0.01 par value, 1,500,000,000 shares authorized and 974,238,458 and 974,146,650 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
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9,742
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9,741
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Additional paid-in-capital
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12,642,099
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12,640,171
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Accumulated other comprehensive loss
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(1,795
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)
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(2,556
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)
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Accumulated deficit
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(4,338,029
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)
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(4,200,423
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)
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Total stockholders’ equity
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8,312,445
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8,447,361
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Non-controlling interests
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169,181
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172,172
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Total equity
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8,481,626
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8,619,533
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Total liabilities and equity
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$
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15,356,535
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$
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15,587,574
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Three Months Ended March 31,
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||||||
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2017
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2016
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||||
Revenues:
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Rental income
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$
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293,739
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$
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313,971
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Direct financing lease income
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433
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569
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Operating expense reimbursements
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26,726
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23,247
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Cole Capital revenue
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27,131
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31,233
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Total revenues
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348,029
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369,020
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Operating expenses:
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||||
Cole Capital reallowed fees and commissions
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2,660
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8,068
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Acquisition-related
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617
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242
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|
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Litigation and other non-routine costs, net of insurance recoveries
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12,875
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(5,175
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)
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Property operating
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34,016
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34,813
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General and administrative
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29,148
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29,400
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Depreciation and amortization
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183,152
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204,308
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Impairments
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6,725
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160,517
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Total operating expenses
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269,193
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432,173
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Operating income (loss)
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78,836
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(63,153
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)
|
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Other (expense) income:
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||||
Interest expense
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(73,743
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)
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(80,426
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)
|
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Loss on extinguishment and forgiveness of debt, net
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(70
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)
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—
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|
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Other income, net
|
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798
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1,062
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Equity in (loss) income and gain on disposition of unconsolidated entities
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(82
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)
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10,404
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Gain (loss) on derivative instruments, net
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824
|
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(1,086
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)
|
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Total other expenses, net
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(72,273
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)
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(70,046
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)
|
||
Income (loss) before taxes and real estate dispositions
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6,563
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(133,199
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)
|
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Gain on disposition of real estate and held for sale assets, net
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12,481
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17,175
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Income (loss) before taxes
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19,044
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(116,024
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)
|
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Provision for income taxes
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(4,254
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)
|
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(56
|
)
|
||
Net income (loss)
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14,790
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|
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(116,080
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)
|
||
Net (income) loss attributable to non-controlling interests
(1)
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(352
|
)
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|
2,994
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|
||
Net income (loss) attributable to the General Partner
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$
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14,438
|
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$
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(113,086
|
)
|
|
|
|
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|
||||
Basic and diluted net loss per share attributable to common stockholders
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$
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(0.00
|
)
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$
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(0.15
|
)
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Distributions declared per common share
|
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$
|
0.14
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$
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0.14
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(1)
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Represents (income) loss attributable to limited partners and consolidated joint venture partners.
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Three Months Ended March 31,
|
||||||
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2017
|
|
2016
|
||||
Net income (loss)
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$
|
14,790
|
|
|
$
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(116,080
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
||||
Unrealized gain (loss) on interest rate derivatives
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504
|
|
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(9,702
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)
|
||
Reclassification of previous unrealized loss on interest rate derivatives into net income (loss)
|
|
470
|
|
|
2,099
|
|
||
Unrealized loss on investment securities, net
|
|
(194
|
)
|
|
(1,961
|
)
|
||
Total other comprehensive income (loss)
|
|
780
|
|
|
(9,564
|
)
|
||
|
|
|
|
|
||||
Total comprehensive income (loss)
|
|
15,570
|
|
|
(125,644
|
)
|
||
Comprehensive (income) loss attributable to non-controlling interests
(1)
|
|
(371
|
)
|
|
3,238
|
|
||
Total comprehensive income (loss) attributable to the General Partner
|
|
$
|
15,199
|
|
|
$
|
(122,406
|
)
|
(1)
|
Represents (income) loss attributable to limited partners and consolidated joint venture partners.
|
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Number
of Shares |
|
Par
Value |
|
Number
of Shares |
|
Par
Value |
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit |
|
Total Stock-holders’ Equity
|
|
Non-Controlling Interests
|
|
Total Equity
|
||||||||||||||||||
Balance, January 1, 2017
|
|
42,834,138
|
|
|
$
|
428
|
|
|
974,146,650
|
|
|
$
|
9,741
|
|
|
$
|
12,640,171
|
|
|
$
|
(2,556
|
)
|
|
$
|
(4,200,423
|
)
|
|
$
|
8,447,361
|
|
|
$
|
172,172
|
|
|
$
|
8,619,533
|
|
Repurchases of common stock to settle tax obligation
|
|
—
|
|
|
—
|
|
|
(140,832
|
)
|
|
(1
|
)
|
|
(1,183
|
)
|
|
—
|
|
|
—
|
|
|
(1,184
|
)
|
|
—
|
|
|
(1,184
|
)
|
||||||||
Equity-based compensation, net
|
|
—
|
|
|
—
|
|
|
232,640
|
|
|
2
|
|
|
3,111
|
|
|
—
|
|
|
—
|
|
|
3,113
|
|
|
—
|
|
|
3,113
|
|
||||||||
Distributions declared on common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(133,929
|
)
|
|
(133,929
|
)
|
|
—
|
|
|
(133,929
|
)
|
||||||||
Distributions to non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,326
|
)
|
|
(3,326
|
)
|
||||||||
Distributions to participating securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
||||||||
Distributions to preferred shareholders and unitholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,937
|
)
|
|
(17,937
|
)
|
|
(36
|
)
|
|
(17,973
|
)
|
||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,438
|
|
|
14,438
|
|
|
352
|
|
|
14,790
|
|
||||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
