Document and Entity Information
Document and Entity Information - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2016 | Apr. 30, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 | |
Entity Registrant Name | Phillips Edison Grocery Center REIT I, Inc. | |
Entity Central Index Key | 1,476,204 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 183.1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Investment in real estate: | ||
Land and improvements | $ 719,781 | $ 719,430 |
Building and improvements | 1,399,392 | 1,397,050 |
Acquired above-market lease assets | 39,311 | 39,311 |
Acquired in-place lease assets | 194,242 | 194,242 |
Total investment in real estate assets | 2,352,726 | 2,350,033 |
Accumulated depreciation and amortization | (258,378) | (232,102) |
Total investment in real estate assets, net | 2,094,348 | 2,117,931 |
Cash and cash equivalents | 10,858 | 40,680 |
Restricted cash | 6,762 | 6,833 |
Other assets, net | 60,297 | 60,804 |
Total assets | 2,172,265 | 2,226,248 |
Liabilities: | ||
Mortgages and loans payable, net | 811,498 | 845,515 |
Acquired below-market lease intangibles, net of accumulated amortization of $15,865 and $14,259, respectively | 38,176 | 39,782 |
Accounts payable – affiliates | 4,150 | 5,278 |
Accounts payable and other liabilities | 49,508 | 43,881 |
Total liabilities | 903,332 | 934,456 |
Commitments and contingencies (Note 6) | 0 | 0 |
Equity: | ||
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 0 | 0 |
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 182,592 and 181,308 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 1,826 | 1,813 |
Additional paid-in capital | 1,601,622 | 1,588,541 |
Accumulated other comprehensive (loss) income | (7,339) | 22 |
Accumulated deficit | (351,919) | (323,761) |
Total stockholders’ equity | 1,244,190 | 1,266,615 |
Noncontrolling interests | 24,743 | 25,177 |
Total equity | 1,268,933 | 1,291,792 |
Total liabilities and equity | $ 2,172,265 | $ 2,226,248 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Acquired below-market lease intangibles, accumulated amortization | $ 15,865 | $ 14,259 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued and outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued and outstanding | 182,592,000 | 181,308,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Rental income | $ 46,939 | $ 44,500 |
Tenant recovery income | 15,944 | 14,104 |
Other property income | 199 | 343 |
Total revenues | 63,082 | 58,947 |
Expenses: | ||
Property operating | 10,291 | 9,986 |
Real estate taxes | 9,411 | 8,179 |
General and administrative | 7,553 | 2,362 |
Acquisition expenses | 20 | 1,735 |
Depreciation and amortization | 25,706 | 24,730 |
Total expenses | 52,981 | 46,992 |
Other expense: | ||
Interest expense, net | (7,732) | (6,794) |
Other expense, net | (116) | (122) |
Net income | 2,253 | 5,039 |
Net income attributable to noncontrolling interests | (34) | (68) |
Net income attributable to stockholders | $ 2,219 | $ 4,971 |
Earnings per common share: | ||
Net income per share - basic and diluted | $ 0.01 | $ 0.03 |
Weighted-average common shares outstanding: | ||
Basic | 182,246 | 182,988 |
Diluted | 185,031 | 185,495 |
Comprehensive (loss) income: | ||
Net income | $ 2,253 | $ 5,039 |
Other comprehensive loss: | ||
Change in unrealized loss on interest rate swaps, net | (7,361) | 0 |
Comprehensive (loss) income | (5,108) | 5,039 |
Comprehensive income attributable to noncontrolling interests | (34) | (68) |
Comprehensive (loss) income attributable to stockholders | $ (5,142) | $ 4,971 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity | Noncontrolling Interest |
Balance in AOCI as of January 1, 2016 at Dec. 31, 2014 | $ 1,378,262 | $ 1,820 | $ 1,567,653 | $ 0 | $ (213,975) | $ 1,355,498 | $ 22,764 |
Balance, shares at Dec. 31, 2014 | 182,131 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share repurchases, value | (3,341) | $ (3) | (3,338) | (3,341) | |||
Share repurchases, shares | (514) | ||||||
Change in redeemable common stock | (54,509) | (54,509) | (54,509) | ||||
Dividend reinvestment plan (DRIP), value | 15,798 | $ 16 | 15,782 | 15,798 | |||
Dividend reinvestment plan (DRIP), shares | 1,662 | ||||||
Common distributions declared, $0.17 per share | (30,236) | (30,236) | (30,236) | ||||
Issuance of partnership units | 4,047 | 4,047 | |||||
Distributions to noncontrolling interests | (428) | (428) | |||||
Net income | 5,039 | 4,971 | 4,971 | 68 | |||
Balance in AOCI as of March 31, 2016 at Mar. 31, 2015 | 1,314,632 | $ 1,833 | 1,525,588 | 0 | (239,240) | 1,288,181 | 26,451 |
Balance, shares at Mar. 31, 2015 | 183,279 | ||||||
Balance in AOCI as of January 1, 2016 at Dec. 31, 2015 | 1,291,792 | $ 1,813 | 1,588,541 | (323,761) | 1,266,615 | 25,177 | |
Balance, shares at Dec. 31, 2015 | 181,308 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share repurchases, value | (2,162) | $ (2) | (2,160) | (2,162) | |||
Share repurchases, shares | (212) | ||||||
Dividend reinvestment plan (DRIP), value | 15,256 | $ 15 | 15,241 | 15,256 | |||
Dividend reinvestment plan (DRIP), shares | 1,496 | ||||||
Change in unrealized loss on interest rate swaps | (7,361) | (7,361) | (7,361) | ||||
Common distributions declared, $0.17 per share | (30,377) | (30,377) | (30,377) | ||||
Distributions to noncontrolling interests | (468) | (468) | |||||
Net income | 2,253 | 2,219 | 2,219 | 34 | |||
Balance in AOCI as of March 31, 2016 at Mar. 31, 2016 | $ 1,268,933 | $ 1,826 | $ 1,601,622 | $ (7,339) | $ (351,919) | $ 1,244,190 | $ 24,743 |
Balance, shares at Mar. 31, 2016 | 182,592 |
Consolidated Statements of Equ6
Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||
Common distributions declared, per share | $ 0.17 | $ 0.17 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,253 | $ 5,039 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 24,933 | 23,958 |
Net amortization of above- and below-market leases | (272) | (178) |
Amortization of deferred financing expense | 1,063 | 1,258 |
Loss on disposal of real estate assets | 104 | 100 |
Loss on write-off of unamortized capitalized leasing commissions and deferred financing expense | 52 | 81 |
Change in fair value of derivative | 53 | 47 |
Straight-line rental income | (899) | (1,244) |
Other | 18 | 0 |
Changes in operating assets and liabilities: | ||
Other assets | 424 | (2,063) |
Accounts payable and other liabilities | (1,484) | 469 |
Accounts payable – affiliates | (1,286) | 1,204 |
Net cash provided by operating activities | 24,959 | 28,671 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions | 0 | (61,839) |
Capital expenditures | (4,274) | (2,995) |
Change in restricted cash | 71 | (506) |
Net cash used in investing activities | (4,203) | (65,340) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in credit facility | (9,000) | 66,800 |
Payments on mortgages and loans payable | (25,026) | (11,654) |
Payments of deferred financing expenses | 0 | (557) |
Distributions paid, net of DRIP | (15,064) | (14,366) |
Distributions to noncontrolling interests | (306) | (134) |
Repurchases of common stock | (1,182) | (4,908) |
Net cash (used in) provided by financing activities | (50,578) | 35,181 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (29,822) | (1,488) |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 40,680 | 15,649 |
End of period | 10,858 | 14,161 |
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES: | 7,478 | 6,021 |
Cash paid for interest | 0 | 24,982 |
Accrued capital expenditures and deferred financing expenses | 1,018 | 853 |
Change in offering costs payable to sponsor(s) | 57 | 72 |
Change in distributions payable | 162 | 294 |
Change in distributions payable - noncontrolling interests | 980 | (1,567) |
Change in accrued share repurchase obligation | $ 15,256 | $ 15,798 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | ORGANIZATION Phillips Edison Grocery Center REIT I, Inc., (“we,” the “Company,” “our,” or “us”) was formed as a Maryland corporation in October 2009. Substantially all of our business is conducted through Phillips Edison Grocery Center Operating Partnership I, L.P., (the “Operating Partnership”), a Delaware limited partnership formed in December 2009. We are a limited partner of the Operating Partnership, and our wholly owned subsidiary, Phillips Edison Grocery Center OP GP I LLC, is the sole general partner of the Operating Partnership. Our advisor is Phillips Edison NTR LLC (“PE-NTR”), which is directly or indirectly owned by Phillips Edison Limited Partnership (the “Phillips Edison sponsor”). Under the terms of the advisory agreement between PE-NTR and us (the “PE-NTR Agreement”), PE-NTR is responsible for the management of our day-to-day activities and the implementation of our investment strategy. We invest primarily in well-occupied, grocery-anchored neighborhood and community shopping centers having a mix of creditworthy national and regional retailers selling necessity-based goods and services in strong demographic markets throughout the United States. As of March 31, 2016 , we owned fee simple interests in 147 real estate properties acquired from third parties unaffiliated with us or PE-NTR. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Set forth below is a summary of the significant accounting estimates and policies that management believes are important to the preparation of our consolidated interim financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by management. As a result, these estimates are subject to a degree of uncertainty. There have been no changes to our significant accounting policies during the three months ended March 31, 2016 , except for those policies included below. For a full summary of our accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2015 , filed with the U.S. Securities and Exchange Commission (“SEC”) on March 3, 2016. Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to the audited consolidated financial statements of Phillips Edison Grocery Center REIT I, Inc. for the year ended December 31, 2015 , which are included in our 2015 Annual Report on Form 10-K. In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report. Our results of operations for the three months ended March 31, 2016 , are not necessarily indicative of the operating results expected for the full year. The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation. Repurchase of Common Stock —We offer a share repurchase program which may allow certain stockholders to have their shares repurchased subject to approval and certain limitations and restrictions (see Note 8). We account for those financial instruments that represent our mandatory obligation to repurchase shares as liabilities to be reported at settlement value. When shares are presented for repurchase, we will reclassify such obligations from redeemable common stock to a liability based upon their respective settlement values. Under our share repurchase program, the maximum amount of common stock that we may redeem, at the shareholder’s election, during any calendar year is limited, among other things, to 5% of the weighted-average number of shares outstanding during the prior calendar year. The maximum amount is reduced each reporting period by the current year share redemptions to date. In addition, the cash available for repurchases on any particular date is generally limited to the proceeds from the DRIP during the preceding four fiscal quarters, less amounts already used for repurchases during the same time period. Reclassifications —The following line items on our consolidated balance sheets as of December 31, 2015 , were reclassified to conform to the current year presentation: • The acquired intangible lease assets balance was separated into Acquired Above-Market Lease Assets and Acquired In-Place Lease Assets, • Certain unamortized debt issuance costs were reclassified from Deferred Financing Expense, Net to Other Assets, Net. Newly Adopted and Recently Issued Accounting Pronouncements —In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This update amends existing guidance to require the presentation of certain debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). This update provides guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. We adopted ASU 2015-03 and ASU 2015-15 on January 1, 2016, and retrospectively applied the guidance for all periods presented. Unamortized debt issuance costs of $7.9 million and $8.6 million are included in Mortgages and Loans Payable, Net as of March 31, 2016 and December 31, 2015, respectively, which were previously included in Deferred Financing Expense, Net in our consolidated balance sheets. The remaining amounts included in Other Assets, Net on our consolidated balance sheets were related to our revolving credit facility. The adoption did not have an impact on our results of operations (see Note 5 ). In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 Consolidation . ASU 2015-02 includes all reporting entities within the scope of Subtopic 810-10 Consolidation - Overall , including limited partnerships and similar legal entities, unless a scope exception applies. Overall the amendments in this update are to simplify the codification and reduce the number of consolidation models and place more emphasis on risk of loss when determining controlling financial interests. ASU 2015-02 is effective for public businesses for interim and annual periods beginning after December 15, 2015. This ASU was effective beginning in the first quarter of our year ending December 31, 2016. We have evaluated the impact of the adoption of ASU 2015-02 on our consolidated financial statements and have determined under ASU 2015-02 the Operating Partnership is considered a variable interest entity (“VIE”). We are the primary beneficiary of the VIE and the our partnership interest is considered a majority voting interest. As such, this standard did not have a material impact on our consolidated financial statements. The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined by ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3—Unobservable inputs, only used to the extent that observable inputs are not available, reflect our assumptions about the pricing of an asset or liability. The following describes the methods we use to estimate the fair value of our financial and non-financial assets and liabilities: Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, and Accounts Payable and Other Liabilities —We consider the carrying values of these financial instruments to approximate fair value because of the short period of time between origination of the instruments and their expected realization. Real Estate Investments —The purchase prices of the investment properties, including related lease intangible assets and liabilities, were allocated at estimated fair value based on Level 3 inputs, such as discount rates, capitalization rates, comparable sales, replacement costs, income and expense growth rates and current market rents and allowances as determined by management. Real estate assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the individual property may not be recoverable, or at least annually. In such an event, a comparison will be made of the projected operating cash flows of each property on an undiscounted basis to the carrying amount of such property. Such carrying amount would be adjusted, if necessary, to estimated fair values to reflect impairment in the value of the asset. Mortgages and Loans Payable —We estimate the fair value of our debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs. The discount rate used approximates current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable). We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed. The following is a summary of discount rates and borrowings as of March 31, 2016 and December 31, 2015 (dollars in thousands): March 31, 2016 December 31, 2015 Discount rates: Fixed-rate debt 3.14 % 2.75 % Secured variable-rate debt 2.69 % 2.36 % Unsecured variable-rate debt 1.94 % 1.66 % Borrowings: Fair value $ 840,113 $ 880,854 Recorded value (1) 819,379 854,079 (1) Recorded value does not include deferred financing cost of $7.9 million and $8.6 million as of March 31, 2016 and December 31, 2015 , respectively. Derivative Instruments — In April 2015, we entered into three interest rate swap agreements with a notional amount of $387.0 million that are measured at fair value on a recurring basis. These interest rate swap agreements effectively fix the LIBOR portion of the interest rate on $387.0 million of outstanding debt under our existing credit facility. These swaps qualify and have been designated as cash flow hedges. As of March 31, 2016 and December 31, 2015 , we were party to an interest rate swap agreement with a notional amount of $11.3 million . The interest rate swap was assumed as part of an acquisition and is measured at fair value on a recurring basis. The interest rate swap agreement, in effect, fixes the variable interest rate of one of our secured variable-rate mortgage notes at an annual interest rate of 5.22% through June 10, 2018. The fair value of the interest rate swap agreements as of March 31, 2016 and December 31, 2015 was based on the estimated amount we would receive or pay to terminate the contract at the reporting date and was determined using interest rate pricing models and interest rate-related observable inputs. Although we determined that the significant inputs used to value our derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2016 and December 31, 2015 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Considerable judgment is necessary to develop estimated fair values of financial and non-financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we did or could actually realize upon disposition of the financial assets and liabilities previously sold or currently held. Our derivative liability is currently recorded in Accounts Payable and Other Liabilities on our consolidated balance sheets. The fair value measurements of our financial liability and asset as of March 31, 2016 and December 31, 2015 are as follows (in thousands): March 31, 2016 December 31, 2015 Derivative liability (asset) designated as hedging instruments: Interest rate swaps - unsecured credit facility $ 7,338 $ (22 ) Derivative liability not designated as hedging instrument: Interest rate swap - mortgage note 496 442 |
Real Estate Acquisitions
Real Estate Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Real Estate Acquisitions | REAL ESTATE ACQUISITIONS During the three months ended March 31, 2015 , we acquired eight grocery-anchored retail centers for an aggregate purchase price of approximately $86.4 million , including $24.0 million of assumed debt with a fair value of $ 25.0 million . We did not acquire any properties during the three months ended March 31, 2016 . The following tables present certain additional information regarding our acquisitions of properties during the three months ended March 31, 2015 , that were deemed individually immaterial when acquired, but were material in the aggregate. For the three months ended March 31, 2015 , we allocated the purchase price of acquisitions to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2015 Land and improvements $ 29,516 Building and improvements 51,186 Acquired in-place leases 8,703 Acquired above-market leases 356 Acquired below-market leases (3,319 ) Total assets and lease liabilities acquired 86,442 Fair value of assumed debt at acquisition (1) 24,982 Net assets acquired $ 61,460 (1) Debt assumed relates to five properties as well as a strip center adjacent to a previously acquired grocery-anchored retail center. The weighted-average amortization periods for acquired in-place lease, above-market lease, and below-market lease intangibles acquired during the three months ended March 31, 2015 are as follows (in years): 2015 Acquired in-place leases 16 Acquired above-market leases 16 Acquired below-market leases 21 The amounts recognized for revenues, acquisition expenses, and net loss recorded during the year of acquisition related to the operating activities of our acquisitions are as follows (in thousands): March 31, 2015 Revenues $ 752 Acquisition expenses 1,458 Net loss 1,498 The following unaudited pro forma information summarizes selected financial information from our combined results of operations, as if all of our acquisitions for 2015 had been acquired on January 1, 2015 . Acquisition expenses related to each respective acquisition are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. This pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of the period, nor does it purport to represent the results of future operations. Three Months Ended (in thousands) March 31, 2015 Pro forma revenues $ 60,970 Pro forma net income attributable to stockholders 6,806 |
