Griffin Realty Trust Inc., a publicly registered non-traded real estate investment trust formerly known as Griffin Capital Essential Asset REIT, has reported its financial results for the second quarter of 2022.
Total revenue grew 3.6 percent to approximately $123.1 million for the quarter ended June 30, 2022, an increase of $4.2 million compared to the same quarter last year.
Net income (loss) attributable to common stockholders was approximately ($72.2 million), or ($0.22) per basic and diluted share, for the quarter ended June 30, 2022, compared to a net income (loss) attributable to common stockholders of approximately $3.0 million, or $0.01 per basic and diluted share, for the quarter ended June 30, 2021.
According to the company, the change was “primarily driven by an impairment provision of approximately $75.6 million during the quarter ended June 30, 2022, as it was determined that the carrying value of certain real estate assets was not likely recoverable.”
Adjusted funds from operations was approximately $60.9 million, or $0.17 per basic and diluted share for the second quarter 2022. During the same quarter last year, AFFO was $55.3 million, or $0.16 per basic and diluted share. The increase was primarily due to an increase in termination income as compared to the same quarter last year, the company said.
Adjusted EBITDA was approximately $84.2 million for the quarter ended June 30, 2022. This outcome resulted in fixed charge and interest coverage ratios of 3.4x and 3.9x, respectively, for the quarter.
The REIT signed five new leases totaling approximately 214,000 square feet. This activity includes a new 15 year lease in Scottsdale for approximately 133,400 square feet. The company also signed three lease renewals for approximately 700,000 square feet, which includes a six-year lease extension with Zebra Technologies Corporation.
The company’s net debt was approximately $2.3 billion. The ratio of consolidated debt, less cash and cash equivalents, to total real estate, was 42.7 percent.
As of June 30, 2022, the company’s weighted average loan maturity was 3.2 years with 70 percent of the loan balance having a fixed interest rate, including the effect of interest rate swaps. Approximately 40 percent of its consolidated debt was secured and approximately 60 percent was unsecured.
“Amidst economic uncertainty, rising concerns about inflation, higher interest rates and lingering headwinds from COVID-19, we are pleased with our portfolio’s resilience and our team’s hard work and diligence. We continue to collect 100 percent of our contractual rents, and proactively execute both new and renewal leases. Nevertheless, the backdrop has been a challenging one, especially for office properties,” said Michael Escalante, chief executive officer.
Escalante added, “On August 5th we announced our strategic monetization plan which we believe is the optimal way to achieve our dual objectives of providing the company and stockholders as much liquidity as possible amid the current capital markets environment, while also maximizing stockholder value.”
As previously reported, Griffin Realty Trust’s “strategic monetization process” will involve a separation of the REIT by spinning off a new public company that will own a portfolio of primarily industrial assets, as well as certain office assets, and listing that company’s shares on a national exchange, providing stockholders with freely tradeable shares in the new public company.
Following the separation, the company plans to sell its remaining portfolio of primarily office assets over time and distribute net proceeds to stockholders. Once these remaining assets have been sold, it intends “to fully liquidate and cease operations.”
On August 5, 2022, the REIT published an updated net asset value per share as of June 30, 2022. The company’s average NAV across all share classes decreased to $7.42 per share when compared to $9.10 per share as of June 30, 2021. The decrease was primarily driven by changes in the fair value of office assets.
Griffin Realty Trust is an internally managed non-traded REIT that owns and operates a geographically diversified portfolio of corporate office and industrial properties that are primarily net leased to single tenants that the company has determined to be creditworthy. As of June 30, 2022, the real estate portfolio had an enterprise value of approximately $5.1 billion and consisted of 121 properties and one land parcel held for future development, in 26 states consisting substantially of office, warehouse, and manufacturing facilities. The portfolio is 93 percent leased with a weighted average remaining lease term was approximately 6.1 years with approximately 2 percent average annual contractual rent growth for the remainder of the existing term.