STORE Capital Announces Second Quarter 2022 Operating Results

Raises 2022 AFFO Per Share Guidance

STORE Capital Corporation (NYSE:STOR, "STORE Capital" or the "Company"))), an internally managed net-lease real estate investment trust (REIT) that invests in Single Tenant Operational Real Estate, today announced operating results for the second quarter ended June 30, 2022.

Highlights

For the quarter ended June 30, 2022:

• Total revenues of $223.8 million
• Net income of $90.5 million, or $0.32 per basic and diluted share, including an aggregate net gain of $13.7 million on dispositions of real estate
• AFFO of $163.8 million, or $0.58 per basic and diluted share
• Declared a regular quarterly cash dividend per common share of $0.385
• Invested $391.9 million in 62 properties at a weighted average initial cap rate of 7.2%
• Closed on an aggregate $600 million of five-year ($400 million) and seven-year ($200 million) unsecured bank term debt at a weighted average interest rate of 3.68%
• Raised $83.4 million in net proceeds from the sale of approximately 3.1 million common shares under the Company's at-the-market equity program

For the six months ended June 30, 2022:

• Total revenues of $445.9 million
• Net income of $177.5 million, or $0.64 per basic and diluted share, including an aggregate net gain of $19.7 million on dispositions of real estate
• AFFO of $321.6 million, or $1.16 per basic and diluted share
• Declared regular cash dividends per common share aggregating $0.770
• Invested $904.4 million in 173 properties at a weighted average initial cap rate of 7.1%
• Raised $249.6 million in net proceeds from the sale of approximately 8.6 million common shares under the Company's at-the-market equity program

Management Commentary

"Our momentum continued into the second quarter as we acquired $392 million in profit center real estate, while at the same time driving higher cap rates and lease escalations. We delivered strong revenue growth of 17% and a robust AFFO per share of $0.58. Our results were powered by our strong first half acquisition pace and the excellent performance of our portfolio," said Mary Fedewa, STORE Capital's President and Chief Executive Officer. "We address a very large market with our unique acquisition model and our financing flexibility allows us to optimize our cost of capital and maintain attractive spreads. As a result, we believe we can continue to deliver attractive risk-adjusted returns to our stakeholders in 2022 and beyond. Based on our results in the first half of 2022 and our outlook for the remainder of the year, we are raising our 2022 AFFO per share guidance from a range of $2.20 to $2.23 to a range of $2.25 to $2.27."

Financial Results

Total Revenues

Total revenues were $223.8 million for the second quarter of 2022, an increase of 16.5% from $192.0 million for the second quarter of 2021.

Total revenues for the first half of 2022 were $445.9 million, an increase of 19.1% from $374.3 million for the first half of 2021. The increase was driven primarily by the growth in the size of STORE Capital's real estate investment portfolio, which grew from $10.0 billion in gross investment amount representing 2,738 property locations and 529 customers at June 30, 2021 to $11.4 billion in gross investment amount representing 3,012 property locations and 579 customers at June 30, 2022.

Net Income

Net income was $90.5 million, or $0.32 per basic and diluted share, for the second quarter of 2022, as compared to $62.4 million, or $0.23 per basic and diluted share, for the second quarter of 2021. Net income for the second quarter of 2022 included an aggregate net gain on dispositions of real estate of $13.7 million, as compared to an aggregate net gain on dispositions of real estate of $5.9 million for the same period in 2021.

Net income includes such items as gain or loss on dispositions of real estate and provisions for impairment, which can vary from quarter to quarter and impact net income and period-to-period comparisons.

Net income for the six months ended June 30, 2022 was $177.5 million, or $0.64 per basic and diluted share, as compared to $117.4 million, or $0.44 per basic and diluted share, for the six months ended June 30, 2021. Net income for the first half of 2022 included an aggregate net gain on dispositions of real estate of $19.7 million, as compared to an aggregate net gain on dispositions of real estate of $21.5 million for the same period in 2021. Net income for the first half of 2021 reflects the impact of $10.1 million of noncash stock-based compensation expense related to the modification of certain performance-based awards granted in prior years.