Mortgages and Loans Payable
Mortgages and Loans Payable | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Mortgages and Loans Payable | MORTGAGES AND LOANS PAYABLE Our credit agreement provides access to an unsecured revolving credit facility and an unsecured term loan facility (the “Term Loans”). The revolving credit facility has a capacity of $500 million with a current interest rate of LIBOR plus 1.3% . The revolving credit facility matures in December 2017 with additional options to extend the maturity to December 2018. The Term Loans include three term loan tranches with interest rates of LIBOR plus 1.25% . The first tranche of Term Loans has a principal amount of $100 million and matures in February 2019 , with two 12 -month options to extend the maturity to February 2021. The second tranche of Term Loans has a principal amount of $175 million and matures in February 2020 , with one option to extend the maturity to February 2021. The third tranche of Term Loans has a principal amount of $125 million and matures in February 2021 . A maturity date extension for the first or second tranche of Term Loans requires the payment of an extension fee of 0.15% of the outstanding principal amount of the corresponding tranche. As of March 31, 2016 and December 31, 2015 , the weighted-average interest rate for all of our mortgages and loans payable was 3.5% . The following is a summary of our debt obligations as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Unsecured Term Loans - fixed-rate (1) $ 387,000 $ 387,000 Unsecured Term Loans - variable-rate 13,000 13,000 Unsecured revolving credit facility - variable-rate (2) 132,000 141,000 Fixed-rate mortgages payable (3)(4) 281,409 306,435 Deferred financing costs, net (5) (7,881 ) (8,564 ) Assumed below-market debt adjustment, net (6) 5,970 6,644 Total $ 811,498 $ 845,515 (1) As of March 31, 2016 and December 31, 2015 , the interest rate on $387 million outstanding under our Term Loans was, effectively, fixed at various interest rates by three interest rate swap agreements with maturities ranging from February 2019 to February 2021 (see Notes 3 and 7 ). (2) The gross borrowings under our revolving credit facility were $7.0 million during the three months ended March 31, 2016 . The gross payments on our credit facility were $16.0 million during the three months ended March 31, 2016 . (3) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the related properties are neither available to pay the debts of the consolidated property-holding limited liability companies nor constitute obligations of such consolidated limited liability companies as of March 31, 2016 . (4) As of March 31, 2016 and December 31, 2015 , the interest rate on one of our variable-rate mortgage notes payable was, in effect, fixed at 5.22% by an interest rate swap agreement (see Notes 3 and 7 ). (5) Net of accumulated amortization of $3.4 million and $2.8 million as of March 31, 2016 and December 31, 2015 , respectively. Accumulated amortization of deferred financing costs included in Other Assets, Net was $4.7 million and $4.8 million as of March 31, 2016 and December 31, 2015 , respectively. (6) Net of accumulated amortization of $6.7 million and $6.5 million as of March 31, 2016 and December 31, 2015 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, we may become subject to litigation or claims. There are no material legal proceedings pending, or known to be contemplated, against us. Environmental Matters In connection with the ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. We record liabilities as they arise related to environmental obligations. We have not been notified by any governmental authority of any material non-compliance, liability or other claim, nor are we aware of any other environmental condition that we believe will have a material impact on our consolidated financial statements. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive (Loss) Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2016 , such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. As of March 31, 2016 , we had three interest rate swaps with a notional amount of $387.0 million that were designated as cash flow hedges of interest rate risk. Amounts reported in Accumulated Other Comprehensive (Loss) Income related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next 12 months, we estimate that an additional $2.9 million will be reclassified from Other Comprehensive Loss as an increase to Interest Expense, Net. Derivatives Not Designated as Hedging Instruments Derivatives not designated as hedges are not speculative and are used to manage our exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of these derivative instruments, as well as any payments, are recorded directly in Other Expense, Net and resulted in a loss of $119,000 and $121,000 for the three months ended March 31, 2016 and 2015 , respectively. Tabular Disclosure of the Effect of Derivative Instruments on Accumulated Other Comprehensive (Loss) Income (“AOCI”) and the Consolidated Statements of Operations and Comprehensive Income (Loss) We did not have any changes in AOCI for the three months ended March 31, 2015 . The table below presents the changes in AOCI and the effect of our derivative financial instruments on the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2016 (in thousands): Balance in AOCI as of January 1, 2016 $ 22 Amount of loss recognized in other comprehensive income on derivative (8,307 ) Amount of loss reclassified from accumulated other comprehensive income into interest expense 946 Current-period other comprehensive income (7,361 ) Balance in AOCI as of March 31, 2016 $ (7,339 ) Credit-risk-related Contingent Features We have an agreement with our derivative counterparties that contains a provision where, if we either default or are capable of being declared in default on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of March 31, 2016 and December 31, 2015 , the fair value of our derivatives excluded any adjustment for nonperformance risk related to this agreement. As of March 31, 2016 and December 31, 2015 , we had not posted any collateral related to this agreement. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Equity | EQUITY On April 14, 2016, our board of directors reaffirmed its estimated value per share of our common stock of $10.20 based substantially on the estimated market value of our portfolio of real estate properties in various geographic locations in the United States as of March 31, 2016 . We engaged a third party, Duff & Phelps, LLC, to provide a calculation of the range in estimated value per share of our common stock as of March 31, 2016 , which reflected the balance sheet assets and liabilities as of that date. Dividend Reinvestment Plan —We have adopted a dividend reinvestment plan (the “DRIP”) that allows stockholders to invest distributions in additional shares of our common stock. As of March 31, 2016 , shares were issued under the DRIP at a price of $10.20 per share. Share Repurchase Program —Our share repurchase program provides an opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations. The following table presents the activity of the share repurchase program for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts): 2016 2015 Shares repurchased 212 514 Cost of repurchases $ 2,162 $ 4,908 Average repurchase price $ 10.20 $ 9.54 During the first quarter of 2016, repurchase requests continued to surpass the funding limits under the share repurchase program. Due to the program’s funding limits, no funds will be available for repurchases during the second quarter of 2016, and the funds available for repurchases during the third quarter of 2016, if any, are expected to be limited. If we are unable to fulfill all repurchase requests in any month, we will attempt to honor requests on a pro rata basis. We continue to fulfill repurchases sought upon a stockholder’s death, determination of incompetence or qualifying disability in accordance with the terms of the share repurchase program. We record a liability representing our obligation to repurchase shares of common stock submitted for repurchase as of period end but not yet repurchased. The liability for a repurchase request recorded as of March 31, 2016 , is due to a stockholder’s death, “qualifying disability,” or “determination of incompetence," and is not subject to the funding limitations of the share repurchase program. Below is a summary of our obligation to repurchase shares of common stock recorded as a component of Accounts Payable and Other Liabilities on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Shares submitted for repurchase 96 — Liability recorded $ 980 $ — On April 14, 2016, our board of directors amended and restated the share repurchase program. The amendments provide that the board of directors reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase, and clarifies that the cash available for repurchases on any particular date will generally be limited to the proceeds from the DRIP during the preceding four fiscal quarters, less