Spirit Realty Expects Funds From Operations to Fall in the Quarter


Spirit Realty Capital Inc. (SRC) forecasts funds from operations, a key profit measure of real estate investment trusts, to drop in the first quarter. The preliminary figures though are still in line with or may beat analyst estimates.

For the quarter funds from operations on a per share basis are expected to be in the range of 77 cents to 79 cents, according to preliminary figures, versus the analyst consensus of 77 cents and down from 89 cents in the year-ago quarter.

During the quarter, Spirit Realty made investments of about $213.4 million, including $205.9 million for the acquisition of 27 properties with an initial weighted average 6.47% cash yield and an 7.41% economic yield. In addition, the real estate investment trust said occupancy rates stood at 99.4%. Walgreens (WBA), Home Depot (HD) and Church’s Chicken are among the real estate trust’s top ten tenants.

At the same time though, Spirit Realty said that it wasn’t able to provide fiscal guidance due to the uncertainty triggered by the coronavirus pandemic.

“The work we have done at Spirit over the past two years has meaningfully transformed our portfolio and balance sheet and vastly improved our ability to understand and process data on a real-time basis,” said Jackson Hsieh, Spirit Realty’s President and Chief Executive Officer. “We look forward to discussing how we are positioning our company and using our tools and insights to navigate the COVID-19 pandemic.”

As of April 10, Spirit Realty had $831.3 million in available assets under its 2019 credit facility and in cash and cash equivalents.

Wall Street analysts have a Moderate Buy consensus rating on the stock based on 2 Holds and 1 Buy. The $42.50 average price target sees 45% upside potential in the shares in the coming 12 months. (See Spirit Realty stock analysis on TipRanks).

During the first quarter, Spirit Realty generated $15.7 million in gross proceeds from the sale of seven properties, of which three were vacant, the trust said. As of the end of March, Spirit Realty’s portfolio comprised 1,772 owned properties and 43 properties securing mortgage loans. The real estate trust’s owned properties, with an aggregate gross leasable area of 36.1 million square feet, are leased to 298 tenants across 48 states and 28 retail industries.

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