Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 03, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | NorthStar Realty Europe Corp. | |
Entity Central Index Key | 1,646,587 | |
Entity Current Reporting Status | Yes | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,428,193 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
COMBINED CONSOLIDATED BALANCE S
COMBINED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Operating real estate, gross | $ 1,765,653 | $ 2,120,460 |
Less: accumulated depreciation | (48,615) | (35,303) |
Operating real estate, net | 1,717,038 | 2,085,157 |
Cash and cash equivalents | 125,102 | 283,844 |
Restricted cash | 13,913 | 20,871 |
Receivables, net of allowance of $399 and $115 as of June 30, 2016 and December 31, 2015, respectively | 9,214 | 9,663 |
Unbilled rent receivable | 8,418 | 5,869 |
Assets held for sale | 299,953 | 6,094 |
Derivative assets, at fair value | 11,672 | 23,792 |
Intangible assets, net | 173,139 | 241,519 |
Other assets, net | 9,817 | 6,241 |
Total assets | 2,368,266 | 2,683,050 |
Liabilities | ||
Mortgage and other notes payable, net | 1,377,584 | 1,424,610 |
Senior notes, net | 109,233 | 333,798 |
Credit facility | 58,642 | 0 |
Accounts payable and accrued expenses | 27,678 | 39,964 |
Due to related party | 3,606 | 3,995 |
Derivative liabilities, at fair value | 1,221 | 0 |
Intangible liabilities, net | 36,075 | 40,718 |
Liabilities held for sale | 10,565 | 0 |
Other liabilities | 33,600 | 42,654 |
Total liabilities | 1,658,204 | 1,885,739 |
Commitments and contingencies | ||
Redeemable non-controlling interest | 1,598 | 1,569 |
Equity | ||
Preferred stock, $0.01 par value, 200,000,000 shares authorized, no shares issued and outstanding as of June 30, 2016 and December 31, 2015 | 0 | 0 |
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 60,418,459 and 59,325,730 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively | 604 | 593 |
Additional paid-in capital | 968,871 | 968,662 |
Retained earnings (accumulated deficit) | (266,915) | (186,246) |
Accumulated other comprehensive income (loss) | (2,955) | 2,560 |
Total NorthStar Realty Europe Corp. stockholders’ equity | 699,605 | 785,569 |
Non-controlling interests | 8,859 | 10,173 |
Total equity | 708,464 | 795,742 |
Total liabilities and equity | $ 2,368,266 | $ 2,683,050 |
COMBINED CONSOLIDATED BALANCE 3
COMBINED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Receivables, allowance | $ 399 | $ 115 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (shares) | 60,418,459 | 59,325,730 |
Common stock, shares outstanding (shares) | 60,418,459 | 59,325,730 |
COMBINED CONSOLIDATED STATEMENT
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||
Revenues | |||||||
Rental income | [1] | $ 33,990 | $ 28,344 | $ 68,823 | $ 29,853 | ||
Escalation income | [1] | 5,908 | 3,213 | 11,998 | 3,890 | ||
Other revenue | [1] | 46 | 67 | 749 | 68 | ||
Total revenues | [1] | 39,944 | 31,624 | 81,570 | 33,811 | ||
Expenses | |||||||
Real estate properties—operating expenses | [1] | 8,540 | 5,423 | 17,771 | 6,257 | ||
Interest expense | [1] | 11,641 | 6,072 | 24,183 | 6,824 | ||
Transaction costs | [1] | 1,652 | 79,120 | 2,483 | 88,124 | ||
Impairment losses | [1] | 27,468 | 0 | 27,468 | 0 | ||
Management fee, related party | [1],[2] | 3,500 | 0 | 7,000 | 0 | ||
Other expenses | [1] | 3,041 | 2,799 | 6,731 | 2,799 | ||
General and administrative expenses | [1] | 1,502 | 306 | 2,978 | 1,234 | ||
Compensation expense | [1] | 3,766 | 0 | 7,034 | 0 | ||
Depreciation and amortization | [1] | 18,404 | 14,694 | 37,275 | 15,620 | ||
Total expenses | [1] | 79,514 | 108,414 | 132,923 | 120,858 | ||
Other income (loss) | |||||||
Unrealized gain (loss) on investments and other | [1] | 383 | 3,629 | (15,788) | (2,402) | ||
Realized gain (loss) on investments and other | [1] | 5,398 | 41 | 3,368 | 35 | ||
Income (loss) before income tax benefit (expense) | [1] | (33,789) | (73,120) | (63,773) | (89,414) | ||
Income tax benefit (expense) | [1] | (520) | 11,379 | 139 | 11,379 | ||
Net income (loss) | [1] | (34,309) | (61,741) | (63,634) | (78,035) | ||
Net (income) loss attributable to non-controlling interests | [1] | 400 | 30 | 743 | 61 | ||
Net income (loss) attributable to NorthStar Realty Europe Corp. common stockholders | [1] | $ (33,909) | $ (61,711) | $ (62,891) | $ (77,974) | ||
Earnings (loss) per share: | |||||||
Basic (in dollars per share) | [1] | $ (0.57) | $ (0.98) | [3] | $ (1.06) | $ (1.24) | [3] |
Diluted (in dollars per share) | [1] | $ (0.57) | $ (0.98) | [3] | $ (1.06) | $ (1.24) | [3] |
Weighted average number of shares: | |||||||
Basic (shares) | [1] | 59,115,895 | 62,987,863 | [3] | 59,266,850 | 62,987,863 | [3] |
Diluted (shares) | [1] | 59,805,545 | 62,987,863 | [3] | 59,957,559 | 62,987,863 | [3] |
Dividends per share of common stock (in dollars per share) | [1] | $ 0.15 | $ 0.30 | ||||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. | ||||||
[2] | The Company began paying fees on November 1, 2015, in connection with the management agreement with NSAM (refer to Note 5). | ||||||
[3] | Basic and diluted earnings per common share for the three and six months ended June 30, 2015 were calculated using the common stock distributed on November 1, 2015 in connection with the Spin-off (refer to Note 7). |
COMBINED CONSOLIDATED STATEMEN5
COMBINED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net income (loss) | [1] | $ (34,309) | $ (61,741) | $ (63,634) | $ (78,035) |
Other comprehensive income (loss): | |||||
Foreign currency translation adjustment, net | (32,363) | 34,620 | (5,789) | 33,683 | |
Total other comprehensive income (loss) | (32,363) | 34,620 | (5,789) | 33,683 | |
Comprehensive income (loss) | (66,672) | (27,121) | (69,423) | (44,352) | |
Comprehensive (income) loss attributable to non-controlling interests | 65 | 31 | 469 | 63 | |
Comprehensive income (loss) attributable to NorthStar Realty Europe Corp. | $ (66,607) | $ (27,090) | $ (68,954) | $ (44,289) | |
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
COMBINED CONSOLIDATED STATEMEN6
COMBINED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Total NorthStar Stockholders’ Equity | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests |
Beginning Balance (shares) at Dec. 31, 2014 | 0 | ||||||
Beginning Balance at Dec. 31, 2014 | $ 80,074 | $ 79,016 | $ 0 | $ 116,982 | $ (33,630) | $ (4,336) | $ 1,058 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net transactions with NorthStar Realty | 653,534 | 653,534 | 653,534 | ||||
Capital contribution of NorthStar Realty (shares) | 62,988 | ||||||
Capital contribution of NorthStar Realty | 250,000 | 250,000 | $ 630 | 249,370 | |||
Non-controlling interests - contributions | 192 | 192 | |||||
Formation of Operating Partnership | 0 | (8,749) | (8,749) | 8,749 | |||
Reallocation of interest in Operating Partnership | 0 | (852) | (852) | 852 | |||
Amortization of equity-based compensation | 837 | 311 | 311 | 526 | |||
Issuance of common stock to directors (shares) | 18 | ||||||
Issuance of common stock to directors | 0 | ||||||
Tax withholding related to vesting of equity-based compensation | (547) | (547) | (547) | ||||
Retirement of shares of common stock (shares) | (3,680) | ||||||
Retirement of shares of common stock | (41,424) | (41,424) | $ (37) | (41,387) | |||
Other comprehensive income (loss) | 6,971 | 6,896 | 6,896 | 75 | |||
Dividends on common stock and equity-based compensation | (9,584) | (9,480) | (9,480) | (104) | |||
Net income (loss) | (144,311) | (143,136) | (143,136) | (1,175) | |||
Ending Balance (shares) at Dec. 31, 2015 | 59,326 | ||||||
Ending Balance at Dec. 31, 2015 | 795,742 | 785,569 | $ 593 | 968,662 | (186,246) | 2,560 | 10,173 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Reallocation of interest in Operating Partnership | 0 | 1,360 | 1,360 | (1,360) | |||
Amortization of equity-based compensation | 6,517 | 5,246 | 5,246 | 1,271 | |||
Tax withholding related to vesting of equity-based compensation | (113) | (113) | (113) | ||||
Issuance of restricted stock, net of tax withholding (shares) | 1,686 | ||||||
Issuance of restricted stock, net of tax withholding | 0 | $ 17 | (17) | ||||
Retirement of shares of common stock (shares) | (594) | ||||||
Retirement of shares of common stock | (6,273) | (6,273) | $ (6) | (6,267) | |||
Other comprehensive income (loss) | (5,789) | (5,515) | (5,515) | (274) | |||
Dividends on common stock and equity-based compensation | (17,986) | (17,778) | (17,778) | (208) | |||
Net income (loss) | (63,634) | (62,891) | (62,891) | (743) | |||
Ending Balance (shares) at Jun. 30, 2016 | 60,418 | ||||||
Ending Balance at Jun. 30, 2016 | $ 708,464 | $ 699,605 | $ 604 | $ 968,871 | $ (266,915) | $ (2,955) | $ 8,859 |
COMBINED CONSOLIDATED STATEMEN7
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Cash flows from operating activities: | |||
Net income (loss) | [1] | $ (63,634) | $ (78,035) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | [1] | 37,275 | 15,620 |
Amortization of deferred financing costs | 3,789 | 798 | |
Amortization of equity-based compensation | 6,517 | 0 | |
Allowance for uncollectible accounts | 287 | 0 | |
Unrealized (gain) loss on investments and other | 15,788 | 2,402 | |
Realized (gain) loss on investments and other | (3,368) | (35) | |
Impairment losses | 27,468 | 0 | |
Amortization of capitalized above/below market leases | 2,318 | 434 | |
Straight line rental income | (3,825) | (1,441) | |
Deferred income taxes, net | (859) | 14,121 | |
Changes in assets and liabilities: | |||
Restricted cash | (4,142) | (868) | |
Receivables | (4,788) | (3,036) | |
Other assets | (691) | 17,153 | |
Accounts payable and accrued expenses | (5,902) | 14,436 | |
Due to related party | (389) | 0 | |
Other liabilities | 2,914 | 21,796 | |
Net cash provided by (used in) operating activities | 8,758 | 3,345 | |
Cash flows from investing activities: | |||
Acquisition of operating real estate | 0 | (1,635,413) | |
Improvements of operating real estate | (5,792) | (705) | |
Proceeds from sale of operating real estate | 74,923 | 0 | |
Other assets | (10,691) | 0 | |
Changes in restricted cash | 9,915 | 0 | |
Net cash provided by (used in) investing activities | 68,355 | (1,636,118) | |
Cash flows from financing activities: | |||
Repayment of mortgage and other notes payable | (32,088) | 0 | |
Borrowings from credit facility | 65,000 | 0 | |
Borrowings from mortgage and other notes payable | 0 | 938,698 | |
Repayment of credit facility | (6,358) | 0 | |
Payment of financing costs | (2,271) | (714) | |
Settlement of derivatives | (1,195) | 0 | |
Purchase of derivative instruments | (380) | (14,064) | |
Repurchase of Senior Notes | (230,782) | 0 | |
Tax withholding related to vesting of equity-based compensation | (113) | 0 | |
Retirement of shares of common stock | (4,919) | 0 | |
Dividends | (17,986) | 0 | |
Net transactions with NorthStar Realty | 0 | 745,264 | |
Contributions from non-controlling interest | 0 | 65 | |
Net cash provided by (used in) financing activities | (231,092) | 1,669,249 | |
Effect of foreign currency translation on cash and cash equivalents | (4,763) | (2,888) | |
Net increase (decrease) in cash and cash equivalents | (158,742) | 33,588 | |
Cash and cash equivalents—beginning of period | 283,844 | 1,552 | |
Cash and cash equivalents—end of period | 125,102 | 35,140 | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Reclassification of operating real estate to assets held for sale | 276,513 | 0 | |
Reclassification of intangible assets and liabilities of operating real estate to assets and liabilities held for sale | 37,394 | 0 | |
Reclassification of other assets and other liabilities to assets and liabilities held for sale | 7,593 | 0 | |
Reclassification related to measurement adjustments/other | 5,628 | 0 | |
Retirement of shares of common stock | 1,351 | 0 | |
Reallocation of interest in Operating Partnership | 1,360 | 0 | |
Reclassification from other assets to operating real estate | $ 774 | $ 0 | |
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Formation and Organization
Formation and Organization | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Formation and Organization | Formation and Organization NorthStar Realty Europe Corp. (“NorthStar Europe” or the “Company”), a publicly-traded real estate investment trust (“REIT”), is a European focused commercial real estate company with predominantly prime office properties in key cities within Germany, the United Kingdom and France. The Company’s objective is to provide its stockholders with stable and recurring cash flow supplemented by capital growth over time. The Company commenced operations on November 1, 2015 following the spin-off by NorthStar Realty Finance Corp. (“NorthStar Realty”) of its European real estate business (excluding its European healthcare properties) into a separate publicly-traded company, NorthStar Europe, a Maryland corporation (the “Spin-off”). Upon completion of the Spin-off, NorthStar Realty contributed: (i) its business activities related to a multi-tenant office complex located in the United Kingdom (the “U.K. Complex”) acquired on September 16, 2014; (ii) other European real estate portfolios acquired in the second and third quarters of 2015 and primarily comprised of multi-tenant office properties (the “New European Investments”); and (iii) certain other assets and liabilities related to NorthStar Realty’s European real estate business, herein collectively referred to as the European Real Estate Business. On November 2, 2015, the Company’s common stock began trading on the New York Stock Exchange (“NYSE”). The Company is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NYSE: NSAM), which together with its affiliates is referred to as NSAM. Substantially all of the Company’s assets, directly or indirectly, are held by, and the Company conducts its operations, directly or indirectly, through NorthStar Realty Europe Limited Partnership, a Delaware limited partnership and the operating partnership of the Company (the “Operating Partnership”). The Company intends to conduct its operations so as to qualify as a REIT for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2016. All references herein to the Company refer to NorthStar Realty Europe Corp. and its consolidated subsidiaries, including the Operating Partnership, collectively, unless the context otherwise requires. Sales Initiatives The Company continues to execute a series of sales initiatives with the goal of maximizing long-term shareholder value. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Quarterly Presentation The accompanying unaudited combined consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the combined consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These combined consolidated financial statements should be read in conjunction with the Company’s combined consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”). The three and six months ended June 30, 2015 are presented on a carve-out basis and have been prepared from the historical consolidated balance sheets, statements of operations, comprehensive income (loss) and cash flows of NorthStar Realty. The contribution of the European Real Estate Business to the Company has been determined to be a combination of entities under common control that results in a change in the reporting entity which requires retrospective application to the Company’s financial statements under U.S. GAAP. Accordingly, the operations of the European Real Estate Business of NorthStar Realty transferred to the Company upon the Spin-off are presented as if the transferred business was the business of the Company for periods in which common control was present and at the carrying value of such assets and liabilities recorded in NorthStar Realty’s historical books and records. Historically, financial statements of the Company have not been prepared as it had not operated separately from NorthStar Realty. These combined consolidated financial statements reflect the revenues and direct expenses of the Company and include material assets and liabilities of NorthStar Realty that are specifically identifiable to the European Real Estate Business and contributed to the Company upon completion of the Spin-off. The combined consolidated financial statements for the three and six months ended June 30, 2015 , represent the Company prior to the Spin-off and include certain consolidated subsidiaries. Subsequent to the Spin-off, the financial statements are presented on a consolidated basis. The combined consolidated financial statements for the three and six months ended June 30, 2015 include an allocation of costs and expenses by NorthStar Realty related to the Company (primarily compensation and other general and administrative expenses of $0.3 million and $0.8 million , respectively) based on an estimate of expenses as if the Company was managed as an independent entity. This allocation method is principally based on relative headcount and management’s knowledge of the operations of the Company. The amounts allocated in the accompanying combined consolidated financial statements are not necessarily indicative of the actual amounts of such indirect expenses that would have been recorded had the Company been a separate independent entity. The Company believes the assumptions underlying its allocation of indirect expenses are reasonable. In addition, an estimate of management fees to NSAM of $0.1 million and $0.2 million for the three and six months ended June 30, 2015 , respectively, is recorded as if the Company was managed as an independent entity and is included in general and administrative expense in the combined consolidated statements of operations. The Company began paying management fees to NSAM on November 1, 2015 pursuant to the terms of the Company’s management agreement with NSAM (refer to Note 5). Principles of Consolidation The combined consolidated financial statements include the combined accounts of the Company, the Operating Partnership and their consolidated subsidiaries. The Company consolidates variable interest entities (“VIE”) where the Company is the primary beneficiary and voting interest entities which are generally majority owned or otherwise controlled by the Company. All significant intercompany balances are eliminated in consolidation. Variable Interest Entities A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity. The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions. The Company will evaluate its investments in unconsolidated ventures to determine whether they are a VIE. The Company analyzes new investments and financings, as well as reconsideration events for existing investments and financings, which vary depending on type of investment or financing. Voting Interest Entities A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party or through a simple majority vote. The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework. Non-controlling Interests A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the combined consolidated balance sheets and presented separately as net income (loss) and other comprehensive income (loss) (“OCI”) attributable to non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entity as a result of a preferred return and allocation formula, if any, as described in such governing documents. Estimates The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. Reclassifications Certain prior period amounts have been reclassified in the combined consolidated financial statements to conform to current period presentation. Comprehensive Income (Loss) The Company reports combined consolidated comprehensive income (loss) in separate statements following the combined consolidated statements of operations. Comprehensive income (loss) is defined as the change in equity resulting from net income (loss) and OCI. The components of OCI principally include the foreign currency translation adjustment, net. Restricted Cash Restricted cash primarily consists of amounts related to operating real estate such as escrows for taxes, insurance, capital expenditures, tenant security deposits and payments required under certain lease agreements and amounts related to the Company’s borrowings. Operating Real Estate Operating real estate is carried at historical cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements which extend the life of the asset are capitalized and depreciated over their useful life. Operating real estate is depreciated using the straight-line method over the estimated useful lives of the assets. The Company accounts for purchases of operating real estate that quality as business combinations using the acquisition method, where the purchase price is allocated to tangible assets such as land, building, tenant and land improvements and other identified intangibles, such as in-place leases, above/below-market leases and goodwill. Costs directly related to an acquisition deemed to be a business combination are expensed and included in transaction costs in the combined consolidated statements of operations. Assets and Liabilities Held For Sale Operating real estate which has met the criteria to be classified as held for sale is separately presented on the combined consolidated balance sheets. Such operating real estate is recorded at the lower of its carrying value or its estimated fair value less the cost to sell net of the intangible assets associated with the asset. Once a property is determined to be held for sale, depreciation is no longer recorded. The Company records a gain or loss on sale of real estate when title is conveyed to the buyer and the Company has no substantial economic involvement with the property. If the sales criteria for the full accrual method are not met, the Company defers some or all of the gain or loss recognition by applying the finance, leasing, profit sharing, deposit, installment or cost recovery method, as appropriate, until the sales criteria are met. Deferred Costs Deferred costs primarily include deferred financing costs and deferred lease costs. Such costs related to borrowings are recorded net against the carrying value of such borrowings. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized to interest expense over the term of the financing using either the effective interest method or straight-line method depending on the type of financing. Unamortized deferred financing costs are expensed when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period such financing transaction was terminated. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and are recorded to depreciation and amortization in the combined consolidated statements of operations. Intangible Assets and Intangible Liabilities The Company records acquired identified intangibles, which includes intangible assets (such as value of the above-market leases, in-place leases, below-market ground leases, goodwill and other intangibles) and intangible liabilities (such as the value of below-market leases), based on estimated fair value. The value allocated to the above or below-market leases is amortized net adjustment to rental income, the value of below-market ground leases is amortized into properties - operating expense and in-place leases is amortized into depreciation and amortization expense, respectively, in the combined consolidated statements of operations on a straight-line basis over the respective remaining lease term. Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination and is not amortized. The Company analyzes goodwill for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be fully recoverable. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit, related to such goodwill, is less than the carrying amount as a basis to determine whether the two-step impairment test is necessary. The first step in the impairment test compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds fair value, the second step is required to determine the amount of the impairment loss, if any, by comparing the implied fair value of the reporting unit goodwill with the carrying amount of such goodwill. The implied fair value of goodwill is derived by performing a hypothetical purchase price allocation for the reporting unit as of the measurement date, allocating the reporting unit’s estimated fair value to its net assets and identifiable intangible assets. The residual amount represents the implied fair value of goodwill. To the extent this amount is below the carrying value of goodwill, an impairment loss is recorded in the combined consolidated statements of operations. The following table presents identified intangibles as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (unaudited) December 31, 2015 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Intangible assets: In-place lease $ 94,785 $ (24,803 ) $ 69,982 $ 121,004 $ (20,120 ) $ 100,884 Above-market lease 40,421 (6,753 ) 33,668 53,236 (5,806 ) 47,430 Below-market ground lease 55,608 (669 ) 54,939 70,971 (618 ) 70,353 Goodwill (1) 14,550 NA 14,550 22,852 NA 22,852 Total $ 205,364 $ (32,225 ) $ 173,139 $ 268,063 $ (26,544 ) $ 241,519 Intangible liabilities: Below-market lease $ 37,283 $ (6,251 ) $ 31,032 $ 40,213 $ (4,490 ) $ 35,723 Above-market ground lease 5,109 (66 ) 5,043 5,026 (31 ) 4,995 Total $ 42,392 $ (6,317 ) $ 36,075 $ 45,239 $ (4,521 ) $ 40,718 _______________________ (1) Represents goodwill associated with certain share-deal acquisitions of the New European Investments in exchange for the Company’s shares. The goodwill and a corresponding deferred tax liability is recorded at acquisition based on tax basis differences. Other Assets and Other Liabilities The following tables present a summary of other assets and other liabilities as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Other assets: Prepaid expenses $ 4,032 $ — Deferred lease costs 3,377 220 Deferred tax assets, net 1,011 3,041 Investment deposits and pending deal costs — 2,007 Other 1,397 973 Total $ 9,817 $ 6,241 June 30, 2016 (Unaudited) December 31, 2015 Other liabilities: Deferred tax liabilities $ 11,274 $ 22,026 Prepaid rent and unearned revenue 14,601 10,450 Tenant security deposits 4,817 4,953 Prepaid service charge reimbursement 2,201 1,988 Other 707 3,237 Total $ 33,600 $ 42,654 Revenue Recognition Operating Real Estate Rental and escalation income from operating real estate is derived from leasing of space to various types of tenants. Rental revenue recognition commences when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. The leases are for fixed terms of varying length and generally provide for annual rentals, subject to indexation, and expense reimbursements to be paid in quarterly or monthly installments. Rental income from leases is recognized on a straight-line basis over the term of the respective leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in unbilled rent receivable on the combined consolidated balance sheets. The Company amortizes any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the lease. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by the Company on behalf of the respective property. This revenue is accrued in the same period as the expenses are incurred. In a situation in which a lease or leases associated with a significant tenant have been, or are expected to be, terminated early, the Company evaluates the remaining useful life of depreciable or amortizable assets in the asset group related to the lease that will be terminated (i.e., tenant improvements, above and below market lease intangibles, in-place lease value and leasing commissions). Based upon consideration of the facts and circumstances surrounding the termination, the Company may write-off or accelerate the depreciation and amortization associated with the asset group. Such amounts are included within depreciation and amortization in the combined consolidated statements of operations. Impairment on Investments Operating Real Estate The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if management’s estimate of the aggregate expected future undiscounted cash flow to be generated by the property is less than the carrying value of the property. In conducting this review, management considers global macroeconomic factors, real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred, the loss is measured as the excess of the carrying value of the property over the estimated fair value of the property and recorded in impairment losses in the combined consolidated statements of operations. An allowance for a doubtful account for a tenant receivable is established based on a periodic review of aged receivables resulting from estimated losses due to the inability of a tenant to make required rent and other payments contractually due. Additionally, the Company establishes, on a current basis, an allowance for future tenant credit losses on unbilled rent receivable based on an evaluation of the collectability of such amounts. Equity-Based Compensation The Company accounts for equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. The Company recognizes compensation expense over the vesting period on a straight-line basis or the attribution method depending if the grant is to an employee or non-employee. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. The Company recognizes compensation expense, over the requisite service period, net of estimated forfeitures, on a straight-line basis. For awards with a combination of performance or market measures, the Company estimates the fair value as if it were two separate awards. First, the Company estimates the probability of achieving the performance measure. If it is not probable the performance condition will be met, the Company records the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, the Company records compensation expense based on the performance-based measure. The Company would then record a cumulative catch-up adjustment for any additional compensation expense. Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. Time-based awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any. Derivatives The Company seeks to use derivative instruments to manage exposure to interest rate risk and foreign currency exchange rate risk. The change in fair value for a derivative is recorded in earnings. The Company’s derivative instruments are recorded on the combined consolidated balance sheets at fair value and do not qualify as hedges under U.S. GAAP. Therefore, the change in fair value of derivative instruments are recorded in earnings. Foreign Currency Assets and liabilities denominated in a functional foreign currency are translated using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are translated into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency translation adjustment (“CTA”), net, is recorded as a component of accumulated OCI in the combined consolidated statements of equity. For the three and six months ended June 30, 2016 , the Company reclassified $0.3 million and $0.7 million of CTA to realized gains (losses) in the combined consolidated statements of operations due to the sale of certain real estate assets (refer to Note 3). Assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are remeasured into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency remeasurement adjustment is recorded in unrealized gain (loss) on investments and other in the combined consolidated statements of operations. Earnings Per Share The Company’s basic earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common stock outstanding. Diluted EPS includes restricted stock and the potential dilution that could occur if outstanding restricted stock units (“RSUs”) or other contracts to issue common stock, assuming performance hurdles have been met, were converted to common stock (including limited partnership interests in the Operating Partnership owned by holders other than the Company (“Common Units”) and Common Units which are structured as profits interests (“LTIP Units” collectively referred to as Unit Holders) (refer to Note 7), where such exercise or conversion would result in a lower EPS. The dilutive effect of such RSUs and Unit Holders is calculated assuming all units are converted to common stock. Income Taxes The Company will elect to be taxed as a REIT for U.S. federal income tax purposes with the initial filing of its 2015 U.S. federal tax return and will comply with the related provisions of the Internal Revenue Code of 1986, as amended, the (“Internal Revenue Code”). Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. To maintain its qualification as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company distributes to its stockholders 100% of its taxable income and therefore no provision for U.S. federal income taxes has been included in the accompanying combined consolidated financial statements for the three and six months ended June 30, 2016 . The Company conducts its business through foreign subsidiaries which may be subject to local level income tax in the European jurisdictions it operates. The Company has also elected taxable REIT subsidiary (“TRS”) status for one of the Company’s foreign subsidiaries. This enables the Company to provide services that would otherwise be considered impermissible for REITs and participate in activities that do not qualify as “rents from real property.” The TRS is not resident in the U.S. and, as such, not subject to U.S. taxation but is subject to foreign income taxes only. In addition, the REIT will not generally be subject to any additional U.S. taxes on the repatriation of its earnings. For the Company’s foreign subsidiaries, including the Company’s foreign TRS, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the foreign tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. The Company evaluates the realizability of its deferred tax assets (e.g. net operating loss) and recognizes a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. Due to past and projected losses in certain local jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company recognized net cumulative valuation allowances against the Company’s deferred tax assets. The Company will continue to review its deferred tax assets in accordance with U.S. GAAP. The Company recorded an income tax expense for the three months ended June 30, 2016 of $0.5 million and an income tax benefit for the six months ended June 30, 2016 of $0.1 million . Other Refer to Note 2 of the combined consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for further disclosure of the Company’s significant accounting policies. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods or services to customers. The accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP. In July 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The effective date of the new revenue standard for the Company will be January 1, 2018. The Company is in the process of evaluating the impact, if any, of the update on its combined consolidated financial position, results of operations and financial statement disclosures. In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance in the first quarter 2016 and determined the Company’s Operating Partnership is considered a VIE. The Company is the primary beneficiary of the VIE, the VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest. In addition, the Company identified each of its properties that have non-controlling interests as VIEs. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights and the Company is the primary beneficiary. As such, this standard resulted in the identification of additional VIEs, however it did not have a material impact on the Company’s combined consolidated financial position or results of operations. In January 2016, the FASB issued an accounting update that addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The new guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2017. The Company is currently assessing the impact of the guidance on the Company’s combined consolidated financial position, results of operations and financial statement disclosures. In February 2016, the FASB issued an accounting update that requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements and is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact that this guidance will have on its combined consolidated financial position, results of operations and financial statement disclosures. In March 2016, the FASB issued guidance clarifying that an assessment of whether an embedded contingent put or call option is clearly and closely related to a borrowing requires only an analysis of the four-step decision sequence. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related. Entities are required to apply the guidance to existing instruments in scope using a modified retrospective transition method as of the period of adoption. The guidance is effective for fiscal years beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The Company is evaluating the impact, if any, that this guidance will have on its combined consolidated financial position, results of operations and financial statement disclosures. In March 2016, the FASB issued guidance which amends several aspects of the acco |
Operating Real Estate
Operating Real Estate | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
