Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AMERICAN FINANCE TRUST, INC. | |
Entity Central Index Key | 1,568,162 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 65,805,176 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Real estate investments, at cost: | ||
Land | $ 345,221 | $ 358,278 |
Buildings, fixtures and improvements | 1,555,548 | 1,540,821 |
Acquired intangible lease assets | 319,268 | 319,028 |
Total real estate investments, at cost | 2,220,037 | 2,218,127 |
Less: accumulated depreciation and amortization | (291,207) | (215,427) |
Total real estate investments, net | 1,928,830 | 2,002,700 |
Cash and cash equivalents | 143,386 | 130,500 |
Restricted cash | 7,890 | 7,887 |
Commercial mortgage loan, held for investment, net | 17,163 | 17,135 |
Prepaid expenses and other assets | 27,273 | 21,982 |
Deferred costs, net | 4,859 | 0 |
Assets held for sale | 0 | 56,884 |
Total assets | 2,129,401 | 2,237,088 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Mortgage notes payable, net of deferred financing costs | 1,022,344 | 1,033,582 |
Mortgage premiums, net | 11,671 | 14,892 |
Market lease liabilities, net | 15,460 | 18,133 |
Accounts payable and accrued expenses (including $676 and $541 due to related parties as of September 30, 2016 and December 31, 2015, respectively) | 15,581 | 24,964 |
Deferred rent and other liabilities | 7,704 | 9,569 |
Distributions payable | 8,902 | 9,199 |
Total liabilities | 1,081,662 | 1,110,339 |
Preferred stock, $0.01 par value per share, 50,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 65,805,432 and 64,961,256 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 658 | 650 |
Additional paid-in capital | 1,449,647 | 1,429,294 |
Accumulated deficit | (402,566) | (303,195) |
Total stockholders' equity | 1,047,739 | 1,126,749 |
Total liabilities and stockholders' equity | $ 2,129,401 | $ 2,237,088 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts payable and accrued expenses, due to affiliates | $ 676 | $ 541 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, issued (in shares) | 65,805,432 | 64,961,256 |
Common stock, outstanding (in shares) | 65,805,432 | 64,961,256 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Rental income | $ 41,357 | $ 40,218 | $ 123,033 | $ 120,649 |
Operating expense reimbursements | 3,162 | 3,105 | 8,979 | 8,809 |
Interest income from debt investments | 239 | 728 | 809 | 728 |
Total revenues | 44,758 | 44,051 | 132,821 | 130,186 |
Operating expenses: | ||||
Asset management fees to related party | 4,500 | 4,413 | 13,500 | 8,509 |
Property operating | 3,511 | 3,525 | 10,131 | 10,051 |
Impairment charges | 117 | 0 | 117 | 0 |
Acquisition and transaction related | 4,381 | 946 | 5,458 | 1,452 |
General and administrative | 2,998 | 2,607 | 8,840 | 8,106 |
Depreciation and amortization | 25,446 | 25,387 | 76,477 | 76,160 |
Total operating expenses | 40,953 | 36,878 | 114,523 | 104,278 |
Operating income | 3,805 | 7,173 | 18,298 | 25,908 |
Other (expense) income: | ||||
Interest expense | (12,574) | (11,297) | (37,533) | (27,696) |
Loss on extinguishment of debt | 0 | (7,564) | 0 | (7,564) |
Distribution income from other real estate securities | 0 | 25 | 0 | 363 |
Gain on sale of other real estate securities | 0 | 192 | 0 | 738 |
Gain on sale of real estate investments | 0 | 0 | 454 | 0 |
Other income | 40 | 43 | 121 | 100 |
Total other expense, net | (12,534) | (18,601) | (36,958) | (34,059) |
Net loss | (8,729) | (11,428) | (18,660) | (8,151) |
Other comprehensive loss: | ||||
Change in unrealized income on investment securities | 0 | (562) | 0 | (746) |
Comprehensive loss | $ (8,729) | $ (11,990) | $ (18,660) | $ (8,897) |
Basic net loss per share (in dollars per share) | $ (0.13) | $ (0.17) | $ (0.29) | $ (0.12) |
Diluted net loss per share (in dollars per share) | $ (0.13) | $ (0.17) | $ (0.29) | $ (0.12) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance, beginning of period (in shares) at Dec. 31, 2015 | 64,961,256 | |||
Balance, beginning of period at Dec. 31, 2015 | $ 1,126,749 | $ 650 | $ 1,429,294 | $ (303,195) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued through distribution reinvestment plan (in shares) | 848,307 | 848,307 | ||
Common stock issued through distribution reinvestment plan | $ 20,499 | $ 8 | 20,491 | |
Common stock repurchases (in shares) | (7,854) | (7,854) | ||
Common stock repurchases | $ (190) | (190) | ||
Share-based compensation | 52 | 52 | ||
Distributions declared | (80,711) | (80,711) | ||
Net loss | (18,660) | (18,660) | ||
Balance, end of period (in shares) at Sep. 30, 2016 | 65,805,432 | |||
Balance, end of period at Sep. 30, 2016 | $ 1,047,739 | $ 658 | $ 1,449,647 | $ (402,566) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (18,660) | $ (8,151) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 50,595 | 50,210 |
Amortization of in-place lease assets | 25,841 | 25,950 |
Amortization (including accelerated write-off) of deferred costs | 3,408 | 11,497 |
Amortization of mortgage premiums on borrowings | (3,221) | (5,624) |
Discount accretion and premium amortization on investments, net | (28) | (18) |
Amortization of market lease intangibles, net | 506 | 1,249 |
Share-based compensation | 52 | 40 |
Gain on sale of real estate investments | (454) | 0 |
Impairment charges | 117 | 0 |
Gain on sale of other real estate securities | 0 | (738) |
Changes in assets and liabilities: | ||
Prepaid expenses and other assets | (6,638) | (6,560) |
Accounts payable and accrued expenses | 6,101 | 2,188 |
Deferred rent and other liabilities | (1,865) | (245) |
Net cash provided by operating activities | 55,754 | 69,798 |
Cash flows from investing activities: | ||
Origination of commercial mortgage loans | 0 | (79,410) |
Proceeds from sale of commercial mortgage loans | 56,884 | 0 |
Purchase of commercial mortgage-backed securities | 0 | (30,198) |
Investments in real estate and other assets | (34,244) | 0 |
Proceeds from sale of real estate investments | 15,521 | 0 |
Proceeds from sale of other real estate securities | 0 | 19,266 |
Net cash provided by (used in) investing activities | 38,161 | (90,342) |
Cash flows from financing activities: | ||
Proceeds from mortgage notes payable | 0 | 655,000 |
Payments on mortgage notes payable | (752) | (716) |
Payments on credit facility | 0 | (423,000) |
Payments of financing costs | (3,512) | (17,078) |
Common stock repurchases | (16,253) | (11,649) |
Distributions paid | (60,509) | (46,905) |
Restricted cash | (3) | (37,947) |
Net cash (used in) provided by financing activities | (81,029) | 117,705 |
Net change in cash and cash equivalents | 12,886 | 97,161 |
Cash and cash equivalents, beginning of period | 130,500 | 74,760 |
Cash and cash equivalents, end of period | 143,386 | 171,921 |
Supplemental Disclosures: | ||
Cash paid for interest | 36,901 | 27,506 |
Cash paid for income taxes | 738 | 810 |
Non-Cash Financing Activities: | ||
Mortgage notes payable released in connection with disposition of real estate | 13,941 | 0 |
Common stock issued through distribution reinvestment plan | $ 20,499 | $ 34,806 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization American Finance Trust, Inc. (the "Company"), formerly known as American Realty Capital Trust V, Inc., has acquired a diversified portfolio of commercial properties comprised primarily of freestanding single-tenant properties that are net leased to investment grade and other creditworthy tenants. The Company manages and optimizes its investments in its existing portfolio of net leased commercial real estate properties (the "Net Lease Portfolio") and selectively invests in additional net lease properties. As of September 30, 2016 , the Company owned 458 properties with an aggregate purchase price of $2.2 billion , comprised of 13.3 million rentable square feet, which were 100.0% leased. To a lesser extent, the Company invests in commercial real estate mortgage loans and other commercial real estate-related debt investments (such investments collectively, "CRE Debt Investments"). The Company has financed its CRE Debt Investments primarily through mortgage financing secured by its Net Lease Portfolio, and it may use mortgage specific repurchase agreement facilities and collateralized debt obligations to finance future CRE Debt Investments. The Company, incorporated on January 22, 2013 , is a Maryland corporation that elected and qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") beginning with the taxable year ended December 31, 2013. Substantially all of the Company's business is conducted through American Finance Operating Partnership, L.P. (the "OP"), a Delaware limited partnership, and its wholly-owned subsidiaries. On April 4, 2013, the Company commenced its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 68.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts. The IPO closed in October 2013. As of September 30, 2016 , the Company had 65.8 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the Company's distribution reinvestment plan (the "DRIP"), and had received total proceeds from the IPO and the DRIP, net of share repurchases, of $1.6 billion . The Company has no employees. The Company has retained American Finance Advisors, LLC (the "Advisor") to manage the Company's affairs on a day-to-day basis. American Finance Properties, LLC (the "Property Manager") serves as the Company's property manager. The Advisor and the Property Manager are wholly owned subsidiaries of AR Global Investments, LLC (the successor business to AR Capital, LLC, the "Sponsor" or "AR Global"), as a result of which, they are related parties of the Company, and each have received or may receive, as applicable, compensation, fees and expense reimbursements for services related to managing the Company's business. |
Pending Merger Agreement
Pending Merger Agreement | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Pending Merger Agreement | Pending Merger Agreement On September 6, 2016, the Company and the OP entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Realty Capital — Retail Centers of America, Inc. (“RCA”), American Realty Capital Retail Operating Partnership, L.P. (the “RCA OP”) and Genie Acquisition, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (the “Merger Sub”). The Merger Agreement provides for (a) the merger of RCA with and into the Merger Sub (the “Merger”), with the Merger Sub surviving as a wholly owned subsidiary of the Company and (b) the merger of the Target OP with and into the OP, with the OP as the surviving entity (the “Partnership Merger”, and together with the Merger, the “Mergers”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Mergers (the “Effective Time”), each outstanding share of common stock of RCA, $0.01 par value per share (“RCA Common Stock”) (including any restricted shares of RCA Common Stock and fractional shares), will be converted into the right to receive (x) a number of shares of common stock of the Company, $0.01 par value per share (the “Company Common Stock”) equal to 0.385 shares of Company Common Stock (the “Stock Consideration”) and (y) cash from the Company, in an amount equal to $0.95 per share (the “Cash Consideration,” and together with the Stock Consideration, the “Merger Consideration”). In addition, at the Effective Time, (i) each unit of partnership interest of the RCA OP designated as an OP Unit issued and outstanding immediately prior to the Effective Time (other than those held by RCA as described in clause (ii) below) will automatically be converted into 0.424 validly issued units of limited partnership interest of the OP (the “Partnership Merger Consideration”); (ii) each unit of partnership interest of the RCA OP designated as either an OP Unit or a GP Unit held by RCA and issued and outstanding immediately prior to the Effective Time will automatically be converted into 0.385 validly issued units of limited partnership interest of the OP; (iii) each unit of partnership interest of the RCA OP designated as a Class B Unit held by RCA’s advisor and a sub-advisor issued and outstanding immediately prior to the Effective Time will be converted into the Partnership Merger Consideration (the “Class B Consideration,” and together with the Partnership Merger Consideration and the Merger Consideration, the “Total Merger Consideration”) and (iv) the interest of American Realty Capital Retail Advisor, LLC, the special limited partner of the RCA OP (the “RCA SLP”), in the RCA OP will be redeemed for a cash payment, to be determined in accordance with the existing terms of the RCA OP’s agreement of limited partnership. The Merger Agreement provided RCA with a go-shop period, during which time RCA had the right to actively solicit superior proposals from third parties for 45 days from the date of the Merger Agreement (the "Go-Shop Period"). The Go-Shop Period ended on October 21, 2016 with no alternative acquisition proposals provided by third parties. In the event that the Company or RCA terminates the Merger Agreement under specified circumstances, the Company or RCA, as applicable, are required to pay a termination fee of $25.6 million . In connection with the execution of the Merger Agreement, the OP entered into a binding commitment, pursuant to which UBS Securities LLC, UBS AG, Stamford Branch and Citizens Bank, N.A. have committed to provide a $360.0 million bridge loan facility, subject to customary conditions. The Company and RCA each are sponsored, directly or indirectly, by AR Global. AR Global and its affiliates provide services to the Company and RCA pursuant to written advisory agreements. The completion of the Mergers is subject to the approval of the Company's and RCA's shareholders as well as satisfaction of customary closing conditions. A joint preliminary proxy statement/prospectus describing the proposed Mergers was filed on Form S-4 with the Securities and Exchange Commission (the “SEC”) on October 21, 2016. The Mergers are expected to close in the first quarter of 2017. However, as of the filing of this Quarterly Report on Form 10-Q, the consummation of the Mergers has not yet occurred, and the Company cannot assure that the Mergers will be completed based on the terms of the Merger Agreement or at all. The shares of the Company's common stock have been approved for listing on the New York Stock Exchange (the "NYSE") under the symbol "AFIN" (the "Listing"), subject to the Company being in compliance with all applicable listing standards on the date it begins trading on the NYSE. The Company intends to list its common stock on the NYSE at a time yet to be determined following the completion of the Mergers. There can be no assurance that the Company's common stock will be listed or when the Company's common stock will commence trading on the NYSE. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The interim data includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results for the entire year or any subsequent interim periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, 2015 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 16, 2016 . There have been no significant changes to the Company's significant accounting policies during the nine months ended September 30, 2016 , other than the updates described below. Consolidation The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity ("VIE") for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP. Deferred Costs, Net Deferred costs, net consists of deferred financing costs net of accumulated amortization and deferred leasing costs net of accumulated amortization. Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method and included in interest expense on the accompanying consolidated statements of operations and comprehensive loss. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. Deferred leasing costs, consisting primarily of lease commissions and payments made to execute new leases, are deferred and amortized over the term of the lease. Recently Adopted Accounting Pronouncements In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are VIEs or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted, including adoption in an interim period. The Company elected to adopt this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company's partnership interest is considered a majority voting interest in a business and the assets of the OP can be used for purposes other than settling its obligations, such as paying distributions. As such, the new guidance did not have a material impact on the Company's consolidated financial statements. In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted for financial statements that have not previously been issued. The Company elected to adopt this guidance effective January 1, 2016. As a result, the Company reclassified $16.6 million and $20.1 million of deferred issuance costs related to the Company's mortgage notes payable from deferred costs, net to mortgage notes payable in the Company's consolidated balance sheets as of September 30, 2016 and December 31, 2015 , respectively. In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 2016, electing to account for forfeitures when they occur, and determined that there is no impact to the Company’s consolidated financial position, results of operations and cash flows. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. The Company has not yet selected a transition method and is currently evaluating the impact of the new guidance. In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity's accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued an update which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both l essees and lessors. The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The revised guidance supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance. In March 2016, the FASB issued guidance which requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The company is currently evaluating the impact of this new guidance. In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In October 2016, the FASB issued guidance relating to interest held through related parties that are under common control, where a reporting entity will need to evaluate if it should consolidate a VIE. The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
Real Estate Investments | Real Estate Investments The Company owned 458 properties, which were acquired for investment purposes, as of September 30, 2016 . The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2016 . There were no real estate assets acquired or liabilities assumed during the nine months ended September 30, 2015 : Nine Months Ended September 30, 2016 (Dollar amounts in thousands) Real estate investments, at cost: Land $ 1,729 Buildings, fixtures and improvements 29,664 Total tangible assets 31,393 Acquired intangibles: In-place leases (1) 3,162 Above-market lease assets (1) 548 Above-market ground lease liability (1) (85 ) Below-market lease liabilities (1) (774 ) Total intangible assets, net 2,851 Cash paid for acquired real estate investments $ 34,244 Number of properties purchased 4 _____________________________________ (1) Weighted-average remaining amortization periods for in-place leases, above-market lease assets, above-market ground lease liability and below-market lease liabilities acquired during the nine months ended September 30, 2016 were 9.5 years , 9.6 years , 48.6 years and 9.5 years , respectively, as of each property's respective acquisition date. Total acquired intangible lease assets and liabilities consist of the following as of the dates presented: September 30, 2016 December 31, 2015 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 305,578 $ 92,515 $ 213,063 $ 305,245 $ 68,278 $ 236,967 Above-market lease assets 13,690 7,410 6,280 13,783 5,555 8,228 Total acquired intangible lease assets $ 319,268 $ 99,925 $ 219,343 $ 319,028 $ 73,833 $ 245,195 Intangible liabilities: Above-market ground lease liability $ 85 $ 1 $ 84 $ — $ — $ — Below-market lease liabilities 19,242 3,866 15,376 20,623 2,490 18,133 Total acquired intangible lease liabilities $ 19,327 $ 3,867 $ 15,460 $ 20,623 $ 2,490 $ 18,133 The following table presents amortization expense and adjustments to revenue and property operating expense for intangible assets and liabilities for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 In-place leases $ 8,550 $ 8,650 $ 25,841 $ 25,950 Total added to depreciation and amortization $ 8,550 $ 8,650 $ 25,841 $ 25,950 Above-market leases $ (724 ) $ (751 ) $ (2,220 ) $ (2,254 ) Below-market lease liabilities 752 335 1,713 1,005 Total added to (deducted from) rental income $ 28 $ (416 ) $ (507 ) $ (1,249 ) Above-market ground lease liability $ — $ — $ (1 ) $ — Total deducted from property operating expense $ — $ — $ (1 ) $ — The following table provides the projected amortization expense and adjustments to revenue and property operating expense for intangible assets and liabilities for the next five years: (In thousands) October 1, 2016 to December 31, 2016 2017 2018 2019 2020 In-place leases $ 8,548 $ 34,193 $ 24,207 $ 24,187 $ 22,569 Total to be added to depreciation and amortization $ 8,548 $ 34,193 $ 24,207 $ 24,187 $ 22,569 Above-market leases $ (724 ) $ (2,895 ) $ (526 ) $ (526 ) $ (526 ) Below-market lease liabilities 752 3,009 974 974 974 Total to be added to rental income $ 28 $ 114 $ 448 $ 448 $ 448 Above-market ground lease liability $ — $ (2 ) $ (2 ) $ (2 ) $ (2 ) Total to be deducted from property operating expense $ — $ (2 ) $ (2 ) $ (2 ) $ (2 ) The following table presents unaudited pro forma information as if the acquisitions during the nine months ended September 30, 2016 had been consummated on January 1, 2015 : Nine Months Ended September 30, (In thousands, except per share data) 2016 (1) 2015 Pro forma revenues $ 133,189 $ 132,210 Pro forma net loss $ (18,533 ) $ (7,240 ) Basic pro forma net loss per share $ (0.28 ) $ (0.11 ) Diluted pro forma net loss per share $ (0.28 ) $ (0.11 ) _____________________ (1) For the nine months ended September 30, 2016 , aggregate revenues and net income derived from the Company's 2016 acquisitions (for the Company's period of ownership) were $1.7 million and $0.8 million , respectively. The following table presents future minimum base rent payments on a cash basis due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items: (In thousands) Future Minimum Base Rent Payments October 1, 2016 to December 31, 2016 $ 39,633 2017 160,004 2018 153,784 2019 155,875 2020 150,703 Thereafter 912,235 $ 1,572,234 The following table lists the tenants (including, for this purpose, all affiliates of such tenants) from which the Company derives annualized rental income on a straight-line basis constituting 10.0% or more of the Company's consolidated annualized rental income on a straight-line basis for all portfolio properties as of the dates indicated: September 30, Tenant 2016 2015 SunTrust Bank 17.8% 17.9% Sanofi US 11.4% 11.6% C&S Wholesale Grocer 10.2% 10.4% The termination, delinquency or non-renewal of leases by one or more of the above tenants may have a material adverse effect on revenues. No other tenant represented 10.0% or greater of consolidated annualized rental income on a straight-line basis as of September 30, 2016 and 2015 . The following table lists the states where the Company has concentrations of properties where annualized rental income on a straight-line basis represented 10.0% or greater of consolidated annualized rental income on a straight-line basis as of the dates indicated: September 30, State 2016 2015 New Jersey 20.0% 20.3% Georgia 11.0% 11.2% The Company did not own properties in any other state that in total represented 10.0% or greater of consolidated annualized rental income on a straight-line basis as of September 30, 2016 and 2015 . Real Estate Sales On May 12, 2016 the Company entered into a purchase and sale agreement with SunTrust Bank, a wholly owned subsidiary of SunTrust Banks, Inc. ("SunTrust"), for, and simultaneously closed on, the sale of eight single-tenant net lease properties operated by SunTrust for an aggregate contract price of $28.9 million , exclusive of closing costs. On September 14, 2016 , the Company sold an additional single-tenant net lease property operated by SunTrust for a contract price of $0.7 million , exclusive of closing costs. The sale of these properties resulted in an impairment charge of $0.1 million for the three and nine months ended September 30, 2016 and a gain of $0.5 million for the nine months ended September 30, 2016 , which is reflected within gain on sale of real estate investments on the consolidated statements of operations and comprehensive loss. No gain on sale of real estate investments was recognized during the three months ended September 30, 2016 . The Company did not sell any properties during the three and nine months ended September 30, 2015 . The disposal of the properties referenced above did not represent a strategic shift that had a major effect on the Company's operations and financial results. Accordingly, the operating results of the properties sold remain classified within continuing operations for all periods presented until the date of disposal. Leasing Activity On May 12, 2016, the Company amended 160 of its leases for single-tenant net lease properties operated by SunTrust, which in general extended the remaining lease terms of theses leases with no modification to the contractual rent increases as set forth in these leases. |
Commercial Mortgage Loans
Commercial Mortgage Loans | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Commercial Mortgage Loans | Commercial Mortgage Loans The following table is a summary of the Company's commercial mortgage loan portfolio: September 30, 2016 December 31, 2015 Loan Type Property Type Par Value Percentage Par Value Percentage (In thousands) (In thousands) Senior Student Housing — Multifamily $ 17,200 100.0 % $ 17,200 21.6 % Senior Retail — (1) — % 18,150 (1) 22.7 % Senior Hospitality — (1) — % 44,500 (1) 55.7 % $ 17,200 100.0 % $ 79,850 100.0 % _____________________________________ (1) These loans were classified as held for sale as of December 31, 2015 and were sold during the nine months ended September 30, 2016 for $56.9 million . Credit Characteristics As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. The loans are scored on a scale of 1 to 5 as follows: Investment Rating Summary Description 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing investments requiring closer monitoring. Trends and risk factors show some deterioration. 4 Underperforming investment with some loss of interest expected but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. All commercial mortgage loans are assigned an initial risk rating of 2. As of September 30, 2016 , the risk rating of the Company's commercial loan held for investment was 3. As of September 30, 2016 , the Company did not have any loans that were past due on their payments, in non-accrual status or impaired. No allowance for loan losses has been recorded as of September 30, 2016 or December 31, 2015 . For the nine months ended September 30, 2016 and 2015 , the activity on the Company's commercial mortgage loans, held for investment, was as follows: Nine Months Ended (In thousands) September 30, 2016 September 30, 2015 Beginning balance $ 17,135 $ — Originations — 79,410 Discount accretion and premium amortization (1) 28 16 Ending balance $ 17,163 $ 79,426 _____________________________________ (1) Includes amortization of capitalized origination fees and expenses. |
Other Real Estate Securities
Other Real Estate Securities | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Other Real Estate Securities | Other Real Estate Securities The following table details the realized gains on sale of the Company's other real estate securities, which consisted of redeemable preferred stock, during the three and nine months ended September 30, 2015 . As of September 30, 2016 and December 31, 2015 , the Company had no investments in other real estate securities; as such, there were no other real estate securities sold during the nine months ended September 30, 2016 : (In thousands) Aggregate Cost Basis Sale Price Realized Gain Three Months Ended September 30, 2015 $ 9,821 $ 10,013 $ 192 Nine Months Ended September 30, 2015 $ 18,528 $ 19,266 $ 738 |
Mortgage Notes Payable
