Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
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, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 104,820,978 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Real estate investments, at cost: | ||
Land | $ 606,296 | $ 328,656 |
Buildings, fixtures and improvements | 2,444,410 | 1,395,602 |
Acquired intangible lease assets | 461,550 | 300,129 |
Total real estate investments, at cost | 3,512,256 | 2,024,387 |
Less: accumulated depreciation and amortization | (380,468) | (287,090) |
Total real estate investments, net | 3,131,788 | 1,737,297 |
Cash and cash equivalents | 68,543 | 131,215 |
Restricted cash | 17,729 | 7,890 |
Commercial mortgage loan, held for investment, net | 17,191 | 17,175 |
Deposits for real estate acquisitions | 810 | 0 |
Prepaid expenses and other assets | 53,140 | 29,513 |
Goodwill | 1,605 | 0 |
Deferred costs, net | 8,280 | 3,767 |
Assets held for sale | 2,489 | 137,602 |
Total assets | 3,301,575 | 2,064,459 |
LIABILITIES AND EQUITY | ||
Mortgage notes payable, net of deferred financing costs | 1,083,079 | 1,022,275 |
Mortgage premiums, net | 11,707 | 10,681 |
Credit facility | 260,000 | 0 |
Market lease liabilities, net | 112,673 | 13,915 |
Accounts payable and accrued expenses (including $1,798 and $910 due to related parties as of September 30, 2017 and December 31, 2016, respectively) | 29,849 | 13,553 |
Derivatives, at fair value | 53 | 0 |
Deferred rent and other liabilities | 10,482 | 9,970 |
Distributions payable | 11,185 | 9,199 |
Total liabilities | 1,519,028 | 1,079,593 |
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, 104,644,581 and 65,805,184 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 1,046 | 658 |
Additional paid-in capital | 2,380,885 | 1,449,662 |
Accumulated other comprehensive income | 44 | 0 |
Accumulated deficit | (604,079) | (465,454) |
Total stockholders' equity | 1,777,896 | 984,866 |
Non-controlling interests | 4,651 | 0 |
Total equity | 1,782,547 | 984,866 |
Total liabilities and equity | $ 3,301,575 | $ 2,064,459 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts payable and accrued expenses, due to affiliates | $ 1,798 | $ 910 |
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) | 104,644,581 | 65,805,184 |
Common stock, outstanding (in shares) | 104,644,581 | 65,805,184 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Rental income | $ 62,287 | $ 41,357 | $ 176,867 | $ 123,033 |
Operating expense reimbursements | 7,182 | 3,162 | 20,936 | 8,979 |
Interest income from debt investments | 260 | 239 | 753 | 809 |
Total revenues | 69,729 | 44,758 | 198,556 | 132,821 |
Operating expenses: | ||||
Asset management fees to related party | 5,250 | 4,500 | 15,250 | 13,500 |
Property operating | 10,760 | 3,511 | 29,996 | 10,131 |
Impairment charges | 7,605 | 117 | 14,183 | 117 |
Acquisition and transaction related | 1,173 | 4,381 | 7,556 | 5,458 |
General and administrative | 4,986 | 2,998 | 15,067 | 8,840 |
Depreciation and amortization | 41,132 | 25,446 | 113,048 | 76,477 |
Total operating expenses | 70,906 | 40,953 | 195,100 | 114,523 |
Operating income | (1,177) | 3,805 | 3,456 | 18,298 |
Other (expense) income: | ||||
Interest expense | (14,502) | (12,574) | (44,912) | (37,533) |
Gain on sale of real estate investments | 264 | 0 | 14,095 | 454 |
Other income | 18 | 40 | 211 | 121 |
Total other expense, net | (14,220) | (12,534) | (30,606) | (36,958) |
Net loss | (15,397) | (8,729) | (27,150) | (18,660) |
Net loss attributable to non-controlling interests | 30 | 0 | 45 | 0 |
Net loss attributable to stockholders | (15,367) | (8,729) | (27,105) | (18,660) |
Other comprehensive income: | ||||
Change in unrealized gain on derivative | 10 | 0 | 44 | 0 |
Comprehensive loss attributable to stockholders | $ (15,357) | $ (8,729) | $ (27,061) | $ (18,660) |
Basic and diluted weighted-average shares outstanding (in shares) | 104,545,591 | 65,741,735 | 97,852,337 | 65,334,465 |
Basic and diluted net loss per share attributable to stockholders (in dollars per share) | $ (0.15) | $ (0.13) | $ (0.28) | $ (0.29) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Total | Total Stockholders' Equity | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interests |
Balance, beginning of period (in shares) at Dec. 31, 2016 | 65,805,184 | ||||||
Beginning balance at Dec. 31, 2016 | $ 984,866 | $ 984,866 | $ 658 | $ 1,449,662 | $ 0 | $ (465,454) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuances of common stock (in shares) | 38,210,213 | ||||||
Issuances of common stock | $ 917,046 | 917,046 | $ 382 | 916,664 | |||
Common stock issued through distribution reinvestment plan (in shares) | 1,845,665 | 1,845,665 | |||||
Common stock issued through distribution reinvestment plan | $ 43,524 | 43,524 | $ 18 | 43,506 | |||
Common stock repurchases (in shares) | (1,225,378) | ||||||
Common stock repurchases | (29,061) | (29,061) | $ (12) | (29,049) | |||
Share-based compensation, net of forfeitures (in shares) | 8,897 | ||||||
Share-based compensation, net of forfeitures | 102 | 102 | 102 | ||||
Distributions declared | (111,520) | (111,520) | (111,520) | ||||
Issuances of operating partnership units | 4,887 | 4,887 | |||||
Distributions to non-controlling interest holders | (191) | (191) | |||||
Net loss | (27,150) | (27,105) | (27,105) | (45) | |||
Other comprehensive income | 44 | 44 | 44 | ||||
Balance, end of period (in shares) at Sep. 30, 2017 | 104,644,581 | ||||||
Ending balance at Sep. 30, 2017 | $ 1,782,547 | $ 1,777,896 | $ 1,046 | $ 2,380,885 | $ 44 | $ (604,079) | $ 4,651 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (27,150) | $ (18,660) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 62,719 | 50,595 |
Amortization of in-place lease assets | 50,149 | 25,841 |
Amortization (including accelerated write-off) of deferred costs | 5,734 | 3,408 |
Amortization of mortgage premiums on borrowings | (3,117) | (3,221) |
Discount accretion on commercial mortgage loan | (16) | (28) |
Amortization of market lease intangibles, net | (3,085) | 506 |
Share-based compensation | 102 | 52 |
Mark-to-market adjustments | (105) | 0 |
Gain on sale of real estate investments | (14,095) | (454) |
Impairment charges | 14,183 | 117 |
Changes in assets and liabilities: | ||
Prepaid expenses and other assets | (7,912) | (6,638) |
Accounts payable and accrued expenses | (5,297) | 6,101 |
Deferred rent and other liabilities | (8,295) | (1,865) |
Restricted cash | 659 | 0 |
Net cash provided by operating activities | 64,474 | 55,754 |
Cash flows from investing activities: | ||
Proceeds from sale of commercial mortgage loans | 0 | 56,884 |
Capital expenditures | (4,344) | 0 |
Investments in real estate and other assets | (107,108) | (34,244) |
Deposits for real estate investments | (810) | 0 |
Proceeds from sale of real estate investments | 179,014 | 15,521 |
Cash paid in merger transaction | (94,502) | 0 |
Cash acquired in merger transaction | 21,922 | 0 |
Restricted cash | (1,033) | 0 |
Net cash (used in) provided by investing activities | (6,861) | 38,161 |
Cash flows from financing activities: | ||
Proceeds from mortgage notes payable | 23,950 | 0 |
Payments on mortgage notes payable | (3,364) | (752) |
Proceeds from credit facility | 70,000 | 0 |
Payments on credit facility | (114,000) | 0 |
Payments of financing costs | (1,576) | (3,512) |
Common stock repurchases | (29,061) | (16,253) |
Distributions paid | (66,010) | (60,509) |
Restricted cash | (224) | (3) |
Net cash used in financing activities | (120,285) | (81,029) |
Net change in cash and cash equivalents | (62,672) | 12,886 |
Cash and cash equivalents, beginning of period | 131,215 | 130,500 |
Cash and cash equivalents, end of period | 68,543 | 143,386 |
Supplemental Disclosures: | ||
Cash paid for interest | 41,534 | 36,901 |
Cash paid for income taxes | 736 | 738 |
Non-Cash Investing and Financing Activities: | ||
Equity issued in the merger transaction | 921,930 | 0 |
Credit facility assumed or used to acquire investments in real estate | 304,000 | 0 |
Mortgage notes payable assumed or used to acquire investments in real estate | 127,651 | 0 |
Premiums on assumed mortgage notes payable | 4,143 | 0 |
Mortgage notes payable released in connection with disposition of real estate | (89,978) | (13,941) |
Common stock issued through distribution reinvestment plan | 43,524 | 20,499 |
Accrued capital expenditures | $ 1,012 | $ 0 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1 — Organization American Finance Trust, Inc. (the "Company") is a diversified REIT with a retail focus. The Company owns a diversified portfolio of commercial properties comprised primarily of freestanding single-tenant properties that are net leased to investment grade and other creditworthy tenants and a portfolio of stabilized core retail properties, consisting primarily of power centers and lifestyle centers, which were acquired in the Merger (as defined below). The Company intends to focus its future acquisitions primarily on net leased retail properties and stabilized core retail properties. As of September 30, 2017 , the Company owned 517 properties, comprised of 19.4 million rentable square feet, which were 96.0% leased, including 482 net leased commercial properties ( 443 of which are retail properties) and 35 stabilized core retail properties. 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. As of September 30, 2017 , the Company had 104.6 million shares of common stock outstanding, including unvested restricted shares of common stock ("restricted shares") and shares issued pursuant to the Company's distribution reinvestment plan (the "DRIP"). 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. On August 8, 2017, the Company's application to list its common stock on The NASDAQ Global Select Market (“NASDAQ”) under the symbol "AFIN" (the "Listing") was approved by NASDAQ, subject to the Company being in compliance with all applicable listing standards on the date it begins trading on NASDAQ. While the Company intends to list its common stock at a time yet to be determined by its board of directors, there can be no assurance as to when or if the Company's common stock will commence trading or of the price at which the Company's common stock may trade. |
Merger Transaction
Merger Transaction | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Merger Transaction | Note 2 — Merger Transaction On February 16, 2017 , the Company and the OP completed (a) the merger of American Realty Capital — Retail Centers of America, Inc. (“RCA”) with and into a subsidiary of the Company referred to as the "Merger Sub," with the Merger Sub surviving as a wholly owned subsidiary of the Company (the "Merger") and (b) the merger of American Realty Capital Retail Operating Partnership, L.P. (the "RCA 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 Agreement and Plan of Merger (the "Merger Agreement") entered into by the Company and the OP with RCA, the RCA OP and the Merger Sub, at the effective time of the Mergers on February 16, 2017 (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), was converted into (x) 0.385 shares of the Company's 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) was automatically 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 was automatically 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 was 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 Advisor”), in the RCA OP was redeemed for a cash payment, determined in accordance with the existing terms of the RCA OP’s agreement of limited partnership. In addition, as provided in the Merger Agreement, all outstanding restricted shares of RCA Common Stock previously issued by RCA became fully vested and entitled to receive the Merger Consideration. The Company issued 38.2 million shares of its common stock as Stock Consideration and paid $94.5 million in Cash Consideration. Prior to the Mergers, the Company and RCA each were sponsored, directly or indirectly, by AR Global. AR Global and its affiliates provide investment and advisory services to the Company, and previously provided such services to RCA, pursuant to written advisory agreements. In connection with, and subject to the terms and conditions of the Merger Agreement, RCA OP units held by AR Global and its affiliates were exchanged for limited partner interests in the OP designated as OP units ("OP Units") and certain special limited partner interests in the RCA OP held by AR Global and its affiliates were, consistent with the terms of the RCA OP partnership agreement, redeemed for a cash payment of approximately $2.8 million . The Advisor has informed the Company that the Advisor has engaged Lincoln Retail REIT Services, LLC (“Lincoln”) as an independent service provider to provide real estate-related services similar to the services provided by Lincoln to the RCA Advisor prior to the Effective Time. Lincoln will continue to provide, subject to the Advisor’s or its affiliates’ oversight, asset management, property management and leasing services for those multi-tenant properties acquired by the Company from RCA in the Mergers. The Advisor has informed the Company that the Advisor has agreed to pass through to Lincoln a portion of the fees and/or other expense reimbursements otherwise payable to the Advisor or its affiliates by the Company for services rendered by Lincoln. The Company has no direct obligation to Lincoln. Accounting Treatment for the Mergers The Mergers are accounted for under the acquisition method for business combinations pursuant to accounting principles generally accepted in the United States of America ("GAAP"), with the Company as the accounting acquirer of RCA. The consideration transferred by the Company to acquire RCA establishes a new accounting basis for the assets acquired, liabilities assumed and any non-controlling interests, measured at their respective fair value as of the Effective Time. In determining the fair value of the consideration transferred, including the Stock Consideration and any non-controlling interests, the Company utilized multiple sources including real estate valuations prepared by independent valuation firms and market sales data. To the extent fair value of the Total Merger Consideration exceeds fair value of net assets acquired, any such excess represents goodwill. Alternatively, if fair value of net assets acquired exceeds fair value of the Total Merger Consideration, the transaction could result in a bargain purchase gain that is recognized immediately in earnings and attributable to the Company's common stockholders. Measurement period adjustments to the estimated fair value of identifiable assets and liabilities of RCA, as well as adjustments to the Total Merger Consideration may change the determination and amount of goodwill and/or bargain purchase gain and may impact depreciation, amortization and accretion based on revised fair value of assets acquired and liabilities assumed. The following table summarizes the estimated fair value of the consideration transferred pursuant to the Mergers and the estimated fair values of the assets acquired and liabilities assumed as of the effective date of the Mergers. (In thousands) RCA Total Consideration: Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement $ 94,504 Fair value of the Stock Consideration 917,046 Fair value of the Partnership Merger Consideration 2 Fair value of the Class B Consideration 4,882 Fair value of the Total Merger Consideration $ 1,016,434 Assets Acquired at Fair Value Land $ 282,063 Buildings, fixtures and improvements 1,079,944 Acquired intangible lease assets 178,634 Total real estate investments, at fair value 1,540,641 Cash and cash equivalents 21,922 Restricted cash 4,241 Prepaid expenses and other assets (1) 18,959 Goodwill (1) 1,605 Total assets acquired at fair value 1,587,368 Liabilities Assumed at Fair Value Mortgage notes payable 127,651 Mortgage premiums 4,143 Credit facility 304,000 Market lease liabilities 104,840 Derivatives 203 Accounts payable and accrued expenses 21,291 Deferred rent and other liabilities 8,806 Total liabilities assumed at fair value 570,934 Net assets acquired $ 1,016,434 _________________________________ (1) Prepaid expenses and other assets includes a measurement period adjustment of $0.5 million that was recognized during the three months ended September 30, 2017 . As a result, goodwill was increased by $0.5 million . The allocations in the table above from land, buildings, fixtures and improvements, acquired intangible lease assets and below-market lease liabilities have been provisionally allocated, and will be finalized as soon as practical within the measurement period pursuant to GAAP upon finalization of the valuation process. As a result of the Merger, the Company acquired goodwill of $1.6 million , which is primarily attributable to expected synergies from combining operations of the Company and RCA. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with 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 nine months ended September 30, 2017 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, 2016 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 13, 2017 . There have been no significant changes to the Company's significant accounting policies during the nine months ended September 30, 2017 , other than the updates described below. Purchase Accounting The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired, including those acquired in the Mergers, based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company's analysis of comparable properties in the Company's portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases as applicable. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses. Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company's pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed. Any excess of purchase price over the fair values of assets acquired and liabilities assumed are recorded as goodwill. Alternatively, if the fair value of net assets acquired exceeds the fair value of consideration paid, the transaction results in a bargain purchase gain that the Company recognizes immediately in earnings. Derivative Instruments The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any change in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the accompanying consolidated statement of operations and comprehensive loss. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Non-controlling interests The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net income (loss) attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net income (loss) based on their share of equity ownership. Non-controlling interests resulted from the issuance of OP Units in conjunction with the Mergers and were recognized at fair value as of the Effective Time. In determining the fair value of the non-controlling interests, the Company utilized multiple sources including real estate valuations prepared by independent valuation firms and market sales data. Please see Note 2 — Merger Transaction for additional information on the Mergers. Recently Adopted Accounting Pronouncements In October 2016, the FASB issued guidance 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. The Company has adopted the provisions of this guidance beginning January 1, 2017 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 an update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, 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. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company will adopt this guidance effective January 1, 2018 and currently expects to utilize the modified retrospective approach upon adoption and does not expect that this will result in a significant cumulative-effect adjustment to equity. The Company has progressed in its project plan in evaluating our various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on the Company’s evaluation of its various revenue streams, the Company believes that gains on sales of real estate could be affected by adoption of ASC 606. The Company expects that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, the Company expects that this would impact partial sales of real estate in situations where the Company no longer retains a controlling financial interest. If the Company were to enter into partial sales of real estate, the Company would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on the Company's consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC Topic 842, Leases as discussed below. In February 2016, the FASB issued an update ASU 2016-02 establishing ASC Topic 842, Leases (“ASC 842”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. The Company will adopt this guidance effective January 1, 2019. The Company is a lessee for some properties in which it has ground leases as of September 30, 2017. For these leases, the Company will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. 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. From a lessor perspective the Company expects that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company anticipates that it will elect the following practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases, which allow the Company to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on the Company’s consolidated financial position, results of operations and disclosures. 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 Company will adopt this guidance effective January 1, 2018. The Company expects that there will be no material impact to the Company's consolidated financial position, results of operations and cash flows. 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 Company will adopt this guidance effective January 1, 2018. The Company expects that there will be no material impact to the Company's consolidated financial position, results of operations and cash flows. In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The Company will adopt this guidance effective January 1, 2018, using a retrospective transition method. As a result, the Company will restate its statements of cash flows for all periods presented to include restricted cash in the beginning and ending cash balances and remove all transfers between cash and restricted cash from operating, investing and financing activities. In January 2017, the FASB issued guidance on simplifying subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments in this update modify the concept of impairment from the condition that exists to when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The revised guidance is effective for reporting periods beginning after December 15, 2019, and the amendments will be applied prospectively. Early application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this new guidance. In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The Company will adopt this guidance effective January 1, 2018, and the amendments will be applied prospectively. The Company has assessed this revised guidance and expects, based on historical property acquisitions, that in most cases, a future property acquired after adoption would be treated as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, all do not change as a result of the modification. The Company will adopt this guidance effective January 1, 2018. The Company expects that any future modifications to its issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost. In August 2017, the FASB issued guidance to better align cash flow and fair value hedge accounting with the corresponding risk management activities. Among other things, the amendments expand which hedging strategies are eligible for hedge accounting, align the timing of recognition of hedge results with the earnings effect of the hedged item and allow companies to include the change in fair value of the derivative in the same income statement line item as the earnings effect of the hedged item. Additionally, for cash flow hedges that are highly effective, the update allows for all changes in fair value of the derivative to be recorded in other comprehensive income. The revised guidance is effective for reporting periods beginning after December 15, 2018. Early application is permitted. The Company is currently evaluating the impact of this new guidance. |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Real Estate Investments | Note 4 — Real Estate Investments The Company owned 517 properties, which were acquired for investment purposes, as of September 30, 2017 . The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2017 and 2016 : Nine Months Ended September 30, (Dollar amounts in thousands) 2017 2016 Real estate investments, at cost (1) : Land $ 303,868 $ 1,729 Buildings, fixtures and improvements 1,150,645 29,664 Total tangible assets 1,454,513 31,393 Acquired intangibles: (2) In-place leases 170,748 3,162 Above-market lease assets 22,862 548 Below-market ground lease asset 1,233 — Above-market ground lease liability — (85 ) Below-market lease liabilities (106,369 ) (774 ) Total intangible assets, net 88,474 2,851 Credit facility assumed in the Merger (304,000 ) — Mortgage notes payable assumed in the Merger (127,651 ) — Premiums on mortgage notes payable assumed in the Merger (4,143 ) — Other assets acquired and (liabilities assumed) in the Merger, net 16,427 — Consideration paid for acquired real estate investments, net of liabilities assumed $ 1,123,620 $ 34,244 Number of properties purchased 81 4 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the nine months ended September 30, 2017 have been provisionally allocated pending receipt and review of final appraisals and/or other information. (2) Weighted-average remaining amortization periods for in-place leases, above-market lease assets and below-market lease liabilities acquired during the nine months ended September 30, 2017 were 7.1 years , 9.1 years and 18.9 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, 2017 December 31, 2016 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 427,467 $ 136,586 $ 290,881 $ 286,548 $ 95,547 $ 191,001 Above-market lease assets 32,850 10,993 21,857 13,581 8,106 5,475 Below-market ground lease asset 1,233 20 1,213 — — — Total acquired intangible lease assets $ 461,550 $ 147,599 $ 313,951 $ 300,129 $ 103,653 $ 196,476 Intangible liabilities: Above-market ground lease liability $ 85 $ 2 $ 83 $ 85 $ 1 $ 84 Below-market lease liabilities 124,719 12,129 112,590 18,443 4,612 13,831 Total acquired intangible lease liabilities $ 124,804 $ 12,131 $ 112,673 $ 18,528 $ 4,613 $ 13,915 The following table presents amortization expense and adjustments to revenue and property operating expenses for intangible assets and liabilities for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 In-place leases $ 18,685 $ 8,550 $ 50,149 $ 25,841 Total added to depreciation and amortization $ 18,685 $ 8,550 $ 50,149 $ 25,841 Above-market leases $ (1,607 ) $ (724 ) $ (4,387 ) $ (2,220 ) Below-market lease liabilities 3,134 752 7,491 1,713 Total added to (deducted from) rental income $ 1,527 $ 28 $ 3,104 $ (507 ) Below-market ground lease asset $ 8 $ — $ 20 $ — Above-market ground lease liability — — (1 ) (1 ) Total deducted from property operating expenses $ 8 $ — $ 19 $ (1 ) The following table provides the projected amortization expense and adjustments to revenue and property operating expenses for intangible assets and liabilities for the next five years: (In thousands) October 1, 2017 to December 31, 2017 2018 2019 2020 2021 In-place leases $ 15,923 $ 54,238 $ 43,938 $ 34,907 $ 29,736 Total to be added to depreciation and amortization $ 15,923 $ 54,238 $ 43,938 $ 34,907 $ 29,736 Above-market leases $ (1,426 ) $ (4,096 ) $ (3,244 ) $ (2,422 ) $ (2,085 ) Below-market lease liabilities 2,356 9,213 8,516 7,795 6,936 Total to be added to rental income $ 930 $ 5,117 $ 5,272 $ 5,373 $ 4,851 Below-market ground lease asset $ 7 $ 32 $ 32 $ 32 $ 32 Above-market ground lease liability — (2 ) (2 ) (2 ) (2 ) Total to be added to property operating expenses $ 7 $ 30 $ 30 $ 30 $ 30 The following table presents unaudited pro forma information as if the acquisitions during the nine months ended September 30, 2017 had been consummated on January 1, 2016 : Nine Months Ended September 30, (In thousands, except per share data) 2017 (1) 2016 Pro forma revenues $ 218,529 $ 237,564 Pro forma net loss $ (20,062 ) $ (10,084 ) Basic and diluted pro forma net loss per share $ (0.19 ) $ (0.10 ) _____________________ (1) For the nine months ended September 30, 2017 , aggregate revenues and net income derived from the Company's 2017 acquisitions (for the Company's period of ownership) were $84.8 million and $7.6 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, 2017 to December 31, 2017 $ 58,208 2018 223,642 2019 213,028 2020 196,395 2021 183,829 Thereafter 1,110,173 $ 1,985,275 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 2017 2016 SunTrust Bank 11.5% 17.8% Sanofi US * 11.4% C&S Wholesale Grocer * 10.2% _____________________ * Tenant's annualized rental income on a straight-line basis was not greater than or equal to 10.0% of consolidated annualized rental income for all properties as of the date specified. 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, 2017 and 2016 . 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 2017 2016 New Jersey * 20.0% Georgia * 11.0% _____________________ * State's annualized rental income on a straight-line basis was not greater than or equal to 10.0% of consolidated annualized rental income for all properties as of the date specified. 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, 2017 and 2016 . Real Estate Held For Sale When assets are identified by management as held for sale, the Company stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company's estimate of the net sales price of the assets. As of September 30, 2017 and December 31, 2016 , there were three and five properties, respectively, classified as held for sale. The disposal of these properties does not represent a strategic shift. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented. The following table details the major classes of assets associated with the properties that have been reclassified as held for sale as of September 30, 2017 and December 31, 2016 . (Dollar amounts in thousands) September 30, 2017 December 31, 2016 Real estate investments held for sale, at cost: Land $ 735 $ 7,225 Buildings, fixtures and improvements 2,423 142,798 Acquired intangible lease assets 404 18,145 Total real estate assets held for sale, at cost 3,562 168,168 Less accumulated depreciation and amortization (1,007 ) (29,213 ) Total real estate investments held for sale, net 2,555 138,955 Impairment charges related to properties reclassified as held for sale (66 ) (1,353 ) Assets held for sale $ 2,489 $ 137,602 Real Estate Sales During the nine months ended September 30, 2017 , the Company closed on the sale of 19 properties, including 13 properties operated by SunTrust Banks, Inc. ("SunTrust") (as discussed below), for an aggregate contract price of $277.9 million , exclusive of closing costs. These sales resulted in aggregate gains of $14.1 million , which is reflected in gain on sale of real estate investments on the consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2017 , as well as impairment losses of $3.6 million . During the three months ended September 30, 2017 , the Company closed on the sale of seven properties operated by SunTrust (as discussed below) for an aggregate contract price of $6.0 million , exclusive of closing costs. These sales resulted in aggregate gains of $0.3 million , as well as impairment losses of $0.1 million . The disposal of these properties did not represent a strategic shift. Accordingly, the operating results of the properties sold remained classified within continuing operations for all periods presented until the date of disposal. During the nine months ended September 30, 2016 , the Company closed on the sale of nine properties, resulting in impairment charges of $0.1 million and gains on sale of real estate investments of $0.5 million . Impairment of Held for Use Real Estate Investments As of September 30, 2017 and December 31, 2016 , the Company owned 44 and 57 held for use single-tenant net lease properties operated by SunTrust, respectively, which had lease terms set to expire between December 31, 2017 and March 31, 2018. As a result, the Company reconsidered its intended holding period for these properties and evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company primarily used a market approach to estimate the future cash flows expected to be generated. This approach involved evaluating comparable sales of properties in the same geographic region as the SunTrust properties in order to generate an estimated sale price. The Company made certain assumptions in this approach including, among others, that the properties in the comparable sales used in the analysis share similar characteristics to the SunTrust properties, and that market and economic conditions at the time of any potential sales of these SunTrust properties, such as discount rates, demand for space, competition for tenants, changes in market rental rates, and costs to operate the property, would be similar to those in the comparable sales analyzed. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses or impairment may be realized in the future. For some of the held for use SunTrust properties noted above, the Company has executed a non-binding letter of intent ("LOI") or a definitive purchase and sale agreement ("PSA") to sell the properties. In those instances, the Company used the sale price from the applicable LOI or PSA to estimate the future cash flows expected to be generated. The Company made certain assumptions in this approach as well, mainly that the sale of these properties would close at the terms specified in the LOI or PSA. There can be no guarantee that the sales of these properties will close under these terms or at all. As a result of its consideration of impairment, the Company determined that as of December 31, 2016 , the carrying value of 43 of the 57 held for use SunTrust properties noted above exceeded their estimated fair values and recognized an aggregate impairment charge of $24.7 million during the year ended December 31, 2016. During the three and nine months ended September 30, 2017 , the Company recognized additional impairment charges of $7.5 million and $9.7 million , respectively, on the held for use SunTrust properties based on LOIs or PSAs entered into, which is included on the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2017 . No impairment was recognized on properties held for use during the three and nine months ended September 30, 2016 . The carrying value of the remaining 44 SunTrust properties noted above was $48.1 million as of September 30, 2017 . Property Damage During the three months ended September 30, 2017 , one of the Company's properties, Southroads Shopping Center, sustained roof damage from a tornado. The property is covered by insurance for property damage, subject to normal deductibles. Accordingly, damage will be covered by insurance proceeds, and the Company does not expect any significant exposure to loss related to this property. As a result of the damage, the Company wrote off the carrying value of the property's roof, which was estimated to be $5.6 million , and booked a corresponding insurance receivable on its consolidated balance sheet as of September 30, 2017 . |
Commercial Mortgage Loan
Commercial Mortgage Loan | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Commercial Mortgage Loan | Note 5 — Commercial Mortgage Loan The following table is a summary of the Company's commercial mortgage loan portfolio: September 30, 2017 December 31, 2016 Loan Type Property Type Par Value Percentage Par Value Percentage (In thousands) (In thousands) Senior Student Housing — Multifamily $ 17,200 100.0 % $ 17,200 100 % Credit Characteristics As part of the Company's process for monitoring the credit quality of its loan, 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, 2017 , the risk rating of the Company's commercial loan held for investment was 3. As of September 30, 2017 , 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, 2017 or December 31, 2016 . For the nine months ended September 30, 2017 and 2016 , the activity on the Company's commercial mortgage loans, held for investment, was as follows: Nine Months Ended (In thousands) September 30, 2017 September 30, 2016 Beginning balance $ 17,175 $ 17,135 Discount accretion and premium amortization (1) 16 15 Ending balance $ 17,191 $ 17,150 _____________________________________ (1) Includes amortization of capitalized origination fees and expenses. |
Credit Facility
Credit Facility | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Credit Facility | Note 6 — Credit Facility On February 16, 2017, the Company, the OP, and certain other subsidiaries of the Company acting as guarantors, entered into an amendment, assumption, joinder and reaffirmation of guaranties (the “Second Amendment”) to an unsecured amended and restated credit agreement, dated December 2, 2014 (as amended by the Second Amendment, the “Credit Agreement”), by and among the RCA OP, to which the OP is successor by merger, BMO Harris Bank N.A., as administrative agent, letter of credit issuer, swingline lender and a lender, and the other parties thereto, relating to a revolving credit facility (the “Amended Credit Facility”). The Second Amendment provides for, among other things, the OP to become the borrower and principal obligor under the Credit Agreement and the Amended Credit Facility, and for the Company to become a guarantor under the Amended Credit Facility. RCA and the RCA OP were parties to the Credit Agreement prior to closing of the Merger. The Amended Credit Facility provides for aggregate revolving loan borrowings of up to $325.0 million (subject to the value and debt service coverage ratio of the unencumbered asset pool comprising the borrowing base thereunder), a swingline subfacility of $25.0 million and a $20.0 million letter of credit subfacility, subject to certain conditions. Through an uncommitted “accordion feature,” the OP, subject to lender consent and certain other conditions, may increase commitments under the Amended Credit Facility to up to $575.0 million . As of September 30, 2017 , the Company's unused borrowing capacity was $65.0 million , based on the aggregate commitments under the Amended Credit Facility. The Amended Credit Facility matures on May 1, 2018. Borrowings under the Amended Credit Facility bear interest at either (i) the base rate (which is defined in the Credit Agreement as the greatest of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.50% , and (c) LIBOR for a one month interest period plus 1.00% ) plus an applicable spread ranging from 0.35% to 1.00% , depending on the Company’s consolidated leverage ratio, or (ii) LIBOR plus an applicable spread ranging from 1.35% to 2.00% , depending on the Company’s consolidated leverage ratio. The Amended Credit Facility provides for quarterly interest payments for each base rate loan and periodic interest payments for each LIBOR loan, based upon the applicable interest period (though no longer than three months) with respect to such LIBOR loan, with all principal outstanding being due on the maturity date. The Amended Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. Upon the occurrence of an event of default, the requisite lenders have the right to terminate their obligations under the Amended Credit Facility and to accelerate the payment on any unpaid principal amount of all outstanding loans. The Company, certain of its subsidiaries and certain subsidiaries of the OP will guarantee the obligations under the Amended Credit Facility. In connection with the Mergers, the Company assumed the outstanding balance on the Amended Credit Facility of $304.0 million . During the nine months ended September 30, 2017 , the Company paid down $114.0 million , and subsequently drew $70.0 million , leaving an outstanding balance of $260.0 million as of September 30, 2017 . The Amended Credit Facility contains various customary covenants, including but not limited to financial maintenance covenants with respect to maximum consolidated leverage and consolidated secured leverage, minimum fixed charge coverage, a maximum ratio of other recourse debt to total asset value and minimum net worth. As of September 30, 2017 , the Company was in compliance with the financial covenants under the Amended Credit Facility. |
Mortgage Notes Payable
Mortgage Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Mortgage Notes Payable | Note 7 — Mortgage Notes Payable The Company's mortgage notes payable as of September 30, 2017 and December 31, 2016 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 $ 7,565 $ 7,841 5.93 % 5.93 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 27 22,756 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 C&S Wholesale Grocer I (1) — — 82,313 — % 5.48 % Fixed Apr. 2037 Apr. 2017 SunTrust Bank III 104 82,685 88,567 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 27 21,243 21,243 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 37,744 38,271 5.63 % 5.63 % Fixed Jun. 2041 Jun. 2021 Multi-Tenant Mortgage Loan 266 648,222 649,532 4.36 % 4.36 % Fixed Sep. 2020 Sep. 2020 Liberty Crossing 1 11,000 — 4.66 % — % Fixed Jul. 2018 Jul. 2018 San Pedro Crossing 1 17,985 — 3.79 % — % Fixed Jan. 2018 Jan. 2018 Tiffany Springs MarketCenter 1 33,802 — 3.92 % — % Fixed (3) Oct. 2018 Oct. 2018 Shops at Shelby Crossing 1 23,105 — 4.97 % — % Fixed Mar. 2024 Mar. 2024 Patton Creek 1 41,060 — 5.76 % — % Fixed Dec. 2020 Dec. 2020 Bob Evans I 23 23,950 — 4.71 % — % Fixed Sep. 2037 Sep. 2027 Gross mortgage notes payable 458 1,096,117 1,037,767 4.69 % (2) 4.75 % (2) Deferred financing costs, net of accumulated amortization (13,038 ) (15,492 ) Mortgage notes payable, net of deferred financing costs $ 1,083,079 $ 1,022,275 _____________________________________ (1) The Company paid off the full mortgage balance secured by the C&S Wholesale Grocer properties on April 19, 2017. (2) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. (3) Fixed as a result of entering into a swap agreement, which is included in derivatives, at fair value on the unaudited consolidated balance sheet as of September 30, 2017 . As of September 30, 2017 and December 31, 2016 , the Company had pledged $2.1 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. In addition, as of September 30, 2017 , $770.3 million in real estate investments were included in the unencumbered asset pool comprising the borrowing base under the Amended Credit Facility. Therefore, this real estate is only available to serve as collateral or satisfy other debts and obligations if it is first removed from the borrowing base under the Amended Credit Facility. 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, 2017 , the Multi-Tenant Mortgage Loan was secured by mortgage interests in 266 of the Company's properties. As of September 30, 2017 , the outstanding balance under the Multi-Tenant Mortgage Loan was $648.2 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, 2017 , the Lenders had released $34.6 million of the amount originally placed in escrow to the Company. As of September 30, 2017 , $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, 2017 . 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, 2017 and thereafter: (In thousands) Future Principal Payments October 1, 2017 to December 31, 2017 $ 582 2018 65,182 2019 2,533 2020 689,107 2021 1,398 Thereafter 337,315 $ 1,096,117 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, 2017 , the Company was in compliance with financial covenants under its mortgage notes payable agreements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8 — Fair Value Measurements 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's derivative instrument is measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of September 30, 2017 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company's derivative. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy. The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company's potential nonperformance risk and the performance risk of the counterparties. The Company had impaired real estate investments held for sale, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of September 30, 2017 and December 31, 2016 . Impaired real estate investments held for sale were valued using the sale price from the applicable LOI or PSA less costs to sell, which is an observable input. As a result, the Company's impaired real estate investments held for sale are classified in Level 2 of the fair value hierarchy. The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of September 30, 2017 and December 31, 2016 . The Company recognized an aggregate impairment charge of $24.7 million during 2016 related to real estate investments held for use. During the three and nine months ended September 30, 2017 , the Company recognized additional impairment charges of $7.5 million and $9.7 million , respectively, related to real estate investments held for use. See Note 4 — Real Estate Investments for additional information on impairment charges incurred by the Company. The Company primarily used a market approach to estimate the future cash flows expected to be generated. This approach involved evaluating comparable sales of properties in the same geographic region as the SunTrust properties in order to generate an estimated sale price, which is an unobservable input. As a result, the impaired properties that the Company evaluated using this approach are classified in Level 3 of the fair value hierarchy. For some of the impaired properties, the Company had an executed LOI or PSA to sell the property. In those instances, the Company used the sale price from the applicable LOI or PSA to estimate the future cash flows expected to be generated, which is an observable input. As a result, the impaired properties that the Company evaluated using this approach are classified in Level 2 of the fair value hierarchy. The following table presents information about the Company's assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2017 and December 31, 2016 , aggregated by the level in the fair value hierarchy within which those instruments fall. (In thousands) Quoted Prices in Active Markets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total September 30, 2017 Impaired real estate investments held for sale $ — $ 573 $ — $ 573 Impaired real estate investments held for use — 25,457 — 25,457 Interest rate swap — (53 ) — (53 ) Total $ — $ 25,977 $ — $ 25,977 December 31, 2016 Impaired real estate investments held for sale $ — $ 961 $ — $ 961 Impaired real estate Investments held for use — 6,525 45,032 51,557 Total $ — $ 7,486 $ 45,032 $ 52,518 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 levels of the fair value hierarchy during the nine months ended September 30, 2017 and 2016 . 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, 2017 and December 31, 2016 are reported in the following table: Carrying Amount at Fair Value at Carrying Amount at Fair Value at (In thousands) Level September 30, 2017 September 30, 2017 December 31, 2016 December 31, 2016 Commercial mortgage loan, held for investment 3 $ 17,191 $ 17,200 $ 17,175 $ 17,200 Gross mortgage notes payable and mortgage premiums, net 3 $ 1,107,824 $ 1,114,908 $ 1,048,448 $ 1,076,065 Credit facility 3 $ 260,000 $ 260,000 $ — $ — 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. Advances under the Amended Credit Facility are considered to be reported at fair value, because its interest rate varies with changes in LIBOR, and there has not been a significant change in credit risk of the Company or credit markets since assumption. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Note 9 — Derivatives and Hedging Activities Risk Management Objective of Using Derivatives The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its related parties may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations. Non-designated Hedges Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. A gain of approximately $21,000 is included in interest expense on the consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2017 . There was no gain or loss on non-designated hedging relationship during the three months ended September 30, 2017 . As of September 30, 2017 and December 31, 2016 , the Company did not have any derivatives that were not designated as hedges in qualifying hedging relationships. Cash Flow Hedges of Interest Rate Risk The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next twelve months, the Company estimates that approximately $45,000 will be reclassified from other comprehensive loss as a decrease to interest expense. As of September 30, 2017 , the Company had the following derivatives that were designated as cash flow hedges of interest rate risk. The Company had no derivatives outstanding as of December 31, 2016 : September 30, 2017 Interest Rate Derivative Number of Instruments Notional Amount (In thousands) Interest Rate Swap 1 $ 34,098 The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the accompanying consolidated balance sheet as of September 30, 2017 . The Company had no derivatives outstanding as of December 31, 2016 : (In thousands) Balance Sheet Location September 30, 2017 Derivatives designated as hedging instruments: Interest Rate Swap Derivatives, at fair value $ (53 ) The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2017 . There was no gain or loss recognized on interest rate derivatives during the three and nine months ended September 30, 2016 : (In thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) $ 1 9 Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense $ (9 ) $ (35 ) Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $ — $ — Credit-risk-related Contingent Features The Company has an agreement with its derivative counterparty that contains a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of September 30, 2017 , the fair value of derivatives in a net liability position including accrued interest, but excluding any adjustment for nonperformance risk related to these agreements, was $0.1 million . As of September 30, 2017 , the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $0.1 million at September 30, 2017 . |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Common Stock | Note 10 — Common Stock As of September 30, 2017 and December 31, 2016 , the Company had 104.6 million and 65.8 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 a monthly distribution equivalent to $1.65 per annum, per share of common stock. Effective July 1, 2017, the Company's board of directors authorized a decrease in the daily accrual of distributions to an annualized rate of $1.30 per annum, per share of common stock. 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, 2017, 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, 2016, which was published on March 20, 2017. 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 price at which the Company's common stock would trade on a national securities exchange or the per-share price a third party would pay to acquire the Company, (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, 2016 that would have affected the Company's net asset value. In determining an Estimated Per-Share NAV as of December 31, 2016, the board of directors considered the Estimated Per-Share NAV increase from the Merger. As such, the board of directors concluded that the Estimated Per-Share NAV selected as of December 31, 2016 would not materially change as a result of the Merger. Share Repurchase Program The Company's board of directors has authorized the Company to repurchase shares pursuant to its 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, in its sole discretion, at each six-month period ending June 30 and December 31. On June 14, 2017, the Company announced that its board of directors had adopted an amendment and restatement of the SRP that superseded and replaced the existing SRP effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company's common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP. Under the SRP, prior to the amendment and restatement, the repurchase price per share for requests other than for death or disability was as follows: • after one year from the purchase date — 92.5% of the then-current Estimated Per-Share NAV ; • after two years from the purchase date — 95.0% of the then-current Estimated Per-Share NAV ; • after three years from the purchase date — 97.5% of the then-current Estimated Per-Share NAV ; and • after four years from the purchase date — 100.0% of the then-current Estimated Per-Share NAV . In the case of requests for death or disability, the repurchase price per share is equal to Estimated Per-Share NAV applicable on the last day of the semiannual period, as described below. 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 funds reserved by the Company in the sole discretion of the board of directors. Repurchases are made at a price based on Estimated Per-Share NAV applicable on the last day of the semiannual period, as described above. 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, 2017 : Number of Shares Weighted-Average Price per Share Cumulative repurchases as of December 31, 2016 2,081,499 $ 24.12 Three months ended March 31, 2017 848,822 (1) 23.85 Three months ended June 30, 2017 6,084 23.83 Three months ended September 30, 2017 370,472 (2) 23.41 Cumulative repurchases as of September 30, 2017 3,306,877 $ 23.97 ___________________________________ (1) Excludes rejected repurchase requests received during 2016 with respect to 5.9 million shares for $140.1 million at a weighted-average price per share of 23.65 . (2) In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Company's board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP. Distribution Reinvestment Plan Pursuant to the DRIP, the Company's stockholders may elect to reinvest distributions by purchasing shares of common stock. 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. Following the effectiveness of the joint proxy statement/prospectus relating to the Mergers on December 16, 2016, the Company reinstated the DRIP. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. Shares issued pursuant to the DRIP are recorded within equity in the accompanying consolidated balance sheets in the period distributions are declared. During the nine months ended September 30, 2017 , 1.8 million shares of common stock were issued pursuant to the DRIP. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 — 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, 2017 to December 31, 2017 $ 361 2018 1,427 2019 1,437 2020 1,219 2021 901 Thereafter 13,450 $ 18,795 Litigation and Regulatory Matters On January 13, 2017, four affiliated stockholders of RCA filed in the United States District Court for the District of Maryland a putative class action lawsuit against the Company, Edward M. Weil, Jr., Leslie D. Michelson, Edward G. Rendell (Weil, Michelson and Rendell, the “Director Defendants”), AR Global, and the Company, alleging violations of Sections 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by RCA and the Director Defendants, violations of Section 20(a) of the Exchange Act by AR Global and the Director Defendants, breaches of fiduciary duty by the Director Defendants, and aiding and abetting breaches of fiduciary duty by AR Global and the Company in connection with the negotiation of and proxy solicitation for a shareholder vote on the proposed merger of the Company and RCA and an amendment to RCA's charter. The complaint sought on behalf of the putative class rescission of the merger transaction, which was voted on and approved by stockholders on February 13, 2017, and closed on February 16, 2017, together with unspecified rescissory damages, unspecified actual damages, and costs and disbursements of the action. On April 26, 2017, the Court appointed a lead plaintiff. Lead plaintiff, along with other stockholders of RCA, filed an amended complaint on June 19, 2017. The Amended Complaint named additional individuals and entities as defendants (David Gong, Stanley Perla, Lisa Kabnick ("Additional Director Defendants"), Nicholas Radesca and American Realty Capital Retail Advisor, LLC), added counts under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 in connection with the Registration Statement for the proposed merger, under Section 13(e) of the Exchange Act, and counts for breach of contract and unjust enrichment, and dropped the demand for rescission (while maintaining the demand for rescissory damages). The Company, the Director Defendants, the Additional Director Defendants and Nicholas Radesca deny wrongdoing and liability and intend to vigorously defend the action. Due to the early stage of the litigation, no estimate of a probable loss or any reasonable possible losses are determinable at this time. No provisions for such losses have been recorded in the accompanying consolidated financial statements for the three and nine months ended September 30, 2017 . There are no other 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, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Note 12 — Related Party Transactions and Arrangements As of September 30, 2017 and December 31, 2016 , 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 owned 30,691 and 90 units, respectively, of 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. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against the Sponsor, the Advisor, advisors of other entities sponsored by the Sponsor, and the Sponsor’s principals (including Edward M. Weil, Jr.). The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there any allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. The Advisor has informed the Company that it believes that the suit is without merit and intends to defend against it vigorously. 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 charter, which were approved by the Company's stockholders on June 23, 2015 . The initial term of the Second A&R Advisory Agreement of 20 years began 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. On September 6, 2016, the date of the Merger Agreement, the Company entered into an amendment and restatement of the Second A&R Advisory Agreement (the "Third A&R Advisory Agreement"), which became effective upon the Effective Time of the Mergers. Under the Third A&R Advisory Agreement, the Company has 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 and leasing agreement (the "Property Management Agreement") with the Property Manager 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. The initial term of the Third A&R Advisory Agreement, which commenced upon the Effective Time, extends to April 29, 2035, and is automatically renewable for another 20 -year term upon each 20 -year anniversary. On September 6, 2016, the date of the Merger Agreement, the Company entered into an amendment and restatement of the agreement of limited partnership of the OP (the “A&R OP Agreement”), which became 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. 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 that would vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP's assets plus all distributions made by the Company 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. As of September 30, 2017 , 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, 2017 , 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 nine months ended September 30, 2017 and 2016 . 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. Pursuant to an amendment (the "Amendment") to the Original A&R Advisory Agreement entered into in April 2015, 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 . Under the Second A&R Advisory Agreement, the Company was required to pay a fixed base management fee of $18.0 million annually. Under the Third A&R Advisory Agreement, the fixed portion of the base management fee increased 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 changed 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. 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, 2017 and 2016 . In addition, under the Third A&R Advisory Agreement, the Company is required 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, 2017 and 2016 . On September 6, 2016, the RCA Advisor, as RCA’s former property manager and leasing agent, assigned RCA’s existing property management agreement (the "Target Property Management Agreement") and existing leasing agreement (the "Target Leasing Agreement") to the Property Manager, in respect of (1) the properties owned by RCA prior to the Merger, and (2) any existing anchored, stabilized core retail properties, such as power centers and lifestyle centers, acquired by the Company after the Effective Time and during the term of the Target Property Management Agreement and the Target Leasing Agreement, (collectively, the "Target Properties"). The Target Property Management Agreement and the Target Leasing Agreement became effective at the Effective Time. In connection with the Merger Agreement, the Target Property Management Agreement and the Target Leasing Agreement, the Company has entered into an amended and restated the Property Management Agreement 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 became effective at the Effective Time. The Target Property Management Agreement provides that the Property Manager is entitled to a management fee equal to 4% of the gross rental receipts from the 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 is 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 Target Property Management Agreement, the Target Leasing Agreement and the Property Management Agreement each have 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. The Company reimburses the Advisor's costs of providing administrative services. During the three and nine months ended September 30, 2017 , the Company incurred $1.9 million and $5.4 million , respectively of reimbursement expenses from the Advisor for providing administrative services. During the three and nine months ended September 30, 2016 , the company incurred $0.8 million and $2.2 million , respectively, of reimbursement expenses 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, 2017 and 2016 . 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. Amounts below are inclusive of fees and other expense reimbursements incurred from and due to the Advisor that are passed through and ultimately paid to Lincoln as a result of the Advisor's exclusive service agreement with Lincoln: Three Months Ended September 30, Nine Months Ended September 30, Payable as of (In thousands) 2017 2016 2017 2016 September 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements $ 49 $ — $ 100 $ — $ 31 $ — Ongoing fees: Asset management fees 5,250 4,500 15,250 13,500 — — Property management and leasing fees 1,965 — 4,788 — 570 — Professional fees and other reimbursements (1) 2,136 780 5,963 2,303 1,085 763 Distributions on Class B Units (1) 345 436 1,206 1,300 112 147 Total related party operation fees and reimbursements $ 9,745 $ 5,716 $ 27,307 $ 17,103 $ 1,798 $ 910 _________________________________ (1) These costs are included in general and administrative expense on the consolidated statements of operations and comprehensive loss. The predecessor to AR Global was party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), a subsidiary of RCAP, 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, a subsidiary of RCAP, 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. ("DST"), a third-party transfer agent. 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 gross proceeds ("Gross Proceeds") of all public and private offerings, including issuance of the Company's common stock pursuant to a merger or business combination (an "Offering") plus (ii) the total amount of cash that, if distributed to those stockholders who purchased shares of common stock in an Offering, 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 form of amended and restated agreement of limited partnership of the OP to be entered into in connection with the Listing, by the Company, as general partner of its OP, with the limited partners party thereto (the "Second A&R OP Agreement"). 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 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. Under the Original A&R Advisory Agreement, 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. No such commissions were incurred during the three and nine months ended September 30, 2017 and 2016 . The Second A&R Advisory Agreement terminated the brokerage commission to the Advisor. |