amounts already used for repurchases since the beginning of that period. The amendments will become effective on May 15, 2016. Class B and Operating Partnership Units —The Operating Partnership issues limited partnerships units that are designated as Class B units and Operating Partnership units (“OP units”) for asset management services provided by PE-NTR. The vesting of the Class B units is contingent upon a market condition and service condition. OP units may be exchanged at the election of the holder for cash or, at the option of the Operating Partnership, for shares of our common stock, under the terms of exchange rights agreements to be prepared at a future date, provided, however, that the OP units have been outstanding for at least one year. PE-NTR has agreed under the PE-NTR Agreement not to exchange any OP units it may hold until the listing of our common stock or the liquidation of our portfolio occurs. As the form of the redemptions for the OP units is within our control, the OP units issued as of March 31, 2016 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets. Additionally, the cumulative distributions that have been paid on these OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity. Below is a summary of our outstanding OP units and unvested Class B units as of March 31, 2016 and December 31, 2015 (shares in thousands): March 31, 2016 December 31, 2015 OP units 2,785 2,785 Class B units 2,211 2,083 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | EARNINGS PER SHARE We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the sum of distributed earnings to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. Class B units and OP units held by limited partners other than the Company are considered to be participating securities because they contain non-forfeitable rights to dividends or dividend equivalents and they have the potential to be exchanged for shares of our common stock in accordance with the terms of the Operating Partnership’s Second Amended and Restated Agreement of Limited Partnership, as amended (the “Partnership Agreement”). The impact of these Class B units and OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the Class B units and OP units based on dividends declared and the units’ participation rights in undistributed earnings. The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements as of March 31, 2016 and 2015. Since the OP units are fully vested, they were included in the diluted net income per share computations for the three months ended March 31, 2016 and 2015 . However, as vesting of the Class B units is contingent upon a market condition and service condition, unvested Class B units were not included in the diluted net income per share computations since the satisfaction of the market or service condition was not probable as of March 31, 2016 and 2015 . There were 2.2 million and 0.2 million unvested Class B units outstanding as of March 31, 2016 and 2015 , respectively, which had no effect on EPS. The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three months ended March 31, 2016 and 2015 : 2016 2015 Numerator for basic and diluted earnings per share: Net income attributable to stockholders $ 2,219 $ 4,971 Denominator: Denominator for basic earnings per share - weighted-average shares 182,246 182,988 Effect of dilutive OP Units 2,785 2,507 Denominator for diluted earnings per share - adjusted weighted-average shares 185,031 185,495 Basic earnings per share: Net income attributable to stockholders $ 0.01 $ 0.03 Diluted earnings per share: Net income attributable to stockholders $ 0.01 $ 0.03 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Economic Dependency —We are dependent on PE-NTR, Phillips Edison & Company Ltd. (the “Property Manager”), and their respective affiliates for certain services that are essential to us, including asset acquisition and disposition decisions, asset management, operating and leasing of our properties, and other general and administrative responsibilities. In the event that PE-NTR, and/or the Property Manager, and their respective affiliates are unable to provide such services, we would be required to find alternative service providers, which could result in higher costs and expenses. As of March 31, 2016 and December 31, 2015 , PE-NTR owned 176,509 shares of our common stock, or approximately 0.10% of our outstanding common stock issued during our initial public offering period, which closed in February 2014. PE-NTR may not sell any of these shares while serving as our advisor. Advisory Agreement —Pursuant to the PE-NTR Agreement effective as of December 3, 2014, PE-NTR is entitled to specified fees for certain services, including managing our day-to-day activities and implementing our investment strategy. PE-NTR manages our day-to-day affairs and our portfolio of real estate investments subject to the board’s supervision. Expenses are to be reimbursed to PE-NTR based on amounts incurred on our behalf by PE-NTR. In October 2015, we entered into amended agreements to revise certain fees that are paid to PE-NTR in consideration for the advisory services that PE-NTR provides to us. Beginning October 1, 2015, we no longer pay a 0.75% financing fee to PE-NTR. The asset management fee remains at 1% of the cost of our assets but is paid 80% in cash and 20% in Class B units of the Operating Partnership. The cash portion is paid on a monthly basis in arrears, in the amount of 0.06667% multiplied by the cost of our assets as of the last day of the preceding monthly period. Acquisition Fee —We pay PE-NTR an acquisition fee related to services provided in connection with the selection and purchase or origination of real estate and real estate-related investments. The acquisition fee is equal to 1.0% of the cost of investments we acquire or originate, including any debt attributable to such investments. Acquisition Expenses —We reimburse PE-NTR for direct expenses incurred related to selecting, evaluating, and acquiring assets on our behalf. During the three months ended March 31, 2015 , we reimbursed PE-NTR for personnel costs related to due diligence services for assets we acquired during the period. During the three months ended March 31, 2016 , there were no acquisition expenses to reimburse as no properties were acquired during the period. Asset Management Subordinated Participation —Within 60 days after the end of each calendar quarter (subject to the approval of our board of directors), we will pay an asset management subordinated participation by issuing a number of restricted operating partnership units designated as Class B Units to PE-NTR and American Realty Capital II Advisors, LLC (“ARC”), equal to: (i) the product of (x) the cost of our assets multiplied by (y) 0.05% (0.25% prior to October 1, 2015); divided by (ii) the most recent primary offering price for a share of our common stock as of the last day of such calendar quarter less any selling commissions and dealer manager fees that would have been payable in connection with that offering. PE-NTR and ARC are entitled to receive distributions on the Class B units (and OP units converted from previously issued and vested Class B units) they receive in connection with their asset management subordinated participation at the same rate as distributions are paid to common stockholders. Such distributions are in addition to the incentive fees that PE-NTR, ARC, and their affiliates may receive from us. We continue to issue Class B units to PE-NTR and ARC in connection with the asset management services provided by PE-NTR under our current advisory agreement. Such Class B units will not vest until the economic hurdle is met in conjunction with (i) a termination of the PE-NTR Agreement by our independent directors without cause, (ii) a listing event, or (iii) a liquidity event; provided that PE-NTR serves as our advisor at the time of any of the foregoing events. During the three months ended March 31, 2016 and 2015 , the Operating Partnership issued 0.1 million and 0.4 million Class B units, respectively, to PE-NTR and ARC under the PE-NTR Agreement for asset management services performed by PE-NTR. Disposition Fee —We pay PE-NTR for substantial assistance by PE-NTR or any of its affiliates in connection with the sale of properties or other investments 2.0% of the contract sales price of each property or other investment sold. The conflicts committee of our board of directors determines whether PE-NTR or its affiliates have provided substantial assistance to us in connection with the sale of an asset. Substantial assistance in connection with the sale of a property includes PE-NTR or its affiliates’ preparation of an investment package for the property (including an investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or such other substantial services performed by PE-NTR or its affiliates in connection with a sale. However, if we sold an asset to an affiliate, our organizational documents would prohibit us from paying a disposition fee to PE-NTR or its affiliates. General and Administrative Expenses —As of March 31, 2016 and December 31, 2015 , we owed PE-NTR $138,000 and $124,000 , respectively, for general and administrative expenses paid on our behalf. Summarized below are the fees earned by and the expenses reimbursable to PE-NTR and ARC, except for general and administrative expenses, which we disclose above, for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Acquisition fees (1) $ — $ 855 $ — $ — Acquisition expenses (1) — 139 — — Asset management fees (2) 4,619 — 1,539 1,538 OP units distribution (3) 464 — 158 159 Class B units distribution (4) 354 440 125 119 Financing fees (5) — 180 — — Total $ 5,437 $ 1,614 $ 1,822 $ 1,816 (1) The acquisition fees and expenses are presented as Acquisition Expenses on the consolidated statements of operations. (2) Asset management fees are presented as General and Administrative on the consolidated statements of operations. (3) The