Spirit Realty Capital, Inc. (SRC)

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Spirit Realty Capital, Inc (SRC)

Q1 2013 Earnings Call

May 08, 2013 05:00 pm ET


Michael Bender – Chief Financial Officer, Treasurer, Head-Investor Relations

Tom Nolan – Chairman, Chief Executive Officer

Pete Mavoides – President, Chief Operating Officer


Rob Stevenson – Macquarie

Alexander Goldfarb – Sandler O’Neill

Rich Moore – RBC Capital Markets



Good afternoon, ladies and gentlemen, and welcome to Spirit Realty Capital’s First Quarter 2013 Results Conference Call. (Operator Instructions). This conference call is being recorded and a replay of the call will be available beginning at 6:00 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 on Spirit Realty Capital’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 Mr. Michael Bender, Senior Vice President and Chief Financial Officer of Spirit Realty Capital. Mr. Bender, please proceed.

Michael Bender

Thank you, Patrick, and good afternoon everyone. Thank you for joining us today. Here with me to discuss our first quarter 2013 performance are Tom Nolan, Chairman and Chief Executive Officer; and Pete Mavoides, President and Chief Operating Officer.

Tom will review our first quarter performance our operatives perspective on the dynamics at play in the triple net lease market. I will provide you with more specifics about our financials and Pete will walk you through our portfolio and recent acquisition activity. Tom will then wrap up our prepared remarks after which we’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 law. The company’s actual future results may differ significantly from the matters discussed in these forward-looking statements and we may not release revisions 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 Capital’s Chairman and Chief Executive Officer.

Tom Nolan

Thank you Mike, and thank you, everyone who’s joined us today. I’m very pleased with our results and with the performance of the team here at Spirit Realty Capital. Our existing business is performing well, our portfolio is healthy, our occupancy rates are up and despite strong competition we continue to acquire properties at attractive cap rates.

We continue to perform as expected and we’re well positioned within an attractive and growing sector. In addition we’ve made significant progress towards completing our merger with Cole II while continuing to deliver steady, attractive returns to our shareholders.

As we’ve talked about previously, this is an exciting time in the triple net lease industry. Institutional and retail investors attracted by the sector’s stable, predictable yields, continue to come into this space. Additionally, historically low interest rates and the economic recovery in the US have led to an active investment market which is ripe with both one-off and portfolio sale lease back transactions which feed our core growth model as well as live entity level transactions similar to the Cole II opportunity.

As Pete will share with you in a bit, we’ve maintained our discipline and deployed our capital in a very thoughtful fashion acquiring properties at attractive cap rates and divesting other properties where it makes sense. We’ve done this with an eye towards ensuring that we continue to optimize our portfolio so that it generates stable returns to our shareholders. We expect this favorable market environment to continue and we remain confident about our ability to execute our strategy effectively.

As you may have noted we have submitted to our shareholders a proxy statement for our merger with Cole II, which establishes a shareholder vote date of June 12. This puts the transaction on track to close in the third quarter of this year as we have previously communicated.

As we noted when we announced this merger, this exciting transaction materially accelerates our operational goals of diversifying the portfolio, de-leveraging our balance sheet and establishing our company in a leadership position in this dynamic segment of the REIT industry.

As I hope you can appreciate with a proxy statement outstanding, there really isn’t much we can say on this call about the merger. That said we continue to work collaboratively with the Cole organization towards the completion of the transaction and I would like to take this opportunity to thank all the employees both here at Spirit Realty Capital and likewise within the Cole organization for working so hard toward making us ready to complete the merger seamlessly and efficiently for the benefit of both of our current shareholders.

We are also pleased with the response we have received from our shareholders and Cole II shareholders, which has reinforced our strong belief in the merits of the proposed transaction. For those of you who would like more information about the merger, I encouraged you to review the proxy materials. We’re looking forward to executing our strategy as a combined company.

In the interim, we’ll continue to focus on managing our portfolio and growing our business with a sharp eye on maintaining a strong, divers portfolio that yield stable and predictable cash flows that support that dividend. With that let me turn the call back to Mike for him to review with you our first quarter results in more detail. Mike?

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