Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
Class of Stock [Line Items] | ||
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 | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 53,594,069 | |
Class B-1 | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 26,264,686.5 | |
Class B2 | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 26,264,686.5 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Real estate investments, at cost: | ||
Land | $ 627,172 | $ 607,675 |
Buildings, fixtures and improvements | 2,416,133 | 2,449,020 |
Acquired intangible lease assets | 414,157 | 454,212 |
Total real estate investments, at cost | 3,457,462 | 3,510,907 |
Less: accumulated depreciation and amortization | (415,567) | (408,194) |
Total real estate investments, net | 3,041,895 | 3,102,713 |
Cash and cash equivalents | 58,882 | 107,666 |
Restricted cash | 19,662 | 19,588 |
Derivative assets, at fair vale | 0 | 23 |
Deposits for real estate acquisitions | 1,025 | 565 |
Prepaid expenses and other assets | 55,685 | 50,859 |
Goodwill | 1,605 | 1,605 |
Deferred costs, net | 13,904 | 8,949 |
Assets held for sale | 1,868 | 4,682 |
Total assets | 3,194,526 | 3,296,650 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Mortgage notes payable, net | 1,224,544 | 1,303,433 |
Credit facility | 132,300 | 95,000 |
Market lease liabilities, net | 103,309 | 108,772 |
Accounts payable and accrued expenses (including $1,972 and $3,169 due to related parties as of June 30, 2018 and December 31, 2017, respectively) | 33,002 | 27,355 |
Derivative liabilities, at fair value | 46 | 0 |
Deferred rent and other liabilities | 10,141 | 9,421 |
Distributions payable | 11,231 | 11,613 |
Total liabilities | 1,514,573 | 1,555,594 |
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, 105,058,793 and 105,172,185 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 1,051 | 1,052 |
Additional paid-in capital | 2,396,775 | 2,393,237 |
Accumulated other comprehensive (loss) income | (47) | 95 |
Accumulated deficit | (722,247) | (657,874) |
Total stockholders’ equity | 1,675,532 | 1,736,510 |
Non-controlling interests | 4,421 | 4,546 |
Total equity | 1,679,953 | 1,741,056 |
Total liabilities and equity | $ 3,194,526 | $ 3,296,650 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts payable and accrued expenses, due to affiliates | $ 1,972 | $ 3,169 |
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) | 105,058,793 | 105,172,185 |
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Rental income | $ 61,765 | $ 62,841 | $ 122,842 | $ 114,580 |
Operating expense reimbursements | 9,343 | 8,513 | 18,385 | 13,754 |
Interest income from debt investments | 0 | 253 | 0 | 493 |
Total revenues | 71,108 | 71,607 | 141,227 | 128,827 |
Operating expenses: | ||||
Asset management fees to related party | 5,837 | 5,250 | 11,446 | 10,000 |
Property operating | 13,157 | 12,194 | 26,512 | 19,236 |
Impairment charges | 8,563 | 2,649 | 8,885 | 6,578 |
Acquisition and transaction related | 1,287 | 947 | 3,241 | 6,383 |
General and administrative | 6,512 | 5,237 | 12,013 | 10,081 |
Depreciation and amortization | 35,438 | 40,438 | 71,937 | 71,916 |
Total operating expenses | 70,794 | 66,715 | 134,034 | 124,194 |
Operating income | 314 | 4,892 | 7,193 | 4,633 |
Other income (expense): | ||||
Interest expense | (16,042) | (14,625) | (32,149) | (30,410) |
Gain on sale of real estate investments | 3,625 | 8,609 | 28,262 | 13,831 |
Other income | 38 | 101 | 60 | 193 |
Total other (expense) income, net | (12,379) | (5,915) | (3,827) | (16,386) |
Net (loss) income | (12,065) | (1,023) | 3,366 | (11,753) |
Net loss (income) attributable to non-controlling interests | 24 | 2 | (6) | 15 |
Net (loss) income attributable to stockholders | (12,041) | (1,021) | 3,360 | (11,738) |
Other comprehensive (loss) income: | ||||
Change in unrealized gain (loss) on derivatives | 218 | 35 | (142) | 35 |
Comprehensive income (loss) attributable to stockholders | $ (11,823) | $ (986) | $ 3,218 | $ (11,703) |
Basic weighted-average shares outstanding (in shares) | 105,028,459 | 104,140,631 | 105,111,959 | 94,450,241 |
Basic net (loss) income per share attributable to stockholders (in dollars per share) | $ (0.11) | $ (0.01) | $ 0.03 | $ (0.12) |
Diluted weighted-average shares outstanding (in shares) | 105,028,459 | 104,140,631 | 105,330,054 | 94,450,241 |
Diluted net (loss) income per share (in dollars per share) | $ (0.11) | $ (0.01) | $ 0.03 | $ (0.12) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Total Stockholders’ Equity | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2017 | 105,172,185 | 105,172,185 | |||||
Beginning balance at Dec. 31, 2017 | $ 1,741,056 | $ 1,736,510 | $ 1,052 | $ 2,393,237 | $ 95 | $ (657,874) | $ 4,546 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued through distribution reinvestment plan (in shares) | 990,393 | 990,393 | |||||
Common stock issued through distribution reinvestment plan | $ 23,248 | 23,248 | $ 10 | 23,238 | |||
Common stock repurchases (in shares) | (1,103,785) | ||||||
Common stock repurchases | (19,802) | (19,802) | $ (11) | (19,791) | |||
Share-based compensation (in shares) | 0 | ||||||
Share-based compensation | 91 | 91 | 91 | ||||
Distributions declared | (67,733) | (67,733) | (67,733) | ||||
Distributions to non-controlling interest holders | (131) | (131) | |||||
Net income | 3,366 | 3,360 | 3,360 | 6 | |||
Other comprehensive loss | $ (142) | (142) | (142) | ||||
Ending balance (in shares) at Jun. 30, 2018 | 105,058,793 | 105,058,793 | |||||
Ending balance at Jun. 30, 2018 | $ 1,679,953 | $ 1,675,532 | $ 1,051 | $ 2,396,775 | $ (47) | $ (722,247) | $ 4,421 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||||
Net income (loss) | $ (12,065) | $ (1,023) | $ 3,366 | $ (11,753) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||
Depreciation | 43,949 | 40,390 | |||
Amortization of in-place lease assets | 27,585 | 31,464 | |||
Amortization (including accelerated write-off) of deferred costs | 3,247 | 4,563 | |||
Amortization of mortgage premiums on borrowings | (1,836) | (2,054) | |||
Discount accretion on commercial mortgage loan | 0 | (13) | |||
Amortization of market lease intangibles, net | (3,678) | (1,566) | |||
Share-based compensation | 91 | 49 | |||
Mark-to-market adjustments | (72) | (80) | |||
Gain on sale of real estate investments | (3,625) | (8,609) | (28,262) | (13,831) | |
Impairment charges | 8,563 | 2,649 | 8,885 | 6,578 | |
Changes in assets and liabilities: | |||||
Prepaid expenses and other assets | (3,468) | 1,848 | |||
Accounts payable and accrued expenses | 3,301 | (5,365) | |||
Deferred rent and other liabilities | 720 | (7,638) | |||
Net cash, cash equivalents and restricted cash provided by operating activities | 53,828 | 42,592 | |||
Cash flows from investing activities: | |||||
Capital expenditures | (2,886) | (1,447) | |||
Investments in real estate and other assets | (71,864) | (78,889) | |||
Deposits for real estate investments | (460) | (252) | |||
Proceeds from sale of real estate investments | 21,664 | 183,060 | |||
Cash paid in merger transaction | 0 | (94,504) | |||
Cash acquired in merger transaction | 0 | 26,163 | |||
Net cash, cash equivalents and restricted cash (used in) provided by investing activities | (53,546) | 34,131 | |||
Cash flows from financing activities: | |||||
Proceeds from mortgage notes payable | 29,887 | 0 | |||
Payments on mortgage notes payable | (45,994) | (2,715) | |||
Payments on credit facility | (95,000) | (114,000) | |||
Proceeds from credit facility | 132,300 | 40,000 | |||
Payments of financing costs | (5,516) | (900) | |||
Common stock repurchases | (19,802) | (20,390) | |||
Distributions paid | (44,867) | (42,994) | |||
Net cash, cash equivalents and restricted cash used in financing activities | (48,992) | (140,999) | |||
Net change in cash, cash equivalents and restricted cash | (48,710) | (64,276) | |||
Cash, cash equivalents and restricted cash beginning of period | 127,254 | 139,105 | $ 139,105 | ||
Cash, cash equivalents and restricted cash end of period | $ 78,544 | $ 74,829 | 78,544 | 74,829 | $ 127,254 |
Supplemental Disclosures: | |||||
Cash paid for interest | 30,440 | 12,104 | |||
Cash paid for income taxes | 924 | 176 | |||
Non-Cash Investing and Financing Activities: | |||||
Equity issued in the merger transaction | 0 | 921,930 | |||
Credit facility assumed or used to acquire investments in real estate | 0 | 304,000 | |||
Mortgage notes payable assumed or used to acquire investments in real estate | 0 | 127,651 | |||
Premiums on assumed mortgage notes payable | 0 | 4,143 | |||
Mortgage notes payable released in connection with disposition of real estate | (62,397) | (84,120) | |||
Common stock issued through distribution reinvestment plan | 23,248 | 29,336 | |||
Accrued capital expenditures | $ 3,452 | $ 1,950 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1 — Organization American Finance Trust, Inc. (the “Company”) is a diversified REIT focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S. 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, as a result of the Merger (as defined in Note 2 - Merger Transaction ), a portfolio of retail properties consisting primarily of power centers and lifestyle centers. The Company intends to focus its future acquisitions primarily on net leased retail properties. As of June 30, 2018 , the Company owned 560 properties, comprised of 19.0 million rentable square feet, which were 94.6% leased, including 525 net leased commercial properties ( 479 of which are retail properties) and 35 retail properties which were acquired in the Merger. 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 June 30, 2018 , the Company had 105.1 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, “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 July 19, 2018 (the “Listing Date”), the Company listed shares of its common stock, which had been renamed “Class A common stock” in connection with a series of corporate actions effected earlier in July 2018, on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “AFIN” (the “Listing”). To effect the Listing, and to address the potential for selling pressure that may have existed at the outset of listing, the Company listed only shares of Class A common stock, which represented approximately 50% of its outstanding shares of common stock, on Nasdaq on the Listing Date. The Company’s two other classes of outstanding stock, Class B-1 common stock, which comprised 25% of the Company’s outstanding shares of common stock at the time of the Listing, and Class B-2 common stock, which comprised 25% of the Company’s outstanding shares of common stock at the time of the Listing, will automatically convert into Class A common stock to be listed on Nasdaq no later than October 17, 2018, 90 days following the Listing Date, and January 15, 2019, 180 days following the Listing Date, respectively. For additional information on the Listing see Note 15 — Subsequent Events. |
Merger Transaction
Merger Transaction | 6 Months Ended |
Jun. 30, 2018 | |
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 (the “Merger Sub”), with the Merger Sub surviving as a wholly owned subsidiary of the Company 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 (together, the “Merger”). 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 Merger 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 Merger, 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 informed the Company that the Advisor 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 Merger. The Advisor informed the Company that the Advisor 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 obligation to Lincoln. Accounting Treatment for the Merger The Merger was 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 established 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. The fair value of the Total Merger Consideration that exceeded the fair value of net assets acquired, was recorded as goodwill. The following table summarizes the estimated fair value of the consideration transferred pursuant to the Merger and the estimated fair values of the assets acquired and liabilities assumed as of the Effective Time. (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 (1) 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 _________________________________ (1) Valued at $24.00 as of the date of the Merger. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 — 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 three and six months ended June 30, 2018 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, 2017 , which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2018 , as amended on June 8, 2018. There have been no significant changes to the Company’s significant accounting policies during the three and six months ended June 30, 2018 . Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. Reclassifications The presentation of prior year restricted cash on the Company’s consolidated statements of cash flows has been changed to conform to the current year presentation. The change in the current year presentation relates to the adoption of accounting standards update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which was adopted by the Company effective December 31, 2017. As a result, the Company adjusted its statements of cash flows for the six months ended June 30, 2017 , to include $7.9 million of restricted cash in the beginning cash balance and remove transfers of $1.2 million between cash and restricted cash from operations, $0.5 million between cash and restricted cash from investing activities and $1,000 between cash and restricted cash from financing activities. Purchase Accounting The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired, including those acquired in the Merger, 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 initial 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. Impairment of Long-Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, we review the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statement of operations and comprehensive income (loss) to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. Revenue Recognition The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rents receivable that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, the Company defers the recognition of contingent rental income, until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. For the three and six months ended June 30, 2018 , approximately $0.2 million and $0.4 million , respectively, in contingent rental income is included in rental income on the accompanying consolidated statements of operations and comprehensive loss. The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the Company’s allowance for uncollectible accounts or records a direct write-off of the receivable in the Company’s consolidated statements of operations and comprehensive income (loss). Cost recoveries from tenants are included in operating expense reimbursements on the accompanying consolidated statements of operations and comprehensive income (loss) in the period the related costs are incurred, as applicable. Recently Issued Accounting Pronouncements Adopted as of January 1, 2018: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 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 adopted this guidance effective January 1, 2018 using the modified retrospective approach, and it did not have an impact on the Company’s consolidated financial statements. The new guidance did not have an impact on the Company’s consolidated financial statements, primarily as a result of revenue being sourced from lease arrangements that are outside the scope of ASC 606 until the new lease standard is adopted. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) , 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 adopted this guidance effective January 1, 2018 and there was no impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides 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 adopted the new guidance beginning in the first quarter of 2018, and it did not have a material impact on the Company’s statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which 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 adopted this guidance effective January 1, 2018, and will apply the new rules prospectively. The Company expects, based on historical property acquisitions, that in most cases, a future property acquired after adoption will be treated as an asset acquisition rather than a business acquisition, which will result in the capitalization of related transaction costs. The Company has evaluated the impact of this new guidance beginning in the first quarter of 2018, and determined that it did not have a material impact on the Company’s consolidated financial statements. As a result, the Company has treated its property acquisitions during the six months ended June 30, 2018 as asset acquisitions, and has capitalized the related transaction costs of approximately $0.7 million . In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Assets Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance related to partial sales of non-financial assets, eliminates rules specifically addressing the sales of real estate, clarifies the definition of in substance non-financial assets, removes the exception to the financial asset derecognition model and clarifies the accounting for contributions of non-financial assets to joint ventures. The Company adopted this guidance effective January 1, 2018 using the modified transition method. Sales of real estate in which the Company loses its controlling interest in the real estate property will result in the full gain amount being recognized at the time of the partial sale. During the three months ended June 30, 2018 the Company did not retain any interest in properties in which it sold. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which 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 adopted this guidance effective January 1, 2018 and it did not have an impact on the Company’s consolidated financial statements. 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. Pending Adoption as of June 30, 2018 : In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), which originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , in July 2018 ("ASU 2018-11"), which allows lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. ASC 842 originally required a modified retrospective method of adoption, however, ASU 2018-11 indicates that companies may be permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The pronouncement allows some optional practical expedients. In addition, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases) , which provides narrow amendments to clarify how to apply certain aspects of the new leasing standard. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company is a lessee for some properties in which it has ground leases as of June 30, 2018 . 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. The Company will adopt this new guidance upon its effective date on January 1, 2019 and will continue to evaluate the impact of this new guidance until it becomes effective. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which 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 January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): S implifying the Test for Goodwill Impairment. This new standard simplifies subsequent measurements of goodwill by eliminating Step 2 from the goodwill impairment test. Instead, entities will perform their interim or annual goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge based on the amount that the carrying amount exceeds the reporting unit's fair value. The loss recognized should not exceed the total goodwill allocated to the reporting unit. The amendments become effective for reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the potential impact of this new guidance. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, 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. In June 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018 and interim periods within those annual periods, however early adoption is permitted. The Company expects this amendment to impact the award made to the Advisor pursuant to an award agreement entered into on the Listing Date, effective as of the Listing (the “2018 OPP,” see Note 15 — Subsequent Events for details). |
Real Estate Investments
