[Report Information](index=1&type=section&id=Report%20Information) This section provides essential filing details for the Quarterly Report on Form 10-Q, including registrant status, stock information, and outstanding shares - This is a **Quarterly Report (Form 10-Q)** filed by SPIRIT REALTY CAPITAL, INC. for the quarterly period ended September 30, 2023[1](index=1&type=chunk)[2](index=2&type=chunk) - The registrant is a **Large accelerated filer** and has filed all required reports and submitted Interactive Data Files during the preceding 12 months[4](index=4&type=chunk) - As of October 30, 2023, **141,331,218 shares of common stock** were outstanding[4](index=4&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :-------------------------------- | :---------------- | :---------------------------------------- | | Common stock, par value $0.05 per share | SRC | New York Stock Exchange | | 6.000% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share | SRC-A | New York Stock Exchange | [Glossary](index=3&type=section&id=Glossary) This section defines key financial and operational terms used throughout the report, including debt facilities, financial measures, and rental metrics - The glossary defines **key terms** used in the report, covering debt facilities, financial measures like **AFFO** and **FFO**, and operational metrics such as **Annualized Base Rent (ABR)**[8](index=8&type=chunk)[9](index=9&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the unaudited financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the period ended September 30, 2023, including balance sheets, statements of operations, comprehensive income, stockholders' equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2023, and December 31, 2022 | Metric (in thousands) | September 30, 2023 | December 31, 2022 | Change (2023 vs 2022) | | :------------------------------------ | :------------------- | :------------------ | :-------------------- | | Total assets | $8,650,208 | $8,472,866 | +$177,342 | | Total liabilities | $4,157,415 | $3,911,550 | +$245,865 | | Total stockholders' equity | $4,492,793 | $4,561,316 | -$68,523 | | Total debt, net | $3,820,248 | $3,575,309 | +$244,939 | | Cash and cash equivalents | $134,166 | $8,770 | +$125,396 | | Real estate assets held for investment, net | $7,468,643 | $7,421,306 | +$47,337 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net income for the three and nine months ended September 30, 2023, compared to the prior year - **Net income attributable to common stockholders decreased by 51.5%** for the three months and **12.8%** for the nine months ended September 30, 2023, compared to 2022[15](index=15&type=chunk) - **Total expenses increased significantly**, primarily due to a substantial rise in **impairments ($19.2 million vs $1.6 million for Q3, $36.1 million vs $11.1 million for 9M)** and **interest expense ($36.9 million vs $31.0 million for Q3, $105.0 million vs $84.6 million for 9M)**[15](index=15&type=chunk) | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $193,375 | $182,904 | $570,965 | $526,235 | | Total expenses | $158,333 | $129,305 | $447,839 | $378,773 | | Net income | $38,468 | $76,640 | $188,822 | $215,436 | | Net income attributable to common stockholders | $35,881 | $74,053 | $181,059 | $207,673 | | Basic EPS | $0.25 | $0.54 | $1.28 | $1.56 | | Diluted EPS | $0.25 | $0.54 | $1.28 | $1.56 | | Dividends declared per common share | $0.6696 | $0.6630 | $1.9956 | $1.9390 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income items, for the three and nine months ended September 30, 2023 - **Total comprehensive income decreased significantly**, primarily due to a lower net income attributable to common stockholders and a reduction in net reclassification of amounts from **Accumulated Other Comprehensive Income/Loss (AOCIL)** compared to the prior year[17](index=17&type=chunk) | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $35,881 | $74,053 | $181,059 | $207,673 | | Net reclassification of amounts from AOCIL | $8,260 | $40,204 | $21,208 | $41,608 | | Total comprehensive income | $44,141 | $114,257 | $202,267 | $249,281 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in the company's stockholders' equity, including common stock, accumulated deficit, and other comprehensive income, as of September 30, 2023 - **Total stockholders' equity decreased by $68.5 million** from December 31, 2022, to September 30, 2023, primarily because **dividends declared on common stock ($282.0 million)** exceeded **net income attributable to common stockholders ($181.1 million)** and other comprehensive income[19](index=19&type=chunk) | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------------- | :------------------ | | Total Stockholders' Equity | $4,492,793 | $4,561,316 | | Accumulated Deficit | $(3,036,475) | $(2,931,640) | | Accumulated Other Comprehensive Income | $55,296 | $34,088 | | Common Stock Shares Outstanding | 141,331,218 | 141,231,219 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 - **Net cash provided by operating activities increased by $34.7 million**, while **net cash used in investing activities decreased significantly by $752.5 million**, primarily due to fewer acquisitions and higher proceeds from dispositions[24](index=24&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - **Net cash from financing activities shifted from a $755.7 million inflow in 2022 to a $46.4 million outflow in 2023**, mainly due to **no common stock issuances in 2023 (vs. $531.6 million in 2022)** and a net decrease in debt financing[24](index=24&type=chunk)[149](index=149&type=chunk) | Metric (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $373,548 | $338,885 | | Net cash used in investing activities | $(250,058) | $(1,002,541) | | Net cash (used in) provided by financing activities | $(46,422) | $755,686 | | Net increase in cash, cash equivalents and restricted cash | $77,068 | $92,030 | | Cash, cash equivalents and restricted cash, end of period | $139,021 | $109,829 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, investments, debt, equity, and other financial aspects [NOTE 1. ORGANIZATION](index=12&type=section&id=NOTE%201.%20ORGANIZATION) Spirit Realty Capital, Inc. operates as a self-managed REIT, investing in single-tenant, operationally essential real estate in the U.S. through long-term, triple-net leases - The Company operates as a **self-administered and self-managed REIT**, focusing on **single-tenant, operationally essential real estate** in the U.S. with long-term, triple-net leases[29](index=29&type=chunk) - The Corporation owns approximately **99% of the Operating Partnership, Spirit Realty, L.P.**, through which its operations are primarily carried out[30](index=30&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines significant accounting policies, including GAAP accrual basis, consolidation principles, revenue recognition for rental and interest income, and policies for cash, taxes, and EPS - The Company prepares consolidated financial statements on the **accrual basis, in accordance with GAAP**, consolidating the Corporation and its wholly-owned subsidiaries, including the Operating Partnership[31](index=31&type=chunk)[32](index=32&type=chunk) - **Rental income from long-term, triple-net operating leases** is recognized on a **straight-line basis** for fixed escalators, with variable rent recognized when changes occur and tenant reimbursement revenue recognized when expenses are incurred[36](index=36&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) - The Corporation has elected to be taxed as a **REIT** and believes it qualifies, thus generally not subject to federal income tax[48](index=48&type=chunk) | Cash Component (in thousands) | September 30, 2023 | December 31, 2022 | | :------------------------------ | :------------------- | :------------------ | | Cash and cash equivalents | $134,166 | $8,770 | | Restricted cash: 1031 Exchange proceeds | $4,210 | $53,183 | | Restricted cash: Tenant security deposits | $645 | — | | Total cash, cash equivalents and restricted cash | $139,021 | $61,953 | [NOTE 3. INVESTMENTS](index=15&type=section&id=NOTE%203.%20INVESTMENTS) This note details the company's real estate investments, including owned properties, leases, and loans receivable, summarizing activity, rental income, lease intangibles, impairments, and credit losses - As of September 30, 2023, the Company's **gross investment in owned real estate properties totaled $9.4 billion**, geographically dispersed across **49 states**, with **Texas representing 15.7%** of the total gross investment[53](index=53&type=chunk) - The Company recorded **significant allowances for loan losses in 2023, totaling $16.7 million** for the nine months ended September 30, 2023, primarily due to changes in borrowers' financial positions[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) | Real Estate Activity (Nine Months Ended Sep 30, 2023, in thousands) | Number of Properties | Dollar Amount of Investments | | :-------------------------------------------------- | :------------------- | :--------------------------- | | Gross balance, December 31, 2022 | 2,115 | $9,183,744 | | Acquisitions/improvements | 30 | $497,876 | | Dispositions of real estate | (108) | $(250,852) | | Transfers to Held for Sale | — | — | | Impairments | — | $(19,331) | | Gross balance, September 30, 2023 | 2,037 | $9,385,094 | | Rental Income Component (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Base Cash Rent | $173,569 | $162,467 | $516,486 | $471,052 | | Variable cash rent (including reimbursables) | $6,331 | $6,479 | $18,385 | $19,713 | | Straight-line rent, net of uncollectible reserve | $8,227 | $10,875 | $26,127 | $28,465 | | Amortization of above- and below-market lease intangibles, net | $78 | $475 | $767 | $1,700 | | Total rental income | $188,205 | $180,296 | $561,765 | $520,930 | [NOTE 4. DEBT](index=18&type=section&id=NOTE%204.%20DEBT) This note summarizes the company's debt, including credit facilities, term loans, Senior Unsecured Notes, and mortgages payable, detailing interest rates, maturities, and interest expense components - As of September 30, 2023, the Company had **$1.2 billion of borrowing capacity** available under the 2019 Credit Facility with no outstanding borrowings, and **$200.0 million available** under the delayed-draw 2023 Term Loans[74](index=74&type=chunk)[76](index=76&type=chunk) | Debt Type (in thousands) | September 30, 2023 | December 31, 2022 | | :----------------------- | :------------------- | :------------------ | | Revolving credit facilities | $0 | $55,500 | | Term loans, net | $1,090,198 | $792,309 | | Senior Unsecured Notes, net | $2,725,505 | $2,722,514 | | Mortgages payable, net | $4,545 | $4,986 | | Total debt, net | $3,820,248 | $3,575,309 | | Weighted Average Effective Interest Rates (9M 2023) | 3.68% | N/A | | Debt Maturity (in thousands) | Total | | :--------------------------- | :---- | | Remainder of 2023 | $141 | | 2024 | $590 | | 2025 | $600,626 | | 2026 | $300,469 | | 2027 | $800,497 | | Thereafter | $2,152,087 | | Total | $3,854,410 | | Interest Expense Component (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revolving credit facilities | $612 | $3,550 | $4,237 | $8,520 | | Term loans | $10,857 | $2,940 | $25,589 | $2,940 | | Senior Unsecured Notes | $22,313 | $22,313 | $66,939 | $66,939 | | Mortgages payable | $65 | $73 | $201 | $225 | | Non-cash amortization (deferred financing costs, debt discount, interest rate swaps) | $3,357 | $2,495 | $9,032 | $6,690 | | Capitalized interest | $(285) | $(415) | $(1,005) | $(741) | | Total interest expense | $36,919 | $30,956 | $104,993 | $84,573 | [NOTE 5. STOCKHOLDERS' EQUITY](index=21&type=section&id=NOTE%205.%20STOCKHOLDERS%27%20EQUITY) This note details changes in stockholders' equity, including common stock activity under the 2021 ATM Program, preferred stock outstanding, and dividends declared for both common and preferred shares - As of September 30, 2023, approximately **$208.7 million of capacity remained available** under the 2021 ATM Program, with no shares sold during the nine months ended September 30, 2023[86](index=86&type=chunk) - The Company had **6.9 million shares of Series A Preferred Stock outstanding**, paying cumulative cash dividends of **6.00% per annum ($1.50 per share annually)**[87](index=87&type=chunk) | Dividend Type | Declaration Date | Dividend Per Share | Total Amount (in thousands) | | :-------------- | :--------------- | :----------------- | :-------------------------- | | Common Stock | Feb 22, 2023 | $0.6630 | $93,675 | | Common Stock | May 3, 2023 | $0.6630 | $93,700 | | Common Stock | Aug 9, 2023 | $0.6696 | $94,635 | | Preferred Stock | Feb 22, 2023 | $0.3750 | $2,588 | | Preferred Stock | May 3, 2023 | $0.3750 | $2,588 | | Preferred Stock | Aug 9, 2023 | $0.3750 | $2,587 | [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the company's legal proceedings, environmental remediation, and capital commitments, confirming no material outstanding claims or environmental liabilities as of September 30, 2023 - As of September 30, 2023, there were **no outstanding claims or litigation** expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows[90](index=90&type=chunk) - The Company had **commitments totaling $138.1 million** as of September 30, 2023, with **$12.2 million for future acquisitions** and the remainder for property improvements, with **$20.6 million expected to be funded by year-end 2023**[92](index=92&type=chunk) [NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES](index=22&type=section&id=NOTE%207.%20DERIVATIVE%20AND%20HEDGING%20ACTIVITIES) This note describes the company's use of interest rate derivative contracts as cash flow hedges to manage variable interest rate exposure, detailing their fair value and impact on AOCIL and operations - The Company uses **interest rate derivative contracts (swaps)** to manage interest rate risk on variable-rate debt, designating them as **cash flow hedges**[93](index=93&type=chunk) - For the nine months ended September 30, 2023, **$21.2 million was recorded in AOCIL** related to cash flow hedge derivatives, with an estimated **$28.8 million expected to be reclassified as a decrease to interest expense** in the next 12 months[97](index=97&type=chunk) | Interest Rate Swap (in thousands) | Notional Amount | Fixed Interest Rate | Maturity Date | Fair Value of Asset (Sep 30, 2023) | | :-------------------------------- | :-------------- | :------------------ | :------------ | :--------------------------------- | | Swap 1 | $300,000 | 2.501% | Aug 22, 2027 | $20,340 | | Swap 2 | $200,000 | 2.507% | Aug 22, 2027 | $13,478 | | Swap 3 | $300,000 | 2.636% | Aug 22, 2025 | $12,403 | | Swap 4 | $300,000 | 3.769% | Jun 15, 2025 | $6,090 | | Swap 5 | $200,000 | 3.590% | Jun 15, 2025 | $3,921 | | Total | $1,300,000 | | | $56,232 | [NOTE 8. FAIR VALUE MEASUREMENTS](index=23&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) This note provides fair value measurements for the company's financial instruments, including recurring interest rate swaps and nonrecurring impaired real estate assets, along with estimated fair values of loans and debt - As of September 30, 2023, the Company held **15 properties impaired during 2023**, with fair values estimated using unobservable inputs like price per square foot from PSAs, LOIs, BOVs, or comparable properties[100](index=100&type=chunk) | Description | Fair Value (Sep 30, 2023, in thousands) | Fair Value Hierarchy Level | | :------------------------ | :-------------------------------------- | :------------------------- | | Interest rate swap assets | $56,232 | Level 2 | | Impaired properties (2023) | $38,284 | Level 3 | | Loans receivable, net | $51,747 | N/A | | Term loans, net | $1,100,705 | Level 2 | | Senior Unsecured Notes, net | $2,339,854 | Level 1 | | Mortgages payable, net | $4,229 | Level 2 | [NOTE 9. INCENTIVE AWARD PLAN](index=24&type=section&id=NOTE%209.