The question from analysts surrounding the Q1 results of Select Income REIT was whether or not tenant issues were a concern. But according to analyst RBC Capital Markets, it “appears workable.”
The company announced in March that a tenant that leases two properties accounting for 2.9% of annualized base rents filed for bankruptcy, and subsequently, rejected these leases, explains RBC Capital Markets in a recent research report. “We think the overall financial impact will likely be minimal in the near-term and could be largely immaterial in the long-term,” said the firm’s analyst, Michael Carroll.
RBC estimates that Select Income will lose about $4 million of annual rent.
In response to the firm’s Q1 numbers, David Blackman, president and COO of SIR, said that Select Income REIT’s solid leasing momentum continued in the first quarter of 2017. “We executed 484,000
square feet of new and renewal leases for weighted average rents that were over 20% higher than previous rents for the same space, for 10 years of weighted average lease term, and with leasing concessions and capital commitments of $0.23 per square foot per lease year.”
He adds that “We also acquired land to expand a building for an existing tenant and entered agreements to acquire two additional properties.”