Document and Entity Information
Document and Entity Information - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 26, 2018 | Jun. 30, 2017 | |
Entity Information [Line Items] | |||
Entity Registrant Name | Cole Office & Industrial REIT (CCIT III), Inc. | ||
Entity Central Index Key | 1,614,976 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 9.4 | ||
Common Class A | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 1,600 | ||
Common Class T | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 662 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Real estate assets: | ||
Land | $ 3,245,003 | $ 2,307,312 |
Buildings and improvements | 41,258,770 | 26,971,327 |
Intangible lease assets | 5,101,432 | 3,471,361 |
Total real estate assets, at cost | 49,605,205 | 32,750,000 |
Less: accumulated depreciation and amortization | (1,911,033) | (418,000) |
Total real estate assets, net | 47,694,172 | 32,332,000 |
Cash and cash equivalents | 351,461 | 605,049 |
Rents and tenant receivables | 1,018,825 | 313,600 |
Prepaid expenses and other assets | 116,796 | 6,400 |
Deferred costs, net | 950,978 | 1,337,541 |
Total assets | 50,132,232 | 34,594,590 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Credit facility | 31,975,000 | 22,000,000 |
Subordinate promissory note | 1,600,000 | 10,300,000 |
Accrued expenses and accounts payable | 853,388 | 366,005 |
Due to affiliates | 278,394 | 77,508 |
Distributions payable | 100,241 | 16,546 |
Deferred rental income | 208,716 | 204,624 |
Total liabilities | 35,015,739 | 32,964,683 |
Commitments and contingencies | ||
Redeemable common stock | 87,337 | 0 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Capital in excess of par value | 18,284,253 | 3,068,672 |
Accumulated distributions in excess of earnings | (3,275,779) | (1,442,163) |
Total stockholders’ equity | 15,029,156 | 1,629,907 |
Total liabilities, redeemable common stock, and stockholders’ equity | 50,132,232 | 34,594,590 |
Class A Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 14,369 | 3,346 |
Class T Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 6,313 | $ 52 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | |
Common stock, shares authorized (in shares) | 490,000,000 | |
Common Class A | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, shares issued (in shares) | 1,436,855 | 334,618 |
Common stock, shares outstanding (in shares) | 1,436,855 | 334,618 |
Common Class T | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, shares issued (in shares) | 631,346 | 5,225 |
Common stock, shares outstanding (in shares) | 631,346 | 5,225 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | [1] | |
Revenues: | ||||
Rental income | $ 2,880,032 | $ 734,528 | $ 0 | |
Tenant reimbursement income | 1,224,565 | 63,905 | 0 | |
Total revenues | 4,104,597 | 798,433 | 0 | |
Operating expenses: | ||||
General and administrative | 815,586 | 372,030 | 0 | |
Property operating | 12,058 | 2,962 | 0 | |
Real estate tax | 1,215,423 | 61,202 | 0 | |
Advisory fees and expenses | 60,565 | 74,289 | 0 | |
Acquisition-related fees and expenses | 41,576 | 764,622 | 0 | |
Depreciation and amortization | 1,493,033 | 418,000 | 0 | |
Total operating expenses | 3,638,241 | 1,693,105 | 0 | |
Operating income (loss) | 466,356 | (894,672) | 0 | |
Interest expense and other, net | (1,588,351) | (497,607) | 0 | |
Net loss | (1,121,995) | (1,392,279) | 0 | [2] |
Class A Common Stock | ||||
Operating expenses: | ||||
Net loss | $ (894,373) | $ (1,389,630) | $ 0 | |
Basic and diluted weighted average number of common shares outstanding (in shares) | 993,758 | 97,638 | 20,000 | |
Basic and diluted net loss per common share (in dollars per share) | $ (0.90) | $ (14.23) | $ 0 | |
Distributions declared per common share (in dollars per share) | $ 0.60 | $ 0.16 | $ 0 | |
Class T Common Stock | ||||
Operating expenses: | ||||
Net loss | $ (227,622) | $ (2,649) | $ 0 | |
Basic and diluted weighted average number of common shares outstanding (in shares) | 228,908 | 186 | 0 | |
Basic and diluted net loss per common share (in dollars per share) | $ (0.99) | $ (14.27) | $ 0 | |
Distributions declared per common share (in dollars per share) | $ 0.60 | $ 0.02 | $ 0 | |
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. | |||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Capital in Excess of Par Value | Accumulated Distributions in Excess of Earnings | Class A Common Stock | Class A Common StockCommon Stock | Class T Common Stock | Class T Common StockCommon Stock | ||
Balance (in shares) at Dec. 31, 2014 | [1] | 20,000 | 0 | ||||||
Balance at Dec. 31, 2014 | [1] | $ 200,000 | $ 199,800 | $ 0 | $ 200 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock | [1] | 0 | |||||||
Net loss | [3] | 0 | [2] | $ 0 | $ 0 | ||||
Balance (in share) at Dec. 31, 2015 | [1] | 20,000 | 0 | ||||||
Balance at Dec. 31, 2015 | [1] | 200,000 | 199,800 | 0 | $ 200 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 314,618 | 5,225 | |||||||
Issuance of common stock | 2,935,000 | 2,931,802 | $ 3,146 | $ 52 | |||||
Distributions to stockholders | (49,884) | (49,884) | |||||||
Commissions on stock sales and related dealer manager fees | (28,968) | (28,968) | |||||||
Other offering costs | (31,962) | (31,962) | |||||||
Distribution and stockholder servicing fees | (2,000) | (2,000) | |||||||
Net loss | (1,392,279) | (1,392,279) | $ (1,389,630) | $ (2,649) | |||||
Balance (in share) at Dec. 31, 2016 | 334,618 | 334,618 | 5,225 | 5,225 | |||||
Balance at Dec. 31, 2016 | 1,629,907 | 3,068,672 | (1,442,163) | $ 3,346 | $ 52 | ||||
Balance (in shares) at Sep. 30, 2016 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (545,549) | ||||||||
Balance (in share) at Dec. 31, 2016 | 334,618 | 334,618 | 5,225 | 5,225 | |||||
Balance at Dec. 31, 2016 | 1,629,907 | 3,068,672 | (1,442,163) | $ 3,346 | $ 52 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 1,102,237 | 626,121 | |||||||
Issuance of common stock | 16,857,284 | 16,840,000 | $ 11,023 | $ 6,261 | |||||
Distributions to stockholders | (711,621) | (711,621) | |||||||
Commissions on stock sales and related dealer manager fees | (1,129,983) | (1,129,983) | |||||||
Other offering costs | (169,994) | (169,994) | |||||||
Distribution and stockholder servicing fees | (237,105) | (237,105) | |||||||
Changes in redeemable common stock | (87,337) | (87,337) | |||||||
Net loss | (1,121,995) | (1,121,995) | $ (894,373) | $ (227,622) | |||||
Balance (in share) at Dec. 31, 2017 | 1,436,855 | 1,436,855 | 631,346 | 631,346 | |||||
Balance at Dec. 31, 2017 | $ 15,029,156 | $ 18,284,253 | $ (3,275,779) | $ 14,369 | $ 6,313 | ||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no activity during the year ended December 31, 2015. | ||||||||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. | ||||||||
[3] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows | 12 Months Ended | ||||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |||
Cash flows from operating activities: | |||||
Net loss | $ (1,121,995) | $ (1,392,279) | $ 0 | [1],[2] | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||
Depreciation and amortization, net | 1,493,033 | 418,000 | 0 | [1] | |
Amortization of deferred financing costs | 501,250 | 144,043 | 0 | [1] | |
Straight-line rental income | (210,776) | (66,090) | 0 | [1] | |
Changes in assets and liabilities: | |||||
Rents and tenant receivables | (494,449) | (247,510) | 0 | [1] | |
Prepaid expenses and other assets | (110,396) | (6,400) | 0 | [1] | |
Accrued expenses and accounts payable | 487,383 | 366,005 | 0 | [1] | |
Deferred rental income | 4,092 | 204,624 | 0 | [1] | |
Due to affiliates | (14,466) | 75,524 | 0 | [1] | |
Net cash provided by (used in) operating activities | 533,676 | (504,083) | 0 | [1] | |
Cash flows from investing activities: | |||||
Investment in real estate assets | (16,855,205) | (32,750,000) | 0 | [1] | |
Payment of property escrow deposits | (250,000) | (700,000) | 0 | [1] | |
Refund of property escrow deposits | 250,000 | 700,000 | 0 | [1] | |
Net cash used in investing activities | (16,855,205) | (32,750,000) | 0 | [1] | |
Cash flows from financing activities: | |||||
Proceeds from issuance of common stock | 16,677,720 | 2,935,000 | 0 | [1] | |
Offering costs on issuance of common stock | (1,299,977) | (60,946) | 0 | [1] | |
Distribution and stockholder servicing fees paid | (21,753) | 0 | 0 | [1] | |
Distributions to stockholders | (448,362) | (33,338) | 0 | [1] | |
Proceeds from credit facility | 12,700,000 | 22,000,000 | 0 | [1] | |
Repayment of credit facility | (2,725,000) | 0 | 0 | ||
Proceeds from subordinate promissory note and affiliates for financing amounts | 16,488,631 | 10,300,000 | 0 | [1] | |
Repayment of subordinate promissory note and increase in financing amounts due from affiliates | (25,188,631) | 0 | 0 | [1] | |
Deferred financing costs paid | (114,687) | (1,481,584) | 0 | [1] | |
Net cash provided by financing activities | 16,067,941 | 33,659,132 | 0 | [1] | |
Net (decrease) increase in cash and cash equivalents | (253,588) | 405,049 | 0 | [1] | |
Cash and cash equivalents, beginning of period | 605,049 | 200,000 | [1] | 200,000 | [1] |
Cash and cash equivalents, end of period | 351,461 | 605,049 | 200,000 | [1] | |
Supplemental disclosures of non-cash investing and financing activities: | |||||
Distributions declared and unpaid | 100,241 | 16,546 | 0 | [1] | |
Change in accrued distribution and stockholder servicing fees due to affiliate | 237,105 | 2,000 | 0 | [1] | |
Common stock issued through distribution reinvestment plan | 179,564 | 0 | 0 | [1] | |
Supplemental cash flow disclosures: | |||||
Interest paid | $ 1,102,926 | $ 299,341 | $ 0 | [1] | |
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. | ||||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS Cole Office & Industrial REIT (CCIT III), Inc. (the “Company”) is a Maryland corporation that was incorporated on May 22, 2014 , which intends to qualify and elect to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with its taxable year ended December 31, 2017. The Company is the sole general partner of, and owns, directly or indirectly, 100% of the partnership interests in Cole Corporate Income Operating Partnership III, LP, a Delaware limited partnership. On November 13, 2017, VEREIT Operating Partnership, L.P. (“VEREIT OP”), a former affiliated entity of the Company’s sponsor, CCO Group (as defined below), entered into a Purchase and Sale Agreement with CCA Acquisition, LLC (“CCA”), a newly-formed affiliate of CIM Group, LLC (“CIM”), pursuant to which CCA agreed to acquire all of the issued and outstanding shares of common stock of Cole Capital Advisors, Inc., the direct or indirect owner of Cole Corporate Income Advisors III, LLC (“CCI III Advisors”), Cole Capital Corporation and CREI Advisors, LLC (“CREI Advisors”), the Company’s external advisor, dealer manager and property manager, respectively (the “Transaction”). On February 1, 2018, the Transaction was completed. Immediately following the completion of the Transaction, Cole Capital Advisors, Inc. and the Company’s dealer manager were each converted into Delaware limited liability companies, Cole Capital Advisors, Inc.’s name was changed to CCO Group, LLC, and the Company’s dealer manager’s name was changed to CCO Capital, LLC (“CCO Capital”). As a result of the Transaction, CIM owns and/or controls CCO Group, LLC and its subsidiaries (collectively, “CCO Group”), and CCO Group, LLC owns and controls CCI III Advisors, CCO Capital and CREI Advisors, the Company’s external advisor, dealer manager for the Offering (as defined below) and property manager, respectively. In addition, as part of the Transaction, VEREIT OP and CCO Group, LLC entered into a services agreement (the “Services Agreement”) pursuant to which VEREIT OP will continue to provide certain services to CCO Group and to the Company, Cole Credit Property Trust IV, Inc. (“CCPT IV”), Cole Credit Property Trust V, Inc. (“CCPT V”), Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”) and Cole Real Estate Income Strategy (Daily NAV), Inc. (“Cole Income NAV Strategy”) (CCPT IV, CCPT V, CCIT II, Cole Income NAV Strategy and the Company collectively, the “Cole REITs”), including operational real estate support. VEREIT OP will continue to provide such services through March 31, 2019 (or, if later, the date of the last government filing other than a tax filing made by any of the Cole REITs with respect to its 2018 fiscal year) (the “Initial Services Term”) and will provide consulting and research services through December 31, 2023 as requested by CCO Group, LLC. Despite the indirect change of ownership and control of the Company’s advisor, dealer manager, property manager and sponsor, the Company expects that, during the Initial Services Term of the Services Agreement, the advisory, dealer manager and property management services the Company receives will continue without any material changes in personnel (except as supplemented by the management oversight of CIM personnel) or material change in service procedures. During the Initial Services Term of the Services Agreement, CCO Group, LLC intends to evaluate and effectuate an appropriate transition of VEREIT OP’s services under the Services Agreement to other CIM affiliates or third parties with the goal of ensuring continuity and minimizing disruption. Pursuant to a Registration Statement on Form S-11 (Registration No. 333-209128) under the Securities Act of 1933, as amended (the “Securities Act”), and declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on September 22, 2016 , the Company commenced its initial public offering on a “best efforts” basis, offering up to a maximum of $3.5 billion in shares of common stock (the “Offering”). Pursuant to the Offering, the Company is offering up to $2.5 billion in shares of its common stock pursuant to the primary offering, consisting of two classes of shares: Class A common stock (“Class A Shares”) at a price of $10.00 per share (up to $1.25 billion in shares) and Class T common stock (“Class T Shares”) at a price of $9.57 per share (up to $1.25 billion in shares). Pursuant to the Offering, the Company is also offering up to $1.0 billion in shares of its common stock pursuant to the distribution reinvestment plan (the “DRIP”) at a purchase price during the Offering equal to the per share primary offering prices net of selling commissions and dealer manager fees, or $9.10 per share for both Class A Shares and Class T Shares, assuming a $10.00 per Class A Share primary offering price and a $9.57 per Class T Share primary offering price. The Company was initially capitalized on July 14, 2014 when VEREIT OP acquired 8,000 shares of common stock (later designated as Class A Shares) for $200,000 . Effective as of December 30, 2015, the Company effected a stock split, whereby every one share of its common stock issued and outstanding was split into two and one-half shares of common stock, resulting in 20,000 Class A Shares of common stock issued and outstanding as of such date. On September 22, 2016, the Company satisfied the conditions of the escrow agreement regarding the minimum offering amount under the Offering and issued 274,725 Class A Shares to VEREIT OP, resulting in gross proceeds of $2.5 million , and commenced principal operations. As of December 31, 2017 , the Company had issued approximately 2.0 million shares of common stock in the Offering for gross proceeds of $19.8 million ( $13.8 million in Class A Shares and $6.0 million in Class T Shares) before organization and offering costs, selling commissions and dealer manager fees of $1.4 million . In addition, the Company has paid distribution and stockholder servicing fees for Class T Shares sold in the primary portion of the Offering of $22,000 and accrued an estimated liability for future distribution and stockholder servicing fees payable of $217,000 . The Company intends to use substantially all of the net proceeds from the Offering to acquire and operate a diversified portfolio of commercial real estate assets primarily consisting of single-tenant, income-producing necessity office and industrial properties, which are leased to creditworthy tenants under long-term leases, including distribution facilities, warehouses, manufacturing plants and corporate or regional headquarters in strategic locations. The Company expects that most of its properties will be subject to “net” leases, whereby the tenant will be primarily responsible for the property’s cost of repairs, maintenance, property taxes, utilities, insurance and other operating costs. As of December 31, 2017 , the Company owned two properties, comprising 391,000 rentable square feet of income-producing necessity corporate office and industrial properties located in two states. As of December 31, 2017 , the rentable space at these properties was 100% leased. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to, bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors, a significant decrease in a property’s revenues due to lease terminations, vacancies, co-tenancy clauses, reduced lease rates, or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions . No impairment indicators were identified and no impairment losses were recorded during the years ended December 31, 2017 , 2016 or 2015 . Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease depreciation and amortization of the assets related to the property and estimate the fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount would be recorded to reflect the estimated fair value of the property, net of selling costs. There were no assets identified as held for sale as of December 31, 2017 or 2016 . Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on their respective fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The fair values of above- and below-market lease intangibles are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) an estimate of fair market lease rates for the corresponding in-place leases, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease including, for below-market leases, any bargain renewal periods. The above- and below-market lease intangibles are capitalized as intangible lease assets or liabilities, respectively. Above-market leases are amortized as a reduction to rental income over the remaining terms of the respective leases. Below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases, including any bargain renewal periods. In considering whether or not the Company expects a tenant to execute a bargain renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition, such as the financial strength of the tenant, the remaining lease term, the tenant mix of the leased property, the Company’s relationship with the tenant and the availability of competing tenant space. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above- or below-market lease intangibles relating to that lease would be recorded as an adjustment to rental income. The fair values of in-place leases include estimates of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rental and other property income which are avoided by acquiring a property with an in-place lease. Direct costs associated with obtaining a new tenant include leasing commissions, legal and other related expenses, and are estimated in part by utilizing information obtained from independent appraisals and management’s consideration of current market costs to execute a similar lease. The intangible values of opportunity costs, which are calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease, are capitalized as intangible lease assets and are amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. The Company may acquire certain properties subject to contingent consideration arrangements that may obligate the Company to pay additional consideration to the seller based on the outcome of future events. Additionally, the Company may acquire certain properties for which it funds certain contingent consideration amounts into an escrow account pending the outcome of certain future events. The outcome may result in the release of all or a portion of the escrow funds to the Company or the seller or a combination thereof. Prior to the adoption of ASU 2017-01 (as defined below) in April 2017, contingent consideration arrangements, including amounts funded through an escrow account, would have been recorded upon acquisition of the respective property at their estimated fair value, and any changes to the estimated fair value subsequent to acquisition were reflected in the accompanying consolidated statements of operations in acquisition-related fees and expenses. Upon adoption of ASU 2017-01 in April 2017, contingent consideration arrangements for asset acquisitions are recognized when the contingency is resolved. The determination of the amount of contingent consideration arrangements is based on the probability of several possible outcomes as identified by management. The Company will estimate the fair value of assumed mortgage notes payable based upon indications of current market pricing for similar types of debt financing with similar maturities. Assumed mortgage notes payable will initially be recorded at their estimated fair value as of the assumption date, and any difference between such estimated fair value and the mortgage note’s outstanding principal balance will be amortized or accreted to interest expense over the term of the respective mortgage note payable. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. In April 2017, the Company elected to early adopt ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Beginning in April 2017, all real estate acquisitions qualified as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities as described above. Prior to the adoption of ASU 2017-01 in April 2017, all of the Company’s real estate acquisitions were accounted for as business combinations, and as such, acquisition-related expenses related to these business combination acquisitions were expensed as incurred. Prior to April 2017, acquisition-related expenses in the Company’s consolidated statements of operations primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. The Company expects its future acquisitions to qualify as asset acquisitions, and as such, the Company will allocate the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on a relative fair value basis. Cash Concentrations Cash and cash equivalents includes cash in bank accounts. The Company deposits cash with several high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. Deferred Financing Costs Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. The presentation of all deferred financing costs, other than those associated with the revolving loan portion of the credit facility, are classified such that the debt issuance costs related to a recognized debt liability are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability rather than as an asset. Debt issuance costs related to securing the Company’s revolving line of credit are presented as an asset and amortized ratably over the term of the line of credit arrangement. The Company’s total deferred costs, net in the accompanying consolidated balance sheets relate only to the revolving loan portion of the Credit Facility (as defined in Note 6 — Credit Facility and Subordinate Promissory Note). As of December 31, 2017 and 2016 , the Company had $951,000 and $1.3 million , respectively, of deferred financing costs, net of accumulated amortization, related to the revolving loan portion of the Credit Facility. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined the financing will not close. Distribution and Stockholder Servicing Fees The Company pays CCO Capital a distribution and stockholder servicing fee for Class T Shares sold in the primary portion of the Offering which are calculated on a daily basis in the amount of 1/365th of 1.0% of the purchase price per share (or, once reported, the amount of the Company’s estimated per share net asset value) of Class T Shares sold in the primary portion of the Offering. The aggregate distribution and stockholder servicing fee for Class T Shares will not exceed an amount equal to 4.0% of the total gross offering proceeds of Class T Shares sold in the primary portion of the Offering. The Company will cease paying the distribution and stockholder servicing fee with respect to Class T Shares sold in the Offering at the earliest of: (i) the end of the month in which the transfer agent, on the Company’s behalf, determines that total selling commissions and distribution and stockholder servicing fees paid by a stockholder within his or her individual account would be equal to 4.0% of the stockholder’s total gross investment amount at the time of the purchase of the primary Class T Shares held in such account, or a lower limit agreed upon between the Company’s dealer manager and the participating broker-dealer at the time such Class T Shares were sold; (ii) the date on which the aggregate underwriting compensation from all sources equals 10.0% of the gross offering proceeds (i.e., excluding proceeds from sales pursuant to the DRIP); (iii) the fourth anniversary of the last day of the month in which the Offering (excluding the offering of shares pursuant to the DRIP) terminates; (iv) the date such Class T Share is no longer outstanding; and (v) the date the Company effects a liquidity event (such as the sale of the Company, the sale of all or substantially all of the Company’s assets, a merger or similar transaction, the listing of the Company’s shares of common stock for trading on a national securities exchange or an alternative strategy that would result in a significant increase in the opportunities for stockholders to dispose of their shares). CCO Capital may, in its discretion, reallow to participating broker-dealers all or a portion of the distribution and stockholder servicing fee. At the time the Company ceases paying the distribution and stockholder servicing fee with respect to an outstanding Class T Share pursuant to the provisions above, such Class T Share will convert into a number of Class A Shares (including any fractional shares) with an equivalent net asset value as such share. The distribution and stockholder servicing fee is paid monthly in arrears. An estimated liability for future distribution and stockholder servicing fees payable to CCO Capital is recognized at the time each Class T Share is sold and included in due to affiliates in the consolidated balance sheets with a corresponding decrease to capital in excess of par value. Due to Affiliates Certain affiliates of CCI III Advisors received, and will continue to receive, fees, reimbursements and compensation in connection with services provided relating to the Offering and the acquisition, management, financing and leasing of the Company’s assets. As of December 31, 2017 and 2016 , $278,000 and $78,000 , respectively, was due to CCI III Advisors and its affiliates for such services, as discussed in Note 8 — Related-Party Transactions and Arrangements to these consolidated financial statements. Redeemable Common Stock Under the Company’s share redemption program, the Company’s obligation to redeem shares of its outstanding common stock is limited, among other things, to the net proceeds received by the Company from the sale of shares under the DRIP during the quarter, net of shares redeemed. The Company records amounts that are redeemable under the share redemption program as redeemable common stock outside of permanent equity in its consolidated balance sheets. Changes in the amount of redeemable common stock from period to period are recorded as an adjustment to capital in excess of par value. Revenue Recognition Certain properties have leases where minimum rental payments increase during the term of the lease. The Company records rental income for the full term of the lease on a straight-line basis when earned and collectability is reasonably assured. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for uncollectible accounts. As of December 31, 2017 and 2016 , the Company did not have an allowance for uncollectible accounts. Income Taxes The Company intends to qualify and elect to be taxed as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code, beginning with its taxable year ended December 31, 2017. If the Company qualifies for taxation as a REIT, the Company will generally not be subject to federal corporate income tax to the extent it distributes its taxable income to its stockholders, and so long as it, among other things, distributes at least 90% of its annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it or its subsidiaries may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As of December 31, 2017 , the Company has the required number of stockholders in order to elect to qualify as a REIT. However, for the period from May 22, 2014 (date of inception) to December 31, 2016, the Company did not meet all of the criteria to qualify as a REIT under the Internal Revenue Code. Specifically, the Company did not have enough stockholders for a sufficient number of days in 2016. As such, the Company was taxable as a C Corporation for the taxable year ended December 31, 2016, and was subject to regular taxes on its income for such period. However, the Company incurred a taxable loss for the period ending December 31, 2016, and as such, there was no federal income tax liability for this period. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. The Company has reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the consolidated financial statements if it is more likely than not that the tax position will be sustained upon examination. The Company had no material uncertain tax positions as of December 31, 2016. Net Loss and Distributions Per Share The Company has two classes of common stock. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which results in different earnings per share for each of the classes. Under the two-class method, earnings per share of each class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. The distributed earnings to Class T Share common stockholders represents distributions declared less the distribution and stockholder servicing fees paid with respect to Class T Shares sold in the primary portion of the Offering. Diluted income per share, when applicable, considers the effect of any potentially dilutive share equivalents, of which the Company had none for each of the years ended December 31, 2017 or 2016 . Distributions per share is calculated based on the authorized daily distribution rate. Offering and Related Costs CCI III Advisors funds all of the organization and offering costs on the Company’s behalf (excluding selling commissions, dealer manager fees and distribution and stockholder servicing fees) and may be reimbursed for such costs up to 1.0% of the gross proceeds from the Offering. As of December 31, 2017 , CCI III Advisors had paid organization and offering costs in excess of 1.0% of the gross proceeds from the Offering. These excess costs were not included in the financial statements of the Company because such costs were not a liability of the Company as they exceeded 1.0% of the aggregate gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these excess costs may become payable. The Company expenses organization costs as incurred and records offering costs, which include items such as legal and accounting fees, marketing, personnel, promotional and printing costs, as a reduction of capital in excess of par value along with selling commissions, and dealer manager fees in the period in which they become payable. Reportable Segment The Company’s commercial real estate assets consist primarily of single-tenant, income-producing necessity office and industrial properties, which are leased to creditworthy tenants under a long-term net leases. The commercial properties are geographically diversified throughout the United States and have similar economic characteristics. The Company’s management evaluates operating performance on an overall portfolio level; therefore, the Company’s properties are one reportable segment. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain of these new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s consolidated financial statements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (“ASC”) (Topic 605) and will require an entity to recognize revenue in a way that depicts 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. For public business entities, the guidance should be applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. In accordance with the Company’s plan for the adoption of ASU 2014-09, the Company’s implementation team has identified all of the Company’s revenue streams and real estate sales and concluded that upon adoption, there will not be a material impact on the Company’s consolidated financial statements and disclosures. The Company plans to adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective approach. In addition, the Company evaluated controls around the implementation of ASU 2014-09 and has concluded there will be no significant impact on the Company’s control structure. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similar to current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current GAAP) and operating leases. The amendments in ASU 2016-02 are effective for fiscal years, beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption and provides for certain practical expedients. The Company is still evaluating the full impact of ASU 2016-02 on the Company’s consolidated financial statements; however, the Company will adopt ASU 2016-02 as of January 1, 2019 and anticipates that it will elect a practical expedient offered in ASU 2016-02 that allows an entity to not reassess the following upon adoption (elected as a group): (i) whether an expired or existing contract contains a lease arrangement; (ii) lease classification related to expired or existing lease arrangements; or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs. As a result of the adoption, all leases for which the Company is the lessee, including ground leases (if any) will be recorded on the Company’s consolidated financial statements as either financing leases or operating leases with a related right of use asset and lease liability. In addition, certain executory and non-lease components, such as common area maintenance, may need to be accounted for separately from the lease component of the lease. Lease components will continue to be recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASU 2014-09 as mentioned above. In January 2018, the FASB proposed amending Topic 842 to allow lessors the option to combine lease and non-lease components when certain criteria are met. ASU No. 2016-01, Financial Instruments (Subtopic 825-10) (“ASU 2016-01”) — The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will adopt ASU 2016-01 during the first quarter of fiscal year 2018 and does not expect it will have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact this amendment will have on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company adopted ASU 2016-15 during the fourth quarter of fiscal year 2017 and has determined that this standard is relevant to its presentation of debt prepayment and debt extinguishment costs and contingent consideration payments made after a business combination. Following the retrospective adoption of this standard, the Company determined these items did not have a material impact on the consolidated statements of cash flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included within cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted ASU 2016-18 during the fourth quarter of 2017 and applied the standard retrospectively for all periods presented. Following the retrospective adoption of this standard, the Company determined these items did not have an im |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: Credit facility and subordinate promissory note — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. These financial instruments are valued using Level 2 inputs. As of December 31, 2017 , the estimated fair value of the Company’s debt was $33.8 million , compared to the carrying value of $33.6 million . As of December 31, 2016 , the estimated fair value of the Company’s debt was $32.9 million , compared to the carrying value on that date of $32.3 million . The carrying and fair values exclude net deferred financing costs. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, tenant receivables, accrued expenses and accounts payable, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, on disposition of the financial assets and liabilities. As of December 31, 2017 and 2016 , there have been no transfers of financial assets or liabilities between fair value hierarchy levels. |
Real Estate Investment
Real Estate Investment | 12 Months Ended |
Dec. 31, 2017 | |