Real Estate Investments | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Real Estate Investments | Note 4 — Real Estate Investments The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented: Six Months Ended June 30, (Dollar amounts in thousands) 2018 2017 Real estate investments, at cost (1) : Land $ 30,549 $ 300,690 Buildings, fixtures and improvements 29,757 1,128,954 Total tangible assets 60,306 1,429,644 Acquired intangibles: (2) In-place leases 11,638 166,889 Above-market lease assets 253 22,802 Below-market ground lease asset — 1,233 Above-market ground lease liability — — Below-market lease liabilities (333 ) (105,878 ) Total intangible assets, net 11,558 85,046 Prior Credit Facility assumed in the Merger (3) — (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 $ 71,864 $ 1,095,323 Number of properties purchased 39 73 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the six months ended June 30, 2017 were subsequently adjusted after 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 six months ended June 30, 2018 were 18.5 years , 17.1 years and 19.3 years , respectively, as of each property’s respective acquisition date. (3) The Prior Credit Facility was scheduled to mature on May 1, 2018. On April 26, 2018, the Company repaid the Prior Credit Facility in full and entered into the Credit Facility (s ee Note 6 - Credit Facility for definitions and additional information). Total acquired intangible lease assets and liabilities consist of the following as of the dates presented: June 30, 2018 December 31, 2017 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place lease assets $ 388,512 $ 127,140 $ 261,372 $ 421,369 $ 140,085 $ 281,284 Above-market lease assets 24,412 5,950 18,462 31,610 11,309 20,301 Below-market ground lease asset 1,233 44 1,189 1,233 28 1,205 Total acquired intangible lease assets $ 414,157 $ 133,134 $ 281,023 $ 454,212 $ 151,422 $ 302,790 Intangible liabilities: Above-market ground lease liability $ 85 $ 4 $ 81 $ 85 $ 3 $ 82 Below-market lease liabilities 118,049 14,821 103,228 119,249 10,559 108,690 Total acquired intangible lease liabilities $ 118,134 $ 14,825 $ 103,309 $ 119,334 $ 10,562 $ 108,772 The following table presents amortization expense and adjustments to revenue and property operating expenses for intangible assets and liabilities during the periods presented: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 In-place leases $ 13,487 $ 18,336 $ 27,585 $ 31,464 Total added to depreciation and amortization $ 13,487 $ 18,336 $ 27,585 $ 31,464 Above-market leases $ (1,043 ) $ (1,616 ) $ (2,092 ) $ (2,780 ) Below-market lease liabilities 3,374 2,737 5,793 4,357 Total added to rental income $ 2,331 $ 1,121 $ 3,701 $ 1,577 Below-market ground lease asset $ 8 $ 8 $ 16 $ 12 Above-market ground lease liability — — (1 ) (1 ) Total added to property operating expenses $ 8 $ 8 $ 15 $ 11 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) 2018 (remainder) 2019 2020 2021 2022 In-place leases $ 24,624 $ 43,034 $ 35,134 $ 30,178 $ 26,073 Total to be added to depreciation and amortization $ 24,624 $ 43,034 $ 35,134 $ 30,178 $ 26,073 Above-market leases $ 1,971 $ 3,259 $ 2,438 $ 2,108 $ 1,728 Below-market lease liabilities (3,112 ) (8,257 ) (7,536 ) (6,825 ) (6,414 ) Total to be added to rental income $ (1,141 ) $ (4,998 ) $ (5,098 ) $ (4,717 ) $ (4,686 ) Below-market ground lease asset $ 16 $ 32 $ 32 $ 32 $ 32 Above-market ground lease liability (1 ) (2 ) (2 ) (2 ) (2 ) Total to be added to property operating expenses $ 15 $ 30 $ 30 $ 30 $ 30 The following table presents unaudited pro forma information as if the acquisitions during the six months ended June 30, 2018 had been consummated on January 1, 2017 : Six Months Ended June 30, (In thousands, except per share data) 2018 (1) 2017 Pro forma revenues $ 142,654 $ 131,835 Pro forma net income (loss) $ 4,614 $ (9,597 ) Basic and diluted pro forma net income (loss) per share $ 0.04 $ (0.10 ) _____________________ (1) For the six months ended June 30, 2018 , aggregate revenues and net income derived from the Company’s 2018 acquisitions (for the Company’s period of ownership) were $1.6 million and $1.1 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 2018 (remainder) $ 113,332 2019 222,361 2020 209,835 2021 198,355 2022 187,302 Thereafter 1,082,692 $ 2,013,877 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: June 30, Tenant 2018 2017 SunTrust Bank * 11.8% _____________________ * Tenant’s annualized rental income on a straight-line basis was not greater than or equal to 10.0% of the Company’s consolidated annualized rental income for all portfolio 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 June 30, 2018 and 2017 . The Company did not own properties in any state that in total represented 10.0% or greater of consolidated annualized rental income on a straight-line basis as of June 30, 2018 and 2017 . 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 June 30, 2018 and December 31, 2017 , there were three and four properties, respectively, classified as held for sale. During the six months ended June 30, 2018 , the Company sold all four of the properties that were held for sale as of December 31, 2017 and classified three additional properties 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 the dates indicated: (Dollar amounts in thousands) June 30, 2018 December 31, 2017 Real estate investments held for sale, at cost: Land $ 592 $ 1,453 Buildings, fixtures and improvements 1,878 4,677 Acquired intangible lease assets — 1,252 Total real estate assets held for sale, at cost 2,470 7,382 Less accumulated depreciation and amortization (467 ) (2,666 ) Total real estate investments held for sale, net 2,003 4,716 Impairment charges related to properties reclassified as held for sale (135 ) (34 ) Assets held for sale $ 1,868 $ 4,682 Real Estate Sales During the six months ended June 30, 2018 , the Company closed on the sale of 19 properties, including 13 properties leased to SunTrust Banks, Inc. (“SunTrust”) which had lease terms that expired between December 31, 2017 and March 31, 2018, for an aggregate contract price of $86.8 million , exclusive of closing costs. These sales resulted in aggregate gains of $28.3 million , which are reflected in gain on sale of real estate investments on the consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2018 . The Company recorded impairment charges of approximately $14,000 and $0.1 million for the three and six months ended June 30, 2018 upon reclassification of properties to assets held for sale properties reclassified as held for sale, as the carrying amount of the long-lived assets associated with these properties was greater than our estimate of their fair value less estimated costs to sell During the six months ended June 30, 2017 , the Company closed on the sale of twelve properties for a contract price of $271.9 million , exclusive of closing costs. These sales resulted in aggregate gains of $8.6 million and $13.8 million , which are reflected in gain on sale of real estate investments on the consolidated statement of operations and comprehensive income (loss) for the three and six months ended June 30, 2017 , respectively. The Company recorded impairment losses of $1.9 million and $4.3 million for the three and six months ended June 30, 2017 , respectively, for properties reclassified as held for sale, as the carrying amount of the long-lived assets associated with these properties was greater than our estimate of their fair value less estimated costs to sell. Impairment of Held for Use Real Estate Investments As of June 30, 2018 , the Company owned held for use properties, which included 26 held for use single-tenant net lease properties leased to SunTrust, which had lease terms that expired between December 31, 2017 and March 31, 2018. For all of its held for use properties, the Company had reconsidered the projected cash flows due to various performance indicators. As a result, the Company 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 held for use 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 held for use properties, and that market and economic conditions at the time of any potential sales of these 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 properties, 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 of its held for use properties, during the three and six months ended June 30, 2018 , the Company recognized impairment charges of $8.6 million and $8.8 million , respectively, on four (including two leased to SunTrust) and eight (including six leased to SunTrust) of the of the Company’s held for use properties, respectively, based on executed LOIs or PSAs received. The majority of the impairment charges related to two multi-tenant properties. During the three and six months ended June 30, 2017, the Company recognized impairment charges of $0.7 million and $2.3 million , respectively on the held for use SunTrust properties based on LOIs entered into. These amounts are recorded in impairment charges in the Company’s consolidated statement of operations and comprehensive income (loss). |
Mortgage Notes Payable, Net
Mortgage Notes Payable, Net | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Mortgage Notes Payable, Net | Note 5 — Mortgage Notes Payable, Net The Company’s mortgage notes payable, net as of June 30, 2018 and December 31, 2017 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties June 30, December 31, June 30, Interest Rate Maturity Anticipated Repayment (In thousands) (In thousands) SAAB Sensis I 1 $ 7,275 $ 7,470 5.93 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 25 19,746 21,243 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank III 95 75,605 79,729 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 25 20,948 22,756 5.50 % Fixed Jul. 2031 Jul. 2021 Sanofi US I 1 125,000 125,000 5.16 % Fixed Jul. 2026 Jan. 2021 Stop & Shop I 4 37,189 37,562 5.63 % Fixed Jun. 2041 Jun. 2021 Mortgage Loan I 254 583,145 638,115 4.36 % Fixed Sep. 2020 Sep. 2020 Liberty Crossing (1) — — 11,000 — % — — — Tiffany Springs MarketCenter (1) — — 33,802 — % — — — Shops at Shelby Crossing 1 22,793 23,002 4.97 % Fixed Mar. 2024 Mar. 2024 Patton Creek 1 40,446 40,858 5.76 % Fixed Dec. 2020 Dec. 2020 Bob Evans I 23 23,950 23,950 4.71 % Fixed Sep. 2037 Sep. 2027 Mortgage Loan II 12 210,000 210,000 4.25 % Fixed Jan. 2028 Jan. 2028 Mortgage Loan III 22 33,400 33,400 4.12 % Fixed Jan. 2028 Jan. 2028 Mortgage Loan IV 39 29,887 — 5.16 % Fixed (3) Mar. 2025 Mar. 2025 Gross mortgage notes payable 503 1,229,384 1,307,887 4.65 % (2) Deferred financing costs, net of accumulated amortization (4) (13,733 ) (15,182 ) Mortgage premiums, net 8,893 10,728 Mortgage notes payable, net $ 1,224,544 $ 1,303,433 _____________________________________ (1) These mortgage notes payable were repaid during the second quarter of 2018. (2) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. (3) Fixed as a result of the Company having entered into swap agreements, which are included in derivatives, at fair value on the unaudited consolidated balance sheet as of June 30, 2018 . (4) Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. As of June 30, 2018 and December 31, 2017 , the Company had pledged $2.4 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 June 30, 2018 , $862.4 million in real estate investments were included in the unencumbered asset pool comprising the borrowing base under the 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 Credit Facility ( see Note 6 — Credit Facility for definition). The following table summarizes the scheduled aggregate principal payments on mortgage notes payable based on stated maturity dates for the five years subsequent to June 30, 2018 and thereafter: (In thousands) Future Principal Payments 2018 (remainder) $ 1,207 2019 2,533 2020 624,030 2021 1,398 2022 1,070 Thereafter 599,146 $ 1,229,384 The Company’s mortgage notes payable agreements require the compliance of certain property-level financial covenants including debt service coverage ratios. As of June 30, 2018 , the Company was in compliance with financial covenants under its mortgage notes payable agreements. |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2018 | |
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 to an unsecured amended and restated credit agreement, dated December 2, 2014 by and among the RCA OP, to which the OP is successor by merger, BMO Harris Bank N.A., (“BMO Bank”) as administrative agent, letter of credit issuer, swingline lender and a lender, and the other parties thereto, relating to a revolving credit facility (the “Prior Credit Facility”). On April 26, 2018, the Company repaid the Prior Credit Facility in full and entered into a new $415.0 million revolving unsecured corporate credit facility (the “Credit Facility”) with BMO Bank, as administrative agent, Citizens Bank, N.A. and SunTrust Robinson Humphrey, Inc., as joint lead arrangers, and the lenders from time to time party thereto. The Credit Facility replaces the $325.0 million Prior Credit Facility which was set to mature in May 2018. The Credit Facility also includes an uncommitted “accordion feature” whereby, upon the request of the OP, but at the sole discretion of the participating lenders, the commitments under the Credit Facility may be increased by up to an additional $500.0 million , subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions. At closing, the Company borrowed $60.0 million , the proceeds of which were used to repay all of the $55.0 million debt outstanding under the Prior Credit Facility and to pay related fees and expenses. The amount available for future borrowings under the Credit Facility is based on the lesser of (1) a percentage of the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (2) a maximum amount permitted to maintain a minimum debt service coverage ratio with respect to the borrowing base, in each case, as of the determination date. As of June 30, 2018 , the Company had a total borrowing base capacity under the Credit Facility of $376.7 million based on the value of the borrowing base under the Credit Facility. Of this amount, $132.3 million was outstanding under the Credit Facility as of June 30, 2018 and $244.4 million remained available for future borrowings. The Credit Facility is interest-only. Because the Listing occurred, the maturity date of the Credit Facility was automatically extended from April 26, 2020 to April 26, 2022. In addition, because the Listing occurred, the Company has a one-time right, subject to customary conditions, to extend the maturity date for an additional term of one year to April 26, 2023. Borrowings under the Credit Facility will bear interest at either (i) the Base Rate (as defined in the Credit Facility) plus an applicable spread ranging from 0.60% to 1.20% , depending on the Company’s consolidated leverage ratio, or (ii) LIBOR plus an applicable spread ranging from 1.60% to 2.20% , depending on the Company’s consolidated leverage ratio. As of June 30, 2018 and December 31, 2017 , the weighted-average interest rate under the Credit Facility and Prior Credit Facility was 3.91% and 2.48% , respectively. The Credit Facility contains various customary operating covenants, including a restricted payments covenant, as well as covenants restricting, among other things, the incurrence of liens, investments, fundamental changes, agreements with affiliates and changes in nature of business. The Credit Facility also contains financial maintenance covenants with respect to maximum consolidated leverage, maximum consolidated secured leverage, minimum fixed charge coverage, maximum other recourse debt to total asset value, and minimum net worth. As of June 30, 2018 , the Company was in compliance with the operating and financial covenants under the Credit Facility. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7 — Fair Value Measurements Fair Value Hierarchy 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. Derivative Instruments The Company’s derivative instruments are measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these derivatives 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 June 30, 2018 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives 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. Real Estate Investments - Held for Sale The Company has impaired real estate investments held for sale, which are carried at fair value on a non-recurring basis on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 . Impaired real estate investments held for sale were valued using the sale price from the applicable 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. Real Estate Investments - Held for Use The Company also has impaired real estate investments held for use ( see Note 4 — Real Estate Investments for additional information on impairment charges recorded by the Company), which are carried at fair value on a non-recurring basis on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 . 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 regions as the impaired 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 June 30, 2018 and December 31, 2017 , 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 June 30, 2018 Impaired real estate investments held for sale $ — $ 564 $ — $ 564 Impaired real estate investments held for use — 41,835 — 41,835 Interest rate swaps - liabilities — 46 — 46 Total $ — $ 42,445 $ — $ 42,445 December 31, 2017 Impaired real estate investments held for sale $ — $ 432 $ — $ 432 Impaired real estate investments held for use — 20,434 10,330 30,764 Interest rate swaps - assets — 23 — 23 Total $ — $ 20,889 $ 10,330 $ 31,219 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 six months ended June 30, 2018 and 2017 . 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 June 30, 2018 and December 31, 2017 are reported in the following table: June 30, 2018 December 31, 2017 (In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value Gross mortgage notes payable 3 $ 1,229,384 $ 1,241,266 $ 1,307,887 $ 1,332,240 Credit facilities 3 $ 132,300 $ 132,300 $ 95,000 $ 95,000 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 Prior Credit Facility or the 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 the credit risk of the Company or credit markets. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Note 8 — 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. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (In thousands) Balance Sheet Location June 30, 2018 December 31, 2017 Derivatives designated as hedging instruments: Interest Rate Swaps Derivative assets, at fair value $ — $ 23 Interest Rate Swaps Derivative liabilities, at fair value (46 ) — Total $ (46 ) $ 23 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 income (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. Additionally, during the three months ended June 30, 2018, the Company accelerated the reclassification of amounts in other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts resulted in a gain of $81,863 . Amounts reported in accumulated other comprehensive income (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 $119,392 will be reclassified from accumulated other comprehensive income (loss) as an increase to interest expense. As of June 30, 2018 and December 31, 2017 , the Company had the following derivatives that were designated as cash flow hedges of interest rate risk. June 30, 2018 December 31, 2017 Interest Rate Derivative Number of Instruments Notional Amount Number of Instruments Notional Amount (In thousands) (In thousands) Interest Rate Swaps 4 $ 29,887 1 $ 34,098 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 six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) $ 271 $ 8 $ (94 ) $ 8 Amount of loss reclassified from accumulated other comprehensive income into income as interest expense $ (29 ) $ (27 ) $ (34 ) $ (27 ) Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $ 82 $ — $ 82 $ — Non-Designated Hedges Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. A loss of approximately $19,000 and a gain of approximately $21,000 is included in interest expense on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2017 , respectively. As of June 30, 2018 and December 31, 2017 , the Company did not have any derivatives that were not designated as hedges in qualifying hedging relationships, therefore no gain or loss was recorded in the three and six months ended June 30, 2018 . Offsetting Derivatives The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2018 and December 31, 2017. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets. Gross Amounts Not Offset on the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount June 30, 2018 $ — $ (46 ) $ — $ (46 ) $ — $ — (46 ) December 31, 2017 $ 23 $ — $ — $ 23 $ — $ — 23 Credit-Risk-Related Contingent Features The Company has agreements with each of its derivative counterparties that contain 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 June 30, 2018 , 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 June 30, 2018 , 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. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Common Stock | Note 9 — Common Stock As of June 30, 2018 and December 31, 2017 , the Company had 105.1 million and 105.2 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 19, 2018, 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, 2017, which was published on March 20, 2018. 