Economic Dependency
Economic Dependency | 9 Months Ended |
Sep. 30, 2017 | |
Economic Dependency [Abstract] | |
Economic Dependency | Note 13 — 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, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 14 — 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 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 shares issued to independent directors vested 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 restricted 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 restricted 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 replaced in its entirety the Original RSP. The A&R RSP amended the terms of the Original RSP as follows: • it increased the number of shares of the Company's common stock, available for awards thereunder from 5.0% of the Company's outstanding shares of common stock on a fully diluted basis at any time, not to exceed 3.4 million shares of common stock, to 10.0% of the Company's outstanding shares of common 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 ("RSUs" and, together with restricted shares, "restricted stock") (including dividend equivalent rights thereon) as a permitted form of award. As of September 30, 2017 , the Company had not yet made any RSU awards. The following table reflects restricted share award activity for the nine months ended September 30, 2017 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2016 9,367 $ 23.70 Granted 8,897 23.59 Vested (2,556 ) 23.47 Unvested, September 30, 2017 15,708 $ 24.00 As of September 30, 2017 , the Company had $0.3 million of unrecognized compensation cost related to unvested restricted stock awards granted. That cost is expected to be recognized over a weighted-average period of 3.0 years . The fair value of the restricted shares is being expensed in accordance with the service period required. Compensation expense related to restricted shares was approximately $53,000 and $31,000 for the three months ended September 30, 2017 and 2016 , respectively. Compensation expense related to restricted shares was approximately $102,000 and $52,000 for the nine months ended September 30, 2017 and 2016 , respectively. Compensation expense related to restricted shares 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 nine months ended September 30, 2017 and 2016 . |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 15 — 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, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except share and per share amounts) 2017 2016 2017 2016 Basic and diluted net loss attributable to stockholders $ (15,367 ) $ (8,729 ) $ (27,105 ) $ (18,660 ) Basic and diluted weighted-average shares outstanding 104,545,591 65,741,735 97,852,337 65,334,465 Basic and diluted net loss per share attributable to stockholders $ (0.15 ) $ (0.13 ) $ (0.28 ) $ (0.29 ) Diluted net loss per share assumes the conversion of all common stock equivalents into an equivalent number of shares of common stock, 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, 2017 2016 2017 2016 Unvested restricted stock (1) 14,404 8,381 12,030 7,521 OP Units (2) 203,612 90 169,319 90 Class B Units 1,052,420 1,052,420 1,052,420 1,052,420 Total weighted-average antidilutive common share equivalents 1,270,436 1,060,891 1,233,769 1,060,031 _____________________________________ (1) Weighted-average number of shares of unvested restricted stock outstanding for the period presented. There were 15,710 and 9,367 shares of unvested restricted stock outstanding as of September 30, 2017 and 2016 , respectively. (2) Weighted-average number of OP Units outstanding for the period presented. There were 203,612 and 90 OP Units outstanding as of September 30, 2017 and 2016 , respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 — 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: Election of Katie P. Kurtz as Chief Financial Officer, Secretary and Treasurer On October 5, 2017, Nicholas Radesca notified the Company's board of directors that he intends to retire and therefore resign from his positions as chief financial officer, secretary and treasurer of the Company, the Advisor and the Property Manager. Mr. Radesca's resignations will be effective on the later of (i) November 15, 2017 and (ii) the day after the Company files its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. There were no disagreements between Mr. Radesca and the Company or the Advisor. On October 9, 2017, the Company's board of directors unanimously elected Katie P. Kurtz as chief financial officer, secretary and treasurer of the Company, effective upon the effectiveness of Mr. Radesca's resignations. Ms. Kurtz has also been appointed as chief financial officer, secretary and treasurer of the Advisor and the Property Manager, effective upon the effectiveness of Mr. Radesca's resignation. Acquisitions From October 1, 2017 to November 13, 2017 , the Company acquired 28 properties with an aggregate base purchase price of $38.9 million , excluding acquisition related costs. Dispositions From October 1, 2017 to November 13, 2017 , the Company sold three properties operated by SunTrust with an aggregate contract sale price of $1.6 million . |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Purchase Accounting | Purchase Accounting The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired, including those acquired in the Mergers, based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company's analysis of comparable properties in the Company's portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases as applicable. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses. Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company's pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed. Any excess of purchase price over the fair values of assets acquired and liabilities assumed are recorded as goodwill. Alternatively, if the fair value of net assets acquired exceeds the fair value of consideration paid, the transaction results in a bargain purchase gain that the Company recognizes immediately in earnings. |
Derivative Instruments | Derivative Instruments The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any change in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the accompanying consolidated statement of operations and comprehensive loss. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. |
Non-controlling interests | Non-controlling interests The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net income (loss) attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net income (loss) based on their share of equity ownership. Non-controlling interests resulted from the issuance of OP Units in conjunction with the Mergers and were recognized at fair value as of the Effective Time. In determining the fair value of the non-controlling interests, the Company utilized multiple sources including real estate valuations prepared by independent valuation firms and market sales data. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2016, the FASB issued guidance 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. The Company has adopted the provisions of this guidance beginning January 1, 2017 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 an update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, 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. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company will adopt this guidance effective January 1, 2018 and currently expects to utilize the modified retrospective approach upon adoption and does not expect that this will result in a significant cumulative-effect adjustment to equity. The Company has progressed in its project plan in evaluating our various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on the Company’s evaluation of its various revenue streams, the Company believes that gains on sales of real estate could be affected by adoption of ASC 606. The Company expects that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, the Company expects that this would impact partial sales of real estate in situations where the Company no longer retains a controlling financial interest. If the Company were to enter into partial sales of real estate, the Company would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on the Company's consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC Topic 842, Leases as discussed below. In February 2016, the FASB issued an update ASU 2016-02 establishing ASC Topic 842, Leases (“ASC 842”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. The Company will adopt this guidance effective January 1, 2019. The Company is a lessee for some properties in which it has ground leases as of September 30, 2017. For these leases, the Company will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. 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. From a lessor perspective the Company expects that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company anticipates that it will elect the following practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases, which allow the Company to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on the Company’s consolidated financial position, results of operations and disclosures. 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 Company will adopt this guidance effective January 1, 2018. The Company expects that there will be no material impact to the Company's consolidated financial position, results of operations and cash flows. 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 Company will adopt this guidance effective January 1, 2018. The Company expects that there will be no material impact to the Company's consolidated financial position, results of operations and cash flows. In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The Company will adopt this guidance effective January 1, 2018, using a retrospective transition method. As a result, the Company will restate its statements of cash flows for all periods presented to include restricted cash in the beginning and ending cash balances and remove all transfers between cash and restricted cash from operating, investing and financing activities. In January 2017, the FASB issued guidance on simplifying subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments in this update modify the concept of impairment from the condition that exists to when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The revised guidance is effective for reporting periods beginning after December 15, 2019, and the amendments will be applied prospectively. Early application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this new guidance. In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The Company will adopt this guidance effective January 1, 2018, and the amendments will be applied prospectively. The Company has assessed this revised guidance and expects, based on historical property acquisitions, that in most cases, a future property acquired after adoption would be treated as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, all do not change as a result of the modification. The Company will adopt this guidance effective January 1, 2018. The Company expects that any future modifications to its issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost. In August 2017, the FASB issued guidance to better align cash flow and fair value hedge accounting with the corresponding risk management activities. Among other things, the amendments expand which hedging strategies are eligible for hedge accounting, align the timing of recognition of hedge results with the earnings effect of the hedged item and allow companies to include the change in fair value of the derivative in the same income statement line item as the earnings effect of the hedged item. Additionally, for cash flow hedges that are highly effective, the update allows for all changes in fair value of the derivative to be recorded in other comprehensive income. The revised guidance is effective for reporting periods beginning after December 15, 2018. Early application is permitted. The Company is currently evaluating the impact of this new guidance. |
Merger Transaction (Tables)
Merger Transaction (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Summary of Merger Transaction | The following table summarizes the estimated fair value of the consideration transferred pursuant to the Mergers and the estimated fair values of the assets acquired and liabilities assumed as of the effective date of the Mergers. (In thousands) RCA Total Consideration: Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement $ 94,504 Fair value of the Stock Consideration 917,046 Fair value of the Partnership Merger Consideration 2 Fair value of the Class B Consideration 4,882 Fair value of the Total Merger Consideration $ 1,016,434 Assets Acquired at Fair Value Land $ 282,063 Buildings, fixtures and improvements 1,079,944 Acquired intangible lease assets 178,634 Total real estate investments, at fair value 1,540,641 Cash and cash equivalents 21,922 Restricted cash 4,241 Prepaid expenses and other assets (1) 18,959 Goodwill (1) 1,605 Total assets acquired at fair value 1,587,368 Liabilities Assumed at Fair Value Mortgage notes payable 127,651 Mortgage premiums 4,143 Credit facility 304,000 Market lease liabilities 104,840 Derivatives 203 Accounts payable and accrued expenses 21,291 Deferred rent and other liabilities 8,806 Total liabilities assumed at fair value 570,934 Net assets acquired $ 1,016,434 The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2017 and 2016 : Nine Months Ended September 30, (Dollar amounts in thousands) 2017 2016 Real estate investments, at cost (1) : Land $ 303,868 $ 1,729 Buildings, fixtures and improvements 1,150,645 29,664 Total tangible assets 1,454,513 31,393 Acquired intangibles: (2) In-place leases 170,748 3,162 Above-market lease assets 22,862 548 Below-market ground lease asset 1,233 — Above-market ground lease liability — (85 ) Below-market lease liabilities (106,369 ) (774 ) Total intangible assets, net 88,474 2,851 Credit facility assumed in the Merger (304,000 ) — Mortgage notes payable assumed in the Merger (127,651 ) — Premiums on mortgage notes payable assumed in the Merger (4,143 ) — Other assets acquired and (liabilities assumed) in the Merger, net 16,427 — Consideration paid for acquired real estate investments, net of liabilities assumed $ 1,123,620 $ 34,244 Number of properties purchased 81 4 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the nine months ended September 30, 2017 have been provisionally allocated pending receipt and review of final appraisals and/or other information. (2) Weighted-average remaining amortization periods for in-place leases, above-market lease assets and below-market lease liabilities acquired during the nine months ended September 30, 2017 were 7.1 years , 9.1 years and 18.9 years , respectively, as of each property's respective acquisition date. |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Purchase Price of Acquired Properties | The following table summarizes the estimated fair value of the consideration transferred pursuant to the Mergers and the estimated fair values of the assets acquired and liabilities assumed as of the effective date of the Mergers. (In thousands) RCA Total Consideration: Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement $ 94,504 Fair value of the Stock Consideration 917,046 Fair value of the Partnership Merger Consideration 2 Fair value of the Class B Consideration 4,882 Fair value of the Total Merger Consideration $ 1,016,434 Assets Acquired at Fair Value Land $ 282,063 Buildings, fixtures and improvements 1,079,944 