Sign in
SR

Sila Realty Trust, Inc. (SILA)·Q2 2025 Earnings Summary

Executive Summary

  • Solid operational quarter: revenue and Cash NOI grew year over year, AFFO/share held at $0.54, and leasing metrics improved to 99.2% occupancy as the Stoughton facility was taken out of service .
  • Versus consensus: Revenue essentially in line ($48.73m vs $48.77m estimate)* and FFO/share in line ($0.54 vs $0.54); GAAP EPS missed ($0.15 vs $0.22) due to $3.3m of impairments running through GAAP results .
  • Balance sheet/capital returns: Liquidity of ~$569m and net debt/EBITDAre 3.6x; Board authorized a new $75m three‑year share repurchase program (max $25m per 12 months); management repurchased ~$7.3m in Q2 via opportunistic buys (call disclosure) .
  • Growth pipeline: Closed a $24.1m IRF in Dover during Q2; post‑quarter closed $16.2m for two MOBs in Southlake, TX; >$70m of LOIs expected to close around Q3 at 6.5%-7.5% cap rates, with long lease terms and escalators .
  • Key near‑term narrative: EPS miss is tied to non‑cash impairments; operating cash metrics and underwriting discipline remain intact; buyback authorization and high occupancy are potential stock catalysts .

What Went Well and What Went Wrong

What Went Well

  • Cash NOI growth and high occupancy: Cash NOI rose to $41.9m (+5% YoY) and leased rate increased to 99.2% after removing Stoughton from service; management reported positive leasing spreads on Q2 renewals .
  • Accretive external growth: Acquired an IRF in Dover, DE for $24.1m (JV with Bayhealth/PAM Health) and subsequently closed $16.2m for two MOBs in Southlake, TX; pipeline under exclusive LOI >$70m .
  • Strong tenant health and liquidity: Reported weighted avg EBITDARM coverage of 5.31x among reporting tenants; liquidity of ~$568.8m and net debt/EBITDAre 3.6x support continued investment and dividend maintenance .

Management quotes:

  • “Our resilient portfolio and enviable capital position provides stability to deliver solid earnings growth and reinforces our ability to maintain a healthy dividend” .
  • “The net lease opportunities we see… are largely priced within a 6.5% to 7.5% cap rate range” .

What Went Wrong

  • GAAP EPS miss due to impairments: Net income $8.6m ($0.15 diluted) included $3.26m of impairment losses; this pressured GAAP EPS vs. consensus despite in‑line FFO/share .
  • Margin compression vs prior year: Cash NOI margin dipped to 86.3% vs 91.6% in Q2’24, partially reflecting Stoughton vacancy impacts and non‑same‑store mix; AFFO dollars down slightly YoY .
  • Interest expense higher: CFO cited higher interest expense from acquisition activity and swap changes vs prior year, partly offset by lower G&A QoQ; net debt/EBITDAre ticked up to 3.6x from 3.5x in Q1 .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions, Rental)$43.554 $46.545 $48.256 $48.544
Diluted EPS ($)$0.08 $0.20 $0.13 $0.15
FFO per share - diluted ($)$0.44 $0.51 $0.51 $0.54
Core FFO per share - diluted ($)$0.52 $0.52 $0.53 $0.54
AFFO per share - diluted ($)$0.54 $0.54 $0.53 $0.54
Cash NOI ($USD Millions)$39.878 $40.960 $41.183 $41.889
Cash NOI Margin (%)91.6% 88.0% 85.3% 86.3%

Vs. consensus (Q2 2025):

  • Revenue: $48.732m actual vs $48.772m estimate*
  • Primary EPS: $0.15 actual vs $0.22 estimate*
  • FFO/share (REIT): $0.54 actual vs $0.54 estimate*

Estimates marked with * are Values retrieved from S&P Global.

Consensus vs Actual (Q2 2025)Estimate*Actual
Revenue ($USD Millions; total)48.77248.732
Primary EPS ($)0.220.15
FFO / Share (REIT) ($)0.540.54
Target Price ($)28.90*28.90*

KPI and balance sheet snapshot:

KPIQ2 2024Q1 2025Q2 2025
Weighted Avg Leased Rate97.5% 96.0% 99.2%
Weighted Avg Remaining Lease Term (years)8.2 9.7 9.5
Weighted Avg Rent Escalation2.2% 2.2% 2.2%
Same Store Cash NOI ($mm)39.802 37.831 40.383
Properties (#)137 136 136
Rentable Sq Ft (mm)5.288 5.333 5.194
Liquidity ($mm)—598.458 568.832
Net Debt / EBITDAre (x)3.1x 3.5x 3.6x
Interest Coverage (x)5.9x 4.5x 4.8x

