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InfraREIT, Inc.Q3 2015 Results & Supplemental Information
Safe Harbor
Forward Looking Statements
These presentations contain “forward-looking statements” about the business, financial performance, contracts, leases and prospects of InfraREIT, Inc. (the
“Company”). Words such as “could,” “will,” “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “guidance,” “outlook,” “target,” “expect,” “intend,” “plan,”
“estimate,” “anticipate,” “believe,” “project,” “budget,” “potential” or “continue” and similar expressions are used to ident ify forward-looking statements, although not all
forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions
about future events and are based on currently available information as to the outcome and timing of future events. This presentation also contains forward-looking
statements that have previously been publicly disclosed by the Company. These previously disclosed forward-looking statements should not be deemed reaffirmed
or updated by their inclusion in this presentation. The Company’s actual results, performance or achievements could differ materially from those expressed or implied
by any forward-looking statements made in connection with this presentation. The Company’s capabilities or performance, stockholder value as well as any other
statements that are not historical facts in this presentation are forward-looking statements that involve certain risks and uncertainties, many of which are difficult to
predict and beyond the Company’s control. Factors that could cause actual results to differ materially from the results contemplated by such forward-looking
statements include, without limitation, risks that the capital expenditures the Company expects will not materialize for a variety of reasons, including as a result of
lower oil and gas drilling and related midstream and service company activities in the Permian Basin relative to the Company's current expectations; the Company’s
ability to acquire T&D assets on terms that are accretive to stockholders; the Company’s current reliance on its tenant for a ll of the Company’s revenues and, as a
result, the Company’s dependency on its tenant’s solvency and financial and operating performance; defaults on or non-renewal or early termination of leases by the
Company’s tenant; risks related to future lease negotiations; changes in the regulated rates the tenants of the Company’s assets may charge their customers; the
completion of the Company’s capital expenditure projects on time and on budget; insufficient cash available to meet distribution requirements; the price and
availability of debt and equity financing; the Company’s level of indebtedness or debt service obligations; changes in governmental policies or regulations with respect
to the Company’s permitted capital structure, acquisitions and dispositions of assets, recovery of investments and the Company’s authorized rate of return; weather
conditions and other natural phenomena; the effects of existing and future tax and other laws and governmental regulations; the Company’s failure to qualify or
maintain its status as a real estate investment trust (REIT); availability of qualified personnel; the termination of the Company’s management agreement or
development agreement or the loss of the services of the Company’s manager or the loss of access to the development function of the Company’s developer; the
effects of future litigation; changes in the tax laws applicable to REITs; adverse economic developments in the electric power industry; and changes in general
business and economic conditions, particularly in Texas. When considering forward-looking statements, you should keep in mind the risk factors and other
cautionary statements described under the heading “Risk Factors” included in the Company’s filings with the Securities and Exchange Commission. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Forward-
looking statements speak only as of the date made and reaffirmed, and the Company disclaims any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Legend
This presentation contains certain financial measures that are not recognized under generally accepted accounting principles (GAAP). These non-GAAP measures
are presented because InfraREIT’s management believes they help investors understand InfraREIT’s business, performance and ab ility to earn and distribute cash to
its stockholders by providing perspectives not immediately apparent from net income. These measures are also measures frequently used by securities analysts,
investors and other interested parties. The presentation of cash available for distribution (CAD), net income (loss) before interest expense, net; income tax expense;
depreciation and amortization (EBITDA), Adjusted EBITDA, funds from operations (FFO) and adjusted FFO (AFFO) in this presentation are not intended to be
considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, InfraREIT’s
method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures as
calculated by other companies that do not use the same methodology as InfraREIT. Reconciliations of these measures to their most directly comparable GAAP
measures are included in the Schedules 1-3 to this presentation.
