☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol(s) | Name of each Exchange on Which Registered | ||
Common Stock, $0.01 par value 6.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share | “CIO” “CIO.PrA” | New York Stock Exchange New York Stock Exchange |
Large accelerated filter | ☐ | Accelerated filter | ☒ | |||
Non-accelerated filter | ☐ | Smaller reporting company | ☐ | |||
Emerging Growth Company | ☐ |
2020
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ITEM 1. | BUSINESS |
At
As
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us achieve our business objective and continue to distinguish us from other owners and operators of office properties in our markets:
market, particularly in our life science portfolio.
Acquire Properties in Our Target Markets:We seek to expand our portfolio through acquisitions of office properties primarily located in our target18-hour cities. We believe that current economic conditions and relatively low levels of competition from institutional buyers in our typical transaction size have created attractive investment opportunities for the acquisition of office propertiesin our target markets. We also use our management team’s market-specific knowledge as well as the expertise of our local real estate operators and our investment partners to identify acquisitions that we believe offer cash flow stability and value enhancement.
Lease Currently Vacant Space:As of December 31, 2019, our portfolio was approximately 91.9% occupied, and we believe that there is potential to generate additional rental income by leasing space in these properties that is currently unoccupied. We have been successful in enhancing the appeal of vacant spaces by completing improvements to vacancies, creating or improving building amenities and renovating common areas.
2019
Acquired $144 million of high-quality office properties, including expanding our geographic footprint into Seattle and deepening our presence in Portland and Denver;
Disposed of three assets for an aggregate sale price of $47 million, selectively enhancing our portfolio;
Issued
Upsized our unsecured credit facility (the “Unsecured Credit Facility”) from $250
Modified loan agreements at four of our properties, generating significant interest savings;
Achieved inclusion to the MSCI US REIT Index (RMZ); and
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ITEM 1A. | RISK FACTORS |
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events may occur, could result in a general decline in rents or an increased incidence of defaults among our
In addition, the ongoing
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significantly weaken their financial condition, whether as a result of general economic conditions, changes in the severity or duration of the
operations, cash flows, or the market price of our common stock or preferred stock.
flows, or the market price of our common stock or preferred stock.
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and leasing costs), from operating cash flow. Consequently, we may rely on third-party sources to fund our capital needs. We may not be able to obtain the necessary financing on favorable terms, in the time period that we desire or at all. Any additional debt we incur will increase our leverage, expose us to the risk of default and may impose operating restrictions on us, and any additional equity we raise could be dilutive to existing stockholders. Our access to third-party sources of capital depends, in part, on:
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common stock or preferred stock.
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condition. No hedging activity can completely insulate us from the risks associated with changes in interest rates. Moreover, interest rate hedging could fail to protect us or adversely affect us because, among other things:
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institutions, is considering replacing U.S. dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”), a new index calculated by short-term repurchase agreements, backed by Treasury securities. The Federal Reserve Bank of New York began publishing SOFR rates in April 2018. Despite IBA’s announcement to delay the phase out of LIBOR, in November 2020, the U.S. Federal Reserve issued a statement encouraging banks to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021.
financial condition, results of operations and cash flow.
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We may incur significant costs complying with various federal, state and local laws, regulations and covenants that are applicable to our properties, which could have an adverse impact on our financial condition, results of operations, cash flows and market price of our common stock.
The properties in our portfolio are subject to various covenants and federal, state and local laws and regulatory requirements, including permitting and licensing requirements. Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval or waivers from local officials or restrict our use of our properties and may require us to obtain approval from local officials of community standards organizations at any time with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. Among other things, these restrictions may relate to fire and safety, seismic or hazardous material abatement requirements. There can be no assurance that existing or future laws and regulatory policies, including federal laws or executive actions affecting the markets in which we operate, will not adversely affect us or the timing or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that could increase such delays or result in additional costs. Our growth strategy may be affected by our ability to obtain permits, licenses and zoning relief. Our failure to obtain such permits, licenses and zoning relief or to comply with applicable laws could have an adverse effect on our financial condition, results of operations, cash flow and per share market price of our common stock or preferred stock.
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Liabilities associated with environmental conditions may be significant and can sometimes exceed the value of the affected property. The presence of hazardous substances on a property may adversely affect our ability to sell or rent that property or to borrow using that property as collateral.
our common stock or preferred stock.
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common stock or preferred stock.
Climate change may adversely affect our business.
Toflows, or the extent that climate change does occur, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage or a decrease in demand for our properties located in the areas affected by these conditions. Should the impact of climate change be material in nature or occur for lengthy periods of time, our financial condition or results of operations would be adversely affected. In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiencymarket price of our existing properties in order to comply with such regulations.
common stock or preferred stock.
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bankruptcy filing would impose an automatic stay barring all efforts by us to collect
common stock or preferred stock.
our common stock or preferred stock.
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of December 31, 2019,2020, may, under certain circumstances, vacate the leased premises before the stated terms of the leases expire with little or no liability to us. There can be no assurance that tenants will continue their activities and continue occupancy of the premises. Any cessation of occupancy by tenants may have an adverse effect on our operations.
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Litigation may result in unfavorable outcomes.
Like many real estate operators, we may be involved in lawsuits involving premises liability claims and alleged violations of landlord-tenant laws, which may give rise to class action litigation or governmental investigations. Any material litigation not covered by insurance, such as a class action, could result in us incurring substantial costs and harm our financial condition, results of operations, cash flows and ability to pay distributions to you.
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Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weakness, in our internal control over financial reporting that may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, or otherwise adversely impact our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
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effective maximum U.S. federal income tax rate of 29.6% on such income. Although the reduced U.S. federal income tax rate applicable to qualified dividend income does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends and the reduced corporate tax rate could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of
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outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of any qualified REIT subsidiary or TRS of ours and securities that are qualified real estate assets) may consist of the securities of any one issuer. No more than 20% of the value of our total assets can be represented by securities of one or more TRSs, and no more than 25% of our assets can be represented by debt of “publicly offered” REITs (i.e., REITs that are required to file annual and periodic reports with the SEC under the Exchange Act) that is not secured by real property or interests in real property. If we fail to comply with these requirements at the end of any calendar quarter, we must remedy the failure within 30 days or qualify for certain limited statutory relief provisions to avoid losing status as a REIT. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.
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reasonable cause to believe that the act or omission was unlawful. We are not aware of any reported decision of a Maryland appellate court that has interpreted provisions similar to the provisions of the partnership agreement of our Operating Partnership that modify and reduce our fiduciary duties or obligations as the general partner or reduce or eliminate our liability for money damages to our Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the partnership agreement that purport to modify or reduce the fiduciary duties that would be in effect were it not for the partnership agreement.
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We may be unable to renew expiring leases orre-lease vacant space on a timely basis or on attractive terms, which could have a material adverse effect on our results of operations and cash flow.
At December 31, 2019, approximately 8.1%, 15.3% and 14.4% of our annualized base rent is scheduled to expire in 2020, 2021, and 2022, respectively, excludingmonth-to-month leases. Current tenants may not renew their leases upon the expiration of their terms and may attempt to terminate their leases prior to the expiration of their current terms. Ifnon-renewals or terminations occur, we may not be able to locate qualified replacement tenants and, as a result, we could lose a significant source of revenue while remaining responsible for the payment of our financial obligations. Moreover, the terms of a renewal or new lease, including the amount of rent, may be less favorable to us than the current lease terms, or we may be forced to provide tenant improvements at our expense or provide other concessions or additional services to maintain or attract tenants. Any of these factors could cause a decline in lease revenue or an increase in operating expenses, which would have a material adverse effect on our results of operations and cash flow.
Our business and operations would suffer in the event of system failures.
Despite system redundancy and the implementation of security measures for our IT networks and related systems, our systems are vulnerable to damages from any number of sources, including computer viruses, energy blackouts, natural disasters, terrorism, war, and telecommunication failures. We rely on our IT networks and related systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and keeping of records, which may include personal identifying information of tenants and lease data. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts. Any failure to maintain proper function, security and availability of our IT networks and related systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our operations. As such, any of the foregoing events could have a material adverse effect on our results of operations.
We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments toe-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to performday-to-day operations (including managing our building systems), and, in some cases, may be critical to the operations of certain of our tenants. There can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving our IT networks and related systems could, among other things:
result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, including personally
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result in unauthorized access to or changes to our financial accounting and reporting systems and related data;
result in our inability to maintain building systems relied on by our tenants;
require significant management attention and resources to remedy any damage that results;
subject us to regulatory penalties or claims for breach of contract, damages, credits, penalties or terminations of leases or other agreements; or
damage our reputation among our tenants and investors.
These events could have an adverse impact on our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control.
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number (whichever is more restrictive) of the outstanding shares of our common stock. Our board of directors may not grant such an exemption to any proposed transferee whose ownership in excess of 9.8% of the foregoing ownership limits would result in the termination of our status as a REIT. These restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify as a REIT. The ownership limit may delay or impede a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.
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cash flows, or the market price of our common stock or preferred stock.
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ITEM 2. | PROPERTIES |
Metropolitan Area | Property | Economic Interest | NRA (000s Square Feet) | In Place Occupancy | Annualized Base Rent per Square Foot | Annualized Gross Rent per Square Foot(1) | Annualized Base Rent(2) ($000s) | |||||||||||||||||||
Phoenix, AZ (20.8% of NRA) | Pima Center | 100.0 | % | 272 | 87.0 | % | $ | 27.19 | $ | 27.19 | $ | 6,431 | ||||||||||||||
SanTan | 100.0 | % | 267 | 91.7 | % | $ | 28.05 | $ | 28.05 | $ | 6,855 | |||||||||||||||
5090 N 40th St | 100.0 | % | 174 | 100.0 | % | $ | 29.28 | $ | 29.28 | $ | 5,108 | |||||||||||||||
Camelback Square | 100.0 | % | 174 | 78.8 | % | $ | 30.92 | $ | 30.92 | $ | 4,237 | |||||||||||||||
The Quad | 100.0 | % | 163 | 100.0 | % | $ | 28.85 | $ | 29.17 | $ | 4,703 | |||||||||||||||
Papago Tech | 100.0 | % | 163 | 86.7 | % | $ | 21.88 | $ | 21.88 | $ | 3,087 | |||||||||||||||
Denver, CO (19.9%) | Cherry Creek | 100.0 | % | 356 | 100.0 | % | $ | 18.59 | $ | 19.31 | $ | 6,612 | ||||||||||||||
Circle Point | 100.0 | % | 272 | 94.3 | % | $ | 17.84 | $ | 31.72 | $ | 4,573 | |||||||||||||||
Denver Tech(4) | 100.0 | % | 381 | 62.7 | % | $ | 22.98 | $ | 27.80 | $ | 5,264 | |||||||||||||||
Superior Pointe | 100.0 | % | 151 | 96.5 | % | $ | 17.81 | $ | 30.29 | $ | 2,602 | |||||||||||||||
Tampa, FL (17.9%) | Park Tower | 94.8 | % | 471 | 92.4 | % | $ | 24.66 | $ | 24.66 | $ | 10,732 | ||||||||||||||
City Center | 95.0 | % | 242 | 93.1 | % | $ | 25.66 | $ | 25.66 | $ | 5,774 | |||||||||||||||
Intellicenter | 100.0 | % | 204 | 100.0 | % | $ | 23.99 | $ | 23.99 | $ | 4,881 | |||||||||||||||
Carillon Point | 100.0 | % | 124 | 100.0 | % | $ | 28.23 | $ | 28.23 | $ | 3,505 | |||||||||||||||
Orlando, FL (12.4%) | Florida Research Park (5) | 96.6 | % | 397 | 92.9 | % | $ | 23.97 | $ | 27.51 | $ | 8,794 | ||||||||||||||
Central Fairwinds | 97.0 | % | 168 | 93.7 | % | $ | 25.50 | $ | 25.50 | $ | 4,019 | |||||||||||||||
Greenwood Blvd | 100.0 | % | 155 | 100.0 | % | $ | 22.75 | $ | 22.75 | $ | 3,527 | |||||||||||||||
San Diego, CA (10.0%) | Sorrento Mesa | 100.0 | % | 296 | 85.3 | % | $ | 25.36 | $ | 33.36 | $ | 6,402 | ||||||||||||||
Mission City | 100.0 | % | 286 | 96.9 | % | $ | 35.53 | $ | 35.53 | $ | 9,845 | |||||||||||||||
Dallas, TX (9.9%) | 190 Office Center | 100.0 | % | 303 | 89.5 | % | $ | 25.67 | $ | 25.67 | $ | 6,970 | ||||||||||||||
