Core Insights - The author has over 10 years of experience researching companies across various sectors, including commodities and technology, which provides valuable insights for readers [1]. Company Research - The author has conducted in-depth research on over 1000 companies, covering industries such as oil, natural gas, gold, copper, and technology companies like Google and Nokia [1]. - The focus has shifted to a value investing-oriented YouTube channel after three years of blogging, where hundreds of companies have been researched [1]. - The preferred sectors for coverage include metals and mining stocks, along with comfort in consumer discretionary/staples, REITs, and utilities [1].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) For H1 2025, Sila Realty Trust reported $97.0 million in revenues, net income decreased to $16.5 million, total assets reached $2.02 billion, and operating cash flow declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate, net | $1,728,062 | $1,707,620 | | Cash and cash equivalents | $24,832 | $39,844 | | Total assets | $2,019,316 | $2,007,074 | | Credit facility, net | $578,490 | $521,921 | | Total liabilities | $661,368 | $603,889 | | Total stockholders' equity | $1,357,948 | $1,403,185 | Condensed Consolidated Statements of Comprehensive Income Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $48,732 | $43,554 | $96,988 | $94,193 | | Total operating expenses | $32,563 | $34,784 | $65,880 | $67,466 | | Net income | $8,598 | $4,628 | $16,496 | $19,608 | | Basic EPS | $0.16 | $0.08 | $0.30 | $0.34 | | Diluted EPS | $0.15 | $0.08 | $0.30 | $0.34 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $56,054 | $68,212 | | Net cash used in investing activities | ($68,101) | ($135,355) | | Net cash used in financing activities | ($2,965) | ($47,905) | | Net change in cash | ($15,012) | ($115,048) | - During the six months ended June 30, 2025, the Company purchased two real estate properties for a total cash consideration of **$59.5 million**[35](index=35&type=chunk)[36](index=36&type=chunk) - The Company recorded impairment losses on real estate of **$6.8 million** for the six months ended June 30, 2025, primarily related to the Stoughton Healthcare Facility following a lease rejection in bankruptcy by Steward Health Care System[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - On August 5, 2025, the Board authorized a quarterly cash dividend of **$0.40 per share**; subsequent to the quarter end, the company also acquired two healthcare properties for **$16.15 million** and authorized a new three-year, **$75 million** share repurchase program[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) H1 2025 rental revenue increased by 2.8%, but net income declined due to higher expenses, while liquidity remains strong with 90% of debt effectively fixed [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2025 vs Q2 2024 Revenue Breakdown (in thousands) | Revenue Category | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same store rental revenue | $42,817 | $41,207 | $1,610 | 3.9% | | Non-same store rental revenue | $1,847 | ($1,396) | $3,243 | 232.3% | | Total rental revenue | $48,544 | $43,554 | $4,990 | 11.5% | | Total revenues | $48,732 | $43,554 | $5,178 | 11.9% | - For Q2 2025, total operating expenses decreased by **6.4%** to **$32.6 million**, primarily due to the absence of **$2.9 million** in listing-related expenses incurred in Q2 2024 and lower depreciation and amortization, partially offset by a **$2.8 million** increase in impairment losses[130](index=130&type=chunk)[132](index=132&type=chunk) H1 2025 vs H1 2024 Revenue Breakdown (in thousands) | Revenue Category | H1 2025 | H1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same store rental revenue | $81,071 | $78,160 | $2,911 | 3.7% | | Non-same store rental revenue | $7,690 | $8,447 | ($757) | (9.0)% | | Total rental revenue | $96,800 | $94,193 | $2,607 | 2.8% | | Total revenues | $96,988 | $94,193 | $2,795 | 3.0% | - For H1 2025, total operating expenses decreased by **2.4%** to **$65.9 million**, driven by lower general & administrative costs (down **$2.7 million**) and the absence of listing-related expenses (**$3.0 million** in 2024), but largely offset by a significant increase in impairment losses to **$6.8 million** from **$0.4 million** in the prior year[137](index=137&type=chunk)[139](index=139&type=chunk) - Interest expense for H1 2025 increased by **44.5%** to **$15.2 million** from **$10.5 million** in H1 2024, primarily due to a higher weighted average interest rate on the credit facility, driven by higher average borrowings and new interest rate swaps[140](index=140&type=chunk)[145](index=145&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's