Document and Entity Information
Document and Entity Information - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Cole Office & Industrial REIT (CCIT II), Inc. | |
Entity Central Index Key | 0001572758 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 64.5 | |
Class T Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2.6 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Real estate assets: | ||
Land | $ 105,567 | $ 94,632 |
Buildings and improvements | 796,724 | 754,749 |
Intangible lease assets | 122,250 | 112,473 |
Total real estate assets, at cost | 1,024,541 | 961,854 |
Less: accumulated depreciation and amortization | (111,428) | (102,692) |
Total real estate assets, net | 913,113 | 859,162 |
Cash and cash equivalents | 7,198 | 102,093 |
Restricted cash | 2,539 | 1,364 |
Rents and tenant receivables | 20,951 | 20,057 |
Prepaid expenses and other assets | 1,118 | 1,572 |
Deferred costs, net | 1,321 | 1,407 |
Total assets | 946,240 | 985,655 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Credit facility and notes payable, net | 401,293 | 368,841 |
Accrued expenses and accounts payable | 4,648 | 3,906 |
Due to affiliates | 650 | 1,093 |
Intangible lease liabilities, net | 28,658 | 26,295 |
Distributions payable | 3,577 | 72,942 |
Derivative liability, deferred rental income and other liabilities | 18,610 | 5,695 |
Total liabilities | 457,436 | 478,772 |
Commitments and contingencies | ||
Redeemable common stock | 26,979 | 26,963 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Capital in excess of par value | 583,518 | 583,482 |
Accumulated distributions in excess of earnings | (110,849) | (104,007) |
Accumulated other comprehensive loss | (11,517) | (228) |
Total stockholders’ equity | 461,825 | 479,920 |
Total liabilities, redeemable common stock, and stockholders’ equity | 946,240 | 985,655 |
Class A Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 648 | 648 |
Class T Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 25 | $ 25 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, shares issued (in shares) | 64,760,378 | 64,766,777 |
Common stock, shares outstanding (in shares) | 64,760,378 | 64,766,777 |
Class T Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, shares issued (in shares) | 2,577,451 | 2,569,510 |
Common stock, shares outstanding (in shares) | 2,577,451 | 2,569,510 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Rental and other property income | $ 22,237 | $ 27,642 |
Operating expenses: | ||
General and administrative | 1,265 | 1,267 |
Property operating | 1,789 | 2,143 |
Real estate tax | 1,088 | 2,375 |
Advisory fees and expenses | 2,081 | 2,636 |
Transaction-related | 10 | 65 |
Depreciation and amortization | 8,521 | 9,028 |
Total operating expenses | 14,754 | 17,514 |
Operating income | 7,483 | 10,128 |
Other expense: | ||
Interest expense and other, net | (3,823) | (6,180) |
Net income | 3,660 | 3,948 |
Net income | 3,660 | 3,948 |
Class A Common Stock | ||
Other expense: | ||
Net income | 3,565 | 3,846 |
Net income | $ 3,565 | $ 3,846 |
Basic and diluted weighted average number of common shares outstanding (in shares) | 64,757,133 | 64,840,701 |
Basic and diluted net income per common share (in dollars per share) | $ 0.06 | $ 0.06 |
Class T Common Stock | ||
Other expense: | ||
Net income | $ 95 | $ 102 |
Net income | $ 95 | $ 102 |
Basic and diluted weighted average number of common shares outstanding (in shares) | 2,574,710 | 2,551,361 |
Basic and diluted net income per common share (in dollars per share) | $ 0.04 | $ 0.04 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 3,660 | $ 3,948 |
Other comprehensive loss | ||
Unrealized loss on interest rate swaps | (11,279) | (218) |
Amount of gain reclassified from other comprehensive loss into income as interest expense and other, net | (10) | (718) |
Total other comprehensive loss | (11,289) | (936) |
Total comprehensive (loss) income | $ (7,629) | $ 3,012 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Class A Common Stock | Class T Common Stock | Common StockClass A Common Stock | Common StockClass T Common Stock | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive Loss |
Balance (in shares) at Dec. 31, 2018 | 64,838,403 | 2,548,436 | ||||||
Balance at Dec. 31, 2018 | $ 462,613 | $ 648 | $ 25 | $ 583,304 | $ (124,308) | $ 2,944 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 461,200 | 19,131 | ||||||
Issuance of common stock | 5,082 | $ 5 | 5,077 | |||||
Distributions declared on common stock — $0.16 per common share | (10,419) | (10,419) | ||||||
Redemptions of common stock (in shares) | (474,437) | (15,384) | ||||||
Redemptions of common stock | (5,170) | $ (5) | (5,165) | |||||
Changes in redeemable common stock | 88 | 88 | ||||||
Equity-based compensation | 33 | 33 | ||||||
Comprehensive income (loss) | 3,012 | 3,948 | (936) | |||||
Balance (in shares) at Mar. 31, 2019 | 64,825,166 | 2,552,183 | ||||||
Balance at Mar. 31, 2019 | 455,239 | $ 648 | $ 25 | 583,337 | (130,779) | 2,008 | ||
Balance (in shares) at Dec. 31, 2019 | 64,766,777 | 2,569,510 | 64,766,777 | 2,569,510 | ||||
Balance at Dec. 31, 2019 | 479,920 | $ 648 | $ 25 | 583,482 | (104,007) | (228) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 423,488 | 17,414 | ||||||
Issuance of common stock | 4,409 | $ 4 | 4,405 | |||||
Distributions declared on common stock — $0.16 per common share | (10,502) | (10,502) | ||||||
Distribution and stockholder servicing fees | 4 | 4 | ||||||
Redemptions of common stock (in shares) | (429,887) | (9,473) | ||||||
Redemptions of common stock | (4,394) | $ (4) | (4,390) | |||||
Changes in redeemable common stock | (16) | (16) | ||||||
Equity-based compensation | 33 | 33 | ||||||
Comprehensive income (loss) | (7,629) | 3,660 | (11,289) | |||||
Balance (in shares) at Mar. 31, 2020 | 64,760,378 | 2,577,451 | 64,760,378 | 2,577,451 | ||||
Balance at Mar. 31, 2020 | $ 461,825 | $ 648 | $ 25 | $ 583,518 | $ (110,849) | $ (11,517) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Distributions declared (dollars per share) | $ 0.16 | $ 0.16 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 3,660 | $ 3,948 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization, net | 7,949 | 8,486 |
Amortization of deferred financing costs | 274 | 263 |
Straight-line rental income | (1,715) | (891) |
Equity-based compensation | 33 | 33 |
Changes in assets and liabilities: | ||
Rents and tenant receivables | 821 | (911) |
Prepaid expenses and other assets | (552) | (1,135) |
Accrued expenses and accounts payable | 1,385 | (393) |
Deferred rental income and other liabilities | 1,632 | (1,477) |
Due to affiliates | (393) | 636 |
Net cash provided by operating activities | 13,094 | 8,559 |
Cash flows from investing activities: | ||
Investment in real estate assets | (59,505) | 0 |
Real estate developments and capital expenditures | (675) | (330) |
Payment of property escrow deposits | (700) | 0 |
Refund of property escrow deposits | 1,700 | 0 |
Proceeds from the settlement of insurance claims | 0 | 28 |
Net cash used in investing activities | (59,180) | (302) |
Cash flows from financing activities: | ||
Redemptions of common stock | (4,394) | (5,170) |
Distribution and stockholder servicing fees paid | (46) | (49) |
Distributions to stockholders | (75,458) | (5,337) |
Proceeds from credit facility | 56,500 | 9,000 |
Repayments of credit facility and notes payable | (24,170) | (5,500) |
Deferred financing costs paid | (66) | (50) |
Net cash used in financing activities | (47,634) | (7,106) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (93,720) | 1,151 |
Cash and cash equivalents and restricted cash, beginning of period | 103,457 | 5,862 |
Cash and cash equivalents and restricted cash, end of period | 9,737 | 7,013 |
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: | ||
Total cash and cash equivalents and restricted cash | 9,737 | 7,013 |
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ||
Distributions declared and unpaid | 3,577 | 3,588 |
Accrued deferred financing costs | 0 | 12 |
Change in fair value on interest rate swaps | (11,289) | (936) |
Common stock issued through distribution reinvestment plan | 4,409 | 5,082 |
Accrued capital expenditures | 22 | 68 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 3,942 | 5,947 |
Cash paid for taxes | $ 17 | $ 32 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | NOTE 1 — ORGANIZATION AND BUSINESS Cole Office & Industrial REIT (CCIT II), Inc. (the “Company”) is a non-exchange traded real estate investment trust (“REIT”) formed as a Maryland corporation on February 26, 2013, that elected to be taxed, and currently qualifies, as a REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2014. The Company primarily acquires commercial real estate assets consisting of single-tenant, income-producing necessity office and industrial properties, which are leased to creditworthy tenants under long-term “net leases”, including distribution facilities, warehouses, manufacturing plants and corporate or regional headquarters in strategic locations. As of March 31, 2020 , the Company owned 26 properties, comprising approximately 3.9 million rentable square feet of 99.5% leased commercial space located in 12 states. Substantially all of the Company’s business is conducted through Cole Corporate Income Operating Partnership II, LP, a Delaware limited partnership (“CCI II OP”), of which the Company is the sole general partner and owns, directly or indirectly, 100% of the partnership interests. The Company is externally managed by Cole Corporate Income Management II, LLC, a Delaware limited liability company (“CCI II Management”), which is an affiliate of CIM Group, LLC (“CIM”). CIM is a community-focused real estate and infrastructure owner, operator, developer and lender with multi-disciplinary expertise, including in acquisitions, management, development, leasing, research and capital markets. CIM is headquartered in Los Angeles, California and has offices in Oakland, California; Bethesda, Maryland; Dallas, Texas; New York, New York; Chicago, Illinois; and Phoenix, Arizona. CCO Group, LLC owns and controls CCI II Management, the Company’s advisor, and is the indirect owner of CCO Capital, LLC (“CCO Capital”), the Company’s dealer manager, and CREI Advisors, LLC (“CREI Advisors”), the Company’s property manager. CCO Group, LLC and its subsidiaries (collectively, “CCO Group”) serve as the Company’s sponsor and as a sponsor to CIM Real Estate Finance Trust, Inc. (formerly known as Cole Credit Property Trust IV, Inc.) (“CMFT”), Cole Credit Property Trust V, Inc. (“CCPT V”), Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”) and CIM Income NAV, Inc. (“CIM Income NAV”). On September 17, 2013, the Company commenced its initial public offering (the “Offering”) on a “best efforts” basis, initially offering up to a maximum of $2.5 billion in shares of a single class of common stock (referred to as Class A Shares) in the primary offering at a price of $10.00 per share, as well as up to $475.0 million in additional shares pursuant to a distribution reinvestment plan (the “Original DRIP”) at a price of $9.50 per share. In March 2016, the Company reclassified a portion of its unissued Class A common stock (the “Class A Shares”) as Class T common stock (the “Class T Shares”) and commenced sales of Class T Shares thereafter upon receipt of the required regulatory approvals. In addition, the Company registered an aggregate of $120.0 million of Class A Shares and Class T Shares under the Amended and Restated Distribution Reinvestment Plan (the “Amended and Restated DRIP” and collectively with the Original DRIP, the “DRIP”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-213306), which was filed with the Securities Exchange Commission (“SEC”) on August 25, 2016 and automatically became effective with the SEC upon filing (the “DRIP Offering” and collectively with the Offering, the “Offerings”). The Company ceased issuing shares in the Offering on September 17, 2016 and had sold a total of $678.0 million