Operating Real Estate | Operating Real Estate The following table presents operating real estate, net as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Land $ 399,828 $ 456,703 Buildings and improvements 1,069,602 1,256,002 Building leasehold interests and improvements 232,565 334,970 Furniture, fixtures and equipment 244 218 Tenant improvements 63,414 72,567 Subtotal 1,765,653 2,120,460 Less: Accumulated depreciation (48,615 ) (35,303 ) Operating real estate, net $ 1,717,038 $ 2,085,157 Real Estate Held for Sale The following table summarizes the Company’s operating real estate held for sale as of June 30, 2016 (dollars in thousands): Assets Description (1) Properties Operating Real Estate, Net Intangible Assets, Net Other assets Total (2) Intangible Liabilities, Net Other Liabilities Total (2)(3) Internos Portfolio 1 $ 11,551 $ 1,273 $ 3,867 $ 16,691 $ — $ 461 $ 461 IVG Portfolio 3 43,504 5,733 7,391 56,628 3,787 1,571 5,358 SEB Portfolio 3 215,849 3,580 1,523 220,952 1,639 3,107 4,746 Deka Portfolio 1 5,610 72 — 5,682 — — — Total 8 $ 276,514 $ 10,658 $ 12,781 $ 299,953 $ 5,426 $ 5,139 $ 10,565 ___________________ (1) The assets classified as held for sale will be sold on the open market as asset deals subject to standard industry terms and conditions. The assets contributed $5.0 million and $5.2 million of revenue and a pretax loss of $31.8 million and $32.2 million for the three and six months ended June 30, 2016 . (2) Represents operating real estate and intangible assets and liabilities, net of depreciation and amortization of $2.0 million . (3) Excludes the mortgage payable associated with these held for sale assets of $63.5 million . In the second quarter 2016, the Company sold five none-core assets with a carrying value of $49.9 million for $59.2 million . The Company received $54.8 million of proceeds, net of sales costs. In connection with the sale, the Company recorded a $7.8 million realized gain in the Company’s combined consolidated statements of operations, which represented a reversal of previously recorded accumulated depreciation. |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table presents borrowings as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Final Contractual (2) Principal Carrying Principal Carrying Mortgage and other notes payable: (1) U.K. Complex - Floating Jan-20 GBP LIBOR + 1.75% (3) $ 54,460 $ 53,409 $ 60,369 $ 59,210 U.K. Complex - Fixed Jan-20 8.325% (3) 12,553 12,466 13,641 13,369 Internos Portfolio Dec-20 (4) 75,288 (7) 74,478 81,494 80,528 IVG Portfolio Dec-20 (4) 69,591 (7) 68,380 77,896 75,308 Deka Portfolio Dec-20 (4) 44,722 (7) 44,028 43,963 44,423 SEB Portfolio Apr-22 (5) 647,622 (7) 638,812 684,540 674,543 SEB Portfolio - Preferred Apr-60 (6) 117,700 (7) 117,339 115,604 115,219 Trianon Tower Jul-23 (8) 366,425 364,629 359,898 357,996 Other - Preferred Oct-45 (9) 6,497 4,043 6,691 4,014 Total mortgage and other notes payable 1,394,858 1,377,584 1,444,096 1,424,610 Senior Notes: Senior Notes (10) Dec-16 4.625% 109,460 109,233 340,000 333,798 Credit Facility Credit Facility May-17 (11) LIBOR + 2.75% 58,642 58,642 — — Grand Total $ 1,562,960 $ 1,545,459 $ 1,784,096 $ 1,758,408 ____________________________________________________________ (1) All borrowings are non-recourse and are interest-only through maturity, subject to compliance with covenants of the respective borrowing and denominated in the same currency as the assets securing the borrowing. (2) Refer to Note 10 for further disclosure regarding derivative instruments which are used to manage interest rate exposure. (3) In May 2016, the loan was syndicated and as such the margins on the floating and fixed interest rates were adjusted. (4) Represents cross-collateralized borrowings among the IVG Portfolio, Internos Portfolio and Deka Portfolio. Comprised of $4.8 million principal amount of floating rate borrowings at EURIBOR plus 2.7% , $102.0 million principal amount of floating rate borrowings at EURIBOR plus 1.55% , $65.6 million principal amount of floating rate borrowings at EURIBOR plus 1.65% and $17.2 million of floating rate borrowings at GBP LIBOR plus 2.7% . (5) Comprised of $332.1 million principal amount of floating rate borrowing at EURIBOR plus 1.8% and $254.1 million of floating rate borrowing at GBP LIBOR plus 1.8% . (6) Represents preferred equity certificates with a contractual interest rate of 3.0% per annum through May 2019, which can be prepaid at that time without penalty in part or in full, which increases to EURIBOR plus 12.0% through May 2022 and subsequently to EURIBOR plus 15.0% through final maturity. Certain prepayments prior to May 2019 are subject to the payment of the unpaid coupon on outstanding principal amount through May 2019. (7) Prepayment provisions include a fee based on principal amount ranging from 0.25% to 1.0% through December 2019 for the Internos Portfolio, the IVG Portfolio and the Deka Portfolio borrowing and 0.5% to 1.5% through April 2019 for the SEB Portfolio borrowing. (8) In June 2016, the Company amended the contractual interest rate from EURIBOR plus 1.45% to EURIBOR plus 1.30% . In addition, a prepayment provision was added in the amendment to include a fee based on principal amount of 0.80% through June 30, 2017, 0.60% through June 30, 2018 and 0.30% through June 30, 2019. (9) Includes assets associated preferred equity certificates each with a fixed contractual interest rate of 1.0% per annum plus variable interest based on specified income levels associated to the German property companies of the IVG Portfolio, Deka Portfolio and Internos Portfolio, respectively, which can be prepaid at any time without penalty through final maturity, being thirty years from the issuance date. (10) The Company has the right to redeem the Senior Notes prior to maturity, in whole or in part from time to time, provided that no redemption in part results in the aggregate principal amount of the Senior Notes outstanding being reduced to less than $100 million . The cash redemption price is equal to the greater of: (i) 100% of the principal amount of the Senior Notes; and (ii) the sum of the present values of the remaining scheduled payments of interest and principal of the Senior Notes discounted to such date of redemption on a semiannual basis at a rate of 0.5% per annum. (11) Subject to one year extensions. The following table presents a reconciliation of principal amount to carrying value of the Company’s mortgage and other notes payables, the Senior Notes and the Credit Facility as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Principal amount $ 1,562,960 $ 1,784,096 Premium (discount), net (456 ) (1,144 ) Deferred financing costs, net (1) (17,045 ) (24,544 ) Carrying value $ 1,545,459 $ 1,758,408 ________________ (1) Includes $0.2 million relating to the Senior Notes. The following table presents scheduled principal on borrowings, based on final maturity as of June 30, 2016 (dollars in thousands): Total Mortgage Senior Notes Credit Facility July 1 to December 31, 2016 $ 109,460 $ — $ 109,460 $ — Years ending December 31: — 2017 58,642 — — 58,642 2018 — — — — 2019 — — — — 2020 263,111 263,111 — — Thereafter 1,131,747 1,131,747 — — Total $ 1,562,960 $ 1,394,858 $ 109,460 $ 58,642 As of June 30, 2016 and December 31, 2015 , the Company was in compliance with all of its financial covenants. Senior Notes In July 2015, the Company issued $340.0 million principal amount of 4.625% senior stock-settlable notes due December 2016 (the “Senior Notes”) for aggregate net proceeds of $331.0 million , after deducting the underwriters’ discount and other expenses. The Senior Notes are senior unsubordinated and unsecured obligations of the Company and NorthStar Realty and NorthStar Realty’s operating partnership guarantee payments on the Senior Notes. Subject to specified conditions being met, such as public notice at least 60 days prior to maturity, the Company may elect to settle all or part of the principal amount of the Senior Notes in the Company’s common stock in lieu of cash, in which case the number of shares delivered per note will be based on the Company’s common stock prices during a measurement period immediately preceding the maturity date. The proceeds from the issuance of the Senior Notes were distributed to subsidiaries of NorthStar Realty, which used such amounts for general corporate purposes, including, among other things, the funding of acquisitions, including the Trianon Tower and the repayment of NorthStar Realty’s borrowings. Such distribution to NorthStar Realty was recorded in equity in net transactions with NorthStar Realty. In February 2016, the Company repurchased approximately $150.0 million of the Senior Notes, at a slight discount to par value, through privately negotiated transactions. In June 2016, the Company repurchased approximately $80.0 million of the Senior Notes, at a slight premium to par value, through privately negotiated transactions. Credit Facility In May 2016, the Company entered into a $75.0 million corporate revolving credit facility (the “Credit Facility”) with certain commercial bank lenders, with an initial one year term. The Credit Facility is secured by collateral relating to a borrowing base and guarantees by certain subsidiaries of the Company. In July 2016, the Credit Facility was repaid. |
Related Party Arrangements
Related Party Arrangements | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Arrangements | Related Party Arrangements NorthStar Asset Management Group Management Agreement Upon completion of the Spin-off, the Company entered into a management agreement with an affiliate of NSAM for an initial term of 20 years, which automatically renews for additional 20 -year terms each anniversary thereafter unless earlier terminated. As asset manager, NSAM is responsible for the Company’s day-to-day operations, subject to supervision and management of the Company’s board of directors. Through its global network of subsidiaries and branch offices, NSAM performs services and engages in activities relating to, among other things, investments and financing, portfolio management and other administrative services, such as accounting and investor relations, to the Company and its subsidiaries. The management agreement with NSAM provides for a base management fee and incentive fee. The management contract with NSAM commenced on November 1, 2015, and as such, there were no management fees incurred for the three and six months ended June 30, 2015 . Base Management Fee For the three and six months ended June 30, 2016 , the Company incurred $3.5 million and $7.0 million , respectively, related to the base management fee. As of June 30, 2016 , $3.5 million is recorded in due to related party on the combined consolidated balance sheets. The base management fee to NSAM could increase subsequent to June 30, 2016 by an amount equal to 1.5% per annum of the sum of: • any equity the Company issues in exchange or conversion of exchangeable or stock-settlable notes; • any other issuances by the Company of common equity, preferred equity or other forms of equity, including but not limited to LTIP Units in the Operating Partnership (excluding units issued to the Company and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and • cumulative cash available for distribution (“CAD”), if any, of the Company in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards which began with our fiscal quarter ended March 31, 2016. Incentive Fee For the three and six months ended June 30, 2016 , the Company did not incur an incentive fee. The incentive fee is calculated and payable quarterly in arrears in cash, equal to: • the product of: (a) 15.0% and (b) the Company’s CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $0.30 per share and up to $0.36 per share; plus • the product of: (a) 25.0% and (b) the Company’s CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $0.36 per share; • multiplied by the Company’s weighted average shares outstanding for the calendar quarter. Weighted average shares represents the number of shares of the Company’s common stock, LTIP Units or other equity-based awards (with some exclusions), outstanding on a daily weighted average basis. With respect to the base management fee, all equity issuances are allocated on a daily weighted average basis during the fiscal quarter of issuance. With respect to the incentive fee, such amounts will be appropriately adjusted from time to time to take into account the effect of any stock split, reverse stock split, stock dividend, reclassification, recapitalization or other similar transaction. Additional Management Agreement Terms If the Company were to spin-off any asset or business in the future, such entity would be managed by NSAM on terms substantially similar to those set forth in the management agreement between the Company and NSAM. The management agreement further provides that the aggregate base management fee in place immediately after any future spin-off will not be less than the aggregate base management fee in place at the Company immediately prior to such spin-off. The Company’s management agreement with NSAM provides that in the event of a change of control of NSAM or other event that could be deemed an assignment of the management agreement, the Company will consider such assignment in good faith and not unreasonably withhold, condition or delay the Company’s consent. The management agreement further provides that the Company anticipates consent would be granted for an assignment or deemed assignment to a party with expertise in commercial real estate and over $ 10 billion of assets under management. The management agreement also provides that, notwithstanding anything in the agreement to the contrary, to the maximum extent permitted by applicable law, rules and regulations, in connection with any merger, sale of all or substantially all of the assets, change of control, reorganization, consolidation or any similar transaction by the Company or NSAM, directly or indirectly, the surviving entity will succeed to the terms of the management agreement. Payment of Costs and Expenses and Expense Allocation The Company is responsible for all of its direct costs and expenses and reimburses NSAM for costs and expenses incurred by NSAM on the Company’s behalf. In addition, NSAM may allocate indirect costs to the Company related to employees, occupancy and other general and administrative costs and expenses in accordance with the terms of, and subject to the limitations contained in, the Company’s management agreement with NSAM (the “G&A Allocation”). The Company’s management agreement with NSAM provides that the amount of the G&A Allocation will not exceed the following: (i) 20% of the combined total of: (a) the Company’s and NorthStar Realty’s (the “NorthStar Listed Companies”) general and administrative expenses as reported in their combined consolidated financial statements excluding: (1) equity-based compensation expense, (2) non-recurring items, (3) fees payable to NSAM under the terms of the applicable management agreement and (4) any allocation of expenses to the NorthStar Listed Companies (“NorthStar Listed Companies’ G&A”); and (b) NSAM’s general and administrative expenses as reported in its consolidated financial statements, excluding equity-based compensation expense and adding back any costs or expenses allocated to any managed company of NSAM; less (ii) the NorthStar Listed Companies’ G&A. The G&A Allocation may include the Company’s allocable share of NSAM’s compensation and benefit costs associated with dedicated or partially dedicated personnel who spend all or a portion of their time managing the Company’s affairs, based upon the percentage of time devoted by such personnel to the Company’s affairs. The G&A Allocation may also include rental and occupancy, technology, office supplies, travel and entertainment and other general and administrative costs and expenses, which may be allocated based on various methodologies, such as weighted average employee count or the percentage of time devoted by personnel to such NorthStar Listed Companies’ affairs. In addition, the Company will pay directly or reimburse NSAM for an allocable portion of any severance paid pursuant to any employment, consulting or similar service agreements in effect between NSAM and any of its executives, employees or other service providers. In connection with the Spin-off and the related agreements, the NorthStar Listed Companies’ obligation to reimburse NSAM for the G&A Allocation and any severance are shared among the NorthStar Listed Companies, at NSAM’s discretion, and the 20% cap on the G&A Allocation, as described above, applies on an aggregate basis to the NorthStar Listed Companies. NSAM currently determined to allocate these amounts based on assets under management. For the three and six months ended June 30, 2016 , NSAM allocated an immaterial amount and $0.1 million , respectively. In addition, the Company, together with NorthStar Realty and any company spun-off from the Company or NorthStar Realty, will pay directly or reimburse NSAM for up to 50% of any long-term bonus or other compensation that NSAM’s compensation committee determines shall be paid and/or settled in the form of equity and/or equity-based compensation to executives, employees and service providers of NSAM during any year. Subject to this limitation and limitations contained in any applicable management agreement between NSAM and NorthStar Realty or any company spun-off from the Company or NorthStar Realty, the amount paid by the Company, NorthStar Realty and any company spun-off from the Company or NorthStar Realty will be determined by NSAM in its discretion. At the discretion of NSAM’s compensation committee, this compensation may be granted in shares of the Company’s restricted stock, restricted stock units, long-term incentive plan units or other forms of equity compensation or stock-based awards; provided that if at any time a sufficient number of shares of the Company’s common stock are not available for issuance under the Company’s equity compensation plan, such compensation shall be paid in the form of RSUs, LTIP Units or other securities that may be settled in cash. The Company’s equity compensation for each year may be allocated on an individual-by-individual basis at the discretion of the NSAM compensation committee and, as long as the aggregate amount of the equity compensation for such year does not exceed the limits set forth in the management agreement, the proportion of any particular individual’s equity compensation may be greater or less than 50% . NSAM purchase of common stock In June 2016, NSAM purchased 0.2 million shares of the Company’s common stock through open market purchases for an aggregate purchase price of $2.3 million . |
Compensation Expense
