Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 10, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | INNOVATIVE INDUSTRIAL PROPERTIES INC | |
Entity Central Index Key | 1,677,576 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | IIPR | |
Entity Common Stock, Shares Outstanding | 3,501,147 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Real estate, at cost: | ||
Land | $ 10,385 | $ 7,600 |
Buildings and improvements | 27,881 | 22,475 |
Total real estate, at cost | 38,266 | 30,075 |
Less accumulated depreciation | (363) | (27) |
Net real estate held for investment | 37,903 | 30,048 |
Cash and cash equivalents | 25,756 | 33,003 |
Prepaid insurance and other assets, net | 253 | 276 |
Total assets | 63,912 | 63,327 |
Liabilities and stockholders' equity | ||
Accounts payable, accrued expenses and other liabilities | 563 | 70 |
Dividends payable | 525 | 0 |
Offering cost liability | 0 | 276 |
Rents received in advance and tenant security deposits | 2,846 | 2,542 |
Total liabilities | 3,934 | 2,888 |
Commitments and contingencies (Note 7 and 10) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share, 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2017 and December 31, 2016 | 0 | 0 |
Common Stock, Value, Issued | 4 | 0 |
Additional paid-in capital | 65,379 | 64,828 |
Accumulated deficit | (5,405) | (4,392) |
Total stockholders' equity | 59,978 | 60,439 |
Total liabilities and stockholders' equity | 63,912 | 63,327 |
Common Class A [Member] | ||
Stockholders' equity: | ||
Common Stock, Value, Issued | 0 | 3 |
Common Class B [Member] | ||
Stockholders' equity: | ||
Common Stock, Value, Issued | $ 0 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 0 |
Common Stock, Shares, Issued | 3,501,147 | 0 |
Common Stock, Shares, Outstanding | 3,501,147 | 0 |
Common Class A [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 0 | 49,000,000 |
Common Stock, Shares, Issued | 0 | 3,416,508 |
Common Stock, Shares, Outstanding | 0 | 3,416,508 |
Common Class B [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 0 | 1,000,000 |
Common Stock, Shares, Issued | 0 | 0 |
Common Stock, Shares, Outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Revenues: | ||
Rental | $ 1,289 | $ 2,579 |
Total revenues | 1,289 | 2,579 |
Expenses: | ||
General and administrative | 1,466 | 3,221 |
Severance | 113 | 113 |
Depreciation | 175 | 336 |
Total expenses | 1,754 | 3,670 |
Loss from operations | (465) | (1,091) |
Other income | 43 | 78 |
Net loss | $ (422) | $ (1,013) |
Net loss per share (basic and diluted) | $ (0.13) | $ (0.31) |
Weighted average shares outstanding: | ||
Basic and diluted | 3,364,948 | 3,357,515 |
Dividends declared per common share | $ 0.15 | $ 0.15 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in capital | Accumulated deficit | ||
Balance, December 31, 2016 at Dec. 31, 2016 | $ 60,439 | $ 3 | $ 64,828 | $ (4,392) | ||
Balance (in Shares) December 31, 2016 at Dec. 31, 2016 | 3,416,508 | |||||
Net loss | (1,013) | $ 0 | 0 | (1,013) | ||
Reclassification of Class A and Class B common stock to common stock | 0 | [1] | 0 | 0 | ||
Reclassification of Class A and Class B common stock to common stock (in shares) | [1] | |||||
Common stock dividends | (525) | $ 0 | (525) | 0 | ||
Net issuance of unvested restricted stock | (298) | $ 1 | (299) | 0 | ||
Net issuance of unvested restricted stock (in shares) | 84,639 | |||||
Stock-based compensation | 1,375 | $ 0 | 1,375 | 0 | ||
Stock-based compensation (in shares) | 0 | |||||
Balance, June 30, 2017 at Jun. 30, 2017 | $ 59,978 | $ 4 | $ 65,379 | $ (5,405) | ||
Balance (in Shares) June 30, 2017 at Jun. 30, 2017 | 3,501,147 | |||||
[1] | Effective as of January 26, 2017, each share of the Company’s outstanding Class A common stock and Class B common stock was reclassified as, and became one share of, a new single class of common stock named “common stock”. There were no shares of Class B common stock outstanding as of January 26, 2017, as all such shares were redeemed by the Company for $0.001 per share (par value) immediately prior to the Company's initial public offering in December 2016. |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares | Jun. 30, 2017 | Jan. 26, 2017 | Dec. 31, 2016 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Cash Flows $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | |
Operating activities | ||
Net loss | $ (422) | $ (1,013) |
Adjustments to reconcile net loss to net cash provided by operating activities | ||
Depreciation and amortization | 175 | 336 |
Amortization of stock-based compensation awards | 1,375 | |
Changes in assets and liabilities | ||
Prepaid insurance and other assets, net | 23 | |
Accounts payable, accrued expenses, and other liabilities | 474 | |
Security deposit | 304 | |
Net cash provided by operating activities | 1,499 | |
Investing activities | ||
Purchases of investments in real estate | (8,166) | |
