Document and Entity Information
Document and Entity Information - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Aug. 07, 2017 | |
Entity Information | ||
Entity Registrant Name | COLE REAL ESTATE INCOME STRATEGY (DAILY NAV), INC. | |
Entity Central Index Key | 1,498,542 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
W Shares Common Stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 14,900 | |
A Shares Common Stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 7,100 | |
I Shares Common Stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding | 915 |
Condensed Consolidated Unaudite
Condensed Consolidated Unaudited Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Investment in real estate assets: | ||
Land | $ 123,209 | $ 86,858 |
Buildings and improvements | 427,004 | 319,589 |
Intangible lease assets | 82,560 | 52,965 |
Total real estate investments, at cost | 632,773 | 459,412 |
Less: accumulated depreciation and amortization | (31,029) | (22,638) |
Total real estate investments, net | 601,744 | 436,774 |
Investment in marketable securities | 5,257 | 5,563 |
Total real estate investments and marketable securities, net | 607,001 | 442,337 |
Cash and cash equivalents | 11,749 | 4,671 |
Restricted cash | 525 | 600 |
Rents and tenant receivables, net | 5,552 | 4,206 |
Property escrow deposits, prepaid expenses, and other assets | 784 | 684 |
Deferred costs, net | 629 | 1,074 |
Total assets | 626,240 | 453,572 |
LIABILITIES AND EQUITY | ||
Notes payable and credit facility, net | 259,632 | 159,143 |
Accrued expenses and accounts payable | 2,830 | 2,798 |
Escrowed investor proceeds | 0 | 75 |
Due to affiliates | 17,076 | 14,786 |
Intangible lease liabilities, net | 11,627 | 5,798 |
Distributions payable | 1,738 | 1,444 |
Deferred rental income, derivative liabilities, and other liabilities | 2,046 | 1,442 |
Total liabilities | 294,949 | 185,486 |
Commitments and contingencies | ||
Redeemable common stock | 39,783 | 32,076 |
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 | 324,297 | 259,817 |
Accumulated distributions in excess of earnings | (33,542) | (24,399) |
Accumulated other comprehensive loss | (249) | (372) |
Total stockholders’ equity | 290,726 | 235,224 |
Non-controlling interests | 782 | 786 |
Total equity | 291,508 | 236,010 |
Total liabilities, redeemable common stock, and equity | 626,240 | 453,572 |
W Shares Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 145 | 125 |
A Shares Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 66 | 45 |
I Shares Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 9 | $ 8 |
Condensed Consolidated Unaudit3
Condensed Consolidated Unaudited Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
W Shares Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 164,000,000 | 164,000,000 |
Common stock, shares issued (in shares) | 14,515,249 | 12,461,616 |
Common stock, shares outstanding (in shares) | 14,515,249 | 12,461,616 |
A Shares Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 163,000,000 | 163,000,000 |
Common stock, shares issued (in shares) | 6,624,984 | 4,449,352 |
Common stock, shares outstanding (in shares) | 6,624,984 | 4,449,352 |
I Shares Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 163,000,000 | 163,000,000 |
Common stock, shares issued (in shares) | 856,659 | 788,270 |
Common stock, shares outstanding (in shares) | 856,659 | 788,270 |
Condensed Consolidated Unaudit4
Condensed Consolidated Unaudited Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Rental income | $ 10,159 | $ 5,713 | $ 19,366 | $ 10,997 |
Tenant reimbursement income | 938 | 600 | 1,727 | 1,239 |
Interest income on marketable securities | 29 | 28 | 59 | 59 |
Total revenues | 11,126 | 6,341 | 21,152 | 12,295 |
Operating expenses: | ||||
General and administrative | 1,387 | 1,115 | 3,138 | 2,186 |
Property operating | 393 | 212 | 683 | 444 |
Real estate tax | 728 | 477 | 1,321 | 970 |
Advisory fees and expenses | 1,012 | 636 | 1,935 | 1,186 |
Acquisition-related | 447 | 703 | 1,296 | 1,043 |
Depreciation and amortization | 4,415 | 2,226 | 8,085 | 4,284 |
Total operating expenses | 8,382 | 5,369 | 16,458 | 10,113 |
Operating income | 2,744 | 972 | 4,694 | 2,182 |
Other income (expense): | ||||
Interest expense and other, net | (2,220) | (1,252) | (4,247) | (2,479) |
Net income (loss) | 524 | (280) | 447 | (297) |
Net income allocated to noncontrolling interest | 9 | 0 | 18 | 0 |
Net income (loss) attributable to the Company | $ 515 | $ (280) | $ 429 | $ (297) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted (in shares) | 20,765,713 | 12,211,730 | 19,741,184 | 11,401,674 |
Net income (loss) per common share: | ||||
Basic and diluted (in dollars per share) | $ 0.02 | $ (0.02) | $ 0.02 | $ (0.03) |
Distributions declared per common share (in dollars per share) | $ 0.24 | $ 0.24 | $ 0.48 | $ 0.49 |
Condensed Consolidated Unaudit5
Condensed Consolidated Unaudited Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 524 | $ (280) | $ 447 | $ (297) |
Other comprehensive (loss) income: | ||||
Unrealized holding gain on marketable securities | 42 | 60 | 52 | 173 |
Reclassification adjustment for gain included in income as other expense | (2) | (7) | 0 | (4) |
Unrealized loss on interest rate swaps | (290) | (392) | (191) | (1,382) |
Amount of loss reclassified from other comprehensive income into income as interest expense | 113 | 136 | 262 | 274 |
Total other comprehensive (loss) income | (137) | (203) | 123 | (939) |
Comprehensive income (loss) | 387 | (483) | 570 | (1,236) |
Comprehensive income allocated to noncontrolling interest | 9 | 0 | 18 | 0 |
Comprehensive income (loss) attributable to the Company | $ 378 | $ (483) | $ 552 | $ (1,236) |
Condensed Consolidated Unaudit6
Condensed Consolidated Unaudited Statement of Changes In Equity - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands | Total | W Shares Common Stock | A Shares Common Stock | I Shares Common Stock | Common StockW Shares Common Stock | Common StockA Shares Common Stock | Common StockI Shares Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | Non- Controlling Interests |
Balance, shares (in shares) at Dec. 31, 2016 | 12,461,616 | 4,449,352 | 788,270 | 12,461,616 | 4,449,352 | 788,270 | ||||||
Balance at Dec. 31, 2016 | $ 236,010 | $ 125 | $ 45 | $ 8 | $ 259,817 | $ (24,399) | $ (372) | $ 235,224 | $ 786 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock (in shares) | 2,738,423 | 2,241,261 | 65,879 | |||||||||
Issuance of common stock | 92,445 | $ 26 | $ 22 | $ 1 | 92,396 | 92,445 | ||||||
Conversion of shares (in shares) | (55,096) | 54,673 | ||||||||||
Distributions to investors | (9,572) | (9,572) | (9,572) | |||||||||
Commissions, dealer manager and distribution fees | (6,029) | (6,029) | (6,029) | |||||||||
Other offering costs | (682) | (682) | (682) | |||||||||
Redemptions of common stock, shares (in shares) | (629,694) | (65,629) | (52,163) | |||||||||
Redemptions of common stock | (13,505) | $ (6) | $ (1) | (13,498) | (13,505) | |||||||
Changes in redeemable common stock | (7,707) | (7,707) | (7,707) | |||||||||
Distributions to non-controlling interests | (22) | (22) | ||||||||||
Comprehensive income | 570 | 429 | 123 | 552 | 18 | |||||||
Balance, shares (in shares) at Jun. 30, 2017 | 14,515,249 | 6,624,984 | 856,659 | 14,515,249 | 6,624,984 | 856,659 | ||||||
Balance at Jun. 30, 2017 | $ 291,508 | $ 145 | $ 66 | $ 9 | $ 324,297 | $ (33,542) | $ (249) | $ 290,726 | $ 782 |
Condensed Consolidated Unaudit7
Condensed Consolidated Unaudited Statement of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 447 | $ (297) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization, net | 7,936 | 4,253 |
Straight-line rental income | (805) | (440) |
Amortization of deferred financing costs | 751 | 282 |
Amortization on marketable securities | 5 | 7 |
Gain on sale of marketable securities | 0 | (4) |
Gain on derivative instruments | (19) | 0 |
Bad debt expense | 0 | 8 |
Changes in assets and liabilities: | ||
Rents and tenant receivables | (541) | 60 |
Prepaid expenses and other assets | 117 | 168 |
Accounts payable and accrued expenses | 23 | (126) |
Deferred rental income and other liabilities | 662 | 169 |
Due to affiliates | (446) | (483) |
Net cash provided by operating activities | 8,130 | 3,597 |
Cash flows from investing activities: | ||
Investment in real estate assets and capital expenditures | (167,068) | (41,618) |
Investment in marketable securities | (432) | (376) |
Proceeds from sale and maturities of marketable securities | 785 | 560 |
Payment of property escrow deposits | (4,040) | (1,291) |
Refund of property escrow deposits | 3,900 | 971 |
Change in restricted cash | 75 | (514) |
Net cash used in investing activities | (166,780) | (42,268) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 87,856 | 66,639 |
Offering costs on issuance of common stock | (3,975) | (1,812) |
Redemptions of common stock | (13,505) | (9,401) |
Distributions to investors | (4,689) | (2,803) |
Proceeds from credit facility and notes payable | 158,200 | 16,275 |
Repayments of credit facility | (57,500) | (15,000) |
Payment of loan deposits | (75) | 0 |
Refund of loan deposits | 30 | 0 |
Deferred financing costs paid | (517) | (209) |
Change in escrowed investor proceeds liability | (75) | 27 |
Distributions to noncontrolling interests | (22) | 0 |
Net cash provided by financing activities | 165,728 | 53,716 |
Net increase in cash and cash equivalents | 7,078 | 15,045 |
Cash and cash equivalents, beginning of period | 4,671 | 14,840 |
Cash and cash equivalents, end of period | 11,749 | 29,885 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Change in accrued dealer manager fee, distribution fee, and other offering costs | 4,552 | 3,295 |
Distributions to investors declared and unpaid | 1,738 | 1,030 |
Common stock issued through distribution reinvestment plan | 4,589 | 2,515 |
Change in fair value of marketable securities | 52 | 96 |
Change in fair value of interest rate swaps | 71 | (1,108) |
Accrued capital expenditures | 9 | 14 |
Supplemental cash flow disclosures: | ||
Interest paid | $ 3,230 | $ 2,054 |
Organization and Business
Organization and Business | 6 Months Ended |
Jun. 30, 2017 | |
