Griffin Capital Essential Asset REIT II Reports 2018 Second Quarter Results
El Segundo, Calif. (August 15, 2018) – Griffin Capital Essential Asset REIT II, announced its operating results for the quarter ended June 30, 2018.
“We continue to execute our investment strategy which provides investors with current income generated from a well diversified real estate portfolio. Our portfolio of business-essential assets remains fully leased with a rent roll comprised of over 75% investment grade rated cash flow,” said Michael Escalante, the REIT’s director and president.
As of June 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 Second Quarter 2018 and Results as of June 30, 2018:
- The total capitalization1 of our portfolio was approximately $1.3 billion.
- Our weighted average remaining lease term was approximately 9.8 years with average annual rent increases of approximately 2.4%.
- Our portfolio is 100% leased and occupied2.
- Approximately 75.6% 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.
- Total revenue for the quarter ended June 30, 2018 was approximately $26.3 million, compared to $26.5 million for the quarter ended June 30, 2017.
- Net loss attributable to common stockholders was approximately $(0.5) million or $(0.01) per basic and diluted share for the quarter ended June 30, 2018, compared to net income attributable to common stockholders of $3.4 million or $0.04 per basic and diluted share for the same period in 2017.
- As of June 30, 2018, the ratio of debt to total real estate acquisition value was 43.7%.
- On April 27, 2018, we entered into a loan agreement with Bank of America, N.A. and KeyBank N.A., in which we borrowed $250.0 million. The loan is secured by cross-collateralized and cross-defaulted first mortgage liens by four properties and has a term of 10 years, maturing on May 1, 2028. The loan bears interest at an annual rate of 4.32%.
- On June 28, 2018, we entered into an amended and restated credit agreement related to a revolving credit facility and a term loan with a syndicate of lenders, under which KeyBank, National Association serves as administrative agent. Pursuant to the amended and restated credit agreement, we were provided with a revolving credit facility with an initial commitment amount of up to $550 million and a term loan in an initial commitment amount of up to $200 million, which commitments may be increased under certain circumstances up to a maximum total commitment of $1.25 billion. Total outstanding balances on the term loan and the revolving credit facility were $113 million and $0.1 million, respectively, as of June 30, 2018.
- Adjusted funds from operations, or AFFO, was approximately $10.0 million and $10.2 million for the quarters ended June 30, 2018 and 2017, respectively. Funds from operations, or FFO 5, was approximately $10.6 million and $14.3 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 amended and restated credit agreement, was approximately $16.9 million for the quarter ended June 30, 2018 with a fixed charge and interest coverage ratio of 3.73, each. 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 June 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 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. Additional information is available at 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 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 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 75.6% 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 75.6% investment grade tenant ratings, 64.0% is from Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 11.6% 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.
5 FFO, as described by NAREIT, is adjusted for non-controlling interest distributions.