Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | May 07, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Highlands REIT, Inc. | ||
Entity Central Index Key | 1,661,458 | ||
Entity Filer Category | 10-Q | ||
Document Period End Date | Mar. 31, 2018 | ||
Amendment Flag | false | ||
Entity Current Reporting Status | Yes | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Common Stock, Shares Outstanding | 871,385,672 | ||
Entity Public Float | $ 303.9 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investment properties | ||
Land | $ 79,129 | $ 79,163 |
Building and other improvements | 296,372 | 296,204 |
Construction in progress | 948 | 483 |
Total | 376,449 | 375,850 |
Less accumulated depreciation | (112,825) | (109,928) |
Net investment properties | 263,624 | 265,922 |
Cash and cash equivalents | 52,335 | 53,852 |
Restricted cash and escrows | 2,358 | 2,155 |
Accounts and rents receivable (net of allowance of $909 and $850) | 5,375 | 4,897 |
Intangible assets, net | 406 | 561 |
Deferred costs and other assets | 3,259 | 2,230 |
Total assets | 327,357 | 329,617 |
Liabilities | ||
Debt, net | 55,021 | 55,273 |
Accounts payable and accrued expenses | 8,919 | 11,048 |
Intangible liabilities, net | 3,310 | 3,413 |
Other liabilities | 1,870 | 1,786 |
Total liabilities | 69,120 | 71,520 |
Commitments and contingencies (Note 11) | ||
Stockholders’ Equity | ||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 871,385,672 and 868,423,581 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 8,714 | 8,684 |
Additional paid-in capital | 1,407,405 | 1,406,460 |
Accumulated distributions in excess of net income | (1,157,882) | (1,157,047) |
Total stockholders’ equity | 258,237 | 258,097 |
Total liabilities and stockholders' equity | $ 327,357 | $ 329,617 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts and rent receivables | $ 909 | $ 850 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 871,385,672 | 868,423,581 |
Common stock, shares outstanding | 871,385,672 | 868,423,581 |
Combined Consolidated Statement
Combined Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | ||
Rental income | $ 8,515 | $ 14,763 |
Tenant recovery income | 1,951 | 1,583 |
Other property income | 179 | 489 |
Total revenues | 10,645 | 16,835 |
Expenses | ||
Property operating expenses | 2,304 | 3,186 |
Real estate taxes | 1,474 | 3,461 |
Depreciation and amortization | 3,131 | 5,624 |
General and administrative expenses | 4,179 | 4,078 |
Total expenses | 11,088 | 16,349 |
Operating (loss) income | (443) | 486 |
Interest income | 133 | 40 |
Gain (loss) on sale of investment properties | 25 | (3) |
Other income | 0 | 3 |
Interest expense | (706) | (7,365) |
Loss before income taxes | (991) | (6,838) |
Income tax benefit (expense) | 155 | (2) |
Net loss | $ (836) | $ (6,840) |
Net income (loss) per common share, basic and diluted (in dollars per share) | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 870,102,100 | 865,591,047 |
Combined Consolidated Statemen5
Combined Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Distributions in Excess of Net Income |
Beginning balance at Dec. 31, 2016 | $ 83,280 | $ 8,649 | $ 1,405,677 | $ (1,331,046) |
Beginning balance (in shares) at Dec. 31, 2016 | 864,890,967 | |||
Net loss | (6,840) | (6,840) | ||
Share-based compensation | 717 | $ 32 | 685 | |
Share-based compensation (in shares) | 3,246,900 | |||
Ending balance (in shares) at Mar. 31, 2017 | 868,137,867 | |||
Ending balance at Mar. 31, 2017 | 77,157 | $ 8,681 | 1,406,362 | (1,337,886) |
Beginning balance at Dec. 31, 2017 | 258,097 | $ 8,684 | 1,406,460 | (1,157,047) |
Beginning balance (in shares) at Dec. 31, 2017 | 868,423,581 | |||
Net loss | (836) | (836) | ||
Share-based compensation | 1,017 | $ 31 | 985 | 1 |
Share-based compensation (in shares) | 3,078,425 | |||
Common stock repurchased and retired | $ (41) | $ (1) | (40) | |
Common stock repurchased and retired (in shares) | (116,334) | (116,334) | ||
Ending balance (in shares) at Mar. 31, 2018 | 871,385,672 | |||
Ending balance at Mar. 31, 2018 | $ 258,237 | $ 8,714 | $ 1,407,405 | $ (1,157,882) |
Combined Consolidated Statemen6
Combined Consolidated Statements of Cash Flow - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (836) | $ (6,840) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 3,129 | 5,552 |
Amortization of above and below market leases, net | (103) | (105) |
Amortization of debt discounts and financing costs | 21 | 37 |
Straight-line rental income | (54) | (451) |
(Gain) loss on sale of investment properties, net | (25) | 3 |
Non-cash stock-based compensation expense | 1,851 | 1,338 |
Changes in assets and liabilities: | ||
Accounts and rents receivable | (425) | 264 |
Deferred costs and other assets | (386) | (842) |
Accounts payable and accrued expenses | (2,128) | 5,963 |
Other liabilities | 84 | 84 |
Net cash flows provided by operating activities | 1,128 | 5,003 |
Cash flows from investing activities: | ||
Capital expenditures and tenant improvements | (634) | (263) |
Proceeds from sale of investment properties | 60 | 0 |
Payment of leasing fees | (219) | 0 |
Net cash flows used in investing activities | (793) | (263) |
Cash flows from financing activities: | ||
Payoff of mortgage debt and note payable | 0 | (30,273) |
Principal payments of mortgage debt | (273) | (1,993) |
Payment of loan fees and deposits | 0 | 65 |
Payment for tax withholding for share-based compensation | (876) | (994) |
Net cash flows used in financing activities | (1,149) | (33,195) |
Net decrease in cash and cash equivalents | (814) | (28,455) |
Cash, cash equivalents and restricted cash, at beginning of period | 56,007 | 64,163 |
Cash, cash equivalents and restricted cash, at end of period | $ 55,193 | $ 35,708 |
Combined Consolidated Statemen7
Combined Consolidated Statements of Cash Flow - Supplemental - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 687 | $ 2,407 |
Cash paid for taxes | 85 | 0 |
Supplemental schedule of non-cash investing and financing activities: | ||
