Document and Entity Information
Document and Entity Information - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 | |
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 | 183.4 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Investment in real estate: | ||
Land and improvements | $ 824,718 | $ 796,192 |
Building and improvements | 1,614,465 | 1,532,888 |
Acquired in-place lease assets | 222,527 | 212,916 |
Acquired above-market lease assets | 42,860 | 42,009 |
Total investment in real estate assets | 2,704,570 | 2,584,005 |
Accumulated depreciation and amortization | (390,662) | (334,348) |
Total investment in real estate assets, net | 2,313,908 | 2,249,657 |
Cash and cash equivalents | 5,367 | 8,224 |
Restricted cash | 5,499 | 41,722 |
Other assets, net | 86,480 | 80,585 |
Total assets | 2,411,254 | 2,380,188 |
Liabilities: | ||
Mortgages and loans payable, net | 1,167,847 | 1,056,156 |
Acquired below-market lease liabilities, net of accumulated amortization of $23,363 and $20,255, respectively | 42,546 | 43,032 |
Accounts payable – affiliates | 5,155 | 4,571 |
Accounts payable and other liabilities | 54,125 | 51,642 |
Total liabilities | 1,269,673 | 1,155,401 |
Commitments and contingencies (Note 7) | 0 | 0 |
Equity: | ||
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 0 | 0 |
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 183,059 and 185,062 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 1,831 | 1,851 |
Additional paid-in capital | 1,606,688 | 1,627,098 |
Accumulated other comprehensive income | 9,787 | 10,587 |
Accumulated deficit | (499,198) | (438,155) |
Total stockholders’ equity | 1,119,108 | 1,201,381 |
Noncontrolling interests | 22,473 | 23,406 |
Total equity | 1,141,581 | 1,224,787 |
Total liabilities and equity | $ 2,411,254 | $ 2,380,188 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Acquired below-market lease liabilities, accumulated amortization | $ 23,363 | $ 20,255 |
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 | 183,059,000 | 185,062,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Rental income | $ 53,167 | $ 47,256 | $ 104,260 | $ 94,195 |
Tenant recovery income | 16,454 | 15,509 | 33,390 | 31,453 |
Other property income | 230 | 288 | 504 | 487 |
Total revenues | 69,851 | 63,053 | 138,154 | 126,135 |
Expenses: | ||||
Property operating | 10,297 | 9,657 | 21,729 | 19,948 |
Real estate taxes | 10,155 | 9,230 | 20,413 | 18,641 |
General and administrative | 8,896 | 8,461 | 16,726 | 16,014 |
Acquisition expenses | 313 | 1,502 | 264 | 1,522 |
Depreciation and amortization | 28,207 | 25,977 | 55,831 | 51,683 |
Total expenses | 57,868 | 54,827 | 114,963 | 107,808 |
Other: | ||||
Interest expense, net | (9,501) | (7,601) | (17,891) | (15,333) |
Transaction expenses | (4,383) | 0 | (6,023) | 0 |
Other income (expense), net | 680 | (42) | 636 | (158) |
Net (loss) income | (1,221) | 583 | (87) | 2,836 |
Net loss (income) attributable to noncontrolling interests | 28 | (23) | 0 | (57) |
Net (loss) income attributable to stockholders | $ (1,193) | $ 560 | $ (87) | $ 2,779 |
Earnings per common share: | ||||
Net (loss) income per share attributable to stockholders - basic | $ (0.01) | $ 0 | $ 0 | $ 0.02 |
Net (loss) income per share attributable to stockholders - diluted | $ (0.01) | $ 0 | $ 0 | $ 0.01 |
Weighted-average common shares outstanding: | ||||
Basic | 183,126 | 183,514 | 183,178 | 182,880 |
Diluted | 183,126 | 186,299 | 183,178 | 185,665 |
Comprehensive loss: | ||||
Net (loss) income | $ (1,221) | $ 583 | $ (87) | $ 2,836 |
Other comprehensive loss: | ||||
Unrealized loss on derivatives | (2,994) | (3,240) | (1,775) | (11,547) |
Reclassification of derivative loss to interest expense | 378 | 928 | 975 | 1,874 |
Comprehensive loss | (3,837) | (1,729) | (887) | (6,837) |
Comprehensive loss (income) attributable to noncontrolling interests | 28 | (23) | 0 | (57) |
Comprehensive loss attributable to stockholders | $ (3,809) | $ (1,752) | $ (887) | $ (6,894) |
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, shares at Dec. 31, 2015 | 181,308 | ||||||
Balance, value at Dec. 31, 2015 | $ 1,291,792 | $ 1,813 | $ 1,588,541 | $ 22 | $ (323,761) | $ 1,266,615 | $ 25,177 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share repurchases, shares | (396) | ||||||
Share repurchases, value | (3,889) | $ (4) | (3,885) | (3,889) | |||
Dividend reinvestment plan (DRIP), shares | 2,961 | ||||||
Dividend reinvestment plan (DRIP), value | 30,190 | $ 30 | 30,160 | 30,190 | |||
Change in unrealized loss on interest rate swaps | (9,673) | (9,673) | (9,673) | ||||
Common distributions declared, $0.34 per share | (60,946) | (60,946) | (60,946) | ||||
Distributions to noncontrolling interests | (935) | (935) | |||||
Net (loss) income | 2,836 | 2,779 | 2,779 | 57 | |||
Balance, shares at Jun. 30, 2016 | 183,873 | ||||||
Balance, value at Jun. 30, 2016 | 1,249,375 | $ 1,839 | 1,614,816 | (9,651) | (381,928) | 1,225,076 | 24,299 |
Balance, shares at Dec. 31, 2016 | 185,062 | ||||||
Balance, value at Dec. 31, 2016 | 1,224,787 | $ 1,851 | 1,627,098 | 10,587 | (438,155) | 1,201,381 | 23,406 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share repurchases, shares | (4,246) | ||||||
Share repurchases, value | (43,307) | $ (42) | (43,265) | (43,307) | |||
Dividend reinvestment plan (DRIP), shares | 2,240 | ||||||
Dividend reinvestment plan (DRIP), value | 22,850 | $ 22 | 22,828 | 22,850 | |||
Change in unrealized loss on interest rate swaps | (800) | (800) | (800) | ||||
Common distributions declared, $0.34 per share | (60,956) | (60,956) | (60,956) | ||||
Distributions to noncontrolling interests | (933) | (933) | |||||
Share-based compensation, shares | 3 | ||||||
Share-based compensation, value | 27 | 27 | 27 | ||||
Net (loss) income | (87) | (87) | (87) | 0 | |||
Balance, shares at Jun. 30, 2017 | 183,059 | ||||||
Balance, value at Jun. 30, 2017 | $ 1,141,581 | $ 1,831 | $ 1,606,688 | $ 9,787 | $ (499,198) | $ 1,119,108 | $ 22,473 |
Consolidated Statements of Equ6
Consolidated Statements of Equity (Parenthetical) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Common distributions declared, per share | $ 0.34 | $ 0.34 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (87) | $ 2,836 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 55,051 | 50,315 |
Net amortization of above- and below-market leases | (686) | (582) |
Amortization of deferred financing expense | 2,389 | 2,093 |
Net loss on write-off of unamortized capitalized leasing commissions, market debt adjustments, and deferred financing expense | (411) | (7) |
Straight-line rental income | (1,943) | (1,725) |
Other | (673) | 172 |
Changes in operating assets and liabilities: | ||
Other assets | (8,327) | 1,592 |
Accounts payable – affiliates | 584 | (1,588) |
Accounts payable and other liabilities | 3,060 | 3,849 |
Net cash provided by operating activities | 48,957 | 56,955 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions | (75,824) | (94,385) |
Capital expenditures | (11,483) | (10,325) |
Proceeds from sale of real estate | 37,037 | 0 |
Change in restricted cash | 323 | (299) |
Net cash used in investing activities | (49,947) | (105,009) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in credit facility | 120,000 | 106,500 |
Payments on mortgages and loans payable | (38,934) | (57,159) |
Distributions paid, net of DRIP | (38,520) | (30,973) |
Distributions to noncontrolling interests | (782) | (790) |
Repurchases of common stock | (43,307) | (3,748) |
Payments of deferred financing expenses | (324) | 0 |
Net cash (used in) provided by financing activities | (1,867) | 13,830 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,857) | (34,224) |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 8,224 | 40,680 |
End of period | 5,367 | 6,456 |
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Cash paid for interest | 16,846 | 14,843 |
Fair value of assumed debt | 30,832 | 0 |
Accrued capital expenditures | 3,055 | 1,920 |
Change in distributions payable | (414) | (217) |
Change in distributions payable - noncontrolling interests | 151 | 145 |
Change in accrued share repurchase obligation | 0 | 141 |
Distributions reinvested | 22,850 | 30,190 |
Utilization of restricted cash held for acquisitions | $ (35,900) | $ 0 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2017 | |
