Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-56566 | |
Entity Registrant Name | Sculptor Diversified Real Estate Income Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 88-0870670 | |
Entity Address, Address Line One | 9 West 57th Street, | |
Entity Address, Address Line Two | 40th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10019 | |
City Area Code | (212) | |
Local Phone Number | 790-0000 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Central Index Key | 0001914496 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class F Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,058,498 | |
Class FF Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 5,499,771 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Investments in real estate, net | $ 412,885,000 | $ 289,915,000 |
Cash and cash equivalents | 57,543,000 | 2,417,000 |
Restricted cash | 6,722,000 | 5,071,000 |
Deferred rent and other receivables | 1,008,000 | 2,441,000 |
Goodwill | 34,458,000 | 0 |
Lease intangible assets, net | 42,576,000 | 0 |
Other assets | 3,353,000 | 2,716,000 |
Total assets | 558,545,000 | 302,560,000 |
Liabilities | ||
Mortgages and other loans payable, net | 213,099,000 | 188,524,000 |
Revolving credit facility, net | 6,574,000 | 30,147,000 |
Accounts payable and other liabilities | 7,467,000 | 5,371,000 |
Intangible lease liabilities, net | 55,793,000 | 0 |
Distributions payable | 1,358,000 | 0 |
Due to related parties | 4,867,000 | 0 |
Total liabilities | 289,158,000 | 224,042,000 |
Commitments and contingencies | ||
Equity [Abstract] | ||
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized, no shares issued and outstanding | 0 | |
Additional paid-in capital | 215,525,000 | |
Accumulated deficit | (13,978,000) | |
Members’ equity | 78,518,000 | |
Total stockholders’ and members’ equity | 201,761,000 | 78,518,000 |
Non-controlling interests in the consolidated subsidiaries | 67,624,000 | |
Non-controlling interests in the Operating Partnership | 2,000 | |
Total equity | 269,387,000 | 78,518,000 |
Total liabilities and equity | 558,545,000 | $ 302,560,000 |
Class F Shares | ||
Equity [Abstract] | ||
Common stock, value, issued | 161,000 | |
Class FF Shares | ||
Equity [Abstract] | ||
Common stock, value, issued | $ 53,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) | Sep. 30, 2023 $ / shares shares |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Common stock authorized (in shares) | 2,200,000,000 |
Common stock outstanding (in shares) | 21,311,876 |
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Preferred stock authorized (in shares) | 100,000,000 |
Preferred stock, issued (in shares) | 0 |
Preferred stock, outstanding (in shares) | 0 |
Class F Shares | |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Common stock authorized (in shares) | 300,000,000 |
Common stock, issued (in shares) | 16,058,259 |
Common stock outstanding (in shares) | 16,058,259 |
Class FF Shares | |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Common stock authorized (in shares) | 300,000,000 |
Common stock, issued (in shares) | 5,253,617 |
Common stock outstanding (in shares) | 5,253,617 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jan. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | |||||
Rental revenue | $ 323 | $ 9,503 | $ 7,360 | $ 27,118 | $ 21,166 |
Other revenue | 0 | 263 | 151 | 821 | 638 |
Total revenues | 323 | 9,766 | 7,511 | 27,939 | 21,804 |
Expenses | |||||
Property operating expenses | 29 | 156 | 221 | 468 | 566 |
Management fees | 0 | 257 | 0 | 647 | 0 |
Performance participation allocation | 0 | 448 | 0 | 1,171 | 0 |
General and administrative | 0 | 1,865 | 532 | 4,666 | 1,812 |
Organization and transaction costs | 0 | 372 | 0 | 2,281 | 0 |
Depreciation and amortization | 0 | 4,315 | 2,136 | 12,289 | 6,283 |
Total expenses | 29 | 7,413 | 2,889 | 21,522 | 8,661 |
Operating income | 294 | 2,353 | 4,622 | 6,417 | 13,143 |
Other income (expense): | |||||
Interest expense, net | (114) | (2,495) | (2,496) | (7,737) | (7,108) |
Impairment of investments in real estate | 0 | (1,460) | 0 | (3,860) | 0 |
Gain on sale of real estate | 0 | 0 | 360 | 0 | 1,367 |
Total other income (expense) | (114) | (3,955) | (2,136) | (11,597) | (5,741) |
Net income (loss) | 180 | (1,602) | 2,486 | (5,180) | 7,402 |
Net income attributable to non-controlling interest in the consolidated subsidiaries | (70) | 247 | |||
Net loss attributable to non-controlling interest in the Operating Partnership | 0 | 0 | |||
Net loss attributable to SDREIT stockholders | $ 180 | $ (1,672) | $ 2,486 | $ (4,933) | $ 7,402 |
Net loss per common share - basic (in dollars per share) | $ (0.09) | $ (0.30) | |||
Net loss per common share - diluted (in dollars per share) | $ (0.09) | $ (0.30) | |||
Weighted-average common shares outstanding - basic (in shares) | 18,744,797 | 16,513,856 | |||
Weighted-average common shares outstanding - diluted (in shares) | 18,744,797 | 16,513,856 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Total | Total Stockholders’ and Members’ Equity | Common Stock Class F Shares | Common Stock Class FF Shares | Additional Paid-in Capital | Members’ Equity | Accumulated Deficit | Non-controlling interests in the consolidated subsidiaries | Non-controlling interests in the Operating Partnership |
Beginning balance at Dec. 31, 2021 | $ 70,184 | $ 70,184 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions to members | 9,838 | 9,838 | |||||||
Distributions to members | (13,128) | (13,128) | |||||||
Net Income (Loss) | 7,402 | 7,402 | |||||||
Net income (loss) | 7,402 | ||||||||
Members' Equity, ending balance at Sep. 30, 2022 | 74,296 | 74,296 | |||||||
Ending balance at Sep. 30, 2022 | 74,296 | 74,296 | |||||||
Members' Equity, beginning balance at Jun. 30, 2022 | 76,445 | 76,445 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions to members | 0 | ||||||||
Distributions to members | (4,635) | (4,635) | |||||||
Net Income (Loss) | 2,486 | 2,486 | |||||||
Net income (loss) | 2,486 | ||||||||
Members' Equity, ending balance at Sep. 30, 2022 | 74,296 | 74,296 | |||||||
Ending balance at Sep. 30, 2022 | 74,296 | 74,296 | |||||||
Beginning balance at Dec. 31, 2022 | 78,518 | 78,518 | |||||||
Members' Equity, beginning balance at Dec. 31, 2022 | 78,518 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income (Loss) | 180 | 180 | |||||||
Net income (loss) | 180 | ||||||||
Ending balance at Jan. 03, 2023 | 78,698 | 78,698 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions to members | $ 2 | ||||||||
Rollover equity in Company parent | 148,427 | $ 148,425 | $ 150 | $ 150,048 | $ (1,773) | 2 | |||
Common stock issued | 66,298 | 66,298 | 11 | $ 53 | 66,234 | ||||
Distribution reinvestment | 246 | 246 | 246 | ||||||
Amortization of compensation awards | 366 | 366 | 366 | ||||||
Distributions declared on common stock | (7,272) | (7,272) | (7,272) | ||||||
Contributions from non-controlling interests | 89,485 | $ 89,485 | |||||||
Distributions to non-controlling interests | (4,983) | (4,983) | |||||||
Noncontrolling interest acquired | (18,000) | (1,369) | (1,369) | (16,631) | |||||
Net Income (Loss) | (4,933) | ||||||||
Net income (loss) | (5,180) | (4,933) | (4,933) | (247) | |||||
Ending balance at Sep. 30, 2023 | 269,387 | 201,761 | 161 | 53 | 215,525 | 0 | (13,978) | 67,624 | 2 |
Beginning balance at Jun. 30, 2023 | 243,873 | 159,026 | 150 | 17 | 167,639 | (8,780) | 84,845 | 2 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued | 48,888 | 48,888 | 11 | 36 | 48,841 | ||||
Distribution reinvestment | 241 | 241 | 241 | ||||||
Amortization of compensation awards | 173 | 173 | 173 | ||||||
Distributions declared on common stock | (3,526) | (3,526) | (3,526) | ||||||
Contributions from non-controlling interests | 621 | 621 | |||||||
Distributions to non-controlling interests | (1,281) | (1,281) | |||||||
Noncontrolling interest acquired | (18,000) | (1,369) | (1,369) | (16,631) | |||||
Net Income (Loss) | (1,672) | ||||||||
Net income (loss) | (1,602) | (1,672) | (1,672) | 70 | |||||
Ending balance at Sep. 30, 2023 | $ 269,387 | $ 201,761 | $ 161 | $ 53 | $ 215,525 | $ 0 | $ (13,978) | $ 67,624 | $ 2 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) $ in Thousands | 9 Months Ended | ||
Jan. 03, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Cash Flows from Operating Activities: | |||
Net income (loss) | $ 180 | $ (5,180) | $ 7,402 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 0 | 12,289 | 6,283 |
Amortization of discounts and deferred financing costs | 0 | 205 | 505 |
Impairment of investments in real estate | 0 | 3,860 | 0 |
Loss on sale of real estate | 0 | 0 | (1,367) |
Straight-line rent adjustment | 0 | (703) | (216) |
Amortization of above- and below-market leases | 0 | (3,662) | 4 |
Non-cash lease expense | 0 | 3 | 0 |
Amortization of share-based compensation | 0 | 366 | 0 |
Changes in operating assets and liabilities: | |||
Deferred rent and other receivables | 559 | 1,434 | 4 |
Other assets | (2) | (322) | (274) |
Accounts payable and other liabilities | 287 | (247) | (349) |
Due to related parties | 0 | 1,707 | 0 |
Net cash provided by operating activities | 1,024 | 9,750 | 11,992 |
Cash Flows From Investing Activities: | |||
Acquisition of a business | 0 | (132,775) | 0 |
Acquisition of real estate | 0 | (12,711) | (35,181) |
Additions to real estate | 0 | (142) | (248) |
Acquisition deposit | 0 | (1,160) | 0 |
Proceeds from sale of real estate | 0 | 9,500 | 4,058 |
Net cash used (provided by) in investing activities | 0 | (137,288) | (31,371) |
Cash Flows from Financing Activities: | |||
Proceeds from mortgages and other loans payable | 0 | 32,241 | 14,700 |
Repayments of mortgages and other loans payable | (140) | (8,029) | (2,795) |
Proceeds from revolving credit facility | 0 | 8,658 | 10,640 |
Repayments of revolving credit facility | 0 | (32,368) | 0 |
Payment of deferred financing costs | 0 | (738) | (479) |
Due to related parties | 0 | 1,410 | 0 |
Subscriptions received in advance | 0 | 1,050 | 0 |
Contributions from members | 0 | 9,838 | |
Distributions to members | 0 | (4,983) | (13,128) |
Issuance of common stock | 66,298 | ||
Distribution to shareholders | (5,668) | ||
Distribution to noncontrolling interests in a consolidated subsidiary | (18,000) | ||
Contribution by noncontrolling interests in a consolidated subsidiary | 1,646 | ||
Net cash provided by (used in) financing activities | (140) | 41,517 | 18,776 |
Net change in cash and cash equivalents and restricted cash | 884 | (86,021) | (603) |
Cash and cash equivalents and restricted cash at end of period | 8,372 | 64,265 | 7,188 |
Cash and cash equivalents and restricted cash at beginning of period | 7,488 | 8,372 | 7,791 |
Reconciliation of Cash and Cash Equivalents and Restricted Cash: | |||
Cash and cash equivalents | 3,049 | 57,543 | 2,270 |
Restricted cash | 5,323 | 6,722 | 4,918 |
Total cash and cash equivalents and restricted cash | 8,372 | 64,265 | 7,188 |
Supplemental Information: | |||
Interest paid | 188 | 8,073 | 6,652 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Capital expenditure payable | 0 | 0 | 42 |
Mortgage and other notes payable assumed at acquisition | 0 | 190,832 | 0 |
Revolving credit facility assumed at acquisition | 0 | 30,284 | 0 |
Dividends unpaid | 0 | 1,358 | 0 |
Distribution reinvestment | 0 | 246 | 0 |
Contribution by noncontrolling interests in a consolidated subsidiary | 0 | 87,839 | 0 |
Transfer to assets held for sale | 0 | 1,302 | 0 |
Transfer of mortgages related to assets held for sale | $ 0 | $ 1,312 | $ 0 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF THE BUSINESS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS | ORGANIZATION AND DESCRIPTION OF THE BUSINESS Sculptor Diversified Real Estate Income Trust, Inc. (the “Company” or the “Successor”) was formed on February 11, 2022 as a Maryland corporation and intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning January 1, 2023. The Company is the sole general partner and a limited partner of Sculptor Diversified REIT Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”), and Sculptor Diversified REIT Special Limited Partner LP (the “Special Limited Partner”), an indirect subsidiary of Sculptor Capital LP (“Sculptor”), is the special limited partner in the Operating Partnership. The Company was organized to invest primarily in stabilized, income-generating commercial real estate across a variety of both traditional and non-traditional sectors in the United States and Europe, and to a lesser extent, invest in real estate related securities. These assets may include multifamily, industrial, net lease, retail and office assets, as well as others, including, without limitation, healthcare, student housing, senior living, lodging, data centers, manufactured housing and self-storage properties. Substantially all of the Company’s business will be conducted through the Operating Partnership, which was formed on February 22, 2022. The Company and the Operating Partnership are externally managed by Sculptor Advisors LLC (the “Adviser”), an affiliate of Sculptor. As of December 31, 2022, the Company had not commenced its principal operations and had neither purchased nor contracted to purchase any investments. As of December 31, 2022, the Company had issued 15,019,800 Class F shares at a purchase price of $10.00 per share, of which 19,800 Class F shares were issued to Sculptor. Additionally, the Special Limited Partner contributed $2,000 to the Operating Partnership for its special limited partner interest. On January 4, 2023, the Operating Partnership acquired a controlling interest in CapGrow Holdings Member, LLC (the “CapGrow Member” or the “Predecessor”), which holds an interest in CapGrow Holdings JV LLC (“CapGrow JV,” and together with CapGrow Member, “CapGrow”), that owns a portfolio of primarily single-family homes (the “CapGrow Portfolio”) leased to and operated by care providers that serve individuals with intellectual and developmental disabilities. In March 2023, the Company launched a private placement offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) (the “Offering”). The Company sells shares monthly in the Offering at a price generally equal to the prior month’s net asset value (“NAV”) per share as determined pursuant to the valuation guidelines adopted by the Company’s board of directors, including a majority of its independent directors, plus applicable fees and commissions. NAV is not a measure used under accounting principles generally accepted in the United States (“GAAP”) and the valuations of and certain adjustments to the Company’s assets and liabilities used in the determination of NAV will differ from GAAP. Through January 1, 2024, the Company intends to offer Class F and Class FF shares in the Offering. Commencing October 1, 2023, the Company also intends to issue Class A, Class AA, Class D, Class I, and Class S shares in the Offering. On September 29, 2023, the Operating Partnership, through a wholly owned subsidiary, formed a joint venture (“Denton JV”) with a third party to fund the required deposit to acquire University Courtyard, a 240-unit, 792-bed student housing property located in Denton, Texas. See Note 14, “Subsequent Events” for related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Since the Company had no significant assets or operations prior to January 1, 2023, the Company concluded that CapGrow Member is the Predecessor and the Company is the Successor and each are defined as such. The Company has made the distinctions in the condensed consolidated financial statements and certain footnote presentations, as follows: • for the period from January 4, 2023 through September 30, 2023 (the “2023 Successor Interim Period”), • for the period from January 1 through January 3, 2023 (the “2023 Predecessor Interim Period”), • nine months ended September 30, 2022 (the “2022 Predecessor Interim Period”), • for the three months ended September 2022 (the “2022 Q3 Predecessor Period”) and • for the three months ended September 2023 (the “2023 Q3 Successor Period”) The Company does not have any results of operations for the nine months ended September 30, 2022. The Successor and Predecessor accounts have been presented based upon the transaction date of January 4, 2023 which resulted in a change of control and application of purchase accounting as required by Accounting Standard Codification (“ASC”) 805. As a result of the foregoing, the condensed consolidated financial statements of the Predecessor and the Successor are not comparable and are separated by a black line. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company at September 30, 2023 and the results of operations for the periods presented have been included. The operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements of the Predecessor as of that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The Predecessor interim condensed consolidated financial statements as of December 31, 2022, for the periods from January 1 through January 3, 2023 and January 1, 2022 through September 30, 2022 should be read in conjunction with the audited Predecessor consolidated financial statements for the year ended December 31, 2022. Principles of Consolidation The Company consolidates entities in which the Company has a controlling financial interest. Entities in which, directly or indirectly, the Company does not have a controlling interest, are accounted for under the equity method. The Company considers the Operating Partnership, CapGrow and Denton as variable interest entities (“VIE”), in which the Company is the primary beneficiary. The Company is the primary beneficiary of a VIE when the Company has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The Company continuously reassesses whether it should consolidate a VIE especially where there is a substantive change in the governing documents or contractual arrangements of the entity, to the capital structure of the entity or in the activities of the entity. A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us, which is generally computed as the other partner’s ownership percentage. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheets and the presentation of net income is modified to present earnings attributed to controlling and noncontrolling interests. The noncontrolling interest in CapGrow JV is entitled to a profit based on meeting certain internal rate of return hurdles. Any profits interest due to the other partner is reported within noncontrolling interests. The assets of consolidated VIEs will be used first to settle obligations of the applicable VIE. Remaining assets may then be distributed to the VIEs' owners, including the Company, subject to the liquidation preferences of certain noncontrolling interest holders and any other preferential distribution provisions contained within the operating agreements of the relevant VIEs. As of September 30, 2023, the total assets and liabilities of the Company's consolidated VIEs w ere $558.5 million and $289.2 million, respectively. Such amounts are included on the Company’s consolidated balance sheets. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain amounts reported in the condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with maturities of three months or less when purchased. The Company may have bank balances in excess of federally insured amounts; however, the Company maintains its cash and cash equivalents with high credit-quality institutions. Restricted Cash Restricted cash consists of subscriptions received in advance and escrows held by lenders for property taxes, debt service and capital expenditures. Deferred Leasing Costs Deferred leasing costs consist primarily of leasing commissions incurred to initiate or renew operating leases. These costs are capitalized as part of other assets in the consolidated balance sheets and amortized on a straight-line basis over the related lease term. Amortization of deferred leasing costs is recorded as part of depreciation and amortization expenses in the condensed consolidated statements of operations. Upon the early termination of a lease, any unamortized deferred leasing costs are charged to expense. Deferred Financing Costs Deferred financing costs, which consist of lender fees, legal, title and other third-party costs related to the issuance of debt, are capitalized and are reported as a deduction from the face amount of the related debt, and are amortized over the term of the related debt agreements using the straight-line method which approximates the effective interest method. Deferred costs under the revolving credit facility are reported as a deduction from the face amount of the related debt. In the event of early redemption, any unamortized costs are charged to operations. Amortization of deferred financing costs is included in interest expense on the condensed consolidated statements of operations. Investments in Real Estate Real estate properties are carried at cost less accumulated depreciation and impairment losses, if any. Upon acquisition, the Company evaluates each acquisition transaction for the purpose of determining whether a transaction should be accounted for as an asset acquisition or business combination. The acquisition transaction qualifies as a business combination when the assets acquired and liabilities assumed constitute a business. If the property acquired does not constitute a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations (“screen test”) states that when substantially all of the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. Whether an acquisition is considered a business combination or asset acquisition, the Company determines the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, site improvements, tenant improvements, above-market and below-market leases, acquired in-place leases, leasing commissions and other identified intangible assets and assumed liabilities), the liabilities assumed and any non-controlling interest in the acquired entity. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Under the business combination, acquisition-related costs are expensed as incurred. For asset acquisitions, the Company allocates the purchase price to the acquired assets and assumed liabilities based on their relative fair values. Acquisition-related costs associated with asset acquisitions are capitalized as part of the acquisition costs. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterment, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method. The estimated useful life of each building is 30 years. Minor improvements to buildings are capitalized and depreciated over useful lives ranging from three Depreciation expense amounted to $3.1 million and $2.1 million for the 2023 Q3 Successor Period and 2022 Q3 Predecessor Period, respectively. Depreciation expense amounted to $9.1 million and $6.2 million for the 2023 Successor Interim Period and 2022 Predecessor Interim Period, respectively. The Company evaluates its real estate investments for impairment upon occurrence of a significant adverse change in its operations to assess whether any impairment indicators are present that affect the recovery of the recorded value. If indicators of impairment are identified, the Company estimates the future undiscounted cash flows from the use and eventual disposition of the property and compares this amount to the carrying value of the property. If any real estate investment is considered impaired, a loss is recognized to reduce the carrying value of the property to its estimated fair value. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company recorded an impairment loss of $0.1 million and $1.8 million, respectively, related to the assets sold. Additionally, during the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company recorded an impairment loss of $1.3 million and $2.1 million related to properties classified as held for sale and vacant properties wherein their expected sales proceeds were lower than the carrying value of these properties. There were no impairment losses during the 2022 Q3 Predecessor Period and 2022 Predecessor Interim Period. From time to time, the Company may identify properties to be sold. The Company considers whether the following conditions have been met in determining whether or not such properties should be classified as held for sale in accordance with GAAP: (i) there is a committed plan to sell a property; (ii) the property is immediately available for sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell a property have been initiated; (iv) the sale of a property is probable within one year (generally determined based upon listing for sale); (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. To the extent that these factors are all present, depreciation is discontinued, and properties held for sale are stated at the lower of its carrying amount or its fair value less estimated costs to sell. As of September 30, 2023 and December 31, 2022, assets held for sale, which are included in other assets in the consolidated balance sheets, amounted to $1.3 million and $1.9 million, respectively. As of September 30, 2023 and December 31, 2022, liabilities held for sale, which are included in accounts payable and other liabilities in the consolidated balance sheets, amounted to $1.3 million and $2.0 million, respectively. Goodwill Goodwill represents the excess of the consideration transferred over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is allocated to an entity's reporting unit, which as of September 30, 2023, relates to CapGrow. The Company evaluates goodwill for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable, or at least annually. Unless circumstances otherwise dictate, the annual impairment test is performed as of the last date of each year. In evaluating goodwill for impairment, the Company assesses qualitative factors such as significant decline in real estate valuations or enterprise value of the reporting unit, current macroeconomic conditions, and the overall financial performance of the reporting unit, among others. If the carrying value of a reporting unit exceeds its estimated fair value, then an impairment charge is recorded in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. As of September 30, 2023, goodwill recognized in connection with the acquisition of CapGrow was $34.5 million and there was no recorded goodwill impairment charge. Organization and Offering Expenses Organization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company incurred organization and offerings costs (including legal, accounting, and other expenses attributable to the organization but excluding any upfront selling commissions and distribution fees) amounting to approximately $0.4 million and $1.4 million. See Note 9, “Related Party Transactions,” for the related disclosures. Fair Value Measurements See Note 10, “Fair Value Measurements,” for related disclosures. Segment Reporting Under the provisions of ASC 280, “Segment Reporting,” the Company has determined that it has one reportable segment with activities related to acquiring, renovating, developing, leasing and operating single-family homes as rental properties. The CapGrow Portfolio is geographically dispersed, and management evaluates operating performance on a total portfolio basis. The aggregation of individual homes constitutes the total portfolio. Decisions regarding acquisitions and dispositions of homes are made at the individual home level with a focus on accretion in high-growth locations where there is greater scale and density. The Company did not consider student housing as a separate segment since we only funded an acquisition deposit as of September 30, 2023. Revenue Recognition The Company and Predecessor derive its revenues from residential leases, which are accounted for as operating leases. The majority of its leases are under a triple net lease arrangement which requires tenants to pay its taxes, insurance and maintenance costs, among others. Other leases are under a modified net lease arrangement wherein tenants pay a proportional share of expenses in addition to its contractual base rent. As a practical expedient, the Company elected to account for both the lease and non-lease components as a single lease component because the timing and pattern of revenue recognition are generally the same. Rental revenue is recognized on the straight-line basis over the non-cancellable terms of the leases from the later of (i) the date of the commencement of the lease or (ii) the date of acquisition of the property. For lease modifications, the commencement date is considered to be the date the lease modification is executed. Rental revenue recognition begins when tenants control the space through the term of their respective leases, which typically have an initial lease term of five (5) years to ten (10) years. Any excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rent and other receivables on the consolidated balance sheets. Any amounts paid in advance by the tenants are recorded as deferred revenue, which is included in accounts payable and other liabilities on the consolidated balance sheets and are recognized as rental income in accordance with the Company’s revenue recognition policy. Rental revenue is recognized if collectability is probable. For leases that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. Other property income includes termination income and late fees. Termination income, which relates to fees paid by tenants to terminate their lease prior to the contractual lease expiration date, are recognized during the period the following conditions are met: (i) the termination agreement is executed, (ii) the termination fee is determinable, and (iii) collectability of the termination fee is assured. Gain or loss on sale of real estate is recognized when the Company no longer has a controlling financial interest in the real estate, a contract exists with a third party and that third party has control of the assets acquired. Gain or losses on sale of real estate is shown as a separate line item in the condensed consolidated statements of operations. Leasing Arrangements CapGrow leases its corporate office. Prior to business combination with the Company, CapGrow accounted for this lease as an operating lease in accordance with the adoption of ASC 842, “Leases,” effective January 1, 2020, which requires a recognition of right-of-use (“ROU”) asset and lease liability in the consolidated balance sheets for the rights and obligations created from this lease. CapGrow recognized the operating lease ROU asset and lease liability based on the present value of future minimum lease payments over the expected lease term at commencement date, which was calculated using CapGrow’s incremental borrowing rate. At acquisition date, the Company remeasured the ROU asset and lease liability, as if it were a new lease, at the present value of the remaining lease payments, which was calculated using the Company’s incremental borrowing rate and considered adjustment related to favorable or unfavorable terms of the lease as compared to market terms. The Company elected to not separate non-lease components from the associated lease component of the office lease. Lease expense is recognized on a straight-line basis over the expected lease term, which is included in property operating expenses in the condensed consolidated statements of operations. As of September 30, 2023 and December 31, 2022, ROU asset, which was included in other assets in the consolidated balance sheets of the Successor and Predecessor, was $0.3 million and $0.3 million, respectively. As of September 30, 2023 and December 31, 2022, lease liability, which was included in accounts payable and other liabilities in the consolidated balance sheets, was $0.3 million and $0.3 million, respectively. Share-based Compensation The Company records all equity-based incentive grants to non-employee members of the Board based on their fair values determined on the date of grant. Stock-based compensation expense, which is included in general and administrative expenses in the condensed consolidated statements of operations, is recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the outstanding equity awards. Income Taxes The Company was treated as a corporation for the taxable year ending December 31, 2022. The Company intends to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes beginning with the Company’s taxable year ending December 31, 2023. As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 100% of its taxable income to its stockholders. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. The Operating Partnership and the Predecessor are classified as a partnership for U.S. federal and state income tax purposes and are therefore not subject to income tax. Each partner is responsible for the tax liability, if any, related to their share of Operating Partnership taxable income or loss. Management is responsible for determining whether a tax position taken by the Company or the Operating Partnership is more likely than not to be sustained on the merits. The Company has no material unrecognized tax benefits or uncertain income tax positions and therefore no interest or penalties associated with uncertain tax positions. Earnings per Share Basic net income (loss) per share (“EPS”) of common stock is determined by net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS of common stock is determined by net income (loss) attributable to common shareholders by the weighted average number of common shares and common share equivalents outstanding for the period. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. All classes of common stock are allocated to net income (loss) at the same rate and receive the same gross distribution share. There were no common share equivalents outstanding that would have a dilutive effect and accordingly, the weighted average number of common shares outstanding is identical to both basic and diluted shares for the 2023 Successor Interim Period. The restricted stock grants of Class F shares held by the Company’s independent directors are not considered to be participating securities because they have forfeitable rights to distributions. As a result, there is no impact of these restricted stock grants on basic and diluted net income (loss) per common share until the restricted stock grants have been fully vested. Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting and then in January 2021, the FASB issued ASU No. 2021-01. The amendments provide practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2024, which was extended from the original sunset date of December 31, 2022 when the FASB issued ASU No. 2022-06 in December 2022. The guidance may be elected over time as reference rate reform activities occur and once elected, the guidance must be applied prospectively for all eligible contract modifications. The Company adopted this guidance on January 1, 2022 and it did not have any material impact on its condensed consolidated financial statements. |
INVESTMENTS IN REAL ESTATE, NET
INVESTMENTS IN REAL ESTATE, NET | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
