Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-52596 | |
Entity Registrant Name | ARES REAL ESTATE INCOME TRUST INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 30-0309068 | |
Entity Address, Address Line One | One Tabor Center, 1200 Seventeenth Street, Suite 2900 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80202 | |
City Area Code | 303 | |
Local Phone Number | 228-2200 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001327978 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class T | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 28,858,446 | |
Class S | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 49,988,280 | |
Class D | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,276,706 | |
Class I | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 68,800,867 | |
Class E | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 51,613,024 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
ASSETS | ||
Net investment in real estate properties | $ 3,585,078 | $ 3,605,578 |
Investments in unconsolidated joint venture partnerships | 125,166 | 120,372 |
Debt-related investments, net | 254,201 | 260,439 |
Investment in available-for-sale securities, at fair value | 14,979 | 14,896 |
Cash and cash equivalents | 36,894 | 13,336 |
Restricted cash | 3,859 | 3,850 |
DST Program Loans | 95,909 | 81,897 |
Other assets | 72,217 | 74,356 |
Total assets | 4,188,303 | 4,174,724 |
Liabilities | ||
Accounts payable and accrued expenses | 54,627 | 58,097 |
Debt, net | 1,589,120 | 1,616,475 |
Intangible lease liabilities, net | 40,233 | 42,444 |
Financing obligations, net | 1,232,129 | 1,130,810 |
Other liabilities | 92,660 | 114,901 |
Total liabilities | 3,008,769 | 2,962,727 |
Commitments and contingencies (Note 14) | ||
Redeemable noncontrolling interest | 17,791 | 18,130 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value-200,000 shares authorized, none issued and outstanding | ||
Additional paid-in capital | 1,751,993 | 1,744,022 |
Distributions in excess of earnings | (993,320) | (973,395) |
Accumulated other comprehensive income | 7,897 | 13,148 |
Total stockholders' equity | 768,645 | 785,836 |
Noncontrolling interests | 393,098 | 408,031 |
Total equity | 1,161,743 | 1,193,867 |
Total liabilities and equity | 4,188,303 | 4,174,724 |
Class T | ||
Stockholders' equity: | ||
Common stock | 282 | 269 |
Class S | ||
Stockholders' equity: | ||
Common stock | 499 | 492 |
Class D | ||
Stockholders' equity: | ||
Common stock | 74 | 79 |
Class I | ||
Stockholders' equity: | ||
Common stock | 694 | 691 |
Class E | ||
Stockholders' equity: | ||
Common stock | $ 526 | $ 530 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class T | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares issued (in shares) | 28,173 | 26,884 |
Common stock, shares outstanding (in shares) | 28,173 | 26,884 |
Class S | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares issued (in shares) | 49,899 | 49,237 |
Common stock, shares outstanding (in shares) | 49,899 | 49,237 |
Class D | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares issued (in shares) | 7,439 | 7,871 |
Common stock, shares outstanding (in shares) | 7,439 | 7,871 |
Class I | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares issued (in shares) | 69,387 | 69,142 |
Common stock, shares outstanding (in shares) | 69,387 | 69,142 |
Class E | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares issued (in shares) | 52,550 | 52,974 |
Common stock, shares outstanding (in shares) | 52,550 | 52,974 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues: | ||
Rental revenues | $ 77,960 | $ 62,505 |
Debt-related income | 5,761 | 3,468 |
Total revenues | 83,721 | 65,973 |
Operating expenses: | ||
Rental expenses | 28,300 | 21,314 |
Real estate-related depreciation and amortization | 33,197 | 27,451 |
General and administrative expenses | 3,044 | 2,037 |
Advisory fees | 9,538 | 7,144 |
Performance participation allocation | 0 | 12,192 |
Acquisition costs and reimbursements | 1,169 | 1,629 |
Impairment loss on debt-related investment held for sale | 2,520 | 0 |
Total operating expenses | 77,768 | 71,767 |
Other expenses (income): | ||
Equity in loss from unconsolidated joint venture partnerships | 2,446 | 1,010 |
Interest expense | 37,545 | 24,410 |
Gain on sale of real estate property | (36,884) | (53,881) |
Loss on extinguishment of debt and financing commitments, net | 700 | 0 |
Loss (gain) on derivative instruments | 103 | (1,550) |
Provision for current expected credit losses | 5,630 | 0 |
Other income | (1,016) | (577) |
Total other expenses (income) | 8,524 | (30,588) |
Net (loss) income | (2,571) | 24,794 |
Net loss (income) attributable to redeemable noncontrolling interests | 18 | (246) |
Net loss (income) attributable to noncontrolling interests | 549 | (3,537) |
Net (loss) income attributable to common stockholders | $ (2,004) | $ 21,011 |
Weighted average number of common shares outstanding | ||
Weighted-average shares outstanding-basic (in shares) | 206,774 | 178,528 |
Weighted-average shares outstanding-diluted (in shares) | 263,026 | 210,676 |
Net (loss) income attributable to common stockholders per common share - basic | $ (0.01) | $ 0.12 |
Net (loss) income attributable to common stockholders per common share - diluted | $ (0.01) | $ 0.12 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (2,571) | $ 24,794 |
Change from cash flow hedging activities | (7,056) | 11,994 |
Change from activities related to available-for-sale securities | 77 | |
Comprehensive (loss) income | (9,550) | 36,788 |
Comprehensive loss (income) attributable to redeemable noncontrolling interests | 73 | (365) |
Comprehensive loss (income) attributable to noncontrolling interests | 2,222 | (5,260) |
Comprehensive (loss) income attributable to common stockholders | $ (7,255) | $ 31,163 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Distributions in Excess of Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Beginning Balances at Dec. 31, 2021 | $ 1,696 | $ 1,457,296 | $ (865,844) | $ (13,418) | $ 196,696 | $ 776,426 |
Beginning Balances (in shares) at Dec. 31, 2021 | 169,665 | |||||
Ending Balances (in shares) at Mar. 31, 2022 | 182,042 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) (excluding portion attributable to redeemable noncontrolling interest) | 21,011 | 3,537 | 24,548 | |||
Change from securities and cash flow hedging activities (excluding attributable to redeemable noncontrolling interest) | 10,152 | 1,723 | 11,875 | |||
Issuance of common stock | $ 142 | 116,368 | 116,510 | |||
Issuance of common stock (in shares) | 14,165 | |||||
Share-based compensation | 50 | 50 | ||||
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs | (1,580) | (1,580) | ||||
Trailing distribution fees | (5,037) | 1,030 | (3,824) | (7,831) | ||
Redemptions of common stock | $ (18) | (14,537) | $ (14,555) | |||
Redemptions of common stock (in shares) | (1,788) | (1,788) | ||||
Issuances of OP Units for DST Interests | 39,441 | $ 39,441 | ||||
Other noncontrolling interests net contributions | 17 | 17 | ||||
Distributions declared on common stock and noncontrolling interests (excludes attributable to redeemable noncontrolling interest) | (16,743) | (2,858) | (19,601) | |||
Redemption value allocation adjustment to redeemable noncontrolling interest | (482) | (482) | ||||
Redemptions of noncontrolling interests | (264) | (2,041) | (2,305) | |||
Ending Balances at Mar. 31, 2022 | $ 1,820 | 1,551,814 | (860,546) | (3,266) | 232,691 | 922,513 |
Beginning Balances at Dec. 31, 2022 | $ 2,061 | 1,744,022 | (973,395) | 13,148 | 408,031 | 1,193,867 |
Beginning Balances (in shares) at Dec. 31, 2022 | 206,108 | |||||
Ending Balances (in shares) at Mar. 31, 2023 | 207,448 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) (excluding portion attributable to redeemable noncontrolling interest) | (2,004) | (549) | (2,553) | |||
Change from securities and cash flow hedging activities (excluding attributable to redeemable noncontrolling interest) | (5,251) | (1,673) | (6,924) | |||
Issuance of common stock | $ 54 | 47,637 | $ 47,691 | |||
Issuance of common stock (in shares) | 5,366 | 5,400 | ||||
Share-based compensation | 75 | $ 75 | ||||
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs | (1,437) | (1,437) | ||||
Trailing distribution fees | (793) | 1,461 | 1,132 | 1,800 | ||
Redemptions of common stock | $ (40) | (35,415) | $ (35,455) | |||
Redemptions of common stock (in shares) | (4,026) | (4,026) | ||||
Other noncontrolling interests net distributions | (4) | $ (4) | ||||
Distributions declared on common stock and noncontrolling interests (excludes attributable to redeemable noncontrolling interest) | (19,382) | (5,079) | (24,461) | |||
Redemption value allocation adjustment to redeemable noncontrolling interest | 74 | 74 | ||||
Redemptions of noncontrolling interests | (2,170) | (8,760) | (10,930) | |||
Ending Balances at Mar. 31, 2023 | $ 2,075 | $ 1,751,993 | $ (993,320) | $ 7,897 | $ 393,098 | $ 1,161,743 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Net loss (income) attributable to redeemable noncontrolling interests | $ 18 | $ (246) |
Unrealized gain (loss) from derivative instruments allocated to redeemable noncontrolling interest | (55) | 119 |
Distribution fees attributable to redeemable noncontrolling interest | $ 192 | $ 160 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities: | ||
Net income (loss) | $ (2,571) | $ 24,794 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Real estate-related depreciation and amortization | 33,197 | 27,451 |
Straight-line rent and amortization of above- and below-market leases | (1,896) | (1,753) |
Gain on sale of real estate property | (36,884) | (53,881) |
Performance participation allocation | 0 | 12,192 |
Impairment loss on debt-related investment held for sale | 2,520 | 0 |
Equity in income of unconsolidated joint venture partnership | 2,446 | 1,010 |
Loss on extinguishment of debt and financing commitments, net | 700 | 0 |
Provision for current expected credit losses | 5,630 | 0 |
Amortization of deferred financing costs | 1,960 | 1,780 |
Financing obligation liability appreciation | 2,862 | 4,007 |
Other | 1,659 | (646) |
Changes in operating assets and liabilities | ||
Changes in operating assets and liabilities | (1,649) | 9,449 |
Cash settlement of accrued performance participation allocation | (23,747) | 0 |
Net cash (used in) provided by operating activities | (15,773) | 24,403 |
Investing activities: | ||
Real estate acquisitions | (14,697) | (368,234) |
Capital expenditures | (12,837) | (6,488) |
Proceeds from disposition of real estate property | 53,735 | 169,421 |
Investments in debt-related investments | (615) | (840) |
Investments in unconsolidated joint venture partnerships | (7,673) | (35,058) |
Other | 1,257 | 33 |
Net cash provided by (used) in investing activities | 19,170 | (241,166) |
Financing activities: | ||
Repayments of mortgage notes | (70,932) | (413) |
Net proceeds from (repayments of) line of credit | 42,000 | (94,000) |
Redemptions of common stock | (35,455) | (14,555) |
Distributions paid to common stockholders, redeemable noncontrolling interest holders and noncontrolling interest holders | (14,505) | (11,251) |
Proceeds from issuance of common stock | 39,700 | 109,767 |
Proceeds from financing obligations, net | 83,834 | 253,093 |
Offering costs for issuance of common stock and private placements | (4,157) | (3,462) |
Redemption of noncontrolling interests | (10,930) | (2,305) |
Redemption of redeemable noncontrolling interests | 0 | (7,724) |
Deferred financing costs paid | (45) | (92) |
Interest rate cap premium | (9,340) | 0 |
Net cash provided by financing activities | 20,170 | 229,058 |
Net increase in cash, cash equivalents and restricted cash | 23,567 | 12,295 |
Cash, cash equivalents and restricted cash, at beginning of period | 17,186 | 14,352 |
Cash, cash equivalents and restricted cash, at end of period | $ 40,753 | $ 26,647 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION Unless the context otherwise requires, the “Company,” “we,” “our” or “us” refers to Ares Real Estate Income Trust Inc. and its consolidated subsidiaries. We are externally managed by our advisor. The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain disclosures normally included in the annual audited financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been omitted. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 20, 2023 (“2022 Form 10-K”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Global macroeconomic conditions, including heightened inflation, changes to fiscal and monetary policy, higher interest rates and challenges in the supply chain, coupled with the war in Ukraine and the ongoing effects of the novel coronavirus pandemic, have the potential to negatively impact us. These current macroeconomic conditions may continue or aggravate and could cause the United States to experience an economic slowdown or recession. We anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with GAAP. As used herein, the term “commercial” refers to our office, retail and industrial properties or customers, as applicable. Reclassifications Certain items in our condensed consolidated statements of operations, condensed consolidated statements of equity and condensed consolidated statements of cash flows for the three months ended March 31, 2022 have been reclassified to conform to the 2023 presentation. |
INVESTMENTS IN REAL ESTATE PROP
INVESTMENTS IN REAL ESTATE PROPERTIES | 3 Months Ended |
Mar. 31, 2023 | |
Real Estate [Abstract] | |
