Griffin Announces Fiscal 2020 Third Quarter Results
Griffin Industrial Realty, Inc. (Nasdaq: GRIF) reported a net loss of $0.6 million for Q3 2020, down from a profit of $1.0 million in Q3 2019. Total revenue rose to $9.9 million, driven by a 16.5% increase in Leasing NOI to $7.0 million. Despite higher cash Leasing NOI for industrial properties, operating income decreased to $1.3 million due to rising expenses. Griffin completed a $27.2 million private placement and has a 94.3% leased portfolio. The company also signed agreements to purchase land for further industrial development, highlighting ongoing growth strategies.
- Leasing NOI increased 14.1% to $7.0 million and Cash Leasing NOI rose 9.3% to $5.5 million in Q3 2020.
- Completed three lease renewals with an average rent growth of 16.5%.
- Raised $27.2 million through a private placement of common stock and warrants.
- Operating income decreased to $1.3 million from $1.7 million in Q3 2019.
- Reported a net loss of $0.6 million for Q3 2020 compared to a net income of $1.0 million in Q3 2019.
- G&A expenses increased significantly, impacting overall profitability.
NEW YORK, Oct. 08, 2020 (GLOBE NEWSWIRE) -- Griffin Industrial Realty, Inc. (Nasdaq: GRIF) (“Griffin” or the “Company”) today reported financial results for the three months ended August 31, 2020 (the “2020 third quarter”).
Highlights
- Operating Income of
$1.3 million , a decrease of$0.4 million from the 2019 third quarter - Leasing NOI1 (as defined below) of
$7.0 million , a14.1% increase over the 2019 third quarter - Cash Leasing NOI2 (as defined below) for industrial/warehouse properties of
$5.5 million , a9.3% increase over the 2019 third quarter - Stabilized in-service industrial portfolio3 was
99.7% leased; total industrial portfolio was94.3% leased - Completed three lease renewals with weighted average rent growth on a straight-line basis of
16.5% and weighted average cash rent growth of3.6% 4 - Raised
$27.2 million through a private placement of common stock and warrants - Signed agreements to purchase additional land for development in the Lehigh Valley and Orlando
- Subsequent to quarter end, commenced construction on a 103,000 SF industrial/warehouse building in the Lehigh Valley
- Recently signed two agreements to sell two multi-story office buildings totaling 161,000 square feet for
$6.25 million and one office/flex building totaling 40,000 square feet for$1.4 million - Released a third quarter earnings supplement simultaneously with this release
- Griffin to host a Virtual Investor Day on November 11, 2020 and participate in NAREIT’s REITworld Virtual Investor Conference being held November 17-19, 2020.
Results of Operations
Griffin reported total revenue of
Rental revenue increased to
Operating income decreased to
“Cash Leasing NOI,” which Griffin defines as Leasing NOI adjusted for noncash rental revenue, including straight-line rents, for the 2020 third quarter and 2020 nine month period were
Leasing NOI and Cash Leasing NOI for Griffin’s industrial/warehouse properties and total portfolio were as follows:
($ in 000s) | For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
Aug. 31, 2020 | Aug. 31, 2019 | Increase | Aug. 31, 2020 | Aug. 31, 2019 | Increase | ||||||||||||
Industrial/Warehouse: | |||||||||||||||||
Leasing NOI | $ | 6,187 | $ | 5,312 | 16.5 | % | $ | 17,412 | $ | 15,693 | 11.0 | % | |||||
Cash Leasing NOI | $ | 5,497 | $ | 5,029 | 9.3 | % | $ | 16,015 | $ | 14,451 | 10.8 | % | |||||
Total: | |||||||||||||||||
Leasing NOI | $ | 6,980 | $ | 6,117 | 14.1 | % | $ | 19,782 | $ | 17,891 | 10.6 | % | |||||
Cash Leasing NOI | $ | 6,234 | $ | 5,796 | 7.6 | % | $ | 17,984 | $ | 16,562 | 8.6 | % |
The increases in Cash Leasing NOI during the 2020 third quarter and 2020 nine month period over the 2019 third quarter and 2019 nine month periods, respectively, principally reflect increases in rental revenue as a result of more space under lease, due mostly to the industrial/warehouse buildings added to Griffin’s portfolio subsequent to August 31, 2019, and to a lesser extent, the initial leasing of first generation space in 6975 Ambassador Drive in the Lehigh Valley and 160 International Drive in Charlotte, and increases in rental rates in Griffin’s other industrial/warehouse properties in fiscal 2020, partially offset by the impact of free rent granted as part of two lease expansion/renewal agreements.