INVESTMENTS IN REAL ESTATE, NET | INVESTMENTS IN REAL ESTATE, NET Investments in real estate, net consist of (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Land and land improvements $ 69,143 $ 48,922 Building and improvements 352,735 267,946 Total real estate properties, at cost 421,878 316,868 Less: accumulated depreciation (8,993) (26,953) Investments in real estate, net $ 412,885 $ 289,915 Business Combination On January 4, 2023, the Company, through the Operating Partnership, acquired a 61.64% controlling indirect interest in CapGrow at a total enterprise value of approximately $455 million. Debt of approximately $221 million was assumed in the transaction which resulted in an approximate cash outlay of $141 million by the Company to acquire this interest. As part of this transaction, CapGrow retained the employees responsible for implementing strategic decisions relating to acquisitions, dispositions and cash flow management, including CapGrow’s chief executive officer. Since the Company consolidates CapGrow as it is the primary beneficiary of CapGrow Member and accounts for this transaction as a business, the Company recognizes all of the tangible and intangible assets acquired, the liabilities assumed and noncontrolling interest in CapGrow Member and CapGrow JV at the acquisition-date fair value. Goodwill was recognized as the excess of the consideration transferred and the net assets acquired, including the noncontrolling interests. The material components of goodwill, amounts paid in excess of amounts attributable to the fair value of the assets acquired, represent the value assigned to a growing and profitable business that includes an experienced management team and the expected synergies and continued expansion of CapGrow's operations. The members of CapGrow management have been with CapGrow for at least 5 to 10 years. The senior members have specific skill sets and significant industry knowledge, including its regulatory and policy environment. These elements make up goodwill, which do not qualify for separate recognition. The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the acquisition date as well as the fair value of the noncontrolling interest in CapGrow at acquisition date: Consideration transferred: Cash $ 141,147 Acquisition-related costs (included in organization and transaction costs) 870 Assets acquired and liabilities assumed: Property level cash 3,049 Restricted cash 5,323 Receivables 1,739 Other assets 58 Investments in real estate 424,999 Intangible assets 46,904 Mortgages and notes payable (190,832) Revolving credit facility (30,284) Accounts payable and other liabilities (4,656) Intangible liabilities (61,772) Total identifiable net assets 194,528 Fair value of noncontrolling interest in CapGrow (87,839) Goodwill 34,458 $ 141,147 On July 5, 2023, the Company acquired additional equity interests in CapGrow for $18 million, thereby increasing its indirect controlling interests in CapGrow to 69.22%. The Company accounted for this change in ownership interests that does not result in a change of control as an equity transaction. The identifiable net assets remained unchanged and the difference between the fair value of the consideration paid and the proportionate interest of the carrying value of the noncontrolling interest by which it is adjusted, which amounted to $1.4 million, is recognized as an adjustment in additional paid in capital on the condensed consolidated statements of equity. On October 3, 2023, the Company acquired additional equity interests in CapGrow. See Note 14, “Subsequent Events” for related disclosures. Pro Forma The 2023 Successor Interim Period included the results of operations of CapGrow since its acquisition date, as summarized below. Additionally, the following table provides the pro forma results of operations of the Predecessor for the 2023 Q3 Successor Period, 2022 Q3 Predecessor Period, 2023 Successor Interim Period and 2022 Predecessor Interim Period, assuming CapGrow was acquired on January 1, 2022. The pro forma information may not be indicative of what actual results of operations would have been had the transaction occurred at the beginning of January 2022, nor is it necessarily indicative of future operating results. Successor Predecessor Three Months Ended September 30, 2023 Period from January 4, 2023 through September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Actual revenues since acquisition $ 9,766 $ 27,939 $ — $ — Actual net income (loss) since acquisition $ 243 $ (544) $ — $ — Pro forma revenues $ — $ — $ 9,081 $ 27,527 Pro forma net income attributable to common stockholders $ — $ — $ 1,427 $ 4,212 Asset Acquisitions During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company acquired 7 and 18 vacant homes at an aggregate purchase price of $2.3 million and $12.7 million, respectively. During the 2022 Q3 Predecessor Period and 2022 Interim Predecessor Period, the Predecessor acquired 2 and 44 vacant homes at an aggregate purchase price of $0.7 million and $35.2 million, respectively. Asset Dispositions During the 2023 Q3 Successor Period and the 2023 Successor Interim Period, CapGrow sold 2 and 32 homes for aggregate net proceeds of $0.4 million and $9.5 million respectively, and recognized $0.1 million and $1.8 million of impairment loss respectively, which was included in impairment on investments in real estate on the condensed consolidated statements of operations. During the 2022 Q3 Predecessor Period and 2022 Interim Predecessor Period, the Predecessor sold 5 and 17 homes respectively, for aggregate net proceeds of $1.1 million and $4.1 million respectively, and recognized $0.4 million and $1.4 million gain on sale of real estate respectively, which was included in the condensed consolidated statements of operations. Properties Held-for-Sale and Asset Impairment As of September 30, 2023, the Company identified two properties classified as held for sale and three vacant properties as impaired. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company recognized impairment loss of $1.3 million and $2.1 million, respectively, which was included in impairment on investments in real estate on the |
LEASE INTANGIBLES
LEASE INTANGIBLES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASE INTANGIBLES | LEASE INTANGIBLES The gross carrying amount and accumulated amortization of the Company's intangible assets and liabilities as of September 30, 2023 consisted of the following (in thousands). There were no intangible assets and liabilities as of December 31, 2022: Successor Cost Accumulated Amortization Net Intangible assets, net: Above-market lease intangibles $ 3,167 $ (505) $ 2,662 In-place lease intangibles 8,907 (823) 8,084 Leasing commissions 34,158 (2,328) 31,830 Total intangible assets $ 46,232 $ (3,656) $ 42,576 Intangible liabilities, net: Below-market lease intangibles $ (59,880) $ 4,087 $ (55,793) During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company recognized $1.6 million and $3.7 million of rental revenue for the amortization of aggregate below-market leases in excess of above-market leases resulting from the allocation of the purchase price of the applicable properties. Amortization of the in-place leases and leasing commissions during the 2023 Q3 Successor Period and 2023 Successor Interim Period aggregating to $1.2 million and $3.2 million, respectively, is included in depreciation and amortization in the condensed consolidated statements of operations. As of September 30, 2023, the weighted-average amortization period for above-market leases, in-place lease intangibles, leasing commissions and below-market lease costs is 4.8 years, 11.6 years, 13.3 years and 13.9 years, respectively. The estimated future amortization on the Company's lease intangibles for each of the next five years and thereafter as of September 30, 2023 is as follows (in thousands): Above-market Lease Intangibles In-place Lease Intangibles Leasing Commissions Below-market Lease Intangibles 2023 (three months) $ 166 $ 249 $ 702 $ (1,183) 2024 658 970 2,799 (4,708) 2025 640 908 2,776 (4,623) 2026 511 798 2,667 (4,493) 2027 343 699 2,548 (4,336) Thereafter 344 4,460 20,338 (36,450) $ 2,662 $ 8,084 $ 31,830 $ (55,793) |
OTHER ASSETS
OTHER ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS The following table summarizes the components of other assets (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Assets held for sale $ 1,302 $ 1,866 Acquisition deposit 1,160 — Deferred costs 41 501 Right of use asset - operating lease 319 282 Prepaid insurance 341 — Other 190 67 Total $ 3,353 $ 2,716 |
ACCOUNTS PAYABLE AND OTHER LIAB
ACCOUNTS PAYABLE AND OTHER LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND OTHER LIABILITIES | ACCOUNTS PAYABLE AND OTHER LIABILITIES The following table summarizes the components of accounts payable and other liabilities (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Accounts payable and accrued expenses $ 2,200 $ 622 Subscriptions received in advance 1,050 — Liabilities related to assets held for sale 1,312 2,007 Tenant security deposits 2,281 2,153 Lease liability - operating lease 321 294 Accrued organization and offering costs 282 — Deferred income 21 295 Total $ 7,467 $ 5,371 |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
BORROWINGS | BORROWINGS Mortgages and Other Loans Payable, net The following table provides information regarding the Company’s mortgages and other loans payable, which were assumed upon acquisition of CapGrow and were secured by certain properties of CapGrow (amounts in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Fixed Interest Initial Maturity Mortgage note payable (1)(4) $ 6,130 $ 6,251 5.00% June 2024 Mortgage note payable (2)(4) 11,064 11,526 5.19% June 2027 Mortgage note payable (4) 9,051 9,238 3.75% April 2028 Mortgage note payable (2)(3) 7,770 12,402 5.59% April 2028 Mortgage note payable (8) 19,392 19,633 4.28% November 2029 Mortgage note payable (5) 49,308 49,635 3.59% September 2030 Successor Predecessor September 30, 2023 December 31, 2022 Fixed Interest Initial Maturity Mortgage note payable (2)(3) 38,573 40,072 3.85% January 2031 Mortgage note payable (4) 2,038 2,077 4.35% February 2031 Mortgage note payable (6) 24,982 24,982 4.01% January 2032 Mortgage note payable (4) 14,353 14,610 4.00% March 2032 Mortgage note payable (9) 32,241 — 6.60% September 2033 Mortgage note payable (4) 1,339 1,566 5.63% to 6.50% February 2037 Notes payable (7) 1,239 1,414 7.00% various Total 217,480 193,406 Discounts and deferred financing costs, net (3,069) (2,875) Total mortgages and other loans payable, net $ 214,411 $ 190,531 _______________________________________ (1) Includes two mortgage loans related to assets held for sale amounting to $1.3 million at September 30, 2023. (2) Includes mortgage loans related to assets held for sale amounting to $0.3 million, $0.2 million, and $1.5 million at December 31, 2022, respectively. (3) Interest only payment loan through January 2024, at which time, monthly principal and interest payments will be due through maturity date. (4) These loans are subject to monthly interest and principal payments through maturity date. (5) Interest only payment loan through September 2023, at which time, monthly principal and interest payments are due through maturity date. (6) Interest only payment loan through January 2025, at which time, monthly principal and interest payments will be due through maturity date. (7) These loans, which are owed to private parties, bear interest rates ranging from 7% to 9%. Monthly principal and interest payments are due through maturity date beginning August 2023 through July 2027. (8) Interest only payment loan through November 2022, at which time, monthly principal and interest payments are due through maturity date. (9) Interest only payment loan through October 2023, at which time, monthly principal and interest payments are due through maturity date. Revolving Credit Facility In February 2022, the Predecessor entered into a third amended and restated revolving line of credit agreement (the “2022 Credit Facility” or “Credit Facility”) with CIBC Bank USA, which was previously amended in July 2021 (the “2021 Credit Facility”) and was originally entered into by the Predecessor in December 2020. Under the 2022 Credit Facility, the maximum borrowing facility increased from $40 million to $50 million and the maturity date of the 2021 Credit Facility was extended from February 2022 to February 2024. The 2022 Credit Facility provides a one-year extension option subject to an extension fee of 0.30% of the total loan commitment. The 2022 Credit Facility bears interest equal to Term SOFR plus 3.5% per annum. Prior to the amendment of the 2021 Credit Facility, interest was based on LIBOR plus 3% per annum with a 0.25% LIBOR floor. As part of the business combination described in Note 3, “Investments in Real Estate,” the Company assumed the outstanding loan balance of $30.3 million. As of September 30, 2023 and December 31, 2022, the interest rate was 8.82% and 7.82% for the Company and the Predecessor, respectively. As of September 30, 2023 and December 31, 2022, the Credit Facility had a carrying value of $6.6 million and $30.1 million for the Company and the Predecessor, respectively. The Credit Facility is guaranteed by certain subsidiaries of CapGrow. Restrictive Covenants The Company is subject to various financial and operational covenants under certain of its mortgages and other loans payable and the Credit Facility. These covenants require the Company to maintain a minimum debt service coverage ratio, liquidity, net worth and a minimum of two-years remaining lease term of all of the CapGrow Portfolio, among others. As of September 30, 2023 and December 31, 2022, the Company and the Predecessor were in compliance with all of its loan covenants, respectively. Contractual Maturities The scheduled principal maturities of the mortgages and other loans payable and Credit Facility as of September 30, 2023 were as follows for the Company: Year Ending Mortgages and Other Loans Payable Credit Facility Total December 31, 2023 (three months) $ 637 $ — $ 637 December 31, 2024 10,016 6,574 16,590 December 31, 2025 4,049 — 4,049 December 31, 2026 4,029 — 4,029 December 31, 2027 14,026 — 14,026 Thereafter 184,723 — 184,723 $ 217,480 $ 6,574 $ 224,054 |
STOCKHOLDERS' AND MEMBERS' EQUI
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES | Stockholders’ and Members’ Equity and Non-controlling Interests in the Operating Partnership and the Consolidated Subsidiaries Authorized Capital Stock As of September 30, 2023, the Company’s authorized capital stock was as follows: Number of Shares Par Value per Share Class F Shares 300,000,000 $0.01 Class FF Shares 300,000,000 $0.01 Class S Shares 300,000,000 $0.01 Class D Shares 100,000,000 $0.01 Class I Shares 300,000,000 $0.01 Class A Shares 300,000,000 $0.01 Class AA Shares 300,000,000 $0.01 Class E Shares 300,000,000 $0.01 Total 2,200,000,000 Preferred Stock 100,000,000 $0.01 2,300,000,000 Common Stock The following table details the movement in the Company’s outstanding shares of common stock: Three Months Ended September 30, 2023 Class F Class FF Total June 30, 2023 15,020,145 1,670,773 16,690,918 Common stock issued 1,037,760 3,560,428 4,598,188 Distribution reinvestment 354 22,416 22,770 September 30, 2023 16,058,259 5,253,617 21,311,876 Nine Months Ended September 30, 2023 Class F Class FF Total December 31, 2022 — — — Rollover equity in Company parent 15,019,800 — 15,019,800 Common stock issued 1,037,760 5,231,032 6,268,792 Distribution reinvestment 699 22,585 23,284 September 30, 2023 16,058,259 5,253,617 21,311,876 Holders of Class F shares purchased before January 1, 2023 are prohibited from seeking repurchase of their shares before January 1, 2026 except in the event of a material violation, amendment or waiver of the Company’s corporate governance guidelines without the prior consent of the holders of a majority of the outstanding Class F shares. The following is a summary of the rights and privileges of the holders of common stock as of September 30, 2023: Conversion of Certain Share Classes: The Company’s charter provides that it will cease paying the distribution fee with respect to any Class A, Class AA, Class S or Class D share held in a stockholder’s account at the end of the month in which the Company, in conjunction with the transfer agent, determines that total upfront selling commissions and distribution fees paid with respect to the shares held by such stockholder within such account would equal or exceed, in the aggregate, the percentage limit (if any, and as set forth in the applicable agreement with a soliciting dealer at the time such shares were issued) of the gross proceeds from the sale of such shares (including the gross proceeds of any shares issued under the Company’s distribution reinvestment plan with respect thereto) (collectively, the “Fee Limit”). At the end of such month, each such Class A, Class AA, Class S or Class D share in such account (including shares in such account purchased through the distribution reinvestment plan or received as a stock dividend) will convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share. In addition, if not already converted into Class I shares upon a determination that total upfront selling commissions and distribution fees paid with respect to such shares would exceed the applicable Fee Limit, if any, each Class A, Class AA, Class S, Class D, Class E, Class F and Class FF share held in a stockholder’s account (including shares in such account purchased through the distribution reinvestment plan or received as stock dividend) will automatically and without any action on the part of the holder thereof convert into a number of Class I shares (including fractional shares) with an equivalent NAV as such share on the earliest of (i) a listing of Class I shares, (ii) the Company’s merger or consolidation with or into another entity in which the Company is not the surviving entity or (iii) the sale or other disposition of all or substantially all of the Company’s assets. However, with respect to Class A, Class AA, Class E, Class F and Class FF shares only, such conversion will not occur if immediately after the occurrence of any such event the Company is externally advised with different management fee allocations (which may or may not include different performance allocations) for holders of Class I shares on the one hand and holders