Market Overview

STORE Capital Announces Second Quarter 2018 Operating Results

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Affirms 2018 Guidance

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 second quarter and six months
ended June 30, 2018.

Highlights

For the quarter ended June 30, 2018:

  • Total revenues of $131.2 million
  • Net income of $62.2 million, or $0.31 per basic and diluted share,
    including an aggregate net gain of $19.9 million on dispositions of
    real estate
  • AFFO of $91.1 million, or $0.46 per basic share and $0.45 per diluted
    share
  • Declared a regular quarterly cash dividend per common share of $0.31
  • Invested $335.1 million in 111 properties at a weighted average
    initial cap rate of 8.0%
  • Raised net proceeds of $187.3 million from the sale of an aggregate of
    approximately 7.1 million common shares under the Company's
    at-the-market equity program

For the six months ended June 30, 2018:

  • Total revenues of $257.0 million
  • Net income of $112.2 million, or $0.57 per basic and diluted share,
    including an aggregate net gain of $29.5 million on dispositions of
    real estate
  • AFFO of $177.0 million, or $0.90 per basic share and $0.89 per diluted
    share
  • Declared regular cash dividends per common share aggregating $0.62
  • Invested $655.5 million in 214 properties at a weighted average
    initial cap rate of 7.9%
  • Raised net proceeds of $286.3 million from the sale of an aggregate of
    approximately 11.3 million common shares under the Company's
    at-the-market equity program
  • Expanded the unsecured revolving credit facility to $600 million and
    the accordion feature to $800 million, raising maximum borrowing
    capacity to $1.4 billion in February 2018
  • Closed inaugural public debt offering, issuing $350 million in
    aggregate principal amount of investment-grade senior unsecured notes
    in March 2018

Management Commentary

"This year marks our fourth consecutive year of realizing investment
activity in excess of $100 million monthly for the first half of the
year," said Christopher Volk, Chief Executive Officer. "But what sets
this quarter apart is our record investment granularity. Our expanded
business development efforts are evident, with more than fifty
transactions averaging just $6.5 million each. This work is foundational
to our future growth, sustained high level of investment diversity, and
the delivery of superior property-level investment returns. We concluded
the quarter with solid portfolio performance, a balance sheet positioned
for sustained growth and a more protected shareholder dividend, all of
which are exciting as we look forward to fulfilling our potential for
the second half of the year."

Financial Results

Total Revenues

Total revenues were $131.2 million for the second quarter of 2018, an
increase of 14.9% from $114.2 million for the second quarter of 2017.

Total revenues for the first half of 2018 were $257.0 million, an
increase of 15.7% from $222.2 million for the first half of 2017. The
increase was driven primarily by the growth in the size of STORE
Capital's real estate investment portfolio, which grew from $5.5 billion
in gross investment amount representing 1,770 property locations and 371
customers at June 30, 2017 to $6.7 billion in gross investment amount
representing 2,084 property locations and 412 customers at June 30, 2018.

Net Income

Net income was $62.2 million, or $0.31 per basic and diluted share, for
the second quarter of 2018, an increase from $61.1 million, or $0.35 per
basic and diluted share, for the second quarter of 2017. Net income for
the second quarter of 2018 includes an aggregate net gain on
dispositions of real estate of $19.9 million as compared to
$25.7 million for the same period in 2017.

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

Net income for the six months ended June 30, 2018 was $112.2 million, or
$0.57 per basic and diluted share, an increase of 21.3% from $92.4
million, or $0.55 per basic and diluted share, for the six months ended
June 30, 2017. Net income for the first half of 2018 includes an
aggregate net gain on dispositions of real estate of $29.5 million as
compared to $29.4 million for the same period in 2017.

Adjusted Funds from Operations (AFFO)

AFFO increased 19.2% to $91.1 million, or $0.46 per basic share and
$0.45 per diluted share, for the second quarter of 2018, compared to
AFFO of $76.4 million, or $0.44 per basic and diluted share, for the
second quarter of 2017.

AFFO for the six months ended June 30, 2018 was $177.0 million, or $0.90
per basic share and $0.89 per diluted share, an increase of 20.9% from
$146.4 million, or $0.88 per basic and diluted share, for the six months
ended June 30, 2017. The increase in AFFO for the three- and six-month
periods between years was primarily driven by additional rental revenues
and interest income generated by the 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 $0.31 for the second quarter ended June 30,
2018. This dividend, totaling $63.6 million, was paid on July 16, 2018
to stockholders of record on June 29, 2018.

