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Sila Realty Trust, Inc.(SILA) - 2024 Q2 - Quarterly Report
SILASila Realty Trust, Inc.(SILA)2024-08-07 21:09

Real Estate Properties - As of June 30, 2024, the company owned 137 real estate properties and two undeveloped land parcels [80] - The company’s real estate properties were 97.5% leased as of June 30, 2024 [90] - As of June 30, 2024, the company had 137 real estate properties with a total leased square feet of 5,155,000, down from 5,400,000 in 2023, resulting in a weighted average percentage of rentable square feet leased of 97.5% [95] Financial Performance - Same store rental revenue decreased by 1,285,000(3.41,285,000 (3.4%) to 36,055,000 for the three months ended June 30, 2024, compared to 37,340,000in2023[98]−Non−samestorerentalrevenuedecreasedby37,340,000 in 2023 [98] - Non-same store rental revenue decreased by 887,000 (19.1%) to 3,756,000forthethreemonthsendedJune30,2024,primarilyduetopropertydispositions[98]−Totalrentalrevenuefor2024was3,756,000 for the three months ended June 30, 2024, primarily due to property dispositions [98] - Total rental revenue for 2024 was 94,193,000, down 416,000or0.4416,000 or 0.4% from 94,609,000 in 2023 [103] - Same store rental revenue for 2024 was 75,917,000,adecreaseof75,917,000, a decrease of 2,592,000 or 10.1% compared to 2023 [103] - Non-same store rental revenue decreased by 2,068,000or16.22,068,000 or 16.2%, totaling 10,690,000 in 2024 [103] - Same store tenant reimbursements increased by 592,000or10.1592,000 or 10.1%, primarily due to higher operating costs [103] - Net income attributable to common stockholders for the three months ended June 30, 2024, was 4,628 million, up from 3,855millionforthesameperiodin2023,representinga203,855 million for the same period in 2023, representing a 20% increase [124] - Funds from operations (FFO) for the six months ended June 30, 2024, was 59,047 million, compared to 62,053millionforthesameperiodin2023,reflectingadecreaseofapproximately462,053 million for the same period in 2023, reflecting a decrease of approximately 4% [124] - The company reported an adjusted funds from operations (AFFO) of 69,130 million for the six months ended June 30, 2024, compared to 65,832millionforthesameperiodin2023,indicatinganincreaseofabout565,832 million for the same period in 2023, indicating an increase of about 5% [124] Stock and Shareholder Activities - The company accepted for purchase 2,212,389 shares of Common Stock at a purchase price of 22.60 per share, totaling approximately 50million[83]−ThecompanysuspendeditsAmendedandRestatedShareRepurchaseProgrameffectiveApril5,2024,andterminateditupontheListing[82]−Thecompanyexecutedaone−for−fourreversestockspliteffectiveMay1,2024,inanticipationofitslistingontheNYSE[81]−Thecompany’scommonstockbegantradingontheNYSEunderthetickersymbol"SILA"onJune13,2024[81]−Cashdistributionstocommonstockholdersincreasedto50 million [83] - The company suspended its Amended and Restated Share Repurchase Program effective April 5, 2024, and terminated it upon the Listing [82] - The company executed a one-for-four reverse stock split effective May 1, 2024, in anticipation of its listing on the NYSE [81] - The company’s common stock began trading on the NYSE under the ticker symbol "SILA" on June 13, 2024 [81] - Cash distributions to common stockholders increased to 36,785,000 for the six months ended June 30, 2024, up from 32,969,000inthesameperiodof2023[117]−TotaldistributionsdeclaredbutnotpaidasofJune30,2024,were32,969,000 in the same period of 2023 [117] - Total distributions declared but not paid as of June 30, 2024, were 7,663,000 for common stockholders, which were paid on July 15, 2024 [120] Impairment and Write-offs - The company recorded a write-off of straight-line rent receivables related to Steward of 1,604,000duringthethreemonthsendedDecember31,2023[91]−Thecompanyrecorded1,604,000 during the three months ended December 31, 2023 [91] - The company recorded 10,945,000 of impairment losses on the real estate property leased to Steward during the three months ended December 31, 2023 [91] - GenesisCare filed for Chapter 11 bankruptcy protection on June 1, 2023, leading to a 1,630,000write−offofstraight−linerentreceivablesforthesixmonthsendedJune30,2023[92]−ImpairmentlossesoncertainrealestatepropertiesleasedorformerlyleasedtoGenesisCarewererecordedat1,630,000 write-off of straight-line rent receivables for the six months ended June 30, 2023 [92] - Impairment losses on certain real estate properties leased or formerly leased to GenesisCare were recorded at 418,000 for the three months ended June 30, 2024, a significant decrease from 6,364,000inthesameperiodof2023[100]CashandDebtManagement−AsofJune30,2024,thecompanyhad6,364,000 in the same period of 2023 [100] Cash and Debt Management - As of June 30, 2024, the company had 86,971,000 in cash and cash equivalents, with expected cash requirements of 25,447,000overthenexttwelvemonths[112]−Thecompanyhad25,447,000 over the next twelve months [112] - The company had 525,000,000 of principal outstanding