REIT Earnings Press Releases

STORE Capital Announces Third Quarter 2021 Operating Results

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- STORE Capital Corporation (NYSE: STOR, “STORE Capital” or the “Company”), an internally managed net-lease real estate investment trust (REIT) that invests in Single Tenant Operational Real Estate, today announced operating results for the third quarter ended September 30, 2021.

Highlights

For the quarter ended September 30, 2021:

  • Total revenues of $199.1 million
  • Net income of $75.9 million, or $0.28 per basic and diluted share, including an aggregate net gain of $10.7 million on dispositions of real estate
  • AFFO of $140.3 million, or $0.52 per basic and diluted share
  • Declared a regular quarterly cash dividend per common share of $0.385
  • Invested $411.7 million in 75 properties at a weighted average initial cap rate of 7.4%
  • Raised $18.9 million in net proceeds from the sale of approximately 0.5 million common shares under the Company’s at-the-market equity program

For the nine months ended September 30, 2021:

  • Total revenues of $573.4 million
  • Net income of $193.3 million, or $0.72 per basic and diluted share, including an aggregate net gain of $32.3 million on dispositions of real estate
  • AFFO of $401.2 million, or $1.49 per basic and diluted share
  • Declared regular cash dividends per common share aggregating $1.105
  • Invested $1.0 billion in 236 properties at a weighted average initial cap rate of 7.7%
  • Raised $188.4 million in net proceeds from the sale of approximately 5.7 million common shares under the Company’s at-the-market equity program
  • Issued $515.0 million of long-term fixed rate notes, at a weighted average interest rate of 2.8%, under STORE’s Master Funding secured debt program in June 2021; the issuance included $337.0 million of AAA rated notes

Management Commentary

“We delivered strong results in the third quarter - originating $412 million of acquisition volume - as our customers, both existing and new, turned their attention to growth initiatives following the pandemic,” said Mary Fedewa, Chief Executive Officer of STORE Capital. “Our portfolio is in great shape, and we expect to deliver another year of strong growth and returns in 2021. Based on our year-to-date performance and outlook, we are reaffirming our net acquisition guidance of $1.0 billion to $1.2 billion and raising our 2021 AFFO per share guidance range to $1.98 to $2.00; as well as introducing our 2022 AFFO per share guidance range of $2.15 to $2.20, representing 9.3% growth based on the midpoints for both years.”

Financial Results

COVID-19 Update

Since early 2020, the world has been impacted by the pandemic. At various times, COVID-19 and measures to prevent its spread have affected the Company by impacting its tenants’ businesses and their ability to pay rent. As restrictions have lifted, the Company’s tenants have increased their business activity and their ability to make rent payments. Essentially all of the Company’s properties are open for business and the Company’s collections of monthly rent and interest have returned to pre-pandemic levels. The Company continues to closely watch for unpredictable factors that could impact its business going forward, including governmental, business and individual actions in response to the pandemic, including the vaccination process (and related government mandates), the impact of COVID-19 variants, and the overall impact on broad economic activity.

Total Revenues

Total revenues were $199.1 million for the third quarter of 2021, an increase of 13.6% from $175.2 million for the third quarter of 2020.

Total revenues for the first nine months of 2021 were $573.4 million, an increase of 10.0% from $521.4 million for the first nine months of 2020. The increase was driven primarily by the growth in the size of STORE Capital’s real estate investment portfolio, which grew from $9.3 billion in gross investment amount representing 2,587 property locations and 511 customers at September 30, 2020 to $10.3 billion in gross investment amount representing 2,788 property locations and 538 customers at September 30, 2021.

Net Income

Net income was $75.9 million, or $0.28 per basic and diluted share, for the third quarter of 2021, as compared to $54.6 million, or $0.21 per basic and diluted share, for the third quarter of 2020. Net income for the third quarter of 2021 included an aggregate net gain on dispositions of real estate of $10.7 million, as compared to an aggregate net gain on dispositions of real estate of $3.5 million for the same period in 2020.

Net income includes such items as gain or loss on dispositions of real estate and provisions for impairment, which can vary from quarter to quarter and impact net income and period-to-period comparisons.

