Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38597 | |
Entity Registrant Name | The Necessity Retail REIT, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 90-0929989 | |
Entity Address, Address Line One | 650 Fifth Ave. | |
Entity Address, Address Line Two | 30th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10019 | |
City Area Code | 212 | |
Local Phone Number | 415-6500 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 134,191,117 | |
Entity Central Index Key | 0001568162 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Stock, $0.01 par value per share | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Class A Common Stock, $0.01 par value per share | |
Trading Symbol | RTL | |
Security Exchange Name | NASDAQ | |
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | |
Trading Symbol | RTLPP | |
Security Exchange Name | NASDAQ | |
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | |
Trading Symbol | RTLPO | |
Security Exchange Name | NASDAQ | |
Preferred Stock Purchase Rights | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock Purchase Rights | |
Security Exchange Name | NASDAQ | |
No Trading Symbol Flag | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Real estate investments, at cost: | ||
Land | $ 980,269 | $ 996,293 |
Buildings, fixtures and improvements | 3,420,185 | 3,467,463 |
Acquired intangible lease assets | 607,353 | 644,553 |
Total real estate investments, at cost | 5,007,807 | 5,108,309 |
Less: accumulated depreciation and amortization | (789,664) | (784,946) |
Total real estate investments, net | 4,218,143 | 4,323,363 |
Cash and cash equivalents | 43,095 | 70,795 |
Restricted cash | 19,422 | 17,956 |
Deferred costs, net | 23,864 | 22,893 |
Straight-line rent receivable | 67,332 | 66,657 |
Operating lease right-of-use assets | 17,713 | 17,839 |
Prepaid expenses and other assets | 67,824 | 66,551 |
Total assets | 4,457,393 | 4,586,054 |
LIABILITIES AND EQUITY | ||
Mortgage notes payable, net | 1,765,239 | 1,808,433 |
Credit facility | 448,000 | 458,000 |
Senior notes, net | 492,653 | 492,319 |
Below market lease liabilities, net | 128,032 | 133,876 |
Accounts payable and accrued expenses (including $1,566 and $1,838 due to related parties as of March 31, 2023 and December 31, 2022, respectively) | 41,540 | 64,169 |
Operating lease liabilities | 19,110 | 19,132 |
Deferred rent and other liabilities | 13,564 | 16,815 |
Dividends payable | 5,837 | 5,837 |
Total liabilities | 2,913,975 | 2,998,581 |
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 134,224,313 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 1,342 | 1,342 |
Additional paid-in capital | 2,999,417 | 2,999,163 |
Distributions in excess of accumulated earnings | (1,483,255) | (1,435,794) |
Total stockholders’ equity | 1,517,629 | 1,564,836 |
Non-controlling interests | 25,789 | 22,637 |
Total equity | 1,543,418 | 1,587,473 |
Total liabilities and equity | 4,457,393 | 4,586,054 |
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock | ||
LIABILITIES AND EQUITY | ||
Cumulative redeemable perpetual preferred stock | 79 | 79 |
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock | ||
LIABILITIES AND EQUITY | ||
Cumulative redeemable perpetual preferred stock | $ 46 | $ 46 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts payable and accrued expenses, due to related parties | $ 1,566 | $ 1,838 |
Preferred stock, authorized (in shares) | 50,000,000 | |
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) | 134,224,313 | |
Common stock, outstanding (in shares) | 134,224,313 | |
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock | ||
Preferred stock dividend rate | 7.50% | 7.50% |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 |
Preferred stock, authorized (in shares) | 12,796,000 | 12,796,000 |
Preferred stock, issued (in shares) | 7,933,711 | 7,933,711 |
Preferred stock, outstanding (in shares) | 7,933,711 | 7,933,711 |
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock | ||
Preferred stock dividend rate | 7.375% | 7.375% |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 |
Preferred stock, authorized (in shares) | 11,536,000 | 11,536,000 |
Preferred stock, issued (in shares) | 4,595,175 | 4,595,175 |
Preferred stock, outstanding (in shares) | 4,595,175 | 4,595,175 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue from tenants | $ 113,594 | $ 94,943 |
Operating expenses: | ||
Asset management fees to related party | 7,956 | 7,826 |
Property operating expense | 26,913 | 19,139 |
Impairment of real estate investments | 0 | 5,942 |
Acquisition, transaction and other costs | 565 | 279 |
Equity-based compensation | 3,567 | 3,498 |
General and administrative | 10,492 | 6,833 |
Depreciation and amortization | 54,182 | 37,688 |
Total operating expenses | 103,675 | 81,205 |
Operating income before gain on sale of real estate investments | 9,919 | 13,738 |
Gain on sale of real estate investments | 11,792 | 53,569 |
Operating income | 21,711 | 67,307 |
Other (expense) income: | ||
Interest expense | (34,675) | (23,740) |
Other income | 27 | 18 |
Gain on non-designated derivatives | 0 | 2,250 |
Total other expense, net | (34,648) | (21,472) |
Net (loss) income | (12,937) | 45,835 |
Net loss (income) attributable to non-controlling interests | 17 | (64) |
Allocation for preferred stock | (5,837) | (5,837) |
Net (loss) income attributable to common stockholders | $ (18,757) | $ 39,934 |
Weighted-average shares outstanding - Basic (in shares) | 133,715,627 | 128,640,845 |
Weighted-average shares outstanding - Diluted (in shares) | 133,715,627 | 130,048,111 |
Net (loss) income per share attributable to common stockholders — Basic ( in dollars per share) | $ (0.14) | $ 0.31 |
Net (loss) income per share attributable to common stockholders — Diluted ( in dollars per share) | $ (0.14) | $ 0.31 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) | Total | Series A preferred stock | Series C preferred stock | Mezzanine Equity | Total Stockholders’ Equity | Total Stockholders’ Equity Series A preferred stock | Total Stockholders’ Equity Series C preferred stock | Preferred Stock Series A preferred stock | Preferred Stock Series C preferred stock | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Series A preferred stock | Additional Paid-in Capital Series C preferred stock | Distributions in excess of accumulated earnings | Distributions in excess of accumulated earnings Series A preferred stock | Distributions in excess of accumulated earnings Series C preferred stock | Non-controlling Interests | ||
Beginning balance at Dec. 31, 2021 | 0 | ||||||||||||||||||
Ending balance at Mar. 31, 2022 | 53,388,000 | ||||||||||||||||||
Beginning Balance (in shares) at Dec. 31, 2021 | 7,933,711 | 4,594,498 | 123,783,060 | [1] | |||||||||||||||
Beginning Balance at Dec. 31, 2021 | $ 1,710,278,000 | $ 1,699,854,000 | $ 79,000 | $ 46,000 | $ 1,238,000 | $ 2,915,926,000 | $ (1,217,435,000) | $ 10,424,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Issuance of stock, net (in shares) | 0 | 0 | 2,761,711 | [1] | |||||||||||||||
Issuance of stock, net | 24,494,000 | $ (19,000) | $ (36,000) | 24,494,000 | $ (19,000) | $ (36,000) | $ 0 | $ 27,000 | 24,467,000 | $ (19,000) | $ (36,000) | ||||||||
Issuance of Shares subject to repurchase, at fair market value upon closing (in shares) | [1] | 6,450,107 | |||||||||||||||||
Issuance of Shares subject to repurchase, at fair market value upon closing | 0 | $ 49,965,000 | |||||||||||||||||
Adjustments to redemption value | (3,423,000) | $ 3,423,000 | (3,423,000) | (3,423,000) | |||||||||||||||
Equity-based compensation (in shares) | [1],[2] | (275) | |||||||||||||||||
Equity-based compensation | [2] | 3,486,000 | 310,000 | $ 0 | 310,000 | 0 | 3,176,000 | ||||||||||||
Dividends declared on Common Stock | (26,677,000) | (26,677,000) | (26,677,000) | ||||||||||||||||
Dividends declared on Preferred Stock | (3,719,000) | (2,118,000) | (3,719,000) | (2,118,000) | $ (3,719,000) | $ (2,118,000) | |||||||||||||
Distributions to non-controlling interest holders | (196,000) | (159,000) | (159,000) | (37,000) | |||||||||||||||
Net income (loss) | 45,835,000 | 45,771,000 | 45,771,000 | 64,000 | |||||||||||||||
Rebalancing of ownership percentage | 0 | 37,000 | 37,000 | (37,000) | |||||||||||||||
Ending Balance (in shares) at Mar. 31, 2022 | 7,933,711 | 4,594,498 | 132,994,603 | [1] | |||||||||||||||
Ending Balance at Mar. 31, 2022 | 1,747,905,000 | 1,734,315,000 | $ 79,000 | $ 46,000 | $ 1,265,000 | 2,937,262,000 | (1,204,337,000) | 13,590,000 | |||||||||||
Beginning Balance (in shares) at Dec. 31, 2022 | 7,933,711 | 4,595,175 | 134,224,313 | ||||||||||||||||
Beginning Balance at Dec. 31, 2022 | 1,587,473,000 | 1,564,836,000 | $ 79,000 | $ 46,000 | $ 1,342,000 | 2,999,163,000 | (1,435,794,000) | 22,637,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Issuance of stock, net (in shares) | 0 | 0 | |||||||||||||||||
Issuance of stock, net | (42,000) | (30,000) | (35,000) | (42,000) | (30,000) | (35,000) | $ 0 | (42,000) | $ (30,000) | $ (35,000) | |||||||||
Equity-based compensation (in shares) | 0 | ||||||||||||||||||
Equity-based compensation | 3,567,000 | 391,000 | $ 0 | 391,000 | 3,176,000 | ||||||||||||||
Dividends declared on Common Stock | (28,523,000) | (28,523,000) | (28,523,000) | ||||||||||||||||
Dividends declared on Preferred Stock | $ (3,719,000) | $ (2,118,000) | $ (3,719,000) | $ (2,118,000) | $ (3,719,000) | $ (2,118,000) | |||||||||||||
Distributions to non-controlling interest holders | (218,000) | (181,000) | (181,000) | (37,000) | |||||||||||||||
Net income (loss) | (12,937,000) | (12,920,000) | (12,920,000) | (17,000) | |||||||||||||||
Rebalancing of ownership percentage | 0 | (30,000) | (30,000) | 30,000 | |||||||||||||||
Ending Balance (in shares) at Mar. 31, 2023 | 7,933,711 | 4,595,175 | 134,224,313 | ||||||||||||||||
Ending Balance at Mar. 31, 2023 | $ 1,543,418,000 | $ 1,517,629,000 | $ 79,000 | $ 46,000 | $ 1,342,000 | $ 2,999,417,000 | $ (1,483,255,000) | $ 25,789,000 | |||||||||||
[1]Includes shares of Class A common stock subject to repurchase.[2]Presented net of forfeitures. During the three months ended March 31, 2022, 275 restricted shares with a fair value of approximately $3,000 were forfeited. |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends declared on common stock (in dollars per share) | $ 0.21 | $ 0.21 |
Shares forfeited (in shares) | 275 | |
Shares forfeited, value | $ 3 | |
Series A preferred stock | ||
Dividends declared on preferred stock (in dollars per share) | 0.47 | $ 0.47 |
Series C preferred stock | ||
Dividends declared on preferred stock (in dollars per share) | $ 0.46 | $ 0.46 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Net (loss) income | $ (12,937) | $ 45,835 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation | 27,866 | 24,407 | |
Amortization of in-place lease assets | 25,543 | 12,745 | |
Amortization of deferred leasing costs | 774 | 536 | |
Amortization (including accelerated write-off) of deferred financing costs | 3,760 | 2,893 | |
Amortization of mortgage discounts (premiums) on borrowings, net | 471 | (13) | |
Accretion of market lease and other intangibles, net | (2,476) | (1,098) | |
Equity-based compensation | 3,567 | 3,498 | |
Gain on non-designated derivatives | 0 | (2,250) | |
Gain on sale of real estate investments | (11,792) | (53,569) | |
Impairment of real estate investments | 0 | 5,942 | |
Payments of prepayment costs on mortgages | 450 | 0 | |
Changes in assets and liabilities: | |||
Straight-line rent receivable | (1,184) | (1,182) | |
Straight-line rent payable | 63 | 68 | |
Prepaid expenses and other assets | (1,817) | 5,505 | |
Accounts payable and accrued expenses | (10,953) | 4,087 | |
Deferred rent and other liabilities | (3,250) | (2,301) | |
Net cash provided by operating activities | 18,085 | 45,103 | |
Cash flows from investing activities: | |||
Capital expenditures | (9,896) | (3,188) | |
Investments in real estate and other assets | (12,260) | (786,311) | |
Proceeds from sale of real estate investments | 24,485 | 244,208 | |
Deposits for real estate investments | 0 | (103) | |
Net cash provided by (used in) investing activities | 2,329 | (545,394) | |
Cash flows from financing activities: | |||
Payments on mortgage notes payable | (1,603) | (8,765) | |
Proceeds from credit facility | 10,000 | 378,000 | |
Payments on credit facility | (20,000) | 0 | |
Payments of financing costs | (5) | (286) | |
Payments of prepayment costs on mortgages | (450) | 0 | |
Distributions on LTIP Units and Class A Units | (218) | (219) | |
Net cash (used in) provided by financing activities | (46,648) | 360,679 | |
Net change in cash, cash equivalents and restricted cash | (26,234) | (139,612) | |
Cash, cash equivalents and restricted cash beginning of period | 88,751 | 236,849 | $ 236,849 |
Cash, cash equivalents and restricted cash end of period | 62,517 | 97,237 | 88,751 |
Cash, cash equivalents and restricted cash end of period | |||
Cash and cash equivalents, end of period | 43,095 | 82,106 | 70,795 |
Restricted cash, end of period | 19,422 | 15,131 | 17,956 |
Cash, cash equivalents and restricted cash end of period | 62,517 | 97,237 | $ 88,751 |
Supplemental Disclosures: | |||
Cash paid for interest | 36,200 | 25,755 | |
Cash paid for income and franchise taxes | 98 | 104 | |
Non-Cash Investing and Financing Activities: | |||
Shares issued in acquisition | 0 | 49,965 | |
Adjustments to value of shares | 0 | 3,423 | |
Proceeds from real estate sales used to pay off related mortgage notes payable | 45,000 | 940 | |
Mortgage notes payable released in connection with disposition of real estate | (45,000) | (940) | |
Mortgages assumed in acquisition (including premiums of $276) | 0 | 19,526 | |
Accrued capital expenditures | 0 | 269 | |
Series A preferred stock | |||
Cash flows from financing activities: | |||
Dividends paid on preferred stock | (3,719) | (3,719) | |
Class A common stock offering costs | (2) | (19) | |
Non-Cash Investing and Financing Activities: | |||
Accrued stock offering costs | 28 | 0 | |
Preferred stock dividend declared | 3,719 | 3,719 | |
Series C preferred stock | |||
Cash flows from financing activities: | |||
Dividends paid on preferred stock | (2,118) | (2,118) | |
Class A common stock offering costs | (5) | (36) | |
Non-Cash Investing and Financing Activities: | |||
Accrued stock offering costs | 31 | 0 | |
Preferred stock dividend declared | 2,118 | 2,118 | |
Class A common stock | |||
Cash flows from financing activities: | |||
Dividends paid on Class A common stock | (28,523) | (26,677) | |
Class A common stock offering costs | (5) | (399) | |
Proceeds from issuance of Class A common stock, net | 0 | 24,917 | |
Non-Cash Investing and Financing Activities: | |||
Accrued stock offering costs | $ 37 | $ 24 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | Mar. 31, 2023 USD ($) |
Statement of Cash Flows [Abstract] | |
Mortgage notes payable assumed in acquisitions, discounts | $ 276 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization The Necessity Retail REIT, Inc. (the “Company”), is an externally managed real estate investment trust for U.S. federal income tax purposes (“REIT”) focusing on acquiring and managing a diversified portfolio of primarily necessity-based retail single-tenant and multi-tenant properties in the United States. As of March 31, 2023, the Company owned 1,039 properties, comprised of 27.6 million rentable square feet, which were 92.6% leased, including 930 single-tenant net-leased commercial properties (892 of which are retail properties) and 109 multi-tenant retail properties. Substantially all of the Company’s business is conducted through The Necessity Retail REIT Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and its wholly-owned subsidiaries. Necessity Retail Advisors, LLC (the “Advisor”) manages the Company’s day-to-day business with the assistance of the Company’s property manager, Necessity Retail Properties, LLC, (the “Property Manager”). The Advisor and the Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to the Company. The Company also reimburses these entities for certain expenses they incur in providing these services to the Company. On December 17, 2021, the Company signed a purchase and sale agreement to acquire 79 multi-tenant retail centers and two single-tenant properties for an aggregate contract purchase price of $1.3 billion (the “CIM Portfolio Acquisition”). The CIM Portfolio Acquisition was accounted for as an asset acquisition. The acquisition closed in multiple transactions from February 2022 through July 2022, and the consideration included cash (including cash sourced from borrowings under the Credit Facility, as defined below), assumption of existing mortgage debt securing certain of the properties and the issuance of shares of the Company’s Class A common stock. The Company closed on the properties of the CIM Portfolio Acquisition in multiple stages as follows: • In the three months ended March 31, 2022, the Company closed on the acquisition of 56 properties of the CIM Portfolio Acquisition for an aggregate contract purchase price of $801.1 million which was funded by $728.4 million in cash, including $378.0 million of borrowings under the Company’s Credit Facility, the assumption of $19.3 million of existing mortgage debt and the issuance of $50.0 million in fair value at issuance ($53.4 million in contractual value) of the Company’s Class A common stock to certain subsidiaries of the CIM Real Estate Finance Trust, Inc. (the “Sellers”), at its closing value on the respective closing dates on which the common stock was issued. • In the three months ended June 30, 2022, the Company closed on 24 additional properties from the CIM Portfolio Acquisition for an aggregate contract purchase price of $452.8 million in three closings. The acquisitions were funded with the assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of the Company’s $40.0 million deposit and the remainder with cash on hand. The assumed mortgages bear stated interest rates between 3.65% and 4.62% and mature between April 2023 and September 2033. • In the three months ended September 30, 2022, the Company closed on the one remaining property from the CIM Portfolio Acquisition for a contract purchase price of $71.1 million. The acquisition was funded with the assumption of $39.0 million of fixed-rate mortgage debt, the application of the remaining $16.2 million of the Company’s $40.0 million deposit, and the remainder with cash on hand (including $6.8 million of previous borrowings under the Credit Facility). The assumed mortgage bears a stated interest rate of 4.05% and matures in May 2024. • The aggregate contract purchase prices above do not include contingent consideration relating to leasing activity at each respective acquired property for a six-month period subsequent to the respective closing dates of each acquired property. During the year ended December 31, 2022, the Company paid $59.3 million for such contingent consideration with cash on hand. As of December 31, 2022, the Company had accrued $6.7 million of contingent consideration based on leases executed prior to December 31, 2022. During the three months ended March 31, 2023, the Company accrued an additional $5.5 million based on leases executed after December 31, 2022. All accrued amounts were paid in the three months ended March 31, 2023, and no further contingent consideration is expected to be paid under the terms of the contract. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on 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. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three month periods ended March 31, 2023 and 2022 are not necessarily indicative of the results for the entire year or any subsequent interim periods. These unaudited 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, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 23, 2023. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2023. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany 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. Except for the OP, as of March 31, 2023 and December 31, 2022, the Company had no interests in entities that were not wholly owned. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable. Out-of-Period Adjustment During the three months ended September 30, 2022, the Company concluded that it had understated amortization by $1.2 million in the three months ended March 31, 2022, and $2.5 million and $3.7 million, respectively, for the three and six month periods ended June 30, 2022, for certain in-place lease intangibles associated with certain leases with below market rents that were acquired as part of the CIM Portfolio Acquisition in the first and second quarters of 2022. The Company has concluded that this adjustment was not material to the financial position or results of operations for any prior quarterly periods and, accordingly, the Company recorded the cumulative adjustment to increase depreciation by $3.7 million in the three and nine month periods ended September 30, 2022. Impacts of the COVID-19 Pandemic During the first quarter of 2020, the global COVID-19 pandemic that spread around the world and to every state in the United States commenced. As a result, the Company experienced delays in rent collections in the second, third and fourth quarters of 2020 and the first quarter of 2021. The Company did not experience any material delays in the receipt of rental payments during the year ended December 31, 2022 or the three months ended March 31, 2023. The Company took a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in the second, third and fourth quarters of 2020 and throughout 2021, the Company executed several types of lease amendments. These amendments included deferrals and abatements and also included extensions to the term of the leases. The Company did not execute any COVID-19-related deferrals or abatements during the year ended December 31, 2022 or the three months ended March 31, 2023. The Company has substantially collected all amounts of previously deferred rent. For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases were being modified, the Financial Accounting Standards Board (“FASB”) and the SEC provided relief that allowed companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (i) as if the changes were originally contemplated in the lease contract or (ii) as if the deferred payments are variable lease payments contained in the lease contract. For all other lease changes that did not qualify for FASB relief, the Company is required to apply modification accounting including assessing classification under ASC 842. Some, but not all of the Company’s lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease. For leases not qualifying for this relief, the Company has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants. Revenue Recognition The Company’s revenues, which are derived primarily from lease contracts, 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. As of March 31, 2023, these leases had an average remaining lease term of approximately 7.1 years. 