Cover
Cover - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Oct. 29, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-54691 | |
Entity Registrant Name | PHILLIPS EDISON & COMPANY, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 27-1106076 | |
Entity Address, Address Line One | 11501 Northlake Drive | |
Entity Address, City or Town | Cincinnati | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45249 | |
City Area Code | (513) | |
Local Phone Number | 554-1110 | |
Security Exchange Name | NASDAQ | |
Trading Symbol | PECO | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | false | |
Entity Central Index Key | 0001476204 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,600 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 93,700 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Investment in real estate: | ||
Land and improvements | $ 1,528,310 | $ 1,549,362 |
Building and improvements | 3,191,637 | 3,237,986 |
In-place lease assets | 434,373 | 441,683 |
Above-market lease assets | 64,555 | 66,106 |
Total investment in real estate assets | 5,218,875 | 5,295,137 |
Accumulated depreciation and amortization | (1,058,765) | (941,413) |
Net investment in real estate assets | 4,160,110 | 4,353,724 |
Investment in unconsolidated joint ventures | 32,315 | 37,366 |
Total investment in real estate assets, net | 4,192,425 | 4,391,090 |
Cash and cash equivalents | 24,455 | 104,296 |
Restricted cash | 89,760 | 27,641 |
Goodwill | 29,066 | 29,066 |
Other assets, net | 139,451 | 126,470 |
Real estate investments and other assets held for sale | 16,464 | 0 |
Total assets | 4,491,621 | 4,678,563 |
Liabilities: | ||
Debt obligations, net | 1,699,417 | 2,292,605 |
Below-market lease liabilities, net | 96,298 | 101,746 |
Earn-out liability | 45,000 | 22,000 |
Derivative liabilities | 35,779 | 54,759 |
Deferred income | 17,251 | 14,581 |
Accounts payable and other liabilities | 99,488 | 176,943 |
Liabilities of real estate investments held for sale | 640 | 0 |
Total liabilities | 1,993,873 | 2,662,634 |
Commitments and contingencies (Note 8) | 0 | 0 |
Equity: | ||
Preferred stock | 0 | 0 |
Additional paid-in capital (“APIC”) | 3,261,585 | 2,739,358 |
Accumulated other comprehensive loss (“AOCI”) | (34,806) | (52,306) |
Accumulated deficit | (1,054,483) | (999,491) |
Total stockholders’ equity | 2,173,428 | 1,690,359 |
Noncontrolling interests | 324,320 | 325,570 |
Total equity | 2,497,748 | 2,015,929 |
Total liabilities and equity | 4,491,621 | 4,678,563 |
Common Stock | ||
Equity: | ||
Common stock | 196 | 0 |
Common Class B | ||
Equity: | ||
Common stock | $ 936 | $ 2,798 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 650,000,000 | 0 |
Common stock, issued (in shares) | 19,550,000 | 0 |
Common stock, outstanding (in shares) | 19,550,000 | 0 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock, issued (in shares) | 93,663,000 | 93,279,000 |
Common stock, outstanding (in shares) | 93,663,000 | 93,279,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues: | ||||
Rental income | $ 128,826 | $ 123,298 | $ 386,784 | $ 367,418 |
Total fees and management income | 2,435 | 2,581 | 7,095 | 7,506 |
Other property income | 1,073 | 816 | 1,906 | 2,334 |
Total revenues | 132,334 | 126,695 | 395,785 | 377,258 |
Operating Expenses: | ||||
Property operating | 21,608 | 20,835 | 65,784 | 62,226 |
Real estate taxes | 16,375 | 17,282 | 49,762 | 50,847 |
General and administrative | 11,627 | 9,595 | 32,905 | 30,141 |
Depreciation and amortization | 53,901 | 56,095 | 165,829 | 168,692 |
Impairment of real estate assets | 698 | 0 | 6,754 | 0 |
Total operating expenses | 104,209 | 103,807 | 321,034 | 311,906 |
Other: | ||||
Interest expense, net | (18,570) | (20,388) | (57,765) | (65,317) |
Gain on disposal of property, net | 14,093 | 10,734 | 31,678 | 8,616 |
Other (expense) income, net | (7,086) | 196 | (25,595) | 9,565 |
Net income | 16,562 | 13,430 | 23,069 | 18,216 |
Net income attributable to noncontrolling interests | (1,929) | (1,646) | (2,739) | (2,251) |
Net income attributable to stockholders | $ 14,633 | $ 11,784 | $ 20,330 | $ 15,965 |
Earnings per share of common stock: | ||||
Net income per share attributable to stockholders - basic (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.21 | $ 0.16 |
Net income per share attributable to stockholders - diluted (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.21 | $ 0.16 |
Comprehensive loss: | ||||
Net income | $ 16,562 | $ 13,430 | $ 23,069 | $ 18,216 |
Other comprehensive income (loss): | ||||
Change in unrealized value on interest rate swaps | 4,488 | 5,098 | 19,981 | (40,013) |
Comprehensive income (loss) | 21,050 | 18,528 | 43,050 | (21,797) |
Net income attributable to noncontrolling interests | (1,929) | (1,646) | (2,739) | (2,251) |
Change in unrealized value on interest rate swaps attributable to noncontrolling interests | (562) | (653) | (2,471) | 5,145 |
Reallocation of comprehensive loss upon conversion of noncontrolling interests | 0 | 0 | (10) | 0 |
Comprehensive income (loss) attributable to stockholders | $ 18,559 | $ 16,229 | $ 37,830 | $ (18,903) |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Total Stockholders’ Equity | Common StockCommon Stock | Common StockCommon Class B | APIC | AOCI | Accumulated Deficit | Noncontrolling Interests |
Beginning balance (in shares) at Dec. 31, 2019 | 0 | 96,349 | ||||||
Beginning balance at Dec. 31, 2019 | $ 2,168,794 | $ 1,814,006 | $ 0 | $ 2,890 | $ 2,779,130 | $ (20,762) | $ (947,252) | $ 354,788 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Dividend Reinvestment Plan (“DRIP”) (in shares) | 479 | |||||||
Dividend Reinvestment Plan (“DRIP”) | 15,940 | 15,940 | $ 14 | 15,926 | ||||
Share repurchases (in shares) | (96) | |||||||
Share repurchases | (2,700) | (2,700) | $ (3) | (2,697) | ||||
Change in unrealized value on interest rate swaps | (40,013) | (34,868) | (34,868) | (5,145) | ||||
Common distributions declared | (48,809) | (48,809) | (48,809) | |||||
Distributions to noncontrolling interests | (7,105) | (7,105) | ||||||
Share-based compensation (in shares) | 36 | |||||||
Share-based compensation | 3,846 | 2,510 | $ 2 | 2,508 | 1,336 | |||
Conversion of noncontrolling interests (in shares) | 56 | |||||||
Conversion of noncontrolling interests | 0 | 1,861 | $ 2 | 1,859 | (1,861) | |||
Other (in shares) | (2) | |||||||
Other | (516) | (509) | (71) | (438) | (7) | |||
Net income (loss) | 18,216 | 15,965 | 15,965 | 2,251 | ||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | 96,822 | ||||||
Ending balance at Sep. 30, 2020 | 2,107,653 | 1,763,396 | $ 0 | $ 2,905 | 2,796,655 | (55,630) | (980,534) | 344,257 |
Beginning balance (in shares) at Jun. 30, 2020 | 0 | 96,822 | ||||||
Beginning balance at Jun. 30, 2020 | 2,087,469 | 1,746,325 | $ 0 | $ 2,905 | 2,795,434 | (60,075) | (991,939) | 341,144 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Change in unrealized value on interest rate swaps | 5,098 | 4,445 | 4,445 | 653 | ||||
Distributions to noncontrolling interests | 0 | |||||||
Share-based compensation | 1,854 | 1,036 | 1,036 | 818 | ||||
Other | (198) | (194) | 185 | (379) | (4) | |||
Net income (loss) | 13,430 | 11,784 | 11,784 | 1,646 | ||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | 96,822 | ||||||
Ending balance at Sep. 30, 2020 | 2,107,653 | 1,763,396 | $ 0 | $ 2,905 | 2,796,655 | (55,630) | (980,534) | 344,257 |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 93,279 | ||||||
Beginning balance at Dec. 31, 2020 | 2,015,929 | 1,690,359 | $ 0 | $ 2,798 | 2,739,358 | (52,306) | (999,491) | 325,570 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 19,550 | |||||||
Issuance of common stock | 547,401 | 547,401 | $ 196 | 547,205 | ||||
Offering costs, discounts, and commissions | (39,042) | (39,042) | (39,042) | |||||
Dividend Reinvestment Plan (“DRIP”) (in shares) | 280 | |||||||
Dividend Reinvestment Plan (“DRIP”) | 7,368 | 7,368 | $ 8 | 7,360 | ||||
Share repurchases (in shares) | (24) | |||||||
Share repurchases | (123) | (123) | (123) | |||||
Change in unrealized value on interest rate swaps | 19,981 | 17,510 | 17,510 | 2,471 | ||||
Common distributions declared | (75,322) | (75,322) | (75,322) | |||||
Distributions to noncontrolling interests | (10,315) | (10,315) | ||||||
Share-based compensation (in shares) | 100 | |||||||
Share-based compensation | 8,831 | 4,299 | $ 1 | 4,298 | 4,532 | |||
Conversion of noncontrolling interests (in shares) | 28 | |||||||
Conversion of noncontrolling interests | 0 | 743 | 743 | (743) | ||||
Reallocation of operating partnership interests | 0 | (66) | (56) | (10) | 66 | |||
Impact of reverse stock split | 0 | $ (1,871) | 1,871 | |||||
Other | (29) | (29) | (29) | |||||
Net income (loss) | 23,069 | 20,330 | 20,330 | 2,739 | ||||
Ending balance (in shares) at Sep. 30, 2021 | 19,550 | 93,663 | ||||||
Ending balance at Sep. 30, 2021 | 2,497,748 | 2,173,428 | $ 196 | $ 936 | 3,261,585 | (34,806) | (1,054,483) | 324,320 |
Beginning balance (in shares) at Jun. 30, 2021 | 0 | 93,640 | ||||||
Beginning balance at Jun. 30, 2021 | 1,995,388 | 1,672,139 | $ 0 | $ 2,808 | 2,749,680 | (38,732) | (1,041,617) | 323,249 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 19,550 | |||||||
Issuance of common stock | 547,401 | 547,401 | $ 196 | 547,205 | ||||
Offering costs, discounts, and commissions | (39,042) | (39,042) | (39,042) | |||||
Change in unrealized value on interest rate swaps | 4,488 | 3,926 | 3,926 | 562 | ||||
Common distributions declared | (27,499) | (27,499) | (27,499) | |||||
Distributions to noncontrolling interests | (3,536) | (3,536) | ||||||
Share-based compensation (in shares) | 23 | |||||||
Share-based compensation | 3,986 | 1,870 | $ (1) | 1,871 | 2,116 | |||
Impact of reverse stock split | 0 | $ (1,871) | 1,871 | |||||
Net income (loss) | 16,562 | 14,633 | 14,633 | 1,929 | ||||
Ending balance (in shares) at Sep. 30, 2021 | 19,550 | 93,663 | ||||||
Ending balance at Sep. 30, 2021 | $ 2,497,748 | $ 2,173,428 | $ 196 | $ 936 | $ 3,261,585 | $ (34,806) | $ (1,054,483) | $ 324,320 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Stockholders' Equity [Abstract] | |||
Common distributions declared (in dollars per share) | $ 0.255 | $ 0.765 | $ 0.503 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 23,069,000 | $ 18,216,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of real estate assets | 162,979,000 | 164,288,000 |
Impairment of real estate assets | 6,754,000 | 0 |
Depreciation and amortization of corporate assets | 2,850,000 | 4,404,000 |
Net amortization of above- and below-market leases | (2,633,000) | (2,394,000) |
Amortization of deferred financing expenses | 3,581,000 | 3,739,000 |
Amortization of debt and derivative adjustments | 1,133,000 | 2,154,000 |
Gain on disposal of property, net | (31,678,000) | (8,616,000) |
Change in fair value of earn-out liability | 23,000,000 | (10,000,000) |
Straight-line rent | (6,884,000) | (3,131,000) |
Share-based compensation | 8,831,000 | 3,846,000 |
Return on investment in unconsolidated joint ventures | 1,520,000 | 825,000 |
Other | 1,213,000 | 1,497,000 |
Changes in operating assets and liabilities: | ||
Other assets, net | (7,470,000) | (11,914,000) |
Accounts payable and other liabilities | 12,048,000 | (5,669,000) |
Net cash provided by operating activities | 198,313,000 | 157,245,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions | (88,954,000) | (23,014,000) |
Capital expenditures | (49,315,000) | (40,772,000) |
Proceeds from sale of real estate | 180,340,000 | 48,276,000 |
Investment in third parties | (3,000,000) | 0 |
Return of investment in unconsolidated joint ventures | 4,278,000 | 1,949,000 |
Investment in marketable securities | (5,514,000) | 0 |
Net cash provided by (used in) investing activities | 37,835,000 | (13,561,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from the issuance of common stock | 547,401,000 | 0 |
Payment of offering costs | (39,042,000) | 0 |
Repurchases of Class B stock | (77,765,000) | (5,211,000) |
Proceeds from revolving credit facility | 9,000,000 | 255,000,000 |
Payments on revolving credit facility | (9,000,000) | (255,000,000) |
Proceeds from loans payable | 480,000,000 | 0 |
Payments on mortgages and loans payable | (1,077,422,000) | (37,778,000) |
Distributions paid, net of DRIP | (75,669,000) | (49,083,000) |
Distributions to noncontrolling interests | (11,344,000) | (9,406,000) |
Other | (29,000) | (516,000) |
Net cash used in financing activities | (253,870,000) | (101,994,000) |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (17,722,000) | 41,690,000 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | ||
Beginning of period | 131,937,000 | 95,108,000 |
End of period | 114,215,000 | 136,798,000 |