INVESTMENTS IN REAL ESTATE PROPERTIES | 2. INVESTMENTS IN REAL ESTATE PROPERTIES The following table summarizes our consolidated investments in real estate properties. As of (in thousands) March 31, 2023 December 31, 2022 Land $ 689,142 $ 694,998 Buildings and improvements 3,166,233 3,152,553 Intangible lease assets 313,324 317,141 Right of use asset 13,637 13,637 Investment in real estate properties 4,182,336 4,178,329 Accumulated depreciation and amortization (597,258) (572,751) Net investment in real estate properties $ 3,585,078 $ 3,605,578 Acquisitions During the three months ended March 31, 2023, we acquired 100% of the following properties through asset acquisitions: ($ in thousands) Property Type Acquisition Date Total Purchase Price (1) 2023 Acquisitions: VM8 Logistics Center Industrial 1/19/2023 $ 17,511 Total 2023 acquisitions $ 17,511 (1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2023 acquisitions. During the three months ended March 31, 2023, we allocated the purchase price of our acquisitions to land and building and improvements as follows: For the Three Months Ended ($ in thousands) March 31, 2023 Land $ 2,166 Building and improvements 15,345 Total purchase price (1) $ 17,511 (1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2023 acquisitions. There were no intangible lease assets or liabilities acquired in connection with our acquisition during the three months ended March 31, 2023. Dispositions During the three months ended March 31, 2023, we sold one partial retail property for net proceeds of approximately $53.7 million. We recorded a net gain on sale of approximately $36.9 million. During the three months ended March 31, 2022, we sold two retail properties, one office property and one retail land parcel for net proceeds of approximately $169.4 million. We recorded a net gain on sale of approximately $53.9 million. Intangible Lease Assets and Liabilities Intangible lease assets and liabilities as of March 31, 2023 and December 31, 2022 include the following: As of March 31, 2023 As of December 31, 2022 Accumulated Accumulated (in thousands) Gross Amortization Net Gross Amortization Net Intangible lease assets (1) $ 290,391 $ (217,141) $ 73,250 $ 294,208 $ (214,201) $ 80,007 Above-market lease assets (1) 22,933 (19,892) 3,041 22,933 (19,707) 3,226 Below-market lease liabilities (73,331) 33,098 (40,233) (76,033) 33,589 (42,444) (1) Included in net investment in real estate properties on the condensed consolidated balance sheets. Rental Revenue Adjustments and Depreciation and Amortization Expense The following table summarizes straight-line rent adjustments, amortization recognized as an increase (decrease) to rental revenues from above- and below-market lease assets and liabilities and real estate-related depreciation and amortization expense: For the Three Months Ended March 31, (in thousands) 2023 2022 Increase (decrease) to rental revenue: Straight-line rent adjustments $ 1,068 $ 726 Above-market lease amortization (186) (169) Below-market lease amortization 1,014 1,196 Real estate-related depreciation and amortization: Depreciation expense $ 26,417 $ 20,198 Intangible lease asset amortization 6,780 7,253 |
INVESTMENTS IN UNCONSOLIDATED J
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investment And Joint Venture [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS | 3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS We have acquired interests in joint venture partnerships for purposes of investing in properties across the U.S. We record our investments in AREIT-McDowell Vue Parent LLC (“Vue 1400 JV”), Pathfinder Core AREIT JV NNN Holdings, LLC (“Net Lease JV I”), Pathfinder Core AREIT Net Lease Aggregator LLC (“Net Lease JV II”) and Pathfinder Core AREIT Net Lease TRS Aggregator LLC (“Net Lease JV III”) under the equity method on our condensed consolidated balance sheets as we have the ability to exercise significant influence in each partnership but do not have control of the entities. Other partners in Net Lease JV I, Net Lease JV II and Net Lease JV III are affiliates of our Advisor. The following table summarizes our investments in unconsolidated joint venture partnerships as of March 31, 2023 and December 31, 2022: As of March 31, 2023 As of December 31, 2022 Investments in Unconsolidated Property Ownership Number of Ownership Number of Joint Venture Partnerships as of ($ in thousands) Type Percentage Properties Percentage Properties As of March 31, 2023 As of December 31, 2022 Vue 1400 JV Residential 85% 1 85% 1 $ 25,574 $ 25,984 Net Lease JV I Net Lease 50% 15 50% 15 16,371 16,393 Net Lease JV II Net Lease 50% 120 50% 117 66,314 65,763 Net Lease JV III Net Lease 50% 23 50% 23 16,907 12,232 Total investments in unconsolidated joint venture partnerships 159 156 $ 125,166 $ 120,372 |
REAL ESTATE DEBT INVESTMENTS
REAL ESTATE DEBT INVESTMENTS | 3 Months Ended |
Mar. 31, 2023 | |
REAL ESTATE DEBT INVESTMENTS. | |
REAL ESTATE DEBT INVESTMENTS | 4. REAL ESTATE DEBT INVESTMENTS Debt-Related Investments The following table summarizes our debt-related investments as of March 31, 2023 and December 31, 2022: Weighted-Average Weighted-Average ($ in thousands) Carrying Amount (1) Outstanding Principal (1) Interest Rate Remaining Life (Years) As of March 31, 2023 Senior loans (2) $ 147,795 $ 155,555 8.9 % 1.8 Mezzanine loans 106,406 108,500 10.9 1.6 Total debt-related investments (2) $ 254,201 $ 264,055 9.9 % 1.7 As of December 31, 2022 Senior loans (2) $ 151,645 $ 154,622 8.5 % 2.1 Mezzanine loans 108,794 108,500 10.4 1.9 Total debt-related investments (2) $ 260,439 $ 263,122 9.5 % 2.0 (1) The difference between the carrying amount and the outstanding principal amount of the debt-related investments consists of unamortized purchase discount, deferred financing costs, loan origination costs, and any recorded credit loss reserves, if applicable. (2) As of March 31, 2023 and December 31, 2022, carrying amounts include $39.5 million and $42.0 million, respectively, related to one senior loan debt-related investment that was in default and on non-accrual status. Outstanding principal includes $43.8 million related to this senior loan as of March 31, 2023 and December 31, 2022. We recorded an impairment loss of $2.5 million related to this senior loan during the three months ended March 31, 2023 and included the impairment loss in impairment loss on debt-related investment held for sale on the condensed consolidated statements of operations. This senior loan is held-for-sale and therefore the carrying amount has been reduced to its fair value as of both March 31, 2023 and December 31, 2022. Weighted-average interest rate and weighted-average remaining life excludes this senior loan from its calculations. Current Expected Credit Losses Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requires us to reflect current expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broad range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform credit loss estimates (the “CECL Reserve”). ASU No. 2016-13 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. ASU No. 2016-13 was adopted by us as of January 1, 2020. Increases and decreases to expected credit losses impact earnings and are recorded within the provision for current expected credit losses in our condensed consolidated statements of operations. The CECL Reserve related to outstanding balances on loans held for investment required under ASU No. 2016-13 is a valuation account that is deducted from the amortized cost basis of our loans held for investment in our condensed consolidated balance sheets. The CECL Reserve related to unfunded commitments on loans held for investment is recorded within other liabilities in our condensed consolidated balance sheets. We estimate our CECL Reserve primarily using a probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan. Calculation of the CECL Reserve requires loan specific data, which includes capital senior to us when we are the subordinate lender, changes in net operating income, debt service coverage ratio, loan-to-value, occupancy, property type and geographic location. Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of our floating rate loan portfolio and (iv) our current and future view of the macroeconomic environment. We may consider loan-specific qualitative factors on certain loans to estimate our CECL Reserve. In order to estimate the future expected loan losses relevant to our portfolio, we utilize historical market loan loss data licensed from a third-party data service. For periods beyond the reasonable and supportable forecast period, we revert back to historical loss data. Loan balances that are deemed to be uncollectible are written off as a realized loss and are deducted from our CECL Reserve. The write-offs are recorded in the period in which the loan balance is deemed uncollectible based on management’s judgment. As of March 31, 2023, our CECL Reserve for our debt-related investment portfolio is $5.6 million or 1.6% of our debt- related investment commitment balance of $358.3 million recognized as an increase in provision for loan loss during the three months ended March 31, 2023. The debt-related investment commitment balance is comprised of $220.4 million of funded commitments and $137.9 million of unfunded commitments with associated CECL Reserves of $3.5 million and $2.1 million, respectively. The CECL Reserve for unfunded commitments is based on the unfunded portion of the loan commitment over the full contractual period over which we are exposed to credit risk through a current obligation to extend credit and is recorded as an other liability on the condensed consolidated balance sheets. The calculation of the CECL Reserve excludes one debt-related investment that is currently held for sale. There have been no write-offs or recoveries Available-for-Sale Debt Securities We acquire debt securities that are primarily collateralized by mortgages on commercial real estate properties primarily for cash management and investment purposes. On the acquisition date, we designate investments in commercial real estate debt securities as available-for-sale. Investments in debt securities that are classified as available-for-sale are carried at fair value. These assets are valued on a recurring basis and any unrealized holding gains and losses other than those associated with a credit loss are recorded each period in other comprehensive income. There were no credit losses associated with our available-for-sale debt securities as of and for the period ended March 31 2023. As of March 31, 2023 and December 31, 2022, we had one debt security investment designated as available-for-sale debt securities. The weighted-average remaining term of our available-for-sale debt security, which is based on the estimated fully extended maturity dates of the underlying loans of the debt security, was approximately 3.8 years as of March 31, 2023 . ($ in thousands) Face Amount Amortized Cost Unamortized Discount Unrealized Gain, Net (1) Fair Value As of March 31, 2023 Available-for-sale debt securities $ 14,979 $ 14,876 $ 103 $ 103 $ 14,979 As of December 31, 2022 Available-for-sale debt securities $ 14,979 $ 14,870 $ 109 $ 26 $ 14,896 (1) Represents cumulative unrealized gain beginning from acquisition date. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | 5. DEBT A summary of our consolidated debt is as follows: Weighted-Average Effective Interest Rate as of Balance as of March 31, December 31, March 31, December 31, ($ in thousands) 2023 2022 Current Maturity Date 2023 2022 Line of credit (1) 6.17 % 5.72 % November 2025 $ 277,000 $ 235,000 Term loan (2) 3.31 3.90 November 2026 400,000 400,000 Term loan (3) 4.26 4.56 January 2027 400,000 400,000 Fixed-rate mortgage notes 3.40 3.48 January 2027 - May 2031 310,084 380,316 Floating-rate mortgage notes (4) 4.52 4.52 October 2024 - October 2026 207,600 207,600 Total principal amount / weighted-average (5) 4.22 % 4.31 % $ 1,594,684 $ 1,622,916 Less: unamortized debt issuance costs $ (13,711) $ (14,849) Add: unamortized mark-to-market adjustment on assumed debt 8,147 8,408 Total debt, net $ 1,589,120 $ 1,616,475 Gross book value of properties encumbered by debt $ 907,741 $ 970,310 (1) The effective interest rate is calculated based on the Term Secured Overnight Financing Rate plus an 11.448 basis point adjustment (“Adjusted Term SOFR”), plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. As of March 31, 2023, the unused and available portions under the line of credit were approximately $623.0 million and $565.6 million, respectively. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. (2) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $300.0 million in borrowings under this term loan and an interest rate cap agreement relating to $100.0 million in borrowings under this term loan. (3) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $350.0 million in borrowings under this term loan and an interest rate cap agreement relating to $50.0 million in borrowings under this term loan. (4) The effective interest rate is calculated based on the London Interbank Offered Rate (“LIBOR”) plus a margin. As of both March 31, 2023 and December 31, 2022, our floating-rate mortgage notes were subject to interest rate spreads ranging from 1.55% to 2.50% . The weighted-average interest rate is the all-in interest rate, including the effects of interest rate cap agreements which capped the effective interest rates of our two floating-rate mortgage notes at 4.50% and 4.55% , respectively, as of March 31, 2023. (5) The weighted-average remaining term of our consolidated borrowings was approximately 3.7 years as of March 31, 2023, excluding the impact of certain extension options. For the three months ended March 31, 2023 and 2022, the amount of interest incurred related to our consolidated indebtedness, excluding amortization of debt issuance costs, was $19.6 million and $9.7 million, respectively. See “Note 6” for the amount of interest incurred related to the DST Program (as defined below). As of March 31, 2023, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows: (in thousands) Line of Credit (1) Term Loans Mortgage Notes Total 2023 — — 1,205 1,205 2024 — — 129,265 129,265 2025 277,000 — 2,360 279,360 2026 — 400,000 84,214 484,214 2027 — 400,000 175,787 575,787 Thereafter — — 124,853 124,853 Total principal payments $ 277,000 $ 800,000 $ 517,684 $ 1,594,684 (1) The term of the line of credit may be extended pursuant to two six-month extension options, subject to certain conditions. In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”), which identified the Secured Overnight Financing Rate as its preferred alternative rate for LIBOR in derivatives and other financial contracts. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. LIBOR is expected to be phased out or modified by June 2023. As of March 31, 2023, certain of our mortgage notes have initial or extended maturity dates beyond 2023 with exposure to LIBOR. The agreements governing these loans provide procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued. However, there can be no assurances as to whether such replacement or alternative base rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the phasing out of LIBOR after June 2023 and work with our lenders to seek to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR. Debt Covenants Our line of credit, term loans and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate-level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. We were in compliance with our debt covenants as of March 31, 2023. Derivative Instruments To manage interest rate risk for certain of our variable-rate debt, we use interest rate derivative instruments as part of our risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. Certain of our variable-rate borrowings are not hedged, and therefore, to an extent, we have ongoing exposure to interest rate movements. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt. During the next 12 months, we estimate that approximately $13.2 million will be reclassified as a decrease to interest expense related to active effective hedges of existing floating-rate debt. As of March 31, 2023, we have two interest rate cap derivative instruments that are not designated as cash flow hedges and therefore, changes in fair value are recognized through income. As a result, in periods with high interest rate volatility, we may experience significant fluctuations in our net income (loss). The following table summarizes the location and fair value of our consolidated derivative instruments on our condensed consolidated balance sheets: Number of Fair Value ($ in thousands) Contracts Notional Amount Other Assets Other Liabilities As of March 31, 2023 Interest rate swaps designated as cash flow hedges 12 $ 650,000 $ 14,339 $ — Interest rate caps designated as cash flow hedges 1 150,000 7,806 Interest rate caps not designated as cash flow hedges 2 207,600 2,889 — Total derivative instruments 15 $ 1,007,600 $ 25,034 $ — As of December 31, 2022 Interest rate swaps designated as cash flow hedges 12 $ 650,000 $ 20,279 $ — Interest rate caps not designated as cash flow hedges 2 207,600 4,169 — Total derivative instruments 14 $ 857,600 $ 24,448 $ — The following table presents the effect of our consolidated derivative instruments on our condensed consolidated financial statements: For the Three Months Ended March 31, (in thousands) 2023 2022 Derivative instruments designated as cash flow hedges: (Loss) gain recognized in AOCI $ (4,000) $ 10,075 Amount reclassified from AOCI (out of) into interest expense (3,056) 1,919 Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded 37,545 24,410 Derivative instruments not designated as cash flow hedges: Unrealized (loss) gain on derivative instruments recognized in other income (expenses) (1) $ (1,224) $ 1,550 Realized gain on derivative instruments recognized in other income (expenses) (2) 1,121 — (1) Unrealized (loss) gain on changes in fair value of derivative instruments relates to mark-to-market changes on our derivatives not designated as cash flow hedges. (2) Realized gain on derivative instruments relates to interim cash settlements for our derivatives not designated as cash flow hedges. |