Acquired intangible lease assets 178,634 Total real estate investments, at fair value 1,540,641 Cash and cash equivalents 21,922 Restricted cash 4,241 Prepaid expenses and other assets (1) 18,959 Goodwill (1) 1,605 Total assets acquired at fair value 1,587,368 Liabilities Assumed at Fair Value Mortgage notes payable 127,651 Mortgage premiums 4,143 Credit facility 304,000 Market lease liabilities 104,840 Derivatives 203 Accounts payable and accrued expenses 21,291 Deferred rent and other liabilities 8,806 Total liabilities assumed at fair value 570,934 Net assets acquired $ 1,016,434 The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2017 and 2016 : Nine Months Ended September 30, (Dollar amounts in thousands) 2017 2016 Real estate investments, at cost (1) : Land $ 303,868 $ 1,729 Buildings, fixtures and improvements 1,150,645 29,664 Total tangible assets 1,454,513 31,393 Acquired intangibles: (2) In-place leases 170,748 3,162 Above-market lease assets 22,862 548 Below-market ground lease asset 1,233 — Above-market ground lease liability — (85 ) Below-market lease liabilities (106,369 ) (774 ) Total intangible assets, net 88,474 2,851 Credit facility assumed in the Merger (304,000 ) — Mortgage notes payable assumed in the Merger (127,651 ) — Premiums on mortgage notes payable assumed in the Merger (4,143 ) — Other assets acquired and (liabilities assumed) in the Merger, net 16,427 — Consideration paid for acquired real estate investments, net of liabilities assumed $ 1,123,620 $ 34,244 Number of properties purchased 81 4 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the nine months ended September 30, 2017 have been provisionally allocated pending receipt and review of final appraisals and/or other information. (2) Weighted-average remaining amortization periods for in-place leases, above-market lease assets and below-market lease liabilities acquired during the nine months ended September 30, 2017 were 7.1 years , 9.1 years and 18.9 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, 2017 December 31, 2016 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 427,467 $ 136,586 $ 290,881 $ 286,548 $ 95,547 $ 191,001 Above-market lease assets 32,850 10,993 21,857 13,581 8,106 5,475 Below-market ground lease asset 1,233 20 1,213 — — — Total acquired intangible lease assets $ 461,550 $ 147,599 $ 313,951 $ 300,129 $ 103,653 $ 196,476 Intangible liabilities: Above-market ground lease liability $ 85 $ 2 $ 83 $ 85 $ 1 $ 84 Below-market lease liabilities 124,719 12,129 112,590 18,443 4,612 13,831 Total acquired intangible lease liabilities $ 124,804 $ 12,131 $ 112,673 $ 18,528 $ 4,613 $ 13,915 |
Finite-lived Intangible Assets Amortization Expense | The following table presents amortization expense and adjustments to revenue and property operating expenses for intangible assets and liabilities for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 In-place leases $ 18,685 $ 8,550 $ 50,149 $ 25,841 Total added to depreciation and amortization $ 18,685 $ 8,550 $ 50,149 $ 25,841 Above-market leases $ (1,607 ) $ (724 ) $ (4,387 ) $ (2,220 ) Below-market lease liabilities 3,134 752 7,491 1,713 Total added to (deducted from) rental income $ 1,527 $ 28 $ 3,104 $ (507 ) Below-market ground lease asset $ 8 $ — $ 20 $ — Above-market ground lease liability — — (1 ) (1 ) Total deducted from property operating expenses $ 8 $ — $ 19 $ (1 ) The following table provides the projected amortization expense and adjustments to revenue and property operating expenses for intangible assets and liabilities for the next five years: (In thousands) October 1, 2017 to December 31, 2017 2018 2019 2020 2021 In-place leases $ 15,923 $ 54,238 $ 43,938 $ 34,907 $ 29,736 Total to be added to depreciation and amortization $ 15,923 $ 54,238 $ 43,938 $ 34,907 $ 29,736 Above-market leases $ (1,426 ) $ (4,096 ) $ (3,244 ) $ (2,422 ) $ (2,085 ) Below-market lease liabilities 2,356 9,213 8,516 7,795 6,936 Total to be added to rental income $ 930 $ 5,117 $ 5,272 $ 5,373 $ 4,851 Below-market ground lease asset $ 7 $ 32 $ 32 $ 32 $ 32 Above-market ground lease liability — (2 ) (2 ) (2 ) (2 ) Total to be added to property operating expenses $ 7 $ 30 $ 30 $ 30 $ 30 |
Business Acquisition, Pro Forma Information | The following table presents unaudited pro forma information as if the acquisitions during the nine months ended September 30, 2017 had been consummated on January 1, 2016 : Nine Months Ended September 30, (In thousands, except per share data) 2017 (1) 2016 Pro forma revenues $ 218,529 $ 237,564 Pro forma net loss $ (20,062 ) $ (10,084 ) Basic and diluted pro forma net loss per share $ (0.19 ) $ (0.10 ) _____________________ (1) For the nine months ended September 30, 2017 , aggregate revenues and net income derived from the Company's 2017 acquisitions (for the Company's period of ownership) were $84.8 million and $7.6 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, 2017 to December 31, 2017 $ 58,208 2018 223,642 2019 213,028 2020 196,395 2021 183,829 Thereafter 1,110,173 $ 1,985,275 |
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 2017 2016 SunTrust Bank 11.5% 17.8% Sanofi US * 11.4% C&S Wholesale Grocer * 10.2% _____________________ * Tenant's annualized rental income on a straight-line basis was not greater than or equal to 10.0% of consolidated annualized rental income for all properties as of the date specified. |
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 2017 2016 New Jersey * 20.0% Georgia * 11.0% _____________________ * State's annualized rental income on a straight-line basis was not greater than or equal to 10.0% of consolidated annualized rental income for all properties as of the date specified. |
Summary of Assets Held-for-sale | The following table details the major classes of assets associated with the properties that have been reclassified as held for sale as of September 30, 2017 and December 31, 2016 . (Dollar amounts in thousands) September 30, 2017 December 31, 2016 Real estate investments held for sale, at cost: Land $ 735 $ 7,225 Buildings, fixtures and improvements 2,423 142,798 Acquired intangible lease assets 404 18,145 Total real estate assets held for sale, at cost 3,562 168,168 Less accumulated depreciation and amortization (1,007 ) (29,213 ) Total real estate investments held for sale, net 2,555 138,955 Impairment charges related to properties reclassified as held for sale (66 ) (1,353 ) Assets held for sale $ 2,489 $ 137,602 |
Commercial Mortgage Loan (Table
Commercial Mortgage Loan (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Composition and Summary of Loan Portfolio | For the nine months ended September 30, 2017 and 2016 , the activity on the Company's commercial mortgage loans, held for investment, was as follows: Nine Months Ended (In thousands) September 30, 2017 September 30, 2016 Beginning balance $ 17,175 $ 17,135 Discount accretion and premium amortization (1) 16 15 Ending balance $ 17,191 $ 17,150 _____________________________________ (1) Includes amortization of capitalized origination fees and expenses. The following table is a summary of the Company's commercial mortgage loan portfolio: September 30, 2017 December 31, 2016 Loan Type Property Type Par Value Percentage Par Value Percentage (In thousands) (In thousands) Senior Student Housing — Multifamily $ 17,200 100.0 % $ 17,200 100 % |
Summary of Credit Characteristics | As part of the Company's process for monitoring the credit quality of its loan, 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. |
Mortgage Notes Payable (Tables)
Mortgage Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The Company's mortgage notes payable as of September 30, 2017 and December 31, 2016 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 $ 7,565 $ 7,841 5.93 % 5.93 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 27 22,756 25,000 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 C&S Wholesale Grocer I (1) — — 82,313 — % 5.48 % Fixed Apr. 2037 Apr. 2017 SunTrust Bank III 104 82,685 88,567 5.50 % 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 27 21,243 21,243 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 37,744 38,271 5.63 % 5.63 % Fixed Jun. 2041 Jun. 2021 Multi-Tenant Mortgage Loan 266 648,222 649,532 4.36 % 4.36 % Fixed Sep. 2020 Sep. 2020 Liberty Crossing 1 11,000 — 4.66 % — % Fixed Jul. 2018 Jul. 2018 San Pedro Crossing 1 17,985 — 3.79 % — % Fixed Jan. 2018 Jan. 2018 Tiffany Springs MarketCenter 1 33,802 — 3.92 % — % Fixed (3) Oct. 2018 Oct. 2018 Shops at Shelby Crossing 1 23,105 — 4.97 % — % Fixed Mar. 2024 Mar. 2024 Patton Creek 1 41,060 — 5.76 % — % Fixed Dec. 2020 Dec. 2020 Bob Evans I 23 23,950 — 4.71 % — % Fixed Sep. 2037 Sep. 2027 Gross mortgage notes payable 458 1,096,117 1,037,767 4.69 % (2) 4.75 % (2) Deferred financing costs, net of accumulated amortization (13,038 ) (15,492 ) Mortgage notes payable, net of deferred financing costs $ 1,083,079 $ 1,022,275 _____________________________________ (1) The Company paid off the full mortgage balance secured by the C&S Wholesale Grocer properties on April 19, 2017. (2) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. (3) Fixed as a result of entering into a swap agreement, which is included in derivatives, at fair value on the unaudited consolidated balance sheet as of September 30, 2017 . |
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, 2017 and thereafter: (In thousands) Future Principal Payments October 1, 2017 to December 31, 2017 $ 582 2018 65,182 2019 2,533 2020 689,107 2021 1,398 Thereafter 337,315 $ 1,096,117 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 and non-recurring basis as of September 30, 2017 and December 31, 2016 , aggregated by the level in the fair value hierarchy within which those instruments fall. (In thousands) Quoted Prices in Active Markets Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Total September 30, 2017 Impaired real estate investments held for sale $ — $ 573 $ — $ 573 Impaired real estate investments held for use — 25,457 — 25,457 Interest rate swap — (53 ) — (53 ) Total $ — $ 25,977 $ — $ 25,977 December 31, 2016 Impaired real estate investments held for sale $ — $ 961 $ — $ 961 Impaired real estate Investments held for use — 6,525 45,032 51,557 Total $ — $ 7,486 $ 45,032 $ 52,518 |
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, 2017 and December 31, 2016 are reported in the following table: Carrying Amount at Fair Value at Carrying Amount at Fair Value at (In thousands) Level September 30, 2017 September 30, 2017 December 31, 2016 December 31, 2016 Commercial mortgage loan, held for investment 3 $ 17,191 $ 17,200 $ 17,175 $ 17,200 Gross mortgage notes payable and mortgage premiums, net 3 $ 1,107,824 $ 1,114,908 $ 1,048,448 $ 1,076,065 Credit facility 3 $ 260,000 $ 260,000 $ — $ — |
Derivatives and Hedging Activ29
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2017 . There was no gain or loss recognized on interest rate derivatives during the three and nine months ended September 30, 2016 : (In thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) $ 1 9 Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense $ (9 ) $ (35 ) Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $ — $ — As of September 30, 2017 , the Company had the following derivatives that were designated as cash flow hedges of interest rate risk. The Company had no derivatives outstanding as of December 31, 2016 : September 30, 2017 Interest Rate Derivative Number of Instruments Notional Amount (In thousands) Interest Rate Swap 1 $ 34,098 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The Company had no derivatives outstanding as of December 31, 2016 : (In thousands) Balance Sheet Location September 30, 2017 Derivatives designated as hedging instruments: Interest Rate Swap Derivatives, at fair value $ (53 ) |
Common Stock Common Stock (Tabl
Common Stock Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Share Repurchases | The following table summarizes the repurchases of shares under the SRP cumulatively through September 30, 2017 : Number of Shares Weighted-Average Price per Share Cumulative repurchases as of December 31, 2016 2,081,499 $ 24.12 Three months ended March 31, 2017 848,822 (1) 23.85 Three months ended June 30, 2017 6,084 23.83 Three months ended September 30, 2017 370,472 (2) 23.41 Cumulative repurchases as of September 30, 2017 3,306,877 $ 23.97 ___________________________________ (1) Excludes rejected repurchase requests received during 2016 with respect to 5.9 million shares for $140.1 million at a weighted-average price per share of 23.65 . (2) In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Company's board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 to December 31, 2017 $ 361 2018 1,427 2019 1,437 2020 1,219 2021 901 Thereafter 13,450 $ 18,795 |
Related Party Transactions an32
Related Party Transactions and Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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. Amounts below are inclusive of fees and other expense reimbursements incurred from and due to the Advisor that are passed through and ultimately paid to Lincoln as a result of the Advisor's exclusive service agreement with Lincoln: Three Months Ended September 30, Nine Months Ended September 30, Payable as of (In thousands) 2017 2016 2017 2016 September 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements $ 49 $ — $ 100 $ — $ 31 $ — Ongoing fees: Asset management fees 5,250 4,500 15,250 13,500 — — Property management and leasing fees 1,965 — 4,788 — 570 — Professional fees and other reimbursements (1) 2,136 780 5,963 2,303 1,085 763 Distributions on Class B Units (1) 345 436 1,206 1,300 112 147 Total related party operation fees and reimbursements $ 9,745 $ 5,716 $ 27,307 $ 17,103 $ 1,798 $ 910 _________________________________ (1) 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, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Restricted Share Award Activity | The following table reflects restricted share award activity for the nine months ended September 30, 2017 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2016 9,367 $ 23.70 Granted 8,897 23.59 Vested (2,556 ) 23.47 Unvested, September 30, 2017 15,708 $ 24.00 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except share and per share amounts) 2017 2016 2017 2016 Basic and diluted net loss attributable to stockholders $ (15,367 ) $ (8,729 ) $ (27,105 ) $ (18,660 ) Basic and diluted weighted-average shares outstanding 104,545,591 65,741,735 97,852,337 65,334,465 Basic and diluted net loss per share attributable to stockholders $ (0.15 ) $ (0.13 ) $ (0.28 ) $ (0.29 ) |
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, 2017 2016 2017 2016 Unvested restricted stock (1) 14,404 8,381 12,030 7,521 OP Units (2) 203,612 90 169,319 90 Class B Units 1,052,420 1,052,420 1,052,420 1,052,420 Total weighted-average antidilutive common share equivalents 1,270,436 1,060,891 1,233,769 1,060,031 _____________________________________ (1) Weighted-average number of shares of unvested restricted stock outstanding for the period presented. There were 15,710 and 9,367 shares of unvested restricted stock outstanding as of September 30, 2017 and 2016 , respectively. (2) Weighted-average number of OP Units outstanding for the period presented. There were 203,612 and 90 OP Units outstanding as of September 30, 2017 and 2016 , respectively. |
Organization (Narrative) (Detai
Organization (Narrative) (Details) ft² in Millions | Sep. 30, 2017ft²propertyshares | Dec. 31, 2016shares |
Operations [Line Items] | ||
Number of real estate properties | 517 | |
Area of real estate property | ft² | 19.4 | |
Percentage of property leased | 96.00% | |
Common stock, outstanding (in shares) | shares | 104,644,581 | 65,805,184 |
Net Leased Commercial Properties | ||
Operations [Line Items] | ||
Number of real estate properties | 482 | |
Stabilized Core Retail Properties | ||
Operations [Line Items] | ||
Number of real estate properties | 35 |
Merger Transaction (Narrative)
Merger Transaction (Narrative) (Details) $ / shares in Units, $ in Thousands, shares in Millions | Feb. 16, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)$ / shares |
