COVER PAGE
COVER PAGE - shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 02, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-41812 | |
Entity Registrant Name | Net Lease Office Properties | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 92-0887849 | |
Entity Address, Street Address | One Manhattan West, 395 9th Avenue, 58th Floor | |
Entity Address, City | New York, | |
Entity Address, State | NY | |
Entity Address, Postal Zip Code | 10001 | |
City Area Code | 844 | |
Local Phone Number | 656-7348 | |
Title of each class | Common Shares of Beneficial Interest, par value $0.001 per share | |
Trading Symbol | NLOP | |
Name of each exchange on which registered | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,785,014 | |
Entity Central Index Key | 0001952976 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | |
Investments in real estate: | |||
Land, buildings and improvements | $ 904,189 | $ 1,203,991 | |
Net investments in finance leases | 0 | 10,522 | |
In-place lease intangible assets and other | 253,192 | 357,788 | |
Above-market rent intangible assets | 40,949 | 57,954 | |
Investments in real estate | 1,198,330 | 1,630,255 | |
Accumulated depreciation and amortization | (342,376) | (458,430) | |
Assets held for sale, net | 68,884 | 0 | |
Net investments in real estate | 924,838 | 1,171,825 | |
Restricted cash | 44,629 | 51,560 | |
Cash and cash equivalents | 36,078 | 16,269 | |
Other assets, net | 39,102 | 65,435 | |
Total assets | [1] | 1,044,647 | 1,305,089 |
Debt: | |||
NLOP Mortgage Loan, net | 127,201 | 266,844 | |
NLOP Mezzanine Loan, net | 84,788 | 106,299 | |
Non-recourse mortgages, net | 115,407 | 168,836 | |
Debt, net | 327,396 | 541,979 | |
Accounts payable, accrued expenses and other liabilities | 40,808 | 59,527 | |
Below-market rent intangible liabilities, net | 8,661 | 10,643 | |
Deferred income taxes | 3,142 | 10,450 | |
Dividends payable | 0 | 1,060 | |
Total liabilities | [1] | 380,007 | 623,659 |
Commitments and contingencies (Note 10) | |||
Preferred stock, $0.001 par value, $5,000,000 shares authorized; none issued | 0 | 0 | |
Common stock, $0.001 par value, $45,000,000 shares authorized; $14,785,118 and $14,620,919 shares, respectively, issued and outstanding | 15 | 15 | |
Additional paid-in capital | 855,716 | 855,554 | |
Distributions in excess of accumulated earnings | (158,362) | (142,960) | |
Accumulated other comprehensive loss | (37,042) | (35,600) | |
Total shareholders’ equity | 660,327 | 677,009 | |
Noncontrolling interests | 4,313 | 4,421 | |
Total equity | 664,640 | 681,430 | |
Total liabilities and equity | $ 1,044,647 | $ 1,305,089 | |
[1] See Note 2 for details related to variable interest entities (“VIEs”). |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - $ / shares | Jun. 30, 2024 | Dec. 31, 2023 |
Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 45,000,000 | 45,000,000 |
Common stock, shares issued (in shares) | 14,785,118 | 14,785,118 |
Common stock, shares outstanding (in shares) | 14,620,919 | 14,620,919 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Revenues | ||||
Lease revenues | $ 35,149 | $ 41,557 | $ 73,463 | $ 82,996 |
Income from finance leases | 0 | 440 | 89 | 882 |
Other lease-related income | 3,880 | 806 | 9,484 | 1,589 |
Revenues | 39,029 | 42,803 | 83,036 | 85,467 |
Operating Expenses | ||||
Depreciation and amortization | 15,122 | 17,703 | 33,092 | 35,441 |
Impairment charges — real estate | 8,222 | 0 | 12,287 | 0 |
Reimbursable tenant costs | 7,189 | 6,910 | 13,389 | 13,739 |
Property expenses, excluding reimbursable tenant costs | 2,652 | 2,056 | 4,903 | 4,127 |
General and administrative | 1,880 | 3,171 | 3,781 | 6,599 |
Asset management fees | 1,599 | 0 | 3,403 | 0 |
Separation and distribution related costs and other | 0 | 948 | 16 | 1,538 |
Total operating expenses | 36,664 | 30,788 | 70,871 | 61,444 |
Other Income and Expenses | ||||
Gain on sale of real estate, net | 37,723 | 0 | 21,947 | 0 |
Interest expense | (27,798) | (8,559) | (48,598) | (16,381) |
Other gains and (losses) | 332 | 37 | (489) | 49 |
Total other income and expenses | 10,257 | (8,522) | (27,140) | (16,332) |
Income (loss) before income taxes | 12,622 | 3,493 | (14,975) | 7,691 |
(Provision for) benefit from income taxes | (149) | 365 | (373) | (72) |
Net Income (Loss) | 12,473 | 3,858 | (15,348) | 7,619 |
Net income attributable to noncontrolling interests | (22) | (33) | (43) | (51) |
Net Income (Loss) Attributable to NLOP | $ 12,451 | $ 3,825 | $ (15,391) | $ 7,568 |
Basic Earnings (Loss) Per Share (per share) | $ 0.84 | $ 0.26 | $ (1.04) | $ 0.52 |
Basic Earnings (Loss) Per Share (per share) | $ 0.84 | $ 0.26 | $ (1.04) | $ 0.52 |
Weighted-Average Shares Outstanding | ||||
Basic (in shares) | 14,785,118 | 14,620,919 | 14,785,118 | 14,620,919 |
Diluted (in shares) | 14,807,960 | 14,620,919 | 14,785,118 | 14,620,919 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ 12,473 | $ 3,858 | $ (15,348) | $ 7,619 |
Other Comprehensive Income (Loss) | ||||
Unrealized gain on derivative instruments | 572 | 0 | 784 | 0 |
Foreign currency translation adjustments | 4 | (474) | (2,226) | (343) |
Other Comprehensive Income (Loss) | 576 | (474) | (1,442) | (343) |
Comprehensive Income (Loss) | 13,049 | 3,384 | (16,790) | 7,276 |
Amounts Attributable to Noncontrolling Interests | ||||
Net income | (22) | (33) | (43) | (51) |
Comprehensive income attributable to noncontrolling interests | (22) | (33) | (43) | (51) |
Comprehensive Income (Loss) Attributable to NLOP | $ 13,027 | $ 3,351 | $ (16,833) | $ 7,225 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Total Shareholders’ Equity | $0.001 Par Value Common Stock | Additional Paid-In Capital | Distributions in Excess of Accumulated Earnings | Accumulated Other Comprehensive Loss | Net Parent Investment | Noncontrolling interests |
Balance - beginning of period at Dec. 31, 2022 | $ 1,109,519 | $ 1,107,776 | $ (42,464) | $ 1,150,240 | $ 1,743 | |||
Net Lease Office Properties | ||||||||
Net income | 7,619 | 7,568 | 7,568 | 51 | ||||
Net transfers from parent | (36,230) | (36,230) | (36,230) | |||||
Contributions from noncontrolling interests | 2,840 | 2,840 | ||||||
Other comprehensive income (loss) | ||||||||
Unrealized gain on derivative instruments | 0 | |||||||
Foreign currency translation adjustments | (343) | (343) | (343) | |||||
Balance - end of period at Jun. 30, 2023 | 1,083,405 | 1,078,771 | (42,807) | 1,121,578 | 4,634 | |||
Balance - beginning of period at Mar. 31, 2023 | 1,098,876 | 1,094,275 | (42,333) | 1,136,608 | 4,601 | |||
Net Lease Office Properties | ||||||||
Net income | 3,858 | 3,825 | 3,825 | 33 | ||||
Net transfers from parent | (18,855) | (18,855) | (18,855) | |||||
Other comprehensive income (loss) | ||||||||
Unrealized gain on derivative instruments | 0 | |||||||
Foreign currency translation adjustments | (474) | (474) | (474) | |||||
Balance - end of period at Jun. 30, 2023 | 1,083,405 | 1,078,771 | (42,807) | $ 1,121,578 | 4,634 | |||
Balance - beginning of period at Dec. 31, 2023 | $ 681,430 | 677,009 | $ 15 | $ 855,554 | $ (142,960) | (35,600) | 4,421 | |
Balance - beginning of period (in shares) at Dec. 31, 2023 | 14,620,919 | 14,620,919 | ||||||
Net Lease Office Properties | ||||||||
Net income | $ (15,348) | (15,391) | (15,391) | 43 | ||||
Shares issued | 1 | 1 | $ 0 | 12 | (11) | |||
Shares issued (in shares) | 164,199 | |||||||
Amortization of stock-based compensation expense | 150 | 150 | 150 | |||||
Distributions to noncontrolling interests | (151) | (151) | ||||||
Other comprehensive income (loss) | ||||||||
Unrealized gain on derivative instruments | 784 | 784 | 784 | |||||
Foreign currency translation adjustments | (2,226) | (2,226) | (2,226) | |||||
Balance - end of period at Jun. 30, 2024 | $ 664,640 | 660,327 | $ 15 | 855,716 | (158,362) | (37,042) | 4,313 | |
Balance - end of period (in shares) at Jun. 30, 2024 | 14,620,919 | 14,785,118 | ||||||
Balance - beginning of period at Mar. 31, 2024 | $ 651,607 | 647,225 | $ 15 | 855,641 | (170,813) | (37,618) | 4,382 | |
Balance - beginning of period (in shares) at Mar. 31, 2024 | 14,785,118 | |||||||
Net Lease Office Properties | ||||||||
Net income | 12,473 | 12,451 | 12,451 | 22 | ||||
Amortization of stock-based compensation expense | 75 | 75 | 75 | |||||
Distributions to noncontrolling interests | (91) | (91) | ||||||
Other comprehensive income (loss) | ||||||||
Unrealized gain on derivative instruments | 572 | 572 | 572 | |||||
Foreign currency translation adjustments | 4 | 4 | 4 | |||||
Balance - end of period at Jun. 30, 2024 | $ 664,640 | $ 660,327 | $ 15 | $ 855,716 | $ (158,362) | $ (37,042) | $ 4,313 | |
Balance - end of period (in shares) at Jun. 30, 2024 | 14,620,919 | 14,785,118 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash Flows — Operating Activities | ||
Net (loss) income | $ (15,348) | $ 7,619 |
Adjustments to net (loss) income: | ||
Depreciation and amortization, including intangible assets and deferred financing costs | 54,679 | 36,461 |
Gain on sale of real estate, net | (21,947) | 0 |
Impairment charges — real estate | 12,287 | 0 |
Amortization of rent-related intangibles and deferred rental revenue | (5,778) | 1,814 |
Net realized and unrealized losses on extinguishment of debt, foreign currency exchange rate movements, and other | 2,579 | 1,179 |
Straight-line rent adjustments | 1,510 | (1,331) |
Stock-based compensation expense | 150 | 1,613 |
Deferred income tax benefit | (306) | (676) |
Proceeds from sales of net investments in sales-type leases | 10,341 | 0 |
Net changes in other operating assets and liabilities | 2,917 | (3,457) |
Net Cash Provided by Operating Activities | 41,084 | 43,222 |
Cash Flows — Investing Activities | ||
Proceeds from sales of real estate | 184,855 | 0 |
Funding for real estate construction, redevelopments, and other capital expenditures on real estate | (7,312) | (2,541) |
Net Cash Provided by (Used in) Investing Activities | 177,543 | (2,541) |
Cash Flows — Financing Activities | ||
Payments of mortgage principal and other debt instruments | (203,968) | (7,130) |
Distributions paid | (1,071) | 0 |
Distributions to noncontrolling interests | (151) | 0 |
Other financing activities, net | 11 | 75 |
Net transfers with Parent | 0 | (36,230) |
Contributions from noncontrolling interests | 0 | 2,840 |
Net Cash Used in Financing Activities | (205,179) | (40,445) |
Change in Cash and Cash Equivalents and Restricted Cash During the Period | ||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (570) | (102) |
Net increase in cash and cash equivalents and restricted cash | 12,878 | 134 |
Cash and cash equivalents and restricted cash, beginning of period | 67,829 | 5,998 |