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 for, and include in revenue from tenants, 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, the 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 modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses, in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, the Company elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company also elected to reflect prior revenue and reimbursements reported under ASC 842 on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis. Future Base Rent Payments The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of March 31, 2023. These amounts exclude tenant reimbursements and 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 Base Rent Payments 2023 (remainder) $ 266,340 2024 339,560 2025 310,608 2026 280,647 2027 241,677 2028 192,489 Thereafter 1,104,857 $ 2,736,178 Contingent Rental Income 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 months ended March 31, 2023 and 2022 such amounts were $0.6 million, and $0.4 million, respectively. Collectability and Bad Debt Expense 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. Under the leasing standard adopted on January 1, 2019 (see the “ Recently Issued Accounting Pronouncements ” section below), the Company is required to assess, based on credit risk only, if it is probable that the Company will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are not permitted. If the Company determines that it’s probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it’s not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants beginning on January 1, 2019, in accordance with new accounting rules, on the accompanying consolidated statements of operations in the period the related costs are incurred, as applicable. Since the second quarter of 2020, this assessment has included consideration of the impacts of the COVID-19 pandemic on the ability of the Company’s tenants to pay rents in accordance with their contracts. The assessment included all of the Company’s tenants with a focus on the Company’s multi-tenant retail properties which have been more negatively impacted by the COVID-19 pandemic than the Company’s single-tenant properties. In accordance with the lease accounting rules, the Company records uncollectable amounts as reductions in revenue from tenants. During the three months ended March 31, 2023 and 2022, uncollectable amounts were $3.4 million and $0.7 million, respectively. Included in the uncollectable amounts for the three months ended March 31, 2023, were $2.9 million of revenue reductions associated with 16 leases with one tenant which were terminated in bankruptcy proceedings. Lease Termination Income The Company entered into two lease termination agreements with tenants in its multi-tenant properties for a total of $0.1 million, which were recognized and received in the three months ended March 31, 2023. The Company entered into lease termination agreements at two and six of its single-tenant properties in the first quarter of 2022 and the fourth quarter of 2021, respectively. Since these leases had short-term remaining occupancy periods for the tenant, these lease termination agreements were treated as lease modifications, and their termination fee income was recognized over the remaining occupancy periods of the respective leases on a straight-line basis. The Company recognized and received $4.5 million in the three months ended March 31, 2022 related to these agreements. As of June 30, 2022, the occupancy periods for these agreements expired and the tenants vacated. Accordingly, no related revenue was recognized on these leases in the three months ended March 31, 2023. Investments in Real Estate Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. At the time an asset is acquired, the Company evaluates the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the Purchase Price Allocation section in this Note for a discussion of the initial accounting for investments in real estate. Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations during the three months ended March 31, 2023 and 2022. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. The Company evaluates the probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of March 31, 2023 and December 31, 2022, no properties were considered held for sale. Purchase Price Allocation In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. No acquisitions occurred during the three months ended March 31, 2023. All acquisitions during the three months ended March 31, 2022 were asset acquisitions. For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values. 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. 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. The Company estimates fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates, and land values per square foot. Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. 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 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. Accounting for Leases Lessor Accounting In accordance with the lease accounting standard, all of the Company’s leases as lessor prior to adoption of ASC 842 were accounted for as operating leases and the Company continued to account for them as operating leases under the transition guidance. The Company evaluates new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. Generally, all the Company’s leases as lessor had historically qualified as operating leases including land leases for which such accounting has been grandfathered. However, as of March 31, 2023 and December 31, 2022 the Company had two parcels of land leased to tenants that qualify as financing leases which were entered into during the year ended December 31, 2022 (subsequent to the three months ended March 31, 2022). The carrying value of these leases were $5.8 million and $5.7 million as of March 31, 2023 and December 31, 2022, respectively, and the amounts are included in prepaid expenses and other assets on the Company’s consolidated balance sheets. For the three months ended March 31, 2023, income of $0.2 million relating to these two leases is included in revenue from tenants in the Company’s consolidated statement of operations. As of March 31, 2023 and December 31, 2022, the Company had no leases as a lessor that were considered as sales-type leases under sales leaseback rules. As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Lessee Accounting For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 9 — Commitments and Contingencies . The Company is the lessee under certain land leases which were previously classified prior to adoption of lease accounting and will continue to be classified as operating leases under transition elections unless subsequently modified. These leases are reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term. Gain on Sale of Real Estate Investments Gains on sales of rental real estate are not considered sales to customers and are generally recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”). In accordance with ASC 845-10, Accounting for Non-Monetary Transactions, if a nonmonetary exchange has commercial substance, the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss shall be recognized on the exchange. Impairment of Long-Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows 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 on its consolidated statements of operations 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. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings. Reportable Segments As of March 31, 2023, the Company has determined that it has two reportable segments, with activities related to investing in single-tenant properties and multi-tenant properties. Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the initial remaining lease terms of the respective leases. The value of customer relationship intangibles, if any, is amortized to expense over the initial term of the lease and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense. Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages. Above- and Below-Market Lease Amortization Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants 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. Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods. Upon termination of an above- or below-market lease, any unamortized amounts would be recognized in the period of termination. Equity-Based Compensation The Company has stock-based plans under which its 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, and certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company are eligible to receive awards. Awards granted thereunder are accounted for under the guidance for employee share-based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such an award is included in the equity-based compensation line item of the consolidated statements of operations and is recognized in accordance with the service period (i.e., vesting) required or when the requirements for exercise of the award have been met. On July 21, 2021, the Company entered into the multi-year outperformance agreement with the Advisor (the “2021 OPP”) pursuant to which the Advisor was granted an award of 8,528,885 units of limited partnership (“LTIP Units”), representing the quotient of $72.0 million divided by $8.4419. The LTIP Units issued under the 2021 OPP were reclassified as an equity award with the cumulative expense reflected as part of non-controlling interest in the Company’s consolidated balance sheets and equity statements. In the event of a modification of any of the awards discussed above, any incremental increase in the value of the instrument measured on the date of the modification both before and after the modification, will result in an incremental amount to be reflected prospectively as a charge to earnings over the remaining service period. For additional information on all of the Company’s equity-based compensation arrangements, see Note 12 — Equity-Based Compensation . Recently Issued Accounting Pronouncements Not Yet Fully Adopted as of March 31, 2023: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through June 30, 2023 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients would preserve the presentation of the Company’s derivatives, if any, which would be consistent with the Company’s past presentation. As of March 31, 2023, the Company did not have any outstanding derivative instruments but has LIBOR-based borrowings under its Credit Facility (see Note 5 — Credit Facility for additional information). The Company will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur. |
Real Estate Investments
Real Estate Investments | 3 Months Ended |
Mar. 31, 2023 | |
Real Estate [Abstract] | |
Real Estate Investments | Real Estate Investments Property Acquisitions The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented. All acquisitions were considered asset acquisitions for accounting purposes. Three Months Ended March 31, (Dollar amounts in thousands) 2023 (2) 2022 Real estate investments, at cost: Land $ — $ 154,815 Buildings, fixtures and improvements — 586,140 Total tangible assets — 740,955 Acquired intangible assets and liabilities: (1) In-place leases 5,535 145,178 Above-market lease assets — 12,574 Below-market lease liabilities — (42,905) Total intangible assets, net 5,535 114,847 Assets Reduced, Liabilities Assumed and Equity Issued: Mortgage notes payable assumed in acquisitions (including premiums of $276) — (19,526) Shares issued in acquisitions — (49,965) Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition 6,725 — Cash paid for real estate investments $ 12,260 $ 786,311 Number of properties purchased from the CIM Portfolio Acquisition (See Note 1 — Organization for additional information) — 56 Number of other properties purchased — 3 ________ (1) Weighted-average remaining amortization periods for in-place lease assets, above-market lease assets and below-market lease liabilities acquired during the three months ended March 31, 2022 were 9.8 years, 6.2 years and 20.0 years, respectively, as of each property’s respective acquisition date. (2) Real estate assets acquired during the three months ended March 31, 2023 were comprised entirely of contingent consideration relating to the CIM Portfolio Acquisition, $6.7 million of which was accrued as of December 31, 2022. See Note 1 — Organization for additional information. The following table presents amortization expense and adjustments to revenue from tenants and property operating expenses for intangible assets and liabilities during the periods presented: Three Months Ended March 31, (In thousands) 2023 2022 In-place leases, included in depreciation and amortization (2) $ 25,543 $ 12,745 Above-market lease intangibles $ (1,628) $ (914) Below-market lease liabilities 4,112 2,020 Total included in revenue from tenants $ 2,484 $ 1,106 Below-market ground lease asset (1) $ 8 $ 8 Above-market ground lease liability (1) — — Total included in property operating expenses $ 8 $ 8 ______ (1) Intangible balances related to ground leases are included as part of the operating lease right-of-use assets presented on the consolidated balance sheets and the amortization expense of such balances is included in property operating expenses on the consolidated statements of operations. (2) During the three months ended March 31, 2023, the Company recorded additional in-place lease amortization of $3.3 million associated with 16 leases with one tenant which were terminated in bankruptcy proceedings. The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years: (In thousands) 2023 (remainder) 2024 2025 2026 2027 In-place leases, to be included in depreciation and amortization $ 53,289 $ 56,539 $ 44,902 $ 35,224 $ 26,804 Above-market lease intangibles $ 4,603 $ 5,381 $ 4,542 $ 3,313 $ 2,704 Below-market lease liabilities (7,746) (9,856) (9,512) (9,052) (8,624) Total to be included in revenue from tenants $ (3,143) $ (4,475) $ (4,970) $ (5,739) $ (5,920) Deposits for Real Estate Investments The Company did not have any deposits for future acquisitions of real estate investments as of March 31, 2023 or December 31, 2022. Real Estate Held for Sale When assets are identified by management as held for sale, the Company ceases depreciation and amortization of 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. For additional information on impairment charges, see “ Impairment Charges” section below. As of March 31, 2023 and December 31, 2022, there were no properties classified as held for sale. The sales of other properties sold during their respective periods did not represent a strategic shift in the Company’s operations or strategy. Real Estate Sales During the three months ended March 31, 2023, the Company sold five properties for an aggregate contract price of $71.3 million, resulting in an aggregate gain of $11.8 million, which is reflected in gain on sale of real estate investments in the consolidated statement of operations for the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company sold six properties for an aggregate contract price of $265.2 million. These dispositions resulted in an aggregate gain of $53.6 million, which is reflected in gain on sale of real estate investments on the consolidated statement of operations for the three months ended March 31, 2022. Real Estate Held for Use When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single-tenant properties, (ii) significant or sustained vacancy in the Company’s multi-tenant properties and (iii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. For all of its held for use properties, the Company had reconsidered the projected cash flows due to various performance indicators and, where appropriate, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over the intended holding period. See “Impairment Charges” below for discussion of specific charges taken. If a triggering event for held for use single-tenant properties is identified, the Company uses either a market approach or an income approach to estimate the future cash flows expected to be generated. The market approach involves evaluating comparable sales of properties in the same geographic region as the held for use properties in order to determine an estimated sale price. The Company makes certain assumptions 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. Under the income approach, the Company evaluates 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 makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach. 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 additional impairment may be realized in the future. Impairment Charges There were no impairment charges recorded in the three months ended March 31, 2023. The following table details the impairment charges recorded by segment for the three months ended March 31, 2022: Three Months Ended March 31, (In thousands) 2022 Single-tenant properties: Various vacant single-tenant properties (1) $ 2,176 United Healthcare (2) 3,766 Total single-tenant impairment charges 5,942 Total impairment charges $ 5,942 (1) For the three months ended March 31, 2022, three properties were impaired, all of which were formerly leased to Truist Bank. All properties in the three months ended March 31, 2022 were impaired to their fair values as determined by their respective purchase and sale agreements and were sold in the year ended December 31, 2022. (2) This property was vacant since June 30, 2021 when a tenant did not renew its lease. This property was impaired to its fair value as determined by the income approach in both the year ended December 31, 2022 and 2021 and disposed of in the year ended December 31, 2022. |
Mortgage Notes Payable, Net
Mortgage Notes Payable, Net | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Mortgage Notes Payable, Net | Mortgage Notes Payable, Net The Company’s mortgage notes payable, net as of March 31, 2023 and December 31, 2022 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties March 31, December 31, March 31, Interest Rate Maturity Anticipated Repayment (4) (In thousands) (In thousands) 2019 Class A-1 Net-Lease Mortgage Notes 102 $ 117,470 $ 117,620 3.83 % Fixed May 2049 May 2026 2019 Class A-2 Net-Lease Mortgage Notes 108 119,868 120,020 4.52 % Fixed May 2049 May 2029 2021 Class A-1 Net-Lease Mortgage Notes 49 53,381 53,601 2.24 % Fixed May 2051 May 2028 2021 Class A-2 Net-Lease Mortgage Notes 47 92,204 92,584 2.83 % Fixed May 2051 May 2031 2021 Class A-3 Net-Lease Mortgage Notes 33 34,997 34,997 3.07 % Fixed May 2051 May 2028 2021 Class A-4 Net-Lease Mortgage Notes 35 54,995 54,995 3.65 % Fixed May 2051 May 2031 Total Net-Lease Mortgage Notes 374 472,915 473,817 Stop & Shop (5) — — 45,000 3.50 % Fixed Jan. 2030 Jan. 2030 Column Financial Mortgage Notes 364 705,567 705,567 3.79 % Fixed Aug. 2025 Aug. 2025 Bob Evans I 22 22,633 22,740 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 Cottonwood Commons 1 19,250 19,250 4.52 % Fixed Sep. 2023 Sep. 2023 The Marquis 1 8,556 8,556 3.95 % Fixed May 2023 May 2023 Assumed Multi-Tenant Mortgage I 3 16,700 16,700 4.68 % Fixed Sep. 2033 Sep. 2023 Assumed Multi-Tenant Mortgage II 4 25,000 25,000 4.54 % Fixed Feb. 2024 Feb. 2024 Assumed Multi-Tenant Mortgage III (6) 3 30,424 30,719 3.70 % Fixed Apr. 2023 Apr. 2023 Assumed Multi-Tenant Mortgage IV (6) 4 28,387 28,387 3.90 % Fixed Apr. 2023 Apr. 2023 Assumed Multi-Tenant Mortgage V 7 60,244 60,544 3.70 % Fixed Sep. 2023 Sep. 2023 The Plant (6) 1 123,000 123,000 3.87 % Fixed May 2033 May 2023 McGowin Park 1 39,025 39,025 4.11 % Fixed May 2024 May 2024 Gross mortgage notes payable 819 1,795,101 1,841,705 3.84 % (1) Deferred financing costs, net of accumulated amortization (2) (29,009) (31,948) Mortgage premiums and discounts, net (3) (853) (1,324) Mortgage notes payable, net $ 1,765,239 $ 1,808,433 __________ (1) Calculated on a weighted-average basis for all mortgages outstanding as of March 31, 2023. (2) 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 it is probable the financing will not close. (3) Mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages. (4) The Company determines an anticipated repayment date when the terms of a debt obligation provide for earlier repayment than the legal maturity and when the Company expects to repay such debt obligations earlier due to factors such as elevated interest rates or additional principal payment requirements. (5) This mortgage note was fully repaid in the three months ended March 31, 2023 in connection with the disposition of the formerly encumbered properties. (6) These mortgage notes were fully repaid subsequent to March 31, 2023 with proceeds from the Credit Facility. See Note 1 5 — Subsequent Events for additional information. As of March 31, 2023 and December 31, 2022, the Company had pledged $3.0 billion in real estate investments, at cost 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 March 31, 2023, $2.0 billion in real estate investments, at cost were included in the unencumbered asset pool comprising the borrowing base under the Company’s revolving unsecured corporate credit facility ( see Note 5 — Credit Facility for more details). The asset pool comprising the borrowing base under the credit facility 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. In connection with refinancing certain properties, the Company may incur prepayment penalties relating to its prior debt obligations. During the three months ended March 31, 2023, the Company incurred $0.5 million of prepayment penalties. These prepayment penalties, when incurred, are included in acquisition, transaction, and other costs in the consolidated statements of operations. The Company’s mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of March 31, 2023, the Company was in compliance with financial covenants under its mortgage notes payable agreements. Combined Debt Obligation Principal Payments The following table summarizes the scheduled aggregate principal payments (based on anticipated repayment dates) on mortgage notes payable and the Company’s other debt based on anticipated repayment dates for the remainder of the year ended December 31, 2023, the five years subsequent to December 31, 2023 and thereafter: Future Principal Payments (In thousands) Mortgage Notes Credit Facility (1) Senior Notes (2) Total 2023 (remainder) (3) $ 288,181 $ — $ — $ 288,181 2024 65,672 — — 65,672 2025 707,237 — — 707,237 2026 116,917 448,000 — 564,917 2027 21,553 — — 21,553 2028 332,242 — 500,000 832,242 Thereafter 263,299 — — 263,299 $ 1,795,101 $ 448,000 $ 500,000 $ 2,743,101 ________ (1) The Credit Facility matures on April 1, 2026, subject to the Company’s right, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. See Note 5 — Credit Facility for additional information. (2) The Senior Notes mature on September 30, 2028. See Note 6 — Senior Notes, Net for additional information. (3) Subsequent to March 31, 2023, the Company fully repaid $181.8 million of mortgage notes payable with borrowings sourced from the Credit Facility. See Note 15 — Subsequent Events for additional information. The Company intends to repay the remaining $106.4 million of principal amounts scheduled for repayment during the year ended December 31, 2023 with (i) proceeds from the Credit Facility by transferring some or all of the encumbered properties to the asset pool comprising the borrowing base thereunder (as defined in N ote 5 — Credit Facility ) and (ii) cash on hand, a portion of which may be generated from future property sales. |
Credit Facility