%20INCENTIVE%20AWARD%20PLAN) This note details the company's Amended Incentive Award Plan, covering restricted share and market-based awards granted to officers, directors, and employees, including grants, valuation, and compensation expense - During the nine months ended September 30, 2023, the Company granted **139 thousand restricted shares** and **189 thousand target market-based awards**[104](index=104&type=chunk)[105](index=105&type=chunk) - **Stock-based compensation expense for the nine months ended September 30, 2023, was $15.1 million**, an increase from **$12.8 million** in the prior year[107](index=107&type=chunk) | Unamortized Stock-Based Compensation (in thousands) | September 30, 2023 | December 31, 2022 | | :-------------------------------------------------- | :------------------- | :------------------ | | Restricted share awards | $5,700 | $4,727 | | Market-based awards | $18,625 | $15,165 | | Total | $24,325 | $19,892 | [NOTE 10. INCOME PER SHARE](index=26&type=section&id=NOTE%2010.%20INCOME%20PER%20SHARE) This note reconciles the numerator and denominator for basic and diluted net income per share, computed using the two-class method - **Diluted EPS decreased from $0.54 to $0.25** for the three months and **from $1.56 to $1.28** for the nine months ended September 30, 2023, compared to the same periods in 2022[109](index=109&type=chunk) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders used in basic and diluted income per share (in thousands) | $35,743 | $73,911 | $180,647 | $207,261 | | Basic weighted average shares of common stock outstanding | 141,124,401 | 136,314,369 | 141,094,907 | 132,835,210 | | Diluted weighted average shares of common stock outstanding | 141,149,865 | 136,314,369 | 141,103,395 | 132,965,297 | | Net income per share attributable to common stockholders - basic | $0.25 | $0.54 | $1.28 | $1.56 | | Net income per share attributable to common stockholders - diluted | $0.25 | $0.54 | $1.28 | $1.56 | [NOTE 11. SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2011.%20SUBSEQUENT%20EVENTS) This note discloses a significant subsequent event: Spirit Realty Capital, Inc. entered into a Merger Agreement with Realty Income Corporation on October 29, 2023, expected to close in Q1 2024 - On October 29, 2023, **Spirit Realty Capital, Inc. entered into a Merger Agreement with Realty Income Corporation**[110](index=110&type=chunk) - **Spirit common stock will convert into 0.762 shares of Realty Income common stock**, and Spirit Series A Preferred Stock will convert into Realty Income Series A Preferred Stock with substantially similar terms[111](index=111&type=chunk) - The merger is subject to Spirit's shareholder approval and is **expected to close during the first quarter of 2024**[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of the company's financial condition and results, covering business strategy, accounting policies, liquidity, operations, and property portfolio [Special Note Regarding Forward-looking Statements](index=28&type=section&id=Special%20Note%20Regarding%20Forward-looking%20Statements) This section highlights that the report contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially from predictions - The report contains **forward-looking statements** subject to numerous risks and uncertainties, and actual results may differ materially from predictions[115](index=115&type=chunk)[116](index=116&type=chunk) - **Key risks** include industry and economic conditions, financial market volatility, business strategy success, tenant financial performance, interest rate changes, access to capital markets, and maintaining REIT qualification[117](index=117&type=chunk)[118](index=118&type=chunk) [Overview](index=29&type=section&id=Overview) This section provides an overview of Spirit Realty Capital, Inc. as an internally-managed net-lease REIT, its diversified property portfolio, and operational structure - **Spirit Realty Capital, Inc. is an internally-managed net-lease REIT** focused on single-tenant, operationally essential real estate in the U.S., leased on a long-term, triple-net basis[119](index=119&type=chunk) - As of September 30, 2023, the Company owned a **diversified portfolio of 2,037 properties** operated by **338 tenants**, with in-place **Annualized Base Rent (ABR) of $690.1 million**[120](index=120&type=chunk) - The Company operates through **Spirit Realty, L.P.**, where the Corporation and a subsidiary collectively own **99% of the Operating Partnership**[121](index=121&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that financial statement preparation requires management judgment in applying accounting policies and estimates, with no material changes during the reporting period - The preparation of financial statements requires management judgment in applying accounting policies and making estimates, with **no material changes** to these policies during the reporting periods[122](index=122&type=chunk) [Supplemental Guarantor Disclosures](index=29&type=section&id=Supplemental%20Guarantor%20Disclosures) This section notes that the Company and Operating Partnership's debt securities are guaranteed by the Company, and summarized financial information is excluded due to immaterial differences from consolidated statements - The Company and the Operating Partnership have **debt securities (Senior Unsecured Notes) guaranteed by the Company** on a senior, full, and unconditional basis[124](index=124&type=chunk) - Summarized financial information for the Company and Operating Partnership is **excluded** because their assets, liabilities, and results of operations are not materially different from the consolidated financial statements[125](index=125&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's short-term and long-term liquidity strategies, funding sources, debt instruments, maturities, cash flow changes, and REIT distribution policy - As of September 30, 2023, **available liquidity included $134.2 million in cash**, **$4.2 million in 1031 Exchange proceeds**, **$1.2 billion borrowing capacity** under the 2019 Credit Facility, and **$200.0 million** under the delayed-draw 2023 Term Loans[129](index=129&type=chunk) - Long-term capital needs are planned to be met through registered debt or equity securities, asset-level financing, and fixed-rate secured or unsecured notes and bonds[130](index=130&type=chunk) - **Net cash provided by operating activities increased by $34.7 million** for the nine months ended September 30, 2023, driven by higher cash rental revenue and interest received, partially offset by increased cash interest paid[143](index=143&type=chunk) - The Company is required to distribute **90% of its taxable income annually** to maintain REIT qualification[146](index=146&type=chunk) | Debt Type (in thousands) | Total Principal Payments Due as of Sep 30, 2023 | | :----------------------- | :---------------------------------------------- | | 2019 Credit Facility | $0 | | Term loans | $1,100,000 | | Senior Unsecured Notes | $2,750,000 | | Mortgages payable | $4,410 | | Total | $3,854,410 | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the three and nine months ended September 30, 2023, detailing changes in revenues, expenses, and other income, attributing them to acquisitions, dispositions, tenant credit, interest rates, and compensation - **Rental income increased by $7.9 million (QoQ) and $40.8 million (YoY)** primarily due to the net acquisition of higher-priced assets[150](index=150&type=chunk)[152](index=152&type=chunk) - **Impairments significantly increased to $19.3 million (QoQ) and $36.1 million (YoY)**, driven by an increased focus on accretive capital recycling and higher allowances for credit losses on loans receivable[150](index=150&type=chunk)[159](index=159&type=chunk) - **General and administrative expenses increased by $2.6 million** for the nine months ended September 30, 2023, mainly due to higher compensation expenses from non-cash compensation and internal promotions[162](index=162&type=chunk) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Total Revenues | $193,375 | $182,904 | $570,965 | $526,235 | | Total Expenses | $158,333 | $129,305 | $447,839 | $378,773 | | Net Income | $38,468 | $76,640 | $188,822 | $215,436 | | Gain on disposition of assets | $3,661 | $23,302 | $66,450 | $63,107 | | Impairments | $19,258 | $1,571 | $36,052 | $11,096 | | Interest Expense | $36,919 | $30,956 | $104,993 | $84,573 | [Property Portfolio Information](index=38&type=section&id=Property%20Portfolio%20Information) This section provides detailed property portfolio information, including diversification by tenant, lease expirations, geographic concentration, asset type, tenant industry, occupancy rate, and weighted average remaining lease term | Metric | Value | | :-------------------- | :---- | | Properties | 2,037 | | Occupancy | 99.6% | | States | 49 | | Tenants | 338 | | Tenant Industries | 37 | | Weighted average remaining non-cancellable initial term of leases (based on ABR) | 10.2 years | | Top Tenant Concepts (as of Sep 30, 2023) | Percent of ABR | | :--------------------------------------- | :------------- | | Life Time Fitness | 4.3% | | Invited Clubs | 3.1% | | BJ's Wholesale Club | 2.3% | | At Home | 2.1% | | Dave & Buster's / Main Event | 1.9% | | Church's Chicken | 1.9% | | Dollar Tree / Family Dollar | 1.9% | | Circle K / Clean Freak | 1.8% | | Home Depot | 1.7% | | GPM | 1.5% | | Lease Expirations (as of Sep 30, 2023) | Number of Properties | Percent of ABR | | :------------------------------------- | :------------------- | :------------- | | Remainder of 2023 | 4 | 0.2% | | 2024 | 32 | 1.7% | | 2025 | 51 | 3.1% | | 2026 | 111 | 6.2% | | 2027 | 146 | 8.1% | | Thereafter | 883 | 52.0% | | Geographic Concentration (as of Sep 30, 2023) | Percent of ABR | | :-------------------------------------------- | :------------- | | Texas | 15.3% | | Florida | 6.6% | | Ohio | 6.5% | | Georgia | 5.9% | | Michigan | 4.3% | | Tennessee | 3.8% | | California | 3.7% | | Indiana | 3.3% | | Illinois | 2.9% | | North Carolina | 2.7% | | Asset Type / Tenant Industry (as of Sep 30, 2023) | Percent of ABR | | :------------------------------------------------ | :------------- | | Retail (Total) | 64.5% | | Health & Fitness | 7.6% | | Convenience Stores | 5.0% | | Car Washes | 4.6% | | Quick Service Restaurants | 4.3% | | Non-Retail (Total) | 35.5% | | Distribution | 11.6% | | Manufacturing | 11.3% | | Industrial Outdoor Storage | 3.1% | | Country Club | 3.1% | [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that the company did not have any material off-balance sheet arrangements as of September 30, 2023 - As of September 30, 2023, the Company did not have any **material off-balance sheet arrangements**[172](index=172&type=chunk) [New Accounting Pronouncements](index=40&type=section&id=New%20Accounting%20Pronouncements) This section states that there were no new accounting pronouncements during the reporting period - There were **no new accounting pronouncements** during the period[173](index=173&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like FFO, AFFO, and Adjusted Debt, providing supplemental insights into operating performance and financial condition - **FFO (Funds From Operations)** is calculated as net income attributable to common stockholders, excluding real estate-related depreciation and amortization, impairment charges, and net gains/losses from property dispositions[174](index=174&type=chunk) - **AFFO (Adjusted Funds From Operations)** further adjusts FFO for items not indicative of core operating performance, such as non-cash interest expenses, non-cash revenues, and non-cash compensation expense[175](index=175&type=chunk) | Non-GAAP Metric (in thousands, except per share) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | FFO attributable to common stockholders | $130,701 | $126,777 | $386,752 | $371,837 | | AFFO attributable to common stockholders | $131,001 | $122,785 | $385,170 | $357,156 | | FFO per share of common stock - Diluted | $0.92 | $0.93 | $2.74 | $2.79 | | AFFO per share of common stock - Diluted | $0.93 | $0.90 | $2.73 | $2.68 | | Debt Metric (in thousands) | September 30, 2023 | September 30, 2022 | | :------------------------- | :------------------- | :------------------- | | Adjusted Debt | $3,716,034 | $3,445,130 | | Adjusted Debt / Annualized Adjusted EBITDAre | 5.2 x | 5.2 x | | Annualized Adjusted EBITDAre | $708,220 | $665,044 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to financial market risks, primarily interest rate risk, and mitigation strategies like long-term leases and interest rate swaps - The Company is exposed to **interest rate risk**, which can significantly influence operating results, particularly the difference between revenue from assets and interest expense on borrowings[184](index=184&type=chunk)[185](index=185&type=chunk) - As of September 30, 2023, **$2.8 billion of indebtedness was fixed-rate** (Senior Unsecured Notes and mortgages payable) with a **weighted average stated interest rate of 3.25%**[186](index=186&type=chunk) - **$1.1 billion of indebtedness was variable-rate** (2022 and 2023 Term Loans), but interest rate swaps resulted in an **effective weighted average fixed rate of 3.86%**[186](index=186&type=chunk) | Debt Instrument (in thousands) | Carrying Value (Sep 30, 2023) | Estimated Fair Value (Sep 30, 2023) | | :----------------------------- | :------------------------------ | :---------------------------------- | | 2019 Credit Facility | $0 | $0 | | Term loans, net | $1,090,198 | $1,100,705 | | Senior Unsecured Notes, net | $2,725,505 | $2,339,854 | | Mortgages payable, net | $4,545 | $4,229 | [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting, concluding they were effective with no material changes - The Company's **disclosure controls and procedures were evaluated and deemed effective** as of September 30, 2023[189](index=189&type=chunk) - There were **no material changes to the Company's internal control over financial reporting** during the quarter ended September 30, 2023[190](index=190&type=chunk) [PART II — OTHER INFORMATION](index=46&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part covers various other information, including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and a list of exhibits [Item 1.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR Commission file number 001-36004 SPIRIT REALTY CAPITAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 2727 North Harwood Str ...