Net income for the nine months ended September 30, 2021 was $193.3 million, or $0.72 per basic and diluted share, as compared to $157.9 million, or $0.63 per basic and diluted share, for the nine months ended September 30, 2020. Net income for the first nine months of 2021 included an aggregate net gain on dispositions of real estate of $32.3 million, as compared to an aggregate net gain on dispositions of real estate of $6.8 million for the same period in 2020.

Adjusted Funds from Operations (AFFO)

AFFO increased to $140.3 million, or $0.52 per basic and diluted share, for the third quarter of 2021, as compared to AFFO of $119.1 million, or $0.47 per basic and $0.46 per diluted share, for the third quarter of 2020. AFFO for the nine months ended September 30, 2021 was $401.2 million, or $1.49 per basic and diluted share, an increase from $347.8 million, or $1.39 per basic and diluted share, for the nine months ended September 30, 2020.

AFFO for the three- and nine-month periods in 2021 rose primarily as a result of net additional rental revenues and interest income generated by growth in the Company’s real estate investment portfolio.

Dividend Information

As previously announced, STORE Capital declared a regular quarterly cash dividend per common share of $0.385 for the third quarter ended September 30, 2021, representing a 6.9% increase over the quarterly cash dividend per common share declared for the prior quarter. This dividend, totaling $104.8 million, was paid on October 15, 2021 to stockholders of record on September 30, 2021.

Real Estate Portfolio Highlights

Investment Activity

The Company originated $411.7 million of gross investments representing 75 property locations during the third quarter of 2021. These origination and other activities resulted in the creation of 16 new customer relationships. The investments had a weighted average initial cap rate of 7.4%. Total investment activity for the first nine months of 2021 was $1.0 billion representing 236 property locations with a weighted average initial cap rate of 7.7%. The Company defines “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property. STORE’s leases customarily have lease escalations, most of which are tied to the consumer price index and subject to a cap. For acquisitions made during the first nine months of 2021, the weighted average stated lease escalation cap was 1.9%.

Disposition Activity

During the nine months ended September 30, 2021, the Company sold 82 properties and recognized an aggregate net gain on the disposition of real estate of $32.3 million; 25 of these 82 properties were sold in the third quarter for an aggregate net gain of $10.7 million. For the nine months ended September 30, 2021, net proceeds from the disposition of real estate aggregated $270.9 million as compared to an aggregate original investment amount of $279.6 million. The Company also collected $1.8 million in lease termination fees in connection with property sales in the third quarter of 2021.

Portfolio

At September 30, 2021, STORE Capital’s real estate portfolio totaled $10.3 billion. Approximately 94% of the portfolio represents commercial real estate properties subject to long-term leases, 6% represents mortgage loans and financing receivables on commercial real estate properties and a nominal amount represents loans receivable secured by the tenants’ other assets. The weighted average non-cancelable remaining term of the leases at September 30, 2021 was approximately 13.5 years with leases representing approximately 3.5% of the portfolio scheduled to expire in the next five years.

The Company’s portfolio of real estate investments is highly diversified across customers, brand names or business concepts, industries and geography. The following table presents a summary of the portfolio.

 

 

 

 

Portfolio At A Glance - As of September 30, 2021

 

 

 

Investment property locations

 

2,788

 

States

 

49

 

Customers

 

538

 

Industries in which customers operate

 

119

 

Proportion of portfolio from direct origination

 

~80

%

Contracts on STORE’s form*(1)

 

96

%

Investment portfolio subject to Master Leases*(2)

 

94

%

Average investment amount/replacement cost (new)(3)

 

80

%

Weighted average annual lease escalation(4)

 

1.8

%

Weighted average remaining lease contract term

 

~13.5 years

 

Occupancy(5)

 

99.4

%

Properties not operating but subject to a lease(6)

 

1.4

%

Investment locations subject to a ground lease(7)

 

0.9

%

Locations subject to unit-level financial reporting

 

98

%

Median unit fixed charge coverage ratio (FCCR)/4‑Wall coverage ratio(8)

 

2.4x/3.0x

 

Contracts rated investment grade(9)

 

~72

%

Based on base rent and interest.

