Document and Entity Information
Document and Entity Information - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2018 | Aug. 06, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | COLE CREDIT PROPERTY TRUST IV, INC. | |
Entity Central Index Key | 1,498,547 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity common stock, shares outstanding (shares) | 310.6 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Real estate assets: | ||
Land | $ 1,190,358 | $ 1,193,029 |
Buildings, fixtures and improvements | 3,360,950 | 3,371,563 |
Intangible lease assets | 582,679 | 589,930 |
Total real estate assets, at cost | 5,133,987 | 5,154,522 |
Less: accumulated depreciation and amortization | (595,255) | (526,976) |
Total real estate assets, net | 4,538,732 | 4,627,546 |
Cash and cash equivalents | 4,356 | 4,745 |
Restricted cash | 9,913 | 9,098 |
Rents and tenant receivables, net | 74,481 | 71,859 |
Due from affiliates | 0 | 56 |
Derivative assets, prepaid expenses, revenue bonds and other assets | 24,597 | 12,351 |
Deferred costs, net | 2,561 | 3,034 |
Total assets | 4,654,640 | 4,728,689 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Notes payable and credit facility, net | 2,447,979 | 2,471,763 |
Accounts payable and accrued expenses | 27,689 | 24,635 |
Due to affiliates | 2,075 | 1,984 |
Intangible lease liabilities, net | 40,579 | 45,572 |
Distributions payable | 15,994 | 16,531 |
Deferred rental income and other liabilities | 11,875 | 11,539 |
Total liabilities | 2,546,191 | 2,572,024 |
Commitments and contingencies | ||
Redeemable common stock and noncontrolling interest | 185,581 | 186,453 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 311,501,575 and 311,582,319 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 3,115 | 3,116 |
Capital in excess of par value | 2,607,296 | 2,607,300 |
Accumulated distributions in excess of earnings | (706,996) | (646,834) |
Accumulated other comprehensive income | 19,453 | 6,630 |
Total stockholders’ equity | 1,922,868 | 1,970,212 |
Total liabilities, redeemable common stock, noncontrolling interest and stockholders’ equity | $ 4,654,640 | $ 4,728,689 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 490,000,000 | 490,000,000 |
Common stock, shares issued (shares) | 311,501,575 | 311,582,319 |
Common stock, shares outstanding (shares) | 311,501,575 | 311,582,319 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Rental income | $ 93,318 | $ 93,044 | $ 187,257 | $ 184,251 |
Tenant reimbursement income | 14,077 | 11,460 | 29,641 | 25,033 |
Total revenues | 107,395 | 104,504 | 216,898 | 209,284 |
Operating expenses: | ||||
General and administrative | 3,754 | 3,624 | 7,070 | 7,031 |
Property operating | 6,501 | 6,851 | 15,059 | 13,536 |
Real estate tax | 9,463 | 9,018 | 19,017 | 18,370 |
Advisory fees and expenses | 10,855 | 10,903 | 21,443 | 21,714 |
Acquisition-related | 168 | 163 | 203 | 1,410 |
Depreciation and amortization | 37,491 | 35,189 | 72,482 | 69,684 |
Total operating expenses | 68,232 | 65,748 | 135,274 | 131,745 |
Operating income | 39,163 | 38,756 | 81,624 | 77,539 |
Other income (expense): | ||||
Interest expense and other, net | (23,325) | (22,101) | (46,977) | (44,633) |
Income before real estate dispositions | 15,838 | 16,655 | 34,647 | 32,906 |
Gain on disposition of real estate, net | 1,987 | 1,452 | 2,251 | 1,452 |
Net income | 17,825 | 18,107 | 36,898 | 34,358 |
Net income allocated to noncontrolling interest | 33 | 32 | 67 | 66 |
Net income attributable to the Company | $ 17,792 | $ 18,075 | $ 36,831 | $ 34,292 |
Weighted average number of common shares outstanding: | ||||
Basic and diluted (in shares) | 311,502,128 | 311,671,130 | 311,543,723 | 311,723,827 |
Net income per common share: | ||||
Basic and diluted (USD per share) | $ 0.06 | $ 0.06 | $ 0.12 | $ 0.11 |
Distributions declared per common share (USD per share) | $ 0.16 | $ 0.16 | $ 0.31 | $ 0.31 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 17,825 | $ 18,107 | $ 36,898 | $ 34,358 |
Other comprehensive income (loss) | ||||
Unrealized gain (loss) on interest rate swaps | 4,406 | (3,798) | 14,336 | (2,274) |
Amount of (gain) loss reclassified from other comprehensive income into income as interest expense and other, net | (1,460) | 951 | (2,001) | 2,410 |
Total other comprehensive income (loss) | 2,946 | (2,847) | 12,335 | 136 |
Comprehensive income | 20,771 | 15,260 | 49,233 | 34,494 |
Comprehensive income allocated to noncontrolling interest | 33 | 32 | 67 | 66 |
Comprehensive income attributable to the Company | $ 20,738 | $ 15,228 | $ 49,166 | $ 34,428 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands | Total | Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive Income |
Balance, (shares) at Dec. 31, 2017 | 311,582,319 | 311,582,319 | |||
Balance at Dec. 31, 2017 | $ 1,970,212 | $ 3,116 | $ 2,607,300 | $ (646,834) | $ 6,630 |
Cumulative effect of accounting changes at Dec. 31, 2017 | (488) | 488 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (shares) | 4,845,688 | ||||
Issuance of common stock | 47,067 | $ 48 | 47,019 | ||
Distributions declared | (96,505) | (96,505) | |||
Redemptions of common stock (shares) | (4,926,432) | ||||
Redemptions of common stock | (47,877) | $ (49) | (47,828) | ||
Changes in redeemable common stock | 805 | 805 | |||
Comprehensive income | $ 49,166 | 36,831 | 12,335 | ||
Balance, (shares) at Jun. 30, 2018 | 311,501,575 | 311,501,575 | |||
Balance at Jun. 30, 2018 | $ 1,922,868 | $ 3,115 | $ 2,607,296 | $ (706,996) | $ 19,453 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 36,898 | $ 34,358 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization, net | 71,872 | 68,763 |
Amortization of deferred financing costs | 2,704 | 2,586 |
Amortization of fair value adjustment of mortgage notes payable assumed | (43) | (42) |
Straight-line rental income | (4,502) | (4,736) |
Bad debt expense | 209 | 787 |
Fair value adjustment to contingent consideration | 0 | (250) |
Ineffectiveness of interest rate swaps | 0 | (100) |
Write-off of deferred financing costs | 0 | 866 |
Gain on disposition of real estate assets, net | (2,251) | (1,452) |
Changes in assets and liabilities: | ||
Rents and tenant receivables | 1,673 | 2,021 |
Prepaid expenses and other assets | (230) | (167) |
Accounts payable and accrued expenses | 2,601 | 1,870 |
Deferred rental income and other liabilities | 542 | 5,559 |
Due from affiliates | 56 | 57 |
Due to affiliates | 91 | (4,000) |
Net cash provided by operating activities | 109,620 | 106,120 |
Cash flows from investing activities: | ||
Investment in real estate assets and capital expenditures | (2,774) | (190,621) |
Investment in revenue bonds | 0 | (2,081) |
Proceeds from disposition of real estate assets | 17,425 | 16,973 |
Payment of property escrow deposits | 0 | (6,820) |
Refund of property escrow deposits | 0 | 7,070 |
Proceeds from the settlement of insurance claims | 113 | 41 |
Net cash provided by (used in) investing activities | 14,764 | (175,438) |
Cash flows from financing activities: | ||
Redemptions of common stock | (47,877) | (52,973) |
Distributions to stockholders | (49,975) | (45,378) |
Proceeds from notes payable and credit facility | 96,500 | 1,383,706 |
Repayments of notes payable and credit facility | (122,472) | (1,200,390) |
Payment of loan deposits | 0 | (1,064) |
Refund of loan deposits | 0 | 1,064 |
Deferred financing costs paid | 0 | (13,228) |
Distributions to noncontrolling interest | (134) | (142) |
Net cash (used in) provided by financing activities | (123,958) | 71,595 |
Net increase in cash and cash equivalents and restricted cash | 426 | 2,277 |
Cash and cash equivalents and restricted cash, beginning of period | 13,843 | 17,794 |
Cash and cash equivalents and restricted cash, end of period | 14,269 | 20,071 |
Cash and cash equivalents | 4,356 | 10,376 |
Restricted cash | $ 9,913 | $ 9,695 |
Organization and Business
Organization and Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS Cole Credit Property Trust IV, Inc. (the “Company”) is a Maryland corporation, incorporated on July 27, 2010 , that elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. The Company is the sole general partner of and owns, directly or indirectly, 100% of the partnership interests in Cole Operating Partnership IV, LP, a Delaware limited partnership. On November 13, 2017, VEREIT Operating Partnership, L.P. (“VEREIT OP”), a former affiliated entity of the Company’s sponsor, CCO Group (as defined below), entered into a Purchase and Sale Agreement with CCA Acquisition, LLC (“CCA”), a newly-formed affiliate of CIM Group, LLC (“CIM”), pursuant to which CCA agreed to acquire all of the issued and outstanding shares of common stock of Cole Capital Advisors, Inc., the direct or indirect owner of Cole REIT Advisors IV, LLC (“CR IV Advisors”), Cole Capital Corporation and CREI Advisors, LLC (“CREI Advisors”), the Company’s external advisor, dealer manager and property manager, respectively (the “Transaction”). On February 1, 2018, the Transaction was completed. Immediately following the completion of the Transaction, Cole Capital Advisors, Inc. and the Company’s dealer manager were each converted into Delaware limited liability companies, Cole Capital Advisors, Inc.’s name was changed to CCO Group, LLC, and the dealer manager’s name was changed to CCO Capital, LLC (“CCO Capital”). As a result of the Transaction, CIM owns and/or controls CCO Group, LLC and its subsidiaries (collectively, “CCO Group”), and CCO Group, LLC owns and controls CR IV Advisors, CCO Capital and CREI Advisors, the Company’s external advisor, dealer manager for the Offerings (as defined below) and property manager, respectively. In addition, as part of the Transaction, VEREIT OP and CCO Group, LLC entered into a services agreement (the “Services Agreement”) pursuant to which VEREIT OP will continue to provide certain services to CCO Group and to the Company, Cole Credit Property Trust V, Inc. (“CCPT V”), Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”), Cole Office & Industrial (CCIT III), Inc. (“CCIT III”) and Cole Real Estate Income Strategy (Daily NAV), Inc. (“Cole Income NAV Strategy”) (CCPT V, CCIT II, CCIT III, Cole Income NAV Strategy and the Company, collectively, the “Cole REITs ® ”), including operational real estate support. VEREIT OP will continue to provide such services through March 31, 2019 (or, if later, the date of the last government filing other than a tax filing made by any of the Cole REITs with respect to its 2018 fiscal year) (the “Initial Services Term”) and will provide consulting and research services through December 31, 2023 as requested by CCO Group, LLC. Despite the indirect change of ownership and control of the Company’s advisor, dealer manager, property manager and sponsor, the Company expects that, during the Initial Services Term of the Services Agreement, the advisory, dealer manager and property management services the Company receives will continue without any material changes in personnel (except as supplemented by the management oversight of CIM personnel) or material change in service procedures. CCO Group, LLC is evaluating and intends to effectuate during the Initial Services Term of the Services Agreement an appropriate transition of VEREIT OP’s services under the Services Agreement to other CIM affiliates or third parties with the goal of ensuring continuity and minimizing disruption. On January 26, 2012 , pursuant to a Registration Statement on Form S-11 (Registration No. 333-169533) (the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”), the Company commenced its initial public offering on a “best efforts” basis of up to a maximum of $2.975 billion in shares of common stock (the “Offering”). On November 25, 2013 , the Company reallocated $400.0 million in shares from the distribution reinvestment plan (the “DRIP”) portion of the Offering to the primary portion of the Offering, and on February 18, 2014 , the Company reallocated an additional $23.0 million in shares from the DRIP portion of the Offering to the primary portion of the Offering. As a result of these reallocations, the Offering offered up to a maximum of approximately 292.3 million shares of common stock at a price of $10.00 per share in the primary portion of the Offering and up to approximately 5.5 million additional shares pursuant to the DRIP portion of the Offering under which the Company’s stockholders could have elected to have distributions reinvested in additional shares of common stock at a price of $9.50 per share. The Company ceased issuing shares in the Offering on April 4, 2014 . At the completion of the Offering, a total of approximately 297.4 million shares of common stock had been issued, including approximately 292.3 million shares of common stock sold to the public pursuant to the primary portion of the Offering and approximately 5.1 million shares of common stock issued pursuant to the DRIP portion of the Offering. The remaining approximately 404,000 unsold shares from the Offering were deregistered. The Company registered $247.0 million of shares of common stock under the DRIP pursuant to a Registration Statement filed on Form S-3 (Registration No. 333-192958) (the “Initial DRIP Offering”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2013 