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. We invest primarily in well-occupied, grocery-anchored, neighborhood and community shopping centers that have a mix of creditworthy national and regional retailers that sell necessity-based goods and services in strong demographic markets throughout the United States. Our advisor is Phillips Edison NTR LLC (“PE-NTR”), which is directly or indirectly owned by Phillips Edison Limited Partnership (“Phillips Edison sponsor” or “PELP”). Under the terms of the advisory agreement between PE-NTR and us (“PE-NTR Agreement”), PE-NTR is responsible for the management of our day-to-day activities and the implementation of our investment strategy. As of June 30, 2017 , we owned fee simple interests in 158 real estate properties acquired from third parties unaffiliated with us or PE-NTR. On May 18, 2017 , we entered into a definitive contribution agreement to acquire certain real estate assets and the third party asset management business of our Phillips Edison sponsor in a stock and cash transaction valued at approximately $1.0 billion (“PELP transaction”), subject to closing adjustments. For a more detailed discussion, see Note 3. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 six months ended June 30, 2017 . For a full summary of our accounting policies, refer to our 2016 Annual Report on Form 10-K filed with the SEC on March 9, 2017. 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, 2016 , which are included in our 2016 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 and six months ended June 30, 2017 , 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. Reclassifications —The following line items on our consolidated statement of cash flows for the six months ended June 30, 2016 , were reclassified: • Loss on Disposal of Real Estate Assets was reclassified to Other due to limited activity in the current period. • Net Loss on Write-off of Unamortized Capitalized Leasing Commissions, Market Debt Adjustments, and Deferred Financing Expense was separately disclosed due to significance in the current period. In the previous period these amounts were included in Other. Newly Adopted and Recently Issued Accounting Pronouncements —We adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, on January 1, 2017, and applied it prospectively. For a more detailed discussion of this adoption, see Note 5 . 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 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) This update amends existing guidance in order to provide consistency in accounting for the derecognition of a business or nonprofit activity. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We will adopt this standard concurrently with ASU 2014-09, listed above. We expect the adoption will impact our transactions that are subject to the amendments, which, although expected to be infrequent, would include a partial sale of real estate or contribution of a nonfinancial asset to form a joint venture. ASU 2016-18, Statement of Cash Flows (Topic 230) This update amends existing guidance in order to clarify the classification and presentation of restricted cash on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 Upon adoption, we will include amounts generally described as restricted cash within the beginning-of-period and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows. ASU 2016-15, Statement of Cash Flows (Topic 230) This update addresses the presentation of eight specific cash receipts and cash payments on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. Of the eight specific cash receipts and cash payments listed within this guidance, we believe only two would be applicable to our business as it stands currently: debt prepayment or debt extinguishment costs and proceeds from settlement of insurance claims. We will continue to evaluate the impact that adoption of the standard will have on our presentation of these and any other applicable cash receipts and cash payments. 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. This update 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. We have identified areas within our accounting policies we believe could be impacted by the new standard. We expect to have a change in presentation on our consolidated statement of operations with regards to Tenant Recovery Income, which includes reimbursement amounts we receive from tenants for operating expenses such as real estate taxes, insurance, and other common area maintenance. Additionally, this standard impacts the lessor’s ability to capitalize certain costs related to the leasing of vacant space, which will result in a reduction in the amount of execution costs currently being capitalized in connection with leasing activities. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) 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 also applies to certain other transactions such as the sale of real estate or equipment. Expanded quantitative and qualitative disclosures are also required for contracts subject to ASU 2014-09. In 2015, the Financial Accounting Standard Board (“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 Our revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, we do not expect the adoption of this standard to have a material impact on our rental or reimbursement revenue. We currently plan to adopt this guidance on a modified retrospective basis. |
PELP Acquisition (Notes)
PELP Acquisition (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | PELP ACQUISITION On May 18, 2017 , we entered into the PELP transaction valued at approximately $1.0 billion , subject to closing adjustments. Under the terms of the PELP transaction, PELP will receive approximately 45.2 million Operating Partnership units (“OP units”), inclusive of 4.8 million OP units and Class B units already outstanding, in the Operating Partnership, and approximately $50.0 million in cash in exchange for the contribution of PELP’s ownership interests in 76 shopping centers and its third party asset management business. On a pro forma basis, immediately following the closing of the transaction, our shareholders are expected to own approximately 80.2% , and former PELP shareholders are expected to own approximately 19.8% of the combined company. PELP’s outstanding debt of approximately $501 million is expected to be refinanced or assumed by us at closing under the terms of the agreement. The agreement also includes an earn-out structure with an opportunity for PELP to receive up to an additional 12.49 million OP units if certain milestones are achieved related to a liquidity event for our shareholders and fundraising targets in PELP’s third non-traded REIT, Phillips Edison Grocery Center REIT III. The transaction was approved by the independent special committee of our board of directors, which had retained independent financial and legal advisors. The completion of this transaction is subject to the satisfaction of customary conditions, and is expected to close during the fourth quarter of 2017. Although not required by law or under our governing documents, we have conditioned the closing of the transaction on the receipt of the approval of our shareholders. PELP will also seek the approval of its partners. For additional information, please see the Definitive Proxy Statement filed with the SEC on July 5, 2017 (the “Proxy Statement”). The PELP transaction will be accounted for as a business combination in accordance with ASC 805, Business Combinations . As a result, costs incurred in connection with the PELP transaction are expensed and have been recorded as Transaction Expenses on our consolidated statements of operations. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following describes the methods we use to estimate the fair value of our financial and nonfinancial 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. 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 rates used approximate 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 borrowings as of June 30, 2017 and December 31, 2016 (dollars in thousands): June 30, 2017 December 31, 2016 Fair value $ 1,171,842 $ 1,056,990 Recorded value (1) 1,175,945 1,065,180 (1) Recorded value does not include deferred financing costs of $8.1 million and $9.0 million as of June 30, 2017 and December 31, 2016 , respectively. Derivative Instruments — As of June 30, 2017 and December 31, 2016 , we had three interest rate swaps that fixed LIBOR on $387 million of our unsecured term loan facility (“Term Loans”), as well as a forward starting interest rate swap, which became effective July 1, 2017, that fixes LIBOR on $255 million of our Term Loans. For a more detailed discussion of our cash flow hedges, see Note 8 . As of June 30, 2017 and December 31, 2016 , we were also party to an interest rate swap that fixed the variable interest rate on $10.9 million and $11.0 million , respectively, of one of our mortgage notes. The change in fair value of this instrument is recorded in Other Expense, Net on the consolidated statements of operations and was not material for the three and six months ended June 30, 2017 and 2016. All interest rate swap agreements are measured at fair value on a recurring basis. The fair values of the interest rate swap agreements as of June 30, 2017 and December 31, 2016 , were based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and were 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 June 30, 2017 and December 31, 2016 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions 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. We record derivative assets in Other Assets, Net and derivative liabilities in Accounts Payable and Other Liabilities on our consolidated balance sheets. The fair value measurements of our derivative assets and liabilities as of June 30, 2017 and December 31, 2016 , were as follows (in thousands): June 30, 2017 December 31, 2016 Derivative asset: Interest rate swaps designated as hedging instruments - Term Loans $ 11,126 $ 11,916 Derivative liability: Interest rate swap not designated as hedging instrument - mortgage note 149 262 |