Credit Facility | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Credit Facility | Credit Facility The Company has a credit facility (the “Credit Facility”) with BMO Harris Bank, N.A. (“BMO Bank”) as administrative agent, Citizens Bank, N.A. and SunTrust Robinson Humphrey, Inc., as joint lead arrangers, and the other lenders from time to time party thereto. On October 1, 2021, the Company entered into an amendment and restatement of the Credit Facility. Also, upon the closing of the Senior Notes (as defined in Note 6 — Senior Notes, Net ) on October 7, 2021, the Company used a portion of the proceeds to repay all outstanding borrowings under the Credit Facility at the time. The aggregate total commitments after the amendment and restatement of the Credit Facility were increased from $540.0 million to $815.0 million including a $50.0 million sublimit for letters of credit and a $55.0 million sublimit for swingline loans. The Credit Facility includes an uncommitted “accordion feature” permitting the Company, subject to certain exceptions, to increase the commitments under the Credit Facility by up to an additional $435.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions. The Credit Facility matures on April 1, 2026, subject to the Company’s right, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. Borrowings under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. The Credit Facility is supported by a pool of eligible unencumbered properties that are owned by the subsidiaries of the OP that serve as Guarantors. The Company may add or remove properties to or from this pool so long as at any time there are at least 15 eligible unencumbered properties with a value of at least $300.0 million, among other things. The amount available for future borrowings under the Credit Facility depends on the amount outstanding thereunder relative to the aggregate commitments; however, the amount the Company may borrow is limited by the financial maintenance covenants described below. The amount available for future borrowings under the Credit Facility is based on the maximum amount of total unsecured indebtedness that could be incurred while maintaining a minimum unsecured interest coverage ratio with respect to the borrowing base, in each case, as of the determination date. As of March 31, 2023, t he Company had a total borrowing capacity under the Credit Facility of $494.6 million (net of a $2.0 million letter of credit) based on the value of the borrowing base under the Credit Facility, and of this amount, $448.0 million was outstanding under the Credit Facility as of March 31, 2023 and $46.6 million remained available for future borrowings. Subsequent to March 31, 2023, the Company (i) disposed of one property formerly part of the asset pool comprising the borrowing base under the Credit Facility, (ii) added seven properties formerly encumbered under mortgage notes to the asset pool comprising the borrowing base under the Credit Facility, (iii) borrowed $173.0 million to fully repay certain mortgage notes and (iv) borrowed $18.0 million for general corporate purposes . After these borrowings and net property additions to the asset pool comprising the borrowing base under the Credit Facility, the Company had $639.0 million outstanding on its Credit Facility and $28.2 million remained available for future borrowings. See Note 15 — Subsequent Events for additional information. The Credit Facility currently requires payments of interest only prior to maturity. Borrowings under the Credit Facility bear interest at either (i) the Base Rate (as defined in the Credit Facility) plus an applicable spread ranging from 0.45% to 1.05%, or (ii) LIBOR plus an applicable spread ranging from 1.45% to 2.05%, in each case depending on the Company’s consolidated leverage ratio. In addition, (i) if the Company or the OP achieves an investment grade credit rating, the OP can elect for the spread to be based on the credit rating of the Company or the OP, and (ii) the “floor” on LIBOR is 0%. As of March 31, 2023 and December 31, 2022, the Company elected to use LIBOR for all of its borrowings under the Credit Facility and the weighted-average interest rate under the Credit Facility was 6.92% and 6.51%, respectively. Subsequent to March 31, 2023, the Company amended its Credit Facility to utilize a SOFR-based interest rate for all of its borrowings thereunder. After completing the amendment, the Company has no further exposure to LIBOR-based contracts. See Note 15 — Subsequent Events for additional information. Any subsidiary owning property that is included in the borrowing base is required to guarantee the OP’s obligations under the Credit Facility. This includes any wholly-owned domestic subsidiary of the OP that directly or indirectly owns or leases a real estate asset added to the pool of eligible unencumbered properties. For any Guarantor subsidiary of the OP, this guarantee will be released if the Company or the OP achieves an investment grade credit rating, but will again be required (i) if either the Company or the OP loses its investment grade credit rating, or (ii) with respect to any Guarantor subsidiary of the OP, for so long as the subsidiary is the primary obligor under or provides a guaranty to any holder of unsecured indebtedness. The Credit Facility contains various customary operating covenants, including covenants restricting, among other things, restricted payments (including dividends and share repurchases), the incurrence of liens, the types of investments the Company may make, fundamental changes, agreements with affiliates and changes in nature of business. The amended and restated Credit Facility also (i) continues to have financial maintenance covenants with respect to maximum consolidated leverage, maximum consolidated secured leverage, minimum fixed charge coverage, and minimum net worth, (ii) amended the maximum recourse debt to total asset value covenant to refer instead to secured recourse debt, and (iii) added new financial maintenance covenants with respect to maximum consolidated unsecured leverage and adjusted net operating income for the pool of eligible unencumbered properties required to be maintained under the Credit Facility to debt service paid on unsecured indebtedness. Under the Credit Facility, subject to certain exceptions, the Company is not permitted to pay distributions, including cash dividends on equity securities, including the Company’s 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) and 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”), in an aggregate amount exceeding 95% of AFFO (as defined in the Credit Facility) for any look-back period of four consecutive fiscal quarters without seeking consent from the lenders under the Credit Facility. However, the Credit Facility also permits the Company to pay distributions in an aggregate amount not exceeding 105% of AFFO for any applicable period if, as of the last day of the period, the Company was able to satisfy a maximum leverage ratio after giving effect to the payments and maintain a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $60.0 million. Moreover, if applicable, during the continuance of an event of default under the Credit Facility, the Company could not pay dividends or other distributions in excess of the amount necessary for the Company to maintain its status as a REIT. As of March 31, 2023, the Company was in compliance with the operating and financial covenants under the Credit Facility. LIBOR Transition In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings will continue to be published through June 30, 2023. The Company is not able to predict when there will be sufficient liquidity in the SOFR market. The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. While the Company expects LIBOR to be available in substantially its current form until at least June 30, 2023, it is possible that LIBOR will become unavailable prior to that time. This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. The Credit Facility contains language governing the establishment of a replacement benchmark index to serve as an alternative to LIBOR, when necessary. Subsequent to March 31, 2023, the Company amended its Credit Facility to utilize a SOFR-based interest rate for all of its borrowings thereunder. After completing the amendment, the Company has no further exposure to LIBOR-based contracts. See Note 15 — Subsequent Events for additional information. |
Senior Notes, Net
Senior Notes, Net | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Senior Notes, Net | Senior Notes, Net On October 7, 2021, the Company and the OP issued $500.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “Senior Notes”). The Company, the OP and their subsidiaries that guarantee the Senior Notes entered into an indenture with U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee. As of March 31, 2023 and December 31, 2022, the carrying value of the Senior Notes on the Company’s consolidated balance sheets totaled $492.7 million and $492.3 million, respectively, which is net of $7.3 million and $7.7 million of deferred financing costs, respectively. The Senior Notes, which were issued at par, will mature on September 30, 2028 and accrue interest at a rate of 4.500% per year. Interest on the Senior Notes, which began to accrue on October 7, 2021, is payable semi-annually in arrears on March 30 and September 30 of each year. The Senior Notes do not require any principal payments prior to maturity. As of March 31, 2023, the Company was in compliance with the covenants under the Indenture governing the Senior Notes. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair Value Hierarchy GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring assets and liabilities 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. 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 three months ended March 31, 2023 and 2022. Financial Instruments Measured at Fair Value on a Recurring Basis 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 this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of March 31, 2023, the Company does not have any derivatives, but would assess the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions if it had any. 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 Measured at Fair Value on a Non-Recurring Basis Real Estate Investments - Held for Sale The Company has had impaired real estate investments classified as held for sale (see Note 3 — Real Estate Investments for additional information on impairment charges recorded by the Company). However, there were no impaired real estate investments held for sale as of March 31, 2023 and December 31, 2022. The carrying value of impaired real estate investments held for sale on the consolidated balance sheets represents their estimated fair value less cost to sell. Impaired real estate investments held for sale are generally classified in Level 3 of the fair value hierarchy. Real Estate Investments - Held for Use The Company has had impaired real estate investments classified as held for use at the time of impairment (see Note 3 — Real Estate Investments for additional information on impairment charges recorded by the Company). The carrying value of these held for use impaired real estate investments on the consolidated balance sheets represents their estimated fair value at the time of impairment. The Company primarily uses a market approach to estimate the future cash flows expected to be generated. Impaired real estate investments which are held for use are generally classified in Level 3 of the fair value hierarchy. Financial Instruments that are not Reported at Fair Value The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The carrying 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 dividends payable approximates their fair value 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 are reported below: March 31, 2023 December 31, 2022 (In thousands) Level Carrying Value Fair Value Carrying Value Fair Value Gross mortgage notes payable and mortgage premiums and discounts, net (1) 3 $ 1,795,101 $ 1,650,370 $ 1,841,705 $ 1,648,505 Senior Notes 2 $ 500,000 $ 377,500 $ 500,000 $ 376,250 Credit Facility (1) 3 $ 448,000 $ 446,527 $ 458,000 $ 456,635 ________ (1) Subsequent to March 31, 2023, the Company fully repaid three mortgage notes with an aggregate carrying value of $181.8 million and an aggregate fair value of $181.4 million. Additionally, the Company borrowed $191.0 million on its Credit Facility subsequent to March 31, 2023. See Note 15 — Subsequent Events for additional information. The financial instruments noted above had lower fair values as compared to their respective carrying values as of March 31, 2023 and December 31, 2022 primarily because of increasing interest rates and widening credit spreads since the origination of the financial instruments. |
Mezzanine Equity and Total Equi
Mezzanine Equity and Total Equity | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Mezzanine Equity and Total Equity | Mezzanine Equity and Total Equity Mezzanine Equity Shares Formerly Subject to Repurchase During the three months ended March 31, 2022, as part of the CIM Portfolio Acquisition, the Company issued a total of 6,450,107 shares of its Class A common stock to the Seller which had a value of $50.0 million, for accounting purposes, using the stock prices at the respective dates of issuance. The Company was required to register the resale of these shares, which it did in April 2022, and was required to subsequently maintain the effectiveness of that resale registration through the termination of the repurchase right. Otherwise, the Company could have been required to repurchase the securities for $53.4 million. The Seller’s repurchase right terminated on August 25, 2022 (six months following the date of the final issuance). Accordingly, during the three months ended September 30, 2022, these securities were reclassified from mezzanine equity to permanent equity. The number of shares issued at the applicable closing was based on the value of the shares or units that were issuable at such closing divided by the per-share volume weighted average price of the Company’s Class A common stock measured over a five-day consecutive trading period immediately preceding (but not including) the date on which written notice for the closing was delivered, indicating the seller’s election to receive either shares or units, to the OP (the price of which was to be limited by a 7.5% collar in either direction from the per share volume weighted-average price of the Company’s Class A common stock measured over a ten-day consecutive trading period immediately preceding (but not including) the effective date of the purchase and sale agreement), which was $8.34 per share. The Company had concluded that as of December 31, 2021, this arrangement constituted an embedded derivative which required separate accounting. The initial value of the embedded derivative was an asset upon the signing of the purchase and sale agreement of $1.7 million, and was a liability of $2.3 million as of December 31, 2021. The shares were issued in two closings in the three months ending March 31, 2022 at contract prices within the collar. Accordingly, the value of the embedded derivative was considered to be zero immediately prior to closing. During the three months ended March 31, 2022, the Company reduced the prior liability at December 31, 2021 to zero at closing and recorded a gain on non-designated derivatives of $2.3 million in the consolidated statements of operations. Total Equity Common Stock As of both March 31, 2023 and December 31, 2022, the Company had 134.2 million shares, of Class A common stock outstanding including restricted shares of Class A common stock (“restricted shares”) and excluding LTIP Units. LTIP Units may ultimately be convertible into shares of Class A common stock in the future if certain conditions are met. Distribution Reinvestment Plan Effective on the listing of the Company’s Class A common stock on the Nasdaq Global Select Market (the “Nasdaq”) on July 19, 2018 (the “Listing Date”), an amendment and restatement of the then effective distribution reinvestment plan approved by the Company’s board of directors became effective (the “DRIP”). The DRIP allows stockholders who have elected to participate in the DRIP to have dividends payable with respect to all or a portion of their shares of Class A common stock reinvested in additional shares of Class A common stock. Shares issued pursuant to the DRIP represent shares that are, at the election of the Company, either (i) acquired directly from the Company, which would issue new shares, 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, or (ii) acquired through open market purchases by the plan administrator at a price 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 dividends for the related quarter, less a per share processing fee. Shares issued pursuant to the DRIP are recorded within stockholders’ equity in the accompanying consolidated balance sheets in the period dividends are declared. During the three months ended March 31, 2023 and 2022, all shares acquired by participants pursuant to the DRIP were acquired through open market purchases by the plan administrator and not acquired directly from the Company. ATM Program — Class A Common Stock In May 2019, the Company established an “at the market” equity offering program for its Class A common stock (the “Class A Common Stock ATM Program”), which was last updated in August 2022, pursuant to which the Company may from time to time, offer, issue and sell to the public up to $450.0 million in shares of Class A common stock, through sales agents. As of March 31, 2023, $254.0 million of issuable value remains available under the Class A Common Stock ATM Program. The Company did not sell any shares of Class A common stock through its Class A Common Stock ATM Program during the three months ended March 31, 2023. The Company sold 2,761,711 shares of Class A common stock through its Class A Common Stock ATM Program during the three months ended March 31, 2022, which generated $24.9 million of gross proceeds, and net proceeds of $24.5 million after commissions, fees and other offering costs incurred of $0.4 million. Preferred Stock The Company is authorized to issue up to 50,000,000 shares of preferred stock, of which it has classified and designated 12,796,000 as authorized shares of its Series A Preferred Stock, 120,000 as authorized shares of its Series B Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) and 11,536,000 as authorized shares of its Series C Preferred Stock as of March 31, 2023. • The Company had 7,933,711 shares of its Series A Preferred Stock issued and outstanding as of both March 31, 2023 and December 31, 2022. • No shares of Series B Preferred Stock were issued or outstanding as of March 31, 2023 or December 31, 2022. • The Company had 4,595,175 shares of its Series C Preferred Stock issued and outstanding as of both March 31, 2023 and December 31, 2022. ATM Program — Series A Preferred Stock In May 2019, the Company established an “at the market” equity offering program for its Series A Preferred Stock (the “Series A Preferred Stock ATM Program”), which was last updated in August 2021, pursuant to which the Company may, from time to time, offer, issue and sell to the public, through sales agents, shares of the Series A Preferred Stock having an aggregate offering price of up to $200.0 million. The Company did not sell any shares of its Series A Preferred Stock under the Series A Preferred Stock ATM Program during the three months ended March 31, 2023 or 2022. ATM Program — Series C Preferred Stock In January 2021, the Company established an “at the market” equity offering program for its Series C Preferred Stock (the “Series C Preferred Stock ATM Program”), which was last updated in August 2021, pursuant to which the Company may, from time to time, offer, issue and sell to the public, through sales agents, shares of the Series C Preferred Stock having an aggregate offering price of up to $200.0 million. The Company did not sell any shares of its Series C Preferred Stock under the Series C Preferred Stock ATM Program during the three months ended March 31, 2023 or 2022. Stockholder Rights Plan In April 2020, the Company announced that its board of directors approved a stockholder rights plan (the “Plan”) to protect the long-term interests of the Company. The Company adopted the Plan due to the substantial volatility in the trading of the Company’s Class A common stock that resulted from the COVID-19 pandemic. The adoption of the Plan is intended to allow the Company to realize the long-term value of the Company’s assets by protecting the Company from the actions of third parties that the Company’s board of directors determines are not in the best interest of the Company. The Company’s Plan is designed to reduce the likelihood that any person or group (including a group of persons that are acting in concert with each other) would gain control of the Company through open market accumulation of stock by imposing significant penalties upon any person or group that acquires 4.9% or more of the outstanding shares of Class A common stock without the approval of the Company’s board of directors. In connection with the adoption of the Plan, the Company’s board of directors authorized a dividend of one preferred share purchase right for each outstanding share of Class A common stock to stockholders of record on April 23, 2020 to purchase from the Company one one-thousandth of a share of Series B Preferred Stock for an exercise price of $35.00 per one-thousandth of a share, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. By the terms of the Plan, the rights will initially trade with Class A common stock and will generally only become exercisable on the 10th business day after the Company’s board of directors becomes aware that a person or entity has become the owner of 4.9% or more of the shares of Class A common stock or the commencement of a tender or exchange offer which would result in the offeror becoming an owner of 4.9% or more of the Class A common stock. In February 2021, the expiration date of these rights was extended to April 12, 2024 unless earlier exercised, exchanged, amended, redeemed or terminated. Non-Controlling Interest Non-controlling interests resulted from the issuance of 172,921 OP Units to an external party in conjunction with the Merger with American Realty Capital-Retail Centers of America, Inc. (“RCA”) in February 2017 (the “Merger”) and were originally recognized at fair value as of the effective time of the Merger on February 16, 2017. In addition, under the 2021 OPP, the OP issued LTIP Units, which are also reflected as part of non-controlling interest. See Note 12 — Equity Based Compensation - Multi-Year Outperformance Agreement for more information regarding the LTIP Units and related accounting. As of March 31, 2023 and December 31, 2022, non-controlling interest was comprised of the following components: (In thousands) March 31, 2023 December 31, 2022 Non-controlling interest attributable to LTIP Units $ 24,248 $ 21,072 Non-controlling interest attributable to Class A Units 1,541 1,565 Total non-controlling interest $ 25,789 $ 22,637 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lessee Arrangements - Ground Leases The Company is a lessee in ground lease agreements for seven of its properties. The ground leases have lease durations, including assumed renewals, ranging from 14.8 years to 32.4 years as of March 31, 2023. The classification of these leases were grandfathered in by adoption of ASU 842, whereby they will continue to be classified as operating leases unless modified. As of March 31, 2023, the Company’s balance sheet includes operating lease right-of-use assets and operating lease liabilities of $17.7 million and $19.1 million, respectively. In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the initial adoption of the new lease guidance in 2019, as well as for new operating leases entered into after adoption, the Company estimated an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Because the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment. The Company did not enter into any additional ground leases during the three months ended March 31, 2023. The Company’s operating ground leases have a weighted-average remaining lease term, including assumed renewals, of 25.9 years and a weighted-average discount rate of 7.5% as of March 31, 2023. For the three months ended March 31, 2023 and 2022, the Company paid cash of $0.4 million and $0.3 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $0.5 million and $0.5 million, respectively. The lease expense is recorded on a straight-line basis in property operating expenses in the consolidated statements of operations. The following table reflects the base cash rental payments due from the Company as of March 31, 2023: (In thousands) Future Base Rent Payments 2023 (remainder) $ 1,196 2024 1,560 2025 1,598 2026 1,628 2027 1,647 Thereafter 41,083 Total lease payments 48,712 Less: Effects of discounting (29,602) Total present value of lease payments $ 19,110 Litigation and Regulatory Matters Merger Litigation On October 26, 2018, Terry Hibbard, a purported stockholder of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, against the Company, AR Global, the Advisor, both individuals who previously served as the Company’s chief executive officer and chair of the board of directors (the “Former Chairmen”), the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger (the “Hibbard Action”). All of the directors immediately prior to the Merger, except for David Gong, served as directors of the Company. The complaint alleged that the registration statement pursuant to which RCA shareholders acquired shares of the Company during the Merger contained materially incomplete and misleading information. The complaint asserted violations of Section 11 of the Securities Act of 1933, as amended (the “Securities Act”) against the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger, violations of Section 12(a)(2) of the Securities Act against the Company and the Company’s current chief executive officer, president and chair of the board of directors, and control person liability against the Advisor, AR Global and the Former Chairmen under Section 15 of the Securities Act. The complaint sought unspecified damages and rescission of the Company’s sale of stock pursuant to the registration statement. On March 6, 2019, Susan Bracken, Michael P. Miller and Jamie Beckett, purported stockholders of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, on behalf of themselves and others who purchased shares of common stock through the Company’s then effective distribution reinvestment plan, against the Company, AR Global, the Advisor, the Former Chairmen, the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger. The allegations, causes of action and remedies sought were similar to those in the Hibbard Action. On April 30, 2019, Lynda Callaway, a purported stockholder of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, against the Company, AR Global, the Advisor, the Former Chairmen, the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger. The allegations, causes of action and remedies sought were similar to those in the Hibbard Action. On July 11, 2019, the New York State Supreme Court issued an order consolidating the three above-mentioned cases: Terry Hibbard, Bracken, and Callaway (the “Consolidated Cases”). The Court also stayed the Consolidated Cases pending a decision on the motions to dismiss in an action involving similar claims pending in the United States District Court for the Southern District of New York. Following the federal court’s decision dismissing that action on October 31, 2019, the plaintiffs filed an amended consolidated class action complaint in the Consolidated Cases seeking substantially similar remedies from the same defendants. The Company moved to dismiss the amended consolidated