Mortgage Notes Payable | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Mortgage Notes Payable | Mortgage Notes Payable The Company's mortgage notes payable as of September 30, 2016 and December 31, 2015 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties September 30, December 31, September 30, December 31, Interest Rate Maturity Anticipated Repayment (In thousands) (In thousands) SAAB Sensis I 1 $ 7,930 $ 8,190 6.01 % 6.01 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 30 25,000 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 C&S Wholesale Grocer I 4 82,313 82,313 5.56 % 5.56 % Fixed Apr. 2037 Apr. 2017 SunTrust Bank III 115 89,493 99,677 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 27 21,243 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 Sanofi US I 1 125,000 125,000 5.16 % 5.16 % Fixed Jul. 2026 Jan. 2021 Stop & Shop I 4 38,444 38,936 5.63 % 5.63 % Fixed Jun. 2041 Jun. 2021 Multi-Tenant Mortgage Loan 268 649,532 649,532 4.36 % 4.36 % Fixed Sep. 2020 Sep. 2020 Gross mortgage notes payable 450 1,038,955 1,053,648 4.76 % (1) 4.77 % (1) Deferred financing costs, net of accumulated amortization (16,611 ) (20,066 ) Mortgage notes payable, net of deferred financing costs $ 1,022,344 $ 1,033,582 _____________________________________ (1) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. As of September 30, 2016 and December 31, 2015 , the Company had pledged $2.0 billion in real estate investments as collateral for its mortgage notes payable. This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable on the properties. During August 2015 , certain subsidiaries of the Company entered into a $655.0 million mortgage loan agreement ("Multi-Tenant Mortgage Loan") with Barclays Bank PLC, Column Financial Inc. and UBS Real Estate Securities Inc. (together, the "Lenders"). The Multi-Tenant Mortgage Loan has a stated maturity of September 6, 2020 and a stated annual interest rate of 4.30% . As of September 30, 2016 , the Multi-Tenant Mortgage Loan was secured by mortgage interests in 268 of the Company's properties. As of September 30, 2016 , the outstanding balance under the Multi-Tenant Mortgage Loan was $649.5 million . At the closing of the Multi-Tenant Mortgage Loan, the Lenders placed $42.5 million of the proceeds from the Multi-Tenant Mortgage Loan in escrow, to be released to the Company upon certain conditions, including the receipt of ground lease estoppels, performance of certain repairs and receipt of environmental insurance. As of September 30, 2016 , the Lenders had released $34.6 million of the amount originally placed in escrow to the Company. As of September 30, 2016 , $7.9 million of the proceeds from the Multi-Tenant Mortgage Loan remained in escrow and is included in restricted cash on the unaudited consolidated balance sheet as of September 30, 2016 . The following table summarizes the scheduled aggregate principal payments on mortgage notes payable based on stated maturity dates for the five years subsequent to September 30, 2016 and thereafter: (In thousands) Future Principal Payments October 1, 2016 to December 31, 2016 $ 262 2017 1,080 2018 1,143 2019 1,211 2020 650,808 Thereafter 384,451 $ 1,038,955 The Company's mortgage notes payable agreements require the compliance of certain property-level financial covenants including debt service coverage ratios. As of September 30, 2016 , the Company was in compliance with financial covenants under its mortgage notes payable agreements. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred sources of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below: Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 — Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare. The Company had commercial mortgage loans held for sale, which were carried at fair value on the consolidated balance sheet as of December 31, 2015 . Commercial mortgage loans held for sale were valued using the sale price from the term sheet, which is an observable input. As a result, the Company's commercial mortgage loans held for sale were classified in Level 2 of the fair value hierarchy. There were no commercial mortgage loans held for sale as of September 30, 2016 . The following table presents information about the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 , aggregated by the level in the fair value hierarchy within which those instruments fall. There were no financial instruments measured at fair value on a recurring basis as of September 30, 2016 . Additionally, there were no financial instruments measured at fair value on a non recurring basis as of September 30, 2016 or December 31, 2015 : (In thousands) Quoted Prices in Active Markets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total December 31, 2015 Commercial mortgage-backed securities $ — $ 56,884 $ — $ 56,884 A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets and liabilities. The Company's policy with respect to transfers between levels of the fair value hierarchy is to recognize transfers into and out of each level as of the end of the reporting period. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2016 and 2015 . There were no transfers into or out of Level 3 of the fair value hierarchy during the nine months ended September 30, 2016 and 2015 . The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and accrued expenses and distributions payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's remaining financial instruments that are not reported at fair value on the consolidated balance sheets as of September 30, 2016 and December 31, 2015 are reported in the following table: Carrying Amount at Fair Value at Carrying Amount at Fair Value at (In thousands) Level September 30, 2016 September 30, 2016 December 31, 2015 December 31, 2015 Commercial mortgage loan, held for investment 3 $ 17,163 $ 16,572 $ 17,135 $ 17,200 Gross mortgage notes payable and mortgage premiums, net 3 $ 1,050,626 $ 1,099,346 $ 1,068,540 $ 1,103,352 The fair value of the commercial mortgage loan is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of investments. The fair value of gross mortgage notes payable is based on combinations of independent third party estimates and management's estimates of market interest rates. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Common Stock | Common Stock As of September 30, 2016 and December 31, 2015 , the Company had 65.8 million and 65.0 million shares of common stock outstanding, respectively, including unvested restricted shares and shares issued pursuant to the DRIP. In April 2013, the Company's board of directors authorized, and the Company declared, a distribution payable on a monthly basis to stockholders of record on each day at a rate equal to $0.00452054795 per day, which is equivalent to $1.65 per annum, per share of common stock. In March 2016, the Company’s board of directors ratified the existing distribution amount equivalent to $1.65 per annum, and, for calendar year 2016, affirmed a change to the daily distribution amount to $0.00450819672 per day per share of common stock, effective January 1, 2016, to reflect that 2016 is a leap year. Distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distributions payments are not assured. On March 17, 2016, the Company's board of directors approved an estimated net asset value per share of the Company's common stock ("Estimated Per-Share NAV) as of December 31, 2015, which was published on March 18, 2016. The Company intends to publish subsequent valuations of Estimated Per-Share NAV periodically at the discretion of the Company's board of directors, provided that such valuations will be made at least once annually. The Estimated Per-Share NAV does not represent: (1) the amount at which the Company's shares would trade on a national securities exchange, (2) the amount a stockholder would obtain if he or she tried to sell his or her shares or (3) the amount stockholders would receive if the Company liquidated its assets and distributed the proceeds after paying all of its expenses and liabilities. In addition, the Estimated Per-Share NAV does not reflect events subsequent to December 31, 2015 that would have affected the Company's net asset value. Share Repurchase Program The Company's board of directors has adopted the share repurchase program (as amended and restated, the "SRP"), which permits investors to sell their shares back to the Company after they have held them for at least one year, subject to certain conditions and limitations. The Company may repurchase shares on a semiannual basis, at each six-month period ending June 30 and December 31. Under the SRP, the repurchase price per share for requests other than for death or disability are as follows: • after one year from the purchase date — 92.5% of the then-current estimated net asset value per share of the Company's common stock, approved by the Company's board of directors (" Estimated Per-Share NAV "); • after two years from the purchase date — 95.0% of Estimated Per-Share NAV ; • after three years from the purchase date — 97.5% of Estimated Per-Share NAV ; and • after four years from the purchase date — 100.0% of Estimated Per-Share NAV . In the case of requests for death or disability, the repurchase price per share will be equal to Estimated Per-Share NAV at the time of repurchase. Under the SRP, repurchases at each semiannual period are limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year. Repurchases pursuant to the SRP for any given semiannual period are funded from proceeds received during that same semiannual period through the issuance of common stock pursuant to the DRIP, as well as any reservation of funds the board of directors may, in its sole discretion, make available for this purpose. If the establishment of an Estimated Per-Share NAV occurs during any semiannual period, any repurchase requests received during such semiannual period are paid at a price based on Estimated Per-Share NAV applicable on the last day of the semiannual period, as described above. On June 28, 2016, in consideration of the strategic review process, the board of directors of the Company determined to amend the SRP to provide for one twelve-month repurchase period for calendar year 2016 instead of two semi-annual periods ending June 30 and December 31. The annual limit on repurchases under the SRP remains unchanged and continues to be limited to a maximum of 5.0% of the weighted average number of shares of common stock of the Company outstanding during its prior fiscal year and is subject to the terms and limitations set forth in the SRP. Following calendar year 2016, the repurchase periods will return to two semi-annual periods and applicable limitations set forth in the SRP. The Company's board of directors reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase, change the purchase price for repurchases or otherwise amend the terms of, suspend or terminate the SRP pursuant to any applicable notice requirements under the SRP. Due to these limitations, the Company cannot guarantee that it will be able to accommodate all repurchase requests. When a stockholder requests repurchases and the repurchases are approved, the Company reclassifies such an obligation from equity to a liability based on the settlement value of the obligation. Shares repurchased have the status of authorized but unissued shares. The following table summarizes the repurchases of shares under the SRP cumulatively through September 30, 2016 : Number of Shares Weighted-Average Price per Share Cumulative repurchases as of December 31, 2015 2,073,645 $ 24.12 Nine months ended September 30, 2016 7,854 24.17 Cumulative repurchases as of September 30, 2016 2,081,499 $ 24.12 During the nine months ended September 30, 2016 , 5.8 million shares have been requested for repurchase and are not yet fulfilled. These shares, and all additional shares requested prior to December 31, 2016 will be considered for repurchase, to the extent the requests are not withdrawn by December 31, 2016. All requested shares will be subject to the annual limitations set forth in the SRP. Distribution Reinvestment Plan Pursuant to the DRIP, the Company's stockholders could elect to reinvest distributions by purchasing shares of common stock. Until November 14, 2014 , the Company offered shares pursuant to the DRIP at $23.75 , which was 95.0% of the initial offering price of shares of common stock in the IPO. Effective November 14, 2014 , the Company began offering shares pursuant to the DRIP at the then-current Estimated Per-Share NAV . The DRIP was suspended following the payment of the Company's June 2015 distribution on July 1, 2015. On April 1, 2016, the Company reinstated the DRIP and registered an additional 7.7 million shares of common stock, offered at the then-current Estimated Per-Share NAV , for use under the DRIP pursuant to a registration statement on Form S-3 (File No. 333-210532). On August 30, 2016, in consideration of the Merger, the Company's board of directors determined to suspend the DRIP effective immediately. Accordingly, the final issuance of shares of common stock pursuant to the DRIP prior to the suspension occurred in connection with the Company's July 2016 distribution, paid in August 2016. No dealer manager fees or selling commissions were paid with respect to shares purchased pursuant to the DRIP. Shares issued pursuant to the DRIP are recorded within stockholders' equity in the accompanying consolidated balance sheets in the period distributions are declared. During the nine months ended September 30, 2016 , 0.8 million shares of common stock were issued pursuant to the DRIP. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Future Minimum Ground Lease Payments The Company entered into ground lease agreements related to certain acquisitions under leasehold interest arrangements. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter: (In thousands) Future Minimum Base Rent Payments October 1, 2016 to December 31, 2016 $ 229 2017 921 2018 903 2019 902 2020 674 Thereafter 4,975 $ 8,604 Unfunded Commitments Under Commercial Mortgage Loans As of September 30, 2016 , the Company had unfunded commitments which will generally be funded to finance capital expenditures by the borrowers under the Company's commercial mortgage loan. The following table reflects the expiration of these commitments over the next five years and thereafter: (In thousands) Funding Expiration October 1, 2016 to December 31, 2016 $ — 2017 2,450 2018 — 2019 — 2020 — Thereafter — $ 2,450 Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company. 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. The Company maintains environmental insurance for its properties that provides coverage for potential environmental liabilities, subject to the policy's coverage conditions and limitations. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on its financial position or results of operations. |
Related Party Transactions and
