Market Overview

Griffin Capital Essential Asset REIT Reports 2018 Second Quarter Results

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-Acquisitions of Key Properties, Solid Renewals Highlight the Second
Quarter-

Griffin Capital Essential Asset REIT, Inc. (the "REIT") announced its
results for the quarter ended June 30, 2018.

"In the second quarter of 2018, we completed the 1031 exchange of the
DreamWorks campus with acquisitions of the McKesson property in
Scottsdale, AZ and the Shaw Industries facility in Port Wentworth
(Savannah), GA," said Chairman and CEO of the REIT, Kevin Shields. "We
renewed five leases for approximately 1.8 million square feet, of which
four leases totaling approximately 382,000 square feet were long-term
extensions, and one lease for approximately 1.4 million square feet is a
short-term extension. We believe these actions further solidify our
existing portfolio of business-essential assets and puts us in a strong
position to continue generating income for our shareholders."

As of June 30, 2018, the REIT's portfolio(1) consisted
of 76 assets encompassing approximately 20.1 million rentable square
feet of space in 20 states.

Highlights and Accomplishments in Second
Quarter 2018 and Results as of June 30, 2018:

Portfolio Overview

  • On April 10, 2018, we acquired two, two-story, Class "A" office
    buildings located in Scottsdale, AZ, consisting of 271,085 square feet
    for approximately $67.0 million.
  • On May 3, 2018, we acquired a Class "A" Industrial building located in
    Savannah, GA, consisting of 1,001,508 square feet for approximately
    $56.5 million.
  • During the quarter ended June 30, 2018, we renewed four leases
    totaling approximately 381,725 square feet with lease expiration dates
    subsequent to June 30, 2019 and one lease totaling approximately
    1,380,070 square feet with a lease expiration date less than one year.
  • The total capitalization of our portfolio as of June 30, 2018 was $3.2
    billion(2).
  • Our weighted average remaining lease term was approximately 6.5 years
    with average annual rent increases of approximately 2.1%.
  • Approximately 62.0% of our portfolio's net rental revenue(3)
    was generated by properties leased to tenants and/or guarantors with
    investment grade credit ratings or whose non-guarantor parent
    companies have investment grade credit ratings(4).

Financial Results

  • Total revenue was $86.0 million for the quarter ended June 30, 2018,
    compared to $82.8 million for the quarter ended June 30, 2017.
  • Net income attributable to common stockholders was $7.4 million or
    $0.04 per basic and diluted share for the quarter ended June 30, 2018,
    compared to $8.8 million or $0.05 per basic and diluted share for the
    quarter ended June 30, 2017.
  • The ratio of debt to total real estate acquisition value as of
    June 30, 2018 was 48.8%(1).

Non-GAAP Measures

  • Adjusted funds from operations, or AFFO, was approximately $33.3
    million for the quarter ended June 30, 2018, compared to approximately
    $39.0 million for the same period in 2017. Funds from operations, or
    FFO(5), was approximately $39.1 million and $35.4 million
    for the quarters ended June 30, 2018 and 2017, respectively. Please
    see the financial reconciliation tables and notes at the end of this
    release for more information regarding AFFO and FFO.
  • Our Adjusted EBITDA, as defined per our credit facility agreement, was
    approximately $59.8 million for the quarter ended June 30, 2018 with a
    fixed charge and interest coverage ratio of 3.94 and 4.39,
    respectively. Please see the financial reconciliation tables and notes
    at the end of this release for more information regarding adjusted
    EBITDA and related ratios.

Subsequent Events

  • On August 8, 2018, we issued 5,000,000 shares of our newly authorized
    Series A Cumulative Perpetual Convertible Preferred Stock in a private
    offering for a total purchase price of $125.0 million.

About Griffin Capital Essential Asset REIT

Griffin Capital Essential Asset REIT, Inc. is a publicly-registered,
non-traded REIT with a portfolio, as of June 30, 2018, of 76 office and
industrial properties totaling 20.1 million rentable square feet,
located in 20 states, representing total REIT capitalization of
approximately $3.2 billion. Griffin Capital Essential Asset REIT, Inc.
is one of several REITs sponsored or co-sponsored by Griffin Capital
Company, LLC ("Griffin Capital").

About Griffin Capital Company, LLC

Griffin Capital is a leading alternative investment asset manager with
$10.75 billion* in assets under management. Founded in 1995, the
privately held firm is led by a seasoned team of senior executives with
more than two decades of investment and real estate experience and who
collectively have executed more than 650 transactions valued at over
$22.0 billion.

