Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | 11-May-15 |
Entity Information | ||
Entity Registrant Name | COLE REAL ESTATE INCOME STRATEGY (DAILY NAV), INC. | |
Entity Central Index Key | 1498542 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Wrap Class common stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 6,200 | |
Advisor Class common stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 928 | |
Institutional Class common stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 405 |
Condensed_Consolidated_Unaudit
Condensed Consolidated Unaudited Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Investment in real estate assets: | ||
Land | $39,543 | $46,455 |
Buildings and improvements, less accumulated depreciation of $5,477 and $4,459, respectively | 150,861 | 152,197 |
Acquired intangible lease assets, less accumulated amortization of $3,077 and $2,521, respectively | 26,034 | 26,853 |
Total investment in real estate assets, net | 216,438 | 225,505 |
Investment in marketable securities | 510 | 490 |
Total investment in real estate assets and marketable securities, net | 216,948 | 225,995 |
Cash and cash equivalents | 6,545 | 4,489 |
Restricted cash | 35 | 25 |
Rents and tenant receivables, less allowance for doubtful accounts of $2 and $0, respectively | 1,627 | 1,267 |
Prepaid expenses and other assets | 171 | 364 |
Deferred financing costs, less accumulated amortization of $1,312 and $1,216, respectively | 2,259 | 1,796 |
Assets held for sale | 7,327 | 0 |
Total assets | 234,912 | 233,936 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Line of credit and notes payable | 121,754 | 120,304 |
Accounts payable and accrued expenses | 922 | 1,188 |
Escrowed investor proceeds | 35 | 25 |
Due to affiliates | 834 | 1,816 |
Acquired below market lease intangibles, less accumulated amortization of $329 and $279, respectively | 2,003 | 2,058 |
Distributions payable | 596 | 595 |
Deferred rental income and other liabilities | 585 | 585 |
Total liabilities | 126,729 | 126,571 |
Commitments and contingencies | ||
Redeemable common stock | 13,120 | 12,545 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Capital in excess of par value | 105,120 | 104,284 |
Accumulated distributions in excess of earnings | -10,138 | -9,539 |
Accumulated other comprehensive income | 8 | 3 |
Total stockholders’ equity | 95,063 | 94,820 |
Total liabilities and stockholders’ equity | 234,912 | 233,936 |
A Shares common stock, $0.01 par value; 163,000,000 shares authorized, 898,585 and 897,376 shares issued and outstanding, respectively | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 9 | 9 |
I Shares common stock, $0.01 par value; 163,000,000 shares authorized, 260,017 and 256,525 shares issued and outstanding, respectively | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 3 | 3 |
W Shares common stock, $0.01 par value; 164,000,000 shares authorized, 6,096,400 and 6,012,043 shares issued and outstanding, respectively | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $61 | $60 |
Condensed_Consolidated_Unaudit1
Condensed Consolidated Unaudited Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Buildings and improvements, less accumulated depreciation of $5,477 and $4,459, respectively | $5,477 | $4,459 |
Acquired intangible lease assets, less accumulated amortization of $3,077 and $2,521, respectively | 3,077 | 2,521 |
Deferred financing costs, less accumulated amortization of $1,312 and $1,216, respectively | 1,312 | 1,216 |
Rents and tenant receivables, less allowance for doubtful accounts of $2 and $0, respectively | 2 | 0 |
Acquired below market lease intangibles, less accumulated amortization of $329 and $279, respectively | $329 | $279 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class W | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 164,000,000 | 164,000,000 |
Common stock, shares issued | 6,096,400 | 6,012,043 |
Common stock, shares outstanding | 6,096,400 | 6,012,043 |
Common Class A | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 163,000,000 | 163,000,000 |
Common stock, shares issued | 898,585 | 897,376 |
Common stock, shares outstanding | 898,585 | 897,376 |
Common Class I | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 163,000,000 | 163,000,000 |
Common stock, shares issued | 260,017 | 256,525 |
Common stock, shares outstanding | 260,017 | 256,525 |
Condensed_Consolidated_Unaudit2
Condensed Consolidated Unaudited Statement of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues: | ||
Rental and other property income | $4,487 | $2,162 |
Tenant reimbursement income | 337 | 189 |
Interest income on marketable securities | 3 | 1 |
Total revenue | 4,827 | 2,352 |
Expenses: | ||
General and administrative expenses | 435 | 236 |
Property operating expenses | 389 | 222 |
Advisory expenses | 284 | 174 |
Acquisition related expenses | 69 | 198 |
Depreciation | 1,092 | 521 |
Amortization | 546 | 263 |
Total operating expenses | 2,815 | 1,614 |
Operating income | 2,012 | 738 |
Other expense: | ||
Interest and other expense, net | 886 | 457 |
Net income | $1,126 | $281 |
Weighted average number of common shares outstanding: | ||
Basic and diluted (shares) | 7,157,057 | 4,467,058 |
Net income per common share: | ||
Basic and diluted (usd per share) | $0.16 | $0.06 |
Distributions declared per common share (usd per share) | $0.24 | $0.23 |
Condensed_Consolidated_Unaudit3
Condensed Consolidated Unaudited Statement of Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Unaudited Statement of Comprehensive Income [Abstract] | ||
Net income | $1,126 | $281 |
Other comprehensive income: | ||
Unrealized gain on marketable securities | 5 | 2 |
Total other comprehensive income | 5 | 2 |
Comprehensive income | $1,131 | $283 |
Condensed_Consolidated_Unaudit4
Condensed Consolidated Unaudited Statement of Stockholders' Equity (USD $) | Total | Common Class A | Common Class I | Common Class W | Common Stock | Common Stock | Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive Income |
In Thousands, except Share data, unless otherwise specified | USD ($) | Common Class A | Common Class I | Common Class W | USD ($) | USD ($) | USD ($) | |||
USD ($) | USD ($) | USD ($) | ||||||||
Balance at Dec. 31, 2014 | $94,820 | $9 | $3 | $60 | $104,284 | ($9,539) | $3 | |||
Balance, shares at Dec. 31, 2014 | 897,376 | 256,525 | 6,012,043 | 897,376 | 256,525 | 6,012,043 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common stock, shares | 28,107 | 3,492 | 225,306 | |||||||
Issuance of common stock | 4,642 | 2 | 4,640 | |||||||
Distributions to investors | -1,725 | -1,725 | ||||||||
Commissions on stock sales and related distribution and dealer manager fees | -205 | -205 | ||||||||
Other offering costs | -35 | -35 | ||||||||
Redemptions of common stock, shares | -26,898 | -140,949 | ||||||||
Redemptions of common stock | -2,990 | -1 | -2,989 | |||||||
Changes in redeemable common stock | -575 | -575 | ||||||||
Comprehensive income | 1,131 | 1,126 | 5 | |||||||
Balance at Mar. 31, 2015 | $95,063 | $9 | $3 | $61 | $105,120 | ($10,138) | $8 | |||
Balance, shares at Mar. 31, 2015 | 898,585 | 260,017 | 6,096,400 | 898,585 | 260,017 | 6,096,400 |
Condensed_Consolidated_Unaudit5
Condensed Consolidated Unaudited Statement of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $1,126 | $281 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 1,092 | 521 |
Amortization of intangible lease assets and below market lease intangibles, net | 593 | 250 |
Amortization of deferred financing costs | 96 | 162 |
Amortization on marketable securities, net | 0 | 1 |
Bad debt expense | 2 | 0 |
Changes in assets and liabilities: | ||
Rents and tenant receivables | -362 | -81 |
Prepaid expenses and other assets | 193 | 3 |
Accounts payable and accrued expenses | -266 | 43 |
Deferred rental income and other liabilities | 0 | -41 |
Due to affiliates | -934 | -524 |
Net cash provided by operating activities | 1,540 | 615 |
Cash flows from investing activities: | ||
Investment in real estate and related assets | 0 | -14,032 |
Investment in marketable securities | -35 | -114 |
Proceeds from sale of marketable securities | 20 | 91 |
Change in restricted cash | -10 | -144 |
Net cash used in investing activities | -25 | -14,199 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 3,900 | 11,383 |
Offering costs on issuance of common stock | -288 | -232 |
Redemptions of common stock | -2,990 | -502 |
Distributions to investors | -982 | -585 |
Proceeds from line of credit and note payable | 24,950 | 8,500 |
Proceeds from line of credit with affiliate | 10,000 | 0 |
Repayments of line of credit | -23,500 | -9,500 |
Repayments of line of credit with affiliate | -10,000 | 0 |
Deferred financing costs paid | -559 | -158 |
Change in escrowed investor proceeds liability | 10 | 144 |
Net cash provided by financing activities | 541 | 9,050 |
Net increase (decrease) in cash and cash equivalents | 2,056 | -4,534 |
Cash and cash equivalents, beginning of period | 4,489 | 5,370 |
Cash and cash equivalents, end of period | 6,545 | 836 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Accrued dealer manager fee and other offering costs | 225 | 192 |
Distributions declared and unpaid | 596 | 386 |
Common stock issued through distribution reinvestment plan | 742 | 377 |
Unrealized gain on marketable securities | 5 | 2 |
Supplemental cash flow disclosures: | ||
Interest paid | $748 | $295 |
Organization_and_Business
Organization and Business | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS |
Cole Real Estate Income Strategy (Daily NAV), Inc. (the “Company”) is a Maryland corporation that was formed on July 27, 2010, which has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes. Substantially all of the Company’s business is conducted through Cole Real Estate Income Strategy (Daily NAV) Operating Partnership, LP (“Cole OP”), a Delaware limited partnership. The Company is the sole general partner of, and owns, directly or indirectly, 100% of the partnership interest in, Cole OP. The Company is externally managed by Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC, a Delaware limited liability company (“Cole Advisors”), an affiliate of the Company’s sponsor, Cole Capital®, which is a trade name used to refer to a group of affiliated entities directly or indirectly controlled by American Realty Capital Properties, Inc. (“ARCP”), a self-managed publicly traded REIT, organized as a Maryland corporation, listed on The NASDAQ Global Select Market. On February 7, 2014, ARCP acquired Cole Real Estate Investments, Inc. (“Cole”), which, prior to its acquisition, indirectly owned and/or controlled the Company’s external advisor, Cole Advisors, the Company’s dealer manager, Cole Capital Corporation (“CCC”), the Company’s property manager, CREI Advisors, LLC (“CREI Advisors”), and Cole Capital. As a result of ARCP’s acquisition of Cole, ARCP indirectly owns and/or controls Cole Advisors, CCC, CREI Advisors and Cole Capital. | |
On December 6, 2011, pursuant to a registration statement filed on Form S-11 (Registration No. 333-169535) (the “Initial Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), the Company commenced its initial public offering on a “best efforts” basis of $4.0 billion in shares of common stock. On August 26, 2013, pursuant to a registration statement filed on Form S-11 (Registration No. 333-186656) (the “Multi-Class Registration Statement”) under the Securities Act, the Company designated the existing shares of the Company’s common stock that were sold prior to such date to be Wrap Class shares (“W Shares”) of common stock and registered two new classes of the Company’s common stock, Advisor Class shares (“A Shares”) and Institutional Class shares (“I Shares”). Pursuant to the Multi-Class Registration Statement, the Company is offering up to $4.0 billion in shares of common stock of the three classes (the “Offering”), consisting of $3.5 billion in shares in the Company’s primary offering (the “Primary Offering”) and $500.0 million in shares pursuant to a distribution reinvestment plan (the “DRIP”). The Company is offering to sell any combination of W Shares, A Shares and I Shares with a dollar value up to the maximum offering amount. | |
The per share purchase price for each class of common stock varies from day-to-day and, on each business day, is equal to, for each class of common stock, the Company’s net asset value (“NAV”) for such class, divided by the number of shares of that class outstanding as of the close of business on such day, plus, for A Shares sold in the Primary Offering, applicable selling commissions. The Company’s NAV per share is calculated daily as of the close of business by an independent fund accountant using a process that reflects (1) estimated values of each of the Company’s commercial real estate assets, related liabilities and notes receivable secured by real estate provided periodically by the Company’s independent valuation expert in individual appraisal reports, (2) daily updates in the price of liquid assets for which third party market quotes are available, (3) accruals of daily distributions and (4) estimates of daily accruals, on a net basis, of operating revenues, expenses, debt service costs and fees. As of March 31, 2015, the NAV per share for W Shares, A Shares and I Shares was $18.08, $18.07 and $18.15, respectively. The Company’s NAV is not audited or reviewed by its independent registered public accounting firm. | |