primary sources of funds are operating cash flows and its credit facility; as of June 30, 2025, **90%** of the company's outstanding debt was effectively fixed through hedging strategies, limiting exposure to interest rate fluctuations[141](index=141&type=chunk) - As of June 30, 2025, the company had **$24.8 million** in cash and cash equivalents; material cash requirements over the next twelve months are estimated at **$39.5 million**, including **$27.4 million** for interest payments, **$9.3 million** for unfunded loan commitments, and **$2.8 million** for lease obligations[149](index=149&type=chunk) - The company's Unsecured Credit Facility has total commitments of **$1.125 billion**; as of June 30, 2025, the outstanding principal balance was **$581 million**, leaving **$544 million** available for drawing[156](index=156&type=chunk)[157](index=157&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of Net Income to FFO, Core FFO and AFFO (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $8,598 | $4,628 | $16,496 | $19,608 | | FFO | $30,014 | $25,268 | $59,180 | $59,047 | | Core FFO | $30,106 | $30,069 | $59,713 | $66,229 | | AFFO | $29,997 | $30,845 | $59,445 | $69,130 | - The company uses FFO, Core FFO, and AFFO as supplemental performance measures; Core FFO adjusts for items like listing-related expenses and severance, while AFFO further adjusts for non-cash rent adjustments and stock-based compensation and is a metric used to evaluate the dividend policy[170](index=170&type=chunk)[171](index=171&type=chunk) - The decrease in Core FFO and AFFO for the six months ended June 30, 2025, compared to the same period in 2024, is partly because the 2024 period included **$4.1 million** of lease termination fee income[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on variable-rate debt, which is actively managed through interest rate swaps - As of June 30, 2025, the company had **10** interest rate swap agreements with an aggregate notional amount of **$525 million**, fixing the interest rate on the majority of its debt[178](index=178&type=chunk) - The company is exposed to interest rate risk on **$56 million** of its total **$581 million** debt outstanding; a hypothetical **50 basis point (0.50%)** increase in market interest rates would result in an approximate **$280,000** increase in annual interest expense[181](index=181&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025[184](index=184&type=chunk) - There were no changes in internal controls over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[185](index=185&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any material pending legal proceedings affecting it or its properties - As of the filing date, the company is not a party to any material pending legal proceedings[187](index=187&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[188](index=188&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased 305,362 shares at an average of $24.09 per share, with $17.7 million remaining available under the program Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | 484 | $24.92 | | June 2025 | 304,878 | $24.09 | | **Total** | **305,362** | **$24.09** | - As of June 30, 2025, the company had up to the lesser of **1,195,122 shares** or **$17,656,000** available for repurchase under its Share Repurchase Program; a new, larger three-year program was authorized on August 4, 2025[194](index=194&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated any Rule 10b5-1 trading plans or other trading arrangements during Q2 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2025[194](index=194&type=chunk)[195](index=195&type=chunk)

Financial Data and Key Metrics Changes - The company reported cash NOI of $41.9 million for Q2 2025, a 1.7% increase from Q2 2024, primarily driven by acquisitions [12] - AFFO was $0.54 per diluted share for Q2 2025, reflecting a 1.7% increase from Q2 2024, despite a 2.7% decrease year-over-year due to higher interest expenses [13][15] - The liquidity position at the end of the quarter was $568.8 million, with a net debt to EBITDAre ratio of 3.6 times [17] Business Line Data and Key Metrics Changes - The average EBITDARM coverage ratio improved to 5.31 times, up from 4.64 times in the previous year, indicating stronger tenant performance [16] - The company maintained a strong tenant base, with 40% associated with investment-grade rated tenants, up from 36.4% year-over-year [16] Market Data and Key Metrics Changes - The company closed on a two-property medical outpatient building portfolio for approximately $16.2 million, enhancing its operational synergies [20] - Year-to-date acquisitions totaled