Compensation Expense | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Expense | Compensation Expense The following summarizes the equity-based compensation plans of the Company and NorthStar Realty, as they relate to compensation payable by the Company or its Operating Partnership: NorthStar Realty Europe Equity Plan In October 2015, the board of directors of the Company adopted the NorthStar Realty Europe Corp. 2015 Omnibus Stock Incentive Plan (the “2015 Plan”), which was subsequently approved by the Company’s sole stockholder at the time. The 2015 Plan provides for the issuance of stock-based incentive awards, including incentive stock options, non-qualified stock options, stock appreciation rights, shares of common stock of NorthStar Europe, in the form of restricted shares and other equity-based awards such as LTIP Units or any combination of the foregoing. Following the completion of the Spin-off, the 2015 Plan is administered by the compensation committee of the board of directors of the Company. The eligible participants in the 2015 Plan include directors, officers, employees, co-employees, consultants and advisors of the Company, NSAM or of any parent or subsidiary who provides services to the Company. 10 million shares of common stock are reserved and available for issuance under the 2015 Plan, plus on January 1, 2017 and each January 1 thereafter, an additional 2% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 will become available for issuance. In addition, shares of common stock underlying any awards that are forfeited, canceled, held back upon exercise of a stock option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock or otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2015 Plan. No equity awards under the 2015 Plan were issued prior to the Spin-off. In March 2016, as contemplated in connection with the Spin-off, the Company granted an aggregate of 995,698 restricted shares of common stock and 1,493,551 RSUs to executive officers and employees of NSAM or one of its subsidiaries. The restricted shares of common stock vest over the approximately four -year period ending December 31, 2019, subject to continued employment with NSAM or one of its subsidiaries and the RSUs are subject to the achievement of performance-based vesting conditions and continued employment with NSAM or one of its subsidiaries. Approximately one-half of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return and continued employment with NSAM or one of its subsidiaries over the approximately four -year period from the grant date through December 31, 2019 (“Absolute RSUs”). The other approximately one-half of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles based on the Company’s total stockholder return relative to the MSCI US REIT Index and continued employment with NSAM or one of its subsidiaries over the approximately four-year period from the grant date through December 31, 2019 (“Relative RSUs”). Award recipients may earn up to 100% of the Absolute RSUs that were granted and up to 125% of the Relative RSUs that were granted. Upon vesting pursuant to the terms of the Absolute RSUs and Relative RSUs, the RSUs that vest will be settled in shares of common stock and the recipients will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each share that vests) on or after the date the RSUs were initially granted. NSAM Bonus Plan Pursuant to the Company’s management agreement with NSAM, the Company and NorthStar Realty are responsible for paying up to 50% of the long-term bonuses earned under the NorthStar Asset Management Group Inc. Executive Incentive Bonus Plan (“NSAM Bonus Plan”). Long-term bonuses are generally paid to executives in the form of equity-based awards of the Company, NorthStar Realty and NSAM, subject to performance-based and time-based vesting conditions over a four -year performance period. In connection with the NSAM Bonus Plan, for 2015, a portion of the long-term bonus was paid in restricted shares of common stock and a portion of the long-term bonus was paid by the Company by issuing RSUs. In connection with the 2015 long-term bonuses paid by the Company, in February 2016, the Company granted 335,336 restricted shares of common stock to NSAM’s executive officers, of which 25% were vested upon grant and the remainder is subject to vesting in equal installments on December 31, 2016, 2017 and 2018, subject to the recipient’s continued employment with NorthStar Realty or NSAM through the applicable vesting dates. In connection with the issuance of these shares, in February 2016, the Company retired 44,214 of the vested shares of common stock to satisfy the minimum statutory withholding requirements. In addition, in February 2016, the Company granted 194,422 RSUs to NSAM’s executive officers, which are subject to vesting based on the total stockholder return of NorthStar Realty for the period prior to the Spin-off and the combined total stockholder return of NorthStar Realty and the Company for the period after the Spin-off, CAD of the Company and continued employment with NorthStar Realty or NSAM over the four -year period ending December 31, 2018. Following the determination of the number of these performance-based RSUs that vest, the Company will settle the vested RSUs by issuing an equal number of shares of common stock and the NSAM executives will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each RSU that vests) on or after January 1, 2015. In February 2016, the Company also granted 283,305 restricted shares of common stock to certain of NSAM’s non-executive employees, including executive officers of the Company, with substantially similar terms to the executive awards subject to time-based vesting conditions. NorthStar Realty Equity Plans NorthStar Realty issued equity-based awards to directors, officers, employees, consultants and advisors pursuant to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (as amended from time to time, the “NorthStar Realty Stock Plan”) and the NorthStar Realty Executive Incentive Bonus Plan, as amended (the “NorthStar Realty Plan” and collectively the “NorthStar Realty Equity Plans”). All of the vested and unvested equity-based awards granted by NorthStar Realty prior to the Spin-off remain outstanding following the Spin-off. In connection with the Spin-off, holders of shares of common stock of NorthStar Realty and LTIP units of NorthStar Realty’s operating partnership subject to outstanding equity awards received one share of the Company’s common stock or one Common Unit in the Company’s operating partnership, respectively, for every six shares of common stock of NorthStar Realty or LTIP units of NorthStar Realty’s operating partnership held (prior to NorthStar Realty’s one-for- two reverse stock split effected immediately following the Spin-off), all of which generally remain subject to the same vesting and other terms that applied prior to the Spin-off. Other equity and equity-based awards relating to NorthStar Realty’s common stock, such as RSUs, were adjusted to also relate to one-third of a share of the Company’s common stock (after giving effect to NorthStar Realty’s one-for- two reverse stock split effected immediately following the Spin-off), but otherwise generally remain subject to the same vesting and other terms that applied prior to the Spin-off. Performance-based vesting conditions based on total stockholder return of NorthStar Realty or NorthStar Realty and NSAM were adjusted to refer to combined total stockholder return of NorthStar Realty and the Company or NorthStar Realty, NSAM and the Company, respectively, with respect to periods after the Spin-off and references to a change of control or similar term in outstanding awards, which referred to a change of control of either NorthStar Realty or NSAM, were adjusted, to the extent such awards relate to common stock of the Company or Common Units in the Company’s Operating Partnership, to refer to a change of control of either the Company or NSAM. Following the Spin-off, NorthStar Realty and the compensation committee of its board of directors continues to administer all awards issued under the NorthStar Realty Equity Plans but the Company is obligated to issue shares of the Company’s common stock or other equity awards of its subsidiaries or make cash payments in lieu thereof or with respect to dividend or distribution equivalent obligations to the extent required by these awards under the NorthStar Realty Equity Plans. These awards continue to be governed by the NorthStar Realty Equity Plans, as applicable, and shares of the Company’s common stock issued pursuant to these awards will not be issued pursuant to, or reduce availability under the 2015 Plan. In connection with the Spin-off, the Company issued the following related to the NorthStar Realty Equity Plans that remain outstanding as of June 30, 2016: 1,362 of restricted stock, net of forfeitures, which remain subject to vesting; 618,511 Common Units, net of forfeitures and conversions, of which 232,081 remain subject to vesting; 83,333 RSUs, which remain subject to vesting and 375,293 RSUs related to executives of NSAM only, which remain subject to vesting based on performance conditions and continued NSAM employment. On December 31, 2015, the performance hurdle for 117,472 RSUs was met pursuant to NorthStar Realty’s bonus plan for 2012 and the Company settled these RSUs on January 4, 2016. Additionally, in connection with the initial election of the independent members of the Company’s board of directors, the Company issued 17,528 restricted shares of common stock and 70,112 LTIP Units to such directors. The following table presents activity related to the issuance, vesting and forfeitures of restricted stock and Common Units. The balance as of June 30, 2016 represents Common Units whether vested or not that are outstanding and unvested shares of restricted stock (grants in thousands): Six Months Ended June 30, 2016 Restricted Stock (1) Common Units Total Grants Weighted December 31, 2015 45 692 737 $ 24.03 New grants 1,625 — 1,625 9.28 Vesting of restricted stock (137 ) — (137 ) 9.51 Forfeited or canceled grants — (4 ) (4 ) 22.40 June 30, 2016 1,533 688 2,221 $ 14.14 ___________________ (1) Represents restricted stock included in common stock. For the three and six months ended June 30, 2016 , the Company recorded $3.8 million and $7.0 million , respectively, of equity-based compensation expense which is recorded in compensation expenses on the combined consolidated statements of operations. As of June 30, 2016 , equity-based compensation expense to be recognized over the remaining vesting period through December 2019 is $21.9 million , provided there are no forfeitures. In connection with the pending change in control of NSAM as a result of its pending merger (the “Merger”) with NorthStar Realty Finance Corp. and Colony Capital, Inc. substantially all outstanding time-based equity awards issued to NSAM executives will vest in accordance with their terms. In addition, all or a portion of the outstanding performance-based awards issued to executives will vest in accordance with their terms subject to forfeiture and reduction. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Spin-off In connection with the Spin-off, NorthStar Realty distributed to its common stockholders all of the common stock of the Company in a pro rata distribution of one share of the Company’s common stock for each six shares of NorthStar Realty common stock. Share Repurchase In November 2015, the Company’s board of directors authorized the repurchase of up to $100 million of its outstanding common stock. The authorization expires in November 2016, unless otherwise extended by the Company’s board of directors. For the three months ended June 30, 2016 , the Company repurchased 0.3 million shares of its common stock for approximately $2.3 million . For the six months ended June 30, 2016 , the Company repurchased 0.6 million shares of its common stock for approximately $6.3 million . From November 2015 through June 30, 2016 , the Company repurchased 4.3 million shares of its common stock for approximately $47.7 million with $52.3 million remaining under the stock repurchase plan. Dividends The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016 : Common Stock Declaration Date Dividend Per Share March 15 $ 0.15 May 10 $ 0.15 Earnings Per Share The following table presents EPS for the three and six months ended June 30, 2016 and 2015 (dollars and shares in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Net income (loss) attributable to NorthStar Realty Europe Corp. $ (33,909 ) $ (61,711 ) $ (62,891 ) $ (77,974 ) Net income (loss) attributable to Unit Holders non-controlling interest (349 ) — (700 ) — Net income (loss) attributable to common stockholders and Unit Holders (1) $ (34,258 ) $ (61,711 ) $ (63,591 ) $ (77,974 ) Denominator: (2) Weighted average shares of common stock 59,116 62,988 (3) 59,267 62,988 (3) Weighted average Unit Holders (1) 690 — 691 — Weighted average shares of common stock and Unit Holders (2) 59,806 62,988 (3) 59,958 62,988 (3) Earnings (loss) per share: Basic $ (0.57 ) $ (0.98 ) (3) $ (1.06 ) $ (1.24 ) (3) Diluted $ (0.57 ) $ (0.98 ) (3) $ (1.06 ) $ (1.24 ) (3) ____________________________________________________________ (1) The EPS calculation takes into account Unit Holders, which receive non-forfeitable dividends from the date of grant, share equally in the Company’s net income (loss) and convert on a one -for-one basis into common stock. (2) Excludes the effect of restricted stock and RSUs outstanding that were not dilutive as of June 30, 2016 . These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors. (3) Basic and diluted earnings per common share for the three and six months ended June 30, 2015 was calculated using the common stock issued in connection with the Spin-off and exclude the effect of any equity-based awards outstanding at that date that were not dilutive. |
Non-controlling Interests
Non-controlling Interests | 6 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Operating Partnership Non-controlling interests include the aggregate Units Holders’ interest in the Operating Partnership. Net income (loss) attributable to this non-controlling interest is based on the weighted average Unit Holders’ ownership percentage of the Operating Partnership for the respective period. As the Operating Partnership was formed in conjunction with the Spin-off, non-controlling interest related to Unit Holders was recognized for the year ended December 31, 2015 to retrospectively adjust for common control of the business (refer to Note 2). The issuance of additional common stock, Common Units or LTIP Units changes the percentage ownership of both the Unit Holders and the Company. Since a Common Unit or LTIP Unit is generally redeemable for cash or common stock at the option of the Company, it is deemed to be equivalent to common stock. Therefore, such transactions are treated as capital transactions and result in an allocation between stockholders’ equity and non-controlling interests on the accompanying combined consolidated balance sheets to account for the change in the ownership of the underlying equity in the Operating Partnership. On a quarterly basis, the carrying value of such non-controlling interest is allocated based on the number of Unit Holders in total in proportion to the number of Units Holders plus the number of shares of common stock outstanding. In connection with the formation of the Operating Partnership in November 2015, the Company recorded a non-controlling interest of $8.7 million related to Unit Holders. As of June 30, 2016 , 688,623 Common Units and LTIP Units were outstanding, representing a 1.1% ownership and non-controlling interest in the Operating Partnership. Net income (loss) attributable to the Operating Partnership non-controlling interest for the three and six months ended June 30, 2016 was a net loss of $0.3 million and $0.7 million . Redeemable Non-controlling Interest In connection with the acquisition of the Trianon Tower, the Company sold a 5.5% non-controlling interest in certain subsidiaries that own the Trianon Tower for $1.5 million . In conjunction with the sale, the Company entered into a put option whereby the holder can redeem its interest for cash at the greater of fair market value of such non-controlling interest or €2.1 million beginning in November 2020 through January 2021. The Company recorded the non-controlling interest at its acquisition date fair value as temporary equity, due to the redemption option and accretes the redeemable non-controlling interest to its redemption value. For the three and six months ended June 30, 2016 the Company recorded an immaterial amount of net (income) loss attributable to non-controlling interests to adjust the carrying value to its redemption value as of June 30, 2016 . |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair Value Measurement The fair value of financial instruments is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities are recorded at fair value on the combined consolidated balance sheets and are categorized based on the inputs to the valuation techniques as follows: Level 1. Quoted prices for identical assets or liabilities in an active market. Level 2. Financial assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets. (b) Quoted prices for identical or similar assets or liabilities in non-active markets. (c) Pricing models whose inputs are observable for substantially the full term of the asset or liability. (d) Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability. Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following is a description of the valuation techniques used to measure fair value of assets and liabilities accounted for at fair value on a recurring basis and the general classification of these instruments pursuant to the fair value hierarchy. Derivative Instruments Derivative instruments are valued using a third-party pricing service. These quotations are not adjusted and are generally based on valuation models with observable inputs such as interest rates and contractual cash flow, and as such, are classified as Level 2 of the fair value hierarchy. Derivative instruments are also assessed for credit valuation adjustments due to the risk of non-performance by the Company and derivative counterparties. Fair Value of Financial Instruments In addition to the above disclosures regarding financial assets or liabilities which are recorded at fair value, U.S. GAAP requires disclosure of fair value about all financial instruments. The following disclosure of estimated fair value of financial instruments was determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value. The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 December 31, 2015 Principal/Notional Carrying Value Fair Principal/Notional Carrying Value Fair Financial assets: (1) Derivative assets $ 1,304,338 $ 11,672 $ 11,672 $ 1,583,569 $ 23,792 $ 23,792 Financial liabilities: (1) Mortgage and other notes payable $ 1,394,858 $ 1,377,584 $ 1,377,584 $ 1,444,096 $ 1,424,610 $ 1,424,610 Derivative liabilities 89,250 1,221 1,221 — — — Senior notes 109,460 109,233 108,242 340,000 333,798 327,330 Credit Facility 58,642 58,642 58,642 — — — _____________________________ (1) The fair value of other financial instruments not included in this table is estimated to approximate their carrying value. Disclosure about fair value of financial instruments is based on pertinent information available to management as of the reporting date. Although management is not aware of any factors that would significantly affect fair value, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. Mortgage and Other Notes Payable As of the reporting date, the Company believes the carrying value of its mortgage and other notes payable approximates fair value. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy. Senior Notes For the Senior Notes, the Company uses available market information, which includes quoted market prices or recent transactions, if available, to estimate their fair value and are, therefore, based on observable inputs or quoted prices for similar liabilities in an active market, and as such, are classified as Level 2 of the fair value hierarchy. Credit Facility As of the reporting date, the Company believes the carrying value of the Credit Facility approximates fair value. The fair value measurement is based on observable inputs, and as such, is classified as Level 2 of the fair value hierarchy. |
Risk Management and Derivative
