Cover
Cover | 6 Months Ended |
Jun. 30, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 30, 2021 |
Document Transition Report | false |
Entity File Number | 000-56236 |
Entity Registrant Name | Copper Property CTL Pass Through Trust |
Entity Incorporation, State or Country Code | NY |
Entity Tax Identification Number | 85-6822811 |
Entity Address, Address Line One | 3 Second Street, Suite 206 |
Entity Address, City or Town | Jersey City |
Entity Address, State or Province | NJ |
Entity Address, Postal Zip Code | 07311-4056 |
Local Phone Number | 839-2200 |
City Area Code | (201) |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Entity Central Index Key | 0001837671 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 0 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Jun. 30, 2021 | Jan. 30, 2021 |
Investment properties: | ||
Land and improvements | $ 692,682 | $ 716,504 |
Building and other improvements | 984,129 | 999,983 |
Gross investment properties | 1,676,811 | 1,716,487 |
Less: accumulated depreciation | (13,652) | 0 |
Net investment properties | 1,663,159 | 1,716,487 |
Cash and cash equivalents | 33,157 | 25,563 |
Accounts receivable | 26,256 | 0 |
Lease intangible assets, net | 301,532 | 314,264 |
Right-of-use lease assets | 101,662 | 110,691 |
Assets associated with investment properties held for sale | 53,744 | 0 |
Other assets, net | 3,232 | 0 |
Total assets | 2,182,742 | 2,167,005 |
Liabilities: | ||
Accounts payable and accrued expenses | 1,286 | 8,651 |
Lease intangible liabilities, net | 157,683 | 168,159 |
Lease liabilities | 37,506 | 38,075 |
Liabilities associated with investment properties held for sale | 7,766 | 0 |
Other liabilities | 8,013 | 0 |
Total liabilities | 212,254 | 214,885 |
Commitments and contingencies (Note 5) | ||
Equity: | ||
Trust certificates, no par value, 75,000,000 certificates authorized, 75,000,000 certificates issued and outstanding, as of June 30, 2021 and Effective Date | 0 | 0 |
Additional paid-in capital | 1,952,120 | 1,952,120 |
Retained earnings | 18,368 | 0 |
Total equity | 1,970,488 | 1,952,120 |
Total liabilities and equity | $ 2,182,742 | $ 2,167,005 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - shares | Jun. 30, 2021 | Jan. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Trust certificates, authorized (in shares) | 75,000,000 | 75,000,000 |
Trust certificates, issued (in shares) | 75,000,000 | 75,000,000 |
Trust certificates, outstanding (in shares) | 75,000,000 | 75,000,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Revenues: | ||
Lease income | $ 41,180 | $ 68,633 |
Expenses: | ||
Operating expenses | 3,960 | 6,611 |
Depreciation and amortization | 10,146 | 16,910 |
Provision for impairment of investment properties | 750 | 750 |
General and administrative expenses | 2,607 | 3,799 |
Total expenses | 17,463 | 28,070 |
Other expenses: | ||
Formation expenses | 0 | 364 |
Net income | $ 23,717 | $ 40,199 |
Earnings per certificate – basic and diluted: | ||
Net income per certificate - basic (in usd per share) | $ 0.32 | $ 0.54 |
Net income per certificate - diluted (in usd per share) | $ 0.32 | $ 0.54 |
Weighted average number of certificates outstanding – basic (shares) | 75,000,000 | 75,000,000 |
Weighted average number of certificates outstanding – diluted (shares) | 75,000,000 | 75,000,000 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Thousands | Total | Trust Certificates | Additional Paid-in Capital | Retained Earnings |
Balance (in shares) at Jan. 30, 2021 | 75,000,000 | |||
Balance at Jan. 30, 2021 | $ 1,952,120 | $ 1,952,120 | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 40,199 | 40,199 | ||
Distributions paid to Certificateholders | (21,831) | (21,831) | ||
Balance (in shares) at Jun. 30, 2021 | 75,000,000 | |||
Balance at Jun. 30, 2021 | 1,970,488 | 1,952,120 | 18,368 | |
Balance (in shares) at Mar. 31, 2021 | 75,000,000 | |||
Balance at Mar. 31, 2021 | 1,967,036 | 1,952,120 | 14,916 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 23,717 | 23,717 | ||
Distributions paid to Certificateholders | (20,265) | (20,265) | ||
Balance (in shares) at Jun. 30, 2021 | 75,000,000 | |||
Balance at Jun. 30, 2021 | $ 1,970,488 | $ 1,952,120 | $ 18,368 |
Consolidated Statement of Equ_2
Consolidated Statement of Equity (Parenthetical) - $ / shares | 3 Months Ended | 5 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Distributions paid to Certificateholders (usd per share) | $ (0.27) | $ (0.29) |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | |
Cash flows from operating activities: | |||
Net income | $ 23,717 | $ 40,199 | $ 40,199 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 10,146 | 16,910 | 16,910 |
Provision for impairment of investment properties | 750 | 750 | 750 |
Amortization of above/below market leases, net | 1 | 1 | 1 |
Changes in assets and liabilities: | |||
Changes in accounts receivable | (26,937) | ||
Changes in other assets | (3,310) | ||
Changes in right-of-use lease assets | 926 | ||
Changes in accounts payable and accrued expenses | 1,336 | ||
Changes in lease liabilities | 45 | ||
Changes in other liabilities | 8,156 | ||
Net cash provided by operating activities | 38,076 | ||
Cash flows from financing activities: | |||
Payment of assumed liability for transaction costs | (8,651) | ||
Distributions paid to Certificateholders | (21,831) | ||
Net cash used in financing activities | (30,482) | ||
Net increase (decrease) in cash and cash equivalents | 7,594 | ||
Cash and cash equivalents, at beginning of period | 25,563 | ||
Cash and cash equivalents, at end of period | $ 33,157 | $ 33,157 | $ 33,157 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION On May 15, 2020, Old Copper Company, Inc. (f/k/a J. C. Penney Company, Inc.) (“Old Copper”) and certain of its subsidiaries (collectively, the “Debtors”) commenced voluntary cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On October 28, 2020, the Debtors entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Copper Retail JV LLC, an entity formed by and under the joint control of Simon Property Group, L.P. and Brookfield Asset Management Inc. (“OpCo Purchaser”), and Copper Bidco LLC (“PropCo Purchaser” and, together with OpCo Purchaser, the “Purchasers”), an entity formed on behalf of lenders under Old Copper’s (i) senior secured superpriority, priming debtor-in-possession credit facility (the “DIP Facility”), (ii) 5.875% senior secured notes due 2023 (the “First Lien Notes”) and (iii) Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (the “Term Loan Facility” and together with the First Lien Notes, the “First Lien Debt”), pursuant to which the Purchasers agreed to acquire substantially all of the Debtors’ assets and assume certain of the Debtors’ obligations in connection with the purchased assets. On December 12, 2020, the Debtors filed the Amended Joint Chapter 11 Plan of Reorganization of J. C. Penney Company, Inc. and its Debtor Affiliates (the “Plan of Reorganization”) which was confirmed by the Bankruptcy Court on December 16, 2020. On December 21, 2020, Copper Property CTL Pass Through Trust, a New York common law trust (the “Trust,” “we,” “our” or “us”) was formed in connection with the reorganization of Old Copper. On January 30, 2021 (the “Effective Date”), the Plan of Reorganization became effective pursuant to its terms, at which point PropCo Purchaser (replacing Old Copper) and GLAS Trust Company LLC, continuing as trustee, entered into an Amended and Restated Trust Agreement (as amended, the “Trust Agreement”). In connection with the consummation of the transactions set forth in the Asset Purchase Agreement and in exchange for a $1 billion aggregate credit bid by PropCo Purchaser, comprising $900 million of claims under the DIP Facility and $100 million of claims, on a pro rata basis, under the First Lien Debt, and simultaneous release of obligations under the DIP Facility and First Lien Debt, Old Copper transferred (or caused its subsidiaries to transfer) its fee simple or ground leasehold title (as applicable) in certain properties to the PropCos (as defined below) and assigned (or caused such subsidiaries to assign) the Master Leases (as defined below) relating to the properties to the Trust. As a result, the Trust owns, through separate wholly-owned property holding companies (the “PropCo”), 160 Retail Properties and six Warehouses (each as defined below), all of which are leased to one or more subsidiaries of OpCo Purchaser (collectively with its subsidiaries, “New JCP”) under two Master Leases. In connection with the foregoing, certain of the Debtors' lenders received, their pro-rata portion of the equity interest in the Trust, as evidenced by the Trust Certificates (as defined below). The aggregate credit bid was not an indicator of the fair value