TAMPA, Fla.–(BUSINESS WIRE)–Sila Realty Trust, Inc., or the Company, a public, non-traded real estate investment trust focused on healthcare properties, today announced operating results for the fourth quarter and year ended December 31, 2021.
Highlights of the Quarter Ended December 31, 2021 and Subsequent Events
- Net income attributable to common stockholders totaled $12.1 million; net income attributable to common stockholders per diluted share was $0.05.
- Net operating income, or NOI*, attributable to our operating healthcare properties totaled $40.4 million.
- Funds from operations, or FFO*, attributable to common stockholders equaled $29.1 million; FFO attributable to common stockholders per diluted share was $0.13.
- Adjusted funds from operations, or AFFO*, attributable to common stockholders equaled $27.7 million; AFFO attributable to common stockholders per diluted share was $0.12.
- On October 21, 2021, the Company sold a healthcare property in the St. Louis, MO market for $6.1 million and generated net proceeds at closing of approximately $6.0 million, after transaction costs and other prorations.
- On December 8, 2021, the Company acquired a portfolio of three healthcare properties and two undeveloped land parcels in the Des Moines, IA market for an aggregate purchase price of $46.4 million. The three healthcare properties are approximately 132,617 rentable square feet and are 100% leased to four tenants.
- On December 22, 2021, the Company sold a healthcare property in the Dallas, TX market for $7.0 million and generated net proceeds at closing of approximately $6.7 million, after transaction costs and other prorations.
- On February 8, 2022, the Company placed one operating healthcare property into service.
- On February 10, 2022, the Company sold one land parcel that used to contain a healthcare property in the Houston, TX market for $24.0 million and generated net proceeds at closing of approximately $22.9 million, after transaction costs and other prorations, subject to additional transaction costs paid subsequent to the closing date.
- On February 15, 2022, the Company entered into a new revolving credit agreement and term loan agreement. Upon closing of the new revolving credit agreement, the Company extinguished all commitments associated with the prior revolving line of credit. The new term loan agreement was entered into to replace the Company’s prior term loan, which was paid off in its entirety upon closing of the new revolving credit agreement and the new term loan agreement.
- On March 10, 2022, the Company acquired one healthcare property in the Yukon, OK market for an aggregate purchase price of $19.4 million. The property is approximately 45,624 rentable square feet and has been 100% leased to a single tenant.
“2021 was a momentous year for the Company as we intentionally pivoted our focus to being a pure play healthcare REIT subsequent to the successful sale of the Company’s entire data center portfolio on July 22, 2021,” stated Michael Seton, the Company’s Chief Executive Officer and President. “The significant gain can be seen in our net income and, although FFO and AFFO reflect an impact of not generating rental revenue from the data center properties subsequent to the sale, the Company realized an increase in same store NOI from its healthcare properties, garnered the benefits of a full year’s savings related to the internalization transaction, and recognized a significant decrease in interest expense as a result of the material reduction in leverage using proceeds from the data center sale. We also placed into service and acquired a total of five class A healthcare properties, and completed the sale of two non-strategic healthcare assets, as we continue to focus on curating a strong and diversified healthcare portfolio, in an effort to maximize stockholder value.”
* An explanation of FFO, AFFO, and NOI, as well as reconciliations of such non-United States generally accepted accounting principles (“GAAP”) financial measures, which should not be considered alternatives to GAAP measures, to the most directly comparable U.S. GAAP measures, is included at the end of this release.
Financial Results
Quarter Ended December 31, 2021, Compared to Quarter Ended December 31, 2020
- Net income attributable to common stockholders was $12.1 million for the quarter ended December 31, 2021, a decrease of 18%, compared to net income attributable to common stockholders of $14.7 million for the quarter ended December 31, 2020.
- FFO attributable to common stockholders was $29.1 million for the quarter ended December 31, 2021, a decrease of 26%, compared to $39.2 million for the quarter ended December 31, 2020.