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, incorporated on July 27, 2010, that qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. 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 interests 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 VEREIT, Inc. (“VEREIT”), a widely-held public company whose shares of common stock are listed on the New York Stock Exchange (NYSE: VER). VEREIT indirectly owns and/or controls 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. 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 a registration statement filed on Form S-11 (Registration No. 333-213271) on February 10, 2017 (the “Continuing Offering 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. As of June 30, 2017 , the Company had issued approximately 25.4 million shares of common stock in the Offering for gross offering proceeds of $453.4 million before offering costs and selling commissions, and the current portion of dealer manager fees and distribution fees of $12.3 million . 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 June 30, 2017 , the NAV per share for W Shares, A Shares and I Shares was $18.14 , $17.95 and $18.30 , 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, (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 June 30, 2017 , the Company owned 133 commercial properties, which includes properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), located in 36 states, containing 3.9 million rentable square feet of commercial space, including the square feet of buildings which are on land subject to ground leases. As of June 30, 2017 , the rentable square feet at these properties was 99.3% leased, including month-to-month agreements, if any. The Company is structured as a perpetual-life, non-exchange traded REIT. This means that, subject to regulatory approval of its 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 Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated unaudited financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated unaudited financial statements. 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 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 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, 2016 , and related notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . 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 and the Consolidated Joint Venture in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. The Company evaluates its relationships and investments to determine if it has variable interests. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates any VIEs when it is determined to be the primary beneficiary of the VIE’s operations. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a VIE. A VIE must be consolidated by its primary beneficiary, which is generally defined as the party who has a controlling financial interest in the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE, and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate any VIEs based on standards set forth in GAAP as described above. As of June 30, 2017 , the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for 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 condensed consolidated unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Investments Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the costs of acquisition, including certain acquisition-related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance costs are expensed as incurred. In April 2017, the Company early adopted Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company’s acquisitions qualify as asset acquisitions, and as such, certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01, all acquisition-related expenses were expensed as incurred. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate 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 assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions. No impairment indicators were identified and no impairment losses were recorded during the six months ended June 30, 2017 or 2016 . Assets Held for Sale 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. There were no assets identified as held for sale as of June 30, 2017 or December 31, 2016 . Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price, including certain acquisition-related expenses after the adoption of ASU 2017-01, to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on their respective fair values. 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 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 determination of the fair values of the real estate 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 materially 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 June 30, 2017 , 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 other comprehensive (loss) 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 judgments 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. Noncontrolling Interest in Consolidated Joint Venture On December 16, 2016, the Company completed the formation of the Consolidated Joint Venture. The Company determined it had a controlling interest in the Consolidated Joint Venture and, therefore, met the GAAP requirements for consolidation. The Company recorded net income of $18,000 and paid distributions of $22,000 related to the noncontrolling interest during the six months ended June 30, 2017 . The Company recorded the noncontrolling interest of $782,000 and $786,000 as of June 30, 2017 and December 31, 2016 , on the condensed consolidated unaudited balance sheets. Restricted Cash The Company had $525,000 and $600,000 in restricted cash as of June 30, 2017 and December 31, 2016 , respectively. Included in restricted cash as of June 30, 2017 and December 31, 2016 was $500,000 held by a lender in an escrow account for a certain property in accordance with the associated loan agreement. Additionally, as part of certain debt agreements, rent from certain of the Company’s tenants is deposited directly into a lockbox account, from which funds in excess of the required minimum balance are disbursed on a weekly basis to the Company. As of June 30, 2017 and December 31, 2016 , the Company had $25,000 held in a lockbox account. In addition, restricted cash included $75,000 of escrowed investor proceeds for which shares of common stock had not been issued as of December 31, 2016 . There were no such proceeds as of June 30, 2017 . Dealer Manager and Distribution Fees The Company pays CCC dealer manager and distribution fees, which are calculated on a daily basis in the amount of 1/365th of the amount indicated in the table below for each class of common stock: Dealer Manager Fee Distribution Fee W Shares 0.55 % — A Shares 0.55 % 0.50 % I Shares 0.25 % — The dealer manager and distribution fees are paid monthly in arrears. An estimated liability for future dealer manager and distribution fees payable to CCC is recognized at the time each share is sold and included in due to affiliates in the condensed consolidated unaudited balance sheets with a corresponding decrease to capital in excess of par value. The Company recognized a liability for future dealer manager and distribution fees payable to CCC of $15.8 million and $12.5 million , as of June 30, 2017 and December 31, 2016 , respectively. Revenue Recognition Certain properties have leases where minimum rental payments increase during the term of the lease. The Company records rental income for the full term of each lease on a straight-line basis when earned and collectability is reasonably assured. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for uncollectible accounts. As of June 30, 2017 , the Company did not have an allowance for uncollectible accounts. The Company had an allowance for uncollectible accounts of $2,000 as of December 31, 2016 . Earnings per Share The Company has three classes of common stock with nonforfeitable dividend rights that are determined based on a different NAV for each class. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which results in the same earnings per share when rounded to within less than one cent for each of the classes. Under the two-class method, earnings per class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. Diluted (loss) income per share considers the effect of any potentially dilutive share equivalents, of which the Company had none for each of the three and six months ended June 30, 2017 or 2016 . Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain of these new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated unaudited financial statements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) (Topic 606), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (Topic 605) (“ASC”) and will require an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public business entities, the guidance should be applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company is currently assessing the adoption methodology. Once ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which, as discussed below, sets forth principles for the recognition, measurement, presentation and disclosure of leases, goes into effect, ASU 2014-09 may apply to non-lease components in the lease agreements. In February 2016, the FASB issued ASU 2016-02, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similar to current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases ( i.e., capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption. The Company’s implementation team has developed an inventory of all leases and is identifying any non-lease components in the lease agreements and is evaluating the impact to the Company, both as lessor and lessee, and its consolidated financial statements. ASU No. 2016-01, Financial Instruments (Subtopic 825-10) – The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive (loss) income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company plans to adopt ASU 2016-15 during the fourth quarter of fiscal year 2017. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt ASU 2016-18 during the fourth quarter of 2017 and apply the standard retrospectively for all periods presented. The Company does not expect it will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), which clarifies the following: (1) nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty; (2) an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations; and (3) requires entities to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it (a) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Subtopic 810 and (b) transfers control of the asset in accordance with Topic 606. The adoption of this standard may result in higher gains on the sale of partial real estate interests, including contributions of nonfinancial assets to a joint venture or other noncontrolling investee, due to recognizing the full gain when the derecognition criteria are met and recording the retained noncontrolling interest at its fair value. ASU 2017-05 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early adoption is permitted. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
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 under current market conditions. 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: Notes payable and line of credit — 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. As of June 30, 2017 , the estimated fair value of the Company’s debt was $261.9 million , compared to the carrying value of $261.8 million . The estimated fair value and the carrying value of the Company’s debt was $161.2 million as of December 31, 2016 . 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. Derivative instruments — The Company’s derivative instruments are comprised of interest rate swaps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2017 and December 31, 2016, the Company has assessed the overall significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. 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, upon disposition of the financial assets and liabilities. As of June 30, 2017 and December 31, 2016 , there have been no transfers of financial assets or liabilities between fair value hierarchy levels. In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016 (in thousands): Balance as of Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2017 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swaps $ 60 $ — $ 60 $ — Marketable securities 5,257 5,257 — — Total financial assets $ 5,317 $ 5,257 $ 60 $ — Financial liabilities: Interest rate swaps $ (313 ) $ — $ (313 ) $ — Balance as of Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2016 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swaps $ 28 $ — $ 28 $ — Marketable securities 5,563 5,563 — — Total financial assets $ 5,591 $ 5,563 $ 28 $ — Financial liabilities: Interest rate swaps $ (371 ) $ — $ (371 ) $ — |
Real Estate Investments
Real Estate Investments | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