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS: | ||
Cash and cash equivalents | 24,455,000 | 103,910,000 |
Restricted cash | 89,760,000 | 32,888,000 |
Cash, cash equivalents, and restricted cash at end of period | 114,215,000 | 136,798,000 |
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Cash paid for interest | 53,463,000 | 59,906,000 |
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities | 239,000 | 551,000 |
Accrued capital expenditures | 4,075,000 | 3,587,000 |
Change in distributions payable | (7,715,000) | (16,214,000) |
Change in distributions payable - noncontrolling interests | (1,029,000) | (2,301,000) |
Change in accrued share repurchase obligation | (77,642,000) | (2,511,000) |
Distributions reinvested | $ 7,368,000 | $ 15,940,000 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. ORGANIZATION Phillips Edison & Company, Inc. (“we,” the “Company,” “PECO,” “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 are a real estate investment trust (“REIT”) that invests primarily in omni-channel grocery-anchored neighborhood and community shopping centers that have a mix of creditworthy national, regional, and local retailers that sell necessity-based goods and services in strong demographic markets throughout the United States. In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to two unconsolidated institutional joint ventures, in which we have a partial ownership interest, and one private fund (collectively, the “Managed Funds”) as of September 30, 2021. As of September 30, 2021, we wholly-owned 267 real estate properties. Additionally, we owned a 14% interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture that owned 20 properties, and a 20% equity interest in Necessity Retail Partners (“NRP”), a joint venture that owned two properties. On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”). The Articles of Amendment became effective upon filing with, and acceptance by, the State Department of Assessments and Taxation of Maryland on July 2, 2021. Unless otherwise indicated, all information in this Form 10-Q gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively. On July 2, 2021, our board of directors (the “Board”) approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding Operating Partnership units (“OP units”). Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (Note 9). On July 19, 2021, we closed our underwritten initial public offering (“underwritten IPO”), through which we offered 17.0 million shares of a new class of common stock, $0.01 par value per share, at an initial price to the public of $28.00 per share, pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (“SEC”) on Form S-11 (File No. 333-255846), as amended. In connection with the underwritten IPO, the underwriters exercised a 30-day option to purchase additional shares of common stock to cover overallotments, and, accordingly, on August 2, 2021, we settled the sale of an additional 2.6 million shares at a price of $28.00 per share. These shares are listed on the Nasdaq Global Select Market (“NASDAQ”) under the trading symbol “PECO”. The underwritten IPO, including the underwriters overallotment election, resulted in gross proceeds of $547.4 million. On September 20, 2021, the SEC declared effective our bond offering registration as filed on Form S-3 (File Nos. 333-259059 and 333-259059-01) relating to the offer, from time to time, of an unspecified number of debt securities not to exceed a maximum aggregate offering of $1 billion (“Bond Registration”). In October 2021, in connection with this registration, we settled $350 million aggregate principal amount of 2.625% senior notes (“2021 Bond Offering”) priced at 98.692% of the principal amount and maturing in November 2031. The notes are fully and unconditionally guaranteed by us. Following our underwritten IPO, we are presenting common stock and Class B common stock as separate classes within our consolidated balance sheets and consolidated statements of equity. Any references to “common stock” in this 10-Q refer to our Nasdaq-listed shares sold through the underwritten IPO, whereas Class B common stock refers to the newly-created class of common stock that is not listed. This applies to all historical periods presented herein. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Set forth below is a summary of the significant accounting estimates and policies that management believes are important to the preparation of our condensed consolidated interim financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by management. For example, significant estimates and assumptions have been made with respect to the useful lives of assets, remaining hold period of assets, recoverable amounts of receivables, and other fair value measurement assessments required for the preparation of the consolidated interim financial statements. As a result, these estimates are subject to a degree of uncertainty. Beginning in 2020, the coronavirus (“COVID-19”) pandemic has caused significant disruption to our operations. All temporarily closed tenants have since been permitted to reopen; however, certain of our tenants have permanently closed. We have backfilled a number of these spaces and continue to work on backfilling any remaining vacancies. The continuing economic impacts of the COVID-19 pandemic could result in increased permanent store closures, reduce the demand for leasing space in our shopping centers, and/or result in a decline in occupancy and rental revenues in our real estate portfolio. Because of the adverse economic conditions that have occurred as a result of the impacts of the COVID-19 pandemic and any remaining uncertainty related to the pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly. All of this activity impacts our estimates around the collectibility of revenue and valuation of real estate assets, goodwill and other intangible assets, and certain liabilities, among others. There were no changes to our significant accounting policies during the nine months ended September 30, 2021, except for those discussed below. For a full summary of our accounting policies, refer to our 2020 Annual Report on Form 10-K as originally filed with the SEC on March 12, 2021. Basis of Presentation and Principles of Consolidation —The accompanying condensed 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 our audited consolidated financial statements for the year ended December 31, 2020, which are included in our 2020 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 nine months ended September 30, 2021 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. Underwritten IPO Costs —Underwritten IPO costs are offset against underwritten IPO proceeds and included as a component of APIC on the consolidated balance sheets. Costs incurred that were related to our underwritten IPO activities but were not directly related to our equity raise were not capitalized and are included as transaction costs, currently in Other (Expense) Income, Net on our consolidated statements of operations and comprehensive income (loss) (“consolidated statements of operations”). As of September 30, 2021, we had underwritten IPO costs of approximately $39.0 million, and we incurred costs related to our underwritten IPO but not directly related to our equity raise of approximately $1.0 million. Income Taxes —Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be treated as Taxable REIT Subsidiaries and are subject to U.S. federal, state, and local income taxes at regular corporate tax rates. We recognized an insignificant amount of federal, state, and local income tax expense for the three and nine months ended September 30, 2021 and 2020, and we retain a full valuation allowance for our deferred tax asset. All income tax amounts are included in Other (Expense) Income, Net on our consolidated statements of operations. Recently Issued Accounting Pronouncements —On January 7, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-01 to amend the scope of the guidance in ASU 2020-04 on facilitation of the effects of reference rate reform on financial reporting. Specifically, the amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. We adopted ASU 2021-01 upon its issuance and the adoption of this standard did not have a material impact on our consolidated financial statements. Reclassifications —The following line items on our consolidated statement of cash flows for the nine months ended September 30, 2020 were reclassified to conform to current year presentation: • Return on Investment in Unconsolidated Joint Ventures was listed on a separate line from Other Assets, Net; and • Net Change in Credit Facility was separated into two lines, Proceeds from Revolving Credit Facility and Payments on Revolving Credit Facility. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | 3. LEASES Lessor —The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rental income related to fixed lease payments (1) $ 95,080 $ 94,511 $ 284,531 $ 285,572 Rental income related to variable lease payments (1)(2) 29,919 31,781 88,774 94,278 Straight-line rent amortization (3) 2,365 1,772 6,627 3,103 Amortization of lease assets 898 802 2,602 2,367 Lease buyout income 560 664 3,138 972 Adjustments for collectibility (4) 4 (6,232) 1,112 (18,874) Total rental income $ 128,826 $ 123,298 $ 386,784 $ 367,418 (1) Includes rental income related to lease payments before assessing for collectibility. (2) Variable payments are primarily related to tenant recovery income. (3) For the three and nine months ended September 30, 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $0.2 million and $0.6 million, respectively. Includes favorable adjustments for the three months ended September 30, 2020 of $0.3 million, and unfavorable adjustments of $2.9 million for the nine months ended September 30, 2020. (4) Includes general reserves as well as adjustments for tenants not considered creditworthy for which we are recording revenue on a cash basis, per ASC Topic 842, Leases (“ASC 842”). For the three and nine months ended September 30, 2021, we had net favorable changes to general reserves of $0.5 million and $4.6 million, respectively. Additionally, we had net unfavorable adjustments of $0.5 million and $3.5 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. For the three and nine months ended September 30, 2020, we had net unfavorable adjustments of $0.8 million and $1.7 million, respectively, related to general reserve collections. Additionally, we had net unfavorable adjustments of $5.5 million and $17.2 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands): Year Amount Remaining 2021 $ 95,360 2022 375,318 2023 332,359 2024 279,403 2025 225,293 Thereafter 568,425 Total $ 1,876,158 In response to the COVID-19 pandemic, we executed payment plans with our tenants. As of September 30, 2021, we had $4.1 million of outstanding payment plans with our tenants and we expect to receive remaining amounts owed to us from these plans over a weighted-average term of approximately eleven months. No single tenant comprised 7% or more of our aggregate annualized base rent (“ABR”) as of September 30, 2021. As of September 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.4% and 10.1% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets. Lessee —Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands): Balance Sheet Information Balance Sheet Location September 30, 2021 December 31, 2020 ROU assets, net - operating leases Investment in Real Estate $ 3,975 $ 3,867 ROU assets, net - operating and finance leases Other Assets, Net 1,080 1,438 Operating lease liability Accounts Payable and Other 5,468 5,731 Finance lease liability Debt Obligations, Net 117 164 |