Real Estate Acquisitions
Real Estate Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate Investments, Net [Abstract] | |
Real Estate Acquisitions | REAL ESTATE ACQUISITIONS In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . This update amends existing guidance in order to clarify when an integrated set of assets and activities is considered a business. We adopted ASU 2017-01 on January 1, 2017, and applied it prospectively. Under this new guidance, most of our real estate acquisition activity will no longer be considered a business combination and will instead be classified as an asset acquisition. As a result, most acquisition-related costs that would have been recorded on our consolidated statements of operations have been capitalized and will be amortized over the life of the related assets. Costs incurred related to properties that were not ultimately acquired were recorded as Acquisition Expenses on our consolidated statements of operations. As of June 30, 2017 , none of our real estate acquisitions in 2017 met the definition of a business; therefore, we accounted for all as asset acquisitions. During the six months ended June 30, 2017 , we acquired five grocery-anchored shopping centers. Our first quarter acquisition closed out the reverse Section 1031 like-kind exchange outstanding as of December 31, 2016. During the six months ended June 30, 2016 , we acquired two grocery-anchored shopping centers and additional real estate adjacent to a previously acquired shopping center. For the six months ended June 30, 2017 and 2016 , we allocated the purchase price of our acquisitions, including acquisition costs for 2017, to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2017 2016 Land and improvements $ 27,139 $ 40,088 Building and improvements 72,597 48,999 Acquired in-place leases 9,611 8,849 Acquired above-market leases 850 1,725 Acquired below-market leases (2,622 ) (5,728 ) Total assets and lease liabilities acquired 107,575 93,933 Less: Fair value of assumed debt at acquisition 30,832 — Net assets acquired $ 76,743 $ 93,933 The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the six months ended June 30, 2017 and 2016 , are as follows (in years): 2017 2016 Acquired in-place leases 13 14 Acquired above-market leases 7 6 Acquired below-market leases 20 23 |
Mortgages and Loans Payable
Mortgages and Loans Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Mortgages and Loans Payable | MORTGAGES AND LOANS PAYABLE The following is a summary of the outstanding principal balances of our debt obligations as of June 30, 2017 and December 31, 2016 (in thousands): Interest Rate (1) June 30, 2017 December 31, 2016 Revolving credit facility (2)(3) 2.47% $ 296,969 $ 176,969 Term loan due 2019 (3) 2.46% 100,000 100,000 Term loan due 2020 (3) 2.65% 175,000 175,000 Term loan due 2021 2.42%-2.80% 125,000 125,000 Term loan due 2023 2.87% 255,000 255,000 Mortgages payable (4) 3.67%-7.91% 219,833 228,721 Assumed market debt adjustments, net (5) 4,143 4,490 Deferred financing costs, net (6) (8,098 ) (9,024 ) Total $ 1,167,847 $ 1,056,156 (1) Includes the effects of derivative financial instruments (see Notes 4 and 8 ) as of June 30, 2017 . (2) The gross borrowings under our revolving credit facility were $191 million during the six months ended June 30, 2017 . The gross payments on our revolving credit facility were $71 million during the six months ended June 30, 2017 . The revolving credit facility had a capacity of $500 million as of June 30, 2017 and December 31, 2016 . (3) The revolving credit facility matures in December 2017. Prior to maturity and in connection with the PELP transaction, we anticipate refinancing this facility. If we do not refinance, we will exercise our option to extend the maturity to 2018. The term loans have options to extend their maturities to 2021. A maturity date extension for the first or second tranche on the term loans requires the payment of an extension fee of 0.15% of the outstanding principal amount of the corresponding tranche. (4) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties securing such mortgages are neither available to pay the debts of the consolidated property-holding limited liability companies, nor do they constitute obligations of such consolidated limited liability companies as of June 30, 2017 and December 31, 2016 . (5) Net of accumulated amortization of $4.4 million and $6.1 million as of June 30, 2017 and December 31, 2016 , respectively. (6) Deferred financing costs shown are related to our Term Loans and mortgages payable and are net of accumulated amortization of $4.7 million and $3.9 million as of June 30, 2017 and December 31, 2016 , respectively. Deferred financing costs related to the revolving credit facility, which are included in Other Assets, Net, were $1.0 million and $2.2 million as of June 30, 2017 and December 31, 2016 , respectively, and are net of accumulated amortization of $7.9 million and $6.7 million , respectively. As of June 30, 2017 and December 31, 2016 , the weighted-average interest rate for all of our mortgages and loans payable was 3.1% and 3.0% , respectively. The allocation of total debt between fixed and variable-rate and between secured and unsecured, excluding market debt adjustments and deferred financing costs, as of June 30, 2017 and December 31, 2016 , is summarized below (in thousands): June 30, 2017 December 31, 2016 As to interest rate: (1) Fixed-rate debt $ 606,833 $ 615,721 Variable-rate debt 564,969 444,969 Total $ 1,171,802 $ 1,060,690 As to collateralization: Unsecured debt $ 951,968 $ 831,969 Secured debt 219,834 228,721 Total $ 1,171,802 $ 1,060,690 (1) Includes the effects of derivative financial instruments (see Notes 4 and 8 ). |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Litigation We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effect on our consolidated financial statements. Environmental Matters In connection with the ownership and operation of real estate, we may potentially be liable for costs and damages related to environmental matters. In addition, we may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property, and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify us against future remediation costs. We also carry environmental liability insurance on our properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which we may be liable. We are not aware of any environmental matters which we believe are reasonably likely to have a material effect on our consolidated financial statements. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 6 Months Ended |
Jun. 30, 2017 | |