DST PROGRAM
DST PROGRAM | 3 Months Ended |
Mar. 31, 2023 | |
Delaware Statutory Trust Program [Abstract] | |
DST PROGRAM | 6. DST PROGRAM We have a program to raise capital through private placement offerings by selling beneficial interests (“DST Interests”) in specific Delaware statutory trusts holding real properties (the “DST Program”). Under the DST Program, each private placement offers interests in one or more real properties placed into one or more Delaware statutory trusts by the Operating Partnership or its affiliates (“DST Properties”). In order to facilitate additional capital raise through the DST Program, we have made and may continue to offer loans (“DST Program Loans”) to finance a portion of the sale of DST Interests in the trusts holding DST Properties to potential investors. As of March 31, 2023 and December 31, 2022, there were approximately $95.9 million and $81.9 million, respectively, of outstanding DST Program Loans that we have made to partially finance the sale of DST Interests. We include our investments in DST Program Loans separately on our condensed consolidated balance sheets in the DST Program Loans line item and we include income earned from DST Program Loans in other income on our condensed consolidated statements of operations. The following table presents our DST Program activity for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, (in thousands) 2023 2022 DST Interests sold $ 101,795 $ 280,802 DST Interests financed by DST Program Loans 14,015 14,827 Income earned from DST Program Loans (1) 1,017 669 Financing obligation liability appreciation (2) 2,862 4,007 Rent obligation incurred under master lease agreements (2) 13,583 9,253 (1) Included in other income and expenses on the condensed consolidated statements of operations. (2) Included in interest expense on the condensed consolidated statements of operations. Additionally, during the three months ended March 31, 2022, 4.8 million partnership units (“OP Units”) in our operating partnership, AREIT Operating Partnership LP (the “Operating Partnership”) were issued in exchange for DST Interests, for a net investment of $39.4 million in accordance with our Umbrella Partnership Real Estate Investment Trust (“UPREIT”) structure. There have been no OP Units issued in accordance with our UPREIT structure during the three months ended March 31, 2023. |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | 7. FAIR VALUE We estimate the fair value of our financial instruments using available market information and valuation methodologies we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of the amounts that we would realize upon disposition of our financial instruments. Fair Value Measurements on a Recurring Basis The following table presents our financial instruments measured at fair value on a recurring basis: Total (in thousands) Level 1 Level 2 Level 3 Fair Value As of March 31, 2023 Assets: Derivative instruments $ — $ 25,034 $ — $ 25,034 Available-for-sale debt securities — 14,979 — 14,979 Total assets measured at fair value $ — $ 40,013 $ — $ 40,013 As of December 31, 2022 Assets: Derivative instruments $ — $ 24,448 $ — $ 24,448 Available-for-sale debt securities — 14,896 — 14,896 Total assets measured at fair value $ — $ 39,344 $ — $ 39,344 The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Derivative Instruments. Available-for-Sale Debt Securities. Nonrecurring Fair Value Measurements As of March 31, 2023 and December 31, 2022, the fair values of cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses and distributions payable approximate their carrying values because of the short-term nature of these instruments. The table below includes fair values for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows: As of March 31, 2023 As of December 31, 2022 Carrying Fair Carrying Fair (in thousands) Value (1) Value Value (1) Value Assets: Debt-related investments $ 264,055 $ 259,305 $ 263,122 $ 260,841 DST Program Loans 95,909 93,621 81,897 79,049 Liabilities: Line of credit $ 277,000 $ 277,000 $ 235,000 $ 235,000 Term loans 800,000 800,000 800,000 800,000 Mortgage notes 517,684 482,992 587,916 541,558 (1) The carrying value reflects the principal amount outstanding. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
EQUITY | 8. EQUITY Public Offerings We intend to conduct a continuous public offering that will not have a predetermined duration, subject to continued compliance with the rules and regulations of the SEC and applicable state laws. On May 3, 2022, the SEC declared our registration statement on Form S-11 with respect to our fourth public offering of up to $10.0 billion of shares of its common stock effective, and the fourth public offering commenced the same day. We ceased selling shares of our common stock under our third public offering of up to $3.0 billion of shares immediately upon the effectiveness of the registration statement for the fourth public offering. Under the fourth public offering, we are offering up to $8.5 billion of shares of our common stock in the primary offering and up to $1.5 billion of shares of our common stock pursuant to our distribution reinvestment plan, in any combination of Class T shares, Class D shares, Class S shares and Class I shares. We may reallocate amounts between the primary offering and distribution reinvestment plan. Pursuant to our public offerings, we offered and continue to offer shares of our common stock at the “transaction price,” plus applicable upfront selling commissions and dealer manager fees. The “transaction price” generally is equal to the net asset value (“NAV”) per share of our common stock most recently disclosed. Our NAV per share is calculated as of the last calendar day of each month for each of our outstanding classes of stock, and will be available generally within 15 calendar days after the end of the applicable month. Shares issued pursuant to our distribution reinvestment plan are offered at the transaction price, as indicated above, in effect on the distribution date. We may update a previously disclosed transaction price in cases where we believe there has been a material change (positive or negative) to our NAV per share relative to the most recently disclosed monthly NAV per share. During the three months ended March 31, 2023, we raised gross proceeds of approximately $47.7 million from the sale of approximately 5.4 million shares of our common stock in our ongoing public offerings, including proceeds from our distribution reinvestment plan of approximately $8.0 million. Common Stock The following table describes the changes in each class of common shares during the periods presented below: Class T Class S Class D Class I Class E Total (in thousands) Shares Shares Shares Shares Shares Shares FOR THE THREE MONTHS ENDED MARCH 31, 2022 Balance as of December 31, 2021 16,425 35,757 6,749 54,406 56,328 169,665 Issuance of common stock: Primary shares 2,555 4,661 1,104 5,019 — 13,339 Distribution reinvestment plan 92 193 37 302 202 826 Redemptions of common stock (3) (122) (228) (356) (1,079) (1,788) Conversions (62) — — 62 — — Balance as of March 31, 2022 19,007 40,489 7,662 59,433 55,451 182,042 FOR THE THREE MONTHS ENDED MARCH 31, 2023 Balance as of December 31, 2022 26,884 49,237 7,871 69,142 52,974 206,108 Issuance of common stock: Primary shares 1,325 972 45 2,117 — 4,459 Distribution reinvestment plan 134 227 40 331 175 907 Redemptions of common stock (69) (561) (240) (2,557) (599) (4,026) Conversions (101) 24 (277) 354 — — Balance as of March 31, 2023 28,173 49,899 7,439 69,387 52,550 207,448 Distributions The following table summarizes our distribution activity (including distributions to noncontrolling interests and distributions reinvested in shares of our common stock) for the periods below: Amount Common Stock Declared per Distributions Other Cash Reinvested in Distribution Gross (in thousands, except per share data) Common Share (1) Paid in Cash Distributions (2) Shares Fees (3) Distributions (4) 2023 March 31 $ 0.09375 $ 9,912 $ 5,271 $ 8,009 $ 1,461 $ 24,653 Total $ 0.09375 $ 9,912 $ 5,271 $ 8,009 $ 1,461 $ 24,653 2022 March 31 $ 0.09375 $ 8,837 $ 3,018 $ 6,876 $ 1,030 $ 19,761 June 30 0.09375 9,299 3,157 7,362 1,259 21,077 September 30 0.09375 9,684 3,972 7,732 1,399 22,787 December 31 0.09375 9,859 4,559 7,923 1,478 23,819 Total $ 0.37500 $ 37,679 $ 14,706 $ 29,893 $ 5,166 $ 87,444 (1) Amount reflects the total gross quarterly distribution rate authorized by our board of directors per Class T share, per Class S share, per Class D share, per Class I share and per Class E share of common stock. Distributions were declared and paid as of monthly record dates. These monthly distributions have been aggregated and presented on a quarterly basis. The distributions on Class T shares, Class S shares and Class D shares of common stock are reduced by the respective distribution fees that are payable with respect to Class T shares, Class S shares and Class D shares. (2) Consists of distribution fees paid to Ares Wealth Management Solutions, LLC (the “Dealer Manager”) with respect to OP Units and distributions paid to holders of OP Units and other noncontrolling interest holders. (3) Distribution fees are paid monthly to the Dealer Manager, with respect to Class T shares, Class S shares and Class D shares issued in the primary portion of our public offerings only. All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers. (4) Gross distributions are total distributions before the deduction of any distribution fees relating to Class T shares, Class S shares and Class D shares issued in the primary portion of our public offerings. Redemptions and Repurchases Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2023 and 2022. All eligible redemption requests were fulfilled for the periods presented. Our board of directors may modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders. For the Three Months Ended March 31, (in thousands, except for per share data) 2023 2022 Number of shares redeemed or repurchased 4,026 1,788 Aggregate dollar amount of shares redeemed or repurchased $ 35,455 $ 14,555 Average redemption or repurchase price per share $ 8.81 $ 8.15 |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2023 | |
Redeemable Noncontrolling Interest [Abstract] | |
REDEEMABLE NONCONTROLLING INTERESTS | 9. REDEEMABLE NONCONTROLLING INTERESTS The Operating Partnership’s net income and loss will generally be allocated to the general partner and the limited partners in accordance with the respective percentage interest in the OP Units issued by the Operating Partnership. The Operating Partnership issued OP Units to the Advisor and Former Sponsor as payment of the performance participation allocation (also referred to as the performance component of the advisory fee) pursuant to the advisory agreement. The Advisor and Former Sponsor subsequently transferred these OP Units to its members or their affiliates or redeemed for cash. We have classified these OP Units as redeemable noncontrolling interests in mezzanine equity on the condensed consolidated balance sheets. The redeemable noncontrolling interests are recorded at the greater of the carrying amount, adjusted for its share of the allocation of income or loss and dividends, or the redemption value, which is equivalent to fair value, of such OP Units at the end of each measurement period. As of both March 31, 2023 and December 31, 2022, we had 2.0 million redeemable OP Units outstanding. The following table summarizes the redeemable noncontrolling interests activity for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Balance at beginning of the year $ 18,130 $ 8,994 Settlement of prior year performance participation allocation (1) — 15,327 Distributions to redeemable noncontrolling interests (192) (160) Redemptions to redeemable noncontrolling interests (2) — (7,724) Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Change from securities and cash flow hedging activities attributable to redeemable noncontrolling interests (55) 119 Redemption value allocation adjustment to redeemable noncontrolling interests (3) (74) 482 Ending balance $ 17,791 $ 17,284 (1) There were no OP Units issued related to the 2022 performance participation allocation, as the $23.7 million payable as of December 31, 2022 was, at the election of the Advisor, settled in cash in January 2023. The 2021 performance participation allocation in the amount of $15.3 million became payable on December 31, 2021, and was issued as 1.9 million Class I OP Units in January 2022. At the direction of the Advisor and in light of our Former Sponsor having been the holder of a separate series of partnership interests in the Operating Partnership with special distribution rights (the “Special Units”) for the first six months of 2021, the holder of the Special Units designated 465,000 of these Class I OP Units to an entity owned indirectly by our Chairman at the time, Mr. Mulvihill, and 465,000 of these Class I OP Units to an entity owned indirectly by a member of our Former Sponsor. The holder of the Special Units transferred 945,000 Class I OP Units to the Advisor thereafter. (2) At the request of the Advisor, the Operating Partnership redeemed all Class I OP Units issued to the Advisor in January 2022 for $7.7 million. (3) Represents the adjustment recorded in order to mark to the redemption value, which is equivalent to fair value, at the end of the measurement period. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
