Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 25, 2019 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-32470 | |
Entity Registrant Name | FRANKLIN STREET PROPERTIES CORP /MA/ | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 04-3578653 | |
Entity Address, Address Line One | 401 Edgewater Place, Suite 200 | |
Entity Address, City or Town | Wakefield | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01880 | |
City Area Code | 781 | |
Local Phone Number | 557-1300 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | FSP | |
Security Exchange Name | NYSEAMER | |
Entity Common Stock, Shares Outstanding | 107,231,155 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001031316 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Real estate assets: | ||
Land | $ 191,578 | $ 191,578 |
Buildings and improvements | 1,886,294 | 1,857,935 |
Fixtures and equipment | 10,607 | 8,839 |
Total real estate assets, gross | 2,088,479 | 2,058,352 |
Less accumulated depreciation | 460,798 | 432,579 |
Real estate assets, net | 1,627,681 | 1,625,773 |
Acquired real estate leases, less accumulated amortization of $70,108 and $101,897, respectively | 49,475 | 59,595 |
Cash, cash equivalents and restricted cash | 13,100 | 11,177 |
Tenant rent receivables | 6,366 | 3,938 |
Straight-line rent receivable | 61,438 | 54,006 |
Prepaid expenses and other assets | 8,052 | 10,400 |
Related party mortgage loan receivables | 21,530 | 70,660 |
Other assets: derivative asset | 4,645 | 14,765 |
Office computers and furniture, net of accumulated depreciation of $1,428 and $1,512, respectively | 154 | 197 |
Deferred leasing commissions, net of accumulated amortization of $26,930 and $24,318, respectively | 50,901 | 47,591 |
Total assets | 1,843,342 | 1,898,102 |
Liabilities: | ||
Bank note payable | 25,000 | |
Term loans payable, less unamortized financing costs of $4,995 and $5,722, respectively | 765,005 | 764,278 |
Series A & Series B Senior Notes, less unamortized financing costs of $1,067 and $1,150, respectively | 198,933 | 198,850 |
Accounts payable and accrued expenses | 54,282 | 59,183 |
Accrued compensation | 2,191 | 3,043 |
Tenant security deposits | 9,118 | 6,319 |
Lease liability | 2,059 | |
Other liabilities: derivative liabilities | 8,132 | |
Acquired unfavorable real estate leases, less accumulated amortization of $5,034 and $6,605, respectively | 3,114 | 3,795 |
Total liabilities | 1,042,834 | 1,060,468 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $.0001 par value, 20,000,000 shares authorized, none issued or outstanding | ||
Common stock, $.0001 par value, 180,000,000 shares authorized, 107,231,155 and 107,231,155 shares issued and outstanding, respectively | 11 | 11 |
Additional paid-in capital | 1,356,457 | 1,356,457 |
Accumulated other comprehensive income (loss) | (3,487) | 14,765 |
Accumulated distributions in excess of accumulated earnings | (552,473) | (533,599) |
Total stockholders' equity | 800,508 | 837,634 |
Total liabilities and stockholders' equity | $ 1,843,342 | $ 1,898,102 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Acquired real estate leases, accumulated amortization | $ 70,108 | $ 101,897 |
Office computers and furniture, accumulated depreciation | 1,428 | 1,512 |
Deferred leasing commissions, accumulated amortization | 26,930 | 24,318 |
Term loan payable, unamortized financing costs | 4,995 | 5,722 |
Series A & Series B Senior notes, unamortized financing costs | 1,067 | 1,150 |
Acquired unfavorable real estate leases, accumulated amortization | $ 5,034 | $ 6,605 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 180,000,000 | 180,000,000 |
Common stock, shares issued (in shares) | 107,231,155 | 107,231,155 |
Common stock, shares outstanding (in shares) | 107,231,155 | 107,231,155 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues: | ||||
Revenue | $ 118,000 | $ 271,000 | ||
Total revenues | $ 66,813,000 | $ 66,694,000 | 131,529,000 | 133,587,000 |
Expenses: | ||||
Real estate operating expenses | 17,116,000 | 16,954,000 | 34,842,000 | 34,105,000 |
Real estate taxes and insurance | 12,801,000 | 12,292,000 | 24,903,000 | 23,469,000 |
Depreciation and amortization | 22,109,000 | 23,591,000 | 45,354,000 | 47,626,000 |
General and administrative | 3,702,000 | 3,082,000 | 7,211,000 | 6,514,000 |
Interest | 9,371,000 | 9,753,000 | 18,739,000 | 19,239,000 |
Total expenses | 65,099,000 | 65,672,000 | 131,049,000 | 130,953,000 |
Income (loss) before taxes on income and equity in income (loss) of non-consolidated REITs | 1,714,000 | 1,022,000 | 480,000 | 2,634,000 |
Tax expense (benefit) on income (loss) | 81,000 | 75,000 | 52,000 | 157,000 |
Equity in loss of non-consolidated REITs | (282,000) | (387,000) | ||
Net income (loss) | $ 1,633,000 | $ 665,000 | $ 428,000 | $ 2,090,000 |
Weighted average number of shares outstanding, basic and diluted (in shares) | 107,231 | 107,231 | 107,231 | 107,231 |
Net income (loss) per share, basic and diluted | $ 0.02 | $ 0.01 | $ 0 | $ 0.02 |
Rental | ||||
Revenues: | ||||
Rental | $ 65,485,000 | $ 65,409,000 | $ 128,844,000 | $ 131,037,000 |
Related party revenue: Management fees and interest income from loans | ||||
Revenues: | ||||
Revenue | 1,322,000 | 1,276,000 | 2,674,000 | 2,532,000 |
Related party revenue: Other | ||||
Revenues: | ||||
Revenue | $ 6,000 | $ 9,000 | $ 11,000 | $ 18,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net income (loss) | $ 1,633 | $ 665 | $ 428 | $ 2,090 |
Comprehensive income: | ||||
Unrealized gain (loss) on derivative financial instruments | (11,461) | 2,455 | (18,252) | 9,030 |
Total comprehensive income (loss) | (11,461) | 2,455 | (18,252) | 9,030 |
Comprehensive income (loss) | $ (9,828) | $ 3,120 | $ (17,824) | $ 11,120 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive income (loss) | Distributions in excess of accumulated earnings | Total |
Balance at Dec. 31, 2017 | $ 11 | $ 1,356,457 | $ 12,166 | $ (497,342) | $ 871,292 |
Balance (in shares) at Dec. 31, 2017 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | 6,575 | 1,425 | 8,000 | ||
Shares issued for: | |||||
Distributions $0.19 and $0.09 per share of common stock | (20,374) | (20,374) | |||
Balance at Mar. 31, 2018 | $ 11 | 1,356,457 | 18,741 | (516,291) | 858,918 |
Balance (in shares) at Mar. 31, 2018 | 107,231 | ||||
Balance at Dec. 31, 2017 | $ 11 | 1,356,457 | 12,166 | (497,342) | 871,292 |
Balance (in shares) at Dec. 31, 2017 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | 11,120 | ||||
Balance at Jun. 30, 2018 | $ 11 | 1,356,457 | 21,196 | (525,277) | 852,387 |
Balance (in shares) at Jun. 30, 2018 | 107,231 | ||||
Balance at Mar. 31, 2018 | $ 11 | 1,356,457 | 18,741 | (516,291) | 858,918 |
Balance (in shares) at Mar. 31, 2018 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | 2,455 | 665 | 3,120 | ||
Shares issued for: | |||||
Distributions $0.19 and $0.09 per share of common stock | (9,651) | (9,651) | |||
Balance at Jun. 30, 2018 | $ 11 | 1,356,457 | 21,196 | (525,277) | 852,387 |
Balance (in shares) at Jun. 30, 2018 | 107,231 | ||||
Balance at Dec. 31, 2018 | $ 11 | 1,356,457 | 14,765 | (533,599) | 837,634 |
Balance (in shares) at Dec. 31, 2018 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | (6,791) | (1,205) | (7,996) | ||
Shares issued for: | |||||
Distributions $0.19 and $0.09 per share of common stock | (9,651) | (9,651) | |||
Balance at Mar. 31, 2019 | $ 11 | 1,356,457 | 7,974 | (544,455) | 819,987 |
Balance (in shares) at Mar. 31, 2019 | 107,231 | ||||
Balance at Dec. 31, 2018 | $ 11 | 1,356,457 | 14,765 | (533,599) | 837,634 |
Balance (in shares) at Dec. 31, 2018 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | (17,824) | ||||
Balance at Jun. 30, 2019 | $ 11 | 1,356,457 | (3,487) | (552,473) | 800,508 |
Balance (in shares) at Jun. 30, 2019 | 107,231 | ||||
Balance at Mar. 31, 2019 | $ 11 | 1,356,457 | 7,974 | (544,455) | 819,987 |
Balance (in shares) at Mar. 31, 2019 | 107,231 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income | (11,461) | 1,633 | (9,828) | ||
Shares issued for: | |||||
Distributions $0.19 and $0.09 per share of common stock | (9,651) | (9,651) | |||
Balance at Jun. 30, 2019 | $ 11 | $ 1,356,457 | $ (3,487) | $ (552,473) | $ 800,508 |
Balance (in shares) at Jun. 30, 2019 | 107,231 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | |
Consolidated Statements of Stockholders' Equity | ||||
Distributions common stock (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.19 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 428,000 | $ 2,090,000 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization expense | 46,791,000 | 49,050,000 |
Amortization of above and below market leases | (193,000) | (208,000) |
Equity in (income) loss of non-consolidated REITs | 387,000 | |
Decrease in allowance for doubtful accounts and write-off of accounts receivable | (91,000) | (80,000) |
