Document And Entity Information
Document And Entity Information - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2016 | Apr. 30, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 | |
Entity Registrant Name | Phillips Edison Grocery Center REIT II, Inc. | |
Entity Central Index Key | 1,581,405 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 46.2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Land and improvements | $ 315,830 | $ 319,272 |
Building and improvements | 648,630 | 635,426 |
Acquired above-market lease assets | 10,749 | 11,667 |
Acquired in-place lease assets | 100,469 | 100,144 |
Total investment in property | 1,075,678 | 1,066,509 |
Accumulated depreciation and amortization | (40,622) | (30,204) |
Net investment in property | 1,035,056 | 1,036,305 |
Investment in unconsolidated joint venture | 6,888 | 0 |
Total investment in real estate assets, net | 1,041,944 | 1,036,305 |
Cash and cash equivalents | 4,166 | 17,359 |
Accounts receivable – affiliates | 601 | 939 |
Other assets, net | 27,413 | 25,110 |
Total assets | 1,074,124 | 1,079,713 |
Liabilities: | ||
Mortgages and loans payable, net | 86,861 | 81,305 |
Acquired below market lease intangibles, less accumulated amortization of $3,236 and $2,468, respectively | 40,911 | 43,917 |
Distributions payable | 6,353 | 6,321 |
Accounts payable – affiliates | 2,678 | 2,073 |
Accounts payable and other liabilities | 23,089 | 22,812 |
Total liabilities | 159,892 | 156,428 |
Commitments and contingencies (Note 7) | 0 | 0 |
Equity: | ||
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at March 31, 2016 and December 31, 2015 | 0 | 0 |
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 46,132 and 45,723 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 461 | 458 |
Additional paid-in capital | 1,019,824 | 1,011,635 |
Accumulated deficit | (106,053) | (88,808) |
Total equity | 914,232 | 923,285 |
Total liabilities and equity | $ 1,074,124 | $ 1,079,713 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Acquired below market lease intangibles, accumulated amortization | $ 3,236 | $ 2,468 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued and outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued and outstanding | 46,132,000 | 45,723,000 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Rental income | $ 20,698 | $ 7,006 |
Tenant recovery income | 7,480 | 2,299 |
Other property income | 123 | 191 |
Total revenues | 28,301 | 9,496 |
Expenses: | ||
Property operating | 5,100 | 1,722 |
Real estate taxes | 4,517 | 1,293 |
General and administrative | 4,040 | 627 |
Acquisition expenses | 2,772 | 1,165 |
Depreciation and amortization | 12,289 | 4,187 |
Total expenses | 28,718 | 8,994 |
Other income (expense): | ||
Interest expense, net | (1,452) | (701) |
Gain on contribution of properties to unconsolidated joint venture | 3,341 | 0 |
Other (expense) income | (121) | 84 |
Net income (loss) | $ 1,351 | $ (115) |
Per share information - basic and diluted: | ||
Net income (loss) per share - basic and diluted | $ 0.03 | $ 0 |
Basic and diluted | 46,024 | 25,186 |
Comprehensive loss: | ||
Net income (loss) | $ 1,351 | $ (115) |
Comprehensive income (loss) | $ 1,351 | $ (115) |
Consolidated Statements Of Equi
Consolidated Statements Of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance, values at Dec. 31, 2014 | $ 468,501 | $ 225 | $ 490,996 | $ (22,720) |
Balance, shares at Dec. 31, 2014 | 22,548 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, value | 157,684 | $ 64 | 157,620 | |
Issuance of common stock, shares | 6,343 | |||
Cost of repurchases | (291) | (291) | ||
Share repurchases, shares | (3) | |||
Distribution reinvestment plan (DRIP), value | 4,883 | $ 2 | 4,881 | |
Distribution reinvestment plan (DRIP), shares | 206 | |||
Common distributions declared, $0.40 per share | (10,096) | (10,096) | ||
Offering costs | (15,710) | (15,710) | ||
Net income (loss) | (115) | (115) | ||
Balance, values at Mar. 31, 2015 | 604,856 | $ 291 | 637,496 | (32,931) |
Balance, shares at Mar. 31, 2015 | 29,094 | |||
Balance, values at Dec. 31, 2015 | 923,285 | $ 458 | 1,011,635 | (88,808) |
Balance, shares at Dec. 31, 2015 | 45,723 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Cost of repurchases | (1,517) | $ (1) | (1,516) | |
Share repurchases, shares | 0 | |||
Distribution reinvestment plan (DRIP), value | 9,709 | $ 4 | 9,705 | |
Distribution reinvestment plan (DRIP), shares | 409 | |||
Common distributions declared, $0.40 per share | (18,596) | (18,596) | ||
Net income (loss) | 1,351 | 1,351 | ||
Balance, values at Mar. 31, 2016 | $ 914,232 | $ 461 | $ 1,019,824 | $ (106,053) |
Balance, shares at Mar. 31, 2016 | 46,132 |
Consolidated Statements Of Equ6
Consolidated Statements Of Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||
Common distributions declared, per share | $ 0.40 | $ 0.40 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 1,351 | $ (115) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 12,167 | 4,061 |
Net amortization of above- and below-market leases | (412) | (230) |
Amortization of deferred financing expense | 276 | 209 |
Gain on sale of properties and disposal of real estate assets | (3,341) | 0 |
Loss on write-off of unamortized tenant allowance, deferred financing expense, capitalized leasing commission, acquired lease and market debt adjustment | 15 | 0 |
Change in fair value of derivative liability | 5 | 0 |
Straight-line rental income | (809) | (273) |
Changes in operating assets and liabilities: | ||
Accounts receivable and accounts payable – affiliates | 943 | 437 |
Other assets | (2,826) | (1,163) |
Accounts payable and other liabilities | 1,987 | 567 |
Net cash provided by operating activities | 9,356 | 3,493 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions | (93,782) | (81,507) |
Capital expenditures | (3,668) | (776) |
Change in restricted cash | (210) | (179) |
Proceeds after investment in unconsolidated joint venture | 87,386 | 0 |
Net cash used in investing activities | (10,274) | (82,462) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock | 0 | 157,684 |
Payment of offering costs | 0 | (17,727) |
Distributions paid, net of DRIP | (8,855) | (4,459) |
Repurchases of common stock | (1,883) | (82) |
Payments on mortgages and notes payable | (345) | (137) |
Payments of deferred financing expenses | (1,192) | (115) |
Net cash (used in) provided by financing activities | (12,275) | 135,164 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (13,193) | 56,195 |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 17,359 | 179,117 |
End of period | 4,166 | 235,312 |
SUPPLEMENTAL CASHFLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Cash paid for interest | 1,325 | 543 |
Fair value of debt assumed | 5,916 | 9,148 |
Investment in unconsolidated joint venture | 6,888 | |
Accrued capital expenditures | 3,691 | 475 |
Change in offering costs payable to sponsor(s) | 0 | (2,017) |
Change in distributions payable | 32 | 754 |
Change in accrued share repurchase obligation | (366) | 209 |
Distributions reinvested | $ 9,709 | $ 4,883 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | ORGANIZATION Phillips Edison Grocery Center REIT II, Inc. (“we,” the “Company,” “our,” or “us”) was formed as a Maryland corporation in June 2013. Substantially all of our business is conducted through Phillips Edison Grocery Center Operating Partnership II, L.P., (the “Operating Partnership”), a Delaware limited partnership formed in June 2013. We are a limited partner of the Operating Partnership, and our wholly owned subsidiary, PE Grocery Center OP GP II LLC, is the sole general partner of the Operating Partnership. We closed our primary offering of shares of common stock on September 15, 2015. We continue to offer up to 55.6 million shares of common stock under our distribution reinvestment plan (the “DRIP”). Our advisor is Phillips Edison NTR II LLC (“PE-NTR II”), which is directly or indirectly owned by Phillips Edison Limited Partnership (the “Phillips Edison sponsor”). Under the terms of the advisory agreement between PE-NTR II and us (the “PE-NTR II Agreement”), PE-NTR II is responsible for the management of our day-to-day activities and the implementation of our investment strategy. The advisory agreement has a one-year term, but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of the parties and approval of the independent members of our board of directors. We invest primarily in well-occupied, grocery-anchored neighborhood and community shopping centers having a mix of creditworthy national and regional retailers selling necessity-based goods and services in strong demographic markets throughout the United States. In addition, we may invest in other retail properties including power and lifestyle shopping centers, multi-tenant shopping centers, free-standing single-tenant retail properties, and other real estate or real estate-related assets. As of March 31, 2016 , we wholly-owned fee simple interests in 57 real estate properties acquired from third parties unaffiliated with us or PE-NTR II. In addition, we own a 20% equity interest in a joint venture that owns six real estate properties (see Note 4). |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Set forth below is a summary of the significant accounting estimates and policies that management believes are important to the preparation of our consolidated interim financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by management. As a result, these estimates are subject to a degree of uncertainty. There have been no changes to our significant accounting policies during the three months ended March 31, 2016 , except for the item discussed below. For a full summary of our accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2016. Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to the audited consolidated financial statements of Phillips Edison Grocery Center REIT II, Inc. for the year ended December 31, 2015 , which are included in our 2015 Annual Report on Form 10-K. In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report. Our results of operations for the three months ended March 31, 2016 are not necessarily indicative of the operating results expected for the full year. The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation. Gain on Sale of Assets —We recognize sales of assets only upon the closing of the transaction with the purchaser. We record payments received from purchasers prior to closing as deposits and classify them as other assets on our consolidated balance sheets. We recognize gains (net of any taxes) on assets sold using the full accrual method upon closing if the collectibility of the sales price is reasonably assured, we are not obligated to perform any significant activities after the sale to earn the profit, we have received adequate initial investment from the purchaser, and other profit recognition criteria have been satisfied. We may defer recognition of gains in whole or in part until: (i) the profit is determinable, meaning that the collectibility of the sales price is reasonably assured or the amount that will not be collectible can be estimated; and (ii) the earnings process is virtually complete, meaning that we are not obliged to perform any significant activities after the sale to earn the profit. Gains and losses on transfers of operating properties resulting from the sale of a partial interest in properties to unconsolidated joint ventures are recognized using the partial sale provisions of the within sales guidance of ASC 360-20. Investment in Unconsolidated Joint Venture —We account for our investment in our unconsolidated joint venture using the equity method of accounting as we exercise significant influence over but do not control this entity. This investment was initially recorded at cost and is subsequently adjusted for contributions made to and distributions received from the joint venture. Earnings for our investment are recognized in accordance with the terms of the applicable joint venture agreement, generally through a pro rata allocation. Under a pro rata allocation, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. To recognize the character of distributions from our unconsolidated joint venture, we review the nature of cash distributions received for purposes of determining whether such distributions should be classified as either a return on investment, which would be included in operating activities, or a return of investment, which would be included in investing activities on the consolidated statements of cash flows. On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions, that the value of our investment in our unconsolidated joint venture may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. Management’s estimates of fair value are based upon a discounted cash flow model for each specific investment that includes all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums, capitalization rates, discount rates and credit spreads used in these models are based upon rates we believe to be within a reasonable range of current market rates. Reclassifications —The following line items on our consolidated balance sheets as of December 31, 2015 were reclassified to conform to the current year presentation: • The acquired intangible lease assets balance was separated into Acquired Above-Market Lease Assets and Acquired In-Place Lease Assets, • Certain unamortized debt issuance costs were reclassified from Deferred Financing Expense, Net, to Other Assets, Net. Newly Adopted and Recently Issued Accounting Pronouncements —In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This update amends existing guidance to require the presentation of certain debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). This update provides guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. We adopted ASU 2015-03 and ASU 2015-15 on January 1, 2016 and retrospectively applied the guidance for all periods presented. Unamortized debt issuance costs of $1.3 million and $1.4 million are included in Mortgage and Loan Payable, Net as of March 31, 2016 and December 31, 2015, respectively, which were previously included in Deferred Financing Expense, Net in our consolidated balance sheets. The remaining amounts included in Other Assets, Net on our consolidated balance sheets were related to our revolving credit facility. The adoption did not have an impact on our results of operations (see Note 6 ). In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 Consolidation . ASU 2015-02 updates to include all reporting entities within the scope of Subtopic 810-10 Consolidation - Overall, including limited partnerships and similar legal entities, unless a scope exception applies. Overall the amendments in this update are to simplify the codification and reduce the number of consolidation models and place more emphasis on risk of loss when determining controlling financial interests. ASU 2015-02 is effective for public businesses for interim and annual periods beginning after December 15, 2015. This ASU is effective beginning in the first quarter of the year ended December 31, 2016. We have evaluated the impact of the adoption of ASU 2015-02 on our consolidated financial statements and have determined under ASU 2015-02 the Operating Partnership is considered a variable interest entity (“VIE”). We are the primary beneficiary of the VIE and our partnership interest is considered a majority voting interest. As such, this standard did not have a material impact on our consolidated financial statements. The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurements (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined by ASC 820 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. 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 we have 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, only used to the extent that observable inputs are not available, reflect our assumptions about the pricing of an asset or liability. The following describes the methods we use to estimate the fair value of our financial and non-financial assets and liabilities: Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, and Accounts Payable and Other Liabilities —We consider the carrying values of these financial instruments to approximate fair value because of the short period of time between origination of the instruments and their expected realization. Included in Cash and Cash Equivalents as of March 31, 2016 , we had $0.1 million in a money market fund for which we consider the carrying value to approximate fair value based on Level 1 inputs. Real Estate Investments —The purchase prices of the investment properties, including related lease intangible assets and liabilities, were allocated at estimated fair value based on Level 3 inputs, such as discount rates, capitalization rates, comparable sales, replacement costs, income and expense growth rates and current market rents and allowances as determined by management. Real estate assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the individual property may not be recoverable, or at least annually. In such an event, a comparison will be made of the projected operating cash flows of each property on an undiscounted basis to the carrying amount of such property. Such carrying amount would be adjusted, if necessary, to estimated fair values to reflect impairment in the value of the asset. Mortgages and Loans Payable —We estimate the fair value of our debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs. The discount rate used approximates current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable). We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed. The following is a summary of discount rates and borrowings as of March 31, 2016 and December 31, 2015 (dollars in thousands): March 31, 2016 December 31, 2015 Discount rates: Secured fixed-rate debt 4.40 % 3.50 % Borrowings: Fair value $ 89,014 $ 87,387 Recorded value (1) 88,182 82,720 (1) Recorded value does not include deferred financing cost of $1.3 million and $1.4 million as of March 31, 2016 and December 31, 2015 , respectively. Derivative Instruments —As of March 31, 2016 and December 31, 2015 , we were party to two interest rate swap agreements with a total notional amount of $ 16.0 million and $16.1 million , respectively. They were assumed as part of two property acquisitions, and are measured at fair value on a recurring basis. The interest rate swap agreements, in effect, fix the variable interest of two of our secured variable-rate mortgage notes at an annual interest rate of 6.0% through July 15, 2018. The fair values of the interest rate swap agreements as of March 31, 2016 and December 31, 2015 were based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and were determined using interest rate pricing models and interest rate related observable inputs. Although we determined that the significant inputs used to value our derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2016 and December 31, 2015 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Our derivative liability is currently recorded as Accounts Payable and Other Liabilities on our consolidated balance sheets. The fair value measurement of our derivative liability as of March 31, 2016 and December 31, 2015 is $1.4 million . Considerable judgment is necessary to develop estimated fair values of financial and non-financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we did or could actually realize upon disposition of the financial assets and liabilities previously sold or currently held. |
Investment in Unconsolidated Jo
Investment in Unconsolidated Joint Venture | 3 Months Ended |
Mar. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments and Joint Ventures Disclosure | INVESTMENT IN UNCONSOLIDATED JOINT VENTURE On March 22, 2016, we entered into a joint venture (the “Joint Venture”) through our indirect wholly-owned subsidiary, PE OP II Value Added Grocery, LLC (“REIT Member”); with a limited partnership (“Investor Member”) affiliated with TPG Real Estate, the real estate platform of the global private investment firm TPG; and with PECO Value Added Grocery Manager, LLC (“PECO Member”), a wholly-owned subsidiary of our Phillips Edison sponsor, and an affiliate of our advisor and property manager, Phillips Edison & Company Ltd. (“Property Manager”). The REIT Member owns a 20% initial equity interest and Investor Member owns an 80% initial equity interest in the Joint Venture. The REIT Member and Investor Member will contribute up to $50 million and $200 million of equity, respectively, to the Joint Venture. PECO Member will manage and conduct the day-to-day operations and affairs of the Joint Venture. The REIT Member has customary approval rights in respect to major decisions, but does not have the right to cause or prohibit various material transactions. The Joint Venture’s income, losses and distributions will generally be allocated based on the members’ respective ownership interests. Therefore, we account for the joint venture under the equity method. Distributions of net cash are anticipated to be made on a monthly basis, as appropriate. Additional capital contributions in proportion to the members’ respective capital interests in the Joint Venture may be required. In addition, the REIT Member entered into a Contribution Agreement with Investor Member and the Joint Venture (the “Contribution Agreement”), pursuant to which the REIT Member contributed to the Joint Venture its ownership interests in six grocery-anchored shopping center properties. The contributed properties were valued at approximately $94.3 million . The Joint Venture distributed cash of $87.4 million to the REIT Member, which was net of the REIT Member’s initial investment of $6.9 million . Due to our 20% interest in the Joint Venture, the contribution of the six properties is considered a partial sale. As a result, we deferred 20% of the gain from the contribution, and recognized a net gain of $3.3 million from this transaction. |
Real Estate Acquisitions
Real Estate Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Real Estate Acquisitions | REAL ESTATE ACQUISITIONS During the three months ended March 31, 2016 , we acquired six grocery-anchored retail centers and one strip center adjacent to a previously acquired grocery-anchored retail center for an aggregate purchase price of approximately $101.2 million , including one acquisition with $5.5 million of assumed debt with a fair value of $5.9 million . During the three months ended March 31, 2015, we acquired five grocery-anchored retail centers for an aggregate purchase price of $65.1 million , including one acquisition with $8.8 million of assumed debt with a fair value of $9.1 million . The following tables present certain additional information regarding our acquisitions of properties, which were deemed individually immaterial when acquired but are material in the aggregate. For the three months ended March 31, 2016 and 2015 , we allocated the purchase price of acquisitions to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2016 2015 Land and improvements $ 25,585 $ 18,984 Building and improvements 67,862 41,197 Acquired in-place leases 10,107 6,826 Acquired above-market leases 272 407 Acquired below-market leases (2,608 ) (2,337 ) Total assets and lease liabilities acquired 101,218 65,077 Fair value of assumed debt at acquisition 5,916 9,148 Net assets acquired $ 95,302 $ 55,929 The weighted-average amortization periods for acquired in-place leases, above-market leases, and below-market leases intangibles acquired during the three months ended March 31, 2016 and 2015 are as follows (in years): 2016 2015 Acquired in-place leases 14 9 Acquired above-market leases 4 8 Acquired below-market leases 15 18 The amounts recognized for revenues, acquisition expenses, and net loss from each respective acquisition date to March 31, 2016 and 2015 related to the operating activities of our acquisitions are as follows (in thousands): 2016 2015 Revenues $ 1,120 $ 903 Acquisition expenses 1,751 1,044 Net loss 1,684 1,052 The following unaudited pro forma information summarizes selected financial information from our combined results of operations, as if all of our acquisitions for 2016 and 2015 had been acquired on January 1, 2015 . Acquisition expenses related to each respective acquisition are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. This pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of the period, nor does it purport to represent the results of future operations. Three Months Ended March 31, (in thousands) 2016 2015 Pro forma revenues $ 29,594 $ 10,307 Pro forma net income 3,497 1,126 |
Mortgages and Loans Payable
Mortgages and Loans Payable | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Mortgages and Loans Payable | MORTGAGES AND LOANS PAYABLE The following is a summary of our debt obligations as of March 31, 2016 and December 31, 2015 (in thousands) March 31, 2016 December 31, 2015 Fixed-rate mortgages payable (1) (2) $ 86,552 $ 81,398 Deferred financing costs, net (3) (1,321 ) (1,415 ) Assumed below-market debt adjustment, net 1,630 1,322 Total $ 86,861 $ 81,305 (1) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties are neither available to pay the debts of the consolidated property-holding limited liability companies nor constitute obligations of such consolidated limited liability companies as of March 31, 2016 . One of our mortgages has a limited exception which represents a potential $1.0 million obligation in the event of default. (2) As of March 31, 2016 and December 31, 2015 , the interest rates on $16.0 million and $16.1 million outstanding under two of our variable-rate mortgage notes payable were, in effect, fixed at 6.00% by two interest rate swap agreements, which expire in July 2018 (see Notes 3 and 8 ). (3) Net of accumulated amortization of $0.3 million and $0.2 million as of March 31, 2016 and December 31, 2015 , respectively. Accumulated amortization of $1.3 million and $1.1 million were included in Other Assets, Net as of March 31, 2016 and December 31, 2015 , respectively. As of March 31, 2016 and December 31, 2015 , the weighted-average interest rate for all of our mortgage and loans payable was 5.55% and 5.60% , respectively. |
Commitments And Contingencies
Commitments And Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, we may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against us. Environmental Matters In connection with the ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. We record liabilities as they arise related to environmental obligations. We have not been notified by any governmental authority of any material non-compliance, liability or other claim, nor are we aware of any other environmental condition that we believe will have a material impact on our consolidated financial statements. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings. Derivatives Not Designated as Hedging Instruments Derivatives not designated as hedges are not speculative and are used to manage our exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of these derivative instruments are recorded directly in other (expense) income, net and resulted in a loss of $0.1 million for the three months ended March 31, 2016 . We had no derivatives outstanding during the three months ended March 31, 2015 . Disclosure of the Effect of Derivative Instruments on the Consolidated Balance Sheets The fair value of our derivative financial instruments is classified as Accounts Payable and Other Liabilities on the consolidated balance sheets in the amount of $1.4 million as of March 31, 2016 and December 31, 2015 . Credit Risk-Related Contingent Features We have an agreement with our derivative counterparty that contains a provision where, if we either default or are capable of being declared in default on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of March 31, 2016 , the fair value of our derivatives was in a liability position including accrued interest, but excluding any adjustment for nonperformance risk related to this agreement. As of March 31, 2016 , we have not posted any collateral related to these agreements. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Equity | EQUITY On April 14, 2016, our board of directors established an estimated value per share of our common stock of $22.50 based substantially on the estimated market value of our portfolio of real estate properties in various geographic locations in the United States as of March 31, 2016 . We engaged a third party, Duff & Phelps LLC, to provide a calculation of the range in estimated value per share of our common stock as of March 31, 2016 , which reflected our balance sheet assets and liabilities as of that date. Distribution Reinvestment Plan —We have adopted the DRIP that allows stockholders to invest distributions in additional shares of our common stock. We continue to offer up to approximately 55.6 million shares of our common stock under the DRIP. Initially, the purchase price per share under the DRIP was $23.75 . In accordance with the DRIP, because we established an estimated value per share on April 14, 2016, subsequent to that date, participants acquire shares of common stock through the DRIP at a price of $22.50 per share. Share Repurchase Program (“SRP”) —Our SRP provides a limited opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations. Initially, shares were repurchased at a price equal to or at a discount from the stockholder’s original purchase prices paid for the shares being repurchased. Effective April 14, 2016, the repurchase price per share for all stockholders is equal to the estimated value per share of $22.50 . Effective May 15, 2016, under our amended SRP, the maximum amount of common stock that we may repurchase at the stockholder’s election during any calendar year is limited, among other things, to 5% of the weighted-average number of shares outstanding during the prior calendar year. The maximum amount is reduced each reporting period by the current year share repurchases to date. In addition, the cash available for repurchases on any particular date is generally limited to the proceeds from the DRIP during the preceding four fiscal quarters, less amounts already used for repurchases since the beginning of that period. The following table presents the activity of the share repurchase program, excluding amounts accrued for share repurchases as discussed below, for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts): 2016 2015 Shares repurchased 78 3 Cost of repurchases $ 1,883 $ 83 Average repurchase price $ 24.05 $ 25.00 We record a liability when we have an obligation to repurchase shares of common stock for which we had received a request as of period end, but the shares had not yet been repurchased. Below is a summary of our obligation to repurchase shares of common stock recorded as a component of Accounts Payable and Other Liabilities on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Shares submitted for repurchase 68 78 Liability recorded $ 1,514 $ 1,882 Class B Units —The Operating Partnership issues limited partnership units that are designated as Class B units for asset management services provided by PE-NTR II. The vesting of the Class B units is contingent upon a market condition and service condition. We had outstanding unvested Class B units of 345,331 and 231,809 as of March 31, 2016 and December 31, 2015 , respectively. |
Earning Per Share
Earning Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | EARNINGS PER SHARE Earnings per share (“EPS”) is calculated based on the weighted-average number of common shares outstanding during each period. Diluted EPS considers the effect of any potentially dilutive share equivalents for the three months ended March 31, 2016 and 2015 . Certain limited partnership units of the Operating Partnership (designated as “Class B units”) are the only potential dilutive securities currently outstanding, as they contain non-forfeitable rights to dividends or dividend equivalents. There were 345,331 and 53,575 Class B units of the Operating Partnership outstanding as of March 31, 2016 and 2015 , respectively. The vesting of the Class B units is contingent upon a market condition and service condition. The satisfaction of the market or service condition was not probable as of March 31, 2016 , and, therefore, the Class B units are not included in the calculation of EPS. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | conomic Dependency —We are dependent on PE-NTR II, the Property Manager, and their respective affiliates for certain services that are essential to us, including asset acquisition and disposition decisions, asset management, operating and leasing of our properties, and other general and administrative responsibilities. In the event that PE-NTR II, the Property Manager and their respective affiliates are unable to provide such services, we would be required to find alternative service providers, which could result in higher costs and expenses. Advisory Agreement —Pursuant to the PE-NTR II Agreement, PE-NTR II is entitled to specified fees for certain services, including managing our day-to-day activities and implementing our investment strategy. PE-NTR II manages our day-to-day affairs and our portfolio of real estate investments subject to the board’s supervision. Expenses are reimbursed to PE-NTR II based on amounts incurred on our behalf by PE-NTR II. Prior to December 3, 2015, our advisor was American Realty Capital PECO II Advisors, LLC (“ARC”). On November 2, 2015, the conflicts committee of our board of directors made the decision to terminate the former advisory agreement with ARC, effective as of December 3, 2015. Pursuant to the former advisory agreement, ARC was entitled to specified fees for certain services, including managing our day-to-day activities and implementing our investment strategy. ARC had entered into a sub-advisory agreement with PE-NTR II, who managed our day-to-day affairs and our portfolio of real estate investments on behalf of ARC, subject to the board’s supervision and with the condition that certain major decisions required the consent of both ARC and PE-NTR II. The expenses reimbursed to ARC and PE-NTR II were reimbursed in proportion to the amount of expenses incurred on our behalf by ARC and PE-NTR II, respectively. Organization and Offering Costs —Under the terms of the former advisory agreement, we were to reimburse on a monthly basis ARC, PE-NTR II, or their respective affiliates for cumulative organization and offering costs and future organization and offering costs they incurred on our behalf, but only to the extent that the reimbursement would not exceed 2.0% of gross proceeds raised in all primary offerings measured at the completion of such primary offering. Summarized below are the cumulative organization and offering costs charged by and the cumulative costs reimbursed to ARC, PE-NTR II and their affiliates as of March 31, 2016 and December 31, 2015 , and any related amounts reimbursable to us as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Total organization and offering costs charged $ 18,081 $ 18,081 Total organization and offering costs reimbursed 18,682 19,020 Total organization and offering costs receivable $ (601 ) $ (939 ) Acquisition Fee —We paid ARC under the former advisory agreement, and we pay PE-NTR II under the PE-NTR II Agreement, an acquisition fee related to services provided in connection with the selection and purchase or origination of real estate and real estate-related investments. The acquisition fee is equal to 1.0% of the contract purchase price of each property we acquire, including acquisition or origination expenses and any debt attributable to such investments. Acquisition Expenses —We reimburse PE-NTR II for expenses actually incurred related to selecting, evaluating, and acquiring assets on our behalf. During the three months ended March 31, 2016 and 2015 , we reimbursed PE-NTR II for personnel costs related to due diligence services for assets we acquired during the period. Asset Management Subordinated Participation —Within 60 days after the end of each calendar quarter (subject to the approval of our board of directors), we will pay an asset management subordinated participation by issuing a number of restricted operating partnership units designated as Class B Units to PE-NTR II and ARC equal to: (i) 0.25% multiplied by (a) prior to the date on which we calculate an estimated net asset value (“NAV”) per share, the cost of assets and (b) on and after the date on which we calculate an estimated NAV per share, the lower of the cost of assets and the applicable quarterly NAV divided by (ii) (a) prior to the date on which we calculate an estimated NAV per share, the value of one share of common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the primary offering price minus selling commissions and dealer manager fees) and (b) on and after the date on which we calculate an estimated NAV per share, the per share NAV. Our board of directors established an estimated NAV per share of $22.50 on April 14, 2016. PE-NTR II and ARC are entitled to receive distributions on the vested and unvested Class B units they receive in connection with their asset management subordinated participation at the same rate as distributions are paid to common stockholders. Such distributions are in addition to the incentive fees that PE-NTR II and ARC and their affiliates may receive from us. During the three months ended March 31, 2016 , the Operating Partnership issued 113,522 Class B units to PE-NTR II and ARC under the advisory agreement for the asset management services performed during the period from October 1, 2015 to December 31, 2015. These Class B units will not vest until an economic hurdle has been met. PE-NTR II or one of its affiliates must continue to provide advisory services through the date that such economic hurdle is met. The economic hurdle will be met when the value of the Operating Partnership’s assets plus all distributions made equal or exceed the total amount of capital contributed by investors plus a 6.0% cumulative, pre-tax, non-compounded annual return thereon. Under the PE-NTR II Agreement, beginning in January 2016, the asset management fee remained at 1.0% of the cost of our assets, but is paid 80% in cash and 20% in Class B units of the Operating Partnership instead of entirely in Class B units. The cash portion of the asset management fee is paid on a monthly basis in arrears at the rate of 0.06667% multiplied by the cost of our assets as of the last day of the preceding monthly period. Under the first amendment to the Operating Partnership’s amended and restated agreement of limited partnership, until we establish an estimated NAV, the Class B units portion of the asset management fee will be based on the rate of 0.05% multiplied by the cost of our assets. After we establish an estimated NAV, which occurred on April 14, 2016, the Class B units portion of the asset management fee will be based on the rate of 0.05% multiplied by the lower of the cost of our assets and our estimated NAV. The Class B units continue to be issued quarterly in arrears and remain subject to existing forfeiture provisions. Financing Coordination Fee— We paid PE-NTR II and ARC under the former advisory agreement a financing fee equal to 0.75% of all amounts made available under any loan or line of credit in connection with the origination or refinancing of any debt that we obtain and use to finance properties or other permitted investments. As of January 1, 2016, we no longer pay this fee. Disposition Fee —We pay PE-NTR II under the PE-NTR II Agreement, and we paid ARC under the former advisory agreement, for substantial assistance in connection with the sale of properties or other investments up to the lesser of: (i) 2.0% of the contract sales price of each property or other investment sold; or (ii) one-half of the total brokerage commissions paid if a non-affiliated broker is also involved in the sale, provided that total real estate commissions paid (to PE-NTR II and others) in connection with the sale may not exceed the lesser of a competitive real estate commission or 6.0% of the contract sales price. The conflicts committee of our board of directors will determine whether PE-NTR II has provided substantial assistance to us in connection with the sale of an asset. Substantial assistance in connection with the sale of a property includes preparation of an investment package for the property (including an investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or such other substantial services performed by PE-NTR II in connection with a sale. General and Administrative Expenses —As of March 31, 2016 and December 31, 2015 , we owed either PE-NTR II or ARC and their affiliates $14,000 and $18,000 , respectively, for general and administrative expenses paid on our behalf. Summarized below are the fees earned by and the expenses reimbursable to ARC and PE-NTR II, except for organization and offering costs and general and administrative expenses, which we disclose above (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Acquisition fees (1) $ 1,009 $ 650 $ — $ — Acquisition expenses (1) 208 84 — 1 Asset management fees (2) 2,116 — 585 — Class B unit distribution (3) 217 9 170 16 Financing coordination fees (4) — 66 — — Total $ 3,550 $ 809 $ 755 $ 17 (1) The acquisition fees and expenses are presented as Acquisition Expenses on the consolidated statements of operations. (2) The asset management fees are presented as General and Administrative on the consolidated statements of operations. (3) Represents the distributions paid to PE-NTR II and ARC as holders of Class B units of the Operating Partnership and is presented as General and Administrative on the consolidated statements of operations. (4) Financing fees were presented as Other Assets or Mortgage and Loan Payable, Net, on the consolidated balance sheets and amortized over the term of the related loan. As of January 1, 2016, we are no longer required to pay financing fees. Annual Subordinated Performance Fee —We may pay PE-NTR II or its assignees an annual subordinated performance fee calculated on the basis of our total return to stockholders, payable annually in arrears, such that for any year in which our total return on stockholders’ capital exceeds 6.0% per annum, PE-NTR II will be entitled to 15.0% of the amount in excess of such 6.0% per annum, provided that the amount paid to PE-NTR II does not exceed 10.0% of the aggregate total return for that year. No such amounts have been incurred or payable to date. Subordinated Participation in Net Sales Proceeds— The Operating Partnership may pay to Phillips Edison Special Limited Partner II LLC (the “Special Limited Partner”) a subordinated participation in the net sales proceeds of the sale of real estate assets equal to 15.0% of remaining net sales proceeds after return of capital contributions to stockholders plus payment to investors of a 6.0% cumulative, pre-tax, non-compounded return on the capital contributed by stockholders. Generally, ARC has a 15.0% interest and PE-NTR II has an 85.0% interest in the Special Limited Partner. No sales of real estate assets have occurred to date. Subordinated Incentive Listing Distribution —The Operating Partnership may pay to the Special Limited Partner a subordinated incentive listing distribution upon the listing of our common stock on a national securities exchange. Such incentive listing distribution is equal to 15.0% of the amount by which the market value of all of our issued and outstanding common stock plus distributions exceeds the aggregate capital contributed by stockholders plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to stockholders. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in the net sales proceeds and the subordinated incentive listing distribution. No subordinated incentive listing distribution has been earned to date. Subordinated Distribution Upon Termination of the Advisor Agreement —Upon termination or non-renewal of the PE-NTR II Agreement, the Special Limited Partner shall be entitled to a subordinated termination distribution in the form of a non-interest bearing promissory note equal to 15.0% of the amount by which the value of our assets owned at the time of such termination or non-renewal plus distributions exceeds the aggregate capital contributed by stockholders plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to stockholders. In addition, the Special Limited Partner may elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or a liquidity event occurs. No such termination has occurred to date. Property Manager —All of our real properties are managed and leased by the Property Manager. The Property Manager is wholly owned by our Phillips Edison sponsor and was organized on September 15, 1999. The Property Manager also manages real properties acquired by the Phillips Edison affiliates or other third parties. Property Management Fee —We pay to the Property Manager in monthly property management fees of 4.0% of the monthly gross cash receipts from the properties managed by the Property Manager. Leasing Commissions —In addition to the property management fee, if the Property Manager provides leasing services with respect to a property, we pay the Property Manager leasing fees in an amount equal to the leasing fees charged by unaffiliated persons rendering comparable services based on national market rates. The Property Manager shall be paid a leasing fee in connection with a tenant’s exercise of an option to extend an existing lease, and the leasing fees payable to the Property Manager may be increased by up to 50% in the event that the Property Manager engages a co-broker to lease a particular vacancy. Construction Management Fee —If we engage the Property Manager to provide construction management services with respect to a particular property, we pay a construction management fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the property. Expenses and Reimbursements —The Property Manager hires, directs and establishes policies for employees who have direct responsibility for the operations of each real property it manages, which may include, but is not limited to, on-site managers and building and maintenance personnel. Certain employees of the Property Manager may be employed on a part-time basis and may also be employed by the Sub-advisor or certain of its affiliates. The Property Manager also directs the purchase of equipment and supplies and will supervise all maintenance activity. We reimburse the costs and expenses incurred by the Property Manager on our behalf, including employee compensation, legal, travel and other out-of-pocket expenses that are directly related to the management of specific properties, as well as fees and expenses of third-party accountants. Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Property management fees (1) $ 992 $ 330 $ 422 $ 307 Leasing commissions (2) 824 422 480 86 Construction management fees (2) 149 20 62 68 Other fees and reimbursements (3) 867 250 399 1,157 Total $ 2,832 $ 1,022 $ 1,363 $ 1,618 (1) The property management fees are included in Property Operating on the consolidated statements of operations. (2) Leasing commissions paid for leases with terms less than one year are expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year and construction management fees are capitalized and amortized over the life of the related leases or assets. (3) Other fees and reimbursements are included in Property Operating and General and Administrative on the consolidated statements of operations based on the nature of the expense. Dealer Manager —The dealer manager for our initial public offering was Realty Capital Securities, LLC (the “Dealer Manager”). The Dealer Manager is a member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and was organized on August 29, 2007. The Dealer Manager is under common control with ARC and provides certain sales, promotional and marketing services in connection with the distribution of the shares of common stock offered under our offering. Excluding shares sold pursuant to the “friends and family” program, the Dealer Manager was generally paid a sales commission equal to 7.0% of the gross proceeds from the sale of shares of the common stock sold in the primary offering and a dealer manager fee equal to 3.0% of the gross proceeds from the sale of shares of the common stock sold in the primary offering. The Dealer Manager typically reallowed 100% of the selling commissions and a portion of the dealer manager fee to participating broker-dealers. Alternatively, a participating broker-dealer could elect to receive a commission based upon the proceeds from the sale of shares by such participating broker-dealer, with a portion of such fee being paid at the time of such sale and the remaining amounts paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale, in which event, a portion of the dealer manager fee could be reallowed such that the combined selling commission and dealer manager fee did not exceed 10% of the gross proceeds of our primary offering. The dealer manager agreement terminated upon termination of the initial public offering. Prior to February 2016, we utilized transfer agent services provided by an affiliate of the Dealer Manager. Fees incurred from this transfer agent represented amounts paid by PE-NTR II to the affiliate of the Dealer Manager for such services. We reimbursed PE-NTR II for these fees through the payment of organization and offering costs. The transfer agent ceased services and the agreement was terminated in connection with the bankruptcy of the transfer agent and its parent company. The following table details total selling commissions, dealer manager fees, and service fees paid to the Dealer Manager and its affiliate related to the sale of common stock for the three months ended March 31, 2016 and 2015 and any related amounts unpaid, which are included as a component of total unpaid organization and offering costs, as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Total commissions and fees incurred from Dealer Manager $ — $ 14,951 $ — $ — Transfer agent fees incurred related to offering costs — 200 — 150 Other fees incurred from transfer agent 140 — 560 420 Share Purchases by PE-NTR II and AR Capital sponsor —PE-NTR II made an initial investment in us through the purchase of 8,888 shares of our common stock and may not sell any of these shares while serving as our advisor. AR Capital LLC, which is under common control with ARC, also purchased 17,778 shares of our common stock. PE-NTR II and AR Capital LLC purchased shares at a purchase price of $22.50 per share, reflecting no dealer manager fee or selling commissions paid on such shares. |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2016 | |
Leases, Operating [Abstract] | |
Operating Leases | OPERATING LEASES The terms and expirations of our operating leases with our tenants vary. The lease agreements frequently contain options to extend the terms of leases and other terms and conditions as negotiated. We retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Approximate future rentals to be received under non-cancelable operating leases in effect at March 31, 2016 , assuming no new or renegotiated leases or option extensions on lease agreements, are as follows (in thousands): Year Amount April 1 to December 31, 2016 $ 55,444 2017 68,852 2018 62,339 2019 54,215 2020 45,497 2021 and thereafter 202,697 Total $ 489,044 No single tenant comprised 10% or more of our aggregate annualized effective rent (“AER”) as of March 31, 2016 . As of March 31, 2016 , our real estate investments in Florida represented 20.1% of our AER. As a result, the geographic concentration of our portfolio makes it susceptible to adverse economic developments in the Florida real estate market. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Distributions to Stockholders Distributions equal to a daily amount of $0.00443989 per share of common stock outstanding were paid subsequent to March 31, 2016 to the stockholders of record from March 1, 2016 through April 30, 2016 as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution March 1, 2016 through March 31, 2016 4/1/2016 $ 6,350 $ 3,259 $ 3,091 April 1, 2016 through April 30, 2016 5/2/2016 6,154 3,132 3,022 In March 2016 , our board of directors authorized distributions to the stockholders of record at the close of business each day in the period commencing May 1, 2016 through May 31, 2016. The authorized distributions equal an amount of $0.00443989 per share of common stock. Acquisitions Subsequent to March 31, 2016 , we acquired the following properties (dollars in thousands): Property Name Location Anchor Tenant Acquisition Date Purchase Price Square Footage Leased % of Rentable Square Feet at Acquisition Bloomingdale Hills Riverview, FL Walmart 4/4/2016 $ 9,200 78,442 95.4 % Bartow Marketplace Cartersville, GA Walmart 4/8/2016 34,800 375,067 99.2 % University Plaza Amherst, NY Tops Markets 4/8/2016 13,650 165,277 95.2 % Stone Gate Plaza Crowley, TX Kroger 4/15/2016 12,700 90,643 96.0 % The supplemental purchase accounting disclosures required by GAAP relating to the recent acquisitions of the aforementioned properties have not been presented as the initial accounting for these acquisitions was incomplete at the time this Quarterly Report on Form 10-Q was filed with the SEC. The initial accounting was incomplete due to the late closing dates of the acquisitions. |
Summary Of Significant Accoun21
Summary Of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to the audited consolidated financial statements of Phillips Edison Grocery Center REIT II, Inc. for the year ended December 31, 2015 , which are included in our 2015 Annual Report on Form 10-K. In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report. Our results of operations for the three months ended March 31, 2016 are not necessarily indicative of the operating results expected for the full year. The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation. |