Lake Vista Pointe | 100.0 | % | 163 | 100.0 | % | $ | 16.00 | $ | 25.00 | $ | 2,613 | |||||||||||||||
2525 McKinnon | 100.0 | % | 111 | 92.5 | % | $ | 28.15 | $ | 45.15 | $ | 2,899 | |||||||||||||||
Portland, OR (5.6%) | AmberGlen | 76.0 | % | 201 | 96.9 | % | $ | 21.69 | $ | 24.28 | $ | 4,227 | ||||||||||||||
Cascade Station | 100.0 | % | 128 | 100.0 | % | $ | 26.61 | $ | 27.98 | $ | 3,393 | |||||||||||||||
Seattle, WA (3.5%) | Canyon Park | 100.0 | % | 207 | 100.0 | % | $ | 21.20 | $ | 29.20 | $ | 4,384 | ||||||||||||||
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Total / Weighted Average—December 31, 2019(3) |
| 5,829 | 91.9 | % | $ | 24.60 | $ | 27.54 | $ | 131,437 | ||||||||||||||||
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Metropolitan Area | Property | Economic Interest | NRA (000s Square Feet) | In Place Occupancy | Annualized Base Rent per Square Foot | Annualized Gross Rent per Square Foot (1) | Annualized Base Rent (2) ($000s) | |||||||||||||||||||
Phoenix, AZ (20.8% of NRA) | Pima Center | 100.0 | % | 272 | 67.9 | % | $ | 27.47 | $ | 27.47 | $ | 5,072 | ||||||||||||||
SanTan | 100.0 | % | 267 | 93.1 | % | $ | 29.02 | $ | 29.02 | $ | 7,199 | |||||||||||||||
5090 N. 40 th St | 100.0 | % | 175 | 94.4 | % | $ | 29.99 | $ | 29.99 | $ | 4,959 | |||||||||||||||
Camelback Square | 100.0 | % | 174 | 77.0 | % | $ | 31.86 | $ | 31.86 | $ | 4,270 | |||||||||||||||
The Quad | 100.0 | % | 163 | 97.4 | % | $ | 30.23 | $ | 30.55 | $ | 4,799 | |||||||||||||||
Papago Tech | 100.0 | % | 163 | 90.9 | % | $ | 22.73 | $ | 22.73 | $ | 3,362 | |||||||||||||||
Tampa, FL (17.9%) | Park Tower | 94.8 | % | 470 | 88.4 | % | $ | 26.44 | $ | 26.44 | $ | 10,983 | ||||||||||||||
City Center | 95.0 | % | 243 | 93.8 | % | $ | 26.57 | $ | 26.57 | $ | 6,046 | |||||||||||||||
Intellicenter | 100.0 | % | 204 | 100.0 | % | $ | 24.53 | $ | 24.53 | $ | 4,993 | |||||||||||||||
Carillon Point | 100.0 | % | 124 | 100.0 | % | $ | 28.80 | $ | 28.80 | $ | 3,577 | |||||||||||||||
Denver, CO (13.8%) | Denver Tech (3) | 100.0 | % | 381 | 89.7 | % | $ | 23.09 | $ | 27.16 | $ | 7,831 | ||||||||||||||
Circle Point | 100.0 | % | 272 | 81.6 | % | $ | 18.63 | $ | 32.63 | $ | 4,134 | |||||||||||||||
Superior Pointe | 100.0 | % | 152 | 94.4 | % | $ | 18.31 | $ | 30.77 | $ | 2,622 | |||||||||||||||
Orlando, FL (12.4%) | Florida Research Park (4) | 96.6 | % | 397 | 98.5 | % | $ | 23.74 | $ | 27.17 | $ | 9,266 | ||||||||||||||
Central Fairwinds | 97.0 | % | 168 | 85.5 | % | $ | 26.17 | $ | 26.17 | $ | 3,764 | |||||||||||||||
Greenwood Blvd | 100.0 | % | 155 | 100.0 | % | $ | 23.25 | $ | 23.25 | $ | 3,605 | |||||||||||||||
San Diego, CA (9.9%) | Sorrento Mesa | 100.0 | % | 296 | 85.3 | % | $ | 33.91 | $ | 41.91 | $ | 8,561 | ||||||||||||||
Mission City | 100.0 | % | 281 | 91.1 | % | $ | 36.41 | $ | 36.41 | $ | 9,333 | |||||||||||||||
Dallas, TX (9.9%) | 190 Office Center | 100.0 | % | 303 | 79.8 | % | $ | 26.13 | $ | 26.13 | $ | 6,327 | ||||||||||||||
Lake Vista Pointe | 100.0 | % | 163 | 100.0 | % | $ | 16.50 | $ | 25.50 | $ | 2,695 | |||||||||||||||
2525 McKinnon | 100.0 | % | 111 | 91.6 | % | $ | 28.61 | $ | 45.61 | $ | 2,919 | |||||||||||||||
Portland, OR (5.7%) | AmberGlen | 76.0 | % | 203 | 98.4 | % | $ | 22.42 | $ | 24.95 | $ | 4,468 | ||||||||||||||
Cascade Station | 100.0 | % | 128 | 100.0 | % | $ | 27.37 | $ | 28.74 | $ | 3,490 | |||||||||||||||
Seattle, WA (3.5%) | Canyon Park | 100.0 | % | 207 | 100.0 | % | $ | 21.84 | $ | 29.84 | $ | 4,515 | ||||||||||||||
Total / Weighted Average—Excluding Assets Held For Sale (5) | 5,472 | 90.6 | % | $ | 26.00 | $ | 29.07 | $ | 128,790 | |||||||||||||||||
Denver, CO (6.1%) | Cherry Creek (6) | 100.0 | % | 356 | 89.7 | % | $ | 19.58 | $ | 19.58 | $ | 6,245 | ||||||||||||||
Total / Weighted Average—December 31, 2020 (5) | 5,828 | 90.5 | % | $ | 25.61 | $ | 28.50 | $ | 135,035 | |||||||||||||||||
(1) | Annualized gross rent per square foot includes adjustment for estimated expense reimbursements of triple net leases for the year ended December 31, |
(2) | Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended December 31, |
(3) |
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Denver Tech is comprised of 7601 Tech |
Florida Research Park is comprised of FRP Collection and FRP Ingenuity Drive. |
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(5) | Averages weighted based on the property’s NRA, adjusted for occupancy. |
(6) | The Cherry Creek property was under contract for sale at December 31, 2020. |
(1) | Percentage represents the NRA of the leases divided by the total NRA of the portfolio, as of December 31, |
(2) |
1.3% represents the leases under contract but not yet in occupancy as of December 31, |
(3) | 6.0% represents the Cherry Creek property, which was under contract for sale at December 31, 2020. |
Year of Lease Expiration | Number of Leases Expiring | NRA of Expiring Leases (000s) | Percentage of NRA | Annualized Base Rent(1) (000s) | Percentage of Total Properties Rent | Annualized Base Rent per Leased Square Foot Expiring(2) | Annualized Base Rent (including Rent Abatement at Dec 31, 2019) | Annualized Base Rent per Leased Square Foot Expiring (Including Rent Abatement at Dec 31, 2019) | ||||||||||||||||||||||||
Vacant | — | 367 | 6.3 | % | — | — | — | — | — | |||||||||||||||||||||||
Contracted | — | 102 | 1.8 | % | — | — | — | — | — | |||||||||||||||||||||||
2020 | 51 | 420 | 7.2 | % | 10,589 | 8.1 | % | 25.21 | 10,540 | 25.10 | ||||||||||||||||||||||
2021 | 68 | 819 | 14.1 | % | 20,051 | 15.3 | % | 24.48 | 19,753 | 24.12 | ||||||||||||||||||||||
2022 | 54 | 730 | 12.5 | % | 18,979 | 14.4 | % | 26.00 | 18,877 | 25.86 | ||||||||||||||||||||||
2023 | 57 | 752 | 12.9 | % | 20,155 | 15.3 | % | 26.80 | 19,951 | 26.53 | ||||||||||||||||||||||
2024 | 51 | 575 | 9.9 | % | 14,591 | 11.1 | % | 25.38 | 14,371 | 24.99 | ||||||||||||||||||||||
2025 | 26 | 397 | 6.8 | % | 10,118 | 7.7 | % | 25.49 | 9,170 | 23.10 | ||||||||||||||||||||||
2026 | 13 | 700 | 12.0 | % | 15,157 | 11.5 | % | 21.65 | 15,157 | 21.65 | ||||||||||||||||||||||
2027 | 5 | 348 | 6.0 | % | 7,778 | 5.9 | % | 22.35 | 7,211 | 20.72 | ||||||||||||||||||||||
2028 | 11 | 259 | 4.4 | % | 5,892 | 4.5 | % | 22.75 | 5,745 | 22.18 | ||||||||||||||||||||||
2029 & Thereafter | 5 | 360 | 6.1 | % | 8,127 | 6.2 | % | 22.58 | 5,782 | 16.06 | ||||||||||||||||||||||
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Total/Weighted Average | 341 | 5,829 | 100.0 | % | $ | 131,437 | 100.0 | % | $ | 24.60 | $ | 126,557 | $ | 23.61 | ||||||||||||||||||
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Year of Lease Expiration | Number of Leases Expiring | NRA of Expiring Leases (000s) | Percentage of NRA | Annualized Base Rent (1 )(000s) | Percentage of Total Properties Rent | Annualized Base Rent per Leased Square Foot Expiring (2) | Annualized Base Rent (including Rent Abatement at Dec 31, 2020) | Annualized Base Rent per Leased Square Foot Expiring (Including Rent Abatement at Dec 31, 2020) | ||||||||||||||||||||||||
Vacant | — | 477 | 8.2 | % | — | — | — | — | — | |||||||||||||||||||||||
Contracted | — | 74 | 1.3 | % | — | — | — | — | — | |||||||||||||||||||||||
2021 | 60 | 500 | 8.6 | % | 15,806 | 11.7 | % | 31.61 | 15,806 | 31.61 | ||||||||||||||||||||||
2022 | 54 | 698 | 12.0 | % | 18,819 | 13.9 | % | 26.96 | 18,714 | 26.81 | ||||||||||||||||||||||
2023 | 65 | 800 | 13.7 | % | 21,961 | 16.3 | % | 27.45 | 21,559 | 26.95 | ||||||||||||||||||||||
2024 | 54 | 596 | 10.2 | % | 15,753 | 11.7 | % | 26.43 | 15,587 | 26.15 | ||||||||||||||||||||||
2025 | 35 | 455 | 7.8 | % | 12,236 | 9.1 | % | 26.89 | 12,213 | 26.84 | ||||||||||||||||||||||
2026 | 23 | 719 | 12.3 | % | 16,189 | 12.0 | % | 22.52 | 15,832 | 22.02 | ||||||||||||||||||||||
2027 | 11 | 528 | 9.1 | % | 10,652 | 7.9 | % | 20.17 | 10,035 | 19.01 | ||||||||||||||||||||||
2028 | 10 | 257 | 4.4 | % | 6,015 | 4.5 | % | 23.40 | 6,015 | 23.40 | ||||||||||||||||||||||
2029 | 3 | 230 | 3.9 | % | 5,157 | 3.8 | % | 22.42 | 4,202 | 18.27 | ||||||||||||||||||||||
2030 & Thereafter | 8 | 494 | 8.5 | % | 12,447 | 9.1 | % | 25.20 | 10,886 | 22.04 | ||||||||||||||||||||||
Total / Weighted Average | 323 | 5,828 | 100.0 | % | $ | 135,035 | 100.0 | % | $ | 25.61 | $ | 130,849 | $ | 24.80 | ||||||||||||||||||
(1) | Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month of December 31, |
(2) | Annualized rent per leased square foot expiring reflects rental payments for the month of December 31, |
31
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
32
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
From time to time, our board of directors may approve the repurchase of our shares of common stock or Series A Preferred Stock, par value $0.01 per share, through open market purchases or otherwise.
33
Issuer Purchases of Equity Securities | ||||||||||||||||
Period | Total Number of Shares of Common Stock Purchased | Average Price Paid per Share of Common Stock Repurchased | Total Number of Shares of Common Stock Purchased as Part of Share Repurchase Plans | Approximate Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Share Repurchase Plans (1) (thousands) | ||||||||||||
October 1 – 31, 2020 | — | $ | — | — | $ | 50,000 | ||||||||||
November 1 – 30, 2020 | — | — | — | 50,000 | ||||||||||||
December 1 – 31, 2020 | — | — | — | 50,000 | ||||||||||||
Total | — | $ | — | — | $ | 50,000 | ||||||||||
(1) | Represents approximate dollar value of shares that could have been purchased under the plans in effect at the end of the month. |
34
Years Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||
Rental and other revenues | $ | 156,297 | $ | 129,484 | $ | 106,487 | $ | 72,461 | $ | 55,052 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Property operating expenses | 57,316 | 49,872 | 42,886 | 28,305 | 20,420 | |||||||||||||||
General and administrative | 11,066 | 8,137 | 6,792 | 6,429 | 3,728 | |||||||||||||||
Depreciation and amortization | 59,159 | 52,352 | 41,594 | 30,178 | 21,624 | |||||||||||||||
Impairment of real estate | — | 3,497 | — | — | — | |||||||||||||||
Acquisition costs | — | — | — | 692 | 2,959 | |||||||||||||||
Base management fee | — | — | — | 109 | 1,302 | |||||||||||||||
External advisor acquisition | — | — | — | 7,045 | 492 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total operating expenses | 127,541 | 113,858 | 91,272 | 72,758 | 50,525 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating income/(loss) | 28,756 | 15,626 | 15,215 | (297 | ) | 4,527 | ||||||||||||||
Interest expense, net | (29,726 | ) | (23,937 | ) | (20,173 | ) | (14,761 | ) | (11,353 | ) | ||||||||||
Net gain on sale of real estate property | 3,412 | 46,980 | 12,116 | 15,934 | — | |||||||||||||||
Change in fair value of contingent consideration | — | — | 2,000 | — | — | |||||||||||||||
Change in fair value ofearn-out | — | — | — | (500 | ) | (841 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income/(loss) | 2,442 | 38,669 | 9,158 | 376 | (7,667 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less: | ||||||||||||||||||||
Net income attributable tonon-controlling interests in properties | (644 | ) | (501 | ) | (3,402 | ) | (354 | ) | (500 | ) | ||||||||||
Net (income)/loss attributable to Operating Partnership unitholders’non-controlling interests | — | — | — | (865 | ) | 1,576 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income/(loss) attributable to the Company | 1,798 | 38,168 | 5,756 | (843 | ) | (6,591 | ) | |||||||||||||
Preferred stock distributions | (7,420 | ) | (7,420 | ) | (7,411 | ) | (1,781 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net (loss)/income attributable to common stockholders | $ | (5,622 | ) | $ | 30,748 | $ | (1,655) | $ | (2,624) | $ | (6,591) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net (loss)/income per common share—basic and diluted | $ | (0.13) | $ | 0.82 | $ | (0.05) | $ | (0.13) | $ | (0.53) | ||||||||||
Dividend distributions declared per common share | $ | 0.94 | $ | 0.94 | $ | 0.94 | $ | 0.94 | $ | 0.94 | ||||||||||
Balance Sheet Data (as of end of period): | ||||||||||||||||||||
Real estate properties, net of accumulated depreciation | $ | 1,007,338 | $ | 935,163 | $ | 728,067 | $ | 550,324 | $ | 354,880 | ||||||||||
Total assets | 1,228,474 | 1,100,431 | 896,489 | 661,494 | 440,207 | |||||||||||||||
Debt | 607,250 | 645,354 | 489,509 | 370,057 | 341,278 | |||||||||||||||
Total liabilities | 679,342 | 702,054 | 536,657 | 405,435 | 366,487 | |||||||||||||||
Total stockholders’ equity | 548,008 | 397,413 | 359,624 | 254,202 | 65,845 | |||||||||||||||
Non-controlling interests in properties | 1,124 | 964 | 208 | 1,749 | (675 | ) | ||||||||||||||
Operating Partnership unitholders’non-controlling interests | — | — | — | 108 | 8,550 | |||||||||||||||
Total equity | 549,132 | 398,377 | 359,832 | 256,059 | 73,720 | |||||||||||||||
Other Data | ||||||||||||||||||||
Cash flows from/(to) | ||||||||||||||||||||
Operating activities | $ | 49,499 | $ | 42,187 | $ | 36,553 | $ | 19,147 | $ | 14,163 | ||||||||||
Investing activities | (81,922 | ) | (197,309 | ) | (243,298 | ) | (216,235 | ) | (175,471 | ) | ||||||||||
Financing activities | 86,801 | 153,253 | 212,108 | 203,425 | 138,667 |
35
Years Ended December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||
Rental and other revenues | $ | 160,840 | $ | 156,297 | $ | 129,484 | $ | 106,487 | $ | 72,461 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Property operating expenses | 58,312 | 57,316 | 49,872 | 42,886 | 28,305 | |||||||||||||||
General and administrative | 10,690 | 11,066 | 8,137 | 6,792 | 6,429 | |||||||||||||||
Depreciation and amortization | 60,367 | 59,159 | 52,352 | 41,594 | 30,178 | |||||||||||||||
Impairment of real estate | — | — | 3,497 | — | — | |||||||||||||||
Acquisition costs | — | — | — | — | 692 | |||||||||||||||
Base management fee | — | — | — | — | 109 | |||||||||||||||
External advisor acquisition | — | — | — | — | 7,045 | |||||||||||||||
Total operating expenses | 129,369 | 127,541 | 113,858 | 91,272 | 72,758 | |||||||||||||||
Operating income/(loss) | 31,471 | 28,756 | 15,626 | 15,215 | (297 | ) | ||||||||||||||
Interest expense, net | (27,689 | ) | (29,726 | ) | (23,937 | ) | (20,173 | ) | (14,761 | ) | ||||||||||
Net gain on sale of real estate property | 1,347 | 3,412 | 46,980 | 12,116 | 15,934 | |||||||||||||||
Change in fair value of contingent consideration | — | — | — | 2,000 | — | |||||||||||||||
Change in fair value of earn-out | — | — | — | — | (500 | ) | ||||||||||||||
Net income | 5,129 | 2,442 | 38,669 | 9,158 | 376 | |||||||||||||||
Less: | ||||||||||||||||||||
Net income attributable to non-controlling interests in properties | (602 | ) | (644 | ) | (501 | ) | (3,402 | ) | (354 | ) | ||||||||||
Net income attributable to Operating Partnership unitholders’ non-controlling interests | — | — | — | — | (865 | ) | ||||||||||||||
Net income/(loss) attributable to the Company | 4,527 | 1,798 | 38,168 | 5,756 | (843 | ) | ||||||||||||||
Preferred stock distributions | (7,420 | ) | (7,420 | ) | (7,420 | ) | (7,411 | ) | (1,781 | ) | ||||||||||
Net (loss)/income attributable to common stockholders | $ | (2,893 | ) | $ | (5,622 | ) | $ | 30,748 | $ | (1,655 | ) | $ | (2,624 | ) | ||||||
Net (loss)/income per common share—basic and diluted | $ | (0.06 | ) | $ | (0.13 | ) | $ | 0.82 | $ | (0.05 | ) | $ | (0.13 | ) | ||||||
Dividend distributions declared per common share | $ | 0.60 | $ | 0.94 | $ | 0.94 | $ | 0.94 | $ | 0.94 | ||||||||||
Balance Sheet Data (as of end of period) | ||||||||||||||||||||
Real estate properties, net of accumulated depreciation | $ | 955,589 | $ | 1,007,338 | $ | 935,163 | $ | 728,067 | $ | 550,324 | ||||||||||
Total assets | 1,157,292 | 1,228,474 | 1,100,431 | 896,489 | 661,494 | |||||||||||||||
Debt | 677,242 | 607,250 | 645,354 | 489,509 | 370,057 | |||||||||||||||
Total liabilities | 739,417 | 679,342 | 702,054 | 536,657 | 405,435 | |||||||||||||||
Total stockholders’ equity | 416,926 | 548,008 | 397,413 | 359,624 | 254,202 | |||||||||||||||
Non-controlling interests in properties | 949 | 1,124 | 964 | 208 | 1,749 | |||||||||||||||
Operating Partnership unitholders’ non-controlling interests | — | — | — | — | 108 | |||||||||||||||
Total equity | 417,875 | 549,132 | 398,377 | 359,832 | 256,059 | |||||||||||||||
Other Data | ||||||||||||||||||||
Cash flows from/(to): | ||||||||||||||||||||
Operating activities | $ | 59,923 | $ | 49,499 | $ | 42,187 | $ | 36,553 | $ | 19,147 | ||||||||||
Investing activities | (27,803 | ) | (81,922 | ) | (197,309 | ) | (243,298 | ) | (216,235 | ) | ||||||||||
Financing activities | (73,692 | ) | 86,801 | 153,253 | 212,108 | 203,425 |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2019. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20192020 and December 31, 2018.
