Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40873 | |
Entity Registrant Name | Orion Office REIT Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 87-1656425 | |
Entity Address, Address Line One | 2398 E. Camelback Road, Suite 1060 | |
Entity Address, City or Town | Phoenix | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85016 | |
City Area Code | (602) | |
Local Phone Number | 698-1002 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ONL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,780,054 | |
Entity Central Index Key | 0001873923 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real estate investments, at cost: | ||
Land | $ 227,203 | $ 238,225 |
Buildings, fixtures and improvements | 1,106,383 | 1,128,400 |
Total real estate investments, at cost | 1,333,586 | 1,366,625 |
Less: accumulated depreciation | 156,904 | 133,379 |
Total real estate investments, net | 1,176,682 | 1,233,246 |
Accounts receivable, net | 26,911 | 21,641 |
Intangible lease assets, net | 144,304 | 202,832 |
Cash and cash equivalents | 32,286 | 20,638 |
Real estate assets held for sale, net | 3,818 | 2,502 |
Other assets, net | 120,390 | 90,214 |
Total assets | 1,504,391 | 1,571,073 |
LIABILITIES AND EQUITY | ||
Mortgages payable, net | 352,683 | 352,167 |
Accounts payable and accrued expenses | 30,570 | 26,161 |
Below-market lease liabilities, net | 9,481 | 14,068 |
Distributions payable | 5,578 | 5,664 |
Other liabilities, net | 21,811 | 23,340 |
Total liabilities | 595,123 | 595,215 |
Common stock, $0.001 par value, 100,000,000 shares authorized 55,780,054 and 56,639,040 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 56 | 57 |
Additional paid-in capital | 1,143,825 | 1,147,014 |
Accumulated other comprehensive income | 986 | 6,308 |
Accumulated deficit | (237,026) | (178,910) |
Total stockholders’ equity | 907,841 | 974,469 |
Non-controlling interest | 1,427 | 1,389 |
Total equity | 909,268 | 975,858 |
Total liabilities and equity | 1,504,391 | 1,571,073 |
Credit facility term loan, net | ||
LIABILITIES AND EQUITY | ||
Credit facilities | 0 | 173,815 |
Credit facility revolver | ||
LIABILITIES AND EQUITY | ||
Credit facilities | $ 175,000 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 55,780,054 | 56,639,040 |
Common stock, shares outstanding (in shares) | 55,780,054 | 56,639,040 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Total revenues | $ 49,076 | $ 51,769 | $ 151,290 | $ 157,824 |
Operating expenses: | ||||
Property operating | 15,506 | 15,303 | 46,337 | 45,773 |
General and administrative | 4,367 | 4,672 | 13,241 | 11,480 |
Depreciation and amortization | 27,013 | 32,693 | 83,056 | 100,874 |
Impairments | 11,403 | 44,801 | 26,976 | 54,161 |
Transaction related | 101 | 194 | 356 | 398 |
Spin related | 0 | 0 | 0 | 964 |
Total operating expenses | 58,390 | 97,663 | 169,966 | 213,650 |
Other (expenses) income: | ||||
Interest expense, net | (7,380) | (7,904) | (21,741) | (22,618) |
Gain on disposition of real estate assets | 18 | 1,059 | 18 | 1,059 |
Loss on extinguishment of debt, net | 0 | 0 | (504) | (468) |
Other income, net | 437 | 31 | 638 | 118 |
Equity in loss of unconsolidated joint venture, net | (108) | (157) | (326) | (252) |
Total other (expenses) income, net | (7,033) | (6,971) | (21,915) | (22,161) |
Loss before taxes | (16,347) | (52,865) | (40,591) | (77,987) |
Provision for income taxes | (160) | (164) | (505) | (494) |
Net loss | (16,507) | (53,029) | (41,096) | (78,481) |
Net income attributable to non-controlling interest | (12) | (18) | (38) | (43) |
Net loss attributable to common stockholders | $ (16,519) | $ (53,047) | $ (41,134) | $ (78,524) |
Weighted-average shares outstanding - basic (in shares) | 56,543,379 | 56,635,038 | 56,621,362 | 56,630,086 |
Weighted-average shares outstanding - diluted (in shares) | 56,543,379 | 56,635,038 | 56,621,362 | 56,630,086 |
Basic net loss per share attributable to common stockholders (in dollars per share) | $ (0.29) | $ (0.94) | $ (0.73) | $ (1.39) |
Diluted net loss per share attributable to common stockholders (in dollars per share) | $ (0.29) | $ (0.94) | $ (0.73) | $ (1.39) |
Rental | ||||
Total revenues | $ 48,876 | $ 51,580 | $ 150,690 | $ 157,256 |
Fee income from unconsolidated joint venture | ||||
Total revenues | $ 200 | $ 189 | $ 600 | $ 568 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (16,507) | $ (53,029) | $ (41,096) | $ (78,481) |
Total other comprehensive income (loss): | ||||
Unrealized gain on interest rate derivatives | 37 | 1,885 | 386 | 7,229 |
Reclassification of previous unrealized gain on interest rate derivatives into net loss | (2,077) | (679) | (5,708) | (471) |
Total other comprehensive income (loss) | (2,040) | 1,206 | (5,322) | 6,758 |
Total comprehensive loss | (18,547) | (51,823) | (46,418) | (71,723) |
Comprehensive income attributable to non-controlling interest | (12) | (18) | (38) | (43) |
Total comprehensive loss attributable to common stockholders | $ (18,559) | $ (51,841) | $ (46,456) | $ (71,766) |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Total Stockholders’ Equity | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-Controlling Interest |
Beginning balance (in shares) at Dec. 31, 2021 | 56,625,650 | ||||||
Beginning balance at Dec. 31, 2021 | $ 1,088,288 | $ 1,086,919 | $ 57 | $ 1,145,278 | $ 299 | $ (58,715) | $ 1,369 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (9,882) | (9,906) | (9,906) | 24 | |||
Distributions | (5,707) | (5,707) | (5,707) | ||||
Equity-based compensation, net | 270 | 270 | 270 | ||||
Other comprehensive income, net | 4,057 | 4,057 | 4,057 | ||||
Ending balance (in shares) at Mar. 31, 2022 | 56,625,650 | ||||||
Ending balance at Mar. 31, 2022 | 1,077,026 | 1,075,633 | $ 57 | 1,145,548 | 4,356 | (74,328) | 1,393 |
Beginning balance (in shares) at Dec. 31, 2021 | 56,625,650 | ||||||
Beginning balance at Dec. 31, 2021 | 1,088,288 | 1,086,919 | $ 57 | 1,145,278 | 299 | (58,715) | 1,369 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (78,481) | ||||||
Other comprehensive income, net | 6,758 | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 56,635,038 | ||||||
Ending balance at Sep. 30, 2022 | 1,000,684 | 999,272 | $ 57 | 1,146,431 | 7,057 | (154,273) | 1,412 |
Beginning balance (in shares) at Mar. 31, 2022 | 56,625,650 | ||||||
Beginning balance at Mar. 31, 2022 | 1,077,026 | 1,075,633 | $ 57 | 1,145,548 | 4,356 | (74,328) | 1,393 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (15,570) | (15,571) | (15,571) | 1 | |||
Distributions | (5,663) | (5,663) | (5,663) | ||||
Equity-based compensation, net (in shares) | 9,388 | ||||||
Equity-based compensation, net | 439 | 439 | 439 | ||||
Other comprehensive income, net | 1,495 | 1,495 | 1,495 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 56,635,038 | ||||||
Ending balance at Jun. 30, 2022 | 1,057,727 | 1,056,333 | $ 57 | 1,145,987 | 5,851 | (95,562) | 1,394 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (53,029) | (53,047) | (53,047) | 18 | |||
Distributions | (5,664) | (5,664) | (5,664) | ||||
Equity-based compensation, net | 444 | 444 | 444 | ||||
Other comprehensive income, net | 1,206 | 1,206 | 1,206 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 56,635,038 | ||||||
Ending balance at Sep. 30, 2022 | 1,000,684 | 999,272 | $ 57 | 1,146,431 | 7,057 | (154,273) | 1,412 |
Beginning balance (in shares) at Dec. 31, 2022 | 56,639,040 | ||||||
Beginning balance at Dec. 31, 2022 | 975,858 | 974,469 | $ 57 | 1,147,014 | 6,308 | (178,910) | 1,389 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (8,874) | (8,885) | (8,885) | 11 | |||
Distributions | (5,721) | (5,721) | (5,721) | ||||
Repurchases of common stock to settle tax obligations (in shares) | (12,728) | ||||||
Repurchases of common stock to settle tax obligations | (74) | (74) | (74) | ||||
Equity-based compensation, net (in shares) | 37,615 | ||||||
Equity-based compensation, net | 526 | 526 | 526 | ||||
Other comprehensive income, net | (1,768) | (1,768) | (1,768) | ||||
Ending balance (in shares) at Mar. 31, 2023 | 56,663,927 | ||||||
Ending balance at Mar. 31, 2023 | 959,947 | 958,547 | $ 57 | 1,147,466 | 4,540 | (193,516) | 1,400 |
Beginning balance (in shares) at Dec. 31, 2022 | 56,639,040 | ||||||
Beginning balance at Dec. 31, 2022 | 975,858 | 974,469 | $ 57 | 1,147,014 | 6,308 | (178,910) | 1,389 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (41,096) | ||||||
Other comprehensive income, net | (5,322) | ||||||
Ending balance (in shares) at Sep. 30, 2023 | 55,780,054 | ||||||
Ending balance at Sep. 30, 2023 | 909,268 | 907,841 | $ 56 | 1,143,825 | 986 | (237,026) | 1,427 |
Beginning balance (in shares) at Mar. 31, 2023 | 56,663,927 | ||||||
Beginning balance at Mar. 31, 2023 | 959,947 | 958,547 | $ 57 | 1,147,466 | 4,540 | (193,516) | 1,400 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (15,715) | (15,730) | (15,730) | 15 | |||
Distributions | (5,683) | (5,683) | (5,683) | ||||
Equity-based compensation, net (in shares) | 31,764 | ||||||
Equity-based compensation, net | 689 | 689 | 689 | ||||
Other comprehensive income, net | (1,514) | (1,514) | (1,514) | ||||
Ending balance (in shares) at Jun. 30, 2023 | 56,695,691 | ||||||
Ending balance at Jun. 30, 2023 | 937,724 | 936,309 | $ 57 | 1,148,155 | 3,026 | (214,929) | 1,415 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (16,507) | (16,519) | (16,519) | 12 | |||
Distributions | $ (5,578) | (5,578) | (5,578) | ||||
Repurchases of common stock under Share Repurchase Program (in shares) | (900,000) | (915,637) | |||||
Repurchases of common stock under Share Repurchase Program | $ (5,018) | (5,018) | $ (1) | (5,017) | |||
Equity-based compensation, net | 687 | 687 | 687 | ||||
Other comprehensive income, net | (2,040) | (2,040) | (2,040) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 55,780,054 | ||||||
Ending balance at Sep. 30, 2023 | $ 909,268 | $ 907,841 | $ 56 | $ 1,143,825 | $ 986 | $ (237,026) | $ 1,427 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (41,096) | $ (78,481) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 83,056 | 100,874 |
Non-cash revenue adjustments, net | (6,562) | (2,683) |
Impairments | 26,976 | 54,161 |
Gain on disposition of real estate assets | (18) | (1,059) |
Loss on extinguishment of debt, net | 504 | 468 |
Amortization of deferred financing costs | 3,041 | 3,295 |
Equity-based compensation | 1,902 | 1,153 |
Equity in loss of unconsolidated joint venture, net | 326 | 252 |
Changes in assets and liabilities: | ||
Accounts receivable, net and other assets, net | (2,545) | 502 |
Accounts payable, accrued expenses and other liabilities, net | 4,004 | 7,435 |
Net cash provided by operating activities | 69,588 | 85,917 |
Cash flows from investing activities: | ||
Capital expenditures and leasing costs | (12,746) | (7,392) |
Proceeds from disposition of real estate, net | 13,767 | 22,281 |
Return of investment from unconsolidated joint venture | 1,374 | 1,798 |
Deposits for real estate assets | (2,340) | 0 |
Refunds of deposits for real estate assets | 2,340 | 0 |
Proceeds from the settlement of property-related insurance claims | 757 | 0 |
Net cash provided by investing activities | 3,152 | 16,687 |
Cash flows from financing activities: | ||
Repayment of bridge facility, including debt extinguishment costs | 0 | (355,026) |
Proceeds from mortgages payable | 0 | 355,000 |
Proceeds from credit facility revolver | 175,000 | 70,000 |
Repayments of credit facility revolver | 0 | (129,000) |
Repayment of credit facility term loan | (175,000) | 0 |
Payments of deferred financing costs | (5,654) | (3,096) |
Repurchases of common stock under Share Repurchase Program | (5,018) | 0 |
Repurchases of common stock to settle tax obligations | (74) | 0 |
Payments of deferred equity offering costs | (41) | 0 |
Distributions paid | (17,000) | (11,327) |
Other financing activities | (68) | (46) |
Net cash used in financing activities | (27,855) | (73,495) |
Net change in cash and cash equivalents and restricted cash | 44,885 | 29,109 |
Cash and cash equivalents and restricted cash at beginning of period | 55,311 | 29,318 |
Cash and cash equivalents and restricted cash at end of period | 100,196 | 58,427 |
Reconciliation of Cash and Cash Equivalents and Restricted Cash | ||
Cash and cash equivalents at beginning of period | 20,638 | 29,318 |
Restricted cash at beginning of period | 34,673 | 0 |
Cash and cash equivalents and restricted cash at beginning of period | 55,311 | 29,318 |
Cash and cash equivalents at end of period | 32,286 | 23,282 |
Restricted cash at end of period | 67,910 | 35,145 |