Real Estate Portfolio Highlights

Investment Activity

The Company originated $335.1 million of gross investments representing
111 property locations during the second quarter of 2018, adding eight
net new customers. These investments had a weighted average initial cap
rate of 8.0%. Total investment activity for the first half of 2018 was
$655.5 million representing 214 property locations with an initial
weighted average cap rate of 7.9%. 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, with most escalations tied to the consumer price
index and subject to a cap. For acquisitions made during the first six
months of 2018, the weighted average annual lease escalation was 1.8%.

Disposition Activity

During the six months ended June 30, 2018, the Company sold 48
properties and recognized an aggregate net gain on the dispositions of
real estate of $29.5 million; 26 of these 48 properties were sold in the
second quarter for an aggregate net gain of $19.9 million. For the six
months ended June 30, 2018, proceeds from the dispositions of real
estate aggregated $175.7 million as compared to an aggregate original
investment amount of $161.0 million for the properties sold.

Portfolio

At June 30, 2018, STORE Capital's real estate portfolio totaled
$6.7 billion representing 2,084 property locations. Approximately 95% of
the portfolio represents commercial real estate properties subject to
long-term leases, 5% represents mortgage loans and direct financing
receivables primarily on commercial real estate buildings (located on
land the Company owns and leases to its customers) and a nominal amount
represents loans receivable secured by the tenants' other assets. As of
June 30, 2018, the portfolio's annualized base rent and interest (based
on rates in effect on June 30, 2018 for all lease and loan contracts)
totaled $537.7 million as compared to $452.6 million a year ago. The
weighted average non-cancelable remaining term of the leases at June 30,
2018 was approximately 14 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 Company's
portfolio.

Portfolio At A Glance - As of June 30, 2018
Investment property locations                       2,084
States 49
Customers 412
Industries in which customers operate 105
Proportion of portfolio from direct origination ~80%
Contracts with STORE-preferred terms*(1) 93%
Weighted average annual lease escalation(2) 1.8%
Weighted average remaining lease contract term ~14 years
Occupancy(3) 99.7%
Properties not operating but subject to a lease(4) 20
Investment locations subject to a ground lease 20
Investment portfolio subject to NNN leases* 98%
Investment portfolio subject to Master Leases*(5) 89%
Average investment amount/replacement cost (new)(6) 82%
Locations subject to unit-level financial reporting 97%
Median unit fixed charge coverage ratio (FCCR)/4-Wall coverage ratio(7) 2.0x/2.5x
Contracts rated investment grade(8)                       ~75%

* Based on annualized base rent and interest.

(1)

   

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

(2)

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 0.2% of annualized base rent and
interest where there are no further escalations remaining in the
current lease term and there are no extension options.

(3)

The Company defines occupancy as a property being subject to a
lease or loan contract.
As of June 30, 2018, six of the
Company's properties were vacant and not subject to a contract.

(4)

Represents the number of the Company's investment locations
that have been closed by the tenant but remain subject to a lease.

(5)

Percentage of investment portfolio in multiple properties with
a single customer subject to master leases. Approximately 85% of
the investment portfolio involves multiple properties with a
single customer, whether or not subject to a master lease.

(6)

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

(7)

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. The 4-Wall
coverage ratio refers to a unit's FCCR before taking into account
standardized corporate overhead expense. The average unit FCCR and
4-Wall coverage ratios were 2.9x and 3.6x, respectively.

(8)

Represents the percentage of the Company's contracts that have
a STORE Score that is investment grade. 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 June
30, 2018, 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

The Company established a new $500 million "at the market" equity
distribution program, or ATM program, in February 2018, and terminated
its previous $400 million ATM Program established in September 2016.
During the second quarter of 2018, the Company sold an aggregate of
approximately 7.1 million common shares at a weighted average share
price of $26.64 and raised approximately $187.3 million in net proceeds
after the payment of sales agents' commissions and offering expenses.
During the first six months of 2018, the Company sold approximately
11.3 million common shares at a weighted average share price of $25.86
and raised approximately $286.3 million in net proceeds after the
payment of sales agents' commissions and offering expenses.

In March 2018, the Company completed its first public debt offering,
issuing $350 million in aggregate principal amount of its unsecured,
investment-grade rated 4.50% Senior Notes, due March 2028. The net
proceeds from the issuance were primarily used to pay down amounts
outstanding under the Company's credit facility.