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 or December 31, 2017, as applicable, that would have affected the Company’s net asset value. On July 3, 2018, the Company initiated a series of corporate actions that were effected prior to the Listing. These corporate actions included a 2 -to- 1 reverse stock split, the renaming of common stock as Class A common stock, the designation of Class B1 common stock and Class B-2 common stock and a change to the distribution rate, among other actions. For additional information on these actions, see Note 15 — Subsequent Events. Tender Offers On February 15, 2018, in response to an unsolicited offer to the Company’s stockholders to purchase 1,000,000 shares of the Company’s common stock at a price of $13.66 per share, the Company commenced a tender offer for up to 1,000,000 shares at a price of $14.35 per share (the “February Offer”). The Company made the February Offer in order to deter an unsolicited bidder and other potential future bidders that may try to exploit the illiquidity of the Company’s common stock and acquire it from stockholders at prices substantially below the current Estimated Per-Share NAV. In accordance with the terms of the February Offer, which expired on March 27, 2018, the Company accepted for purchase 483,133 shares for a total cost of approximately $6.9 million , excluding fees and expenses relating to the Offer. On May 1, 2018, in response to an unsolicited offer to the Company’s stockholders to purchase 1,000,000 shares of the Company’s common stock at a price of $15.35 per share, the Company commenced a tender offer for up to 1,000,000 shares at a price of $15.45 per share (the “May Offer”). The Company made the May Offer in order to deter an unsolicited bidder and other potential future bidders that may try to exploit the illiquidity of the Company’s common stock and acquire it from stockholders at prices substantially below the current Estimated Per-Share NAV. In accordance with the May Offer, which expired on May 31, 2018, the Company accepted for purchase 207,713 shares for a total cost of approximately $3.2 million , excluding fees and expenses relating to the May Offer. Share Repurchase Program In anticipation of the Listing, the Company’s board of directors terminated the Company’s share repurchase program (the “SRP”) in accordance with its terms, effective June 30, 2018. The Company’s board of directors had previously authorized the Company to repurchase shares pursuant to its SRP, which permitted investors to offer to sell their shares back to the Company after they held them for at least one year, subject to certain conditions and limitations. The Company repurchased shares on a semiannual basis, in its sole discretion, at each six-month period ending June 30 and December 31. No further repurchases of shares of any class of common stock will be made pursuant to the SRP, including any SRP requests received during the first semester of 2018. 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 were 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 was 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 were 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 were 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 Company’s board of directors. Repurchases were 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 had 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 did not guarantee that it was able to accommodate all repurchase requests. When a stockholder requested repurchases and the repurchases were approved, the Company reclassified 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 June 30, 2018 : Number of Shares Weighted - Average Price per Share Cumulative repurchases as of December 31, 2017 (1) 3,306,864 $ 23.97 Three months ended March 31, 2018 (2) 412,939 23.37 Three months ended June 30, 2018 — — Cumulative repurchases as of June 30, 2018 3,719,803 — (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 . Also, 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 December 31, 2017. No repurchases were made with respect to requests received during 2017 that were not valid requests in accordance with the amended and restated SRP. (2) During January 2018, the Company repurchased 412,939 shares for approximately $9.7 million at a price of $23.37 per share equal to the then current Estimated Per-Share NAV. Distribution Reinvestment Plan On June 29, 2018, the Company announced that its board of directors had suspended the DRIP effective June 30, 2018. As a result, all distributions paid for the month of June 2018 were paid in cash in July 2018. Prior to its suspension, the Company’s stockholders were able to elect to reinvest distributions by purchasing shares of common stock from the Company at the applicable Estimated Per-Share NAV. On the Listing Date, an amendment and restatement of the Company’s DRIP approved by the Company’s board of directors became effective (the “A&R DRIP”). For additional information on the A&R DRIP, see Note 15 — Subsequent Events. 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 stockholders’ equity in the consolidated balance sheets in the period distributions are declared. During the six months ended June 30, 2018 , 990,393 shares of common stock were issued pursuant to the DRIP. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 — 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 2018 (remainder) $ 728 2019 1,460 2020 1,243 2021 925 2022 941 Thereafter 12,516 $ 17,813 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 RCA, the Company, Edward M. Weil, Jr., Leslie D. Michelson, Edward G. Rendell (Weil, Michelson and Rendell, the “Director Defendants”), and AR Global, 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 the RCA Advisor), added counts under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended (the “Securities Act”) 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. The Company, RCA, the Director Defendants, the Additional Director Defendants and Nicholas Radesca deny wrongdoing and liability and intend to vigorously defend the action. On August 14, 2017, defendants moved to dismiss the amended complaint. On March 29, 2018, the Court granted defendants’ motion to dismiss and dismissed the amended complaint. On April 26, 2018, the plaintiffs filed a notice of appeal of the court’s order, which appeal is pending. 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 six months ended June 30, 2018 or the year ended December 31, 2017. On February 8, 2018, Carolyn St. Clair-Hibbard, a purported stockholder of the Company, filed a putative class action complaint in the United States District Court for the Southern District of New York against the Company, AR Global, the Advisor, Nicholas S. Schorsch and William D. Kahane. On February 23, 2018, the complaint was amended to, among other things, assert some claims on the plaintiff’s own behalf and other claims on behalf of herself and other similarly situated shareholders of the Company as a class. On April 26, 2018, defendants moved to dismiss the amended complaint. On May 25, 2018, plaintiff filed a second amended complaint. The second amended complaint alleges that the proxy materials used to solicit stockholder approval of the Merger at the Company’s 2017 annual meeting were materially incomplete and misleading. The complaint asserts violations of Section 14(a) of the Exchange Act against the Company, as well as control person liability against the Advisor, AR Global, and Messrs. Schorsch and Kahane under 20(a). It also asserts state law claims for breach of fiduciary duty against the Advisor, and claims for aiding and abetting such breaches, of fiduciary duty against the Advisor, AR Global and Messrs. Schorsch and Kahane. The complaint seeks unspecified damages, rescission of the Company’s advisory agreement (or severable portions thereof) which became effective when the Merger became effective, and a declaratory judgment that certain provisions of the Company’s advisory agreement are void. The Company believes the second amended complaint is without merit and intends to defend vigorously. On June 22, 2018, defendants moved to dismiss the second amended complaint. On August 1, 2018, plaintiff filed an opposition to defendants’ motions to dismiss. Due to the early stage of the litigation, no estimate of a probable loss or any reasonably possible losses are determinable at this time. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Note 11 — Related Party Transactions and Arrangements As of June 30, 2018 and December 31, 2017 , American Finance Special Limited Partner, LLC (the “Special Limited Partner”), an entity controlled by AR Global, owned 8,888 shares of the Company’s outstanding common stock and owned 90 units of limited partnership interests in the OP (“OP Units”). On September 6, 2016, the agreement of limited partnership of the OP was amended and restated in connection with the effectiveness of the Merger (as so amended and restated, the “A&R OP Agreement”). On the Listing Date, the A&R OP Agreement was amended and restated in connection with the effectiveness of the Listing (as so amended and restated, the “Second A&R OP Agreement”). The amendments effected to the A&R OP Agreement pursuant to the Second A&R OP Agreement generally reflect provisions more consistent with agreements of limited partnership of other operating partnerships controlled by real estate investment trusts whose securities are publicly traded and listed and make other changes in light of the transactions entered into by the Company in connection with the Listing, including designating the units of limited partnership previously designated as “OP Units” that correspond to each share of the Company’s common stock, with respect to distributions and otherwise, as “Class A Units” (the “Class A Units”) and setting forth the terms of a new class of units of limited partnership designated as “LTIP Units” (“LTIP Units”) issued to the Advisor on the Listing Date pursuant to the 2018 OPP. Additional transactions entered into by the Company in connection with the Listing also involved the Advisor and Special Limited Partner. Moreover, subsequent to the Listing, all of the Class A Units held by the Advisor and its affiliates were redeemed for shares of Class A common stock and all of the shares of Class A common stock, Class B-1 common stock and Class B-2 common stock owned by the Advisor and its affiliates (including the Special Limited Partner) were distributed pro rata to the individual members of those entities, including Edward M. Weil, Jr., the Company’s chairman and chief executive officer. For additional information regarding these, and all other, transactions entered into in connection with the Listing, see Note 15 - Subsequent Events. Holders of OP Units or Class A Units have the right to redeem their OP Units or Class A 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 applicable 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 Company’s initial public offering. 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 AR Global. 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 AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global’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. On November 30, 2017, the court issued an opinion partially granting the defendant’s motion. On December 7, 2017, the creditor trust moved for limited reargument of the court’s dismissal of its breach of fiduciary duty claim, and on January 10, 2018, the defendants filed a supplemental motion to dismiss certain claims. On April 5, 2018, the court issued an opinion denying the creditor trust’s motion for reconsideration while partially granting the defendants’ supplemental motion 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 “First 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 First 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 at the Effective Time. The Third A&R Advisory Agreement grants the Company the right to internalize the services provided under the Third A&R Advisory Agreement (“Internalization”) and thereby terminate the Third A&R Advisory Agreement pursuant to a notice received by the Advisor after January 1, 2018 as long as (i) more than 67% of the Company’s independent directors have approved the Internalization; and (ii) the Company pays the Advisor a specified Internalization fee pursuant to the terms of the Third A&R Advisory Agreement, which is equal to $15.0 million plus either (x) if the Internalization occurs on or before December 31, 2028, Subject Fees multiplied by 4.5 and (y) if the Internalization occurs on or after January 1, 2029, Subject Fees multiplied by 3.5 plus 1% of the purchase price of each acquisition or merger that occurs between the date of the notice of Internalization received by the Advisor and the Internalization or 1% of the cumulative net proceeds of any equity raised by the Company between the end of the fiscal quarter in which notice was received and the Internalization. The “Subject Fees” are equal to (i) the product of four multiplied by the sum of (A) the actual base management fee plus (B) the actual variable management fee, in each of clauses (A) and (B), payable for the fiscal quarter in which the notice of Internalization is received by the Advisor, plus, (ii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised in respect of the fiscal quarter in which the notice of Internalization is received by the Advisor. Up to 10% of the Internalization fee may be payable in shares of common stock subject to certain conditions. The initial term of the Third A&R Advisory Agreement expires on April 29, 2035, the twentieth anniversary of Second A&R Advisory Agreement. This term is automatically renewed for successive twenty -year terms upon expiration unless the Third A&R Advisory Agreement is terminated (1) in accordance with an Internalization, (2) by the Company or the Advisor with cause, without penalty, with 60 days’ notice, (3) by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Third A&R Advisory Agreement or (b) any material breach of the Third A&R Advisory Agreement of any nature whatsoever by the Company, or (4) by the Advisor in connection with a change of control of the Company. Upon the termination of the Third A&R Advisory Agreement, the Advisor will be entitled to receive from the Company all amounts due to the Advisor, as well as the then-present fair market value of the Advisor’s interest in the Company. On September 6, 2016, the date of the Merger Agreement, the Company entered into 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) an Internalization; and (c) certain matters related to changes in the Third A&R Advisory Agreement. On the Listing Date, the Company entered into the Second A&R OP Agreement. For additional information, see Note 15 — Subsequent Events. Acquisition Fees 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. Financing Coordination Fees 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. Asset Management Fees and Variable Management/Incentive Fees 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: (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 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 has been met. As of June 30, 2018 , in aggregate, the Company’s board of directors had approved the cumulative issuance of 1,052,420 Class B Units to the Advisor in connection with the arrangement described above. Pursuant to the terms of the A&R OP Agreement, the Advisor was entitled to receive 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. Also, as of June 30, 2018 , the Company’s board of directors determined that Economic Hurdle had been satisfied, however none of the events had occurred, including the Listing, which would have satisfied the other vesting requirement of the Class B Units. Therefore, no expense was recognized in connection with the Class B Units during the three and six months ended June 30, 2018 , or in any prior period. As a result of the Listing on July 19, 2018 and the satisfaction of the Economic Hurdle, which had previously been approved by the Company’s board of directors, all of the Class B Units vested in accordance with their terms and were converted into an equal number of Class A Units. In addition, effective at the Listing following this conversion and as approved by the Company’s board of directors, these Class A Units were redeemed for an equal number of shares of newly issued shares of Class A common stock consistent with the redemption provisions contained in the Second A&R OP Agreement (see Note 15 — Subsequent Events for additional information). 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 (including certain convertible debt, proceeds from the DRIP and any cumulative Core Earnings (as defined below) in excess of distributions paid on common stock but excluding equity based compensation and proceeds from an Specified Transaction after the Effective Time) 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 income (loss) for the three and six months ended June 30, 2018 and 2017 . In addition, under the Third A&R Advisory Agreement, the Company is required to pay the Advisor a variable management fee equal to the product of (1) the fully diluted shares of common stock outstanding multiplied by (2) (x) 15.0% of the applicable quarter’s Core Earnings 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. On the Listing Date, the Company entered into an amendment to the Third A&R Advisory Agreement (the “Listing Amendment") which lowered the quarterly thresholds of Core Earnings per share, to be calculated based on the Company’s reported diluted weighted-average shares outstanding. For additional information on the Listing Amendment, see Note 15 - Subsequent Events. Core Earnings is defined as, for the applicable period, net income or loss computed in accordance with GAAP 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 or losses or other non-cash items recorded in net income or loss for the applicable 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 impairments 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(in each case after discussions between the Advisor and the independent directors and approved by a majority of the independent directors). The variable management fee is payable to the Advisor or its assignees in cash or shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor and the value of any share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. The Company did not incur a variable management fee during the three and six months ended June 30, 2018 and 2017 . Property Management Fees On September 6, 2016, the date of the Merger Agreement, RCA’s former property manager and leasing agent assigned RCA’s existing property management agreement (as amended and restated in connection with the execution of the Merger Agreement and further amended from time to time, the “Multi-Tenant Property Management Agreement”) and existing leasing agreement (as amended and restated in connection with the execution of the Merger Agreement, the “Multi-Tenant Leasing Agreement”) to the Property Manager. The Multi-Tenant Property Management Agreement and the Multi-Tenant Leasing Agreement became effective at the Effective Time. The Multi-Tenant Property Management Agreement provides that, unless a property is subject to a separate property management agreement with the Property Manager, the Property Manager is the sole and exclusive property manager for (1) the properties owned by RCA prior to the Merger, and (2) any existing anchored, retail properties, such as power centers and lifestyle centers, acquired by the Company after the Effective Time and during the term of the Multi-Tenant Property Management Agreement and the Multi-Tenant Leasing Agreement, (the “Multi-Tenant Properties”). In December 2017, in connection with a $210.0 million mortgage loan secured by 12 of the Company’s anchored, stabilized core retail properties, the Company entered into 12 identical property management agreements with the Property Manager, the substantive terms of which are substantially identical to the terms of the Multi-Tenant Property Management Agreement, except they do not provide for the transition fees described below. The Multi-Tenant Property Management Agreement provides that the Property Manager is entitled to a management fee equal to 4% of the gross rental receipts from the Multi-Tenant 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 Multi-Tenant 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 Multi-Tenant 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 Multi-Tenant Properties. Pursuant to the Multi-Tenant Leasing Agreement, the Company may, under certain circumstances and subject to certain conditions, pay the Property Manager a leasing fee for services in leasing Multi-Tenant Properties to third parties. In addition, also in connection with entering into the Merger Agreement, the Company entered into an amendment and restatement of its existing property management and leasing agreement with the Property Manager (the “Property Management Agreement”), under which the properties owned by the Company prior to the Merger and any double- and triple-net leased single- tenant properties acquired by the Company after the Effective Time have been and will be managed. The amendment and restatement did not change the substantive terms of the Property Management Agreement, which permit the Property Manager to subcontract its duties to third parties and provide that the Company is responsible for all costs and expenses of managing the properties, except for general overhead and administrative expenses of the Property Manager. The Multi-Tenant Property Management Agreement, the Multi-Tenant 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. Professional Fees and Other Reimbursements The Company reimburses the Advisor’s costs of providing administrative services. During the three and six months ended June 30, 2018 , the Company incurred $2.1 million and $4.0 million , respectively, of reimbursement expenses from the Advisor for providing administrative services. During the three and six months ended June 30, 2017 , the Company incurred $2.7 million and $3.5 million , respectively, of reimbursement expenses from the Advisor for providing administrative services. This reimbursement includes reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. These reimbursements are included in general and administrative expense on the consolidated statements of operations and comprehensive income (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 six months ended June 30, 2018 and 2017 . 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 June 30, Six Months Ended June 30, Payable as of (In thousands) 2018 2017 2018 2017 June 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements (1) $ 53 $ 51 $ 171 $ 51 $ 30 $ 9 Ongoing fees: Asset management fees to related party 5,837 5,250 11,446 10,000 74 408 Property management and leasing fees (2) 2,532 2,086 4,605 2,823 630 1,114 Professional fees and other reimbursements (3) 2,296 2,181 4,399 3,827 1,126 (4) 1,522 (4) Distributions on Class B Units (3) 340 433 678 861 112 116 Total related party operating fees and reimbursements $ 11,058 $ 10,001 $ 21,299 $ 17,562 $ 1,972 $ 3,169 _________________________________ (1) Amounts for the three and six months ended June 30, 2018 and 2017 included in acquisition and transaction related expenses in the unaudited consolidated statements of operations and comprehensive income (loss). (2) Amounts for the three and six months ended June 30, 2018 and 2017 are included in property operating expenses in the unaudited consolidated statements of operations and comprehensive income (loss). (3) Amounts for the three and six months ended June 30, 2018 and 2017 are included in general and administrative expense in the unaudited consolidated statements of operations and comprehensive income (loss). (4) Balance includes costs which were incurred and accrued due to ANST and a subsidiary of RCAP which were related parties of the Company. See above for further details on the status of the ANST and RCAP relationship. Listing Arrangements Fees Incurred in Connection with a Listing Pursuant to the A&R OP Agreement, in the event that the Company’s common stock was listed on a national exchange, the OP was obligated to distribute to the Special Limited Partner a promissory note in 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 A&R OP Agreement) 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 (including the Merger)or business combination (an “Offering”) as of the Listing Date plus (ii) the total amount of cash that, if distributed to those stockholders who purchased shares of the Company’s common stock in an Offering prior to the Listing, 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. Effective at the Listing, the OP entered into a listing note agreement with respect to this obligation (the “Listing Note”) with the Special Limited Partner. For additional information on the Listing Note, see Note 15 — Subsequent Events. Multi-Year Outperformance Agreement On the Listing Date, the Company issued LTIP Units to the Advisor pursuant to the 2018 OPP which, together with the Second A&R OP Agreement, superseded in all respects the general terms of the multi-year outperformance agreement and the amendment and restatement of the limited partnership agreement of the OP previously approved by the Board in April 2015 to be effective upon a listing of the Company’s common stock. For additional information on the 2018 OPP and the LTIP Units, see Note 15 — Subsequent Events. |
