Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | BROADSTONE NET LEASE, INC. | |
Entity Central Index Key | 0001424182 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 26,855,508.755 | |
Entity Shell Company | false | |
Entity File Number | 000-55774 | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 26-1516177 | |
Entity Address, Address Line One | 800 Clinton Square | |
Entity Address, City or Town | Rochester | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 14604 | |
City Area Code | 585 | |
Local Phone Number | 287-6500 | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Accounted for using the operating method, net of accumulated depreciation | $ 3,367,566 | $ 3,415,400 |
Accounted for using the direct financing method | 39,961 | 41,890 |
Investment in rental property, net | 3,407,527 | 3,457,290 |
Cash and cash equivalents | 93,151 | 12,455 |
Accrued rental income | 84,932 | 84,534 |
Tenant and other receivables, net | 1,287 | 934 |
Prepaid expenses and other assets | 12,397 | 12,613 |
Interest rate swap, assets | 2,911 | |
Goodwill | 339,769 | |
Intangible lease assets, net | 320,418 | 331,894 |
Debt issuance costs – unsecured revolving credit facility, net | 2,081 | 2,380 |
Leasing fees, net | 12,492 | 12,847 |
Total assets | 4,274,054 | 3,917,858 |
Liabilities, mezzanine equity and equity | ||
Unsecured revolving credit facility | 353,300 | 197,300 |
Mortgages and notes payable, net | 110,464 | 111,793 |
Unsecured term notes, net | 1,672,587 | 1,672,081 |
Interest rate swap, liabilities | 79,622 | 24,471 |
Earnout liability | 44,296 | |
Accounts payable and other liabilities | 35,835 | 37,377 |
Accrued interest payable | 9,764 | 3,594 |
Intangible lease liabilities, net | 89,673 | 92,222 |
Total liabilities | 2,395,541 | 2,138,838 |
Commitments and contingencies (See Note 16) | ||
Mezzanine equity | ||
Common stock, 781 shares issued and outstanding at March 31, 2020 | 66,376 | |
Non-controlling interests | 112,158 | |
Total mezzanine equity | 178,534 | |
Broadstone Net Lease, Inc. stockholders' equity: | ||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued or outstanding | ||
Common stock, $0.001 par value; 80,000 shares authorized, 26,074 and 26,001 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 26 | 26 |
Additional paid-in capital | 1,899,616 | 1,895,935 |
Cumulative distributions in excess of retained earnings | (233,067) | (208,261) |
Accumulated other comprehensive loss | (73,138) | (20,086) |
Total Broadstone Net Lease, Inc. stockholders’ equity | 1,593,437 | 1,667,614 |
Non-controlling interests | 106,542 | 111,406 |
Total equity | 1,699,979 | 1,779,020 |
Total liabilities, mezzanine equity and equity | $ 4,274,054 | $ 3,917,858 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Redeemable shares of common stock, issued | 781,000 | |
Redeemable shares of common stock, outstanding | 781,000 | |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 26,074,000 | 26,001,000 |
Common stock, shares outstanding | 26,074,000 | 26,001,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive (Loss) Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Lease revenues, net | $ 78,231 | $ 68,430 |
Operating expenses | ||
Depreciation and amortization | 31,219 | 24,310 |
Property and operating expense | 4,115 | 4,390 |
General and administrative | 5,842 | 1,103 |
Provision for impairment of investment in rental properties | 2,133 | 1,017 |
Total operating expenses | 47,045 | 37,825 |
Other income (expenses) | ||
Interest income | 9 | 1 |
Interest expense | (20,991) | (15,828) |
Cost of debt extinguishment | (22) | (713) |
Gain on sale of real estate | 7,619 | 1,400 |
Income taxes | (549) | (443) |
Internalization expenses | (1,205) | |
Change in fair value of earnout liability | (4,177) | |
Other losses | (22) | |
Net income | 11,848 | 15,022 |
Net income attributable to non-controlling interests | (1,032) | (1,084) |
Net income attributable to Broadstone Net Lease, Inc. | $ 10,816 | $ 13,938 |
Weighted average number of common shares outstanding | ||
Basic | 26,527 | 22,335 |