Related Party Transactions and Arrangements | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Related Party Transactions and Arrangements As of September 30, 2016 and December 31, 2015 , American Finance Special Limited Partner, LLC (the "Special Limited Partner"), an entity controlled by the Sponsor, owned 8,888 shares of the Company's outstanding common stock and 90 units of limited partner interests in the OP ("OP Units"). After holding the OP Units for a period of one year, or upon liquidation of the OP or sale of substantially all of the assets of the OP, holders of OP Units have the right to convert OP Units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, in accordance with the limited partnership agreement of the OP. The remaining rights of the limited partner interests are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets. Realty Capital Securities, LLC (the " Former Dealer Manager ") served as the dealer manager of the IPO. American National Stock Transfer, LLC ("ANST"), a subsidiary of the parent company of the Former Dealer Manager, provided other general professional services through January 2016. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was under common control with the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. Fees and Participations Incurred in Connection With the Operations of the Company On April 29, 2015 , the independent directors of the board of directors unanimously approved certain amendments to the Amended and Restated Advisory Agreement, as amended (the "Original A&R Advisory Agreement"), by and among the Company, the OP and the Advisor (the "Second A&R Advisory Agreement"). The Second A&R Advisory Agreement, which superseded the Original A&R Advisory Agreement, took effect on July 20, 2015 , the date on which the Company filed certain changes to the Company's Articles of Amendment and Restatement, which were approved by the Company's stockholders on June 23, 2015 . The initial term of the Second A&R Advisory Agreement is 20 years beginning on April 29, 2015 , and is automatically renewable for another 20 -year term upon each 20 -year anniversary unless terminated by the board of directors for cause. Prior to January 16, 2016 , the Advisor was paid an acquisition fee equal to 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment. The Advisor also has been and may continue to be reimbursed for costs it incurs in providing investment-related services, or "insourced expenses." These insourced expenses may not exceed, 0.5% of the contract purchase price of each acquired property and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company has paid and may continue to pay third party acquisition expenses. The aggregate amount of acquisition fees and financing coordination fees (as described below) were not to exceed 1.5% of the contract purchase price and the amount advanced for a loan or other investment for all the assets acquired. The Second A&R Advisory Agreement terminated the acquisition fee and financing coordination fee (both as defined in the Second A&R Advisory Agreement) effective January 16, 2016 . As of January 16, 2016 , aggregate acquisition fees and financing coordination fees did not exceed the 1.5% threshold. Further, the total of all acquisition fees, acquisition expenses and any financing coordination fees payable was not to exceed 4.5% of the Company's total portfolio contract purchase price or 4.5% of the amount advanced for the Company's total portfolio of loans or other investments. As of January 16, 2016 , the total of all cumulative acquisition fees, acquisition expenses and financing coordination fees did not exceed the 4.5% threshold. Additionally, prior to January 16, 2016 , if the Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Advisor a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Prior to April 15, 2015, in connection with asset management services provided by the Advisor, the Company issued to the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based restricted, forfeitable partnership units of the OP designated as "Class B Units." The Class B Units were intended to be profit interests and will vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP's assets plus all distributions made equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon (the "economic hurdle"); (b) any one of the following events occurs concurrently with or subsequently to the achievement of the economic hurdle described above: (i) a listing; (ii) a transaction to which the Company or the OP is a party, as a result of which OP Units or the Company's common stock are exchanged for, or converted into, the right, or the holders of such securities are otherwise entitled, to receive cash, securities or other property or any combination thereof; or (iii) the termination of the advisory agreement without cause; and (c) the Advisor pursuant to the advisory agreement is providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above, unless the failure to provide such services is attributable to the termination without cause of the advisory agreement by an affirmative vote of a majority of the Company's independent directors after the economic hurdle described above has been met. Unvested Class B Units will be forfeited immediately if: (x) the advisory agreement is terminated for any reason other than a termination without cause; or (y) the advisory agreement is terminated without cause by an affirmative vote of a majority of the board of directors before the economic hurdle described above has been met. The Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP. The number of Class B Units issued in any quarter was equal to the cost of the Company's assets multiplied by 0.1875% , divided by the value of one share of common stock as of the last day of such calendar quarter, which was initially equal to $22.50 (the initial offering price in the IPO minus selling commissions and dealer manager fees) and, as of the Initial NAV Pricing Date, to Estimated Per-Share NAV . On April 15, 2015 , the Company's board of directors approved an amendment (the "Amendment") to the Original A&R Advisory Agreement, which, among other things, provided that, effective as of April 15, 2015 until July 20, 2015 : (i) for any period commencing on or after April 1, 2015, the Company paid the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets an Asset Management Fee (as defined in the Original A&R Advisory Agreement) equal to 0.75% per annum of the Cost of Assets (as defined in the Original A&R Advisory Agreement); (ii) such Asset Management Fee was payable monthly in arrears in cash, in shares of common stock, or a combination of both, the form of payment determined in the sole discretion of the Advisor; and (iii) the Company would not cause the OP to issue any Class B Units in respect of periods subsequent to March 31, 2015. As of September 30, 2016 , in aggregate, the Company's board of directors had approved the issuance of 1,052,420 Class B Units to the Advisor in connection with the arrangement described above. As of September 30, 2016 , the Company could not determine the probability of achieving the performance condition, as such, no expense was recognized in connection with this arrangement during the three and nine months ended September 30, 2016 and 2015 . The Advisor receives distributions on unvested Class B Units equal to the distribution amount received on the same number of shares of the Company's common stock. Such distributions on issued Class B Units are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. As stated above, pursuant to the Amendment, the OP will not issue any further Class B Units. The changes made pursuant to the Amendment were incorporated into the Agreement of Limited Partnership of the OP (the "OP Agreement") through a Third Amendment to the OP Agreement, which was approved by the board of directors and entered into on April 29, 2015 . Effective July 20, 2015 , the Second A&R Advisory Agreement requires the Company to pay the Advisor a base management fee. Effective October 1, 2015, the fixed portion of the base management fee, which is equal to $1.5 million per month, is payable on the first business day of each month, while the variable portion of the base management fee, which is equal to 0.375% of the cumulative net proceeds of any equity raised subsequent to the potential Listing, is payable quarterly in arrears. Base management fees are included in asset management fees to related party on the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016 and 2015 . In addition, the Second A&R Advisory Agreement requires the Company to pay the Advisor a variable management fee equal to (x) 15.0% of the applicable quarter's Core Earnings (as defined below) per share in excess of $0.375 per share plus (y) 10.0% of the applicable quarter's Core Earnings per share in excess of $0.50 per share, in each case as adjusted for changes in the number of shares of common stock outstanding. Core Earnings are defined as, for the applicable period, GAAP net income or loss excluding non-cash equity compensation expense, the variable management fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains, losses or other non-cash items recorded in net loss for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairment of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent, amortization of market lease intangibles, provision for loss loans, and other non-recurring revenue and expenses. The Company did not incur a variable management fee during the three and nine months ended September 30, 2016 and 2015 . The Company reimburses the Advisor's costs of providing administrative services, but may not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees, acquisition expenses or real estate commissions. During the three and nine months ended September 30, 2016 , the Company incurred $0.8 million and $2.2 million of reimbursement expenses from the Advisor for providing administrative services. During the three and nine months ended September 30, 2015 , the Company incurred $0.4 million of reimbursements from the Advisor for providing administrative services. These reimbursements are included in general and administrative expense on the consolidated statements of operations and comprehensive loss. In order to improve operating cash flows and the ability to pay distributions from operating cash flows, the Advisor may elect to forgive certain fees. Because the Advisor may forgive certain fees, cash flows from operations that would have been paid to the Advisor may be available to pay distributions to stockholders. The fees that are forgiven are not deferrals and, accordingly, will not be paid to the Advisor. In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's general and administrative costs or property operating costs. No such fees were forgiven or costs were absorbed by the Advisor during the three and nine months ended September 30, 2016 and 2015 . The following table details amounts incurred and payable to related parties in connection with the operations-related services described above as of and for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, Payable as of (In thousands) 2016 2015 2016 2015 September 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements (1) $ — $ 1,330 $ — $ 1,330 $ — $ — Financing coordination fees — 4,913 — 4,913 — — Ongoing fees: Asset management fees 4,500 4,413 13,500 8,509 — — Professional fees and other reimbursements (2) 780 1,007 2,303 2,555 534 541 Distributions on Class B Units (2) 436 438 1,300 1,135 142 — Total related party operation fees and reimbursements $ 5,716 $ 12,101 $ 17,103 $ 18,442 $ 676 $ 541 _________________________________ (1) Acquisition fees and expenses from related parties of $0.9 million were recognized in acquisition and transaction related expense on the consolidated statement of operations and comprehensive loss for three and nine months ended September 30, 2015 . In addition, over the same periods, the Company capitalized $0.4 million of acquisition expenses to the Company's consolidated balance sheet, which are amortized over the life of each investment using the effective interest method. No acquisition expenses were capitalized during the three and nine months ended September 30, 2016 . (2) These costs are included in general and administrative expense on the consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2016 , the Company incurred $1.3 million of cost reimbursements from the Advisor for lease commissions relating to the execution of new SunTrust leases. The lease commissions are included in deferred costs, net on the consolidated balance sheet as of September 30, 2016 , and are amortized over the terms of the respective leases. No such costs were incurred during the three months ended September 30, 2016 or the three and nine months ended September 30, 2015 . The predecessor to the Sponsor was party to a services agreement with RCS Advisory Services, LLC, a subsidiary of the parent company of the Former Dealer Manager ("RCS Advisory"), pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to AR Global instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory. The Company was also party to a transfer agency agreement with ANST, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc., a third-party transfer agent ("DST"). The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). Fees Incurred in Connection with the Liquidation or Listing of the Company's Real Estate Assets In connection with the Listing, the Company, as the general partner of the OP, would cause the OP to issue a note (the "Listing Note") to the Special Limited Partner to evidence the OP's obligation to distribute to the Special Limited Partner an aggregate amount (the "Listing Amount") equal to 15.0% of the difference (to the extent the result is a positive number) between: • the sum of (i) the "market value" (as defined in the Listing Note) of the Company's common stock plus (ii) the sum of all distributions or dividends (from any source) paid by the Company to its stockholders prior to the Listing; and • the sum of (i) the total raised in the IPO and under the DRIP prior to the Listing ("Gross Proceeds") plus (ii) the total amount of cash that, if distributed to those stockholders who purchased shares of common stock in the IPO and under the DRIP, would have provided those stockholders a 6.0% cumulative, non-compounded, pre-tax annual return (based on a 365-day year) on the gross proceeds. The "market value" used to calculate the Listing Amount will not be determinable until the end of a measurement period, the period of 30 consecutive trading days, commencing on the 180th day following the Listing, unless another liquidity event, such as a merger, occurs prior to the end of the measurement period. If another liquidity event occurs prior to the end of the measurement period, the Listing Note provides for appropriate adjustment to the calculation of the Listing Amount. The Special Limited Partner will have the right to receive distributions of "Net Sales Proceeds," as defined in the Listing Note, until the Listing Note is paid in full; provided that, the Special Limited Partner has the right, but not the obligation, to convert the entire Special Limited Partner interest into OP Units. OP Units are convertible into shares of the Company's common stock in accordance with the terms governing conversion of OP Units into shares of common stock and contained in the Second Amended and Restated Agreement of Limited Partnership of the OP by the Company, as general partner of its OP, with the limited partners party thereto (the "Second A&R OP Agreement"), which will be entered into at Listing. On April 29, 2015 , the board of directors authorized the execution, in conjunction with the potential Listing, the Second A&R OP Agreement to conform more closely with agreements of limited partnership of other operating partnerships controlled by real estate investment trusts whose securities are publicly traded and listed, and to add long term incentive plan units ("LTIP Units") as a new class of units of limited partnership in the OP to the existing common units ("OP Units"). The Company may at any time cause the OP to issue LTIP Units pursuant to an outperformance agreement. On April 29, 2015 , the board of directors approved the general terms of a Multi-Year Outperformance Agreement to be entered into with the Company, the OP and the Advisor in connection with the Listing. The Advisor was paid a brokerage commission on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and one-half of the total brokerage commission paid, if a third party broker was also involved; provided, however, that in no event could the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. During the nine months ended September 30, 2016 , the Company incurred $0.6 million of real estate commissions from the Advisor for its services in connection with the sale of real estate investments. The impact of the real estate commissions is included in gain on sale of real estate investments on the consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2016 . No such commissions were incurred during the three months ended September 30, 2016 or the three and nine months ended September 30, 2015 . The Second A&R Advisory Agreement terminated the brokerage commission to the Advisor. Related Party Agreements Executed in Connection with the Mergers On September 6, 2016, the Company entered into an amendment of the Second A&R Advisory Agreement (the "Third A&R Advisory Agreement"), which will become effective upon the Effective Time. Under the Third A&R Advisory Agreement, the fixed portion of the base management fee will increase from $18.0 million annually to (i) $21.0 million annually for the first year following the Effective Time; (ii) $22.5 million annually for the second year following the Effective Time; and (iii) $24.0 million annually for the remainder of the term. If the Company acquires (whether by merger, consolidation or otherwise) any REIT, other than RCA, that is advised by an entity that is wholly-owned, directly or indirectly, by AR Global, other than any joint ventures, (a "Specified Transaction") the fixed portion of the base management fee will be increased by an amount equal to the consideration paid for the acquired company's equity multiplied by 0.0031 , 0.0047 and 0.0062 for years one, two and three and thereafter, respectively, following the Specified Transaction. The variable portion of the base management fee will change from a quarterly fee equal to 0.375% of the cumulative net proceeds of any equity raised after the Company lists its common stock on a national securities exchange to a monthly fee equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity raised by the Company or its subsidiaries from and after the Effective Time. Under the Third A&R Advisory Agreement, the Company will have the right to internalize the services and terminate the Advisory Agreement, referred to as an “internalization,” after January 1, 2018 as long as (1) more than 67% of the Company’s independent directors approve the internalization; (2) the Company provides written notice to the Advisor; and (3) the Company pays the Advisor a fee equal to (a) $15.0 million plus (b) either (x) if the internalization occurs on or before December 31, 2028, the Subject Fees (defined below) multiplied by 4.5 or (y) if the internalization occurs on or after January 1, 2029, the Subject Fees multiplied by 3.5 plus (c)(x) 1% of the purchase price (excluding the portion of the purchase price funded with equity proceeds raised prior to the end of the fiscal quarter in which the notice of election occurs) of each acquisition or merger that occurs between the end of the fiscal quarter in which notice is given and the internalization and (y) without duplication, 1% of the amount of new equity raised by the Company between the end of the fiscal quarter in which notice is given and the internalization. Subject Fees means (I) (A) all amounts payable pursuant to the Advisory Agreement and the Property Management Agreement for the fiscal quarter in which notice occurs multiplied by (B) four plus (II) without duplication, the annual increase in the base management fee resulting from the amount of new equity raised by the Company within the fiscal quarter in which notice occurs, as described above. On September 6, 2016, the Company entered into an amendment to the agreement of limited partnership of the OP (the “A&R OP Agreement”), which will become effective upon the Effective Time. The A&R OP Agreement makes certain changes to the provisions of the partnership agreement relating to (a) distributions of net sales proceeds and the Termination Note (as defined in the A&R OP Agreement) issuable on termination of the Third A&R Advisory Agreement to address the issuance of shares of the Company’s common stock pursuant to the Merger and in future transactions; (b) internalization of the Advisor’s services after the Effective Time pursuant to the conditions in the Third A&R Advisory Agreement; and (c) certain matters related to changes in the Third A&R Advisory Agreement. On September 6, 2016, the Company entered into an amended and restated property management and leasing agreement (the “Property Management Agreement”) with the Property Manager in respect of (1) the properties owned by the Company prior to the Merger and (2) any double- and triple-net leased single tenant properties acquired by the Company after the Effective Time and during the term of the Property Management Agreement (collectively, the “Company Properties” and together with the Target Properties, the “Properties”). The Property Management Agreement will become effective at the Effective Time and will be of no force or effect in the event the Merger Agreement is terminated prior to the Merger being consummated. The Property Management Agreement provides that the Property Manager will be entitled to a management fee equal to 4% of the gross rental receipts from properties currently owned by RCA (“Target Properties”), including common area maintenance reimbursements, tax and insurance reimbursements, percentage rental payments, utility reimbursements, late fees, vending machine collections, service charges, rental interruption insurance, and a 15% administrative charge for common area expenses. In addition, the Property Manager will be entitled to transition fees of up to $2,500 for each Target Property managed, a construction fee equal to 6% of construction costs incurred, if any, and reimbursement of all expenses specifically related to the operation of a Target Property, including compensation and benefits of property management, accounting, lease administration, executive and supervisory personnel of the Property Manager, and excluding expenses of the Property Manager’s corporate and general management office and excluding compensation and other expenses applicable to time spent on matters other than the Target Properties. The Property Management Agreement has an initial term ending October 1, 2018, with automatic renewal for successive one-year terms unless terminated 60 days prior to the end of a term or terminated for cause due to material breach of the agreement, fraud, criminal conduct or willful misconduct, insolvency or bankruptcy of the Property Manager. |
Economic Dependency
Economic Dependency | 9 Months Ended |
Sep. 30, 2016 | |
Economic Dependency [Abstract] | |
Economic Dependency | Economic Dependency Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor 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 and legal services, human resources and information technology. As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Restricted Share Plan The Company had an employee and director incentive restricted share plan (the "Original RSP"), which provided for the automatic grant of 1,333 restricted shares of common stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, on the date of initial election to the board of directors and on the date of each annual stockholders' meeting. Restricted stock issued to independent directors vests over a five -year period following the date of grant in increments of 20.0% per annum. The Original RSP provided the Company with the ability to grant awards of restricted shares to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to other entities that provide services to the Company. The total number of shares of common stock granted under the Original RSP could not exceed 5.0% of the Company's shares of common stock on a fully diluted basis at any time, and in any event could not exceed 3.4 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events). Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. For restricted share awards granted prior to 2015, such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with the Company. Restricted share awards granted during or after 2015 provide for accelerated vesting of the portion of the unvested shares scheduled to vest in the year of the recipient's voluntary termination or the failure to be re-elected to the board. The Company accounts for forfeitures when they occur. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock are subject to the same restrictions as the underlying restricted shares. In April 2015 , the board of directors adopted an Amended and Restated RSP (the "A&R RSP") that replaces in its entirety the Original RSP. The A&R RSP amends the terms of the Original RSP as follows: • it increases the number of shares of Company capital stock, par value $0.01 per share (the "Capital Stock"), available for awards thereunder from 5.0% of the Company's outstanding shares of Capital Stock on a fully diluted basis at any time, not to exceed 3.4 million shares of Capital Stock, to 10.0% of the Company's outstanding shares of Capital Stock on a fully diluted basis at any time; • it removes the fixed amount of shares that were automatically granted to the Company's independent directors; and • it adds restricted stock units (including dividend equivalent rights thereon) as a permitted form of award. The following table reflects restricted share award activity for the nine months ended September 30, 2016 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2015 7,455 $ 23.34 Granted 3,723 24.17 Vested (1,811 ) 23.19 Unvested, September 30, 2016 9,367 $ 23.70 As of September 30, 2016 , the Company had $0.2 million of unrecognized compensation cost related to unvested restricted share awards granted. That cost is expected to be recognized over a weighted-average period of 3.4 years . The fair value of the restricted shares is being expensed in accordance with the service period required. Compensation expense related to restricted stock was approximately $31,000 and $26,000 for the three months ended September 30, 2016 and 2015 , respectively. Compensation expense related to restricted stock was $0.1 million and approximately $40,000 for the nine months ended September 30, 2016 and 2015 , respectively. Compensation expense related to restricted stock is included in general and administrative expense on the accompanying consolidated statements of operations and comprehensive loss. Other Share-Based Compensation The Company may issue common stock in lieu of cash to pay fees earned by the Company's directors at each director's election. There are no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no shares of common stock issued to directors in lieu of cash compensation during the three and nine months ended September 30, 2016 and 2015 . |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The following table sets forth the basic and diluted net loss per share computations for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except share and per share amounts) 2016 2015 2016 2015 Basic and diluted net loss $ (8,729 ) $ (11,428 ) $ (18,660 ) $ (8,151 ) Basic and diluted weighted-average shares outstanding 65,741,735 66,450,057 65,334,465 66,058,803 Basic and diluted net loss per share $ (0.13 ) $ (0.17 ) $ (0.29 ) $ (0.12 ) Diluted net loss per share assumes the conversion of certain common share equivalents into an equivalent number of common shares, unless the effect is antidilutive. The Company considers unvested restricted stock, OP Units and Class B Units to be common share equivalents. The Company had the following common share equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share as their effect would have been antidilutive for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Unvested restricted stock (1) 8,381 7,319 7,521 5,975 OP Units 90 90 90 90 Class B Units 1,052,420 1,052,420 1,052,420 919,611 Total weighted-average antidilutive common share equivalents 1,060,891 1,059,829 1,060,031 925,676 _____________________________________ (1) Weighted-average number of shares of unvested restricted stock outstanding for the period presented. There were 9,367 and 7,455 shares of unvested restricted stock outstanding as of September 30, 2016 and 2015 , respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q , and determined that there have not been any events that have occurred that would require adjustments to, or disclosures in, the consolidated financial statements except for the following disclosures: SRP Amendment On November 7, 2016, the board of directors of the Company determined to amend the Company’s existing SRP to provide that for purposes of the SRP, shares received from the Company in exchange for shares of RCA pursuant to the Merger, if the Merger is completed, will be deemed to have been acquired from the Company on the date that the holder acquired the shares of RCA, provided the holder of RCA shares purchased the RCA shares from RCA or received their shares from RCA (directly or indirectly) through one or more non-cash transactions and any holding period under the SRP shall be deemed to include the period that shares of RCA were held by the holder. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity ("VIE") for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP. |
Deferred Costs, Net | Deferred Costs, Net Deferred costs, net consists of deferred financing costs net of accumulated amortization and deferred leasing costs net of accumulated amortization. Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method and included in interest expense on the accompanying consolidated statements of operations and comprehensive loss. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. Deferred leasing costs, consisting primarily of lease commissions and payments made to execute new leases, are deferred and amortized over the term of the lease. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are VIEs or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted, including adoption in an interim period. The Company elected to adopt this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company's partnership interest is considered a majority voting interest in a business and the assets of the OP can be used for purposes other than settling its obligations, such as paying distributions. As such, the new guidance did not have a material impact on the Company's consolidated financial statements. In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption was permitted for financial statements that have not previously been issued. The Company elected to adopt this guidance effective January 1, 2016. As a result, the Company reclassified $16.6 million and $20.1 million of deferred issuance costs related to the Company's mortgage notes payable from deferred costs, net to mortgage notes payable in the Company's consolidated balance sheets as of September 30, 2016 and December 31, 2015 , respectively. In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 2016, electing to account for forfeitures when they occur, and determined that there is no impact to the Company’s consolidated financial position, results of operations and cash flows. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers 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 revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. The Company has not yet selected a transition method and is currently evaluating the impact of the new guidance. In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity's accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. The Company is currently evaluating the impact of the new guidance. In February 2016, the FASB issued an update which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both l essees and lessors. The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The revised guidance supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance. In March 2016, the FASB issued guidance which requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The company is currently evaluating the impact of this new guidance. In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. In October 2016, the FASB issued guidance relating to interest held through related parties that are under common control, where a reporting entity will need to evaluate if it should consolidate a VIE. The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