of Class A Shares and Class T Shares, including $651.3 million of Class A Shares and Class T Shares sold to the public pursuant to the primary portion of the Offering and $26.7 million of Class A Shares and Class T Shares sold pursuant to the DRIP. The unsold Class A Shares and Class T Shares of $2.3 billion in the aggregate were subsequently deregistered. The Company has continued to issue Class A Shares and Class T Shares under the DRIP Offering. The Company’s board of directors (the “Board”) establishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231. Distributions are reinvested in shares of the Company’s common stock under the DRIP Offering at the estimated per share NAV as determined by the Board. Additionally, the estimated per share NAV as determined by the Board serves as the per share NAV price for the purposes of the share redemption program. On March 26, 2020 , the Board established an updated estimated per share NAV of the Company’s common stock, using a valuation date of December 31, 2019 , of $10.06 per share for both Class A Shares and Class T Shares. As a result, commencing on March 30, 2020 , distributions are reinvested under the DRIP Offering at a price of $10.06 per share for both Class A Shares and Class T Shares, the updated estimated per share NAV as of December 31, 2019 , as determined by the Board. Additionally, $10.06 per share serves as the most recent estimated per share NAV for purposes of the share redemption program. The Board previously established a per share NAV as of February 29, 2016 , December 31, 2016 , December 31, 2017 and December 31, 2018 . The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm. The Company intends to publish an updated estimated per share NAV on a quarterly, rather than an annual, basis going forward, until such time that the Company has greater visibility into the impact of the current novel coronavirus (“COVID-19”) pandemic on the Company’s property valuations. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements. Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2019 , and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 . The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; changes in anticipated holding periods; or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions. No impairment indicators were identified and no impairment losses were recorded during the three months ended March 31, 2020 or 2019 . The Company’s impairment assessment as of March 31, 2020 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in impairment charges in the future. The Company cannot provide any assurance that material impairment charges with respect to the Company’s real estate assets will not occur during 2020 or in future periods, particularly in light of the negative economic impacts caused by the COVID-19 pandemic. If the effects of the COVID-19 pandemic cause economic and market conditions to continue to deteriorate or if the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. As of March 31, 2020, we have not identified any further impairments resulting from COVID-19 related impacts, including as a result of tenant requests for rent relief. The Company intends to hold its assets for the long-term; therefore, a temporary change in cash flows due to COVID-19 related impacts alone would not be an indicator of impairment. However, we have y et to see the long-term effects of COVID-19 on the economy and the extent to which it may impact our tenants in the future. Indications of a tenant’s inability to continue as a going concern, changes in our view or strategy relative to a tenant’s business or industry as a result of the economic impacts of COVID-19, or changes in our long-term hold strategies, could be indicative of an impairment triggering event. Accordingly, the Company will continue to monitor circumstances and events in future periods to determine whether additional impairment charges are warranted. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount is then recorded to reflect the estimated fair value of the property, net of selling costs. There were no assets identified as held for sale as of March 31, 2020 or December 31, 2019 . Disposition of Real Estate Assets Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. There were no property dispositions during the three months ended March 31, 2020 and 2019. The disposition of 18 of the Company’s individual properties subsequent to the three months ended March 31, 2019 did not qualify for discontinued operations presentation and, thus, the results of operations of the properties that were sold remain in income from continuing operations, and any associated gains or losses from the disposition are included in gain on disposition of real estate, net. Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their relative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. Acquisition-related fees and certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. Restricted Cash The Company had $2.5 million and $1.4 million in restricted cash as of March 31, 2020 and December 31, 2019 , respectively. Included in restricted cash was $2.3 million and $1.1 million held by lenders in lockbox accounts as of March 31, 2020 and December 31, 2019 , respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Restricted cash also included $265,000 and $254,000 held by a lender in an escrow account for a certain property in accordance with the associated loan agreement as of March 31, 2020 and December 31, 2019 , respectively. Leases The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee. Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations. The Company has an investment in a real estate property that is subject to a ground lease, for which a lease liability and right of use (“ROU”) asset was recorded. See Note 12 — Leases for a further discussion regarding this ground lease. Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized. Revenue Recognition Rental and other property income is primarily derived from fixed contractual payments from operating leases and, therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants are probable. The determination of whether collectability is probable takes 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. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available to management. The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable. Earnings (Loss) and Distributions Per Share The Company has two classes of common stock. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which can result in different earnings per share for each of the classes. Under the two-class method, earnings per share of each class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. The distributed earnings to Class T Share common stockholders represents distributions declared less the distribution and stockholder servicing fees. Diluted income per share, when applicable, considers the effect of any potentially dilutive share equivalents, of which the Company had no ne for the three months ended March 31, 2020 or 2019 . Distributions per share are calculated based on the authorized daily distribution rate. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which was subsequently amended by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”), in November 2018. Subsequently, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to provide additional guidance on the credit losses standard. ASU 2016-13 and the related updates are intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held- for-investment, held-to-maturity debt securities, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No. 2016-02, Leases ( Topic 842 ) (“ASC 842”) . ASU 2016-13 and ASU 2018-19 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted ASU 2016-13 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This ASU amends and removes several disclosure requirements including the valuation processes for Level 3 fair value measurements. ASU 2018-13 also modifies some disclosure requirements and requires additional disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and requires the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The provisions of ASU 2018-13 are effective January 1, 2020 using a prospective transition method for amendments effecting changes in unrealized gains and losses, significant unobservable inputs used to develop Level 3 fair value measurements and narrative description on uncertainty of measurements. The remaining provisions of ASU 2018-13 are to be applied retrospectively, and early adoption is permitted. The Company adopted ASU 2018-13 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes (“ASU 2018-16”). The amendments in this ASU permit the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes, or another acceptable benchmark interest rate. The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in specified segments of the U.S. Treasury repo market. It has been selected as the preferred replacement for the U.S. dollar London Interbank Offered Rate (“LIBOR”), which will be phased out by the end of 2021. ASU 2018-16 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2018-16 is required to be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The Company currently uses LIBOR as its benchmark interest rate in the Company’s interest rate swaps associated with the Company’s LIBOR-based variable rate borrowings. The Company has not entered into any new or redesignated hedging relationships on or after the date of adoption of ASU 2018-16. The Company has evaluated the effect of this new benchmark interest rate option, and does not believe this ASU will have a material impact on its condensed consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities . The guidance changes the guidance for determining whether a decision-making fee is a variable interest. Under the new ASU, indirect interests held through related parties under common control will now be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interests. Such indirect interests were previously treated the same as direct interests. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted ASU 2018-17 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In April 2020, the FASB issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Due to the business disruptions and challenges severely affecting the global economy caused by COVID-19, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842 addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from COVID-19 related impacts. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 3 — FAIR VALUE MEASUREMENTS GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: Credit facility and notes payable — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of March 31, 2020 , the estimated fair value of the Company’s debt was $404.1 million , compared to a carrying value of $403.4 million . The estimated fair value of the Company’s debt was $371.1 million as of December 31, 2019 , which approximated its carrying value. Derivative instruments — The Company’s derivative instruments are comprised of interest rate swaps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of March 31, 2020 and December 31, 2019 , the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accrued expenses and accounts payable , other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. As of March 31, 2020 and December 31, 2019 , there have been no transfers of financial assets or liabilities between fair value hierarchy levels. In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of March 31, 2020 and as of December 31, 2019 (in thousands): Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance as of March 31, 2020 (Level 1) (Level 2) (Level 3) Financial liability: Interest rate swap $ (11,517 ) $ — $ (11,517 ) $ — Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance as of December 31, 2019 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swap $ 6 $ — $ 6 $ — Financial liability: Interest rate swap $ (234 ) $ — $ (234 ) $ — |