Capital expenditures | (6) | |
Net cash used in investing activities | (8,172) | |
Financing activities | ||
Initial public offering costs | (276) | |
Taxes paid related to net share settlement of equity awards | (298) | |
Net cash used in financing activities | (574) | |
Net decrease in cash and cash equivalents | (7,247) | |
Cash and cash equivalents, December 31, 2016 | 33,003 | |
Cash and cash equivalents, June 30, 2017 | 25,756 | 25,756 |
Supplemental disclosure of non-cash investing and financing activities | ||
Accrual for common stock dividend declared | $ 525 | 525 |
Accrued transaction costs for purchases of investments in real estate | $ 19 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization Innovative Industrial Properties, Inc. (the "Company", "we", "us" and "our"), formerly known as Innovative Greenhouse Properties, Inc. and incorporated in Maryland on June 15, 2016 On December 5, 2016, the Company completed its initial public offering of 3,350,000 0.001 20.00 61.1 As of June 30, 2017, the Company owned two properties: a 127,000 30.0 72,000 8.0 7.0 IIP Operating Partnership, LP, a Delaware limited partnership (the "Operating Partnership"), was formed on June 20, 2016 and is a wholly-owned subsidiary of the Company. The Company is the sole general partner of the Operating Partnership and conducts substantially all of its business through the Operating Partnership. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. The comparative financial statements for the period from June 15, 2016 (date of incorporation) through June 30, 2016 have been omitted as the Company had no significant operations during the period. This interim financial information should be read in conjunction with the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report and in the Company's Annual Report on Form 10-K for the period from June 15, 2016 (date of incorporation) through December 31, 2016. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2017. We intend to elect and to operate our business so as to qualify, and to be taxed, as a real estate investment trust ("REIT") for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2017. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our consolidated statement of operations represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements. Actual results may differ materially from these estimates and assumptions. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region and the fair value of buildings on as as-if vacant basis. Acquisition costs are capitalized as incurred. The acquisitions of our two properties in New York and Maryland were each recorded as an asset acquisition. 35 Our leases and future tenant leases are expected to be triple-net leases, an arrangement under which the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, taxes and insurance. We anticipate that all leases will be accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term, unless the collectability of minimum lease payments is not reasonably predictable. Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursements in the period when such costs are incurred. Year Contractual Minimum Rent 2017 (six months ending December 31) $ 3,018 2018 6,566 2019 6,768 2020 6,979 2021 7,153 Thereafter 75,869 Total $ 106,353 We recognize an allowance for doubtful accounts relating to accounts receivable for amounts deemed uncollectible. We consider tenant specific issues, such as financial stability and ability to pay, when determining collectability of accounts receivable and appropriate allowances to record. We record revenue for each of our properties on a cash basis due to the uncertainty of collectability of lease payments from each tenant due to its limited operating history. Rent under the lease for the property we acquired in Maryland in May 2017 is subject to an initial rent abatement of three months, and as such no rental revenues were generated from that property during the three and six months ended June 30, 2017. 22.9 In May 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2015-07 that eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value per share practical expedient in the FASB’s fair value measurement guidance. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments were applied retrospectively by removing from the fair value hierarchy any investments for which fair value is measured using the net asset value per share practical expedient. Adoption of this guidance did not have an impact on the Company’s financial position or results of operations. Recent Accounting Pronouncements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. ASU 2014-09 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The majority of our revenues related to rental income from leasing arrangements, which is excluded from ASU 2014-09. The Company is currently evaluating the impact that ASU 2014-09 will have on any non-lease components and revenues generated from activities other than leasing. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). Under this new standard the large majority of operating leases are expected to remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term. ASU 2016-02 is effective for years beginning after December 15, 2019 as a result of the Company’s election as an emerging growth company, using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The amendments in ASU 2016-02 do not significantly change the current lessor accounting model or the lessee accounting model for our corporate office operating lease; therefore, we do not currently believe that the adoption of this standard will have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation; Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for years beginning after December 15, 2017 as a result of the Company’s election as an emerging growth company, and early adoption is permitted. ASU 2016-09 is not expected to have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses ("ASU 2016-13"), which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2016-13 is effective for years beginning after December 15, 2020 as a result of the Company’s election as an emerging growth company, with early adoption permitted. The Company is in the initial stage of evaluating the impact of this new standard. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which clarifies or provides guidance relating to eight specific cash flow classification issues. The standard should be applied retrospectively for each period presented, as appropriate. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company, with early adoption permitted. The impact of ASU 2016-15 will depend on future transactions, though the impact will only be related to the classification of those items on the statement of cash flows and will not impact our cash flows or our consolidated results of operations. In February 2017, the FASB issued ASU No. 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), which defines “in substance nonfinancial asset”, unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. ASU 2017-05 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. ASU 2017-05 is not expected to have a material impact on our consolidated financial statements. . Our properties are located in the states of New York and Maryland. The ability of our tenants to honor the terms of their leases are dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which our tenants operate. As of June 30, 2017, the tenant at our property in New York represented 100 We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 . Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 3. Common Stock The Company is authorized to issue up to 50,000,000 0.001 0.001 |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred Stock | 4. Preferred Stock The Company is authorized to issue up to 50,000,000 0.001 |
Dividend
Dividend | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Dividend | 5. Dividend Amount Declaration Per Dividend Payable Date Share Period Covered Date Dividend Amount (In thousands) May 30, 2017 $ 0.15 April 1, 2017 to June 30, 2017 July 14, 2017 $ 525 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 6. Net Loss Per Share Through June 30, 2017, all of the Company’s participating securities received dividends at an equal dividend rate per share. As a result, distributions in excess of earnings to participating securities for the three and six months ended June 30, 2017 have been included in net loss attributable to common stockholders to calculate basic and diluted loss per share. Computations of basic and diluted loss per share (in thousands, except share data) were as follows: Three Months Six Months Ended June 30, Ended June 30, 2017 2017 Net loss $ (422) $ (1,013) Distributions in excess of earnings to participating securities (16) (16) Net loss attributable to common stockholders $ (438) $ (1,029) Weighted-average common shares outstanding - basic and diluted 3,364,948 3,357,515 Net loss per share attributable to common stockholders - basic and diluted $ (0.13) $ (0.31) |
Properties
Properties | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Properties | 7. Properties On December 19, 2016, we purchased a 127,000 30.1 75,000 The lease term is 15 years, with two options to extend the term of the lease for two additional five-year periods. 319,580 annual increases at a rate based on the higher of (i) 4% or (ii) 75% of the consumer price index, or CPI. 1.5 105,477 On May 26, 2017, we purchased an industrial property located in Maryland, which is currently under development and expected to comprise approximately 72,000 8.2 185,000 3.0 4.0 1.9 The initial term of the lease is 16 years, with three options to extend the term of the lease for three additional five year periods. 15 3.25 1.5 7.5 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 8. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2Includes other inputs that are directly or indirectly observable in the marketplace. Level 3Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions. At June 30, 2017, cash equivalent instruments consisted of $4.9 million in short-term money market funds that were measured using the net asset value per share that have not been classified using the fair value hierarchy. The fund invests primarily in short-term U.S. Treasury and government securities. The carrying amounts of financial instruments such as cash equivalents invested in certificates of deposit, receivables, accounts payable, accrued expenses and other liabilities approximate their relative fair values due to the short-term maturities and market rates of interest of these instruments. |
Common Stock Incentive Plan
Common Stock Incentive Plan | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Stock Incentive Plan | 9. Common Stock Incentive Plan Our board of directors adopted our 2016 Omnibus Incentive Plan (the "2016 Plan") to enable us to motivate, attract and retain the services of directors, employees and consultants considered essential to our long-term success. The 2016 Plan offers our directors, employees and consultants an opportunity to own our stock or rights that will reflect our growth, development and financial success. Under the terms of the 2016 Plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 1,000,000 Unvested Weighted- Restricted Average Date Shares Fair Value Balance at December 31, 2016 66,508 $ 17.47 Granted 109,056 18.68 Balance at March 31, 2017 175,564 18.55 Granted 5,955 17.64 Vested (42,508) 18.55 Forfeited (1) (30,372) 18.49 Balance at June 30, 2017 108,639 $ 18.52 (1) Includes 16,792 The remaining unrecognized compensation cost of $ 1.7 2.6 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Office Lease . As of June 30, 2017, we had approximately $ 265,000 29,000 75,000 89,000 72,000 Acquisition and Real Estate Related Commitments . See Note 7. Environmental Matters . We follow the policy of monitoring our properties, both targeted acquisition and existing properties, for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liabilities that would have a material adverse effect on our financial condition, results of operations and cash flow, or that we believe would require disclosure or the recording of a loss contingency. Litigation . We may, from time to time, be a party to legal proceedings, which arise in the ordinary course of our business. We are not aware of any pending or threatened litigation that, if resolved against us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events On August 1, 2017, we paid the additional $ 3.0 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. The comparative financial statements for the period from June 15, 2016 (date of incorporation) through June 30, 2016 have been omitted as the Company had no significant operations during the period. This interim financial information should be read in conjunction with the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report and in the Company's Annual Report on Form 10-K for the period from June 15, 2016 (date of incorporation) through December 31, 2016. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2017. |
Federal Income Taxes | Federal Income Taxes. We intend to elect and to operate our business so as to qualify, and to be taxed, as a real estate investment trust ("REIT") for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2017. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. The income taxes recorded on our consolidated statement of operations represent amounts paid for city and state income and franchise taxes and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. |
Use of Estimates | Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements. Actual results may differ materially from these estimates and assumptions. |
Acquisition of Real Estate Properties | Acquisition of Real Estate Properties. Our investment in real estate is recorded at historical cost, less accumulated depreciation. Upon acquisition of a property, the tangible and intangible assets acquired and liabilities assumed are initially measured based upon their relative fair values. We estimate the fair value of land by reviewing comparable sales within the same submarket and/or region and the fair value of buildings on as as-if vacant basis. Acquisition costs are capitalized as incurred. The acquisitions of our two properties in New York and Maryland were each recorded as an asset acquisition. |
Depreciation | Depreciation. 35 |
Provision for Impairment | Provision for Impairment. |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable. Our leases and future tenant leases are expected to be triple-net leases, an arrangement under which the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, taxes and insurance. We anticipate that all leases will be accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term, unless the collectability of minimum lease payments is not reasonably predictable. Contractually obligated reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursements in the period when such costs are incurred. Year Contractual Minimum Rent 2017 (six months ending December 31) $ 3,018 2018 6,566 2019 6,768 2020 6,979 2021 7,153 Thereafter 75,869 Total $ 106,353 We recognize an allowance for doubtful accounts relating to accounts receivable for amounts deemed uncollectible. We consider tenant specific issues, such as financial stability and ability to pay, when determining collectability of accounts receivable and appropriate allowances to record. We record revenue for each of our properties on a cash basis due to the uncertainty of collectability of lease payments from each tenant due to its limited operating history. Rent under the lease for the property we acquired in Maryland in May 2017 is subject to an initial rent abatement of three months, and as such no rental revenues were generated from that property during the three and six months ended June 30, 2017. |
Cash and Cash Equivalents | Cash and Cash Equivalents. 22.9 |
Stock-Based Compensation | Stock-Based Compensation. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements. In May 2015, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2015-07 that eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value per share practical expedient in the FASB’s fair value measurement guidance. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments were applied retrospectively by removing from the fair value hierarchy any investments for which fair value is measured using the net asset value per share practical expedient. Adoption of this guidance did not have an impact on the Company’s financial position or results of operations. Recent Accounting Pronouncements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. ASU 2014-09 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. The majority of our revenues related to rental income from leasing arrangements, which is excluded from ASU 2014-09. The Company is currently evaluating the impact that ASU 2014-09 will have on any non-lease components and revenues generated from activities other than leasing. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). Under this new standard the large majority of operating leases are expected to remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term. ASU 2016-02 is effective for years beginning after December 15, 2019 as a result of the Company’s election as an emerging growth company, using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The amendments in ASU 2016-02 do not significantly change the current lessor accounting model or the lessee accounting model for our corporate office operating lease; therefore, we do not currently believe that the adoption of this standard will have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation; Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for years beginning after December 15, 2017 as a result of the Company’s election as an emerging growth company, and early adoption is permitted. ASU 2016-09 is not expected to have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses ("ASU 2016-13"), which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2016-13 is effective for years beginning after December 15, 2020 as a result of the Company’s election as an emerging growth company, with early adoption permitted. The Company is in the initial stage of evaluating the impact of this new standard. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which clarifies or provides guidance relating to eight specific cash flow classification issues. The standard should be applied retrospectively for each period presented, as appropriate. This new standard is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company, with early adoption permitted. The impact of ASU 2016-15 will depend on future transactions, though the impact will only be related to the classification of those items on the statement of cash flows and will not impact our cash flows or our consolidated results of operations. In February 2017, the FASB issued ASU No. 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), which defines “in substance nonfinancial asset”, unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. ASU 2017-05 is effective for years beginning after December 15, 2018 as a result of the Company’s election as an emerging growth company. ASU 2017-05 is not expected to have a material impact on our consolidated financial statements. |
Concentration of Credit Risk | Concentration of Credit Risk . Our properties are located in the states of New York and Maryland. The ability of our tenants to honor the terms of their leases are dependent upon the economic, regulatory, competition, natural and social factors affecting the community in which our tenants operate. As of June 30, 2017, the tenant at our property in New York represented 100 We have deposited cash with a financial institution that is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 |
Reclassifications | Reclassifications . Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future contractual minimum rent (including base rent, supplemental base rent (for our property in New York) and property management fees) under the operating leases as of June 30, 2017 for future periods is summarized as follows (in thousands): Year Contractual Minimum Rent 2017 (six months ending December 31) $ 3,018 2018 6,566 2019 6,768 2020 6,979 2021 7,153 Thereafter 75,869 Total $ 106,353 |
Dividend (Tables)
Dividend (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of Dividends Payable | The following table describes the dividend declared by the Company during the period from June 15, 2016 (date of incorporation) through June 30, 2017: Amount Declaration Per Dividend Payable Date Share Period Covered Date Dividend Amount (In thousands) May 30, 2017 $ 0.15 April 1, 2017 to June 30, 2017 July 14, 2017 $ 525 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Computations of basic and diluted loss per share (in thousands, except share data) were as follows: Three Months Six Months Ended June 30, Ended June 30, 2017 2017 Net loss $ (422) $ (1,013) Distributions in excess of earnings to participating securities (16) (16) Net loss attributable to common stockholders $ (438) $ (1,029) Weighted-average common shares outstanding - basic and diluted 3,364,948 3,357,515 Net loss per share attributable to common stockholders - basic and diluted $ (0.13) $ (0.31) |
Common Stock Incentive Plan (Ta
Common Stock Incentive Plan (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Nonvested Restricted Stock Shares Activity | Unvested Weighted- Restricted Average Date Shares Fair Value Balance at December 31, 2016 66,508 $ 17.47 Granted 109,056 18.68 Balance at March 31, 2017 175,564 18.55 Granted 5,955 17.64 Vested (42,508) 18.55 Forfeited (1) (30,372) 18.49 Balance at June 30, 2017 108,639 $ 18.52 (1) Includes 16,792 |
Organization (Details Textual)
Organization (Details Textual) $ / shares in Units, $ in Millions | Dec. 05, 2016USD ($)$ / sharesshares | May 26, 2017USD ($)ft² | Dec. 19, 2016USD ($)ft² | Jun. 30, 2017$ / shares | Jan. 26, 2017$ / shares | Dec. 31, 2016$ / shares |
Entity Incorporation, Date of Incorporation | Jun. 15, 2016 | |||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Industrial Property in Maryland [Member] | ||||||
Area of Real Estate Property | ft² | 72,000 | |||||
Payments to Acquire Real Estate | $ | $ 8.2 | |||||
Payments to Develop Real Estate Assets | $ | $ 7 | |||||
PharmaCann LLC [Member] | ||||||
Area of Real Estate Property | ft² | 127,000 | |||||
Payments to Acquire Real Estate | $ | $ 30.1 | |||||
Common Class A [Member] | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Common Class A [Member] | IPO [Member] | ||||||
Stock Issued During Period, Shares, New Issues | shares | 3,350,000 | |||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | |||||
Shares Issued, Price Per Share | $ / shares | $ 20 | |||||
Proceeds from Issuance Initial Public Offering | $ | $ 61.1 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Contractual Minimum Rent | |
2017 (six months ending December 31) | $ 3,018 |
2,018 | 6,566 |
2,019 | 6,768 |
2,020 | 6,979 |
2,021 | 7,153 |
Thereafter | 75,869 |
Total | $ 106,353 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Details Textual) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Cash, FDIC Insured Amount | $ 250,000 |
Impairment Losses on Property | 0 |
Money Market Funds [Member] | |
Short-term Investments | $ 22,900,000 |
Building [Member] | |
Property, Plant and Equipment, Useful Life | 35 years |
PharmaCann LLC [Member] | Rental Revenue, Net [Member] | |
Concentration Risk, Percentage | 100.00% |
Common Stock (Details Textual)
Common Stock (Details Textual) - $ / shares | Jun. 30, 2017 | Jan. 26, 2017 | Dec. 31, 2016 |
Common Stock, Shares Authorized | 50,000,000 | 0 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock [Member] | |||
Common Stock, Shares Authorized | 50,000,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | ||
Common Class A [Member] | |||
Common Stock, Shares Authorized | 0 | 49,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | 0.001 | $ 0.001 |
Common Class B [Member] | |||
Common Stock, Shares Authorized | 0 | 1,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock (Details Textua
Preferred Stock (Details Textual) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Issued | 0 | 0 |