REAL ESTATE INVESTMENTS | REAL ESTATE INVESTMENTS 2017 Property Acquisitions During the six months ended June 30, 2017 , the Company acquired a 100% interest in 25 commercial properties, of which 13 were determined to be asset acquisitions and 12 were acquired prior to the adoption of ASU 2017-01 in April 2017 and thus were accounted for as business combinations for an aggregate purchase price of $167.1 million (the “ 2017 Acquisitions ”). The Company funded the 2017 Acquisitions with net proceeds from the Offering and available borrowings. The following table summarizes the consideration transferred for the properties purchased during the six months ended June 30, 2017 (in thousands): 2017 Acquisitions Investments in real estate: Purchase price of asset acquisitions $ 114,611 Purchase price of business combinations 52,457 Total purchase price of real estate investments acquired (1) $ 167,068 ______________________ (1) The weighted average amortization period for the 2017 Acquisitions is 11.7 years for acquired in-place leases, 15.7 years for acquired above-market leases and 14.4 years for acquired intangible lease liabilities. During the six months ended June 30, 2017 , the Company acquired a 100% interest in 13 commercial properties for an aggregate purchase price of $114.6 million (the “2017 Asset Acquisitions”), which includes $963,000 of external acquisition-related expenses that were capitalized in accordance with ASU 2017-01. Prior to the adoption of ASU 2017-01, costs related to property acquisitions were expensed as incurred. The following table summarizes the purchase price allocation for the 2017 Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Asset Acquisitions Land $ 22,139 Building and improvements 84,324 Acquired in-place leases 11,538 Acquired above-market leases 1,529 Intangible lease liabilities (4,919 ) Total purchase price $ 114,611 During the six months ended June 30, 2017 , the Company acquired a 100% interest in 12 commercial properties for an aggregate purchase price of $52.5 million which were accounted for as business combinations (the “ 2017 Business Combination Acquisitions ”). The purchase price allocation for each of the Company’s 2017 Business Combination Acquisitions is preliminary and subject to change as it finalizes the allocation, which the Company expects will be prior to the end of the current fiscal year. The Company preliminarily allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocation for the 2017 Business Combination Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Business Combination Acquisitions Land $ 14,213 Building and improvements 23,092 Acquired in-place leases 15,112 Acquired above-market leases 1,454 Intangible lease liabilities (1,414 ) Total purchase price $ 52,457 The Company recorded revenue of $914,000 and $1.6 million , respectively, and net income of $207,000 and $129,000 , respectively, for the three and six months ended June 30, 2017 , related to the 2017 Business Combination Acquisitions . In addition, the Company recorded $426,000 of acquisition-related expenses for the six months ended June 30, 2017 , which is included in acquisition-related expenses on the condensed consolidated unaudited statements of operations. The following table summarizes selected financial information of the Company as if all of the 2017 Business Combination Acquisitions were completed on January 1, 2016 for each period presented below. The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and six months ended June 30, 2017 and 2016 , respectively (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma basis: Revenue $ 11,267 $ 7,396 $ 21,370 $ 14,075 Net income (loss) $ 1,213 $ 634 $ 951 $ (72 ) The unaudited pro forma information for the six months ended June 30, 2017 was adjusted to exclude $426,000 of acquisition-related expenses recorded during such periods related to the 2017 Business Combination Acquisitions . Accordingly, these expenses were instead recognized in the pro forma information for the six months ended June 30, 2016 . 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 2016 , nor does it purport to represent the results of future operations. 2016 Property Acquisitions During the six months ended June 30, 2016 , the Company acquired a 100% interest in 13 commercial properties for an aggregate purchase price of $41.6 million (the “ 2016 Acquisitions ”). The 2016 Acquisitions were accounted for as business combinations. The Company funded the 2016 Acquisitions with net proceeds from the Offering and available 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 for the properties purchased during the six months ended June 30, 2016 (in thousands): 2016 Acquisitions Land $ 4,890 Building and improvements 33,578 Acquired in-place leases (1) 3,165 Acquired above-market leases (2) 67 Intangible lease liabilities (3) (69 ) Total purchase price $ 41,631 ______________________ (1) The weighted average amortization period for acquired in-place leases is 12.8 years for the 2016 Acquisitions . (2) The weighted average amortization period for acquired above-market leases is 9.9 years for the 2016 Acquisitions . (3) The weighted average amortization period for acquired intangible lease liabilities is 9.9 years for the 2016 Acquisitions . The Company recorded revenue of $577,000 and $681,000 , respectively, and net income of $62,000 and $59,000 , respectively, for the three and six months ended June 30, 2016 , related to the 2016 Acquisitions . In addition, the Company recorded $279,000 and $330,000 of acquisition-related expenses for the three and six months ended June 30, 2016 , respectively, which is included in acquisition-related expenses on the condensed consolidated unaudited statements of operations. The following information summarizes selected financial information of the Company as if all of the 2016 Acquisitions were completed on January 1, 2015 for each period presented below. The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Pro forma basis Revenue $ 6,523 $ 5,324 $ 13,132 $ 10,910 Net (loss) income $ (135 ) $ 5,363 $ 63 $ 6,535 The unaudited pro forma information for the three and six months ended June 30, 2016 was adjusted to exclude acquisition-related expenses recorded during such periods related to the 2016 Acquisitions . Accordingly, these expenses were instead recognized in the pro forma information for the three and six months ended June 30, 2015 . 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 2015 , nor does it purport to represent the results of future operations. Consolidated Joint Venture As of June 30, 2017 , the Company had an interest in a Consolidated Joint Venture that owns and manages two properties, with total assets of $7.8 million , which included $7.7 million of real estate assets, net of accumulated depreciation and amortization of $124,000 , and total liabilities of $165,000 . The Consolidated Joint Venture does not have any debt outstanding as of June 30, 2017 . The Company has the ability to control operating and financial policies of the Consolidated Joint Venture. There are restrictions on the use of these assets as the Company would generally be required to obtain the approval of the partner (the “Consolidated Joint Venture Partner”) in accordance with the joint venture agreement for any major transactions. The Company and the Consolidated Joint Venture Partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
MARKETABLE SECURITIES | MARKETABLE SECURITIES The Company owned marketable securities with an estimated fair value of $5.3 million and $5.6 million as of June 30, 2017 and December 31, 2016 , respectively. The following is a summary of the Company’s available-for-sale securities as of June 30, 2017 (in thousands): Available-for-sale securities Amortized Cost Basis Unrealized (Loss) Gain Fair Value U.S. Treasury Bonds $ 2,007 $ (7 ) $ 2,000 U.S. Agency Bonds 367 (1 ) 366 Corporate Bonds 2,860 31 2,891 Total available-for-sale securities $ 5,234 $ 23 $ 5,257 The following table provides the activity for the marketable securities during the six months ended June 30, 2017 (in thousands): Amortized Cost Basis Unrealized (Loss) Gain Fair Value Marketable securities as of January 1, 2017 $ 5,592 $ (29 ) $ 5,563 Face value of marketable securities acquired 426 — 426 Premiums and discounts on purchase of marketable securities, net of acquisition costs 6 — 6 Amortization on marketable securities (5 ) — (5 ) Sales and maturities of securities (785 ) — (785 ) Unrealized gain on marketable securities — 52 52 Marketable securities as of June 30, 2017 $ 5,234 $ 23 $ 5,257 During the six months ended June 30, 2017 , the Company sold 37 marketable securities for aggregate proceeds of $785,000 . Unrealized gains (losses) on marketable securities are recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified into other expense, net on the accompanying condensed consolidated statements of operations as securities are sold and gains (losses) are recognized. In addition, the Company recorded an unrealized gain of $52,000 on its investments, which is included in accumulated other comprehensive loss on the accompanying condensed consolidated unaudited statement of changes in equity for the six months ended June 30, 2017 and the condensed consolidated unaudited balance sheet as of June 30, 2017 . The scheduled maturities of the Company’s marketable securities as of June 30, 2017 are as follows (in thousands): Available-for-sale securities Amortized Cost Estimated Fair Value Due within one year 786 785 Due after one year through five years 2,205 2,210 Due after five years through ten years 2,157 2,176 Due after ten years 86 86 Total 5,234 5,257 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. In estimating other-than-temporary impairment losses, management considers a variety of factors, including (1) whether the Company has the intent to sell the impaired security, (2) whether the Company expects to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value, and (3) whether the Company expects to recover the entire amortized cost basis of the security. The Company believes that none of the unrealized losses on investment securities are other-than-temporary as management expects the Company will fully recover the entire amortized cost basis of all securities. As of June 30, 2017 , the Company had no other-than-temporary impairment losses. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. During the six months ended June 30, 2017 , the Company entered into three interest rate swap agreements. The following table summarizes the terms of the Company’s executed interest rate swap agreements designated as hedging instruments as of June 30, 2017 and December 31, 2016 (in thousands): Outstanding Notional Amount as of Interest Effective Maturity Fair Value of Assets and (Liabilities) as of Balance Sheet Location June 30, 2017 Rate (1) Date Date June 30, 2017 December 31, 2016 Interest Rate Swaps Property escrow deposits, prepaid expenses, and other assets $ 65,040 3.23% to 4.04% 6/30/2015 to 6/27/2017 9/12/2019 to 7/1/2022 $ 60 $ 28 Interest Rate Swaps Deferred rental income, derivative liabilities, and other liabilities $ 39,800 3.56% to 4.17% 12/16/2016 to 6/30/2017 1/1/2022 to 7/1/2022 $ (313 ) $ (371 ) ______________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2017 . Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements to these condensed consolidated unaudited financial statements. The notional amount under the interest rate swap agreements is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks. Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt. The change in fair value of the effective portion of the derivative instruments that are designated as hedges is recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. For the three and six months ended June 30, 2017 , the amounts reclassified were $113,000 and $262,000 , respectively. The amounts reclassified for the three and six months ended June 30, 2016 , were $136,000 and $274,000 , respectively. During the next 12 months, the Company estimates that an additional $420,000 will be reclassified from other comprehensive (loss) income as an increase to interest expense. Any ineffective portion of the change in fair value of the derivative instruments is recorded in interest expense. During the six months ended June 30, 2017 , $19,000 of the change in the fair value of the interest rate swaps was considered ineffective. There were no portions of the change in the fair value of the interest rate swaps that were considered ineffective during the three months ended June 30, 2017 and 2016 and the six months ended June 30, 2016 . The Company has agreements with each of its derivative counterparties that contain provisions whereby, if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment. If the Company had breached any of these provisions, it could have been required to settle its obligations, under the agreements at an aggregate termination value, inclusive of interest payments, of $338,000 , which includes accrued interest, at June 30, 2017 . In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the credit quality of the Company and the respective counterparty. There were no termination events or events of default related to the interest rate swaps as of June 30, 2017 . |