Risk Management and Derivative Activities | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Risk Management and Derivative Activities | Risk Management and Derivative Activities Derivatives The Company uses derivative instruments primarily to manage interest rate and currency risk and such derivatives are not considered speculative. These derivative instruments are in the form of interest cap agreements where the primary objective is to minimize interest rate risks associated with investment and financing activities and foreign currency forward agreements where the primary objective is to minimize foreign currency exchange rate risks associated with operating activities. The counterparties of these arrangements are major financial institutions with which the Company may also have other financial relationships. The Company is exposed to credit risk in the event of non-performance by these counterparties and it monitors their financial condition; however, the Company currently does not anticipate that any of the counterparties will fail to meet their obligations. The following tables present derivative instruments that were not designated as hedges under U.S. GAAP as of June 30, 2016 and December 31, 2015 (dollars in thousands): Number Notional Amount Fair Value Range of Range of Maturity As of June 30, 2016: Interest rate caps 5 $ 1,287,668 $ 9,826 (1) October 2016 - July 2023 Foreign currency forwards (2) 2 105,920 625 N/A July 2016 - November 2017 Total 7 $ 1,393,588 $ 10,451 As of December 31, 2015: Interest rate caps 6 $ 1,429,216 $ 23,375 (1) April 2016 - July 2023 Foreign currency forwards (2) 3 154,353 417 N/A February 2016 - November 2017 Total 9 $ 1,583,569 $ 23,792 _____________________________ (1) Includes a range of interest rate caps of 0.5% for EURIBOR and 2.0% for GBP LIBOR. (2) Includes Euro and U.K. Pounds Sterling currency forwards. The following table presents the fair value of derivative instruments, as well as their classification on the combined consolidated balance sheets, as of June 30, 2016 and December 31, 2015 (dollars in thousands): Balance Sheet June 30, December 31, Location Interest rate caps Derivative assets $ 9,826 $ 23,375 Foreign currency forwards Derivative assets $ 1,846 $ 417 Foreign currency forwards Derivative liabilities $ (1,221 ) $ — The following table presents the effect of derivative instruments in the combined consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): Three Months Ended June 30, Six Months Ended 2016 2015 2016 2015 Amount of gain (loss) recognized in earnings: Statements of operations location: (1) Adjustment to fair value of interest rate caps Unrealized gain (loss) on investments and other $ (3,391 ) $ 1,833 $ (14,175 ) $ 1,755 Adjustment to fair value of foreign currency forwards Unrealized gain (loss) on investments and other 4,638 (4,253 ) 207 (4,253 ) Net cash receipt (payment) on derivatives Unrealized gain (loss) on investments and other (776 ) — (1,194 ) — _____________________________ (1) Excludes the unrealized gain (loss) relating to foreign currency remeasurement adjustments. The Company’s counterparties held no cash margin as collateral against the Company’s derivative contracts as of June 30, 2016 and December 31, 2015 . The Company had no derivative financial instruments that were designated as hedges in qualifying hedging relationships as of June 30, 2016 and December 31, 2015 . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is involved in various litigation matters arising in the ordinary course of its business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, in the opinion of management, the current legal proceedings are not expected to have a material adverse effect on the Company’s financial position or results of operations. The Company engages third-party service providers for its portfolio who are remunerated based on either a fixed fee or a percentage of rental income. The contracts terms vary by party and are subject to break options. These costs are recorded in properties - operating expense and other expenses in the combined consolidated statements of operations. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company currently conducts its business through the following two segments, based on how management reviews and manages its business: • Real Estate - The European commercial real estate business is predominantly focused on office properties. The Company acquired its first real estate investment in September 2014. • Corporate - The corporate segment includes corporate level interest expense, management fee and general and administrative expenses. The following tables present segment reporting for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): Statement of Operations: Three Months Ended June 30, 2016 Real Estate Corporate Total Rental income $ 33,990 $ — $ 33,990 Interest expense 8,691 (2) 2,950 (2) 11,641 Income (loss) before income tax benefit (expense) (21,748 ) (12,041 ) (33,789 ) Income tax benefit (expense) (520 ) — (520 ) Net income (loss) (22,268 ) (1) (12,041 ) (34,309 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $18.4 million . (2) Includes $0.8 million and $0.9 million of amortization of deferred financing costs in the real estate and corporate segment, respectively. Statement of Operations: Three Months Ended June 30, 2015 Real Estate Corporate Total Rental income $ 28,344 $ — $ 28,344 Interest expense 6,072 — 6,072 Income (loss) before income tax benefit (expense) (79,478 ) (1) 6,358 (2) (73,120 ) Income tax benefit (expense) 11,379 — 11,379 Net income (loss) (68,099 ) 6,358 (61,741 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $14.7 million . (2) Includes an allocation of general and administrative expense based on an estimate of expenses had the Company been run as an independent entity (refer to Note 2). Statement of Operations: Six Months Ended June 30, 2016 Real Estate Corporate Total Rental income $ 68,823 $ — $ 68,823 Interest expense 17,117 (2) 7,066 (2) 24,183 Income (loss) before income tax benefit (expense) (31,544 ) (32,229 ) (3) (63,773 ) Income tax benefit (expense) 139 — 139 Net income (loss) (31,405 ) (1) (32,229 ) (63,634 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $37.3 million . (2) Includes $1.7 million and $2.1 million of amortization of deferred financing costs in the real estate and corporate segment, respectively. (3) Includes an allocation of general and administrative expenses from NSAM of $0.1 million . Statement of Operations: Six Months Ended June 30, 2015 Real Estate Corporate Total Rental income $ 29,853 $ — $ 29,853 Interest expense 6,824 — 6,824 Income (loss) before income tax benefit (expense) (94,844 ) (1) 5,430 (2) (89,414 ) Income tax benefit (expense) 11,379 — 11,379 Net income (loss) (83,465 ) 5,430 (78,035 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $15.6 million . (2) Includes an allocation of general and administrative expense based on an estimate of expenses had the Company been run as an independent entity (refer to Note 2). The following table presents total assets by segment as of June 30, 2016 and December 31, 2015 (dollars in thousands): Total Assets Real Estate Corporate Total June 30, 2016 $ 2,361,228 $ 7,038 $ 2,368,266 December 31, 2015 $ 2,544,992 $ 138,058 $ 2,683,050 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Dividends On August 3, 2016 , the Company declared a dividend of $0.15 per share of common stock. The common stock dividend is expected to be paid on August 19, 2016 to stockholders of record as of the close of business on August 15, 2016 . Sales Subsequent to June 30, 2016, the Company sold three none-core assets with a carrying value of $223.9 million for $227.6 million . |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Quarterly Presentation | The accompanying unaudited combined consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the combined consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These combined consolidated financial statements should be read in conjunction with the Company’s combined consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”). The three and six months ended June 30, 2015 are presented on a carve-out basis and have been prepared from the historical consolidated balance sheets, statements of operations, comprehensive income (loss) and cash flows of NorthStar Realty. The contribution of the European Real Estate Business to the Company has been determined to be a combination of entities under common control that results in a change in the reporting entity which requires retrospective application to the Company’s financial statements under U.S. GAAP. Accordingly, the operations of the European Real Estate Business of NorthStar Realty transferred to the Company upon the Spin-off are presented as if the transferred business was the business of the Company for periods in which common control was present and at the carrying value of such assets and liabilities recorded in NorthStar Realty’s historical books and records. Historically, financial statements of the Company have not been prepared as it had not operated separately from NorthStar Realty. These combined consolidated financial statements reflect the revenues and direct expenses of the Company and include material assets and liabilities of NorthStar Realty that are specifically identifiable to the European Real Estate Business and contributed to the Company upon completion of the Spin-off. The combined consolidated financial statements for the three and six months ended June 30, 2015 , represent the Company prior to the Spin-off and include certain consolidated subsidiaries. Subsequent to the Spin-off, the financial statements are presented on a consolidated basis. The combined consolidated financial statements for the three and six months ended June 30, 2015 include an allocation of costs and expenses by NorthStar Realty related to the Company (primarily compensation and other general and administrative expenses of $0.3 million and $0.8 million , respectively) based on an estimate of expenses as if the Company was managed as an independent entity. This allocation method is principally based on relative headcount and management’s knowledge of the operations of the Company. The amounts allocated in the accompanying combined consolidated financial statements are not necessarily indicative of the actual amounts of such indirect expenses that would have been recorded had the Company been a separate independent entity. The Company believes the assumptions underlying its allocation of indirect expenses are reasonable. In addition, an estimate of management fees to NSAM of $0.1 million and $0.2 million for the three and six months ended June 30, 2015 , respectively, is recorded as if the Company was managed as an independent entity and is included in general and administrative expense in the combined consolidated statements of operations. The Company began paying management fees to NSAM on November 1, 2015 pursuant to the terms of the Company’s management agreement with NSAM (refer to Note 5). |
Principles of Consolidation | The combined consolidated financial statements include the combined accounts of the Company, the Operating Partnership and their consolidated subsidiaries. The Company consolidates variable interest entities (“VIE”) where the Company is the primary beneficiary and voting interest entities which are generally majority owned or otherwise controlled by the Company. All significant intercompany balances are eliminated in consolidation. |
Variable Interest Entities | A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity. The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions. The Company will evaluate its investments in unconsolidated ventures to determine whether they are a VIE. The Company analyzes new investments and financings, as well as reconsideration events for existing investments and financings, which vary depending on type of investment or financing. |
Voting Interest Entities | A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party or through a simple majority vote. The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework. |
Non-controlling Interests | A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the combined consolidated balance sheets and presented separately as net income (loss) and other comprehensive income (loss) (“OCI”) attributable to non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entity as a result of a preferred return and allocation formula, if any, as described in such governing documents. |
Estimates | The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. |
Reclassifications | Certain prior period amounts have been reclassified in the combined consolidated financial statements to conform to current period presentation. |
Comprehensive Income (Loss) | The Company reports combined consolidated comprehensive income (loss) in separate statements following the combined consolidated statements of operations. Comprehensive income (loss) is defined as the change in equity resulting from net income (loss) and OCI. The components of OCI principally include the foreign currency translation adjustment, net. |
Restricted Cash | Restricted cash primarily consists of amounts related to operating real estate such as escrows for taxes, insurance, capital expenditures, tenant security deposits and payments required under certain lease agreements and amounts related to the Company’s borrowings. |
Operating Real Estate | Operating real estate is carried at historical cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements which extend the life of the asset are capitalized and depreciated over their useful life. Operating real estate is depreciated using the straight-line method over the estimated useful lives of the assets. The Company accounts for purchases of operating real estate that quality as business combinations using the acquisition method, where the purchase price is allocated to tangible assets such as land, building, tenant and land improvements and other identified intangibles, such as in-place leases, above/below-market leases and goodwill. Costs directly related to an acquisition deemed to be a business combination are expensed and included in transaction costs in the combined consolidated statements of operations. |
Assets and Liabilities Held For Sale | Operating real estate which has met the criteria to be classified as held for sale is separately presented on the combined consolidated balance sheets. Such operating real estate is recorded at the lower of its carrying value or its estimated fair value less the cost to sell net of the intangible assets associated with the asset. Once a property is determined to be held for sale, depreciation is no longer recorded. The Company records a gain or loss on sale of real estate when title is conveyed to the buyer and the Company has no substantial economic involvement with the property. If the sales criteria for the full accrual method are not met, the Company defers some or all of the gain or loss recognition by applying the finance, leasing, profit sharing, deposit, installment or cost recovery method, as appropriate, until the sales criteria are met. |
Deferred Costs | Deferred costs primarily include deferred financing costs and deferred lease costs. Such costs related to borrowings are recorded net against the carrying value of such borrowings. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized to interest expense over the term of the financing using either the effective interest method or straight-line method depending on the type of financing. Unamortized deferred financing costs are expensed when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period such financing transaction was terminated. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and are recorded to depreciation and amortization in the combined consolidated statements of operations. |
Intangible Assets and Intangible Liabilities | The Company records acquired identified intangibles, which includes intangible assets (such as value of the above-market leases, in-place leases, below-market ground leases, goodwill and other intangibles) and intangible liabilities (such as the value of below-market leases), based on estimated fair value. The value allocated to the above or below-market leases is amortized net adjustment to rental income, the value of below-market ground leases is amortized into properties - operating expense and in-place leases is amortized into depreciation and amortization expense, respectively, in the combined consolidated statements of operations on a straight-line basis over the respective remaining lease term. Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination and is not amortized. The Company analyzes goodwill for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be fully recoverable. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit, related to such goodwill, is less than the carrying amount as a basis to determine whether the two-step impairment test is necessary. The first step in the impairment test compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds fair value, the second step is required to determine the amount of the impairment loss, if any, by comparing the implied fair value of the reporting unit goodwill with the carrying amount of such goodwill. The implied fair value of goodwill is derived by performing a hypothetical purchase price allocation for the reporting unit as of the measurement date, allocating the reporting unit’s estimated fair value to its net assets and identifiable intangible assets. The residual amount represents the implied fair value of goodwill. To the extent this amount is below the carrying value of goodwill, an impairment loss is recorded in the combined consolidated statements of operations. |
Revenue Recognition | Operating Real Estate Rental and escalation income from operating real estate is derived from leasing of space to various types of tenants. Rental revenue recognition commences when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. The leases are for fixed terms of varying length and generally provide for annual rentals, subject to indexation, and expense reimbursements to be paid in quarterly or monthly installments. Rental income from leases is recognized on a straight-line basis over the term of the respective leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in unbilled rent receivable on the combined consolidated balance sheets. The Company amortizes any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the lease. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by the Company on behalf of the respective property. This revenue is accrued in the same period as the expenses are incurred. In a situation in which a lease or leases associated with a significant tenant have been, or are expected to be, terminated early, the Company evaluates the remaining useful life of depreciable or amortizable assets in the asset group related to the lease that will be terminated (i.e., tenant improvements, above and below market lease intangibles, in-place lease value and leasing commissions). Based upon consideration of the facts and circumstances surrounding the termination, the Company may write-off or accelerate the depreciation and amortization associated with the asset group. Such amounts are included within depreciation and amortization in the combined consolidated statements of operations |
Impairment on Investments | Operating Real Estate The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if management’s estimate of the aggregate expected future undiscounted cash flow to be generated by the property is less than the carrying value of the property. In conducting this review, management considers global macroeconomic factors, real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred, the loss is measured as the excess of the carrying value of the property over the estimated fair value of the property and recorded in impairment losses in the combined consolidated statements of operations. An allowance for a doubtful account for a tenant receivable is established based on a periodic review of aged receivables resulting from estimated losses due to the inability of a tenant to make required rent and other payments contractually due. Additionally, the Company establishes, on a current basis, an allowance for future tenant credit losses on unbilled rent receivable based on an evaluation of the collectability of such amounts. |
Equity-Based Compensation | The Company accounts for equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. The Company recognizes compensation expense over the vesting period on a straight-line basis or the attribution method depending if the grant is to an employee or non-employee. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. The Company recognizes compensation expense, over the requisite service period, net of estimated forfeitures, on a straight-line basis. For awards with a combination of performance or market measures, the Company estimates the fair value as if it were two separate awards. First, the Company estimates the probability of achieving the performance measure. If it is not probable the performance condition will be met, the Company records the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, the Company records compensation expense based on the performance-based measure. The Company would then record a cumulative catch-up adjustment for any additional compensation expense. Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. Time-based awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any. |
