STORE Capital (STOR) Tops Q3 EPS by 1c, Revenues Beat; Offers FY18/FY19 AFFO Guidance

STORE Capital (NYSE: STOR) reported Q3 EPS of $0.23, $0.01 better than the analyst estimate of $0.22. Revenue for the quarter came in at $137 million versus the consensus estimate of $128.26 million.

• Total revenues of $137.0 million
• Net income of $48.2 million, or $0.23 per basic and diluted share, including an aggregate net gain of $1.2 million on dispositions of real estate
• AFFO of $97.4 million, or $0.47 per basic and diluted share
• Declared a regular quarterly cash dividend per common share of $0.33, representing a 6.5% increase over the second quarter
• Invested $510.6 million in 129 properties at a weighted average initial cap rate of 7.9%
• Raised net proceeds of $187.2 million from the sale of an aggregate of 6.7 million common shares under the Company’s at-the-market equity program

“The third quarter was a momentous one for STORE,” said Christopher Volk, Chief Executive Officer. “On the real estate acquisition side, we had a record quarter, which reflects the strong demand for our capital solutions as well as the investments we have made in our acquisition platform over the past year. On the portfolio side, we are virtually fully occupied and our investment activity this quarter further diversified our portfolio. On the investor side, we raised our dividends by 6.5% during the quarter while maintaining our conservative AFFO payout ratio that serves to provide a high level of dividend protection for our investors. In total, STORE has raised its dividends four times over the past four years for a total increase of 32%. And more recently, we successfully issued our first ever AAA rated notes under our Master Funding program, which expands the market for our notes, materially lowers our cost of capital and makes STORE amongst the few REITs having the capacity to issue AAA rated debt. We are proud of these accomplishments, which position us well for a strong close to 2018 and provide strong prospects for continued growth in 2019.”

2018 Guidance

The Company is raising its expected 2018 annual real estate acquisition volume guidance, net of projected property sales, from $900 million to approximately $1.2 billion and is updating its 2018 AFFO per share guidance by raising the lower end of the expected range. The Company currently expects 2018 AFFO per share to be within a range of $1.81 to $1.84, up from $1.78 to $1.84 as initially presented in November 2017. AFFO per share is sensitive to the timing and amount of real estate acquisitions, property dispositions and capital markets activities. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $0.84 to $0.86 per share, plus $0.88 to $0.89 per share of expected real estate depreciation and amortization, plus approximately $0.09 per share related to such items as straight-line rent, the amortization of stock-based compensation and deferred financing costs.

2019 Guidance

The Company currently expects 2019 AFFO per share to be within a range of $1.90 to $1.96, based on the Company’s current projections for net real estate acquisitions for the remainder of 2018 plus projected 2019 annual real estate acquisition volume, net of projected property sales, of approximately $1.1 billion. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $0.92 to $0.97 per share, plus $0.91 to $0.92 per share of expected real estate depreciation and amortization, plus approximately $0.07 per share related to noncash items. The midpoint of our AFFO per share guidance is based on a weighted average initial cap rate on new acquisitions of 7.85% and target leverage in the range of 5½ to 6 times run-rate net debt to EBITDA. AFFO per share is sensitive to the timing and amount of real estate acquisitions, property dispositions and capital markets activities during the year, as well as to the spread achieved between the lease rates on new acquisitions and the interest rates on borrowings used to finance those acquisitions.

For earnings history and earnings-related data on STORE Capital (STOR) click here.

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