The Company intends to use substantially all of the net proceeds from the Offering to acquire and operate a diversified portfolio primarily consisting of (1) necessity retail, office and industrial properties that are leased to creditworthy tenants under long-term net leases and are strategically located throughout the United States and U.S. protectorates, (2) notes receivable secured by commercial real estate, including the origination of loans, and (3) cash, cash equivalents, other short-term investments and traded real estate-related securities. As of March 31, 2015, the Company owned 75 commercial properties located in 26 states, containing 1.8 million rentable square feet of commercial space, including the square feet of buildings which are on land subject to ground leases. As of March 31, 2015, these properties were 99.6% leased. | |
The Company is structured as a perpetual-life, non-exchange traded REIT. This means that, subject to regulatory approval of our filing for additional offerings, the Company will be selling shares of common stock on a continuous basis and for an indefinite period of time to the extent permissible under applicable law. The Company will endeavor to take all reasonable actions to avoid interruptions in the continuous offering of shares of common stock. The Company reserves the right to terminate the Offering at any time. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Principles of Consolidation and Basis of Presentation | |||
The condensed consolidated unaudited financial statements of the Company have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2014, and related notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The condensed consolidated unaudited financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. | |||
The condensed consolidated unaudited financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Investment in and Valuation of Real Estate and Related Assets | |||
Real estate and related assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate and related assets consist of the cost of acquisition, excluding acquisition related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate and related assets and leasing costs. All repairs and maintenance are expensed as incurred. | |||
The Company is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life of the assets. Real estate and related assets, other than land, are depreciated or amortized on a straight-line basis. The estimated useful lives of the Company’s real estate and related assets by class are generally as follows: | |||
Buildings | 40 years | ||
Tenant improvements | Lesser of useful life or lease term | ||
Intangible lease assets | Lease term | ||
The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to, bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors, a significant decrease in a property’s revenues due to lease terminations, vacancies, co-tenancy clauses, reduced lease rates or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate and related assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. As of March 31, 2015, the Company noted potential impairment indicators at a property with an aggregate carrying value of $1.1 million due to a fire loss at the property. However, based on insurance coverage and the expectation of continued rental income from the tenant, the Company’s estimate of undiscounted cash flows indicated that such carrying amount was expected to be recovered as of March 31, 2015, and as such no impairment loss was recorded. Nonetheless, it is reasonably possible that the estimate of undiscounted cash flows may change in the near term, which may result in the need to record an impairment loss to reduce such asset to fair value. Any such impairment losses will affect the Company’s assets and stockholders’ equity, operating and net income. The evaluation of properties for potential impairment requires the Company’s management to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions. No impairment indicators were identified and no impairment losses were recorded during the three months ended March 31, 2014. | |||
When developing estimates of expected future cash flows, the Company makes certain assumptions regarding future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, terminal capitalization and discount rates, the expected number of months it takes to re-lease the property, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in estimating expected future cash flows could result in a different determination of the property’s expected future cash flows and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the fair value of the real estate and related assets. | |||
When a real estate asset is identified by the Company as held for sale, the Company will cease depreciation and amortization of the assets related to the property and estimate the fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount would be recorded to reflect the estimated fair value of the property, net of selling costs. During the three months ended March 31, 2015, the Company identified one multi-tenant property as held for sale, which was sold subsequent to March 31, 2015, as discussed in Note 10 to these condensed consolidated unaudited financial statements. No assets were identified as held for sale as of December 31, 2014. | |||
Allocation of Purchase Price of Real Estate and Related Assets | |||
Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and identified intangible assets and liabilities, consisting of the value of above market and below market leases and the value of in-place leases, based in each case on their respective fair values. Acquisition related expenses are expensed as incurred. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The Company obtains an independent appraisal for each real property acquisition. The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. | |||
The fair values of above market and below market lease intangibles are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) an estimate of fair market lease rates for the corresponding in-place leases, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease including any bargain renewal periods, with respect to a below market lease. The above market and below market lease intangibles are capitalized as intangible lease assets or liabilities, respectively. Above market leases are amortized as a reduction to rental income over the remaining terms of the respective leases. Below market leases are amortized as an increase to rental income over the remaining terms of the respective leases, including any bargain renewal periods. In considering whether or not the Company expects a tenant to execute a bargain renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition, such as the financial strength of the tenant, remaining lease term, the tenant mix of the leased property, the Company’s relationship with the tenant and the availability of competing tenant space. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market or below market lease intangibles relating to that lease would be recorded as an adjustment to rental income. | |||
The fair values of in-place leases include estimates of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rental and other property income which are avoided by acquiring a property with an in-place lease. Direct costs associated with obtaining a new tenant include commissions and other direct costs, and are estimated in part by utilizing information obtained from independent appraisals and management’s consideration of current market costs to execute a similar lease. The intangible values of opportunity costs, which are calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease, are capitalized as intangible lease assets and are amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. | |||
The Company may acquire certain properties subject to contingent consideration arrangements that may obligate the Company to pay additional consideration to the seller based on the outcome of future events. Additionally, the Company may acquire certain properties for which it funds certain contingent consideration amounts into an escrow account pending the outcome of certain future events. The outcome may result in the release of all or a portion of the escrow funds to the Company or the seller or a combination thereof. Contingent consideration arrangements will be based on a predetermined formula and have set time periods regarding the obligation to make future payments, including funds released to the seller from escrow accounts, or the right to receive escrowed funds as set forth in the respective purchase and sale agreement. Contingent consideration arrangements, including amounts funded through an escrow account, will be recorded upon acquisition of the respective property at their estimated fair value, and any changes to the estimated fair value, subsequent to acquisition, will be reflected in the accompanying condensed consolidated unaudited statements of operations. The determination of the amount of contingent consideration arrangements is based on the probability of several possible outcomes as identified by management. | |||
The Company will estimate the fair value of assumed mortgage notes payable based upon indications of current market pricing for similar types of debt financing with similar maturities. Assumed mortgage notes payable will initially be recorded at their estimated fair value as of the assumption date, and any difference between such estimated fair value and the mortgage note’s outstanding principal balance will be amortized to interest expense over the term of the respective mortgage note payable. | |||
The determination of the fair values of the real estate and related assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could impact the Company’s results of operations. | |||
Investment in Marketable Securities | |||
Investment in marketable securities consists primarily of the Company’s investment in corporate and government debt securities. The Company determines the appropriate classification for debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. As of March 31, 2015, the Company classified its investments as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. | |||
The Company monitors its available-for-sale securities for impairments. A loss is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary. The Company considers many factors in determining whether the impairment of a security is deemed to be other-than-temporary, including, but not limited to, the length of time the security has had a decline in estimated fair value below its amortized cost, the amount of the unrealized loss, the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. The analysis of determining whether the impairment of a security is deemed to be other-than-temporary requires significant judgment and assumptions. The use of alternative judgments and assumptions could result in a different conclusion. | |||
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is recorded in the accompanying condensed consolidated unaudited statements of operations in interest and other expense, net. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method. | |||
Restricted Cash and Escrows | |||
Included in restricted cash were escrowed investor proceeds for which shares of common stock had not been issued as of March 31, 2015 and December 31, 2014. | |||
Concentration of Credit Risk | |||
As of March 31, 2015, the Company had cash on deposit, including restricted cash, at four financial institutions, in one of which the Company had deposits in excess of federally insured levels, totaling $6.2 million; however, the Company has not experienced any losses in such accounts. The Company limits significant cash deposits to accounts held by financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. | |||
As of March 31, 2015, no single tenant accounted for greater than 10% of the Company’s 2015 gross annualized rental revenues. Tenants in the discount store, manufacturing, drugstore and grocery industries accounted for 15% 13%, 10% and 10%, respectively, of the Company’s 2015 gross annualized rental revenues. Additionally, the Company has certain geographic concentrations in its property holdings. In particular, as of March 31, 2015, eight of the Company’s properties were located in Texas, accounting for 17% of the Company’s 2015 gross annualized rental revenues. | |||