Non-cash accruals for capital expense and investment in development | $ 427 | $ 0 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Highlands REIT, Inc. (“Highlands”), which was formed in December 2015, is a Maryland corporation with a portfolio of multi-tenant office assets, industrial assets, retail assets, correctional facilities, multi-family assets, unimproved land and a bank branch. Prior to April 28, 2016, Highlands was a wholly owned subsidiary of InvenTrust Properties Corp. (“InvenTrust” and formerly known as Inland American Real Estate Trust, Inc.). On April 28, 2016, Highlands was spun-off from InvenTrust through a pro rata distribution by InvenTrust of 100% of the outstanding shares of common stock, $0.01 par value per share (the “Common Stock”), of Highlands to holders of record of InvenTrust's common stock as of the close of business on April 25, 2016 (the “Record Date”). Each holder of record of InvenTrust's common stock received one share of Common Stock for every one share of InvenTrust's common stock held at the close of business on the Record Date (the “Distribution”). As a result, Highlands became an independent, self-advised, non-traded public company. Highlands has elected to be taxed, and currently qualifies, as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code") for U.S. federal income tax purposes commencing with Highlands' short taxable year ending December 31, 2016. In connection with the Distribution, Highlands entered into a Separation and Distribution Agreement, Transition Services Agreement and Employee Matters Agreement with InvenTrust. Refer to Notes 4 and 11 for more details. Each asset is owned by a separate legal entity, which maintains its own books and financial records, and each entity’s assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in Note 5. As of March 31, 2018 and December 31, 2017 , the Company owned 15 assets and two parcels of unimproved land. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Refer to the Company’s audited combined consolidated financial statements for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 16, 2018 (the “Annual Report”), as certain note disclosures contained in such audited financial statements have been omitted from these interim condensed consolidated financial statements. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Highlands and its predecessors, as well as all of Highlands' wholly owned subsidiaries (collectively, the “Company”). Wholly owned subsidiaries generally consist of limited liability companies (LLCs) and limited partnerships (LPs). The effects of all significant intercompany transactions have been eliminated. As described in Note 1, on April 28, 2016, Highlands was spun off from InvenTrust. Prior to the Distribution, the historical condensed combined consolidated financial statements did not represent the financial position and results of a single legal entity, but rather a combination of entities under common control that had been “carved out” of InvenTrust’s consolidated financial statements and reflected significant assumptions and allocations. The condensed combined consolidated financial statements reflect the operations of certain assets and liabilities that had been historically held by InvenTrust, but which were specifically identifiable or attributable to the Company. Revenue Recognition The Company commences revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If we are the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If we conclude we are not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded under the lease are treated as lease incentives which reduces revenue recognized over the term of the lease. In these circumstances, we begin revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. We consider a number of different factors to evaluate whether the Company or the lessee is the owner of the tenant improvements for accounting purposes. These factors include: • whether the lease stipulates how and on what a tenant improvement allowance may be spent; • whether the tenant or landlord retains legal title to the improvements; • the uniqueness of the improvements; • the expected economic life of the tenant improvements relative to the length of the lease; and • who constructs or directs the construction of the improvements. The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making that determination, we consider all of the above factors. No one factor, however, necessarily establishes its determination. Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying condensed consolidated balance sheets. The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met and amounts due are considered collectible. Share Based Compensation In accordance with FASB ASC Topic 718, Accounting for Share Based Compensation, companies are required to recognize in the income statement the grant-date fair value of stock options and other equity based compensation issued to employees. Under Topic 718, the way an award is classified will affect the measurement of compensation cost. Equity classified awards are measured at grant date fair value, and amortized on a straight-line basis over the vesting period of the stock and are not subsequently re-measured. The cost of the share based payments that are fully vested at the grant date are measured and recognized at that date. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period plus any additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Any anti-dilutive securities are excluded from the diluted earnings per-share calculation. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which introduces a lessee model that brings most leases on the balance sheet and, among other changes, eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. In March 2018, the FASB approved an amendment to 2016-02, which would provide lessors with a practical expedient, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease component, if certain criteria are met. ASU 2016-02 is not effective for us until January 1, 2019, with early adoption permitted. We are continuing to evaluate this guidance and the impact to us, as both lessor and lessee, on our condensed consolidated financial statements. We expect to utilize the practical expedients proposed in the amended ASU 2016-02 as part of our adoption. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The core objective of ASU No. 2014-09 (as codified in ASC 606) is for an entity to recognize revenue based on the consideration it expects to receive in exchange for goods or services. Additionally, this ASU requires entities to use a single model in accounting for revenues derived from contracts with customers. ASU No. 2014-09 replaces prior guidance regarding the recognition of revenue from sales of real estate, except for revenue from sales that are part of a sale-leaseback transaction. The provisions of ASU No. 2014-09, as subsequently amended in conjunction with ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross Versus Net), comprise ASU 606, Revenue Recognition, became effective for us on January 1, 2018. The Company elected the modified retrospective method of adoption, but determined that there was no cumulative adjustment to be recorded in connection with the adoption of ASC 606. We have evaluated all of our revenue streams to identify which of our revenue streams would be subject to the provisions of ASC 606 and any differences in the timing, measurement or presentation of revenue recognition. In evaluating our revenue streams, substantially all of our revenues result from leasing transactions that are not within the scope of the new standard and will be governed by the recently issued leasing guidance, ASU 2016-02, which is discussed above and will not be effective until January 1, 2019. As a result, the Company has concluded that the adoption of ASC 606 did not have a material impact on the process for, timing of, and presentation and disclosure of revenue recognition from contracts with tenants and other customers. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The Company adopted ASU No. 2016-15 effective January 1, 2018, the effects of which were not material to the condensed consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Classification and Presentation of Restricted Cash in the Statement of Cash Flows. ASU 2016-18 requires an explanation in the cash flow statement of a change in the total of (1) total cash, (2) cash equivalents, and (3) restricted cash or restricted cash equivalents. The Company adopted ASU No. 2016-18 effective January 1, 2018, the effects of which were presenting restricted cash and escrows with cash and cash equivalents in the condensed consolidated statement of cash flow. The inclusion of restricted cash increased the beginning balances of the unaudited condensed consolidated statement of cash flow by $2.2 million and $7.0 million , respectively, and the ending balances by $2.9 million and $7.4 million , respectively, for the three months ended March 31, 2018 and 2017. The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders and other various agreements. As of March 31, 2018 and December 31, 2017, the Company’s cash balances restricted for these uses were $2.9 million and $2.2 million , respectively. The table below provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheet that sum to the total of the same such amounts shown on the Condensed Consolidated Statement of Cash Flow. March 31, 2018 December 31, 2017 Cash and cash equivalents $ 52,335 $ 53,852 Restricted cash 2,358 2,155 Restricted cash included in other assets 500 — Total cash, cash equivalents and restricted cash $ 55,193 $ 56,007 In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-1 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions (including treatment of acquisition costs), disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those periods. Early adoption of this standard is permitted. The Company early adopted ASU 2017-01 effective as of July 1, 2017, the effects of which were not material to the condensed consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets. As it relates to gains on sale of real estate, we will apply the provisions of ASC 610-20, Gain or Loss From Derecognition of Non-financial Assets (“ASC 610-20”), and we expect to recognize any gains when we transfer control of a property and when it is probable that we will collect substantially all of the related consideration. The adoption of ASC 610-20 on January 1, 2018 did not have a material impact on our condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance is effective prospectively for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. The early adoption of ASU 2017-09 in 2017 did not have a material impact on the condensed consolidated financial statements. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: March 31, 2018 December 31, 2017 Accrued real estate taxes $ 6,366 $ 6,488 Accrued compensation 739 1,919 Accrued interest payable 204 206 Other accrued expenses 1,610 2,435 Total accounts payable and accrued expenses $ 8,919 $ 11,048 |
Transactions with Related Parti
Transactions with Related Parties | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties The following table summarizes the Company’s related party transactions for the three months ended March 31, 2018 , and 2017 . Three Months Ended March 31, 2018 2017 Other reimbursements (a) $ 9 $ — (a) The Separation and Distribution Agreement with InvenTrust called for reimbursement of insurance premiums for a six year term starting April 28, 2016, which the Company began accruing during the third quarter of the year ended December 31, 2017 when the Company received information to reasonably estimate the expense attributable to the Company. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Mortgages Payable Mortgage loans outstanding as of March 31, 2018 and December 31, 2017 , net of unamortized deferred financing costs, were $55,021 and $55,273 , respectively, and had a weighted average interest rate of 4.92% per annum. Deferred financing costs, net, as of March 31, 2018 and December 31, 2017 were $591 and $613 , respectively. As of March 31, 2018 , scheduled maturities for the Company’s outstanding mortgage indebtedness had various due dates through December 2026, as follows: For the year ended December 31, As of March 31, 2018 Weighted average interest rate 2019 $ — — % 2020 — — % 2021 19,725 5.25 % 2022 9,505 5.24 % Thereafter 26,382 4.56 % Total $ 55,612 4.92 % The Company's ability to pay off mortgages when they become due is dependent upon the Company's ability either to refinance the related mortgage debt or to sell the related asset. With respect to each loan, if the applicable wholly-owned property-owning subsidiary is unable to refinance or sell the related asset, or in the event that the estimated asset value is less than the mortgage balance, the applicable wholly owned property-owning subsidiary may, if appropriate, satisfy a mortgage obligation by transferring title of the asset to the lender or permitting a lender to foreclose. As of March 31, 2018 and December 31, 2017 , no debt is recourse to the Company, although Highlands or its subsidiaries may act as guarantor under customary, non-recourse carve-out clauses in our wholly owned property-owning subsidiaries' mortgage loans. Some of the mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of March 31, 2018 and December 31, 2017 , the Company is in compliance with such covenants in all material respects. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements In accordance with ASC 820, Fair Value Measurement and Disclosures, the Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: • Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. • Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. Financial Instruments Not Measured at Fair Value The table below represents the fair value of financial instruments presented at carrying values in the consolidated financial statements as of March 31, 2018 and as of December 31, 2017 . March 31, 2018 December 31, 2017 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Mortgages payable $ 55,612 $ 56,126 $ 55,886 $ 56,862 The Company typically estimates the fair value of its debt instruments using a weighted average market effective interest rate of 4.47% per annum as of March 31, 2018 . The Company estimates the fair value of its mortgages payable by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are based on credit spreads observed in the marketplace during the quarter for similar debt instruments, and a floor rate that the Company has derived using its subjective judgment for each asset segment. Based on this, the Company determines the appropriate rate for each of its individual mortgages payable based upon the specific terms of the agreement, including the term to maturity, the quality and nature of the underlying property and its leverage ratio. The weighted average market effective interest rates used range from 4.15% to 4.97% as of March 31, 2018 . For certain debt, the Company estimates the fair value of debt instruments based on the fair value of the underlying collateral. The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is taxed and operates in a manner that will allow the Company to continue to qualify as a REIT for U.S. federal income tax purposes. So long as it maintains its qualification as a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed currently to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders each year. If the Company fails to continue to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and would not be able to re-elect REIT status during the four years following the year of the failure. Although the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and U.S. federal income and excise taxes on its undistributed income. During the three months ended March 31, 2018 , an income tax benefit of $155 was included on the condensed consolidated statements of operations. During the three months ended March 31, 2017, an income tax expense of $2 was included on the condensed consolidated statements of operations. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company currently has three business segments, consisting of (i) net lease, (ii) retail and (iii) multi-tenant office. The net lease segment consists of single-tenant office and industrial assets, as well as the Company’s correctional facilities. The Company’s multi-family and unimproved land assets are presented below in Other. The following table summarizes net property operations income by segment for the three months ended March 31, 2018 . Total Net Lease Retail Multi-Tenant Office Other Rental income $ 8,515 $ 3,120 $ 4,228 $ 891 $ 276 Tenant recovery income 1,951 65 1,835 30 21 Other property income 179 — 9 87 83 Total income 10,645 3,185 6,072 1,008 380 Operating expenses and real estate taxes 3,778 189 2,425 757 407 Net operating income (loss) $ 6,867 $ 2,996 $ 3,647 $ 251 $ (27 ) Non-allocated expenses (a) (7,310 ) Other income and expenses (b) (418 ) Gain on sale of investment properties (c) 25 Net loss $ (836 ) Balance Sheet Data Real estate assets, net (d) $ 264,030 $ 42,024 $ 146,652 $ 46,461 $ 28,893 Non-segmented assets (e) 63,327 Total assets $ 327,357 Capital expenditures $ 634 $ — $ 466 $ 135 $ 33 (a) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (b) Other income and expenses consists of interest income, interest expense, and income tax benefit. (c) Gain on the sale of investment properties is related to a parcel of one retail asset. (d) Real estate assets include intangible assets, net of amortization. (e) Non-segmented assets include cash and cash equivalents, restricted cash and escrows, accounts and rents receivable and deferred costs and other assets. The following table summarizes net property operations income by segment for the three months ended March 31, 2017 . Total Net Lease Retail Multi-Tenant Office Other Rental income $ 14,763 $ 7,563 $ 4,120 $ 3,080 $ — Tenant recovery income 1,583 88 1,516 (64 ) 44 Other property income 489 8 394 82 4 Total income 16,835 7,659 6,030 3,098 48 Operating expenses and real estate taxes 6,647 2,565 2,221 1,401 460 Net operating income (loss) $ 10,188 $ 5,094 $ 3,809 $ 1,697 $ (412 ) Non-allocated expenses (a) (9,702 ) Other income and expenses (b) (7,327 ) Net loss $ (6,840 ) (a) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (b) Other income and expenses consists of interest income, interest expense, loss on sale of investment properties, and income tax expense. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, plus any additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The following table reconciles net loss attributable to the Company to basic and diluted EPS (in thousands, except share and per share data): Three Months Ended March 31, 2018 2017 Numerator: Net loss $ (836 ) $ (6,840 ) Denominator: Weighted average shares outstanding - basic and diluted 870,102,100 865,591,047 Basic and diluted income (loss) per share: Net income (loss) per common share $ 0.00 $ (0.01 ) |
Share Based Compensation
Share Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Share-based Compensation [Abstract] | |