complaint on December 16, 2019. After the parties completed briefing on this motion, the United States Court of Appeals for the Second Circuit issued its decision affirming dismissal of the federal action. The plaintiffs moved to amend their complaint, purportedly to limit it to claims still viable in spite of the results of the federal action. The proposed second amended complaint no longer contains direct claims against the Company. Instead, the plaintiffs seek to pursue state law claims derivatively against the Advisor, AR Global, the Company’s initial chief executive officer and chair of the board of directors, the Company’s current directors and David Gong, a former director, with the Company as a nominal defendant. On December 20, 2021, the Court denied the plaintiffs’ motion to amend and dismissed the litigation. On January 26, 2022, the plaintiffs filed a notice of appeal from the Court’s decision. In a decision and order entered on March 9, 2023, the Supreme Court of the State of New York, Appellate Division, First Department, affirmed the dismissal of the complaint. During the three months ended March 31, 2023, the Company incurred $0.1 million in litigation costs related to the above matters. No such amounts were incurred in the three months ended March 31, 2022. A portion of these litigation costs were subject to a claim for reimbursement under the insurance policies maintained by the Company (the “Policies”). There were no such reimbursements recorded during the three months ended March 31, 2023 or 2022. The Policies were subject to other claims that had priority over the Company’s claim for reimbursement, and have been exhausted. Blackwells Litigation On December 19, 2022, the Company filed a complaint against Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore (together with Blackwells Capital, “Blackwells”), and certain others involved with Blackwells’ proxy solicitation (collectively the “Defendants”), captioned Global Net Lease, Inc. v. Blackwells Capital LLC, et al., No. 1:22-cv-10702 (Dec. 19, 2022), in the United States District Court for the Southern District of New York. The complaint alleges that Blackwells and the other Defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by omitting or misstating material information in materials filed by the Defendants. The complaint seeks, among other things, to (i) declare that the proxy materials filed by Blackwells violate Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, (ii) order Blackwells and the other Defendants to publicly correct their material misstatements or omissions, (iii) enjoin Blackwells and the other Defendants from publishing any soliciting materials until each of them files corrective statements to address the material misstatements or omissions, and (iv) preliminarily and permanently enjoin Blackwells and the other Defendants from committing any further violations of federal securities law. In addition, on December 19, 2022, Blackwells Onshore filed a complaint against the Company and another defendant captioned Blackwells Onshore I LLC v. Global Net Lease, Inc., et al., No. 24C22005195, in the Circuit Court of Maryland for Baltimore City. The complaint alleges that the Company committed a breach of contract and violated its duties under Maryland law by rejecting the purported nomination of two persons to the Company’s board proposed by Blackwells and various proposals which Blackwells seeks to have considered at the Company’s 2023 annual meeting of stockholders. The complaint seeks, among other things, (i) to enjoin the Company from interpreting its bylaws in a fashion that would preclude Blackwells Onshore from nominating two candidates for election to the Company’s board, (ii) to declare that the Company’s bylaws do not preclude Blackwells Onshore’s nominees or business proposals, (iii) to declare the previously announced Second Amendment to the Company’s bylaws void and unenforceable, (iv) to enjoin the Company from taking any steps to reject the nominations made by Blackwells Onshore and require the Company to count votes cast in favor of any of the persons nominated by Blackwells Onshore, and (v) unspecified damages for purported breach of the bylaws. The Company intends to vigorously defend against the claims. On March 10, 2023, the Company filed a motion for a preliminary injunction seeking to enjoin Defendants from publishing any soliciting materials, or soliciting until they file corrective statements; and enjoining them from making false statements about the absence of any joint venture between Blackwells and Related. The Court denied the preliminary injunction motion on May 3, 2023. On May 4, 2023, the Company filed a notice of appeal with the Court of Appeals for the Second Circuit. On April 21, Blackwells filed a motion in the Circuit Court of Maryland for Baltimore City for a preliminary injunction seeking to enjoin the Company from, among other things, (i) refusing to count votes in favor of Blackwells nominees; (ii) refusing to seat Blackwells’ nominees should they be elected; and (iii) communicating that Blackwells’ nominees are invalid or otherwise improperly nominated. The Company has filed its opposition to the preliminary injunction motion. The Court has not yet set a date for a hearing. Other Litigation 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. As of March 31, 2023, the Company had 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 | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Related Party Transactions and Arrangements Fees and Participations Incurred in Connection with the Operations of the Company Summary of Advisory Agreement The initial term of the Advisory Agreement expires on April 29, 2035. This term is automatically renewed for successive 20-year terms upon expiration unless the Advisory Agreement is terminated (1) in accordance with an Internalization (as defined below), (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 Advisory Agreement or (b) any material breach of the 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 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. The Advisory Agreement grants the Company the right to internalize the services provided under the Advisory Agreement (“Internalization”) and to terminate the Advisory Agreement pursuant to a notice received by the Advisor as long as (i) more than 67% of the Company’s independent directors have approved the Internalization; and (ii) the Company pays the Advisor an Internalization fee equal to (1) $15.0 million plus (2) either (x) if the Internalization occurs on or before December 31, 2028, the Subject Fees (as defined below) multiplied by 4.5 or (y) if the Internalization occurs on or after January 1, 2029, the Subject Fees multiplied by 3.5 plus (3) 1.0% multiplied by (x) the purchase price of properties or other investments acquired after the end of the fiscal quarter in which the notice of Internalization is received by the Advisor and prior to the Internalization and (y) without duplication, the cumulative net proceeds of any equity raised by the Company during the period following the end of the fiscal quarter in which notice is 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 (including both the fixed and variable portion thereof) 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 Class A common stock subject to certain conditions. In-Sourced Expenses The Advisor is reimbursed for costs it incurs in providing investment-related services, or “in-sourced expenses.” These in-sourced expenses may not exceed 0.5% of the contract purchase price of each acquired property or 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 expenses, including in-sourced expenses, may not exceed 4.5% of the contract purchase price of the Company’s portfolio or 4.5% of the amount advanced for all loans or other investments and this threshold has not been exceeded through March 31, 2023. The Company did not incur any acquisition expenses and related cost reimbursements for the three months ended March 31, 2023 and incurred $0.2 million of acquisition expenses and related cost reimbursements for the three months ended March 31, 2022. Asset Management Fees and Incentive Management Fees The Company pays the Advisor a base management fee, which includes a fixed and variable portion, and, if certain performance thresholds are met, an incentive variable management fee. Under the Advisory Agreement, the fixed portion of the base management fee is $24.0 million annually. If the Company acquires (whether by merger, consolidation or otherwise) any other REIT, that is advised by an entity that is wholly-owned, directly or indirectly, by AR Global, other than any joint venture, (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 for the first year following the Specified Transaction, 0.0047 for the second year and 0.0062 thereafter. The variable portion of the base management fee is a monthly fee equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity raised by the Company and its subsidiaries from and after the initial effective date of the Advisory Agreement on February 16, 2017. Base management fees, including the variable portion, are included in asset management fees to related party on the consolidated statements of operations. The Company incurred $8.0 million and $7.8 million during the three months ended March 31, 2023 and 2022, respectively, in asset management fees (including both the fixed and variable portion) and incentive management fees. In addition, under the Advisory Agreement, the Company is required to pay the Advisor an incentive 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 (as defined below) per share in excess of $0.275 per share plus (y) 10.0% of the applicable quarter’s Core Earnings per share in excess of $0.3125 per share, in each case as adjusted for changes in the number of shares of common stock outstanding. The definition of Adjusted Outstanding Shares (as defined in the Advisory Agreement), which is used to calculate Core Earnings per share, is based on the Company’s reported diluted weighted-average shares outstanding. 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 incentive 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 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 the approval of a majority of the independent directors). The incentive 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 any incentive management fees for the three months ended March 31, 2023 and 2022. Property Management Fees The Company has a property management agreement (the “Multi-Tenant Property Management Agreement”), a leasing agreement (the “Multi-Tenant Leasing Agreement”) and a net lease property management and leasing agreement (the “Net Lease Property Management Agreement”) with the Property Manager. The Multi-Tenant Property Management Agreement, the Multi-Tenant Leasing Agreement and the Net Lease Property Management Agreement each became effective on February 16, 2017. In connection with the Net Lease Mortgage Notes, the Issuers have entered into the Property Management and Servicing Agreement (as amended from time to time, the “ABS Property Management Agreement”), with the Property Manager, KeyBank National Association (“KeyBank”), as back-up property manager, and Citibank, N.A. as indenture trustee. See Note 4 — Mortgage Notes Payable, Net for additional information regarding the Notes. 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 the Company’s multi-tenant properties, which are generally anchored, retail properties, such as power centers and lifestyle centers. In December 2017, in connection with a $210.0 million mortgage loan secured by 12 of the Company’s 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 entitles the Property Manager to a management fee equal to 4.0% 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 15.0% administrative charge for common area expenses. In addition, the Property Manager is entitled to a one-time transition fee of up to $2,500 for each multi-tenant property managed, a construction fee equal to 6.0% 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. The Company’s double- and triple-net leased single-tenant properties are managed by the Property Manager pursuant to the Net Lease Property Management Agreement, unless they are subject to a separate agreement with the Property Manager. The Net Lease Property Management Agreement permits the Property Manager to subcontract its duties to third parties and provides 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. In July 2020, in connection with the loan agreement with Column Financial, Inc., all but one of the Company’s borrower subsidiaries entered into a new property management and leasing agreement with the Property Manager with respect to all but one of the mortgaged properties, all of which are double- and triple-net leased single-tenant properties. The Company’s other double- and triple-net leased single-tenant properties, including the one mortgaged property excluded from the new property management and leasing agreement, are managed by the Property Manager pursuant to the Net Lease Property Management Agreement. The new property management and leasing agreement is identical to the Net Lease Property Management Agreement, except that the new property management and leasing agreement does not permit the Property Manager to subcontract its duties to third parties. The initial term of the Net Lease Property Management Agreement ended on October 1, 2021, and has been and will be automatically renewed for successive one-year terms unless terminated 60 days prior to the end of a term or terminated for cause. The Multi-Tenant Property Management Agreement and the Multi-Tenant Leasing Agreement each expire on the later of (i) November 4, 2025 and (ii) the termination date of the Advisory Agreement. These agreements with the Property Manager may only be terminated for cause prior to the end of the term. Additionally, during the second quarter of 2022, certain subsidiaries of the OP each entered into a property management agreement with the Property Manager in connection with debt assumptions related to the acquisition of the properties of the CIM Portfolio Acquisition. Each property management agreement entitles the Property Manager to a management fee equal to 4.0% of the gross rental receipts from the 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 15.0% administrative charge for common area expenses. In addition, under these property management agreements, the Property Manager is entitled to a construction fee equal to 6.0% 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 properties. Property Management and Services Agreement - Net Lease Mortgage Notes Under the ABS Property Management Agreement, the Property Manager is responsible for servicing and administering the properties and leases securing the Net Lease Mortgage Notes under ordinary and special circumstances, and KeyBank, as the back-up property manager, is responsible for, among other things, maintaining current servicing records and systems for the assets securing the Net Lease Mortgage Notes in order to enable it to assume the responsibilities of the Property Manager in the event the Property Manager is no longer the property manager and special servicer. Pursuant to the ABS Property Management Agreement, the Property Manager may also be required to advance principal and interest payments on the Net Lease Mortgage Notes to preserve and protect the value of the applicable assets. The Issuers are required to reimburse any of these payments or advances. Pursuant to the ABS Property Management Agreement, as amended and restated in connection with the issuance of the 2021 Net Lease Mortgage Notes in June 2021, for all properties that are not specially serviced, the Issuers are required to pay the Property Manager a monthly fee equal to the product of (i) one-twelfth of 0.25% and (ii) the lower of (a) the aggregate allocated loan amounts and (b) the aggregate collateral value of the properties that are a part of the collateral pool. Prior to the amendment and restatement of the ABS Property Management Agreement, for all properties that were not specially serviced, the Issuers were required to pay the Property Manager a monthly fee equal to the product of (i) one-twelfth of 0.25%, and (ii) the aggregate allocated loan amounts of all the properties that serve as part of the collateral for the Net Lease Mortgage Notes. With respect to the specially serviced properties, the Property Manager is entitled to receive a workout fee or liquidation fee under certain circumstances based on 0.50% of applicable amounts recovered, as well as a monthly fee equal to the product of (i) one-twelfth of 0.75% and (ii) the lower of (a) the aggregate allocated loan amounts and (b) the aggregate collateral value of all the specially serviced properties that are part of the collateral pool. Prior to the amendment and restatement of the ABS Property Management Agreement, the monthly fee for specially serviced properties was equal to the product of (i) one-twelfth of 0.75%, and (ii) the aggregate allocated loan amounts of all the specially serviced properties that serve as part of the collateral pool for the Net Lease Mortgage Notes. The Property Manager has retained KeyBank as a sub-manager pursuant to a separate sub-management agreement pursuant to which KeyBank provides certain services that the Property Manager is required to provide as property manager under the ABS Property Management Agreement. Under the ABS Property Management Agreement, the Property Manager has agreed to waive (i) the portion of the monthly fee related to the properties that are not specially serviced that is in excess of the amount to be paid to KeyBank as sub-manager pursuant to the sub-management agreement, (ii) the workout fee, (iii) the liquidation fee and (iv) the monthly fee related to the properties that are specially serviced, although the Property Manager retains the right to revoke these waivers at any time. The Property Manager is also entitled to receive additional servicing compensation related to certain fees and penalties under the leases it is responsible for under the ABS Property Management Agreement. The services provided by the Property Manager with respect to the double- and triple-net leased single-tenant properties in the collateral pool and related property management fees are separate and independent from the property management services the Property Manager has provided and will continue to provide with respect to those properties pursuant to the Net Lease Property Management Agreement. Professional Fees and Other Reimbursements The Company reimburses the Advisor’s costs of providing administrative services, including among other things, reasonable allocation of salaries and wages, benefits and overhead of employees of the Advisor or its affiliates, except for costs to the extent that the employees perform services for which the Advisor receives a separate fee. The reimbursement includes reasonable overhead expenses, including the reimbursement of an allocated portion 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 as part of Professional fees and other reimbursements in the table below and in general and administrative expense in the consolidated statements of operations. During the three months ended March 31, 2023 and 2022, the Company incurred $3.6 million and $2.7 million, respectively, (which includes $1.0 million and $0.5 million, respectively, of compensation and overhead costs related to the Multi-Tenant Property Management Agreement which is not subject to the Capped Reimbursement Amount under the Advisory Agreement, discussed below) of reimbursement expenses to the Advisor for providing administrative services. Under the Advisory Agreement, the Company is required to reimburse the Advisor for a portion of the salary, wages, and benefits paid to the Company’s chief financial officer as part of the aggregate reimbursement for salaries, wages and benefits of employees of the Advisor or its affiliates, excluding any executive officer who is also a partner, member or equity owner of AR Global and subject to a limit on certain limitations. The aggregate amount that may be reimbursed under the Advisory Agreement in each fiscal year for salaries, wages and benefits (excluding overhead) of employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”) for each fiscal year is subject to a limit that is equal to the greater of: (a) a fixed component (the “Fixed Component”); and (b) a variable component (the “Variable Component”). Both the Fixed Component and the Variable Component increase by an annual cost of living adjustment equal to the greater of (x) 3.0% and (y) the CPI (as defined in the Advisory Agreement) for the prior year ended December 31. Initially, for the year ended December 31, 2019: (a) the annual Fixed Component was equal to $7.0 million; and (b) the Variable Component was equal to: (i) the sum of the total real estate investments, at cost as recorded on the balance sheet dated as of the last day of each fiscal quarter (the “Real Estate Cost”) in the year divided by four, which amount is then (ii) multiplied by 0.20%. As of March 31, 2023 and December 31, 2022, the annual Fixed Component was $8.1 million and $7.7 million, respectively. If the Company sells real estate investments aggregating an amount equal to or more than 25% of Real Estate Cost in one or a series of related dispositions in which the proceeds of the disposition(s) are not reinvested in Investments (as defined in the Advisory Agreement), then within 12 months following the disposition(s), the Advisory Agreement requires the Advisor and the Company to negotiate in good faith to reset the Fixed Component; provided that if the proceeds of the disposition(s) are paid to stockholders of the Company as a special distribution or used to repay loans with no intent of subsequently refinancing and reinvesting the proceeds thereof in Investments, the Advisory Agreement requires these negotiations within 90 days thereof, in each case taking into account reasonable projections of reimbursable costs in light of the reduced assets of the Company. Summary of Fees, Expenses and Related Payables The following table details amounts incurred and payable to related parties in connection with the operations-related services described above as of and for the periods presented: Three Months Ended March 31, Payable (Receivable) as of (In thousands) 2023 2022 March 31, December 31, Non-recurring fees and reimbursements: Acquisition cost reimbursements (1) $ — $ 203 $ — $ 9 Ongoing fees: Asset management fees to related party (2) 7,956 7,826 — — Property management and leasing fees (3) 4,545 1,914 1,441 1,302 Professional fees and other reimbursements (4) 4,118 3,294 125 527 Total related party operating fees and reimbursements $ 16,619 $ 13,237 $ 1,566 $ 1,838 ______ (1) Amounts included in acquisition and transaction related expenses in the consolidated statements of operations. (2) There were no incentive management fees earned in these periods. (3) Amounts included in property operating expenses in the consolidated statements of operations, with the exception of approximately $1.6 million and $0.3 million of leasing fees incurred in the three months ended March 31, 2023 and 2022, respectively, which were capitalized and are included in deferred costs, net in the consolidated balance sheets. A portion of leasing fees are ultimately paid to a third party. Property management fees increased significantly throughout the year ended December 31, 2022, related to fees on the CIM Portfolio Acquisition for each property acquired. (4) Amounts included in general and administrative expense in the consolidated statements of operations. Includes amounts for directors’ and officers’ insurance. |
Economic Dependency
Economic Dependency | 3 Months Ended |
Mar. 31, 2023 | |
Economic Dependency [Abstract] | |