Offering and Related Costs | |||
Cole Advisors funds all of the organization and offering costs associated with the sale of the Company’s common stock (excluding selling commissions, the distribution fee and the dealer manager fee) and is reimbursed for such costs up to 0.75% of gross proceeds from the Offering, excluding selling commissions charged on A Shares sold in the Primary Offering. As of March 31, 2015, Cole Advisors or its affiliates had paid organization and offering costs in excess of 0.75% in connection with the Offering. These excess costs were not included in the financial statements of the Company because such costs were not a liability of the Company as they exceeded 0.75% of gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these excess costs may become payable to Cole Advisors. | |||
Redeemable Common Stock | |||
The Company has adopted a share redemption program that permits its stockholders to redeem their shares, subject to certain limitations. The Company records amounts that are redeemable under the share redemption program as redeemable common stock outside of permanent equity on its condensed consolidated unaudited balance sheets. Redeemable common stock is recorded at the greater of the carrying amount or redemption value each reporting period. Changes in the value from period to period are recorded as an adjustment to capital in excess of par value. | |||
As of March 31, 2015 and December 31, 2014, the quarterly redemption capacity was equal to 10% of the Company’s NAV, and this amount was recorded as redeemable common stock on the condensed consolidated unaudited balance sheet for a total of $13.1 million and $12.5 million, respectively. | |||
Recent Accounting Pronouncements | |||
In May 2014, the U.S. Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers, including real estate sales, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the impact of the new standard, but does not believe it will have a material impact, when effective, on the Company’s condensed consolidated unaudited financial statements. | |||
In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”), which eliminates the deferral of Financial Accounting Standard 167, modifies the evaluation of whether limited partnerships and similar legal entities are variable or voting interest entities, eliminates the presumption that the general partner should consolidate a limited partnership, modifies the consolidation analysis for reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships, and provides a scope exception for reporting entities with interests in legal entities that operate as registered money market funds. These changes will require re-evaluation of the consolidation conclusion for certain entities and will require the Company to revise its analysis regarding the consolidation or deconsolidation of such entities. ASU 2015-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. Companies may elect to apply the amendments in ASU 2015-02 using a modified retrospective approach or by applying the amendments retrospectively. The Company is currently evaluating the impact of the new standard on its financial statements. | |||
In April 2015, FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than presenting the deferred charge as an asset. The previous requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, “Elements of Financial Statements,” which states that debt issuance costs are similar to debt discounts and effectively reduce the proceeds of borrowing, thereby increasing the effective interest rate. FASB Concepts Statement No. 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. After the update is adopted, debt disclosures would include the face amount of the debt liability and the effective interest rate. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and is to be applied retrospectively, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |
Mar. 31, 2015 | ||
Fair Value Disclosures [Abstract] | ||
FAIR VALUE MEASUREMENTS | ||
FAIR VALUE MEASUREMENTS | ||
GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. | ||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: | ||
Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | ||
Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). | ||
Level 3 – Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. | ||
The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: | ||
Cash and cash equivalents – The Company considers the carrying amounts of these financial assets to approximate fair value because of the short period of time between their origination and their expected realization. These financial assets are considered Level 1. | ||
Line of credit and notes payable – The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. The estimated fair value of the Company’s debt was $121.8 million and $120.3 million as of March 31, 2015 and December 31, 2014, respectively, which approximated the carrying value on such dates. The fair value of the Company’s debt is estimated using Level 2 inputs. | ||
Marketable securities – The Company’s marketable securities are carried at fair value and are valued using Level 1 inputs. The estimated fair value of the Company’s marketable securities are based on quoted market prices that are readily and regularly available in an active market. | ||
Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, on disposition of the financial assets and liabilities. As of March 31, 2015, there have been no transfers of financial assets or liabilities between fair value hierarchy levels. |
Real_Estate_Acquisitions
Real Estate Acquisitions | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Real Estate [Abstract] | |||||||||
REAL ESTATE ACQUISITIONS | REAL ESTATE ACQUISITIONS | ||||||||
2015 Property Acquisitions | |||||||||
During the three months ended March 31, 2015, the Company did not acquire any commercial properties. | |||||||||
2014 Property Acquisitions | |||||||||
During the three months ended March 31, 2014, the Company acquired a 100% interest in eight commercial properties for an aggregate purchase price of $14.0 million (the “2014 Acquisitions”). The Company purchased the 2014 Acquisitions with net proceeds from the Offering combined with proceeds from borrowings. The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocation (in thousands): | |||||||||
31-Mar-14 | |||||||||
Land | $ | 2,874 | |||||||
Building and improvements | 9,509 | ||||||||
Acquired in-place leases | 1,395 | ||||||||
Acquired above market leases | 444 | ||||||||
Acquired below market leases | (190 | ) | |||||||
Total purchase price | $ | 14,032 | |||||||
The Company recorded revenue of $122,000 and a net loss of $112,000 for the three months ended March 31, 2014 related to the 2014 Acquisitions. In addition, the Company recorded $198,000 of acquisition related expenses for the three months ended March 31, 2014. | |||||||||
The following information summarizes selected financial information of the Company, as if all of the 2014 Acquisitions were completed on January 1, 2013 for each period presented below. The table below presents the Company’s estimated revenue and net income (loss), on a pro forma basis, for the three months ended March 31, 2014 and 2013, respectively (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Pro forma basis: | |||||||||
Revenue | $ | 2,496 | $ | 1,046 | |||||
Net income (loss) | $ | 461 | $ | (116 | ) | ||||
The pro forma information for the three months ended March 31, 2014 was adjusted to exclude acquisition costs related to the 2014 Acquisitions. These costs were recognized in the pro forma information for the three months ended March 31, 2013. The pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of periods presented, nor does it purport to represent the results of future operations. |
Marketable_Securities
Marketable Securities | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||
MARKETABLE SECURITIES | MARKETABLE SECURITIES | ||||||||||||
The Company owned marketable securities with an estimated fair value of $510,000 and $490,000 as of March 31, 2015 and December 31, 2014, respectively. The following is a summary of the Company’s available-for-sale securities as of March 31, 2015 (in thousands): | |||||||||||||
Available-for-Sale Securities | |||||||||||||
Amortized Cost Basis | Unrealized Gain | Fair Value | |||||||||||
U.S. Treasury Bonds | $ | 179 | $ | 5 | $ | 184 | |||||||
U.S. Agency Bonds | 85 | — | 85 | ||||||||||
Corporate Bonds | 238 | 3 | 241 | ||||||||||
Total available-for-sale securities | $ | 502 | $ | 8 | $ | 510 | |||||||
The following table provides the activity for the marketable securities during the three months ended March 31, 2015 (in thousands): | |||||||||||||
Amortized Cost Basis | Unrealized Gain | Fair Value | |||||||||||
Marketable securities as of December 31, 2014 | $ | 487 | $ | 3 | $ | 490 | |||||||
Face value of marketable securities acquired | 35 | — | 35 | ||||||||||
Amortization on marketable securities | — | — | — | ||||||||||
Sales of securities | (20 | ) | — | (20 | ) | ||||||||
Increase in fair value of marketable securities | — | 5 | 5 | ||||||||||
Marketable securities as of March 31, 2015 | $ | 502 | $ | 8 | $ | 510 | |||||||
During the three months ended March 31, 2015, the Company sold three marketable securities for aggregate proceeds of $20,000, which approximated their carrying value. In addition, the Company recorded an unrealized gain of $5,000 on its investments, which is included in accumulated other comprehensive income on the accompanying condensed consolidated unaudited statement of stockholders’ equity for the three months ended March 31, 2015 and the condensed consolidated unaudited balance sheet as of March 31, 2015. | |||||||||||||
The scheduled maturities of the Company’s marketable securities as of March 31, 2015 are as follows (in thousands): | |||||||||||||
Available-for-Sale Securities | |||||||||||||
Amortized Cost | Estimated Fair Value | ||||||||||||
Due within one year | $ | 75 | $ | 75 | |||||||||
Due after one year through five years | 205 | 206 | |||||||||||
Due after five years through ten years | 206 | 213 | |||||||||||
Due after ten years | 16 | 16 | |||||||||||
Total | $ | 502 | $ | 510 | |||||||||
Actual maturities of marketable securities can differ from contractual maturities because borrowers on certain debt securities may have the right to prepay their respective debt obligations at any time. In addition, factors such as prepayments and interest rates may affect the yields on such securities. |
Line_of_Credit_and_Note_Payabl
Line of Credit and Note Payable | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
LINE OF CREDIT AND NOTE PAYABLE | LINES OF CREDIT AND NOTES PAYABLE | ||||||||||||||||
As of March 31, 2015, the Company had $121.8 million of debt outstanding, with weighted average years to maturity of 4.2 years and a weighted average interest rate of 2.79%. The following table summarizes the debt activity for the three months ended March 31, 2015 and the debt balances as of March 31, 2015 and December 31, 2014 (in thousands): | |||||||||||||||||
During the Three Months Ended March 31, 2015 | |||||||||||||||||
Balance as of December 31, 2014 | Debt Issuance | Repayments | Balance as of March 31, 2015 | ||||||||||||||
Line of credit | $ | 100,000 | $ | 8,000 | $ | (23,500 | ) | $ | 84,500 | ||||||||
Fixed rate debt | 20,304 | 16,950 | — | 37,254 | |||||||||||||
Line of credit with affiliate | — | $ | 10,000 | $ | (10,000 | ) | $ | — | |||||||||
Total | $ | 120,304 | $ | 34,950 | $ | (33,500 | ) | $ | 121,754 | ||||||||
As of March 31, 2015, the fixed rate debt outstanding of $37.3 million has interest rates ranging from 3.82% to 4.05% per annum. The debt outstanding matures on various dates from October 2021 to February 2025. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $59.2 million as of March 31, 2015. Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed. | |||||||||||||||||
Included in the fixed rate debt is a $17.0 million mortgage note payable which the Company entered into with Silverpeak Real Estate Finance LLC during the three months ended March 31, 2015 (the “Silverpeak Loan”). The Silverpeak Loan has a fixed interest rate of 4.05% per annum with interest payments due monthly. The principal amount is due on February 6, 2025, the maturity date. The Silverpeak Loan is collateralized by 12 single-tenant commercial properties, which were purchased for an aggregate purchase price of $25.5 million. | |||||||||||||||||