Cash and cash equivalents and restricted cash at end of period | $ 100,196 | $ 58,427 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1 – Organization Organization Orion Office REIT Inc. (the “Company”, “Orion”, “we” or “us”) is an internally managed real estate investment trust (“REIT”) engaged in the ownership, acquisition, and management of a diversified portfolio of mission-critical regional and corporate headquarters office buildings located in high-quality suburban markets across the U.S. and leased primarily on a single-tenant net lease basis to creditworthy tenants. The Company was incorporated in the state of Maryland on July 1, 2021 and has been operating in a manner so as to qualify and has elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its initial taxable year ended December 31, 2021. The Company was initially formed as a wholly-owned subsidiary of Realty Income Corporation (“Realty Income”). Following completion of the merger transaction involving Realty Income and VEREIT, Inc. (“VEREIT”) on November 1, 2021, Realty Income contributed the combined business comprising certain office real properties and related assets previously owned by subsidiaries of Realty Income, and certain office real properties and related assets previously owned by subsidiaries of VEREIT (the “Separation”), to the Company and its operating partnership, Orion Office REIT LP (“Orion OP”), and on November 12, 2021, effected a special distribution to its stockholders of all the outstanding shares of common stock of the Company (the “Distribution”). Following the Distribution, the Company became independent and publicly traded and its common stock, par value $0.001 per share, trades on the New York Stock Exchange (the “NYSE”) under the symbol “ONL”. As of September 30, 2023, the Company owned and operated 79 office properties and related assets totaling approximately 9.3 million leasable square feet located within 29 states. In addition, the Company owns an equity interest in OAP/VER Venture, LLC (the “Arch Street Joint Venture”), an unconsolidated joint venture with an affiliate of Arch Street Capital Partners, LLC (“Arch Street Capital Partners”). As of September 30, 2023, the Arch Street Joint Venture owned a portfolio consisting of six office properties totaling approximately 1.0 million leasable square feet located within six states. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The consolidated statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2023. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the Company’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one or more of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance; (b) the obligation to absorb the expected losses of the entity; or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity. The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate investment impairments. Revenue Recognition Rental Revenue For operating leases with minimum scheduled rent increases, the Company recognizes rental revenue on a straight-line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments is probable. Variable lease payments are recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Certain of the Company’s leases also contain provisions for tenants to reimburse the Company for real estate taxes, insurance and maintenance and other property operating expenses. Such reimbursements are included in rental revenue on a gross basis. Property operating expenses paid directly by tenants are recorded on a net basis (i.e., treated as fully offset by an identical amount of assumed reimbursement revenue) and, therefore, are not included in the Company’s consolidated financial statements. The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and nine months ended September 30, 2023, the Company recorded a reduction to rental revenue of less than $0.1 million for income not probable of collection. During the three and nine months ended September 30, 2022, the Company recorded a reduction to rental revenue of $0.5 million for property operating expense reimbursements not probable of collection. Rental revenue also includes lease termination income collected from tenants to allow for the tenants to settle their lease obligations and/or to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases and lease incentives. During the three and nine months ended September 30, 2023, the Company recognized $1.0 million and $4.1 million of lease termination income, respectively. During the nine months ended September 30, 2022, the Company recognized $0.9 million of lease termination income. Fee Income from Unconsolidated Joint Venture The Company provides various services to the Arch Street Joint Venture in exchange for market-based fees. Total asset and property management fees earned in connection with this entity was $0.2 million for the three months ended September 30, 2023 and 2022 and $0.6 million for the nine months ended September 30, 2023 and 2022. Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. Restricted Cash The Company had $67.9 million and $34.7 million in restricted cash as of September 30, 2023 and December 31, 2022, primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net) for future rent concessions and tenant improvement allowances and excess cash held by the administrative agent under the Revolving Facility (as defined in Note 6 – Debt, Net) to be used to prepay borrowings under the Revolving Facility upon the scheduled expiration in November 2023 (or earlier termination) of the Company’s interest rate swap agreements with respect to $175.0 million of borrowings thereunder. Restricted cash is included in other assets, net on the Company’s consolidated balance sheets. Recent Accounting Pronouncements There are no recent accounting pronouncements that the Company has yet to adopt as of September 30, 2023, that are expected to have a significant impact on its consolidated financial statements. |
Real Estate Investments and Rel
Real Estate Investments and Related Intangibles | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Real Estate Investments and Related Intangibles | Note 3 – Real Estate Investments and Related Intangibles Property Acquisitions During the three and nine months ended September 30, 2023, the Company had no acquisitions. During the nine months ended September 30, 2022, the Company acquired for no consideration the fee interest in one parcel of land in connection with the maturity of the tax advantaged bond and ground lease structure. As a result of the transaction, $4.7 million that was previously classified as a finance lease right-of-use asset with respect to such land parcel previously subject to the ground lease was reclassified from other assets, net to real estate investments in the Company’s consolidated balance sheet as of September 30, 2022. The Company did not have any other acquisitions during the three and nine months ended September 30, 2022. Property Dispositions and Real Estate Assets Held for Sale The following table summarizes the Company’s property dispositions for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Total dispositions 2 4 2 5 Aggregate gross sales price $ 14,050 $ 19,530 $ 14,050 $ 23,130 Gain on disposition of real estate assets $ 18 $ 1,059 $ 18 $ 1,059 Property count 2 3 2 3 Impairments on disposition of real estate assets $ — $ 21 $ — $ 1,098 Property count — 1 — 2 As of September 30, 2023, the Company had two properties classified as held for sale with a carrying value of $3.8 million, primarily comprised of land of $1.1 million and building, fixtures and improvements, net, of $2.7 million, included in real estate assets held for sale, net in the accompanying consolidated balance sheets, which it expects to be sold in the next 12 months as part of its portfolio management strategy. During the nine months ended September 30, 2023 and 2022, the Company recorded losses of $4.4 million and $6.0 million, respectively, related to held for sale properties, which are included in impairments in the accompanying consolidated statements of operations. One of the properties classified as held for sale as of September 30, 2023 was sold during October 2023. See Note 15 – Subsequent Events, below. Intangible Lease Assets and Liabilities Intangible lease assets and liabilities consisted of the following (in thousands, except weighted-average useful life): Weighted-Average Useful Life (Years) September 30, 2023 December 31, 2022 Intangible lease assets: In-place leases, net of accumulated amortization of $185,587 and $144,798, respectively 6.1 $ 121,165 $ 177,698 Leasing commissions, net of accumulated amortization of $2,651 and $1,553, respectively 12.4 13,493 13,614 Above-market lease assets, net of accumulated amortization of $13,798 and $11,391, respectively 6.5 6,052 9,826 Deferred lease incentives, net of accumulated amortization of $303 and $116, respectively 9.1 3,594 1,694 Total intangible lease assets, net $ 144,304 $ 202,832 Intangible lease liabilities: Below-market leases, net of accumulated amortization of $21,769 and $17,249, respectively 9.9 $ 9,481 $ 14,068 The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of September 30, 2023 (in thousands) : Remainder of 2023 2024 2025 2026 2027 2028 In-place leases: Total projected to be included in amortization expense $ 17,157 $ 49,039 $ 21,608 $ 15,499 $ 7,441 $ 4,592 Leasing commissions: Total projected to be included in amortization expense $ 373 $ 1,450 $ 1,382 $ 1,379 $ 1,356 $ 1,207 Above-market lease assets: Total projected to be deducted from rental revenue $ 1,042 $ 2,964 $ 850 $ 682 $ 237 $ 115 Deferred lease incentives: Total projected to be deducted from rental revenue $ 84 $ 338 $ 321 $ 223 $ 200 $ 186 Below-market lease liabilities: Total projected to be added to rental revenue $ 1,407 $ 3,786 $ 1,036 $ 817 $ 655 $ 571 Investment in Unconsolidated Joint Venture The following is a summary of the Company’s investment in the Arch Street Joint Venture, as of September 30, 2023 and December 31, 2022 and for the nine months ended September 30, 2023 and 2022 (dollars in thousands): Ownership % (1) Number of Properties Carrying Value of Equity in Loss, Net Nine Months Ended Investment September 30, 2023 September 30, 2023 December 31, 2022 September 30, 2023 September 30, 2022 Arch Street Joint Venture (2) (3) 20% 6 $ 14,124 15,824 $ (326) (252) ____________________________________ (1) The Company’s ownership interest reflects its legal ownership interest. The Company’s legal ownership interest may, at times, not equal the Company’s economic interest because of various provisions in the joint venture agreement regarding capital contributions, distributions of cash flow based on capital account balances and allocations of profits and losses. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interest. (2) During the three and nine months ended September 30, 2023 and 2022, the Arch Street Joint Venture did not acquire any properties. (3) The total carrying value of the Company’s investment in the Arch Street Joint Venture was greater than the underlying equity in net assets by $0.5 million and $0.9 million as of September 30, 2023 and December 31, 2022, respectively. This difference is related to a step up in the fair value of the investment in the Arch Street Joint Venture in connection with the Separation and the Distribution. The step up in fair value was allocated based on the underlying assets and liabilities of the Arch Street Joint Venture and is being amortized over the estimated useful lives of the respective assets and liabilities in accordance with the Company’s accounting policies. |
Receivables and Other Assets
Receivables and Other Assets | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Receivables and Other Assets | Note 4 – Receivables and Other Assets : Accounts receivable, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Accounts receivable, net $ 11,961 $ 10,461 Straight-line rent receivable, net 14,950 11,180 Total $ 26,911 $ 21,641 Other assets, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Restricted cash $ 67,910 $ 34,673 Right-of-use assets, net (1) 25,650 26,422 Investment in unconsolidated joint venture 14,124 15,824 Deferred costs, net (2) 8,444 4,619 Prepaid expenses 2,203 1,305 Derivative assets 986 6,308 Other assets, net 1,073 1,063 Total $ 120,390 $ 90,214 ____________________________________ (1) Amortization expense for below market right-of-use asset was less than $0.1 million and $0.1 million, respectively, for the three and nine months ended September 30, 2023 and 2022. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $9.9 million, and a below-market right-of-use asset, net of $6.7 million as of September 30, 2023. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $10.6 million, and a below-market right-of-use asset, net of $6.8 million as of December 31, 2022. |
Fair Value Measures
Fair Value Measures | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measures | Note 5 – Fair Value Measures Items Measured at Fair Value on a Recurring Basis The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands): Level 1 Level 2 Level 3 Balance as of September 30, 2023 Derivative assets $ — $ 986 $ — $ 986 Level 1 Level 2 Level 3 Balance as of December 31, 2022 Derivative assets $ — $ 6,308 $ — $ 6,308 Derivative Assets – The Company’s derivative financial instruments relate to interest rate swap agreements entered into in order to hedge interest rate volatility with respect to the Company’s borrowings with an aggregate notional amount of $175.0 million (as described in Note 6 – Debt, Net). The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties. Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2023 and December 31, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Items Measured at Fair Value on a Non-Recurring Basis Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Real Estate and Other Investments – The Company performs quarterly impairment review procedures for real estate investments, right of use assets and its investment in the Arch Street Joint Venture, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of such assets may not be recoverable. As part of the Company’s impairment review procedures, net real estate assets representing six and 10 properties were deemed to be impaired during the nine months ended September 30, 2023 and 2022, respectively, resulting in impairment charges of $27.0 million and $54.2 million during the nine months ended September 30, 2023 and 2022, respectively. The impairment charges were incurred primarily with respect to real estate assets expected to be sold and reflect changes in the Company’s future cash flow assumptions for agreed-upon or estimated sale proceeds, as well as changes to assumptions with regard to management’s intent to sell or lease the real estate assets. The following table summarizes our provisions for impairment during the periods indicated below (dollars in thousands): Nine Months Ended September 30, 2023 2022 Number of properties 6 10 Carrying value of impaired properties $ 54,803 $ 98,633 Provisions for impairment (26,976) (54,161) Estimated fair value $ 27,827 $ 44,472 The Company estimates fair values using Level 2 and Level 3 inputs and uses a combined income and market approach, specifically using discounted cash flow analysis and/or recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and make certain key assumptions, including the following: (1) capitalization rates; (2) discount rates; (3) number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions including number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of the Company’s tenants. For the Company’s impairment tests for the real estate assets during the nine months ended September 30, 2023, the fair value measurement for five properties was determined based on sales prices under definitive agreements and the one remaining property was determined by applying an estimated sales price based on market data. During the nine months ended September 30, 2023, impairment charges of $14.0 million were recorded for held and used properties, $8.4 million impairment charges were recorded for held for sale properties and $4.6 million for disposed properties. For the Company’s impairment tests for the real estate assets during the nine months ended September 30, 2022, the fair value measurement for eight impaired properties was determined by applying an estimated sales price based on market data and two impaired properties by applying a discount rate of 8.5% and capitalization rate of 8.0%. During the nine months ended September 30, 2022, impairment charges of $44.0 million were recorded for held and used properties, and $1.6 million impairment charges were recorded for held for sale properties and $8.6 million for disposed properties. The following table presents certain of the Company’s assets measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those assets fall (in thousands): Level 1 Level 2 (1) Level 3 (1) Balance as of September 30, 2023 Assets of properties held and used $ — $ 10,000 $ 2,762 $ 12,762 Assets of properties held for sale — 1,316 — 1,316 Total $ — $ 11,316 $ 2,762 $ 14,078 Level 1 Level 2 (1) Level 3 (1) Balance as of December 31, 2022 Assets of properties held and used $ — $ 38,900 $ 11,957 $ 50,857 Assets of properties held for sale — 2,502 — 2,502 Total $ — $ 41,402 $ 11,957 $ 53,359 ____________________________________ (1) The fair value of the level 2 category was derived using negotiated sales prices with third parties and the fair value of the level 3 category was derived using discounted cash flow analysis and management estimates of selling prices. Fair Value of Financial Instruments The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their carrying value in the accompanying consolidated balance sheets due to their short-term nature. The fair values of the Company’s long-term financial instruments are reported below (dollars in thousands): Level Carrying Value at September 30, 2023 Fair Value at September 30, 2023 Carrying Value at December 31, 2022 Fair Value at December 31, 2022 Assets: Derivative assets 2 $ 986 $ 986 $ 6,308 $ 6,308 Liabilities (1) : Mortgages payable 2 355,000 332,924 355,000 332,323 Credit facility term loan 2 — — 175,000 175,000 Credit facility revolver 2 175,000 175,000 — — Total $ 530,000 $ 507,924 $ 530,000 $ 507,323 ____________________________________ (1) Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. Debt – The fair value is estimated by an independent third party using a discounted cash flow analysis, based on management’s estimates of credit spreads and observable market interest rates, representing level 2 on the fair value hierarchy. |
Debt, Net
Debt, Net | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt, Net | Note 6 – Debt, Net As of September 30, 2023, the Company had $527.7 million of debt outstanding, including net deferred financing costs, with a weighted-average years to maturity of 3.1 years and a weighted-average interest rate of 4.63%. The following table summarizes the carrying value of debt as of September 30, 2023 and December 31, 2022, and the debt activity for the nine months ended September 30, 2023 (in thousands): Nine Months Ended September 30, 2023 Balance as of December 31, 2022 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of September 30, 2023 Mortgages payable: Outstanding balance $ 355,000 $ — $ — $ — $ 355,000 Deferred costs (2,833) — — 516 (2,317) Mortgages payable, net 352,167 — — 516 352,683 Credit facility term loan: Outstanding balance 175,000 — (175,000) — — Deferred costs (1,185) — 504 681 — Credit facility term loan, net 173,815 — (174,496) 681 — Credit facility revolver — 175,000 — — 175,000 Total debt $ 525,982 $ 175,000 $ (174,496) $ 1,197 $ 527,683 The following table summarizes the scheduled aggregate principal repayments due on the Company’s debt outstanding as of September 30, 2023 (in thousands): Total October 1, 2023 to December 31, 2023 $ — 2024 — 2025 — 2026 (1) 175,000 2027 355,000 Total $ 530,000 ____________________________________ (1) As described below, the Company’s Revolving Facility is scheduled to mature on November 12, 2024 and Orion OP has an option to extend the maturity date to May 12, 2026. This table assumes exercise of the extension option. Credit Agreement In connection with the Separation and the Distribution, on November 12, 2021, the Company, as parent, and Orion OP, as borrower, entered into (i) a credit agreement (the “Credit Agreement”) providing for a three-year, $425.0 million senior revolving credit facility (the “Revolving Facility”), including a $25.0 million letter of credit sub-facility, and a two-year, $175.0 million senior term loan facility (the “Term Loan Facility”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders and issuing banks party thereto and (ii) a credit agreement (the “Bridge Credit Agreement”) providing for a six-month, $355.0 million senior bridge term loan facility (the “Bridge Facility”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. In February 2022, as further described below, the Company refinanced the Bridge Facility in full with the $355.0 million CMBS Loan (defined below), and the Bridge Credit Agreement was terminated. In June 2023, as further described below, the Term Loan Facility was repaid and retired with borrowings under the Revolving Facility and, as of September 30, 2023, $175.0 million of principal amount was outstanding under the Revolving Facility with $250.0 million available for future borrowings thereunder, including the $25.0 million letter of credit sub-facility. The Company and Orion OP have entered into two amendments to the Credit Agreement. The purpose of the first amendment entered into in December 2022 was to change the benchmark rate for borrowings under the Credit Agreement from LIBOR to SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York). The purpose of the second amendment entered into in June 2023 was to repay and retire $175.0 million of outstanding borrowings under the Term Loan Facility with borrowings from the Revolving Facility which was undrawn at the time of the second amendment, provide Orion OP with the option to extend the maturity of the Revolving Facility for an additional 18 months to May 12, 2026 from November 12, 2024 and to effect certain other modifications. The extension option may be exercised beginning on May 16, 2024 and is subject to customary conditions including there being no default or event of default and the payment of an extension fee. Giving effect to the amendments described above, the interest rate applicable to the loans under the Revolving Facility may be determined, at the election of Orion OP, on the basis of Daily Simple SOFR, Term SOFR or a base rate, in the case of a SOFR loan, plus a SOFR adjustment of 0.10% per annum, and in the case of a SOFR loan or a base rate loan, plus an applicable margin of 3.25% for SOFR loans and 2.25% for base rate loans. Loans under the Revolving Facility may be prepaid and reborrowed, and unused commitments under the Revolving Facility may be reduced, at any time, in whole or in part, by Orion OP, without premium or penalty (except for SOFR breakage costs). In December 2022, the Company entered into interest rate swap agreements with an aggregate notional amount of $175.0 million, which has effectively fixed the interest rate on $175.0 million of principal under the Revolving Facility at 3.92% per annum until November 12, 2023. Upon the scheduled expiration of the interest rate swap agreements, the Company’s borrowing cost on the Revolving Facility will no longer be effectively fixed, but rather will float and, therefore, the Company’s borrowing cost on the Revolving Facility will immediately shift to prevailing short-term interest rates based on the benchmark and applicable margin described above, and the Company will be exposed to interest rate fluctuations on these borrowings. To the extent that amounts under the Revolving Facility remain unused, Orion OP is required to pay a quarterly commitment fee on the unused portion of the Revolving Facility in an amount equal to 0.25% per annum of the unused portion of the Revolving Facility. The Revolving Facility is guaranteed pursuant to a guaranty by the Company and, subject to certain exceptions, substantially all of Orion OP’s existing and future subsidiaries (including substantially all of its subsidiaries that directly or indirectly own unencumbered real properties), other than certain joint ventures and subsidiaries that own real properties subject to certain other indebtedness (such subsidiaries of Orion OP, the “Subsidiary Guarantors”). The Revolving Facility is secured by, among other things, first priority pledges of the equity interests in the Subsidiary Guarantors. The Revolving Facility requires that Orion OP comply with various covenants, including covenants restricting, subject to certain exceptions, liens, investments, mergers, asset sales and the payment of certain dividends. Pursuant to the second amendment described above, if, on any day, Orion OP has unrestricted cash and cash equivalents in excess of $25.0 million (excluding amounts that are then designated for application or use and are subsequently used for such purposes within 30 days), Orion OP will use (or, under certain circumstances, set aside in an escrow account established by the administrative agent) such excess amount to prepay loans under the Revolving Facility, without premium or penalty and without any reduction in the lenders’ commitment under the Revolving Facility. As of September 30, 2023, the Company had $33.2 million of restricted cash deposited in an escrow account with the administrative agent under the Revolving Facility as additional cash collateral. These funds will, in accordance with Orion OP’s obligations described above, be used to prepay borrowings under the Revolving Facility upon the scheduled expiration in November 2023 (or earlier termination) of the Company’s interest rate swap agreements with respect to $175.0 million of borrowings thereunder. In addition, the Revolving Facility giving effect to the modifications pursuant to the second amendment described above, requires that Orion OP satisfy the following financial covenants: • ratio of total debt to total asset value of not more than 0.60 to 1.00; • ratio of adjusted EBITDA to fixed charges of not less than 1.50 to 1.00; • ratio of secured debt to total asset value of not more than 0.40 to 1.00; • ratio of unsecured debt to unencumbered asset value of not more than 0.60 to 1.00; • ratio of net operating income from all unencumbered real properties to unsecured interest expense of not less than 2.00 to 1.00; and • the unencumbered asset value maintained by Orion OP must be at least $600.0 million. Pursuant to the second amendment described above, if the ratio of unsecured debt to unencumbered asset value exceeds 0.35 to 1.00 as of the end of two consecutive fiscal quarters, Orion OP will be required, within 90 days and subject to cure rights, to grant the administrative agent a first priority lien on all the properties included in the pool of unencumbered assets (other than properties identified for disposition by the Company so long as such properties are sold within one year of such identification). As of September 30, 2023, Orion OP was in compliance with the Revolving Facility financial covenants. The Revolving Facility includes customary representations and warranties of the Company and Orion OP, which must be true and correct in all material respects as a condition to future extensions of credit under the Revolving Facility. The Revolving Facility also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Orion OP under the Revolving Facility to be immediately due and payable and foreclose on the collateral securing the Revolving Facility. CMBS Loan On February 10, 2022, certain indirect subsidiaries of the Company (the “Mortgage Borrowers”) obtained a $355.0 million fixed rate mortgage loan (the “CMBS Loan”) from Wells Fargo Bank, National Association (together with its successor, the “Lender”), which is secured by the Mortgage Borrowers’ fee simple or ground lease interests in 19 properties owned indirectly by the Company (collectively, the “Mortgaged Properties”). During March 2022, Wells Fargo effected a securitization of the CMBS Loan. The CMBS Loan bears interest at a fixed rate of 4.971% per annum and matures on February 11, 2027. The CMBS Loan requires monthly payments of interest only and all principal is due at maturity. The proceeds of the CMBS Loan were used to repay the Bridge Facility. Upon closing of the CMBS Loan, the Mortgage Borrowers funded $35.5 million of loan reserves primarily for future rent concessions and tenant improvement allowances under the leases with respect to the 19 Mortgaged Properties. These amounts, as well as the transaction expenses incurred in connection with the CMBS Loan, were funded with cash on hand and borrowings under the Company’s Revolving Facility. The CMBS Loan is secured by, among other things, first priority mortgages and deeds of trust granted by the Mortgage Borrowers and encumbering the Mortgaged Properties. The