G&A expenses were
The change in fair value of financial instruments of
Griffin reported a net loss for the 2020 third quarter of (
Leasing Activity
During the 2020 third quarter, the Company executed three renewal leases aggregating 83,000 square feet with an average lease term of 6.1 years and weighted average tenant improvement and leasing commission costs per square foot per year of
During the 2020 nine month period, the Company executed four new leases and six renewal leases aggregating 555,000 square feet with an average lease term of 6.0 years and weighted average tenant improvement and leasing commission costs per square foot per year of
Dispositions
During 2020 third quarter, the Company disposed of several small parcels of residential land for
Subsequent to the end of the 2020 third quarter, the Company entered into agreements to sell three office/flex properties for a total of
Land Acquisitions
During the 2020 third quarter, the Company entered into separate agreements to purchase a total of 37 acres of land for industrial development in the Lehigh Valley and Orlando for a total purchase price of
The purchase agreements are subject to significant contingencies, including Griffin obtaining all governmental approvals for its planned industrial developments on the land parcels that would be acquired. There is no guarantee that the land acquisitions as contemplated under the agreements will be completed under their current terms, or at all.
Development Activity
Subsequent to the end of the 2020 third quarter, the Company commenced construction on a 103,000 square foot industrial/warehouse building in the Lehigh Valley (Chapmans Road) on land acquired in fiscal 2019. Completion of this project is estimated in the third calendar year quarter of 2021.
Liquidity
As of August 31, 2020, the Company maintained
On August 24, 2020, the Company raised cash of
REIT Conversion
On May 7, 2020, at Griffin’s 2020 Annual Meeting of Stockholders, amendments to Griffin’s bylaws and Griffin’s reincorporation from Delaware to Maryland were approved by Griffin’s stockholders, essentially enabling Griffin to continue to pursue its anticipated conversion to a REIT. As such, Griffin intends to elect REIT status for federal income tax purposes commencing with the taxable year beginning January 1, 2021.
Portfolio
As of August 31, 2020, Griffin owned 30 industrial/warehouse properties containing an aggregate of 4,206,000 rentable square feet that was
Rent Collection / COVID-19 Impact
During the 2020 third quarter, COVID-19 did not have a material impact on Griffin’s rent collections. Griffin collected
Subsequent to the end of the 2020 third quarter, one tenant that leases 59,000 square feet in one of Griffin’s industrial/warehouse buildings in Connecticut requested rent relief under its lease that expires on December 31, 2020. The tenant has paid all rent through September 30, 2020 and Griffin has not determined if it will grant any rent relief in connection with such request. The lease for 59,000 square feet will not be renewed, as Griffin previously entered into a lease agreement with the adjoining tenant in the same building, whereby the adjoining tenant has agreed to expand into that space after December 31, 2020.
Third Quarter Webcast and Earnings Supplement
Griffin is hosting a pre-recorded webcast that will be available starting tomorrow, October 9, 2020 at 8:00 A.M. Eastern Time, to discuss its third quarter operating results. All investors and other interested parties are invited to the listen-only webcast which can be accessed via the Investor Relations section of Griffin’s website at griffinindustrial.com/investors or by logging on at https://services.choruscall.com/links/grif201009.html. The webcast will be available through January 9, 2021.
A copy of the Company's supplemental information is available through the Investor Relations section of the Company's website.
