Second Quarter 2024 Supplemental Report
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
(Exact Name of Registrant as Specified in its Charter)
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001-41812 |
92-0887849 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
( |
One Manhattan West, |
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10001 |
(Address of principal executive offices) |
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( |
Registrant's telephone number, including area code: (844)656-7348
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
- Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
- Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
- Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
- Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Common Shares of Beneficial Interest, par value |
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NLOP |
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share |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
On
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits |
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Exhibit No. |
Description |
99.1Supplemental financial information of the Company at
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: |
By: /s/ |
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Chief Financial Officer |
Exhibit 99.1
Supplemental Financial Information
Second Quarter 2024
Terms and Definitions
As used in this supplemental package, the terms "
REIT |
Real estate investment trust |
WPC |
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Spin-Off |
The spin-off of 59 office properties owned by WPC into NLOP, a separate publicly-traded REIT, which |
was completed on |
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ABR |
Contractual minimum annualized base rent |
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NAREIT |
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WALT |
Weighted-average lease term |
NLOP Mortgage Loan |
Our |
NLOP Mezzanine Loan |
Our |
NLOP Financing Arrangements |
The NLOP Mortgage Loan and NLOP Mezzanine Loan, which are collateralized by the assignment of |
certain of our previously unencumbered real estate properties |
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SOFR |
Secured Overnight Financing Rate |
Important Note Regarding Non-GAAP Financial Measures
This supplemental package includes certain "non-GAAP" supplemental measures that are not defined by generally accepted accounting principles ("GAAP"), including funds from operations ("FFO"); adjusted funds from operations ("AFFO"); pro rata cash net operating income ("pro rata cash NOI"); and normalized pro rata cash NOI. FFO is a non-GAAP measure defined by NAREIT. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are provided within this supplemental package. In addition, refer to the Disclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of these non-GAAP financial measures and other metrics.
Amounts may not sum to totals due to rounding.
Supplemental Information - Second Quarter 2024
Table of Contents
Capitalization |
6 |
Debt Overview |
7 |
Dispositions |
8 |
Capital Expenditures and Leasing Activity |
9 |
Top Ten Tenants |
10 |
Lease Expirations |
11 |
Property List |
12 |
Appendix |
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Normalized Pro Rata Cash NOI |
16 |
Disclosures Regarding Non-GAAP and Other Metrics |
18 |
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Second Quarter 2024
Summary Metrics
As of or for the three months ended
Financial Results |
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Revenues, including reimbursable costs - consolidated ($000s) |
$ |
39,029 |
Net income attributable to NLOP ($000s) |
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12,451 |
Net income attributable to NLOP per diluted share |
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0.84 |
Normalized pro rata cash NOI ($000s) (a) (b) |
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26,025 |
AFFO attributable to NLOP ($000s) (a) (b) |
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17,402 |
AFFO attributable to NLOP per diluted share (a) (b) |
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1.18 |
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Balance Sheet and Capitalization |
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Equity market capitalization - based on quarter end share price of |
$ |
364,010 |
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Total consolidated debt ($000s) |
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327,396 |
Gross assets ($000s) (c) |
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1,214,530 |
Total consolidated debt to gross assets |
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27.0 % |
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NLOP Mortgage Loan principal outstanding ($000s) (d) |
$ |
131,993 |
NLOP Mezzanine Loan principal outstanding ($000s) (d) |
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89,345 |
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Advisory Fees and Reimbursements Paid to WPC |
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Asset management fees (e) |
$ |
1,599 |
Administrative reimbursements (f) |
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1,000 |
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Portfolio (Pro Rata) (b) |
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ABR (in thousands) (g) |
$ |
102,483 |
Number of properties |
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47 |
Number of tenants |
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50 |
Occupancy |
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82.7 % |
Weighted-average lease term (in years) |
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5.2 |
Leasable square footage (in thousands) (h) |
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6,905 |
ABR from investment grade tenants as a % of total ABR (i) |
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50.9 % |
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Dispositions - number of properties sold |
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6 |
Dispositions - gross proceeds (in thousands) |
$ |
192,174 |
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Subsequent to Quarter End |
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NLOP Mortgage Loan principal outstanding as of the date of this report ($000s) (j) |
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73,892 |
NLOP Mezzanine Loan principal outstanding as of the date of this report ($000s) (j) |
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80,916 |
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Dispositions - number of properties sold |
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1 |
Dispositions - gross proceeds (in thousands) |
$ |
71,500 |
________
- Normalized pro rata cash NOI and AFFO are non-GAAP measures. See the Disclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of our non-GAAP measures and for details on how certain non-GAAP measures are calculated.