Business Acquisition [Line Items] | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Cash consideration | $ 94,502 | $ 0 | ||
Goodwill | $ 1,605 | $ 0 | ||
American Realty Capital - Retail Centers of America, Inc. | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
Share price (in usd per share) | $ / shares | $ 0.95 | |||
Stock issued as consideration in Merger (in shares) | shares | 38.2 | |||
Cash consideration | $ 94,504 | |||
Cash payment for redemption of Operating Partnership Units | 2,800 | |||
Goodwill | $ 1,605 | |||
American Realty Capital - Retail Centers of America, Inc. | Limited partner interests in acquiree OP converted to acquirer OP units | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.424 | |||
American Realty Capital - Retail Centers of America, Inc. | OP and GP units of acquiree converted to acquirer OP units | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
American Realty Capital - Retail Centers of America, Inc. | RCA Common Stock | ||||
Business Acquisition [Line Items] | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Merger Transaction (Summary of
Merger Transaction (Summary of Merger Transaction) (Details) - USD ($) $ in Thousands | Feb. 16, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Total Consideration: | |||||
Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement | $ 94,502 | $ 0 | |||
Fair value of the Stock Consideration | 921,930 | 0 | |||
Fair value of the Total Merger Consideration | 1,123,620 | $ 34,244 | |||
Assets Acquired at Fair Value | |||||
Goodwill | $ 1,605 | $ 1,605 | $ 0 | ||
Liabilities Assumed at Fair Value | |||||
Adjustment to prepaid expenses and other assets | 500 | ||||
Adjustment to goodwill | $ 500 | ||||
American Realty Capital - Retail Centers of America, Inc. | |||||
Total Consideration: | |||||
Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement | $ 94,504 | ||||
Fair value of the Stock Consideration | 917,046 | ||||
Fair value of the Partnership Merger Consideration | 2 | ||||
Fair value of the Class B Consideration | 4,882 | ||||
Fair value of the Total Merger Consideration | 1,016,434 | ||||
Assets Acquired at Fair Value | |||||
Land | 282,063 | ||||
Buildings, fixtures and improvements | 1,079,944 | ||||
Acquired intangible lease assets | 178,634 | ||||
Total real estate investments, at fair value | 1,540,641 | ||||
Cash and cash equivalents | 21,922 | ||||
Restricted cash | 4,241 | ||||
Prepaid expenses and other assets | 18,959 | ||||
Goodwill | 1,605 | ||||
Total assets acquired at fair value | 1,587,368 | ||||
Liabilities Assumed at Fair Value | |||||
Mortgage notes payable | 127,651 | ||||
Mortgage premiums | 4,143 | ||||
Credit facility | 304,000 | ||||
Market lease liabilities | 104,840 | ||||
Derivatives | 203 | ||||
Accounts payable and accrued expenses | 21,291 | ||||
Deferred rent and other liabilities | 8,806 | ||||
Total liabilities assumed at fair value | 570,934 | ||||
Net assets acquired | $ 1,016,434 |
Real Estate Investments (Narrat
Real Estate Investments (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)damaged_propertyproperty | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)damaged_propertyproperty | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)property | |
Business Acquisition [Line Items] | |||||
Number of real estate properties | property | 517 | 517 | |||
Gain on sale of real estate investments | $ 264 | $ 0 | $ 14,095 | $ 454 | |
Impairment losses | 7,605 | $ 117 | 14,183 | $ 117 | |
Real estate investments | $ 3,131,788 | $ 3,131,788 | $ 1,737,297 | ||
SunTrust Bank | |||||
Business Acquisition [Line Items] | |||||
Number of real estate properties | property | 44 | 44 | 57 | ||
Number of real estate properties impaired | property | 43 | ||||
Impairment of real estate | $ 7,500 | $ 9,700 | $ 24,700 | ||
Real estate investments | $ 48,100 | $ 48,100 | |||
Assets Held-for-sale | |||||
Business Acquisition [Line Items] | |||||
Number of real estate properties | property | 3 | 3 | 5 | ||
Impairment losses | $ 66 | $ 1,353 | |||
Assets Sold | |||||
Business Acquisition [Line Items] | |||||
Number of properties sold | property | 7 | 19 | |||
Sales of real estate | $ 6,000 | $ 277,900 | |||
Gain on sale of real estate investments | 300 | 14,100 | |||
Impairment losses | $ 100 | $ 3,600 | |||
Assets Sold | SunTrust Bank | |||||
Business Acquisition [Line Items] | |||||
Number of properties sold | property | 13 | ||||
Southroads Shopping Center | |||||
Business Acquisition [Line Items] | |||||
Number of real estate properties | damaged_property | 1 | 1 | |||
Real estate investments | $ 5,600 | $ 5,600 |
Real Estate Investments (Assets
Real Estate Investments (Assets Acquired) (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)property | Sep. 30, 2016USD ($)property | |
Real estate investments, at cost: | ||
Land | $ 303,868 | $ 1,729 |
Buildings, fixtures and improvements | 1,150,645 | 29,664 |
Total tangible assets | 1,454,513 | 31,393 |
Acquired intangibles | 88,474 | 2,851 |
Above-market ground lease liability | 0 | (85) |
Below-market lease liabilities | (106,369) | (774) |
Credit facility assumed in the Merger | (304,000) | 0 |
Mortgage notes payable assumed in the Merger | (127,651) | 0 |
Premiums on mortgage notes payable assumed in the Merger | (4,143) | 0 |
Other assets acquired and (liabilities assumed) in the Merger, net | 16,427 | 0 |
Consideration paid for acquired real estate investments, net of liabilities assumed | $ 1,123,620 | $ 34,244 |
Number of properties purchased | property | 81 | 4 |
In-place leases | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 170,748 | $ 3,162 |
Weighted-average amortization period | 7 years 1 month 10 days | |
Above-market leases | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 22,862 | 548 |
Weighted-average amortization period | 9 years 1 month 22 days | |
Below-market ground lease asset | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 1,233 | $ 0 |
Below market leases | ||
Real estate investments, at cost: | ||
Weighted-average amortization period | 18 years 10 months 19 days |
Real Estate Investments (Acquir
Real Estate Investments (Acquired Leases) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Intangible assets: | ||
Finite-lived intangible assets, gross | $ 461,550 | $ 300,129 |
Finite-lived intangible assets, accumulated amortization | 147,599 | 103,653 |
Intangible assets, net | 313,951 | 196,476 |
Intangible liabilities: | ||
Below market lease, gross | 124,719 | 18,443 |
Below market lease, accumulated amortization | 12,129 | 4,612 |
Below market lease, net | 112,590 | 13,831 |
Finite-lived intangible liabilities, gross | 124,804 | 18,528 |
Finite-lived intangible liabilities, accumulated amortization | 12,131 | 4,613 |
Intangible liabilities, net | 112,673 | 13,915 |
In-place leases | ||
Intangible assets: | ||
Finite-lived intangible assets, gross | 427,467 | 286,548 |
Finite-lived intangible assets, accumulated amortization | 136,586 | 95,547 |
Intangible assets, net | 290,881 | 191,001 |
Above-market leases | ||
Intangible assets: | ||
Finite-lived intangible assets, gross | 32,850 | 13,581 |
Finite-lived intangible assets, accumulated amortization | 10,993 | 8,106 |
Intangible assets, net | 21,857 | 5,475 |
Below-market ground lease asset | ||
Intangible assets: | ||
Finite-lived intangible assets, gross | 1,233 | 0 |
Finite-lived intangible assets, accumulated amortization | 20 | 0 |
Intangible assets, net | 1,213 | 0 |
Above-market ground leases | ||
Intangible liabilities: | ||
Finite-lived intangible liabilities, gross | 85 | 85 |
Finite-lived intangible liabilities, accumulated amortization | 2 | 1 |
Intangible liabilities, net | $ 83 | $ 84 |
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 50,149 | $ 25,841 | ||
Depreciation and Amortization | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 18,685 | $ 8,550 | 50,149 | 25,841 |
Depreciation and Amortization | In-place leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 18,685 | 8,550 | 50,149 | 25,841 |
Rental Income | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization (accretion) of leases | 1,527 | 28 | 3,104 | (507) |
Rental Income | Above-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 1,607 | 724 | 4,387 | 2,220 |
Rental Income | Below market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 3,134 | 752 | 7,491 | 1,713 |
Property Operating Expense | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 8 | 0 | 19 | (1) |
Property Operating Expense | Below-market ground lease asset | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 8 | 0 | 20 | 0 |
Property Operating Expense | Above-market ground leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 0 | $ 0 | $ 1 | $ 1 |
Real Estate Investments (Lease
Real Estate Investments (Lease Amortization) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Depreciation and Amortization | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | $ 15,923 |
2,018 | 54,238 |
2,019 | 43,938 |
2,020 | 34,907 |
2,021 | 29,736 |
Depreciation and Amortization | In-place leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | 15,923 |
2,018 | 54,238 |
2,019 | 43,938 |
2,020 | 34,907 |
2,021 | 29,736 |
Rental Income | |
Finite-Lived Intangible Assets [Line Items] | |
Below market leases, October 1, 2017 to December 31, 2017 | 930 |
Below market leases, 2018 | 5,117 |
Below market leases, 2019 | 5,272 |
Below market leases, 2020 | 5,373 |
Below market lease, 2021 | 4,851 |
Rental Income | Above-market leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | (1,426) |
2,018 | (4,096) |
2,019 | (3,244) |
2,020 | (2,422) |
2,021 | (2,085) |
Rental Income | Below market leases | |
Finite-Lived Intangible Assets [Line Items] | |
Below market leases, October 1, 2017 to December 31, 2017 | 2,356 |
Below market leases, 2018 | 9,213 |
Below market leases, 2019 | 8,516 |
Below market leases, 2020 | 7,795 |
Below market lease, 2021 | 6,936 |
Property Operating Expense | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | 7 |
2,018 | 30 |
2,019 | 30 |
2,020 | 30 |
2,021 | 30 |
Property Operating Expense | Below-market ground lease asset | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | 7 |
2,018 | 32 |
2,019 | 32 |
2,020 | 32 |
2,021 | 32 |
Property Operating Expense | Above-market ground leases | |
Finite-Lived Intangible Assets [Line Items] | |
October 1, 2017 to December 31, 2017 | 0 |
2,018 | (2) |
2,019 | (2) |
2,020 | (2) |
2,021 | $ (2) |
Real Estate Investments (Pro Fo
Real Estate Investments (Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Real Estate [Abstract] | ||
Pro forma revenues | $ 218,529 | $ 237,564 |
Pro forma net loss | $ (20,062) | $ (10,084) |
Basic and diluted pro forma net loss per share (in usd per share) | $ (0.19) | $ (0.10) |
Revenue since acquisition | $ 84,800 | |
Net income since acquisition | $ 7,600 |
Real Estate Investments (Minimu
Real Estate Investments (Minimum Lease Payments) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Real Estate [Abstract] | |
October 1, 2017 to December 31, 2017 | $ 58,208 |
2,018 | 223,642 |
2,019 | 213,028 |
2,020 | 196,395 |
2,021 | 183,829 |
Thereafter | 1,110,173 |
Total | $ 1,985,275 |
Real Estate Investments (Concen
Real Estate Investments (Concentrations) (Details) - Annualized Rental Income | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Customer Concentration | SunTrust Bank | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.50% | 17.80% |
Customer Concentration | Sanofi US | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.40% | |
Customer Concentration | C&S Wholesale Grocer | ||
Concentration Risk [Line Items] | ||
Concentration risk | 10.20% | |
Geographic Concentration | New Jersey | ||
Concentration Risk [Line Items] | ||
Concentration risk | 20.00% | |
Geographic Concentration | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.00% |
Real Estate Investments (Summ46
Real Estate Investments (Summary of Assets Held-for-Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Real estate investments held for sale, at cost: | |||||
Impairment charges related to properties reclassified as held for sale | $ (7,605) | $ (117) | $ (14,183) | $ (117) | |
Assets held for sale | 2,489 | 2,489 | $ 137,602 | ||
Assets Held-for-sale | |||||
Real estate investments held for sale, at cost: | |||||
Land | 735 | 735 | 7,225 | ||
Buildings, fixtures and improvements | 2,423 | 2,423 | 142,798 | ||
Acquired intangible lease assets | 404 | 404 | 18,145 | ||
Total real estate assets held for sale, at cost | 3,562 | 3,562 | 168,168 | ||
Less accumulated depreciation and amortization | (1,007) | (1,007) | (29,213) | ||
Total real estate investments held for sale, net | 2,555 | 2,555 | 138,955 | ||
Impairment charges related to properties reclassified as held for sale | (66) | (1,353) | |||
Assets held for sale | $ 2,489 | $ 2,489 | $ 137,602 |
Commercial Mortgage Loan (Compo
Commercial Mortgage Loan (Composition of Loan Portfolio) (Details) - Commercial Portfolio Segment - Student Housing - Multifamily - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Par Value | $ 17,200 | $ 17,200 |
Percentage | 100.00% | 100.00% |
Commercial Mortgage Loan (Rollf
Commercial Mortgage Loan (Rollforward of Loan Portfolio) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | ||
Beginning balance | $ 17,175 | $ 17,135 |
Discount accretion and premium amortization | 16 | 15 |
Ending balance | $ 17,191 | $ 17,150 |
Commercial Mortgage Loan (Narra
Commercial Mortgage Loan (Narrative) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Allowance for loan losses | $ 0 | $ 0 |
Credit Facility (Narrative) (De
Credit Facility (Narrative) (Details) - USD ($) | Feb. 16, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||
Credit facility assumed in Merger | $ 304,000,000 | $ 0 | ||
Payments on credit facility | 114,000,000 | 0 | ||
Draw on lines of credit | 70,000,000 | $ 0 | ||
Credit facility | 260,000,000 | $ 0 | ||
Amended credit facility | ||||
Debt Instrument [Line Items] | ||||
Additional borrowing capacity, accordion feature | $ 575,000,000 | |||
Unused borrowing capacity | 65,000,000 | |||
Credit facility assumed in Merger | 304,000,000 | |||
Payments on credit facility | 114,000,000 | |||
Draw on lines of credit | $ 70,000,000 | |||
Amended credit facility | Option one | Federal funds effective rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 0.50% | |||
Amended credit facility | Option one | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 1.00% | |||
Amended credit facility | Option two | Federal funds effective rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 0.35% | |||
Amended credit facility | Option two | Federal funds effective rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 1.00% | |||
Amended credit facility | Option two | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 1.35% | |||
Amended credit facility | Option two | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on interest rate | 2.00% | |||
Amended credit facility | Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 325,000,000 | |||
Amended credit facility | Swingline subfacility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 25,000,000 | |||
Amended credit facility | Letter of credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 20,000,000 |
Mortgage Notes Payable (Summary
Mortgage Notes Payable (Summary of Mortgage Notes Payable) (Details) - Mortgage notes payable and premiums, net $ in Thousands | Sep. 30, 2017USD ($)property | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 458 | |
Outstanding Loan Amount | $ 1,096,117 | $ 1,037,767 |
Effective Interest Rate | 4.69% | 4.75% |
Deferred financing costs, net of accumulated amortization | $ (13,038) | $ (15,492) |
Mortgage notes payable, net of deferred financing costs | $ 1,083,079 | 1,022,275 |
SAAB Sensis I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 7,565 | $ 7,841 |
Effective Interest Rate | 5.93% | 5.93% |
SunTrust Bank II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 27 | |
Outstanding Loan Amount | $ 22,756 | $ 25,000 |
Effective Interest Rate | 5.50% | 5.50% |