About Griffin
Griffin Industrial Realty Inc. (“Griffin”) is a real estate business principally engaged in developing, acquiring, managing and leasing industrial/warehouse properties. Griffin currently owns 42 buildings totaling approximately 4.6 million square feet (approximately 4.2 million of which is industrial/warehouse space) in Connecticut, Pennsylvania, North Carolina and Florida in addition to over 3,400 acres of undeveloped land.
Forward-Looking Statements:
This Press Release includes “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. These forward-looking statements include Griffin’s beliefs and expectations regarding future events or conditions including, without limitation, statements regarding the outcome of discussions regarding rent relief with certain tenants, Griffin’s anticipated conversion to a REIT, completion of contemplated acquisition and sale agreements and construction and development plans. Although Griffin believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. The projected information disclosed herein is based on assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin and which could cause actual results and events to differ materially from those expressed or implied in the forward-looking statements. Other important factors that could affect the outcome of the events set forth in these statements are described in Griffin’s Securities and Exchange Commission filings, including the “Business,” “Risk Factors” and “Forward-Looking Statements” sections in Griffin’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019 and the “Risk Factors” section in Griffin’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2020. Griffin disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release except as required by law.
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1 Leasing NOI is not a financial measure in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). It is presented because Griffin believes it is a useful financial indicator for measuring results of its real estate leasing activities. However, it should not be considered as an alternative to operating income as a measure of operating results in accordance with U.S. GAAP.
2 Cash Leasing NOI is not a financial measure in conformity with U.S. GAAP. It is presented because Griffin believes it is a useful financial indicator for measuring results of its real estate leasing activities. However, it should not be considered as an alternative to operating income as a measure of operating results in accordance with U.S. GAAP.
3 “Stabilized” properties reflects in-Service properties / buildings that have either (a) reached
4 Weighted average rent growth reflects the percentage change of annualized rental rates between the previous leases and the current leases. The rental rate change on a straight-line basis represents average annual base rental payments on a straight-line basis for the term of each lease including free rent periods. Cash basis rent growth represents the change in starting rental rates per the lease agreement on new and renewed leases signed during the period, as compared to the previous ending rental rates for that same space. The cash rent growth calculation excludes free rent periods. The change in rental rate calculations excludes leases for first generation space on properties acquired or developed by Griffin.
GRIFFIN INDUSTRIAL REALTY, INC. Consolidated Statements of Operations (dollars in thousands, except per share data) (unaudited) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |||||||||||||
Rental revenue | $ | 9,575 | $ | 8,600 | $ | 27,703 | $ | 25,458 | ||||||||
Revenue from property sales5 | 288 | 302 | 1,139 | 9,828 | ||||||||||||
Total revenue | 9,863 | 8,902 | 28,842 | 35,286 | ||||||||||||
Operating expenses of rental properties | 2,595 | 2,483 | 7,921 | 7,567 | ||||||||||||
Depreciation and amortization expense | 3,594 | 2,925 | 10,188 | 8,806 | ||||||||||||
General and administrative expenses | 2,290 | 1,668 | 6,785 | 5,567 | ||||||||||||
Costs related to property sales | 129 | 176 | 314 | 1,999 | ||||||||||||
Total expenses | 8,608 | 7,252 | 25,208 | 23,939 | ||||||||||||
