Griffin Capital Essential Asset REIT II Reports First Quarter 2019 Results
EL SEGUNDO, Calif. (May 22, 2019) – Griffin Capital Essential Asset REIT II, Inc. (the “Company” or “REIT”) announced its operating results for the quarter ended March 31, 2019. Michael Escalante, Chief Executive Officer of the REIT stated, “We are pleased to have garnered such overwhelming support from our shareholders for the approval of the completion of the merger of Griffin Capital Essential Asset REIT and Griffin Capital Essential Asset REIT II, which closed subsequent to first quarter on April 30, 2019. As we have recently stated, the transaction significantly increased the size, scale, and diversification of the REIT. Furthermore, the merger brings additional long-term benefits to our shareholders which we expect will become more evident in our financial statements as we progress through 2019 and beyond.”
Results as of March 31, 2019 – Financial Highlights and Accomplishments:
- Total revenue for the three months ended March 31, 2019 was approximately $26.4 million, compared to $26.8 million for the three months ended March 31, 2018.
- Net loss attributable to common shareholders was approximately $(1.6) million or $(0.02) per basic and diluted share for the three months ended March 31, 2019, compared to net income attributable to common shareholders of $0.8 million or $0.01 per basic and diluted share for the same period in 2018 primarily related to higher interest expense in the current year.
- As of March 31, 2019, the ratio of debt to total real estate acquisition price was 44.6 percent.
- Adjusted funds from operations, or AFFO, was approximately $9.3 million and $10.1 million for the three months ended March 31, 2019 and 2018, respectively. Funds from operations, or FFO(1), was approximately $9.3 million and $11.8 million for the three months ended March 31, 2019 and 2018, 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 $17.9 million for the quarter ended March 31, 2019 with both a fixed charge and interest coverage ratio of 3.49. Please see the financial reconciliation tables and notes at the end of this release for more information regarding Adjusted EBITDA and related ratios.
Merger Transaction and Other Subsequent Events
Merger with Griffin Capital Essential Asset REIT, Inc. (“GCEAR”)
- On April 30, 2019, we announced the completion of the merger with GCEAR. The merger creates a $4.7 billion, self-managed REIT, which will generate significant benefits for shareholders, including substantial cost savings, increased operating efficiencies, and immediate accretion to earnings and cash flows.
- As of April 30, 2019, we owned 124 buildings located on 101 properties in 25 states, encompassing approximately 27.2 million rentable square feet, 96.8 percent leased business essential assets occupied by credit worthy-tenants with a weighted average remaining lease term of approximately 7.5 years.
New Credit Facility
- As part of the merger, we also entered into a second amended and restated credit agreement (“Second Amended and Restated Credit Agreement”) with a syndicate of lenders, under which KeyBank, National Association serves as administrative agent. Pursuant to the Second Amended and Restated Credit Agreement, we were provided with an upsized revolving credit facility with an initial commitment of $750 million, an existing $200 million term loan, a new five year $400 million term loan and a new seven year $150 million term loan, which commitments may be increased under certain circumstances up to a maximum total commitment of $2.0 billion. In addition, we entered into a guaranty agreement.
- On May 6, 2019, we commenced a self-tender offer for up to $100 million in shares of common stock. Our offer expires on Monday, June 10, 2019, unless extended or withdrawn per the terms of our offer.
About Griffin Capital Essential Asset REIT II
Griffin Capital Essential Asset REIT II, Inc., is a self-managed, publicly registered, non-listed Real Estate Investment Trust (REIT) that reports its Net Asset Value (NAV) daily. Its portfolio of net-lease assets consists of single-tenant, business essential properties throughout the United States, diversified by corporate credit, physical geography, product type, and lease duration. As of April 30, 2019, Griffin Capital Essential Asset REIT II owns 101 properties located in 25 states totaling 27.2 million in rentable square feet, representing a total REIT market capitalization of $4.7 billion(2). Griffin Capital Securities, LLC, Member FINRA/SIPC, is the dealer manager for Griffin Capital Essential Asset REIT II.
Additional information is available at www.gcear.com.
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 FFO, as described by National Association of Real Estate Investment Trusts (“NAREIT”), is adjusted for non-controlling interest distributions.
2 Total market capitalization includes the outstanding debt balance (excluding deferred financing costs and premium/discounts), plus total outstanding shares (including limited partnership units issued and shares issued pursuant to DRP, net of redemptions) multiplied by the NAV per share as of March 31, 2019.