On September 12, 2014, the Company entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, (“JPMorgan Chase”), U.S. Bank National Association and other lending institutions that may become parties to the Amended Credit Agreement. The agreement allows the Company to borrow up to $75.0 million in revolving loans (the “Revolving Loans”), and includes a $25.0 million term loan (the “Term Loan”), with the maximum amount outstanding not to exceed the borrowing base (the “Borrowing Base”), calculated as 65% of the aggregate value allocated to each qualified property comprising eligible collateral (collectively, the “Qualified Properties”) during the period from March 31, 2015 through September 11, 2015 and 60% of the Qualified Properties during the period from September 12, 2015 to September 12, 2017. As of March 31, 2015, the Company had $84.5 million of debt outstanding and $15.5 million available for borrowing under its secured revolving line of credit, as amended (the “Line of Credit”). The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Line of Credit was $160.6 million as of March 31, 2015. As of March 31, 2015, the Line of Credit had a weighted average interest rate of 2.28%. The Line of Credit matures on September 12, 2017; however, the Company may elect to extend the maturity dates of such loans to September 12, 2019, subject to satisfying certain conditions described in the Amended Credit Agreement. | |||||||||||||||||
The Revolving Loans and Term Loan bear interest at rates dependent upon the type of loan specified by the Company. For a eurodollar rate loan the interest rate will be equal to the one-month, two-month, three-month or six-month LIBOR for the interest period, as elected by the Company, multiplied by the Statutory Reserve Rate (as defined in the Amended Credit Agreement), plus the applicable rate (the “Eurodollar Applicable Rate”). The Eurodollar Applicable Rate is based upon the Company’s overall leverage ratio, generally defined in the Amended Credit Agreement as the total consolidated outstanding indebtedness of the Company divided by the total consolidated asset value of the Company (as defined in the Amended Credit Agreement) (the “Leverage Ratio”), and ranges from 1.90% at a Leverage Ratio of 50.0% or less to 2.45% at a Leverage Ratio greater than 60.0%. For base rate committed loans, the interest rate will be a per annum amount equal to the greatest of: (a) JPMorgan Chase’s Prime Rate; (b) the Federal Funds Effective Rate (as defined in the Amended Credit Agreement) plus 0.50%; and (c) one-month LIBOR multiplied by the Statutory Reserve plus 1.0% plus the applicable rate (the “Base Rate Applicable Rate”). The Base Rate Applicable Rate is based upon the Leverage Ratio, and ranges from 0.90% at a Leverage Ratio of 50.0% or less to 1.45% at a Leverage Ratio greater than 60.0%. As of March 31, 2015, amounts outstanding on the Line of Credit accrued interest at an annual rate of 2.09%. | |||||||||||||||||
The Amended Credit Agreement contains customary representations, warranties, borrowing conditions and affirmative, negative and financial covenants, including minimum net worth, debt service coverage and leverage ratio requirements and dividend payout and REIT status requirements. The Amended Credit Agreement also includes usual and customary events of default and remedies for facilities of this nature. Based on the Company’s analysis and review of its results of operations and financial condition, as of March 31, 2015, the Company believes it was in compliance with the covenants of the Amended Credit Agreement. | |||||||||||||||||
On December 16, 2014, the Company entered into a $20.0 million unsecured revolving line of credit with Series C, LLC, an affiliate of the Company’s advisor (the “Series C Line of Credit”). The Series C Line of Credit bears interest at a rate per annum equal to the one-month LIBOR plus 2.45% with accrued interest payable monthly in arrears and principal due upon maturity on December 15, 2015. In the event the Series C Line of Credit is not paid off on the maturity date, the loan includes default provisions. The Series C Line of Credit has been approved by a majority of the Company’s board of directors (including a majority of the independent directors) not otherwise interested in the transaction as fair, competitive and commercially reasonable and no less favorable to the Company than a comparable loan between unaffiliated parties under the same circumstances. As of March 31, 2015, the Company had no amounts outstanding on the Series C Line of Credit and $20.0 million available for borrowing. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES |
Litigation | |
In the ordinary course of business, the Company may become subject to litigation or claims. The Company is not aware of any pending legal proceedings of which the outcome is reasonably possible to have a material effect on its results of operations, financial condition or liquidity. | |
Environmental Matters | |
In connection with the ownership and operation of real estate, the Company potentially may be liable for costs and damages related to environmental matters. The Company owns certain properties that are subject to environmental remediation. In each case, the seller of the property, the tenant of the property and/or another third party has been identified as the responsible party for environmental remediation costs related to the respective property. Additionally, in connection with the purchase of certain of the properties, the respective sellers and/or tenants have indemnified the Company against future remediation costs. In addition, the Company carries environmental liability insurance on its properties that provides limited coverage for remediation liability and pollution liability for third-party bodily injury and property damage claims. Accordingly, the Company does not believe that it is reasonably possible that the environmental matters identified at such properties will have a material effect on its results of operations, financial condition or liquidity, nor is it aware of any environmental matters at other properties which it believes are reasonably possible to have a material effect on its results of operations, financial condition or liquidity. |
RelatedParty_Transactions_and_
Related-Party Transactions and Arrangements | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Related Party Transactions [Abstract] | ||||||||||
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | |||||||||
The Company has incurred, and will continue to incur, commissions, fees and expenses payable to Cole Advisors and certain of its affiliates in connection with the Offering, and the acquisition, management and performance of the Company’s assets. | ||||||||||
Offering | ||||||||||
In connection with the Offering, CCC, the Company’s dealer manager, will receive selling commissions, an asset-based dealer manager fee and/or an asset-based distribution fee, as summarized in the table below for each class of common stock: | ||||||||||
Selling Commission (1) | Dealer | Distribution Fee (2) | ||||||||
Manager Fee (2) | ||||||||||
W Shares | — | 0.55 | % | — | ||||||
A Shares | up to 3.75% | 0.55 | % | 0.5 | % | |||||
I Shares | — | 0.25 | % | — | ||||||
(1) The selling commission is based on the offering price for A Shares. The selling commission expressed as a percentage of NAV per A Share, rather than the offering price, is up to 3.90%, subject to rounding and the effect of volume discounts the Company is offering on certain purchases of $150,001 or more of A Shares. Selling commissions are deducted directly from the offering price for A Shares and paid to CCC. CCC reallows 100% of the selling commissions on A Shares to participating broker-dealers. | ||||||||||
(2) The dealer manager and distribution fees accrue daily in an amount equal to 1/365th of the percentage of NAV per W Share, A Share or I Share, as applicable, for such day on a continuous basis. CCC, in its sole discretion, may reallow a portion of the dealer manager fee and distribution fee to participating broker-dealers. | ||||||||||
All organization and offering expenses associated with the sale of the Company’s common stock (excluding selling commissions, the distribution fee and the dealer manager fee) are paid for by Cole Advisors or its affiliates and can be reimbursed by the Company up to 0.75% of the aggregate gross offering proceeds, excluding selling commissions charged on A Shares sold in the Primary Offering. As of March 31, 2015, Cole Advisors or its affiliates had paid organization and offering costs in excess of the 0.75% in connection with the Offering. These excess costs were not included in the financial statements of the Company because such costs were not a liability of the Company as they exceeded 0.75% of gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these excess costs may become payable to Cole Advisors. | ||||||||||
The Company recorded commissions, fees and expense reimbursements as shown in the table below for services provided by Cole Advisors and its affiliates related to the services described above during the periods indicated (in thousands): | ||||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Offering: | ||||||||||
Selling commissions | $ | 15 | $ | 25 | ||||||
Selling commissions reallowed by CCC | $ | 15 | $ | 25 | ||||||
Distribution fees | $ | 20 | $ | 1 | ||||||
Distribution fees reallowed by CCC | $ | 19 | $ | — | ||||||
Dealer manager fees | $ | 170 | $ | 100 | ||||||
Dealer manager fees reallowed by CCC | $ | 25 | $ | 2 | ||||||
Organization and offering expense reimbursement | $ | 35 | $ | 88 | ||||||
As of March 31, 2015, $225,000 had been incurred, but not yet paid, for services provided by Cole Advisors or its affiliates in connection with the offering stage of the Offering and was a liability to the Company. | ||||||||||
Acquisitions, Operations and Performance | ||||||||||
The Company pays Cole Advisors an asset-based advisory fee that is payable in arrears on a monthly basis and accrues daily in an amount equal to 1/365th of 0.90% of the Company’s NAV for each class of common stock, for each day. | ||||||||||
The Company will reimburse Cole Advisors for the operating expenses it paid or incurred in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse for any amount by which its operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceeds the greater of (1) 2% of average invested assets; or (2) 25% of net income, other than any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of assets for that period. | ||||||||||
In addition, the Company will reimburse Cole Advisors for all out-of-pocket expenses incurred in connection with the acquisition of the Company’s investments. While most of the acquisition expenses are expected to be paid to third parties, a portion of the out-of-pocket acquisition expenses may be reimbursed to Cole Advisors or its affiliates. Acquisition expenses, together with any acquisition fees paid to third parties for a particular real estate-related asset, will in no event exceed 6% of the gross purchase price of such asset. | ||||||||||
Cole Advisors implemented an expense cap for the three months ended December 31, 2013, which has been continued for the three months ended March 31, 2015 and will be continued for the three months ending June 30, 2015, whereby Cole Advisors will fund all general and administrative expenses of the Company that are in excess of an amount calculated by multiplying the average NAV for the respective three month period by an annualized rate of 1.25% (the “Excess G&A”). General and administrative expenses, as presented in these condensed consolidated unaudited financial statements, include, but are not limited to, legal fees, audit fees, board of directors costs, professional fees, escrow and trustee fees, insurance, state franchise and income taxes and fees for unused amounts on the Line of Credit. At Cole Advisors’ discretion, it may fund the Excess G&A through reimbursement to the Company or payment to third parties on behalf of the Company, but in no event will the Company be liable to Cole Advisors in future periods for such amounts paid or reimbursed. During the three months ended March 31, 2015, the Company incurred $66,000 of Excess G&A which, was reimbursed by Cole Advisors subsequent to March 31, 2015. will be reimbursed by Cole Advisors. | ||||||||||