and automatically became effective with the SEC upon filing. The Company ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016. At the completion of the Initial DRIP Offering, a total of approximately $241.7 million of common stock had been issued. The remaining $5.3 million of unsold shares from the Initial DRIP Offering were deregistered. The Company registered an additional $600.0 million of shares of common stock under the DRIP pursuant to a Registration Statement filed on Form S-3 (Registration No. 333-212832) (the “Secondary DRIP Offering,” and together with the Initial DRIP Offering, the “DRIP Offerings,” and the DRIP Offerings collectively with the Offering, the “Offerings”), which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and will continue to issue shares under the Secondary DRIP Offering. On September 27, 2015, the Company announced that its board of directors (the “Board”) had established an estimated value of the Company’s common stock, as of August 31, 2015, of $9.70 per share for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340. On November 10, 2016, the Board established an updated estimated per share net asset value (“NAV”) of the Company’s common stock, as of September 30, 2016, of $9.92 per share. On March 24, 2017, the Board established an updated estimated per share NAV of the Company’s common stock, as of December 31, 2016, of $10.08 per share. On March 29, 2018, the Board established an updated estimated per share NAV of the Company’s common stock, as of December 31, 2017, of $9.37 per share. In determining the estimated per share NAVs as of August 31, 2015, September 30, 2016, December 31, 2016, and December 31, 2017, the Board considered information and analysis, including valuation materials that were provided by a third-party valuation expert, information provided by CR IV Advisors, and the estimated per share NAV recommendation made by the valuation committee of the Board, which committee is comprised entirely of independent directors. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm. Prior to October 1, 2015, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.50 per share. From October 1, 2015 to November 13, 2016, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.70 per share, the estimated value per share as of August 31, 2015, as determined by the Board. From November 14, 2016 to March 27, 2017, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.92 per share, the estimated per share NAV as of September 30, 2016, as determined by the Board. From March 28, 2017 to March 28, 2018, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $10.08 per share, the estimated per share NAV as of December 31, 2016, as determined by the Board. Commencing on March 29, 2018, distributions are reinvested in shares of the Company’s common stock under the DRIP at a price of $9.37 per share, the estimated per share NAV as of December 31, 2017, as determined by the Board. As of June 30, 2018 , the Company had issued approximately 344.1 million shares of its common stock in the Offerings, including 45.8 million shares issued in the DRIP Offerings, for gross offering proceeds of $3.4 billion before organization and offering costs, selling commissions and dealer manager fees of $306.0 million . As of June 30, 2018 , the Company owned 897 properties, including nine properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), comprising 26.8 million rentable square feet of commercial space located in 45 states. As of June 30, 2018 , the rentable square feet at these properties was 96.3% leased, including month-to-month agreements, if any. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
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 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 financial statements. Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by 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, 2017 , and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The condensed consolidated 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 financial statements include the accounts of the Company, 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 condensed 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, 2018 and December 31, 2017 , the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for consolidation. Reclassifications In connection with the adoption of Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), certain reclassifications have been made to prior period balances to conform to the current presentation in the condensed consolidated statements of cash flows. Under ASU 2016-15, the Company reclassified $41,000 of proceeds from the settlement of insurance claims from cash flows from operating activities to cash flows from investing activities for the six months ended June 30, 2017 . Under ASU 2016-18, transfers to or from restricted cash, which have previously been shown in the Company’s investing activities section of the condensed consolidated statements of cash flows, are now required to be shown as part of the total change in cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows. This change resulted in a decrease in cash flows from investing activities of $1.7 million during the six months ended June 30, 2017 . The Company adopted ASU 2017-12, as defined in “Recent Accounting Pronouncements,” during the first quarter of fiscal year 2018. Accordingly, for the six months ended June 30, 2018 , the Company recorded a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of accumulated distributions in excess of earnings of $488,000 . 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. 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; changes in anticipated holding periods; 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 is 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, 2018 or 2017 . The Company is in the process of determining if anticipated holding periods for certain properties may materially differ from the initial intended holding periods for such properties, which could result in an impairment charge in the future. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its 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 is then 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, 2018 or December 31, 2017 . Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price 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 and other intangibles, 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. In April 2017, the Company elected to early adopt 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. Beginning in April 2017, all real estate acquisitions qualified as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities, as described above. Prior to the adoption of ASU 2017-01 in April 2017, all of the Company’s real estate acquisitions were accounted for as business combinations and, as such, acquisition-related expenses related to these business combination acquisitions were expensed as incurred. Prior to April 2017, acquisition-related expenses in the Company’s condensed consolidated statements of operations primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. The Company expects its future acquisitions to qualify as asset acquisitions and, as such, the Company will allocate the purchase price to acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. Investment in Held-to-Maturity Securities The Company has investments classified as held-to-maturity securities, which consist of revenue bonds acquired in connection with the purchase of an anchored shopping center. The bonds have a 9.0% interest rate and mature on November 1, 2044. As of June 30, 2018 , the Company classified these investments as held-to-maturity as the Company has the intent and ability to hold the securities to maturity. These investments are initially recognized in derivative assets, prepaid expenses, revenue bonds and other assets on the condensed consolidated balance sheets and are subsequently measured using amortized cost. The Company’s investments in revenue bonds are reviewed for impairment, including the evaluation of changes in events or circumstances that may indicate that the carrying amount of the investment may not be recoverable. Realization is dependent on a number of factors, including investment performance, market conditions and payment structure. The Company will record an impairment charge if it is determined that a decline in the value of the investment below its carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment will be held to maturity. 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. Redeemable Noncontrolling Interest in Consolidated Joint Venture On June 27, 2014 , the Company completed the formation of the Consolidated Joint Venture. Pursuant to the joint venture agreement, the joint venture partner has a right to exercise an option (the “Option”), which became effective on June 27, 2016 , whereby the Company will be required to purchase the ownership interest of the joint venture partner at fair market value. As of June 30, 2018 , the Option has not been exercised. The Compa ny 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 $67,000 and paid distributions of $134,000 related to the noncontrolling interest during the six months ended June 30, 2018 . The Company recorded the noncontrolling interest of $2.3 million and $2.4 million as of June 30, 2018 and December 31, 2017 , respectively, as temporary equity in the mezzanine section of the condensed consolidated balance sheets, due to the ability to exercise the Option being outside the control of the Company. Restricted Cash The Company had $9.9 million and $9.1 million in restricted cash as of June 30, 2018 and December 31, 2017 , respectively. Included in restricted cash was $3.4 million and $3.7 million held by lenders in lockbox accounts, as of June 30, 2018 and December 31, 2017 , respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Also included in restricted cash was $6.5 million and $5.4 million held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement, as of June 30, 2018 and December 31, 2017 , respectively. Revenue Recognition Certain properties have leases where the minimum rental payment increases 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. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (“ASC”) Topic 605 and requires 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. The Company records revenue for real estate taxes and insurance reimbursed by its tenants on the leased properties, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations as the Company has concluded it is the primary obligor. The Company has identified its revenue streams as rental income from leasing arrangements and tenant reimbursement income, which are outside of the scope of Topic 606. The Company adopted ASU 2014-09 using the modified retrospective approach and determined it does not have a material impact on the Company’s condensed consolidated financial statements. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants, and determines their 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, 2018 and December 31, 2017 , the Company had an allowance for uncollectible accounts of $720,000 and $1.5 million , respectively. 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 new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require that most lease obligations be recognized as a right of use asset with a corresponding liability on the balance sheet. The guidance also requires additional qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 and subsequent amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The guidance, including optional practical expedients, should be implemented for the earliest period presented using a modified retrospective approach. The Company is currently in the process of assessing the inventory of its leases that will be impacted by adoption of the new guidance. The Company does not expect the adoption to have a material impact on the accounting treatment of the Company’s net leases, which are the primary source of the Company’s revenues. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) . The targeted amendments in this ASU are designed to help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. ASU 2017-12 applies to the Company’s interest rate swaps designated as cash flow hedges. Upon adoption of ASU 2017-12, all changes in the fair value of highly effective cash flow hedges will be recorded in accumulated other comprehensive income rather than recognized directly in earnings. Under current GAAP, the ineffective portion of the change in fair value of cash flow hedges is recognized directly in earnings. This eliminates the requirement to separately measure and disclose ineffectiveness for qualifying cash flow hedges. ASU 2017-12 is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2017-12 is required to be adopted using a modified retrospective approach with early adoption permitted. The Company adopted ASU 2017-12 during the first quarter of fiscal year 2018. Accordingly, during the six months ended June 30, 2018 , the Company recorded a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of accumulated distributions in excess of earnings of $488,000 . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