2
Q3 2015 Performance Summary$ millions
3
Strong Q3 2015 performance, in line with expectations
Cash Available for Distribution
$14.3
$17.1
Q3 2014 Q3 2015
+19%
Lease Revenue
$39.3 $41.5
Q3 2014 Q3 2015
+6%
Adjusted EBITDA
$30.8$33.5
Q3 2014 Q3 2015
+9%
September YTD 2015 Performance Summary$ millions
4
Strong September YTD 2015 performance, in line with expectations
Cash Available for Distribution
$43.6
$53.6
YTD 2014 YTD 2015
+23%
Lease Revenue
$89.4$100.3
YTD 2014 YTD 2015
+12%
Adjusted EBITDA
$91.2$101.8
YTD 2014 YTD 2015
+12%
Adjusted EBITDA Q3 2015 vs. Q3 2014
5
Q3 2015 adjusted EBITDA exceeded Q3 2014 adjusted EBITDA by 9%, driven by
growth in lease revenue
$ thousands Q3 2015 Q3 2014
Increase/(Decrease)
$ %
Lease revenue $ 41,452 $ 39,309
G&A expense (5,504) (6,143)
Other income 707 294
EBITDA 36,655 33,460
Non-cash reorganization structuring fee — —
Percentage rent adjustment (2,791) (4,157)
Base rent adjustment 338 937
Reorganization expenses — 808
Other income, net (707) (294)
Adjusted EBITDA $ 33,495 $ 30,754 $2,741 9%
Adjusted EBITDASeptember YTD 2015 vs. September YTD 2014
6
September YTD 2015 adjusted EBITDA exceeded September YTD 2014 adjusted
EBITDA by 12%, driven by growth in lease revenue
$ thousands YTD 2015 YTD 2014
Increase/(Decrease)
$ %
Lease revenue $ 100,282 $ 89,371
G&A expense (58,965) (12,839)
Other income 2,180 333
EBITDA 43,497 76,865
Non-cash reorganization structuring fee 44,897 —
Percentage rent adjustment 9,768 8,899
Base rent adjustment 5,469 4,921
Reorganization expenses 333 808
Other income, net (2,180) (333)
Adjusted EBITDA $ 101,784 $ 91,160 $10,624 12%
Cash Available For Distribution Q3 2015 vs. Q3 2014
7
CAD grew by 19% over Q3 2014, reflecting growth in adjusted EBITDA
$ thousands Q3 2015 Q3 2014
Increase/(Decrease)
$ %
Net income $ 19,430 $ 15,515
Depreciation 10,259 8,998
FFO 29,689 24,513
Non-cash reorganization structuring fee — —
Percentage rent adjustment (2,791) (4,157)
Base rent adjustment 338 937
Amortization of deferred financing costs 612 1,534
Reorganization expenses — 808
Non-cash equity compensation 185 —
Other income, net (707) (294)
Capital expenditures to maintain net assets (10,259) (8,998)
Cash Available For Distribution (CAD) $ 17,067 $ 14,343 $ 2,724 19%
Shares outstanding (as of 9/30/2015) 60,594
CAD Per Share $ 0.28
Cash Available For Distribution September YTD 2015 vs. September YTD 2014
8
CAD grew by 23% over September YTD 2014, reflecting growth in adjusted EBITDA
$ thousands YTD 2015 YTD 2014
Increase/(Decrease)
$ %
Net (loss) income $ (7,600) $ 26,020
Depreciation 29,438 25,825
FFO 21,838 51,845
Non-cash reorganization structuring fee 44,897 —
Percentage rent adjustment 9,768 8,899
Base rent adjustment 5,469 4,921
Amortization of deferred financing costs 2,436 3,193
Reorganization expenses 333 808
Non-cash equity compensation 493 120
Other income, net (2,180) (333)
Capital expenditures to maintain net assets (29,438) (25,825)
Cash Available For Distribution (CAD) $ 53,616 $ 43,628 $ 9,988 23%
Shares outstanding (as of 9/30/2015) 60,594
CAD Per Share $ 0.88
Debt Obligations & Available Liquidity
9
Long-Term Debt (rate / maturity)