Notes Payable and Credit Facili
Notes Payable and Credit Facility | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable and Credit Facility | NOTES PAYABLE AND CREDIT FACILITY As of June 30, 2017 , the Company had $259.6 million of debt outstanding, including net deferred financing costs, with weighted average years to maturity of 3.2 years and a weighted average interest rate of 3.52% . The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date. Should the loan not be repaid by its scheduled repayment date, the applicable interest rate will increase as specified in the respective loan agreement until the extended maturity date. The following table summarizes the debt balances as of June 30, 2017 and December 31, 2016 , and the debt activity for the six months ended June 30, 2017 (in thousands): During the Six Months Ended June 30, 2017 Balance as of Debt Issuance, Net (1) Repayments Accretion Balance as of June 30, 2017 Credit facility $ 64,000 $ 119,000 $ (57,500 ) $ — $ 125,500 Fixed rate debt 97,169 39,200 — — 136,369 Total debt 161,169 158,200 (57,500 ) — 261,869 Deferred costs (2) (2,026 ) (443 ) — 232 (2,237 ) Total debt, net $ 159,143 $ 157,757 $ (57,500 ) $ 232 $ 259,632 ______________________ (1) Includes deferred financing costs incurred during the period. (2) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility. As of June 30, 2017 , the Company had fixed rate debt outstanding of $136.4 million , including $64.8 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rate per annum through the maturity of the variable rate debt. The fixed rate debt has interest rates ranging from 3.37% to 4.17% per annum and as of June 30, 2017 , the fixed rate debt had a weighted average interest rate of 3.84% . The fixed rate debt outstanding matures on various dates from December 2020 to February 2025 . The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $241.4 million as of June 30, 2017 . Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed. The Company has an amended and restated credit agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent (“JPMorgan Chase”), that provides for borrowings up to $225.0 million , which is comprised of up to $153.0 million in revolving loans (the “Revolving Loans”), and $72.0 million in term loans (the “Term Loans”) and collectively, with the Revolving Loans, the unsecured credit facility (the “Credit Facility”). The Term Loans mature on September 12, 2019 and the Revolving Loans mature on September 12, 2017 ; however, the Company may elect to extend the maturity date for the Revolving Loans to September 12, 2019 , subject to satisfying certain conditions contained in the Amended Credit Agreement. With respect to the Company’s $53.5 million of Revolving Loans maturing within the next year, the Company expects to either exercise its right under the Amended Credit Agreement to extend the maturity date of the Revolving Loans or refinance the debt or enter into new financing arrangements in order to meet its debt obligations. Depending upon the type of loan specified and overall leverage ratio, the Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month London Interbank Offered Rate (“LIBOR”) multiplied by the statutory reserve rate (the “Eurodollar Rate”) plus an interest rate spread ranging from 1.70% to 2.20% ; or (ii) a base rate ranging from 0.70% to 1.20% , plus the greater of: (a) JPMorgan Chase’s Prime Rate (as defined in the Amended Credit Agreement); (b) the Federal Funds Effective Rate (as defined in the Amended Credit Agreement) plus 0.50% ; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.0% . As of June 30, 2017 , the Revolving Loans outstanding totaled $53.5 million at a weighted average interest rate of 3.29% and the Term Loans outstanding totaled $72.0 million , $40.0 million of which is subject to an interest rate swap agreement (the “Swapped Term Loan”). The interest rate swap agreement had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loan. As of June 30, 2017 , the all-in rate for the Swapped Term Loan was 3.23% . The Company had $125.5 million of debt outstanding under the Credit Facility as of June 30, 2017 at a weighted average interest rate of 3.18% and $99.5 million in unused capacity, subject to borrowing availability. The Amended Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Amended Credit Agreement requires the Company to maintain a minimum consolidated net worth not less than $63.0 million plus 75% of the equity interests issued by the Company, a leverage ratio less than or equal to 60% , a fixed charge coverage ratio equal to or greater than 1.50 , an unsecured debt to unencumbered asset value ratio equal to or less than 60% , an unsecured debt service coverage ratio greater than 1.75 and a secured debt ratio equal to or less than 40% . As of June 30, 2017 , the Company believes it was in compliance with the financial covenants of the Amended Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
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 and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject. Purchase Commitments As of June 30, 2017 , the Company had entered into a purchase agreement with an unaffiliated third-party seller to acquire a 100% interest in one retail property, subject to meeting certain criteria, for an aggregate purchase price of $24.3 million , exclusive of closing costs. As of June 30, 2017 , the Company had $550,000 of property escrow deposits held by an escrow agent in connection with this future property acquisition. This deposit is included in the condensed consolidated unaudited balance sheets in property escrow deposits, prepaid expenses and other assets. As of June 30, 2017 , this escrow deposit has not been forfeited. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity. |
Related-Party Transactions and
Related-Party Transactions and Arrangements | 6 Months Ended |
Jun. 30, 2017 | |
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. Selling commissions, dealer manager and distribution fees 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 Manager Fee (2) Distribution Fee (2) W Shares — 0.55 % — A Shares up to 3.75% 0.55 % 0.50 % 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. The Company has been advised that CCC intends to reallow 100% of the selling commissions on A Shares to participating broker-dealers. (2) The dealer manager and distribution fees will be calculated on a daily basis 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. Other organization and offering expenses All other 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 June 30, 2017 , Cole Advisors or its affiliates had paid organization and offering expenses in excess of the 0.75% in connection with the Offering. These excess amounts were not included in the financial statements of the Company because such amounts 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 amounts may become payable to Cole Advisors. Advisory fees and expenses 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. Operating expenses The Company reimburses 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. Acquisition expenses In addition, the Company reimburses 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. Performance Fee 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 did not reach the 6% Return during the six months ended June 30, 2017 . The Company incurred 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 June 30, Six Months Ended June 30, Offering: 2017 2016 2017 2016 Selling commissions $ 921 $ 421 $ 1,477 $ 804 Distribution fee (1) $ 132 $ 50 $ 239 $ 88 Dealer manager fees (1) $ 502 $ 295 $ 949 $ 552 Organization and offering expense reimbursement $ 394 $ 276 $ 682 $ 513 Acquisition expense reimbursement $ 429 $ 377 $ 845 $ 657 Advisory fee $ 1,012 $ 636 $ 1,935 $ 1,186 Operating expense reimbursement $ 620 $ 402 $ 1,579 $ 749 Performance fee $ — $ — $ — $ — ______________________ (1) Amounts are calculated for the respective period in accordance with the dealer manager agreement and exclude the estimated liability for the future dealer manager and distribution fees payable to CCC, which are included in due to affiliates in the condensed consolidated unaudited balance sheets, with a corresponding decrease to capital in excess of par value, as described in Note 2 — Summary of Significant Accounting Policies. Due to Affiliates As of June 30, 2017 and December 31, 2016 , $17.1 million and $14.8 million , respectively, was due to Cole Advisors or its affiliates primarily related to the estimated liability for current and future dealer manager and distribution fees, advisory fees, the reimbursement of organization and offering expenses, and acquisition expenses, which were included in amounts due to affiliates on the condensed consolidated unaudited balance sheets. |
Economic Dependency
Economic Dependency | 6 Months Ended |
Jun. 30, 2017 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | ECONOMIC DEPENDENCY Under various agreements, the Company has engaged and may in the future engage Cole Advisors or 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 or 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 | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The following events occurred subsequent to June 30, 2017 : Investment in Real Estate Assets Subsequent to June 30, 2017 , the Company acquired a 100% interest in one real estate property for an aggregate purchase price of $24.3 million . The acquisition was funded with net proceeds from the Offering. The Company has not completed its initial purchase price allocation with respect to these properties and therefore cannot provide similar disclosures to those included in Note 4 — Real Estate Investments in these condensed consolidated unaudited financial statements for these properties. Credit Facility and Notes Payable Subsequent to June 30, 2017 , the Company entered into an interest swap loan agreement with Huntington Bank, N.A. in the principal amount of $13.4 million that bears interest at a fixed rate of approximately 4.14% . Additionally, subsequent to June 30, 2017 , the Company reduced the amounts outstanding under the Credit Facility by $13.0 million . |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
