Sila Realty Trust Reports Third Quarter 2020 Results
Sila Realty Trust Inc., a publicly registered non-traded real estate investment trust formerly known as Carter Validus Mission Critical REIT II, announced operating results for the third quarter of 2020.
Sila Realty Trust Inc., a publicly registered non-traded real estate investment trust formerly known as Carter Validus Mission Critical REIT II, announced operating results for the third quarter of 2020.
Financial Results
Net income (loss) attributable to common stockholders was $5.3 million for the quarter ended September 30, 2020, an increase of 155 percent, compared to net loss attributable to common stockholders of $9.6 million for the same period last year.
Funds from operations, or FFO, attributable to common stockholders was $33.5 million for the quarter ended September 30, 2020, an increase of 71 percent, compared to $19.6 million for the same period last year.
Modified funds from operations, or MFFO, attributable to common stockholders was $27.9 million for the quarter ended September 30, 2020, an increase of 78 percent, compared to $15.7 million for the same period last year.
Adjusted funds from operations, or AFFO, attributable to common stockholders was $29 million for the quarter ended September 30, 2020, an increase of 77 percent, compared to $16.4 million for the same period last year.
Operating Results
Net operating income, or NOI, was $58.6 million for the quarter ended September 30, 2020, an increase of 57 percent, compared to $37.3 million for the same period last year.
Rental revenue was $70.7 million for the quarter ended September 30, 2020, an increase of 47 percent, compared to $48.1 million for the same period last year.
Same store NOI was $39.2 million for the quarter ended September 30, 2020, an increase of 6 percent, compared to $37.1 million for the same period last year.
The REIT noted that the increases in financial and operating results during the periods presented above are primarily the result of 67 operating property acquisitions, including 60 properties acquired in the merger with Carter Validus Mission Critical REIT Inc., since July 1, 2019, one of which was sold on May 28, 2020.
Portfolio Overview
On September 8, 2020, the company purchased a multi-tenant healthcare property with 100 percent occupancy, located in the Tampa market, for $11 million.
During the third quarter of 2020, the company wrote off approximately $1.3 million of intangible assets, intangible liabilities, accounts receivable and tenant reimbursements related to two tenants in two data center properties that were experiencing financial difficulties due to deteriorating economic conditions driven by the impact of the COVID-19 pandemic and the pandemic’s acceleration of the tenant’s modification of work strategy to a remote environment.
As of September 30, 2020, the company owned 153 real estate properties, located in 70 markets, comprising approximately 8.7 million rentable square feet with total purchase price of approximately $3.1 billion. The company’s properties had a weighted average occupancy of 94.1 percent and weighted average remaining lease term of 9.5 years.
During the three months ended September 30, 2020, the company entered into one COVID-related rent concession with a tenant in a data center property.
As of September 30, 2020, the company entered into 30 rent concessions and lease modifications with tenants impacted by COVID-19 and collected approximately 98 percent of rental revenue originally contracted for the period.
Balance Sheet and Liquidity
As of September 30, 2020, the company had total principal debt outstanding of $1.4 billion, consisting of $454.5 million of notes payable and $983 million of the credit facility with a net debt leverage ratio (the ratio of principal debt outstanding less cash to fair market value of real estate plus the total aggregate cost of properties acquired after the net asset value date of October 31, 2019) of 42.1 percent.
The company’s outstanding debt was comprised of 66.4 percent fixed rate debt (including debt fixed through the use of interest rate swaps) and 33.6 percent variable rate debt.
During the three months ended September 30, 2020, the company drew $45 million on its credit facility related to a healthcare property acquisition and the internalization transaction.
As of September 30, 2020, the company had liquidity of approximately $230.7 million, consisting of $75.5 million in cash and cash equivalents and $155.2 million in borrowing base availability on the credit facility.
Internalization Transaction
On July 28, 2020, the REIT (under its former name, Carter Validus Mission Critical REIT II) agreed to purchase all assets from its former advisor, Carter Validus REIT Management Company II, and their affiliates, effectively internalizing the company’s management structure.
The REIT agreed to pay total consideration of $40 million in cash in connection with the internalization transaction, of which $25 million was paid at the time of closing on September 30, 2020, and the balance will be paid over the next 18 months.
At the closing of the internalization transaction, the REIT hired 76 employees previously employed by an affiliate of the former advisor, including key executives.
As a result of the transaction, the company anticipates its expenses will decrease by approximately $18 million on an annualized basis starting in the fourth quarter of 2020 due to the elimination of asset management, property management and other various fees that would have otherwise been paid to the former advisor.
Sila Realty Trust, which invests in healthcare properties and data centers, owned 153 real estate properties, consisting of 29 data centers and 124 healthcare properties located in 70 markets across the United States, as of September 30, 2020.