REAL ESTATE ASSETS
REAL ESTATE ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
REAL ESTATE ASSETS | NOTE 4 — REAL ESTATE ASSETS 2020 Property Acquisitions During the three months ended March 31, 2020 , the Company acquired two office properties for an aggregate purchase price of $59.5 million (the “2020 Asset Acquisitions”), which includes $1.9 million of acquisition-related expenses that were capitalized. The Company funded the 2020 Asset Acquisitions with proceeds from real estate dispositions during the year ended December 31, 2019. The Company did not acquire any properties during the three months ended March 31, 2019 . The following table summarizes the purchase price allocations for the 2020 Asset Acquisitions (in thousands): 2020 Asset Acquisitions Land $ 10,935 Buildings and improvements 41,943 Acquired in-place leases and other intangibles (1) 9,777 Intangible lease liabilities (2) (3,150 ) Total purchase price $ 59,505 ______________________ (1) The weighted average amortization period for acquired in-place leases and other intangibles was 12.4 years. (2) The weighted average amortization period for acquired intangible lease liabilities was 12.7 years. |
INTANGIBLE LEASE ASSETS AND LIA
INTANGIBLE LEASE ASSETS AND LIABILITIES | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE LEASE ASSETS AND LIABILITIES | NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES Intangible lease assets and liabilities consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands, except weighted average life remaining): March 31, 2020 December 31, 2019 Intangible lease assets: In-place leases and other intangibles, net of accumulated amortization of $30,814 and $28,347 respectively (with a weighted average life remaining of 8.9 years and 8.8 years, respectively) $ 83,622 $ 76,312 Acquired above-market leases, net of accumulated amortization of $966 and $751, respectively (with a weighted average life remaining of 11.9 years and 12.1 years, respectively) 6,848 7,063 Total intangible lease assets, net $ 90,470 $ 83,375 Intangible lease liabilities: Acquired below-market leases, net of accumulated amortization of $10,190 and $9,403, respectively (both with a weighted average life remaining of 8.9 years) $ 28,658 $ 26,295 Amortization of the above-market leases is recorded as a reduction to rental and other property income, and amortization expense for the in-place leases and other intangibles is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. Amortization of below-market leases is recorded as an increase to rental and other property income in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization related to the intangible lease assets and liabilities for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended March 31, 2020 2019 In-place lease and other intangible amortization $ 2,467 $ 2,423 Above-market lease amortization $ 215 $ 31 Below-market lease amortization $ 787 $ 573 As of March 31, 2020 , the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands): Amortization In-Place Leases and Other Intangibles Above-Market Leases Below-Market Leases Remainder of 2020 $ 7,532 $ 521 $ 2,404 2021 10,043 694 3,206 2022 10,043 694 3,206 2023 9,336 578 3,206 2024 8,592 531 3,206 Thereafter 38,076 3,830 13,430 Total $ 83,622 $ 6,848 $ 28,658 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 6 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. During the three months ended March 31, 2020 , one of the Company’s interest rate swap agreements matured. Additionally, the Company’s interest rate swap agreement associated with a $200.0 million notional amount became effective as of January 10, 2020. As of March 31, 2020 , the Company had one interest rate swap agreement. The following table summarizes the terms of the Company’s executed interest rate swap agreements designated as hedging instruments as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands): Outstanding Notional Amount as of Interest Rates (1) Effective Dates Maturity Dates Fair Value of Liability as of Balance Sheet Location March 31, 2020 March 31, 2020 December 31, 2019 (2) Interest Rate Swap Derivative liability, deferred rental income and other liabilities $ 200,000 3.02 % 1/10/2020 12/10/2024 $ (11,517 ) $ (234 ) ______________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of March 31, 2020 . (2) As of December 31, 2019 , the Company had one interest rate swap agreement in an asset position with a notional amount of $21.7 million and a fair value of $6,000 included in prepaid expenses and other assets on the condensed consolidated balance sheets. Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements. The notional amount under the interest rate swap agreements is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks. Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt. The change in fair value of the derivative instruments that are designated as hedges is recorded in other comprehensive loss , with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. For the three months ended March 31, 2020 and 2019 , the amount of gains reclassified from other comprehensive loss as a decrease to interest expense was $10,000 and $718,000 , respectively. During the next 12 months, the Company estimates that $2.6 million will be reclassified from other comprehensive loss as an increase to interest expense. The Company includes cash flows from interest rate swap agreements in cash flows provided by operating activities on its condensed consolidated statements of cash flows, as the Company’s accounting policy is to present cash flows from hedging instruments in the same category in its condensed consolidated statements of cash flows as the category for cash flows from the hedged items. The Company has agreements with each of its derivative counterparties that contain provisions whereby, if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment. If the Company breaches any of these provisions, it could be required to settle its obligations under these agreements at the aggregate termination value of the derivative instruments, inclusive of interest payments and accrued interest of $11.7 million as of March 31, 2020. In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the credit quality of the Company and the respective counterparty. There were no termination events or events of default related to the interest rate swaps as of March 31, 2020. |
CREDIT FACILITY AND NOTES PAYAB
CREDIT FACILITY AND NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITY AND NOTES PAYABLE | NOTE 7 — CREDIT FACILITY AND NOTES PAYABLE As of March 31, 2020 , the Company had $401.3 million of debt outstanding, including net deferred financing costs, with a weighted average interest rate of 3.5% and weighted average term to maturity of 2.9 years . The weighted average term to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date. Should a loan not be repaid by its scheduled repayment date, the applicable interest rate will increase as specified in the respective loan agreement until the extended maturity date. The following table summarizes the debt balances as of March 31, 2020 and December 31, 2019 and the debt activity for the three months ended March 31, 2020 (in thousands): During the Three Months Ended March 31, 2020 Balance as of Debt Issuance, Net Repayments and Modifications Accretion Balance as of March 31, 2020 Fixed rate debt $ 171,065 $ — $ (21,670 ) $ — $ 149,395 Credit facility 200,000 56,500 (2,500 ) — 254,000 Total debt 371,065 56,500 (24,170 ) — 403,395 Deferred costs – credit facility (1) (2,116 ) — — 45 (2,071 ) Deferred costs – fixed rate debt (108 ) — — 77 (31 ) Total debt, net $ 368,841 $ 56,500 $ (24,170 ) $ 122 $ 401,293 ______________________ (1) Deferred costs related to the term portion of the Credit Facility, as defined below. Notes Payable As of March 31, 2020 , the Company had fixed rate debt outstanding of $149.4 million . The fixed rate debt has interest rates ranging from 4.3% to 4.8% per annum and matures on various dates from April 2020 to November 2020. As of March 31, 2020 , the fixed rate debt had a weighted average interest rate of 4.5% . The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt was $230.7 million as of March 31, 2020 . Each of the mortgage notes payable, comprising the fixed rate debt, is secured by the respective properties on which the debt was placed. Subsequent to March 31, 2020 , the Company repaid $71.5 million of mortgage notes that matured on April 6, 2020. With respect to the remaining $77.9 million of debt maturing within the next 12 months following the date these financial statements are issued, the Company believes cash on hand, net cash provided by operations, borrowings available under the Credit Facility or the entry into new financing arrangements will be sufficient in order to meet its debt obligations. Credit Facility The Company has a credit agreement with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) as administrative agent, and the lenders under the credit agreement (the “Credit Agreement”), that allows for borrowings of up to $500.0 million (the “Credit Facility”), including a $300.0 million delayed draw term loan facility (the “Term Loan”) and up to $200.0 million in revolving loans under a revolving credit facility (the “Revolving Loans”). The Credit Facility replaced the Company’s prior unsecured credit facility with JPMorgan Chase (the “Prior Credit Agreement”), and the Company used the proceeds of the Term Loan to repay amounts outstanding under the Prior Credit Agreement. The Term Loan matures on December 10, 2024. The Revolving Loans are set to mature on December 10, 2023; however, the Company may elect to extend the maturity date of the Revolving Loans for up to two six -month periods, but no later than December 10, 2024, subject to satisfying certain conditions described in the Credit Agreement. Depending upon the type of loan specified and overall leverage ratio, the Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month LIBOR, multiplied by the statutory reserve rate (the “Adjusted LIBO Rate”), plus an applicable rate ranging from 1.40% to 1.90% , or (ii) a base rate, ranging from 0.40% to 0.90% , plus the greater of: (a) JPMorgan Chase’s prime rate; (b) the NYFRB Rate, as defined in the Credit Agreement, plus 0.50% ; or (c) the Adjusted LIBO Rate for a period of one-month plus 1.00% . As of March 31, 2020 , there was $54.0 million outstanding under the Revolving Loans at a weighted average interest rate of 2.6% , and the amount outstanding under the Term Loan totaled $200.0 million , which was subject to an interest rate swap agreement (the “Swapped Term Loan”). The interest rate swap agreement had the effect of fixing the Adjusted LIBO Rate per annum of the Swapped Term Loan at an all-in rate of 3.02% . As of March 31, 2020 , the Company had $241.1 million in unused capacity under the Credit Facility, subject to borrowing availability. The Company had available borrowings of $174.5 million as of March 31, 2020 . The Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the sum of (i) $400.0 million plus (ii) 75% of the equity issued minus (iii) the aggregate amount of any redemptions or similar transaction from the date of the Credit Agreement, a net leverage ratio less than or equal to 60% , a fixed charge coverage ratio equal to or greater than 1.50 , an unsecured debt to unencumbered asset value ratio equal to or less than 60% , an unsecured debt service coverage ratio greater than 1.75 , a secured debt ratio equal to or less than 40% , and recourse debt at less than or equal to 15% of total asset value. The Company believes it was in compliance with the financial covenants of the Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements, as of March 31, 2020 . Maturities The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to March 31, 2020 (in thousands): Principal Repayments Remainder of 2020 $ 149,395 2021 — 2022 — 2023 54,000 2024 200,000 Thereafter — Total $ 403,395 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 — COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, the Company may become subject to litigation and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity. |