- Presented on a pro rata basis. See theDisclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of pro rata.
- Gross assets represent consolidated total assets before accumulated depreciation on buildings and improvements. Gross assets are net of accumulated amortization on in-place lease intangible assets of
$148.0 million and above-market rent intangible assets of$24.5 million . - Original principal outstanding for the NLOP Mortgage Loan was
$335.0 million . NLOP Mortgage Loan principal outstanding (as a % of original principal) was 39.4% as ofJune 30, 2024 . Original principal outstanding for the NLOP Mezzanine Loan was$120.0 million . NLOP Mezzanine Loan principal outstanding (as a % of original principal) was 74.5% as ofJune 30, 2024 . - Pursuant to certain advisory agreements, our Advisor provides us with strategic management services, including asset management, property disposition support, and various related services. We pay our Advisor an asset management fee that was initially set at an annual amount of
$7.5 million and is proportionately reduced each month following the disposition of each portfolio property. - Pursuant to certain advisory agreements, we will reimburse our Advisor a base administrative amount of approximately
$4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters. - See theDisclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of ABR.
- Excludes 570,999 of operating square footage for a parking garage at a domestic property.
- Percentage of portfolio is based on ABR, as of
June 30, 2024 . Includes tenants or guarantors with investment grade ratings (31.1%) and subsidiaries of non-guarantor parent companies with investment grade ratings (19.8%). Investment grade refers to an entity with a rating of BBB- or higher fromStandard & Poor's Ratings Services or Baa3 or higher from Moody's Investors Service. See the Disclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of ABR. - NLOP Mortgage Loan principal outstanding (as a % of original principal) was 22.1% as of the date of this report. NLOP Mezzanine Loan principal outstanding (as a % of original principal) was 67.4% as of the date of this report.
Second Quarter 2024
Components of Net Asset Value
Dollars in thousands.
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Three Months Ended |
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Normalized Pro Rata Cash NOI (a) (b) |
$ |
26,025 |
Balance Sheet - Selected Information |
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As of |
Assets |
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Book value of select real estate (c) |
$ |
39,974 |
Cash and cash equivalents |
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36,078 |
Restricted cash, including escrow (d) |
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44,629 |
Other assets, net: |
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Straight-line rent adjustments |
$ |
24,258 |
Prepaid expenses |
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4,283 |
Deferred charges |
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3,385 |
Accounts receivable |
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2,656 |
Securities and derivatives |
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130 |
Taxes receivable |
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76 |
Other |
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4,314 |
Total other assets, net |
$ |
39,102 |
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Liabilities |
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NLOP Mortgage Loan (e) |
$ |
131,993 |
NLOP Mezzanine Loan (f) |
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89,345 |
Non-recourse mortgages, net (g) |
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115,511 |
Deferred income taxes |
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3,142 |
Dividends payable |
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- |
Accounts payable, accrued expenses and other liabilities: |
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Accounts payable and accrued expenses |
$ |
10,857 |
Prepaid and deferred rents |
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8,387 |
Accrued taxes payable |
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1,329 |
Tenant security deposits |
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814 |
Operating lease liabilities |
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308 |
Other |
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19,113 |
Total accounts payable, accrued expenses and other liabilities |
$ |
40,808 |
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________
- Normalized pro rata cash NOI is a non-GAAP measure. See the Disclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of our non-GAAP measures and for details on how they are calculated.
- Presented on a pro rata basis. See theDisclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of pro rata.
- Represents the value of real estate not appropriately captured in normalized pro rata cash NOI, such as vacant assets.