NONCONTROLLING INTERESTS | 10. NONCONTROLLING INTERESTS OP Units The following table summarizes the number of OP Units issued and outstanding to third-party investors (excludes interests held by redeemable noncontrolling interest holders): For the Three Months Ended March 31, (in thousands) 2023 2022 Balance at beginning of period 55,079 27,180 Issuance of units — 4,825 Redemption of units (1,240) (286) Balance at end of period 53,839 31,719 Subject to certain restrictions and limitations, the holders of OP Units may redeem all or a portion of their OP Units for either: shares of the equivalent class of common stock, cash or a combination of both. If we elect to redeem OP Units for shares of our common stock, we will generally deliver one share of our common stock for each such OP Unit redeemed (subject to any redemption fees withheld), and such shares may, subsequently, only be redeemed for cash in accordance with the terms of our share redemption program. If we elect to redeem OP Units for cash, the cash delivered per unit will equal the then-current NAV per unit of the applicable class of OP Units (subject to any redemption fees withheld), which will equal the then-current NAV per share of our corresponding class of shares. During the three months ended March 31, 2023 and 2022, the aggregate amount of OP Units redeemed was $10.9 million and $2.3 million, respectively. The estimated maximum redemption value (unaudited) as of March 31, 2023 and December 31, 2022 was $468.4 million and $488.3 million, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 11. RELATED PARTY TRANSACTIONS Summary of Fees and Expenses The table below summarizes the fees and expenses incurred by us for services provided by the Advisor and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with our public offerings and any related amounts payable: For the Three Months Ended March 31, Payable as of (in thousands) 2023 2022 March 31, 2023 December 31, 2022 Selling commissions and dealer manager fees (1) $ 512 $ 1,042 $ — $ — Ongoing distribution fees (1)(2) 2,154 1,298 741 748 Advisory fees—fixed component 9,538 7,144 2,905 2,868 Performance participation allocation (3) — 12,192 — 23,747 Other expense reimbursements—Advisor (4)(5) 3,106 2,140 3,439 4,192 Other expense reimbursements—Dealer Manager — 27 70 109 Property accounting fee (6) 489 — 489 478 DST Program selling commissions, dealer manager and distribution fees (1) 2,671 7,524 241 241 Other DST Program related costs—Advisor (5) 1,931 4,951 146 146 Total $ 20,401 $ 36,318 $ 8,031 $ 32,529 (1) All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers. (2) The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable of approximately $59.1 million and $60.9 million as of March 31, 2023 and December 31, 2022, respectively, are included in other liabilities on the condensed consolidated balance sheets. (3) The 2022 performance participation allocation in the amount of $23.7 million became payable on December 31, 2022, and the Advisor elected to settle the amounts owed in cash in January 2023. (4) Other expense reimbursements include certain expenses incurred for organization and offering, acquisition and general administrative services provided to us under the advisory agreement, including, but not limited to, certain expenses described below after footnote 6, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment. (5) Includes costs reimbursed to the Advisor related to the DST Program. (6) The cost of the property management fee, including the property accounting fee, is generally borne by the tenant or tenants at each real property, either via a direct reimbursement to us or, in the case of tenants subject to a gross lease, as part of the lease cost. In certain circumstances, we may pay for a portion of the property management fee, including the property accounting fee, without reimbursement from the tenant or tenants at a real property. Certain of the expense reimbursements described in the table above include a portion of the compensation expenses of officers and employees of the Advisor or its affiliates related to activities for which the Advisor did not otherwise receive a separate fee. Amounts incurred related to these compensation expenses for the three months ended March 31, 2023, and 2022 were approximately $2.8 million and $2.4 million, respectively. No reimbursement is made for compensation of our named executive officers unless the named executive officer is providing stockholder services, as outlined in the advisory agreement. Performance Participation Allocation As used below, “Fund Interests” means our outstanding shares of common stock, along with OP Units, which may be or were held directly or indirectly by the Advisor, the Former Sponsor, members or affiliates of the Former Sponsor, and third parties. The performance participation allocation is a performance-based amount that will be paid to the Advisor. This amount is calculated on the basis of the overall investment return provided to holders of Fund Interests (i.e., our outstanding shares and OP Units held by third-party investors) in any calendar year such that the Advisor will receive the lesser of (1) 12.5% of (a) the annual total return amount less (b) any loss carryforward, and (2) the amount equal to (x) the annual total return amount, less (y) any loss carryforward, less (z) the amount needed to achieve an annual total return amount equal to 5% of the NAV per Fund Interest at the beginning of such year (the “Hurdle Amount”). The foregoing calculations are calculated on a per Fund Interest basis and multiplied by the weighted-average Fund Interests outstanding during the year. In no event will the performance participation allocation be less than zero. Accordingly, if the annual total return amount exceeds the Hurdle Amount plus the amount of any loss carryforward, then the Advisor will earn a performance participation allocation equal to 100% of such excess, but limited to 12.5% of the annual total return amount that is in excess of the loss carryforward. Additionally, the Advisor will provide us with a waiver of a portion of its fees generally equal to the amount of the performance component that would have been payable with respect to the Class E shares and the Series 1 Class E OP Units held by third parties until the NAV of such shares or units exceeds $10.00 a share or unit, the benefit of which will be shared among all holders of Fund Interests. The allocation of the performance participation interest is ultimately determined at the end of each calendar year and will be paid in Class I OP units or cash, at the election of the Advisor. The performance hurdle was not achieved as of March 31, 2023, therefore no performance participation allocation expense was recognized in our condensed consolidated statements of operations for the three months ended March 31, 2023. As the performance hurdle was achieved as of March 31, 2022, we recognized approximately $12.2 million of performance participation allocation expense in our condensed consolidated statements of operations for the three months ended March 31, 2022. |
NET INCOME (LOSS) PER COMMON SH
NET INCOME (LOSS) PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER COMMON SHARE | 12. NET INCOME (LOSS) PER COMMON SHARE The computation of our basic and diluted net income (loss) per share attributable to common stockholders is as follows: For the Three Months Ended March 31, (in thousands, except per share data) 2023 2022 Net (loss) income attributable to common stockholders—basic $ (2,004) $ 21,011 Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Net (loss) income attributable to noncontrolling interests (549) 3,537 Net (loss) income attributable to common stockholders—diluted $ (2,571) $ 24,794 Weighted-average shares outstanding—basic 206,774 178,528 Incremental weighted-average shares effect of conversion of noncontrolling interests 56,252 32,148 Weighted-average shares outstanding—diluted 263,026 210,676 Net (loss) income per share attributable to common stockholders: Basic $ (0.01) $ 0.12 Diluted $ (0.01) $ 0.12 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
Cash and Cash Equivalents [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | 13. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information and disclosure of non-cash investing and financing activities is as follows: For the Three Months Ended March 31, (in thousands) 2023 2022 Supplemental disclosure of non-cash investing and financing activities: Distributions reinvested in common stock $ 7,990 $ 6,743 (Decrease) increase in accrued future ongoing distribution fees (1,800) 7,828 Increase in DST Program Loans receivable through DST Program capital raising 14,015 14,827 Redeemable noncontrolling interest issued as settlement of performance participation allocation — 15,327 Issuances of OP Units for DST Interests — 39,441 Restricted Cash Restricted cash consists of lender and property-related escrow accounts. The following table presents the components of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows: For the Three Months Ended March 31, (in thousands) 2023 2022 Beginning of period: Cash and cash equivalents $ 13,336 $ 10,605 Restricted cash 3,850 3,747 Cash, cash equivalents and restricted cash $ 17,186 $ 14,352 End of period: Cash and cash equivalents $ 36,894 $ 22,626 Restricted cash 3,859 4,021 Cash, cash equivalents and restricted cash $ 40,753 $ 26,647 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 14. COMMITMENTS AND CONTINGENCIES Litigation We and the Operating Partnership are not presently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us or our investments. Environmental Matters A majority of the properties we acquire have been or will be subject to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of land. We have acquired or may in the future acquire certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. We are not aware of any environmental liabilities that we believe would have a material adverse effect on our business, financial condition, or results of operations as of March 31, 2023. |
SEGMENT FINANCIAL INFORMATION
SEGMENT FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT FINANCIAL INFORMATION | 15. SEGMENT FINANCIAL INFORMATION Our four reportable segments are office, retail, residential and industrial. Factors used to determine our reportable segments include the physical and economic characteristics of our properties and the related operating activities. Our chief operating decision makers rely on net operating income, among other factors, to make decisions about allocating resources and assessing segment performance. Net operating income is the key performance metric that captures the unique operating characteristics of each segment. Net investment in real estate properties, restricted cash, tenant receivables, straight-line rent receivables and other assets directly assignable to a property are allocated to the segment groupings. Corporate items that are not directly assignable to a property, such as investments in unconsolidated joint venture partnerships, investments in real estate-related securities, debt-related investments and DST Program Loans, are not allocated to segment groupings, but are reflected as reconciling items. The following table reflects our total consolidated assets by business segment as of March 31, 2023 and December 31, 2022: As of (in thousands) March 31, 2023 December 31, 2022 Assets: Office properties $ 379,355 $ 377,546 Retail properties 517,000 537,147 Residential properties 1,485,956 1,495,532 Industrial properties 1,252,141 1,248,255 Corporate 553,851 516,244 Total assets $ 4,188,303 $ 4,174,724 The following table is a reconciliation of our reported net income (loss) attributable to common stockholders to our net operating income for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, (in thousands) 2023 2022 Net (loss) income attributable to common stockholders $ (2,004) $ 21,011 Debt-related income (5,761) (3,468) Real estate-related depreciation and amortization 33,197 27,451 General and administrative expenses 3,044 2,037 Advisory fees 9,538 7,144 Performance participation allocation — 12,192 Acquisition costs and reimbursements 1,169 1,629 Impairment loss on debt-related investment held for sale 2,520 — Equity in loss from unconsolidated joint venture partnerships 2,446 1,010 Interest expense 37,545 24,410 Gain on sale of real estate property (36,884) (53,881) Loss on extinguishment of debt and financing commitments, net 700 — Loss (gain) on derivative instruments 103 (1,550) Provision for current expected credit losses 5,630 — Other income (1,016) (577) Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Net (loss) income attributable to noncontrolling interests (549) 3,537 Net operating income $ 49,660 $ 41,191 The following table sets forth consolidated financial results by segment for the three months ended March 31, 2023 and 2022: (in thousands) Office Retail Residential Industrial Consolidated For the Three Months Ended March 31, 2023 Rental revenues $ 13,349 $ 14,518 $ 28,848 $ 21,245 $ 77,960 Rental expenses (6,630) (3,584) (13,190) (4,896) (28,300) Net operating income $ 6,719 $ 10,934 $ 15,658 $ 16,349 $ 49,660 Real estate-related depreciation and amortization $ 3,963 $ 4,035 $ 9,489 $ 15,710 $ 33,197 For the Three Months Ended March 31, 2022 Rental revenues $ 13,633 $ 17,066 $ 16,354 $ 15,452 $ 62,505 Rental expenses (6,192) (4,629) (6,944) (3,549) (21,314) Net operating income $ 7,441 $ 12,437 $ 9,410 $ 11,903 $ 41,191 Real estate-related depreciation and amortization $ 3,997 $ 4,654 $ 8,353 $ 10,447 $ 27,451 We consider net operating income to be an appropriate supplemental performance measure and believe net operating income provides useful information to our investors regarding our financial condition and results of operations because net operating income reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the properties, such as real estate-related depreciation and amortization, general and administrative expenses, advisory fees, impairment charges, interest expense, gains on sale of properties, other income and expense, gains and losses on the extinguishment of debt and noncontrolling interests. However, net operating income should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our net operating income may not be comparable to that of other real estate companies, as they may use different methodologies for calculating net operating income. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 16 . SUBSEQUENT EVENTS Renewal of Advisory Agreement Ares Real Estate Income Trust Inc., the Operating Partnership and the Advisor previously entered into that certain Amended and Restated Advisory Agreement (2022), effective May 1, 2022 (the “2022 Advisory Agreement”). The term of the 2022 Advisory Agreement continued through April 30, 2023, subject to renewal for an unlimited number of one-year periods. Effective as of April 30, 2023, Ares Real Estate Income Trust Inc., the Operating Partnership and the Advisor renewed the 2022 Advisory Agreement through April 30, 2024 by entering into the Amended and Restated Advisory Agreement (2023) (the “2023 Advisory Agreement”). The terms of the 2023 Advisory Agreement are substantially the same as the terms of the prior version of the agreement. |