Economic Dependency
Economic Dependency | 6 Months Ended |
Jun. 30, 2018 | |
Economic Dependency [Abstract] | |
Economic Dependency | Note 12 — 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 | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 13 — Share-Based Compensation Restricted Share Plan The Company’s board of directors has adopted an employee and director restricted share plan (the “RSP”), pursuant to which the Company may issue restricted shares and restricted stock units in respect of shares of common stock (“RSUs”) under specific award agreements 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 entities that provide services to the Company. Under the RSP, the Company may issue up to 10.0% of its outstanding shares of common stock on a fully diluted basis at any time. 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 July 1, 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. For restricted share awards granted on or after July 1, 2015, such awards 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 Company’s board of directors. 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 to holders of restricted shares payable in shares of common stock are subject to the same restrictions as the underlying restricted shares. RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and/or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of common stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are generally credited with dividend or other distribution equivalents which are subject to the same vesting conditions and/or other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of common stock. During the six months ended June 30, 2018 , the Company did not grant any RSU awards. The following table reflects restricted share award activity for the six months ended June 30, 2018 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2017 15,708 $ 23.67 Granted — — Vested (6,621 ) 23.55 Unvested, June 30, 2018 9,087 23.76 As of June 30, 2018 , the Company had $0.1 million of unrecognized compensation cost related to unvested restricted share awards granted. That cost is expected to be recognized over a weighted-average period of 2.5 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 $65,000 and $91,000 for the three and six months ended June 30, 2018 , respectively. Compensation expense related to restricted shares was approximately $19,000 and $49,000 for the three and six months ended June 30, 2017 , respectively. Compensation expense related to restricted shares is included in general and administrative expense on the accompanying consolidated statements of operations and comprehensive loss. Effective at the Listing, the Company’s board of directors adopted two new equity plans that are intended to succeed and replace the RSP such that no further awards will be issued under the RSP; provided, however, that any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, will remain outstanding in accordance with their terms and the terms of the RSP until all those awards are forfeited, canceled, expired or otherwise terminated in accordance with their terms. Effective at the Listing, the Company’s board of directors also replaced the Company’s existing director compensation program. See Note 15 — Subsequent Events for additional information. 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 six months ended June 30, 2018 and 2017 . |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Note 14 — Net Income (Loss) Per Share The following table sets forth the basic and diluted net income (loss) per share computations: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share amounts) 2018 2017 2018 2017 Net (loss) income attributable to stockholders - basic and diluted $ (12,041 ) $ (1,021 ) $ 3,360 $ (11,738 ) Weighted-average shares outstanding - Basic 105,028,459 104,140,631 105,111,959 94,450,241 Unvested restricted shares — — 14,483 — OP Units — — 203,612 — Weighted-average shares outstanding - Diluted 105,028,459 104,140,631 105,330,054 94,450,241 Net (loss) income per share attributable to stockholders - Basic $ (0.11 ) $ (0.01 ) $ 0.03 $ (0.12 ) Net (loss) income per share attributable to stockholders - Diluted $ (0.11 ) $ (0.01 ) $ 0.03 $ (0.12 ) Diluted net loss per share assumes the vesting or conversion of restricted shares and OP Units into an equivalent number of unrestricted shares of common stock and the conversion of Class B Units into common shares if certain contingencies were met as of June 30, 2018 (see Note 11 - Related Party Transactions and Arrangements for additional information), unless the effect is antidilutive. The Company had the following restricted shares, OP Units and Class B Units 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, or in the case of Class B Units, certain contingencies had not been met as of June 30, 2018: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Unvested restricted shares (1) 13,455 11,197 — 10,823 OP Units (2) 203,612 203,612 — 151,888 Class B Units (3) 1,052,420 1,052,420 1,052,420 1,052,420 Total 1,269,487 1,267,229 1,052,420 1,215,131 _____________________________________ (1) Weighted-average number of shares of unvested restricted shares outstanding for the period presented. There were 9,088 and 9,543 unvested restricted shares outstanding as of June 30, 2018 and June 30, 2017 , respectively. (2) Weighted-average number of OP Units outstanding for the period presented. There were 203,612 OP Units outstanding as of June 30, 2018 and June 30, 2017 . (3) Weighted-average number of Class B Units outstanding for the period presented. There were 1,052,420 Class B Units outstanding as of June 30, 2018 and June 30, 2017 . |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 — 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: Acquisitions Subsequent to June 30, 2018 , the Company acquired seven properties with an aggregate base purchase price of $16.3 million , excluding acquisition related costs. Dispositions Subsequent to June 30, 2018 , the Company sold two properties (both tenanted by SunTrust) with an aggregate contract sale price of approximately $1.4 million . Listing of the Company’s Common Stock Corporate Actions On July 3, 2018, in order to effect the Listing, the Company effected a sequence of corporate actions: • The Company effected a 2 -to- 1 reverse stock split combining every two shares of common stock, par value $0.01 per share, into one share of common stock, par value $0.02 per share, and subsequently reducing the resulting par value of the shares of common stock outstanding after the reverse stock split from $0.02 per share back to $0.01 per share. In addition, the Company changed the name of its common stock to “Class A common stock.” • The Company reclassified a number of authorized but unissued shares of Class A common stock equal to half of the number of shares of Class A common stock then outstanding into equal numbers of shares of Class B-1 common stock and shares of Class B-2 common stock. • The Company paid to the holders of shares of Class A common stock, following the steps described above, a stock dividend equal to one-half share of Class B-1 common stock and one-half share of Class B-2 common stock for each share of Class A common stock outstanding. To address the potential for selling pressure that may have existed at the outset of listing, the Company listed only shares of Class A common stock on Nasdaq, which represented approximately 50% of the Company’s shares of common stock outstanding at the Listing. The shares of Class B-1 common stock and Class B-2 common stock, which each represented approximately 25% of the Company’s shares of common stock outstanding at the Listing were not listed on Nasdaq. Instead, the shares of Class B-1 common stock and Class B-2 common stock will automatically convert into shares of Class A common stock and become listed on Nasdaq no later than 90 days and 180 days, respectively, from the Listing Date. Each share of Class B-1 common stock and Class B-2 common stock will otherwise be identical to each share of Class A common stock in all other respects, including the right to vote on matters presented to the Company’s stockholders, and shares of all classes of common stock are expected to receive the same distributions. Outstanding Shares of Common Stock As a result of the corporate actions described above, the number of outstanding shares in total, and on a weighted-average basis for earnings per share purposes, remained the same with the exception of any fractional shares that were repurchased or forfeited as a result of the reverse stock split. The table below provides details of the Company’s outstanding shares of common stock as of June 30, 2018 and July 31, 2018: June 30, 2018 As of July 31, 2018 Shares Outstanding Class A Common Stock Class B-1 Common Stock Class B-2 Common Stock Shares Outstanding Shares of common stock (1) 105,049,705 52,506,417 26,262,414.5 26,262,414.5 105,031,246 Vesting and conversion of Class B Units (2) (3) — 1,052,420 — — 1,052,420 Redemption of Class A Units (formerly known as OP Units) (3) (4) — 30,691 — — 30,691 Unvested restricted shares (5) 9,088 4,541 2,272 2,272 9,085 Total 105,058,793 53,594,069 26,264,686.5 26,264,686.5 106,123,442 (1) See “Corporate Actions” above for a description of the reverse stock split and classification of shares as Class A, Class B-1 and Class B-2. Fractional shares totaling 18,459 were repurchased by the Company as a result of the reverse stock split. Includes 4,444 shares of Class A common stock, 2,222 shares of Class B-1 common stock and 2,222 shares of Class B-2 common stock owned by the Special Limited Partner with respect to the 8,888 shares of common stock owned by the Special Limited Partner as of June 30, 2018. (2) As a result of the Listing and the satisfaction of the Economic Hurdle, which had previously been approved by the Company’s board of directors, t he 1,052,420 Class B Units previously issued to the Advisor vested in accordance with their terms as the Economic Hurdle had been satisfied and the Listing qualified as a liquidity event. The Class B Units were converted into an equal number of Class A Units. In addition, effective at the Listing following this conversion and as approved by the Company’s board of directors, these Class A Units were redeemed for an equal number of newly issued shares of Class A common stock consistent with the redemption provisions contained in the Second A&R OP Agreement ( see Note 11 — Related Party Transactions and Arrangements for additional information on the Class B Units). As a result of the conversion of the Class B Units, the Company will record non-cash compensation expense of approximately $15.8 million in the third quarter of 2018. (3) Following the Listing, all of the shares of Class A common stock, Class B-1 common stock and Class B-2 common stock owned by the Advisor and its affiliates (including the Special Limited Partner) were distributed pro rata to the individual members of those entities, including Edward M. Weil, Jr., the Company’s chairman and chief executive officer. (4) Pursuant to the redemption provisions contained in the agreement of limited partnership of the OP, holders of Class A Units may redeem all or a portion of their Class A Units for, at the Company’s election, either shares of Class A common stock or the cash equivalent thereof. 203,612 Class A Units were eligible for redemption after the Listing. On July 20, 2018, 30,690.5 Class A Units held by the RCA Advisor and the Special Limited Partner were redeemed for an equal number of newly issued shares of Class A common stock consistent with the redemption provisions contained in the agreement of limited partnership of the OP. (5) Fractional unvested restricted shares of common stock held by the Company’s independent directors totaled approximately three , and these fractional shares were forfeited in connection with the reverse stock split effected prior to the Listing. Listing Note On the Listing Date, the OP entered into the Listing Note with the Special Limited Partner, as required under its agreement of limited partnership, (see Note 11 — Related Party Transactions and Arrangements ) and entered into a related subordination agreement (the “Subordination Agreement”) with the administrative agent under the Company’s Credit Facility, BMO Bank. The Listing Note evidences the OP’s obligation to distribute to the Special Limited Partner the Listing Amount, which will be calculated based on the Market Value of the Company’s common stock. The measurement period used to calculate the Market Value of the Company’s common stock will not be determinable until the end of the 30 consecutive trading days commencing on the 180th day following the date on which shares of Class B-2 common stock convert into shares of Class A common stock. Until the amount of the Listing Note can be determined, the Listing Note will be considered a liability which will be marked to fair value at each reporting date, with changes in the fair value recorded in the consolidated statements of operations and comprehensive income (loss). The fair value of the Listing Note at issuance was not material and was determined using a Monte Carlo simulation, which uses a combination of observable and unobservable inputs. 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 has 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 its entire special limited partnership interest in the OP into Class A Units. Second Amended and Restated Agreement of Limited Partnership of the OP On the Listing Date, the Second A&R OP Agreement became effective at the Listing. The amendments effected to the A&R OP Agreement pursuant to the Second A&R OP Agreement generally reflect provisions more consistent with agreements of limited partnership of other operating partnerships controlled by real estate investment trusts whose securities are publicly traded and listed and make other changes in light of the transactions entered into by the Company in connection with the Listing, including designating the units of limited partnership previously designated as “OP Units” that correspond to each share of the Company’s common stock, with respect to distributions and otherwise, as “Class A Units” and setting forth the terms of a new class of units of limited partnership designated as “LTIP Units” (“LTIP Units”) including the Master LTIP Unit (the “Master LTIP Unit”) issued to the Advisor on the Listing Date pursuant to the 2018 OPP. In addition, the Second A&R OP Agreement describes the procedures pursuant to which holders of Class A Units may redeem all or a portion of their Class A Units for, at the Company’s election, either shares of Class A common stock or the cash equivalent thereof. The Second A&R OP Agreement also requires the Company, upon the request of a holder of Class A Units but subject to certain conditions and limitations, to register under the Securities Act the issuance or resale of the shares of Class A common stock issuable upon redemption of Class A Units in accordance with the Second A&R OP Agreement. Advisory Agreement Amendment On the Listing Date, the Company entered into the Listing Amendment which lowered the quarterly thresholds of Core Earnings per share the Company must reach on a quarterly basis for the Advisor to receive a Variable Management Fee (as defined in the Third A&R Advisory Agreement) from $0.375 and $0.50 to $0.275 and $0.3125 . The Amendment also revises the definition of Adjusted Outstanding Shares (as defined in the Third A&R Advisory Agreement), which is used to calculate Core Earnings per share, to be based on the Company’s reported diluted weighted-average shares outstanding. In resetting the applicable thresholds, the Company aimed to further align the Advisor with the Company’s shareholders by incentivizing growth through the continued implementation of the Company’s current business strategy. Equity Plans Effective at the Listing, the Company’s board of directors adopted an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan”). The Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Participation in the Individual Plan is open 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 entities that provide services to the Company. By contrast, participation in the Advisor Plan is only open to the Advisor. The Advisor Plan and Individual Plan are intended to succeed and replace the existing RSP. Following the effectiveness of the Advisor Plan and Individual Plan at the Listing, no further awards will be issued under the RSP; provided, however, that any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, will remain outstanding in accordance with their terms and the terms of the RSP until all those awards are forfeited, canceled, expired or otherwise terminated in accordance with their terms. While the RSP provided only for awards of restricted shares and restricted stock units, the Advisor Plan and Individual Plan have been expanded to permit awards of options, stock appreciation rights, stock awards, LTIP Units and other equity awards in addition to restricted shares and restricted stock units. Each Plan has a term of 10 years , commencing on the Listing Date. Identical to the RSP, the number of shares of the Company’s capital stock available for awards under the Advisor Plan and Individual Plan, in the aggregate, is 10.0% of the Company’s outstanding shares on a fully diluted basis at any time. Shares subject to awards under the Individual Plan will reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa. Distribution Policy Changes In connection with the Listing, the Company’s board of directors changed the rate at which the Company pays distributions on its common stock from an annualized rate equal to $1.30 per share to an annualized rate equal to $1.10 per share, effective as of July 1, 2018, and the Company transitioned to declaring distributions based on monthly, rather than daily, record dates. A&R DRIP Effective on the Listing Date, the Company’s board of directors approved the A&R DRIP. Beginning with the distribution period from July 1, 2018 to July 18, 2018 (the day prior to the Listing Date), distributions payable with respect to all or a portion of the shares of the Company’s common stock (including Class A common stock, Class B-1 common stock and Class B-2 common stock) held by participants may be reinvested in shares of Class A common stock. Shares reinvested pursuant to the A&R DRIP may be acquired directly from the Company at a price based on the average of the high and low sales prices of Class A common stock on Nasdaq on the date of