CMBS Loan is generally not freely prepayable by the Mortgage Borrowers without payment of certain prepayment premiums and costs. The CMBS Loan may be prepaid in whole, but not in part, except as provided in the loan agreement governing the CMBS Loan (the “CMBS Loan Agreement”), at any time following the Prepayment Lockout Release Date (as defined in the CMBS Loan Agreement) (generally in March 2024, two years after the CMBS Loan has been fully securitized), subject to the payment of a yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. Further, releases of individual properties are permitted in connection with an arms’ length third party sale upon repayment of the Release Price (as defined in the CMBS Loan Agreement) for the applicable individual property and subject to payment of the applicable yield maintenance premium and the satisfaction of other terms and conditions set forth in the CMBS Loan Agreement. The CMBS Loan Agreement also contains customary cash management provisions, including certain trigger events (such as failure of the Mortgage Borrowers to satisfy a minimum debt yield) which allow the Lender to retain any excess cash flow as additional collateral for the Loan, until such trigger event is cured. In connection with the CMBS Loan Agreement, the Company (as the guarantor) delivered a customary non-recourse carveout guaranty to the Lender (the “Guaranty”), under which the Company guaranteed the obligations and liabilities of the Mortgage Borrowers to the Lender with respect to certain non-recourse carveout events and the circumstances under which the CMBS Loan will be fully recourse to the Mortgage Borrowers, and which includes requirements for the Company to maintain a net worth of no less than $355.0 million and liquid assets of no less than $10.0 million, in each case, exclusive of the values of the collateral for the CMBS Loan. As of September 30, 2023, the Company was in compliance with these financial covenants. The Mortgage Borrowers and the Company also provided a customary environmental indemnity agreement, pursuant to which the Mortgage Borrowers and the Company agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities relating to the Mortgaged Properties. The CMBS Loan Agreement includes customary representations, warranties and covenants of the Mortgage Borrowers and the Company. The CMBS Loan Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the Lender to, among other things, declare the principal, accrued interest and other obligations of the Mortgage Borrowers to be immediately due and payable and foreclose on the Mortgaged Properties. The Company’s mortgages payable consisted of the following as of September 30, 2023 (dollars in thousands): Encumbered Properties Net Carrying Value of Collateralized Properties (1) Outstanding Balance Weighted-Average Weighted-Average Years to Maturity Fixed-rate debt 19 $ 441,293 $ 355,000 4.97 % 3.4 ____________________________________ (1) Net carrying value is real estate assets, including right-of-use assets, net of real estate liabilities. The table above does not include mortgage notes associated with the Arch Street Joint Venture of $136.7 million as of September 30, 2023. |
Derivative and Hedging Activiti
Derivative and Hedging Activities | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative and Hedging Activities | Note 7 – Derivatives and Hedging Activities Cash Flow Hedges of Interest Rate Risk As of each of September 30, 2023 and December 31, 2022, the Company had interest rate swap agreements with an aggregate notional amount of $175.0 million, which were designated as cash flow hedges under U.S. GAAP. The interest rate swap agreements were entered into in order to hedge interest rate volatility. The initial interest rate swap agreements were effective on December 1, 2021 and were scheduled to terminate on November 12, 2023. During the year ended December 31, 2022, in connection with the transition of the benchmark rate for borrowings under the Credit Agreement from LIBOR to SOFR, the Company terminated the initial interest rate swap agreements and entered into new interest rate swap agreements with an aggregate notional amount of $175.0 million, effective on December 1, 2022 and terminating on November 12, 2023. These interest rate swap agreements remain in effect for the $175.0 million of borrowings under the Revolving Facility as of September 30, 2023 until November 12, 2023. The table below presents the fair value of the Company’s derivative financial instrument designated as a cash flow hedge as well as its classification in the Company’s consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands): Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2023 December 31, 2022 Interest rate swaps Other assets, net $ 986 $ 6,308 During the three and nine months ended September 30, 2023, the Company recorded unrealized gains of less than $0.1 million and $0.4 million, respectively, for changes in the fair value of its cash flow hedge in accumulated other comprehensive income. During the three and nine months ended September 30, 2022, the Company recorded unrealized gains of $1.9 million and $7.2 million, respectively, for changes in the fair value of its cash flow hedge in accumulated other comprehensive income. During the three and nine months ended September 30, 2023, the Company reclassified previous gains of $2.1 million and $5.7 million, respectively, from accumulated other comprehensive income into interest expense as a result of the hedged transactions impacting earnings. During the three and nine months ended September 30, 2022, the Company reclassified previous gains of $0.7 million and $0.5 million, respectively, from accumulated other comprehensive income into interest expense as a result of the hedged transactions impacting earnings. The Company estimates that an additional $1.0 million will be reclassified from other comprehensive income as a decrease to interest expense through November 12, 2023. Derivatives Not Designated as Hedging Instruments As of each of September 30, 2023 and December 31, 2022, the Company had no interest rate swaps that were not designated as qualifying hedging relationships. Tabular Disclosure of Offsetting Derivatives The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2023 and December 31, 2022 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2023 $ 986 $ — $ — $ 986 $ — $ — $ — $ 986 December 31, 2022 $ 6,308 $ — $ — $ 6,308 $ — $ — $ — $ 6,308 |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Disclosures | Note 8 – Supplemental Cash Flow Disclosures Supplemental cash flow information was as follows during the periods indicated below (in thousands): Nine Months Ended September 30, 2023 2022 Supplemental disclosures: Cash paid for interest $ 18,727 $ 18,729 Cash paid for income taxes $ 453 $ 678 Non-cash investing and financing activities: Accrued capital expenditures and leasing costs $ 4,628 $ 1,251 Distributions declared and unpaid $ 5,578 $ 5,664 Land acquired upon finance lease termination $ — $ 4,707 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 9 – Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Accrued real estate and other taxes $ 15,497 $ 10,191 Accrued operating and other 7,599 10,034 Accrued capital expenditures and leasing costs 4,183 2,333 Accrued interest 1,708 1,810 Accounts payable 1,583 1,793 Total $ 30,570 $ 26,161 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Leasing As part of its ordinary re-leasing activities, the Company has agreed and anticipates that it will continue to agree to provide rent concessions to tenants and incur leasing costs with respect to its properties, including amounts paid directly to tenants to improve their space and/or building systems, or tenant improvement allowances, landlord agreements to perform and pay for certain improvements, and leasing commissions. These rent concession and leasing cost commitments could be significant and are expected to vary due to factors such as competitive market conditions for leasing of commercial office space and the volume of square footage subject to re-leasing by the Company. As of September 30, 2023, the Company had total commitments of $44.3 million outstanding for tenant improvement allowances and $0.3 million for leasing commissions. The timing of the Company’s cash outlay for tenant improvement allowances is significantly uncertain and will depend upon the applicable tenant’s schedule for the improvements and corresponding use of capital, if any. For assets financed on the CMBS Loan, the Company has funded reserves with the lender for tenant improvement allowances and rent concession commitments. The restricted cash included in the reserve totaled $34.7 million as of September 30, 2023, including $23.6 million for tenant improvement allowances and $11.1 million for rent concession commitments, and is included in other assets, net in the Company’s consolidated balance sheets. Litigation From time to time, the Company may be party to various legal proceedings which it believes are routine in nature and incidental to the operation of its business. The Company does not believe that any such legal proceedings will have a material adverse effect upon its consolidated position or results of operations. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect upon its consolidated position or results of operations. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 11 – Leases Lessor As of September 30, 2023, the Company’s operating leases have non-cancelable lease terms ranging from 0.2 years to 15.6 years. Certain leases with tenants include tenant options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index). The following table presents future minimum base rent payments due to the Company under the terms of its operating lease agreements, excluding expense reimbursements, over the next five years and thereafter as of September 30, 2023 (in thousands). Future Minimum October 1, 2023 - December 31, 2023 $ 32,890 2024 112,183 2025 75,683 2026 72,381 2027 51,814 2028 40,104 Thereafter 158,714 Total $ 543,769 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2023, the Company’s operating leases had remaining lease terms ranging from 0.2 years to 61.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.50% as of September 30, 2023. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease commencement date or the lease guidance adoption date, as applicable, in determining the present value of lease payments. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2023 (in thousands). Future Minimum Lease Payments October 1, 2023 - December 31, 2023 $ 278 2024 883 2025 892 2026 478 2027 445 2028 447 Thereafter 12,492 Total 15,915 Less: imputed interest 5,799 Total $ 10,116 |
Leases | Note 11 – Leases Lessor As of September 30, 2023, the Company’s operating leases have non-cancelable lease terms ranging from 0.2 years to 15.6 years. Certain leases with tenants include tenant options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index). The following table presents future minimum base rent payments due to the Company under the terms of its operating lease agreements, excluding expense reimbursements, over the next five years and thereafter as of September 30, 2023 (in thousands). Future Minimum October 1, 2023 - December 31, 2023 $ 32,890 2024 112,183 2025 75,683 2026 72,381 2027 51,814 2028 40,104 Thereafter 158,714 Total $ 543,769 Lessee The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of September 30, 2023, the Company’s operating leases had remaining lease terms ranging from 0.2 years to 61.3 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.50% as of September 30, 2023. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease commencement date or the lease guidance adoption date, as applicable, in determining the present value of lease payments. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2023 (in thousands). Future Minimum Lease Payments October 1, 2023 - December 31, 2023 $ 278 2024 883 2025 892 2026 478 2027 445 2028 447 Thereafter 12,492 Total 15,915 Less: imputed interest 5,799 Total $ 10,116 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Note 12 – Stockholders’ Equity Common Stock The Company was initially capitalized on July 15, 2021 with the issuance of 100,000 shares of common stock to Realty Income for a total of $1,000. On November 10, 2021, the Company issued 56,525,650 additional shares of common stock to Realty Income, such that Realty Income owned 56,625,650 shares of the Company’s common stock. On November 12, 2021, Realty Income effected the Distribution. Dividends During the nine months ended September 30, 2023 and 2022, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows: Declaration Date Record Date Paid Date Distributions Per Share March 7, 2023 March 31, 2023 April 17, 2023 $ 0.10 May 8, 2023 June 30, 2023 July 17, 2023 $ 0.10 August 8, 2023 September 29, 2023 October 16, 2023 $ 0.10 Declaration Date Record Date Paid Date Distributions Per Share March 22, 2022 March 31, 2022 April 15, 2022 $ 0.10 May 3, 2022 June 30, 2022 July 15, 2022 $ 0.10 August 2, 2022 September 30, 2022 October 17, 2022 $ 0.10 On November 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share for the fourth quarter of 2023, payable on January 16, 2024, to stockholders of record as of December 29, 2023. Arch Street Warrants On November 12, 2021, in connection with the Distribution, Orion OP entered into an Amended and Restated Limited Liability Company Agreement (the “LLCA”) of the Arch Street Joint Venture, by and between Orion OP and OAP Holdings LLC (the “Arch Street Partner”), an affiliate of Arch Street Capital Partners, pursuant to which the Arch Street Partner consented to the transfer of the equity interests of the Arch Street Joint Venture previously held by VEREIT Real Estate, L.P. to Orion OP. Also on November 12, 2021, in connection with the entry into the LLCA, the Company granted certain affiliates of the Arch Street Partner warrants to purchase up to 1,120,000 shares of the Company’s common stock (the “Arch Street Warrants”). The Arch Street Warrants entitle the respective holders to purchase shares of the Company’s common stock at a price per share equal to $22.42, at any time. The Arch Street Warrants may be exercised, in whole or in part, through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of Company common stock determined according to the formula set forth in the Arch Street Warrants. The Arch Street Warrants expire on the earlier of (a) ten years after issuance and (b) if the Arch Street Joint Venture is terminated, the later of the termination of the Arch Street Joint Venture and seven years after issuance. Share Repurchase Program |