Share Based Compensation | Share Based Compensation Incentive Award Plan On April 28, 2016, the board of directors adopted, ratified and approved the Highlands REIT, Inc. 2016 Incentive Award Plan (the “Incentive Award Plan”), under which the Company may grant cash and equity-based incentive awards to eligible employees, directors, and consultants. Prior to the Company’s spin-off from InvenTrust, the board of directors of the Company (then a wholly owned subsidiary of InvenTrust) adopted, and InvenTrust, as the sole stockholder of Highlands, approved, the Incentive Awards Plan. During the three months ended March 31, 2018 , the Company granted 5,621,212 fully vested shares of common stock with an aggregate value of $1,855 based on an estimated net asset value per share of $.33 and during the twelve months ended December 31, 2017 , the Company granted 3,454,761 fully vested shares of common stock with an aggregate value of $1,209 based on an estimated net asset value per share of $0.35 . Under the guidance of ASC 718, during the twelve months ended December 31, 2017, 1,940,476 shares of common stock awards were treated as a modification of the terms of the original awards for two of the Company’s executive officers, resulting in an increase in compensation expense of $650 at the modification date. Under the Incentive Award Plan, the Company is authorized to grant up to 43,000,000 shares of the Company's common stock pursuant to awards under the plan. At March 31, 2018 , 25,868,471 shares were available for future issuance under the Incentive Award Plan. A summary of the Company's stock awards activity as of March 31, 2018 is as follows: Non-Vested stock awards Stock Awards Weighted Average Grant Date Fair Value Outstanding at January 1, 2018 — $ — Granted 5,621,212 0.33 Vested (5,621,212 ) 0.33 Forfeited — — Balance at March 31, 2018 — $ — For the three months ended March 31, 2018 and 2017, the Company recognized stock-based compensation expense of $1,855 and $1,338 , respectively, related to the Incentive Award Plan. At March 31, 2018 , there was approximately $0 of estimated unrecognized compensation expense related to these awards. For the three months ended March 31, 2018 and 2017, the Company paid $876 and $994 , respectively, related to tax withholding for share-based compensation. The Company repurchased and retired 116,334 of fully vested shares previously awarded to an employee pursuant to a separation agreement during the three months ended March 31, 2018. The shares were repurchased based on the Company's most recently announced per share estimated net asset value of $.33 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the financial statements of the Company. In addition, in connection with the Company’s separation from InvenTrust, on April 14, 2016, the Company entered into a Separation and Distribution Agreement, and on April 28, 2016, the Company entered into a Transition Services Agreement and Employee Matters Agreement, each with InvenTrust. Pursuant to the Separation and Distribution Agreement, Highlands has agreed to indemnify, defend and hold harmless InvenTrust and its affiliates and each of their respective current or former stockholders, directors, officers, agents and employees and their respective heirs, executors, administrators, successors and assigns from and against all liabilities relating to, arising out of or resulting from (i) the liabilities assumed by Highlands in the Separation and Distribution Agreement, Transition Services Agreement and Employee Matters Agreement, (ii) any breach by Highlands or any of its subsidiaries of the Separation and Distribution Agreement, Transition Services Agreement and Employee Matters Agreement (iii) losses arising from third party claims relating to the separation and distribution and (iv) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Registration Statement, other than specified information relating to and provided by InvenTrust (the “Specified InvenTrust Information”). Similarly, InvenTrust has agreed to indemnify, defend and hold harmless Highlands and its affiliates and each of their respective current or former stockholders, directors, officers, agents and employees and their respective heirs, executors, administrators, successors and assigns from and against all liabilities relating to, arising out of or resulting from (i) the liabilities assumed by InvenTrust in the Separation and Distribution Agreement, Transition Services Agreement and Employee Matters Agreement, (ii) any breach by InvenTrust or any of its subsidiaries of the Separation and Distribution Agreement, Transition Services Agreement and Employee Matters Agreement and (iii) the Specified InvenTrust Information. InvenTrust and Highlands will not be deemed to be affiliates of the other for purposes of determining the above described indemnification obligations. Highlands has also agreed to indemnify InvenTrust against all taxes related to the Company, its subsidiaries and its assets, including taxes attributable to periods prior to the separation and distribution. InvenTrust has agreed to indemnify the Company for any taxes attributable to failure by InvenTrust or MB REIT (Florida), Inc., a subsidiary of the Company, to qualify as a REIT for any taxable year ending on or before December 31, 2016. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Highlands and its predecessors, as well as all of Highlands' wholly owned subsidiaries (collectively, the “Company”). Wholly owned subsidiaries generally consist of limited liability companies (LLCs) and limited partnerships (LPs). The effects of all significant intercompany transactions have been eliminated. As described in Note 1, on April 28, 2016, Highlands was spun off from InvenTrust. Prior to the Distribution, the historical condensed combined consolidated financial statements did not represent the financial position and results of a single legal entity, but rather a combination of entities under common control that had been “carved out” of InvenTrust’s consolidated financial statements and reflected significant assumptions and allocations. The condensed combined consolidated financial statements reflect the operations of certain assets and liabilities that had been historically held by InvenTrust, but which were specifically identifiable or attributable to the Company. |
Revenue Recognition | Revenue Recognition The Company commences revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If we are the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If we conclude we are not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded under the lease are treated as lease incentives which reduces revenue recognized over the term of the lease. In these circumstances, we begin revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. We consider a number of different factors to evaluate whether the Company or the lessee is the owner of the tenant improvements for accounting purposes. These factors include: • whether the lease stipulates how and on what a tenant improvement allowance may be spent; • whether the tenant or landlord retains legal title to the improvements; • the uniqueness of the improvements; • the expected economic life of the tenant improvements relative to the length of the lease; and • who constructs or directs the construction of the improvements. The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making that determination, we consider all of the above factors. No one factor, however, necessarily establishes its determination. Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying condensed consolidated balance sheets. The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met and amounts due are considered collectible. |
Share Based Compensation | Share Based Compensation In accordance with FASB ASC Topic 718, Accounting for Share Based Compensation, companies are required to recognize in the income statement the grant-date fair value of stock options and other equity based compensation issued to employees. Under Topic 718, the way an award is classified will affect the measurement of compensation cost. Equity classified awards are measured at grant date fair value, and amortized on a straight-line basis over the vesting period of the stock and are not subsequently re-measured. The cost of the share based payments that are fully vested at the grant date are measured and recognized at that date. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period plus any additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Any anti-dilutive securities are excluded from the diluted earnings per-share calculation. |
Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which introduces a lessee model that brings most leases on the balance sheet and, among other changes, eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. In March 2018, the FASB approved an amendment to 2016-02, which would provide lessors with a practical expedient, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease component, if certain criteria are met. ASU 2016-02 is not effective for us until January 1, 2019, with early adoption permitted. We are continuing to evaluate this guidance and the impact to us, as both lessor and lessee, on our condensed consolidated financial statements. We expect to utilize the practical expedients proposed in the amended ASU 2016-02 as part of our adoption. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The core objective of ASU No. 2014-09 (as codified in ASC 606) is for an entity to recognize revenue based on the consideration it expects to receive in exchange for goods or services. Additionally, this ASU requires entities to use a single model in accounting for revenues derived from contracts with customers. ASU No. 2014-09 replaces prior guidance regarding the recognition of revenue from sales of real estate, except for revenue from sales that are part of a sale-leaseback transaction. The provisions of ASU No. 2014-09, as subsequently amended in conjunction with ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross Versus Net), comprise ASU 606, Revenue Recognition, became effective for us on January 1, 2018. The Company elected the modified retrospective method of adoption, but determined that there was no cumulative adjustment to be recorded in connection with the adoption of ASC 606. We have evaluated all of our revenue streams to identify which of our revenue streams would be subject to the provisions of ASC 606 and any differences in the timing, measurement or presentation of revenue recognition. In evaluating our revenue streams, substantially all of our revenues result from leasing transactions that are not within the scope of the new standard and will be governed by the recently issued leasing guidance, ASU 2016-02, which is discussed above and will not be effective until January 1, 2019. As a result, the Company has concluded that the adoption of ASC 606 did not have a material impact on the process for, timing of, and presentation and disclosure of revenue recognition from contracts with tenants and other customers. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The Company adopted ASU No. 2016-15 effective January 1, 2018, the effects of which were not material to the condensed consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Classification and Presentation of Restricted Cash in the Statement of Cash Flows. ASU 2016-18 requires an explanation in the cash flow statement of a change in the total of (1) total cash, (2) cash equivalents, and (3) restricted cash or restricted cash equivalents. The Company adopted ASU No. 2016-18 effective January 1, 2018, the effects of which were presenting restricted cash and escrows with cash and cash equivalents in the condensed consolidated statement of cash flow. The inclusion of restricted cash increased the beginning balances of the unaudited condensed consolidated statement of cash flow by $2.2 million and $7.0 million , respectively, and the ending balances by $2.9 million and $7.4 million , respectively, for the three months ended March 31, 2018 and 2017. The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders and other various agreements. As of March 31, 2018 and December 31, 2017, the Company’s cash balances restricted for these uses were $2.9 million and $2.2 million , respectively. The table below provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheet that sum to the total of the same such amounts shown on the Condensed Consolidated Statement of Cash Flow. March 31, 2018 December 31, 2017 Cash and cash equivalents $ 52,335 $ 53,852 Restricted cash 2,358 2,155 Restricted cash included in other assets 500 — Total cash, cash equivalents and restricted cash $ 55,193 $ 56,007 In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-1 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions (including treatment of acquisition costs), disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those periods. Early adoption of this standard is permitted. The Company early adopted ASU 2017-01 effective as of July 1, 2017, the effects of which were not material to the condensed consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets. As it relates to gains on sale of real estate, we will apply the provisions of ASC 610-20, Gain or Loss From Derecognition of Non-financial Assets (“ASC 610-20”), and we expect to recognize any gains when we transfer control of a property and when it is probable that we will collect substantially all of the related consideration. The adoption of ASC 610-20 on January 1, 2018 did not have a material impact on our condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance is effective prospectively for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. The early adoption of ASU 2017-09 in 2017 did not have a material impact on the condensed consolidated financial statements. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Restricted Cash | The table below provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheet that sum to the total of the same such amounts shown on the Condensed Consolidated Statement of Cash Flow. March 31, 2018 December 31, 2017 Cash and cash equivalents $ 52,335 $ 53,852 Restricted cash 2,358 2,155 Restricted cash included in other assets 500 — Total cash, cash equivalents and restricted cash $ 55,193 $ 56,007 |