Purchase Price of Acquired Properties | The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2016 . There were no real estate assets acquired or liabilities assumed during the nine months ended September 30, 2015 : Nine Months Ended September 30, 2016 (Dollar amounts in thousands) Real estate investments, at cost: Land $ 1,729 Buildings, fixtures and improvements 29,664 Total tangible assets 31,393 Acquired intangibles: In-place leases (1) 3,162 Above-market lease assets (1) 548 Above-market ground lease liability (1) (85 ) Below-market lease liabilities (1) (774 ) Total intangible assets, net 2,851 Cash paid for acquired real estate investments $ 34,244 Number of properties purchased 4 _____________________________________ (1) Weighted-average remaining amortization periods for in-place leases, above-market lease assets, above-market ground lease liability and below-market lease liabilities acquired during the nine months ended September 30, 2016 were 9.5 years , 9.6 years , 48.6 years and 9.5 years , respectively, as of each property's respective acquisition date. |
Schedule of Intangible Assets and Goodwill | Total acquired intangible lease assets and liabilities consist of the following as of the dates presented: September 30, 2016 December 31, 2015 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 305,578 $ 92,515 $ 213,063 $ 305,245 $ 68,278 $ 236,967 Above-market lease assets 13,690 7,410 6,280 13,783 5,555 8,228 Total acquired intangible lease assets $ 319,268 $ 99,925 $ 219,343 $ 319,028 $ 73,833 $ 245,195 Intangible liabilities: Above-market ground lease liability $ 85 $ 1 $ 84 $ — $ — $ — Below-market lease liabilities 19,242 3,866 15,376 20,623 2,490 18,133 Total acquired intangible lease liabilities $ 19,327 $ 3,867 $ 15,460 $ 20,623 $ 2,490 $ 18,133 |
Finite-lived Intangible Assets Amortization Expense | The following table provides the projected amortization expense and adjustments to revenue and property operating expense for intangible assets and liabilities for the next five years: (In thousands) October 1, 2016 to December 31, 2016 2017 2018 2019 2020 In-place leases $ 8,548 $ 34,193 $ 24,207 $ 24,187 $ 22,569 Total to be added to depreciation and amortization $ 8,548 $ 34,193 $ 24,207 $ 24,187 $ 22,569 Above-market leases $ (724 ) $ (2,895 ) $ (526 ) $ (526 ) $ (526 ) Below-market lease liabilities 752 3,009 974 974 974 Total to be added to rental income $ 28 $ 114 $ 448 $ 448 $ 448 Above-market ground lease liability $ — $ (2 ) $ (2 ) $ (2 ) $ (2 ) Total to be deducted from property operating expense $ — $ (2 ) $ (2 ) $ (2 ) $ (2 ) The following table presents amortization expense and adjustments to revenue and property operating expense for intangible assets and liabilities for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 In-place leases $ 8,550 $ 8,650 $ 25,841 $ 25,950 Total added to depreciation and amortization $ 8,550 $ 8,650 $ 25,841 $ 25,950 Above-market leases $ (724 ) $ (751 ) $ (2,220 ) $ (2,254 ) Below-market lease liabilities 752 335 1,713 1,005 Total added to (deducted from) rental income $ 28 $ (416 ) $ (507 ) $ (1,249 ) Above-market ground lease liability $ — $ — $ (1 ) $ — Total deducted from property operating expense $ — $ — $ (1 ) $ — |
Business Acquisition, Pro Forma Information | The following table presents unaudited pro forma information as if the acquisitions during the nine months ended September 30, 2016 had been consummated on January 1, 2015 : Nine Months Ended September 30, (In thousands, except per share data) 2016 (1) 2015 Pro forma revenues $ 133,189 $ 132,210 Pro forma net loss $ (18,533 ) $ (7,240 ) Basic pro forma net loss per share $ (0.28 ) $ (0.11 ) Diluted pro forma net loss per share $ (0.28 ) $ (0.11 ) _____________________ (1) For the nine months ended September 30, 2016 , aggregate revenues and net income derived from the Company's 2016 acquisitions (for the Company's period of ownership) were $1.7 million and $0.8 million , respectively. |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table presents future minimum base rent payments on a cash basis due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items: (In thousands) Future Minimum Base Rent Payments October 1, 2016 to December 31, 2016 $ 39,633 2017 160,004 2018 153,784 2019 155,875 2020 150,703 Thereafter 912,235 $ 1,572,234 |
Schedule of Annualized Rental Income by Major Tenants | The following table lists the tenants (including, for this purpose, all affiliates of such tenants) from which the Company derives annualized rental income on a straight-line basis constituting 10.0% or more of the Company's consolidated annualized rental income on a straight-line basis for all portfolio properties as of the dates indicated: September 30, Tenant 2016 2015 SunTrust Bank 17.8% 17.9% Sanofi US 11.4% 11.6% C&S Wholesale Grocer 10.2% 10.4% |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | The following table lists the states where the Company has concentrations of properties where annualized rental income on a straight-line basis represented 10.0% or greater of consolidated annualized rental income on a straight-line basis as of the dates indicated: September 30, State 2016 2015 New Jersey 20.0% 20.3% Georgia 11.0% 11.2% |
Commercial Mortgage Loans (Tabl
Commercial Mortgage Loans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Composition and Summary of Loan Portfolio | The following table is a summary of the Company's commercial mortgage loan portfolio: September 30, 2016 December 31, 2015 Loan Type Property Type Par Value Percentage Par Value Percentage (In thousands) (In thousands) Senior Student Housing — Multifamily $ 17,200 100.0 % $ 17,200 21.6 % Senior Retail — (1) — % 18,150 (1) 22.7 % Senior Hospitality — (1) — % 44,500 (1) 55.7 % $ 17,200 100.0 % $ 79,850 100.0 % _____________________________________ (1) These loans were classified as held for sale as of December 31, 2015 and were sold during the nine months ended September 30, 2016 for $56.9 million . For the nine months ended September 30, 2016 and 2015 , the activity on the Company's commercial mortgage loans, held for investment, was as follows: Nine Months Ended (In thousands) September 30, 2016 September 30, 2015 Beginning balance $ 17,135 $ — Originations — 79,410 Discount accretion and premium amortization (1) 28 16 Ending balance $ 17,163 $ 79,426 _____________________________________ (1) Includes amortization of capitalized origination fees and expenses. |
Summary of Credit Characteristics | As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. The loans are scored on a scale of 1 to 5 as follows: Investment Rating Summary Description 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing investments requiring closer monitoring. Trends and risk factors show some deterioration. 4 Underperforming investment with some loss of interest expected but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. |
Other Real Estate Securities (T
Other Real Estate Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Realized Gain (Loss) | The following table details the realized gains on sale of the Company's other real estate securities, which consisted of redeemable preferred stock, during the three and nine months ended September 30, 2015 . As of September 30, 2016 and December 31, 2015 , the Company had no investments in other real estate securities; as such, there were no other real estate securities sold during the nine months ended September 30, 2016 : (In thousands) Aggregate Cost Basis Sale Price Realized Gain Three Months Ended September 30, 2015 $ 9,821 $ 10,013 $ 192 Nine Months Ended September 30, 2015 $ 18,528 $ 19,266 $ 738 |
Mortgage Notes Payable (Tables)
Mortgage Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The Company's mortgage notes payable as of September 30, 2016 and December 31, 2015 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties September 30, December 31, September 30, December 31, Interest Rate Maturity Anticipated Repayment (In thousands) (In thousands) SAAB Sensis I 1 $ 7,930 $ 8,190 6.01 % 6.01 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 30 25,000 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 C&S Wholesale Grocer I 4 82,313 82,313 5.56 % 5.56 % Fixed Apr. 2037 Apr. 2017 SunTrust Bank III 115 89,493 99,677 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 27 21,243 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 Sanofi US I 1 125,000 125,000 5.16 % 5.16 % Fixed Jul. 2026 Jan. 2021 Stop & Shop I 4 38,444 38,936 5.63 % 5.63 % Fixed Jun. 2041 Jun. 2021 Multi-Tenant Mortgage Loan 268 649,532 649,532 4.36 % 4.36 % Fixed Sep. 2020 Sep. 2020 Gross mortgage notes payable 450 1,038,955 1,053,648 4.76 % (1) 4.77 % (1) Deferred financing costs, net of accumulated amortization (16,611 ) (20,066 ) Mortgage notes payable, net of deferred financing costs $ 1,022,344 $ 1,033,582 _____________________________________ (1) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. |
Schedule of Maturities of Long-term Debt | The following table summarizes the scheduled aggregate principal payments on mortgage notes payable based on stated maturity dates for the five years subsequent to September 30, 2016 and thereafter: (In thousands) Future Principal Payments October 1, 2016 to December 31, 2016 $ 262 2017 1,080 2018 1,143 2019 1,211 2020 650,808 Thereafter 384,451 $ 1,038,955 |
Fair Value of Financial Instr27
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The following table presents information about the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 , aggregated by the level in the fair value hierarchy within which those instruments fall. There were no financial instruments measured at fair value on a recurring basis as of September 30, 2016 . Additionally, there were no financial instruments measured at fair value on a non recurring basis as of September 30, 2016 or December 31, 2015 : (In thousands) Quoted Prices in Active Markets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total December 31, 2015 Commercial mortgage-backed securities $ — $ 56,884 $ — $ 56,884 |
Fair Value, by Balance Sheet Grouping | The fair values of the Company's remaining financial instruments that are not reported at fair value on the consolidated balance sheets as of September 30, 2016 and December 31, 2015 are reported in the following table: Carrying Amount at Fair Value at Carrying Amount at Fair Value at (In thousands) Level September 30, 2016 September 30, 2016 December 31, 2015 December 31, 2015 Commercial mortgage loan, held for investment 3 $ 17,163 $ 16,572 $ 17,135 $ 17,200 Gross mortgage notes payable and mortgage premiums, net 3 $ 1,050,626 $ 1,099,346 $ 1,068,540 $ 1,103,352 |
Common Stock Common Stock (Tabl
Common Stock Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Schedule of Share Repurchases | The following table summarizes the repurchases of shares under the SRP cumulatively through September 30, 2016 : Number of Shares Weighted-Average Price per Share Cumulative repurchases as of December 31, 2015 2,073,645 $ 24.12 Nine months ended September 30, 2016 7,854 24.17 Cumulative repurchases as of September 30, 2016 2,081,499 $ 24.12 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Master Leases | The Company entered into ground lease agreements related to certain acquisitions under leasehold interest arrangements. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter: (In thousands) Future Minimum Base Rent Payments October 1, 2016 to December 31, 2016 $ 229 2017 921 2018 903 2019 902 2020 674 Thereafter 4,975 $ 8,604 |
Unfunded Commitments Under Commercial Mortgage Loans | The following table reflects the expiration of these commitments over the next five years and thereafter: (In thousands) Funding Expiration October 1, 2016 to December 31, 2016 $ — 2017 2,450 2018 — 2019 — 2020 — Thereafter — $ 2,450 |
Related Party Transactions an30
Related Party Transactions and Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services | The following table details amounts incurred and payable to related parties in connection with the operations-related services described above as of and for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, Payable as of (In thousands) 2016 2015 2016 2015 September 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements (1) $ — $ 1,330 $ — $ 1,330 $ — $ — Financing coordination fees — 4,913 — 4,913 — — Ongoing fees: Asset management fees 4,500 4,413 13,500 8,509 — — Professional fees and other reimbursements (2) 780 1,007 2,303 2,555 534 541 Distributions on Class B Units (2) 436 438 1,300 1,135 142 — Total related party operation fees and reimbursements $ 5,716 $ 12,101 $ 17,103 $ 18,442 $ 676 $ 541 _________________________________ (1) Acquisition fees and expenses from related parties of $0.9 million were recognized in acquisition and transaction related expense on the consolidated statement of operations and comprehensive loss for three and nine months ended September 30, 2015 . In addition, over the same periods, the Company capitalized $0.4 million of acquisition expenses to the Company's consolidated balance sheet, which are amortized over the life of each investment using the effective interest method. No acquisition expenses were capitalized during the three and nine months ended September 30, 2016 . (2) These costs are included in general and administrative expense on the consolidated statements of operations and comprehensive loss. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table reflects restricted share award activity for the nine months ended September 30, 2016 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2015 7,455 $ 23.34 Granted 3,723 24.17 Vested (1,811 ) 23.19 Unvested, September 30, 2016 9,367 $ 23.70 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the basic and diluted net loss per share computations for the three and nine months ended September 30, 2016 and 2015 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except share and per share amounts) 2016 2015 2016 2015 Basic and diluted net loss $ (8,729 ) $ (11,428 ) $ (18,660 ) $ (8,151 ) Basic and diluted weighted-average shares outstanding 65,741,735 66,450,057 65,334,465 66,058,803 Basic and diluted net loss per share $ (0.13 ) $ (0.17 ) $ (0.29 ) $ (0.12 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company had the following common share equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share as their effect would have been antidilutive for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Unvested restricted stock (1) 8,381 7,319 7,521 5,975 OP Units 90 90 90 90 Class B Units 1,052,420 1,052,420 1,052,420 919,611 Total weighted-average antidilutive common share equivalents 1,060,891 1,059,829 1,060,031 925,676 _____________________________________ (1) Weighted-average number of shares of unvested restricted stock outstanding for the period presented. There were 9,367 and 7,455 shares of unvested restricted stock outstanding as of September 30, 2016 and 2015 , respectively. |