In February 2018, the Company expanded its unsecured revolving credit
facility from $500 million to $600 million and the accordion feature
from $300 million to $800 million for a total maximum borrowing capacity
of $1.4 billion. The amended credit facility matures in February 2022
and includes two six-month extension options, subject to certain
conditions.

2018 Guidance

Affirming its 2018 guidance initially presented in November 2017, the
Company currently expects 2018 AFFO per share to be within a range of
$1.78 to $1.84, based on projected 2018 annual real estate acquisition
volume, net of projected property sales, of approximately $900 million.
This AFFO per share guidance equates to anticipated net income,
excluding gains or losses on sales of property, of $0.83 to $0.88 per
share, plus $0.88 to $0.89 per share of expected real estate
depreciation and amortization, plus approximately $0.07 per share
related to such items as straight-line rent and the amortization of
stock-based compensation and deferred financing costs. 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. The
midpoint of our AFFO guidance is based on a weighted average cap rate on
new acquisitions of 7.75% and target leverage in the range of 5½ to 6
times run-rate net debt to EBITDA.

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 second quarter ended June 30, 2018 operating
results and answer questions.

  • Live conference call: 855-656-0920 (domestic) or 412-542-4168
    (international)
  • Conference call replay available through August 16, 2018: 877-344-7529
    (domestic) or 412-317-0088 (international)
  • Replay access code: 10122326
  • Live and archived webcast: http://ir.storecapital.com/webcasts

About STORE Capital

STORE Capital Corporation is an internally managed net-lease real estate
investment trust, or REIT, that is the 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
2,084 property locations, substantially all of which are profit centers,
in 49 states. 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. 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 non-cash
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 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 non-cash 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 may cause
short-term fluctuations in net income but have no impact on long-term
operating performance. The Company believes that these costs are not an
ongoing cost of the portfolio in place at the end of each reporting
period and, for these reasons, the portion expensed is added back when
computing AFFO. 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

June 30,

Six months ended

June 30,

2018       2017 2018       2017
(unaudited) (unaudited)
Revenues:
Rental revenues $ 124,413 $ 108,149 $ 244,313 $ 210,054

Interest income on loans and direct financing receivables

6,279 5,447 11,800 11,227
Other income   513   612   934   898
Total revenues   131,205   114,208   257,047   222,179
 
Expenses:
Interest 31,925 30,919 61,264 60,559
Property costs 741 1,131 2,082 1,937
General and administrative 10,852 9,289 21,703 19,532
Depreciation and amortization 44,216 37,396 86,526 72,611
Provisions for impairment   1,038     2,608   4,270
Total expenses   88,772   78,735   174,183   158,909
 
Income from operations before income taxes 42,433 35,473 82,864 63,270
Income tax expense   158   147   207   253
Income before gain on dispositions of real estate 42,275 35,326 82,657 63,017
Gain on dispositions of real estate, net of tax   19,926   25,734   29,504   29,433
Net income $ 62,201 $ 61,060 $ 112,161 $ 92,450
 

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

$ 0.31 $ 0.35 $ 0.57 $ 0.55
 
 

Weighted average common shares outstanding:

Basic

  199,514,368   172,661,739   197,113,915   166,768,835

 

Diluted

  200,142,303   172,661,739   197,531,008   166,768,835
 
Dividends declared per common share $ 0.31 $ 0.29 $ 0.62 $ 0.58
 
 
                       

STORE Capital Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 
June 30,

2018

December 31,

2017

(unaudited) (audited)
Assets
Investments:
Real estate investments:
Land and improvements $ 1,997,439 $ 1,898,342
Buildings and improvements 4,304,221 3,958,003
Intangible lease assets   85,148     87,402  
Total real estate investments 6,386,808 5,943,747
Less accumulated depreciation and amortization   (497,476 )   (426,931 )
5,889,332 5,516,816
Real estate investments held for sale, net 16,741
Loans and direct financing receivables   321,694     271,453  
Net investments 6,211,026 5,805,010
Cash and cash equivalents 43,622 42,937
Other assets, net   67,092     51,830  
Total assets $ 6,321,740   $ 5,899,777  
 
Liabilities and stockholders' equity
Liabilities:
Credit facility $ 115,000 $ 290,000
Unsecured notes and term loans payable, net 916,023 570,595
Non-recourse debt obligations of consolidated special purpose
entities, net
1,686,129 1,736,306
Dividends payable 63,614 60,068
Accrued expenses, deferred revenue and other liabilities   89,926     71,866  
Total liabilities   2,870,692     2,728,835  
 
