American Realty Capital Trust Forecasts 13% Earnings Growth, Announces Dividend Increase, and Reports Operating Results through Second Quarter 2012
Tuesday, July 31, 2012 5:44:00 PM ET
American Realty Capital Trust, Inc. (ARCT ) ("ARCT" or the "Company") announced today estimated earnings growth of 13% between 2012 and 2013 based on updated earnings guidance for 2012 and recently initiated 2013 earnings guidance. In addition, the Company announced a dividend increase and its operating results for the three and six months ended June 30, 2012. Operating highlights are provided below. All per share results are reported on a fully diluted basis.
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ARCT has published and clarified its earlier earnings guidance for the calendar year ending December 31, 2012, and is providing new guidance for 2013. Based on that guidance, the Company is projecting that full year 2012 AFFO will range between $0.755 and $0.775 per share, which is in line with its previous estimates. ARCTs newly published preliminary 2013 AFFO is expected to range between $0.840 and $0.870 per share. This AFFO guidance for 2012 to 2013 suggests estimated earnings growth of 13% for the period.
This guidance assumes $300 million of acquisitions in 2013. Both 2012 and 2013 guidance factor in 100% of physical and economic occupancy, with no lease expirations in 2012 or 2013, but assumes no benefit of interest expense reduction that may result from further mortgage debt recapitalization or upward credit ratings adjustments.
Additionally, the Companys board of directors authorized and the Company declared a 2.14% increase in its current annual dividend. The dividend rate will be increased from $0.700 per share to $0.715 per share per annum. The new annual dividend rate will be payable monthly commencing September 15, 2012 to stockholders of record on September 8, 2012.
"We could not be more pleased with the Companys performance these last three months," said William M. Kahane, chief executive officer of ARCT. "Since listing our shares on the NASDAQ on March 1, 2012, American Realty Capital Trust has outperformed the broader equities market, reaffirmed its earnings guidance, forecasted earnings growth of 13% based on AFFO estimates for 2012 and 2013, announced a dividend increase, confirmed its acquisition program by placing $64 million under contract of property purchases consistent with its investment strategy, and demonstrated continued improvements in its overall balance sheet metrics."
"We have solidified our financial position and have embarked on the next phase of our value creation strategy. Our 2013 earnings forecast calls for us to grow AFFO by approximately 13%, strong estimates for a net lease real estate company with a majority of investment grade corporate tenants subject to long term leases. Our board of directors approved an increase in the annual dividend from $0.700 per share to $0.715 per share, commencing September 15, 2012, and will review the dividend again following third quarter 2012. Moreover, we believe the initiatives executed surrounding our balance sheet during the quarter strongly contributed to our improved credit ratings," Mr. Kahane offered. "For the remainder of the year, we expect to continue to grow the Companys assets and earnings through acquisition opportunities accretive to the dividend. In this regard, our recently announced $64 million of new acquisitions are at an average cap rate of 8.66%."
"The Companys strategy is to produce high, durable dividends with growth grounded in a consistent business model, namely corporate net leases. The real estate portfolio remains 100% occupied with no dark stores, leased to a diversified group of over 60 corporate tenants representing 20 industries for an average term of 13 years, with virtually no leases expiring until 2018," explained Mr. Kahane. "All of our real estate is domestic and our leverage remains modest at approximately 35%. The portfolio generates top line contractual rent growth, while property expenses, as well as capital costs, are largely borne by the tenants, thus providing our investors a predictable income stream."
Second Quarter 2012 Operating Highlights (three months ended June 30, 2012 compared to the three months ended June 30, 2011)
Funds from operations: $30.7 million, or $0.193 per share, up from $6.2 million, or $0.055 per share.
Adjusted funds from operations: $30.4 million, or $0.191 per share, up from $17.2 million, or $0.153 per share.
Revenues: $45.6 million, up from $29.0 million.
Net operating income: $43.7 million, up from $28.1 million.
Net income attributable to stockholders: $4.3 million, or $0.03 per share, up from a loss of $9.5 million, or $0.09 per share.
Total dividends paid to stockholders: $27.7 million, or $0.70 per share on an annualized basis, compared to $16.7 million, or $0.70 per share on an annualized basis.