Equity Based Compensation
Equity Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Based Compensation | Note 13 - Equity-Based Compensation The Company has an equity-based incentive award plan (the “Equity Plan”) for officers, other employees, non-employee directors and consultants who provide services to the Company. Awards under the Equity Plan are accounted for under U.S. GAAP as share-based payments. The expense for such awards is recognized over the requisite service period, which is generally the vesting period. Under the Equity Plan, the Company may grant various types of awards, including restricted stock units that will vest if the recipient maintains employment with the Company over the requisite service period (the “Time-Based RSUs”) and restricted stock units that may vest in a number ranging from 0% to 100% of the total number of units granted, based on the Company’s total shareholder return measured on an absolute basis (“TSR-Based RSUs”) and based on certain operational performance metrics (“Metrics-Based RSUs” and collectively with the TSR-Based RSUs, “Performance-Based RSUs”), in each case for officers and other employees during a three-year performance period. The Company also granted Time-Based RSUs to its non-employee directors which are scheduled to vest on the earlier of the one-year anniversary of the grant date and the next annual meeting, subject to the recipient’s continued service with the Company. During the nine months ended September 30, 2023 and 2022, the Company granted Time-Based RSUs and/or Performance-Based RSUs to non-employee directors and officers and other employees of the Company. The fair value of the Time-Based RSUs is determined using the closing stock price on the grant date and is expensed over the requisite service period on a straight-line basis. The fair value of the TSR-Based RSUs is determined using a Monte Carlo simulation which takes into account multiple input variables that determine the probability of satisfying the required total shareholder return, and such fair value is expensed over the performance period. The fair value of the Metrics-Based RSUs is determined using the closing stock price on the grant date and is expensed over the requisite service period to the extent that the likelihood of achieving the performance metrics is probable. As of September 30, 2023, the Company determined that the likelihood of achieving some of the performance metrics was probable and, accordingly, the Company recognized compensation expense for such Metrics-Based RSUs and determined that the likelihood of achieving the remaining performance metrics was improbable and the Company recognized no compensation expense for the remaining Metrics-Based RSUs. Time-Based RSUs and Performance-Based RSUs do not provide for any rights of a common stockholder prior to the vesting of such restricted stock units. Equity-based compensation expense related to Time-Based RSUs and Performance-Based RSUs for the three and nine months ended September 30, 2023, was $0.6 million and $1.7 million, respectively. Equity-based compensation expense related to Time-Based RSUs and Performance-Based RSUs for the three and nine months ended September 30, 2022, was $0.4 million and $0.8 million, respectively. As of September 30, 2023, total unrecognized compensation expense related to Time-Based RSUs and Performance-Based RSUs was approximately $4.0 million, with an aggregate weighted-average remaining term of 1.9 years. The Company is also required under U.S. GAAP to recognize equity-based compensation expense for awards to its former employees of Realty Income time-based restricted stock units and stock options granted in connection with the Separation and |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Note 14 - Net Income (Loss) Per Share The computation of basic and diluted earnings per share is as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (16,507) $ (53,029) $ (41,096) $ (78,481) Income attributable to non-controlling interest (12) (18) (38) (43) Net loss available to common stockholders used in basic and diluted net income per share (16,519) (53,047) (41,134) (78,524) Weighted average shares of common stock outstanding - basic 56,543,379 56,635,038 56,621,362 56,630,086 Effect of dilutive securities (1) — — — — Weighted average shares of common stock - diluted 56,543,379 56,635,038 56,621,362 56,630,086 Basic and diluted net loss per share attributable to common stockholders $ (0.29) $ (0.94) $ (0.73) $ (1.39) ____________________________________ (1) As of September 30, 2023 and 2022, there were no adjustments to the weighted average common shares outstanding used in the diluted calculation given that all potentially dilutive shares were anti-dilutive. The following were excluded from diluted net loss per share attributable to common stockholders, as the effect would have been antidilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Weighted average unvested Time-Based RSUs (1) 25,559 — 3,337 — Weighted average stock warrants 1,120,000 1,120,000 1,120,000 1,120,000 ____________________________________ (1) Net of assumed repurchases in accordance with the treasury stock method and exclude Performance-Based RSUs for which the performance thresholds have not been met by the end of the applicable reporting period. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 – Subsequent Events Distributions On November 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share for the fourth quarter of 2023, payable on January 16, 2024, to stockholders of record as of December 29, 2023. Dispositions On October 23, 2023, the Company closed on the sale of one property for a gross sales price of approximately $1.4 million. Leasing Activity During October 2023, the Company entered into a 10.0-year early lease renewal for approximately 90,000 square feet at its property in Memphis, Tennessee. Also during October 2023, the Company entered into a new 10.0-year lease for 3,000 square feet of retail space at its property in Covington, Kentucky leased primarily to the United States of America. On November 1, 2023, one additional lease comprising 0.3 million square feet terminated at one of our properties. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (16,519) | $ (53,047) | $ (41,134) | $ (78,524) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation The consolidated statements of the Company presented herein include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2023. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC and U.S. GAAP. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in the Company’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of equity. For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one or more of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance; (b) the obligation to absorb the expected losses of the entity; or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity. The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company continually evaluates the need to consolidate VIEs based on standards set forth in U.S. GAAP. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding real estate investment impairments. |
Revenue Recognition | Revenue Recognition Rental Revenue For operating leases with minimum scheduled rent increases, the Company recognizes rental revenue on a straight-line basis, including the effect of any free rent periods, over the lease term when collectability of lease payments is probable. Variable lease payments are recognized as rental revenue in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Certain of the Company’s leases also contain provisions for tenants to reimburse the Company for real estate taxes, insurance and maintenance and other property operating expenses. Such reimbursements are included in rental revenue on a gross basis. Property operating expenses paid directly by tenants are recorded on a net basis (i.e., treated as fully offset by an identical amount of assumed reimbursement revenue) and, therefore, are not included in the Company’s consolidated financial statements. The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and nine months ended September 30, 2023, the Company recorded a reduction to rental revenue of less than $0.1 million for income not probable of collection. During the three and nine months ended September 30, 2022, the Company recorded a reduction to rental revenue of $0.5 million for property operating expense reimbursements not probable of collection. Rental revenue also includes lease termination income collected from tenants to allow for the tenants to settle their lease obligations and/or to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases and lease incentives. During the three and nine months ended September 30, 2023, the Company recognized $1.0 million and $4.1 million of lease termination income, respectively. During the nine months ended September 30, 2022, the Company recognized $0.9 million of lease termination income. Fee Income from Unconsolidated Joint Venture The Company provides various services to the Arch Street Joint Venture in exchange for market-based fees. Total asset and property management fees earned in connection with this entity was $0.2 million for the three months ended September 30, 2023 and 2022 and $0.6 million for the nine months ended September 30, 2023 and 2022. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts, as well as investments in highly-liquid funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held. |
Restricted cash | Restricted Cash The Company had $67.9 million and $34.7 million in restricted cash as of September 30, 2023 and December 31, 2022, primarily comprised of reserves held by the lender under the CMBS Loan (as defined in Note 6 – Debt, Net) for future rent concessions and tenant improvement allowances and excess cash held by the administrative agent under the Revolving Facility (as defined in Note 6 – Debt, Net) to be used to prepay borrowings under the Revolving Facility upon the scheduled expiration in November 2023 (or earlier termination) of the Company’s interest rate swap agreements with respect to $175.0 million of borrowings thereunder. Restricted cash is included in other assets, net on the Company’s consolidated balance sheets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are no recent accounting pronouncements that the Company has yet to adopt as of September 30, 2023, that are expected to have a significant impact on its consolidated financial statements. |
Real Estate Investments and R_2
Real Estate Investments and Related Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties | The following table summarizes the Company’s property dispositions for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Total dispositions 2 4 2 5 Aggregate gross sales price $ 14,050 $ 19,530 $ 14,050 $ 23,130 Gain on disposition of real estate assets $ 18 $ 1,059 $ 18 $ 1,059 Property count 2 3 2 3 Impairments on disposition of real estate assets $ — $ 21 $ — $ 1,098 Property count — 1 — 2 |
Schedule of Finite-Lived Intangible Assets and Liabilities | Intangible lease assets and liabilities consisted of the following (in thousands, except weighted-average useful life): Weighted-Average Useful Life (Years) September 30, 2023 December 31, 2022 Intangible lease assets: In-place leases, net of accumulated amortization of $185,587 and $144,798, respectively 6.1 $ 121,165 $ 177,698 Leasing commissions, net of accumulated amortization of $2,651 and $1,553, respectively 12.4 13,493 13,614 Above-market lease assets, net of accumulated amortization of $13,798 and $11,391, respectively 6.5 6,052 9,826 Deferred lease incentives, net of accumulated amortization of $303 and $116, respectively 9.1 3,594 1,694 Total intangible lease assets, net $ 144,304 $ 202,832 Intangible lease liabilities: Below-market leases, net of accumulated amortization of $21,769 and $17,249, respectively 9.9 $ 9,481 $ 14,068 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of September 30, 2023 (in thousands) : Remainder of 2023 2024 2025 2026 2027 2028 In-place leases: Total projected to be included in amortization expense $ 17,157 $ 49,039 $ 21,608 $ 15,499 $ 7,441 $ 4,592 Leasing commissions: Total projected to be included in amortization expense $ 373 $ 1,450 $ 1,382 $ 1,379 $ 1,356 $ 1,207 Above-market lease assets: Total projected to be deducted from rental revenue $ 1,042 $ 2,964 $ 850 $ 682 $ 237 $ 115 Deferred lease incentives: Total projected to be deducted from rental revenue $ 84 $ 338 $ 321 $ 223 $ 200 $ 186 Below-market lease liabilities: Total projected to be added to rental revenue $ 1,407 $ 3,786 $ 1,036 $ 817 $ 655 $ 571 |