[Glossary](index=3&type=section&id=Glossary) This section defines key financial terms and non-GAAP measures, clarifying their calculation and purpose - The glossary defines **key financial terms and non-GAAP measures**, providing clarity on their calculation and purpose[8](index=8&type=chunk)[9](index=9&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents unaudited consolidated financial statements and management's discussion of financial condition and operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited consolidated financial statements, including balance sheets, income, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheets (Thousands) | Metric | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | | :--------------------------------- | :-------------------------- | :--------------------------- | | Total assets | $8,481,696 | $8,472,866 | | Total liabilities | $3,927,797 | $3,911,550 | | Total stockholders' equity | $4,553,899 | $4,561,316 | - **Total assets increased by $8.8 million**, while **total liabilities increased by $16.2 million**, leading to a **decrease in total stockholders' equity by $7.4 million** from December 31, 2022, to March 31, 2023[13](index=13&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income over specific periods Consolidated Statements of Operations (Thousands) | Metric | Three Months Ended March 31, 2023 (Thousands) | Three Months Ended March 31, 2022 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total revenues | $188,289 | $168,396 | | Total expenses | $141,080 | $118,552 | | Income before income tax expense | $96,396 | $56,228 | | Net income | $96,173 | $56,056 | | Net income attributable to common stockholders | $93,585 | $53,468 | | Basic EPS | $0.66 | $0.42 | | Diluted EPS | $0.66 | $0.42 | - **Net income attributable to common stockholders increased by $40.1 million (75%)** from **$53.5 million in Q1 2022 to $93.6 million in Q1 2023**, primarily due to a substantial gain on disposition of assets[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the total comprehensive income, including net income and other comprehensive income items Consolidated Statements of Comprehensive Income (Thousands) | Metric | Three Months Ended March 31, 2023 (Thousands) | Three Months Ended March 31, 2022 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income attributable to common stockholders | $93,585 | $53,468 | | Net reclassification of amounts (to) from AOCIL | $(10,586) | $702 | | Total comprehensive income | $82,999 | $54,170 | - **Total comprehensive income increased by $28.8 million (53.2%)** year-over-year, despite a significant net reclassification of amounts to AOCIL in Q1 2023 compared to a reclassification from AOCIL in Q1 2022[17](index=17&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in equity from net income, dividends, and other comprehensive income Consolidated Statements of Stockholders' Equity (Thousands) | Metric | Balance, December 31, 2022 (Thousands) | Balance, March 31, 2023 (Thousands) | | :----------------------------------- | :----------------------------------- | :---------------------------------- | | Total Stockholders' Equity | $4,561,316 | $4,553,899 | | Net income | - | $96,173 | | Dividends declared on common stock | - | $(93,675) | | Other comprehensive loss | - | $(10,586) | - **Total stockholders' equity decreased by $7.4 million** from December 31, 2022, to March 31, 2023, primarily due to common stock dividends and other comprehensive loss, partially offset by net income and stock-based compensation[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows (Thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 (Thousands) | Three Months Ended March 31, 2022 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $101,691 | $78,271 | | Net cash used in investing activities | $(89,974) | $(499,550) | | Net cash (used) provided by financing activities | $(55,172) | $430,056 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(43,455) | $8,777 | - **Net cash provided by operating activities increased by $23.4 million** year-over-year[22](index=22&type=chunk) - **Net cash used in investing activities decreased significantly by $409.6 million**, primarily due to fewer real estate acquisitions[22](index=22&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) - **Net cash from financing activities shifted from a $430.1 million inflow in Q1 2022 to a $55.2 million outflow in Q1 2023**, mainly due to reduced borrowings and stock issuances[22](index=22&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, and financial instrument disclosures [NOTE 1. ORGANIZATION](index=11&type=section&id=NOTE%201.%20ORGANIZATION) This note describes the company's business as a self-administered, self-managed REIT investing in single-tenant real estate - Spirit Realty Capital, Inc. operates as a **self-administered and self-managed REIT**, investing in single-tenant, operationally essential real estate across the U.S. on a long-term, triple-net basis[27](index=27&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's accounting principles, including GAAP compliance, consolidation, and revenue recognition policies - Financial statements are prepared in accordance with **GAAP**, with detailed revenue recognition policies for rental income and interest income on loans receivable[29](index=29&type=chunk)[30](index=30&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) Cash, Cash Equivalents and Restricted Cash (Thousands) | Category | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $4,871 | $8,770 | | Restricted cash (1031 Exchange proceeds) | $12,983 | $53,183 | | Total cash, cash equivalents and restricted cash | $18,498 | $61,953 | [NOTE 3. INVESTMENTS](index=14&type=section&id=NOTE%203.%20INVESTMENTS) This note details the company's real estate investments, including acquisitions, dispositions, and rental income components - As of March 31, 2023, the Company's **gross investment in owned real estate properties totaled $9.3 billion**, diversified across 49 states, with Texas exceeding 10%[51](index=51&type=chunk) Real Estate Activity (Three Months Ended March 31, 2023) (Thousands) | Activity | Number of Properties | Dollar Amount of Investments | | :----------------------------------- | :------------------- | :--------------------------- | | Gross balance, December 31, 2022 | 2,115 | $9,183,744 | | Acquisitions/improvements | 7 | $206,143 | | Dispositions of real estate | (39) | $(115,104) | | Gross balance, March 31, 2023 | 2,083 | $9,262,434 | Rental Income Components (Three Months Ended March 31) (Thousands) | Component | 2023 | 2022 | | :----------------------------------- | :---------- | :---------- | | Base Cash Rent | $171,230 | $150,635 | | Variable cash rent (incl. reimbursables) | $5,795 | $7,218 | | Straight-line rent, net | $9,920 | $8,575 | | Amortization of above-/below-market lease intangibles, net | $349 | $647 | | Total rental income | $187,294 | $167,075 | - The Company recorded **$5.3 million in total impairment loss for Q1 2023**, significantly higher than **$0.1 million in Q1 2022**, primarily due to real estate asset impairment and increased allowance for credit losses[62](index=62&type=chunk) [NOTE 4. DEBT](index=17&type=section&id=NOTE%204.%20DEBT) This note details the company's debt structure, including revolving credit facilities, term loans, and senior unsecured notes Total Debt, Net (Thousands) | Metric | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Revolving credit facilities | $98,000 | $55,500 | | Term loans, net | $792,813 | $792,309 | | Senior Unsecured Notes, net | $2,723,503 | $2,722,514 | | Mortgages payable, net | $4,841 | $4,986 | | Total debt, net | $3,619,157 | $3,575,309 | - **Total debt, net, increased by $43.8 million** from December 31, 2022, to March 31, 2023, primarily due to an increase in revolving credit facilities[13](index=13&type=chunk)[63](index=63&type=chunk) Interest Expense Components (Three Months Ended March 31) (Thousands) | Component | 2023 | 2022 | | :----------------------------------- | :---------- | :---------- | | Revolving credit facilities | $1,839 | $1,822 | | Term loans | $7,006 | — | | Senior Unsecured Notes | $22,313 | $22,313 | | Mortgages payable | $69 | $77 | | Non-cash amortization | $2,770 | $1,937 | | Capitalized interest | $(460) | $(126) | | Total interest expense | $33,547 | $26,023 | - **Total interest expense increased by $7.5 million (28.9%)** year-over-year, largely due to interest on new term loans and higher non-cash amortization[80](index=80&type=chunk) [NOTE 5. STOCKHOLDERS' EQUITY](index=19&type=section&id=NOTE%205.%20STOCKHOLDERS'%20EQUITY) This note details the company's equity structure, including preferred stock, common stock, and dividend declarations - As of March 31, 2023, the Company had **6.9 million shares of Series A Preferred Stock outstanding**, paying cumulative cash dividends of **6.00% per annum ($1.50 per share annually)**[83](index=83&type=chunk) Dividends Declared (Three Months Ended March 31, 2023) (Thousands) | Stock Type | Dividend Per Share | Total Amount | | :----------------------------------- | :----------------- | :----------- | | Common Stock | $0.663 | $93,675 | | Preferred Stock | $0.375 | $2,588 | [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's financial commitments for acquisitions and improvements, and contingent liabilities - As of March 31, 2023, the Company had **commitments totaling $132.7 million**, with **$9.8 million for future acquisitions** and the remainder for property improvements[88](index=88&type=chunk) - The Company **reversed a $5.7 million accrual** related to a contingent liability for tenant debt in Q1 2022, as no payments were made and the debt matured[85](index=85&type=chunk) [NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES](index=21&type=section&id=NOTE%207.%20DERIVATIVE%20AND%20HEDGING%20ACTIVITIES) This note describes the company's use of interest rate derivatives as cash flow hedges to manage variable interest rate exposure - The Company uses **interest rate derivative contracts as cash flow hedges** to manage exposure to variable interest rates, recording changes in fair value in AOCIL[89](index=89&type=chunk) Interest Rate Swap Fair Value (March 31, 2023) (Thousands) | Notional Amount | Fixed Interest Rate | Maturity Date | Fair Value of Asset (Liability) | | :---------------- | :------------------ | :------------ | :------------------------------ | | $300,000 | 2.501% | August 22, 2027 | $10,708 | | $200,000 | 2.507% | August 22, 2027 | $7,075 | | $300,000 | 2.636% | August 22, 2025 | $8,185 | | $300,000 | 3.769% | June 15, 2025 | $172 | | $200,000 | 3.590% | June 15, 2025 | $(299) | | Total | | | $25,841 | - Approximately **$2.3 million is estimated to be reclassified as an increase to interest expense** related to terminated hedges, and **$18.3 million as a decrease to interest expense** related to cash flow hedge derivatives over the next 12 months[93](index=93&type=chunk) [NOTE 8. FAIR VALUE MEASUREMENTS](index=22&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) This note describes the methodologies used to measure the fair value of financial instruments and other assets - **Interest rate swaps are measured at fair value** using market observable inputs (Level 2), while nonrecurring fair value measurements for impaired assets use PSAs, LOIs, BOVs, or discounted cash flows (Level 3)[94](index=94&type=chunk)[95](index=95&type=chunk) Estimated Fair Value of Financial Instruments (Thousands) | Instrument | Carrying Value (March 31, 2023) | Estimated Fair Value (March 31, 2023) | | :----------------------------------- | :------------------------------ | :------------------------------------ | | Loans receivable, net | $56,270 | $57,821 | | 2019 Credit Facility | $98,000 | $97,999 | | 2022 Term Loans, net | $792,813 | $801,667 | | Senior Unsecured Notes, net | $2,723,503 | $2,390,320 | | Mortgages payable, net | $4,841 | $4,650 | [NOTE 9. INCENTIVE AWARD PLAN](index=23&type=section&id=NOTE%209.%20INCENTIVE%20AWARD%20PLAN) This note details the company's stock-based compensation plans, including restricted shares and market-based awards - The Company granted **103 thousand restricted shares and 189 thousand target market-based awards** in Q1 2023[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) - **Stock-based compensation expense for Q1 2023 was $5.2 million**, up from **$4.0 million in Q1 2022**[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) Unamortized Stock-based Compensation Expense (Thousands) | Award Type | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | Restricted share awards | $6,940 | $4,727 | | Market-based awards | $25,959 | $15,165 | | Total unamortized stock-based compensation expense | $32,899 | $19,892 | [NOTE 10. INCOME PER SHARE](index=24&type=section&id=NOTE%2010.%20INCOME%20PER%20SHARE) This note provides a breakdown of basic and diluted net income per share attributable to common stockholders Net Income Per Share Attributable to Common Stockholders (Three Months Ended March 31) | Metric | 2023 | 2022 | | :----------------------------------- | :---------- | :---------- | | Net income attributable to common stockholders used in basic and diluted income per share | $93,446 | $53,337 | | Basic weighted average shares of common stock outstanding | 141,055,850 | 127,951,825 | | Diluted weighted average shares of common stock outstanding | 141,055,850 | 128,360,431 | | Net income per share - Basic | $0.66 | $0.42 | | Net income per share - Diluted | $0.66 | $0.42 | - **Basic and diluted EPS increased from $0.42 in Q1 2022 to $0.66 in Q1 2023**, reflecting higher net income despite an increase in weighted average shares outstanding[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition, liquidity, capital resources, and results of operations [Special Note Regarding Forward-looking Statements](index=25&type=section&id=Special%20Note%20Regarding%20Forward-looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains **forward-looking statements** subject to numerous risks and uncertainties, including industry conditions, market volatility, and business strategy implementation[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Overview](index=26&type=section&id=Overview) This section provides a high-level summary of the company's business model and portfolio characteristics - Spirit Realty Capital, Inc. is an **internally-managed net-lease REIT**, investing in single-tenant, operationally essential real estate across the U.S.[109](index=109&type=chunk)[110](index=110&type=chunk) - As of March 31, 2023, the Company owned **2,083 properties with 347 tenants** and an in-place **Annualized Base Rent (ABR) of $689.1 million**[109](index=109&type=chunk)[110](index=110&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section outlines the company's short-term and long-term liquidity strategies, detailing credit facilities and debt instruments - As of March 31, 2023, **available liquidity included $4.9 million in cash**, **$13.0 million in 1031 Exchange proceeds**, **$1.1 billion of borrowing capacity** under the 2019 Credit Facility, and **$500.0 million under the 2023 Term Loans**[119](index=119&type=chunk) - Long-term capital needs are planned to be met by issuing **registered debt or equity securities**, obtaining asset-level financing, and issuing fixed-rate secured or unsecured notes and bonds[120](index=120&type=chunk) Debt Maturities as of March 31, 2023 (Thousands) | Debt Type | Total Outstanding | Remainder of 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | | :----------------------------------- | :---------------- | :---------------- | :--- | :--- | :--- | :--- | :--------- | | 2019 Credit Facility | $98,000 | $0 | $0 | $0 | $98,000 | $0 | $0 | | Term loans | $800,000 | $0 | $0 | $300,000 | $0 | $500,000 | $0 | | Senior Unsecured Notes | $2,750,000 | $0 | $0 | $0 | $300,000 | $300,000 | $2,150,000 | | Mortgages payable | $4,689 | $420 | $590 | $626 | $469 | $497 | $2,087 | | **Total** | **$3,652,689** | **$420** | **$590** | **$300,626** | **$398,469** | **$800,497** | **$2,152,087** | [Cash Flows](index=29&type=section&id=Cash%20Flows) This section analyzes the company's cash flow changes from operating, investing, and financing activities Summary of Cash Flows (Three Months Ended March 31) (Thousands) | Cash Flow Activity | 2023 | 2022 | Change | | :----------------------------------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $101,691 | $78,271 | $23,420 | | Net cash used in investing activities | $(89,974) | $(499,550) | $409,576 | | Net cash (used) provided by financing activities | $(55,172) | $430,056 | $(485,228) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(43,455) | $8,777 | $(52,232) | - The increase in operating cash flows was driven by a **$20.2 million net increase in cash rental revenue** from net acquisitions, partially offset by a **$9.8 million increase in cash interest paid** due to higher interest rates and debt structure changes[135](index=135&type=chunk)[136](index=136&type=chunk) - **Investing cash outflows decreased by $306.1 million** due to fewer property acquisitions (7 in Q1 2023 vs. 41 in Q1 2022)[137](index=137&type=chunk) - **Financing cash flows decreased by $485.2 million**, primarily due to reduced borrowings and no common stock issuances in 2023 compared to 2022[137](index=137&type=chunk) [Distribution Policy](index=30&type=section&id=Distribution%20Policy) This section outlines the company's policy for distributing taxable income to stockholders as a REIT - As a REIT, the Company is required to **distribute at least 90% of its taxable income** annually to stockholders to maintain federal income tax qualification[139](index=139&type=chunk) - Distributions are at the **sole discretion of the Board of Directors**, dependent on operations, FFO, liquidity, cash flows, debt service, capital expenditures, and REIT requirements[141](index=141&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section compares revenues, expenses, and other income for Q1 2023 versus Q1 2022, highlighting key drivers of change Consolidated Statements of Operations (Three Months Ended March 31) (Thousands) | Metric | 2023 | 2022 | Increase / (Decrease) | | :----------------------------------- | :---------- | :---------- | :-------------------- | | Total revenues | $188,289 | $168,396 | $19,893 | | Total expenses | $141,080 | $118,552 | $22,528 | | Total other income | $49,187 | $6,384 | $42,803 | | Net income | $96,173 | $56,056 | $40,117 | - **Rental income increased by $20.2 million**, primarily driven by net acquisitions of 138 properties with **$78.3 million in annual in-place rent** over the trailing twelve months[145](index=145&type=chunk) - **Interest expense increased by $7.5 million** due to higher total debt and rising market interest rates, with the **weighted average stated interest rate increasing from 2.92% to 3.36%** year-over-year[154](index=154&type=chunk) - **Gain on disposition of assets increased significantly by $48.3 million**, from **$0.9 million in Q1 2022 to $49.2 million in Q1 2023**, due to increased disposition volume of occupied properties[151](index=151&type=chunk) [Property Portfolio Information](index=35&type=section&id=Property%20Portfolio%20Information) This section details the company's property portfolio, including diversification by tenant, lease expirations, and geographic concentration - As of March 31, 2023, the portfolio comprised **2,083 properties with 99.8% occupancy**, spread across 49 states and 347 tenant industries, with a **weighted average remaining lease term of 10.4 years**[156](index=156&type=chunk)[159](index=159&type=chunk) Top Tenant Concentration by ABR (March 31, 2023) | Tenant Concept | Percent of ABR | | :----------------------------------- | :------------- | | Life Time Fitness | 4.3% | | Invited Clubs | 2.7% | | BJ's Wholesale Club | 2.3% | | At Home | 2.1% | | Church's Chicken | 1.9% | | Dave & Buster's / Main Event | 1.9% | | Circle K / Clean Freak | 1.9% | | Dollar Tree / Family Dollar | 1.9% | | Home Depot | 1.7% | | GPM | 1.5% | | Other (no individual tenant > 1.5%) | 77.8% | Geographic Concentration by ABR (Top 5 States, March 31, 2023) | Location | Percent of ABR | | :----------------------------------- | :------------- | | Texas | 14.6% | | Florida | 7.6% | | Ohio | 6.6% | | Georgia | 5.9% | | Michigan | 4.3% | Asset Type and Tenant Industry Concentration by ABR (March 31, 2023) | Asset Type | Tenant Industry / Underlying Use | Percent of ABR | | :----------------------------------- | :------------------------------- | :------------- | | Retail | | 67.0% | | | Health & Fitness | 7.9% | | | Convenience Stores | 5.3% | | | Quick Service Restaurants | 4.6% | | | Car Washes | 4.6% | | Non-Retail | | 33.0% | | | Distribution | 11.2% | | | Manufacturing | 10.6% | | | Office | 3.0% | [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements as of the reporting date - As of March 31, 2023, the Company did not have any **material off-balance sheet arrangements**[163](index=163&type=chunk) [New Accounting Pronouncements](index=37&type=section&id=New%20Accounting%20Pronouncements) This section reports that there were no new material accounting pronouncements during the reporting period - There were **no new material accounting pronouncements** during the period[164](index=164&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles key non-GAAP financial measures, providing insights into operating performance and financial leverage FFO and AFFO Attributable to Common Stockholders (Thousands, except per share data) | Metric | 2023 | 2022 | | :----------------------------------- | :---------- | :---------- | | FFO attributable to common stockholders | $127,722 | $121,683 | | AFFO attributable to common stockholders | $126,036 | $113,287 | | FFO per share of common stock - Diluted | $0.90 | $0.95 | | AFFO per share of common stock - Diluted | $0.89 | $0.88 | - **FFO attributable to common stockholders increased by $6.0 million (4.9%)** year-over-year, while **AFFO increased by $12.7 million (11.2%)**[173](index=173&type=chunk) - **Diluted FFO per share decreased from $0.95 to $0.90**, and **diluted AFFO per share increased from $0.88 to $0.89**[173](index=173&type=chunk) Adjusted Debt and Annualized Adjusted EBITDAre (Thousands) | Metric | March 31, 2023 | March 31, 2022 | | :----------------------------------- | :------------- | :------------- | | Adjusted Debt | $3,634,835 | $3,248,145 | | Adjusted EBITDAre | $171,723 | $155,321 | | Annualized Adjusted EBITDAre | $684,944 | $620,432 | | Adjusted Debt / Annualized Adjusted EBITDAre | 5.3x | 5.2x | - **Adjusted Debt increased by $386.7 million**, and **Annualized Adjusted EBITDAre increased by $64.5 million** year-over-year[174](index=174&type=chunk) - The **Adjusted Debt to Annualized Adjusted EBITDAre ratio slightly increased from 5.2x to 5.3x**[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to financial market risks, primarily interest rate risk, and mitigation strategies - As of March 31, 2023, **$2.8 billion of indebtedness was fixed-rate** (Senior Unsecured Notes and mortgages payable) with a **weighted average stated interest rate of 3.25%**[177](index=177&type=chunk) - **$800.0 million of variable-rate 2022 Term Loans were effectively fixed at 3.50%** through interest rate swaps[177](index=177&type=chunk)[178](index=178&type=chunk) - The remaining **$98.0 million under the 2019 Credit Facility was variable-rate**, with a **100 basis point increase in 1-month SOFR impacting annual interest expense by $1.0 million**[177](index=177&type=chunk)[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control - Management concluded that the design and operation of **disclosure controls and procedures were effective** as of March 31, 2023[180](index=180&type=chunk) - There were **no material changes to internal control over financial reporting** during the quarter ended March 31, 2023[181](index=181&type=chunk) [PART II — OTHER INFORMATION](index=43&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not currently involved in any material legal proceedings - The Company is **not a party to any legal proceedings** expected to have a material adverse effect on its business, financial condition, or results of operations[183](index=183&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - **No material changes to the risk factors** as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[184](index=184&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates no unregistered sales of equity securities or use of proceeds to report - None to report[185](index=185&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities - None to report[186](index=186&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states no mine safety disclosures to report - None to report[187](index=187&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section indicates no other information to report - None to report[188](index=188&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including organizational documents and certifications - The report includes various exhibits such as Articles of Restatement, Bylaws, Preferred Stock designations, award notices, and **certifications from the CEO and CFO**[189](index=189&type=chunk) [Signatures](index=45&type=section&id=Signatures) This section contains the official signatures certifying the filing of the quarterly report - The report was signed by **Prakash J. Parag, Senior Vice President and Chief Accounting Officer** of Spirit Realty Capital, Inc. on May 3, 2023[192](index=192&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36004 SPIRIT REALTY CAPITAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...