- Comprised of approximately
$43.4 million related to certain reserve requirements for debt service, capital improvements, and real estate taxes pursuant to the NLOP Mortgage Loan and NLOP Mezzanine Loan. Approximately$1.2 million is related to certain reserve requirements for other loan agreements. - Excludes unamortized discount, net totaling
$3.3 million and unamortized deferred financing costs totaling$1.5 million as ofJune 30, 2024 . - Excludes unamortized discount, net totaling
$3.2 million and unamortized deferred financing costs totaling$1.4 million as ofJune 30, 2024 . - Excludes unamortized discount, net totaling
$0.1 million as ofJune 30, 2024 .
Second Quarter 2024
Consolidated Statement of Income
In thousands, except share and per share amounts.
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Three Months Ended |
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Revenues |
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Lease revenues |
$ |
35,149 |
Other lease-related income |
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3,880 |
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39,029 |
Operating Expenses |
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Depreciation and amortization |
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15,122 |
Impairment charges - real estate |
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8,222 |
Reimbursable tenant costs |
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7,189 |
Property expenses, excluding reimbursable tenant costs |
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2,652 |
General and administrative (a) |
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1,880 |
Asset management fees (b) |
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1,599 |
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36,664 |
Other Income and Expenses |
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Loss on sale of real estate, net |
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37,723 |
Interest expense (c) |
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(27,798) |
Other gains and (losses) |
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332 |
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10,257 |
Income before income taxes |
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12,622 |
Provision for income taxes |
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(149) |
Net Income |
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12,473 |
Net income attributable to noncontrolling interests |
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(22) |
Net Income Attributable to NLOP |
$ |
12,451 |
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Basic Earnings Per Share |
$ |
0.84 |
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Diluted Earnings Per Share |
$ |
0.84 |
Weighted-Average Shares Outstanding |
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Basic |
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14,785,118 |
Diluted |
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14,807,960 |
________
- Includes
$1.0 million of administrative reimbursements to our Advisor. - Amount is comprised of fees paid to Advisor for strategic management services, including asset management, property disposition support, and various related services.
- Includes
$17.0 million of non-cash amortization of deferred financing costs.
Second Quarter 2024
FFO and AFFO, Consolidated
In thousands, except share and per share amounts.
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Three Months Ended |
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Net income attributable to NLOP |
$ |
12,451 |
Adjustments: |
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Gain on sale of real estate, net |
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(37,723) |
Depreciation and amortization of real property |
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15,122 |
Impairment charges - real estate |
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8,222 |
Proportionate share of adjustments for noncontrolling interests (a) |
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(51) |
Total adjustments |
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(14,430) |
FFO (as defined by NAREIT) Attributable to NLOP (b) |
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(1,979) |
Adjustments: |
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Amortization of deferred financing costs |
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17,028 |
Above- and below-market rent intangible lease amortization, net |
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931 |
Other amortization and non-cash items |
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824 |
Straight-line and other leasing and financing adjustments |
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733 |
Stock-based compensation |
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75 |
Tax benefit - deferred and other |
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(183) |
Other (gains) and losses |
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(14) |
Proportionate share of adjustments for noncontrolling interests (a) |
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(13) |
Total adjustments |
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19,381 |
AFFO Attributable to NLOP (b) |
$ |
17,402 |
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Summary |
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FFO (as defined by NAREIT) attributable to NLOP (b) |
$ |
(1,979) |
FFO (as defined by NAREIT) attributable to NLOP per diluted share (b) |
$ |
(0.13) |
AFFO attributable to NLOP (b) |
$ |
17,402 |
AFFO attributable to NLOP per diluted share (b) |
$ |
1.18 |
Diluted weighted-average shares outstanding |
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14,807,960 |
________
- Adjustments disclosed elsewhere in this reconciliation are on a consolidated basis. This adjustment reflects our FFO or AFFO on a pro rata basis.
- FFO and AFFO are non-GAAP measures. See the Disclosures RegardingNon-GAAPand Other Metricssection in the Appendix for a description of our non-GAAP measures.
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