INVESTMENTS IN REAL ESTATE PR_2
INVESTMENTS IN REAL ESTATE PROPERTIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Real Estate [Abstract] | |
Schedule of Consolidated Investments in Real Estate Properties | The following table summarizes our consolidated investments in real estate properties. As of (in thousands) March 31, 2023 December 31, 2022 Land $ 689,142 $ 694,998 Buildings and improvements 3,166,233 3,152,553 Intangible lease assets 313,324 317,141 Right of use asset 13,637 13,637 Investment in real estate properties 4,182,336 4,178,329 Accumulated depreciation and amortization (597,258) (572,751) Net investment in real estate properties $ 3,585,078 $ 3,605,578 |
Schedule of Asset Acquisitions | During the three months ended March 31, 2023, we acquired 100% of the following properties through asset acquisitions: ($ in thousands) Property Type Acquisition Date Total Purchase Price (1) 2023 Acquisitions: VM8 Logistics Center Industrial 1/19/2023 $ 17,511 Total 2023 acquisitions $ 17,511 (1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2023 acquisitions. |
Allocation of Purchase Price Allocations | During the three months ended March 31, 2023, we allocated the purchase price of our acquisitions to land and building and improvements as follows: For the Three Months Ended ($ in thousands) March 31, 2023 Land $ 2,166 Building and improvements 15,345 Total purchase price (1) $ 17,511 (1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2023 acquisitions. There were no intangible lease assets or liabilities acquired in connection with our acquisition during the three months ended March 31, 2023. |
Schedule of Intangible Lease Assets and Liabilities | Intangible lease assets and liabilities as of March 31, 2023 and December 31, 2022 include the following: As of March 31, 2023 As of December 31, 2022 Accumulated Accumulated (in thousands) Gross Amortization Net Gross Amortization Net Intangible lease assets (1) $ 290,391 $ (217,141) $ 73,250 $ 294,208 $ (214,201) $ 80,007 Above-market lease assets (1) 22,933 (19,892) 3,041 22,933 (19,707) 3,226 Below-market lease liabilities (73,331) 33,098 (40,233) (76,033) 33,589 (42,444) (1) Included in net investment in real estate properties on the condensed consolidated balance sheets. |
Summary of Rental Revenue and Depreciation and Amortization Expense | The following table summarizes straight-line rent adjustments, amortization recognized as an increase (decrease) to rental revenues from above- and below-market lease assets and liabilities and real estate-related depreciation and amortization expense: For the Three Months Ended March 31, (in thousands) 2023 2022 Increase (decrease) to rental revenue: Straight-line rent adjustments $ 1,068 $ 726 Above-market lease amortization (186) (169) Below-market lease amortization 1,014 1,196 Real estate-related depreciation and amortization: Depreciation expense $ 26,417 $ 20,198 Intangible lease asset amortization 6,780 7,253 |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investment And Joint Venture [Abstract] | |
Equity Method Investments | The following table summarizes our investments in unconsolidated joint venture partnerships as of March 31, 2023 and December 31, 2022: As of March 31, 2023 As of December 31, 2022 Investments in Unconsolidated Property Ownership Number of Ownership Number of Joint Venture Partnerships as of ($ in thousands) Type Percentage Properties Percentage Properties As of March 31, 2023 As of December 31, 2022 Vue 1400 JV Residential 85% 1 85% 1 $ 25,574 $ 25,984 Net Lease JV I Net Lease 50% 15 50% 15 16,371 16,393 Net Lease JV II Net Lease 50% 120 50% 117 66,314 65,763 Net Lease JV III Net Lease 50% 23 50% 23 16,907 12,232 Total investments in unconsolidated joint venture partnerships 159 156 $ 125,166 $ 120,372 |
REAL ESTATE DEBT INVESTMENTS (T
REAL ESTATE DEBT INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REAL ESTATE DEBT INVESTMENTS. | |
Summary of Debt Related Investments | The following table summarizes our debt-related investments as of March 31, 2023 and December 31, 2022: Weighted-Average Weighted-Average ($ in thousands) Carrying Amount (1) Outstanding Principal (1) Interest Rate Remaining Life (Years) As of March 31, 2023 Senior loans (2) $ 147,795 $ 155,555 8.9 % 1.8 Mezzanine loans 106,406 108,500 10.9 1.6 Total debt-related investments (2) $ 254,201 $ 264,055 9.9 % 1.7 As of December 31, 2022 Senior loans (2) $ 151,645 $ 154,622 8.5 % 2.1 Mezzanine loans 108,794 108,500 10.4 1.9 Total debt-related investments (2) $ 260,439 $ 263,122 9.5 % 2.0 (1) The difference between the carrying amount and the outstanding principal amount of the debt-related investments consists of unamortized purchase discount, deferred financing costs, loan origination costs, and any recorded credit loss reserves, if applicable. (2) As of March 31, 2023 and December 31, 2022, carrying amounts include $39.5 million and $42.0 million, respectively, related to one senior loan debt-related investment that was in default and on non-accrual status. Outstanding principal includes $43.8 million related to this senior loan as of March 31, 2023 and December 31, 2022. We recorded an impairment loss of $2.5 million related to this senior loan during the three months ended March 31, 2023 and included the impairment loss in impairment loss on debt-related investment held for sale on the condensed consolidated statements of operations. This senior loan is held-for-sale and therefore the carrying amount has been reduced to its fair value as of both March 31, 2023 and December 31, 2022. Weighted-average interest rate and weighted-average remaining life excludes this senior loan from its calculations. |
Summary of Available-for-Sale Debt Securities | As of March 31, 2023 and December 31, 2022, we had one debt security investment designated as available-for-sale debt securities. The weighted-average remaining term of our available-for-sale debt security, which is based on the estimated fully extended maturity dates of the underlying loans of the debt security, was approximately 3.8 years as of March 31, 2023 . ($ in thousands) Face Amount Amortized Cost Unamortized Discount Unrealized Gain, Net (1) Fair Value As of March 31, 2023 Available-for-sale debt securities $ 14,979 $ 14,876 $ 103 $ 103 $ 14,979 As of December 31, 2022 Available-for-sale debt securities $ 14,979 $ 14,870 $ 109 $ 26 $ 14,896 (1) Represents cumulative unrealized gain beginning from acquisition date. |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | A summary of our consolidated debt is as follows: Weighted-Average Effective Interest Rate as of Balance as of March 31, December 31, March 31, December 31, ($ in thousands) 2023 2022 Current Maturity Date 2023 2022 Line of credit (1) 6.17 % 5.72 % November 2025 $ 277,000 $ 235,000 Term loan (2) 3.31 3.90 November 2026 400,000 400,000 Term loan (3) 4.26 4.56 January 2027 400,000 400,000 Fixed-rate mortgage notes 3.40 3.48 January 2027 - May 2031 310,084 380,316 Floating-rate mortgage notes (4) 4.52 4.52 October 2024 - October 2026 207,600 207,600 Total principal amount / weighted-average (5) 4.22 % 4.31 % $ 1,594,684 $ 1,622,916 Less: unamortized debt issuance costs $ (13,711) $ (14,849) Add: unamortized mark-to-market adjustment on assumed debt 8,147 8,408 Total debt, net $ 1,589,120 $ 1,616,475 Gross book value of properties encumbered by debt $ 907,741 $ 970,310 (1) The effective interest rate is calculated based on the Term Secured Overnight Financing Rate plus an 11.448 basis point adjustment (“Adjusted Term SOFR”), plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. As of March 31, 2023, the unused and available portions under the line of credit were approximately $623.0 million and $565.6 million, respectively. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. (2) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $300.0 million in borrowings under this term loan and an interest rate cap agreement relating to $100.0 million in borrowings under this term loan. (3) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $350.0 million in borrowings under this term loan and an interest rate cap agreement relating to $50.0 million in borrowings under this term loan. (4) The effective interest rate is calculated based on the London Interbank Offered Rate (“LIBOR”) plus a margin. As of both March 31, 2023 and December 31, 2022, our floating-rate mortgage notes were subject to interest rate spreads ranging from 1.55% to 2.50% . The weighted-average interest rate is the all-in interest rate, including the effects of interest rate cap agreements which capped the effective interest rates of our two floating-rate mortgage notes at 4.50% and 4.55% , respectively, as of March 31, 2023. (5) The weighted-average remaining term of our consolidated borrowings was approximately 3.7 years as of March 31, 2023, excluding the impact of certain extension options. |
Schedule of Maturities of Long-term Debt | As of March 31, 2023, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows: (in thousands) Line of Credit (1) Term Loans Mortgage Notes Total 2023 — — 1,205 1,205 2024 — — 129,265 129,265 2025 277,000 — 2,360 279,360 2026 — 400,000 84,214 484,214 2027 — 400,000 175,787 575,787 Thereafter — — 124,853 124,853 Total principal payments $ 277,000 $ 800,000 $ 517,684 $ 1,594,684 (1) The term of the line of credit may be extended pursuant to two six-month extension options, subject to certain conditions. |
Schedule of Derivative Instruments | The following table summarizes the location and fair value of our consolidated derivative instruments on our condensed consolidated balance sheets: Number of Fair Value ($ in thousands) Contracts Notional Amount Other Assets Other Liabilities As of March 31, 2023 Interest rate swaps designated as cash flow hedges 12 $ 650,000 $ 14,339 $ — Interest rate caps designated as cash flow hedges 1 150,000 7,806 Interest rate caps not designated as cash flow hedges 2 207,600 2,889 — Total derivative instruments 15 $ 1,007,600 $ 25,034 $ — As of December 31, 2022 Interest rate swaps designated as cash flow hedges 12 $ 650,000 $ 20,279 $ — Interest rate caps not designated as cash flow hedges 2 207,600 4,169 — Total derivative instruments 14 $ 857,600 $ 24,448 $ — |
Schedule of Derivative Instruments, Gain (Loss) | The following table presents the effect of our consolidated derivative instruments on our condensed consolidated financial statements: For the Three Months Ended March 31, (in thousands) 2023 2022 Derivative instruments designated as cash flow hedges: (Loss) gain recognized in AOCI $ (4,000) $ 10,075 Amount reclassified from AOCI (out of) into interest expense (3,056) 1,919 Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded 37,545 24,410 Derivative instruments not designated as cash flow hedges: Unrealized (loss) gain on derivative instruments recognized in other income (expenses) (1) $ (1,224) $ 1,550 Realized gain on derivative instruments recognized in other income (expenses) (2) 1,121 — (1) Unrealized (loss) gain on changes in fair value of derivative instruments relates to mark-to-market changes on our derivatives not designated as cash flow hedges. (2) Realized gain on derivative instruments relates to interim cash settlements for our derivatives not designated as cash flow hedges. |
DST PROGRAM (Tables)
DST PROGRAM (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Delaware Statutory Trust Program [Abstract] | |
Schedule of DST Program activity | The following table presents our DST Program activity for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, (in thousands) 2023 2022 DST Interests sold $ 101,795 $ 280,802 DST Interests financed by DST Program Loans 14,015 14,827 Income earned from DST Program Loans (1) 1,017 669 Financing obligation liability appreciation (2) 2,862 4,007 Rent obligation incurred under master lease agreements (2) 13,583 9,253 (1) Included in other income and expenses on the condensed consolidated statements of operations. (2) Included in interest expense on the condensed consolidated statements of operations. |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Instruments Measured at Fair Value on a Recurring Basis | The following table presents our financial instruments measured at fair value on a recurring basis: Total (in thousands) Level 1 Level 2 Level 3 Fair Value As of March 31, 2023 Assets: Derivative instruments $ — $ 25,034 $ — $ 25,034 Available-for-sale debt securities — 14,979 — 14,979 Total assets measured at fair value $ — $ 40,013 $ — $ 40,013 As of December 31, 2022 Assets: Derivative instruments $ — $ 24,448 $ — $ 24,448 Available-for-sale debt securities — 14,896 — 14,896 Total assets measured at fair value $ — $ 39,344 $ — $ 39,344 |
Schedule of Financial Instruments Measured at Fair Value on a Nonrecurring Basis | The carrying values and fair values of these financial instruments were as follows: As of March 31, 2023 As of December 31, 2022 Carrying Fair Carrying Fair (in thousands) Value (1) Value Value (1) Value Assets: Debt-related investments $ 264,055 $ 259,305 $ 263,122 $ 260,841 DST Program Loans 95,909 93,621 81,897 79,049 Liabilities: Line of credit $ 277,000 $ 277,000 $ 235,000 $ 235,000 Term loans 800,000 800,000 800,000 800,000 Mortgage notes 517,684 482,992 587,916 541,558 (1) The carrying value reflects the principal amount outstanding. |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Summary of Changes for Each Class of Common Stock | The following table describes the changes in each class of common shares during the periods presented below: Class T Class S Class D Class I Class E Total (in thousands) Shares Shares Shares Shares Shares Shares FOR THE THREE MONTHS ENDED MARCH 31, 2022 Balance as of December 31, 2021 16,425 35,757 6,749 54,406 56,328 169,665 Issuance of common stock: Primary shares 2,555 4,661 1,104 5,019 — 13,339 Distribution reinvestment plan 92 193 37 302 202 826 Redemptions of common stock (3) (122) (228) (356) (1,079) (1,788) Conversions (62) — — 62 — — Balance as of March 31, 2022 19,007 40,489 7,662 59,433 55,451 182,042 FOR THE THREE MONTHS ENDED MARCH 31, 2023 Balance as of December 31, 2022 26,884 49,237 7,871 69,142 52,974 206,108 Issuance of common stock: Primary shares 1,325 972 45 2,117 — 4,459 Distribution reinvestment plan 134 227 40 331 175 907 Redemptions of common stock (69) (561) (240) (2,557) (599) (4,026) Conversions (101) 24 (277) 354 — — Balance as of March 31, 2023 28,173 49,899 7,439 69,387 52,550 207,448 |