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 credit facility — 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. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of June 30, 2018 , the estimated fair value of the Company’s debt was $2.44 billion , compared to a carrying value of $2.46 billion . The estimated fair value of the Company’s debt as of December 31, 2017 was $2.48 billion , compared to a carrying value of $2.49 billion . 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, 2018 and December 31, 2017 , the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and 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. Contingent consideration arrangements — The contingent consideration arrangements are carried at fair value and are valued using Level 3 inputs. The fair value of additional consideration paid in connection with the acquisition of properties subject to contingent consideration arrangements is determined based on key assumptions, including, but not limited to, rental rates, discount rates and the estimated timing and probability of successfully leasing vacant space subsequent to the Company’s acquisition of certain properties. Revenue bonds — The fair value estimates of the Company’s revenue bonds are based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis. This analysis reflects the contractual terms of the bonds, including the period to maturity, and uses unobservable market-based inputs, including discount rates rangi ng from 7.75% to 9.0% . As a result, the Company has determined that its revenue bonds are classified in Level 3 of the fair value hierarchy. As of June 30, 2018 , the estimated fair value of the Company’s revenue bonds was $2.1 million . 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, 2018 and December 31, 2017 , there have been no transfer s 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, 2018 and December 31, 2017 (in thousands): Balance as of Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets: Interest rate swaps $ 19,453 $ — $ 19,453 $ — Total financial assets $ 19,453 $ — $ 19,453 $ — Balance as of Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets: Interest rate swaps $ 7,324 $ — $ 7,324 $ — Total financial assets $ 7,324 $ — $ 7,324 $ — Financial liabilities: Interest rate swaps $ (206 ) $ — $ (206 ) $ — Total financial liabilities $ (206 ) $ — $ (206 ) $ — The following are reconciliations of the changes in financial assets and liabilities with Level 3 inputs in the fair value hierarchy for the six months ended June 30, 2018 and 2017 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beginning Balance, December 31, 2017 $ 2,067 Revenue bond payments received (5 ) Ending Balance, June 30, 2018 $ 2,062 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beginning Balance, December 31, 2016 $ (337 ) Purchases and fair value adjustments: Revenue bond purchases 2,081 Contingent consideration fair value adjustments 250 Ending Balance, June 30, 2017 $ 1,994 |
Real Estate Assets
Real Estate Assets | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
REAL ESTATE ASSETS | REAL ESTATE ASSETS 2018 Property Acquisitions During the six months ended June 30, 2018 , the Company did not acquire any properties. 2018 Property Dispositions During the six months ended June 30, 2018 , the Company disposed of 12 retail properties for an aggregate gross sales price of $17.9 million , resulting in proceeds of $17.4 million after closing costs and a gain of $2.3 million . No disp osition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and the Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the condensed consolidated statements of operations. 2017 Property Acquisitions During the six months ended June 30, 2017 , the Company acquired 27 commercial properties for an aggregate purchase price of $186.7 million (the “2017 Acquisitions”), of which 23 were determined to be asset acquisitions and four were accounted for as business combinations as they were acquired prior to the adoption of ASU 2017-01 in April 2017. The Company funded the 2017 Acquisitions with net cash provided by operations 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 Real estate assets: Purchase price of asset acquisitions $ 131,281 Purchase price of business combinations 55,386 Total purchase price of real estate assets acquired (1) $ 186,667 ______________________ (1) The weighted average amortization period for the 2017 Acquisitions is 12.3 years for acquired in-place leases and other intangibles, 13.6 years for acquired above-market leases and 8.2 years for acquired intangible lease liabilities. During the six months ended June 30, 2017 , the Company acquired a 100% interest in 23 commercial properties for an aggregate purchase price of $131.3 million , which were accounted for as asset acquisitions (the “ 2017 Asset Acquisitions”). The aggregate purchase price includes $3.4 million of external acquisition-related expenses that were capitalized in accordance with ASU 2017-01. Prior to 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 Asset Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Asset Acquisitions Land $ 14,382 Buildings, fixtures and improvements 100,711 Acquired in-place leases and other intangibles 13,799 Acquired above-market leases 3,531 Revenue bonds 2,081 Intangible lease liabilities (3,223 ) Total purchase price $ 131,281 During the six months ended June 30, 2017 , the Company acquired a 100% interest in four commercial properties for an aggregate purchase price of $55.4 million , which were accounted for as business combinations (the “2017 Business Combination Acquisitions”). 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 2017 Business Combination Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Business Combination Acquisitions Land $ 9,873 Buildings, fixtures and improvements 41,186 Acquired in-place leases and other intangibles 5,974 Acquired above-market leases 988 Intangible lease liabilities (2,635 ) Total purchase price $ 55,386 The Company recorded revenue for the three and six months ended June 30, 2017 of $1.3 million and $2.3 million , respectively, and net income of $558,000 and a net loss of $328,000 for the three and six months ended June 30, 2017 , respectively, related to the 2017 Business Combination Acquisitions. In addition, the Company recorded $25,000 and $1.3 million , respectively, of acquisition-related expenses for the three and six months ended June 30, 2017 , 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 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 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma basis: Revenue $ 104,504 $ 101,918 $ 209,595 $ 203,724 Net income $ 18,075 $ 19,324 $ 35,378 $ 38,366 The pro forma information for the three and six months ended June 30, 2017 was adjusted to exclude $25,000 and $1.3 million , respectively, of acquisition-related fees and expenses recorded during such periods related to the 2017 Business Combination Acquisitions. Accordingly, these costs were instead recognized in the pro forma information for the three and 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. 2017 Property Dispositions During the six months ended six months ended June 30, 2017 , the Company disposed of 11 retail properties for an aggregate gross sales price of $17.7 million , resulting in proceeds of $17.0 million after closing costs and a gain of $1.5 million . No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and the Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the consolidated statements of operations. Consolidated Joint Venture As of June 30, 2018 , the Company had an interest in a Consolidated Joint Venture that owns and manages nine properties, with total assets of $51.6 million , which included $9.3 million of land, $42.0 million of buildings and improvements, and $5.6 million of intangible lease assets, net of accumulated depreciation and amortization of $6.0 million , and total liabilities of $503,000 . The Consolidated Joint Venture does not have any debt outstanding as of June 30, 2018 . 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 partner’s (the “Consolidated Joint Venture Partner”) approval 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. |
Intangible Lease Assets
Intangible Lease Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE LEASE ASSETS | INTANGIBLE LEASE ASSETS Intangible lease assets consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands, except weighted average life remaining): June 30, 2018 December 31, 2017 In-place leases and other intangibles, net of accumulated amortization of $185,536 and $166,874, respectively (with a weighted average life remaining of 10.2 years and 10.5 years, respectively) $ 330,352 $ 355,683 Acquired above-market leases, net of accumulated amortization of $28,747 and $25,626, respectively (with a weighted average life remaining of 8.4 years and 8.7 years, respectively) 38,044 41,747 $ 368,396 $ 397,430 Amortization of the above-market leases is recorded as a reduction to rental revenue, and amortization expense for the in-place leases and other intangibles is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization expense related to the intangible lease assets for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 In-place lease and other intangible amortization $ 13,618 $ 11,421 $ 24,613 $ 22,835 Above-market lease amortization $ 1,973 $ 1,825 $ 3,703 $ 3,622 As of June 30, 2018 , the estimated amortization expense relating to the intangible lease assets for each of the five succeeding fiscal years is as follows (in thousands): Amortization Expense In-Place Leases and Other Intangibles Above-Market Leases Remainder of 2018 $ 21,048 $ 3,146 2019 $ 38,152 $ 5,190 2020 $ 35,818 $ 4,614 2021 $ 32,394 $ 3,991 2022 $ 30,246 $ 3,663 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2018 | |
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. As of June 30, 2018 , the Company had 11 executed interest rate swap agreements. The following table summarizes the terms of the Company’s 10 interest rate swap agreements designated as hedging instruments effective as of June 30, 2018 and December 31, 2017 (dollar amounts in thousands): Outstanding Notional Fair Value of Assets Balance Sheet Amount as of Interest Effective Maturity June 30, December 31, Location June 30, 2018 Rates (1) Dates Dates 2018 2017 Interest Rate Swaps Derivative assets, prepaid expenses, revenue bonds and other assets (2) $1,005,066 2.55% to 4.75% 8/20/2013 to 9/1/2016 8/15/2018 to 7/1/2021 $5,613 $4,717 ____________________________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2018 . (2) As of December 31, 2017, two of the interest rate swaps, with an aggregate outstanding notional amount of $38.7 million , were in a liability position with an aggregate fair value balance of $206,000 and are included in deferred rental income and other liabilities in the accompanying condensed consolidated balance sheets. The Company entered into one interest rate swap agreement associated with a $811.7 million notional amount, effective on August 15, 2018. The following table summarizes the terms of this interest rate swap agreement designated as a hedging instrument as of June 30, 2018 and December 31, 2017 (dollar amounts in thousands): Outstanding Notional Fair Value of Assets Balance Sheet Amount as of Interest Effective Maturity June 30, December 31, Location June 30, 2018 Rate (1) Date Date 2018 2017 Interest Rate Swap Derivative assets, prepaid expenses, revenue bonds and other assets $811,666 3.77% 8/15/2018 3/15/2021 $13,840 $2,607 ____________________________________ (1) The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2018 . Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements. 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 derivative instruments that are designated as hedges is recorded in other comprehensive 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 months ended June 30, 2018 and 2017 , the amounts reclassified were a gain of $1.5 million and a loss of $951,000 , respectively, and for the six months ended June 30, 2018 and 2017 , the amounts reclassified were a gain of $2.0 million and a loss of $2.4 million , respectively. During the next 12 months, the Company estimates that an additional $5.5 million will be reclassified from other comprehensive income as a decrease to interest expense. 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 their aggregate termination value, inclusive of interest payments and accrued interest. As of June 30, 2018 , all derivatives were in an asset position. Therefore, there was no termination value as of June 30, 2018 . 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, 2018 . |
Notes Payable And Credit Facili