of Class A, Class AA, Class E, Class F or Class FF shares on the other hand. Liquidation Preference: In the event of liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock. Immediately before any liquidation, dissolution or winding up, or any distribution of the assets of the Company pursuant to a plan of liquidation, dissolution or winding up, Class A, Class AA, Class S, Class D, Class E, Class F and Class FF shares will automatically convert to Class I shares at the conversion rate applicable to each share class. Following such conversion, the aggregate assets of the Company available for distribution to holders of the shares, or the proceeds therefrom, shall be distributed to each holder of Class I shares, ratably with each other holder of Class I shares, which will include all converted Class A, Class AA, Class S, Class D, Class E, Class F and Class FF shares, in such proportion as the number of outstanding Class I shares held by such holder bears to the total number of outstanding Class I shares then outstanding. If the Company has not raised $450 million in gross proceeds from the sale of capital stock before December 31, 2024, then upon the written request of any beneficial owner owning 10% or more of the shares made between January 1, 2025 and March 31, 2025, a majority of the board of directors shall adopt a resolution declaring that dissolution of the Company is advisable and shall direct the proposed dissolution be submitted for consideration at the next annual stockholders’ meeting. Notwithstanding the foregoing, the board of directors has the ability to recommend against any dissolution. Dividends: Subject to any preferential rights of any outstanding class or series of shares of stock and to the provisions in the Company’s charter regarding the restrictions on ownership and transfer of stock, holders of common stock are entitled to such distributions as may be authorized from time to time by the board of directors (or a committee of the board of directors) and declared by the Company out of legally available funds. Voting Rights: Each holder of common stock is entitled to one vote per share on all matters voted on by stockholders, including the election of directors. Under the Company’s charter, stockholders do not have cumulative voting rights. Therefore, the holders of a majority of the Company’s outstanding shares of common stock can elect the entire board of directors. Rights and Preferences: Holders of common stock have no preemptive rights or automatic option to purchase any new shares of stock. The Company’s board of directors has the ability to establish without any action by the stockholders, to classify or reclassify any unissued common stock into one or more classes or series by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms or conditions of repurchase of any new class or series of shares of stock. Beginning on October 1, 2023, the Company intends to issue Class A, Class AA, Class D, Class I, and Class S shares. The Company expects that these classes will have different class-specific fees and expenses allocated to them, different minimum investment amounts, and different eligibility requirements for purchase. Share Repurchase Plan On February 10, 2023, the Company adopted a Share Repurchase Plan (the “Repurchase Plan”), whereby, subject to certain limitations, stockholders may request on a monthly basis that the Company repurchase all or any portion of their shares. Repurchases under the Repurchase Plan began in July 2023. The total amount of aggregate repurchases of the Company’s stock is limited during each calendar month to 2% of the aggregate NAV of all classes as of the last calendar day of the previous quarter and in each calendar quarter will be limited to 5% of the aggregate NAV of all share classes as of the last calendar day of the previous calendar quarter; provided, however, that every month and quarter each class of the Company’s stock will be allocated capacity within such aggregate limit to allow stockholders in such class to either (a) redeem shares equal to at least 2% of the aggregate NAV of such share class as of the last calendar day of the previous quarter, or, if more limiting, (b) redeem shares over the course of a given quarter equal to at least 5% of the aggregate NAV of such share class as of the last calendar day of the previous quarter. Shares will be repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any Early Repurchase Deduction (as defined below). The transaction price will generally equal the prior month’s NAV per share for that share class. Shares repurchased within one year of the date of issuance will be repurchased at 95% of the current transaction price (the “Early Repurchase Deduction”). The Early Repurchase Deduction will not apply to shares acquired through the distribution reinvestment plan. Due to the illiquid nature of investments in real estate, the Company may not have sufficient liquid resources to fund repurchase requests, and the Company has established limitations on the amount of funds it may use for repurchases during any calendar month and quarter as described above. The Company’s board of directors may modify, suspend or terminate the Repurchase Plan. Distributions The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders beginning January 1, 2023 and each year thereafter to comply with the REIT provisions of the Code. Each class of common stock receives the same gross distribution per share. The net distribution varies for each class based on the applicable distribution fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor, as applicable. The following table details the aggregate distributions declared for each applicable class of common stock: Three Months Ended September 30, 2023 Class F Class FF Aggregate gross distributions declared per share of common stock $ 0.1864 $ 0.1864 Stockholder servicing fee per share of common stock — — Net distributions declared per share of common stock $ 0.1864 $ 0.1864 Nine Months Ended September 30, 2023 Class F Class FF Aggregate gross distributions declared per share of common stock $ 0.4260 $ 0.3084 Stockholder servicing fee per share of common stock — — Net distributions declared per share of common stock $ 0.4260 $ 0.3084 Distribution Reinvestment Plan In February 2023, the Company adopted a distribution reinvestment plan (“DRIP”) whereby participating stockholders will have their cash distributions attributable to the class of shares purchased automatically reinvested in the same class of shares. The per share purchase price for shares purchased under the DRIP will be equal to the transaction price on the record date of the distribution that is payable. Stockholders will not pay upfront selling commissions when purchasing shares pursuant to the DRIP, but such shares will be subject to distribution fees, if any. The distribution fees (when applicable) are calculated based on the NAV for these applicable shares and may reduce the NAV, or alternatively, the distributions payable with respect to the shares of each such class, including shares issued under the DRIP. During the 2023 Q3 Successor Period, the Company issued 354 Class F shares and 22,416 Class FF shares under the DRIP. During the 2023 Successor Interim Period, the Company issued 699 Class F shares and 22,585 Class FF shares under the DRIP. Share-Based Compensation Plan On March 7, 2023, the Board approved the independent director compensation plan (the “Compensation Plan”), which provides independent directors an initial one-time grant of Class F restricted shares of common stock valued at $100,000 (“Initial Grant”), annual compensation consisting of a number of restricted shares (“Equity Retainer”) valued at $25,000 and all or a portion of their cash compensation (“Cash Retainer”) if the independent directors elect to receive such cash compensation in the form of restricted shares of the Company’ common stock. Prior to September 3, 2023, any grant of restricted stock was based on the then-current per share transaction price of the Class F shares at the time of grant. Thereafter, any grant of restricted stock will be based on the then-current per share transaction price of the Class E shares at the time of grant. Subject to the approval of the Board, the Company expects to issue Class E shares to non-employee directors in exchange for Class F shares previously issued to them under an Initial Grant or subsequent grant. Restricted stock grants will generally vest on the first anniversary of the date of grant. During the restricted period, these Class F restricted shares are automatically subject to the Company's DRIP with all dividends and other distributions declared and paid in respect of such restricted shares being applied to the purchase of additional restricted shares of the same class until the later of (i) such restricted shares becomes fully vested or (ii) receipt of nonparticipation in the DRIP by such independent director. The maximum number of shares that will be available for issuance under the Compensation Plan is 500,000. In March 2023, the Company granted approximately $0.6 million or approximately 62,410 Class F restricted shares of common stock which represented the Initial Grant, Equity Retainer and a portion of the Cash Retainer that the independent directors have elected to receive in restricted shares of stock. These restricted stock grants along with the additional restricted shares earned under the DRIP will vest between February 2024 and April 2024. As of September 30, 2023, 437,590 shares of common stock remain available for issuance under the Compensation Plan. Non-controlling Interest in the Operating Partnership In connection with its performance participation interest as discussed in Note 9, “Related Party Transactions,” the Special Limited Partner contributed $2,000 to the Operating Partnership, which constitutes a non-redeemable partnership interest with special distribution rights (“Special Units”). The Special Units do not receive Operating Partnership distributions or allocations except for the performance participation interest discussed below. Holders of Special Units do not share in the distributions paid to holders of units of limited partnership interests in the Operating Partnership (“OP units”) and are not allocated income or losses of the Operating Partnership except to the extent of taxable income allocated to the Special Limited Partner. Non-controlling Interest in the Consolidated Subsidiaries Noncontrolling interest in the consolidated subsidiaries represents an affiliate and third-party equity interests in CapGrow Member, CapGrow and Denton JV, respectively. Members’ Equity (Predecessor) Within CapGrow, the members’ obligations and rights relating to contributions, distributions, allocation of income and loss, among others, were governed by CapGrow’s limited liability company agreement, as further amended from time to time (“CapGrow Agreement”). As of December 31, 2022, CapGrow’s members did not have any outstanding capital commitments. Distributions of available cash are distributed to the members of CapGrow based on their respective membership interests until certain internal rate of return thresholds are met. As the rate of return thresholds are achieved, the allocation of distributions is modified as further described in the CapGrow Agreement. Income or losses are allocated to the members in amounts that result in ending capital account balances reflecting the amounts that would be distributed to them assuming CapGrow was liquidated at book value at the end of the reporting period. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Related Party Transactions Due to a Related Party The components of due to related parties of the Company are as follows (in thousands): Successor September 30, 2023 Accrued management fee $ 647 Accrued performance participation allocation 1,171 Advanced organization costs 2,945 Due to Adviser 104 $ 4,867 Management Fee Effective upon the acquisition of CapGrow in January 2023, the Company pays the Adviser an annual asset management fee equal to 0.50% of the NAV of the Company’s Class F and Class FF Common Shares. If in the future the Company sells other classes of shares, the Company will pay the Adviser a management fee of 0.75% of the aggregate NAV of Class A Common Shares and Class AA Common Shares and 1.25% of the aggregate NAV of Class S Common Shares, Class D Common Shares and Class I Common Shares per annum payable monthly. Additionally, to the extent that the Operating Partnership issues Operating Partnership units to parties other than the Company, the Operating Partnership will pay the Adviser a management fee equal to 1.25% of the aggregate NAV of the Operating Partnership attributable to such Operating Partnership units not held by the Company per annum payable monthly in arrears. No management fee will be paid with respect to Class E Common Shares or Class E Units, which are only expected to be held by Sculptor, its personnel and affiliates. In calculating the management fee, the Company will use its NAV and the NAV of the Operating Partnership units not held by the Company before giving effect to monthly accruals for the management fee, the performance participation allocation, distribution fees or distributions payable on the Company’s shares of stock or OP units. The management fee, which is due monthly in arrears, may be paid, at the Adviser’s election, in cash, Class E shares or Class E units of our Operating Partnership. The Adviser may defer the payment of management fee at its discretion. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company owed management fees amounting to $0.3 million and $0.6 million, respectively. Performance Participation The Special Limited Partner holds a performance participation interest in the Operating Partnership, which has three components: a performance participation interest with respect to the Class D units, Class I units and Class S units (the “Performance Allocation”); a performance allocation with respect to the Class A units and Class AA units (the “Class A Performance Allocation”); and a performance allocation with respect to the Class F units and Class FF units (the “Class F Performance Allocation”). The Performance Allocation entitles the Special Limited Partner to receive an allocation from the Operating Partnership equal to 12.5% of the Total Return, subject to a 5% Hurdle Amount and a High-Water Mark, with a Catch-Up; the Class A Performance Allocation entitles the Special Limited Partner to receive an allocation equal to 10.0% of the Class A Total Return, subject to a 7% Class A Hurdle Amount and a High-Water Mark, with a 50% Catch-Up; and the Class F Performance Allocation entitles the Special Limited Partner to receive an allocation equal to 6.25% of the Class F Total Return, subject to a 7% Class F Hurdle Amount and a High-Water Mark, with a 50% Catch-Up (as each of those terms is defined in the amended and restated limited partnership agreement of the Operating Partnership). Distributions on the Performance Allocation, Class A Performance Allocation and Class F Performance Allocation are payable in cash or Class E Units at the election of the Special Limited Partner. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company accrued a performance allocation amounting to $0.4 million and $1.2 million, respectively. There were no performance allocations during the 2022 Successor Interim Period. Expense Reimbursements Except for the employees of CapGrow, the Company does not have any employees. Currently, the Adviser is responsible for the payroll costs and related expenses of the Adviser’s personnel who are involved in the operation and management of the Company. The Adviser is entitled to reimbursement of all costs and expenses incurred on behalf of the Company, which includes (a) organization and offering expenses (excluding upfront selling commissions and distribution fees), (b) professional fees for services obtained from third parties that directly relate to the management and operations of the Company, (c) expenses of managing and operating our properties, whether payable to an affiliate or a non-affiliated person, and (d) out-of-pocket expenses in connection with the selection and acquisition of properties and real estate debt, whether or not such investments are acquired. The Company will reimburse organization and offering expenses incurred prior to the first anniversary of the commencement of the Offering ratably over 60 months commencing in the first month following the first anniversary of the date the Company commenced the Offering. Commencing four fiscal quarters after we acquired CapGrow, the Company may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses that in the four consecutive fiscal quarters then ended exceed the greater of: 2% of our “average invested assets” or 25% of our “net income” (as defined in the advisory agreement) unless the independent directors determine that the excess expenses were justified based on such factors that they deem sufficient. As of September 30, 2023, the Company owed offering and organization costs of $2.9 million. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | Fair Value Measurements The Company is required to disclose fair value information with regard to certain financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The FASB guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (e.g., the exit price). The Company measures and/or discloses the estimated fair value of certain financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date; Level 2 - inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 -unobservable inputs for the asset or liability that are used when little or no market data is available. The Company follows this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. As of September 30, 2023, the Compa ny does not have any financial instruments that are measured at fair value o n a recurring basis. Valuation of Assets Measured at Fair Value on a Nonrecurring Basis. On January 4, 2023, the Company, through the Operating Partnership, acquired a 61.64% controlling indirect interest in CapGrow at a total enterprise value of approximately $455 million. Debt of approximately $221 million was assumed at closing. Since this acquisition meets the definition of a business, the Company recognized all of the tangible and intangible assets acquired, the liabilities assumed and noncontrolling interest in CapGrow Member and CapGrow JV at the acquisition-date fair value. The fair value of each property was determined primarily based on unobservable data inputs, which utilized market knowledge obtained from historical transactions and published market data. Typically, the Company allocates 15% of the purchase price to land. The above- and below market lease intangibles were derived (using a discount rate which reflects the risks associated with the lease acquired) based on the difference between contractual rent and market rent, measured over a period equal to the remaining term of each of the leases, including the renewal options for below market leases. In estimating in-place leases and deferred commissions, the Company uses estimates of its carry costs during hypothetical expected lease-up periods and costs to execute similar leases, which include estimates of lost rental at market rates as well as leasing commissions. Debt was valued by a third-party appraiser, utilizing the discounted cash flow and inputs such as discount rate, prepayment speeds, general economic and industry trends. All of these inputs are classified as Level 3 inputs. Goodwill was recognized as the excess of the consideration transferred and the net assets acquired, including the noncontrolling interests. Certain of the Company’s assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments, such as when there is evidence of impairment, and therefore measured at fair value on a nonrecurring basis. The Company reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that could indicate the carrying amount of the real estate value may not be recoverable. During the 2023 Q3 Successor Period and 2023 Successor Interim Period, the Company recorded an impairment loss aggregating to $1.5 million and $3.9 million, respectively, in respect of the assets sold, held for sale properties and certain vacant properties where leases were terminated and the expected sales proceeds were lower than the carrying value of the properties. The fair value of these impaired assets is primarily based on the sale price pursuant to the binding executed contracts or list price less estimated costs to sell, which is considered a Level 3 input. Refer to Note 3 for additional disclosure relating to asset impairment. Valuation of Liabilities Not Measured at Fair Value The following table presents the carrying value and estimated fair value of our financial instruments that are not carried at fair value on the consolidated balance sheets: September 30, 2023 Carrying Value (1) Estimated Fair Value Mortgages and other loans payable $ 217,480 $ 207,057 Revolving credit facility 6,574 6,574 $ 224,054 $ 213,631 (1) The carrying value of these loans do not include unamortized debt issuance costs. The fair value of the Company’s borrowings is estimated by modeling the cash flows required by our debt agreements and discounting them back to present value using the appropriate discount rate. Additionally, we consider current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of our borrowings are considered Level 3. |
ECONOMIC DEPENDENCY
ECONOMIC DEPENDENCY | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate Investment Trust, Operating Support [Abstract] | |
ECONOMIC DEPENDENCY' | ECONOMIC DEPENDENCYThe Company is dependent on the Adviser and its affiliates for certain services that are essential to it, including the sale of the Company’s shares of common stock, acquisition and disposition decisions, and certain other responsibilities. In the event that the Adviser and its affiliates are unable to provide such services, the Company would be required to find alternative service providers. |
RENTAL INCOME
RENTAL INCOME | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
RENTAL INCOME | RENTAL INCOME The Company leases the CapGrow Portfolio to various companies who serve adults with behavioral health needs, primarily under triple-net lease agreements, with terms extending through November 2034. Under the terms of the triple-net lease agreements, tenants are responsible for the payment of all taxes, maintenance, repairs, insurance, environmental and other operating expenses relating to the residential and commercial real estate. Variable lease payments consist of tenant reimbursements and other fees such as late fees, among others. As of September 30, 2023 and December 31, 2022, 44 subsidiaries of National Mentor Holdings, Inc., a Delaware corporation doing business as “Sevita,” lease approximately 49% of CapGrow Portfolio properties (representing 42% and 53% of total assets, respectively), and these leases have various expiration dates extending through March 2032. There are no cross-default provisions among the Sevita leases. Although Sevita is not a party to these leases, Sevita has entered into separate guarantee agreements with respect to 421 of CapGrow’s properties, which represents approximately 41% and 42% of the total rental income for the 2023 Successor Interim Period and 2022 and 2022 Predecessor Interim Period, respectively (representing 35% and 45%, respectively, of total assets as of September 30, 2023 and December 31, 2022, respectively). As of September 30, 2023, there are four tenants that each represent more than 5% of CapGrow’s rental income, and collectively, the leases on the properties with these tenants represent over 72% of the Company’s rental income for the nine months ended September 30, 2023. While this represents a significant concentration risk with regard to CapGrow’s revenue, the credit risk associated with these tenants is mitigated since the payor stream is principally derived through Medicaid waivers. A majority of the CapGrow Portfolio is located in Texas, Minnesota and Ohio. As of September 30, 2023, the future minimum cash rents to be received over the next five years and thereafter for noncancellable operating leases are as follows: Year Ending December 31, 2023 (three months) $ 7,718 December 31, 2024 29,760 December 31, 2025 26,457 December 31, 2026 22,989 December 31, 2027 16,109 Thereafter 21,352 $ 124,385 The components of lease income from operating leases for the 2023 Q3 Successor Period, 2022 Q3 Predecessor Period, 2023 Successor Interim Period, 2023 Predecessor Interim Period, and 2022 Predecessor Interim Period, are as follows (in thousands): Successor Predecessor Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Fixed lease payments $ 9,463 $ 7,277 Variable lease payments 40 83 $ 9,503 $ 7,360 Successor Predecessor Period from January 4, 2023 through September 30, 2023 Period from January 1, 2023 through January 3, 2023 Nine Months Ended September 30, 2022 Fixed lease payments $ 26,963 $ 320 $ 20,922 Variable lease payments 155 3 244 $ 27,118 $ 323 $ 21,166 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Office Lease CapGrow leases its office space from a third party under an operating lease, which expires in February 2028. During the 2023 Q3 Successor Period and 2022 Q3 Predecessor period, rental expenses, which were included in general and administrative in the condensed consolidated statements of operations, were less than $0.1 million for each respective period. For the 2023 Successor Interim Period, 2023 Predecessor Interim Period, and 2022 Predecessor Interim Period, rental expenses, which were included in general and administrative in the condensed consolidated statements of operations, were less than $0.1 million for each respective period. Following the acquisition of CapGrow, the Company utilized an incremental borrowing rate of 3.90% in calculating the lease liabilities. The following table reflects the future minimum lease payments as of September 30, 2023 (in thousands): Year Ending December 31, 2023 (three months) $ 19 December 31, 2024 77 December 31, 2025 79 December 31, 2026 80 December 31, 2027 82 Thereafter 14 Total minimum lease payments 351 Imputed interest (30) Total operating lease liabilities $ 321 Legal Matters The Company is not involved in any material litigation nor, to management’s knowledge, was any material litigation threatened against the Company which if adversely determined could have a material adverse impact on the Company other than routine litigation arising in the ordinary course of business. Environmental Matters As an owner of real estate, the Company is subject to various environmental laws of federal, state, and local governments. The Company’s compliance with existing laws has not had a material adverse effect on its financial condition and results of operations, and the Company does not believe it will have a material adverse effect in the future. However, the Company cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on its current properties or on properties that the Company may acquire. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent Events Private Placement Offerin g Subsequent to September 30, 2023, the Company received total net proceeds of $2.2 million from the issuance of common stock. Further, the Company extended its offering of Class F and Class FF shares through the closing that will occur on January 1, 2024. Additionally, Class A, Class AA, Class D, Class E, Class I and Class S shares became available for issuance commencing October 1, 2023, although Class E shares will only be available for the Company’s sponsor and its personnel and affiliates. Distributions Commencing October 1, 2023, the Company’s Class FF shares became subject to an annual distribution fee equal to 0.50% per annum of the aggregate NAV of the Company’s outstanding Class FF shares payable monthly in arrears. The following table summarizes the Company’s distributions declared and paid or payable (net of distribution fees) to stockholders beginning in October 1 2023: Declaration Date Record Date Class F Shares Class FF Shares Payment Date September 29, 2023 September 30, 2023 $ 0.0625 $ 0.0625 October 12, 2023 October 31, 2023 October 31, 2023 $ 0.0622 $ 0.0577 November 10, 2023 Acquisition of Additional Interests in CapGrow On October 3, 2023, the Company acquired additional equity interests in CapGrow for $25 million, thereby increasing its indirect controlling interest in CapGrow to 79.64%. Acquisition of Denton On October 27, 2023, Denton JV, through its wholly owned subsidiary (“Denton Owner”), closed on the acquisition of University Courtyard for a gross purchase price of $58.0 million, exclusive of closing costs. Immediately following the completion of the purchase of University Courtyard, Denton Owner entered into (a) a sale agreement for the sale of the underlying land to a third party for a gross purchase price of $23.2 million (the “Land Sale”) and (b) a 99-year ground lease agreement (“Ground Lease”), as tenant, with the third party, as landlord, granting a leasehold interest (the “Leasehold Interest”) in University Courtyard. The Ground Lease requires annual lease payments by Denton Owner of $1.1 million, subject to fixed annual increases equal to 2.23% of the prior year’s lease payments. The Ground Lease provides for various customary events of default, which could result in the termination of the Leasehold Interest. The acquisition was funded, in part, with equity, proceeds from the sale of the Land Sale and a $20.9 million mortgage loan on the Leasehold Interest (the “Loan”) by Denton Owner as borrower. The Loan bears interest at a rate of 2.56% plus the 30-day compounded average of the secured overnight financing rate as administered by the Federal Reserve Bank of New York (the “SOFR Average”), determined monthly, and matures on November 1, 2033. The Loan is subject to monthly interest only payments through December 1, 2028, and thereafter, monthly principal and interest payments are due through the maturity date. In connection with the Loan, Denton Owner purchased a five-year 1% SOFR cap for $3.3 million. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Since the Company had no significant assets or operations prior to January 1, 2023, the Company concluded that CapGrow Member is the Predecessor and the Company is the Successor and each are defined as such. The Company has made the distinctions in the condensed consolidated financial statements and certain footnote presentations, as follows: • for the period from January 4, 2023 through September 30, 2023 (the “2023 Successor Interim Period”), • for the period from January 1 through January 3, 2023 (the “2023 Predecessor Interim Period”), • nine months ended September 30, 2022 (the “2022 Predecessor Interim Period”), • for the three months ended September 2022 (the “2022 Q3 Predecessor Period”) and • for the three months ended September 2023 (the “2023 Q3 Successor Period”) The Company does not have any results of operations for the nine months ended September 30, 2022. The Successor and Predecessor accounts have been presented based upon the transaction date of January 4, 2023 which resulted in a change of control and application of purchase accounting as required by Accounting Standard Codification (“ASC”) 805. As a result of the foregoing, the condensed consolidated financial statements of the Predecessor and the Successor are not comparable and are separated by a black line. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company at September 30, 2023 and the results of operations for the periods presented have been included. The operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements of the Predecessor as of that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The Predecessor interim condensed consolidated financial statements as of December 31, 2022, for the periods from January 1 through January 3, 2023 and January 1, 2022 through September 30, 2022 should be read in conjunction with the audited Predecessor consolidated financial statements for the year ended December 31, 2022. |
Principles of Consolidation | Principles of Consolidation The Company consolidates entities in which the Company has a controlling financial interest. Entities in which, directly or indirectly, the Company does not have a controlling interest, are accounted for under the equity method. The Company considers the Operating Partnership, CapGrow and Denton as variable interest entities (“VIE”), in which the Company is the primary beneficiary. The Company is the primary beneficiary of a VIE when the Company has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The Company continuously reassesses whether it should consolidate a VIE especially where there is a substantive change in the governing documents or contractual arrangements of the entity, to the capital structure of the entity or in the activities of the entity. A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us, which is generally computed as the other partner’s ownership percentage. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheets and the presentation of net income is modified to present earnings attributed to controlling and noncontrolling interests. The noncontrolling interest in CapGrow JV is entitled to a profit based on meeting certain internal rate of return hurdles. Any profits interest due to the other partner is reported within noncontrolling interests. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain amounts reported in the condensed consolidated financial statements and accompanying notes to condensed consolidated financial statements. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with maturities of three months or less when purchased. The Company may have bank balances in excess of federally insured amounts; however, the Company maintains its cash and cash equivalents with high credit-quality institutions. |
Restricted Cash | Restricted Cash Restricted cash consists of subscriptions received in advance and escrows held by lenders for property taxes, debt service and capital expenditures. |
Deferred Leasing Costs and Deferred Financing Costs | Deferred Leasing Costs Deferred leasing costs consist primarily of leasing commissions incurred to initiate or renew operating leases. These costs are capitalized as part of other assets in the consolidated balance sheets and amortized on a straight-line basis over the related lease term. Amortization of deferred leasing costs is recorded as part of depreciation and amortization expenses in the condensed consolidated statements of operations. Upon the early termination of a lease, any unamortized deferred leasing costs are charged to expense. Deferred Financing Costs Deferred financing costs, which consist of lender fees, legal, title and other third-party costs related to the issuance of debt, are capitalized and are reported as a deduction from the face amount of the related debt, and are amortized over the term of the related debt agreements using the straight-line method which approximates the effective interest method. Deferred costs under the revolving credit facility are reported as a deduction from the face amount of the related debt. In the event of early redemption, any unamortized costs are charged to operations. Amortization of deferred financing costs is included in interest expense on the condensed consolidated statements of operations. |