761
|
|
|
19
|
|
|
780
|
|
||||||||
Balance, March 31, 2017
|
|
42,834,138
|
|
|
$
|
428
|
|
|
974,238,458
|
|
|
$
|
9,742
|
|
|
$
|
12,642,099
|
|
|
$
|
(1,795
|
)
|
|
$
|
(4,338,029
|
)
|
|
$
|
8,312,445
|
|
|
$
|
169,181
|
|
|
$
|
8,481,626
|
|
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Number
of Shares |
|
Par
Value |
|
Number
of Shares |
|
Par
Value |
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit |
|
Total Stock-holders’ Equity
|
|
Non-Controlling Interests
|
|
Total Equity
|
||||||||||||||||||
Balance, January 1, 2016
|
|
42,834,138
|
|
|
$
|
428
|
|
|
904,884,394
|
|
|
$
|
9,049
|
|
|
$
|
11,931,768
|
|
|
$
|
(2,025
|
)
|
|
$
|
(3,415,233
|
)
|
|
$
|
8,523,987
|
|
|
$
|
189,972
|
|
|
$
|
8,713,959
|
|
Repurchases of common stock to settle tax obligation
|
|
—
|
|
|
—
|
|
|
(127,741
|
)
|
|
(1
|
)
|
|
(1,023
|
)
|
|
—
|
|
|
—
|
|
|
(1,024
|
)
|
|
—
|
|
|
(1,024
|
)
|
||||||||
Equity-based compensation, net
|
|
—
|
|
|
—
|
|
|
712
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
1,730
|
|
||||||||
Contributions from non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
675
|
|
|
675
|
|
||||||||
Distributions declared on common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124,285
|
)
|
|
(124,285
|
)
|
|
—
|
|
|
(124,285
|
)
|
||||||||
Distributions to non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,299
|
)
|
|
(3,299
|
)
|
||||||||
Distributions to participating securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
|
(125
|
)
|
|
—
|
|
|
(125
|
)
|
||||||||
Distributions to preferred shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,937
|
)
|
|
(17,937
|
)
|
|
(36
|
)
|
|
(17,973
|
)
|
||||||||
Cumulative effect adjustment for equity-based compensation forfeitures
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
384
|
|
|
—
|
|
|
(384
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113,086
|
)
|
|
(113,086
|
)
|
|
(2,994
|
)
|
|
(116,080
|
)
|
||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,320
|
)
|
|
—
|
|
|
(9,320
|
)
|
|
(244
|
)
|
|
(9,564
|
)
|
||||||||
Balance, March 31, 2016
|
|
42,834,138
|
|
|
$
|
428
|
|
|
904,757,365
|
|
|
$
|
9,048
|
|
|
$
|
11,932,859
|
|
|
$
|
(11,345
|
)
|
|
$
|
(3,671,050
|
)
|
|
$
|
8,259,940
|
|
|
$
|
184,074
|
|
|
$
|
8,444,014
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
189,880
|
|
|
208,362
|
|
||
Gain on real estate assets and joint venture, net
|
|
(12,481
|
)
|
|
(27,373
|
)
|
||
Impairments
|
|
6,725
|
|
|
160,517
|
|
||
Equity-based compensation
|
|
3,111
|
|
|
1,730
|
|
||
Equity in loss (income) of unconsolidated entities
|
|
82
|
|
|
(206
|
)
|
||
Distributions from unconsolidated entities
|
|
851
|
|
|
1,491
|
|
||
(Gain) loss on derivative instruments, net
|
|
(824
|
)
|
|
1,086
|
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
70
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Investment in direct financing leases
|
|
621
|
|
|
701
|
|
||
Rent and tenant receivables and other assets, net
|
|
(20,939
|
)
|
|
(13,024
|
)
|
||
Due from affiliates
|
|
3,792
|
|
|
(984
|
)
|
||
Accounts payable and accrued expenses
|
|
(3,269
|
)
|
|
(32,556
|
)
|
||
Deferred rent, derivative and other liabilities
|
|
1,935
|
|
|
(4,822
|
)
|
||
Due to affiliates
|
|
(9
|
)
|
|
(230
|
)
|
||
Net cash provided by operating activities
|
|
184,335
|
|
|
178,612
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Investments in real estate assets
|
|
(101,914
|
)
|
|
(19,952
|
)
|
||
Capital expenditures and leasing costs
|
|
(6,960
|
)
|
|
(5,388
|
)
|
||
Real estate developments
|
|
(5,615
|
)
|
|
(554
|
)
|
||
Principal repayments received from borrowers
|
|
3,672
|
|
|
3,863
|
|
||
Proceeds from disposition of real estate and joint venture
|
|
195,730
|
|
|
176,137
|
|
||
Investment in leasehold improvements and other assets
|
|
(99
|
)
|
|
(574
|
)
|
||
Deposits for real estate assets
|
|
(13,532
|
)
|
|
(3,818
|
)
|
||
Uses and refunds of deposits for real estate assets
|
|
7,717
|
|
|
2,019
|
|
||
Line of credit repayments from affiliates
|
|
2,550
|
|
|
50,000
|
|
||
Change in restricted cash
|
|
(1,694
|
)
|
|
(365
|
)
|
||
Net cash provided by investing activities
|
|
79,855
|
|
|
201,368
|
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from mortgage notes payable
|
|
2,403
|
|
|
206
|
|
||
Payments on mortgage notes payable and other debt, including extinguishment costs
|
|
(84,261
|
)
|
|
(21,948
|
)
|
||
Proceeds from credit facility
|
|
—
|
|
|
203,000
|
|
||
Payments on credit facility
|
|
—
|
|
|
(383,000
|
)
|
||
Payments of deferred financing costs
|
|
(3
|
)
|
|
(240
|
)
|
||
Repurchases of common stock to settle tax obligations
|
|
(976
|
)
|
|
(801
|
)
|
||
Contributions from non-controlling interest holders
|
|
—
|
|
|
675
|
|
||
Distributions paid
|
|
(152,219
|
)
|
|
(142,525
|
)
|
||
Net cash used in financing activities
|
|
(235,056
|
)
|
|
(344,633
|
)
|
||
Net change in cash and cash equivalents
|
|
29,134
|
|
|
35,347
|
|
||
Cash and cash equivalents, beginning of period
|
|
256,452
|
|
|
69,103
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
285,586
|
|
|
$
|
104,450
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
|
||||
Real estate investments, at cost:
|
|
|
|
|
||||
Land
|
|
$
|
2,868,447
|
|
|
$
|
2,895,625
|
|
Buildings, fixtures and improvements
|
|
10,630,598
|
|
|
10,644,296
|
|
||
Intangible lease assets
|
|
2,017,739
|
|
|
2,044,521
|
|
||
Total real estate investments, at cost
|
|
15,516,784
|
|
|
15,584,442
|
|
||
Less: accumulated depreciation and amortization
|
|
2,494,811
|
|
|
2,331,643
|
|
||
Total real estate investments, net
|
|
13,021,973
|
|
|
13,252,799
|
|
||
Investment in unconsolidated entities
|
|
45,145
|
|
|
46,077
|
|
||
Investment in direct financing leases, net
|
|
34,909
|
|
|
39,455
|
|
||
Investment securities, at fair value
|
|
42,630
|
|
|
47,215
|
|
||
Mortgage notes receivable, net
|
|
22,545
|
|
|
22,764
|
|
||
Cash and cash equivalents
|
|
285,586
|
|
|
256,452
|
|
||
Restricted cash
|
|
46,712
|
|
|
45,018
|
|
||
Intangible assets, net
|
|
20,464
|
|
|
24,609
|
|
||
Rent and tenant receivables and other assets, net
|
|
346,898
|
|
|
330,705
|
|
||
Goodwill
|
|
1,462,585
|
|
|
1,462,203
|
|
||
Due from affiliates
|
|
15,007
|
|
|
21,349
|
|
||
Real estate assets held for sale, net
|
|
12,081
|
|
|
38,928
|
|
||
Total assets
|
|
$
|
15,356,535
|
|
|
$
|
15,587,574
|
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|||
Mortgage notes payable and other debt, net
|
|
$
|
2,586,917
|
|
|
$
|
2,671,106
|
|
Corporate bonds, net
|
|
2,227,307
|
|
|
2,226,224
|
|
||
Convertible debt, net
|
|
976,031
|
|
|
973,340
|
|
||
Credit facility, net
|
|
497,148
|
|
|
496,578
|
|
||
Below-market lease liabilities, net
|
|
217,721
|
|
|
224,023
|
|
||
Accounts payable and accrued expenses
|
|
135,817
|
|
|
146,137
|
|
||
Deferred rent, derivative and other liabilities
|
|
68,196
|
|
|
68,039
|
|
||
Distributions payable
|
|
165,765
|
|
|
162,578
|
|
||
Due to affiliates
|
|
7
|
|
|
16
|
|
||
Total liabilities
|
|
6,874,909
|
|
|
6,968,041
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
|
||
General Partner's preferred equity, 42,834,138 General Partner Preferred Units issued and outstanding as of each of March 31, 2017 and December 31, 2016
|
|
835,884
|
|
|
853,821
|
|
||
General Partner's common equity, 974,238,458 and 974,146,650 General Partner OP Units issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
|
|
7,476,561
|
|
|
7,593,540
|
|
||
Limited Partner's preferred equity, 86,874 Limited Partner Preferred Units issued and outstanding as of each of March 31, 2017 and December 31, 2016
|
|
3,135
|
|
|
3,171
|
|
||
Limited Partner's common equity, 23,748,347 Limited Partner OP Units issued and outstanding as of each of March 31, 2017 and December 31, 2016, respectively
|
|
163,710
|
|
|
166,598
|
|
||
Total partners’ equity
|
|
8,479,290
|
|
|
8,617,130
|
|
||
Non-controlling interests
|
|
2,336
|
|
|
2,403
|
|
||
Total equity
|
|
8,481,626
|
|
|
8,619,533
|
|
||
Total liabilities and equity
|
|
$
|
15,356,535
|
|
|
$
|
15,587,574
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Revenues:
|
|
|
|
|
||||
Rental income
|
|
$
|
293,739
|
|
|
$
|
313,971
|
|
Direct financing lease income
|
|
433
|
|
|
569
|
|
||
Operating expense reimbursements
|
|
26,726
|
|
|
23,247
|
|
||
Cole Capital revenue
|
|
27,131
|
|
|
31,233
|
|
||
Total revenues
|
|
348,029
|
|
|
369,020
|
|
||
Operating expenses:
|
|
|
|
|
||||
Cole Capital reallowed fees and commissions
|
|
2,660
|
|
|
8,068
|
|
||
Acquisition-related
|
|
617
|
|
|
242
|
|
||
Litigation and other non-routine costs, net of insurance recoveries
|
|
12,875
|
|
|
(5,175
|
)
|
||
Property operating
|
|
34,016
|
|
|
34,813
|
|
||
General and administrative
|
|
29,148
|
|
|
29,400
|
|
||
Depreciation and amortization
|
|
183,152
|
|
|
204,308
|
|
||
Impairments
|
|
6,725
|
|
|
160,517
|
|
||
Total operating expenses
|
|
269,193
|
|
|
432,173
|
|
||
Operating income (loss)
|
|
78,836
|
|
|
(63,153
|
)
|
||
Other (expense) income:
|
|
|
|
|
||||
Interest expense
|
|
(73,743
|
)
|
|
(80,426
|
)
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
(70
|
)
|
|
—
|
|
||
Other income, net
|
|
798
|
|
|
1,062
|
|
||
Equity in (loss) income and gain on disposition of unconsolidated entities
|
|
(82
|
)
|
|
10,404
|
|
||
Gain (loss) on derivative instruments, net
|
|
824
|
|
|
(1,086
|
)
|
||
Total other expenses, net
|
|
(72,273
|
)
|
|
(70,046
|
)
|
||
Income (loss) before taxes and real estate dispositions
|
|
6,563
|
|
|
(133,199
|
)
|
||
Gain on disposition of real estate and held for sale assets, net
|
|
12,481
|
|
|
17,175
|
|
||
Income (loss) before taxes
|
|
19,044
|
|
|
(116,024
|
)
|
||
Provision for income taxes
|
|
(4,254
|
)
|
|
(56
|
)
|
||
Net income (loss)
|
|
14,790
|
|
|
(116,080
|
)
|
||
Net loss attributable to non-controlling interests
(1)
|
|
7
|
|
|
39
|
|
||
Net income (loss) attributable to the OP
|
|
$
|
14,797
|
|
|
$
|
(116,041
|
)
|
|
|
|
|
|
||||
Basic and diluted net loss per unit attributable to common unitholders
|
|
$
|
(0.00
|
)
|
|
$
|
(0.15
|
)
|
Distributions declared per common unit
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
(1)
|
Represents loss attributable to consolidated joint venture partners.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
||||
Unrealized gain (loss) on interest rate derivatives
|
|
504
|
|
|
(9,702
|
)
|
||
Reclassification of previous unrealized loss on interest rate derivatives into net income (loss)
|
|
470
|
|
|
2,099
|
|
||
Unrealized loss on investment securities, net
|
|
(194
|
)
|
|
(1,961
|
)
|
||
Total other comprehensive income (loss)
|
|
780
|
|
|
(9,564
|
)
|
||
|
|
|
|
|
||||
Total comprehensive income (loss)
|
|
15,570
|
|
|
(125,644
|
)
|
||
Comprehensive loss attributable to non-controlling interests
(1)
|
|
7
|
|
|
39
|
|
||
Total comprehensive income (loss) attributable to the OP
|
|
$
|
15,577
|
|
|
$
|
(125,605
|
)
|
(1)
|
Represents loss attributable to consolidated joint venture partners.
|
|
|
Preferred Units
|
|
Common Units
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
General Partner
|
|
Limited Partner
|
|
General Partner
|
|
Limited Partner
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Total Partners' Capital
|
|
Non-Controlling Interests
|
|
Total Capital
|
||||||||||||||||||
Balance, January 1, 2017
|
|
42,834,138
|
|
|
$
|
853,821
|
|
|
86,874
|
|
|
$
|
3,171
|
|
|
974,146,650
|
|
|
$
|
7,593,540
|
|
|
23,748,347
|
|
|
$
|
166,598
|
|
|
$
|
8,617,130
|
|
|
$
|
2,403
|
|
|
$
|
8,619,533
|
|
Repurchases of common OP Units to settle tax obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(140,832
|
)
|
|
(1,184
|
)
|
|
—
|
|
|
—
|
|
|
(1,184
|
)
|
|
—
|
|
|
(1,184
|
)
|
|||||||
Equity-based compensation, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232,640
|
|
|
3,113
|
|
|
—
|
|
|
—
|
|
|
3,113
|
|
|
—
|
|
|
3,113
|
|
|||||||
Distributions to Common OP Units and non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(134,107
|
)
|
|
—
|
|
|
(3,266
|
)
|
|
(137,373
|
)
|
|
(60
|
)
|
|
(137,433
|
)
|
|||||||
Distributions to Preferred OP Units
|
|
—
|
|
|
(17,937
|
)
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,973
|
)
|
|
—
|
|
|
(17,973
|
)
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,438
|
|
|
—
|
|
|
359
|
|
|
14,797
|
|
|
(7
|
)
|
|
14,790
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
19
|
|
|
780
|
|
|
—
|
|
|
780
|
|
|||||||
Balance, March 31, 2017
|
|
42,834,138
|
|
|
$
|
835,884
|
|
|
86,874
|
|
|
$
|
3,135
|
|
|
974,238,458
|
|
|
$
|
7,476,561
|
|
|
23,748,347
|
|
|
$
|
163,710
|
|
|
$
|
8,479,290
|
|
|
$
|
2,336
|
|
|
$
|
8,481,626