Notes Payable And Credit Facility | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND CREDIT FACILITY | NOTES PAYABLE AND CREDIT FACILITY As of June 30, 2018 , the Company had $2.4 billion of debt outstanding, including net deferred financing costs, with weighted average years to maturity of 3.8 years and a weighted average interest rate of 3.7% . 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 a loan not be repaid by its scheduled repayment date, the applicable interest rate will increase as specified in the respective loan agreement. The following table summarizes the debt balances as of June 30, 2018 and December 31, 2017 , and the debt activity for the six months ended June 30, 2018 (in thousands): During the Six Months Ended June 30, 2018 Balance as of December 31, 2017 Debt Issuances & Assumptions (1) Repayments Accretion and (Amortization) Balance as of Fixed rate debt $ 1,217,377 $ — $ (23,972 ) $ — $ 1,193,405 Variable rate debt 20,500 — — — 20,500 Credit facility 1,251,000 96,500 (98,500 ) — 1,249,000 Total debt 2,488,877 96,500 (122,472 ) — 2,462,905 Net premiums (2) 419 — — (43 ) 376 Deferred costs (3) (17,533 ) — — 2,231 (15,302 ) Total debt, net $ 2,471,763 $ 96,500 $ (122,472 ) $ 2,188 $ 2,447,979 ____________________________________ (1) Includes deferred financing costs incurred during the period. (2) Net premiums on mortgage notes payable were recorded upon the assumption of the respective debt instruments. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method. (3) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility (as defined below). As of June 30, 2018 , the fixed rate debt outstanding of $1.2 billion included $193.4 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date of the variable rate debt. The fixed rate debt has interest rates ranging from 2.6% to 5.0% per annum. The fixed rate debt outstanding matures on various dates from September 1, 2019 through October 1, 2025 . The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $2.1 billion as of June 30, 2018 . Each of the mortgage notes payable, comprising the fixed rate debt, is secured by the respective properties on which the debt was placed. As of June 30, 2018 , the variable rate debt outstanding of $20.5 million had a weighted average interest rate of 5.2% . The variable rate debt outstanding matures on February 26, 2020 . The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the variable rate debt outstanding was $40.8 million as of June 30, 2018 . The Company has a second amended and restated unsecured credit agreement (the “Second Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent (“JPMorgan Chase”), and the other lenders party thereto that provides for borrowings of up to $1.40 billion , which includes a $1.05 billion unsecured term loan (the “Term Loan”) and up to $350.0 million in unsecured revolving loans (the “Revolving Loans” and, collectively with the Term Loan, the “Credit Facility”). The Term Loan matures on March 15, 2022 and the Revolving Loans mature on March 15, 2021 ; however, the Company has the right to extend the maturity date of the Revolving Loans to March 15, 2022 . 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 1.65% to 2.25% or (ii) a base rate, ranging from 0.65% to 1.25% , plus the greater of: (a) JPMorgan Chase’s Prime Rate; (b) the Federal Funds Effective Rate (as defined in the Second Amended and Restated Credit Agreement) plus 0.50% ; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.00% . As of June 30, 2018 , the Revolving Loans outstanding totaled $199.0 million at a weighted average interest rate of 3.9% . As of June 30, 2018 , the Term Loan outstanding totaled $1.05 billion , $811.7 million of which is subject to interest rate swap agreements (the “Swapped Term Loan”). The interest rate swap agreements had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loan. As of June 30, 2018 , the weighted average all-in rate for the Swapped Term Loan was 3.2% . As of June 30, 2018 , the Company had $1.25 billion outstanding under the Credit Facility at a weighted average interest rate of 3.4% and $149.2 million in unused capacity, subject to borrowing availability. The Second Amended and Restated Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Second Amended and Restated Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the sum of (i) $2.0 billion plus (ii) 75% of the equity issued minus (iii) the aggregate amount of any redemptions or similar transaction from the date of the Second Amended and Restated Credit Agreement, a leverage ratio less than or equal to 60% , a fixed charge coverage ratio 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 , a secured debt ratio equal to or less than 40% and the amount of secured debt that is recourse debt at no greater than 15% of total asset value. The Company believes it was in compliance with the financial covenants under the Second Amended and Restated Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements, as of June 30, 2018 . Maturities The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to June 30, 2018 for each of the five succeeding fiscal years and the period thereafter (in thousands): Principal Repayments Remainder of 2018 $ 239 2019 49,799 2020 333,215 2021 299,603 2022 1,092,464 Thereafter 687,585 Total $ 2,462,905 |
Intangible Lease Liabilities
Intangible Lease Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
INTANGIBLE LEASE LIABILITIES | INTANGIBLE LEASE LIABILITIES Intangible lease liabilities of the Company consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands, except weighted average life): June 30, 2018 December 31, 2017 Acquired below-market leases, net of accumulated amortization of $35,256 and $31,330, respectively (with a weighted average life remaining of 7.1 years and 7.5 years, respectively) $ 40,579 $ 45,572 Amortization of below-market leases is recorded as an increase to rental revenue in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization of intangible lease liabilities for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Amortization of below-market leases $ 2,204 $ 2,292 $ 4,343 $ 4,571 As of June 30, 2018 , the estimated amortization of the intangible lease liabilities for each of the five succeeding fiscal years is as follows (in thousands): Amortization of Below-Market Leases Remainder of 2018 $ 4,198 2019 $ 7,415 2020 $ 6,611 2021 $ 4,489 2022 $ 3,724 |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW DISCLOSURES | SUPPLEMENTAL CASH FLOW DISCLOSURES Supplemental cash flow disclosures for the six months ended June 30, 2018 and 2017 are as follows (in thousands): Six Months Ended June 30, 2018 2017 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Distributions declared and unpaid $ 15,994 $ 16,003 Accrued capital expenditures $ 645 $ 605 Common stock issued through distribution reinvestment plan $ 47,067 $ 51,673 Change in fair value of interest rate swaps $ 12,335 $ 136 Supplemental Cash Flow Disclosures: Interest paid $ 45,008 $ 41,178 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
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. 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, 2018 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS The Company has incurred fees and expenses payable to CR IV Advisors and certain of its affiliates in connection with the acquisition, management and disposition of its assets. Acquisition fees and expenses The Company pays CR IV Advisors or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset the Company acquires; (2) the amount paid in respect of the development, construction or improvement of each asset the Company acquires; (3) the purchase price of any loan the Company acquires; and (4) the principal amount of any loan the Company originates. In addition, the Company reimburses CR IV Advisors or its affiliates for acquisition-related expenses incurred in the process of acquiring properties, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of the Board, including a majority of the Company’s independent directors, as commercially competitive, fair and reasonable to the Company. Advisory fees and expenses The Company pays CR IV Advisors a monthly advisory fee based upon the Company’s monthly average invested assets, which, effective January 1, 2018, is based on the estimated market value of such assets used to determine the Company’s estimated per share NAV as of December 31, 2017, as discussed in Note 1 — Organization and Business, and for those assets acquired subsequent to December 31, 2017, is based on the purchase price. The monthly advisory fee is equal to the following amounts: (1) an annualized rate of 0.75% paid on the Company’s average invested assets that are between $0 and $2.0 billion ; (2) an annualized rate of 0.70% paid on the Company’s average invested assets that are between $2.0 billion and $4.0 billion ; and (3) an annualized rate of 0.65% paid on the Company’s average invested assets that are over $4.0 billion . Operating expenses The Company reimburses CR IV Advisors or its affiliates for certain expenses CR IV Advisors or its affiliates paid or incurred in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse CR IV Advisors or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed the greater of: (1) 2.0% of average invested assets, or (2) 25.0% of net income excluding 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. The Company will not reimburse CR IV Advisors or its affiliates for the salaries and benefits paid to personnel in connection with the services for which CR IV Advisors receives acquisition fees, and the Company will not reimburse CR IV Advisors for salaries and benefits paid to the Company’s executive officers. Disposition fees If CR IV Advisors or its affiliates provide a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more properties (or the Company’s entire portfolio), the Company will pay CR IV Advisors or its affiliates a disposition fee in an amount equal to up to one-half of the real estate or brokerage commission paid by the Company to third parties on the sale of such property, not to exceed 1.0% of the contract price of the property sold; provided, however, in no event may the total disposition fees paid to CR IV Advisors, its affiliates and unaffiliated third parties exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. During the three and six months ended June 30, 2018 and 2017 , no disposition fees were incurred for any such services provided by CR IV Advisors or its affiliates. Subordinated performance fees If the Company is sold or its assets are liquidated, CR IV Advisors will be entitled to receive a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after stockholders have received, from regular distributions plus special distributions paid from proceeds of such sale, a return of their net capital invested and an 8.0% annual cumulative, non-compounded return. Alternatively, if the Company’s shares are listed on a national securities exchange, CR IV Advisors will be entitled to a subordinated performance fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing, exceeds the sum of the total amount of capital raised from stockholders and the amount of distributions necessary to generate an 8.0% annual cumulative, non-compounded return to stockholders. As an additional alternative, upon termination of the advisory agreement, CR IV Advisors may be entitled to a subordinated performance fee similar to the fee to which CR IV Advisors would have been entitled had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. During the three and six months ended June 30, 2018 and 2017 , no subordinated performance fees were incurred related to any such events. The Company recorded fees and expense reimbursements as shown in the table below for services provided by CR IV Advisors or its affiliates related to the services described above during the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Acquisition fees and expenses $ 168 $ 2,686 $ 198 $ 3,998 Advisory fees and expenses $ 10,855 $ 10,903 $ 21,443 $ 21,714 Operating expenses $ 1,466 $ 1,096 $ 2,486 $ 2,423 Of the amounts shown above, $2.1 million and $1.3 million had been incurred, but not yet paid, for services provided by CR IV Advisors or its affiliates in connection with the acquisition and operations activities during the six months ended June 30, 2018 and 2017 , respectively, and such amounts were recorded as liabilities of the Company as of such dates. Due to/from Affiliates As of June 30, 2018 and December 31, 2017 , $2.1 million and $2.0 million , respectively, had been incurred primarily for advisory fees and operating expenses by CR IV Advisors or its affiliates, but had not yet been reimbursed by the Company. These amounts were included in due to affiliates in the condensed consolidated balance sheets for such periods. As of December 31, 2017 , $56,000 was due from CR IV Advisors or its affiliates related to amounts received by affiliates of the advisor which were due to the Company. No such amounts were due to the Company as of June 30, 2018 . |
Economic Dependency
Economic Dependency | 6 Months Ended |
