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 (3.4%) to $36,055,000 for the three months ended June 30, 2024, compared to $37,340,000 in 2023 [98] - Non-same store rental revenue decreased by $887,000 (19.1%) to $3,756,000 for the three months ended June 30, 2024, primarily due to property dispositions [98] - Total rental revenue for 2024 was $94,193,000, down $416,000 or 0.4% from $94,609,000 in 2023 [103] - Same store rental revenue for 2024 was $75,917,000, a decrease of $2,592,000 or 10.1% compared to 2023 [103] - Non-same store rental revenue decreased by $2,068,000 or 16.2%, totaling $10,690,000 in 2024 [103] - Same store tenant reimbursements increased by $592,000 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 $3,855 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 $62,053 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 $65,832 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 $50 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 $32,969,000 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 $1,604,000 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 $1,630,000 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 $6,364,000 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 $25,447,000 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, with an outstanding principal balance of $525,000,000, leaving $500,000,000 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 $20,000,000 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 (2.3%) to $34,784,000 for the three months ended June 30, 2024, compared to $35,587,000 in 2023 [100] - Interest and other income increased by $910,000 (645.4%) to $1,051,000 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 $3,292,000 in 2024 [108] - Interest expense decreased by $799,000 or 7.1%, amounting to $10,487,000 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 $9,920,000 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 $1,359,000 provided in the same period of 2023, reflecting a change of $(136,714,000) [115] - The company received a $2,000,000 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 $2,564,000 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 $13,521,000 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 $525,000 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]
Sila Realty Trust, Inc.(SILA) - 2024 Q2 - Quarterly Report