distributions paid to holders of OP units are presented as Distributions to Noncontrolling Interests on the consolidated statements of equity. (4) The distributions paid to holders of unvested Class B units are presented as General and Administrative on the consolidated statements of operations. (5) Financing fees are presented as Other Assets, Net or Mortgages and Loans Payable, Net, on the consolidated balance sheets and amortized over the term of the related loan. As of October 1, 2015, we are no longer required to pay financing fees. Subordinated Participation in Net Sales Proceeds— The Operating Partnership may pay to Phillips Edison Special Limited Partner LLC (the “Special Limited Partner”) a subordinated participation in the net sales proceeds of the sale of real estate assets equal to 15.0% of remaining net sales proceeds after return of capital contributions to stockholders plus payment to stockholders of a 7.0% cumulative, pre-tax, non-compounded return on the capital contributed by stockholders. ARC has a 15.0% interest and PE-NTR has an 85.0% interest in the Special Limited Partner. Subordinated Incentive Listing Distribution —The Operating Partnership may pay to the Special Limited Partner a subordinated incentive listing distribution upon the listing of our common stock on a national securities exchange. Such incentive listing distribution is equal to 15.0% of the amount by which the market value of all of our issued and outstanding common stock plus distributions exceeds the aggregate capital contributed by stockholders plus an amount equal to a 7.0% cumulative, pre-tax non-compounded annual return to stockholders. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in net sales proceeds and the subordinated incentive listing distribution. No subordinated incentive listing distribution has been earned to date. Subordinated Distribution Upon Termination of the Advisor Agreement —Upon termination or non-renewal of the PE-NTR Agreement, the Special Limited Partner shall be entitled to a subordinated termination distribution in the form of a non-interest bearing promissory note equal to 15.0% of the amount by which the value of our assets owned at the time of such termination or non-renewal plus distributions exceeds the aggregate capital contributed by stockholders plus an amount equal to a 7.0% cumulative, pre-tax non-compounded annual return to stockholders. In addition, the Special Limited Partner may elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or a liquidity event occurs. No such termination has occurred to date. Property Manager —All of our real properties are managed and leased by the Property Manager. The Property Manager is wholly owned by our Phillips Edison sponsor. The Property Manager also manages real properties acquired by the Phillips Edison affiliates or other third parties. Property Management Fee —We pay to the Property Manager a monthly property management fee of 4.0% of the monthly gross cash receipts from the properties it manages. Leasing Commissions —In addition to the property management fee, if the Property Manager provides leasing services with respect to a property, we pay the Property Manager leasing fees in an amount equal to the leasing fees charged by unaffiliated persons rendering comparable services based on national market rates. The Property Manager shall be paid a leasing fee in connection with a tenant’s exercise of an option to extend an existing lease, and the leasing fees payable to the Property Manager may be increased by up to 50% in the event that the Property Manager engages a co-broker to lease a particular vacancy. Construction Management Fee —If we engage the Property Manager to provide construction management services with respect to a particular property, we pay a construction management fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the property. Expenses and Reimbursements —The Property Manager hires, directs and establishes policies for employees who have direct responsibility for the operations of each real property it manages, which may include, but is not limited to, on-site managers and building and maintenance personnel. Certain employees of the Property Manager may be employed on a part-time basis and may also be employed by PE-NTR or certain of its affiliates. The Property Manager also directs the purchase of equipment and supplies and will supervise all maintenance activity. We reimburse the costs and expenses incurred by the Property Manager on our behalf, including employee compensation, legal, travel and other out-of-pocket expenses that are directly related to the management of specific properties, as well as fees and expenses of third-party accountants. Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Property management fees (1) $ 2,427 $ 2,185 $ 863 $ 755 Leasing commissions (2) 2,195 2,028 748 729 Construction management fees (2) 159 165 71 155 Other fees and reimbursements (3) 1,170 1,003 508 1,699 Total $ 5,951 $ 5,381 $ 2,190 $ 3,338 (1) The property management fees are included in Property Operating on the consolidated statements of operations. (2) Leasing commissions paid for leases with terms less than one year are expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year, and construction management fees are capitalized and amortized over the life of the related leases or assets. (3) Other fees and reimbursements are included in Property Operating and General and Administrative on the consolidated statements of operations based on the nature of the expense. |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2016 | |
Leases, Operating [Abstract] | |
Operating Leases | OPERATING LEASES The terms and expirations of our operating leases with our tenants vary. The lease agreements frequently contain options to extend the terms of leases and other terms and conditions as negotiated. We retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Approximate future rentals to be received under non-cancelable operating leases in effect at March 31, 2016 , assuming no new or renegotiated leases or option extensions on lease agreements, are as follows (in thousands): Year Amount April 1 to December 31, 2016 $ 179,309 2017 167,446 2018 149,548 2019 126,547 2020 104,496 2021 and thereafter 415,966 Total $ 1,143,312 No single tenant comprised 10% or more of our aggregate annualized effective rent as of March 31, 2016 . |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Distributions to Stockholders Distributions equal to a daily amount of $0.00183060 per share of common stock outstanding were paid subsequent to March 31, 2016 to the stockholders of record from March 1, 2016 through April 30, 2016 as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution March 1, 2016 through March 31, 2016 4/1/2016 $ 10,367 $ 5,076 $ 5,291 April 1, 2016 through April 30, 2016 5/2/2016 10,054 4,887 5,167 In March 2016, our board of directors authorized distributions to the stockholders of record at the close of business each day in the period commencing May 1, 2016 through May 31, 2016. The authorized distributions equal a daily amount of $0.00183060 per share of common stock. Tender Offer On April 25, 2016, in order to deter an unsolicited tender offer by a third party and other potential future bidders that may try to exploit the illiquidity of shares of our common stock and acquire them from stockholders at prices substantially below their value, we launched a self-tender offer to purchase up to 9.3 million shares of our common stock. The tender offer will expire at 5:00 p.m. central time on Tuesday, June 7, 2016, unless extended or withdrawn. Our share repurchase program has been temporarily suspended during this offer as required by SEC rules. No repurchases will be made under the share repurchase program during the tender offer and for ten business days thereafter. Redemption requests that are submitted through the share repurchase program during the offer will not be accepted for consideration. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to the audited consolidated financial statements of Phillips Edison Grocery Center REIT I, Inc. for the year ended December 31, 2015 , which are included in our 2015 Annual Report on Form 10-K. In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report. Our results of operations for the three months ended March 31, 2016 , are not necessarily indicative of the operating results expected for the full year. The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation. |
Redeemable Common Stock | Repurchase of Common Stock —We offer a share repurchase program which may allow certain stockholders to have their shares repurchased subject to approval and certain limitations and restrictions (see Note 8). We account for those financial instruments that represent our mandatory obligation to repurchase shares as liabilities to be reported at settlement value. When shares are presented for repurchase, we will reclassify such obligations from redeemable common stock to a liability based upon their respective settlement values. Under our share repurchase program, the maximum amount of common stock that we may redeem, at the shareholder’s election, during any calendar year is limited, among other things, to 5% of the weighted-average number of shares outstanding during the prior calendar year. The maximum amount is reduced each reporting period by the current year share redemptions to date. In addition, the cash available for repurchases on any particular date is generally limited to the proceeds from the DRIP during the preceding four fiscal quarters, less amounts already used for repurchases during the same time period. |
Reclassifications | Reclassifications —The following line items on our consolidated balance sheets as of December 31, 2015 , were reclassified to conform to the current year presentation: • The acquired intangible lease assets balance was separated into Acquired Above-Market Lease Assets and Acquired In-Place Lease Assets, • Certain unamortized debt issuance costs were reclassified from Deferred Financing Expense, Net to Other Assets, Net |