Schedule of Company's Investment in Unconsolidated Joint Venture | The following is a summary of the Company’s investment in the Arch Street Joint Venture, as of September 30, 2023 and December 31, 2022 and for the nine months ended September 30, 2023 and 2022 (dollars in thousands): Ownership % (1) Number of Properties Carrying Value of Equity in Loss, Net Nine Months Ended Investment September 30, 2023 September 30, 2023 December 31, 2022 September 30, 2023 September 30, 2022 Arch Street Joint Venture (2) (3) 20% 6 $ 14,124 15,824 $ (326) (252) ____________________________________ (1) The Company’s ownership interest reflects its legal ownership interest. The Company’s legal ownership interest may, at times, not equal the Company’s economic interest because of various provisions in the joint venture agreement regarding capital contributions, distributions of cash flow based on capital account balances and allocations of profits and losses. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interest. (2) During the three and nine months ended September 30, 2023 and 2022, the Arch Street Joint Venture did not acquire any properties. (3) The total carrying value of the Company’s investment in the Arch Street Joint Venture was greater than the underlying equity in net assets by $0.5 million and $0.9 million as of September 30, 2023 and December 31, 2022, respectively. This difference is related to a step up in the fair value of the investment in the Arch Street Joint Venture in connection with the Separation and the Distribution. The step up in fair value was allocated based on the underlying assets and liabilities of the Arch Street Joint Venture and is being amortized over the estimated useful lives of the respective assets and liabilities in accordance with the Company’s accounting policies. |
Receivables and Other Assets (T
Receivables and Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts Receivables, Net | Accounts receivable, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Accounts receivable, net $ 11,961 $ 10,461 Straight-line rent receivable, net 14,950 11,180 Total $ 26,911 $ 21,641 |
Schedule of Other Assets, Net | Other assets, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Restricted cash $ 67,910 $ 34,673 Right-of-use assets, net (1) 25,650 26,422 Investment in unconsolidated joint venture 14,124 15,824 Deferred costs, net (2) 8,444 4,619 Prepaid expenses 2,203 1,305 Derivative assets 986 6,308 Other assets, net 1,073 1,063 Total $ 120,390 $ 90,214 ____________________________________ (1) Amortization expense for below market right-of-use asset was less than $0.1 million and $0.1 million, respectively, for the three and nine months ended September 30, 2023 and 2022. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $9.9 million, and a below-market right-of-use asset, net of $6.7 million as of September 30, 2023. Includes right-of-use finance leases of $9.0 million, right-of-use operating leases of $10.6 million, and a below-market right-of-use asset, net of $6.8 million as of December 31, 2022. |
Fair Value Measures (Tables)
Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Recurring | The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands): Level 1 Level 2 Level 3 Balance as of September 30, 2023 Derivative assets $ — $ 986 $ — $ 986 Level 1 Level 2 Level 3 Balance as of December 31, 2022 Derivative assets $ — $ 6,308 $ — $ 6,308 |
Schedule of Provisions for Impairment | The following table summarizes our provisions for impairment during the periods indicated below (dollars in thousands): Nine Months Ended September 30, 2023 2022 Number of properties 6 10 Carrying value of impaired properties $ 54,803 $ 98,633 Provisions for impairment (26,976) (54,161) Estimated fair value $ 27,827 $ 44,472 |
Schedule of Assets Measured at Fair Value on a Non-recurring Basis | The following table presents certain of the Company’s assets measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those assets fall (in thousands): Level 1 Level 2 (1) Level 3 (1) Balance as of September 30, 2023 Assets of properties held and used $ — $ 10,000 $ 2,762 $ 12,762 Assets of properties held for sale — 1,316 — 1,316 Total $ — $ 11,316 $ 2,762 $ 14,078 Level 1 Level 2 (1) Level 3 (1) Balance as of December 31, 2022 Assets of properties held and used $ — $ 38,900 $ 11,957 $ 50,857 Assets of properties held for sale — 2,502 — 2,502 Total $ — $ 41,402 $ 11,957 $ 53,359 ____________________________________ (1) The fair value of the level 2 category was derived using negotiated sales prices with third parties and the fair value of the level 3 category was derived using discounted cash flow analysis and management estimates of selling prices. |
Schedule of Fair Value, by Balance Sheet Grouping | The fair values of the Company’s long-term financial instruments are reported below (dollars in thousands): Level Carrying Value at September 30, 2023 Fair Value at September 30, 2023 Carrying Value at December 31, 2022 Fair Value at December 31, 2022 Assets: Derivative assets 2 $ 986 $ 986 $ 6,308 $ 6,308 Liabilities (1) : Mortgages payable 2 355,000 332,924 355,000 332,323 Credit facility term loan 2 — — 175,000 175,000 Credit facility revolver 2 175,000 175,000 — — Total $ 530,000 $ 507,924 $ 530,000 $ 507,323 ____________________________________ (1) Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. |
Debt, Net (Tables)
Debt, Net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the carrying value of debt as of September 30, 2023 and December 31, 2022, and the debt activity for the nine months ended September 30, 2023 (in thousands): Nine Months Ended September 30, 2023 Balance as of December 31, 2022 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of September 30, 2023 Mortgages payable: Outstanding balance $ 355,000 $ — $ — $ — $ 355,000 Deferred costs (2,833) — — 516 (2,317) Mortgages payable, net 352,167 — — 516 352,683 Credit facility term loan: Outstanding balance 175,000 — (175,000) — — Deferred costs (1,185) — 504 681 — Credit facility term loan, net 173,815 — (174,496) 681 — Credit facility revolver — 175,000 — — 175,000 Total debt $ 525,982 $ 175,000 $ (174,496) $ 1,197 $ 527,683 |
Schedule of Maturities of Long-Term Debt | The following table summarizes the scheduled aggregate principal repayments due on the Company’s debt outstanding as of September 30, 2023 (in thousands): Total October 1, 2023 to December 31, 2023 $ — 2024 — 2025 — 2026 (1) 175,000 2027 355,000 Total $ 530,000 ____________________________________ (1) As described below, the Company’s Revolving Facility is scheduled to mature on November 12, 2024 and Orion OP has an option to extend the maturity date to May 12, 2026. This table assumes exercise of the extension option. |
Schedule of Mortgage Notes Payable | The Company’s mortgages payable consisted of the following as of September 30, 2023 (dollars in thousands): Encumbered Properties Net Carrying Value of Collateralized Properties (1) Outstanding Balance Weighted-Average Weighted-Average Years to Maturity Fixed-rate debt 19 $ 441,293 $ 355,000 4.97 % 3.4 ____________________________________ (1) Net carrying value is real estate assets, including right-of-use assets, net of real estate liabilities. |
Derivative and Hedging Activi_2
Derivative and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The table below presents the fair value of the Company’s derivative financial instrument designated as a cash flow hedge as well as its classification in the Company’s consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands): Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2023 December 31, 2022 Interest rate swaps Other assets, net $ 986 $ 6,308 |
Schedule of Derivative Offsetting Assets | The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2023 and December 31, 2022 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2023 $ 986 $ — $ — $ 986 $ — $ — $ — $ 986 December 31, 2022 $ 6,308 $ — $ — $ 6,308 $ — $ — $ — $ 6,308 |
Schedule of Derivative Offsetting Liabilities | The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of September 30, 2023 and December 31, 2022 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. Offsetting of Derivative Assets and Liabilities Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount September 30, 2023 $ 986 $ — $ — $ 986 $ — $ — $ — $ 986 December 31, 2022 $ 6,308 $ — $ — $ 6,308 $ — $ — $ — $ 6,308 |
Supplemental Cash Flow Disclo_2
Supplemental Cash Flow Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information was as follows during the periods indicated below (in thousands): Nine Months Ended September 30, 2023 2022 Supplemental disclosures: Cash paid for interest $ 18,727 $ 18,729 Cash paid for income taxes $ 453 $ 678 Non-cash investing and financing activities: Accrued capital expenditures and leasing costs $ 4,628 $ 1,251 Distributions declared and unpaid $ 5,578 $ 5,664 Land acquired upon finance lease termination $ — $ 4,707 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Accrued real estate and other taxes $ 15,497 $ 10,191 Accrued operating and other 7,599 10,034 Accrued capital expenditures and leasing costs 4,183 2,333 Accrued interest 1,708 1,810 Accounts payable 1,583 1,793 Total $ 30,570 $ 26,161 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Operating Lease Payments to be Received | The following table presents future minimum base rent payments due to the Company under the terms of its operating lease agreements, excluding expense reimbursements, over the next five years and thereafter as of September 30, 2023 (in thousands). Future Minimum October 1, 2023 - December 31, 2023 $ 32,890 2024 112,183 2025 75,683 2026 72,381 2027 51,814 2028 40,104 Thereafter 158,714 Total $ 543,769 |
Schedule of Operating Lease Liability, Maturity | The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of September 30, 2023 (in thousands). Future Minimum Lease Payments October 1, 2023 - December 31, 2023 $ 278 2024 883 2025 892 2026 478 2027 445 2028 447 Thereafter 12,492 Total 15,915 Less: imputed interest 5,799 Total $ 10,116 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Dividends Declared | During the nine months ended September 30, 2023 and 2022, the Company’s Board of Directors declared quarterly cash dividends on shares of the Company’s common stock as follows: Declaration Date Record Date Paid Date Distributions Per Share March 7, 2023 March 31, 2023 April 17, 2023 $ 0.10 May 8, 2023 June 30, 2023 July 17, 2023 $ 0.10 August 8, 2023 September 29, 2023 October 16, 2023 $ 0.10 Declaration Date Record Date Paid Date Distributions Per Share March 22, 2022 March 31, 2022 April 15, 2022 $ 0.10 May 3, 2022 June 30, 2022 July 15, 2022 $ 0.10 August 2, 2022 September 30, 2022 October 17, 2022 $ 0.10 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computation of basic and diluted earnings per share is as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (16,507) $ (53,029) $ (41,096) $ (78,481) Income attributable to non-controlling interest (12) (18) (38) (43) Net loss available to common stockholders used in basic and diluted net income per share (16,519) (53,047) (41,134) (78,524) Weighted average shares of common stock outstanding - basic 56,543,379 56,635,038 56,621,362 56,630,086 Effect of dilutive securities (1) — — — — Weighted average shares of common stock - diluted 56,543,379 56,635,038 56,621,362 56,630,086 Basic and diluted net loss per share attributable to common stockholders $ (0.29) $ (0.94) $ (0.73) $ (1.39) ____________________________________ (1) As of September 30, 2023 and 2022, there were no adjustments to the weighted average common shares outstanding used in the diluted calculation given that all potentially dilutive shares were anti-dilutive. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following were excluded from diluted net loss per share attributable to common stockholders, as the effect would have been antidilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Weighted average unvested Time-Based RSUs (1) 25,559 — 3,337 — Weighted average stock warrants 1,120,000 1,120,000 1,120,000 1,120,000 ____________________________________ (1) Net of assumed repurchases in accordance with the treasury stock method and exclude Performance-Based RSUs for which the performance thresholds have not been met by the end of the applicable reporting period. |
Organization (Details)
Organization (Details) ft² in Millions | Sep. 30, 2023 ft² property state $ / shares | Dec. 31, 2022 $ / shares |
Real Estate Properties [Line Items] | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Number of properties | property | 79 | |
Area of real estate property | ft² | 9.3 | |
Number of states with real estate properties owned | state | 29 | |
Arch Street Joint Venture | ||
Real Estate Properties [Line Items] | ||
Number of properties | property | 6 | |
Area of real estate property | ft² | 1 | |
Number of states with real estate properties owned | state | 6 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 01, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||||
Reduction to rental revenue | $ 100 | $ 500 | $ 100 | $ 500 | |||
Lease termination income | 1,000 | 4,100 | 900 | ||||
Property management fee revenue | 200 | 200 | 600 | 600 | |||
Restricted cash | 67,910 | $ 35,145 | 67,910 | $ 35,145 | $ 34,673 | $ 0 | |
Interest Rate Swap | |||||||
Debt Instrument [Line Items] | |||||||
Derivative, notional amount | $ 175,000 | ||||||
Interest Rate Swap | Designated as Hedging Instrument | |||||||
Debt Instrument [Line Items] | |||||||
Derivative, notional amount | $ 175,000 | $ 175,000 | $ 175,000 |
Real Estate Investments and R_3
Real Estate Investments and Related Intangibles - Property Acquisitions (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 acquistion | Sep. 30, 2023 acquistion | Sep. 30, 2022 USD ($) landParcel | |
Real Estate [Abstract] | |||
Number of real estate acquisitions | 0 | 0 | 1 |
Payments to acquire property | $ 0 | ||
Finance lease ROU asset reclassified to real estate investments | $ 4,700,000 |
Real Estate Investments and R_4
Real Estate Investments and Related Intangibles - Schedule of Real Estate Properties (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | |
Property, Plant and Equipment [Line Items] | ||||
Gain on disposition of real estate assets | $ 18 | $ 1,059 | $ 18 | $ 1,059 |
Impairments on disposition of real estate assets | $ 11,403 | $ 44,801 | $ 26,976 | $ 54,161 |
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||
Property, Plant and Equipment [Line Items] | ||||
Total dispositions | property | 2 | 4 | 2 | 5 |
Aggregate gross sales price | $ 14,050 | $ 19,530 | $ 14,050 | $ 23,130 |
Gain on disposition of real estate assets | $ 18 | $ 1,059 | $ 18 | $ 1,059 |
Property count | property | 2 | 3 | 2 | 3 |
Impairments on disposition of real estate assets | $ 0 | $ 21 | $ 0 | $ 1,098 |
Property count | property | 0 | 1 | 0 | 2 |
Real Estate Investments and R_5
Real Estate Investments and Related Intangibles - Property Dispositions and Real Estate Assets Held for Sale (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2023 property | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||
Number of properties held for sale | property | 2 | |||||
Real estate assets held for sale, net | $ 3,818 | $ 3,818 | $ 2,502 | |||
Impairments | 11,403 | $ 44,801 | 26,976 | $ 54,161 | ||
Subsequent Event | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Number of properties sold | property | 1 | |||||
Held-for-sale | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Impairments | 4,400 | $ 6,000 | ||||
Land | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Real estate assets held for sale, net | 1,100 | 1,100 | ||||
Building, Fixtures And Improvements | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Real estate assets held for sale, net | $ 2,700 | $ 2,700 |
Real Estate Investments and R_6
Real Estate Investments and Related Intangibles - Schedule of Finite-Lived Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Real Estate [Line Items] | |||||
Intangible lease assets, net | $ 144,304 | $ 144,304 | $ 202,832 | ||
Below market-leases accumulated amortization | 21,769 | $ 21,769 | 17,249 | ||
Weighted-Average Useful Life (Years) | 9 years 10 months 24 days | ||||
Below-market lease liabilities, net | 9,481 | $ 9,481 | 14,068 | ||
Amortization of deferred lease incentives | $ 100 | 200 | $ 100 | ||
In-place leases: | |||||
Real Estate [Line Items] | |||||
Accumulated amortization | $ 185,587 | $ 185,587 | 144,798 | ||
Weighted-Average Useful Life (Years) | 6 years 1 month 6 days | 6 years 1 month 6 days | |||
Intangible lease assets, net | $ 121,165 | $ 121,165 | 177,698 | ||
Leasing commissions: | |||||
Real Estate [Line Items] | |||||
Accumulated amortization | $ 2,651 | $ 2,651 | 1,553 | ||
Weighted-Average Useful Life (Years) | 12 years 4 months 24 days | 12 years 4 months 24 days | |||
Intangible lease assets, net | $ 13,493 | $ 13,493 | 13,614 | ||
Above-market lease assets: | |||||
Real Estate [Line Items] | |||||
Accumulated amortization | $ 13,798 | $ 13,798 | 11,391 | ||
Weighted-Average Useful Life (Years) | 6 years 6 months | 6 years 6 months | |||
Intangible lease assets, net | $ 6,052 | $ 6,052 | 9,826 | ||
Deferred lease incentives: | |||||
Real Estate [Line Items] | |||||
Accumulated amortization | $ 303 | $ 303 | 116 | ||
Weighted-Average Useful Life (Years) | 9 years 1 month 6 days | 9 years 1 month 6 days | |||
Intangible lease assets, net | $ 3,594 | $ 3,594 | $ 1,694 | ||
Above‑ and below-market leases | |||||
Real Estate [Line Items] | |||||
Amortization expense | 300 | 300 | 800 | 900 | |
In-place leases, leasing commissions and other lease intangibles | |||||
Real Estate [Line Items] | |||||
Amortization expense | $ 18,500 | $ 23,700 | $ 57,400 | $ 73,500 |
Real Estate Investments and R_7
Real Estate Investments and Related Intangibles - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Below-market lease liabilities: | |
Remainder of 2023 | $ 1,407 |
2024 | 3,786 |
2025 | 1,036 |
2026 | 817 |
2027 | 655 |
2028 | 571 |
In-place leases: | |
Real Estate [Line Items] | |
Remainder of 2023 | 17,157 |
2024 | 49,039 |
2025 | 21,608 |
2026 | 15,499 |
2027 | 7,441 |
2028 | 4,592 |
Leasing commissions: | |
Real Estate [Line Items] | |
Remainder of 2023 | 373 |
2024 | 1,450 |
2025 | 1,382 |
2026 | 1,379 |
2027 | 1,356 |
2028 | 1,207 |
Above-market lease assets: | |
Real Estate [Line Items] | |
Remainder of 2023 | 1,042 |
2024 | 2,964 |
2025 | 850 |
2026 | 682 |
2027 | 237 |
2028 | 115 |
Deferred lease incentives: | |
Real Estate [Line Items] | |
Remainder of 2023 | 84 |
2024 | 338 |
2025 | 321 |
2026 | 223 |
2027 | 200 |
2028 | $ 186 |
Real Estate Investments and R_8
Real Estate Investments and Related Intangibles - Schedule of Company's Investment in Unconsolidated Joint Venture (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) property | Sep. 30, 2022 property | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | Dec. 31, 2022 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||||
Number of Properties | property | 79 | 79 | |||
Arch Street Joint Venture | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership (in percent) | 20% | 20% | |||
Number of Properties | property | 6 | 6 | |||
Carrying Value of Investment | $ | $ 14,124 | $ 14,124 | $ 15,824 | ||
Equity in Loss, Net | $ | $ (326) | $ (252) | |||
Number of properties acquired | property | 0 | 0 | 0 | 0 | |
Difference between carrying amount and underlying equity | $ | $ 500 | $ 500 | $ 900 |
Receivables and Other Assets -
Receivables and Other Assets - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Accounts receivable, net | $ 11,961 | $ 10,461 |
Straight-line rent receivable, net | 14,950 | 11,180 |
Total | $ 26,911 | $ 21,641 |
Receivables and Other Assets _2
Receivables and Other Assets - Other Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||||||
Restricted cash | $ 67,910 | $ 35,145 | $ 67,910 | $ 35,145 | $ 34,673 | $ 0 |
Operating lease, right-of-use asset, statement of financial position [Extensible Enumeration] | Total | Total | Total | |||
Finance lease, right-of-use asset, statement of financial position [Extensible Enumeration] | Total | Total | Total | |||
Right-of-use assets, net | $ 25,650 | $ 25,650 | $ 26,422 | |||
Investment in unconsolidated joint venture | 14,124 | 14,124 | 15,824 | |||
Deferred costs, net | 8,444 | 8,444 | 4,619 | |||
Prepaid expenses | 2,203 | 2,203 | 1,305 | |||
Derivative assets | 986 | 986 | 6,308 | |||
Other assets, net | 1,073 | 1,073 | 1,063 | |||
Total | 120,390 | 120,390 | 90,214 | |||
Amortization expense for below market right-of-use, less than | 100 | 100 | 100 | 100 | ||
Finance lease, right-of-use | 9,000 | 9,000 | 9,000 | |||
Operating lease, right-of-use | 9,900 | 9,900 | 10,600 | |||
Below market lease, right-of-use asset | 6,700 | 6,700 | 6,800 | |||
Line of Credit Facility [Line Items] | ||||||
Amortization of deferred financing costs | 3,041 | 3,295 | ||||
Deferred offering costs | 600 | 600 | 500 | |||
Credit facility revolver | Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Amortization of deferred financing costs | 800 | $ 500 | 1,800 | $ 1,600 | ||
Accumulated amortization of deferred costs | $ 4,300 | 4,300 | $ 2,500 | |||
Deferred costs capitalized | $ 5,600 |
Fair Value Measures - Schedule
Fair Value Measures - Schedule of Fair Value Measurements, Recurring (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 986 | $ 6,308 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 986 | 6,308 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 0 | $ 0 |
Fair Value Measures - Narrative
Fair Value Measures - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 6 | 10 | ||
Impairments | $ 11,403 | $ 44,801 | $ 26,976 | $ 54,161 |
Interest Rate Swap | Designated as Hedging Instrument | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Notional amount | $ 175,000 | 175,000 | ||
Assets Impaired During The Nine Months Ended September 30, 2023 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment, long-lived asset, held-for-use | 14,000 | |||
Impairment of properties held for sale | 8,400 | |||
Impairment of properties disposed of | $ 4,600 | |||
Assets Impaired During The Nine Months Ended September 30, 2023 | Estimated Sales Price per Definitive Agreements | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 5 | |||
Assets Impaired During The Nine Months Ended September 30, 2023 | Estimated Sales Price per Market Data | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 1 | |||
Assets Impaired During The Nine Months Ended September 30, 2022 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment, long-lived asset, held-for-use | 44,000 | |||
Impairment of properties held for sale | 1,600 | |||
Impairment of properties disposed of | $ 8,600 | |||
Assets Impaired During The Nine Months Ended September 30, 2022 | Estimated Sales Price per Market Data | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 8 | |||
Assets Impaired During The Nine Months Ended September 30, 2022 | Discount Rate and Capitalization Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of properties | property | 2 | |||
Assets Impaired During The Nine Months Ended September 30, 2022 | Discount Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Measurement input (percent) | 0.085 | 0.085 | ||
Assets Impaired During The Nine Months Ended September 30, 2022 | Capitalization Rate | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Measurement input (percent) | 0.080 | 0.080 |
Fair Value Measures - Schedul_2
Fair Value Measures - Schedule of Provisions for Impairment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | |
Fair Value Disclosures [Abstract] | ||||
Number of properties | property | 6 | 10 | ||
Carrying value of impaired properties | $ 54,803 | $ 98,633 | $ 54,803 | $ 98,633 |
Provisions for impairment | (11,403) | (44,801) | (26,976) | (54,161) |
Estimated fair value | $ 27,827 | $ 44,472 | $ 27,827 | $ 44,472 |
Fair Value Measures - Schedul_3
Fair Value Measures - Schedule of Assets Measured at Fair Value on a Non-recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | $ 12,762 | $ 50,857 |
Assets of properties held for sale | 1,316 | 2,502 |
Total | 14,078 | 53,359 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 0 | 0 |
Assets of properties held for sale | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 10,000 | 38,900 |
Assets of properties held for sale | 1,316 | 2,502 |
Total | 11,316 | 41,402 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets of properties held and used | 2,762 | 11,957 |
Assets of properties held for sale | 0 | 0 |
Total | $ 2,762 | $ 11,957 |
Fair Value Measures - Schedul_4
Fair Value Measures - Schedule of Fair Value, by Balance Sheet Grouping (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 530,000 | $ 530,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 507,924 | 507,323 |
Level 2 | Derivative assets | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 986 | 6,308 |
Level 2 | Derivative assets | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 986 | 6,308 |
Level 2 | Mortgages payable | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 355,000 | 355,000 |
Level 2 | Mortgages payable | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 332,924 | 332,323 |
Level 2 | Credit facility term loan | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 175,000 |
Level 2 | Credit facility term loan | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 0 | 175,000 |
Level 2 | Credit facility revolver | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 175,000 | 0 |
Level 2 | Credit facility revolver | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 175,000 | $ 0 |
Debt, Net - Narrative (Details)
Debt, Net - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
Total debt outstanding | $ 527,683 | $ 525,982 |
Debt instrument, term | 3 years 1 month 6 days | |
Weighted-Average Interest Rate | 4.63% |
Debt, Net - Schedule of Debt (D
Debt, Net - Schedule of Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Debt [Roll Forward] | ||
Total debt, beginning balance | $ 525,982 | |
Debt issuance principal amount | 175,000 | |
Repayments, extinguishment and assumptions, total debt, net | (174,496) | |
Amortization of deferred costs | 3,041 | $ 3,295 |
Amortization of deferred financing costs | 1,197 | |
Total debt, ending balance | 527,683 | |
Mortgages payable | ||
Debt [Roll Forward] | ||
Outstanding balance, beginning | 355,000 | |
Deferred costs, beginning balance | (2,833) | |
Total debt, beginning balance | 352,167 | |
Debt issuance outstanding balance amount | 0 | |
Debt issuance, deferred cost | 0 | |
Debt issuance principal amount | 0 | |
Repayments, extinguishment and assumptions, deferred costs, amount | 0 | |
Repayments, extinguishment and assumptions, total debt, net | 0 | |
Amortization of deferred costs | 516 | |
Amortization of deferred financing costs | 516 | |
Outstanding balance, ending | 355,000 | |
Deferred costs, ending balance | (2,317) | |
Total debt, ending balance | 352,683 | |
Credit facility term loan, net | ||
Debt [Roll Forward] | ||
Outstanding balance, beginning | 175,000 | |
Deferred costs, beginning balance | (1,185) | |
Total debt, beginning balance | 173,815 | |
Debt issuance outstanding balance amount | 0 | |
Debt issuance, deferred cost | 0 | |
Debt issuance principal amount | 0 | |
Repayments, extinguishment and assumptions outstanding balance amount | (175,000) | |
Repayments, extinguishment and assumptions, deferred costs, amount | 504 | |
Repayments, extinguishment and assumptions, total debt, net | (174,496) | |
Amortization of deferred costs | 681 | |
Amortization of deferred financing costs | 681 | |
Outstanding balance, ending | 0 | |
Deferred costs, ending balance | 0 | |
Total debt, ending balance | 0 | |
Credit facility revolver | ||
Debt [Roll Forward] | ||
Total debt, beginning balance | 0 | |
Debt issuance principal amount | 175,000 | |
Repayments, extinguishment and assumptions, total debt, net | 0 | |
Amortization of deferred financing costs | 0 | |
Total debt, ending balance | $ 175,000 |
Debt, Net - Schedule of Maturit
Debt, Net - Schedule of Maturities of Long-Term Debt (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
October 1, 2023 to December 31, 2023 | $ 0 |
2024 | 0 |
2025 | 0 |