($ millions)
Outstanding
As of
September 30, 2015
TDC - Senior Secured Notes (8.50% / December 30, 2020) $ 19.1
SDTS - Senior Secured Notes (6.47% / September 30, 2030) 102.7
SDTS - Senior Secured Notes (7.25% / December 30, 2029) 45.0
SP - Senior Secured Credit Facility (2.45% (1) / June 20, 2018) (2) 388.7
SP - Senior Secured Notes (5.04% / June 20, 2018) (2) 60.0
Total (3) $ 615.4
Liquidity Facilities
($ millions)
Total
Amount
Outstanding
As of
September 30, 2015
Available
InfraREIT Partners Revolver $ 75.0 $ — $ 75.0
SDTS Revolver 250.0 20.0 230.0
Total $ 325.0 $ 20.0 $ 305.0
Cash (as of September 30, 2015) 29.7
Total Available Liquidity $ 334.7
(1) Interest based on LIBOR at September 30, 2015, plus an applicable margin
(2) Sharyland Projects (SP) debt used to fund construction of the CREZ Transmission assets
(3) The sum of the Long-Term Debt Total may not equal due to rounding
Financing Strategy
10
Focus on Regulated
T&D Opportunities
Maintain Strong Balance Sheet
Grow Dividends
Sign long-term leases
that reflect regulated
rate structure
Minimize regulatory
lag with prudent rate
case / TCOS filings
80% - 85% long-term
CAD payout ratio
Construct Footprint
Projects
Acquire ROFO Projects
Acquire Other Hunt
Development Projects
Opportunistically
acquire other T&D
assets
Target consolidated credit metrics of 60% Debt / Capitalization and 12% AFFO / Debt
Maintain 55% Debt / Capitalization at regulated subsidiary
Maintain significant liquidity to support capex plan and financial flexibility
Q3 2015 Highlights
Solid performance continued in Q3 2015
Year-over-year growth remains on target
Financial objectives proceeding as planned
Increasing guidance for 2015 CAD per share to $1.10 and $1.15; quarterly dividend
remains at $0.225 per share
10%-15% cumulative annual growth rate in distributions per share for 2015-2018
Updating 2015-2017 capital expenditure range to $720 million to $775 million
reflecting revised phasing estimates, primarily for the addition of the second
circuit to our CREZ lines in the Texas Panhandle
Progress on ROFO projects
Golden Spread Electric Cooperative Interconnection and Cross Valley Transmission
Line projects remain on schedule
FERC issued a declaratory order in September that grants negotiated rate authority
to the Southline Transmission Project
11
2015E Footprint Project Capital Expenditures (1)
$ millions
12
(1) Footprint projects are transmission or distribution projects primarily situated within our distribution service territory, or that
physically hang from our existing transmission assets.
SEPTEMBER YTD 2015 UPDATED 2015 PLAN PREVIOUS 2015 PLAN
2015 Footprint Capex
$240 - $250
$210-$220
$159
Updating 2015 Footprint Project capital expenditures from $240 million - $250 million to
$210 million - $220 million due to revised phasing estimates for capex projects
Previous 2015 PlanUpdated 2015 PlanSept. YTD 2015
2015E-17E Footprint Project Capital Expenditures (1)
$ millions
13
(1) Footprint projects are transmission or distribution projects primarily situated within our distribution service territory, or that
physically hang from our existing transmission assets.