The firm manages, sponsors or co-sponsors a suite of carefully curated,
institutional quality investment solutions distributed by Griffin
Capital Securities, LLC to retail investors through a community of
partners, including independent and insurance broker-dealers,
wirehouses, registered investment advisory firms and the financial
advisors who work with these enterprises. Additional information is
available at www.griffincapital.com.

*Includes the property information related to interests held in certain
joint ventures. As of June 30, 2018.

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 related
to the timing and availability of distributions; and other risk factors
as outlined in the REIT's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q as filed with the Securities and Exchange
Commission (the "SEC"). This is neither an offer nor a solicitation to
purchase securities.

______________________________
1   Excludes the property information related to the acquisition of an
80% ownership interest in a joint venture with affiliates of Digital
Realty Trust, L.P.
2 Total capitalization includes the outstanding debt balance plus
total equity raised and issued, including operating partnership
units, net of redemptions.
3 Net rent is based on (a) the contractual base rental payments
assuming the lease requires the tenant to reimburse us for certain
operating expenses or the property is self-managed by the tenant and
the tenant is responsible for all, or substantially all, of the
operating expenses; or (b) contractual rent payments less certain
operating expenses that are our responsibility for the 12-month
period subsequent to June 30, 2018 and 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.
4 Approximately 62.0% of our portfolio's net rental revenue was
generated by properties leased to tenants and/or guarantors with
investment grade credit ratings or whose non-guarantor parent
companies have investment grade ratings or what management believes
are generally equivalent ratings. Of the 62.0% investment grade
tenant ratings, 54.8% is from a Nationally Recognized Statistical
Rating Organization (NRSRO) credit rating, with the remaining 7.2%
being from a non-NRSRO, but having a rating that we believe is
generally equivalent to an NRSRO investment grade rating.
Bloomberg's default risk rating is an example of a non-NRSRO rating.
5 FFO, as described by NAREIT, is adjusted for non-controlling
interest distributions.
 
 
GRIFFIN CAPITAL ESSENTIAL ASSET REIT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share amounts)
 
June 30, 2018 December 31, 2017
ASSETS
Cash and cash equivalents $ 36,245 $ 40,735
Restricted cash 18,202 174,132
Real estate:
Land 353,008 342,021
Building and improvements 2,170,571 2,024,865
Tenant origination and absorption cost 532,700 495,364
Construction in progress 17,663   7,078  
Total real estate 3,073,942 2,869,328
Less: accumulated depreciation and amortization (484,310 ) (426,752 )
Total real estate, net 2,589,632 2,442,576
Investments in unconsolidated entities 35,872 37,114
Intangible assets, net 14,799 18,269
Deferred rent 52,039 46,591
Deferred leasing costs, net 20,923 19,755
Other assets 31,674   24,238  
Total assets $ 2,799,386   $ 2,803,410  
LIABILITIES AND EQUITY
Debt, net $ 1,461,403 $ 1,386,084
Restricted reserves 9,012 8,701
Redemptions payable 29,638 20,382
Distributions payable 6,205 6,409
Due to affiliates 4,732 3,545
Below market leases, net 26,361 23,581
Accrued expenses and other liabilities 64,355   64,133  
Total liabilities 1,601,706 1,512,835
Commitments and contingencies (Note 11)
Noncontrolling interests subject to redemption; 531,000 units
eligible towards redemption as of June 30, 2018 and December 31, 2017
4,887 4,887
Common stock subject to redemption 33,877
Stockholders' equity:
Common Stock, $0.001 par value; 700,000,000 shares authorized;
166,468,160 and 170,906,111 shares outstanding, as of June 30, 2018
and December 31, 2017, respectively
166 171
Additional paid-in capital 1,544,734 1,561,694
Cumulative distributions (512,885 ) (454,526 )
Accumulated earnings 124,657 110,907
Accumulated other comprehensive income 6,526   2,460  
Total stockholders' equity 1,163,198 1,220,706
Noncontrolling interests 29,595   31,105  
Total equity 1,192,793   1,251,811  
Total liabilities and equity $ 2,799,386   $ 2,803,410  
 