Mid-Year 2012 Operating Highlights (six months ended June 30, 2012 compared to the six months ended June 30, 2011)
Funds from operations: $61.6 million, or $0.382 per share, up from $11.4 million, or $0.125 per share.
Adjusted funds from operations: $61.5 million, or $0.381 per share up from $29.3 million or $0.316 per share.
Revenues: $91.3 million, up from $49.8 million.
Net operating income: $86.6 million, up from $48.7 million.
Net income attributable to stockholders: $9.9 million, or $0.06 per share, based on adjusted first quarter net income, or $23.8 million loss, or $0.14 per share, as reported, compared to a net loss of $14.0 million, or $0.16 per share.
Total dividends paid to stockholders: $61.4 million, or $0.70 per share on an annualized basis, compared to $27.8 million, or $0.70 per share on an annualized basis.
Second Quarter 2012 Property Portfolio Highlights
Portfolio occupancy: 100% physical and economic occupancy (no lease expirations in 2012 or 2013).
Investment grade tenancy: 74.6% (based on average annual rents), up from 71.1% at March 31, 2012.
Announced $64 million of new acquisitions: announced agreements to acquire $64 million of properties with an average capitalization rate of 8.66%, consistent with our net lease investment strategy, which would increase geographic diversification by one state and two new tenants.
Acquisitions: completed acquisitions/expansions for a total purchase price of $12.9 million (as of June 30, 2012).
Second Quarter 2012 Capital Markets Activity
Completed self-tender: funded the modified "Dutch Auction" tender offer of 20.95 million shares of common stock on April 4, 2012, for cost of $220 million, reducing total shares outstanding to approximately 158.5 million shares.
Prepaid mortgage debt: funded prepayment of $161.2 million of secured mortgage debt on April 17, 2012, resulting in a net annual reduction in interest expense of $4.3 million.
Secured permanent term loan: secured $235 million permanent term loan led by Wells Fargo Securities, LLC on July 2, 2012, replacing $200 million interim term loan funded on April 16, 2012 by Wells Fargo Bank, N.A.
Increased revolving line of credit: increased revolving line of credit led by RBS Citizens Bank, N.A., from $220 million to $330 million on May 4, 2012.
Upgraded by two major national credit rating agencies: upgraded from Ba3 to Ba2 with a "stable" outlook by one major national rating agency on April 5, 2012, and upgraded to a BB with a "stable" outlook on June 8, 2012 by another major rating agency as a result of the strengthening of our balance sheet.
Incorporated into various indices: Companys common stock was included for the first time in over ten different market indices, broadening ARCTs institutional stockholder base.
Funds from operations and adjusted funds from operations
Funds from operations (FFO) for the three months ended June 30, 2012, totaled $30.7 million, or $0.193 per share, compared to FFO as adjusted for the sequential three month period ended March 31, 2012 of $30.9 million, or $0.189 per share, and $6.2 million, or $0.055 per share, for the three months ended June 30, 2011.
Adjusted fund from operations (AFFO) for the three months ended June 30, 2012, totaled $30.4 million, or $0.191 per share compared to AFFO as adjusted for the sequential three month period ended March 31, 2012 of $31.9 million, or $0.190 per share, and $17.2 million, or $0.153 per share, for the three months ended June 30, 2011.
For the six months ended June 30, 2012, and using adjusted first quarter FFO, FFO totaled $61.6 million, or $0.382 per share, compared to $11.4 million, or $0.125 per share, for the six months ended June 30, 2011.
AFFO for the six months ended June 30, 2012, similarly calculated, totaled $61.5 million, or $0.381 per share, compared to $29.3 million, or $0.316 per share, for the six months ended June 30, 2011.
2012 and 2013 earnings guidance
In March, ARCT provided annualized FFO and AFFO guidance for the 12 month period commencing April 1, 2012, in the range of $0.79 to $0.82 per share. The estimates assumed: (i) purchase of $220 million of common shares at the tender offer price of $10.50; (ii) recapitalization of approximately $161.3 million of fixed rate mortgage indebtedness; and, (iii) $100 million of acquisitions funded with available working capital and capacity under the existing revolving credit facility.
