VEREIT, Inc. (VER) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016
Net Loss of $200.8 million and Net Loss per diluted share of $0.29
Achieved $0.78 AFFO per diluted share, within the 2016 guidance range of $0.75 - $0.78
Completed $1.14 billion in dispositions and $100.2 million of acquisitions
Decreased Debt from $8.1 billion to $6.4 billion and Net Debt from $8.0 billion to $6.1 billion
Reduced Net Debt to Normalized EBITDA from 7.0x to 5.7x since the beginning of 2016
Issued $1.0 billion of senior notes and completed $702.5 million common stock offering; prepaid the Company’s senior notes due February 2017
Credit rating updates:
S&P raised its corporate credit rating of VEREIT to 'BB+' and the rating on corporate debt to 'BBB-'
Fitch issued VEREIT a first time investment grade rating of ‘BBB-‘
Moody’s affirmed the ‘Ba1’ credit rating of VEREIT and revised the outlook to ‘positive’
Cole Capital® raised $487.2 million of new equity capital
The following information was filed by VEREIT, Inc. on Thursday, February 23, 2017 as an 8K 2.02 statement, which is a press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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- ver_10k_2017-02-23_41_54Financial - ExpenseIf more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and tenant improvements
- ver_10k_2017-02-23_129_117Financial - Expensevs 2014 The decrease in depreciation and amortization expense during the year ended December 31, 2015 was primarily related to a decrease in the amortization of the management and advisory contracts the Management Contracts with the Managed REITs of $42.6 million due to an impairment of $86.4 million recorded in the fourth quarter of 2014.
- ver_10k_2017-02-23_129_118Financial - ExpenseAdditionally, real estate depreciation and amortization expense decreased $27.0 million, primarily due to dispositions of 228 properties in 2015 and 110 properties in 2014.
- ver_10k_2017-02-23_8_17Financial - ExpenseThese include: overall economic activity and employment growth, interest rate levels, the cost and availability of credit and the impact of tax and regulatory policies.
- ver_10k_2017-02-23_148_133Financial - IncomeThe decrease also related to the decrease in interest income from investment securities, largely resulting from the sale of 15 CMBS for $158.0 million during the third quarter of 2014, as well as a decrease in interest income from mortgage notes receivable, two of which were repaid in the fourth quarter of 2014.
- ver_10k_2017-02-23_302_276Financial - Shares / EquityHowever, net leases that require the tenant to pay its allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, may reduce our exposure to increases in costs and operating expenses resulting from inflation.
- ver_10k_2017-02-23_111_95MA - OtherThe decrease in acquisition related expenses of $4.9 million during the year ended December 31, 2016 was due to a decrease in costs incurred for deals that were not consummated and fewer properties acquired in 2016.
- ver_10k_2017-02-23_105_89MA - OtherThe net decrease of $34.9 million for the year ended December 31, 2015 was primarily due to decreases in acquisition fee revenue as there were less funds raised by the Managed REITs offerings that could be deployed into real estate acquisitions on their behalf.
- ver_10k_2017-02-23_296_255Financial - Cash FlowCash flows provided by operating activities during the year ended December 31, 2014 were mainly due to adjusted net income of $806.6 million net loss of $1.0 billion adjusted for non-cash items including the issuance of OP Units, depreciation and amortization, gain on sale of properties, equity-based compensation, gain on derivative instruments and gain on the early extinguishment of debt totaling $1.8 billion, in the aggregate, offset by a decrease in accounts payable and accrued expenses of $16.3 million, a decrease in prepaid and other assets of $97.1 million and a decrease in deferred rent, derivative and other liabilities of $99.9 million.
- ver_10k_2017-02-23_15_291Financial - IncomeWe use a combined income and market approach in evaluations for potential impairment, which requires management to make key assumptions related to revenue growth rate, cash flow assumptions, discount rate and selection of comparable companies.
- ver_10k_2017-02-23_59_323Financial - Shares / EquityRegistered a continuous offering program allowing for the issuance of up to $750.0 million in shares of common stock over three years.
- ver_10k_2017-02-23_106_358MA - Othervs 2015 The increase of $9.5 million for the year ended December 31, 2016 was primarily due to an increase in the average assets under management, excluding assets owned by CCIT, as CCIT merged with Select Income REIT on January 29, 2015, from $6.3 billion for the year ended December 31, 2015 to $7.0 billion for the year ended December 31, 2016 and an increase in reimbursement revenue of $3.7 million for the year ended December 31, 2016.