approximately $75 million, with over $70 million of properties under exclusive LOI [21] Company Strategy and Development Direction - The company focuses on necessity-based healthcare solutions, aiming to capitalize on the aging population and limited competition in its markets [5][19] - A strategic decision was made to demolish the Stoughton asset to halt expense leakage and maximize future land value [10][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow despite macroeconomic uncertainties, emphasizing a prudent capital allocation strategy [4][11] - The company aims to maintain a healthy dividend while pursuing growth through acquisitions and share repurchases [17] Other Important Information - The board approved a three-year share repurchase program for up to $75 million, with a cap of $25 million per year [15] - The company is currently under exclusive LOI for additional acquisitions, indicating a robust pipeline for future growth [21] Q&A Session Summary Question: What types of assets are included in the $70 million LOIs? - Management confirmed that the properties under LOI are consistent with their current portfolio and have long lease durations [25][26] Question: What is the current status of the Stoughton facility? - Management indicated that the demolition process is underway and will significantly reduce carrying costs [39][57] Question: How does the company evaluate share repurchases versus acquisitions? - Management stated that share repurchases are viewed as a tool, and decisions are based on the perceived disconnect between share price and intrinsic value [30][41] Question: What are the expectations for lease expirations in the near term? - Management is optimistic about renewing nearly all leases expiring in 2025 and 2026, with only minor exposures expected [42][46]

Financial Performance - Rental revenue for the three months ended June 30, 2025, was $48544 thousand[9] - Net income attributable to common stockholders for the three months ended June 30, 2025, was $8598 thousand[9] - EBITDAre for the three months ended June 30, 2025, was $37870 thousand[9] - FFO per common share - diluted was $054 for the three months ended June 30, 2025[9] - AFFO for the three months ended June 30, 2025, was $29997 thousand[9] Portfolio Metrics - The company had 136 properties as of June 30, 2025[9] - Rentable square feet was 5194 thousand as of June 30, 2025[9] - Weighted average leased rate was 992% as of June 30, 2025[9] - Triple net lease exposure was 999% as of June 30, 2025[9, 10] Debt and Liquidity - Principal debt outstanding was $581000 thousand as of June 30, 2025[11] - Net debt was $556168 thousand as of June 30, 2025[11] - Liquidity was $568832 thousand as of June 30, 2025[13]

Core Viewpoint - Sila Realty Trust (SILA) reported quarterly funds from operations (FFO) of $0.54 per share, matching the Zacks Consensus Estimate, and showing no year-over-year change [1] - The company posted revenues of $48.73 million for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.08%, but up from $43.55 million a year ago [2] Group 1: Financial Performance - FFO for the previous quarter was expected to be $0.54 per share, but the actual result was $0.53, resulting in a surprise of -1.85% [1] - Over the last four quarters, Sila has surpassed consensus FFO estimates only once [1] - The current consensus FFO estimate for the upcoming quarter is $0.55 on revenues of $49.67 million, and for the current fiscal year, it is $2.16 on revenues of $197.72 million [7] Group 2: Market Performance - Sila shares have increased by approximately 4% since the beginning of the year, compared to a 7.1% gain in the S&P 500 [3] - The estimate revisions trend for Sila was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 3: Industry Context - The REIT and Equity Trust - Other industry, to which Sila belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which can be tracked by investors [5]

[Sila Realty Trust Second Quarter 2025 Results](index=1&type=section&id=Sila_Realty_Trust_Second_Quarter_2025_Results) Sila Realty Trust reported strong Q2 2025 results, driven by strategic acquisitions, share repurchases, and solid financial performance [Overview and Highlights](index=1&type=section&id=Overview_and_Highlights) Sila Realty Trust reported $8.6 million net income for Q2 2025, acquiring properties, repurchasing shares, and declaring a $0.40 dividend Q2 2025 Key Financial Metrics | Metric | Value | Per Diluted Share | | :--- | :--- | :--- | | Net Income | $8.6 million | $0.15 | | Cash Net Operating Income (Cash NOI) | $41.9 million | N/A | | Adjusted Funds From Operations (AFFO) | $30.0 million | $0.54 | | Cash Distributions Paid | N/A | $0.40 | - Management emphasized a disciplined investment approach, focusing on acquiring net-lease healthcare properties and repurchasing shares at a perceived discount to intrinsic value[5](index=5&type=chunk) - The company achieved positive cash NOI growth compared to both the prior quarter and the same quarter last year, driven by strong leasing spreads on renewals[6](index=6&type=chunk) - Subsequent to the quarter end, on August 5, 2025, the board declared a quarterly cash dividend of **$0.40 per share**[7](index=7&type=chunk) - On August 4, 2025, the board authorized a new three-year share repurchase program for up to **$75.0 million**, with an annual limit of **$25.0 million**[7](index=7&type=chunk)[18](index=18&type=chunk) [Financial Performance](index=2&type=section&id=Financial_Performance) Q2 2025 GAAP net income nearly doubled to $8.6 million, Cash NOI rose to $41.9 million, and AFFO remained stable at $0.54 per share Net Income Comparison (in millions, except per share data) | Period | Net Income | Per Diluted Share | | :--- | :--- | :--- | | **Q2 2025** | **$8.6** | **$0.15** | | Q2 2024 | $4.6 | $0.08 | | **YTD 2025** | **$16.5** | **$0.30** | | YTD 2024 | $19.6 | $0.34 | Cash NOI Comparison (in millions) | Period | Cash NOI | Key Drivers | | :--- | :--- | :--- | | **Q2 2025** | **$41.9** | Acquisitions, contractual rent increases | | Q2 2024 | $39.9 | - | | **YTD 2025** | **$83.1** | Decrease due to prior year termination fees and vacancy | | YTD 2024 | $86.8 | - | AFFO Comparison (in millions, except per share data) | Period | AFFO | Per Diluted Share | | :--- | :--- | :--- | | **Q2 2025** | **$30.0** | **$0.54** | | Q2 2024 | $30.8 | $0.54 | | **YTD 2025** | **$59.4** | **$1.07** | | YTD 2024 | $69.1 | **$1.20** | [Real Estate Portfolio](index=2&type=section&id=Real_Estate_Portfolio) Sila acquired one healthcare property for $24.1 million, expanding its portfolio to 136 properties with 99.2% occupancy - Acquired one inpatient rehabilitation facility in Dover, Delaware for **$24.1 million**, comprising **42,140 rentable square feet**, 100% leased with an expiration in 2036[13](index=13&type=chunk) Portfolio Snapshot as of June 30, 2025 | Metric | Value | | :--- | :--- | | Number of Properties | 136 | | Rentable Square Feet | ~5.2 million | | Percentage Leased | 99.2% | | Weighted Avg. Remaining Lease Term | ~9.5 years | | Weighted Avg. Fixed Rent Escalation | 2.2% | - The percentage of square feet leased increased by **3.2 percentage points** in Q2 2025, largely because the vacant Stoughton Healthcare Facility was taken out of service[15](index=15&type=chunk) [Balance Sheet and Capital Markets](index=3&type=section&id=Balance_Sheet_and_Capital_Markets) Sila maintained strong liquidity of $568.8 million, with $581.0 million in debt, and authorized a new $75 million share repurchase program Liquidity and Debt Position as of June 30, 2025 | Metric | Value | | :--- | :--- | | Total Liquidity | ~$568.8 million | | Cash and Cash Equivalents | $24.8 million | | Credit Facility Availability | $544.0 million | | Total Principal Debt Outstanding | $581.0 million | | Weighted Average Interest Rate | 4.7% | | Net Debt to Enterprise Value | ~29.8% | - Of the **$581.0 million** in debt, **$525.0 million** was fixed through 10 interest rate swap agreements[17](index=17&type=chunk) - A new share repurchase program was authorized on August 4, 2025, allowing for up to **$75.0 million** in repurchases over three years, replacing the prior one-year program[18](index=18&type=chunk) [Distributions](index=3&type=section&id=Distributions) The Q2 2025 dividend payout to AFFO ratio was 74.0%, with a quarterly cash dividend of $0.40 per share declared - The dividend payout to AFFO ratio for Q2 2025 was **74.0%**[19](index=19&type=chunk) - A quarterly cash dividend of **$0.40 per share** was authorized on August 5, 2025, payable on September 4, 2025, to stockholders of record as of August 21, 2025[19](index=19&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated_Financial_Statements) Consolidated financial statements show total assets of $2.02 billion, with Q2 2025 total revenues of $48.7 million and net income of $8.6 million [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed_Consolidated_Balance_Sheets) The balance sheet details assets, liabilities, and equity, with total assets reaching $2.02 billion as of June 30, 2025 Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate, net | $1,728,062 | $1,707,620 | | Cash and cash equivalents | $24,832 | $39,844 | | **Total assets** | **$2,019,316** | **$2,007,074** | | Credit facility, net | $578,490 | $521,921 | | **Total liabilities** | **$661,368** | **$603,889** | | **Total