Jun. 30, 2018 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | ECONOMIC DEPENDENCY Under various agreements, the Company has engaged and may in the future engage CR IV 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, as well as other administrative responsibilities for the Company including accounting services and stockholder relations. As a result of these relationships, the Company is dependent upon CR IV 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. Services Agreement Pursuant to the Services Agreement, VEREIT OP will continue to provide certain services to CCO Group and to the Company, including operational real estate support. VEREIT OP will continue to provide such services through March 31, 2019 (or, if later, the date of the last government filing other than a tax filing made by any of the Cole REITs with respect to its 2018 fiscal year) and will provide consulting and research services through December 31, 2023 as requested by CCO Group, LLC. Despite the indirect change of ownership and control of the Company’s advisor, dealer manager, property manager and sponsor, the Company expects that, during the Initial Services Term of the Services Agreement, the advisory, dealer manager and property management services the Company receives will continue without any material changes in personnel (except as supplemented by the management oversight of CIM personnel) or material change in service procedures. During the Initial Services Term of the Services Agreement, CCO Group, LLC intends to evaluate and effectuate an appropriate transition of VEREIT OP’s services under the Services Agreement to other CIM affiliates or third parties with the goal of ensuring continuity and minimizing disruption. |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
OPERATING LEASES | OPERATING LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms and expirations vary. As of June 30, 2018 , the leases had a weighted-average remaining term of 9.3 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. As of June 30, 2018 , the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands): Future Minimum Rental Income Remainder of 2018 $ 178,858 2019 349,857 2020 338,137 2021 321,258 2022 304,685 Thereafter 1,968,622 Total $ 3,461,417 A certain amount of the Company’s rental income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels. For the six months ended June 30, 2018 and 2017 , the amount of the contingent rent earned by the Company was not significant . |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The following events occurred subsequent to June 30, 2018 : Redemption of Shares of Common Stock Subsequent to June 30, 2018 , the Company redeemed approximately 2.5 million shares pursuant to the Company’s share redemption program for $23.2 million (at an average price per share of $9.37 ). Management, in its discretion, limited the amount of shares redeemed for the three months ended June 30, 2018 to shares issued in the DRIP Offerings during the respective period. The remaining redemption requests received during the three months ended June 30, 2018 totaling approximately 14.9 million shares went unfulfilled. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated 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 financial statements. |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by 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, 2017 , and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The condensed consolidated 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 financial statements include the accounts of the Company, 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 condensed 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, 2018 and December 31, 2017 , the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for consolidation. |
Reclassifications | Reclassifications In connection with the adoption of Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), certain reclassifications have been made to prior period balances to conform to the current presentation in the condensed consolidated statements of cash flows. Under ASU 2016-15, the Company reclassified $41,000 of proceeds from the settlement of insurance claims from cash flows from operating activities to cash flows from investing activities for the six months ended June 30, 2017 . Under ASU 2016-18, transfers to or from restricted cash, which have previously been shown in the Company’s investing activities section of the condensed consolidated statements of cash flows, are now required to be shown as part of the total change in cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows. This change resulted in a decrease in cash flows from investing activities of $1.7 million during the six months ended June 30, 2017 . The Company adopted ASU 2017-12, as defined in “Recent Accounting Pronouncements,” during the first quarter of fiscal year 2018. Accordingly, for the six months ended June 30, 2018 , the Company recorded a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of accumulated distributions in excess of earnings of $488,000 . |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Assets, Recoverability of Real Estate Assets, and Assets Held for Sale | Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. 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; changes in anticipated holding periods; 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 is 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, 2018 or 2017 . The Company is in the process of determining if anticipated holding periods for certain properties may materially differ from the initial intended holding periods for such properties, which could result in an impairment charge in the future. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its 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 is then recorded to reflect the estimated fair value of the property, net of selling costs. |
Allocation of Purchase Price of Real Estate Assets | Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price 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 and other intangibles, 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. In April 2017, the Company elected to early adopt 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. Beginning in April 2017, all real estate acquisitions qualified as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities, as described above. Prior to the adoption of ASU 2017-01 in April 2017, all of the Company’s real estate acquisitions were accounted for as business combinations and, as such, acquisition-related expenses related to these business combination acquisitions were expensed as incurred. Prior to April 2017, acquisition-related expenses in the Company’s condensed consolidated statements of operations primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. The Company expects its future acquisitions to qualify as asset acquisitions and, as such, the Company will allocate the purchase price to acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. |
Investment in Held-to-Maturity Securities | Investment in Held-to-Maturity Securities The Company has investments classified as held-to-maturity securities, which consist of revenue bonds acquired in connection with the purchase of an anchored shopping center. The bonds have a 9.0% interest rate and mature on November 1, 2044. As of June 30, 2018 , the Company classified these investments as held-to-maturity as the Company has the intent and ability to hold the securities to maturity. These investments are initially recognized in derivative assets, prepaid expenses, revenue bonds and other assets on the condensed consolidated balance sheets and are subsequently measured using amortized cost. The Company’s investments in revenue bonds are reviewed for impairment, including the evaluation of changes in events or circumstances that may indicate that the carrying amount of the investment may not be recoverable. Realization is dependent on a number of factors, including investment performance, market conditions and payment structure. The Company will record an impairment charge if it is determined that a decline in the value of the investment below its carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment will be held to maturity. 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. |
Redeemable Noncontrolling Interest in Consolidated Joint Venture | Redeemable Noncontrolling Interest in Consolidated Joint Venture On June 27, 2014 , the Company completed the formation of the Consolidated Joint Venture. Pursuant to the joint venture agreement, the joint venture partner has a right to exercise an option (the “Option”), which became effective on June 27, 2016 , whereby the Company will be required to purchase the ownership interest of the joint venture partner at fair market value. As of June 30, 2018 , the Option has not been exercised. The Compa ny 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 $67,000 and paid distributions of $134,000 related to the noncontrolling interest during the six months ended June 30, 2018 . The Company recorded the noncontrolling interest of $2.3 million and $2.4 million as of June 30, 2018 and December 31, 2017 , respectively, as temporary equity in the mezzanine section of the condensed consolidated balance sheets, due to the ability to exercise the Option being outside the control of the Company. |
Restricted Cash | Restricted Cash The Company had $9.9 million and $9.1 million in restricted cash as of June 30, 2018 and December 31, 2017 , respectively. Included in restricted cash was $3.4 million and $3.7 million held by lenders in lockbox accounts, as of June 30, 2018 and December 31, 2017 , respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Also included in restricted cash was $6.5 million and $5.4 million held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement, as of June 30, 2018 and December 31, 2017 , respectively. |
Revenue Recognition | Revenue Recognition Certain properties have leases where the minimum rental payment increases 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. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (“ASC”) Topic 605 and requires 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. The Company records revenue for real estate taxes and insurance reimbursed by its tenants on the leased properties, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations as the Company has concluded it is the primary obligor. The Company has identified its revenue streams as rental income from leasing arrangements and tenant reimbursement income, which are outside of the scope of Topic 606. The Company adopted ASU 2014-09 using the modified retrospective approach and determined it does not have a material impact on the Company’s condensed consolidated financial statements. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants, and determines their 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. |
Recent Accounting Pronouncements | 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 new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require that most lease obligations be recognized as a right of use asset with a corresponding liability on the balance sheet. The guidance also requires additional qualitative and quantitative disclosures to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 and subsequent amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The guidance, including optional practical expedients, should be implemented for the earliest period presented using a modified retrospective approach. The Company is currently in the process of assessing the inventory of its leases that will be impacted by adoption of the new guidance. The Company does not expect the adoption to have a material impact on the accounting treatment of the Company’s net leases, which are the primary source of the Company’s revenues. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) . The targeted amendments in this ASU are designed to help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. ASU 2017-12 applies to the Company’s interest rate swaps designated as cash flow hedges. Upon adoption of ASU 2017-12, all changes in the fair value of highly effective cash flow hedges will be recorded in accumulated other comprehensive income rather than recognized directly in earnings. Under current GAAP, the ineffective portion of the change in fair value of cash flow hedges is recognized directly in earnings. This eliminates the requirement to separately measure and disclose ineffectiveness for qualifying cash flow hedges. ASU 2017-12 is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2017-12 is required to be adopted using a modified retrospective approach with early adoption permitted. The Company adopted ASU 2017-12 during the first quarter of fiscal year 2018. Accordingly, during the six months ended June 30, 2018 , the Company recorded a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of accumulated distributions in excess of earnings of $488,000 . |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Useful Lives of Real Estate 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 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | 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, 2018 and December 31, 2017 (in thousands): Balance as of Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets: Interest rate swaps $ 19,453 $ — $ 19,453 $ — Total financial assets $ 19,453 $ — $ 19,453 $ — Balance as of Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets: Interest rate swaps $ 7,324 $ — $ 7,324 $ — Total financial assets $ 7,324 $ — $ 7,324 $ — Financial liabilities: Interest rate swaps $ (206 ) $ — $ (206 ) $ — Total financial liabilities $ (206 ) $ — $ (206 ) $ — |
Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following are reconciliations of the changes in financial assets and liabilities with Level 3 inputs in the fair value hierarchy for the six months ended June 30, 2018 and 2017 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beginning Balance, December 31, 2017 $ 2,067 Revenue bond payments received (5 ) Ending Balance, June 30, 2018 $ 2,062 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beginning Balance, December 31, 2016 $ (337 ) Purchases and fair value adjustments: Revenue bond purchases 2,081 Contingent consideration fair value adjustments 250 Ending Balance, June 30, 2017 $ 1,994 |
Real Estate Assets (Tables)
Real Estate Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Real Estate Properties | The following table summarizes the consideration transferred for the properties purchased during the six months ended June 30, 2017 (in thousands): 2017 Acquisitions Real estate assets: Purchase price of asset acquisitions $ 131,281 Purchase price of business combinations 55,386 Total purchase price of real estate assets acquired (1) $ 186,667 ______________________ (1) The weighted average amortization period for the 2017 Acquisitions is 12.3 years for acquired in-place leases and other intangibles, 13.6 years for acquired above-market leases and 8.2 years for acquired intangible lease liabilities. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the purchase price allocation for the 2017 Asset Acquisitions purchased during the six months ended June 30, 2017 (in thousands): 2017 Asset Acquisitions Land $ 14,382 Buildings, fixtures and improvements 100,711 Acquired in-place leases and other intangibles 13,799 Acquired above-market leases 3,531 Revenue bonds 2,081 Intangible lease liabilities (3,223 ) Total purchase price $ 131,281 The following table summarizes the 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 $ 9,873 Buildings, fixtures and improvements 41,186 Acquired in-place leases and other intangibles 5,974 Acquired above-market leases 988 Intangible lease liabilities (2,635 ) Total purchase price $ 55,386 |
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 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Pro forma basis: Revenue $ 104,504 $ 101,918 $ 209,595 $ 203,724 Net income $ 18,075 $ 19,324 $ 35,378 $ 38,366 |
Intangible Lease Assets (Tables
Intangible Lease Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | Intangible lease assets consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands, except weighted average life remaining): June 30, 2018 December 31, 2017 In-place leases and other intangibles, net of accumulated amortization of $185,536 and $166,874, respectively (with a weighted average life remaining of 10.2 years and 10.5 years, respectively) $ 330,352 $ 355,683 Acquired above-market leases, net of accumulated amortization of $28,747 and $25,626, respectively (with a weighted average life remaining of 8.4 years and 8.7 years, respectively) 38,044 41,747 $ 368,396 $ 397,430 |
Schedule of finite-lived intangible assets amortization expense | The following table summarizes the amortization expense related to the intangible lease assets for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 In-place lease and other intangible amortization $ 13,618 $ 11,421 $ 24,613 $ 22,835 Above-market lease amortization $ 1,973 $ 1,825 $ 3,703 $ 3,622 |
Schedule of finite-lived intangible assets, future amortization expense | As of June 30, 2018 , the estimated amortization expense relating to the intangible lease assets for each of the five succeeding fiscal years is as follows (in thousands): Amortization Expense In-Place Leases and Other Intangibles Above-Market Leases Remainder of 2018 $ 21,048 $ 3,146 2019 $ 38,152 $ 5,190 2020 $ 35,818 $ 4,614 2021 $ 32,394 $ 3,991 2022 $ 30,246 $ 3,663 |
Derivative Instruments and He27
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table summarizes the terms of the Company’s 10 interest rate swap agreements designated as hedging instruments effective as of June 30, 2018 and December 31, 2017 (dollar amounts in thousands): Outstanding Notional Fair Value of Assets Balance Sheet Amount as of Interest Effective Maturity June 30, December 31, Location June 30, 2018 Rates (1) Dates Dates 2018 2017 Interest Rate Swaps Derivative assets, prepaid expenses, revenue bonds and other assets (2) $1,005,066 2.55% to 4.75% 8/20/2013 to 9/1/2016 8/15/2018 to 7/1/2021 $5,613 $4,717 ____________________________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2018 . (2) As of December 31, 2017, two of the interest rate swaps, with an aggregate outstanding notional amount of $38.7 million , were in a liability position with an aggregate fair value balance of $206,000 and are included in deferred rental income and other liabilities in the accompanying condensed consolidated balance sheets. The Company entered into one interest rate swap agreement associated with a $811.7 million notional amount, effective on August 15, 2018. The following table summarizes the terms of this interest rate swap agreement designated as a hedging instrument as of June 30, 2018 and December 31, 2017 (dollar amounts in thousands): Outstanding Notional Fair Value of Assets Balance Sheet Amount as of Interest Effective Maturity June 30, December 31, Location June 30, 2018 Rate (1) Date Date 2018 2017 Interest Rate Swap Derivative assets, prepaid expenses, revenue bonds and other assets $811,666 3.77% 8/15/2018 3/15/2021 $13,840 $2,607 ____________________________________ (1) The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2018 . |
Notes Payable And Credit Faci28
Notes Payable And Credit Facility (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the debt balances as of June 30, 2018 and December 31, 2017 , and the debt activity for the six months ended June 30, 2018 (in thousands): During the Six Months Ended June 30, 2018 Balance as of December 31, 2017 Debt Issuances & Assumptions (1) Repayments Accretion and (Amortization) Balance as of Fixed rate debt $ 1,217,377 $ — $ (23,972 ) $ — $ 1,193,405 Variable rate debt 20,500 — — — 20,500 Credit facility 1,251,000 96,500 (98,500 ) — 1,249,000 Total debt 2,488,877 96,500 (122,472 ) — 2,462,905 Net premiums (2) 419 — — (43 ) 376 Deferred costs (3) (17,533 ) — — 2,231 (15,302 ) Total debt, net $ 2,471,763 $ 96,500 $ (122,472 ) $ 2,188 $ 2,447,979 ____________________________________ (1) Includes deferred financing costs incurred during the period. (2) Net premiums on mortgage notes payable were recorded upon the assumption of the respective debt instruments. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method. (3) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility (as defined below). |
Schedule of Maturities of Long-term Debt | The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to June 30, 2018 for each of the five succeeding fiscal years and the period thereafter (in thousands): Principal Repayments Remainder of 2018 $ 239 2019 49,799 2020 333,215 2021 299,603 2022 1,092,464 Thereafter 687,585 Total $ 2,462,905 |
Intangible Lease Liabilities (T
Intangible Lease Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of finite-lived intangible liabilities | Intangible lease liabilities of the Company consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands, except weighted average life): June 30, 2018 December 31, 2017 Acquired below-market leases, net of accumulated amortization of $35,256 and $31,330, respectively (with a weighted average life remaining of 7.1 years and 7.5 years, respectively) $ 40,579 $ 45,572 |
Schedule of amortization expense of below market lease | The following table summarizes the amortization of intangible lease liabilities for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Amortization of below-market leases $ 2,204 $ 2,292 $ 4,343 $ 4,571 |
Schedule of finite-lived intangible liabilities, future amortization expense | As of June 30, 2018 , the estimated amortization of the intangible lease liabilities for each of the five succeeding fiscal years is as follows (in thousands): Amortization of Below-Market Leases Remainder of 2018 $ 4,198 2019 $ 7,415 2020 $ 6,611 2021 $ 4,489 2022 $ 3,724 |
Supplemental Cash Flow Disclo30
Supplemental Cash Flow Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Supplemental cash flow disclosures for the six months ended June 30, 2018 and 2017 are as follows (in thousands): Six Months Ended June 30, 2018 2017 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Distributions declared and unpaid $ 15,994 $ 16,003 Accrued capital expenditures $ 645 $ 605 Common stock issued through distribution reinvestment plan $ 47,067 $ 51,673 Change in fair value of interest rate swaps $ 12,335 $ 136 Supplemental Cash Flow Disclosures: Interest paid $ 45,008 $ 41,178 |
Related Party Transactions and
Related Party Transactions and Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The Company recorded fees and expense reimbursements as shown in the table below for services provided by CR IV Advisors or its affiliates related to the services described above during the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Acquisition fees and expenses $ 168 $ 2,686 $ 198 $ 3,998 Advisory fees and expenses $ 10,855 $ 10,903 $ 21,443 $ 21,714 Operating expenses $ 1,466 $ 1,096 $ 2,486 $ 2,423 |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Schedule of future minimum rental payments for operating leases | As of June 30, 2018 , the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands): Future Minimum Rental Income Remainder of 2018 $ 178,858 2019 349,857 2020 338,137 2021 321,258 2022 304,685 Thereafter 1,968,622 Total $ 3,461,417 |
Organization and Business (Deta
Organization and Business (Details) $ / shares in Units, ft² in Millions | Apr. 04, 2014shares | Feb. 18, 2014USD ($)$ / sharesshares | Nov. 25, 2013USD ($) | Jun. 30, 2018USD ($)ft²statepropertyshares | Jun. 30, 2016USD ($) | Dec. 31, 2017$ / sharesshares | Jun. 30, 2017USD ($) | Dec. 31, 2016$ / shares | Nov. 13, 2016$ / shares | Sep. 30, 2016$ / shares | Aug. 02, 2016USD ($) | Sep. 30, 2015$ / shares | Sep. 27, 2015$ / shares | Dec. 19, 2013USD ($) | Jan. 26, 2012USD ($) |
Organization and business [Line Items] | |||||||||||||||
Common stock, shares authorized (shares) | 490,000,000 | 490,000,000 | |||||||||||||
Issuance of common stock | $ | $ 47,067,000 | ||||||||||||||
Common stock, shares outstanding (shares) | 311,501,575 | 311,582,319 | |||||||||||||
Number of owned properties (property) | property | 897 | ||||||||||||||
Rentable square feet (sqft) | ft² | 26.8 | ||||||||||||||
Number of states in which entity owns properties (state) | state | 45 | ||||||||||||||
Percentage of rentable space leased | 96.30% | ||||||||||||||
Consolidated Properties | |||||||||||||||
Organization and business [Line Items] | |||||||||||||||
Number of owned properties (property) | property | 9 | ||||||||||||||
The Share Redemption Program | |||||||||||||||
Organization and business [Line Items] | |||||||||||||||
Net asset value per share (USD per share) | $ / shares | $ 9.37 | $ 10.08 | $ 9.92 | ||||||||||||
IPO | |||||||||||||||
Organization and business [Line Items] | |||||||||||||||
Common stock, shares authorized, value (maximum) | $ | $ 2,975,000,000 | ||||||||||||||
Common stock, shares authorized, value reallocated | $ | $ 23,000,000 | $ 400,000,000 | |||||||||||||
Common stock, shares authorized (shares) | 292,300,000 | ||||||||||||||
Share price (USD per share) | $ / shares | $ 10 | $ 9.70 | |||||||||||||
Issuance of common stock (shares) | 297,400,000 | ||||||||||||||
Shares subscribed and issued (shares) | 292,300,000 | ||||||||||||||
Unsold shares deregistered (shares) | 404,000 | ||||||||||||||
Issuance of common stock | $ | $ 3,400,000,000 | ||||||||||||||
Net asset value per share (USD per share) | $ / shares | $ 9.92 | ||||||||||||||
Common stock, shares outstanding (shares) | 344,100,000 | ||||||||||||||
Offering costs, selling commissions, and dealer management fees | $ | $ 306,000,000 | ||||||||||||||
Distribution reinvestment plan | |||||||||||||||
Organization and business [Line Items] | |||||||||||||||
Common stock, shares authorized (shares) | 5,500,000 | ||||||||||||||
Share price (USD per share) | $ / shares | $ 9.5 | $ 9.70 | $ 9.50 | ||||||||||||
Shares subscribed and issued (shares) | 5,100,000 | ||||||||||||||
Common stock shares registered dividend reinvestment plan, value | $ | $ 600,000,000 | $ 247,000,000 | |||||||||||||
Issuance of common stock | $ | $ 241,700,000 | ||||||||||||||
Shares deregistered, value | $ | $ 5,300,000 | ||||||||||||||
Common stock, shares outstanding (shares) | 45,800,000 | ||||||||||||||
CCPT IV OP | |||||||||||||||
Organization and business [Line Items] | |||||||||||||||
General partner partnership interest percentage | 100.00% |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Reclassifications) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease in net cash provided by operating activities | $ (109,620) | $ (106,120) | |
Increase (decrease) in net cash provided by (used in) investing activities | $ 14,764 | (175,438) | |