Accounts Payable and Accrued 21
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following: March 31, 2018 December 31, 2017 Accrued real estate taxes $ 6,366 $ 6,488 Accrued compensation 739 1,919 Accrued interest payable 204 206 Other accrued expenses 1,610 2,435 Total accounts payable and accrued expenses $ 8,919 $ 11,048 |
Transactions with Related Par22
Transactions with Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The following table summarizes the Company’s related party transactions for the three months ended March 31, 2018 , and 2017 . Three Months Ended March 31, 2018 2017 Other reimbursements (a) $ 9 $ — (a) The Separation and Distribution Agreement with InvenTrust called for reimbursement of insurance premiums for a six year term starting April 28, 2016, which the Company began accruing during the third quarter of the year ended December 31, 2017 when the Company received information to reasonably estimate the expense attributable to the Company. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Scheduled Maturities of Mortgage Indebtedness | As of March 31, 2018 , scheduled maturities for the Company’s outstanding mortgage indebtedness had various due dates through December 2026, as follows: For the year ended December 31, As of March 31, 2018 Weighted average interest rate 2019 $ — — % 2020 — — % 2021 19,725 5.25 % 2022 9,505 5.24 % Thereafter 26,382 4.56 % Total $ 55,612 4.92 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of the Fair Value of Financial Instruments | The table below represents the fair value of financial instruments presented at carrying values in the consolidated financial statements as of March 31, 2018 and as of December 31, 2017 . March 31, 2018 December 31, 2017 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Mortgages payable $ 55,612 $ 56,126 $ 55,886 $ 56,862 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Net Property Operations | The following table summarizes net property operations income by segment for the three months ended March 31, 2018 . Total Net Lease Retail Multi-Tenant Office Other Rental income $ 8,515 $ 3,120 $ 4,228 $ 891 $ 276 Tenant recovery income 1,951 65 1,835 30 21 Other property income 179 — 9 87 83 Total income 10,645 3,185 6,072 1,008 380 Operating expenses and real estate taxes 3,778 189 2,425 757 407 Net operating income (loss) $ 6,867 $ 2,996 $ 3,647 $ 251 $ (27 ) Non-allocated expenses (a) (7,310 ) Other income and expenses (b) (418 ) Gain on sale of investment properties (c) 25 Net loss $ (836 ) Balance Sheet Data Real estate assets, net (d) $ 264,030 $ 42,024 $ 146,652 $ 46,461 $ 28,893 Non-segmented assets (e) 63,327 Total assets $ 327,357 Capital expenditures $ 634 $ — $ 466 $ 135 $ 33 (a) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (b) Other income and expenses consists of interest income, interest expense, and income tax benefit. (c) Gain on the sale of investment properties is related to a parcel of one retail asset. (d) Real estate assets include intangible assets, net of amortization. (e) Non-segmented assets include cash and cash equivalents, restricted cash and escrows, accounts and rents receivable and deferred costs and other assets. The following table summarizes net property operations income by segment for the three months ended March 31, 2017 . Total Net Lease Retail Multi-Tenant Office Other Rental income $ 14,763 $ 7,563 $ 4,120 $ 3,080 $ — Tenant recovery income 1,583 88 1,516 (64 ) 44 Other property income 489 8 394 82 4 Total income 16,835 7,659 6,030 3,098 48 Operating expenses and real estate taxes 6,647 2,565 2,221 1,401 460 Net operating income (loss) $ 10,188 $ 5,094 $ 3,809 $ 1,697 $ (412 ) Non-allocated expenses (a) (9,702 ) Other income and expenses (b) (7,327 ) Net loss $ (6,840 ) (a) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (b) Other income and expenses consists of interest income, interest expense, loss on sale of investment properties, and income tax expense. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Net (Loss) Income to Basic and Diluted EPS | The following table reconciles net loss attributable to the Company to basic and diluted EPS (in thousands, except share and per share data): Three Months Ended March 31, 2018 2017 Numerator: Net loss $ (836 ) $ (6,840 ) Denominator: Weighted average shares outstanding - basic and diluted 870,102,100 865,591,047 Basic and diluted income (loss) per share: Net income (loss) per common share $ 0.00 $ (0.01 ) |
Share Based Compensation (Table
Share Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Share-based Compensation [Abstract] | |
Summary of Stock Award Activity | A summary of the Company's stock awards activity as of March 31, 2018 is as follows: Non-Vested stock awards Stock Awards Weighted Average Grant Date Fair Value Outstanding at January 1, 2018 — $ — Granted 5,621,212 0.33 Vested (5,621,212 ) 0.33 Forfeited — — Balance at March 31, 2018 — $ — |
Organization (Details)
Organization (Details) | Apr. 28, 2016$ / sharesshares | Mar. 31, 2018parcelproperty$ / shares | Dec. 31, 2017parcelproperty$ / shares |
Conversion of Stock [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 |
Number of assets (in property) | property | 15 | 15 | |
Parcels of land | parcel | 2 | 2 | |
Common stock | |||
Conversion of Stock [Line Items] | |||
Shares issued for each share held at date of spin-off (in shares) | shares | 1 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash | $ 2.9 | $ 2.2 | |
ASU 2016-18 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase in beginning balance | 2.2 | $ 7 | |
Increase in ending balance | $ 2.9 | $ 7.4 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Schedule of Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 52,335 | $ 53,852 | ||
Restricted cash | 2,358 | 2,155 | ||
Restricted cash included in other assets | 500 | 0 | ||
Total cash, cash equivalents and restricted cash | $ 55,193 | $ 56,007 | $ 35,708 | $ 64,163 |