Stockholders' equity:

Common stock, $0.01 par value per share, 375,000,000 shares
authorized, 205,205,239 and 193,766,854 shares issued and
outstanding, respectively

2,052 1,938
Capital in excess of par value 3,668,964 3,381,090
Distributions in excess of retained earnings (228,487 ) (214,845 )
Accumulated other comprehensive income   8,519     2,759  
Total stockholders' equity   3,451,048     3,170,942  
Total liabilities and stockholders' equity $ 6,321,740   $ 5,899,777  
 
 
           

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

June 30,

Six months ended

June 30,

2018       2017 2018       2017
(unaudited) (unaudited)
 
Net income $ 62,201 $ 61,060 $ 112,161 $ 92,450
Depreciation and amortization of real estate assets 43,967 37,227 86,035 72,301
Provision for impairment of real estate 4,270
Gain on dispositions of real estate, net of tax   (19,926 )   (25,734 )   (29,504 )   (29,433 )
Funds from Operations   86,242     72,553     168,692     139,588  
 
Adjustments:
Straight-line rental revenue, net:
Fixed rent escalations accrued (1,694 ) (1,183 ) (3,523 ) (3,247 )
Construction period rent deferrals 1,405 561 2,122 1,470
Amortization of:
Equity-based compensation 2,200 1,994 3,666 3,868

Deferred financing costs and other noncash interest expense

2,023 2,081 4,126 4,090
Lease-related intangibles and costs 571 673 1,211 1,177
Provision for loan losses 1,038 2,608
Capitalized interest (657 ) (251 ) (1,054 ) (560 )
Gain on extinguishment of debt           (814 )    
Adjusted Funds from Operations $ 91,128   $ 76,428   $ 177,034   $ 146,386  
 
Dividends declared to common stockholders $ 63,614   $ 55,105   $ 125,007   $ 104,805  
 
Net income per share of common stock: (1)
Basic and Diluted $ 0.31   $ 0.35   $ 0.57   $ 0.55  
FFO per share of common stock: (1)
Basic and Diluted $ 0.43   $ 0.42   $ 0.85   $ 0.84  
AFFO per share of common stock: (1)
Basic $ 0.46   $ 0.44   $ 0.90   $ 0.88  
Diluted $ 0.45   $ 0.44   $ 0.89   $ 0.88  
 

(1)

    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
June
30, 2018

Real Estate Portfolio Information

As of June 30, 2018, STORE Capital's total investment in real estate and
loans approximated $6.7 billion, representing investments in 2,084
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 June 30, 2018, for all leases,
loans and direct financing receivables in place as of that date.

Diversification by Customer

STORE Capital has a diverse customer base. At June 30, 2018, the
Company's 2,084 property locations were operated by over 400 customers.
The largest single customer represented 3.3% of annualized base rent and
interest and the top ten customers totaled 19.2% of annualized base rent
and interest. The following table identifies STORE Capital's ten largest
customers as of June 30, 2018:

          Customer                

% of

Annualized

Base Rent and

Interest

         

Number of

Properties

AVF Parent, LLC (Art Van Furniture) 3.3 % 24
Bass Pro Group, LLC (Cabela's) 2.4 9
Mills Fleet Farm Group, LLC 2.3 8
American Multi-Cinema, Inc. (Starplex/Carmike/Showplex/AMC) 2.0 14
Cadence Education, Inc. (Early childhood/elementary education) 1.8 32
Zips Holdings, LLC 1.7 41
US LBM Holdings, LLC (Building materials distribution) 1.6 37
Dufresne Spencer Group Holdings, LLC (Ashley Furniture HomeStore) 1.5 16
CWGS Group, LLC (Camping World/Gander Outdoors) 1.4 16
National Veterinary Associates, Inc. 1.2 43
All other (402 customers) 80.8   1,844
Total 100.0 % 2,084
 

STORE Capital Corporation
Investment Portfolio
June
30, 2018

Diversification by Concept

STORE Capital's customers operate their businesses under a wide range of
brand names or business concepts. Of the over 550 concepts represented
in the Company's investment portfolio as of June 30, 2018, the largest
single concept represented 2.4% of annualized base rent and interest and
the top ten concepts totaled 17.0% of annualized base rent and interest.
The following table identifies the top ten customer business concepts as
of June 30, 2018:

          Customer Business Concept                

% of

Annualized

Base Rent and

Interest

         

Number of

Properties

Ashley Furniture HomeStore 2.4 % 25
Art Van Furniture 2.4 17
Fleet Farm 2.4 8
Cabela's 2.3 8
Zips Car Wash 1.7 41
Popeyes Louisiana Kitchen 1.3 63
Applebee's 1.2 37
Stratford School 1.1 4
America's Auto Auction 1.1 6
O'Charley's 1.1 30
All other (545 concepts) 83.0   1,845
Total 100.0 % 2,084
 

STORE Capital Corporation
Investment Portfolio
June
30, 2018

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 75 industry groups as of
June 30, 2018:

          Customer Industry Group          

% of

Annualized

Base Rent and

Interest

         

Number of

Properties

         

Building

Square

Footage

(in thousands)

Service:
Restaurants – full service 12.8 % 410 2,743
Restaurants – limited service 6.8 411 1,084
Early childhood education 6.0 176 1,912
Movie theaters 5.6 39 1,916
Health clubs 5.5 71 1,985
Family entertainment 4.1 34 1,082
Automotive repair and maintenance 3.8 121 568
Pet care 3.5 139 1,382
Medical and dental 2.2 56 552
Lumber and construction materials wholesalers 1.9 53 2,541
Career education 1.8 7 584
Behavioral health 1.7 32 462
Elementary and secondary schools 1.4 6 222
Equipment sales and leasing 1.3 18 570
Wholesale automobile auction 1.1 6 224
Consumer goods rental 1.0 44 593
All other service (20 industry groups) 5.6   92 4,438
Total service 66.1   1,715 22,858
Retail:
Furniture 6.4 55 3,316
Farm and ranch supply 3.3 24 2,048
Hunting and fishing 3.0 17 1,292
Recreational vehicle dealers 1.0 10 259
Home furnishings 0.9 5 691
Used car dealers 0.7 17 212
Electronics and appliances 0.7 7 331
All other retail (10 industry groups) 2.0   47 1,857
Total retail 18.0   182 10,006
Manufacturing:
Metal fabrication 4.0 54 5,922
Plastic and rubber products 2.9 32 3,997
Furniture manufacturing 1.0 4 1,385
Aerospace product and parts 0.9 10 952
Medical and pharmaceutical 0.8 6 431
Electronics equipment 0.7 6 664
Paper and packaging 0.7 6 969
All other manufacturing (15 industry groups) 4.9   69 6,163
Total manufacturing 15.9   187 20,483
Total 100.0 % 2,084 53,347
 

STORE Capital Corporation
Investment Portfolio
June
30, 2018

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
Delaware. The following table details the top ten geographical locations
of the properties as of June 30, 2018:

          State                

% of

Annualized

Base Rent and

Interest

         

Number of

Properties

Texas 12.3 % 222
Illinois 6.3 127
Florida 6.1 128
Ohio 6.0 128
Georgia 5.7 133
Tennessee 4.4 101
Michigan 4.2 68
Pennsylvania 4.0 65
Arizona 3.7 71
California 3.7 26
All other (39 states) (1) 43.6   1,015
Total 100.0 % 2,084
 

(1)

    Includes one property in Ontario, Canada, which represents 0.4% of
annualized base rent and interest.
 

STORE Capital Corporation
Investment Portfolio
June
30, 2018

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 June 30,
2018, 98% of the Company's investment portfolio was subject to a
triple-net lease. Where the Company owns multiple properties leased to a
single customer, 89% of this portion of the investment portfolio was
subject to master leases. Leases and loans representing approximately
12.6% of the annualized base rent and interest will expire in the next
ten years (before 2028). The following table sets forth the schedule of
lease, loan and direct financing receivable expirations as of June 30,
2018:

          Year of Lease Expiration or Loan Maturity (1)                

% of

Annualized

Base Rent and

Interest

         

Number of

Properties (2)

    Remainder of 2018 0.4 % 6
2019 0.7 14
2020 0.5 11
2021 0.7 7
2022 0.5 7
2023 1.2 28
2024 0.7 15
2025 1.7 23
2026 2.2 53
2027 4.0 64
Thereafter 87.4   1,850
Total 100.0 % 2,078
 
(1)     Expiration year of contracts in place as of June 30, 2018, excluding
any tenant renewal option periods.
(2) Excludes six properties which were vacant and not subject to a lease
as of June 30, 2018.
 

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