Summary of Distribution Activity | The following table summarizes our distribution activity (including distributions to noncontrolling interests and distributions reinvested in shares of our common stock) for the periods below: Amount Common Stock Declared per Distributions Other Cash Reinvested in Distribution Gross (in thousands, except per share data) Common Share (1) Paid in Cash Distributions (2) Shares Fees (3) Distributions (4) 2023 March 31 $ 0.09375 $ 9,912 $ 5,271 $ 8,009 $ 1,461 $ 24,653 Total $ 0.09375 $ 9,912 $ 5,271 $ 8,009 $ 1,461 $ 24,653 2022 March 31 $ 0.09375 $ 8,837 $ 3,018 $ 6,876 $ 1,030 $ 19,761 June 30 0.09375 9,299 3,157 7,362 1,259 21,077 September 30 0.09375 9,684 3,972 7,732 1,399 22,787 December 31 0.09375 9,859 4,559 7,923 1,478 23,819 Total $ 0.37500 $ 37,679 $ 14,706 $ 29,893 $ 5,166 $ 87,444 (1) Amount reflects the total gross quarterly distribution rate authorized by our board of directors per Class T share, per Class S share, per Class D share, per Class I share and per Class E share of common stock. Distributions were declared and paid as of monthly record dates. These monthly distributions have been aggregated and presented on a quarterly basis. The distributions on Class T shares, Class S shares and Class D shares of common stock are reduced by the respective distribution fees that are payable with respect to Class T shares, Class S shares and Class D shares. (2) Consists of distribution fees paid to Ares Wealth Management Solutions, LLC (the “Dealer Manager”) with respect to OP Units and distributions paid to holders of OP Units and other noncontrolling interest holders. (3) Distribution fees are paid monthly to the Dealer Manager, with respect to Class T shares, Class S shares and Class D shares issued in the primary portion of our public offerings only. All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers. (4) Gross distributions are total distributions before the deduction of any distribution fees relating to Class T shares, Class S shares and Class D shares issued in the primary portion of our public offerings. |
Redemptions and Repurchases Activity | Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2023 and 2022. All eligible redemption requests were fulfilled for the periods presented. Our board of directors may modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders. For the Three Months Ended March 31, (in thousands, except for per share data) 2023 2022 Number of shares redeemed or repurchased 4,026 1,788 Aggregate dollar amount of shares redeemed or repurchased $ 35,455 $ 14,555 Average redemption or repurchase price per share $ 8.81 $ 8.15 |
REDEEMABLE NONCONTROLLING INT_2
REDEEMABLE NONCONTROLLING INTERESTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Redeemable Noncontrolling Interest [Abstract] | |
Schedule of Redeemable Noncontrolling Interest Activity | The following table summarizes the redeemable noncontrolling interests activity for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Balance at beginning of the year $ 18,130 $ 8,994 Settlement of prior year performance participation allocation (1) — 15,327 Distributions to redeemable noncontrolling interests (192) (160) Redemptions to redeemable noncontrolling interests (2) — (7,724) Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Change from securities and cash flow hedging activities attributable to redeemable noncontrolling interests (55) 119 Redemption value allocation adjustment to redeemable noncontrolling interests (3) (74) 482 Ending balance $ 17,791 $ 17,284 (1) There were no OP Units issued related to the 2022 performance participation allocation, as the $23.7 million payable as of December 31, 2022 was, at the election of the Advisor, settled in cash in January 2023. The 2021 performance participation allocation in the amount of $15.3 million became payable on December 31, 2021, and was issued as 1.9 million Class I OP Units in January 2022. At the direction of the Advisor and in light of our Former Sponsor having been the holder of a separate series of partnership interests in the Operating Partnership with special distribution rights (the “Special Units”) for the first six months of 2021, the holder of the Special Units designated 465,000 of these Class I OP Units to an entity owned indirectly by our Chairman at the time, Mr. Mulvihill, and 465,000 of these Class I OP Units to an entity owned indirectly by a member of our Former Sponsor. The holder of the Special Units transferred 945,000 Class I OP Units to the Advisor thereafter. (2) At the request of the Advisor, the Operating Partnership redeemed all Class I OP Units issued to the Advisor in January 2022 for $7.7 million. (3) Represents the adjustment recorded in order to mark to the redemption value, which is equivalent to fair value, at the end of the measurement period. |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Schedule of Noncontrolling Interest Balances | The following table summarizes the number of OP Units issued and outstanding to third-party investors (excludes interests held by redeemable noncontrolling interest holders): For the Three Months Ended March 31, (in thousands) 2023 2022 Balance at beginning of period 55,079 27,180 Issuance of units — 4,825 Redemption of units (1,240) (286) Balance at end of period 53,839 31,719 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule Fees and Expenses to the Advisor and Its Affiliates | The table below summarizes the fees and expenses incurred by us for services provided by the Advisor and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with our public offerings and any related amounts payable: For the Three Months Ended March 31, Payable as of (in thousands) 2023 2022 March 31, 2023 December 31, 2022 Selling commissions and dealer manager fees (1) $ 512 $ 1,042 $ — $ — Ongoing distribution fees (1)(2) 2,154 1,298 741 748 Advisory fees—fixed component 9,538 7,144 2,905 2,868 Performance participation allocation (3) — 12,192 — 23,747 Other expense reimbursements—Advisor (4)(5) 3,106 2,140 3,439 4,192 Other expense reimbursements—Dealer Manager — 27 70 109 Property accounting fee (6) 489 — 489 478 DST Program selling commissions, dealer manager and distribution fees (1) 2,671 7,524 241 241 Other DST Program related costs—Advisor (5) 1,931 4,951 146 146 Total $ 20,401 $ 36,318 $ 8,031 $ 32,529 (1) All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers. (2) The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable of approximately $59.1 million and $60.9 million as of March 31, 2023 and December 31, 2022, respectively, are included in other liabilities on the condensed consolidated balance sheets. (3) The 2022 performance participation allocation in the amount of $23.7 million became payable on December 31, 2022, and the Advisor elected to settle the amounts owed in cash in January 2023. (4) Other expense reimbursements include certain expenses incurred for organization and offering, acquisition and general administrative services provided to us under the advisory agreement, including, but not limited to, certain expenses described below after footnote 6, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment. (5) Includes costs reimbursed to the Advisor related to the DST Program. (6) The cost of the property management fee, including the property accounting fee, is generally borne by the tenant or tenants at each real property, either via a direct reimbursement to us or, in the case of tenants subject to a gross lease, as part of the lease cost. In certain circumstances, we may pay for a portion of the property management fee, including the property accounting fee, without reimbursement from the tenant or tenants at a real property. |
NET INCOME (LOSS) PER COMMON _2
NET INCOME (LOSS) PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Details of Numerator and Denominator Used to Calculate Basic and Diluted Net Income (Loss) Per Common Share | The computation of our basic and diluted net income (loss) per share attributable to common stockholders is as follows: For the Three Months Ended March 31, (in thousands, except per share data) 2023 2022 Net (loss) income attributable to common stockholders—basic $ (2,004) $ 21,011 Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Net (loss) income attributable to noncontrolling interests (549) 3,537 Net (loss) income attributable to common stockholders—diluted $ (2,571) $ 24,794 Weighted-average shares outstanding—basic 206,774 178,528 Incremental weighted-average shares effect of conversion of noncontrolling interests 56,252 32,148 Weighted-average shares outstanding—diluted 263,026 210,676 Net (loss) income per share attributable to common stockholders: Basic $ (0.01) $ 0.12 Diluted $ (0.01) $ 0.12 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Supplemental Cash Flow Information and Disclosure Non-Cash Investing and Financing Activities | Supplemental cash flow information and disclosure of non-cash investing and financing activities is as follows: For the Three Months Ended March 31, (in thousands) 2023 2022 Supplemental disclosure of non-cash investing and financing activities: Distributions reinvested in common stock $ 7,990 $ 6,743 (Decrease) increase in accrued future ongoing distribution fees (1,800) 7,828 Increase in DST Program Loans receivable through DST Program capital raising 14,015 14,827 Redeemable noncontrolling interest issued as settlement of performance participation allocation — 15,327 Issuances of OP Units for DST Interests — 39,441 |
Summary of Cash, Cash Equivalents and Restricted Cash | Restricted cash consists of lender and property-related escrow accounts. The following table presents the components of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows: For the Three Months Ended March 31, (in thousands) 2023 2022 Beginning of period: Cash and cash equivalents $ 13,336 $ 10,605 Restricted cash 3,850 3,747 Cash, cash equivalents and restricted cash $ 17,186 $ 14,352 End of period: Cash and cash equivalents $ 36,894 $ 22,626 Restricted cash 3,859 4,021 Cash, cash equivalents and restricted cash $ 40,753 $ 26,647 |
SEGMENT FINANCIAL INFORMATION (
SEGMENT FINANCIAL INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Summary of Total Assets by Business Segment | The following table reflects our total consolidated assets by business segment as of March 31, 2023 and December 31, 2022: As of (in thousands) March 31, 2023 December 31, 2022 Assets: Office properties $ 379,355 $ 377,546 Retail properties 517,000 537,147 Residential properties 1,485,956 1,495,532 Industrial properties 1,252,141 1,248,255 Corporate 553,851 516,244 Total assets $ 4,188,303 $ 4,174,724 |
Reconciliation of Net Operating Income to Reported Net Income (Loss) | The following table is a reconciliation of our reported net income (loss) attributable to common stockholders to our net operating income for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, (in thousands) 2023 2022 Net (loss) income attributable to common stockholders $ (2,004) $ 21,011 Debt-related income (5,761) (3,468) Real estate-related depreciation and amortization 33,197 27,451 General and administrative expenses 3,044 2,037 Advisory fees 9,538 7,144 Performance participation allocation — 12,192 Acquisition costs and reimbursements 1,169 1,629 Impairment loss on debt-related investment held for sale 2,520 — Equity in loss from unconsolidated joint venture partnerships 2,446 1,010 Interest expense 37,545 24,410 Gain on sale of real estate property (36,884) (53,881) Loss on extinguishment of debt and financing commitments, net 700 — Loss (gain) on derivative instruments 103 (1,550) Provision for current expected credit losses 5,630 — Other income (1,016) (577) Net (loss) income attributable to redeemable noncontrolling interests (18) 246 Net (loss) income attributable to noncontrolling interests (549) 3,537 Net operating income $ 49,660 $ 41,191 |
Revenue and Components of Net Operating Income | The following table sets forth consolidated financial results by segment for the three months ended March 31, 2023 and 2022: (in thousands) Office Retail Residential Industrial Consolidated For the Three Months Ended March 31, 2023 Rental revenues $ 13,349 $ 14,518 $ 28,848 $ 21,245 $ 77,960 Rental expenses (6,630) (3,584) (13,190) (4,896) (28,300) Net operating income $ 6,719 $ 10,934 $ 15,658 $ 16,349 $ 49,660 Real estate-related depreciation and amortization $ 3,963 $ 4,035 $ 9,489 $ 15,710 $ 33,197 For the Three Months Ended March 31, 2022 Rental revenues $ 13,633 $ 17,066 $ 16,354 $ 15,452 $ 62,505 Rental expenses (6,192) (4,629) (6,944) (3,549) (21,314) Net operating income $ 7,441 $ 12,437 $ 9,410 $ 11,903 $ 41,191 Real estate-related depreciation and amortization $ 3,997 $ 4,654 $ 8,353 $ 10,447 $ 27,451 |
INVESTMENTS IN REAL ESTATE PR_3
INVESTMENTS IN REAL ESTATE PROPERTIES (Narrative) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) property | Mar. 31, 2022 USD ($) property Office | |
Real Estate Properties [Line Items] | ||
Proceeds from disposition of real estate property | $ | $ 53,735 | $ 169,421 |
Gain on sale of real estate property | $ | $ 36,884 | $ 53,881 |
Disposed of by Sale | Office properties | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | Office | 1 | |
Disposed of by Sale | Retail properties | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | property | 1 | 2 |
Disposed of by Sale | Retail land parcel | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | property | 1 |
INVESTMENTS IN REAL ESTATE PR_4
INVESTMENTS IN REAL ESTATE PROPERTIES (Schedule of Consolidated Investments in Real Estate Properties) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Real Estate [Abstract] | ||
Land | $ 689,142 | $ 694,998 |
Buildings and improvements | 3,166,233 | 3,152,553 |
Intangible lease assets | 313,324 | 317,141 |
Right of use asset | $ 13,637 | $ 13,637 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Net investment in real estate properties | Net investment in real estate properties |
Investment in real estate properties | $ 4,182,336 | $ 4,178,329 |
Accumulated depreciation and amortization | (597,258) | (572,751) |
Net investment in real estate properties | $ 3,585,078 | $ 3,605,578 |
INVESTMENTS IN REAL ESTATE PR_5
INVESTMENTS IN REAL ESTATE PROPERTIES (Schedule of Asset Acquisitions) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Asset Acquisition [Line Items] | |
Percentage of assets acquired | 100% |
Asset Acquisition | |
Asset Acquisition [Line Items] | |
Total acquisitions | $ 17,511 |
Debt assumed at fair value | 0 |
VM8 Logistics Center [Member] | |
Asset Acquisition [Line Items] | |
Total acquisitions | $ 17,511 |
INVESTMENTS IN REAL ESTATE PR_6
INVESTMENTS IN REAL ESTATE PROPERTIES (Purchase Price Allocation) (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Real Estate [Line Items] | |
Land | $ 2,166 |
Building and improvements | 15,345 |
Total purchase price | 17,511 |
Lease liability | 0 |
Asset Acquisition | |
Real Estate [Line Items] | |
Debt assumed at fair value | 0 |
Intangible lease assets | $ 0 |
INVESTMENTS IN REAL ESTATE PR_7
INVESTMENTS IN REAL ESTATE PROPERTIES (Intangible Lease Assets and Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross, Assets | $ 313,324 | $ 317,141 |
Gross, Liabilities | (73,331) | (76,033) |
Accumulated Amortization, Liabilities | 33,098 | 33,589 |
Net, Liabilities | (40,233) | (42,444) |
Intangible lease assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross, Assets | 290,391 | 294,208 |
Accumulated Amortization, Assets | (217,141) | (214,201) |
