Financial Performance - Total rental revenue for the three months ended September 30, 2020, was $70,667,000, a 47.0% increase compared to $48,063,000 in the same period of 2019[221]. - Same store rental revenue increased by 3.7% to $42,415,000 in Q3 2020 from $40,908,000 in Q3 2019[221]. - Non-same store rental revenue surged by 606.8% to $1,555,000 in Q3 2020, compared to $220,000 in Q3 2019[221]. - Total rental revenue rose by $67.26 million, or 47.5%, reaching $208.73 million for the nine months ended September 30, 2020, compared to $141.47 million in 2019[228]. - Same store rental revenue increased by $1.75 million, or 1.4%, to $124.17 million for the nine months ended September 30, 2020, compared to $122.42 million in 2019[228]. - Non-same store rental revenue surged by $4.28 million, or 1,944.1%, to $4.50 million, driven by the acquisition of seven operating properties since January 1, 2019[229]. - FFO (Funds From Operations) for the nine months ended September 30, 2020, were approximately $99.9 million[261]. - FFO (Funds From Operations) attributable to common stockholders for the nine months ended September 30, 2020, was $99.932 million, up from $64.105 million in 2019, representing a 55.8% increase[286]. - MFFO (Modified Funds From Operations) attributable to common stockholders for the three months ended September 30, 2020, was $27.937 million, compared to $15.696 million in 2019, indicating a 77.8% increase[286]. Property Acquisitions and Sales - As of September 30, 2020, the company had purchased 154 properties for an aggregate purchase price of approximately $3,146.9 million, comprising about 8,751,000 rentable square feet[191]. - The company generated net proceeds of $9.0 million from the sale of one Legacy REIT I healthcare property and a portion of another, with an aggregate sale price of $38.1 million[191]. - The company acquired one operating real estate property for $11,047,000 during the three months ended September 30, 2020, compared to five properties acquired for $69,851,000 in the same period of 2019[218]. - The company added two healthcare properties to the unencumbered pool, increasing total pool availability by approximately $8,704,000[253]. Financial Position and Liquidity - As of September 30, 2020, the company had $75.5 million in cash and cash equivalents, and $6.5 million in restricted cash for capital expenditures[247]. - The company had a total pool availability under its credit facility of $1,138,249,000 as of September 30, 2020, with an outstanding principal balance of $983,000,000[253]. - The company had approximately $1,437.5 million of principal debt outstanding as of September 30, 2020[263]. - The company is in compliance with all financial covenant requirements as of September 30, 2020[253]. - The net cash provided by operating activities increased by 53.4% to $80,604,000 for the nine months ended September 30, 2020, compared to $52,540,000 in the same period of 2019[254]. - The net cash used in investing activities decreased by 28.4% to $55,716,000 for the nine months ended September 30, 2020, compared to $77,824,000 in 2019[254]. Expenses and Cost Management - Total expenses for the three months ended September 30, 2020, were $52,119,000, reflecting a 13.9% increase from $45,773,000 in the same period of 2019[222]. - General and administrative expenses increased by 59.8% to $3,578,000 in Q3 2020 from $2,239,000 in Q3 2019[222]. - Total expenses increased by $37.78 million, or 34.7%, totaling $146.60 million for the nine months ended September 30, 2020, compared to $108.82 million in 2019[229]. - General and administrative expenses increased by $4.78 million, or 92.4%, to $9.96 million, primarily due to higher administrative costs related to managing real estate properties[229]. COVID-19 Impact - During the nine months ended September 30, 2020, the company entered into 30 rent concessions and lease modifications due to COVID-19, collecting approximately 98% of rental revenue originally contracted for that period[204]. - The company continues to monitor the impact of COVID-19 on its business, with uncertainties affecting predictions of future performance[208]. - The ongoing COVID-19 pandemic may impact operations and liquidity, with properties operating at reduced capacities affecting cash generation[246]. - The company temporarily suspended share repurchases under its share repurchase program effective July 30, 2020, due to uncertainties surrounding COVID-19[207]. Internalization Transaction - Effective September 30, 2020, the company completed the Internalization Transaction, acquiring 100% of the membership interests in Manager Sub for an aggregate cash purchase price of $40,000,000[193]. - The company anticipates that the Internalization Transaction will provide cost savings and further alignment of interests between management and stockholders[195]. - The company expects future operating results to be influenced by the impact of the Internalization Transaction, which will eliminate fees previously paid to the Former Advisor[216]. Debt and Interest Rate Risk - The primary market risk faced by the company is interest rate risk, which could affect its business plan and financial performance[288]. - As of September 30, 2020, the total principal debt outstanding was $1,437.5 million, with a weighted average interest rate of 3.5%[296]. - The company had $483.0 million of variable rate debt outstanding, with a weighted average interest rate of 2.4% per annum[297]. - An increase of 50 basis points in market interest rates would result in an increase in interest expense of approximately $2.4 million per year[297]. - The company had 20 interest rate swap agreements with an aggregate notional amount of $735.8 million, maturing between December 2020 and December 2024[298]. - The aggregate settlement liability value of the interest rate swap agreements was $25.3 million as of September 30, 2020[298]. - An increase of 50 basis points in market interest rates would decrease the settlement liability value of the interest rate swaps to $16.4 million[298]. - The company is exposed to interest rate risk due to variable rate debt indexed to LIBOR, amounting to $483.0 million[291]. - The transition from LIBOR to an alternative reference rate, such as SOFR, poses risks that could affect interest payments[290]. - The company has entered into derivative financial instruments to mitigate interest rate risk, exposing it to credit and market risk[294]. Shareholder Returns - The total distributions declared and paid for the nine months ended September 30, 2020, amounted to approximately $80.4 million, compared to $64.6 million in 2019[261]. - The weighted average common shares outstanding for the three months ended September 30, 2020, was 221,346,730, compared to 137,063,509 in 2019, reflecting a significant increase in shares[286]. - The company anticipates pursuing a liquidity event five to seven years after the termination of its primary offering, aligning with industry standards for publicly registered, non-listed REITs[275]. - MFFO is used to evaluate sustainable performance and dividend policy, and it is not equivalent to net income as determined under GAAP[276]. - The company excludes acquisition fees and expenses from MFFO, which may not reflect ongoing operations, impacting returns to investors[277].
Sila Realty Trust, Inc.(SILA) - 2020 Q3 - Quarterly Report