Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 08, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | EPRT | |
Entity Registrant Name | Essential Properties Realty Trust, Inc. | |
Entity Central Index Key | 1,728,951 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,749,092 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Real estate investments, at cost: | |||
Land and improvements | $ 355,184 | $ 278,985 | |
Building and improvements | 748,004 | 584,385 | |
Lease incentive | 2,275 | 2,275 | |
Construction in progress | 11,263 | 4,076 | |
Intangible lease assets | 64,315 | 62,453 | |
Total real estate investments, at cost | 1,181,041 | 932,174 | |
Less: accumulated depreciation and amortization | (36,310) | (24,825) | |
Total real estate investments, net | 1,144,731 | 907,349 | |
Loans and direct financing lease receivables, net | 6,322 | 2,725 | |
Real estate investments held for sale, net | 7,195 | 4,173 | |
Net investments | 1,158,248 | 914,247 | |
Cash and cash equivalents | 131,387 | 7,250 | |
Restricted cash | 8,644 | 12,180 | |
Straight-line rent receivable, net | 9,015 | 5,498 | |
Prepaid expenses and other assets, net | 5,115 | 3,045 | |
Total assets | [1] | 1,312,409 | 942,220 |
LIABILITIES AND EQUITY | |||
Secured borrowings, net of deferred financing costs | 508,821 | 511,646 | |
Notes payable to related party | 0 | 230,000 | |
Intangible lease liabilities, net | 12,152 | 12,321 | |
Intangible lease liabilities held for sale, net | 256 | 129 | |
Accrued liabilities and other payables (including $324 due to a related party as of December 31, 2017) | 6,736 | 6,722 | |
Total liabilities | [1] | 527,965 | 760,818 |
Commitments and contingencies (see Note 10) | 0 | 0 | |
Stockholders' equity: | |||
Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of June 30, 2018 | 0 | 0 | |
Common stock, $0.01 par value; 500,000,000 authorized; 40,976,901 issued and outstanding as of June 30, 2018 | 403 | 0 | |
Additional paid-in capital | 531,589 | 0 | |
Retained earnings | 222 | 0 | |
Members' equity: | |||
Total stockholders'/members' equity | 532,214 | 181,402 | |
Non-controlling interests | 252,230 | 0 | |
Total equity | 784,444 | 181,402 | |
Total liabilities and equity | 1,312,409 | 942,220 | |
Class A Units | |||
Members' equity: | |||
Members' equity value | 0 | 86,668 | |
Class B Units | |||
Members' equity: | |||
Members' equity value | 0 | 574 | |
Class C Units | |||
Members' equity: | |||
Members' equity value | 0 | 94,064 | |
Class D Units | |||
Members' equity: | |||
Members' equity value | $ 0 | $ 96 | |
[1] | The consolidated balance sheets of Essential Properties Realty Trust, Inc. and Essential Properties Realty Trust, Inc. Predecessor include assets and liabilities of consolidated variable interest entities (“VIEs”). See Notes 2 and 5. As of June 30, 2018, with the exception of $100 of cash and cash equivalents and $3.5 million of accrued liabilities and other payables, all of the assets and liabilities of the Company were held by its operating partnership, a consolidated VIE. As of December 31, 2017, the consolidated balance sheets included the following amounts related to the Company’s consolidated VIEs: $191.7 million of land and improvements, $391.3 million of building and improvements,$2.1 million of lease incentive,$49.7 million of intangible lease assets, $21.4 million of accumulated depreciation and amortization,$2.4 million of direct financing lease receivables, net, $4.2 million of real estate investments held for sale, net,$5.0 million of straight-line rent receivable,$511.6 million of secured borrowings, net of deferred financing costs, $10.8 million of intangible lease liabilities, net, and $0.1 million of intangible lease liabilities held for sale, net. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Common shares, par value per share | $ 0.01 | |
Common shares, authorized shares | 500,000,000 | |
Common shares, issued shares | 40,976,901 | |
Common shares, outstanding shares | 40,976,901 | |
Preferred shares, par value per share | $ 0.01 | |
Preferred shares, authorized shares | 150,000,000 | |
Preferred shares, issued shares | 0 | |
Preferred shares, outstanding shares | 0 | |
Cash and cash equivalents | $ 131,387 | $ 7,250 |
Accrued liabilities and other payables | 6,736 | 6,722 |
Assets and Liabilities Not Held by Variable Interest Entities (“VIEs”) | ||
Cash and cash equivalents | 100 | |
Accrued liabilities and other payables | $ 3,500 | |
Predecessor | ||
Due to related party included in accrued liabilities and other payables | 324 | |
Predecessor | variable Interest Entities (“VIEs”) | ||
Land and improvements | 191,700 | |
Building and improvements | 391,300 | |
Lease incentive | 2,100 | |
Intangible lease assets | 49,700 | |
Accumulated depreciation and amortization | 21,400 | |
Direct financing lease receivables, net | 2,400 | |
Real estate investments held for sale, net | 4,200 | |
Straight-line rent receivable | 5,000 | |
Secured borrowings, net of deferred financing costs | 511,600 | |
Intangible lease liabilities, net | 10,800 | |
Intangible lease liabilities held for sale, net | $ 100 | |
Predecessor | Class A Units | ||
Members' equity, per unit | $ 1,000 | |
Members' equity, units issued | 83,700 | |
Members' equity, units outstanding | 83,700 | |
Predecessor | Class B Units | ||
Members' equity, units issued | 8,550 | |
Members' equity, units outstanding | 1,610 | |
Members' equity, units vested | 1,610 | |
Predecessor | Class C Units | ||
Members' equity, per unit | $ 1,000 | |
Members' equity, units issued | 91,450 | |
Members' equity, units outstanding | 91,450 | |
Predecessor | Class D Units | ||
Members' equity, units issued | 3,000 | |
Members' equity, units outstanding | 600 | |
Members' equity, units vested | 600 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Rental revenue | $ 21,548 | $ 12,670 | $ 41,623 | $ 22,678 |
Interest income on loans and direct financing lease receivables | 89 | 82 | 159 | 165 |
Other revenue | 56 | 565 | 113 | 571 |
Total revenues | 21,693 | 13,317 | 41,895 | 23,414 |
Expenses: | ||||
Interest (including $2,524, $1,713, $4,603 and $1,923 to related parties during the three and six months ended June 30, 2018 and 2017, respectively) | 8,634 | 5,160 | 16,911 | 8,875 |
General and administrative | 2,987 | 2,331 | 6,343 | 4,275 |
Property expenses | 380 | 479 | 727 | 689 |
Depreciation and amortization | 7,611 | 4,305 | 14,079 | 8,087 |
Provision for impairment of real estate | 907 | 428 | 2,756 | 579 |
Total expenses | 20,519 | 12,703 | 40,816 | 22,505 |
Income before income tax expense | 1,174 | 614 | 1,079 | 909 |
Income tax expense | 87 | 35 | 117 | 42 |
Income before gain on dispositions of real estate | 1,087 | 579 | 962 | 867 |
Gain on dispositions of real estate, net | 2,412 | 1,468 | 3,645 | 1,762 |
Net income | 3,499 | 2,047 | 4,607 | 2,629 |
Net income attributable to non-controlling interests | (99) | (99) | ||
Net income attributable to stockholders and members | 3,400 | 2,047 | 4,508 | 2,629 |
Comprehensive income attributable to stockholders and members | $ 3,400 | $ 2,047 | $ 4,508 | $ 2,629 |
Basic weighted-average shares outstanding | 40,976,901 | 40,976,901 | ||
Basic net income per share | $ 0.01 | $ 0.01 | ||
Diluted weighted-average shares outstanding | 60,033,453 | 60,033,453 | ||
Diluted net income per share | $ 0.01 | $ 0.01 |
Consolidated Statements of Ope5
Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Interest expense related parties | $ 2,524 | $ 1,713 | $ 4,603 | $ 1,923 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' / Members' Equity (Unaudited) - USD ($) $ in Thousands | Total | Class A Units | Class B Units | Class C Units | Class D Units | SCF Funding LLC | Common Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' / Members' Equity | Non-controlling interests |
Balance (Predecessor) at Dec. 31, 2016 | $ 174,650 | $ 174,650 | |||||||||
Contributions | Predecessor | 101,008 | $ 83,700 | 17,308 | ||||||||
Distributions | Predecessor | (101,222) | (101,222) | |||||||||
Conversion of equity resulting from issuance of units | Predecessor | $ 90,823 | (90,823) | |||||||||
Unit compensation expense | Predecessor | 329 | $ 260 | $ 69 | ||||||||
Net income | Predecessor | 2,629 | 1,215 | 1,327 | $ 87 | |||||||
Net income | 2,629 | ||||||||||
Balance (Predecessor) at Jun. 30, 2017 | 177,394 | 84,915 | 260 | 92,150 | 69 | ||||||
Balance (Predecessor) at Dec. 31, 2017 | 181,402 | 86,668 | 574 | 94,064 | 96 | $ 181,402 | |||||
Balance at Dec. 31, 2017 | 181,402 | ||||||||||
Net income | 4,607 | ||||||||||
Balance at Jun. 30, 2018 | $ 784,444 | $ 403 | $ 531,589 | $ 222 | 532,214 | $ 252,230 | |||||
Balance, shares at Jun. 30, 2018 | 40,976,901 | 40,976,901 | |||||||||
Balance (Predecessor) at Dec. 31, 2017 | $ 181,402 | 86,668 | 574 | 94,064 | 96 | 181,402 | |||||
Balance at Dec. 31, 2017 | 181,402 | ||||||||||
Contributions | Predecessor | 50,000 | 50,000 | 50,000 | ||||||||
Unit compensation expense | Predecessor | 443 | 373 | 70 | 443 | |||||||
Net income | Predecessor | 4,285 | 2,414 | 1,871 | 4,285 | |||||||
Balance (Predecessor) at Jun. 24, 2018 | 236,130 | 139,082 | 947 | 95,935 | 166 | 236,130 | |||||
Contribution of Predecessor equity in exchange for OP Units | $ (139,082) | $ (947) | $ (95,935) | $ (166) | (236,130) | 236,130 | |||||
Initial public offering | 455,000 | $ 325 | 454,675 | 455,000 | |||||||
Initial public offering, shares | 32,500,000 | ||||||||||
Concurrent private placement of common stock | 108,999 | $ 78 | 108,921 | 108,999 | |||||||
Concurrent private placement of common stock, shares | 7,785,611 | ||||||||||
Concurrent private placement of OP Units | 16,001 | 16,001 | |||||||||
Costs related to initial public offering | (32,053) | (32,053) | (32,053) | ||||||||
Share-based compensation expense | 46 | 46 | 46 | ||||||||
Share-based compensation expense, shares | 691,290 | ||||||||||
Net income | 321 | 222 | 222 | 99 | |||||||
Balance at Jun. 30, 2018 | $ 784,444 | $ 403 | $ 531,589 | $ 222 | $ 532,214 | $ 252,230 | |||||
Balance, shares at Jun. 30, 2018 | 40,976,901 | 40,976,901 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 4,607 | $ 2,629 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and lease intangible amortization | 14,079 | 8,087 |
Amortization of lease incentive | 77 | 67 |
Amortization of above/below market leases | 130 | 144 |
Amortization of deferred financing costs | 1,165 | 758 |
Provision for impairment of real estate | 2,756 | 579 |
Gain on dispositions of investments, net | (3,645) | (1,762) |
Straight-line rent receivable | (3,518) | (1,960) |
Equity-based compensation expense | 347 | 399 |
Allowance for doubtful accounts | 130 | |
Changes in other assets and liabilities: | ||
Prepaid expenses and other assets | 1,020 | (63) |
Accrued liabilities and other payables | (3,573) | 831 |
Net cash provided by operating activities | 13,575 | 9,709 |
Cash flows from investing activities: | ||
Proceeds from sales of investments, net | 21,500 | 16,336 |
Principal collections on direct financing lease receivables | 35 | 44 |
Investments in loans receivable | (3,632) | |
Deposits for prospective real estate investments | 285 | (125) |
Investment in real estate | (266,251) | (216,441) |
Investment in construction in progress | (8,754) | (1,689) |
Capital expenditures | (328) | (48) |
Net cash used in investing activities | (257,145) | (201,923) |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable to related parties | 154,000 | 313,000 |
Payments of principal on notes payable to related party | (384,000) | (103,000) |
Repayments of secured borrowings | (3,959) | (1,928) |
Deferred financing costs | (3,284) | 251 |
Capital contributions by members in Predecessor | 50,000 | 83,700 |
Distributions paid to members by Predecessor | (101,222) | |
Proceeds from initial public offering, net | 427,700 | |
Initial public offering costs | (1,286) | |
Net cash provided by financing activities | 364,171 | 190,801 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 120,601 | (1,413) |
Cash and cash equivalents and restricted cash, beginning of period | 19,430 | 11,922 |
Cash and cash equivalents and restricted cash, end of period | 140,031 | 10,509 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 131,387 | 3,793 |
Restricted cash | 8,644 | 6,716 |
Cash and cash equivalents and restricted cash, end of period | 140,031 | 10,509 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest, net of amounts capitalized | 16,258 | 7,860 |
Non-cash investing and financing activities: | ||
Reclassification from construction in progress upon project completion | 1,567 | |
Non-cash equity contributions | 17,308 | |
Real estate investments acquired through direct equity investment | $ (17,308) | |
Contribution of Predecessor equity in exchange for OP Units | 236,130 | |
Payable and accrued initial public offering costs | 3,467 | |
Underwriters discount on capital raised through initial public offering | 27,300 | |
Payable and accrued deferred financing costs | 261 | |
Operating Partnership Unit | ||
Cash flows from financing activities: | ||
Proceeds from concurrent private placement | 16,001 | |
Common Stock | ||
Cash flows from financing activities: | ||
Proceeds from concurrent private placement | $ 108,999 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2018 | |
Organization And Formation Activities [Abstract] | |
Organization | 1. Organization Essential Properties Realty Trust, Inc. (“EPRT Inc.” or the “Company”) is an internally managed real estate company that acquires, owns and manages primarily single-tenant properties that are net leased on a long-term basis to middle-market companies operating service-oriented or experience-based businesses. EPRT Inc. has a diversified portfolio that focuses on properties leased to tenants in businesses such as restaurants (including quick service and casual and family dining), car washes, automotive services, medical services, convenience stores, entertainment, early childhood education and health and fitness. EPRT Inc. acquires and leases freestanding, single-tenant commercial real estate facilities where a tenant services its customers and conducts activities that are essential to the generation of the tenant’s sales and profits. EPRT Inc. was organized on January 12, 2018 as a Maryland corporation and intends to qualify to be taxed as a real estate investment trust (“REIT”) beginning with its taxable year ending December 31, 2018. On June 25, 2018, EPRT Inc. completed its initial public offering (the “IPO”) of 32,500,000 shares of common stock, $0.01 par value per share, at an initial public offering price of $14.00 per share for total gross proceeds of $455.0 million, pursuant to a registration statement on Form S-11 (File No. 333-225215) (the “Registration Statement”), filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”). The common stock of EPRT Inc. trades on the New York Stock Exchange under the ticker symbol “EPRT”. Additionally, on June 20, 2018, through a series of formation transactions (the “Formation Transactions”), Essential Properties Realty Trust LLC (“EPRT LLC”) converted from a Delaware limited liability company (“LLC”) into a Delaware limited partnership, changed its name to Essential Properties, L.P. (the “Operating Partnership”) and became a subsidiary of EPRT Inc. Prior to the completion of the Formation Transactions, EPRT LLC was a wholly-owned subsidiary of EPRT Holdings LLC (“EPRT Holdings” and, collectively with EPRT LLC, the “Predecessor”) and EPRT Holdings received 17,913,592 units of limited partnership interest in the Operating Partnership (“OP Units”) in connection with EPRT LLC’s conversion into a Delaware limited partnership. Essential Properties OP G.P., LLC, a wholly-owned subsidiary of EPRT Inc., became the sole general partner of the Operating Partnership and holds a 1.0% general partnership interest in the Operating Partnership. The Formation Transactions were accounted for as a reorganization of entities under common control in the consolidated financial statements and the assets and liabilities of the Predecessor were recorded by EPRT Inc. at their historical carrying amounts. Concurrent with the completion of the IPO, EPRT Inc. received an additional $125.0 million investment from Eldridge Industries, LLC (“Eldridge”) in private placements (the “Concurrent Private Placement”) of 7,785,611 shares of EPRT Inc.’s common stock and 1,142,960 OP Units. EPRT Inc. contributed the net proceeds from the IPO and the Concurrent Private Placement of common stock to Eldridge to the Operating Partnership and received 40,976,901 OP Units. Following the completion of the IPO, the Formation Transactions and the Concurrent Private Placement, EPRT Inc. held a 68.3% ownership interest in the Operating Partnership, with EPRT Holdings and Eldridge holding 29.8% and 1.9% ownership interests in the Operating Partnership, respectively. Substantially all of EPRT Inc.’s assets are held by, and its operations are conducted through, the Operating Partnership. On June 22, 2018, EPRT Inc. registered an additional 3,550,000 shares of common stock, $0.01 par value per share, reserved for issuance under EPRT Inc.’s 2018 Incentive Plan (the “Equity Incentive Plan”), pursuant to a registration statement on Form S-8 (File No. 333-225837), filed with the SEC under the Securities Act. On June 25, 2018, EPRT Inc. issued 691,290 shares of restricted common stock to its directors, executive officers and other employees pursuant to the Equity Incentive Plan. See Note 9 – Equity-Based Compensation for further details. The Predecessor EPRT LLC was formed on March 30, 2016 as a Delaware LLC by its initial sole member, SCF Funding LLC (the “Parent”). EPRT LLC commenced operations on March 30, 2016 and the affairs of EPRT LLC were managed by Stonebriar Finance Holdings LLC (the “Manager”). The Parent and Manager were ultimately wholly-owned through a series of Delaware LLCs by Eldridge. EPRT LLC’s operating agreement (the “EPRT LLC Operating Agreement”) provided certain limitations on the liability of the Parent and the Manager. These limitations included 1) that neither the Parent nor the Manager shall be liable for the debts, obligations, or liabilities of the Predecessor solely by reason of being a member or manager of the Predecessor, 2) that neither the Parent nor the Manager shall be liable to the Predecessor or to any member of the Predecessor or other person or entity who may become party to the EPRT LLC Operating Agreement for any breach of the EPRT LLC Operating Agreement arising under or in connection with the EPRT LLC Operating Agreement except for any act or omission made in bad faith, and 3) the Predecessor indemnifies the Parent, Manager and officers from and against all losses, claims, damages, liabilities, costs and expenses except those resulting primarily from bad faith of the indemnitee. On January 31, 2017, EPRT LLC received additional capital contributions from Stonebriar Holdings LLC (“Stonebriar Holdings”) and members of EPRT LLC’s management (“EPRT Management”), and issued four classes of equity units: Class A, Class B, Class C and Class D. The Class A and C units have voting rights while the Class B and D units do not have voting rights. After these equity contributions, the Parent owned approximately 52.3% of EPRT LLC, Stonebriar Holdings owned approximately 45.7% and EPRT Management owned approximately 2.0%. On December 31, 2017, EPRT LLC reorganized (the “EPRT LLC Reorganization”) and the holders of the Class A, Class B, Class C and Class D units contributed all of their interests in EPRT LLC to a newly formed Delaware LLC, EPRT Holdings, in exchange for interests in EPRT Holdings with the same rights as the interests they held in EPRT LLC. The EPRT LLC Reorganization lacked economic substance as the newly issued units of EPRT Holdings have the same rights and privileges as the previously issued units of EPRT LLC and there was no change in ownership percentages of the individual unitholders. As of December 31, 2017, EPRT LLC became a wholly-owned subsidiary of EPRT Holdings. The EPRT LLC Reorganization was accounted for as a reorganization of entities under common control in the Predecessor’s consolidated financial statements and the assets and liabilities of EPRT LLC was recorded by EPRT Holdings at their historical carrying amounts. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the SEC. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2018 and 2017 are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Registration Statement. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation. As of June 30, 2018, the Company held a 68.3% ownership interest in the Operating Partnership and the consolidated financial statements include the financial statements of the Operating Partnership as of that date. As of December 31, 2017, all subsidiaries of the Company were wholly-owned. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Investments Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. The Company evaluates each acquisition transaction to determine whether the acquired assets meet the definition of a business. Under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business The Company allocates the purchase price of acquired properties accounted for as asset acquisitions to tangible and identifiable intangible assets or liabilities based on their relative fair values. Tangible assets may include land, site improvements and buildings. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics. The Company may incur various costs in the leasing and development of its properties. Amounts paid to tenants that incentivize them to extend or otherwise amend an existing lease or to sign a new lease agreement are capitalized to lease incentive on the Company’s consolidated balance sheets. Tenant improvements are capitalized to building and improvements within the Company’s consolidated balance sheets. Costs incurred which are directly related to properties under development, which include preconstruction costs essential to the development of the property, development costs, construction costs, interest costs and real estate taxes and insurance, are capitalized during the period of development as construction in progress. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that benefited. Determination of when a development project commences and capitalization begins, and when a development project has reached substantial completion and is available for occupancy and capitalization must cease, involves a degree of judgment. The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases based on the specific characteristics of each tenant’s lease. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. Factors the Company considers in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from six to 12 months. The fair value of above- or below-market leases is recorded based on the net present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company’s estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining non-cancelable term of the lease including any below-market fixed rate renewal options for below-market leases. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including real estate valuations prepared by independent valuation firms. The Company also considers information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate, e.g. location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Additionally, the Company considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations and, when necessary, will record an asset retirement obligation as part of the purchase price allocation. Real estate investments that are intended to be sold are designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Real estate investments are no longer depreciated when they are classified as held for sale. If the disposal, or intended disposal, of certain real estate investments represents a strategic shift that has had or will have a major effect on the Company’s operations and financial results, the operations of such real estate investments would be presented as discontinued operations in the consolidated statements of operations and comprehensive income for all applicable periods. Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings and 15 years for site improvements. During the three months ended June 30, 2018 and 2017, the Company recorded $5.7 million and $3.1 million, respectively, of depreciation on its real estate investments. During the six months ended June 30, 2018 and 2017, the Company recorded $10.9 million and $5.6 million, respectively, of depreciation on its real estate investments. Lease incentives are amortized on a straight-line basis as a reduction of rental income over the remaining non-cancellable terms of the respective leases. In the event that a tenant terminates its lease, the unamortized portion of the lease incentive is charged to rental revenue. Construction in progress is not depreciated until the development has reached substantial completion. Tenant improvements are depreciated over the non-cancellable term of the related lease or their estimated useful life, whichever is shorter. Capitalized above-market lease values are amortized on a straight-line basis as a reduction of rental revenue over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are accreted on a straight-line basis as an increase to rental revenue over the remaining non-cancellable terms of the respective leases including any below-market fixed rate renewal option periods. Capitalized above-market ground lease values are accreted as a reduction of property expenses over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property expenses over the remaining terms of the respective leases and any expected below-market renewal option periods where renewal is considered probable. The value of in-place leases, exclusive of the value of above-market and below-market lease intangibles, is amortized to depreciation and amortization expense on a straight-line basis expense over the remaining periods of the respective leases. In the event that a tenant terminates its lease, the unamortized portion of each intangible, including in-place lease values, is charged to depreciation and amortization expense, while above- and below-market lease adjustments are recorded within rental revenue in the consolidated statements of operations and comprehensive income. Loans Receivable The Company holds its loans receivable for long-term investment. Loans receivable are carried at amortized cost, including related unamortized discounts or premiums, if any. The Company recognizes interest income on loans receivable using the effective-interest method applied on a loan-by-loan basis. Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective-interest method. The Company periodically evaluates the collectability of its loans receivable, including accrued interest, by analyzing the underlying property‑level economics and trends, collateral value and quality and other relevant factors in determining the adequacy of its allowance for loan losses. A loan is determined to be impaired when, in management’s judgment based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Specific allowances for loan losses are provided for impaired loans on an individual loan basis in the amount by which the carrying value exceeds the estimated fair value of the underlying collateral less disposition costs. As of June 30, 2018, the Company had no allowance for loan losses recorded in its consolidated financial statements. The Company had no loans receivable, and therefore had no allowance for loan losses, as of December 31, 2017. Direct Financing Lease Receivables Certain of the Company’s real estate investment transactions are accounted for as direct financing leases. The Company records the direct financing lease receivables at their net investment, determined as the aggregate minimum lease payments and the estimated non-guaranteed residual value of the leased property less unearned income. The unearned income is recognized over the life of the related lease contracts so as to produce a constant rate of return on the net investment in the asset. The Company’s investment in direct financing lease receivables is reduced over the applicable lease term to its non-guaranteed residual value by the portion of rent allocated to the direct financing lease receivables. If and when an investment in direct financing lease receivables is identified for impairment evaluation, the Company will apply the guidance in both the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 310 “Receivables” (“ASC 310”) and ASC 840 “Leases” (“ASC 840”). Under ASC 310, the lease receivable portion of the net investment in a direct financing lease receivable is evaluated for impairment when it becomes probable the Company, as the lessor, will be unable to collect all rental payments associated with the Company’s investment in the direct financing lease receivable. Under ASC 840, the Company reviews the estimated non-guaranteed residual value of a leased property at least annually. If the review results in a lower estimate than had been previously established, the Company determines whether the decline in estimated non-guaranteed residual value is other than temporary. If a decline is judged to be other than temporary, the accounting for the transaction is revised using the changed estimate and the resulting reduction in the net investment in direct financing lease receivables is recognized by the Company as a loss in the period in which the estimate is changed. As of June 30, 2018 and December 31, 2017, the Company determined that none of its direct financing lease receivables were impaired. Impairment of Long-Lived Assets If circumstances indicate that the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. Impairment assessments have a direct impact on the consolidated statements of operations and comprehensive income because recording an impairment loss results in an immediate negative adjustment to the consolidated statements of operations and comprehensive income. During the three months ended June 30, 2018 and 2017, the Company recorded a provision for impairment of real estate of $0.9 million and $0.4 million, respectively. During the six months ended June 30, 2018 and 2017, the Company recorded a provision for impairment of real estate of $2.8 million and $0.6 million, respectively. Cash and Cash Equivalents Cash and cash equivalents includes cash in the Company’s bank accounts. The Company considers all cash balances and highly-liquid investments with original maturities of three months or less to be cash and cash equivalents. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit. As of June 30, 2018 and December 31, 2017, the Company had deposits of $131.4 million and $7.3 million, respectively, of which $131.1 million and $7.0 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result. Restricted Cash Restricted cash consists of cash held with the trustee for the Company’s Master Trust Funding Program (as defined in Note 5—Secured Borrowings). This restricted cash is used to make principal and interest payments on the Company’s secured borrowings, to pay trust expenses, and to acquire future real estate investments which will be pledged as collateral under the Master Trust Funding Program. See Note 5—Secured Borrowings for further discussion. Allowance for Doubtful Accounts The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the accounts receivable and straight-line rent receivable balances are reduced by an allowance for uncollectible accounts on the consolidated balance sheets or a direct write-off of the receivable is recorded in the consolidated statements of operations. The provision for doubtful accounts is included in property expenses in the Company’s consolidated statements of operations and comprehensive income. If the accounts receivable balance or straight-line rent receivable balance is subsequently deemed to be uncollectible, such receivable amounts are written-off to the allowance for doubtful accounts. As of June 30, 2018 and December 31, 2017, the Company recorded an allowance for doubtful accounts of $0.2 million and $0.1 million, respectively, related to base rent receivable. As of June 30, 2018, the Company had no reserve recorded against straight-line rent receivable and had a $0.1 million reserve recorded against straight-line rent receivable as of December 31, 2017. Deferred Financing Costs Financing costs related to the issuance of the Company’s unsecured revolving credit facility are deferred and amortized as an increase to interest expense in the consolidated statements of operations and comprehensive income over the term of the related debt instrument and are reported as an asset on the consolidated balance sheets. Financing costs related to the issuance of the Company’s secured borrowings under the Master Trust Funding Program are deferred and amortized as an increase to interest expense in the consolidated statements of operations and comprehensive income over the term of the related debt instrument and are reported as a reduction of the related debt balance on the consolidated balance sheets. Fair Value Measurement The Company estimates fair value of financial and non-financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1—Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3—Unobservable inputs that reflect the Company’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. Revenue Recognition The Company’s rental revenue is primarily related to rent received from tenants. Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the non-cancellable initial term of the lease from the later of the date of the commencement of the lease or the date of acquisition of the property subject to the lease. Rental revenue recognition begins when the tenant controls the space through the term of the related lease. Because substantially all of the leases provide for rental increases at specified intervals, the Company records a straight-line rent receivable and recognizes revenue on a straight-line basis through the expiration of the non-cancellable term of the lease. The Company takes into account whether the collectability of rents is reasonably assured in determining the amount of straight-line rent to record. Rental revenue from leases with contingent rentals is recognized when changes in the factors on which the contingent payments are based actually occur. The Company defers rental revenue related to lease payments received from tenants in advance of their due dates. These amounts are presented within accrued liabilities and other payables on the Company’s consolidated balance sheets. Certain properties in the Company’s investment portfolio are subject to leases that provide for contingent rent based on a percentage of the tenant’s gross sales. For these leases, the Company recognizes contingent rental revenue when the threshold upon which the contingent lease payment is based is actually reached. During the three months ended June 30, 2018 and 2017, the Company recorded contingent rent of $0.2 million and $0.5 million, respectively. During the six months ended June 30, 2018 and 2017, the Company recorded contingent rent of $0.7 million. Organizational Costs Costs related to the initial organization of the Company and its subsidiaries are expensed as they are incurred and are recorded within general and administrative expense in the Company’s consolidated statements of operations and comprehensive income. Offering Costs In connection with the IPO, the Company incurred legal, accounting and other offering-related costs. Such costs have been deducted from the gross proceeds of the IPO upon its completion. As of June 30, 2018 and December 31, 2017, the Company had capitalized $32.1 million and $1.3 million of such costs in the Company’s consolidated balance sheets. These costs are presented as a reduction of additional paid-in capital as of June 30, 2018 (after the completion of the IPO) and are presented within prepaid expenses and other assets as of December 31, 2017 (prior to the completion of the IPO). Gains and Losses on Dispositions of Real Estate Gains and losses on dispositions of real estate investments are recorded in accordance with ASC 360-20, Property, Plant and Equipment—Real Estate Sales On January 1, 2018, the Company adopted FASB ASU 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 Income Taxes EPRT Inc. intends to elect to be taxed as a REIT under sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ending December 31, 2018. REITs are subject to a number of organizational and operational requirements, including a requirement that 90% of ordinary “REIT taxable income” (as determined without regard to the dividends paid deduction or net capital gains) be distributed. As a REIT, the Company will generally not be subject to U.S. federal income tax to the extent that it meets the organizational and operational requirements and its distributions equal or exceed REIT taxable income. For the period subsequent to the effective date of our REIT election, the Company has met the organizational and operational requirements and distributions have exceeded net taxable income. Accordingly, no provision has been made for U.S. federal income taxes. Even if the Company qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income. Additionally, taxable income from non-REIT activities managed through the Company's taxable REIT subsidiary is subject to federal, state, and local taxes. From the Predecessor’s commencement of operations on March 30, 2016 through January 31, 2017, the Predecessor and its subsidiaries included in the consolidated financial statements were treated as disregarded entities for U.S. federal and state income tax purposes, and, accordingly, the Predecessor was not subject to entity-level tax. Therefore, until the Predecessor’s issuance of Class A and Class C units on January 31, 2017, the Predecessor’s net income flowed through to the Parent for federal income tax purposes. Following the issuance of Class A and C units, the Predecessor’s net income flowed through to Class A and Class C unitholders for federal income tax purposes. Accordingly, no provision for U.S. federal income taxes has been included in the accompanying consolidated financial statements. With regard to state income taxes, the Predecessor was a taxable entity only in certain states that tax all entities, including partnerships. The Company analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in such jurisdictions. The Company follows a two-step process to evaluate uncertain tax positions. Step one, recognition, occurs when an entity concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Step two, measurement, determines the amount of benefit that is more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited. As of June 30, 2018 and December 31, 2017, the Company did not record any accruals for uncertain tax positions. The Company’s policy is to classify interest expense and penalties in general and administrative expense in the consolidated statements of operations and comprehensive income. During the three and six months ended June 30, 2018 and 2017, the Company did not record any interest or penalties, and there are no interest or penalties accrued at June 30, 2018 and December 31, 2017. The 2017 and 2016 taxable years remain open to examination by federal and state taxing jurisdictions to which the Company is subject. Equity-Based Compensation In 2018, EPRT Inc. granted shares of restricted common stock to its directors, executive officers and other employees that vest over a multi-year period, subject to the recipient’s continued service. In 2017, the Predecessor granted unit-based compensation awards to certain of its employees and managers, as well as non-employees, consisting of units that vest over a multi-year period, subject to the recipient’s continued service. The Company accounts for the restricted common stock and unit-based compensation in accordance with ASC 718, Compensation – Stock Compensation, which requires that such compensation be recognized in the financial statements based on their estimated grant-date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the requisite service periods, with subsequent remeasurement for any unvested units granted to non-employees. The Company recognizes compensation expense using the straight-line method based on the terms of the individual grant. Variable Interest Entities The FASB provides guidance for determining whether an entity is a VIE. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE. Following the completion of the Formation Transactions, the Company concluded that the Operating Partnership is a VIE of which the Company is the primary beneficiary as the Company has the power to direct the activities that most significantly impact the economic performance of the Operating Partnership . Substantially all of the Company’s assets and liabilities are held by the Operating Partnership. The assets and liabilities of the Operating Partnership are consolidated and reported as assets and liabilities on the Company’s consolidated balance sheet as of June 30, 2018. Reportable Segments ASC Topic 280, Segment Reporting, establishes standards for the manner in which enterprises report information about operating segments. Substantially all of the Company’s investments, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis. Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment. Net Income per Share Basic net income per share of common stock is calculated by dividing net income attributable to stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period. The OP Units held by non-controlling interests represent potentially dilutive securities as the OP Units may be exchanged for cash or, at the Company’s election, shares of the Company’s common stock on a one-for-one basis. The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per share (dollars in thousands): (dollar amounts in thousands) Period from June 25, 2018 to June 30, 2018 Numerator: Net income used in basic net income per share $ 223 Net income attributable to non-controlling interests 99 Net income used in diluted net income per share $ 322 Denominator: Weighted average shares outstanding used in basic net income per share 40,976,901 Potentially dilutive securities 19,056,552 Weighted average shares outstanding used in diluted net income per share 60,033,453 Recent Accounting Developments In May 2014, with subsequent updates in 2015, 2016 and 2017, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Such revenues are related to lease contracts with tenants, which currently fall within the scope of ASC Topic 840, and will fall within the scope of ASC Topic 842 upon the adoption of ASU 2016-02 on January 1, 2019 (see below). The Company’s sales of real estate are within the scope of ASU 2017-05 (see above). In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Targeted Improvements to Topic 842, Leases he Company is currently evaluating ASU 2018-11 including the impact of this change on its financial statement presentation. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Investments | 3. Investments As of June 30, 2018, the Company had investments in 602 property locations, including four developments in progress and two undeveloped land parcels, and a mortgage loan receivable secured by two additional properties. Of these 602 property locations, 588 represented owned properties (of which five were subject to leases accounted for as direct financing leases) and 14 represented ground lease interests (of which one building was subject to a lease accounted for as a direct financing lease). The Company’s gross investment portfolio totaled $1.2 billion as of June 30, 2018 and consisted of gross acquisition cost of real estate investments (including transaction costs) totaling $1.2 billion, loans and direct financing lease receivables, net, with an aggregate carrying amount of $6.3 million and real estate investments held for sale, net of $7.2 million. As of June 30, 2018, 347 of these investments comprising $618.0 million of net investments were assets of consolidated special purpose entity subsidiaries and were pledged as collateral under the non-recourse obligations of these special purpose entities (See Note 5 – Secured Borrowings). As of December 31, 2017, the Company had investments in 508 property locations, including two developments in progress and two undeveloped land parcels. Of these 508 property locations, 493 represented owned properties (of which five were subject to leases accounted for as direct financing leases) and 15 represented ground lease interests (of which one building was subject to a lease accounted for as a direct financing lease). The Company’s gross investment portfolio totaled $939.1 million as of December 31, 2017 and consisted of gross acquisition cost of real estate investments (including transaction costs) totaling $932.2 million, direct financing lease receivables, net, with an aggregate carrying amount of $2.7 million and net real estate investments held for sale, net of $4.2 million. As of December 31, 2017, 348 of these investments comprising $620.0 million of net investments were assets of consolidated special purpose entity subsidiaries and were pledged as collateral under the non-recourse obligations of these special purpose entities (See Note 5 – Secured Borrowings). Acquisitions in 2018 During the six months ended June 30, 2018, the Company did not have any investments that represented more than 5% of the Company’s total investment activity as of June 30, 2018. The following table presents information about the Company’s acquisition activity during the six months ended June 30, 2018: (Dollar amounts in thousands) Total Investments Ownership type (1) Number of properties acquired 112 Allocation of Purchase Price: Land and improvements $ 83,721 Building and improvements 177,502 Construction in progress (2) 8,754 Intangible lease assets 6,010 Assets acquired 275,987 Intangible lease liabilities (982 ) Liabilities assumed (982 ) Purchase price (including acquisition costs) $ 275,005 (1) During the six months ended June 30, 2018, the Company acquired the fee interest in 111 properties and acquired one property subject to a ground lease arrangement. (2) Represents amounts incurred at and subsequent to acquisition and includes $0.1 million of capitalized interest expense. Gross Investment Activity During the six months ended June 30, 2018 and 2017, the Company had the following gross investment activity: (Dollar amounts in thousands) Number of Investment Locations Dollar Amount of Investments Gross investments, January 1, 2017 344 $ 458,667 Acquisitions of and additions to real estate investments 72 235,769 Sales of investments in real estate and direct financing lease receivables (21) (15,923 ) Provisions for impairment of real estate (1) (579 ) Principal collections on direct financing lease receivables (44 ) Gross investments, June 30, 2017 677,890 Less: Accumulated depreciation and amortization (2) (14,855 ) Net investments, June 30, 2017 395 $ 663,035 Gross investments, January 1, 2018 508 $ 939,072 Acquisitions of and additions to real estate investments 112 276,315 Sales of investments in real estate (16) (19,301 ) Relinquishment of properties at end of ground lease term (2) (853 ) Provisions for impairment of real estate (3) (2,781 ) Investments in loans receivable 3,632 Principal collections on direct financing lease receivables (35 ) Other (1,491 ) Gross investments, June 30, 2018 1,194,558 Less: Accumulated depreciation and amortization (2) (36,310 ) Net investments, June 30, 2018 602 $ 1,158,248 (1) During the six months ended June 30, 2017, the Company identified and recorded provisions for impairment at 3 vacant properties where expected future cash flows from the property, based on quoted market or comparable sales prices, were less than the Company’s carrying value. (2) Includes $25.1 million and $8.3 million of accumulated depreciation as of June 30, 2018 and 2017, respectively. (3) During the six months ended June 30, 2018, the Company identified and recorded provisions for impairment at 6 vacant and 7 tenanted properties where expected future cash flows from the property, based on quoted market or comparable sales prices, were less than the Company’s carrying value. The amount in the table above excludes approximately $25,000 related to intangible lease liabilities for these assets. Real Estate Investments The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more renewal options. Substantially all of the leases are triple-net, which provide that the lessees are responsible for the payment of all property operating expenses, including maintenance, insurance, utilities, property taxes and, if applicable, ground rent expense; therefore, the Company is generally not responsible for repairs or other capital expenditures related to the properties while the triple-net leases are in effect. Scheduled future minimum base rental payments due to be received under the remaining non-cancelable term of the operating leases in place as of June 30, 2018 are as follows: (in thousands) Future Minimum Base Rental Receipts July 1, 2018 - December 31, 2018 $ 45,180 2019 90,929 2020 91,075 2021 91,718 2022 93,114 Thereafter 1,037,679 Total $ 1,449,695 Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum base rental payments to be received during the initial non-cancelable lease term only. In addition, the future minimum lease payments exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to performance thresholds and exclude increases in annual rent based on future changes in the Consumer Price Index, among other items. Loans and Direct Financing Lease Receivables During the six months ended June 30, 2018, the Company entered into two loan receivable arrangements with an aggregate carrying amount of $3.6 million as of June 30, 2018. One of the loans is a mortgage loan secured by land and buildings and improvements on two mortgaged properties. This loan receivable matures in July 2021 and requires monthly payments of interest only with a balloon payment due at maturity. The second loan is a development construction loan which is secured by a mortgage on the building and improvements at the development property. The Company provides periodic funding to the borrower under this arrangement as construction progresses. This loan requires the borrower to make monthly principal and interest payments based on a 40-year amortization schedule with any outstanding principal balance due at maturity or earlier upon the occurrence of certain other events. Both of the Company’s loans receivables allow for prepayments in whole or in part without penalty. The Company’s loans receivable as of June 30, 2018 are summarized below (dollars in thousands): (Dollar amounts in thousands) Interest rate Maturity date Principal Outstanding Mortgage loan receivable 10% 2021 $ 2,375 Development construction loan receivable (1) 8% 2058 1,257 Net investment $ 3,632 (1) Mortgaged property is subject to a ground lease arrangement with the Company, as landlord, and borrower, as tenant. If the tenant does not exercise its right to renew the ground lease at the end of its initial 15-year term, the balance of the mortgage loan receivable will be forgiven, and the Company will retain title to the mortgaged property. Scheduled principal payments due to be received under the loans receivable as of June 30, 2018 are as follows: (in thousands) Loans receivables July 1, 2018 - December 31, 2018 $ 2 2019 3 2020 4 2021 2,379 2022 4 Thereafter 1,240 Total $ 3,632 As of June 30, 2018 and December 31, 2017, the Company had $2.7 million of net investments accounted for as direct financing lease receivables. The components of the investments accounted for as direct financing lease receivables were as follows: (in thousands) June 30, 2018 December 31, 2017 Minimum lease payments receivable 4,359 4,518 Estimated unguaranteed residual value of leased assets 270 270 Unearned income from leased assets (1,939 ) (2,063 ) Net investment $ 2,690 $ 2,725 Scheduled future minimum non-cancelable base rental payments due to be received under the direct financing lease receivables as of June 30, 2018 are as follows: (in thousands) Future Minimum Base Rental Payments July 1, 2018 - December 31, 2018 $ 161 2019 332 2020 337 2021 340 2022 345 Thereafter 2,844 Total $ 4,359 Real Estate Investments Held for Sale The Company continually evaluates its portfolio of real estate investments and may elect to dispose of investments considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, associated indebtedness, asset location and tenant operation type (e.g., industry, sector, or concept/brand). Real estate investments held for sale are expected to be sold to within twelve months. The following table shows the activity in real estate investments held for sale and intangible lease liabilities held for sale during the six months ended June 30, 2018 . (Dollar amounts in thousands) Number of Properties Real Estate Investments Intangible Lease Liabilities Net Carrying Value Held for sale balance, December 31, 2017 3 $ 4,173 $ (129 ) $ 4,044 Transfers to held for sale classification 10 13,080 (256 ) 12,824 Sales (7 ) (10,058 ) 129 (9,929 ) Transfers to held and used classification — — — — Held for sale balance, June 30, 2018 6 $ 7,195 $ (256 ) $ 6,939 Significant Concentrations The Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose rental revenue for the three and six months ended June 30, 2018 and 2017 represented 10% or more of total rental revenue in the Company’s consolidated statements of operations and comprehensive income. The following table lists the states where the rental revenue from the properties in that state during the periods presented represented 10% or more of total rental revenue in the Company’s consolidated statements of operations and comprehensive income: Three months ended June 30, Six months ended June 30, State 2018 2017 2018 2017 Georgia 11.5% 12.5% 11.7% 13.0% Texas 12.9% 12.5% 13.1% 11.8% Michigan * 10.3% * * * State's rental revenue was not greater than 10% of total rental revenue during the period specified. Intangible Assets and Liabilities Intangible assets and liabilities consisted of the following as of the dates presented: June 30, 2018 December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 47,556 $ 7,655 $ 39,901 $ 44,738 $ 6,638 $ 38,100 Intangible market lease assets 16,759 3,531 13,228 17,715 2,794 14,921 Total intangible assets $ 64,315 $ 11,186 $ 53,129 $ 62,453 $ 9,432 $ 53,021 Intangible market lease liabilities $ 14,748 $ 2,596 $ 12,152 $ 14,824 $ 2,503 $ 12,321 The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2018, by category and in total, were as follows: Years Remaining In-place leases 11.3 Intangible market lease assets 9.0 Intangible market lease liabilities 16.2 Total intangible assets and liabilities 11.7 The following table discloses amounts recognized within the consolidated statements of operations and comprehensive income related to amortization of in-place leases, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands) 2018 2017 2018 2017 Amortization of in-place leases (1) $ 1,914 $ 1,197 $ 3,143 $ 2,445 Amortization (accretion) of market lease intangibles, net (2) 118 224 398 434 Amortization (accretion) of above- and below-market ground lease intangibles, net (3) (127 ) (89 ) (268 ) (290 ) (1) Reflected within depreciation and amortization expense. (2) Reflected within rental revenue. (3) Reflected within property expenses. The following table provides the projected amortization of in-place lease assets to depreciation and amortization expense, net amortization of above- and below-market lease intangibles to rental revenue, and net amortization of above- and below-market ground lease intangibles into property expenses for the next five years: (in thousands) July 1 - December 31, 2018 2019 2020 2021 2022 In-place lease assets $ 2,289 $ 4,407 $ 4,049 $ 3,868 $ 3,786 Total to be added to amortization expense $ 2,289 $ 4,407 $ 4,049 $ 3,868 $ 3,786 Above-market lease assets $ (795 ) $ (1,547 ) $ (1,330 ) $ (1,280 ) $ (1,278 ) Below-market lease liabilities 351 693 668 668 666 Net adjustment to rental revenue $ (444 ) $ (854 ) $ (662 ) $ (612 ) $ (612 ) Below-market ground lease assets $ 86 $ 99 $ — $ — $ — Above-market ground lease liabilities (265 ) (381 ) (230 ) (183 ) (180 ) Net adjustment to property expenses $ (179 ) $ (282 ) $ (230 ) $ (183 ) $ (180 ) Subsequent to June 30, 2018, the Company acquired 10 real estate investment properties with an aggregate investment (including acquisition-related costs) of $30.5 million, invested $3.9 million in new and ongoing construction in progress, provided $0.3 million of additional construction financing to a tenant through a mortgage note and invested $5.8 million in a mortgage note receivable secured by 9 properties. Subsequent to June 30, 2018, the Company sold or transferred its investment in 7 real estate properties, including three properties which were classified as held for sale as of June 30, 2018, for an aggregate gross sales price of $9.8 million and incurred $0.4 million of disposition costs related to these transactions. |
Unsecured Revolving Credit Faci
Unsecured Revolving Credit Facility | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Unsecured Revolving Credit Facility | 4. Unsecured Revolving Credit Facility On June 25, 2018, the Company entered into an agreement with a group of lenders for a senior unsecured revolving credit facility (the “Revolving Credit Facility”) in the maximum aggregate initial original principal amount of up to $300.0 million. Barclays Bank PLC, Citigroup Global Markets Inc. and Goldman Sachs Bank USA were joint lead arrangers of the Revolving Credit Facility, with Barclays Bank PLC acting as administrative agent. The Revolving Credit Facility has a term of four years with an extension option of up to 12-months exercisable by the Company, subject to certain conditions, and initially bears interest at an annual rate of applicable LIBOR, as defined therein, plus the applicable margin. The applicable LIBOR is the rate with a term equivalent to the interest period applicable to the relevant borrowing. The applicable margin is initially a spread set according to a leverage-based pricing grid. At the Company’s election, on and after receipt of an investment grade corporate credit rating from Standard & Poor’s (“S&P”) or Moody’s Investment Services, Inc. (“Moody’s”), the applicable margin will be a spread set according to the Company’s corporate credit ratings by S&P and/or Moody’s. The Revolving Credit Facility is freely pre-payable at any time and is mandatorily pre-payable if borrowings exceed the borrowing base or the facility limit. The Company may re-borrow amounts paid down, subject to customary borrowing conditions. The Company is required to pay revolving credit fees throughout the term of the Revolving Credit Facility based upon its usage of the Revolving Credit Facility, at a rate which depends on the Company’s usage of the Revolving Credit Facility during the period before it receives an investment grade corporate credit rating from S&P or Moody’s, and which rate shall be based on the corporate credit rating from S&P and/or Moody’s after the time, if applicable, it receives such a rating. The Revolving Credit Facility provides an accordion feature to increase, subject to certain conditions, the maximum availability of the Revolving Credit Facility by up to $200.0 million. During the three and six months ended June 30, 2018, the Company did not make any borrowings or repayments under the Revolving Credit Facility. As of June 30, 2018, the Company had no principal balance outstanding under the Revolving Credit Facility and deferred financing costs, net, of $3.5 million related to the Revolving Credit Facility were included within prepaid expenses and other assets, net on the Company’s consolidated balance sheets. During the three and six months ended June 30, 2018, the Company recorded approximately $13,000 of interest expense related to the Revolving Credit Facility. The Revolving Credit Facility requires the Company to meet certain financial covenants. The Company was in compliance with all financial covenants and was not in default of any other provisions under the Revolving Credit Facility as of June 30, 2018. |
Secured Borrowings
Secured Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Secured Borrowings | 5. Secured Borrowings In the normal course of business, the Company transfers financial assets in various transactions with Special Purpose Entities (“SPE”) determined to be VIEs, which primarily consist of securitization trusts established for a limited purpose (the “Master Trust Funding Program”). These SPEs are formed for the purpose of securitization transactions in which the Company transfers assets to an SPE, which then issues to investors various forms of debt obligations supported by those assets. In these securitization transactions, the Company typically receives cash from the SPE as proceeds for the transferred assets and retains the rights and obligations to service the transferred assets in accordance with servicing guidelines. All debt obligations issued from the VIEs are non-recourse to the Company. In accordance with the accounting guidance for asset transfers, the Company considers any ongoing involvement with transferred assets in determining whether the assets can be derecognized from the balance sheets. For transactions that do not meet the requirements for derecognition and remain on the consolidated balance sheets, the transferred assets may not be pledged or exchanged by the Company. The Company evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Company is the primary beneficiary and, therefore, should consolidate the entity based on the variable interests it held both at inception and when there was a change in circumstances that required a reconsideration. The Company has determined that the SPEs created in connection with its Master Trust Funding Program should be consolidated as the Company is the primary beneficiary of each of these entities. In December 2016, the Company issued its first series of notes under the Master Trust Funding Program, consisting of $263.5 million of Class A Notes and $17.3 million of Class B Notes (“RC Funding 2016-1”). These notes were issued to an affiliate of Eldridge through underwriting agents. Upon issuance of these notes, the combined net proceeds of $273.3 million were deposited directly with the Parent and were presented as a non-cash distribution. RC Funding 2016-1 includes two SPEs formed to hold assets and issue the secured borrowings associated with the securitization. In July 2017, the Company issued its second series of notes under the Master Trust Funding Program, consisting of $232.4 million of Class A Notes and $15.7 million of Class B Notes (“RC Funding 2017-1”). Of these notes, $75.1 million of the Class A Notes and all of the Class B Notes were issued to an affiliate of Eldridge through underwriting agents. The proceeds received from the issuance of RC Funding 2017-1 were used by the Company to repay short-term notes payable to related parties. RC Funding 2017-1 consists of one SPE formed to hold assets and issue the secured borrowings associated with the securitization. As of June 30, 2018 and December 31, 2017, the Company had $519.0 million and $522.9 million, respectively, in combined principal outstanding under the notes issued through its Master Trust Funding Program, and had deferred financing costs, net, of $10.2 million and $11.3 million, respectively. Tenant rentals received on assets transferred to SPEs under the Master Trust Funding Program are sent to the trustee and used to pay monthly principal and interest payments. The RC Funding 2016-1 notes mature in November 2046, but the terms of the Class A Notes require principal to be paid monthly through November 2021, with a balloon repayment at that time, and the terms of the Class B Notes require no monthly principal payments but require the full principal balance to be paid in November 2021. If the Company does not meet these repayment schedules, the base interest rates on the notes increase by the greater of (i) 5.00% and (ii) the amount by which the sum of the following exceeds the base interest rates on the notes: (a) the yield to maturity of 10-year U.S. treasury securities in November 2021, plus (b) 5.00%, plus (c) 2.73% for the Series A Notes or 3.70% for the Class B Notes. Additionally, in this event, the full amount of any tenant rental payments received on the assets transferred to the securitization would be used to repay principal. The RC Funding 2016-1 notes may be voluntarily prepaid, in whole or in part, at any time on or after the date that is 24 months prior to the anticipated repayment date in November 2021 without the payment of a make whole amount. Voluntary prepayments may be made before 24 months prior to the anticipated repayment date but will be subject to the payment of a make whole amount. Interest for RC Funding 2016-1 accrues at a weighted-average interest rate of 4.51%. The RC Funding 2017-1 notes mature in June 2047, but the terms of the Class A Notes require principal to be paid monthly through June 2024, with a balloon repayment at that time, and the terms of the Class B Notes require no monthly principal payments but require the full principal balance to be paid in June 2024. The RC Funding 2017-1 notes contain similar interest rate escalation provisions as detailed above for RC Funding 2016-1 if these repayment schedules are not met. The RC Funding 2017-1 notes may be voluntarily prepaid, in whole or in part, at any time on or after the date that is 31 months prior to the anticipated repayment date in June 2024 without the payment of a make whole amount. Voluntary prepayments may be made before 31 months prior to the anticipated repayment date but will be subject to the payment of a make whole amount. Interest for the RC Funding 2017-1 notes accrues at a weighted-average interest rate of 4.16%. During the three months ended June 30, 2018 and 2017, the Company recorded $5.6 million and $3.1 million, respectively, of interest expense related to the Master Trust Funding Program. During the six months ended June 30, 2018 and 2017, the Company recorded $11.3 million and $6.3 million, respectively, of interest expense related to the Master Trust Funding Program. The following table summarizes the scheduled principal payments on the Company’s secured borrowings as of June 30, 2018: (in thousands) Future Principal Payments July 1 - December 31, 2018 $ 3,857 2019 8,009 2020 8,419 2021 267,558 2022 4,292 Thereafter 226,842 Total $ 518,977 |
Notes Payable to Related Partie
Notes Payable to Related Parties | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Notes Payable to Related Parties | 6. Notes Payable to Related Parties Until the completion of the IPO, the Company had a secured warehouse line of credit with an affiliate of Eldridge through which it issued short-term notes (the “Warehouse Notes”) and used the proceeds to acquire investments in real estate. The Warehouse Notes accrued interest at a rate equal to LIBOR plus a spread of between 2.14% and 2.55% and matured within one year of the date of issuance. During the six months ended June 30, 2018, the Company issued 20 Warehouse Notes for a combined $154.0 million. On January 31, 2018, the Company made principal payments on the Warehouse Notes of $50.0 million, repaying three of the Warehouse Notes in full and one of the Warehouse notes in part, prior to maturity. On June 25, 2018, the Company used a portion of the net proceeds from the IPO and the Concurrent Private Placement to repay all 36 of the outstanding Warehouse Notes, with an aggregate outstanding principal amount of $334.0 million, in full, prior to maturity, and had no amounts outstanding related to the Warehouse Notes as of June 30, 2018. During the six months ended June 30, 2017, the Company issued 14 Warehouse Notes for a combined $293.0 million and one short-term note for $20.0 million payable to a separate affiliate of Eldridge. The $20.0 million short-term note accrued interest at a rate of 8.0%. During the six months ended June 30, 2017, the Company made separate principal re-payments on one of the Warehouse Notes prior to and at maturity, in the aggregate amount of $103.0 million. As of December 31, 2017, the Company had 19 Warehouse Notes outstanding for a combined $230.0 million. During the three months ended June 30, 2018 and 2017, the Company recorded $2.5 million and $1.7 million, respectively, of interest expense on notes payable to related parties. During the six months ended June 30, 2018 and 2017, the Company recorded $4.6 million and $1.9 million, respectively, of interest expense on notes payable to related parties. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Equity | 7. Equity Stockholders’ Equity On June 25, 2018, EPRT Inc. completed the IPO and issued 32,500,000 shares of its common stock at an initial public offering price of $14.00 per share. Concurrently with the completion of IPO, EPRT Inc. completed the Concurrent Private Placement and issued 7,785,611 shares of its common stock and 1,142,960 OP Units at a price per share/unit of $14.00 to an affiliate of Eldridge for proceeds of $125.0 million. The issuance and sale of the shares and OP Units in the Concurrent Private Placement were made pursuant to private placement purchase agreements and there were no underwriting discounts or commissions associated with the sales. The OP Units issued to an affiliate of Eldridge are presented as a non-controlling interest in the Company’s consolidated financial statements. See Note 8 – Non-controlling Interests for additional information. The net proceeds to EPRT Inc., after deducting underwriting discounts and commissions and other expenses, from the IPO and the Concurrent Private Placement were $547.9 million. Additionally, on June 25, 2018, 691,290 shares of restricted As of June 30, 2018, following the completion of the IPO, the Concurrent Private Placement of common stock and the grant of restricted common stock under the Equity Incentive Plan, the purchasers of shares of common stock in the IPO owned 79.3% of the outstanding shares of EPRT Inc.’s common stock, Eldridge owned 19.0% of the outstanding shares of EPRT Inc.’s common stock and the directors, executive officers and other employees that were awarded restricted shares under the Equity Incentive Plan collectively owned the remaining 1.7% of the outstanding shares of EPRT Inc.’s common stock. As part of the IPO, the underwriters of the IPO were granted an option, exercisable within 30 days from June 20, 2018, to purchase up to an additional 4,875,000 shares of EPRT Inc.’s common stock at the IPO price of $14.00 per share, less underwriting discounts and commissions. On July 20, 2018, the underwriters of the IPO exercised this option in part, and on July 24, 2018, the Company issued an additional 2,772,191 shares of common stock and received an additional $36.5 million in proceeds, net of underwriting discounts. Following the issuance of these additional 2,772,191 shares of common stock, the purchasers of common stock in the IPO own 80.6% of the outstanding shares of EPRT Inc.’s common stock, Eldridge owns 17.8% of the outstanding shares of EPRT Inc.’s common stock and the directors, executive officers and other employees that were awarded restricted shares under the Equity Incentive Plan collectively own the remaining 1.6% of the outstanding shares of EPRT Inc.’s common stock. Members’ Equity EPRT LLC was capitalized by the Parent through direct and indirect capital contributions. During the period from March 30, 2016 (commencement of operations) to December 31, 2016, the Parent made direct capital contributions of $288.6 million and made indirect capital contributions of $163.1 million. In January 2017, the Parent made additional indirect capital contributions of $17.3 million. In these indirect capital contributions, the Parent made direct cash payments to sellers of real estate investments acquired by EPRT LLC. On January 31, 2017, in exchange for Class A units of EPRT LLC, Stonebriar Holdings made a direct equity contribution of $80.0 million and certain members of EPRT Management and certain members of the EPRT LLC’s board of managers made direct equity contributions of $3.7 million. Concurrently, EPRT LLC issued Class C units to the Parent in exchange for the Parent’s retention of an equity investment in EPRT LLC of $91.5 million. The Class A and Class C units were issued at $1,000 per unit and both classes contain liquidation preferences equal to the per unit value of $1,000 plus 8% per annum compounded quarterly. Additionally, on January 31, 2017, EPRT LLC approved and issued unvested Class B units to members of EPRT Management and a member of EPRT LLC’s board of managers and approved and issued unvested Class D units to members of EPRT LLC’s board of managers and external unitholders. See Note 9 – Equity Based Compensation for additional information. Pursuant to the EPRT Operating Agreement, distributions to unitholders are to be made in the following order and priority: • First, to the holders of Class A and Class C units until each holder of these units has first received an amount equal to each class’ yield, as defined in the Operating Agreement, and then until each holder of these units has received an amount equal to each class’ aggregate unreturned class contributions; • Next, to the holders of Class B and Class D units in an aggregate amount based on a return threshold defined in the Operating Agreement for each class of units; • Then, to the holders of Class B and Class D units in an aggregate amount equal to each class’ unit percentage of distributions, as defined in the Operating Agreement; and • Lastly, any remaining amounts to the holders of Class A and Class C units. Pursuant to the EPRT LLC Operating Agreement, EPRT LLC’s net income or loss is allocated to the holders of the Class A, B, C and D units in a similar manner as the distribution allocation outlined above. On December 31, 2017, EPRT LLC completed the EPRT LLC Reorganization and the Parent, Stonebriar Holdings, EPRT Management and the holders of Class B and Class D units contributed all of their interests in EPRT LLC to EPRT Holdings, in exchange for interests in EPRT Holdings with the same rights as the interests they held in EPRT LLC. As of such date, EPRT LLC became a wholly-owned subsidiary of EPRT Holdings. Additionally, EPRT Holdings issued a new grant of 500 unvested Class B units to an additional member of EPRT Management on the same date. On January 31, 2018, Stonebriar Holdings LLC made an additional $50.0 million direct equity contribution to EPRT Holdings. EPRT Holdings used these proceeds to repay $50.0 million of outstanding principal on the Warehouse Notes. As part of the Formation Transactions, EPRT LLC converted from a Delaware LLC into a Delaware limited partnership, changed its name to Essential Properties, L.P. and became the Operating Partnership. In connection with EPRT LLC’s conversion into a Delaware limited partnership, EPRT Holdings interest in EPRT LLC was converted into 17,913,592 OP Units. The OP Units issued to EPRT Holdings are presented as a non-controlling interest in the Company’s consolidated financial statements. See Note 8 – Non-controlling Interests for additional information. |
Non-controlling Interests
Non-controlling Interests | 6 Months Ended |
Jun. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | 8. Non-controlling Interests Essential Properties OP G.P., LLC, a wholly-owned subsidiary of the Company, is the sole general partner of the Operating Partnership and holds a 1.0% general partner interest in the Operating Partnership. The Company contributed the net proceeds from the IPO and the Concurrent Private Placement of common stock to Eldridge to the Operating Partnership and received 40,976,901 OP Units, a 67.3% interest in the Operating Partnership. EPRT Holdings and Eldridge, through the Formation Transactions and the Concurrent Private Placement of OP Units, respectively, directly or indirectly hold 17,913,592 and 1,142,960 OP Units, representing 29.8% and 1.9% interests in the Operating Partnership, respectively. The OP Units held by EPRT Holdings and Eldridge are presented as non-controlling interests in the Company’s consolidated financial statements. A holder of OP Units has the right to distributions and has the right to exchange OP Units for cash or, at the Company’s election, shares of the Company's common stock on a one-for-one basis, provided, however, that such OP Units must have been outstanding for at least one year. No distributions were made to holders of OP Units during the three and six months ended June 30, 2018. |
Equity Based Compensation
Equity Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Of Compensation Related Costs Equity Based Payments [Abstract] | |
Equity Based Compensation | 9. Equity Based Compensation 2018 Incentive Plan Effective immediately prior to the initial closing of the IPO, the Company adopted the Equity Incentive Plan, which provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards, performance awards and LTIP units. Officers, employees, non-employee directors, consultants, independent contractors and agents who provide services to the Company or to any subsidiary of the Company are eligible to receive such awards. A maximum of 3,550,000 shares may be issued under the Equity Incentive Plan, subject to certain conditions. On June 25, 2018, an aggregate of 691,290 shares of restricted common stock was issued to the Company’s directors, executive officers and other employees under the Equity Incentive Plan. Of these awards,15,484 shares of restricted common stock vest on the first anniversary of the date of grant and 675,806 shares of restricted stock vest ratably on the first, second and third anniversaries of the date of grant, subject to the individual’s continued provision of service to the Company through the applicable vesting dates. The following table presents information about the restricted common stock awards during the six months ended June 30, 2018: 2018 Equity Incentive Plan Unvested restricted common stock outstanding, January 1, 2018 — Granted 691,290 Vested — Forfeited — Unvested restricted common stock outstanding, June 30, 2018 691,290 The Company estimated the grant date fair value of the unvested restricted common stock awards granted under the Equity Incentive he Company recorded approximately $45,000 of compensation as a component of general and administrative expense related to the during the three and six months ended June 30, 2018. As of June 30, 2018, there was $9.4 million of total unrecognized compensation cost related to restricted common stock awards Unit Based Compensation On January 31, 2017, EPRT LLC approved the issuance of Class B and Class D units and issued 8,050 unvested Class B units to members of EPRT Management and a member of EPRT LLC’s board of managers and issued 3,000 unvested Class D units to members of EPRT LLC’s board of managers and external unitholders. The Class B and Class D units vest in five equal installments, beginning on March 30, 2017 and on each anniversary thereof through March 30, 2021. The holders of vested Class B units can put the Class B units to the Company beginning on the seventh (7th) anniversary of the commencement of EPRT LLC’s operations. On December 31, 2017, the holders of Class B and Class D units contributed all of their interests in EPRT LLC to EPRT Holdings in the EPRT LLC Reorganization in exchange for interests in EPRT Holdings with the same rights as the interests they held in EPRT LLC. The EPRT LLC units were exchanged on a one-for-one basis for equivalent units in EPRT Holdings with the same vesting conditions, distribution rights, priority and income allocation rights, among others. Additionally, EPRT Holdings issued a new grant of 500 unvested Class B units to an additional member of EPRT Management on the same date. The Class B units granted on December 31, 2017 vest in five equal installments beginning on May 1, 2018 and on each anniversary thereof through May 1, 2022 and have similar put rights as the Class B units granted on January 31, 2017. Following the completion of the Formation Transactions, the Class B and Class D unitholders continue to hold vested and unvested interests in EPRT Holdings and, indirectly, the OP Units held by EPRT Holdings. The following table presents information about the unvested Class B and Class D units during the six months ended June 30, 2018 and 2017: Class B Units Class D Units Total Unvested units outstanding, January 1, 2017 — — — Granted 8,050 3,000 11,050 Vested (1,610 ) (600 ) (2,210 ) Forfeited — — — Unvested units outstanding, June 30, 2017 6,440 2,400 8,840 Unvested units outstanding, January 1, 2018 6,940 2,400 9,340 Granted — — — Vested (1,710 ) (600 ) (2,310 ) Forfeited — — — Unvested units outstanding, June 30, 2018 5,230 1,800 7,030 The Company estimated the grant date fair value of the unvested Class B and Class D awards granted to employees on January 31, 2017 and the fair value of the Class D awards granted to non-employees as of June 30, 2018 and June 30, 2017 using a Black-Scholes valuation model. The Company's assumptions for expected volatility were based on daily historical volatility data related to market trading of publicly traded companies that invest in similar types of real estate as the Company, plus an adjustment to account for differences in the Company’s leverage compared to the publicly traded companies. The risk-free interest rate assumptions were determined by using U.S. treasury rates of the same period as the expected vesting term of each award. The marketability discounts were calculated using a Finnerty Model. The Company determined that the grant date per unit fair value of the unvested Class B and Class D units granted on January 31, 2017 was $323.65 and $152.16, respectively. As of June 30, 2018 and 2017, the Company determined that the per unit fair value of the Class D units granted to non-employees on January 31, 2017 was $79.09 and $582.31, respectively. During the three months ended June 30, 2018 and 2017, the Company recorded $0.1 million and $0.2 million, respectively, of compensation as a component of general and administrative expense related to the Class B and Class D units compensation as a component of general and administrative expense related to the Class B and Class D units As of June 30, 2018, there was $2.3 million and $0.3 million of total unrecognized compensation cost related to the Class B and Class D units, respectively, and the Company had a liability of approximately $30,000 for unvested Class D units granted to non-employees, which is recorded within accrued liabilities and other payables in the Company’s consolidated balance sheets. As of December 31, 2017, there was $2.7 million and $0.8 million of total unrecognized compensation cost related to the Class B and Class D units, respectively, and the Company had a liability of $0.2 million for unvested Class D units granted to non-employees. The unrecognized compensation expense for Class B and Class D units is expected to be recognized over a weighted average period of 2.8 years from June 30, 2018. The per unit fair value of unvested Class B and Class D units was estimated using the following assumptions as of the respective valuation dates: Valuation Date June 30, 2018 June 30, 2017 January 31, 2017 Volatility 20 % 35 % 40 % Risk free rate 2.33 % 1.38 % 1.30 % Marketability discount 25 % 20 % 30 % |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies The Company leases office space in Princeton, New Jersey. The Company is obligated under a non-cancelable operating lease for this space through December 2018. During the three months ended June 30, 2018 and 2017, the Company recorded $0.1 million and approximately $45,000, respectively, of rent expense related to this operating lease within general and administrative expense in the Company’s consolidated statements of operations and comprehensive income. During the six months ended June 30, 2018 and 2017, the Company recorded $0.1 million of rent expense related to this operating lease within general and administrative expense in the Company’s consolidated statements of operations and comprehensive income. This lease has no contingent rental arrangements and the Company does not have any options to renew this lease. In February 2018, the Company entered into a new lease agreement for 13,453 square feet of office space in West Windsor Township, New Jersey. The lease has a seven year term and contains provisions for two five-year renewal periods at the Company’s option. The lease has an estimated commencement date of December 15, 2018 and a rent commencement date of January 1, 2019. Initial annualized base rent due under the terms of the lease will be $0.5 million, with annual escalations in base rent of $0.50 per square foot per year. As of June 30, 2018 and December 31, 2017, the Company was a lessee under long-term, non-cancelable ground leases accounted for as operating leases at 14 and 15 real estate properties, respectively, where the Company did not acquire the fee simple interest in the land. At five of these ground leased properties, the Company’s lease as lessor of the building directly obligates the building lessee to pay rents due under the ground lease to the ground lessor; such ground lease rents are presented on a net basis in the Company’s consolidated statements of operations and comprehensive income. During the three months ended June 30, 2018 and 2017, the Company recorded $0.1 million and $0.2 million, respectively, of ground rent expense within property expenses in the Company’s consolidated statements of operations and comprehensive income. During the six months ended June 30, 2018 and 2017, the Company recorded $0.3 million of ground rent expense within property expenses in the Company’s consolidated statements of operations and comprehensive income. The Company’s ground leases do not contain contingent rental arrangements and, as of June 30, 2018, four of the ground leases escalate based on fixed schedules, with the remaining 10 ground leases containing no rental escalation provisions. As of June 30, 2018, the Company’s ground leases have remaining non-cancelable lease terms of between eight months and 5.9 years, and five of the ground leases are renewable at the Company’s option for periods of up to 20 years. As of June 30, 2018, the future minimum base cash rental payments due from the Company under the office and ground leases where the Company is responsible for payment and the future minimum base cash rental payments under the ground leases where the Company’s tenants are responsible for payment over the next five years and thereafter are as follows: (in thousands) Office and Ground Leases to be Paid by the Company Ground Leases to be Paid Directly by the Company’s Tenants Total Future Minimum Base Rental Payments July 1 - December 31, 2018 $ 344 $ 243 $ 587 2019 925 492 1,417 2020 793 328 1,121 2021 681 331 1,012 2022 669 327 996 Thereafter 1,749 26 1,775 Total $ 5,161 $ 1,747 $ 6,908 As of June 30, 2018, the Company has remaining future commitments of $2.3 million to provide construction financing to a tenant through a mortgage note at one property and $10.7 million to reimburse its tenants at four properties for development and construction costs incurred and paid directly by the tenant. Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties. Environmental Matters In connection with the ownership of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of June 30, 2018, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the Company’s results of operations. Defined Contribution Retirement Plan The Company has a defined contribution retirement savings plan qualified under Section 401(a) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan is available to all of the Company’s full-time employees. The Company provides a matching contribution in cash equal to 100% of the first 3% of eligible compensation contributed by participants and 50% of the next 2% of eligible compensation contributed by participants, which vests immediately. During the three months ended June 30, 2018 and 2017, the matching contributions made by the Company totaled approximately $33,000 and approximately $13,000, respectively. During the six months ended June 30, 2018 and 2017, the matching contributions made by the Company totaled $0.1 million and approximately $45,000, respectively. Employment Agreements The Company has employment agreements with its executive officers. These employment agreements have an initial term of four years, with automatic one-year extensions unless notice of non-renewal is provided by either party. These agreements provide for initial annual base salaries and an annual performance bonus. In the event an executive officer’s employment terminates under certain circumstances, the Company would be liable for any annual performance bonus awarded for the year prior to termination, to the extent unpaid, continued payments equal to 12 months of base salary, monthly reimbursement for 12 months of COBRA premiums, and under certain situations, a pro rata bonus for the year of termination. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 11. Fair Value Measurements GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures regularly and, depending on various factors, it is possible that an asset or liability may be classified differently from period to period. However, the Company expects that changes in classifications between levels will be rare. In addition to the disclosures for assets and liabilities required to be measured at fair value at the balance sheet date, companies are required to disclose the estimated fair values of all financial instruments, even if they are not presented at their fair value on the consolidated balance sheet. The fair values of financial instruments are estimates based upon market conditions and perceived risks at June 30, 2018 and December 31, 2017. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities. Financial assets and liabilities for which the carrying values approximate their fair values include cash and cash equivalents, restricted cash, accounts receivable included within prepaid expenses and other assets, notes payable to related party and accrued liabilities and other payables. Generally, these assets and liabilities are short term in duration and their carrying value approximates fair value on the consolidated balance sheets. The estimated fair values of the Company’s secured borrowings have been derived based on primarily unobservable market inputs such as interest rates and discounted cash flow analyses using estimates of the amount and timing of future cash flows, market rates and credit spreads. These measurements are classified as Level 3 within the fair value hierarchy. As of June 30, 2018, the Company’s secured borrowings had an aggregate carrying value of $519.0 million (excluding net deferred financing costs of $10.2 million) and an estimated fair value of $523.9 million. As of December 31, 2017, the Company’s secured borrowings had an aggregate carrying value of $522.9 million (excluding net deferred financing costs of $11.3 million) and an estimated fair value of $527.9 million. The Company measures its real estate investments at fair value on a nonrecurring basis. The fair values of these real estate investments were determined using the following input levels as of the dates presented: Net Carrying Fair Value Measurements Using Fair Value Hierarchy (in thousands) Value Fair Value Level 1 Level 2 Level 3 June 30, 2018 Non-financial assets: Long-lived assets $ 6,243 $ 6,243 $ — $ — $ 6,243 December 31, 2017 Non-financial assets: Long-lived assets $ 5,817 $ 5,817 $ — $ — $ 5,817 Long-lived assets: The Company reviews its investments in real estate when events or circumstances change indicating that the carrying amount of an asset may not be recoverable. In the evaluation of an investment in real estate for impairment, many factors are considered, including estimated current and expected operating cash flows from the asset during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of the asset in the ordinary course of business. Quantitative information about Level 3 fair value measurements as of June 30, 2018 was as follows: (dollar amounts in thousands) Fair Value Valuation Techniques Significant Unobservable Inputs Non-financial assets: Long-lived assets: Vacant property—Indianapolis, IN (1) $ 299 Sales comparison approach Binding Sales Contract $ 325 Vacant property—Allegan, MI (1) $ 141 Sales comparison approach Binding Sales Contract $ 165 Vacant property—Huntingdon, TN $ 35 Sales comparison approach Comparable sales prices $ 35 Vacant property—Detroit, MI $ 140 Sales comparison approach Non-binding Sales Contract $ 140 Convenience store—Carthage, TX (1) $ 1,172 Sales comparison approach Binding Sales Contract $ 1,228 Family Dining restaurant - North Port, FL (1) $ 2,351 Sales comparison approach Binding Sales Contract $ 2,462 Family Dining restaurant - Brattleboro, VT $ 45 Discounted cash flow approach N/A N/A Family Dining restaurant - Royal Palm Beach, FL (1) $ 2,060 Sales comparison approach Binding Sales Contract $ 2,154 (1) Fair value is net of $0.3 million of estimated disposition costs as these assets are classified as held for sale within the Company’s consolidated balance sheets as of June 30, 2018. |
Related Party Disclosures
Related Party Disclosures | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 12. Related-Party Transactions During the six months ended June 30, 2018 and 2017, an affiliate of Eldridge provided certain treasury and information technology services to the Company. Additionally, during the first three months of 2017, the Manager provided certain administrative services to the Company. The Manager charged the Company a flat monthly fee for its services based on the estimated cost incurred in the provision of the services, and the fee was reviewed by the Company’s management and determined to be reasonable. The Company incurred $0.1 million of expense for these services during the six months ended June 30, 2017, which is included in general and administrative expense in the Company’s consolidated statements of operations and comprehensive income, and incurred a de minimis amount during the three months ended June 30, 2017 and the three and six months ended June 30, 2018. The costs for the services provided by the affiliate of Eldridge and the Manager would likely be different if such services were provided by unrelated parties. During the three and six months ended June 30, 2018 and 2017, the Company issued and repaid short-term notes to an affiliate of Eldridge. See Note 6 – Notes Payable to Related Parties for additional information. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events The Company has evaluated all events and transactions that occurred after June 30, 2018 through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustment to disclosures in the consolidated financial statements except as disclosed elsewhere in these notes to the consolidated financial statements. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the SEC. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2018 and 2017 are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Registration Statement. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation. As of June 30, 2018, the Company held a 68.3% ownership interest in the Operating Partnership and the consolidated financial statements include the financial statements of the Operating Partnership as of that date. As of December 31, 2017, all subsidiaries of the Company were wholly-owned. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Investments | Real Estate Investments Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. The Company evaluates each acquisition transaction to determine whether the acquired assets meet the definition of a business. Under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business The Company allocates the purchase price of acquired properties accounted for as asset acquisitions to tangible and identifiable intangible assets or liabilities based on their relative fair values. Tangible assets may include land, site improvements and buildings. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics. The Company may incur various costs in the leasing and development of its properties. Amounts paid to tenants that incentivize them to extend or otherwise amend an existing lease or to sign a new lease agreement are capitalized to lease incentive on the Company’s consolidated balance sheets. Tenant improvements are capitalized to building and improvements within the Company’s consolidated balance sheets. Costs incurred which are directly related to properties under development, which include preconstruction costs essential to the development of the property, development costs, construction costs, interest costs and real estate taxes and insurance, are capitalized during the period of development as construction in progress. After the determination is made to capitalize a cost, it is allocated to the specific component of a project that benefited. Determination of when a development project commences and capitalization begins, and when a development project has reached substantial completion and is available for occupancy and capitalization must cease, involves a degree of judgment. The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases based on the specific characteristics of each tenant’s lease. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. Factors the Company considers in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from six to 12 months. The fair value of above- or below-market leases is recorded based on the net present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company’s estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining non-cancelable term of the lease including any below-market fixed rate renewal options for below-market leases. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including real estate valuations prepared by independent valuation firms. The Company also considers information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate, e.g. location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Additionally, the Company considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations and, when necessary, will record an asset retirement obligation as part of the purchase price allocation. Real estate investments that are intended to be sold are designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Real estate investments are no longer depreciated when they are classified as held for sale. If the disposal, or intended disposal, of certain real estate investments represents a strategic shift that has had or will have a major effect on the Company’s operations and financial results, the operations of such real estate investments would be presented as discontinued operations in the consolidated statements of operations and comprehensive income for all applicable periods. |
Depreciation and Amortization | Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings and 15 years for site improvements. During the three months ended June 30, 2018 and 2017, the Company recorded $5.7 million and $3.1 million, respectively, of depreciation on its real estate investments. During the six months ended June 30, 2018 and 2017, the Company recorded $10.9 million and $5.6 million, respectively, of depreciation on its real estate investments. Lease incentives are amortized on a straight-line basis as a reduction of rental income over the remaining non-cancellable terms of the respective leases. In the event that a tenant terminates its lease, the unamortized portion of the lease incentive is charged to rental revenue. Construction in progress is not depreciated until the development has reached substantial completion. Tenant improvements are depreciated over the non-cancellable term of the related lease or their estimated useful life, whichever is shorter. Capitalized above-market lease values are amortized on a straight-line basis as a reduction of rental revenue over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are accreted on a straight-line basis as an increase to rental revenue over the remaining non-cancellable terms of the respective leases including any below-market fixed rate renewal option periods. Capitalized above-market ground lease values are accreted as a reduction of property expenses over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property expenses over the remaining terms of the respective leases and any expected below-market renewal option periods where renewal is considered probable. The value of in-place leases, exclusive of the value of above-market and below-market lease intangibles, is amortized to depreciation and amortization expense on a straight-line basis expense over the remaining periods of the respective leases. In the event that a tenant terminates its lease, the unamortized portion of each intangible, including in-place lease values, is charged to depreciation and amortization expense, while above- and below-market lease adjustments are recorded within rental revenue in the consolidated statements of operations and comprehensive income. |
Loans Receivable | Loans Receivable The Company holds its loans receivable for long-term investment. Loans receivable are carried at amortized cost, including related unamortized discounts or premiums, if any. The Company recognizes interest income on loans receivable using the effective-interest method applied on a loan-by-loan basis. Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective-interest method. The Company periodically evaluates the collectability of its loans receivable, including accrued interest, by analyzing the underlying property‑level economics and trends, collateral value and quality and other relevant factors in determining the adequacy of its allowance for loan losses. A loan is determined to be impaired when, in management’s judgment based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Specific allowances for loan losses are provided for impaired loans on an individual loan basis in the amount by which the carrying value exceeds the estimated fair value of the underlying collateral less disposition costs. As of June 30, 2018, the Company had no allowance for loan losses recorded in its consolidated financial statements. The Company had no loans receivable, and therefore had no allowance for loan losses, as of December 31, 2017. |
Direct Financing Lease Receivables | Direct Financing Lease Receivables Certain of the Company’s real estate investment transactions are accounted for as direct financing leases. The Company records the direct financing lease receivables at their net investment, determined as the aggregate minimum lease payments and the estimated non-guaranteed residual value of the leased property less unearned income. The unearned income is recognized over the life of the related lease contracts so as to produce a constant rate of return on the net investment in the asset. The Company’s investment in direct financing lease receivables is reduced over the applicable lease term to its non-guaranteed residual value by the portion of rent allocated to the direct financing lease receivables. If and when an investment in direct financing lease receivables is identified for impairment evaluation, the Company will apply the guidance in both the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 310 “Receivables” (“ASC 310”) and ASC 840 “Leases” (“ASC 840”). Under ASC 310, the lease receivable portion of the net investment in a direct financing lease receivable is evaluated for impairment when it becomes probable the Company, as the lessor, will be unable to collect all rental payments associated with the Company’s investment in the direct financing lease receivable. Under ASC 840, the Company reviews the estimated non-guaranteed residual value of a leased property at least annually. If the review results in a lower estimate than had been previously established, the Company determines whether the decline in estimated non-guaranteed residual value is other than temporary. If a decline is judged to be other than temporary, the accounting for the transaction is revised using the changed estimate and the resulting reduction in the net investment in direct financing lease receivables is recognized by the Company as a loss in the period in which the estimate is changed. As of June 30, 2018 and December 31, 2017, the Company determined that none of its direct financing lease receivables were impaired. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets If circumstances indicate that the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. Impairment assessments have a direct impact on the consolidated statements of operations and comprehensive income because recording an impairment loss results in an immediate negative adjustment to the consolidated statements of operations and comprehensive income. During the three months ended June 30, 2018 and 2017, the Company recorded a provision for impairment of real estate of $0.9 million and $0.4 million, respectively. During the six months ended June 30, 2018 and 2017, the Company recorded a provision for impairment of real estate of $2.8 million and $0.6 million, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents includes cash in the Company’s bank accounts. The Company considers all cash balances and highly-liquid investments with original maturities of three months or less to be cash and cash equivalents. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit. As of June 30, 2018 and December 31, 2017, the Company had deposits of $131.4 million and $7.3 million, respectively, of which $131.1 million and $7.0 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result. |
Restricted Cash | Restricted Cash Restricted cash consists of cash held with the trustee for the Company’s Master Trust Funding Program (as defined in Note 5—Secured Borrowings). This restricted cash is used to make principal and interest payments on the Company’s secured borrowings, to pay trust expenses, and to acquire future real estate investments which will be pledged as collateral under the Master Trust Funding Program. See Note 5—Secured Borrowings for further discussion. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the accounts receivable and straight-line rent receivable balances are reduced by an allowance for uncollectible accounts on the consolidated balance sheets or a direct write-off of the receivable is recorded in the consolidated statements of operations. The provision for doubtful accounts is included in property expenses in the Company’s consolidated statements of operations and comprehensive income. If the accounts receivable balance or straight-line rent receivable balance is subsequently deemed to be uncollectible, such receivable amounts are written-off to the allowance for doubtful accounts. As of June 30, 2018 and December 31, 2017, the Company recorded an allowance for doubtful accounts of $0.2 million and $0.1 million, respectively, related to base rent receivable. As of June 30, 2018, the Company had no reserve recorded against straight-line rent receivable and had a $0.1 million reserve recorded against straight-line rent receivable as of December 31, 2017. |
Deferred Financing Costs | Deferred Financing Costs Financing costs related to the issuance of the Company’s unsecured revolving credit facility are deferred and amortized as an increase to interest expense in the consolidated statements of operations and comprehensive income over the term of the related debt instrument and are reported as an asset on the consolidated balance sheets. Financing costs related to the issuance of the Company’s secured borrowings under the Master Trust Funding Program are deferred and amortized as an increase to interest expense in the consolidated statements of operations and comprehensive income over the term of the related debt instrument and are reported as a reduction of the related debt balance on the consolidated balance sheets. |
Fair Value Measurement | Fair Value Measurement The Company estimates fair value of financial and non-financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1—Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3—Unobservable inputs that reflect the Company’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. |
Revenue Recognition | Revenue Recognition The Company’s rental revenue is primarily related to rent received from tenants. Rent from tenants is recorded in accordance with the terms of each lease on a straight-line basis over the non-cancellable initial term of the lease from the later of the date of the commencement of the lease or the date of acquisition of the property subject to the lease. Rental revenue recognition begins when the tenant controls the space through the term of the related lease. Because substantially all of the leases provide for rental increases at specified intervals, the Company records a straight-line rent receivable and recognizes revenue on a straight-line basis through the expiration of the non-cancellable term of the lease. The Company takes into account whether the collectability of rents is reasonably assured in determining the amount of straight-line rent to record. Rental revenue from leases with contingent rentals is recognized when changes in the factors on which the contingent payments are based actually occur. The Company defers rental revenue related to lease payments received from tenants in advance of their due dates. These amounts are presented within accrued liabilities and other payables on the Company’s consolidated balance sheets. Certain properties in the Company’s investment portfolio are subject to leases that provide for contingent rent based on a percentage of the tenant’s gross sales. For these leases, the Company recognizes contingent rental revenue when the threshold upon which the contingent lease payment is based is actually reached. During the three months ended June 30, 2018 and 2017, the Company recorded contingent rent of $0.2 million and $0.5 million, respectively. During the six months ended June 30, 2018 and 2017, the Company recorded contingent rent of $0.7 million. |
Organizational Costs | Organizational Costs Costs related to the initial organization of the Company and its subsidiaries are expensed as they are incurred and are recorded within general and administrative expense in the Company’s consolidated statements of operations and comprehensive income. |
Offering Costs | Offering Costs In connection with the IPO, the Company incurred legal, accounting and other offering-related costs. Such costs have been deducted from the gross proceeds of the IPO upon its completion. As of June 30, 2018 and December 31, 2017, the Company had capitalized $32.1 million and $1.3 million of such costs in the Company’s consolidated balance sheets. These costs are presented as a reduction of additional paid-in capital as of June 30, 2018 (after the completion of the IPO) and are presented within prepaid expenses and other assets as of December 31, 2017 (prior to the completion of the IPO). |
Gains and Losses on Dispositions of Real Estate | Gains and Losses on Dispositions of Real Estate Gains and losses on dispositions of real estate investments are recorded in accordance with ASC 360-20, Property, Plant and Equipment—Real Estate Sales On January 1, 2018, the Company adopted FASB ASU 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 |
Income Taxes | Income Taxes EPRT Inc. intends to elect to be taxed as a REIT under sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ending December 31, 2018. REITs are subject to a number of organizational and operational requirements, including a requirement that 90% of ordinary “REIT taxable income” (as determined without regard to the dividends paid deduction or net capital gains) be distributed. As a REIT, the Company will generally not be subject to U.S. federal income tax to the extent that it meets the organizational and operational requirements and its distributions equal or exceed REIT taxable income. For the period subsequent to the effective date of our REIT election, the Company has met the organizational and operational requirements and distributions have exceeded net taxable income. Accordingly, no provision has been made for U.S. federal income taxes. Even if the Company qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income. Additionally, taxable income from non-REIT activities managed through the Company's taxable REIT subsidiary is subject to federal, state, and local taxes. From the Predecessor’s commencement of operations on March 30, 2016 through January 31, 2017, the Predecessor and its subsidiaries included in the consolidated financial statements were treated as disregarded entities for U.S. federal and state income tax purposes, and, accordingly, the Predecessor was not subject to entity-level tax. Therefore, until the Predecessor’s issuance of Class A and Class C units on January 31, 2017, the Predecessor’s net income flowed through to the Parent for federal income tax purposes. Following the issuance of Class A and C units, the Predecessor’s net income flowed through to Class A and Class C unitholders for federal income tax purposes. Accordingly, no provision for U.S. federal income taxes has been included in the accompanying consolidated financial statements. With regard to state income taxes, the Predecessor was a taxable entity only in certain states that tax all entities, including partnerships. The Company analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in such jurisdictions. The Company follows a two-step process to evaluate uncertain tax positions. Step one, recognition, occurs when an entity concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Step two, measurement, determines the amount of benefit that is more-likely-than-not to be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited. As of June 30, 2018 and December 31, 2017, the Company did not record any accruals for uncertain tax positions. The Company’s policy is to classify interest expense and penalties in general and administrative expense in the consolidated statements of operations and comprehensive income. During the three and six months ended June 30, 2018 and 2017, the Company did not record any interest or penalties, and there are no interest or penalties accrued at June 30, 2018 and December 31, 2017. The 2017 and 2016 taxable years remain open to examination by federal and state taxing jurisdictions to which the Company is subject. |
Equity Based Compensation | Equity-Based Compensation In 2018, EPRT Inc. granted shares of restricted common stock to its directors, executive officers and other employees that vest over a multi-year period, subject to the recipient’s continued service. In 2017, the Predecessor granted unit-based compensation awards to certain of its employees and managers, as well as non-employees, consisting of units that vest over a multi-year period, subject to the recipient’s continued service. The Company accounts for the restricted common stock and unit-based compensation in accordance with ASC 718, Compensation – Stock Compensation, which requires that such compensation be recognized in the financial statements based on their estimated grant-date fair value. The value of such awards is recognized as compensation expense in general and administrative expenses in the accompanying consolidated statements of operations over the requisite service periods, with subsequent remeasurement for any unvested units granted to non-employees. The Company recognizes compensation expense using the straight-line method based on the terms of the individual grant. |
Variable Interest Entities | Variable Interest Entities The FASB provides guidance for determining whether an entity is a VIE. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE. Following the completion of the Formation Transactions, the Company concluded that the Operating Partnership is a VIE of which the Company is the primary beneficiary as the Company has the power to direct the activities that most significantly impact the economic performance of the Operating Partnership . Substantially all of the Company’s assets and liabilities are held by the Operating Partnership. The assets and liabilities of the Operating Partnership are consolidated and reported as assets and liabilities on the Company’s consolidated balance sheet as of June 30, 2018. |
Reportable Segments | Reportable Segments ASC Topic 280, Segment Reporting, establishes standards for the manner in which enterprises report information about operating segments. Substantially all of the Company’s investments, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis. Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment. |
Net Income Per Common Share | Net Income per Share Basic net income per share of common stock is calculated by dividing net income attributable to stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period. The OP Units held by non-controlling interests represent potentially dilutive securities as the OP Units may be exchanged for cash or, at the Company’s election, shares of the Company’s common stock on a one-for-one basis. The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per share (dollars in thousands): (dollar amounts in thousands) Period from June 25, 2018 to June 30, 2018 Numerator: Net income used in basic net income per share $ 223 Net income attributable to non-controlling interests 99 Net income used in diluted net income per share $ 322 Denominator: Weighted average shares outstanding used in basic net income per share 40,976,901 Potentially dilutive securities 19,056,552 Weighted average shares outstanding used in diluted net income per share 60,033,453 |
Recent Accounting Developments | Recent Accounting Developments In May 2014, with subsequent updates in 2015, 2016 and 2017, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Such revenues are related to lease contracts with tenants, which currently fall within the scope of ASC Topic 840, and will fall within the scope of ASC Topic 842 upon the adoption of ASU 2016-02 on January 1, 2019 (see below). The Company’s sales of real estate are within the scope of ASU 2017-05 (see above). In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Targeted Improvements to Topic 842, Leases he Company is currently evaluating ASU 2018-11 including the impact of this change on its financial statement presentation. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Reconciliation of Numerator and Denominator used in Computation of Basic and Diluted Net Income Per Share | Basic net income per share of common stock is calculated by dividing net income attributable to stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period. The OP Units held by non-controlling interests represent potentially dilutive securities as the OP Units may be exchanged for cash or, at the Company’s election, shares of the Company’s common stock on a one-for-one basis. The following is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per share (dollars in thousands): (dollar amounts in thousands) Period from June 25, 2018 to June 30, 2018 Numerator: Net income used in basic net income per share $ 223 Net income attributable to non-controlling interests 99 Net income used in diluted net income per share $ 322 Denominator: Weighted average shares outstanding used in basic net income per share 40,976,901 Potentially dilutive securities 19,056,552 Weighted average shares outstanding used in diluted net income per share 60,033,453 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Schedule of Information about Acquisition Activity | The following table presents information about the Company’s acquisition activity during the six months ended June 30, 2018: (Dollar amounts in thousands) Total Investments Ownership type (1) Number of properties acquired 112 Allocation of Purchase Price: Land and improvements $ 83,721 Building and improvements 177,502 Construction in progress (2) 8,754 Intangible lease assets 6,010 Assets acquired 275,987 Intangible lease liabilities (982 ) Liabilities assumed (982 ) Purchase price (including acquisition costs) $ 275,005 (1) During the six months ended June 30, 2018, the Company acquired the fee interest in 111 properties and acquired one property subject to a ground lease arrangement. (2) Represents amounts incurred at and subsequent to acquisition and includes $0.1 million of capitalized interest expense. |
Schedule of Gross Investment Activity | During the six months ended June 30, 2018 and 2017, the Company had the following gross investment activity: (Dollar amounts in thousands) Number of Investment Locations Dollar Amount of Investments Gross investments, January 1, 2017 344 $ 458,667 Acquisitions of and additions to real estate investments 72 235,769 Sales of investments in real estate and direct financing lease receivables (21) (15,923 ) Provisions for impairment of real estate (1) (579 ) Principal collections on direct financing lease receivables (44 ) Gross investments, June 30, 2017 677,890 Less: Accumulated depreciation and amortization (2) (14,855 ) Net investments, June 30, 2017 395 $ 663,035 Gross investments, January 1, 2018 508 $ 939,072 Acquisitions of and additions to real estate investments 112 276,315 Sales of investments in real estate (16) (19,301 ) Relinquishment of properties at end of ground lease term (2) (853 ) Provisions for impairment of real estate (3) (2,781 ) Investments in loans receivable 3,632 Principal collections on direct financing lease receivables (35 ) Other (1,491 ) Gross investments, June 30, 2018 1,194,558 Less: Accumulated depreciation and amortization (2) (36,310 ) Net investments, June 30, 2018 602 $ 1,158,248 (1) During the six months ended June 30, 2017, the Company identified and recorded provisions for impairment at 3 vacant properties where expected future cash flows from the property, based on quoted market or comparable sales prices, were less than the Company’s carrying value. (2) Includes $25.1 million and $8.3 million of accumulated depreciation as of June 30, 2018 and 2017, respectively. (3) During the six months ended June 30, 2018, the Company identified and recorded provisions for impairment at 6 vacant and 7 tenanted properties where expected future cash flows from the property, based on quoted market or comparable sales prices, were less than the Company’s carrying value. The amount in the table above excludes approximately $25,000 related to intangible lease liabilities for these assets. |
Scheduled Future Minimum Base Rental Payments Under Remaining Non-cancelable Term of Operating Leases | Scheduled future minimum base rental payments due to be received under the remaining non-cancelable term of the operating leases in place as of June 30, 2018 are as follows: (in thousands) Future Minimum Base Rental Receipts July 1, 2018 - December 31, 2018 $ 45,180 2019 90,929 2020 91,075 2021 91,718 2022 93,114 Thereafter 1,037,679 Total $ 1,449,695 |
Schedule of Loans Receivable | The Company’s loans receivable as of June 30, 2018 are summarized below (dollars in thousands): (Dollar amounts in thousands) Interest rate Maturity date Principal Outstanding Mortgage loan receivable 10% 2021 $ 2,375 Development construction loan receivable (1) 8% 2058 1,257 Net investment $ 3,632 (1) Mortgaged property is subject to a ground lease arrangement with the Company, as landlord, and borrower, as tenant. If the tenant does not exercise its right to renew the ground lease at the end of its initial 15-year term, the balance of the mortgage loan receivable will be forgiven, and the Company will retain title to the mortgaged property. |
Scheduled Principal Payments Due to be Received under Loans Receivable | Scheduled principal payments due to be received under the loans receivable as of June 30, 2018 are as follows: (in thousands) Loans receivables July 1, 2018 - December 31, 2018 $ 2 2019 3 2020 4 2021 2,379 2022 4 Thereafter 1,240 Total $ 3,632 |
Schedule of Direct Financing Lease Receivables | The components of the investments accounted for as direct financing lease receivables were as follows: (in thousands) June 30, 2018 December 31, 2017 Minimum lease payments receivable 4,359 4,518 Estimated unguaranteed residual value of leased assets 270 270 Unearned income from leased assets (1,939 ) (2,063 ) Net investment $ 2,690 $ 2,725 |
Scheduled Future Minimum Non-cancelable Base Rental Payments Under Direct Financing Lease Receivables | Scheduled future minimum non-cancelable base rental payments due to be received under the direct financing lease receivables as of June 30, 2018 are as follows: (in thousands) Future Minimum Base Rental Payments July 1, 2018 - December 31, 2018 $ 161 2019 332 2020 337 2021 340 2022 345 Thereafter 2,844 Total $ 4,359 |
Activity in Real Estate Investments and Intangible Lease Liabilities Held for Sale | The following table shows the activity in real estate investments held for sale and intangible lease liabilities held for sale during the six months ended June 30, 2018 . (Dollar amounts in thousands) Number of Properties Real Estate Investments Intangible Lease Liabilities Net Carrying Value Held for sale balance, December 31, 2017 3 $ 4,173 $ (129 ) $ 4,044 Transfers to held for sale classification 10 13,080 (256 ) 12,824 Sales (7 ) (10,058 ) 129 (9,929 ) Transfers to held and used classification — — — — Held for sale balance, June 30, 2018 6 $ 7,195 $ (256 ) $ 6,939 |
Schedule of External Customers by Geographic Areas | The following table lists the states where the rental revenue from the properties in that state during the periods presented represented 10% or more of total rental revenue in the Company’s consolidated statements of operations and comprehensive income: Three months ended June 30, Six months ended June 30, State 2018 2017 2018 2017 Georgia 11.5% 12.5% 11.7% 13.0% Texas 12.9% 12.5% 13.1% 11.8% Michigan * 10.3% * * * State's rental revenue was not greater than 10% of total rental revenue during the period specified. |
Schedule of Intangible Assets and Liabilities | Intangible assets and liabilities consisted of the following as of the dates presented: June 30, 2018 December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 47,556 $ 7,655 $ 39,901 $ 44,738 $ 6,638 $ 38,100 Intangible market lease assets 16,759 3,531 13,228 17,715 2,794 14,921 Total intangible assets $ 64,315 $ 11,186 $ 53,129 $ 62,453 $ 9,432 $ 53,021 Intangible market lease liabilities $ 14,748 $ 2,596 $ 12,152 $ 14,824 $ 2,503 $ 12,321 |
Summary of Remaining Weighted Average Amortization Period for Intangible Assets and Liabilities | The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2018, by category and in total, were as follows: Years Remaining In-place leases 11.3 Intangible market lease assets 9.0 Intangible market lease liabilities 16.2 Total intangible assets and liabilities 11.7 |
Summary of Amortization and Accretion Recognized | The following table discloses amounts recognized within the consolidated statements of operations and comprehensive income related to amortization of in-place leases, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented: Three months ended June 30, Six months ended June 30, (in thousands) 2018 2017 2018 2017 Amortization of in-place leases (1) $ 1,914 $ 1,197 $ 3,143 $ 2,445 Amortization (accretion) of market lease intangibles, net (2) 118 224 398 434 Amortization (accretion) of above- and below-market ground lease intangibles, net (3) (127 ) (89 ) (268 ) (290 ) (1) Reflected within depreciation and amortization expense. (2) Reflected within rental revenue. (3) Reflected within property expenses. |
Summary of Projected Amortization Expenses for Next Five Years | The following table provides the projected amortization of in-place lease assets to depreciation and amortization expense, net amortization of above- and below-market lease intangibles to rental revenue, and net amortization of above- and below-market ground lease intangibles into property expenses for the next five years: (in thousands) July 1 - December 31, 2018 2019 2020 2021 2022 In-place lease assets $ 2,289 $ 4,407 $ 4,049 $ 3,868 $ 3,786 Total to be added to amortization expense $ 2,289 $ 4,407 $ 4,049 $ 3,868 $ 3,786 Above-market lease assets $ (795 ) $ (1,547 ) $ (1,330 ) $ (1,280 ) $ (1,278 ) Below-market lease liabilities 351 693 668 668 666 Net adjustment to rental revenue $ (444 ) $ (854 ) $ (662 ) $ (612 ) $ (612 ) Below-market ground lease assets $ 86 $ 99 $ — $ — $ — Above-market ground lease liabilities (265 ) (381 ) (230 ) (183 ) (180 ) Net adjustment to property expenses $ (179 ) $ (282 ) $ (230 ) $ (183 ) $ (180 ) |
Secured Borrowings (Tables)
Secured Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Scheduled Principal Payments | The following table summarizes the scheduled principal payments on the Company’s secured borrowings as of June 30, 2018: (in thousands) Future Principal Payments July 1 - December 31, 2018 $ 3,857 2019 8,009 2020 8,419 2021 267,558 2022 4,292 Thereafter 226,842 Total $ 518,977 |
Equity Based Compensation (Tabl
Equity Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Of Compensation Related Costs Equity Based Payments [Abstract] | |
Schedule of Information about Restricted Common Stock Awards | The following table presents information about the restricted common stock awards during the six months ended June 30, 2018: 2018 Equity Incentive Plan Unvested restricted common stock outstanding, January 1, 2018 — Granted 691,290 Vested — Forfeited — Unvested restricted common stock outstanding, June 30, 2018 691,290 |
Schedule of Information about Unvested Class B and Class D Units | The following table presents information about the unvested Class B and Class D units during the six months ended June 30, 2018 and 2017: Class B Units Class D Units Total Unvested units outstanding, January 1, 2017 — — — Granted 8,050 3,000 11,050 Vested (1,610 ) (600 ) (2,210 ) Forfeited — — — Unvested units outstanding, June 30, 2017 6,440 2,400 8,840 Unvested units outstanding, January 1, 2018 6,940 2,400 9,340 Granted — — — Vested (1,710 ) (600 ) (2,310 ) Forfeited — — — Unvested units outstanding, June 30, 2018 5,230 1,800 7,030 |
Schedule of Per Unit Fair Value of Unvested Class B and Class D Units Estimated Using Assumptions as of Valuation Dates | The per unit fair value of unvested Class B and Class D units was estimated using the following assumptions as of the respective valuation dates: Valuation Date June 30, 2018 June 30, 2017 January 31, 2017 Volatility 20 % 35 % 40 % Risk free rate 2.33 % 1.38 % 1.30 % Marketability discount 25 % 20 % 30 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Base Cash rental payments Due from Company under Office and Ground Leases | As of June 30, 2018, the future minimum base cash rental payments due from the Company under the office and ground leases where the Company is responsible for payment and the future minimum base cash rental payments under the ground leases where the Company’s tenants are responsible for payment over the next five years and thereafter are as follows: (in thousands) Office and Ground Leases to be Paid by the Company Ground Leases to be Paid Directly by the Company’s Tenants Total Future Minimum Base Rental Payments July 1 - December 31, 2018 $ 344 $ 243 $ 587 2019 925 492 1,417 2020 793 328 1,121 2021 681 331 1,012 2022 669 327 996 Thereafter 1,749 26 1,775 Total $ 5,161 $ 1,747 $ 6,908 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Values of Real Estate Investments Measured at Nonrecurring Basis | The Company measures its real estate investments at fair value on a nonrecurring basis. The fair values of these real estate investments were determined using the following input levels as of the dates presented: Net Carrying Fair Value Measurements Using Fair Value Hierarchy (in thousands) Value Fair Value Level 1 Level 2 Level 3 June 30, 2018 Non-financial assets: Long-lived assets $ 6,243 $ 6,243 $ — $ — $ 6,243 December 31, 2017 Non-financial assets: Long-lived assets $ 5,817 $ 5,817 $ — $ — $ 5,817 |
Summary of Quantitative Information About Level 3 Fair Value Measurements | Quantitative information about Level 3 fair value measurements as of June 30, 2018 was as follows: (dollar amounts in thousands) Fair Value Valuation Techniques Significant Unobservable Inputs Non-financial assets: Long-lived assets: Vacant property—Indianapolis, IN (1) $ 299 Sales comparison approach Binding Sales Contract $ 325 Vacant property—Allegan, MI (1) $ 141 Sales comparison approach Binding Sales Contract $ 165 Vacant property—Huntingdon, TN $ 35 Sales comparison approach Comparable sales prices $ 35 Vacant property—Detroit, MI $ 140 Sales comparison approach Non-binding Sales Contract $ 140 Convenience store—Carthage, TX (1) $ 1,172 Sales comparison approach Binding Sales Contract $ 1,228 Family Dining restaurant - North Port, FL (1) $ 2,351 Sales comparison approach Binding Sales Contract $ 2,462 Family Dining restaurant - Brattleboro, VT $ 45 Discounted cash flow approach N/A N/A Family Dining restaurant - Royal Palm Beach, FL (1) $ 2,060 Sales comparison approach Binding Sales Contract $ 2,154 (1) Fair value is net of $0.3 million of estimated disposition costs as these assets are classified as held for sale within the Company’s consolidated balance sheets as of June 30, 2018. |
Organization - Additional Infor
Organization - Additional Information (Details) $ / shares in Units, $ in Thousands | Jun. 30, 2018$ / sharesshares | Jun. 25, 2018USD ($)$ / sharesshares | Jun. 20, 2018shares | Jan. 31, 2017ClassofEquity | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 22, 2018$ / sharesshares | Jun. 21, 2018shares | Dec. 31, 2017 |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Common shares, par value per share | $ / shares | $ 0.01 | $ 0.01 | ||||||
Proceeds from initial public offering | $ | $ 427,700 | |||||||
Percentage of ownership interest | 68.30% | 68.30% | ||||||
Predecessor | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Number of classes of equity units issued | ClassofEquity | 4 | |||||||
Sale of stock, percentage of ownership after transaction | 52.30% | |||||||
Operating Partnership Unit | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Proceeds from concurrent private placement | $ | $ 16,001 | |||||||
Eldridge Industries, LLC | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Percentage of ownership interest | 1.90% | 1.90% | ||||||
Eldridge Industries, LLC | Operating Partnership Unit | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Operating partnership units received | 40,976,901 | |||||||
Stonebriar Holdings | Predecessor | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Percentage of ownership | 45.70% | |||||||
EPRT Management | Predecessor | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Percentage of ownership | 2.00% | |||||||
EPRT Holdings LLC | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Interest received in Operating Partnership | 17,913,592 | 17,913,592 | 17,913,592 | 17,913,592 | ||||
General partner ownership interest | 1.00% | 1.00% | ||||||
Percentage of ownership interest | 29.80% | 29.80% | ||||||
EPRT Holdings LLC | Predecessor | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Change in ownership percentages | 0.00% | |||||||
EPRT Holdings LLC | 2018 Incentive Plan | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Common shares, par value per share | $ / shares | $ 0.01 | |||||||
Additional shares of common stock reserved for issuance | 3,550,000 | |||||||
Restricted common stock shares issued | 691,290 | |||||||
Common Stock | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Initial public offering, shares | 32,500,000 | |||||||
Proceeds from concurrent private placement | $ | $ 108,999 | |||||||
Concurrent private placement of common stock, shares | 7,785,611 | |||||||
Initial Public Offering | Common Stock | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Initial public offering, shares | 32,500,000 | |||||||
Common shares, par value per share | $ / shares | $ 0.01 | |||||||
Common stock, price per share | $ / shares | $ 14 | |||||||
Proceeds from initial public offering | $ | $ 455,000 | |||||||
Private Placement | Eldridge Industries, LLC | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Common stock, price per share | $ / shares | $ 14 | |||||||
Proceeds from concurrent private placement | $ | $ 125,000 | $ 125,000 | ||||||
Private Placement | Eldridge Industries, LLC | Operating Partnership Unit | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Common stock, price per share | $ / shares | $ 14 | |||||||
Stock/Units issued | 1,142,960 | |||||||
Private Placement | Common Stock | Eldridge Industries, LLC | ||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||||||
Concurrent private placement of common stock, shares | 7,785,611 | 7,785,611 |
Summary of Significant Accoun29
Summary of Significant Accounting Principles - Additional Information (Details) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)Segment | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of ownership interest | 68.30% | 68.30% | 68.30% | |||
Allowance for loan losses | $ 0 | $ 0 | $ 0 | $ 0 | ||
Provision for impairment | 900,000 | $ 400,000 | 2,781,000 | $ 579,000 | ||
Cash and cash equivalents | 131,387,000 | 131,387,000 | 3,793,000 | 131,387,000 | 3,793,000 | 7,250,000 |
Deposits in excess of amount insured by FDIC | 131,100,000 | 131,100,000 | 131,100,000 | 7,000,000 | ||
Contingent rent | 200,000 | 500,000 | 700,000 | 700,000 | ||
Capitalized offering costs | 32,100,000 | 32,100,000 | $ 32,100,000 | 1,300,000 | ||
Percentage of taxable income require to REIT | 90.00% | |||||
Provision for income tax | 0 | 0 | $ 0 | |||
Uncertain tax positions, interest or penalties | 0 | 0 | 0 | 0 | ||
Uncertain tax position, interest or penalties accrued | $ 0 | 0 | $ 0 | 0 | ||
Number of reportable segments | Segment | 1 | |||||
Common stock, conversion basis | one-for-one basis | one-for-one basis | ||||
Federal | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Open tax year | 2016 2017 | |||||
State | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Open tax year | 2016 2017 | |||||
Base Rent | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Allowance for doubtful accounts receivable | $ 200,000 | 200,000 | $ 200,000 | 100,000 | ||
Straight-line Rent | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Allowance for doubtful accounts receivable | $ 0 | 0 | 0 | $ 100,000 | ||
Real Estate Investments | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation | $ 5,700,000 | $ 3,100,000 | $ 10,900,000 | $ 5,600,000 | ||
Buildings | Maximum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated useful life | 40 years | |||||
Site Improvements | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated useful life | 15 years |
Summary of Significant Accoun30
Summary of Significant Accounting Principles - Reconciliation of Numerator and Denominator used in Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Numerator: | |||||
Net income used in basic net income per share | $ 223 | $ 3,400 | $ 2,047 | $ 4,508 | $ 2,629 |
Net income attributable to non-controlling interests | 99 | $ (99) | $ (99) | ||
Net income used in diluted net income per share | $ 322 | ||||
Denominator: | |||||
Weighted average shares outstanding used in basic net income per share | 40,976,901 | 40,976,901 | 40,976,901 | ||
Potentially dilutive securities | 19,056,552 | ||||
Weighted average shares outstanding used in diluted net income per share | 60,033,453 | 60,033,453 | 60,033,453 |
Investments - Additional Inform
Investments - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Aug. 08, 2018USD ($)Property | Jun. 30, 2017USD ($)Loan | Jun. 30, 2018USD ($)PropertyInvestment | Jun. 30, 2017USD ($)Loan | Dec. 31, 2017USD ($)PropertyInvestment | Dec. 31, 2016USD ($) | |
Investment [Line Items] | ||||||
Number of property locations of investments | Property | 602 | 508 | ||||
Number of property development in progress | Property | 4 | 2 | ||||
Number of real estate properties undeveloped land parcels | Property | 2 | 2 | ||||
Number of additional properties secured for mortgage loan receivable | Property | 2 | |||||
Number of owned properties | Property | 588 | 493 | ||||
Number of properties owned as direct financing receivables | Property | 5 | 5 | ||||
Number of ground lease interests | Property | 14 | 15 | ||||
Number of real estate subject to direct financing leases | Property | 1 | 1 | ||||
Gross acquisition cost of real estate investments | $ 677,890,000 | $ 1,194,558,000 | $ 677,890,000 | $ 939,072,000 | $ 458,667,000 | |
Real estate investments, at cost | 1,181,041,000 | 932,174,000 | ||||
Aggregate carrying amount of loans and direct financing lease receivable | 6,300,000 | |||||
Real estate investments held for sale, net | $ 7,200,000 | $ 4,200,000 | ||||
Number of investments | Investment | 347 | 348 | ||||
Net investments | $ 618,000,000 | $ 620,000,000 | ||||
Aggregate carrying amount of direct financing lease receivable | 2,700,000 | |||||
Number of investments represented more than five percentage of total investment activity | Investment | 0 | |||||
Number of loan receivable agreements secured | Loan | 2 | 2 | ||||
Aggegate carrying value of loans receivable | $ 3,600,000 | $ 3,600,000 | ||||
Number of mortgage loans secured under agreement | Loan | 1 | 1 | ||||
Number of mortgage loans secured under agreement | Loan | 1 | 1 | ||||
Mortgage loan receivable, maturity date | Jul. 31, 2021 | |||||
Description of mortgage loans payment due | monthly payments of interest only with a balloon payment | |||||
Amortization schedule of loan receivable under development construction agreement | 40 years | |||||
Real estate investments transfers to held for sale | $ 13,080,000 | $ 0 | ||||
Real estate investments transfers from held for sale | 0 | |||||
Real estate investments held for sale | $ 0 | $ 7,195,000 | $ 0 | $ 4,173,000 | ||
Number of Properties, Held for sale | Property | 6 | 3 | ||||
Subsequent Event | ||||||
Investment [Line Items] | ||||||
Number of additional properties secured for mortgage loan receivable | Property | 9 | |||||
Number of real estate investment properties acquired | Property | 10 | |||||
Aggregate investment (including acquisition-related costs) | $ 30,500,000 | |||||
Investment in new and ongoing construction in progress | 3,900,000 | |||||
Additional real estate investment in new and ongoing construction | 300,000 | |||||
Investment in secured mortgage note receivable | $ 5,800,000 | |||||
Number of investment properties sold or transferred | Property | 7 | |||||
Number of Properties, Held for sale | Property | 3 | |||||
Investment, aggregate gross sales price | $ 9,800,000 | |||||
Investment, disposition costs | $ 400,000 |
Investments - Schedule of Infor
Investments - Schedule of Information about Acquisition Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($)Property | |
Investments [Abstract] | |
Ownership type | fee interest |
Number of properties acquired | Property | 112 |
Allocation of Purchase Price: | |
Land and improvements | $ 83,721 |
Building and improvements | 177,502 |
Construction in progress | 8,754 |
Intangible lease assets | 6,010 |
Assets acquired | 275,987 |
Intangible lease liabilities | (982) |
Liabilities assumed | (982) |
Purchase price (including acquisition costs) | $ 275,005 |
Investments - Schedule of Inf33
Investments - Schedule of Information about Acquisition Activity (Parenthetical) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($)Property | |
Investments [Abstract] | |
Ownership type | fee interest |
Number of properties acquired fee interest | 111 |
Number of properties acquired subject to ground lease arrangement | 1 |
Capitalized interest expense | $ | $ 0.1 |
Investments - Summary of Gross
Investments - Summary of Gross Investment Activity (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018USD ($)InvestmentLocation | Jun. 30, 2017USD ($)InvestmentLocation | Jun. 30, 2018USD ($)InvestmentLocation | Jun. 30, 2017USD ($)InvestmentLocation | Dec. 31, 2017USD ($)InvestmentLocation | Dec. 31, 2016InvestmentLocation | |
Real Estate Investments [Abstract] | ||||||
Number of Investment Locations | InvestmentLocation | 602 | 395 | 602 | 395 | 508 | 344 |
Number of Investment Locations, Acquisitions of and additions to real estate investments | InvestmentLocation | 112 | 72 | ||||
Number of Investment Locations, Sales of investments in real estate and direct financing lease receivables | InvestmentLocation | (21) | |||||
Number of Investment Locations, Sales of investments in real estate | InvestmentLocation | (16) | |||||
Number of Investment Locations, Relinquishment of properties at end of ground lease term | InvestmentLocation | (2) | |||||
Gross investments | $ 939,072 | $ 458,667 | ||||
Acquisitions of and additions to real estate investments | 276,315 | 235,769 | ||||
Sales of investments in real estate and direct financing lease receivables | (15,923) | |||||
Sales of investments in real estate | (19,301) | |||||
Relinquishment of properties at end of ground lease term | (853) | |||||
Provisions for impairment of real estate | $ (900) | $ (400) | (2,781) | (579) | ||
Investments in loans receivable | 3,632 | |||||
Principal collections on direct financing lease receivables | (35) | (44) | ||||
Other | (1,491) | |||||
Gross investments | 1,194,558 | 677,890 | 1,194,558 | 677,890 | ||
Less: accumulated depreciation and amortization | (36,310) | (14,855) | (36,310) | (14,855) | $ (24,825) | |
Net investments | $ 1,158,248 | $ 663,035 | $ 1,158,248 | $ 663,035 | $ 914,247 |
Investments - Summary of Gros35
Investments - Summary of Gross Investment Activity (Parenthetical) (Details) | 6 Months Ended | ||
Jun. 30, 2018USD ($)Property | Dec. 31, 2017Property | Jun. 30, 2017USD ($)Property | |
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 602 | 508 | |
Accumulated depreciation | $ | $ 25,100,000 | $ 8,300,000 | |
Intangible lease liabilities | $ | $ 25,000 | ||
Vacant Properties | |||
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 6 | 3 | |
Tenanted Properties | |||
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 7 |
Investments - Scheduled Future
Investments - Scheduled Future Minimum Base Rental Payments Under Remaining Non-cancelable Term of Operating Leases (Details) - Real Estate Investments $ in Thousands | Jun. 30, 2018USD ($) |
Schedule Of Fair Value Of Separate Accounts By Major Category Of Investment [Line Items] | |
July 1, 2018 - December 31, 2018 | $ 45,180 |
2,019 | 90,929 |
2,020 | 91,075 |
2,021 | 91,718 |
2,022 | 93,114 |
Thereafter | 1,037,679 |
Total | $ 1,449,695 |
Investments - Schedule of Loans
Investments - Schedule of Loans Receivable (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Loans Receivable Disclosure [Line Items] | |
Loans receivable, Principal Outstanding | $ 3,632 |
Mortgage Loan Receivable | |
Loans Receivable Disclosure [Line Items] | |
Loans receivable, Interest rate | 10.00% |
Loans receivable, Maturity date | 2,021 |
Loans receivable, Principal Outstanding | $ 2,375 |
Development Construction Loan Receivable | |
Loans Receivable Disclosure [Line Items] | |
Loans receivable, Interest rate | 8.00% |
Loans receivable, Maturity date | 2,058 |
Loans receivable, Principal Outstanding | $ 1,257 |
Investments - Schedule of Loa38
Investments - Schedule of Loans Receivable (Parenthetical) (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Loans And Leases Receivable Disclosure [Abstract] | |
Mortgage property ground lease agreement renewal term | 15-year |
Investments - Scheduled of Prin
Investments - Scheduled of Principal Payments Due to be Received under Loans Receivable (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Loans Receivable Scheduled Principal Payments Due To Be Received [Abstract] | |
July 1, 2018 - December 31, 2018 | $ 2 |
2,019 | 3 |
2,020 | 4 |
2,021 | 2,379 |
2,022 | 4 |
Thereafter | 1,240 |
Total | $ 3,632 |
Investments - Schedule of Direc
Investments - Schedule of Direct Financing Lease Receivables (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Net Investment In Leases [Abstract] | ||
Minimum lease payments receivable | $ 4,359 | $ 4,518 |
Estimated unguaranteed residual value of leased assets | 270 | 270 |
Unearned income from leased assets | (1,939) | (2,063) |
Net investment | $ 2,690 | $ 2,725 |
Investments - Scheduled Futur41
Investments - Scheduled Future Minimum Non-cancelable Base Rental Payments Under Direct Financing Lease Receivables (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Net Investment In Leases [Abstract] | |
July 1, 2018 - December 31, 2018 | $ 161 |
2,019 | 332 |
2,020 | 337 |
2,021 | 340 |
2,022 | 345 |
Thereafter | 2,844 |
Total | $ 4,359 |
Investments - Activity in Real
Investments - Activity in Real Estate Investments and Intangible Lease Liabilities Held for Sale (Details) | 6 Months Ended | |
Jun. 30, 2018USD ($)Property | Jun. 30, 2017USD ($) | |
Investments [Abstract] | ||
Number of Properties, Held for sale balance, December 31, 2017 | Property | 3 | |
Number of Properties, Transfers to held for sale classification | Property | 10 | |
Number of Properties, Sales | Property | (7) | |
Number of Properties, Held for sale balance, June 30, 2018 | Property | 6 | |
Real Estate Investments, Held for sale balance, December 31, 2017 | $ 4,173,000 | |
Real Estate Investments, Transfers to held for sale classification | 13,080,000 | $ 0 |
Real Estate Investments, Sales | (10,058,000) | |
Real Estate Investments, Held for sale balance, June 30, 2018 | 7,195,000 | $ 0 |
Intangible Lease Liabilities, Held for sale balance, December 31, 2017 | (129,000) | |
Intangible Lease Liabilities, Transfers to held for sale classification | (256,000) | |
Intangible Lease Liabilities, Sales | 129,000 | |
Intangible Lease Liabilities, Held for sale balance, June 30, 2018 | (256,000) | |
Net Carrying Value, Held for sale balance, December 31, 2017 | 4,044,000 | |
Net Carrying Value, Transfers to held for sale classification | 12,824,000 | |
Net Carrying Value, Sales | (9,929,000) | |
Net Carrying Value, Held for sale balance, June 30, 2018 | $ 6,939,000 |
Investments - Schedule of Exter
Investments - Schedule of External Customers by Geographic Areas (Details) - Rental Revenue - Geographic Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Georgia | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 11.50% | 12.50% | 11.70% | 13.00% |
Texas | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 12.90% | 12.50% | 13.10% | 11.80% |
Michigan | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 10.30% |
Investments - Schedule of Intan
Investments - Schedule of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross Carrying Amount | $ 64,315 | $ 62,453 |
Intangible assets, Accumulated Amortization | 11,186 | 9,432 |
Intangible assets, Net Carrying Amount | 53,129 | 53,021 |
Intangible market lease liabilities, Gross Carrying Amount | 14,748 | 14,824 |
Intangible market lease liabilities, Accumulated Amortization | 2,596 | 2,503 |
Intangible market lease liabilities, Net Carrying Amount | 12,152 | 12,321 |
In-place Leases | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross Carrying Amount | 47,556 | 44,738 |
Intangible assets, Accumulated Amortization | 7,655 | 6,638 |
Intangible assets, Net Carrying Amount | 39,901 | 38,100 |
Intangible Market Lease Assets | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross Carrying Amount | 16,759 | 17,715 |
Intangible assets, Accumulated Amortization | 3,531 | 2,794 |
Intangible assets, Net Carrying Amount | $ 13,228 | $ 14,921 |
Investments - Summary of Remain
Investments - Summary of Remaining Weighted Average Amortization Period for Intangible Assets and Liabilities (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Finite Lived Intangible Assets [Line Items] | |
Remaining weighted average amortization period, Intangible market lease liabilities | 16 years 2 months 12 days |
Total intangible assets and liabilities | 11 years 8 months 12 days |
In-place Leases | |
Finite Lived Intangible Assets [Line Items] | |
Remaining weighted average amortization period, In-place leases | 11 years 3 months 18 days |
Intangible Market Lease Assets | |
Finite Lived Intangible Assets [Line Items] | |
Remaining weighted average amortization period, Intangible assets | 9 years |
Investments - Summary of Amorti
Investments - Summary of Amortization and Accretion Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Amortization of In-Place Leases, Amortization and Accretion of Above- and Below-Market Lease Assets and Liabilities [Line Items] | ||||
Amortization of in-place leases | $ 1,914 | $ 1,197 | $ 3,143 | $ 2,445 |
Market Lease Intangibles | Rental Revenue | ||||
Amortization of In-Place Leases, Amortization and Accretion of Above- and Below-Market Lease Assets and Liabilities [Line Items] | ||||
Amortization (accretion) of market lease intangibles, net | 118 | 224 | 398 | 434 |
Above and Below Market Ground Lease Intangibles | Property Expenses | ||||
Amortization of In-Place Leases, Amortization and Accretion of Above- and Below-Market Lease Assets and Liabilities [Line Items] | ||||
Amortization (accretion) of above- and below-market ground lease intangibles, net | $ (127) | $ (89) | $ (268) | $ (290) |
Investments - Summary of Projec
Investments - Summary of Projected Amortization Expenses for Next Five Years (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Amortization Expense | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, amortization expense, July 1, 2018 - December 31, 2018 | $ 2,289 |
Finite-lived intangible assets, amortization expense, 2019 | 4,407 |
Finite-lived intangible assets, amortization expense, 2020 | 4,049 |
Finite-lived intangible assets, amortization expense, 2021 | 3,868 |
Finite-lived intangible assets, amortization expense, 2022 | 3,786 |
In-place Leases | Amortization Expense | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, amortization expense, July 1, 2018 - December 31, 2018 | 2,289 |
Finite-lived intangible assets, amortization expense, 2019 | 4,407 |
Finite-lived intangible assets, amortization expense, 2020 | 4,049 |
Finite-lived intangible assets, amortization expense, 2021 | 3,868 |
Finite-lived intangible assets, amortization expense, 2022 | 3,786 |
Above-Market Lease Assets | Rental Revenue | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, amortization expense, July 1, 2018 - December 31, 2018 | (795) |
Finite-lived intangible assets, amortization expense, 2019 | (1,547) |
Finite-lived intangible assets, amortization expense, 2020 | (1,330) |
Finite-lived intangible assets, amortization expense, 2021 | (1,280) |
Finite-lived intangible assets, amortization expense, 2022 | (1,278) |
Below-Market Ground Lease Assets | Property Expenses | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, amortization expense, July 1, 2018 - December 31, 2018 | 86 |
Finite-lived intangible assets, amortization expense, 2019 | 99 |
Above-Market Ground Lease Liabilities | Property Expenses | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible liability, amortization income, July 1, 2018 - December 31, 2018 | (265) |
Finite-lived intangible liability, amortization income, 2019 | (381) |
Finite-lived intangible liability, amortization income, 2020 | (230) |
Finite-lived intangible liability, amortization income, 2021 | (183) |
Finite-lived intangible liability, amortization income, 2022 | (180) |
Net Adjustment in-place Lease | Rental Revenue | |
Finite Lived Intangible Assets [Line Items] | |
Above and below market lease (assets) liabilities net adjustment to rental revenue, July 1, 2018 - December 31, 2018 | (444) |
Above and below market lease (assets) liabilities net adjustment to rental revenue, 2019 | (854) |
Above and below market lease (assets) liabilities net adjustment to rental revenue, 2020 | (662) |
Above and below market lease (assets) liabilities net adjustment to rental revenue, 2021 | (612) |
Above and below market lease (assets) liabilities net adjustment to rental revenue, 2022 | (612) |
Net Adjustment in-place Lease | Property Expenses | |
Finite Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, amortization expense, July 1, 2018 - December 31, 2018 | (179) |
Finite-lived intangible assets, amortization expense, 2019 | (282) |
Finite-lived intangible assets, amortization expense, 2020 | (230) |
Finite-lived intangible assets, amortization expense, 2021 | (183) |
Finite-lived intangible assets, amortization expense, 2022 | (180) |
Below-Market Lease Liabilities | Rental Revenue | |
Finite Lived Intangible Assets [Line Items] | |
Below market leases, amortization income, July 1, 2018 - December 31, 2018 | 351 |
Below market leases, amortization income, 2019 | 693 |
Below market leases, amortization income, 2020 | 668 |
Below market leases, amortization income, 2021 | 668 |
Below market leases, amortization income, 2022 | $ 666 |
Unsecured Revolving Credit Fa48
Unsecured Revolving Credit Facility - Additional Information (Details) - USD ($) | Jun. 25, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Line Of Credit Facility [Line Items] | ||||||
Deferred finance costs, net | $ 10,200,000 | $ 10,200,000 | $ 11,300,000 | |||
Interest expense | 8,634,000 | $ 5,160,000 | 16,911,000 | $ 8,875,000 | ||
Senior Unsecured Revolving Credit Facility | ||||||
Line Of Credit Facility [Line Items] | ||||||
Maximum aggregate initial original principal amount | $ 300,000,000 | |||||
Credit facility term | 4 years | |||||
Maximum availability of the facility | $ 200,000,000 | |||||
Borrowings or repayments under facitlity | 0 | 0 | ||||
Principal balance outstanding under the facility | 0 | 0 | ||||
Interest expense | 13,000 | 13,000 | ||||
Senior Unsecured Revolving Credit Facility | Prepaid Expenses and Other Current Assets, Net | ||||||
Line Of Credit Facility [Line Items] | ||||||
Deferred finance costs, net | $ 3,500,000 | $ 3,500,000 | ||||
Senior Unsecured Revolving Credit Facility | Maximum | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit facility extension term | 12 months |
Secured Borrowings - Additional
Secured Borrowings - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jul. 31, 2017USD ($)SpecialPurposeEntity | Dec. 31, 2016USD ($)SpecialPurposeEntity | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||||||
Number of special purpose entities formed to hold assets and issue secured borrowings | SpecialPurposeEntity | 1 | 2 | |||||
Principal outstanding | $ 518,977 | $ 518,977 | $ 522,900 | ||||
Deferred finance costs, net | $ 10,200 | $ 10,200 | $ 11,300 | ||||
Debt instrument, interest rate terms description | If the Company does not meet these repayment schedules, the base interest rates on the notes increase by the greater of (i) 5.00% and (ii) the amount by which the sum of the following exceeds the base interest rates on the notes: (a) the yield to maturity of 10-year U.S. treasury securities in November 2021, plus (b) 5.00%, plus (c) 2.73% for the Series A Notes or 3.70% for the Class B Notes. Additionally, in this event, the full amount of any tenant rental payments received on the assets transferred to the securitization would be used to repay principal. | ||||||
Percentage of increase in base interest rate upon non repayment of schedules | 5.00% | 5.00% | |||||
Debt instrument, base interest rates | 5.00% | 5.00% | |||||
Interest expense | $ 5,600 | $ 3,100 | $ 11,300 | $ 6,300 | |||
U.S. Treasury Securities | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument maturity term upon exceeding base interest rate | 10 years | ||||||
Eldridge Industries, LLC | |||||||
Debt Instrument [Line Items] | |||||||
Notes issued | $ 75,100 | ||||||
Net proceeds from issuance of notes | $ 273,300 | ||||||
RC Funding 2016-1 Class A Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, frequency of periodic payment | monthly through November 2021 | ||||||
Debt instrument, base interest rates | 2.73% | 2.73% | |||||
RC Funding 2016-1 Class A Notes | Eldridge Industries, LLC | |||||||
Debt Instrument [Line Items] | |||||||
Notes issued | 263,500 | ||||||
RC Funding 2016-1 Class B Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, base interest rates | 3.70% | 3.70% | |||||
RC Funding 2016-1 Class B Notes | Eldridge Industries, LLC | |||||||
Debt Instrument [Line Items] | |||||||
Notes issued | $ 17,300 | ||||||
RC Funding 2017-1 Class A Notes | |||||||
Debt Instrument [Line Items] | |||||||
Notes issued | 232,400 | ||||||
RC Funding 2017-1 Class B Notes | |||||||
Debt Instrument [Line Items] | |||||||
Notes issued | $ 15,700 | ||||||
RC Funding 2016-1 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, payment terms description | The RC Funding 2016-1 notes mature in November 2046, but the terms of the Class A Notes require principal to be paid monthly through November 2021, with a balloon repayment at that time, and the terms of the Class B Notes require no monthly principal payments but require the full principal balance to be paid in November 2021. | ||||||
Debt instrument maturity month year | 2046-11 | ||||||
Weighted-average interest rate | 4.51% | 4.51% | |||||
R C Funding Two Thousand Seventeen One | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument maturity month year | 2047-06 | ||||||
Weighted-average interest rate | 4.16% | 4.16% |
Secured Borrowings - Summary of
Secured Borrowings - Summary of Scheduled Principal Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
July 1 - December 31, 2018 | $ 3,857 | |
2,019 | 8,009 | |
2,020 | 8,419 | |
2,021 | 267,558 | |
2,022 | 4,292 | |
Thereafter | 226,842 | |
Total | $ 518,977 | $ 522,900 |
Notes Payable to Related Part51
Notes Payable to Related Parties - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)Note | Jun. 30, 2017USD ($)Note | Jun. 25, 2018USD ($)Note | Jan. 31, 2018USD ($)Note | Dec. 31, 2017USD ($)Note | |
Related Party Transaction [Line Items] | |||||||
Debt instrument, base interest rates | 5.00% | 5.00% | |||||
Notes issued amount | $ 0 | $ 0 | $ 230,000 | ||||
Interest expense related parties | 2,524 | $ 1,713 | $ 4,603 | $ 1,923 | |||
Warehouse Notes | Eldridge Industries, LLC | |||||||
Related Party Transaction [Line Items] | |||||||
Number of notes issued | Note | 20 | 14 | |||||
Notes issued amount | 154,000 | 293,000 | $ 154,000 | $ 293,000 | $ 230,000 | ||
Principal payments on notes | 103,000 | 103,000 | $ 50,000 | ||||
Number of notes repaid in full | Note | 3 | ||||||
Number of notes repaid in part | Note | 1 | ||||||
Number of notes outstanding | Note | 19 | ||||||
Short-term note payable to separate affiliate | $ 20,000 | $ 20,000 | |||||
Short-term note accrued interest rate | 8.00% | 8.00% | |||||
Interest expense related parties | $ 2,500 | $ 1,700 | $ 4,600 | $ 1,900 | |||
Warehouse Notes | Eldridge Industries, LLC | Private Placement | |||||||
Related Party Transaction [Line Items] | |||||||
Notes issued amount | $ 334,000 | ||||||
Number of notes outstanding | Note | 36 | ||||||
Warehouse Notes | Eldridge Industries, LLC | Minimum [Member] | LIBOR | |||||||
Related Party Transaction [Line Items] | |||||||
Debt instrument, base interest rates | 2.14% | 2.14% | |||||
Warehouse Notes | Eldridge Industries, LLC | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Accrued interest rate maturity period | 1 year | ||||||
Warehouse Notes | Eldridge Industries, LLC | Maximum | LIBOR | |||||||
Related Party Transaction [Line Items] | |||||||
Debt instrument, base interest rates | 2.55% | 2.55% |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) | Jul. 24, 2018 | Jun. 30, 2018 | Jun. 25, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2017 | Jul. 20, 2018 | Jan. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 21, 2018 | Jun. 20, 2018 |
Class Of Stock [Line Items] | |||||||||||||
Direct capital contributions | $ 288,600,000 | ||||||||||||
Indirect capital contributions | $ 163,100,000 | ||||||||||||
Additional indirect capital contributions | $ 17,300,000 | ||||||||||||
Direct equity contribution | $ 532,214,000 | $ 181,402,000 | $ 532,214,000 | ||||||||||
Price per unit | $ 1,000 | $ 1,000 | |||||||||||
Compound interest rate percentage | 8.00% | 8.00% | |||||||||||
Issuance of new grant of unvested shares | 500 | 11,050 | |||||||||||
Additional direct equity contribution | $ 50,000,000 | ||||||||||||
Proceeds to repay of outstanding principal | $ 50,000,000 | ||||||||||||
EPRT Holdings LLC | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Direct equity contribution | $ 80,000,000 | $ 80,000,000 | |||||||||||
Interest received in Operating Partnership | 17,913,592 | 17,913,592 | 17,913,592 | 17,913,592 | |||||||||
Directors, Executive Officers and Other Employees | Subsequent Event | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Percentage of outstanding shares owned | 1.60% | ||||||||||||
EPRT Management and Certain Members of EPRT LLC's Board of Managers | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Direct equity contribution | 3,700,000 | $ 3,700,000 | |||||||||||
Retention of equity investment in subsidiary | $ 91,500,000 | ||||||||||||
2018 Equity Incentive Plan | Directors, Executive Officers and Other Employees | Restricted Stock Awards | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Percentage of outstanding shares owned by purchasers | 1.70% | ||||||||||||
Operating Partnership Unit | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Proceeds from concurrent private placement | $ 16,001,000 | ||||||||||||
Common Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Initial public offering, shares | 32,500,000 | ||||||||||||
Concurrent private placement shares | 7,785,611 | ||||||||||||
Proceeds from concurrent private placement | $ 108,999,000 | ||||||||||||
Common Stock | Subsequent Event | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Common stock, price per share | $ 14 | ||||||||||||
Percentage of outstanding shares owned by purchasers | 80.60% | ||||||||||||
Common stock to purchase number of additional shares | 4,875,000 | ||||||||||||
Common Stock | 2018 Equity Incentive Plan | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Proceeds from concurrent private placement | $ 547,900,000 | ||||||||||||
Common Stock | 2018 Equity Incentive Plan | Directors, Executive Officers and Other Employees | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Restricted shares issued | 691,290 | ||||||||||||
Common Stock | Initial Public Offering | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Initial public offering, shares | 32,500,000 | ||||||||||||
Common stock, price per share | $ 14 | ||||||||||||
Percentage of outstanding shares owned by purchasers | 79.30% | ||||||||||||
Common Stock | Over-allotment Option | Subsequent Event | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Initial public offering, shares | 2,772,191 | ||||||||||||
Proceeds from issuance of common stock | $ 36,500,000 | ||||||||||||
Eldridge Industries, LLC | Subsequent Event | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Percentage of outstanding shares owned | 17.80% | ||||||||||||
Eldridge Industries, LLC | Private Placement | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Common stock, price per share | $ 14 | ||||||||||||
Proceeds from concurrent private placement | $ 125,000,000 | $ 125,000,000 | |||||||||||
Underwriting discounts or commissions | $ 0 | ||||||||||||
Eldridge Industries, LLC | Operating Partnership Unit | Private Placement | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Common stock, price per share | $ 14 | ||||||||||||
Stock/Units issued | 1,142,960 | ||||||||||||
Eldridge Industries, LLC | Common Stock | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Percentage of outstanding shares owned by purchasers | 19.00% | ||||||||||||
Eldridge Industries, LLC | Common Stock | Private Placement | |||||||||||||
Class Of Stock [Line Items] | |||||||||||||
Concurrent private placement shares | 7,785,611 | 7,785,611 |
Non-controlling Interests - Add
Non-controlling Interests - Additional Information (Details) - shares | Jun. 30, 2018 | Jun. 20, 2018 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 21, 2018 |
Minority Interest [Line Items] | |||||
Percentage of ownership interest, excluding general partner ownership interest | 67.30% | 67.30% | 67.30% | ||
Percentage of ownership interest | 68.30% | 68.30% | 68.30% | ||
Common stock, conversion basis | one-for-one basis | one-for-one basis | |||
Distribution made to holders of OP units | 0 | 0 | |||
Eldridge Industries, LLC | |||||
Minority Interest [Line Items] | |||||
Percentage of ownership interest | 1.90% | 1.90% | 1.90% | ||
Eldridge Industries, LLC | Operating Partnership Unit | |||||
Minority Interest [Line Items] | |||||
Operating partnership units received | 40,976,901 | ||||
Eldridge Industries, LLC | Operating Partnership Unit | Private Placement | |||||
Minority Interest [Line Items] | |||||
Stock/Units issued | 1,142,960 | ||||
EPRT Holdings LLC | |||||
Minority Interest [Line Items] | |||||
General partner ownership interest | 1.00% | 1.00% | |||
Interest received in Operating Partnership | 17,913,592 | 17,913,592 | 17,913,592 | 17,913,592 | 17,913,592 |
Percentage of ownership interest | 29.80% | 29.80% | 29.80% |
Equity Based Compensation - 201
Equity Based Compensation - 2018 Incentive Plan - Additional Information (Details) - USD ($) | Jun. 25, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
General and Administrative Expense | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Compensation expense | $ 100,000 | $ 200,000 | $ 300,000 | $ 400,000 | |
2018 Equity Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Maximum number of shares issuable under plan | 3,550,000 | 3,550,000 | |||
2018 Equity Incentive Plan | Restricted Stock Awards | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Number of shares issued | 691,290 | ||||
Grant date fair value of common stock awards per share | $ 13.68 | ||||
Unrecognized compensation cost | $ 9,400,000 | $ 9,400,000 | |||
Unrecognized compensation cost, weighted average recognition period | 2 years 10 months 24 days | ||||
2018 Equity Incentive Plan | Restricted Stock Awards | General and Administrative Expense | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Compensation expense | $ 45,000 | $ 45,000 | |||
2018 Equity Incentive Plan | Restricted Stock Awards | First Anniversary | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock awards expected to vest | 15,484 | ||||
2018 Equity Incentive Plan | Restricted Stock Awards | First, Second and Third Anniversaries | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock awards expected to vest | 675,806 | ||||
2018 Equity Incentive Plan | Restricted Stock Awards | Directors, Executive Officers and Other Employees | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Number of shares issued | 691,290 |
Equity Based Compensation - Sch
Equity Based Compensation - Schedule of Information about Restricted Common Stock Awards (Details) - 2018 Equity Incentive Plan - Restricted Stock Awards | 6 Months Ended |
Jun. 30, 2018shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unvested restricted common stock, Granted | 691,290 |
Unvested restricted common stock outstanding, Ending Balance | 691,290 |
Equity Based Compensation - Uni
Equity Based Compensation - Unit Based Compensation - Additional Information - (Details) | Jun. 30, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)Installmentshares | Jun. 30, 2017$ / shares | Jan. 31, 2017Installment$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) |
General and Administrative Expense | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Compensation expense | $ 100,000 | $ 200,000 | $ 300,000 | $ 400,000 | ||||
Class B Units | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Grant date fair value of common stock awards per share | $ / shares | $ 323.65 | |||||||
Unrecognized compensation cost | $ 2,300,000 | $ 2,700,000 | 2,300,000 | $ 2,300,000 | ||||
Unrecognized compensation cost, weighted average recognition period | 2 years 9 months 18 days | |||||||
Class D Units | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Grant date fair value of common stock awards per share | $ / shares | $ 152.16 | |||||||
Unrecognized compensation cost | 300,000 | 800,000 | 300,000 | $ 300,000 | ||||
Unvested units, granted to non-employees | $ 30,000 | $ 200,000 | $ 30,000 | $ 30,000 | ||||
Unrecognized compensation cost, weighted average recognition period | 2 years 9 months 18 days | |||||||
Class D Units | Non-employees | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Grant date fair value of common stock awards per share | $ / shares | $ 79.09 | $ 582.31 | ||||||
Restricted Stock Awards | Class B Units | Members of EPRT Management and EPRT LLC’s Board of Managers | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Number of unvested units issued | shares | 8,050 | |||||||
Number of vesting installments | Installment | 5 | |||||||
Vesting period start date | Mar. 30, 2017 | |||||||
Vesting period end date | Mar. 30, 2021 | |||||||
Restricted Stock Awards | Class B Units | Additional Member of EPRT Management | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Number of unvested units issued | shares | 500 | |||||||
Number of vesting installments | Installment | 5 | |||||||
Vesting period start date | May 1, 2018 | |||||||
Vesting period end date | May 1, 2022 | |||||||
Restricted Stock Awards | Class D Units | Members of EPRT LLC’s Board of Managers and External Unitholders | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Number of unvested units issued | shares | 3,000 | |||||||
Number of vesting installments | Installment | 5 | |||||||
Vesting period start date | Mar. 30, 2017 | |||||||
Vesting period end date | Mar. 30, 2021 |
Equity Based Compensation - S57
Equity Based Compensation - Schedule of Information about Unvested Class B and Class D Units (Details) - shares | Dec. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units outstanding, Beginning balance | 9,340 | ||
Issuance of new grant of unvested shares | 500 | 11,050 | |
Unvested units, Vested | (2,310) | (2,210) | |
Unvested units outstanding, Ending balance | 9,340 | 7,030 | 8,840 |
Class B Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units outstanding, Beginning balance | 6,940 | ||
Issuance of new grant of unvested shares | 8,050 | ||
Unvested units, Vested | (1,710) | (1,610) | |
Unvested units outstanding, Ending balance | 6,940 | 5,230 | 6,440 |
Class D Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units outstanding, Beginning balance | 2,400 | ||
Issuance of new grant of unvested shares | 3,000 | ||
Unvested units, Vested | (600) | (600) | |
Unvested units outstanding, Ending balance | 2,400 | 1,800 | 2,400 |
Equity Based Compensation - S58
Equity Based Compensation - Schedule of Per Unit Fair Value of Unvested Class B and Class D Units Estimated Using Assumptions as of Valuation Dates (Details) | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 31, 2017 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||
Volatility | 20.00% | 35.00% | 40.00% |
Risk free rate | 2.33% | 1.38% | 1.30% |
Marketability discount | 25.00% | 20.00% | 30.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 28, 2018USD ($)ft²Option$ / ft² | Jun. 30, 2018USD ($)Property | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)Property | Jun. 30, 2017USD ($) | Dec. 31, 2017Property | |
Commitments and Contingencies [Line Items] | ||||||
Rent expense related to operating lease | $ 100,000 | $ 200,000 | $ 300,000 | $ 300,000 | ||
Options to renewal of operating lease | false | |||||
Operating lease term | 7 years | |||||
Number of operating lease renewal options | Option | 2 | |||||
Number of operating lease renewal period | 5 years | |||||
Operating lease estimated commencement date | Dec. 15, 2018 | |||||
Operating lease rent commencement date | Jan. 1, 2019 | |||||
Initial annual operating lease base rent due | $ 500,000 | |||||
Annual escalations in base rent per square foot per year | $ / ft² | 0.50 | |||||
Number of real estate properties leased under operating leases | Property | 14 | 14 | 15 | |||
Number of ground leased properties | Property | 5 | 5 | ||||
Number of remaining ground leased properties | Property | 10 | |||||
Operating leases future remaining commitments | $ 2,300,000 | $ 2,300,000 | ||||
Number of properties provided for construction financing to tenants | Property | 1 | |||||
Reimbursement to tenants | $ 10,700,000 | |||||
Number of property for development | Property | 4 | |||||
Defined contribution plan name | 401(k) Plan | |||||
Employer matching contribution | 33,000 | 13,000 | $ 100,000 | 45,000 | ||
Executive Officers | ||||||
Commitments and Contingencies [Line Items] | ||||||
Employment agreement initial term | 4 years | |||||
Employment agreement automatic extension period upon non-renewal notice not provided | 1 year | |||||
First 3% of Eligible Compensation | ||||||
Commitments and Contingencies [Line Items] | ||||||
Employer matching contribution, percent of match | 100.00% | |||||
Next 2% of Eligible Compensation | ||||||
Commitments and Contingencies [Line Items] | ||||||
Employer matching contribution, percent of match | 50.00% | |||||
Minimum [Member] | ||||||
Commitments and Contingencies [Line Items] | ||||||
Non cancellable remaining lease term | 8 months | |||||
Maximum | ||||||
Commitments and Contingencies [Line Items] | ||||||
Non cancellable remaining lease term | 5 years 10 months 24 days | |||||
Ground lease renewable term | 20 years | |||||
New Jersey | ||||||
Commitments and Contingencies [Line Items] | ||||||
Area of leased office space | ft² | 13,453 | |||||
General and Administrative Expense | ||||||
Commitments and Contingencies [Line Items] | ||||||
Rent expense related to operating lease | $ 100,000 | $ 45,000 | $ 100,000 | $ 100,000 |
Commitments and Contingencies60
Commitments and Contingencies - Schedule of Future Minimum Base Cash rental payments Due from Company under Office and Ground Leases (Detail) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies [Line Items] | |
July 1 - December 31, 2018 | $ 587 |
2,019 | 1,417 |
2,020 | 1,121 |
2,021 | 1,012 |
2,022 | 996 |
Thereafter | 1,775 |
Total | 6,908 |
Office and Ground Leases to be Paid by the Company | |
Commitments and Contingencies [Line Items] | |
July 1 - December 31, 2018 | 344 |
2,019 | 925 |
2,020 | 793 |
2,021 | 681 |
2,022 | 669 |
Thereafter | 1,749 |
Total | 5,161 |
Ground Leases to be Paid Directly by the Company's Tenants | |
Commitments and Contingencies [Line Items] | |
July 1 - December 31, 2018 | 243 |
2,019 | 492 |
2,020 | 328 |
2,021 | 331 |
2,022 | 327 |
Thereafter | 26 |
Total | $ 1,747 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Deferred finance costs, net | $ 10.2 | $ 11.3 |
Carrying Value | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Secured borrowings | 519 | 522.9 |
Level 3 | Estimated Fair Value | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Secured borrowings | $ 523.9 | $ 527.9 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Values of Real Estate Investments Measured at Nonrecurring Basis (Details) - Fair Value Measurements, Nonrecurring - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Net Carrying Value | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Non-financial long-lived assets | $ 6,243 | $ 5,817 |
Fair Value | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Non-financial long-lived assets | 6,243 | 5,817 |
Fair Value | Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Non-financial long-lived assets | $ 6,243 | $ 5,817 |
Fair Value Measurements - Sum63
Fair Value Measurements - Summary of Quantitative Information About Level 3 Fair Value Measurements (Details) - Level 3 $ in Thousands | Jun. 30, 2018USD ($) |
Vacant Property | Indianapolis, IN | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 299 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:BindingSalesContractMember |
Vacant Property | Indianapolis, IN | Binding Sales Contract | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 325 |
Vacant Property | Allegan, MI | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 141 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:BindingSalesContractMember |
Vacant Property | Allegan, MI | Binding Sales Contract | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 165 |
Vacant Property | Huntingdon, TN | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 35 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:ComparableSalesPricesMember |
Vacant Property | Huntingdon, TN | Comparable Sales Prices | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 35 |
Vacant Property | Detroit, MI | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 140 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:NonBindingSalesContractMember |
Vacant Property | Detroit, MI | Comparable Sales Prices | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 140 |
Convenience Store | Carthage, TX | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 1,172 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:BindingSalesContractMember |
Convenience Store | Carthage, TX | Binding Sales Contract | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 1,228 |
Family Dining Restaurant | North Port, FL | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 2,351 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:BindingSalesContractMember |
Family Dining Restaurant | North Port, FL | Binding Sales Contract | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 2,462 |
Family Dining Restaurant | Brattleboro, VT | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 45 |
Alternative Investment, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Family Dining Restaurant | Royal Palm Beach, FL | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair Value | $ 2,060 |
Alternative Investment, Valuation Technique [Extensible List] | eprt:SalesComparisonApproachMember |
Alternative Investment, Measurement Input [Extensible List] | eprt:BindingSalesContractMember |
Family Dining Restaurant | Royal Palm Beach, FL | Binding Sales Contract | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | $ 2,154 |
Fair Value Measurements - Sum64
Fair Value Measurements - Summary of Quantitative Information About Level 3 Fair Value Measurements (Parenthetical) (Details) $ in Millions | Jun. 30, 2018USD ($) |
Fair Value Disclosures [Abstract] | |
Estimated disposition costs of assets held for sale | $ 0.3 |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Affiliate of Eldridge and Manager | |
Related Party Transaction [Line Items] | |
Services expense | $ 0.1 |