- ver_10k_2017-02-23_293_249Financial - Cash FlowThe increase in cash flow primarily related to a decrease in cash paid for real estate assets of $3.5 billion and a decrease in cash paid for real estate businesses of $756.2 million, both as a result of a decrease in acquisition activity as compared to the same period in the prior year.
- ver_10k_2017-02-23_294_252Financial - ExpenseThe increase was primarily related to a decrease in proceeds from the issuance of corporate bonds of $2.5 billion and an increase in net payments on the Credit Facility of $1.6 billion, combined with a decrease in the proceeds from the issuance of common stock, net of offering costs, of $1.6 billion, all of which related to the fact that the Company raised more capital to fund large acquisitions in the prior period.
- ver_10k_2017-02-23_104_86Revenue - ProductIn addition, disposition fee revenue decreased as the Company received $4.4 million of such fees relating to the Cole Corporate Income Trust, Inc. disposition in 2015.
- ver_10k_2017-02-23_159_143Revenue - GeographyThe decrease in loss on derivative instruments, net for the year ended December 31, 2015 primarily related to the fact that we recorded a loss of $18.8 million for the year ended December 31, 2014 relating to the Series D embedded derivative, which was settled in connection with the redemption of the Series D Preferred Stock in the third quarter of 2014.
- ver_10k_2017-02-23_298_258Other - OtherNet cash provided by financing activities was $2.4 billion during the year ended December 31, 2014 related to proceeds from the issuance of corporate bonds of $2.5 billion, proceeds from mortgage notes payable of $1.0 billion and proceeds from the issuance of common stock of $1.6 billion.
- ver_10k_2017-02-23_148_132Financial - Incomevs 2014 The decrease in other income, net during the year ended December 31, 2015 was primarily a result of a litigation settlement with RCS Capital Corporation in 2014, from which the Company received $60.0 million in connection with the unconsummated sale of Cole Capital as discussed in Note 18 Related Party Transactions and Arrangements to our consolidated financial statements.
- ver_10k_2017-02-23_42_309Financial - ExpenseIntangible lease assets and liabilities can be significantly affected by estimates, including market rent, lease term including renewal options at rental rates below estimated market rental rates, carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions and
- ver_10k_2017-02-23_115_100Financial - Expensevs 2014 The decrease of $166.0 million during the year ended December 31, 2015 was primarily related to costs incurred relating to the Cole Merger and the ARCT IV Merger, including a $78.2 million subordinated distribution fee to an affiliate of the Former Manager upon the consummation of the ARCT IV Merger that was settled with 6.7 million OP Units to the affiliate of the Former Manager during the year ended December 31, 2014.
- ver_10k_2017-02-23_41_53Financial - ExpenseThe value allocated to land as opposed to buildings, fixtures and tenant improvements affects the amount of depreciation expense we record.
- ver_10k_2017-02-23_145_130Financial - Incomevs 2015 Other income, net remained relatively constant, decreasing $0.4 million during the year ended December 31, 2016 as compared to the same period in 2015.
- ver_10k_2017-02-23_35_46Financial - Shares / EquityThe difference between consolidating the VIE and accounting for it using the equity method could be material to the Companys consolidated financial statements.
- ver_10k_2017-02-23_292_246Other - OtherDuring the year ended December 31, 2015, net cash provided by operating activities increased $364.1 million to $867.0 million from $502.9 million.
- ver_10k_2017-02-23_245_173Revenue - ProductThe Company intends to use the proceeds from any sale of shares for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness.
- ver_10k_2017-02-23_293_248Other - OtherNet cash provided by investing activities for the year ended December 31, 2015 increased $3.5 billion to $932.6 million from net cash used in investing activities in 2014 of $2.6 billion.
- ver_10k_2017-02-23_294_251Other - OtherNet cash used in financing activities increased $4.5 billion to $2.1 billion during the year ended December 31, 2015 from net cash provided by financing activities of $2.4 billion.
- ver_10k_2017-02-23_30_41Financial - ExpenseThe risks and uncertainties involved in applying the principles related to program development costs include, but are not limited to, the following:
- ver_10k_2017-02-23_166_150Other - OtherManagement uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below.
- ver_10k_2017-02-23_30_40Financial - ExpenseAdditional reserves are generally recorded if actual proceeds raised from the offerings and corresponding program development costs incurred differ from managements assumptions.