ARCT has clarified its guidance to provide data for the calendar year ending December 31, 2012 and is providing new guidance for 2013. The Company is projecting, based on adjusted first and second quarter FFO per share of $0.189 and $0.193, respectively, and adjusted first and second quarter AFFO per share of $0.190 and $0.191, respectively, that full year 2012 FFO and AFFO will range between $0.755 and $0.775 per share, which is in line with its previous estimates.
We are also publishing preliminary 2013 FFO and AFFO guidance. FFO is expected to range between $0.822 and $0.852 per share and AFFO is expected to range between $0.840 and $0.870 per share. This guidance assumes $300 million of acquisitions in 2013.
Both 2012 and 2013 guidance factor in 100% physical and economic occupancy, with no lease expirations in 2012 or 2013, but assume no benefit of interest expense reduction that may result from further mortgage debt recapitalization or upward credit ratings adjustments.
Total revenues were $45.6 million for the three months ended June 30, 2012, compared to revenues for the sequential three month period ended March 31, 2012 of $45.6 million, and increased 57% from $29.0 million for the three months ended June 30, 2011. Rental income increased 57% to $44.1 million for the three months ended June 30, 2012, compared to $28.1 million for the three months ended June 30, 2011.
Total revenues increased 83% to $91.3 million for the six months ended June 30, 2012, compared to $49.8 million for the six months ended June 30, 2011. Rental income increased 81% to $88.2 million for the six months ended June 30, 2012, compared to $48.8 million for the six months ended June 30, 2011. Increases in revenues were driven by the acquisition of approximately $500 million of net leased properties subsequent to June 30, 2011.
Net operating income
Net operating income (NOI) increased to $43.7 million for the three months ended June 30, 2012, compared to NOI for the sequential three month period ended March 31, 2012 of $42.9 million and NOI of $28.1 million for the three months ended June 30, 2011. NOI increased 78% to $86.6 million for the six months ended June 30, 2012, compared to $48.7 million for the six months ended June 30, 2011. Increases in NOI were due to the acquisition of approximately $500 million of net leased properties subsequent to June 30, 2011.
Net income (loss) to stockholders
Net income attributable to stockholders totaled $4.3 million, or $0.03 per share, for the three months ended June 30, 2012. Net income includes the effect of the recognition of $0.4 million of expenses related to our NASDAQ listing and termination of our advisory agreement with our former advisor and $0.3 million of expenses related to the early extinguishment of debt.
For the six months ended June 30, 2012, net income attributable to stockholders totaled $9.9 million, or $0.06 per share, based on adjusted first quarter net income, which excludes charges for the NASDAQ listing and internalization. As reported, net loss attributable to stockholders for the six months ended June 30, 2012 was $23.8 million, or $0.14 per share.
The Company paid $27.7 million for the three months ended June 30, 2012, equal to three $0.05833 per share monthly dividends or, $0.70 per annum. For the six months ended June 30, 2012, dividends totaled $61.4 million, equal to six $0.05833 per share monthly dividends. On July 30, 2012, the Companys board of directors authorized an increase in its annual dividend from $0.70 per share to $0.715 per share, or $0.05958 per month. This equates to a 2.14% annual increase from the current dividend and will be payable commencing on September 15, 2012 to stockholders of record on September 8, 2012. The Companys board of directors plans to review its dividend policy on a quarterly basis, including a review of current and projected earnings, and increase dividends to the Companys stockholders when warranted.
Real Estate Portfolio Grows, Strengthens and Diversifies
As of June 30, 2012, the Company owned 486 freestanding, single-tenant, net leased properties, totaling 15.6 million square feet, located in 43 states plus Puerto Rico. This compares to 368 properties totaling 11.0 million square feet as of June 30, 2011. ARCTs portfolio is comprised of 62 corporate tenants, operating in 20 distinct industries. The weighted average remaining primary lease term of the portfolio is 13.0 years. The portfolio has de minimis lease expirations in the next five years, and 75% of annualized rental income is from tenants with an investment grade rating from a major credit rating agency.