- AFFO attributable to common stockholders was $27.7 million for the quarter ended December 31, 2021, a decrease of 21%, compared to $35.2 million for the quarter ended December 31, 2020.
Year Ended December 31, 2021, Compared to Year Ended December 31, 2020
- Net income attributable to common stockholders was $402.7 million for the year ended December 31, 2021, an increase of 994%, compared to net income attributable to common stockholders of $36.8 million for the year ended December 31, 2020.
- FFO attributable to common stockholders was $115.9 million for the year ended December 31, 2021, a decrease of 17%, compared to $139.1 million for the year ended December 31, 2020.
- AFFO attributable to common stockholders was $135.7 million for the year ended December 31, 2021, an increase of 11%, compared to $122.3 million for the year ended December 31, 2020.
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Three Months |
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Year Ended |
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| 2021 |
| 2020 |
| $ Change |
| % Change |
| 2021 |
| 2020 |
| $ Change |
| % Change | ||||||||||
Net income attributable to common stockholders per common share – basic | $ | 0.05 |
| $ | 0.07 |
| $ | (0.02 | ) |
| (28.57 | )% |
| $ | 1.80 |
| $ | 0.17 |
| $ | 1.63 |
|
| 958.82 | % |
Net income attributable to common stockholders per common share – diluted | $ | 0.05 |
| $ | 0.07 |
| $ | (0.02 | ) |
| (28.57 | )% |
| $ | 1.79 |
| $ | 0.17 |
| $ | 1.62 |
|
| 952.94 | % |
FFO per common share – basic | $ | 0.13 |
| $ | 0.18 |
| $ | (0.05 | ) |
| (27.78 | )% |
| $ | 0.52 |
| $ | 0.63 |
| $ | (0.11 | ) |
| (17.46 | )% |
FFO per common share – diluted | $ | 0.13 |
| $ | 0.18 |
| $ | (0.05 | ) |
| (27.78 | )% |
| $ | 0.52 |
| $ | 0.63 |
| $ | (0.11 | ) |
| (17.46 | )% |
AFFO per common share – basic | $ | 0.12 |
| $ | 0.16 |
| $ | (0.04 | ) |
| (25.00 | )% |
| $ | 0.61 |
| $ | 0.55 |
| $ | 0.06 |
|
| 10.91 | % |
AFFO per common share – diluted | $ | 0.12 |
| $ | 0.16 |
| $ | (0.04 | ) |
| (25.00 | )% |
| $ | 0.60 |
| $ | 0.55 |
| $ | 0.05 |
|
| 9.09 | % |
The decrease in financial results during the quarter ended December 31, 2021, is primarily the result of not generating rental revenue from the data center properties subsequent to the sale on July 22, 2021. The decrease in net income was partially offset by a decrease in interest expense due to the payoff of all of the Company’s notes payable in connection with the data center portfolio sale.
Operating Results
Quarter Ended December 31, 2021, Compared to Quarter Ended December 31, 2020
- NOI attributable to our operating healthcare properties was $40.4 million for the quarter ended December 31, 2021, an increase of 3%, compared to $39.4 million for the quarter ended December 31, 2020.
- Rental revenue attributable to our operating healthcare properties was $43.6 million for the quarter ended December 31, 2021, an increase of 4%, compared to $41.9 million for the quarter ended December 31, 2020.
- Same store NOI attributable to our operating healthcare properties was $39.2 million for the quarters ended December 31, 2021 and 2020, respectively.
Operating Results
Year Ended December 31, 2021, Compared to Year Ended December 31, 2020
- NOI attributable to our operating healthcare properties was $160.1 million for the year ended December 31, 2021, an increase of 6%, compared to $150.6 million for the year ended December 31, 2020.
- Rental revenue attributable to our operating healthcare properties was $172.8 million for the year ended December 31, 2021, an increase of 4%, compared to $165.8 million for the year ended December 31, 2020.
- Same store NOI attributable to our operating healthcare properties was $155.0 million for the year ended December 31, 2021, an increase of 3%, compared to $149.8 million for the year ended December 31, 2020.