   
GRIFFIN CAPITAL ESSENTIAL ASSET REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except share and per share amounts)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Revenue:
Rental income $ 61,488 $ 65,111 $ 121,573 $ 131,210
Lease termination income 6,304 9,006 12,845
Property expense recoveries 18,199   17,661   35,811   35,425  
Total revenue 85,991   82,772   166,390   179,480  
Expenses:
Property operating expense 11,682 11,750 23,005 23,754
Property tax expense 11,140 11,536 22,159 22,549
Asset management fees to affiliates 5,947 5,932 11,655 11,865
Property management fees to affiliates 2,234 2,538 4,546 5,066
General and administrative expenses 1,489 2,700 2,931 4,244
Corporate operating expenses to affiliates 848 679 1,682 1,307
Depreciation and amortization 31,843 29,952 59,162 60,548
Impairment provision       5,675  
Total expenses 65,183   65,087   125,140   135,008  
Income before other income and (expenses) 20,808 17,685 41,250 44,472
Other income (expenses):
Interest expense (13,753 ) (12,472 ) (27,090 ) (24,540 )
Other income 105 136 160 235
Loss from investment in unconsolidated entities (519 ) (482 ) (1,038 ) (994 )
Gain from disposition of assets 1,158   4,293     1,158   4,293  
Net income 7,799 9,160 14,440 23,466
Net (income) attributable to noncontrolling interests (280 ) (316 ) (514 ) (808 )
Net income attributable to controlling interest 7,519 8,844 13,926 22,658
Distributions to redeemable noncontrolling interests attributable to
common stockholders
(88 ) (88 ) (176 ) (176 )
Net income attributable to common stockholders $ 7,431   $ 8,756   $ 13,750     $ 22,482  
Net income attributable to common stockholders per share, basic and
diluted
$ 0.04   $ 0.05   $ 0.08     $ 0.13  
Weighted average number of common shares outstanding, basic and
diluted
167,866,188   175,048,607   169,573,603   175,359,706  
Distributions declared per common share $ 0.17   $ 0.17   $ 0.34   $ 0.34  
 

GRIFFIN CAPITAL ESSENTIAL ASSET REIT, INC.
Funds from
Operations and Adjusted Funds from Operations

(Unaudited; in
thousands)

Funds from Operations and Adjusted Funds from Operations

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.

Management is responsible for managing interest rate, hedge and foreign
exchange risks. To achieve our objectives, we may borrow at fixed rates
or variable rates. In order to mitigate our interest rate risk on
certain financial instruments, if any, we may enter into interest rate
cap agreements or other hedge instruments and in order to mitigate our
risk to foreign currency exposure, if any, we may enter into foreign
currency hedges. We view fair value adjustments of derivatives,
impairment charges and gains and losses from dispositions of assets as
non-recurring items or items which are unrealized and may not ultimately
be realized, and which are not reflective of ongoing operations and are
therefore typically adjusted for when assessing operating performance.

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, joint ventures and preferred
distributions. 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.

Beginning with the three months ended March 31, 2018, we are now using
Adjusted Funds from Operations ("AFFO") as a non-GAAP financial measure
to evaluate our operating performance. We previously used Modified Funds
from Operations as a non-GAAP measure of operating performance.
Management decided to replace the Modified Funds from Operations measure
with AFFO because AFFO provides investors with supplemental performance
information that is consistent with the performance models and analysis
used by management. In addition, AFFO is a measure used among our peer
group, which includes publicly traded REITs. We also believe that AFFO
is a recognized measure of sustainable operating performance by the REIT
industry. Further, we believe AFFO is useful in comparing the
sustainability of our operating performance with the sustainability of
the operating performance of other real estate companies.

Management believes that AFFO is a beneficial indicator of our ongoing
portfolio performance and ability to sustain our current distribution
level. More specifically, AFFO isolates the financial results of the
Company's operations. AFFO, 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, AFFO for the
period presented may not be indicative of future results or our future
ability to pay our dividends. By providing FFO and AFFO, we present
information that assists investors in aligning their analysis with
management's analysis of long-term operating activities. As explained
below, management's evaluation of our operating performance excludes
items considered in the calculation of AFFO based on the following
economic considerations:

  • Deferred rent. Most of our leases provide for periodic minimum rent
    payment increases throughout the term of the lease. In accordance with
    GAAP, these periodic minimum rent payment increases during the term of
    a lease are recorded on a straight-line basis and creates deferred
    rent. As deferred rent is a GAAP non-cash adjustment and is included
    in historical earnings, FFO is adjusted for the effect of deferred
    rent to arrive at AFFO as a means of determining operating results of
    our portfolio.
  • Amortization of in-place lease valuation. Acquired in-place leases are
    valued as above-market or below-market as of the date of acquisition
    based on the present value of the difference between (a) the
    contractual amounts to be paid pursuant to the in-place leases and (b)
    management's estimate of fair market lease rates for the corresponding
    in-place leases over a period equal to the remaining non-cancelable
    term of the lease for above-market leases. The above-market and
    below-market lease values are capitalized as intangible lease assets
    or liabilities and amortized as an adjustment to rental income over
    the remaining terms of the respective leases. As this item is a
    non-cash adjustment and is included in historical earnings, FFO is
    adjusted for the effect of the amortization of in-place lease
    valuation to arrive at AFFO as a means of determining operating
    results of our portfolio.
  • Acquisition-related costs. We were organized primarily with the
    purpose of acquiring or investing in income-producing real property in
    order to generate operational income and cash flow that will allow us
    to provide regular cash distributions to our stockholders. In the
    process, we incur non-reimbursable affiliated and non-affiliated
    acquisition-related costs, which in accordance with GAAP are
    capitalized and included as part of the relative fair value when the
    property acquisition meets the definition of an asset acquisition or
    are expensed as incurred and are included in the determination of
    income (loss) from operations and net income (loss), for property
    acquisitions accounted for as a business combination. By excluding
    acquisition-related costs, AFFO may not provide an accurate indicator
    of our operating performance during periods in which acquisitions are
    made. However, it can provide an indication of our on-going ability to
    generate cash flow from operations and continue as a going concern
    after we cease to acquire properties on a frequent and regular basis,
    which can be compared to the AFFO of other non-listed REITs that have
    completed their acquisition activity and have similar operating
    characteristics to ours. Management believes that excluding these
    costs from AFFO provides investors with supplemental performance
    information that is consistent with the performance models and
    analyses used by management.
  • Financed termination fee, net of payments received. We believe that a
    fee received from a tenant for terminating a lease is appropriately
    included as a component of rental revenue and therefore included in
    AFFO. If, however, the termination fee is to be paid over time, we
    believe the recognition of such termination fee into income should not
    be included in AFFO. Alternatively, we believe that the periodic
    amount paid by the tenant in subsequent periods to satisfy the
    termination fee obligation should be included in AFFO.
  • Gain or loss from the extinguishment of debt. We use debt as a partial
    source of capital to acquire properties in our portfolio. As a term of
    obtaining this debt, we will pay financing costs to the respective
    lender. Financing costs are presented on the balance sheet as a direct
    deduction from the carrying amount of that debt liability, consistent
    with debt discounts and amortized into interest expense on a
    straight-line basis over the term of the debt. We consider the
    amortization expense to be a component of operations if the debt was
    used to acquire properties. From time to time, we may cancel certain
    debt obligations and replace these canceled debt obligations with new
    debt at more favorable terms to us. In doing so, we are required to
    write off the remaining capitalized financing costs associated with
    the canceled debt, which we consider to be a cost, or loss, on
    extinguishing such debt. Management believes that this loss is
    considered an event not associated with our operations, and therefore,
    deems this write off to be an exclusion from AFFO.
  • Unrealized gains (losses) on derivative instruments. These adjustments
    include unrealized gains (losses) from mark-to-market adjustments on
    interest rate swaps and losses due to hedge ineffectiveness. The
    change in the fair value of interest rate swaps not designated as a
    hedge and the change in the fair value of the ineffective portion of
    interest rate swaps are non-cash adjustments recognized directly in
    earnings and are included in interest expense. We have excluded these
    adjustments in our calculation of AFFO to more appropriately reflect
    the economic impact of our interest rate swap agreements.

For all of these reasons, we believe the non-GAAP measures of FFO and
AFFO, in addition to income (loss) from operations, net income (loss)
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 AFFO 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 AFFO. The
use of AFFO as a measure of long-term operating performance on value is
also limited if we do not continue to operate under our current business
plan as noted above. AFFO is useful in assisting management and
investors in assessing our ongoing ability to generate cash flow from
operations and continue as a going concern in future operating periods,
and in particular, after the offering and acquisition stages are
complete. However, FFO and AFFO are not useful measures in evaluating
NAV because impairments are taken into account in determining NAV but
not in determining FFO and AFFO. Therefore, FFO and AFFO should not be
viewed as a more prominent measure of performance than income (loss)
from operations, 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 AFFO 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 AFFO is presented in the following table for
the three and six months ended June 30, 2018 and 2017 (in thousands):