Cash and cash equivalents and restricted cash, end of period | $ 80,707 | $ 6,132 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization Pursuant to the terms of a separation and distribution agreement, W. P. Carey Inc. (“WPC”) spun off a portfolio of 59 office assets into a separate publicly-traded company (the “Spin-Off”). To accomplish this Spin-Off, WPC formed a Maryland real estate investment trust, Net Lease Office Properties (“NLOP”), on October 21, 2022, to own the 59 office assets. Information with respect to number of properties and square footage is unaudited. On November 1, 2023, WPC completed the Spin-Off, contributing 59 office properties to NLOP. Following the closing of the Spin-Off, NLOP operates as a separate publicly-traded real estate investment trust (“REIT”), and certain wholly-owned affiliates of WPC (our “Advisor”) externally manage NLOP pursuant to certain advisory agreements (the “NLOP Advisory Agreements”). The Spin-Off was accomplished via a pro rata dividend of 1 NLOP common share for every 15 shares of WPC common stock outstanding. NLOP intends to qualify and elect to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, commencing with the Company’s taxable year ended December 31, 2023. NLOP operates as one segment, and through its subsidiaries, owns, operates, and finances office buildings. As of June 30, 2024, NLOP’s portfolio was comprised of full or partial ownership interests in 47 properties, net leased to 50 corporate tenants, totaling approximately 7.5 million leasable square feet (including 0.6 million of operating square footage for a parking garage at a domestic property), with a weighted-average lease term of 5.2 years. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation NLOP For periods after November 1, 2023, the consolidated financial statements include the results of NLOP and all entities in which the Company has a controlling interest. Intercompany transactions and balances have been eliminated in consolidation. Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a complete statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair presentation of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2023, which are included in the 2023 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Prior to the Spin-Off For periods prior to November 1, 2023, the accompanying historical consolidated financial statements and related notes of NLOP do not represent the balance sheet, statement of operations and cash flows of a legal entity, but rather a combination of entities under common control that have been “carved-out” of WPC’s consolidated financial statements and presented herein, in each case, in accordance with GAAP. Intercompany transactions and balances have been eliminated in combination. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. In the opinion of management, the financial information for the periods presented in this Report reflects all normal and recurring adjustments necessary for a fair presentation of financial position, results of operations, and cash flows. These consolidated financial statements reflect the revenues and direct expenses of NLOP and include material assets and liabilities of WPC that are specifically attributable to NLOP. Equity in these consolidated financial statements represents the excess of total assets over total liabilities. Equity is impacted by contributions from and distributions to WPC, which are the result of treasury activities and net funding provided by or distributed to WPC prior to the Spin-Off, as well as the allocated costs and expenses described below. The consolidated financial statements also include an allocation of indirect costs and expenses incurred by WPC related to NLOP, primarily consisting of compensation and other general and administrative costs using the relative percentage of property annualized base rent (“ABR”) of NLOP and WPC management’s knowledge of NLOP. In addition, the consolidated financial statements reflect the allocation of interest expense from WPC unsecured debt, excluding debt that is specifically attributable to NLOP ( Note 9 ); interest expense was allocated by calculating the unencumbered net investment in real estate of each property held by NLOP as a percentage of WPC’s total consolidated unencumbered net investment in real estate and multiplying that percentage by the corporate interest expense on WPC unsecured debt ( Note 9 ). The amounts allocated in the accompanying consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had NLOP been a separate independent entity during the applicable periods. WPC believes the assumptions underlying WPC’s allocation of indirect expenses are reasonable. The amounts allocated in the accompanying consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had NLOP been a separate independent entity. WPC believes the assumptions underlying WPC’s allocation of indirect expenses are reasonable. Basis of Consolidation Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries. The portions of equity in consolidated subsidiaries that are not attributable, directly or indirectly, to us are presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a VIE and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. There have been no significant changes in our VIE policies from what was disclosed in the 2023 Annual Report. At both June 30, 2024 and December 31, 2023, we considered one entity to be a VIE (given certain decision-making rights each partner has in accordance with the partnership agreement), which we consolidated, as we are considered the primary beneficiary. The following table presents a summary of selected financial data of the consolidated VIE included in our consolidated balance sheets (in thousands): June 30, 2024 December 31, 2023 Land, buildings and improvements $ 37,917 $ 37,917 In-place lease intangible assets and other 9,685 9,685 Above-market rent intangible assets 4,338 4,338 Accumulated depreciation and amortization (4,975) (3,679) Total assets 48,490 49,410 Total liabilities $ 304 $ 304 Cash and Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands): June 30, 2024 December 31, 2023 Cash and cash equivalents $ 36,078 $ 16,269 Restricted cash (a) 44,629 51,560 Total cash and cash equivalents and restricted cash $ 80,707 $ 67,829 __________ (a) Amounts as of June 30, 2024 and December 31, 2023 include approximately $43.4 million and $48.4 million, respectively, related to certain reserve requirements pursuant to the NLOP Financing Arrangements ( Note 9 ). Net Parent Investment In the consolidated statements of equity, the net parent investment represents WPC’s historical investment in NLOP prior to the Spin-Off, accumulated net earnings after taxes, and the net effect of transactions between NLOP and WPC. Earnings Per Share Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted-average number of shares of common shares outstanding during the year. Diluted earnings per share reflects potentially dilutive securities using the treasury stock method, except when the effect would be anti-dilutive. Earnings per share is computed by dividing the net income for the period by the weighted-average number of common shares outstanding during the period post Spin-Off. For the six months ended June 30, 2024, we recognized net loss. Therefore, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share equals diluted net loss per share for the six months ended June 30, 2024. The calculation of basic and diluted earnings per share for any of the periods presented prior to the Spin-Off were based on the number of shares outstanding on November 1, 2023. For periods prior to the Spin-Off, it is assumed that there are no dilutive equity instruments as there were no NLOP stock-based awards outstanding prior to the Spin-Off. |
Agreements and Transactions wit
Agreements and Transactions with Related Parties | 6 Months Ended |
Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
Agreements and Transactions with Related Parties | Agreements and Transactions with Related Parties Advisory Agreements Pursuant to the NLOP Advisory Agreements, which we entered into on November 1, 2023, our Advisor provides us with strategic management services, including asset management, property disposition support, and various related services. We pay our Advisor an asset management fee that was initially set at an annual amount of $7.5 million and is being proportionately reduced each month following the disposition of each portfolio property. In addition, we reimburse our Advisor a base administrative amount of approximately $4.0 million annually, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters. The following tables present a summary of fees we paid and expenses we reimbursed to our Advisor in accordance with the terms of the NLOP Advisory Agreements (in thousands): Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Asset management fees (a) $ 1,599 $ 3,403 Administrative reimbursements (b) 1,000 2,000 $ 2,599 $ 5,403 __________ (a) Included within Asset management fees in the consolidated statements of operations. (b) Included within General and administrative expenses in the consolidated statements of operations. The following table presents a summary of amounts due to affiliates, which are included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements (in thousands): June 30, 2024 December 31, 2023 Asset management fees payable $ 507 $ 1,245 Administrative reimbursements payable and other 344 676 $ 851 $ 1,921 Other Transactions with WPC NLOP Share Costs Historically, prior to the Spin-Off, NLOP was managed and operated in the normal course of business consistent with other affiliates of WPC. Accordingly, certain shared costs were allocated to NLOP and reflected as expenses in the consolidated statements of operations. Management considers the allocation methodologies used to be reasonable and appropriate reflections of the historical WPC expenses attributable to NLOP for purposes of the consolidated financial statements of NLOP. However, the expenses reflected in the consolidated statements of operations may not be indicative of the actual expenses that would have been incurred during the periods presented if NLOP historically operated as a separate, stand-alone entity. In addition, the expenses reflected in the consolidated statements of operations may not be indicative of related expenses that will be incurred in the future by NLOP. The following table presents amounts of shared costs that were allocated to NLOP (in thousands): Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 General and administrative (a) $ 3,121 $ 6,545 Interest expense (b) 5,236 10,432 Total $ 8,357 $ 16,977 __________ (a) General and administrative fees are inclusive of expenses such as employee compensation and benefits, stock-based compensation and professional fees. (b) NLOP’s income statement prior to the Spin-Off includes an allocation of interest expense associated with WPC unsecured debt utilized partially to fund property assets of NLOP. Net parent investment shown in the consolidated statements of equity include contributions from WPC, which are the result of treasury activities and net funding provided by WPC prior to the Spin-Off, and also includes the indirect costs and expenses allocated to NLOP by WPC as described in Note 2 . Other Transactions with Related Parties At June 30, 2024, we owned an interest in one jointly owned investment in real estate, with the remaining interest held by a third party. We consolidate this investment. |
Land, Buildings and Improvement
Land, Buildings and Improvements | 6 Months Ended |
Jun. 30, 2024 | |
Real Estate [Abstract] | |
Land, Buildings and Improvements | Land, Buildings and Improvements Land, Buildings and Improvements Land and buildings leased to others, which are subject to operating leases, are summarized as follows (in thousands): June 30, 2024 December 31, 2023 Land $ 122,327 $ 168,200 Buildings and improvements 781,862 1,035,791 Less: Accumulated depreciation (169,883) (213,034) $ 734,306 $ 990,957 During the six months ended June 30, 2024, the U.S. dollar strengthened against the British pound sterling, euro, and Norwegian krone. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements decreased by $4.3 million from December 31, 2023 to June 30, 2024. Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $6.1 million and $7.8 million for the three months ended June 30, 2024 and 2023, respectively, and $13.3 million and $15.5 million for the six months ended June 30, 2024 and 2023, respectively. Dispositions of Properties During the six months ended June 30, 2024, we disposed of seven properties, which were classified as Land, buildings and improvements. As a result, the carrying value of our Land, buildings and improvements decreased by $165.3 million from December 31, 2023 to June 30, 2024 ( Note 13 ). Leases Operating Lease Income Lease income related to operating leases recognized and included in the consolidated statements of operations is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lease income — fixed $ 27,182 $ 33,960 $ 58,544 $ 67,926 Lease income — variable (a) 7,967 7,597 14,919 15,070 Total operating lease income $ 35,149 $ 41,557 $ 73,463 $ 82,996 __________ (a) Includes (i) rent increases based on changes in the U.S. Consumer Price Index and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services. Other Lease-Related Income For the three and six months ended June 30, 2024, other lease-related income on our consolidated statements of operations included lease termination income of $3.1 million and $7.8 million, respectively, recognized from one tenant. In addition, other lease-related income on our consolidated statements of operations included income from a parking garage attached to one of our net-leased properties totaling $0.5 million for both the three months ended June 30, 2024 and 2023, and $1.0 million and $0.9 million for the six months ended June 30, 2024 and 2023, respectively. Assets Held for Sale, Net Below is a summary of our properties held for sale (in thousands): June 30, 2024 December 31, 2023 Land, buildings and improvements $ 72,103 $ — In-place lease intangible assets and other 1,986 — Accumulated depreciation and amortization (5,205) — $ 68,884 $ — At June 30, 2024, we had one property classified as Assets held for sale, net, with a carrying value of $68.9 million. |