Derivatives | The Company seeks to use derivative instruments to manage exposure to interest rate risk and foreign currency exchange rate risk. The change in fair value for a derivative is recorded in earnings. The Company’s derivative instruments are recorded on the combined consolidated balance sheets at fair value and do not qualify as hedges under U.S. GAAP. Therefore, the change in fair value of derivative instruments are recorded in earnings. |
Foreign Currency | Assets and liabilities denominated in a functional foreign currency are translated using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are translated into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency translation adjustment (“CTA”), net, is recorded as a component of accumulated OCI in the combined consolidated statements of equity. For the three and six months ended June 30, 2016 , the Company reclassified $0.3 million and $0.7 million of CTA to realized gains (losses) in the combined consolidated statements of operations due to the sale of certain real estate assets (refer to Note 3). Assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are remeasured into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency remeasurement adjustment is recorded in unrealized gain (loss) on investments and other in the combined consolidated statements of operations. |
Earnings Per Share | The Company’s basic earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common stock outstanding. Diluted EPS includes restricted stock and the potential dilution that could occur if outstanding restricted stock units (“RSUs”) or other contracts to issue common stock, assuming performance hurdles have been met, were converted to common stock (including limited partnership interests in the Operating Partnership owned by holders other than the Company (“Common Units”) and Common Units which are structured as profits interests (“LTIP Units” collectively referred to as Unit Holders) (refer to Note 7), where such exercise or conversion would result in a lower EPS. The dilutive effect of such RSUs and Unit Holders is calculated assuming all units are converted to common stock. |
Income Taxes | The Company will elect to be taxed as a REIT for U.S. federal income tax purposes with the initial filing of its 2015 U.S. federal tax return and will comply with the related provisions of the Internal Revenue Code of 1986, as amended, the (“Internal Revenue Code”). Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. To maintain its qualification as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company distributes to its stockholders 100% of its taxable income and therefore no provision for U.S. federal income taxes has been included in the accompanying combined consolidated financial statements for the three and six months ended June 30, 2016 . The Company conducts its business through foreign subsidiaries which may be subject to local level income tax in the European jurisdictions it operates. The Company has also elected taxable REIT subsidiary (“TRS”) status for one of the Company’s foreign subsidiaries. This enables the Company to provide services that would otherwise be considered impermissible for REITs and participate in activities that do not qualify as “rents from real property.” The TRS is not resident in the U.S. and, as such, not subject to U.S. taxation but is subject to foreign income taxes only. In addition, the REIT will not generally be subject to any additional U.S. taxes on the repatriation of its earnings. For the Company’s foreign subsidiaries, including the Company’s foreign TRS, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the foreign tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. The Company evaluates the realizability of its deferred tax assets (e.g. net operating loss) and recognizes a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. Due to past and projected losses in certain local jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company recognized net cumulative valuation allowances against the Company’s deferred tax assets. The Company will continue to review its deferred tax assets in accordance with U.S. GAAP. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods or services to customers. The accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP. In July 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The effective date of the new revenue standard for the Company will be January 1, 2018. The Company is in the process of evaluating the impact, if any, of the update on its combined consolidated financial position, results of operations and financial statement disclosures. In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance in the first quarter 2016 and determined the Company’s Operating Partnership is considered a VIE. The Company is the primary beneficiary of the VIE, the VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest. In addition, the Company identified each of its properties that have non-controlling interests as VIEs. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights and the Company is the primary beneficiary. As such, this standard resulted in the identification of additional VIEs, however it did not have a material impact on the Company’s combined consolidated financial position or results of operations. In January 2016, the FASB issued an accounting update that addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The new guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2017. The Company is currently assessing the impact of the guidance on the Company’s combined consolidated financial position, results of operations and financial statement disclosures. In February 2016, the FASB issued an accounting update that requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements and is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact that this guidance will have on its combined consolidated financial position, results of operations and financial statement disclosures. In March 2016, the FASB issued guidance clarifying that an assessment of whether an embedded contingent put or call option is clearly and closely related to a borrowing requires only an analysis of the four-step decision sequence. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related. Entities are required to apply the guidance to existing instruments in scope using a modified retrospective transition method as of the period of adoption. The guidance is effective for fiscal years beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The Company is evaluating the impact, if any, that this guidance will have on its combined consolidated financial position, results of operations and financial statement disclosures. In March 2016, the FASB issued guidance which amends several aspects of the accounting for equity-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The Company is evaluating the impact, if any, that this guidance will have on its combined consolidated financial position, results of operations and financial statement disclosures. In June 2016, the FASB issued guidance which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Additionally, entities will have to disclose significantly more information, including information used to track credit quality by year of origination, for most financing receivables. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of the guidance on its combined consolidated financial position, results of operations and financial statement disclosures. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Costs and Intangible Assets | The following table presents identified intangibles as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (unaudited) December 31, 2015 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Intangible assets: In-place lease $ 94,785 $ (24,803 ) $ 69,982 $ 121,004 $ (20,120 ) $ 100,884 Above-market lease 40,421 (6,753 ) 33,668 53,236 (5,806 ) 47,430 Below-market ground lease 55,608 (669 ) 54,939 70,971 (618 ) 70,353 Goodwill (1) 14,550 NA 14,550 22,852 NA 22,852 Total $ 205,364 $ (32,225 ) $ 173,139 $ 268,063 $ (26,544 ) $ 241,519 Intangible liabilities: Below-market lease $ 37,283 $ (6,251 ) $ 31,032 $ 40,213 $ (4,490 ) $ 35,723 Above-market ground lease 5,109 (66 ) 5,043 5,026 (31 ) 4,995 Total $ 42,392 $ (6,317 ) $ 36,075 $ 45,239 $ (4,521 ) $ 40,718 _______________________ (1) Represents goodwill associated with certain share-deal acquisitions of the New European Investments in exchange for the Company’s shares. The goodwill and a corresponding deferred tax liability is recorded at acquisition based on tax basis differences. |
Schedule of Other Assets and Other Liabilities | The following tables present a summary of other assets and other liabilities as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Other assets: Prepaid expenses $ 4,032 $ — Deferred lease costs 3,377 220 Deferred tax assets, net 1,011 3,041 Investment deposits and pending deal costs — 2,007 Other 1,397 973 Total $ 9,817 $ 6,241 June 30, 2016 (Unaudited) December 31, 2015 Other liabilities: Deferred tax liabilities $ 11,274 $ 22,026 Prepaid rent and unearned revenue 14,601 10,450 Tenant security deposits 4,817 4,953 Prepaid service charge reimbursement 2,201 1,988 Other 707 3,237 Total $ 33,600 $ 42,654 |
Operating Real Estate (Tables)
Operating Real Estate (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
Schedule of Operating Real Estate | The following table presents operating real estate, net as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Land $ 399,828 $ 456,703 Buildings and improvements 1,069,602 1,256,002 Building leasehold interests and improvements 232,565 334,970 Furniture, fixtures and equipment 244 218 Tenant improvements 63,414 72,567 Subtotal 1,765,653 2,120,460 Less: Accumulated depreciation (48,615 ) (35,303 ) Operating real estate, net $ 1,717,038 $ 2,085,157 |
Schedule of Real Estate Held for Sale | The following table summarizes the Company’s operating real estate held for sale as of June 30, 2016 (dollars in thousands): Assets Description (1) Properties Operating Real Estate, Net Intangible Assets, Net Other assets Total (2) Intangible Liabilities, Net Other Liabilities Total (2)(3) Internos Portfolio 1 $ 11,551 $ 1,273 $ 3,867 $ 16,691 $ — $ 461 $ 461 IVG Portfolio 3 43,504 5,733 7,391 56,628 3,787 1,571 5,358 SEB Portfolio 3 215,849 3,580 1,523 220,952 1,639 3,107 4,746 Deka Portfolio 1 5,610 72 — 5,682 — — — Total 8 $ 276,514 $ 10,658 $ 12,781 $ 299,953 $ 5,426 $ 5,139 $ 10,565 ___________________ (1) The assets classified as held for sale will be sold on the open market as asset deals subject to standard industry terms and conditions. The assets contributed $5.0 million and $5.2 million of revenue and a pretax loss of $31.8 million and $32.2 million for the three and six months ended June 30, 2016 . (2) Represents operating real estate and intangible assets and liabilities, net of depreciation and amortization of $2.0 million . (3) Excludes the mortgage payable associated with these held for sale assets of $63.5 million . |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Borrowings | The following table presents borrowings as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Final Contractual (2) Principal Carrying Principal Carrying Mortgage and other notes payable: (1) U.K. Complex - Floating Jan-20 GBP LIBOR + 1.75% (3) $ 54,460 $ 53,409 $ 60,369 $ 59,210 U.K. Complex - Fixed Jan-20 8.325% (3) 12,553 12,466 13,641 13,369 Internos Portfolio Dec-20 (4) 75,288 (7) 74,478 81,494 80,528 IVG Portfolio Dec-20 (4) 69,591 (7) 68,380 77,896 75,308 Deka Portfolio Dec-20 (4) 44,722 (7) 44,028 43,963 44,423 SEB Portfolio Apr-22 (5) 647,622 (7) 638,812 684,540 674,543 SEB Portfolio - Preferred Apr-60 (6) 117,700 (7) 117,339 115,604 115,219 Trianon Tower Jul-23 (8) 366,425 364,629 359,898 357,996 Other - Preferred Oct-45 (9) 6,497 4,043 6,691 4,014 Total mortgage and other notes payable 1,394,858 1,377,584 1,444,096 1,424,610 Senior Notes: Senior Notes (10) Dec-16 4.625% 109,460 109,233 340,000 333,798 Credit Facility Credit Facility May-17 (11) LIBOR + 2.75% 58,642 58,642 — — Grand Total $ 1,562,960 $ 1,545,459 $ 1,784,096 $ 1,758,408 ____________________________________________________________ (1) All borrowings are non-recourse and are interest-only through maturity, subject to compliance with covenants of the respective borrowing and denominated in the same currency as the assets securing the borrowing. (2) Refer to Note 10 for further disclosure regarding derivative instruments which are used to manage interest rate exposure. (3) In May 2016, the loan was syndicated and as such the margins on the floating and fixed interest rates were adjusted. (4) Represents cross-collateralized borrowings among the IVG Portfolio, Internos Portfolio and Deka Portfolio. Comprised of $4.8 million principal amount of floating rate borrowings at EURIBOR plus 2.7% , $102.0 million principal amount of floating rate borrowings at EURIBOR plus 1.55% , $65.6 million principal amount of floating rate borrowings at EURIBOR plus 1.65% and $17.2 million of floating rate borrowings at GBP LIBOR plus 2.7% . (5) Comprised of $332.1 million principal amount of floating rate borrowing at EURIBOR plus 1.8% and $254.1 million of floating rate borrowing at GBP LIBOR plus 1.8% . (6) Represents preferred equity certificates with a contractual interest rate of 3.0% per annum through May 2019, which can be prepaid at that time without penalty in part or in full, which increases to EURIBOR plus 12.0% through May 2022 and subsequently to EURIBOR plus 15.0% through final maturity. Certain prepayments prior to May 2019 are subject to the payment of the unpaid coupon on outstanding principal amount through May 2019. (7) Prepayment provisions include a fee based on principal amount ranging from 0.25% to 1.0% through December 2019 for the Internos Portfolio, the IVG Portfolio and the Deka Portfolio borrowing and 0.5% to 1.5% through April 2019 for the SEB Portfolio borrowing. (8) In June 2016, the Company amended the contractual interest rate from EURIBOR plus 1.45% to EURIBOR plus 1.30% . In addition, a prepayment provision was added in the amendment to include a fee based on principal amount of 0.80% through June 30, 2017, 0.60% through June 30, 2018 and 0.30% through June 30, 2019. (9) Includes assets associated preferred equity certificates each with a fixed contractual interest rate of 1.0% per annum plus variable interest based on specified income levels associated to the German property companies of the IVG Portfolio, Deka Portfolio and Internos Portfolio, respectively, which can be prepaid at any time without penalty through final maturity, being thirty years from the issuance date. (10) The Company has the right to redeem the Senior Notes prior to maturity, in whole or in part from time to time, provided that no redemption in part results in the aggregate principal amount of the Senior Notes outstanding being reduced to less than $100 million . The cash redemption price is equal to the greater of: (i) 100% of the principal amount of the Senior Notes; and (ii) the sum of the present values of the remaining scheduled payments of interest and principal of the Senior Notes discounted to such date of redemption on a semiannual basis at a rate of 0.5% per annum. (11) Subject to one year extensions. |
Summary of Reconciliation of Principal Amount to Carrying Value | The following table presents a reconciliation of principal amount to carrying value of the Company’s mortgage and other notes payables, the Senior Notes and the Credit Facility as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 (Unaudited) December 31, 2015 Principal amount $ 1,562,960 $ 1,784,096 Premium (discount), net (456 ) (1,144 ) Deferred financing costs, net (1) (17,045 ) (24,544 ) Carrying value $ 1,545,459 $ 1,758,408 ________________ (1) Includes $0.2 million relating to the Senior Notes. |
Schedule of Principal Payments on Borrowings, Based on Final Maturity | The following table presents scheduled principal on borrowings, based on final maturity as of June 30, 2016 (dollars in thousands): Total Mortgage Senior Notes Credit Facility July 1 to December 31, 2016 $ 109,460 $ — $ 109,460 $ — Years ending December 31: — 2017 58,642 — — 58,642 2018 — — — — 2019 — — — — 2020 263,111 263,111 — — Thereafter 1,131,747 1,131,747 — — Total $ 1,562,960 $ 1,394,858 $ 109,460 $ 58,642 |
Compensation Expense (Tables)
Compensation Expense (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Common Unit and Unvested Restricted Stock Activity | The following table presents activity related to the issuance, vesting and forfeitures of restricted stock and Common Units. The balance as of June 30, 2016 represents Common Units whether vested or not that are outstanding and unvested shares of restricted stock (grants in thousands): Six Months Ended June 30, 2016 Restricted Stock (1) Common Units Total Grants Weighted December 31, 2015 45 692 737 $ 24.03 New grants 1,625 — 1,625 9.28 Vesting of restricted stock (137 ) — (137 ) 9.51 Forfeited or canceled grants — (4 ) (4 ) 22.40 June 30, 2016 1,533 688 2,221 $ 14.14 ___________________ (1) Represents restricted stock included in common stock. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Dividends Declared | The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016 : Common Stock Declaration Date Dividend Per Share March 15 $ 0.15 May 10 $ 0.15 |
Schedule of Earnings Per Share | The following table presents EPS for the three and six months ended June 30, 2016 and 2015 (dollars and shares in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Net income (loss) attributable to NorthStar Realty Europe Corp. $ (33,909 ) $ (61,711 ) $ (62,891 ) $ (77,974 ) Net income (loss) attributable to Unit Holders non-controlling interest (349 ) — (700 ) — Net income (loss) attributable to common stockholders and Unit Holders (1) $ (34,258 ) $ (61,711 ) $ (63,591 ) $ (77,974 ) Denominator: (2) Weighted average shares of common stock 59,116 62,988 (3) 59,267 62,988 (3) Weighted average Unit Holders (1) 690 — 691 — Weighted average shares of common stock and Unit Holders (2) 59,806 62,988 (3) 59,958 62,988 (3) Earnings (loss) per share: Basic $ (0.57 ) $ (0.98 ) (3) $ (1.06 ) $ (1.24 ) (3) Diluted $ (0.57 ) $ (0.98 ) (3) $ (1.06 ) $ (1.24 ) (3) ____________________________________________________________ (1) The EPS calculation takes into account Unit Holders, which receive non-forfeitable dividends from the date of grant, share equally in the Company’s net income (loss) and convert on a one -for-one basis into common stock. (2) Excludes the effect of restricted stock and RSUs outstanding that were not dilutive as of June 30, 2016 . These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors. (3) Basic and diluted earnings per common share for the three and six months ended June 30, 2015 was calculated using the common stock issued in connection with the Spin-off and exclude the effect of any equity-based awards outstanding at that date that were not dilutive. |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities | The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities as of June 30, 2016 and December 31, 2015 (dollars in thousands): June 30, 2016 December 31, 2015 Principal/Notional Carrying Value Fair Principal/Notional Carrying Value Fair Financial assets: (1) Derivative assets $ 1,304,338 $ 11,672 $ 11,672 $ 1,583,569 $ 23,792 $ 23,792 Financial liabilities: (1) Mortgage and other notes payable $ 1,394,858 $ 1,377,584 $ 1,377,584 $ 1,444,096 $ 1,424,610 $ 1,424,610 Derivative liabilities 89,250 1,221 1,221 — — — Senior notes 109,460 109,233 108,242 340,000 333,798 327,330 Credit Facility 58,642 58,642 58,642 — — — _____________________________ (1) The fair value of other financial instruments not included in this table is estimated to approximate their carrying value. |