26, 2020.
36
On February 25, 2019, the Company, through a wholly owned subsidiary of the Operating Partnership, closed on the acquisition of Canyon Park, a 206,771 square foot property in Seattle, Washington, for $63.0 million.
On May 7, 2019, the Company sold the 10455 Pacific Center building of the Sorrento Mesa property in San Diego, California for $16.5$6.5 million, resulting in an aggregate gain of $0.5$1.3 million net of disposal-related costs and taxes paid by our taxable REIT subsidiary, which has been classified as net gain on sale of real estate property in the consolidated statements of operations.
On June 13, 2019, the Company, through a wholly owned subsidiary of the Operating Partnership, closed on the acquisition of Cascade Station, a 127,508 square foot property in Portland, Oregon, for $32.5 million.
On September 5, 2019, the Company, through a wholly owned subsidiary of the Operating Partnership, closed on the acquisition of 7601 Tech, a 191,368 square foot property in Denver, Colorado, for $48.8 million.
On October 7, 2019, the Company completed a public offering pursuant to which the Company sold 6,900,000 shares of its common stock, inclusive of the overallotment option. The Company raised $95.6 million in gross proceeds, resulting in net proceeds to the Company of approximately $94.1 million after deducting underwriting discounts and offering expenses.
On December 12, 2019, the Company sold the Logan Tower property in Denver, Colorado for $12.6 million, resulting in an aggregate gain of $2.9 million net of disposal-related costs, which has been classified as net gain on sale of real estate property in the consolidated statements of operations.
During the year ended
Indebtedness
On February 25, 2019, the Company closed on a $41.0 million loan secured by a first mortgage lien on the Canyon Park property in Seattle, Washington. The mortgage loan anticipated repayment date is March 2027. Interest is payable at a fixed rate of 4.30% per annum.
On June 13, 2019, the Company assumed a $22.5 million loan secured by a first mortgage lien on the Cascade Station property in Portland, Oregon. The mortgage loan matures in May 2024. Interest is payable at a fixed rate of 4.55% per annum.
On August 30, 2019, the Company closed on a loan modification agreement reducing the interest rate from 4.60% to 3.15% per annum on the Greenwood Blvd property in Orlando, Florida. The modification has the same maturity of December 2025 and loan amount of $22.4 million as the original agreement.
On August 30, 2019, the Company closed on a loan modification agreement reducing the interest rate from 3.85% to 3.10% per annum on the FRP Collection property in Orlando, Florida. The modification has the same maturity of September 2023 and loan amount of $30.9 million as the original agreement.
On August 30, 2019, the Company closed on a loan modification agreement reducing the interest rate from 3.50% to 3.10% per annum on the Carillon property in Tampa, Florida. The modification has the same maturity of October 2023 and loan amount of $17.1 million as the original agreement.
On September 24, 2019, the Company closed on a loan modification agreement reducing the interest rate from 4.00% to 3.15% per annum on the Central Fairwinds property in Orlando, Florida. The modification has the same maturity of June 2024 and loan amount of $18.0 million as the original agreement.
37
On September 27, 2019, the Company entered into a five-year $50 million term loan (the “Term Loan”), increasing its authorized borrowingsoutstanding under the Company’s unsecured credit facility (the “Unsecured Credit Facility”) from $250and a $7.0 million letter of credit to $300 million. Borrowings undersatisfy escrow requirements for a mortgage lender.
For additional information regarding these mortgage loans, the Unsecured Credit Facility, the Term Loan and the Interest Rate Swap,, please refer to “Liquidity and Capital Resources” below.
Our target markets are attractive, among other reasons, because we believe that ownership is often concentrated among local real estate operators that typically do not benefit from the same access to capital as public REITs and there is a relatively low level of participation of large institutional investors. We believe that these factors result in attractive pricing levels and risk-adjusted returns. The long-term impact of the
38
to maintain or increase rental rates at our properties. We believe that the average rental rates for our portfolio of properties are generally
The
In addition, it is uncertain and impossible to estimate the potential impact that the
39
case on their fair values. For acquisitions that do not meet the business combination accounting criteria, these are accounted for as asset acquisitions. The Company allocates the cost of the acquisition, which includes any associated acquisition costs to individual assets and liabilities assumed on a relative fair value basis. Also,
40
Adopted in the Current Year
Effective January 1, 2019, the Company adopted FASB ASU2016-02, Leases (ASC 842) and elected the effective date method for the transition. The Company elected the following practical expedients:
Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustmentexceptions to the opening balance of retained earnings. Financial informationguidance on contract modifications and disclosures for periods before January 1, 2019 werehedge accounting to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. For contracts affected by reference rate reform, if certain criteria are met, companies can elect to not updated.
Package of practicalremeasure contracts at the modification date or reassess a previous accounting conclusion. Companies can also elect various optional expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Companythat would allow them to continue classifying its leases at transition in substantially the same manner.
Single component practical expedient – permits the Company to not separate lease andnon-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the consolidated statement of operations.
Land easement practical expedient – permits the Company not to reassess under the new standard its prior conclusions about land easements.
41
Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.
Lessor Accounting
Theapplying hedge accounting for lessors underhedging relationships affected by reference rate reform if certain criteria are met. Further, in January 2021, the new standard remained relatively unchanged with a few targeted updates impactingFinancial Accounting Standards Board issued Accounting Standards Update (“ASU”)
Lessee Accounting
optional use through December 31, 2022. The new standard requires lesseesapplies prospectively to recognizecontract modifications and hedging relationships and may be elected over time as reference rate reform activities occur. The Company has not yet adopted the standard and continues to evaluate the impact of ASU
modification guidance to the applicable contracts.
2019
the year ended December 31, 2019.
42
or 12%1%, to $129.4 million for the year ended December 31, 2020, from $127.5 million for the year ended December 31, 2019, from $113.9 million for the year ended December 31, 2018, primarily due to the acquisitions described above.2019. Total operating expenses increased by $1.7$2.8 million, $4.1 million, $2.1 million, $2.9 million, $4.2 million, $2.4 million, $1.5$1.2 million and $1.3$0.8 million, respectively, from the acquisitions of Pima Center, Circle Point, The Quad, Greenwood Blvd, Camelback Square, Canyon Park,7601 Tech, Cascade Station and 7601 TechCanyon Park properties. Park Tower operating expenses also increased by $0.8 million due to the higher occupancy at that property. Washington Group PlazaPartially offsetting these increases, total operating expenses decreased by $0.8$1.2 million, due to its sale in March 2018 and Plaza 25 operating expenses decreased by $6.4$0.2 million, due to its sale in February 2019. Sorrento Mesa decreased by $3.0 millionrespectively, due to the sale of the 10455 Pacific Center buildingLogan Tower and Plaza 25 properties. Operating expenses at our Camelback Square and 5090 N. 40
year ended December 31, 2019.
and stock-based compensation costs for the year ended December 31, 2020.
Impairment of Real Estate. Impairment of real estate Depreciation and amortization was nilalso lower at Camelback Square and 5090 N. 40
43
Other Expense (Income)
Interest Expense. Interest expense increased $5.8 million, or 24%, to2020, from $29.7 million for the year ended December 31, 2019, from $23.9 million2019. The decrease was primarily attributable to a decrease of interest expense on our Unsecured Credit Facility (as defined herein) primarily as a result of lower floating interest rates for the year ended December 31, 2018. The increase was primarily due2020 compared to interest expense related to acquisitions. Interest expense for the Circle Point, The Quad, Greenwood Blvd, Canyon Park and Cascade Station property level debt increased by $1.2 million, $0.9 million, $1.0 million, $1.5 million and $0.5 million, respectively, and the interest on our Unsecured Credit Facility increased by $2.1 million as a result of acquisitions funded by borrowings thereunder, net of the repayments resulting from the proceeds of the equity raises during the year. These increases were partially offset by decreases of $0.2 million and $0.7 million, of debt of the Washington Group Plaza and Plaza 25, respectively, as a result of the sale of those properties and the extinguishment of its property level debt.
year ended December 31, 2019.
$0.5 million.
2019
of real estate and lower proceeds from the sale of real estate during the year ended December 31, 2020.
2019.
2020.
44
Company’s consolidated leverage ratio. As of December 31, 2019,2020, we had no amountsapproximately $75.0 million outstanding under our Unsecured Credit Facility and approximately $7.0 million of letters of credit to satisfy escrow requirements for mortgage lenders.
On October 7, 2019, the Company completed a public offering pursuant to which the Company sold 6,900,000 shares of its common stock, inclusive of the overallotment option. The Company raised $95.6 million in aggregate gross proceeds, resulting in aggregate net proceeds to the Company of approximately $94.1 million after deducting underwriting discounts and offering expenses.
45
equity and debt securities. We also may fund property acquisitions and
2020
Property | December 31, 2019 | Interest Rate as of December 31, 2019(1) | Maturity | |||||||||
Unsecured Credit Facility(3)(4) | $ | — | LIBOR +1.40%(2) | March 2022 | ||||||||
Term Loan(4) | 50,000 | LIBOR +1.25%(2) | September 2024 | |||||||||
Midland Life Insurance(5) | 85,293 | 4.34 | May 2021 | |||||||||
Mission City | 47,000 | 3.78 | November 2027 | |||||||||
Canyon Park(6) | 40,950 | 4.30 | March 2027 | |||||||||
190 Office Center | 40,854 | 4.79 | October 2025 | |||||||||
Circle Point | 39,650 | 4.49 | September 2028 | |||||||||
SanTan | 34,053 | 4.56 | March 2027 | |||||||||
Intellicenter | 32,971 | 4.65 | October 2025 | |||||||||
The Quad | 30,600 | 4.20 | September 2028 | |||||||||
FRP Collection(7) | 28,969 | 3.10 | September 2023 | |||||||||
2525 McKinnon | 27,000 | 4.24 | April 2027 | |||||||||
Greenwood Blvd(7) | 22,425 | 3.15 | December 2025 | |||||||||
Cascade Station | 22,304 | 4.55 | May 2024 | |||||||||
5090 N 40th St | 22,000 | 3.92 | January 2027 | |||||||||
AmberGlen | 20,000 | 3.69 | May 2027 | |||||||||
Lake Vista Pointe | 17,717 | 4.28 | August 2024 | |||||||||
Central Fairwinds(8) | 17,534 | 3.15 | June 2024 | |||||||||
FRP Ingenuity Drive | 17,000 | 4.44 | December 2024 | |||||||||
Carillon Point(7) | 15,972 | 3.10 | October 2023 | |||||||||
|
| |||||||||||
Total principal | 612,292 | |||||||||||
Deferred financing costs, net | (5,660 | ) | ||||||||||
Unamortized fair value adjustments | 618 | |||||||||||
|
| |||||||||||
Total | $ | 607,250 | ||||||||||
|
|
Property | December 31, 2020 | Interest Rate as of December 31, 2020 (1) | Maturity | |||||||||
Unsecured Credit Facility (3)(4) | $ | 75,000 | LIBOR +1.50% (2) | March 2022 | ||||||||
Term Loan (4) | 50,000 | LIBOR +1.40% (2) | September 2024 | |||||||||
Midland Life Insurance (5) | 83,537 | 4.34% | May 2021 | |||||||||
Mission City | 47,000 | 3.78% | November 2027 | |||||||||
Canyon Park (6) | 40,950 | 4.30% | March 2027 | |||||||||
190 Office Center | 40,236 | 4.79% | October 2025 | |||||||||
Circle Point | 39,650 | 4.49% | September 2028 | |||||||||
SanTan | 33,444 | 4.56% | March 2027 | |||||||||
Intellicenter | 32,442 | 4.65% | October 2025 | |||||||||
The Quad | 30,600 | 4.20% | September 2028 | |||||||||
FRP Collection | 28,263 | 3.10% | September 2023 | |||||||||
2525 McKinnon | 27,000 | 4.24% | April 2027 | |||||||||
Greenwood Blvd | 22,425 | 3.15% | December 2025 | |||||||||
Cascade Station | 21,952 | 4.55% | May 2024 | |||||||||
5090 N. 40 th St | 21,640 | 3.92% | January 2027 | |||||||||
AmberGlen | 20,000 | 3.69% | May 2027 | |||||||||
Lake Vista Pointe | 17,375 | 4.28% | August 2024 | |||||||||
Central Fairwinds | 17,127 | 3.15% | June 2024 | |||||||||
FRP Ingenuity Drive | 16,736 | 4.44% | December 2024 | |||||||||
Carillon Point | 15,585 | 3.10% | October 2023 | |||||||||
Total Principal | 680,962 | |||||||||||
Deferred financing costs, net | (4,195 | ) | ||||||||||
Unamortized fair value adjustments | 475 | |||||||||||
Total | $ | 677,242 | ||||||||||
(1) | All interest rates are fixed interest rates with the exception of the Unsecured Credit Facility (“Unsecured Credit Facility”) and the Term Loan (as defined herein), as explained in footnotes 3 and 4 below. |
(2) | As of December 31, one-month LIBOR rate was |
(3) | In March 2018, the Company entered into the Credit Agreement for |
46
(4) | In September 2019, the Company entered into a five-year $50 million Term Loan (the “Term Loan”) increasing its authorized borrowings under the Unsecured Credit Facility from $250 million to $300 million. Borrowings under the |
Term Loan bear interest at a rate equal to the LIBOR rate plus a margin between 125 to 215 basis points depending upon the Company’s consolidated leverage ratio. In conjunction with the Term Loan, the Company also entered into 30-day LIBOR payments. |
(5) | The mortgage loan is cross-collateralized by Cherry Creek, City Center and 7595 Tech (formerly “DTC Crossroads”). |
(6) | The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five year “on the run” treasury reported by Bloomberg market data service plus 450 basis points. |
|
|
Payments Due by Period(in thousands) | ||||||||||||||||||||
Contractual Obligations | Total | 2020 | 2021-2022 | 2023-2024 | More than 5 years | |||||||||||||||
Principal payments on mortgage loans | $ | 612,292 | $ | 6,279 | $ | 95,885 | $ | 173,253 | $ | 336,875 | ||||||||||
Interest payments(1) | 135,458 | 24,525 | 42,527 | 36,958 | 31,448 | |||||||||||||||
Tenant-related commitments | 10,509 | 9,140 | 1,369 | — | — | |||||||||||||||
Lease obligations | 30,173 | 560 | 1,669 | 1,264 | 26,680 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 788,432 | $ | 40,504 | $ | 141,450 | $ | 211,475 | $ | 395,003 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total | 2021 | 2022-2023 | 2024-2025 | More than 5 years | |||||||||||||||
Principal payments on mortgage loans | $ | 680,962 | $ | 89,304 | $ | 130,058 | $ | 216,761 | $ | 244,839 | ||||||||||
Interest payments (1) | 112,754 | 23,447 | 40,655 | 30,830 | 17,822 | |||||||||||||||
Tenant-related commitments | 9,663 | 9,663 | — | — | — | |||||||||||||||
Lease obligations | 29,348 | 579 | 1,492 | 1,193 | 26,084 | |||||||||||||||
Total | $ | 832,727 | $ | 122,993 | $ | 172,205 | $ | 248,784 | $ | 288,745 | ||||||||||
(1) | Contracted interest on the floating rate |
2019,2020, we did not have any91.8%81.6% of our outstanding consolidated indebtedness had a fixed contractual interest rate at December 31, 2019. The entire balance2020. A portion of the variable rate debtbalance relates to the Term Loan against which we have applied the Interest Rate Swap. The Interest Rate Swap effectively fixes the100%89.0% of our debt hadwas fixed rate debt as of December 31, 2019.47
Our consolidated financial statements and supplementary datathis Item 8 areis included as a separate section ofin this Annual Reportannual report on Form10-K commencing on page 52 and are incorporated herein by reference.