As compensation for services provided pursuant to the advisory agreement, the Company will also pay Cole Advisors a performance-based fee calculated based on the Company’s annual total return to stockholders for each class of common stock (defined below), payable annually in arrears. The performance fee will be calculated such that for any calendar year in which the total return per share for a particular class exceeds 6% (the “6% Return”), Cole Advisors will receive 25% of the excess total return on such class above the 6% Return allocable to that class, but in no event will the Company pay Cole Advisors more than 10% of the aggregate total return, for that class, for such year. However, in the event the NAV per share of the Company’s W Shares, A Shares and I Shares decreases below the base NAV for the respective share class ($15.00, $16.72 and $16.82 for the W Shares, A Shares and I Shares, respectively) (the “Base NAV”), the performance-based fee for a respective class will not be calculated on any increase in NAV up to the Base NAV for the respective share class. In addition, the performance fee will not be paid with respect to any calendar year in which the NAV per share as of the last business day of the calendar year (the “Ending NAV”) for the respective share class is less than the Base NAV of that class. The Base NAV of any share class is subject to downward adjustment in the event that the Company’s board of directors, including a majority of the independent directors, determines that such an adjustment is necessary to provide an appropriate incentive to Cole Advisors to perform in a manner that seeks to maximize stockholder value and is in the best interests of the Company’s stockholders. In the event of any stock dividend, stock split, recapitalization or similar change in the Company’s capital structure, the Base NAV for the respective share class shall be ratably adjusted to reflect the effect of any such event. | ||||||||||
The total return to stockholders is defined, for each class of the Company’s common stock, as the change in NAV per share plus distributions per share for such class. The NAV per share for a class calculated on the last trading day of a calendar year shall be the amount against which changes in NAV per share for such class are measured during the subsequent calendar year. Therefore, for each class of the Company’s common stock, payment of the performance-based component of the advisory fee (1) is contingent upon the Company’s actual annual total return exceeding the 6% Return and the Ending NAV per share for the respective share class being greater than the Base NAV of that class, (2) will vary in amount based on the Company’s actual performance, (3) cannot cause the Company’s total return as a percentage of stockholders’ invested capital for the year to be reduced below 6% and (4) is payable to Cole Advisors if the Company’s total return exceeds the 6% Return in a particular calendar year, even if the total return to stockholders (or any particular stockholder) on a cumulative basis over any longer or shorter period has been less than 6% per annum. Cole Advisors will not be obligated to return any portion of advisory fees paid based on the Company’s subsequent performance. | ||||||||||
The Company recorded fees and expense reimbursements as shown in the table below for services provided by Cole Advisors or its affiliates related to the services described above during the periods indicated (in thousands): | ||||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Acquisitions, Operations and Performance: | ||||||||||
Acquisition expense reimbursement | $ | 25 | $ | — | ||||||
Advisory fee | $ | 284 | $ | 174 | ||||||
Operating expense reimbursement | $ | — | $ | — | ||||||
Performance fee | $ | — | $ | — | ||||||
As of March 31, 2015, $594,000 had been incurred, but not yet paid, for services provided by Cole Advisors or its affiliates in connection with the acquisitions and operations stage and was a liability to the Company. Cole Advisors waived its right to receive acquisition expense reimbursements for the three months ended March 31, 2014; accordingly, the Company did not reimburse Cole Advisors for any acquisition expenses during these periods. Additionally, Cole Advisors waived its right to receive operating expense reimbursements for the three months ended March 31, 2015 and 2014; accordingly, the Company did not reimburse Cole Advisors for any such expenses during the three months ended March 31, 2015 and 2014. During the three months ended March 31, 2015, Cole Advisors permanently waived its rights to expense reimbursements totaling approximately $258,000, and thus the Company is not responsible for this amount. | ||||||||||
Due to Affiliates | ||||||||||
As of March 31, 2015, $834,000 was due to Cole Advisors and its affiliates related to advisory, distribution and dealer manager fees and the reimbursement of organization, offering and acquisition expenses as well as platform fees, which were included in amounts due to affiliates on the condensed consolidated unaudited balance sheet. As of December 31, 2014, $1.8 million was due to Cole Advisors and its affiliates related to performance fees, advisory, distribution and dealer manager fees, the reimbursement of organization and offering expenses, and escrow deposits that were paid on the Company’s behalf in connection with the acquisition of the Company’s properties, which were included in amounts due to affiliates on the condensed consolidated unaudited balance sheet. |
Economic_Dependency
Economic Dependency | 3 Months Ended |
Mar. 31, 2015 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | ECONOMIC DEPENDENCY |
Under various agreements, the Company has engaged or will engage Cole Advisors and its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations. As a result of these relationships, the Company is dependent upon Cole Advisors and its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS |
Investment in Real Estate Assets | |
Subsequent to March 31, 2015, the Company did not acquire any real estate properties. | |
Status of the Offering | |
As of May 11, 2015, the Company had received $147.6 million in gross offering proceeds through the issuance of approximately 8.8 million shares of its common stock in the Offering (including shares issued pursuant to the DRIP). | |
Share Redemptions | |
Subsequent to March 31, 2015 through May 11, 2015, the Company redeemed approximately 58,500 shares for $1.1 million. | |
Line of Credit | |
As of May 11, 2015, the Company had $70.0 million outstanding under the Line of Credit and $40.8 million available for borrowing under the Line of Credit and the Series C Line of Credit. | |
Cap on General and Administrative Expenses | |
As discussed in Note 8 to these condensed consolidated unaudited financial statements, Cole Advisors stated that it will continue the existing expense cap for the three months ending June 30, 2015, whereby Cole Advisors will fund all Excess G&A of the Company for such periods. | |
Property Dispositions | |
Subsequent to March 31, 2015, as a part of the Company's active portfolio management, the Company sold one multi-tenant and two single-tenant properties, for an aggregate gross sale price of $15.9 million resulting in net cash proceeds of $15.5 million, of which $10.6 million was used to pay down the Company’s line of credit. As of March 31, 2015, one multi-tenant property was classified as held for sale, as discussed in Note 2 to these condensed consolidated unaudited financial statements. The two single-tenant properties did not meet the held for sale criteria as of March 31, 2015. | |
Available-for-Sale Securities | |
Subsequent to March 31, 2015, we allocated $5.0 million for additional investment in the marketable securities portfolio, managed by our independent fund accountant. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
Basis of presentation | The condensed consolidated unaudited financial statements of the Company have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2014, and related notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The condensed consolidated unaudited financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. | ||
Principles of consolidation | The condensed consolidated unaudited financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | ||
Use of estimates | Use of Estimates | ||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Investment in and valuation of real estate and related assets | Investment in and Valuation of Real Estate and Related Assets | ||
Real estate and related assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate and related assets consist of the cost of acquisition, excluding acquisition related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate and related assets and leasing costs. All repairs and maintenance are expensed as incurred. | |||
The Company is required to make subjective assessments as to the useful lives of its depreciable assets. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life of the assets. Real estate and related assets, other than land, are depreciated or amortized on a straight-line basis. The estimated useful lives of the Company’s real estate and related assets by class are generally as follows: | |||
Buildings | 40 years | ||
Tenant improvements | Lesser of useful life or lease term | ||
Intangible lease assets | Lease term | ||
The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to, bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors, a significant decrease in a property’s revenues due to lease terminations, vacancies, co-tenancy clauses, reduced lease rates or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate and related assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. As of March 31, 2015, the Company noted potential impairment indicators at a property with an aggregate carrying value of $1.1 million due to a fire loss at the property. However, based on insurance coverage and the expectation of continued rental income from the tenant, the Company’s estimate of undiscounted cash flows indicated that such carrying amount was expected to be recovered as of March 31, 2015, and as such no impairment loss was recorded. Nonetheless, it is reasonably possible that the estimate of undiscounted cash flows may change in the near term, which may result in the need to record an impairment loss to reduce such asset to fair value. Any such impairment losses will affect the Company’s assets and stockholders’ equity, operating and net income. The evaluation of properties for potential impairment requires the Company’s management to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions. No impairment indicators were identified and no impairment losses were recorded during the three months ended March 31, 2014. | |||
When developing estimates of expected future cash flows, the Company makes certain assumptions regarding future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, terminal capitalization and discount rates, the expected number of months it takes to re-lease the property, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in estimating expected future cash flows could result in a different determination of the property’s expected future cash flows and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the fair value of the real estate and related assets. | |||
When a real estate asset is identified by the Company as held for sale, the Company will cease depreciation and amortization of the assets related to the property and estimate the fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount would be recorded to reflect the estimated fair value of the property, net of selling costs. During the three months ended March 31, 2015, the Company identified one multi-tenant property as held for sale, which was sold subsequent to March 31, 2015, as discussed in Note 10 to these condensed consolidated unaudited financial statements. No assets were identified as held for sale as of December 31, 2014. | |||
Allocation of purchase price of real estate and related assets | Allocation of Purchase Price of Real Estate and Related Assets | ||
Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and identified intangible assets and liabilities, consisting of the value of above market and below market leases and the value of in-place leases, based in each case on their respective fair values. Acquisition related expenses are expensed as incurred. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The Company obtains an independent appraisal for each real property acquisition. The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. | |||
The fair values of above market and below market lease intangibles are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) an estimate of fair market lease rates for the corresponding in-place leases, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease including any bargain renewal periods, with respect to a below market lease. The above market and below market lease intangibles are capitalized as intangible lease assets or liabilities, respectively. Above market leases are amortized as a reduction to rental income over the remaining terms of the respective leases. Below market leases are amortized as an increase to rental income over the remaining terms of the respective leases, including any bargain renewal periods. In considering whether or not the Company expects a tenant to execute a bargain renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition, such as the financial strength of the tenant, remaining lease term, the tenant mix of the leased property, the Company’s relationship with the tenant and the availability of competing tenant space. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market or below market lease intangibles relating to that lease would be recorded as an adjustment to rental income. | |||
