Griffin Capital Essential Asset REIT Reports 2018 First Quarter Results
May 16, 2018

Griffin Capital Essential Asset REIT Reports 2018 First Quarter Results

El Segundo, Calif. (May 16, 2018) - Griffin Capital Essential Asset REIT, Inc. (the “REIT”) announced its results for the quarter ended March 31, 2018.

“We are pleased with our results, which reflect not only continued favorable market conditions, but also the strength of our value creation strategy, and the discipline we bring to bear in its implementation,” said Kevin Shields, Chairman and CEO of the REIT. “Our unique expertise as veteran operators, as well as acquirers, of complex commercial real estate positions us to deliver effectively on our objectives of generating stable income and long-term capital appreciation for the REIT’s shareholders. Looking ahead, we are excited about continued opportunities to drive value through careful acquisitions and dispositions of assets within our portfolio, with an ongoing emphasis on the highest quality properties in fast-growing metropolitan markets across the country.”

As of March 31, 2018, the REIT’s portfolio(1) consisted of 74 assets encompassing approximately 18.8 million rentable square feet of space in 20 states.

Highlights and Accomplishments in First Quarter 2018 and Results as of March 31, 2018:

Portfolio Overview

  • On March 13, 2018, we acquired one property located in Lakeland, FL, consisting of 605,412 square feet for approximately $59.6 million. The acquisition of the property serves as the second of four replacement properties acquired in a 1031 exchange transaction related to the sale of DreamWorks Animation Headquarters and Studio Campus ("DreamWorks") for $290.0 million.
  • We executed new and renewal leases totaling 17,823 square feet for the quarter ended March 31, 2018.
  • The total capitalization of our portfolio as of March 31, 2018 was $3.2 billion(2).
  • Our weighted average remaining lease term was approximately 6.4 years with average annual rent increases of approximately 2.1%.
  • Approximately 60.5% 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 ratings(4).

Financial Results

  • Total revenue was $80.4 million for the quarter ended March 31, 2018, compared to $96.7 million for the quarter ended March 31, 2017.
  • Net income attributable to common stockholders was $6.3 million or $0.04 per basic and diluted share for the quarter ended March 31, 2018, compared to $13.7 million or $0.08 per basic and diluted share for the quarter ended March 31, 2017. The decrease was primarily due to termination income recognized during the first quarter of 2017, the sale of two properties, One Century Plaza and DreamWorks in the fourth quarter of 2017, and terminations/expired leases subsequent to March 31, 2017, offset by the acquisition of the LPL Holdings property (two buildings) in the fourth quarter of 2017.
  • The ratio of debt to total real estate acquisition value as of March 31, 2018 was 48.2%(1).

Non-GAAP Measures

  • Adjusted funds from operations, or AFFO, was approximately $34.4 million for the quarter ended March 31, 2018, compared to approximately $38.2 million for the same period in 2017. Funds from operations, or FFO(5), was approximately $34.6 million and $51.2 million for the quarters ended March 31, 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 $54.8 million for the quarter ended March 31, 2018 with a fixed charge and interest coverage ratio of 3.70 and 4.20, 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 April 10, 2018, the REIT acquired two, two-story, Class "A" office buildings totaling approximately 271,085 square feet situated on a 30.87-acre site located in Scottsdale, Arizona (the "McKesson Property"). The purchase price for the McKesson Property was $67.0 million, plus closing costs. The acquisition of the McKesson Property serves as a replacement property under our 1031 exchange, related to the REIT's recent sale of DreamWorks.
  • On May 3, 2018, the REIT acquired a Class "A" Industrial building totaling approximately 1,001,508 square feet situated on a 69.54-acre site located in Savannah, Georgia (the "Shaw Industries Property"). The purchase price for the Shaw Industries Property was $56.6 million, plus closing costs. The acquisition of the Shaw Industries Property serves as the final replacement property under our 1031 exchange of DreamWorks.
  • In April, we executed two lease renewals totaling 333,833 square feet.

About Griffin Capital Essential Asset REIT

Griffin Capital Essential Asset REIT, Inc. is a publicly-registered, non-traded REIT with a portfolio, as of March 31, 2018, of 74 office and industrial properties totaling 18.8 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 approximately $10.3 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 March 31, 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.

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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 March 31, 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 60.5% 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 60.5% investment grade tenant ratings, 56.3% is from a Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 4.3% 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.
5 FFO, as described by NAREIT, is adjusted for non-controlling interest distributions.

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