Griffin Capital Essential Asset REIT Reports Third Quarter 2017 Results
El Segundo, Calif. (November 16, 2017) – Griffin Capital Essential Asset REIT, Inc. (the “REIT”) announced its operating results for the quarter ended September 30, 2017. As of September 30, 2017, the REIT’s portfolio consisted of 741 assets encompassing approximately 18.8 million1 rentable square feet of space in 20 states with a total acquisition value of $3.0 billion1.
“Our solid third quarter financial results reflect our fundamental goals of delivering stable income and long-term capital appreciation through focused acquisitions and dispositions and disciplined management of top-quality commercial properties in fast-growing metropolitan markets,” said Kevin Shields, Chairman and Chief Executive Officer of the REIT. “During the quarter, we executed new and renewal leases with credit-worthy tenants such as AT&T Services Inc. and T-Mobile West. With steady economic growth, we believe the REIT is well positioned for the future,” Mr. Shields added.
Highlights and Accomplishments in Third Quarter 2017 and Results as of September 30, 2017:
- The total capitalization of our portfolio as of September 30, 2017 was $3.4 billion2.
- Our weighted average remaining lease term was approximately 6.91 years with average annual rent increases of approximately 2.1%1.
- Approximately 65.8%1 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 344,467 square feet, including an 8-year lease renewal with AT&T Services, Inc. for 155,830 square feet in Seattle, WA, a 10-year renewal with T-Mobile West for 158,135 square feet in Frisco, TX and a new 49-month lease with Zoom Video Communications, Inc. for 30,502 square feet in Denver, CO commencing on January 1, 2018.
- Total revenue was $85.1 million for the quarter ended September 30, 2017, compared to $86.7 million for the quarter ended September 30, 2016. The change in total revenue was due to lower occupancy.
- Net income attributable to common stockholders was $9.0 million or $0.05 per basic and diluted share for the quarter ended September 30, 2017, compared to $6.8 million or $0.04 per basic and diluted share for the quarter ended September 30, 2016. Our debt to total real estate acquisition value as of September 30, 2017 was 51.4%1.
- Modified funds from operations, or MFFO, as defined by the Investment Program Association (IPA), was approximately $39.3 million for the quarter, compared to approximately $39.8 million for the same period in 2016. Funds from operations, or FFO, was approximately $39.5 million and $43.1 million for the quarters ended September 30, 2017 and 2016, respectively. Please see 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 $57.8 million for the quarter with a fixed charge and interest coverage ratio of 3.99 and 4.55, respectively. Please see financial reconciliation tables and notes at the end of this release for more information regarding adjusted EBITDA and related ratios.
- On October 19, 2017, the Company 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.
About Griffin Capital Essential Asset REIT
Griffin Capital Essential Asset REIT, Inc. is a publicly-registered non-traded REIT with a portfolio, as of September 30, 2017, of 74 office and industrial properties totaling 18.8 million rentable square feet, located in 20 states, representing total REIT capitalization of approximately $3.4 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 $9.6 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 September 30, 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 September 30, 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 Of the 65.8% investment grade tenant ratings, 62.2% is from a Nationally Recognized Statistical Rating Organization (NRSRO) credit rating, with the remaining 3.6% being from a non-NRSRO, but having a rating that we believe is equivalent to an NRSRO investment grade rating. Bloomberg’s default risk rating is an example of a non-NRSRO rating.