Organization (Narrative) (Detai
Organization (Narrative) (Details) $ / shares in Units, ft² in Millions, $ in Billions | 44 Months Ended | |||
Sep. 30, 2016USD ($)ft²property$ / sharesshares | Sep. 06, 2016$ / shares | Dec. 31, 2015$ / sharesshares | Apr. 04, 2013$ / sharesshares | |
Operations [Line Items] | ||||
Number of real estate properties | property | 458 | |||
Purchase price | $ | $ 2.2 | |||
Area of real estate property | ft² | 13.3 | |||
Percentage of property leased | 100.00% | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, outstanding (in shares) | shares | 65,805,432 | 64,961,256 | ||
Proceeds from issuance of common stock | $ | $ 1.6 | |||
Common Stock | ||||
Operations [Line Items] | ||||
Shares available in IPO (in shares) | shares | 68,000,000 | |||
Share Price (in dollars per share) | $ / shares | $ 25 |
Pending Merger Agreement (Narra
Pending Merger Agreement (Narrative) (Details) $ / shares in Units, $ in Millions | Sep. 06, 2016USD ($)$ / shares | Sep. 30, 2016$ / shares | Dec. 31, 2015$ / shares | Apr. 04, 2013$ / shares |
Business Acquisition [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
Share price (in usd per share) | $ 0.95 | |||
Go-shop period | 45 days | |||
Termination fee applicable sixteen days after go-shop period | $ | $ 25.6 | |||
OP | Loan Facility | American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Line of credit | $ | $ 360 | |||
Limited partner interests in acquiree OP converted to acquirer OP units | American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.424 | |||
OP and GP units of acquiree converted to acquirer OP units | American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
RCA Common Stock | American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.01 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Narrative) (Details) - Accounting Standards Update 2015-03 - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred Costs | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred financing costs, net | $ 16.6 | $ 20.1 |
Mortgage Notes Payable | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred financing costs, net | $ (16.6) | $ (20.1) |
Real Estate Investments (Narrat
Real Estate Investments (Narrative) (Details) $ in Thousands | Sep. 14, 2016USD ($) | May 12, 2016USD ($)property | Sep. 30, 2016USD ($)property | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)property | Sep. 30, 2015USD ($) |
Business Acquisition [Line Items] | ||||||
Number of real estate properties | property | 458 | 458 | ||||
Impairment charges | $ | $ 117 | $ 0 | $ 117 | $ 0 | ||
Gain on sale of real estate investments | $ | $ 0 | $ 0 | $ 454 | $ 0 | ||
SunTrust Bank | ||||||
Business Acquisition [Line Items] | ||||||
Number of properties sold | property | 8 | |||||
Sales of real estate | $ | $ 700 | $ 28,900 | ||||
Number of property leases amended | property | 160 |
Real Estate Investments (Assets
Real Estate Investments (Assets Acquired) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)property | |
Business Acquisition [Line Items] | |
Land | $ 1,729 |
Buildings, fixtures and improvements | 29,664 |
Total tangible assets | 31,393 |
Acquired leases | 2,851 |
Above-market ground lease liability | (85) |
Below-market lease liabilities | (774) |
Cash paid for acquired real estate investments | $ 34,244 |
Number of properties purchased | property | 4 |
In-place leases | |
Business Acquisition [Line Items] | |
Acquired leases | $ 3,162 |
Weighted-average amortization period | 9 years 5 months 18 days |
Above-market leases | |
Business Acquisition [Line Items] | |
Acquired leases | $ 548 |
Weighted-average amortization period | 9 years 7 months |
Above-market ground leases | |
Business Acquisition [Line Items] | |
Weighted-average amortization period | 48 years 7 months |
Below market leases | |
Business Acquisition [Line Items] | |
Weighted-average amortization period | 9 years 6 months 6 days |
Real Estate Investments (Acquir
Real Estate Investments (Acquired Leases) (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 319,268 | $ 319,028 |
Finite-lived intangible assets, accumulated amortization | 99,925 | 73,833 |
Intangible assets, net | 219,343 | 245,195 |
Finite-lived intangible liabilities, gross | 19,327 | 20,623 |
Finite-lived intangible liabilities, accumulated amortization | 3,867 | 2,490 |
Intangible liabilities, net | 15,460 | 18,133 |
Below market lease, gross | 19,242 | 20,623 |
Below market lease, accumulated amortization | 3,866 | 2,490 |
Below market lease, net | 15,376 | 18,133 |
In-place leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 305,578 | 305,245 |
Finite-lived intangible assets, accumulated amortization | 92,515 | 68,278 |
Intangible assets, net | 213,063 | 236,967 |
Above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 13,690 | 13,783 |
Finite-lived intangible assets, accumulated amortization | 7,410 | 5,555 |
Intangible assets, net | 6,280 | 8,228 |
Above-market ground leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible liabilities, gross | 85 | 0 |
Finite-lived intangible liabilities, accumulated amortization | 1 | 0 |
Intangible liabilities, net | $ 84 | $ 0 |
Real Estate Investments (Summar
Real Estate Investments (Summary of Amortization Expense and Adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 25,841 | $ 25,950 | ||
Depreciation and Amortization | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 8,550 | $ 8,650 | 25,841 | 25,950 |
Depreciation and Amortization | In-place leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 8,550 | 8,650 | 25,841 | 25,950 |
Rental Income | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization (accretion) of leases | 28 | (416) | (507) | (1,249) |
Rental Income | Above-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 724 | 751 | 2,220 | 2,254 |
Rental Income | Below market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 752 | 335 | 1,713 | 1,005 |
Property Operating Expense | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 0 | 0 | 1 | 0 |
Property Operating Expense | Above-market ground leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | $ 0 | $ 0 | $ 1 | $ 0 |
Real Estate Investments (Lease
Real Estate Investments (Lease Amortization) (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Depreciation and Amortization | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2016 to December 31, 2016 | $ 8,548 |
2,017 | 34,193 |
2,018 | 24,207 |
2,019 | 24,187 |
2,020 | 22,569 |
Depreciation and Amortization | In-place leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2016 to December 31, 2016 | 8,548 |
2,017 | 34,193 |
2,018 | 24,207 |
2,019 | 24,187 |
2,020 | 22,569 |
Rental Income | |
Finite-Lived Intangible Assets [Line Items] | |
Below market leases, October 1, 2016 to December 31, 2016 | 28 |
Below market leases, 2017 | 114 |
Below market leases, 2018 | 448 |
Below market leases, 2019 | 448 |
Below market lease, 2020 | 448 |
Rental Income | Above-market leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2016 to December 31, 2016 | (724) |
2,017 | (2,895) |
2,018 | (526) |
2,019 | (526) |
2,020 | (526) |
Rental Income | Below market leases | |
Finite-Lived Intangible Assets [Line Items] | |
Below market leases, October 1, 2016 to December 31, 2016 | 752 |
Below market leases, 2017 | 3,009 |
Below market leases, 2018 | 974 |
Below market leases, 2019 | 974 |
Below market lease, 2020 | 974 |
Property Operating Expense | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2016 to December 31, 2016 | 0 |
2,017 | (2) |
2,018 | (2) |
2,019 | (2) |
2,020 | (2) |
Property Operating Expense | Above-market ground leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2016 to December 31, 2016 | 0 |
2,017 | (2) |
2,018 | (2) |
2,019 | (2) |
2,020 | $ (2) |
Real Estate Investments (Pro Fo
Real Estate Investments (Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Real Estate [Abstract] | ||
Pro forma revenues | $ 133,189 | $ 132,210 |
Pro forma net loss | $ (18,533) | $ (7,240) |
Basic pro forma net loss per share (in usd per share) | $ (0.28) | $ (0.11) |
Diluted pro forma net loss per share (in usd per share) | $ (0.28) | $ (0.11) |
Revenue since acquisition | $ 1,700 | |
Net income since acquisition | $ 800 |
Real Estate Investments (Minimu
Real Estate Investments (Minimum Lease Payments) (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Real Estate [Abstract] | |
October 1, 2016 to December 31, 2016 | $ 39,633 |
2,017 | 160,004 |
2,018 | 153,784 |
2,019 | 155,875 |
2,020 | 150,703 |
Thereafter | 912,235 |
Total | $ 1,572,234 |
Real Estate Investments (Concen
Real Estate Investments (Concentrations) (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
New Jersey | ||
Concentration Risk [Line Items] | ||
Concentration risk | 20.00% | 20.30% |
Georgia | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.00% | 11.20% |
SunTrust Bank | ||
Concentration Risk [Line Items] | ||
Concentration risk | 17.80% | 17.90% |
Sanofi US | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.40% | 11.60% |
C&S Wholesale Grocer | ||
Concentration Risk [Line Items] | ||
Concentration risk | 10.20% | 10.40% |
Commercial Mortgage Loans (Comp
Commercial Mortgage Loans (Composition of Loan Portfolio) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Sales of commercial mortgage loans | $ 56,900 | |
Commercial Portfolio Segment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Par Value | $ 17,200 | $ 79,850 |
Percentage | 100.00% | 100.00% |
Commercial Portfolio Segment | Student Housing - Multifamily | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Par Value | $ 17,200 | $ 17,200 |
Percentage | 100.00% | 21.60% |
Commercial Portfolio Segment | Retail | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Par Value | $ 0 | $ 18,150 |
Percentage | 0.00% | 22.70% |
Commercial Portfolio Segment | Hospitality | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Par Value | $ 0 | $ 44,500 |
Percentage | 0.00% | 55.70% |
Commercial Mortgage Loans (Roll
Commercial Mortgage Loans (Rollforward of Loan Portfolio) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | ||
Beginning balance | $ 17,135 | $ 0 |
Originations | 0 | 79,410 |
Discount accretion and premium amortization | 28 | 16 |
Ending balance | $ 17,163 | $ 79,426 |
Commercial Mortgage Loans (Narr
Commercial Mortgage Loans (Narrative) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Allowance for loan losses | $ 0 | $ 0 |
Other Real Estate Securities (S
Other Real Estate Securities (Summary of Realized Gains) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | |||||
Available-for-sale securities | $ 0 | $ 0 | $ 0 | ||
Sale Price | 0 | $ 19,266 | |||
Realized Gain | $ 0 | $ 192 | $ 0 | 738 | |
Other Real Estate Securities | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Aggregate Cost Basis | 9,821 | 18,528 | |||
Sale Price | 10,013 | 19,266 | |||
Realized Gain | $ 192 | $ 738 |
Mortgage Notes Payable (Summary
Mortgage Notes Payable (Summary of Mortgage Notes Payable) (Details) - Mortgage notes payable and premiums, net $ in Thousands | Sep. 30, 2016USD ($)property | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 450 | |
Outstanding Loan Amount | $ 1,038,955 | $ 1,053,648 |
Effective Interest Rate | 4.76% | 4.77% |
Deferred financing costs, net of accumulated amortization | $ (16,611) | $ (20,066) |
Mortgage notes payable, net of deferred financing costs | $ 1,022,344 | 1,033,582 |
SAAB Sensis I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 7,930 | $ 8,190 |
Effective Interest Rate | 6.01% | 6.01% |
SunTrust Bank II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 30 | |
Outstanding Loan Amount | $ 25,000 | $ 25,000 |
Effective Interest Rate | 5.50% | 5.50% |
C&S Wholesale Grocer I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 82,313 | $ 82,313 |
Effective Interest Rate | 5.56% | 5.56% |
SunTrust Bank III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 115 | |
Outstanding Loan Amount | $ 89,493 | $ 99,677 |
Effective Interest Rate | 5.50% | 5.50% |
SunTrust Bank IV | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 27 | |
Outstanding Loan Amount | $ 21,243 | $ 25,000 |
Effective Interest Rate | 5.50% | 5.50% |
Stop & Shop I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 38,444 | $ 38,936 |
Effective Interest Rate | 5.63% | 5.63% |
Sanofi US I - New Loan | Sanofi US I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 125,000 | $ 125,000 |
Effective Interest Rate | 5.16% | 5.16% |
Multi-Tenant Mortgage Loan | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 268 | |
Outstanding Loan Amount | $ 649,532 | $ 649,532 |
Effective Interest Rate | 4.36% | 4.36% |
Mortgage Notes Payable (Narrati
Mortgage Notes Payable (Narrative) (Details) | 9 Months Ended | |||
Sep. 30, 2016USD ($)property | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Aug. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Restricted cash | $ 7,890,000 | $ 7,887,000 | ||
Restricted cash released | (3,000) | $ (37,947,000) | ||
Mortgage notes payable and premiums, net | ||||
Debt Instrument [Line Items] | ||||
Collateral pledged | $ 2,000,000,000 | 2,000,000,000 | ||
Encumbered Properties | property | 450 | |||
Outstanding Loan Amount | $ 1,038,955,000 | 1,053,648,000 | ||
Mortgage notes payable and premiums, net | Multi-Tenant Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 655,000,000 | |||
Interest rate | 4.30% | |||
Encumbered Properties | property | 268 | |||
Outstanding Loan Amount | $ 649,532,000 | $ 649,532,000 | ||
Restricted cash | 7,900,000 | $ 42,500,000 | ||
Restricted cash released | $ 34,600,000 |
Mortgage Notes Payable (Future
Mortgage Notes Payable (Future Minimum Payments) (Details) - Mortgage notes payable and premiums, net - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
October 1, 2016 to December 31, 2016 | $ 262 | |
2,017 | 1,080 | |
2,018 | 1,143 | |
2,019 | 1,211 | |
2,020 | 650,808 | |
Thereafter | 384,451 | |
Long-term Debt | $ 1,038,955 | $ 1,053,648 |
Fair Value of Financial Instr51
Fair Value of Financial Instruments (Schedule of Fair Value, Assets Measured on Recurring Basis) (Details) - Mortgage-Backed Securities - Fair Value, Measurements, Recurring $ in Thousands | Dec. 31, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Investment securities, at fair value | $ 56,884 |
Fair Value, Inputs, Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Investment securities, at fair value | 0 |
Fair Value, Inputs, Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Investment securities, at fair value | 56,884 |