- ver_10k_2017-02-23_170_159Financial - ExpenseManagement believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time.
- ver_10k_2017-02-23_140_122Financial - Expensevs 2014 The decrease in interest expense during the year ended December 31, 2015 was primarily a result of a decrease in amortization expense in relation to a 2014 cumulative adjustment of amortization for premium on a loan in default of $16.7 million.
- ver_10k_2017-02-23_93_350Financial - Incomevs 2014 The increase in rental income during the year ended December 31, 2015 was primarily due to the acquisition of 1,107 properties in 2014, including the consummation of the Cole Merger in the first quarter of 2014 and the acquisition of over 500 Red Lobster
- ver_10k_2017-02-23_290_244Financial - ExpenseThe decrease was primarily due to the 2016 common stock offering offering resulting in net proceeds, after underwriting discounts and offering costs, of $702.5 million and an increase in proceeds from debt, net of repayments, of $305.6 million, which were partially offset by an increase in distributions paid of $345.0 million.
- ver_10k_2017-02-23_75_336Other - OtherSee the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable U.S. GAAP measure.
- ver_10k_2017-02-23_40_49Other - OtherTangible assets consist of land, buildings, fixtures and tenant improvements.
- ver_10k_2017-02-23_115_103Financial - ExpenseThese expenses were offset by $11.4 million of insurance proceeds, $10.5 of which related to expenses for litigation arising from the results of the Audit Committee Investigation.
- ver_10k_2017-02-23_94_351MA - OtherCole Capitals results of operations are primarily impacted by capital raised on behalf of the Cole REITs in offerings as well as the timing and extent of real estate asset acquisitions, dispositions, assets under management and reimbursements, which are driven by the Cole REITs capital raised, cash flows provided by operations and available proceeds from debt financing.
- ver_10k_2017-02-23_78_70Other - OtherEffective interest rates ranged from
- ver_10k_2017-02-23_119_105Financial - ExpenseOperating expense reimbursement revenue represents reimbursements for such costs that are reimbursable by the tenants per their respective leases.
- ver_10k_2017-02-23_293_250Revenue - ProductThe increase was partially offset by a decrease in cash proceeds from the disposition of real estate assets of $589.7 million, driven primarily by the sale of the multi-tenant portfolio in 2014.
- ver_10k_2017-02-23_245_172Financial - Shares / EquityOn September 19, 2016, the Company registered a continuous equity offering program the Program pursuant to which the Company can offer and sell, from time to time through September 19, 2019 in at-the-market offerings or certain other transactions, shares of common stock with an aggregate gross sales price of up to $750.0 million, through its sales agents.
- ver_10k_2017-02-23_300_268Financial - IncomeHowever, the Operating Partnership may be subject to certain state and local taxes on its income and property.
- ver_10k_2017-02-23_240_165Other - OtherIn May 2016, VEREIT, Inc. and the OP filed a shelf registration statement with the SEC, which is effective for a term of three years.
- ver_10k_2017-02-23_23_297Other - OtherThe estimated useful lives of our depreciable assets affects the amount of depreciation and amortization recognized on our investments.
- ver_10k_2017-02-23_289_240Other - OtherNet cash provided by investing activities for the year ended December 31, 2016 decreased $42.4 million to $890.2 million from $932.6 million during the same period in 2015.
- ver_10k_2017-02-23_290_243Other - OtherNet cash used in financing activities of $1.5 billion decreased $643.8 million during the year ended December 31, 2016 from $2.1 billion during the same period in 2015.
- ver_10k_2017-02-23_45_58Other - OtherThe tax provision or benefit related to significant or unusual items is recognized in the quarter in which those items occur.
- ver_10k_2017-02-23_288_237Other - OtherDuring the year ended December 31, 2016, net cash provided by operating activities decreased $66.5 million to $800.5 million from $867.0 million during the same period in 2015.
- ver_10k_2017-02-23_248_179Other - OtherDuring the year ended December 31, 2016, the Company repaid all of the outstanding borrowings under its revolving credit facility.
- ver_10k_2017-02-23_155_388Other - Othervs 2014 The increase of $9.2 million during the year ended December 31, 2015 as compared to 2014 is primarily due to a gain of $6.7 million related to the disposition of our interest in one consolidated joint venture as discussed above.
