Griffin Capital Essential Asset REIT Reports First Quarter 2013 Results
Total Capitalization Exceeds Half a Billion Dollars and MFFO is more than three times the result for the same quarter in 2012
EL SEGUNDO, Calif. (May 22, 2013) – Griffin Capital Essential Asset REIT, Inc. (the “Essential Asset REIT” announced today its operating results for the first quarter ended March 31, 2013.
“The first quarter of 2013 picked up solidly on the strong momentum we were enjoying at the end of last year… and the momentum continues through the second quarter. We started 2013 with the acquisition of the Comcast Technical Support Headquarters outside of Denver in January, followed in February with the Boeing Capital Headquarters acquisition in Seattle, with a combined value of $39.0 million,” stated Kevin Shields, chairman and chief executive officer of the Essential Asset REIT. “The second quarter thus far has been equally robust. In April we acquired an interest in the HealthSpring Regional Headquarters in Nashville and in May we purchased the Schlumberger financial hub in Houston as well as the United Technologies Aerospace Headquarters in Charlotte.”
“Our first and second quarter acquisitions continue to expand the outstanding credit characteristics of our portfolio-including our purchase of the UTC Aerospace Headquarters property in May, over three quarters of the REIT’s net income is now generated by companies, or lease guarantors, with investment grade-rated credit quality, or have a parent company with an investment-grade rating,” added David Rupert, president of the Essential Asset REIT.
Highlights and Accomplishments in the First Quarter of 2013 and through May 3, 2013
- During the first quarter of 2013 and through May 3, 2013 we acquired four assets and a minority interest in a Delaware Statutory Trust, consisting of nearly 0.6 million square feet for approximately $129 million of acquisition value. Each property is either leased to investment-grade rated tenants or the lease is guaranteed by an investment grade-rated company, or the parent organization of the tenant is investment-grade rated – Comcast Holdings, The Boeing Company, Schlumberger Technology Corporation, United Technology Corporation, and HealthSpring (a subsidiary of CIGNA).
- Our portfolio grew over 60% from December 31, 2012 through May 3, 2013 and now consists of 18 assets, which are 100% leased and comprise more than 3.8 million square feet. The total capitalization1 of our properties is over half a billion dollars
- More than three quarters of the portfolio net rental revenue is generated by investment-grade rated companies that lease the property directly, have a lease guaranteed by an investment grade-rated company, or have a parent company that is investment grade-rated.
- The weighted average remaining lease term is 8.75 years with average annual rental rate increases of 2.3%.
- On February 27, 2013, we refinanced part of the KeyBank credit facility with a new $105.6 million first mortgage fixed for 10 years at 3.94% with Midland National Life Insurance Company, an affiliate of Guggenheim Partners. The mortgage is interest-only for the first four years and amortized over a thirty-year schedule thereafter.
- Following the Guggenheim financing, the average interest rate on our debt is 4.22%, resulting in a 374 basis point positive spread relative to our current lease yield of 7.96% 2 Our leverage ratio relative to total capitalization is approximately 52.0% as of March 31, 2013.
- Modified funds from operations, or MFFO, as defined by the Investment Program Association (IPA), equaled $3.4 million for the quarter, representing year-over-year growth of approximately 342% for the same quarter 2012. Funds from operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT), equaled approximately $2.5 million, compared with ($1.2) million for the same quarter 2012. (Please see financial reconciliation tables and notes at the end of this release for more information regarding MFFO and FFO.) “We could not be more pleased with the growth in our portfolio since inception, the quality of our tenant base, overall credit quality of our portfolio cash flow and the incredible support we receive from both our broker-dealer partners and new members of our lending group,” concluded Mr. Shields.
1 Total capitalization includes the outstanding debt balance, plus total equity raised in our public offering and operating partnership units issued for contributed properties, less net current assets.
2 The weighted average lease yield is determined by dividing the projected net rental payment for the ensuing 12-month period by the initial acquisition price (exclusive of closing and offering costs). The projected net rental payment 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.
About Griffin Capital Essential Asset REIT and Griffin Capital Corporation
Griffin Capital Essential Asset REIT, Inc. is a publicly-registered non-traded REIT with a portfolio that currently includes 18 office and industrial distribution properties totaling approximately 3.8 million rentable square feet and total capitalization in excess of $500 million. The REIT’s sponsor is Griffin Capital Corporation (“Griffin Capital”), a privately-owned real estate company headquartered in Los Angeles. Led by senior executives, each with more than two decades of real estate experience collectively encompassing over $16 billion of transaction value and more than 650 transactions, Griffin Capital and its affiliates have acquired or constructed over 17 million square feet of space since 1996. Griffin Capital and its affiliates currently own and manage a portfolio consisting of over 14.8 million square feet of space, located in 28 states and representing approximately $2.5 billion in asset value. Additional information about Griffin Capital is available at www.griffincapital.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 relating to the public offering of our common stock; uncertainties related to the timing and availability of distributions; and other risk factors as outlined in the REIT’s prospectus, as amended from time to time. This is neither an offer nor a solicitation to purchase securities.