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 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 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, 2016 , and related notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . 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 and the Consolidated Joint Venture in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. |
Variable interest entity | On December 16, 2016, the Company completed the formation of the Consolidated Joint Venture. The Company determined it had a controlling interest in the Consolidated Joint Venture and, therefore, met the GAAP requirements for consolidation. The Company evaluates its relationships and investments to determine if it has variable interests. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates any VIEs when it is determined to be the primary beneficiary of the VIE’s operations. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a VIE. A VIE must be consolidated by its primary beneficiary, which is generally defined as the party who has a controlling financial interest in the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE, and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate any VIEs based on standards set forth in GAAP as described above. As of June 30, 2017 , the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for 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 condensed consolidated unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Investments, Recoverability of Real Estate Assets, and Assets Held for Sale | Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the costs of acquisition, including certain acquisition-related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance costs are expensed as incurred. In April 2017, the Company early adopted Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company’s acquisitions qualify as asset acquisitions, and as such, certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01, all acquisition-related expenses were expensed as incurred. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate 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 assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions. No impairment indicators were identified and no impairment losses were recorded during the six months ended June 30, 2017 or 2016 . Assets Held for Sale 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. |
Allocation of purchase price of real estate assets | Upon the acquisition of real properties, the Company allocates the purchase price, including certain acquisition-related expenses after the adoption of ASU 2017-01, to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on their respective fair values. 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 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 determination of the fair values of the real estate 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 materially 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 June 30, 2017 , 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 other comprehensive (loss) 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 judgments 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 | The Company had $525,000 and $600,000 in restricted cash as of June 30, 2017 and December 31, 2016 , respectively. Included in restricted cash as of June 30, 2017 and December 31, 2016 was $500,000 held by a lender in an escrow account for a certain property in accordance with the associated loan agreement. Additionally, as part of certain debt agreements, rent from certain of the Company’s tenants is deposited directly into a lockbox account, from which funds in excess of the required minimum balance are disbursed on a weekly basis to the Company. As of June 30, 2017 and December 31, 2016 , the Company had $25,000 held in a lockbox account. In addition, restricted cash included $75,000 of escrowed investor proceeds for which shares of common stock had not been issued as of December 31, 2016 . There were no such proceeds as of June 30, 2017 . |
Dealer manager and distribution fees | The Company pays CCC dealer manager and distribution fees, which are calculated on a daily basis in the amount of 1/365th of the amount indicated in the table below for each class of common stock: Dealer Manager Fee Distribution Fee W Shares 0.55 % — A Shares 0.55 % 0.50 % I Shares 0.25 % — The dealer manager and distribution fees are paid monthly in arrears. An estimated liability for future dealer manager and distribution fees payable to CCC is recognized at the time each share is sold and included in due to affiliates in the condensed consolidated unaudited balance sheets with a corresponding decrease to capital in excess of par value. |
Revenue recognition | Certain properties have leases where minimum rental payments increase during the term of the lease. The Company records rental income for the full term of each lease on a straight-line basis when earned and collectability is reasonably assured. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for uncollectible accounts. As of June 30, 2017 , the Company did not have an allowance for uncollectible accounts. The Company had an allowance for uncollectible accounts of $2,000 as of December 31, 2016 |
Earnings per share | The Company has three classes of common stock with nonforfeitable dividend rights that are determined based on a different NAV for each class. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which results in the same earnings per share when rounded to within less than one cent for each of the classes. Under the two-class method, earnings per class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. Diluted (loss) income per share considers the effect of any potentially dilutive share equivalents, of which the Company had none for each of the three and six months ended June 30, 2017 or 2016 . |
Recent accounting pronouncements | From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain of these new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated unaudited financial statements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) (Topic 606), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (Topic 605) (“ASC”) and will require an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public business entities, the guidance should be applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company is currently assessing the adoption methodology. Once ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which, as discussed below, sets forth principles for the recognition, measurement, presentation and disclosure of leases, goes into effect, ASU 2014-09 may apply to non-lease components in the lease agreements. In February 2016, the FASB issued ASU 2016-02, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similar to current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases ( i.e., capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption. The Company’s implementation team has developed an inventory of all leases and is identifying any non-lease components in the lease agreements and is evaluating the impact to the Company, both as lessor and lessee, and its consolidated financial statements. ASU No. 2016-01, Financial Instruments (Subtopic 825-10) – The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive (loss) income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company plans to adopt ASU 2016-15 during the fourth quarter of fiscal year 2017. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt ASU 2016-18 during the fourth quarter of 2017 and apply the standard retrospectively for all periods presented. The Company does not expect it will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), which clarifies the following: (1) nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty; (2) an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations; and (3) requires entities to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it (a) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Subtopic 810 and (b) transfers control of the asset in accordance with Topic 606. The adoption of this standard may result in higher gains on the sale of partial real estate interests, including contributions of nonfinancial assets to a joint venture or other noncontrolling investee, due to recognizing the full gain when the derecognition criteria are met and recording the retained noncontrolling interest at its fair value. ASU 2017-05 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early adoption is permitted. |
Fair value measurements | 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 under current market conditions. 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. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Investment in and valuation of real estate and related assets | The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term |
Dealer manager and distribution fee calculations | The Company pays CCC dealer manager and distribution fees, which are calculated on a daily basis in the amount of 1/365th of the amount indicated in the table below for each class of common stock: Dealer Manager Fee Distribution Fee W Shares 0.55 % — A Shares 0.55 % 0.50 % I Shares 0.25 % — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Company's Financial Assets and Liabilities | In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016 (in thousands): Balance as of Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2017 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swaps $ 60 $ — $ 60 $ — Marketable securities 5,257 5,257 — — Total financial assets $ 5,317 $ 5,257 $ 60 $ — Financial liabilities: Interest rate swaps $ (313 ) $ — $ (313 ) $ — Balance as of Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs December 31, 2016 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swaps $ 28 $ — $ 28 $ — Marketable securities 5,563 5,563 — — Total financial assets $ 5,591 $ 5,563 $ 28 $ — Financial liabilities: Interest rate swaps $ (371 ) $ — $ (371 ) $ — |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business combination, separately recognized transactions | The following table summarizes the consideration transferred for the properties purchased during the six months ended June 30, 2017 (in thousands): 2017 Acquisitions Investments in real estate: Purchase price of asset acquisitions $ 114,611 Purchase price of business combinations 52,457 Total purchase price of real estate investments acquired (1) $ 167,068 ______________________ (1) The weighted average amortization period for the 2017 Acquisitions is 11.7 years for acquired in-place leases, 15.7 years for acquired above-market leases and 14.4 years for acquired intangible lease liabilities. |
Schedule of asset acquisitions | The following table summarizes the purchase price allocation for the 2017 Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Asset Acquisitions Land $ 22,139 Building and improvements 84,324 Acquired in-place leases 11,538 Acquired above-market leases 1,529 Intangible lease liabilities (4,919 ) Total purchase price $ 114,611 |
Schedule of purchase price allocation | The following table summarizes the purchase price allocation for the properties purchased during the six months ended June 30, 2016 (in thousands): 2016 Acquisitions Land $ 4,890 Building and improvements 33,578 Acquired in-place leases (1) 3,165 Acquired above-market leases (2) 67 Intangible lease liabilities (3) (69 ) Total purchase price $ 41,631 ______________________ (1) The weighted average amortization period for acquired in-place leases is 12.8 years for the 2016 Acquisitions . (2) The weighted average amortization period for acquired above-market leases is 9.9 years for the 2016 Acquisitions . (3) The weighted average amortization period for acquired intangible lease liabilities is 9.9 years for the 2016 Acquisitions . The following table summarizes the preliminary purchase price allocation for the 2017 Business Combination Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Business Combination Acquisitions Land $ 14,213 Building and improvements 23,092 Acquired in-place leases 15,112 Acquired above-market leases 1,454 Intangible lease liabilities (1,414 ) Total purchase price $ 52,457 |