- ver_10k_2017-02-23_7_15Other - OtherDuring 2016, the U.S. real gross domestic product increased 1.6% to $16.66 trillion, the unemployment rate decreased 0.3 percentage points to 4.7%, and Core CPI, a measure of inflation which removes food & energy prices and is seasonally adjusted, increased 2.2%, as compared to the same period a year earlier.
- ver_10k_2017-02-23_250_187Other - OtherBase Rate is defined as the highest of the prime rate, the federal funds rate plus 0.50% or a floating rate based on one month LIBOR, determined on a daily basis.
- ver_10k_2017-02-23_134_374Financial - ExpenseOther expense income and tax benefit provision:
- ver_10k_2017-02-23_284_236Financial - DebtWe used the effective interest rates fixed under our swap agreements to calculate the debt payment obligations in future periods.
- ver_10k_2017-02-23_152_136Financial - Shares / Equityvs 2015 Equity in income loss and gain on disposition of unconsolidated entities increased $0.7 million during the year ended December 31, 2016 as compared to 2015.
- ver_10k_2017-02-23_112_97MA - OtherThe decrease in acquisition related expenses during the year ended December 31, 2015 was primarily due to a significant decrease in acquisition activity as compared to the same period in 2014.
- ver_10k_2017-02-23_2_6Other - OtherFor a discussion of such risk factors, see the section in this report entitled Risk Factors.
- ver_10k_2017-02-23_276_234Financial - Shares / EquityAs of December 31, 2016, there were approximately 42.8 million shares of Series F Preferred Stock and approximately 42.8 million corresponding Series F Preferred Units that were issued to the General Partner and 86,874 Limited Partner Series F Preferred Units that were issued and outstanding.
- ver_10k_2017-02-23_246_176Financial - DebtWe expect to continue to explore opportunities to sell additional properties as we pay off outstanding debt and reduce our borrowings under the Credit Facility, which will reduce our overall leverage and provide us further financial flexibility.
- ver_10k_2017-02-23_40_50Other - OtherIntangible assets consist of above- and below- market lease values and the value of in-place leases.
- ver_10k_2017-02-23_143_126Financial - DebtThese losses were partially offset by a gain on forgiveness of debt of $19.1 million related to a property foreclosed upon.
- ver_10k_2017-02-23_17_29Other - OtherThe Company evaluates intangible assets for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable.
- ver_10k_2017-02-23_130_371Revenue - Productvs 2015 The decrease in impairments of $1.3 million during the year ended December 31, 2016 was due to a decrease in the impairment of the intangible assets and goodwill in the Cole Capital segment of $92.4 million, as discussed in Note 10 Fair Value Measures to our consolidated financial statements, offset by an increase in impairment charges recorded related to the REI segment of $91.1 million primarily due to management identifying certain properties for potential sale as part of its portfolio management strategy to reduce exposure to office properties, as well as the Ovation Bankruptcy.
- ver_10k_2017-02-23_21_296Other - OtherFair Value Measures for discussion regarding our sensitivity analysis performed around these assumptions.
- ver_10k_2017-02-23_16_292Other - OtherFair Value Measures for discussion regarding our sensitivity analysis performed around these assumptions.
- ver_10k_2017-02-23_65_327Other - OtherEconomic occupancy rate equals the sum of square feet leased including month-to-month divided by total square feet.
- ver_10k_2017-02-23_299_261Financial - IncomeAs a REIT, except as discussed below, the General Partner generally is not subject to federal income tax on taxable income that it distributes to its stockholders so long as it distributes at least 90% of its annual taxable income computed without regard to the deduction for dividends paid and excluding net capital gains.
- ver_10k_2017-02-23_129_119Other - OtherThe Company also recorded $100.5 million of impairment charges on real estate investments from continuing operations during the year ended December 31, 2014, of which impairment charges totaling $96.7 million arose during the fourth quarter of 2014.
- ver_10k_2017-02-23_66_68Other - OtherThe ratings may reflect those assigned by Standard & Poors Rating Services or Moodys Investor Service, Inc. to the lease guarantor or the parent company, as applicable.
- ver_10k_2017-02-23_92_75Revenue - Productvs 2015 Rental revenue decreased $111.9 million during the year ended December 31, 2016, of which $105.6 million was due to the disposition of 529 consolidated properties subsequent to January 1, 2015.
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- Form Type: Annual
- Number of times amended: 0
- Accession Number: 0001507385-17-000019
- Submitted to the SEC: Thursday, February 23, 2017
- Accepted by the SEC: Wednesday, February 22, 2017
- Period Ending: December 2016