(1)

Represents the percentage of lease contracts that were created by STORE or contain preferred contract terms such as unit-level financial reporting, triple-net lease provisions and, when applicable, master lease provisions.

(2)

Percentage of investment portfolio in multiple properties with a single customer subject to master leases. Approximately 87% of the investment portfolio involves multiple properties with a single customer, whether or not subject to a master lease.

(3)

Represents the ratio of purchase price to replacement cost (new) at acquisition.

(4)

Represents the weighted average annual escalation rate of the entire portfolio as if all escalations occurred annually. For escalations based on a formula including CPI, assumes the stated fixed percentage in the contract or assumes 1.5% if no fixed percentage is in the contract. For contracts with no escalations remaining in the current lease term, assumes the escalation in the extension term. Calculation excludes contracts representing less than 0.1% of base rent and interest where there are no further escalations remaining in the current lease term and there are no extension options.

(5)

The Company defines occupancy as a property being subject to a lease or loan contract. As of September 30, 2021, 16 of the Company’s properties were vacant and not subject to a contract.

(6)

Represents the percentage (based on the number of locations) of the Company’s investment locations that have been closed by the tenant but remain subject to a lease.

(7)

Represents the percentage (based on the number of locations) of the Company’s investment locations that are subject to a ground lease.

(8)

STORE Capital calculates a unit’s FCCR generally as the ratio of (i) the unit’s EBITDAR, less a standardized corporate overhead expense based on estimated industry standards, to (ii) the unit’s total fixed charges, which are its lease expense, interest expense and scheduled principal payments on indebtedness (if applicable). The 4‑Wall coverage ratio refers to a unit’s FCCR before taking into account standardized corporate overhead expense. The weighted average unit FCCR and 4‑Wall coverage ratios were 3.4x and 4.4x, respectively.

(9)

Represents the percentage of the Company’s contracts that have a STORE Score that is investment grade; amount disclosed represents the average since the inception of the Company. The Company measures the credit quality of its portfolio on a contract-by-contract basis using the STORE Score, which is a proprietary risk measure reflective of both the credit risk of the Company’s tenants and the profitability of the operations at the properties. As of September 30, 2021, STORE Capital’s tenants had a median tenant credit profile of approximately ‘Ba2’ as measured by Moody’s Analytics RiskCalc rating scale. Considering the profitability of the operations at each of its properties and STORE’s assessment of the likelihood that each of the tenants will choose to continue to operate at the properties in the event of their insolvency, the credit quality of its contracts, or STORE Score, is enhanced to a median of ‘Baa2’.

Capital Transactions

In October 2021, S&P Global Ratings raised its outlook to positive from stable and affirmed its ‘BBB’ issuer credit rating on the Company.

The Company established a $900 million “at the market” equity distribution program, or ATM Program, in November 2020 and terminated its previous program. During the third quarter of 2021, the Company sold an aggregate of approximately 0.5 million common shares at a weighted average share price of $35.98 and raised approximately $18.9 million in net proceeds after the payment of sales agents’ commissions and offering expenses. For the nine months ended September 30, 2021, the Company sold an aggregate of approximately 5.7 million common shares at a weighted average share price of $33.82 and raised approximately $188.4 million in net proceeds after the payment of sales agents’ commissions and offering expenses.

In June 2021, the Company amended its unsecured revolving credit facility with its group of banks. The amended facility provides the Company immediate access to a $600 million unsecured, revolving credit facility and expanded the accordion feature from $800 million to $1.0 billion for a total maximum borrowing capacity of $1.6 billion; the amendment also reduced the interest rate on LIBOR-based borrowings by 15 basis points to LIBOR plus 85 basis points. The amended credit facility matures in June 2025 and includes two six-month extension options, subject to certain conditions.