Economic Dependency | Economic Dependency Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting and legal services, human resources and information technology. As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Equity Plans 2018 Equity Plan 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” and together with the Advisor Plan, the “2018 Equity Plan”). The Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Under the Individual Plan, the Company may only make awards to its 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, under the Advisor Plan the Company may only make awards to the Advisor. The 2018 Equity Plan succeeded and replaced the existing employee and director restricted share plan (the “RSP”). Following the effectiveness of the 2018 Equity 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, remained outstanding in accordance with their terms and the terms of the RSP until all those awards are vested, forfeited, canceled, expired or otherwise terminated in accordance with their terms. The Company accounts for forfeitures when they occur. The 2018 Equity Plan permits awards of restricted shares, restricted stock units (“RSUs”), options, stock appreciation rights, stock awards, LTIP Units and other equity awards. The 2018 Equity Plan has a term of 10 years, expiring on July 19, 2028. Identical to the RSP, the number of shares of the Company’s capital stock available for awards under the 2018 Equity Plan, in the aggregate, is equal to 10.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa. If any awards granted under the 2018 Equity Plan are forfeited for any reason, the number of forfeited shares is again available for purposes of granting awards under the 2018 Equity Plan. Restricted Shares Restricted shares are shares of common stock awarded under terms that provide for vesting over a specified period of time. Holders of restricted shares may receive non-forfeitable cash dividends prior to the time that the restrictions on the restricted shares have lapsed. Any dividends to holders of restricted shares payable in shares of common stock are subject to the same restrictions as the underlying restricted shares. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Prior to June 30, 2020, the Company only granted restricted shares to the Company’s directors. Since then, the Company has granted restricted shares to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial officer, and certain consultants to the Company and the Advisor or its affiliates. No awards may be made to anyone who is also a partner, member or equity owner of the parent of the Advisor. No restricted shares were granted by the Company in the three months ended March 31, 2023. The restricted shares granted to the Company’s directors vest on a straight-line basis over periods of one year to five years from the date of grant and provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s termination of his or her position as a director of the Company due to a voluntary resignation or failure to be re-elected to the Company’s board of directors following nomination therefor. All unvested restricted shares held by the Company’s directors also vest in the event of a Change of Control (as defined in the RSP or the Individual Plan) or a termination of a directorship without cause or as a result of death or disability. The restricted shares granted to employees of the Advisor or its affiliates vest in 25% increments on each of the first four The following table reflects the activity of restricted shares for the three months ended March 31, 2023: Number of Shares of Common Stock Weighted-Average Grant Price Unvested, December 31, 2022 508,677 $ 7.93 Granted — — Vested — — Forfeited — — Unvested, March 31, 2023 508,677 $ 7.93 As of March 31, 2023, the Company had $2.2 million of unrecognized compensation cost related to unvested restricted share awards granted, which is expected to be recognized over a weighted-average period of 2.7 years. The fair value of restricted shares are expensed in accordance with the service period required. Compensation expense related to restricted shares is included in equity-based compensation on the accompanying consolidated statements of operations. Compensation expense related to restricted shares was approximately $0.4 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. Restricted Stock Units RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and 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 other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of common stock. The Company has not granted any RSUs, and no unvested RSUs were outstanding for the three months ended March 31, 2023 or 2022. Multi-Year Outperformance Agreements 2021 OPP On May 4, 2021, the Company’s independent directors authorized an award of LTIP Units under the 2021 OPP which was entered into on July 21, 2021. Based on a maximum award value of $72.0 million and the Initial Share Price of $8.4419, which was determined on July 20, 2021, the Advisor was granted a total of 8,528,885 LTIP Units pursuant to the 2021 OPP. These LTIP Units may be earned and become vested based on the Company’s total shareholder return (“TSR”), including both share price appreciation and reinvestment of Class A common stock dividends, compared to the Initial Share Price over a performance period commencing on July 20, 2021 and ending on the earliest of (i) July 20, 2024, (ii) the effective date of any Change of Control (as defined in the Advisor Plan) and (iii) the effective date of any termination of the Advisor’s services as the Company’s advisor. The amortization of the fair value of the LTIP Units that were granted will be recorded evenly over the requisite service period which is approximately 38.5 months from May 4, 2021, the date that the Company’s independent board of directors approved the award of LTIP Units under the 2021 OPP, through July 20, 2024, the end of the performance period. Compensation Expense - 2021 OPP During the three months ended March 31, 2023 and 2022, the Company recorded equity-based compensation expense related to the LTIP Units of $3.2 million in each period. These expenses are recorded in equity-based compensation in the unaudited consolidated statements of operations. As of March 31, 2023, the Company had $16.6 million of unrecognized compensation expense related to the LTIP Units awarded under the 2021 OPP which is expected to be recognized over a period of 1.3 years. LTIP Units Distributions/Redemptions The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are entitled to distributions on the LTIP Units equal to 10% of the distributions made per Class A Unit (other than distributions of sale proceeds) until the LTIP Units are earned. Distributions paid on a Class A Unit are equal to dividends paid on a share of Class A common stock. Distributions paid on LTIP Units are not subject to forfeiture, even if the LTIP Units are ultimately forfeited. The Advisor is entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on Class A Units during the applicable performance period. Any LTIP Units that are earned become entitled to receive the same distributions paid on Class A Units. If and when the Advisor’s capital account with respect to an earned LTIP Unit is equal to the capital account balance of a Class A Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, is entitled to convert the LTIP Unit into a Class A Unit, which may in turn be redeemed on a one-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof. The Company paid distributions on LTIP Units of $0.2 million for both the three months ended March 31, 2023 and 2022. These amounts are recorded in the Company’s consolidated statements of changes in equity. Performance Measures As indicated above, on July 19, 2021, at the end of the performance period, the compensation committee of the Company’s board of directors determined that none of the 4,496,796 LTIP Units under the 2018 OPP had been earned. These LTIP Units were thus automatically forfeited effective as of July 19, 2021, without the payment of any consideration by the Company or the OP. With respect to one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute TSR levels as shown in the table below. Performance Level Absolute TSR Percentage of LTIP Units Earned Number of LTIP Units Earned Below Threshold Less than 18 % 0 % 0 Threshold 18 % 25 % 1,066,110.625 Target 24 % 50 % 2,132,221.250 Maximum 36 % or higher 100 % 4,264,442.500 If the Company’s absolute TSR is more than 18% but less than 24%, or more than 24% but less than 36%, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively. With respect to the remaining one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group (consisting of Broadstone Net Lease, Inc., Office Properties Income Trust, RPT Realty and Spirit Realty Capital, Inc.) as of the last day of the performance period as follows: Performance Level Relative TSR Excess Percentage of LTIP Units Earned Number of LTIP Units Earned Below Threshold Less than -600 Basis points 0 % 0 Threshold -600 Basis points 25 % 1,066,110.625 Target 0 Basis points 50 % 2,132,221.250 Maximum +600 Basis points 100 % 4,264,442.500 If the relative TSR excess is more than -600 basis points but less than zero basis points, or more than zero basis points but less than +600 basis points, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively. Other Terms In the case of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), the number of LTIP Units that become earned will be calculated based on actual 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 prorated to reflect a performance period of less than three years but without prorating the number of LTIP Units that may become earned to reflect the shortened performance period. In the case of a termination of the Advisor for Cause, the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR and the number of LTIP Units that may become earned each prorated to reflect a performance period of less than three years. Pursuant to the terms of the Advisor Plan, the LTIP Units will be administered by the Company’s board or a committee thereof, defined as the “Committee” in the Advisor Plan. Promptly following the performance period, the Committee will, except in certain circumstances, determine the number of LTIP Units earned (if any) based on calculations prepared by an independent consultant engaged by the Committee and as approved by the Committee in its reasonable and good faith discretion. The Committee also must approve the transfer of any LTIP Units or any Class A Units into which LTIP Units may be converted in accordance with the terms of the agreement of limited partnership of the OP. Any LTIP Units that are not earned will automatically be forfeited effective as of the end of the performance period and neither the Company nor the OP will be required to pay any future consideration in respect thereof. Director Compensation Under the current director compensation program, on a regular basis, each independent director receives 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. The lead independent director receives an additional annual cash retainer of $100,000, the chair of the audit committee of the Company’s board of directors receives an additional annual cash retainer of $30,000, each other member of the audit committee receives an additional annual cash retainer of $15,000, the chair of each of the compensation committee and the nominating and corporate governance committee of the Company’s board of directors receives an additional annual cash retainer of $15,000, and each other member of each of the compensation committee and the nominating and corporate governance committee receives an additional annual cash retainer of $10,000. Other Equity-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. If the Company did so, there would be no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no shares of common stock issued to directors in lieu of cash compensation during the three months ended March 31, 2023 and 2022. |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net (Loss) Income Per Share | Net (Loss) Income Per Share The following table sets forth the basic and diluted net loss per share computations: Three Months Ended March 31, (In thousands, except share and per share amounts) 2023 2022 Net (loss) income attributable to common stockholders $ (18,757) $ 39,934 Adjustments to net (loss) income for common share equivalents (326) (206) Adjusted net (loss) income attributable to common stockholders $ (19,083) $ 39,728 Weighted-average shares outstanding — Basic 133,715,627 128,640,845 Weighted-average shares outstanding — Diluted 133,715,627 130,048,111 Net (loss) income per share attributable to common stockholders — Basic and Diluted $ (0.14) $ 0.31 Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares, Class A Units and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above excludes the distributions to the unvested restricted shares, Class A Units and the unearned LTIP Units that were issued under the 2021 OPP from the numerator. Diluted net income per share assumes the conversion of all common stock share equivalents into an equivalent number of shares of common stock, unless the effect is antidilutive. The Company considers unvested restricted shares, Class A Units and unvested LTIP Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share as their effect would have been antidilutive for the periods presented: Three Months Ended March 31, 2023 2022 Unvested restricted shares (1) 508,677 422,218 Class A Units (2) 172,921 172,921 2021 LTIP Units (3) 8,528,885 7,121,619 Total 9,210,483 7,716,758 _______ (1) Weighted-average number of unvested restricted shares outstanding for the periods presented. There were 508,677 and 422,108 unvested restricted shares outstanding as of March 31, 2023 and 2022, respectively. (2) Weighted-average number of Class A Units outstanding for the periods presented. There were 172,921 Class A Units outstanding as of March 31, 2023 and 2022. (3) Weighted-average number of 2021 LTIP Units outstanding for the periods presented. There were 8,528,885 2021 LTIP Units outstanding as of March 31, 2023 and 2022. For more information see Note 12 — Equity-Based Compensation. Under the relative TSR portion of the 2021 OPP award, 1,407,266 LTIP Units would have been issued had March 31, 2022 been the end of the measurement period and these units were included in the calculation for diluted EPS purposes. If dilutive, conditionally issuable shares relating to the 2021 OPP award would be included, as applicable, in the computation of fully diluted earnings per share on a weighted-average basis for the three months ended March 31, 2023 and 2022 based on shares that would be issued if the applicable balance sheet date was the end of the measurement period. No LTIP Unit share equivalents were included in the computation for the three ended March 31, 2023 because (i) no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2021 OPP) at March 31, 2023 or (ii) the Company recorded a net loss attributable to common stockholders for the period, thus any shares conditionally issuable under the LTIP Units would be antidilutive. Under the relative TSR portion of the 2021 OPP award, 1,407,266 LTIP Units would have been issued had March 31, 2022 been the end of the measurement period, and the Company recorded net income attributable to common stockholders for the period. Accordingly, these 1,407,266 LTIP Units were included in the calculation for diluted EPS purposes. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting As of March 31, 2023, the Company concluded it operates in two reportable segments consistent with its current management internal financial reporting purposes: single-tenant properties and multi-tenant properties. The Company evaluates performance and make resource allocations based on its two business segments. Net Operating Income The Company evaluates the performance of the combined properties in each segment based on net operating income (“NOI”). NOI is defined as total revenues from tenants, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net (loss) income. The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net (loss) income. NOI excludes certain components from net (loss) income in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. The Company believes that in order to facilitate a clear understanding of the Company’s operating results, NOI should be compared with net (loss) income prepared in accordance with GAAP and as presented in the Company’s consolidated financial statements. NOI should not be considered as an alternative to net (loss) income as an indication of the Company’s performance or to cash flows as a measure of the Company’s liquidity or ability to pay distributions. The following table reconciles the segment activity to consolidated net loss (income) for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 (In thousands) Single-Tenant Properties Multi-Tenant Properties Consolidated Single-Tenant Properties Multi-Tenant Properties Consolidated Revenue from tenants $ 46,166 $ 67,428 $ 113,594 $ 53,282 $ 41,661 $ 94,943 Property operating expense 4,450 22,463 26,913 3,924 15,215 19,139 NOI $ 41,716 $ 44,965 86,681 $ 49,358 $ 26,446 75,804 Asset management fees to related party (7,956) (7,826) Impairment of real estate investments — (5,942) Acquisition, transaction and other costs (565) (279) Equity-based compensation (3,567) (3,498) General and administrative (10,492) (6,833) Depreciation and amortization (54,182) (37,688) Gain on sale of real estate investments 11,792 53,569 Interest expense (34,675) (23,740) Other income 27 18 Gain on non-designated derivatives — 2,250 Net loss (income) attributable to non-controlling interests 17 (64) Allocation for preferred stock (5,837) (5,837) Net loss (income) attributable to common stockholders $ (18,757) $ 39,934 The following table reconciles the segment activity to consolidated total assets as of the periods presented: (In thousands) March 31, 2023 December 31, 2022 ASSETS Investments in real estate, net: Single-tenant properties $ 1,798,895 $ 1,880,418 Multi-tenant properties 2,419,248 2,442,945 Total investments in real estate, net 4,218,143 4,323,363 Cash and cash equivalents 43,095 70,795 Restricted cash 19,422 17,956 Deferred costs, net 23,864 22,893 Straight-line rent receivable 67,332 66,657 Operating lease right-of-use assets 17,713 17,839 Prepaid expenses and other assets 67,824 66,551 Total assets $ 4,457,393 $ 4,586,054 The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented: Three Months Ended March 31, (In thousands) 2023 (1) 2022 Single-tenant properties $ 67 $ 208 Multi-tenant properties 2,533 3,249 Total capital expenditures $ 2,600 $ 3,457 (1) Excludes $6.4 million of accrued capital expenditures as of December 31, 2022 which was paid in the three months ended March 31, 2023. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there were not any material events that have occurred that would require adjustments to, or disclosures in, the consolidated financial statements except those stated below: Dispositions Subsequent to March 31, 2023 Subsequent to March 31, 2023, the Company disposed of one property for a contract sales price of $1.1 million. This property was formerly part of the asset pool comprising the borrowing base under the Credit Facility. Mortgage Note Repayments and Credit Facility Borrowings Subsequent to March 31, 2023 In April 2023, the Company fully repaid its “Assumed Multi-Tenant Mortgage III” and “Assumed Multi-Tenant Mortgage IV” mortgage notes, both of which were scheduled for repayment in April 2023. These mortgage notes had an aggregate balance of $58.8 million as of March 31, 2023. The Company repaid these mortgage notes with draws of $50.0 million under its Credit Facility. Of the seven total properties formerly encumbered under these mortgage notes, six were added to the asset pool comprising the borrowing base under the Credit Facility. The Company also separately drew $18.0 million on its Credit Facility for general corporate purposes in April 2023. In May 2023, the Company fully repaid its “The Plant” mortgage note, which was scheduled for repayment in May 2023. This mortgage note had a gross balance of $123.0 million as of March 31, 2023. The Company repaid this mortgage note with a draw of $123.0 million under its Credit Facility. The property formerly encumbered under this mortgage note was added to the asset pool comprising the borrowing base under the Credit Facility. After these draws and net property additions to the asset pool comprising the borrowing base under the Credit Facility, the Company had $639.0 million outstanding on its Credit Facility and $28.2 million remained available for future borrowings. Credit Facility Amendment In April 2023, the Company amended its Credit Facility to utilize a SOFR-based interest rate on all of its borrowings thereunder. Lease Terminations Subsequent to March 31, 2023, four single-tenant leases with a Burger King franchisee were terminated in bankruptcy proceedings. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on 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. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three month periods ended March 31, 2023 and 2022 are not necessarily indicative of the results for the entire year or any subsequent interim periods. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany 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. Except for the OP, as of March 31, 2023 and December 31, 2022, the Company had no interests in entities that were not wholly owned. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable. |
Revenue Recognition | Revenue Recognition The Company’s revenues, which are derived primarily from lease contracts, 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. As of March 31, 2023, these leases had an average remaining lease term of approximately 7.1 years. 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 for, and include in revenue from tenants, 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, the 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 modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses, in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, the Company elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company also elected to reflect prior revenue and reimbursements reported under ASC 842 on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis. Future Base Rent Payments The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of March 31, 2023. These amounts exclude tenant reimbursements and 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 Base Rent Payments 2023 (remainder) $ 266,340 2024 339,560 2025 310,608 2026 280,647 2027 241,677 2028 192,489 Thereafter 1,104,857 $ 2,736,178 Contingent Rental Income 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 months ended March 31, 2023 and 2022 such amounts were $0.6 million, and $0.4 million, respectively. Collectability and Bad Debt Expense 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. Under the leasing standard adopted on January 1, 2019 (see the “ Recently Issued Accounting Pronouncements ” section below), the Company is required to assess, based on credit risk only, if it is probable that the Company will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are not permitted. If the Company determines that it’s probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it’s not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants beginning on January 1, 2019, in accordance with new accounting rules, on the accompanying consolidated statements of operations in the period the related costs are incurred, as applicable. Since the second quarter of 2020, this assessment has included consideration of the impacts of the COVID-19 pandemic on the ability of the Company’s tenants to pay rents in accordance with their contracts. The assessment included all of the Company’s tenants with a focus on the Company’s multi-tenant retail properties which have been more negatively impacted by the COVID-19 pandemic than the Company’s single-tenant properties. In accordance with the lease accounting rules, the Company records uncollectable amounts as reductions in revenue from tenants. During the three months ended March 31, 2023 and 2022, uncollectable amounts were $3.4 million and $0.7 million, respectively. Included in the uncollectable amounts for the three months ended March 31, 2023, were $2.9 million of revenue reductions associated with 16 leases with one tenant which were terminated in bankruptcy proceedings. Lease Termination Income The Company entered into two lease termination agreements with tenants in its multi-tenant properties for a total of $0.1 million, which were recognized and received in the three months ended March 31, 2023. |
Investments in Real Estate | Investments in Real Estate Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. At the time an asset is acquired, the Company evaluates the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the Purchase Price Allocation section in this Note for a discussion of the initial accounting for investments in real estate. Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations during the three months ended March 31, 2023 and 2022. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. The Company evaluates the probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of March 31, 2023 and December 31, 2022, no properties were considered held for sale. |