Changes in operating assets and liabilities: | ||
Tenant rent receivables | (2,337,000) | (836,000) |
Straight-line rents | (4,829,000) | 299,000 |
Lease acquisition costs | (2,603,000) | (398,000) |
Prepaid expenses and other assets | 2,392,000 | 325,000 |
Accounts payable and accrued expenses | (8,741,000) | (8,609,000) |
Accrued compensation | (852,000) | (1,863,000) |
Tenant security deposits | 2,799,000 | 193,000 |
Payment of deferred leasing commissions | (8,114,000) | (6,641,000) |
Net cash provided by operating activities | 24,650,000 | 33,709,000 |
Cash flows from investing activities: | ||
Property improvements, fixtures and equipment | (28,944,000) | (24,281,000) |
Distributions in excess of earnings from non-consolidated REITs | 710,000 | |
Investment in related party mortgage loan receivable | (2,400,000) | |
Repayment of related party mortgage loan receivable | 51,530,000 | 530,000 |
Proceeds received from liquidating trust | 1,470,000 | |
Net cash provided by (used in) investing activities | 21,656,000 | (23,041,000) |
Cash flows from financing activities: | ||
Distributions to stockholders | (19,302,000) | (30,025,000) |
Borrowings under bank note payable | 45,000,000 | 30,000,000 |
Repayments of bank note payable | (70,000,000) | (10,000,000) |
Deferred financing costs | (81,000) | (14,000) |
Net cash provided by (used in) financing activities | (44,383,000) | (10,039,000) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,923,000 | 629,000 |
Cash, cash equivalents and restricted cash, beginning of year | 11,177,000 | 9,819,000 |
Cash, cash equivalents and restricted cash, end of period | 13,100,000 | 10,448,000 |
Cash paid for: | ||
Interest | 17,383,000 | 18,001,000 |
Taxes | 377,000 | 485,000 |
Non-cash investing activities: | ||
Accrued costs for purchases of real estate assets | $ 11,201,000 | $ 5,360,000 |
Organization, Properties, Basis
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | 1. Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards Organization Franklin Street Properties Corp. (“FSP Corp.” or the “Company”) holds, directly and indirectly, 100 % of the interest in FSP Investments LLC, FSP Property Management LLC, FSP Holdings LLC and FSP Protective TRS Corp. FSP Property Management LLC provides asset management and property management services. The Company also has a non-controlling common stock interest in two corporations organized to operate as real estate investment trusts (“REIT”). Collectively, the two REITs are referred to as the “Sponsored REITs”. As of June 30, 2019, the Company owned and operated a portfolio of real estate consisting of 32 operating properties, three redevelopment properties and two managed Sponsored REITs and held two promissory notes secured by mortgages on real estate owned by Sponsored REITs, including one mortgage loan and one revolving line of credit. From time-to-time, the Company may acquire real estate or make additional secured loans. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons. Properties The following table summarizes the Company’s number of operating properties and rentable square feet of real estate. As of June 30, 2019 and June 30, 2018, the Company had three redevelopment properties and one redevelopment property, respectively, which are excluded from the table. As of June 30, 2019 2018 Operating Properties: Number of properties 32 34 Rentable square feet 9,498,858 9,760,699 Basis of Presentation The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission. The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other period. Financial Instruments As disclosed in Note 4, the Company’s derivatives are recorded at fair value using Level 2 inputs. The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, and tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates or at rates that are at market for similar investments. Cash, Cash Equ ivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. June 30, June 30, (in thousands) 2019 2018 Cash and cash equivalents $ 13,100 $ 10,448 Restricted cash — — Total cash, cash equivalents and restricted cash $ 13,100 $ 10,448 Recent Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (“ASU 2016-02”); in July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”); and in December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. ASU 2016-02 requires lessees to establish a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term on their balance sheets. Lessees will continue to recognize lease expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This new standard is effective for annual periods beginning after December 15, 2018, and interim periods thereafter with early adoption permitted. The Company adopted these standards on January 1, 2019 and applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Additionally, the Company’s leases met the criteria in ASU 2018-11 to not separate non-lease components from the related lease component, therefore the accounting for these leases remained largely unchanged from the previous standard. The Company applied the optional transition method in ASU 2018-11, which allows entities to initially apply the new lease standard at the adoption date. The Company recorded a right-to-use asset of $2.1 million and a lease liability of $2.2 million upon adoption of this standard. The presentation and disclosure that is required to be presented under the new lease standard is provided in Note 8. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company’s receivables associated with its real estate operating leases are not within the scope of this standard. The Company is currently assessing the potential impact that the adoption of ASU 2016-13 may have on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The amendment also eases the application of hedge accounting in certain situations, including eliminating the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and earlier adoption is permitted. The Company adopted this new standard in the first quarter of 2019 using the modified retrospective method, which requires the Company to account for ASU 2017-12 as of the date of adoption with any retrospective adjustments applicable to prior periods included as a cumulative-effect adjustment to accumulate other comprehensive loss and retained earnings. No adjustment was necessary to account for the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption because there was no cumulative ineffectiveness that had been recorded on the Company’s existing interest rate swaps as of December 31, 2018, and all trades were highly effective. The amended presentation and disclosure guidance which is required to be presented prospectively under this new standard is provided in Note 4. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The ASU is intended to improve the effectiveness of fair value measurement disclosures. ASU 2018-13 is effective for all entities for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. This ASU amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures. ASU 2018-13 will be effective for the Company as of January 1, 2020, and earlier adoption is permitted. The Company is currently assessing the potential impact that the adoption of ASU 2018-13 may have on its consolidated financial statements . |
Related Party Transactions and
Related Party Transactions and Investments in Non-Consolidated Entities | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions and Investments in Non-Consolidated Entities | 2. Related Party Transactions and Investments in Non-Consolidated Entities Investment in Sponsored REITs: At June 30, 2019 and December 31, 2018, the Company held a common stock interest in two and three Sponsored REITs, respectively. The Company previously held a non-controlling preferred stock investment in two Sponsored REITs, FSP 303 East Wacker Drive Corp. (“East Wacker”) and FSP Grand Boulevard Corp. (“Grand Boulevard”), which were liquidated during the three months ended September 30, 2018. In December 2007, the Company purchased 965.75 preferred shares or 43.7 % of the outstanding preferred shares of one of its Sponsored REITs, East Wacker. On September 24, 2018, the property owned by East Wacker was sold and, thereafter, East Wacker declared and issued a liquidating distribution for its preferred shareholders, from which the Company was entitled to $70 million. On September 27, 2018, the Company received $69 million in an initial cash distribution, and on April 3, 2019, the Company received a $1 million distribution. As a result of the sale, the Company recognized a gain on liquidation of $7.1 million. In May 2009, the Company purchased 175.5 preferred shares or 27.0 % of the outstanding preferred shares of one of its Sponsored REITs, Grand Boulevard. On July 19, 2018, the