Griffin Capital Essential Asset REIT Inc., a publicly registered non-traded real estate investment trust, announced its results for the quarter ended March 31, 2020.
The company reported approximately 618,000 square feet of executed new and renewal leases during the quarter. Subsequent to March 31, 2020, it signed a full-building lease for approximately 183,000 square feet at its Arlington Heights, Illinois property to a major Fortune 100 company with a lease term of more than 10 years. In addition, the company indicated that it collected 98 percent and 96 percent of April and May rents to date, respectively.
“We are pleased with our first quarter operating results and our rent collections over the last two months. We are cautiously approaching our path forward in light of the current global health crisis and its impact on the U.S. economy,” said Michael Escalante, chief executive officer.
“Our strategy today is not significantly different from that which has served us well since our inception: to control and minimize risk while positioning the company to capitalize on potential opportunities as they arise,” Escalante added. “Underpinning this approach is the solid, time-tested foundation of a diversified portfolio of more than 100 high-quality properties leased to blue-chip, credit-worthy tenants in a broad cross section of industries.”
As of March 31, 2020, the company’s portfolio consisted of 100 office and industrial properties (123 buildings), totaling more than 27 million rentable square feet of space in 25 states.
Total revenue was $95.7 million for the first quarter of 2020 compared to $76.5 million for the same period last year, predominantly as a result of the merger in the second quarter of 2019.
Net income attributable to common stockholders was $0.7 million, or zero cents per basic and diluted share, for the quarter ended March 31, 2020, compared to $5.3 million, or $0.03 per basic and diluted share, for the quarter ended March 31, 2019.
Adjusted funds from operations available to common stockholders and limited partners, or AFFO, was approximately $41.3 million, or $0.16 per basic and diluted share, for the quarter ended March 31, 2020, compared to approximately $37.7 million, or $0.19 per basic and diluted share, for the same period in 2019.
Funds from operations attributable to common stockholders and limited partners, or FFO, was approximately $44 million, or $0.17 per basic and diluted share, and $43.2 million, or $0.22 per basic and diluted share, for the quarter ended March 31, 2020 and 2019, respectively.
Adjusted EBITDA was approximately $63.5 million for the quarter ended March 31, 2020, with a fixed charge and interest coverage ratio of 2.8x and 3.3x, respectively.
The enterprise value as of March 31, 2020 was $4.7 billion.
The weighted average remaining lease term was approximately 7.3 years with approximately 2.1 percent average rent growth for the remainder of the existing term for all leases combined.
The portfolio was 89 percent leased, as of March 31, 2020.
Approximately 56.8 percent of the 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 credit ratings.
The ratio of net debt (pro rata share) to total real estate acquisition price and adjusted net debt (pro rata share) to total enterprise value as of March 31, 2020 was 48.7 percent and 45.3 percent, respectively.
During the quarter, seven lease transactions totaling 618,000 square feet were executed, including a 267,000 square foot renewal with Nike Inc. in Hillsboro, Oregon and a 321,000 square foot renewal with Hopkins Enterprises in Emporia, Kansas, both of which extend lease terms that would have otherwise expired December 31, 2020.
Additionally, seven previously executed leases to new tenants totaling 112,000 square feet commenced during the quarter, as did three renewals totaling 38,000 square feet. Combined with existing lease encumbrances on vacant space totaling 318,000 square feet, the portfolio is 89 percent leased.
On October 7, 2019, the company sold the FedEx Freight property located in Columbus, Ohio, for total proceeds of $30.3 million, less closing costs and other closing credits. The property sold for a value which approximates carrying value.
On November 20, 2019, the REIT sold the BT Infonet property, located in El Segundo, California, for total proceeds of $63.5 million, less closing costs and other closing credits. The carrying value of the property on the closing date was approximately $41.5 million. Upon the sale of the property, the REIT recognized a gain of approximately $21.5 million, in addition to a termination fee of approximately $11.2 million.
For the year ended December 31, 2019, total proceeds from the sale of three properties and a land parcel were approximately $144.4 million, with combined gains of approximately $29.9 million.
On February 5, 2020, the REIT purchased a new 526,320 square-foot industrial property, fully leased by Pepsi Bottling Ventures for approximately 12 years and located in Winston-Salem, North Carolina. The purchase price was approximately $34.9 million. As part of the acquisition, the company assumed a $18.9 million mortgage loan. The loan matures on October 1, 2024, has a fixed interest rate of 3.69 percent, and requires monthly payments of principal and interest.
The REIT collected 98 percent of April rents and 96 percent of May rents, as of May 13, 2020.
Received rent relief requests from 11 tenants. The REIT said that it continues to evaluate each tenant’s need for rent relief and have not approved any of these requests.
“Rent relief will only be approved if warranted,” the company said. “We anticipate some of these rent relief amendments will result in positive lease modifications for the company.”
Griffin Capital Essential Asset REIT Inc. is a self-managed, publicly registered, non-traded REIT with 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.