Griffin Capital Essential Asset REIT Reports 2017 Results
March 20, 2018

Griffin Capital Essential Asset REIT Reports 2017 Results

El Segundo, Calif. (March 20, 2018) - Griffin Capital Essential Asset REIT, Inc. (the “REIT”) announced its operating results for the year ended December 31, 2017.

“We are proud of our 2017 results,” said Kevin Shields, Chairman and CEO of the REIT. “As we remain focused on our goals of delivering stable income and long-term capital appreciation through focused acquisitions and dispositions, along with our disciplined management of top properties in fast-growing metropolitan markets, we believe the REIT remains positively positioned for the future.”

As of December 31, 2017, the REIT’s portfolio1 consisted of 73 assets encompassing approximately 18.2 million rentable square feet of space in 20 states.

Highlights and Accomplishments in 2017 and Results as of December 31, 2017:

Portfolio Overview

  • The total capitalization of our portfolio as of December 31, 2017 was $3.2 billion2.
  • Our weighted average remaining lease term was approximately 6.5 years with average annual rent increases of approximately 2.1%.
  • Approximately 64.8% 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.
  • We executed new and renewal leases totaling 216,324 and 597,878 square feet, respectively, for the year ended December 31, 2017, including execution of a new 162-month lease with Consolidated Container Co. for 51,850 square feet in Atlanta, GA during the quarter ended December 31, 2017.
  • On October 19, 2017, we sold the One Century Plaza property located in Nashville, Tennessee for total proceeds of $100.0 million, less closing costs and other closing credits. The carrying value of the property on the closing date was approximately $67.9 million. Upon the sale of the property, we recognized a gain of approximately $32.1 million.
  • On November 20, 2017, we sold the DreamWorks Animation Headquarters located in Glendale (Los Angeles), California for total proceeds of $290.0 million, less closing costs and other closing credits. The carrying value of the property on the closing date was approximately $210.1 million. Upon the sale of the property, we recognized a gain of approximately $79.9 million. Proceeds from the sale will be used to execute a series of 1031 exchanges to defer the taxable gain.
  • On November 30, 2017, we acquired one property located in Fort Mill (Charleston), SC for approximately $130.0 million. The property is leased on an absolute-net basis in its entirety to LPL Holdings, Inc. The acquisition of the property serves as a replacement property for the 1031 exchange related to the sale of the DreamWorks Animation Headquarters.

Financial Results

  • Total revenue was $346.5 million for the year ended December 31, 2017, compared to $344.3 million for the year ended December 31, 2016.
  • Net income attributable to common stockholders was $140.7 million or $0.81 per basic and diluted share for the year ended December 31, 2017, compared to $25.3 million or $0.14 per basic and diluted share for the year ended December 31, 2016. The increase was primarily due to the sale of two properties, One Century Plaza and DreamWorks Animation Headquarters, for a gain on sale of approximately $112 million.
  • The ratio of debt to total real estate acquisition value as of December 31, 2017 was 49.3%1.

Non-GAAP Measures

  • Modified funds from operations, or MFFO, as defined by the Investment Program Association (IPA), was approximately $148.7 million for the year ended December 31, 2017, compared to approximately $149.9 million for the same period in 2016. Funds from operations, or FFO, was approximately $157.2 million and $159.5 million for the years ended December 31, 2017 and 2016, respectively. Please see the financial reconciliation tables and notes at the end of this release for more information regarding MFFO and FFO.
  • Our Adjusted EBITDA, as defined per our credit facility agreement, was approximately $225.5 million for the year ended December 31, 2017 with a fixed charge and interest coverage ratio of 3.93 and 4.43, respectively (3.49 and 3.94 for the quarter ended December 31, 2017). 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 March 13, 2018, we acquired a distribution warehouse consisting of approximately 605,412 square feet located in Lakeland, Florida. The property is currently leased in its entirety to Quaker Sales & Distribution, Inc., a wholly-owned subsidiary of PepsiCo, Inc. The purchase price for the property was $59.6 million, plus closing costs. The acquisition of the property serves as a replacement property for the 1031 exchange related to the sale of the DreamWorks Animation Headquarters.

About Griffin Capital Essential Asset REIT

Griffin Capital Essential Asset REIT, Inc. is a publicly-registered, non-traded REIT with a portfolio, as of December 31, 2017, of 73 office and industrial properties totaling 18.2 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 cosponsored by Griffin Capital Company, LLC ("Griffin Capital").

About Griffin Capital Company, LLC

Griffin Capital is a leading alternative investment asset manager with approximately $9.8 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 billion. Additional information is available at www.griffincapital.com.
*As of December 31, 2017.

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. 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 December 31, 2017 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 64.8% of our portfolio's net rental revenue was generated by properties leased to tenants and/or guarantors or whose non-guarantor parent companies have investment grade ratings or what management believes are generally equivalent ratings. Of the 64.8% investment grade tenant ratings, 55.5% is from a Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 9.3% 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.

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