Net, Assets | 73,250 | 80,007 |
Above-market lease assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross, Assets | 22,933 | 22,933 |
Accumulated Amortization, Assets | (19,892) | (19,707) |
Net, Assets | $ 3,041 | $ 3,226 |
INVESTMENTS IN REAL ESTATE PR_8
INVESTMENTS IN REAL ESTATE PROPERTIES (Schedule of Adjustments to Rental Revenue Related to Amortization) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Straight-line rent adjustments | $ (1,068) | $ (726) |
Depreciation expense | 26,417 | 20,198 |
Intangible lease asset amortization | 6,780 | 7,253 |
Above-market lease assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of above and below Market Leases | (186) | (169) |
Below-market lease | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of above and below Market Leases | $ 1,014 | $ 1,196 |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS (Details) $ in Thousands | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) property |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated joint venture partnerships | $ 125,166 | $ 120,372 |
Unconsolidated Joint Venture Partnerships | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of real estate properties | property | 159 | 156 |
Investments in unconsolidated joint venture partnerships | $ 125,166 | $ 120,372 |
Vue 1400 JV | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 85% | 85% |
Number of real estate properties | property | 1 | 1 |
Investments in unconsolidated joint venture partnerships | $ 25,574 | $ 25,984 |
Net Lease JV I | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50% | 50% |
Number of real estate properties | property | 15 | 15 |
Investments in unconsolidated joint venture partnerships | $ 16,371 | $ 16,393 |
Net Lease JV II | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50% | 50% |
Number of real estate properties | property | 120 | 117 |
Investments in unconsolidated joint venture partnerships | $ 66,314 | $ 65,763 |
Net Lease JV III | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50% | 50% |
Number of real estate properties | property | 23 | 23 |
Investments in unconsolidated joint venture partnerships | $ 16,907 | $ 12,232 |
REAL ESTATE DEBT INVESTMENTS (S
REAL ESTATE DEBT INVESTMENTS (Summarizes Debt Related Investments) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 USD ($) loan | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) loan | |
Marketable Securities [Line Items] | |||
Carrying Amount | $ 254,201 | $ 260,439 | |
Outstanding Principal | $ 264,055 | $ 263,122 | |
Weighted-Average Interest Rate | 9.90% | 9.50% | |
Weighted-Average Remaining Life (Years) | 1 year 8 months 12 days | 2 years | |
Impairment loss on debt-related investment held for sale | $ 2,520 | $ 0 | |
Senior loans | |||
Marketable Securities [Line Items] | |||
Carrying Amount | 147,795 | $ 151,645 | |
Outstanding Principal | $ 155,555 | $ 154,622 | |
Weighted-Average Interest Rate | 8.90% | 8.50% | |
Weighted-Average Remaining Life (Years) | 1 year 9 months 18 days | 2 years 1 month 6 days | |
Senior Loans In Default And On Non-Accrual Status [Member] | |||
Marketable Securities [Line Items] | |||
Carrying Amount | $ 39,500 | $ 42,000 | |
Outstanding Principal | $ 43,800 | $ 43,800 | |
Number of contracts | loan | 1 | 1 | |
Impairment loss on debt-related investment held for sale | $ 2,500 | ||
Mezzanine loans | |||
Marketable Securities [Line Items] | |||
Carrying Amount | 106,406 | $ 108,794 | |
Outstanding Principal | $ 108,500 | $ 108,500 | |
Weighted-Average Interest Rate | 10.90% | 10.40% | |
Weighted-Average Remaining Life (Years) | 1 year 7 months 6 days | 1 year 10 months 24 days |
REAL ESTATE DEBT INVESTMENTS (C
REAL ESTATE DEBT INVESTMENTS (Current Expected Credit Losses) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
REAL ESTATE DEBT INVESTMENTS. | |
Debt investments, Allowance for credit loss | $ 5.6 |
Percentage of CECL Reserve to debt related investment commitment | 1.60% |
Number of debt related investments, held for sale | 1 |
Held to Maturity debt related Investments | $ 358.3 |
Funded Commitment Balance | 220.4 |
Unfunded Commitment Balance | 137.9 |
Funded Commitments Related to Allowance | 3.5 |
Unfunded Commitments Related to Allowance | 2.1 |
Write Off of Debt related investments | 0 |
Recoveries of Debt related investments | $ 0 |
REAL ESTATE DEBT INVESTMENTS _2
REAL ESTATE DEBT INVESTMENTS (Summary of Available for Sale Debt Securities) (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Debt Securities, Available-for-Sale [Line Items] | ||
Face Amount | $ 14,979 | $ 14,979 |
Amortized Cost | 14,876 | 14,870 |
Unamortized Discount | 103 | 109 |
Unrealized Gain, Net | 103 | 26 |
Fair Value | 14,979 | $ 14,896 |
Credit loss | $ 0 | |
Number of available for sale debt securities | 1 | 1 |
Weighted Average | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Debt Securities, Available-for-Sale, Term | 3 years 9 months 18 days |
DEBT (Schedule of Debt) (Detail
DEBT (Schedule of Debt) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 4.22% | 4.31% | |
Total borrowings | $ 1,594,684 | $ 1,622,916 | |
Less: unamortized debt issuance costs | (13,711) | (14,849) | |
Add: unamortized mark-to-market adjustment on assumed debt | 8,147 | 8,408 | |
Total debt, net | 1,589,120 | 1,616,475 | |
Gross book value of properties encumbered by debt | 907,741 | $ 970,310 | |
Interest expense | $ 19,600 | $ 9,700 | |
Weighted Average | |||
Debt Instrument [Line Items] | |||
Remaining debt term (in years) | 3 years 8 months 12 days | ||
Line of Credit | |||
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 6.17% | 5.72% | |
Total borrowings | $ 277,000 | $ 235,000 | |
Current borrowing capacity | 623,000 | ||
Available portions under the line of credit | $ 565,600 | ||
Line of Credit | SOFR | |||
Debt Instrument [Line Items] | |||
Borrowings spread rate adjustment | 0.11448% | 0.11448% | |
Line of Credit | SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.25% | 1.25% | |
Line of Credit | SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 2% | 2% | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Total borrowings | $ 800,000 | ||
Term Loan (Maturity Date November 2026) | |||
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 3.31% | 3.90% | |
Total borrowings | $ 400,000 | $ 400,000 | |
Maximum borrowing capacity | $ 400,000 | ||
Term Loan (Maturity Date November 2026) | SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.20% | 1.20% | |
Term Loan (Maturity Date November 2026) | SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.90% | 1.90% | |
Term Loan (Maturity Date November 2026) | Interest rate swaps | |||
Debt Instrument [Line Items] | |||
Amount of hedged item | $ 300,000 | ||
Term Loan (Maturity Date November 2026) | Interest rate caps | |||
Debt Instrument [Line Items] | |||
Total borrowings | $ 100,000 | ||
Term Loan (Maturity Date January 2027) | |||
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 4.26% | 4.56% | |
Total borrowings | $ 400,000 | $ 400,000 | |
Maximum borrowing capacity | $ 400,000 | ||
Term Loan (Maturity Date January 2027) | SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.20% | 1.20% | |
Term Loan (Maturity Date January 2027) | SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.90% | 1.90% | |
Term Loan (Maturity Date January 2027) | Interest rate swaps | |||
Debt Instrument [Line Items] | |||
Amount of hedged item | $ 350,000 | ||
Term Loan (Maturity Date January 2027) | Interest rate caps | |||
Debt Instrument [Line Items] | |||
Total borrowings | $ 50,000 | ||
Fixed-Rate Mortgage Notes | |||
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 3.40% | 3.48% | |
Total borrowings | $ 310,084 | $ 380,316 | |
Floating-Rate Mortgage Notes | |||
Debt Instrument [Line Items] | |||
Weighted-Average Effective Interest Rate as of | 4.52% | 4.52% | |
Total borrowings | $ 207,600 | $ 207,600 | |
Floating-Rate Mortgage Notes | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 1.55% | 1.55% | |
Floating-Rate Mortgage Notes | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings spread rate | 2.50% | 2.50% | |
Floating-Rate Mortgage Notes | Interest rate caps | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Floating rate | 4.50% | ||
Floating-Rate Mortgage Notes | Interest rate caps | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Floating rate | 4.55% |
DEBT (Summary of Borrowings Ref
DEBT (Summary of Borrowings Reflects Contractual Debt Maturities) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||
2023 | $ 1,205 | |
2024 | 129,265 | |
2025 | 279,360 | |
2026 | 484,214 | |
2027 | 575,787 | |
Thereafter | 124,853 | |
Total principal payments | 1,594,684 | $ 1,622,916 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
2023 | 0 | |
2024 | 0 | |
2025 | 277,000 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total principal payments | $ 277,000 | $ 235,000 |
Term of extension | 6 months | |
Number of extension options | item | 2 | |
Term Loan | ||
Debt Instrument [Line Items] | ||
2023 | $ 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 400,000 | |
2027 | 400,000 | |
Thereafter | 0 | |
Total principal payments | 800,000 | |
Mortgage Notes | ||
Debt Instrument [Line Items] | ||
2023 | 1,205 | |
2024 | 129,265 | |
2025 | 2,360 | |
2026 | 84,214 | |
2027 | 175,787 | |
Thereafter | 124,853 | |
Total principal payments | $ 517,684 |
DEBT (Summary of Location and F
DEBT (Summary of Location and Fair Value of Derivative Instruments) (Details) $ in Thousands | Mar. 31, 2023 | Mar. 31, 2023 USD ($) | Mar. 31, 2023 | Mar. 31, 2023 contract | Dec. 31, 2022 USD ($) contract |
Derivatives, Fair Value [Line Items] | |||||
Number of derivative contracts | contract | 15 | 14 | |||
Total notional amount | $ 1,007,600 | $ 857,600 | |||
Derivative assets | 25,034 | $ 24,448 | |||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets. | Other Assets. | |||
Derivative liabilities | 0 | $ 0 | |||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities. | Other Liabilities. | |||
Interest rate swaps | |||||
Derivatives, Fair Value [Line Items] | |||||
Estimated change to interest expense related to active effective hedges of floating rate debt | 13,200 | ||||
Interest rate swaps | Designated Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of derivative contracts | contract | 12 | 12 | |||
Total notional amount | 650,000 | $ 650,000 | |||
Derivative assets | 14,339 | $ 20,279 | |||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets. | Other Assets. | |||
Derivative liabilities | 0 | $ 0 | |||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities. | Other Liabilities. | |||
Interest rate caps | Designated Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of derivative contracts | contract | 1 | ||||
Total notional amount | 150,000 | ||||
Derivative assets | 7,806 | ||||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets. | ||||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities. | ||||
Interest rate caps | Not Designated as Hedging Instrument | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of derivative contracts | 2 | 2 | 2 | ||
Total notional amount | 207,600 | $ 207,600 | |||
Derivative assets | 2,889 | $ 4,169 | |||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets. | Other Assets. | |||
Derivative liabilities | $ 0 | $ 0 | |||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities. | Other Liabilities. |
DEBT (Effect of Derivative Fina
DEBT (Effect of Derivative Financial Instruments on Financial Statements) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded | $ 37,545 | $ 24,410 |
Designated Hedges | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded | 37,545 | 24,410 |
Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized (loss) gain on derivative instruments recognized in other (income) expenses | (1,224) | $ 1,550 |
Realized gain on derivative instruments recognized in other (income) expenses | $ 1,121 | |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Cash Flow Hedging | Designated Hedges | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) gain recognized in AOCI | $ (4,000) | $ 10,075 |
Amount reclassified from AOCI (out of) into interest expense | $ (3,056) | $ 1,919 |
DST Program (Details)
DST Program (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Delaware Statutory Trust Programs [Line Items] | |||
DST Program Loans | $ 95,909 | $ 81,897 | |
Financing obligation liability appreciation | 2,862 | $ 4,007 | |
Issuances of OP Units for DST Interests | 39,441 | ||
DST Program | |||
Delaware Statutory Trust Programs [Line Items] | |||
DST Program Loans | 95,900 | $ 81,900 | |
DST Interests sold | 101,795 | 280,802 | |
DST Interests financed by DST Program Loans | 14,015 | 14,827 | |
Income earned from DST Program Loans | 1,017 | 669 | |
Financing obligation liability appreciation | 2,862 | 4,007 | |
Rent obligation incurred under master lease agreements | 13,583 | $ 9,253 | |
Issuances of OP Units for DST Interests | $ 39,400 | ||
DST Program | OP Units | |||
Delaware Statutory Trust Programs [Line Items] | |||
Issuance of OP Units (in shares) | 0 | 4,800,000 |
FAIR VALUE (Measured on Recurri
FAIR VALUE (Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Derivative instruments | $ 25,034 | $ 24,448 |
Investment in available-for-sale securities, at fair value | 14,979 | 14,896 |
Recurring | ||
Assets: | ||
Derivative instruments | 25,034 | 24,448 |
Investment in available-for-sale securities, at fair value | 14,979 | 14,896 |
Total assets measured at fair value | 40,013 | 39,344 |
Recurring | Level 1 | ||
Assets: | ||
Derivative instruments | 0 | 0 |
Investment in available-for-sale securities, at fair value | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Recurring | Level 2 | ||
Assets: | ||
Derivative instruments | 25,034 | 24,448 |
Investment in available-for-sale securities, at fair value | 14,979 | 14,896 |
Total assets measured at fair value | 40,013 | 39,344 |
Recurring | Level 3 | ||
Assets: | ||
Derivative instruments | 0 | 0 |
Investment in available-for-sale securities, at fair value | 0 | 0 |
Total assets measured at fair value | $ 0 | $ 0 |
FAIR VALUE (Measured on Nonrecu
FAIR VALUE (Measured on Nonrecurring Basis) (Details) - Level 3 - Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Debt-related investments | $ 264,055 | $ 263,122 |
DST Program Loans | 95,909 | 81,897 |
Line of credit | 277,000 | 235,000 |
Term loans | 800,000 | 800,000 |
Mortgage notes | 517,684 | 587,916 |
Fair Value | ||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Debt-related investments | 259,305 | 260,841 |
DST Program Loans | 93,621 | 79,049 |
Line of credit | 277,000 | 235,000 |
Term loans | 800,000 | 800,000 |
Mortgage notes | $ 482,992 | $ 541,558 |
EQUITY (Narrative) (Details)
EQUITY (Narrative) (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | May 03, 2022 | May 02, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Amount of registration statement offering | $ 10,000,000 | $ 3,000,000 | ||
Issuance of common stock | $ 47,691 | $ 116,510 | ||
Issuance of common stock (in shares) | 5.4 | |||