property owned by Grand Boulevard was sold and, thereafter, Grand Boulevard declared and issued a liquidating distribution for its preferred shareholders, from which the Company was entitled to $6.2 million. On August 17, 2018, the Company received $5.9 million in an initial cash distribution. As a result of the sale, the Company recognized a loss on liquidation of $0.1 million. As of June 30, 2019, the Company held a beneficial interest in the Grand Boulevard liquidating trust in the amount of $0.1 million, which is included in other assets in the accompanying consolidated balance sheet. Equity in income (loss) of investments in non-consolidated REITs is derived from the Company’s share of income or loss in the operations of those entities and includes gain or loss on liquidation. The Company exercised influence over, but did not control these entities, and investments are accounted for using the equity method. Equity in income (loss) of investments in non-consolidated REITs: The following table includes equity in loss of investments in non-consolidated REITs: Six Months Ended June 30, (in thousands) 2019 2018 Equity in loss of East Wacker $ — $ 26 Equity in loss of Grand Boulevard — 52 Impairment charge — 309 Total $ — $ 387 The Company received distributions of $710,000 from non-consolidated REITs during the six months ended June 30, 2018. Management fees and interest income from loans: Asset management fees range from 1% to 5% of collected rents and the applicable contracts are cancelable with 30 days notice. Asset management fee income from non-consolidated entities amounted to approximately $118,000 and $271,000 for the six months ended June 30, 2019 and 2018, respectively. From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes. The Company reviews Sponsored REIT loans for impairment each reporting period. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts recorded on the balance sheet. The Company applies normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. None of the Sponsored REIT loans have been impaired. The Company anticipates that each Sponsored REIT Loan will be repaid at maturity or earlier from refinancing, long term financings of the underlying properties, cash flows from the underlying properties or some other capital event. Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years . The mortgage loan bears interest at a fixed rate and advances under the secured revolving line of credit bear interest at a rate equal to the 30-day LIBOR rate plus an agreed upon amount of basis points and also require a 50 basis point draw fee. The following is a summary of the Sponsored REIT Loans outstanding as of June 30, 2019: Maximum Amount Interest (dollars in thousands, except footnotes) Maturity Amount Drawn at Interest Draw Rate at Sponsored REIT Location Date of Loan 30-Jun-19 Rate (1) Fee (2) 30-Jun-19 Secured revolving line of credit FSP Satellite Place Corp. Duluth, GA 31-Dec-19 $ 5,500 $ 530 L+ 4.4 % 0.5 % 6.83 % Mortgage loan secured by property FSP Monument Circle LLC (3) Indianapolis, IN 6-Dec-20 21,000 21,000 7.19 % n/a 7.19 % $ 26,500 $ 21,530 (1) The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate. (2) The draw fee is a percentage of each new advance, and is paid at the time of each new draw. (3) This mortgage loan includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower. The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $2,553,000 and $2,262,000 for the six months ended June 30, 2019 and 2018, respectively. Non-consolidated REITs: The balance sheet data below for 2019 and 2018 includes the two Sponsored REITs the Company held an interest in as of June 30, 2019 and three Sponsored REITs the Company held an interest in as of December 31, 2018. The operating data below for 2019 and 2018 include the operations of the three and six Sponsored REITs in which the Company held an interest in during the six months ended June 30, 2019 and 2018, respectively. Summarized financial information for these Sponsored REITs is as follows: June 30, December 31, (in thousands) 2019 2018 Balance Sheet Data (unaudited): Real estate, net $ 44,781 $ 97,034 Other assets 9,850 18,532 Total liabilities (22,775) (75,382) Shareholders’ equity $ 31,856 $ 40,184 For the Six Months Ended June 30, (in thousands) 2019 2018 Operating Data (unaudited): Rental revenues $ 7,152 $ 25,755 Other revenues — 1 Operating and maintenance expenses (3,561) (13,175) Depreciation and amortization (2,664) (8,606) Interest expense (2,538) (4,030) Gain (loss) on sale — 9,393 Net income (loss) $ (1,611) $ 9,338 |
Bank Note Payable, Term Note Pa
Bank Note Payable, Term Note Payable | 6 Months Ended |
Jun. 30, 2019 | |
Bank Note Payable and Term Note Payable | 3. Bank Note Payable and Term Note Payable JPM Term Loan On August 2, 2018, the Company entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and lender (“JPMorgan”), and the other lending institutions party thereto (the “JPM Credit Agreement”), which provides a single unsecured bridge loan in the aggregate principal amount of $150 million (the “JPM Term Loan”) that remains fully advanced and outstanding. The JPM Term Loan matures on November 30, 2021. The JPM Term Loan was previously evidenced by a Credit Agreement, dated November 30, 2016, among the Company, JPMorgan, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated October 18, 2017. The JPM Term Loan bears interest at either (i) a number of basis points over a LIBOR-based rate depending on the Company’s credit rating (125.0 basis points over the LIBOR-based rate at June 30, 2019) or (ii) a number of basis points over the base rate depending on the Company’s credit rating (25.0 basis points over the base rate at June 30, 2019). Although the interest rate on the JPM Term Loan is variable under the JPM Credit Agreement, the Company fixed the LIBOR-based rate on a portion of the JPM Term Loan by entering into interest rate swap transactions. On March 7, 2019, the Company entered into ISDA Master Agreements with various financial institutions to hedge a $100 million portion of the future LIBOR-based rate risk under the JPM Credit Agreement. Effective March 29, 2019, the Company fixed the LIBOR-based rate at 2.44% per annum on a $100 million portion of the JPM Term Loan until November 30, 2021. Accordingly, based upon the Company’s credit rating, as of June 30, 2019, the effective interest rate on a $100 million portion of the JPM Term Loan was 3.69% per annum. Based upon the Company’s credit rating, as of June 30, 2019, the effective interest rate on the unhedged $50 million portion of the JPM Term Loan was 3.69 % per annum. The weighted average interest rate on the unhedged $50 million portion of the JPM Term Loan during the six months ended June 30, 2019 was approximately 3.77 % per annum. The weighted average interest rate on the JPM Term Loan during the year ended December 31, 2018 was approximately 3.33 % per annum. The JPM Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates. The JPM Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a minimum fixed charge coverage ratio, a maximum secured leverage ratio, a maximum leverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The JPM Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control of the Company (as defined in the JPM Credit Agreement). In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the JPM Credit Agreement immediately due and payable, and enforce any and all rights of the lenders or administrative agent under the JPM Credit Agreement and related documents. For certain events of default related to bankruptcy, insolvency, and receivership, all outstanding obligations of the Company will become immediately due and payable. The Company was in compliance with the JPM Term Loan financial covenants as of June 30, 2019. BMO Term Loan On September 27, 2018, the Company entered into a Second Amended and Restated Credit Agreement with the lending institutions party thereto and Bank of Montreal (“BMO”), as administrative agent (the “BMO Credit Agreement”). The BMO Credit Agreement provides for a single, unsecured term loan borrowing in the amount of $220 million (the “BMO Term Loan”) that remains fully advanced and outstanding. The BMO Term Loan consists of a $55 million tranche A term loan and a $165 million tranche B term loan. The tranche A term loan matures on November 30, 2021 and the tranche B term loan matures on January 31, 2024. The BMO Credit Agreement also includes an accordion feature that allows up to $100 million of additional loans, subject to receipt of lender commitments and satisfaction of certain customary conditions. The BMO Term Loan was previously evidenced by an Amended and Restated Credit Agreement, dated October 29, 2014, among the Company, BMO, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated July 21, 2016, and a Second Amendment, dated October 18, 2017. The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating (125 basis points over LIBOR at June 30, 2019) or (ii) a number of basis points over the base rate depending on the Company’s credit rating (25 basis points over the base rate at June 30, 2019). Although the interest rate on the BMO Term Loan is variable under the BMO Credit Agreement, the Company fixed the base LIBOR interest rate by entering into interest rate swap transactions. On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32 % per annum until August 26, 2020. On February 20, 2019, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BMO Term Loan at 2.39 % per annum for the period beginning on August 26, 2020 and ending January 31, 2024. Accordingly, based upon the Company’s credit rating, as of June 30, 2019, the effective interest rate on the BMO Term Loan was 3.57% per annum. The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates. The BMO Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The BMO Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control of the Company (as defined in the BMO Credit Agreement). In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the BMO Credit Agreement immediately due and payable, terminate the lenders’ commitments to make loans under the BMO Credit Agreement, and enforce any and all rights of the lenders or the administrative agent under the BMO Credit Agreement and related documents. For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable. The Company was in compliance with the BMO Term Loan financial covenants as of June 30, 2019. The Company may use the proceeds of the loans under the BMO Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BMO Credit Agreement. BAML Credit Facility On July 21, 2016, the Company entered into a First Amendment (the “BAML First Amendment”), and on October 18, 2017, the Company entered into a Second Amendment (the “BAML Second Amendment”), to the Second Amended and Restated Credit Agreement dated October 29, 2014 among the Company, the lending institutions party thereto and Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line Lender (as amended by the BAML First Amendment and the BAML Second Amendment, the “BAML Credit Facility”) that continued an existing unsecured revolving line of credit (the “BAML Revolver”) and an existing term loan (the “BAML Term Loan”). BAML Revolver Highlights ● The BAML Revolver is for borrowings, at the Company's election, of up to $600 million. Borrowings made pursuant to the BAML Revolver may be revolving loans, swing line loans or letters of credit, the combined sum of which may not exceed $600 million outstanding at any time. ● Borrowings made pursuant to the BAML Revolver may be borrowed, repaid and reborrowed from time to time until the maturity date of January 12, 2022. The Company has the right to extend the maturity date of the BAML Revolver by two additional 6 month periods, or until January 12, 2023, upon payment of a fee and satisfaction of certain customary conditions. ● The BAML Credit Facility includes an accordion feature that allows for an aggregate amount of up to $500 million of additional borrowing capacity applicable to the BAML Revolver and/or the BAML Term Loan, subject to receipt of lender commitments and satisfaction of certain customary conditions. As of June 30, 2019, there were no borrowings outstanding under the BAML Revolver. The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.20% over LIBOR at June 30, 2019) or (ii) a margin over the base rate depending on the Company’s credit rating (0.20% over the base rate at June 30, 2019). The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating. The facility fee is assessed against the total amount of the BAML Revolver, or $600 million (0.25% at June 30, 2019). Based upon the Company’s credit rating, as of June 30, 2019, the interest rate on the BAML Revolver was 3.60 % per annum. The weighted average interest rate on all amounts outstanding on the BAML Revolver during the six months ended June 30, 2019 was approximately 3.68 % per annum. As of December 31, 2018, there were borrowings of $25 million outstanding under the BAML Revolver at an interest rate of 3.63% BAML Term Loan Highlights ● The BAML Term Loan is for $400 million. ● The BAML Term Loan matures on January 12, 2023. ● The BAML Credit Facility includes an accordion feature that allows for an aggregate amount of up to $500 million of additional borrowing capacity to the BAML Revolver and/or the BAML Term Loan, subject to receipt of lender commitments and satisfaction of certain customary conditions. ● On September 27, 2012, the Company drew down the entire $400 million under the BAML Term Loan and such amount remains fully advanced and outstanding under the BAML Term Loan. The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.35% over LIBOR at June 30, 2019) or (ii) a margin over the base rate depending on the Company’s credit rating (0.35% over the base rate at June 30, 2019). Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into an interest rate swap agreement. On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BAML Term Loan at per annum for the period beginning on September 27, 2017 and ending on September 27, 2021. Accordingly, based upon the Company’s credit rating, as of June 30, 2019, the effective interest rate on the BAML Term Loan was BAML Credit Facility General Information The BAML Credit Facility contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates. The BAML Credit Facility also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The BAML Credit Facility provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control of the Company (as defined in the BAML Credit Facility). In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the BAML Credit Facility immediately due and payable, terminate the lenders’ commitments to make loans under the BAML Credit Facility, and enforce any and all rights of the lenders or administrative agent under the BAML Credit Facility and related documents. For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable. The Company was in compliance with the BAML Credit Facility financial covenants as of June 30, 2019. The Company may use the proceeds of the loans under the BAML Credit Facility to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BAML Credit Facility. Senior Notes On October 24, 2017, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with the various purchasers named therein (the “Purchasers”) in connection with a private placement of senior unsecured notes. Under the Note Purchase Agreement, the Company agreed to sell to the Purchasers an aggregate principal amount of $200 million of senior unsecured notes consisting of (i) 3.99% Series A Senior Notes due December 20, 2024 in an aggregate principal amount of $116 million (the “Series A Notes”) and (ii) 4.26% Series B Senior Notes due December 20, 2027 in an aggregate principal amount of $84 million (the “Series B Notes”) and, together with the Series A Notes, the (“Senior Notes”). On December 20, 2017, the Senior Notes were funded and proceeds were used to reduce the outstanding balance of the BAML Revolver. The Note Purchase Agreement contains customary financial covenants, including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, and a maximum unencumbered leverage ratio. The Note Purchase Agreement also contains restrictive covenants that, among other things, restrict the ability of the Company and its subsidiaries to enter into transactions with affiliates, merge, consolidate, create liens, make certain restricted payments, enter into certain agreements or prepay certain indebtedness. Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in the BAML Credit Facility, the BMO Credit Agreement and the JPM Credit Agreement. The Senior Notes financial covenants require, among other things, the maintenance of a fixed charge coverage ratio of at least 1.50; a maximum leverage ratio and an unsecured leverage ratio of no more than 60% (65 % if there were a significant acquisition for a short period of time). In addition, the Note Purchase Agreement provides that the Note Purchase Agreement will automatically incorporate additional financial and other specified covenants (such as limitations on investments and distributions) that are effective from time to time under the existing credit agreements, other material indebtedness or certain other private placements of debt of the Company and its subsidiaries. The Note Purchase Agreement contains customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, the Purchasers may, among other remedies, accelerate the payment of all obligations. |
Financial Instruments_ Derivati
Financial Instruments: Derivatives and Hedging | 6 Months Ended |