Impact of Recently Issued Accounting Pronouncements | Newly Adopted and Recently Issued Accounting Pronouncements —In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This update amends existing guidance to require the presentation of certain debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). This update provides guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. We adopted ASU 2015-03 and ASU 2015-15 on January 1, 2016, and retrospectively applied the guidance for all periods presented. Unamortized debt issuance costs of $7.9 million and $8.6 million are included in Mortgages and Loans Payable, Net as of March 31, 2016 and December 31, 2015, respectively, which were previously included in Deferred Financing Expense, Net in our consolidated balance sheets. The remaining amounts included in Other Assets, Net on our consolidated balance sheets were related to our revolving credit facility. The adoption did not have an impact on our results of operations (see Note 5 ). In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 Consolidation . ASU 2015-02 includes all reporting entities within the scope of Subtopic 810-10 Consolidation - Overall , including limited partnerships and similar legal entities, unless a scope exception applies. Overall the amendments in this update are to simplify the codification and reduce the number of consolidation models and place more emphasis on risk of loss when determining controlling financial interests. ASU 2015-02 is effective for public businesses for interim and annual periods beginning after December 15, 2015. This ASU was effective beginning in the first quarter of our year ending December 31, 2016. We have evaluated the impact of the adoption of ASU 2015-02 on our consolidated financial statements and have determined under ASU 2015-02 the Operating Partnership is considered a variable interest entity (“VIE”). We are the primary beneficiary of the VIE and the our partnership interest is considered a majority voting interest. As such, this standard did not have a material impact on our consolidated financial statements. The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Fair Value Measurement, Policy [Policy Text Block] | ASC 820, Fair Value Measurement (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined by ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3—Unobservable inputs, only used to the extent that observable inputs are not available, reflect our assumptions about the pricing of an asset or liability. |
Earnings Per Share Earnings per
Earnings Per Share Earnings per Share (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Earnings Per Share, Policy [Policy Text Block] | We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the sum of distributed earnings to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. Class B units and OP units held by limited partners other than the Company are considered to be participating securities because they contain non-forfeitable rights to dividends or dividend equivalents and they have the potential to be exchanged for shares of our common stock in accordance with the terms of the Operating Partnership’s Second Amended and Restated Agreement of Limited Partnership, as amended (the “Partnership Agreement”). The impact of these Class B units and OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the Class B units and OP units based on dividends declared and the units’ participation rights in undistributed earnings. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Inputs, Liabilities, Quantitative Information | The following is a summary of discount rates and borrowings as of March 31, 2016 and December 31, 2015 (dollars in thousands): March 31, 2016 December 31, 2015 Discount rates: Fixed-rate debt 3.14 % 2.75 % Secured variable-rate debt 2.69 % 2.36 % Unsecured variable-rate debt 1.94 % 1.66 % Borrowings: Fair value $ 840,113 $ 880,854 Recorded value (1) 819,379 854,079 (1) Recorded value does not include deferred financing cost of $7.9 million and $8.6 million as of March 31, 2016 and December 31, 2015 , respectively. |
Fair Value, Liabilities Measured on a Recurring Basis | Our derivative liability is currently recorded in Accounts Payable and Other Liabilities on our consolidated balance sheets. The fair value measurements of our financial liability and asset as of March 31, 2016 and December 31, 2015 are as follows (in thousands): March 31, 2016 December 31, 2015 Derivative liability (asset) designated as hedging instruments: Interest rate swaps - unsecured credit facility $ 7,338 $ (22 ) Derivative liability not designated as hedging instrument: Interest rate swap - mortgage note 496 442 |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | For the three months ended March 31, 2015 , we allocated the purchase price of acquisitions to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2015 Land and improvements $ 29,516 Building and improvements 51,186 Acquired in-place leases 8,703 Acquired above-market leases 356 Acquired below-market leases (3,319 ) Total assets and lease liabilities acquired 86,442 Fair value of assumed debt at acquisition (1) 24,982 Net assets acquired $ 61,460 (1) Debt assumed relates to five properties as well as a strip center adjacent to a previously acquired grocery-anchored retail center. |
Schedule of Finite-lived Intangible Assets Acquired as Part of Business Combination | The weighted-average amortization periods for acquired in-place lease, above-market lease, and below-market lease intangibles acquired during the three months ended March 31, 2015 are as follows (in years): 2015 Acquired in-place leases 16 Acquired above-market leases 16 Acquired below-market leases 21 |
Real Estate Acquisitions, Operating Activities Since Acquisition Date | The amounts recognized for revenues, acquisition expenses, and net loss recorded during the year of acquisition related to the operating activities of our acquisitions are as follows (in thousands): March 31, 2015 Revenues $ 752 Acquisition expenses 1,458 Net loss 1,498 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma information summarizes selected financial information from our combined results of operations, as if all of our acquisitions for 2015 had been acquired on January 1, 2015 . Acquisition expenses related to each respective acquisition are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. This pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of the period, nor does it purport to represent the results of future operations. Three Months Ended (in thousands) March 31, 2015 Pro forma revenues $ 60,970 Pro forma net income attributable to stockholders 6,806 |
Mortgages and Loans Payable (Ta
Mortgages and Loans Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | The following is a summary of our debt obligations as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Unsecured Term Loans - fixed-rate (1) $ 387,000 $ 387,000 Unsecured Term Loans - variable-rate 13,000 13,000 Unsecured revolving credit facility - variable-rate (2) 132,000 141,000 Fixed-rate mortgages payable (3)(4) 281,409 306,435 Deferred financing costs, net (5) (7,881 ) (8,564 ) Assumed below-market debt adjustment, net (6) 5,970 6,644 Total $ 811,498 $ 845,515 (1) As of March 31, 2016 and December 31, 2015 , the interest rate on $387 million outstanding under our Term Loans was, effectively, fixed at various interest rates by three interest rate swap agreements with maturities ranging from February 2019 to February 2021 (see Notes 3 and 7 ). (2) The gross borrowings under our revolving credit facility were $7.0 million during the three months ended March 31, 2016 . The gross payments on our credit facility were $16.0 million during the three months ended March 31, 2016 . (3) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the related properties are neither available to pay the debts of the consolidated property-holding limited liability companies nor constitute obligations of such consolidated limited liability companies as of March 31, 2016 . (4) As of March 31, 2016 and December 31, 2015 , the interest rate on one of our variable-rate mortgage notes payable was, in effect, fixed at 5.22% by an interest rate swap agreement (see Notes 3 and 7 ). (5) Net of accumulated amortization of $3.4 million and $2.8 million as of March 31, 2016 and December 31, 2015 , respectively. Accumulated amortization of deferred financing costs included in Other Assets, Net was $4.7 million and $4.8 million as of March 31, 2016 and December 31, 2015 , respectively. (6) Net of accumulated amortization of $6.7 million and $6.5 million as of March 31, 2016 and December 31, 2015 , respectively. |
Derivatives and Hedging Activ27
Derivatives and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | We did not have any changes in AOCI for the three months ended March 31, 2015 . The table below presents the changes in AOCI and the effect of our derivative financial instruments on the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2016 (in thousands): Balance in AOCI as of January 1, 2016 $ 22 Amount of loss recognized in other comprehensive income on derivative (8,307 ) Amount of loss reclassified from accumulated other comprehensive income into interest expense 946 Current-period other comprehensive income (7,361 ) Balance in AOCI as of March 31, 2016 $ (7,339 ) |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Share Repurchase Program | The following table presents the activity of the share repurchase program for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts): 2016 2015 Shares repurchased 212 514 Cost of repurchases $ 2,162 $ 4,908 Average repurchase price $ 10.20 $ 9.54 |