reinvestment. Shares reinvested pursuant to the A&R DRIP may also be acquired through open market purchases by the plan administrator at a price that will be based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with all participants’ reinvested distributions for the related quarter, less a per share processing fee. Multi-Year Outperformance Agreement On the Listing Date, effective at the Listing, the Company entered into the 2018 OPP pursuant to which it granted a performance-based equity award to the Advisor in the form of LTIP Units. On the Listing Date, the OP issued the Advisor a Master LTIP Unit which will automatically convert on August 30, 2018 (the “Effective Date”), the 30th trading day following the Listing Date, into a number of LTIP Units (the “Award LTIP Units”) equal to the quotient of $72.0 million divided by the average closing price of the Company’s Class A common stock on Nasdaq over the 10 consecutive trading days immediately prior to the Effective Date (the “Initial Share Price”). Therefore, the number of Award LTIP Units cannot currently be determined. The Award LTIP Units represent the maximum number of LTIP Units that could be earned by the Advisor during a performance period (the “Performance Period”) commencing on the Listing Date and ending on the earliest of (i) the third anniversary of the Listing Date, (ii) the effective date of any Change of Control (as defined in the OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company. Half of the Award LTIP Units (the “Absolute TSR LTIP Units”) will be eligible to be earned as of the last day of the Performance Period (the “Valuation Date”) if Company achieves an absolute total stockholder return (“TSR”) for the Performance Period as follows: Performance Level Absolute TSR Percentage of Award LTIPs Earned Below Threshold Less than 24 % — % Threshold 24 % 25 % Target 30 % 50 % Maximum 36 % or higher 100 % If the Company’s absolute TSR is more than 24% but less than 30% , or more than 30% but less than 36% , the percentage of the Absolute TSR Award LTIPs earned will be determined using linear interpolation as between those tiers, respectively. Half of the Award LTIP Units (the “Relative TSR LTIP Units”) will be eligible to be earned as of the Valuation Date if the amount, expressed in terms of basis points, whether positive or negative, by which the Company’s absolute TSR on the Valuation Date exceeds the average TSR of a peer group as of the Valuation Date as follows: Performance Level Relative TSR Excess Percentage of Relative TSR Award LTIPs Earned Below Threshold Less than -600 basis points — % Threshold -600 basis points 25 % Target — basis points 50 % Maximum +600 basis points 100 % If the relative TSR excess is more than -600 bps but less than 0 bps, or more than 0 bps but less than +600 bps, the percentage of the Relative TSR Award LTIPs earned will be determined using linear interpolation as between those tiers, respectively. Until an LTIP Unit is earned in accordance with the provisions of the 2018 OPP, the holder of the LTIP Unit will be entitled to distributions on the LTIP Unit equal to 10% of the distributions made per Class A Unit (other than distribution of sale proceeds). Distributions paid with respect to an LTIP Unit will not be subject to forfeiture, even if the LTIP Unit is ultimately forfeited because it is not earned in accordance with the 2018 OPP. Moreover, the Master LTIP Unit will be entitled, on the Effective Date, to receive a distribution equal to the product of 10% of the distributions made per Class A Unit during the period from the Listing Date to the Effective Date multiplied by the number of Award LTIP Units. After an LTIP Unit is earned, the holder will be entitled to a priority catch-up distribution per earned LTIP Unit equal to the accrued unpaid distributions on a Class A Unit during the Performance Period, less distributions already paid on the LTIP Unit during the Performance Period. As of the Valuation Date, the earned LTIP Units will become entitled to the same distributions as Class A Units. At the time the Advisor’s capital account with respect to an LTIP Unit is economically equivalent to the average capital account balance of a Class A Unit, the LTIP Unit has been earned and it has been vested for 30 days , the Advisor, in its sole discretion, will be entitled to convert the LTIP Unit into a Class A Unit in accordance with the Second A&R OP Agreement. In accordance with, and subject to the terms of, the Second A&R OP Agreement, Class A Units may be redeemed on a one-for-one basis for, at the Company’s election, shares of Class A common stock or the cash equivalent thereof. If the Valuation Date is the effective date of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), then calculations relating to the number of LTIP Units earned pursuant to the 2018 OPP will be performed based on actual performance as of (and including) the effective date of the Change of Control or termination (as applicable) based on the performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR pro-rated to reflect that the Performance Period lasted less than three years but without pro-rating the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn to reflect the shortened period. If the Valuation Date is the effective date of a termination of the Advisor with Cause, then calculations relating to the number of LTIP Units earned pursuant to the 2018 OPP will also be performed based on actual performance as of (and including) the effective date of the termination based on the performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR pro-rated to reflect that the Performance Period lasted less than three years and with the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn also pro-rated to reflect the shortened period. The award of LTIP Units under the 2018 OPP will be administered by the Compensation Committee, provided that any of the Compensation Committee’s powers can be exercised instead by the Board if the Board so elects. Following the Valuation Date, the Compensation Committee is responsible for determining the number of Absolute TSR Award LTIPs and Relative TSR Award LTIPs earned, as calculated by an independent consultant engaged by the Compensation Committee and as approved by the Compensation Committee in its reasonable and good faith discretion. The Compensation Committee also must approve the transfer of any Absolute TSR Award LTIPs and Relative TSR Award LTIPs (or Class A Units into which they may be converted in accordance with the terms of the A&R LPA). LTIP Units earned as of the Valuation Date will also become vested as of the Valuation Date. Any LTIP Units that are not earned and vested after the Compensation Committee makes the required determination will automatically and without notice be forfeited without the payment of any consideration by the Company or the OP, effective as of the Valuation Date. Authorized Share Repurchase Program Effective at the Listing, the Company’s board of directors authorized a share repurchase program of up to $200.0 million of Class A common stock (the “Repurchase Program”) that the Company may implement from time to time, following the Listing, through open market repurchases or in privately negotiated transaction based on the Board and management’s assessment of, among other things, market conditions prevailing at the particular time. The Company will have the ability to repurchase shares of Class A common stock up to this amount at its discretion, subject to authorization by the Board prior to any such repurchase. There have not been any purchases under the Repurchase Program. Director Compensation The Company’s board of directors has adopted a new director compensation program, which became effective at the Listing and replaced the Company’s existing director compensation program and supersede in all respects the director compensation previously approved by the Company’s board of directors in April 2015 to be effective on the Listing Date. Under the new director compensation program, each of the Company’s directors will receive a one-time retention grant of a number of restricted shares equal to the quotient of $340,000 divided by the Initial Share Price, vesting annually over a three -year period commencing on the Listing Date in equal installments. In addition, under the new director compensation program, on a regular basis, each independent director will receive an annual cash retainer of $60,000 and, in connection with each of the Company’s annual meetings of stockholders, a grant of $85,000 in restricted shares, vesting on the one-year anniversary of the annual meeting. Also, members of the Company’s board of directors will no longer be receiving fees for attending meetings or taking actions by written consent. Because the independent directors did not receive an annual grant of restricted shares in connection with the Company’s 2018 annual meeting of stockholders pursuant to the Company’s existing director compensation program, the independent directors will receive a grant of restricted shares pursuant to the new director compensation program of a number of restricted shares equal to the quotient of $85,000 divided by the Initial Share price, vesting on the first anniversary of the Listing Date. The lead independent director will receive an additional annual cash retainer of $100,000 , the chair of the audit committee of the Company’s board of directors (the “Audit Committee”) will receive an additional annual cash retainer of $30,000 , each other member of the Audit Committee will receive an additional annual cash retainer of $15,000 , the chair of each of the Compensation Committee and the NCG Committee will receive an additional annual cash retainer of $15,000 , and each other member of each of the Compensation Committee and the NCG Committee will receive an additional annual cash retainer of $10,000 . The Company will continue to reimburse directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the Company’s board of directors and its committees and pay each independent director for each external seminar, conference, panel, forum or other industry-related event attended in person and in which the independent director actively participates, solely in his or her capacity as an independent director of the Company. Indemnification Agreements On the Listing Date, effective at the Listing, the Company entered into new indemnification agreements (the “Indemnification Agreements”) with its directors, executive officers, the Advisor and AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), which wholly owns the Advisor (collectively, the “Indemnitees”). The Company also expects to enter into similar indemnification agreements with its future directors and officers. The Indemnification Agreements replace and supersede previous indemnification agreements between the Company and each of its directors, executive officers, the Advisor and AR Global, and were entered into in connection with the Listing. The new form of Indemnification Agreement permits the Company to indemnify the Indemnitees to the maximum extent permitted by Maryland law and removes certain limitations previously required by the Statement of Policy Regarding Real Estate Investment Trusts promulgated by the North American Securities Administrators Association, Inc., or the NASAA Guidelines, that are no longer applicable to the Company. Amended Bylaws The Company’s board of directors adopted an amendment and restatement of the Company’s Bylaws, which became effective at the Listing. The amendments clarify certain corporate procedures, make ministerial changes and eliminate redundancies. |
(Policies)
(Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. |
Reclassifications | Reclassifications The presentation of prior year restricted cash on the Company’s consolidated statements of cash flows has been changed to conform to the current year presentation. The change in the current year presentation relates to the adoption of accounting standards update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which was adopted by the Company effective December 31, 2017. |
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 Merger, 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 initial 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. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, we review the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statement of operations and comprehensive income (loss) to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. |
Revenue Recognition | Revenue Recognition The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rents receivable that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, the Company defers the recognition of contingent rental income, until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. For the three and six months ended June 30, 2018 , approximately $0.2 million and $0.4 million , respectively, in contingent rental income is included in rental income on the accompanying consolidated statements of operations and comprehensive loss. The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the Company’s allowance for uncollectible accounts or records a direct write-off of the receivable in the Company’s consolidated statements of operations and comprehensive income (loss). Cost recoveries from tenants are included in operating expense reimbursements on the accompanying consolidated statements of operations and comprehensive income (loss) in the period the related costs are incurred, as applicable. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adopted as of January 1, 2018: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 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 adopted this guidance effective January 1, 2018 using the modified retrospective approach, and it did not have an impact on the Company’s consolidated financial statements. The new guidance did not have an impact on the Company’s consolidated financial statements, primarily as a result of revenue being sourced from lease arrangements that are outside the scope of ASC 606 until the new lease standard is adopted. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) , 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 adopted this guidance effective January 1, 2018 and there was no impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides 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 adopted the new guidance beginning in the first quarter of 2018, and it did not have a material impact on the Company’s statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which 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 adopted this guidance effective January 1, 2018, and will apply the new rules prospectively. The Company expects, based on historical property acquisitions, that in most cases, a future property acquired after adoption will be treated as an asset acquisition rather than a business acquisition, which will result in the capitalization of related transaction costs. The Company has evaluated the impact of this new guidance beginning in the first quarter of 2018, and determined that it did not have a material impact on the Company’s consolidated financial statements. As a result, the Company has treated its property acquisitions during the six months ended June 30, 2018 as asset acquisitions, and has capitalized the related transaction costs of approximately $0.7 million . In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Assets Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance related to partial sales of non-financial assets, eliminates rules specifically addressing the sales of real estate, clarifies the definition of in substance non-financial assets, removes the exception to the financial asset derecognition model and clarifies the accounting for contributions of non-financial assets to joint ventures. The Company adopted this guidance effective January 1, 2018 using the modified transition method. Sales of real estate in which the Company loses its controlling interest in the real estate property will result in the full gain amount being recognized at the time of the partial sale. During the three months ended June 30, 2018 the Company did not retain any interest in properties in which it sold. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which 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 adopted this guidance effective January 1, 2018 and it did not have an impact on the Company’s consolidated financial statements. 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. Pending Adoption as of June 30, 2018 : In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), which originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , in July 2018 ("ASU 2018-11"), which allows lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. ASC 842 originally required a modified retrospective method of adoption, however, ASU 2018-11 indicates that companies may be permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The pronouncement allows some optional practical expedients. In addition, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases) , which provides narrow amendments to clarify how to apply certain aspects of the new leasing standard. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company is a lessee for some properties in which it has ground leases as of June 30, 2018 . 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. The Company will adopt this new guidance upon its effective date on January 1, 2019 and will continue to evaluate the impact of this new guidance until it becomes effective. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which 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 January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): S implifying the Test for Goodwill Impairment. This new standard simplifies subsequent measurements of goodwill by eliminating Step 2 from the goodwill impairment test. Instead, entities will perform their interim or annual goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge based on the amount that the carrying amount exceeds the reporting unit's fair value. The loss recognized should not exceed the total goodwill allocated to the reporting unit. The amendments become effective for reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the potential impact of this new guidance. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, 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. In June 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018 and interim periods within those annual periods, however early adoption is permitted. The Company expects this amendment to impact the award made to the Advisor pursuant to an award agreement entered into on the Listing Date, effective as of the Listing (the “2018 OPP,” see Note 15 — Subsequent Events for details). |
Merger Transaction (Tables)
Merger Transaction (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of Merger Transaction | The following table summarizes the estimated fair value of the consideration transferred pursuant to the Merger and the estimated fair values of the assets acquired and liabilities assumed as of the Effective Time. (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 (1) 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 _________________________________ (1) Valued at $24.00 as of the date of the Merger. The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented: Six Months Ended June 30, (Dollar amounts in thousands) 2018 2017 Real estate investments, at cost (1) : Land $ 30,549 $ 300,690 Buildings, fixtures and improvements 29,757 1,128,954 Total tangible assets 60,306 1,429,644 Acquired intangibles: (2) In-place leases 11,638 166,889 Above-market lease assets 253 22,802 Below-market ground lease asset — 1,233 Above-market ground lease liability — — Below-market lease liabilities (333 ) (105,878 ) Total intangible assets, net 11,558 85,046 Prior Credit Facility assumed in the Merger (3) — (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 $ 71,864 $ 1,095,323 Number of properties purchased 39 73 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the six months ended June 30, 2017 were subsequently adjusted after 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 six months ended June 30, 2018 were 18.5 years , 17.1 years and 19.3 years , respectively, as of each property’s respective acquisition date. (3) The Prior Credit Facility was scheduled to mature on May 1, 2018. On April 26, 2018, the Company repaid the Prior Credit Facility in full and entered into the Credit Facility (s ee Note 6 - Credit Facility for definitions and additional information). |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Purchase Price of Acquired Properties | The following table summarizes the estimated fair value of the consideration transferred pursuant to the Merger and the estimated fair values of the assets acquired and liabilities assumed as of the Effective Time. (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 (1) 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 _________________________________ (1) Valued at $24.00 as of the date of the Merger. The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented: Six Months Ended June 30, (Dollar amounts in thousands) 2018 2017 Real estate investments, at cost (1) : Land $ 30,549 $ 300,690 Buildings, fixtures and improvements 29,757 1,128,954 Total tangible assets 60,306 1,429,644 Acquired intangibles: (2) In-place leases 11,638 166,889 Above-market lease assets 253 22,802 Below-market ground lease asset — 1,233 Above-market ground lease liability — — Below-market lease liabilities (333 ) (105,878 ) Total intangible assets, net 11,558 85,046 Prior Credit Facility assumed in the Merger (3) — (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 $ 71,864 $ 1,095,323 Number of properties purchased 39 73 _____________________________________ (1) Real estate investments, at cost and market lease liabilities acquired during the six months ended June 30, 2017 were subsequently adjusted after 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 six months ended June 30, 2018 were 18.5 years , 17.1 years and 19.3 years , respectively, as of each property’s respective acquisition date. (3) The Prior Credit Facility was scheduled to mature on May 1, 2018. On April 26, 2018, the Company repaid the Prior Credit Facility in full and entered into the Credit Facility (s ee Note 6 - Credit Facility for definitions and additional information). |