RELATED-PARTY TRANSACTIONS AND
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | NOTE 9 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS The Company has incurred, and will continue to incur, fees and expenses payable to CCI II Management and certain of its affiliates in connection with the Offering and the acquisition, management and disposition of its assets. Distribution and stockholder servicing fees The Company pays CCO Capital a distribution and stockholder servicing fee for Class T Shares that is calculated on a daily basis in the amount of 1/365th of 0.8% of the per share NAV of the Class T Shares that were sold in the primary portion of the Offering. The distribution and stockholder servicing fee is paid monthly in arrears from cash flows from operations or, if the Company’s cash flows from operations are not sufficient to pay the distribution and stockholder servicing fee, from borrowings in anticipation of future cash flows. An estimated liability for future distribution and stockholder servicing fees payable to CCO Capital was recognized at the time each Class T Share was sold and included in due to affiliates in the condensed consolidated balance sheets with a corresponding decrease to capital in excess of par value. The Company will cease paying the distribution and stockholder servicing fee with respect to Class T Shares at the earliest of (i) the end of the month in which the transfer agent, on behalf of the Company, determines that total selling commissions and distribution and stockholder servicing fees paid by a stockholder within his or her individual account would be equal to 7.0% of the stockholder’s total gross investment amount at the time of the purchase of the primary Class T Shares held in such account; (ii) the date on which the aggregate underwriting compensation from all sources equals 10.0% of the gross proceeds from the sale of the Company’s shares in the Offering, excluding shares sold pursuant to the DRIP portion of the Offering; (iii) the fifth anniversary of the last day of the month in which the Offering (excluding the offering of shares pursuant to the DRIP portion of the Offering) terminated; (iv) the date such Class T Share is no longer outstanding; and (v) the date the Company effects a liquidity event. CCO Capital may, in its discretion, reallow to participating broker-dealers all or a portion of the distribution and stockholder servicing fee for services that such participating broker-dealers perform. No distribution and stockholder servicing fees are paid to CCO Capital or other participating broker-dealers with respect to shares sold pursuant to the DRIP portion of the Offering or the DRIP Offering. Acquisition fees and expenses The Company pays CCI II Management or its affiliates acquisition fees of up to 2.0% of: (i) the contract purchase price of each property or asset the Company acquires; (ii) the amount paid in respect of the development, construction or improvement of each asset the Company acquires; (iii) the purchase price of any loan the Company acquires; and (iv) the principal amount of any loan the Company originates. In addition, the Company reimburses CCI II Management or its affiliates for acquisition-related expenses incurred in the process of acquiring a property or the origination or acquisition of a loan, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of the Board, including a majority of the Company’s independent directors, as commercially competitive, fair and reasonable to the Company. Other transaction-related expenses, such as advisor reimbursements for disposition activities, are expensed as incurred and are included in transaction-related expenses in the condensed consolidated statements of operations. Advisory fees and expenses The Company pays CCI II Management a monthly advisory fee based upon the Company’s monthly average invested assets, which, for those assets acquired prior to January 1, 2020, is based on the estimated market value of such assets used to determine the Company’s estimated per share NAV as of December 31, 2019, as discussed in Note 1 — Organization and Business , and for those assets acquired subsequent to December 31, 2019, is based on the purchase price. The monthly advisory fee is equal to the following amounts: (i) an annualized rate of 0.75% paid on the Company’s average invested assets that are between $0 and $2.0 billion ; (ii) an annualized rate of 0.70% paid on the Company’s average invested assets that are between $2.0 billion and $4.0 billion ; and (iii) an annualized rate of 0.65% paid on the Company’s average invested assets that are over $4.0 billion . Operating expenses The Company reimburses CCI II Management or its affiliates for the operating expenses they paid or incurred in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse CCI II Management or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed the greater of (i) 2.0% of average invested assets, or (ii) 25.0% of net income, excluding any additions to reserves for depreciation or other similar non-cash reserves and excluding any gain from the sale of assets for that period. The Company will not reimburse CCI II Management or its affiliates for the salaries and benefits paid to personnel in connection with the services for which CCI II Management or its affiliates receive acquisition fees, and the Company will not reimburse CCI II Management for salaries and benefits paid to the Company’s executive officers. Disposition fees If CCI II Management or its affiliates provide a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more properties (or the Company’s entire portfolio), the Company will pay CCI II Management or its affiliates a disposition fee in an amount equal to up to one-half of the real estate or brokerage commission paid by the Company to third parties on the sale of such property, not to exceed 1.0% of the contract price of the property sold; provided, however, in no event may the total disposition fees paid to CCI II Management, its affiliates, and unaffiliated third parties, exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. In addition, if CCI II Management or its affiliates provides a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more assets other than properties, the Company may separately compensate CCI II Management or its affiliates at such rates and in such amounts as the Board, including a majority of the Company’s independent directors, and CCI II Management agree upon, not to exceed an amount equal to 1.0% of the contract price of the assets sold. Subordinated performance fees If the Company is sold or its assets are liquidated, CCI II Management will be entitled to receive a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after stockholders have received, from regular distributions plus special distributions paid from proceeds of such sale, a return of their net capital invested and an 8.0% annual cumulative, non-compounded return. Alternatively, if the Company’s shares are listed on a national securities exchange, CCI II Management will be entitled to a subordinated performance fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing exceeds the sum of the total amount of capital raised from stockholders and the amount of distributions necessary to generate an 8.0% annual cumulative, non-compounded return to stockholders. As an additional alternative, upon termination of the advisory agreement, CCI II Management may be entitled to a subordinated performance fee similar to the fee to which it would have been entitled had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. During the three months ended March 31, 2020 and 2019 , no subordinated performance fees were incurred related to any such events. The Company incurred fees and expense reimbursements as shown in the table below for services provided by CCI II Management and its affiliates related to the services described above during the periods indicated (in thousands): Three Months Ended March 31, 2020 2019 Distribution and stockholder servicing fees (1) $ 46 $ 49 Acquisition fees and expenses $ 1,312 $ 65 Advisory fees and expenses $ 2,081 $ 2,636 Operating expenses $ 206 $ 386 ______________________ (1) Amounts are calculated in accordance with the dealer manager agreement and exclude the estimated liability for future distribution and stockholder servicing fees payable to CCO Capital of $242,000 and $492,000 for the three months ended March 31, 2020 and 2019 , respectively, which is included in due to affiliates in the condensed consolidated balance sheets with a corresponding decrease to capital in excess of par value. Due to Affiliates As of March 31, 2020 and December 31, 2019 , $650,000 and $1.1 million , respectively, was recorded for services and expenses incurred, but not yet reimbursed, to CCI II Management or its affiliates. These amounts are primarily for operating expenses and distribution and stockholder servicing fees payable to CCO Capital. These amounts were included in due to affiliates in the condensed consolidated balance sheets for such periods. |
ECONOMIC DEPENDENCY
ECONOMIC DEPENDENCY | 3 Months Ended |
Mar. 31, 2020 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | NOTE 10 — ECONOMIC DEPENDENCY Under various agreements, the Company has engaged and may in the future engage CCI II Management or its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and stockholder relations. As a result of these relationships, the Company is dependent upon CCI II Management or its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 11 — STOCKHOLDERS’ EQUITY Equity-Based Compensation On August 9, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “Plan”), under which 400,000 of the Company’s common shares were reserved for issuance and share awards of 376,000 are available for future grant as of March 31, 2020 . As of March 31, 2020 , Company has granted awards of approximately 6,000 restricted Class A Shares to each of the independent members of the Board (approximately 24,000 restricted shares in aggregate) under the Plan. As of March 31, 2020 , 12,000 of the restricted Class A Shares had vested based on one year of continuous service. The remaining 12,000 shares issued had not vested or been forfeited as of March 31, 2020 . The fair value of the Company’s share awards is determined using the Company’s NAV per share on the date of grant. Compensation expense related to these restricted Class A Shares is recognized over the vesting period. The Company recorded compensation expense of $33,000 for the three months ended March 31, 2020 and 2019, related to these restricted Class A Shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2020 , there was $66,000 of total unrecognized compensation expense related to these restricted Class A Shares, which will be recognized ratably over the remaining period of service prior to October 1, 2020. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 12 — LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and extension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred. As of March 31, 2020 , the leases had a weighted-average remaining term of 8.8 years . Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2020 , the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands): Future Minimum Rental Income Remainder of 2020 $ 54,796 2021 75,973 2022 77,683 2023 75,343 2024 70,648 Thereafter 349,129 Total $ 703,572 Rental and other property income during the three months ended March 31, 2020 and 2019 consisted of the following (in thousands): Three Months Ended March 31, 2020 2019 Fixed rental and other property income (1) $ 19,945 $ 23,601 Variable rental and other property income (2) 2,292 4,041 Total rental and other property income $ 22,237 $ 27,642 ______________________ (1) Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases. (2) Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses. The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 2.5 years . Upon initial adoption of ASC 842, the Company recognized a lease liability (in deferred rental income and other liabilities) and a related ROU asset (in prepaid expenses, derivative assets and other assets) of $170,000 in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3% . This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease. The Company recognized $12,000 of ground lease expense during the three months ended March 31, 2020 , all of which was paid in cash during the period it was recognized. As of March 31, 2020 , the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $36,000 for the remainder of 2020, and $48,000 annually for 2021 through the maturity date of the lease in October 2022. |