The increase in NOI and rental revenue attributable to operating healthcare properties during the quarter ended December 31, 2021, as compared to the quarter ended December 31, 2020, is primarily attributable to the acquisition of four operating properties and placement of two development properties in service since October 1, 2020.
Portfolio Overview
During the fourth quarter of 2021, the Company acquired a portfolio of three healthcare properties and two undeveloped land parcels, located in the Des Moines, IA market, for an aggregate purchase price of $46.4 million. The three healthcare properties are composed of 132,617 rentable square feet and are 100% leased to four tenants. The Company also disposed of two healthcare properties, located in the St. Louis, MO and Dallas, TX markets, for an aggregate sale price of $13.1 million, which generated net proceeds of $12.6 million and resulted in a gain on sale of the properties of $0.1 million in the fourth quarter of 2021.
As of December 31, 2021, the Company owned 125 real estate properties, located in 56 markets, composed of approximately 5.2 million rentable square feet with a total real estate investment of approximately $2.2 billion. The Company’s properties had a weighted average occupancy of 99.5% and weighted-average remaining lease term of 9.5 years.
As of December 31, 2021, the Company had one land parcel that formerly contained a healthcare property which was classified as held for sale. The Company sold the land attributable to the healthcare property on February 10, 2022.
Balance Sheet and Liquidity
On December 23, 2021, the Company repaid $20.0 million on its credit facility primarily with proceeds from the sale of the two previously mentioned healthcare properties during the fourth quarter.
As of December 31, 2021, the Company had liquidity of approximately $532.4 million, consisting of $32.4 million in cash and cash equivalents and $500.0 million in borrowing base availability under its credit facility.
As of December 31, 2021, the Company had total principal debt outstanding of $500.0 million under the Company’s credit facility, with a net debt leverage ratio, which is 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 May 31, 2021, of 20.2%. The Company’s outstanding debt was composed of 80.0% fixed rate debt through the use of interest rate swaps and 20.0% variable rate debt.
On February 15, 2022, the Company, Sila Realty Operating Partnership, LP, or the Operating Partnership, and certain of its subsidiaries, entered into a senior unsecured revolving credit agreement, or the New Revolving Credit Agreement, with Truist Bank, as Administrative Agent for the lenders, for aggregate commitments available of up to $500.0 million, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000.0 million. The maturity date for the New Revolving Credit Agreement is February 15, 2026, which, at the Company’s election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee. The New Revolving Credit Agreement was entered into to replace the Company’s prior $500.0 million revolving line of credit, which had a maturity date of April 27, 2022, with the option to extend for one twelve-month period. The Company did not exercise the option to extend. Upon closing of the New Revolving Credit Agreement, the Company extinguished all commitments associated with the prior revolving line of credit.
Simultaneously with the New Revolving Credit Agreement’s execution, on February 15, 2022, the Company, the Operating Partnership, and certain of its subsidiaries, entered into the senior unsecured term loan agreement, or the New Term Loan Agreement, with Truist Bank, as Administrative Agent for the lenders. The New Term Loan Agreement was fully funded at closing, and is made up of aggregate commitments of $300.0 million, which may be increased, subject to lender approval, to an aggregate amount not to exceed $600.0 million. The New Term Loan Agreement has a maturity date of December 31, 2024, and, at the Company’s election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee. The New Term Loan Agreement was entered into to replace the Company’s prior term loan, which was paid off in its entirety upon closing of the New Revolving Credit Agreement and the New Term Loan Agreement. The New Revolving Credit Agreement and the New Term Loan Agreement have aggregate commitments available of $800.0 million.