Diluted | 29,053 | 24,072 |
Net earnings per common share | ||
Basic and diluted | $ 0.41 | $ 0.62 |
Comprehensive (loss) income | ||
Net income | $ 11,848 | $ 15,022 |
Other comprehensive income (loss) | ||
Change in fair value of interest rate swaps | (58,062) | (12,624) |
Realized gain on interest rate swaps | (42) | (81) |
Comprehensive (loss) income | (46,256) | 2,317 |
Comprehensive loss (income) attributable to non-controlling interests | 4,020 | (167) |
Comprehensive (loss) income attributable to Broadstone Net Lease, Inc. | (42,236) | 2,150 |
Asset Management Fees | ||
Operating expenses | ||
Operating expenses | 2,461 | 5,120 |
Property Management Fees | ||
Operating expenses | ||
Operating expenses | $ 1,275 | $ 1,885 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity and Mezzanine Equity (Unaudited) - USD ($) $ in Thousands | Total | Mezzanine Equity Common Stock | Mezzanine Equity Non-controlling Interests | Common Stock | Additional Paid-in Capital | Subscriptions Receivable | Cumulative Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Non-controlling Interests |
Beginning Balance at Dec. 31, 2018 | $ 1,528,920 | $ 22 | $ 1,557,421 | $ (155,150) | $ 14,806 | $ 111,821 | |||
Net income | 15,022 | 13,938 | 1,084 | ||||||
Issuance of shares of common stock | 74,875 | 1 | 75,099 | $ (225) | |||||
Other offering costs | (300) | (300) | |||||||
Distributions declared | (31,983) | (29,635) | (2,348) | ||||||
Change in fair value of interest rate swap agreements | (12,624) | (11,713) | (911) | ||||||
Realized gain on interest rate swap agreements | (81) | (75) | (6) | ||||||
Redemption of shares of common stock, value | (1,803) | (1,803) | |||||||
Ending Balance at Mar. 31, 2019 | 1,572,026 | 23 | 1,630,417 | $ (225) | (170,847) | 3,018 | 109,640 | ||
Beginning Balance at Dec. 31, 2019 | 1,779,020 | 26 | 1,895,935 | (208,261) | (20,086) | 111,406 | |||
Cumulative effect of accounting change (see Note 2) | (323) | (323) | |||||||
Net income | 11,526 | 10,816 | 710 | ||||||
Net income | 11,848 | ||||||||
Issuance of shares of common stock | 6,097 | 6,097 | |||||||
Adjustment to carrying value of mezzanine equity non-controlling interest | (2,416) | (2,416) | |||||||
Distributions declared | (37,399) | (35,299) | (2,100) | ||||||
Change in fair value of interest rate swap agreements | (56,486) | (53,014) | (3,472) | ||||||
Realized gain on interest rate swap agreements | (40) | (38) | (2) | ||||||
Realized gain on interest rate swap agreements | (42) | ||||||||
Ending Balance at Mar. 31, 2020 | 1,699,979 | $ 26 | $ 1,899,616 | $ (233,067) | $ (73,138) | $ 106,542 | |||
Net income | 322 | $ 322 | |||||||
Issuance shares of mezzanine equity common stock | 66,376 | $ 66,376 | |||||||
Issuance of mezzanine non-controlling interests | 112,159 | 112,159 | |||||||
Adjustment to carrying value of mezzanine equity non-controlling interest | 2,416 | 2,416 | |||||||
Distributions declared | (1,161) | (1,161) | |||||||
Change in fair value of interest rate swap agreements | (1,576) | (1,576) | |||||||
Realized gain on interest rate swap agreements | (2) | (2) | |||||||
Ending Balance at Mar. 31, 2020 | $ 178,534 | $ 66,376 | $ 112,158 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity and Mezzanine Equity (Unaudited) (Parenthetical) - $ / shares | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Jan. 31, 2019 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Redemption of shares of common stock, shares | 0 | 21,000 | ||
Redeemable shares of common stock, outstanding | 781,000 | |||
Issuance of shares of common stock, shares | 73,000 | 883,000 | ||
Issuance of mezzanine non-controlling interests, shares | 1,320,000 | |||
Common Stock | ||||
Distribution declared per share | $ 0.43 | $ 0.44 | $ 0.44 | |
Redemption of shares of common stock, shares | 21,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net income | $ 11,848 | $ 15,022 |
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: | ||
Depreciation and amortization including intangibles associated with investment in rental property | 30,081 | 23,572 |