Jun. 30, 2019 | |
Financial Instruments: Derivatives and Hedging | 4. Financial Instruments: Derivatives and Hedging On July 22, 2016, the Company fixed the interest rate for the period beginning on September 27, 2017 and ending on September 27, 2021 on the BAML Term Loan (the “2017 Interest Rate Swap”). On August 26, 2013, the Company fixed the interest rate until August 26, 2020 on the BMO Term Loan (the “2013 BMO Interest Rate Swap”). On March 7, 2019, the Company fixed the interest rate for the period beginning on March 29, 2019 and ending on November 30, 2021 on a $100 million portion of the JPM Term Loan (the “2019 JPM Interest Rate Swap”). On February 20, 2019, the Company fixed the interest rate for the period beginning August 26, 2020 and ending January 31, 2024 on the BMO Term Loan (the “2019 BMO Interest Rate Swap”). The variable rates that were fixed under the 2017 Interest Rate Swap, the 2013 BMO Interest Rate Swap, the 2019 JPM Interest Rate Swap and the 2019 BMO Interest Rate Swap (collectively referred to as the “Interest Rate Swaps”) are described in Note 3. The Interest Rate Swaps qualify as cash flow hedges and have been recognized on the consolidated balance sheets at fair value. If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. The following table summarizes the notional and fair value of our derivative financial instruments at June 30, 2019. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks. Notional Strike Effective Expiration Fair (in thousands) Value Rate Date Date Value 2017 Interest Rate Swap $ 400,000 1.12 % Sep-17 Sep-21 $ 4,645 2013 BMO Interest Rate Swap $ 220,000 2.32 % Aug-13 Aug-20 $ (1,292) 2019 JPM Interest Rate Swap $ 100,000 2.44 % Mar-19 Nov-21 $ (1,837) 2019 BMO Interest Rate Swap (1) $ 220,000 2.39 % Aug-20 Jan-24 $ (5,003) (1) The Notional Value will decrease to $165 million on November 30, 2021. On June 30, 2019, the 2017 Interest Rate Swap was reported as an asset at its fair value of approximately $4.6 million, which is included in other assets: derivative asset on the consolidated balance sheet at June 30, 2019. The 2013 BMO Interest Rate Swap, 2019 JPM Interest Rate Swap and 2019 BMO Interest Rate Swap were reported as a liabilities in the aggregate fair value of approximately $8.1 million and are included in other liabilities: derivative liabilities in the consolidated balance sheet at June 30, 2019. Offsetting adjustments are reported as unrealized gains or losses on derivative financial instruments in accumulated other comprehensive income or loss of $18.3 million. During the six months ended June 30, 2019, $2.9 million was reclassified out of other comprehensive income (“OCI”) and into interest expense. The gain/(loss) on the Company’s Interest Rate Swaps that was recorded in OCI and the accompanying consolidated statements of income as a component of interest expense for the six months ended June 30, 2019 and 2018, respectively, was as follows: (in thousands) Six Months Ended June 30, Interest Rate Swaps in Cash Flow Hedging Relatioships: 2019 2018 Amounts of gain (loss) recognized in OCI $ (15,322) $ 9,708 Amounts of previously recorded gain/(loss) reclassified from OCI into Interest Expense $ (2,930) $ (678) Total amount of Interest Expense presented in the consolidated statements of income $ 18,739 $ 19,239 Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. The Company estimates that approximately $0.9 million of the current balance held in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. The Company is hedging the exposure to variability in anticipated future interest payments on existing debt. The BMO Term Loan, BAML Term Loan and JPM Term Loan hedging transactions used derivative instruments that involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in either or both of the contracts. We require our derivatives contracts to be with counterparties that have investment grade ratings. As a result, we do not anticipate that any counterparty will fail to meet its obligations. However, there can be no assurance that we will be able to adequately protect against the foregoing risks or that we will ultimately realize an economic benefit that exceeds the related amounts incurred in connection with engaging in such hedging strategies. The fair value of the Company’s derivative instruments are determined using the net discounted cash flows of the expected cash flows of the derivative based on the market based interest rate curve and are adjusted to reflect credit or nonperformance risk. The risk is estimated by the Company using credit spreads and risk premiums that are observable in the market. These financial instruments were classified within Level 2 of the fair value hierarchy and were classified as an asset or liability on the consolidated balance sheets. The Company’s derivatives are recorded at fair value in other assets and other liabilities in the consolidated balance sheets. The derivatives’ fair value is recorded to comprehensive income in the consolidated statements of other comprehensive income. |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Net Income Per Share | 5. Net Income Per Share Basic net income per share is computed by dividing net income by the weighted average number of Company shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares. There were no potential dilutive shares outstanding at each of June 30, 2019 and 2018. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity | 6. Stockholders’ Equity As of June 30, 2019, the Company had 107,231,155 shares of common stock outstanding. The Company declared and paid dividends as follows (in thousands, except per share amounts): Dividends Per Total Quarter Paid Share Dividends First quarter of 2019 $ 0.09 $ 9,651 Second quarter of 2019 $ 0.09 $ 9,651 First quarter of 2018 $ 0.19 $ 20,374 Second quarter of 2018 $ 0.09 $ 9,651 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | 7. Income Taxes General The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only. The Company must comply with a variety of restrictions to maintain its status as a REIT. These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually. One such restriction is that the Company generally cannot own more than 10 % of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”). In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed 20% of the value of all of the Company’s assets beginning with calendar year 2018 and 25% for previous years and, when considered together with other non-real estate assets, cannot exceed 25 % of the value of all of the Company’s assets. FSP Investments LLC and FSP Protective TRS Corp. are the Company’s TRSs operating as taxable corporations under the Code. Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities. In estimating future tax consequences, potential future events are considered except for potential changes in income tax law or in rates. The Tax Cuts and Job Act of 2017 did not have a material impact on the Company’s income taxes. Interest and penalties will be recorded as income tax expense, if the Company records a liability in the future. The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from 2015 and thereafter. The Company is subject to a business tax known as the Revised Texas Franchise Tax. Some of the Company’s leases allow reimbursement by tenants for these amounts because the Revised Texas Franchise Tax replaces a portion of the property tax for school districts. Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure, it is considered an income tax. The Company recorded a provision for the Revised Texas Franchise Tax of $164,000 and $134,000 for the six months ended June 30, 2019 and 2018, respectively. Net operating losses Section 382 of the Code restricts a corporation’s ability to use net operating losses (“NOLs”) to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Sponsored REITs available for use by the Company in any particular future taxable year will be limited. To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years. NOLs expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured. The Tax Cuts and Jobs Act of 2017 is not expected to have an impact on the Company’s ability to use NOLs or the valuation allowance. The gross amount of NOLs available to the Company was $13,041,000 as of each of June 30, 2019 and December 31, 2018. Income Tax Expense The income tax expense reflected in the consolidated statements of income relates primarily to a franchise tax on our Texas properties. FSP Protective TRS Corp. provides taxable services to tenants at some of the Company’s properties, and the tax expenses associated with these activities and a refund receivable of $0.1 million recorded during the six months ended June 30, 2019 are reported as Other Taxes in the table below: For the Six Months Ended June 30, (Dollars in thousands) 2019 2018 Revised Texas Franchise Tax $ 164 $ 134 Other Taxes (112) 23 Tax expense (benefit) $ 52 $ 157 Taxes on income are a current tax expense. No deferred income taxes were provided as there were no material temporary differences between the financial reporting basis and the tax basis of the TRSs. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | 8. Leases Leases as a Lessee: The Company entered into a noncancelable contract with a third party to obtain office space that commenced on September 1, 2010. The contract was amended on October 25, 2016 to extend the contract through September 30, 2024. The Company adopted ASU 2016-02 on January 1, 2019 and applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. As of June 30, 2019, the Company’s right-to-use asset was $1,975,000 , which is included in prepaid and other assets on the consolidated balance sheet as of June 30, 2019. The Company has an option to extend the terms of its office space lease with one 5-year extension. As of June 30, 2019, the exercise of the extension option was not reasonably certain. Therefore, the extension option is not recognized as part of the Company’s right-of-use asset and lease liability. A discount rate equal to the Company’s incremental borrowing rate applied to the future monthly contractual lease payments remaining as of June 30, 2019 to compute the lease liability. The incremental borrowing rate is the rate equal to the closest borrowing under the BAML Revolver at the time of the Company’s adoption of ASU 2016-02. The Company has elected to apply the practical expedient to not separate non-lease components from the related lease component of its real estate lease, therefore the accounting for the lease remains largely unchanged from the previous standard. Lease Costs For the Six Months Ended (in thousands) June 30, 2019 Operating lease cost $ 209 $ 209 Other information Cash paid for amounts included in the measurement of lease liabilities $ 205 Weighted average remaining lease terms in years - operating leases 5.25 Weighted average discount rate - operating leases 3.86% Maturity analysis for liabilities Total Undiscounted (in thousands) Cash Flows Discount rate at commencement 3.86% Remainder of 2019 $ 207 2020 421 2021 429 2022 438 2023 447 2024 and thereafter 340 $ 2,282 Present value lease liability $ 2,059 Difference between undiscounted cash flows and discounted cash flows $ 223 Leases as a Lessor: The Company is a lessor of commercial real estate with operations that include the leasing of office and industrial properties. Many of the leases with customers contain options to extend leases at a fair market rate and may also include options to terminate leases. The Company considers several inputs when evaluating the amount it expects to derive from its leased assets at the end of the lease terms, such as the remaining useful life, expected market conditions, fair value of lease payments, expected fair values of underlying assets, and expected deployment of the underlying assets. The Company’s strategy to address its risk for the residual value in its commercial real estate is to re-lease the commercial space. The Company has elected to apply the practical expedient to not separate non-lease components from the related lease component of real estate leases. This combined component is primarily comprised of fixed lease payments, early termination fees, common area maintenance cost reimbursements, and parking lease payments. The Company applies ASC 842-Leases to the combined lease and non-lease components. A minority of the Company’s leases are subject to annual changes in the Consumer Price Index (“CPI”). Although increases in the CPI are not estimated as part of the Company’s measurement of straight-line rent revenue, to the extent that the actual CPI is greater or less than the CPI at lease commencement, there could be changes to realized income or loss. For the six months ended June 30, 2019, the Company recognized the following amounts of income relating to lease payments: Income relating to lease payments: For the Six Months Ended (in thousands) June 30, 2019 Income from leases (1) $ 123,821 $ 123,821 Undiscounted Cash Flows Year ending (in thousands) December 31, Remainder of 2019 $ 85,662 2020 170,226 2021 159,589 2022 133,796 2023 117,753 2024 and thereafter 376,076 $ 1,043,102 (1) Amount from variable lease payments $32,085 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | 9. Subsequent Events On July 5, 2019, the Board of Directors of the Company declared a cash distribution of $0.09 per share of common stock payable on August 8, 2019 to stockholders of record on July 19, 2019. |
Organization, Properties, Bas_2
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission. The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other period. |
Financial Instruments | Financial Instruments As disclosed in Note 4, the Company’s derivatives are recorded at fair value using Level 2 inputs. The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, and tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates or at rates that are at market for similar investments. |
Restricted Cash | Cash, Cash Equ ivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. June 30, June 30, (in thousands) 2019 2018 Cash and cash equivalents $ 13,100 $ 10,448 Restricted cash — — Total cash, cash equivalents and restricted cash $ 13,100 $ 10,448 |
Organization, Properties, Bas_3
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of the entity's investment in real estate assets, including number of properties and rentable square feet of real estate | As of June 30, 2019 2018 Operating Properties: Number of properties 32 34 Rentable square feet 9,498,858 9,760,699 |
Reconciliation of cash, cash equivalents, and restricted cash | June 30, June 30, (in thousands) 2019 2018 Cash and cash equivalents $ 13,100 $ 10,448 Restricted cash — — Total cash, cash equivalents and restricted cash $ 13,100 $ 10,448 |
Related Party Transactions an_2
Related Party Transactions and Investments in Non-Consolidated Entities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of equity in losses of investments in non-consolidated REITs | Six Months Ended June 30, (in thousands) 2019 2018 Equity in loss of East Wacker $ — $ 26 Equity in loss of Grand Boulevard — 52 Impairment charge — 309 Total $ — $ 387 |
Summary of the Sponsored REIT Loans outstanding | Maximum Amount Interest (dollars in thousands, except footnotes) Maturity Amount Drawn at Interest Draw Rate at Sponsored REIT Location Date of Loan 30-Jun-19 Rate (1) Fee (2) 30-Jun-19 Secured revolving line of credit FSP Satellite Place Corp. Duluth, GA 31-Dec-19 $ 5,500 $ 530 L+ 4.4 % 0.5 % 6.83 % Mortgage loan secured by property FSP Monument Circle LLC (3) Indianapolis, IN 6-Dec-20 21,000 21,000 7.19 % n/a 7.19 % $ 26,500 $ 21,530 (1) The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate. (2) The draw fee is a percentage of each new advance, and is paid at the time of each new draw. (3) This mortgage loan includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower. |
Summary of financial information of Sponsored REITs | June 30, December 31, (in thousands) 2019 2018 Balance Sheet Data (unaudited): Real estate, net $ 44,781 $ 97,034 Other assets 9,850 18,532 Total liabilities (22,775) (75,382) Shareholders’ equity $ 31,856 $ 40,184 For the Six Months Ended June 30, (in thousands) 2019 2018 Operating Data (unaudited): Rental revenues $ 7,152 $ 25,755 Other revenues — 1 Operating and maintenance expenses (3,561) (13,175) Depreciation and amortization (2,664) (8,606) Interest expense (2,538) (4,030) Gain (loss) on sale — 9,393 Net income (loss) $ (1,611) $ 9,338 |
Financial Instruments_ Deriva_2
Financial Instruments: Derivatives and Hedging (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of notional and fair value of derivative financial instruments | Notional Strike Effective Expiration Fair (in thousands) Value Rate Date Date Value 2017 Interest Rate Swap $ 400,000 1.12 % Sep-17 Sep-21 $ 4,645 2013 BMO Interest Rate Swap $ 220,000 2.32 % Aug-13 Aug-20 $ (1,292) 2019 JPM Interest Rate Swap $ 100,000 2.44 % Mar-19 Nov-21 $ (1,837) 2019 BMO Interest Rate Swap (1) $ 220,000 2.39 % Aug-20 Jan-24 $ (5,003) (1) The Notional Value will decrease to $165 million on November 30, 2021. |