Distributions
The following table summarizes the Company’s distributions paid and distributions declared during the fourth quarter of 2021 (amounts in thousands, except per share amounts):
Common Stock |
| Cash |
| DRIP (1) |
| Total Distributions |
| Distributions Declared Per Share (2) | ||||
Class A |
| $ | 13,092 |
| $ | 3,670 |
| $ | 16,762 |
| $ | 0.10 |
Class I |
|
| 848 |
|
| 586 |
|
| 1,434 |
| $ | 0.10 |
Class T |
|
| 1,681 |
|
| 1,503 |
|
| 3,184 |
| $ | 0.08 |
Class T2 |
|
| 85 |
|
| 75 |
|
| 160 |
| $ | 0.08 |
|
| $ | 15,706 |
| $ | 5,834 |
| $ | 21,540 |
|
| |
(1) | Distribution reinvestment plan (DRIP). |
(2) | The Company declared weighted average distributions per share of common stock in the amount of $0.10. |
The following table summarizes the Company’s distributions paid and distributions declared during the year ended December 31, 2021 (amounts in thousands, except per share amounts):
Common Stock |
| Cash |
| DRIP (1) |
| Total Distributions |
| Distributions Declared Per Share (2) | ||||
Class A |
| $ | 355,135 |
| $ | 17,268 |
| $ | 372,403 |
| $ | 2.21 |
Class I |
|
| 26,266 |
|
| 2,412 |
|
| 28,678 |
| $ | 2.21 |
Class T |
|
| 77,871 |
|
| 7,286 |
|
| 85,157 |
| $ | 2.12 |
Class T2 |
|
| 6,577 |
|
| 618 |
|
| 7,195 |
| $ | 2.12 |
|
| $ | 465,849 |
| $ | 27,584 |
| $ | 493,433 |
|
| |
(1) | Distribution reinvestment plan (DRIP). |
(2) | The Company declared weighted average distributions per share of common stock in the amount of $2.19, which includes a special cash distribution. On July 20, 2021, the Company’s board of directors declared a special cash distribution of $1.75 per share of Class A, Class I, Class T and Class T2 common stock. The special cash distribution was funded with proceeds from the sale of its data center portfolio on July 22, 2021. The special cash distribution was paid on July 30, 2021, to stockholders of record at the close of business on July 26, 2021, in the aggregate amount of approximately $392.7 million. |
Supplemental Information
The Company routinely provides information for investors and the marketplace through press releases, SEC filings and the Company’s website at investors.silarealtytrust.com. The information that the Company posts to its website may be deemed material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor and review the information that the Company posts on its website, in addition to following the Company’s press releases and SEC filings. A glossary of definitions (including those of certain non-GAAP financial measures) and other supplemental information may be found attached to the Current Report on Form 8-K filed on March 29, 2022. A comprehensive listing of the Company’s properties is available at silarealtytrust.com/portfolio.
About Sila Realty Trust, Inc.
Sila Realty Trust, Inc. is a public, non-traded real estate investment trust headquartered in Tampa, Florida, that invests in high-quality healthcare properties leased to tenants capitalizing on critical and structural economic growth drivers. The Company is focused on investing in and managing strategic healthcare assets across the continuum of care, with emphasis on lower cost patient settings, which generate predictable, durable and growing income streams. As of December 31, 2021, the Company owned 125 real estate properties located in 56 markets across the United States.