[Glossary](index=3&type=section&id=Glossary) The glossary provides definitions for key terms and financial measures used throughout the report - The glossary provides definitions for key terms and financial measures used throughout the report, including various debt instruments (e.g., 2019 Credit Facility, Senior Unsecured Notes), equity programs (e.g., ATM Programs), and non-GAAP financial measures (e.g., Adjusted Debt, AFFO, EBITDAre, FFO)[8](index=8&type=chunk)[9](index=9&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | September 30, 2022 (Thousands) | December 31, 2021 (Thousands) | Change (Thousands) | | :--------------------------------- | :----------------------------- | :---------------------------- | :----------------- | | Total assets | $8,341,510 | $7,330,870 | +$1,010,640 | | Total liabilities | $3,820,720 | $3,331,071 | +$489,649 | | Total stockholders' equity | $4,520,790 | $3,999,799 | +$520,991 | - Total assets increased by **over $1 billion**, primarily driven by an increase in real estate assets held for investment, net, from **$6,445,527 thousand** to **$7,258,538 thousand**, and a significant increase in cash and cash equivalents from **$17,799 thousand** to **$109,829 thousand**[13](index=13&type=chunk) - Total debt, net, increased from **$3,012,592 thousand** to **$3,518,455 thousand**, mainly due to new term loans of **$791,791 thousand**, partially offset by a decrease in revolving credit facilities[13](index=13&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, net income, and earnings per share over specific periods | Metric (Thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $182,904 | $152,568 | $526,235 | $452,335 | | Total expenses | $129,305 | $111,900 | $378,773 | $335,151 | | Net income | $76,640 | $40,878 | $215,436 | $127,333 | | Net income per share attributable to common stockholders - Basic | $0.54 | $0.32 | $1.56 | $1.02 | | Dividends declared per common share issued | $0.6630 | $0.6380 | $1.9390 | $1.8880 | - Net income attributable to common stockholders significantly increased for both the three and nine months ended September 30, 2022, primarily driven by higher rental income and substantial gains on disposition of assets[15](index=15&type=chunk) - Basic net income per share attributable to common stockholders rose from **$0.32** to **$0.54** for the three-month period and from **$1.02** to **$1.56** for the nine-month period year-over-year[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's net income and other comprehensive income components, reflecting total changes in equity from non-owner sources | Metric (Thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $74,053 | $38,291 | $207,673 | $119,570 | | Net reclassification of amounts from AOCIL | $40,204 | $702 | $41,608 | $2,106 | | Total comprehensive income | $114,257 | $38,993 | $249,281 | $121,676 | - Total comprehensive income saw a substantial increase, particularly for the three months ended September 30, 2022, largely due to a significant net reclassification of amounts from Accumulated Other Comprehensive Income (Loss) (AOCIL) of **$40,204 thousand**, compared to **$702 thousand** in the prior year[17](index=17&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity accounts, including common stock, capital in excess of par value, accumulated deficit, and comprehensive income | Metric (Thousands) | September 30, 2022 | December 31, 2021 | | :------------------------------------ | :----------------- | :---------------- | | Total Stockholders' Equity | $4,520,790 | $3,999,799 | | Common Stock Shares Outstanding | 139,661,826 | 127,699,235 | | Capital in Excess of Common Stock Par Value | $7,217,245 | $6,673,440 | | Accumulated Deficit | $(2,905,376) | $(2,840,356) | | Accumulated Other Comprehensive Income (Loss) | $35,761 | $(5,847) | - Total stockholders' equity increased by **$520,991 thousand** from December 31, 2021, to September 30, 2022, primarily driven by net income, issuance of common stock, and a positive shift in accumulated other comprehensive income[13](index=13&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - The number of common shares outstanding increased from **127,699,235** to **139,661,826**, contributing to an increase in capital in excess of common stock par value by **$543,805 thousand**[13](index=13&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (Thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $338,885 | $275,383 | | Net cash used in investing activities | $(1,002,541) | $(681,338) | | Net cash provided by financing activities | $755,686 | $338,221 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $92,030 | $(67,734) | - The company experienced a net increase in cash, cash equivalents, and restricted cash of **$92,030 thousand** for the nine months ended September 30, 2022, a significant improvement from a net decrease of **$67,734 thousand** in the prior year[28](index=28&type=chunk) - Cash provided by operating activities increased by **$63,502 thousand**, while cash used in investing activities increased by **$321,203 thousand**, primarily due to higher real estate acquisitions[28](index=28&type=chunk) - Net cash provided by financing activities more than doubled, increasing by **$417,465 thousand**, driven by term loan borrowings and common stock issuances[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, investments, debt, and other financial aspects [NOTE 1. ORGANIZATION](index=14&type=section&id=NOTE%201.%20ORGANIZATION) This note describes the company's corporate structure, its status as a REIT, and its primary business activities - Spirit Realty Capital, Inc. operates as a self-administered and self-managed REIT, primarily investing in and managing a portfolio of single-tenant, operationally essential real

[Glossary](index=3&type=section&id=Glossary) This section defines key financial terms and programs, including ATM Programs, Senior Notes, and non-GAAP financial measures like AFFO and EBITDAre - The glossary provides definitions for key financial terms and programs relevant to Spirit Realty Capital, Inc., including various ATM Programs (At-the-market equity distribution programs), Senior Notes, and non-GAAP financial measures like Adjusted Debt, Adjusted EBITDAre, AFFO, EBITDAre, and FFO[9](index=9&type=chunk)[10](index=10&type=chunk) - Key operational metrics defined include Annualized Base Rent (ABR), which reflects base rent plus earned income from direct financing leases and deferred revenue from development deals, adjusted for acquisitions and dispositions[9](index=9&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and management's discussion and analysis of Spirit Realty Capital, Inc [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Spirit Realty Capital, Inc. for the period ended June 30, 2022, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with accompanying notes detailing the Company's organization, accounting policies, investments, debt, equity, commitments, derivatives, fair value measurements, incentive plans, and subsequent events [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :----------- | | Total assets | $8,082,233 | $7,330,870 | +$751,363 | | Total liabilities | $3,729,362 | $3,331,071 | +$398,291 | | Total stockholders' equity | $4,352,871 | $3,999,799 | +$353,072 | | Total investments, net | $7,606,827 | $6,898,655 | +$708,172 | | Total debt, net | $3,420,333 | $3,012,592 | +$407,741 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the Company's revenues, expenses, and net income over specific periods | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (YoY) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (YoY) | | :----------------------------------- | :---------------------------------------- | :---------------------------------------- | :----------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Total revenues | $174,935 | $164,626 | +$10,309 | $343,331 | $299,767 | +$43,564 | | Total expenses | $130,916 | $114,070 | +$16,846 | $249,468 | $223,251 | +$26,217 | | Net income | $82,740 | $87,924 | -$5,184 | $138,796 | $86,455 | +$52,341 | | Net income attributable to common stockholders | $80,152 | $85,336 | -$5,184 | $133,620 | $81,279 | +$52,341 | | Basic EPS | $0.60 | $0.74 | -$0.14 | $1.02 | $0.71 | +$0.31 | | Diluted EPS | $0.60 | $0.74 | -$0.14 | $1.02 | $0.70 | +$0.32 | | Dividends declared per common share | $0.6380 | $0.6250 | +$0.0130 | $1.2760 | $1.2500 | +$0.0260 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's total comprehensive income, including net income and other comprehensive income items | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net income attributable to common stockholders | $80,152 | $85,336 | $133,620 | $81,279 | | Total comprehensive income | $80,854 | $86,038 | $135,024 | $82,683 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the Company's equity accounts, including common stock and retained earnings | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $4,352,871 | $3,999,799 | | Common Stock Shares Outstanding | 136,341,685 | 127,699,235 | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the Company's cash inflows and outflows from operating, investing, and financing activities | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net cash provided by operating activities | $224,342 | $191,493 | +$32,849 | | Net cash used in investing activities | $(811,517) | $(395,368) | -$(416,149) | | Net cash provided by financing activities | $606,337 | $188,134 | +$418,203 | | Net increase in cash, cash equivalents and restricted cash | $19,162 | $(15,741) | +$34,903 | | Cash, cash equivalents and restricted cash, end of period | $36,961 | $67,557 | -$30,596 | [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [NOTE 1. ORGANIZATION](index=14&type=section&id=NOTE%201.%20ORGANIZATION) This note describes the Company's structure as a self-administered REIT focused on single-tenant real estate - Spirit Realty Capital, Inc. operates as a self-administered and self-managed REIT, primarily investing in and managing a portfolio of single-tenant, operationally essential real estate throughout the United States, leased on a long-term, triple-net basis[32](index=32&type=chunk) - The Company's operations are generally carried out through Spirit Realty, L.P. (the Operating Partnership), with the Corporation and a wholly-owned subsidiary owning **99%** as limited partners[33](index=33&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements - The Company elected to account for lease concessions related to the COVID-19 pandemic consistent with ASC 842, recognizing rent deferrals as an increase to rent receivables[40](index=40&type=chunk) - For the six months ended June 30, 2022, **$0.4 million** of deferrals were recognized in rental income, a significant decrease from **$11.8 million** for the same period in 2021[40](index=40&type=chunk) - The Corporation has elected to be taxed as a REIT and believes it continues to qualify, generally not being subject to federal income tax[50](index=50&type=chunk) [NOTE 3. INVESTMENTS](index=17&type=section&id=NOTE%203.%20INVESTMENTS) This note details the Company's real estate investments, including acquisitions, dispositions, and impairment losses - As of June 30, 2022, the Company's gross investment in owned real estate properties totaled approximately **$8.8 billion**, geographically dispersed throughout **49 states**, with Texas at **14.1%**[54](index=54&type=chunk) - During the six months ended June 30, 2022, the Company acquired **97 properties** for **$920.4 million** and disposed of **22 properties** for **$78.1 million**[54](index=54&type=chunk) | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total rental income (operating leases) | $340,634 | $299,107 | | Total future minimum rentals (operating leases) | $7,394,318 | N/A | | Impairment Type | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | | Real estate asset impairment | $8,903 | $13,783 | | Intangible asset impairment | $495 | $747 | | Allowance for credit losses | $127 | $0 | | **Total impairment loss** | **$9,525** | **$14,530** | [NOTE 4. DEBT](index=19&type=section&id=NOTE%204.%20DEBT) This note provides information on the Company's debt structure, including credit facilities, senior notes, and mortgages | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :---------------------- | :----------------------------- | :------------------------------- | | Revolving credit facilities | $694,500 | $288,400 | | Senior Unsecured Notes | $2,750,000 | $2,750,000 | | Mortgages payable | $5,091 | $5,350 | | **Total debt** | **$3,449,591** | **$3,043,750** | | Total debt, net | $3,420,333 | $3,012,592 | - The 2019 Credit Facility's borrowing capacity was increased to **$1.2 billion** in March 2022, with **$694.5 million** outstanding as of June 30, 2022, bearing interest at **1-Month adjusted SOFR plus 0.775%**[69](index=69&type=chunk)[70](index=70&type=chunk) - A **$0.2 million** loss on debt extinguishment was recognized in the six months ended June 30, 2022, due to the amendment and restatement of the 2019 Revolving Credit and Term Loan Agreement[79](index=79&type=chunk) | Debt Type | Total (in thousands) | Remainder of 2022 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2025 (in thousands) | 2026 (in thousands) | Thereafter (in thousands) | | :---------------------- | :------------------- | :------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | | 2019 Credit Facility | $694,500 | — | — | — | — | $694,500 | — | | Senior Unsecured Notes | $2,750,000 | — | — | — | — | $300,000 | $2,450,000 | | Mortgages payable | $5,091 | $266 | $556 | $590 | $626 | $468 | $2,585 | | **Total** | **$3,449,591** | **$266** | **$556** | **$590** | **$626** | **$994,968** | **$2,452,585** | | Interest Expense Component | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Revolving credit facilities | $4,970 | $1,353 | | Senior Unsecured Notes | $44,626 | $41,370 | | Mortgages payable | $152 | $2,346 | | Convertible Notes | $0 | $2,658 | | Non-cash (amortization, swaps) | $4,195 | $5,043 | | Capitalized interest | $(326) | $0 | | **Total interest expense** | **$53,617** | **$52,794** | [NOTE 5. STOCKHOLDERS' EQUITY](index=22&type=section&id=NOTE%205.%20STOCKHOLDERS%27%20EQUITY) This note details changes in the Company's equity, including share issuances and dividend declarations - In January 2022, the Company entered into forward sale agreements for **9.4 million shares** of common stock at **$47.60 per share**, settling **8.3 million shares** for **$376.4 million** by June 30, 2022, with **1.1 million shares** remaining open[83](index=83&type=chunk) - Under the 2021 ATM Program, **2.9 million shares** of common stock have been sold since inception through June 30, 2022, with approximately **$364.9 million** of capacity remaining[85](index=85&type=chunk) | Dividend Type | Declaration Date | Dividend Per Share | Total Amount (in thousands) | | :-------------- | :--------------- | :----------------- | :-------------------------- | | Common Stock | Feb 9, 2022 | $0.638 | $85,688 | | Common Stock | May 18, 2022 | $0.638 | $86,987 | | Preferred Stock | Feb 9, 2022 | $0.375 | $2,588 | | Preferred Stock | May 18, 2022 | $0.375 | $2,588 | [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the Company's financial commitments and potential liabilities - As of June 30, 2022, the Company had commitments totaling **$214.5 million**, with **$126.1 million** for future acquisitions and the remainder for property improvements, mostly expected to be funded in 2022[91](index=91&type=chunk) - The Company reversed a **$5.7 million** accrued liability in Q1 2022, previously reserved for debt owed by a former tenant, as no payments were made and the debt matured[88](index=88&type=chunk) [NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES](index=23&type=section&id=NOTE%207.