48
the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
2020.
2020.
|
On June 16, 2017, the Company and the Operating Partnership previously entered into the equity distribution agreements (collectively, the “Original Agreements”) with each
the Original Agreements (as amended by the Amendments, the “EDAs”) with each of the Sales Agents to increase the number of shares of common stock issuable under the ATM Program. During the year ended December 31, 2019, the Company issued 8,000,000 shares of common stock under the ATM Program. The Company raised $106.5 million in aggregate gross proceeds, resulting in aggregate net proceeds to the Company of approximately $104.8 million after deducting sales commissions and offering expenses. During the year ended December 31, 2018, the Company issued 3,410,802 shares of common stock under the ATM Program pursuant to the Original Agreements. The Company raised $43.6 million in gross proceeds, resulting in net proceeds to us of approximately $42.9 million after deducting sales commissions and offering expenses. The Company terminated the EDAs effective February 25, 2020.
50
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 10.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Page | ||||
52
Opinion on the Consolidated Financial Statements
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
53
54
55
December 31, | ||||||||
2019 | 2018 | |||||||
Assets | ||||||||
Real estate properties | ||||||||
Land | $ | 230,034 | $ | 223,789 | ||||
Building and improvement | 784,636 | 704,113 | ||||||
Tenant improvement | 94,218 | 77,426 | ||||||
Furniture, fixtures and equipment | 285 | 319 | ||||||
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|
| |||||
1,109,173 | 1,005,647 | |||||||
Accumulated depreciation | (101,835 | ) | (70,484 | ) | ||||
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|
|
| |||||
1,007,338 | 935,163 | |||||||
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|
|
| |||||
Cash and cash equivalents | 70,129 | 16,138 | ||||||
Restricted cash | 17,394 | 17,007 | ||||||
Rents receivable, net | 32,112 | 26,095 | ||||||
Deferred leasing costs, net | 12,393 | 10,402 | ||||||
Acquired lease intangible assets, net | 67,533 | 75,501 | ||||||
Other assets | 17,061 | 2,755 | ||||||
Assets held for sale | 4,514 | 17,370 | ||||||
|
|
|
| |||||
Total Assets | $ | 1,228,474 | $ | 1,100,431 | ||||
|
|
|
| |||||
Liabilities and Equity | ||||||||
Liabilities: | ||||||||
Debt | $ | 607,250 | $ | 645,354 | ||||
Accounts payable and accrued liabilities | 28,786 | 25,892 | ||||||
Deferred rent | 6,593 | 5,331 | ||||||
Tenant rent deposits | 5,658 | 4,564 | ||||||
Acquired lease intangible liabilities, net | 8,194 | 8,887 | ||||||
Other liabilities | 22,794 | 11,148 | ||||||
Liabilities related to assets held for sale | 67 | 878 | ||||||
|
|
|
| |||||
Total Liabilities | 679,342 | 702,054 | ||||||
|
|
|
| |||||
Commitments and Contingencies (Note 10) | ||||||||
Equity: | ||||||||
6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding as of December 31, 2019 and 2018 respectively | 112,000 | 112,000 | ||||||
Common stock, $0.01 par value, 100,000,000 shares authorized, 54,591,047 and 39,544,073 shares issued and outstanding as of December 31, 2019 and 2018 respectively | 545 | 395 | ||||||
Additionalpaid-in capital | 577,131 | 377,126 | ||||||
Accumulated deficit | (142,383 | ) | (92,108 | ) | ||||
Accumulated other comprehensive income | 715 | — | ||||||
|
|
|
| |||||
Total Stockholders’ Equity | 548,008 | 397,413 | ||||||
Non-controlling interests in properties | 1,124 | 964 | ||||||
|
|
|
| |||||
Total Equity | 549,132 | 398,377 | ||||||
|
|
|
| |||||
Total Liabilities and Equity | $ | 1,228,474 | $ | 1,100,431 | ||||
|
|
|
|
December 31, 2020 | December 31, 2019 | |||||||
Assets | ||||||||
Real estate properties | ||||||||
Land | $ | 204,289 | $ | 230,034 | ||||
Building and improvement | 777,184 | 784,636 | ||||||
Tenant improvement | 104,694 | 94,218 | ||||||
Furniture, fixtures and equipment | 642 | 285 | ||||||
1,086,809 | 1,109,173 | |||||||
Accumulated depreciation | (131,220 | ) | (101,835 | ) | ||||
955,589 | 1,007,338 | |||||||
Cash and cash equivalents | 25,305 | 70,129 | ||||||
Restricted cash | 20,646 | 17,394 | ||||||
Rents receivable, net | 32,968 | 32,112 | ||||||
Deferred leasing costs, net | 16,829 | 12,393 | ||||||
Acquired lease intangible assets, net | 44,143 | 67,533 | ||||||
Other assets | 15,758 | 17,061 | ||||||
Assets held for sale | 46,054 | 4,514 | ||||||
Total Assets | $ | 1,157,292 | $ | 1,228,474 | ||||
Liabilities and Equity | ||||||||
Liabilities: | ||||||||
Debt | $ | 677,242 | $ | 607,250 | ||||
Accounts payable and accrued liabilities | 25,414 | 28,786 | ||||||
Deferred rent | 7,295 | 6,593 | ||||||
Tenant rent deposits | 4,801 | 5,658 | ||||||
Acquired lease intangible liabilities, net | 6,035 | 8,194 | ||||||
Other liabilities | 18,099 | 22,794 | ||||||
Liabilities related to assets held for sale | 531 | 67 | ||||||
Total Liabilities | 739,417 | 679,342 | ||||||
Commitments and Contingencies (Note 10) | 0 | 0 | ||||||
Equity: | ||||||||
6.625% Series A Preferred stock, $0.01 par value per share, 5,600,000 shares authorized, 4,480,000 issued and outstanding as of December 31, 2020 and 2019 | 112,000 | 112,000 | ||||||
Common stock, $0.01 par value, 100,000,000 shares authorized, 43,397,117 and 54,591,047 shares issued and outstanding as of December 31, 2020 and 2019 respectively | 433 | 545 | ||||||
Additional paid-in capital | 479,411 | 577,131 | ||||||
Accumulated deficit | (172,958 | ) | (142,383 | ) | ||||
Accumulated other comprehensive (loss)/income | (1,960 | ) | 715 | |||||
Total Stockholders’ Equity | 416,926 | 548,008 | ||||||
Non-controlling interests in properties | 949 | 1,124 | ||||||
Total Equity | 417,875 | 549,132 | ||||||
Total Liabilities and Equity | $ | 1,157,292 | $ | 1,228,474 | ||||
Subsequent Events (Note 13) |
56
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Rental and other revenues | $ | 156,297 | $ | 129,484 | $ | 106,487 | ||||||
Operating expenses: | ||||||||||||
Property operating expenses | 57,316 | 49,872 | 42,886 | |||||||||
General and administrative | 11,066 | 8,137 | 6,792 | |||||||||
Depreciation and amortization | 59,159 | 52,352 | 41,594 | |||||||||
Impairment of real estate | — | 3,497 | — | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 127,541 | 113,858 | 91,272 | |||||||||
|
|
|
|
|
| |||||||
Operating income | 28,756 | 15,626 | 15,215 | |||||||||
Interest expense: | ||||||||||||
Contractual interest expense | (28,401 | ) | (22,316 | ) | (18,721 | ) | ||||||
Amortization of deferred financing costs and debt fair value | (1,325 | ) | (1,621 | ) | (1,452 | ) | ||||||
|
|
|
|
|
| |||||||
(29,726 | ) | (23,937 | ) | (20,173 | ) | |||||||
Net gain on sale of real estate property | 3,412 | 46,980 | 12,116 | |||||||||
Change in fair value of contingent consideration | — | — | 2,000 | |||||||||
|
|
|
|
|
| |||||||
Net income | 2,442 | 38,669 | 9,158 | |||||||||
Less: | ||||||||||||
Net income attributable tonon-controlling interests in properties | (644 | ) | (501 | ) | (3,402 | ) | ||||||
|
|
|
|
|
| |||||||
Net income attributable to the Company | 1,798 | 38,168 | 5,756 | |||||||||
Preferred stock distributions | (7,420 | ) | (7,420 | ) | (7,411 | ) | ||||||
|
|
|
|
|
| |||||||
Net (loss)/income attributable to common stockholders | $ | (5,622 | ) | $ | 30,748 | $ | (1,655 | ) | ||||
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|
|
|
|
| |||||||
Net (loss)/income per common share: | ||||||||||||
Basic | $ | (0.13 | ) | $ | 0.82 | $ | (0.05 | ) | ||||
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|
|
|
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| |||||||
Diluted | $ | (0.13 | ) | $ | 0.82 | $ | (0.05 | ) | ||||
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| |||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 43,997 | 37,321 | 30,198 | |||||||||
|
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|
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| |||||||
Diluted | 43,997 | 37,670 | 30,198 | |||||||||
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|
|
|
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| |||||||
Dividend distributions declared per common share | $ | 0.940 | $ | 0.940 | $ | 0.940 | ||||||
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|
|
|
|
|
Years Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Rental and other revenues | $ | 160,840 | $ | 156,297 | $ | 129,484 | ||||||
Operating expenses: | ||||||||||||
Property operating expenses | 58,312 | 57,316 | 49,872 | |||||||||
General and administrative | 10,690 | 11,066 | 8,137 | |||||||||
Depreciation and amortization | 60,367 | 59,159 | 52,352 | |||||||||
Impairment of real estate | — | — | 3,497 | |||||||||
Total operating expenses | 129,369 | 127,541 | 113,858 | |||||||||
Operating income | 31,471 | 28,756 | 15,626 | |||||||||
Interest expense: | ||||||||||||
Contractual interest expense | (26,363 | ) | (28,401 | ) | (22,316 | ) | ||||||
Amortization of deferred financing costs and debt fair value | (1,326 | ) | (1,325 | ) | (1,621 | ) | ||||||
(27,689 | ) | (29,726 | ) | (23,937 | ) | |||||||
Net gain on sale of real estate property | 1,347 | 3,412 | 46,980 | |||||||||
Net income | 5,129 | 2,442 | 38,669 | |||||||||
Less: | ||||||||||||
Net income attributable to non-controlling interests in properties | (602 | ) | (644 | ) | (501 | ) | ||||||
Net income attributable to the Company | 4,527 | 1,798 | 38,168 | |||||||||
Preferred stock distributions | (7,420 | ) | (7,420 | ) | (7,420 | ) | ||||||
Net (loss)/income attributable to common stockholders | $ | (2,893 | ) | $ | (5,622) | $ | 30,748 | |||||
Net (loss)/income per common share: | ||||||||||||
Basic | $ | (0.06 | ) | $ | (0.13 | ) | $ | 0.82 | ||||
Diluted | $ | (0.06 | ) | $ | (0.13 | ) | $ | 0.82 | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 47,223 | 43,997 | 37,321 | |||||||||
Diluted | 47,223 | 43,997 | 37,670 | |||||||||
Dividend distributions declared per common share | $ | 0.60 | $ | 0.94 | $ | 0.94 | ||||||
57
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net income | $ | 2,442 | $ | 38,669 | $ | 9,158 | ||||||
Unrealized cash flow hedge gains | 821 | — | — | |||||||||
Amounts reclassed from accumulated other comprehensive income to interest expense | (106 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Comprehensive income | 3,157 | 38,669 | 9,158 | |||||||||
Less: | ||||||||||||
Comprehensive income attributable tonon-controlling interests in properties | (644 | ) | (501 | ) | (3,402 | ) | ||||||
|
|
|
|
|
| |||||||
Comprehensive income attributable to the Company | 2,513 | 38,168 | 5,756 | |||||||||
Preferred stock distributions | (7,420 | ) | (7,420 | ) | (7,411 | ) | ||||||
|
|
|
|
|
| |||||||
Comprehensive (loss)/income attributable to common stockholders | $ | (4,907 | ) | $ | 30,748 | $ | (1,655) | |||||
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|
|
|
|
Years Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Net income | $ | 5,129 | $ | 2,442 | $ | 38,669 | ||||||
Other comprehensive (loss)/income: | ||||||||||||
Unrealized cash flow hedge (loss)/gain | (3,003 | ) | 821 | — | ||||||||
Amounts reclassified to interest expense | 328 | (106 | ) | — | ||||||||
(2,675 | ) | 715 | — | |||||||||
Comprehensive income | 2,454 | 3,157 | 38,669 | |||||||||
Less: | ||||||||||||
Comprehensive income attributable to non-controlling interests in properties | (602 | ) | (644 | ) | (501 | ) | ||||||
Comprehensive income attributable to the Company | $ | 1,852 | $ | 2,513 | $ | 38,168 | ||||||
58
Number of shares of preferred stock | Preferred stock | Number of shares of common stock | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income | Total stockholders’ equity | Operating Partnership unitholders’ non- controlling interests | Non- controlling interests in properties | Total equity | ||||||||||||||||||||||||||||||||||
Balance—January 1, 2017 | 4,480 | 112,000 | 24,382 | 244 | 195,566 | (53,608 | ) | — | 254,202 | 108 | 1,749 | 256,059 | ||||||||||||||||||||||||||||||||
Conversion of OP units to shares | �� | — | 40 | — | 108 | — | — | 108 | (108 | ) | — | — | ||||||||||||||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 90 | 1 | 1,741 | (71 | ) | — | 1,671 | — | — | 1,671 | ||||||||||||||||||||||||||||||||
Net proceeds from sale of common stock | — | — | 11,500 | 115 | 136,826 | — | — | 136,941 | — | — | 136,941 | |||||||||||||||||||||||||||||||||
Common stock dividend distributions declared | — | — | — | — | — | (31,148 | ) | — | (31,148 | ) | — | — | (31,148 | ) | ||||||||||||||||||||||||||||||
Preferred stock dividend distributions declared | — | — | — | — | — | (7,906 | ) | — | (7,906 | ) | — | — | (7,906 | ) | ||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | — | (4,943 | ) | (4,943 | ) | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 5,756 | — | 5,756 | — | 3,402 | 9,158 | |||||||||||||||||||||||||||||||||
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|
|
|
|
|
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|
|
|
|
|
| |||||||||||||||||||||||
Balance—December 31, 2017 | 4,480 | 112,000 | 36,012 | 360 | 334,241 | (86,977 | ) | — | 359,624 | — | 208 | 359,832 | ||||||||||||||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 121 | 1 | 1,641 | (312 | ) | — | 1,330 | — | — | 1,330 | ||||||||||||||||||||||||||||||||
Net proceeds from sale of common stock | — | — | 3,411 | 34 | 42,868 | — | — | 42,902 | — | — | 42,902 | |||||||||||||||||||||||||||||||||
Common stock dividend distributions declared | — | — | — | — | — | (35,567 | ) | — | (35,567 | ) | — | — | (35,567 | ) | ||||||||||||||||||||||||||||||
Preferred stock dividend distributions declared | — | — | — | — | — | (7,420 | ) | — | (7,420 | ) | — | — | (7,420 | ) | ||||||||||||||||||||||||||||||
