PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements 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 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 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 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 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 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 care18 - During Q1 2025, the company acquired one healthcare facility in Knoxville for cash consideration of $35.3 million3233 - 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 proceedings3738 - 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 extinguishment60 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 parcels106 Results of Operations 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 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 fluctuations127 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 drawn143 Cash Flows 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 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 2025160 Quantitative and Qualitative Disclosures About Market Risk 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 agreements164 - 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 points166 Controls and Procedures 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, 2025170 - No material changes were made to the company's internal controls over financial reporting during the first quarter of 2025171 PART II. OTHER INFORMATION Legal Proceedings 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 proceedings173 Risk Factors 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-K174 Unregistered Sales of Equity Securities and Use of Proceeds 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 Program175 - As of March 31, 2025, up to $25 million of common stock remained available for repurchase under the authorized Share Repurchase Program175 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None176 Mine Safety Disclosures This item is not applicable to the company - Not applicable177 Other Information 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, 2025178 Exhibits 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 certifications179
Sila Realty Trust, Inc.(SILA) - 2025 Q1 - Quarterly Report