Finance Receivables
Finance Receivables | 6 Months Ended |
Jun. 30, 2024 | |
Receivables [Abstract] | |
Finance Receivables | Finance Receivables Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in finance leases. Operating leases are not included in finance receivables. Net Investments in Sales-Type Leases One property was classified as a net investment in sales-type leases as of December 31, 2023. We had previously entered into an agreement to sell the property to the tenant occupying the property during the fourth quarter of 2023 and recognized a Loss on sale of real estate, net, of $8.3 million during the three months ended December 31, 2023 related to this transaction. During the six months ended June 30, 2024, we sold this property, which had an aggregate carrying value of $10.5 million as of December 31, 2023. Net investments in sales-type leases is summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Lease payments receivable $ — $ 10,614 — 10,614 Less: unearned income — (92) $ — $ 10,522 At December 31, 2023, there was no reserve or estimate of credit loss on the financing leases. Earnings from our net investments in sales-type leases were included in Income from finance leases in the consolidated financial statements, and totaled less than $0.1 million for the six months ended June 30, 2024. Prior to its reclassification to net investments in sales-type leases, earnings from this investment were recognized in Lease revenues in the consolidated financial statements. Net Investments in Direct Financing Leases During the third quarter of 2023, we reclassified an investment classified as a direct financing lease (comprised of four properties) with an aggregate carrying value of $14.6 million from Net investments in direct finance leases to Land, buildings and improvements in connection with a change in lease classification due to an extension of the underlying lease. Income from this direct financing lease was $0.4 million and $0.9 million for the three and six months ended June 30, 2023, respectively. We had no net investments in direct financing leases as of June 30, 2024 and December 31, 2023. Credit Quality of Finance Receivables We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. A credit quality of one through three indicates a range of investment grade to stable. A credit quality of four through five indicates a range of inclusion on the watch list to risk of default. The credit quality evaluation of our finance receivables is updated quarterly. Our finance receivable internal credit quality rating was one as of December 31, 2023. |
Intangible Assets and Liabiliti
Intangible Assets and Liabilities | 6 Months Ended |
Jun. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Liabilities | Intangible Assets and Liabilities In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Below-market rent intangibles are included in Below-market rent intangible liabilities, net in the consolidated financial statements. Intangible assets and liabilities are summarized as follows (in thousands): June 30, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-Lived Intangible Assets In-place lease $ 251,143 $ (147,985) $ 103,158 $ 353,525 $ (212,456) $ 141,069 Above-market rent 40,949 (24,508) 16,441 57,954 (32,940) 25,014 Total intangible assets $ 292,092 $ (172,493) $ 119,599 $ 411,479 $ (245,396) $ 166,083 Finite-Lived Intangible Liabilities Below-market rent $ (23,432) $ 14,771 $ (8,661) $ (26,801) $ 16,158 $ (10,643) Total intangible liabilities $ (23,432) $ 14,771 $ (8,661) $ (26,801) $ 16,158 $ (10,643) During the six months ended June 30, 2024, the U.S. dollar strengthened against the British pound sterling, euro, and Norwegian krone, resulting in a decrease of $0.4 million in the carrying value of our net intangible assets from December 31, 2023 to June 30, 2024. Net amortization of intangibles, including the effect of foreign currency translation, was $9.8 million and $10.8 million for the three months ended June 30, 2024 and 2023, respectively, and $21.5 million for both the six months ended June 30, 2024 and 2023. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of in-place lease intangibles is included in Depreciation and amortization. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, and foreign currency collars; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs. Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps ( Note 8 ). The valuation of our derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves, spot and forward rates, and implied volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative instruments for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. These derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. Our material financial instruments had the following carrying values and fair values as of the dates shown (in thousands): June 30, 2024 December 31, 2023 Level Carrying Value Fair Value Carrying Value Fair Value NLOP Mortgage Loan, net (a) (b) (c) 3 $ 127,201 $ 133,313 $ 266,844 $ 291,358 NLOP Mezzanine Loan, net (a) (b) (c) 3 84,788 89,811 106,299 113,797 Non-recourse mortgages, net (a) (b) (c) 3 115,407 110,146 168,836 165,077 __________ (a) The carrying value of the NLOP Mortgage Loan, net ( Note 9 ) includes unamortized deferred financing costs of $1.5 million and $6.7 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of the NLOP Mezzanine Loan, net ( Note 9 ) includes unamortized deferred financing costs of $1.4 million and $2.4 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of Non-recourse mortgages, net includes unamortized deferred financing costs of less than $0.1 million at December 31, 2023. There were no unamortized deferred financing costs on our Non-recourse mortgages, net as of June 30, 2024. (b) The carrying value of the NLOP Mortgage Loan, net ( Note 9 ) includes unamortized discount of $3.3 million and $15.3 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of the NLOP Mezzanine Loan, net ( Note 9 ) includes unamortized discount of $3.2 million and $5.6 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of Non-recourse mortgages, net includes unamortized discount of $0.1 million and $0.7 million at June 30, 2024 and December 31, 2023, respectively. (c) We determined the estimated fair value of our NLOP Mortgage Loan, NLOP Mezzanine Loan, and non-recourse mortgage loans using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity. We estimated that our other financial assets and liabilities, excluding finance receivables ( Note 5 ), had fair values that approximated their carrying values at both June 30, 2024 and December 31, 2023. Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges) We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. There have been no significant changes in our impairment policies from what was disclosed in the 2023 Annual Report. The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (in thousands): Three Months Ended June 30, 2024 2023 Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Impairment Charges Real estate $ 74,754 $ 8,222 $ — $ — $ 8,222 $ — Six Months Ended June 30, 2024 2023 Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Impairment Charges Real estate $ 88,464 $ 12,287 $ — $ — $ 12,287 $ — Impairment charges, and their related triggering events and fair value measurements, recognized during the three and six months ended June 30, 2024, were as follows (we did not incur any impairment charges during the three and six months ended June 30, 2023): Real Estate The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of operations. 2024 — During the three and six months ended June 30, 2024, we recognized impairment charges totaling $8.2 million on two properties and $12.3 million on four properties, respectively, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices. |
Risk Management and Use of Deri
Risk Management and Use of Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Risk Management and Use of Derivative Financial Instruments | Risk Management and Use of Derivative Financial Instruments Risk Management In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, due to changes in interest rates or other market factors. We own investments in the United States and Europe and are subject to risks associated with fluctuating foreign currency exchange rates. Derivative Financial Instruments There have been no significant changes in our derivative financial instrument policies from what was disclosed in the 2023 Annual Report. At both June 30, 2024 and December 31, 2023, no cash collateral had been posted nor received for any of our derivative positions. The following table sets forth certain information regarding our derivative instruments (in thousands): Asset Derivatives Fair Value at Derivatives Designated as Hedging Instruments Balance Sheet Location June 30, 2024 December 31, 2023 Interest rate cap Other assets, net $ 130 $ 433 130 433 Total derivatives $ 130 $ 433 The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands): Amount of Gain (Loss) Recognized on Derivatives in Three Months Ended June 30, Six Months Ended June 30, Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023 Interest rate cap $ 572 $ — $ 784 $ — Total $ 572 $ — $ 784 $ — Amount of Gain (Loss) on Derivatives Reclassified from Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Interest rate cap Other gains and (losses) $ (539) $ — $ (539) $ — Interest rate cap Interest expense (166) — (381) — Total $ (705) $ — $ (920) $ — Amounts reported in Other comprehensive income (loss) related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt. As of June 30, 2024, we estimate that an additional $0.8 million will be reclassified as Interest expense during the next 12 months. Amount of Gain (Loss) on Derivatives Recognized in Income Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Interest rate cap Interest expense $ (15) $ — $ (17) $ — Total $ (15) $ — $ (17) $ — See below for information on our purposes for entering into derivative instruments. Interest Rate Caps We are exposed to the impact of interest rate changes primarily through our borrowing activities. We have obtained, and may in the future obtain, variable-rate debt (our NLOP Financing Arrangements ( Note 9 )), and, as a result, we have entered into, and may continue to enter into, interest rate cap agreements with counterparties. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations. Our objective in using these derivatives is to limit our exposure to interest rate movements. The interest rate caps that our consolidated subsidiaries had outstanding at June 30, 2024 are summarized as follows (currency in thousands): Interest Rate Derivatives Number of Instruments Notional Fair Value at Designated as Cash Flow Hedging Instruments Interest rate cap 1 150,904 USD $ 130 $ 130 Credit Risk-Related Contingent Features We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2024. At June 30, 2024, both our total credit exposure and the maximum exposure to any single counterparty was $0.1 million. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt Facility On September 20, 2023, in connection with the Spin-Off ( Note 1 ), we and certain of our wholly-owned subsidiaries entered into financing arrangements for which funding was subject to certain conditions (including the closing of the Spin-Off), including (i) a $335.0 million senior secured mortgage loan with an original maturity on November 9, 2025, with two separate one-year extension options subject to certain conditions (the “NLOP Mortgage Loan”) and (ii) a $120.0 million mezzanine loan facility maturing on November 9, 2028 (the “NLOP Mezzanine Loan” and, together with the NLOP Mortgage Loan, the “NLOP Financing Arrangements”). Upon closing of the Spin-Off on November 1, 2023 ( Note 1 ), the NLOP Financing Arrangements were drawn in full, and approximately $343.9 million of the proceeds from the financing (net of transaction expenses) was transferred to WPC in connection with the Spin-Off. The NLOP Financing Arrangements were initially collateralized by the assignment of 40 of our previously unencumbered real estate properties. As of June 30, 2024, the NLOP Financing Arrangements were collateralized by 32 of our properties, following the dispositions of eight properties during 2023 and 2024. The NLOP Mortgage Loan bears interest at an annual rate of one-month forward-looking term rate based on the Secured Overnight Financing Rate (“SOFR”), subject to a floor of 3.85%, plus 5.0%. In addition, we entered into an interest rate cap agreement that limits our SOFR rate exposure to 5.35% ( Note 8 ). The NLOP Mezzanine Loan bears interest at an annual rate of 14.5% (10.0% of which is required to be paid current on a monthly basis, and 4.5% of which is a payment-in-kind accrual, on a quarterly basis). The NLOP Mortgage Loan is subject to certain deleveraging thresholds that require us to make repayments on the original loan balance totaling (i) 15% (or $50.3 million) on or prior to November 1, 2024, which is 12 months following the funding date of the loan; (ii) 25% (or $83.8 million) on or prior to November 1, 2025, which is 12 months following the initial deleveraging threshold of the loan, such that no less than 40% of the loan has been repaid, and (iii) in the event we exercise the first one-year extension option, 30% (or $100.5 million) on or prior to November 1, 2026, which is 12 months following the second deleveraging threshold of the loan, such that no less than 70% of the loan has been repaid. To the extent the deleveraging thresholds are not met, we may be subject to certain fees and restrictions, in accordance with the terms of the NLOP Financing Arrangements, until these thresholds are met. We reached the 15%, 25%, and 30% deleveraging thresholds during the first, second, and third quarters of 2024, respectively ( Note 15 ). We are required to use the net proceeds from property sales collateralizing the NLOP Financing Arrangements to repay the portions of the NLOP Mortgage Loan and NLOP Mezzanine Loan representing the release amount for any individual property sale, with excess net proceeds, if any, used to repay the NLOP Mortgage Loan. Property sales are subject to the satisfaction of certain conditions, including satisfaction of a debt yield test and minimum release prices. During the six months ended June 30, 2024, we repaid $156.9 million and $25.0 million of outstanding principal on the NLOP Mortgage Loan and NLOP Mezzanine Loan, respectively, using proceeds from certain dispositions and lease terminations, as well as excess cash from operations. In July and August 2024, we repaid $58.1 million and $8.4 million of outstanding principal on the NLOP Mortgage Loan and NLOP Mezzanine Loan, respectively, using proceeds from a disposition and lease terminations, as well as excess cash from operations ( Note 15 ). The following table presents a summary of our NLOP Financing Arrangements (dollars in thousands): NLOP Financing Arrangements Original Principal Balance Interest Rate at June 30, 2024 Maturity Date at June 30, 2024 Principal Outstanding Balance at June 30, 2024 December 31, 2023 NLOP Mortgage Loan (a) (b) (c) $ 335,000 10.3% 11/9/2025 $ 131,993 $ 288,895 NLOP Mezzanine Loan (d) 120,000 14.5% 11/9/2028 89,345 114,336 $ 221,338 $ 403,231 __________ (a) Interest rate is based on SOFR plus 5.0%. The interest rate is subject to an interest rate cap that limits our SOFR rate exposure at 5.35%. (b) The NLOP Mortgage Loan is subject to two separate one-year extension options. (c) Balance excludes unamortized discount of $3.3 million and $15.3 million at June 30, 2024 and December 31, 2023, respectively, and unamortized deferred financing costs of $1.5 million and $6.7 million at June 30, 2024 and December 31, 2023, respectively. (d) Balance excludes unamortized discount of $3.2 million and $5.6 million at June 30, 2024 and December 31, 2023, respectively, and unamortized deferred financing costs of $1.4 million and $2.4 million at June 30, 2024 and December 31, 2023, respectively. Non-Recourse Mortgages Non-recourse mortgages consist of mortgage notes payable, which are collateralized by the assignment of real estate properties. At June 30, 2024, our non-recourse mortgage notes payable encumbered seven properties, with an aggregate weighted-average interest rate of 4.5% (fixed-rate and variable-rate non-recourse mortgage notes payable were 4.4% and 4.8%, respectively), and maturity dates ranging from January 2025 to May 2026. Repayments During the six months ended June 30, 2024, we prepaid one non-recourse mortgage loan for $19.2 million. We recognized a net loss on extinguishment of debt of $0.3 million on this repayment, which is included within Other gains and (losses) on our consolidated statements of operations. The interest rate for this non-recourse mortgage loan on its date of repayment was 5.2%. As a result of this repayment, WPC no longer serves as guarantor for any of our non-recourse mortgage loans. Parent Debt Prior to the Spin-Off, certain wholly-owned affiliates of WPC entered into debt agreements with the international NLOP entities to provide the funding necessary to acquire certain international assets. In connection with the Spin-Off, WPC assigned to us the receivable related to these debt amounts, which eliminates in consolidation. These debt instruments were reflected in these financials as Parent debt. During the six months ended June 30, 2023, we prepaid Parent debt totaling $1.7 million. Foreign Currency Exchange Rate Impact During the six months ended June 30, 2024, the U.S. dollar strengthened against the Norwegian krone, resulting in a decrease of $1.9 million in the aggregate carrying value of our Non-recourse mortgages, net from December 31, 2023 to June 30, 2024. Scheduled Mortgage Debt Principal Payments Scheduled mortgage debt principal payments as of June 30, 2024 are as follows (in thousands): Years Ending December 31, Total 2024 (remainder) $ 22,558 2025 217,567 2026 7,379 2027 — 2028 89,345 Total principal payments 336,849 Unamortized discount, net (6,559) Unamortized deferred financing costs (2,894) Total $ 327,396 Certain amounts in the table above are based on the applicable foreign currency exchange rate at June 30, 2024. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At June 30, 2024, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. |
Stock-Based Compensation and Eq
Stock-Based Compensation and Equity | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
Stock-Based Compensation and Equity | Stock-Based Compensation and Equity Stock-Based Compensation We maintain a stock-based compensation plan, which is more fully described in the 2023 Annual Report. The total compensation expense for awards issued under this plan was less than $0.1 million and $0.2 million for the three and six months ended June 30, 2024, respectively, which was included in General and administrative expense in the consolidated financial statements. Restricted and Conditional Awards As of both June 30, 2024 and December 31, 2023, we had 28,653 shares of nonvested restricted stock units (“RSUs”) with a weighted-average grant date fair value of $10.47. The grant date fair value of RSUs reflect our share price on the date of grant on a one-for-one basis. At June 30, 2024, total unrecognized compensation expense related to these awards was approximately $0.1 million, with an aggregate weighted-average remaining term of 0.3 years. Equity Common Shares During the fourth quarter of 2023, our Board of Trustees declared a dividend of $0.34 per share, which was paid on January 29, 2024 to shareholders of record as of December 18, 2023. Shareholders had the option to elect to receive their dividend in the form of cash or additional NLOP shares, with the aggregate amount of cash distributed by NLOP limited to a maximum of 20% of the total dividend. The total number of shares issued in the share dividend was 164,199 shares. Cash paid in connection with the share dividend totaled $1.1 million, which includes cash paid in lieu of fractional shares. Earnings Per Share The following table summarizes basic and diluted earnings (dollars in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) — basic and diluted $ 12,451 $ 3,825 $ (15,391) $ 7,568 Weighted-average shares outstanding – basic 14,785,118 14,620,919 14,785,118 14,620,919 Effect of dilutive securities 22,842 — — — Weighted-average shares outstanding – diluted 14,807,960 14,620,919 14,785,118 14,620,919 For the three months ended June 30, 2024, diluted earnings per share reflects potentially dilutive securities using the treasury stock method. For the six months ended June 30, 2024, we recognized net loss. Therefore, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share. For the three and six months ended June 30, 2023, there were no potentially dilutive securities excluded from the computation of diluted earnings per share. Reclassifications Out of Accumulated Other Comprehensive Loss The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands): Three Months Ended June 30, 2024 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ (979) $ (36,639) $ (37,618) Other comprehensive loss before reclassifications (133) 4 (129) Amounts reclassified from accumulated other comprehensive loss to: Other gains (losses) 539 — 539 Interest expense 166 — 166 Total 705 — 705 Net current period other comprehensive income 572 4 576 Ending balance $ (407) $ (36,635) $ (37,042) Three Months Ended June 30, 2023 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ — $ (42,333) $ (42,333) Net current period other comprehensive loss — (474) (474) Ending balance $ — $ (42,807) $ (42,807) Six Months Ended June 30, 2024 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ (1,191) $ (34,409) $ (35,600) Other comprehensive loss before reclassifications (136) (2,226) (2,362) Amounts reclassified from accumulated other comprehensive loss to: Other gains (losses) 539 — 539 Interest expense 381 — 381 Total 920 — 920 Net current period other comprehensive loss 784 (2,226) (1,442) Ending balance $ (407) $ (36,635) $ (37,042) Six Months Ended June 30, 2023 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ — $ (42,464) $ (42,464) Net current period other comprehensive loss — (343) (343) Ending balance $ — $ (42,807) $ (42,807) See Note 8 for additional information on our derivatives activity recognized within Other comprehensive income (loss) for the periods presented. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We intend to qualify and elect to be treated as a REIT commencing with our taxable year ended December 31, 2023 and believe that we have been organized and have operated in such a manner to qualify as a REIT for federal and state income tax purposes. As a REIT, we would generally not be subject to corporate level federal income taxes on earnings distributed to our shareholders. Accordingly, we have not included any provisions for federal income taxes related to the REIT in the accompanying consolidated financial statements for the three and six months ended June 30, 2024 and 2023. Current income tax (expense) benefit was $(0.3) million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively. Deferred income tax benefit was $0.2 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively. Current income tax expense was $0.7 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. Deferred income tax benefit was $0.3 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. |
