Press Release Details

Sila Realty Trust, Inc. Fourth Quarter and Year Ended 2023 Results

March 6, 2024

TAMPA, Fla.--(BUSINESS WIRE)-- Sila Realty Trust, Inc. today announced operating results for the fourth quarter and year ended December 31, 2023.

Highlights of the Quarter Ended December 31, 2023 vs. December 31, 2022

  • Rental revenue was $45.9 million, an increase of 5%.
  • Net loss attributable to common stockholders was $9.0 million, a decrease of 74%.
  • Funds from operations, or FFO*, was $27.4 million, a decrease of 2%.
  • Core funds from operations, or Core FFO*, was $30.9 million, an increase of 1%.
  • Adjusted funds from operations, or AFFO*, was $32.7 million, an increase of 6%.
  • Same store cash net operating income, or same store cash NOI*, was $38.4 million, an increase of 2%.

Highlights of the Year Ended December 31, 2023 vs. December 31, 2022

  • Rental revenue was $189.1 million, an increase of 5%.
  • Net income attributable to common stockholders was $24.0 million, an increase of 401%.
  • Funds from operations, or FFO*, was $122.5 million, an increase of 6%.
  • Core funds from operations, or Core FFO*, was $128.8 million, an increase of 4%.
  • Adjusted funds from operations, or AFFO*, was $132.7 million, an increase of 9%.
  • Same store cash net operating income, or same store cash NOI*, was $142.0 million, an increase of 1%.

“During 2023, the Company was firmly focused on rigorous balance sheet management while continuing to identify acquisitions with solid creditworthy tenancy,” stated Michael Seton, the Company’s President and Chief Executive Officer. “We were patient and prudent in allocating capital due to a dramatic increase in short- and long-term interest rates, which outpaced the expectations of potential sellers and general real estate valuations. We are proud of the two Class A medical outpatient buildings that we added to our portfolio, while disposing of certain non-strategic assets. In addition, we sold the Company’s largest acute care hospital at an attractive price to the Company, which was acquired by the tenant who elected to exercise its purchase option in its lease. This disposition allowed the Company to further strengthen its balance sheet by paying down all variable rate debt while maintaining what we believe is substantial liquidity to further enhance our diverse portfolio.

“We believe our quarter over quarter and year over year AFFO growth demonstrates the durability of our property income streams. With our conservative leverage and dividend pay-out profile, we believe we are well positioned to maximize shareholder value through acquisitions that grow and enhance our portfolio. We will continue to monitor the dynamic economic landscape, as our desire to pursue a public market listing on a national exchange remains a primary focus, conditioned upon the financial market opportunity.”

* Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and reconciliations to the most directly comparable GAAP measure.

Investing and Leasing

During the year ended December 31, 2023, the Company acquired two healthcare properties in two separate transactions for an aggregate purchase price of $69.8 million.

During the year ended December 31, 2023, the Company sold three real estate properties for $271.1 million, generating net proceeds of $270.3 million.

During the year ended December 31, 2023, the Company's new and renewal lease executions totaled 289,429 rentable square feet.

As of December 31, 2023, the Company's properties had a weighted average leased rate of 99.4%, a weighted average remaining lease term of 8.5 years, and a weighted average rent escalation rate of 2.2%.

Debt and Capital

As of December 31, 2023, the Company had total principal debt outstanding of $525.0 million under the Company's credit facility, with a net debt leverage ratio, which is the ratio of principal debt outstanding less cash to adjusted fair value of real estate investments, of approximately 16.1%.

As of December 31, 2023, the Company’s outstanding debt was comprised of 100% fixed rate debt through the use of interest rate swaps. The Company’s weighted average interest rate on total debt was 3.3% as of December 31, 2023.

As of December 31, 2023, the Company had liquidity of approximately $702.0 million, consisting of $202.0 million in cash and cash equivalents and $500.0 million in borrowing base availability under its credit facility.

The Company declared distributions per share of common stock in the amount of $0.40 for the year ended December 31, 2023. The Company's dividend payout to AFFO ratio was 68.8% for the year ended December 31, 2023.

About Sila Realty Trust, Inc.

Sila Realty Trust, Inc. is a net lease real estate investment trust headquartered in Tampa, Florida, with a strategic focus on investing in the significant, growing, and resilient healthcare sector of the U.S. economy. The Company invests in high quality healthcare facilities along the continuum of care, which, we believe, generate predictable, durable, and growing income streams. Our portfolio is comprised of high quality tenants in geographically diverse facilities which are positioned to capitalize on the dynamic delivery of healthcare to patients. As of December 31, 2023, the Company owned 131 real estate properties and two undeveloped land parcels located in 62 markets across the United States.