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 Income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2017 and 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. For the three and six months ended June 30, 2017 , the ineffective portion of the change in fair value of the derivatives recognized directly in earnings was not material. A floor feature on the interest rate of our hedged debt that was not included on the associated interest rate swap caused this ineffectiveness. Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next twelve months, the estimated additional amount that will be reclassified from Other Comprehensive Loss to Interest Expense, Net is not material. The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2017 and December 31, 2016 , and includes an interest rate swap that we entered into in October 2016 with a notional amount of $255 million that became effective July 1, 2017 (notional amount in thousands): Count Notional Amount Fixed LIBOR Maturity Date 4 $642,000 1.2% - 1.5% 2019 - 2023 Credit-risk-related Contingent Features We have agreements with our derivative counterparties that contain provisions 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 June 30, 2017 and December 31, 2016 , the fair value of our derivatives excluded any adjustment for nonperformance risk related to these agreements. As of June 30, 2017 and December 31, 2016 , we had not posted any collateral related to these agreements. |
Equity (Notes)
Equity (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Equity | EQUITY On May 9, 2017 , 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 as of March 31, 2017 . We engaged a third party valuation firm to provide a calculation of the range in estimated value per share of our common stock as of March 31, 2017 , which reflected certain balance sheet assets and liabilities as of that date. Dividend Reinvestment Plan —We have adopted a DRIP that allows stockholders to invest distributions in additional shares of our common stock. For the six months ended June 30, 2017 and 2016 , shares were issued under the DRIP at a price of $10.20 per share. In connection with the PELP transaction (see Note 3 ), the DRIP was suspended during May 2017; therefore, all DRIP participants received their May distribution, which was payable in June, in cash rather than in stock. The DRIP plan resumed in June 2017, with distributions payable in July 2017. Share Repurchase Program —Our share repurchase program (“SRP”) provides an opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations. 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 board of directors reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase. In connection with the PELP transaction, the SRP was suspended during May 2017 and resumed in June 2017. During the six months ended June 30, 2017 , repurchase requests surpassed the funding limits under the SRP. Due to the program’s funding limits, no funds will be available for the remainder of 2017. When we are unable to fulfill all repurchase requests in any month, we will honor requests on a pro rata basis to the extent possible. As of June 30, 2017 , we had 9.5 million shares of unfulfilled repurchase requests, which will be treated as requests for repurchase during future months until satisfied or withdrawn. We continue to fulfill repurchases sought upon a stockholder’s death, “qualifying disability,” or “determination of incompetence” in accordance with the terms of the SRP. Class B and Operating Partnership Units —The Operating Partnership issues limited partnership units that are designated as Class B 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. Once vested, Class B units may be converted into OP units in accordance with the terms of the Operating Partnership’s Second Amended and Restated Agreement of Limited Partnership, as amended (the “Partnership Agreement”). 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. As the form of the redemptions for the OP units is within our control, the OP units outstanding as of June 30, 2017 and December 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 number of outstanding OP units and unvested Class B units as of June 30, 2017 and December 31, 2016 (in thousands): June 30, 2017 December 31, 2016 OP units 2,785 2,785 Class B units 2,892 2,610 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 income available to common stockholders by the weighted-average number of shares of common stock 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 us 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 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 for the three and six months ended June 30, 2017 and 2016 . Since the OP units are fully vested, they were treated as potentially dilutive in the diluted net (loss) income per share computations for the three and six months ended June 30, 2017 and 2016 . The vesting of the Class B units is contingent upon a market condition and service condition. Since the satisfaction of both conditions was not probable as of June 30, 2017 and 2016 , the Class B units remained unvested and thus were not included in the diluted net (loss) income per share computations. There were 2.9 million and 2.3 million unvested Class B units outstanding as of June 30, 2017 and 2016 , 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 and six months ended June 30, 2017 and 2016 (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator for basic and diluted earnings per share: Net (loss) income attributable to stockholders $ (1,193 ) $ 560 $ (87 ) $ 2,779 Denominator: Denominator for basic earnings per share - weighted-average shares 183,126 183,514 183,178 182,880 Effect of dilutive OP units — 2,785 — 2,785 Denominator for diluted earnings per share - adjusted weighted-average shares 183,126 186,299 183,178 185,665 Basic earnings per common share: Net (loss) income attributable to stockholders $ (0.01 ) $ 0.00 $ (0.00 ) $ 0.02 Diluted earnings per common share: Net (loss) income attributable to stockholders $ (0.01 ) $ 0.00 $ (0.00 ) $ 0.01 As of June 30, 2017 , approximately 2.8 million OP units and 7,400 restricted stock awards were outstanding. For the three and six months ended June 30, 2017 , these securities were anti-dilutive and, as a result, were excluded from the weighted average common shares used to calculate diluted EPS. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
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, the Property Manager, and/or 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 June 30, 2017 and December 31, 2016 , PE-NTR owned 176,509 shares of our common stock, or approximately 0.1% 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, 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. Expenditures are reimbursed to PE-NTR based on amounts incurred on our behalf. Acquisition Fee —We pay PE-NTR under the PE-NTR Agreement 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% of the cost of investments we acquire or originate, including any debt attributable to such investments. Due Diligence Fee —We reimburse PE-NTR for expenses incurred related to selecting, evaluating, and acquiring assets on our behalf, including certain personnel costs. Asset Management Fee and Subordinated Participation —The asset management compensation is equal to 1% of the cost of our assets, and 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 at the rate of 0.06667% multiplied by the cost of our assets as of the last day of the preceding monthly period. Within 60 days after the end of each calendar quarter (subject to the approval of our board of directors), we 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% 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) at the same rate as distributions are paid to common stockholders. These 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 six months ended June 30, 2017 and 2016 , the Operating Partnership issued 0.3 million Class B units 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 its affiliates, 2% 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 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 June 30, 2017 and December 31, 2016 , we owed PE-NTR and their affiliates approximately $154,000 and $43,000 , 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 unpaid general and administrative expenses, which we disclose above, for the three and six months ended June 30, 2017 and 2016 , and any related amounts unpaid as of June 30, 2017 and December 31, 2016 (in thousands): Three Months Ended Six Months Ended Unpaid Amount as of June 30, June 30, June 30, December 31, 2017 2016 2017 2016 2017 2016 Acquisition fees (1) $ 902 $ 940 $ 1,050 $ 940 $ — $ — Due diligence fees (1) 183 155 213 155 78 29 Asset management fees (2) 5,228 4,711 10,317 9,330 1,766 1,687 OP units distribution (3) 465 464 925 928 158 158 Class B units distribution (4) 473 382 911 736 155 148 Disposition fees 19 — 19 — — — Total $ 7,270 $ 6,652 $ 13,435 $ 12,089 $ 2,157 $ 2,022 (1) Prior to January 1, 2017, acquisition and due diligence fees were recorded on our consolidated statements of operations. The majority of these costs are now capitalized and allocated to the related investment in real estate assets on the consolidated balance sheet based on the acquisition-date fair values of the respective assets and liability acquired. (2) Asset management fees are presented in 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 in General and Administrative on the consolidated statements of operations. 