Business acquisition, pro forma information | The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and six months ended June 30, 2017 and 2016 , respectively (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma basis: Revenue $ 11,267 $ 7,396 $ 21,370 $ 14,075 Net income (loss) $ 1,213 $ 634 $ 951 $ (72 ) The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Pro forma basis Revenue $ 6,523 $ 5,324 $ 13,132 $ 10,910 Net (loss) income $ (135 ) $ 5,363 $ 63 $ 6,535 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 June 30, 2017 (in thousands): Available-for-sale securities Amortized Cost Basis Unrealized (Loss) Gain Fair Value U.S. Treasury Bonds $ 2,007 $ (7 ) $ 2,000 U.S. Agency Bonds 367 (1 ) 366 Corporate Bonds 2,860 31 2,891 Total available-for-sale securities $ 5,234 $ 23 $ 5,257 |
Schedule of available-for-sale securities reconciliation | The following table provides the activity for the marketable securities during the six months ended June 30, 2017 (in thousands): Amortized Cost Basis Unrealized (Loss) Gain Fair Value Marketable securities as of January 1, 2017 $ 5,592 $ (29 ) $ 5,563 Face value of marketable securities acquired 426 — 426 Premiums and discounts on purchase of marketable securities, net of acquisition costs 6 — 6 Amortization on marketable securities (5 ) — (5 ) Sales and maturities of securities (785 ) — (785 ) Unrealized gain on marketable securities — 52 52 Marketable securities as of June 30, 2017 $ 5,234 $ 23 $ 5,257 |
Investments classified by contractual maturity date | The scheduled maturities of the Company’s marketable securities as of June 30, 2017 are as follows (in thousands): Available-for-sale securities Amortized Cost Estimated Fair Value Due within one year 786 785 Due after one year through five years 2,205 2,210 Due after five years through ten years 2,157 2,176 Due after ten years 86 86 Total 5,234 5,257 |
Derivative Instruments and He24
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments | The following table summarizes the terms of the Company’s executed interest rate swap agreements designated as hedging instruments as of June 30, 2017 and December 31, 2016 (in thousands): Outstanding Notional Amount as of Interest Effective Maturity Fair Value of Assets and (Liabilities) as of Balance Sheet Location June 30, 2017 Rate (1) Date Date June 30, 2017 December 31, 2016 Interest Rate Swaps Property escrow deposits, prepaid expenses, and other assets $ 65,040 3.23% to 4.04% 6/30/2015 to 6/27/2017 9/12/2019 to 7/1/2022 $ 60 $ 28 Interest Rate Swaps Deferred rental income, derivative liabilities, and other liabilities $ 39,800 3.56% to 4.17% 12/16/2016 to 6/30/2017 1/1/2022 to 7/1/2022 $ (313 ) $ (371 ) ______________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2017 . |
Notes Payable and Credit Faci25
Notes Payable and Credit Facility (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Debt Activity | The following table summarizes the debt balances as of June 30, 2017 and December 31, 2016 , and the debt activity for the six months ended June 30, 2017 (in thousands): During the Six Months Ended June 30, 2017 Balance as of Debt Issuance, Net (1) Repayments Accretion Balance as of June 30, 2017 Credit facility $ 64,000 $ 119,000 $ (57,500 ) $ — $ 125,500 Fixed rate debt 97,169 39,200 — — 136,369 Total debt 161,169 158,200 (57,500 ) — 261,869 Deferred costs (2) (2,026 ) (443 ) — 232 (2,237 ) Total debt, net $ 159,143 $ 157,757 $ (57,500 ) $ 232 $ 259,632 ______________________ (1) Includes deferred financing costs incurred during the period. (2) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility |
Related-Party Transactions an26
Related-Party Transactions and Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | 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 Manager Fee (2) Distribution Fee (2) W Shares — 0.55 % — A Shares up to 3.75% 0.55 % 0.50 % 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. The Company has been advised that CCC intends to reallow 100% of the selling commissions on A Shares to participating broker-dealers. (2) The dealer manager and distribution fees will be calculated on a daily basis 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. The Company incurred 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 June 30, Six Months Ended June 30, Offering: 2017 2016 2017 2016 Selling commissions $ 921 $ 421 $ 1,477 $ 804 Distribution fee (1) $ 132 $ 50 $ 239 $ 88 Dealer manager fees (1) $ 502 $ 295 $ 949 $ 552 Organization and offering expense reimbursement $ 394 $ 276 $ 682 $ 513 Acquisition expense reimbursement $ 429 $ 377 $ 845 $ 657 Advisory fee $ 1,012 $ 636 $ 1,935 $ 1,186 Operating expense reimbursement $ 620 $ 402 $ 1,579 $ 749 Performance fee $ — $ — $ — $ — ______________________ (1) Amounts are calculated for the respective period in accordance with the dealer manager agreement and exclude the estimated liability for the future dealer manager and distribution fees payable to CCC, which are included in due to affiliates in the condensed consolidated unaudited balance sheets, with a corresponding decrease to capital in excess of par value, as described in Note 2 — Summary of Significant Accounting Policies. |
Organization and Business (Shar
Organization and Business (Shares Offerings) (Details) | 6 Months Ended | |||
Jun. 30, 2017USD ($)class_of_stock$ / sharesshares | Dec. 31, 2016shares | Aug. 26, 2013USD ($)class_of_stock | Dec. 06, 2011USD ($) | |
Organization and business | ||||
Issuance of common stock | $ 92,445,000 | |||
W Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 14,515,249 | 12,461,616 | ||
Net asset value per share (in dollars per share) | $ / shares | $ 18.14 | |||
A Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 6,624,984 | 4,449,352 | ||
Net asset value per share (in dollars per share) | $ / shares | $ 17.95 | |||
I Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 856,659 | 788,270 | ||
Net asset value per share (in dollars per share) | $ / shares | $ 18.30 | |||
Common Stock | W Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 14,515,249 | 12,461,616 | ||
Issuance of common stock | $ 26,000 | |||
Common Stock | A Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 6,624,984 | 4,449,352 | ||
Issuance of common stock | $ 22,000 | |||
Common Stock | I Shares Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 856,659 | 788,270 | ||
Issuance of common stock | $ 1,000 | |||
IPO | ||||
Organization and business | ||||
Common stock, value authorized | $ 4,000,000,000 | |||
Classes of common stock, additions | class_of_stock | 2 | |||
IPO | Common Stock | ||||
Organization and business | ||||
Common stock, shares outstanding (in shares) | shares | 25,400,000 | |||
Issuance of common stock | $ 453,400,000 | |||
Offering costs, selling commissions and dealer manager fees | $ 12,300,000 | |||
Multi-class offering | ||||
Organization and business | ||||
Common stock, value authorized | $ 4,000,000,000 | |||
Classes of common stock | class_of_stock | 3 | 3 | ||
Primary Offering | ||||
Organization and business | ||||
Common stock, value authorized | $ 3,500,000,000 | |||
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% |
Organization and Business (Real
Organization and Business (Real Estate) (Details) ft² in Millions | Jun. 30, 2017ft²propertystates |
Real Estate Properties [Line Items] | |
Number of states in which entity owns properties | states | 36 |
Percentage of rentable space leased | 99.30% |
Consolidated properties | |
Real Estate Properties [Line Items] | |
Number of owned properties | property | 133 |
Rentable square feet (in square feet) | ft² | 3.9 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Real Estate) (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Real Estate Properties [Line Items] | |||
Impairment | $ 0 | $ 0 | |
Real estate held for sale | $ 0 | $ 0 | |
Building | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (years) | 40 years | ||
Site Improvements | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (years) | 15 years |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Noncontrolling Interest in Consolidated Joint Venture) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Variable Interest Entity [Line Items] | |||||
Net income allocated to noncontrolling interest | $ 9 | $ 0 | $ 18 | $ 0 | |
Payments to noncontrolling interests | (22) | ||||
Stockholders' equity, including portion attributable to noncontrolling interest | 291,508 | 291,508 | $ 236,010 | ||
Non- Controlling Interests | |||||
Variable Interest Entity [Line Items] | |||||
Stockholders' equity, including portion attributable to noncontrolling interest | $ 782 | $ 782 | $ 786 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Restricted Cash) (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Restricted Cash and Cash Equivalents | ||
Restricted cash | $ 525,000 | $ 600,000 |
Held by lender in escrow | ||
Restricted Cash and Cash Equivalents | ||
Restricted cash | 500,000 | 500,000 |
Lockbox Accounts | ||
Restricted Cash and Cash Equivalents | ||
Restricted cash | 25,000 | 25,000 |
Escrowed investor proceeds | ||
Restricted Cash and Cash Equivalents | ||
Restricted cash | $ 0 | $ 75,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Dealer Manager and Distribution Fees) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Related Party Transaction | ||
Due to affiliates | $ 17,076 | $ 14,786 |
Dealer manager | ||
Related Party Transaction | ||
Due to affiliates | $ 15,800 | $ 12,500 |
Dealer Manager Fee | Dealer manager | W Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.55% | |
Dealer Manager Fee | Dealer manager | A Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.55% | |
Dealer Manager Fee | Dealer manager | I Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.25% | |
Distribution Fee | Dealer manager | W Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.00% | |
Distribution Fee | Dealer manager | A Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.50% | |
Distribution Fee | Dealer manager | I Shares Common Stock | ||
Related Party Transaction | ||
Daily asset based related party fee percent | 0.00% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Other) (Details) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017USD ($)class_of_stockshares | Jun. 30, 2016shares | Jun. 30, 2017USD ($)class_of_stockshares | Jun. 30, 2016shares | Dec. 31, 2016USD ($) | Aug. 26, 2013class_of_stock | |
Revenue Recognition | ||||||
Allowance for doubtful accounts receivable | $ | $ 0 | $ 0 | $ 2,000 | |||
Earnings Per Share | ||||||
Weighted average number diluted shares outstanding adjustment (in shares) | shares | 0 | 0 | 0 | 0 | ||
Multi-class offering | ||||||
Earnings Per Share | ||||||
Classes of common stock | class_of_stock | 3 | 3 | 3 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Marketable securities | $ 5,257 | $ 5,563 |
Reported value measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt outstanding | 261,800 | 161,200 |
Fair value, inputs, level 2 | Fair value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt outstanding | 261,900 | 161,200 |
Recurring | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Marketable securities | 5,257 | 5,563 |
Total assets | 5,317 | 5,591 |
Recurring | Fair Value, Inputs, level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Marketable securities | 5,257 | 5,563 |