Fair Value, Inputs, Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Investment securities, at fair value | $ 0 |
Fair Value of Financial Instr52
Fair Value of Financial Instruments (Fair Value of Financial Instruments) (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 17,163 | $ 17,135 |
Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 16,572 | 17,200 |
Mortgage notes payable and premiums, net | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 1,050,626 | 1,068,540 |
Mortgage notes payable and premiums, net | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | $ 1,099,346 | $ 1,103,352 |
Common Stock (Narrative) (Detai
Common Stock (Narrative) (Details) - $ / shares | Apr. 09, 2013 | Mar. 31, 2016 | Sep. 30, 2016 | Apr. 01, 2016 | Dec. 31, 2015 | Nov. 14, 2014 |
Class of Stock [Line Items] | ||||||
Common stock, outstanding (in shares) | 65,805,432 | 64,961,256 | ||||
Dividends declared per day (in dollars per share) | $ 0.00452054795 | $ 0.00450819672 | ||||
Dividends declared (in dollars per share) | $ 1.65 | $ 1.65 | ||||
Percentage of weighted average outstanding stock for fiscal semester | 2.50% | |||||
Percentage of weighted average outstanding stock for fiscal year | 5.00% | |||||
Number of shares in unfulfilled requests (in shares) | 5,800,000 | |||||
Shares available for issuance under a distribution reinvestment plan (in shares) | 7,700,000 | |||||
Common stock issued through distribution reinvestment plan (in shares) | 848,307 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Share price for Drip (in dollars per share) | $ 23.75 | |||||
Drip Share price (in dollars per share) | 95.00% | |||||
One Year | ||||||
Class of Stock [Line Items] | ||||||
Percentage of value of capital paid | 92.50% | |||||
Two Years | ||||||
Class of Stock [Line Items] | ||||||
Percentage of value of capital paid | 95.00% | |||||
Three Years | ||||||
Class of Stock [Line Items] | ||||||
Percentage of value of capital paid | 97.50% | |||||
Four Years | ||||||
Class of Stock [Line Items] | ||||||
Percentage of value of capital paid | 100.00% |
Common Stock (Stock Redemption)
Common Stock (Stock Redemption) (Details) - $ / shares | 9 Months Ended | 35 Months Ended | 44 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Equity [Abstract] | |||
Number of Shares (in shares) | 7,854 | 2,073,645 | 2,081,499 |
Weighted Average Price per Share (in dollars per share) | $ 24.17 | $ 24.12 | $ 24.12 |
Commitments and Contingencies55
Commitments and Contingencies (Future Minimum Ground Lease Payments) (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
October 1, 2016 to December 31, 2016 | $ 229 |
2,017 | 921 |
2,018 | 903 |
2,019 | 902 |
2,020 | 674 |
Thereafter | 4,975 |
Total | $ 8,604 |
Commitments and Contingencies56
Commitments and Contingencies (Summary of Unfunded Commitments Under Commercial Mortgage Loans) (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
October 1, 2016 to December 31, 2016 | $ 0 |
2,017 | 2,450 |
2,018 | 0 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 0 |
Total | $ 2,450 |
Related Party Transactions an57
Related Party Transactions and Arrangements (Narrative) (Details) - American Realty Capital Trust V Special Limited Partner, LLC - Special Limited Partner - shares | Sep. 30, 2016 | Dec. 31, 2015 |
Related Party Transaction [Line Items] | ||
Common stock held by related party (in shares) | 8,888 | 8,888 |
OP units outstanding (in shares) | 90 | 90 |
Related Party Transactions an58
Related Party Transactions and Arrangements (Fees and Participations Paid in Connection With the Operations of the Company) (Details) - USD ($) | Sep. 06, 2016 | Sep. 05, 2016 | Jul. 20, 2015 | Apr. 29, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Apr. 15, 2015 |
Related Party Transaction [Line Items] | |||||||||
Total commissions and fees from the Dealer Manager | $ 4,500,000 | $ 4,413,000 | $ 13,500,000 | $ 8,509,000 | |||||
Advisory Agreement | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction, term | 20 years | ||||||||
Sales Commissions and Dealer Manager Fees | |||||||||
Related Party Transaction [Line Items] | |||||||||
Share Price (in dollars per share) | $ 22.50 | $ 22.50 | |||||||
Base Management Fee | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party fee, quarterly payments | $ 1,500,000 | ||||||||
Related party fee, quarterly payments, percent of net proceeds from equity financing | 1.25% | 0.375% | 0.375% | ||||||
Amount of transaction | $ 18,000,000 | ||||||||
Base Management Fee - First Year following Effective Time | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Amount of transaction | $ 21,000,000 | ||||||||
Base Management Fee - Second Year following Effective Time | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Amount of transaction | 22,500,000 | ||||||||
Base Management Fee - Thereafter | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Amount of transaction | $ 24,000,000 | ||||||||
Annual Subordinated Performance Fee | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party fee, percent of earnings in excess of benchmark one | 15.00% | ||||||||
Related party fee, earnings per share used in calculation, benchmark one (in usd per share) | $ 0.375 | ||||||||
Related party fee, percent of earnings in excess of benchmark two | 10.00% | ||||||||
Related party fee, earnings per share used in calculation, benchmark two (in usd per share) | $ 0.50 | ||||||||
American Realty Capital Advisors | Contract Purchase Price | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Acquisition fees earned by related party percentage | 1.00% | 1.00% | |||||||
Financing advance fees earned by related party percentage | 1.00% | 1.00% | |||||||
Expected third party acquisition costs reimbursable | 0.50% | 0.50% | |||||||
Acquisition fees and acquisition related expenses | 4.50% | 4.50% | |||||||
Quarterly asset management fee earned | 0.1875% | 0.1875% | |||||||
Antidilutive shares (in shares) | 1,052,420 | ||||||||
American Realty Capital Advisors | Advance on Loan or Other Investment | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Financing advance fees earned by related party percentage | 4.50% | 4.50% | |||||||
Expected third party acquisition costs reimbursable | 0.50% | 0.50% | |||||||
American Realty Capital Advisors | Contract Purchase Price, All Assets Acquired | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Acquisition fees and acquisition related expenses | 1.50% | 1.50% | |||||||
American Realty Capital Advisors | Amount Available or Outstanding Under Financing Arrangement | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Financing coordination fees earned | 0.75% | 0.75% | |||||||
American Realty Capital Advisors | Annual Targeted Investor Return | Pre-tax Non-compounded Return on Capital Contribution | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Cumulative capital investment return | 6.00% | 6.00% | |||||||
American Realty Capital Advisors | Annual Asset Management Fee as Percentage of Assets | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction, annual asset management fee percentage | 0.75% | ||||||||
American Realty Capital Advisors | Administrative Services | Advisor | |||||||||
Related Party Transaction [Line Items] | |||||||||
Total commissions and fees from the Dealer Manager | $ 800,000 | 400,000 | $ 2,200,000 | 400,000 | |||||
American Realty Capital Advisors | Lease Commissions | |||||||||
Related Party Transaction [Line Items] | |||||||||
Amount of transaction | $ 0 | $ 0 | $ 1,300,000 | $ 0 |
Related Party Transactions an59
Related Party Transactions and Arrangements (Fees and Participations Paid in Connection With the Operations of the Company, Incurred, Forgiven and Payable) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||
Expenses incurred | $ 4,500 | $ 4,413 | $ 13,500 | $ 8,509 | |
Acquisition costs | 4,859 | 4,859 | $ 0 | ||
Total related party operation fees and reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 5,716 | 12,101 | 17,103 | 18,442 | |
Due to Affiliate | 676 | 676 | 541 | ||
Acquisition fees and related cost reimbursements (1) | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 0 | 1,330 | 0 | 1,330 | |
Due to Affiliate | 0 | 0 | 0 | ||
Financing coordination fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 0 | 4,913 | 0 | 4,913 | |
Due to Affiliate | 0 | 0 | 0 | ||
Asset management fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 4,500 | 4,413 | 13,500 | 8,509 | |
Due to Affiliate | 0 | 0 | 0 | ||
Professional fees and other reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 780 | 1,007 | 2,303 | 2,555 | |
Due to Affiliate | 534 | 534 | 541 | ||
Distributions on Class B Units | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 436 | $ 438 | 1,300 | $ 1,135 | |
Due to Affiliate | 142 | 142 | $ 0 | ||
Advisor | Acquisition fees and related cost reimbursements (1) | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 900 | ||||
Acquisition costs | $ 400 | $ 400 |
Related Party Transactions an60
Related Party Transactions and Arrangements (Fees and Participations Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | ||||
Total commissions and fees from the Dealer Manager | $ 4,500,000 | $ 4,413,000 | $ 13,500,000 | $ 8,509,000 |
Cash Distribution | Special Limited Partner | ||||
Related Party Transaction [Line Items] | ||||
OP’s obligation to distribute to Special Limited Partner, percentage | 15.00% | 15.00% | ||
Minimum cumulative, non-compounded pre-tax annual return | 6.00% | 6.00% | ||
Brokerage Commission Fees | Contract Sales Price | American Realty Capital Advisors | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Real estate commissions as a percentage of benchmark | 2.00% | 2.00% | ||
Brokerage Commission Fees | Brokerage Commissions Paid | American Realty Capital Advisors | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Real estate commissions as a percentage of benchmark | 50.00% | 50.00% | ||
Real Estate Commissions | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Total commissions and fees from the Dealer Manager | $ 600,000 | $ 0 | ||
Real Estate Commissions | Contract Sales Price | American Realty Capital Advisors | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Real estate commissions as a percentage of benchmark | 6.00% | 6.00% |
Related Party Transactions an61
Related Party Transactions and Arrangements (Related Party Agreements Executed in Connection with the Mergers) (Details) - USD ($) | Sep. 06, 2016 | Sep. 05, 2016 | Jul. 20, 2015 |
Related Party Transaction [Line Items] | |||
Ineligible termination period | 60 days | ||
Advisor | |||
Related Party Transaction [Line Items] | |||
Percentage of independent directors approval needed to terminate agreement | 67.00% | ||
Advisor | Base Management Fee | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 18,000,000 | ||
Related party fee, quarterly payments, percent of net proceeds from equity financing | 1.25% | 0.375% | 0.375% |
Advisor | Base Management Fee - First Year following Effective Time | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 21,000,000 | ||
Transaction multiplier | 0.0031 | ||
Advisor | Base Management Fee - Second Year following Effective Time | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 22,500,000 | ||
Transaction multiplier | 0.0047 | ||
Advisor | Base Management Fee - Thereafter | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 24,000,000 | ||
Transaction multiplier | 0.0062 | ||
Advisor | Termination Fees for Agreement | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 15,000,000 | ||
Advisor | Base Subject Fees Spread | |||
Related Party Transaction [Line Items] | |||
Transaction multiplier | 4 | ||
Advisor | Subject Fees | |||
Related Party Transaction [Line Items] | |||
Transaction multiplier | 4.5 | ||
Advisor | Subject Fees - Applicable if Internalization Occurs On or After January 1, 2029 | |||
Related Party Transaction [Line Items] | |||
Transaction multiplier | 3.5 | ||
Advisor | Basis Spread - Purchase Price | |||
Related Party Transaction [Line Items] | |||
Margin on multiplier | 1.00% | ||
Advisor | Basis Spread - Equity Raised | |||
Related Party Transaction [Line Items] | |||
Margin on multiplier | 1.00% | ||
Property Manager | Property Management Fee | |||
Related Party Transaction [Line Items] | |||
Percentage of gross rental receipts | 4.00% | ||
Percentage of reimbursable administrative charges | 15.00% | ||
Property Manager | Transition Fees | |||
Related Party Transaction [Line Items] | |||
Amount of transaction | $ 2,500 | ||
Construction fee percentage | 6.00% |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 31, 2015 | Apr. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 06, 2016 | Dec. 31, 2015 | Apr. 04, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Distribution Reinvestment Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||||||
Restricted Share Plan | Restricted Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares granted automatically upon election to board of directors (in shares) | 1,333 | 1,333 | |||||||
Vesting period | 5 years | ||||||||
Periodic vesting percentage | 20.00% | 20.00% | |||||||
Maximum authorized amount as a percentage of shares authorized | 5.00% | 10.00% | 5.00% | ||||||
Number of shares authorized (in shares) | 3,400,000 | 3,400,000 | 3,400,000 | ||||||
Unrecognized compensation costs | $ 200 | $ 200 | |||||||
Weighted average period for recognition | 3 years 4 months 30 days | ||||||||
Share based compensation expense | $ 31 | $ 26 | $ 100 | $ 40 |
Share-Based Compensation (Summa
Share-Based Compensation (Summary of Unvested Restricted Stock Activity) (Details) - Restricted Share Plan - Restricted Stock | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of shares unvested - beginning balance (in shares) | shares | 7,455 |
Granted (in shares) | shares | 3,723 |
Vested (in shares) | shares | (1,811) |
Number of shares unvested - ending balance (in shares) | shares | 9,367 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted average grant date fair value - beginning balance (in usd per share) | $ / shares | $ 23.34 |
Granted (in usd per share) | $ / shares | 24.17 |
Vested (in usd per share) | $ / shares | 23.19 |
Weighted average grant date fair value - ending balance (in usd per share) | $ / shares | $ 23.70 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Basic and diluted net loss | $ (8,729) | $ (11,428) | $ (18,660) | $ (8,151) |
Basic and diluted weighted-average shares outstanding (in shares) | 65,741,735 | 66,450,057 | 65,334,465 | 66,058,803 |
Basic and diluted net loss per share (in dollars per share) | $ (0.13) | $ (0.17) | $ (0.29) | $ (0.12) |
Antidilutive shares (in shares) | 1,060,891 | 1,059,829 | 1,060,031 | 925,676 |
Restricted Stock | Restricted Share Plan | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Shares outstanding (in shares) | 9,367 | 7,455 | 9,367 | 7,455 |
Restricted Stock | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 8,381 | 7,319 | 7,521 | 5,975 |
OP Units | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 90 | 90 | 90 | 90 |
Class B Units | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 1,052,420 | 1,052,420 | 1,052,420 | 919,611 |