June Update on Carter Validus Mission Critical REIT II, Inc.’s Response to COVID-19
June 9, 2020
TAMPA, FL – The following is a letter provided by the CEO of Carter Validus Critical REIT II, Inc.
Dear Valued Stockholder,
Over the past few months, unprecedented circumstances related to the novel coronavirus have resulted in significant economic volatility. I am providing you with an update on our company’s performance and financial position as we deal with the ramifications of an evolving economic landscape. As of March 31, 2020, our total real estate investment was approximately $3.2 billion1, comprised of 153 properties totaling roughly 8.7 million square feet with a weighted average occupancy of approximately 94.7%. In the subsequent months, we have maintained a strong balance sheet and portfolio performance.
Since the onset of the pandemic, we have received tenant requests for rent deferment and abatement. All accommodations that we provided have been limited relative to the company’s annual revenue. In the vast majority of cases in which we allowed tenants to defer rent, repayment of such deferred amounts is due within six to twelve months. For a limited number of requests, we provided an abatement of rent in conjunction with a multi-year lease extension, in which cases we anticipate such extensions adding value to the corresponding property and overall company portfolio. For the months of April and May, to date we have collected approximately 97% and 94% of contractual rent, respectively, however, when deferred rents and other tenant accommodations made in light of the novel coronavirus are excluded, our collections to date are 99% in April and 98% in May. The aggregate amount of deferment and abatement granted to our tenants is equal to approximately 1.75% of our total annual contractual revenue in 2020, which we do not anticipate being material to our near-term liquidity or ability to cover our current monthly distributions.
In May, we further strengthened our liquidity position through the sale of a healthcare property for approximately $35 million, receiving $7 million at close and originating a $28 million two-year loan to the purchaser on favorable terms. Our current liquidity position, comprised of cash and available credit facility proceeds after the sale, is approximately $270 million.
Although the economic landscape remains uncertain, we have observed an improvement in the quality of our tenant’s financial profiles as the country gradually reopens. Based upon significant government stimulus and healthcare regulatory changes, we believe that the healthcare and data center/technology subsectors in which we focus will disproportionately benefit from improving economic activity.
Thank you for your continued investment in our company.
Wishing you safety and good health.
Sincerely,
Michael Seton
Chief Executive Officer and President
Carter Validus Mission Critical REIT II, Inc.