The fair values of in-place leases include estimates of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rental and other property income which are avoided by acquiring a property with an in-place lease. Direct costs associated with obtaining a new tenant include commissions and other direct costs, and are estimated in part by utilizing information obtained from independent appraisals and management’s consideration of current market costs to execute a similar lease. The intangible values of opportunity costs, which are calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease, are capitalized as intangible lease assets and are amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. | |||
The Company may acquire certain properties subject to contingent consideration arrangements that may obligate the Company to pay additional consideration to the seller based on the outcome of future events. Additionally, the Company may acquire certain properties for which it funds certain contingent consideration amounts into an escrow account pending the outcome of certain future events. The outcome may result in the release of all or a portion of the escrow funds to the Company or the seller or a combination thereof. Contingent consideration arrangements will be based on a predetermined formula and have set time periods regarding the obligation to make future payments, including funds released to the seller from escrow accounts, or the right to receive escrowed funds as set forth in the respective purchase and sale agreement. Contingent consideration arrangements, including amounts funded through an escrow account, will be recorded upon acquisition of the respective property at their estimated fair value, and any changes to the estimated fair value, subsequent to acquisition, will be reflected in the accompanying condensed consolidated unaudited statements of operations. The determination of the amount of contingent consideration arrangements is based on the probability of several possible outcomes as identified by management. | |||
The Company will estimate the fair value of assumed mortgage notes payable based upon indications of current market pricing for similar types of debt financing with similar maturities. Assumed mortgage notes payable will initially be recorded at their estimated fair value as of the assumption date, and any difference between such estimated fair value and the mortgage note’s outstanding principal balance will be amortized to interest expense over the term of the respective mortgage note payable. | |||
The determination of the fair values of the real estate and related assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could impact the Company’s results of operations. | |||
Investment in marketable securities | Investment in Marketable Securities | ||
Investment in marketable securities consists primarily of the Company’s investment in corporate and government debt securities. The Company determines the appropriate classification for debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. As of March 31, 2015, the Company classified its investments as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. | |||
The Company monitors its available-for-sale securities for impairments. A loss is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary. The Company considers many factors in determining whether the impairment of a security is deemed to be other-than-temporary, including, but not limited to, the length of time the security has had a decline in estimated fair value below its amortized cost, the amount of the unrealized loss, the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. The analysis of determining whether the impairment of a security is deemed to be other-than-temporary requires significant judgment and assumptions. The use of alternative judgments and assumptions could result in a different conclusion. | |||
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is recorded in the accompanying condensed consolidated unaudited statements of operations in interest and other expense, net. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method. | |||
Restricted cash and escrows | Restricted Cash and Escrows | ||
Included in restricted cash were escrowed investor proceeds for which shares of common stock had not been issued as of March 31, 2015 and December 31, 2014. | |||
Concentration of credit risk | Concentration of Credit Risk | ||
As of March 31, 2015, the Company had cash on deposit, including restricted cash, at four financial institutions, in one of which the Company had deposits in excess of federally insured levels, totaling $6.2 million; however, the Company has not experienced any losses in such accounts. The Company limits significant cash deposits to accounts held by financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. | |||
As of March 31, 2015, no single tenant accounted for greater than 10% of the Company’s 2015 gross annualized rental revenues. Tenants in the discount store, manufacturing, drugstore and grocery industries accounted for 15% 13%, 10% and 10%, respectively, of the Company’s 2015 gross annualized rental revenues. Additionally, the Company has certain geographic concentrations in its property holdings. In particular, as of March 31, 2015, eight of the Company’s properties were located in Texas, accounting for 17% of the Company’s 2015 gross annualized rental revenues. | |||
Offering and related costs | Offering and Related Costs | ||
Cole Advisors funds all of the organization and offering costs associated with the sale of the Company’s common stock (excluding selling commissions, the distribution fee and the dealer manager fee) and is reimbursed for such costs up to 0.75% of gross proceeds from the Offering, excluding selling commissions charged on A Shares sold in the Primary Offering. As of March 31, 2015, Cole Advisors or its affiliates had paid organization and offering costs in excess of 0.75% in connection with the Offering. These excess costs were not included in the financial statements of the Company because such costs were not a liability of the Company as they exceeded 0.75% of gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these excess costs may become payable to Cole Advisors. | |||
Redeemable common stock | Redeemable Common Stock | ||
The Company has adopted a share redemption program that permits its stockholders to redeem their shares, subject to certain limitations. The Company records amounts that are redeemable under the share redemption program as redeemable common stock outside of permanent equity on its condensed consolidated unaudited balance sheets. Redeemable common stock is recorded at the greater of the carrying amount or redemption value each reporting period. Changes in the value from period to period are recorded as an adjustment to capital in excess of par value. | |||
As of March 31, 2015 and December 31, 2014, the quarterly redemption capacity was equal to 10% of the Company’s NAV, and this amount was recorded as redeemable common stock on the condensed consolidated unaudited balance sheet for a total of $13.1 million and $12.5 million, respectively. | |||
Recent accounting pronouncements | Recent Accounting Pronouncements | ||
In May 2014, the U.S. Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers, including real estate sales, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the impact of the new standard, but does not believe it will have a material impact, when effective, on the Company’s condensed consolidated unaudited financial statements. | |||
In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”), which eliminates the deferral of Financial Accounting Standard 167, modifies the evaluation of whether limited partnerships and similar legal entities are variable or voting interest entities, eliminates the presumption that the general partner should consolidate a limited partnership, modifies the consolidation analysis for reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships, and provides a scope exception for reporting entities with interests in legal entities that operate as registered money market funds. These changes will require re-evaluation of the consolidation conclusion for certain entities and will require the Company to revise its analysis regarding the consolidation or deconsolidation of such entities. ASU 2015-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. Companies may elect to apply the amendments in ASU 2015-02 using a modified retrospective approach or by applying the amendments retrospectively. The Company is currently evaluating the impact of the new standard on its financial statements. | |||
In April 2015, FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than presenting the deferred charge as an asset. The previous requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, “Elements of Financial Statements,” which states that debt issuance costs are similar to debt discounts and effectively reduce the proceeds of borrowing, thereby increasing the effective interest rate. FASB Concepts Statement No. 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. After the update is adopted, debt disclosures would include the face amount of the debt liability and the effective interest rate. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and is to be applied retrospectively, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
Investment in and valuation of real estate and related assets | Real estate and related assets, other than land, are depreciated or amortized on a straight-line basis. The estimated useful lives of the Company’s real estate and related assets by class are generally as follows: | ||
Buildings | 40 years | ||
Tenant improvements | Lesser of useful life or lease term | ||
Intangible lease assets | Lease term |
Real_Estate_Acquisitions_Table
Real Estate Acquisitions (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Real Estate [Abstract] | |||||||||
Schedule of purchase price allocation | The following table summarizes the purchase price allocation (in thousands): | ||||||||
31-Mar-14 | |||||||||
Land | $ | 2,874 | |||||||
Building and improvements | 9,509 | ||||||||
Acquired in-place leases | 1,395 | ||||||||
Acquired above market leases | 444 | ||||||||
Acquired below market leases | (190 | ) | |||||||
Total purchase price | $ | 14,032 | |||||||
Business acquisition, pro forma information | The table below presents the Company’s estimated revenue and net income (loss), on a pro forma basis, for the three months ended March 31, 2014 and 2013, respectively (in thousands): | ||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Pro forma basis: | |||||||||
Revenue | $ | 2,496 | $ | 1,046 | |||||
Net income (loss) | $ | 461 | $ | (116 | ) | ||||
Marketable_Securities_Tables
Marketable Securities (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||
Available-for-sale securities | The following is a summary of the Company’s available-for-sale securities as of March 31, 2015 (in thousands): | ||||||||||||
Available-for-Sale Securities | |||||||||||||
Amortized Cost Basis | Unrealized Gain | Fair Value | |||||||||||
U.S. Treasury Bonds | $ | 179 | $ | 5 | $ | 184 | |||||||
U.S. Agency Bonds | 85 | — | 85 | ||||||||||
Corporate Bonds | 238 | 3 | 241 | ||||||||||
Total available-for-sale securities | $ | 502 | $ | 8 | $ | 510 | |||||||
Schedule of available-for-sale securities reconciliation | The following table provides the activity for the marketable securities during the three months ended March 31, 2015 (in thousands): | ||||||||||||
Amortized Cost Basis | Unrealized Gain | Fair Value | |||||||||||
Marketable securities as of December 31, 2014 | $ | 487 | $ | 3 | $ | 490 | |||||||
Face value of marketable securities acquired | 35 | — | 35 | ||||||||||
Amortization on marketable securities | — | — | — | ||||||||||
Sales of securities | (20 | ) | — | (20 | ) | ||||||||
Increase in fair value of marketable securities | — | 5 | 5 | ||||||||||
Marketable securities as of March 31, 2015 | $ | 502 | $ | 8 | $ | 510 | |||||||
Investments classified by contractual maturity date | The scheduled maturities of the Company’s marketable securities as of March 31, 2015 are as follows (in thousands): | ||||||||||||