LEASES | NOTE 12 — LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and extension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred. As of March 31, 2020 , the leases had a weighted-average remaining term of 8.8 years . Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2020 , the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands): Future Minimum Rental Income Remainder of 2020 $ 54,796 2021 75,973 2022 77,683 2023 75,343 2024 70,648 Thereafter 349,129 Total $ 703,572 Rental and other property income during the three months ended March 31, 2020 and 2019 consisted of the following (in thousands): Three Months Ended March 31, 2020 2019 Fixed rental and other property income (1) $ 19,945 $ 23,601 Variable rental and other property income (2) 2,292 4,041 Total rental and other property income $ 22,237 $ 27,642 ______________________ (1) Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases. (2) Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses. The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 2.5 years . Upon initial adoption of ASC 842, the Company recognized a lease liability (in deferred rental income and other liabilities) and a related ROU asset (in prepaid expenses, derivative assets and other assets) of $170,000 in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3% . This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease. The Company recognized $12,000 of ground lease expense during the three months ended March 31, 2020 , all of which was paid in cash during the period it was recognized. As of March 31, 2020 , the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $36,000 for the remainder of 2020, and $48,000 annually for 2021 through the maturity date of the lease in October 2022. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENTS COVID-19 Update The global outbreak of COVID-19 continues to adversely impact commercial activity and has contributed to significant volatility in financial markets. The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of the Company’s business. The extent to which this pandemic could affect the Company’s financial condition, liquidity, and results of operations is difficult to predict and depends on evolving factors, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The magnitude of the outbreak will depend on factors beyond the Company’s control including actions taken by local, state and federal agencies, non-governmental organizations, the medical community, the Company’s tenants, and others. Due to these uncertainties, the Company is unable to predict the impact that the COVID-19 pandemic will have on the Company’s financial condition, results of operations and cash flows in future periods or the impact that COVID-19 will have on the Company’s tenants and other business partners; however, any material effect on these parties could adversely impact the Company. From late March through May 8, 2020, the Company received a short term rent relief request or request for further discussion from one tenant, totaling approximately $209,000 of monthly base rent. The Company has not reached any agreements with any of its tenants in regard to rental relief. Redemption of Shares of Common Stock Subsequent to March 31, 2020 , the Company redeemed approximately 434,000 shares for $4.4 million at an average per share price of $10.06 pursuant to the Company’s share redemption program. Management, in its discretion, limited the amount of shares redeemed for the three months ended March 31, 2020 to an amount equal to the net proceeds the Company received from the sale of shares pursuant to the DRIP Offering during the respective period. The remaining redemption requests received during the three months ended March 31, 2020 , totaling approximately 3.8 million shares, went unfulfilled. Credit Facility and Notes Payable Subsequent to March 31, 2020 , the Company borrowed $125.0 million on the Revolving Loans to increase cash liquidity and repaid $71.5 million of mortgage notes that matured on April 6, 2020. Second Amended and Restated Distribution Reinvestment Plan Subsequent to March 31, 2020 , the Board approved and adopted a Second Amended and Restated Distribution Reinvestment Plan (the “Amended DRIP”). The Amended DRIP is effective as of May 15, 2020. The Amended DRIP amends and restates the Company’s Amended and Restated Distribution Reinvestment Plan (the “Plan”) and, among other changes, (i) provides that the Plan may be suspended at any time by majority vote of the Board without prior notice to Plan participants if the Board believes such action is in the best interest of the Company and its stockholders, and (ii) clarifies that the Company may provide notice of any amendment, supplement, suspension or termination of the Plan by including such information in a Current Report on Form 8-K or in its annual or quarterly reports filed with the SEC or in a separate mailing to Plan participants. Amended Share Redemption Program Subsequent to March 31, 2020 , the Board approved and adopted an Amended and Restated Share Redemption Program (the “Amended Share Redemption Program”). The Amended Share Redemption Program is effective as of June 1, 2020. The Amended Share Redemption Program amends and restates the Company’s Share Redemption Program (the “Program”) and, among other changes, replaces the requirement for advance notice of any modification, suspension or termination of the Program with a provision that the Board may amend the terms of, suspend or terminate the Amended Share Redemption Program at any time in its sole discretion if it believes that such action is in the best interest of the Company and its stockholders, and that any material modifications or suspension of the Amended Share Redemption Program will be disclosed to stockholders as promptly as practicable in the Company’s reports filed with the SEC and via its website. The Amended Share Redemption Program also clarifies the types of stockholders whose share redemption requests are eligible to qualify for the special treatment that may be afforded in event of the death of a stockholder, as well as the process for such redemptions, and extends the time during which notice of any stockholder death must be given in connection with any such redemption requests, from 270 days to 12 months. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2019 , and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 . The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Assets, Recoverability of Real Estate Assets, Assets Held for Sale and Disposition of Real Estate Assets | Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; changes in anticipated holding periods; or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions. No impairment indicators were identified and no impairment losses were recorded during the three months ended March 31, 2020 or 2019 . The Company’s impairment assessment as of March 31, 2020 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in impairment charges in the future. The Company cannot provide any assurance that material impairment charges with respect to the Company’s real estate assets will not occur during 2020 or in future periods, particularly in light of the negative economic impacts caused by the COVID-19 pandemic. If the effects of the COVID-19 pandemic cause economic and market conditions to continue to deteriorate or if the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. As of March 31, 2020, we have not identified any further impairments resulting from COVID-19 related impacts, including as a result of tenant requests for rent relief. The Company intends to hold its assets for the long-term; therefore, a temporary change in cash flows due to COVID-19 related impacts alone would not be an indicator of impairment. However, we have y et to see the long-term effects of COVID-19 on the economy and the extent to which it may impact our tenants in the future. Indications of a tenant’s inability to continue as a going concern, changes in our view or strategy relative to a tenant’s business or industry as a result of the economic impacts of COVID-19, or changes in our long-term hold strategies, could be indicative of an impairment triggering event. Accordingly, the Company will continue to monitor circumstances and events in future periods to determine whether additional impairment charges are warranted. Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate its fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount is then recorded to reflect the estimated fair value of the property, net of selling costs. There were no assets identified as held for sale as of March 31, 2020 or December 31, 2019 . Disposition of Real Estate Assets Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. There were no property dispositions during the three months ended March 31, 2020 and 2019. The disposition of 18 of the Company’s individual properties subsequent to the three months ended March 31, 2019 did not qualify for discontinued operations presentation and, thus, the results of operations of the properties that were sold remain in income from continuing operations, and any associated gains or losses from the disposition are included in gain on disposition of real estate, net. |
Allocation of Purchase Price of Real Estate Assets | Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their relative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. Acquisition-related fees and certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. |
Restricted Cash | Restricted Cash The Company had $2.5 million and $1.4 million in restricted cash as of March 31, 2020 and December 31, 2019 , respectively. Included in restricted cash was $2.3 million and $1.1 million held by lenders in lockbox accounts as of March 31, 2020 and December 31, 2019 , respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Restricted cash also included $265,000 and $254,000 held by a lender in an escrow account for a certain property in accordance with the associated loan agreement as of March 31, 2020 and December 31, 2019 , respectively. |
Leases | Leases The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee. Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations. The Company has an investment in a real estate property that is subject to a ground lease, for which a lease liability and right of use (“ROU”) asset was recorded. See Note 12 — Leases for a further discussion regarding this ground lease. Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized. |
Revenue Recognition | Revenue Recognition Rental and other property income is primarily derived from fixed contractual payments from operating leases and, therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants are probable. The determination of whether collectability is probable takes 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. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available to management. The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable. |
Earnings (Loss) and Distributions Per Share | Earnings (Loss) and Distributions Per Share The Company has two classes of common stock. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which can result in different earnings per share for each of the classes. Under the two-class method, earnings per share of each class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. The distributed earnings to Class T Share common stockholders represents distributions declared less the distribution and stockholder servicing fees. Diluted income per share, when applicable, considers the effect of any potentially dilutive share equivalents, of which the Company had no ne for the three months ended March 31, 2020 or 2019 . Distributions per share are calculated based on the authorized daily distribution rate. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements. In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which was subsequently amended by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”), in November 2018. Subsequently, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to provide additional guidance on the credit losses standard. ASU 2016-13 and the related updates are intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held- for-investment, held-to-maturity debt securities, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No. 2016-02, Leases ( Topic 842 ) (“ASC 842”) . ASU 2016-13 and ASU 2018-19 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted ASU 2016-13 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This ASU amends and removes several disclosure requirements including the valuation processes for Level 3 fair value measurements. ASU 2018-13 also modifies some disclosure requirements and requires additional disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and requires the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The provisions of ASU 2018-13 are effective January 1, 2020 using a prospective transition method for amendments effecting changes in unrealized gains and losses, significant unobservable inputs used to develop Level 3 fair value measurements and narrative description on uncertainty of measurements. The remaining provisions of ASU 2018-13 are to be applied retrospectively, and early adoption is permitted. The Company adopted ASU 2018-13 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes (“ASU 2018-16”). The amendments in this ASU permit the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes, or another acceptable benchmark interest rate. The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in specified segments of the U.S. Treasury repo market. It has been selected as the preferred replacement for the U.S. dollar London Interbank Offered Rate (“LIBOR”), which will be phased out by the end of 2021. ASU 2018-16 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2018-16 is required to be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The Company currently uses LIBOR as its benchmark interest rate in the Company’s interest rate swaps associated with the Company’s LIBOR-based variable rate borrowings. The Company has not entered into any new or redesignated hedging relationships on or after the date of adoption of ASU 2018-16. The Company has evaluated the effect of this new benchmark interest rate option, and does not believe this ASU will have a material impact on its condensed consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities . The guidance changes the guidance for determining whether a decision-making fee is a variable interest. Under the new ASU, indirect interests held through related parties under common control will now be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interests. Such indirect interests were previously treated the same as direct interests. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted ASU 2018-17 during the first quarter of fiscal year 2020, and has concluded that there is no material impact on its condensed consolidated financial statements. In April 2020, the FASB issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Due to the business disruptions and challenges severely affecting the global economy caused by COVID-19, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842 addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from COVID-19 related impacts. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. |
Fair Value Measurements | GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Investment in and valuation of real estate and related assets | The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of the fair value of the company's financial assets and liabilities | In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of March 31, 2020 and as of December 31, 2019 (in thousands): Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance as of March 31, 2020 (Level 1) (Level 2) (Level 3) Financial liability: Interest rate swap $ (11,517 ) $ — $ (11,517 ) $ — Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance as of December 31, 2019 (Level 1) (Level 2) (Level 3) Financial asset: Interest rate swap $ 6 $ — $ 6 $ — Financial liability: Interest rate swap $ (234 ) $ — $ (234 ) $ — |
REAL ESTATE ASSETS (Tables)
REAL ESTATE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the purchase price allocations for the 2020 Asset Acquisitions (in thousands): 2020 Asset Acquisitions Land $ 10,935 Buildings and improvements 41,943 Acquired in-place leases and other intangibles (1) 9,777 Intangible lease liabilities (2) (3,150 ) Total purchase price $ 59,505 ______________________ (1) The weighted average amortization period for acquired in-place leases and other intangibles was 12.4 years. (2) The weighted average amortization period for acquired intangible lease liabilities was 12.7 years. |
INTANGIBLE LEASE ASSETS AND L_2
INTANGIBLE LEASE ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets and liabilities | Intangible lease assets and liabilities consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands, except weighted average life remaining): March 31, 2020 December 31, 2019 Intangible lease assets: In-place leases and other intangibles, net of accumulated amortization of $30,814 and $28,347 respectively (with a weighted average life remaining of 8.9 years and 8.8 years, respectively) $ 83,622 $ 76,312 Acquired above-market leases, net of accumulated amortization of $966 and $751, respectively (with a weighted average life remaining of 11.9 years and 12.1 years, respectively) 6,848 7,063 Total intangible lease assets, net $ 90,470 $ 83,375 Intangible lease liabilities: Acquired below-market leases, net of accumulated amortization of $10,190 and $9,403, respectively (both with a weighted average life remaining of 8.9 years) $ 28,658 $ 26,295 |
Schedule of finite-lived intangible assets amortization expense | The following table summarizes the amortization related to the intangible lease assets and liabilities for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended March 31, 2020 2019 In-place lease and other intangible amortization $ 2,467 $ 2,423 Above-market lease amortization $ 215 $ 31 Below-market lease amortization $ 787 $ 573 |
Schedule of finite-lived intangible assets, future amortization expense | As of March 31, 2020 , the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands): Amortization In-Place Leases and Other Intangibles Above-Market Leases Below-Market Leases Remainder of 2020 $ 7,532 $ 521 $ 2,404 2021 10,043 694 3,206 2022 10,043 694 3,206 2023 9,336 578 3,206 2024 8,592 531 3,206 Thereafter 38,076 3,830 13,430 Total $ 83,622 $ 6,848 $ 28,658 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments | The following table summarizes the terms of the Company’s executed interest rate swap agreements designated as hedging instruments as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands): Outstanding Notional Amount as of Interest Rates (1) Effective Dates Maturity Dates Fair Value of Liability as of Balance Sheet Location March 31, 2020 March 31, 2020 December 31, 2019 (2) Interest Rate Swap Derivative liability, deferred rental income and other liabilities $ 200,000 3.02 % 1/10/2020 12/10/2024 $ (11,517 ) $ (234 ) ______________________ (1) The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of March 31, 2020 . (2) As of December 31, 2019 , the Company had one interest rate swap agreement in an asset position with a notional amount of $21.7 million and a fair value of $6,000 included in prepaid expenses and other assets on the condensed consolidated balance sheets. |
CREDIT FACILITY AND NOTES PAY_2
CREDIT FACILITY AND NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the debt balances as of March 31, 2020 and December 31, 2019 and the debt activity for the three months ended March 31, 2020 (in thousands): During the Three Months Ended March 31, 2020 Balance as of Debt Issuance, Net Repayments and Modifications Accretion Balance as of March 31, 2020 Fixed rate debt $ 171,065 $ — $ (21,670 ) $ — $ 149,395 Credit facility 200,000 56,500 (2,500 ) — 254,000 Total debt 371,065 56,500 (24,170 ) — 403,395 Deferred costs – credit facility (1) (2,116 ) — — 45 (2,071 ) Deferred costs – fixed rate debt (108 ) — — 77 (31 ) Total debt, net $ 368,841 $ 56,500 $ (24,170 ) $ 122 $ 401,293 ______________________ (1) Deferred costs related to the term portion of the Credit Facility, as defined below. |
Schedule of Maturities of Long-term Debt | The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to March 31, 2020 (in thousands): Principal Repayments Remainder of 2020 $ 149,395 2021 — 2022 — 2023 54,000 2024 200,000 Thereafter — Total $ 403,395 |
RELATED-PARTY TRANSACTIONS AN_2
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | The Company incurred fees and expense reimbursements as shown in the table below for services provided by CCI II Management and its affiliates related to the services described above during the periods indicated (in thousands): Three Months Ended March 31, 2020 2019 Distribution and stockholder servicing fees (1) $ 46 $ 49 Acquisition fees and expenses $ 1,312 $ 65 Advisory fees and expenses $ 2,081 $ 2,636 Operating expenses $ 206 $ 386 ______________________ (1) Amounts are calculated in accordance with the dealer manager agreement and exclude the estimated liability for future distribution and stockholder servicing fees payable to CCO Capital of $242,000 and $492,000 for the three months ended March 31, 2020 and 2019 , respectively, which is included in due to affiliates in the condensed consolidated balance sheets with a corresponding decrease to capital in excess of par value. |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of future minimum rental payments for operating leases | As of March 31, 2020 , the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands): Future Minimum Rental Income Remainder of 2020 $ 54,796 2021 75,973 2022 77,683 2023 75,343 2024 70,648 Thereafter 349,129 Total $ 703,572 |
Schedule of rental and other property income | Rental and other property income during the three months ended March 31, 2020 and 2019 consisted of the following (in thousands): Three Months Ended March 31, 2020 2019 Fixed rental and other property income (1) $ 19,945 $ 23,601 Variable rental and other property income (2) 2,292 4,041 Total rental and other property income $ 22,237 $ 27,642 ______________________ (1) Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases. (2) Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses. |
ORGANIZATION AND BUSINESS (Rea
ORGANIZATION AND BUSINESS (Real Estate) (Details) ft² in Millions | Mar. 31, 2020ft²propertystates |
Real Estate Properties [Line Items] | |
Percentage of rentable space leased | 99.50% |
Number of states in which entity operates | states | 12 |
Consolidated properties | |
Real Estate Properties [Line Items] | |
Number of real estate properties | property | 26 |
Net rentable area (in square feet) | ft² | 3.9 |
ORGANIZATION AND BUSINESS (Sha
ORGANIZATION AND BUSINESS (Shares Offerings) (Details) - USD ($) | Sep. 17, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 30, 2020 | Dec. 31, 2019 | Dec. 30, 2019 | Aug. 25, 2016 | Sep. 17, 2013 |