2026 | 175,000 |
2027 | 355,000 |
Total | $ 530,000 |
Debt, Net - Credit Agreement (D
Debt, Net - Credit Agreement (Details) | 9 Months Ended | |||||||
Jun. 29, 2023 USD ($) qtr | Nov. 12, 2021 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 01, 2022 USD ($) | Feb. 28, 2022 USD ($) | Feb. 10, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 3 years 1 month 6 days | |||||||
Repayments of term loans | $ 175,000,000 | $ 0 | ||||||
Interest Rate Swap | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative, notional amount | $ 175,000,000 | |||||||
Senior term loan | Credit facility term loan, net | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 2 years | |||||||
Borrowing capacity | $ 175,000,000 | |||||||
Repayments of term loans | $ 175,000,000 | |||||||
Optional term extension period | 18 months | |||||||
Mortgages payable | CMBS Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 355,000,000 | $ 355,000,000 | ||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Credit facilities | 175,000,000 | $ 0 | ||||||
Commitment fee percentage | 0.25% | |||||||
Escrow deposit | 33,200,000 | |||||||
Revolving Credit Facility | 3.92%, due November 12, 2023 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 175,000,000 | |||||||
Effective interest rate percentage | 3.92% | |||||||
Revolving Credit Facility | 3.92%, due November 12, 2023 | Interest Rate Swap | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative, notional amount | $ 175,000,000 | |||||||
Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 3 years | |||||||
Borrowing capacity | $ 425,000,000 | |||||||
Credit facilities | 175,000,000 | |||||||
Remaining borrowing capacity | 250,000,000 | |||||||
Unrestricted cash and cash equivalents | $ 25,000,000 | |||||||
Covenant, total debt to total asset value, maximum | 0.60 | |||||||
Covenant, adjusted EBITDA to fixed charges, minimum | 1.50 | |||||||
Covenant, secured debt to total asset value, maximum | 0.40 | |||||||
Covenant, unsecured debt to unencumbered asset value, maximum | 0.60 | |||||||
Covenant, unencumbered real properties to unsecured interest expense, minimum | 2 | |||||||
Covenant, unencumbered asset value, minimum | $ 600,000,000 | |||||||
Covenant, unsecured debt to total unencumbered assets, threshold | 0.35 | |||||||
Covenant measurement period - number of consecutive quarters | qtr | 2 | |||||||
Period within which to grant administrative agent a first priority lien on all property included in pool | 90 days | |||||||
Revolving Credit Facility | Line of Credit | SOFR | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
Revolving Credit Facility | Line of Credit | Term SOFR | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 3.25% | |||||||
Revolving Credit Facility | Line of Credit | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 2.25% | |||||||
Revolving Credit Facility | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing capacity | $ 25,000,000 | $ 25,000,000 | ||||||
Bridge Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 6 months | |||||||
Borrowing capacity | $ 355,000,000 |
Debt, Net - CMBS Loan (Details)
Debt, Net - CMBS Loan (Details) $ in Millions | Feb. 10, 2022 USD ($) property | Sep. 30, 2023 USD ($) | Feb. 28, 2022 USD ($) |
Unconsolidated Joint Venture | |||
Debt Instrument [Line Items] | |||
Net balance of mortgage note payable | $ 136.7 | ||
CMBS Loan | |||
Debt Instrument [Line Items] | |||
Number properties used to secure debt | property | 19 | ||
Fixed interest rate | 4.971% | ||
Loan reserves, amount funded | $ 35.5 | ||
Prepayment lockout period | 2 years | ||
Covenant, net worth requirement, minimum | $ 355 | ||
Covenant, liquid asset requirement, minimum | 10 | ||
CMBS Loan | CMBS Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 355 | $ 355 |
Debt, Net - Schedule of Mortgag
Debt, Net - Schedule of Mortgage Notes Payable (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) property | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||
Net Carrying Value of Collateralized Properties | $ 1,176,682 | $ 1,233,246 |
Weighted-Average Interest Rate | 4.63% | |
Weighted-Average Years to Maturity | 3 years 1 month 6 days | |
Mortgages payable | ||
Debt Instrument [Line Items] | ||
Encumbered Properties | property | 19 | |
Net Carrying Value of Collateralized Properties | $ 441,293 | |
Outstanding Balance | $ 355,000 | |
Weighted-Average Interest Rate | 4.97% | |
Weighted-Average Years to Maturity | 3 years 4 months 24 days |
Derivative and Hedging Activi_3
Derivative and Hedging Activities - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 USD ($) derivative_instrument | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) derivative_instrument | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) derivative_instrument | Dec. 01, 2022 USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Unrealized gain on interest rate derivatives | $ 37 | $ 1,885 | $ 386 | $ 7,229 | ||
Reclassification of previous unrealized gain on interest rate derivatives | 2,077 | 679 | 5,708 | 471 | ||
Amount to be reclassified from other comprehensive income | 1,000 | 1,000 | ||||
Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Unrealized gain on interest rate derivatives | 100 | 1,900 | 400 | 7,200 | ||
Reclassification of previous unrealized gain on interest rate derivatives | 2,100 | $ 700 | 5,700 | $ 500 | ||
Interest Rate Swap | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 175,000 | |||||
Interest Rate Swap | Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 175,000 | $ 175,000 | $ 175,000 | |||
Interest Rate Swap | Not Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Number of interest rate swaps not designated as qualifying hedging relationships | derivative_instrument | 0 | 0 | 0 |
Derivative and Hedging Activi_4
Derivative and Hedging Activities - Schedule of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Interest Rate Swap | Other assets, net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Cash flow hedges derivative instruments at fair value, net | $ 986 | $ 6,308 |
Derivative and Hedging Activi_5
Derivative and Hedging Activities - Schedule of Offsetting Derivatives Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amounts of Recognized Assets | $ 986 | $ 6,308 |
Gross Amounts of Recognized Liabilities | 0 | 0 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets Presented in the Consolidated Balance Sheets | 986 | 6,308 |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | 0 | 0 |
Financial Instruments | 0 | 0 |
Cash Collateral Received | 0 | 0 |
Net Amount | $ 986 | $ 6,308 |
Supplemental Cash Flow Disclo_3
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Supplemental disclosures: | |||
Cash paid for interest | $ 18,727 | $ 18,729 | |
Cash paid for income taxes | 453 | 678 | |
Non-cash investing and financing activities: | |||
Accrued capital expenditures and leasing costs | 4,628 | 1,251 | |
Distributions declared and unpaid | 5,578 | 5,664 | $ 5,664 |
Land acquired upon finance lease termination | $ 0 | $ 4,707 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued real estate and other taxes | $ 15,497 | $ 10,191 |
Accrued operating and other | 7,599 | 10,034 |
Accrued capital expenditures and leasing costs | 4,183 | 2,333 |
Accrued interest | 1,708 | 1,810 |
Accounts payable | 1,583 | 1,793 |
Total | $ 30,570 | $ 26,161 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment outstanding | $ 44.3 |
Leasing commissions | 0.3 |
Total leasing commitment | 34.7 |
Tenant improvement allowance | 23.6 |
Rent concession | $ 11.1 |
Leases - Lessor Narrative (Deta
Leases - Lessor Narrative (Details) | Sep. 30, 2023 |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Lessor, operating leases term | 2 months 12 days |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Lessor, operating leases term | 15 years 7 months 6 days |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Payments to be Received (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
October 1, 2023 - December 31, 2023 | $ 32,890 |
2024 | 112,183 |
2025 | 75,683 |
2026 | 72,381 |
2027 | 51,814 |
2028 | 40,104 |
Thereafter | 158,714 |
Total | $ 543,769 |
Leases - Lessee Narrative (Deta
Leases - Lessee Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, discount rate | 3.50% | 3.50% | ||
Operating lease, cost | $ 0.3 | $ 0.3 | $ 0.9 | $ 0.8 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, remaining lease term | 2 months 12 days | 2 months 12 days | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lessee, operating lease, remaining lease term | 61 years 3 months 18 days | 61 years 3 months 18 days |
Leases - Schedule of Operatin_2
Leases - Schedule of Operating Lease Liability, Maturity (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
October 1, 2023 - December 31, 2023 | $ 278 |
2024 | 883 |
2025 | 892 |
2026 | 478 |
2027 | 445 |
2028 | 447 |
Thereafter | 12,492 |
Total | 15,915 |
Less: imputed interest | 5,799 |
Total | $ 10,116 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||||
Nov. 09, 2023 | Nov. 12, 2021 | Nov. 10, 2021 | Jul. 15, 2021 | Sep. 30, 2023 | Nov. 01, 2022 | |
Class of Stock [Line Items] | ||||||
Issuance of common stock, net (in shares) | 56,525,650 | 100,000 | ||||
Proceeds from issuance of common stock | $ 1 | |||||
Warrants to purchase (in shares) | 1,120,000 | |||||
Warrant, exercise price (in dollars per share) | $ 22.42 | |||||
Stock repurchase program, authorized amount | $ 50,000 | |||||
Repurchases of common stock (in shares) | 900,000 | |||||
Weighted average share price (in dollars per share) | $ 5.46 | |||||
Repurchases of common stock | $ 5,018 | |||||
Subsequent Event | ||||||
Class of Stock [Line Items] | ||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 0.10 | |||||
Maximum | ||||||
Class of Stock [Line Items] | ||||||
Warrants expire term | 10 years | |||||
Minimum | ||||||
Class of Stock [Line Items] | ||||||
Warrants expire term | 7 years | |||||
Realty Income | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares owned by realty income (in shares) | 56,625,650 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Dividends Payable (Details) - $ / shares | Oct. 16, 2023 | Jul. 17, 2023 | Apr. 17, 2023 | Oct. 17, 2022 | Jul. 15, 2022 | Apr. 15, 2022 |
Common stock dividends paid (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | |
Subsequent Event | ||||||
Common stock dividends paid (in dollars per share) | $ 0.10 |
Equity Based Compensation (Deta
Equity Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Time-Based Restricted Stock Units and Restricted Stock Units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rights, percentage | 0% | |||
Time-Based Restricted Stock Units and Restricted Stock Units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rights, percentage | 100% | |||
Time-Based Restricted Stock Units and Restricted Stock Units | Non-employee directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Performance-Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 0.6 | $ 0.4 | $ 1.7 | $ 0.8 |
Unrecognized compensation expense | 4 | $ 4 | ||
Weighted-average remaining term (in years) | 1 year 10 months 24 days | |||
Realty Income Time-Based Restricted Stock Units and Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 0.1 | $ 0.1 | $ 0.2 | $ 0.3 |
Unrecognized compensation expense | $ 0.1 | $ 0.1 | ||
Weighted-average remaining term (in years) | 4 months 24 days |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||||||
Net loss | $ (16,507) | $ (15,715) | $ (8,874) | $ (53,029) | $ (15,570) | $ (9,882) | $ (41,096) | $ (78,481) |
Income attributable to non-controlling interest | (12) | (18) | (38) | (43) | ||||
Net loss available to common stockholders used in basic net income per share | (16,519) | (53,047) | (41,134) | (78,524) | ||||
Net loss available to common stockholders used in diluted net income per share | $ (16,519) | $ (53,047) | $ (41,134) | $ (78,524) | ||||
Weighted average shares of common stock outstanding - basic (in shares) | 56,543,379 | 56,635,038 | 56,621,362 | 56,630,086 | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted average shares of common stock - diluted (in shares) | 56,543,379 | 56,635,038 | 56,621,362 | 56,630,086 | ||||
Basic net loss per share attributable to common stockholders (in dollars per share) | $ (0.29) | $ (0.94) | $ (0.73) | $ (1.39) | ||||
Diluted net loss per share attributable to common stockholders (in dollars per share) | $ (0.29) | $ (0.94) | $ (0.73) | $ (1.39) |
Net Income (Loss) Per Share -_2
Net Income (Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Weighted average unvested Time-Based RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 25,559 | 0 | 3,337 | 0 |
Weighted average stock warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,120,000 | 1,120,000 | 1,120,000 | 1,120,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions | 1 Months Ended | ||||
Nov. 09, 2023 $ / shares | Nov. 01, 2023 ft² lease | Oct. 23, 2023 USD ($) property | Oct. 31, 2023 ft² property | Sep. 30, 2023 ft² | |
Subsequent Event [Line Items] | |||||
Area of real estate property | 9,300,000 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Common stock, dividends, per share, declared (in dollars per share) | $ / shares | $ 0.10 | ||||
Number of properties sold | property | 1 | ||||
Number of terminated leases | lease | 1 | ||||
Area of real estate property of terminated lease (in sqft) | 300,000 | ||||
Subsequent Event | Memphis, Tennessee | |||||
Subsequent Event [Line Items] | |||||
Lessor, operating leases term | 10 years | ||||
Area of real estate property | 90,000 | ||||
Subsequent Event | Covington, Kentucky | |||||
Subsequent Event [Line Items] | |||||
Lessor, operating leases term | 10 years | ||||
Area of real estate property | 3,000 | ||||
Subsequent Event | Sold | |||||
Subsequent Event [Line Items] | |||||
Number of properties sold | property | 1 | ||||
Aggregate gross sales price | $ | $ 1.4 |