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 6, 2024.

Non-GAAP Financial Measures

This press release includes certain financial performance measures not defined by United States generally accepted accounting principles, or GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. We believe such measures provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. Our definitions and calculations of these non-GAAP measures may not be the same as similar measures reported by other REITs.

These non-GAAP financial measures should not be considered as alternatives to net income (loss) attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance, as alternatives to cash flows from operating activities (determined in accordance with GAAP), or as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flows to fund all of our needs.

Forward-Looking Statements

Certain statements contained herein, including those regarding the Company's desire to pursue a public listing on a national exchange, liquidity position and pursuit to maximize stockholder value through acquisitions that grow and enhance the Company's portfolio, 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, including those described under the section entitled Item 1A. "Risk Factors" of Part I of the Company's 2023 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, 2023

 

December 31, 2022

ASSETS

Real estate:

 

 

 

Land

$

157,821

 

 

$

163,419

 

Buildings and improvements, less accumulated depreciation of $227,156 and $209,118, respectively

 

1,470,831

 

 

 

1,716,663

 

Total real estate, net

 

1,628,652

 

 

 

1,880,082

 

Cash and cash equivalents

 

202,019

 

 

 

12,917

 

Intangible assets, less accumulated amortization of $102,456 and $90,239, respectively

 

134,999

 

 

 

167,483

 

Goodwill

 

17,700

 

 

 

21,710

 

Right-of-use assets

 

36,384

 

 

 

37,443

 

Other assets

 

79,825

 

 

 

100,167

 

Total assets

$

2,099,579

 

 

$

2,219,802

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:

 

 

 

Credit facility, net of deferred financing costs of $1,847 and $2,412, respectively

 

523,153

 

 

 

580,588

 

Accounts payable and other liabilities

 

30,381

 

 

 

30,619

 

Intangible liabilities, less accumulated amortization of $7,417 and $5,923, respectively

 

10,452

 

 

 

11,946

 

Lease liabilities

 

41,158

 

 

 

41,554

 

Total liabilities

 

605,144

 

 

 

664,707

 

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; 244,617,615 and 241,425,332 shares issued, respectively; 227,934,254 and 226,255,969 shares outstanding, respectively

 

2,279

 

 

 

2,263

 

Additional paid-in capital

 

2,042,741

 

 

 

2,024,176

 

Distributions in excess of accumulated earnings

 

(567,188

)

 

 

(499,334

)

Accumulated other comprehensive income

 

16,603

 

 

 

27,990

 

Total stockholders’ equity

 

1,494,435

 

 

 

1,555,095

 

Total liabilities and stockholders’ equity

$

2,099,579

 

 

$

2,219,802

 

 

Consolidated Quarterly (Unaudited) and Annual Statements of Comprehensive (Loss) Income (amounts in thousands, except share data and per share amounts)

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

Rental revenue

$

45,914

 

 

$

43,905

 

 

$

189,065

 

 

$

179,986

 

Expenses:

 

 

 

 

 

 

 

Rental expenses

 

5,468

 

 

 

4,731

 

 

 

20,196

 

 

 

17,950

 

General and administrative expenses

 

7,418

 

 

 

5,313

 

 

 

23,896

 

 

 

22,079

 

Depreciation and amortization

 

18,841

 

 

 

22,756

 

 

 

74,293

 

 

 

77,199

 

Impairment losses

 

17,544

 

 

 

40,037

 

 

 

24,252

 

 

 

47,424

 

Total operating expenses

 

49,271

 

 

 

72,837

 

 

 

142,637

 

 

 

164,652

 

Gain on real estate dispositions

 

 

 

 

 

 

 

22

 

 

 

460

 

Interest and other income

 

532

 

 

 

7

 

 

 

702

 

 

 

305

 

Interest expense

 

6,171

 

 

 

5,837

 

 

 

23,110

 

 

 

24,077

 

Net (loss) income attributable to common stockholders

$

(8,996

)

 

$

(34,762

)

 

$

24,042

 

 

$

(7,978

)

Other comprehensive (loss) income - unrealized (loss) gain on interest rate swaps, net

 

(12,820

)

 

 

(1,620

)

 

 

(11,387

)

 

 

32,837

 

Comprehensive (loss) income attributable to common stockholders

$

(21,816

)