Available-for-Sale Securities | |||||||||||||
Amortized Cost | Estimated Fair Value | ||||||||||||
Due within one year | $ | 75 | $ | 75 | |||||||||
Due after one year through five years | 205 | 206 | |||||||||||
Due after five years through ten years | 206 | 213 | |||||||||||
Due after ten years | 16 | 16 | |||||||||||
Total | $ | 502 | $ | 510 | |||||||||
Line_of_Credit_and_Note_Payabl1
Line of Credit and Note Payable (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Summary of Debt Activity | The following table summarizes the debt activity for the three months ended March 31, 2015 and the debt balances as of March 31, 2015 and December 31, 2014 (in thousands): | ||||||||||||||||
During the Three Months Ended March 31, 2015 | |||||||||||||||||
Balance as of December 31, 2014 | Debt Issuance | Repayments | Balance as of March 31, 2015 | ||||||||||||||
Line of credit | $ | 100,000 | $ | 8,000 | $ | (23,500 | ) | $ | 84,500 | ||||||||
Fixed rate debt | 20,304 | 16,950 | — | 37,254 | |||||||||||||
Line of credit with affiliate | — | $ | 10,000 | $ | (10,000 | ) | $ | — | |||||||||
Total | $ | 120,304 | $ | 34,950 | $ | (33,500 | ) | $ | 121,754 | ||||||||
RelatedParty_Transactions_and_1
Related-Party Transactions and Arrangements (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Related Party Transactions [Abstract] | ||||||||||
Schedule of Related Party Transactions | The Company recorded fees and expense reimbursements as shown in the table below for services provided by Cole Advisors or its affiliates related to the services described above during the periods indicated (in thousands): | |||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Acquisitions, Operations and Performance: | ||||||||||
Acquisition expense reimbursement | $ | 25 | $ | — | ||||||
Advisory fee | $ | 284 | $ | 174 | ||||||
Operating expense reimbursement | $ | — | $ | — | ||||||
Performance fee | $ | — | $ | — | ||||||
The Company recorded commissions, fees and expense reimbursements as shown in the table below for services provided by Cole Advisors and its affiliates related to the services described above during the periods indicated (in thousands): | ||||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Offering: | ||||||||||
Selling commissions | $ | 15 | $ | 25 | ||||||
Selling commissions reallowed by CCC | $ | 15 | $ | 25 | ||||||
Distribution fees | $ | 20 | $ | 1 | ||||||
Distribution fees reallowed by CCC | $ | 19 | $ | — | ||||||
Dealer manager fees | $ | 170 | $ | 100 | ||||||
Dealer manager fees reallowed by CCC | $ | 25 | $ | 2 | ||||||
Organization and offering expense reimbursement | $ | 35 | $ | 88 | ||||||
In connection with the Offering, CCC, the Company’s dealer manager, will receive selling commissions, an asset-based dealer manager fee and/or an asset-based distribution fee, as summarized in the table below for each class of common stock: | ||||||||||
Selling Commission (1) | Dealer | Distribution Fee (2) | ||||||||
Manager Fee (2) | ||||||||||
W Shares | — | 0.55 | % | — | ||||||
A Shares | up to 3.75% | 0.55 | % | 0.5 | % | |||||
I Shares | — | 0.25 | % | — | ||||||
(1) The selling commission is based on the offering price for A Shares. The selling commission expressed as a percentage of NAV per A Share, rather than the offering price, is up to 3.90%, subject to rounding and the effect of volume discounts the Company is offering on certain purchases of $150,001 or more of A Shares. Selling commissions are deducted directly from the offering price for A Shares and paid to CCC. CCC reallows 100% of the selling commissions on A Shares to participating broker-dealers. | ||||||||||
(2) The dealer manager and distribution fees accrue daily in an amount equal to 1/365th of the percentage of NAV per W Share, A Share or I Share, as applicable, for such day on a continuous basis. CCC, in its sole discretion, may reallow a portion of the dealer manager fee and distribution fee to participating broker-dealers. |
Organization_and_Business_Deta
Organization and Business (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Aug. 26, 2013 | Dec. 06, 2011 | |
class_of_stock | |||
Organization and business | |||
Number of states in which entity owns properties (in number of states) | 26 | ||
Percentage of rentable space leased (in square feet) | 99.60% | ||
Consolidated properties | |||
Organization and business | |||
Number of owned properties (in number of properties) | 75 | ||
Rentable square feet (in square feet) | 1,800,000 | ||
Common Class W | |||
Organization and business | |||
Share price (in dollars per share) | 18.08 | ||
Common Class A | |||
Organization and business | |||
Share price (in dollars per share) | 18.07 | ||
Common Class I | |||
Organization and business | |||
Share price (in dollars per share) | 18.15 | ||
IPO | |||
Organization and business | |||
Common stock, value authorized | $4,000,000,000 | ||
Classes of common stock, additions | 2 | ||
Multi-class offering | |||
Organization and business | |||
Common stock, value authorized | 4,000,000,000 | ||
Classes of common stock | 3 | ||
Multi-class offering | Primary offering | |||
Organization and business | |||
Common stock, value authorized | 3,500,000,000 | ||
Multi-class offering | Distribution reinvestment plan | |||
Organization and business | |||
Common stock, value authorized | 500,000,000 | ||
Cole OP | |||
Organization and business | |||
General partner partnership interest percentage | 100.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Valuation of real estate and related assets | ||
Document Fiscal Year Focus | 2015 | |
Quarterly redemption capacity | 10.00% | 10.00% |
Temporary Equity, Carrying Amount, Attributable to Parent | $13,120,000 | $12,545,000 |
Document Period End Date | 31-Mar-15 | |
Maximum | Advisors | Organization and offering expense reimbursement | ||
Valuation of real estate and related assets | ||
Organization and offering expense | 0.75% | |
Building | ||
Valuation of real estate and related assets | ||
Acquired real estate asset, useful life | 40 years | |
Fire Loss Property [Member] | ||
Valuation of real estate and related assets | ||
Value of property with potential impairment indicators | $1,100,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Concentration of credit risk (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Concentration Risk | |
Cash on deposit, number of financial institutions | 4 |
Cash on deposit, number of financial institutions which had deposits in excess of current federally insured limits | 1 |
Texas | |
Concentration Risk | |
Number of owned properties (in number of properties) | 8 |
Gross annualized rental revenues by industry | |
Concentration Risk | |
Concentration risk, percentage | 10.00% |
Credit concentration risk | Demand deposits | |
Concentration Risk | |
Concentration risk, credit risk, financial instrument, maximum exposure | 6.2 |
Credit concentration risk | Gross annualized rental revenues by industry | Texas | |
Concentration Risk | |
Concentration risk, percentage | 17.00% |
Customer concentration risk | Gross annualized rental revenues by industry | |
Concentration Risk | |
Number of tenants | 0 |
Customer concentration risk | Gross annualized rental revenues by industry | Discount store industry | |
Concentration Risk | |
Concentration risk, percentage | 15.00% |
Customer concentration risk | Gross annualized rental revenues by industry | Manufacturing Industry [Member] | |
Concentration Risk | |
Concentration risk, percentage | 13.00% |
Customer concentration risk | Gross annualized rental revenues by industry | Drugstore industry | |
Concentration Risk | |
Concentration risk, percentage | 10.00% |
Customer concentration risk | Gross annualized rental revenues by industry | Grocery store industry | |
Concentration Risk | |
Concentration risk, percentage | 10.00% |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Carrying amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Line of credit, fair value | $121.80 | $120.30 |
Fair value, inputs, level 2 | Fair value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Line of credit, fair value | $121.80 | $120.30 |
Real_Estate_Acquisitions_Detai
Real Estate Acquisitions (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Acquisition related expenses | $69,000 | $198,000 | |
2014 Acquisitions | |||
Business Acquisition | |||
Business acquisition, percentage of voting interests acquired | 100.00% | ||
Number of real estate acquisitions (in number of properties) | 8 | ||
Total purchase price | 14,000,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Land | 2,874,000 | ||
Building and improvements | 9,509,000 | ||
Total purchase price | 14,032,000 | ||
Revenue of acquiree since acquisition date | 122,000 | ||
Net income (loss) of acquiree since acquisition date | -112,000 | ||
Acquisition related expenses | 198,000 | ||
Pro forma basis | |||
Revenue | 2,496,000 | 1,046,000 | |
Net income (loss) | 461,000 | -116,000 | |
2014 Acquisitions | Acquired in-place leases | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Acquired in-place leases and acquired above market leases | 1,395,000 | ||
2014 Acquisitions | Acquired above market leases | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Acquired in-place leases and acquired above market leases | 444,000 | ||
2014 Acquisitions | Acquired below market leases | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||
Acquired below market leases | ($190,000) |
Marketable_Securities_Details
Marketable Securities (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Security | |||
Schedule of Available-for-sale Securities | |||
Investment in marketable securities | $510 | $490 | |
Amortized cost | 502 | ||
Unrealized Gain | 8 | ||
Fair value | 510 | ||
Amortized Cost Basis Rollforward | |||
Marketable securities as of March 31, 2015 | 502 | ||
Unrealized Gain Rollforward | |||
Marketable securities as of December 31, 2014 | 3 | ||
Sales of securities | 0 | ||
Increase in fair value of marketable securities | 5 | ||
Marketable securities as of March 31, 2015 | 8 | ||
Fair Value Rollforward | |||
Increase in fair value of marketable securities | 5 | ||
Marketable securities as of March 31, 2015 | 510 | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Due within one year | 75 | ||
Due after one year through five years | 205 | ||
Due after five years through ten years | 206 | ||
Due after ten years | 16 | ||
Total | 502 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Due within one year | 75 | ||
Due after one year through five years | 206 | ||
Due after five years through ten years | 213 | ||
Due after ten years | 16 | ||
Total | 510 | ||
Available-for-sale Securities, Other Disclosure Items [Abstract] | |||
Number of Securities Sold | 3 | ||
Proceeds from sale of marketable securities | 20 | 91 | |
Unrealized gain on investments | 5 | ||
Amortized Cost Basis | |||
Schedule of Available-for-sale Securities | |||
Amortized cost | 502 | ||
Amortized Cost Basis Rollforward | |||
Marketable securities as of December 31, 2014 | 487 | ||
Face value of marketable securities acquired | 35 | ||
Amortization on marketable securities | 0 | ||
Sales of securities | -20 | ||
Marketable securities as of March 31, 2015 | 502 | ||
Fair Value Rollforward | |||
Face value of marketable securities acquired | 35 | ||
Amortization on marketable securities | 0 | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Total | 502 | ||
Fair Value | |||
Schedule of Available-for-sale Securities | |||
Fair value | 510 | ||
Amortized Cost Basis Rollforward | |||
Face value of marketable securities acquired | 35 | ||
Amortization on marketable securities | 0 | ||
Unrealized Gain Rollforward | |||
Increase in fair value of marketable securities | 5 | ||
Fair Value Rollforward | |||
Marketable securities as of December 31, 2014 | 490 | ||
Face value of marketable securities acquired | 35 | ||
Amortization on marketable securities | 0 | ||
Sales of securities | -20 | ||
Increase in fair value of marketable securities | 5 | ||
Marketable securities as of March 31, 2015 | 510 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Total | 510 | ||
U.S. Treasury Bonds | |||
Schedule of Available-for-sale Securities | |||
Amortized cost | 179 | ||
Unrealized Gain | 5 | ||
Fair value | 184 | ||
Amortized Cost Basis Rollforward | |||
Marketable securities as of March 31, 2015 | 179 | ||
Unrealized Gain Rollforward | |||
Marketable securities as of March 31, 2015 | 5 | ||
Fair Value Rollforward | |||
Marketable securities as of March 31, 2015 | 184 | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Total | 179 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Total | 184 | ||
U.S. Agency Bonds | |||
Schedule of Available-for-sale Securities | |||
Amortized cost | 85 | ||
Unrealized Gain | 0 | ||