Updating Range to $720 million - $775 million for the 2015-2017 Forecast Period
2015-2017 Footprint Project Capital Expenditure Plan
2015 2016 2017
Base Distribution $70 - $75 $60 - $65 $70 - $75
Base Transmission $140 - $145 $140 - $145 $150 - $155
Base Footprint Projects $210 - $220 $200 - $210 $220 - $230
Synchronous
Condensers─ $15 - $20 $35 - $40
Second Circuit ─ $5 - $10 $35 - $45
Total Footprint Capex $210 - $220 $220 - $240 $290 - $315
Pipeline of Development Projects
14
NV
CA
OK
TX
AZNM
MEXICO
Additional U.S. –
Mexico DC Ties
Additional South Texas
Transmission / Generation
Interconnections
Import capacity from
New Mexico and
Arizona to California
PJM and MISO
interconnection
ERCOT
Southeast
Loop
Transmission
Line
South Plains
Reinforcement
NM
TX
AZ
NV
CA
M E X I C O
ROFO
Project (1)
Estimated
Project CostExpected
Completion Status
GSEC Inter-
connection$80-$100mm 2016
Under
construction
Cross
Valley Line $160-$185mm 2016
Under
construction
Southline $700-$800mm —Draft EIS
Published
Verde $60-$80mm —In
development
Southline
Transmission
Project
Verde Transmission
Project
Cross Valley
Transmission Line
Golden Spread
Electric Coop
(GSEC)
Interconnection
Lubbock Power & Light
Interconnection
Under Construction Other ROFO Additional Development Opportunities
(1) ROFO projects are identified projects that are being developed by Hunt Consolidated, Inc. and its affiliates with respect to which
InfraREIT has a right of first offer.
ROFO Project UpdateAs of November 6, 2015
15
ROFO Project State Estimated Costs (1) Status
Golden Spread
InterconnectionTX
$80-$100 mm
(incl. financing)
• CCN (Certificate of Convenience & Necessity) received
• Major components continue to arrive and construction is
proceeding as planned
• Expected completion in late Q1 or early Q2 2016
Cross Valley
TransmissionTX
$160-$185 mm
(incl. financing)
• CCN received
• Major components continue to arrive and construction is
proceeding as planned
• Expected completion in late Q2 or Q3 2016
SouthlineAZ
NM
$700-$800 mm
(excl. financing)
• Final EIS (Environmental Impact Statement) in November
2015
• Achieved Phase 3 status in WECC (Western Electricity
Coordinating Council) ratings process in March 2015
• FERC (Federal Energy Regulatory Commission) granted
a PDO (Petition for Declaratory Order) in September 2015
Verde NM$60-$80 mm
(excl. financing)
• Easement agreements reached with three Native
American Pueblos
(1) Cost estimates are preliminary estimates, and include estimated financing costs for the Golden Spread Interconnection (GSEC) and Cross
Valley Transmission Line (CV). For Southline, Verde and other development projects other than GSEC and CV, Hunt may opt to partner
with other parties in the development of projects depending on their scope, location and cost.
Questions
16
Reg G Reconciliation
17
Schedule 1:
Explanation and Reconciliation of CADQ3 2015 vs. Q3 2014
18
CAD
The Company defines CAD in a manner that it believes is appropriate to show its core operational performance, which includes a
deduction of the portion of capital expenditures needed to maintain its net assets which equals depreciation expense within the
applicable period. The portion of the capital expenditures in excess of depreciation, which the Company refers to as growth
capital expenditures, will increase its net assets. Also included in CAD are various other adjustments from net income, as outlined
below and described in more detail on Schedules 2 and 3.