Dividend (Details)
Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | 13 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Declaration Date | May 30, 2017 | |
Amount Per Share | $ 0.15 | |
Period Covered | April 1, 2017 to June 30, 2017 | |
Dividend Payable Date | Jul. 14, 2017 | |
Dividend Amount | $ 525 | $ 0 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Net loss | $ (422) | $ (1,013) |
Distributions in excess of earnings to participating securities | (16) | (16) |
Net loss attributable to common stockholders | $ (438) | $ (1,029) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 3,364,948 | 3,357,515 |
Net loss per share attributable to common stockholders - basic and diluted (per share) | $ (0.13) | $ (0.31) |
Properties (Details Textual)
Properties (Details Textual) | 1 Months Ended | |
May 26, 2017USD ($)ft² | Dec. 19, 2016USD ($)ft² | |
PharmaCann LLC [Member] | ||
Sale Leaseback Transaction [Line Items] | ||
Payments to Acquire Real Estate | $ 30,100,000 | |
Sale Leaseback Transaction, Transaction Costs, Investing Activities | $ 75,000 | |
Sale Leaseback Transaction, Lease Terms | The lease term is 15 years, with two options to extend the term of the lease for two additional five-year periods. | |
Description of Operating Leases Rate | annual increases at a rate based on the higher of (i) 4% or (ii) 75% of the consumer price index, or CPI. | |
Operating Leases, Monthly Dynamic Rental Revenue | $ 319,580 | |
Property Management Fee, Percent Fee | 1.50% | |
Operating Leases, Monthly Static Rental Revenue | $ 105,477 | |
Area of Real Estate Property | ft² | 127,000 | |
Lessor Leasing Arrangements, Operating Leases, Term of Contract | 15 years | |
Industrial Property in Maryland [Member] | ||
Sale Leaseback Transaction [Line Items] | ||
Payments to Acquire Real Estate | $ 8,200,000 | |
Sale Leaseback Transaction, Transaction Costs, Investing Activities | $ 185,000 | |
Sale Leaseback Transaction, Lease Terms | The initial term of the lease is 16 years, with three options to extend the term of the lease for three additional five year periods. | |
Sale Leaseback Transaction, Other Payments Required | $ 3,000,000 | |
Reimbursement of Tenant Improvements Payable | $ 4,000,000 | |
Property Management Fee, Percent Fee | 1.50% | |
Percentage of Expected To Provide Return On Total Purchase Price | 15.00% | |
Percentage of Annual Rent Escalations | 3.25% | |
Industrial Properties Capitalization Rate | 7.50% | |
Area of Real Estate Property | ft² | 72,000 | |
Lessor Leasing Arrangements, Operating Leases, Term of Contract | 16 years | |
Lease Incentive, Payable | $ 1,900,000 |
Fair Value of Financial Instr32
Fair Value of Financial Instruments (Details Textual) $ in Millions | Jun. 30, 2017USD ($) |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | |
Cash and Cash Equivalents, Fair Value Disclosure | $ 4.9 |
Common Stock Incentive Plan (De
Common Stock Incentive Plan (Details) - $ / shares | 3 Months Ended | ||
Jun. 30, 2017 | Mar. 31, 2017 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unvested Restricted Shares, Beginning Balance | 175,564 | 66,508 | |
Unvested Restricted Shares, Granted | 5,955 | 109,056 | |
Unvested Restricted Shares, Vested | (42,508) | ||
Unvested Restricted Shares, Forfeited | [1] | (30,372) | |
Unvested Restricted Shares, Ending Balance | 108,639 | 175,564 | |
Weighted-Average Date Fair Value, Beginning Balance | $ 18.55 | $ 17.47 | |
Weighted-Average Date Fair Value, Granted | 17.64 | 18.68 | |
Weighted-Average Date Fair Value, Vested | 18.55 | ||
Weighted-Average Date Fair Value, Forfeited | [1] | 18.49 | |
Weighted-Average Date Fair Value, Ending Balance | $ 18.52 | $ 18.55 | |
[1] | Includes 16,792 shares that were forfeited to cover the employees’ tax withholding obligation upon vesting. |
Common Stock Incentive Plan (34
Common Stock Incentive Plan (Details Textual) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($)shares | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ | $ 1.7 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 7 months 6 days |
Shares Paid for Tax Withholding for Share Based Compensation | 16,792 |
2016 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - Office Lease [Member] | Jun. 30, 2017USD ($) |
Other Commitments [Line Items] | |
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 29,000 |
Operating Leases, Future Minimum Payments, Due in Two Years | 75,000 |
Operating Leases, Future Minimum Payments, Due in Three Years | 89,000 |
Operating Leases, Future Minimum Payments, Due in Four Years | 72,000 |
Operating Leases, Future Minimum Payments Due | $ 265,000 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) - Industrial Property in Maryland [Member] - USD ($) $ in Millions | Aug. 01, 2017 | May 26, 2017 |
Payments to Develop Real Estate Assets | $ 7 | |
Subsequent Event [Member] | ||
Payments to Develop Real Estate Assets | $ 3 |