Schedule of Intangible Assets and Goodwill | Total acquired intangible lease assets and liabilities consist of the following as of the dates presented: June 30, 2018 December 31, 2017 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place lease assets $ 388,512 $ 127,140 $ 261,372 $ 421,369 $ 140,085 $ 281,284 Above-market lease assets 24,412 5,950 18,462 31,610 11,309 20,301 Below-market ground lease asset 1,233 44 1,189 1,233 28 1,205 Total acquired intangible lease assets $ 414,157 $ 133,134 $ 281,023 $ 454,212 $ 151,422 $ 302,790 Intangible liabilities: Above-market ground lease liability $ 85 $ 4 $ 81 $ 85 $ 3 $ 82 Below-market lease liabilities 118,049 14,821 103,228 119,249 10,559 108,690 Total acquired intangible lease liabilities $ 118,134 $ 14,825 $ 103,309 $ 119,334 $ 10,562 $ 108,772 |
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 during the periods presented: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 In-place leases $ 13,487 $ 18,336 $ 27,585 $ 31,464 Total added to depreciation and amortization $ 13,487 $ 18,336 $ 27,585 $ 31,464 Above-market leases $ (1,043 ) $ (1,616 ) $ (2,092 ) $ (2,780 ) Below-market lease liabilities 3,374 2,737 5,793 4,357 Total added to rental income $ 2,331 $ 1,121 $ 3,701 $ 1,577 Below-market ground lease asset $ 8 $ 8 $ 16 $ 12 Above-market ground lease liability — — (1 ) (1 ) Total added to property operating expenses $ 8 $ 8 $ 15 $ 11 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) 2018 (remainder) 2019 2020 2021 2022 In-place leases $ 24,624 $ 43,034 $ 35,134 $ 30,178 $ 26,073 Total to be added to depreciation and amortization $ 24,624 $ 43,034 $ 35,134 $ 30,178 $ 26,073 Above-market leases $ 1,971 $ 3,259 $ 2,438 $ 2,108 $ 1,728 Below-market lease liabilities (3,112 ) (8,257 ) (7,536 ) (6,825 ) (6,414 ) Total to be added to rental income $ (1,141 ) $ (4,998 ) $ (5,098 ) $ (4,717 ) $ (4,686 ) Below-market ground lease asset $ 16 $ 32 $ 32 $ 32 $ 32 Above-market ground lease liability (1 ) (2 ) (2 ) (2 ) (2 ) Total to be added to property operating expenses $ 15 $ 30 $ 30 $ 30 $ 30 |
Business Acquisition, Pro Forma Information | The following table presents unaudited pro forma information as if the acquisitions during the six months ended June 30, 2018 had been consummated on January 1, 2017 : Six Months Ended June 30, (In thousands, except per share data) 2018 (1) 2017 Pro forma revenues $ 142,654 $ 131,835 Pro forma net income (loss) $ 4,614 $ (9,597 ) Basic and diluted pro forma net income (loss) per share $ 0.04 $ (0.10 ) _____________________ (1) For the six months ended June 30, 2018 , aggregate revenues and net income derived from the Company’s 2018 acquisitions (for the Company’s period of ownership) were $1.6 million and $1.1 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 2018 (remainder) $ 113,332 2019 222,361 2020 209,835 2021 198,355 2022 187,302 Thereafter 1,082,692 $ 2,013,877 |
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: June 30, Tenant 2018 2017 SunTrust Bank * 11.8% _____________________ * Tenant’s annualized rental income on a straight-line basis was not greater than or equal to 10.0% of the Company’s consolidated annualized rental income for all portfolio 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 the dates indicated: (Dollar amounts in thousands) June 30, 2018 December 31, 2017 Real estate investments held for sale, at cost: Land $ 592 $ 1,453 Buildings, fixtures and improvements 1,878 4,677 Acquired intangible lease assets — 1,252 Total real estate assets held for sale, at cost 2,470 7,382 Less accumulated depreciation and amortization (467 ) (2,666 ) Total real estate investments held for sale, net 2,003 4,716 Impairment charges related to properties reclassified as held for sale (135 ) (34 ) Assets held for sale $ 1,868 $ 4,682 |
Mortgage Notes Payable, Net (Ta
Mortgage Notes Payable, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The Company’s mortgage notes payable, net as of June 30, 2018 and December 31, 2017 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties June 30, December 31, June 30, Interest Rate Maturity Anticipated Repayment (In thousands) (In thousands) SAAB Sensis I 1 $ 7,275 $ 7,470 5.93 % Fixed Apr. 2025 Apr. 2025 SunTrust Bank II 25 19,746 21,243 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank III 95 75,605 79,729 5.50 % Fixed Jul. 2031 Jul. 2021 SunTrust Bank IV 25 20,948 22,756 5.50 % Fixed Jul. 2031 Jul. 2021 Sanofi US I 1 125,000 125,000 5.16 % Fixed Jul. 2026 Jan. 2021 Stop & Shop I 4 37,189 37,562 5.63 % Fixed Jun. 2041 Jun. 2021 Mortgage Loan I 254 583,145 638,115 4.36 % Fixed Sep. 2020 Sep. 2020 Liberty Crossing (1) — — 11,000 — % — — — Tiffany Springs MarketCenter (1) — — 33,802 — % — — — Shops at Shelby Crossing 1 22,793 23,002 4.97 % Fixed Mar. 2024 Mar. 2024 Patton Creek 1 40,446 40,858 5.76 % Fixed Dec. 2020 Dec. 2020 Bob Evans I 23 23,950 23,950 4.71 % Fixed Sep. 2037 Sep. 2027 Mortgage Loan II 12 210,000 210,000 4.25 % Fixed Jan. 2028 Jan. 2028 Mortgage Loan III 22 33,400 33,400 4.12 % Fixed Jan. 2028 Jan. 2028 Mortgage Loan IV 39 29,887 — 5.16 % Fixed (3) Mar. 2025 Mar. 2025 Gross mortgage notes payable 503 1,229,384 1,307,887 4.65 % (2) Deferred financing costs, net of accumulated amortization (4) (13,733 ) (15,182 ) Mortgage premiums, net 8,893 10,728 Mortgage notes payable, net $ 1,224,544 $ 1,303,433 _____________________________________ (1) These mortgage notes payable were repaid during the second quarter of 2018. (2) Calculated on a weighted-average basis for all mortgages outstanding as of the dates indicated. (3) Fixed as a result of the Company having entered into swap agreements, which are included in derivatives, at fair value on the unaudited consolidated balance sheet as of June 30, 2018 . (4) Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. |
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 June 30, 2018 and thereafter: (In thousands) Future Principal Payments 2018 (remainder) $ 1,207 2019 2,533 2020 624,030 2021 1,398 2022 1,070 Thereafter 599,146 $ 1,229,384 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 , 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 June 30, 2018 Impaired real estate investments held for sale $ — $ 564 $ — $ 564 Impaired real estate investments held for use — 41,835 — 41,835 Interest rate swaps - liabilities — 46 — 46 Total $ — $ 42,445 $ — $ 42,445 December 31, 2017 Impaired real estate investments held for sale $ — $ 432 $ — $ 432 Impaired real estate investments held for use — 20,434 10,330 30,764 Interest rate swaps - assets — 23 — 23 Total $ — $ 20,889 $ 10,330 $ 31,219 |
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 June 30, 2018 and December 31, 2017 are reported in the following table: June 30, 2018 December 31, 2017 (In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value Gross mortgage notes payable 3 $ 1,229,384 $ 1,241,266 $ 1,307,887 $ 1,332,240 Credit facilities 3 $ 132,300 $ 132,300 $ 95,000 $ 95,000 |
Derivatives and Hedging Activ27
Derivatives and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 : (In thousands) Balance Sheet Location June 30, 2018 December 31, 2017 Derivatives designated as hedging instruments: Interest Rate Swaps Derivative assets, at fair value $ — $ 23 Interest Rate Swaps Derivative liabilities, at fair value (46 ) — Total $ (46 ) $ 23 |
Schedule of Interest Rate Derivatives | As of June 30, 2018 and December 31, 2017 , the Company had the following derivatives that were designated as cash flow hedges of interest rate risk. June 30, 2018 December 31, 2017 Interest Rate Derivative Number of Instruments Notional Amount Number of Instruments Notional Amount (In thousands) (In thousands) Interest Rate Swaps 4 $ 29,887 1 $ 34,098 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 six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) $ 271 $ 8 $ (94 ) $ 8 Amount of loss reclassified from accumulated other comprehensive income into income as interest expense $ (29 ) $ (27 ) $ (34 ) $ (27 ) Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $ 82 $ — $ 82 $ — |
Offsetting Assets | The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2018 and December 31, 2017. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets. Gross Amounts Not Offset on the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount June 30, 2018 $ — $ (46 ) $ — $ (46 ) $ — $ — (46 ) December 31, 2017 $ 23 $ — $ — $ 23 $ — $ — 23 |
Offsetting Liabilities | The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2018 and December 31, 2017. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets. Gross Amounts Not Offset on the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount June 30, 2018 $ — $ (46 ) $ — $ (46 ) $ — $ — (46 ) December 31, 2017 $ 23 $ — $ — $ 23 $ — $ — 23 |
Common Stock (Tables)
Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of Share Repurchases | The following table summarizes the repurchases of shares under the SRP cumulatively through June 30, 2018 : Number of Shares Weighted - Average Price per Share Cumulative repurchases as of December 31, 2017 (1) 3,306,864 $ 23.97 Three months ended March 31, 2018 (2) 412,939 23.37 Three months ended June 30, 2018 — — Cumulative repurchases as of June 30, 2018 3,719,803 — (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 . Also, 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 December 31, 2017. No repurchases were made with respect to requests received during 2017 that were not valid requests in accordance with the amended and restated SRP. (2) During January 2018, the Company repurchased 412,939 shares for approximately $9.7 million at a price of $23.37 per share equal to the then current Estimated Per-Share NAV. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Master Leases | 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 2018 (remainder) $ 728 2019 1,460 2020 1,243 2021 925 2022 941 Thereafter 12,516 $ 17,813 |
Related Party Transactions an30
Related Party Transactions and Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, Six Months Ended June 30, Payable as of (In thousands) 2018 2017 2018 2017 June 30, December 31, One-time fees and reimbursements: Acquisition fees and related cost reimbursements (1) $ 53 $ 51 $ 171 $ 51 $ 30 $ 9 Ongoing fees: Asset management fees to related party 5,837 5,250 11,446 10,000 74 408 Property management and leasing fees (2) 2,532 2,086 4,605 2,823 630 1,114 Professional fees and other reimbursements (3) 2,296 2,181 4,399 3,827 1,126 (4) 1,522 (4) Distributions on Class B Units (3) 340 433 678 861 112 116 Total related party operating fees and reimbursements $ 11,058 $ 10,001 $ 21,299 $ 17,562 $ 1,972 $ 3,169 _________________________________ (1) Amounts for the three and six months ended June 30, 2018 and 2017 included in acquisition and transaction related expenses in the unaudited consolidated statements of operations and comprehensive income (loss). (2) Amounts for the three and six months ended June 30, 2018 and 2017 are included in property operating expenses in the unaudited consolidated statements of operations and comprehensive income (loss). (3) Amounts for the three and six months ended June 30, 2018 and 2017 are included in general and administrative expense in the unaudited consolidated statements of operations and comprehensive income (loss). (4) Balance includes costs which were incurred and accrued due to ANST and a subsidiary of RCAP which were related parties of the Company. See above for further details on the status of the ANST and RCAP relationship. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018 : Number of Shares of Common Stock Weighted-Average Issue Price Unvested, December 31, 2017 15,708 $ 23.67 Granted — — Vested (6,621 ) 23.55 Unvested, June 30, 2018 9,087 23.76 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the basic and diluted net income (loss) per share computations: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share amounts) 2018 2017 2018 2017 Net (loss) income attributable to stockholders - basic and diluted $ (12,041 ) $ (1,021 ) $ 3,360 $ (11,738 ) Weighted-average shares outstanding - Basic 105,028,459 104,140,631 105,111,959 94,450,241 Unvested restricted shares — — 14,483 — OP Units — — 203,612 — Weighted-average shares outstanding - Diluted 105,028,459 104,140,631 105,330,054 94,450,241 Net (loss) income per share attributable to stockholders - Basic $ (0.11 ) $ (0.01 ) $ 0.03 $ (0.12 ) Net (loss) income per share attributable to stockholders - Diluted $ (0.11 ) $ (0.01 ) $ 0.03 $ (0.12 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company had the following restricted shares, OP Units and Class B Units 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, or in the case of Class B Units, certain contingencies had not been met as of June 30, 2018: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Unvested restricted shares (1) 13,455 11,197 — 10,823 OP Units (2) 203,612 203,612 — 151,888 Class B Units (3) 1,052,420 1,052,420 1,052,420 1,052,420 Total 1,269,487 1,267,229 1,052,420 1,215,131 _____________________________________ (1) Weighted-average number of shares of unvested restricted shares outstanding for the period presented. There were 9,088 and 9,543 unvested restricted shares outstanding as of June 30, 2018 and June 30, 2017 , respectively. (2) Weighted-average number of OP Units outstanding for the period presented. There were 203,612 OP Units outstanding as of June 30, 2018 and June 30, 2017 . (3) Weighted-average number of Class B Units outstanding for the period presented. There were 1,052,420 Class B Units outstanding as of June 30, 2018 and June 30, 2017 . |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Schedule of Stock by Class | The table below provides details of the Company’s outstanding shares of common stock as of June 30, 2018 and July 31, 2018: June 30, 2018 As of July 31, 2018 Shares Outstanding Class A Common Stock Class B-1 Common Stock Class B-2 Common Stock Shares Outstanding Shares of common stock (1) 105,049,705 52,506,417 26,262,414.5 26,262,414.5 105,031,246 Vesting and conversion of Class B Units (2) (3) — 1,052,420 — — 1,052,420 Redemption of Class A Units (formerly known as OP Units) (3) (4) — 30,691 — — 30,691 Unvested restricted shares (5) 9,088 4,541 2,272 2,272 9,085 Total 105,058,793 53,594,069 26,264,686.5 26,264,686.5 106,123,442 |
Share-based Compensation Arrangements by Share-based Payment Award, Performance-Based Units | Half of the Award LTIP Units (the “Relative TSR LTIP Units”) will be eligible to be earned as of the Valuation Date if the amount, expressed in terms of basis points, whether positive or negative, by which the Company’s absolute TSR on the Valuation Date exceeds the average TSR of a peer group as of the Valuation Date as follows: Performance Level Relative TSR Excess Percentage of Relative TSR Award LTIPs Earned Below Threshold Less than -600 basis points — % Threshold -600 basis points 25 % Target — basis points 50 % Maximum +600 basis points 100 % Half of the Award LTIP Units (the “Absolute TSR LTIP Units”) will be eligible to be earned as of the last day of the Performance Period (the “Valuation Date”) if Company achieves an absolute total stockholder return (“TSR”) for the Performance Period as follows: Performance Level Absolute TSR Percentage of Award LTIPs Earned Below Threshold Less than 24 % — % Threshold 24 % 25 % Target 30 % 50 % Maximum 36 % or higher 100 % |
Organization (Details)
Organization (Details) ft² in Millions | Jul. 19, 2018 | Jul. 31, 2018shares | Jun. 30, 2018ft²employeepropertyshares | Dec. 31, 2017shares |
Operations [Line Items] | ||||
Number of real estate properties | property | 560 | |||
Area of real estate property (sqft) | ft² | 19 | |||
Percentage of property leased | 94.60% | |||
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 | ||
Entity number of employees | employee | 0 | |||
Subsequent Event | ||||
Operations [Line Items] | ||||
Common stock, outstanding (in shares) | 106,123,442 | |||
Class A | Subsequent Event | ||||
Operations [Line Items] | ||||
Common stock, outstanding (in shares) | 53,594,069 | |||
Class A | Subsequent Event | Nasdaq Listing | ||||
Operations [Line Items] | ||||
Percentage of common stock listed | 50.00% | |||
Class B-1 | Subsequent Event | ||||
Operations [Line Items] | ||||
Common stock, outstanding (in shares) | 26,264,686.5 | |||
Class B-1 | Subsequent Event | Nasdaq Listing | ||||
Operations [Line Items] | ||||
Percentage of common stock listed | 25.00% | |||
Class B2 | Subsequent Event | ||||
Operations [Line Items] | ||||
Common stock, outstanding (in shares) | 26,264,686.5 | |||
Class B2 | Subsequent Event | Nasdaq Listing | ||||
Operations [Line Items] | ||||
Percentage of common stock listed | 25.00% | |||
Conversion into Class A Common Stock to be listed on Nasdaq | Class B-1 | Subsequent Event | Nasdaq Listing | ||||
Operations [Line Items] | ||||
Period following Listing Date that outstanding shares will automatically convert into Class A common stock to be listed on Nasdaq (no later than) | 90 days | |||
Conversion into Class A Common Stock to be listed on Nasdaq | Class B2 | Subsequent Event | Nasdaq Listing | ||||
Operations [Line Items] | ||||
Period following Listing Date that outstanding shares will automatically convert into Class A common stock to be listed on Nasdaq (no later than) | 180 days | |||
Common Stock | ||||
Operations [Line Items] | ||||
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 | ||
Net Leased Commercial Properties | ||||
Operations [Line Items] | ||||
Number of real estate properties | property | 525 | |||
Net Leased Retail Properties | ||||
Operations [Line Items] | ||||
Number of real estate properties | property | 479 | |||
Stabilized Core Retail Properties | ||||
Operations [Line Items] | ||||
Number of real estate properties | property | 35 |
Merger Transaction (Narrative)
Merger Transaction (Narrative) (Details) $ / shares in Units, $ in Thousands, shares in Millions | Feb. 16, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / shares | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / shares |
Business Acquisition [Line Items] | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Cash consideration | $ 0 | $ 94,504 | ||
Goodwill | $ 1,605 | $ 1,605 | ||
RCA | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
Business acquisition, share price conversion (in dollars 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 | |||
RCA | Limited partner interests in acquiree OP converted to acquirer OP units | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.424 | |||
RCA | OP and GP units of acquiree converted to acquirer OP units | ||||
Business Acquisition [Line Items] | ||||
Share conversion ratio | 0.385 | |||
RCA | 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 ($) $ / shares in Units, $ in Thousands | Feb. 16, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Total Consideration: | ||||
Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement | $ 0 | $ 94,504 | ||
Fair value of the Stock Consideration | 0 | 921,930 | ||
Fair value of the Total Merger Consideration | 71,864 | $ 1,095,323 | ||
Assets Acquired at Fair Value | ||||
Goodwill | $ 1,605 | $ 1,605 | ||
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 | 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 | |||
Business acquisition, share price (in dollars per share) | $ 24 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash and restricted cash from operations | $ (53,828) | $ (42,592) | ||
Cash and restricted cash from investing activities | 53,546 | (34,131) | ||
Cash and restricted cash from financing activities | 48,992 | 140,999 | ||
Operating leases, income statement, contingent revenue | $ 200 | $ 400 | ||
Minimum | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating leases, expected lease up period | 6 months | |||
Maximum | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating leases, expected lease up period | 24 months | |||
Accounting Standards Update 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Restricted cash | $ 7,900 | |||
Cash and restricted cash from operations | 1,200 | |||
Cash and restricted cash from investing activities | 500 | |||
Cash and restricted cash from financing activities | $ 1 | |||
Accounting Standards Update 2017-01 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Acquisition costs, period cost | $ 700 |
Real Estate Investments (Assets
Real Estate Investments (Assets Acquired and Liabilities Assumed) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($)property | |