of the assets and liabilities of the Trust as of the Effective Date, and it does not represent the full extent of debt that was owed to the creditor group. The Trust accounted for the reorganization using fresh start accounting under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification ("ASC") Topic 852, which resulted in the Trust becoming a new entity for financial reporting purposes on the Effective Date. Accordingly, all assets and liabilities are recorded at fair value in accordance with accounting requirements for business combinations under ASC 805-20. As of the Effective Date, Old Copper has no ability to exercise any control over the Properties or the Trust and has no affiliation with the Trust. The Trust owns directly or indirectly 100% of the equity or partnership interests (as applicable) in the PropCos. Specifically, the PropCos include (i) CTL Propco I LLC, a Delaware limited liability company, and CTL Propco I L.P., a Delaware limited partnership, which collectively own the fee simple or ground leasehold title (as applicable) to the Retail Properties and (ii) CTL Propco II LLC, a Delaware limited liability company, and CTL Propco II L.P., a Delaware limited partnership, which collectively own the fee simple title to the Warehouses. The Trust’s operations consist solely of (i) owning the Properties, (ii) leasing the Properties under the terms of the Master Leases (as discussed in Note 4), to New JCP as the sole tenants and (iii) subject to market conditions and the conditions set forth in the Trust Agreement, selling the Properties to third-party purchasers in each case through the PropCos. The real estate portfolio consists of 160 retail properties (the “Retail Properties”) and six distribution centers (the “Warehouses” and, together with the Retail Properties, the “Properties”) across 37 U.S. states and Puerto Rico. In the aggregate, the Warehouses and Retail Properties comprise 10.1 million square feet and 21.7 million square feet, respectively, of leasable space, all of which is leased to the tenants under the Master Leases (as discussed in Note 4). The Trust is governed by the Trust Agreement between PropCo Purchaser and the Trustee. The Trust Agreement created a series of equity trust certificates designated as “Copper Property CTL Pass Through Certificates” (the “Trust Certificates”), 75 million of which were issued on the Effective Date. Each Trust Certificate represents a fractional undivided beneficial interest in the Trust and represents the interests of the holders of the Trust Certificates (“Certificateholders”) in the Trust. All Trust Certificateholders shall vote as a single class and shall be in all respects equally and ratably entitled to the benefits of the Trust Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of the Trust Agreement. The Trust has retained Hilco JCP LLC, an affiliate of Hilco Real Estate LLC as its independent third-party manager to perform asset management duties with respect to the Properties (together with any of its affiliates, replacement or successor, the “Manager”). The Trust pays the Manager a base management fee (the “Base Fee”) and a fee for each property sold (the “Asset Management Fee”). The Base Fee is an amount equal to the greater of 5.75% of the lease payments of the Properties per month and $333 per month. The Asset Management Fees consist of a closing fee of $50 for each Warehouse sold and a success fee for both Retail Properties and Warehouses sold which varies based on the sales proceeds and date sold. The Trust incurred Base Fees of $2,251 in the three months ended June 30, 2021 and $3,752 from the Effective Date to June 30, 2021, which are included in “Operating expenses” on the accompanying consolidated statements of operations of which $750 was included in “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets as of June 30, 2021. The Trust did not incur Asset Management Fees for the three months ended June 30, 2021 and from the Effective Date to June 30, 2021. Proxy Statement |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the Financial Statements included in our amended Registration Statement on Form 10 filed on March 18, 2021, as certain footnote disclosures which would substantially duplicate those contained in the Registration Statement have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair statement have been included in this Quarterly Report. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, determining the useful lives of real estate properties, determination of discount rates in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets. Actual results could differ from these estimates.All certificate amounts and dollar amounts in this Quarterly Report on Form 10-Q, including the consolidated financial statements and notes thereto, are stated in thousands with the exception of certificate and per certificate amounts. The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements are commensurate with market and therefore the Trustee and Manager are not variable interest entities. The accompanying consolidated financial statements include the period from the Effective Date to June 30, 2021 (the “Reporting Period”), and do not include a comparative consolidated statement of financial position as of December 31, 2020 as the Trust had no assets, liabilities or equity until the Effective Date. Fresh Start Accounting and Investment Properties The Trust determined the fresh start accounting fair value of the investment properties based upon the fair value of the individual assets and liabilities assumed as of the Effective Date, which generally included (i) land and land improvements, (ii) building and other improvements, (iii) in-place lease intangibles, (iv) above and below market lease intangibles and (v) leasehold right-of-use assets and related operating lease liabilities. In estimating the fair value of tangible assets, including land and improvements, building and other improvements for fresh start accounting, as of the Effective Date, the Trust considered available comparable market and industry information. The Trust allocated a portion of the fair value to the estimated in-place lease intangibles based on estimated lease execution costs for similar leases as well as lost rental payments during an assumed lease-up period. The Trust also evaluated each lease as compared to current market rates. If a lease was determined to be above or below market, the Trust allocated a portion of the fair value to such above or below market leases based upon the present value of the difference between the contractual lease payments and estimated market rent payments over the remaining lease term. Renewal periods were included within the lease term in the calculation of above and below market lease values if, based upon factors known at the Effective Date, market participants would consider it reasonably certain that the lessee would exercise such options. Fair value estimates used in fresh start accounting, including the capitalization rates and discount rate used, required the Trust to consider various factors, including, but not limited to, market knowledge, demographics, age and physical condition of the property, geographic location, size and location of tenant spaces within the investment properties, and tenant profile. The portion of the fair value allocated to in-place lease intangibles is amortized on a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. With respect to leases in which the Trust is the lessor, the portion of fair value allocated to above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to lease income. With respect to ground leases (in which the Trust is the lessee), a lease liability is measured at the present value of the remaining lease payments and the right-of-use lease (ROU) asset is initially measured as the same amount as the lease liability and adjusted for any above or below market ground lease intangibles. On the Effective Date, the Trust assumed a liability of $8,651 related to transaction costs. Such costs were required to be incurred in order for the emergence from bankruptcy to take place, and are therefore considered pre-emergence costs (costs incurred prior to the change in control). This assumed liability decreased the net assets of the Trust by $8,651 as of the Effective Date. Ordinary repairs and maintenance will be expensed as incurred. Expenditures for significant improvements will be capitalized. Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon estimated useful lives which range from 27 to 43 years for building and other improvements and 6 to 10 years for land improvements. Tenant improvements not considered a component of the building are amortized on a straight-line basis over the lesser of the estimated remaining useful life of the asset or the term of the lease. Impairment of Investment Properties The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to: • a substantial decline in occupancy rate or cash flow; • expected significant declines in occupancy in the near future; • continued difficulty in leasing space; • a significant change in the credit quality of tenant; • a reduction in anticipated holding period; • a significant decrease in market price; and • any other quantitative or qualitative events or factors deemed significant by the Trust’s management. If the presence of one or more impairment indicators as described above is identified at the end of a reporting period or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to: • projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location; • estimated holding period or various potential holding periods when considering probability-weighted scenarios; • projected capital expenditures and lease origination costs; • estimated interest and internal costs expected to be capitalized; • projected cash flows from the anticipated or eventual disposition of an operating property; • comparable selling prices; and • property-specific capitalization rates and discount rates. To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the Reporting Period, the Trust recognized a provision for impairment of investment properties of $750 related to a Retail Property located in San Diego, California that was classified as held for sale as of June 30, 2021. The Trust estimated a fair value of approximately $14,552, net of estimated sales and closing costs, based upon signed sales agreements from third parties. Investment Properties Held for Sale In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made. If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of cost or net realizable value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period. Four properties were classified as held for sale as of June 30, 2021, comprising of Retail Properties located in San Diego, California, Lone Tree, Colorado, Frisco, Texas, and Carson, California. The following Retail Properties were classified as held for sale as of June 30, 2021: Date of Sale Location Gross Sales Price Carrying value at June 30, 2021 July 9, 2021 San Diego, CA $ 14,750 $ 14,471 (a) July 29, 2021 Lone Tree, CO 7,000 6,251 July 29, 2021 Frisco, TX 10,500 9,894 September 2021 (b) Carson, CA 19,000 15,362 (a) Carrying value includes provision for impairment of investment properties of $750. (b) Anticipated date of closing, which is subject to change. Real estate held for sale consisted of the following at June 30, 2021: June 30, 2021 Land and improvements $ 23,822 Building and other improvements 15,103 Less: accumulated depreciation (202) Net investment properties 38,723 Accounts receivable 682 Lease intangible assets, net 6,158 Right-of-use lease assets 8,103 Other assets 78 Assets associated with investment properties held for sale 53,744 Accounts payable and accrued expenses 51 Lease intangible liabilities, net 6,958 Lease liabilities 614 Other liabilities 143 Liabilities associated with investment properties held for sale $ 7,766 Cash and Cash Equivalents The Trust maintains its cash and cash equivalents at major financial institutions. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. Lease Income and Accounts Receivable The Trust accounts for leases under the provisions of ASC 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income, for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets. At lease commencement, the Trust expected that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenants on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. As of June 30, 2021, none of the Trust’s tenants are being accounted for on the cash basis of accounting. The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statement of operations. During the Reporting Period, there was no uncollectible lease income. Right-of-use Lease Assets and Lease Liabilities The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Leases, rental expense associated within land is paid directly by New JCP and is included in “Lease income” in the accompanying consolidated statement of operations (see Note 4). On the Effective Date, the Trust recognized ROU lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability. The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised. The Trust also does not recognize ROU assets for leases with a term of 12 months or less and has elected not to separate lease and non-lease components for operating leases. Income Taxes The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended. The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns since January 30, 2021 remain subject to examination by federal and various state tax jurisdictions. As of June 30, 2021, the balance of unrecognized tax benefits was $0. Segment Reporting The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties. |
INVESTMENT PROPERTIES
INVESTMENT PROPERTIES | 6 Months Ended |
Jun. 30, 2021 | |
Real Estate [Abstract] | |
INVESTMENT PROPERTIES | INVESTMENT PROPERTIES As of the Effective Date, the Trust obtained control of a real estate portfolio that consists of 160 Retail Properties and six Warehouses located across 37 U.S. states and Puerto Rico. The January 30, 2021 balance sheet reflects the allocation of fair value to the assets and liabilities that existed on the Effective Date and emergence from bankruptcy. The following table summarizes the allocated fair value by property type as of the Effective Date, including Retail Properties classified as held for sale: Property Type Ownership Square Footage Fair Value Retail Fee Simple 18,326 $ 1,234,100 Ground Leasehold 3,386 203,208 Warehouse Fee Simple 10,109 497,900 31,821 $ 1,935,208 As of the Effective Date, the weighted average amortization period for lease intangible assets and lease intangible liabilities was 19.9 years. The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of June 30, 2021, excluding Retail Properties classified as held for sale: Period from July 1 to December 31, 2021 2022 2023 2024 2025 Thereafter Total Amortization of: Above market lease intangibles (a) $ 4,174 $ 8,347 $ 8,347 $ 8,347 $ 8,347 $ 125,204 $ 162,766 In-place lease intangibles (a) 3,558 7,116 7,116 7,116 7,116 106,744 138,766 Lease intangible assets, net (b) $ 7,732 $ 15,463 $ 15,463 $ 15,463 $ 15,463 $ 231,948 $ 301,532 Below market lease intangibles (a) $ 4,043 $ 8,086 $ 8,086 $ 8,086 $ 8,086 $ 121,296 $ 157,683 Lease intangible liabilities, net (b) $ 4,043 $ 8,086 $ 8,086 $ 8,086 $ 8,086 $ 121,296 $ 157,683 (a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above and below market lease intangibles is recorded as an adjustment to lease income and the amortization of in-place lease intangibles is recorded to depreciation and amortization expense. (b) Lease intangible assets, net and lease intangible liabilities, net are presented net of $6,575 and $3,518 of accumulated amortization, respectively, as of June 30, 2021. Amortization expense pertaining to in-place lease intangibles was $1,833 for the three months ended June 30, 2021 and $3,055 from the Effective Date to June 30, 2021. Amortization pertaining to above market lease intangibles of $2,112 for the three months ended June 30, 2021 and $3,519 from the Effective Date to June 30, 2021, was recorded as a reduction to “Lease income” in the accompanying consolidated statements of operations. Amortization pertaining to below market lease intangibles of $2,111 for the three months ended June 30, 2021 and $3,518 from the Effective Date to June 30, 2021, was recorded as an increase to “Lease income” in the accompanying consolidated statements of operations. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
LEASES | LEASES Leases as Lessor The 160 Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the six Warehouses are leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, New JCP assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which is 50% abated during the first lease year for each of the Retail Properties. At the beginning of the fourth lease year, base rent under the DC Master Lease increases by 2% per year and the increase is included in fixed lease payments and the future undiscounted lease payments schedule. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. The Master Leases require direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), and common area maintenance costs by New JCP and allow for lessor reimbursement if amounts are not directly paid. Expenses paid directly by New JCP are not included in the accompanying consolidated statement of operations, except for ground lease payments made by New JCP, since recording cash payments made by New JCP is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by New JCP of $1,021 for the three months ended June 30, 2021, and $1,701 from the Effective Date to June 30, 2021, were included in “Lease income” in the accompanying consolidated statements of operations. Ground lease rent expense of $1,538 for the three months ended June 30, 2021, and $2,672 from the Effective Date to June 30, 2021, were included in “Operating expenses” in the accompanying consolidated statements of operations. In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by New JCP to the Trust in accordance with the terms of the applicable Master Lease, and are presented net of reimbursement from New JCP on the consolidated statements of operations. For the three months ended June 30, 2021 and from the Effective Date to June 30, 2021, the Trust remitted sales and use taxes of $159 to governmental authorities, which was fully reimbursed by New JCP. From time to time the Trust may have leasing activity with replacement tenants other than New JCP, but has had none to date. Lease income related to the Trust’s operating leases, including Retail Properties classified as held for sale , is comprised of the following: Lease income related to fixed lease payments Three Months Ended Period from Base rent (a) $ 23,998 $ 39,997 Straight-line rental income, net (b) 16,162 26,936 Lease income related to variable lease payments Ground lease reimbursement income (c) 1,021 1,701 Other Amortization of above and below market lease intangibles (d) (1) (1) Lease income $ 41,180 $ 68,633 (a) Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b) Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c) Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d) Represents above and below market lease amortization recognized straight line over the lease term. As of June 30, 2021, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows, excluding Retail Properties classified as held for sale: Lease Payments Period from July 1 to December 31, 2021 $ 47,139 2022 153,177 2023 153,884 2024 154,606 2025 155,342 Thereafter 2,429,229 Total $ 3,093,377 The weighted average remaining lease terms range was approximately 19.5 years as of June 30, 2021. Leases as Lessee The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. On the Effective Date, the Trust recorded lease liabilities and ROU assets of $38,075 for long-term ground leases, calculated by discounting future lease payments by the Trust’s incremental borrowing rate as of January 30, 2021. The incremental borrowing rate was determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The weighted average incremental borrowing rate used to discount the future payments was 11.0% and the Trust’s operating leases had a weighted average remaining lease term of 46.5 years as of January 30, 2021. The Trust’s ground lease intangible assets of $80,384 and ground lease intangible liability of $15,309 are presented net of the ROU assets. Ground lease rent expense was $1,538 for the three months ended June 30, 2021 and $2,672 from Effective Date to June 30, 2021, which is included within “Operating expenses” in the accompanying consolidated statement of operations. Ground rent lease expense includes amortization pertaining to above market ground lease intangibles of $(225) for the three months ended June 30, 2021 and $(266) from the Effective Date to June 30, 2021 and amortization pertaining to below market ground lease intangibles of $456 for the three months ended June 30, 2021 and $760 from the Effective Date to June 30, 2021. There were no cash payments for ground rent lease expense since these amounts are paid directly to the ground lessor by New JCP and included in "Lease income" in the accompanying consolidated statements of operations. As of June 30, 2021, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows, excluding obligations of Retail Properties classified as held for sale: Lease Obligations Period from July 1 to December 31, 2021 $ 2,016 2022 4,015 2023 4,062 2024 4,124 2025 4,116 Thereafter 228,493 Less imputed interest (209,320) Lease liabilities as of June 30, 2021 $ 37,506 The Trust’s long-term ground leases had a weighted average remaining lease term of 46.1 years and a weighted average discount rate of 11.0% as of June 30, 2021. |
LEASES | LEASES Leases as Lessor The 160 Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the six Warehouses are leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, New JCP assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which is 50% abated during the first lease year for each of the Retail Properties. At the beginning of the fourth lease year, base rent under the DC Master Lease increases by 2% per year and the increase is included in fixed lease payments and the future undiscounted lease payments schedule. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. The Master Leases require direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), and common area maintenance costs by New JCP and allow for lessor reimbursement if amounts are not directly paid. Expenses paid directly by New JCP are not included in the accompanying consolidated statement of operations, except for ground lease payments made by New JCP, since recording cash payments made by New JCP is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by New JCP of $1,021 for the three months ended June 30, 2021, and $1,701 from the Effective Date to June 30, 2021, were included in “Lease income” in the accompanying consolidated statements of operations. Ground lease rent expense of $1,538 for the three months ended June 30, 2021, and $2,672 from the Effective Date to June 30, 2021, were included in “Operating expenses” in the accompanying consolidated statements of operations. In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by New JCP to the Trust in accordance with the terms of the applicable Master Lease, and are presented net of reimbursement from New JCP on the consolidated statements of operations. For the three months ended June 30, 2021 and from the Effective Date to June 30, 2021, the Trust remitted sales and use taxes of $159 to governmental authorities, which was fully reimbursed by New JCP. From time to time the Trust may have leasing activity with replacement tenants other than New JCP, but has had none to date. Lease income related to the Trust’s operating leases, including Retail Properties classified as held for sale , is comprised of the following: Lease income related to fixed lease payments Three Months Ended Period from Base rent (a) $ 23,998 $ 39,997 Straight-line rental income, net (b) 16,162 26,936 Lease income related to variable lease payments Ground lease reimbursement income (c) 1,021 1,701 Other Amortization of above and below market lease intangibles (d) (1) (1) Lease income $ 41,180 $ 68,633 (a) Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b) Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c) Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d) Represents above and below market lease amortization recognized straight line over the lease term. As of June 30, 2021, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows, excluding Retail Properties classified as held for sale: Lease Payments Period from July 1 to December 31, 2021 $ 47,139 2022 153,177 2023 153,884 2024 154,606 2025 155,342 Thereafter 2,429,229 Total $ 3,093,377 The weighted average remaining lease terms range was approximately 19.5 years as of June 30, 2021. Leases as Lessee The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. On the Effective Date, the Trust recorded lease liabilities and ROU assets of $38,075 for long-term ground leases, calculated by discounting future lease payments by the Trust’s incremental borrowing rate as of January 30, 2021. The incremental borrowing rate was determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The weighted average incremental borrowing rate used to discount the future payments was 11.0% and the Trust’s operating leases had a weighted average remaining lease term of 46.5 years as of January 30, 2021. The Trust’s ground lease intangible assets of $80,384 and ground lease intangible liability of $15,309 are presented net of the ROU assets. Ground lease rent expense was $1,538 for the three months ended June 30, 2021 and $2,672 from Effective Date to June 30, 2021, which is included within “Operating expenses” in the accompanying consolidated statement of operations. Ground rent lease expense includes amortization pertaining to above market ground lease intangibles of $(225) for the three months ended June 30, 2021 and $(266) from the Effective Date to June 30, 2021 and amortization pertaining to below market ground lease intangibles of $456 for the three months ended June 30, 2021 and $760 from the Effective Date to June 30, 2021. There were no cash payments for ground rent lease expense since these amounts are paid directly to the ground lessor by New JCP and included in "Lease income" in the accompanying consolidated statements of operations. As of June 30, 2021, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows, excluding obligations of Retail Properties classified as held for sale: Lease Obligations Period from July 1 to December 31, 2021 $ 2,016 2022 4,015 2023 4,062 2024 4,124 2025 4,116 Thereafter 228,493 Less imputed interest (209,320) Lease liabilities as of June 30, 2021 $ 37,506 The Trust’s long-term ground leases had a weighted average remaining lease term of 46.1 years and a weighted average discount rate of 11.0% as of June 30, 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Master Leases Landlord Option Properties: The Retail Master Lease provides the Trust an option on 23 of the Retail Properties, allowing current or future landlords to terminate the Retail Master Lease as to that property upon 24 months’ prior written notice but such option is (for the Trust, but not for future landlords) limited to eight Retail Properties in any lease year. The DC Master Lease provides the Trust an option on all six of the distribution centers, allowing current or future landlords to terminate the DC Master Lease upon 24 months’ prior written notice if the tenant has ceased operations within the premises. Tenant Option Properties: The Retail Master Lease provides New JCP an option to terminate the Retail Master Lease upon 24 months’ prior written notice as to all or a portion of any one or more of six specified properties but such option is limited to no more than five Properties in any lease year. Substitution Options and Go Dark Rights: The Retail Master Lease provides New JCP an option to terminate the Retail Master Lease with respect to selected sub-performing properties upon replacement of such sub-performing properties with a qualified replacement property in accordance with the terms and conditions of the Retail Master Lease. Notwithstanding the foregoing, New JCP shall only be entitled to exercise a substitution option (i) between the third and 15th anniversary of the commencement date of the Retail Master Lease and (ii) if the aggregate allocated base rent amounts for all Go Dark/Substitution Properties (as defined in the Retail Master Lease) during the applicable period (as described in the Retail Master Lease) is less than or equal to 15% of the aggregate first year’s base rent. The Retail Master Lease also provides New JCP with the limited right to “go dark” (i.e., cease operations) at one or more Retail Properties in certain limited circumstances as set forth in the Retail Master Lease; provided that such right does not relieve New JCP of its obligation to make any rent payments that are due and owing. Tenant Purchase Rights: The Master Leases contain preferential offer rights in favor of New JCP with respect to 70 of the Retail Properties and each of the Warehouses (the “Tenant Purchase Rights”), which enable New JCP, in connection with a potential sale of such Properties, to acquire such Properties for a price determined in accordance with the procedures set forth in the Master Leases. Lockout Periods: The Trust has agreed not to deliver notice to New JCP formally commencing the sales process at those Properties subject to the Tenant Purchase Rights prior to the dates specified in the applicable Master Lease for such Properties. All lockout periods with respect to the Tenant Purchase Rights for the 70 Retail Properties and 6 Warehouses have expired. Environmental Matters Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property owned by us, we could incur liability for the removal of the substances and the cleanup of the property. There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup. There are no environmental matters that are expected to have a material effect on the Trust’s consolidated financial statements. Risk of Uninsured Property Losses The Trust maintains property damage, fire loss, environmental, and liability insurance. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, floods and certain other environmental hazards. Should such events occur, (i) we may suffer a loss of capital invested, (ii) tenants may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties. Significant Risks and Uncertainties In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a global pandemic. COVID-19 has caused significant disruptions to the U.S. and global economy and has contributed to significant volatility and negative pressure in the financial markets. The global impact of the COVID-19 outbreak has been rapidly evolving and many U.S. states and cities, including where the Trust owns properties, have in place or had previously imposed measures intended to control its spread, such as instituting “shelter-in-place” rules and restrictions on the types of businesses that may continue to operate. While the Trust did not incur significant disruptions to its lease income and occupancy during the Reporting Period as a result of the COVID-19 pandemic, the Trust continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. Due to numerous uncertainties, it is not possible to accurately predict the impact the pandemic will have on the Trust’s financial condition, results of operations and cash flows. Concentration of Credit Risk As of June 30, 2021, all of the Properties were leased to New JCP, and all of the Trust’s lease income was derived from the Master Leases (see Note 4). The Properties' tenants constitute a significant asset concentration, as all tenants are subsidiaries of New JCP and New JCP provides financial guarantees with respect to the Master Leases. Until the Trust materially diversifies the composition of tenants for its properties, an event that has a material adverse effect on New JCP’s business, financial condition or results of operations could have a material adverse effect on the Trust’s business, financial condition or results of operations. The Trust's real estate portfolio was reasonably diversified by geographical location and did not contain any other significant concentrations of credit risk. As of June 30, 2021, the Trust's properties are located across 37 U.S. states and Puerto Rico. Litigation |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Subsequent to June 30, 2021, we paid monthly distributions to Certificateholders of $6,822 or $0.09 per certificate in July 2021 and $38,381 or $0.51 per certificate in August 2021. On July 9, 2021, the Trust sold a Retail Property in San Diego, California to an affiliate of New JCP in accordance with the Tenant Purchase Rights set forth in the Master Leases for a gross sales price of $14,750 with a carrying value at June 30, 2021 of $14,471. On July 29, 2021, the Trust sold a Retail Property in Lone Tree, Colorado to an affiliate of New JCP in accordance with the Tenant Purchase Rights set forth in the Master Leases for a gross sales price of $7,000 with a carrying value at June 30, 2021 of $6,251 and another Retail Property in Frisco, Texas to an affiliate of New JCP in accordance with the Tenant Purchase Rights set forth in the Master Leases for gross sales price of $10,500 with a carrying value at June 30, 2021 of $9,894. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report should refer to the Financial Statements included in our amended Registration Statement on Form 10 filed on March 18, 2021, as certain footnote disclosures which would substantially duplicate those contained in the Registration Statement have been omitted from this Quarterly Report. In the opinion of management, all adjustments necessary, all of which were of normal recurring nature, for a fair statement have been included in this Quarterly Report. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, determining the useful lives of real estate properties, determination of discount rates in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets. Actual results could differ from these estimates.All certificate amounts and dollar amounts in this Quarterly Report on Form 10-Q, including the consolidated financial statements and notes thereto, are stated in thousands with the exception of certificate and per certificate amounts. The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements are commensurate with market and therefore the Trustee and Manager are not variable interest entities. The accompanying consolidated financial statements include the period from the Effective Date to June 30, 2021 (the “Reporting Period”), and do not include a comparative consolidated statement of financial position as of December 31, 2020 as the Trust had no assets, liabilities or equity until the Effective Date. |
Investment Properties, Impairment of Investment Properties and Investment Properties Held for Sale | Investment Properties The Trust determined the fresh start accounting fair value of the investment properties based upon the fair value of the individual assets and liabilities assumed as of the Effective Date, which generally included (i) land and land improvements, (ii) building and other improvements, (iii) in-place lease intangibles, (iv) above and below market lease intangibles and (v) leasehold right-of-use assets and related operating lease liabilities. In estimating the fair value of tangible assets, including land and improvements, building and other improvements for fresh start accounting, as of the Effective Date, the Trust considered available comparable market and industry information. The Trust allocated a portion of the fair value to the estimated in-place lease intangibles based on estimated lease execution costs for similar leases as well as lost rental payments during an assumed lease-up period. The Trust also evaluated each lease as compared to current market rates. If a lease was determined to be above or below market, the Trust allocated a portion of the fair value to such above or below market leases based upon the present value of the difference between the contractual lease payments and estimated market rent payments over the remaining lease term. Renewal periods were included within the lease term in the calculation of above and below market lease values if, based upon factors known at the Effective Date, market participants would consider it reasonably certain that the lessee would exercise such options. Fair value estimates used in fresh start accounting, including the capitalization rates and discount rate used, required the Trust to consider various factors, including, but not limited to, market knowledge, demographics, age and physical condition of the property, geographic location, size and location of tenant spaces within the investment properties, and tenant profile. The portion of the fair value allocated to in-place lease intangibles is amortized on a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. With respect to leases in which the Trust is the lessor, the portion of fair value allocated to above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to lease income. With respect to ground leases (in which the Trust is the lessee), a lease liability is measured at the present value of the remaining lease payments and the right-of-use lease (ROU) asset is initially measured as the same amount as the lease liability and adjusted for any above or below market ground lease intangibles. On the Effective Date, the Trust assumed a liability of $8,651 related to transaction costs. Such costs were required to be incurred in order for the emergence from bankruptcy to take place, and are therefore considered pre-emergence costs (costs incurred prior to the change in control). This assumed liability decreased the net assets of the Trust by $8,651 as of the Effective Date. Ordinary repairs and maintenance will be expensed as incurred. Expenditures for significant improvements will be capitalized. Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon estimated useful lives which range from 27 to 43 years for building and other improvements and 6 to 10 years for land improvements. Tenant improvements not considered a component of the building are amortized on a straight-line basis over the lesser of the estimated remaining useful life of the asset or the term of the lease. Impairment of Investment Properties The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to: • a substantial decline in occupancy rate or cash flow; • expected significant declines in occupancy in the near future; • continued difficulty in leasing space; • a significant change in the credit quality of tenant; • a reduction in anticipated holding period; • a significant decrease in market price; and • any other quantitative or qualitative events or factors deemed significant by the Trust’s management. If the presence of one or more impairment indicators as described above is identified at the end of a reporting period or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to: • projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location; • estimated holding period or various potential holding periods when considering probability-weighted scenarios; • projected capital expenditures and lease origination costs; • estimated interest and internal costs expected to be capitalized; • projected cash flows from the anticipated or eventual disposition of an operating property; • comparable selling prices; and • property-specific capitalization rates and discount rates. To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the Reporting Period, the Trust recognized a provision for impairment of investment properties of $750 related to a Retail Property located in San Diego, California that was classified as held for sale as of June 30, 2021. The Trust estimated a fair value of approximately $14,552, net of estimated sales and closing costs, based upon signed sales agreements from third parties. Investment Properties Held for Sale In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made. If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of cost or net realizable value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period. Four properties were classified as held for sale as of June 30, 2021, comprising of Retail Properties located in San Diego, California, Lone Tree, Colorado, Frisco, Texas, and Carson, California. The following Retail Properties were classified as held for sale as of June 30, 2021: Date of Sale Location Gross Sales Price Carrying value at June 30, 2021 July 9, 2021 San Diego, CA $ 14,750 $ 14,471 (a) July 29, 2021 Lone Tree, CO 7,000 6,251 July 29, 2021 Frisco, TX 10,500 9,894 September 2021 (b) Carson, CA 19,000 15,362 (a) Carrying value includes provision for impairment of investment properties of $750. (b) Anticipated date of closing, which is subject to change. Real estate held for sale consisted of the following at June 30, 2021: June 30, 2021 Land and improvements $ 23,822 Building and other improvements 15,103 Less: accumulated depreciation (202) Net investment properties 38,723 Accounts receivable 682 Lease intangible assets, net 6,158 Right-of-use lease assets 8,103 Other assets 78 Assets associated with investment properties held for sale 53,744 Accounts payable and accrued expenses 51 Lease intangible liabilities, net 6,958 Lease liabilities 614 Other liabilities 143 Liabilities associated with investment properties held for sale $ 7,766 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Trust maintains its cash and cash equivalents at major financial institutions. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. |
Lease Income and Accounts Receivable | Lease Income and Accounts Receivable The Trust accounts for leases under the provisions of ASC 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income, for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets. At lease commencement, the Trust expected that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenants on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. As of June 30, 2021, none of the Trust’s tenants are being accounted for on the cash basis of accounting. The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statement of operations. During the Reporting Period, there was no uncollectible lease income. |
Right-of-use Lease Assets and Lease Liabilities | Right-of-use Lease Assets and Lease Liabilities The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Leases, rental expense associated within land is paid directly by New JCP and is included in “Lease income” in the accompanying consolidated statement of operations (see Note 4). On the Effective Date, the Trust recognized ROU lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability. The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised. The Trust also does not recognize ROU assets for leases with a term of 12 months or less and has elected not to separate lease and non-lease components for operating leases. |
Income Taxes | Income Taxes The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended. |
Segment Reporting | Segment Reporting The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Retail Properties and real estate held for sale | The following Retail Properties were classified as held for sale as of June 30, 2021: Date of Sale Location Gross Sales Price Carrying value at June 30, 2021 July 9, 2021 San Diego, CA $ 14,750 $ 14,471 (a) July 29, 2021 Lone Tree, CO 7,000 6,251 July 29, 2021 Frisco, TX 10,500 9,894 September 2021 (b) Carson, CA 19,000 15,362 (a) Carrying value includes provision for impairment of investment properties of $750. (b) Anticipated date of closing, which is subject to change. Real estate held for sale consisted of the following at June 30, 2021: June 30, 2021 Land and improvements $ 23,822 Building and other improvements 15,103 Less: accumulated depreciation (202) Net investment properties 38,723 Accounts receivable 682 Lease intangible assets, net 6,158 Right-of-use lease assets 8,103 Other assets 78 Assets associated with investment properties held for sale 53,744 Accounts payable and accrued expenses 51 Lease intangible liabilities, net 6,958 Lease liabilities 614 Other liabilities 143 Liabilities associated with investment properties held for sale $ 7,766 |
INVESTMENT PROPERTIES (Tables)
INVESTMENT PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Real Estate [Abstract] | |
Acquisition price by property type | The following table summarizes the allocated fair value by property type as of the Effective Date, including Retail Properties classified as held for sale: Property Type Ownership Square Footage Fair Value Retail Fee Simple 18,326 $ 1,234,100 Ground Leasehold 3,386 203,208 Warehouse Fee Simple 10,109 497,900 31,821 $ 1,935,208 |
Amortization related to the acquired lease intangible assets and liabilities | The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of June 30, 2021, excluding Retail Properties classified as held for sale: Period from July 1 to December 31, 2021 2022 2023 2024 2025 Thereafter Total Amortization of: Above market lease intangibles (a) $ 4,174 $ 8,347 $ 8,347 $ 8,347 $ 8,347 $ 125,204 $ 162,766 In-place lease intangibles (a) 3,558 7,116 7,116 7,116 7,116 106,744 138,766 Lease intangible assets, net (b) $ 7,732 $ 15,463 $ 15,463 $ 15,463 $ 15,463 $ 231,948 $ 301,532 Below market lease intangibles (a) $ 4,043 $ 8,086 $ 8,086 $ 8,086 $ 8,086 $ 121,296 $ 157,683 Lease intangible liabilities, net (b) $ 4,043 $ 8,086 $ 8,086 $ 8,086 $ 8,086 $ 121,296 $ 157,683 (a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above and below market lease intangibles is recorded as an adjustment to lease income and the amortization of in-place lease intangibles is recorded to depreciation and amortization expense. |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Lease income related to operating leases | Lease income related to the Trust’s operating leases, including Retail Properties classified as held for sale , is comprised of the following: Lease income related to fixed lease payments Three Months Ended Period from Base rent (a) $ 23,998 $ 39,997 Straight-line rental income, net (b) 16,162 26,936 Lease income related to variable lease payments Ground lease reimbursement income (c) 1,021 1,701 Other Amortization of above and below market lease intangibles (d) (1) (1) Lease income $ 41,180 $ 68,633 (a) Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b) Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c) Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d) Represents above and below market lease amortization recognized straight line over the lease term. |
Undiscounted lease payments to be received under operating leases | As of June 30, 2021, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows, excluding Retail Properties classified as held for sale: Lease Payments Period from July 1 to December 31, 2021 $ 47,139 2022 153,177 2023 153,884 2024 154,606 2025 155,342 Thereafter 2,429,229 Total $ 3,093,377 |
Undiscounted future rental obligations to be paid under long-term ground and office leases | As of June 30, 2021, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows, excluding obligations of Retail Properties classified as held for sale: Lease Obligations Period from July 1 to December 31, 2021 $ 2,016 2022 4,015 2023 4,062 2024 4,124 2025 4,116 Thereafter 228,493 Less imputed interest (209,320) Lease liabilities as of June 30, 2021 $ 37,506 |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Thousands | Jan. 30, 2021USD ($)ft²shares | Jun. 30, 2021USD ($)ft²statepropertylease | Jun. 30, 2021USD ($)ft²statepropertylease | Jun. 30, 2021USD ($)ft²statepropertylease | Oct. 28, 2020 |
Real Estate [Line Items] | |||||
Asset Purchase Agreement, consideration | $ 1,000,000 | ||||
Number of master leases | lease | 2 | 2 | 2 | ||
Number of states operated in | state | 37 | 37 | 37 | ||
Square feet of leasable space | ft² | 31,821,000 | ||||
Trust certificates issued (in shares) | shares | 75,000,000 | ||||
Base management fee percentage | 5.75% | ||||
Base management fee, monthly amount | $ 333 | ||||
Closing fee per DC property sold | 50 | ||||
Asset management fees | $ 2,251 | $ 3,752 | |||
Asset management fees payable | $ 750 | $ 750 | $ 750 | ||
Senior Notes | First Lien Notes | Old Copper | |||||
Real Estate [Line Items] | |||||
Interest rate | 5.875% | ||||
Credit Facility | First Lien Notes | |||||
Real Estate [Line Items] | |||||
Asset Purchase Agreement, debt assumed | $ 100,000 | ||||
Credit Facility | DIP Facility | |||||
Real Estate [Line Items] | |||||
Asset Purchase Agreement, debt assumed | $ 900,000 | ||||
Retail | |||||
Real Estate [Line Items] | |||||
Number of real estate properties | property | 160 | 160 | 160 | ||
Square feet of leasable space | ft² | 21,700,000 | 21,700,000 | 21,700,000 | ||
Warehouse | |||||
Real Estate [Line Items] | |||||
Number of real estate properties | property | 6 | 6 | 6 | ||
Square feet of leasable space | ft² | 10,100,000 | 10,100,000 | 10,100,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | Jan. 30, 2021USD ($)lease | Jun. 30, 2021USD ($)property | Jun. 30, 2021USD ($)property | Jun. 30, 2021USD ($)property | Jun. 30, 2021USD ($)propertysegment |
Accounting Policies [Abstract] | |||||
Transaction costs | $ 8,651,000 | ||||
Real Estate Properties [Line Items] | |||||
Provision for impairment of investment properties | $ 750,000 | $ 750,000 | $ 750,000 | ||
Investment properties, fair value | $ 14,552,000 | $ 14,552,000 | $ 14,552,000 | $ 14,552,000 | |
Number of properties held for sale | property | 4 | 4 | 4 | 4 | |
Number of lease contracts | lease | 23 | ||||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | $ 0 | |
Number of reportable segments | segment | 1 | ||||
Minimum | Building and associated improvements | |||||
Real Estate Properties [Line Items] | |||||
Estimated useful lives | 27 years | ||||
Minimum | Land improvements | |||||
Real Estate Properties [Line Items] | |||||
Estimated useful lives | 6 years | ||||
Maximum | Building and associated improvements | |||||
Real Estate Properties [Line Items] | |||||
Estimated useful lives | 43 years | ||||
Maximum | Land improvements | |||||
Real Estate Properties [Line Items] | |||||
Estimated useful lives | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Retail Properties Held for Sale (Details) - USD ($) $ in Thousands | Jul. 29, 2021 | Jul. 09, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 |
Real Estate Properties [Line Items] | ||||||
Provision for impairment of investment properties | $ 750 | $ 750 | $ 750 | |||
San Diego, CA | ||||||
Real Estate Properties [Line Items] | ||||||
Carrying value | 14,471 | 14,471 | 14,471 | |||
San Diego, CA | Subsequent Event | ||||||
Real Estate Properties [Line Items] | ||||||
Gross sales price | $ 14,750 | |||||
Lone Tree, CO | ||||||
Real Estate Properties [Line Items] | ||||||
Carrying value | 6,251 | 6,251 | 6,251 | |||
Lone Tree, CO | Subsequent Event | ||||||
Real Estate Properties [Line Items] | ||||||
Gross sales price | $ 7,000 | |||||
Frisco, TX | ||||||
Real Estate Properties [Line Items] | ||||||
Carrying value | 9,894 | 9,894 | 9,894 | |||
Frisco, TX | Subsequent Event | ||||||
Real Estate Properties [Line Items] | ||||||
Gross sales price | $ 10,500 | |||||
Carson, CA | ||||||
Real Estate Properties [Line Items] | ||||||
Carrying value | $ 15,362 | $ 15,362 | $ 15,362 | |||
Carson, CA | Forecast | ||||||
Real Estate Properties [Line Items] | ||||||
Gross sales price | $ 19,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate Held For Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jan. 30, 2021 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Assets associated with investment properties held for sale | $ 53,744 | $ 0 |
Liabilities associated with investment properties held for sale | 7,766 | $ 0 |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Land and improvements | 23,822 | |
Building and other improvements | 15,103 | |
Less: accumulated depreciation | (202) | |
Net investment properties | 38,723 | |
Accounts receivable | 682 | |
Lease intangible assets, net | 6,158 | |
Right-of-use lease assets | 8,103 | |
Other assets | 78 | |
Assets associated with investment properties held for sale | 53,744 | |
Accounts payable and accrued expenses | 51 | |