|
|
|
|
Preferred Units
|
|
Common Units
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
General Partner
|
|
Limited Partner
|
|
General Partner
|
|
Limited Partner
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Number of Units
|
|
Capital
|
|
Total Partners' Capital
|
|
Non-Controlling Interests
|
|
Total Capital
|
||||||||||||||||||
Balance, January 1, 2016
|
|
42,834,138
|
|
|
$
|
925,569
|
|
|
86,874
|
|
|
$
|
3,315
|
|
|
904,884,394
|
|
|
$
|
7,598,418
|
|
|
23,763,797
|
|
|
$
|
184,800
|
|
|
$
|
8,712,102
|
|
|
$
|
1,857
|
|
|
$
|
8,713,959
|
|
Repurchases of common OP Units to settle tax obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127,741
|
)
|
|
(1,024
|
)
|
|
—
|
|
|
—
|
|
|
(1,024
|
)
|
|
—
|
|
|
(1,024
|
)
|
|||||||
Equity-based compensation, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
712
|
|
|
1,730
|
|
|
—
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
1,730
|
|
|||||||
Contributions from non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
675
|
|
|
675
|
|
|||||||
Distributions to Common OP Units and non-controlling interest holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124,410
|
)
|
|
—
|
|
|
(3,269
|
)
|
|
(127,679
|
)
|
|
(30
|
)
|
|
(127,709
|
)
|
|||||||
Distributions to Preferred OP Units
|
|
—
|
|
|
(17,937
|
)
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,973
|
)
|
|
—
|
|
|
(17,973
|
)
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113,086
|
)
|
|
—
|
|
|
(2,955
|
)
|
|
(116,041
|
)
|
|
(39
|
)
|
|
(116,080
|
)
|
|||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,320
|
)
|
|
—
|
|
|
(244
|
)
|
|
(9,564
|
)
|
|
—
|
|
|
(9,564
|
)
|
|||||||
Balance, March 31, 2016
|
|
42,834,138
|
|
|
$
|
907,632
|
|
|
86,874
|
|
|
$
|
3,279
|
|
|
904,757,365
|
|
|
$
|
7,352,308
|
|
|
23,763,797
|
|
|
$
|
178,332
|
|
|
$
|
8,441,551
|
|
|
$
|
2,463
|
|
|
$
|
8,444,014
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
189,880
|
|
|
208,362
|
|
||
Gain on real estate assets and joint venture, net
|
|
(12,481
|
)
|
|
(27,373
|
)
|
||
Impairments
|
|
6,725
|
|
|
160,517
|
|
||
Equity-based compensation
|
|
3,111
|
|
|
1,730
|
|
||
Equity in loss (income) of unconsolidated entities
|
|
82
|
|
|
(206
|
)
|
||
Distributions from unconsolidated entities
|
|
851
|
|
|
1,491
|
|
||
(Gain) loss on derivative instruments, net
|
|
(824
|
)
|
|
1,086
|
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
70
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Investment in direct financing leases
|
|
621
|
|
|
701
|
|
||
Rent and tenant receivables and other assets, net
|
|
(20,939
|
)
|
|
(13,024
|
)
|
||
Due from affiliates
|
|
3,792
|
|
|
(984
|
)
|
||
Accounts payable and accrued expenses
|
|
(3,269
|
)
|
|
(32,556
|
)
|
||
Deferred rent, derivative and other liabilities
|
|
1,935
|
|
|
(4,822
|
)
|
||
Due to affiliates
|
|
(9
|
)
|
|
(230
|
)
|
||
Net cash provided by operating activities
|
|
184,335
|
|
|
178,612
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Investments in real estate assets
|
|
(101,914
|
)
|
|
(19,952
|
)
|
||
Capital expenditures and leasing costs
|
|
(6,960
|
)
|
|
(5,388
|
)
|
||
Real estate developments
|
|
(5,615
|
)
|
|
(554
|
)
|
||
Principal repayments received from borrowers
|
|
3,672
|
|
|
3,863
|
|
||
Proceeds from disposition of real estate and joint venture
|
|
195,730
|
|
|
176,137
|
|
||
Investment in leasehold improvements and other assets
|
|
(99
|
)
|
|
(574
|
)
|
||
Deposits for real estate assets
|
|
(13,532
|
)
|
|
(3,818
|
)
|
||
Uses and refunds of deposits for real estate assets
|
|
7,717
|
|
|
2,019
|
|
||
Line of credit repayments from affiliates
|
|
2,550
|
|
|
50,000
|
|
||
Change in restricted cash
|
|
(1,694
|
)
|
|
(365
|
)
|
||
Net cash provided by investing activities
|
|
79,855
|
|
|
201,368
|
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from mortgage notes payable
|
|
2,403
|
|
|
206
|
|
||
Payments on mortgage notes payable and other debt, including extinguishment costs
|
|
(84,261
|
)
|
|
(21,948
|
)
|
||
Proceeds from credit facility
|
|
—
|
|
|
203,000
|
|
||
Payments on credit facility
|
|
—
|
|
|
(383,000
|
)
|
||
Payments of deferred financing costs
|
|
(3
|
)
|
|
(240
|
)
|
||
Repurchases of common units to settle tax obligations
|
|
(976
|
)
|
|
(801
|
)
|
||
Contributions from non-controlling interest holders
|
|
—
|
|
|
675
|
|
||
Distributions paid
|
|
(152,219
|
)
|
|
(142,525
|
)
|
||
Net cash used in financing activities
|
|
(235,056
|
)
|
|
(344,633
|
)
|
||
Net change in cash and cash equivalents
|
|
29,134
|
|
|
35,347
|
|
||
Cash and cash equivalents, beginning of period
|
|
256,452
|
|
|
69,103
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
285,586
|
|
|
$
|
104,450
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Litigation and other non-routine costs:
|
|
|
|
|
||||
Audit Committee Investigation and related matters
(1)
|
|
$
|
12,671
|
|
|
$
|
4,742
|
|
Legal fees and expenses
(2)
|
|
204
|
|
|
83
|
|
||
Total costs incurred
|
|
12,875
|
|
|
4,825
|
|
||
Insurance recoveries
|
|
—
|
|
|
(10,000
|
)
|
||
Total
|
|
$
|
12,875
|
|
|
$
|
(5,175
|
)
|
(1)
|
Includes all fees and costs associated with the previously-announced investigation conducted by the audit committee (the “Audit Committee”) of the Company’s board of directors (the “Audit Committee Investigation”) and various litigations and investigations prompted by the results of the Audit Committee Investigation, including fees and costs incurred pursuant to the Company’s advancement obligations.
|
(2)
|
Includes legal fees and expenses associated with litigation resulting from prior mergers.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
REI segment:
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
||||
Rental income
|
|
$
|
293,739
|
|
|
$
|
313,971
|
|
Direct financing lease income
|
|
433
|
|
|
569
|
|
||
Operating expense reimbursements
|
|
26,726
|
|
|
23,247
|
|
||
Total real estate investment revenues
|
|
320,898
|
|
|
337,787
|
|
||
Operating expenses:
|
|
|
|
|
||||
Acquisition-related
|
|
617
|
|
|
217
|
|
||
Litigation and other non-routine costs, net of insurance recoveries
|
|
12,875
|
|
|
(5,175
|
)
|
||
Property operating
|
|
34,016
|
|
|
34,813
|
|
||
General and administrative
|
|
12,560
|
|
|
12,228
|
|
||
Depreciation and amortization
|
|
178,297
|
|
|
195,991
|
|
||
Impairment of real estate
|
|
6,725
|
|
|
160,517
|
|
||
Total operating expenses
|
|
245,090
|
|
|
398,591
|
|
||
Operating income (loss)
|
|
75,808
|
|
|
(60,804
|
)
|
||
Other (expense) income:
|
|
|
|
|
||||
Interest expense
|
|
(73,743
|
)
|
|
(80,426
|
)
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
(70
|
)
|
|
—
|
|
||
Other income, net
|
|
670
|
|
|
568
|
|
||
Equity in (loss) income and gain on disposition of unconsolidated entities
|
|
(82
|
)
|
|
10,404
|
|
||
Gain (loss) on derivative instruments, net
|
|
824
|
|
|
(1,086
|
)
|
||
Total other expenses, net
|
|
(72,401
|
)
|
|
(70,540
|
)
|
||
Income (loss) before taxes and real estate dispositions
|
|
3,407
|
|
|
(131,344
|
)
|
||
Gain on disposition of real estate and held for sale assets, net
|
|
12,481
|
|
|
17,175
|
|
||
Income (loss) before taxes
|
|
15,888
|
|
|
(114,169
|
)
|
||
Provision for income taxes
|
|
(3,108
|
)
|
|
(1,365
|
)
|
||
Net income (loss)
|
|
$
|
12,780
|
|
|
$
|
(115,534
|
)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Cole Capital segment:
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
||||
Offering-related fees and reimbursements
|
|
$
|
4,316
|
|
|
$
|
12,391
|
|
Transaction service fees and reimbursements
|
|
4,097
|
|
|
2,384
|
|
||
Management fees and reimbursements
|
|
18,718
|
|
|
16,458
|
|
||
Total Cole Capital revenues
|
|
27,131
|
|
|
31,233
|
|
||
Operating expenses:
|
|
|
|
|
||||
Cole Capital reallowed fees and commissions
|
|
2,660
|
|
|
8,068
|
|
||
Acquisition-related
|
|
—
|
|
|
25
|
|
||
General and administrative
|
|
16,588
|
|
|
17,172
|
|
||
Depreciation and amortization
|
|
4,855
|
|
|
8,317
|
|
||
Total operating expenses
|
|
24,103
|
|
|
33,582
|
|
||
Operating income (loss)
|
|
3,028
|
|
|
(2,349
|
)
|
||
Total other income, net
|
|
128
|
|
|
494
|
|
||
Income (loss) before taxes
|
|
3,156
|
|
|
(1,855
|
)
|
||
(Provision for) benefit from income taxes
|
|
(1,146
|
)
|
|
1,309
|
|
||
Net income (loss)
|
|
$
|
2,010
|
|
|
$
|
(546
|
)
|
|
|
|
|
|
||||
Total Company:
|
|
|
|
|
||||
Total revenues
|
|
$
|
348,029
|
|
|
$
|
369,020
|
|
Total operating expenses
|
|
$
|
(269,193
|
)
|
|
$
|
(432,173
|
)
|
Total other expense, net
|
|
$
|
(72,273
|
)
|
|
$
|
(70,046
|
)
|
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
|
|
Total Assets
|
||||||
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
REI segment
|
|
$
|
15,110,337
|
|
|
$
|
15,337,623
|
|
Cole Capital segment
|
|
246,198
|
|
|
249,951
|
|
||
Total Company
|
|
$
|
15,356,535
|
|
|
$
|
15,587,574
|
|
|
|
Weighted-Average Useful Life
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Intangible lease assets:
|
|
|
|
|
|
|
||||
In-place leases, net of accumulated amortization of $525,079 and $494,131, respectively
|
|
14.7
|
|
$
|
1,148,158
|
|
|
$
|
1,192,756
|
|
Leasing commissions, net of accumulated amortization of $2,158 and $1,836, respectively
|
|
10.3
|
|
10,570
|
|
|
10,231
|
|
||
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $74,206 and $69,670, respectively
|
|
16.1
|
|
257,568
|
|
|
275,897
|
|
||
Total intangible lease assets, net
|
|
|
|
$
|
1,416,296
|
|
|
$
|
1,478,884
|
|
|
|
|
|
|
|
|
||||
Intangible lease liabilities:
|
|
|
|
|
|
|
||||
Below-market leases, net of accumulated amortization of $61,631 and $56,891, respectively
|
|
18.1
|
|
$
|
217,721
|
|
|
$
|
224,023
|
|
|
|
April 1, 2017 - December 31, 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
||||||||||
In-place leases:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total projected to be included in amortization expense
|
|
$
|
111,195
|
|
|
$
|
136,056
|
|
|
$
|
124,895
|
|
|
$
|
116,752
|
|
|
$
|
107,913
|
|
Leasing commissions:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total projected to be included in amortization expense
|
|
1,008
|
|
|
1,164
|
|
|
1,098
|
|
|
1,076
|
|
|
1,038
|
|
|||||
Above-market lease assets and deferred lease incentives:
|
|
|
|
|
|
|
|
|
||||||||||||
Total projected to be deducted from rental income
|
|
18,533
|
|
|
24,098
|
|
|
22,184
|
|
|
21,748
|
|
|
21,234
|
|
|||||
Below-market lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total projected to be included in rental income
|
|
16,204
|
|
|
19,672
|
|
|
18,939
|
|
|
17,775
|
|
|
16,425
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Real estate investments, at cost:
|
|
|
|
|
||||
Land
|
|
$
|
24,107
|
|
|
$
|
4,215
|
|
Buildings, fixtures and improvements
|
|
59,261
|
|
|
14,555
|
|
||
Total tangible assets
|
|
83,368
|
|
|
18,770
|
|
||
Acquired intangible assets:
|
|
|
|
|
||||
In-place leases
|
|
15,916
|
|
|
1,182
|
|
||
Above-market leases
|
|
2,815
|
|
|
—
|
|
||
Assumed intangible liabilities:
|
|
|
|
|
||||
Below-market leases
|
|
(185
|
)
|
|
—
|
|
||
Total purchase price of assets acquired
|
|
$
|
101,914
|
|
|
$
|
19,952
|
|
|
|
Future Minimum Operating Lease
Base Rent Payments
|
|
Future Minimum
Direct Financing Lease Payments
(1)
|
||||
April 1, 2017 - December 31, 2017
|
|
$
|
812,431
|
|
|
$
|
2,599
|
|
2018
|
|
1,086,126
|
|
|
3,016
|
|
||
2019
|
|
1,049,422
|
|
|
2,397
|
|
||
2020
|
|
1,013,348
|
|
|
2,023
|
|
||
2021
|
|
971,437
|
|
|
1,899
|
|
||
Thereafter
|
|
6,300,003
|
|
|
3,993
|
|
||
Total
|
|
$
|
11,232,767
|
|
|
$
|
15,927
|
|
(1)
|
29
properties are subject to direct financing leases and, therefore, revenue is recognized as direct financing lease income on the discounted cash flows of the lease payments. Amounts reflected are the minimum base rental cash payments due to the Company under the lease agreements on these respective properties.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Future minimum lease payments receivable
|
|
$
|
15,927
|
|
|
$
|
17,147
|
|
Unguaranteed residual value of property
|
|
23,700
|
|
|
27,450
|
|
||
Unearned income
|
|
(4,718
|
)
|
|
(5,142
|
)
|
||
Net investment in direct financing leases
|
|
$
|
34,909
|
|
|
$
|
39,455
|
|
Name of Joint Venture
|
|
Partner
|
|
Ownership %
(1)
|
|
Carrying Amount
of Investment (2) |
||
Cole/Mosaic JV South Elgin IL, LLC
|
|
Affiliate of Mosaic Properties and Development, LLC
|
|
50%
|
|
$
|
5,839
|
|
Cole/Faison JV Bethlehem GA, LLC
|
|
Faison-Winder Investors, LLC
|
|
90%
|
|
35,119
|
|
|
|
|
|
|
|
|
$
|
40,958
|
|
(1)
|
The Company’s ownership interest in this table reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.