 

$

(36,382

)

 

$

12,655

 

 

$

24,859

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

227,806,489

 

 

 

226,112,737

 

 

 

227,199,543

 

 

 

225,320,043

 

Diluted

 

227,806,489

 

 

 

226,112,737

 

 

 

229,046,546

 

 

 

225,320,043

 

Net (loss) income per common share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

(0.04

)

 

$

(0.15

)

 

$

0.11

 

 

$

(0.03

)

Diluted

$

(0.04

)

 

$

(0.15

)

 

$

0.10

 

 

$

(0.03

)

Distributions declared per common share

$

0.10

 

 

$

0.10

 

 

$

0.40

 

 

$

0.40

 

 

Non-GAAP Financial Measures Reconciliation

A description of FFO, Core FFO and AFFO, and reconciliations of these non-GAAP measures to net (loss) income, the most directly comparable GAAP measure, and a description of same store cash NOI and reconciliation of this non-GAAP measure to rental revenue, the most directly comparable GAAP measure, are provided below.

 

Reconciliation of Net (Loss) Income to FFO, Core FFO and AFFO (amounts in thousands)

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2023

 

2022

 

2023

 

2022

Net (loss) income attributable to common stockholders

$

(8,996

)

 

$

(34,762

)

 

$

24,042

 

 

$

(7,978

)

Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization of real estate assets

 

18,818

 

 

 

22,730

 

 

 

74,202

 

 

 

77,099

 

Gain on real estate dispositions

 

 

 

 

 

 

 

(22

)

 

 

(460

)

Impairment losses

 

17,544

 

 

 

40,037

 

 

 

24,252

 

 

 

47,424

 

FFO

$

27,366

 

 

$

28,005

 

 

$

122,474

 

 

$

116,085

 

Adjustments:

 

 

 

 

 

 

 

Severance

 

1,318

 

 

 

 

 

 

1,401

 

 

 

889

 

Write-off of straight-line rent receivables related to prior periods

 

1,650

 

 

 

2,434

 

 

 

3,268

 

 

 

2,434

 

Accelerated stock-based compensation

 

318

 

 

 

 

 

 

318

 

 

 

402

 

Amortization of above (below) market lease intangibles, including ground leases

 

276

 

 

 

282

 

 

 

1,386

 

 

 

1,044

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

3,367

 

Core FFO

$

30,928

 

 

$

30,721

 

 

$

128,847

 

 

$

124,221

 

Adjustments:

 

 

 

 

 

 

 

Deferred rent

 

456

 

 

 

738

 

 

 

1,644

 

 

 

1,535

 

Straight-line rent adjustments

 

(1,357

)

 

 

(2,042

)

 

 

(5,465

)

 

 

(9,695

)

Amortization of deferred financing costs

 

425

 

 

 

412

 

 

 

1,665

 

 

 

1,679

 

Stock-based compensation

 

2,245

 

 

 

1,146

 

 

 

5,966

 

 

 

3,778

 

AFFO

$

32,697

 

 

$

30,975

 

 

$

132,657

 

 

$

121,518

 

 

Funds From Operations (FFO)

FFO is calculated consistent with NAREIT's definition, as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of real estate assets and impairments of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. It should be noted, however, that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than the Company does, making comparisons less meaningful.

Core FFO

The Company believes Core FFO is a supplemental financial performance measure that provides investors with additional information to understand the Company's sustainable performance. The Company calculates Core FFO by adjusting FFO to remove the effect of items that are not expected to impact its operating performance on an ongoing basis or effect comparability to prior periods. These include severance, write-off of straight-line rent receivables related to prior periods, accelerated stock-based compensation, amortization of above- and below-market lease intangibles (including ground leases) and loss on extinguishment of debt. Other REITs may use different methodologies for calculating Core FFO and, accordingly, the Company’s Core FFO may not be comparable to other REITs.

AFFO

The Company believes AFFO is a supplemental financial performance measure that provides investors appropriate supplemental information to evaluate the ongoing operations of the Company. AFFO is a metric used by management to evaluate the Company's dividend policy. The Company calculates AFFO by further adjusting Core FFO for the following items: deferred rent, current period straight-line rent adjustments, amortization of deferred financing costs and stock-based compensation. Other REITs may use different methodologies for calculating AFFO and, accordingly, the Company’s AFFO may not be comparable to other REITs.