Real estate investments, at cost: | ||
Land | $ 30,549 | $ 300,690 |
Buildings, fixtures and improvements | 29,757 | 1,128,954 |
Total tangible assets | 60,306 | 1,429,644 |
Above-market ground lease liability | 0 | 0 |
Below-market lease liabilities | (333) | (105,878) |
Total intangible assets, net | 11,558 | 85,046 |
Prior Credit Facility assumed in the Merger | 0 | (304,000) |
Mortgage notes payable assumed in the Merger | 0 | (127,651) |
Premiums on mortgage notes payable assumed in the Merger | 0 | (4,143) |
Other assets acquired and (liabilities assumed) in the Merger, net | 0 | 16,427 |
Consideration paid for acquired real estate investments, net of liabilities assumed | $ 71,864 | $ 1,095,323 |
Number of properties purchased | property | 39 | 73 |
In-place lease assets | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 11,638 | $ 166,889 |
Weighted-average amortization period | 18 years 5 months 19 days | |
Above-market lease assets | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 253 | 22,802 |
Weighted-average amortization period | 17 years 26 days | |
Below-market ground lease asset | ||
Real estate investments, at cost: | ||
Acquired intangibles | $ 0 | $ 1,233 |
Below market leases | ||
Real estate investments, at cost: | ||
Weighted-average amortization period | 19 years 3 months |
Real Estate Investments (Acquir
Real Estate Investments (Acquired Leases) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Intangible assets: | ||
Gross Carrying Amount | $ 414,157 | $ 454,212 |
Accumulated Amortization | 133,134 | 151,422 |
Net Carrying Amount | 281,023 | 302,790 |
Intangible liabilities: | ||
Gross Carrying Amount | 118,134 | 119,334 |
Accumulated Amortization | 14,825 | 10,562 |
Net Carrying Amount | 103,309 | 108,772 |
Below-market lease liabilities, Gross Carrying Amount | 118,049 | 119,249 |
Below-market lease liabilities, Accumulated Amortization | 14,821 | 10,559 |
Below-market lease liabilities, Net Carrying Amount | 103,228 | 108,690 |
In-place lease assets | ||
Intangible assets: | ||
Gross Carrying Amount | 388,512 | 421,369 |
Accumulated Amortization | 127,140 | 140,085 |
Net Carrying Amount | 261,372 | 281,284 |
Above-market lease assets | ||
Intangible assets: | ||
Gross Carrying Amount | 24,412 | 31,610 |
Accumulated Amortization | 5,950 | 11,309 |
Net Carrying Amount | 18,462 | 20,301 |
Below-market ground lease asset | ||
Intangible assets: | ||
Gross Carrying Amount | 1,233 | 1,233 |
Accumulated Amortization | 44 | 28 |
Net Carrying Amount | 1,189 | 1,205 |
Above-market ground lease liability | ||
Intangible liabilities: | ||
Gross Carrying Amount | 85 | 85 |
Accumulated Amortization | 4 | 3 |
Net Carrying Amount | $ 81 | $ 82 |
Real Estate Investments (Summar
Real Estate Investments (Summary of Amortization Expense and Adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 27,585 | $ 31,464 | ||
Depreciation and Amortization | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | $ 13,487 | $ 18,336 | 27,585 | 31,464 |
Depreciation and Amortization | In-place leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 13,487 | 18,336 | 27,585 | 31,464 |
Rental Income | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization (accretion) of leases | 2,331 | 1,121 | 3,701 | 1,577 |
Rental Income | Above-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of leases | 1,043 | 1,616 | 2,092 | 2,780 |
Rental Income | Below-market lease liabilities | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 3,374 | 2,737 | 5,793 | 4,357 |
Property Operating Expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 8 | 8 | 15 | 11 |
Property Operating Expenses | Below-market ground lease asset | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Accretion of leases | 8 | 8 | 16 | 12 |
Property Operating Expenses | Above-market ground lease liability | ||||
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 | Jun. 30, 2018USD ($) |
Depreciation and Amortization | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | $ 24,624 |
2,019 | 43,034 |
2,020 | 35,134 |
2,021 | 30,178 |
2,022 | 26,073 |
Depreciation and Amortization | In-place leases | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | 24,624 |
2,019 | 43,034 |
2,020 | 35,134 |
2,021 | 30,178 |
2,022 | 26,073 |
Rental Income | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | (1,141) |
2,019 | (4,998) |
2,020 | (5,098) |
2,021 | (4,717) |
2,022 | (4,686) |
Rental Income | Above-market leases | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | 1,971 |
2,019 | 3,259 |
2,020 | 2,438 |
2,021 | 2,108 |
2,022 | 1,728 |
Rental Income | Below-market lease liabilities | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | (3,112) |
2,019 | (8,257) |
2,020 | (7,536) |
2,021 | (6,825) |
2,022 | (6,414) |
Property Operating Expenses | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | 15 |
2,019 | 30 |
2,020 | 30 |
2,021 | 30 |
2,022 | 30 |
Property Operating Expenses | Below-market ground lease asset | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | 16 |
2,019 | 32 |
2,020 | 32 |
2,021 | 32 |
2,022 | 32 |
Property Operating Expenses | Above-market ground lease liability | |
Finite-Lived Intangible Assets [Line Items] | |
2018 (remainder) | 1 |
2,019 | 2 |
2,020 | 2 |
2,021 | 2 |
2,022 | $ 2 |
Real Estate Investments (Pro Fo
Real Estate Investments (Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Real Estate [Abstract] | ||
Pro forma revenues | $ 142,654 | $ 131,835 |
Pro forma net income (loss) | $ 4,614 | $ (9,597) |
Basic and diluted pro forma net income (loss) per share (in dollars per share) | $ 0.04 | $ (0.10) |
Revenue since acquisition | $ 1,600 | |
Net income since acquisition | $ 1,100 |
Real Estate Investments (Minimu
Real Estate Investments (Minimum Lease Payments) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Future Minimum Base Rent Payments | |
2018 (remainder) | $ 113,332 |
2,019 | 222,361 |
2,020 | 209,835 |
2,021 | 198,355 |
2,022 | 187,302 |
Thereafter | 1,082,692 |
Total | $ 2,013,877 |
Real Estate Investments (Concen
Real Estate Investments (Concentrations) (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Annualized Rental Income | Customer Concentration | SunTrust Bank | |
Concentration Risk [Line Items] | |
Concentration risk | 11.80% |
Real Estate Investments (Narrat
Real Estate Investments (Narrative) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($)property | Jun. 30, 2018USD ($)property | Jun. 30, 2017USD ($)property | Dec. 31, 2017property | |
Business Acquisition [Line Items] | |||||
Number of real estate properties | 560 | 560 | |||
Gain on sale of real estate investments | $ | $ 3,625 | $ 8,609 | $ 28,262 | $ 13,831 | |
Number of real estate properties impaired | 4 | 8 | 4 | 8 | |
SunTrust Bank | |||||
Business Acquisition [Line Items] | |||||
Number of real estate properties | 26 | 26 | |||
Impairment of real estate | $ | $ 8,600 | $ 700 | $ 8,800 | $ 2,300 | |
Number of real estate properties impaired | 2 | 6 | 2 | 6 | |
Number of multi-tenant properties majority of impairment charges are related to | 2 | 2 | |||
Assets Held-for-sale | |||||
Business Acquisition [Line Items] | |||||
Number of real estate properties | 3 | 3 | 4 | ||
Assets Sold | |||||
Business Acquisition [Line Items] | |||||
Number of properties sold | 19 | 12 | |||
Sales of real estate | $ | $ 86,800 | $ 271,900 | |||
Gain on sale of real estate investments | $ | $ 8,600 | 28,300 | 13,800 | ||
Impairment charges | $ | $ 14 | $ 1,900 | $ 100 | $ 4,300 | |
Assets Sold | SunTrust Bank | |||||
Business Acquisition [Line Items] | |||||
Number of properties sold | 13 |
Real Estate Investments (Summ46
Real Estate Investments (Summary of Assets Held-for-Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Real estate investments held for sale, at cost: | |||||
Impairment charges related to properties reclassified as held for sale | $ (8,563) | $ (2,649) | $ (8,885) | $ (6,578) | |
Assets held for sale | 1,868 | 1,868 | $ 4,682 | ||
Assets Held-for-sale | |||||
Real estate investments held for sale, at cost: | |||||
Land | 592 | 592 | 1,453 | ||
Buildings, fixtures and improvements | 1,878 | 1,878 | 4,677 | ||
Acquired intangible lease assets | 0 | 0 | 1,252 | ||
Total real estate assets held for sale, at cost | 2,470 | 2,470 | 7,382 | ||
Less accumulated depreciation and amortization | (467) | (467) | (2,666) | ||
Total real estate investments held for sale, net | 2,003 | 2,003 | 4,716 | ||
Impairment charges related to properties reclassified as held for sale | (135) | (34) | |||
Assets held for sale | $ 1,868 | $ 1,868 | $ 4,682 |
Mortgage Notes Payable, Net (Su
Mortgage Notes Payable, Net (Summary of Mortgage Notes Payable) (Details) - Mortgage notes payable and premiums, net $ in Thousands | Jun. 30, 2018USD ($)property | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 503 | |
Outstanding Loan Amount | $ 1,229,384 | $ 1,307,887 |
Effective Interest Rate | 4.65% | |
Deferred financing costs, net of accumulated amortization | $ (13,733) | (15,182) |
Mortgage premiums, net | 8,893 | 10,728 |
Mortgage notes payable, net | $ 1,224,544 | 1,303,433 |
Mortgage Loan I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 254 | |
Outstanding Loan Amount | $ 583,145 | 638,115 |
Effective Interest Rate | 4.36% | |
Mortgage Loan II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 12 | |
Outstanding Loan Amount | $ 210,000 | 210,000 |
Effective Interest Rate | 4.25% | |
Mortgage Loan III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 22 | |
Outstanding Loan Amount | $ 33,400 | 33,400 |
Effective Interest Rate | 4.12% | |
Mortgage Loan IV | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 39 | |
Outstanding Loan Amount | $ 29,887 | 0 |
Effective Interest Rate | 5.16% | |
SAAB Sensis I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 7,275 | 7,470 |
Effective Interest Rate | 5.93% | |
SunTrust Bank II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 25 | |
Outstanding Loan Amount | $ 19,746 | 21,243 |
Effective Interest Rate | 5.50% | |
SunTrust Bank III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 95 | |
Outstanding Loan Amount | $ 75,605 | 79,729 |
Effective Interest Rate | 5.50% | |
SunTrust Bank IV | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 25 | |
Outstanding Loan Amount | $ 20,948 | 22,756 |
Effective Interest Rate | 5.50% | |
Sanofi US I | Sanofi US I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 125,000 | 125,000 |
Effective Interest Rate | 5.16% | |
Stop & Shop I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 37,189 | 37,562 |
Effective Interest Rate | 5.63% | |
Liberty Crossing | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 0 | |
Outstanding Loan Amount | $ 0 | 11,000 |
Effective Interest Rate | 0.00% | |
Tiffany Springs MarketCenter | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 0 | |
Outstanding Loan Amount | $ 0 | 33,802 |
Effective Interest Rate | 0.00% | |
Shops at Shelby Crossing | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 22,793 | 23,002 |
Effective Interest Rate | 4.97% | |
Patton Creek | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 40,446 | 40,858 |
Effective Interest Rate | 5.76% | |
Bob Evans I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 23 | |
Outstanding Loan Amount | $ 23,950 | $ 23,950 |
Effective Interest Rate | 4.71% |
Mortgage Notes Payable, Net (Na
Mortgage Notes Payable, Net (Narrative) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Amended credit facility | ||
Debt Instrument [Line Items] | ||
Collateral pledged | $ 862.4 | |
Mortgage notes payable and premiums, net | ||
Debt Instrument [Line Items] | ||
Collateral pledged | $ 2,400 | $ 2,400 |
Mortgage Notes Payable, Net (Fu
Mortgage Notes Payable, Net (Future Minimum Payments) (Details) - Mortgage notes payable and premiums, net - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Future Principal Payments | ||
2018 (remainder) | $ 1,207 | |
2,019 | 2,533 | |
2,020 | 624,030 | |
2,021 | 1,398 | |
2,022 | 1,070 | |
Thereafter | 599,146 | |
Future Principal Payments | $ 1,229,384 | $ 1,307,887 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) | Apr. 26, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Feb. 16, 2017 |
Debt Instrument [Line Items] | |||||
Proceeds from credit facility | $ 132,300,000 | $ 40,000,000 | |||
Debt outstanding | 95,000,000 | $ 114,000,000 | |||
Amount outstanding | $ 132,300,000 | $ 95,000,000 | |||
Revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | 3.91% | 2.48% | |||
Revolving credit facility | Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 415,000,000 | ||||
Additional borrowing capacity, accordion feature | 500,000,000 | ||||
Proceeds from credit facility | $ 60,000,000 | ||||
Total borrowing base | $ 376,700,000 | ||||
Amount outstanding | 132,300,000 | ||||
Amount remaining available but undrawn | $ 244,400,000 | ||||
Additional term | 1 year | ||||
Revolving credit facility | Credit Facility | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 0.60% | ||||
Revolving credit facility | Credit Facility | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 1.20% | ||||
Revolving credit facility | Credit Facility | LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 1.60% | ||||
Revolving credit facility | Credit Facility | LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 2.20% | ||||
Revolving credit facility | Prior Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 325,000,000 | ||||
Debt outstanding | $ 55,000,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value, Assets Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps - liabilities | $ 46 | $ 0 |
Interest rate swaps - assets | 0 | 23 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 42,445 | 31,219 |
Fair Value, Measurements, Recurring | Interest rate swaps - assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps - liabilities | 46 | |
Interest rate swaps - assets | 23 | |
Fair Value, Measurements, Recurring | Impaired real estate investments held for sale | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 564 | 432 |
Fair Value, Measurements, Recurring | Impaired real estate investments held for use | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 41,835 | 30,764 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets Level 1 | Interest rate swaps - assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps - liabilities | 0 | |
Interest rate swaps - assets | 0 | |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets Level 1 | Impaired real estate investments held for sale | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets Level 1 | Impaired real estate investments held for use | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 42,445 | 20,889 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs Level 2 | Interest rate swaps - assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps - liabilities | 46 | |
Interest rate swaps - assets | 23 | |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs Level 2 | Impaired real estate investments held for sale | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 564 | 432 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs Level 2 | Impaired real estate investments held for use | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 41,835 | 20,434 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 0 | 10,330 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs Level 3 | Interest rate swaps - assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swaps - liabilities | 0 | |
Interest rate swaps - assets | 0 | |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs Level 3 | Impaired real estate investments held for sale | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs Level 3 | Impaired real estate investments held for use | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired real estate | $ 0 | $ 10,330 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Financial Instruments) (Details) - Level 3 - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | Gross mortgage notes payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of financial instruments | $ 1,229,384 | $ 1,307,887 |
Carrying Amount | Credit facilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of financial instruments | 132,300 | 95,000 |
Fair Value | Gross mortgage notes payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of financial instruments | 1,241,266 | 1,332,240 |
Fair Value | Credit facilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of financial instruments | $ 132,300 | $ 95,000 |
Derivatives and Hedging Activ53
Derivatives and Hedging Activities (Schedule of Derivative Instruments in Statement of Financial Position) (Details) - Cash Flow Hedging - Derivatives designated as hedging instruments - Interest rate swaps - assets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Derivative assets, at fair value | $ 0 | $ 23 |
Derivative liabilities, at fair value | (46) | 0 |
Total | $ (46) | $ 23 |
Derivatives and Hedging Activ54
Derivatives and Hedging Activities (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative [Line Items] | ||||
Accelerated gain | $ 81,863 | |||
Other comprehensive income (loss) to be reclassified in the next twelve months | (119,392) | $ (119,392) | ||
Derivatives in net liability position | 100,000 | 100,000 | ||
Interest Expense | ||||
Derivative [Line Items] | ||||
Gain (loss) on derivative | $ 0 | $ (19,000) | $ 0 | $ 21,000 |
Derivatives and Hedging Activ55
Derivatives and Hedging Activities (Schedule of Interest Rate Derivatives) (Details) - Cash Flow Hedging - Designated as Hedging Instrument - Interest rate swaps - assets $ in Thousands | Jun. 30, 2018USD ($)derivative | Dec. 31, 2017USD ($)derivative |
Derivative [Line Items] | ||
Number of Instruments | derivative | 4 | 1 |
Notional Amount | $ | $ 29,887 | $ 34,098 |
Derivatives and Hedging Activ56
Derivatives and Hedging Activities (Derivative Instruments, Gain (Loss)) (Details) - Cash Flow Hedging - Interest rate swaps - assets - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative [Line Items] | ||||
Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) | $ 271 | $ 8 | $ (94) | $ 8 |
Amount of gain (loss) recognized in income on derivative (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) | 82 | 0 | 82 | 0 |
Interest Expense | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from accumulated other comprehensive income into income as interest expense | $ (29) | $ (27) | $ (34) | $ (27) |
Derivatives and Hedging Activ57
Derivatives and Hedging Activities (Offsetting Derivatives) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amounts of Recognized Assets | $ 0 | $ 23 |
Gross Amounts of Recognized (Liabilities) | (46) | 0 |
Gross Amounts Offset on the Balance Sheet | 0 | 0 |
Net Amounts of Assets (Liabilities) Presented on the Balance Sheet | (46) | 0 |
Net Amounts of Assets (Liabilities) Presented on the Balance Sheet | 0 | 23 |
Gross Amounts Not Offset on the Balance Sheet | ||
Financial Instruments | 0 | 0 |
Cash Collateral Received (Posted) | 0 | 0 |
Net Amount | $ (46) | |
Net Amount | $ 23 |
Common Stock (Narrative) (Detai
Common Stock (Narrative) (Details) $ / shares in Units, $ in Millions | Jul. 03, 2018 | May 01, 2018$ / sharesshares | Feb. 15, 2018$ / sharesshares | Jul. 01, 2017$ / shares | May 31, 2018USD ($)shares | Mar. 27, 2018USD ($)shares | Apr. 30, 2013$ / shares | Jun. 30, 2018shares | Jul. 31, 2018shares | Dec. 31, 2017shares |
Class of Stock [Line Items] | ||||||||||
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 | ||||||||
Dividends declared (in dollars per share) | $ / shares | $ 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% | |||||||||
Common stock issued through distribution reinvestment plan (in shares) | 990,393 | |||||||||
Each One-Year Period | ||||||||||
Class of Stock [Line Items] | ||||||||||
Percentage of value of capital paid | 92.50% | |||||||||
Two-Year Period | ||||||||||
Class of Stock [Line Items] | ||||||||||
Percentage of value of capital paid | 95.00% | |||||||||
Three-Year Period | ||||||||||
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% | |||||||||
Initial MacKenzie Offering | ||||||||||
Class of Stock [Line Items] | ||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 1,000,000 | 1,000,000 | ||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 15.35 | $ 13.66 | ||||||||
MacKenzie Offering Counter Offer | ||||||||||
Class of Stock [Line Items] | ||||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 15.45 | $ 14.35 | ||||||||
MacKenzie Final Offer | ||||||||||
Class of Stock [Line Items] | ||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 207,713 | 483,133 | ||||||||
Sale of stock, consideration received on transaction | $ | $ 3.2 | $ 6.9 | ||||||||
Maximum | MacKenzie Offering Counter Offer | ||||||||||
Class of Stock [Line Items] | ||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 1,000,000 | 1,000,000 | ||||||||
Shares Outstanding | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 | ||||||||
Common stock issued through distribution reinvestment plan (in shares) | 990,393 | |||||||||
Subsequent Event | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, outstanding (in shares) | 106,123,442 | |||||||||
Reverse stock split ratio | 2 |
Common Stock (Stock Redemption)
Common Stock (Stock Redemption) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | 59 Months Ended | 65 Months Ended | ||
Jan. 31, 2018 | Jul. 31, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2017 | Jun. 30, 2018 | |
Equity [Abstract] | |||||||
Number of Shares (in shares) | 0 | 412,939 | 3,306,864 | 3,719,803 | |||