%20DERIVATIVE%20AND%20HEDGING%20ACTIVITIES) This note describes the Company's use of derivative instruments to manage interest rate risk - The Company uses interest rate derivative contracts (cash flow hedges) to manage its exposure to changes in interest rates on variable rate debt[94](index=94&type=chunk) - An unamortized loss of **$4.4 million** related to terminated interest rate swaps remains in Accumulated Other Comprehensive Loss (AOCL) as of June 30, 2022, with an estimated **$2.8 million** to be reclassified as an increase to interest expense in the next 12 months[95](index=95&type=chunk)[96](index=96&type=chunk) [NOTE 8. FAIR VALUE MEASUREMENTS](index=23&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) This note provides information on how the Company measures the fair value of its financial instruments and impaired assets - Fair value measurements for impaired assets are primarily classified as **Level 3**, using unobservable inputs such as purchase and sale agreements (PSAs), letters of intent (LOIs), broker opinions of value (BOVs), or comparable property prices[98](index=98&type=chunk) | Financial Instrument | Carrying Value (June 30, 2022, in thousands) | Estimated Fair Value (June 30, 2022, in thousands) | | :----------------------- | :------------------------------------------- | :------------------------------------------------- | | Loans receivable, net | $23,023 | $23,884 | | 2019 Credit Facility | $694,500 | $717,596 | | Senior Unsecured Notes, net | $2,720,562 | $2,408,658 | | Mortgages payable, net | $5,271 | $5,088 | [NOTE 9. INCENTIVE AWARD PLAN](index=25&type=section&id=NOTE%209.%20INCENTIVE%20AWARD%20PLAN) This note details the Company's stock-based compensation and incentive awards granted to employees - During the six months ended June 30, 2022, the Company granted **122 thousand restricted shares** and approved target grants of **166 thousand market-based awards** to executive officers[103](index=103&type=chunk)[104](index=104&type=chunk) | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Stock-based compensation expense | $8,412 | $6,992 | | Total unamortized stock-based compensation expense (June 30, 2022) | $28,681 | N/A | [NOTE 10. INCOME PER SHARE](index=26&type=section&id=NOTE%2010.%20INCOME%20PER%20SHARE) This note presents the basic and diluted earnings per share calculations for common stockholders | Metric | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2022 | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Net income per share attributable to common stockholders - Basic | $0.60 | $1.02 | | Net income per share attributable to common stockholders - Diluted | $0.60 | $1.02 | | Diluted weighted average shares of common stock outstanding | 134,219,450 | 131,307,057 | [NOTE 11. SUBSEQUENT EVENTS](index=26&type=section&id=NOTE%2011.%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On July 28, 2022, the Company entered into two interest rate swaps for notional amounts of **$300.0 million** and **$200.0 million**, swapping 1-Month SOFR with fixed interest rates of **2.501%** and **2.507%**, respectively, maturing on **August 22, 2027**[110](index=110&type=chunk) - On August 1, 2022, the Company entered into one interest rate swap for a notional amount of **$300.0 million**, swapping 1-Month SOFR with a fixed interest rate of **2.636%**, maturing on **August 22, 2025**[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key trends, significant events, and the impact of various factors, including the COVID-19 pandemic, on its performance for the three and six months ended June 30, 2022. It covers revenue and expense changes, property portfolio details, liquidity, debt, and non-GAAP financial measures [Special Note Regarding Forward-looking Statements](index=27&type=section&id=Special%20Note%20Regarding%20Forward-looking%20Statements) This section cautions readers about forward-looking statements and associated risks - The report contains forward-looking statements that involve numerous risks and uncertainties, including industry and economic conditions, financial market volatility, interest rate changes, and the ability to implement business strategy[113](index=113&type=chunk)[114](index=114&type=chunk) - The Company disclaims any obligation to publicly update or revise forward-looking statements, except as required by law[114](index=114&type=chunk) [Overview](index=28&type=section&id=Overview) This section provides a high-level summary of Spirit Realty Capital, Inc.'s business and portfolio - Spirit Realty Capital, Inc. is a self-administered and self-managed REIT listed on the NYSE (SRC), specializing in single-tenant, operationally essential real estate leased on a long-term, triple-net basis[115](index=115&type=chunk) - As of June 30, 2022, the portfolio comprised **2,078 owned properties** across **49 states**, leased to **342 tenants** in **35 industries**, with approximately **99.8% occupancy**[116](index=116&type=chunk) [Business Impact of the COVID-19 Pandemic](index=28&type=section&id=Business%20Impact%20of%20the%20COVID-19%20Pandemic) This section discusses the ongoing effects of the COVID-19 pandemic on the Company's operations and financial performance - The impact of the COVID-19 pandemic on the Company's business has significantly reduced since the beginning of 2021[119](index=119&type=chunk) - For the six months ended June 30, 2022, the Company deferred **$0.2 million** of rent and reversed **$0.2 million** of previous reserves against deferred rent, with no rent abatements[119](index=119&type=chunk) - As of June 30, 2022, **$11.5 million** in deferred rent receivables remained, with **61%** expected to be repaid by the end of 2023[120](index=120&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the accounting policies and estimates that require significant management judgment - Management uses judgment in applying accounting policies and making estimates, which are re-evaluated periodically[121](index=121&type=chunk) - No material changes to critical accounting policies were made during the periods covered by this quarterly report[121](index=121&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance, including revenue, expenses, and net income trends [Changes related to operating properties](index=29&type=section&id=Changes%20related%20to%20operating%20properties) This section details the factors influencing changes in rental income and other property-related revenues - Base Cash Rent increased due to net acquisitions, with **220 properties acquired** (**$105.5 million** annual in-place rent) and **29 disposed** (**$4.2 million** annual in-place rent) in the trailing twelve months ended June 30, 2022[125](index=125&type=chunk) - Net recoveries of Base Cash Rent previously reserved due to COVID-19 were minimal in H1 2022 (**$0.1 million**) compared to **$5.7 million** in H1 2021[126](index=126&type=chunk) - Variable cash rent increased due to higher tenant reimbursements for property costs, primarily property taxes, following net acquisitions[127](index=127&type=chunk) - Non-cash rental income (straight-line rent and intangible amortization) increased minimally, with net reserves of **$0.1 million** in H1 2022 compared to net recoveries of **$11.0 million** in H1 2021[129](index=129&type=chunk) [Impairments](index=31&type=section&id=Impairments) This section discusses the recognition of impairment losses on real estate and intangible assets - Impairments declined in 2022, with **$8.6 million** recorded on **two underperforming properties** and **$0.8 million** on **one vacant property** for the six months ended June 30, 2022, compared to **$11.8 million** on **15 properties** and **$2.7 million** on **five vacant properties** in H1 2021[130](index=130&type=chunk) - An allowance for credit loss of **$0.1 million** was recorded in 2022 as a result of entering into a new loan receivable[131](index=131&type=chunk) [Gain on disposition of assets](index=31&type=section&id=Gain%20on%20disposition%20of%20assets) This section reports the gains realized from the sale of properties - Gain on disposition of assets remained relatively flat, with **$39.8 million** for the six months ended June 30, 2022, compared to **$39.3 million** in H1 2021[132](index=132&type=chunk) - In H1 2022, **11 active properties** were disposed of for **$37.4 million** in net gains, and **11 vacant properties** for **$2.0 million** in net gains[132](index=132&type=chunk) [Changes related to debt](index=31&type=section&id=Changes%20related%20to%20debt) This section analyzes the impact of debt structure changes on interest expense and related financial metrics - The weighted average effective interest rate decreased from **3.64%** at June 30, 2021, to **3.19%** at June 30, 2022, primarily due to changes in the debt structure[136](index=136&type=chunk) - Interest expense increased due to higher borrowings and increased effective interest rates on the 2019 Credit Facility[136](index=136&type=chunk) - A **$0.2 million** loss on debt extinguishment was recognized in H1 2022 from amending the 2019 Revolving Credit and Term Loan Agreement[134](index=134&type=chunk) [Changes related to general and administrative expenses](index=32&type=section&id=Changes%20related%20to%20general%20and%20administrative%20expenses) This section explains the fluctuations in general and administrative costs - General and administrative expenses increased by **$1.6 million** for the six months ended June 30, 2022, primarily driven by a **$2.6 million** increase in compensation expenses (cash and non-cash)[137](index=137&type=chunk) - This increase was partially offset by a **$0.7 million** decrease in expenses related to the COVID-19 pandemic[137](index=137&type=chunk) [Changes related to other income](index=32&type=section&id=Changes%20related%20to%20other%20income) This section details non-operating income sources and their impact on financial results - The Company recognized **$5.7 million** in other income in Q1 2022 by reversing a fully reserved contingent liability for a former tenant's debt that matured without payment[138](index=138&type=chunk) [Property Portfolio Information](index=33&type=section&id=Property%20Portfolio%20Information) This section provides detailed statistics and diversification metrics for the Company's real estate portfolio [Diversification By Tenant](index=33&type=section&id=Diversification%20By%20Tenant) This section illustrates the distribution of Annualized Base Rent across various tenant concepts - As of June 30, 2022, the portfolio consisted of **2,078 properties** leased to **342 tenants** in **35 industries**, with approximately **99.8% occupancy**[116](index=116&type=chunk)[139](index=139&type=chunk) - No single tenant concept accounts for more than **4.2%** of Annualized Base Rent (ABR)[139](index=139&type=chunk)[140](index=140&type=chunk) | Tenant Concept | Percent of ABR | | :--------------- | :------------- | | Life Time Fitness | 4.2% | | ClubCorp | 2.6% | | BJ's Wholesale Club | 2.2% | | At Home | 2.2% | | Dave & Buster's / Main Event | 2.2% | | Church's Chicken | 2.0% | [Lease Expirations](index=33&type=section&id=Lease%20Expirations) This section presents a schedule of lease expirations and their impact on Annualized Base Rent - As of June 30, 2022, the weighted average remaining non-cancelable initial term of leases was **10.3 years**[141](index=141&type=chunk) | Leases Expiring In: | Percent of ABR | | :------------------ | :------------- | | Remainder of 2022 | 0.5% | | 2023 | 3.6% | | 2024 | 2.7% | | 2025 | 3.5% | | 2026 | 7.0% | | Thereafter | 51.5% | [Diversification By Geography](index=34&type=section&id=Diversification%20By%20Geography) This section outlines the geographical distribution of the Company's property portfolio - The portfolio is geographically diversified across **49 states**[142](index=142&type=chunk) | Location | Percent of ABR | | :--------- | :------------- | | Texas | 13.8% | | Florida | 7.8% | | Georgia | 6.2% | | Ohio | 5.5% | | Michigan | 4.3% | | California | 4.2% | [Diversification By Asset Type and Tenant Industry](index=35&type=section&id=Diversification%20By%20Asset%20Type%20and%20Tenant%20Industry) This section categorizes the portfolio by asset type and the industries of its tenants | Asset Type | Percent of ABR | | :----------- | :------------- | | Retail | 70.9% | | Non-Retail | 29.1% | | Top Retail Tenant Industries | Percent of ABR | | :--------------------------- | :------------- | | Health and Fitness | 8.2% | | Convenience Stores | 6.0% | | Restaurants - Quick Service | 5.1% | | Restaurants - Casual Dining | 4.8% | | Car Washes | 4.5% | | Top Non-Retail Underlying Use | Percent of ABR | | :---------------------------- | :------------- | | Distribution | 10.5% | | Manufacturing | 7.5% | | Office | 2.7% | | Country Club | 2.6% | | Medical | 2.2% | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the Company's ability to meet its short-term and long-term financial obligations [ATM PROGRAM](index=36&type=section&id=ATM%20PROGRAM) This section describes the Company's At-the-Market equity distribution program - A new **$500.0 million** 2021 ATM Program was approved in November 2021[145](index=145&type=chunk) - As of June 30, 2022, **2.9 million shares** were sold under the 2021 ATM Program, with approximately **$364.9 million** of capacity remaining[147](index=147&type=chunk) [FORWARD EQUITY OFFERING](index=36&type=section&id=FORWARD%20EQUITY%20OFFERING) This section details the Company's forward sale agreements for common stock - In January 2022, the Company entered into forward sale agreements for **9.4 million shares** of common stock at an initial public offering price of **$47.60 per share**[148](index=148&type=chunk) - By June 30, 2022, **8.3 million shares** were settled, generating net proceeds of **$376.4 million**, with **1.1 million shares** remaining open for settlement by **July 19, 2023**[148](index=148&type=chunk) [SHORT-TERM LIQUIDITY AND CAPITAL RESOURCES](index=36&type=section&id=SHORT-TERM%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section outlines the Company's immediate sources of funds and financial flexibility - Short-term funding sources include cash from operating activities, borrowings under the 2019 Credit Facility, and equity issuances[149](index=149&type=chunk) - As of June 30, 2022, available liquidity included **$5.4 million** in cash, **$31.5 million** in restricted cash, **$505.5 million** of borrowing capacity under the 2019 Credit Facility, and **$51.8 million** of expected proceeds from open forward equity contracts[149](index=149&type=chunk) [LONG-TERM LIQUIDITY AND CAPITAL RESOURCES](index=36&type=section&id=LONG-TERM%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section describes the Company's strategies for securing capital to fund long-term growth and operations - Long-term capital needs are planned to be met by issuing registered debt or equity securities, obtaining asset-level financing, and issuing fixed-rate secured or unsecured notes and bonds[150](index=150&type=chunk) - The Company acknowledges market uncertainties (rising interest rates, inflation, geopolitical events) that could impact access to capital markets[150](index=150&type=chunk) [DESCRIPTION OF CERTAIN DEBT](index=37&type=section&id=DESCRIPTION%20OF%20CERTAIN%20DEBT) This section provides details on the Company's various debt instruments [2019 Credit Facility](index=37&type=section&id=2019%20Credit%20Facility) This section describes the terms and outstanding amounts of the Company's revolving credit facility - The 2019 Credit Facility was amended in March 2022, increasing borrowing capacity to **$1.2 billion** (expandable to **$1.7 billion**) with a maturity of **March 31, 2026**[152](index=152&type=chunk) - As of June 30, 2022, **$694.5 million** was outstanding, bearing interest at a **1-Month adjusted SOFR rate plus 0.775%**[154](index=154&type=chunk) [Senior Unsecured Notes](index=37&type=section&id=Senior%20Unsecured%20Notes) This section lists the Company's senior unsecured notes, including maturity dates and interest rates | Senior Unsecured Notes | Maturity Date | Stated Interest Rate | Outstanding Principal (June 30, 2022, in thousands) | | :--------------------- | :------------ | :------------------- | :------------------------------------------------ | | 2026 Senior Notes | Sep 15, 2026 | 4.45% | $300,000 | | 2027 Senior Notes | Jan 15, 2027 | 3.20% | $300,000 | | 2028 Senior Notes | Mar 15, 2028 | 2.10% | $450,000 | | 2029 Senior Notes | Jul 15, 2029 | 4.00% | $400,000 | | 2030 Senior Notes | Jan 15, 2030 | 3.40% | $500,000 | | 2031 