Share Repurchase Program, Repurchase Obligations | Below is a summary of our obligation to repurchase shares of common stock recorded as a component of Accounts Payable and Other Liabilities on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Shares submitted for repurchase 96 — Liability recorded $ 980 $ — |
Class B Units Outstanding | Below is a summary of our outstanding OP units and unvested Class B units as of March 31, 2016 and December 31, 2015 (shares in thousands): March 31, 2016 December 31, 2015 OP units 2,785 2,785 Class B units 2,211 2,083 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three months ended March 31, 2016 and 2015 : 2016 2015 Numerator for basic and diluted earnings per share: Net income attributable to stockholders $ 2,219 $ 4,971 Denominator: Denominator for basic earnings per share - weighted-average shares 182,246 182,988 Effect of dilutive OP Units 2,785 2,507 Denominator for diluted earnings per share - adjusted weighted-average shares 185,031 185,495 Basic earnings per share: Net income attributable to stockholders $ 0.01 $ 0.03 Diluted earnings per share: Net income attributable to stockholders $ 0.01 $ 0.03 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Advisor Transactions | Summarized below are the fees earned by and the expenses reimbursable to PE-NTR and ARC, except for general and administrative expenses, which we disclose above, for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Acquisition fees (1) $ — $ 855 $ — $ — Acquisition expenses (1) — 139 — — Asset management fees (2) 4,619 — 1,539 1,538 OP units distribution (3) 464 — 158 159 Class B units distribution (4) 354 440 125 119 Financing fees (5) — 180 — — Total $ 5,437 $ 1,614 $ 1,822 $ 1,816 (1) The acquisition fees and expenses are presented as Acquisition Expenses on the consolidated statements of operations. (2) Asset management fees are presented as General and Administrative on the consolidated statements of operations. (3) The distributions paid to holders of OP units are presented as Distributions to Noncontrolling Interests on the consolidated statements of equity. (4) The distributions paid to holders of unvested Class B units are presented as General and Administrative on the consolidated statements of operations. (5) Financing fees are presented as Other Assets, Net or Mortgages and Loans Payable, Net, on the consolidated balance sheets and amortized over the term of the related loan. As of October 1, 2015, we are no longer required to pay financing fees. |
Property Manager Transactions | Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Property management fees (1) $ 2,427 $ 2,185 $ 863 $ 755 Leasing commissions (2) 2,195 2,028 748 729 Construction management fees (2) 159 165 71 155 Other fees and reimbursements (3) 1,170 1,003 508 1,699 Total $ 5,951 $ 5,381 $ 2,190 $ 3,338 (1) The property management fees are included in Property Operating on the consolidated statements of operations. (2) Leasing commissions paid for leases with terms less than one year are expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year, and construction management fees are capitalized and amortized over the life of the related leases or assets. (3) Other fees and reimbursements are included in Property Operating and General and Administrative on the consolidated statements of operations based on the nature of the expense. |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Leases, Operating [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Approximate future rentals to be received under non-cancelable operating leases in effect at March 31, 2016 , assuming no new or renegotiated leases or option extensions on lease agreements, are as follows (in thousands): Year Amount April 1 to December 31, 2016 $ 179,309 2017 167,446 2018 149,548 2019 126,547 2020 104,496 2021 and thereafter 415,966 Total $ 1,143,312 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Dividends Paid | Distributions equal to a daily amount of $0.00183060 per share of common stock outstanding were paid subsequent to March 31, 2016 to the stockholders of record from March 1, 2016 through April 30, 2016 as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution March 1, 2016 through March 31, 2016 4/1/2016 $ 10,367 $ 5,076 $ 5,291 April 1, 2016 through April 30, 2016 5/2/2016 10,054 4,887 5,167 |
Organization (Details)
Organization (Details) | Mar. 31, 2016property |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of real estate properties owned | 147 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Percent of shares authorized for repurchase | 5.00% | |
Unamortized debt issuance costs reclassified | $ 7.9 | $ 8.6 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) Mortgages and Loans Payable - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value Inputs, Liabilities, Quantitative Information | ||
Recorded value | $ 819,379 | $ 854,079 |
Unamortized Debt Issuance Expense | (7,881) | (8,564) |
Fair Value, Level 3 Inputs | ||
Fair Value Inputs, Liabilities, Quantitative Information | ||
Fair value of mortgages and loans payable | $ 840,113 | $ 880,854 |
Fixed-rate debt | Fair Value, Level 3 Inputs | ||
Fair Value Inputs, Liabilities, Quantitative Information | ||
Fair value inputs, discount rate | 3.14% | 2.75% |
Secured variable-rate debt | Fair Value, Level 3 Inputs | ||
Fair Value Inputs, Liabilities, Quantitative Information | ||
Fair value inputs, discount rate | 2.69% | 2.36% |
Unsecured variable-rate debt | Fair Value, Level 3 Inputs | ||
Fair Value Inputs, Liabilities, Quantitative Information | ||
Fair value inputs, discount rate | 1.94% | 1.66% |
Fair Value Measurements (Deta36
Fair Value Measurements (Details) - Derivative Instruments - Interest Rate Swap - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Not Designated as Hedging Instrument | ||
Fair Value, (Assets) Liabilities Measured on Recurring Basis | ||
Derivative, notional amount | $ 11,300 | $ 11,300 |
Swap agreement interest rate | 5.22% | |
Not Designated as Hedging Instrument | Fair value, Level 2 inputs | ||
Fair Value, (Assets) Liabilities Measured on Recurring Basis | ||
Derivative (Assets) Liabilities, at Fair Value, Net | $ 496 | 442 |
Designated as Hedging Instrument | ||
Fair Value, (Assets) Liabilities Measured on Recurring Basis | ||
Number of interest rate swap agreements | 3 | |
Derivative, notional amount | $ 387,000 | |
Portion of hedged debt | 387,000 | 387,000 |
Designated as Hedging Instrument | Fair value, Level 2 inputs | ||
Fair Value, (Assets) Liabilities Measured on Recurring Basis | ||
Derivative (Assets) Liabilities, at Fair Value, Net | $ 7,338 | $ (22) |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) - Series of individually immaterial business acquisitions $ in Thousands | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |
Number of Businesses Acquired | 8 |
Payments to Acquire Businesses, Gross | $ 86,442 |
Business acquisition, cost of acquired entity, debt assumed | 24,000 |
Fair value of assumed debt at acquisition (1) | $ 24,982 |
Real Estate Acquisitions (Det38
Real Estate Acquisitions (Details) - Allocation - Series of individually immaterial business acquisitions $ in Thousands | Mar. 31, 2015USD ($) |
Business Acquisition [Line Items] | |
Land and improvements | $ 29,516 |
Building and improvements | 51,186 |
Acquired below-market leases | (3,319) |
Total assets and liabilities acquired | 86,442 |
Fair value of assumed debt at acquisition (1) | 24,982 |
Net assets acquired | 61,460 |
Acquired in-place leases | |
Business Acquisition [Line Items] | |
Acquired finite-lived intangibles | 8,703 |
Acquired above-market leases | |
Business Acquisition [Line Items] | |
Acquired finite-lived intangibles | $ 356 |
Real Estate Acquisitions (Deta
Real Estate Acquisitions (Details) - Weighted-average amortization - Series of individually immaterial business acquisitions | 3 Months Ended |
Mar. 31, 2015 | |
Acquired in-place leases | |
Business Acquisition [Line Items] | |
Acquired finite-lived intangible assets, weighted average useful life | 16 years |
Acquired above-market leases | |
Business Acquisition [Line Items] | |
Acquired finite-lived intangible assets, weighted average useful life | 16 years |
Acquired below-market leases | |
Business Acquisition [Line Items] | |
Acquired finite-lived intangible assets, weighted average useful life | 21 years |
Real Estate Acquisitions (Det40
Real Estate Acquisitions (Details) - Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Acquisition expenses | $ 20 | $ 1,735 |
Series of individually immaterial business acquisitions | ||
Business Acquisition [Line Items] | ||
Revenues | 752 | |
Acquisition expenses | 1,458 | |
Net loss | $ 1,498 |
Real Estate Acquisitions (Det41
Real Estate Acquisitions (Details) - Pro Forma - Series of individually immaterial business acquisitions $ in Thousands | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |
Pro forma revenues | $ 60,970 |
Pro forma net income attributable to stockholders | $ 6,806 |
Mortgages and Loans Payable (De
Mortgages and Loans Payable (Details) | 3 Months Ended | |
Mar. 31, 2016USD ($)loan_trancheoption | Dec. 31, 2015USD ($) | |
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 819,379,000 | $ 854,079,000 |
Weighted-average interest rate on debt | 3.46% | |
Revolving Credit Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 500,000,000 | |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Maturity date extension fee, percent | 0.15% | |
Term Loan Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Number of Term Loan Tranches | loan_tranche | 3 | |
Term Loans Tranche One | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Number of Extension Options | option | 2 | |
Debt Instrument, Period of Extensions to Maturity | 12 months | |
Term Loans Tranche One | Term Loan Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 100,000,000 | |
Term Loans Tranche Two | Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Number of Extension Options | option | 1 | |
Term Loans Tranche Two | Term Loan Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 175,000,000 | |