Minority interest buyout | — | — | — | — | (1,624 | ) | — | — | (1,624 | ) | — | 485 | (1,139 | ) | ||||||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | — | 297 | 297 | |||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | — | (527 | ) | (527 | ) | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 38,168 | — | 38,168 | — | 501 | 38,669 | |||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Balance—December 31, 2018 | 4,480 | 112,000 | 39,544 | 395 | 377,126 | (92,108 | ) | — | 397,413 | — | 964 | 398,377 | ||||||||||||||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 147 | 1 | 1,280 | (374 | ) | — | 907 | — | — | 907 | ||||||||||||||||||||||||||||||||
Net proceeds from sale of common stock | — | — | 14,900 | 149 | 198,725 | — | — | 198,874 | — | — | 198,874 | |||||||||||||||||||||||||||||||||
Common stock dividend distributions declared | — | — | — | — | — | (44,279 | ) | — | (44,279 | ) | — | — | (44,279 | ) | ||||||||||||||||||||||||||||||
Preferred stock dividend distributions declared | — | — | — | — | — | (7,420 | ) | — | (7,420 | ) | — | — | (7,420 | ) | ||||||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | — | 112 | 112 | |||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | — | (596 | ) | (596 | ) | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 1,798 | — | 1,798 | — | 644 | 2,442 | |||||||||||||||||||||||||||||||||
Unrealized cash flow hedge gains | — | — | — | — | — | — | 715 | 715 | — | — | 715 | |||||||||||||||||||||||||||||||||
|
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|
|
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|
|
|
|
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|
|
|
|
|
|
| |||||||||||||||||||||||
Balance—December 31, 2019 | 4,480 | $ | 112,000 | 54,591 | $ | 545 | $ | 577,131 | $ | (142,383 | ) | $ | 715 | $ | 548,008 | $ | — | $ | 1,124 | $ | 549,132 | |||||||||||||||||||||||
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|
|
|
|
|
Number of shares of preferred stock | Preferred stock | Number of shares of common stock | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income/(loss) | Total stockholders’ equity | Non-controlling interests in properties | Total equity | |||||||||||||||||||||||||||||||
Balance—January 1, 2018 | 4,480 | $ | 112,000 | 36,012 | $ | 360 | $ | 334,241 | $ | (86,977 | ) | $ | — | $ | 359,624 | $ | 208 | $ | 359,832 | |||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 121 | 1 | 1,641 | (312 | ) | — | 1,330 | — | 1,330 | |||||||||||||||||||||||||||||
Net proceeds from sale of common stock | — | — | 3,411 | 34 | 42,868 | — | — | 42,902 | — | 42,902 | ||||||||||||||||||||||||||||||
Common stock dividend distribution declared | — | — | — | — | — | (35,567 | ) | — | (35,567 | ) | — | (35,567 | ) | |||||||||||||||||||||||||||
Preferred stock dividend distribution declared | — | — | — | — | — | (7,420 | ) | — | (7,420 | ) | — | (7,420 | ) | |||||||||||||||||||||||||||
Minority interest buyout | — | — | — | — | (1,624 | ) | — | — | (1,624 | ) | 485 | (1,139 | ) | |||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | 297 | 297 | ||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | (527 | ) | (527 | ) | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 38,168 | — | 38,168 | 501 | 38,669 | ||||||||||||||||||||||||||||||
Balance—December 31, 2018 | 4,480 | $ | 112,000 | 39,544 | $ | 395 | $ | 377,126 | $ | (92,108 | ) | $ | — | $ | 397,413 | $ | 964 | $ | 398,377 | |||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 147 | 1 | 1,280 | (374 | ) | — | 907 | — | 907 | |||||||||||||||||||||||||||||
Net proceeds from sale of common stock | — | — | 14,900 | 149 | 198,725 | — | — | 198,874 | — | 198,874 | ||||||||||||||||||||||||||||||
Common stock dividend distribution declared | — | — | — | — | — | (44,279 | ) | — | (44,279 | ) | — | (44,279 | ) | |||||||||||||||||||||||||||
Preferred stock dividend distribution declared | — | — | — | — | — | (7,420 | ) | — | (7,420 | ) | — | (7,420 | ) | |||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | 112 | 112 | ||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | (596 | ) | (596 | ) | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 1,798 | — | 1,798 | 644 | 2,442 | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 715 | 715 | — | 715 | ||||||||||||||||||||||||||||||
Balance—December 31, 2019 | 4,480 | $ | 112,000 | 54,591 | $ | 545 | $ | 577,131 | $ | (142,383 | ) | $ | 715 | $ | 548,008 | $ | 1,124 | $ | 549,132 | |||||||||||||||||||||
Restricted stock award grants and vesting | — | — | 170 | 2 | 2,531 | (243 | ) | — | 2,290 | — | 2,290 | |||||||||||||||||||||||||||||
Common stock repurchased | — | — | (11,364 | ) | (114 | ) | (100,251 | ) | — | — | (100,365 | ) | — | (100,365 | ) | |||||||||||||||||||||||||
Common stock dividend distribution declared | — | — | — | — | — | (27,439 | ) | — | (27,439 | ) | — | (27,439 | ) | |||||||||||||||||||||||||||
Preferred stock dividend distribution declared | — | — | — | — | — | (7,420 | ) | — | (7,420 | ) | — | (7,420 | ) | |||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | (829 | ) | (829 | ) | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 4,527 | — | 4,527 | 602 | 5,129 | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (2,675 | ) | (2,675 | ) | — | (2,675 | ) | |||||||||||||||||||||||||||
Balance—December 31, 2020 | 4,480 | $ | 112,000 | 43,397 | $ | 433 | $ | 479,411 | $ | (172,958 | ) | $ | (1,960 | ) | $ | 416,926 | $ | 949 | $ | 417,875 | ||||||||||||||||||||
59
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 2,442 | $ | 38,669 | $ | 9,158 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 59,159 | 52,352 | 41,594 | |||||||||
Amortization of deferred financing costs and debt fair value | 1,325 | 1,621 | 1,452 | |||||||||
Amortization of above/below market leases | (27 | ) | (182 | ) | (337 | ) | ||||||
Increase in straight-line rent/expense | (5,233 | ) | (4,703 | ) | (2,820 | ) | ||||||
Non-cash stock compensation | 1,742 | 1,416 | 1,671 | |||||||||
Earn-out termination payment | — | — | (2,400 | ) | ||||||||
Net gain on sale of real estate property | (3,412 | ) | (46,980 | ) | (12,116 | ) | ||||||
Impairment of real estate | — | 3,497 | — | |||||||||
Changes innon-cash working capital: | ||||||||||||
Rents receivable, net | (1,061 | ) | (1,602 | ) | (1,647 | ) | ||||||
Other assets | (330 | ) | (353 | ) | 349 | |||||||
Accounts payable and accrued liabilities | (5,538 | ) | (910 | ) | 670 | |||||||
Deferred rent | 1,022 | (834 | ) | 324 | ||||||||
Tenant rent deposits | (590 | ) | 196 | 655 | ||||||||
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| |||||||
Net Cash Provided By Operating Activities | 49,499 | 42,187 | 36,553 | |||||||||
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| |||||||
Cash Flows to Investing Activities: | ||||||||||||
Additions to real estate properties | (16,002 | ) | (23,586 | ) | (8,189 | ) | ||||||
Acquisition of real estate | (108,358 | ) | (254,514 | ) | (249,299 | ) | ||||||
Net proceeds from sale of real estate | 46,364 | 84,839 | 18,479 | |||||||||
Deferred leasing costs | (3,926 | ) | (4,048 | ) | (4,289 | ) | ||||||
|
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|
|
| |||||||
Net Cash Used In Investing Activities | (81,922 | ) | (197,309 | ) | (243,298 | ) | ||||||
|
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|
|
|
| |||||||
Cash Flows from Financing Activities: | ||||||||||||
Net proceeds from sale of common stock | 198,874 | 42,902 | 136,941 | |||||||||
Debt issuance and extinguishment costs | (1,008 | ) | (2,963 | ) | (3,202 | ) | ||||||
Proceeds from borrowings | 154,750 | 398,749 | 392,340 | |||||||||
Repayment of borrowings | (216,336 | ) | (241,820 | ) | (272,772 | ) | ||||||
Shares withheld for payment of taxes on restricted stock unit vesting | (832 | ) | (87 | ) | — | |||||||
Minority interest buyout | — | (1,140 | ) | — | ||||||||
Contributions fromnon-controlling interests in properties | 112 | 297 | — | |||||||||
Distributions tonon-controlling interests in properties | (596 | ) | (527 | ) | (4,943 | ) | ||||||
Dividend distributions paid to stockholders and Operating Partnership unitholders | (48,163 | ) | (42,158 | ) | (36,256 | ) | ||||||
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| |||||||
Net Cash Provided By Financing Activities | 86,801 | 153,253 | 212,108 | |||||||||
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| |||||||
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash | 54,378 | (1,869 | ) | 5,363 | ||||||||
Cash, Cash Equivalents and Restricted Cash, Beginning of Period | 33,145 | 35,014 | 29,651 | |||||||||
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Cash, Cash Equivalents and Restricted Cash, End of Period | $ | 87,523 | $ | 33,145 | $ | 35,014 | ||||||
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60
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash: | ||||||||||||
Cash and Cash Equivalents, End of Period | 70,129 | 16,138 | 12,301 | |||||||||
Restricted Cash, End of Period | 17,394 | 17,007 | 22,713 | |||||||||
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Cash, Cash Equivalents and Restricted Cash, End of Period | $ | 87,523 | $ | 33,145 | $ | 35,014 | ||||||
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Supplemental Disclosures of Cash Flow Information: | ||||||||||||
Cash paid for interest | $ | 28,479 | $ | 22,131 | $ | 18,408 | ||||||
Purchases of additions in real estate properties included in accounts payable | $ | 6,489 | $ | 6,791 | $ | 2,616 | ||||||
Purchases of deferred leasing costs included in accounts payable | $ | 603 | $ | 654 | $ | 815 | ||||||
Debt assumed on acquisition of real estate | $ | 22,473 | $ | — | $ | — |
Years Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 5,129 | $ | 2,442 | $ | 38,669 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 60,367 | 59,159 | 52,352 | |||||||||
Amortization of deferred financing costs and debt fair value | 1,326 | 1,325 | 1,621 | |||||||||
Amortization of above and below market leases | (17 | ) | (27 | ) | (182 | ) | ||||||
Straight-line rent/expense | (3,389 | ) | (5,233 | ) | (4,703 | ) | ||||||
Non-cash stock compensation | 2,332 | 1,742 | 1,416 | |||||||||
Net gain on sale of real estate property | (1,347 | ) | (3,412 | ) | (46,980 | ) | ||||||
Impairment of real estate | — | — | 3,497 | |||||||||
Changes in non-cash working capital: | ||||||||||||
Rents receivable, net | (182 | ) | (1,061 | ) | (1,602 | ) | ||||||
Other assets | 53 | (330 | ) | (353 | ) | |||||||
Accounts payable and accrued liabilities | (4,194 | ) | (5,538 | ) | (910 | ) | ||||||
Deferred rent | 702 | 1,022 | (834 | ) | ||||||||
Tenant rent deposits | (857 | ) | (590 | ) | 196 | |||||||
Net Cash Provided By Operating Activities | 59,923 | 49,499 | 42,187 | |||||||||
Cash Flows to Investing Activities: | ||||||||||||
Additions to real estate properties | (26,352 | ) | (16,002 | ) | (23,586 | ) | ||||||
Acquisition of real estate | — | (108,358 | ) | (254,514 | ) | |||||||
Net proceeds from sale of real estate . | 6,340 | 46,364 | 84,839 | |||||||||
Deferred leasing costs | (7,791 | ) | (3,926 | ) | (4,048 | ) | ||||||
Net Cash Used In Investing Activities | (27,803 | ) | (81,922 | ) | (197,309 | ) | ||||||
Cash Flows (to)/from Financing Activities: | ||||||||||||
Repurchases of common stock | (100,365 | ) | — | — | ||||||||
Proceeds from sale of common stock | — | 198,874 | 42,902 | |||||||||
Debt issuance and extinguishment costs | — | (1,008 | ) | (2,963 | ) | |||||||
Proceeds from borrowings | 130,000 | 154,750 | 398,749 | |||||||||
Repayment of borrowings | (61,330 | ) | (216,336 | ) | (241,820 | ) | ||||||
Shares withheld for payment of taxes on restricted stock unit vesting | (42 | ) | (832 | ) | (87 | ) | ||||||
Minority interest buyout | — | — | (1,140 | ) | ||||||||
Contributions from non-controlling interests in properties . | 52 | 112 | 297 | |||||||||
Distributions to non-controlling interests in properties | (829 | ) | (596 | ) | (527 | ) | ||||||
Dividend distributions paid to stockholders | (41,178 | ) | (48,163 | ) | (42,158 | ) | ||||||
Net Cash (Used In)/Provided By Financing Activities | (73,692 | ) | 86,801 | 153,253 | ||||||||
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash | (41,572 | ) | 54,378 | (1,869 | ) | |||||||
Cash, Cash Equivalents and Restricted Cash, Beginning of Period | 87,523 | 33,145 | 35,014 | |||||||||
Cash, Cash Equivalents and Restricted Cash, End of Period | $ | 45,951 | $ | 87,523 | $ | 33,145 | ||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash: | ||||||||||||
Cash and Cash Equivalents, End of Period | 25,305 | 70,129 | 16,138 | |||||||||
Restricted Cash, End of Period | 20,646 | 17,394 | 17,007 | |||||||||
Cash, Cash Equivalents and Restricted Cash, End of Period | $ | 45,951 | $ | 87,523 | $ | 33,145 | ||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||||||
Cash paid for interest | $ | 26,454 | $ | 28,479 | $ | 22,131 | ||||||
Purchase of additions in real estate properties included in accounts payable | $ | 7,640 | $ | 6,489 | $ | 6,791 | ||||||
Purchase of deferred leasing costs included in accounts payable | $ | 289 | $ | 603 | $ | 654 | ||||||
Debt assumed on acquisition of real estate | $ | — | $ | 22,473 | $ | — |
61
62
63
Years | ||||
Buildings | 28-50 | |||
| ||||
Furniture, fixtures and equipment | 4-10 |
64
cost or fair value less the estimated cost to sell. The Company reviews its real estate properties
Variable Interest Entities
The Company consolidates variable interest entities (“VIE”) if the Company determines that it is the primary beneficiary of the entity. When evaluating the accounting for a VIE, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance relative to other economic interest holders. The Company determines the rights, if any, to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE by considering the economic interest in the entity, regardless of form, which may include debt, equity, management and servicing fees, or other contractual arrangements. The Company considers other relevant factors including each entity’s capital structure, contractual rights to earnings (losses), subordination of the Company’s interests relative to those of other investors, contingent payments, and other contractual arrangements that may be economically significant.