Property Dispositions
Property Dispositions | 6 Months Ended |
Jun. 30, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Property Dispositions | Property Dispositions Our property dispositions are also discussed in Note 4 and Note 5 . During the three and six months ended June 30, 2024, we sold four and six properties, respectively, for total proceeds, net of selling costs, of $152.4 million and $195.2 million, respectively, and recognized a net loss on these sales totaling $40.0 million and $24.2 million, respectively (inclusive of income taxes totaling $0.1 million recognized upon sale during the six months ended June 30, 2024). In April 2024, we transferred ownership of a property in Warrenville, Illinois, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $19.3 million and mortgage principal outstanding of $19.8 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $1.0 million (we also wrote off $1.4 million of working capital). In April 2024, we transferred ownership of a property in Tempe, Arizona, and the related non-recourse mortgage loan, which had an aggregate net asset carrying value of approximately $13.3 million and mortgage principal outstanding of $13.2 million, respectively, on the date of transfer, to the mortgage lender, resulting in a net loss of $1.3 million (we also wrote off $1.2 million of working capital). |
Geographic Information
Geographic Information | 6 Months Ended |
Jun. 30, 2024 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information Our portfolio is comprised of domestic and international investments. At June 30, 2024, our international investments were comprised of investments in Poland, United Kingdom, and Norway. No international tenant or country individually comprised at least 10% of our total lease revenues for the three and six months ended June 30, 2024 or 2023, or at least 10% of our total long-lived assets at June 30, 2024 or December 31, 2023. One domestic tenant comprised (i) 22.4% and 17.3% of our total lease revenues for the three months ended June 30, 2024 and 2023, respectively, and 20.3% and 17.6% for the six months ended June 30, 2024 and 2023, respectively, and (ii) 17.7% and 14.4% of our total long-lived assets at June 30, 2024 and December 31, 2023, respectively. Another domestic tenant comprised 12.1% and 10.1% of our total lease revenues for the three months ended June 30, 2024 and 2023, respectively, and 11.3% and 9.6% for the six months ended June 30, 2024 and 2023, respectively. The following tables present the geographic information (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Domestic $ 36,993 $ 39,058 $ 77,524 $ 77,918 International 2,036 3,745 5,512 7,549 Total $ 39,029 $ 42,803 $ 83,036 $ 85,467 June 30, 2024 December 31, 2023 Long-lived Assets (a) Domestic $ 851,329 $ 1,025,078 International (b) 73,509 146,747 Total $ 924,838 $ 1,171,825 __________ (a) Consists of Net investments in real estate. (b) We sold two international properties during the six months ended June 30, 2024 ( Note 4 , Note 5 , Note 13 ). |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Dispositions In August 2024, we sold a property located in Scottsdale, Arizona, for gross proceeds of $71.5 million. This property was included in the collateral pool for the NLOP Financing Arrangements at the time of sale and net proceeds from the sale were used to repay portions of the NLOP Financing Arrangements, as described below ( Note 9 ). Lease Termination Proceeds In July 2024, two tenants exercised their early lease termination options and we received termination proceeds of $3.5 million. Repayments of NLOP Financing Arrangements In July and August 2024, we repaid $58.1 million and $8.4 million of outstanding principal on the NLOP Mortgage Loan and NLOP Mezzanine Loan, respectively, using proceeds from the sale of the property and the lease terminations described above, as well as excess cash from operations ( Note 9 ). As a result of these repayments, we reached the third and final deleveraging threshold for the NLOP Mortgage Loan, which was repayments on the original loan balance totaling 30% (or $100.5 million) on or prior to November 1, 2026, such that 70% of the loan has been repaid ( Note 9 ). Following the sale of the property described above, as of the date of this Report, the NLOP Financing Arrangements were collateralized by 31 of our properties ( Note 9 ). |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Net Parent Investment | Net Parent Investment In the consolidated statements of equity, the net parent investment represents WPC’s historical investment in NLOP prior to the Spin-Off, accumulated net earnings after taxes, and the net effect of transactions between NLOP and WPC. |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted-average number of shares of common shares outstanding during the year. Diluted earnings per share reflects potentially dilutive securities using the treasury stock method, except when the effect would be anti-dilutive. |
Intangible Assets and Liabilities and Goodwill | In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Below-market rent intangibles are included in Below-market rent intangible liabilities, net in the consolidated financial statements. |
Fair Value Measurements | The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, and foreign currency collars; and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs. Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps ( Note 8 ). The valuation of our derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves, spot and forward rates, and implied volatilities. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative instruments for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. These derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The following table presents a summary of selected financial data of the consolidated VIE included in our consolidated balance sheets (in thousands): June 30, 2024 December 31, 2023 Land, buildings and improvements $ 37,917 $ 37,917 In-place lease intangible assets and other 9,685 9,685 Above-market rent intangible assets 4,338 4,338 Accumulated depreciation and amortization (4,975) (3,679) Total assets 48,490 49,410 Total liabilities $ 304 $ 304 |
Schedule of Reconciliation of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands): June 30, 2024 December 31, 2023 Cash and cash equivalents $ 36,078 $ 16,269 Restricted cash (a) 44,629 51,560 Total cash and cash equivalents and restricted cash $ 80,707 $ 67,829 __________ (a) Amounts as of June 30, 2024 and December 31, 2023 include approximately $43.4 million and $48.4 million, respectively, related to certain reserve requirements pursuant to the NLOP Financing Arrangements ( Note 9 ). |
Schedule of Reconciliation of Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands): June 30, 2024 December 31, 2023 Cash and cash equivalents $ 36,078 $ 16,269 Restricted cash (a) 44,629 51,560 Total cash and cash equivalents and restricted cash $ 80,707 $ 67,829 __________ (a) Amounts as of June 30, 2024 and December 31, 2023 include approximately $43.4 million and $48.4 million, respectively, related to certain reserve requirements pursuant to the NLOP Financing Arrangements ( Note 9 ). |
Agreements and Transactions w_2
Agreements and Transactions with Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following tables present a summary of fees we paid and expenses we reimbursed to our Advisor in accordance with the terms of the NLOP Advisory Agreements (in thousands): Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Asset management fees (a) $ 1,599 $ 3,403 Administrative reimbursements (b) 1,000 2,000 $ 2,599 $ 5,403 __________ (a) Included within Asset management fees in the consolidated statements of operations. (b) Included within General and administrative expenses in the consolidated statements of operations. The following table presents amounts of shared costs that were allocated to NLOP (in thousands): Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 General and administrative (a) $ 3,121 $ 6,545 Interest expense (b) 5,236 10,432 Total $ 8,357 $ 16,977 __________ (a) General and administrative fees are inclusive of expenses such as employee compensation and benefits, stock-based compensation and professional fees. (b) NLOP’s income statement prior to the Spin-Off includes an allocation of interest expense associated with WPC unsecured debt utilized partially to fund property assets of NLOP. |
Schedule of Balances Due to and from Related Party | The following table presents a summary of amounts due to affiliates, which are included within Accounts payable, accrued expenses and other liabilities in the consolidated financial statements (in thousands): June 30, 2024 December 31, 2023 Asset management fees payable $ 507 $ 1,245 Administrative reimbursements payable and other 344 676 $ 851 $ 1,921 |
Land, Buildings and Improveme_2
Land, Buildings and Improvements (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Real Estate [Abstract] | |
Schedule of Real Estate | Land and buildings leased to others, which are subject to operating leases, are summarized as follows (in thousands): June 30, 2024 December 31, 2023 Land $ 122,327 $ 168,200 Buildings and improvements 781,862 1,035,791 Less: Accumulated depreciation (169,883) (213,034) $ 734,306 $ 990,957 |
Schedule of Operating Lease Income | Lease income related to operating leases recognized and included in the consolidated statements of operations is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lease income — fixed $ 27,182 $ 33,960 $ 58,544 $ 67,926 Lease income — variable (a) 7,967 7,597 14,919 15,070 Total operating lease income $ 35,149 $ 41,557 $ 73,463 $ 82,996 __________ (a) Includes (i) rent increases based on changes in the U.S. Consumer Price Index and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services. |
Schedule of Disclosure of Long Lived Assets Held-for-Sale | Below is a summary of our properties held for sale (in thousands): June 30, 2024 December 31, 2023 Land, buildings and improvements $ 72,103 $ — In-place lease intangible assets and other 1,986 — Accumulated depreciation and amortization (5,205) — $ 68,884 $ — |
Finance Receivables (Tables)
Finance Receivables (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Receivables [Abstract] | |
Schedule of Net Investments in Direct Financing Leases | Net investments in sales-type leases is summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Lease payments receivable $ — $ 10,614 — 10,614 Less: unearned income — (92) $ — $ 10,522 |
Intangible Assets and Liabili_2
Intangible Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Intangible assets and liabilities are summarized as follows (in thousands): June 30, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-Lived Intangible Assets In-place lease $ 251,143 $ (147,985) $ 103,158 $ 353,525 $ (212,456) $ 141,069 Above-market rent 40,949 (24,508) 16,441 57,954 (32,940) 25,014 Total intangible assets $ 292,092 $ (172,493) $ 119,599 $ 411,479 $ (245,396) $ 166,083 Finite-Lived Intangible Liabilities Below-market rent $ (23,432) $ 14,771 $ (8,661) $ (26,801) $ 16,158 $ (10,643) Total intangible liabilities $ (23,432) $ 14,771 $ (8,661) $ (26,801) $ 16,158 $ (10,643) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Fair Values of Debt Instruments | Our material financial instruments had the following carrying values and fair values as of the dates shown (in thousands): June 30, 2024 December 31, 2023 Level Carrying Value Fair Value Carrying Value Fair Value NLOP Mortgage Loan, net (a) (b) (c) 3 $ 127,201 $ 133,313 $ 266,844 $ 291,358 NLOP Mezzanine Loan, net (a) (b) (c) 3 84,788 89,811 106,299 113,797 Non-recourse mortgages, net (a) (b) (c) 3 115,407 110,146 168,836 165,077 __________ (a) The carrying value of the NLOP Mortgage Loan, net ( Note 9 ) includes unamortized deferred financing costs of $1.5 million and $6.7 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of the NLOP Mezzanine Loan, net ( Note 9 ) includes unamortized deferred financing costs of $1.4 million and $2.4 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of Non-recourse mortgages, net includes unamortized deferred financing costs of less than $0.1 million at December 31, 2023. There were no unamortized deferred financing costs on our Non-recourse mortgages, net as of June 30, 2024. (b) The carrying value of the NLOP Mortgage Loan, net ( Note 9 ) includes unamortized discount of $3.3 million and $15.3 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of the NLOP Mezzanine Loan, net ( Note 9 ) includes unamortized discount of $3.2 million and $5.6 million at June 30, 2024 and December 31, 2023, respectively. The carrying value of Non-recourse mortgages, net includes unamortized discount of $0.1 million and $0.7 million at June 30, 2024 and December 31, 2023, respectively. (c) We determined the estimated fair value of our NLOP Mortgage Loan, NLOP Mezzanine Loan, and non-recourse mortgage loans using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity. |
