SILA REALTY TRUST, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q) - Marketscreener.com

Overview
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operations on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2021.
As of June 30, 2022, we owned 130 real estate healthcare properties and two undeveloped land parcels in two µSAs and 55 MSAs.
Critical Accounting Estimates
Our critical accounting estimates were disclosed in our 2021 Annual Report on Form 10-K. There have been no material changes to our critical accounting estimates as disclosed therein.
Interim Unaudited Financial Data
Qualification as a REIT
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see Note 2-“Summary of Significant Accounting Policies-Recently Adopted Accounting Pronouncements” to our condensed consolidated financial statements that are a part of this Quarterly Report on Form 10-Q.
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Segment Reporting
Factors That May Influence Results of Operations
The results of operations discussed below reflect the data centers segment presented as discontinued operations.
June 30,
The following table summarizes our healthcare real estate activity for the three and six months ended June 30, 2022 and 2021:
Aggregate cost of operating real estate properties placed into service
Net book value of operating real estate properties disposed
– $ – (2) $ – Leased square feet of operating real estate property additions
(1)Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions.
Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021
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Changes in interest and other expense, net, are summarized in the following table (amounts in thousands):
Total interest and other expense, net $ 4,329 $ 9,534 $ (5,205) (54.6) % Income from discontinued operations $ – $ 16,305 $ (16,305) (100.0) %
•Interest on notes payable decreased due to the pay-off of all our notes payable on July 22, 2021, in connection with the Data Center Sale.
•There was no income from discontinued operations during the three months ended June 30, 2022, due to the Data Center Sale in July 2021.
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
(566) (43.2) %
General and administrative expenses 14,600 13,262 1,338
10.1 %
100.0 %
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Changes in interest and other expense, net, are summarized in the following table (amounts in thousands):
•Interest on notes payable decreased due to the pay-off of all our notes payable on July 22, 2021, in connection with the Data Center Sale.
•There was no income from discontinued operations during the six months ended June 30, 2022, due to the Data Center Sale in July 2021.
Liquidity and Capital Resources
Short-term Liquidity and Capital Resources
For at least the next twelve months, we expect our principal demands for funds will be for operating expenses, including our general and administrative expenses, as well as the acquisition of real estate and real estate-related investments and funding of capital improvements and tenant improvements, distributions to and repurchases from stockholders, and interest payments on
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We believe we will have sufficient liquidity available to meet our obligations in a timely manner, under both normal and stressed conditions, for the next twelve months.
Long-term Liquidity and Capital Resources
We currently expect to meet our long-term liquidity requirements through proceeds from cash flows from operations and borrowings on our credit facility and potential other borrowings.
Material Cash Requirements
We expect to require approximately $23,755,000 in cash over the next twelve months, of which $14,900,000 will be required for the payment of estimated interest on our outstanding debt, $742,000 related to contingent consideration from Note 14-“Commitments and Contingencies” that resulted from an earn-out arrangement, $1,988,000 related to our various lease obligations and approximately $6,125,000 will be required to fund capital improvement expenditures on our healthcare properties. We cannot provide assurances, however, that actual expenditures will not exceed these estimates.
As of June 30, 2022, we had approximately $23,077,000 in cash and cash equivalents. For the six months ended June 30, 2022, we paid capital expenditures of $6,477,000 that primarily related to the completion of one development property, which was placed into service, and re-developing another operating real estate property.
As of June 30, 2022, the aggregate notional amount under our derivative instruments was $485,000,000. We have agreements with each derivative counterparty that contain cross-default provisions; if we default on our indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment. As of June 30, 2022, we were in compliance with all such cross-default provisions.
Debt Service Requirements
Credit Facility
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Cash Flows
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
Change % Change
Net cash provided by operating activities $ 56,753 $ 81,119 $ (24,366) (30.0) %
Net cash used in investing activities $ (27,249) $ (46,791) $ 19,542 (41.8) %
Net cash used in financing activities $ (39,140) $ (31,690) $ (7,450) 23.5 %
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Financing Activities
Distributions to Stockholders
The following table shows the sources of distributions paid during the six months ended June 30, 2022 and 2021 (amounts in thousands):
Six Months Ended June 30,
Distributions paid in cash – common stockholders $ 32,401
(1)Percentages were calculated by dividing the respective source amount by the total sources of distributions.
For a discussion of distributions paid subsequent to June 30, 2022, see Note 15-“Subsequent Events” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Non-GAAP Financial Measures
A description of FFO and AFFO and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, are provided below.
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Funds from Operations and Adjusted Funds from Operations
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AFFO is a metric used by management to evaluate our dividend policy. Additionally, we consider AFFO to be an appropriate supplemental measure of our operating performance because it provides to investors a more complete understanding of our sustainable performance.
Reconciliation of FFO and AFFO
(1)During the six months ended June 30, 2022 and 2021, we accelerated the amortization of certain in-place lease intangible assets in the amounts of approximately $380,000 and $1,120,000, respectively.
(2)Represents the amortization of above-and below-market leases.
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realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, which aligns with our analysis of operating performance.
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