Senior Notes | Feb 15, 2031 | 3.20% | $450,000 | | 2032 Senior Notes | Feb 15, 2032 | 2.70% | $350,000 | | **Total** | | **3.25%** | **$2,750,000** | [Mortgages payable](index=37&type=section&id=Mortgages%20payable) This section provides details on the Company's outstanding mortgage loans - As of June 30, 2022, the Company had two fixed-rate CMBS loans totaling **$5.1 million** in aggregate outstanding principal, with stated interest rates of **5.80%** and **6.00%**, maturing in **August 2031** and **December 2025**, respectively[156](index=156&type=chunk) [DEBT MATURITIES](index=37&type=section&id=DEBT%20MATURITIES) This section presents a schedule of the Company's debt obligations by maturity year | Debt Type | Total (in thousands) | Remainder of 2022 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2025 (in thousands) | 2026 (in thousands) | Thereafter (in thousands) | | :---------------------- | :------------------- | :------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | | 2019 Credit Facility | $694,500 | — | — | — | — | $694,500 | — | | Senior Unsecured Notes | $2,750,000 | — | — | — | — | $300,000 | $2,450,000 | | Mortgages payable | $5,091 | $266 | $556 | $590 | $626 | $468 | $2,585 | | **Total** | **$3,449,591** | **$266** | **$556** | **$590** | **$626** | **$994,968** | **$2,452,585** | [CONTRACTUAL OBLIGATIONS](index=38&type=section&id=CONTRACTUAL%20OBLIGATIONS) This section outlines the Company's significant contractual commitments and payment obligations - No material changes to contractual obligations occurred during the six months ended June 30, 2022, outside the ordinary course of business, other than the amendment and restatement of the 2019 Revolving Credit and Term Loan Agreement[158](index=158&type=chunk) [DISTRIBUTION POLICY](index=38&type=section&id=DISTRIBUTION%20POLICY) This section describes the Company's policy for distributing income to shareholders as a REIT - The Company is required to distribute **90%** of its taxable income (subject to certain adjustments and excluding net capital gains) annually to maintain qualification as a REIT for federal income tax purposes[161](index=161&type=chunk) - Distributions are at the sole discretion of the Board of Directors, with form, timing, and amount dependent on factors including actual and projected results of operations, FFO, liquidity, cash flows, and REIT taxable income[163](index=163&type=chunk) [Cash Flows](index=38&type=section&id=Cash%20Flows) This section analyzes the Company's cash generation and usage across operating, investing, and financing activities | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net cash provided by operating activities | $224,342 | $191,493 | +$32,849 | | Net cash used in investing activities | $(811,517) | $(395,368) | -$(416,149) | | Net cash provided by financing activities | $606,337 | $188,134 | +$418,203 | | Net increase in cash, cash equivalents and restricted cash | $19,162 | $(15,741) | +$34,903 | - Operating cash flow increased by **$32.8 million**, driven by a **$53.2 million** increase in cash rental revenue from net acquisitions, partially offset by higher cash interest paid and lease incentives[166](index=166&type=chunk) - Investing activities used **$811.5 million**, primarily for **97 property acquisitions** (**$872.7 million**) and capitalized expenditures, partially offset by **$111.2 million** in net proceeds from dispositions[168](index=168&type=chunk) - Financing activities provided **$606.3 million**, mainly from net borrowings under revolving credit facilities (**$406.1 million**) and common stock issuance (**$389.7 million**), offset by dividend payments (**$174.1 million**)[171](index=171&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any material off-balance sheet transactions or obligations - As of June 30, 2022, the Company did not have any material off-balance sheet arrangements[172](index=172&type=chunk) [New Accounting Pronouncements](index=39&type=section&id=New%20Accounting%20Pronouncements) This section refers to disclosures regarding recently adopted or issued accounting standards - Refer to Note 2 to the consolidated financial statements for details on new accounting pronouncements[173](index=173&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial metrics used by management [FFO and AFFO](index=41&type=section&id=FFO%20and%20AFFO) This section presents the Company's Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | FFO attributable to common stockholders | $123,377 | $115,562 | $245,060 | $173,341 | | AFFO attributable to common stockholders | $121,084 | $99,872 | $234,371 | $187,132 | | FFO per share of common stock - Diluted | $0.92 | $1.00 | $1.86 | $1.50 | | AFFO per share of common stock - Diluted | $0.90 | $0.86 | $1.78 | $1.62 | - FFO increased by **$7.8 million** (**6.8%**) for Q2 2022 and **$71.7 million** (**41.4%**) for H1 2022[183](index=183&type=chunk) - AFFO increased by **$21.2 million** (**21.2%**) for Q2 2022 and **$47.2 million** (**25.2%**) for H1 2022[183](index=183&type=chunk) [Adjusted Debt, Adjusted EBITDAre and Annualized Adjusted EBITDAre](index=42&type=section&id=Adjusted%20Debt,%20Adjusted%20EBITDAre%20and%20Annualized%20Adjusted%20EBITDAre) This section provides details on the Company's adjusted debt and EBITDAre metrics | Metric | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Adjusted Debt | $3,412,630 | $2,701,044 | +$711,586 | | Annualized Adjusted EBITDAre | $651,368 | $540,224 | +$111,144 | | Adjusted Debt / Annualized Adjusted EBITDAre | 5.2x | 5.0x | +0.2x | - Adjusted EBITDAre for Q2 2022 was **$163.0 million**, up from **$150.3 million** in Q2 2021[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to financial market risks, primarily interest rate risk, which influences its performance more than inflation due to its long-term, triple-net leases. While the majority of its indebtedness is fixed-rate, variable-rate borrowings under the 2019 Credit Facility expose it to rising interest rates, potentially increasing annual interest expense - The Company's operating results depend heavily on the difference between revenue from assets and interest expense incurred on borrowings[190](index=190&type=chunk) - As of June 30, 2022, **$2.8 billion** of indebtedness was fixed-rate (**3.25%** weighted average stated interest rate), and **$694.5 million** was variable-rate under the 2019 Credit Facility (**2.31%** stated interest rate)[191](index=191&type=chunk) - A **100 basis point (1.0%)** increase in 1-Month SOFR would increase annual interest expense by **$6.9 million** on the outstanding 2019 Credit Facility borrowings[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022. No material changes to internal control over financial reporting occurred during the quarter - An evaluation concluded that the design and operation of disclosure controls and procedures were **effective** as of June 30, 2022[193](index=193&type=chunk) - There were no changes to internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2022[194](index=194&type=chunk) [PART II — OTHER INFORMATION](index=44&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently a party to any material legal proceedings that are expected to have a significant adverse effect on its business, financial condition, or results of operations - The Company is not currently a party to any legal proceedings that are believed to be material or that would individually or in the aggregate be expected to have a material effect on its business, financial condition, or results of operations[196](index=196&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to the risk factors as disclosed in Part I, Item 1A. Risk Factors in the Annual Report on Form 10-K for the year ended December 31, 2021[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[198](index=198&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures to report for the period - None[200](index=200&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) No other information is required to be disclosed under this item for the period - None[201](index=201&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, incentive award plans, certifications, and XBRL-related documents - Exhibits include Articles of Restatement, Articles of Amendment, Bylaws, the Second Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, Form of Indemnification Agreement, and certifications from the Chief Executive Officer and Chief Financial Officer[202](index=202&type=chunk) [SIGNATURES](index=46&type=section&id=SIGNATURES) This section confirms the official signing and submission of the report - The report was signed on behalf of Spirit Realty Capital, Inc. by Prakash J. Parag, Senior Vice President and Chief Accounting Officer, on August 3, 2022[205](index=205&type=chunk)

[Glossary](index=3&type=section&id=Glossary) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Q1 2022 unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and key accounting notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) | Metric | March 31, 2022 (Thousands) | December 31, 2021 (Thousands) | | :----------------------------------- | :-------------------------- | :--------------------------- | | Total assets | $7,789,101 | $7,330,870 | | Total liabilities | $3,523,933 | $3,331,071 | | Total stockholders' equity | $4,265,168 | $3,999,799 | - Total assets **increased** by approximately **$458.2 million** from December 31, 2021, to March 31, 2022, primarily driven by an increase in total investments, net, and cash and cash equivalents[14](index=14&type=chunk) - Total debt, net, **increased** by approximately **$231.9 million**, from **$3,012,592 thousand** at December 31, 2021, to **$3,244,509 thousand** at March 31, 2022, mainly due to increased borrowings under revolving credit facilities[14](index=14&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :----------------------------------- | :--------------- | :--------------- | :----------- | | Total revenues | $168,396 | $135,141 | +24.6% | | Total expenses | $118,552 | $109,181 | +8.6% | | Net income (loss) | $56,056 | $(1,469) | N/A | | Net income (loss) attributable to common stockholders | $53,468 | $(4,057) | N/A | | Basic EPS | $0.42 | $(0.04) | N/A | | Diluted EPS | $0.42 | $(0.04) | N/A | - The company reported a **significant turnaround** from a net loss of **$1,469 thousand** in Q1 2021 to a net income of **$56,056 thousand** in Q1 2022[16](index=16&type=chunk) - Rental income **increased** by **$32,417 thousand** (**24.1%**) year-over-year, contributing significantly to the revenue growth[16](index=16&type=chunk) - Loss on debt extinguishment **decreased** substantially from **$(29,177) thousand** in Q1 2021 to **$(172) thousand** in Q1 2022, positively impacting net income[16](index=16&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | | :----------------------------------- | :--------------- | :--------------- | | Net income (loss) attributable to common stockholders | $53,468 | $(4,057) | | Net reclassification of amounts from AOCL | $702 | $702 | | Total comprehensive income (loss) | $54,170 | $(3,355) | - Total comprehensive income saw a **substantial improvement**, moving from a loss of **$3,355 thousand** in Q1 2021 to an income of **$54,170 thousand** in Q1 2022[18](index=18&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric (March 31) | 2022 (Thousands) | 2021 (Thousands) | | :---------------- | :--------------- | :--------------- | | Total Stockholders' Equity | $4,265,168 | $3,525,056 | | Common Stock Shares Outstanding | 134,306,501 | 114,947,986 | - Total stockholders' equity **increased** by **$265,369 thousand** from December 31, 2021, to March 31, 2022, primarily due to net income and issuance of common stock[21](index=21&type=chunk) - The number of common shares issued and outstanding **increased** significantly from 127,699,235 at December 31, 2021, to 134,306,501 at March 31, 2022, reflecting new share issuances[14](index=14&type=chunk)[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :----------------------------------------------- | :--------------- | :--------------- | :----------- | | Net cash provided by operating activities | $78,271 | $64,431 | +21.5% | | Net cash used in investing activities | $(499,550) | $(181,254) | -175.6% | | Net cash provided by financing activities | $430,056 | $295,414 | +45.6% | | Net increase in cash, cash equivalents and restricted cash | $8,777 | $178,591 | -95.1% | - Net cash used in investing activities significantly **increased** due to higher acquisitions of real estate (**$474.4 million** in Q1 2022 vs **$194.2 million** in Q1 2021) and investments in loans receivable[25](index=25&type=chunk) - Net cash provided by financing activities **increased**, driven by net borrowings under revolving credit facilities and proceeds from common stock issuance, partially offset by dividend payments[25](index=25&type=chunk) [NOTE 1. ORGANIZATION](index=12&type=section&id=NOTE%201.%20ORGANIZATION) - Spirit Realty Capital, Inc. operates as a self-administered and self-managed REIT, primarily investing in and managing a portfolio of single-tenant, operationally essential real estate across the United States[30](index=30&type=chunk) - The Company's operations are mainly conducted through Spirit Realty, L.P. (the Operating Partnership), where the Corporation and a wholly-owned subsidiary collectively own **99%** as limited partners[31](index=31&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACOUNTING%20POLICIES) - The financial statements are prepared in accordance with GAAP and SEC rules, including normal recurring adjustments, and should be read with the Company's 2021 Form 10-K[32](index=32&type=chunk) - The Company consolidates its wholly-owned subsidiaries, including the Operating Partnership, and eliminates all significant intercompany balances and transactions[33](index=33&type=chunk) - The Company operates as a single segment focused on net leasing operations[36](index=36&type=chunk) [NOTE 3. INVESTMENTS](index=15&type=section&id=NOTE%203.%20INVESTMENTS) - As of March 31, 2022, the Company's gross investment in owned real estate properties totaled approximately **$8.4 billion**, geographically dispersed across **49 states**, with Texas being the only state exceeding **10%** of the total gross investment at **13.1%**[53](index=53&type=chunk) | Real Estate Activity (Three Months Ended March 31, 2022) | Number of Properties | Dollar Amount of Investments (Thousands) | | :--------------------------------------- | :------------------- | :------------------------------------- | | Gross balance, December 31, 2021 | 2,003 | $7,943,185 | | Acquisitions/improvements | 41 | $505,238 | | Dispositions of real estate | (5) | $(10,177) | | Gross balance, March 31, 2022 | 2,039 | $8,433,638 | - Total rental income for operating leases **increased** from **$134,658 thousand** in Q1 2021 to **$167,075 thousand** in Q1 2022, primarily driven by Base Cash Rent[57](index=57&type=chunk) | Scheduled Minimum Future Rent (March 31, 2022) | Amount (Thousands) | | :--------------------------------------------- | :----------------- | | Remainder of 2022 | $469,027 | | 2023 | $618,693 | | 2024 | $605,399 | | 2025 | $593,938 | | 2026 | $567,428 | | Thereafter | $4,354,297 | | Total future minimum rentals | $7,208,782 | [NOTE 4. DEBT](index=17&type=section&id=NOTE%204.%20DEBT) | Debt Type (Thousands) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Revolving credit facilities | $519,500 | $288,400 | | Senior Unsecured Notes | $2,750,000 | $2,750,000 | | Mortgages payable | $5,221 | $5,350 | | Total debt | $3,274,721 | $3,043,750 | - The 2019 Credit Facility's borrowing capacity was **increased** to **$1.2 billion** in March 2022, with **$680.5 million** available as of March 31, 2022[67](index=67&type=chunk)[70](index=70&type=chunk) - The weighted average effective interest rate on total debt **decreased** from **3.80%** at March 31, 2021, to **3.17%** at March 31, 2022[132](index=132&type=chunk) | Debt Maturities (March 31, 2022, Thousands) | Total | | :------------------------------------------ | :---- | | Remainder of 2022 | $396 | | 2023 | $556 | | 2024 | $590 | | 2025 | $626 | | 2026 | $819,968 | | Thereafter | $2,452,585 | | Total | $3,274,721 | [NOTE 5. STOCKHOLDERS' EQUITY](index=19&type=section&id=NOTE%205.