Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38530 | |
Entity Registrant Name | Essential Properties Realty Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 82-4005693 | |
Entity Address, Address Line One | 902 Carnegie Center Blvd. | |
Entity Address, Address Line Two | Suite 520 | |
Entity Address, City or Town | Princeton | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08540 | |
City Area Code | (609) | |
Local Phone Number | 436-0619 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | EPRT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 148,838,117 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001728951 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | |
Real estate investments, at cost: | |||
Land and improvements | $ 1,274,398 | $ 1,228,687 | |
Building and improvements | 2,554,139 | 2,440,630 | |
Lease incentives | 18,191 | 18,352 | |
Construction in progress | 42,777 | 34,537 | |
Intangible lease assets | 87,851 | 88,364 | |
Total real estate investments, at cost | 3,977,356 | 3,810,570 | |
Less: accumulated depreciation and amortization | (297,362) | (276,307) | |
Total real estate investments, net | 3,679,994 | 3,534,263 | |
Loans and direct financing lease receivables, net | 231,731 | 240,035 | |
Real estate investments held for sale, net | 5,398 | 4,780 | |
Net investments | 3,917,123 | 3,779,078 | |
Cash and cash equivalents | 70,958 | 62,345 | |
Restricted cash | 0 | 9,155 | |
Straight-line rent receivable, net | 85,425 | 78,587 | |
Derivative assets | 36,640 | 47,877 | |
Rent receivables, prepaid expenses and other assets, net | 26,201 | 22,991 | |
Total assets | [1] | 4,136,347 | 4,000,033 |
LIABILITIES AND EQUITY | |||
Unsecured term loans, net of deferred financing costs | 1,025,773 | 1,025,492 | |
Senior unsecured notes, net | 395,426 | 395,286 | |
Revolving credit facility | 0 | 0 | |
Intangible lease liabilities, net | 11,536 | 11,551 | |
Dividend payable | 41,183 | 39,398 | |
Derivative liabilities | 6,024 | 2,274 | |
Accrued liabilities and other payables | 25,778 | 29,261 | |
Total liabilities | [1] | 1,505,720 | 1,503,262 |
Commitments and contingencies (see Note 11) | 0 | 0 | |
Stockholders' equity: | |||
Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022 | 0 | 0 | |
Common stock, $0.01 par value; 500,000,000 authorized; 148,838,117 and 142,379,655 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 1,488 | 1,424 | |
Additional paid-in capital | 2,712,797 | 2,563,305 | |
Distributions in excess of cumulative earnings | (118,066) | (117,187) | |
Accumulated other comprehensive income | 25,982 | 40,719 | |
Total stockholders' equity | 2,622,201 | 2,488,261 | |
Non-controlling interests | 8,426 | 8,510 | |
Total equity | 2,630,627 | 2,496,771 | |
Total liabilities and equity | $ 4,136,347 | $ 4,000,033 | |
[1] The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 2 — Summary of Significant Accounting Policies. As of March 31, 2023 and December 31, 2022, all of the assets and liabilities of the Company were held by its operating partnership, Essential Properties, L.P., a consolidated VIE, with the exception of $41.0 million and $39.2 million, respectively, of dividends payable. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Preferred shares, par value per share (in USD per share) | $ 0.01 | $ 0.01 |
Preferred shares, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Preferred shares, issued shares (in shares) | 0 | 0 |
Preferred shares, outstanding shares (in shares) | 0 | 0 |
Common shares, par value per share (in USD per share) | $ 0.01 | $ 0.01 |
Common shares, authorized shares (in shares) | 500,000,000 | 500,000,000 |
Common shares, issued shares (in shares) | 148,838,117 | 142,379,655 |
Common shares, outstanding shares (in shares) | 148,838,117 | 142,379,655 |
Dividend payable | $ 41,183 | $ 39,398 |
Consolidated Entity, Excluding VIE | ||
Dividend payable | $ 41,000 | $ 39,200 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues: | ||
Rental revenue | $ 78,172 | $ 66,112 |
Interest on loans and direct financing lease receivables | 4,446 | 3,822 |
Other revenue, net | 1,069 | 187 |
Total revenues | 83,687 | 70,121 |
Expenses: | ||
General and administrative | 8,583 | 8,063 |
Property expenses | 843 | 1,009 |
Depreciation and amortization | 23,824 | 20,313 |
Provision for impairment of real estate | 677 | 3,935 |
Change in provision for credit losses | (30) | 60 |
Total expenses | 33,897 | 33,380 |
Other operating income: | ||
Gain on dispositions of real estate, net | 4,914 | 1,658 |
Income from operations | 54,704 | 38,399 |
Other (expense)/income: | ||
Loss on debt extinguishment | 0 | (2,138) |
Interest expense | (12,133) | (9,160) |
Interest income | 638 | 18 |
Income before income tax expense | 43,209 | 27,119 |
Income tax expense | 153 | 301 |
Net income | 43,056 | 26,818 |
Net income attributable to non-controlling interests | (160) | (119) |
Net income attributable to stockholders | $ 42,896 | $ 26,699 |
Basic weighted average shares outstanding (in shares) | 144,406,044 | 126,839,258 |
Basic net income per share (in USD per share) | $ 0.30 | $ 0.21 |
Diluted weighted average shares outstanding (in shares) | 146,000,007 | 127,923,499 |
Diluted net income per share (in USD per share) | $ 0.29 | $ 0.21 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 43,056 | $ 26,818 |
Other comprehensive income: | ||
Unrealized (loss) gain on cash flow hedges | (9,485) | 26,462 |
Cash flow hedge (gain) loss reclassified to interest expense | (5,343) | 2,499 |
Total other comprehensive (loss) income | (14,828) | 28,961 |
Comprehensive income | 28,228 | 55,779 |
Net income attributable to non-controlling interests | (160) | (119) |
Adjustment for other comprehensive (loss) income attributable to non-controlling interests | 91 | (181) |
Comprehensive income attributable to stockholders | $ 28,159 | $ 55,479 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid In Capital | Distributions in Excess of Cumulative Earnings | Accumulated Other Comprehensive Income | Total Stockholders' Equity | Non-controlling Interests |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 124,649,053 | ||||||
Balance at beginning of period at Dec. 31, 2021 | $ 2,043,803 | $ 1,246 | $ 2,151,088 | $ (100,982) | $ (14,786) | $ 2,036,566 | $ 7,237 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issuance (in shares) | 6,382,994 | ||||||
Common stock issuance | 159,643 | $ 66 | 159,577 | 159,643 | |||
Common stock withheld related to net share settlement of equity awards | (2,235) | (2,235) | (2,235) | ||||
Costs related to issuance of common stock | (1,582) | (1,582) | (1,582) | ||||
Other comprehensive income (loss) | 28,961 | 28,780 | 28,780 | 181 | |||
Equity based compensation expense (in shares) | 119,646 | ||||||
Equity based compensation expense | 2,835 | 2,835 | 2,835 | ||||
Dividends declared on common stock and OP Units | (34,333) | (34,188) | (34,188) | (145) | |||
Net income | 26,818 | 26,699 | 26,699 | 119 | |||
Balance at end of period (in shares) at Mar. 31, 2022 | 131,151,693 | ||||||
Balance at end of period at Mar. 31, 2022 | $ 2,223,910 | $ 1,312 | 2,311,918 | (110,706) | 13,994 | 2,216,518 | 7,392 |
Balance at beginning of period (in shares) at Dec. 31, 2022 | 142,379,655 | 142,379,655 | |||||
Balance at beginning of period at Dec. 31, 2022 | $ 2,496,771 | $ 1,424 | 2,563,305 | (117,187) | 40,719 | 2,488,261 | 8,510 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issuance (in shares) | 6,248,695 | ||||||
Common stock issuance | 147,279 | $ 62 | 147,217 | 147,279 | |||
Common stock withheld related to net share settlement of equity awards | (2,745) | (2,745) | (2,745) | ||||
Costs related to issuance of common stock | (444) | (444) | (444) | ||||
Other comprehensive income (loss) | (14,828) | (14,737) | (14,737) | (91) | |||
Equity based compensation expense (in shares) | 209,767 | ||||||
Equity based compensation expense | 2,721 | $ 2 | 2,719 | 2,721 | |||
Dividends declared on common stock and OP Units | (41,183) | (41,030) | (41,030) | (153) | |||
Net income | $ 43,056 | 42,896 | 42,896 | 160 | |||
Balance at end of period (in shares) at Mar. 31, 2023 | 148,838,117 | 148,838,117 | |||||
Balance at end of period at Mar. 31, 2023 | $ 2,630,627 | $ 1,488 | $ 2,712,797 | $ (118,066) | $ 25,982 | $ 2,622,201 | $ 8,426 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 43,056 | $ 26,818 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 23,824 | 20,313 |
Amortization of lease incentive | 366 | 281 |
Amortization of above/below market leases and right of use assets, net | (85) | 187 |
Amortization of deferred financing costs and other non-cash interest expense | 1,534 | 744 |
Loss on debt extinguishment | 0 | 2,138 |
Provision for impairment of real estate | 677 | 3,935 |
Change in provision for credit losses | (30) | 60 |
Gain on dispositions of real estate, net | (4,914) | (1,658) |
Straight-line rent receivable, net | (6,838) | (6,216) |
Equity-based compensation expense | 2,721 | 2,835 |
Adjustment to rental revenue for tenant credit | (160) | (568) |
Changes in other assets and liabilities: | ||
Rent receivables, prepaid expenses and other assets | (2,111) | (1,584) |
Accrued liabilities and other payables | (4,354) | (3,177) |
Net cash provided by operating activities | 53,686 | 44,108 |
Cash flows from investing activities: | ||
Proceeds from sales of real estate, net | 36,636 | 18,531 |
Principal collections on loans and direct financing lease receivables | 11,734 | 10,657 |
Investments in loans receivable | (3,400) | (54,277) |
Deposits for prospective real estate investments | (649) | (365) |
Investment in real estate, including capital expenditures | (188,998) | (180,316) |
Investment in construction in progress | (14,520) | (5,687) |
Lease incentives paid | 0 | (108) |
Net cash used in investing activities | (159,197) | (211,565) |
Cash flows from financing activities: | ||
Borrowings under revolving credit facility | 0 | 148,000 |
Repayments under revolving credit facility | 0 | (145,000) |
Proceeds from issuance of common stock, net | 147,241 | 158,338 |
Payments for taxes related to net settlement of equity awards | (2,746) | (2,235) |
Payment of debt extinguishment costs | 0 | (467) |
Deferred financing costs | 0 | (4,045) |
Offering costs | (128) | (27) |
Dividends paid | (39,398) | (32,610) |
Net cash provided by financing activities | 104,969 | 121,954 |
Net decrease in cash and cash equivalents and restricted cash | (542) | (45,503) |
Cash and cash equivalents and restricted cash, beginning of period | 71,500 | 59,758 |
Cash and cash equivalents and restricted cash, end of period | 70,958 | 14,255 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 70,958 | 14,255 |
Restricted cash | 0 | 0 |
Cash and cash equivalents and restricted cash, end of period | 70,958 | 14,255 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest, net of amounts capitalized | 11,833 | 4,430 |
Cash paid for income taxes | 504 | 100 |
Non-cash investing and financing activities: | ||
Reclassification from construction in progress upon project completion | 6,712 | 5,332 |
Non-cash investments in real estate and loan receivable activity | 0 | 9,679 |
Unrealized (loss) gain on cash flow hedges | 9,485 | (1,427) |
Accrued deferred debt restructuring costs | 0 | 191 |
Payable and accrued offering costs | 277 | 0 |
Discounts and fees on capital raised through issuance of common stock | 38 | 1,305 |
Dividends declared and unpaid | $ 41,183 | $ 34,333 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Description of Business Essential Properties Realty Trust, Inc. (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. The Company generally invests in 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. The Company was organized on January 12, 2018 as a Maryland corporation. It elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes beginning with the year ended December 31, 2018, and it believes that its current organizational and operational status and intended distributions will allow it to continue to so qualify. Substantially all of the Company’s business is conducted directly and indirectly through its operating partnership, Essential Properties, L.P. (the “Operating Partnership”). The common stock of the Company is listed on the New York Stock Exchange under the ticker symbol “EPRT”. COVID-19 Pandemic The adverse impact of the COVID-19 pandemic ("COVID-19") significantly diminished in 2022. However, the expiration of governmental support programs that were instituted during the height of COVID-19 could impact the macro-economic environment of the U.S. If there were a reemergence of COVID-19 that caused the reoccurrence of conditions experienced in 2020 and 2021, such conditions could have an adverse impact on the Company and its tenants. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying unaudited 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 U.S. Securities and Exchange Commission (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 months ended March 31, 2023 and 2022 are not necessarily indicative of the results for the full year. These unaudited financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 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 March 31, 2023 and December 31, 2022, the Company, directly and indirectly, held a 99.6% ownership interest in the Operating Partnership and the consolidated financial statements include the financial statements of the Operating Partnership as of these dates. See Note 7—Equity for changes in the ownership interest in the Operating Partnership. 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. 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 or real estate that secures the Company's investment in loans and direct financing lease receivables. Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment. Real Estate Investments Investments in real estate are carried at cost less accumulated depreciation and impairment losses. 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 asset meets the definition of a business. Under Accounting Standards Update (“ASU”) 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business , an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred. 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 incurs 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 incentives 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 pre-construction 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 Company does not engage in speculative real estate development. The Company does, however, opportunistically agree to reimburse certain of its tenants for development costs at its properties in exchange for contractually specified rent that generally increases proportionally with its funding. 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 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 uses 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 and fair value less estimated selling costs. 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 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. The Company recorded the following amounts of depreciation expense on its real estate investments during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Depreciation on real estate investments $ 22,129 $ 18,555 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. If 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 intangibles 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 intangibles 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 over the remaining periods of the respective leases. If 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. 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, less the Company's estimated allowance for credit losses. 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. 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 term of the related lease 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. Allowance for Credit Losses Under ASC Topic 326, Financial Instruments – Credit Losses, the Company uses a real estate loss estimate model (“RELEM”) which estimates losses on its loans and direct financing lease receivable portfolio, for purposes of calculating allowances for credit losses. The RELEM allows the Company to refine (on an ongoing basis) the expected loss estimate by incorporating asset-specific assumptions as necessary, such as anticipated funding, interest payments, estimated extensions and estimated loan repayment/refinancing at maturity to estimate cash flows over the life of the loan or direct financing lease receivable. The model also incorporates assumptions related to underlying collateral values, various loss scenarios, and predicted losses to estimate expected losses. The Company's specific asset-level inputs include loan-to-stabilized-value (“LTV”), principal balance, property type, location, coupon, origination year, term, subordination, expected repayment date and future funding. The Company categorizes the results by LTV range, which it considers the most significant indicator of credit quality for its loans and direct financing lease receivables. A lower LTV ratio typically indicates a lower credit loss risk. The Company also evaluates each loan and direct financing lease receivable measured at amortized cost for credit deterioration at least quarterly. Credit deterioration occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan or direct financing lease receivable. The Company's allowance for credit losses is adjusted to reflect its estimation of the current and future economic conditions that impact the performance of the real estate assets securing its loans. These estimations include various macroeconomic factors impacting the likelihood and magnitude of potential credit losses for the Company's loans and direct financing lease receivables during their anticipated term. Changes in the Company's allowance for credit losses are presented within change in provision for credit losses in its consolidated statements of operations. Impairment of Long-Lived Assets If circumstances indicate that the carrying value of a property may not be recoverable, the Company reviews the property 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 losses, if any, are recorded directly within our consolidated statement of operations. The Company recorded the following provisions for impairment of long lived assets during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Provision for impairment of real estate $ 677 $ 3,935 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 March 31, 2023 and December 31, 2022, the Company had deposits of $71.0 million and $62.3 million, respectively, of which $70.7 million and $62.1 million, respectively, were in excess of the amount insured by the FDIC. Restricted Cash Restricted cash primarily consists of cash proceeds from the sale of assets held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Forward Equity Sales The Company has and may continue to enter into forward sale agreements relating to shares of its common stock, either through its 2022 ATM Program (as defined herein) or through underwritten public offerings. These agreements may be physically settled in stock, settled in cash or net share settled at the Company’s election. The Company evaluated its forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity. Prior to settlement, a forward sale agreement will be reflected in the diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of the Company’s common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of the Company’s common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of the Company’s common stock that could be purchased by the Company in the market (based on the average market price during the reporting period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to settlement of a forward sale agreement, there will be no dilutive effect on the Company’s earnings per share except during periods when the average market price of the Company’s common stock is above the adjusted forward sale price. However, upon settlement of a forward sales agreement, if the Company elects to physically settle or net share settle such forward sale agreement, delivery of the Company’s shares will result in dilution to the Company’s earnings per share. Deferred Financing Costs Financing costs related to establishing the Company’s Revolving Credit Facility (as defined below) were deferred and are being amortized as an increase to interest expense in the consolidated statements of operations over the term of the facility and are reported as a component of rent receivables, prepaid expenses and other assets, net on the consolidated balance sheets. Financing costs related to the issuance of the Company’s borrowings under the 2024 Term Loan, 2027 Term Loan, 2028 Term Loan and 2031 Notes were deferred and are being amortized as an increase to interest expense in the consolidated statements of operations over the term of the related debt instrument and are reported as a reduction of the related debt balance on the consolidated balance sheets. Derivative Instruments In the normal course of business, the Company uses derivative financial instruments, which may include interest rate swaps, caps, options, floors and other interest rate derivative contracts, to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the Company’s floating-rate debt. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may also enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income to the extent that it is effective. Any ineffective portion of a change in derivative fair value is immediately recorded in earnings. If the Company elects not to apply hedge accounting treatment (or for derivatives that do not qualify as hedges), any change in the fair value of such derivative instruments would be recognized immediately as a gain or loss on derivative instruments in the consolidated statements of operations. Fair Value Measurement The Company estimates the 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 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 and the date of acquisition of the property subject to the lease. Rental revenue recognition begins when the tenant controls the space and continues 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-cancelable term of the lease. The Company considers whether the collectability of rents is reasonably assured in determining the amount of straight-line rent to record. Generally, the Company’s leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions provided under the initial lease term, including rent increases. If economic incentives make it reasonably certain that an option period to extend the lease will be exercised, the Company will include these options in determining the non-cancelable term of the lease. 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. The Company recorded the following amounts as contingent rent, which are included as a component of rental revenue in the Company's consolidated statements of operations, during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Contingent rent $ 176 $ 156 Adjustment to Rental Revenue for Tenant Credit 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. If the assessment of the collectability of substantially all payments due under a lease changes from probable to not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current period reduction of rental revenue in the consolidated statements of operations. The Company recorded the following amounts adjustments as increases to or reductions of rental revenue for tenant credit during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Adjustment to increase rental revenue for tenant credit $ 160 $ 568 Offering Costs In connection with the completion of equity offerings, the Company incurs legal, accounting and other offering-related costs. Such costs are deducted from the gross proceeds of each equity offering when the offering is completed. As of March 31, 2023 and December 31, 2022, the Company capitalized a total of $90.7 million and $90.3 million, respectively, of such costs, which are presented as a reduction of additional paid-in capital in the Company’s consolidated balance sheets. Income Taxes The Company elected and qualified to be taxed as a REIT under sections 856 through 860 of the Code, commencing with its taxable year ended 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 its REIT election, the Company continues to meet the organizational and operational requirements and expects distributions to exceed REIT taxable income. Accordingly, no provision has been made for U.S. federal income taxes. Even though the Company has elected and qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income and excise tax on its undistributed income. Franchise taxes and federal excise taxes on the Company’s undistributed income, if any, are included in general and administrative expenses on the accompanying consolidated statements of operations. Additionally, taxable income from non-REIT activities managed through the Company's taxable REIT subsidiary is subject to federal, state, and local taxes. 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 March 31, 2023 and December 31, 2022, the Company had no accruals recorded for uncertain tax positions. The Company’s policy is to classify interest expense and penalties relating to taxes in general and administrative expense in the consolidated statements of operations. During the three months ended March 31, 2023 and 2022, the Company recorded de minimis interest or penalties relating to taxes, and there were no interest or penalties with respect to taxes accrued as of March 31, 2023 or December 31, 2022. The 2022, 2021, 2020 and 2019 taxable years remain open to examination by federal and/or state taxing jurisdictions to which the Company is subject. Equity-Based Compensation The Company grants shares of restricted common stock ("RSAs") and restricted stock units (“RSUs”) to its directors, executive officers and other employees that vest over specified time periods, subject to the recipient’s continued service. The Company also grants performance-based RSUs to executive officers, the final number of which is determined based on objective and subjective performance conditions and which vest over a multi-year period, subject to the recipient’s continued service. The Company accounts for RSAs and RSUs in accordance with ASC 718, Compensation – Stock Compensation, which requires that such compensation be recognized in the financial statements based on its 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 applicable service periods. The Company recognizes compensation expense for equity-based compensation using the straight-line method based on the fair value of the award on the grant date. Forfeitures of equity-based compensation awards, if any, are recognized when they occur. Variable Interest Entities The Financial Accounting Standards Board (“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. The Company has 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 sheets as of March 31, 2023 and December 31, 2022. Additionally, the Company has concluded that certain entities to which it has provided mortgage loans are VIEs because the entities' equity was not sufficient to fi |
Investments
Investments | 3 Months Ended |
Mar. 31, 2023 | |
Investments [Abstract] | |
Investments | 70% 3,400 89,465 26,559 10,578 20,276 466 150,744 $ 3,400 $ 112,465 $ 56,202 $ 10,578 $ 48,276 $ 1,545 $ 232,467 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, tenant operation type (e.g., industry, sector or concept), unit-level financial performance, local market conditions and lease rates, associated indebtedness and asset location. Real estate investments held for sale are expected to be sold 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 three months ended March 31, 2023 and 2022. (Dollar amounts in thousands) Number of Properties Real Estate Investments Intangible Lease Liabilities Net Carrying Value Held for sale balance, January 1, 2022 9 $ 15,434 $ — $ 15,434 Transfers to held for sale classification 1 4,979 — 4,979 Sales (4) (5,925) — (5,925) Transfers to held and used classification — — — — Held for sale balance, March 31, 2022 6 $ 14,488 $ — $ 14,488 Held for sale balance, January 1, 2023 4 $ 4,780 $ — $ 4,780 Transfers to held for sale classification 3 3,701 — 3,701 Sales (3) (3,083) — (3,083) Transfers to held and used classification — — — — Held for sale balance, March 31, 2023 4 $ 5,398 $ — $ 5,398 Significant Concentrations The Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose rental revenue for the three months ended March 31, 2023 or 2022 represented 10% or more of total rental revenue in the Company’s consolidated statements of operations. The following table lists the state 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: Three months ended March 31, State 2023 2022 Texas 13.2% 13.3% Intangible Assets and Liabilities Intangible assets and liabilities consisted of the following as of the dates presented: March 31, 2023 December 31, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 76,597 $ 31,544 $ 45,053 $ 77,096 $ 30,217 $ 46,879 Intangible market lease assets 11,254 5,091 6,163 11,268 4,917 6,351 Total intangible assets $ 87,851 $ 36,635 $ 51,216 $ 88,364 $ 35,134 $ 53,230 Intangible market lease liabilities $ 15,527 $ 3,991 $ 11,536 $ 15,325 $ 3,774 $ 11,551 The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2023, by category and in total, were as follows: Years Remaining In-place leases 8.7 Intangible market lease assets 11.0 Total intangible assets 9.0 Intangible market lease liabilities 9.3 The following table discloses amounts recognized within the consolidated statements of operations 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 March 31, (in thousands) 2023 2022 Amortization of in-place leases (1) $ 1,627 $ 1,705 Amortization (accretion) of market lease intangibles, net (2) (1) 1 Amortization (accretion) of above- and below-market ground lease intangibles, net (3) (84) (88) _____________________________________ (1) Reflected within depreciation and amortization expense. (2) Reflected within rental revenue. (3) Reflected within property expenses. The following table provides the estimated amortization of in-place lease assets to be recognized as a component of depreciation and amortization expense for the next five years and thereafter: (in thousands) In-Place Lease Assets April 1 - December 31, 2023 $ 4,572 2024 5,489 2025 4,241 2026 3,936 2027 3,408 Thereafter 23,407 Total $ 45,053 The following table provides the estimated net amortization of above- and below-market lease intangibles to be recognized as a component of rental revenue for the next five years and thereafter: (in thousands) Above Market Lease Asset Below Market Lease Liabilities Net Adjustment to Rental Revenue April 1 - December 31, 2023 $ (517) $ 507 $ (10) 2024 (658) 681 23 2025 (650) 682 32 2026 (641) 686 45 2027 (619) 711 92 Thereafter (3,078) 8,269 5,191 Total $ (6,163) $ 11,536 $ 5,373 " id="sjs-B4" xml:space="preserve">Investments The following table presents information about the number of investments in the Company’s real estate investment portfolio as of each date presented: March 31, December 31, Owned properties (1) 1,527 1,489 Properties securing investments in mortgage loans (2) 150 153 Ground lease interests 11 11 Total number of investments 1,688 1,653 _____________________________________ (1) Includes seven and eight properties which are subject to leases accounted for as direct financing leases or loans as of March 31, 2023 and December 31, 2022, respectively. (2) Properties secure 20 mortgage loans receivable as of March 31, 2023 and December 31, 2022. The following table presents information about the gross investment value of the Company’s real estate investment portfolio as of each date presented: (in thousands) March 31, December 31, Real estate investments, at cost $ 3,977,356 $ 3,810,570 Loans and direct financing lease receivables, net 231,731 240,035 Real estate investments held for sale, net 5,398 4,780 Total gross investments $ 4,214,485 $ 4,055,385 Investments in 2023 and 2022 The following table presents information about the Company’s acquisition activity during the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 Ownership type (1) Fee Interest Number of properties 56 47 Purchase price allocation Land and improvements $ 58,464 $ 83,342 Building and improvements 128,805 97,178 Construction in progress (2) 14,520 5,687 Intangible lease assets 570 — Total purchase price 202,359 186,207 Intangible lease liabilities — — Purchase price (including acquisition costs) $ 202,359 $ 186,207 _____________________________________ (1) During the three months ended March 31, 2023, the Company acquired the fee interest in 55 properties and acquired one property subject to a ground lease. (2) Represents amounts incurred at and subsequent to acquisition and includes $0.4 million and $0.1 million, respectively of capitalized interest expense during the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 and 2022, the Company did not make any new investments that individually represented more than 5% of the Company’s total real estate investment portfolio. Gross Investment Activity During the three months ended March 31, 2023 and 2022, the Company had the following gross investment activity: (Dollar amounts in thousands) Number of Dollar Gross investments, January 1, 2022 1,451 $ 3,355,561 Acquisitions of and additions to real estate investments 47 195,790 Sales of investments in real estate (6) (18,531) Provision for impairment of real estate (1) (3,935) Investments in loans receivable 58 54,277 Principal collections on and settlements of loans and direct financing lease receivables (5) (20,336) Other (64) Gross investments, March 31, 2022 3,562,762 Less: Accumulated depreciation and amortization (2) (220,711) Net investments, March 31, 2022 1,545 $ 3,342,051 Gross investments, January 1, 2023 1,653 $ 4,055,385 Acquisitions of and additions to real estate investments 56 203,518 Sales of investments in real estate (16) (33,641) Relinquishment of property at end of ground lease term (1) (837) Provision for impairment of real estate (3) (677) Investments in loans receivable 1 3,400 Principal collections on and settlements of loans and direct financing lease receivables (5) (11,734) Other (929) Gross investments, March 31, 2023 4,214,485 Less: Accumulated depreciation and amortization (2) (297,362) Net investments, March 31, 2023 1,688 $ 3,917,123 _____________________________________ (1) During the three months ended March 31, 2022, the Company identified and recorded provisions for impairment on four tenanted properties. (2) Includes $260.7 million and $189.7 million of accumulated depreciation as of March 31, 2023 and 2022, respectively. (3) During the three months ended March 31, 2023, the Company identified and recorded provisions for impairment at one tenanted property and two vacant properties. 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. See Note 4—Leases for more information about the Company’s leases. Loans and Direct Financing Lease Receivables As of March 31, 2023 and December 31, 2022, the Company had 20 and 23 loans receivable outstanding, respectively, and three leases accounted for as loans with an aggregate carrying amount of $230.9 million and $238.7 million, respectively. The maximum amount of loss due to credit risk is the Company's current principal balance of $230.9 million as of March 31, 2023. The Company’s loans receivable portfolio as of March 31, 2023 and December 31, 2022 is summarized below (dollars in thousands): Principal Balance Outstanding Loan Type Monthly Payment (1) Number of Secured Properties Effective Interest Rate Stated Interest Rate Maturity Date March 31, December 31, Mortgage (2)(3) I/O 2 8.80% 8.00% 2039 $ 12,000 $ 12,000 Mortgage (2) I/O 2 8.53% 7.75% 2039 7,300 7,300 Mortgage (2) I/O 69 8.16% 7.70% 2034 51,000 51,000 Mortgage (2) I/O 1 8.42% 7.65% 2040 5,300 5,300 Mortgage (2) I/O 3 8.79% 8.50% 2022 2,324 2,324 Mortgage (2) I/O 1 7.00% 7.00% 2023 550 600 Mortgage (2) I/O 3 8.30% 8.25% 2023 3,146 3,146 Mortgage (2) I/O 2 6.87% 6.40% 2036 2,520 2,520 Mortgage (2) I/O 0 7.51% 7.00% 2036 — 2,673 Mortgage (2) I/O 2 8.29% 8.25% 2023 2,389 2,389 Mortgage (2) I/O 1 5.72% 8.00% 2051 24,100 24,100 Mortgage (2) I/O 1 7.44% 7.10% 2036 1,408 9,808 Mortgage (2) I/O 7 7.30% 6.80% 2036 35,474 35,474 Mortgage (2) I/O 1 7.73% 7.20% 2036 2,470 2,470 Mortgage (2) I/O 1 8.00% 8.00% 2023 1,754 1,754 Mortgage (2) I/O 37 6.80% 7.00% 2027 26,307 26,307 Mortgage (2) I/O 1 6.99% 7.20% 2037 3,600 3,600 Mortgage (2) I/O 1 8.40% 8.25% 2024 760 760 Mortgage (2) I/O 4 8.64% 8.05% 2037 12,250 12,250 Mortgage (2) I/O 10 8.93% 8.25% 2037 28,938 28,938 Mortgage (2) I/O 1 8.82% 8.25% 2038 3,400 — Leasehold interest P+I 1 2.25% (4) 2034 976 992 Leasehold interest P+I 1 2.41% (4) 2034 1,450 1,473 Leasehold interest P+I 1 4.97% (4) 2038 1,505 1,517 Net investment $ 230,921 $ 238,695 _____________________________________ (1) I/O: Interest Only; P+I: Principal and Interest (2) Loan requires monthly payments of interest only with a balloon payment due at maturity. (3) Loan allows for prepayments in whole or in part without penalty. (4) These leasehold interests are accounted for as loans receivable, as the lease for each property contains an option for the lessee to repurchase the leased property in the future. Scheduled principal payments due to be received under the Company’s loans receivable as of March 31, 2023 were as follows: (in thousands) Future Principal Payments Due April 1 - December 31, 2023 $ 7,995 2024 3,304 2025 234 2026 248 2027 26,570 Thereafter 192,570 Total $ 230,921 As of March 31, 2023 and December 31, 2022, the Company had $1.5 million and $2.1 million, respectively, 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) March 31, December 31, Minimum lease payments receivable $ 1,901 $ 2,812 Estimated unguaranteed residual value of leased assets 250 251 Unearned income from leased assets (606) (957) Net investment $ 1,545 $ 2,106 Scheduled future minimum non-cancelable base rental payments due to be received under the direct financing lease receivables as of March 31, 2023 were as follows: (in thousands) Future Minimum April 1 - December 31, 2023 $ 192 2024 210 2025 178 2026 167 2027 143 Thereafter 1,011 Total $ 1,901 Allowance for Credit Losses The Company utilizes a real estate loss estimate model (i.e., a RELEM model) which estimates losses on loans and direct financing lease receivables for purposes of calculating an allowance for credit losses. As of March 31, 2023 and December 31, 2022, the company recorded an allowance for credit losses of $0.7 million and $0.8 million, respectively. Changes in the Company’s allowance for credit losses are presented within change in provision for credit losses in the Company’s consolidated statements of operations. For the three months ended March 31, 2023 and 2022, the changes to the Company's allowance for credit losses were as follows: (in thousands) Loans and Direct Financing Lease Receivables Balance at January 1, 2022 $ 814 Current period change in provision for expected credit losses 60 Write-offs charged — Recoveries — Balance at March 31, 2022 $ 874 Balance at January 1, 2023 $ 765 Current period change in provision for expected credit losses (30) Write-offs charged — Recoveries — Balance at March 31, 2023 $ 735 The Company considers the ratio of loan to value ("LTV") to be a significant credit quality indicator for its loans and direct financing lease portfolio. The following table presents information about the LTV of the Company's loans and direct financing lease receivables measured at amortized cost as of March 31, 2023: Amortized Cost Basis by Origination Year Total Amortized Cost Basis (in thousands) 2023 2022 2021 2020 2019 Prior LTV <60% $ — $ 23,000 $ — $ — $ 28,000 $ 1,080 $ 52,080 LTV 60%-70% — — 29,643 — — — 29,643 LTV >70% 3,400 89,465 26,559 10,578 20,276 466 150,744 $ 3,400 $ 112,465 $ 56,202 $ 10,578 $ 48,276 $ 1,545 $ 232,467 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, tenant operation type (e.g., industry, sector or concept), unit-level financial performance, local market conditions and lease rates, associated indebtedness and asset location. Real estate investments held for sale are expected to be sold 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 three months ended March 31, 2023 and 2022. (Dollar amounts in thousands) Number of Properties Real Estate Investments Intangible Lease Liabilities Net Carrying Value Held for sale balance, January 1, 2022 9 $ 15,434 $ — $ 15,434 Transfers to held for sale classification 1 4,979 — 4,979 Sales (4) (5,925) — (5,925) Transfers to held and used classification — — — — Held for sale balance, March 31, 2022 6 $ 14,488 $ — $ 14,488 Held for sale balance, January 1, 2023 4 $ 4,780 $ — $ 4,780 Transfers to held for sale classification 3 3,701 — 3,701 Sales (3) (3,083) — (3,083) Transfers to held and used classification — — — — Held for sale balance, March 31, 2023 4 $ 5,398 $ — $ 5,398 Significant Concentrations The Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose rental revenue for the three months ended March 31, 2023 or 2022 represented 10% or more of total rental revenue in the Company’s consolidated statements of operations. The following table lists the state 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: Three months ended March 31, State 2023 2022 Texas 13.2% 13.3% Intangible Assets and Liabilities Intangible assets and liabilities consisted of the following as of the dates presented: March 31, 2023 December 31, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 76,597 $ 31,544 $ 45,053 $ 77,096 $ 30,217 $ 46,879 Intangible market lease assets 11,254 5,091 6,163 11,268 4,917 6,351 Total intangible assets $ 87,851 $ 36,635 $ 51,216 $ 88,364 $ 35,134 $ 53,230 Intangible market lease liabilities $ 15,527 $ 3,991 $ 11,536 $ 15,325 $ 3,774 $ 11,551 The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2023, by category and in total, were as follows: Years Remaining In-place leases 8.7 Intangible market lease assets 11.0 Total intangible assets 9.0 Intangible market lease liabilities 9.3 The following table discloses amounts recognized within the consolidated statements of operations 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 March 31, (in thousands) 2023 2022 Amortization of in-place leases (1) $ 1,627 $ 1,705 Amortization (accretion) of market lease intangibles, net (2) (1) 1 Amortization (accretion) of above- and below-market ground lease intangibles, net (3) (84) (88) _____________________________________ (1) Reflected within depreciation and amortization expense. (2) Reflected within rental revenue. (3) Reflected within property expenses. The following table provides the estimated amortization of in-place lease assets to be recognized as a component of depreciation and amortization expense for the next five years and thereafter: (in thousands) In-Place Lease Assets April 1 - December 31, 2023 $ 4,572 2024 5,489 2025 4,241 2026 3,936 2027 3,408 Thereafter 23,407 Total $ 45,053 The following table provides the estimated net amortization of above- and below-market lease intangibles to be recognized as a component of rental revenue for the next five years and thereafter: (in thousands) Above Market Lease Asset Below Market Lease Liabilities Net Adjustment to Rental Revenue April 1 - December 31, 2023 $ (517) $ 507 $ (10) 2024 (658) 681 23 2025 (650) 682 32 2026 (641) 686 45 2027 (619) 711 92 Thereafter (3,078) 8,269 5,191 Total $ (6,163) $ 11,536 $ 5,373 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases As Lessor The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more tenant renewal options. The Company’s leases provide for annual base rental payments (generally payable in monthly installments) and generally provide for increases in rent based on fixed contractual terms or as a result of increases in the Consumer Price Index. Substantially all of the leases are triple-net, which means that the lessees are responsible for paying 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 and, at the end of the lease term, the lessees are responsible for returning the property to the Company in a substantially similar condition as when they took possession. Some of the Company’s leases provide that in the event the Company wishes to sell the property subject to that lease, it first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which it intends to accept for the sale of the property. Scheduled future minimum base rental payments due to be received under the remaining non-cancelable term of the operating leases in place as of March 31, 2023 were as follows: (in thousands) Future Minimum Base Rental Receipts April 1 - December 31, 2023 $ 233,959 2024 314,453 2025 314,754 2026 317,544 2027 317,762 Thereafter 3,416,993 Total $ 4,915,465 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. The fixed and variable components of lease revenues for the three months ended March 31, 2023 and 2022 were as follows: Three months ended March 31, (in thousands) 2023 2022 Fixed lease revenues $ 77,465 $ 65,113 Variable lease revenues (1) 730 660 Total lease revenues (2) $ 78,195 $ 65,773 _____________________________________ (1) Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants. (2) Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit. As Lessee The Company has a number of ground leases, an office lease and other equipment leases which are classified as operating leases. As of March 31, 2023, the Company’s right of use ("ROU") assets lease liabilities The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate ("IBR"). The Company considers the general economic environment and its historical borrowing activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply hindsight, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. Certain of the Company’s ground leases offer renewal options which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that the Company is reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset. The following table sets forth information related to the measurement of the Company’s lease liabilities as of the dates presented: March 31, 2023 December 31, 2022 Weighted average remaining lease term (in years) 23.1 22.9 Weighted average discount rate 6.16% 6.09% The following table sets forth the details of rent expense for the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 Fixed rent expense - ground leases $ 247 $ 240 Fixed rent expense - office and equipment leases 128 128 Variable rent expense — — Total rent expense $ 375 $ 368 As of March 31, 2023, future lease payments due from the Company under the ground, office and equipment operating leases where the Company is directly responsible for payment and the future lease payments due under the ground operating leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows: (in thousands) Office and Equipment Leases 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 April 1 - December 31, 2023 $ 394 $ 96 $ 594 $ 1,084 2024 531 28 782 1,341 2025 538 — 706 1,244 2026 — — 711 711 2027 — — 724 724 Thereafter — — 16,263 16,263 Total $ 1,463 $ 124 $ 19,780 21,367 Present value discount (12,080) Lease liabilities $ 9,287 The Company has adopted the short-term lease policy election and accordingly, the table above excludes future minimum base cash rental payments by the Company or its tenants on leases that have a term of less than 12 months at lease inception. The total of such future obligations is not material. |
Leases | Leases As Lessor The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more tenant renewal options. The Company’s leases provide for annual base rental payments (generally payable in monthly installments) and generally provide for increases in rent based on fixed contractual terms or as a result of increases in the Consumer Price Index. Substantially all of the leases are triple-net, which means that the lessees are responsible for paying 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 and, at the end of the lease term, the lessees are responsible for returning the property to the Company in a substantially similar condition as when they took possession. Some of the Company’s leases provide that in the event the Company wishes to sell the property subject to that lease, it first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which it intends to accept for the sale of the property. Scheduled future minimum base rental payments due to be received under the remaining non-cancelable term of the operating leases in place as of March 31, 2023 were as follows: (in thousands) Future Minimum Base Rental Receipts April 1 - December 31, 2023 $ 233,959 2024 314,453 2025 314,754 2026 317,544 2027 317,762 Thereafter 3,416,993 Total $ 4,915,465 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. The fixed and variable components of lease revenues for the three months ended March 31, 2023 and 2022 were as follows: Three months ended March 31, (in thousands) 2023 2022 Fixed lease revenues $ 77,465 $ 65,113 Variable lease revenues (1) 730 660 Total lease revenues (2) $ 78,195 $ 65,773 _____________________________________ (1) Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants. (2) Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit. As Lessee The Company has a number of ground leases, an office lease and other equipment leases which are classified as operating leases. As of March 31, 2023, the Company’s right of use ("ROU") assets lease liabilities The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate ("IBR"). The Company considers the general economic environment and its historical borrowing activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply hindsight, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. Certain of the Company’s ground leases offer renewal options which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that the Company is reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset. The following table sets forth information related to the measurement of the Company’s lease liabilities as of the dates presented: March 31, 2023 December 31, 2022 Weighted average remaining lease term (in years) 23.1 22.9 Weighted average discount rate 6.16% 6.09% The following table sets forth the details of rent expense for the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 Fixed rent expense - ground leases $ 247 $ 240 Fixed rent expense - office and equipment leases 128 128 Variable rent expense — — Total rent expense $ 375 $ 368 As of March 31, 2023, future lease payments due from the Company under the ground, office and equipment operating leases where the Company is directly responsible for payment and the future lease payments due under the ground operating leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows: (in thousands) Office and Equipment Leases 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 April 1 - December 31, 2023 $ 394 $ 96 $ 594 $ 1,084 2024 531 28 782 1,341 2025 538 — 706 1,244 2026 — — 711 711 2027 — — 724 724 Thereafter — — 16,263 16,263 Total $ 1,463 $ 124 $ 19,780 21,367 Present value discount (12,080) Lease liabilities $ 9,287 The Company has adopted the short-term lease policy election and accordingly, the table above excludes future minimum base cash rental payments by the Company or its tenants on leases that have a term of less than 12 months at lease inception. The total of such future obligations is not material. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following table summarizes the Company's outstanding indebtedness as of March 31, 2023 and December 31, 2022: Principal Outstanding Weighted Average Interest Rate (1) (in thousands) Maturity Date March 31, December 31, March 31, December 31, Unsecured term loans: 2024 Term Loan April 2024 $ 200,000 $ 200,000 5.5% 5.3% 2027 Term Loan February 2027 430,000 430,000 5.7% 5.3% 2028 Term Loan January 2028 400,000 400,000 5.6% 5.3% Senior unsecured notes July 2031 400,000 400,000 3.0% 3.0% Revolving Credit Facility February 2026 — — —% —% Total principal outstanding $ 1,430,000 $ 1,430,000 4.9% 4.6% ______________________ (1) Interest rates are presented as stated in debt agreements and do not reflect the impact of the Company's interest rate swap and lock agreements, where applicable (see Note 6—Derivative and Hedging Activities). The following table summarizes the scheduled principal payments on the Company’s outstanding indebtedness as of March 31, 2023: (in thousands) 2024 Term Loan 2027 Term Loan 2028 Term Loan Senior Unsecured Notes Revolving Credit Facility Total April 1 - December 31, 2023 $ — $ — $ — $ — $ — $ — 2024 200,000 — — — — 200,000 2025 — — — — — — 2026 — — — — — — 2027 — 430,000 — — — 430,000 Thereafter — — 400,000 400,000 — 800,000 Total $ 200,000 $ 430,000 $ 400,000 $ 400,000 $ — $ 1,430,000 The Company was not in default of any provisions under any of its outstanding indebtedness as of March 31, 2023 or December 31, 2022. Revolving Credit Facility, 2024 Term Loan and 2028 Term Loan In April 2019, the Company, through the Operating Partnership, entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with a group of lenders, amending and restating the terms of the Company’s previous $300.0 million revolving credit facility to increase the maximum aggregate initial original principal amount of the revolving loans available thereunder up to $400.0 million (the “Revolving Credit Facility”) and to permit the incurrence of an additional $200.0 million in term loans thereunder (the “2024 Term Loan”). The full amount available under the 2024 Term Loan was borrowed in May 2019. In February 2022, the Company entered into an amendment to the Amended Credit Agreement (as so amended, the "Credit Agreement") and, pursuant to such amendment, among other things, the availability of extensions of credit under the Revolving Credit Facility was increased to $600.0 million, the accordion feature was increased to $600.0 million, the borrowing base limitation on borrowings thereunder was removed, the leverage-based margin applicable to borrowings under the Revolving Credit Facility was reduced, the LIBOR reference rate was replaced with reference to the Adjusted Term SOFR rate, consistent with market practice, and the composition and extent of lender participation under the Revolving Credit Facility was changed. During the three months ended March 31, 2022, in connection with this amendment, the Company recorded a $0.1 million loss on debt extinguishment related to the write-off of certain deferred financing costs on the Revolving Credit Facility. Prior to the February 2022 amendment, the Revolving Credit Facility had a term of four years beginning on April 12, 2019, with an extension option of up to six months exercisable by the Operating Partnership, subject to certain conditions, and the 2024 Term Loan was set to mature on April 12, 2024. The loans under each of the Revolving Credit Facility and the 2024 Term Loan initially bore interest at an annual rate of applicable LIBOR plus the applicable margin (which applicable margin varied between the Revolving Credit Facility and the 2024 Term Loan). The applicable LIBOR was the rate with a term equivalent to the interest period applicable to the relevant borrowing. The applicable margin was initially a spread set according to a leverage-based pricing grid. The Revolving Credit Facility matures on February 10, 2026, with two extension options of six months each, exercisable by the Operating Partnership subject to the satisfaction of certain conditions. The 2024 Term Loan matures on April 12, 2024. The loans under each of the Revolving Credit Facility and the 2024 Term Loan initially bear interest at an annual rate of applicable Adjusted Term SOFR (as defined in the Credit Agreement) plus an applicable margin (which applicable margin varies between the Revolving Credit Facility and the 2024 Term Loan). The Adjusted Term SOFR is a rate with a term equivalent to the interest period applicable to the relevant borrowing. In addition, the Operating Partnership is required to pay a revolving facility fee throughout the term of the Revolving Credit Facility. The applicable margin and the revolving facility fee rate are initially a spread and rate, as applicable, set according to a leverage-based pricing grid. At the Operating Partnership's election, on and after receipt of an investment grade corporate credit rating from S&P, Moody's or Fitch, the applicable margin and the revolving facility fee rate will be a spread and rate, as applicable, set according to the credit ratings provided by S&P, Moody's and/or Fitch. In July 2022, the Credit Agreement was further amended to provide for an additional $400.0 million of second tranche term loans (the “2028 Term Loan”). Loans under the 2028 Term Loan in an aggregate principal amount of $250.0 million were drawn in July 2022, concurrently with the closing of such amendment, and the remaining $150 million was drawn in October 2022. Such amendment also amended the applicable margin grid such that the applicable pricing for all borrowings under the Credit Agreement is based on the credit rating of the Company’s long-term senior unsecured non-credit enhanced debt for borrowed money (subject to a single step-down in the applicable pricing if the Company achieves a consolidated leverage ratio that is less than 0.35 to 1:00 while maintaining a credit rating of BBB/Baa2 from S&P, Moody's and/or Fitch), and reset the accordion feature to maintain the $600.0 million availability thereunder. Each of the Revolving Credit Facility, the 2024 Term Loan and the 2028 Term Loan is freely pre-payable at any time. Outstanding credit extensions under the Revolving Credit Facility are mandatorily payable if the amount of such credit extensions exceeds the revolving facility limit. The Operating Partnership may re-borrow amounts paid down on the Revolving Credit Facility prior to its maturity. Loans repaid under the 2024 Term Loan and 2028 Term Loan cannot be reborrowed. The Operating Partnership is the borrower under the Credit Agreement, and the Company and certain of its subsidiaries that own direct or indirect interests in an eligible real property assets are guarantors under the Credit Agreement. Under the terms of the Credit Agreement, the Company is subject to various restrictive financial and nonfinancial covenants which, among other things, require the Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. The Company was in compliance with all financial covenants and was not in default on any provisions under the Credit Agreement as of March 31, 2023 and December 31, 2022. The following table presents information about the Revolving Credit Facility for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Balance on January 1, $ — $ 144,000 Borrowings — 148,000 Repayments — (145,000) Balance on March 31, $ — $ 147,000 The following table presents information about interest expense related to the Revolving Credit Facility for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 225 $ 834 Amortization of deferred financing costs 295 318 Total $ 520 $ 1,152 Total deferred financing costs, net, of $3.4 million and $3.7 million related to the Revolving Credit Facility are included within rent receivables, prepaid expenses and other assets, net on the Company’s consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023 and December 31, 2022, the Company had $600.0 million of unused borrowing capacity under the Revolving Credit Facility. 2027 Term Loan On November 26, 2019, the Company, through the Operating Partnership, entered into a new $430 million term loan (the “2027 Term Loan”) with a group of lenders. The 2027 Term Loan provides for term loans to be drawn up to an aggregate amount of $430 million with maturity of November 26, 2026. The Company borrowed the entire $430.0 million available under the 2027 Term Loan in separate draws in December 2019 and March 2020. In February 2022, the Company entered into an amendment to the 2027 Term Loan to, among other things, reduce the leverage-based margin applicable to borrowings, extend the maturity date of the 2027 Term Loan to February 18, 2027, replace the LIBOR reference rate with reference to the Adjusted Term SOFR rate, consistent with market practice, and change the composition and extent of lender participation under the 2027 Term Loan. During the three months ended March 31, 2022, in connection with this amendment, the Company recorded a $2.1 million loss on debt extinguishment related to fees and the write-off of certain deferred financing costs on the 2027 Term Loan. In August 2022, the Company entered into an amendment to the 2027 Term Loan to make certain changes to provisions relating to the rates and other matters to reflect changes in market standards. Prior to its amendment in February 2022, borrowings under the 2027 Term Loan bore interest at an annual rate of applicable LIBOR plus the applicable margin. Following this amendment, the 2027 Term Loan bears interest at an annual rate of applicable Adjusted Term SOFR plus the applicable margin. The applicable LIBOR/Adjusted Term SOFR is the rate with a term equivalent to the interest period applicable to the relevant borrowing. The applicable margin was initially a spread set according to a leverage-based pricing grid. In May 2022, the Operating Partnership made an irrevocable election to have the applicable margin be a spread set according to the Company’s corporate credit ratings provided by S&P, Moody’s and/or Fitch. The 2027 Term Loan is pre-payable at any time by the Operating Partnership (as borrower) without penalty. The Operating Partnership may not re-borrow amounts paid down on the 2027 Term Loan. The 2027 Term Loan has an accordion feature to increase, subject to certain conditions, the maximum availability of the facility up to an aggregate of $500 million. The Operating Partnership is the borrower under the 2027 Term Loan, and the Company and certain of its subsidiaries that own direct or indirect interests in eligible real property assets are guarantors under the facility. Under the terms of the 2027 Term Loan, the Company is subject to various restrictive financial and nonfinancial covenants which, among other things, require the Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios and a minimum level of tangible net worth. The Company was in compliance with all financial covenants and was not in default of any provisions under the 2027 Term Loan as of March 31, 2023 and December 31, 2022. The following table presents information about aggregate interest expense related to the 2024 Term Loan, 2027 Term Loan and 2028 Term Loan: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 14,040 $ 2,341 Amortization of deferred financing costs 281 167 Total $ 14,321 $ 2,508 As of March 31, 2023 and December 31, 2022, total deferred financing costs, net, of $4.2 million and $4.5 million, respectively, related to the term loan facilities are included as a component of unsecured term loans, net of deferred financing costs on the Company’s consolidated balance sheets. The Company fixed the interest rates on its variable-rate term loan debt through the use of interest rate swap agreements. See Note 6—Derivative and Hedging Activities for additional information. Senior Unsecured Notes In June 2021, through its Operating Partnership, the Company completed a public offering of $400.0 million aggregate principal amount of 2.950% Senior Notes due 2031 (the "2031 Notes"), resulting in net proceeds of $396.6 million. The 2031 Notes were issued by the Operating Partnership, and the obligations of the Operating Partnership under the 2031 Notes are fully and unconditionally guaranteed on a senior basis by the Company. The 2031 Notes were issued at 99.8% of their principal amount. In connection with the offering of the 2031 Notes, the Operating Partnership incurred $4.7 million in deferred financing costs and an offering discount of $0.8 million. The following is a summary of the senior unsecured notes outstanding as of March 31, 2023 and December 31, 2022: (dollars in thousands) Maturity Date Interest Payment Dates Stated Interest Rate Principal Outstanding 2031 Notes July 15, 2031 January 15 and July 15 2.95% $ 400,000 The Company's senior unsecured notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership's option, at a redemption price equal to the sum of: • 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, up to, but not including, the redemption date; and • a make-whole premium calculated in accordance with the indenture governing the notes. In addition, if any of the 2031 Notes are redeemed on or after April 15, 2031 (three months prior to the stated maturity date of such notes), the redemption price will equal 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, up to, but not including, the redemption date, without any make-whole premium. The following table presents information about interest expense related to the Company's senior unsecured notes for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 2,928 $ 2,927 Amortization of deferred financing costs and original issue discount 140 141 Total $ 3,068 $ 3,068 Total deferred financing costs, net, of $3.9 million and $4.0 million related to the Company's senior unsecured notes were included within senior unsecured notes, net on the Company’s consolidated balance sheet as of March 31, 2023 and December 31, 2022, respectively. The Company was in compliance with all financial covenants and was not in default of any provisions under the 2031 Notes as of March 31, 2023 and December 31, 2022. |
Derivative and Hedging Activiti
Derivative and Hedging Activities | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative and Hedging Activities | Derivative and Hedging Activities The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value. Subsequent to the adoption of ASU 2017-12, assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach. The Company recognizes the entire change in the fair value in accumulated other comprehensive income (loss) and the change is reflected as derivative changes in fair value in the supplemental disclosures of non-cash financing activities in the consolidated statements of cash flows. The amounts recorded in accumulated other comprehensive income (loss) will subsequently be reclassified to interest expense as interest payments are made on the Company's borrowings under its variable-rate term loan facilities. During the next twelve months, the Company estimates that $24.6 million will be reclassified from accumulated other comprehensive income as a decrease to interest expense. The Company does not have netting arrangements related to its derivatives. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations. As of March 31, 2023, there were no events of default related to the Company's derivative financial instruments. The following table summarizes the notional amount at inception and fair value of these instruments on the Company's balance sheet as of March 31, 2023 and December 31, 2022 (dollar amounts in thousands): Derivatives Designated as Hedging Instruments Fixed Rate Paid by Company Effective Date Maturity Date Notional Value (1) Fair value of Asset/(Liability) (2) March 31, 2023 December 31, 2022 Interest Rate Swap (3) 1.96% 5/14/2019 4/12/2024 $ 100,000 $ 2,751 $ 3,545 Interest Rate Swap (3) 1.95% 5/14/2019 4/12/2024 50,000 1,380 1,781 Interest Rate Swap (3) 1.94% 5/14/2019 4/12/2024 50,000 1,380 1,777 Interest Rate Swap (3) 1.52% 12/9/2019 11/26/2026 175,000 11,848 14,685 Interest Rate Swap (3) 1.51% 12/9/2019 11/26/2026 50,000 3,447 4,248 Interest Rate Swap (3) 1.49% 12/9/2019 11/26/2026 25,000 1,723 2,120 Interest Rate Swap (3) 1.26% 7/9/2020 11/26/2026 100,000 7,693 9,324 Interest Rate Swap (3) 1.28% 7/9/2020 11/26/2026 80,000 6,080 7,418 Interest Rate Swap 3.19% 9/26/2022 1/25/2028 50,000 326 1,166 Interest Rate Swap 3.35% 9/26/2022 1/25/2028 50,000 (23) 804 Interest Rate Swap 3.36% 9/26/2022 1/25/2028 25,000 (26) 387 Interest Rate Swap 3.43% 9/26/2022 1/25/2028 50,000 (206) 612 Interest Rate Swap 3.71% 9/26/2022 1/25/2028 50,000 (807) (12) Interest Rate Swap 3.70% 9/26/2022 1/25/2028 25,000 (413) (15) Interest Rate Swap 4.00% 10/26/2022 1/25/2028 50,000 (1,464) (693) Interest Rate Swap 3.95% 11/28/2022 1/25/2028 25,000 (678) (293) Interest Rate Swap 4.03% 11/28/2022 1/25/2028 25,000 (778) (396) Interest Rate Swap 4.06% 11/28/2022 1/25/2028 25,000 (808) (427) Interest Rate Swap 4.07% 11/28/2022 1/25/2028 25,000 (809) (428) $ 1,030,000 $ 30,616 $ 45,603 _____________________________________ (1) Notional value indicates the extent of the Company’s involvement in these instruments, but does not represent exposure to credit, interest rate or market risks. (2) Derivatives in an asset position are included within derivative assets and derivatives in a liability position are included within derivative liabilities in the Company's consolidated balance sheets. (3) In June 2022, the Company converted the reference rate used in these interest rate swaps from 1-month LIBOR to 1-month Adjusted Term SOFR. The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. The following table presents amounts recorded to accumulated other comprehensive income/loss related to derivative and hedging activities for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Other comprehensive (loss) income $ (14,828) $ 28,961 As of March 31, 2023, the fair value of derivatives in a net asset position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $37.0 million and the fair value of derivatives in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $6.2 million. As of December 31, 2022, the fair value of derivatives in a net asset position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $48.2 million and the fair value of derivatives in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $2.4 million. During the three months ended March 31, 2023, the Company realized a gain on the change in fair value of its interest rate swaps of $5.3 million, which was included as a reduction of interest expense in the Company's consolidated statements of operations. During the three months ended March 31, 2022, the Company realized a loss on the change in fair value of its interest rate swaps of $2.5 million, which was included in interest expense in the Company's consolidated statements of operations. As of March 31, 2023 and December 31, 2022, the Company had not posted any collateral related to these agreements and was not in breach of any provisions of such agreements. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value, which were a $30.8 million asset and a $45.9 million asset as of March 31, 2023 and December 31, 2022, respectively. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Equity | Equity Stockholders’ Equity In August 2022, the Company completed a follow-on offering of 8,740,000 shares of its common stock, including the full exercise of the underwriters' option to purchase 1,140,000 additional shares of common stock, at a public offering price of $23.00 per share. Net proceeds from this follow-on offering, after deducting underwriting discounts and commissions and other expenses, were $192.6 million. In February 2023, the Company completed a follow-on primary offering of 8,855,000 shares of its common stock, including the full exercise of the underwriters' option to purchase 1,155,000 additional shares of common stock, at a public offering price of $24.60 per share, and entered into forward sale agreements relating to all such shares. Assuming full physical settlement of the forward sale agreements, net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses and making certain other adjustments as provided in the forward sale agreements, are expected to be $208.9 million. Through March 31, 2023, the Company physically settled 4,433,599 shares under the forward sale agreements relating to this offering, realizing net proceeds of $105.0 million. The Company is required to settle the balance of the forward sale agreements by February 2024. At the Market Program In May 2022, the Company established a new at the market common equity offering program, pursuant to which it can publicly offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $500 million (the "2022 ATM Program") through the identified sales agents, as its sales agents or, if applicable, as forward sellers, or directly to such agents as principals. In addition to the issuance and sale by the Company of shares to or through the agents, the 2022 ATM Program also permits the Company to enter into separate forward sale agreements with the identified forward purchasers. References to the Company's "ATM Program" are to the 2022 ATM Program or the 2022 ATM Program and its prior ATM programs as the context requires. The following table presents information about the 2022 ATM Program and the Company's prior ATM Programs: Program Name Date Established Date Terminated Maximum Sales Authorization Gross Sales through March 31, 2023 2019 ATM Program August 2019 June 2020 $ 200,000 $ 184,400 2020 ATM Program June 2020 July 2021 $ 250,000 $ 166,800 2021 ATM Program July 2021 May 2022 $ 350,000 $ 348,140 2022 ATM Program May 2022 $ 500,000 $ 96,108 The following table details information related to activity under the ATM Program for each period presented: (in thousands, except share and per share data) Three months ended March 31, 2023 2022 Shares of common stock sold (1) 857,643 6,382,994 Weighted average sale price per share $ 24.12 $ 25.01 Gross proceeds $ 20,689 $ 159,641 Net proceeds $ 20,651 $ 158,059 _____________________________________ (1) During the three months ended March 31, 2023, the Company also issued an additional 957,453 shares of common stock which were previously sold on a forward basis under the ATM Program and were unsettled as of December 31, 2022. Dividends on Common Stock During the three months ended March 31, 2023 and 2022, the Company’s board of directors declared the following quarterly cash dividends on common stock: Date Declared Record Date Date Paid Dividend per Share of Common Stock Total Dividend March 7, 2023 March 31, 2023 April 14, 2023 $ 0.275 $ 41,031 March 14, 2022 March 31, 2022 April 13, 2022 $ 0.26 $ 34,188 |
Non-controlling Interests
Non-controlling Interests | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | 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 contributes the net proceeds from issuing shares of common stock to the Operating Partnership in exchange for a number of OP Units equal to the number of shares of common stock issued. OP Units (“OP Units”) are limited partnership interests in the Operating Partnership. As of March 31, 2023, the Company held 148,838,117 OP Units, representing a 99.6% limited partner interest in the Operating Partnership. As of the same date, certain members of management and external parties (the "Non-controlling OP Unit Holders") held 553,847 OP Units in the aggregate, representing a 0.4% limited partner interest in the Operating Partnership. As of December 31, 2022, the Company held 142,379,655 OP Units, representing a 99.6% limited partner interest in the Operating Partnership and the Non-controlling OP Unit Holders held 553,847 OP Units in the aggregate, representing a 0.4% limited partner interest in the Operating Partnership. The OP Units held by the Non-controlling OP Unit Holders are presented as non-controlling interests in the Company’s consolidated financial statements. |
Equity Based Compensation
Equity Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Based Compensation | Equity Based Compensation Equity Incentive Plan In 2018, the Company adopted an equity incentive plan (the “Equity Incentive Plan”), which provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSAs, RSUs, 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. The following table presents information about the Company’s RSAs and RSUs during the three months ended March 31, 2023 and 2022: Restricted Stock Awards Restricted Stock Units Shares Wtd. Avg. Grant Date Fair Value Units Wtd. Avg. Grant Date Fair Value Unvested, January 1, 2022 18,904 $ 14.12 454,692 $ 29.39 Granted — — 568,706 27.31 Vested (9,865) 14.12 (200,427) 24.46 Forfeited — — — — Unvested, March 31, 2022 9,039 $ 14.12 822,971 $ 29.15 Unvested, January 1, 2023 9,039 $ 14.12 817,380 $ 30.26 Granted — — 351,663 32.85 Vested (9,039) 14.12 (324,360) 27.00 Forfeited — — (6,786) 24.65 Unvested, March 31, 2023 — $ — 837,897 $ 32.65 Restricted Stock Awards In January 2019, RSAs relating to an aggregate of 46,368 shares of unvested restricted common stock were granted to the Company’s executive officers, other employees and an external consultant under the Equity Incentive Plan. These RSAs vest over periods ranging from one year to four years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates. The Company estimates the grant date fair value of RSAs granted under the Equity Incentive Plan using the average market price of the Company’s common stock on the date of grant. The following table presents information about the Company’s RSAs for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Compensation cost recognized in general and administrative expense $ 2 $ 32 Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings — 2 Fair value of shares vested during the period 128 139 The following table presents information about the Company’s RSAs as of the dates presented: (Dollars in thousands) March 31, December 31, Total unrecognized compensation cost $ — $ 2 Weighted average period over which compensation cost will be recognized (in years) — 0.1 Restricted Stock Units In 2019, 2020, 2021, 2022 and 2023, the Company issued target grants of 119,085, 84,684, 126,353, 149,699 and 147,587 performance-based RSUs, respectively, to the Company’s senior management team under the Equity Incentive Plan. Of these awards, 75% are non-vested RSUs for which vesting percentages and the ultimate number of units vesting is calculated based on the total shareholder return (“TSR”) of the Company's common stock as compared to the TSR of peer companies identified in the grant agreements. The payout schedule can produce vesting percentages ranging from 0% to 250% of target. TSR is calculated over the performance period for each award based upon the average closing price for the 20-trading day period ending December 31st of the year prior to grant divided by the average closing price for the 20-trading day period ending December 31st of the third year following the grant. The target number of units is based on achieving a TSR equal to the 50th percentile of the peer group. The Company records expense on these TSR RSUs based on achieving the target. The grant date fair value of the TSR RSUs was measured using a Monte Carlo simulation model based on the following assumptions: Grant Year 2023 2022 Volatility 37% 54% Risk free rate 4.36% 1.68% The remaining 25% of these performance-based RSUs vest based on the Compensation Committee's subjective evaluation of the individual recipient’s achievement of certain strategic objectives over the performance period of the award. In January 2022 and February 2023, the Compensation Committee identified specific performance targets and completed its subjective evaluation in relation to the performance-based RSUs granted in 2019 and 2020 and concluded that 78,801 and 50,598 RSUs, respectively, should be awarded. 50% of these RSUs vested immediately upon the Compensation Committee's certification and the remaining 50% vested on December 31, 2022 or will vest on December 31, 2023, subject to the recipient's continued provision of service to the Company through such date. During the three months ended March 31, 2023 and 2022, the Company recorded $0.7 million and $1.3 million, respectively, of compensation expense with respect to these subjective performance-based RSUs granted in 2019 and 2020. As of March 31, 2023, the Compensation Committee had not identified specific performance targets relating to the individual recipients' achievement of strategic objectives for the subjective awards granted in 2021, 2022 and 2023. As such, these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation expense with respect to this portion of the performance-based RSUs during the three months ended March 31, 2023 and 2022. In 2020, 2021, 2022 and 2023, the Company issued an aggregate of 184,760, 135,686, 199,793 and 128,526 RSUs, respectively, to the Company’s executive officers, other employees and directors under the Equity Incentive Plan. These awards vest over a period of up to five years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates. In January 2022, the Company issued 69,372 performance-based RSUs (at target) to an executive officer under the Equity Incentive Plan. These RSUs vest based on the compound annual growth rate of the Company's adjusted funds from operations ("AFFO CAGR") over a five year performance period, and the payout schedule can produce vesting percentages ranging from 0% to 200% of target. To the extent the performance goal is achieved, these performance-based RSUs will vest in 50% increments on each of the four-year and five-year anniversary of the grant date, subject to the recipient's continued provision of service to the Company through the applicable vesting dates. As of March 31, 2023 and 2022, based on its AFFO CAGR forecasts, the Company believes it is probable that the maximum performance level will be achieved and recorded $0.2 million of compensation expense based off of this estimate during the three months ended March 31, 2023 and 2022. A portion of the RSUs that vested in 2023 and 2022 were net share settled such that the Company withheld shares with a value equal to the relevant employee's income and employment tax obligations with respect to the vesting and remitted a cash payment to the appropriate taxing authority. The following table presents information about the Company’s RSUs for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Compensation cost recognized in general and administrative expense $ 2,719 $ 2,804 Dividend equivalents declared and charged directly to distributions in excess of cumulative earnings 101 88 Fair value of units vested during the period 8,759 4,903 The following table presents information about the Company’s RSUs as of the dates presented: (Dollars in thousands) March 31, December 31, Total unrecognized compensation cost $ 20,056 $ 13,761 Weighted average period over which compensation cost will be recognized (in years) 2.7 2.8 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The Company computes net income per share pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share . The guidance requires the classification of the Company’s unvested restricted common stock and units, which contain rights to receive non-forfeitable dividends or dividend equivalents, as participating securities requiring the two-class method of computing net income per share. Diluted net income per share of common stock further considers the effect of potentially dilutive shares of common stock outstanding during the period, including the assumed vesting of RSUs with a market-based or service-based vesting condition, where dilutive. The OP Units held by non-controlling interests represent potentially dilutive securities as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for 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): Three months ended March 31, (dollar amounts in thousands) 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 43,056 $ 26,818 Less: net income attributable to non-controlling interests (160) (119) Less: net income allocated to unvested RSAs and RSUs (101) (90) Net income available for common stockholders: basic 42,795 26,609 Net income attributable to non-controlling interests 160 119 Net income available for common stockholders: diluted $ 42,955 $ 26,728 Denominator for basic and diluted earnings per share: Weighted average common shares outstanding 144,406,747 126,849,066 Less: weighted average number of shares of unvested RSAs (703) (9,808) Weighted average shares outstanding used in basic net income per share 144,406,044 126,839,258 Effects of dilutive securities: (1) OP Units 553,847 553,847 Unvested RSAs and RSUs 482,013 530,394 Forward Sales 558,103 — Weighted average shares outstanding used in diluted net income per share 146,000,007 127,923,499 _____________________________________ |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of March 31, 2023, the Company had remaining future commitments under mortgage notes, reimbursement obligations or similar arrangements to fund $89.9 million to its tenants for development, construction and renovation costs related to properties leased from the Company. Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. As of March 31, 2023, 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 be liable for costs and damages related to environmental matters. As of March 31, 2023, 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 business, financial condition, results of operations or liquidity. Defined Contribution Retirement Plan The Company has a defined contribution retirement savings plan qualified under Section 401(a) of the 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 6% of eligible compensation contributed by participants, which vests immediately. The following table presents the matching contributions made by the Company for the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 401(k) matching contributions $ 154 $ 170 Employment Agreements The Company has employment agreements with certain of 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. If 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 | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 as of March 31, 2023 and December 31, 2022. 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 rent receivables, prepaid expenses and other assets, net, dividends payable 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 fixed-rate loans receivable 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. The Company believes the carrying value of its fixed-rate loans receivable approximates fair value as of March 31, 2023 and December 31, 2022. The estimated fair values of the Company’s borrowings under the Revolving Credit Facility, the 2024 Term Loan, the 2027 Term Loan and the 2028 Term Loan 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. The Company believes the carrying value of its borrowings under the Revolving Credit Facility, the 2024 Term Loan, the 2027 Term Loan and the 2028 Term Loan as of March 31, 2023 and December 31, 2022 approximate fair value. The Company measures the fair value of its senior unsecured notes and derivative financial instruments on a recurring basis. The fair values of these financial assets and liabilities were determined using the following input levels as of the dates presented: Net Carrying Value Fair Value Measurements Using Fair Value Hierarchy (in thousands) Fair Value Level 1 Level 2 Level 3 March 31, 2023 Financial assets (liabilities): Interest rate swaps $ 30,616 $ 30,616 $ — $ 30,616 $ — Senior unsecured notes (1) (395,426) (295,720) (295,720) — — December 31, 2022 Financial assets (liabilities): Interest rate swaps $ 45,603 $ 45,603 $ — $ 45,603 $ — Senior unsecured notes (1) (395,286) (292,120) (292,120) — — _____________________________________ (1) Carrying value is net of $3.9 million and $4.0 million of net deferred financing costs and $0.6 million and $0.7 million of net discount as of March 31, 2023 and December 31, 2022, respectively. The Company measures its real estate investments at fair value on a nonrecurring basis. The fair values of real estate investments that were impaired as of the dates presented were determined using the following input levels. Net Carrying Value Fair Value Measurements Using Fair Value Hierarchy (in thousands) Fair Value Level 1 Level 2 Level 3 March 31, 2023 Non-financial assets: Long-lived assets $ 2,100 $ 2,100 $ — $ — $ 2,100 December 31, 2022 Non-financial assets: Long-lived assets $ 12,144 $ 12,144 $ — $ — $ 12,144 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 March 31, 2023 is as follows: (dollar amounts in thousands) Fair Value Valuation Techniques Significant Unobservable Inputs Non-financial assets: Long-lived assets Restaurant - Jacksonville, FL $ 1,750 Sales comparison approach Non-binding sales agreement $ 1,750 Convenience Store - Deming, NM 100 Sales comparison approach Non-binding sales agreement 100 Restaurant - Davenport, IA 250 Sales comparison approach Non-binding listing agreement 250 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated all events and transactions that occurred after March 31, 2023 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 below. Investment Activity Subsequent to March 31, 2023, the Company invested in two real estate properties for an aggregate investment amount (including acquisition-related costs) of $6.2 million and invested $1.6 million in new and ongoing construction in progress and reimbursements to tenants for development, construction and renovation costs related to properties leased from the Company. Subsequent to March 31, 2023, the Company sold its investments in two real estate properties for an aggregate gross sales price of $3.2 million and incurred $0.2 million of disposition costs related to these transactions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying unaudited 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 U.S. Securities and Exchange Commission (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 months ended March 31, 2023 and 2022 are not necessarily indicative of the results for the full year. These unaudited financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. |
Principles of Consolidation | Principles of ConsolidationThe 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. |
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. |
Reportable Segments | Reportable SegmentsASC 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 or real estate that secures the Company's investment in loans and direct financing lease receivables. |
Real Estate Investments | Real Estate Investments Investments in real estate are carried at cost less accumulated depreciation and impairment losses. 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 asset meets the definition of a business. Under Accounting Standards Update (“ASU”) 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business , an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred. 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 incurs 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 incentives 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 pre-construction 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 Company does not engage in speculative real estate development. The Company does, however, opportunistically agree to reimburse certain of its tenants for development costs at its properties in exchange for contractually specified rent that generally increases proportionally with its funding. 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 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 uses 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 and fair value less estimated selling costs. 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 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. The Company recorded the following amounts of depreciation expense on its real estate investments during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Depreciation on real estate investments $ 22,129 $ 18,555 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. If 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 intangibles 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 intangibles 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 over the remaining periods of the respective leases. If 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. |
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, less the Company's estimated allowance for credit losses. 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 |
Direct Financing Lease Receivables and Adjustment to Rental Revenue for Tenant Credit | 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 term of the related lease 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. Adjustment to Rental Revenue for Tenant Credit 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. If the assessment of the collectability of substantially all payments due under a lease changes from probable to not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current period reduction of rental revenue in the consolidated statements of operations. |
Allowance for Credit Losses | Allowance for Credit Losses Under ASC Topic 326, Financial Instruments – Credit Losses, the Company uses a real estate loss estimate model (“RELEM”) which estimates losses on its loans and direct financing lease receivable portfolio, for purposes of calculating allowances for credit losses. The RELEM allows the Company to refine (on an ongoing basis) the expected loss estimate by incorporating asset-specific assumptions as necessary, such as anticipated funding, interest payments, estimated extensions and estimated loan repayment/refinancing at maturity to estimate cash flows over the life of the loan or direct financing lease receivable. The model also incorporates assumptions related to underlying collateral values, various loss scenarios, and predicted losses to estimate expected losses. The Company's specific asset-level inputs include loan-to-stabilized-value (“LTV”), principal balance, property type, location, coupon, origination year, term, subordination, expected repayment date and future funding. The Company categorizes the results by LTV range, which it considers the most significant indicator of credit quality for its loans and direct financing lease receivables. A lower LTV ratio typically indicates a lower credit loss risk. The Company also evaluates each loan and direct financing lease receivable measured at amortized cost for credit deterioration at least quarterly. Credit deterioration occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan or direct financing lease receivable. The Company's allowance for credit losses is adjusted to reflect its estimation of the current and future economic conditions that impact the performance of the real estate assets securing its loans. These estimations include various macroeconomic factors impacting the likelihood and magnitude of potential credit losses for the Company's loans and direct financing lease receivables during their anticipated term. Changes in the Company's allowance for credit losses are presented within change in provision for credit losses in its consolidated statements of operations. |
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 property 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 losses, if any, are recorded directly within our consolidated statement of operations. |
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. |
Restricted Cash | Restricted Cash Restricted cash primarily consists of cash proceeds from the sale of assets held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). |
Forward Equity Sales | Forward Equity Sales The Company has and may continue to enter into forward sale agreements relating to shares of its common stock, either through its 2022 ATM Program (as defined herein) or through underwritten public offerings. These agreements may be physically settled in stock, settled in cash or net share settled at the Company’s election. The Company evaluated its forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity. Prior to settlement, a forward sale agreement will be reflected in the diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of the Company’s common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of the Company’s common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of the Company’s common stock that could be purchased by the Company in the market (based on the average market price during the reporting period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). Consequently, prior to settlement of a forward sale agreement, there will be no dilutive effect on the Company’s earnings per share except during periods when the average market price of the Company’s common stock is above the adjusted forward sale price. However, upon settlement of a forward sales agreement, if the Company elects to physically settle or net share settle such forward sale agreement, delivery of the Company’s shares will result in dilution to the Company’s earnings per share. |
Deferred Financing Costs | Deferred Financing Costs Financing costs related to establishing the Company’s Revolving Credit Facility (as defined below) were deferred and are being amortized as an increase to interest expense in the consolidated statements of operations over the term of the facility and are reported as a component of rent receivables, prepaid expenses and other assets, net on the consolidated balance sheets. Financing costs related to the issuance of the Company’s borrowings under the 2024 Term Loan, 2027 Term Loan, 2028 Term Loan and 2031 Notes were deferred and are being amortized as an increase to interest expense in the consolidated statements of operations over the term of the related debt instrument and are reported as a reduction of the related debt balance on the consolidated balance sheets. |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company uses derivative financial instruments, which may include interest rate swaps, caps, options, floors and other interest rate derivative contracts, to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the Company’s floating-rate debt. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may also enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income to the extent that it is effective. Any ineffective portion of a change in derivative fair value is immediately recorded in earnings. If the Company elects not to apply hedge accounting treatment (or for derivatives that do not qualify as hedges), any change in the fair value of such derivative instruments would be recognized immediately as a gain or loss on derivative instruments in the consolidated statements of operations. |
Fair Value Measurement | Fair Value Measurement The Company estimates the 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 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 and the date of acquisition of the property subject to the lease. Rental revenue recognition begins when the tenant controls the space and continues 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-cancelable term of the lease. The Company considers whether the collectability of rents is reasonably assured in determining the amount of straight-line rent to record. Generally, the Company’s leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions provided under the initial lease term, including rent increases. If economic incentives make it reasonably certain that an option period to extend the lease will be exercised, the Company will include these options in determining the non-cancelable term of the lease. 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. |
Offering Costs | Offering CostsIn connection with the completion of equity offerings, the Company incurs legal, accounting and other offering-related costs. Such costs are deducted from the gross proceeds of each equity offering when the offering is completed. |
Income Taxes | Income Taxes The Company elected and qualified to be taxed as a REIT under sections 856 through 860 of the Code, commencing with its taxable year ended 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 its REIT election, the Company continues to meet the organizational and operational requirements and expects distributions to exceed REIT taxable income. Accordingly, no provision has been made for U.S. federal income taxes. Even though the Company has elected and qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income and excise tax on its undistributed income. Franchise taxes and federal excise taxes on the Company’s undistributed income, if any, are included in general and administrative expenses on the accompanying consolidated statements of operations. Additionally, taxable income from non-REIT activities managed through the Company's taxable REIT subsidiary is subject to federal, state, and local taxes. 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 |
Equity-Based Compensation | Equity-Based Compensation The Company grants shares of restricted common stock ("RSAs") and restricted stock units (“RSUs”) to its directors, executive officers and other employees that vest over specified time periods, subject to the recipient’s continued service. The Company also grants performance-based RSUs to executive officers, the final number of which is determined based on objective and subjective performance conditions and which vest over a multi-year period, subject to the recipient’s continued service. The Company accounts for RSAs and RSUs in accordance with ASC 718, Compensation – Stock Compensation, which requires that such compensation be recognized in the financial statements based on its 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 applicable service periods. The Company recognizes compensation expense for equity-based compensation using the straight-line method based on the fair value of the award on the grant date. Forfeitures of equity-based compensation awards, if any, are recognized when they occur. |
Variable Interest Entities | Variable Interest Entities The Financial Accounting Standards Board (“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. The Company has 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 sheets as of March 31, 2023 and December 31, 2022. |
Recent Accounting Developments | Recent Accounting Developments In July 2021, the FASB issued ASU 2021-05, Lease (Topic 842): Lessors - Certain Leases with Variable Lease Payments ("ASU 2021-05"). The guidance in ASU 2021-05 amends the lease classification requirements for the lessors under certain leases containing variable payments to align with practice under ASC 840. The lessor should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in ASC 842-10-25-2 through 25-3; and 2) the lessor would have otherwise recognized a day-one loss. The amendments in ASU 2021-05 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The adoption of ASU 2021-05 did not have a material impact on the Company's consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Depreciation Expense and Impairment on Real Estate Investments | The Company recorded the following amounts of depreciation expense on its real estate investments during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Depreciation on real estate investments $ 22,129 $ 18,555 |
Schedule of Impairment of Long-Lived Assets | The Company recorded the following provisions for impairment of long lived assets during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Provision for impairment of real estate $ 677 $ 3,935 |
Schedule of Adjustments to Rental Revenue and Contingent Rent | The Company recorded the following amounts as contingent rent, which are included as a component of rental revenue in the Company's consolidated statements of operations, during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Contingent rent $ 176 $ 156 The Company recorded the following amounts adjustments as increases to or reductions of rental revenue for tenant credit during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Adjustment to increase rental revenue for tenant credit $ 160 $ 568 The fixed and variable components of lease revenues for the three months ended March 31, 2023 and 2022 were as follows: Three months ended March 31, (in thousands) 2023 2022 Fixed lease revenues $ 77,465 $ 65,113 Variable lease revenues (1) 730 660 Total lease revenues (2) $ 78,195 $ 65,773 _____________________________________ (1) Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants. (2) Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit. |
Schedule of Mortgage Loan-Related VIEs | The following table presents information about the Company’s mortgage loan-related VIEs as of the dates presented: (dollar amounts in thousands) March 31, December 31, Number of VIEs 21 21 Aggregate carrying value $ 225,662 $ 233,351 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Investments [Abstract] | |
Schedule of Real Estate Properties | The following table presents information about the number of investments in the Company’s real estate investment portfolio as of each date presented: March 31, December 31, Owned properties (1) 1,527 1,489 Properties securing investments in mortgage loans (2) 150 153 Ground lease interests 11 11 Total number of investments 1,688 1,653 _____________________________________ (1) Includes seven and eight properties which are subject to leases accounted for as direct financing leases or loans as of March 31, 2023 and December 31, 2022, respectively. (2) Properties secure 20 mortgage loans receivable as of March 31, 2023 and December 31, 2022. |
Schedule of Real Estate Investment Property, at Cost | The following table presents information about the gross investment value of the Company’s real estate investment portfolio as of each date presented: (in thousands) March 31, December 31, Real estate investments, at cost $ 3,977,356 $ 3,810,570 Loans and direct financing lease receivables, net 231,731 240,035 Real estate investments held for sale, net 5,398 4,780 Total gross investments $ 4,214,485 $ 4,055,385 |
Schedule of Information about Investment Activity | The following table presents information about the Company’s acquisition activity during the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 Ownership type (1) Fee Interest Number of properties 56 47 Purchase price allocation Land and improvements $ 58,464 $ 83,342 Building and improvements 128,805 97,178 Construction in progress (2) 14,520 5,687 Intangible lease assets 570 — Total purchase price 202,359 186,207 Intangible lease liabilities — — Purchase price (including acquisition costs) $ 202,359 $ 186,207 _____________________________________ (1) During the three months ended March 31, 2023, the Company acquired the fee interest in 55 properties and acquired one property subject to a ground lease. (2) Represents amounts incurred at and subsequent to acquisition and includes $0.4 million and $0.1 million, respectively of capitalized interest expense during the three months ended March 31, 2023 and 2022, respectively. |
Schedule of Gross Investment Activity | During the three months ended March 31, 2023 and 2022, the Company had the following gross investment activity: (Dollar amounts in thousands) Number of Dollar Gross investments, January 1, 2022 1,451 $ 3,355,561 Acquisitions of and additions to real estate investments 47 195,790 Sales of investments in real estate (6) (18,531) Provision for impairment of real estate (1) (3,935) Investments in loans receivable 58 54,277 Principal collections on and settlements of loans and direct financing lease receivables (5) (20,336) Other (64) Gross investments, March 31, 2022 3,562,762 Less: Accumulated depreciation and amortization (2) (220,711) Net investments, March 31, 2022 1,545 $ 3,342,051 Gross investments, January 1, 2023 1,653 $ 4,055,385 Acquisitions of and additions to real estate investments 56 203,518 Sales of investments in real estate (16) (33,641) Relinquishment of property at end of ground lease term (1) (837) Provision for impairment of real estate (3) (677) Investments in loans receivable 1 3,400 Principal collections on and settlements of loans and direct financing lease receivables (5) (11,734) Other (929) Gross investments, March 31, 2023 4,214,485 Less: Accumulated depreciation and amortization (2) (297,362) Net investments, March 31, 2023 1,688 $ 3,917,123 _____________________________________ (1) During the three months ended March 31, 2022, the Company identified and recorded provisions for impairment on four tenanted properties. (2) Includes $260.7 million and $189.7 million of accumulated depreciation as of March 31, 2023 and 2022, respectively. |
Schedule of Loans Receivable | The Company’s loans receivable portfolio as of March 31, 2023 and December 31, 2022 is summarized below (dollars in thousands): Principal Balance Outstanding Loan Type Monthly Payment (1) Number of Secured Properties Effective Interest Rate Stated Interest Rate Maturity Date March 31, December 31, Mortgage (2)(3) I/O 2 8.80% 8.00% 2039 $ 12,000 $ 12,000 Mortgage (2) I/O 2 8.53% 7.75% 2039 7,300 7,300 Mortgage (2) I/O 69 8.16% 7.70% 2034 51,000 51,000 Mortgage (2) I/O 1 8.42% 7.65% 2040 5,300 5,300 Mortgage (2) I/O 3 8.79% 8.50% 2022 2,324 2,324 Mortgage (2) I/O 1 7.00% 7.00% 2023 550 600 Mortgage (2) I/O 3 8.30% 8.25% 2023 3,146 3,146 Mortgage (2) I/O 2 6.87% 6.40% 2036 2,520 2,520 Mortgage (2) I/O 0 7.51% 7.00% 2036 — 2,673 Mortgage (2) I/O 2 8.29% 8.25% 2023 2,389 2,389 Mortgage (2) I/O 1 5.72% 8.00% 2051 24,100 24,100 Mortgage (2) I/O 1 7.44% 7.10% 2036 1,408 9,808 Mortgage (2) I/O 7 7.30% 6.80% 2036 35,474 35,474 Mortgage (2) I/O 1 7.73% 7.20% 2036 2,470 2,470 Mortgage (2) I/O 1 8.00% 8.00% 2023 1,754 1,754 Mortgage (2) I/O 37 6.80% 7.00% 2027 26,307 26,307 Mortgage (2) I/O 1 6.99% 7.20% 2037 3,600 3,600 Mortgage (2) I/O 1 8.40% 8.25% 2024 760 760 Mortgage (2) I/O 4 8.64% 8.05% 2037 12,250 12,250 Mortgage (2) I/O 10 8.93% 8.25% 2037 28,938 28,938 Mortgage (2) I/O 1 8.82% 8.25% 2038 3,400 — Leasehold interest P+I 1 2.25% (4) 2034 976 992 Leasehold interest P+I 1 2.41% (4) 2034 1,450 1,473 Leasehold interest P+I 1 4.97% (4) 2038 1,505 1,517 Net investment $ 230,921 $ 238,695 _____________________________________ (1) I/O: Interest Only; P+I: Principal and Interest (2) Loan requires monthly payments of interest only with a balloon payment due at maturity. (3) Loan allows for prepayments in whole or in part without penalty. (4) These leasehold interests are accounted for as loans receivable, as the lease for each property contains an option for the lessee to repurchase the leased property in the future. |
Schedule of Principal Payments Due under Loans Receivable | Scheduled principal payments due to be received under the Company’s loans receivable as of March 31, 2023 were as follows: (in thousands) Future Principal Payments Due April 1 - December 31, 2023 $ 7,995 2024 3,304 2025 234 2026 248 2027 26,570 Thereafter 192,570 Total $ 230,921 |
Schedule of Direct Financing Lease Receivables | The components of the investments accounted for as direct financing lease receivables were as follows: (in thousands) March 31, December 31, Minimum lease payments receivable $ 1,901 $ 2,812 Estimated unguaranteed residual value of leased assets 250 251 Unearned income from leased assets (606) (957) Net investment $ 1,545 $ 2,106 |
Schedule of 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 March 31, 2023 were as follows: (in thousands) Future Minimum April 1 - December 31, 2023 $ 192 2024 210 2025 178 2026 167 2027 143 Thereafter 1,011 Total $ 1,901 |
Schedule of Changes to Allowance for Credit Losses | For the three months ended March 31, 2023 and 2022, the changes to the Company's allowance for credit losses were as follows: (in thousands) Loans and Direct Financing Lease Receivables Balance at January 1, 2022 $ 814 Current period change in provision for expected credit losses 60 Write-offs charged — Recoveries — Balance at March 31, 2022 $ 874 Balance at January 1, 2023 $ 765 Current period change in provision for expected credit losses (30) Write-offs charged — Recoveries — Balance at March 31, 2023 $ 735 |
Schedule of Significant Credit Quality Indicators Measured at Amortized Cost | 70% 3,400 89,465 26,559 10,578 20,276 466 150,744 $ 3,400 $ 112,465 $ 56,202 $ 10,578 $ 48,276 $ 1,545 $ 232,467 " id="sjs-B13" xml:space="preserve">The Company considers the ratio of loan to value ("LTV") to be a significant credit quality indicator for its loans and direct financing lease portfolio. The following table presents information about the LTV of the Company's loans and direct financing lease receivables measured at amortized cost as of March 31, 2023: Amortized Cost Basis by Origination Year Total Amortized Cost Basis (in thousands) 2023 2022 2021 2020 2019 Prior LTV <60% $ — $ 23,000 $ — $ — $ 28,000 $ 1,080 $ 52,080 LTV 60%-70% — — 29,643 — — — 29,643 LTV >70% 3,400 89,465 26,559 10,578 20,276 466 150,744 $ 3,400 $ 112,465 $ 56,202 $ 10,578 $ 48,276 $ 1,545 $ 232,467 |
Schedule of 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 three months ended March 31, 2023 and 2022. (Dollar amounts in thousands) Number of Properties Real Estate Investments Intangible Lease Liabilities Net Carrying Value Held for sale balance, January 1, 2022 9 $ 15,434 $ — $ 15,434 Transfers to held for sale classification 1 4,979 — 4,979 Sales (4) (5,925) — (5,925) Transfers to held and used classification — — — — Held for sale balance, March 31, 2022 6 $ 14,488 $ — $ 14,488 Held for sale balance, January 1, 2023 4 $ 4,780 $ — $ 4,780 Transfers to held for sale classification 3 3,701 — 3,701 Sales (3) (3,083) — (3,083) Transfers to held and used classification — — — — Held for sale balance, March 31, 2023 4 $ 5,398 $ — $ 5,398 |
Schedule of External Customers by Geographic Areas | The following table lists the state 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: Three months ended March 31, State 2023 2022 Texas 13.2% 13.3% |
Schedule of Intangible Assets and Liabilities | Intangible assets and liabilities consisted of the following as of the dates presented: March 31, 2023 December 31, 2022 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets: In-place leases $ 76,597 $ 31,544 $ 45,053 $ 77,096 $ 30,217 $ 46,879 Intangible market lease assets 11,254 5,091 6,163 11,268 4,917 6,351 Total intangible assets $ 87,851 $ 36,635 $ 51,216 $ 88,364 $ 35,134 $ 53,230 Intangible market lease liabilities $ 15,527 $ 3,991 $ 11,536 $ 15,325 $ 3,774 $ 11,551 |
