Griffin Capital Essential Asset REIT II Reports 2018 Third Quarter Results
November 14, 2018

Griffin Capital Essential Asset REIT II Reports 2018 Third Quarter Results

El Segundo, Calif. (November 14, 2018) - Griffin Capital Essential Asset REIT II, Inc. (the “REIT") announced its operating results for the quarter ended September 30, 2018.

“We continue to rely on the core strengths of our portfolio which allow us to execute on an investment strategy that provides investors with consistent income generated from our high-quality corporate tenants,” said Michael Escalante, Chief Investment Officer, Griffin Capital and Director and President of the REIT.

As of September 30, 2018, our portfolio consisted of 27 properties (35 buildings) encompassing approximately 7.3 million square feet of space in 17 states.

Highlights and Accomplishments in Third Quarter 2018 and Results as of September 30, 2018:

Portfolio Overview

  • The total capitalization(1) of our portfolio was approximately $1.3 billion.
  • Our weighted average remaining lease term was approximately 9.6 years with average annual rent increases of approximately 2.4%.
  • Our portfolio is 100% leased and occupied2.
  • Approximately 75.8% of our portfolio’s net rental revenue3 was generated by properties leased to tenants and/or guarantors with investment grade credit ratings or whose non-guarantor parent companies have investment grade credit ratings4.

Financial Results

  • Total revenue for the quarter ended September 30, 2018 was approximately $26.7 million, compared to $27.3 million for the quarter ended September 30, 2017.
  • Net loss attributable to common stockholders was approximately $(0.8) million or $(0.01) per basic and diluted share for the quarter ended September 30, 2018, compared to net income attributable to common stockholders of $3.1 million or $0.04 per basic and diluted share for the same period in 2017.
  • As of September 30, 2018, the ratio of debt to total real estate acquisition value was 43.7%.

Non-GAAP Measures

  • Adjusted funds from operations, or AFFO, was approximately $8.4 million and $10.3 million for the quarters ended September 30, 2018 and 2017, respectively. Funds from operations, or FFO5, was approximately $10.5 million and $14.3 million for the quarters ended September 30, 2018 and 2017, respectively. Please see the financial reconciliation tables and notes at the end of this release for more information regarding AFFO and FFO.
  • Our Adjusted EBITDA, as defined per our amended and restated credit agreement, was approximately $17.4 million for the quarter ended September 30, 2018 with both a fixed charge and interest coverage ratio of 3.70. Please see the financial reconciliation tables and notes at the end of this release for more information regarding Adjusted EBITDA and related ratios.

About Griffin Capital Essential Asset REIT II

Griffin Capital Essential Asset REIT II, Inc. is a publicly registered, non-traded REIT focused on acquiring a portfolio consisting primarily of single tenant business essential properties throughout the United States, diversified by corporate credit, physical geography, product type, and lease duration. As of September 30, 2018, Griffin Capital Essential Asset REIT II, Inc. has acquired 35 office and industrial buildings totaling approximately 7.3 million rentable square feet and asset acquisition value of approximately $1.1 billion. Griffin Capital Essential Asset REIT II, Inc. is one of several REITs sponsored or co-sponsored by Griffin Capital Company, LLC ("Griffin Capital").

About Griffin Capital Company, LLC

Griffin Capital is a leading alternative investment asset manager that owns, manages, or co-sponsors approximately $11.2 billion* in assets. Founded in 1995, the privately held firm is led by a seasoned team of senior executives with more than two decades of investment and real estate experience and who collectively have executed more than 650 transactions valued at over $22.0 billion.

The firm manages, sponsors or co-sponsors a suite of carefully curated, institutional quality investment solutions distributed by Griffin Capital Securities, LLC to retail investors through a community of partners, including independent and insurance broker-dealers, wirehouses, registered investment advisory firms and the financial advisors who work with these enterprises. Additional information is available at www.griffincapital.com

*Includes the property information related to interests held in certain joint ventures. As of September 30, 2018.

This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to: uncertainties relating to changes in general economic and real estate conditions; uncertainties relating to the implementation of our real estate investment strategy; uncertainties relating to financing availability and capital proceeds; uncertainties relating to the closing of property acquisitions; uncertainties related to the timing and availability of distributions; and other risk factors as outlined in the REIT’s prospectus, Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the "SEC"). This is neither an offer nor a solicitation to purchase securities.

1 Total capitalization includes the outstanding debt balance, plus total equity raised in our public offerings, net of redemptions.
2 There is no guarantee that our properties will remain 100% leased and occupied.
3 Net rent is based on (a) the contractual base rental payments assuming the lease requires the tenant to reimburse us for certain operating expenses or the property is self-managed by the tenant and the tenant is responsible for all, or substantially all, of the operating expenses; or (b) contractual rent payments less certain operating expenses that are our responsibility for the 12-month period subsequent to September 30, 2018, and includes assumptions that may not be indicative of the actual future performance of a property, including the assumption that the tenant will perform its obligations under its lease agreement during the next 12 months.
4 Approximately 75.8% of our portfolio's net rental revenue was generated by properties leased to tenants and/or guarantors with investment grade credit ratings or whose non-guarantor parent companies have investment grade ratings or what management believes are generally equivalent ratings. Of the 75.8% investment grade tenant ratings, 64.0% is from Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 11.8% being from a non-NRSRO, but having a rating that we believe is generally equivalent to an NRSRO investment grade rating. Bloomberg’s default risk rating is one example of a non-NRSRO rating.
5FFO, as described by National Association of Real Estate Investment Trusts ("NAREIT"), is adjusted for non-controlling interest distributions.

