Spirit Realty Capital : 2021 Annual Report(opens in new window)

Dear Spirit Shareholders,

Once again, I find myself writing to you in a time of global volatility. It was this time two years ago that we were plunging into the depths of a global pandemic, and now we face the largest European land war since World War II. I am particularly heartbroken over the human suffering that is occurring within Ukraine, and the resulting extraordinary refugee crises unfolding there. The Ukrainian struggle reminds me of my own family history: my father had to flee Shanghai in 1949, leaving literally everything behind, on one of the last flights out before Mao's Chinese Communist Party closed the country. Fortunately for my brothers and me, my parents were able to escape Communist China and eventually settle in San Francisco in the early 1950s. As a child, they constantly reminded us of how fortunate my brothers and I were to be American citizens, where we were free to determine our own destiny. They taught us that if we worked hard, did our best and never gave up, we could achieve anything we set our minds to. I have continued to make those lessons a daily part of my life and I applied those same lessons in shaping Spirit into the company it is today.

The "New Spirit" looks nothing like the company I joined back in September 2016. My team and I have worked tirelessly to reshape our real estate portfolio, retool our balance sheet, re-engineer our processes and add key personnel. Today, we are ideally positioned to pursue our growth strategy and weather external market dislocations and volatility.

Since the team was put in place in 2017 through the end of 2021, we have sold and spun-off $3.8 billion in non-core real estate assets and have acquired $3.8 billion of carefully selected real estate assets that meet our long-term investment strategy. The scope and breadth of this portfolio shaping has been transformational. As of December 31, 2021, compared to where we stood at March 31, 2017, this effort resulted in:

• - a greater than 100% increase in industrial exposure to 18.6% of Annualized Base Rent ("ABR"),

• - a 15% increase in public tenant exposure to 51.9% of ABR,

• - a 7% increase in investment grade tenant exposure to 21.9% of ABR; and

• - a decrease in credit losses, reflected by a decrease in lost rent to effectively zero, with only 4 vacant properties, the lowest in Spirit's history.

The quality of Spirit's portfolio, and the resulting stability of its cash flows, was a key factor that enabled us to increase our guidance in January 2022 beyond the initial 2022 earnings targets originally provided pre-pandemic.

Equally transformational has been Spirit's balance sheet. Today, we are a BBB rated serial bond issuer with stellar credit metrics and liquidity, access to well-priced capital, and a long-dated, well-laddered debt maturity profile. In addition, our newly expanded $1.2 billion revolving credit facility, coupled with our $450 million forward equity offering in January 2022, provides us with substantial debt and equity capacity to execute on this year's acquisition pipeline and enable us to deliver on the acquisition and earnings guidance we presented in January.

impediments it faced in the past. Post-spin, our portfolio is stronger

across every key metric and our balance sheet is significantly enhanced. Further, our operational performance has been consistent, with de minimus

2727 North Harwood Street

Suite 300

lost rent, healthy same-store rent growth and record occupancy. Finally, Dallas, TX 75201 we were able to deliver AFFO at the high end of our expectations while

Further, I would highlight that our acquismitaioi ntsainpilnagtfolorwmlehvaesrahgitei.tsTshtersideer.eWsueltsarvealaidcaqteuiwrinhgatfwasetesra,idatbgarcekaitner20vo1l7ume, and with more grawnhuelanriwtyethaann oeuvnecrebdetfhoeres.pWine-oaffreofaSlsMoTAso, uthrcatintghemimorpeaacct qtouiSspitioritnosffsroepmareaxtiinsgtinSgMtTeAnaisntsiamnpdlyo-wAnWerErSeOlaMtioEn! ships. In 2021, we sourced over 70% of our acquisitions from existing tenant or owner relationships. Our acquisition, credit and asset management

As I laid out in the Path Forward strategy and have continued to teams are fully built out, well-seasoned and coordinating efforts to expand our opportunity set, while processing opportunities

at aenmapchcaesliezera,toeudrpoabcjec.tive is to make Spirit a simplified, pure play triple net REIT with a strong balance sheet that can deliver consistent AFFO and dividend growth. As we stand here today, much of the heavy lifting

1.6%

SAME STORE SALES GROWTH

SoisWdhoyneO. wWneObuerlieSvteocokurTinotdearnya?l processes and portfolio management It ctomolessadreowant thoethcreuettinsgimepdlegreeaosfotnhse: industry, our portfolio quality is high, and our balance sheet is efficient, flexible and low leveraged. We aligned, focused and able to take Spirit forward and maximize value for

$3.78

5.1X

AFFO1

LEVERAGE2

1) Our transformation is complete - our real estate portfolio is excellent, our team is producing consistently and efficiently, our havperoacsessesmebsleadreafufilrlysto-cplatismsizseedn,ioarnldeaoduerrsbhaiplantecaemshtheaett iiss cstoemllaprl;etely 99.7%

0.3%

OCCUPIED

LOST RENT

2) Our earnings growth is sustainable - we are well capitalized to achieve our 2022 acquisition and AFFO per share targets; our shareholders. We have come a long way, and I firmly believe that we and are entering the final 10% of a plan that started with an unconventional idea and took a great deal of hard work

3) Our current AFFO per share multiple lags our peers - we believe there is room for outsized total shareholder returns and and fortitude to realize. I think it is a great time to be a Spirit shareholder for several reasons: opportunity for earnings growth acceleration as our cost of equity improves.

