Phillips Edison Grocery Center REIT II Increases Second Quarter 2017 FFO by 76%
Phillips Edison Grocery Center REIT II, Inc., a publicly registered, non-traded real estate investment trust reported its results for the second quarter of 2017.
“In a time of retail uncertainty, shopping centers anchored by leading grocers continue to perform well, as illustrated by the 3.2 percent increase in our same-center NOI for the quarter,” said Jeff Edison, chairman and chief executive officer of Phillips Edison Grocery Center REIT II. “These grocery-anchored centers provide a necessity-based shopping experience that has proven to be more resistant to recession and e-commerce than malls and power centers.”
Financial Results for the Second Quarter of 2017
• Net loss totaled $1.3 million for the second quarter of 2017, an improvement of $3.3 million when compared to a net loss of $4.6 million during the second quarter of 2016. The company noted that the results were driven by an $8.6 million increase in revenues due to the acquisition of 23 properties since April 1, 2016, offset by an increase in related operating costs, real estate taxes and interest expenses.
• Funds from operations increased 75.8 percent to $16.7 million for the second quarter of 2017, compared to $9.5 million during the same quarter last year.
• Modified funds from operations increased 19.2 percent to $15.4 million for the second quarter of 2017, compared to $12.9 million year-over-year.
• Same-center NOI increased 3.2 percent to $16.3 million for the second quarter of 2017, compared to $15.8 million during the second quarter of 2016. The company said that the improvement was driven by a 2.2 percent increase in minimum rent per square foot, partially offset by an 8.1 percent increase in real estate taxes resulting from property reassessments, versus the comparable period.
• Same-center occupancy totaled 94.8 percent, a decrease of 0.1 percent from June 30, 2016.
• Two grocery-anchored shopping centers located in California and Georgia were acquired for a total cost of $36.4 million during the second quarter of 2017.
• During the second quarter of 2017, Necessity Retail Partners, the company’s joint venture with TPG Real Estate, acquired one grocery-anchored shopping center, bringing its total property count to 13.
• The company has $166 million outstanding on its $350 million revolving credit facility and its net debt to total enterprise value was 38.7 percent at June 30, 2017.
• The weighted-average interest rate of outstanding debt was 3.0 percent with a weighted-average maturity of 2.5 years. 75.3 percent of the total debt was fixed-rate debt.
• Gross distributions of $19.1 million were paid during the second quarter of 2017, including $9.3 million reinvested through the dividend reinvestment plan, for net cash distributions of $9.9 million.
• During the three months ended June 30, 2017, the company repurchased approximately 344,000 shares.
Phillips Edison Grocery Center REIT II invests in grocery-anchored neighborhood shopping centers having a mix of national and regional retailers selling necessity-based goods and services. The offering was declared effective in November 2013 and closed in September 2015 after raising $1.1 billion in investor equity. The company owns a retail portfolio of 80 properties purchased for approximately $1.6 billion.