|
(2)
|
The total carrying amount of the investments is greater than the underlying equity in net assets by
$6.3 million
. This difference relates to a purchase price allocation of goodwill and a step up in fair value of the investment assets acquired in connection with the Cole Merger. The step up in fair value was allocated to the individual investment assets and is being amortized in accordance with the Company’s depreciation policy.
|
|
|
March 31, 2017
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
CMBS
|
|
$
|
43,906
|
|
|
$
|
1,039
|
|
|
$
|
(2,315
|
)
|
|
$
|
42,630
|
|
|
|
December 31, 2016
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
CMBS
|
|
$
|
48,297
|
|
|
$
|
1,248
|
|
|
$
|
(2,330
|
)
|
|
$
|
47,215
|
|
|
|
March 31, 2017
|
||||||
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due within one year
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
|
18,142
|
|
|
18,638
|
|
||
Due after five years through 10 years
|
|
11,955
|
|
|
9,685
|
|
||
Due after 10 years
|
|
13,809
|
|
|
14,307
|
|
||
Total
|
|
$
|
43,906
|
|
|
$
|
42,630
|
|
Outstanding Balance
|
|
Carrying Value
|
|
Interest Rate Range
|
|
Maturity Date Range
|
|||||||||
$
|
24,574
|
|
|
$
|
22,545
|
|
|
5.9
|
%
|
–
|
7.2%
|
|
May 2020
|
–
|
January 2033
|
|
|
Outstanding Balance
|
||
Due within one year
|
|
$
|
1,122
|
|
Due after one year through five years
|
|
5,378
|
|
|
Due after five years through 10 years
|
|
7,034
|
|
|
Due after 10 years
(1)
|
|
14,832
|
|
|
Total
|
|
$
|
28,366
|
|
(1)
|
Includes additional
$3.8 million
of interest that will be capitalized into the outstanding balance of the mortgage note receivable subsequent to
March 31, 2017
.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Accounts receivable, net
(1)
|
|
$
|
48,477
|
|
|
$
|
49,148
|
|
Straight-line rent receivable
|
|
207,420
|
|
|
201,584
|
|
||
Deferred costs, net
(2)
|
|
13,548
|
|
|
16,154
|
|
||
Prepaid expenses
|
|
11,600
|
|
|
6,814
|
|
||
Leasehold improvements, property and equipment, net
(3)
|
|
14,056
|
|
|
14,702
|
|
||
Restricted escrow deposits
|
|
11,555
|
|
|
5,741
|
|
||
Deferred tax asset and tax receivable
|
|
32,976
|
|
|
31,113
|
|
||
Program development costs, net
(4)
|
|
3,182
|
|
|
3,161
|
|
||
Interest rate swap assets, at fair value
|
|
371
|
|
|
199
|
|
||
Other assets
|
|
3,713
|
|
|
2,089
|
|
||
Total
|
|
$
|
346,898
|
|
|
$
|
330,705
|
|
(1)
|
Allowance for doubtful accounts was
$8.1 million
and
$6.0 million
as of
March 31, 2017
and
December 31, 2016
, respectively.
|
(2)
|
Amortization expense for deferred costs related to the revolving credit facility totaled
$2.6 million
for each of the
three months ended March 31, 2017
and
2016
. Accumulated amortization for deferred costs related to the revolving credit facility were
$32.4 million
and
$29.8 million
as of
March 31, 2017
and
December 31, 2016
, respectively.
|
(3)
|
Amortization expense for leasehold improvements totaled
$0.3 million
for each of the
three months ended March 31, 2017
and
2016
. Accumulated amortization was
$3.8 million
and
$3.5 million
as of
March 31, 2017
and
December 31, 2016
, respectively. Depreciation expense for property and equipment totaled
$0.4 million
and
$0.5 million
for the
three months ended March 31, 2017
and
2016
. Accumulated depreciation was
$4.3 million
and
$3.9 million
as of
March 31, 2017
and
December 31, 2016
, respectively.
|
(4)
|
As of
March 31, 2017
and
December 31, 2016
, the Company had reserves of
$33.8 million
and
$31.7 million
, respectively, relating to the program development costs.
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance as of March 31, 2017
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
CMBS
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,630
|
|
|
$
|
42,630
|
|
Derivative assets
|
|
—
|
|
|
371
|
|
|
—
|
|
|
371
|
|
||||
Total assets
|
|
$
|
—
|
|
|
$
|
371
|
|
|
$
|
42,630
|
|
|
$
|
43,001
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
|
$
|
—
|
|
|
$
|
(1,996
|
)
|
|
$
|
—
|
|
|
$
|
(1,996
|
)
|
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance as of December 31, 2016
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
CMBS
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,215
|
|
|
$
|
47,215
|
|
Derivative assets
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
||||
Total assets
|
|
$
|
—
|
|
|
$
|
199
|
|
|
$
|
47,215
|
|
|
$
|
47,414
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
|
$
|
—
|
|
|
$
|
(3,547
|
)
|
|
$
|
—
|
|
|
$
|
(3,547
|
)
|
|
|
CMBS
|
||
Balance as of December 31, 2016
|
|
$
|
47,215
|
|
Total gains and losses
|
|
|
||
Unrealized loss included in other comprehensive income, net
|
|
(194
|
)
|
|
Purchases, issuance, settlements
|
|
|
||
Return of principal received
|
|
(3,469
|
)
|
|
Amortization included in net income, net
|
|
(922
|
)
|
|
Ending Balance, March 31, 2017
|
|
$
|
42,630
|
|
|
|
CMBS
|
||
Balance as of December 31, 2015
|
|
$
|
53,304
|
|
Total gains and losses
|
|
|
||
Unrealized loss included in other comprehensive loss, net
|
|
(1,961
|
)
|
|
Purchases, issuance, settlements
|
|
|
||
Return of principal received
|
|
(3,217
|
)
|
|
Accretion included in net loss, net
|
|
36
|
|
|
Ending Balance, March 31, 2016
|
|
$
|
48,162
|
|
|
|
Level
|
|
Carrying Amount at March 31, 2017
|
|
Fair Value at March 31, 2017
|
|
Carrying Amount at December 31, 2016
|
|
Fair Value at December 31, 2016
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mortgage notes receivable
|
|
3
|
|
$
|
22,545
|
|
|
$
|
30,355
|
|
|
$
|
22,764
|
|
|
$
|
30,460
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
(1)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mortgage notes payable and other debt, net
|
|
2
|
|
$
|
2,602,733
|
|
|
$
|
2,644,244
|
|
|
$
|
2,687,739
|
|
|
$
|
2,713,155
|
|
Corporate bonds, net
|
|
2
|
|
2,248,239
|
|
|
2,305,877
|
|
|
2,248,063
|
|
|
2,273,850
|
|
||||
Convertible debt, net
|
|
2
|
|
988,367
|
|
|
1,007,731
|
|
|
987,106
|
|
|
1,004,733
|
|
||||
Credit facility
|
|
2
|
|
500,000
|
|
|
500,000
|
|
|
500,000
|
|
|
500,000
|
|
||||
Total liabilities
|
|
|
|
$
|
6,339,339
|
|
|
$
|
6,457,852
|
|
|
$
|
6,422,908
|
|
|
$
|
6,491,738
|
|
(1)
|
Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.
|
|
|
Three Months Ended March 31, 2017
|
||
Properties impaired
(1)
|
|
14
|
|
|
|
|
|
||
Asset classes impaired:
|
|
|
||
Investment in real estate assets, net
|
|
$
|
6,748
|
|
Below-market lease liabilities, net
|
|
(23
|
)
|
|
Total impairment loss
|
|
$
|
6,725
|
|
(1)
|
None
of these properties were disposed of during the
three months ended March 31, 2017
.
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
|
|
|
||||||||||||||
|
|
|
Balance as of December 31, 2016
|
|
Debt Issuances
|
|
Repayments, Extinguishment and Assumptions
|
|
Accretion and Amortization
|
|
Balance as of March 31, 2017
|
|
||||||||||
Mortgage notes payable:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Outstanding balance
|
|
$
|
2,629,949
|
|
|
$
|
2,403
|
|
|
$
|
(78,966
|
)
|
|
$
|
—
|
|
|
$
|
2,553,386
|
|
(1)
|
|
Net premiums
(2)
|
|
36,751
|
|
|
—
|
|
|
—
|
|
|
(3,290
|
)
|
|
33,461
|
|
|
|||||
|
Deferred costs
|
|
(16,633
|
)
|
|
—
|
|
|
—
|
|
|
817
|
|
|
(15,816
|
)
|
|
|||||
Other debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Outstanding balance
|
|
20,947
|
|
|
—
|
|
|
(5,125
|
)
|
|
—
|
|
|
15,822
|
|
|
|||||
|
Premium
(2)
|
|
92
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
64
|
|
|
|||||
Mortgages and other debt, net
|
|
2,671,106
|
|
|
2,403
|
|
|
(84,091
|
)
|
|
(2,501
|
)
|
|
2,586,917
|
|
|
||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Outstanding balance
|
|
2,250,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,250,000
|
|
|
|||||
|
Discount
(3)
|
|
(1,937
|
)
|
|
—
|
|
|
—
|
|
|
176
|
|
|
(1,761
|
)
|
|
|||||
|
Deferred costs
|
|
(21,839
|
)
|
|
—
|
|
|
—
|
|
|
907
|
|
|
(20,932
|
)
|
|
|||||
Corporate bonds, net
|
|
2,226,224
|
|
|
—
|
|
|
—
|
|
|
1,083
|
|
|
2,227,307
|
|
|
||||||
Convertible debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Outstanding balance
|
|
1,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000,000
|
|
|
|||||
|
Discount
(3)
|
|
(12,894
|
)
|
|
—
|
|
|
—
|
|
|
1,261
|
|
|
(11,633
|
)
|
|
|||||
|
Deferred costs
|
|
(13,766
|
)
|
|
—
|
|
|
—
|
|
|
1,430
|
|
|
(12,336
|
)
|
|
|||||
Convertible debt, net
|
|
973,340
|
|
|
—
|
|
|
—
|
|
|
2,691
|
|
|
976,031
|
|
|
||||||
Credit facility:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Outstanding balance
|
|
500,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|
|||||
|
Deferred costs
(4)
|
|
(3,422
|
)
|
|
—
|
|
|
—
|
|
|
570
|
|
|
(2,852
|
)
|
|
|||||
Credit facility, net
|
|
496,578
|
|
|
—
|
|
|
—
|
|
|
570
|
|
|
497,148
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total debt
|
|
$
|
6,367,248
|
|
|
$
|
2,403
|
|
|
$
|
(84,091
|
)
|
|
$
|
1,843
|
|
|
$
|
6,287,403
|
|
|
(1)
|
Includes
$41.8 million
related to
two
mortgage notes payable in default.
|
(2)
|
Net premiums on mortgage notes payable and other debt were recorded upon the assumption of the respective debt instruments in relation to the various mergers and acquisitions. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method.
|
(3)
|
Discounts on the corporate bonds and convertible debt were recorded based upon the fair value of the respective debt instruments as of the respective issuance dates. Amortization of these discounts is recorded as an increase to interest expense over the remaining term of the respective debt instruments using the effective-interest method.