ASU 2016-15 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease in net cash provided by operating activities | 41 | ||
Increase (decrease) in net cash provided by (used in) investing activities | 41 | ||
ASU 2016-18 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase (decrease) in net cash provided by (used in) investing activities | $ (1,700) | ||
ASU 2017-12 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Adjustment to opening balance of accumulated distribution in excess of earnings | $ 488 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Real Estate Investment and Investment in Held-to-Maturity Securities) (Details) | 6 Months Ended | ||
Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($) | Dec. 31, 2017property | |
Real Estate Properties [Line Items] | |||
Impairment | $ | $ 0 | $ 0 | |
Number of real estate property held for sale | property | 0 | 0 | |
Building | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life | 40 years | ||
Site improvements | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life | 15 years | ||
Held-to-maturity revenue bonds | |||
Real Estate Properties [Line Items] | |||
Stated interest rate (percent) | 9.00% |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Redeemable Noncontrolling Interest in Consolidated Joint Venture) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||||
Net income allocated to noncontrolling interest | $ 33 | $ 32 | $ 67 | $ 66 | |
Payments to Noncontrolling Interests | 134 | $ 142 | |||
Noncontrolling interest | $ 2,300 | $ 2,300 | $ 2,400 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Restricted Cash) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 9,913 | $ 9,098 | $ 9,695 |
Restricted cash, held by lenders in lockbox accounts | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | 3,400 | 3,700 | |
Restricted cash, held by lenders in escrow | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 6,500 | $ 5,400 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Revenue Recognition) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts receivable | $ 720 | $ 1,500 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Significant Other Observable Inputs (Level 2) | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument fair value disclosure | $ 2,440 | $ 2,480 |
Significant Other Observable Inputs (Level 2) | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument fair value disclosure | $ 2,460 | $ 2,490 |
Significant Unobservable Inputs (Level 3) | Investments | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value inputs, discount rate | 7.75% | |
Significant Unobservable Inputs (Level 3) | Investments | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value inputs, discount rate | 9.00% | |
Significant Unobservable Inputs (Level 3) | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Revenue bonds | $ 2.1 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps | $ 19,453 | $ 7,324 |
Total financial assets | 19,453 | 7,324 |
Interest rate swaps | (206) | |
Total financial liabilities | (206) | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps | 0 | 0 |
Total financial assets | 0 | 0 |
Interest rate swaps | 0 | |
Total financial liabilities | 0 | |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps | 19,453 | 7,324 |
Total financial assets | 19,453 | 7,324 |
Interest rate swaps | (206) | |
Total financial liabilities | (206) | |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps | 0 | 0 |
Total financial assets | $ 0 | 0 |
Interest rate swaps | 0 | |
Total financial liabilities | $ 0 |
Fair Value Measurements (Sche41
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | $ 2,067 | $ (337) |
Revenue bond payments received | (5) | |
Revenue bond purchases | 2,081 | |
Contingent consideration fair value adjustments | 250 | |
Ending Balance | $ 2,062 | $ 1,994 |
Real Estate Assets (Narrative)
Real Estate Assets (Narrative) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($)property | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||||
Number of properties acquired | property | 27 | ||||
Total purchase price | $ 186,700 | $ 186,700 | |||
Below market lease, weighted average useful life | 7 years 1 month 5 days | 8 years 2 months 5 days | 7 years 6 months | ||
Acquisition costs | $ 168 | 163 | $ 203 | $ 1,410 | |
2018 Acquisitions | |||||
Business Acquisition [Line Items] | |||||
Number of businesses acquired (property) | property | 0 | ||||
2017 Acquisitions | |||||
Business Acquisition [Line Items] | |||||
Number of businesses acquired (property) | property | 4 | ||||
Purchase price of business combinations | 55,386 | $ 55,386 | |||
Business combination, pro forma information, revenue of acquiree since acquisition date, actual | 1,300 | 2,300 | |||
Business combination, pro forma information, earnings (loss) of acquiree since acquisition date, actual | 558 | (328) | |||
Acquisition costs | 25 | 1,300 | |||
2017 Asset Acquisitions | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | 131,281 | $ 131,281 | |||
Number of properties acquired | property | 23 | ||||
External acquisition-related expense | $ 3,400 | $ 3,400 | |||
Acquired in-place leases | |||||
Business Acquisition [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years 3 months | ||||
Acquired above-market leases | |||||
Business Acquisition [Line Items] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 13 years 6 months 20 days |
Real Estate Assets (Property Di
Real Estate Assets (Property Dispositions and Real Estate Assets Held for Sale) (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($)property | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from disposition of properties | $ 17,425,000 | $ 16,973,000 | ||
Gain on disposition of real estate, net | $ 1,987,000 | $ 1,452,000 | $ 2,251,000 | $ 1,452,000 |
Property Disposition 2018 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of properties disposed | property | 12 | |||
Aggregate gross sales price | $ 17,900,000 | |||
Proceeds from disposition of properties | 17,400,000 | |||
Gain on disposition of real estate, net | 2,300,000 | |||
Property Dispositions, 2017 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of properties disposed | property | 11 | |||
Aggregate gross sales price | $ 17,700,000 | |||
Proceeds from disposition of properties | 17,000,000 | |||
Gain on disposition of real estate, net | 1,500,000 | |||
Affiliated entity | Disposition fee | Property Disposition 2018 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Disposition fees paid | $ 0 | |||
Affiliated entity | Disposition fee | Property Dispositions, 2017 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Disposition fees paid | $ 0 |
Real Estate Assets (Purchase Pr
Real Estate Assets (Purchase Price of Real Estate Investment) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Business Acquisition [Line Items] | |||
Purchase price of asset acquisitions | $ 186,700 | ||
Total purchase price of real estate investments acquired | $ 5,133,987 | $ 5,154,522 | |
2017 Acquisitions | |||
Business Acquisition [Line Items] | |||
Purchase price of business combinations | 55,386 | ||
Total purchase price of real estate investments acquired | 186,667 | ||
2017 Asset Acquisitions | |||
Business Acquisition [Line Items] | |||
Purchase price of asset acquisitions | $ 131,281 |
Real Estate Assets (Schedule of
Real Estate Assets (Schedule of Recognized Identified Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Business Acquisition [Line Items] | |||
Land | $ 1,190,358 | $ 1,193,029 | |
Total purchase price | $ 186,700 | ||
2017 Acquisitions | |||
Business Acquisition, Purchase Price Allocation [Abstract] | |||
Land | 9,873 | ||
Buildings, fixtures and improvements | 41,186 | ||
Intangible lease liabilities | (2,635) | ||
Total purchase price | 55,386 | ||
Acquired in-place leases and other intangibles | 2017 Acquisitions | |||
Business Acquisition, Purchase Price Allocation [Abstract] | |||
Acquired finite-lived intangible asset - leases, amount | 5,974 | ||
Acquired above-market leases | 2017 Acquisitions | |||
Business Acquisition, Purchase Price Allocation [Abstract] | |||
Acquired finite-lived intangible asset - leases, amount | 988 | ||
2017 Asset Acquisitions | |||
Business Acquisition [Line Items] | |||
Land | 14,382 | ||
Buildings and Improvements, Gross | 100,711 | ||
Acquired in-place leases and other intangibles | 13,799 | ||
Acquired above-market leases | 3,531 | ||
Revenue bonds | 2,081 | ||
Intangible Lease Liability | (3,223) | ||
Total purchase price | $ 131,281 |
Real Estate Assets (Business Ac
Real Estate Assets (Business Acquisition, Pro Forma Information) (Details) - 2017 Acquisitions - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pro forma basis (unaudited) | ||||
Revenue | $ 104,504 | $ 101,918 | $ 209,595 | $ 203,724 |
Net income | $ 18,075 | $ 19,324 | $ 35,378 | $ 38,366 |
Real Estate Assets (Consolidate
Real Estate Assets (Consolidated Joint Venture) (Details) $ in Thousands | Jun. 30, 2018USD ($)property | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | ||
Number of owned properties (property) | property | 897 | |
Assets | $ 4,654,640 | $ 4,728,689 |
Land | 1,190,358 | 1,193,029 |
Liabilities | $ 2,546,191 | $ 2,572,024 |
Consolidated Properties | ||
Business Acquisition [Line Items] | ||
Number of owned properties (property) | property | 9 | |
Consolidated Joint Venture | ||
Business Acquisition [Line Items] | ||
Assets | $ 51,600 | |
Land | 9,300 | |
Buildings and improvements | 42,000 | |
Intangible lease assets | 5,600 | |
Accumulated depreciation and amortization | 6,000 | |
Liabilities | $ 503 | |
Consolidated Joint Venture | Consolidated Properties | ||
Business Acquisition [Line Items] | ||
Number of owned properties (property) | property | 9 |
Intangible Lease Assets (Detail
Intangible Lease Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible leased assets | $ 368,396 | $ 397,430 |
Acquired in-place leases and other intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible leased assets | 330,352 | 355,683 |
Accumulated amortization | $ 185,536 | $ 166,874 |
Useful life | 10 years 2 months 11 days | 10 years 6 months |
Acquired above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible leased assets | $ 38,044 | $ 41,747 |
Accumulated amortization | $ 28,747 | $ 25,626 |
Useful life | 8 years 4 months 24 days | 8 years 8 months 11 days |
Intangible Lease Assets (Schedu
Intangible Lease Assets (Schedule of finite-lived intangible assets amortization expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Acquired in-place leases and other intangibles | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 13,618 | $ 11,421 | $ 24,613 | $ 22,835 |
Acquired above-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 1,973 | $ 1,825 | $ 3,703 | $ 3,622 |
Intangible Lease Assets (Estima
Intangible Lease Assets (Estimated Amortization of Intangible lease assets) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Acquired in-place leases and other intangibles | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2018 | $ 21,048 |
2,019 | 38,152 |
2,020 | 35,818 |
2,021 | 32,394 |
2,022 | 30,246 |
Acquired above-market leases | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2018 | 3,146 |
2,019 | 5,190 |
2,020 | 4,614 |
2,021 | 3,991 |
2,022 | $ 3,663 |
Derivative Instruments and He51
Derivative Instruments and Hedging Activities (Narrative) (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)derivative | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)derivative | Jun. 30, 2017USD ($) | Dec. 31, 2017derivative | |
Derivatives, Fair Value [Line Items] | |||||
Amount of (gain) loss reclassified from other comprehensive income into income as interest expense and other, net | $ 1,460,000 | $ (951,000) | $ 2,001,000 | $ (2,410,000) | |
Interest Rate Swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of interest rate derivatives held (derivative) | derivative | 11 | 11 | |||
Cash Flow Hedging | Interest Rate Swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of interest rate derivatives held (derivative) | derivative | 10 | 10 | 10 | ||
Number of interest rate swaps entered into (derivative) | derivative | 1 | ||||
Derivative liability, event of default, termination amount | $ 0 | $ 0 | |||
Cash Flow Hedging | Interest Rate Swap | Interest Expense | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months | 5,500,000 | 5,500,000 | |||
Cash Flow Hedging | One Interest Rate Swap | Derivative assets, prepaid expenses, revenue bonds and other assets | |||||
Derivatives, Fair Value [Line Items] | |||||
Outstanding notional amount | $ 811,666,000 | $ 811,666,000 |
Derivative Instruments and He52
Derivative Instruments and Hedging Activities (Schedule of Derivative Instruments) (Details) $ in Thousands | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($)derivative |
Deferred rental income and other liabilities | ||
Derivative [Line Items] | ||
Number of derivative instrument in liability position | derivative | 2 | |
Outstanding notional amount | $ 38,700 | |
Derivative liability, fair value | 206 | |
Cash Flow Hedging | Derivative assets, prepaid expenses, revenue bonds and other assets | Ten Interest Rate Swap | ||
Derivative [Line Items] | ||