The following sets forth a reconciliation of net income to CAD for the three months ended September 30, 2015 and 2014:
Three Months Ended
September 30,
(In thousands) 2015 2014
Net income $ 19,430 $ 15,515
Depreciation 10,259 8,998
FFO 29,689 24,513
Non-cash reorganization structuring fee — —
Percentage rent adjustment (1) (2,791 ) (4,157 )
Base rent adjustment (2) 338 937
Amortization of deferred financing costs 612 1,534
Reorganization expenses — 808
Non-cash equity compensation 185 —
Other income, net (3) (707 ) (294 )
Capital expenditures to maintain net assets (10,259 ) (8,998 )
CAD $ 17,067 $ 14,343
Shares Outstanding (MM of Shares) 60.6 (4) 45.7 (5)
CAD Per Share $ 0.28 $ 0.31
Post-IPO CAD Payout Ratio 79.9% (8) N/A
Schedule 1:
Explanation and Reconciliation of CADSeptember YTD 2015 vs. September YTD 2014
19
CAD
The following sets forth a reconciliation of net (loss) income to CAD for the nine months ended September 30, 2015 and 2014:
Nine Months Ended
September 30,
(In thousands) 2015 2014
Net (loss) income $ (7,600 ) $ 26,020
Depreciation 29,438 25,825
FFO 21,838 51,845
Non-cash reorganization structuring fee 44,897 —
Percentage rent adjustment (1) 9,768 8,899
Base rent adjustment (2) 5,469 4,921
Amortization of deferred financing costs 2,436 3,193
Reorganization expenses 333 808
Non-cash equity compensation 493 120
Other income, net (3) (2,180 ) (333 )
Capital expenditures to maintain net assets (29,438 ) (25,825 )
CAD $ 53,616 $ 43,628
Shares Outstanding (MM of Shares) 60.6 (6) 45.7 (7)
CAD Per Share $ 0.88 $ 0.95
CAD Payout Ratio 76.2% (9) N/A
Schedule 1:
Explanation and Reconciliation of CAD
20
(1) Represents the amount of percentage rent owed to the Company related to the applicable period. The amount of
percentage rent related to each quarter is paid during the second month following the specific quarter. Although the
Company receives percentage rent payments related to each quarter, it does not recognize lease revenue related to
these percentage rent payments until its tenant’s annual gross revenues exceed minimum specified breakpoints in the
leases.
(2) This adjustment relates to the difference between the timing of cash based rent payments made under the Company’s
leases and when the Company recognizes base rent revenue under GAAP. The Company recognizes base rent on a
straight-line basis over the applicable term of the lease commencing when the related assets are placed in service, which
is frequently different than the period in which the cash rent becomes due.
(3) Includes allowance for funds used during construction (AFUDC) on equity of $0.7 million and $0.5 million for the three
months ended September 30, 2015 and 2014, respectively, and $2.2 million and $1.4 million for the nine months ended
September 30, 2015 and 2014, respectively.
(4) Calculated based on outstanding shares of 60.6 million as of September 30, 2015, which consists of 43.6 million
outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of
the Operating Partnership as of September 30, 2015. Net income attributable to InfraREIT, Inc. common shareholders
per share was calculated based on 43.6 million weighted average shares outstanding during the three months ended
September 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.
(5) Calculated based on outstanding shares of 45.7 million as of September 30, 2014, which consists of 35.1 million
outstanding shares of common stock of InfraREIT and 10.6 million outstanding OP Units held by the limited partners of
the Operating Partnership as of September 30, 2014. Net income attributable to InfraREIT, Inc. common shareholders
per share was calculated based on 35.1 million weighted average shares outstanding during the three months ended
September 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.
Schedule 1:
Explanation and Reconciliation of CAD
21
(6) Calculated based on outstanding shares of 60.6 million as of September 30, 2015, which consists of 43.6 million
outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of
the Operating Partnership as of September 30, 2015. Net loss attributable to InfraREIT, Inc. common shareholders per
share was calculated based on 42.8 million weighted average shares outstanding during the nine months ended
September 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.
(7) Calculated based on outstanding shares of 45.7 million as of September 30, 2014, which consists of 35.1 million
outstanding shares of common stock of InfraREIT and 10.6 million outstanding OP Units held by the limited partners of
the Operating Partnership as of September 30, 2014. Net income attributable to InfraREIT, Inc. common shareholders
per share was calculated based on 35.1 million weighted average shares outstanding during the nine months ended
September 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.
(8) Reflects the distributions of $13.6 million divided by CAD of $17.1 million.
(9) Reflects the post-IPO distributions of $35.8 million divided by the post-IPO CAD of $46.9 million (based on a pro-rata
calculation from the IPO date).
Schedule 2:
Explanation and Reconciliation of EBITDA and Adjusted EBITDAQ3 2015 vs. Q3 2014
22
EBITDA and Adjusted EBITDA
InfraREIT defines EBITDA as net income (loss) before interest expense, net; income tax expense; depreciation and amortization.