From time to time, the Company has elected to treat certain subsidiaries as TRSs. A TRS is treated as a regular corporation and is subject to federal income tax and applicable state income and franchise taxes at regular corporate rates.
65
New
Adopted in the Current Year
66
Effective January 1, 2019, 2021-01 can be applied as of the Company adopted FASB ASU2016-02, Leases (ASC 842) and electedbeginning of the effective date methodinterim period that includes March 12, 2020, however, the guidance will only be available for the transition. The Company elected the following practical expedients:
Transition method practical expedient – permits the Company tooptional use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
Package of practical expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Company to continue classifying its leases at transition in substantially the same manner.
Single component practical expedient – permits the Company to not separate lease andnon-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the consolidated statement of operations.
Land easement practical expedient – permits the Company not to reassess under the new standard its prior conclusions about land easements.
Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.
Lessor Accounting
The accounting for lessors under the new standard remained relatively unchanged with a few targeted updates impacting the Company, which included: (i) narrower definition of initial direct costs that requires certain costs to be expensed rather than capitalized, and (ii) provisions for uncollectible rents to be recorded as a reduction in revenue rather than as bad debt expense.
Lessee Accounting
through December 31, 2022. The new standard requires lesseesapplies prospectively to recognizecontract modifications and hedging relationships
modification guidance to the applicable contracts.
December 31, 2019 | December 31, 2018 | |||||||
Billed receivables | $ | 2,880 | $ | 2,383 | ||||
Straight-line receivables | 29,232 | 23,712 | ||||||
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| |||||
Total rents receivable | $ | 32,112 | $ | 26,095 | ||||
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December 31, 2020 | December 31, 2019 | |||||||
Billed receivables | $ | 2,239 | $ | 2,880 | ||||
Straight-line receivables | 30,729 | 29,232 | ||||||
Total rents receivable | $ | 32,968 | $ | 32,112 | ||||
67
Property | Date Acquired | Percentage Owned | ||||||
7601 Tech (1) | September 2019 | 100 % | ||||||
Cascade Station | June 2019 | 100 % | ||||||
Canyon Park | February 2019 | 100 % | ||||||
Camelback Square | December 2018 | 100 % | ||||||
Greenwood Blvd | December 2018 | 100 % | ||||||
Circle Point Land | December 2018 | 100 % | ||||||
The Quad | July 2018 | 100 % | ||||||
Circle Point | July 2018 | 100 % | ||||||
Pima Center | April 2018 | 100 % | ||||||
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(1) | Denver Tech is comprised of 7601 Tech |
Canyon Park | Cascade Station | 7601 Tech | Total December 31, 2019 | |||||||||||||
Land | $ | 7,098 | $ | — | $ | 10,865 | $ | 17,963 | ||||||||
Buildings and improvements | 36,619 | 25,141 | 25,677 | 87,437 | ||||||||||||
Tenant improvements | 1,797 | 2,080 | 3,858 | 7,735 | ||||||||||||
Lease intangible assets | 8,109 | 3,134 | 7,401 | 18,644 | ||||||||||||
Other assets | 10 | 3,164 | 293 | 3,467 | ||||||||||||
Debt | — | (697 | ) | — | (697 | ) | ||||||||||
Accounts payable and other liabilities | (1,266 | ) | (186 | ) | (668 | ) | (2,120 | ) | ||||||||
Lease intangible liabilities | (1,297 | ) | (220 | ) | (79 | ) | (1,596 | ) | ||||||||
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Net assets acquired | $ | 51,070 | $ | 32,416 | $ | 47,347 | $ | 130,833 | ||||||||
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Canyon Park | Cascade Station | 7601 Tech | December 31, 2019 | |||||||||||||
Land | $ | 7,098 | $ | — | $ | 10,865 | $ | 17,963 | ||||||||
Buildings and improvements | 36,619 | 25,141 | 25,677 | 87,437 | ||||||||||||
Tenant improvements | 1,797 | 2,080 | 3,858 | 7,735 | ||||||||||||
Lease intangible assets | 8,109 | 3,134 | 7,401 | 18,644 | ||||||||||||
Other assets | 10 | 3,164 | 293 | 3,467 | ||||||||||||
Debt | — | (697 | ) | — | (697 | ) | ||||||||||
Accounts payable and other liabilities | (1,266 | ) | (186 | ) | (668 | ) | (2,120 | ) | ||||||||
Lease intangible liabilities | (1,297 | ) | (220 | ) | (79 | ) | (1,596 | ) | ||||||||
Net assets acquired | $ | 51,070 | $ | 32,416 | $ | 47,347 | $ | 130,833 | ||||||||
68
Pima Center | Circle Point | The Quad | Circle Point Land | Greenwood Blvd | Camelback Square | Total December 31, 2018 | ||||||||||||||||||||||
Land | $ | — | $ | 8,744 | $ | 8,079 | $ | 4,937 | $ | 3,945 | $ | 11,738 | $ | 37,443 | ||||||||||||||
Buildings and improvements | 42,235 | 33,708 | 38,060 | — | 23,741 | 35,532 | 173,276 | |||||||||||||||||||||
Tenant improvements | 2,898 | 5,393 | 1,798 | — | 2,278 | 2,390 | 14,757 | |||||||||||||||||||||
Lease intangible assets | 10,691 | 10,299 | 4,209 | — | 4,578 | 4,304 | 34,081 | |||||||||||||||||||||
Other assets | 95 | 25 | 15 | — | 15 | 10 | 160 | |||||||||||||||||||||
Accounts payable and other liabilities | (337 | ) | (1,157 | ) | (527 | ) | (72 | ) | (96 | ) | (421 | ) | (2,610 | ) | ||||||||||||||
Lease intangible liabilities | (129 | ) | (390 | ) | (1,247 | ) | — | — | (827 | ) | (2,593 | ) | ||||||||||||||||
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Net assets acquired | $ | 55,453 | $ | 56,622 | $ | 50,387 | $ | 4,865 | $ | 34,461 | $ | 52,726 | $ | 254,514 | ||||||||||||||
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The following table summarizes the Company’s allocations of the purchase price of assets acquired and liabilities assumed during the year ended December 31, 2017 (in thousands):
2525 McKinnon | Mission City and Sorrento Mesa | Papago Tech | Total December 31, 2017 | |||||||||||||
Land | $ | 10,629 | $ | 66,097 | $ | 10,746 | $ | 87,472 | ||||||||
Buildings and improvements | 33,357 | 78,072 | 17,469 | 128,898 | ||||||||||||
Tenant improvements | 1,158 | 8,393 | 2,293 | 11,844 | ||||||||||||
Lease intangible assets | 3,267 | 22,846 | 2,816 | 28,929 | ||||||||||||
Other assets | — | 140 | 10 | 150 | ||||||||||||
Accounts payable and other liabilities | (190 | ) | (1,507 | ) | (246 | ) | (1,943 | ) | ||||||||
Lease intangible liabilities | (2,186 | ) | (3,766 | ) | (99 | ) | (6,051 | ) | ||||||||
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Net assets acquired | $ | 46,035 | $ | 170,275 | $ | 32,989 | $ | 249,299 | ||||||||
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Pima Center | Circle Point | The Quad | Circle Point Land | Greenwood Blvd | Camelback Square | December 31, 2018 | ||||||||||||||||||||||
Land | $ | — | $ | 8,744 | $ | 8,079 | $ | 4,937 | $ | 3,945 | $ | 11,738 | $ | 37,443 | ||||||||||||||
Buildings and improvements | 42,235 | 33,708 | 38,060 | — | 23,741 | 35,532 | 173,276 | |||||||||||||||||||||
Tenant improvements | 2,898 | 5,393 | 1,798 | — | 2,278 | 2,390 | 14,757 | |||||||||||||||||||||
Lease intangible assets | 10,691 | 10,299 | 4,209 | — | 4,578 | 4,304 | 34,081 | |||||||||||||||||||||
Other assets | 95 | 25 | 15 | — | 15 | 10 | 160 | |||||||||||||||||||||
Accounts payable and other liabilities | (337 | ) | (1,157 | ) | (527 | ) | (72 | ) | (96 | ) | (421 | ) | (2,610 | ) | ||||||||||||||
Lease intangible liabilities | (129 | ) | (390 | ) | (1,247 | ) | — | — | (827 | ) | (2,593 | ) | ||||||||||||||||
Net assets acquired | $ | 55,453 | $ | 56,622 | $ | 50,387 | $ | 4,865 | $ | 34,461 | $ | 52,726 | $ | 254,514 | ||||||||||||||
On May 2, 2017, the Company sold the 1400 and 1600 buildings at the AmberGlen property in Portland, Oregon, and its related assets and liabilities, for a sales price of $18.9 million, resulting in an aggregate net gain
69
of $12.1 million, net of $2.0 million in costs, which has been classified as net gain on sale of real estate property in the consolidated statements of operations.
Cherry Creek | December 31, 2020 | |||
Real estate properties, net | $ | 40,849 | ||
Deferred leasing costs, net | 150 | |||
Acquired lease intangible assets, net | 2,256 | |||
Rents receivable, prepaid expenses and other assets | 2,799 | |||
Assets held for sale | $ | 46,054 | ||
Accounts payable, accrued expenses, deferred rent and tenant rent deposits | $ | (531 | ) | |
Liabilities related to assets held for sale | $ | (531) | ||
completed the sale of the land parcel at the Circle Point property.
December 31, 2019 | Circle Point Land | |||
Real estate properties, net | $ | 4,514 | ||
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Assets held for sale | $ | 4,514 | ||
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Accounts payable, accrued expenses, deferred rent and tenant rent deposits | (67) | |||
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Liabilities related to assets held for sale | $ | (67) | ||
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On November 30, 2018, the Company entered into a purchase and sale agreement to sell the Plaza 25 property for $17.9 million. The Company determined that the property met the criteria for classification as held for sale as
Circle Point Land | December 31, 2019 | |||
Real estate properties, net | $ | 4,514 | ||
Assets held for sale | $ | 4,514 | ||
Accounts payable, accrued expenses, deferred rent and tenant rent deposits | $ | (67 | ) | |
Liabilities related to assets held for sale | $ | (67 | ) | |
completion of the 1031 Exchanges. As such, Mission City, Sorrento Mesa and Papago Tech are included in the Consolidated Balance Sheets and Consolidated Statements of Operations as a VIE. As of December 31, 2019 and December 31, 2018 the Company did not have any variable interest entities.
