Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Griffin Capital Net Lease REIT Reports Third Quarter 2012 Results



Griffin Capital Net Lease REIT Reports Third Quarter 2012 Results

Portfolio Asset Purchases Grow 64% Year-to-Date and MFFO Increases 149%
Year-Over-Year

EL SEGUNDO, Calif., Nov. 14, 2012 (GLOBE NEWSWIRE) -- Griffin Capital Net
Lease REIT, Inc. (the "REIT") today announced operating results for the
company's third quarter ended September 30, 2012.

"Griffin Capital Net Lease REIT continued the strong momentum established at
the beginning of the year and, through September, our portfolio grew nearly
64%, providing our investors greater diversification and stability to our
portfolio cash flow," stated Kevin Shields, chairman and chief executive
officer of the REIT, "This year we added four outstanding assets to our
portfolio, occupied by tenants representing over 13% of the historic core of
the Dow Jones 30 Industrials: AT&T, Westinghouse, GE and Travelers Indemnity."
David Rupert, president of the REIT, added, "Not only have we continued to add
high credit quality tenants, we have done so at favorable yields such that our
weighted average going-in capitalization rate exceeds 8%^1; this compares very
favorably to our 4.3% average cost of debt – this accretive leverage is
beneficial to our stockholders."

Highlights and Accomplishments Year-to-Date through September 30, 2012

  * In the first half of 2012 the REIT acquired four assets occupied by
    investment-grade rated tenants – AT&T Wireless, Westinghouse, GE Aviation
    Systems and Travelers Indemnity Group – with a total acquisition value of
    $105 million and a total of 520,000 square feet. The total dollar amount
    of the REIT's portfolio increased 64%, from $165 million at the end of
    2011 to $270 million at the close of the second quarter, consisting of
    2.82 million square feet of 100% occupied space. 
  * At the beginning of the fourth quarter the REIT acquired two assets –
    Zeller Plastik and Northrop Grumman – with a total acquisitions value of
    $32.6 million and approximately 300,000 additional square feet. With these
    acquisitions, the portfolio acquisitions value is $302.6 million, with
    over 3.0 million square feet, an acquisition value increase of 83% from
    year end 2011.
  * 68% of the portfolio rental revenue is generated by investment-grade rated
    companies.
  * The weighted average remaining lease term is 9.3 years with average annual
    rental rate increases of 2.3%.
  * Given the REIT's average 4.2% interest rate on our debt, there is
    currently a 380 basis point positive spread relative to the REIT's
    weighted average portfolio capitalization rate of 8.1%^1. The REIT's
    leverage ratio relative to total capitalization is 53%.
  * Modified funds from operations, or MFFO, as defined by the Investment
    Program Association, equaled $2.3 million for the quarter, representing
    year-over-year growth of approximately 149% from the same quarter 2011.
    Funds from operations, or FFO, as defined by the National Association of
    Real Estate Investment Trusts, or NAREIT, equaled approximately $2.7
    million, compared with $1.3 million during the third quarter 2011. (Please
    see financial reconciliation tables and notes at the end of this release
    for more information regarding MFFO and FFO.)
  * The REIT's $150 million credit facility was fully subscribed in the third
    quarter of 2012 in which KeyBank and Bank of America were joined with
    commitments from North Shore Bank & Trust (a subsidiary of Wintrust
    Financial Corporation), Regions Bank and Fifth Third Bank.

"We could not be more pleased with the growth in our portfolio thus far this
year and the incredible support we receive from both our broker-dealer
partners and the existing and new members of our lending group," concluded Mr.
Shields.

______________________

^1 The estimated going-in capitalization rate is determined by dividing the
projected net rental payment for the first fiscal year we own the property by
the acquisition price (exclusive of closing and offering costs). Generally,
pursuant to each lease, if the tenant is directly responsible for the payment
of all property operating expenses, insurance and taxes, the net rental
payment by the tenant to the landlord is equivalent to the base rental
payment. The projected net rental payment includes assumptions that may not be
indicative of the actual future performance of a property, including the
assumption that the tenant will perform its obligations under its lease
agreement during the next 12 months.