Forward-Looking Statements
Certain statements contained herein, including those regarding our focus on curating our strong and diversified healthcare portfolio, our efforts to maximize stockholder value, and expectations regarding the payment of distributions to our stockholders, other than historical fact may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided by the same. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties. No forward-looking statement is intended to, nor shall it, serve as a guarantee of future performance. You can identify the forward-looking statements by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will” and other similar terms and phrases, including references to assumptions and forecasts of future results, strategic acquisitions and growth opportunities, and future distributions. Forward-looking statements are subject to various risks and uncertainties and factors that could cause actual results to differ materially from the Company’s expectations, and you should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond the Company’s control and could materially affect the Company’s results of operations, financial condition, cash flows, performance or future achievements or events. Additional factors include the risk that the expected benefits for the Company’s pure-play healthcare REIT strategy are not achieved, and other factors, including those described under the section entitled Item 1A. “Risk Factors” of Part I of the Company’s 2021 Annual Report on Form 10-K with the SEC a copy of which is available at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Consolidated Balance Sheets (amounts in thousands, except share data) | |||||||
|
December 31, |
|
December 31, | ||||
ASSETS | |||||||
Real estate: |
|
|
| ||||
Land | $ | 163,992 |
|
| $ | 168,969 |
|
Buildings and improvements, less accumulated depreciation of $165,784 and $119,947, respectively |
| 1,648,685 |
|
|
| 1,661,351 |
|
Construction in progress |
| 14,628 |
|
|
| 19,232 |
|
Total real estate, net |
| 1,827,305 |
|
|
| 1,849,552 |
|
Cash and cash equivalents |
| 32,359 |
|
|
| 53,174 |
|
Acquired intangible assets, less accumulated amortization of $71,067 and $49,866, respectively |
| 181,639 |
|
|
| 197,901 |
|
Goodwill |
| 23,284 |
|
|
| 23,955 |
|
Right-of-use assets – operating leases |
| 21,737 |
|
|
| 22,499 |
|
Right-of-use assets – finance lease |
| 2,296 |
|
|
| 2,527 |
|
Notes receivable, net |
| — |
|
|
| 31,262 |
|
Other assets, net |
| 66,365 |
|
|
| 64,669 |
|
Assets held for sale, net |
| 22,570 |
|
|
| 959,750 |
|
Total assets | $ | 2,177,555 |
|
| $ | 3,205,289 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: |
|
|
| ||||
Notes payable, net of deferred financing costs of $0 and $682, respectively | $ | — |
|
| $ | 146,645 |
|
Credit facility, net of deferred financing costs of $3,226 and $5,900, respectively |
| 496,774 |
|
|
| 932,100 |
|
Accounts payable and other liabilities |
| 39,597 |
|
|
| 67,946 |
|
Acquired intangible liabilities, less accumulated amortization of $4,444 and $3,122, respectively |
| 12,962 |
|
|
| 11,971 |
|
Operating lease liabilities |
| 23,758 |
|
|
| 23,926 |
|
Finance lease liabilities |
| 2,636 |
|
|
| 2,843 |
|
Liabilities held for sale, net |
| 698 |
|
|
| 365,985 |
|
Total liabilities |
| 576,425 |
|
|
| 1,551,416 |
|
Stockholders’ equity: |
|
|
| ||||
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; none issued and outstanding |
| — |
|
|
| — |
|
Common stock, $0.01 par value per share, 510,000,000 shares authorized; 238,226,119 and 234,957,801 shares issued, respectively; 224,179,939 and 222,045,522 shares outstanding, respectively |
| 2,242 |
|
|
| 2,220 |
|
Additional paid-in capital |
| 2,004,404 |
|
|
| 1,983,361 |
|
Accumulated distributions in excess of earnings |
| (400,669 | ) |
|
| (311,264 | ) |
Accumulated other comprehensive loss |
| (4,847 | ) |
|
| (20,444 | ) |
Total stockholders’ equity |
| 1,601,130 |