Weighted Average Price per Share (in dollars per share) | $ 23.37 | $ 0 | $ 23.37 | $ 23.97 | $ 0 | ||
Shares rejected for repurchase (in shares) | 5,900,000 | ||||||
Shares rejected for repurchase | $ 140.1 | ||||||
Shares rejected for repurchase, weighted average cost (in dollars per share) | $ 23.65 | ||||||
Percentage approved | 100.00% | ||||||
Treasury stock, shares, acquired (in shares) | 412,939 | ||||||
Treasury stock, value, acquired, cost method | $ 9.7 |
Commitments and Contingencies60
Commitments and Contingencies (Future Minimum Ground Lease Payments) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Future Minimum Base Rent Payments | |
2018 (remainder) | $ 728 |
2,019 | 1,460 |
2,020 | 1,243 |
2,021 | 925 |
2,022 | 941 |
Thereafter | 12,516 |
Future Minimum Base Rent Payments | $ 17,813 |
Commitments and Contingencies61
Commitments and Contingencies (Narrative) (Details) - Putative Class Action Lawsuit | Jan. 13, 2017plaintiff | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Loss Contingencies [Line Items] | |||
Loss contingency, number of plaintiffs | plaintiff | 4 | ||
Loss contingency accrual, provision | $ | $ 0 | $ 0 |
Related Party Transactions an62
Related Party Transactions and Arrangements (Narrative) (Details) - shares | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Related Party Transaction [Line Items] | |||
OP units outstanding (in shares) | 203,612 | 203,612 | |
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) | 90 | 90 |
Related Party Transactions an63
Related Party Transactions and Arrangements (Fees and Participations Paid in Connection With the Operations of the Company) (Details) | Sep. 06, 2016USD ($)$ / shares | Sep. 05, 2016 | Apr. 29, 2015 | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)shares | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)propertyagreement | Jan. 16, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Related Party Transaction [Line Items] | |||||||||||
Ineligible termination period | 60 days | ||||||||||
Total commissions and fees from the Dealer Manager | $ 5,837,000 | $ 5,250,000 | $ 11,446,000 | $ 10,000,000 | |||||||
Advisor | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Percentage of independent directors approval needed to terminate agreement | 67.00% | ||||||||||
Internalization fee, percentage payable in equity | 10.00% | ||||||||||
Advisor | American Realty Capital Advisors | Contract Purchase Price | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Acquisition fees earned by related party percentage | 1.00% | ||||||||||
Financing advance fees earned by related party percentage | 1.00% | ||||||||||
Expected third party acquisition costs reimbursable | 0.50% | ||||||||||
Acquisition fees and acquisition related expenses | 4.50% | ||||||||||
Antidilutive shares (in shares) | shares | 1,052,420 | ||||||||||
Advisor | American Realty Capital Advisors | Advance on Loan or Other Investment | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Financing advance fees earned by related party percentage | 4.50% | ||||||||||
Expected third party acquisition costs reimbursable | 0.50% | ||||||||||
Advisor | American Realty Capital Advisors | Contract Purchase Price, All Assets Acquired | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Acquisition fees and acquisition related expenses | 1.50% | ||||||||||
Advisor | American Realty Capital Advisors | Amount Available or Outstanding Under Financing Arrangement | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Financing coordination fees earned | 0.75% | ||||||||||
Property Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Renewal term | 1 year | ||||||||||
Advisory Agreement | Advisor | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party transaction, term | 20 years | ||||||||||
Termination Fees for Agreement | Advisor | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Amount of transaction | $ 15,000,000 | ||||||||||
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 | ||||||||||
Annual Targeted Investor Return | Advisor | American Realty Capital Advisors | Pre-tax Non-compounded Return on Capital Contribution | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Cumulative capital investment return | 6.00% | ||||||||||
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 | 0.10417% | 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 dollars per share) | $ / shares | $ 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 dollars per share) | $ / shares | $ 0.5 | ||||||||||
Property Management Fee | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of property management agreements | agreement | 12 | ||||||||||
Property Management Fee | Secured Debt | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Debt instrument, face amount | $ 210,000,000 | ||||||||||
Number of properties securing mortgage loan | property | 12 | ||||||||||
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% | ||||||||||
Administrative Services | Advisor | American Realty Capital Advisors | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Total commissions and fees from the Dealer Manager | 2,100,000 | 2,700,000 | $ 4,000,000 | 3,500,000 | |||||||
Absorbed General and Administrative Expenses | Advisor | American Realty Capital Advisors | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Total commissions and fees from the Dealer Manager | $ 0 | $ 0 | $ 0 | $ 0 |
Related Party Transactions an64
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 | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | $ 5,837 | $ 5,250 | $ 11,446 | $ 10,000 | |
Total related party operating fees and reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 11,058 | 10,001 | 21,299 | 17,562 | |
Payable | 1,972 | 1,972 | $ 3,169 | ||
Acquisition fees and related cost reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 53 | 51 | 171 | 51 | |
Payable | 30 | 30 | 9 | ||
Asset management fees to related party | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 5,837 | 5,250 | 11,446 | 10,000 | |
Payable | 74 | 74 | 408 | ||
Property management and leasing fees | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 2,532 | 2,086 | 4,605 | 2,823 | |
Payable | 630 | 630 | 1,114 | ||
Professional fees and other reimbursements | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 2,296 | 2,181 | 4,399 | 3,827 | |
Payable | 1,126 | 1,126 | 1,522 | ||
Distributions on Class B Units | |||||
Related Party Transaction [Line Items] | |||||
Total related party operating fees and reimbursements | 340 | $ 433 | 678 | $ 861 | |
Payable | $ 112 | $ 112 | $ 116 |
Related Party Transactions an65
Related Party Transactions and Arrangements (Listing Arrangements) (Details) - Special Limited Partner - Cash Distribution | Jun. 30, 2018 |
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% |
Share-Based Compensation (Narra
Share-Based Compensation (Narrative) (Details) $ in Thousands | Jul. 19, 2018plan | Jul. 03, 2018 | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)shares | Jun. 30, 2017USD ($)shares |
Subsequent Event | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum authorized amount as a percentage of shares authorized | 10.00% | |||||
Subsequent Event | Listing | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of new equity plans adopted by board of directors | plan | 2 | |||||
Directors | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock issued in lieu of cash compensation (in shares) | shares | 0 | 0 | ||||
Restricted Share Plan | Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum authorized amount as a percentage of shares authorized | 10.00% | |||||
Unrecognized compensation costs | $ 100 | $ 100 | ||||
Weighted average period for recognition | 2 years 6 months | |||||
Share based compensation expense | $ 65 | $ 19 | $ 91 | $ 49 |
Share-Based Compensation (Summa
Share-Based Compensation (Summary of Unvested Restricted Stock Activity) (Details) - Restricted Stock | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Shares of Common Stock | |
Unvested - ending balance (in shares) | 9,088 |
Restricted Share Plan | |
Number of Shares of Common Stock | |
Unvested - beginning balance (in shares) | 15,708 |
Granted (in shares) | 0 |
Vested (in shares) | (6,621) |
Unvested - ending balance (in shares) | 9,087 |
Weighted-Average Issue Price | |
Beginning balance (in dollars per share) | $ / shares | $ 23.67 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 23.55 |
Ending balance (in dollars per share) | $ / shares | $ 23.76 |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule of Basic and Diluted Net Income (Loss) Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net (loss) income attributable to stockholders - basic and diluted | $ (12,041) | $ (1,021) | $ 3,360 | $ (11,738) |
Weighted-average shares outstanding - Basic (in shares) | 105,028,459 | 104,140,631 | 105,111,959 | 94,450,241 |
Unvested restricted shares (in shares) | 0 | 0 | 14,483 | 0 |
OP Units (in shares) | 0 | 0 | 203,612 | 0 |
Weighted-average shares outstanding - Diluted (in shares) | 105,028,459 | 104,140,631 | 105,330,054 | 94,450,241 |
Net (loss) income per share attributable to stockholders - Basic (in dollars per share) | $ (0.11) | $ (0.01) | $ 0.03 | $ (0.12) |
Net (loss) income per share attributable to stockholders - Diluted (in dollars per share) | $ (0.11) | $ (0.01) | $ 0.03 | $ (0.12) |
Net Income (Loss) Per Share (69
Net Income (Loss) Per Share (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 1,269,487 | 1,267,229 | 1,052,420 | 1,215,131 |
OP units outstanding (in shares) | 203,612 | 203,612 | 203,612 | 203,612 |
Capital Unit, Class B | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Weighted-average number of Class B Units outstanding (in shares) | 1,052,420 | 1,052,420 | ||
Unvested restricted shares | Restricted Share Plan | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares outstanding (in shares) | 9,088 | 9,543 | 9,088 | 9,543 |
Unvested restricted shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 13,455 | 11,197 | 0 | 10,823 |
OP Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 203,612 | 203,612 | 0 | 151,888 |
Class B Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 1,052,420 | 1,052,420 | 1,052,420 | 1,052,420 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) | Aug. 30, 2018USD ($) | Jul. 19, 2018 | Jul. 03, 2018USD ($)$ / shares | Jul. 01, 2018$ / shares | Sep. 06, 2016$ / shares | Aug. 09, 2018USD ($)property | Jun. 30, 2018USD ($)property$ / shares | Jun. 30, 2017USD ($)property | Dec. 31, 2017$ / shares |
Subsequent Event [Line Items] | |||||||||
Aggregate base purchase price | $ 71,864,000 | $ 78,889,000 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||
Dividends declared (in dollars per share) | $ / shares | $ 1.30 | ||||||||
Dispositions by sale | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of properties sold | property | 19 | 12 | |||||||
Aggregate contract sale price | $ 86,800,000 | $ 271,900,000 | |||||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of properties acquired | property | 7 | ||||||||
Aggregate base purchase price | $ 16,300,000 | ||||||||
Reverse stock split ratio | 2 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Common stock, temporary par value, reverse stock split (in dollars per share) | $ / shares | $ 0.02 | ||||||||
Maximum authorized amount as a percentage of shares authorized | 10.00% | ||||||||
Dividends declared (in dollars per share) | $ / shares | $ 1.10 | ||||||||
Authorized repurchase amount | $ 200,000,000 | ||||||||
Subsequent Event | Listed initially | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage of common stock listed | 25.00% | ||||||||
Subsequent Event | Listed within 90 days | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage of common stock listed | 50.00% | ||||||||
Subsequent Event | Class A Common Stock | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage of outstanding shares reclassified | 50.00% | ||||||||
Subsequent Event | Class B-1 Common Stock | |||||||||
Subsequent Event [Line Items] | |||||||||
Stock dividend rate as a percentage of outstanding shares | 50.00% | ||||||||
Subsequent Event | Class B-2 Common Stock | |||||||||
Subsequent Event [Line Items] | |||||||||
Stock dividend rate as a percentage of outstanding shares | 50.00% | ||||||||
Subsequent Event | Dispositions by sale | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of properties sold | property | 2 | ||||||||
Aggregate contract sale price | $ 1,400,000 | ||||||||
Annual Subordinated Performance Fee | Advisor | |||||||||
Subsequent Event [Line Items] | |||||||||
Related party fee, earnings per share used in calculation, benchmark one (in dollars per share) | $ / shares | $ 0.375 | ||||||||
Related party fee, earnings per share used in calculation, benchmark two (in dollars per share) | $ / shares | $ 0.5 | ||||||||
Annual Subordinated Performance Fee | Advisor | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Related party fee, earnings per share used in calculation, benchmark one (in dollars per share) | $ / shares | $ 0.275 | ||||||||
Related party fee, earnings per share used in calculation, benchmark two (in dollars per share) | $ / shares | $ 0.3125 | ||||||||
LTIP Unit | Scenario, Forecast | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage of entitled distributions | 10.00% | ||||||||
LTIP conversion period after vesting | 30 days | ||||||||
LTIP Unit | Advisor | Scenario, Forecast | American Realty Capital Advisors | |||||||||
Subsequent Event [Line Items] | |||||||||
Value of LTIP Units granted | $ 72,000,000 | ||||||||
Absolute TSR | Scenario, Forecast | |||||||||
Subsequent Event [Line Items] | |||||||||
Performance measurement period | 3 years | ||||||||
Relative TSR Excess | Scenario, Forecast | |||||||||
Subsequent Event [Line Items] | |||||||||
Percentage LTIP Awards Eligible To Be Earned Based On Relative Total Stockholder Return | 50.00% | ||||||||
Chair Of NCG Committee | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | $ 15,000 | ||||||||
Directors | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | 60,000 | ||||||||
Directors | One Time Grant, Restricted Stock | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation, restricted stock | $ 340,000 | ||||||||
Award vesting period | 3 years | ||||||||
Directors | Restricted Stock | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation, restricted stock | $ 85,000 | ||||||||
Lead Independent Director | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | 100,000 | ||||||||
Chair Of Audit Committee | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | 30,000 | ||||||||
Other Audit Committee Members | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | 15,000 | ||||||||
Chair Of Compensation Committee | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | 15,000 | ||||||||
Other Compensation Committee Or NCG Committee Member | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Director compensation annual cash retainer | $ 10,000 | ||||||||
Advisor Plan | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Plan term | 10 years | ||||||||
Individual Plan | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Plan term | 10 years |
Subsequent Events (Schedule of
Subsequent Events (Schedule of Common Stock Outstanding) (Details) - USD ($) $ in Millions | Jul. 20, 2018 | Jul. 03, 2018 | Jul. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 |
Class of Stock [Line Items] | ||||||||
Common stock, outstanding (in shares) | 105,058,793 | 105,172,185 | 105,058,793 | |||||
Common stock repurchases (in shares) | 0 | 412,939 | 3,306,864 | 3,719,803 | ||||
Special Limited Partner | American Realty Capital Trust V Special Limited Partner, LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock held by related party (in shares) | 8,888 | 8,888 | 8,888 | |||||
Scenario, Forecast | Vesting and conversion of Class B Units | ||||||||
Class of Stock [Line Items] | ||||||||
Noncash compensation expense | $ 15.8 | |||||||
Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 9,088 | 9,088 | ||||||
Shares Outstanding | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock (in shares) | 105,049,705 | 105,049,705 | ||||||
Class A | Special Limited Partner | American Realty Capital Trust V Special Limited Partner, LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock held by related party (in shares) | 4,444 | 4,444 | ||||||
Class B-1 | Special Limited Partner | American Realty Capital Trust V Special Limited Partner, LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock held by related party (in shares) | 2,222 | 2,222 | ||||||
Class B2 | Special Limited Partner | American Realty Capital Trust V Special Limited Partner, LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock held by related party (in shares) | 2,222 | 2,222 | ||||||
Subsequent Event | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, outstanding (in shares) | 106,123,442 | |||||||
Subsequent Event | Fractional Shares Repurchased As Result Of Stock Split | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock repurchases (in shares) | 18,459 | |||||||
Subsequent Event | Vesting and conversion of Class B Units | ||||||||
Class of Stock [Line Items] | ||||||||
Vesting and conversion of Class B Units (in shares) | 1,052,420 | 1,052,420 | ||||||
Subsequent Event | Redemption of Class A Units (formerly known as OP Units) | ||||||||
Class of Stock [Line Items] | ||||||||
Redemption of Class A Units (in shares) | 30,690.5 | 30,691 | ||||||
Subsequent Event | Class A Units | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 203,612 | |||||||
Subsequent Event | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 9,085 | |||||||
Subsequent Event | Restricted Stock | Fractional Shares Repurchased As Result Of Stock Split | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock repurchases (in shares) | 3 | |||||||
Subsequent Event | Shares Outstanding | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock (in shares) | 105,031,246 | |||||||
Subsequent Event | Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock (in shares) | 52,506,417 | |||||||
Common stock, outstanding (in shares) | 53,594,069 | |||||||
Subsequent Event | Class A | Vesting and conversion of Class B Units | ||||||||
Class of Stock [Line Items] | ||||||||
Vesting and conversion of Class B Units (in shares) | 1,052,420 | |||||||
Subsequent Event | Class A | Redemption of Class A Units (formerly known as OP Units) | ||||||||
Class of Stock [Line Items] | ||||||||
Redemption of Class A Units (in shares) | 30,691 | |||||||
Subsequent Event | Class A | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 4,541 | |||||||
Subsequent Event | Class B-1 | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock (in shares) | 26,262,414.5 | |||||||
Common stock, outstanding (in shares) | 26,264,686.5 | |||||||
Subsequent Event | Class B-1 | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 2,272 | |||||||
Subsequent Event | Class B2 | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock (in shares) | 26,262,414.5 | |||||||
Common stock, outstanding (in shares) | 26,264,686.5 | |||||||
Subsequent Event | Class B2 | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Unvested restricted shares (in shares) | 2,272 |
Subsequent Events (Schedule o72
Subsequent Events (Schedule of LTIP Vesting Scenarios) (Details) - Scenario, Forecast | Aug. 30, 2018 |
Absolute TSR | |
Subsequent Event [Line Items] | |
Percentage LTIP Awards Eligible To Be Earned Based On Absolute Total Stockholder Return | 50.00% |
Relative TSR Excess | |
Subsequent Event [Line Items] | |
Percentage LTIP Awards Eligible To Be Earned Based On Relative Total Stockholder Return | 50.00% |
Below Threshold | Absolute TSR | |
Subsequent Event [Line Items] | |
Percentage of award earned | 0.00% |
Below Threshold | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Percentage of award earned | 0.00% |
Threshold | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 24.00% |
Percentage of award earned | 25.00% |
Threshold | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | (6.00%) |
Percentage of award earned | 25.00% |
Target | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 30.00% |
Percentage of award earned | 50.00% |
Target | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | 0.00% |
Percentage of award earned | 50.00% |
Maximum | Absolute TSR | |
Subsequent Event [Line Items] | |
Percentage of award earned | 100.00% |
Maximum | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Percentage of award earned | 100.00% |
Minimum | Below Threshold | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 24.00% |
Minimum | Threshold | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | (6.00%) |
Minimum | Target | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 30.00% |
Minimum | Target | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | 0.00% |
Minimum | Maximum | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 36.00% |
Minimum | Maximum | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | 6.00% |
Maximum | Below Threshold | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 24.00% |
Maximum | Below Threshold | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | (6.00%) |
Maximum | Target | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 30.00% |
Maximum | Target | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | 0.00% |
Maximum | Maximum | Absolute TSR | |
Subsequent Event [Line Items] | |
Absolute TSR | 36.00% |
Maximum | Maximum | Relative TSR Excess | |
Subsequent Event [Line Items] | |
Relative TSR Excess | 6.00% |