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 owned by Phillips Edison affiliates and other third parties. Property Management Fee —We pay to the Property Manager a monthly property management fee of 4% 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 supervises 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 and corporate matters, 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 and six months ended June 30, 2017 and 2016 , and any related amounts unpaid as of June 30, 2017 and December 31, 2016 (in thousands): Three Months Ended Six Months Ended Unpaid Amount as of June 30, June 30, June 30, December 31, 2017 2016 2017 2016 2017 2016 Property management fees (1) $ 2,683 $ 2,572 $ 5,269 $ 4,999 $ 857 $ 840 Leasing commissions (2) 2,077 1,547 4,400 3,742 809 705 Construction management fees (2) 380 254 684 413 163 165 Other fees and reimbursements (3) 1,912 1,406 3,621 2,576 1,015 796 Total $ 7,052 $ 5,779 $ 13,974 $ 11,730 $ 2,844 $ 2,506 (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, General and Administrative, and Transaction Expenses on the consolidated statements of operations based on the nature of the expense. |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2017 | |
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 rental income to be received under non-cancelable operating leases in effect as of June 30, 2017 , assuming no new or renegotiated leases or option extensions on lease agreements, was as follows (in thousands): Year Amount Remaining 2017 $ 103,281 2018 195,464 2019 171,809 2020 149,559 2021 124,903 2022 and thereafter 412,963 Total $ 1,157,979 No single tenant comprised 10% or more of our aggregate annualized base rent as of June 30, 2017 . |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Distributions to Stockholders Distributions equal to a daily amount of $0.00183562 per share of common stock outstanding were paid subsequent to June 30, 2017 , to the stockholders of record from June 1, 2017, through July 31, 2017, as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution June 1, 2017, through June 30, 2017 7/3/2017 $ 10,091 $ 4,383 $ 5,708 July 1, 2017, through July 31, 2017 8/1/2017 10,385 4,468 5,917 In August 2017 our board of directors authorized distributions to the stockholders of record at the close of business each day in the period commencing September 1, 2017, through November 30, 2017, equal to a daily amount of $0.00183562 per share of common stock. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
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, 2016 , which are included in our 2016 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 and six months ended June 30, 2017 , 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. |
Reclassifications | Reclassifications —The following line items on our consolidated statement of cash flows for the six months ended June 30, 2016 , were reclassified: • Loss on Disposal of Real Estate Assets was reclassified to Other due to limited activity in the current period. • Net Loss on Write-off of Unamortized Capitalized Leasing Commissions, Market Debt Adjustments, and Deferred Financing Expense was separately disclosed due to significance in the current period. In the previous period these amounts were included in Other. |
Newly Adopted and Recently Issued Accounting Pronouncements | Newly Adopted and Recently Issued Accounting Pronouncements —We adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, on January 1, 2017, and applied it prospectively. For a more detailed discussion of this adoption, see Note 5 . 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 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) This update amends existing guidance in order to provide consistency in accounting for the derecognition of a business or nonprofit activity. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We will adopt this standard concurrently with ASU 2014-09, listed above. We expect the adoption will impact our transactions that are subject to the amendments, which, although expected to be infrequent, would include a partial sale of real estate or contribution of a nonfinancial asset to form a joint venture. ASU 2016-18, Statement of Cash Flows (Topic 230) This update amends existing guidance in order to clarify the classification and presentation of restricted cash on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 Upon adoption, we will include amounts generally described as restricted cash within the beginning-of-period and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows. ASU 2016-15, Statement of Cash Flows (Topic 230) This update addresses the presentation of eight specific cash receipts and cash payments on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. Of the eight specific cash receipts and cash payments listed within this guidance, we believe only two would be applicable to our business as it stands currently: debt prepayment or debt extinguishment costs and proceeds from settlement of insurance claims. We will continue to evaluate the impact that adoption of the standard will have on our presentation of these and any other applicable cash receipts and cash payments. 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. This update 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. We have identified areas within our accounting policies we believe could be impacted by the new standard. We expect to have a change in presentation on our consolidated statement of operations with regards to Tenant Recovery Income, which includes reimbursement amounts we receive from tenants for operating expenses such as real estate taxes, insurance, and other common area maintenance. Additionally, this standard impacts the lessor’s ability to capitalize certain costs related to the leasing of vacant space, which will result in a reduction in the amount of execution costs currently being capitalized in connection with leasing activities. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) 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 also applies to certain other transactions such as the sale of real estate or equipment. Expanded quantitative and qualitative disclosures are also required for contracts subject to ASU 2014-09. In 2015, the Financial Accounting Standard Board (“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 Our revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, we do not expect the adoption of this standard to have a material impact on our rental or reimbursement revenue. We currently plan to adopt this guidance on a modified retrospective basis. |
Earnings Per Share Earnings Per
Earnings Per Share Earnings Per Share (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share, Policy | 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 income available to common stockholders by the weighted-average number of shares of common stock 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 us 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 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) | 6 Months Ended |
Jun. 30, 2017 | |
