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Spirit Realty (SRC) Issues Preliminary Results for Q1 Earnings

Zacks Equity Research
·4-min read

Spirit Realty Capital, Inc. SRC recently issued its preliminary financial and operating results for the first quarter of 2020. The company estimated funds from operations (FFO) per share of 71-73 cents compared with the year-ago quarter’s 90 cents. Adjusted FFO per share is expected at 77-79 cents compared with the 86 cents reported in the year-earlier period. The Zacks Consensus Estimate is pegged at 78 cents.

Moreover, this net-lease REIT, which mainly invests in single-tenant, operationally essential real estate assets, operated a portfolio of 1,772 owned properties at 99.4% of occupancy, ending the quarter with 11 vacant properties.

Lost rent for the quarter was 0.6% and property cost leakage was 2.4%. In its conference call, management noted that leakage was high in the quarter because of property tax accruals for tenants from whom, the company believes, payment is doubtful.

With regard to its portfolio, the company noted that it made investments of $213.4 million in the first quarter in acquisitions and revenue-producing capital expenditures with a weighted average cash yield of 6.5%. Meanwhile, it reaped $15.7 million in gross proceeds from sale of seven properties, of which three were vacant.

Additionally, the issuance of 0.4 million shares of common stock helped generate gross proceeds of $17.9 million and net proceeds of $17.6 million, under its At-the-Market program. The company also estimated adjusted debt to annualized adjusted EBITDAre of 5.2x–5.4x.

In response to the pandemic, the company took measures to strengthen its liquidity position, raising additional 300 million of term-loan proceeds. As such, the company’s corporate liquidity amounted to $831.3 million as of Apr 10, 2020. This consisted of availability under its 2019 credit facility as well as cash and cash equivalents. With this liquidity position, the company remains poised to repay debt that matures in 2021. However, the company did not provide any guidance in light of the present circumstances.

The coronavirus pandemic has wreaked havoc and the number of positive cases in the United States and several countries is skyrocketing. Several industries have been hit hard and the overall impact on the economy is uncertain. As such the rent-paying capability of tenants is likely to be hurt and demand of real estate space is expected to be tempered. Nevertheless, a solid liquidity position can help the companies sail through the current challenging times.

Shares of this Zacks Rank #3 (Hold) company have declined 26.4% compared with the industry’s fall of 10.5% over the past 12 months.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Stocks to Consider

Plymouth Industrial REIT’s PLYM Zacks Consensus Estimate for 2020 FFO per share moved up about 2% to $2.08 over the past two months. The stock currently holds a Zacks Rank of 1.

SBA Communications Corporation’s SBAC FFO per share estimate of $9.37 for the ongoing year indicates an increase of 10.4% year over year. The stock currently carries a Zacks Rank #2 (Buy).

National Retail Properties’ NNN FFO per share estimate of $2.84 for the current year suggests growth of 2.9% year over year. The stock currently carries a Zacks Rank #2.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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