Schedule of Fair Value Impairment Charges Using Unobservable Inputs Nonrecurring Basis | The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (in thousands): Three Months Ended June 30, 2024 2023 Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Impairment Charges Real estate $ 74,754 $ 8,222 $ — $ — $ 8,222 $ — Six Months Ended June 30, 2024 2023 Fair Value Measurements Impairment Charges Fair Value Measurements Impairment Charges Impairment Charges Real estate $ 88,464 $ 12,287 $ — $ — $ 12,287 $ — |
Risk Management and Use of De_2
Risk Management and Use of Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table sets forth certain information regarding our derivative instruments (in thousands): Asset Derivatives Fair Value at Derivatives Designated as Hedging Instruments Balance Sheet Location June 30, 2024 December 31, 2023 Interest rate cap Other assets, net $ 130 $ 433 130 433 Total derivatives $ 130 $ 433 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands): Amount of Gain (Loss) Recognized on Derivatives in Three Months Ended June 30, Six Months Ended June 30, Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023 Interest rate cap $ 572 $ — $ 784 $ — Total $ 572 $ — $ 784 $ — Amount of Gain (Loss) on Derivatives Reclassified from Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Interest rate cap Other gains and (losses) $ (539) $ — $ (539) $ — Interest rate cap Interest expense (166) — (381) — Total $ (705) $ — $ (920) $ — |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | Amount of Gain (Loss) on Derivatives Recognized in Income Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Interest rate cap Interest expense $ (15) $ — $ (17) $ — Total $ (15) $ — $ (17) $ — |
Schedule of Derivative Instruments | The interest rate caps that our consolidated subsidiaries had outstanding at June 30, 2024 are summarized as follows (currency in thousands): Interest Rate Derivatives Number of Instruments Notional Fair Value at Designated as Cash Flow Hedging Instruments Interest rate cap 1 150,904 USD $ 130 $ 130 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table presents a summary of our NLOP Financing Arrangements (dollars in thousands): NLOP Financing Arrangements Original Principal Balance Interest Rate at June 30, 2024 Maturity Date at June 30, 2024 Principal Outstanding Balance at June 30, 2024 December 31, 2023 NLOP Mortgage Loan (a) (b) (c) $ 335,000 10.3% 11/9/2025 $ 131,993 $ 288,895 NLOP Mezzanine Loan (d) 120,000 14.5% 11/9/2028 89,345 114,336 $ 221,338 $ 403,231 __________ (a) Interest rate is based on SOFR plus 5.0%. The interest rate is subject to an interest rate cap that limits our SOFR rate exposure at 5.35%. (b) The NLOP Mortgage Loan is subject to two separate one-year extension options. (c) Balance excludes unamortized discount of $3.3 million and $15.3 million at June 30, 2024 and December 31, 2023, respectively, and unamortized deferred financing costs of $1.5 million and $6.7 million at June 30, 2024 and December 31, 2023, respectively. (d) |
Scheduled Mortgage Debt Principal Payments | Scheduled mortgage debt principal payments as of June 30, 2024 are as follows (in thousands): Years Ending December 31, Total 2024 (remainder) $ 22,558 2025 217,567 2026 7,379 2027 — 2028 89,345 Total principal payments 336,849 Unamortized discount, net (6,559) Unamortized deferred financing costs (2,894) Total $ 327,396 |
Stock-Based Compensation and _2
Stock-Based Compensation and Equity (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following table summarizes basic and diluted earnings (dollars in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) — basic and diluted $ 12,451 $ 3,825 $ (15,391) $ 7,568 Weighted-average shares outstanding – basic 14,785,118 14,620,919 14,785,118 14,620,919 Effect of dilutive securities 22,842 — — — Weighted-average shares outstanding – diluted 14,807,960 14,620,919 14,785,118 14,620,919 |
Schedule of Reclassification out of Accumulated Other Comprehensive Income | The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands): Three Months Ended June 30, 2024 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ (979) $ (36,639) $ (37,618) Other comprehensive loss before reclassifications (133) 4 (129) Amounts reclassified from accumulated other comprehensive loss to: Other gains (losses) 539 — 539 Interest expense 166 — 166 Total 705 — 705 Net current period other comprehensive income 572 4 576 Ending balance $ (407) $ (36,635) $ (37,042) Three Months Ended June 30, 2023 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ — $ (42,333) $ (42,333) Net current period other comprehensive loss — (474) (474) Ending balance $ — $ (42,807) $ (42,807) Six Months Ended June 30, 2024 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ (1,191) $ (34,409) $ (35,600) Other comprehensive loss before reclassifications (136) (2,226) (2,362) Amounts reclassified from accumulated other comprehensive loss to: Other gains (losses) 539 — 539 Interest expense 381 — 381 Total 920 — 920 Net current period other comprehensive loss 784 (2,226) (1,442) Ending balance $ (407) $ (36,635) $ (37,042) Six Months Ended June 30, 2023 Gains and (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total Beginning balance $ — $ (42,464) $ (42,464) Net current period other comprehensive loss — (343) (343) Ending balance $ — $ (42,807) $ (42,807) |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Revenues by Geographic Areas | The following tables present the geographic information (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Domestic $ 36,993 $ 39,058 $ 77,524 $ 77,918 International 2,036 3,745 5,512 7,549 Total $ 39,029 $ 42,803 $ 83,036 $ 85,467 |
Schedule of Long-Lived Assets by Geographic Areas | June 30, 2024 December 31, 2023 Long-lived Assets (a) Domestic $ 851,329 $ 1,025,078 International (b) 73,509 146,747 Total $ 924,838 $ 1,171,825 __________ (a) Consists of Net investments in real estate. (b) We sold two international properties during the six months ended June 30, 2024 ( Note 4 , Note 5 , Note 13 ). |
Business and Organization (Deta
Business and Organization (Details) $ in Thousands, a in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 USD ($) a tenant property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) a tenant segment property | Jun. 30, 2023 USD ($) | Nov. 01, 2023 property | |
Real Estate Properties | |||||
Number of real estate properties (property) | property | 47 | 47 | |||
Spin-Off, stock dividend rate | 0.0667 | ||||
Number of business segments | segment | 1 | ||||
Number of corporate tenants (tenant) | tenant | 50 | 50 | |||
Area of real estate property | a | 7.5 | 7.5 | |||
Separation and distribution related costs and other | $ | $ 0 | $ 948 | $ 16 | $ 1,538 | |
Office | Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | Net Lease Office Properties | |||||
Real Estate Properties | |||||
Number of real estate properties (property) | property | 59 | ||||
Parking Garage | |||||
Real Estate Properties | |||||
Separation and distribution related costs and other | $ | $ 600 | ||||
Operating lease term (in years) | 5 years 2 months 12 days | 5 years 2 months 12 days |
Basis of Presentation - Narrati
Basis of Presentation - Narratives (Details) - vie | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of entities | 1 | 1 |
Basis of Presentation - Variabl
Basis of Presentation - Variable Interest Entity Disclosure (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | |
Variable Interest Entity | |||
Land, buildings and improvements | $ 904,189 | $ 1,203,991 | |
In-place lease intangible assets and other | 253,192 | 357,788 | |
Above-market rent intangible assets | 40,949 | 57,954 | |
Accumulated depreciation and amortization | (342,376) | (458,430) | |
Total assets | [1] | 1,044,647 | 1,305,089 |
Total liabilities | [1] | 380,007 | 623,659 |
Variable Interest Entity | |||
Variable Interest Entity | |||
Land, buildings and improvements | 37,917 | 37,917 | |
In-place lease intangible assets and other | 9,685 | 9,685 | |
Above-market rent intangible assets | 4,338 | 4,338 | |
Accumulated depreciation and amortization | (4,975) | (3,679) | |
Total assets | 48,490 | 49,410 | |
Total liabilities | $ 304 | $ 304 | |
[1] See Note 2 for details related to variable interest entities (“VIEs”). |
Basis of Presentation - Cash an
Basis of Presentation - Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 36,078 | $ 16,269 | ||
Restricted cash | 44,629 | 51,560 | ||
Total cash and cash equivalents and restricted cash | 80,707 | 67,829 | $ 6,132 | $ 5,998 |
Debt covenant, cash requirements | $ 43,400 | $ 48,400 |
Agreements and Transactions w_3
Agreements and Transactions with Related Parties - Narratives (Details) $ in Millions | Nov. 01, 2023 USD ($) | Jun. 30, 2024 investment |
Related Party Transaction | ||
Number of jointly owned investments | investment | 1 | |
Related Party | ||
Related Party Transaction | ||
Asset management fees, annual expense | $ 7.5 | |
Administrative fees, annual expense rate | $ 4 |
Agreements and Transactions w_4
Agreements and Transactions with Related Parties - Related Party Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2024 | Jun. 30, 2024 | |
Related Party Transaction | ||
Transactions with related party | $ 2,599 | $ 5,403 |
Asset management fees | ||
Related Party Transaction | ||
Transactions with related party | 1,599 | 3,403 |
Administrative reimbursements | ||
Related Party Transaction | ||
Transactions with related party | $ 1,000 | $ 2,000 |
Agreements and Transactions w_5
Agreements and Transactions with Related Parties - Due from Affiliates (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Related Party Transaction | ||
Due from affiliates | $ 40,808 | $ 59,527 |
Related Party | ||
Related Party Transaction | ||
Asset management fees payable | 507 | 1,245 |
Administrative reimbursements payable and other | 344 | 676 |
Due from affiliates | $ 851 | $ 1,921 |
Agreements and Transactions w_6
Agreements and Transactions with Related Parties - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Related Party Transaction | ||||
General and administrative | $ 1,880 | $ 3,171 | $ 3,781 | $ 6,599 |
Interest expense | $ 27,798 | 8,559 | $ 48,598 | 16,381 |
Related Party | ||||
Related Party Transaction | ||||
General and administrative | 3,121 | 6,545 | ||
Interest expense | 5,236 | 10,432 | ||
Total operating expenses | $ 8,357 | $ 16,977 |
Land, Buildings and Improveme_3
Land, Buildings and Improvements - Assets Subject To Operating Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Real Estate Investment Property At Cost | ||
Less: Accumulated depreciation | $ (169,883) | $ (213,034) |
Net property subject to operating lease | 734,306 | 990,957 |
Land | ||
Real Estate Investment Property At Cost | ||
Net operating lease subject to operating lease, gross | 122,327 | 168,200 |
Buildings and improvements | ||
Real Estate Investment Property At Cost | ||
Net operating lease subject to operating lease, gross | $ 781,862 | $ 1,035,791 |
Land, Buildings and Improveme_4
Land, Buildings and Improvements - Narratives (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||
Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property | Dec. 31, 2023 USD ($) | |
Real Estate Properties | ||||||
PPE decrease related to foreign exchange | $ 4,300 | |||||
Depreciation | $ 6,100 | $ 7,800 | 13,300 | $ 15,500 | ||
Number of properties sold (property) | property | 8 | |||||
Lease termination income | 3,100 | 7,800 | ||||
Other income | $ 500 | $ 500 | $ 1,000 | $ 900 | ||
Number of real estate properties (property) | property | 47 | 47 | 47 | |||
Assets held for sale, net | $ 68,884 | $ 68,884 | $ 68,884 | $ 0 | ||
Properties Disposed of by Sale | ||||||
Real Estate Properties | ||||||
Number of properties sold (property) | property | 4 | 6 | ||||
Properties Disposed of by Sale | Land, buildings and improvements | ||||||
Real Estate Properties | ||||||
Number of properties sold (property) | property | 7 | |||||
Increase (decrease) in carrying value of real estate | $ (165,300) | |||||
Asset Held for Sale, Not in Discontinued Operations | ||||||
Real Estate Properties | ||||||
Number of real estate properties (property) | property | 1 | 1 | 1 | |||
Assets held for sale, net | $ 68,900 | $ 68,900 | $ 68,900 |
Land, Buildings and Improveme_5
Land, Buildings and Improvements - Operating Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Operating Lease, Lease Income [Abstract] | ||||
Lease income — fixed | $ 27,182 | $ 33,960 | $ 58,544 | $ 67,926 |
Lease income – variable | 7,967 | 7,597 | 14,919 | 15,070 |
Total operating lease income | $ 35,149 | $ 41,557 | $ 73,463 | $ 82,996 |
Land, Buildings and Improveme_6
Land, Buildings and Improvements - Summary of Assets Held for Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Long-Lived Assets Held-for-sale | ||
Accumulated depreciation and amortization | $ (5,205) | $ 0 |
Assets held for sale, net | 68,884 | 0 |
In-place lease intangible assets and other | ||
Long-Lived Assets Held-for-sale | ||
Assets Held-for-sale, gross | 1,986 | 0 |
Land, buildings and improvements | ||
Long-Lived Assets Held-for-sale | ||
Assets Held-for-sale, gross | $ 72,103 | $ 0 |
Finance Receivables - Narrative
Finance Receivables - Narratives (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) | Dec. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Financing Receivable | |||||||
Loss on sale of real estate, net | $ (37,723) | $ 0 | $ (21,947) | $ 0 | |||
Income from finance leases | $ 0 | 440 | 89 | 882 | |||
Number of properties reclassified (property) | property | 4 | ||||||
Interest income from direct financing leases | $ 400 | $ 900 | |||||
Adjustments | |||||||
Financing Receivable | |||||||
Land investment building and building improvements | $ 14,600 | ||||||
Net investments in direct financing leases | $ 14,600 | ||||||
Sales Type Lease | |||||||
Financing Receivable | |||||||
Income from finance leases | $ 100 | ||||||
Property Located in the United Kingdom | |||||||
Financing Receivable | |||||||
Loss on sale of real estate, net | $ 8,300 | ||||||
Reclassification of net-lease assets to net investments | $ 10,500 |
Finance Receivables - Net Inves
Finance Receivables - Net Investments in Direct Financing Lease (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Receivables [Abstract] | ||
Lease payments receivable | $ 0 | $ 10,614 |
Net investment in finance leases, excluding unearned income | 0 | 10,614 |
Less: unearned income | 0 | (92) |
Net investments in finance leases and loans receivable | $ 0 | $ 10,522 |
Intangible Assets and Liabili_3
Intangible Assets and Liabilities - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Decrease in carrying value of net intangible assets due to foreign currency translation adjustments | $ (0.4) | |||
Amortization of intangible assets | $ 9.8 | $ 10.8 | $ 21.5 | $ 21.5 |
Intangible Assets and Liabili_4
Intangible Assets and Liabilities - Intangible Assets, Liabilities and Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 292,092 | $ 411,479 |
Accumulated Amortization | (172,493) | (245,396) |
Net Carrying Amount | 119,599 | 166,083 |
Finite-Lived Intangible Liabilities | ||
Gross Carrying Amount | (23,432) | (26,801) |
Accumulated Amortization | 14,771 | 16,158 |
Net Carrying Amount | (8,661) | (10,643) |
Below-market rent | ||
Finite-Lived Intangible Liabilities | ||
Gross Carrying Amount | (23,432) | (26,801) |
Accumulated Amortization | 14,771 | 16,158 |
Net Carrying Amount | (8,661) | (10,643) |
In-place lease | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 251,143 | 353,525 |
Accumulated Amortization | (147,985) | (212,456) |
Net Carrying Amount | 103,158 | 141,069 |
Above-market rent | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 40,949 | 57,954 |
Accumulated Amortization | (24,508) | (32,940) |
Net Carrying Amount | $ 16,441 | $ 25,014 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Fair Value Measurements (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Unamortized deferred financing costs | $ 2,894,000 | |
Unamortized discount | 6,559,000 | |
Senior Secured Mortgage Loan | Loans Payable | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Unamortized deferred financing costs | 1,500,000 | $ 6,700,000 |
Unamortized discount | 3,300,000 | 15,300,000 |
Mezzanine Loan Facility | Loans Payable | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Unamortized deferred financing costs | 1,400,000 | 2,400,000 |
Unamortized discount | 3,200,000 | 5,600,000 |
Non-Recourse Mortgages | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Unamortized deferred financing costs | 0 | 100,000 |
Unamortized discount | 100,000 | 700,000 |
Level 3 | Carrying Value | Senior Secured Mortgage Loan | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | 127,201,000 | 266,844,000 |
Level 3 | Carrying Value | Mezzanine Loan Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | 84,788,000 | 106,299,000 |
Level 3 | Carrying Value | Non-Recourse Mortgages | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | 115,407,000 | 168,836,000 |
Level 3 | Fair Value | Senior Secured Mortgage Loan | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | 133,313,000 | 291,358,000 |
Level 3 | Fair Value | Mezzanine Loan Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | 89,811,000 | 113,797,000 |
Level 3 | Fair Value | Non-Recourse Mortgages | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Debt instrument, fair value | $ 110,146,000 | $ 165,077,000 |
Fair Value Measurements - Impai
Fair Value Measurements - Impairment of Assets Measured on a Non-Recurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Impairment Disclosure | ||||
Impairment Charges | $ 8,222 | $ 0 | $ 12,287 | $ 0 |
Fair Value, Measurements, Nonrecurring | Level 3 | ||||
Impairment Disclosure | ||||
Fair Value Measurements | 74,754 | 0 | 88,464 | 0 |
Impairment Charges | $ 8,222 | $ 0 | $ 12,287 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques | ||||
Impairment charges — real estate | $ 8,222 | $ 0 | $ 12,287 | $ 0 |
Level 3 | Fair Value, Measurements, Nonrecurring | ||||
Fair Value Measurement Inputs and Valuation Techniques | ||||
Impairment charges — real estate | $ 8,222 | $ 0 | $ 12,287 | $ 0 |
Number of impaired real estate properties (property) | property | 2 | 4 |
Risk Management and Use of De_3
Risk Management and Use of Derivative Financial Instruments - Narratives (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Dec. 31, 2023 | |
Summary of Derivative Instruments | ||
Net collateral posted for derivatives | $ 0 | $ 0 |
Total credit exposure on derivatives | 100,000 | |
Individual Counterparty | ||
Summary of Derivative Instruments | ||
Total credit exposure on derivatives | 100,000 | |
Interest expense | ||
Summary of Derivative Instruments | ||
Estimated amount reclassified from OCI to expense (gain) | $ 800,000 |
Risk Management and Use of De_4
Risk Management and Use of Derivative Financial Instruments - Information Regarding Derivative Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Derivatives, Fair Value | ||
Derivative assets, fair value | $ 130 | $ 433 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value | ||
Derivative assets, fair value | 130 | 433 |
Other assets, net | Interest rate cap | Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value | ||
Derivative assets, fair value | $ 130 | $ 433 |
Risk Management and Use of De_5
Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Recognized in OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Derivative Instruments, Gain (Loss) | ||||
Unrealized gain on derivative instruments | $ 572 | $ 0 | $ 784 | $ 0 |
Interest rate cap | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Unrealized gain on derivative instruments | $ 572 | $ 0 | $ 784 | $ 0 |
Risk Management and Use of De_6
Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Reclassified From OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | $ (705) | $ 0 | $ (920) | $ 0 |
Cash Flow Hedging | Interest rate cap | Other gains and (losses) | ||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | (539) | 0 | (539) | 0 |
Cash Flow Hedging | Interest rate cap | Interest expense | ||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | $ (166) | $ 0 | $ (381) | $ 0 |
Risk Management and Use of De_7
Risk Management and Use of Derivative Financial Instruments - Derivative Gain Loss Recognized in Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net [Abstract] | ||||
Total | $ (15) | $ 0 | $ (17) | $ 0 |
Interest rate cap | Derivatives Designated as Hedging Instruments | ||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net [Abstract] | ||||
Gain (loss) on hedging activity | $ (15) | $ 0 | $ (17) | $ 0 |
Risk Management and Use of De_8
Risk Management and Use of Derivative Financial Instruments - Interest Rate Swap and Caps Summary (Details) $ in Thousands | Jun. 30, 2024 USD ($) derivative |
Derivative Disclosure | |
Fair value | $ 130 |
Interest rate cap | Cash Flow Hedging | Derivatives Designated as Hedging Instruments | |
Derivative Disclosure | |
Derivative, number of instruments held | derivative | 1 |
Derivative, notional amount | $ 150,904 |
Fair value | $ 130 |
Debt - Narratives (Details)
Debt - Narratives (Details) | 1 Months Ended | 6 Months Ended | 18 Months Ended | |||
Aug. 07, 2024 USD ($) property | Sep. 20, 2023 USD ($) property option | Jul. 31, 2024 USD ($) property | Jun. 30, 2024 USD ($) option property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property option | |
Debt Instrument | ||||||
Debt instrument, extension term | 1 year | |||||
Payments of distributions to affiliates | $ 343,900,000 | |||||
Number of encumbered property | property | 40 | 32 | 32 | |||
Number of properties sold (property) | property | 8 | |||||
Prepayment of debt | $ 203,968,000 | $ 7,130,000 | ||||
Number of real estate properties (property) | property | 47 | 47 | ||||
Decrease in the value of debt related to foreign currency | $ 1,900,000 | |||||
Fixed Interest Rate | ||||||
Debt Instrument | ||||||
Weighted average interest rate (as a percent) | 4.40% | 4.40% | ||||
Loans Payable | Subsequent events | ||||||
Debt Instrument | ||||||
Number of real estate properties (property) | property | 31 | 31 | ||||
Senior Secured Mortgage Loan | Loans Payable | ||||||
Debt Instrument | ||||||
Principal amount | $ 335,000,000 | $ 335,000,000 | $ 335,000,000 | |||
Number of extension option | option | 2 | 2 | 2 | |||
Debt instrument, extension term | 1 year | 1 year | 1 year | |||
Floor rate (as a percent) | 3.85% | |||||
Variable interest rate (as a percent) | 5% | 5% | ||||
Stated interest rate (as a percent) | 10.30% | 10.30% | ||||
Debt Instrument, first periodic payment threshold, percentage | 15% | |||||
Debt Instrument, first periodic payment threshold, amount | $ 50,300,000 | |||||
Debt Instrument, second periodic payment threshold, percentage | 25% | |||||
Debt instrument, second periodic payment threshold, amount | $ 83,800,000 | |||||
Debt instrument, second period periodic payment threshold percentage | 40% | |||||
Debt instrument, third periodic payment threshold, percentage | 30% | |||||
Debt instrument, third periodic payment threshold, amount | $ 100,500,000 | |||||
Debt instrument, third period periodic payment threshold percentage | 70% | |||||