During the six months ended June 30, 2012, ARCT acquired three Tractor Supply retail properties, a Family Dollar retail property and an expansion space to a previously acquired FedEx distribution facility, all 100% occupied, for a total purchase price of $12.9 million at an average capitalization rate of 8.55%. Gross leasable area for these buildings total 82,154 square feet.
On July 12, 2012, ARCT announced that it had entered into agreements to acquire approximately $64 million of new properties, which include the Family Dollar and FedEx described above. These purchases are from multiple sellers, and include a Shaws grocery store, seven Ruby Tuesday restaurants, 16 Family Dollar stores, five Dollar General stores, a Walgreens pharmacy, a FedEx distribution facility expansion, and a Fresenius distribution facility expansion. The portfolio has an average remaining lease term of approximately 12 years and is priced at an average cap rate of 8.66%. The acquisitions will add two new tenants to the ARCT property portfolio, bringing the Companys total number of discrete corporate tenants to 64, while maintaining our currently high investment grade tenancy, and increasing the geographic presence to 44 states. The acquisitions are in line with the Companys strategy to achieve a diversified portfolio with a 60% concentration in the retail sector.
During the three months ended June 30, 2012, cash rents on the 318 "same store" properties held for the full period in both 2011 and 2012 increased 1.5% to $24.7 million, compared to $24.3 million for the three months ended June 30, 2011. The Company, since its inception, has had no lease turnover, "dark stores" or lease renegotiations.
Investment grade tenancy increased
On April 30, 2012, the corporate credit rating of tenant Dollar General Corp. was upgraded by a major national credit rating agency from BB+ to investment grade BBB- with a "stable" outlook. Following this upgrade and recent acquisitions, ARCTs investment grade tenancy increased to 74.6% from 71.1%. Approximately 92.0% of the companys tenants are rated by a major national credit rating agency. (Percentages are based on average annual rents.)
Capital Market Activities Improve Financial Position
Tender offer completed
On April 4, 2012, ARCT completed its tender offer and purchased 20.95 million shares of its common stock at a purchase price of $10.50 per share for an aggregate cost of $220.0 million, excluding fees and expenses. The source of funds was $218.9 million from the RBS facility. This transaction reduced total outstanding shares of common stock from 179.4 million to 158.5 million.
Permanent term loan secured
On July 2, 2012, ARCT secured a $235 million 5-year term loan led by Wells Fargo Securities, LLC, which replaced a $200 million interim term loan previously funded by Wells Fargo Bank, N.A. The facility bears interest at the rate of LIBOR plus 195 to 275 basis points depending on the Companys leverage ratio. The net proceeds from the term loan were used to repay outstanding balances on the Companys $330 million revolving line of credit and for general working capital purposes. The effective interest rate on the term loan was 2.62% at June 30, 2012. The weighted average interest rate on the $912.7 million of outstanding debt at June 30, 2012 was 4.01%.
Revolving line of credit increased
The Company increased its revolving line of credit on its RBS facility from $220 million to $330 million on May 4, 2012. The RBS facility matures on August 17, 2014 and has an accordion feature up to $500.0 million. The RBS Facility bears interest at the rate of (i) LIBOR with respect to Eurodollar rate loans plus a margin of 205 to 285 basis points, depending on our leverage ratio; or (ii) the greater of the federal funds rate plus 1.0% and the interest rate publicly announced by RBS Citizens as its prime rate or "base rate at such time with respect to base rate loans plus a margin of 125 to 175 basis points depending on our leverage ratio. As of June 30, 2012, $201.1 million was outstanding on the RBS Facility, and the effective interest rate was 2.32%.
Two credit rating agency upgrades
The Company was upgraded from a Ba3 to a Ba2 credit rating with a "stable" outlook by Moodys on April 5, 2012. Additionally, on June 8, 2012, ARCT was upgraded by another national credit rating agency by two notches to a BB with a "stable" outlook. The Company believes that these upgrades reflect its strong asset base and the reduction of ARCTs effective leverage and secured debt levels, all of which were accomplished while maintaining a strong fixed charge coverage.
