Spirit Realty Capital, Inc. (SRC)

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Spirit Realty Capital, Inc. (SRC)

Q4 2012 Earnings Call

February 27, 2013, 05:00 pm ET


Michael Bender - SVP & CFO

Tom Nolan - Chairman & CEO

Pete Mavoides - President & COO


Rich Moore - RBC Capital Markets

Alexander Goldfarb - Sandler O’Neill

Joshua Barber - Stifel Nicolaus



Good afternoon ladies and gentlemen and welcome to Spirit Realty Capital Fourth Quarter and Full-Year 2012 Results Conference Call. At this time, all lines have been placed on listen-only mode. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions) This conference call is being recorded and a replay of the call will be available beginning at 06:00 PM Eastern Time today for one week. The dial-in details for the replay can be found in today’s press release. Additionally, there will be an audio webcast available on Spirit Realty’s website at www.spiritrealty.com, an archive of which will be available for 30 days.

It is now my pleasure to turn the call over to Michael Bender, Senior Vice President and Chief Financial Officer of Spirit Realty. Mr. Bender, please proceed.

Michael Bender

Thank you, Regina and good afternoon everyone. Thank you for joining us today. Here with me to discuss our fourth quarter and full-year 2012 performance are, Tom Nolan, Chairman and Chief Executive Officer; and Pete Mavoides, President and Chief Operating Officer. Tom will review our fourth quarter and full-year performance and provide you with our views going into the New Year. I will provide you with more specifics about our financials and Pete will then walk you through our portfolio and recent activities. Tom will wrap up our prepared remarks after which I'll be happy to take your questions.

Before we begin, please note that during this conference call, we will make certain statements that may be considered to be forward-looking statements under Federal Securities laws. The company’s actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release provision to those forward-looking statements to reflect changes after the statements were made.

I would now like to turn the call over to Tom Nolan, Spirit Realty’s Chairman and Chief Executive Officer.

Tom Nolan

Thank you very much Mike and thank you everyone who has joined us today. We are very pleased with our results for our fourth quarter which was our first full quarter as a public company and for the full-year. This is an exciting time in the triple-net industry and we are pleased to have gone public when we did. We believe a number of positive trends and fundamental changes are benefiting the triple-net industry overall.

Consolidation is well underway, as you know not just for Spirit Realty, but for others as well. In addition, we are seeing a significant increase in institutional interest in the triple-net companies as a class. I believe institutional investors increasingly recognize the attractive risk reward profile of the industry and the opportunities before us.

Following the close of the Cole II transaction, Spirit Realty will be the second largest publicly traded triple-net lease company. And we intend not only to participate in the positive trends affecting our industry, but also to be a leader in the development of the industry as an attractive investment class for both institutional and retail investors.

The recent focus on Spirit has been about the Cole II merger and our call today will certainly touch on that. That said, we want to focus most of today’s call on our fourth quarter and full-year performance. I hope you will find that as we’ve discussed in the past, our core portfolio has very predictable cash flows to result in financial performance that is equally predictable and reliable.

Before we begin discussing these results, I would like to briefly update you on our proposed merger with Cole Credit Property Trust II or simply Cole II. To the extent that we are able, since it is still pending shareholder and regulatory approval; I do hope you will bear with us and recognize that we are limited in responding to certain enquiries concerning the merger, until such time as the appropriate regulatory filings have been made.

On January 22, 2013, we announced the definitive agreement to merge with Cole II to create the second largest publicly traded triple-net lease REIT in the United States with a proforma enterprise value of approximately $7.1 billion. The proposed transaction with Cole II supports and significantly accelerates our long-term business objectives and better positions Spirit Realty to deliver long-term value to shareholders by enhancing our ability to generate stable and predictable cash flows.

We and the Cole organization are in the process of preparing Registration Statement and Joint Proxy Statement to be filed with the Securities and Exchange Commission within the next few weeks. We anticipate scheduling the date for shareholder meeting and vote shortly thereafter. And we remain confident we will close the transaction by the end of the third quarter of this year. In the meantime, we remain focused on our existing portfolio and on executing the operating and investment strategies which were the foundation of the investment theses we articulated at the time of the IPO.

The fourth quarter was a productive quarter for acquisitions. We invested more than $77 million in 33 real estate properties. This activity was comprised of four new investments with both new and existing tenants. Pete will provide some additional color on these acquisitions in a moment.

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