Purchase Price Allocation | Purchase Price Allocation In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. No acquisitions occurred during the three months ended March 31, 2023. All acquisitions during the three months ended March 31, 2022 were asset acquisitions. For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values. 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. 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. The Company estimates fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates, and land values per square foot. Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. 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 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. |
Lessor Accounting | Lessor Accounting In accordance with the lease accounting standard, all of the Company’s leases as lessor prior to adoption of ASC 842 were accounted for as operating leases and the Company continued to account for them as operating leases under the transition guidance. The Company evaluates new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. Generally, all the Company’s leases as lessor had historically qualified as operating leases including land leases for which such accounting has been grandfathered. However, as of March 31, 2023 and December 31, 2022 the Company had two parcels of land leased to tenants that qualify as financing leases which were entered into during the year ended December 31, 2022 (subsequent to the three months ended March 31, 2022). The carrying value of these leases were $5.8 million and $5.7 million as of March 31, 2023 and December 31, 2022, respectively, and the amounts are included in prepaid expenses and other assets on the Company’s consolidated balance sheets. For the three months ended March 31, 2023, income of $0.2 million relating to these two leases is included in revenue from tenants in the Company’s consolidated statement of operations. As of March 31, 2023 and December 31, 2022, the Company had no leases as a lessor that were considered as sales-type leases under sales leaseback rules. As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. |
Lessee Accounting | Lessee Accounting For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 9 — Commitments and Contingencies . The Company is the lessee under certain land leases which were previously classified prior to adoption of lease accounting and will continue to be classified as operating leases under transition elections unless subsequently modified. These leases are reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term. |
Gain on Sale of Real Estate Investments | Gain on Sale of Real Estate Investments Gains on sales of rental real estate are not considered sales to customers and are generally recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”). In accordance with ASC 845-10, Accounting for Non-Monetary Transactions, if a nonmonetary exchange has commercial substance, the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss shall be recognized on the exchange. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows 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 on its consolidated statements of operations 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. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings. |
Reportable Segments | Reportable Segments As of March 31, 2023, the Company has determined that it has two reportable segments, with activities related to investing in single-tenant properties and multi-tenant properties. |
Depreciation and Amortization | Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the initial remaining lease terms of the respective leases. The value of customer relationship intangibles, if any, is amortized to expense over the initial term of the lease and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense. Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages. |
Above and Below-Market Lease Amortization | Above- and Below-Market Lease Amortization Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants 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. Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods. Upon termination of an above- or below-market lease, any unamortized amounts would be recognized in the period of termination. |
Equity-Based Compensation | Equity-Based Compensation The Company has stock-based plans under which its 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, and certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company are eligible to receive awards. Awards granted thereunder are accounted for under the guidance for employee share-based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such an award is included in the equity-based compensation line item of the consolidated statements of operations and is recognized in accordance with the service period (i.e., vesting) required or when the requirements for exercise of the award have been met. On July 21, 2021, the Company entered into the multi-year outperformance agreement with the Advisor (the “2021 OPP”) pursuant to which the Advisor was granted an award of 8,528,885 units of limited partnership (“LTIP Units”), representing the quotient of $72.0 million divided by $8.4419. The LTIP Units issued under the 2021 OPP were reclassified as an equity award with the cumulative expense reflected as part of non-controlling interest in the Company’s consolidated balance sheets and equity statements. In the event of a modification of any of the awards discussed above, any incremental increase in the value of the instrument measured on the date of the modification both before and after the modification, will result in an incremental amount to be reflected prospectively as a charge to earnings over the remaining service period. For additional information on all of the Company’s equity-based compensation arrangements, see Note 12 — Equity-Based Compensation . |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Not Yet Fully Adopted as of March 31, 2023: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through June 30, 2023 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients would preserve the presentation of the Company’s derivatives, if any, which would be consistent with the Company’s past presentation. As of March 31, 2023, the Company did not have any outstanding derivative instruments but has LIBOR-based borrowings under its Credit Facility (see Note 5 — Credit Facility |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Lessor, Operating Lease, Payments to be Received, Maturity | These amounts exclude tenant reimbursements and 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 Base Rent Payments 2023 (remainder) $ 266,340 2024 339,560 2025 310,608 2026 280,647 2027 241,677 2028 192,489 Thereafter 1,104,857 $ 2,736,178 |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Real Estate [Abstract] | |
Schedule of Purchase Price of Acquired Properties | The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented. All acquisitions were considered asset acquisitions for accounting purposes. Three Months Ended March 31, (Dollar amounts in thousands) 2023 (2) 2022 Real estate investments, at cost: Land $ — $ 154,815 Buildings, fixtures and improvements — 586,140 Total tangible assets — 740,955 Acquired intangible assets and liabilities: (1) In-place leases 5,535 145,178 Above-market lease assets — 12,574 Below-market lease liabilities — (42,905) Total intangible assets, net 5,535 114,847 Assets Reduced, Liabilities Assumed and Equity Issued: Mortgage notes payable assumed in acquisitions (including premiums of $276) — (19,526) Shares issued in acquisitions — (49,965) Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition 6,725 — Cash paid for real estate investments $ 12,260 $ 786,311 Number of properties purchased from the CIM Portfolio Acquisition (See Note 1 — Organization for additional information) — 56 Number of other properties purchased — 3 ________ (1) Weighted-average remaining amortization periods for in-place lease assets, above-market lease assets and below-market lease liabilities acquired during the three months ended March 31, 2022 were 9.8 years, 6.2 years and 20.0 years, respectively, as of each property’s respective acquisition date. (2) Real estate assets acquired during the three months ended March 31, 2023 were comprised entirely of contingent consideration relating to the CIM Portfolio Acquisition, $6.7 million of which was accrued as of December 31, 2022. See Note 1 — Organization for additional information. |
Schedule of Finite-lived Intangible Assets Amortization Expense | The following table presents amortization expense and adjustments to revenue from tenants and property operating expenses for intangible assets and liabilities during the periods presented: Three Months Ended March 31, (In thousands) 2023 2022 In-place leases, included in depreciation and amortization (2) $ 25,543 $ 12,745 Above-market lease intangibles $ (1,628) $ (914) Below-market lease liabilities 4,112 2,020 Total included in revenue from tenants $ 2,484 $ 1,106 Below-market ground lease asset (1) $ 8 $ 8 Above-market ground lease liability (1) — — Total included in property operating expenses $ 8 $ 8 ______ (1) Intangible balances related to ground leases are included as part of the operating lease right-of-use assets presented on the consolidated balance sheets and the amortization expense of such balances is included in property operating expenses on the consolidated statements of operations. (2) During the three months ended March 31, 2023, the Company recorded additional in-place lease amortization of $3.3 million associated with 16 leases with one tenant which were terminated in bankruptcy proceedings. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years: (In thousands) 2023 (remainder) 2024 2025 2026 2027 In-place leases, to be included in depreciation and amortization $ 53,289 $ 56,539 $ 44,902 $ 35,224 $ 26,804 Above-market lease intangibles $ 4,603 $ 5,381 $ 4,542 $ 3,313 $ 2,704 Below-market lease liabilities (7,746) (9,856) (9,512) (9,052) (8,624) Total to be included in revenue from tenants $ (3,143) $ (4,475) $ (4,970) $ (5,739) $ (5,920) |
Schedule of Impairment Charges Recorded by Segment | The following table details the impairment charges recorded by segment for the three months ended March 31, 2022: Three Months Ended March 31, (In thousands) 2022 Single-tenant properties: Various vacant single-tenant properties (1) $ 2,176 United Healthcare (2) 3,766 Total single-tenant impairment charges 5,942 Total impairment charges $ 5,942 (1) For the three months ended March 31, 2022, three properties were impaired, all of which were formerly leased to Truist Bank. All properties in the three months ended March 31, 2022 were impaired to their fair values as determined by their respective purchase and sale agreements and were sold in the year ended December 31, 2022. (2) This property was vacant since June 30, 2021 when a tenant did not renew its lease. This property was impaired to its fair value as determined by the income approach in both the year ended December 31, 2022 and 2021 and disposed of in the year ended December 31, 2022. |
Mortgage Notes Payable, Net (Ta
Mortgage Notes Payable, Net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The Company’s mortgage notes payable, net as of March 31, 2023 and December 31, 2022 consisted of the following: Outstanding Loan Amount as of Effective Interest Rate as of Portfolio Encumbered Properties March 31, December 31, March 31, Interest Rate Maturity Anticipated Repayment (4) (In thousands) (In thousands) 2019 Class A-1 Net-Lease Mortgage Notes 102 $ 117,470 $ 117,620 3.83 % Fixed May 2049 May 2026 2019 Class A-2 Net-Lease Mortgage Notes 108 119,868 120,020 4.52 % Fixed May 2049 May 2029 2021 Class A-1 Net-Lease Mortgage Notes 49 53,381 53,601 2.24 % Fixed May 2051 May 2028 2021 Class A-2 Net-Lease Mortgage Notes 47 92,204 92,584 2.83 % Fixed May 2051 May 2031 2021 Class A-3 Net-Lease Mortgage Notes 33 34,997 34,997 3.07 % Fixed May 2051 May 2028 2021 Class A-4 Net-Lease Mortgage Notes 35 54,995 54,995 3.65 % Fixed May 2051 May 2031 Total Net-Lease Mortgage Notes 374 472,915 473,817 Stop & Shop (5) — — 45,000 3.50 % Fixed Jan. 2030 Jan. 2030 Column Financial Mortgage Notes 364 705,567 705,567 3.79 % Fixed Aug. 2025 Aug. 2025 Bob Evans I 22 22,633 22,740 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 Cottonwood Commons 1 19,250 19,250 4.52 % Fixed Sep. 2023 Sep. 2023 The Marquis 1 8,556 8,556 3.95 % Fixed May 2023 May 2023 Assumed Multi-Tenant Mortgage I 3 16,700 16,700 4.68 % Fixed Sep. 2033 Sep. 2023 Assumed Multi-Tenant Mortgage II 4 25,000 25,000 4.54 % Fixed Feb. 2024 Feb. 2024 Assumed Multi-Tenant Mortgage III (6) 3 30,424 30,719 3.70 % Fixed Apr. 2023 Apr. 2023 Assumed Multi-Tenant Mortgage IV (6) 4 28,387 28,387 3.90 % Fixed Apr. 2023 Apr. 2023 Assumed Multi-Tenant Mortgage V 7 60,244 60,544 3.70 % Fixed Sep. 2023 Sep. 2023 The Plant (6) 1 123,000 123,000 3.87 % Fixed May 2033 May 2023 McGowin Park 1 39,025 39,025 4.11 % Fixed May 2024 May 2024 Gross mortgage notes payable 819 1,795,101 1,841,705 3.84 % (1) Deferred financing costs, net of accumulated amortization (2) (29,009) (31,948) Mortgage premiums and discounts, net (3) (853) (1,324) Mortgage notes payable, net $ 1,765,239 $ 1,808,433 __________ (1) Calculated on a weighted-average basis for all mortgages outstanding as of March 31, 2023. (2) 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 it is probable the financing will not close. (3) Mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages. (4) The Company determines an anticipated repayment date when the terms of a debt obligation provide for earlier repayment than the legal maturity and when the Company expects to repay such debt obligations earlier due to factors such as elevated interest rates or additional principal payment requirements. (5) This mortgage note was fully repaid in the three months ended March 31, 2023 in connection with the disposition of the formerly encumbered properties. (6) These mortgage notes were fully repaid subsequent to March 31, 2023 with proceeds from the Credit Facility. See Note 1 5 — Subsequent Events for additional information. |
Schedule of Maturities of Long-term Debt | Combined Debt Obligation Principal Payments The following table summarizes the scheduled aggregate principal payments (based on anticipated repayment dates) on mortgage notes payable and the Company’s other debt based on anticipated repayment dates for the remainder of the year ended December 31, 2023, the five years subsequent to December 31, 2023 and thereafter: Future Principal Payments (In thousands) Mortgage Notes Credit Facility (1) Senior Notes (2) Total 2023 (remainder) (3) $ 288,181 $ — $ — $ 288,181 2024 65,672 — — 65,672 2025 707,237 — — 707,237 2026 116,917 448,000 — 564,917 2027 21,553 — — 21,553 2028 332,242 — 500,000 832,242 Thereafter 263,299 — — 263,299 $ 1,795,101 $ 448,000 $ 500,000 $ 2,743,101 ________ (1) The Credit Facility matures on April 1, 2026, subject to the Company’s right, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. See Note 5 — Credit Facility for additional information. (2) The Senior Notes mature on September 30, 2028. See Note 6 — Senior Notes, Net for additional information. (3) Subsequent to March 31, 2023, the Company fully repaid $181.8 million of mortgage notes payable with borrowings sourced from the Credit Facility. See Note 15 — Subsequent Events for additional information. The Company intends to repay the remaining $106.4 million of principal amounts scheduled for repayment during the year ended December 31, 2023 with (i) proceeds from the Credit Facility by transferring some or all of the encumbered properties to the asset pool comprising the borrowing base thereunder (as defined in N ote 5 — Credit Facility ) and (ii) cash on hand, a portion of which may be generated from future property sales. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Liabilities Measured on Recurring Basis | The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below: March 31, 2023 December 31, 2022 (In thousands) Level Carrying Value Fair Value Carrying Value Fair Value Gross mortgage notes payable and mortgage premiums and discounts, net (1) 3 $ 1,795,101 $ 1,650,370 $ 1,841,705 $ 1,648,505 Senior Notes 2 $ 500,000 $ 377,500 $ 500,000 $ 376,250 Credit Facility (1) 3 $ 448,000 $ 446,527 $ 458,000 $ 456,635 ________ (1) Subsequent to March 31, 2023, the Company fully repaid three mortgage notes with an aggregate carrying value of $181.8 million and an aggregate fair value of $181.4 million. Additionally, the Company borrowed $191.0 million on its Credit Facility subsequent to March 31, 2023. See Note 15 — Subsequent Events for additional information. |
Mezzanine Equity and Total Eq_2
Mezzanine Equity and Total Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of Non-Controlling Interest | As of March 31, 2023 and December 31, 2022, non-controlling interest was comprised of the following components: (In thousands) March 31, 2023 December 31, 2022 Non-controlling interest attributable to LTIP Units $ 24,248 $ 21,072 Non-controlling interest attributable to Class A Units 1,541 1,565 Total non-controlling interest $ 25,789 $ 22,637 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Master Leases | The following table reflects the base cash rental payments due from the Company as of March 31, 2023: (In thousands) Future Base Rent Payments 2023 (remainder) $ 1,196 2024 1,560 2025 1,598 2026 1,628 2027 1,647 Thereafter 41,083 Total lease payments 48,712 Less: Effects of discounting (29,602) Total present value of lease payments $ 19,110 |
Related Party Transactions an_2
Related Party Transactions and Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services | The following table details amounts incurred and payable to related parties in connection with the operations-related services described above as of and for the periods presented: Three Months Ended March 31, Payable (Receivable) as of (In thousands) 2023 2022 March 31, December 31, Non-recurring fees and reimbursements: Acquisition cost reimbursements (1) $ — $ 203 $ — $ 9 Ongoing fees: Asset management fees to related party (2) 7,956 7,826 — — Property management and leasing fees (3) 4,545 1,914 1,441 1,302 Professional fees and other reimbursements (4) 4,118 3,294 125 527 Total related party operating fees and reimbursements $ 16,619 $ 13,237 $ 1,566 $ 1,838 ______ (1) Amounts included in acquisition and transaction related expenses in the consolidated statements of operations. (2) There were no incentive management fees earned in these periods. (3) Amounts included in property operating expenses in the consolidated statements of operations, with the exception of approximately $1.6 million and $0.3 million of leasing fees incurred in the three months ended March 31, 2023 and 2022, respectively, which were capitalized and are included in deferred costs, net in the consolidated balance sheets. A portion of leasing fees are ultimately paid to a third party. Property management fees increased significantly throughout the year ended December 31, 2022, related to fees on the CIM Portfolio Acquisition for each property acquired. (4) Amounts included in general and administrative expense in the consolidated statements of operations. Includes amounts for directors’ and officers’ insurance. |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation, Restricted Share Award Activity | The following table reflects the activity of restricted shares for the three months ended March 31, 2023: Number of Shares of Common Stock Weighted-Average Grant Price Unvested, December 31, 2022 508,677 $ 7.93 Granted — — Vested — — Forfeited — — Unvested, March 31, 2023 508,677 $ 7.93 |
Schedule of Share-based Compensation Arrangements by Share-based Payment Award, Performance-Based Units | With respect to one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute TSR levels as shown in the table below. Performance Level Absolute TSR Percentage of LTIP Units Earned Number of LTIP Units Earned Below Threshold Less than 18 % 0 % 0 Threshold 18 % 25 % 1,066,110.625 Target 24 % 50 % 2,132,221.250 Maximum 36 % or higher 100 % 4,264,442.500 With respect to the remaining one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group (consisting of Broadstone Net Lease, Inc., Office Properties Income Trust, RPT Realty and Spirit Realty Capital, Inc.) as of the last day of the performance period as follows: Performance Level Relative TSR Excess Percentage of LTIP Units Earned Number of LTIP Units Earned Below Threshold Less than -600 Basis points 0 % 0 Threshold -600 Basis points 25 % 1,066,110.625 Target 0 Basis points 50 % 2,132,221.250 Maximum +600 Basis points 100 % 4,264,442.500 |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the basic and diluted net loss per share computations: Three Months Ended March 31, (In thousands, except share and per share amounts) 2023 2022 Net (loss) income attributable to common stockholders $ (18,757) $ 39,934 Adjustments to net (loss) income for common share equivalents (326) (206) Adjusted net (loss) income attributable to common stockholders $ (19,083) $ 39,728 Weighted-average shares outstanding — Basic 133,715,627 128,640,845 Weighted-average shares outstanding — Diluted 133,715,627 130,048,111 Net (loss) income per share attributable to common stockholders — Basic and Diluted $ (0.14) $ 0.31 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share as their effect would have been antidilutive for the periods presented: Three Months Ended March 31, 2023 2022 Unvested restricted shares (1) 508,677 422,218 Class A Units (2) 172,921 172,921 2021 LTIP Units (3) 8,528,885 7,121,619 Total 9,210,483 7,716,758 _______ (1) Weighted-average number of unvested restricted shares outstanding for the periods presented. There were 508,677 and 422,108 unvested restricted shares outstanding as of March 31, 2023 and 2022, respectively. (2) Weighted-average number of Class A Units outstanding for the periods presented. There were 172,921 Class A Units outstanding as of March 31, 2023 and 2022. (3) Weighted-average number of 2021 LTIP Units outstanding for the periods presented. There were 8,528,885 2021 LTIP Units outstanding as of March 31, 2023 and 2022. For more information see Note 12 — Equity-Based Compensation. Under the relative TSR portion of the 2021 OPP award, 1,407,266 LTIP Units would have been issued had March 31, 2022 been the end of the measurement period and these units were included in the calculation for diluted EPS purposes. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table reconciles the segment activity to consolidated net loss (income) for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 (In thousands) Single-Tenant Properties Multi-Tenant Properties Consolidated Single-Tenant Properties Multi-Tenant Properties Consolidated Revenue from tenants $ 46,166 $ 67,428 $ 113,594 $ 53,282 $ 41,661 $ 94,943 Property operating expense 4,450 22,463 26,913 3,924 15,215 19,139 NOI $ 41,716 $ 44,965 86,681 $ 49,358 $ 26,446 75,804 Asset management fees to related party (7,956) (7,826) Impairment of real estate investments — (5,942) Acquisition, transaction and other costs (565) (279) Equity-based compensation (3,567) (3,498) General and administrative (10,492) (6,833) Depreciation and amortization (54,182) (37,688) Gain on sale of real estate investments 11,792 53,569 Interest expense (34,675) (23,740) Other income 27 18 Gain on non-designated derivatives — 2,250 Net loss (income) attributable to non-controlling interests 17 (64) Allocation for preferred stock (5,837) (5,837) Net loss (income) attributable to common stockholders $ (18,757) $ 39,934 |
Schedule of Reconciliation of Assets from Segment to Consolidated | The following table reconciles the segment activity to consolidated total assets as of the periods presented: (In thousands) March 31, 2023 December 31, 2022 ASSETS Investments in real estate, net: Single-tenant properties $ 1,798,895 $ 1,880,418 Multi-tenant properties 2,419,248 2,442,945 Total investments in real estate, net 4,218,143 4,323,363 Cash and cash equivalents 43,095 70,795 Restricted cash 19,422 17,956 Deferred costs, net 23,864 22,893 Straight-line rent receivable 67,332 66,657 Operating lease right-of-use assets 17,713 17,839 Prepaid expenses and other assets 67,824 66,551 Total assets $ 4,457,393 $ 4,586,054 |
Schedule of Reconciliation of Other Significant Reconciling Items from Segments to Consolidated | The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented: Three Months Ended March 31, (In thousands) 2023 (1) 2022 Single-tenant properties $ 67 $ 208 Multi-tenant properties 2,533 3,249 Total capital expenditures $ 2,600 $ 3,457 (1) Excludes $6.4 million of accrued capital expenditures as of December 31, 2022 which was paid in the three months ended March 31, 2023. |
Organization (Details)
Organization (Details) $ in Thousands, ft² in Millions | 3 Months Ended | |||||
Dec. 17, 2021 USD ($) property | Mar. 31, 2023 USD ($) ft² property | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) property | Jun. 30, 2022 USD ($) property | Mar. 31, 2022 USD ($) property | |
Operations [Line Items] | ||||||