Total assets | 5,257 | 5,563 |
Recurring | Fair value, inputs, level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Marketable securities | 0 | 0 |
Total assets | 60 | 28 |
Recurring | Fair Value, Inputs, level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Marketable securities | 0 | 0 |
Total assets | 0 | 0 |
Recurring | Interest rate swaps | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative asset | 60 | 28 |
Interest rate swaps | (313) | (371) |
Recurring | Interest rate swaps | Fair Value, Inputs, level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative asset | 0 | 0 |
Interest rate swaps | 0 | 0 |
Recurring | Interest rate swaps | Fair value, inputs, level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative asset | 60 | 28 |
Interest rate swaps | (313) | (371) |
Recurring | Interest rate swaps | Fair Value, Inputs, level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative asset | 0 | 0 |
Interest rate swaps | $ 0 | $ 0 |
Real Estate Investments (2017 A
Real Estate Investments (2017 Asset and Business Acquisitions Narrative) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($)property | Jun. 30, 2016USD ($)property | |
Business Combinations [Abstract] | ||
Interest in businesses and assets acquired during the period | 100.00% | |
Number of properties acquired through business combinations and asset acquisitions in the period | 25 | |
Number of properties acquired through asset acquisitions | 13 | |
Number of properties acquired through business combinations (in number of properties) | 12 | 13 |
Total payments to acquire properties through asset acquisition and business combinations | $ | $ 167,068 | $ 41,618 |
Real Estate Investments (2017 P
Real Estate Investments (2017 Property Acquisitions) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Investments in real estate: | ||
Purchase price of asset acquisitions | $ 114,611 | |
Purchase price of business combinations | 52,457 | $ 41,600 |
Total purchase price of real estate investments acquired | $ 167,068 | $ 41,618 |
In-place leases | ||
Investments in real estate: | ||
Weighted average amortization period (years) | 11 years 8 months 12 days | 12 years 9 months 18 days |
Acquired above-market leases | ||
Investments in real estate: | ||
Weighted average amortization period (years) | 15 years 8 months 12 days | 9 years 10 months 24 days |
Intangible lease liabilities | ||
Investments in real estate: | ||
Below market lease, weighted average useful life | 14 years 4 months 24 days | 9 years 10 months 24 days |
Real Estate Investments (201737
Real Estate Investments (2017 Asset Acquisitions Narrative) (Details) | 6 Months Ended | |
Jun. 30, 2017USD ($)property | Dec. 31, 2016USD ($) | |
Business Acquisition | ||
Total purchase price | $ 632,773,000 | $ 459,412,000 |
Percent of assets acquired | 100.00% | |
Number of properties acquired through asset acquisitions | property | 13 | |
External acquisition-related capitalized expenses | $ 963,000 | |
Wholly Owned Properties | ||
Business Acquisition | ||
Total purchase price | $ 114,611,000 |
Real Estate Investments (201738
Real Estate Investments (2017 Assets and Liabilities Acquired Through Asset Acquisition) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Real Estate [Line Items] | |||
Land | $ 123,209 | $ 86,858 | |
Buildings and improvements | 427,004 | 319,589 | |
Intangible lease assets | 82,560 | 52,965 | |
Total real estate investments, at cost | 632,773 | $ 459,412 | |
Intangible lease liabilities | |||
Real Estate [Line Items] | |||
Intangible lease liabilities | (1,414) | $ (69) | |
Wholly Owned Properties | |||
Real Estate [Line Items] | |||
Land | 22,139 | ||
Buildings and improvements | 84,324 | ||
Total real estate investments, at cost | 114,611 | ||
Wholly Owned Properties | Acquired in-place leases | |||
Real Estate [Line Items] | |||
Intangible lease assets | 11,538 | ||
Wholly Owned Properties | Acquired above-market leases | |||
Real Estate [Line Items] | |||
Intangible lease assets | 1,529 | ||
Wholly Owned Properties | Intangible lease liabilities | |||
Real Estate [Line Items] | |||
Intangible lease liabilities | $ (4,919) |
Real Estate Investments (Busine
Real Estate Investments (Business Combination Narrative) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)property | Jun. 30, 2016USD ($)property | |
Business Acquisition | ||||
Business acquisition, percentage of voting interests acquired | 100.00% | 100.00% | 100.00% | 100.00% |
Number of real estate acquisitions (in number of properties) | property | 12 | 13 | ||
Total purchase price | $ 52,457 | $ 41,600 | ||
Revenue of acquiree since acquisition date | $ 914 | $ 577 | 1,600 | 681 |
Net income (loss) of acquiree | 207 | 62 | 129 | 59 |
Acquisition-related expenses | $ 447 | 703 | 1,296 | 1,043 |
2017 Acquisitions | ||||
Business Acquisition | ||||
Acquisition-related expenses | $ 426 | |||
2016 Acquisitions | ||||
Business Acquisition | ||||
Acquisition-related expenses | $ 279 | $ 330 |
Real Estate Investments (Schedu
Real Estate Investments (Schedule of Business Combination Purchase Price allocation) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Land | $ 14,213 | $ 4,890 |
Building and improvements | 23,092 | 33,578 |
Total purchase price | 52,457 | 41,631 |
In-place leases | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Intangible assets other than goodwill, acquired | $ 15,112 | $ 3,165 |
Weighted average amortization period (years) | 11 years 8 months 12 days | 12 years 9 months 18 days |
Acquired above-market leases | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Intangible assets other than goodwill, acquired | $ 1,454 | $ 67 |
Weighted average amortization period (years) | 15 years 8 months 12 days | 9 years 10 months 24 days |
Intangible lease liabilities | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Intangible lease liabilities | $ (1,414) | $ (69) |
Below market lease, weighted average useful life | 14 years 4 months 24 days | 9 years 10 months 24 days |
Real Estate Investments (Busi41
Real Estate Investments (Business Acquisition, Pro Forma Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
2017 Acquisitions | ||||||
Pro forma basis | ||||||
Revenue | $ 11,267 | $ 7,396 | $ 21,370 | $ 14,075 | ||
Net (loss) income | $ 1,213 | 634 | $ 951 | (72) | ||
2016 Acquisitions | ||||||
Pro forma basis | ||||||
Revenue | 6,523 | $ 5,324 | 13,132 | $ 10,910 | ||
Net (loss) income | $ (135) | $ 5,363 | $ 63 | $ 6,535 |
Real Estate Investments Consoli
Real Estate Investments Consolidated Joint Venture (Details) $ in Thousands | Jun. 30, 2017USD ($)property | Dec. 31, 2016USD ($) |
Business Acquisition | ||
Assets | $ 626,240 | $ 453,572 |
Total real estate investments, net | 601,744 | 436,774 |
Liabilities | 294,949 | $ 185,486 |
Consolidated joint venture | ||
Business Acquisition | ||
Assets | 7,800 | |
Total real estate investments, net | 7,700 | |
Accumulated depreciation, depletion and amortization, property, plant, and equipment | 124 | |
Liabilities | $ 165 | |
Consolidated properties | ||
Business Acquisition | ||
Number of owned properties | property | 133 | |
Consolidated properties | Consolidated joint venture | ||
Business Acquisition | ||
Number of owned properties | property | 2 |
Marketable Securities (Narrativ
Marketable Securities (Narrative) (Details) | 6 Months Ended | ||
Jun. 30, 2017USD ($)security | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Available-for-sale Securities, Other Disclosure Items [Abstract] | |||
Marketable securities | $ 5,257,000 | $ 5,563,000 | |
Number of securities sold | security | 37 | ||
Proceeds from sale and maturities of marketable securities | $ 785,000 | $ 560,000 | |
Unrealized gain on marketable securities | 52,000 | ||
Other than temporary impairment losses, investments, available-for-sale securities | $ 0 |
Marketable Securities (Schedule
Marketable Securities (Schedule of available-for-sale securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | $ 5,234 | $ 5,592 |
Unrealized (Loss) Gain | 23 | (29) |
Fair Value | 5,257 | $ 5,563 |
U.S. Treasury Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 2,007 | |
Unrealized (Loss) Gain | (7) | |
Fair Value | 2,000 | |
U.S. Agency Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 367 | |
Unrealized (Loss) Gain | (1) | |
Fair Value | 366 | |
Corporate Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 2,860 | |
Unrealized (Loss) Gain | 31 | |
Fair Value | $ 2,891 |
Marketable Securities (Schedu45
Marketable Securities (Schedule of available-for-sale securities reconciliation) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Amortized Cost Basis Rollforward | |
Marketable securities as of January 1, 2017 | $ 5,592 |
Face value of marketable securities acquired | 426 |
Premiums and discounts on purchase of marketable securities, net of acquisition costs | 6 |
Amortization on marketable securities | (5) |
Sales and maturities of securities | (785) |
Marketable securities as of June 30, 2017 | 5,234 |
Unrealized Loss(Gain) Rollforward | |
Marketable securities as of January 1, 2017 | (29) |
Sales and maturities of securities | 0 |
Unrealized gain on marketable securities | 52 |
Marketable securities as of June 30, 2017 | 23 |
Fair Value Rollforward | |
Marketable securities as of January 1, 2017 | 5,563 |
Face value of marketable securities acquired | 426 |
Premiums and discounts on purchase of marketable securities, net of acquisition costs | 6 |
Amortization on marketable securities | (5) |
Sales and maturities of securities | (785) |
Unrealized gain on marketable securities | 52 |
Marketable securities as of June 30, 2017 | $ 5,257 |
Marketable Securities (Schedu46
Marketable Securities (Schedule of Maturities) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Due within one year | $ 786 | |
Due after one year through five years | 2,205 | |
Due after five years through ten years | 2,157 | |
Due after ten years | 86 | |
Total | 5,234 | |
Estimated Fair Value | ||
Due within one year | 785 | |
Due after one year through five years | 2,210 | |
Due after five years through ten years | 2,176 | |
Due after ten years | 86 | |
Total | $ 5,257 | $ 5,563 |
Derivative Instruments and He47
Derivative Instruments and Hedging Activities (Narrative) (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)swap_agreement | Jun. 30, 2016USD ($) | |
Derivatives, Fair Value [Line Items] | ||||
Amount of loss reclassified from other comprehensive income into income as interest expense | $ 113,000 | $ 136,000 | $ 262,000 | $ 274,000 |
Portion of change in fair value of derivative considered ineffective | 0 | $ 0 | $ 19,000 | $ 0 |
Interest rate swaps | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liability, number of instruments entered into | swap_agreement | 3 | |||
Cash Flow Hedging | Interest rate swaps | ||||
Derivatives, Fair Value [Line Items] | ||||
Interest rate cash flow hedge gain (loss) to be reclassified during next twelve months | 420,000 | $ 420,000 | ||
Derivative liability, event of default, termination amount | $ 338,000 | $ 338,000 |
Derivative Instruments and He48
Derivative Instruments and Hedging Activities (Schedule of derivative instruments) (Details) - Cash Flow Hedging - Interest rate swaps - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property escrow deposits, prepaid expenses, and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding notional amount | $ 65,040 | |
Fair value of assets | 60 | $ 28 |
Deferred rental income, derivative liabilities, and other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding notional amount | 39,800 | |
Fair value of liabilities | $ (313) | $ (371) |
Minimum | Property escrow deposits, prepaid expenses, and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate (percentage) | 3.23% | |