Investments in Real Estate | Investments in Real Estate Real estate properties are carried at cost less accumulated depreciation and impairment losses, if any. Upon acquisition, the Company evaluates each acquisition transaction for the purpose of determining whether a transaction should be accounted for as an asset acquisition or business combination. The acquisition transaction qualifies as a business combination when the assets acquired and liabilities assumed constitute a business. If the property acquired does not constitute a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations (“screen test”) states that when substantially all of the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. Whether an acquisition is considered a business combination or asset acquisition, the Company determines the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, site improvements, tenant improvements, above-market and below-market leases, acquired in-place leases, leasing commissions and other identified intangible assets and assumed liabilities), the liabilities assumed and any non-controlling interest in the acquired entity. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Under the business combination, acquisition-related costs are expensed as incurred. For asset acquisitions, the Company allocates the purchase price to the acquired assets and assumed liabilities based on their relative fair values. Acquisition-related costs associated with asset acquisitions are capitalized as part of the acquisition costs. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterment, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method. The estimated useful life of each building is 30 years. Minor improvements to buildings are capitalized and depreciated over useful lives ranging from three Depreciation expense amounted to $3.1 million and $2.1 million for the 2023 Q3 Successor Period and 2022 Q3 Predecessor Period, respectively. Depreciation expense amounted to $9.1 million and $6.2 million for the 2023 Successor Interim Period and 2022 Predecessor Interim Period, respectively. The Company evaluates its real estate investments for impairment upon occurrence of a significant adverse change in its operations to assess whether any impairment indicators are present that affect the recovery of the recorded value. If indicators |
Goodwill | Goodwill Goodwill represents the excess of the consideration transferred over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is allocated to an entity's reporting unit, which as of September 30, 2023, relates to CapGrow. |
Organization and Offering Expenses | Organization and Offering ExpensesOrganization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. |
Segment Reporting | Segment Reporting Under the provisions of ASC 280, “Segment Reporting,” the Company has determined that it has one reportable segment with activities related to acquiring, renovating, developing, leasing and operating single-family homes as rental properties. The CapGrow Portfolio is geographically dispersed, and management evaluates operating performance on a total portfolio basis. The aggregation of individual homes constitutes the total portfolio. Decisions regarding acquisitions and dispositions of homes are made at the individual home level with a focus on accretion in high-growth locations where there is greater scale |
Revenue Recognition | Revenue Recognition The Company and Predecessor derive its revenues from residential leases, which are accounted for as operating leases. The majority of its leases are under a triple net lease arrangement which requires tenants to pay its taxes, insurance and maintenance costs, among others. Other leases are under a modified net lease arrangement wherein tenants pay a proportional share of expenses in addition to its contractual base rent. As a practical expedient, the Company elected to account for both the lease and non-lease components as a single lease component because the timing and pattern of revenue recognition are generally the same. Rental revenue is recognized on the straight-line basis over the non-cancellable terms of the leases from the later of (i) the date of the commencement of the lease or (ii) the date of acquisition of the property. For lease modifications, the commencement date is considered to be the date the lease modification is executed. Rental revenue recognition begins when tenants control the space through the term of their respective leases, which typically have an initial lease term of five (5) years to ten (10) years. Any excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rent and other receivables on the consolidated balance sheets. Any amounts paid in advance by the tenants are recorded as deferred revenue, which is included in accounts payable and other liabilities on the consolidated balance sheets and are recognized as rental income in accordance with the Company’s revenue recognition policy. Rental revenue is recognized if collectability is probable. For leases that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. Other property income includes termination income and late fees. Termination income, which relates to fees paid by tenants to terminate their lease prior to the contractual lease expiration date, are recognized during the period the following conditions are met: (i) the termination agreement is executed, (ii) the termination fee is determinable, and (iii) collectability of the termination fee is assured. Gain or loss on sale of real estate is recognized when the Company no longer has a controlling financial interest in the real estate, a contract exists with a third party and that third party has control of the assets acquired. Gain or losses on sale of real estate is shown as a separate line item in the condensed consolidated statements of operations. |
Leasing Arrangements | Leasing Arrangements CapGrow leases its corporate office. Prior to business combination with the Company, CapGrow accounted for this lease as an operating lease in accordance with the adoption of ASC 842, “Leases,” effective January 1, 2020, which requires a recognition of right-of-use (“ROU”) asset and lease liability in the consolidated balance sheets for the rights and obligations created from this lease. CapGrow recognized the operating lease ROU asset and lease liability based on the present value of future minimum lease payments over the expected lease term at commencement date, which was calculated using CapGrow’s incremental borrowing rate. At acquisition date, the Company remeasured the ROU asset and lease liability, as if it were a new lease, at the present value of the remaining lease payments, which was calculated using the Company’s incremental borrowing rate and considered adjustment related to favorable or unfavorable terms of the lease as compared to market terms. |
Share-based Compensation | Share-based Compensation The Company records all equity-based incentive grants to non-employee members of the Board based on their fair values determined on the date of grant. Stock-based compensation expense, which is included in general and administrative |
Income Taxes | Income Taxes The Company was treated as a corporation for the taxable year ending December 31, 2022. The Company intends to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes beginning with the Company’s taxable year ending December 31, 2023. As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 100% of its taxable income to its stockholders. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. The Operating Partnership and the Predecessor are classified as a partnership for U.S. federal and state income tax purposes and are therefore not subject to income tax. Each partner is responsible for the tax liability, if any, related to their share of Operating Partnership taxable income or loss. Management is responsible for determining whether a tax position taken by the Company or the Operating Partnership is more likely than not to be sustained on the merits. The Company has no material unrecognized tax benefits or uncertain income tax positions and therefore no interest or penalties associated with uncertain tax positions. |
Earnings per Share | Earnings per Share Basic net income (loss) per share (“EPS”) of common stock is determined by net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS of common stock is determined by net income (loss) attributable to common shareholders by the weighted average number of common shares and common share equivalents outstanding for the period. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. All classes of common stock are allocated to net income (loss) at the same rate and receive the same gross distribution share. There were no common share equivalents outstanding that would have a dilutive effect and accordingly, the weighted average number of common shares outstanding is identical to both basic and diluted shares for the 2023 Successor Interim Period. The restricted stock grants of Class F shares held by the Company’s independent directors are not considered to be participating securities because they have forfeitable rights to distributions. As a result, there is no impact of these restricted stock grants on basic and diluted net income (loss) per common share until the restricted stock grants have been fully vested. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting and then in January 2021, the FASB issued ASU No. 2021-01. The amendments provide practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2024, which was extended from the original sunset date of December 31, 2022 when the FASB issued ASU No. 2022-06 in December 2022. The guidance may be elected over time as reference rate reform activities occur and once elected, the guidance must be applied prospectively for all eligible contract modifications. The Company adopted this guidance on January 1, 2022 and it did not have any material impact on its condensed consolidated financial statements. |
Fair Value Measurements | The Company is required to disclose fair value information with regard to certain financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The FASB guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (e.g., the exit price). The Company measures and/or discloses the estimated fair value of certain financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date; Level 2 - inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 -unobservable inputs for the asset or liability that are used when little or no market data is available. The Company follows this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. |
INVESTMENTS IN REAL ESTATE, N_2
INVESTMENTS IN REAL ESTATE, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Schedule of Investments in Real Estate | Investments in real estate, net consist of (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Land and land improvements $ 69,143 $ 48,922 Building and improvements 352,735 267,946 Total real estate properties, at cost 421,878 316,868 Less: accumulated depreciation (8,993) (26,953) Investments in real estate, net $ 412,885 $ 289,915 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the acquisition date as well as the fair value of the noncontrolling interest in CapGrow at acquisition date: Consideration transferred: Cash $ 141,147 Acquisition-related costs (included in organization and transaction costs) 870 Assets acquired and liabilities assumed: Property level cash 3,049 Restricted cash 5,323 Receivables 1,739 Other assets 58 Investments in real estate 424,999 Intangible assets 46,904 Mortgages and notes payable (190,832) Revolving credit facility (30,284) Accounts payable and other liabilities (4,656) Intangible liabilities (61,772) Total identifiable net assets 194,528 Fair value of noncontrolling interest in CapGrow (87,839) Goodwill 34,458 $ 141,147 |
Schedule of Pro Forma Information | The 2023 Successor Interim Period included the results of operations of CapGrow since its acquisition date, as summarized below. Additionally, the following table provides the pro forma results of operations of the Predecessor for the 2023 Q3 Successor Period, 2022 Q3 Predecessor Period, 2023 Successor Interim Period and 2022 Predecessor Interim Period, assuming CapGrow was acquired on January 1, 2022. The pro forma information may not be indicative of what actual results of operations would have been had the transaction occurred at the beginning of January 2022, nor is it necessarily indicative of future operating results. Successor Predecessor Three Months Ended September 30, 2023 Period from January 4, 2023 through September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Actual revenues since acquisition $ 9,766 $ 27,939 $ — $ — Actual net income (loss) since acquisition $ 243 $ (544) $ — $ — Pro forma revenues $ — $ — $ 9,081 $ 27,527 Pro forma net income attributable to common stockholders $ — $ — $ 1,427 $ 4,212 |
LEASE INTANGIBLES (Tables)
LEASE INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Finite-Lived Intangible Assets and Liabilities | The gross carrying amount and accumulated amortization of the Company's intangible assets and liabilities as of September 30, 2023 consisted of the following (in thousands). There were no intangible assets and liabilities as of December 31, 2022: Successor Cost Accumulated Amortization Net Intangible assets, net: Above-market lease intangibles $ 3,167 $ (505) $ 2,662 In-place lease intangibles 8,907 (823) 8,084 Leasing commissions 34,158 (2,328) 31,830 Total intangible assets $ 46,232 $ (3,656) $ 42,576 Intangible liabilities, net: Below-market lease intangibles $ (59,880) $ 4,087 $ (55,793) |
Schedule of Estimated Future Amortization Expense | The estimated future amortization on the Company's lease intangibles for each of the next five years and thereafter as of September 30, 2023 is as follows (in thousands): Above-market Lease Intangibles In-place Lease Intangibles Leasing Commissions Below-market Lease Intangibles 2023 (three months) $ 166 $ 249 $ 702 $ (1,183) 2024 658 970 2,799 (4,708) 2025 640 908 2,776 (4,623) 2026 511 798 2,667 (4,493) 2027 343 699 2,548 (4,336) Thereafter 344 4,460 20,338 (36,450) $ 2,662 $ 8,084 $ 31,830 $ (55,793) |
Schedule of Estimated Future Amortization Income | The estimated future amortization on the Company's lease intangibles for each of the next five years and thereafter as of September 30, 2023 is as follows (in thousands): Above-market Lease Intangibles In-place Lease Intangibles Leasing Commissions Below-market Lease Intangibles 2023 (three months) $ 166 $ 249 $ 702 $ (1,183) 2024 658 970 2,799 (4,708) 2025 640 908 2,776 (4,623) 2026 511 798 2,667 (4,493) 2027 343 699 2,548 (4,336) Thereafter 344 4,460 20,338 (36,450) $ 2,662 $ 8,084 $ 31,830 $ (55,793) |
OTHER ASSETS_ (Tables)
OTHER ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | The following table summarizes the components of other assets (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Assets held for sale $ 1,302 $ 1,866 Acquisition deposit 1,160 — Deferred costs 41 501 Right of use asset - operating lease 319 282 Prepaid insurance 341 — Other 190 67 Total $ 3,353 $ 2,716 |
ACCOUNTS PAYABLE AND OTHER LI_2
ACCOUNTS PAYABLE AND OTHER LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | The following table summarizes the components of accounts payable and other liabilities (in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Accounts payable and accrued expenses $ 2,200 $ 622 Subscriptions received in advance 1,050 — Liabilities related to assets held for sale 1,312 2,007 Tenant security deposits 2,281 2,153 Lease liability - operating lease 321 294 Accrued organization and offering costs 282 — Deferred income 21 295 Total $ 7,467 $ 5,371 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgage and Other Loan Payables | The following table provides information regarding the Company’s mortgages and other loans payable, which were assumed upon acquisition of CapGrow and were secured by certain properties of CapGrow (amounts in thousands): Successor Predecessor September 30, 2023 December 31, 2022 Fixed Interest Initial Maturity Mortgage note payable (1)(4) $ 6,130 $ 6,251 5.00% June 2024 Mortgage note payable (2)(4) 11,064 11,526 5.19% June 2027 Mortgage note payable (4) 9,051 9,238 3.75% April 2028 Mortgage note payable (2)(3) 7,770 12,402 5.59% April 2028 Mortgage note payable (8) 19,392 19,633 4.28% November 2029 Mortgage note payable (5) 49,308 49,635 3.59% September 2030 Successor Predecessor September 30, 2023 December 31, 2022 Fixed Interest Initial Maturity Mortgage note payable (2)(3) 38,573 40,072 3.85% January 2031 Mortgage note payable (4) 2,038 2,077 4.35% February 2031 Mortgage note payable (6) 24,982 24,982 4.01% January 2032 Mortgage note payable (4) 14,353 14,610 4.00% March 2032 Mortgage note payable (9) 32,241 — 6.60% September 2033 Mortgage note payable (4) 1,339 1,566 5.63% to 6.50% February 2037 Notes payable (7) 1,239 1,414 7.00% various Total 217,480 193,406 Discounts and deferred financing costs, net (3,069) (2,875) Total mortgages and other loans payable, net $ 214,411 $ 190,531 _______________________________________ (1) Includes two mortgage loans related to assets held for sale amounting to $1.3 million at September 30, 2023. (2) Includes mortgage loans related to assets held for sale amounting to $0.3 million, $0.2 million, and $1.5 million at December 31, 2022, respectively. (3) Interest only payment loan through January 2024, at which time, monthly principal and interest payments will be due through maturity date. (4) These loans are subject to monthly interest and principal payments through maturity date. (5) Interest only payment loan through September 2023, at which time, monthly principal and interest payments are due through maturity date. (6) Interest only payment loan through January 2025, at which time, monthly principal and interest payments will be due through maturity date. (7) These loans, which are owed to private parties, bear interest rates ranging from 7% to 9%. Monthly principal and interest payments are due through maturity date beginning August 2023 through July 2027. (8) Interest only payment loan through November 2022, at which time, monthly principal and interest payments are due through maturity date. (9) Interest only payment loan through October 2023, at which time, monthly principal and interest payments are due through maturity date. |