Summary of Interest Rate Swaps that was recorded in OCI | (in thousands) Six Months Ended June 30, Interest Rate Swaps in Cash Flow Hedging Relatioships: 2019 2018 Amounts of gain (loss) recognized in OCI $ (15,322) $ 9,708 Amounts of previously recorded gain/(loss) reclassified from OCI into Interest Expense $ (2,930) $ (678) Total amount of Interest Expense presented in the consolidated statements of income $ 18,739 $ 19,239 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of dividends declared and paid | Dividends Per Total Quarter Paid Share Dividends First quarter of 2019 $ 0.09 $ 9,651 Second quarter of 2019 $ 0.09 $ 9,651 First quarter of 2018 $ 0.19 $ 20,374 Second quarter of 2018 $ 0.09 $ 9,651 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of income tax expense reflected in the condensed consolidated statements of income | For the Six Months Ended June 30, (Dollars in thousands) 2019 2018 Revised Texas Franchise Tax $ 164 $ 134 Other Taxes (112) 23 Tax expense (benefit) $ 52 $ 157 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Summary of lease costs | Lease Costs For the Six Months Ended (in thousands) June 30, 2019 Operating lease cost $ 209 $ 209 Other information Cash paid for amounts included in the measurement of lease liabilities $ 205 Weighted average remaining lease terms in years - operating leases 5.25 Weighted average discount rate - operating leases 3.86% Maturity analysis for liabilities Total Undiscounted (in thousands) Cash Flows Discount rate at commencement 3.86% Remainder of 2019 $ 207 2020 421 2021 429 2022 438 2023 447 2024 and thereafter 340 $ 2,282 Present value lease liability $ 2,059 Difference between undiscounted cash flows and discounted cash flows $ 223 |
Summary of maturity analysis for liabilities | |
Summary of income relating to lease payments | Income relating to lease payments: For the Six Months Ended (in thousands) June 30, 2019 Income from leases (1) $ 123,821 $ 123,821 Undiscounted Cash Flows Year ending (in thousands) December 31, Remainder of 2019 $ 85,662 2020 170,226 2021 159,589 2022 133,796 2023 117,753 2024 and thereafter 376,076 $ 1,043,102 (1) Amount from variable lease payments $32,085 |
Summary of undiscounted cash flows | |
Organization (Details)
Organization (Details) | 6 Months Ended | ||||
Jun. 30, 2019USD ($)ft²propertyitementity | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($)entity | Jun. 30, 2018USD ($)ft²property | Dec. 31, 2017USD ($) | |
Organization | |||||
Number of REITs in which the entity holds non-controlling common stock interest | entity | 2 | 3 | |||
Number of Sponsored REITs | entity | 2 | ||||
Number of properties in redevelopment | property | 3 | 1 | |||
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs | item | 2 | ||||
Properties | |||||
Number of properties | property | 32 | 34 | |||
Rentable square feet | ft² | 9,498,858 | 9,760,699 | |||
Cash, Cash Equivalents and Restricted Cash | |||||
Cash and cash equivalents | $ 13,100,000 | $ 10,448,000 | |||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Total | 13,100,000 | $ 11,177,000 | $ 10,448,000 | $ 9,819,000 | |
Recent Accounting Standards | |||||
Right to use asset | 1,975,000 | ||||
Lease liability | $ 2,059,000 | ||||
FSP Investments LLC | |||||
Organization | |||||
Ownership interest (as a percent) | 100.00% | ||||
FSP Property Management LLC | |||||
Organization | |||||
Ownership interest (as a percent) | 100.00% | ||||
FSP Holdings LLC | |||||
Organization | |||||
Ownership interest (as a percent) | 100.00% | ||||
FSP Protective TRS Corp. | |||||
Organization | |||||
Ownership interest (as a percent) | 100.00% | ||||
ASU 2016-02 | Adjustment | |||||
Recent Accounting Standards | |||||
Right to use asset | $ 2,100,000 | ||||
Lease liability | $ 2,200,000 | ||||
Mortgage loan secured by property | |||||
Organization | |||||
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs | item | 1 | ||||
Secured revolving lines of credit | |||||
Organization | |||||
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs | item | 1 |
Related Party Transactions an_3
Related Party Transactions and Investments in Non-Consolidated Entities - Investment in Sponsored REITs (Details) - entity | Jun. 30, 2019 | Dec. 31, 2018 |
Number of REITs in which the entity holds non-controlling common stock interest | 2 | 3 |
Number of REITs in which the entity holds non-controlling preferred stock interest | 2 |
Related Party Transactions an_4
Related Party Transactions and Investments in Non-Consolidated Entities - Equity in losses of investment in non-consolidated REITs (Details) - USD ($) | Apr. 03, 2019 | Sep. 27, 2018 | Sep. 24, 2018 | Aug. 17, 2018 | Jul. 19, 2018 | May 31, 2009 | Dec. 31, 2007 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 |
Sponsored REITs | ||||||||||
Equity in loss of non-consolidated REITs | $ (282,000) | $ (387,000) | ||||||||
Impairment charge | (309,000) | |||||||||
Distributions received from non-consolidated REITs | ||||||||||
Equity Method Investment Distribution in Excess of Earnings | 710,000 | |||||||||
East Wacker | ||||||||||
Sponsored REITs | ||||||||||
Equity in loss of non-consolidated REITs | (26,000) | |||||||||
Preferred shares purchased | 965.75 | |||||||||
Percentage of outstanding preferred shares purchased | 43.70% | |||||||||
Liquidating distribution receivable | $ 70,000,000 | |||||||||
Gain (loss) on liquidation | $ 7,100,000 | |||||||||
Amount received | $ 1,000,000 | $ 69,000,000 | ||||||||
Grand Boulevard | ||||||||||
Sponsored REITs | ||||||||||
Equity in loss of non-consolidated REITs | $ (52,000) | |||||||||
Preferred shares purchased | 175.5 | |||||||||
Percentage of outstanding preferred shares purchased | 27.00% | |||||||||
Liquidating distribution receivable | $ 6,200,000 | |||||||||
Gain (loss) on liquidation | $ (100,000) | |||||||||
Amount received | $ 5,900,000 | |||||||||
Beneficial interest | $ 100,000 |
Related Party Transactions an_5
Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Schedule of Equity Method Investments [Line Items] | ||
Asset management fees, low end of range (as a percent) | 1.00% | |
Asset management fees, high end of range (as a percent) | 5.00% | |
Notice period for cancellation of applicable contracts | 30 days | |
Revenue | $ 118,000 | $ 271,000 |
Revenue, Product and Service [Extensible List] | us-gaap:AssetManagement1Member | us-gaap:AssetManagement1Member |
Sponsored REITs | ||
Schedule of Equity Method Investments [Line Items] | ||
Impairment of Sponsored REIT | $ 0 |
Related Party Transactions an_6
Related Party Transactions and Investments in Non-Consolidated Entities - Sponsored REIT Loans outstanding (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Sponsored REITs | |||
Maximum amount of loan | $ 26,500,000 | ||
Amount Drawn | $ 21,530,000 | $ 70,660,000 | |
Sponsored REITs | |||
Sponsored REITs | |||
Term of sponsored REIT loan secured by mortgage, minimum | 1 year | ||
Term of sponsored REIT loan secured by mortgage, maximum | 3 years | ||
Interest income and fees from the Sponsored REIT Loans | $ 2,553,000 | $ 2,262,000 | |
Secured revolving lines of credit | FSP Satellite Place Corp. | |||
Sponsored REITs | |||
Maximum amount of loan | 5,500,000 | ||
Amount Drawn | $ 530,000 | ||
Sponsored REIT loans, base rate | 30-day LIBOR | ||
Sponsored REIT loans, base rate margin (as a percent) | 4.40% | ||
Draw Fee (as a percent) | 0.50% | ||
Interest rate (as a percent) | 6.83% | ||
Mortgage loan secured by property | FSP Monument Circle LLC | |||
Sponsored REITs | |||
Maximum amount of loan | $ 21,000,000 | ||
Amount Drawn | $ 21,000,000 | ||
Fixed rate of interest (as a percent) | 7.19% | ||
Interest rate (as a percent) | 7.19% | ||
Origination fee | $ 164,000 | ||
Exit fee | $ 38,000 |
Related Party Transactions an_7
Related Party Transactions and Investments in Non-Consolidated Entities - Summarized financial information for Sponsored REITs (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019USD ($)entity | Jun. 30, 2018USD ($)entity | Dec. 31, 2018USD ($)entity | |
Sponsored REITs | |||
Number of REITs in which the entity holds non-controlling common stock interest | entity | 2 | 3 | |
Number of REITs in which are included in the operations data | entity | 3 | 6 | |
Number of Sponsored REITs the Company held an interest in at period end | entity | 2 | ||
Balance Sheet Data (unaudited): | |||
Real estate, net | $ 44,781 | $ 97,034 | |
Other assets | 9,850 | 18,532 | |
Total liabilities | (22,775) | (75,382) | |
Shareholders' equity | 31,856 | $ 40,184 | |
Operating Data (unaudited): | |||
Rental revenues | 7,152 | $ 25,755 | |
Other revenues | 1 | ||
Operating and maintenance expenses | (3,561) | (13,175) | |
Depreciation and amortization | (2,664) | (8,606) | |
Interest expense | (2,538) | (4,030) | |
Gain (loss) on sale | 9,393 | ||
Net income (loss) | $ (1,611) | $ 9,338 |
Bank Note Payable and Term Note
Bank Note Payable and Term Note Payable (Details) | Sep. 27, 2012USD ($) | Jun. 30, 2019USD ($)period | Dec. 31, 2018USD ($) | Aug. 02, 2018USD ($) |
Debt Instrument [Line Items] | ||||
Portion of future LIBOR-based rate risk | $ 8,100,000 | |||
Borrowings outstanding | $ 25,000,000 | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 200,000,000 | |||
Fixed charge coverage ratio | 1.50 | |||