Adjusted EBITDA is defined as EBITDA adjusted in a manner the Company believes is appropriate to show its core operational
performance, including: (a) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between
the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and the
amount of percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the difference between
the amount of base rent payments that the Company receives with respect to the applicable period and the amount of straight-line
base rent recognized under GAAP, (d) adding back the one-time reorganization expenses related to the Company’s IPO and
related reorganization transactions, and (e) adjusting for other income (expense), net.
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended
September 30, 2015 and 2014:
Three Months Ended
September 30,
(In thousands) 2015 2014
Net income $ 19,430 $ 15,515
Interest expense, net 6,723 8,699
Income tax expense 243 248
Depreciation 10,259 8,998
EBITDA 36,655 33,460
Non-cash reorganization structuring fee — —
Percentage rent adjustment (1) (2,791) (4,157)
Base rent adjustment (2) 338 937
Reorganization expenses — 808
Other income, net (3) (707) (294)
Adjusted EBITDA $ 33,495 $ 30,754
(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD
(2) See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD
(3) See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD
Schedule 2:
Explanation and Reconciliation of EBITDA and Adjusted EBITDASeptember YTD 2015 vs. September YTD 2014
23
EBITDA and Adjusted EBITDA
The following table sets forth a reconciliation of net (loss) income to EBITDA and Adjusted EBITDA for the nine months ended
September 30, 2015 and 2014:
Nine Months Ended
September 30,
(In thousands) 2015 2014
Net (loss) income $ (7,600) $ 26,020
Interest expense, net 21,084 24,364
Income tax expense 575 656
Depreciation 29,438 25,825
EBITDA 43,497 76,865
Non-cash reorganization structuring fee 44,897 —
Percentage rent adjustment (1) 9,768 8,899
Base rent adjustment (2) 5,469 4,921
Reorganization expenses 333 808
Other income, net (3) (2,180) (333)
Adjusted EBITDA $ 101,784 $ 91,160
(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD
(2) See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD
(3) See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD
Schedule 3:
Explanation of FFO and AFFO
24
FFO and AFFO
The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (computed in accordance with
GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate
depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated
partnerships and joint ventures. Applying the NAREIT definition to the Company’s consolidated financial statements, which is the
basis for the FFO presented in the press release and the reconciliations below, results in FFO representing net (loss) income
before depreciation, impairment of assets and gain (loss) on sale of assets. FFO does not represent cash generated from
operations as defined by GAAP and it is not indicative of cash available to fund all cash needs, including distributions.
AFFO is defined as FFO adjusted in a manner the Company believes is appropriate to show its core operational performance,
including: (a) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between the amount of
percentage rent payments that the Company expects to receive with respect to the applicable period and the amount of
percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the difference between the amount
of base rent payments that the Company receives with respect to the applicable period and the amount of straight-line base rent
recognized under GAAP, (d) adding back the one-time reorganization expenses related to the Company’s IPO and related
reorganization transactions, and (e) adjusting for other income (expense), net.