About Griffin Capital Net Lease REIT and Griffin Capital Corporation

Griffin Capital Net Lease REIT, Inc. is a publicly registered non-traded REIT
with a portfolio that currently includes eleven office and industrial
distribution properties totaling approximately 2.8 million rentable square
feet and total capitalization in excess of $300 million. The REIT's sponsor is
Griffin Capital Corporation ("Griffin Capital"), a privately-owned real estate
company headquartered in Los Angeles. Led by senior executives each with more
than two decades of real estate experience collectively encompassing over
$14.0 billion of transaction value and more than 400 transactions, Griffin
Capital and its affiliates have acquired or constructed over 17 million square
feet of space since 1996. Griffin Capital and its affiliates currently own and
manage a portfolio consisting of over 11.1 million square feet of space,
located in 27 states and representing over $1.7 billion in asset
value. Additional information about Griffin Capital is available at
www.griffincapital.com.

The Griffin Capital logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=14268

This press release may contain certain 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. Such forward-looking
statements can generally be identified by our use of forward-looking
terminology such as "may," "will," "expect," "intend," "anticipate,"
"estimate," "believe," "continue," or other similar words. Because such
statements include risks, uncertainties and contingencies, actual results may
differ materially from the expectations, intentions, beliefs, plans or
predictions of the future expressed or implied by such forward-looking
statements. These risks, uncertainties and contingencies include, but are not
limited to: uncertainties relating to changes in general economic and real
estate conditions; uncertainties relating to the implementation of our real
estate investment strategy; uncertainties relating to financing availability
and capital proceeds; uncertainties relating to the closing of property
acquisitions; uncertainties relating to the public offering of our common
stock; uncertainties related to the timing and availability of distributions;
and other risk factors as outlined in the REIT's prospectus, as amended from
time to time. This is neither an offer nor a solicitation to purchase
securities.

                                                                   
                                                                   
GRIFFIN CAPITAL NET LEASE REIT, INC.
CONSOLIDATED BALANCE SHEETS
                                                                   
                                                    September 30, December 31,
                                                    2012          2011
                                                                   
                                                    (unaudited)    
ASSETS                                                             
Cash and cash equivalents                           $5,844,401    $5,429,440
Restricted cash                                     2,327,514     1,879,865
Due from affiliates, net                            —             459,521
Real estate:                                                       
Land                                                42,797,019    27,003,796
Building and improvements                           176,137,525   110,929,358
Tenant origination and absorption cost              53,294,720    34,400,671
                                                                   
Total real estate                                   272,229,264   172,333,825
Less: accumulated depreciation and amortization     (16,145,673)  (9,471,264)
                                                                   
Total real estate, net                              256,083,591   162,862,561
Above market leases, net                            6,764,950     1,515,938
Deferred rent                                       2,475,747     1,483,686
Deferred financing costs, net                       1,494,349     1,012,677
Prepaid expenses and other assets                   1,689,336     1,301,414
                                                                   
Total assets                                        $276,679,888  $175,945,102
                                                                   
LIABILITIES AND EQUITY                                             
Debt:                                                              
Mortgage payable, plus unamortized premium of       $66,155,704   $60,032,962
$487,066 and $357,815, respectively
Credit Facility                                     95,880,000    35,395,985
                                                                   
Total debt                                          162,035,704   95,428,947
Restricted reserves                                 1,205,396     761,047
Accounts payable and other liabilities              2,143,094     1,238,340
Distributions payable                               312,497       412,221
Due to affiliates                                   356,695       —
Below market leases, net                            8,622,159     9,289,407
                                                                   
Total liabilities                                   174,675,545   107,129,962
                                                                   
Commitments and contingencies (Note 7)                             
Noncontrolling interests subject to redemption,
531,000 units eligible towards redemption as of     4,886,686     4,886,686
September 30, 2012 and December 31, 2011
Common stock subject to redemption                  2,746,732     1,070,490
Stockholders' equity:                                              
Preferred Stock, $0.001 par value; 200,000,000
shares authorized; no shares outstanding, as of     —             —
September 30, 2012 and December 31, 2011
Common Stock, $0.001 par value; 700,000,000 shares
authorized; 10,644,187 and 5,667,551 shares         106,284       56,611
outstanding, respectively
Additional paid-in capital                          89,518,588    47,872,560
Cumulative distributions                            (7,153,425)   (3,085,438)
Accumulated deficit                                 (6,588,918)   (3,772,346)
                                                                   