Term Loans Tranche Three | Term Loan Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 125,000,000 | |
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.30% | |
London Interbank Offered Rate (LIBOR) | Term Loan Facility | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.25% |
Mortgages and Loans Payable (43
Mortgages and Loans Payable (Details) - Debt Obligations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 819,379 | $ 854,079 |
Deferred financing costs, net | (7,881) | (8,564) |
Assumed below-market debt adjustment, net | 5,970 | 6,644 |
Total mortgages and loans payable, net | 811,498 | 845,515 |
Accumulated Amortization, Deferred Finance Costs | 3,400 | 2,800 |
Accumulated Amortization, Deferred Finance Costs Asset | 4,700 | 4,800 |
Accumulated amortization, assumed below-market debt adjustment | 6,700 | 6,500 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | 132,000 | 141,000 |
Fixed-rate mortgages payable | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 281,409 | 306,435 |
Swap agreement interest rate | 5.22% | |
Unsecured Line of Credit Variable-rate [Member] | ||
Debt Instrument [Line Items] | ||
Gross borrowings | $ 7,000 | |
Gross payments | 16,000 | |
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | ||
Debt Instrument [Line Items] | ||
Portion of hedged debt | 387,000 | 387,000 |
Term Loan Facility [Member] | Unsecured variable-rate debt | ||
Debt Instrument [Line Items] | ||
Fixed Rate Debt Instrument Carrying Amount | 387,000 | 387,000 |
Variable Rate Debt instrument Carrying Amount | $ 13,000 | $ 13,000 |
Commitments and Contingencies N
Commitments and Contingencies Narrative (Details) | Mar. 31, 2016claim |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingency, Pending Claims, Number | 0 |
Derivatives and Hedging Activ45
Derivatives and Hedging Activities (Details) | 3 Months Ended | ||
Mar. 31, 2016USD ($)agreement | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Accumulated other comprehensive (loss) income | $ (7,339,000) | $ 22,000 | |
Interest Rate Swap | Designated as Hedging Instrument | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Accumulated other comprehensive (loss) income | $ (7,339,000) | 22,000 | |
Derivative, number of instruments held | agreement | 3 | ||
Derivative, notional amount | $ 387,000,000 | ||
Amount estimated to be reclassified from AOCI into interest expense over the next 12 months | 2,900,000 | ||
Interest Rate Swap | Not Designated as Hedging Instrument | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, notional amount | 11,300,000 | $ 11,300,000 | |
Loss (gain) on derivative not designated as hedges | $ 119,000 | $ 121,000 |
Derivatives and Hedging Activ46
Derivatives and Hedging Activities (Details) - Tabular Disclosure $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance in AOCI as of January 1, 2016 | $ 22 |
Balance in AOCI as of March 31, 2016 | (7,339) |
Interest Rate Swap | Designated as Hedging Instrument | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance in AOCI as of January 1, 2016 | 22 |
Amount of loss recognized in other comprehensive income on derivative | 8,307 |
Amount of loss reclassified from accumulated other comprehensive income into interest expense | (946) |
Current-period other comprehensive income | (7,361) |
Balance in AOCI as of March 31, 2016 | $ (7,339) |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Class of Stock [Line Items] | |||
Share Price | $ 10.20 | ||
OP Units | 2,785,341 | 2,785,341 | |
Class B units | 2,211,000 | 200,000 | 2,083,000 |
Dividend Reinvestment Plan | |||
Class of Stock [Line Items] | |||
Share Price | $ 10.20 | ||
Share Repurchase Program | |||
Class of Stock [Line Items] | |||
Shares repurchased | 212,000 | 514,000 | |
Cost of repurchases | $ 2,162 | $ 4,908 | |
Average repurchase price | $ 10.20 | $ 9.54 | |
Shares submitted for repurchase | 96,000 | 0 | |
Liability recorded | $ 980 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||
Class B units unvested | 2,211 | 200 | 2,083 |
Net income attributable to stockholders | $ 2,219 | $ 4,971 | |
Basic | 182,246 | 182,988 | |
Effect of dilutive OP Units | 2,785 | 2,507 | |
Diluted | 185,031 | 185,495 | |
Basic earnings per share: net income attributable to stockholders | $ 0.01 | $ 0.03 | |
Diluted earnings per share: net income attributable to stockholders | $ 0.01 | $ 0.03 |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Subordinated Participation in Net Sales Proceeds Percentage | 15.00% | ||
Accounts payable – affiliates | $ 4,150 | $ 5,278 | |
Investor Return Before Subordinated Participation in Net Sales Proceeds | 7.00% | ||
Advisor Interest in Special Limited Partner | 15.00% | ||
Sub-Advisor Interest in Special Limited Partner | 85.00% | ||
Subordinated Incentive Listing Fee Percentage | 15.00% | ||
Investor Return Before Subordinated Listing Incentive Fee | 7.00% | ||
Subordinated Distribution Upon Termination of Advisor Agreement Percentage | 15.00% | ||
General and Administrative Expenses of the Company Paid by Sponsor | $ 138 | 124 | |
Advisory Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Fees and Expenses Incurred from Advisor and Sub-Advisor | 5,437 | $ 1,614 | |
Fees and Expenses Owed to Advisor and Sub-Advisor | $ 1,822 | 1,816 | |
Advisory Agreement [Member] | Asset management fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 1.00% | ||
Advisory Agreement [Member] | Asset Management Fee, Portion Paid in Cash, Monthly Payment [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 0.06667% | ||
Advisory Agreement [Member] | Acquisition fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 1.00% | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0 | 855 | |
Accounts payable – affiliates | 0 | 0 | |
Advisory Agreement [Member] | Acquisition Expense Reimbursement [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 139 | |
Accounts payable – affiliates | 0 | 0 | |
Advisory Agreement [Member] | General and Administrative Reimbursements [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 4,619 | 0 | |
Accounts payable – affiliates | 1,539 | 1,538 | |
Advisory Agreement [Member] | Dividend Paid [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 354 | 440 | |
Accounts payable – affiliates | 125 | 119 | |
OP Units Distribution | 464 | 0 | |
OP Units Distribution Payable | 158 | 159 | |
Advisory Agreement [Member] | Financing fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | $ 180 | |
Accounts payable – affiliates | $ 0 | $ 0 | |
Advisory Agreement [Member] | Asset Management Subordination Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Class B Units Issuance Due Date | 60 days | ||
Limited Partners' Capital Account, Units Issued | 128,000 | 400,000 | |
Advisory Agreement [Member] | Disposition fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 2.00% | ||
Cash [Member] | Advisory Agreement [Member] | Asset management fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 80.00% | ||
Unit Distribution [Member] | Advisory Agreement [Member] | Asset management fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Rate | 20.00% |
Related Party Transactions Re50
Related Party Transactions Related Party (Details) - Economic Dependency shares in Thousands | Mar. 31, 2016shares |
Related Party Transactions [Abstract] | |
Shares owned by sub-advisor | 177 |
Percentage of shares owned by sub-advisor | 0.10% |
Related Party Transactions Prop
Related Party Transactions Property Management Transactions (Details) Property Management Transactions - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Property Management Fee, Percent Fee | 4.00% | ||
Allowed Percentage Increase to Leasing Fee Payable | 50.00% | ||
Accounts payable – affiliates | $ 4,150 | $ 5,278 | |
Property Manager Fees and Reimbursements Incurred | 5,951 | $ 5,381 | |
Property Manager Fees and Reimbursements Payable | 2,190 | 3,338 | |
Property Manager [Member] | Property management fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 2,427 | 2,185 | |
Accounts payable – affiliates | 863 | 755 | |
Property Manager [Member] | Leasing Commissions [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 2,195 | 2,028 | |
Accounts payable – affiliates | 748 | 729 | |
Property Manager [Member] | Construction management fee [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 159 | 165 | |
Accounts payable – affiliates | 71 | 155 | |
Property Manager [Member] | Other fees and reimbursements [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 1,170 | $ 1,003 | |
Accounts payable – affiliates | $ 508 | $ 1,699 |
Operating Leases Future Minimum
Operating Leases Future Minimum Rents(Details) $ in Thousands | Mar. 31, 2016USD ($) |
Future rentals to be received under non-cancelable operating leases: | |
April 1 to December 31, 2016 | $ 179,309 |
2,017 | 167,446 |
2,018 | 149,548 |
2,019 | 126,547 |
2,020 | 104,496 |
2021 and thereafter | 415,966 |
Total | $ 1,143,312 |
Subsequent Events (Details) - D
Subsequent Events (Details) - Distributions to Stockholders - USD ($) $ / shares in Units, $ in Thousands | May. 02, 2016 | Apr. 01, 2016 | May. 31, 2016 | Apr. 30, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Subsequent Event [Line Items] | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.17 | $ 0.17 | ||||
Change in accrued share repurchase obligation | $ 15,256 | $ 15,798 | ||||
Net cash distribution | $ 15,064 | $ 14,366 | ||||
Dividend Paid | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.00183060 | |||||
Gross amount of distribution paid | $ 10,054 | $ 10,367 | ||||
Change in accrued share repurchase obligation | 4,887 | 5,076 | ||||
Net cash distribution | $ 5,167 | $ 5,291 | ||||
Dividend Declared | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.00183060 |
Subsequent Events (Details) - T
Subsequent Events (Details) - Tender Offer $ in Millions | Apr. 25, 2016USD ($) |
Subsequent Event | Share Repurchase Program - Tender Offer | |
Subsequent Event [Line Items] | |
Stock Repurchase Program, Authorized Amount | $ 9.3 |