Griffin Essential Asset REIT II Reports Higher Revenue, Lower FFO in Q1
Griffin Capital Essential Asset REIT II Inc., a publicly registered non-traded real estate investment trust, reported its operating results for the first quarter of 2018.
Griffin Capital Essential Asset REIT II Inc., a publicly registered non-traded real estate investment trust, reported its operating results for the first quarter of 2018.
“For the past year, we have continued to rely on the core strengths of our portfolio, under a guiding investment strategy that emphasizes current income, credit tenants, new properties, and long duration leases with embedded contractual growth,” said Michael Escalante, the REIT’s president. “Today, the REIT’s property portfolio is 100 percent leased and occupied. Our emphasis on being highly disciplined commercial property operators, together with our continued focus on acquiring only top-quality assets under long-term leases to high quality corporate tenants, provide the REIT with significant forward momentum.”
Highlights and Accomplishments in First Quarter 2018 and Results as of March 31, 2018:
Financial Results
Total revenue for the quarter ended March 31, 2018 was approximately $26.8 million, representing year-over-year growth of 3 percent from the same period in 2017.
Net income attributable to common stockholders was approximately $0.8 million or $0.01 per basic and diluted share for the quarter ended March 31, 2018, compared to $3.1 million net income or $0.04 per basic and diluted share for the same period in 2017.
As of March 31, 2018, the ratio of debt to total real estate acquisition value was 43.2 percent.
Non-GAAP Measures
Adjusted funds from operations was approximately $10.1 million in the first quarter of 2018, compared to $10.4 million for the same quarter in 2017.
Funds from operations was approximately $11.8 million for the first quarter of 2018, compared to $13.6 million for the first quarter of 2017.
Adjusted EBITDA was approximately $16.7 million for the quarter ended March 31, 2018 with a fixed charge and interest coverage ratio of 4.25 each.
Portfolio Overview
The total capitalization of the company’s portfolio was approximately $1.2 billion.
The weighted average remaining lease term was approximately 10.1 with average annual rent increases of approximately 2.4 percent.
The portfolio is 100 percent leased and occupied.
Approximately 82.6 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.
Subsequent Events
On April 27, 2018, the REIT, through four special purpose entities owned by Griffin Capital Essential Asset Operating Partnership II L.P., the REIT’s operating partnership, entered into a loan agreement with Bank of America, N.A. and KeyBank N.A. in which the lender provided the four entities with a loan in the aggregate amount of $250 million.
The loan is secured by various mortgages, has a term of 10 years, maturing on May 1, 2028, and requires monthly payments of interest only at a fixed rate of 4.32 percent. The REIT utilized approximately $249.8 million of the proceeds provided by the loan to pay down a portion of the REIT’s revolving credit facility.
Griffin Capital Essential Asset REIT II focuses on acquiring a portfolio consisting primarily of single tenant business essential properties throughout the United States and has acquired 35 office and industrial buildings for approximately $1.1 billion.
The offering was declared effective by the SEC in July 2014 and closed in January 2017 after raising $746 million in investor equity. The REIT commenced a follow-on offering as a perpetual life REIT in September 2017.
