Griffin Capital Essential Asset REIT Closes $125 Million Perpetual Preferred Private Offering Shares Purchased by Korean Trust
August 15, 2018

Griffin Capital Essential Asset REIT Reports 2018 Second Quarter Results

El Segundo, Calif. (August 15, 2018) - Griffin Capital Essential Asset REIT, Inc. (the “REIT”), announced its results for the quarter ended June 30, 2018.

“In the second quarter of 2018, we completed the 1031 exchange of the DreamWorks campus with acquisitions of the McKesson property in Scottsdale, AZ and the Shaw Industries facility in Port Wentworth (Savannah), GA,” said Chairman and CEO of the REIT, Kevin Shields. “We renewed five leases for approximately 1.8 million square feet, of which four leases totaling approximately 382,000 square feet were long-term extensions, and one lease for approximately 1.4 million square feet is a short-term extension. We believe these actions further solidify our existing portfolio of business-essential assets and puts us in a strong position to continue generating income for our shareholders.”

As of June 30, 2018, the REIT’s portfolio1 consisted of 76 assets encompassing approximately 20.1 million rentable square feet of space in 20 states.

Highlights and Accomplishments in Second Quarter 2018 and Results as of June 30, 2018:

Portfolio Overview

  • On April 10, 2018, we acquired two, two-story, Class "A" office buildings located in Scottsdale, AZ, consisting of 271,085 square feet for approximately $67.0 million.
  • On May 3, 2018, we acquired a Class "A" Industrial building located in Savannah, GA, consisting of 1,001,508 square feet for approximately $56.5 million.
  • During the quarter ended June 30, 2018, we renewed four leases totaling approximately 381,725 square feet with lease expiration dates subsequent to June 30, 2019 and one lease totaling approximately 1,380,070 square feet with a lease expiration date less than one year.
  • The total capitalization of our portfolio as of June 30, 2018 was $3.2 billion(2).
  • Our weighted average remaining lease term was approximately 6.5 years with average annual rent increases of approximately 2.1%.
  • Approximately 62.0% of our portfolio’s net rental revenue(3) 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 was $86.0 million for the quarter ended June 30, 2018, compared to $82.8 million for the quarter ended June 30, 2017.
  • Net income attributable to common stockholders was $7.4 million or $0.04 per basic and diluted share for the quarter ended June 30, 2018, compared to $8.8 million or $0.05 per basic and diluted share for the quarter ended June 30, 2017.
  • The ratio of debt to total real estate acquisition value as of June 30, 2018 was 48.8%1.

Non-GAAP Measures

  • Adjusted funds from operations, or AFFO, was approximately $33.3 million for the quarter ended June 30, 2018, compared to approximately $39.0 million for the same period in 2017. Funds from operations, or FFO5, was approximately $39.1 million and $35.4 million for the quarters ended June 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 credit facility agreement, was approximately $59.8 million for the quarter ended June 30, 2018 with a fixed charge and interest coverage ratio of 3.94 and 4.39, respectively. Please see the financial reconciliation tables and notes at the end of this release for more information regarding adjusted EBITDA and related ratios.

Subsequent Events

  • On August 8, 2018, we issued 5,000,000 shares of our newly authorized Series A Cumulative Perpetual Convertible Preferred Stock in a private offering for a total purchase price of $125.0 million.

About Griffin Capital Essential Asset REIT

Griffin Capital Essential Asset REIT, Inc. is a publicly-registered, non-traded REIT with a portfolio, as of June 30, 2018, of 76 office and industrial properties totaling 20.1 million rentable square feet, located in 20 states, representing total REIT capitalization of approximately $3.2 billion. Griffin Capital Essential Asset REIT, 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 with $10.75 billion* in assets under management. 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. www.griffincapital.com.

*Includes the property information related to interests held in certain joint ventures. As of June 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 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 Excludes the property information related to the acquisition of an 80% ownership interest in a joint venture with affiliates of Digital Realty Trust, L.P.
2 Total capitalization includes the outstanding debt balance plus total equity raised and issued, including operating partnership units, net of redemptions.
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 June 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 62.0% 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 62.0% investment grade tenant ratings, 54.8% is from a Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 7.2% 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 an example of a non-NRSRO rating.
5 FFO, as described by NAREIT, is adjusted for non-controlling interest distributions.

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