Prepayment of debt | $ 156,900,000 | |||||
Senior Secured Mortgage Loan | Loans Payable | Subsequent events | ||||||
Debt Instrument | ||||||
Prepayment of debt | $ 58,100,000 | |||||
Senior Secured Mortgage Loan | Loans Payable | Maximum | ||||||
Debt Instrument | ||||||
Variable interest rate (as a percent) | 5.35% | 5.35% | ||||
Mezzanine Loan Facility | Loans Payable | ||||||
Debt Instrument | ||||||
Principal amount | $ 120,000,000 | $ 120,000,000 | $ 120,000,000 | |||
Stated interest rate (as a percent) | 14.50% | 14.50% | 14.50% | |||
Stated interest rate, cash (as a percent) | 10% | |||||
Stated interest rate, payment-in-kind (as a percent) | 4.50% | |||||
Prepayment of debt | $ 25,000,000 | |||||
Mezzanine Loan Facility | Loans Payable | Subsequent events | ||||||
Debt Instrument | ||||||
Prepayment of debt | $ 8,400,000 | |||||
Non-Recourse Mortgages | ||||||
Debt Instrument | ||||||
Prepayment of debt | $ 19,200,000 | |||||
Number of real estate properties (property) | property | 7 | 7 | ||||
Weighted average interest rate (as a percent) | 4.50% | 4.50% | ||||
Gain on extinguishment of debt (less than) | $ (300,000) | |||||
Weighted-average interest rate on respective dates of prepayment and repayment (as a percent) | 5.20% | |||||
Non-Recourse Mortgages | Maximum | ||||||
Debt Instrument | ||||||
Weighted average interest rate (as a percent) | 4.80% | 4.80% | ||||
Parent Debt | ||||||
Debt Instrument | ||||||
Prepayment of debt | $ 1,700,000 |
Debt - Financing Arrangements (
Debt - Financing Arrangements (Details) | 6 Months Ended | ||
Sep. 20, 2023 USD ($) option | Jun. 30, 2024 USD ($) option | Dec. 31, 2023 USD ($) | |
Debt Instrument | |||
Debt instrument, extension term | 1 year | ||
Unamortized discount | $ 6,559,000 | ||
Unamortized deferred financing costs | 2,894,000 | ||
Loans Payable | |||
Debt Instrument | |||
Principal outstanding | 221,338,000 | $ 403,231,000 | |
Senior Secured Mortgage Loan | Loans Payable | |||
Debt Instrument | |||
Principal amount | $ 335,000,000 | $ 335,000,000 | |
Stated interest rate (as a percent) | 10.30% | ||
Principal outstanding | $ 131,993,000 | 288,895,000 | |
Variable interest rate (as a percent) | 5% | 5% | |
Number of extension option | option | 2 | 2 | |
Debt instrument, extension term | 1 year | 1 year | |
Unamortized discount | $ 3,300,000 | 15,300,000 | |
Unamortized deferred financing costs | 1,500,000 | 6,700,000 | |
Mezzanine Loan Facility | Loans Payable | |||
Debt Instrument | |||
Principal amount | $ 120,000,000 | $ 120,000,000 | |
Stated interest rate (as a percent) | 14.50% | 14.50% | |
Principal outstanding | $ 89,345,000 | 114,336,000 | |
Unamortized discount | 3,200,000 | 5,600,000 | |
Unamortized deferred financing costs | $ 1,400,000 | $ 2,400,000 |
Debt - Debt Principal Payments
Debt - Debt Principal Payments (Details) $ in Thousands | Jun. 30, 2024 USD ($) |
Long-term Debt, by Maturity | |
2024 (remainder) | $ 22,558 |
2025 | 217,567 |
2026 | 7,379 |
2027 | 0 |
2028 | 89,345 |
Total principal payments | 336,849 |
Unamortized discount, net | (6,559) |
Unamortized deferred financing costs | (2,894) |
Total | $ 327,396 |
Stock-Based Compensation and _3
Stock-Based Compensation and Equity - Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 100 | $ 150 | $ 1,613 | |
Dividends declared (in dollars per share) | $ 0.34 | |||
Stock dividends, shares | 164,199 | |||
Payments of dividends | $ 1,100 | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, nonvested (in shares) | 28,653 | 28,653 | 28,653 | |
Share-based compensation arrangement by share-based payment award, nonvested, weighted average grant date fair value (in dollars per share) | $ 10.47 | $ 10.47 | $ 10.47 | |
Total unrecognized compensation expense | $ 100 | $ 100 | ||
Weighted-average remaining term (in years) | 3 months 18 days |
Stock-Based Compensation and _4
Stock-Based Compensation and Equity - Earnings Per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Earnings Per Share Reconciliation | ||||
Net income (loss) — basic | $ 12,451 | $ 3,825 | $ (15,391) | $ 7,568 |
Net income (loss) — diluted | $ 12,451 | $ 3,825 | $ (15,391) | $ 7,568 |
Weighted-average shares outstanding – basic (in shares) | 14,785,118 | 14,620,919 | 14,785,118 | 14,620,919 |
Effect of dilutive securities (in shares) | 22,842 | 0 | 0 | 0 |
Weighted-average shares outstanding – diluted (in shares) | 14,807,960 | 14,620,919 | 14,785,118 | 14,620,919 |
Stock-Based Compensation and _5
Stock-Based Compensation and Equity - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Balance - beginning of period | $ 651,607 | $ 1,098,876 | $ 681,430 | $ 1,109,519 |
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Other gains and (losses) | 332 | 37 | (489) | 49 |
Interest expense | 27,798 | 8,559 | 48,598 | 16,381 |
Net current period other comprehensive income (loss) | 576 | (474) | (1,442) | (343) |
Balance - end of period | 664,640 | 1,083,405 | 664,640 | 1,083,405 |
Accumulated Other Comprehensive Loss | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Balance - beginning of period | (37,618) | (42,333) | (35,600) | (42,464) |
Other comprehensive loss before reclassifications | (129) | (2,362) | ||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Balance - end of period | (37,042) | (42,807) | (37,042) | (42,807) |
Gains and (Losses) on Derivative Instruments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Balance - beginning of period | (979) | 0 | (1,191) | 0 |
Other comprehensive loss before reclassifications | (133) | (136) | ||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Balance - end of period | (407) | 0 | (407) | 0 |
Foreign Currency Translation Adjustments | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | ||||
Balance - beginning of period | (36,639) | (42,333) | (34,409) | (42,464) |
Other comprehensive loss before reclassifications | 4 | (2,226) | ||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Balance - end of period | (36,635) | (42,807) | (36,635) | (42,807) |
Gains and (Losses) on Derivative Instruments | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Total | 705 | 920 | ||
Net current period other comprehensive income (loss) | 572 | 0 | 784 | 0 |
Gains and (Losses) on Derivative Instruments | Amounts reclassified from accumulated other comprehensive loss to | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Other gains and (losses) | 539 | 539 | ||
Interest expense | 166 | 381 | ||
Foreign Currency Translation Adjustments | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Total | 0 | 0 | ||
Net current period other comprehensive income (loss) | 4 | (474) | (2,226) | (343) |
Foreign Currency Translation Adjustments | Amounts reclassified from accumulated other comprehensive loss to | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Other gains and (losses) | 0 | 0 | ||
Interest expense | 0 | 0 | ||
AOCI Including Portion Attributable to Noncontrolling Interest | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Total | 705 | 920 | ||
Net current period other comprehensive income (loss) | 576 | $ (474) | (1,442) | $ (343) |
AOCI Including Portion Attributable to Noncontrolling Interest | Amounts reclassified from accumulated other comprehensive loss to | ||||
Amounts reclassified from accumulated other comprehensive loss to: | ||||
Other gains and (losses) | 539 | 539 | ||
Interest expense | $ 166 | $ 381 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | ||||
Current income tax (expense) benefit | $ (300) | $ 100 | $ (700) | $ (700) |
Deferred income tax benefit | $ 200 | $ 300 | $ 306 | $ 676 |
Property Dispositions (Details)
Property Dispositions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||
Apr. 30, 2024 USD ($) | Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) property | Dec. 31, 2023 USD ($) | |
Discontinued Operation Additional Disclosures | |||||||
Number of properties sold (property) | property | 8 | ||||||
Proceeds from sales of real estate | $ 184,855 | $ 0 | |||||
Loss on sale of real estate, net | $ (37,723) | $ 0 | (21,947) | $ 0 | |||
Investment in real estate | $ 1,198,330 | 1,198,330 | $ 1,198,330 | $ 1,630,255 | |||
Non-Recourse Mortgages | |||||||
Discontinued Operation Additional Disclosures | |||||||
Loss on extinguishment of debt | $ 300 | ||||||
Warrensville, Illinois | Non-Recourse Mortgages | |||||||
Discontinued Operation Additional Disclosures | |||||||
Investment in real estate | $ 19,300 | ||||||
Debt transferred | 19,800 | ||||||
Loss on extinguishment of debt | 1,000 | ||||||
Working capital, write off | 1,400 | ||||||
Tempe Arizona | Non-Recourse Mortgages | |||||||
Discontinued Operation Additional Disclosures | |||||||
Investment in real estate | 13,300 | ||||||
Debt transferred | 13,200 | ||||||
Loss on extinguishment of debt | 1,300 | ||||||
Working capital, write off | $ 1,200 | ||||||
Properties Disposed of by Sale | |||||||
Discontinued Operation Additional Disclosures | |||||||
Number of properties sold (property) | property | 4 | 6 | |||||
Proceeds from sales of real estate | $ 152,400 | $ 195,200 | |||||
Loss on sale of real estate, net | $ 40,000 | 24,200 | |||||
Loss on sales of investment real estate, tax | $ 100 |
Geographic Information - Narrat
Geographic Information - Narrative (Details) - property | 3 Months Ended | 6 Months Ended | 12 Months Ended | 18 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Jun. 30, 2024 | |
Concentration Risk | ||||||
Number of properties sold (property) | 8 | |||||
International | ||||||
Concentration Risk | ||||||
Number of properties sold (property) | 2 | |||||
Customer Concentration Risk | Lease Revenues | One Domestic Tenant | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 22.40% | 17.30% | 20.30% | 17.60% | ||
Customer Concentration Risk | Lease Revenues | Two Domestic Tenant | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 12.10% | 10.10% | 11.30% | 9.60% | ||
Customer Concentration Risk | Long-lived Assets | One Domestic Tenant | ||||||
Concentration Risk | ||||||
Concentration risk percentage | 17.70% | 14.40% |
Geographic Information - Revenu
Geographic Information - Revenues and Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Revenues from External Customers and Long-Lived Assets | |||||
Revenues | $ 39,029 | $ 42,803 | $ 83,036 | $ 85,467 | |
Long-lived assets | 924,838 | 924,838 | $ 1,171,825 | ||
Domestic | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Revenues | 36,993 | 39,058 | 77,524 | 77,918 | |
Long-lived assets | 851,329 | 851,329 | 1,025,078 | ||
International | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Revenues | 2,036 | $ 3,745 | 5,512 | $ 7,549 | |
Long-lived assets | $ 73,509 | $ 73,509 | $ 146,747 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |||
Aug. 07, 2024 USD ($) property | Sep. 20, 2023 USD ($) | Jul. 31, 2024 USD ($) option property | Jun. 30, 2024 USD ($) property | Jun. 30, 2023 USD ($) | |
Subsequent Event | |||||
Proceeds from sales of real estate | $ 184,855 | $ 0 | |||
Repayment of debt | $ 203,968 | $ 7,130 | |||
Number of real estate properties (property) | property | 47 | ||||
Senior Secured Mortgage Loan | Loans Payable | |||||
Subsequent Event | |||||
Repayment of debt | $ 156,900 | ||||
Debt instrument, third periodic payment threshold, percentage | 30% | ||||
Debt instrument, third periodic payment threshold, amount | $ 100,500 | ||||
Debt instrument, third period periodic payment threshold percentage | 70% | ||||
Mezzanine Loan Facility | Loans Payable | |||||
Subsequent Event | |||||
Repayment of debt | $ 25,000 | ||||
Subsequent events | |||||
Subsequent Event | |||||
Proceeds from sales of real estate | $ 71,500 | ||||
Number of tenants exercised | option | 2 | ||||
Proceeds from lease termination | $ 3,500 | ||||
Subsequent events | Loans Payable | |||||
Subsequent Event | |||||
Number of real estate properties (property) | property | 31 | 31 | |||
Subsequent events | Senior Secured Mortgage Loan | Loans Payable | |||||
Subsequent Event | |||||
Repayment of debt | $ 58,100 | ||||
Subsequent events | Mezzanine Loan Facility | Loans Payable | |||||
Subsequent Event | |||||
Repayment of debt | $ 8,400 |