%20STOCKHOLDERS'%20EQUITY) - In January 2022, the Company entered into forward sale agreements for **9.4 million** shares of common stock, settling **6.3 million** shares by March 31, 2022, for net proceeds of **$286.5 million**[81](index=81&type=chunk) - A new **$500.0 million** ATM Program was approved in November 2021, with **$364.9 million** capacity remaining as of March 31, 2022[83](index=83&type=chunk)[144](index=144&type=chunk) - The Company declared a common stock dividend of **$0.638** per share and a preferred stock dividend of **$0.375** per share for the three months ended March 31, 2022[85](index=85&type=chunk) [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company reversed a **$5.7 million** accrued liability for a former tenant's debt in Q1 2022, as no payments were made and the debt matured[86](index=86&type=chunk) - As of March 31, 2022, the Company had commitments totaling **$301.6 million**, with **$248.4 million** for future acquisitions and the remainder for property improvements, mostly expected to be funded in 2022[89](index=89&type=chunk) [NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES](index=21&type=section&id=NOTE%207.%20DERIVATIVE%20AND%20HEDGING%20ACTIVITIES) - The Company uses interest rate derivative contracts as cash flow hedges to manage variable rate debt exposure, recognizing changes in fair value in Accumulated Other Comprehensive Loss (AOCL)[92](index=92&type=chunk) - An unamortized loss of **$5.1 million** related to terminated interest rate swaps remained in AOCL as of March 31, 2022, with an estimated **$2.8 million** expected to be reclassified to interest expense in the next **12 months**[93](index=93&type=chunk)[94](index=94&type=chunk) [NOTE 8. FAIR VALUE MEASUREMENTS](index=21&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) - No properties were impaired during the three months ended March 31, 2022, compared to **14 properties** impaired in 2021[97](index=97&type=chunk) | Financial Instrument (Thousands) | Carrying Value (March 31, 2022) | Estimated Fair Value (March 31, 2022) | | :------------------------------- | :------------------------------ | :------------------------------------ | | Loans receivable, net | $23,023 | $24,367 | | 2019 Credit Facility | $519,500 | $539,182 | | Senior Unsecured Notes, net | $2,719,597 | $2,645,123 | | Mortgages payable, net | $5,412 | $5,362 | [NOTE 9. INCENTIVE AWARD PLAN](index=23&type=section&id=NOTE%209.%20INCENTIVE%20AWARD%20PLAN) - The Company granted **87 thousand** restricted shares and **166 thousand** target market-based awards in Q1 2022, resulting in **$4.1 million** in deferred compensation for restricted shares[102](index=102&type=chunk)[103](index=103&type=chunk) - Stock-based compensation expense **increased** to **$4.0 million** for Q1 2022 from **$3.4 million** for Q1 2021[105](index=105&type=chunk) | Unamortized Stock-based Compensation Expense (Thousands) | March 31, 2022 | December 31, 2021 | | :------------------------------------------------------- | :------------- | :---------------- | | Restricted share awards | $7,476 | $4,787 | | Market-based awards | $24,113 | $11,143 | | Total unamortized stock-based compensation expense | $31,589 | $15,930 | [NOTE 10. INCOME PER SHARE](index=24&type=section&id=NOTE%2010.%20INCOME%20PER%20SHARE) | Metric (Three Months Ended March 31) | 2022 | 2021 | | :----------------------------------- | :------------- | :------------- | | Basic EPS | $0.42 | $(0.04) | | Diluted EPS | $0.42 | $(0.04) | | Basic weighted average shares outstanding | 127,951,825 | 114,673,218 | | Diluted weighted average shares outstanding | 128,360,431 | 114,673,218 | - Net income attributable to common stockholders used in EPS calculation significantly **improved** from a loss of **$4,201 thousand** in Q1 2021 to an income of **$53,337 thousand** in Q1 2022[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of Q1 2022 financial performance, covering operations, COVID-19 impact, revenues, expenses, portfolio, liquidity, cash flow, and non-GAAP measures [Special Note Regarding Forward-looking Statements](index=25&type=section&id=Special%20Note%20Regarding%20Forward-looking%20Statements) - The report contains forward-looking statements, which involve numerous risks and uncertainties, and readers should not rely on them as predictions of future events[109](index=109&type=chunk)[110](index=110&type=chunk) - Key risks include industry and economic conditions, financial market volatility, success of business strategy, tenant financial performance, competition, borrowing costs, access to capital markets, lease renewals, legal/regulatory issues, and real estate business inherent risks[111](index=111&type=chunk) [Overview](index=26&type=section&id=Overview) - Spirit Realty Capital, Inc. is a self-administered and self-managed REIT, investing in single-tenant, operationally essential real estate leased on a long-term, triple-net basis[112](index=112&type=chunk) - As of March 31, 2022, the portfolio comprised **2,039** owned properties across **49 states**, leased to **334 tenants** in **35 industries**, with approximately **99.8%** occupancy[113](index=113&type=chunk) [Business Impact of the COVID-19 Pandemic](index=26&type=section&id=Business%20Impact%20of%20the%20COVID-19%20Pandemic) - The impact of the COVID-19 pandemic significantly reduced in Q1 2022, with no deferred rent or rent abatements recognized, and **$0.2 million** in recoveries of previous reserves[116](index=116&type=chunk) - As of March 31, 2022, **$13.0 million** in deferred rent receivables remained, with **68%** expected to be repaid by the end of 2023[117](index=117&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management uses judgment and estimates in applying accounting policies, with no material changes to these policies during the current reporting period[118](index=118&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) | Metric (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | Increase / (Decrease) | | :----------------------------------- | :--------------- | :--------------- | :-------------------- | | Total revenues | $168,396 | $135,141 | $33,255 | | Total expenses | $118,552 | $109,181 | $9,371 | | Net income (loss) | $56,056 | $(1,469) | $57,525 | - Rental income **increased** by **$32.4 million**, primarily due to net acquisitions and recoveries of previously reserved Base Cash Rent[122](index=122&type=chunk)[123](index=123&type=chunk) - Impairments **decreased** significantly from **$6.7 million** in Q1 2021 to **$0.1 million** in Q1 2022, reflecting commercial real estate market recovery[127](index=127&type=chunk) - Interest expense **decreased** by **$0.6 million** despite increased debt, due to new debt issuances at lower interest rates, reducing the weighted average interest rate to **3.17%** from **3.80%**[132](index=132&type=chunk) - General and administrative expenses **increased** by **$1.6 million**, mainly due to higher compensation expenses from internal promotions, new hires, and non-cash compensation[133](index=133&type=chunk) [Property Portfolio Information](index=31&type=section&id=Property%20Portfolio%20Information) - The portfolio consists of **2,039** properties with **99.8%** occupancy across **49 states**, leased to **334 tenants** in **35 industries**[136](index=136&type=chunk) | Top Tenant Concepts (as of March 31, 2022) | Percent of ABR | | :----------------------------------------- | :------------- | | Life Time Fitness | 3.5% | | ClubCorp | 2.7% | | BJ's Wholesale Club | 2.3% | | Church's Chicken | 2.1% | | At Home | 1.9% | | Home Depot | 1.9% | | Main Event | 1.8% | | Circle K | 1.8% | | Dollar Tree / Family Dollar | 1.7% | | GPM | 1.6% | - The weighted average remaining non-cancelable initial lease term is **10.4 years**, with **0.8%** of ABR expiring in the remainder of 2022[138](index=138&type=chunk) | Top Geographic Concentrations (as of March 31, 2022) | Percent of ABR | | :--------------------------------------------------- | :------------- | | Texas | 13.1% | | Florida | 8.5% | | Georgia | 6.2% | | Ohio | 5.2% | | Michigan | 4.2% | | California | 4.2% | | Tennessee | 4.1% | | Asset Type / Tenant Industry (as of March 31, 2022) | Percent of ABR | | :-------------------------------------------------- | :------------- | | Retail | 70.7% | | Health and Fitness | 7.5% | | Convenience Stores | 6.3% | | Restaurants - Quick Service | 5.2% | | Non-Retail | 29.3% | | Distribution | 11.5% | | Manufacturing | 7.7% | | Office | 2.8% | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2022, available liquidity included **$24.2 million** in cash, **$680.5 million** borrowing capacity under the 2019 Credit Facility, and **$141.8 million** in expected proceeds from open forward equity contracts[146](index=146&type=chunk) - The Company plans to meet long-term capital needs through debt or equity securities, asset-level financing, and fixed-rate notes, while continuously evaluating financing alternatives[147](index=147&type=chunk) - The 2019 Credit Facility was amended to **increase** borrowing capacity to **$1.2 billion**, with a maturity of March 31, 2026, and two six-month extension options[149](index=149&type=chunk) - The Company is required to distribute **90%** of its taxable income annually to maintain REIT qualification and intends to make distributions to minimize corporate-level federal income and excise taxes[158](index=158&type=chunk)[159](index=159&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) | Cash Flow Activity (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :----------------------------------------------- | :--------------- | :--------------- | :----------- | | Net cash provided by operating activities | $78,271 | $64,431 | +$13,840 | | Net cash used in investing activities | $(499,550) | $(181,254) | -$(318,296) | | Net cash provided by financing activities | $430,056 | $295,414 | +$134,642 | - Operating cash flow **increased** by **$13.8 million**, driven by a **$26.3 million** increase in cash rental revenue from net acquisitions, partially offset by higher cash interest paid and bonus payments[163](index=163&type=chunk) - Investing activities used significantly more cash (**$499.6 million** vs **$181.3 million** YoY) due to increased real estate acquisitions (**$474.4 million** for **41 properties**) and new loan investments[165](index=165&type=chunk)[166](index=166&type=chunk) - Financing cash flow **increased** by **$134.6 million**, primarily from **$299.8 million** in common stock issuance proceeds and **$231.1 million** in net revolving credit facility borrowings, partially offset by **$85.8 million** in dividends[168](index=168&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of March 31, 2022, the Company did not have any material off-balance sheet arrangements[169](index=169&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) - FFO (Funds From Operations) and AFFO (Adjusted Funds From Operations) are non-GAAP measures used to assess operational performance, excluding items like depreciation, impairment, and debt extinguishment losses[171](index=171&type=chunk)[173](index=173&type=chunk) | Non-GAAP Metric (Three Months Ended March 31) | 2022 (Thousands) | 2021 (Thousands) | | :-------------------------------------------- | :--------------- | :--------------- | | FFO attributable to common stockholders | $121,683 | $57,779 | | AFFO attributable to common stockholders | $113,287 | $87,260 | | FFO per share of common stock - Diluted | $0.95 | $0.50 | | AFFO per share of common stock - Diluted | $0.88 | $0.76 | - Adjusted Debt to Annualized Adjusted EBITDAre **improved** to **5.2x** as of March 31, 2022, from **5.5x** as of March 31, 2021, indicating **improved leverage**[184](index=184&type=chunk) | Adjusted Debt & EBITDAre (Thousands) | March 31, 2022 | March 31, 2021 | | :----------------------------------- | :------------- | :------------- | | Adjusted Debt | $3,248,145 | $2,684,260 | | Adjusted EBITDAre | $155,321 | $122,932 | | Annualized Adjusted EBITDAre | $620,432 | $487,752 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the Company's exposure to financial market risks, primarily interest rate risk, and its management and mitigation strategies - The Company is exposed to interest rate risk, with operating results heavily dependent on the difference between asset revenue and interest expense on borrowings[189](index=189&type=chunk)[190](index=190&type=chunk) - As of March 31, 2022, **$2.8 billion** of indebtedness was fixed-rate (Senior Unsecured Notes and mortgages payable) with a weighted average stated interest rate of **3.25%**[191](index=191&type=chunk) - The remaining **$519.5 million** was variable-rate borrowings under the 2019 Credit Facility (stated interest rate of **1.18%**). A **100 basis point** increase in 1-Month SOFR would **increase** annual interest expense by **$5.2 million**[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effective disclosure controls and procedures, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the design and operation of disclosure controls and procedures were effective as of March 31, 2022[193](index=193&type=chunk) - There were no material changes to internal control over financial reporting during the quarter ended March 31, 2022[194](index=194&type=chunk) [PART II — OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not a party to any material legal proceedings significantly impacting its business or financial condition - The Company is not currently involved in any legal proceedings expected to have a material adverse effect on its financial position, results of operations, or cash flows[196](index=196&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to the 2021 Annual Report on Form 10-K - No material changes to the risk factors were reported compared to those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - There were no unregistered sales of equity securities or use of proceeds to report[198](index=198&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred during the reporting period[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - No mine safety disclosures were reported[200](index=200&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No other information was reported - No other information was reported[201](index=201&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and certifications - The exhibits include various corporate governance documents, such as Articles of Restatement, Articles of Amendment, and Fifth Amended and Restated Bylaws[202](index=202&type=chunk) - Key operational agreements like the Amended and Restated Revolving Credit Agreement are also filed as exhibits[202](index=202&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer, as required by the Exchange Act and Sarbanes-Oxley Act, are included[202](index=202&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Maryland 20-1676382 (I.R.S. Employer Identification Number) 2727 North Harwood Street, Suite 300, Dallas, Texas 75201 (972) 476-1900 (Address of principal executive offices; zip code) (Registrant's telephone number, including area code) Securities registered pursuan ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36004 SPIRIT REALTY CAPITAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