C&S Wholesale Grocer I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 0 | |
Outstanding Loan Amount | $ 0 | $ 82,313 |
Effective Interest Rate | 0.00% | 5.48% |
SunTrust Bank III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 104 | |
Outstanding Loan Amount | $ 82,685 | $ 88,567 |
Effective Interest Rate | 5.50% | 5.50% |
SunTrust Bank IV | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 27 | |
Outstanding Loan Amount | $ 21,243 | $ 21,243 |
Effective Interest Rate | 5.50% | 5.50% |
Stop & Shop I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 37,744 | $ 38,271 |
Effective Interest Rate | 5.63% | 5.63% |
Liberty Crossing | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 11,000 | $ 0 |
Effective Interest Rate | 4.66% | 0.00% |
San Pedro Crossing | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 17,985 | $ 0 |
Effective Interest Rate | 3.79% | 0.00% |
Tiffany Springs MarketCenter | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 33,802 | $ 0 |
Effective Interest Rate | 3.92% | 0.00% |
Shops at Shelby Crossing | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 23,105 | $ 0 |
Effective Interest Rate | 4.97% | 0.00% |
Patton Creek | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 41,060 | $ 0 |
Effective Interest Rate | 5.76% | 0.00% |
Bob Evans I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 23 | |
Outstanding Loan Amount | $ 23,950 | $ 0 |
Effective Interest Rate | 4.71% | 0.00% |
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 | 266 | |
Outstanding Loan Amount | $ 648,222 | $ 649,532 |
Effective Interest Rate | 4.36% | 4.36% |
Mortgage Notes Payable (Narrati
Mortgage Notes Payable (Narrative) (Details) | 9 Months Ended | |||
Sep. 30, 2017USD ($)property | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Aug. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Restricted cash | $ 17,729,000 | $ 7,890,000 | ||
Restricted cash released | (224,000) | $ (3,000) | ||
Amended credit facility | ||||
Debt Instrument [Line Items] | ||||
Collateral pledged | 770,300,000 | |||
Mortgage notes payable and premiums, net | ||||
Debt Instrument [Line Items] | ||||
Collateral pledged | $ 2,100,000,000 | 2,100,000,000 | ||
Encumbered Properties | property | 458 | |||
Outstanding Loan Amount | $ 1,096,117,000 | 1,037,767,000 | ||
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 | 266 | |||
Outstanding Loan Amount | $ 648,222,000 | $ 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, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
October 1, 2017 to December 31, 2017 | $ 582 | |
2,018 | 65,182 | |
2,019 | 2,533 | |
2,020 | 689,107 | |
2,021 | 1,398 | |
Thereafter | 337,315 | |
Long-term Debt | $ 1,096,117 | $ 1,037,767 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value, Assets Measured on Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | $ 25,977 | $ 52,518 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 25,977 | 7,486 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 0 | 45,032 |
Impaired real estate investments held for sale | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 573 | 961 |
Impaired real estate investments held for sale | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Impaired real estate investments held for sale | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 573 | 961 |
Impaired real estate investments held for sale | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Impaired real estate investments held for use | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 25,457 | 51,557 |
Impaired real estate investments held for use | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Impaired real estate investments held for use | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 25,457 | 6,525 |
Impaired real estate investments held for use | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | $ 45,032 |
Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap | (53) | |
Interest rate swap | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap | 0 | |
Interest rate swap | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap | (53) | |
Interest rate swap | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap | $ 0 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Financial Instruments) (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commercial mortgage loan, held for investment | $ 17,191 | $ 17,175 |
Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commercial mortgage loan, held for investment | 17,200 | 17,200 |
Gross mortgage notes payable and mortgage premiums, net | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 1,107,824 | 1,048,448 |
Gross mortgage notes payable and mortgage premiums, net | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 1,114,908 | 1,076,065 |
Credit facility | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | 260,000 | 0 |
Credit facility | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt | $ 260,000 | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
SunTrust Bank | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment of real estate | $ 7.5 | $ 9.7 | $ 24.7 |
Derivatives and Hedging Activ57
Derivatives and Hedging Activities (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Derivative [Line Items] | ||
Other comprehensive loss to be reclassified in the next twelve months | $ 45 | $ 45 |
Interest rate derivatives, at fair value, including adjustments for nonperformance risk | 100 | 100 |
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap | ||
Derivative [Line Items] | ||
Assets needed for immediate settlement | 100 | 100 |
Interest Expense | ||
Derivative [Line Items] | ||
Gain on derivative | $ 0 | $ 21 |
Derivatives and Hedging Activ58
Derivatives and Hedging Activities (Schedule of Interest Rate Derivatives) (Details) - Cash Flow Hedging - Designated as Hedging Instrument - Interest rate swap $ in Thousands | Sep. 30, 2017USD ($)derivative |
Derivative [Line Items] | |
Number of Instruments | derivative | 1 |
Notional Amount | $ | $ 34,098 |
Derivatives and Hedging Activ59
Derivatives and Hedging Activities (Schedule of Derivative Instruments in Statement of Financial Position) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap | |
Derivative [Line Items] | |
Derivatives, at fair value | $ (53) |
Derivatives and Hedging Activ60
Derivatives and Hedging Activities (Derivative Instruments, Gain (Loss)) (Details) - Cash Flow Hedging - Interest rate swap - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Derivative [Line Items] | ||
Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) | $ 1 | $ 9 |
Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) | 0 | 0 |
Interest Expense | ||
Derivative [Line Items] | ||
Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense | $ (9) | $ (35) |
Common Stock (Narrative) (Detai
Common Stock (Narrative) (Details) - $ / shares | Jul. 01, 2017 | Apr. 30, 2013 | Sep. 30, 2017 | Dec. 31, 2016 | Apr. 01, 2016 |
Class of Stock [Line Items] | |||||
Common stock, outstanding (in shares) | 104,644,581 | 65,805,184 | |||
Dividends declared (in dollars per share) | $ 1.30 | $ 1.65 | |||
Percentage of weighted average outstanding stock for fiscal semester | 2.50% | ||||
Percentage of weighted average outstanding stock for fiscal year | 5.00% | ||||
Shares available for issuance under a distribution reinvestment plan (in shares) | 7,700,000 | ||||
Common stock issued through distribution reinvestment plan (in shares) | 1,845,665 | ||||
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) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | 47 Months Ended | 56 Months Ended | ||
Jul. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2016 | Sep. 30, 2017 | |
Equity [Abstract] | |||||||
Number of Shares (in shares) | 370,472 | 6,084 | 848,822 | 2,081,499 | 3,306,877 | ||
Weighted Average Price per Share (in dollars per share) | $ 23.41 | $ 23.83 | $ 23.85 | $ 24.12 | $ 23.97 | ||
Shares rejected for repurchase (in shares) | 5,900,000 | ||||||
Shares rejected for repurchase | $ 140.1 | ||||||
Shares rejected for repurchase, weighted average cost (in usd per share) | $ 23.65 | ||||||
Percentage approved | 100.00% |
Commitments and Contingencies63
Commitments and Contingencies (Future Minimum Ground Lease Payments) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
October 1, 2017 to December 31, 2017 | $ 361 |
2,018 | 1,427 |
2,019 | 1,437 |
2,020 | 1,219 |
2,021 | 901 |
Thereafter | 13,450 |
Total | $ 18,795 |
Related Party Transactions an64
Related Party Transactions and Arrangements (Narrative) (Details) - shares | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Related Party Transaction [Line Items] | |||
OP units outstanding (in shares) | 203,612 | 90 | |
American Realty Capital Trust V Special Limited Partner, LLC | Special Limited Partner | |||
Related Party Transaction [Line Items] | |||
Common stock held by related party (in shares) | 8,888 | 8,888 | |
OP units outstanding (in shares) | 30,691 | 90 |
Related Party Transactions an65
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 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Related Party Transaction [Line Items] | |||||||
Ineligible termination period | 60 days | ||||||
Total commissions and fees from the Dealer Manager | $ 5,250,000 | $ 4,500,000 | $ 15,250,000 | $ 13,500,000 | |||
Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of independent directors approval needed to terminate agreement | 67.00% | ||||||
Renewal term | 20 years | ||||||
Termination Fees for Agreement | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Amount of transaction | $ 15,000,000 | ||||||
Base Management Fee | Advisor | |||||||
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% | |||||
Base Management Fee - First Year following Effective Time | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Amount of transaction | $ 21,000,000 | ||||||
Transaction multiplier | 0.0031 | ||||||
Base Management Fee - Second Year following Effective Time | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Amount of transaction | $ 22,500,000 | ||||||
Transaction multiplier | 0.0047 | ||||||
Base Management Fee - Thereafter | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Amount of transaction | $ 24,000,000 | ||||||
Transaction multiplier | 0.0062 | ||||||
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) | $ 0.5 | ||||||
Subject Fees | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 4.5 | ||||||
Subject Fees - Applicable if Internalization Occurs On or After January 1, 2029 | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 3.5 | ||||||
Basis Spread - Purchase Price | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Margin on multiplier | 1.00% | ||||||
Basis Spread - Equity Raised | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Margin on multiplier | 1.00% | ||||||
Base Subject Fees Spread | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 4 | ||||||
Property Management Fee | Property Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of gross rental receipts | 4.00% | ||||||
Percentage of reimbursable administrative charges | 15.00% | ||||||
Transition Fees | Property Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Amount of transaction | $ 2,500 | ||||||
Construction fee percentage | 6.00% | ||||||
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% | |||||
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 | Administrative Services | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Total commissions and fees from the Dealer Manager | $ 1,900,000 | $ 800,000 | $ 5,400,000 | $ 2,200,000 |
Related Party Transactions an66
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Expenses incurred | $ 5,250 | $ 4,500 | $ 15,250 | $ 13,500 | |
Total related party operation fees and reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 9,745 | 5,716 | 27,307 | 17,103 | |
Payable | 1,798 | 1,798 | $ 910 | ||
Acquisition fees and related cost reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 49 | 0 | 100 | 0 | |
Payable | 31 | 31 | 0 | ||
Asset management fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 5,250 | 4,500 | 15,250 | 13,500 | |
Payable | 0 | 0 | 0 | ||
Property management and leasing fees | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 1,965 | 0 | 4,788 | 0 | |
Payable | 570 | 570 | 0 | ||
Professional fees and other reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 2,136 | 780 | 5,963 | 2,303 | |
Payable | 1,085 | 1,085 | 763 | ||
Distributions on Class B Units | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred | 345 | $ 436 | 1,206 | $ 1,300 | |
Payable | $ 112 | $ 112 | $ 147 |
Related Party Transactions an67
Related Party Transactions and Arrangements (Fees and Participations Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets) (Details) | Sep. 30, 2017 |
Cash Distribution | Special Limited Partner | |
Related Party Transaction [Line Items] | |
OP’s obligation to distribute to Special Limited Partner, percentage | 15.00% |
Minimum cumulative, non-compounded pre-tax annual return | 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% |
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% |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 31, 2015 | Apr. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
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 | ||||
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 | $ 300 | $ 300 | |||||
Weighted average period for recognition | 2 years 11 months 26 days | ||||||
Share based compensation expense | $ 53 | $ 31 | $ 102 | $ 52 |
Share-Based Compensation (Summa
Share-Based Compensation (Summary of Unvested Restricted Stock Activity) (Details) - Restricted Share Plan - Restricted Stock | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Shares of Common Stock | |
Number of shares unvested - beginning balance (in shares) | shares | 9,367 |
Granted (in shares) | shares | 8,897 |
Vested (in shares) | shares | (2,556) |
Number of shares unvested - ending balance (in shares) | shares | 15,708 |
Weighted-Average Issue Price | |
Weighted average grant date fair value - beginning balance (in usd per share) | $ / shares | $ 23.70 |
Granted (in usd per share) | $ / shares | 23.59 |
Vested (in usd per share) | $ / shares | 23.47 |
Weighted average grant date fair value - ending balance (in usd per share) | $ / shares | $ 24 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Basic and diluted net loss attributable to stockholders | $ (15,367) | $ (8,729) | $ (27,105) | $ (18,660) |
Basic and diluted weighted-average shares outstanding (in shares) | 104,545,591 | 65,741,735 | 97,852,337 | 65,334,465 |
Basic and diluted net loss per share attributable to stockholders (in dollars per share) | $ (0.15) | $ (0.13) | $ (0.28) | $ (0.29) |
Antidilutive shares (in shares) | 1,270,436 | 1,060,891 | 1,233,769 | 1,060,031 |
OP units outstanding (in shares) | 203,612 | 90 | 203,612 | 90 |
Restricted Stock | Restricted Share Plan | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Shares outstanding (in shares) | 15,710 | 9,367 | 15,710 | 9,367 |
Restricted Stock | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 14,404 | 8,381 | 12,030 | 7,521 |
OP Units | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 203,612 | 90 | 169,319 | 90 |
Class B Units | ||||
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Antidilutive shares (in shares) | 1,052,420 | 1,052,420 | 1,052,420 | 1,052,420 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Nov. 13, 2017USD ($)property | Sep. 30, 2017USD ($)property | Sep. 30, 2016USD ($)property | |
Subsequent Event [Line Items] | |||
Number of properties purchased | property | 81 | 4 | |
Consideration paid for acquired real estate investments, net of liabilities assumed | $ | $ 1,123,620 | $ 34,244 | |
Assets Disposed | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Number of properties sold | property | 3 | ||
Contract sale price | $ | $ 1,600 | ||
Series of Individually Immaterial Business Acquisitions | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Number of properties purchased | property | 28 | ||
Consideration paid for acquired real estate investments, net of liabilities assumed | $ | $ 38,900 |