Schedule of Remaining Weighted Average Amortization Periods for Intangible Assets and Liabilities | The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2023, by category and in total, were as follows: Years Remaining In-place leases 8.7 Intangible market lease assets 11.0 Total intangible assets 9.0 Intangible market lease liabilities 9.3 |
Schedule of Amortization and Accretion Recognized | The following table discloses amounts recognized within the consolidated statements of operations 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 March 31, (in thousands) 2023 2022 Amortization of in-place leases (1) $ 1,627 $ 1,705 Amortization (accretion) of market lease intangibles, net (2) (1) 1 Amortization (accretion) of above- and below-market ground lease intangibles, net (3) (84) (88) _____________________________________ (1) Reflected within depreciation and amortization expense. (2) Reflected within rental revenue. (3) Reflected within property expenses. |
Schedule of Projected Amortization Expenses for Next Five Years | The following table provides the estimated amortization of in-place lease assets to be recognized as a component of depreciation and amortization expense for the next five years and thereafter: (in thousands) In-Place Lease Assets April 1 - December 31, 2023 $ 4,572 2024 5,489 2025 4,241 2026 3,936 2027 3,408 Thereafter 23,407 Total $ 45,053 The following table provides the estimated net amortization of above- and below-market lease intangibles to be recognized as a component of rental revenue for the next five years and thereafter: (in thousands) Above Market Lease Asset Below Market Lease Liabilities Net Adjustment to Rental Revenue April 1 - December 31, 2023 $ (517) $ 507 $ (10) 2024 (658) 681 23 2025 (650) 682 32 2026 (641) 686 45 2027 (619) 711 92 Thereafter (3,078) 8,269 5,191 Total $ (6,163) $ 11,536 $ 5,373 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Future Minimum Base Rental Payments due to be Received 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 March 31, 2023 were as follows: (in thousands) Future Minimum Base Rental Receipts April 1 - December 31, 2023 $ 233,959 2024 314,453 2025 314,754 2026 317,544 2027 317,762 Thereafter 3,416,993 Total $ 4,915,465 |
Schedule of Components of Fixed and Variable Lease Revenues | The Company recorded the following amounts as contingent rent, which are included as a component of rental revenue in the Company's consolidated statements of operations, during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Contingent rent $ 176 $ 156 The Company recorded the following amounts adjustments as increases to or reductions of rental revenue for tenant credit during the periods presented: Three months ended March 31, (in thousands) 2023 2022 Adjustment to increase rental revenue for tenant credit $ 160 $ 568 The fixed and variable components of lease revenues for the three months ended March 31, 2023 and 2022 were as follows: Three months ended March 31, (in thousands) 2023 2022 Fixed lease revenues $ 77,465 $ 65,113 Variable lease revenues (1) 730 660 Total lease revenues (2) $ 78,195 $ 65,773 _____________________________________ (1) Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants. (2) Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit. |
Schedule of Information Related to Measurement of Lease Liabilities | The following table sets forth information related to the measurement of the Company’s lease liabilities as of the dates presented: March 31, 2023 December 31, 2022 Weighted average remaining lease term (in years) 23.1 22.9 Weighted average discount rate 6.16% 6.09% |
Schedule of Rent Expense | The following table sets forth the details of rent expense for the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 Fixed rent expense - ground leases $ 247 $ 240 Fixed rent expense - office and equipment leases 128 128 Variable rent expense — — Total rent expense $ 375 $ 368 |
Schedule of Future Lease Payments due from Company Under Ground, Office and Equipment Operating Leases (ASC 842) | As of March 31, 2023, future lease payments due from the Company under the ground, office and equipment operating leases where the Company is directly responsible for payment and the future lease payments due under the ground operating leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows: (in thousands) Office and Equipment Leases 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 April 1 - December 31, 2023 $ 394 $ 96 $ 594 $ 1,084 2024 531 28 782 1,341 2025 538 — 706 1,244 2026 — — 711 711 2027 — — 724 724 Thereafter — — 16,263 16,263 Total $ 1,463 $ 124 $ 19,780 21,367 Present value discount (12,080) Lease liabilities $ 9,287 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Indebtedness | The following table summarizes the Company's outstanding indebtedness as of March 31, 2023 and December 31, 2022: Principal Outstanding Weighted Average Interest Rate (1) (in thousands) Maturity Date March 31, December 31, March 31, December 31, Unsecured term loans: 2024 Term Loan April 2024 $ 200,000 $ 200,000 5.5% 5.3% 2027 Term Loan February 2027 430,000 430,000 5.7% 5.3% 2028 Term Loan January 2028 400,000 400,000 5.6% 5.3% Senior unsecured notes July 2031 400,000 400,000 3.0% 3.0% Revolving Credit Facility February 2026 — — —% —% Total principal outstanding $ 1,430,000 $ 1,430,000 4.9% 4.6% ______________________ (1) Interest rates are presented as stated in debt agreements and do not reflect the impact of the Company's interest rate swap and lock agreements, where applicable (see Note 6—Derivative and Hedging Activities). The following table presents information about the Revolving Credit Facility for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Balance on January 1, $ — $ 144,000 Borrowings — 148,000 Repayments — (145,000) Balance on March 31, $ — $ 147,000 The following table presents information about interest expense related to the Revolving Credit Facility for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 225 $ 834 Amortization of deferred financing costs 295 318 Total $ 520 $ 1,152 The following table presents information about aggregate interest expense related to the 2024 Term Loan, 2027 Term Loan and 2028 Term Loan: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 14,040 $ 2,341 Amortization of deferred financing costs 281 167 Total $ 14,321 $ 2,508 The following is a summary of the senior unsecured notes outstanding as of March 31, 2023 and December 31, 2022: (dollars in thousands) Maturity Date Interest Payment Dates Stated Interest Rate Principal Outstanding 2031 Notes July 15, 2031 January 15 and July 15 2.95% $ 400,000 The following table presents information about interest expense related to the Company's senior unsecured notes for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Interest expense $ 2,928 $ 2,927 Amortization of deferred financing costs and original issue discount 140 141 Total $ 3,068 $ 3,068 |
Schedule of Principal Payments | The following table summarizes the scheduled principal payments on the Company’s outstanding indebtedness as of March 31, 2023: (in thousands) 2024 Term Loan 2027 Term Loan 2028 Term Loan Senior Unsecured Notes Revolving Credit Facility Total April 1 - December 31, 2023 $ — $ — $ — $ — $ — $ — 2024 200,000 — — — — 200,000 2025 — — — — — — 2026 — — — — — — 2027 — 430,000 — — — 430,000 Thereafter — — 400,000 400,000 — 800,000 Total $ 200,000 $ 430,000 $ 400,000 $ 400,000 $ — $ 1,430,000 |
Derivative and Hedging Activi_2
Derivative and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amount and Fair Value of Instruments | The following table summarizes the notional amount at inception and fair value of these instruments on the Company's balance sheet as of March 31, 2023 and December 31, 2022 (dollar amounts in thousands): Derivatives Designated as Hedging Instruments Fixed Rate Paid by Company Effective Date Maturity Date Notional Value (1) Fair value of Asset/(Liability) (2) March 31, 2023 December 31, 2022 Interest Rate Swap (3) 1.96% 5/14/2019 4/12/2024 $ 100,000 $ 2,751 $ 3,545 Interest Rate Swap (3) 1.95% 5/14/2019 4/12/2024 50,000 1,380 1,781 Interest Rate Swap (3) 1.94% 5/14/2019 4/12/2024 50,000 1,380 1,777 Interest Rate Swap (3) 1.52% 12/9/2019 11/26/2026 175,000 11,848 14,685 Interest Rate Swap (3) 1.51% 12/9/2019 11/26/2026 50,000 3,447 4,248 Interest Rate Swap (3) 1.49% 12/9/2019 11/26/2026 25,000 1,723 2,120 Interest Rate Swap (3) 1.26% 7/9/2020 11/26/2026 100,000 7,693 9,324 Interest Rate Swap (3) 1.28% 7/9/2020 11/26/2026 80,000 6,080 7,418 Interest Rate Swap 3.19% 9/26/2022 1/25/2028 50,000 326 1,166 Interest Rate Swap 3.35% 9/26/2022 1/25/2028 50,000 (23) 804 Interest Rate Swap 3.36% 9/26/2022 1/25/2028 25,000 (26) 387 Interest Rate Swap 3.43% 9/26/2022 1/25/2028 50,000 (206) 612 Interest Rate Swap 3.71% 9/26/2022 1/25/2028 50,000 (807) (12) Interest Rate Swap 3.70% 9/26/2022 1/25/2028 25,000 (413) (15) Interest Rate Swap 4.00% 10/26/2022 1/25/2028 50,000 (1,464) (693) Interest Rate Swap 3.95% 11/28/2022 1/25/2028 25,000 (678) (293) Interest Rate Swap 4.03% 11/28/2022 1/25/2028 25,000 (778) (396) Interest Rate Swap 4.06% 11/28/2022 1/25/2028 25,000 (808) (427) Interest Rate Swap 4.07% 11/28/2022 1/25/2028 25,000 (809) (428) $ 1,030,000 $ 30,616 $ 45,603 _____________________________________ (1) Notional value indicates the extent of the Company’s involvement in these instruments, but does not represent exposure to credit, interest rate or market risks. (2) Derivatives in an asset position are included within derivative assets and derivatives in a liability position are included within derivative liabilities in the Company's consolidated balance sheets. |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents amounts recorded to accumulated other comprehensive income/loss related to derivative and hedging activities for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Other comprehensive (loss) income $ (14,828) $ 28,961 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of At the Market Program | The following table presents information about the 2022 ATM Program and the Company's prior ATM Programs: Program Name Date Established Date Terminated Maximum Sales Authorization Gross Sales through March 31, 2023 2019 ATM Program August 2019 June 2020 $ 200,000 $ 184,400 2020 ATM Program June 2020 July 2021 $ 250,000 $ 166,800 2021 ATM Program July 2021 May 2022 $ 350,000 $ 348,140 2022 ATM Program May 2022 $ 500,000 $ 96,108 The following table details information related to activity under the ATM Program for each period presented: (in thousands, except share and per share data) Three months ended March 31, 2023 2022 Shares of common stock sold (1) 857,643 6,382,994 Weighted average sale price per share $ 24.12 $ 25.01 Gross proceeds $ 20,689 $ 159,641 Net proceeds $ 20,651 $ 158,059 _____________________________________ (1) During the three months ended March 31, 2023, the Company also issued an additional 957,453 shares of common stock which were previously sold on a forward basis under the ATM Program and were unsettled as of December 31, 2022. |
Schedule of Quarterly Cash Dividends | During the three months ended March 31, 2023 and 2022, the Company’s board of directors declared the following quarterly cash dividends on common stock: Date Declared Record Date Date Paid Dividend per Share of Common Stock Total Dividend March 7, 2023 March 31, 2023 April 14, 2023 $ 0.275 $ 41,031 March 14, 2022 March 31, 2022 April 13, 2022 $ 0.26 $ 34,188 |
Equity Based Compensation (Tabl
Equity Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Information about RSAs and RSUs | The following table presents information about the Company’s RSAs and RSUs during the three months ended March 31, 2023 and 2022: Restricted Stock Awards Restricted Stock Units Shares Wtd. Avg. Grant Date Fair Value Units Wtd. Avg. Grant Date Fair Value Unvested, January 1, 2022 18,904 $ 14.12 454,692 $ 29.39 Granted — — 568,706 27.31 Vested (9,865) 14.12 (200,427) 24.46 Forfeited — — — — Unvested, March 31, 2022 9,039 $ 14.12 822,971 $ 29.15 Unvested, January 1, 2023 9,039 $ 14.12 817,380 $ 30.26 Granted — — 351,663 32.85 Vested (9,039) 14.12 (324,360) 27.00 Forfeited — — (6,786) 24.65 Unvested, March 31, 2023 — $ — 837,897 $ 32.65 The following table presents information about the Company’s RSAs for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Compensation cost recognized in general and administrative expense $ 2 $ 32 Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings — 2 Fair value of shares vested during the period 128 139 The following table presents information about the Company’s RSUs for the periods presented: Three months ended March 31, (in thousands) 2023 2022 Compensation cost recognized in general and administrative expense $ 2,719 $ 2,804 Dividend equivalents declared and charged directly to distributions in excess of cumulative earnings 101 88 Fair value of units vested during the period 8,759 4,903 |
Schedule of Unrecognized Compensation Cost | The following table presents information about the Company’s RSAs as of the dates presented: (Dollars in thousands) March 31, December 31, Total unrecognized compensation cost $ — $ 2 Weighted average period over which compensation cost will be recognized (in years) — 0.1 The following table presents information about the Company’s RSUs as of the dates presented: (Dollars in thousands) March 31, December 31, Total unrecognized compensation cost $ 20,056 $ 13,761 Weighted average period over which compensation cost will be recognized (in years) 2.7 2.8 |
Schedule of Assumptions Used in Measurement of Grant Date Fair Value of Total Shareholder Return RSUs Using Monte Carlo Simulation Model | The grant date fair value of the TSR RSUs was measured using a Monte Carlo simulation model based on the following assumptions: Grant Year 2023 2022 Volatility 37% 54% Risk free rate 4.36% 1.68% |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | 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): Three months ended March 31, (dollar amounts in thousands) 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 43,056 $ 26,818 Less: net income attributable to non-controlling interests (160) (119) Less: net income allocated to unvested RSAs and RSUs (101) (90) Net income available for common stockholders: basic 42,795 26,609 Net income attributable to non-controlling interests 160 119 Net income available for common stockholders: diluted $ 42,955 $ 26,728 Denominator for basic and diluted earnings per share: Weighted average common shares outstanding 144,406,747 126,849,066 Less: weighted average number of shares of unvested RSAs (703) (9,808) Weighted average shares outstanding used in basic net income per share 144,406,044 126,839,258 Effects of dilutive securities: (1) OP Units 553,847 553,847 Unvested RSAs and RSUs 482,013 530,394 Forward Sales 558,103 — Weighted average shares outstanding used in diluted net income per share 146,000,007 127,923,499 _____________________________________ |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Matching Contributions for Defined Contribution Retirement Savings Plan | The following table presents the matching contributions made by the Company for the three months ended March 31, 2023 and 2022: Three months ended March 31, (in thousands) 2023 2022 401(k) matching contributions $ 154 $ 170 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Values of Financial Assets Measured at Recurring Basis | The fair values of these financial assets and liabilities were determined using the following input levels as of the dates presented: Net Carrying Value Fair Value Measurements Using Fair Value Hierarchy (in thousands) Fair Value Level 1 Level 2 Level 3 March 31, 2023 Financial assets (liabilities): Interest rate swaps $ 30,616 $ 30,616 $ — $ 30,616 $ — Senior unsecured notes (1) (395,426) (295,720) (295,720) — — December 31, 2022 Financial assets (liabilities): Interest rate swaps $ 45,603 $ 45,603 $ — $ 45,603 $ — Senior unsecured notes (1) (395,286) (292,120) (292,120) — — _____________________________________ (1) Carrying value is net of $3.9 million and $4.0 million of net deferred financing costs and $0.6 million and $0.7 million of net discount as of March 31, 2023 and December 31, 2022, respectively. |
Schedule of Fair Values of Real Estate Investments Measured at Nonrecurring Basis | The fair values of real estate investments that were impaired as of the dates presented were determined using the following input levels. Net Carrying Value Fair Value Measurements Using Fair Value Hierarchy (in thousands) Fair Value Level 1 Level 2 Level 3 March 31, 2023 Non-financial assets: Long-lived assets $ 2,100 $ 2,100 $ — $ — $ 2,100 December 31, 2022 Non-financial assets: Long-lived assets $ 12,144 $ 12,144 $ — $ — $ 12,144 |
Schedule of Fair Value Valuation Techniques | (dollar amounts in thousands) Fair Value Valuation Techniques Significant Unobservable Inputs Non-financial assets: Long-lived assets Restaurant - Jacksonville, FL $ 1,750 Sales comparison approach Non-binding sales agreement $ 1,750 Convenience Store - Deming, NM 100 Sales comparison approach Non-binding sales agreement 100 Restaurant - Davenport, IA 250 Sales comparison approach Non-binding listing agreement 250 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | |||
Mar. 31, 2023 USD ($) segment option | Dec. 31, 2022 USD ($) | Mar. 31, 2022 USD ($) | ||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of reportable segments | segment | 1 | |||
Deposits | $ 70,958,000 | $ 62,345,000 | $ 14,255,000 | |
Deposits in excess of amount insured by FDIC | 70,700,000 | 62,100,000 | ||
Capitalized offering costs | 90,700,000 | 90,300,000 | ||
Uncertain tax positions | 0 | 0 | ||
Uncertain tax positions, interest and penalties | 0 | 0 | ||
Liabilities | [1] | 1,505,720,000 | 1,503,262,000 | |
Variable Interest Entity, Not Primary Beneficiary | Mortgage Receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Liabilities | $ 0 | $ 0 | ||
Buildings | ||||
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 | |||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Lease-up period | 6 months | |||
Number of multi-year renewal options | option | 1 | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Lease-up period | 12 months | |||
Operating Partnership Unit | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Percentage of ownership interests in operating partnership | 99.60% | 99.60% | ||
[1] The Company’s consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). See Note 2 — Summary of Significant Accounting Policies. As of March 31, 2023 and December 31, 2022, all of the assets and liabilities of the Company were held by its operating partnership, Essential Properties, L.P., a consolidated VIE, with the exception of $41.0 million and $39.2 million, respectively, of dividends payable. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Depreciation on Real Estate Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Depreciation on real estate investments | $ 22,129 | $ 18,555 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Provisions for Impairment of Long Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Provision for impairment of real estate | $ 677 | $ 3,935 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Contingent Rent (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Contingent rent | $ 176 | $ 156 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Adjustment to Rental Revenue for Tenant Credit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Adjustment to increase rental revenue for tenant credit | $ 160 | $ 568 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Mortgage Loan-Related VIEs (Details) $ in Thousands | Mar. 31, 2023 USD ($) entity | Dec. 31, 2022 USD ($) entity |
Variable Interest Entity [Line Items] | ||
Aggregate carrying value | $ 231,731 | $ 240,035 |
Mortgage Receivable | Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Number of VIEs | entity | 21 | 21 |
Aggregate carrying value | $ 225,662 | $ 233,351 |
Investments - Schedule of Real
Investments - Schedule of Real Estate Investment Portfolio (Details) - property | Mar. 31, 2023 | Dec. 31, 2022 |
Investments [Abstract] | ||
Owned properties | 1,527 | 1,489 |
Properties securing investments in mortgage loans | 150 | 153 |
Ground lease interests | 11 | 11 |
Total number of investments | 1,688 | 1,653 |
Investments - Schedule of Rea_2
Investments - Schedule of Real Estate Investment Portfolio, Footnotes (Details) | Mar. 31, 2023 loan property | Dec. 31, 2022 property loan |
Investments [Abstract] | ||
Number of properties owned as direct financing receivables | property | 7 | 8 |
Number of mortgage loans receivable | loan | 20 | 20 |
Investments - Schedule of Gross
Investments - Schedule of Gross Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Investments [Abstract] | ||||
Real estate investments, at cost | $ 3,977,356 | $ 3,810,570 | ||
Loans and direct financing lease receivables, net | 231,731 | 240,035 | ||
Real estate investments held for sale, net | 5,398 | 4,780 | $ 14,488 | $ 15,434 |
Total gross investments | $ 4,214,485 | $ 4,055,385 | $ 3,562,762 | $ 3,355,561 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) lease loan option investment | Mar. 31, 2022 USD ($) investment | Dec. 31, 2022 USD ($) loan lease | Dec. 31, 2021 USD ($) | |
Investments [Abstract] | ||||
Number of acquisitions individually represented more than five percentage of total investment activity | investment | 0 | 0 | ||
Schedule of Investments [Line Items] | ||||
Number of loan receivable agreements secured | loan | 20 | 23 | ||
Number of loan receivable agreements secured by lease | lease | 3 | 3 | ||
Aggregate carrying value of loans | $ 230,900 | $ 238,700 | ||
Credit risk, maximum exposure | 230,900 | |||
Net investments accounted for as direct financing lease receivables | 1,545 | 2,106 | ||
Allowance for credit losses | $ 735 | $ 874 | $ 765 | $ 814 |
Minimum | ||||
Schedule of Investments [Line Items] | ||||
Number of renewal options | option | 1 |
Investments - Schedule of Infor
Investments - Schedule of Information about Acquisition Activity (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) property | Mar. 31, 2022 USD ($) property | |
Investments [Abstract] | ||
Number of properties | property | 56 | 47 |
Purchase price allocation | ||
Land and improvements | $ 58,464 | $ 83,342 |
Building and improvements | 128,805 | 97,178 |
Construction in progress | 14,520 | 5,687 |
Intangible lease assets | 570 | 0 |
Total purchase price | 202,359 | 186,207 |
Intangible lease liabilities | 0 | 0 |
Purchase price (including acquisition costs) | $ 202,359 | $ 186,207 |
Investments - Schedule of Inf_2
Investments - Schedule of Information about Acquisition Activity, Footnotes (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) property | Mar. 31, 2022 USD ($) | |
Investments [Abstract] | ||
Number of properties acquired, fee interest | 55 | |
Number of properties acquired, subject to ground lease | 1 | |
Capitalized interest expense | $ | $ 0.4 | $ 0.1 |
Investments - Summary of Gross
Investments - Summary of Gross Investment Activity (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 USD ($) investmentLocation | Mar. 31, 2022 USD ($) investmentLocation | Dec. 31, 2022 USD ($) | |
Number of Investment Locations | |||
Beginning balance | investmentLocation | 1,653 | 1,451 | |
Acquisitions of and additions to real estate investments | investmentLocation | 56 | 47 | |
Sales of investments in real estate | investmentLocation | (16) | (6) | |
Relinquishment of property at end of ground lease term | investmentLocation | (1) | ||
Investments in loans receivable | investmentLocation | 1 | 58 | |
Principal collections on and settlements of loans and direct financing lease receivables | investmentLocation | (5) | (5) | |
Ending balance | investmentLocation | 1,688 | 1,545 | |
Dollar Amount of Investments | |||
Beginning balance | $ 4,055,385 | $ 3,355,561 | |
Acquisitions of and additions to real estate investments | 203,518 | 195,790 | |
Sales of investments in real estate | (33,641) | (18,531) | |
Relinquishment of properties at end of ground lease term | (837) | ||
Provision for impairment of real estate | (677) | (3,935) | |
Investments in loans receivable | 3,400 | 54,277 | |
Principal collections on and settlements of loans and direct financing lease receivables | (11,734) | (20,336) | |
Other | (929) | (64) | |
Ending balance | 4,214,485 | 3,562,762 | |
Less: accumulated depreciation and amortization | (297,362) | (220,711) | $ (276,307) |
Net investments | $ 3,917,123 | $ 3,342,051 | $ 3,779,078 |
Investments - Summary of Gros_2
Investments - Summary of Gross Investment Activity, Footnotes (Details) $ in Millions | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 property | Mar. 31, 2022 USD ($) property |
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 1,688 | 1,653 | |
Accumulated depreciation | $ | $ 260.7 | $ 189.7 | |
Tenanted Properties | |||
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 1 | 4 | |
Vacant Properties | |||
Real Estate Properties [Line Items] | |||
Number of property locations of investments | 2 |
Investments - Schedule of Loans
Investments - Schedule of Loans Receivable (Details) $ in Thousands | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal balance outstanding | $ 230,921 | $ 238,695 |
Mortgage Receivable 8.00% Due at 2039 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 2 | |
Effective Interest Rate | 8.80% | |
Stated Interest Rate | 8% | |
Principal balance outstanding | $ 12,000 | 12,000 |
Mortgage Receivable 7.75% Due at 2039 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 2 | |
Effective Interest Rate | 8.53% | |
Stated Interest Rate | 7.75% | |
Principal balance outstanding | $ 7,300 | 7,300 |
Mortgage Receivable 7.70% Due at 2034 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 69 | |
Effective Interest Rate | 8.16% | |
Stated Interest Rate | 7.70% | |
Principal balance outstanding | $ 51,000 | 51,000 |
Mortgage Receivable 7.65% Due at 2040 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 8.42% | |
Stated Interest Rate | 7.65% | |
Principal balance outstanding | $ 5,300 | 5,300 |
Mortgage Receivables 8.50% Due 2022 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 3 | |
Effective Interest Rate | 8.79% | |
Stated Interest Rate | 8.50% | |
Principal balance outstanding | $ 2,324 | 2,324 |
Mortgage Receivables 7.00% Due 2023 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 7% | |
Stated Interest Rate | 7% | |
Principal balance outstanding | $ 550 | 600 |
Mortgage Receivables 8.25% Due 2023 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 3 | |
Effective Interest Rate | 8.30% | |
Stated Interest Rate | 8.25% | |
Principal balance outstanding | $ 3,146 | 3,146 |
Mortgage Receivables 6.40% Due 2036 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 2 | |
Effective Interest Rate | 6.87% | |
Stated Interest Rate | 6.40% | |
Principal balance outstanding | $ 2,520 | 2,520 |
Mortgage Receivables 7.00% Due 2036 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 0 | |
Effective Interest Rate | 7.51% | |
Stated Interest Rate | 7% | |
Principal balance outstanding | $ 0 | 2,673 |
Mortgage Receivables 8.25% Due 2023 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 2 | |
Effective Interest Rate | 8.29% | |
Stated Interest Rate | 8.25% | |
Principal balance outstanding | $ 2,389 | 2,389 |
Mortgage Receivables 8.00% Due 2051 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 5.72% | |
Stated Interest Rate | 8% | |
Principal balance outstanding | $ 24,100 | 24,100 |
Mortgage Receivables 7.10% Due 2036 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 7.44% | |
Stated Interest Rate | 7.10% | |
Principal balance outstanding | $ 1,408 | 9,808 |
Mortgage Receivables 6.80% Due 2036 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 7 | |
Effective Interest Rate | 7.30% | |
Stated Interest Rate | 6.80% | |
Principal balance outstanding | $ 35,474 | 35,474 |
Mortgage Receivables 7.20% Due 2036 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 7.73% | |
Stated Interest Rate | 7.20% | |
Principal balance outstanding | $ 2,470 | 2,470 |
Mortgage Receivables 8.00% Due 2023 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 8% | |
Stated Interest Rate | 8% | |
Principal balance outstanding | $ 1,754 | 1,754 |
Mortgage Receivables 7.00% Due 2027 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 37 | |
Effective Interest Rate | 6.80% | |
Stated Interest Rate | 7% | |
Principal balance outstanding | $ 26,307 | 26,307 |
Mortgage Receivables 7.20% Due 2037 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 6.99% | |
Stated Interest Rate | 7.20% | |
Principal balance outstanding | $ 3,600 | 3,600 |
Mortgage Receivables 8.25% Due 2024 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 8.40% | |
Stated Interest Rate | 8.25% | |
Principal balance outstanding | $ 760 | 760 |
Mortgage Receivables 8.05% Due 2037 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 4 | |
Effective Interest Rate | 8.64% | |
Stated Interest Rate | 8.05% | |
Principal balance outstanding | $ 12,250 | 12,250 |
Mortgage Receivables 8.25% Due 2037 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 10 | |
Effective Interest Rate | 8.93% | |
Stated Interest Rate | 8.25% | |
Principal balance outstanding | $ 28,938 | 28,938 |
Mortgage Receivables 8.25% Due 2038 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 8.82% | |
Stated Interest Rate | 8.25% | |
Principal balance outstanding | $ 3,400 | 0 |
Leasehold Interest 2.25% Due 2034 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 2.25% | |
Principal balance outstanding | $ 976 | 992 |
Leasehold Interest 2.41% Due 2034 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 2.41% | |
Principal balance outstanding | $ 1,450 | 1,473 |
Leasehold Interest 4.97% Due 2038 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Secured Properties | property | 1 | |
Effective Interest Rate | 4.97% | |
Principal balance outstanding | $ 1,505 | $ 1,517 |
Investments - Scheduled of Prin
Investments - Scheduled of Principal Payments Due under Loans Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investments [Abstract] | ||
April 1 - December 31, 2023 | $ 7,995 | |
2024 | 3,304 | |
2025 | 234 | |
2026 | 248 | |
2027 | 26,570 | |
Thereafter | 192,570 | |
Total | $ 230,921 | $ 238,695 |
Investments - Schedule of Direc
Investments - Schedule of Direct Financing Lease Receivables (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investments [Abstract] | ||
Minimum lease payments receivable | $ 1,901 | $ 2,812 |
Estimated unguaranteed residual value of leased assets | 250 | 251 |
Unearned income from leased assets | (606) | (957) |
Net investment | $ 1,545 | $ 2,106 |
Investments - Scheduled Future
Investments - Scheduled Future Minimum Non-cancelable Base Rental Payments Under Direct Financing Lease Receivables (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Investments [Abstract] | |
April 1 - December 31, 2023 | $ 192 |
2024 | 210 |
2025 | 178 |
2026 | 167 |
2027 | 143 |
Thereafter | 1,011 |
Total | $ 1,901 |
Investments - Summary of Change
Investments - Summary of Changes to Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 765 | $ 814 |
Current period change in provision for expected credit losses | (30) | 60 |
Write-offs charged | 0 | 0 |
Recoveries | 0 | 0 |
Balance at end of period | $ 735 | $ 874 |
Investments - Summary of Signif
Investments - Summary of Significant Credit Quality Indicators Measured at Amortized Cost (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2023 | $ 3,400 |
2022 | 112,465 |
2021 | 56,202 |
2020 | 10,578 |
2019 | 48,276 |
Prior | 1,545 |
Total Amortized Costs Basis | 232,467 |
LTV less than 60% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2023 | 0 |
2022 | 23,000 |
2021 | 0 |
2020 | 0 |
2019 | 28,000 |
Prior | 1,080 |
Total Amortized Costs Basis | 52,080 |
LTV 60%-70% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2023 | 0 |
2022 | 0 |
2021 | 29,643 |
2020 | 0 |
2019 | 0 |
Prior | 0 |
Total Amortized Costs Basis | 29,643 |
LTV greater than 70% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2023 | 3,400 |
2022 | 89,465 |
2021 | 26,559 |
2020 | 10,578 |
2019 | 20,276 |
Prior | 466 |
Total Amortized Costs Basis | $ 150,744 |
Investments - Activity in Real
Investments - Activity in Real Estate Investments and Intangible Lease Liabilities Held for Sale (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) property | Mar. 31, 2022 USD ($) property | |
Number of Properties | ||
Beginning balance | property | 4 | 9 |
Transfers to held for sale classification | property | 3 | 1 |
Sales | property | (3) | (4) |
Transfers to held and used classification | property | 0 | 0 |
Ending balance | property | 4 | 6 |
Real Estate Investments | ||
Beginning balance | $ 4,780 | $ 15,434 |
Transfers to held for sale classification | 3,701 | 4,979 |
Sales | (3,083) | (5,925) |
Transfers to held and used classification | 0 | 0 |
Ending balance | 5,398 | 14,488 |
Intangible Lease Liabilities | ||
Beginning balance | 0 | 0 |
Transfers to held for sale classification | 0 | 0 |
Sales | 0 | 0 |
Transfers to held and used classification | 0 | 0 |
Ending balance | 0 | 0 |
Net Carrying Value | ||
Beginning balance | 4,780 | 15,434 |
Transfers to held for sale classification | 3,701 | 4,979 |
Sales | (3,083) | (5,925) |
Transfers to held and used classification | 0 | 0 |
Ending balance | $ 5,398 | $ 14,488 |
Investments - Schedule of Exter
Investments - Schedule of External Customers by Geographic Areas (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Rental Revenue | Texas | Geographic Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 13.20% | 13.30% |
Investments - Schedule of Intan
Investments - Schedule of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross carrying amount | $ 87,851 | $ 88,364 |
Intangible assets, accumulated amortization | 36,635 | 35,134 |
Intangible assets, net carrying amount | 51,216 | 53,230 |
Intangible market lease liabilities, gross carrying amount | 15,527 | 15,325 |
Intangible market lease liabilities, accumulated amortization | 3,991 | 3,774 |
Intangible market lease liabilities, net carrying amount | 11,536 | 11,551 |
In-place leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross carrying amount | 76,597 | 77,096 |
Intangible assets, accumulated amortization | 31,544 | 30,217 |
Intangible assets, net carrying amount | 45,053 | 46,879 |
Intangible market lease assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross carrying amount | 11,254 | 11,268 |
Intangible assets, accumulated amortization | 5,091 | 4,917 |
Intangible assets, net carrying amount | $ 6,163 | $ 6,351 |
Investments - Summary of Remain
Investments - Summary of Remaining Weighted Average Amortization Periods for Intangible Assets and Liabilities (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |
Years remaining, intangible assets | 9 years |
Years remaining, intangible market lease liabilities | 9 years 3 months 18 days |
In-place leases | |
Finite-Lived Intangible Assets [Line Items] | |
Years remaining, in-place leases | 8 years 8 months 12 days |
Intangible market lease assets | |
Finite-Lived Intangible Assets [Line Items] | |
Years remaining, intangible assets | 11 years |
Investments - Summary of Amorti
Investments - Summary of Amortization and Accretion Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Amortization of In-Place Leases, Amortization and Accretion of Above- and Below-Market Lease Assets and Liabilities [Line Items] | ||
Amortization of in-place leases | $ 1,627 | $ 1,705 |
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 | (1) | 1 |
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 | $ (84) | $ (88) |
Investments - Summary of Projec
Investments - Summary of Projected Amortization Expenses for Next Five Years (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Below Market Lease Liabilities | |
April 1 - December 31, 2023 | $ 507 |
2024 | 681 |
2025 | 682 |
2026 | 686 |
2027 | 711 |
Thereafter | 8,269 |
Total | 11,536 |
Net Adjustment to Rental Revenue | |
April 1 - December 31, 2023 | (10) |
2024 | 23 |
2025 | 32 |
2026 | 45 |
2027 | 92 |
Thereafter | 5,191 |
Total | 5,373 |
In-place leases | |
Intangible Assets | |
April 1 - December 31, 2023 | 4,572 |
2024 | 5,489 |
2025 | 4,241 |
2026 | 3,936 |
2027 | 3,408 |
Thereafter | 23,407 |
Total | 45,053 |
Above Market Lease Asset | |
Intangible Assets | |
April 1 - December 31, 2023 | 517 |
2024 | 658 |
2025 | 650 |
2026 | 641 |
2027 | 619 |
Thereafter | 3,078 |
Total | $ 6,163 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | Mar. 31, 2023 USD ($) option | Dec. 31, 2022 USD ($) |
Lessor, Lease, Description [Line Items] | ||
ROU assets | $ 8,300 | $ 7,300 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Rent receivables, prepaid expenses and other assets, net | Rent receivables, prepaid expenses and other assets, net |
Lease liabilities | $ 9,287 | $ 9,000 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accrued liabilities and other payables | Accrued liabilities and other payables |
Minimum | ||
Lessor, Lease, Description [Line Items] | ||
Number of renewal options | option | 1 |
Leases - Scheduled Future Minim
Leases - Scheduled Future Minimum Base Rental Payments due to be Received Under Remaining Non-Cancelable Term of Operating Leases (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Leases [Abstract] | |
April 1 - December 31, 2023 | $ 233,959 |
2024 | 314,453 |
2025 | 314,754 |
2026 | 317,544 |
2027 | 317,762 |
Thereafter | 3,416,993 |
Total | $ 4,915,465 |
Leases - Components of Fixed an
Leases - Components of Fixed and Variable Lease Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Fixed lease revenues | $ 77,465 | $ 65,113 |
Variable lease revenues | 730 | 660 |
Total lease revenues | $ 78,195 | $ 65,773 |
Leases - Information Related to
Leases - Information Related to Measurement of Lease Liabilities (Details) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term (in years) | 23 years 1 month 6 days | 22 years 10 months 24 days |
Weighted average discount rate | 6.16% | 6.09% |
Leases - Details of Rent Expens
Leases - Details of Rent Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Lessee, Lease, Description [Line Items] | ||
Variable rent expense | $ 0 | $ 0 |
Total rent expense | 375 | 368 |
Ground Leases | ||
Lessee, Lease, Description [Line Items] | ||
Fixed rent expenses | 247 | 240 |
Office And Equipment Leases | ||
Lessee, Lease, Description [Line Items] | ||
Fixed rent expenses | $ 128 | $ 128 |
Leases - Summary of Future Leas
Leases - Summary of Future Lease Payments due from Company Under Ground, Office and Equipment Operating Leases (ASC 842) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Lessee, Lease, Description [Line Items] | ||
April 1 - December 31, 2023 | $ 1,084 | |
2024 | 1,341 | |
2025 | 1,244 | |
2026 | 711 | |
2027 | 724 | |
Thereafter | 16,263 | |
Total | 21,367 | |
Present value discount | (12,080) | |
Lease liabilities | 9,287 | $ 9,000 |
Office and Equipment Leases | ||
Lessee, Lease, Description [Line Items] | ||
April 1 - December 31, 2023 | 394 | |
2024 | 531 | |
2025 | 538 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total | 1,463 | |
Ground Leases to be Paid by the Company | ||
Lessee, Lease, Description [Line Items] | ||
April 1 - December 31, 2023 | 96 | |
2024 | 28 | |
2025 | 0 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total | 124 | |
Ground Leases to be Paid Directly by the Company’s Tenants | ||
Lessee, Lease, Description [Line Items] | ||
April 1 - December 31, 2023 | 594 | |
2024 | 782 | |
2025 | 706 | |
2026 | 711 | |
2027 | 724 | |
Thereafter | 16,263 | |
Total | $ 19,780 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Principal outstanding | $ 1,430,000 | $ 1,430,000 |
Weighted-average interest rates | 4.90% | 4.60% |
Senior unsecured notes | Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Principal outstanding | $ 400,000 | $ 400,000 |
Weighted-average interest rates | 3% | 3% |
Unsecured term loans | 2024 Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Principal outstanding | $ 200,000 | $ 200,000 |
Weighted-average interest rates | 5.50% | 5.30% |
Unsecured term loans | 2027 Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Principal outstanding | $ 430,000 | $ 430,000 |
Weighted-average interest rates | 5.70% | 5.30% |
Unsecured term loans | 2028 Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Principal outstanding | $ 400,000 | $ 400,000 |
Weighted-average interest rates | 5.60% | 5.30% |
Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Principal outstanding | $ 0 | $ 0 |
Weighted-average interest rates | 0% | 0% |
Long-Term Debt - Summary of Sch
Long-Term Debt - Summary of Scheduled Principal Payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | $ 0 |
2024 | 200,000 |
2025 | 0 |
2026 | 0 |
2027 | 430,000 |
Thereafter | 800,000 |
Total | 1,430,000 |
Senior Unsecured Notes | |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 400,000 |
Total | 400,000 |
Unsecured term loans | 2024 Term Loan | Line of Credit | |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | 0 |
2024 | 200,000 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | 200,000 |
Unsecured term loans | 2027 Term Loan | Line of Credit | |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 430,000 |
Thereafter | 0 |
Total | 430,000 |
Unsecured term loans | 2028 Term Loan | Line of Credit | |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 400,000 |
Total | 400,000 |
Revolving Credit Facility | Line of Credit | |
Debt Instrument [Line Items] | |
April 1 - December 31, 2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | $ 0 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility, 2024 Term Loan And 2028 Term Loan - Additional Information (Details) | 1 Months Ended | 3 Months Ended | ||||||
Apr. 12, 2019 | Oct. 31, 2022 USD ($) | Jul. 31, 2022 USD ($) | Feb. 28, 2022 USD ($) option | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Apr. 30, 2019 USD ($) | |
Line of Credit Facility [Line Items] | ||||||||
Loss on debt extinguishment | $ 0 | $ 2,138,000 | ||||||
Revolving Credit Facility | Line of Credit | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Aggregate revolving credit commitments | $ 300,000,000 | |||||||
Total deferred finance costs, net | 3,400,000 | $ 3,700,000 | ||||||
Line of credit facility, unused borrowing capacity | $ 600,000,000 | $ 600,000,000 | ||||||
Revolving Credit Facility | Line of Credit | Amended Credit Agreement | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Aggregate revolving credit commitments | 400,000,000 | |||||||
Credit facility term | 4 years | |||||||
Extension term | 6 months | |||||||
Revolving Credit Facility | Line of Credit | Credit Agreement | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Aggregate revolving credit commitments | $ 600,000,000 | |||||||
Accordion feature to revolving credit commitment | $ 600,000,000 | |||||||
Loss on debt extinguishment | $ 100,000 | |||||||
Extension term | 6 months | |||||||
Number of extension options | option | 2 | |||||||
Unsecured term loans | Line of Credit | 2024 Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum additional availability of the facility | $ 200,000,000 | |||||||
Unsecured term loans | Line of Credit | 2028 Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Aggregate revolving credit commitments | $ 600,000,000 | |||||||
Proceeds from debt | $ 150,000,000 | $ 250,000,000 | ||||||
Consolidated leverage ratio, maximum | 0.35 | |||||||
Unsecured term loans | Line of Credit | 2028 Term Loan, Second Tranche | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Aggregate revolving credit commitments | $ 400,000,000 |
Long-Term Debt - Summary of Inf
Long-Term Debt - Summary of Information about Revolving Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Line of Credit Facility, Roll Forward [Roll Forward] | ||
Beginning balance | $ 0 | |
Borrowings | 0 | $ 148,000 |
Repayments | 0 | (145,000) |
Ending balance | 0 | |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility, Roll Forward [Roll Forward] | ||
Beginning balance | 0 | 144,000 |
Borrowings | 0 | 148,000 |
Repayments | 0 | (145,000) |
Ending balance | $ 0 | $ 147,000 |
Long-Term Debt - Information Ab
Long-Term Debt - Information About Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Senior Unsecured Notes | Senior Unsecured Notes | ||
Line of Credit Facility [Line Items] | ||
Interest expense | $ 2,928 | $ 2,927 |
Amortization of deferred financing costs and original issue discount | 140 | 141 |
Total | 3,068 | 3,068 |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Interest expense | 225 | 834 |
Amortization of deferred financing costs | 295 | 318 |
Total | 520 | 1,152 |
Unsecured term loans | Line of Credit | April 2024 and February 2027 and February 2028 Term Loan Facilities | ||
Line of Credit Facility [Line Items] | ||
Interest expense | 14,040 | 2,341 |
Amortization of deferred financing costs | 281 | 167 |
Total | $ 14,321 | $ 2,508 |
Long-Term Debt - 2027 Term Loan
Long-Term Debt - 2027 Term Loan - Additional Information (Details) - USD ($) | 3 Months Ended | 4 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2020 | Dec. 31, 2022 | Nov. 26, 2019 | |
Line of Credit Facility [Line Items] | |||||
Loss on debt extinguishment | $ 0 | $ 2,138,000 | |||
Unsecured term loans | Line of Credit | 2027 Term Loan | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 430,000,000 | ||||
Aggregate revolving credit commitments | 430,000,000 | ||||
Proceeds from debt | $ 430,000,000 | ||||