• • We have excellent people, properties and processes;

• • Spirit presents an attractive value proposition relative to peers; and

We are•detTehrme ifnuelldcotomcplloestieonthoef trheelaPtivaethAFFoFrOwamrdupltilpanleisgajupstwoitvherotuhrepheoerrizsoann. d we believe that continued, solid execution going forward will lead us to future re-rating of our multiple.

I am proud to say that we have met or exceeded every target we have laid out as a company since I became

FinCalElyO, I.caWnitahstshuarteinyomuinthda,taosuwr beelosot-kint-ocwlaasrsdtethaemyeoaf rparohfeasds,iownealswwill ifllocounstionnuethtroe excerictiuctael,inmitaiakteivegsootodpcoaspititioanl allocation decisions to maximize risk adjusted returns; producing consistent operating results that will drive steady earnings and dividend growth to

Spirit for long-term success. In 2019, we will: generate meaningful shareholder value.

1. Assist the SMTA Independent Trustees in their accelerated strategic process. Completion of this process and the final decoupling of Spirit from SMTA is the most critical step in making Spirit simple Best, and understandable for investors.

• 2. Continue to improve predictive analytics and our tenant relationships in order to maintain high quality operations and deliver strong, consistent results; and

• 3. Execute on the acquisition and disposition targets that have been incorporated in our 2019 earnings guidance.

In closing, the finish line is in sight. We are grateful to our board for their advice and counsel and to our team members for their hard work and dedication. Finally, to all our shareholders, we thank you for your support and patience as we complete our journey to make Spirit a truly great company.

Sincerely,

JJaacckkson Hssieiehh

President and

Director, President & Chief Executive Officer

Chief Executive Officer

(1) Full year AFFO per diluted share excluding the Haggen settlement, as outlined on page 48 of our 2018 10-K.

(2) Calculated as adjusted debt to annualized adjusted EBITDAre.

1 1

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Spirit Realty Capital | Annual Report

Company Information

Executive Officers

Jackson Hsieh President

Chief Executive OfficerMichael Hughes Executive Vice President Chief Financial OfficerKen Heimlich Executive Vice President Chief Investment Officer

Jay Young

Executive Vice President Chief Administrative Officer Chief Legal Officer

Board of Directors

Rochelle Thomas Executive Vice President General Counsel

Richard Gilchrist Chairman

Compensation Committee

Jackson Hsieh Director

President & Chief Executive Officer

Diana Laing Director

Audit Committee (Chair)

Michelle Frymire Director

Audit Committee

Kevin Charlton Director

Compensation Committee (Chair)

Thomas Sullivan Director

Compensation Committee

Todd Dunn Director

Nominating & Corporate Governance Committee (Chair)

Nicholas Shepherd Director

Compensation Committee Nominating & Corporate Governance Committee

Kristian Gathright Director

Nominating & Corporate Governance Committee

Elizabeth Frank Director

Audit Committee Nominating & Corporate Governance Committee

Spirit Realty Capital | Annual Report

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, 2021

Commission File Number 001-36004

SPIRIT REALTY CAPITAL, INC.

(Exact name of registrant as specified in its charter)

Maryland	20-1676382
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
2727 North Harwood Street, Suite 300,
Dallas, Texas 75201	[phone]
(Address of principal executive offices; zip code)	(Registrant's telephone number, including

area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.05 par value per share	SRC	New York Stock Exchange
6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	SRC-A	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Emerging growth company ☐

Accelerated filer

☐

Non-accelerated filer ☐

Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2021 (the last business day of the registrant's most recently completed second fiscal quarter), the aggregate market value of Spirit Realty Capital, Inc.'s shares of common stock, $0.05 par value, held by non-affiliates of the Registrant, was $5.7 billion based on the last reported sale price of $47.84 per share on the New York Stock Exchange on June 30, 2021.

The number of outstanding shares of Spirit Realty Capital, Inc.'s common stock, $0.05 par value, as of February 10, 2022, was 127,745,808 shares.

Documents Incorporated by Reference

Certain specific portions of the definitive Proxy Statement for Spirit Realty Capital, Inc.'s 2022 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K. Only those portions of the Proxy Statement which are specifically incorporated by reference herein shall constitute a part of this Annual Report on Form 10-K.