Leases | 3. LEASES Lessor —The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rental income related to fixed lease payments (1) $ 95,080 $ 94,511 $ 284,531 $ 285,572 Rental income related to variable lease payments (1)(2) 29,919 31,781 88,774 94,278 Straight-line rent amortization (3) 2,365 1,772 6,627 3,103 Amortization of lease assets 898 802 2,602 2,367 Lease buyout income 560 664 3,138 972 Adjustments for collectibility (4) 4 (6,232) 1,112 (18,874) Total rental income $ 128,826 $ 123,298 $ 386,784 $ 367,418 (1) Includes rental income related to lease payments before assessing for collectibility. (2) Variable payments are primarily related to tenant recovery income. (3) For the three and nine months ended September 30, 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $0.2 million and $0.6 million, respectively. Includes favorable adjustments for the three months ended September 30, 2020 of $0.3 million, and unfavorable adjustments of $2.9 million for the nine months ended September 30, 2020. (4) Includes general reserves as well as adjustments for tenants not considered creditworthy for which we are recording revenue on a cash basis, per ASC Topic 842, Leases (“ASC 842”). For the three and nine months ended September 30, 2021, we had net favorable changes to general reserves of $0.5 million and $4.6 million, respectively. Additionally, we had net unfavorable adjustments of $0.5 million and $3.5 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. For the three and nine months ended September 30, 2020, we had net unfavorable adjustments of $0.8 million and $1.7 million, respectively, related to general reserve collections. Additionally, we had net unfavorable adjustments of $5.5 million and $17.2 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands): Year Amount Remaining 2021 $ 95,360 2022 375,318 2023 332,359 2024 279,403 2025 225,293 Thereafter 568,425 Total $ 1,876,158 In response to the COVID-19 pandemic, we executed payment plans with our tenants. As of September 30, 2021, we had $4.1 million of outstanding payment plans with our tenants and we expect to receive remaining amounts owed to us from these plans over a weighted-average term of approximately eleven months. No single tenant comprised 7% or more of our aggregate annualized base rent (“ABR”) as of September 30, 2021. As of September 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.4% and 10.1% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets. Lessee —Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands): Balance Sheet Information Balance Sheet Location September 30, 2021 December 31, 2020 ROU assets, net - operating leases Investment in Real Estate $ 3,975 $ 3,867 ROU assets, net - operating and finance leases Other Assets, Net 1,080 1,438 Operating lease liability Accounts Payable and Other 5,468 5,731 Finance lease liability Debt Obligations, Net 117 164 |
Leases | 3. LEASES Lessor —The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rental income related to fixed lease payments (1) $ 95,080 $ 94,511 $ 284,531 $ 285,572 Rental income related to variable lease payments (1)(2) 29,919 31,781 88,774 94,278 Straight-line rent amortization (3) 2,365 1,772 6,627 3,103 Amortization of lease assets 898 802 2,602 2,367 Lease buyout income 560 664 3,138 972 Adjustments for collectibility (4) 4 (6,232) 1,112 (18,874) Total rental income $ 128,826 $ 123,298 $ 386,784 $ 367,418 (1) Includes rental income related to lease payments before assessing for collectibility. (2) Variable payments are primarily related to tenant recovery income. (3) For the three and nine months ended September 30, 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $0.2 million and $0.6 million, respectively. Includes favorable adjustments for the three months ended September 30, 2020 of $0.3 million, and unfavorable adjustments of $2.9 million for the nine months ended September 30, 2020. (4) Includes general reserves as well as adjustments for tenants not considered creditworthy for which we are recording revenue on a cash basis, per ASC Topic 842, Leases (“ASC 842”). For the three and nine months ended September 30, 2021, we had net favorable changes to general reserves of $0.5 million and $4.6 million, respectively. Additionally, we had net unfavorable adjustments of $0.5 million and $3.5 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. For the three and nine months ended September 30, 2020, we had net unfavorable adjustments of $0.8 million and $1.7 million, respectively, related to general reserve collections. Additionally, we had net unfavorable adjustments of $5.5 million and $17.2 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis. Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands): Year Amount Remaining 2021 $ 95,360 2022 375,318 2023 332,359 2024 279,403 2025 225,293 Thereafter 568,425 Total $ 1,876,158 In response to the COVID-19 pandemic, we executed payment plans with our tenants. As of September 30, 2021, we had $4.1 million of outstanding payment plans with our tenants and we expect to receive remaining amounts owed to us from these plans over a weighted-average term of approximately eleven months. No single tenant comprised 7% or more of our aggregate annualized base rent (“ABR”) as of September 30, 2021. As of September 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.4% and 10.1% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets. Lessee —Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands): Balance Sheet Information Balance Sheet Location September 30, 2021 December 31, 2020 ROU assets, net - operating leases Investment in Real Estate $ 3,975 $ 3,867 ROU assets, net - operating and finance leases Other Assets, Net 1,080 1,438 Operating lease liability Accounts Payable and Other 5,468 5,731 Finance lease liability Debt Obligations, Net 117 164 |
Real Estate Activity
Real Estate Activity | 9 Months Ended |
Sep. 30, 2021 | |
Real Estate Investments, Net [Abstract] | |
Real Estate Activity | 4. REAL ESTATE ACTIVITY Property Sales —The following table summarizes our real estate disposition activity (dollars in thousands): Nine Months Ended September 30, 2021 2020 Number of properties sold (1) 20 6 Number of outparcels sold (2)(3) 3 — Proceeds from sale of real estate $ 180,340 $ 48,276 Gain on sale of properties, net (4) 33,121 9,915 (1) We retained an outparcel for one property sold during the nine months ended September 30, 2021, and therefore the sale did not result in a reduction in our total property count. (2) During the nine months ended September 30, 2021, our outparcel sales included: (i) the only remaining portion of one of our properties; therefore, resulting in a reduction in our total property count; and (ii) an undeveloped parcel of land, as well as an outparcel adjacent to one of our centers, neither of which resulted in a reduction in our total property count. (3) In addition to the three outparcels sold during the nine months ended September 30, 2021, a tenant at one of our properties exercised a bargain purchase option to acquire a parcel of land that we previously owned. This generated minimal proceeds for us. (4) The gain on sale of properties, net does not include miscellaneous write-off activity, which is also recorded in Gain on Disposal of Property, Net on the consolidated statements of operations. Subsequent to September 30, 2021, we sold one property for $4.4 million. Acquisitions —The following table summarizes our real estate acquisition activity (dollars in thousands): Nine Months Ended September 30, 2021 2020 Number of properties acquired 4 1 Number of outparcels acquired (1) 3 2 Total acquisition price $ 88,954 $ 23,014 (1) Outparcels acquired are adjacent to shopping centers that we own. The fair value and weighted-average useful life at acquisition for lease intangibles acquired are as follows (dollars in thousands, weighted-average useful life in years): Nine Months Ended September 30, 2021 September 30, 2020 Fair Value Weighted-Average Useful Life Fair Value Weighted-Average Useful Life In-place leases $ 8,728 10 $ 1,682 16 Above-market leases 198 5 120 5 Below-market leases (7,250) 17 (1,882) 26 Subsequent to September 30, 2021, we purchased two properties for $91.2 million. Property Held for Sale —As of September 30, 2021, three properties were classified as held for sale. As of December 31, 2020, no properties were classified as held for sale. Properties classified as held for sale as of September 30, 2021 were under contract to sell, with no substantive contingencies, and the prospective buyers had significant funds at risk as of the reporting date. Subsequent to September 30, 2021, we sold one of our held for sale properties. A summary of assets and liabilities for the properties held for sale as of September 30, 2021 is below (in thousands): September 30, 2021 ASSETS Total investment in real estate assets, net $ 16,109 Other assets, net 355 Total assets $ 16,464 LIABILITIES Below-market lease liabilities, net $ 323 Accounts payable and other liabilities 317 Total liabilities $ 640 |
Other Assets, Net
Other Assets, Net | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets [Abstract] | |
Other Assets, Net | 5. OTHER ASSETS, NET The following is a summary of Other Assets, Net outstanding as of September 30, 2021 and December 31, 2020, excluding amounts related to assets held for sale (in thousands): September 30, 2021 December 31, 2020 Other assets, net: Deferred leasing commissions and costs $ 46,732 $ 41,664 Deferred financing expenses (1) 4,898 13,971 Office equipment, ROU assets, and other 23,418 21,578 Corporate intangible assets 6,706 6,804 Total depreciable and amortizable assets 81,754 84,017 Accumulated depreciation and amortization (43,204) (45,975) Net depreciable and amortizable assets 38,550 38,042 Accounts receivable, net (2) 35,683 46,893 Accounts receivable - affiliates 417 543 Deferred rent receivable, net (3) 37,821 32,298 Prepaid expenses and other 18,623 8,694 Investment in third parties 3,000 — Investment in marketable securities 5,357 — Total other assets, net $ 139,451 $ 126,470 (1) Deferred financing expenses per the above table are related to our revolving line of credit, and as such we have elected to classify them as an asset rather than as a contra-liability. (2) Net of $6.3 million and $8.9 million of general reserves for uncollectible amounts as of September 30, 2021 and December 31, 2020, respectively. Receivables that were removed for tenants considered to be non-creditworthy were $12.5 million and $22.8 million as of September 30, 2021 and December 31, 2020, respectively. (3) Net of $4.8 million and $4.4 million of receivables removed as of September 30, 2021 and December 31, 2020, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy. |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt Obligations | 6. DEBT OBLIGATIONS The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of September 30, 2021 and December 31, 2020 (dollars in thousands): Interest Rate (1) September 30, 2021 December 31, 2020 Revolving credit facility LIBOR + 1.1% $ — $ — Term loans (2) 1.3% - 4.3% 1,105,000 1,622,500 Secured loan facilities 3.4% - 3.5% 395,000 395,000 Mortgages 3.5% - 7.2% 215,597 290,022 Finance lease liability 117 164 Assumed market debt adjustments, net (1,568) (1,543) Deferred financing expenses, net (14,729) (13,538) Total $ 1,699,417 $ 2,292,605 Weighted-average interest rate 3.3 % 3.1 % (1) Interest rates are as of September 30, 2021. (2) Our term loans carry an interest rate of LIBOR plus a spread. While most of the rates are fixed through the use of swaps, there is a portion of these loans that are not subject to a swap, and thus are still indexed to LIBOR. Debt Activity —In July 2021, we entered into a new $980 million credit facility comprised of a $500 million senior unsecured revolving credit facility and two $240 million senior unsecured term loan tranches (the “Refinancing”). In connection with the Refinancing, we paid off a $472.5 million term loan due in November 2025. The revolving credit facility will mature in January 2026, and the two senior unsecured term loan tranches will mature in November 2025 and July 2026, respectively. Additionally, we used proceeds from the underwritten IPO to retire a $375 million term loan that was set to mature in April 2022. In August 2021, we paid down $150 million of our $300 million term loan that was set to mature in November 2023. In October 2021, in connection with our Bond Registration, we settled $350 million aggregate principal amount of 2.625% senior notes priced at 98.692% of the principal amount, resulting in gross proceeds of $345.4 million and maturing in November 2031. The notes are fully and unconditionally guaranteed by us. In October 2021, we paid down the remaining $150 million outstanding balance of our $300 million term loan that was set to mature in November 2023, as described above. Debt Allocation —The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, and including the effects of derivative financial instruments (see Notes 7 and 12) as of September 30, 2021 and December 31, 2020 is summarized below (in thousands): September 30, 2021 December 31, 2020 As to interest rate: Fixed-rate debt $ 1,540,714 $ 1,727,186 Variable-rate debt 175,000 580,500 Total $ 1,715,714 $ 2,307,686 As to collateralization: Unsecured debt $ 1,105,000 $ 1,622,500 Secured debt 610,714 685,186 Total $ 1,715,714 $ 2,307,686 |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | 7. 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 through the use of derivative financial instruments. Specifically, we enter into interest rate swaps 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 —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 changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ended September 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. 