Gain on insurance recovery6 | — | — | — | 126 | ||||||||||||
Operating income | 1,255 | 1,650 | 3,634 | 11,473 | ||||||||||||
Interest expense7 | (1,776 | ) | (1,508 | ) | (5,467 | ) | (4,776 | ) | ||||||||
Change in fair value of financial instruments8 | (414 | ) | — | (414 | ) | — | ||||||||||
Investment income | 3 | 61 | 31 | 242 | ||||||||||||
(Loss) income before income tax benefit (provision) | (932 | ) | 203 | (2,216 | ) | 6,939 | ||||||||||
Income tax benefit (provision) | 291 | 814 | 562 | (689 | ) | |||||||||||
Net (loss) income | $ | (641 | ) | $ | 1,017 | $ | (1,654 | ) | $ | 6,250 | ||||||
Basic net (loss) income per common share | $ | (0.12 | ) | $ | 0.20 | $ | (0.32 | ) | $ | 1.23 | ||||||
Diluted net (loss) income per common share | $ | (0.12 | ) | $ | 0.20 | $ | (0.32 | ) | $ | 1.23 | ||||||
Weighted average common shares outstanding for computation of basic per share results | 5,179 | 5,073 | 5,126 | 5,068 | ||||||||||||
Weighted average common shares outstanding for computation of diluted per share results | 5,179 | 5,113 | 5,126 | 5,102 | ||||||||||||
GRIFFIN INDUSTRIAL REALTY, INC. Non-GAAP Reconciliations – Leasing NOI and Cash Leasing NOI (dollars in thousands, except per share data) (unaudited) | |||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Third | Third | Nine Month | Nine Month | ||||||||||||
Quarter | Quarter | Period | Period | ||||||||||||
Net (loss) income | $ | (641 | ) | $ | 1,017 | $ | (1,654 | ) | $ | 6,250 | |||||
Income tax benefit (provision) | 291 | 814 | 562 | (689 | ) | ||||||||||
Pretax (loss) income | (932 | ) | 203 | (2,216 | ) | 6,939 | |||||||||
Exclude: | |||||||||||||||
Investment income | (3 | ) | (61 | ) | (31 | ) | (242 | ) | |||||||
Change in fair value of financial instruments | 414 | - | 414 | - | |||||||||||
Interest expense | 1,776 | 1,508 | 5,467 | 4,776 | |||||||||||
Operating income | 1,255 | 1,650 | 3,634 | 11,473 | |||||||||||
Exclude: | |||||||||||||||
Gain on insurance recovery | - | - | - | (126 | ) | ||||||||||
Costs related to property sales | 129 | 176 | 314 | 1,999 | |||||||||||
Depreciation and amortization expense | 3,594 | 2,925 | 10,188 | 8,806 | |||||||||||
General and administrative expenses | 2,290 | 1,668 | 6,785 | 5,567 | |||||||||||
Revenue from property sales | (288 | ) | (302 | ) | (1,139 | ) | (9,828 | ) | |||||||
Leasing NOI | 6,980 | 6,117 | 19,782 | 17,891 | |||||||||||
Noncash rental revenue including straight-line rents | (746 | ) | (321 | ) | (1,798 | ) | (1,329 | ) | |||||||
Cash Leasing NOI | $ | 6,234 | $ | 5,796 | $ | 17,984 | $ | 16,562 | |||||||
Leasing NOI | $ | 6,980 | $ | 6,117 | $ | 19,782 | $ | 17,891 | |||||||
Exclude: | |||||||||||||||
Rental revenue from non-industrial/warehouse properties | (1,581 | ) | (1,638 | ) | (4,667 | ) | (4,649 | ) | |||||||
Operating expenses of non-industrial/warehouse properties | 788 | 833 | 2,297 | 2,451 | |||||||||||
Leasing NOI of industrial/warehouse properties | 6,187 | 5,312 | 17,412 | 15,693 | |||||||||||
Noncash rental revenue including straight-line rents of industrial/warehouse properties | (690 | ) | (283 | ) | (1,397 | ) | (1,242 | ) | |||||||
Cash Leasing NOI for industrial/warehouse properties | $ | 5,497 | $ | 5,029 | $ | 16,015 | $ | 14,451 | |||||||
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5 Revenue from property sales in the nine months ended August 31, 2019 included
6 Reflects the settlement of an insurance claim for storm damage to Griffin’s nursery farm in Quincy, Florida that had been leased to a nursery operator. The lease terminated in fiscal 2018 upon the bankruptcy filing of the former tenant.
7 Interest expense is primarily for mortgages on Griffin’s rental properties.
8 Reflects changes in fair value of the common stock warrants and the contingent value rights that were issued along with common stock in a private placement transaction completed on August 24, 2020.
CONTACT:
Anthony Galici
Chief Financial Officer
(860) 286-1307
agalici@griffinindustrial.com
Ashley Pizzo
Director, IR & Capital Markets
(212) 218-7914
apizzo@griffinindustrial.com
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