Accounts Payable and Accrued 31
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued real estate taxes | $ 6,366 | $ 6,488 |
Accrued compensation | 739 | 1,919 |
Accrued interest payable | 204 | 206 |
Other accrued expenses | 1,610 | 2,435 |
Total accounts payable and accrued expenses | $ 8,919 | $ 11,048 |
Transactions with Related Par32
Transactions with Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
InvenTrust | ||
Related Party Transaction [Line Items] | ||
Business Manager Fee | $ 9 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Debt, net | $ 55,021 | $ 55,273 |
Mortgages | ||
Debt Instrument [Line Items] | ||
Debt, net | $ 55,021 | 55,273 |
Weighted average interest rate | 4.92% | |
Deferred financing costs, net | $ 591 | $ 613 |
Debt - Scheduled Maturities (De
Debt - Scheduled Maturities (Details) - Mortgages $ in Thousands | Mar. 31, 2018USD ($) |
Debt Instrument [Line Items] | |
2,018 | $ 0 |
2,019 | 0 |
2,020 | 19,725 |
2,021 | 9,505 |
Thereafter | 26,382 |
Total | $ 55,612 |
Weighted average interest rate | |
2,018 | 0.00% |
2,019 | 0.00% |
2,020 | 5.25% |
2,021 | 5.24% |
Thereafter | 4.56% |
Total | 4.92% |
Fair Value Measurements - Not M
Fair Value Measurements - Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Mortgages payable | $ 55,612 | $ 55,886 |
Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Mortgages payable | $ 56,126 | $ 56,862 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Long-term debt | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Discount rate | 4.47% |
Minimum | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Discount rate | 4.15% |
Maximum | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Discount rate | 4.97% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ (155) | $ 2 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018segmentleased_asset | |
Concentration Risk [Line Items] | |
Number of business segments (in segments) | segment | 3 |
Multi-Tenant Office | |
Concentration Risk [Line Items] | |
Number of leased assets | leased_asset | 1 |
Segment Reporting - Net Propert
Segment Reporting - Net Property Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Rental income | $ 8,515 | $ 14,763 | |
Tenant recovery income | 1,951 | 1,583 | |
Other property income | 179 | 489 | |
Total revenues | 10,645 | 16,835 | |
Operating expenses and real estate taxes | 3,778 | 6,647 | |
Net operating income (loss) | 6,867 | 10,188 | |
Gain (loss) on sale of investment properties | 25 | (3) | |
Net loss | (836) | (6,840) | |
Total assets | 327,357 | $ 329,617 | |
Capital expenditures | 634 | 263 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Rental income | 276 | 0 | |
Tenant recovery income | 21 | 44 | |
Other property income | 83 | 4 | |
Total revenues | 380 | 48 | |
Operating expenses and real estate taxes | 407 | 460 | |
Net operating income (loss) | (27) | (412) | |
Total assets | 28,893 | ||
Capital expenditures | 33 | ||
Reconciling items | |||
Segment Reporting Information [Line Items] | |||
Non-allocated expenses | (7,310) | (9,702) | |
Other income and expenses | (418) | (7,327) | |
Total assets | 63,327 | ||
Operating Segments And Corporate, Non-Segment | |||
Segment Reporting Information [Line Items] | |||
Total assets | 264,030 | ||
Net Lease | Operating segments | |||
Segment Reporting Information [Line Items] | |||
Rental income | 3,120 | 7,563 | |
Tenant recovery income | 65 | 88 | |
Other property income | 0 | 8 | |
Total revenues | 3,185 | 7,659 | |
Operating expenses and real estate taxes | 189 | 2,565 | |
Net operating income (loss) | 2,996 | 5,094 | |
Total assets | 42,024 | ||
Capital expenditures | 0 | ||
Retail | Operating segments | |||
Segment Reporting Information [Line Items] | |||
Rental income | 4,228 | 4,120 | |
Tenant recovery income | 1,835 | 1,516 | |
Other property income | 9 | 394 | |
Total revenues | 6,072 | 6,030 | |
Operating expenses and real estate taxes | 2,425 | 2,221 | |
Net operating income (loss) | 3,647 | 3,809 | |
Total assets | 146,652 | ||
Capital expenditures | 466 | ||
Multi-Tenant Office | Operating segments | |||
Segment Reporting Information [Line Items] | |||
Rental income | 891 | 3,080 | |
Tenant recovery income | 30 | (64) | |
Other property income | 87 | 82 | |
Total revenues | 1,008 | 3,098 | |
Operating expenses and real estate taxes | 757 | 1,401 | |
Net operating income (loss) | 251 | $ 1,697 | |
Total assets | 46,461 | ||
Capital expenditures | $ 135 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator: | ||
Net loss | $ (836) | $ (6,840) |
Denominator: | ||
Weighted average shares outstanding - basic and diluted (in shares) | 870,102,100 | 865,591,047 |
Basic and diluted income (loss) per share: | ||
Net income (loss) per common share (in dollars per share) | $ 0 | $ (0.01) |
Share Based Compensation (Detai
Share Based Compensation (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018USD ($)employee$ / sharesshares | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | Apr. 28, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ | $ 1,855 | $ 1,338 | ||
Unrecognized compensation expense | $ | 0 | |||
Payment for tax withholding for share-based compensation | $ | $ 876 | $ 994 | ||
Common stock repurchased and retired (in shares) | 116,334 | |||
Incentive awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized to grant (up to) (in shares) | 43,000,000 | |||
Shares available for future issuance (in shares) | 25,868,471 | |||
Stock Awards | ||||
Beginning balance (in shares) | 0 | |||
Granted (in shares) | 5,621,212 | |||
Vested (in shares) | (5,621,212) | |||
Forfeited (in shares) | 0 | |||
Ending balance (in shares) | 0 | 0 | ||
Weighted Average Grant Date Fair Value | ||||
Beginning balance (in dollars per share) | $ / shares | $ 0 | |||
Granted (in dollars per share) | $ / shares | 0.33 | |||
Vested (in dollars per share) | $ / shares | 0.33 | |||
Forfeited (in dollars per share) | $ / shares | 0 | |||
Ending balance (in dollars per share) | $ / shares | $ 0 | $ 0 | ||
Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate value of shares granted | $ | $ 1,855 | $ 1,209 | ||
Stock Awards | ||||
Granted (in shares) | 5,621,212 | 3,454,761 | ||
Weighted Average Grant Date Fair Value | ||||
Granted (in dollars per share) | $ / shares | $ 0.33 | $ 0.35 | ||
Two Executive Officers | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of employees affected | employee | 2 | |||
Incremental compensation cost, plan modification | $ | $ 650 | |||
Stock Awards | ||||
Granted (in shares) | 1,940,476 |