|
(4)
|
Deferred costs relate to the term portion of the credit facility.
|
|
|
Encumbered Properties
|
|
Gross Carrying Value of Collateralized Properties
(1)
|
|
Outstanding Balance
|
|
Weighted-Average
Interest Rate
(2)
|
|
Weighted-Average Years to Maturity
|
||||||
Fixed-rate debt
(3)
|
|
596
|
|
|
$
|
4,949,078
|
|
|
$
|
2,539,726
|
|
|
4.99
|
%
|
|
4.6
|
Variable-rate debt
|
|
1
|
|
|
30,846
|
|
|
13,660
|
|
|
3.79
|
%
|
|
0.4
|
||
Total
(4)
|
|
597
|
|
|
$
|
4,979,924
|
|
|
$
|
2,553,386
|
|
|
4.99
|
%
|
|
4.6
|
(1)
|
Gross carrying value is gross real estate assets, including investment in direct financing leases, net of gross real estate liabilities.
|
(2)
|
Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of
March 31, 2017
.
|
(3)
|
Includes
$188.7 million
of variable-rate debt fixed by way of interest rate swap arrangements.
|
(4)
|
The table above does not include the loan amount associated with an Unconsolidated Joint Venture of
$20.4 million
,
none
of which is recourse to the Company. The loan represents a secured fixed rate of
5.20%
and a maturity of
July 2021
.
|
|
|
Total
|
||
April 1, 2017 - December 31, 2017
(1)
|
|
$
|
340,411
|
|
2018
|
|
108,694
|
|
|
2019
|
|
228,107
|
|
|
2020
|
|
280,668
|
|
|
2021
|
|
356,849
|
|
|
Thereafter
|
|
1,238,657
|
|
|
Total
|
|
$
|
2,553,386
|
|
(1)
|
Includes
$41.8 million
of outstanding balances on mortgage notes payable, excluding accrued interest, related to
two
mortgage notes payable in default.
|
|
|
Outstanding Balance
|
|
Collateral Carrying Value
|
||||
Mortgage notes receivable
|
|
$
|
5,598
|
|
|
$
|
18,936
|
|
Intercompany mortgage loans
|
|
404
|
|
|
1,240
|
|
||
CMBS
|
|
9,820
|
|
|
30,688
|
|
||
Total
|
|
$
|
15,822
|
|
|
$
|
50,864
|
|
|
|
Outstanding Balance March 31, 2017
|
|
Interest Rate
|
|
Maturity Date
|
|||
2019 Senior Notes
|
|
750,000
|
|
|
3.000
|
%
|
|
February 6, 2019
|
|
2021 Senior Notes
|
|
400,000
|
|
|
4.125
|
%
|
|
June 1, 2021
|
|
2024 Senior Notes
|
|
500,000
|
|
|
4.600
|
%
|
|
February 6, 2024
|
|
2026 Senior Notes
|
|
600,000
|
|
|
4.875
|
%
|
|
June 1, 2026
|
|
Total balance and weighted-average interest rate
|
|
$
|
2,250,000
|
|
|
4.056
|
%
|
|
|
|
|
Outstanding Balance
(1)
|
|
Interest Rate
|
|
|
Conversion Rate
(2)
|
|
Maturity Date
|
|||
2018 Convertible Notes
|
|
$
|
597,500
|
|
|
3.00
|
%
|
|
60.5997
|
|
|
August 1, 2018
|
2020 Convertible Notes
|
|
402,500
|
|
|
3.75
|
%
|
|
66.7249
|
|
|
December 15, 2020
|
|
Total balance and weighted-average interest rate
|
|
$
|
1,000,000
|
|
|
3.30
|
%
|
|
|
|
|
(1)
|
Excludes the carrying value of the conversion options recorded within additional paid-in capital of
$28.6 million
and the unamortized discount of
$11.6 million
as of
March 31, 2017
. The discount will be amortized over the remaining weighted average term of
2.3
years.
|
(2)
|
Conversion rate represents the amount of the General Partner OP Units per
$1,000
principal amount of Convertible Notes converted as of
March 31, 2017
, as adjusted in accordance with the applicable indentures as a result of cash dividend payments.
|
Interest Rate Swaps
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Number of Instruments
|
|
11
|
|
|
14
|
|
||
Notional Amount
|
|
$
|
637,304
|
|
|
$
|
690,816
|
|
Derivatives Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Interest rate swaps
|
|
Rent and tenant receivables and other assets, net
|
|
$
|
7
|
|
|
$
|
3
|
|
Interest rate swaps
|
|
Deferred rent, derivative and other liabilities
|
|
$
|
(1,996
|
)
|
|
$
|
(3,547
|
)
|
Interest Rate Swap
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Number of Instruments
|
|
1
|
|
|
1
|
|
||
Notional Amount
|
|
$
|
51,400
|
|
|
$
|
51,400
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Interest rate swaps
|
|
Rent and tenant receivables and other assets, net
|
|
$
|
364
|
|
|
$
|
196
|
|
|
|
Offsetting of Derivative Assets and Liabilities
|
||||||||||||||||||||||||||||||
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets Presented in the Consolidated Balance Sheets
|
|
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||||||
March 31, 2017
|
|
$
|
371
|
|
|
$
|
(1,996
|
)
|
|
$
|
—
|
|
|
$
|
371
|
|
|
$
|
(1,996
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,625
|
)
|
December 31, 2016
|
|
$
|
199
|
|
|
$
|
(3,547
|
)
|
|
$
|
—
|
|
|
$
|
199
|
|
|
$
|
(3,547
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,348
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Supplemental Disclosures:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
68,908
|
|
|
$
|
93,713
|
|
Cash paid for income taxes
|
|
$
|
4,503
|
|
|
$
|
10,848
|
|
Non-cash investing and financing activities:
|
|
|
|
|
||||
Accrued capital expenditures and real estate developments
|
|
$
|
720
|
|
|
$
|
1,327
|
|
Accrued repurchases of common stock to settle tax obligation
|
|
$
|
208
|
|
|
$
|
223
|
|
Distributions declared and unpaid
|
|
$
|
140,232
|
|
|
$
|
130,494
|
|
Mortgage notes payable assumed in real estate disposition
|
|
$
|
—
|
|
|
$
|
55,000
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Accrued interest
|
|
$
|
43,472
|
|
|
$
|
43,188
|
|
Accrued real estate taxes
|
|
37,392
|
|
|
38,877
|
|
||
Accrued legal fees
|
|
28,159
|
|
|
17,827
|
|
||
Accounts payable
|
|
2,132
|
|
|
5,030
|
|
||
Accrued other
|
|
24,662
|
|
|
41,215
|
|
||
Total
|
|
$
|
135,817
|
|
|
$
|
146,137
|
|
|
|
Future Minimum Base Rent Payments
|
||||||
|
|
Ground Leases
|
|
Office Leases
|
||||
April 1, 2017 - December 31, 2017
|
|
$
|
10,575
|
|
|
$
|
3,283
|
|
2018
|
|
13,832
|
|
|
4,298
|
|
||
2019
|
|
13,789
|
|
|
4,359
|
|
||
2020
|
|
13,317
|
|
|
4,381
|
|
||
2021
|
|
12,738
|
|
|
4,367
|
|
||
Thereafter
|
|
211,630
|
|
|
8,415
|
|
||
Total
|
|
$
|
275,881
|
|
|
$
|
29,103
|
|
|
|
Restricted Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested shares, December 31, 2016
|
|
562,406
|
|
|
$
|
13.78
|
|
Vested
|
|
(178,046
|
)
|
|
14.01
|
|
|
Forfeited
|
|
(36,346
|
)
|
|
13.88
|
|
|
Unvested shares, March 31, 2017
|
|
348,014
|
|
|
$
|
13.65
|
|
|
|
Time-Based Restricted Stock Units
|
|
Weighted-Average Grant Date Fair Value
|
|
Deferred Stock Units
|
|
Weighted-Average Grant Date Fair Value
|
||||||
Unvested units, December 31, 2016
|
|
1,085,914
|
|
|
$
|
8.43
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
673,381
|
|
|
8.90
|
|
|
12,006
|
|
|
8.67
|
|
||
Vested
|
|
(244,915
|
)
|
|
7.87
|
|
|
(12,006
|
)
|
|
8.67
|
|
||
Unvested units, March 31, 2017
|
|
1,514,380
|
|
|
$
|
8.73
|
|
|
—
|
|
|
$
|
—
|
|
|
|
LTI Target Awards
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested units, December 31, 2016
|
|
1,522,487
|
|
|
$
|
9.00
|
|
Granted
|
|
726,867
|
|
|
8.96
|
|
|
Unvested units, March 31, 2017
|
|
2,249,354
|
|
|
$
|
8.99
|
|
|
|
Selling Commissions
(1)
|
|
Dealer Manager Fees
(2)
|
|
Annual Distribution and Stockholder Servicing Fee
(2)
|
|
Open Programs
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CCPT V
|
|
|
|
|
|
|
|
Class A Shares
|
|
7%
|
|
2%
|
|
—%
|
|
Class T Shares
|
|
3%
|
|
2%
|
|
1%
|
(4)
|
|
|
|
|
|
|
|
|
INAV
|
|
|
|
|
|
|
|
Wrap Class Shares
|
|
—%
|
|
0.55%
|
(5)
|
—%
|
|
Advisor Class Shares
|
|
up to 3.75%
|
|
0.55%
|
(5)
|
0.5%
|
(5)
|
Institutional Class Shares
|
|
—%
|
|
0.25%
|
(5)
|
—%
|
|
|
|
|
|
|
|
|
|
CCIT III
|
|
|
|
|
|
|
|
Class A Shares
|
|
7%
|
|
2%
|
|
—%
|
|
Class T Shares
|
|
3%
|
|
2%
|
|
1%
|
(4)
|
(1)
|
The Company reallowed
100%
of selling commissions to participating broker-dealers during the
three months ended March 31, 2017
and
2016
.
|
(2)
|
The Company may reallow all or a portion of its dealer manager fee and/or distribution and stockholder servicing fee to participating broker-dealers as a marketing and due diligence expense reimbursement.
|
(3)
|
CCIT II closed its offering during the three months ended September 30, 2016. The program’s fee structure was similar to that of CCPT V.
|
(4)
|
The maximum amount of the distribution and stockholder servicing fee with respect to sales of Class T shares is
4.0%
of the gross offering proceeds for CCPT V and CCIT III. Distribution and stockholder servicing fees continue to be paid after the offering closes if the
4.0%
maximum has not been met.
|
(5)
|
Fees are accrued daily in the amount of 1/365th of a percentage of the estimated per share NAV and payable monthly in arrears.
|
Program
|
|
Acquisition Fees
(1)
|
|
Disposition Fees
|
|
Performance Fees
(2)
|
|
Financing Coordination Fee
(3)
|
Open Programs
|
|
|
|
|
|
|
|
|
CCPT V
|
|
2%
|
|
1%
|
|
15%
|
|
—
|
INAV
|
|
—
|
|
—
|
|
—
|
|
—
|
CCIT III
|
|
2%
|
|
1%
|
|
15%
|
|
1%
|
|
|
|
|
|
|
|
|
|
Closed Programs
|
|
|
|
|
|
|
|
|
CCIT II
|
|
2%
|
|
1%
|
|
15%
|
|
—
|
CCPT IV
|
|
2%
|
|
1%
|
|
15%
|
|
—
|
Other Programs
|
|
Various
|
|
Various
|
|
Various
|
|
—
|
(1)
|
Percent taken on gross purchase price.
|
(2)
|
Performance fee paid only under the following circumstances: (i) if shares are listed on a national securities exchange; (ii) if the respective Cole REIT is sold or the assets are liquidated; or (iii) upon termination of the advisory agreement. In connection with such events, the performance fee will only be earned upon the return to investors of their net capital invested and a
6%
annual cumulative, non-compounded return (
8%
in the case of CCIT II and CCPT IV).
|
(3)
|
Financing coordination fee payable for services in connection with the origination, assumption, or refinancing of any debt (other than loans advanced by the Company) to acquire properties or make other permitted investments.
|
Program
|
|
Asset Management / Advisory Fees
(1)
|
|
Performance Fees
(2)
|
Open Programs
|
|
|
|
|
CCPT V
|
|
0.65% - 0.75%
|
|
—
|
INAV
|
|
0.90%
|
|
25%
|
CCIT III
|
|
0.65% - 0.75%
|
|
—
|
|
|
|
|
|
Closed Programs
|
|
|
|
|
CCIT II
|
|
0.65% - 0.75%
|
|
—
|
CCPT IV
|
|
0.65% - 0.75%
|
|
—
|
Other Programs
|
|
Various
|
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Offering-related fees and reimbursements
|
|
|
|
|
||||
Selling commissions
(1)
|
|
$
|
2,177
|
|
|
$
|
7,041
|
|
Dealer manager and distribution fees
(2)
|
|
1,253
|
|
|
2,640
|
|
||
Reimbursement revenue
|
|
886
|
|
|
2,710
|
|
||
Offering-related fees and reimbursements
|
|
4,316
|
|
|
12,391
|
|
||
|
|
|
|
|
||||
Transaction service fees and reimbursements
|
|
|
|
|
||||
Acquisition fees
|
|
3,272
|
|
|
1,702
|
|
||
Reimbursement revenues
|
|
734
|
|
|
682
|
|
||
Transaction service fees and reimbursements
|
|
4,006
|
|
|
2,384
|
|
||
|
|
|
|
|
||||
Management fees and reimbursements
|
|
|
|
|
||||
Asset and property management fees and leasing fees
|
|
53
|
|
|
55
|
|
||
Advisory and performance fee revenue
|
|
13,624
|
|
|
12,050
|
|
||
Reimbursement revenues
|
|
4,767
|
|
|
4,123
|
|
||
Management fees and reimbursements
|
|
18,444
|
|
|
16,228
|
|
||
|
|
|
|
|
||||
Interest income on Affiliate Lines of Credit
|
|
124
|
|
|
308
|
|
||
|
|
|
|
|
||||
Total related party revenues
(3)
|
|
$
|
26,890
|
|
|
$
|
31,311
|
|
(1)
|
The Company reallowed
100%
of selling commissions to participating broker-dealers during the
three months ended March 31, 2017
and
2016
.
|
(2)
|
During the
three months ended March 31, 2017
and
2016
, the Company reallowed
$0.5 million
and
$1.0 million
, respectively, of dealer manager fees and/or distribution and stockholder servicing fees to participating broker-dealers as a marketing and due diligence expense reimbursement.
|
(3)
|
Total related party revenues excludes fees earned from
1031
real estate programs of
$0.4 million
and
$0.2 million
, for the
three months ended March 31, 2017
and
2016
, respectively.
|
|
|
March 31, 2017
|
||||
Cole REIT
|
|
% of Outstanding Shares Owned
|
|
Carrying Amount of Investment
|
||
CCPT V
|
|
0.86%
|
|
$
|
1,359
|
|
INAV
|
|
0.07%
|
|
135
|
|
|
CCIT II
|
|
0.44%
|
|
1,222
|
|
|
CCIT III
|
|
41.29%
|
|
961
|
|
|
CCPT IV
|
|
0.01%
|
|
111
|
|
|
Funds not yet in offering
|
|
100.00%
|
|
400
|
|
|
Total
|
|
|
|
$
|
4,188
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net income (loss) attributable to the General Partner
|
|
$
|
14,438
|
|
|
$
|
(113,086
|
)
|
Dividends to preferred shares and units
|
|
(17,973
|
)
|
|
(17,973
|
)
|
||
Net loss available to the General Partner
|
|
(3,535
|
)
|
|
(131,059
|
)
|
||
Earnings allocated to participating securities
|
|
(178
|
)
|
|
(125
|
)
|
||
Net loss available to common stockholders used in basic and diluted net loss per share
|
|
$
|
(3,713
|
)
|
|
$
|
(131,184
|
)
|
|
|
|
|
|
||||
Weighted average number of common stock outstanding - basic and diluted
|
|
973,849,610
|
|
|
903,825,726
|
|
||
|
|
|
|
|
||||
Basic and diluted net loss per share attributable to common stockholders
|
|
$
|
(0.00
|
)
|
|
$
|
(0.15
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net income (loss) attributable to the Operating Partnership
|
|
$
|
14,797
|
|
|
$
|
(116,041
|
)
|
Dividends to preferred units
|
|
(17,973
|
)
|
|
(17,973
|
)
|
||
Net loss available to the Operating Partnership
|
|
(3,176
|
)
|
|
(134,014
|
)
|
||
Earnings allocated to participating units
|
|
(178
|
)
|
|
(125
|
)
|
||
Net loss available to common unitholders used in basic and diluted net loss per unit
|
|
$
|
(3,354
|
)
|
|
$
|
(134,139
|
)
|
|
|
|
|
|
||||
Weighted average number of common units outstanding - basic and diluted
|
|
997,597,957
|
|
|
927,589,523
|
|
||
|
|
|
|
|
||||
Basic and diluted net loss per unit attributable to common unitholders
|
|
$
|
(0.00
|
)
|
|
$
|
(0.15
|
)
|
Period
|
|
Record Date
|
|
Payment Date
|
June 15, 2017 - July 14, 2017
|
|
July 1, 2017
|
|
July 17, 2017
|
July 15, 2017 - August 14, 2017
|
|
August 1, 2017
|
|
August 15, 2017
|
August 15, 2017 - September 14, 2017
|
|
September 1, 2017
|
|
September 15, 2017
|
•
|
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
|
•
|
We are subject to risks associated with tenant, geographic and industry concentrations with respect to our properties.
|
•
|
Our properties, goodwill and intangible assets and other assets may be subject to impairment charges.
|
•
|
We could be subject to unexpected costs or unexpected liabilities that may arise from potential dispositions.
|
•
|
We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties and we may be unable to acquire, dispose of, or lease properties on advantageous terms.
|
•
|
We could be subject to risks associated with bankruptcies or insolvencies of tenants or from tenant defaults generally.
|
•
|
We are subject to risks associated with pending government investigations relating to the findings of the previously-announced investigation conducted by the audit committee (the “Audit Committee”) of the General Partner’s board of directors (the “Audit Committee Investigation”) and related litigation.
|
•
|
We have substantial indebtedness, which may affect our ability to pay dividends, and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.
|
•
|
Our overall borrowing and operating flexibility may be adversely affected by the terms and restrictions within the indenture governing the Senior Notes (as defined in
Note 10 –
Debt
), and the terms of the Credit Facility (as defined in
Note 10 –
Debt
).
|
•
|
Our access to capital and terms of future financings may be affected by adverse changes to our credit rating.
|
•
|
We may be affected by the incurrence of additional secured or unsecured debt.
|
•
|
We may not be able to achieve and maintain profitability.
|
•
|
We may not generate cash flows sufficient to pay our dividends to stockholders or meet our debt service obligations.
|
•
|
We may be affected by risks resulting from losses in excess of insured limits.
|
•
|
We may fail to remain qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes.
|
•
|
Compliance with the REIT annual distribution requirements may limit our operating flexibility.
|
•
|
We may be unable to fully reestablish the financial network which previously supported Cole Capital
®
and its Cole REITs (defined below) and/or regain the prior level of transaction and capital raising volume of Cole Capital.
|
•
|
Our Cole Capital operations are subject to extensive governmental regulation.
|
•
|
We are subject to conflicts of interest relating to Cole Capital’s investment management business.
|
•
|
We may be unable to retain or hire key personnel.
|
•
|
Acquired controlling financial interests in
16
commercial properties and
three
land parcels for an aggregate purchase price of
$101.5 million
.
|
•
|
Disposed of
50
properties for an aggregate sales price of
$210.6 million
, of which our share was
$200.8 million
, resulting in consolidated proceeds of
$195.7 million
after closing costs.
|
•
|
Total secured debt decreased by
$81.7 million
, from
$2.65 billion
to
$2.57 billion
.
|
•
|
Declared a quarterly dividend of
$0.1375
per share of common stock for the first quarter of 2017, representing an annualized dividend rate of
$0.55
per share.
|
|
|
March 31, 2017
(1)
|
|
March 31, 2016
|
Portfolio Metrics
|
|
|
|
|
Operating properties
|
|
4,105
|
|
4,378
|
Rentable square feet (in millions)
|
|
93.0
|
|
99.0
|
Economic occupancy rate
(2)
|
|
98.4%
|
|
98.6%
|
Investment-grade tenants
(3)
|
|
41.6%
|
|
42.1%
|
(1)
|
Omits the impact of the Excluded Properties, if any.
|
(2)
|
Economic occupancy rate equals the sum of square feet leased (including space subject to month-to-month agreements) divided by total square feet.
|
(3)
|
Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable.
|
|
|
March 31, 2017
(1)
|
|
March 31, 2016
|
Economic Metrics
|
|
|
|
|
Weighted-average lease term (in years)
(2)
|
|
9.6
|
|
10.4
|
Lease rollover
(2)(3)
:
|
|
|
|
|
Annual average
|
|
4.4%
|
|
3.9%
|
Maximum for a single year
|
|
7.8%
|
|
4.6%
|
(1)
|
Omits the impact of the Excluded Properties, if any.
|
(2)
|
Based on annualized rental income of our real estate portfolio as of
March 31, 2017
.
|
(3)
|
Through the end of the next five years as of the respective reporting date.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Financial Metrics
|
|
|
|
|
||||
REI Segment
|
|
|
|
|
||||
Revenues
|
|
$
|
320,898
|
|
|
$
|
337,787
|
|
Operating income (loss)
|
|
$
|
75,808
|
|
|
$
|
(60,804
|
)
|
Net income (loss)
|
|
$
|
12,780
|
|
|
$
|
(115,534
|
)
|
Funds from operations (“FFO”) attributable to common stockholders and limited partners
(1)
|
|
$
|
168,055
|
|
|
$
|
196,775
|
|
Adjusted funds from operations (“AFFO”) attributable to common stockholders and limited partners
(1)
|
|
$
|
177,437
|
|
|
$
|
185,528
|
|
AFFO attributable to common stockholders and limited partners per diluted share
(1)
|
|
$
|
0.18
|
|
|
$
|
0.20
|
|
|
|
|
|
|
||||
Cole Capital Segment
|
|
|
|
|
||||
Revenues
|
|
$
|
27,131
|
|
|
$
|
31,233
|
|
Operating income (loss)
|
|
$
|
3,028
|
|
|
$
|
(2,349
|
)
|
Net income (loss)
|
|
$
|
2,010
|
|
|
$
|
(546
|
)
|
FFO attributable to common stockholders and limited partners
(1)
|
|
$
|
2,010
|
|
|
$
|
(546
|
)
|
AFFO attributable to common stockholders and limited partners
(1)
|
|
$
|
9,884
|
|
|
$
|
7,147
|
|
AFFO attributable to common stockholders and limited partners per diluted share
(1)
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
|
|
|
|
||||
Consolidated
|
|
|
|
|
||||
Revenues
|
|
$
|
348,029
|
|
|
$
|
369,020
|
|
Operating income (loss)
|
|
$
|
78,836
|
|
|
$
|
(63,153
|
)
|
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
FFO attributable to common stockholders and limited partners
(1)
|
|
$
|
170,065
|
|
|
$
|
196,229
|
|
AFFO attributable to common stockholders and limited partners
(1)
|
|
$
|
187,321
|
|
|
$
|
192,675
|
|
Net loss attributable to common stockholders per diluted share
(2)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.15
|
)
|
AFFO attributable to common stockholders and limited partners per diluted share
(1)
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
(1)
|
See the “Non-GAAP Measures” section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S. GAAP measure.
|
(2)
|
See “Note 18 – Net Income (Loss) Per Share/Unit” for calculation of net loss per share.
|
|
|
Total Assets
|
||||||
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
REI segment
|
|
$
|
15,110,337
|
|
|
$
|
15,337,623
|
|
Cole Capital segment
|
|
246,198
|
|
|
249,951
|
|
||
Total
|
|
$
|
15,356,535
|
|
|
$
|
15,587,574
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2017 vs 2016
Increase/(Decrease) |
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Rental income
|
|
$
|
293,739
|
|
|
$
|
313,971
|
|
|
$
|
(20,232
|
)
|
Direct financing lease income
|
|
433
|
|
|
569
|
|
|
(136
|
)
|
|||
Operating expense reimbursements
|
|
26,726
|
|
|
23,247
|
|
|
3,479
|
|
|||
Cole Capital revenue:
|
|
|
|
|
|
|
|
|||||
Offering-related fees and reimbursements
|
|
4,316
|
|
|
12,391
|
|
|
(8,075
|
)
|
|||
Transaction service fees and reimbursements
|
|
4,097
|
|
|
2,384
|
|
|
1,713
|
|
|||
Management fees and reimbursements
|
|
18,718
|
|
|
16,458
|
|
|
2,260
|
|
|||
Total Cole Capital revenue
|
|
27,131
|
|
|
31,233
|
|
|
(4,102
|
)
|
|||
Total revenues
|
|
$
|
348,029
|
|
|
$
|
369,020
|
|
|
$
|
(20,991
|
)
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2017 vs 2016
Increase/(Decrease) |
||||||
Offering-related fees and commissions
|
|
$
|
3,430
|
|
|
$
|
9,681
|
|
|
$
|
(6,251
|
)
|
Offering-related reimbursements
|
|
886
|
|
|
2,710
|
|
|
(1,824
|
)
|
|||
Less: reallowed fees and commissions
|
|
2,660
|
|
|
8,068
|
|
|
(5,408
|
)
|
|||
Offering-related fees and reimbursements, net of reallowed
|
|
$
|
1,656
|
|
|
$
|
4,323
|
|
|
$
|
(2,667
|
)
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2017 vs 2016
Increase/(Decrease) |
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||
Cole Capital reallowed fees and commissions
|
|
$
|
2,660
|
|
|
$
|
8,068
|
|
|
$
|
(5,408
|
)
|
Acquisition-related expenses
|
|
617
|
|
|
242
|
|
|
375
|
|
|||
Litigation and other non-routine costs, net of insurance recoveries
|
|
12,875
|
|
|
(5,175
|
)
|
|
18,050
|
|
|||
Property operating expenses
|
|
34,016
|
|
|
34,813
|
|
|
(797
|
)
|
|||
General and administrative expenses
|
|
29,148
|
|
|
29,400
|
|
|
(252
|
)
|
|||
Depreciation and amortization expenses
|
|
183,152
|
|
|
204,308
|
|
|
(21,156
|
)
|
|||
Impairments
|
|
6,725
|
|
|
160,517
|
|
|
(153,792
|
)
|
|||
Total operating expenses
|
|
$
|
269,193
|
|
|
$
|
432,173
|
|
|
$
|
(162,980
|
)
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2017 vs 2016
Increase/(Decrease) |
||||||
Property operating expenses
|
|
$
|
34,016
|
|
|
$
|
34,813
|
|
|
$
|
(797
|
)
|
Less: Operating expense reimbursements
|
|
26,726
|
|
|
23,247
|
|
|
3,479
|
|
|||
Property operating expenses, net of operating expense reimbursements
|
|
$
|
7,290
|
|
|
$
|
11,566
|
|
|
$
|
(4,276
|
)
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2017 vs 2016
Increase/(Decrease) |
||||||
Other expense and tax provision:
|
|
|
|
|
|
|
|
|||||
Interest expense
|
|
$
|
(73,743
|
)
|
|
$
|
(80,426
|
)
|
|
$
|
(6,683
|
)
|
Loss on extinguishment and forgiveness of debt, net
|
|
(70
|
)
|
|
—
|
|
|
(70
|
)
|
|||
Other income, net
|
|
798
|
|
|
1,062
|
|
|
(264
|
)
|
|||
Equity in (loss) income and gain on disposition of unconsolidated entities
|
|
(82
|
)
|
|
10,404
|
|
|
(10,486
|
)
|
|||
Gain (loss) on derivative instruments, net
|
|
824
|
|
|
(1,086
|
)
|
|
1,910
|
|
|||
Gain on disposition of real estate and held for sale assets, net
|
|
12,481
|
|
|
17,175
|
|
|
(4,694
|
)
|
|||
Provision for income taxes
|
|
(4,254
|
)
|
|
(56
|
)
|
|
4,198
|
|
|
|
Three Months Ended March 31,
|
||||||
Consolidated
|
|
2017
|
|
2016
|
||||
Net income (loss)
|
|
$
|
14,790
|
|
|
$
|
(116,080
|
)
|
Dividends on non-convertible preferred stock
|
|
(17,973
|
)
|
|
(17,973
|
)
|
||
Gain on real estate assets and interest in joint venture, net
|
|
(12,481
|
)
|
|
(27,373
|
)
|
||
Depreciation and amortization of real estate assets
|
|
178,295
|
|
|
195,991
|
|
||
Impairment of real estate
|
|
6,725
|
|
|
160,517
|
|
||
Proportionate share of adjustments for unconsolidated entities
|
|
709
|
|
|
1,147
|
|
||
FFO attributable to common stockholders and limited partners
|
|
170,065
|
|
|
196,229
|
|
||
Acquisition-related expenses
|
|
617
|
|
|
242
|
|
||
Litigation and other non-routine costs, net of insurance recoveries
|
|
12,875
|
|
|
(5,175
|
)
|
||
(Gain) loss on derivative instruments, net
|
|
(824
|
)
|
|
1,086
|
|
||
Amortization of premiums and discounts on debt and investments, net
|
|
(847
|
)
|
|
(4,426
|
)
|
||
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
|
|
1,305
|
|
|
1,296
|
|
||
Net direct financing lease adjustments
|
|
621
|
|
|
559
|
|
||
Amortization and write-off of deferred financing costs
|
|
6,347
|
|
|
7,307
|
|
||
Amortization of management contracts
|
|
4,146
|
|
|
7,451
|
|
||
Deferred tax expense (benefit)
(1)
|
|
1,649
|
|
|
(1,457
|
)
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
70
|
|
|
—
|
|
||
Straight-line rent, net of bad debt expense related to straight-line rent
|
|
(12,797
|
)
|
|
(13,045
|
)
|
||
Equity-based compensation
|
|
3,111
|
|
|
1,730
|
|
||
Other amortization and non-cash charges
|
|
634
|
|
|
743
|
|
||
Proportionate share of adjustments for unconsolidated entities
|
|
55
|
|
|
135
|
|
||
Adjustments for Excluded Properties
|
|
294
|
|
|
—
|
|
||
AFFO attributable to common stockholders and limited partners
|
|
$
|
187,321
|
|
|
$
|
192,675
|
|
|
|
|
|
|
||||
Weighted-average shares of common stock outstanding - basic
|
|
973,849,610
|
|
|
903,825,726
|
|
||
Limited Partner OP Units and effect of dilutive securities
(2)
|
|
24,402,139
|
|
|
26,354,148
|
|
||
Weighted-average shares of common stock outstanding - diluted
(3)
|
|
998,251,749
|
|
|
930,179,874
|
|
||
|
|
|
|
|
||||
AFFO attributable to common stockholders and limited partners per diluted share
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
(1)
|
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
|
(2)
|
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
|
(3)
|
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt with cash.
|
|
|
Three Months Ended March 31,
|
||||||
REI segment:
|
|
2017
|
|
2016
|
||||
Net income (loss)
|
|
$
|
12,780
|
|
|
$
|
(115,534
|
)
|
Dividends on non-convertible preferred stock
|
|
(17,973
|
)
|
|
(17,973
|
)
|
||
Gain on real estate assets and interest in joint venture, net
|
|
(12,481
|
)
|
|
(27,373
|
)
|
||
Depreciation and amortization of real estate assets
|
|
178,295
|
|
|
195,991
|
|
||
Impairment of real estate
|
|
6,725
|
|
|
160,517
|
|
||
Proportionate share of adjustments for unconsolidated entities
|
|
709
|
|
|
1,147
|
|
||
FFO attributable to common stockholders and limited partners
|
|
168,055
|
|
|
196,775
|
|
||
|
|
|
|
|
||||
Acquisition-related expenses
|
|
617
|
|
|
217
|
|
||
Litigation and other non-routine costs, net of insurance recoveries
|
|
12,875
|
|
|
(5,175
|
)
|
||
(Gain) loss on derivative instruments, net
|
|
(824
|
)
|
|
1,086
|
|
||
Amortization of premiums and discounts on debt and investments, net
|
|
(847
|
)
|
|
(4,426
|
)
|
||
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities
|
|
1,305
|
|
|
1,296
|
|
||
Net direct financing lease adjustments
|
|
621
|
|
|
559
|
|
||
Amortization and write-off of deferred financing costs
|
|
6,347
|
|
|
7,307
|
|
||
Loss on extinguishment and forgiveness of debt, net
|
|
70
|
|
|
—
|
|
||
Straight-line rent, net of bad debt expense related to straight-line rent
|
|
(12,797
|
)
|
|
(13,045
|
)
|
||
Equity-based compensation
|
|
1,664
|
|
|
799
|
|
||
Other amortization and non-cash charges
|
|
2
|
|
|
—
|
|
||
Proportionate share of adjustments for unconsolidated entities
|
|
55
|
|
|
135
|
|
||
Adjustments for Excluded Properties
|
|
294
|
|
|
—
|
|
||
AFFO attributable to common stockholders and limited partners
|
|
$
|
177,437
|
|
|
$
|
185,528
|
|
|
|
|
|
|
||||
Weighted-average shares of common stock outstanding - basic
|
|
973,849,610
|
|
|
903,825,726
|
|
||
Limited Partner OP Units and effect of dilutive securities
(1)
|
|
24,402,139
|
|
|
26,354,148
|
|
||
Weighted-average shares of common stock outstanding - diluted
(2)
|
|
998,251,749
|
|
|
930,179,874
|
|
||
|
|
|
|
|
||||
AFFO attributable to common stockholders and limited partners per diluted share
|
|
$
|
0.18
|
|
|
$
|
0.20
|
|
(1)
|
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
|
(2)
|
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt with cash.
|
|
|
Three Months Ended March 31,
|
||||||
Cole Capital segment:
|
|
2017
|
|
2016
|
||||
Net income (loss)
|
|
2,010
|
|
|
$
|
(546
|
)
|
|
FFO attributable to common stockholders and limited partners
|
|
2,010
|
|
|
(546
|
)
|
||
|
|
|
|
|
||||
Acquisition-related expenses
|
|
—
|
|
|
25
|
|
||
Amortization of Management Contracts
|
|
4,146
|
|
|
7,451
|
|
||
Deferred tax expense (benefit)
(1)
|
|
1,649
|
|
|
(1,457
|
)
|
||
Equity-based compensation
|
|
1,447
|
|
|
931
|
|
||
Other amortization and non-cash charges
|
|
632
|
|
|
743
|
|
||
AFFO attributable to common stockholders and limited partners
|
|
$
|
9,884
|
|
|
$
|
7,147
|
|
|
|
|
|
|
||||
Weighted-average shares of common stock outstanding - basic
|
|
973,849,610
|
|
|
903,825,726
|
|
||
Limited Partner OP Units and effect of dilutive securities
(2)
|
|
24,402,139
|
|
|
26,354,148
|
|
||
Weighted-average shares of common stock outstanding - diluted
(3)
|
|
998,251,749
|
|
|
930,179,874
|
|
||
|
|
|
|
|
||||
AFFO attributable to common stockholders and limited partners per diluted share
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
(1)
|
This adjustment represents the non-current portion of the provision for or benefit from income taxes in order to show only the current portion of the provision for or benefit from income taxes as an impact to AFFO.
|
(2)
|
Dilutive securities include unvested restricted shares of common stock and unvested restricted stock units.
|
(3)
|
Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt with cash.
|
•
|
fund normal recurring expenses;
|
•
|
meet debt service and principal repayment obligations, including balloon payments on maturing debt;
|
•
|
pay dividends;
|
•
|
fund capital expenditures, tenant improvements and leasing costs;
|
•
|
pay litigation costs; and
|
•
|
fund property acquisitions.
|
•
|
cash flow from operations;
|
•
|
proceeds from real estate dispositions;
|
•
|
utilization of existing line of credit;
|
•
|
cash and cash equivalents balance; and
|
•
|
issuance of VEREIT debt and equity securities.
|
Unsecured Credit Facility Key Covenants
|
|
Required
|
Minimum tangible net worth
|
|
≥ $5.5 B
|
Ratio of total indebtedness to total asset value
|
|
≤ 60%
|
Ratio of adjusted EBITDA to fixed charges
|
|
≥ 1.5x
|
Ratio of secured indebtedness to total asset value
|
|
≤ 45%
|
Ratio of unsecured indebtedness to unencumbered asset value
|
|
≤ 60%
|
Ratio of unencumbered adjusted NOI to unsecured interest expense
|
|
≥ 1.75x
|
Minimum unencumbered asset value
|
|
≥ $8.0 B
|
Corporate Bond Key Covenants
|
|
Required
|
Limitation on incurrence of total debt
|
|
≤ 65%
|
Limitation on incurrence of secured debt
|
|
≤ 40%
|
Debt service coverage ratio
|
|
≥ 1.5x
|
Maintenance of total unencumbered assets
|
|
≥ 150%
|
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than
5 years
|
||||||||||
Principal payments - mortgage notes and other debt
|
|
$
|
2,569,208
|
|
|
$
|
359,587
|
|
|
$
|
336,738
|
|
|
$
|
636,057
|
|
|
$
|
1,236,826
|
|
Interest payments - mortgage notes and other debt
(1) (2)
|
|
545,903
|
|
|
118,842
|
|
|
204,774
|
|
|
147,975
|
|
|
74,312
|
|
|||||
Principal payments - Credit Facility
|
|
500,000
|
|
|
—
|
|
|
500,000
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments - Credit Facility
(1) (2)
|
|
20,560
|
|
|
16,459
|
|
|
4,101
|
|
|
—
|
|
|
—
|
|
|||||
Principal payments - corporate bonds
|
|
2,250,000
|
|
|
—
|
|
|
750,000
|
|
|
400,000
|
|
|
1,100,000
|
|
|||||
Interest payments - corporate bonds
|
|
535,924
|
|
|
91,250
|
|
|
156,563
|
|
|
123,750
|
|
|
164,361
|
|
|||||
Principal payments - convertible debt
|
|
1,000,000
|
|
|
—
|
|
|
597,500
|
|
|
402,500
|
|
|
—
|
|
|||||
Interest payments - convertible debt
|
|
79,831
|
|
|
33,019
|
|
|
36,163
|
|
|
10,649
|
|
|
—
|
|
|||||
Operating and ground lease commitments
|
|
304,984
|
|
|
13,858
|
|
|
36,278
|
|
|
34,803
|
|
|
220,045
|
|
|||||
Total
|
|
$
|
7,806,410
|
|
|
$
|
633,015
|
|
|
$
|
2,622,117
|
|
|
$
|
1,755,734
|
|
|
$
|
2,795,544
|
|
(1)
|
As of
March 31, 2017
, we had
$188.7 million
of variable rate mortgage notes and
$0.5 billion
of variable rate debt on the Credit Facility effectively fixed through the use of interest rate swap agreements. We used the effective interest rates fixed under our swap agreements to calculate the debt payment obligations in future periods.
|
(2)
|
Interest payments due in future periods on the
$13.7 million
of variable rate debt payment obligations were calculated using a forward LIBOR curve.
|
Period
|
|
Total Number of Shares/ Units Purchased
|
|
Average Price Paid Per Share/Unit
(1)
|
|||
January 1, 2017 – January 31, 2017
|
|
1,104
|
|
|
$
|
8.46
|
|
February 1, 2017 – February 28, 2017
|
|
33,844
|
|
|
8.70
|
|
|
March 1, 2017 – March 31, 2017
|
|
30,025
|
|
|
8.49
|
|
|
Total
|
|
64,973
|
|
|
$
|
8.60
|
|
(1)
|
With respect to these shares/units, the price paid per share/unit is based on the weighted average closing price on the respective vesting date.
|
|
VEREIT, INC.
|
|
|
By:
|
/s/ Michael J. Bartolotta
|
|
Michael J. Bartolotta
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
VEREIT OPERATING PARTNERSHIP, L.P.
|
|
|
By: VEREIT, Inc., its sole general partner
|
|
|
By:
|
/s/ Michael J. Bartolotta
|
|
Michael J. Bartolotta
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Exhibit No.
|
|
Description
|
3.1
|
|
Articles of Amendment and Restatement of VEREIT, Inc. (Incorporated by reference to the Company's Pre-Effective Amendment No. 5 to Form S-11 (Registration No. 333-172205), filed with the SEC on July 5, 2011).
|
3.2
|
|
Articles Supplementary Relating to the Series A Convertible Preferred Stock of VEREIT, Inc., dated May 10, 2012 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on May 15, 2012).
|
3.3
|
|
Articles Supplementary Relating to the Series B Convertible Preferred Stock of VEREIT, Inc., dated July 24, 2012 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on July 30, 2012).
|
3.4
|
|
Articles Supplementary for the Series C Convertible Preferred Stock of VEREIT, Inc., dated June 6, 2013 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on June 12, 2013).
|
3.5
|
|
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective July 2, 2013 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on July 9, 2013).
|
3.6
|
|
Articles Supplementary for the Series D Cumulative Convertible Preferred Stock of VEREIT, Inc., filed November 8, 2013 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on November 15, 2013).
|
3.7
|
|
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective December 9, 2013 (Incorporated by reference to the Company's Amended Current Report on Form 8-K/A (File No. 001-35263), filed with the SEC on December 20, 2013).
|
3.8
|
|
Articles Supplementary Relating to the 6.70% Series F Cumulative Redeemable Preferred Stock of VEREIT, Inc., dated January 2, 2014 (Incorporated by reference to the Company's Registration Statement on Form 8-A (File No. 333-190056), filed with the SEC on January 3, 2014).
|
3.9
|
|
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., dated July 28, 2015 (Incorporated by reference to the Company's Form 8-K (File No. 001-35263), filed with the SEC on July 28, 2015).
|
3.10
|
|
Articles Supplementary to Articles of Amendment and Restatement of VEREIT, Inc., dated August 5, 2015 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
3.11
|
|
Amended and Restated Bylaws of VEREIT, Inc., effective as of January 1, 2016 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended September 30, 2015 filed with the SEC on November 5, 2015).
|
3.12
|
|
Certificate of Limited Partnership of VEREIT Operating Partnership, L.P. (Incorporated by reference to the Company's Registration Statement on Form S-4 (Registration No. 333-197780-01), filed with the SEC on August 1, 2014).
|
3.13
|
|
Amendment to Certificate of Limited Partnership of VEREIT Operating Partnership, L.P., effective July 28, 2015 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
4.1
|
|
Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., effective January 3, 2014 (Incorporated by reference to the Company's Amendment No. 2 to its Annual Report on Form 10-K/A (File No. 001-35263), for the year ended December 31, 2013 filed with the SEC on March 2, 2015).
|
4.2
|
|
First Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated January 26, 2015 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
4.3
|
|
Second Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated July 28, 2015 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
|
4.4
|
|
Indenture, dated as of July 29, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on July 29, 2013).
|
4.5
|
|
First Supplemental Indenture, dated as of July 29, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on July 29, 2013).
|
4.6
|
|
Form of 3.00% Convertible Senior Notes due 2018 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 11, 2013).
|
4.7
|
|
Second Supplemental Indenture, dated as of December 10, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 11, 2013).
|
4.8
|
|
Form of 3.75% Convertible Senior Notes due 2020 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 11, 2013).
|
4.9
|
|
Indenture, dated as of February 6, 2014, among ARC Properties Operating Partnership, L.P., Clark Acquisition, LLC, the guarantors named therein and U.S. Bank National Association, as trustee (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).
|
Exhibit No.
|
|
Description
|
4.10
|
|
Officers’ Certificate, dated as of February 6, 2014 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).
|
4.11
|
|
Registration Rights Agreement, dated as of February 6, 2014, among ARC Properties Operating Partnership, L.P., Clark Acquisition, LLC, the guarantors named therein, Barclays Capital Inc. and Citigroup Global Markets Inc. (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).
|
4.12
|
|
First Supplemental Indenture, dated as of February 9, 2015, by and among ARC Properties Operating Partnership, L.P., American Realty Capital Properties, Inc. and U.S. Bank National Association (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 13, 2015).
|
4.13
|
|
Officer’s Certificate, dated as of June 2, 2016 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
|
4.14
|
|
Form of 4.125% Senior Notes due 2021 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
|
4.15
|
|
Form of 4.875% Senior Notes due 2026 (Incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
|
10.1*
|
|
Form of 2017 Deferred Stock Unit Award Agreement to be entered into with non-executive directors pursuant to the VEREIT, Inc. Equity Plan.
|
10.2*
|
|
Form of 2017 Deferred Stock Unit Award Agreement to be entered into with non-executive directors pursuant to the VEREIT, Inc. Equity Plan and the Independent Directors’ Deferred Compensation Program.
|
10.3
|
|
Amendment effective February 22, 2017, to the Amended and Restated Employment Letter, dated as of February 23, 2016, by and between VEREIT, Inc. and William C. Miller (Incorporated by reference to the Company's Annual Report on Form 10-K (File No. 001-35263), for the year ended December 31, 2016 filed with the SEC on February 23, 2017).
|
31.1*
|
|
Certification of the Chief Executive Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of the Chief Financial Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.3*
|
|
Certification of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.4*
|
|
Certification of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
|
Written statements of the Chief Executive Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2**
|
|
Written statements of the Chief Financial Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.3**
|
|
Written statements of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.4**
|
|
Written statements of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
|
XBRL Instance Document.
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith
|
**
|
In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VEREIT, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 3, 2017
|
/s/ Glenn J. Rufrano
|
|
|
Glenn J. Rufrano
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VEREIT, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 3, 2017
|
/s/ Michael J. Bartolotta
|
|
|
Michael J. Bartolotta
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VEREIT Operating Partnership, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 3, 2017
|
/s/ Glenn J. Rufrano
|
|
|
Glenn J. Rufrano
|
|
|
Chief Executive Officer of VEREIT, Inc., the sole general partner
|
|
|
of VEREIT Operating Partnership, L.P.
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of VEREIT Operating Partnership, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 3, 2017
|
/s/ Michael J. Bartolotta
|
|
|
Michael J. Bartolotta
Executive Vice President and Chief Financial Officer of
|
|
|
VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P.
|
|
|
(Principal Financial Officer)
|
Date:
|
May 3, 2017
|
/s/ Glenn J. Rufrano
|
|
|
Glenn J. Rufrano
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date:
|
May 3, 2017
|
/s/ Michael J. Bartolotta
|
|
|
Michael J. Bartolotta
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Date:
|
May 3, 2017
|
/s/ Glenn J. Rufrano
|
|
|
Glenn J. Rufrano
|
|
|
Chief Executive Officer of VEREIT, Inc., the sole general partner
|
|
|
of VEREIT Operating Partnership, L.P.
|
|
|
(Principal Executive Officer)
|
Date:
|
May 3, 2017
|
/s/ Michael J. Bartolotta
|
|
|
Michael J. Bartolotta
Executive Vice President and Chief Financial Officer of
|
|
|
VEREIT Inc., the sole general partner of VEREIT Operating Partnership, L.P.
|
|
|
(Principal Financial Officer)
|