Loss on debt extinguishment | $ 2,100,000 | ||||
Maximum additional availability of the facility | $ 500,000,000 | ||||
Total deferred finance costs, net | $ 4,200,000 | $ 4,500,000 |
Long-Term Debt - Senior Unsecur
Long-Term Debt - Senior Unsecured Note - Additional Information (Details) - 2031 Senior Notes - Senior Unsecured Notes - USD ($) | 1 Months Ended | 3 Months Ended | |
Jun. 30, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Notes issued | $ 400,000,000 | $ 400,000,000 | $ 400,000,000 |
Stated Interest Rate | 2.95% | 2.95% | 2.95% |
Proceeds from issuance of Senior Unsecured Notes | $ 396,600,000 | ||
Percent of principal note amount issued | 99.80% | ||
Deferred finance costs | $ 4,700,000 | ||
Offering discount | $ 800,000 | $ 600,000 | $ 700,000 |
Debt instrument, redemption price, percentage | 100% | ||
Total deferred finance costs, net | $ 3,900,000 | $ 4,000,000 |
Long-Term Debt - Senior Unsec_2
Long-Term Debt - Senior Unsecured Note - Schedule of Interest Expense and Amounts Outstanding (Details) - 2031 Senior Notes - Senior Unsecured Notes - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2021 |
Debt Instrument [Line Items] | |||
Stated Interest Rate | 2.95% | 2.95% | 2.95% |
Credit facility | $ 400,000,000 | $ 400,000,000 | $ 400,000,000 |
Derivative and Hedging Activi_3
Derivative and Hedging Activities - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Derivative [Line Items] | |||
Derivatives reclassified from other comprehensive income | $ 24.6 | ||
Derivative asset, including accrued interest | 37 | $ 48.2 | |
Derivative liability, including accrued interest | 6.2 | 2.4 | |
Derivative asset, termination value | 30.8 | $ 45.9 | |
Cash Flow Hedging | Derivatives Designated as Hedging Instruments | |||
Derivative [Line Items] | |||
Gain (loss) on change in fair value | $ 5.3 | $ (2.5) |
Derivative and Hedging Activi_4
Derivative and Hedging Activities - Summary of Notional Amount and Fair Value of Instruments (Details) - Derivatives Designated as Hedging Instruments - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Notional value | $ 1,030,000,000 | |
Fair value of Asset/(Liability)(2) | $ 30,616,000 | $ 45,603,000 |
Interest Rate Swap One | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.96% | |
Notional value | $ 100,000,000 | |
Fair value of Asset/(Liability)(2) | $ 2,751,000 | 3,545,000 |
Interest Rate Swap Two | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.95% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ 1,380,000 | 1,781,000 |
Interest Rate Swap Three | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.94% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ 1,380,000 | 1,777,000 |
Interest Rate Swap Four | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.52% | |
Notional value | $ 175,000,000 | |
Fair value of Asset/(Liability)(2) | $ 11,848,000 | 14,685,000 |
Interest Rate Swap Five | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.51% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ 3,447,000 | 4,248,000 |
Interest Rate Swap Six | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.49% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ 1,723,000 | 2,120,000 |
Interest Rate Swap Seven | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.26% | |
Notional value | $ 100,000,000 | |
Fair value of Asset/(Liability)(2) | $ 7,693,000 | 9,324,000 |
Interest Rate Swap Eight | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 1.28% | |
Notional value | $ 80,000,000 | |
Fair value of Asset/(Liability)(2) | $ 6,080,000 | 7,418,000 |
Interest Rate Swap Nine | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.19% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ 326,000 | 1,166,000 |
Interest Rate Swap Ten | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.35% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ (23,000) | 804,000 |
Interest Rate Swap Eleven | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.36% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (26,000) | 387,000 |
Interest Rate Swap Twelve | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.43% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ (206,000) | 612,000 |
Interest Rate Swap Thirteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.71% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ (807,000) | (12,000) |
Interest Rate Swap Fourteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.70% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (413,000) | (15,000) |
Interest Rate Swap Fifteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 4% | |
Notional value | $ 50,000,000 | |
Fair value of Asset/(Liability)(2) | $ (1,464,000) | (693,000) |
Interest Rate Swap Sixteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 3.95% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (678,000) | (293,000) |
Interest Rate Swap Seventeen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 4.03% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (778,000) | (396,000) |
Interest Rate Swap Eighteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 4.06% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (808,000) | (427,000) |
Interest Rate Swap Nineteen | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Rate Paid by Company | 4.07% | |
Notional value | $ 25,000,000 | |
Fair value of Asset/(Liability)(2) | $ (809,000) | $ (428,000) |
Derivative and Hedging Activi_5
Derivative and Hedging Activities - Summary of Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive (loss) income | $ (14,828) | $ 28,961 |
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other comprehensive (loss) income | $ (14,828) | $ 28,961 |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Apr. 26, 2023 | Feb. 28, 2023 | Aug. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | May 31, 2022 | |
2022 ATM Program | ||||||
Class of Stock [Line Items] | ||||||
Authorized equity distribution program | $ 500,000,000 | $ 500,000,000 | ||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Shares of common stock sold (in shares) | 6,248,695 | 6,382,994 | ||||
Common Stock | Follow-On Offering | ||||||
Class of Stock [Line Items] | ||||||
Shares of common stock sold (in shares) | 8,855,000 | 8,740,000 | ||||
Number of shares sold pursuant to underwriter's option (in shares) | 1,155,000 | 1,140,000 | ||||
Price of shares sold (in USD per share) | $ 24.60 | $ 23 | ||||
Proceeds from shares sold | $ 208,900,000 | $ 192,600,000 | ||||
Common Stock | Follow-On Offering | Subsequent Event | ||||||
Class of Stock [Line Items] | ||||||
Proceeds from shares sold | $ 105,000,000 | |||||
Common stock sold (in shares) | 4,433,599 |
Equity - Schedule of Informatio
Equity - Schedule of Information about 2022 ATM and Prior Programs (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | May 31, 2022 | |
2019 ATM Program | ||
Subsidiary, Sale of Stock [Line Items] | ||
Authorized equity distribution program | $ 200,000,000 | |
Gross proceeds | 184,400,000 | |
2020 ATM Program | ||
Subsidiary, Sale of Stock [Line Items] | ||
Authorized equity distribution program | 250,000,000 | |
Gross proceeds | 166,800,000 | |
2021 ATM Program | ||
Subsidiary, Sale of Stock [Line Items] | ||
Authorized equity distribution program | 350,000,000 | |
Gross proceeds | 348,140,000 | |
2022 ATM Program | ||
Subsidiary, Sale of Stock [Line Items] | ||
Authorized equity distribution program | 500,000,000 | $ 500,000,000 |
Gross proceeds | $ 96,108,000 |
Equity - Schedule of At the Mar
Equity - Schedule of At the Market Program (Details) - ATM Program - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||
Shares of common stock sold (in shares) | 857,643 | 6,382,994 |
Weighted average sale price per share (in USD per share) | $ 24.12 | $ 25.01 |
Gross proceeds | $ 20,689 | $ 159,641 |
Net proceeds | $ 20,651 | $ 158,059 |
Shares sold on a forward basis, not yet settled (in shares) | 957,453 |
Equity - Summary of Quarterly C
Equity - Summary of Quarterly Cash Dividends (Details) - Common Stock - USD ($) $ / shares in Units, $ in Thousands | Mar. 07, 2023 | Mar. 14, 2022 |
Dividends Payable [Line Items] | ||
Dividend per Share of Common Stock (in USD per share) | $ 0.275 | $ 0.26 |
Total Dividend (in thousands) | $ 41,031 | $ 34,188 |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - shares | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2023 | |
Operating Partnership Unit | |||
Noncontrolling Interest [Line Items] | |||
Percentage of ownership interests in operating partnership | 99.60% | 99.60% | 99.60% |
Award exchange ratio | 1 | 1 | |
Outstanding period for distribution | 1 year | ||
Operating Partnership Unit | EPRT Holdings LLC | |||
Noncontrolling Interest [Line Items] | |||
Percentage of ownership interests in operating partnership | 0.40% | 0.40% | 0.40% |
Interest held in operating partnership (in shares) | 553,847 | 553,847 | 553,847 |
Eldridge Industries, LLC | Operating Partnership Unit | |||
Noncontrolling Interest [Line Items] | |||
Operating partnership units held (in shares) | 148,838,117 | 142,379,655 | |
Essential Properties OP GP LLC | |||
Noncontrolling Interest [Line Items] | |||
Percentage of general partner partnership interest owned | 1% |
Equity Based Compensation - Equ
Equity Based Compensation - Equity Incentive Plan - Additional Information (Details) | Mar. 31, 2023 shares |
Share-Based Payment Arrangement [Abstract] | |
Maximum number of shares issuable under plan (in shares) | 3,550,000 |
Equity Based Compensation - Sch
Equity Based Compensation - Schedule of Information about RSA and RSU Activity (Details) - $ / shares | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2019 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Restricted Stock Awards | ||||
Restricted Stock Awards | ||||
Beginning balance (in shares) | 9,039 | 18,904 | 18,904 | |
Granted (in shares) | 46,368 | 0 | 0 | |
Vested (in shares) | (9,039) | (9,865) | ||
Forfeited (in shares) | 0 | 0 | ||
Ending balance (in shares) | 0 | 9,039 | 9,039 | |
Restricted Stock Units | ||||
Beginning balance (in USD per share) | $ 14.12 | $ 14.12 | $ 14.12 | |
Granted (in USD per share) | 0 | 0 | ||
Vested (in USD per share) | 14.12 | 14.12 | ||
Forfeited (in USD per share) | 0 | 0 | ||
Ending balance (in USD per share) | $ 0 | $ 14.12 | $ 14.12 | |
Restricted Stock Units | ||||
Restricted Stock Awards | ||||
Beginning balance (in shares) | 817,380 | 454,692 | 454,692 | |
Granted (in shares) | 351,663 | 568,706 | ||
Vested (in shares) | (324,360) | (200,427) | ||
Forfeited (in shares) | (6,786) | 0 | ||
Ending balance (in shares) | 837,897 | 822,971 | 817,380 | |
Restricted Stock Units | ||||
Beginning balance (in USD per share) | $ 30.26 | $ 29.39 | $ 29.39 | |
Granted (in USD per share) | 32.85 | 27.31 | ||
Vested (in USD per share) | 27 | 24.46 | ||
Forfeited (in USD per share) | 24.65 | 0 | ||
Ending balance (in USD per share) | $ 32.65 | $ 29.15 | $ 30.26 |
Equity Based Compensation - Res
Equity Based Compensation - Restricted Stock Awards - Additional Information (Details) - Restricted Stock Awards - shares | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2019 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of unvested shares issued (in shares) | 46,368 | 0 | 0 |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years |
Equity Based Compensation - S_2
Equity Based Compensation - Schedule of Information about RSAs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost recognized in general and administrative expense | $ 2,721 | $ 2,835 |
Restricted Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividends declared on unvested RSAs and charged directly to distributions in excess of cumulative earnings | 0 | 2 |
Fair value of shares vested during the period | 128 | 139 |
Restricted Stock Awards | General and Administrative Expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost recognized in general and administrative expense | $ 2 | $ 32 |
Equity Based Compensation - S_3
Equity Based Compensation - Schedule of Information about Unrecognized Compensation Cost RSAs (Details) - Restricted Stock Awards - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation cost | $ 2 | $ 0 |
Weighted average period over which compensation cost will be recognized (in years) | 1 month 6 days |
Equity Based Compensation - R_2
Equity Based Compensation - Restricted Stock Units - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Feb. 28, 2023 | Jan. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity-based compensation expense | $ 2,721,000 | $ 2,835,000 | ||||||
Performance Based Restricted Stock Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of unvested shares issued (in shares) | 50,598 | 78,801 | 147,587 | 149,699 | 126,353 | 84,684 | 119,085 | |
Nonvested share awards percentage | 75% | |||||||
Performance period | 20 days | |||||||
TSR as percentage of peer group | 50% | |||||||
Nonvested share awards remaining percentage issued | 25% | |||||||
Performance Based Restricted Stock Units (RSUs) | Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of unvested shares issued (in shares) | 69,372 | |||||||
Equity-based compensation expense | $ 200,000 | 200,000 | ||||||
Vesting performance period | 5 years | |||||||
Performance Based Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche One | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 50% | 50% | ||||||
Performance Based Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche One | Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 50% | |||||||
Vesting period | 4 years | |||||||
Performance Based Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Two | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 50% | 50% | ||||||
Performance Based Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Two | Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 50% | |||||||
Vesting period | 5 years | |||||||
Performance Based Restricted Stock Units (RSUs) | Minimum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 0% | |||||||
Performance Based Restricted Stock Units (RSUs) | Minimum | Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage of award payout based on adjusted funds from operations performance | 0 | |||||||
Performance Based Restricted Stock Units (RSUs) | Maximum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage payout | 250% | |||||||
Performance Based Restricted Stock Units (RSUs) | Maximum | Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage of award payout based on adjusted funds from operations performance | 2 | |||||||
Performance Based Restricted Stock Units (RSUs) Granted In 2019 and 2020 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity-based compensation expense | $ 700,000 | 1,300,000 | ||||||
Performance Based Restricted Stock Units (RSUs) Granted In 2021, 2022 And 2023 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity-based compensation expense | $ 0 | $ 0 | ||||||
Time Based Restricted Stock Based Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of unvested shares issued (in shares) | 128,526 | 199,793 | 135,686 | 184,760 | ||||
Vesting period | 5 years | 5 years | 5 years | 5 years |
Equity Based Compensation - S_4
Equity Based Compensation - Schedule of Assumptions Used in Measurement of Grant Date Fair Value of Total Shareholder Return RSUs Using Monte Carlo Simulation Model (Details) - Performance Based Restricted Stock Units (RSUs) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility | 37% | 54% |
Risk free rate | 4.36% | 1.68% |
Equity Based Compensation - S_5
Equity Based Compensation - Schedule of Information about RSUs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost recognized in general and administrative expense | $ 2,721 | $ 2,835 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend equivalents declared and charged directly to distributions in excess of cumulative earnings | 101 | 88 |
Fair value of units vested during the period | 8,759 | 4,903 |
Restricted Stock Units | General and Administrative Expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost recognized in general and administrative expense | $ 2,719 | $ 2,804 |
Equity Based Compensation - S_6
Equity Based Compensation - Schedule of Information about Unrecognized Compensation Cost Restricted Stock Units (Details) - Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation cost | $ 20,056 | $ 13,761 |
Weighted average period over which compensation cost will be recognized (in years) | 2 years 8 months 12 days | 2 years 9 months 18 days |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) | Mar. 31, 2023 |
Operating Partnership Unit | |
Earnings Per Share [Line Items] | |
Award exchange ratio | 1 |
Net Income Per Share - Reconcil
Net Income Per Share - Reconciliation of Numerator and Denominator used in Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator for basic and diluted earnings per share: | ||
Net income | $ 43,056 | $ 26,818 |
Less: net income attributable to non-controlling interests | (160) | (119) |
Less: net income allocated to unvested RSAs and RSUs | (101) | (90) |
Net income available for common stockholders: basic | 42,795 | 26,609 |
Net income attributable to non-controlling interests | 160 | 119 |
Net income available for common stockholders: diluted | $ 42,955 | $ 26,728 |
Denominator for basic and diluted earnings per share: | ||
Weighted average common shares outstanding (in shares) | 144,406,747 | 126,849,066 |
Less: weighted average number of shares of unvested RSAs (in shares) | (703) | (9,808) |
Weighted average shares outstanding used in basic net income per share (in shares) | 144,406,044 | 126,839,258 |
Effects of dilutive securities: | ||
Forward sales (in shares) | 558,103 | 0 |
Weighted average shares outstanding used in diluted net income per share (in shares) | 146,000,007 | 127,923,499 |
Restricted Stock Units | ||
Effects of dilutive securities: | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 186,707 | 258,712 |
Forward Sales | ||
Effects of dilutive securities: | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 83,681 | |
Unvested RSAs and RSUs | ||
Effects of dilutive securities: | ||
Dilutive securities (in shares) | 482,013 | 530,394 |
OP Units | ||
Effects of dilutive securities: | ||
Dilutive securities (in shares) | 553,847 | 553,847 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Commitments and Contingencies [Line Items] | |
Reimbursement to tenants | $ 89.9 |
Employer matching contribution, percent of match | 100% |
Employer matching contribution, percent of eligible compensation | 6% |
Executive Officer | |
Commitments and Contingencies [Line Items] | |
Employment agreement, initial term | 4 years |
Employment agreement, automatic extension period upon non-renewal notice not provided | 1 year |
Employment agreement, base salary term after termination | 12 months |
Employment agreement, COBRA term after termination | 12 months |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Matching Contributions for Defined Contribution Retirement Savings Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
401(k) matching contributions | $ 154 | $ 170,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Values of Financial Assets Measured at Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2021 |
Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total deferred finance costs, net | $ 3,900 | $ 4,000 | |
Offering discount | 600 | 700 | $ 800 |
Fair Value, Recurring | Reported Value Measurement | Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | (395,426) | (395,286) | |
Fair Value, Recurring | Reported Value Measurement | Interest Rate Swaps | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 30,616 | 45,603 | |
Fair Value, Recurring | Fair Value | Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | (295,720) | (292,120) | |
Fair Value, Recurring | Fair Value | Interest Rate Swaps | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 30,616 | 45,603 | |
Fair Value, Recurring | Fair Value | Level 1 | Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | (295,720) | (292,120) | |
Fair Value, Recurring | Fair Value | Level 1 | Interest Rate Swaps | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 0 | 0 | |
Fair Value, Recurring | Fair Value | Level 2 | Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 0 | 0 | |
Fair Value, Recurring | Fair Value | Level 2 | Interest Rate Swaps | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 30,616 | 45,603 | |
Fair Value, Recurring | Fair Value | Level 3 | Senior unsecured notes | Senior Unsecured Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | 0 | 0 | |
Fair Value, Recurring | Fair Value | Level 3 | Interest Rate Swaps | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial assets (liabilities) | $ 0 | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Fair Values of Real Estate Investments Measured at Nonrecurring Basis (Details) - Fair Value Measurements, Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Net Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-lived assets | $ 2,100 | $ 12,144 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-lived assets | 2,100 | 12,144 |
Fair Value | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-lived assets | 0 | 0 |
Fair Value | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-lived assets | 0 | 0 |
Fair Value | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-lived assets | $ 2,100 | $ 12,144 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Quantitative Information About Level 3 Fair Value Measurements (Details) - Level 3 $ in Thousands | Mar. 31, 2023 USD ($) |
Restaurant | Jacksonville, FL | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-lived assets | $ 1,750 |
Restaurant | Davenport, IA | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-lived assets | $ 250 |
Convenience Store | Jacksonville, FL | Non-binding sales agreement | Sales comparison approach | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | 1,750 |
Convenience Store | Deming, NM | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-lived assets | $ 100 |
Convenience Store | Deming, NM | Non-binding sales agreement | Sales comparison approach | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | 100 |
Convenience Store | Davenport, IA | Non-binding listing agreement | Sales comparison approach | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Significant Unobservable Inputs | 250 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | 1 Months Ended |
Apr. 26, 2023 USD ($) property | |
Subsequent Event | |
Number of real estate investment properties acquired | property | 2 |
Aggregate investment (including acquisition-related costs) | $ 6.2 |
Investment in new and ongoing construction in progress | $ 1.6 |
Number of investment properties sold or transferred | property | 2 |
Investment, aggregate gross sales price | $ 3.2 |
Investment, disposition costs | $ 0.2 |