VEREIT, Inc. (NYSE:VER) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 01:30 pm ET

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VEREIT, Inc. (NYSE:VER) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Jeremy Metz with BMO Capital Markets. Please go ahead.

Analyst
Jeremy Metz

Hey, guys. I just wanted to talk about the partnership angle a little bit for the industrial partnerships, are these existing from what you did last or are they new? How much equity will you be contributing out of the $400 million to $600 million? And then can you talk about the potential fee opportunities within these?

Executive
Glenn Rufrano

Yeah, I'll start, and then as Bonni mentioned, both Tom and Paul are here, so I'll kick this over to Tom. But Jeremy to start with the fees, we have confidentiality in the partnerships, but I can give you a good sense of about how the fees will work for both partnerships, both the industrial and the office. The asset management fee is approximately half a point on equity. The acquisition fee on new assets would be half a point on gross asset. The property management fee approximates 1% of revenues. And then we have disproportionate sharing of equity of promote, but that's down the road. That's a little different for each one. But those three fees would approximate what we'd be getting from the partnerships in terms of the industrial partnership and what we've been looking at, it's both existing and to be built, and I'll let Tom fill you on that.

Executive
Thomas W. Roberts

Yes. A lot of the assets are going to be newer, state of the art distribution facilities. And as you know, it's a investment grade appetite for industrial. And generally, these are build-to-suit assets that are in some cases a forward commitment that allow us to give a little higher yield by trimming those and funding those six months to nine months out. So, as you know, we did contribute six assets off to the balance sheet, about $407 million, about 4.8 million square feet and that was slightly under a six cap.

So, the one thing we have noticed is our pipeline of sourced assets has increased, that's obviously an area we couldn't compete in the past on the balance sheet because of pricing. So with this new form of equity, we're seeing tremendous activity in that industrial investment grade, you know, like I said state of the art distribution warehouse type facility. So we're very excited about the activity. Glenn mentioned, we have $280 million or $248 million on the industrial front that's under contract, scheduled to close early -- first, early second quarter.

Analyst
Jeremy Metz

And so, that $600 million, is that your share or is that the gross value and you'll have a percentage of that?

Executive
Glenn Rufrano

That's the gross value, Jeremy. And it's an 80/20 deal, so that we have 20% of the equity and our partner Gatehouse would have 80%, and we're expecting somewhere about 60% to 65% financing.

Analyst
Jeremy Metz

Got it. Okay. And then in terms of the office partnership acquisitions, just Glenn, how do you weigh, you know, your desire, you