Fair value | 85 | ||
Amortized Cost Basis Rollforward | |||
Marketable securities as of March 31, 2015 | 85 | ||
Unrealized Gain Rollforward | |||
Marketable securities as of March 31, 2015 | 0 | ||
Fair Value Rollforward | |||
Marketable securities as of March 31, 2015 | 85 | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Total | 85 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Total | 85 | ||
Corporate Bonds | |||
Schedule of Available-for-sale Securities | |||
Amortized cost | 238 | ||
Unrealized Gain | 3 | ||
Fair value | 241 | ||
Amortized Cost Basis Rollforward | |||
Marketable securities as of March 31, 2015 | 238 | ||
Unrealized Gain Rollforward | |||
Marketable securities as of March 31, 2015 | 3 | ||
Fair Value Rollforward | |||
Marketable securities as of March 31, 2015 | 241 | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Total | 238 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Total | $241 |
Line_of_Credit_and_Note_Payabl2
Line of Credit and Note Payable (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Feb. 06, 2015 | Dec. 16, 2014 | Dec. 31, 2014 | |
Debt Instrument | ||||
Debt outstanding | $121,754,000 | |||
Weighted average interest rate | 2.79% | |||
Weighted average years to maturity | 4 years 1 month 27 days | |||
Debt Outstanding [Roll Forward] | ||||
Balance as of December 31, 2014 | 120,304,000 | |||
Debt Issuance | 34,950,000 | |||
Repayments | -33,500,000 | |||
Balance as of March 31, 2015 | 121,754,000 | |||
Debt security, amount, aggregate gross real estate assets net of gross intangible lease liabilities | 160,600,000 | |||
Line of credit and notes payable | 121,754,000 | 120,304,000 | ||
Line of Credit | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 2.09% | |||
Line of credit facilities, borrowing base Calculation, percentage applied to the value of qualified properties | 65.00% | |||
Line of credit and notes payable | 84,500,000 | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument | ||||
Weighted average interest rate | 2.28% | |||
Debt Outstanding [Roll Forward] | ||||
Line of credit facility, maximum borrowing capacity | 75,000,000 | |||
Line of credit, remaining borrowing capacity | 15,500,000 | |||
JPMorgan Chase, Revolving Credit Facility | Line of Credit | Revolving Credit Facility | ||||
Debt Instrument | ||||
Debt outstanding | 84,500,000 | |||
Debt Outstanding [Roll Forward] | ||||
Balance as of December 31, 2014 | 100,000,000 | |||
Debt Issuance | 8,000,000 | |||
Repayments | -23,500,000 | |||
Balance as of March 31, 2015 | 84,500,000 | |||
JPMorgan Chase, Revolving Credit Facility | Unsecured Debt | Term Loan | ||||
Debt Outstanding [Roll Forward] | ||||
Line of credit facility, maximum borrowing capacity | 25,000,000 | |||
Fixed Rate Debt | Loans Payable | ||||
Debt Instrument | ||||
Debt outstanding | 37,254,000 | |||
Debt Outstanding [Roll Forward] | ||||
Balance as of December 31, 2014 | 20,304,000 | |||
Debt Issuance | 16,950,000 | |||
Repayments | 0 | |||
Balance as of March 31, 2015 | 37,254,000 | |||
Debt security, amount, aggregate gross real estate assets net of gross intangible lease liabilities | 59,200,000 | |||
Silverpeak Loan [Member] | Loans Payable | ||||
Debt Outstanding [Roll Forward] | ||||
Long-term debt | 17,000,000 | |||
Number of properties held as collateral | 12 | |||
Amended Credit Facility | Line of Credit | ||||
Debt Outstanding [Roll Forward] | ||||
Line of credit facilities, borrowing base Calculation, percentage applied to the value of qualified properties | 60.00% | |||
Affiliated Line of Credit, Series C, LLC Loan [Member] | Line of Credit | Revolving Credit Facility | ||||
Debt Instrument | ||||
Debt outstanding | 0 | |||
Debt Outstanding [Roll Forward] | ||||
Balance as of December 31, 2014 | 0 | |||
Debt Issuance | 10,000,000 | |||
Repayments | -10,000,000 | |||
Balance as of March 31, 2015 | 0 | |||
Leverage Ratio Less than or Equal to Fifty Percent | Secured Revolving Credit Facility, Base Rate | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 0.90% | |||
Leverage ratio | 50.00% | |||
Leverage Ratio Less than or Equal to Fifty Percent | Secured Revolving Credit Facility, Eurodollar Rate | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 1.90% | |||
Leverage ratio | 50.00% | |||
Leverage Ratio Greater than Sixty-Five Percent | Secured Revolving Credit Facility, Base Rate | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 1.45% | |||
Leverage ratio | 60.00% | |||
Leverage Ratio Greater than Sixty-Five Percent | Secured Revolving Credit Facility, Eurodollar Rate | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 2.45% | |||
Leverage ratio | 60.00% | |||
Federal Funds Effective Rate | Secured Revolving Credit Facility | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Basis spread on variable rate | 0.50% | |||
Statutory Reserve Rate | Secured Revolving Credit Facility | Line of Credit | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Basis spread on variable rate | 1.00% | |||
Commercial Real Estate | Silverpeak Loan [Member] | Loans Payable | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 0.00% | |||
Total purchase price | 25,500,000 | |||
Series C, Llc [Member] | Affiliate of Company Advisor [Member] | Unsecured Debt | Revolving Credit Facility | ||||
Debt Instrument | ||||
Line of credit, amount outstanding | 0 | |||
Debt Outstanding [Roll Forward] | ||||
Line of credit facility, maximum borrowing capacity | 20,000,000 | |||
Line of credit, remaining borrowing capacity | $20,000,000 | |||
Series C, Llc [Member] | Affiliate of Company Advisor [Member] | London Interbank Offered Rate (LIBOR) [Member] | Unsecured Debt | Revolving Credit Facility | ||||
Debt Outstanding [Roll Forward] | ||||
Basis spread on variable rate | 2.45% | |||
Minimum | Fixed Rate Debt | Loans Payable | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 3.82% | |||
Maximum | Fixed Rate Debt | Loans Payable | ||||
Debt Outstanding [Roll Forward] | ||||
Debt instrument, interest rate, stated percentage | 4.05% |
RelatedParty_Transactions_and_2
Related-Party Transactions and Arrangements (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||
Related Party Transaction | ||||
Due to Affiliate | $834,000 | $1,816,000 | ||
Common Class W | ||||
Related Party Transaction | ||||
Share price, base net asset value | $15 | |||
Common Class A | ||||
Related Party Transaction | ||||
Share price, base net asset value | $16.72 | |||
Common Class I | ||||
Related Party Transaction | ||||
Share price, base net asset value | $16.82 | |||
Advisors | ||||
Related Party Transaction | ||||
Excess general and administrative expense, annualized rate limitation | 1.25% | |||
Due to affiliates | 834,000 | 1,800,000 | ||
Advisors | Minimum | ||||
Related Party Transaction | ||||
Operating expense reimbursement percent of average invested assets | 2.00% | |||
Operating expense reimbursement percent of net income | 25.00% | |||
Selling commissions | Dealer manager | Common Class W | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.00% | [1] | ||
Selling commissions | Dealer manager | Common Class A | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 3.75% | [1] | ||
Common stock, share purchase volume discount | 150,001 | |||
Selling commissions | Dealer manager | Common Class I | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.00% | [1] | ||
Selling commissions | Dealer manager | Maximum | Common Class A | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 3.90% | |||
Selling commissions | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 15,000 | 25,000 | ||
Selling commissions reallowed by CCC | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 15,000 | 25,000 | ||
Selling commissions reallowed by CCC | Advisors | Common Class A | ||||
Related Party Transaction | ||||
Daily asset based related party fee reallowed to third party percent | 100.00% | |||
Distribution fees | Dealer manager | Common Class W | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.00% | [2] | ||
Distribution fees | Dealer manager | Common Class A | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.50% | [2] | ||
Distribution fees | Dealer manager | Common Class I | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.00% | [2] | ||
Distribution fees | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 20,000 | 1,000 | ||
Distribution fees reallowed by CCC | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 19,000 | 0 | ||
Dealer manager fees | Dealer manager | Common Class W | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.55% | [2] | ||
Dealer manager fees | Dealer manager | Common Class A | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.55% | [2] | ||
Dealer manager fees | Dealer manager | Common Class I | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.25% | [2] | ||
Dealer manager fees | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 170,000 | 100,000 | ||
Dealer manager fees reallowed by CCC | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 25,000 | 2,000 | ||
Organization and offering expense reimbursement | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 35,000 | 88,000 | ||
Organization and offering expense reimbursement | Advisors | Maximum | ||||
Related Party Transaction | ||||
Organization and offering expense | 0.75% | |||
Commissions, Fees and Expense Reimbursements | Advisors | ||||
Related Party Transaction | ||||
Due to Affiliate | 225,000 | |||
Acquisition and advisory fees and expenses | Advisors | ||||
Related Party Transaction | ||||
Daily asset based related party fee percent | 0.90% | |||
Related party transaction, expenses from transactions with related party | 25,000 | 0 | ||
Acquisition and advisory fees and expenses | Advisors | Maximum | ||||
Related Party Transaction | ||||
Acquisition and advisory fee | 6.00% | |||
Excess general and administrative expenses to be reimbursed | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 66,000 | |||
Advisory fees | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 284,000 | 174,000 | ||
Operating expense reimbursement | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 0 | 0 | ||
Performance fee | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 0 | 0 | ||
Performance fee, percent applied to total return on stockholders' capital between 6 percent and 10 percent | 25.00% | |||
Performance fee | Advisors | Maximum | ||||
Related Party Transaction | ||||
Total return threshold to receive performance fee | 10.00% | |||
Performance fee | Advisors | Minimum | ||||
Related Party Transaction | ||||
Total return threshold to receive performance fee | 6.00% | |||
Fees and Expense Reimbursements | Advisors | ||||
Related Party Transaction | ||||
Due to Affiliate | 594,000 | |||
Waived Fees and Expense Reimbursements | Advisors | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | $258,000 | |||
[1] | The selling commission is based on the offering price for A Shares. The selling commission expressed as a percentage of NAV per A Share, rather than the offering price, is up to 3.90%, subject to rounding and the effect of volume discounts the Company is offering on certain purchases of $150,001 or more of A Shares. Selling commissions are deducted directly from the offering price for A Shares and paid to CCC. CCC reallows 100% of the selling commissions on A Shares to participating broker-dealers. | |||
[2] | The dealer manager and distribution fees accrue daily in an amount equal to 1/365th of the percentage of NAV per W Share, A Share or I Share, as applicable, for such day on a continuous basis. CCC, in its sole discretion, may reallow a portion of the dealer manager fee and distribution fee to participating broker-dealers. |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | 11-May-15 | 11-May-15 | 13-May-15 | |
multi-tenant_property | multi-tenant_property | ||||
single_tenant_property | |||||
Subsequent Event | |||||
Issuance of common stock | $4,642,000 | ||||
Number Of Real Estate Properties, Held for Sale | 1 | ||||
Investment in marketable securities | -35,000 | -114,000 | |||
Subsequent event | |||||
Subsequent Event | |||||
Issuance of common stock | 147,600,000 | ||||
Issuance of common stock, shares | 8,800,000 | ||||
Redemption of stock (in shares) | 59,000 | ||||
Value of stock redeemed (in usd) | 1,100,000 | ||||
Number of multi tenant properties sold | 1 | ||||
Number of single tenant properties sold | 2 | ||||
Gross sale price of real estate | 15,900,000 | ||||
Cash proceeds from sale of real estate | 15,500,000 | ||||
Investment in marketable securities | -5,000,000 | ||||
Subsequent event | Line of Credit | |||||
Subsequent Event | |||||
Line of credit, amount outstanding | 70,000,000 | 70,000,000 | |||
Line of credit, remaining borrowing capacity | 40,800,000 | 40,800,000 | |||
Pay-down of the Company's line of credit | $10,600,000 |