Risk Management and Derivativ28
Risk Management and Derivative Activities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Derivative Instruments not Designated as Hedges under U.S. GAAP | The following tables present derivative instruments that were not designated as hedges under U.S. GAAP as of June 30, 2016 and December 31, 2015 (dollars in thousands): Number Notional Amount Fair Value Range of Range of Maturity As of June 30, 2016: Interest rate caps 5 $ 1,287,668 $ 9,826 (1) October 2016 - July 2023 Foreign currency forwards (2) 2 105,920 625 N/A July 2016 - November 2017 Total 7 $ 1,393,588 $ 10,451 As of December 31, 2015: Interest rate caps 6 $ 1,429,216 $ 23,375 (1) April 2016 - July 2023 Foreign currency forwards (2) 3 154,353 417 N/A February 2016 - November 2017 Total 9 $ 1,583,569 $ 23,792 _____________________________ (1) Includes a range of interest rate caps of 0.5% for EURIBOR and 2.0% for GBP LIBOR. (2) Includes Euro and U.K. Pounds Sterling currency forwards. |
Schedule of Fair Value of Derivative Instruments and Balance Sheet Classification | The following table presents the fair value of derivative instruments, as well as their classification on the combined consolidated balance sheets, as of June 30, 2016 and December 31, 2015 (dollars in thousands): Balance Sheet June 30, December 31, Location Interest rate caps Derivative assets $ 9,826 $ 23,375 Foreign currency forwards Derivative assets $ 1,846 $ 417 Foreign currency forwards Derivative liabilities $ (1,221 ) $ — |
Schedule of the Effect of Derivative Instruments on Combined Statements of Operations | The following table presents the effect of derivative instruments in the combined consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): Three Months Ended June 30, Six Months Ended 2016 2015 2016 2015 Amount of gain (loss) recognized in earnings: Statements of operations location: (1) Adjustment to fair value of interest rate caps Unrealized gain (loss) on investments and other $ (3,391 ) $ 1,833 $ (14,175 ) $ 1,755 Adjustment to fair value of foreign currency forwards Unrealized gain (loss) on investments and other 4,638 (4,253 ) 207 (4,253 ) Net cash receipt (payment) on derivatives Unrealized gain (loss) on investments and other (776 ) — (1,194 ) — _____________________________ (1) Excludes the unrealized gain (loss) relating to foreign currency remeasurement adjustments. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | The following tables present segment reporting for the three and six months ended June 30, 2016 and 2015 (dollars in thousands): Statement of Operations: Three Months Ended June 30, 2016 Real Estate Corporate Total Rental income $ 33,990 $ — $ 33,990 Interest expense 8,691 (2) 2,950 (2) 11,641 Income (loss) before income tax benefit (expense) (21,748 ) (12,041 ) (33,789 ) Income tax benefit (expense) (520 ) — (520 ) Net income (loss) (22,268 ) (1) (12,041 ) (34,309 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $18.4 million . (2) Includes $0.8 million and $0.9 million of amortization of deferred financing costs in the real estate and corporate segment, respectively. Statement of Operations: Three Months Ended June 30, 2015 Real Estate Corporate Total Rental income $ 28,344 $ — $ 28,344 Interest expense 6,072 — 6,072 Income (loss) before income tax benefit (expense) (79,478 ) (1) 6,358 (2) (73,120 ) Income tax benefit (expense) 11,379 — 11,379 Net income (loss) (68,099 ) 6,358 (61,741 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $14.7 million . (2) Includes an allocation of general and administrative expense based on an estimate of expenses had the Company been run as an independent entity (refer to Note 2). Statement of Operations: Six Months Ended June 30, 2016 Real Estate Corporate Total Rental income $ 68,823 $ — $ 68,823 Interest expense 17,117 (2) 7,066 (2) 24,183 Income (loss) before income tax benefit (expense) (31,544 ) (32,229 ) (3) (63,773 ) Income tax benefit (expense) 139 — 139 Net income (loss) (31,405 ) (1) (32,229 ) (63,634 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $37.3 million . (2) Includes $1.7 million and $2.1 million of amortization of deferred financing costs in the real estate and corporate segment, respectively. (3) Includes an allocation of general and administrative expenses from NSAM of $0.1 million . Statement of Operations: Six Months Ended June 30, 2015 Real Estate Corporate Total Rental income $ 29,853 $ — $ 29,853 Interest expense 6,824 — 6,824 Income (loss) before income tax benefit (expense) (94,844 ) (1) 5,430 (2) (89,414 ) Income tax benefit (expense) 11,379 — 11,379 Net income (loss) (83,465 ) 5,430 (78,035 ) ___________________________________ (1) Primarily relates to depreciation and amortization expense of $15.6 million . (2) Includes an allocation of general and administrative expense based on an estimate of expenses had the Company been run as an independent entity (refer to Note 2). The following table presents total assets by segment as of June 30, 2016 and December 31, 2015 (dollars in thousands): Total Assets Real Estate Corporate Total June 30, 2016 $ 2,361,228 $ 7,038 $ 2,368,266 December 31, 2015 $ 2,544,992 $ 138,058 $ 2,683,050 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Basis of Quarterly Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | |
Management fees | General and administrative expense | ||
Business Acquisition [Line Items] | ||
Estimate of management fees | $ 0.1 | $ 0.2 |
NSAM | Cost and expense reimbursement | ||
Business Acquisition [Line Items] | ||
Allocated general and administrative expense | $ 0.3 | $ 0.8 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Intangible Assets and Intangible Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Intangible assets: | ||
Goodwill, gross amount | $ 14,550 | $ 22,852 |
Total, gross amount | 205,364 | 268,063 |
Accumulated amortization | (32,225) | (26,544) |
Goodwill, net | 14,550 | 22,852 |
Total, net | 173,139 | 241,519 |
Intangible liabilities: | ||
Below market lease, gross amount | 37,283 | 40,213 |
Below market lease, accumulated amortization | (6,251) | (4,490) |
Total | 31,032 | 35,723 |
Intangible liabilities, gross | 42,392 | 45,239 |
Intangible liabilities, accumulated amortization | (6,317) | (4,521) |
Total, net | 36,075 | 40,718 |
In-place lease | ||
Intangible assets: | ||
Intangible assets, gross amount | 94,785 | 121,004 |
Accumulated amortization | (24,803) | (20,120) |
Total | 69,982 | 100,884 |
Above-market lease | ||
Intangible assets: | ||
Intangible assets, gross amount | 40,421 | 53,236 |
Accumulated amortization | (6,753) | (5,806) |
Total | 33,668 | 47,430 |
Intangible liabilities: | ||
Intangible liabilities, gross amount | 5,109 | 5,026 |
Intangible liabilities, accumulated amortization | (66) | (31) |
Other intangible liabilities, net | 5,043 | 4,995 |
Below-market ground lease | ||
Intangible assets: | ||
Intangible assets, gross amount | 55,608 | 70,971 |
Accumulated amortization | (669) | (618) |
Total | $ 54,939 | $ 70,353 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Other Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Other assets: | ||
Prepaid expenses | $ 4,032 | $ 0 |
Deferred lease costs | 3,377 | 220 |
Deferred tax assets, net | 1,011 | 3,041 |
Investment deposits and pending deal costs | 0 | 2,007 |
Other | 1,397 | 973 |
Total | 9,817 | 6,241 |
Other liabilities: | ||
Deferred tax liabilities | 11,274 | 22,026 |
Prepaid rent and unearned revenue | 14,601 | 10,450 |
Tenant security deposits | 4,817 | 4,953 |
Prepaid service charge reimbursement | 2,201 | 1,988 |
Other | 707 | 3,237 |
Total | $ 33,600 | $ 42,654 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Accounting Policies [Abstract] | ||
CTA reclassified to realized gains (losses) | $ 0.3 | $ 0.7 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Accounting Policies [Abstract] | |||||
Income tax benefit | [1] | $ (520) | $ 11,379 | $ 139 | $ 11,379 |
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Operating Real Estate - Operati
Operating Real Estate - Operating Real Estate, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Real Estate [Abstract] | ||
Land | $ 399,828 | $ 456,703 |
Buildings and improvements | 1,069,602 | 1,256,002 |
Building leasehold interests and improvements | 232,565 | 334,970 |
Furniture, fixtures and equipment | 244 | 218 |
Tenant improvements | 63,414 | 72,567 |
Subtotal | 1,765,653 | 2,120,460 |
Less: Accumulated depreciation | (48,615) | (35,303) |
Operating real estate, net | $ 1,717,038 | $ 2,085,157 |
Operating Real Estate - Real Es
Operating Real Estate - Real Estate Held for Sale (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016USD ($)property | Jun. 30, 2016USD ($)property | Dec. 31, 2015USD ($) | |
Real Estate Properties [Line Items] | |||
Operating Real Estate, Net | $ 299,953 | $ 299,953 | $ 6,094 |
Total | 10,565 | 10,565 | $ 0 |
Mortgage payable with held for sale assets | $ 63,500 | $ 63,500 | |
Held-for-sale | |||
Real Estate Properties [Line Items] | |||
Properties | property | 8 | 8 | |
Operating Real Estate, Net | $ 276,514 | $ 276,514 | |
Intangible Assets, Net | 10,658 | 10,658 | |
Other assets | 12,781 | 12,781 | |
Total | 299,953 | 299,953 | |
Intangible Liabilities, Net | 5,426 | 5,426 | |
Other Liabilities | 5,139 | 5,139 | |
Total | 10,565 | 10,565 | |
Revenue | 5,000 | 5,200 | |
Pretax loss | $ 31,800 | 32,200 | |
Depreciation and amortization | $ 2,000 | ||
Held-for-sale | Internos Portfolio | |||
Real Estate Properties [Line Items] | |||
Properties | property | 1 | 1 | |
Operating Real Estate, Net | $ 11,551 | $ 11,551 | |
Intangible Assets, Net | 1,273 | 1,273 | |
Other assets | 3,867 | 3,867 | |
Total | 16,691 | 16,691 | |
Intangible Liabilities, Net | 0 | 0 | |
Other Liabilities | 461 | 461 | |
Total | $ 461 | $ 461 | |
Held-for-sale | IVG Portfolio | |||
Real Estate Properties [Line Items] | |||
Properties | property | 3 | 3 | |
Operating Real Estate, Net | $ 43,504 | $ 43,504 | |
Intangible Assets, Net | 5,733 | 5,733 | |
Other assets | 7,391 | 7,391 | |
Total | 56,628 | 56,628 | |
Intangible Liabilities, Net | 3,787 | 3,787 | |
Other Liabilities | 1,571 | 1,571 | |
Total | $ 5,358 | $ 5,358 | |
Held-for-sale | SEB Portfolio | |||
Real Estate Properties [Line Items] | |||
Properties | property | 3 | 3 | |
Operating Real Estate, Net | $ 215,849 | $ 215,849 | |
Intangible Assets, Net | 3,580 | 3,580 | |
Other assets | 1,523 | 1,523 | |
Total | 220,952 | 220,952 | |
Intangible Liabilities, Net | 1,639 | 1,639 | |
Other Liabilities | 3,107 | 3,107 | |
Total | $ 4,746 | $ 4,746 | |
Held-for-sale | Deka Portfolio | |||
Real Estate Properties [Line Items] | |||
Properties | property | 1 | 1 | |
Operating Real Estate, Net | $ 5,610 | $ 5,610 | |
Intangible Assets, Net | 72 | 72 | |
Other assets | 0 | 0 | |
Total | 5,682 | 5,682 | |
Intangible Liabilities, Net | 0 | 0 | |
Other Liabilities | 0 | 0 | |
Total | $ 0 | $ 0 |
Operating Real Estate - Narrati
Operating Real Estate - Narrative (Details) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016USD ($)property | Dec. 31, 2015USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Carrying value | $ 299,953 | $ 6,094 |
Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Carrying value | $ 276,514 | |
2016 Property Dispositions | Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of none-core assets sold | property | 5 | |
Carrying value | $ 49,900 | |
Proceeds from sale | 59,200 | |
Proceeds from sale, net of sales cost | 54,800 | |
Gain in connection with sale | $ 7,800 |
Borrowings (Details)
Borrowings (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | May 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||||
Principal Amount | $ 1,562,960,000 | $ 1,562,960,000 | $ 1,784,096,000 | |
Carrying Value | 1,545,459,000 | 1,545,459,000 | 1,758,408,000 | |
Mortgage and Other Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 1,394,858,000 | 1,394,858,000 | 1,444,096,000 | |
Carrying Value | 1,377,584,000 | 1,377,584,000 | 1,424,610,000 | |
Mortgage and Other Notes Payable | Internos Portfolio | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 75,288,000 | 75,288,000 | 81,494,000 | |
Carrying Value | 74,478,000 | 74,478,000 | 80,528,000 | |
Mortgage and Other Notes Payable | IVG Portfolio | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 69,591,000 | 69,591,000 | 77,896,000 | |
Carrying Value | 68,380,000 | 68,380,000 | 75,308,000 | |
Mortgage and Other Notes Payable | Deka Portfolio | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 44,722,000 | 44,722,000 | 43,963,000 | |
Carrying Value | 44,028,000 | 44,028,000 | 44,423,000 | |
Mortgage and Other Notes Payable | SEB Portfolio | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 647,622,000 | 647,622,000 | 684,540,000 | |
Carrying Value | 638,812,000 | $ 638,812,000 | 674,543,000 | |
Mortgage and Other Notes Payable | SEB Portfolio | Minimum | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 0.50% | |||
Mortgage and Other Notes Payable | SEB Portfolio | Maximum | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 1.50% | |||
Mortgage and Other Notes Payable | SEB Portfolio - Preferred | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 117,700,000 | $ 117,700,000 | 115,604,000 | |
Carrying Value | 117,339,000 | 117,339,000 | 115,219,000 | |
Mortgage and Other Notes Payable | Trianon Tower | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 366,425,000 | 366,425,000 | 359,898,000 | |
Carrying Value | 364,629,000 | 364,629,000 | 357,996,000 | |
Mortgage and Other Notes Payable | IVG, Internos, and Deka Portfolio | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 6,497,000 | 6,497,000 | 6,691,000 | |
Carrying Value | 4,043,000 | $ 4,043,000 | 4,014,000 | |
Mortgage and Other Notes Payable | IVG, Internos, and Deka Portfolio | Minimum | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 0.25% | |||
Mortgage and Other Notes Payable | IVG, Internos, and Deka Portfolio | Maximum | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 1.00% | |||
Mortgage and Other Notes Payable | Floating - GBP LIBOR Plus 1.75% | U.K. Complex | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 54,460,000 | $ 54,460,000 | 60,369,000 | |
Carrying Value | 53,409,000 | $ 53,409,000 | $ 59,210,000 | |
Mortgage and Other Notes Payable | Floating - GBP LIBOR Plus 1.75% | U.K. Complex | GBP LIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 1.75% | 1.75% | ||
Mortgage and Other Notes Payable | Fixed - at 8.325% | U.K. Complex | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 12,553,000 | $ 12,553,000 | $ 13,641,000 | |
Carrying Value | $ 12,466,000 | $ 12,466,000 | $ 13,369,000 | |
Contractual Interest Rate | 8.325% | 8.325% | 8.325% | |
Mortgage and Other Notes Payable | EURIBOR Plus 2.7% | IVG, Internos, and Deka Portfolio | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 4,800,000 | $ 4,800,000 | ||
Contractual Interest Rate | 2.70% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.55% | IVG, Internos, and Deka Portfolio | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 102,000,000 | $ 102,000,000 | ||
Contractual Interest Rate | 1.55% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.65% | IVG, Internos, and Deka Portfolio | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 65,600,000 | $ 65,600,000 | ||
Contractual Interest Rate | 1.65% | |||
Mortgage and Other Notes Payable | GBP LIBOR Plus 2.7% | IVG, Internos, and Deka Portfolio | GBP LIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 2.70% | |||
Mortgage and Other Notes Payable | GBP LIBOR Plus 2.7% | IVG, Internos, and Deka Portfolio | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 17,200,000 | $ 17,200,000 | ||
Mortgage and Other Notes Payable | EURIBOR Plus 1.8% | SEB Portfolio | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 332,100,000 | $ 332,100,000 | ||
Contractual Interest Rate | 1.80% | |||
Mortgage and Other Notes Payable | GBP LIBOR Plus 1.8% | SEB Portfolio | GBP LIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 254,100,000 | $ 254,100,000 | ||
Contractual Interest Rate | 1.80% | |||
Mortgage and Other Notes Payable | Variable rate | SEB Portfolio - Preferred | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 3.00% | 3.00% | ||
Mortgage and Other Notes Payable | Variable rate | SEB Portfolio - Preferred | May 2019 through May 2022 | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 12.00% | 12.00% | ||
Mortgage and Other Notes Payable | Variable rate | SEB Portfolio - Preferred | May 2022 through Maturity | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 15.00% | 15.00% | ||
Mortgage and Other Notes Payable | EURIBOR Plus 1.45% | Trianon Tower | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 1.45% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.30% | Trianon Tower | EURIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 1.30% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.30% | Trianon Tower | EURIBOR | Repayment provision through June 30, 2017 | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 0.80% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.30% | Trianon Tower | EURIBOR | Repayment provision through June 30, 2018 | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 0.60% | |||
Mortgage and Other Notes Payable | EURIBOR Plus 1.30% | Trianon Tower | EURIBOR | Repayment provision through June 30, 2019 | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage range on principal | 0.30% | |||
Mortgage and Other Notes Payable | Fixed rate at 1.0% | IVG, Internos, and Deka Portfolio | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 1.00% | 1.00% | ||
Maturity | 30 years | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 109,460,000 | $ 109,460,000 | $ 340,000,000 | |
Carrying Value | $ 109,233,000 | $ 109,233,000 | $ 333,798,000 | |
Contractual Interest Rate | 4.625% | 4.625% | 4.625% | |
Redemption threshold for aggregate principal outstanding | $ 100,000,000 | $ 100,000,000 | ||
Redemption percentage of principal amount | 100.00% | |||
Redemption discount per annum | 0.50% | |||
Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 58,642,000 | $ 58,642,000 | $ 0 | |
Carrying Value | $ 58,642,000 | $ 58,642,000 | $ 0 | |
Maturity | 1 year | |||
Extension period | 1 year | |||
Credit Facility | LIBOR | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate | 2.75% | 2.75% |
Borrowings - Reconciliation of
Borrowings - Reconciliation of Principal to Carrying Amount (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Principal amount | $ 1,562,960 | $ 1,784,096 |
Premium (discount), net | (456) | (1,144) |
Deferred financing costs, net | (17,045) | (24,544) |
Carrying value | 1,545,459 | 1,758,408 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Principal amount | 109,460 | 340,000 |
Deferred financing costs, net | (200) | |
Carrying value | $ 109,233 | $ 333,798 |
Borrowings - Scheduled Principa
Borrowings - Scheduled Principal on Borrowings (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
July 1 to December 31, 2016 | $ 109,460 | |