Schedule of Maturities of Mortgage and Other loans Payable | The scheduled principal maturities of the mortgages and other loans payable and Credit Facility as of September 30, 2023 were as follows for the Company: Year Ending Mortgages and Other Loans Payable Credit Facility Total December 31, 2023 (three months) $ 637 $ — $ 637 December 31, 2024 10,016 6,574 16,590 December 31, 2025 4,049 — 4,049 December 31, 2026 4,029 — 4,029 December 31, 2027 14,026 — 14,026 Thereafter 184,723 — 184,723 $ 217,480 $ 6,574 $ 224,054 |
STOCKHOLDERS' AND MEMBERS' EQ_2
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Stock by Class | As of September 30, 2023, the Company’s authorized capital stock was as follows: Number of Shares Par Value per Share Class F Shares 300,000,000 $0.01 Class FF Shares 300,000,000 $0.01 Class S Shares 300,000,000 $0.01 Class D Shares 100,000,000 $0.01 Class I Shares 300,000,000 $0.01 Class A Shares 300,000,000 $0.01 Class AA Shares 300,000,000 $0.01 Class E Shares 300,000,000 $0.01 Total 2,200,000,000 Preferred Stock 100,000,000 $0.01 2,300,000,000 |
Schedule of Common Stock Outstanding Roll Forward | The following table details the movement in the Company’s outstanding shares of common stock: Three Months Ended September 30, 2023 Class F Class FF Total June 30, 2023 15,020,145 1,670,773 16,690,918 Common stock issued 1,037,760 3,560,428 4,598,188 Distribution reinvestment 354 22,416 22,770 September 30, 2023 16,058,259 5,253,617 21,311,876 Nine Months Ended September 30, 2023 Class F Class FF Total December 31, 2022 — — — Rollover equity in Company parent 15,019,800 — 15,019,800 Common stock issued 1,037,760 5,231,032 6,268,792 Distribution reinvestment 699 22,585 23,284 September 30, 2023 16,058,259 5,253,617 21,311,876 |
Schedule of Dividends Payable | The following table details the aggregate distributions declared for each applicable class of common stock: Three Months Ended September 30, 2023 Class F Class FF Aggregate gross distributions declared per share of common stock $ 0.1864 $ 0.1864 Stockholder servicing fee per share of common stock — — Net distributions declared per share of common stock $ 0.1864 $ 0.1864 Nine Months Ended September 30, 2023 Class F Class FF Aggregate gross distributions declared per share of common stock $ 0.4260 $ 0.3084 Stockholder servicing fee per share of common stock — — Net distributions declared per share of common stock $ 0.4260 $ 0.3084 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The components of due to related parties of the Company are as follows (in thousands): Successor September 30, 2023 Accrued management fee $ 647 Accrued performance participation allocation 1,171 Advanced organization costs 2,945 Due to Adviser 104 $ 4,867 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Liabilities Not Measured at Fair Value | The following table presents the carrying value and estimated fair value of our financial instruments that are not carried at fair value on the consolidated balance sheets: September 30, 2023 Carrying Value (1) Estimated Fair Value Mortgages and other loans payable $ 217,480 $ 207,057 Revolving credit facility 6,574 6,574 $ 224,054 $ 213,631 (1) The carrying value of these loans do not include unamortized debt issuance costs. |
RENTAL INCOME (Tables)
RENTAL INCOME (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Future Minimum Cash Rents to be Received | As of September 30, 2023, the future minimum cash rents to be received over the next five years and thereafter for noncancellable operating leases are as follows: Year Ending December 31, 2023 (three months) $ 7,718 December 31, 2024 29,760 December 31, 2025 26,457 December 31, 2026 22,989 December 31, 2027 16,109 Thereafter 21,352 $ 124,385 |
Operating Lease, Lease Income | The components of lease income from operating leases for the 2023 Q3 Successor Period, 2022 Q3 Predecessor Period, 2023 Successor Interim Period, 2023 Predecessor Interim Period, and 2022 Predecessor Interim Period, are as follows (in thousands): Successor Predecessor Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Fixed lease payments $ 9,463 $ 7,277 Variable lease payments 40 83 $ 9,503 $ 7,360 Successor Predecessor Period from January 4, 2023 through September 30, 2023 Period from January 1, 2023 through January 3, 2023 Nine Months Ended September 30, 2022 Fixed lease payments $ 26,963 $ 320 $ 20,922 Variable lease payments 155 3 244 $ 27,118 $ 323 $ 21,166 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lessee, Operating Lease, Liability, to be Paid, Maturity | Following the acquisition of CapGrow, the Company utilized an incremental borrowing rate of 3.90% in calculating the lease liabilities. The following table reflects the future minimum lease payments as of September 30, 2023 (in thousands): Year Ending December 31, 2023 (three months) $ 19 December 31, 2024 77 December 31, 2025 79 December 31, 2026 80 December 31, 2027 82 Thereafter 14 Total minimum lease payments 351 Imputed interest (30) Total operating lease liabilities $ 321 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Schedule of Subsequent Events | The following table summarizes the Company’s distributions declared and paid or payable (net of distribution fees) to stockholders beginning in October 1 2023: Declaration Date Record Date Class F Shares Class FF Shares Payment Date September 29, 2023 September 30, 2023 $ 0.0625 $ 0.0625 October 12, 2023 October 31, 2023 October 31, 2023 $ 0.0622 $ 0.0577 November 10, 2023 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF THE BUSINESS (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) $ / shares shares | Sep. 30, 2023 shares | Sep. 29, 2023 unit bed | |
University Courtyard | |||
Class of Stock [Line Items] | |||
Number of units in property | unit | 240 | ||
Number of beds in property | bed | 792 | ||
Special Limited Partner | |||
Class of Stock [Line Items] | |||
Limited partners' contributed capital | $ | $ 2 | ||
Class F Shares | |||
Class of Stock [Line Items] | |||
Sale of stock, issued in transaction (in shares) | 15,019,800 | ||
Sale of stock (in dollars per share) | $ / shares | $ 10 | ||
Common stock, issued (in shares) | 16,058,259 | ||
Class F Shares | Sculptor | |||
Class of Stock [Line Items] | |||
Common stock, issued (in shares) | 19,800 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 9 Months Ended | |||||
Jan. 03, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Variable Interest Entity [Line Items] | |||||||
Total assets | $ 558,545,000 | $ 558,545,000 | $ 558,545,000 | $ 302,560,000 | |||
Total liabilities | 289,158,000 | 289,158,000 | 289,158,000 | 224,042,000 | |||
Property, Plant and Equipment [Line Items] | |||||||
Depreciation | 3,100,000 | $ 2,100,000 | 9,100,000 | $ 6,200,000 | |||
Impairment loss, held for sale | 100,000 | 1,800,000 | |||||
Impairment of long-lived assets to be disposed of | 1,300,000 | 0 | 2,100,000 | 0 | |||
Assets held for sale | 1,300,000 | 1,300,000 | 1,300,000 | 1,900,000 | |||
Liabilities held for sale | 1,312,000 | 1,312,000 | 1,312,000 | 2,007,000 | |||
Goodwill | 34,458,000 | 34,458,000 | $ 34,458,000 | 0 | |||
Goodwill impairment charge | 0 | ||||||
Organization and transaction costs | $ 0 | 372,000 | $ 0 | 2,281,000 | $ 0 | ||
Number of reportable segments | segment | 1 | ||||||
Right of use asset - operating lease | 319,000 | 319,000 | $ 319,000 | 282,000 | |||
Lease liability - operating lease | 321,000 | 321,000 | $ 321,000 | $ 294,000 | |||
Related Party | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Organization and transaction costs | $ 400,000 | $ 1,400,000 | |||||
Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Operating lease, term of contract | 5 years | 5 years | 5 years | ||||
Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Operating lease, term of contract | 10 years | 10 years | 10 years | ||||
Building | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property, plant and equipment, useful life | 30 years | 30 years | 30 years | ||||
Building Improvements | Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property, plant and equipment, useful life | 3 years | 3 years | 3 years | ||||
Building Improvements | Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property, plant and equipment, useful life | 15 years | 15 years | 15 years | ||||
Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Total assets | $ 558,500,000 | $ 558,500,000 | $ 558,500,000 | ||||
Total liabilities | $ 289,200,000 | $ 289,200,000 | $ 289,200,000 |
INVESTMENTS IN REAL ESTATE, N_3
INVESTMENTS IN REAL ESTATE, NET - Schedule of Investments in Real Estate (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real Estate [Abstract] | ||
Land and land improvements | $ 69,143 | $ 48,922 |
Building and improvements | 352,735 | 267,946 |
Total real estate properties, at cost | 421,878 | 316,868 |
Less: accumulated depreciation | (8,993) | (26,953) |
Investments in real estate, net | $ 412,885 | $ 289,915 |
INVESTMENTS IN REAL ESTATE, N_4
INVESTMENTS IN REAL ESTATE, NET - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||
Jul. 05, 2023 USD ($) | Jan. 04, 2023 USD ($) | Jan. 03, 2023 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) property | |
Business Acquisition [Line Items] | |||||||
Acquisition of a business | $ 0 | $ 132,775,000 | $ 0 | ||||
Noncontrolling interest acquired | $ 18,000,000 | $ 18,000,000 | |||||
Asset acquisition, number of properties acquired | property | 7 | 2 | 18 | 44 | |||
Payments to acquire productive assets | $ 2,300,000 | $ 700,000 | $ 12,700,000 | $ 35,200,000 | |||
Proceeds from sale of real estate | 400,000 | 1,100,000 | 9,500,000 | 4,100,000 | |||
Impairment loss, held for sale | 100,000 | 1,800,000 | |||||
Gain on sale of real estate | $ 0 | $ 0 | 360,000 | $ 0 | 1,367,000 | ||
Number of properties held for sale | property | 2 | 2 | |||||
Number of vacant impaired properties | property | 3 | 3 | |||||
Impairment of long-lived assets to be disposed of | $ 1,300,000 | $ 0 | $ 2,100,000 | $ 0 | |||
CapGrow | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, percentage of voting interests acquired | 61.64% | ||||||
Business combination, consideration transferred | $ 18,000,000 | $ 455,000,000 | |||||
Business combination, consideration transferred, liabilities incurred | 221,000,000 | ||||||
Acquisition of a business | $ 141,147,000 | ||||||
Equity interest in acquiree, including subsequent acquisition, percentage | 69.22% | ||||||
Number of real estate properties sold | property | 2 | 5 | 32 | 17 | |||
CapGrow | Minimum | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, management experience | 5 years | ||||||
CapGrow | Maximum | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, management experience | 10 years |
INVESTMENTS IN REAL ESTATE, N_5
INVESTMENTS IN REAL ESTATE, NET - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Jan. 04, 2023 | Jan. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Consideration transferred: | |||||
Cash | $ 0 | $ 132,775 | $ 0 | ||
Assets acquired and liabilities assumed: | |||||
Goodwill | $ 34,458 | $ 0 | |||
CapGrow | |||||
Consideration transferred: | |||||
Cash | $ 141,147 | ||||
Acquisition-related costs (included in organization and transaction costs) | 870 | ||||
Assets acquired and liabilities assumed: | |||||
Property level cash | 3,049 | ||||
Restricted cash | 5,323 | ||||
Receivables | 1,739 | ||||
Other assets | 58 | ||||
Investments in real estate | 424,999 | ||||
Intangible assets | 46,904 | ||||
Mortgages and notes payable | (190,832) | ||||
Revolving credit facility | (30,284) | ||||
Accounts payable and other liabilities | (4,656) | ||||
Intangible liabilities | (61,772) | ||||
Total identifiable net assets | 194,528 | ||||
Fair value of noncontrolling interest in CapGrow | (87,839) | ||||
Goodwill | 34,458 | ||||
Total identifiable net assets, less noncontrolling interest and goodwill | $ 141,147 |
INVESTMENTS IN REAL ESTATE, N_6
INVESTMENTS IN REAL ESTATE, NET - Schedule of Pro Forma Information (Details) - CapGrow - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Actual revenues since acquisition | $ 9,766 | $ 0 | $ 27,939 | $ 0 |
Actual net income (loss) since acquisition | 243 | 0 | (544) | 0 |
Pro forma revenues | 0 | 9,081 | 0 | 27,527 |
Pro forma net income attributable to common stockholders | $ 0 | $ 1,427 | $ 0 | $ 4,212 |
LEASE INTANGIBLES - Narrative (
LEASE INTANGIBLES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Jan. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Lease intangible assets, net | $ 42,576,000 | $ 42,576,000 | $ 0 | |||
Below-market lease intangibles, net | 55,793,000 | 55,793,000 | $ 0 | |||
Total revenues | $ 323,000 | 9,766,000 | $ 7,511,000 | 27,939,000 | $ 21,804,000 | |
Depreciation and amortization | $ 1,200,000 | $ 3,200,000 | ||||
Below market lease, weighted average amortization period | 13 years 10 months 24 days | 13 years 10 months 24 days | ||||
Above-market Lease Intangibles | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Lease intangible assets, net | $ 2,662,000 | $ 2,662,000 | ||||
Finite-lived intangible assets, weighted average amortization period | 4 years 9 months 18 days | 4 years 9 months 18 days | ||||
In-place Lease Intangibles | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Lease intangible assets, net | $ 8,084,000 | $ 8,084,000 | ||||
Finite-lived intangible assets, weighted average amortization period | 11 years 7 months 6 days | 11 years 7 months 6 days | ||||
Leasing Commissions | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Lease intangible assets, net | $ 31,830,000 | $ 31,830,000 | ||||
Finite-lived intangible assets, weighted average amortization period | 13 years 3 months 18 days | 13 years 3 months 18 days | ||||
Rental | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Total revenues | $ 1,600,000 | $ 3,700,000 |
LEASE INTANGIBLES - Schedule of
LEASE INTANGIBLES - Schedule of Finite-Lived Intangible Assets and Liabilities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Intangible assets, net: | ||
Cost | $ 46,232,000 | |
Accumulated Amortization | (3,656,000) | |
Net | 42,576,000 | $ 0 |
Intangible liabilities, net: | ||
Cost | (59,880,000) | |
Accumulated Amortization | 4,087,000 | |
Net | (55,793,000) | $ 0 |
Above-market Lease Intangibles | ||
Intangible assets, net: | ||
Cost | 3,167,000 | |
Accumulated Amortization | (505,000) | |
Net | 2,662,000 | |
In-place Lease Intangibles | ||
Intangible assets, net: | ||
Cost | 8,907,000 | |
Accumulated Amortization | (823,000) | |
Net | 8,084,000 | |
Leasing Commissions | ||
Intangible assets, net: | ||
Cost | 34,158,000 | |
Accumulated Amortization | (2,328,000) | |
Net | $ 31,830,000 |
LEASE INTANGIBLES - Schedule _2
LEASE INTANGIBLES - Schedule of Estimated Future Amortization (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Net | $ 42,576,000 | $ 0 |
Below-market Lease Intangibles | ||
2023 (three months) | (1,183,000) | |
2024 | (4,708,000) | |
2025 | (4,623,000) | |
2026 | (4,493,000) | |
2027 | (4,336,000) | |
Thereafter | (36,450,000) | |
Net | (55,793,000) | $ 0 |
Above-market Lease Intangibles | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 (three months) | 166,000 | |
2024 | 658,000 | |
2025 | 640,000 | |
2026 | 511,000 | |
2027 | 343,000 | |
Thereafter | 344,000 | |
Net | 2,662,000 | |
In-place Lease Intangibles | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 (three months) | 249,000 | |
2024 | 970,000 | |
2025 | 908,000 | |
2026 | 798,000 | |
2027 | 699,000 | |
Thereafter | 4,460,000 | |
Net | 8,084,000 | |
Leasing Commissions | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 (three months) | 702,000 | |
2024 | 2,799,000 | |
2025 | 2,776,000 | |
2026 | 2,667,000 | |
2027 | 2,548,000 | |
Thereafter | 20,338,000 | |
Net | $ 31,830,000 |
OTHER ASSETS_- Schedule of Othe
OTHER ASSETS - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Assets held for sale | $ 1,302 | $ 1,866 |
Acquisition deposit | 1,160 | 0 |
Deferred costs | 41 | 501 |
Right of use asset - operating lease | 319 | 282 |
Prepaid insurance | 341 | 0 |
Other | 190 | 67 |
Total | $ 3,353 | $ 2,716 |
ACCOUNTS PAYABLE AND OTHER LI_3
ACCOUNTS PAYABLE AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accounts payable and accrued expenses | $ 2,200 | $ 622 |
Subscriptions received in advance | 1,050 | 0 |
Liabilities related to assets held for sale | 1,312 | 2,007 |
Tenant security deposits | 2,281 | 2,153 |
Lease liability - operating lease | 321 | 294 |
Accrued organization and offering costs | 282 | 0 |
Deferred income | 21 | 295 |
Total | $ 7,467 | $ 5,371 |
BORROWINGS - SCHEDULE OF MORTGA
BORROWINGS - SCHEDULE OF MORTGAGE AND OTHER LOAN PAYABLES (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) loan | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 224,054 | |
Discounts and deferred financing costs, net | $ (3,069) | $ (2,875) |
Number of Mortgage Loans | loan | 2 | |
Assets held for sale | $ 1,302 | 1,866 |
Mortgages and Other Loans Payable | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | 217,480 | 193,406 |
Total mortgages and other loans payable, net | 214,411 | 190,531 |
Notes Payable | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 1,239 | 1,414 |
Fixed Interest Rate | 7% | |
0.05 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 6,130 | 6,251 |
Fixed Interest Rate | 5% | |
Assets held for sale | $ 1,300 | |
0.0519 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 11,064 | 11,526 |
Fixed Interest Rate | 5.19% | |
Assets held for sale | 300 | |
0.0375 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 9,051 | 9,238 |
Fixed Interest Rate | 3.75% | |