Series A Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 116,000,000 | |||
Interest rate (as a percent) | 3.99% | |||
Series B Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 84,000,000 | |||
Interest rate (as a percent) | 4.26% | |||
Maximum | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Unsecured leverage ratio | 60.00% | |||
Unsecured leverage ratio for significant acquisition | 65.00% | |||
BAML Revolver | ||||
Debt Instrument [Line Items] | ||||
Weighted average interest rate (as a percent) | 3.68% | |||
Effective interest rate (as a percent) | 3.60% | 3.63% | ||
Total available | $ 600,000,000 | |||
Number of periods of extension | period | 2 | |||
Length of extension period | 6 months | |||
Additional borrowing capacity allowed by exercising an accordion feature | $ 500,000,000 | |||
Borrowings outstanding | $ 0 | $ 25,000,000 | ||
Facility fee at period end (as a percent) | 0.25% | |||
BAML Revolver | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 1.20% | |||
BAML Revolver | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 0.20% | |||
BAML Term Loan | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 400,000,000 | |||
Effective interest rate (as a percent) | 2.47% | |||
Additional borrowing capacity allowed by exercising an accordion feature | $ 500,000,000 | |||
Amount drawn down | $ 400,000,000 | |||
BAML Term Loan | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 1.35% | |||
Fixed rate (as a percent) | 1.12% | |||
BAML Term Loan | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 0.35% | |||
JPM Term Loan | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 150,000,000 | |||
Portion of future LIBOR-based rate risk | $ 100,000,000 | |||
JPM Term Loan | Hedged portion | ||||
Debt Instrument [Line Items] | ||||
Portion of future LIBOR-based rate risk | $ 100,000,000 | |||
Effective interest rate (as a percent) | 3.69% | |||
JPM Term Loan | Unhedged portion | ||||
Debt Instrument [Line Items] | ||||
Weighted average interest rate (as a percent) | 3.77% | 3.33% | ||
Portion of future LIBOR-based rate risk | $ 50,000,000 | |||
Effective interest rate (as a percent) | 3.69% | |||
JPM Term Loan | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 1.25% | |||
JPM Term Loan | LIBOR | Hedged portion | ||||
Debt Instrument [Line Items] | ||||
Fixed rate (as a percent) | 2.44% | |||
JPM Term Loan | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 0.25% | |||
BMO Term Loan | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 220,000,000 | |||
Additional loans allowed by exercising an accordion feature | $ 100,000,000 | |||
Effective interest rate (as a percent) | 3.57% | |||
BMO Term Loan | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 1.25% | |||
Fixed rate (as a percent) | 2.32% | |||
BMO Term Loan | LIBOR | Hedged portion | ||||
Debt Instrument [Line Items] | ||||
Fixed rate (as a percent) | 2.39% | |||
BMO Term Loan | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate at period end (as a percent) | 0.25% | |||
Tranche A Term Loan | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 55,000,000 | |||
Tranche B Term Loan | ||||
Debt Instrument [Line Items] | ||||
Principal amount of loan | $ 165,000,000 |
Financial Instruments_ Deriva_3
Financial Instruments: Derivatives and Hedging (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Nov. 30, 2021 | |
Financial Instruments: Derivatives and Hedging | ||
Hedged amount of portion of the future LIBOR-based rate risk | $ 8,100 | |
Interest reclassified from accumulated other comprehensive income into interest expense | 2,900 | |
Amount estimated to be reclassified into earnings within next 12 months | 900 | |
Cash flow hedges | ||
Financial Instruments: Derivatives and Hedging | ||
Unrealized gains or losses on derivative financial instruments in accumulated other comprehensive income | 18,300 | |
JPM Term Loan | ||
Financial Instruments: Derivatives and Hedging | ||
Hedged amount of portion of the future LIBOR-based rate risk | 100,000 | |
2017 Interest Rate Swap | ||
Financial Instruments: Derivatives and Hedging | ||
Fair Value | 4,600 | |
2017 Interest Rate Swap | Cash flow hedges | ||
Financial Instruments: Derivatives and Hedging | ||
Notional Value | $ 400,000 | |
Strike Rate (as a percent) | 1.12% | |
Fair Value | $ 4,645 | |
2013 BMO Interest Rate Swap | Cash flow hedges | ||
Financial Instruments: Derivatives and Hedging | ||
Notional Value | $ 220,000 | |
Strike Rate (as a percent) | 2.32% | |
Fair Value | $ (1,292) | |
2019 JPM Interest Rate Swap | Cash flow hedges | ||
Financial Instruments: Derivatives and Hedging | ||
Notional Value | $ 100,000 | |
Strike Rate (as a percent) | 2.44% | |
Fair Value | $ (1,837) | |
2019 BMO Interest Rate Swap | Cash flow hedges | ||
Financial Instruments: Derivatives and Hedging | ||
Notional Value | $ 220,000 | |
Strike Rate (as a percent) | 2.39% | |
Fair Value | $ (5,003) | |
2019 BMO Interest Rate Swap | Cash flow hedges | Forecast | ||
Financial Instruments: Derivatives and Hedging | ||
Notional Value | $ 165,000 |
Financial Instruments_ Interest
Financial Instruments: Interest Rate Swaps (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of income | $ 9,371 | $ 9,753 | $ 18,739 | $ 19,239 |
Interest rate swap | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of income | 18,739 | 19,239 | ||
Interest rate swap | Amounts of previously recorded gain/(loss) reclassified from OCI into Interest Expense | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of income | (2,930) | (678) | ||
Interest rate swap | Amounts of gain (loss) recognized in OCI | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of income | $ (15,322) | $ 9,708 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Potential dilutive shares outstanding | 0 | 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | |
Stockholders' Equity | |||||
Common Stock, Shares, Outstanding | 107,231,155 | 107,231,155 | |||
Dividends declared and paid | |||||
Cash dividend declared per share (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.19 | |
Total Dividends | $ 9,651 | $ 9,651 | $ 9,651 | $ 20,374 |
Income Taxes - General and Inco
Income Taxes - General and Income Tax Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Maximum ownership as a percentage of the voting power or value of the securities of each issuer other than REIT or "TRS" | 10.00% | ||||
Maximum ownership of securities in all TRS (as a percent) | 20.00% | 25.00% | |||
Maximum ownership of securities in all TRS when considered together with other non-real estate assets (as a percent) | 25.00% | ||||
Period of statute of limitations applicable to the entity's income tax returns | 3 years | ||||
Net operating losses | |||||
NOLs expiration period | 20 years | ||||
Gross amount of NOLs available to company | $ 13,041,000 | $ 13,041,000 | $ 13,041,000 | ||
Income Tax Expense | |||||
Income Taxes Receivable | 100,000 | 100,000 | |||
Revised Texas Franchise Tax | 164,000 | $ 134,000 | |||
Other Taxes | (112,000) | 23,000 | |||
Taxes on income | $ 81,000 | $ 75,000 | 52,000 | $ 157,000 | |
Deferred income taxes | $ 0 |
Leases - Lease Costs and Maturi
Leases - Lease Costs and Maturity Analysis for Liabilities (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Leases | |
Right to use asset | $ 1,975,000 |
Option to extend the terms | true |
Extension term | 5 years |
Lease Costs | |
Operating lease cost | $ 209,000 |
Lease cost | 209,000 |
Cash paid for amounts included in the measurement of lease liabilities | $ 205,000 |
Weighted average remaining lease terms in years - operating leases | 5 years 3 months |
Weighted average discount rate - operating leases | 3.86% |
Maturity analysis for liabilities | |
Discount rate at commencement | 3.86% |
2019 | $ 207,000 |
2020 | 421,000 |
2021 | 429,000 |
2022 | 438,000 |
2023 | 447,000 |
2024 and thereafter | 340,000 |
Total undiscounted cash flows | 2,282,000 |
Present value lease liability | 2,059,000 |
Difference between undiscounted cash flows and discounted cash flows | $ 223,000 |
Leases - Income Relating to Lea
Leases - Income Relating to Lease Payments (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Income relating to lease payments: | |
Income from leases | $ 123,821 |
Undiscounted Cash Flows | |
2019 | 85,662 |
2020 | 170,226 |
2021 | 159,589 |
2022 | 133,796 |
2023 | 117,753 |
2024 and thereafter | 376,076 |
Income relating to lease payments | 1,043,102 |
Variable lease payments | $ 32,085 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Jul. 05, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 |
Subsequent Events | |||||
Cash dividend declared per share (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.19 | |
Cash distribution declared | Subsequent Events. | |||||
Subsequent Events | |||||
Cash dividend declared per share (in dollars per share) | $ 0.09 |