Class of Stock [Line Items] | ||||||||
Shares sold in offering | $ 678,000,000 | $ 4,409,000 | $ 5,082,000 | |||||
IPO | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized, value (up to) | $ 2,500,000,000 | |||||||
Share price (in dollars per share) | $ 10 | |||||||
Shares sold in offering | 651,300,000 | |||||||
IPO | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Stock deregistered | 2,300,000,000 | |||||||
DRIP | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized, value (up to) | $ 475,000,000 | |||||||
Share price (in dollars per share) | $ 9.50 | |||||||
Shares sold in offering | $ 26,700,000 | |||||||
DRIP | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized, value (up to) | $ 120,000,000 | |||||||
Cole Corporate Income Operating Partnership II, LP | ||||||||
Class of Stock [Line Items] | ||||||||
General partner partnership interest percentage | 100.00% | |||||||
The Share Redemption Program | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Net asset value per share (in dollars per share) | $ 10.06 | |||||||
Class A Common Stock | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Shares sold in offering | $ 4,000 | $ 5,000 | ||||||
Class A Common Stock | DRIP | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Share price (in dollars per share) | $ 10.06 | |||||||
Net asset value per share (in dollars per share) | $ 10.06 | |||||||
Class T Common Stock | DRIP | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Share price (in dollars per share) | $ 10.06 | |||||||
Net asset value per share (in dollars per share) | $ 10.06 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Real Estate) (Details) | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020USD ($)property | Mar. 31, 2019USD ($)property | Dec. 31, 2019property | |
Real Estate Properties [Line Items] | |||
Impairment | $ | $ 0 | $ 0 | |
Number of real estate properties held for sale | 0 | 0 | |
Buildings | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (in years) | 40 years | ||
Site improvements | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (in years) | 15 years | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties disposed | 0 | 0 | 18 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Restricted Cash) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 2,539 | $ 1,364 | $ 1,299 |
Lockbox Accounts | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | 2,300 | 1,100 | |
Escrow Accounts | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash | $ 265 | $ 254 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Earnings per Share) (Details) | 3 Months Ended | |
Mar. 31, 2020class_of_stockshares | Mar. 31, 2019shares | |
Accounting Policies [Abstract] | ||
Classes of common stock | class_of_stock | 2 | |
Potentially dilutive securities (in shares) | shares | 0 | 0 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) - Significant Other Observable Inputs (Level 2) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Estimate of fair value disclosure | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | $ 404.1 | $ 371.1 |
Carrying (reported) amount, fair value disclosure | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | $ 403.4 | $ 371.1 |
FAIR VALUE MEASUREMENTS (Schedu
FAIR VALUE MEASUREMENTS (Schedule of Fair Value Assets and Liabilities) (Details) - Interest rate swap - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial asset: | ||
Interest rate swap | $ 6 | |
Financial liabilities: | ||
Interest rate swaps | $ (11,517) | (234) |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial asset: | ||
Interest rate swap | 0 | |
Financial liabilities: | ||
Interest rate swaps | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Financial asset: | ||
Interest rate swap | 6 | |
Financial liabilities: | ||
Interest rate swaps | 11,517 | (234) |
Significant Unobservable Inputs (Level 3) | ||
Financial asset: | ||
Interest rate swap | 0 | |
Financial liabilities: | ||
Interest rate swaps | $ 0 | $ 0 |
REAL ESTATE ASSETS (Narrative)
REAL ESTATE ASSETS (Narrative) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)property | Mar. 31, 2019property | Dec. 31, 2019USD ($) | |
Schedule Of Asset Acquisition [Line Items] | |||
Aggregate purchase price | $ 1,024,541 | $ 961,854 | |
2020 Asset Acquisitions | |||
Schedule Of Asset Acquisition [Line Items] | |||
Properties acquired | property | 2 | ||
Aggregate purchase price | $ 59,500 | ||
Acquisition costs | $ 1,900 | ||
Number of real estate properties acquired | property | 0 |
REAL ESTATE ASSETS (Property Ac
REAL ESTATE ASSETS (Property Acquisitions) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Schedule Of Asset Acquisition [Line Items] | ||
Land | $ 105,567 | $ 94,632 |
Buildings and improvements | 796,724 | 754,749 |
Acquired in-place leases and other intangibles | 122,250 | 112,473 |
Total real estate assets, at cost | $ 1,024,541 | $ 961,854 |
Acquired below market lease, weighted average useful life | 8 years 10 months 24 days | 8 years 10 months 24 days |
Leases, Acquired-in-Place | ||
Schedule Of Asset Acquisition [Line Items] | ||
Weighted average amortization period | 12 years 4 months 24 days | |
2020 Asset Acquisitions | ||
Schedule Of Asset Acquisition [Line Items] | ||
Total real estate assets, at cost | $ 59,500 | |
2020 Asset Acquisitions | Wholly Owned Properties | ||
Schedule Of Asset Acquisition [Line Items] | ||
Land | 10,935 | |
Buildings and improvements | 41,943 | |
Total real estate assets, at cost | 59,505 | |
2020 Asset Acquisitions | Wholly Owned Properties | Leases, Acquired-in-Place | ||
Schedule Of Asset Acquisition [Line Items] | ||
Acquired in-place leases and other intangibles | 9,777 | |
2020 Asset Acquisitions | Wholly Owned Properties | Below Market Leases | ||
Schedule Of Asset Acquisition [Line Items] | ||
Intangible lease liabilities | $ (3,150) | |
A 2019 Asset Acquisition [Member] | ||
Schedule Of Asset Acquisition [Line Items] | ||
Acquired below market lease, weighted average useful life | 12 years 8 months 12 days |
INTANGIBLE LEASE ASSETS AND L_3
INTANGIBLE LEASE ASSETS AND LIABILITIES (Schedule of Intangible Lease Assets and Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets | $ 90,470 | $ 83,375 |
Intangible lease liabilities, net | 28,658 | 26,295 |
Acquired below market lease, accumulated amortization | $ 10,190 | $ 9,403 |
Acquired below market lease, weighted average useful life | 8 years 10 months 24 days | 8 years 10 months 24 days |
In-Place Leases and Other Intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets | $ 83,622 | $ 76,312 |
Accumulated amortization | $ 30,814 | $ 28,347 |
Useful life | 8 years 10 months 24 days | 8 years 9 months |
Above-Market Leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets | $ 6,848 | $ 7,063 |
Accumulated amortization | $ 966 | $ 751 |
Useful life | 11 years 10 months 24 days | 12 years 1 month 6 days |
INTANGIBLE LEASE ASSETS AND L_4
INTANGIBLE LEASE ASSETS AND LIABILITIES (Schedule of finite-lived intangible assets amortization expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Below-market lease amortization | $ 787 | $ 573 |
In-place lease and other intangible amortization | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 2,467 | 2,423 |
Above-market lease amortization | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 215 | $ 31 |
INTANGIBLE LEASE ASSETS AND L_5
INTANGIBLE LEASE ASSETS AND LIABILITIES (Estimated Amortization of Intangible lease assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Amortization, In-Please Leases and Other Intangibles and Above-Market Leases | ||
Total | $ 90,470 | $ 83,375 |
Amortization, Below-Market Leases | ||
Remainder of 2020 | 2,404 | |
2021 | 3,206 | |
2022 | 3,206 | |
2023 | 3,206 | |
2024 | 3,206 | |
Thereafter | 13,430 | |
Total | 28,658 | 26,295 |
In-Place Leases and Other Intangibles | ||
Amortization, In-Please Leases and Other Intangibles and Above-Market Leases | ||
Remainder of 2020 | 7,532 | |
2021 | 10,043 | |
2022 | 10,043 | |
2023 | 9,336 | |
2024 | 8,592 | |
Thereafter | 38,076 | |
Total | 83,622 | 76,312 |
Above-Market Leases | ||
Amortization, In-Please Leases and Other Intangibles and Above-Market Leases | ||
Remainder of 2020 | 521 | |
2021 | 694 | |
2022 | 694 | |
2023 | 578 | |
2024 | 531 | |
Thereafter | 3,830 | |
Total | $ 6,848 | $ 7,063 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Narrative) (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($)derivativeswap_agreement | Mar. 31, 2019USD ($) | Jan. 10, 2020USD ($) | |
Derivative [Line Items] | |||
Number of interest rate derivatives matured | derivative | 1 | ||
Number of interest rate derivative held | swap_agreement | 1 | ||
Amount of income reclassified from other comprehensive income (loss) into income as interest expense | $ 10,000 | $ 718,000 | |
Interest rate swap | |||
Derivative [Line Items] | |||
Outstanding notional amount | $ 200,000,000 | ||
Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Number of interest rate derivatives terminated | 0 | ||
Designated as Hedging Instrument | Interest rate swap | |||
Derivative [Line Items] | |||
Interest rate cash flow hedge gain to be reclassified during next twelve months | $ 2,600,000 | ||
Amount required to settle obligation in case of default | $ 11,700,000 |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Instruments) (Details) - Interest rate swap | Mar. 31, 2020USD ($) | Jan. 10, 2020USD ($) | Dec. 31, 2019USD ($)swap_agreement |
Derivatives, Fair Value [Line Items] | |||
Outstanding notional amount | $ 200,000,000 | ||
Designated as Hedging Instrument | Derivative liability, deferred rental income and other liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Outstanding notional amount | $ 200,000,000 | ||
Interest rate (percentage) | 3.02% | ||
Fair Value of Liability as of | $ (11,517,000) | $ (234,000) | |
Designated as Hedging Instrument | Prepaid expenses and other assets | |||
Derivatives, Fair Value [Line Items] | |||
Outstanding notional amount | $ 21,700,000 | ||
Number of instruments held | swap_agreement | 1 | ||
Derivative asset | $ 6,000 |
CREDIT FACILITY AND NOTES PAY_3
CREDIT FACILITY AND NOTES PAYABLE (Fixed Rate Debt) (Details) - USD ($) $ in Thousands | Apr. 06, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Long-term debt outstanding | $ 401,293 | $ 368,841 | |
Debt, weighted average interest rate | 3.50% | ||
Weighted average years to maturity | 2 years 10 months 24 days | ||
Long-term debt, gross | $ 403,395 | 371,065 | |
Repayments of debt | $ 24,170 | ||
Fixed Rate Debt | |||
Debt Instrument [Line Items] | |||
Debt, weighted average interest rate | 4.50% | ||
Long-term debt, gross | $ 149,395 | $ 171,065 | |
Net real estate assets securing the debt | 230,700 | ||
Repayments of debt | 21,670 | ||
Repayment of principal next 12 months | 77,900 | ||
Purchaser loans assumed | $ 0 | ||
Minimum | Fixed Rate Debt | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.30% | ||
Maximum | Fixed Rate Debt | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.766% | ||
Subsequent Event | Interest rate swap | Variable Rate Debt | |||
Debt Instrument [Line Items] | |||
Repayments of debt | $ 71,500 |
CREDIT FACILITY AND NOTES PAY_4
CREDIT FACILITY AND NOTES PAYABLE (Schedule of Debt) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt [Roll Forward] | ||
Long-term debt, gross, beginning balance | $ 371,065 | |
Total debt, net, beginning of period | 368,841 | |
Debt Issuance, Gross | 56,500 | $ 9,000 |
Deferred costs | (274) | $ (263) |
Debt Issuance, Net | 56,500 | |
Repayments and Modifications | (24,170) | |
Repayments and Modifications | (24,170) | |
Accretion | 122 | |
Long-term debt, gross, ending balance | 403,395 | |
Total debt, net, ending of period | 401,293 | |
Fixed Rate Debt | ||
Debt [Roll Forward] | ||
Long-term debt, gross, beginning balance | 171,065 | |
Deferred costs, beginning of period | (108) | |
Deferred costs | 0 | |
Repayments and Modifications | (21,670) | |
Repayments and Modifications | 0 | |