stockholders' equity** | **$1,357,948** | **$1,403,185** | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed_Consolidated_Statements_of_Comprehensive_Income) The income statement reports Q2 2025 total revenues of $48.7 million and net income of $8.6 million, with diluted EPS of $0.15 Income Statement Summary - Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $48,732 | $43,554 | | Total operating expenses | $32,563 | $34,784 | | **Net income** | **$8,598** | **$4,628** | | **Diluted EPS** | **$0.15** | **$0.08** | Income Statement Summary - Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $96,988 | $94,193 | | Total operating expenses | $65,880 | $67,466 | | **Net income** | **$16,496** | **$19,608** | | **Diluted EPS** | **$0.30** | **$0.34** | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP_Financial_Measures_and_Reconciliations) This section reconciles non-GAAP measures like FFO, Core FFO, AFFO, and Same Store Cash NOI, providing definitions for investor understanding [Reconciliation of Net Income to FFO, Core FFO and AFFO](index=9&type=section&id=Reconciliation_of_Net_Income_to_FFO_Core_FFO_and_AFFO) This reconciliation details the adjustments from net income to FFO, Core FFO, and AFFO for Q2 2025 and Q2 2024 FFO, Core FFO, and AFFO Reconciliation Summary - Q2 2025 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $8,598 | $4,628 | | FFO | $30,014 | $25,268 | | Core FFO | $30,106 | $30,069 | | AFFO | $29,997 | $30,845 | [Reconciliation of Net Income to Same Store Cash NOI](index=11&type=section&id=Reconciliation_of_Net_Income_to_Same_Store_Cash_NOI) This reconciliation details the adjustments from rental revenue to net operating income, Cash NOI, and Same Store Cash NOI Cash NOI Reconciliation Summary - Q2 2025 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Rental revenue | $48,544 | $43,554 | | Net operating income | $42,553 | $37,705 | | Cash NOI | $41,889 | $39,878 | | Same store cash NOI | $40,383 | $39,802 | [Definitions of Non-GAAP Measures](index=10&type=section&id=Definitions_of_Non-GAAP_Measures) This section provides clear definitions for key non-GAAP financial measures, including FFO, Core FFO, AFFO, and Cash NOI - **FFO (Funds From Operations):** Calculated per Nareit's definition, starting with net income and excluding gains/losses from property sales, impairment losses, and real estate depreciation[33](index=33&type=chunk) - **Core FFO:** Adjusts FFO to remove non-cash items and unusual or infrequent items like listing-related expenses and severance to show sustainable performance[34](index=34&type=chunk) - **AFFO (Adjusted Funds From Operations):** Further adjusts Core FFO for items like deferred rent and stock-based compensation, serving as a key metric for management to evaluate dividend policy[35](index=35&type=chunk) - **Cash NOI (Cash Net Operating Income):** Defined as NOI excluding non-cash GAAP adjustments like straight-line rent, used to evaluate the cash-based performance of the real estate portfolio[43](index=43&type=chunk)

Group 1 - The investment group High Yield Landlord, led by Jussi Askola, provides real-time updates on a REIT portfolio and transactions, featuring three portfolios: core, retirement, and international [2] - The group offers buy/sell alerts and a chat room for direct interaction with Jussi and his team of analysts, enhancing member engagement and investment decision-making [2] - Jussi Askola, as President of Leonberg Capital, has extensive experience in REIT investing, having authored award-winning academic papers and built relationships with top REIT executives [2] Group 2 - The company invests significant resources, over $100,000 annually, into researching profitable investment opportunities, particularly in real estate strategies [1] - The approach has garnered over 500 five-star reviews from satisfied members, indicating a strong level of member satisfaction and perceived value [1]

Group 1 - The article discusses the investment strategy focused on Real Estate Investment Trusts (REITs) for generating stable passive income and potential mean reversion [1] - The individual highlighted in the article, Luuk Wierenga, emphasizes the importance of dividends from REITs as a source of additional cash flow to support lifestyle needs [1] - The investment journey began during the COVID-19 pandemic, leading to a specialization in identifying high-yield REITs [1] Group 2 - There is a mention of Sila Realty Trust, indicating that a position may be initiated if the company shows improved per share performance in upcoming quarters [3]