Total stockholders' equity                          75,882,529    41,071,387
Noncontrolling interests                            18,488,396    21,786,577
                                                                   
Total equity                                        94,370,925    62,857,964
                                                                   
Total liabilities and equity                        $276,679,888  $175,945,102

                                                                   
 
GRIFFIN CAPITAL NET LEASE REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
                                                                   
                                                                   
                               Three Months Ended    Nine Months Ended
                               September 30,         September 30,
                               2012       2011       2012         2011
                                                                   
Revenue:                                                           
Rental income                  $5,915,635 $3,796,729 $15,671,673  $9,426,655
Property expense recoveries    969,822    501,378    2,271,477    1,284,108
Interest income                114        252        455          944
                                                                   
Total revenue                  6,885,571  4,298,359  17,943,605   10,711,707
                                                                   
Expenses:                                                          
Asset management fees to       506,652    309,213    1,335,113    774,089
affiliates
Property management fees to    181,218    105,951    466,759      271,127
affiliates
Property operating expense     201,734    —          270,276      —
Property tax expense           735,648    501,378    1,934,653    1,284,108
Acquisition fees and expenses  35,754     —          951,585      1,119,194
to non-affiliates
Acquisition fees and expenses  —          —          3,159,000    1,680,000
to affiliates
General and administrative     430,534    370,646    1,420,538    1,243,538
expenses
Depreciation and amortization  2,499,988  1,614,288  6,674,409    3,994,382
Interest expense               2,129,475  1,707,484  5,726,351    4,393,647
                                                                   
Total expenses                 6,721,003  4,608,960  21,938,684   14,760,085
                                                                   
Net income (loss)              164,568    (310,601)  (3,995,079)  (4,048,378)
Distributions to redeemable
noncontrolling interests       (66,604)   (44,847)   (187,874)    (133,079)
attributable to common
stockholders
                                                                   
Net income (loss) including
distributions to redeemable
noncontrolling interests       97,964     (355,448)  (4,182,953)  (4,181,457)
attributable to common
stockholders
Net income (loss) attributable 42,952     (147,225)  (1,366,381)  (2,040,383)
to noncontrolling interests
                                                                   
Net income (loss) attributable $55,012    ($208,223) ($2,816,572) ($2,141,074)
to common stockholders
                                                                   
Net income (loss) per share,   $0.01      ($0.05)    ($0.35)      ($0.71)
basic and diluted
                                                                   
Weighted average number of
common shares outstanding,     9,782,341  3,840,830  8,070,662    3,017,889
basic and diluted
                                                                   
Comprehensive income (loss)    $164,568   ($310,601) ($3,995,079) ($4,048,378)
                                                                   
Distributions declared per     $0.17      $0.17      $0.51        $0.51
common share
                                                                   

                     GRIFFIN CAPITAL NET LEASE REIT, INC.

           Funds from Operations and Modified Funds from Operations

                                 (Unaudited)

Our management believes that historical cost accounting for real estate assets
in accordance with GAAP implicitly assumes that the value of real estate
assets diminishes predictably over time. Since real estate values have
historically risen or fallen with market conditions, many industry investors
and analysts have considered the presentation of operating results for real
estate companies that use historical cost accounting to be insufficient.
Additionally, publicly registered, non-listed REITs typically have a
significant amount of acquisition activity and are substantially more dynamic
during their initial years of investment and operation. While other start-up
entities may also experience significant acquisition activity during their
initial years, we believe that non-listed REITs are unique in that they have a
limited life with targeted exit strategies within a relatively limited time
frame after the acquisition activity ceases.