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, we estimate that an additional $17.5 million will be reclassified from AOCI as an increase to Interest Expense, Net. The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of September 30, 2021 and December 31, 2020 (dollars in thousands): September 30, 2021 December 31, 2020 Count 5 6 Notional amount $ 930,000 $ 1,042,000 Fixed LIBOR 1.3% - 2.9% 1.3% - 2.9% Maturity date 2022 - 2025 2021 - 2025 Weighted-average term (in years) 2.4 2.8 We assumed five hedges with a notional amount of $570 million as a part of a merger in 2018. The fair value of the five hedges assumed was $14.7 million and is amortized over the remaining lives of the respective hedges and recorded in Interest Expense, Net in the consolidated statements of operations. As of September 30, 2021 and December 31, 2020 there was one remaining hedge with a net unamortized amount remaining of $4.0 million and $5.0 million, respectively. The table below details the nature of the gain and loss recognized on interest rate derivatives designated as cash flow hedges in the consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amount of (loss) gain recognized in Other Comprehensive Income (Loss) $ (417) $ (45) $ 5,397 $ (51,575) Amount of loss reclassified from AOCI into Interest Expense, Net 4,905 5,143 14,584 11,562 Credit-risk-related Contingent Features —We have agreements with our derivative counterparties that contain provisions where, if we 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 September 30, 2021, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $35.8 million. As of September 30, 2021, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions. If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of $35.8 million. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. 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 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. Depending on the nature of the environmental matter, the seller of the property, a tenant of the property, and/or another third party may be 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. Captive Insurance —Our captive insurance company, Silver Rock Insurance, Inc. (“Silver Rock”) provides general liability insurance, wind, reinsurance, and other coverage to us and our related-party joint ventures. We capitalize Silver Rock in accordance with applicable regulatory requirements. Silver Rock established annual premiums based on the past loss experience of the insured properties. An independent third party was engaged to perform an actuarial estimate of projected future claims, related deductibles, and projected future expenses necessary to fund associated risk management programs. Premiums paid to Silver Rock may be adjusted based on these estimates, and such premiums may be reimbursed by tenants pursuant to specific lease terms. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Equity | 9. EQUITY General —The holders of common stock are entitled to one vote per share on all matters voted on by stockholders, including one vote per nominee in the election of the Board. Our charter does not provide for cumulative voting in the election of directors. Reverse Stock Split —On July 2, 2021, we effected a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units. Neither the number of authorized shares nor the par value of the common stock were impacted. As a result of the reverse split, every three shares of our common stock or OP units were automatically combined and converted into one issued and outstanding share of common stock or OP unit rounded to the nearest 1/100th share. The reverse stock split impacts all common stock and OP units proportionately and had no impact on any stockholder’s percentage ownership of common stock. In connection with the reverse stock split, the number of shares of common stock and OP units underlying the outstanding share-based awards was also proportionately reduced. All references to shares of common stock, number of OP units, and per share data for all periods presented in our consolidated financial statements and notes have been adjusted to reflect the reverse split on a retroactive basis. Class B Common Stock —On June 18, 2021, our stockholders approved Articles of Amendment that effected the Recapitalization, wherein each share of our common stock outstanding at the time the amendment became effective was converted into one share of a newly created class of Class B common stock. Our Class B common stock is identical to our common stock, except that (i) our Class B common stock is not listed on a national securities exchange, and (ii) upon the six month anniversary of the listing of our common stock for trading on a national securities exchange, or January 15, 2022 (or such earlier date or dates as may be approved by our Board in certain circumstances with respect to all or any portion of the outstanding shares of our Class B common stock), each share of our Class B common stock will automatically, and without any stockholder action, convert into one share of our listed common stock. Underwritten IPO —On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price to the public of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and expect to use the remaining amount to fund external growth with property acquisitions and for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.55 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option. The underwritten IPO, including the underwriters overallotment election, resulted in gross proceeds of $547.4 million. Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to September 30, 2021 were as follows (dollars in thousands, excluding per share amounts): Month Date of Record Monthly Distribution Rate Date Distribution Paid Cash Distribution September 2021 9/15/2021 $ 0.085 10/1/2021 $ 9,623 October 2021 10/15/2021 0.090 11/1/2021 10,189 On November 3, 2021, our Board authorized distributions for November and December 2021, as well as January 2022, to the stockholders of record at the close of business on November 15, 2021, December 15, 2021, and January 19, 2022, respectively, equal to a monthly amount of $0.09 per share of common stock. OP unit holders will receive distributions at the same rate as common stockholders. Convertible Noncontrolling Interests —As of September 30, 2021 and December 31, 2020, we had approximately 13.4 million and 13.3 million outstanding OP units, respectively. Additionally, certain of our outstanding restricted share and performance share awards will result in the issuance of OP units upon vesting in future periods. Under the terms of the Fourth Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), OP unit holders may elect to exchange their OP units. The Operating Partnership controls the form of the redemption, and may elect to exchange OP units either for shares of our Class B common stock, provided that the OP units have been outstanding for at least one year, or for cash. As the form of redemption for OP units is within our control, the OP units outstanding as of September 30, 2021 and December 31, 2020 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets. The table below is a summary of our OP unit activity for the three and nine months ended September 30, 2021 and 2020 (dollars and shares in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 OP units converted into shares of Class B common stock (1) — — 28 56 Distributions paid on OP units (2) $ 3,536 $ — $ 10,315 $ 7,105 (1) OP units are converted into shares of our Class B common stock at a 1:1 ratio. (2) Distributions paid on OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity. Underwritten IPO Grants —In connection with our underwritten IPO, we issued a total of 0.5 million restricted stock units (“RSUs”), inclusive of 0.3 million OP units, and restricted stock awards in the form of time-based stock compensation awards with expenses included within Other (Expense) Income, Net. The shares have a grant price of $28.00 per share and, with the exception of one individual whose award is subject to accelerated vesting provisions, 50% of the shares will vest after 18 months and the remaining 50% will vest after 36 months. Estimated Value per Share —Prior to our underwritten IPO, on April 29, 2021, our Board increased the estimated value per share (“EVPS”) of our common stock to $31.65 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2021. We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock as of March 31, 2021, which reflected certain balance sheet assets and liabilities as of that date. Previously, our EVPS was $26.25, based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2020. Dividend Reinvestment Plan and Share Repurchase Program (“SRP”) —On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 10. 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 Net Income Attributable to 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. 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 have the potential to be exchanged for an equal number of shares of our common stock in accordance with the terms of the Partnership Agreement. The impact of these outstanding OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the OP units based on dividends declared and the OP 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 during the three and nine months ended September 30, 2021 and 2020. The following table provides a reconciliation of the numerator and denominator of the earnings per share calculations, restated for prior periods to display the effect of the reverse split (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2021 2020 2021 2020 Numerator: Net income attributable to stockholders - basic $ 14,633 $ 11,784 $ 20,330 $ 15,965 Net income attributable to convertible OP units (1) 1,929 1,646 2,739 2,251 Net income - diluted $ 16,562 $ 13,430 $ 23,069 $ 18,216 Denominator: Weighted-average shares - basic (2) 108,997 96,822 98,761 96,765 OP units (1) 13,388 14,247 13,371 14,264 Dilutive restricted stock awards 188 119 185 131 Adjusted weighted-average shares - diluted 122,573 111,188 112,317 111,160 Earnings per share of common stock: Basic and diluted income per share $ 0.13 $ 0.12 $ 0.21 $ 0.16 (1) OP units include units that are convertible into Class B common stock or cash, at the Operating Partnership’s option. The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Income Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented. OP units are allocated income on a consistent basis with the common stockholder and therefore have no dilutive impact to earnings per share of common stock. (2) Includes 93.7 million weighted-average shares of Class B common stock and 15.3 million weighted-average shares of common stock. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. RELATED PARTY TRANSACTIONS Revenue —We have entered into agreements with the Managed Funds related to certain advisory, management, and administrative services we provide to their real estate assets in exchange for fees and reimbursement of certain expenses. Summarized below are amounts included in Fees and Management Income. The revenue includes the fees and reimbursements earned by us from the Managed Funds, and other revenues that are not in the scope of ASC Topic 606, Revenue from Contracts with Customers, but that are included in this table for the purpose of disclosing all related party revenues (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Recurring fees (1) $ 1,040 $ 1,233 $ 3,268 $ 3,631 Transactional revenue and reimbursements (2) 573 719 1,502 2,109 Insurance premiums (3) 822 629 2,325 1,766 Total fees and management income $ 2,435 $ 2,581 $ 7,095 $ 7,506 (1) Recurring fees include asset management fees and property management fees. (2) Transactional revenue includes items such as leasing commissions, construction management fees, and acquisition fees. (3) Insurance premium income includes amounts for reinsurance from third parties not affiliated with us. Tax Protection Agreement —Through our Operating Partnership, we are currently party to a tax protection agreement (the “2017 TPA”) with certain partners that contributed property to our Operating Partnership on October 4, 2017, among them certain of our executive officers, including Jeffrey S. Edison, our Chairman and Chief Executive Officer, under which the Operating Partnership has agreed to indemnify such partners for tax liabilities that could accrue to them personally related to our potential disposition of certain properties within our portfolio. The 2017 TPA will expire on October 4, 2027. On July 19, 2021, we entered into an additional tax protection agreement (the “2021 TPA”) with certain of our executive officers, including Mr. Edison. The 2021 TPA carries a term of four years and will become effective upon the expiration of the 2017 TPA. As of September 30, 2021, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $150 million. The protection provided under the terms of the 2021 TPA will expire in 2031. We have not recorded any liability related to the 2017 TPA or the 2021 TPA on our consolidated balance sheets for any periods presented, nor recognized any expense since the inception of the 2017 TPA, owing to the fact that any potential liability under the agreements is controlled by us and we will either (i) continue to own and operate the protected properties or (ii) be able to successfully complete Section 1031 Exchanges (unless there is a change in applicable law) or complete other tax-efficient transactions to avoid any liability under the agreements. Other Related Party Matters —We are the limited guarantor for up to $190 million, capped at $50 million in most instances, of debt for our NRP joint venture. As of September 30, 2021, the outstanding loan balance related to our NRP joint venture was $32.1 million. As of September 30, 2021, we were also the limited guarantor of a $175 million mortgage loan secured by GRP I properties. Our guaranty for both the NRP and GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor. Further, in both cases, we are also party to an agreement with our institutional joint venture partners in which any potential liability under such guarantees will be apportioned between us and our applicable joint venture partner based on our respective ownership percentages in the applicable joint venture. We have no liability recorded on our consolidated balance sheets for either guaranty as of September 30, 2021 and December 31, 2020. Additionally, during 2021, we made a cash investment of $3.0 million into a third-party company in exchange for preferred shares of their stock. As part of the investment agreement, the third-party company committed to enter into leases at two of our properties. As of September 30, 2021, we had entered into two leases under the terms of the investment agreement, both of which carry a term of ten years, over which period we expect to receive contractual rents of $2.6 million in total for both leases. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 12. 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 —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. Debt Obligations —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 September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 December 31, 2020 Recorded Principal Balance (1) Fair Value Recorded Principal Balance (1) Fair Value Term loans $ 1,091,518 $ 1,106,176 $ 1,610,204 $ 1,621,902 Secured portfolio loan facilities 391,492 404,132 391,131 404,715 Mortgages (2) 216,407 223,976 291,270 303,647 Total $ 1,699,417 $ 1,734,284 $ 2,292,605 $ 2,330,264 (1) Recorded principal balances include net deferred financing expenses of $14.7 million and $13.5 million as of September 30, 2021 and December 31, 2020, respectively. Recorded principal balances also include assumed market debt adjustments of $1.6 million and $1.5 million as of September 30, 2021 and December 31, 2020, respectively. We have recorded deferred financing expenses related to our revolving credit facility, which are not included in these balances, but included in Other Assets, Net on our consolidated balance sheets. (2) Our finance lease liability is included in the mortgages line item, as presented . Recurring and Nonrecurring Fair Value Measurements —Our marketable securities, earn-out liability, and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed. Fair value measurements that occurred as of and during the nine months ended September 30, 2021 and the year ended December 31, 2020, were as follows (in thousands): September 30, 2021 December 31, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Recurring Marketable securities $ 5,357 $ — $ — $ — $ — $ — Derivative liabilities (1) — (35,779) — — (54,759) — Earn-out liability — — (45,000) — — (22,000) Nonrecurring Impaired real estate assets, net (2) $ — $ 24,000 $ — $ — $ 19,350 $ — Impaired corporate ROU asset, net — — — — 537 — (1) We record derivative liabilities in Derivative Liabilities on our consolidated balance sheets. (2) The carrying value of impaired real estate assets may have subsequently increased or decreased after the measurement date due to capital improvements, depreciation, or sale. Marketable Securities— We estimate the fair value of marketable securities using Level 1 inputs. We utilize unadjusted quoted prices for identical assets in active markets that we have the ability to access. Derivative Instruments— As of September 30, 2021 and December 31, 2020, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities. All interest rate swap agreements are measured at fair value on a recurring basis. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of ASC Topic 820, Fair Value Measurement , we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. 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 September 30, 2021 and December 31, 2020, 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. Earn-out —As part of our acquisition of Phillips Edison Limited Partnership (“PELP”) in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition. After the expiration of certain provisions in 2019, PELP is now eligible to earn a minimum of 1.0 million and a maximum of approximately 1.7 million OP units as contingent consideration based upon the timing and valuation of a liquidity event for PECO. Certain of these performance targets are tied to the post-underwritten IPO trading price of our common stock. The number of OP units awarded will vary based on the highest volume weighted average price per share of our common stock over any 30 consecutive trading day period during the 180 days following the underwritten IPO commencement (the “liquidity event price per share”): • if the liquidity event price per share is greater than or equal to $33.60, PELP will receive approximately 1.7 million OP units; • if the liquidity event price per share is less than $33.60 but greater than or equal to $26.40, PELP will receive a number of OP units equal to (i) 1.0 million plus (ii) the product of (A) approximately 0.7 million and (B) the quotient obtained by dividing the liquidity event price per share in excess of $26.40 by $7.20; or • if the liquidity event price per share is less than $26.40, PELP will receive 1.0 million OP units. Prior to the second quarter of 2021, we estimated the fair value of the earn-out liability on a quarterly basis using the Monte Carlo method. Following our underwritten IPO, the only remaining variable for calculating final amounts to be paid under the earn-out agreement was the liquidity event price per share. Therefore, as of September 30, 2021, we estimated the fair value of the liability related to the earn-out using a probability-weighted model to estimate the liquidity event price per share. In calculating the fair value of this liability as of September 30, 2021, we have determined that 1.4 million OP units have been earned with the possibility of up to an additional 0.3 million units being issued. For the three months ended September 30, 2021, we recorded expense of $5.0 million related to the change in fair value of the earn-out liability. There was no change to the fair value of our earn-out liability for the three months ended September 30, 2020. We recorded expense of $23.0 million and income of $10.0 million, respectively, for the nine months ended September 30, 2021 and September 30, 2020 related to changes in the fair value of the earn-out liability. The increase in the fair value of the liability as of September 30, 2021 was attributable to the commencement of our underwritten IPO as well as improved market conditions in 2021. The change in fair value for each period has been recognized in Other (Expense) Income, Net in the consolidated statements of operations. Real Estate Asset Impairment —Our real estate assets are measured and recognized at fair value, less costs to sell for held-for-sale properties, on a nonrecurring basis dependent upon when we determine an impairment has occurred. During the three and nine months ended September 30, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators. The valuation technique used for the fair value of all impaired real estate assets was the expected net sales proceeds, which we consider to be a Level 2 input in the fair value hierarchy. There were no impairment charges recorded during the three and nine months ended September 30, 2020. On a quarterly basis, we employ a multi-step approach to assess our real estate assets for possible impairment and record any impairment charges identified. The first step is the identification of potential triggering events, such as significant decreases in occupancy or the presence of large dark or vacant spaces. If we observe any of these indicators for a shopping center, we then perform an additional screen test consisting of a years-to-recover analysis to determine if we will recover the net carrying value of the property over its remaining economic life based upon net operating income (“NOI”) as forecasted for the current year. In the event that the results of this first step indicate a triggering event for a center, we proceed to the second step, utilizing an undiscounted cash flow model for the center to identify potential impairment. If the undiscounted cash flows are less than the net book value of the center as of the balance sheet date, we proceed to the third step. In performing the third step, we utilize market data such as capitalization rates and sales price per square foot on comparable recent real estate transactions to estimate fair value of the real estate assets. We also utilize expected net sales proceeds to estimate the fair value of any centers that are actively being marketed for sale. If the estimated fair value of the property is less than the recorded net book value at the balance sheet date, we record an impairment charge. In addition to these procedures, we also review undeveloped or unimproved land parcels that we own for evidence of impairment and record any impairment charges as necessary. Primary impairment triggers for these land parcels are changes to our plans or intentions with regards to such properties, or planned dispositions at prices that are less than the current carrying values. It is possible that we could experience unanticipated changes in assumptions that are employed in our impairment review which could impact our cash flows and fair value conclusions. Such unanticipated changes relative to our expectations may include but are not limited to: increases or decreases in the duration or permanence of tenant closures, increases or decreases in collectibility reserves and write-offs, additional capital required to fill vacancies, extended lease-up periods, future closings of large tenants, changes in macroeconomic assumptions such as rate of inflation and capitalization rates, and changes to the estimated timing of disposition of the properties under review. We recorded the following expense upon impairment of real estate assets (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Impairment of real estate assets $ 698 $ — $ 6,754 $ — |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. SUBSEQUENT EVENTS In preparing the condensed and unaudited consolidated financial statements, we have evaluated subsequent events through the filing of this report on Form 10-Q for recognition and/or disclosure purposes. Based on this evaluation, we have determined that there were no events that have occurred that require recognition or disclosure, other than certain events and transactions that have been disclosed elsewhere in these consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation —The accompanying condensed 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 our audited consolidated financial statements for the year ended December 31, 2020, which are included in our 2020 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 nine months ended September 30, 2021 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. |