0.0559 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 7,770 | 12,402 |
Fixed Interest Rate | 5.59% | |
Assets held for sale | 200 | |
0.0428 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 19,392 | 19,633 |
Fixed Interest Rate | 4.28% | |
0.0359 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 49,308 | 49,635 |
Fixed Interest Rate | 3.59% | |
0.0385 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 38,573 | 40,072 |
Fixed Interest Rate | 3.85% | |
Assets held for sale | 1,500 | |
0.0435 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 2,038 | 2,077 |
Fixed Interest Rate | 4.35% | |
0.0401 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 24,982 | 24,982 |
Fixed Interest Rate | 4.01% | |
0.04 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 14,353 | 14,610 |
Fixed Interest Rate | 4% | |
0.066 | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 32,241 | 0 |
Fixed Interest Rate | 6.60% | |
5.63% to 6.50% | Mortgages | ||
Debt Instrument [Line Items] | ||
Mortgages and other loans payable, net | $ 1,339 | $ 1,566 |
5.63% to 6.50% | Mortgages | Minimum | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 5.63% | |
5.63% to 6.50% | Mortgages | Maximum | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 6.50% | |
7.00% due various | Notes Payable | Minimum | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 7% | |
7.00% due various | Notes Payable | Maximum | ||
Debt Instrument [Line Items] | ||
Fixed Interest Rate | 9% |
BORROWINGS - REVOLVING CREDIT F
BORROWINGS - REVOLVING CREDIT FACILITY (Details) - USD ($) | 1 Months Ended | 5 Months Ended | |||
Jan. 31, 2022 | Feb. 28, 2022 | Sep. 30, 2023 | Jan. 04, 2023 | Dec. 31, 2022 | |
CapGrow | |||||
Line of Credit Facility [Line Items] | |||||
Revolving credit facility | $ 30,284,000 | ||||
Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Extension period | 1 year | ||||
Line of Credit | CapGrow | |||||
Line of Credit Facility [Line Items] | |||||
Revolving credit facility | $ 30,300,000 | ||||
Revolving Credit Facility | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 40,000,000 | $ 50,000,000 | |||
Extension fee percentage | 0.30% | ||||
Effective percentage | 8.82% | 7.82% | |||
Mortgages and other loans payable, net | $ 6,600,000 | $ 30,100,000 | |||
Revolving Credit Facility | London Interbank Offer Rate Floor | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Floor on variable rate | 0.0025 | ||||
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 3% | ||||
Secured Overnight Financing Rate (SOFR) | Revolving Credit Facility | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 3.50% |
BORROWINGS - RESTRUCTIVE COVENA
BORROWINGS - RESTRUCTIVE COVENANTS (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Remaining lease term, covenants | 2 years |
BORROWINGS - MATURITY (Details)
BORROWINGS - MATURITY (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
December 31, 2023 (three months) | $ 637 | |
December 31, 2024 | 16,590 | |
December 31, 2025 | 4,049 | |
December 31, 2026 | 4,029 | |
December 31, 2027 | 14,026 | |
Thereafter | 184,723 | |
Mortgages and other loans payable, net | 224,054 | |
Mortgages and Other Loans Payable | ||
Debt Instrument [Line Items] | ||
December 31, 2023 (three months) | 637 | |
December 31, 2024 | 10,016 | |
December 31, 2025 | 4,049 | |
December 31, 2026 | 4,029 | |
December 31, 2027 | 14,026 | |
Thereafter | 184,723 | |
Mortgages and other loans payable, net | 217,480 | $ 193,406 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
December 31, 2023 (three months) | 0 | |
December 31, 2024 | 6,574 | |
December 31, 2025 | 0 | |
December 31, 2026 | 0 | |
December 31, 2027 | 0 | |
Thereafter | 0 | |
Mortgages and other loans payable, net | $ 6,574 |
STOCKHOLDERS' AND MEMBERS' EQ_3
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES - AUTHORIZED STOCK (Details) | Sep. 30, 2023 $ / shares shares |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 2,200,000,000 |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Preferred stock authorized (in shares) | 100,000,000 |
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Total Number of Shares | 2,300,000,000 |
Class F Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Class FF Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.01 |
Class S Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Class D Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 100,000,000 |
Class I Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Class A Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Class AA Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
Class E Shares | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 300,000,000 |
STOCKHOLDERS' AND MEMBERS' EQ_4
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES - COMMON STOCK (Details) - shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 16,690,918 | 0 | |
Rollover equity in Company parent (in shares) | 15,019,800 | ||
Common stock issued (in shares) | 4,598,188 | 6,268,792 | |
Distribution reinvestment (in shares) | 22,770 | 23,284 | |
Ending balance (in shares) | 21,311,876 | 21,311,876 | 21,311,876 |
Class F Shares | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 15,020,145 | 0 | |
Rollover equity in Company parent (in shares) | 15,019,800 | ||
Common stock issued (in shares) | 1,037,760 | 1,037,760 | |
Distribution reinvestment (in shares) | 354 | 699 | 699 |
Ending balance (in shares) | 16,058,259 | 16,058,259 | 16,058,259 |
Class FF Shares | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 1,670,773 | 0 | |
Rollover equity in Company parent (in shares) | 0 | ||
Common stock issued (in shares) | 3,560,428 | 5,231,032 | |
Distribution reinvestment (in shares) | 22,416 | 22,585 | 22,585 |
Ending balance (in shares) | 5,253,617 | 5,253,617 | 5,253,617 |
STOCKHOLDERS' AND MEMBERS' EQ_5
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES - DISTRIBUTIONS DECLARED (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |
Sep. 29, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Class F Shares | |||
Class of Stock [Line Items] | |||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0625 | $ 0.1864 | $ 0.4260 |
Stockholder servicing fee per share of common stock (in dollars per share) | 0 | 0 | |
Net distributions declared per share of common stock (in dollars per share) | 0.1864 | 0.4260 | |
Class FF Shares | |||
Class of Stock [Line Items] | |||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0625 | 0.1864 | 0.3084 |
Stockholder servicing fee per share of common stock (in dollars per share) | 0 | 0 | |
Net distributions declared per share of common stock (in dollars per share) | $ 0.1864 | $ 0.3084 |
STOCKHOLDERS' AND MEMBERS' EQ_6
STOCKHOLDERS' AND MEMBERS' EQUITY AND NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AND THE CONSOLIDATED SUBSIDIARIES - NARRATIVE (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 15 Months Ended | ||||||
Mar. 07, 2023 | Feb. 10, 2023 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2024 | Oct. 31, 2024 | |
Class of Stock [Line Items] | ||||||||||
Issuance of common stock | $ 66,298 | |||||||||
Distribution reinvestment (in shares) | 22,770 | 23,284 | ||||||||
Contributions to members | $ 0 | $ 9,838 | ||||||||
Non-controlling interests in the Operating Partnership | ||||||||||
Class of Stock [Line Items] | ||||||||||
Contributions to members | $ 2 | |||||||||
Forecast | ||||||||||
Class of Stock [Line Items] | ||||||||||
Issuance of common stock | $ 450,000 | |||||||||
Ownership of stock percentage | 10% | |||||||||
Compensation Plan | ||||||||||
Class of Stock [Line Items] | ||||||||||
Maximum number of shares available for issuance (in shares) | 500,000 | 437,590 | 437,590 | 437,590 | ||||||
Compensation Plan | Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares granted, equity retainer | $ 25 | |||||||||
Class F Shares | ||||||||||
Class of Stock [Line Items] | ||||||||||
Distribution reinvestment (in shares) | 354 | 699 | 699 | |||||||
Shares granted | $ 600 | |||||||||
Shares granted (in shares) | 62,410 | |||||||||
Class F Shares | Compensation Plan | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares granted | $ 100 | |||||||||
Class FF Shares | ||||||||||
Class of Stock [Line Items] | ||||||||||
Distribution reinvestment (in shares) | 22,416 | 22,585 | 22,585 | |||||||
Repurchase Plan | ||||||||||
Class of Stock [Line Items] | ||||||||||
Monthly maximum amount, percentage | 2% | |||||||||
Quarterly maximum amount, percentage | 5% | |||||||||
Repurchase of shares period | 1 year | |||||||||
Current transaction price repurchase percentage | 95% |
RELATED PARTY TRANSACTIONS - Sc
RELATED PARTY TRANSACTIONS - Schedule of Related Party Transactions (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Due to related parties | $ 4,867 | $ 0 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 4,867 | |
Accrued management fee | Related Party | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 647 | |
Accrued performance participation allocation | Related Party | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 1,171 | |
Advanced organization costs | Related Party | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 2,945 | |
Due to Adviser | Related Party | ||
Related Party Transaction [Line Items] | ||
Due to related parties | $ 104 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jan. 03, 2023 USD ($) | Jan. 31, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 0 | $ 1,707,000 | $ 0 | |||
Reimbursable excess expense, period | 60 months | |||||
Reimbursable excess expense, average invested assets, maximum, percentage | 2% | |||||
Reimbursable excess expense, net income, maximum, percentage | 25% | |||||
Due to related parties | $ 4,867,000 | $ 4,867,000 | $ 0 | |||
Number of components for performance participation classification | property | 3 | |||||
Non-controlling interests in the Operating Partnership | 2,000 | $ 2,000 | ||||
Management Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 1.25% | |||||
Management Fee | Class F Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 0.50% | |||||
Management Fee | Class FF Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 0.50% | |||||
Management Fee | Class A Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 0.75% | |||||
Management Fee | Class AA Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 0.75% | |||||
Management Fee | Class S Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 1.25% | |||||
Management Fee | Class D Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 1.25% | |||||
Management Fee | Class I Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 1.25% | |||||
Performance Participation Allocation, Total Return | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 12.50% | |||||
Performance Participation Allocation, Total Return | Class F Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 6.25% | |||||
Performance Participation Allocation, Total Return | Class A Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 10% | |||||
Performance Participation Allocation, Hurdle Amount | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 5% | |||||
Performance Participation Allocation, Hurdle Amount | Class F Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 7% | |||||
Performance Participation Allocation, Hurdle Amount | Class A Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 7% | |||||
Performance Participation Allocation, Catch-Up | Class F Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 50% | |||||
Performance Participation Allocation, Catch-Up | Class A Shares | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction rate | 50% | |||||
Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 4,867,000 | $ 4,867,000 | ||||
Related Party | Management Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 300,000 | 600,000 | ||||
Related Party | Advanced organization costs | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 2,945,000 | 2,945,000 | ||||
Related Party | Perfornance Participation | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 400,000 | $ 1,200,000 | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 05, 2023 | Jan. 04, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Asset impairment charges | $ 1.5 | $ 3.9 | ||
CapGrow | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Business acquisition, percentage of voting interests acquired | 61.64% | |||
Business combination, consideration transferred | $ 18 | $ 455 | ||
Business combination, consideration transferred, liabilities incurred | $ 221 | |||
Percentage of the purchase price to land | 15% |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Liabilities Not Measured at Fair Value (Details) - Fair Value, Inputs, Level 3 $ in Thousands | Sep. 30, 2023 USD ($) |
Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | $ 224,054 |
Carrying Value | Mortgages and Other Loans Payable | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | 217,480 |
Carrying Value | Line of Credit | Revolving Credit Facility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | 6,574 |
Estimated Fair Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | 213,631 |
Estimated Fair Value | Mortgages and Other Loans Payable | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | 207,057 |
Estimated Fair Value | Line of Credit | Revolving Credit Facility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | $ 6,574 |
RENTAL INCOME - NARRATIVE (Deta
RENTAL INCOME - NARRATIVE (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 subsidiary | Sep. 30, 2023 property subsidiary | Sep. 30, 2022 | Dec. 31, 2022 subsidiary | |
Concentration Risk [Line Items] | ||||
Number of subsidiaries | subsidiary | 44 | 44 | 44 | |
Number of properties | property | 421 | |||
Assets Benchmark | Customer Concentration Risk | 48 Subsidiaries | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 42% | 53% | ||
Assets Benchmark | Customer Concentration Risk | 421 Properties | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 35% | 45% | ||
Revenue Benchmark | Customer Concentration Risk | 48 Subsidiaries | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 49% | |||
Revenue Benchmark | Customer Concentration Risk | 421 Properties | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 41% | 42% | ||
Revenue Benchmark | Customer Concentration Risk | Four Customers | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 72% |
RENTAL INCOME - OPERATING LEASE
RENTAL INCOME - OPERATING LEASE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jan. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | |||||
Fixed lease payments | $ 320 | $ 9,463 | $ 7,277 | $ 26,963 | $ 20,922 |
Variable lease payments | 3 | 40 | 83 | 155 | 244 |
Lease Income | $ 323 | $ 9,503 | $ 7,360 | $ 27,118 | $ 21,166 |
RENTAL INCOME - CASH RENTS TO B
RENTAL INCOME - CASH RENTS TO BE RECEIVED (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
December 31, 2023 (three months) | $ 7,718 |
December 31, 2024 | 29,760 |
December 31, 2025 | 26,457 |
December 31, 2026 | 22,989 |
December 31, 2027 | 16,109 |
Thereafter | 21,352 |
Total | $ 124,385 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - NARRATIVE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jan. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Rent expense (less than) | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Incremental borrowing rate percent | 3.90% | |
December 31, 2023 (three months) | $ 19 | |
December 31, 2024 | 77 | |
December 31, 2025 | 79 | |
December 31, 2026 | 80 | |
December 31, 2027 | 82 | |
Thereafter | 14 | |
Total minimum lease payments | 351 | |
Imputed interest | (30) | |
Lease liability - operating lease | $ 321 | $ 294 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Oct. 31, 2023 | Oct. 28, 2023 | Oct. 27, 2023 | Oct. 03, 2023 | Sep. 29, 2023 | Jul. 05, 2023 | Jan. 04, 2023 | Nov. 14, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Subsequent Event [Line Items] | |||||||||||
Issuance of common stock | $ 66,298 | ||||||||||
CapGrow | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Business combination, consideration transferred | $ 18,000 | $ 455,000 | |||||||||
Equity interest in acquiree, including subsequent acquisition, percentage | 69.22% | ||||||||||
Class F Shares | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0625 | $ 0.1864 | $ 0.4260 | ||||||||
Class FF Shares | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0625 | $ 0.1864 | $ 0.3084 | ||||||||
Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Issuance of common stock | $ 2,200 | ||||||||||
Gross purchase price | $ 23,200 | ||||||||||
Operating lease term of contract | 99 years | ||||||||||
Operating lease, annual expense | $ 1,100 | ||||||||||
Percentage of increase | 2.23% | ||||||||||
Proceeds from sale | $ 3,300 | ||||||||||
Term of derivative contract | 5 years | ||||||||||
Basis spread on variable rate | 1% | ||||||||||
Subsequent Event | Mortgage Loan, 2.56% | Mortgages | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Proceeds from sale | $ 20,900 | ||||||||||
Fixed Interest Rate | 2.56% | ||||||||||
Compounded average period | 30 days | ||||||||||
Subsequent Event | CapGrow | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Business combination, consideration transferred | $ 25,000 | ||||||||||
Equity interest in acquiree, including subsequent acquisition, percentage | 79.64% | ||||||||||
Subsequent Event | University Courtyard | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Business combination, consideration transferred | $ 58,000 | ||||||||||
Subsequent Event | Class F Shares | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0622 | ||||||||||
Subsequent Event | Class FF Shares | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate gross distributions declared per share of common stock (in dollars per share) | $ 0.0577 |
Uncategorized Items - sdreit-20
Label | Element | Value |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | $ 150,286,000 |