In order to provide a more complete understanding of the operating performance
of a REIT, the National Association of Real Estate Investment Trusts
("NAREIT") promulgated a measure known as funds from operations ("FFO"). FFO
is defined as net income or loss computed in accordance with GAAP, excluding
extraordinary items, as defined by GAAP, and gains and losses from sales of
depreciable operating property, adding back asset impairment write-downs, plus
real estate related depreciation and amortization (excluding amortization of
deferred financing costs and depreciation of non-real estate assets), and
after adjustment for unconsolidated partnerships and joint ventures. Because
FFO calculations exclude such items as depreciation and amortization of real
estate assets and gains and losses from sales of operating real estate assets
(which can vary among owners of identical assets in similar conditions based
on historical cost accounting and useful-life estimates), they facilitate
comparisons of operating performance between periods and between other REITs.
As a result, we believe that the use of FFO, together with the required GAAP
presentations, provides a more complete understanding of our performance
relative to our competitors and a more informed and appropriate basis on which
to make decisions involving operating, financing, and investing activities. 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 we do, making comparisons less meaningful.

The Investment Program Association ("IPA") issued Practice Guideline 2010-01
(the "IPA MFFO Guideline") on November 2, 2010, which extended financial
measures to include modified funds from operations ("MFFO"). In computing
MFFO, FFO is adjusted for certain non-cash items such as straight-line rent,
amortization of in-place lease valuations, accretion/amortization of debt
discounts/premiums, nonrecurring impairments of real estate-related
investments, and certain non-operating cash items such as acquisitions fees
and expenses. Management believes that MFFO is a beneficial indicator of our
on-going portfolio performance. More specifically, MFFO isolates the financial
results of the REIT's operations. MFFO, however, is not considered an
appropriate measure of historical earnings as it excludes certain significant
costs that are otherwise included in reported earnings. Further, since the
measure is based on historical financial information, MFFO for the period
presented may not be indicative of future results or our future ability to pay
our distributions.

By providing FFO and MFFO, we present information that assists investors in
aligning their analysis with management's analysis of long-term operating
activities. MFFO also allows for a comparison of the performance of our
portfolio with other REITs that are not currently engaging in acquisitions, as
well as a comparison of our performance with that of other non-traded REITs,
as MFFO, or an equivalent measure, is routinely reported by non-traded REITs,
and we believe often used by analysts and investors for comparison purposes.
As explained below, management's evaluation of our operating performance
excludes items considered in the calculation of MFFO based on the following
economic considerations:

  * Straight line rent, amortization of in-place lease valuation and
    amortization of debt premiums. These items are GAAP non-cash adjustments
    and are included in historical earnings. These items are deducted from FFO
    to arrive at MFFO as a means of determining operating results of our
    portfolio.
  * Acquisition-related costs. In accordance with GAAP, acquisition-related
    costs are required to be expensed as incurred. These costs have been and
    we expect will continue to be funded with cash proceeds from our public
    offering. In evaluating the performance of our portfolio over time,
    management employs business models and analyses that differentiate the
    costs to acquire investments from the investments' revenues and expenses.
    By excluding acquisition-related costs that affect our operations only in
    periods in which properties are acquired, MFFO can provide an indication
    of operating performance after we cease to acquire properties on a regular
    basis. Management believes that excluding these costs from MFFO provides
    investors with supplemental performance information that is consistent
    with the performance models and analysis used by management.

For all of these reasons, we believe the non-GAAP measures of FFO and MFFO, in
addition to net income and cash flows from operating activities, as defined by
GAAP, are helpful supplemental performance measures and useful to investors in
evaluating the performance of our real estate portfolio. However, a material
limitation associated with FFO and MFFO is that they are not indicative of our
cash available to fund distributions since other uses of cash, such as capital
expenditures at our properties and principal payments of debt, are not
deducted when calculating FFO and MFFO. Additionally, MFFO has limitations as
a performance measure in an offering such as ours where the price of a share
of common stock is a stated value and there is no net asset value
determination during the offering stage and for a period thereafter. MFFO is
useful in assisting management and investors in assessing the sustainability
of operating performance in future operating periods, and in particular, after
the offering and acquisition stages are complete and net asset value is
disclosed. However, MFFO is not a useful measure in evaluating net asset value
because impairments are taken into account in determining net asset value but
not in determining MFFO. Therefore, FFO and MFFO should not be considered as
alternatives to net income (loss) or to cash flows from operating activities
and each should be reviewed in connection with GAAP measurements.