FFO, Core FFO and AFFO should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in its applicability in evaluating the Company's operational performance. The method used to evaluate the value and performance of real estate under GAAP should be considered as a more relevant measure of operating performance and considered more prominent than the non-GAAP FFO, Core FFO and AFFO measures and the adjustments to GAAP in calculating FFO, Core FFO and AFFO.

 

Reconciliation of Net (Loss) Income to Same Store Cash Net Operating Income (Same Store Cash NOI) (amounts in thousands)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

2023

 

2022

 

2023

 

2022

Rental revenue

 

$

45,914

 

 

$

43,905

 

 

$

189,065

 

 

$

179,986

 

Rental expenses

 

 

(5,468

)

 

 

(4,731

)

 

 

(20,196

)

 

 

(17,950

)

Net operating income

 

 

40,446

 

 

 

39,174

 

 

 

168,869

 

 

 

162,036

 

Adjustments:

 

 

 

 

 

 

 

 

Straight-line rent adjustments, net of write-offs

 

 

293

 

 

 

392

 

 

 

(2,197

)

 

 

(7,261

)

Amortization of above (below) market lease intangibles, including ground leases

 

 

276

 

 

 

282

 

 

 

1,386

 

 

 

1,044

 

Internal property management fee

 

 

1,332

 

 

 

1,268

 

 

 

5,250

 

 

 

5,220

 

Deferred rent

 

 

456

 

 

 

738

 

 

 

1,644

 

 

 

1,535

 

Cash NOI

 

 

42,803

 

 

 

41,854

 

 

 

174,952

 

 

 

162,574

 

Non-same store cash NOI

 

 

(4,359

)

 

 

(4,248

)

 

 

(32,960

)

 

 

(22,423

)

Same store cash NOI

 

 

38,444

 

 

 

37,606

 

 

 

141,992

 

 

 

140,151

 

General and administrative expenses

 

 

(7,418

)

 

 

(5,313

)

 

 

(23,896

)

 

 

(22,079

)

Depreciation and amortization

 

 

(18,841

)

 

 

(22,756

)

 

 

(74,293

)

 

 

(77,199

)

Impairment losses

 

 

(17,544

)

 

 

(40,037

)

 

 

(24,252

)

 

 

(47,424

)

Gain on real estate dispositions

 

 

 

 

 

 

 

 

22

 

 

 

460

 

Interest and other income

 

 

532

 

 

 

3

 

 

 

702

 

 

 

305

 

Interest expense

 

 

(6,171

)

 

 

(5,833

)

 

 

(23,110

)

 

 

(24,077

)

Straight-line rent adjustments, net of write-offs

 

 

(293

)

 

 

(392

)

 

 

2,197

 

 

 

7,261

 

Amortization of above (below) market lease intangibles, including ground leases

 

 

(276

)

 

 

(282

)

 

 

(1,386

)

 

 

(1,044

)

Internal property management fee

 

 

(1,332

)

 

 

(1,268

)

 

 

(5,250

)

 

 

(5,220

)

Deferred rent

 

 

(456

)

 

 

(738

)

 

 

(1,644

)

 

 

(1,535

)

Non-same store cash NOI

 

 

4,359

 

 

 

4,248

 

 

 

32,960

 

 

 

22,423

 

Net (loss) income attributable to common stockholders

 

$

(8,996

)

 

$

(34,762

)

 

$

24,042

 

 

$

(7,978

)

 

NOI

The Company defines net operating income, or NOI, as rental revenue, less rental expenses, on an accrual basis.

Same Store Properties

In order to evaluate the overall portfolio, management analyzes the net operating income of same store properties. The Company defines "same store properties" as properties that were owned and operated for the entirety of both calendar periods being compared and excludes properties under development, re-development, or classified as held for sale. By evaluating same store properties, management is able to monitor the operations of the Company's existing properties for comparable periods to measure the performance of the current portfolio and readily observe the expected effects of new acquisitions and dispositions on net income (loss). There were 128 same store properties for the quarters ended December 31, 2023 and 2022, and 120 same store properties for the year ended December 31, 2023 and 2022.

Cash NOI

The Company defines Cash NOI as NOI for its properties, excluding the impact of GAAP adjustments to rental revenue and rental expenses, consisting of straight-line rent adjustments, net of write-offs, amortization of above- and below-market lease intangibles (including ground leases) and internal property management fees, then including deferred rent received in cash.

Investor Relations:
IR@silarealtytrust.com
Miles Callahan, Senior Vice President of Capital Markets and Investor Relations

Source: Sila Realty Trust, Inc.

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