2,017 | 58,642 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 263,111 | |
Thereafter | 1,131,747 | |
Total | 1,562,960 | $ 1,784,096 |
Mortgage and Other Notes Payable | ||
Debt Instrument [Line Items] | ||
July 1 to December 31, 2016 | 0 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 263,111 | |
Thereafter | 1,131,747 | |
Total | 1,394,858 | |
Senior Notes | ||
Debt Instrument [Line Items] | ||
July 1 to December 31, 2016 | 109,460 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 0 | |
Thereafter | 0 | |
Total | 109,460 | 340,000 |
Revolving Credit Facility | Credit Facility | ||
Debt Instrument [Line Items] | ||
July 1 to December 31, 2016 | 0 | |
2,017 | 58,642 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 0 | |
Thereafter | 0 | |
Total | $ 58,642 | $ 0 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |||
May 31, 2016 | Feb. 29, 2016 | Jul. 31, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Exchangeable Senior Notes | 4.625% Notes | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 340,000,000 | ||||
Stated interest rate | 4.625% | ||||
Aggregate net proceeds | $ 331,000,000 | ||||
Senior unsubordinated unsecured note | Consolidated Entity Excluding Variable Interest Entities (VIE) | |||||
Debt Instrument [Line Items] | |||||
Notice required prior to maturity to settle outstanding principal in common stock, term | 60 days | ||||
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate | 4.625% | 4.625% | |||
Amount repurchased | $ 150,000,000 | $ 80,000,000 | |||
Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Corporate revolving credit facility | $ 75,000,000 | ||||
Initial term | 1 year |
Related Party Arrangements (Det
Related Party Arrangements (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Aug. 05, 2016 | Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||||
Annualized base management fee to be paid | $ 3,606 | $ 3,606 | $ 3,606 | $ 3,995 | |||
NSAM | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, initial term | 20 years | ||||||
Asset management agreement, renewal term | 20 years | ||||||
Asset management fee expense, related party | 3,500 | $ 7,000 | |||||
Annualized base management fee to be paid | 3,500 | 3,500 | 3,500 | ||||
Asset management agreement, assets under management | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | ||||
Increase in annualized base management fee | 20.00% | ||||||
NSAM | Tier 1 | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, incentive fee | 15.00% | ||||||
NSAM | Tier 2 | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, incentive fee | 25.00% | ||||||
NSAM | Minimum | Tier 1 | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, incentive fee, per share (dollars per share) | $ 0.30 | ||||||
NSAM | Minimum | Tier 2 | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, incentive fee, per share (dollars per share) | 0.36 | ||||||
NSAM | Maximum | Tier 1 | |||||||
Related Party Transaction [Line Items] | |||||||
Asset management agreement, incentive fee, per share (dollars per share) | $ 0.36 | ||||||
NSAM | Management fees | Subsequent Event | |||||||
Related Party Transaction [Line Items] | |||||||
Additional asset management fee | 1.50% | ||||||
NSAM | Cost and expense reimbursement | |||||||
Related Party Transaction [Line Items] | |||||||
Allocated general and administrative expense | $ 300 | $ 800 | |||||
NSAM | Cost and expense reimbursement | Due to Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Allocated general and administrative expense | $ 100 | ||||||
NSAM | Long-term bonus or other compensation | |||||||
Related Party Transaction [Line Items] | |||||||
Reimbursement percentage | 50.00% | ||||||
Investor | NSAM | |||||||
Related Party Transaction [Line Items] | |||||||
Common stock purchased (shares) | 0.2 | ||||||
Aggregate purchase price of common stock | $ 2,300 |
Compensation Expense - Narrativ
Compensation Expense - Narrative (Details) $ in Thousands | Dec. 31, 2015shares | Oct. 31, 2015shares | Mar. 31, 2016shares | Feb. 29, 2016shares | Oct. 30, 2015shares | Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 1,625,000 | |||||||||
Spinoff conversion ratio | 0.1667 | |||||||||
Conversion ratio | 0.50 | |||||||||
Common stock given as payout | 0.3333 | |||||||||
Compensation expense | $ | [1] | $ 3,766 | $ 0 | $ 7,034 | $ 0 | |||||
Equity-based compensation expense not yet recognized | $ | $ 21,900 | $ 21,900 | ||||||||
2015 Omnibus Stock Incentive Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock reserved for future issuance (shares) | 10,000,000 | |||||||||
Common stock, additional shares reserved for issuance as a percentage of total shares issued and outstanding | 2.00% | |||||||||
Awards granted (shares) | 0 | |||||||||
NSAM Bonus Plan | NSAM | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 4 years | |||||||||
Maximum percent of salaries, wages and officers' compensation from related party to be covered by entity | 50.00% | |||||||||
Restricted Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 1,625,000 | |||||||||
Restricted Stock | Director | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Issued in period (shares) | 17,528 | |||||||||
Restricted Stock | Spin-off | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 995,698 | |||||||||
Award vesting period | 4 years | |||||||||
Restricted Stock | NSAM Bonus Plan | Executive Officer | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 335,336 | |||||||||
Awards vested upon grant, percentage | 25.00% | |||||||||
Awards retired in period (shares) | 44,214 | |||||||||
Restricted Stock | NSAM Bonus Plan | Non Executive Employees | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 283,305 | |||||||||
Restricted Stock | Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Issued in period (shares) | 1,362 | |||||||||
Restricted Stock Units (RSUs) | Spin-off | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 1,493,551 | |||||||||
Maximum award vesting rights based on absolute performance, percentage | 100.00% | |||||||||
Maximum award vesting rights based on relative performance, percentage | 125.00% | |||||||||
Restricted Stock Units (RSUs) | NSAM Bonus Plan | Executive Officer | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 194,422 | |||||||||
Restricted Stock Units (RSUs) | Omnibus Stock Incentive Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Percent of performance-based equity instruments based on total shareholder return | 50.00% | |||||||||
Percent of performance-based equity instruments, subject to total shareholder return relative to the MSCI US REIT index | 50.00% | |||||||||
Restricted Stock Units (RSUs) | Omnibus Stock Incentive Plan | Executive Officer | NorthStar Realty Finance Corporation | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 117,472 | 375,293 | ||||||||
Restricted Stock Units (RSUs) | Incentive Compensation Plan | NorthStar Realty Finance Corporation | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards with remaining vesting requirement (shares) | 83,333 | 83,333 | ||||||||
Operating Partnership Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Awards granted (shares) | 0 | |||||||||
Operating Partnership Units | Incentive Compensation Plan | NorthStar Realty Finance Corporation | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Issued in period (shares) | 618,511 | |||||||||
Awards with remaining vesting requirement (shares) | 232,081 | 232,081 | ||||||||
LTIP Units | Director | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Issued in period (shares) | 70,112 | |||||||||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Compensation Expense - Common U
Compensation Expense - Common Units and Unvested Restricted Stock Activity (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Beginning balance (shares) | 737 |
New grants (shares) | 1,625 |
Vesting of restricted stock (shares) | (137) |
Forfeited or canceled grants (shares) | (4) |
Ending balance (shares) | 2,221 |
Weighted Average Grant Price | |
Beginning balance (in dollars per share) | $ / shares | $ 24.03 |
New grants (in dollars per share) | $ / shares | 9.28 |
Vesting of restricted stock (in dollars per share) | $ / shares | 9.51 |
Forfeited or canceled grants (in dollars per share) | $ / shares | 22.40 |
Ending balance (in dollars per share) | $ / shares | $ 14.14 |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Beginning balance (shares) | 45 |
New grants (shares) | 1,625 |
Vesting of restricted stock (shares) | (137) |
Forfeited or canceled grants (shares) | 0 |
Ending balance (shares) | 1,533 |
Common Units | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Beginning balance (shares) | 692 |
New grants (shares) | 0 |
Vesting of restricted stock (shares) | 0 |
Forfeited or canceled grants (shares) | (4) |
Ending balance (shares) | 688 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, shares in Millions | May 10, 2016$ / shares | Mar. 15, 2016$ / shares | Oct. 31, 2015 | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2016USD ($)shares | Nov. 30, 2015USD ($) | ||
Equity [Abstract] | |||||||||
Spinoff conversion ratio | 0.1667 | ||||||||
Authorized amount of outstanding common stock (up to) | $ 100,000,000 | ||||||||
Common stock repurchased (shares) | shares | 0.3 | 0.6 | |||||||
Common stock repurchased | $ 2,300,000 | $ 6,300,000 | |||||||
Shares repurchased | shares | 4.3 | ||||||||
Repurchase of equity | $ 47,700,000 | ||||||||
Amount remaining under stock repurchase plan | $ 52,300,000 | $ 52,300,000 | $ 52,300,000 | ||||||
Common stock dividends declared (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | $ 0.15 | [1] | $ 0.30 | [1] | |||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends Declared (Details) - $ / shares | May 10, 2016 | Mar. 15, 2016 | Jun. 30, 2016 | Jun. 30, 2016 | ||
Equity [Abstract] | ||||||
Common Stock, Dividend Per Share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.15 | [1] | $ 0.30 | [1] |
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Stockholders' Equity - Earnings
Stockholders' Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |||||||
Net income (loss) attributable to NorthStar Realty Europe Corp. common stockholders | [1] | $ (33,909) | $ (61,711) | $ (62,891) | $ (77,974) | ||
Net income (loss) attributable to Unit Holders non-controlling interest | (349) | 0 | (700) | 0 | |||
Net income (loss) attributable to common stockholders and Unit Holders | $ (34,258) | $ (61,711) | $ (63,591) | $ (77,974) | |||
Weighted average shares of common stock (shares) | [1] | 59,115,895 | 62,987,863 | [2] | 59,266,850 | 62,987,863 | [2] |
Weighted average Unit Holders (shares) | 690,000 | 0 | 691,000 | 0 | |||
Weighted average shares of common stock and Unit Holders (shares) | [1] | 59,805,545 | 62,987,863 | [2] | 59,957,559 | 62,987,863 | [2] |
Earnings (loss) per share: | |||||||
Basic (in dollars per share) | [1] | $ (0.57) | $ (0.98) | [2] | $ (1.06) | $ (1.24) | [2] |
Diluted (in dollars per share) | [1] | $ (0.57) | $ (0.98) | [2] | $ (1.06) | $ (1.24) | [2] |
LTIP Units | |||||||
Earnings (loss) per share: | |||||||
Shares issued upon conversion of awards (shares) | 1 | ||||||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. | ||||||
[2] | Basic and diluted earnings per common share for the three and six months ended June 30, 2015 were calculated using the common stock distributed on November 1, 2015 in connection with the Spin-off (refer to Note 7). |
Non-controlling Interests (Deta
Non-controlling Interests (Details) $ in Thousands, € in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2016EUR (€)shares | Nov. 25, 2015USD ($) | |
Noncontrolling Interest [Line Items] | ||||||
Non-controlling interest | $ 8,700 | |||||
Non-controlling ownership interest | 1.10% | 1.10% | 1.10% | |||
Net income (loss) attributable to Unit Holders non-controlling interest | $ 349 | $ 0 | $ 700 | $ 0 | ||
Ownership percentage in disposed asset | 5.50% | 5.50% | 5.50% | |||
Redeemable noncontrolling interest, equity, redemption value | € | € 2.1 | |||||
Non-controlling Interest in Subsidiaries Owning Trianon Tower | ||||||
Noncontrolling Interest [Line Items] | ||||||
Consideration received | $ 1,500 | $ 1,500 | ||||
LTIP units | Non-controlling interest | ||||||
Noncontrolling Interest [Line Items] | ||||||
Number of units outstanding (shares) | shares | 688,623 | 688,623 | 688,623 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 11,672 | $ 23,792 |
Principal/Notional Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 1,304,338 | 1,583,569 |
Principal/Notional Amount | Mortgage and other notes payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 1,394,858 | 1,444,096 |
Derivative liabilities | 89,250 | 0 |
Principal/Notional Amount | Senior notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 109,460 | 340,000 |
Principal/Notional Amount | Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 58,642 | 0 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 11,672 | 23,792 |
Carrying Value | Mortgage and other notes payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 1,377,584 | 1,424,610 |
Derivative liabilities | 1,221 | 0 |
Carrying Value | Senior notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 109,233 | 333,798 |
Carrying Value | Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 58,642 | 0 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 11,672 | 23,792 |
Fair Value | Mortgage and other notes payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 1,377,584 | 1,424,610 |
Derivative liabilities | 1,221 | 0 |
Fair Value | Senior notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | 108,242 | 327,330 |
Fair Value | Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities | $ 58,642 | $ 0 |
Risk Management and Derivativ50
Risk Management and Derivative Activities - Derivative Instruments Not Designated as Hedges (Details) - Not designated as hedges $ in Thousands | Jun. 30, 2016USD ($)instrument | Dec. 31, 2015USD ($)instrument |
Derivative [Line Items] | ||
Number | instrument | 7 | 9 |
Notional Amount | $ 1,393,588 | $ 1,583,569 |
Fair Value Asset (Liability) | $ 10,451 | $ 23,792 |
Interest rate caps | ||
Derivative [Line Items] | ||
Number | instrument | 5 | 6 |
Notional Amount | $ 1,287,668 | $ 1,429,216 |
Fair Value Asset (Liability) | $ 9,826 | $ 23,375 |
Interest rate caps | EURIBOR | Minimum | ||
Derivative [Line Items] | ||
Interest rate caps | 0.50% | 0.50% |
Interest rate caps | GBP LIBOR | Maximum | ||
Derivative [Line Items] | ||
Interest rate caps | 2.00% | 2.00% |
Foreign currency forwards | ||
Derivative [Line Items] | ||
Number | instrument | 2 | 3 |
Notional Amount | $ 105,920 | $ 154,353 |
Fair Value Asset (Liability) | $ 625 | $ 417 |
Risk Management and Derivativ51
Risk Management and Derivative Activities - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Derivative assets | Interest rate caps | ||
Derivative [Line Items] | ||
Derivatives | $ 9,826 | $ 23,375 |
Derivative assets | Foreign currency forwards | ||
Derivative [Line Items] | ||
Derivatives | 1,846 | 417 |
Derivative liabilities | Foreign currency forwards | ||
Derivative [Line Items] | ||
Derivatives | $ (1,221) | $ 0 |
Risk Management and Derivativ52
Risk Management and Derivative Activities - Effect of Derivative Instruments in the Combined Consolidated Statements of Operations (Details) - Unrealized gain (loss) on investments and other - Derivatives - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Derivative [Line Items] | ||||
Net cash receipt (payment) on derivatives | $ (776) | $ 0 | $ (1,194) | $ 0 |
Interest rate caps | ||||
Derivative [Line Items] | ||||
Adjustments to fair value | (3,391) | 1,833 | (14,175) | 1,755 |
Foreign currency forwards | ||||
Derivative [Line Items] | ||||
Adjustments to fair value | $ 4,638 | $ (4,253) | $ 207 | $ (4,253) |
Risk Management and Derivativ53
Risk Management and Derivative Activities - Narrative (Details) | Jun. 30, 2016USD ($)instrument | Dec. 31, 2015USD ($)instrument |
Derivative [Line Items] | ||
Cash collateral held by counter parties | $ | $ 0 | $ 0 |
Designated as hedge | ||
Derivative [Line Items] | ||
Number of derivative instruments | instrument | 0 | 0 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)segment | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | ||
Segment Reporting Information [Line Items] | ||||||
Number of reporting segments | segment | 2 | |||||
Rental income | [1] | $ 33,990 | $ 28,344 | $ 68,823 | $ 29,853 | |
Interest expense | [1] | 11,641 | 6,072 | 24,183 | 6,824 | |
Income (loss) before income tax benefit (expense) | [1] | (33,789) | (73,120) | (63,773) | (89,414) | |
Income tax benefit (expense) | [1] | (520) | 11,379 | 139 | 11,379 | |
Net income (loss) | [1] | (34,309) | (61,741) | (63,634) | (78,035) | |
Depreciation and amortization | [1] | 18,404 | 14,694 | 37,275 | 15,620 | |
Amortization of deferred financing costs | 3,789 | 798 | ||||
General and administrative expense | [1] | 1,502 | 306 | 2,978 | 1,234 | |
Total Assets | 2,368,266 | 2,368,266 | $ 2,683,050 | |||
Operating Segments | Real Estate | ||||||
Segment Reporting Information [Line Items] | ||||||
Rental income | 33,990 | 28,344 | 68,823 | 29,853 | ||
Interest expense | 8,691 | 6,072 | 17,117 | 6,824 | ||
Income (loss) before income tax benefit (expense) | (21,748) | (79,478) | (31,544) | (94,844) | ||
Income tax benefit (expense) | (520) | 11,379 | 139 | 11,379 | ||
Net income (loss) | (22,268) | (68,099) | (31,405) | (83,465) | ||
Amortization of deferred financing costs | 800 | 1,700 | ||||
Total Assets | 2,361,228 | 2,361,228 | 2,544,992 | |||
Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Rental income | 0 | 0 | 0 | 0 | ||
Interest expense | 2,950 | 0 | 7,066 | 0 | ||
Income (loss) before income tax benefit (expense) | (12,041) | 6,358 | (32,229) | 5,430 | ||
Income tax benefit (expense) | 0 | 0 | 0 | 0 | ||
Net income (loss) | (12,041) | $ 6,358 | (32,229) | $ 5,430 | ||
Amortization of deferred financing costs | 900 | 2,100 | ||||
General and administrative expense | 100 | |||||
Total Assets | $ 7,038 | $ 7,038 | $ 138,058 | |||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands | Aug. 03, 2016$ / shares | May 10, 2016$ / shares | Mar. 15, 2016$ / shares | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | Aug. 05, 2016USD ($)property | Dec. 31, 2015USD ($) | ||
Subsequent Event [Line Items] | |||||||||
Common stock dividends declared (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | $ 0.15 | [1] | $ 0.30 | [1] | |||
Carrying value | $ 299,953 | $ 299,953 | $ 6,094 | ||||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock dividends declared (in dollars per share) | $ / shares | $ 0.15 | ||||||||
Subsequent Event | 2016 Property Dispositions | Asset Sold | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of none-core assets sold | property | 3 | ||||||||
Carrying value | $ 223,900 | ||||||||
Proceeds from sale | $ 227,600 | ||||||||
[1] | The combined consolidated financial statements for the three and six months ended June 30, 2016 represent the Company’s results of operations following the Spin-off on October 31, 2015. The combined consolidated financial statements for the three and six months ended June 30, 2015 represent: (i) the Company’s results of operations of the European Real Estate Business as if the transferred business was the business for the periods in which common control was present (refer to Notes 1 and 3); and (ii) an allocation of costs related to the Company. As a result, results of operations for the three and six months ended June 30, 2016 may not be comparable to the Company’s results of operations reported for the prior periods presented. |