Neither the SEC, NAREIT, nor any other applicable regulatory body has opined
on the acceptability of the adjustments contemplated to adjust FFO in order to
calculate MFFO and its use as a non-GAAP performance measure. In the future,
the SEC or NAREIT may decide to standardize the allowable exclusions across
the REIT industry, and we may have to adjust the calculation and
characterization of this non-GAAP measure.

Our calculation of FFO and MFFO is presented in the following table for the
three and nine months ended September 30, 2012 and 2011.

                                                                 
                                                                 
                      Three Months Ended         Nine Months Ended
                      September 30,              September 30,
                      2012          2011 ^ (1)   2012           2011 ^ (1)
                                                                 
Net Loss              $164,568      $(310,601)   $(3,995,079)   $(4,048,378)
Adjustments:                                                     
Depreciation of
building and          1,228,083     820,405      3,315,509      2,152,127
improvements 
Amortization of       1,271,905     793,883      3,358,900      1,842,255
intangible assets 
                                                                 
FFO/(FFO Deficit)     $2,664,556    $1,303,687   $2,679,330     $(53,996)
                                                                 
Reconciliation of FFO                                            
to MFFO
FFO/(FFO Deficit)     $2,664,556    $1,303,687   $2,679,330     $(53,996)
Adjustments:                                                     
Acquisition fees and
expenses to           35,754        —            951,585        1,119,194
non-affiliates 
Acquisition fees and
expenses to           —             —            3,159,000      1,680,000
affiliates 
Revenues in excess of
cash received         (405,349)     (229,908)    (992,061)      (581,782)
(straight-line
rents) 
Amortization of
above/(below) market  (44,693)      (169,936)    (244,086)      (211,735)
rent 
                                                                 
MFFO                  $2,250,268    $903,843     $5,553,768     $1,951,681
                                                                 
(a) In evaluating investments in real estate, we differentiate the costs to
acquire the investment from the operations derived from the investment. Such
information would be comparable only for publicly registered, non-listed REITs
that have completed their acquisition activity and have other similar
operating characteristics. By excluding expensed acquisition related expenses,
we believe MFFO provides useful supplemental information that is comparable
for each type of real estate investment and is consistent with management's
analysis of the investing and operating performance of our properties.
Acquisition fees and expenses include payments to our advisor and third
parties. Acquisition related expenses under GAAP are considered operating
expenses and as expenses included in the determination of net income (loss)
and income (loss) from continuing operations, both of which are performance
measures under GAAP. All paid and accrued acquisition fees and expenses will
have negative effects on returns to investors, the potential for future
distributions, and cash flows generated by us, unless earnings from operations
or net sales proceeds from the disposition of other properties are generated
to cover the purchase price of the property, these fees and expenses and other
costs related to such property. 
(b) Under GAAP, rental revenue is recognized on a straight-line basis over the
terms of the related lease (including rent holidays). This may result in
income recognition that is different than the underlying contract terms. By
adjusting for the change in deferred rent receivables, MFFO may provide useful
supplemental information on the realized economic impact of the underlying
lease, providing insight on the expected contractual cash flows of such lease
terms, and aligns results with our analysis of operating performance. 
(c) Under GAAP, above and below market leases are assumed to change
predictably in value over time. Similar to depreciation and amortization of
other real estate related assets, that are excluded from FFO, so is the
amortization of allocated above and below market lease value. However, because
real estate values and market lease rates historically rise or fall with
market conditions, including inflation, interest rates, the business cycle,
unemployment and consumer spending, we believe that by adjusting this matrix
for the amortization relating to above and below market leases, MFFO may
provide useful supplemental information on the performance of the real
estate. 
(d) Under GAAP, we are required to record certain financial instruments, such
as debt, at fair value at the acquisition date for each reporting period. We
believe that adjusting for the change in fair value of our financial
instruments is appropriate because such adjustments may not be reflective of
on-going operations and reflect unrealized impacts on value based only on then
current market conditions, although they may be based upon general market
conditions. The need to reflect the change in fair value of our financial
instruments is a continuous process and is analyzed on a quarterly basis in
accordance with GAAP.

CONTACT: Jennifer Nahas
         Vice President, Marketing
         Griffin Capital Corporation
         jnahas@griffincapital.com
         Office Phone: 949-270-9332
         Cell Phone: 949-433-6860

Griffin Capital Logo
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement