Sila Realty Trust, Inc. Q2 FY2025 earnings call

• Acquisitions: Closed the Dover healthcare facility, a 2-property medical outpatient building portfolio in Southlake, Texas; over $70 million of new net lease health care transactions are under exclusive LOI.
• Share Repurchases: Executed over $7 million of share repurchases during the quarter; Board approved a 3-year $75 million share repurchase program, capped at $25 million per year.
• Stoughton Asset: Decision to demolish the building and entitle the land for separate use; demolition expected to be completed by the end of 2025.
• Leasing: Executed 3 renewals totaling ~56,000 square feet at positive rent spreads; working on renewals for 2025 and 2026 lease expirations.
• Mezzanine Loans: Funding for development of a 60,000 sq ft inpatient rehabilitation facility and a 60,000 sq ft behavioral health care facility, with funding expected to be complete by the end of the third quarter.

For the second quarter of 2025, cash NOI was $41.9 million, a 1.7% increase from the first quarter and a 5% increase from the second quarter of 2024. AFFO was $0.54 per diluted share, up 1.7% from the first quarter but down 2.7% from the second quarter of 2024. Over $7.3 million of share repurchases were executed at an average price of approximately $24.09 per share. The portfolio had a 99.2% lease percentage, a 5.31x EBITDARM coverage ratio, and 40% of the tenancy associated with investment-grade rated tenants.

• Anticipates closing of over $70 million of new net lease health care transactions in or around the third quarter of 2025.
• Board-approved 3-year $75 million share repurchase program, with a cap of $25 million per 12-month period.
• Goal to continue growing through accretive acquisitions of physical property and strategic share repurchases when share price is dislocated from private market values.

• Macroeconomic and legislative uncertainty affecting the health care sector.
• Uncertainty regarding the One Big Beautiful Bill Act and its impact on health care delivery.
• Potential challenges with lease expirations and tenant renewals, though current renewals are strong.
• Asbestos abatement and demolition costs for the Stoughton asset could impact financial results.

Q: Nate Crossett on $70 million LOIs, buyback, tenant issues A: Michael Seton states the $70 million+ of properties under exclusive LOI are consistent with current property types, cap rates range from low 6s to mid-7s, shares repurchased at a significant disconnect from private market values, and mentions Landmark Hospitals (tenant with one property in bankruptcy but current on obligations) Q: Michael Lewis on Stoughton demolition, stock repurchases vs acquisitions, lease expirations A: Michael Seton discusses Stoughton demolition timeline and cost, evaluates stock repurchases vs acquisitions based on disconnect between share price and intrinsic value, and notes strong lease renewals with only small expirations expected in 2025 and 2026 Q: Rob Stevenson on Stoughton demolition cost, carry costs, entitlement, financing acquisitions A: Kay Neely discusses Stoughton demolition cost (~$1.9 million) and carry costs, Michael Seton talks about entitlement plans for the land (potential multifamily, senior housing, etc.), and Kay Neely mentions using the revolver to fund acquisitions in the short term with potential longer-term debt options in the future