News & Updates

Michael Koehler
Director of Investor Relations
Phillips Edison Grocery Center REIT III, Inc.

513-338-2743
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The Griffin Capital Essential Asset REIT II, Inc. website is available for use subject to its Terms and Conditions and our Privacy Policy. Please click on the highlighted terms to review these. To review a summary of the risk factors related to an investment in the Griffin Capital Essential Asset REIT II, Inc. program  click here.

This material must be read in conjunction with the applicable prospectus in order to understand all the implications and risks of any offering of securities to which the material relates. If you have not previously reviewed a prospectus, click here. Otherwise, to proceed, agree to the Terms and Conditions and Privacy Policy of this website.

THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. AN OFFERING IS MADE ONLY BY THE PROSPECTUS. THIS SALES AND ADVERTISING LITERATURE MUST BE READ IN CONJUNCTION WITH THE PROSPECTUS IN ORDER TO UNDERSTAND FULLY ALL OF THE IMPLICATIONS AND RISKS OF THE OFFERING OF SECURITIES TO WHICH IT RELATES. A COPY OF THE PROSPECTUS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH THIS OFFERING. NO OFFERING IS MADE TO NEW YORK RESIDENTS EXCEPT BY A PROSPECTUS FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE ATTORNEY GENERAL OF THE STATE OF NEW YORK NOR ANY OTHER STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN GRIFFIN CAPITAL ESSENTIAL ASSET REIT II, INC. INVOLVES A HIGH DEGREE OF RISK AND THERE CAN BE NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF THIS PROGRAM WILL BE ATTAINED. 

Risk Factors: An investment in Griffin Capital Essential Asset REIT II, Inc. involves a high degree of risk and there can be no assurance that the investment objectives of this program will be attained. Some of the risks associated with this offering include the following: this is a “best efforts” offering and some or all of our shares may not be sold; no public market currently exists for our shares; it may be difficult to sell your shares, and if you do, it will likely be at a substantial discount; the purchase and redemption price for shares of our common stock will be based on the NAV of each class of common stock; we must depend on our advisor to conduct our operations; we will pay substantial fees and expenses to our advisor; there are substantial conflicts of interest among us and our sponsor, advisor, dealer manager and property manager; we may use substantial debt to acquire our properties; we may fail to continue to qualify as a REIT; our share redemption program is subject to available liquidity and other significant restrictions and we may amend, suspend or terminate the share redemption program at any time; a portion of the offering proceeds may be used to redeem or repurchase our shares; and future distribution declarations are at the sole discretion of the board of directors and are not guaranteed. We may fund a portion of our distributions from offering proceeds or from borrowings in anticipation of future cash flows, some or all of which may be a return of capital. 

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Please Accept

The Griffin Capital Essential Asset REIT II, Inc. website is available for use subject to its Terms and Conditions and our Privacy Policy. Please click on the highlighted terms to review these. To review a summary of the risk factors related to an investment in the Griffin Capital Essential Asset REIT II, Inc. program  click here.

This material must be read in conjunction with the applicable prospectus in order to understand all the implications and risks of any offering of securities to which the material relates. If you have not previously reviewed a prospectus, click here. Otherwise, to proceed, agree to the Terms and Conditions and Privacy Policy of this website.

THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. AN OFFERING IS MADE ONLY BY THE PROSPECTUS. THIS SALES AND ADVERTISING LITERATURE MUST BE READ IN CONJUNCTION WITH THE PROSPECTUS IN ORDER TO UNDERSTAND FULLY ALL OF THE IMPLICATIONS AND RISKS OF THE OFFERING OF SECURITIES TO WHICH IT RELATES. A COPY OF THE PROSPECTUS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH THIS OFFERING. NO OFFERING IS MADE TO NEW YORK RESIDENTS EXCEPT BY A PROSPECTUS FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE ATTORNEY GENERAL OF THE STATE OF NEW YORK NOR ANY OTHER STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN GRIFFIN CAPITAL ESSENTIAL ASSET REIT II, INC. INVOLVES A HIGH DEGREE OF RISK AND THERE CAN BE NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF THIS PROGRAM WILL BE ATTAINED. 

Risk Factors: An investment in Griffin Capital Essential Asset REIT II, Inc. involves a high degree of risk and there can be no assurance that the investment objectives of this program will be attained. Some of the risks associated with this offering include the following: this is a “best efforts” offering and some or all of our shares may not be sold; no public market currently exists for our shares; it may be difficult to sell your shares, and if you do, it will likely be at a substantial discount; the purchase and redemption price for shares of our common stock will be based on the NAV of each class of common stock; we must depend on our advisor to conduct our operations; we will pay substantial fees and expenses to our advisor; there are substantial conflicts of interest among us and our sponsor, advisor, dealer manager and property manager; we may use substantial debt to acquire our properties; we may fail to continue to qualify as a REIT; our share redemption program is subject to available liquidity and other significant restrictions and we may amend, suspend or terminate the share redemption program at any time; a portion of the offering proceeds may be used to redeem or repurchase our shares; and future distribution declarations are at the sole discretion of the board of directors and are not guaranteed. We may fund a portion of our distributions from offering proceeds or from borrowings in anticipation of future cash flows, some or all of which may be a return of capital.