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 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) This update amends existing guidance in order to provide consistency in accounting for the derecognition of a business or nonprofit activity. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We will adopt this standard concurrently with ASU 2014-09, listed above. We expect the adoption will impact our transactions that are subject to the amendments, which, although expected to be infrequent, would include a partial sale of real estate or contribution of a nonfinancial asset to form a joint venture. ASU 2016-18, Statement of Cash Flows (Topic 230) This update amends existing guidance in order to clarify the classification and presentation of restricted cash on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 Upon adoption, we will include amounts generally described as restricted cash within the beginning-of-period and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows. ASU 2016-15, Statement of Cash Flows (Topic 230) This update addresses the presentation of eight specific cash receipts and cash payments on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. Of the eight specific cash receipts and cash payments listed within this guidance, we believe only two would be applicable to our business as it stands currently: debt prepayment or debt extinguishment costs and proceeds from settlement of insurance claims. We will continue to evaluate the impact that adoption of the standard will have on our presentation of these and any other applicable cash receipts and cash payments. 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. This update 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. We have identified areas within our accounting policies we believe could be impacted by the new standard. We expect to have a change in presentation on our consolidated statement of operations with regards to Tenant Recovery Income, which includes reimbursement amounts we receive from tenants for operating expenses such as real estate taxes, insurance, and other common area maintenance. Additionally, this standard impacts the lessor’s ability to capitalize certain costs related to the leasing of vacant space, which will result in a reduction in the amount of execution costs currently being capitalized in connection with leasing activities. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) 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 also applies to certain other transactions such as the sale of real estate or equipment. Expanded quantitative and qualitative disclosures are also required for contracts subject to ASU 2014-09. In 2015, the Financial Accounting Standard Board (“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 Our revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, we do not expect the adoption of this standard to have a material impact on our rental or reimbursement revenue. We currently plan to adopt this guidance on a modified retrospective basis. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following is a summary of borrowings as of June 30, 2017 and December 31, 2016 (dollars in thousands): June 30, 2017 December 31, 2016 Fair value $ 1,171,842 $ 1,056,990 Recorded value (1) 1,175,945 1,065,180 (1) Recorded value does not include deferred financing costs of $8.1 million and $9.0 million as of June 30, 2017 and December 31, 2016 , respectively. |
Schedule of Derivative Instruments, Fair Value | The fair value measurements of our derivative assets and liabilities as of June 30, 2017 and December 31, 2016 , were as follows (in thousands): June 30, 2017 December 31, 2016 Derivative asset: Interest rate swaps designated as hedging instruments - Term Loans $ 11,126 $ 11,916 Derivative liability: Interest rate swap not designated as hedging instrument - mortgage note 149 262 |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate Investments, Net [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | For the six months ended June 30, 2017 and 2016 , we allocated the purchase price of our acquisitions, including acquisition costs for 2017, to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2017 2016 Land and improvements $ 27,139 $ 40,088 Building and improvements 72,597 48,999 Acquired in-place leases 9,611 8,849 Acquired above-market leases 850 1,725 Acquired below-market leases (2,622 ) (5,728 ) Total assets and lease liabilities acquired 107,575 93,933 Less: Fair value of assumed debt at acquisition 30,832 — Net assets acquired $ 76,743 $ 93,933 |
Schedule of Finite-lived Intangible Assets Acquired as Part of Business Combination | The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the six months ended June 30, 2017 and 2016 , are as follows (in years): 2017 2016 Acquired in-place leases 13 14 Acquired above-market leases 7 6 Acquired below-market leases 20 23 |
Mortgages and Loans Payable (Ta
Mortgages and Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Principal Balances of Debt Obligations | The following is a summary of the outstanding principal balances of our debt obligations as of June 30, 2017 and December 31, 2016 (in thousands): Interest Rate (1) June 30, 2017 December 31, 2016 Revolving credit facility (2)(3) 2.47% $ 296,969 $ 176,969 Term loan due 2019 (3) 2.46% 100,000 100,000 Term loan due 2020 (3) 2.65% 175,000 175,000 Term loan due 2021 2.42%-2.80% 125,000 125,000 Term loan due 2023 2.87% 255,000 255,000 Mortgages payable (4) 3.67%-7.91% 219,833 228,721 Assumed market debt adjustments, net (5) 4,143 4,490 Deferred financing costs, net (6) (8,098 ) (9,024 ) Total $ 1,167,847 $ 1,056,156 (1) Includes the effects of derivative financial instruments (see Notes 4 and 8 ) as of June 30, 2017 . (2) The gross borrowings under our revolving credit facility were $191 million during the six months ended June 30, 2017 . The gross payments on our revolving credit facility were $71 million during the six months ended June 30, 2017 . The revolving credit facility had a capacity of $500 million as of June 30, 2017 and December 31, 2016 . (3) The revolving credit facility matures in December 2017. Prior to maturity and in connection with the PELP transaction, we anticipate refinancing this facility. If we do not refinance, we will exercise our option to extend the maturity to 2018. The term loans have options to extend their maturities to 2021. A maturity date extension for the first or second tranche on the term loans requires the payment of an extension fee of 0.15% of the outstanding principal amount of the corresponding tranche. (4) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties securing such mortgages are neither available to pay the debts of the consolidated property-holding limited liability companies, nor do they constitute obligations of such consolidated limited liability companies as of June 30, 2017 and December 31, 2016 . (5) Net of accumulated amortization of $4.4 million and $6.1 million as of June 30, 2017 and December 31, 2016 , respectively. (6) Deferred financing costs shown are related to our Term Loans and mortgages payable and are net of accumulated amortization of $4.7 million and $3.9 million as of June 30, 2017 and December 31, 2016 , respectively. Deferred financing costs related to the revolving credit facility, which are included in Other Assets, Net, were $1.0 million and $2.2 million as of June 30, 2017 and December 31, 2016 , respectively, and are net of accumulated amortization of $7.9 million and $6.7 million , respectively. |
Schedule of Debt Allocation | The allocation of total debt between fixed and variable-rate and between secured and unsecured, excluding market debt adjustments and deferred financing costs, as of June 30, 2017 and December 31, 2016 , is summarized below (in thousands): June 30, 2017 December 31, 2016 As to interest rate: (1) Fixed-rate debt $ 606,833 $ 615,721 Variable-rate debt 564,969 444,969 Total $ 1,171,802 $ 1,060,690 As to collateralization: Unsecured debt $ 951,968 $ 831,969 Secured debt 219,834 228,721 Total $ 1,171,802 $ 1,060,690 (1) Includes the effects of derivative financial instruments (see Notes 4 and 8 ). |
Derivatives and Hedging Activ27
Derivatives and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2017 and December 31, 2016 , and includes an interest rate swap that we entered into in October 2016 with a notional amount of $255 million that became effective July 1, 2017 (notional amount in thousands): Count Notional Amount Fixed LIBOR Maturity Date 4 $642,000 1.2% - 1.5% 2019 - 2023 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Outstanding OP Units and Unvested Class B Units | Below is a summary of our number of outstanding OP units and unvested Class B units as of June 30, 2017 and December 31, 2016 (in thousands): June 30, 2017 December 31, 2016 OP units 2,785 2,785 Class B units 2,892 2,610 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three and six months ended June 30, 2017 and 2016 (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator for basic and diluted earnings per share: Net (loss) income attributable to stockholders $ (1,193 ) $ 560 $ (87 ) $ 2,779 Denominator: Denominator for basic earnings per share - weighted-average shares 183,126 183,514 183,178 182,880 Effect of dilutive OP units — 2,785 — 2,785 Denominator for diluted earnings per share - adjusted weighted-average shares 183,126 186,299 183,178 185,665 Basic earnings per common share: Net (loss) income attributable to stockholders $ (0.01 ) $ 0.00 $ (0.00 ) $ 0.02 Diluted earnings per common share: Net (loss) income attributable to stockholders $ (0.01 ) $ 0.00 $ (0.00 ) $ 0.01 As of June 30, 2017 , approximately 2.8 million OP units and 7,400 restricted stock awards were outstanding. For the three and six months ended June 30, 2017 , these securities were anti-dilutive and, as a result, were excluded from the weighted average common shares used to calculate diluted EPS. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Advisor Transactions | Summarized below are the fees earned by and the expenses reimbursable to PE-NTR and ARC, except for unpaid general and administrative expenses, which we disclose above, for the three and six months ended June 30, 2017 and 2016 , and any related amounts unpaid as of June 30, 2017 and December 31, 2016 (in thousands): Three Months Ended Six Months Ended Unpaid Amount as of June 30, June 30, June 30, December 31, 2017 2016 2017 2016 2017 2016 Acquisition fees (1) $ 902 $ 940 $ 1,050 $ 940 $ — $ — Due diligence fees (1) 183 155 213 155 78 29 Asset management fees (2) 5,228 4,711 10,317 9,330 1,766 1,687 OP units distribution (3) 465 464 925 928 158 158 Class B units distribution (4) 473 382 911 736 155 148 Disposition fees 19 — 19 — — — Total $ 7,270 $ 6,652 $ 13,435 $ 12,089 $ 2,157 $ 2,022 (1) Prior to January 1, 2017, acquisition and due diligence fees were recorded on our consolidated statements of operations. The majority of these costs are now capitalized and allocated to the related investment in real estate assets on the consolidated balance sheet based on the acquisition-date fair values of the respective assets and liability acquired. (2) Asset management fees are presented in 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 in General and Administrative on the consolidated statements of operations. |
Property Manager Transactions | Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three and six months ended June 30, 2017 and 2016 , and any related amounts unpaid as of June 30, 2017 and December 31, 2016 (in thousands): Three Months Ended Six Months Ended Unpaid Amount as of June 30, June 30, June 30, December 31, 2017 2016 2017 2016 2017 2016 Property management fees (1) $ 2,683 $ 2,572 $ 5,269 $ 4,999 $ 857 $ 840 Leasing commissions (2) 2,077 1,547 4,400 3,742 809 705 Construction management fees (2) 380 254 684 413 163 165 Other fees and reimbursements (3) 1,912 1,406 3,621 2,576 1,015 796 Total $ 7,052 $ 5,779 $ 13,974 $ 11,730 $ 2,844 $ 2,506 (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, General and Administrative, and Transaction Expenses on the consolidated statements of operations based on the nature of the expense. |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Leases, Operating [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Approximate future rental income to be received under non-cancelable operating leases in effect as of June 30, 2017 , assuming no new or renegotiated leases or option extensions on lease agreements, was as follows (in thousands): Year Amount Remaining 2017 $ 103,281 2018 195,464 2019 171,809 2020 149,559 2021 124,903 2022 and thereafter 412,963 Total $ 1,157,979 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Distributions to Stockholders | Distributions equal to a daily amount of $0.00183562 per share of common stock outstanding were paid subsequent to June 30, 2017 , to the stockholders of record from June 1, 2017, through July 31, 2017, as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution June 1, 2017, through June 30, 2017 7/3/2017 $ 10,091 $ 4,383 $ 5,708 July 1, 2017, through July 31, 2017 8/1/2017 10,385 4,468 5,917 |
Organization (Details)
Organization (Details) $ in Billions | May 18, 2017USD ($) | Jun. 30, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of real estate properties owned | 158 | |
Phillips Edison Limited Partnership | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of real estate properties owned | 76 | |
Business Acquisition [Line Items] | ||
Business combination, date of contribution agreement | May 18, 2017 | |
Business combination, consideration transferred | $ 1 |
PELP Acquisition (Details)
PELP Acquisition (Details) shares in Thousands, $ in Millions | May 18, 2017USD ($)shares | Jun. 30, 2017 |
Business Acquisition [Line Items] | ||
Number of real estate properties | 158 | |
Phillips Edison Limited Partnership | ||
Business Acquisition [Line Items] | ||
Business combination, date of contribution agreement | May 18, 2017 | |
Business combination, consideration transferred | $ | $ 1,000 | |
Business combination, consideration transferred, equity interests issued or issuable, amount | shares | 45,200 | |
Business combination, equity interests outstanding | shares | 4,800 | |
Business combination, payments to acquire business | $ | $ 50 | |
Number of real estate properties | 76 | |
Business combination, post-transaction acquirer ownership percentage | 80.20% | |
Business combination, post-transaction equity interests issued or issuable, percentage | 19.80% | |
Business combination, consideration transferred, liabilities incurred | $ | $ 501 | |
Business combination, contingent consideration, equity interests issuable | shares | 12,490 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Mortgages and Loans Payable - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value Inputs, Liabilities, Quantitative Information | ||
Recorded value | $ 1,175,945 | $ 1,065,180 |
Deferred financing costs | 8,098 | 9,024 |
Fair value, level 3 inputs | ||
Fair Value Inputs, Liabilities, Quantitative Information | ||
Fair value | $ 1,171,842 | $ 1,056,990 |
Fair Value Measurements (Deta36
Fair Value Measurements (Details) - Derivative Instruments $ in Thousands | Jun. 30, 2017USD ($)derivative | Dec. 31, 2016USD ($)derivative |
Interest rate swap | Designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Number of interest rate swap agreements | derivative | 3 | 3 |
Derivative, notional amount | $ 387,000 | $ 387,000 |
Derivative assets / liabilities, at fair value, net | $ 11,126 | $ 11,916 |
Interest rate swap | Not designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Number of interest rate swap agreements | derivative | 1 | 1 |
Derivative, notional amount | $ 10,900 | $ 11,000 |
Derivative assets / liabilities, at fair value, net | (149) | (262) |
Forward swap | Designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Derivative, notional amount | $ 255,000 | $ 255,000 |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Real Estate Investments, Net [Abstract] | ||
Number of real estate acquisitions | 5 | 2 |
Real Estate Acquisitions (Det38
Real Estate Acquisitions (Details) - Allocation - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Real Estate Investments, Net [Abstract] | ||
Land and improvements | $ 27,139 | $ 40,088 |
Building and improvements | 72,597 | 48,999 |
Acquired in-place leases | 9,611 | 8,849 |
Acquired above-market leases | 850 | 1,725 |
Acquired below-market leases | (2,622) | (5,728) |
Total assets and lease liabilities acquired | 107,575 | 93,933 |
Less: Fair value of assumed debt at acquisition | 30,832 | 0 |
Net assets acquired | $ 76,743 | $ 93,933 |
Real Estate Acquisitions (Deta
Real Estate Acquisitions (Details) - Weighted-average amortization | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Acquired in-place leases | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 13 years | 14 years |
Acquired above-market leases | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 7 years | 6 years |
Acquired below-market leases | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 20 years | 23 years |
Mortgages and Loans Payable (De
Mortgages and Loans Payable (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 1,171,802 | $ 1,060,690 |
Assumed market debt adjustments, net | 4,143 | 4,490 |
Deferred financing costs, net | (8,098) | (9,024) |
Total | 1,167,847 | 1,056,156 |
Accumulated amortization, assumed below-market debt adjustment | 4,400 | 6,100 |
Accumulated amortization, deferred finance costs | $ 4,700 | $ 3,900 |
Weighted-average interest rate on debt | 3.10% | 3.00% |
Mortgages | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 219,833 | $ 228,721 |
Minimum | Mortgages | ||
Debt Instrument [Line Items] | ||
Interest rate | 3.67% | |
Maximum | Mortgages | ||
Debt Instrument [Line Items] | ||
Interest rate | 7.91% | |
Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.47% | |
Outstanding principal balance | $ 296,969 | 176,969 |
Gross borrowings | 191,000 | |
Gross payments | 71,000 | |
Line of credit facility, maximum borrowing capacity | 500,000 | 500,000 |
Deferred financing costs, line of credit arrangements, net | 1,000 | 2,200 |
Accumulated amortization of deferred financing costs, line of credit arrangements | $ 7,900 | 6,700 |
Term loan due 2019 | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.46% | |
Outstanding principal balance | $ 100,000 | 100,000 |