Underwritten IPO Costs | Underwritten IPO Costs—Underwritten IPO costs are offset against underwritten IPO proceeds and included as a component of APIC on the consolidated balance sheets. Costs incurred that were related to our underwritten IPO activities but were not directly related to our equity raise were not capitalized and are included as transaction costs, currently in Other (Expense) Income, Net on our consolidated statements of operations and comprehensive income (loss) (“consolidated statements of operations”). |
Income Taxes | Income Taxes —Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be treated as Taxable REIT Subsidiaries and are subject to U.S. federal, state, and local income taxes at regular corporate tax rates. We recognized an insignificant amount of federal, state, and local income tax expense for the three and nine months ended September 30, 2021 and 2020, and we retain a full valuation allowance for our deferred tax asset. All income tax amounts are included in Other (Expense) Income, Net on our consolidated statements of operations. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements —On January 7, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-01 to amend the scope of the guidance in ASU 2020-04 on facilitation of the effects of reference rate reform on financial reporting. Specifically, the amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform |
Reclassifications | Reclassifications —The following line items on our consolidated statement of cash flows for the nine months ended September 30, 2020 were reclassified to conform to current year presentation: • Return on Investment in Unconsolidated Joint Ventures was listed on a separate line from Other Assets, Net; and • Net Change in Credit Facility was separated into two lines, Proceeds from Revolving Credit Facility and Payments on Revolving Credit Facility. |
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 Net Income Attributable to 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. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Summary of Operating Leases | All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rental income related to fixed lease payments (1) $ 95,080 $ 94,511 $ 284,531 $ 285,572 Rental income related to variable lease payments (1)(2) 29,919 31,781 88,774 94,278 Straight-line rent amortization (3) 2,365 1,772 6,627 3,103 Amortization of lease assets 898 802 2,602 2,367 Lease buyout income 560 664 3,138 972 Adjustments for collectibility (4) 4 (6,232) 1,112 (18,874) Total rental income $ 128,826 $ 123,298 $ 386,784 $ 367,418 (1) Includes rental income related to lease payments before assessing for collectibility. (2) Variable payments are primarily related to tenant recovery income. (3) For the three and nine months ended September 30, 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $0.2 million and $0.6 million, respectively. Includes favorable adjustments for the three months ended September 30, 2020 of $0.3 million, and unfavorable adjustments of $2.9 million for the nine months ended September 30, 2020. (4) Includes general reserves as well as adjustments for tenants not considered creditworthy for which we are recording revenue on a cash basis, per ASC Topic 842, Leases (“ASC 842”). |
Schedule of Operating Lease Maturity | Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands): Year Amount Remaining 2021 $ 95,360 2022 375,318 2023 332,359 2024 279,403 2025 225,293 Thereafter 568,425 Total $ 1,876,158 |
Schedule of Lessee Leases | Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands): Balance Sheet Information Balance Sheet Location September 30, 2021 December 31, 2020 ROU assets, net - operating leases Investment in Real Estate $ 3,975 $ 3,867 ROU assets, net - operating and finance leases Other Assets, Net 1,080 1,438 Operating lease liability Accounts Payable and Other 5,468 5,731 Finance lease liability Debt Obligations, Net 117 164 |
Real Estate Activity (Tables)
Real Estate Activity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Real Estate Investments, Net [Abstract] | |
Schedule of Real Estate Disposal | The following table summarizes our real estate disposition activity (dollars in thousands): Nine Months Ended September 30, 2021 2020 Number of properties sold (1) 20 6 Number of outparcels sold (2)(3) 3 — Proceeds from sale of real estate $ 180,340 $ 48,276 Gain on sale of properties, net (4) 33,121 9,915 (1) We retained an outparcel for one property sold during the nine months ended September 30, 2021, and therefore the sale did not result in a reduction in our total property count. (2) During the nine months ended September 30, 2021, our outparcel sales included: (i) the only remaining portion of one of our properties; therefore, resulting in a reduction in our total property count; and (ii) an undeveloped parcel of land, as well as an outparcel adjacent to one of our centers, neither of which resulted in a reduction in our total property count. (3) In addition to the three outparcels sold during the nine months ended September 30, 2021, a tenant at one of our properties exercised a bargain purchase option to acquire a parcel of land that we previously owned. This generated minimal proceeds for us. (4) The gain on sale of properties, net does not include miscellaneous write-off activity, which is also recorded in Gain on Disposal of Property, Net on the consolidated statements of operations. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes our real estate acquisition activity (dollars in thousands): Nine Months Ended September 30, 2021 2020 Number of properties acquired 4 1 Number of outparcels acquired (1) 3 2 Total acquisition price $ 88,954 $ 23,014 |
Schedule of Acquired Intangible Leases | The fair value and weighted-average useful life at acquisition for lease intangibles acquired are as follows (dollars in thousands, weighted-average useful life in years): Nine Months Ended September 30, 2021 September 30, 2020 Fair Value Weighted-Average Useful Life Fair Value Weighted-Average Useful Life In-place leases $ 8,728 10 $ 1,682 16 Above-market leases 198 5 120 5 Below-market leases (7,250) 17 (1,882) 26 |
Schedule of Real Estate Held-for-sale | A summary of assets and liabilities for the properties held for sale as of September 30, 2021 is below (in thousands): September 30, 2021 ASSETS Total investment in real estate assets, net $ 16,109 Other assets, net 355 Total assets $ 16,464 LIABILITIES Below-market lease liabilities, net $ 323 Accounts payable and other liabilities 317 Total liabilities $ 640 |
Other Assets, Net (Tables)
Other Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets [Abstract] | |
Schedule of Other Assets | The following is a summary of Other Assets, Net outstanding as of September 30, 2021 and December 31, 2020, excluding amounts related to assets held for sale (in thousands): September 30, 2021 December 31, 2020 Other assets, net: Deferred leasing commissions and costs $ 46,732 $ 41,664 Deferred financing expenses (1) 4,898 13,971 Office equipment, ROU assets, and other 23,418 21,578 Corporate intangible assets 6,706 6,804 Total depreciable and amortizable assets 81,754 84,017 Accumulated depreciation and amortization (43,204) (45,975) Net depreciable and amortizable assets 38,550 38,042 Accounts receivable, net (2) 35,683 46,893 Accounts receivable - affiliates 417 543 Deferred rent receivable, net (3) 37,821 32,298 Prepaid expenses and other 18,623 8,694 Investment in third parties 3,000 — Investment in marketable securities 5,357 — Total other assets, net $ 139,451 $ 126,470 (1) Deferred financing expenses per the above table are related to our revolving line of credit, and as such we have elected to classify them as an asset rather than as a contra-liability. (2) Net of $6.3 million and $8.9 million of general reserves for uncollectible amounts as of September 30, 2021 and December 31, 2020, respectively. Receivables that were removed for tenants considered to be non-creditworthy were $12.5 million and $22.8 million as of September 30, 2021 and December 31, 2020, respectively. (3) Net of $4.8 million and $4.4 million of receivables removed as of September 30, 2021 and December 31, 2020, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of September 30, 2021 and December 31, 2020 (dollars in thousands): Interest Rate (1) September 30, 2021 December 31, 2020 Revolving credit facility LIBOR + 1.1% $ — $ — Term loans (2) 1.3% - 4.3% 1,105,000 1,622,500 Secured loan facilities 3.4% - 3.5% 395,000 395,000 Mortgages 3.5% - 7.2% 215,597 290,022 Finance lease liability 117 164 Assumed market debt adjustments, net (1,568) (1,543) Deferred financing expenses, net (14,729) (13,538) Total $ 1,699,417 $ 2,292,605 Weighted-average interest rate 3.3 % 3.1 % (1) Interest rates are as of September 30, 2021. |
Schedule of Debt Allocation | The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, and including the effects of derivative financial instruments (see Notes 7 and 12) as of September 30, 2021 and December 31, 2020 is summarized below (in thousands): September 30, 2021 December 31, 2020 As to interest rate: Fixed-rate debt $ 1,540,714 $ 1,727,186 Variable-rate debt 175,000 580,500 Total $ 1,715,714 $ 2,307,686 As to collateralization: Unsecured debt $ 1,105,000 $ 1,622,500 Secured debt 610,714 685,186 Total $ 1,715,714 $ 2,307,686 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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 September 30, 2021 and December 31, 2020 (dollars in thousands): September 30, 2021 December 31, 2020 Count 5 6 Notional amount $ 930,000 $ 1,042,000 Fixed LIBOR 1.3% - 2.9% 1.3% - 2.9% Maturity date 2022 - 2025 2021 - 2025 Weighted-average term (in years) 2.4 2.8 |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The table below details the nature of the gain and loss recognized on interest rate derivatives designated as cash flow hedges in the consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amount of (loss) gain recognized in Other Comprehensive Income (Loss) $ (417) $ (45) $ 5,397 $ (51,575) Amount of loss reclassified from AOCI into Interest Expense, Net 4,905 5,143 14,584 11,562 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of Dividends Payable | Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to September 30, 2021 were as follows (dollars in thousands, excluding per share amounts): Month Date of Record Monthly Distribution Rate Date Distribution Paid Cash Distribution September 2021 9/15/2021 $ 0.085 10/1/2021 $ 9,623 October 2021 10/15/2021 0.090 11/1/2021 10,189 |
Schedule of OP Unit Activity | The table below is a summary of our OP unit activity for the three and nine months ended September 30, 2021 and 2020 (dollars and shares in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 OP units converted into shares of Class B common stock (1) — — 28 56 Distributions paid on OP units (2) $ 3,536 $ — $ 10,315 $ 7,105 (1) OP units are converted into shares of our Class B common stock at a 1:1 ratio. (2) Distributions paid on OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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 share calculations, restated for prior periods to display the effect of the reverse split (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2021 2020 2021 2020 Numerator: Net income attributable to stockholders - basic $ 14,633 $ 11,784 $ 20,330 $ 15,965 Net income attributable to convertible OP units (1) 1,929 1,646 2,739 2,251 Net income - diluted $ 16,562 $ 13,430 $ 23,069 $ 18,216 Denominator: Weighted-average shares - basic (2) 108,997 96,822 98,761 96,765 OP units (1) 13,388 14,247 13,371 14,264 Dilutive restricted stock awards 188 119 185 131 Adjusted weighted-average shares - diluted 122,573 111,188 112,317 111,160 Earnings per share of common stock: Basic and diluted income per share $ 0.13 $ 0.12 $ 0.21 $ 0.16 (1) OP units include units that are convertible into Class B common stock or cash, at the Operating Partnership’s option. The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Income Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented. OP units are allocated income on a consistent basis with the common stockholder and therefore have no dilutive impact to earnings per share of common stock. (2) Includes 93.7 million weighted-average shares of Class B common stock and 15.3 million weighted-average shares of common stock. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Disaggregation of Revenue | Summarized below are amounts included in Fees and Management Income. The revenue includes the fees and reimbursements earned by us from the Managed Funds, and other revenues that are not in the scope of ASC Topic 606, Revenue from Contracts with Customers, but that are included in this table for the purpose of disclosing all related party revenues (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Recurring fees (1) $ 1,040 $ 1,233 $ 3,268 $ 3,631 Transactional revenue and reimbursements (2) 573 719 1,502 2,109 Insurance premiums (3) 822 629 2,325 1,766 Total fees and management income $ 2,435 $ 2,581 $ 7,095 $ 7,506 (1) Recurring fees include asset management fees and property management fees. (2) Transactional revenue includes items such as leasing commissions, construction management fees, and acquisition fees. (3) Insurance premium income includes amounts for reinsurance from third parties not affiliated with us. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Summary of Borrowings | The following is a summary of borrowings as of September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 December 31, 2020 Recorded Principal Balance (1) Fair Value Recorded Principal Balance (1) Fair Value Term loans $ 1,091,518 $ 1,106,176 $ 1,610,204 $ 1,621,902 Secured portfolio loan facilities 391,492 404,132 391,131 404,715 Mortgages (2) 216,407 223,976 291,270 303,647 Total $ 1,699,417 $ 1,734,284 $ 2,292,605 $ 2,330,264 (1) Recorded principal balances include net deferred financing expenses of $14.7 million and $13.5 million as of September 30, 2021 and December 31, 2020, respectively. Recorded principal balances also include assumed market debt adjustments of $1.6 million and $1.5 million as of September 30, 2021 and December 31, 2020, respectively. We have recorded deferred financing expenses related to our revolving credit facility, which are not included in these balances, but included in Other Assets, Net on our consolidated balance sheets. (2) Our finance lease liability is included in the mortgages line item, as presented |