under its Unsecured Credit Facility as of June 30, 2024, and was in compliance with all covenants [112] - As of June 30, 2024, the total pool availability under the Unsecured Credit Facility was 1,025,000,000,withanoutstandingprincipalbalanceof1,025,000,000, with an outstanding principal balance of 525,000,000, leaving 500,000,000availabletobedrawn[114]−The2027TermLoanAgreementhadanoutstandingprincipalbalanceof500,000,000 available to be drawn [114] - The 2027 Term Loan Agreement had an outstanding principal balance of 250,000,000 as of June 30, 2024, and was entered into to replace a prior term loan agreement [114] - The company borrowed 20,000,000ontheRevolvingCreditAgreementonJuly24,2024,tofundanacquisition,increasingtheoutstandingprincipalbalanceto20,000,000 on the Revolving Credit Agreement on July 24, 2024, to fund an acquisition, increasing the outstanding principal balance to 545,000,000 [114] Operating Expenses and Income - Total operating expenses decreased by 803,000(2.3803,000 (2.3%) to 34,784,000 for the three months ended June 30, 2024, compared to 35,587,000in2023[100]−Interestandotherincomeincreasedby35,587,000 in 2023 [100] - Interest and other income increased by 910,000 (645.4%) to 1,051,000forthethreemonthsendedJune30,2024,primarilyduetoincreaseddividendincomefrommoneymarketfunds[102]−Interestandotherincomesurgedby1,051,000 for the three months ended June 30, 2024, primarily due to increased dividend income from money market funds [102] - Interest and other income surged by 3,145,000 or 2,139.5%, totaling 3,292,000in2024[108]−Interestexpensedecreasedby3,292,000 in 2024 [108] - Interest expense decreased by 799,000 or 7.1%, amounting to 10,487,000in2024[108]RiskFactors−Thecompanyfacesrisksfromincreasedinterestratesandinflation,whichmayimpactitsborrowingcostsandrealestateassetvalues[89]−Thecompanyisexposedtointerestrateriskduetovariableratedebtfinancingandhasstrategiesinplacetomanagethisrisk[125]−Thecompanydoesnothaveforeignoperations,thusavoidingexposuretoforeigncurrencyfluctuationrisks[126]−Thecompanyplanstocontinueenteringintoderivativefinancialinstrumentstomitigateinterestrateriskonvariableratefinancialinstruments[126]SignificantTransactions−Significantinvestingactivitiesincludedaninvestmentof10,487,000 in 2024 [108] Risk Factors - The company faces risks from increased interest rates and inflation, which may impact its borrowing costs and real estate asset values [89] - The company is exposed to interest rate risk due to variable rate debt financing and has strategies in place to manage this risk [125] - The company does not have foreign operations, thus avoiding exposure to foreign currency fluctuation risks [126] - The company plans to continue entering into derivative financial instruments to mitigate interest rate risk on variable rate financial instruments [126] Significant Transactions - Significant investing activities included an investment of 135,681,000 to purchase seven properties during the six months ended June 30, 2024, compared to 9,920,000foronepropertyinthesameperiodof2023[116]−Thecompanyreportedanetcashusedininvestingactivitiesof9,920,000 for one property in the same period of 2023 [116] - The company reported a net cash used in investing activities of (135,355,000) for the six months ended June 30, 2024, compared to 1,359,000providedinthesameperiodof2023,reflectingachangeof1,359,000 provided in the same period of 2023, reflecting a change of (136,714,000) [115] - The company received a 2,000,000severancefeefromGenesisCareduringthesixmonthsendedJune30,2024,whichwillberecognizedinrentalrevenuesovertheremainingleaseterm[92]−Thecompanyreceived2,000,000 severance fee from GenesisCare during the six months ended June 30, 2024, which will be recognized in rental revenues over the remaining lease term [92] - The company received 4,098 million in lease termination fee income for the six months ended June 30, 2024 [124] Miscellaneous - The company recorded accelerated amortization of in-place lease intangible assets totaling 2,564,000forthethreemonthsendedJune30,2024,asaresultoftheGenesisCareAmendedMasterLease[92]−Generalandadministrativeexpensesroseby2,564,000 for the three months ended June 30, 2024, as a result of the GenesisCare Amended Master Lease [92] - General and administrative expenses rose by 1,871,000 or 16.1%, reaching 13,521,000in2024[105]−Listing−relatedexpensesof13,521,000 in 2024 [105] - Listing-related expenses of 2,980,000 were incurred in the first half of 2024 due to advisory fees related to the company's listing [105] - The company has 11 interest rate swap agreements with an aggregate notional amount of 525,000million,whicharedesignatedascashflowhedginginstruments[126]−Anincreaseof50basispointsinmarketinterestrateswouldraisethesettlementassetvalueofinterestrateswapsto525,000 million, which are designated as cash flow hedging instruments [126] - An increase of 50 basis points in market interest rates would raise the settlement asset value of interest rate swaps to 23,481 million, while a decrease of 50 basis points would lower it to $14,017 million [126]