Number of real estate properties | property | 1,039 | |||||
Area of real estate property (sqft) | ft² | 27.6 | |||||
Percentage of property leased | 92.60% | |||||
Number of assets acquired | property | 0 | 3 | ||||
Maximum borrowing capacity | $ 135,000 | |||||
Redeemable securities issued in acquisition | $ 0 | $ 49,965 | ||||
Mortgages assumed in acquisition (including premiums of $276) | 0 | 19,526 | ||||
Security deposit | 0 | |||||
Accrued contingent consideration on acquired properties in the CIM Portfolio Acquisition | $ (5,500) | $ 0 | ||||
CIM Portfolio Acquisition | ||||||
Operations [Line Items] | ||||||
Number of assets acquired | property | 0 | 1 | 24 | 56 | ||
Consideration transferred for acquisitions | $ 1,300,000 | $ 71,100 | $ 452,800 | $ 801,100 | ||
Payments to acquire businesses, net of cash acquired | 728,400 | |||||
Maximum borrowing capacity | 6,800 | $ 128,200 | 378,000 | |||
Number of properties closed | property | 3 | |||||
Mortgages assumed in acquisition (including premiums of $276) | $ 39,000 | $ 294,500 | ||||
Deposit acquired in acquisition | 23,800 | |||||
Security deposit | $ 40,000 | |||||
Application of deposits for real estate acquisitions | $ 16,200 | |||||
Asset acquisition, contingent consideration, liability | $ 6,700 | 59,300 | ||||
Accrued contingent consideration on acquired properties in the CIM Portfolio Acquisition | 6,725 | |||||
CIM Portfolio Acquisition | Class A | ||||||
Operations [Line Items] | ||||||
Sale of stock, consideration received on transaction | $ 53,400 | 53,400 | ||||
CIM Portfolio Acquisition | Gross mortgage notes payable | ||||||
Operations [Line Items] | ||||||
Debt instrument, face amount | 19,300 | |||||
Redeemable securities issued in acquisition | $ 50,000 | |||||
CIM Portfolio Acquisition | Gross mortgage notes payable | Minimum | ||||||
Operations [Line Items] | ||||||
Stated interest rate | 3.65% | |||||
CIM Portfolio Acquisition | Gross mortgage notes payable | Maximum | ||||||
Operations [Line Items] | ||||||
Stated interest rate | 4.62% | |||||
CIM Portfolio Acquisition | Revolving credit facility | ||||||
Operations [Line Items] | ||||||
Stated interest rate | 4.05% | |||||
Net Leased Commercial Properties | ||||||
Operations [Line Items] | ||||||
Number of real estate properties | property | 930 | |||||
Net Leased Retail Properties | ||||||
Operations [Line Items] | ||||||
Number of real estate properties | property | 892 | |||||
Stabilized Core Retail Properties | ||||||
Operations [Line Items] | ||||||
Number of real estate properties | property | 109 | |||||
Multi-tenant Retail Centers | CIM Portfolio Acquisition | ||||||
Operations [Line Items] | ||||||
Number of assets acquired | property | 79 | |||||
2 Single-tenant Properties | CIM Portfolio Acquisition | ||||||
Operations [Line Items] | ||||||
Number of assets acquired | property | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jul. 21, 2021 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) property segment | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) property | Dec. 31, 2021 property | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) property | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Amortization of in-place lease assets | $ 25,543 | $ 12,745 | ||||||
Depreciation | $ 27,866 | 24,407 | ||||||
Weighted average remaining lease term | 7 years 1 month 6 days | |||||||
Contingent rental income | $ 600 | 400 | ||||||
Bad debt expense | $ 3,400 | $ 700 | ||||||
Number of lease termination agreement | property | 2 | |||||||
Uncollectable amounts recovered | $ 100 | |||||||
Number of single-tenant properties in lease termination agreement | property | 2 | 6 | ||||||
Number of real estate properties | property | 1,039 | |||||||
NumberOfParcelsOfLandLeased | property | 2 | 2 | ||||||
Finance lease, carrying value | $ 5,800 | $ 5,700 | ||||||
Sublease Income | $ 200 | |||||||
Number of reportable segments | segment | 2 | |||||||
Revision of Prior Period, Error Correction, Adjustment | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Depreciation | $ 3,700 | $ 3,700 | ||||||
2021 OPP | American Realty Capital Advisors | Advisor | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Director compensation, restricted stock | $ 72,000 | |||||||
Granted (in shares) | shares | 8,528,885 | |||||||
Ten-day trailing average closing price (in dollars per share) | $ / shares | $ 8.4419 | |||||||
Minimum | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Expected lease up period | 6 months | |||||||
Maximum | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Expected lease up period | 24 months | |||||||
Impaired real estate investments held for sale | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Number of real estate properties | property | 0 | 0 | ||||||
Truist Bank | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Gain on termination of lease | $ 4,500 | |||||||
16 Leases With One Tenant | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Bad debt expense | $ 2,900 | |||||||
Buildings | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 40 years | |||||||
Land Improvements | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 15 years | |||||||
Fixtures and Improvements | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 5 years | |||||||
In-place lease assets | Revision of Prior Period, Error Correction, Adjustment | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Amortization of in-place lease assets | $ 1,200 | $ 2,500 | $ 3,700 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Future Minimum Rental Payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Future Minimum Payments Receivable under Topic 842 | |
2023 (remainder) | $ 266,340 |
2024 | 339,560 |
2025 | 310,608 |
2026 | 280,647 |
2027 | 241,677 |
2028 | 192,489 |
Thereafter | 1,104,857 |
Total | $ 2,736,178 |
Real Estate Investments - Asset
Real Estate Investments - Assets Acquired and Liabilities Assumed (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) property | Sep. 30, 2022 property | Jun. 30, 2022 property | Mar. 31, 2022 USD ($) property | |
Real estate investments, at cost: | ||||
Land | $ 0 | $ 154,815 | ||
Buildings, fixtures and improvements | 0 | 586,140 | ||
Total tangible assets | 0 | 740,955 | ||
Total intangible assets, net | 5,535 | 114,847 | ||
Liabilities Assumed at Fair Value | ||||
Mortgage notes payable | 0 | (19,526) | ||
Mortgage notes payable assumed in acquisitions, discounts | 276 | |||
Shares issued in acquisitions | 0 | (49,965) | ||
Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition | (5,500) | 0 | ||
Cash paid for real estate investments | $ 12,260 | $ 786,311 | ||
Number of assets acquired | property | 0 | 3 | ||
CIM Portfolio Acquisition | ||||
Liabilities Assumed at Fair Value | ||||
Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition | $ 6,725 | |||
Number of assets acquired | property | 0 | 1 | 24 | 56 |
In-place leases | ||||
Real estate investments, at cost: | ||||
Acquired intangible assets | $ 5,535 | $ 145,178 | ||
Liabilities Assumed at Fair Value | ||||
Weighted-average amortization period | 9 years 9 months 18 days | |||
Above-market lease assets | ||||
Real estate investments, at cost: | ||||
Acquired intangible assets | $ 0 | 12,574 | ||
Liabilities Assumed at Fair Value | ||||
Weighted-average amortization period | 6 years 2 months 12 days | |||
Below-market lease liabilities | ||||
Real estate investments, at cost: | ||||
Acquired intangible assets | $ 0 | $ (42,905) | ||
Below market leases | ||||
Liabilities Assumed at Fair Value | ||||
Weighted-average amortization period | 20 years |
Real Estate Investments - Summa
Real Estate Investments - Summary of Amortization Expense and Adjustments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of leases | $ (25,543) | $ (12,745) |
16 Leases With One Tenant | ||
Finite-Lived Intangible Assets [Line Items] | ||
Accretion of leases | $ 3,300 | |
Number of leases | lease | 16 | |
Depreciation and Amortization | In-place leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of leases | $ 25,543 | 12,745 |
Rental Income | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total included in revenue from tenants | 2,484 | 1,106 |
Rental Income | Above-market lease intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of leases | (1,628) | (914) |
Rental Income | Below-market lease liabilities | ||
Finite-Lived Intangible Assets [Line Items] | ||
Accretion of leases | 4,112 | 2,020 |
Property Operating Expenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Accretion of leases | 8 | 8 |
Property Operating Expenses | Below-market ground lease asset | ||
Finite-Lived Intangible Assets [Line Items] | ||
Accretion of leases | 8 | 8 |
Property Operating Expenses | Above-market ground lease liability | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of leases | $ 0 | $ 0 |
Real Estate Investments - Lease
Real Estate Investments - Lease Amortization (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Depreciation and Amortization | In-place leases | |
Finite-Lived Intangible Assets [Line Items] | |
2023 (remainder) | $ 53,289 |
2024 | 56,539 |
2025 | 44,902 |
2026 | 35,224 |
2027 | 26,804 |
Rental Income | |
Intangible assets: | |
2023 (remainder) | (3,143) |
2024 | (4,475) |
2025 | (4,970) |
2026 | (5,739) |
2027 | (5,920) |
Rental Income | Above-market lease assets | |
Finite-Lived Intangible Assets [Line Items] | |
2023 (remainder) | 4,603 |
2024 | 5,381 |
2025 | 4,542 |
2026 | 3,313 |
2027 | 2,704 |
Rental Income | Below-market lease liabilities | |
Below Market Lease [Abstract] | |
2023 (remainder) | (7,746) |
2024 | (9,856) |
2025 | (9,512) |
2026 | (9,052) |
2027 | $ (8,624) |
Real Estate Investments - Narra
Real Estate Investments - Narrative (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) property | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) property | Dec. 31, 2022 property | |
Business Acquisition [Line Items] | ||||
Security deposit | $ 0 | |||
Number of real estate properties | property | 1,039 | |||
Gain on sale of real estate investments | $ 11,792 | $ 53,569 | ||
CIM Portfolio Acquisition | ||||
Business Acquisition [Line Items] | ||||
Security deposit | $ 40,000 | |||
Impaired real estate investments held for sale | ||||
Business Acquisition [Line Items] | ||||
Number of real estate properties | property | 0 | 0 | ||
Assets Sold | ||||
Business Acquisition [Line Items] | ||||
Number of properties sold | property | 6 | 5 | ||
Aggregate contract sale price | $ 71,300 | $ 265,200 |
Real Estate Investments - Sched
Real Estate Investments - Schedule of Impairment Charges Recorded by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Real Estate [Line Items] | ||
Impairment of real estate investments | $ 0 | $ 5,942 |
Single-tenant properties: | ||
Real Estate [Line Items] | ||
Impairment of real estate investments | 5,942 | |
Single-tenant properties: | Various Vacant Single-Tenant Properties | ||
Real Estate [Line Items] | ||
Impairment of real estate investments | 2,176 | |
Single-tenant properties: | United Healthcare Property | ||
Real Estate [Line Items] | ||
Impairment of real estate investments | $ 3,766 |
Mortgage Notes Payable, Net - S
Mortgage Notes Payable, Net - Summary of Mortgage Notes Payable (Details) | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) |
Debt Instrument [Line Items] | ||
Outstanding Loan Amount | $ 2,743,101,000 | |
Mortgage notes payable and premiums, net | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 819 | |
Outstanding Loan Amount | $ 1,795,101,000 | $ 1,841,705,000 |
Deferred financing costs, net of accumulated amortization | (29,009,000) | (31,948,000) |
Mortgage (discounts) and premiums, net | (853,000) | (1,324,000) |
Mortgage notes payable, net | $ 1,765,239,000 | 1,808,433,000 |
Effective interest rate | 3.84% | |
Mortgage notes payable and premiums, net | Net Lease Mortgage Note | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 374 | |
Outstanding Loan Amount | $ 472,915,000 | 473,817,000 |
Mortgage notes payable and premiums, net | 2019 Class A-1 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 102 | |
Outstanding Loan Amount | $ 117,470,000 | 117,620,000 |
Effective interest rate | 3.83% | |
Mortgage notes payable and premiums, net | 2019 Class A-2 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 108 | |
Outstanding Loan Amount | $ 119,868,000 | 120,020,000 |
Effective interest rate | 4.52% | |
Mortgage notes payable and premiums, net | 2021 Class A-1 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 49 | |
Outstanding Loan Amount | $ 53,381,000 | 53,601,000 |
Effective interest rate | 2.24% | |
Mortgage notes payable and premiums, net | 2021 Class A-2 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 47 | |
Outstanding Loan Amount | $ 92,204,000 | 92,584,000 |
Effective interest rate | 2.83% | |
Mortgage notes payable and premiums, net | 2021 Class A-3 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 33 | |
Outstanding Loan Amount | $ 34,997,000 | 34,997,000 |
Effective interest rate | 3.07% | |
Mortgage notes payable and premiums, net | 2021 Class A-4 Net-Lease Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 35 | |
Outstanding Loan Amount | $ 54,995,000 | 54,995,000 |
Effective interest rate | 3.65% | |
Mortgage notes payable and premiums, net | Column Financial Mortgage Notes | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 364 | |
Outstanding Loan Amount | $ 705,567,000 | 705,567,000 |
Effective interest rate | 3.79% | |
Mortgage notes payable and premiums, net | Mortgage Loan II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 12 | |
Outstanding Loan Amount | $ 210,000,000 | 210,000,000 |
Effective interest rate | 4.25% | |
Mortgage notes payable and premiums, net | Mortgage Loan III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 22 | |
Outstanding Loan Amount | $ 33,400,000 | 33,400,000 |
Effective interest rate | 4.12% | |
Mortgage notes payable and premiums, net | Cottonwood Commons | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 19,250,000 | 19,250,000 |
Effective interest rate | 4.52% | |
Mortgage notes payable and premiums, net | The Marquis | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 8,556,000 | 8,556,000 |
Effective interest rate | 3.95% | |
Mortgage notes payable and premiums, net | Assumed Multi-Tenant Mortgage I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 3 | |
Outstanding Loan Amount | $ 16,700,000 | 16,700,000 |
Effective interest rate | 4.68% | |
Mortgage notes payable and premiums, net | Assumed Multi-Tenant Mortgage II | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 25,000,000 | 25,000,000 |
Effective interest rate | 4.54% | |
Mortgage notes payable and premiums, net | Assumed Multi-Tenant Mortgage III | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 3 | |
Outstanding Loan Amount | $ 30,424,000 | 30,719,000 |
Effective interest rate | 3.70% | |
Mortgage notes payable and premiums, net | Assumed Multi-Tenant Mortgage IV | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 4 | |
Outstanding Loan Amount | $ 28,387,000 | 28,387,000 |
Effective interest rate | 3.90% | |
Mortgage notes payable and premiums, net | Assumed Multi-Tenant Mortgage V | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 7 | |
Outstanding Loan Amount | $ 60,244,000 | 60,544,000 |
Effective interest rate | 3.70% | |
Mortgage notes payable and premiums, net | The Plant | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 123,000,000 | 123,000,000 |
Effective interest rate | 3.87% | |
Mortgage notes payable and premiums, net | McGowin Park | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 1 | |
Outstanding Loan Amount | $ 39,025,000 | 39,025,000 |
Effective interest rate | 4.11% | |
Mortgage notes payable and premiums, net | Stop & Shop (5) | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 0 | |
Outstanding Loan Amount | $ 0 | 45,000,000 |
Effective interest rate | 3.50% | |
Mortgage notes payable and premiums, net | Bob Evans I | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 22 | |
Outstanding Loan Amount | $ 22,633,000 | $ 22,740,000 |
Effective interest rate | 4.71% |
Mortgage Notes Payable, Net - N
Mortgage Notes Payable, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Payments of prepayment costs on mortgages | $ 450 | $ 0 | |
Amended Credit Facility | |||
Debt Instrument [Line Items] | |||
Collateral amount | 2,000,000 | ||
Gross mortgage notes payable | |||
Debt Instrument [Line Items] | |||
Collateral amount | $ 3,000,000 | $ 3,000,000 |
Mortgage Notes Payable, Net - F
Mortgage Notes Payable, Net - Future Minimum Payments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Oct. 07, 2021 | May 10, 2023 USD ($) | Mar. 31, 2023 USD ($) option | Dec. 31, 2022 USD ($) | |
Total | ||||
2023 (remainder) | $ 288,181 | |||
2024 | 65,672 | |||
2025 | 707,237 | |||
2026 | 564,917 | |||
2027 | 21,553 | |||
2028 | 832,242 | |||
Thereafter | 263,299 | |||
Total | 2,743,101 | |||
Credit Facility | Revolving credit facility | ||||
Total | ||||
Additional term | 6 months | |||
Credit Facility | Revolving credit facility | Forecast | ||||
Total | ||||
Repayments of notes payable | $ 106,400 | |||
Mortgage notes payable and premiums, net | ||||
Total | ||||
2023 (remainder) | 288,181 | |||
2024 | 65,672 | |||
2025 | 707,237 | |||
2026 | 116,917 | |||
2027 | 21,553 | |||
2028 | 332,242 | |||
Thereafter | 263,299 | |||
Total | 1,795,101 | $ 1,841,705 | ||
Mortgage notes payable and premiums, net | Subsequent Event | ||||
Total | ||||
Repayments of notes payable | $ 181,800 | |||
Mortgage notes payable and premiums, net | The Plant | ||||
Total | ||||
Total | 123,000 | 123,000 | ||
Mortgage notes payable and premiums, net | The Marquis | ||||
Total | ||||
Total | 8,556 | $ 8,556 | ||
Credit Facility | ||||
Total | ||||
2023 (remainder) | 0 | |||
2024 | 0 | |||
2025 | 0 | |||
2026 | 448,000 | |||
2027 | 0 | |||
2028 | 0 | |||
Thereafter | 0 | |||
Total | $ 448,000 | |||
Number of additional extensions | option | 2 | |||
Additional term | 6 months | |||
Senior Notes | ||||
Total | ||||
2023 (remainder) | $ 0 | |||
2024 | 0 | |||
2025 | 0 | |||
2026 | 0 | |||
2027 | 0 | |||
2028 | 500,000 | |||
Thereafter | 0 | |||
Total | $ 500,000 |
Credit Facility (Details)
Credit Facility (Details) | 3 Months Ended | 12 Months Ended | |||
Oct. 07, 2021 USD ($) extension property | Mar. 31, 2023 USD ($) property $ / shares | Dec. 31, 2022 USD ($) $ / shares | Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 135,000,000 | ||||
Credit facility | $ 448,000,000 | $ 458,000,000 | |||
Series A preferred stock | |||||
Debt Instrument [Line Items] | |||||
Preferred stock dividend rate | 7.50% | 7.50% | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock | |||||
Debt Instrument [Line Items] | |||||
Preferred stock dividend rate | 7.375% | 7.375% | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
Revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | 6.92% | 6.51% | |||
Revolving credit facility | Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 815,000,000 | $ 173,000,000 | $ 540,000,000 | ||
Additional borrowing capacity, accordion feature | $ 435,000,000 | ||||
Number of additional extensions | extension | 2 | ||||
Additional term | 6 months | ||||
Unencumbered properties | property | 15 | ||||
Minimum value of unencumbered properties | $ 300,000,000 | ||||
Total borrowing base | 494,600,000 | ||||
Credit facility | 448,000,000 | ||||
Amount remaining available but undrawn | $ 46,600,000 | ||||
Number of property mortgaged | property | 7 | ||||
Debt covenant cash and borrowing availability required | $ 60,000,000 | ||||
Revolving credit facility | Credit Facility | Four Consecutive Fiscal Quarters | |||||
Debt Instrument [Line Items] | |||||
Dividends as percent of modified FFO maximum in rolling four quarter period | 95% | ||||
Revolving credit facility | Credit Facility | Two Consecutive Fiscal Quarters | |||||
Debt Instrument [Line Items] | |||||
Dividends as percent fo modified FFO maximum in individual quarter over two consecutive quarters | 105% | ||||
Revolving credit facility | Credit Facility | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 0.45% | ||||
Revolving credit facility | Credit Facility | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 1.05% | ||||
Revolving credit facility | Credit Facility | LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 1.45% | ||||
Revolving credit facility | Credit Facility | LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 2.05% | ||||
Revolving credit facility | Credit Facility | London Interbank Offered Rate (LIBOR) Floor | |||||
Debt Instrument [Line Items] | |||||
Basis spread on interest rate | 0% | ||||
Letter of Credit | Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 50,000,000 | ||||
Total borrowing base | $ 2,000,000 | ||||
Bridge Loan | Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 55,000,000 |
Senior Notes, Net (Details)
Senior Notes, Net (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Oct. 07, 2021 |
Debt Instrument [Line Items] | |||
Senior notes, net | $ 492,653,000 | $ 492,319,000 | |
Deferred costs, net | 23,864,000 | 22,893,000 | |
4.500% Senior Notes due 2028 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 500,000,000 | ||
Stated interest rate | 4.50% | ||
Senior notes, net | 492,700,000 | 492,300,000 | |
Deferred costs, net | $ 7,300,000 | $ 7,700,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Instruments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
May 10, 2023 USD ($) | Mar. 31, 2023 USD ($) investment | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) investment | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of impaired real estate investments held-for-sale | investment | 0 | 0 | ||
Proceeds from credit facility | $ 10,000 | $ 378,000 | ||
Subsequent Event | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Proceeds from credit facility | $ 191,000 | |||
Gross mortgage notes payable | Subsequent Event | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of financial instruments | 181,400 | |||
Repayments of notes payable | $ 181,800 | |||
Level 3 | Carrying Amount | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Lines of credit facility, fair value disclosure | 448,000 | $ 458,000 | ||
Level 3 | Carrying Amount | Gross mortgage notes payable | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of financial instruments | 1,795,101 | 1,841,705 | ||
Level 3 | Fair Value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Lines of credit facility, fair value disclosure | 446,527 | 456,635 | ||
Level 3 | Fair Value | Gross mortgage notes payable | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of financial instruments | 1,650,370 | 1,648,505 | ||
Level 2 | Carrying Amount | Senior Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of financial instruments | 500,000 | 500,000 | ||
Level 2 | Fair Value | Senior Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of financial instruments | $ 377,500 | $ 376,250 |
Mezzanine Equity and Total Eq_3
Mezzanine Equity and Total Equity - Mezzanine Equity and Total Equity/Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||
May 31, 2019 | Mar. 31, 2023 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 17, 2021 | ||
Class of Stock [Line Items] | ||||||||
Gain on embedded derivative | $ 2.3 | |||||||
Common stock, outstanding (in shares) | 134,224,313 | |||||||
Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Gross consideration received | $ 24.9 | |||||||
Commissions paid | 0.4 | |||||||
Class A Common Stock ATM Program | Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, consideration received on transaction (up to) | 24.5 | |||||||
Sale of stock, maximum offering amount | $ 450 | $ 254 | ||||||
CIM Portfolio Acquisition | ||||||||
Class of Stock [Line Items] | ||||||||
Percentage of outstanding common stock available for issuance to determine price | 7.50% | |||||||
Embedded derivative asset | $ 1.7 | |||||||
Embedded derivative liability | $ 2.3 | |||||||
CIM Portfolio Acquisition | Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 6,450,107 | |||||||
Sale of stock, number of shares issued in transaction, value | $ 50 | |||||||
Sale of stock, consideration received on transaction (up to) | $ 53.4 | $ 53.4 | ||||||
Sale of stock, price per share (in usd per share) | $ 8.34 | |||||||
Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, outstanding (in shares) | 134,200,000 | 134,200,000 | ||||||
Issuance of Stock, net (in shares) | 0 | 2,761,711 | [1] | |||||
[1]Includes shares of Class A common stock subject to repurchase. |
Mezzanine Equity and Total Eq_4
Mezzanine Equity and Total Equity - Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Apr. 30, 2020 | |
Class of Stock [Line Items] | |||||
Preferred stock, authorized (in shares) | 50,000,000 | ||||
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred stock, authorized (in shares) | 12,796,000 | 12,796,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Preferred stock, issued (in shares) | 7,933,711 | 7,933,711 | |||