Lease intangible liabilities, net | 6,958 | |
Lease liabilities | 614 | |
Other liabilities | 143 | |
Liabilities associated with investment properties held for sale | $ 7,766 |
INVESTMENT PROPERTIES - Additio
INVESTMENT PROPERTIES - Additional Information (Details) $ in Thousands | 3 Months Ended | 5 Months Ended |
Jun. 30, 2021USD ($)stateproperty | Jun. 30, 2021USD ($)stateproperty | |
Real Estate Properties [Line Items] | ||
Number of states operated in | state | 37 | 37 |
Amortization of below market lease intangibles | $ 2,111 | $ 3,518 |
In-place lease value intangibles | ||
Real Estate Properties [Line Items] | ||
Amortization of lease intangible assets | 1,833 | 3,055 |
Above market lease intangibles | ||
Real Estate Properties [Line Items] | ||
Amortization of lease intangible assets | $ 2,112 | $ 3,519 |
Retail | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | property | 160 | 160 |
Warehouse | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | property | 6 | 6 |
INVESTMENT PROPERTIES - Acquisi
INVESTMENT PROPERTIES - Acquisition Price (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021ft² | Jan. 30, 2021USD ($)ft² | |
Real Estate Properties [Line Items] | ||
Square Footage | 31,821,000 | |
Fair Value | $ | $ 1,935,208 | |
Weighted average amortization period for acquired lease intangible assets | 19 years 10 months 24 days | |
Retail | ||
Real Estate Properties [Line Items] | ||
Square Footage | 21,700,000 | |
Retail | Fee Simple | ||
Real Estate Properties [Line Items] | ||
Square Footage | 18,326,000 | |
Fair Value | $ | $ 1,234,100 | |
Retail | Ground Leasehold | ||
Real Estate Properties [Line Items] | ||
Square Footage | 3,386,000 | |
Fair Value | $ | $ 203,208 | |
Warehouse | ||
Real Estate Properties [Line Items] | ||
Square Footage | 10,100,000 | |
Warehouse | Fee Simple | ||
Real Estate Properties [Line Items] | ||
Square Footage | 10,109,000 | |
Fair Value | $ | $ 497,900 |
INVESTMENT PROPERTIES - Amortiz
INVESTMENT PROPERTIES - Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jan. 30, 2021 |
Acquired lease intangible assets, net | ||
Period from July 1 to December 31, 2021 | $ 7,732 | |
2022 | 15,463 | |
2023 | 15,463 | |
2024 | 15,463 | |
2025 | 15,463 | |
Thereafter | 231,948 | |
Total | 301,532 | $ 314,264 |
Acquired below market lease intangibles | ||
Period from July 1 to December 31, 2021 | 4,043 | |
2022 | 8,086 | |
2023 | 8,086 | |
2024 | 8,086 | |
2025 | 8,086 | |
Thereafter | 121,296 | |
Total | 157,683 | $ 168,159 |
Acquired lease intangible assets, net, accumulated amortization | 6,575 | |
Acquired lease intangible liabilities, accumulated amortization | 3,518 | |
Above market lease intangibles | ||
Acquired lease intangible assets, net | ||
Period from July 1 to December 31, 2021 | 4,174 | |
2022 | 8,347 | |
2023 | 8,347 | |
2024 | 8,347 | |
2025 | 8,347 | |
Thereafter | 125,204 | |
Total | 162,766 | |
In-place lease value intangibles | ||
Acquired lease intangible assets, net | ||
Period from July 1 to December 31, 2021 | 3,558 | |
2022 | 7,116 | |
2023 | 7,116 | |
2024 | 7,116 | |
2025 | 7,116 | |
Thereafter | 106,744 | |
Total | $ 138,766 |
LEASES - Additional Information
LEASES - Additional Information (Details) | Jan. 30, 2021USD ($) | Jun. 30, 2021USD ($)property | Jun. 30, 2021USD ($)property | Jun. 30, 2021property |
Real Estate [Line Items] | ||||
Master lease, term | 20 years | 20 years | 20 years | |
Master lease, percent rent abatement in first year | 50.00% | |||
Annual increase in base rent at the beginning of the third lease year | 2.00% | |||
Consumer price index maximum increase | 2.00% | |||
Ground lease reimbursement income | $ 1,021,000 | $ 1,701,000 | ||
Ground lease rent expense | 1,538,000 | 2,672,000 | ||
Sales and use taxes | $ 159,000 | $ 159,000 | ||
Lessor, weighted average remaining lease terms | 19 years 6 months | |||
ROU assets for long-term ground leases, net of lease liabilities | $ 38,075,000 | |||
Weighted average incremental borrowing rate, lessor | 11.00% | |||
Weighted average remaining lease terms | 46 years 6 months | 46 years 1 month 6 days | 46 years 1 month 6 days | 46 years 1 month 6 days |
Ground lease intangible assets | $ 80,384,000 | |||
Ground lease intangible liability | $ 15,309,000 | |||
Amortization of below market lease intangibles | $ 2,111,000 | $ 3,518,000 | ||
Weighted average incremental borrowing rate, lessee | 11.00% | 11.00% | 11.00% | |
Ground Leasehold | ||||
Real Estate [Line Items] | ||||
Amortization of below market lease intangibles | $ 456,000 | $ 760,000 | ||
Above market lease intangibles | ||||
Real Estate [Line Items] | ||||
Amortization of above market ground lease intangibles | 2,112,000 | 3,519,000 | ||
Above market lease intangibles | Ground Leasehold | ||||
Real Estate [Line Items] | ||||
Amortization of above market ground lease intangibles | $ (225,000) | $ (266,000) | ||
Retail | ||||
Real Estate [Line Items] | ||||
Number of real estate properties | property | 160 | 160 | 160 | |
Warehouse | ||||
Real Estate [Line Items] | ||||
Number of real estate properties | property | 6 | 6 | 6 |
LEASES - Lease Income (Details)
LEASES - Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | |
Lease income related to fixed lease payments | ||||
Base rent | $ 23,998 | $ 39,997 | ||
Straight-line rental income, net | 16,162 | 26,936 | ||
Lease income related to variable lease payments | ||||
Ground lease reimbursement income | 1,021 | 1,701 | ||
Other | ||||
Amortization of above and below market lease intangibles | (1) | (1) | $ (1) | |
Lease income | $ 41,180 | $ 68,633 | ||
Master lease, percent rent abatement in first year | 50.00% |
LEASES - Undiscounted Lease Pay
LEASES - Undiscounted Lease Payments to be Received (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
Period from July 1 to December 31, 2021 | $ 47,139 |
2022 | 153,177 |
2023 | 153,884 |
2024 | 154,606 |
2025 | 155,342 |
Thereafter | 2,429,229 |
Total | $ 3,093,377 |
LEASES - Undiscounted Future Re
LEASES - Undiscounted Future Rental Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jan. 30, 2021 |
Leases [Abstract] | ||
Period from July 1 to December 31, 2021 | $ 2,016 | |
2022 | 4,015 | |
2023 | 4,062 | |
2024 | 4,124 | |
2025 | 4,116 | |
Thereafter | 228,493 | |
Less imputed interest | (209,320) | |
Lease liabilities | $ 37,506 | $ 38,075 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 6 Months Ended |
Jun. 30, 2021propertystate | |
Real Estate [Line Items] | |
Termination rights by lessor, written notice period | 24 months |
Number of properties subject to termination rights by lessee | 6 |
Number of properties subject to termination rights by lessee, in any lease year | 5 |
Go Dark/Substitution Properties allocated base rent as a percentage of total base rent | 15.00% |
Number of properties subject to lockout period | 70 |
Number of states operated in | state | 37 |
Retail | |
Real Estate [Line Items] | |
Number of properties subject to termination rights by lessor | 23 |
Termination rights by lessor, written notice period | 24 months |
Number of properties subject to termination rights by lessor, in any lease year | 8 |
Warehouse | |
Real Estate [Line Items] | |
Number of properties subject to termination rights by lessor | 6 |
Termination rights by lessor, written notice period | 24 months |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 12, 2021 | Jul. 29, 2021 | Jul. 09, 2021 | Sep. 30, 2021 | Jul. 31, 2021 | Jun. 30, 2021 |
San Diego, CA | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | $ 14,471 | |||||
Lone Tree, CO | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | 6,251 | |||||
Lone Tree, CO | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | 6,251 | |||||
Frisco, TX | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | 9,894 | |||||
Frisco, TX | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | 9,894 | |||||
Carson, CA | ||||||
Subsequent Event [Line Items] | ||||||
Carrying value | $ 15,362 | |||||
Carson, CA | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | $ 19,000 | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Distribution | $ 38,381 | $ 6,822 | ||||
Distribution (usd per share) | $ 0.51 | $ 0.09 | ||||
Subsequent Event | San Diego, CA | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | $ 14,750 | |||||
Subsequent Event | San Diego, CA | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | $ 14,750 | |||||
Subsequent Event | Lone Tree, CO | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | $ 7,000 | |||||
Subsequent Event | Lone Tree, CO | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | 7,000 | |||||
Subsequent Event | Frisco, TX | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | 10,500 | |||||
Subsequent Event | Frisco, TX | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Gross sales price | $ 10,500 |