In late June 2021, certain of the Company’s consolidated special purpose entities issued the tenth series, Series 2021-1, of seven- and twelve-year, net-lease mortgage notes under the Company’s STORE Master Funding debt program, separated into four classes as summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

Note Class

 

Rating

 

Amount
(in millions)

 

Coupon Rate

 

Term

 

Maturity Date

Class A-1

 

AAA

 

$

168.5

 

2.12

%

 

7 years

 

June 2028

Class A-2

 

AAA

 

 

168.5

 

2.96

%

 

12 years

 

June 2033

Class A-3

 

A+

 

 

89.0

 

2.86

%

 

7 years

 

June 2028

Class A-4

 

A+

 

 

89.0

 

3.70

%

 

12 years

 

June 2033

Total/Weighted Average Coupon

 

 

 

$

515.0

 

2.80

%

 

 

 

 

As part of this issuance, the Company prepaid, without penalty, $86.7 million of STORE Master Funding Series 2013-1 Class A-2 notes in May 2021 and $83.3 million of STORE Master Funding Series 2013-2 Class A-2 notes in July 2021; the two prepaid note classes bore a weighted average interest rate of 4.98%. A portion of the net proceeds from the issuance was also used to pay down balances on the Company’s revolving credit facility with the remainder of the proceeds representing new incremental term borrowings.

2021 Guidance

The Company is raising its 2021 AFFO per share guidance from a range of $1.94 to $1.97 to a range of $1.98 to $2.00 and is maintaining its expected 2021 annual real estate acquisition volume guidance, net of projected property sales, at $1.0 billion to $1.2 billion. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $0.88 to $0.90 per share, plus $0.97 per share of expected real estate depreciation and amortization, plus approximately $0.13 per share related to noncash items. The AFFO per share guidance is based on a weighted average initial cap rate for 2021 acquisitions of 7.5%.

2022 Guidance

The Company currently expects 2022 AFFO per share to be within a range of $2.15 to $2.20, based on the Company’s current projections for net real estate acquisitions for the remainder of 2021 plus projected 2022 annual real estate acquisition volume, net of projected property sales, of $1.1 billion to $1.3 billion. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $1.01 to $1.05 per share, plus $1.03 to $1.04 per share of expected real estate depreciation and amortization, plus approximately $0.11 per share related to noncash items. AFFO per share is sensitive to the timing and amount of real estate acquisitions, property dispositions and capital markets activities during the year, as well as to the spread achieved between the lease rates on new acquisitions and the interest rates on borrowings used to finance those acquisitions.

Conference Call and Webcast

A conference call and audio webcast with analysts and investors will be held later today at 12:00 p.m. Eastern Time / 9:00 a.m. Scottsdale, Arizona Time, to discuss third quarter ended September 30, 2021 operating results and answer questions.

  • Live conference call: 855-656-0920 (domestic) or 412-542-4168 (international)
  • Conference call replay available through November 18, 2021: 877-344-7529 (domestic) or 412-317-0088 (international)
  • Replay access code: 10160821
  • Live and archived webcast: https://ir.storecapital.com/news-results/webcasts/default.aspx

About STORE Capital

STORE Capital Corporation is an internally managed net-lease real estate investment trust, or REIT, that is a leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is its target market and the inspiration for its name. STORE Capital is one of the largest and fastest growing net-lease REITs and owns a large, well-diversified portfolio that consists of investments in more than 2,750 property locations across the United States, substantially all of which are profit centers. Additional information about STORE Capital can be found on its website at www.storecapital.com.

Forward-Looking Statements

Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for STORE Capital’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. STORE Capital expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in STORE Capital’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.

Non-GAAP Financial Measures

FFO and AFFO

STORE Capital’s reported results are presented in accordance with U.S. generally accepted accounting principles, or GAAP. The Company also discloses Funds from Operations, or FFO, and Adjusted Funds from Operations, or AFFO, both of which are non-GAAP measures. Management believes these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or to cash flows from operations as reported on a statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

The Company computes FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income, excluding gains (or losses) from extraordinary items and sales of depreciable property, real estate impairment losses, and depreciation and amortization expense from real estate assets, including the pro rata share of such adjustments of unconsolidated subsidiaries.