Primary offering | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Amount of registration statement offering | 8,500,000 | |||
DRIP Offering | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Amount of registration statement offering | $ 1,500,000 | |||
Issuance of common stock | $ 8,000 |
EQUITY (Information of Share Tr
EQUITY (Information of Share Transactions) (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Redemptions of common stock (in shares) | (4,026) | (1,788) |
Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 206,108 | 169,665 |
Primary shares (in shares) | 4,459 | 13,339 |
Distribution reinvestment plan (in shares) | 907 | 826 |
Redemptions of common stock (in shares) | (4,026) | (1,788) |
Conversions (in shares) | 0 | 0 |
Ending Balances (in shares) | 207,448 | 182,042 |
Class T | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 26,884 | |
Ending Balances (in shares) | 28,173 | |
Class T | Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 26,884 | 16,425 |
Primary shares (in shares) | 1,325 | 2,555 |
Distribution reinvestment plan (in shares) | 134 | 92 |
Redemptions of common stock (in shares) | (69) | (3) |
Conversions (in shares) | (101) | (62) |
Ending Balances (in shares) | 28,173 | 19,007 |
Class S | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 49,237 | |
Ending Balances (in shares) | 49,899 | |
Class S | Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 49,237 | 35,757 |
Primary shares (in shares) | 972 | 4,661 |
Distribution reinvestment plan (in shares) | 227 | 193 |
Redemptions of common stock (in shares) | (561) | (122) |
Conversions (in shares) | 24 | 0 |
Ending Balances (in shares) | 49,899 | 40,489 |
Class D | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 7,871 | |
Ending Balances (in shares) | 7,439 | |
Class D | Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 7,871 | 6,749 |
Primary shares (in shares) | 45 | 1,104 |
Distribution reinvestment plan (in shares) | 40 | 37 |
Redemptions of common stock (in shares) | (240) | (228) |
Conversions (in shares) | (277) | 0 |
Ending Balances (in shares) | 7,439 | 7,662 |
Class I | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 69,142 | |
Ending Balances (in shares) | 69,387 | |
Class I | Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 69,142 | 54,406 |
Primary shares (in shares) | 2,117 | 5,019 |
Distribution reinvestment plan (in shares) | 331 | 302 |
Redemptions of common stock (in shares) | (2,557) | (356) |
Conversions (in shares) | 354 | |
Conversions (in shares) | 62 | |
Ending Balances (in shares) | 69,387 | 59,433 |
Class E | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 52,974 | |
Ending Balances (in shares) | 52,550 | |
Class E | Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning Balances (in shares) | 52,974 | 56,328 |
Primary shares (in shares) | 0 | 0 |
Distribution reinvestment plan (in shares) | 175 | 202 |
Redemptions of common stock (in shares) | (599) | (1,079) |
Conversions (in shares) | 0 | 0 |
Ending Balances (in shares) | 52,550 | 55,451 |
EQUITY (Total Distributions Dec
EQUITY (Total Distributions Declared and Portion of Each Contribution Paid in Cash and Reinvested) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | |
Equity [Abstract] | ||||||
Declared per Common Share (usd per share) | $ 0.09375 | $ 0.09375 | $ 0.09375 | $ 0.09375 | $ 0.09375 | $ 0.37500 |
Common Stock Distributions Paid in Cash | $ 9,912 | $ 9,859 | $ 9,684 | $ 9,299 | $ 8,837 | $ 37,679 |
Other Cash Distributions | 5,271 | 4,559 | 3,972 | 3,157 | 3,018 | 14,706 |
Reinvested in Shares | 8,009 | 7,923 | 7,732 | 7,362 | 6,876 | 29,893 |
Distribution Fees | 1,461 | 1,478 | 1,399 | 1,259 | 1,030 | 5,166 |
Total Distributions | $ 24,653 | $ 23,819 | $ 22,787 | $ 21,077 | $ 19,761 | $ 87,444 |
EQUITY (Redemptions and Repurch
EQUITY (Redemptions and Repurchases Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity [Abstract] | ||
Number of shares redeemed or repurchased (in shares) | 4,026 | 1,788 |
Aggregate dollar amount of shares redeemed or repurchased | $ 35,455 | $ 14,555 |
Average redemption or repurchase price per share (usd per share) | $ 8.81 | $ 8.15 |
REDEEMABLE NONCONTROLLING INT_3
REDEEMABLE NONCONTROLLING INTERESTS (Schedule of redeemable noncontrolling interest activity) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Redeemable Noncontrolling Interest [Line Items] | |||||
Beginning balance | $ 8,994 | $ 18,130 | $ 8,994 | $ 8,994 | |
Settlement of prior year performance participation allocation | 15,327 | ||||
Distributions to redeemable noncontrolling interests | (192) | (160) | |||
Redemptions to redeemable noncontrolling interests | (7,724) | ||||
Net (loss) income attributable to redeemable noncontrolling interests | (18) | 246 | |||
Change from securities and cash flow hedging activities attributable to redeemable noncontrolling interests | (55) | 119 | |||
Redemption value allocation adjustment to redeemable noncontrolling interests | (74) | 482 | |||
Ending balance | 17,791 | $ 17,284 | 18,130 | ||
Payable as of | $ 8,031 | $ 32,529 | |||
OP Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Redeemable OP units outstanding | 2,000,000 | 2,000,000 | |||
Black Creek Diversified Property Advisors, LLC | Performance Participation Allocation | OP Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Issuance of OP Units (in shares) | 465,000 | ||||
Advisor | Advisory Fee, Performance Component | OP Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Redemptions to redeemable noncontrolling interests | $ 7,700 | ||||
Issuance of OP Units (in shares) | 945,000 | ||||
Advisor | Performance Participation Allocation | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Payable as of | $ 23,747 | ||||
Advisor | Performance Participation Allocation | OP Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Issuance of OP Units (in shares) | 1,900,000 | 0 | |||
Performance participation allocation, Settled in cash | $ 23,700 | ||||
Payable as of | $ 15,300 | ||||
Chairman | Performance Participation Allocation | OP Units | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Issuance of OP Units (in shares) | 465,000 |
NONCONTROLLING INTERESTS (Narra
NONCONTROLLING INTERESTS (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Noncontrolling Interest [Line Items] | |||
Aggregate amount redeemed | $ 35,455 | $ 14,555 | |
OP Units | |||
Noncontrolling Interest [Line Items] | |||
Number of common stock issued per operating partnership unit | 1 | ||
Aggregate amount redeemed | $ 10,900 | $ 2,300 | |
OP Units | Maximum | |||
Noncontrolling Interest [Line Items] | |||
Estimated maximum redemption value (unaudited) | $ 468,400 | $ 488,300 |
NONCONTROLLING INTERESTS (Summa
NONCONTROLLING INTERESTS (Summary of Balances) (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Noncontrolling Interest [Line Items] | ||
Issuance of common stock (in shares) | 5,400 | |
Redemptions of common stock (in shares) | (4,026) | (1,788) |
OP Units | ||
Noncontrolling Interest [Line Items] | ||
Beginning Balances (in shares) | 55,079 | 27,180 |
Issuance of common stock (in shares) | 4,825 | |
Redemptions of common stock (in shares) | (1,240) | (286) |
Ending Balances (in shares) | 53,839 | 31,719 |
RELATED PARTY TRANSACTIONS - (D
RELATED PARTY TRANSACTIONS - (DST Program & Summary of Fees and Expenses Incurred by Company) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||||
Related party transaction expense | $ 20,401 | $ 36,318 | ||
Payable as of | 8,031 | $ 32,529 | ||
Advisor | ||||
Related Party Transaction [Line Items] | ||||
Amount reimbursed for services | 2,800 | 2,400 | ||
Selling commissions and dealer manager fees | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 512 | 1,042 | ||
Ongoing Distribution Fees [Member] | Dealer Manager | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 2,154 | 1,298 | ||
Payable as of | 741 | 748 | ||
Ongoing Distribution Fees [Member] | Dealer Manager | Other Liabilities | ||||
Related Party Transaction [Line Items] | ||||
Future Estimated Distribution Fees Payable | 59,100 | 60,900 | ||
Property accounting fee | Dealer Manager | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 489 | |||
Payable as of | 489 | 478 | ||
Advisory Fees | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 9,538 | 7,144 | ||
Payable as of | 2,905 | 2,868 | ||
Performance Participation Allocation | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 0 | 12,192 | ||
Payable as of | 23,747 | |||
Performance Participation Allocation | Advisor | OP Units | ||||
Related Party Transaction [Line Items] | ||||
Payable as of | $ 15,300 | |||
Other Expense Reimbursements [Member] | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 3,106 | 2,140 | ||
Payable as of | 3,439 | 4,192 | ||
Other Expense Reimbursements [Member] | Dealer Manager | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 27 | |||
Payable as of | 70 | 109 | ||
DST Program Manager Fees | Advisor | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 1,931 | 4,951 | ||
Payable as of | 146 | 146 | ||
DST Program dealer manager fees | Dealer Manager | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 2,671 | $ 7,524 | ||
Payable as of | $ 241 | $ 241 |
RELATED PARTY TRANSACTIONS - (A
RELATED PARTY TRANSACTIONS - (Advisory Fee and Operating Expense Reimbursement) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Related party transaction expense | $ 20,401 | $ 36,318 |
Advisor | Performance Participation Allocation | ||
Related Party Transaction [Line Items] | ||
Threshold for performance component of advisory fee | 12.50% | |
Threshold of annual total return as % of NAV | 5% | |
Performance component earned for excess return over the hurdle amount | 100% | |
Maximum performance component limited to % of total annual return | 12.50% | |
Class E Dealer Manager Fee Portion Waived Under NAV Per Share Threshold | $ 10 | |
Related party transaction expense | $ 0 | 12,192 |
Advisor | Advisory Fees | ||
Related Party Transaction [Line Items] | ||
Related party transaction expense | $ 9,538 | $ 7,144 |
NET INCOME (LOSS) PER COMMON _3
NET INCOME (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net (loss) income attributable to common stockholders-basic | $ (2,004) | $ 21,011 |
Net (loss) income attributable to redeemable noncontrolling interests | (18) | 246 |
Net (loss) income attributable to noncontrolling interests | (549) | 3,537 |
Net (loss) income attributable to common stockholders-diluted | $ (2,571) | $ 24,794 |
Weighted-average shares outstanding-basic (in shares) | 206,774 | 178,528 |
Incremental weighted-average shares effect of conversion of noncontrolling interests | 56,252 | 32,148 |
Weighted-average shares outstanding - diluted (in shares) | 263,026 | 210,676 |
Basic | $ (0.01) | $ 0.12 |
Diluted | $ (0.01) | $ 0.12 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Supplemental disclosure of non-cash investing and financing activities: | ||||
Distributions reinvested in common stock | $ 7,990 | $ 6,743 | ||
(Decrease) increase in accrued future ongoing distribution fees | (1,800) | 7,828 | ||
Increase in DST Program Loans receivable through DST Program capital raising | 14,015 | 14,827 | ||
Redeemable noncontrolling interest issued as settlement of performance participation allocation | 0 | 15,327 | ||
Issuances of OP Units for DST Interests | 0 | 39,441 | ||
Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | 36,894 | 22,626 | $ 13,336 | $ 10,605 |
Restricted cash | 3,859 | 4,021 | 3,850 | 3,747 |
Cash, cash equivalents and restricted cash | $ 40,753 | $ 26,647 | $ 17,186 | $ 14,352 |
SEGMENT FINANCIAL INFORMATION_2
SEGMENT FINANCIAL INFORMATION (Schedule of Total Assets by Business Segment) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Number of reportable segments | segment | 4 | |
Total Assets | $ 4,188,303 | $ 4,174,724 |
Operating Segments | Office | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | 379,355 | 377,546 |
Operating Segments | Retail | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | 517,000 | 537,147 |
Operating Segments | Residential | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | 1,485,956 | 1,495,532 |
Operating Segments | Industrial | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | 1,252,141 | 1,248,255 |
Corporate | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total Assets | $ 553,851 | $ 516,244 |
SEGMENT FINANCIAL INFORMATION_3
SEGMENT FINANCIAL INFORMATION (Reconciliation of Net Operating Income to Reported Net Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of net operating income attributable to common shareholders | ||
Net (loss) income attributable to common stockholders | $ (2,004) | $ 21,011 |
Debt-related income | (5,761) | (3,468) |
Real estate-related depreciation and amortization | 33,197 | 27,451 |
General and administrative expenses | 3,044 | 2,037 |
Advisory fees | 9,538 | 7,144 |
Performance participation allocation | 0 | 12,192 |
Acquisition costs and reimbursements | 1,169 | 1,629 |
Impairment loss on debt-related investment held for sale | 2,520 | 0 |
Equity in loss from unconsolidated joint venture partnerships | 2,446 | 1,010 |
Interest expense | 37,545 | 24,410 |
Gain on sale of real estate property | (36,884) | (53,881) |
Loss on extinguishment of debt and financing commitments, net | 700 | 0 |
Loss (gain) on derivative instruments | 103 | (1,550) |
Provision for current expected credit losses | 5,630 | 0 |
Other income | (1,016) | (577) |
Net (loss) income attributable to redeemable noncontrolling interests | (18) | 246 |
Net (loss) income attributable to noncontrolling interests | (549) | 3,537 |
Net operating income | $ 49,660 | $ 41,191 |
SEGMENT FINANCIAL INFORMATION_4
SEGMENT FINANCIAL INFORMATION (Revenue and Components of Net Operating Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Rental revenues | $ 77,960 | $ 62,505 |
Rental expenses | (28,300) | (21,314) |
Net operating income | 49,660 | 41,191 |
Real estate-related depreciation and amortization | 33,197 | 27,451 |
Office | ||
Segment Reporting Information [Line Items] | ||
Rental revenues | 13,349 | 13,633 |
Rental expenses | (6,630) | (6,192) |
Net operating income | 6,719 | 7,441 |
Real estate-related depreciation and amortization | 3,963 | 3,997 |
Retail | ||
Segment Reporting Information [Line Items] | ||
Rental revenues | 14,518 | 17,066 |
Rental expenses | (3,584) | (4,629) |
Net operating income | 10,934 | 12,437 |
Real estate-related depreciation and amortization | 4,035 | 4,654 |
Residential | ||
Segment Reporting Information [Line Items] | ||
Rental revenues | 28,848 | 16,354 |
Rental expenses | (13,190) | (6,944) |
Net operating income | 15,658 | 9,410 |
Real estate-related depreciation and amortization | 9,489 | 8,353 |
Industrial | ||
Segment Reporting Information [Line Items] | ||
Rental revenues | 21,245 | 15,452 |
Rental expenses | (4,896) | (3,549) |
Net operating income | 16,349 | 11,903 |
Real estate-related depreciation and amortization | $ 15,710 | $ 10,447 |
SUBSEQUENT EVENTS (Renewal of A
SUBSEQUENT EVENTS (Renewal of Advisory Agreement) (Details) | Apr. 30, 2023 |
Subsequent Event | Advisor | |
Subsequent Event [Line Items] | |
Advisory Agreement Renewal Term Period | 1 year |