|
|
| 1,653,873 |
|
Total liabilities and stockholders’ equity | $ | 2,177,555 |
|
| $ | 3,205,289 |
|
Consolidated Quarterly (Unaudited) and Annual Statements of Comprehensive Income (amounts in thousands, except share data and per share amounts) | |||||||||||||||
|
Three Months Ended |
|
Year Ended | ||||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||||
Revenue: |
|
|
|
|
|
|
| ||||||||
Rental revenue | $ | 43,606 |
| $ | 41,902 |
| $ | 172,838 |
| $ | 165,781 |
| |||
Expenses: |
|
|
|
|
|
|
| ||||||||
Rental expenses |
| 3,192 |
|
| 2,548 |
|
| 12,705 |
|
| 15,187 |
| |||
General and administrative expenses |
| 6,785 |
|
| 6,721 |
|
| 26,395 |
|
| 16,681 |
| |||
Internalization transaction expenses |
| — |
|
| — |
|
| — |
|
| 3,640 |
| |||
Asset management fees |
| — |
|
| — |
|
| — |
|
| 12,604 |
| |||
Depreciation and amortization |
| 17,161 |
|
| 17,135 |
|
| 70,259 |
|
| 69,849 |
| |||
Impairment loss on real estate |
| — |
|
| — |
|
| 27,166 |
|
| — |
| |||
Impairment loss on goodwill |
| — |
|
| — |
|
| 671 |
|
| — |
| |||
Total expenses |
| 27,138 |
|
| 26,404 |
|
| 137,196 |
|
| 117,961 |
| |||
Gain on real estate dispositions |
| 89 |
|
| 439 |
|
| 89 |
|
| 3,142 |
| |||
Income from operations |
| 16,557 |
|
| 15,937 |
|
| 35,731 |
|
| 50,962 |
| |||
Interest and other expense, net |
| 4,480 |
|
| 9,428 |
|
| 34,515 |
|
| 42,025 |
| |||
Income from continuing operations |
| 12,077 |
|
| 6,509 |
|
| 1,216 |
|
| 8,937 |
| |||
Income from discontinued operations |
| — |
|
| 8,239 |
|
| 401,444 |
|
| 27,839 |
| |||
Net income attributable to common stockholders | $ | 12,077 |
| $ | 14,748 |
| $ | 402,660 |
| $ | 36,776 |
| |||
Other comprehensive income (loss): |
|
|
|
|
|
|
| ||||||||
Unrealized income (loss) on interest rate swaps, net | $ | 5,789 |
| $ | 3,150 |
| $ | 15,597 |
| $ | (15,740 | ) | |||
Other comprehensive income (loss) |
| 5,789 |
|
| 3,150 |
|
| 15,597 |
|
| (15,740 | ) | |||
Comprehensive income attributable to common stockholders | $ | 17,866 |
| $ | 17,898 |
| $ | 418,257 |
| $ | 21,036 |
| |||
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
| ||||||||
Basic |
| 224,054,323 |
|
| 221,863,141 |
|
| 223,325,293 |
|
| 221,436,617 |
| |||
Diluted |
| 225,031,906 |
|
| 222,475,926 |
|
| 224,293,339 |
|
| 221,622,444 |
| |||
Net income per common share attributable to common stockholders: |
|
|
|
|
|
|
| ||||||||
Basic: |
|
|
|
|
|
|
| ||||||||
Continuing operations | $ | 0.05 |
| $ | 0.03 |
| $ | 0.00 |
| $ | 0.04 |
| |||
Discontinued operations |
| 0.00 |
|
| 0.04 |
|
| 1.80 |
|
| 0.13 |
| |||
Net income attributable to common stockholders | $ | 0.05 |
| $ | 0.07 |
| $ | 1.80 |
| $ | 0.17 |
| |||
Diluted: |
|
|
|
|
|
|
| ||||||||
Continuing operations | $ | 0.05 |
| $ | 0.03 |
| $ | 0.00 |
| $ | 0.04 |
| |||
Discontinued operations |
| 0.00 |
|
| 0.04 |
|
| 1.79 |
|
| 0.13 |
| |||
Net income attributable to common stockholders | $ | 0.05 |
| $ | 0.07 |
| $ | 1.79 |
| $ | 0.17 |
| |||
Distributions declared per common share | $ | 0.10 |
| $ | 0.12 |
| $ | 2.19 |
| $ | 0.48 |
| |||
Use of Non-GAAP Information
Net operating income, a non-GAAP financial measure, is defined as rental revenue, less rental expenses, which excludes general and administrative expenses, internalization transaction expenses, asset management fees, depreciation and amortization, impairment loss on real estate, impairment loss on goodwill, gain on real estate dispositions, interest and other expense, net, and income from discontinued operations. The Company believes that net operating income serves as a useful supplement to net income because it allows investors and management to measure unlevered property-level operating results and to compare operating results to the operating results of other real estate companies between periods on a consistent basis.
Contacts
Investor Relations:
IR@silarealtytrust.com
Miles Callahan, Vice President of Capital Markets and Investor Relations