Schedule 3:
Reconciliation of FFO and AFFOQ3 2015 vs. Q3 2014
25
FFO and AFFO
The following table sets forth a reconciliation of net income to FFO and AFFO for the three months ended September 30, 2015
and 2014:
Three Months Ended
September 30,
(In thousands) 2015 2014
Net income $ 19,430 $ 15,515
Depreciation 10,259 8,998
FFO 29,689 24,513
Non-cash reorganization structuring fee — —
Percentage rent adjustment (1) (2,791) (4,157)
Base rent adjustment (2) 338 937
Reorganization expenses — 808
Other income, net (3) (707) (294)
AFFO $ 26,529 $ 21,807
(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD
(2) See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD
(3) See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD
Schedule 3:
Reconciliation of FFO and AFFOSeptember YTD 2015 vs. September YTD 2014
26
FFO and AFFO
The following table sets forth a reconciliation of net income (loss) to FFO and AFFO for the nine months ended September 30,
2015 and 2014:
Nine Months Ended
September 30,
(In thousands) 2015 2014
Net (loss) income $ (7,600) $ 26,020
Depreciation 29,438 25,825
FFO 21,838 51,845
Non-cash reorganization structuring fee 44,897 —
Percentage rent adjustment (1) 9,768 8,899
Base rent adjustment (2) 5,469 4,921
Reorganization expenses 333 808
Other income, net (3) (2,180) (333)
AFFO $ 80,125 $ 66,140
(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD
(2) See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD
(3) See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD
Appendix
27
Disciplined, Multifaceted Pursuit of Growth
28
Footprint Projects
(Funded by InfraREIT)
Hunt Development
team members
have an average of
15 years’ industry
experience
ROFO Projects
Growth Strategy Growth Drivers
• Population and economic growth across Texas
• Energy-driven economic expansion
• Generator interconnections to Panhandle
Transmission assets
• Specific Hunt T&D projects under construction or
in development
• Cross Valley transmission line and Golden
Spread interconnection have approved CCNs
and are under construction
• Value enhancing M&A Transactions that build on:
• Hunt’s industry relationships and reputation
• Expertise with REIT structure
• Future T&D projects developed and constructed
by Hunt
• Primarily focused on Texas and the Southwest
Other Hunt
Development Projects
Acquire other T&D assets
from third parties
SDTS (2)
Structure Mechanics
29
SDTS owns our T&D
assets and leases them
to Sharyland
Sharyland collects rate-
regulated revenue from
other utilities and retail
electric providers
Sharyland makes regular
lease payments to SDTS
InfraREIT receives a tax
deduction equal to the
amount of dividends the
Company distributes
1
2
3
4
Shareholders
InfraREIT (1)
Hunt Family
Sharyland
Utilities
Customers
T&D Services Cash
Lease
Rent
1
2
3
4 Ownership (3)
Hunt Manager
Hunt Developer
100% Interest
(1) Represents InfraREIT public entity, InfraREIT Partners, LP (Operating Partnership) and Transmission and Distribution
Company, L.L.C. (TDC).
(2) Represents Sharyland Distribution & Transmission Services, L.L.C. (SDTS) and subsidiaries.
(3) Represents Hunt Transmission Services, L.L.C. (limited partner of the Operating Partnership and shareholder of InfraREIT)
Conducted business as a REIT since 2010
Hunt
Consolidated,
Inc.
Board Structure
Management
Related Party
Transactions
Management
Agreement
9 total members, 6 independent
CEO, CFO and General Counsel are officers of InfraREIT and Hunt
Manager
Require majority approval by the independent board members (i.e.
ROFO Project acquisitions)
Responsible for the day-to-day business and legal activities of
InfraREIT
Annual base fee equal to $13.1 million for April 1, 2015 through March
31, 2016, and 1.50% of total book equity as of the previous year
thereafter
Capped at $30 mm per year
Incentive fee equal to 20% of dividends per share in excess of the
Threshold Distribution Amount (120% of initial dividend) payable
quarterly
2015 Dividend per share: $0.225
Threshold Dividend: $0.270
Governance and Management
30
Lease Mechanics
31
Lease Terms
InfraREIT is obligated to fund
capex for Footprint Projects
New assets are added to leases
through supplements
Lease renewals apply the same
methodology but are updated for
new rate case information
Approximately 80% - 90% of rent
is a fixed amount – paid monthly
Approximately 10% - 20% of rent
is variable based on a percentage
of Sharyland’s gross revenue less
adjustments – paid quarterly
Lease Objectives
InfraREIT
Rent payments intended to
provide InfraREIT with
approximately 97% of the
projected regulated return on rate
base investment attributable to
InfraREIT’s assets
Sharyland
Sharyland recovers operating and
maintenance (O&M) costs and a
portion of the return on InfraREIT’s
rate base