Guidance Changes

Metric/ProgramPeriodPrevious Guidance/ProgramCurrentChange
Formal Financial Guidance (Revenue, EPS/FFO, Margins, OpEx, Tax)FY 2025None providedNone providedMaintained (no formal guidance)
Dividend per ShareQuarterly$0.40 (shifted from monthly to quarterly in 2025) $0.40 (payable Sep 4, 2025) Maintained
Share Repurchase Authorization2024-2025Up to lesser of 1.5m shares or $25m for 12 months (Aug 16, 2024) $75m over 3 years, max $25m per any 12 months (Aug 4, 2025) Raised/extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Capital allocation & buybacksCompleted $50m Dutch auction in 2024; maintained $0.40 dividend and added $600m revolver capacity .$75m 3‑yr buyback authorization; repurchased ~$7.3m in Q2 at ~ $24.9/share; buybacks are “tool in the toolbox,” preference remains toward accretive acquisitions .Increasing flexibility
Acquisition pipeline & cap ratesEight acquisitions in 2024 ($164m); Q1’25: $35.3m Knoxville IRF and entered $600m revolver .Q2: $24.1m Dover IRF; post‑Q2: $16.2m Southlake MOBs; >$70m under LOI; cap rates 6.5%-7.5%; long lease terms and escalators .Robust pipeline at attractive yields
Tenant health & coverageQ4: lease extensions (PAM to 2044), addressing Steward/GenesisCare; high coverage ratios maintained .Reporting tenancy EBITDARM coverage 5.31x; Landmark Hospitals in bankruptcy but paying rent; expect emergence in ~60 days .Improving coverage; contained watchlist
Stoughton facility (Steward)Q3-Q4’24: Lease rejected; marketing for sale; later new lease at El Segundo (separate) .Decision to demolish Stoughton to stop expense leakage; cost ~$1.9m (non‑recurring); carry costs to fall from ~$120k/mo toward $20–25k/mo post‑demo .Proactive resolution
Leverage & fundingNet debt/EBITDAre 3.3x in Q4’24; $500m+ liquidity; new $600m revolver in Feb’25 .Liquidity ~$569m; net debt/EBITDAre 3.6x; fund near‑term buys on revolver, consider private placement debt later; potential equity if accretive .Balanced, prudent stance

Management Commentary

  • Strategic focus and resilience: “Our resilient portfolio and enviable capital position provides stability to deliver solid earnings growth and reinforces our ability to maintain a healthy dividend…” .
  • Capital deployment: “We remain emboldened by our focus on necessity based healthcare solutions… we allocated capital toward … net‑lease healthcare properties and purchasing outstanding shares at a… discount to… intrinsic value” .
  • Accretive growth: “We are currently under exclusive LOI on over $70,000,000 of new net lease healthcare transactions… anticipated [to] close in or around the third quarter” .
  • Stoughton plan: “The course allowing for the highest value… is to demolish the building… expected to be completed around the end of this year” .
  • Pricing environment: “Net lease opportunities… largely priced within a 6.5% to 7.5% cap rate range” .

Q&A Highlights

  • Pipeline specifics: ~$70m under LOI, upper‑end of low‑6% to mid‑7% cap range; long lease duration with escalators .
  • Buybacks vs. acquisitions: Management requires ≥100–150 bps disconnect to NAV to lean into buybacks; still biased to portfolio‑enhancing acquisitions .
  • Watchlist/tenant issues: Landmark Hospitals in bankruptcy but current on rent; expect emergence with recap sponsor in ~60 days; otherwise no material issues .
  • Stoughton costs and savings: Demo/abatement ~$1.9m (non‑recurring; adjusted out of Core FFO/AFFO); carry costs expected to drop from ~ $120k/month to ~$20–25k/month once demo complete .
  • Financing strategy: Near‑term funding via revolver; potential private placement for longer‑term debt later; equity issuance possible if aligned with deleveraging and valuation .

Estimates Context

  • Q2’25 actuals vs S&P Global consensus: Revenue essentially in line ($48.73m actual vs $48.77m); Primary EPS missed ($0.15 vs $0.22) primarily due to $3.26m impairments flowing through GAAP . FFO/share matched ($0.54 vs $0.54)*, underscoring stable cash generation despite GAAP noise .
  • Forward quarters: Q3’25 revenue estimate ~$49.73m* and Primary EPS ~$0.19*; FFO/share ~$0.527*; limited analyst coverage (1–2 estimates) suggests potential for estimate volatility*.

Estimates marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Operating engine intact: In‑line FFO/share and rising Cash NOI with 99%+ occupancy show durable cash flows despite GAAP EPS volatility from non‑cash impairments .
  • Capital returns optionality: New $75m buyback authorization and a healthy dividend (74% AFFO payout) offer multiple capital return levers alongside external growth .
  • External growth at attractive yields: > $70m LOIs at 6.5%–7.5% caps with long terms/escalators should support incremental NOI and FFO as deals close around Q3 .
  • Risk management: Stoughton demolition should reduce expense leakage; tenant coverage at 5.31x and watchlist issues appear contained (Landmark paying) .
  • Balance sheet strength: ~$569m liquidity, 3.6x net debt/EBITDAre, and ample revolver capacity support accretive growth and the dividend through macro uncertainty .
  • Trading setup: EPS miss tied to non‑cash items; with FFO in line, buyback program, and occupancy uplift, narrative skew is constructive near term as pipeline closes and demo savings materialize .

Citations:

  • Q2’25 8‑K and Supplemental:
  • Q2’25 Earnings Call:
  • Q1’25 8‑K and Supplemental:
  • Q4’24 8‑K and Supplemental:
  • Q3’24 8‑K and Supplemental:

Estimates:

  • S&P Global consensus (via tool): Revenue, EPS, FFO/share, target price and # of estimates marked with *. Values retrieved from S&P Global.