[Glossary](index=3&type=section&id=Glossary) The glossary provides definitions for key terms and financial measures used throughout the report - The glossary provides definitions for key terms and financial measures used throughout the report, including non-GAAP measures like **Adjusted Debt**, **Adjusted EBITDAre**, **AFFO**, and **FFO**, as well as various debt instruments and company-specific agreements[7](index=7&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [Part I — Financial Information](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including the balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, significant accounting policies, investments, debt, equity, commitments, derivatives, fair value measurements, incentive awards, income per share, and related party transactions for the periods ended June 30, 2021 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (In Thousands) | Metric | June 30, 2021 | December 31, 2020 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $6,713,192 | $6,396,786 | $316,406 | 4.95% | | Total liabilities | $3,028,368 | $2,795,666 | $232,702 | 8.32% | | Total stockholders' equity | $3,684,824 | $3,601,120 | $83,704 | 2.32% | | Cash and cash equivalents | $9,403 | $70,303 | $(60,900) | -86.63% | | Senior Unsecured Notes, net | $2,716,752 | $1,927,348 | $789,404 | 40.96% | | Term loans, net | $— | $177,309 | $(177,309) | -100.00% | | Convertible Notes, net | $— | $189,102 | $(189,102) | -100.00% | - The company's total assets increased by **4.95%** from December 31, 2020, to June 30, 2021, primarily driven by an increase in real estate investments and intangible lease assets. Total liabilities also increased, largely due to a significant increase in **Senior Unsecured Notes**, while **Term Loans** and **Convertible Notes** were fully repaid[13](index=13&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (In Thousands, Except Per Share Data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $164,626 | $118,524 | $299,767 | $241,244 | | Total expenses | $114,070 | $119,527 | $223,251 | $258,341 | | Net income (loss) | $87,924 | $(413) | $86,455 | $(16,260) | | Net income (loss) attributable to common stockholders | $85,336 | $(3,001) | $81,279 | $(21,436) | | Basic EPS | $0.74 | $(0.03) | $0.71 | $(0.21) | | Diluted EPS | $0.74 | $(0.03) | $0.70 | $(0.21) | - The company reported a significant turnaround in profitability, moving from a net loss in the prior year to substantial net income for both the three and six months ended June 30, 2021. This improvement was driven by increased total revenues and a decrease in total expenses, particularly a sharp reduction in impairment charges[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) Highlights (In Thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders | $85,336 | $(3,001) | $81,279 | $(21,436) | | Total comprehensive income (loss) | $86,038 | $(2,299) | $82,683 | $(20,032) | - Total comprehensive income showed a strong positive shift, aligning with the improved net income, reflecting a recovery from the losses experienced in the comparable periods of the prior year[18](index=18&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Stockholders' Equity Highlights (In Thousands, Except Share Data) | Metric | June 30, 2021 | December 31, 2020 | Change | % Change | | :--------------------------------------- | :------------ | :---------------- | :----- | :------- | | Total Stockholders' Equity | $3,684,824 | $3,601,120 | $83,704 | 2.32% | | Common stock shares outstanding | 119,103,912 | 114,812,615 | 4,291,297 | 3.74% | | Capital in excess of common stock par value | $6,278,735 | $6,126,503 | $152,232 | 2.49% | | Accumulated deficit | $(2,758,793) | $(2,688,647) | $(70,146) | 2.61% | - Stockholders' equity increased by **2.32%** primarily due to net income and issuance of common stock, partially offset by dividends declared. The number of common shares outstanding increased by **3.74%** during the six months ended June 30, 2021[21](index=21&type=chunk)[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, In Thousands) | Metric | 2021 | 2020 | Change | % Change | | :--------------------------------------- | :----------- | :----------- | :------- | :------- | | Net cash provided by operating activities | $191,493 | $133,011 | $58,482 | 43.97% | | Net cash used in investing activities | $(395,368) | $(206,840) | $(188,528) | 91.15% | | Net cash provided by financing activities | $188,134 | $157,191 | $30,943 | 19.69% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(15,741) | $83,362 | $(99,103) | -118.88% | | Cash, cash equivalents and restricted cash, end of period | $67,557 | $109,385 | $(41,828) | -38.24% | - Operating cash flow significantly increased by **43.97%** in the first half of 2021, while cash used in investing activities more than doubled due to increased real estate acquisitions. Financing activities also provided more cash, primarily from **Senior Unsecured Notes** issuance and common stock, but overall cash and equivalents decreased due to higher investment outflows[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - Spirit Realty Capital, Inc. operates as a self-administered and self-managed REIT, primarily investing in single-tenant, operationally essential real estate leased on a long-term, triple-net basis across retail, industrial, and office sectors in the United States[33](index=33&type=chunk) - The company's gross investment in owned real estate properties totaled approximately **$7.2 billion** as of June 30, 2021. During the six months ended June 30, 2021, the company acquired 43 properties for **$478.6 million** and disposed of 16 properties for **$54.2 million**[56](index=56&type=chunk)[57](index=57&type=chunk) Debt Summary (In Thousands) | Debt Type | June 30, 2021 | December 31, 2020 | Weighted Average Effective Interest Rate (2021) | | :------------------------ | :------------ | :---------------- | :---------------------------------------------- | | Revolving credit facilities | $13,000 | $— | 4.06% | | Term loans | $— | $178,000 | 1.96% | | Senior Unsecured Notes | $2,750,000 | $1,950,000 | 3.51% | | Mortgages payable | $5,601 | $214,237 | 4.40% | | Convertible Notes | $— | $190,426 | 5.03% | | Total debt, net | $2,735,575 | $2,506,341 | 3.64% | - During the six months ended June 30, 2021, the company repaid **$178.0 million** of 2020 Term Loans and **$190.4 million** of Convertible Notes upon maturity. It also issued **$800.0 million** in new Senior Unsecured Notes (2028 and 2032 series) and repaid **$207.4 million** of CMBS indebtedness, incurring a **$28.5 million** loss on debt extinguishment primarily due to prepayment penalties[74](index=74&type=chunk)[75](index=75&type=chunk)[78](index=78&type=chunk)[83](index=83&type=chunk) - As of June 30, 2021, the company had **$289.1 million** remaining available under its **$500.0 million** 2020 ATM Program. It declared common stock dividends of **$0.625 per share** for both Q1 and Q2 2021, and preferred stock dividends of **$0.375 per share**[86](index=86&type=chunk)[88](index=88&type=chunk) - Commitments as of June 30, 2021, totaled **$269.9 million**, with **$246.3 million** allocated to future acquisitions, expected to be funded primarily during 2021[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational performance, highlighting key drivers of revenue and expense changes, portfolio diversification, liquidity, and capital resources. It also includes a discussion of non-GAAP financial measures crucial for REIT performance evaluation [Overview](index=29&type=section&id=Overview) - Spirit Realty Capital, Inc. is a self-administered and self-managed REIT focused on single-tenant, operationally essential real estate in the U.S., leased on a long-term, triple-net basis. As of June 30, 2021, its portfolio comprised **1,887 owned properties** across 48 states, with **99.7% occupancy**, leased to 306 tenants in over 28 industries[120](index=120&type=chunk)[121](index=121&type=chunk) - The impact of the COVID-19 pandemic on tenants has significantly reduced since the beginning of 2021. For the three and six months ended June 30, 2021, the company recognized **$9.1 million** and **$11.8 million**, respectively, in rental income from rent deferrals, and abated **$0.2 million** and **$1.1 million** of rent, respectively[124](index=124&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Key Revenue and Expense Changes (In Thousands) | Metric | 3 Months Ended June 30, 2021 vs 2020 (Change) | 6 Months Ended June 30, 2021 vs 2020 (Change) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Rental income | $47,259 | $60,554 | | General and administrative expenses | $1,475 | $1,031 | | Interest expense | $75 | $1,340 | | Depreciation and amortization | $6,914 | $11,765 | | Impairments | $(13,249) | $(47,293) | | Gain on disposition of assets | $36,849 | $38,297 | | Net income (loss) | $88,337 | $102,715 | - The increase in rental income was primarily driven by net acquisitions and a significant reversal of reserves for **Base Cash Rent** previously deemed uncollectible, reflecting improved tenant credit conditions post-COVID-19. Rent abatements also decreased[129](index=129&type=chunk)[130](index=130&type=chunk) - Impairment charges decreased substantially due to the absence of significant tenant bankruptcies in 2021 and a recovery in market conditions compared to the downturn in 2020. Gains on asset dispositions also increased significantly[133](index=133&type=chunk)[137](index=137&type=chunk) - Interest expense saw a slight increase despite a reduction in the weighted average interest rate from **3.55%** (June 30, 2020) to **3.24%** (June 30, 2021), primarily due to an overall increase in total debt outstanding[142](index=142&type=chunk) [Property Portfolio Information](index=34&type=section&id=Property%20Portfolio%20Information) - As of June 30, 2021, the company's portfolio consisted of **1,887 owned properties** with **99.7% occupancy** across 48 states, leased to 306 tenants in 28 retail industries. The weighted average remaining non-cancelable initial lease term was **10.1 years**[145](index=145&type=chunk)[147](index=147&type=chunk) Top Tenant Concentration (As of June 30, 2021) | Tenant | Percent of ABR | | :-------------------------- | :------------- | | Life Time Fitness, Inc. | 3.2% | | Cajun Global LLC | 2.4% | | BJ's Wholesale Club, Inc. | 2.4% | | At Home Group, Inc. | 2.2% | | The Home Depot, Inc. | 2.2% | Geographic and Asset Type Diversification (As of June 30, 2021) | Category | Top Concentration | Percent of ABR | | :---------------- | :---------------- | :------------- | | **Geography** | Texas | 10.7% | | | Florida | 9.4% | | **Asset Type** | Retail | 75.1% | | | Industrial | 17.9% | | | Office and Other | 7.0% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2021, the company's available liquidity included **$9.4 million** in cash and cash equivalents, **$787.0 million** of borrowing capacity under the 2019 Credit Facility, and **$58.2 million** in restricted cash. Additionally, **$289.1 million** remained available under the 2020 ATM Program[156](index=156&type=chunk) - The company's long-term capital needs are planned to be met through issuing registered debt or equity securities, asset-level financing, and fixed-rate secured or unsecured notes and bonds[157](index=157&type=chunk) Cash Flow Summary (Six Months Ended June 30, In Thousands) | Cash Flow Type | 2021 | 2020 | Change | | :------------------------------- | :----------- | :----------- | :------- | | Net cash provided by operating activities | $191,493 | $133,011 | $58,482 | | Net cash used in investing activities | $(395,368) | $(206,840) | $(188,528) | | Net cash provided by financing activities | $188,134 | $157,191 | $30,943 | - Operating cash flow increased due to higher cash rental revenue, reduced rent abatements, and decreased deferred rent. Investing cash outflow increased significantly due to **$480.2 million** in real estate acquisitions. Financing cash flow was boosted by **$794.8 million** in Senior Unsecured Notes and **$145.7 million** from common stock issuance, partially offset by debt repayments and dividend payments[173](index=173&type=chunk)[175](index=175&type=chunk)[178](index=178&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) - The company uses non-GAAP financial measures such as **FFO** (Funds From Operations) and **AFFO** (Adjusted Funds From Operations) to evaluate operational performance, and **Adjusted Debt**, **EBITDAre**, and **Adjusted EBITDAre** to assess financial condition and debt servicing capability[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) Non-GAAP Performance Metrics (Three Months Ended June 30, In Thousands, Except Per Share Data) | Metric | 2021 | 2020 | | :--------------------------------------- | :----------- | :----------- | | FFO attributable to common stockholders | $115,562 | $70,404 | | AFFO attributable to common stockholders | $99,872 | $73,605 | | FFO per share of common stock - Diluted | $1.00 | $0.68 | | AFFO per share of common stock - Diluted | $0.86 | $0.71 | Adjusted Debt and Leverage Ratio (In Thousands) | Metric | June 30, 2021 | June 30, 2020 | | :--------------------------------------- | :------------ | :------------ | | Adjusted Debt | $2,701,044 | $2,351,931 | | Annualized Adjusted EBITDAre | $540,224 | $410,972 | | Adjusted Debt / Annualized Adjusted EBITDAre | 5.0x | 5.7x | - The **Adjusted Debt to Annualized Adjusted EBITDAre ratio** improved to **5.0x** as of June 30, 2021, from **5.7x** in the prior year, indicating improved leverage[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to financial market risks, primarily interest rate risk, and discusses how its asset and debt structures mitigate these risks. It also provides a sensitivity analysis for variable-rate debt - The company is primarily exposed to interest rate risk, but this is mitigated by its long-term, fixed-rate leases with scheduled rent increases. As of June 30, 2021, **$2.8 billion** of its indebtedness was fixed-rate (**3.25%** weighted average stated interest rate), while **$13.0 million** was variable-rate (**1.05%** stated interest rate)[199](index=199&type=chunk)[201](index=201&type=chunk) - A **100 basis point (1.0%)** increase in 1-Month LIBOR would result in an estimated **$0.1 million** increase in annual interest expense on the variable-rate debt outstanding as of June 30, 2021[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[203](index=203&type=chunk) - There were no changes to the company's internal control over financial reporting during the quarter ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[204](index=204&type=chunk) [Part II — Other Information](index=45&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses the status of any material legal proceedings involving the company - The company is not currently a party to any legal proceedings that are believed to be material or would have a material adverse effect on its business, financial condition, or results of operations[206](index=206&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section addresses any material changes to the risk factors previously disclosed in the company's annual report - There have been no material changes to the risk factors as disclosed in Part I, Item 1A. Risk Factors in the company's Annual Report on Form 10-K for the year ended December 31, 2020[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any unregistered sales of equity securities and the use of proceeds from such sales - There were no unregistered sales of equity securities or use of proceeds to report for the period[208](index=208&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section discloses any defaults upon senior securities - There were no defaults upon senior securities to report for the period[209](index=209&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section provides any required mine safety disclosures - There were no mine safety disclosures to report for the period[210](index=210&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section includes any other information required to be disclosed that is not covered by other items - There was no other information to report for the period[211](index=211&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the quarterly report, including corporate governance documents, debt indentures, and certifications - The exhibits include Articles of Restatement and Amendment, Bylaws, Partnership Agreements, Supplemental Indentures for Senior Unsecured Notes, and certifications from the Chief Executive Officer and Chief Financial Officer[212](index=212&type=chunk) [Signatures](index=47&type=section&id=Signatures) This section contains the official signatures confirming the report's compliance with regulatory requirements - The report is duly signed on behalf of Spirit Realty Capital, Inc. by **Prakash J. Parag**, Senior Vice President and Chief Accounting Officer, confirming compliance with Securities Exchange Act of 1934 requirements[214](index=214&type=chunk)[215](index=215&type=chunk)