Griffin Capital Essential Asset REIT Reports Strong Leasing and Rent Collections in 2Q20
Griffin Capital Essential Asset REIT Inc., a publicly registered non-traded real estate investment trust, announced its results for the second quarter of 2020.
Griffin Capital Essential Asset REIT Inc., a publicly registered non-traded real estate investment trust, announced its results for the second quarter of 2020.
Net income attributable to common stockholders was $3.3 million, or $0.01 per basic and diluted share, for the second quarter of 2020, compared to $14.2 million, or $0.06 per basic and diluted share, for the same period last year. The company said that the decline was primarily a result of non-cash impairment charges during the quarter.
Adjusted funds from operations was approximately $50.0 million, or $0.19 per basic and diluted share, for the quarter ended June 30, 2020, compared to approximately $43.2 million, or $0.17 per basic and diluted share, for the same period in 2019.
Funds from operations was approximately $55.3 million, or $0.21 per basic and diluted share, for the quarter ended June 30, 2020, compared to $54.1 million, or $0.21 per basic and diluted share, for the quarter ended June 30, 2019.
The company said that the increase in both AFFO and FFO was primarily attributable to lease termination income earned in the current period.
The company also reported 191,300 square feet of leases signed during the quarter with a weighted average lease term of approximately 10.2 years, as well as the collection of approximately 99 percent of contractual rent due during the quarter and approximately 100 percent of contractual rent due during July.
“Despite a challenging market environment impacted by COVID-19, a situation which continues to evolve, we produced solid results in the second quarter. These results reflect the quality of our tenants and properties and the tireless efforts of our management team who has been proactively working with our tenants to further strengthen our relationships and pursue opportunities for long-term growth,” said chief executive officer Michael Escalante.
As of June 30, 2020, the company’s portfolio consisted of 99 office and industrial properties (122 buildings), encompassing more than 27 million rentable square feet of space in 25 states.
Highlights for the Quarter Ended June 30, 2020:
Total revenue was $105.4 million for the second quarter of 2020 compared to $103.4 million for the same period last year.
Adjusted EBITDA was approximately $69.6 million for the quarter ended June 30, 2020 with a fixed charge and interest coverage ratio of 3.2x and 3.8x, respectively.
Portfolio Overview
The enterprise value as of June 30, 2020 was $4.5 billion.
The weighted average remaining lease term was approximately 7.2 years with approximately 2.0 percent average annual rent growth for the remainder of the existing term for all leases combined.
The portfolio as of June 30, 2020 was 88.6 percent leased.
Approximately 59.0 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 value and net debt (pro rata share) to total enterprise value as of June 30, 2020 were 48.5 percent and 46.2 percent, respectively.
The ratio of net debt (pro rata share) to adjusted EBITDA as of June 30, 2020 was 7.5x.
Leasing Activity
Executed three leases during the quarter for 191,300 square feet with a weighted average lease term of approximately 10.2 years. Included in this total was an approximately 183,000-square-foot lease to a major Fortune 100 e-commerce company at its Arlington Heights, Illinois property for a term of more than 10 years. Simultaneous with the execution of the lease, the REIT entered into a termination agreement with the previous tenant for a payment of $10.9 million.
In addition, leases commencing during the quarter included three renewal leases and one new lease for a total of 785,138 square feet of space which was offset by 758,073 square feet of lease expirations and terminations, resulting in positive net absorption of 27,065 square feet.
Dispositions
On June 30, 2020, the company sold a 273,241-square-foot office property located in Simi Valley, California for $24.5 million which was 100 percent leased to Bank of America N.A through December 2020. The sale price resulted in a gain of $4.3 million on the property’s carrying value.
COVID-19 Update
Collected approximately 99 percent of contractual rent due in April, May and June to date.
Collected approximately 100 percent of contractual rent due in July.
To date, granted temporary rent relief for two tenants for three months of deferred rent, to be re-paid in 2021, which approximates 0.22 percent of the 12-month forward net rents as of June 30, 2020.
Griffin Capital Essential Asset REIT Inc. is a self-managed non-traded REIT with a portfolio consisting primarily of single tenant business essential properties throughout the United States.