Real Estate [Abstract] | |
REAL ESTATE INVESTMENT | REAL ESTATE ASSETS 2017 Property Acquisition During the year ended December 31, 2017 , the Company acquired one industrial property, leased to Actuant Corporation, for a purchase price of $16.9 million (the “ 2017 Acquisition ”), which includes $355,000 of external acquisition-related expenses that were capitalized in accordance with ASU 2017-01. Prior to the Company’s adoption of ASU 2017-01, costs related to the property acquisitions were expensed as incurred. The Company purchased the 2017 Acquisition with net proceeds from the Offering and available borrowings. The Company allocated the purchase price of this property to the fair value of the assets acquired. The following table summarizes the purchase price allocation: December 31, 2017 Land $ 937,691 Buildings and improvements 14,287,443 Acquired in-place lease (1) 1,630,071 Total purchase price $ 16,855,205 ______________________ (1) The weighted average amortization period for the acquired in-place lease was 16.2 years for the 2017 Acquisition . The tenant of the 2017 Acquisition , Enerpac, is a significant tenant and is a subsidiary of Actuant Corporation. The audited financial statements for Actuant Corporation, for the fiscal year ended August 31, 2017, are publicly available on the SEC’s web site, http://www.sec.gov. 2016 Property Acquisition During the year ended December 31, 2016, the Company acquired one office property, leased to Siemens Corporation, for a purchase price of $32.8 million (the “2016 Acquisition”). The Company purchased the 2016 Acquisition with net proceeds from the Offering and available borrowings. The Company allocated the purchase price of this property to the fair value of the assets acquired. The following table summarizes the purchase price allocation: December 31, 2016 Land $ 2,307,312 Buildings and improvements 26,971,327 Acquired in-place lease (1) 3,471,361 Total purchase price $ 32,750,000 ______________________ (1) The weighted average amortization period for the acquired in-place lease was 9.6 years for the 2016 Acquisition. The Company recorded revenue for the year ended December 31, 2016 of $798,000 and a net loss for the year ended December 31, 2016 of $439,000 related to the 2016 Acquisition. In addition, the Company recorded $765,000 of acquisition-related fees and expenses for the year ended December 31, 2016. The Company’s tenant, Siemens Corporation, is a significant tenant and is a subsidiary of Siemens AG. The audited financial statements for Siemens AG, for the fiscal year from October 1, 2016 to September 30, 2017, can be found on their website at https://www.siemens.com/investor/pool/en/investor_relations/Siemens_AR2017.pdf. The following table summarizes selected financial information of the Company as if the 2016 Acquisition was completed on January 1, 2015. The table below presents the Company’s estimated revenue and net loss, on a pro forma basis, for the years ended December 31, 2016 and 2015 : Year Ended December 31, 2016 2015 Pro forma basis (unaudited): Revenue $ 2,922,263 $ 2,922,263 Net loss $ (1,612,080 ) $ (1,418,625 ) The unaudited pro forma information for the year ended December 31, 2016 was adjusted to exclude $765,000 of acquisition-related fees and expenses recorded during the year ended December 31, 2016. Accordingly, these costs were instead recognized in the unaudited pro forma information for the year ended December 31, 2015. The unaudited 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. |
Intangible Lease Assets
Intangible Lease Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE LEASE ASSETS | INTANGIBLE LEASE ASSETS The Company’s intangible lease assets consisted of the following as of December 31, 2017 and 2016 : As of December 31, 2017 2016 In-place leases, net of accumulated amortization of $480,483 and $105,651, respectively (with a weighted average life remaining of 10.8 years and 9.3 years, respectively) $ 4,620,949 $ 3,365,710 Amortization expense for the in-place lease is included in depreciation and amortization in the accompanying consolidated statement of operations. The following table summarizes the amortization expense related to the in-place lease assets for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, 2017 2016 2015 In-place lease amortization $ 374,832 $ 105,651 $ — As of December 31, 2017 , the estimated amortization expense relating to the intangible lease assets for each of the five succeeding fiscal years is as follows: Amortization Expense Year ending December 31, In-Place Leases 2018 $ 463,058 2019 $ 463,058 2020 $ 463,058 2021 $ 463,058 2022 $ 463,058 |
Credit Facility and Subordinate
Credit Facility and Subordinate Promissory Note | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITY AND SUBORDINATE PROMISSORY NOTE | CREDIT FACILITY AND SUBORDINATE PROMISSORY NOTE As of December 31, 2017 , the Company had $33.6 million of debt outstanding, with a weighted average interest rate of 4.1% and weighted average years to maturity of 1.7 years . The following table summarizes the debt balances as of December 31, 2017 and 2016, respectively, and the debt activity for the year ended December 31, 2017 : During The Year Ended December 31, 2017 Balance as of Debt Issuance Repayments Accretion Balance as of Credit facility $ 22,000,000 $ 12,700,000 $ (2,725,000 ) $ — $ 31,975,000 Subordinate promissory note with affiliate 10,300,000 16,400,000 (25,100,000 ) — 1,600,000 Total debt $ 32,300,000 $ 29,100,000 $ (27,825,000 ) $ — $ 33,575,000 As of December 31, 2017 , the Company had $32.0 million of debt outstanding under its secured credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent, and the lenders under the credit agreement (as amended, the “Credit Agreement”), that provides for borrowings of up to $100.0 million in revolving loans (the “Revolving Loans”). The Revolving Loans mature on September 23, 2019 ; however, the Company may elect to extend the maturity date of such loans to September 23, 2021 , subject to satisfying certain conditions contained in the Credit Agreement. Depending upon the type of loan specified and overall leverage ratio, the Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month London Interbank Offered Rate (“LIBOR”) multiplied by the statutory reserve rate (the “Eurodollar Rate”) plus an interest rate spread ranging from 2.20% to 2.45% ; or (ii) a base rate ranging from 1.20% to 1.45% , plus the greater of: (a) JPMorgan Chase’s Prime Rate (as defined in the Credit Agreement); (b) the Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.50% ; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.0% . As of December 31, 2017 , the Revolving Loans outstanding totaled $32.0 million at an interest rate of 4.0% . The Company had $68.0 million in unused capacity, subject to borrowing availability, as of December 31, 2017 . The Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to 75% of the equity issued from the date of the Credit Agreement, a leverage ratio no greater than 65% , and a fixed charge coverage ratio equal to or greater than 1.50 . The Company believes it was in compliance with the financial covenants of the Credit Agreement as of December 31, 2017 . In addition, in 2016, the Company entered into a $30.0 million subordinate loan with an affiliate of the Company’s advisor (the “Subordinate Promissory Note”). On March 28, 2017, the Company, pursuant to a modification agreement, extended the maturity date of the Subordinate Promissory Note from September 22, 2017 to September 30, 2018. The Subordinate Promissory Note bears interest at a rate per annum equal to the sum of (a) one-month LIBOR, (b) the Credit Facility Margin (as defined in the Subordinate Promissory Note modification agreement) and (c) 1.75% , with accrued interest payable monthly in arrears and principal due upon maturity on September 30, 2018. The Subordinate Promissory Note had an interest rate of 5.6% as of December 31, 2017 . With respect to the Company’s $1.6 million Subordinate Promissory Note maturing within the next year, the Company expects to repay in full on or before its maturity date of September 30, 2018. In the event the Subordinate Promissory Note is not paid off on the maturity date, the loan includes default provisions. The Subordinate Promissory Note has been approved by a majority of the Company’s board of directors (including a majority of the independent directors) not otherwise interested in the transaction as fair, competitive and commercially reasonable and no less favorable to the Company than a comparable loan between unaffiliated parties under the same circumstances. As of December 31, 2017 , the Company had $1.6 million of debt outstanding and $28.4 million available for borrowing under the Subordinate Promissory Note. Liquidity and Financial Condition — The Company’s consolidated financial statements for the years ended December 31, 2017 and 2016, have been prepared assuming that the Company will continue its operations as a going concern. As of December 31, 2017, the Company had $1.6 million of debt outstanding under the Subordinate Promissory Note maturing on September 30, 2018. The Company believes cash on hand, net cash provided by operations and proceeds from the Offering will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued. However, this evaluation assumes continued positive cash flow and sufficient proceeds from the Offering. The Company is in its start-up phase and dependent on capital raise to meet its capital requirements, including property acquisitions, shareholder distributions and repayment of maturing debt. In the event that cash on hand, net cash provided by operations and proceeds from the Offering are insufficient to repay the Subordinate Promissory Note, the Company has obtained a letter from its sponsor stating that it intends to provide financial support, as necessary, so that the Company can satisfy its liabilities and obligations under the Subordinate Promissory Note as they become due over the next 12 months. Maturities The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt as of December 31, 2017 for each of the five succeeding fiscal years and the period thereafter: Principal Repayments 2018 $ 1,600,000 2019 31,975,000 2020 — 2021 — 2022 — Thereafter — Total $ 33,575,000 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, the Company may become subject to litigation and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity. |
Related-Party Transactions and
Related-Party Transactions and Arrangements | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS | RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS The Company has incurred, and will continue to incur, commissions, fees and expenses payable to CCI III Advisors and certain of its affiliates in connection with the Offering and the acquisition, management and disposition of its assets. Selling commissions and dealer manager fees In connection with the Offering, CCO Capital, the Company’s dealer manager, which is affiliated with CCI III Advisors, receives selling commissions of up to 7.0% and 3.0% of gross offering proceeds from the primary portion of the Offering for Class A Shares and Class T Shares, respectively. CCO Capital reallows 100% of selling commissions earned to participating broker-dealers. In addition, CCO Capital receives 2.0% of gross offering proceeds from the primary portion of the Offering for both Class A Shares and Class T Shares as a dealer manager fee. CCO Capital, in its sole discretion, may reallow all or a portion of its dealer manager fee to participating broker-dealers. No selling commissions or dealer manager fees are paid to CCO Capital or other participating broker-dealers with respect to shares sold pursuant to the DRIP. Organization and offering expenses All other organization and offering expenses associated with the sale of the Company’s common stock (excluding selling commissions, dealer manager fees and distribution and stockholder servicing fees) are paid by CCI III Advisors or its affiliates and are reimbursed by the Company up to 1.0% of aggregate gross offering proceeds, including proceeds from sales of shares under the DRIP. A portion of the other organization and offering expenses may be considered to be underwriting compensation. As of December 31, 2017 , CCI III Advisors had paid organization and offering expenses in excess of the 1.0% of aggregate gross offering proceeds in connection with the Offering. These excess amounts were not included in the consolidated financial statements of the Company because such amounts were not a liability of the Company as they exceeded 1.0% of gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these amounts may become payable. Distribution and stockholder servicing fees The Company pays CCO Capital a distribution and stockholder servicing fee for Class T Shares that is calculated on a daily basis in an amount equal to 1/365th of 1.0% of the purchase price per share (or, once reported, the amount of the Company’s estimated per share net asset value) of the Class T Shares sold in the primary portion of the Offering. The distribution and stockholder servicing fee is paid monthly in arrears from cash flow from operations or, if the Company’s cash flow from operations is not sufficient to pay the distribution and stockholder servicing fee, from borrowings in anticipation of future cash flow. An estimated liability for future distribution and stockholder servicing fees payable to CCO Capital is recognized at the time each Class T Share is sold and included in due to affiliates in the consolidated balance sheets with a corresponding decrease to capital in excess of par value. The Company will cease paying the distribution and stockholder servicing fee with respect to Class T Shares at the earliest of (i) the end of the month in which the total distribution and stockholder servicing fees paid by a stockholder within his or her individual account would be equal to 4.0% of the stockholder’s total gross investment amount at the time of the purchase of the primary Class T Shares held in such account, or a lower limit agreed upon between the Company’s dealer manager and the participating broker-dealer at the time such Class T Shares were sold; (ii) the date on which the aggregate underwriting compensation from all sources equals 10.0% of the gross proceeds from the aggregate sale of the Class A Shares and Class T Shares in the Offering, excluding proceeds from sales pursuant to the DRIP; (iii) the fourth anniversary of the last day of the month in which the Offering (excluding the offering of shares pursuant to the DRIP) terminates; (iv) the date such Class T Share is no longer outstanding; and (v) the date the Company effects a liquidity event. CCO Capital may, in its discretion, reallow to participating broker-dealers all or a portion of the distribution and stockholder servicing fee for services that such participating broker-dealers perform in connection with the distribution of Class T Shares. At the time the Company ceases paying the distribution and stockholder servicing fee with respect to an outstanding Class T Share pursuant to the provisions above, such Class T Share will convert into a number of Class A Shares (including any fractional shares) with an equivalent net asset value as such Class T Share. The Company cannot predict when this will occur. No distribution and stockholder servicing fees are paid to CCO Capital or other participating broker-dealers with respect to shares sold pursuant to the DRIP. Acquisition-related fees and expenses The Company pays CCI III Advisors or its affiliates acquisition fees of up to 2.0% of: (i) the contract purchase price of each property or asset the Company acquires; (ii) the amount paid in respect of the development, construction or improvement of each asset the Company acquires; (iii) the purchase price of any loan the Company acquires; and (iv) the principal amount of any loan the Company originates. In addition, the Company reimburses CCI III Advisors or its affiliates for acquisition-related expenses incurred in the process of acquiring a property or the origination or acquisition of a loan, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of the Company’s board of directors, including a majority of the independent directors, as commercially competitive, fair and reasonable to the Company. Advisory fees and expenses Pursuant to the advisory agreement, the Company pays CCI III Advisors a monthly advisory fee based upon the Company’s monthly average asset value, which is equal to the following amounts: (i) an annualized rate of 0.75% paid on the Company’s average asset value that is between $0 and $2.0 billion ; (ii) an annualized rate of 0.70% paid on the Company’s average asset value that is between $2.0 billion and $4.0 billion ; and (iii) an annualized rate of 0.65% paid on the Company’s average asset value that are over $4.0 billion . During the year ended December 31, 2017 , these advisory fees exceeded the expense limit of the greater of 2.0% of the average invested assets or 25.0% of net income (see operating expenses below) and were not recognized in the consolidated financial statements of the Company because such amounts were not contractually payable by the Company. As of December 31, 2017 , $205,000 of advisory fees exceeded such expense limit. As the Company raises additional proceeds from the Offering and acquires additional properties, these amounts may become payable if future operating expenses are below the expense limits. Operating expenses The Company reimburses CCI III Advisors or its affiliates for the operating expenses they paid or incurred in connection with advisory and administrative services provided to the Company, subject to the limitation that the Company will not reimburse CCI III Advisors or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed the greater of (i) 2.0% of average invested assets, or (ii) 25.0% of net income, excluding any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of assets for that period. The Company will not reimburse CCI III Advisors or its affiliates for compensation paid to the Company’s executive officers or employees of CCI III Advisors in connection with the services for which CCI III Advisors or its affiliates receive an acquisition fee, financing coordination fee or disposition fee. During the year ended December 31, 2017 , CCI III Advisors paid or reimbursed the Company for operating expenses in excess