- Same-Store Property Net Operating Income: Up 4.2% compared to the same period last year.
- Portfolio Occupancy: 97% with a weighted average lease expiry of 13.4 years.
- Global Rent Collection Rate: Nearly 99% as of June 30.
- Leasing Deals: Executed 810,000 square feet with a retention rate of over 80% in the first half of 2024.
- Divestitures: Sold 23 noncore properties and unlisted securities, generating $430 million in the first half of 2024.
- UK Portfolio Sale: Sold for $885 million, including $708 million in cash and $177 million in shares of Assura.
- Total Sales from Strategic Review: $1.6 billion.
- Debt Reduction: Reduced consolidated debt to gross book value to 47.1%.
- Revenue from Investment Properties: Decreased by 6% over the prior year period.
- Consolidated Same-Property Net Operating Income: $86 million, 4.2% higher than Q2 2023.
- Q2 2024 AFFO: $0.09 per unit compared to $0.13 per unit in Q2 2023.
- General and Administrative Expenses: $2 million lower compared to the prior year and prior quarter.
- Interest Expense: $53.8 million in Q2 2024, down from $57.2 million in Q2 2023.
- Proportionate Investment Properties: $5.2 billion as of June 30, 2024, down from $5.5 billion in Q1 2024.
- Proportionate Debt Reduction: Reduced from $3.5 billion to $2.6 billion since Q1 2024.
- Proportionate Leverage: Reduced by 400 basis points to 55.1%.
- Near-Term Debt Maturities: Repaid over $780 million of 2024 and 2025 debt maturities, leaving $628 million remaining.
- Variable Rate Debt Exposure: Reduced to 29.8% from 35.3% as of December 31.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Same-store property net operating income increased by 4.2% compared to the same period last year.
- Portfolio occupancy remains high at 97%, with a weighted average lease expiry of 13.4 years.
- Global rent collection rate was nearly 99% as of June 30, 2024.
- Executed 810,000 square feet of leasing deals with a retention rate of over 80%.
- Successfully divested 23 noncore properties and unlisted securities, generating $430 million.
Negative Points
- Q2 revenue from investment properties decreased by 6% over the prior year period.
- AFFO per unit decreased to $0.09 in Q2 2024 from $0.13 in Q2 2023.
- Interest expense remains high, although it decreased slightly to $53.8 million in Q2 2024.
- Proportionate investment properties decreased by $300 million due to disposition activity and fair value losses.
- General and administrative expenses increased due to professional fees for statutory and tax compliance filings.
Q & A Highlights
Q: Congrats on the sale of your UK portfolio and the conclusion of the strategic review. Are you considering potential sales of your assets in Brazil and the US?
A: Everything is on the table. We are seeing more demand in the sell market and will take those opportunities. We aim to lower leverage and make accretive transactions. We are constantly looking at our portfolio for opportunities.
Q: Is the asset-light strategy still in your mind? Will you continue to explore opportunities to grow your JV business?
A: Yes, we like the asset management and asset-light business. We have strong partners and will continue to grow through that avenue when the market recovers.
Q: Can you explain the $105 million write-down on the UK portfolio sale and its impact on the remaining European assets?
A: The European assets sit at around a 6.1% cap rate. The UK portfolio was valued higher a year ago, but the formal sales process determined the best opportunity and counterparty, leading to the write-down.
Q: Are there any tax implications from the UK portfolio sale?
A: We were able to repatriate the cash without any tax withholdings due to our UK REIT structure. The proceeds came back free and clear of tax.
Q: How will the Assura investment be reflected on the balance sheet, and how will the distribution income be recorded?
A: The investment will be shown as other investment and the distribution income will be recorded as earned. We will mark it to market every quarter.
Q: What are the plans for the remaining 2024 and 2025 debt maturities?
A: We are actively engaging with lenders to refinance or extend the maturity of the remaining debt. No further asset sales are needed to conclude this.
Q: Why was the UK portfolio chosen for sale over other geographies?
A: The UK portfolio was strong and attracted a lot of inbound interest, leading us to run a formal sales process. Other geographies like the US and Brazil are also being explored for disposition opportunities.
Q: What are the terms for extending the 2025 debt maturities?
A: We are looking to extend terms as much as possible, likely between two to three years.
Q: Any update on the lease expiry in Brazil with Sabra?
A: We have terms agreed for a 10-year extension and are working through the documentation. It will be a month-by-month rent until finalized.
Q: Can the same property NOI growth of 4% to 5% continue for the rest of the year?
A: We expect it to be in the 3% to 4% range as inflation comes down. The portfolio remains strong with low bad debts and high collections.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