To derive AFFO, the Company modifies the NAREIT computation of FFO to include other adjustments to GAAP net income related to certain revenues and expenses that have no impact on the Company’s long-term operating performance, such as straight-line rents, amortization of deferred financing costs and stock-based compensation. In addition, in deriving AFFO, the Company excludes certain other costs not related to its ongoing operations, such as the amortization of lease-related intangibles.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among the Company’s peers primarily because it excludes the effect of real estate depreciation and amortization and net gains (or losses) on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude certain additional revenues and expenses such as straight-line rents, including construction period rent deferrals, and the amortization of deferred financing costs, stock-based compensation and lease-related intangibles as such items have no impact on long-term operating performance. As a result, the Company believes AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, the Company discloses both FFO and AFFO and reconciles them to the most appropriate GAAP performance metric, which is net income. STORE Capital’s FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

STORE Capital Corporation

Condensed Consolidated Statements of Income

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

(unaudited)

 

(unaudited)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenues

 

$

184,083

 

$

163,325

 

$

533,575

 

$

482,669

Interest income on loans and financing receivables

 

 

12,973

 

 

11,021

 

 

37,196

 

 

34,374

Other income

 

 

2,069

 

 

877

 

 

2,661

 

 

4,357

Total revenues

 

 

199,125

 

 

175,223

 

 

573,432

 

 

521,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

43,367

 

 

42,090

 

 

126,904

 

 

127,816

Property costs

 

 

4,267

 

 

3,309

 

 

14,098

 

 

14,603

General and administrative

 

 

17,456

 

 

14,729

 

 

58,551

 

 

35,742

Depreciation and amortization

 

 

67,123

 

 

61,119

 

 

195,725

 

 

180,753

Provisions for impairment

 

 

3,400

 

 

2,772

 

 

17,350

 

 

10,972

Total expenses

 

 

135,613

 

 

124,019

 

 

412,628

 

 

369,886

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

Net gain on dispositions of real estate

 

 

10,721

 

 

3,537

 

 

32,271

 

 

6,814

Income from non-real estate, equity method investment

 

 

1,872

 

 

 

 

804

 

 

Income before income taxes

 

 

76,105

 

 

54,741

 

 

193,879

 

 

158,328

Income tax expense

 

 

169

 

 

111

 

 

552

 

 

438

Net income

 

$

75,936

 

$

54,630

 

$

193,327

 

$

157,890

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share of common stock - basic and diluted:

 

$

0.28

 

$

0.21

 

$

0.72

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

271,273,253

 

 

255,308,189

 

 

269,329,141

 

 

248,999,635

Diluted

 

 

271,273,253

 

 

255,610,628

 

 

269,329,141

 

 

248,999,635

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.385

 

$

0.36

 

$

1.105

 

$

1.06

STORE Capital Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

 

 

 

September 30, 2021

December 31, 2020

 

(unaudited)

(audited)

Assets

 

 

 

 

Investments:

 

 

 

 

Real estate investments:

 

 

 

 

Land and improvements

$

3,025,429

 

$

2,807,153

 

Buildings and improvements

 

6,565,092

 

 

6,059,513

 

Intangible lease assets

 

54,971

 

 

61,634

 

Total real estate investments

 

9,645,492

 

 

8,928,300

 

Less accumulated depreciation and amortization

 

(1,098,560

)

 

(939,591

)

 

 

8,546,932

 

 

7,988,709

 

Real estate investments held for sale, net

 

26,553

 

 

22,304

 

Operating ground lease assets

 

33,653

 

 

34,683

 

Loans and financing receivables, net

 

649,414

 

 

650,321

 

Net investments

 

9,256,552

 

 

8,696,017

 

Cash and cash equivalents

 

37,018

 

 

166,381

 

Other assets, net

 

131,428

 

 

141,942

 

Total assets

$

9,424,998

 

$

9,004,340

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

Liabilities:

 

 

 

 

Credit facility

$

109,000

 

$

 

Unsecured notes and term loans payable, net

 

1,411,239

 

 

1,509,612

 

Non-recourse debt obligations of consolidated special purpose entities, net

 

2,517,136

 

 

2,212,634

 

Dividends payable

 

104,801

 

 

95,801

 

Operating lease liabilities

 

38,499

 

 

39,317

 

Accrued expenses, deferred revenue and other liabilities

 

131,931

 

 

131,198

 

Total liabilities

 

4,312,606

 

 

3,988,562

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Common stock, $0.01 par value per share, 375,000,000 shares authorized, 272,211,360 and 266,112,676 shares issued and outstanding, respectively

 

2,722

 

 

2,661

 

Capital in excess of par value

 