of the greater of 2.0% of average invested assets or 25.0% of net income, which were not recognized in the consolidated financial statements of the Company because such amounts were not contractually payable by the Company. As of December 31, 2017 , $769,000 of operating expenses exceeded such expense limit. As the Company raises additional proceeds from the Offering and acquires additional properties, these amounts may become payable. Financing coordination fees If CCI III Advisors provides services in connection with the origination, assumption or refinancing of any debt to acquire properties or to make other permitted investments, the Company will pay CCI III Advisors a financing coordination fee equal to 1.0% of the amount available and/or outstanding under such financing. However, CCI III Advisors will not be entitled to a financing coordination fee on any debt where CCI III Advisors previously received a fee unless (i) the maturity date of the refinanced debt was scheduled to occur less than one year after the date of the refinancing and the new loan has a term of at least five years or (ii) the new loan is approved by a majority of the independent directors; and provided, further, that no financing coordination fee will be paid in connection with loans advanced by an affiliate of CCI III Advisors. Disposition fees If CCI III Advisors or its affiliates provide a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more properties (or the Company’s entire portfolio), the Company will pay CCI III Advisors or its affiliates a disposition fee in an amount equal to up to one-half of the real estate or brokerage commission paid by the Company to third parties on the sale of such properties, not to exceed 1.0% of the contract price of the properties sold; provided, however, in no event may the total disposition fees paid to CCI III Advisors, its affiliates, and unaffiliated third parties, exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. In addition, if CCI III Advisors or its affiliates provides a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more assets other than properties, the Company may separately compensate CCI III Advisors or its affiliates at such rates and in such amounts as the Company’s board of directors, including a majority of the independent directors, and CCI III Advisors agree upon, not to exceed an amount equal to 1.0% of the contract price of the assets sold. During the years ended December 31, 2017 and 2016 , no disposition fees were incurred for any such services provided by CCI III Advisors or its affiliates. Subordinated performance fees The Company will pay a subordinated performance fee under one of the following alternative events: (1) if the Company’s shares are listed on a national securities exchange, CCI III Advisors, or its affiliates, will be entitled to a subordinated performance fee equal to 15.0% of the amount, if any, by which (i) the market value of the Company’s outstanding stock plus distributions paid by the Company prior to listing, exceeds (ii) the sum of the total amount of capital raised from stockholders and the amount of distributions necessary to generate a 6.0% annual cumulative, non-compounded return to stockholders; (2) if the Company is sold or its assets are liquidated, CCI III Advisors will be entitled to a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after stockholders have received, from regular distributions plus special distributions paid from proceeds of such sale, a return of their net capital invested and a 6.0% annual cumulative, non-compounded return; or (3) upon termination of the advisory agreement, CCI III Advisors may be entitled to a subordinated performance fee similar to the fee to which it would have been entitled had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. During the years ended December 31, 2017 and 2016 , no subordinated performance fees were incurred related to any such events. The Company incurred commissions, fees and expense reimbursements as shown in the table below for services provided by CCI III Advisors and its affiliates related to the services described above during the periods indicated: Year Ended Year Ended December 31, 2017 December 31, 2016 Selling commissions $ 798,184 15,500 Dealer manager fees $ 331,799 13,468 Distribution and stockholder servicing fees (1) $ 21,753 16 Organization and offering costs $ 169,994 31,962 Acquisition fees and expenses $ 330,000 665,090 Advisory fees $ 60,565 74,289 Operating expenses (2) $ 50,000 107,429 Financing coordination fees $ 99,750 220,000 ______________________ (1) Amounts are calculated for the respective periods in accordance with the dealer manager agreement and excludes the estimated liability for future distribution and stockholder servicing fees payable to CCO Capital of $217,000 and $2,000 for the years ended December 31, 2017 and 2016 , respectively, which is included in due to affiliates in the consolidated balance sheets with a corresponding decrease to capital in excess of par value, as described in Note 2 — Summary of Significant Accounting Policies. (2) CCI III Advisors permanently waived its rights to $80,000 of expense reimbursements for the year ended December 31, 2016 , which is excluded from the table above as the Company is not responsible for this amount. Services Agreement Pursuant to the Services Agreement, VEREIT OP will continue to provide certain services to CCO Group and to the Company, including operational real estate support. VEREIT OP will continue to provide such services through March 31, 2019 (or, if later, the date of the last government filing other than a tax filing made by any of the Cole REITs with respect to its 2018 fiscal year) and will provide consulting and research services through December 31, 2023 as requested by CCO Group, LLC. Despite the indirect change of ownership and control of our advisor, dealer manager, property manager and sponsor, the Company expects that, during the Initial Services Term of the Services Agreement, the advisory, dealer manager and property management services the Company receives will continue without any material changes in personnel (except as supplemented by the management oversight of CIM personnel) or material change in service procedures. During the Initial Services Term of the Services Agreement, CCO Group, LLC intends to evaluate and effectuate an appropriate transition of VEREIT OP’s services under the Services Agreement to other CIM affiliates or third parties with the goal of ensuring continuity and minimizing disruption. Due to/from Affiliates As of December 31, 2017 and 2016 , $278,000 and $78,000 , respectively, was recorded for services and expenses incurred, but not yet reimbursed to CCI III Advisors, or its affiliates. The amounts are primarily for future distribution fees, operating expenses, advisory fees and expenses, and interest expense. As of December 31, 2017 and 2016 , the Company incurred $262,000 and $145,000 , respectively, of interest expense related to the Subordinate Promissory Note, of which $10,000 and $45,000 , respectively, had been incurred, but not yet paid. These amounts were included in due to affiliates in the consolidated balance sheets for such periods. As of December 31, 2017 , $1,000 was due from CCI III Advisors or its affiliates related to amounts received by affiliates of the advisor which were due to the Company. No such amounts were due from CCI III Advisors or its affiliates as of December 31, 2016 . |
Economic Dependency
Economic Dependency | 12 Months Ended |
Dec. 31, 2017 | |
Economic Dependency [Abstract] | |
ECONOMIC DEPENDENCY | ECONOMIC DEPENDENCY Under various agreements, the Company has engaged and may in the future engage CCI III Advisors or its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and stockholder relations. As a result of these relationships, the Company is dependent upon CCI III Advisors or its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY As of December 31, 2017 , the Company was authorized to issue 490.0 million shares of common stock pursuant to the primary offering, consisting of two classes of shares ( 245.0 million in Class A Shares and 245.0 million in Class T Shares) and 10.0 million shares of preferred stock. All shares of such stock have a par value of $0.01 per share. On July 14, 2014 , VEREIT OP acquired 8,000 shares of common stock, at $25.00 per share. Effective December 31, 2015, the Company effected a stock split, whereby every one share of their common stock issued and outstanding was split into two and one-half shares of common stock, resulting in 20,000 Class A Shares of common stock issued and outstanding. On February 1, 2018, VEREIT OP transferred these 20,000 shares to CCI III Advisors and pursuant to the Company’s charter, CCI III Advisors is prohibited from selling the 20,000 shares of the common stock that represents the initial investment in the Company for so long as CCO Group remains the Company’s sponsor; provided, however, that CCI III Advisors may transfer ownership of all or a portion of these 20,000 shares of the Company’s common stock to other affiliates of the Company’s sponsor. Distribution Reinvestment Plan Pursuant to the DRIP, the Company allows stockholders to elect to have their distributions reinvested in additional shares of the Company’s common stock. Distributions on Class A Shares are reinvested in Class A Shares and distributions on Class T Shares are reinvested in Class T Shares. The purchase price per share under the DRIP is $9.10 per share. The Company’s board of directors may terminate or amend the DRIP at the Company’s discretion at any time upon ten days’ prior written notice to the stockholders. During the year ended December 31, 2017 , 20,000 shares were purchased under the DRIP for $180,000 . During the year ended December 31, 2016 , no shares were purchased under the DRIP. Share Redemption Program The Company’s share redemption program permits its stockholders to sell their shares back to the Company after they have held them for at least one year, subject to the significant conditions and limitations described below. The share redemption program provides that the Company will redeem shares of its common stock from requesting stockholders, subject to the terms and conditions of the share redemption program. The Company will limit the number of shares redeemed pursuant to the share redemption program as follows: (1) the Company will not redeem in excess of 5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid; and (2) funding for the redemption of shares will be limited, among other things to the net proceeds the Company receives from the sale of shares under the DRIP, net of shares redeemed to date. In an effort to accommodate redemption requests throughout the calendar year, the Company intends to limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter, and funding for redemptions for each quarter generally will be limited to the net proceeds the Company receives from the sale of shares in the respective quarter under the DRIP. Except for redemptions due to a stockholder’s death, bankruptcy or other exigent circumstances, the redemption price per share will equal the per share value shown on the stockholder’s most recent customer account statement. The redemption price will be adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to the Company’s common stock if any such event is not already reflected in the per share value shown on the stockholder’s most recent customer account statement. At any time the Company is engaged in an offering of shares, the per share price for shares purchased under our share redemption program will always be equal to or lower than the then-current per share offering price of the respective class of shares. Upon receipt of a request for redemption, the Company may conduct a Uniform Commercial Code search to ensure that no liens are held against the shares. If the Company cannot purchase all shares presented for redemption in any fiscal quarter, based upon insufficient cash available and/or the limit on the number of shares the Company may redeem during any quarter or year, the Company will give priority to the redemption of deceased stockholders’ shares. The Company next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the time the Company receives the request, in order to reduce the expense of maintaining small accounts. Thereafter, the Company will honor the remaining quarterly redemption requests on a pro rata basis. Following such quarterly redemption period, the unsatisfied portion of the prior redemption request must be resubmitted, prior to the last day of the new quarter. Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods. The Company redeems shares no later than the end of the month following the end of each fiscal quarter. Requests for redemption must be received on or prior to the end of the fiscal quarter in order for the Company to repurchase the shares in the month following the end of that fiscal quarter. The Company’s board of directors may amend, suspend or terminate the share redemption program at any time upon 30 days’ notice to the stockholders. The Company did not redeem any shares during the years ended December 31, 2017 and 2016 . Distributions Payable and Distribution Policy The board of directors authorized a daily distribution, based on 365 days in the calendar year, of $0.001643836 per Class A Share for stockholders of record as of the close of business on each day of the period commencing on January 1, 2017 and ending on June 30, 2018 . The board of directors authorized a daily distribution on Class T Shares for stockholders of record of such class of shares as of the close of business on each day commencing on January 1, 2017 and ending on June 30, 2018 , equal to $0.001381644 per Class T Share, less the per share distribution and stockholder servicing fees that are payable with respect to the Class T Shares (as calculated on a daily basis). As of December 31, 2017 , the Company had distributions payable of $100,000 . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For federal income tax purposes, distributions to stockholders are characterized as ordinary dividends, capital gain distributions, or nondividend distributions. Nondividend distributions will reduce U.S stockholders’ basis (but not below zero) in their shares. The following table shows the character of the distributions the Company paid on a percentage basis for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, Character of Distributions: 2017 2016 2015 (1) Ordinary dividends — % — % — % Nondividend distributions 100 % 100 % — % Total 100 % 100 % — % ____________________________________ (1) The Company paid no distributions during the year ended December 31, 2015. During the year ended December 31, 2017 , the Company distributed as dividends to its stockholders 100% of its taxable income for federal income tax purposes. Accordingly, no provision for federal income taxes related to such taxable income was recorded in the Company’s consolidated financial statements. During the year ended December 31, 2017 , the Company incurred state and local income and franchise taxes of $2,500 , which was recorded in general and administrative expenses on the consolidated statement of operations. For its taxable year ended December 31, 2016 , the Company was taxed as a C corporation under the Internal Revenue Code, as it did not meet all of the criteria to qualify as a REIT during this period. As such, the Company was subject to regular corporate income taxes on its taxable income for such period. The Company uses the asset and liability method of accounting for income taxes. Under this method, tax return positions are recognized in the consolidated financial statements when they are “more-likely-than-not” to be sustained upon examination by the taxing authority. Deferred income tax assets and liabilities result from temporary differences. Temporary differences are differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future periods. A valuation allowance may be placed on deferred income tax assets, if it is determined that it is more likely than not that a deferred tax asset may not be realized. The Company did not pay any income tax for the taxable year ended December 31, 2016 because it incurred a net operating loss for such year. However, the income tax benefit from such net operating loss was offset by a full valuation allowance of approximately $496,000 against the net deferred tax assets as of December 31, 2016 because the Company intended to qualify as a REIT for the taxable years ending on or after December 31, 2017 , and did not expect to utilize its net operating loss carryforward. The net change in the total valuation allowance was an increase of approximately $496,000 for the year ended December 31, 2016 . As a result, no provision or benefit for income taxes was recognized in the accompanying financial statements. The Company calculated its estimated annualized effective tax expense rate at 0% for the year ended December 31, 2016 . The Company had no income tax expense or benefit for the years ended December 31, 2015 as it did not commence material operations until 2016 . Deferred tax assets (liabilities) consisted of the following components as of the periods indicated: Year Ended December 31, 2016 2015 Fixed assets $ 337,888 $ — Net operating loss 109,072 — Deferred rent 72,948 — Other (23,561 ) — Valuation allowance (496,347 ) — Total net deferred tax asset $ — $ — The following is a reconciliation of benefit from income taxes with the amount computed by applying the statutory federal income tax rate to loss before income taxes for the periods indicated: 2016 2015 Net loss $ (1,392,279 ) $ — Federal provision (benefit) at statutory rate (487,297 ) — State and local provision at statutory rate (9,050 ) — Change in valuation allowance against net deferred tax assets 496,347 — Total benefit from income taxes $ — $ — As of December 31, 2016 , the Company had federal net operating loss carryforwards of approximately $303,000 and $306,000 . As the Company does not expect to utilize its net operating loss carryforwards, a full valuation allowance was placed against the deferred tax assets related to these carryforwards. The Company had no unrecognized tax benefits as of or during the year ended December 31, 2017 , 2016 and 2015 . Any interest and penalties related to unrecognized tax benefits would be recognized within the provision for income taxes in the Company’s consolidated statements of operations. The Company files income tax returns in the U.S. federal jurisdiction, as well as various state and local jurisdictions, and is subject to routine examinations by the respective tax authorities. In December 2017, the Tax Cuts and Jobs Act was signed into law which, in addition to reducing corporate and individual tax rates, eliminates or restricts various deductions. The Tax Cuts and Jobs Act makes numerous large and small changes to the tax rules that do not affect the Company’s REIT qualification rules directly. |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