Preferred stock, outstanding (in shares) | 7,933,711 | 7,933,711 | |||
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock | Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Issuance of Stock, net (in shares) | 0 | ||||
Series B Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred stock, authorized (in shares) | 120,000 | 120,000 | 1 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Preferred stock, issued (in shares) | 0 | 0 | |||
Preferred stock, outstanding (in shares) | 0 | 0 | |||
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | |||||
Class of Stock [Line Items] | |||||
Preferred stock, authorized (in shares) | 11,536,000 | 11,536,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Preferred stock, issued (in shares) | 4,595,175 | 4,595,175 | |||
Preferred stock, outstanding (in shares) | 4,595,175 | 4,595,175 | |||
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Issuance of Stock, net (in shares) | 0 | 0 | |||
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share | Series C Preferred Stock ATM Program | |||||
Class of Stock [Line Items] | |||||
Sale of stock, maximum offering amount | $ 200 | ||||
Series A Cumulative Redeemable Perpetual Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred stock, issued (in shares) | 7,933,711 | 7,933,711 | |||
Preferred stock, outstanding (in shares) | 7,933,711 | 7,933,711 | |||
Series A Cumulative Redeemable Perpetual Preferred Stock | Series A Preferred Stock ATM Program | |||||
Class of Stock [Line Items] | |||||
Sale of stock, maximum offering amount | $ 200 | ||||
Sale of stock, number of shares issued in transaction (in shares) | 0 | 0 |
Mezzanine Equity and Total Eq_5
Mezzanine Equity and Total Equity - Stockholder Rights Plan (Details) - $ / shares | 1 Months Ended | ||
Apr. 30, 2020 | Mar. 31, 2023 | Dec. 31, 2022 | |
Class of Stock [Line Items] | |||
Percentage of ownership after transaction | 4.90% | ||
Preferred stock, authorized (in shares) | 50,000,000 | ||
Series B Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred stock, authorized (in shares) | 1 | 120,000 | 120,000 |
Preferred stock, exercise price (in dollars per share) | $ 0.035 |
Mezzanine Equity and Total Eq_6
Mezzanine Equity and Total Equity - Non-controlling Interest Narrative (Details) - shares | Mar. 31, 2023 | Mar. 31, 2022 |
Equity [Abstract] | ||
Class A units outstanding (in shares) | 172,921 | 172,921 |
Mezzanine Equity and Total Eq_7
Mezzanine Equity and Total Equity - Non-Controlling Interest (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Noncontrolling Interest [Line Items] | ||
Non-controlling interests | $ 25,789 | $ 22,637 |
LTIP Units | ||
Noncontrolling Interest [Line Items] | ||
Non-controlling interests | 24,248 | 21,072 |
Class A Units | ||
Noncontrolling Interest [Line Items] | ||
Non-controlling interests | $ 1,541 | $ 1,565 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2023 USD ($) property | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Loss Contingencies [Line Items] | |||
Operating lease right-of-use assets | $ 17,713,000 | $ 17,839,000 | |
Operating lease liabilities | $ 19,110,000 | $ 19,132,000 | |
Weighted average remaining lease term | 7 years 1 month 6 days | ||
Legal fees | $ 100,000 | $ 0 | |
Insurance recoveries | $ 0 | 0 | |
Land | |||
Loss Contingencies [Line Items] | |||
Number of ground leases | property | 7 | ||
Weighted average remaining lease term | 25 years 10 months 24 days | ||
Weighted average discount rate | 7.50% | ||
Operating lease payments | $ 400,000 | 300,000 | |
Operating lease cost | $ 500,000 | $ 500,000 | |
Land | Minimum | |||
Loss Contingencies [Line Items] | |||
Term of contract | 14 years 9 months 18 days | ||
Land | Maximum | |||
Loss Contingencies [Line Items] | |||
Term of contract | 32 years 4 months 24 days |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Ground Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Future Base Rent Payments | ||
2023 (remainder) | $ 1,196 | |
2024 | 1,560 | |
2025 | 1,598 | |
2026 | 1,628 | |
2027 | 1,647 | |
Thereafter | 41,083 | |
Total lease payments | 48,712 | |
Less: Effects of discounting | (29,602) | |
Total present value of lease payments | $ 19,110 | $ 19,132 |
Related Party Transactions an_3
Related Party Transactions and Arrangements - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Sep. 06, 2016 USD ($) | Jun. 30, 2021 | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2022 USD ($) | Jun. 30, 2020 USD ($) quarter | Dec. 31, 2022 USD ($) | Dec. 31, 2018 USD ($) agreement property | |
Related Party Transaction [Line Items] | |||||||
Termination notice period | 60 days | ||||||
Total commissions and fees from the dealer manager | $ 7,956,000 | $ 7,826,000 | |||||
Renewal term | 1 year | ||||||
Ineligible termination period | 60 days | ||||||
Percentage of gross rental receipts to calculate management fee | 4% | ||||||
Percentage of gross rental receipts to calculate administrative charge | 15% | ||||||
Percentage of construction costs incurred to calculate construction fee | 6% | ||||||
Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Advisory agreement, renewal term | 20 years | ||||||
Percentage of independent directors approval needed to terminate agreement | 67% | ||||||
Internalization fee, percentage payable in equity | 10% | ||||||
Advisor | American Realty Capital Advisors | Contract Purchase Price | |||||||
Related Party Transaction [Line Items] | |||||||
Expected third party acquisition costs reimbursable | 0.50% | ||||||
Advisor | American Realty Capital Advisors | Advance on Loan or Other Investment | |||||||
Related Party Transaction [Line Items] | |||||||
Expected third party acquisition costs reimbursable | 0.50% | ||||||
Advisor | American Realty Capital Advisors | Contact Purchase Price, All Of Portfolio Costs | |||||||
Related Party Transaction [Line Items] | |||||||
Acquisition fees and acquisition related expenses | 4.50% | ||||||
Advisor | American Realty Capital Advisors | Contract Purchase Price, All Assets Acquired | |||||||
Related Party Transaction [Line Items] | |||||||
Acquisition fees and acquisition related expenses | 4.50% | ||||||
Termination Fees for Agreement | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Equity issued fair value | $ 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% | ||||||
Base Subject Fees Spread | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 4 | ||||||
Acquisition cost reimbursements | |||||||
Related Party Transaction [Line Items] | |||||||
Total commissions and fees from the dealer manager | $ 0 | 203,000 | |||||
Base Management Fee - Thereafter | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Equity issued fair value | $ 24,000,000 | ||||||
Transaction multiplier | 0.0062 | ||||||
Base Management Fee - First Year following Effective Time | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 0.0031 | ||||||
Base Management Fee - Second Year following Effective Time | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Transaction multiplier | 0.0047 | ||||||
Base management fee | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Management fee expense | $ 8,000,000 | 7,800,000 | |||||
Annual Subordinated Performance Fee | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Related party fee, percent of earnings in excess of benchmark one | 15% | ||||||
Related party fee, earnings per share used in calculation, benchmark one (in dollars per share) | $ / shares | $ 0.275 | ||||||
Related party fee, percent of earnings in excess of benchmark two | 10% | ||||||
Related party fee, earnings per share used in calculation, benchmark two (in dollars per share) | $ / shares | $ 0.3125 | ||||||
Variable Management Fee | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Equity issued fair value | $ 0 | ||||||
Property Management Fee | Property Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Number of property management agreements | agreement | 12 | ||||||
Percentage of gross rental receipts | 4% | ||||||
Percentage of reimbursable administrative charges | 15% | ||||||
Percentage of Allocated Loan Not Related to Specially Service Properties | 0.02083% | ||||||
Percentage of loan amount recovered | 0.50% | ||||||
Percentage of Allocated Loan Including Amount Related to Specially Service Properties | 0.0625% | ||||||
Property Management Fee | Property Manager | Secured Debt | |||||||
Related Party Transaction [Line Items] | |||||||
Debt instrument, face amount | $ 210,000,000 | ||||||
Number of properties securing mortgage loan | property | 12 | ||||||
Transition Fees | Property Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Equity issued fair value | $ 2,500 | ||||||
Construction fee percentage | 6% | ||||||
Administrative Services | Advisor | American Realty Capital Advisors | |||||||
Related Party Transaction [Line Items] | |||||||
Total commissions and fees from the dealer manager | 3,600,000 | 2,700,000 | |||||
Compensation And Overhead Costs | 1,000,000 | 500,000 | |||||
Salaries, Wages, Benefits and Overhead | Advisor | American Realty Capital Advisors | |||||||
Related Party Transaction [Line Items] | |||||||
Equity issued fair value | $ 8,100,000 | $ 7,000,000 | $ 7,700,000 | ||||
Reimbursement of executive salary annual cost of living adjustment | 3% | ||||||
Reimbursement of executive salary variable component, number of quarters | quarter | 4 | ||||||
Reimbursement of executive salary variable component, multiplier | 0.20% | ||||||
Reimbursement of executive salary reduction of real estate cost | 25% | ||||||
Reimbursement of executive salary reinvestment period | 12 months | ||||||
Reimbursement of executive salary negotiation period | 90 days | ||||||
Base Management Monthly Fee | Advisor | |||||||
Related Party Transaction [Line Items] | |||||||
Related party fee, quarterly payments, percent of net proceeds from equity financing | 0.10417% | ||||||
Property management and leasing fees | |||||||
Related Party Transaction [Line Items] | |||||||
Total commissions and fees from the dealer manager | $ 4,545,000 | 1,914,000 | |||||
Capitalized leasing fees | $ 1,600,000 | $ 300,000 |
Related Party Transactions an_4
Related Party Transactions and Arrangements - Summary of Fees, Expenses and Related Payables (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | $ 7,956 | $ 7,826 | |
Total related party operating fees and reimbursements | |||
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | 16,619 | 13,237 | |
Related party payable (receivable) | 1,566 | $ 1,838 | |
Acquisition cost reimbursements | |||
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | 0 | 203 | |
Related party payable (receivable) | 0 | 9 | |
Asset management fees to related party | |||
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | 7,956 | 7,826 | |
Related party payable (receivable) | 0 | 0 | |
Property management and leasing fees | |||
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | 4,545 | 1,914 | |
Related party payable (receivable) | 1,441 | 1,302 | |
Capitalized leasing fees | 1,600 | 300 | |
Professional fees and other reimbursements | |||
Related Party Transaction [Line Items] | |||
Total related party operating fees and reimbursements | 4,118 | $ 3,294 | |
Related party payable (receivable) | $ 125 | $ 527 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) | 3 Months Ended | ||||||
Jul. 21, 2021 | Jul. 19, 2021 | May 04, 2021 | Jul. 03, 2018 | Mar. 31, 2023 | Mar. 31, 2022 | Aug. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum authorized amount as a percentage of shares authorized | 10% | ||||||
Equity-based compensation | $ 3,567,000 | $ 3,498,000 | |||||
Percentage of aggregate distributions that is subject to priority catch-up distribution on each earned share-based arrangement unit | 90% | ||||||
Share-based payment arrangement, converted instrument, rate | 1 | ||||||
Distributions to non-controlling interest holders | $ 218,000 | $ 196,000 | |||||
Directors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | $ 60,000 | ||||||
Common stock issued in lieu of cash compensation (in shares) | 0 | 0 | |||||
Lead Independent Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | $ 100,000 | ||||||
Chair of Audit Committee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | 30,000 | ||||||
Other Audit Committee Members | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | 15,000 | ||||||
Chair of Compensation Committee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | 15,000 | ||||||
Other Compensation Committee or NCG Committee Member | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation annual cash retainer | $ 10,000 | ||||||
Share-based Compensation - Restricted Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 4 years | ||||||
Percentage of award earned | 25% | ||||||
Share-based Compensation - Restricted Shares | Directors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 1 year | ||||||
Director compensation, restricted stock | $ 85,000 | ||||||
Share-based Compensation - Restricted Shares | Share-based Payment Arrangement, Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of award earned | 50% | ||||||
Share-based Compensation - Restricted Shares | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 1 year | ||||||
Share-based Compensation - Restricted Shares | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 5 years | ||||||
2021 OPP | Advisor | American Realty Capital Advisors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Director compensation, restricted stock | $ 72,000,000 | ||||||
Ten-day trailing average closing price (in dollars per share) | $ 8.4419 | ||||||
Units granted (in shares) | 8,528,885 | ||||||
2018 LTIP Unit Award | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity-based compensation | $ 3,200,000 | $ 3,200,000 | |||||
Forfeited (in shares) | 4,496,796 | ||||||
LTIP Unit | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Units granted (in shares) | 1,407,266 | ||||||
Percentage of entitled distributions | 10% | ||||||
Distributions to non-controlling interest holders | $ 200,000 | $ 200,000 | |||||
Performance period | 3 years | ||||||
2021 LTIP Unit Award | Below Threshold | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of award earned | 0% | ||||||
Absolute TSR | 18% | ||||||
2021 LTIP Unit Award | Target | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of award earned | 50% | ||||||
Absolute TSR | 24% | ||||||
2021 LTIP Unit Award | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of award earned | 100% | ||||||
Absolute TSR | 36% | ||||||
2018 Equity Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Plan term | 10 years | ||||||
Restricted Share Plan | Share-based Compensation - Restricted Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | $ 2,200,000 | ||||||
Weighted average period for recognition | 2 years 8 months 12 days | ||||||
Equity-based compensation | $ 400,000 | $ 300,000 | |||||
Units granted (in shares) | 0 | ||||||
Forfeited (in shares) | 0 | ||||||
2021 OPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | $ 16,600,000 | ||||||
Weighted average period for recognition | 1 year 3 months 18 days | ||||||
Requisite service period (in years) | 38 months 16 days |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Unvested Restricted Stock Activity (Details) - Restricted Share Plan - Share-based Compensation - Restricted Shares | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares of Common Stock | |
Unvested - Beginning balance (in shares) | shares | 508,677 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Unvested - Ending balance (in shares) | shares | 508,677 |
Weighted-Average Grant Price | |
Unvested - Beginning balance (in dollars per share) | $ / shares | $ 7.93 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Unvested - Ending balance (in dollars per share) | $ / shares | $ 7.93 |
Equity-Based Compensation - Sch
Equity-Based Compensation - Schedule of LTIP Vesting Scenarios (Details) - 2021 LTIP Unit Award | May 04, 2021 shares |
Below Threshold | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Absolute TSR | 18% |
Percentage of LTIP Units Earned | 0% |
Number of LTIP Units Earned (in shares) | 0 |
Below Threshold | Peer Group | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | (6.00%) |
Percentage of LTIP Units Earned | 0% |
Number of LTIP Units Earned (in shares) | 0 |
Threshold | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Absolute TSR | 18% |
Percentage of LTIP Units Earned | 25% |
Number of LTIP Units Earned (in shares) | 10,661.10625 |
Threshold | Peer Group | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | (6.00%) |
Percentage of LTIP Units Earned | 25% |
Number of LTIP Units Earned (in shares) | 10,661.10625 |
Threshold | Peer Group | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | (6.00%) |
Target | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Absolute TSR | 24% |
Percentage of LTIP Units Earned | 50% |
Number of LTIP Units Earned (in shares) | 21,322.2125 |
Target | Peer Group | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | 0% |
Percentage of LTIP Units Earned | 50% |
Number of LTIP Units Earned (in shares) | 21,322.2125 |
Target | Peer Group | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | 0% |
Target | Peer Group | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | 0% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Absolute TSR | 36% |
Percentage of LTIP Units Earned | 100% |
Number of LTIP Units Earned (in shares) | 42,644.425 |
Maximum | Peer Group | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | 6% |
Percentage of LTIP Units Earned | 100% |
Number of LTIP Units Earned (in shares) | 42,644.425 |
Maximum | Peer Group | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Relative TSR Excess | 6% |
Net (Loss) Income Per Share - S
Net (Loss) Income Per Share - Schedule of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net (loss) income attributable to common stockholders | $ (18,757) | $ 39,934 |
Adjustments to net (loss) income for common share equivalents | (326) | (206) |
Adjusted net (loss) income attributable to common stockholders | $ (19,083) | $ 39,728 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Weighted-average shares outstanding - Basic (in shares) | 133,715,627 | 128,640,845 |
Weighted-average shares outstanding - Diluted (in shares) | 133,715,627 | 130,048,111 |
Earnings Per Share [Abstract] | ||
Net (loss) income per share attributable to common stockholders — Basic ( in dollars per share) | $ (0.14) | $ 0.31 |
Net (loss) income per share attributable to common stockholders — Diluted ( in dollars per share) | $ (0.14) | $ 0.31 |
Net (Loss) Income Per Share -_2
Net (Loss) Income Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive shares (in shares) | 9,210,483 | 7,716,758 | |
Class A units outstanding (in shares) | 172,921 | 172,921 | |
Unvested restricted shares | Restricted Share Plan | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Shares outstanding (in shares) | 508,677 | 422,108 | |
Unvested restricted shares (in shares) | 508,677 | 508,677 | |
Granted (in shares) | 0 | ||
2021 LTIP Unit Award | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Unvested restricted shares (in shares) | 8,528,885 | 8,528,885 | |
LTIP Unit | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Granted (in shares) | 1,407,266 | ||
Unvested restricted shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive shares (in shares) | 508,677 | 422,218 | |
Class A Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive shares (in shares) | 172,921 | 172,921 | |
2021 LTIP Unit Award | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive shares (in shares) | 8,528,885 | 7,121,619 |
Net (Loss) Income Per Share - N
Net (Loss) Income Per Share - Narrative (Details) | 3 Months Ended |
Mar. 31, 2022 shares | |
LTIP Unit | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Granted (in shares) | 1,407,266 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of the Segment Activity to Consolidated Net Income (Loss) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Revenue from tenants | $ 113,594 | $ 94,943 |
Property operating expense | 26,913 | 19,139 |
NOI | 86,681 | 75,804 |
Asset management fees to related party | (7,956) | (7,826) |
Impairment charges related to properties reclassified as held for sale | 0 | (5,942) |
Acquisition, transaction and other costs | (565) | (279) |
Equity-based compensation | (3,567) | (3,498) |
General and administrative | (10,492) | (6,833) |
Depreciation and amortization | (54,182) | (37,688) |
Gain on sale of real estate investments | 11,792 | 53,569 |
Interest expense | (34,675) | (23,740) |
Other income | 27 | 18 |
Gain on non-designated derivatives | 0 | 2,250 |
Net loss (income) attributable to non-controlling interests | 17 | (64) |
Allocation for preferred stock | (5,837) | (5,837) |
Net (loss) income attributable to common stockholders | (18,757) | 39,934 |
Single-Tenant Properties | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenue from tenants | 46,166 | 53,282 |
Property operating expense | 4,450 | 3,924 |
NOI | 41,716 | 49,358 |
Multi-Tenant Properties | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenue from tenants | 67,428 | 41,661 |
Property operating expense | 22,463 | 15,215 |
NOI | $ 44,965 | $ 26,446 |
Segment Reporting - Reconcili_2
Segment Reporting - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total investments in real estate, net | $ 4,218,143 | $ 4,323,363 | |
Cash and cash equivalents | 43,095 | 70,795 | $ 82,106 |
Restricted cash | 19,422 | 17,956 | $ 15,131 |
Deferred costs, net | 23,864 | 22,893 | |
Straight-line rent receivable | 67,332 | 66,657 | |
Prepaid expenses and other assets | 17,713 | 17,839 | |
Prepaid expenses and other assets | 67,824 | 66,551 | |
Total assets | 4,457,393 | 4,586,054 | |
Single-Tenant Properties | Operating Segments | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total investments in real estate, net | 1,798,895 | 1,880,418 | |
Multi-Tenant Properties | Operating Segments | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total investments in real estate, net | $ 2,419,248 | $ 2,442,945 |
Segment Reporting - Reconcili_3
Segment Reporting - Reconciliation of Capital Expenditures from Segments to Consolidated (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Total capital expenditures | $ 12,260 | $ 786,311 |
Accrued capital expenditures | 6,400 | |
Operating Segments | ||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Total capital expenditures | 2,600 | 3,457 |
Operating Segments | Single-Tenant Properties | ||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Total capital expenditures | 67 | 208 |
Operating Segments | Multi-Tenant Properties | ||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Total capital expenditures | $ 2,533 | $ 3,249 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | 3 Months Ended | |||||||
May 04, 2023 USD ($) | May 10, 2023 property | May 04, 2023 USD ($) property | Apr. 30, 2023 USD ($) property | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | Oct. 07, 2021 USD ($) | Sep. 30, 2021 USD ($) | |
Subsequent Event [Line Items] | |||||||||
Long-term Debt, Gross | $ 2,743,101,000 | ||||||||
Maximum borrowing capacity | $ 135,000,000 | ||||||||
Gross mortgage notes payable | |||||||||
Subsequent Event [Line Items] | |||||||||
Long-term Debt, Gross | 1,795,101,000 | $ 1,841,705,000 | |||||||
Assumed Multi-Tenant Mortgage III And Assumed Multi-Tenant Mortgage IV | Gross mortgage notes payable | |||||||||
Subsequent Event [Line Items] | |||||||||
Long-term Debt, Gross | $ 58,800,000 | ||||||||
Credit Facility | Revolving credit facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of property mortgaged | property | 7 | ||||||||
Maximum borrowing capacity | $ 173,000,000 | $ 815,000,000 | $ 540,000,000 | ||||||
Amount remaining available but undrawn | $ 46,600,000 | ||||||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of properties sold | property | 1 | ||||||||
Aggregate contract sale price | $ 1,100,000 | ||||||||
Number of property mortgaged | property | 7 | ||||||||
Number of property Asset Pooled | property | 6 | ||||||||
Number Of Leases Terminated | property | 4 | ||||||||
Subsequent Event | Assumed Multi-Tenant Mortgage III And Assumed Multi-Tenant Mortgage IV | Gross mortgage notes payable | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayments of debt | $ 50,000,000 | ||||||||
Subsequent Event | The Marquis And The Plant | Gross mortgage notes payable | |||||||||
Subsequent Event [Line Items] | |||||||||
Long-term Debt, Gross | $ 123,000,000 | 123,000,000 | |||||||
Repayments of debt | 123,000,000 | ||||||||
Subsequent Event | Credit Facility | Revolving credit facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Maximum borrowing capacity | 639,000,000 | 639,000,000 | $ 18,000,000 | ||||||
Amount remaining available but undrawn | $ 28,200,000 | $ 28,200,000 |