Term loan due 2020 | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.65% | |
Outstanding principal balance | $ 175,000 | 175,000 |
Term loan due 2021 | ||
Debt Instrument [Line Items] | ||
Outstanding principal balance | $ 125,000 | 125,000 |
Term loan due 2021 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.42% | |
Term loan due 2021 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.80% | |
Term loan due 2023 | ||
Debt Instrument [Line Items] | ||
Interest rate | 2.87% | |
Outstanding principal balance | $ 255,000 | $ 255,000 |
Term loan facility | ||
Debt Instrument [Line Items] | ||
Maturity date extension fee, percent | 0.15% |
Mortgages and Loans Payable (41
Mortgages and Loans Payable (Details) - Debt Obligations - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Fixed-rate debt | $ 606,833 | $ 615,721 |
Variable-rate debt | 564,969 | 444,969 |
Unsecured debt | 951,968 | 831,969 |
Secured debt | 219,834 | 228,721 |
Total | $ 1,171,802 | $ 1,060,690 |
Derivatives and Hedging Activ42
Derivatives and Hedging Activities (Details) - Designated as hedging instrument $ in Thousands | Jun. 30, 2017USD ($)derivative | Dec. 31, 2016USD ($)derivative |
Interest rate swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, notional amount | $ 387,000 | $ 387,000 |
Interest rate swap | Minimum | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fixed LIBOR | 1.20% | 1.20% |
Interest rate swap | Maximum | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fixed LIBOR | 1.50% | 1.50% |
Forward swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, notional amount | $ 255,000 | $ 255,000 |
London Interbank Offered Rate (LIBOR) | Interest rate swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Count | derivative | 4 | 4 |
Derivative, notional amount | $ 642,000 | $ 642,000 |
Equity (Details)
Equity (Details) - $ / shares shares in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Stockholders' Equity Note [Abstract] | |||
Share price | $ 10.20 | ||
SRP, outstanding requests | 9,500 | ||
OP units | 2,785 | 2,785 | |
Class B units unvested | 2,892 | 2,610 | 2,300 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||
Class B units unvested | 2,892,000 | 2,300,000 | 2,892,000 | 2,300,000 | 2,610,000 |
Numerator for basic and diluted earnings per share: | |||||
Net (loss) income attributable to stockholders | $ (1,193) | $ 560 | $ (87) | $ 2,779 | |
Denominator: | |||||
Denominator for basic earnings per share - weighted-average shares | 183,126,000 | 183,514,000 | 183,178,000 | 182,880,000 | |
Effect of dilutive OP units | 0 | 2,785,000 | 0 | 2,785,000 | |
Denominator for diluted earnings per share - adjusted weighted-average shares | 183,126,000 | 186,299,000 | 183,178,000 | 185,665,000 | |
Basic earnings per common share: | |||||
Net (loss) income per share attributable to stockholders - basic | $ (0.01) | $ 0 | $ 0 | $ 0.02 | |
Diluted earnings per common share: | |||||
Net (loss) income per share attributable to stockholders - diluted | $ (0.01) | $ 0 | $ 0 | $ 0.01 | |
OP units | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 2,800,000 | 2,800,000 | |||
Restricted stock awards | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 7,400 | 7,400 |
Related Party Transactions Rela
Related Party Transactions Related Party (Details) - Economic Dependency - shares | Jun. 30, 2017 | Dec. 31, 2016 |
Related Party Transactions [Abstract] | ||
Shares owned by sub-advisor | 176,509 | 176,509 |
Percentage of shares owned by sub-advisor | 0.10% | 0.10% |
Related Party Transactions Re46
Related Party Transactions Related Party Transactions (Details) - Advisor - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Accounts payable – affiliates | $ 5,155,000 | $ 5,155,000 | $ 4,571,000 | ||
Advisory Agreement | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 7,270,000 | $ 6,652,000 | 13,435,000 | $ 12,089,000 | |
Accounts payable – affiliates | 2,157,000 | $ 2,157,000 | 2,022,000 | ||
Advisory Agreement | Acquisition fee | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 1.00% | ||||
Expenses from transactions with related party | 902,000 | 940,000 | $ 1,050,000 | 940,000 | |
Accounts payable – affiliates | 0 | $ 0 | 0 | ||
Advisory Agreement | Asset management fee | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 1.00% | ||||
Expenses from transactions with related party | 5,228,000 | 4,711,000 | $ 10,317,000 | $ 9,330,000 | |
Accounts payable – affiliates | 1,766,000 | $ 1,766,000 | 1,687,000 | ||
Advisory Agreement | Asset management fee, portion paid in cash, monthly payment | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 0.06667% | ||||
Advisory Agreement | Asset management subordination agreement | |||||
Related Party Transaction [Line Items] | |||||
Class B units issuance due date | 60 days | ||||
Class B units of operating partnership, issued in connection with asset management services | 0.3 | 0.3 | |||
Advisory Agreement | Disposition fee | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 2.00% | ||||
Expenses from transactions with related party | 19,000 | 0 | $ 19,000 | $ 0 | |
Accounts payable – affiliates | 0 | 0 | 0 | ||
Advisory Agreement | General and administrative reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Accounts payable – affiliates | 154,000 | 154,000 | 43,000 | ||
Advisory Agreement | Due diligence fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 183,000 | 155,000 | 213,000 | 155,000 | |
Accounts payable – affiliates | 78,000 | 78,000 | 29,000 | ||
Advisory Agreement | OP units distribution | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 465,000 | 464,000 | 925,000 | 928,000 | |
Accounts payable – affiliates | 158,000 | 158,000 | 158,000 | ||
Advisory Agreement | Class B units distribution | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 473,000 | $ 382,000 | 911,000 | $ 736,000 | |
Accounts payable – affiliates | $ 155,000 | $ 155,000 | $ 148,000 | ||
Advisory Agreement | Cash | Asset management fee | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 80.00% | ||||
Advisory Agreement | Class B units | Asset management fee | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, rate | 20.00% |
Related Party Transactions Re47
Related Party Transactions Related Party Transactions (Details) - Property Manager - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Accounts payable – affiliates | $ 5,155 | $ 5,155 | $ 4,571 | ||
Property Manager | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 7,052 | $ 5,779 | 13,974 | $ 11,730 | |
Accounts payable – affiliates | 2,844 | $ 2,844 | 2,506 | ||
Property Manager | Property management fee | |||||
Related Party Transaction [Line Items] | |||||
Property management fee, percent fee | 4.00% | ||||
Expenses from transactions with related party | 2,683 | 2,572 | $ 5,269 | 4,999 | |
Accounts payable – affiliates | 857 | $ 857 | 840 | ||
Property Manager | Leasing commissions | |||||
Related Party Transaction [Line Items] | |||||
Allowed percentage increase to leasing fee payable | 50.00% | ||||
Expenses from transactions with related party | 2,077 | 1,547 | $ 4,400 | 3,742 | |
Accounts payable – affiliates | 809 | 809 | 705 | ||
Property Manager | Construction management fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 380 | 254 | 684 | 413 | |
Accounts payable – affiliates | 163 | 163 | 165 | ||
Property Manager | Other fees and reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 1,912 | $ 1,406 | 3,621 | $ 2,576 | |
Accounts payable – affiliates | $ 1,015 | $ 1,015 | $ 796 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
Remaining 2,017 | $ 103,281 |
2,018 | 195,464 |
2,019 | 171,809 |
2,020 | 149,559 |
2,021 | 124,903 |
2022 and thereafter | 412,963 |
Total | $ 1,157,979 |
Subsequent Events (Details) - D
Subsequent Events (Details) - Distributions - USD ($) $ / shares in Units, $ in Thousands | Aug. 01, 2017 | Jul. 03, 2017 | Jul. 31, 2017 | Nov. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Subsequent Event [Line Items] | ||||||
Common stock, dividends, per share, declared | $ 0.34 | $ 0.34 | ||||
Distributions reinvested | $ 22,850 | $ 30,190 | ||||
Net cash distribution | $ 38,520 | $ 30,973 | ||||
Subsequent event | Dividend paid | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, dividends, per share, declared | $ 0.00183562 | |||||
Gross amount of distribution paid | $ 10,385 | $ 10,091 | ||||
Distributions reinvested | 4,468 | 4,383 | ||||
Net cash distribution | $ 5,917 | $ 5,708 | ||||
Subsequent event | Dividend declared | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, dividends, per share, declared | $ 0.00183562 |