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Net income $ 7,799 $ 9,160 $ 14,440 $ 23,466
Adjustments:
Depreciation of building and improvements 14,620 14,211 28,399 28,296
Amortization of leasing costs and intangibles 17,216 15,734 30,749 32,238
Impairment provision 5,675
Equity interest of depreciation of building and improvements -
unconsolidated entities
643 619 1,277 1,237
Equity interest of amortization of intangible assets -
unconsolidated entities
1,162 1,171 2,324 2,347
Gain from sale of depreciable operating property (1,158 ) (4,293 ) (1,158 ) (4,293 )
FFO $ 40,282 $ 36,602 $ 76,031 $ 88,966
Distributions to noncontrolling interest (1,181 ) (1,181 ) (2,349 ) (2,349 )
FFO, net of noncontrolling interest distributions $ 39,101   $ 35,421   $ 73,682   $ 86,617  
Reconciliation of FFO to AFFO:
FFO, net of noncontrolling interest distributions $ 39,101 $ 35,421 $ 73,682 $ 86,617
Adjustments:
Deferred rent (2,883 ) (2,481 ) (5,187 ) (5,065 )
Amortization of above/(below) market rent 772 316 528 721
Amortization of debt premium/(discount) 8 8 16 (430 )
Amortization of ground leasehold interests 7 7 14 14
Non-cash lease termination income (6,304 ) (6,304 ) (12,845 )
Financed termination fee payments received 1,830 5,070 3,436 6,966
Equity interest of revenues in excess of cash received
(straight-line rents) - unconsolidated entities
(7 ) (112 ) (38 ) (249 )
Unrealized (gain) loss on derivatives 12 (5 )
Equity interest of amortization of above market rent -
unconsolidated entities
739   744   1,478   1,488  
AFFO $ 33,263   $ 38,985   $ 67,625   $ 77,212  
 
   
GRIFFIN CAPITAL ESSENTIAL ASSET REIT, INC.
Adjusted EBITDA
(Unaudited; dollars in thousands)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
ADJUSTED EBITDA(1):
Net income $ 7,799 $ 9,160 $ 14,440 $ 23,466
Depreciation and amortization 31,843 29,952 59,162 60,548
Interest expense 13,008 11,799 25,551 23,544
Amortization - Deferred financing costs 736 665 1,523 1,426
Amortization - Debt premium 7 8 15 (430 )
Amortization - In-place lease 772 316 528 721
Income taxes (75 ) 1,224 141 1,608
Asset management fees 5,947 5,932 11,655 11,865
Property management fees 2,234 2,538 4,546 5,066
Deferred rent (3,144 ) (2,481 ) (5,448 ) (5,065 )
Extraordinary Losses or Gains:
Termination fee (12,845 )
Gain on disposition (1,158 ) (4,293 ) (1,158 ) (4,293 )
Loss on Impairment 5,675
Equity percentage of net (income) loss for the Parent's non-wholly
owned direct and indirect subsidiaries
519 482 1,038 994
Equity percentage of EBITDA for the Parent's non-wholly owned direct
and indirect subsidiaries
2,262   2,178   4,448   4,304  
60,750 57,480 116,441 116,584
Less: Capital reserves (931 ) (923 ) (1,820 ) (1,846 )
Adjusted EBITDA (per credit facility agreement) $ 59,819   $ 56,557   $ 114,621   $ 114,738  
 
Principal paid and due $ 1,558 $ 1,797 $ 3,319 $ 2,965
Interest expense 13,610   12,431   26,645   24,756  
$ 15,168   $ 14,228   $ 29,964   $ 27,721  
 
Interest Coverage Ratio(2) 4.39   4.55   4.30   4.63  
Fixed Charge Coverage Ratio(3) 3.94   3.98   3.83   4.14  
 
(1)   Adjusted EBITDA, as defined in our credit facility agreement, is
calculated as net income before interest, taxes, depreciation and
amortization (EBITDA), plus acquisition fees and expenses, asset and
property management fees, straight-line rents and in-place lease
amortization for the period, further adjusted for acquisitions that
have closed during the quarter and certain reserves for capital
expenditures.
(2) Interest coverage is the ratio of interest expense as if the
corresponding debt was in place at the beginning of the period to
adjusted EBITDA.
(3) Fixed charge coverage is the ratio of principal amortization for the
period plus interest expense as if the corresponding debt were in
place at the beginning of the period plus preferred unit
distributions as if in place at the beginning of the period over
adjusted EBITDA.

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