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Sila Realty Trust's Q1 2025 saw total revenues of $48.3 million and net income of $7.9 million, a decline from the prior year due to lower rental revenue and a $3.5 million impairment loss, with total assets at $2.01 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased slightly to $2.015 billion, driven by net real estate assets, while total liabilities rose to $633.2 million and stockholders' equity decreased to $1.382 billion Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total real estate, net** | $1,721,750 | $1,707,620 | | Cash and cash equivalents | $30,458 | $39,844 | | **Total assets** | **$2,014,931** | **$2,007,074** | | Credit facility, net | $554,115 | $521,921 | | **Total liabilities** | **$633,167** | **$603,889** | | **Total stockholders' equity** | **$1,381,764** | **$1,403,185** | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2025 net income significantly decreased to $7.9 million from $15.0 million in Q1 2024, primarily due to a 4.7% decline in rental revenue, a $3.5 million impairment loss, and a 38.4% increase in interest expense Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Rental revenue | $48,256 | $50,639 | | Total operating expenses | $33,317 | $32,682 | | Impairment losses | $3,531 | $0 | | Interest expense | ($7,325) | ($5,294) | | **Net income** | **$7,898** | **$14,980** | | Comprehensive income | $760 | $17,848 | | **Basic EPS** | **$0.14** | **$0.26** | | **Diluted EPS** | **$0.14** | **$0.26** | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased by $21.4 million to $1.382 billion in Q1 2025, primarily due to $22.3 million in distributions and a $7.1 million other comprehensive loss, partially offset by net income Changes in Stockholders' Equity for Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | **Balance, December 31, 2024** | **$1,403,185** | | Net income | $7,898 | | Distributions to common stockholders | ($22,297) | | Other comprehensive loss | ($7,138) | | Stock-based compensation | $1,261 | | Repurchase of common stock | ($1,145) | | **Balance, March 31, 2025** | **$1,381,764** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 net cash from operating activities decreased to $24.1 million, while net cash used in investing activities significantly fell to $36.0 million, and financing activities provided a $2.5 million inflow, ending with $30.5 million in cash Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $24,129 | $36,572 | ($12,443) | | Net cash used in investing activities | ($36,042) | ($123,920) | $87,878 | | Net cash provided by (used in) financing activities | $2,527 | ($24,429) | $26,956 | | **Net change in cash** | **($9,386)** | **($111,777)** | | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes highlight the company's healthcare REIT focus, detailing a $35.3 million property acquisition, a $3.5 million impairment loss on the Stoughton Healthcare Facility, and a new $600 million revolving credit agreement in Q1 2025 - The company is primarily focused on investing in high-quality healthcare facilities across the continuum of care[18](index=18&type=chunk) - During Q1 2025, the company acquired one healthcare facility in Knoxville for cash consideration of **$35.3 million**[32](index=32&type=chunk)[33](index=33&type=chunk) - A real estate impairment loss of **$3.5 million** was recorded in Q1 2025 for the Stoughton Healthcare Facility, following the lease rejection by tenant sponsor Steward Health Care System during its bankruptcy proceedings[37](index=37&type=chunk)[38](index=38&type=chunk) - In February 2025, the company entered into a new **$600 million** senior unsecured revolving credit agreement, replacing its prior facility and resulting in a **$233,000** loss on debt extinguishment[60](index=60&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 4.7% decrease in Q1 2025 total rental revenue to lower non-same store revenue and a $3.5 million impairment loss, while liquidity remains strong with $568 million available on its credit facility, and non-GAAP measures FFO, Core FFO, and AFFO all declined [Overview](index=22&type=section&id=Overview) The company invests in high-quality healthcare facilities, with a portfolio of 136 properties and two undeveloped land parcels as of March 31, 2025 - As of March 31, 2025, the company owned **136 real estate properties** and two undeveloped land parcels[106](index=106&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2025 total rental revenue decreased by 4.7% to $48.3 million, primarily due to a 49.6% drop in non-same store revenue, while total operating expenses increased by 1.9% to $33.3 million, largely due to a $3.5 million impairment loss Rental Revenue Breakdown (in thousands) | Revenue Source | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same store rental revenue | $40,676 | $40,011 | $665 | 1.7% | | Non-same store rental revenue | $3,421 | $6,786 | ($3,365) | (49.6)% | | **Total rental revenue** | **$48,256** | **$50,639** | **($2,383)** | **(4.7)%** | Operating Expenses Breakdown (in thousands) | Expense Category | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Rental expenses | $6,326 | $5,554 | $772 | 13.9% | | General and administrative | $5,698 | $8,174 | ($2,476) | (30.3)% | | Depreciation and amortization | $17,762 | $18,898 | ($1,136) | (6.0)% | | Impairment losses | $3,531 | $0 | $3,531 | n/a | | **Total operating expenses** | **$33,317** | **$32,682** | **$635** | **1.9%** | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by operating cash flows and its credit facility, with $46.3 million in anticipated cash requirements for the next twelve months and $568 million available on its $1.125 billion Unsecured Credit Facility as of March 31, 2025 - The company has effectively fixed **94%** of its outstanding debt as of March 31, 2025, through its hedging strategy, limiting exposure to interest rate fluctuations[127](index=127&type=chunk) Material Cash Requirements (as of March 31, 2025) | Time Horizon | Amount (in thousands) | Description | | :--- | :--- | :--- | | Next 12 Months | $46,348 | Interest payments ($26.0M), unfunded loan commitments ($17.5M), lessee obligations ($2.8M) | | Beyond 12 Months | $709,660 | Debt principal & interest ($595.6M), lessee obligations ($114.0M) | - As of March 31, 2025, the company had an aggregate outstanding principal balance of **$557.0 million** on its Unsecured Credit Facility, with **$568.0 million** available to be drawn[143](index=143&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) Net cash from operating activities decreased by $12.4 million year-over-year, while cash used in investing activities fell sharply by $87.9 million due to reduced acquisitions, and financing activities provided a $2.5 million inflow Comparison of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $24,129 | $36,572 | ($12,443) | | Net cash used in investing activities | ($36,042) | ($123,920) | $87,878 | | Net cash provided by (used in) financing activities | $2,527 | ($24,429) | $26,956 | [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) The company's non-GAAP measures, FFO, Core FFO, and AFFO, all decreased in Q1 2025 compared to Q1 2024, primarily due to lower net income and the impact of a $4.1 million prior-period lease termination fee Reconciliation of Net Income to Non-GAAP Measures (in thousands) | Measure | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to common stockholders | $7,898 | $14,980 | | **FFO** | **$29,166** | **$33,779** | | **Core FFO** | **$29,607** | **$36,160** | | **AFFO** | **$29,448** | **$38,285** | - The Q1 2024 non-GAAP results include **$4.1 million** of lease termination fee income, which affects comparability with Q1 2025[160](index=160&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages its primary market risk, interest rate risk on variable-rate debt, through swaps, fixing **$525 million** of its **$557 million** debt, with a 50 basis point rate increase on the remaining **$32 million** impacting annual interest expense by **$160,000** - As of March 31, 2025, the company had fixed the interest rate on **$525 million** of its **$557 million** total principal debt (approximately **94%**) using 10 interest rate swap agreements[164](index=164&type=chunk) - The **$32 million** of outstanding debt subject to variable interest rates would incur an additional **$160,000** in annual interest expense if market rates increased by **50 basis points**[166](index=166&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[170](index=170&type=chunk) - No material changes were made to the company's internal controls over financial reporting during the first quarter of 2025[171](index=171&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any material pending legal proceedings to which it or its properties are subject - As of the filing date, the company is not a party to any **material pending legal proceedings**[173](index=173&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred regarding the risk factors since the filing of the 2024 Annual Report on Form 10-K - No material changes have occurred regarding the risk factors since the filing of the 2024 Annual Report on Form 10-K[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased **47,229 shares** for approximately **$1.1 million** for tax withholding on vested stock awards, with the full **$25 million** Share Repurchase Program authorization remaining available Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 45,222 | $24.19 | | February 2025 | 394 | $25.24 | | March 2025 | 1,613 | $25.51 | | **Total** | **47,229** | **$24.24** | - All shares repurchased during the quarter were for the net settlement of withholding taxes on vested stock awards, not under the formal Share Repurchase Program[175](index=175&type=chunk) - As of March 31, 2025, up to **$25 million** of common stock remained available for repurchase under the authorized Share Repurchase Program[175](index=175&type=chunk) [Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[176](index=176&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[177](index=177&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the first quarter of 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2025[178](index=178&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including amendments to loan agreements, the new credit agreement, and CEO and CFO certifications - Exhibits filed include amendments to existing term loan agreements, the new Credit Agreement dated February 18, 2025, and Sarbanes-Oxley Act certifications[179](index=179&type=chunk)

Financial Data and Key Metrics Changes - Cash NOI for Q1 2025 was $41.2 million, a slight increase from $41 million in Q4 2024, driven by contractual lease escalations and a recent acquisition [12] - AFFO for Q1 2025 was $29.4 million or $0.53 per diluted share, down from $30.2 million or $0.54 per diluted share in Q4 2024, primarily due to increased interest expenses [13] - AFFO decreased 23.1% compared to Q1 2024, largely due to nonrecurring fees and bankruptcies impacting cash NOI [14] Business Line Data and Key Metrics Changes - The weighted average remaining lease term is over 9.5 years with average annual contractual rent escalations of 2.2%, providing predictable long-term revenues [9] - The company maintained a 96% lease rate, unchanged from the previous quarter [23] Market Data and Key Metrics Changes - The company completed two acquisitions totaling approximately $59 million in March and April 2025, expanding its footprint into Tennessee and Delaware [19] - The Knoxville Healthcare facility is fully leased to a joint venture with investment-grade rated partners, while the Dover facility is also fully leased to a similar joint venture [20] Company Strategy and Development Direction - The company focuses on acquiring health care properties, which are seen as essential and non-discretionary, providing a stable investment opportunity [7] - The management emphasizes a disciplined investment approach, navigating macroeconomic uncertainties while seeking accretive acquisitions [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic challenges, including inflation and potential recession, but believes the company's focus on health care properties positions it well for long-term success [6][11] - The demographic shift towards an aging population is expected to drive increased health care spending, benefiting the company's portfolio [10] Other Important Information - The company has over $598 million in liquidity available for future acquisitions, supported by a new $600 million revolving line of credit [16][17] - The credit loss reserve increased by $171,000, related to the company's mezzanine loans, reflecting a qualitative assessment under GAAP [31][32] Q&A Session Summary Question: Update on Stoughton property - Management engaged a broker to solicit bids for the sale or lease of the Stoughton property, with more interest in sales for multifamily use, potentially involving demolition and entitlement processes [27][29] Question: Update on mezzanine loan investments - The company has funded amounts related to the mezzanine loan for the inpatient rehab facility and expects both loans to be fully funded by Q3 2025 [30] Question: Impact of credit loss reserve - The credit loss reserve is a required GAAP reserve for loans receivable, assessed qualitatively each quarter, and is related to the two mezzanine loans [31][32] Question: Investment pipeline and cost of equity - The company sees opportunities to acquire between $150 million and $250 million of real estate under normal conditions, but is cautious due to current market uncertainties [35][38] Question: Minimum yield for acquisitions - The company targets a cap rate of 6.5% to 7.5% for quality acquisitions, depending on property type and sponsorship quality [42] Question: Improvement in EBITDARM coverage - The improvement in EBITDARM coverage was driven by properties moving up in coverage levels, with a significant portion of the affected ABR being investment-grade rated [44][46] Question: Borrowing costs for future debt - Current borrowing on the revolving line of credit is at 5.57%, with plans to explore longer-duration fixed-rate debt in the future [48][50]