5,682,456

 

 

5,475,889

 

Distributions in excess of retained earnings

 

(570,560

)

 

(459,977

)

Accumulated other comprehensive loss

 

(2,226

)

 

(2,795

)

Total stockholders’ equity

 

5,112,392

 

 

5,015,778

 

Total liabilities and stockholders’ equity

$

9,424,998

 

$

9,004,340

 

STORE Capital Corporation

Reconciliations of Non-GAAP Financial Measures

(In thousands, except per share data)

Funds from Operations and Adjusted Funds from Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

 

(unaudited)

(unaudited)

 

 

 

 

 

 

 

 

 

Net income

$

75,936

 

$

54,630

 

$

193,327

 

$

157,890

 

Depreciation and amortization of real estate assets

 

67,061

 

 

61,051

 

 

195,542

 

 

180,528

 

Provision for impairment of real estate

 

3,400

 

 

2,000

 

 

15,350

 

 

10,200

 

Net gain on dispositions of real estate

 

(10,721

)

 

(3,537

)

 

(32,271

)

 

(6,814

)

Funds from Operations (1)

 

135,676

 

 

114,144

 

 

371,948

 

 

341,804

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

Straight-line rental revenue:

 

 

 

 

 

 

 

 

Fixed rent escalations accrued

 

(2,277

)

 

(3,354

)

 

(6,256

)

 

(7,278

)

Construction period rent deferrals

 

980

 

 

466

 

 

2,717

 

 

1,402

 

Amortization of:

 

 

 

 

 

 

 

 

Equity-based compensation

 

6,467

 

 

2,744

 

 

24,161

 

 

1,645

 

Deferred financing costs and other (2)

 

2,698

 

 

2,082

 

 

7,396

 

 

6,310

 

Lease-related intangibles and costs

 

626

 

 

769

 

 

2,413

 

 

2,298

 

Provision for loan losses

 

 

 

772

 

 

2,000

 

 

772

 

Lease termination fees

 

(1,785

)

 

(350

)

 

(1,785

)

 

(587

)

Capitalized interest

 

(191

)

 

(175

)

 

(609

)

 

(500

)

Executive severance costs

 

 

 

1,980

 

 

 

 

1,980

 

Income from non-real estate, equity method investment

 

(1,872

)

 

 

 

(804

)

 

 

Adjusted Funds from Operations (1)

$

140,322

 

$

119,078

 

$

401,181

 

$

347,846

 

 

 

 

 

 

 

 

 

 

Dividends declared to common stockholders

$

104,801

 

$

94,085

 

$

299,812

 

$

268,195

 

 

 

 

 

 

 

 

 

 

Net income per share of common stock: (3)

 

 

 

 

 

 

 

 

Basic and Diluted

$

0.28

 

$

0.21

 

$

0.72

 

$

0.63

 

FFO per share of common stock: (3)

 

 

 

 

 

 

 

 

Basic and Diluted

$

0.50

 

$

0.45

 

$

1.38

 

$

1.37

 

AFFO per share of common stock: (3)

 

 

 

 

 

 

 

 

Basic

$

0.52

 

$

0.47

 

$

1.49

 

$

1.39

 

Diluted

$

0.52

 

$

0.46

 

$

1.49

 

$

1.39

 

(1)

FFO and AFFO for the three and nine months ended September 30, 2021, include approximately $0.8 million and $5.8 million, respectively, of net revenue that is subject to the short-term deferral arrangements entered into in response to the COVID-19 pandemic; the Company accounts for these deferral arrangements as rental revenue and a corresponding increase in receivables. For the three and nine months ended September 30, 2021, FFO and AFFO exclude $8.0 million and $19.2 million, respectively, collected under these short-term deferral arrangements. For the three and nine months ended September 30, 2020, FFO and AFFO include approximately $13.0 million and $51.2 million, respectively, of net revenue subject to the short-term deferral arrangements. For both the three and nine months ended September 30, 2020, FFO and AFFO exclude $1.3 million collected under these short-term deferral arrangements.

(2)

For the three and nine months ended September 30, 2021, includes $0.6 million and $1.1 million, respectively, of accelerated amortization of deferred financing costs related to the prepayment of debt.

(3)

Under the two-class method, earnings attributable to unvested restricted stock are deducted from earnings in the computation of per share amounts where applicable.

STORE Capital Corporation
Investment Portfolio
September 30, 2021

Real Estate Portfolio Information

As of September 30, 2021, STORE Capital’s total investment in real estate and loans approximated $10.3 billion, representing investments in 2,788 property locations, substantially all of which are profit centers for its customers. The Company’s real estate portfolio is highly diversified. The following tables summarize the diversification of the real estate portfolio based on the percentage of base rent and interest, annualized based on rates in effect on September 30, 2021, for all leases, loans and financing receivables in place as of that date.

Diversification by Customer

STORE Capital has a diverse customer base. At September 30, 2021, the Company’s property locations were operated by 538 customers. The largest single customer represented 3.1% of base rent and interest and the top ten customers totaled 18.7% of base rent and interest. STORE Capital’s customers operate their businesses under a wide range of brand names or business concepts. Of the approximately 830 concepts represented in the Company’s investment portfolio as of September 30, 2021, the largest single concept represented 2.3% of base rent and interest; more than 85% of base rent and interest consists of concepts each representing less than 1% of base rent and interest.

The following table identifies STORE Capital’s ten largest customers as of September 30, 2021:

 

 

 

 

 

 

 

 

% of

 

 

 

 

Base Rent and

 

Number of

Customer

 

Interest

 

Properties

LBM Acquisition, LLC (Building materials distribution)

 

3.1

%

 

156

Spring Education Group Inc. (Stratford School/Nobel Learning Communities)

 

2.9

 

 

27

Fleet Farm Group LLC

 

2.3

 

 

9

Cadence Education, Inc. (Early childhood/elementary education)

 

2.0

 

 

65

Dufresne Spencer Group Holdings, LLC (Ashley Furniture HomeStore)

 

1.6

 

 

25

CWGS Group, LLC (Camping World/Gander Outdoors)

 

1.5

 

 

20

Great Outdoors Group, LLC (Cabela’s)

 

1.4

 

 

9

American Multi-Cinema, Inc.

 

1.4

 

 

14

Zips Holdings, LLC

 

1.3

 

 

43

At Home Stores LLC

 

1.2

 

 

11

All other (528 customers)

 

81.3

 

 

2,409

Total

 

100.0

%

 

2,788

Diversification by Industry

The business concepts of STORE Capital’s customers are diversified across more than 100 industries within the service, retail and manufacturing sectors of the U.S. economy. The following table summarizes these industries, by sector, into 80 industry groups as of September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of

Base Rent and

 

Number of

 

Building

Square

Footage

Customer Industry Group

 

Interest

 

Properties

 

(in thousands)

Service:

 

 

 

 

 

 

 

Restaurants – full service

 

7.1

%

 

348

 

2,411

Restaurants – limited service

 

5.3

 

 

400

 

1,290

Early childhood education

 

6.3

 

 

262

 

2,756

Automotive repair and maintenance

 

5.2

 

 

207

 

1,115

Health clubs

 

5.2

 

 

90

 

3,085

Pet care

 

3.5

 

 

183

 

1,732

Lumber and construction materials wholesalers

 

3.5

 

 

167

 

6,865

Movie theaters

 

3.4

 

 

36

 

1,790

Behavioral Health

 

3.3

 

 

79

 

1,441

Family entertainment

 

3.1

 

 

40

 

1,566

Medical and dental

 

2.8

 

 

121

 

1,253

Elementary and secondary schools

 

2.7

 

 

15

 

799

Logistics

 

2.1

 

 

33

 

4,188

Equipment sales and leasing

 

1.8

 

 

49

 

1,260

Wholesale automobile auction

 

1.2

 

 

8

 

428

Metal and mineral merchant wholesalers

 

1.0

 

 

26

 

2,152

All other service (23 industry groups)

 

8.3

 

 

201

 

12,293

Total service

 

65.8

 

 

2,265

 

46,424

Service-Oriented Retail:

 

 

 

 

 

 

 

Furniture

 

3.1

 

 

59

 

3,414

Farm and ranch supply

 

3.0

 

 

41

 

4,136

Recreational vehicle dealers

 

2.1

 

 

30

 

1,246

Used car dealers

 

1.5

 

 

27

 

274

Hunting and fishing

 

1.4

 

 

8

 

631

Home furnishings

 

1.2

 

 

11

 

1,262

New car dealers

 

1.2

 

 

14

 

505

All other retail (11 industry groups)

 

1.7

 

 

50

 

2,207

Total service-oriented retail

 

15.2

 

 

240

 

13,675

Manufacturing:

 

 

 

 

 

 

 

Metal fabrication

 

5.2

 

 

97

 

11,965

Food processing

 

2.7

 

 

26

 

3,087

Plastic and rubber products

 

1.7

 

 

19

 

3,130

Automotive parts and accessories

 

1.6

 

 

22

 

4,051

Furniture manufacturing

 

1.3

 

 

12

 

2,980

Aerospace product and parts

 

1.1

 

 

23

 

1,736

Electronics equipment

 

0.9

 

 

11

 

1,006

All other manufacturing (16 industry groups)

 

4.5

 

 

73

 

8,059

Total manufacturing

 

19.0

 

 

283

 

36,014

Total

 

100.0

%

 

2,788

 

96,113

Diversification by Geography

STORE Capital’s portfolio is also highly diversified by geography, as the Company’s property locations can be found in every state except Hawaii. The following table details the top ten geographical locations of the properties as of September 30, 2021:

 

 

 

 

 

 

 

 

% of

 

 

 

 

Base Rent and

 

Number of

State

 

Interest

 

Properties

Texas

 

11.2

%

 

333

California

 

6.1

 

 

80

Illinois

 

5.9

 

 

177

Georgia

 

5.5

 

 

161

Florida

 

5.2

 

 

155

Ohio

 

5.2

 

 

142

Wisconsin

 

5.1

 

 

77

Arizona

 

4.6

 

 

92

Tennessee

 

3.5

 

 

115

Minnesota

 

3.4

 

 

87

All other (39 states) (1)

 

44.3

 

 

1,369

Total

 

100.0

%

 

2,788

(1)

Includes one property in Ontario, Canada which represents less than 0.1% of base rent and interest.

Contracts and Expirations

The Company focuses on long-term, triple-net leases with built-in lease escalators and uses master leases, where appropriate. As of September 30, 2021, 99% of the Company’s investment portfolio was subject to triple-net leases. Where the Company owns multiple properties leased to a single customer, 94% of this portion of the investment portfolio was subject to master leases. Leases and loans representing approximately 3.5% of base rent and interest will expire in the next five years (before 2026). The following table sets forth the schedule of lease, loan and financing receivable expirations as of September 30, 2021:

 

 

 

 

 

 

 

 

% of

 

 

 

 

Base Rent and

 

Number of

Year of Lease Expiration or Loan Maturity (1)

 

Interest

 

Properties (2)

Remainder of 2021

 

0.4

%

 

17

2022

 

0.3

 

 

10

2023

 

1.1

 

 

10

2024

 

0.6

 

 

22

2025

 

1.1

 

 

24

2026

 

1.4

 

 

51

2027

 

1.8

 

 

53

2028

 

3.1

 

 

67

2029

 

5.5

 

 

168

2030

 

3.7

 

 

147

Thereafter

 

81.0

 

 

2,203

Total

 

100.0

%

 

2,772

(1)

Expiration year of contracts in place as of September 30, 2021, excluding any tenant renewal option periods.

(2)

Excludes 16 properties that were vacant and not subject to a lease as of September 30, 2021.

 

Financial Profiles, Inc.
STORECapital@finprofiles.com
Investors or Media:
Moira Conlon, 310-622-8220
Megan McGrath, 310-622-6248

Source: STORE Capital Corporation

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REIT Profile

Store Capital Corp
Symbol: STOR
CIK: 1538990
Exchange: NYSE
Founded: 2011 (11 years)
Type of REIT: Equity REIT
Listing Status: Public
Market Capitalization: Mid-Cap
REIT Sector: Retail, Industrial

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Overall Score: 8.6 | See trend

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Last updated: 2022-01-14 12:57:03 PST

Last updated: 2022-01-16 - v0.5