Gain on Sale of Assets Policy [Policy Text Block] | Gain on Sale of Assets —We recognize sales of assets only upon the closing of the transaction with the purchaser. We record payments received from purchasers prior to closing as deposits and classify them as other assets on our consolidated balance sheets. We recognize gains (net of any taxes) on assets sold using the full accrual method upon closing if the collectibility of the sales price is reasonably assured, we are not obligated to perform any significant activities after the sale to earn the profit, we have received adequate initial investment from the purchaser, and other profit recognition criteria have been satisfied. We may defer recognition of gains in whole or in part until: (i) the profit is determinable, meaning that the collectibility of the sales price is reasonably assured or the amount that will not be collectible can be estimated; and (ii) the earnings process is virtually complete, meaning that we are not obliged to perform any significant activities after the sale to earn the profit. Gains and losses on transfers of operating properties resulting from the sale of a partial interest in properties to unconsolidated joint ventures are recognized using the partial sale provisions of the within sales guidance |
Equity Method Investments and Joint Ventures Disclosure | Investment in Unconsolidated Joint Venture —We account for our investment in our unconsolidated joint venture using the equity method of accounting as we exercise significant influence over but do not control this entity. This investment was initially recorded at cost and is subsequently adjusted for contributions made to and distributions received from the joint venture. Earnings for our investment are recognized in accordance with the terms of the applicable joint venture agreement, generally through a pro rata allocation. Under a pro rata allocation, net income or loss is allocated between the partners in the joint venture based on their respective stated ownership percentages. To recognize the character of distributions from our unconsolidated joint venture, we review the nature of cash distributions received for purposes of determining whether such distributions should be classified as either a return on investment, which would be included in operating activities, or a return of investment, which would be included in investing activities on the consolidated statements of cash flows. On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions, that the value of our investment in our unconsolidated joint venture may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. Management’s estimates of fair value are based upon a discounted cash flow model for each specific investment that includes all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums, capitalization rates, discount rates and credit spreads used in these models are based upon rates we believe to be within a reasonable range of current market rates. |
Reclassifications | Reclassifications —The following line items on our consolidated balance sheets as of December 31, 2015 were reclassified to conform to the current year presentation: • The acquired intangible lease assets balance was separated into Acquired Above-Market Lease Assets and Acquired In-Place Lease Assets, • Certain unamortized debt issuance costs were reclassified from Deferred Financing Expense, Net, to Other Assets, Net |
Impact of Recently Issued Accounting Pronouncements | Newly Adopted and Recently Issued Accounting Pronouncements —In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This update amends existing guidance to require the presentation of certain debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). This update provides guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. We adopted ASU 2015-03 and ASU 2015-15 on January 1, 2016 and retrospectively applied the guidance for all periods presented. Unamortized debt issuance costs of $1.3 million and $1.4 million are included in Mortgage and Loan Payable, Net as of March 31, 2016 and December 31, 2015, respectively, which were previously included in Deferred Financing Expense, Net in our consolidated balance sheets. The remaining amounts included in Other Assets, Net on our consolidated balance sheets were related to our revolving credit facility. The adoption did not have an impact on our results of operations (see Note 6 ). In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 Consolidation . ASU 2015-02 updates to include all reporting entities within the scope of Subtopic 810-10 Consolidation - Overall, including limited partnerships and similar legal entities, unless a scope exception applies. Overall the amendments in this update are to simplify the codification and reduce the number of consolidation models and place more emphasis on risk of loss when determining controlling financial interests. ASU 2015-02 is effective for public businesses for interim and annual periods beginning after December 15, 2015. This ASU is effective beginning in the first quarter of the year ended December 31, 2016. We have evaluated the impact of the adoption of ASU 2015-02 on our consolidated financial statements and have determined under ASU 2015-02 the Operating Partnership is considered a variable interest entity (“VIE”). We are the primary beneficiary of the VIE and our partnership interest is considered a majority voting interest. As such, this standard did not have a material impact on our consolidated financial statements. The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value, Measurement Inputs, Disclosure [Text Block] | ASC 820, Fair Value Measurements (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined by ASC 820 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. 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 we have 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, only used to the extent that observable inputs are not available, reflect our assumptions about the pricing of an asset or liability. The following describes the methods we use to estimate the fair value of our financial and non-financial assets and liabilities: |
Earnings Per Share, Policy [Policy Text Block] | Earnings per share (“EPS”) is calculated based on the weighted-average number of common shares outstanding during each period. Diluted EPS considers the effect of any potentially dilutive share equivalents for the three months ended March 31, 2016 and 2015 . Certain limited partnership units of the Operating Partnership (designated as “Class B units”) are the only potential dilutive securities currently outstanding, as they contain non-forfeitable rights to dividends or dividend equivalents. |
Summary Of Significant Accoun22
Summary Of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table provides a brief description of recent accounting pronouncements that could have a material effect on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters ASU 2014-09, Revenue from Contracts with Customers This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017. January 1, 2018 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. It is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. January 1, 2019 We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Inputs, Liabilities, Quantitative Information | The following is a summary of discount rates and borrowings as of March 31, 2016 and December 31, 2015 (dollars in thousands): March 31, 2016 December 31, 2015 Discount rates: Secured fixed-rate debt 4.40 % 3.50 % Borrowings: Fair value $ 89,014 $ 87,387 Recorded value (1) 88,182 82,720 (1) Recorded value does not include deferred financing cost of $1.3 million and $1.4 million as of March 31, 2016 and December 31, 2015 , respectively. |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | For the three months ended March 31, 2016 and 2015 , we allocated the purchase price of acquisitions to the fair value of the assets acquired and liabilities assumed as follows (in thousands): 2016 2015 Land and improvements $ 25,585 $ 18,984 Building and improvements 67,862 41,197 Acquired in-place leases 10,107 6,826 Acquired above-market leases 272 407 Acquired below-market leases (2,608 ) (2,337 ) Total assets and lease liabilities acquired 101,218 65,077 Fair value of assumed debt at acquisition 5,916 9,148 Net assets acquired $ 95,302 $ 55,929 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The weighted-average amortization periods for acquired in-place leases, above-market leases, and below-market leases intangibles acquired during the three months ended March 31, 2016 and 2015 are as follows (in years): 2016 2015 Acquired in-place leases 14 9 Acquired above-market leases 4 8 Acquired below-market leases 15 18 |
Real Estate Acquisitions, Operating Activities Since Acquisition Date | The amounts recognized for revenues, acquisition expenses, and net loss from each respective acquisition date to March 31, 2016 and 2015 related to the operating activities of our acquisitions are as follows (in thousands): 2016 2015 Revenues $ 1,120 $ 903 Acquisition expenses 1,751 1,044 Net loss 1,684 1,052 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma information summarizes selected financial information from our combined results of operations, as if all of our acquisitions for 2016 and 2015 had been acquired on January 1, 2015 . Acquisition expenses related to each respective acquisition are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. This pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of the period, nor does it purport to represent the results of future operations. Three Months Ended March 31, (in thousands) 2016 2015 Pro forma revenues $ 29,594 $ 10,307 Pro forma net income 3,497 1,126 |
Mortgages and Loans Payable (Ta
Mortgages and Loans Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | The following is a summary of our debt obligations as of March 31, 2016 and December 31, 2015 (in thousands) March 31, 2016 December 31, 2015 Fixed-rate mortgages payable (1) (2) $ 86,552 $ 81,398 Deferred financing costs, net (3) (1,321 ) (1,415 ) Assumed below-market debt adjustment, net 1,630 1,322 Total $ 86,861 $ 81,305 (1) Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties are neither available to pay the debts of the consolidated property-holding limited liability companies nor constitute obligations of such consolidated limited liability companies as of March 31, 2016 . One of our mortgages has a limited exception which represents a potential $1.0 million obligation in the event of default. (2) As of March 31, 2016 and December 31, 2015 , the interest rates on $16.0 million and $16.1 million outstanding under two of our variable-rate mortgage notes payable were, in effect, fixed at 6.00% by two interest rate swap agreements, which expire in July 2018 (see Notes 3 and 8 ). (3) Net of accumulated amortization of $0.3 million and $0.2 million as of March 31, 2016 and December 31, 2015 , respectively. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Share repurchase program | The following table presents the activity of the share repurchase program, excluding amounts accrued for share repurchases as discussed below, for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts): 2016 2015 Shares repurchased 78 3 Cost of repurchases $ 1,883 $ 83 Average repurchase price $ 24.05 $ 25.00 |
Share repurchase program, repurchase obligations | Below is a summary of our obligation to repurchase shares of common stock recorded as a component of Accounts Payable and Other Liabilities on our consolidated balance sheets as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Shares submitted for repurchase 68 78 Liability recorded $ 1,514 $ 1,882 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Summary of Organization and Offering Costs | Summarized below are the cumulative organization and offering costs charged by and the cumulative costs reimbursed to ARC, PE-NTR II and their affiliates as of March 31, 2016 and December 31, 2015 , and any related amounts reimbursable to us as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Total organization and offering costs charged $ 18,081 $ 18,081 Total organization and offering costs reimbursed 18,682 19,020 Total organization and offering costs receivable $ (601 ) $ (939 ) |
Advisor Transactions | Summarized below are the fees earned by and the expenses reimbursable to ARC and PE-NTR II, except for organization and offering costs and general and administrative expenses, which we disclose above (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Acquisition fees (1) $ 1,009 $ 650 $ — $ — Acquisition expenses (1) 208 84 — 1 Asset management fees (2) 2,116 — 585 — Class B unit distribution (3) 217 9 170 16 Financing coordination fees (4) — 66 — — Total $ 3,550 $ 809 $ 755 $ 17 (1) The acquisition fees and expenses are presented as Acquisition Expenses on the consolidated statements of operations. (2) The asset management fees are presented as General and Administrative on the consolidated statements of operations. (3) Represents the distributions paid to PE-NTR II and ARC as holders of Class B units of the Operating Partnership and is presented as General and Administrative on the consolidated statements of operations. (4) Financing fees were presented as Other Assets or Mortgage and Loan Payable, Net, on the consolidated balance sheets and amortized over the term of the related loan. As of January 1, 2016, we are no longer required to pay financing fees. |
Property Manager Transactions | Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three months ended March 31, 2016 and 2015 and any related amounts unpaid as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Property management fees (1) $ 992 $ 330 $ 422 $ 307 Leasing commissions (2) 824 422 480 86 Construction management fees (2) 149 20 62 68 Other fees and reimbursements (3) 867 250 399 1,157 Total $ 2,832 $ 1,022 $ 1,363 $ 1,618 (1) The property management fees are included in Property Operating on the consolidated statements of operations. (2) Leasing commissions paid for leases with terms less than one year are expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year and construction management fees are capitalized and amortized over the life of the related leases or assets. (3) Other fees and reimbursements are included in Property Operating and General and Administrative on the consolidated statements of operations based on the nature of the expense. |
Dealer Manager Transactions | The following table details total selling commissions, dealer manager fees, and service fees paid to the Dealer Manager and its affiliate related to the sale of common stock for the three months ended March 31, 2016 and 2015 and any related amounts unpaid, which are included as a component of total unpaid organization and offering costs, as of March 31, 2016 and December 31, 2015 (in thousands): Three Months Ended Unpaid Amount as of March 31, March 31, December 31, 2016 2015 2016 2015 Total commissions and fees incurred from Dealer Manager $ — $ 14,951 $ — $ — Transfer agent fees incurred related to offering costs — 200 — 150 Other fees incurred from transfer agent 140 — 560 420 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Leases, Operating [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Approximate future rentals to be received under non-cancelable operating leases in effect at March 31, 2016 , assuming no new or renegotiated leases or option extensions on lease agreements, are as follows (in thousands): Year Amount April 1 to December 31, 2016 $ 55,444 2017 68,852 2018 62,339 2019 54,215 2020 45,497 2021 and thereafter 202,697 Total $ 489,044 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Dividends Paid | Distributions equal to a daily amount of $0.00443989 per share of common stock outstanding were paid subsequent to March 31, 2016 to the stockholders of record from March 1, 2016 through April 30, 2016 as follows (in thousands): Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution March 1, 2016 through March 31, 2016 4/1/2016 $ 6,350 $ 3,259 $ 3,091 April 1, 2016 through April 30, 2016 5/2/2016 6,154 3,132 3,022 |
Schedule of Business Acquisitions | Subsequent to March 31, 2016 , we acquired the following properties (dollars in thousands): Property Name Location Anchor Tenant Acquisition Date Purchase Price Square Footage Leased % of Rentable Square Feet at Acquisition Bloomingdale Hills Riverview, FL Walmart 4/4/2016 $ 9,200 78,442 95.4 % Bartow Marketplace Cartersville, GA Walmart 4/8/2016 34,800 375,067 99.2 % University Plaza Amherst, NY Tops Markets 4/8/2016 13,650 165,277 95.2 % Stone Gate Plaza Crowley, TX Kroger 4/15/2016 12,700 90,643 96.0 % |
Organization (Details)
Organization (Details) - Mar. 31, 2016 shares in Millions | property | shares | Properties | Total |
Schedule of Equity Method Investments [Line Items] | ||||
Maximum Shares Authorized Under Dividend Reinvestment Plan | shares | 55.6 | |||
Number of Real Estate Properties | property | 57 | |||
TPG Joint Venture [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of Real Estate Properties | 6 | 6 | ||
Joint Venture Ownership Percentage | 20.00% |
Summary Of Significant Accoun31
Summary Of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Effect of New Accounting Principle in Period of Adoption - Debt Issuance Costs | $ 1,321 | $ 1,415 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Cash and Cash Equivalents - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money Market Funds, at Carrying Value | $ 0.1 | $ 30 |
Fair Value Measurements (Deta33
Fair Value Measurements (Details) - Mortgages and Loans Payable - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Borrowings: Recorded Value | $ 88,182 | $ 82,720 |
Deferred financing cost | $ 1,321 | $ 1,415 |
Secured fixed-rate debt | Fair Value, Inputs, Level 3 | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, discount rate | 4.40% | 3.50% |
Borrowings: Fair Value | $ 89,014 | $ 87,387 |
Fair Value Measurements (Deta34
Fair Value Measurements (Details) - Derivative Instruments $ in Millions | 3 Months Ended | ||
Mar. 31, 2016USD ($)Debt_Instrumentacquisition | Mar. 31, 2015 | Dec. 31, 2015USD ($)Debt_Instrument | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Derivative, Amount of Hedged Item | $ | $ 16 | $ 16.1 | |
Number of properties acquired during period | 6 | 5 | |
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Derivative Assets (Liabilities), at Fair Value, Net | $ | $ 1.4 | ||
Fixed Rate Mortgages Payable [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Debt Instrument, Number of Instruments Held | Debt_Instrument | 2 | ||
Interest Rate Swap [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Number of Interest Rate Derivatives Held | Debt_Instrument | 2 | 2 | |
Number of properties acquired during period | acquisition | 2 | ||
Derivative, Fixed Interest Rate | 6.00% |
Investment in Unconsolidated 35
Investment in Unconsolidated Joint Venture (Details) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2016USD ($)property | Mar. 31, 2015USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2016Properties | Mar. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||||
Gain on contribution of properties to unconsolidated joint venture | $ 3,341 | $ 0 | |||
Number of Real Estate Properties | property | 57 | ||||
TPG Joint Venture [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Joint Venture Ownership Percentage | 20.00% | ||||
Number of Real Estate Properties | 6 | 6 | |||
Value of Properties Contributed to Unconsolidated Joint Venture | $ 94,274 | ||||
Proceeds From Contribution of Properties to Unconsolidated Joint Venture After Investment | 87,386 | ||||
Real Estate Investments, Joint Ventures | $ 6,900 | ||||
REIT Member | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Joint Venture Ownership Percentage | 20.00% | ||||
Investor Member | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Joint Venture Ownership Percentage | 80.00% | ||||
Maximum | REIT Member | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to Acquire Interest in Joint Venture | 50,000 | ||||
Maximum | Investor Member | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to Acquire Interest in Joint Venture | $ 200,000 |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | |
Business Combinations [Abstract] | ||
Number of properties acquired during period | 6 | 5 |
Number of non-grocery anchored properties acquired during period | 1 | |
Business acquisition, cost of acquired entity, purchase price | $ 101,200 | $ 65,100 |
Business combination, cost of acquired entity, debt assumed | $ 5,500 | $ 8,800 |
Real Estate Acquisitions (Det37
Real Estate Acquisitions (Details) - Allocation - Series of individually immaterial business acquisition - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Business Acquisition [Line Items] | ||
Land and improvements | $ 25,585 | $ 18,984 |
Building and improvements | 67,862 | 41,197 |
Acquired below-market leases | (2,608) | (2,337) |
Total assets and lease liabilities acquired | 101,218 | 65,077 |
Fair value of assumed debt at acquisition | 5,916 | 9,148 |
Net assets acquired | 95,302 | 55,929 |
Acquired in-place leases | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangibles | 10,107 | 6,826 |
Acquired above-market leases | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangibles | $ 272 | $ 407 |
Real Estate Acquisitions (Deta
Real Estate Acquisitions (Details)-Weighted average amortization periods - Series of individually immaterial business acquisition | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Acquired in-place leases | ||
Business Acquisition [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 14 years | 9 years |
Acquired above-market leases | ||
Business Acquisition [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years | 8 years |
Acquired below-market leases | ||
Business Acquisition [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | 18 years |
Real Estate Acquisitions (Det39
Real Estate Acquisitions (Details) - Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Acquisition expenses | $ 2,772 | $ 1,165 |
Series of individually immaterial business acquisition | ||
Business Acquisition [Line Items] | ||
Revenues | 1,120 | 903 |
Acquisition expenses | 1,751 | 1,044 |
Net loss | $ 1,684 | $ 1,052 |
Real Estate Acquisitions (Det40
Real Estate Acquisitions (Details) - Pro Forma - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Pro forma revenues | $ 29,594 | $ 10,307 |
Pro forma net income | $ 3,497 | $ 1,126 |
Mortgages and Loans Payable (De
Mortgages and Loans Payable (Details) - Debt Obligations $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)mortgage | Dec. 31, 2015USD ($) | |
Debt Instrument [Line Items] | ||
Fixed-rate mortgages payable | $ 88,182 | $ 82,720 |
Deferred financing cost, net | (1,321) | (1,415) |
Assumed below-market debt adjustment, net | 1,630 | 1,322 |
Mortgages and loans payable, net | $ 86,861 | 81,305 |
Debt Instrument, Number of Instruments with Limited Recourse | mortgage | 1 | |
Debt Instrument, Recourse Amount | $ 1,000 | |
Derivative, Amount of Hedged Item | 16,000 | 16,100 |
Accumulated Amortization, Deferred Finance Costs | 328 | 233 |
Accumulated Amortization, Deferred Finance Costs Asset | $ 1,272 | $ 1,091 |
Weighted-average interest rate on debt | 5.55% | 5.60% |
Fixed Rate Mortgages Payable [Member] | ||
Debt Instrument [Line Items] | ||
Fixed-rate mortgages payable | $ 86,552 | $ 81,398 |
Commitments And Contingencies N
Commitments And Contingencies Narrative (Details) | Mar. 31, 2016claim |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingency, Pending Claims, Number | 0 |
Derivatives and Hedging Activ43
Derivatives and Hedging Activities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative, Loss on Derivative | $ 100,000 | $ 0 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Class of Stock [Line Items] | |||
Common stock, price per share | $ 22.50 | ||
Initial purchase price per share under DRIP | $ 23.75 | ||
Maximum Shares Authorized Under Dividend Reinvestment Plan | 55,600,000 | ||
Maximum Shares Under SRP | 5.00% | ||
Cost of repurchases | $ 1,517 | $ 291 | |
Class B Units Outstanding | 345,331 | 231,809 | |
Dividend Reinvestment Plan [Member] | |||
Class of Stock [Line Items] | |||
Common stock, price per share | $ 22.50 | ||
Share Repurchase Program | |||
Class of Stock [Line Items] | |||
Shares repurchased | 78,000 | 3,000 | |
Cost of repurchases | $ 1,883 | $ 83 | |
Average repurchase price | $ 24.05 | $ 25 | |
Shares submitted for repurchase | 68,000 | 78,000 | |
Liability recorded | $ 1,514 | $ 1,882 |
Earning Per Share (Details)
Earning Per Share (Details) - shares | Mar. 31, 2016 | Mar. 31, 2015 |
Earnings Per Share [Abstract] | ||
Class B Units Outstanding | 345,331 | 53,575 |
Related Party Transactions (Det
Related Party Transactions (Details) - Advisor - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Accounts payable – affiliates | $ 2,678 | $ 2,073 | |
Total organization and offering costs charged | 18,081 | 18,081 | |
Total organization and offering costs reimbursed | 18,682 | 19,020 | |
Total organization and offering costs receivable | $ (601) | (939) | |
Investor return before subordinated performance participation | 6.00% | ||
Limit on performance fee, percent of total return, max | 10.00% | ||
Subordinated participation in net sales proceeds percentage | 15.00% | ||
Investor return before subordinated participation in net sales proceeds | 6.00% | ||
Advisor interest in special limited partner | 15.00% | ||
Sub-advisor interest in special limited partner | 85.00% | ||
Subordinated incentive listing fee percentage | 15.00% | ||
Investor return before subordinated listing incentive fee | 6.00% | ||
Subordinated distribution upon termination of advisor agreement percentage | 15.00% | ||
Investor return before subordinated distribution upon termination of advisor agreement | 6.00% | ||
Common stock, price per share | $ 22.50 | ||
Advisory Agreement | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 3,550 | $ 809 | |
Accounts payable – affiliates | $ 755 | 17 | |
Advisory Agreement | Acquisition fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 1.00% | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 1,009 | 650 | |
Accounts payable – affiliates | $ 0 | 0 | |
Advisory Agreement | Asset Management Subordination Agreement | |||
Related Party Transaction [Line Items] | |||
Class B units issued | 113,522 | ||
Class B Units Issuance Due Date | 60 days | ||
Common stock, price per share | $ 22.50 | ||
Advisory Agreement | Asset management fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 1.00% | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 2,116 | 0 | |
Accounts payable – affiliates | $ 585 | 0 | |
Advisory Agreement | Asset Management Fee, Portion Paid in Cash, Monthly Payment | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 0.06667% | ||
Advisory Agreement | Acquisition Expense Reimbursement | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 208 | 84 | |
Accounts payable – affiliates | 0 | $ 1 | |
Advisory Agreement | Financing fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 0.75% | ||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 66 | |
Accounts payable – affiliates | 0 | $ 0 | |
Advisory Agreement | General and Administrative Reimbursements | |||
Related Party Transaction [Line Items] | |||
Accounts payable – affiliates | 14 | 18 | |
Advisory Agreement | Dividend Paid | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 217 | $ 9 | |
Accounts payable – affiliates | $ 170 | $ 16 | |
Advisory Agreement | Annual Subordinated Performance Fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 15.00% | ||
Maximum | Advisory Agreement | Organization and offering cost reimbursement | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 2.00% | ||
Maximum | Advisory Agreement | Disposition fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 6.00% | ||
Minimum | Advisory Agreement | Disposition fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 2.00% | ||
Class B units | Advisory Agreement | Asset management fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 20.00% | ||
Cash | Advisory Agreement | Asset management fee | |||
Related Party Transaction [Line Items] | |||
Related part transaction, rate | 80.00% |
Related Party Transactions (D47
Related Party Transactions (Details) - Property Manager Transactions - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Property management fee, percent fee | 4.00% | ||
Allowed Percentage Increase to Leasing Fee Payable | 50.00% | ||
Accounts Payable, Related Parties | $ 2,678 | $ 2,073 | |
Property Manager | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 2,832 | $ 1,022 | |
Accounts Payable, Related Parties | 1,363 | 1,618 | |
Property Manager | Property management fee | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 992 | 330 | |
Accounts Payable, Related Parties | 422 | 307 | |
Property Manager | Leasing Commissions | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 824 | 422 | |
Accounts Payable, Related Parties | 480 | 86 | |
Property Manager | Construction management fee | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 149 | 20 | |
Accounts Payable, Related Parties | 62 | 68 | |
Property Manager | Other fees and reimbursements | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | 867 | $ 250 | |
Accounts Payable, Related Parties | $ 399 | $ 1,157 |
Related Party Transactions (D48
Related Party Transactions (Details) - Other - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |||
Dealer manager selling commission percentage | 7.00% | ||
Dealer manager fee percentage | 3.00% | ||
Percentage of dealer manager selling commissions typically reallowed | 100.00% | ||
Selling commission & dealer manager fee, percent of offering, max | 10.00% | ||
Total commissions and fees incurred from Dealer Manager | $ 0 | $ 14,951 | |
Fees and Commissions Payable to the Dealer Manager | 0 | $ 0 | |
Transfer agent fees incurred related to offering costs | 0 | 200 | |
Fees and commissions payable to the transfer agent | $ 0 | 150 | |
Shares owned by sub-advisor | 8,888 | ||
Shares owned by AR capital sponsor | 17,778 | ||
Advisor and sub-advisor share purchase price | $ 22.50 | ||
Noninterest Expense Transfer Agent and Custodian Fees | $ 140 | $ 0 | |
Fees and Commissions Payable to Transfer Agent, Expensed | $ 560 | $ 420 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
April 1 to December 31, 2016 | $ 55,444 |
2,017 | 68,852 |
2,018 | 62,339 |
2,019 | 54,215 |
2,020 | 45,497 |
2021 and thereafter | 202,697 |
Total | $ 489,044 |
Rental Income [Member] | Geographic Concentration Risk [Member] | FLORIDA | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 20.10% |
Subsequent Events (Details) - D
Subsequent Events (Details) - Distributions - USD ($) $ / shares in Units, $ in Thousands | May. 02, 2016 | Apr. 01, 2016 | May. 31, 2016 | Apr. 30, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Subsequent Event [Line Items] | ||||||
Distribution reinvestment plan (DRIP), value | $ 9,709 | $ 4,883 | ||||
Net cash distribution | $ 8,855 | $ 4,459 | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.40 | $ 0.40 | ||||
Dividend Paid | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Gross amount of distribution paid | $ 6,154 | $ 6,350 | ||||
Distribution reinvestment plan (DRIP), value | 3,132 | 3,259 | ||||
Net cash distribution | $ 3,022 | $ 3,091 | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.00443989 | |||||
Dividend Declared | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.00443989 |
Subsequent Events (Details) - A
Subsequent Events (Details) - Acquisitions $ in Thousands | Apr. 15, 2016USD ($)ft² | Apr. 08, 2016USD ($)ft² | Apr. 04, 2016USD ($)ft² | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) |
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 101,200 | $ 65,100 | |||
Bloomingdale Hills [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 9,200 | ||||
Square Footage | ft² | 78,442 | ||||
Leased % of Rentable Square Feet at Acquisition | 95.40% | ||||
Bartow Marketplace [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 34,800 | ||||
Square Footage | ft² | 375,067 | ||||
Leased % of Rentable Square Feet at Acquisition | 99.20% | ||||
University Plaza [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 13,650 | ||||
Square Footage | ft² | 165,277 | ||||
Leased % of Rentable Square Feet at Acquisition | 95.20% | ||||
Stone Gate Plaza [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 12,700 | ||||
Square Footage | ft² | 90,643 | ||||
Leased % of Rentable Square Feet at Acquisition | 96.00% |