Summary of Recurring and Nonrecurring Fair Value | Fair value measurements that occurred as of and during the nine months ended September 30, 2021 and the year ended December 31, 2020, were as follows (in thousands): September 30, 2021 December 31, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Recurring Marketable securities $ 5,357 $ — $ — $ — $ — $ — Derivative liabilities (1) — (35,779) — — (54,759) — Earn-out liability — — (45,000) — — (22,000) Nonrecurring Impaired real estate assets, net (2) $ — $ 24,000 $ — $ — $ 19,350 $ — Impaired corporate ROU asset, net — — — — 537 — (1) We record derivative liabilities in Derivative Liabilities on our consolidated balance sheets. (2) The carrying value of impaired real estate assets may have subsequently increased or decreased after the measurement date due to capital improvements, depreciation, or sale. |
Summary of Nonrecurring Fair Value | We recorded the following expense upon impairment of real estate assets (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Impairment of real estate assets $ 698 $ — $ 6,754 $ — |
Organization (Details)
Organization (Details) $ / shares in Units, shares in Thousands, $ in Millions | Jul. 19, 2021$ / sharesshares | Jul. 02, 2021 | Oct. 31, 2021USD ($) | Sep. 30, 2021property | Sep. 20, 2021USD ($) | Aug. 02, 2021USD ($) |
Schedule of Equity Method Investments [Line Items] | ||||||
Number of real estate properties | property | 267 | |||||
Reverse stock split, conversion ratio | 0.33 | |||||
Issuance of common stock (in shares) | shares | 17,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||||
Stock price (in dollars per share) | $ / shares | $ 28 | |||||
Over-allotment, gross proceeds | $ | $ 547.4 | |||||
Senior notes due November 2031 | Senior notes | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Debt securities, maximum aggregate offering | $ | $ 1,000 | |||||
Senior notes due November 2031 | Senior notes | Subsequent event | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Debt face amount | $ | $ 350 | |||||
Stated interest rate | 2.625% | |||||
Debt discount | 98.692% | |||||
Over-allotment option | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Maximum additional shares granted to underwriters (in shares) | shares | 2,550 | |||||
Grocery Retail Partners I | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Number of real estate properties | property | 20 | |||||
Equity method investment, ownership percentage | 14.00% | |||||
Necessity Retail Partners | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Number of real estate properties | property | 2 | |||||
Equity method investment, ownership percentage | 20.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - IPO $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Subsidiary, Sale of Stock [Line Items] | |
Deferred offering costs | $ 39 |
Underwriting expenses | $ 1 |
Leases - Lessor (Details)
Leases - Lessor (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | |
Operating Lease, Lease Income | ||||
Rental income related to fixed lease payments | $ 95,080 | $ 94,511 | $ 284,531 | $ 285,572 |
Rental income related to variable lease payments | 29,919 | 31,781 | 88,774 | 94,278 |
Straight-line rent amortization | 2,365 | 1,772 | 6,627 | 3,103 |
Amortization of lease assets | 898 | 802 | 2,602 | 2,367 |
Lease buyout income | 560 | 664 | 3,138 | 972 |
Adjustments for collectability | 4 | (6,232) | 1,112 | (18,874) |
Total rental income | 128,826 | 123,298 | 386,784 | 367,418 |
Favorable (unfavorable) adjustments for straight line rent, non-creditworthy | (200) | 300 | (600) | (2,900) |
Favorable (unfavorable) adjustments for collectability, general reserves | 500 | (800) | 4,600 | (1,700) |
Unfavorable adjustments for collectability, collections received, non-creditworthy | 500 | $ 5,500 | 3,500 | $ 17,200 |
Future Minimum Payments Due, Maturity | ||||
Remaining 2021 | 95,360 | 95,360 | ||
2022 | 375,318 | 375,318 | ||
2023 | 332,359 | 332,359 | ||
2024 | 279,403 | 279,403 | ||
2025 | 225,293 | 225,293 | ||
Thereafter | 568,425 | 568,425 | ||
Total | 1,876,158 | 1,876,158 | ||
Lease income deferred | $ 4,100 | $ 4,100 | ||
Lease income deferred, remaining term | 11 | 11 | ||
Customer Concentration Risk | Revenue Benchmark | Largest tenant | ||||
Future Minimum Payments Due, Maturity | ||||
Concentration risk, percentage | 7.00% | |||
Florida | Geographic Concentration Risk | Revenue Benchmark | ||||
Future Minimum Payments Due, Maturity | ||||
Concentration risk, percentage | 12.40% | |||
California | Geographic Concentration Risk | Revenue Benchmark | ||||
Future Minimum Payments Due, Maturity | ||||
Concentration risk, percentage | 10.10% |
Leases - Lessee (Details)
Leases - Lessee (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
ROU assets, net - operating leases | $ 3,975 | $ 3,867 |
ROU assets, net - operating and finance leases | 1,080 | 1,438 |
Operating lease liability | 5,468 | 5,731 |
Finance lease liability | $ 117 | $ 164 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other Accounts Payable and Accrued Liabilities | Other Accounts Payable and Accrued Liabilities |
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Debt obligations, net | Debt obligations, net |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets, net, Real Estate Investment Property, Net | Other assets, net, Real Estate Investment Property, Net |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets, net | Other assets, net |
Real Estate Activity - Property
Real Estate Activity - Property Sales (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Nov. 04, 2021USD ($)property | Sep. 30, 2021USD ($)propertylandParcel | Sep. 30, 2020USD ($)propertylandParcel | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of properties sold | property | 20 | 6 | |
Number of outparcels sold | landParcel | 3 | 0 | |
Proceeds from sale of real estate | $ 180,340 | $ 48,276 | |
Gain on sale of properties, net | $ 33,121 | $ 9,915 | |
Subsequent event | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of properties sold | property | 1 | ||
Proceeds from sale of real estate | $ 4,400 |
Real Estate Activity - Acquisit
Real Estate Activity - Acquisitions (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021USD ($)propertylandParcel | Sep. 30, 2020USD ($)landParcelproperty | |
Real Estate Investments, Net [Abstract] | ||
Number of properties acquired | property | 4 | 1 |
Number of outparcels acquired | landParcel | 3 | 2 |
Total acquisition price | $ | $ 88,954 | $ 23,014 |
Real Estate Activity - Acquis_2
Real Estate Activity - Acquisition of Intangible Leases (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Nov. 04, 2021USD ($)property | Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($)property | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair value, below-market leases | $ (7,250) | $ (1,882) | |
Weighted-average useful life, below-market leases | 17 years | 26 years | |
Number of properties acquired | property | 4 | 1 | |
Total acquisition price | $ 88,954 | $ 23,014 | |
Subsequent event | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Number of properties acquired | property | 2 | ||
Total acquisition price | $ 91,200 | ||
In-place leases | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair Value | $ 8,728 | $ 1,682 | |
Weighted-Average Useful Life | 10 years | 16 years | |
Above-market leases | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Fair Value | $ 198 | $ 120 | |
Weighted-Average Useful Life | 5 years | 5 years |
Real Estate Activity - Proper_2
Real Estate Activity - Property Held-for-Sale (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Nov. 04, 2021property | Sep. 30, 2021USD ($)property | Sep. 30, 2020property | Dec. 31, 2020USD ($)property | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of real estate properties | property | 267 | |||
Number of properties sold | property | 20 | 6 | ||
LIABILITIES | ||||
Total liabilities | $ 640 | $ 0 | ||
Subsequent event | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of properties sold | property | 1 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of real estate properties | property | 3 | 0 | ||
ASSETS | ||||
Total investment in real estate assets, net | $ 16,109 | |||
Other assets, net | 355 | |||
Total assets | 16,464 | |||
LIABILITIES | ||||
Below-market lease liabilities, net | 323 | |||
Accounts payable and other liabilities | 317 | |||
Total liabilities | $ 640 |
Other Assets, Net (Details)
Other Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other Assets [Abstract] | ||
Deferred leasing commissions and costs | $ 46,732 | $ 41,664 |
Deferred financing expenses | 4,898 | 13,971 |
Office equipment, ROU assets, and other | 23,418 | 21,578 |
Corporate intangible assets | 6,706 | 6,804 |
Total depreciable and amortizable assets | 81,754 | 84,017 |
Accumulated depreciation and amortization | (43,204) | (45,975) |
Net depreciable and amortizable assets | 38,550 | 38,042 |
Accounts receivable, net | 35,683 | 46,893 |
Accounts receivable - affiliates | 417 | 543 |
Deferred rent receivable, net | 37,821 | 32,298 |
Prepaid expenses and other | 18,623 | 8,694 |
Investment in third parties | 3,000 | 0 |
Investment in marketable securities | 5,357 | 0 |
Total other assets, net | 139,451 | 126,470 |
Uncollectable lease receivables, general reserves | 6,300 | 8,900 |
Lease billings, nonaccrual basis | 12,500 | 22,800 |
Uncollectible lease receivables - straight line rent | $ 4,800 | $ 4,400 |
Debt Obligations - Schedule of
Debt Obligations - Schedule of Debt Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Jul. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Outstanding principal balance | $ 980,000 | ||
Finance lease liability | $ 117 | $ 164 | |
Assumed market debt adjustments, net | (1,568) | (1,543) | |
Deferred financing expenses, net | (14,729) | (13,538) | |
Total | $ 1,699,417 | $ 2,292,605 | |
Weighted-average interest rate on debt | 3.30% | 3.10% | |
Revolving credit facility | |||
Debt Instrument [Line Items] | |||
Line of credit - interest spread | 1.10% | ||
Outstanding principal balance | $ 0 | $ 500,000 | $ 0 |
Term loans | |||
Debt Instrument [Line Items] | |||
Outstanding principal balance | $ 1,105,000 | 1,622,500 | |
Term loans | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.30% | ||
Term loans | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.30% | ||
Secured loan facilities | |||
Debt Instrument [Line Items] | |||
Outstanding principal balance | $ 395,000 | 395,000 | |
Secured loan facilities | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.40% | ||
Secured loan facilities | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.50% | ||
Mortgages | |||
Debt Instrument [Line Items] | |||
Outstanding principal balance | $ 215,597 | $ 290,022 | |
Mortgages | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.50% | ||
Mortgages | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 7.20% |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Details) - USD ($) $ in Thousands | Jul. 20, 2021 | Oct. 31, 2021 | Aug. 31, 2021 | Jul. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||||||