Minimum | Deferred rental income, derivative liabilities, and other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate (percentage) | 3.56% | |
Maximum | Property escrow deposits, prepaid expenses, and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate (percentage) | 4.04% | |
Maximum | Deferred rental income, derivative liabilities, and other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate (percentage) | 4.17% |
Notes Payable and Credit Faci49
Notes Payable and Credit Facility (Fixed Rate Debt) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Long-term debt, including net deferred financing costs | $ 259,632 | $ 159,143 |
Weighted average years to maturity | 3 years 2 months 27 days | |
Weighted average interest rate (percentage) | 3.52% | |
Debt outstanding | $ 261,869 | 161,169 |
Fixed rate debt | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (percentage) | 3.84% | |
Debt outstanding | $ 136,369 | $ 97,169 |
Debt security, amount, aggregate gross real estate assets net of gross intangible lease liabilities | $ 241,400 | |
Minimum | Fixed rate debt | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 3.37% | |
Maximum | Fixed rate debt | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 4.165% | |
Interest rate swaps | Variable Rate Debt | ||
Debt Instrument [Line Items] | ||
Debt outstanding | $ 64,800 |
Notes Payable and Credit Faci50
Notes Payable and Credit Facility (Schedule of Debt) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | $ 161,169 |
Deferred costs, beginning of period | (2,026) |
Total debt, net, beginning of period | 159,143 |
Debt issuances, gross | 158,200 |
Debt issuances, net | (443) |
Proceeds from debt, net of issuance costs | 157,757 |
Repayments | (57,500) |
Accretion | 232 |
Amortization of deferred financing costs | 232 |
Long-term debt, gross, ending balance | 261,869 |
Deferred costs, end of period | (2,237) |
Total debt, net, ending of period | 259,632 |
Credit facility | |
Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | 64,000 |
Debt issuances, gross | 119,000 |
Repayments | (57,500) |
Long-term debt, gross, ending balance | 125,500 |
Fixed rate debt | |
Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | 97,169 |
Debt issuances, gross | 39,200 |
Repayments | 0 |
Long-term debt, gross, ending balance | $ 136,369 |
Notes Payable and Credit Faci51
Notes Payable and Credit Facility (Amended Credit Agreement) (Details) | 6 Months Ended | |
Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Debt Instrument [Line Items] | ||
Notes payable and credit facility, net | $ 259,632,000 | $ 159,143,000 |
Weighted average interest rate (percentage) | 3.52% | |
Line of Credit | JPMorgan Chase Bank, N.A. | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 225,000,000 | |
Notes payable and credit facility, net | $ 125,500,000 | |
Weighted average interest rate (percentage) | 3.18% | |
Line of credit, remaining borrowing capacity | $ 99,500,000 | |
Line of credit facility, covenant, minimum consolidated net worth | $ 63,000,000 | |
Line of credit facility, covenant, minimum consolidated net worth, percentage of equity issuance | 75.00% | |
Debt instrument, covenant, secured leverage ratio, maximum | 40.00% | |
Line of Credit | JPMorgan Chase Bank, N.A. | Federal Funds Effective Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percentage) | 0.50% | |
Line of Credit | JPMorgan Chase Bank, N.A. | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percentage) | 1.00% | |
Line of Credit | JPMorgan Chase Bank, N.A. | Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 0.70% | |
Line of credit facility, covenant, leverage ratio | 175.00% | |
Debt instrument, covenant, fixed charge coverage ratio | 1.5 | |
Line of Credit | JPMorgan Chase Bank, N.A. | Minimum | Statutory Reserve Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percentage) | 1.70% | |
Line of Credit | JPMorgan Chase Bank, N.A. | Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 1.20% | |
Line of credit facility, covenant, leverage ratio | 60.00% | |
Line of Credit | JPMorgan Chase Bank, N.A. | Maximum | Statutory Reserve Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percentage) | 2.20% | |
Line of Credit | Revolving Credit Facility | JPMorgan Chase Bank, N.A. | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 153,000,000 | |
Notes payable and credit facility, net | $ 53,500,000 | |
Line of credit facility, interest rate during period | 3.29% | |
Line of Credit | Term Loan | JPMorgan Chase Bank, N.A. | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 72,000,000 | |
Notes payable and credit facility, net | 72,000,000 | |
Line of Credit | Term Loan | JPMorgan Chase Bank, N.A. | Interest rate swaps | ||
Debt Instrument [Line Items] | ||
Notes payable and credit facility, net | $ 40,000,000 | |
Line of Credit | Term Loan | JPMorgan Chase Bank, N.A. | Interest rate swaps | Cash Flow Hedging | ||
Debt Instrument [Line Items] | ||
Interest rate at period end (percentage) | 3.23% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($)property | Jun. 30, 2016property | |
Business Acquisition | ||
Number of real estate acquisitions (in number of properties) | property | 12 | 13 |
Real estate investment purchase commitments | ||
Business Acquisition | ||
Business acquisition, percentage of voting interests acquired | 100.00% | |
Number of real estate acquisitions (in number of properties) | property | 1 | |
Total purchase price | $ | $ 24,300 | |
Escrow deposit | $ | $ 550 |
Related-Party Transactions an53
Related-Party Transactions and Arrangements (Selling commissions, dealer manager and distribution fees) (Details) | Jun. 30, 2017USD ($) |
W Shares Common Stock | Dealer manager | Selling commissions | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.00% |
W Shares Common Stock | Dealer manager | Dealer Manager Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.55% |
W Shares Common Stock | Dealer manager | Distribution Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.00% |
A Shares Common Stock | Dealer manager | Selling commissions | |
Related Party Transaction | |
Daily asset based related party fee percent | 3.75% |
Common stock, share purchase volume discount | $ 150,001 |
A Shares Common Stock | Dealer manager | Dealer Manager Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.55% |
A Shares Common Stock | Dealer manager | Distribution Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.50% |
A Shares Common Stock | Advisors | Selling commissions reallowed by CCC | |
Related Party Transaction | |
Daily asset based related party fee reallowed to third party percent | 100.00% |
I Shares Common Stock | Dealer manager | Selling commissions | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.00% |
I Shares Common Stock | Dealer manager | Dealer Manager Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.25% |
I Shares Common Stock | Dealer manager | Distribution Fee | |
Related Party Transaction | |
Daily asset based related party fee percent | 0.00% |
Maximum | A Shares Common Stock | Dealer manager | Selling commissions | |
Related Party Transaction | |
Daily asset based related party fee percent | 3.90% |
Related-Party Transactions an54
Related-Party Transactions and Arrangements (Other organization and offering expenses and Advisory fees and expenses) (Details) - Advisors | 6 Months Ended |
Jun. 30, 2017 | |
Advisory fees and expenses | |
Related Party Transaction | |
Distribution and stockholder servicing fee, percentage of net asset value, daily accrual rate | 0.00025% |
Maximum | Organization and offering expense reimbursement | |
Related Party Transaction | |
Organization and offering expense limit (percent) | 0.75% |
Related-Party Transactions an55
Related-Party Transactions and Arrangements (Operating expenses, Expense Cap and Acquisition expenses) (Details) - Advisors | Jun. 30, 2017 |
Minimum | Operating expenses | |
Related Party Transaction | |
Operating expense reimbursement percent of average invested assets | 2.00% |
Operating expense reimbursement percent of net income | 25.00% |
Maximum | Acquisition expense reimbursement | |
Related Party Transaction | |
Acquisition and advisory fee (percent) | 6.00% |
Related-Party Transactions an56
Related-Party Transactions and Arrangements (Performance Fee) (Details) | Jun. 30, 2017$ / shares |
Advisors | Performance fee | |
Related Party Transaction | |
Performance fee, percent applied to total return on stockholders' capital between 6 percent and 10 percent | 25.00% |
Minimum | Advisors | Performance fee | |
Related Party Transaction | |
Total return threshold to receive performance fee (percent) | 6.00% |
Maximum | Advisors | Performance fee | |
Related Party Transaction | |
Total return threshold to receive performance fee (percent) | 10.00% |
W Shares Common Stock | |
Related Party Transaction | |
Share price, base net asset value (in dollars per share) | $ 15 |
A Shares Common Stock | |
Related Party Transaction | |
Share price, base net asset value (in dollars per share) | 16.72 |
I Shares Common Stock | |
Related Party Transaction | |
Share price, base net asset value (in dollars per share) | $ 16.82 |
Related-Party Transactions an57
Related-Party Transactions and Arrangements (Schedule of Related Party Transaction) (Details) - Advisors - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Selling commissions | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | $ 921 | $ 421 | $ 1,477 | $ 804 |
Distribution Fee | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 132 | 50 | 239 | 88 |
Dealer Manager Fee | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 502 | 295 | 949 | 552 |
Organization and offering expense reimbursement | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 394 | 276 | 682 | 513 |
Acquisition expense reimbursement | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 429 | 377 | 845 | 657 |
Advisory fee | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 1,012 | 636 | 1,935 | 1,186 |
Operating expense reimbursement | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | 620 | 402 | 1,579 | 749 |
Performance fee | ||||
Related Party Transaction | ||||
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 | $ 0 | $ 0 |
Related-Party Transactions an58
Related-Party Transactions and Arrangements (Due to Affiliates) (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Advisors | ||
Related Party Transaction | ||
Due to cole advisor | $ 17.1 | $ 14.8 |
Subsequent Events (Investment i
Subsequent Events (Investment in Real Estate Assets) (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Aug. 10, 2017USD ($)property | Jun. 30, 2017USD ($)property | Jun. 30, 2016USD ($)property | |
Subsequent Event | |||
Business acquisition, percentage of voting interests acquired | 100.00% | 100.00% | |
Number of real estate acquisitions (in number of properties) | property | 12 | 13 | |
Total purchase price | $ | $ 52,457 | $ 41,600 | |
Subsequent event | Acquisitions, Subsequent Period | |||
Subsequent Event | |||
Business acquisition, percentage of voting interests acquired | 100.00% | ||
Number of real estate acquisitions (in number of properties) | property | 1 | ||
Total purchase price | $ | $ 24,300 |
Subsequent Events (Credit Facil
Subsequent Events (Credit Facility and Notes Payable) (Details) - Subsequent event | 1 Months Ended |
Aug. 10, 2017USD ($) | |
Interest rate swaps | Mortgages | Huntington National | |
Subsequent Event | |
Interest rate swap agreement, amount | $ 13,400,000 |
Interest rate swap agreement, stated percentage | 4.14% |
Revolving Credit Facility | Line of Credit | JPMorgan Chase Bank, N.A. | |
Subsequent Event | |
Reduction in amount outstanding under the credit facility | $ 13,000,000 |