Lease Intangible Assets | Lease Intangible Liabilities | |||||||||||||||||||||||||||||||
December 31, 2019 | Above Market Leases | Below Market Ground Lease(1) | In Place Leases | Leasing Commissions | Total | Below Market Leases | Below Market Ground Lease(1) | Total | ||||||||||||||||||||||||
Cost | $ | 15,242 | $ | — | $ | 87,320 | $ | 36,048 | $ | 138,610 | $ | (13,878) | $ | (138) | $ | (14,016) | ||||||||||||||||
Accumulated amortization | (6,704 | ) | — | (48,229 | ) | (16,144 | ) | (71,077 | ) | 5,782 | 40 | 5,822 | ||||||||||||||||||||
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$ | 8,538 | $ | — | $ | 39,091 | $ | 19,904 | $ | 67,533 | $ | (8,096) | $ | (98) | $ | (8,194) | |||||||||||||||||
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Lease Intangible Assets | Lease Intangible Liabilities | |||||||||||||||||||||||||||||||
December 31, 2018 | Above Market Leases | Below Market Ground Lease(1) | In Place Leases | Leasing Commissions | Total | Below Market Leases | Below Market Ground Lease(1) | Total | ||||||||||||||||||||||||
Cost | $ | 10,595 | $ | 1,855 | $ | 82,474 | $ | 31,706 | $ | 126,630 | $ | (12,925) | $ | (138) | $ | (13,063) | ||||||||||||||||
Accumulated amortization | (4,800 | ) | (19 | ) | (34,273 | ) | (12,037 | ) | (51,129 | ) | 4,140 | 36 | 4,176 | |||||||||||||||||||
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$ | 5,795 | $ | 1,836 | $ | 48,201 | $ | 19,669 | $ | 75,501 | $ | (8,785) | $ | (102) | $ | (8,887) | |||||||||||||||||
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Lease Intangible Assets | Lease Intangible Liabilities | |||||||||||||||||||||||||||
December 31, 2020 | Above Market Leases | In Place Leases | Leasing Commissions | Total | Below Market Leases | Below Market Ground Lease | Total | |||||||||||||||||||||
Cost | $ | 14,894 | $ | 80,259 | $ | 30,284 | $ | 125,437 | $ | (13,093) | $ | (138) | $ | (13,231) | ||||||||||||||
Accumulated amortization | (8,497 | ) | (55,636 | ) | (17,161 | ) | (81,294 | ) | 7,152 | 44 | 7,196 | |||||||||||||||||
$ | 6,397 | $ | 24,623 | $ | 13,123 | $ | 44,143 | $ | (5,941) | $ | (94) | $ | (6,035) | |||||||||||||||
Lease Intangible Assets | Lease Intangible Liabilities | |||||||||||||||||||||||||||
December 31, 2019 | Above Market Leases | In Place Leases | Leasing Commissions | Total | Below Market Leases | Below Market Ground Lease | Total | |||||||||||||||||||||
Cost | $ | 15,242 | $ | 87,320 | $ | 36,048 | $ | 138,610 | $ | (13,878) | $ | (138) | $ | (14,016) | ||||||||||||||
Accumulated amortization | (6,704 | ) | (48,229 | ) | (16,144 | ) | (71,077 | ) | 5,782 | 40 | 5,822 | |||||||||||||||||
$ | 8,538 | $ | 39,091 | $ | 19,904 | $ | 67,533 | $ | (8,096) | $ | (98) | $ | (8,194) | |||||||||||||||
2020 | $ | 18,987 | ||
2021 | 15,894 | |||
2022 | 8,217 | |||
2023 | 5,358 | |||
2024 | 3,190 | |||
Thereafter | 7,693 | |||
|
| |||
$ | 59,339 | |||
|
|
71
2021 | $ | 13,632 | ||
2022 | 8,229 | |||
2023 | 5,355 | |||
2024 | 3,040 | |||
2025 | 2,659 | |||
Thereafter | 5,193 | |||
$ | 38,108 | |||
Property | December 31, 2019 | December 31, 2018 | Interest Rate as of December 31, 2019(1) | Maturity | ||||||||||||
Unsecured Credit Facility(3)(4) | $ | — | $ | 147,500 | LIBOR +1.40 | %(2) | March 2022 | |||||||||
Term Loan(4) | 50,000 | — | LIBOR +1.25 | %(2) | September 2024 | |||||||||||
Midland Life Insurance(5) | 85,293 | 86,973 | 4.34 | May 2021 | ||||||||||||
Mission City | 47,000 | 47,000 | 3.78 | November 2027 | ||||||||||||
Canyon Park(6) | 40,950 | — | 4.30 | March 2027 | ||||||||||||
190 Office Center | 40,854 | 41,250 | 4.79 | October 2025 | ||||||||||||
Circle Point | 39,650 | 39,650 | 4.49 | September 2028 | ||||||||||||
SanTan | 34,053 | 34,682 | 4.56 | March 2027 | ||||||||||||
Intellicenter | 32,971 | 33,481 | 4.65 | October 2025 | ||||||||||||
The Quad | 30,600 | 30,600 | 4.20 | September 2028 | ||||||||||||
FRP Collection(7) | 28,969 | 29,589 | 3.10 | September 2023 | ||||||||||||
2525 McKinnon | 27,000 | 27,000 | 4.24 | April 2027 | ||||||||||||
Greenwood Blvd(7) | 22,425 | 22,425 | 3.15 | December 2025 | ||||||||||||
Cascade Station | 22,304 | — | 4.55 | May 2024 | ||||||||||||
5090 N 40th St | 22,000 | 22,000 | 3.92 | January 2027 | ||||||||||||
AmberGlen | 20,000 | 20,000 | 3.69 | May 2027 | ||||||||||||
Lake Vista Pointe | 17,717 | 18,044 | 4.28 | August 2024 | ||||||||||||
Central Fairwinds(8) | 17,534 | 17,882 | 3.15 | June 2024 | ||||||||||||
FRP Ingenuity Drive | 17,000 | 17,000 | 4.44 | December 2024 | ||||||||||||
Carillon Point(7) | 15,972 | 16,330 | 3.10 | October 2023 | ||||||||||||
|
|
|
| |||||||||||||
Total Principal | 612,292 | 651,406 | ||||||||||||||
Deferred financing costs, net | (5,660 | ) | (6,052 | ) | ||||||||||||
Unamortized fair value adjustments | 618 | — | ||||||||||||||
|
|
|
| |||||||||||||
Total | $ | 607,250 | $ | 645,354 | ||||||||||||
|
|
|
|
Property | December 31, 2020 | December 31, 2019 | Interest Rate as of December 31, 2020 (1) | Maturity | ||||||||||||
Unsecured Credit Facility (3)(4) | $ | 75,000 | $ | — | LIBOR +1.50 | % (2) | March 2022 | |||||||||
Term Loan (4) | 50,000 | 50,000 | LIBOR +1.40 | % (2) | September 2024 | |||||||||||
Midland Life Insurance (5) | 83,537 | 85,293 | 4.34 | % | May 2021 | |||||||||||
Mission City | 47,000 | 47,000 | 3.78 | % | November 2027 | |||||||||||
Canyon Park (6) | 40,950 | 40,950 | 4.30 | % | March 2027 | |||||||||||
190 Office Center | 40,236 | 40,854 | 4.79 | % | October 2025 | |||||||||||
Circle Point | 39,650 | 39,650 | 4.49 | % | September 2028 | |||||||||||
SanTan | 33,444 | 34,053 | 4.56 | % | March 2027 | |||||||||||
Intellicenter | 32,442 | 32,971 | 4.65 | % | October 2025 | |||||||||||
The Quad | 30,600 | 30,600 | 4.20 | % | September 2028 | |||||||||||
FRP Collection | 28,263 | 28,969 | 3.10 | % | September 2023 | |||||||||||
2525 McKinnon | 27,000 | 27,000 | 4.24 | % | April 2027 | |||||||||||
Greenwood Blvd | 22,425 | 22,425 | 3.15 | % | December 2025 | |||||||||||
Cascade Station | 21,952 | 22,304 | 4.55 | % | May 2024 | |||||||||||
5090 N . 40th St | 21,640 | 22,000 | 3.92 | % | January 2027 | |||||||||||
AmberGlen | 20,000 | 20,000 | 3.69 | % | May 2027 | |||||||||||
Lake Vista Pointe | 17,375 | 17,717 | 4.28 | % | August 2024 | |||||||||||
Central Fairwinds | 17,127 | 17,534 | 3.15 | % | June 2024 | |||||||||||
FRP Ingenuity Drive | 16,736 | 17,000 | 4.44 | % | December 2024 | |||||||||||
Carillon Point | 15,585 | 15,972 | 3.10 | % | October 2023 | |||||||||||
Total Principal | 680,962 | 612,292 | ||||||||||||||
Deferred financing costs, net | (4,195 | ) | (5,660 | ) | ||||||||||||
Unamortized fair value adjustments | 475 | 618 | ||||||||||||||
Total | $ | 677,242 | $ | 607,250 | ||||||||||||
(1) | All interest rates are fixed interest rates with the exception of the |
(2) | As of December 31, one-month LIBOR rate was |
(3) | In March 2018, the Company entered into the Credit Agreement for 2022 March 2023 at the Company’s option upon meeting certain conditions. |
(4) | In September 2019, the Company entered into a five-year $50million Term Loan (the “Term Loan”) increasing its authorized borrowings under the Unsecured Credit Facility from $250million to $300million. Borrowings under the Term Loan bear interest at a rate equal to the LIBOR rate plus a margin between 125 to 215 basis points depending upon the Company’s consolidated leverage ratio. In conjunction with the Term Loan, the Company also entered into a five-year interest rate swap for a notional amount of $50 million (the “Interest Rate Swap”). Pursuant to the Interest Rate Swap, the Company will pay a fixed rate of approximately 1.27% of the notional amount annually, payable monthly, and receive floating rate 30-day LIBOR payments. |
(5) | The mortgage loan is cross-collateralized by Cherry Creek, City Center and 7595 Tech (formerly “DTC Crossroads”). In February 2021, the loan $83.5million was repaid in full. |
72
(6) | The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus 200 basis points or (ii) the yield on the five year “on the run” treasury reported by Bloomberg market data service plus 450 basis points. |
|
|
2020 | $ | 6,279 | ||
2021 | 89,355 | |||
2022 | 6,529 | |||
2023 | 48,529 | |||
2024 | 124,725 | |||
Thereafter | 336,875 | |||
|
| |||
$ | 612,292 | |||
|
|
2021 | $ | 89,304 | ||
2022 | 81,529 | |||
2023 | 48,529 | |||
2024 | 124,725 | |||
2025 | 92,036 | |||
Thereafter | 244,839 | |||
$ | 680,962 | |||
As of December 31, 2018, the Company did not have any hedges or derivatives.
73
Earn-Out Payment
On February 15, 2017, the Company entered into a Termination and Mutual Release Agreement with Second City that terminated our obligation to make any futureearn-out payments associated with the Central Fairwinds property in exchange for a cash payment of $2.4 million, which was made to Second City on February 21, 2017.
74
For
Year ended December 31, 2019 | ||||
Fixed payments | $ | 132,540 | ||
Variable payments | 20,990 | |||
|
| |||
$ | 153,530 | |||
|
|
Years Ended December 31, | ||||||||
2020 | 2019 | |||||||
Fixed payments | $ | 137,247 | $ | 132,540 | ||||
Variable payments | 23,502 | 20,990 | ||||||
$ | 160,749 | $ | 153,530 | |||||
2020 | $ | 116,513 | ||
2021 | 110,491 | |||
2022 | 94,800 | |||
2023 | 73,959 | |||
2024 | 53,905 | |||
Thereafter | 113,580 | |||
|
| |||
$ | 563,248 | |||
|
|
The above minimum lease payments to be received do not include reimbursements from tenants for certain operating expenses and real estate taxes and do not include early termination payments provided for in certain leases.
2021 | $ | 125,736 | ||
2022 | 108,493 | |||
2023 | 91,708 | |||
2024 | 72,312 | |||
2025 | 56,709 | |||
Thereafter | 146,488 | |||
$ | 601,446 | |||
75
right-of-use assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset, which was included within theright-of-use assets recognized upon transition. As of December 31, 2019,2020, these leases had remaining terms of two1 to 6968 years and a weighted average remaining lease term of 5658 years. Operating and financingright-of-use
As of December 31, 2019 | ||||
Right-of-use asset – operating leases | $ | 13,130 | ||
Lease liability – operating leases | $ | 8,033 | ||
Right-of-use asset – financing leases | $ | 79 | ||
Lease liability – financing leases | $ | 79 |
December 31, 2020 | December 31, 2019 | |||||||
Right-of-use | $ | 12,739 | $ | 13,130 | ||||
Lease liability – operating leases | $ | 7,719 | $ | 8,033 | ||||
Right-of-use | $ | 55 | $ | 79 | ||||
Lease liability – financing leases | $ | 55 | $ | 79 |
Operating Leases | Financing Leases | |||||||
2020 | $ | 533 | $ | 27 | ||||
2021 | 817 | 27 | ||||||
2022 | 798 | 27 | ||||||
2023 | 663 | 4 | ||||||
2024 | 597 | — | ||||||
Thereafter | 26,680 | — | ||||||
|
|
|
| |||||
Total future minimum lease payments | 30,088 | 85 | ||||||
Discount | (22,055 | ) | (6 | ) | ||||
|
|
|
| |||||
Total | $ | 8,033 | $ | 79 | ||||
|
|
|
|
Operating Leases | Financing Leases | |||||||
2021 | $ | 552 | $ | 27 | ||||
2022 | 798 | 27 | ||||||
2023 | 663 | 4 | ||||||
2024 | 597 | 0 | ||||||
2025 | 596 | 0 | ||||||
Thereafter | 26,084 | 0 | ||||||
Total future minimum lease payments | 29,290 | 58 | ||||||
Discount | (21,571 | ) | (3 | ) | ||||
Total | $ | 7,719 | $ | 55 | ||||
76
Year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net income | $ | 2,442 | $ | 38,669 | $ | 9,158 | ||||||
Less: Net income attributable to noncontrolling interests in properties | (644 | ) | (501 | ) | (3,402 | ) | ||||||
Less: Net income attributable to Preferred stockholders | (7,420 | ) | (7,420 | ) | (7,411 | ) | ||||||
|
|
|
|
|
| |||||||
Numerator for basic and diluted EPS | $ | (5,622 | ) | $ | 30,748 | $ | (1,655) | |||||
|
|
|
|
|
| |||||||
Denominator for basic EPS | 43,997 | 37,321 | 30,198 | |||||||||
Dilutive effect of RSUs | — | 349 | — | |||||||||
|
|
|
|
|
| |||||||
Denominator for dilutive EPS | 43,997 | 37,670 | 30,198 | |||||||||
|
|
|
|
|
| |||||||
Net (loss)/income per common share: | ||||||||||||
Basic | $ | (0.13 | ) | $ | 0.82 | $ | (0.05 | ) | ||||
Dilutive | $ | (0.13 | ) | $ | 0.82 | $ | (0.05 | ) |
Years ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Net income | $ | 5,129 | $ | 2,442 | $ | 38,669 | ||||||
Less: Net income attributable to noncontrolling interests in properties | (602 | ) | (644 | ) | (501 | ) | ||||||
Less: Net income attributable to Preferred stockholders | (7,420 | ) | (7,420 | ) | (7,420 | ) | ||||||
Numerator for basic and diluted EPS | $ | (2,893 | ) | $ | (5,622 | ) | $ | 30,748 | ||||
Denominator for basic EPS | 47,223 | 43,997 | 37,321 | |||||||||
Dilutive effect of RSUs | — | — | 349 | |||||||||
Denominator for dilutive EPS | $ | 47,223 | $ | 43,997 | $ | 37,670 | ||||||
Net (loss)/income per common share: | ||||||||||||
Basic | $ | (0.06 | ) | $ | (0.13 | ) | $ | 0.82 | ||||
Dilutive | $ | (0.06 | ) | $ | (0.13 | ) | $ | 0.82 |
77
other than on an exchange or, with the prior consent of the Company, in privately negotiated transactions. The Sales Agents will be entitled to compensation of up to 2.0%
The Company did not issue any shares of common stock or Series A Preferred Stock under the Prior ATM Program for the period beginning on January 1, 2020 through the date the Prior EDAs were terminated.
Non-controlling Interests
December 31, 2019 | December 31, 2018 | |||||||
City Center | $ | (147 | ) | $ | (183 | ) | ||
Central Fairwinds | (314 | ) | (304 | ) | ||||
AmberGlen | (1,141 | ) | (1,272 | ) | ||||
FRP Collection | 851 | 791 | ||||||
Park Tower | 1,875 | 1,932 | ||||||
�� |
|
|
|
| ||||
$ | 1,124 | $ | 964 | |||||
|
|
|
|
2018.
2020.
Period | Distribution per Common Share/Unit | Declaration Date | Record Date | Payment Date | ||||||||||||
January 1, 2019 – March 31, 2019 | $ | 0.235 | March 15, 2019 | April 11, 2019 | April 25, 2019 | |||||||||||
April 1, 2019 – June 30, 2019 | 0.235 | June 14, 2019 | July 11, 2019 | July 25, 2019 | ||||||||||||
July 1, 2019 – September 30, 2019 | 0.235 | September 16, 2019 | October 11, 2019 | October 25, 2019 | ||||||||||||
October 1, 2019 – December 31, 2019 | 0.235 | December 13, 2019 | January 10, 2020 | January 24, 2020 | ||||||||||||
|
| |||||||||||||||
Total | $ | 0.940 | ||||||||||||||
|
|
Period | Distribution per Common Share/Unit | Declaration Date | Record Date | Payment Date | ||||||||||||
January 1, 2020 – March 31, 2020 | $ | 0.15 | March 25, 2020 | April 9, 2020 | April 24, 2020 | |||||||||||
April 1, 2020 – June 30, 2020 | 0.15 | June 12, 2020 | July 10, 2020 | July 24, 2020 | ||||||||||||
July 1, 2020 – September 30, 2020 | 0.15 | September 15, 2020 | October 8, 2020 | October 22, 2020 | ||||||||||||
October 1, 2020 – December 31, 2020 | 0.15 | December 15, 2020 | January 11, 2021 | January 25, 2021 | ||||||||||||
Total | $ | 0.60 | ||||||||||||||
78
Restricted Stock Units
During the year ended December 31, 2017, 117,478 RSUs were granted to directors, executive officers andnon-executive employees with a fair value of $1.5 million. The awards will vest in three equal, annual installments on each of the first three anniversaries of the date of grant.