Accretion | 77 | |
Long-term debt, gross, ending balance | 149,395 | |
Deferred costs, ending of period | (31) | |
Credit Facility | ||
Debt [Roll Forward] | ||
Long-term debt, gross, beginning balance | 200,000 | |
Deferred costs, beginning of period | (2,116) | |
Debt Issuance, Gross | 56,500 | |
Deferred costs | 0 | |
Repayments and Modifications | (2,500) | |
Repayments and Modifications | 0 | |
Accretion | 45 | |
Long-term debt, gross, ending balance | 254,000 | |
Deferred costs, ending of period | $ (2,071) |
CREDIT FACILITY AND NOTES PAY_5
CREDIT FACILITY AND NOTES PAYABLE (JP Morgan Chase Credit Facility) (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)extension | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | ||
Line of credit outstanding | $ 401,293,000 | $ 368,841,000 |
Debt, weighted average interest rate | 3.50% | |
JPMorgan Chase Bank, N.A. | Line of credit | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 500,000,000 | |
Number of extensions | extension | 2 | |
Term of extensions | 6 months | |
Line of credit facility, remaining borrowing capacity | $ 241,100,000 | |
Available borrowings | 174,500,000 | |
Line of credit facility, covenant, minimum consolidated net worth | $ 400,000,000 | |
Line of credit facility, covenant, minimum consolidated net worth (percentage) | 75.00% | |
Line of credit facility, covenant, unsecured debt to unencumbered asset value, maximum | 60.00% | |
Line of credit facility, covenant, unsecured debt service coverage ratio, minimum | 1.75 | |
JPMorgan Chase Bank, N.A. | Line of credit | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate | 0.40% | |
Debt instrument, covenant, fixed charge coverage ratio | 1.50 | |
JPMorgan Chase Bank, N.A. | Line of credit | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate | 0.90% | |
Line of credit facility, covenant, leverage ratio (less than or equal to) (percentage) | 60.00% | |
Line of credit facility, covenant, secured debt ratio | 40.00% | |
Line of credit facility, covenant, recourse debt coverage ratio | 15.00% | |
JPMorgan Chase Bank, N.A. | Line of credit | Statutory Reserve Rate | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percentage) | 1.00% | |
JPMorgan Chase Bank, N.A. | Line of credit | Statutory Reserve Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percentage) | 1.40% | |
JPMorgan Chase Bank, N.A. | Line of credit | Statutory Reserve Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percentage) | 1.90% | |
JPMorgan Chase Bank, N.A. | Line of credit | Federal Funds Effective Swap Rate | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate (percentage) | 0.50% | |
JPMorgan Chase Bank, N.A. | Line of credit | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 200,000,000 | |
Line of credit outstanding | $ 54,000,000 | |
Debt, weighted average interest rate | 2.60% | |
JPMorgan Chase Bank, N.A. | Line of credit | Term Loan | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 300,000,000 | |
Line of credit outstanding | $ 200,000,000 | |
JPMorgan Chase Bank, N.A. | Line of credit | Term Loan | Interest rate swap | ||
Debt Instrument [Line Items] | ||
Interest rate, effective percentage | 3.02% |
CREDIT FACILITY AND NOTES PAY_6
CREDIT FACILITY AND NOTES PAYABLE (Schedule Of Aggregate Principal Repayments) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Remainder of 2020 | $ 149,395 | |
2021 | 0 | |
2022 | 0 | |
2023 | 54,000 | |
2024 | 200,000 | |
Thereafter | 0 | |
Total | $ 403,395 | $ 371,065 |
RELATED-PARTY TRANSACTIONS AN_3
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Distribution and Stockholder Servicing Fees) (Details) - Affiliated entity | 3 Months Ended |
Mar. 31, 2020 | |
Distribution and stockholder servicing fees | |
Related Party Transaction [Line Items] | |
Distribution and servicing fee, termination of payments threshold, percentage of total gross investment | 7.00% |
Distribution and servicing fee, termination of payments threshold, percentage gross proceeds from shares in offering | 10.00% |
Class T Common Stock | |
Related Party Transaction [Line Items] | |
Distribution and stockholder servicing fee, percentage of net asset value | 0.00219% |
RELATED-PARTY TRANSACTIONS AN_4
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Acquisition Fees and Expenses) (Details) - Maximum - Affiliated entity - Acquisition fees and expenses | Mar. 31, 2020 |
Related Party Transaction [Line Items] | |
Acquisition fees and expenses | 2.00% |
Acquisition fees and expenses reimbursed | 6.00% |
RELATED-PARTY TRANSACTIONS AN_5
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Advisory Fees and Expenses) (Details) | Mar. 31, 2020USD ($) |
Minimum | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 0 |
Minimum | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Minimum | Average invested assets over $4 bilion | |
Related Party Transaction [Line Items] | |
Average invested assets | 4,000,000,000 |
Maximum | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Maximum | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 4,000,000,000 |
Advisory fees and expenses | Affiliated entity | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Annualized rate percentage paid on average invested asset | 0.75% |
Advisory fees and expenses | Affiliated entity | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Annualized rate percentage paid on average invested asset | 0.70% |
Advisory fees and expenses | Affiliated entity | Average invested assets over $4 bilion | |
Related Party Transaction [Line Items] | |
Annualized rate percentage paid on average invested asset | 0.65% |
RELATED-PARTY TRANSACTIONS AN_6
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Operating Expenses) (Details) - Minimum - Affiliated entity | Mar. 31, 2020 |
Related Party Transaction [Line Items] | |
Operating expense reimbursement percentage of average invested assets | 2.00% |
Operating expense reimbursement percentage of net income | 25.00% |
RELATED-PARTY TRANSACTIONS AN_7
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Disposition Fees) (Details) - Affiliated entity | Mar. 31, 2020 |
Brokerage Commission Fee | |
Related Party Transaction [Line Items] | |
Commissions performance and other fees percent | 1.00% |
Property sales commission | |
Related Party Transaction [Line Items] | |
Commissions performance and other fees percent | 1.00% |
Maximum | Brokerage Commission Fee | |
Related Party Transaction [Line Items] | |
Commissions performance and other fees percent | 50.00% |
Maximum | Property portfolio | |
Related Party Transaction [Line Items] | |
Commissions performance and other fees percent | 6.00% |
RELATED-PARTY TRANSACTIONS AN_8
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Subordinated Performance Fees) (Details) - Affiliated entity - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transaction [Line Items] | ||
Cumulative noncompounded annual return | 8.00% | |
Subordinated Performance Fees | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 |
Subordinate Performance Fees On Event of Sale of Company | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 15.00% | |
Subordinate Performance Fees For Listing | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 15.00% |
RELATED-PARTY TRANSACTIONS AN_9
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Schedule of Related Party Transactions) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transaction [Line Items] | ||
Distribution and stockholder fees payable | $ 242 | $ 492 |
Affiliated entity | Distribution and stockholder servicing fees | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 46 | 49 |
Affiliated entity | Acquisition fees and expenses | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 1,312 | 65 |
Affiliated entity | Advisory fees and expenses | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 2,081 | 2,636 |
Affiliated entity | Operating expenses | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | $ 206 | $ 386 |
RELATED-PARTY TRANSACTIONS A_10
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS (Due to Affiliates) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Related Party Transactions [Abstract] | ||
Due to affiliates | $ 650 | $ 1,093 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - CCIT II 2018 Equity Incentive Plan (the “Plan”) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Aug. 09, 2018 |
Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares authorized (in shares) | 400,000 | |||
Shares available for grants (in shares) | 376,000 | 376,000 | ||
Restricted Stock | Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Options grants in period to each independent members of board of directors (in shares) | 6,000 | |||
Grants in period (in shares) | 24,000 | |||
Vested in period (in shares) | 12,000 | |||
Vesting period | 1 year | |||
Remaining shares (in shares) | 12,000 | 12,000 | ||
Unrecognized compensation expense | $ 66 | $ 66 | ||
General and Administrative Expense | Restricted Stock | Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Share based compensation expenses | $ 33 | $ 33 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)lease | |
Leases [Abstract] | |
Operating lease, weighted average remaining lease term | 8 years 9 months 4 days |
Number of non-cancelable operating ground leases | lease | 1 |
Remaining term of operating ground lease | 2 years 6 months |
Right of use asset | $ 170 |
Lease liabilities | $ 170 |
Weighted average discount rate, percent | 4.30% |
Ground lease expense | $ 12 |
Ground lease expense for remainder of 2020 | 36 |
Ground lease expense annually from 2021 through 2022 | $ 48 |
LEASES (Schedule of Future Mini
LEASES (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Future Minimum Rental Income | |
Remainder of 2020 | $ 54,796 |
2021 | 75,973 |
2022 | 77,683 |
2023 | 75,343 |
2024 | 70,648 |
Thereafter | 349,129 |
Total | $ 703,572 |
LEASES (Schedule of Rental and
LEASES (Schedule of Rental and Other Property Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Fixed rental and other property income | $ 19,945 | $ 23,601 |
Variable rental and other property income | 2,292 | 4,041 |
Total rental and other property income | $ 22,237 | $ 27,642 |
SUBSEQUENT EVENTS (COVID-19 Upd
SUBSEQUENT EVENTS (COVID-19 Update) (Details) - Subsequent Event $ in Thousands | 2 Months Ended |
May 08, 2020USD ($)tenant | |
Subsequent Event [Line Items] | |
Rent relief request, number of tenants | tenant | 1 |
Rent relief request | $ | $ 209 |
SUBSEQUENT EVENTS (Redemption o
SUBSEQUENT EVENTS (Redemption of Shares of Common Stock) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | |
May 13, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Subsequent Event [Line Items] | |||
Redemption of stock | $ 4,394 | $ 5,170 | |
Share redemption requests unfulfilled (shares) | 3,800 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Redemption of stock (in shares) | 434 | ||
Redemption of stock | $ 4,400 | ||
Redemption of stock (in dollars per share) | $ 10.06 |
SUBSEQUENT EVENTS (Notes Payabl
SUBSEQUENT EVENTS (Notes Payable) (Details) - USD ($) $ in Thousands | Apr. 06, 2020 | May 13, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Subsequent Event [Line Items] | ||||
Proceeds from lines of credit | $ 56,500 | $ 9,000 | ||
Repayments of debt | 24,170 | |||
Credit Facility | ||||
Subsequent Event [Line Items] | ||||
Proceeds from lines of credit | 56,500 | |||
Repayments of debt | $ 2,500 | |||
Variable Rate Debt | Interest rate swap | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Repayments of debt | $ 71,500 | |||
Revolving credit facility | Credit Facility | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Proceeds from lines of credit | $ 125,000 |
SUBSEQUENT EVENTS (Amended Shar
SUBSEQUENT EVENTS (Amended Share Redemption Program) (Details) | 1 Months Ended | 3 Months Ended |
May 13, 2020 | Mar. 31, 2020 | |
Subsequent Event [Line Items] | ||
Notice of death period | 270 days | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Notice of death period | 12 months |