Included in multiple indices
ARCT was added to various indices in the month of June. The Companys inclusion into the Russell Global Index and the Russell 2000? Index became effective after the close of market trading on June 22, 2012. Its inclusion in both the FTSE NAREIT and S&P Indices became effective after the close of market trading on June 18, 2012. These indices included the FTSE NAREIT Composite Index, the FTSE NAREIT Equity REIT Index, the FTSE/EPRA Global Real Estate Index, the S&P Total Market Index, both the S&P Developed and Global BMI (Broad Market Index) and other smaller custom S&P indices, thus broadening ARCTs institutional stockholder base.
Second Quarter 2012 Conference Call Details
ARCT will be hosting its second quarter 2012 conference call and webcast on Wednesday, August 1, 2012 at 11:00 a.m. ET. William M. Kahane, Chief Executive Officer, and Brian D. Jones, Chief Financial Officer, will conduct the call. Conference call details are as follows:
Live Conference Call and Webcast Details* Domestic Dial-In Number: 1-877-883-0383 International Dial-In Number: 1-412-902-6506 Canada Dial-In: 1-877-885-0477 Conference ID: 9905547 Webcast: : www.arctreit.com/q2earningscall *Participants should dial in 10-15 minutes early.
AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
June 30, 2012 December 31,
Real estate investments, at cost:
Land $ 328,448 $ 325,458
Buildings, fixtures and improvements 1,537,166 1,528,962
Acquired intangible lease assets 273,504 271,751
Total real estate investments, at cost 2,139,118 2,126,171
Less: accumulated depreciation and amortization (153,576) (101,576)
Total real estate investments, net 1,985,542 2,024,595
Cash and cash equivalents 12,383 33,329
Investment securities, at fair value 19,207 17,275
Restricted cash 2,731 2,728
Investment in unconsolidated joint venture -- 11,201
Prepaid expenses and other assets 23,020 27,564
Deferred costs, net 13,183 13,883
Total assets $ 2,056,066 $ 2,130,575
LIABILITIES AND EQUITY
Revolving credit facility $ 201,138 $ 10,000
Note payable 200,000 --
Mortgage notes payable 511,543 673,978
Mortgage discount and premium, net 815 679
Below-market lease liabilities, net 7,998 8,150
Derivatives, at fair value 162 8,602
Accounts payable and accrued expenses 11,966 11,706
Deferred rent and other liabilities 6,849 6,619
Dividends payable -- 10,637
Total liabilities 940,471 730,371
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding -- --
Common stock, $0.01 par value; 240,000,000 shares authorized, 158,576,630 and 177,963,413 1,586 1,780
shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively
Additional paid-in capital 1,338,382 1,548,009
Accumulated other comprehensive income (loss) 1,429 (5,053)
Accumulated deficit (241,159) (166,265)
Total stockholders equity 1,100,238 1,378,471
Non-controlling interests 15,357 21,733
Total equity 1,115,595 1,400,204
Total liabilities and equity $ 2,056,066 $ 2,130,575
AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except for per share data)
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
Rental income $ 44,110 $ 28,054 $ 88,190 $ 48,772
Operating expense reimbursements 1,538 922 3,072 1,061
Total revenues 45,648 28,976 91,262 49,833
Acquisition and transaction related 58 10,691 699 17,823
Property operating 1,993 911 4,691 1,124
Fees to affiliate -- 950 4,143 1,550
General and administrative 3,030 562 5,014 732
Equity-based compensation 650 370 1,157 725
Depreciation and amortization 26,154 15,244 52,212 25,187
Listing and internalization 391 -- 17,660 --
Total operating expenses 32,276 28,728 85,576 47,141
Operating income 13,372 248 5,686 2,692
Other income (expenses):
Interest expense (10,078) (8,769) (19,935) (15,515)
Extinguishment of debt (276) (720) (6,902) (720)
Equity in income of unconsolidated joint venture 14 25 36 49
Other income (loss), net 1,452 -- 1,716 (102)
Gain (loss) on derivative instruments (9) 6 (4,055) 148
Loss on disposition of property -- -- -- (44)
Total other expenses, net (8,897) (9,458) (29,140) (16,184)
Net income (loss) 4,475 (9,210) (23,454) (13,492)
Net income attributable to non-controlling interests (203) (307) (347) (545)
Net income (loss) attributable to stockholders 4,272 (9,517) (23,801) (14,037)
Other comprehensive income (loss) items:
Designated derivatives, fair value adjustment 30 (728) 4,551 (26)
Unrealized gain on investment securities, net 663 -- 1,931 --
Total other comprehensive income (loss) 693 (728) 6,482 (26)
Comprehensive income (loss) $ 4,965 $ (10,245) $ (17,319) $ (14,063)
Basic and diluted net income (loss) per share $ 0.03 $ (0.09) $ (0.14) $ (0.16)
attributable to stockholders
The below table reflects the items deducted or added to net income (loss) in our calculation of FFO and AFFO for the three and six months ended June 30, 2012 and 2011 (in thousands). Items are presented net of non-controlling interest portions where applicable.