Adjusted Funds from Operations (AFFO)

AFFO increased to $163.8 million, or $0.58 per basic and diluted share, for the second quarter of 2022, as compared to AFFO of $135.6 million, or $0.50 per basic and diluted share, for the second quarter of 2021. AFFO for the six months ended June 30, 2022 was $321.6 million, or $1.16 per basic and diluted share, an increase from $260.9 million, or $0.97 per basic and diluted share, for the six months ended June 30, 2021.

AFFO for the three- and six-month periods in 2022 rose primarily as a result of net additional rental revenues and interest income generated by growth in the Company's real estate investment portfolio.

Dividend Information

As previously announced, STORE Capital declared a regular quarterly cash dividend per common share of $0.385 for the second quarter ended June 30, 2022. This dividend, totaling $108.8 million, was paid on July 15, 2022 to stockholders of record on June 30, 2022.

Real Estate Portfolio Highlights

Investment Activity

The Company originated $391.9 million of gross investments representing 62 property locations during the second quarter of 2022. These origination and other activities resulted in the creation of 11 new customer relationships. The investments had a weighted average initial cap rate of 7.2%. Total investment activity for the first half of 2022 was $904.4 million representing 173 property locations with a weighted average initial cap rate of 7.1%. The Company defines "initial cap rate" for property acquisitions as the initial annual cash rent divided by the purchase price of the property. STORE's leases customarily have lease escalations, most of which are tied to the consumer price index and subject to a cap. For acquisitions made during the three and six months ended June 30, 2022, the weighted average stated lease escalation cap was 2.0% and 1.9%, respectively.

Disposition Activity

During the six months ended June 30, 2022, the Company sold 24 properties and recognized an aggregate net gain on the disposition of real estate of $19.7 million; 13 of these 24 properties were sold in the second quarter for an aggregate net gain of $13.7 million. For the six months ended June 30, 2022, net proceeds from the disposition of real estate aggregated $117.2 million as compared to an aggregate original investment amount of $113.4 million. The Company also collected $4.2 million in lease termination fees in connection with property sales during the six months ended June 30, 2022.

Portfolio

At June 30, 2022, STORE Capital's real estate portfolio totaled $11.4 billion. Approximately 94% of the portfolio represents commercial real estate properties subject to long-term leases, 6% represents mortgage loans and financing receivables on commercial real estate properties and a nominal amount represents loans receivable secured by the tenants' other assets. As of June 30, 2022, the portfolio's annualized base rent and interest (based on rates in effect on June 30, 2022 for all lease and loan contracts) totaled $908 million. The weighted average non-cancelable remaining term of the leases at June 30, 2022 was approximately 13.2 years, excluding renewal options, with leases representing approximately 4.4% of the portfolio scheduled to expire in the next five years (prior to 2027).

The Company's portfolio of real estate investments is highly diversified across customers, brand names or business concepts, industries and geography. The following table presents a summary of the portfolio.

Capital Transactions

The Company established a $900 million "at the market" equity distribution program, or ATM Program, in November 2020 and terminated its previous program. During the second quarter of 2022, the Company sold an aggregate of approximately 3.1 million common shares at a weighted average share price of $27.52 and raised approximately $83.4 million in net proceeds after the payment of sales agents' commissions and offering expenses. For the six months ended June 30, 2022, the Company sold an aggregate of approximately 8.6 million common shares at a weighted average share price of $29.38 and raised approximately $249.6 million in net proceeds after the payment of sales agents' commissions and offering expenses.

In April 2022, the Company entered into a term loan agreement under which the Company borrowed an aggregate $600 million of floating-rate, unsecured term loans through several banks who also participate in the Company's revolving credit facility. The new term loans consist of a $400 million 5-year loan and a $200 million 7-year loan. In connection with the new floating-rate term loans, the Company also entered into interest rate swap agreements that effectively convert the floating rates to a weighted average fixed rate of 3.68%. The Company used proceeds from the transaction to pay down outstanding balances on its unsecured revolving credit facility and to prepay, without penalty, $134.5 million of STORE Master Funding Series 2014-1, Class A-2 notes, which were scheduled to mature in 2024 and bore an interest rate of 5.0%.