79
2019 Quarters | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
Revenue | $ | 39,060 | $ | 38,946 | $ | 41,171 | $ | 37,120 | ||||||||
Net income/(loss) | 2,988 | (947 | ) | 1,321 | (920 | ) | ||||||||||
Net income/(loss) attributable to common stockholders | 987 | (2,966 | ) | (699 | ) | (2,944 | ) | |||||||||
Net income/(loss) per share | 0.02 | (0.07 | ) | (0.02 | ) | (0.07 | ) | |||||||||
2018 Quarters | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
Revenue | $ | 34,167 | $ | 33,547 | $ | 30,236 | $ | 31,534 | ||||||||
Net (loss)/income | (6,684 | ) | (1,161 | ) | (684 | ) | 47,198 | |||||||||
Net (loss)/income attributable to common stockholders | (8,656 | ) | (3,151 | ) | (2,653 | ) | 45,208 | |||||||||
Net (loss)/income per share | (0.22 | ) | (0.08 | ) | (0.07 | ) | 1.25 |
80
2020 Quarters | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
Revenue | $ | 39,840 | $ | 41,261 | $ | 39,617 | $ | 40,122 | ||||||||
Net income | 461 | 3,039 | 623 | 1,006 | ||||||||||||
Net (loss)/income attributable to common stockholders | (1,482 | ) | 1,031 | (1,411 | ) | (1,031 | ) | |||||||||
Net (loss)/income per share | (0.03 | ) | 0.02 | (0.03 | ) | (0.02 | ) | |||||||||
2019 Quarters | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
Revenue | $ | 39,060 | $ | 38,946 | $ | 41,171 | $ | 37,120 | ||||||||
Net income/(loss) | 2,988 | (947 | ) | 1,321 | (920 | ) | ||||||||||
Net income/(loss) attributable to common stockholders | 987 | (2,966 | ) | (699 | ) | (2,944 | ) | |||||||||
Net income/(loss) per share | 0.02 | (0.07 | ) | (0.02 | ) | (0.07 | ) |
Encumbrances(2) | Intial Costs to Company | Costs Capitalized Subsequent to Acquisition |
| Gross Amount at Which Carried as of December 31, 2019(1) | Accumulated Amortization | Year of Construction | Year Acquired | |||||||||||||||||||||||||||||||||
Description | Land | Buildings and Improvements | Improvements | Land | Building and Improvements | Total(3) | ||||||||||||||||||||||||||||||||||
AmberGlen | $ | 20,000 | $ | 6,546 | $ | 3,490 | $ | 2,578 | $ | 6,546 | $ | 6,068 | $ | 12,614 | $ | 2,898 | 1984-1998 | 2009 | ||||||||||||||||||||||
City Center | 22,965 | 3,123 | 10,656 | 9,790 | 3,123 | 20,446 | 23,569 | 7,484 | 1984 | 2010 | ||||||||||||||||||||||||||||||
Central Fairwinds | 17,534 | 1,747 | 9,751 | 6,927 | 1,747 | 16,678 | 18,425 | 4,471 | 1982 | 2012 | ||||||||||||||||||||||||||||||
Cherry Creek | 46,867 | 25,745 | 20,144 | 1,837 | 25,745 | 21,981 | 47,726 | 6,590 | 1962-1980 | 2014 | ||||||||||||||||||||||||||||||
Lake Vista Pointe | 17,717 | 4,115 | 20,600 | 178 | 4,115 | 20,778 | 24,893 | 5,171 | 2007 | 2014 | ||||||||||||||||||||||||||||||
Florida Research Park(4) | 45,969 | 11,446 | 56,475 | 3,228 | 11,446 | 59,703 | 71,149 | 9,100 | 1999 | 2014; 2016 | ||||||||||||||||||||||||||||||
Superior Pointe | — | 3,153 | 19,834 | 1,810 | 3,153 | 21,644 | 24,797 | 3,452 | 2000 | 2015 | ||||||||||||||||||||||||||||||
Denver Tech(5) | 15,461 | 18,002 | 52,719 | 1,679 | 18,002 | 54,398 | 72,400 | 4,314 | 1999; 1997 | 2015; 2019 | ||||||||||||||||||||||||||||||
190 Office Center | 40,854 | 7,162 | 39,690 | 1,596 | 7,162 | 41,286 | 48,448 | 5,110 | 2001 | 2015 | ||||||||||||||||||||||||||||||
Intellicenter | 32,971 | 5,244 | 34,278 | 69 | 5,244 | 34,347 | 39,591 | 4,726 | 2008 | 2015 | ||||||||||||||||||||||||||||||
Carillon Point | 15,972 | 5,172 | 17,316 | 213 | 5,172 | 17,529 | 22,701 | 3,160 | 2007 | 2016 | ||||||||||||||||||||||||||||||
Park Tower | — | 3,479 | 68,656 | 15,513 | 3,479 | 84,169 | 87,648 | 9,617 | 1973 | 2016 | ||||||||||||||||||||||||||||||
5090 N 40th St | 22,000 | 6,696 | 32,123 | 1,633 | 6,696 | 33,756 | 40,452 | 3,018 | 1988 | 2016 | ||||||||||||||||||||||||||||||
SanTan | 34,053 | 6,803 | 37,187 | 4,556 | 6,803 | 41,743 | 48,546 | 5,180 | 2000-2003 | 2016 | ||||||||||||||||||||||||||||||
2525 McKinnon | 27,000 | 10,629 | 34,515 | 1,778 | 10,629 | 36,293 | 46,922 | 2,846 | 2003 | 2017 | ||||||||||||||||||||||||||||||
Mission City | 47,000 | 25,741 | 41,474 | 6,337 | 25,741 | 47,811 | 73,552 | 6,066 | 1990-2007 | 2017 | ||||||||||||||||||||||||||||||
Sorrento Mesa | — | 34,305 | 36,726 | 2,445 | 34,305 | 39,171 | 73,476 | 4,093 | 1985-2001 | 2017 | ||||||||||||||||||||||||||||||
Papago Tech | — | 10,746 | 19,762 | 709 | 10,746 | 20,471 | 31,217 | 2,169 | 1993-1995 | 2017 | ||||||||||||||||||||||||||||||
Pima Center | — | — | 45,133 | 1,030 | — | 46,163 | 46,163 | 3,345 | 2006-2008 | 2018 | ||||||||||||||||||||||||||||||
Circle Point | 39,650 | 9,320 | 39,101 | 1,581 | 9,320 | 40,682 | 50,002 | 3,036 | 2001 | 2018 | ||||||||||||||||||||||||||||||
The Quad | 30,600 | 8,079 | 39,858 | 93 | 8,079 | 39,951 | 48,030 | 2,103 | 1982 | 2018 | ||||||||||||||||||||||||||||||
Greenwood Blvd | 22,425 | 3,945 | 26,019 | 500 | 3,945 | 26,519 | 30,464 | 915 | 1997 | 2018 | ||||||||||||||||||||||||||||||
Camelback Square | — | 11,738 | 37,922 | 1,267 | 11,738 | 39,189 | 50,927 | 1,325 | 1978 | 2018 | ||||||||||||||||||||||||||||||
Canyon Park | 40,950 | 7,098 | 38,416 | 2,691 | 7,098 | 41,107 | 48,205 | 1,046 | 1993; 1999 | 2019 | ||||||||||||||||||||||||||||||
Cascade Station | 22,304 | — | 27,220 | 36 | — | 27,256 | 27,256 | 600 | 2008-2009 | 2019 | ||||||||||||||||||||||||||||||
Corporate | 50,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | $ | 612,292 | $ | 230,034 | $ | 809,065 | $ | 70,074 | $ | 230,034 | $ | 879,139 | $ | 1,109,173 | $ | 101,835 | ||||||||||||||||||||||||
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|
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|
|
|
|
|
|
|
|
|
|
|
Intial Costs to Company | Costs Capitalized Subsequent to Acquisition | Gross Amount at Which Carried as of December 31, 2020 (1) | Accumulated Amortization | Year of Construction | Year Acquired | |||||||||||||||||||||||||||||||||||
Description | Encumbrances (2) | Land | Buildings and Improvements | Improvements | Land | Building and Improvements | Total (3) | |||||||||||||||||||||||||||||||||
AmberGlen | $ | 20,000 | $ | 6,546 | $ | 3,490 | $ | 2,919 | $ | 6,546 | $ | 6,409 | $ | 12,955 | $ | 3,226 | 1984-1998 | 2009 | ||||||||||||||||||||||
City Center | 22,492 | 3,123 | 10,656 | 10,321 | 3,123 | 20,977 | 24,100 | 8,397 | 1984 | 2010 | ||||||||||||||||||||||||||||||
Central Fairwinds | 17,127 | 1,747 | 9,751 | 6,833 | 1,747 | 16,584 | 18,331 | 5,072 | 1982 | 2012 | ||||||||||||||||||||||||||||||
Lake Vista Pointe | 17,375 | 4,115 | 20,600 | 196 | 4,115 | 20,796 | 24,911 | 6,128 | 2007 | 2014 | ||||||||||||||||||||||||||||||
Florida Research Park (4) | 44,999 | 11,446 | 56,475 | 3,518 | 11,446 | 59,993 | 71,439 | 11,562 | 1999 | 2014; 2016 | ||||||||||||||||||||||||||||||
Superior Pointe | — | 3,153 | 19,834 | 1,971 | 3,153 | 21,805 | 24,958 | 4,372 | 2000 | 2015 | ||||||||||||||||||||||||||||||
Denver Tech (5) | 15,142 | 18,002 | 52,719 | 8,397 | 18,002 | 61,116 | 79,118 | 6,901 | 1999; 1997 | 2015; 2019 | ||||||||||||||||||||||||||||||
190 Office Center | 40,236 | 7,162 | 39,690 | 1,609 | 7,162 | 41,299 | 48,461 | 6,357 | 2001 | 2015 | ||||||||||||||||||||||||||||||
Intellicenter | 32,442 | 5,244 | 34,278 | 87 | 5,244 | 34,365 | 39,609 | 5,765 | 2008 | 2015 | ||||||||||||||||||||||||||||||
Carillon Point | 15,585 | 5,172 | 17,316 | 227 | 5,172 | 17,543 | 22,715 | 4,040 | 2007 | 2016 | ||||||||||||||||||||||||||||||
Park Tower | — | 3,479 | 68,656 | 16,138 | 3,479 | 84,794 | 88,273 | 13,348 | 1973 | 2016 | ||||||||||||||||||||||||||||||
5090 N 40th St | 21,640 | 6,696 | 32,123 | 3,213 | 6,696 | 35,336 | 42,032 | 4,136 | 1988 | 2016 | ||||||||||||||||||||||||||||||
SanTan | 33,444 | 6,803 | 37,187 | 4,999 | 6,803 | 42,186 | 48,989 | 7,314 | 2000-2003 | 2016 | ||||||||||||||||||||||||||||||
2525 McKinnon | 27,000 | 10,629 | 34,515 | 2,396 | 10,629 | 36,911 | 47,540 | 3,949 | 2003 | 2017 | ||||||||||||||||||||||||||||||
Mission City | 47,000 | 25,741 | 41,474 | 8,756 | 25,741 | 50,230 | 75,971 | 9,010 | 1990-2007 | 2017 | ||||||||||||||||||||||||||||||
Sorrento Mesa | — | 34,305 | 36,726 | 4,143 | 34,305 | 40,869 | 75,174 | 6,287 | 1985-2001 | 2017 | ||||||||||||||||||||||||||||||
Papago Tech | — | 10,746 | 19,762 | 775 | 10,746 | 20,537 | 31,283 | 3,193 | 1993-1995 | 2017 | ||||||||||||||||||||||||||||||
Pima Center | — | — | 45,133 | 2,431 | - | 47,564 | 47,564 | 4,883 | 2006-2008 | 2018 | ||||||||||||||||||||||||||||||
Circle Point | 39,650 | 9,320 | 39,101 | 2,995 | 9,320 | 42,096 | 51,416 | 4,934 | 2001 | 2018 | ||||||||||||||||||||||||||||||
The Quad | 30,600 | 8,079 | 39,858 | 129 | 8,079 | 39,987 | 48,066 | 3,486 | 1982 | 2018 | ||||||||||||||||||||||||||||||
Greenwood Blvd | 22,425 | 3,945 | 26,019 | 1,224 | 3,945 | 27,243 | 31,188 | 1,864 | 1997 | 2018 | ||||||||||||||||||||||||||||||
Camelback Square | — | 11,738 | 37,922 | 5,842 | 11,738 | 43,764 | 55,502 | 2,754 | 1978 | 2018 | ||||||||||||||||||||||||||||||
Canyon Park | 40,950 | 7,098 | 38,416 | 4,197 | 7,098 | 42,613 | 49,711 | 2,537 | 1993; 1999 | 2019 | ||||||||||||||||||||||||||||||
Cascade Station | 21,952 | — | 27,220 | 283 | — | 27,503 | 27,503 | 1,705 | 2008-2009 | 2019 | ||||||||||||||||||||||||||||||
Corporate | 125,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Total | $ | 635,059 | $ | 204,289 | $ | 788,921 | $ | 93,599 | $ | 204,289 | $ | 882,520 | $ | 1,086,809 | $ | 131,220 | ||||||||||||||||||||||||
(1) | The aggregate cost for federal tax purposes as of December 31, |
(2) | Encumbrances exclude net deferred financing costs of |
(3) | Properties identified as held for sale at December 31, |
(4) | Florida Research Park is comprised of |
(5) | Denver Tech is comprised of . |
81
2019 | 2018 | |||||||
Real Estate Properties | ||||||||
Balance, beginning of year | $ | 1,005,647 | $ | 776,301 | ||||
Acquisitions | 113,134 | 225,476 | ||||||
Dispositions and impairments | (27,585 | ) | (5,715 | ) | ||||
Capital improvements | 22,491 | 30,378 | ||||||
Assets held for sale | (4,514 | ) | (20,793 | ) | ||||
|
|
|
| |||||
Balance, end of year | $ | 1,109,173 | $ | 1,005,647 | ||||
|
|
|
| |||||
Accumulated Depreciation | ||||||||
Balance, beginning of year | $ | 70,484 | $ | 48,234 | ||||
Depreciation | 35,531 | 29,196 | ||||||
Dispositions | (4,180 | ) | (2,301 | ) | ||||
Depreciation on assets held for sale | — | (4,645 | ) | |||||
|
|
|
| |||||
Balance, end of year | $ | 101,835 | $ | 70,484 | ||||
|
|
|
|
82
2020 | 2019 | 2018 | ||||||||||
Real Estate Properties | ||||||||||||
Balance, beginning of year | $ | 1,109,173 | $ | 1,005,647 | $ | 776,301 | ||||||
Acquisitions | — | 113,134 | 225,476 | |||||||||
Dispositions | (1,993 | ) | (27,585 | ) | (5,715 | ) | ||||||
Capital improvements | 27,503 | 22,491 | 30,378 | |||||||||
Assets held for sale | (47,874 | ) | (4,514 | ) | (20,793 | ) | ||||||
Balance, end of year | $ | 1,086,809 | $ | 1,109,173 | $ | 1,005,647 | ||||||
Accumulated Depreciation | ||||||||||||
Balance, beginning of year | $ | 101,835 | $ | 70,484 | $ | 48,234 | ||||||
Depreciation | 38,372 | 35,531 | 29,196 | |||||||||
Dispositions | (1,962 | ) | (4,180 | ) | (2,301 | ) | ||||||
Depreciation on assets held for sale | (7,025 | ) | — | (4,645 | ) | |||||||
Balance, end of year | $ | 131,220 | $ | 101,835 | $ | 70,484 | ||||||
| Description | |
1.1 | ||
1.2 | ||
1.3 | ||
1.4 | ||
1.5 | ||
1.6 | ||
1.7 | ||
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
10.1 |
Exhibit Number | Description | |
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
| ||
10.12 |
| |
Exhibit Number | Description | |
10.16 | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | INSTANCE DOCUMENT** | |
101.SCH | SCHEMA DOCUMENT** |
|
| ||
101.CAL | CALCULATION LINKBASE DOCUMENT** | ||
101.LAB | LABELS LINKBASE DOCUMENT** | ||
101.PRE | PRESENTATION LINKBASE DOCUMENT** | ||
101.DEF | DEFINITION LINKBASE DOCUMENT** | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
† | Filed |
* | Compensatory Plan or arrangement |
** | Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements. |
CITY OFFICE REIT, INC. | ||||||
Date: February | By: | /s/ James Farrar | ||||
James Farrar | ||||||
Chief Executive Officer and Director |
Name | Title | Date | ||
/s/ James Farrar James Farrar | Chief Executive Officer and Director
| February | ||
/s/ Anthony Maretic Anthony Maretic | Chief Financial Officer, Secretary and Treasurer
Principal Accounting Officer) | February | ||
/s/ John McLernon John McLernon | Independent Director, Chairman of Board of Directors | February | ||
/s/ Mark Murski Mark Murski | Independent Director | February | ||
/s/ William Flatt William Flatt | Independent Director | February | ||
/s/ John Sweet John Sweet | Independent Director | February | ||
/s/ Sabah Mirza Sabah Mirza | Independent Director | February |