Outstanding principal balance | $ 980,000 | |||||
Unsecured debt | $ 1,105,000 | $ 1,622,500 | ||||
Revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding principal balance | 500,000 | $ 0 | $ 0 | |||
Term loan due July 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Unsecured debt | 240,000 | |||||
Term loan due November 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Unsecured debt | 240,000 | |||||
Term loan due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Payments for loans | $ 472,500 | |||||
Term loan due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Payments for loans | $ 375,000 | |||||
Term loan due November 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding principal balance | $ 300,000 | |||||
Payments for loans | $ 150,000 | |||||
Term loan due November 2023 | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding principal balance | $ 300,000 | |||||
Payments for loans | 150,000 | |||||
Senior notes | Senior notes due November 2031 | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Debt face amount | $ 350,000 | |||||
Stated interest rate | 2.625% | |||||
Debt discount | 98.692% | |||||
Gross proceeds | $ 345,400 |
Debt Obligations - Schedule o_2
Debt Obligations - Schedule of Debt Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Fixed-rate debt | $ 1,540,714 | $ 1,727,186 |
Variable-rate debt | 175,000 | 580,500 |
Unsecured debt | 1,105,000 | 1,622,500 |
Secured debt | 610,714 | 685,186 |
Total | $ 1,715,714 | $ 2,307,686 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021USD ($)Debt_Instrumentderivative | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)Debt_Instrumentderivative | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)Debt_Instrumentderivative | Nov. 16, 2018USD ($)derivative | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Amount of (loss) gain recognized in Other Comprehensive Income (Loss) | $ (417) | $ (45) | $ 5,397 | $ (51,575) | ||
Contingent credit-risk-related derivative liabilities, fair value | 35,800 | 35,800 | ||||
Interest Expense, Net | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Amount of loss reclassified from AOCI into Interest Expense, Net | $ 4,905 | $ 5,143 | 14,584 | $ 11,562 | ||
Interest rate swap | Designated as hedging instrument | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Reclassification from OCI to income, estimated net amount to be transferred | $ 17,500 | |||||
Count | Debt_Instrument | 5 | 5 | 6 | |||
Notional amount | $ 930,000 | $ 930,000 | $ 1,042,000 | |||
Weighted-average term (in years) | 2 years 4 months 24 days | 2 years 9 months 18 days | ||||
Interest rate swap | Designated as hedging instrument | REIT II | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Count | derivative | 1 | 1 | 1 | 5 | ||
Business combination, noncurrent assets | $ 14,700 | |||||
Business combination, noncurrent assets, unamortized | $ 4,000 | $ 4,000 | $ 5,000 | |||
Interest rate swap | Designated as hedging instrument | Minimum | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Fixed LIBOR | 1.30% | 1.30% | 1.30% | |||
Interest rate swap | Designated as hedging instrument | Maximum | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Fixed LIBOR | 2.90% | 2.90% | 2.90% | |||
Interest rate swap | Not designated as hedging instrument | REIT II | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Notional amount | $ 570,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2021USD ($)obligation |
Commitments and Contingencies Disclosure [Abstract] | |
Number of letters of credit outstanding | obligation | 4 |
Letters of credit outstanding | $ | $ 9 |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Jul. 19, 2021 | Sep. 30, 2021 | Aug. 02, 2021 | Apr. 29, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Class of Stock [Line Items] | ||||||
Issuance of common stock (in shares) | 17,000 | |||||
Stock price (in dollars per share) | $ 28 | |||||
Over-allotment, gross proceeds | $ 547.4 | |||||
OP units outstanding, shares | 13,400 | 13,300 | ||||
Share price (in dollars per share) | $ 31.65 | $ 26.25 | ||||
Restricted stock | ||||||
Class of Stock [Line Items] | ||||||
Granted (in shares) | 500 | |||||
Granted, weighted average grant date fair value (in dollars per share) | $ 28 | |||||
OP units | ||||||
Class of Stock [Line Items] | ||||||
Granted (in shares) | 300 | |||||
Vesting period one | Restricted stock | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Vesting period | 18 months | |||||
Vesting period two | Restricted stock | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 50.00% | |||||
Vesting period | 36 months | |||||
Over-allotment option | ||||||
Class of Stock [Line Items] | ||||||
Maximum additional shares granted to underwriters (in shares) | 2,550 |
Equity - Schedule of Dividends
Equity - Schedule of Dividends Payable (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 03, 2021 | Nov. 01, 2021 | Oct. 01, 2021 | Oct. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Common distributions declared (in dollars per share) | $ 0.255 | $ 0.765 | $ 0.503 | |||||
Distributions paid | $ 75,669 | $ 49,083 | ||||||
Dividend declared | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Common distributions declared (in dollars per share) | $ 0.085 | |||||||
Dividend declared | Subsequent event | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Common distributions declared (in dollars per share) | $ 0.09 | $ 0.090 | ||||||
Dividend paid | Subsequent event | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Distributions paid | $ 10,189 | $ 9,623 |
Equity - Schedule of OP Unit Ac
Equity - Schedule of OP Unit Activity (Details) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($)shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2021USD ($)shares | Sep. 30, 2020USD ($)shares | |
Equity [Abstract] | ||||
OP units converted into shares of Class B common stock (in shares) | shares | 0 | 0 | 28 | 56 |
Distributions paid on OP units | $ | $ 3,536 | $ 0 | $ 10,315 | $ 7,105 |
OP conversion ratio | 1 | 1 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||
Net (loss) income attributable to stockholders - basic | $ 14,633 | $ 11,784 | $ 20,330 | $ 15,965 |
Net (loss) income attributable to convertible OP units | 1,929 | 1,646 | 2,739 | 2,251 |
Net loss - diluted | $ 16,562 | $ 13,430 | $ 23,069 | $ 18,216 |
Denominator: | ||||
Weighted-average shares - basic (in shares) | 108,997 | 96,822 | 98,761 | 96,765 |
OP units (in shares) | 13,388 | 14,247 | 13,371 | 14,264 |
Dilutive restricted stock awards (in shares) | 188 | 119 | 185 | 131 |
Adjusted weighted-average shares - diluted (in shares) | 122,573 | 111,188 | 112,317 | 111,160 |
Earnings per share of common stock: | ||||
Basic income per share (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.21 | $ 0.16 |
Diluted income per share (in dollars per share) | $ 0.13 | $ 0.12 | $ 0.21 | $ 0.16 |
Common Class B | ||||
Denominator: | ||||
Weighted-average shares - basic (in shares) | 93,700 | |||
Common Stock | ||||
Denominator: | ||||
Weighted-average shares - basic (in shares) | 15,300 |
Related Party Transactions - Di
Related Party Transactions - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transaction [Line Items] | ||||
Total fees and management income | $ 2,435 | $ 2,581 | $ 7,095 | $ 7,506 |
Insurance premiums | ||||
Related Party Transaction [Line Items] | ||||
Total fees and management income | 822 | 629 | 2,325 | 1,766 |
Affiliated entity | Recurring fees | ||||
Related Party Transaction [Line Items] | ||||
Total fees and management income | 1,040 | 1,233 | 3,268 | 3,631 |
Affiliated entity | Transactional revenue and reimbursements | ||||
Related Party Transaction [Line Items] | ||||
Total fees and management income | $ 573 | $ 719 | $ 1,502 | $ 2,109 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) $ in Thousands | Jul. 19, 2021 | Sep. 30, 2021USD ($)contract | Dec. 31, 2020USD ($) |
Related Party Transaction [Line Items] | |||
Debt obligations, net | $ 1,699,417 | $ 2,292,605 | |
Investment in third parties | $ 3,000 | $ 0 | |
Number of leases | contract | 2 | ||
Lease, term of contract | 10 years | ||
Due from related party | $ 2,600 | ||
Executive officers | 2021 TPA | |||
Related Party Transaction [Line Items] | |||
Term of contract | 4 years | ||
Off-balance sheet risks, liability | 150,000 | ||
Necessity Retail Partners | |||
Related Party Transaction [Line Items] | |||
Guarantor, maximum exposure | 190,000 | ||
Guarantee, expected exposure | 50,000 | ||
Debt obligations, net | 32,100 | ||
Grocery Retail Partners I | |||
Related Party Transaction [Line Items] | |||
Guarantor, maximum exposure | $ 175,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Recorded Principal Balance | $ 1,699,417 | $ 2,292,605 |
Deferred financing costs | 14,729 | 13,538 |
Assumed market debt adjustments, net | 1,568 | 1,543 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 1,734,284 | 2,330,264 |
Term loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Recorded Principal Balance | 1,091,518 | 1,610,204 |
Term loans | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 1,106,176 | 1,621,902 |
Secured loan facilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Recorded Principal Balance | 391,492 | 391,131 |
Secured loan facilities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 404,132 | 404,715 |
Mortgages | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Recorded Principal Balance | 216,407 | 291,270 |
Mortgages | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 223,976 | $ 303,647 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Recurring and Nonrecurring Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Marketable securities | $ 5,357 | $ 0 |
Derivative liabilities | (35,800) | |
Recurring | Level 1 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Marketable securities | 5,357 | 0 |
Earn-out liability | 0 | 0 |
Recurring | Level 1 | Interest rate swap | Designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 2 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Marketable securities | 0 | 0 |
Earn-out liability | 0 | 0 |
Recurring | Level 2 | Interest rate swap | Designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Derivative liabilities | (35,779) | (54,759) |
Recurring | Level 3 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Marketable securities | 0 | 0 |
Earn-out liability | (45,000) | (22,000) |
Recurring | Level 3 | Interest rate swap | Designated as hedging instrument | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Derivative liabilities | 0 | 0 |
Nonrecurring | Level 1 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Impaired real estate assets, net | 0 | 0 |
Impaired corporate ROU asset, net | 0 | 0 |
Nonrecurring | Level 2 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Impaired real estate assets, net | 24,000 | 19,350 |
Impaired corporate ROU asset, net | 0 | 537 |
Nonrecurring | Level 3 | ||
Fair Value, Assets (Liabilities) Measured on Recurring Basis | ||
Impaired real estate assets, net | 0 | 0 |
Impaired corporate ROU asset, net | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ / shares in Units, shares in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)shares | Sep. 30, 2020USD ($) | Dec. 31, 2019tradingDay$ / sharesshares | Apr. 29, 2021$ / shares | Mar. 31, 2021$ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Share price (in dollars per share) | $ / shares | $ 31.65 | $ 26.25 | |||||
Income (expense), change in fair value of earn-out liability | $ | $ (5,000,000) | $ 0 | $ (23,000,000) | $ 10,000,000 | |||
Phillips Edison Limited Partnership | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
PELP transaction, OP units issued and issuable (in shares) | shares | 1.4 | 0.7 | |||||
PELP transaction, consecutive trading days | tradingDay | 30 | ||||||
PELP transaction, trading days | tradingDay | 180 | ||||||
Liquidity quotient denominator (in dollars per share) | $ / shares | $ 7.20 | ||||||
PELP transaction, additional OP units issued and issuable (in shares) | shares | 0.3 | ||||||
Phillips Edison Limited Partnership | Minimum | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
PELP transaction, OP units issued and issuable (in shares) | shares | 1 | ||||||
Share price (in dollars per share) | $ / shares | $ 33.60 | ||||||
Phillips Edison Limited Partnership | Maximum | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
PELP transaction, OP units issued and issuable (in shares) | shares | 1.7 | ||||||
Share price (in dollars per share) | $ / shares | $ 26.40 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Nonrecurring Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||||
Impairment of real estate assets | $ 698 | $ 0 | $ 6,754 | $ 0 |