2022 Guidance

The Company is raising its 2022 AFFO per share guidance from a range of $2.20 to $2.23 to a range of $2.25 to $2.27 and is maintaining its expected 2022 annual real estate acquisition volume, net of projected property sales, of $1.3 billion to $1.5 billion. This AFFO per share guidance equates to anticipated net income, excluding gains or losses on sales of property, of $1.11 to $1.12 per share, plus $1.07 to $1.08 per share of expected real estate depreciation and amortization, plus approximately $0.07 per share related to noncash items. 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. The AFFO per share guidance is based on a weighted average initial cap rate on new acquisitions in the range of 7.0% to 7.2%.

Conference Call and Webcast

A conference call and audio webcast with analysts and investors will be held tomorrow, August 4, 2022, at 12:00 p.m. Eastern Time / 9:00 a.m. Scottsdale, Arizona Time, to discuss second quarter ended June 30, 2022 operating results and answer questions.

• Live conference call: 855-656-0920 (domestic) or 412-542-4168 (international)
• Conference call replay available through August 18, 2022: 877-344-7529 (domestic) or 412-317-0088 (international) using access code 3145919
• Live and archived webcast: https://ir.storecapital.com/news-results/webcasts/default.aspx

Supplemental Materials

The Company's Supplemental Operating and Financial Information for the second quarter ended June 30, 2022 is available on the Investor Relations section of the STORE Capital website (www.storecapital.com) at News & Results - Quarterly Results | STORE Capital Corporation.

About STORE Capital

STORE Capital Corporation is an internally managed net-lease real estate investment trust, or REIT, that is a leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is its target market and the inspiration for its name. STORE Capital is one of the largest and fastest growing net-lease REITs and owns a large, well-diversified portfolio that consists of investments in more than 3,000 property locations across the United States, substantially all of which are profit centers. Additional information about STORE Capital can be found on its website at www.storecapital.com.

Forward-Looking Statements

Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the "safe harbor" created by those sections. Forward-looking statements can be identified by the use of words such as "estimate," "anticipate," "expect," "believe," "intend," "may," "will," "should," "seek," "approximate" or "plan," or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for STORE Capital's business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. STORE Capital expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in STORE Capital's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.

Non-GAAP Financial Measures

FFO and AFFO

STORE Capital's reported results are presented in accordance with U.S. generally accepted accounting principles, or GAAP. The Company also discloses Funds from Operations, or FFO, and Adjusted Funds from Operations, or AFFO, both of which are non‑GAAP measures. Management believes these two non‑GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or to cash flows from operations as reported on a statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

The Company computes FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income, excluding gains (or losses) from extraordinary items and sales of depreciable property, real estate impairment losses, and depreciation and amortization expense from real estate assets, including the pro rata share of such adjustments of unconsolidated subsidiaries.

To derive AFFO, the Company modifies the NAREIT computation of FFO to include other adjustments to GAAP net income related to certain revenues and expenses that have no impact on the Company's long-term operating performance, such as straight-line rents, amortization of deferred financing costs and stock-based compensation. In addition, in deriving AFFO, the Company excludes certain other costs not related to its ongoing operations, such as the amortization of lease-related intangibles and executive severance and transition costs.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among the Company's peers primarily because it excludes the effect of real estate depreciation and amortization and net gains (or losses) on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude certain additional revenues and expenses such as, as applicable, straight-line rents, including construction period rent deferrals, and the amortization of deferred financing costs, stock-based compensation, lease-related intangibles and executive severance and transition costs as such items have no impact on long-term operating performance. As a result, the Company believes AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, the Company discloses both FFO and AFFO and reconciles them to the most appropriate GAAP performance metric, which is net income. STORE Capital's FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

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