OPERATING LEASES | OPERATING LEASES The Company’s real estate assets are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2017 , the leases had a remaining weighted-average lease term of 10.7 years . The leases include provisions to extend the lease term, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. The future minimum rental income from the Company’s real estate assets under the non-cancelable operating leases, assuming no exercise of renewal options, as of December 31, 2017 , was as follows: Year Ending December 31, Future Minimum Rental Income 2018 $ 3,740,278 2019 3,808,708 2020 3,878,462 2021 3,756,969 2022 3,829,450 Thereafter 22,784,446 Total $ 41,798,313 |
Quarterly Results (Unaudited)
Quarterly Results (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY RESULTS (UNAUDITED) | QUARTERLY RESULTS (UNAUDITED) Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2017 and 2016 . In the opinion of management, the information for the interim periods presented includes all adjustments, which are of a normal and recurring nature, necessary to present a fair presentation of the results for each period. December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 744,504 $ 739,749 $ 1,581,290 $ 1,039,054 Acquisition-related expenses $ — $ — $ — $ 41,576 Operating income (loss) $ 108,977 $ 155,952 $ 212,773 $ (11,346 ) Net loss $ (327,144 ) $ (228,657 ) $ (135,116 ) $ (431,078 ) Basic and diluted net loss per share - Class A common stock (1) $ (0.66 ) $ (0.23 ) $ (0.09 ) $ (0.21 ) Distributions declared per common share - Class A common stock $ 0.15 $ 0.15 $ 0.15 $ 0.15 Basic and diluted net loss per share - Class T common stock (1) $ (0.68 ) $ (0.26 ) $ (0.11 ) $ (0.24 ) Distributions declared per common share - Class T common stock $ 0.15 $ 0.15 $ 0.15 $ 0.15 ____________________________________ (1) The sum of the quarterly net loss per share amounts does not agree to the full year net loss per share amounts. The Company calculates net loss per share based on the weighted-average number of outstanding shares of common stock during the reporting period. The average number of shares fluctuates throughout the year and can therefore produce a full year result that does not agree to the sum of the individual quarters. December 31, 2016 First Quarter (1) Second Quarter (1) Third Quarter Fourth Quarter Revenues $ — $ — $ 59,961 $ 738,472 Acquisition-related fees and expenses $ — $ — $ 754,531 $ 10,091 Operating loss $ — $ — $ (793,933 ) $ (100,739 ) Net loss $ — $ — $ (846,730 ) $ (545,549 ) Basic and diluted net loss per share - Class A common stock (2) $ — $ — $ (19.29 ) $ (1.78 ) Distributions declared per common share - Class A common stock $ — $ — $ 0.01 $ 0.15 Basic and diluted net loss per share - Class T common stock (2), (3) $ — $ — $ — $ (1.82 ) Distributions declared per common share - Class T common stock (3) $ — $ — $ — $ 0.02 ____________________________________ (1) The Company did not commence principal operations until September 22, 2016. Therefore, the Company had no activity. (2) The sum of the quarterly net loss per share amounts does not agree to the full year net loss per share amounts. The Company calculates net loss per share based on the weighted-average number of outstanding shares of common stock during the reporting period. The average number of shares fluctuates throughout the year and can therefore produce a full year result that does not agree to the sum of the individual quarters. (3) As of September 30, 2016, no Class T Shares were issued or outstanding. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The following events occurred subsequent to December 31, 2017 : Credit Facility and Subordinate Promissory Note Subsequent to December 31, 2017 , the Company had $29.5 million and $3.2 million , respectively, outstanding under the Credit facility and the Subordinate Promissory Note. Sale of Cole Capital As described in Note 1 — Organization and Business, on February 1, 2018, the Transaction was completed. Immediately following the completion of the Transaction, Cole Capital Advisors, Inc. and the Company’s dealer manager were each converted into Delaware limited liability companies, Cole Capital Advisors, Inc.’s name was changed to CCO Group, LLC, and the Company’s dealer manager’s name was changed to CCO Capital. As a result of the Transaction, CIM owns and/or controls CCO Group, and CCO Group, LLC owns and controls CCI III Advisors, CCO Capital and CREI Advisors, the Company’s external advisor, dealer manager for the Offering and property manager, respectively. In addition, as part of the Transaction, VEREIT OP and CCO Group, LLC entered into the Services Agreement pursuant to which VEREIT OP will continue to provide certain services to CCO Group and to the Company, and the Cole REITs, including operational real estate support. VEREIT OP will continue to provide such services through the Initial Services Term and will provide consulting and research services through December 31, 2023 as requested by CCO Group, LLC. |
Schedule III - Real Estate Asse
Schedule III - Real Estate Assets And Accumulated Depreciation | 12 Months Ended |
Dec. 31, 2017 | |
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
SCHEDULE III - REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION | SCHEDULE III — REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION Gross Amount at Initial Costs to Company Total Which Carried Accumulated Buildings & Adjustment At December 31, 2017 Depreciation Date Date Description (a) Encumbrances Land Improvements to Basis (b) (c) (d) (e) (f) Acquired Constructed Real Estate Held for Investment the Company has Invested in Under Operating Leases: Siemens Milford, OH (g) $ 2,307,312 $ 26,971,327 $ — $ 29,278,639 $ 1,383,265 9/23/2016 1991 Actuant Columbus, WI (g) 937,691 14,287,443 — 15,225,134 47,285 11/6/2017 2014 TOTAL: $ — $ 3,245,003 $ 41,258,770 $ — $ 44,503,773 $ 1,430,550 ____________________________________ (a) As of December 31, 2017 , we owned one office property and one industrial property. (b) Gross intangible lease assets of $5.1 million and the associated accumulated amortization of $480,483 are not reflected in the table above. (c) The aggregate cost for federal income tax purposes was $50.4 million . (d) The following is a reconciliation of total real estate carrying value for the years ended December 31, 2017 and 2016 : Year Ended December 31, 2017 2016 Balance, beginning of period $ 29,278,639 $ — Additions Acquisitions 15,225,134 29,278,639 Improvements — — Total additions 15,225,134 29,278,639 Deductions — — Cost of real estate sold — — Total deductions — — Balance, end of period $ 44,503,773 $ 29,278,639 (e) The following is a reconciliation of accumulated depreciation for the years ended December 31, 2017 and 2016 : Year Ended December 31, 2017 2016 Balance, beginning of period $ 312,350 $ — Additions Acquisitions - Depreciation Expense for Building & Tenant Improvements Acquired 1,118,200 312,350 Improvements - Depreciation Expense for Tenant Improvements & Building Equipment — — Total additions 1,118,200 312,350 Deductions — — Cost of real estate sold — — Total deductions — — Balance, end of period $ 1,430,550 $ 312,350 (f) The Company’s assets are depreciated or amortized using the straight-line method over the useful lives of the assets by class. Generally, buildings are depreciated over 40 years, site improvements are depreciated over 15 years, and tenant improvements are amortized over the remaining life of the lease or the useful life, whichever is shorter. (g) Part of the Credit Facility’s unencumbered borrowing base. As of December 31, 2017 , the Company had $32.0 million outstanding under the Credit Facility. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Investments, Recoverability of Real Estate Assets, and Assets Held for Sale | Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation and amortization. The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term Recoverability of Real Estate Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited to, bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors, a significant decrease in a property’s revenues due to lease terminations, vacancies, co-tenancy clauses, reduced lease rates, or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value will be determined using a discounted cash flow analysis and recent comparable sales transactions . No impairment indicators were identified and no impairment losses were recorded during the years ended December 31, 2017 , 2016 or 2015 . Assets Held for Sale When a real estate asset is identified by the Company as held for sale, the Company will cease depreciation and amortization of the assets related to the property and estimate the fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount would be recorded to reflect the estimated fair value of the property, net of selling costs. |
Allocation of Purchase Price of Real Estate Assets | Allocation of Purchase Price of Real Estate Assets Upon the acquisition of real properties, the Company allocates the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on their respective fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information. The fair values of above- and below-market lease intangibles are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) an estimate of fair market lease rates for the corresponding in-place leases, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease including, for below-market leases, any bargain renewal periods. The above- and below-market lease intangibles are capitalized as intangible lease assets or liabilities, respectively. Above-market leases are amortized as a reduction to rental income over the remaining terms of the respective leases. Below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases, including any bargain renewal periods. In considering whether or not the Company expects a tenant to execute a bargain renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition, such as the financial strength of the tenant, the remaining lease term, the tenant mix of the leased property, the Company’s relationship with the tenant and the availability of competing tenant space. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above- or below-market lease intangibles relating to that lease would be recorded as an adjustment to rental income. The fair values of in-place leases include estimates of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rental and other property income which are avoided by acquiring a property with an in-place lease. Direct costs associated with obtaining a new tenant include leasing commissions, legal and other related expenses, and are estimated in part by utilizing information obtained from independent appraisals and management’s consideration of current market costs to execute a similar lease. The intangible values of opportunity costs, which are calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease, are capitalized as intangible lease assets and are amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. The Company may acquire certain properties subject to contingent consideration arrangements that may obligate the Company to pay additional consideration to the seller based on the outcome of future events. Additionally, the Company may acquire certain properties for which it funds certain contingent consideration amounts into an escrow account pending the outcome of certain future events. The outcome may result in the release of all or a portion of the escrow funds to the Company or the seller or a combination thereof. Prior to the adoption of ASU 2017-01 (as defined below) in April 2017, contingent consideration arrangements, including amounts funded through an escrow account, would have been recorded upon acquisition of the respective property at their estimated fair value, and any changes to the estimated fair value subsequent to acquisition were reflected in the accompanying consolidated statements of operations in acquisition-related fees and expenses. Upon adoption of ASU 2017-01 in April 2017, contingent consideration arrangements for asset acquisitions are recognized when the contingency is resolved. The determination of the amount of contingent consideration arrangements is based on the probability of several possible outcomes as identified by management. The Company will estimate the fair value of assumed mortgage notes payable based upon indications of current market pricing for similar types of debt financing with similar maturities. Assumed mortgage notes payable will initially be recorded at their estimated fair value as of the assumption date, and any difference between such estimated fair value and the mortgage note’s outstanding principal balance will be amortized or accreted to interest expense over the term of the respective mortgage note payable. The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations. In April 2017, the Company elected to early adopt ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Beginning in April 2017, all real estate acquisitions qualified as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities as described above. Prior to the adoption of ASU 2017-01 in April 2017, all of the Company’s real estate acquisitions were accounted for as business combinations, and as such, acquisition-related expenses related to these business combination acquisitions were expensed as incurred. Prior to April 2017, acquisition-related expenses in the Company’s consolidated statements of operations primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. The Company expects its future acquisitions to qualify as asset acquisitions, and as such, the Company will allocate the purchase price to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases, based in each case on a relative fair value basis. |
Cash Concentrations | Cash Concentrations Cash and cash equivalents includes cash in bank accounts. The Company deposits cash with several high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. The presentation of all deferred financing costs, other than those associated with the revolving loan portion of the credit facility, are classified such that the debt issuance costs related to a recognized debt liability are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability rather than as an asset. Debt issuance costs related to securing the Company’s revolving line of credit are presented as an asset and amortized ratably over the term of the line of credit arrangement. The Company’s total deferred costs, net in the accompanying consolidated balance sheets relate only to the revolving loan portion of the Credit Facility (as defined in Note 6 — Credit Facility and Subordinate Promissory Note). As of December 31, 2017 and 2016 , the Company had $951,000 and $1.3 million , respectively, of deferred financing costs, net of accumulated amortization, related to the revolving loan portion of the Credit Facility. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined the financing will not close. |
Distribution and Stockholder Servicing Fees | Distribution and Stockholder Servicing Fees The Company pays CCO Capital a distribution and stockholder servicing fee for Class T Shares sold in the primary portion of the Offering which are calculated on a daily basis in the amount of 1/365th of 1.0% of the purchase price per share (or, once reported, the amount of the Company’s estimated per share net asset value) of Class T Shares sold in the primary portion of the Offering. The aggregate distribution and stockholder servicing fee for Class T Shares will not exceed an amount equal to 4.0% of the total gross offering proceeds of Class T Shares sold in the primary portion of the Offering. The Company will cease paying the distribution and stockholder servicing fee with respect to Class T Shares sold in the Offering at the earliest of: (i) the end of the month in which the transfer agent, on the Company’s behalf, determines that total selling commissions and distribution and stockholder servicing fees paid by a stockholder within his or her individual account would be equal to 4.0% of the stockholder’s total gross investment amount at the time of the purchase of the primary Class T Shares held in such account, or a lower limit agreed upon between the Company’s dealer manager and the participating broker-dealer at the time such Class T Shares were sold; (ii) the date on which the aggregate underwriting compensation from all sources equals 10.0% of the gross offering proceeds (i.e., excluding proceeds from sales pursuant to the DRIP); (iii) the fourth anniversary of the last day of the month in which the Offering (excluding the offering of shares pursuant to the DRIP) terminates; (iv) the date such Class T Share is no longer outstanding; and (v) the date the Company effects a liquidity event (such as the sale of the Company, the sale of all or substantially all of the Company’s assets, a merger or similar transaction, the listing of the Company’s shares of common stock for trading on a national securities exchange or an alternative strategy that would result in a significant increase in the opportunities for stockholders to dispose of their shares). CCO Capital may, in its discretion, reallow to participating broker-dealers all or a portion of the distribution and stockholder servicing fee. At the time the Company ceases paying the distribution and stockholder servicing fee with respect to an outstanding Class T Share pursuant to the provisions above, such Class T Share will convert into a number of Class A Shares (including any fractional shares) with an equivalent net asset value as such share. The distribution and stockholder servicing fee is paid monthly in arrears. An estimated liability for future distribution and stockholder servicing fees payable to CCO Capital is recognized at the time each Class T Share is sold and included in due to affiliates in the consolidated balance sheets with a corresponding decrease to capital in excess of par value. |
Due to Affiliates | Due to Affiliates Certain affiliates of CCI III Advisors received, and will continue to receive, fees, reimbursements and compensation in connection with services provided relating to the Offering and the acquisition, management, financing and leasing of the Company’s assets. As of December 31, 2017 and 2016 , $278,000 and $78,000 , respectively, was due to CCI III Advisors and its affiliates for such services, as discussed in Note 8 — Related-Party Transactions and Arrangements to these consolidated financial statements. |
Redeemable Common Stock | Redeemable Common Stock Under the Company’s share redemption program, the Company’s obligation to redeem shares of its outstanding common stock is limited, among other things, to the net proceeds received by the Company from the sale of shares under the DRIP during the quarter, net of shares redeemed. The Company records amounts that are redeemable under the share redemption program as redeemable common stock outside of permanent equity in its consolidated balance sheets. Changes in the amount of redeemable common stock from period to period are recorded as an adjustment to capital in excess of par value. |
Revenue Recognition | Revenue Recognition Certain properties have leases where minimum rental payments increase during the term of the lease. The Company records rental income for the full term of the lease on a straight-line basis when earned and collectability is reasonably assured. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred. The Company continually reviews receivables related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for uncollectible accounts. |
Income Taxes | Income Taxes The Company intends to qualify and elect to be taxed as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code, beginning with its taxable year ended December 31, 2017. If the Company qualifies for taxation as a REIT, the Company will generally not be subject to federal corporate income tax to the extent it distributes its taxable income to its stockholders, and so long as it, among other things, distributes at least 90% of its annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it or its subsidiaries may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As of December 31, 2017 , the Company has the required number of stockholders in order to elect to qualify as a REIT. However, for the period from May 22, 2014 (date of inception) to December 31, 2016, the Company did not meet all of the criteria to qualify as a REIT under the Internal Revenue Code. Specifically, the Company did not have enough stockholders for a sufficient number of days in 2016. As such, the Company was taxable as a C Corporation for the taxable year ended December 31, 2016, and was subject to regular taxes on its income for such period. However, the Company incurred a taxable loss for the period ending December 31, 2016, and as such, there was no federal income tax liability for this period. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. The Company has reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the consolidated financial statements if it is more likely than not that the tax position will be sustained upon examination. The Company had no material uncertain tax positions as of December 31, 2016. |
Net Loss and Distributions Per Share | Net Loss and Distributions Per Share The Company has two classes of common stock. Accordingly, the Company utilizes the two-class method to determine its earnings per share, which results in different earnings per share for each of the classes. Under the two-class method, earnings per share of each class of common stock are computed by dividing the sum of the distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares for each class of common stock for the respective period. The distributed earnings to Class T Share common stockholders represents distributions declared less the distribution and stockholder servicing fees paid with respect to Class T Shares sold in the primary portion of the Offering. Diluted income per share, when applicable, considers the effect of any potentially dilutive share equivalents, of which the Company had none for each of the years ended December 31, 2017 or 2016 . Distributions per share is calculated based on the authorized daily distribution rate. |
Offering and Related Costs | Offering and Related Costs CCI III Advisors funds all of the organization and offering costs on the Company’s behalf (excluding selling commissions, dealer manager fees and distribution and stockholder servicing fees) and may be reimbursed for such costs up to 1.0% of the gross proceeds from the Offering. As of December 31, 2017 , CCI III Advisors had paid organization and offering costs in excess of 1.0% of the gross proceeds from the Offering. These excess costs were not included in the financial statements of the Company because such costs were not a liability of the Company as they exceeded 1.0% of the aggregate gross proceeds from the Offering. As the Company raises additional proceeds from the Offering, these excess costs may become payable. The Company expenses organization costs as incurred and records offering costs, which include items such as legal and accounting fees, marketing, personnel, promotional and printing costs, as a reduction of capital in excess of par value along with selling commissions, and dealer manager fees in the period in which they become payable. |
Reportable Segment | Reportable Segment The Company’s commercial real estate assets consist primarily of single-tenant, income-producing necessity office and industrial properties, which are leased to creditworthy tenants under a long-term net leases. The commercial properties are geographically diversified throughout the United States and have similar economic characteristics. The Company’s management evaluates operating performance on an overall portfolio level; therefore, the Company’s properties are one reportable segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain of these new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s consolidated financial statements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification (“ASC”) (Topic 605) and will require an entity to recognize revenue in a way that depicts 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. For public business entities, the guidance should be applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. In accordance with the Company’s plan for the adoption of ASU 2014-09, the Company’s implementation team has identified all of the Company’s revenue streams and real estate sales and concluded that upon adoption, there will not be a material impact on the Company’s consolidated financial statements and disclosures. The Company plans to adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective approach. In addition, the Company evaluated controls around the implementation of ASU 2014-09 and has concluded there will be no significant impact on the Company’s control structure. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similar to current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current GAAP) and operating leases. The amendments in ASU 2016-02 are effective for fiscal years, beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption and provides for certain practical expedients. The Company is still evaluating the full impact of ASU 2016-02 on the Company’s consolidated financial statements; however, the Company will adopt ASU 2016-02 as of January 1, 2019 and anticipates that it will elect a practical expedient offered in ASU 2016-02 that allows an entity to not reassess the following upon adoption (elected as a group): (i) whether an expired or existing contract contains a lease arrangement; (ii) lease classification related to expired or existing lease arrangements; or (iii) whether costs incurred on expired or existing leases qualify as initial direct costs. As a result of the adoption, all leases for which the Company is the lessee, including ground leases (if any) will be recorded on the Company’s consolidated financial statements as either financing leases or operating leases with a related right of use asset and lease liability. In addition, certain executory and non-lease components, such as common area maintenance, may need to be accounted for separately from the lease component of the lease. Lease components will continue to be recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASU 2014-09 as mentioned above. In January 2018, the FASB proposed amending Topic 842 to allow lessors the option to combine lease and non-lease components when certain criteria are met. ASU No. 2016-01, Financial Instruments (Subtopic 825-10) (“ASU 2016-01”) — The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will adopt ASU 2016-01 during the first quarter of fiscal year 2018 and does not expect it will have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact this amendment will have on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company adopted ASU 2016-15 during the fourth quarter of fiscal year 2017 and has determined that this standard is relevant to its presentation of debt prepayment and debt extinguishment costs and contingent consideration payments made after a business combination. Following the retrospective adoption of this standard, the Company determined these items did not have a material impact on the consolidated statements of cash flows. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included within cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted ASU 2016-18 during the fourth quarter of 2017 and applied the standard retrospectively for all periods presented. Following the retrospective adoption of this standard, the Company determined these items did not have an impact on the consolidated statements of cash flows as the Company had no restricted cash as of December 31, 2017 and 2016. In February 2017, the FASB issued ASU No. 2017-05 , Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), which clarifies the following: (1) nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty; (2) an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations; and (3) entities are required to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it (a) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Subtopic 810 and (b) transfers control of the asset in accordance with Topic 606. The adoption of this standard may result in higher gains on the sale of partial real estate interests, including contributions of nonfinancial assets to a joint venture or other noncontrolling investee, due to recognizing the full gain when the derecognition criteria are met and recording the retained noncontrolling interest at its fair value. ASU 2017-05 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The standard is applied prospectively to sales of nonfinancial assets on or after the adoption date. The Company plans to adopt ASU 2017-05 effective January 1, 2018 using the modified retrospective approach and does not expect it will have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows: Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability. |
Fair Value of Financial Instruments | The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities: Credit facility and subordinate promissory note — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. These financial instruments are valued using Level 2 inputs. As of December 31, 2017 , the estimated fair value of the Company’s debt was $33.8 million , compared to the carrying value of $33.6 million . As of December 31, 2016 , the estimated fair value of the Company’s debt was $32.9 million , compared to the carrying value on that date of $32.3 million . The carrying and fair values exclude net deferred financing costs. Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, tenant receivables, accrued expenses and accounts payable, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. |
Environmental Matters | Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Investment in and valuation of real estate | The estimated useful lives of the Company’s real estate assets by class are generally as follows: Buildings 40 years Site improvements 15 years Tenant improvements Lesser of useful life or lease term Intangible lease assets Lease term |
Real Estate Investment (Tables)
Real Estate Investment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Real Estate [Abstract] | |
Schedule of purchase price allocation | The following table summarizes the purchase price allocation: December 31, 2017 Land $ 937,691 Buildings and improvements 14,287,443 Acquired in-place lease (1) 1,630,071 Total purchase price $ 16,855,205 ______________________ (1) The weighted average amortization period for the acquired in-place lease was 16.2 years for the 2017 Acquisition . The following table summarizes the purchase price allocation: December 31, 2016 Land $ 2,307,312 Buildings and improvements 26,971,327 Acquired in-place lease (1) 3,471,361 Total purchase price $ 32,750,000 ______________________ (1) The weighted average amortization period for the acquired in-place lease was 9.6 years for the 2016 Acquisition. |
Business acquisition, pro forma information | The following table summarizes selected financial information of the Company as if the 2016 Acquisition was completed on January 1, 2015. The table below presents the Company’s estimated revenue and net loss, on a pro forma basis, for the years ended December 31, 2016 and 2015 : Year Ended December 31, 2016 2015 Pro forma basis (unaudited): Revenue $ 2,922,263 $ 2,922,263 Net loss $ (1,612,080 ) $ (1,418,625 ) |
Intangible Lease Assets (Tables
Intangible Lease Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible asset | The Company’s intangible lease assets consisted of the following as of December 31, 2017 and 2016 : As of December 31, 2017 2016 In-place leases, net of accumulated amortization of $480,483 and $105,651, respectively (with a weighted average life remaining of 10.8 years and 9.3 years, respectively) $ 4,620,949 $ 3,365,710 |
Schedule of finite-lived intangible assets amortization expense | The following table summarizes the amortization expense related to the in-place lease assets for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, 2017 2016 2015 In-place lease amortization $ 374,832 $ 105,651 $ — |
Schedule of finite-lived intangible assets, future amortization expense | As of December 31, 2017 , the estimated amortization expense relating to the intangible lease assets for each of the five succeeding fiscal years is as follows: Amortization Expense Year ending December 31, In-Place Leases 2018 $ 463,058 2019 $ 463,058 2020 $ 463,058 2021 $ 463,058 2022 $ 463,058 |
Credit Facility and Subordina26
Credit Facility and Subordinate Promissory Note (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The following table summarizes the debt balances as of December 31, 2017 and 2016, respectively, and the debt activity for the year ended December 31, 2017 : During The Year Ended December 31, 2017 Balance as of Debt Issuance Repayments Accretion Balance as of Credit facility $ 22,000,000 $ 12,700,000 $ (2,725,000 ) $ — $ 31,975,000 Subordinate promissory note with affiliate 10,300,000 16,400,000 (25,100,000 ) — 1,600,000 Total debt $ 32,300,000 $ 29,100,000 $ (27,825,000 ) $ — $ 33,575,000 |
Schedule of aggregate principal repayments | The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt as of December 31, 2017 for each of the five succeeding fiscal years and the period thereafter: Principal Repayments 2018 $ 1,600,000 2019 31,975,000 2020 — 2021 — 2022 — Thereafter — Total $ 33,575,000 |
Related-Party Transactions an27
Related-Party Transactions and Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | The Company incurred commissions, fees and expense reimbursements as shown in the table below for services provided by CCI III Advisors and its affiliates related to the services described above during the periods indicated: Year Ended Year Ended December 31, 2017 December 31, 2016 Selling commissions $ 798,184 15,500 Dealer manager fees $ 331,799 13,468 Distribution and stockholder servicing fees (1) $ 21,753 16 Organization and offering costs $ 169,994 31,962 Acquisition fees and expenses $ 330,000 665,090 Advisory fees $ 60,565 74,289 Operating expenses (2) $ 50,000 107,429 Financing coordination fees $ 99,750 220,000 ______________________ (1) Amounts are calculated for the respective periods in accordance with the dealer manager agreement and excludes the estimated liability for future distribution and stockholder servicing fees payable to CCO Capital of $217,000 and $2,000 for the years ended December 31, 2017 and 2016 , respectively, which is included in due to affiliates in the consolidated balance sheets with a corresponding decrease to capital in excess of par value, as described in Note 2 — Summary of Significant Accounting Policies. (2) CCI III Advisors permanently waived its rights to $80,000 of expense reimbursements for the year ended December 31, 2016 , which is excluded from the table above as the Company is not responsible for this amount. |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of dividends and distributions | The following table shows the character of the distributions the Company paid on a percentage basis for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, Character of Distributions: 2017 2016 2015 (1) Ordinary dividends — % — % — % Nondividend distributions 100 % 100 % — % Total 100 % 100 % — % ____________________________________ (1) The Company paid no distributions during the year ended December 31, 2015. |
Schedule of deferred tax assets and liabilities | Deferred tax assets (liabilities) consisted of the following components as of the periods indicated: Year Ended December 31, 2016 2015 Fixed assets $ 337,888 $ — Net operating loss 109,072 — Deferred rent 72,948 — Other (23,561 ) — Valuation allowance (496,347 ) — Total net deferred tax asset $ — $ — |
Schedule of effective income tax rate reconciliation | The following is a reconciliation of benefit from income taxes with the amount computed by applying the statutory federal income tax rate to loss before income taxes for the periods indicated: 2016 2015 Net loss $ (1,392,279 ) $ — Federal provision (benefit) at statutory rate (487,297 ) — State and local provision at statutory rate (9,050 ) — Change in valuation allowance against net deferred tax assets 496,347 — Total benefit from income taxes $ — $ — |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of future minimum rental payments for operating leases | The future minimum rental income from the Company’s real estate assets under the non-cancelable operating leases, assuming no exercise of renewal options, as of December 31, 2017 , was as follows: Year Ending December 31, Future Minimum Rental Income 2018 $ 3,740,278 2019 3,808,708 2020 3,878,462 2021 3,756,969 2022 3,829,450 Thereafter 22,784,446 Total $ 41,798,313 |
Quarterly Results (Unaudited) (
Quarterly Results (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial information | In the opinion of management, the information for the interim periods presented includes all adjustments, which are of a normal and recurring nature, necessary to present a fair presentation of the results for each period. December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 744,504 $ 739,749 $ 1,581,290 $ 1,039,054 Acquisition-related expenses $ — $ — $ — $ 41,576 Operating income (loss) $ 108,977 $ 155,952 $ 212,773 $ (11,346 ) Net loss $ (327,144 ) $ (228,657 ) $ (135,116 ) $ (431,078 ) Basic and diluted net loss per share - Class A common stock (1) $ (0.66 ) $ (0.23 ) $ (0.09 ) $ (0.21 ) Distributions declared per common share - Class A common stock $ 0.15 $ 0.15 $ 0.15 $ 0.15 Basic and diluted net loss per share - Class T common stock (1) $ (0.68 ) $ (0.26 ) $ (0.11 ) $ (0.24 ) Distributions declared per common share - Class T common stock $ 0.15 $ 0.15 $ 0.15 $ 0.15 ____________________________________ (1) The sum of the quarterly net loss per share amounts does not agree to the full year net loss per share amounts. The Company calculates net loss per share based on the weighted-average number of outstanding shares of common stock during the reporting period. The average number of shares fluctuates throughout the year and can therefore produce a full year result that does not agree to the sum of the individual quarters. December 31, 2016 First Quarter (1) Second Quarter (1) Third Quarter Fourth Quarter Revenues $ — $ — $ 59,961 $ 738,472 Acquisition-related fees and expenses $ — $ — $ 754,531 $ 10,091 Operating loss $ — $ — $ (793,933 ) $ (100,739 ) Net loss $ — $ — $ (846,730 ) $ (545,549 ) Basic and diluted net loss per share - Class A common stock (2) $ — $ — $ (19.29 ) $ (1.78 ) Distributions declared per common share - Class A common stock $ — $ — $ 0.01 $ 0.15 Basic and diluted net loss per share - Class T common stock (2), (3) $ — $ — $ — $ (1.82 ) Distributions declared per common share - Class T common stock (3) $ — $ — $ — $ 0.02 ____________________________________ (1) The Company did not commence principal operations until September 22, 2016. Therefore, the Company had no activity. (2) The sum of the quarterly net loss per share amounts does not agree to the full year net loss per share amounts. The Company calculates net loss per share based on the weighted-average number of outstanding shares of common stock during the reporting period. The average number of shares fluctuates throughout the year and can therefore produce a full year result that does not agree to the sum of the individual quarters. (3) As of September 30, 2016, no Class T Shares were issued or outstanding. |
Organization and Business (Deta
Organization and Business (Details) | Sep. 22, 2016USD ($)class_of_stock$ / sharesshares | Dec. 31, 2015shares | Dec. 30, 2015shares | Jul. 14, 2014USD ($)$ / sharesshares | Dec. 31, 2014shares | Dec. 31, 2017USD ($)class_of_stock$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | Sep. 30, 2016shares | ||||
Class of Stock [Line Items] | |||||||||||||
Classes of common stock | class_of_stock | 2 | 2 | |||||||||||
Issuance of common stock, shares (in shares) | shares | 8,000 | ||||||||||||
Proceeds from issuance of common stock | $ 200,000 | $ 16,677,720 | $ 2,935,000 | $ 0 | [1] | ||||||||
Distribution and stockholder fees payable | $ 217,000 | $ 2,000 | |||||||||||
CCI II OP | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
General partner partnership interest percentage | 100.00% | ||||||||||||
Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Share price (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Issuance of common stock, shares (in shares) | shares | 8,000 | ||||||||||||
Initial public offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock shares authorized, value | $ 3,500,000,000 | ||||||||||||
Initial public offering | Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Proceeds from issuance of common stock | $ 19,800,000 | ||||||||||||
Common stock, shares outstanding (in shares) | shares | 2,048,201 | ||||||||||||
Organization and offering costs, selling commissions and dealer manager fees | $ 1,400,000 | ||||||||||||
Multi class offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock shares authorized, value | 2,500,000,000 | ||||||||||||
Distribution reinvestment plan | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock shares authorized, value | $ 1,000,000,000 | ||||||||||||
Share price (in dollars per share) | $ / shares | $ 9.10 | $ 9.10 | |||||||||||
Class A Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Issuance of common stock, shares (in shares) | shares | [2] | 20,000 | |||||||||||
Stock issued during period, shares, stock splits, conversion ratio | 2.5 | 2.5 | |||||||||||
Common stock, shares outstanding (in shares) | shares | 1,436,855 | 334,618 | |||||||||||
Class A Common Stock | Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Issuance of common stock, shares (in shares) | shares | 20,000 | 1,102,237 | 314,618 | ||||||||||
Common stock, shares outstanding (in shares) | shares | 20,000 | [2] | 20,000 | [2] | 1,436,855 | 334,618 | 20,000 | [2] | |||||
Class A Common Stock | Initial public offering | Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Issuance of common stock, shares (in shares) | shares | 274,725.275 | ||||||||||||
Proceeds from issuance of common stock | $ 2,500,000 | $ 13,800,000 | |||||||||||
Class A Common Stock | Multi class offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock shares authorized, value | $ 1,250,000,000 | ||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | ||||||||||||
Class T Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock, shares outstanding (in shares) | shares | 631,346 | 5,225 | 0 | ||||||||||
Class T Common Stock | Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Issuance of common stock, shares (in shares) | shares | 626,121 | 5,225 | |||||||||||
Common stock, shares outstanding (in shares) | shares | 0 | [2] | 0 | [2] | 631,346 | 5,225 | 0 | [2] | |||||
Class T Common Stock | Initial public offering | Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Proceeds from issuance of common stock | $ 6,000,000 | ||||||||||||
Class T Common Stock | Multi class offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock shares authorized, value | $ 1,250,000,000 | ||||||||||||
Share price (in dollars per share) | $ / shares | $ 9.57 | ||||||||||||
Distribution and stockholder servicing fees | Advisors | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Related party transaction, expenses from transactions with related party | 21,753 | $ 16 | |||||||||||
Distribution and stockholder servicing fees | Advisors | Class T Common Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Related party transaction, expenses from transactions with related party | $ 22,000 | ||||||||||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. | ||||||||||||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no activity during the year ended December 31, 2015. |
Organization and Business (Real
Organization and Business (Real Estate) (Details) ft² in Thousands | Dec. 31, 2017ft²statesproperty |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of real estate properties | property | 2 |
Net rentable square feet | ft² | 391 |
Number of states | states | 2 |
Percentage of rentable space leased | 100.00% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Real Estate) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Real Estate Properties [Line Items] | |||
Impairment | $ 0 | $ 0 | $ 0 |
Assets held for sale | $ 0 | $ 0 | |
Buildings | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (in years) | 40 years | ||
Site Improvements | |||
Real Estate Properties [Line Items] | |||
Acquired real estate asset, useful life (in years) | 15 years |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Other Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)class_of_stocksegmentshares | Dec. 31, 2016USD ($)shares | Sep. 22, 2016class_of_stock | |
Accounting Policies [Abstract] | |||
Deferred finance costs | $ 951,000 | $ 1,338,000 | |
Due to affiliates | 278,000 | 78,000 | |
Allowance for uncollectible accounts | $ 0 | $ 0 | |
Classes of common stock | class_of_stock | 2 | 2 | |
Antidilutive securities (in shares) | shares | 0 | 0 | |
Number of reportable segments | segment | 1 | ||
Restricted cash | $ 0 | $ 0 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Distribution and Stockholder Servicing Fees) (Details) - Advisors | 12 Months Ended |
Dec. 31, 2017 | |
Class T Common Stock | |
Related Party Transaction [Line Items] | |
Net asset value, daily accrual rate | 0.00274% |
Distribution and stockholder servicing fees | |
Related Party Transaction [Line Items] | |
Related party transaction, daily distribution and servicing fee, termination of payments threshold, percentage of total gross investment | 4.00% |
Related party transaction, daily distribution and servicing fee, termination of payments threshold, percentage of gross proceeds from shares in offering | 10.00% |
Distribution and stockholder servicing fees | Class T Common Stock | Maximum | |
Related Party Transaction [Line Items] | |
Related party expense from transaction, percent of gross proceeds | 4.00% |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Offering and Related Costs) (Details) | Dec. 31, 2017 |
Other organization and offering expenses | Maximum | Advisors | |
Related Party Transaction [Line Items] | |
Organization and offering expense limit, percent | 1.00% |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - Affiliated entity - Fair value, inputs, level 2 - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Estimate of fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notes payable | $ 33.8 | $ 32.9 |
Carrying value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notes payable | $ 33.6 | $ 32.3 |
Real Estate Investment (Narrati
Real Estate Investment (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)property | Dec. 31, 2016USD ($)property | Dec. 31, 2015USD ($) | [1] | |
Business Acquisition [Line Items] | ||||||||||||
Acquisition-related expenses | $ 41,576 | $ 0 | $ 0 | $ 0 | $ 10,091 | $ 754,531 | $ 0 | $ 0 | $ 41,576 | $ 764,622 | $ 0 | |
Acquisitions, 2017 | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of businesses acquired (in properties) | property | 1 | |||||||||||
Aggregate purchase price | $ 16,900,000 | |||||||||||
Acquisition-related expenses | $ 355,000 | |||||||||||
Acquisitions, 2016 | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of businesses acquired (in properties) | property | 1 | |||||||||||
Aggregate purchase price | $ 32,800,000 | |||||||||||
Acquisition-related expenses | 765,000 | |||||||||||
Revenues recorded | 798,000 | |||||||||||
Net income(loss) since acquisition date | $ 439,000 | |||||||||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. |
Real Estate Investment (Purchas
Real Estate Investment (Purchase Price Allocation) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Acquisitions, 2017 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Land | $ 937,691 | |
Buildings and improvements | 14,287,443 | |
Total purchase price | 16,855,205 | |
Acquisitions, 2017 | Acquired in-place leases | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Acquired leases | $ 1,630,071 | |
Weighted average amortization period | 16 years 2 months 12 days | |
Acquisitions, 2016 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Land | $ 2,307,312 | |
Buildings and improvements | 26,971,327 | |
Total purchase price | 32,750,000 | |
Acquisitions, 2016 | Acquired in-place leases | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||
Acquired leases | $ 3,471,361 | |
Weighted average amortization period | 9 years 7 months 6 days |
Real Estate Investment (Pro for
Real Estate Investment (Pro forma Basis) (Details) - Acquisitions, 2016 - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Pro forma basis | ||
Revenue | $ 2,922,263 | $ 2,922,263 |
Net loss | $ (1,612,080) | $ (1,418,625) |
Intangible Lease Assets (Detail
Intangible Lease Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ 480,483 | $ 105,651 |
Useful life | 10 years 9 months 18 days | 9 years 3 months 18 days |
Acquired in-place leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible leased asset | $ 4,620,949 | $ 3,365,710 |
Intangible Lease Assets (Schedu
Intangible Lease Assets (Schedule of finite-lived intangible assets amortization expense) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquired in-place leases | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 374,832 | $ 105,651 | $ 0 |
Intangible Lease Assets (Estima
Intangible Lease Assets (Estimated Amortization of Intangible lease assets) (Details) - Acquired in-place leases | Dec. 31, 2017USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2,018 | $ 463,058 |
2,019 | 463,058 |
2,020 | 463,058 |
2,021 | 463,058 |
2,022 | $ 463,058 |
Credit Facility and Subordina44
Credit Facility and Subordinate Promissory Note (Schedule of Debt) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Debt [Roll Forward] | |
Total debt, net, beginning of period | $ 32,300 |
Debt issuances, net | 29,100 |
Repayments of Debt | (27,825) |
Accretion Expense | 0 |
Total debt, net, end of period | 33,575 |
Line of credit | |
Debt [Roll Forward] | |
Total debt, net, beginning of period | 22,000 |
Debt issuances, net | 12,700 |
Repayments of Debt | (2,725) |
Accretion Expense | 0 |
Total debt, net, end of period | 31,975 |
Subordinated Promissory Note | |
Debt [Roll Forward] | |
Total debt, net, beginning of period | 10,300 |
Debt issuances, net | 16,400 |
Repayments of Debt | (25,100) |
Accretion Expense | 0 |
Total debt, net, end of period | $ 1,600 |
Credit Facility and Subordina45
Credit Facility and Subordinate Promissory Note (Credit facility and Subordinate promissory note) (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 23, 2016USD ($) | |
Line of Credit Facility [Line Items] | |||
Long-term debt | $ 33,575,000 | $ 32,300,000 | |
Debt, weighted average interest rate | 4.10% | ||
Weighted average remaining term | 1 year 8 months 12 days | ||
Credit facility | $ 31,975,000 | 22,000,000 | |
Line of credit | |||
Line of Credit Facility [Line Items] | |||
Long-term debt | 31,975,000 | $ 22,000,000 | |
JPMorgan Chase Bank, N.A. | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Credit facility | $ 32,000,000 | ||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 | ||
Effective interest rate | 4.00% | ||
Line of credit facility, remaining available borrowing capacity | $ 68,000,000 | ||
Line of credit facility, covenant, minimum consolidated net worth (percentage) | 75.00% | ||
JPMorgan Chase Bank, N.A. | Minimum | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Interest rate spread (percentage) | 1.20% | ||
Debt covenant fixed charge coverage ratio | 1.50 | ||
JPMorgan Chase Bank, N.A. | Maximum | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Interest rate spread (percentage) | 1.45% | ||
Debt covenant leverage ratio | 65.00% | ||
JPMorgan Chase Bank, N.A. | LIBOR | Minimum | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.20% | ||
JPMorgan Chase Bank, N.A. | LIBOR | Maximum | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.45% | ||
JPMorgan Chase Bank, N.A. | Federal Funds Effective Rate | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
JPMorgan Chase Bank, N.A. | Statutory Reserve Rate | Line of credit | Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Affiliated entity | Line of credit | Subordinated Promissory Note | |||
Line of Credit Facility [Line Items] | |||
Credit facility | $ 1,600,000 | ||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | ||
Interest rate spread (percentage) | 1.75% | ||
Effective interest rate | 5.60% | ||
Line of credit facility, remaining available borrowing capacity | $ 28,400,000 |
Credit Facility and Subordina46
Credit Facility and Subordinate Promissory Note (Future Debt Repayments Schedule) (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2,018 | $ 1,600 |
2,019 | 31,975 |
2,020 | 0 |
2,021 | 0 |
2,022 | 0 |
Thereafter | 0 |
Total | $ 33,575 |
Credit Facility and Subordina47
Credit Facility and Subordinate Promissory Note (Liquidity and Financial Condition) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 33,575 | $ 32,300 |
Subordinated Promissory Note | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,600 | $ 10,300 |
Related-Party Transactions an48
Related-Party Transactions and Arrangements (Selling commissions and dealer manager fees) (Details) - Dealer manager | Dec. 31, 2017 |
Selling commissions | |
Related Party Transaction [Line Items] | |
Expense reallowed | 100.00% |
Class A Common Stock | Dealer manager fee | |
Related Party Transaction [Line Items] | |
Commissions percentage on stock sales and related dealer manager fees | 2.00% |
Class T Common Stock | Dealer manager fee | |
Related Party Transaction [Line Items] | |
Commissions percentage on stock sales and related dealer manager fees | 2.00% |
Maximum | Class A Common Stock | Selling commissions | |
Related Party Transaction [Line Items] | |
Related party expense from transaction, percent of gross proceeds | 7.00% |
Maximum | Class T Common Stock | Selling commissions | |
Related Party Transaction [Line Items] | |
Commissions percentage on stock sales and related dealer manager fees | 3.00% |
Related-Party Transactions an49
Related-Party Transactions and Arrangements (Organization and offering expenses) (Details) | Dec. 31, 2017 |
Advisors | Other organization and offering expenses | |
Related Party Transaction [Line Items] | |
Related party expense from transaction, percent of gross proceeds | 1.00% |
Related-Party Transactions an50
Related-Party Transactions and Arrangements (Distribution and stockholder servicing fees) (Details) - Advisors | 12 Months Ended |
Dec. 31, 2017 | |
Distribution and stockholder servicing fees | |
Related Party Transaction [Line Items] | |
Related party transaction, daily distribution and servicing fee, termination of payments threshold, percentage of total gross investment | 4.00% |
Related party transaction, daily distribution and servicing fee, termination of payments threshold, percentage of gross proceeds from shares in offering | 10.00% |
Class T Common Stock | |
Related Party Transaction [Line Items] | |
Net asset value, daily accrual rate | 0.00274% |
Related-Party Transactions an51
Related-Party Transactions and Arrangements (Acquisition fees and expenses) (Details) - Maximum - Advisors - Acquisition fees and expenses | Dec. 31, 2017 |
Related Party Transaction [Line Items] | |
Acquisition and expenses percentage | 2.00% |
Acquisition fees and expenses, reimbursement, percentage | 6.00% |
Related-Party Transactions an52
Related-Party Transactions and Arrangements (Advisory fees and expenses) (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Advisors | Advisory fees | |
Related Party Transaction [Line Items] | |
Expense exceeding the expense limit | $ 205,000 |
Average invested assets between $0 to $2 billion | Advisors | Advisory fees | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees percent | 0.75% |
Average invested assets between $2 billion to $4 billion | Advisors | Advisory fees | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees percent | 0.70% |
Average invested assets over $4 billion | Advisors | Advisory fees | |
Related Party Transaction [Line Items] | |
Asset management or advisory fees percent | 0.65% |
Minimum | Advisors | Advisory fees | |
Related Party Transaction [Line Items] | |
Reimbursement of related party expense threshold, percent of average invested assets | 2.00% |
Reimbursement of related party expense threshold, percent of net income | 25.00% |
Minimum | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 0 |
Minimum | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Minimum | Average invested assets over $4 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | 4,000,000,000 |
Maximum | Average invested assets between $0 to $2 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | 2,000,000,000 |
Maximum | Average invested assets between $2 billion to $4 billion | |
Related Party Transaction [Line Items] | |
Average invested assets | $ 4,000,000,000 |
Related-Party Transactions an53
Related-Party Transactions and Arrangements (Operating expenses) (Details) - Operating expenses - Advisors $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | |
Operating expense exceeding the expense limit | $ 769 |
Minimum | |
Related Party Transaction [Line Items] | |
Reimbursement of related party expense threshold, percent of average invested assets | 2.00% |
Reimbursement of related party expense threshold, percent of net income | 25.00% |
Related-Party Transactions an54
Related-Party Transactions and Arrangements (Financing coordination fees) (Details) | Dec. 31, 2017 |
Advisors | Financing coordination fee | |
Related Party Transaction [Line Items] | |
Expense from related party transaction, percent | 1.00% |
Related-Party Transactions an55
Related-Party Transactions and Arrangements (Disposition fees) (Details) - Advisors - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property sales commission | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 1.00% | |
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 |
Maximum | Brokerage Commission Fee | ||
Related Party Transaction [Line Items] | ||
Expense from related party transaction, percent | 50.00% | |
Maximum | Property Portfolio | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 6.00% |
Related-Party Transactions an56
Related-Party Transactions and Arrangements (Subordinated performance fees) (Details) - Advisors - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Cumulative noncompounded annual return | 6.00% | |
Subordinate performance fees on event of sale of company | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 15.00% | |
Subordinate fees for listing | ||
Related Party Transaction [Line Items] | ||
Commissions performance and other fees percent | 15.00% | |
Subordinated performance fees | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | $ 0 | $ 0 |
Related-Party Transactions an57
Related-Party Transactions and Arrangements (Schedule of related party transactions) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Distribution and stockholder fees payable | $ 217,000 | $ 2,000 |
Selling commissions | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 798,184 | 15,500 |
Dealer manager fee | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 331,799 | 13,468 |
Distribution and stockholder servicing fees | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 21,753 | 16 |
Organization and offering costs | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 169,994 | 31,962 |
Acquisition fees and expenses | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 330,000 | 665,090 |
Advisory fees | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 60,565 | 74,289 |
Operating expenses | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 50,000 | 107,429 |
Financing coordination fee | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | 99,750 | $ 220,000 |
Waived fees and expense reimbursements | Advisors | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | $ 80,000 |
Related-Party Transactions an58
Related-Party Transactions and Arrangements (Due to/from Affiliates) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Due to affiliates | $ 278,000 | $ 78,000 |
Affiliated entity | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 278,000 | 78,000 |
Advisor | ||
Related Party Transaction [Line Items] | ||
Due from Affiliates | 1,000 | 0 |
Revolving credit facility | Line of credit | Series C, Llc | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 10,000 | 45,000 |
Related party, interest expense | $ 262,000 | $ 145,000 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) | Dec. 31, 2015shares | Dec. 30, 2015shares | Jul. 14, 2014$ / sharesshares | Dec. 31, 2014 | Dec. 31, 2017$ / sharesshares | Dec. 31, 2016$ / sharesshares | |
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 490,000,000 | ||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | |||||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | ||||||
Issuance of common stock (in shares) | 8,000 | ||||||
Class A Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 | |||||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Issuance of common stock (in shares) | [1] | 20,000 | |||||
Stock issued during period, shares, stock splits, conversion ratio | 2.5 | 2.5 | |||||
Class T Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 | |||||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock (in shares) | 8,000 | ||||||
Share price (in dollars per share) | $ / shares | $ 25 | ||||||
Common Stock | Class A Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock (in shares) | 20,000 | 1,102,237 | 314,618 | ||||
Common Stock | Class T Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock (in shares) | 626,121 | 5,225 | |||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no activity during the year ended December 31, 2015. |
Stockholders' Equity (Distribut
Stockholders' Equity (Distribution reinvestment plan) (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | [1] | Sep. 22, 2016 | Jul. 14, 2014 | |
Class of Stock [Line Items] | ||||||
Dividend reinvestment plan, termination notice period | 10 days | |||||
Common stock issued through distribution reinvestment plan | $ 179,564 | $ 0 | $ 0 | |||
Distribution reinvestment plan | ||||||
Class of Stock [Line Items] | ||||||
Share price (in dollars per share) | $ 9.10 | $ 9.10 | ||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Share price (in dollars per share) | $ 25 | |||||
Stock issued during period, distribution reinvestment plan (in shares) | 0 | |||||
Common Stock | Distribution reinvestment plan | ||||||
Class of Stock [Line Items] | ||||||
Stock issued during period, distribution reinvestment plan (in shares) | 20,000 | |||||
Common stock issued through distribution reinvestment plan | $ 180,000 | |||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. |
Stockholders' Equity (Share red
Stockholders' Equity (Share redemption program) (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Class of Stock [Line Items] | ||
Stock repurchase program, required holding period | 1 year | |
Stock redemption program, number of shares authorized to be repurchased, percentage of weighted average number of shares outstanding | 5.00% | |
Stock redemption program, termination notice period | 30 days | |
Stock redeemed during period (in shares) | 0 | 0 |
Maximum | ||
Class of Stock [Line Items] | ||
Stock redemption program, number of shares authorized to be repurchased, percentage of weighted average number of shares outstanding | 1.25% | |
Stock redemption program, redemption priority (in shares) | 250 |
Stockholders' Equity (Distrib62
Stockholders' Equity (Distribution payable and distributions policy) (Details) - USD ($) | 12 Months Ended | 18 Months Ended | |||
Dec. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2016 | Dec. 31, 2015 | [1] | |
Class of Stock [Line Items] | |||||
Dividend, common stock and preferred stock, number of days in the calendar year for the daily distribution | 365 days | ||||
Distributions payable | $ 100,241 | $ 16,546 | $ 0 | ||
Subsequent Event | Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Daily distributions payable amount per share (in usd per share) | $ 0.001643836 | ||||
Subsequent Event | Class T Common Stock | |||||
Class of Stock [Line Items] | |||||
Daily distributions payable amount per share (in usd per share) | $ 0.001381644 | ||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. |
Income Taxes (Schedule of divid
Income Taxes (Schedule of dividends and distributions) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Income Tax Disclosure [Abstract] | ||||
Ordinary dividends | 0.00% | 0.00% | 0.00% | |
Nondividend distributions | 100.00% | 100.00% | 0.00% | |
Total | 100.00% | 100.00% | 0.00% | |
Payment of distributions | $ 448,362 | $ 33,338 | $ 0 | [1] |
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | |||
State and local income and franchise taxes | $ 2,500 | ||
Deferred tax assets, valuation allowance | $ 496,347 | $ 0 | |
Effective income tax rate | 0.00% | ||
Income tax expense (benefit) | 0 | $ 0 | 0 |
Unrecognized tax benefits | $ 0 | 0 | $ 0 |
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 303,000 | ||
Local | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 306,000 |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Fixed assets | $ 337,888 | $ 0 |
Net operating loss | 109,072 | 0 |
Deferred rent | 72,948 | 0 |
Other | (23,561) | 0 |
Valuation allowance | (496,347) | 0 |
Total net deferred tax asset | $ 0 | $ 0 |
Income Taxes (Schedule of effec
Income Taxes (Schedule of effective tax rate reconciliation) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Income Tax Disclosure [Abstract] | ||||||||||||
Net loss | $ (431,078) | $ (135,116) | $ (228,657) | $ (327,144) | $ (545,549) | $ (846,730) | $ 0 | $ 0 | $ (1,121,995) | $ (1,392,279) | $ 0 | [1],[2] |
Federal provision (benefit) at statutory rate | (487,297) | 0 | ||||||||||
State and local provision at statutory rate | (9,050) | 0 | ||||||||||
Change in valuation allowance against net deferred tax assets | 496,347 | 0 | ||||||||||
Total benefit from income taxes | $ 0 | $ 0 | $ 0 | |||||||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. | |||||||||||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. |
Operating Leases (Details)
Operating Leases (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Operating Leased Assets [Line Items] | |
2,018 | $ 3,740,278 |
2,019 | 3,808,708 |
2,020 | 3,878,462 |
2,021 | 3,756,969 |
2,022 | 3,829,450 |
Thereafter | 22,784,446 |
Total | $ 41,798,313 |
Acquired in-place leases | |
Operating Leased Assets [Line Items] | |
Operating leases of lessor, weighted average remaining lease term | 10 years 8 months 12 days |
Quarterly Results (Unaudited)68
Quarterly Results (Unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | [1] | |
Class of Stock [Line Items] | ||||||||||||
Revenues | $ 1,039,054 | $ 1,581,290 | $ 739,749 | $ 744,504 | $ 738,472 | $ 59,961 | $ 0 | $ 0 | $ 4,104,597 | $ 798,433 | $ 0 | |
Acquisition-related expenses | 41,576 | 0 | 0 | 0 | 10,091 | 754,531 | 0 | 0 | 41,576 | 764,622 | 0 | |
Operating income (loss) | (11,346) | 212,773 | 155,952 | 108,977 | (100,739) | (793,933) | 0 | 0 | 466,356 | (894,672) | 0 | |
Net loss | $ (431,078) | $ (135,116) | $ (228,657) | $ (327,144) | $ (545,549) | $ (846,730) | $ 0 | $ 0 | (1,121,995) | (1,392,279) | 0 | [2] |
Class A Common Stock | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Net loss | $ (894,373) | $ (1,389,630) | $ 0 | |||||||||
Basic and diluted net loss per common share (in dollars per share) | $ (0.21) | $ (0.09) | $ (0.23) | $ (0.66) | $ (1.78) | $ (19.29) | $ 0 | $ 0 | $ (0.90) | $ (14.23) | $ 0 | |
Distributions declared per common share (in dollars per share) | $ 0.15 | 0.15 | 0.15 | 0.15 | $ 0.15 | 0.01 | 0 | 0 | $ 0.60 | $ 0.16 | $ 0 | |
Common stock, shares issued (in shares) | 1,436,855 | 334,618 | 1,436,855 | 334,618 | ||||||||
Common stock, shares outstanding (in shares) | 1,436,855 | 334,618 | 1,436,855 | 334,618 | ||||||||
Class T Common Stock | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Net loss | $ (227,622) | $ (2,649) | $ 0 | |||||||||
Basic and diluted net loss per common share (in dollars per share) | $ (0.24) | (0.11) | (0.26) | (0.68) | $ (1.82) | 0 | 0 | 0 | $ (0.99) | $ (14.27) | $ 0 | |
Distributions declared per common share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.02 | $ 0 | $ 0 | $ 0 | $ 0.60 | $ 0.02 | $ 0 | |
Common stock, shares issued (in shares) | 631,346 | 5,225 | 0 | 631,346 | 5,225 | |||||||
Common stock, shares outstanding (in shares) | 631,346 | 5,225 | 0 | 631,346 | 5,225 | |||||||
[1] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. Therefore, the Company had no income statement activity during the year ended December 31, 2015. | |||||||||||
[2] | The Company was formed on May 22, 2014, but did not commence principal operations until September 22, 2016. |
Subsequent Events (Credit Facil
Subsequent Events (Credit Facility and Subordinate Promissory Note) (Details) - USD ($) $ in Thousands | Mar. 29, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||
Amount outstanding | $ 33,575 | $ 32,300 | |
Line of credit | |||
Subsequent Event [Line Items] | |||
Amount outstanding | 31,975 | 22,000 | |
Line of credit | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Amount outstanding | $ 29,475 | ||
Subordinated Promissory Note | |||
Subsequent Event [Line Items] | |||
Amount outstanding | $ 1,600 | $ 10,300 | |
Subordinated Promissory Note | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Amount outstanding | $ 3,200 |
Schedule III - Real Estate As70
Schedule III - Real Estate Assets And Accumulated Depreciation (Details) | 12 Months Ended | |||
Dec. 31, 2017USD ($)property | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Real Estate and Accumulated Depreciation [Line Items] | ||||
Encumbrances | $ 0 | |||
Initial Costs to Company | ||||
Land | 3,245,003 | |||
Buildings & Improvements | 41,258,770 | |||
Total Adjustments to Basis | 0 | |||
Gross Amount at Which Carried at December 31, 2017 | $ 29,278,639 | $ 0 | 44,503,773 | $ 29,278,639 |
Accumulated Depreciation | 312,350 | 0 | 1,430,550 | 312,350 |
Intangible lease assets, gross | 5,101,432 | 3,471,361 | ||
Accumulated amortization | 480,483 | 105,651 | ||
Aggregate cost for federal income tax purposes | 50,400,000 | |||
SEC Schedule III, Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward] | ||||
Balance, beginning of period | 29,278,639 | 0 | ||
Additions | ||||
Acquisitions | 15,225,134 | 29,278,639 | ||
Improvements | 0 | 0 | ||
Total additions | 15,225,134 | 29,278,639 | ||
Deductions | ||||
Deductions | 0 | 0 | ||
Cost of real estate sold | 0 | 0 | ||
Total deductions | 0 | 0 | ||
Balance, end of period | 44,503,773 | 29,278,639 | ||
SEC Schedule III, Reconciliation of Real Estate Accumulated Depreciation [Roll Forward] | ||||
Balance, beginning of period | 312,350 | 0 | ||
Additions | ||||
Acquisitions - Depreciation Expense for Building & Tenant Improvements Acquired | 1,118,200 | 312,350 | ||
Improvements - Depreciation Expense for Tenant Improvements & Building Equipment | 0 | 0 | ||
Total additions | 1,118,200 | 312,350 | ||
Deductions | ||||
Deductions | 0 | 0 | ||
Cost of real estate sold | 0 | 0 | ||
Total deductions | 0 | 0 | ||
Balance, end of period | $ 1,430,550 | $ 312,350 | ||
Credit facility | 31,975,000 | $ 22,000,000 | ||
Revolving credit facility | JPMorgan Chase Bank, N.A. | Line of credit | ||||
Deductions | ||||
Credit facility | 32,000,000 | |||
Buildings | ||||
Deductions | ||||
Acquired real estate asset, useful life (in years) | 40 years | |||
Site Improvements | ||||
Deductions | ||||
Acquired real estate asset, useful life (in years) | 15 years | |||
Office property | ||||
Initial Costs to Company | ||||
Number of single-tenant commercial properties owned | property | 1 | |||
Industrial property | ||||
Initial Costs to Company | ||||
Number of single-tenant commercial properties owned | property | 1 | |||
Siemens Corp. | Milford, OH | ||||
Initial Costs to Company | ||||
Land | 2,307,312 | |||
Buildings & Improvements | 26,971,327 | |||
Total Adjustments to Basis | 0 | |||
Gross Amount at Which Carried at December 31, 2017 | $ 29,278,639 | 29,278,639 | ||
Accumulated Depreciation | 1,383,265 | 1,383,265 | ||
Deductions | ||||
Balance, end of period | 29,278,639 | |||
Deductions | ||||
Balance, end of period | 1,383,265 | |||
Actuant | Columbus, WI | ||||
Initial Costs to Company | ||||
Land | 937,691 | |||
Buildings & Improvements | 14,287,443 | |||
Total Adjustments to Basis | 0 | |||
Gross Amount at Which Carried at December 31, 2017 | 15,225,134 | 15,225,134 | ||
Accumulated Depreciation | 47,285 | $ 47,285 | ||
Deductions | ||||
Balance, end of period | 15,225,134 | |||
Deductions | ||||
Balance, end of period | $ 47,285 |