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012(1) 2011
Net income (loss) attributable to stockholders (in $ 4,272 $ (9,517) $ 9,873 $ (14,037)
accordance with GAAP)
Non-cash mark-to-market adjustments 9 (6) (465) (148)
Expenses related to the listing and internalization 391 -- 391 --
Expenses related to the extinguishment of debt 276 720 276 720
Depreciation and amortization 25,788 15,007 51,566 24,718
Loss on disposition of property -- -- -- 44
Other non-cash losses -- -- -- 102
FFO 30,736 6,204 61,641 11,399
Acquisition and transaction related 58 10,688 699 17,820
Amortization of below-market lease liabilities (76) (76) (152) (152)
Amortization of deferred financing costs 942 1,520 1,890 2,148
Straight-line rent (1,881) (1,483) (3,842) (2,624)
Equity-based compensation 650 370 1,290 725
AFFO $ 30,429 $ 17,223 $ 61,526 $ 29,316
(1) As adjusted, see reconciliation below for the three months ended March 31, 2012. Adjustments related to the Listing and
Internalization as well as to normalize periodic expenses based on the Companys anticipated expense structure
subsequent to the Internalization.
Reconciliation of Net Income, Funds From Operations and Adjusted Funds from Operations
Jan and Mar 2012 Three Adjustments Adjusted Three Adjusted
Feb 2012 Months (1) Three Months Six
Ended Months Ended Months
March Ended June 30, Ended
31, 2012 March 2012 June 30,
31, 2012 2012
Rental income $ 29,386 $ 14,694 $ 44,080 $ 44,080 $ 44,110 $ 88,190
Operating expense reimbursement 1,023 511 1,534 1,534 1,538 3,072
Total revenues 30,409 15,205 45,614 45,614 45,648 91,262
Acquisition and transaction related 261 380 641 (641) - 58 58
Property operating 1,793 896 2,689 2,689 1,993 4,682
Fees to affiliate 4,152 - 4,152 (4,152) - - -
General and administrative 902 1,082 1,984 (599) 1,385 3,030 4,415
Equity based compensation 251 256 507 133 640 650 1,290
Depreciation and amortization 17,344 8,714 26,058 26,058 26,154 52,212
Listing and internalization - 17,269 17,269 (17,269) - 391 391
Total operating expenses 24,703 28,597 53,300 30,772 32,276 63,048
Operating income (loss) 5,706 (13,392) (7,686) 14,842 13,372 28,214
Other income (expense):
Interest expense (6,440) (3,417) (9,857) (9,857) (10,078) (19,935)
Extinguishment of debt - (6,626) (6,626) 6,626 - (276) (276)
Equity in income from unconsolidated joint venture 14 8 22 22 14 36
Other income, net 176 88 264 264 1,452 1,716
Unrealized losses on derivative instruments - (4,046) (4,046) 4,520 474 (9) 465
Total other expense, net (6,250) (13,993) (20,243) (9,097) (8,897) (17,994)
Net loss (544) (27,385) (27,929) 5,745 4,475 10,220
Net income attributable to noncontrolling interests (96) (48) (144) (144) (203) (347)
Net income (loss) attributable to stockholders (640) (27,433) (28,073) 5,601 4,272 9,873
Net income (loss) per share (2) $ 0.034 $ 0.027 $ 0.061
Funds from operations:
Add: Non-cash mark-to-market adjustments - 4,046 4,046 (474) 9 (465)
Add: Listing and internalization expenses - 17,269 17,269 - 391 391
Add: Debt extinguishment expenses - 6,626 6,626 - 276 276
Add: Depreciation and amortization 17,113 8,665 25,778 25,778 25,788 51,566
Funds from operations 16,473 9,173 25,646 30,905 30,736 61,641
Funds from operations per share (2) $ 0.189 $ 0.193 $ 0.382
Adjusted funds from operations:
Add: Acquisition expenses 641 - 641 641 58 699
Less: Amortization of below-market leases (51) (25) (76) (76) (76) (152)
Add: Amortization of deferred financing costs 558 390 948 948 942 1,890
Less: Straight-line rent (1,316) (645) (1,961) (1,961) (1,881) (3,842)
Add: Equity based compensation 251 256 507 640 650 1,290
Adjusted funds from operations $ 16,556 $ 9,149 $ 25,705 $ 31,097 $ 30,429 $ 61,526
Adjusted funds from operations per share (2) $ 0.190 $ 0.191 $ 0.381
(1) Adjustments made for items related to the Listing and Internalization as well as to normalize periodic expenses.