Outstanding notional amount | $ 1,005,066 | |
Fair value of assets | $ 5,613 | 4,717 |
Cash Flow Hedging | Derivative assets, prepaid expenses, revenue bonds and other assets | Ten Interest Rate Swap | Minimum | ||
Derivative [Line Items] | ||
Derivative interest rate (percent) | 2.55% | |
Cash Flow Hedging | Derivative assets, prepaid expenses, revenue bonds and other assets | Ten Interest Rate Swap | Maximum | ||
Derivative [Line Items] | ||
Derivative interest rate (percent) | 4.75% | |
Cash Flow Hedging | Derivative assets, prepaid expenses, revenue bonds and other assets | One Interest Rate Swap | ||
Derivative [Line Items] | ||
Outstanding notional amount | $ 811,666 | |
Derivative interest rate (percent) | 3.77% | |
Fair value of assets | $ 13,840 | $ 2,607 |
Notes Payable And Credit Faci53
Notes Payable And Credit Facility (Schedule of Debt) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Short-Term and Long-Term Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | $ 2,488,877 |
Net premiums, beginning balance | 419 |
Deferred costs, beginning balance | (17,533) |
Long-term debt, beginning balance | 2,471,763 |
Debt issuance & assumptions | 96,500 |
Debt issuance and assumptions costs | 0 |
Repayments and Modifications | (122,472) |
Repayments and Modifications Deferred Costs | 0 |
Accretion and (Amortization) | (43) |
Amortization of financing costs related to revolving credit facility | 2,231 |
Proceeds from debt, net of issuance and assumption costs | 96,500 |
Repayments and Modifications, Extinguishment and Assumptions of Debt, Net | (122,472) |
Accretion and (Amortization) | 2,188 |
Long-term debt, gross, ending balance | 2,462,905 |
Net premiums, ending balance | 376 |
Deferred costs, ending balance | (15,302) |
Long-term debt, ending balance | 2,447,979 |
Fixed Rate Debt | |
Short-Term and Long-Term Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | 1,217,377 |
Debt issuance & assumptions | 0 |
Repayments and Modifications | (23,972) |
Long-term debt, gross, ending balance | 1,193,405 |
Variable Rate Debt | |
Short-Term and Long-Term Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | 20,500 |
Debt issuance & assumptions | 0 |
Repayments and Modifications | 0 |
Long-term debt, gross, ending balance | 20,500 |
Line of Credit | |
Short-Term and Long-Term Debt [Roll Forward] | |
Long-term debt, gross, beginning balance | 1,251,000 |
Debt issuance & assumptions | 96,500 |
Repayments and Modifications | (98,500) |
Long-term debt, gross, ending balance | $ 1,249,000 |
Notes Payable And Credit Faci54
Notes Payable And Credit Facility (Narrative) (Details) | 6 Months Ended | |
Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,447,979,000 | $ 2,471,763,000 |
Weighted average years to maturity | 3 years 9 months 18 days | |
Weighted average interest rate (percent) | 3.70% | |
Long-term debt, gross | $ 2,462,905,000 | 2,488,877,000 |
Long-term line of credit | 2,447,979,000 | 2,471,763,000 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 1,249,000,000 | 1,251,000,000 |
Fixed Rate Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 1,193,405,000 | 1,217,377,000 |
Debt security, amount, aggregate gross real estate assets net of gross intangible lease liabilities | $ 2,100,000,000 | |
Fixed Rate Debt | Minimum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (percent) | 2.60% | |
Fixed Rate Debt | Maximum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (percent) | 5.00% | |
Variable Rate Debt | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (percent) | 5.20% | |
Long-term debt, gross | $ 20,500,000 | $ 20,500,000 |
Debt security, amount, aggregate gross real estate assets net of gross intangible lease liabilities | $ 40,800,000 | |
JPMorgan Chase Bank, N.A. | Line of Credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (percent) | 3.40% | |
Line of credit maximum borrowing capacity | $ 1,400,000,000 | |
Long-term line of credit | 1,250,000,000 | |
Line of credit, current borrowing capacity | 149,200,000 | |
Line of credit facility, covenant, minimum consolidated net worth | $ 2,000,000,000 | |
Line of credit facility, covenant, minimum consolidated net worth, percentage of equity issuance (percent) | 75.00% | |
Debt instrument, covenant, fixed charge coverage ratio, minimum | 1.5 | |
JPMorgan Chase Bank, N.A. | Line of Credit | Minimum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (percent) | 0.65% | |
Line of credit facility, covenant, unsecured debt service coverage ratio | 1.75 | |
JPMorgan Chase Bank, N.A. | Line of Credit | Maximum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (percent) | 1.25% | |
Line of credit facility, covenant, leverage ratio (percent) | 60.00% | |
Debt instrument, covenant, unsecured debt to unencumbered asset value ratio (percent) | 60.00% | |
Line of credit facility, covenant, secured debt ratio (percent) | 40.00% | |
Line of credit facility, covenant, recourse debt ratio (percent) | 15.00% | |
JPMorgan Chase Bank, N.A. | Line of Credit | Statutory Reserve Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 1.65% | |
JPMorgan Chase Bank, N.A. | Line of Credit | Statutory Reserve Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 2.25% | |
JPMorgan Chase Bank, N.A. | Line of Credit | Federal funds rate plus | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 0.50% | |
JPMorgan Chase Bank, N.A. | Line of Credit | One-Month LIBOR | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percent) | 1.00% | |
JPMorgan Chase Bank, N.A. | Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | $ 1,050,000,000 | |
Long-term line of credit | 1,050,000,000 | |
JPMorgan Chase Bank, N.A. | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | 350,000,000 | |
Long-term line of credit | 199,000,000 | |
Interest Rate Swap | Variable Rate Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 193,400,000 | |
Cash Flow Hedging | Interest Rate Swap | JPMorgan Chase Bank, N.A. | Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (percent) | 3.20% | |
Long-term line of credit | $ 811,700,000 | |
Cash Flow Hedging | Interest Rate Swap | JPMorgan Chase Bank, N.A. | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (percent) | 3.90% |
Notes Payable And Credit Faci55
Notes Payable And Credit Facility (Schedule of Maturities of Long-term Debt) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Remainder of 2018 | $ 239 | |
2,019 | 49,799 | |
2,020 | 333,215 | |
2,021 | 299,603 | |
2,022 | 1,092,464 | |
Thereafter | 687,585 | |
Total | $ 2,462,905 | $ 2,488,877 |
Intangible Lease Liabilities (S
Intangible Lease Liabilities (Schedule of lease liabilities) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |||
Below market leases net of amortization | $ 40,579 | $ 45,572 | |
Below market lease, accumulated amortization | $ 35,256 | $ 31,330 | |
Below market lease, weighted average useful life | 7 years 1 month 5 days | 8 years 2 months 5 days | 7 years 6 months |
Intangible Lease Liabilities 57
Intangible Lease Liabilities (Schedule of amortization expense of below market lease) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | ||||
Amortization of below market lease | $ 2,204 | $ 2,292 | $ 4,343 | $ 4,571 |
Intangible Lease Liabilities 58
Intangible Lease Liabilities (Schedule of future amortization expense) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | |
Remainder of 2018 | $ 4,198 |
2,019 | 7,415 |
2,020 | 6,611 |
2,021 | 4,489 |
2,022 | $ 3,724 |
Supplemental Cash Flow Disclo59
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||
Distributions declared and unpaid | $ 15,994 | $ 16,003 | $ 16,531 |
Accrued capital expenditures | 645 | 605 | |
Common stock issued through distribution reinvestment plan | 47,067 | 51,673 | |
Change in fair value of interest rate swaps | 12,335 | 136 | |
Supplemental Cash Flow Disclosures: | |||
Interest paid | $ 45,008 | $ 41,178 |
Related Party Transactions an60
Related Party Transactions and Arrangements (Acquisition fees and expenses) (Details) - Advisors - Acquisition fees and expenses - Maximum | Jun. 30, 2018 |
Related Party Transaction [Line Items] | |
Acquisition and advisory fee (percent) | 2.00% |
Acquisition fees and expenses, reimbursement (percent) | 6.00% |
Related Party Transactions an61
Related Party Transactions and Arrangements (Advisory fees and expenses) (Details) | Jun. 30, 2018USD ($) |
Average invested assets between $0 to $2 billion | Minimum | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 0 |
Average invested assets between $0 to $2 billion | Maximum | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Average invested assets between $2 billion to $4 billion | Minimum | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Average invested assets between $2 billion to $4 billion | Maximum | |
Related Party Transaction [Line Items] | |
Average invested assets | 4,000,000,000 |
Average invested assets over $4 billion | Minimum | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 4,000,000,000 |
Advisors | Advisory Fees and Expenses | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees (percent) | 0.75% |
Advisors | Advisory Fees and Expenses | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees (percent) | 0.70% |
Advisors | Advisory Fees and Expenses | Average invested assets over $4 billion | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees (percent) | 0.65% |
Related Party Transactions an62
Related Party Transactions and Arrangements (Operating expenses) (Details) - Advisors - Minimum | Jun. 30, 2018 |
Related Party Transaction [Line Items] | |
Operating expense reimbursement percent of average invested assets (percent) | 2.00% |
Operating expense reimbursement percent of net income (percent) | 25.00% |
Related Party Transactions an63
Related Party Transactions and Arrangements (Disposition fees) (Details) - Advisors - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Brokerage commission fee | Maximum | ||||
Related Party Transaction [Line Items] | ||||
Commissions performance and other fees (percent) | 50.00% | 50.00% | ||
Property sales commission | ||||
Related Party Transaction [Line Items] | ||||
Commissions performance and other fees (percent) | 1.00% | 1.00% | ||
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 | $ 0 | $ 0 |
Property portfolio | Maximum | ||||
Related Party Transaction [Line Items] | ||||
Commissions performance and other fees (percent) | 6.00% | 6.00% |
Related Party Transactions an64
Related Party Transactions and Arrangements (Subordinated performance fees) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Due to affiliates | $ 2,075,000 | $ 2,075,000 | $ 1,984,000 | ||
Advisors | |||||
Related Party Transaction [Line Items] | |||||
Cumulative noncompounded annual return (percent) | 8.00% | 8.00% | |||
Due to affiliates | $ 2,100,000 | $ 2,100,000 | $ 2,000,000 | ||
Advisors | Subordinated performance fees | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 | $ 0 | $ 0 | |
Advisors | Subordinate performace fees on event of sale of company | |||||
Related Party Transaction [Line Items] | |||||
Commissions performance and other fees (percent) | 15.00% | 15.00% | |||
Advisors | Subordinate performance fees for listing | |||||
Related Party Transaction [Line Items] | |||||
Commissions performance and other fees (percent) | 15.00% | 15.00% | |||
Advisors | Acquisitions and Operations Costs | |||||
Related Party Transaction [Line Items] | |||||
Due to affiliates | $ 2,100,000 | 1,300,000 | $ 2,100,000 | 1,300,000 | |
Advisors | Acquisition fees and expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, expenses from transactions with related party | 168,000 | 2,686,000 | 198,000 | 3,998,000 | |
Advisors | Advisory Fees and Expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, expenses from transactions with related party | 10,855,000 | 10,903,000 | 21,443,000 | 21,714,000 | |
Advisors | Operating expenses | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, expenses from transactions with related party | $ 1,466,000 | $ 1,096,000 | $ 2,486,000 | $ 2,423,000 |
Related Party Transactions an65
Related Party Transactions and Arrangements (Due to/from Affiliates) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||
Due to affiliates | $ 2,075,000 | $ 1,984,000 |
Due from affiliates | 0 | 56,000 |
Advisors | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 2,100,000 | 2,000,000 |
Due from affiliates | $ 0 | $ 56,000 |
Subsequent Events (Redemption o
Subsequent Events (Redemption of Shares of Common Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Aug. 13, 2018 | Jun. 30, 2018 | Jun. 30, 2018 | |
Subsequent Event | |||
Redemptions of common stock | $ 47,877 | ||
Unfulfilled redemption requests (shares) | 14.9 | ||
Subsequent event | |||
Subsequent Event | |||
Redemption of common stock (shares) | 2.5 | ||
Redemptions of common stock | $ 23,200 | ||
Common stock, average redemption price per share (USD per share) | $ 9.37 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Leases [Abstract] | |
Operating lease, weighted average remaining lease term | 9 years 3 months 18 days |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
Remainder of 2018 | $ 178,858 |
2,019 | 349,857 |
2,020 | 338,137 |
2,021 | 321,258 |
2,022 | 304,685 |
Thereafter | 1,968,622 |
Total | $ 3,461,417 |