(2) Based on 163,712,513 shares for the adjusted Q1 2012 calculation representing the estimated weighted average shares for the quarter beginning
April 1, 2012 including the effect of the issuer Tender Offer.
Supplemental information on the Companys second quarter 2012 operations can be found in the Companys Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) on Tuesday, July 31, 2012. The report is titled Quarterly Supplemental Information: Second Quarter 2012. Information in this report includes, in addition to other data: 1) Consolidated Balance Sheet and Income Statement Details; 2) Funds from Operations and Adjusted Funds from Operations details; 3) Dividend Summary; 4) Debt Summary and Mortgage Notes Payable; and 5) Portfolio Details.
Funds from Operations and Adjusted Funds from Operations Definitions
ARCT considers FFO and AFFO, which is FFO as adjusted to exclude acquisition-related fees and expenses, amortization of above-market lease assets and liabilities, amortization of deferred financing costs, straight-line rent, non-cash mark-to-market adjustments, amortization of restricted stock, non-cash compensation and non-recurring gains and losses useful indicators of the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs in our peer group. ARCT also adds back to net income which is used in deriving FFO, certain costs associated with our NASDAQ listing, management internalization and mortgage prepayments as these expenses and losses do not properly reflect our operating performance. Accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.
Additionally, the Company believes that AFFO, by excluding acquisition-related fees and expenses, amortization of above-market lease assets and liabilities, amortization of deferred financing costs, straight-line rent, non-cash mark-to-market adjustments, amortization of restricted stock, non-cash compensation and non-recurring gains and losses, provides information consistent with managements analysis of the operating performance of the properties. By providing AFFO, ARCT believes it is presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance. Further, ARCT believes AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies, including exchange-traded and non-traded REITs.
As a result, the Company believes that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.
About the Company
American Realty Capital Trust, Inc., a publicly traded Maryland corporation listed on The NASDAQ Global Select Market under the trading symbol "ARCT", is a leading self-administered real estate company that owns and acquires single tenant free standing commercial real estate properties that are primarily net leased on a long-term basis to investment grade rated and other creditworthy tenants. Additional information about the Company can be found on the Companys website at www.arctreit.com.
The statements in this press release that are not historical facts may be forward-looking statements. These forward looking statements involve substantial risks and uncertainties. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements ARCT makes. Forward-looking statements may include, but are not limited to, statements regarding stockholder liquidity and investment value and returns. The words "anticipates," "believes," "expects," "estimates," "projects," "plans," "intends," "may," "will," "would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that might cause such differences include, but are not limited to: the impact of current and future regulation; the impact of credit rating changes; the effects of competition; the ability to attract, develop and retain executives and other qualified employees; changes in general economic or market conditions; and other factors, many of which are beyond our control, including other factors included in our reports filed with the SEC, particularly in the "Risk Factors" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" sections of ARCTs latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, each as filed with the SEC, as such Risk Factors may be updated from time to time in subsequent reports. ARCT does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE American Realty Capital Trust, Inc.