Provision for impairment of investment in rental properties | 2,133 | 1,017 |
Amortization of debt issuance costs charged to interest expense | 853 | 517 |
Straight-line rent and financing lease adjustments | (1,610) | (5,143) |
Cost of debt extinguishment | 22 | 713 |
Gain on sale of real estate | (7,619) | (1,400) |
Change in fair value of earnout liability | 4,177 | |
Leasing fees paid | (258) | |
Adjustment to provision for credit losses | (17) | |
Other non-cash items | 194 | 92 |
Changes in assets and liabilities, net of acquisition: | ||
Tenant and other receivables | (353) | (350) |
Prepaid expenses and other assets | 291 | (442) |
Accounts payable and other liabilities | (5,851) | (315) |
Accrued interest payable | 6,170 | (1,386) |
Net cash provided by operating activities | 40,319 | 31,639 |
Investing activities | ||
Acquisition of rental property accounted for using the operating method | (75,080) | |
Cash paid for Internalization | (30,861) | |
Capital expenditures and improvements | (48) | (256) |
Proceeds from disposition of rental property, net | 35,383 | 10,612 |
Increase in tenant and capital reserves | (13) | |
Change in deposits on investments in rental property | 100 | |
Net cash provided by (used in) investing activities | 4,474 | (64,637) |
Financing activities | ||
Proceeds from issuance of common stock, net | 131 | 59,869 |
Redemptions of common stock | (1,803) | |
Cash paid for deferred offering costs | (811) | |
Borrowings on unsecured term notes | 60,000 | 300,000 |
Principal payments on mortgages, notes payable and unsecured term notes | (151,781) | (306,970) |
Borrowings on unsecured revolving credit facility | 167,000 | 43,800 |
Repayments on unsecured revolving credit facility | (11,000) | (45,000) |
Cash distributions paid to stockholders | (29,148) | (14,495) |
Cash distributions paid to non-controlling interests | (2,681) | (2,330) |
Debt issuance and extinguishment costs paid | (102) | (5,902) |
Net cash provided by financing activities | 31,608 | 27,169 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 76,401 | (5,829) |
Cash and cash equivalents and restricted cash at beginning of period | 20,311 | 18,989 |
Cash and cash equivalents and restricted cash at end of period | 96,712 | 13,160 |
Reconciliation of cash and cash equivalents and restricted cash | ||
Cash and cash equivalents at beginning of period | 12,455 | 18,612 |
Restricted cash at beginning of period | 7,856 | 377 |
Cash and cash equivalents and restricted cash at beginning of period | 20,311 | 18,989 |
Cash and cash equivalents at end of period | 93,151 | 11,726 |
Restricted cash at end of period | 3,561 | 1,434 |
Cash and cash equivalents and restricted cash at end of period | $ 96,712 | $ 13,160 |
Business Description
Business Description | 3 Months Ended |
Mar. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business Description | 1. Business Description Broadstone Net Lease, Inc. (the “Corporation”) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (“REIT”) commencing with the taxable year ended December 31, 2008. The Corporation focuses on investing in income-producing, net leased commercial properties, primarily in the United States. The Corporation leases industrial, healthcare, restaurant, office, retail, and other commercial properties under long-term lease agreements. At March 31, 2020, the Corporation owned a diversified portfolio of 635 individual commercial properties located in 41 states throughout the continental United States and one property in British Columbia, Canada. Broadstone Net Lease, LLC (the Corporation’s operating company, or the “OP”), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The remaining membership units in the OP (“OP Units”), which are referred to as non-controlling interests, are held by members who acquired their interest by contributing real estate properties or other assets to the OP in exchange for OP Units. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (“UPREIT”). The Corporation, the OP, and its consolidated subsidiaries are collectively referred to as the “Company”. The following table summarizes the outstanding equity and economic ownership interest of the Corporation and the OP: March 31, 2020 December 31, 2019 (in thousands) Shares of Common Stock OP Units Total Diluted Shares Shares of Common Stock OP Units Total Diluted Shares Permanent equity 26,074 1,737 27,811 26,001 1,737 27,738 Mezzanine equity 781 1,320 2,101 — — — Total 26,855 3,057 29,912 26,001 1,737 27,738 Percent Ownership of OP 89.9 % 10.1 % 100.0 % 93.7 % 6.3 % 100.0 % Refer to Note 14 for further discussion regarding the weighted average shares outstanding. The Corporation operates under the direction of its board of directors (the “Board of Directors”), which is responsible for the management and control of the Company’s affairs. Prior to February 7, 2020, the Corporation was externally managed by Broadstone Real Estate, LLC (“BRE”) and Broadstone Asset Management, LLC (the “Asset Manager”) subject to the Board of Directors’ direction, oversight, and approval. The Asset Manager was a wholly owned subsidiary of BRE and all of the Corporation’s officers were employees of BRE. Accordingly, both BRE and the Asset Manager were related parties of the Company. Refer to Note 3 for further discussion concerning related parties and related party transactions. On February 7, 2020, the Corporation, the OP, BRE, and certain of their respective subsidiaries and affiliates, completed through a series of mergers (the “Mergers”) the internalization of the external management functions previously performed for the Corporation and the OP by BRE and the Asset Manager (such transactions, collectively, the “Internalization”). Upon consummation of the Internalization, the Company’s management team and corporate staff, who were previously employed by BRE, became employees of an indirect subsidiary of the OP and the Company became internally managed. Upon Internalization, the prior Property Management Agreement and Asset Management Agreement were terminated. The Internalization was not considered a “Termination Event” under the terms of the agreements and therefore no fees were paid under them as a result of the Internalization. The Internalization consisted of the acquisition of BRE in accordance with the definitive merger agreement (the “Merger Agreement”). Refer to Note 4 for further discussion regarding the Internalization, including the associated payments related thereto. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Interim Information The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting Summary of Significant Accounting Policies Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts and operations of the Company. All intercompany balances and transactions have been eliminated in consolidation. To the extent the Corporation has a variable interest in entities that are not evaluated under the variable interest entity (“VIE”) model, the Corporation evaluates its interests using the voting interest entity model. The Corporation has complete responsibility for the day-to-day management of, authority to make decisions for, and control of the OP. Based on consolidation guidance, the Corporation has concluded that the OP is a VIE as the members in the OP do not possess kick-out rights or substantive participating rights. Accordingly, the Corporation consolidates its interest in the OP. However, because the Corporation holds the majority voting interest in the OP, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs. The portion of the OP not owned by the Corporation is presented as non-controlling interests as of and during the periods presented. Basis of Accounting The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Use of Estimates The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include, but are not limited to, the allocation of purchase price between tangible and intangible assets acquired and liabilities assumed, the value of long-lived assets and goodwill, the provision for impairment, the depreciable lives of rental property, the amortizable lives of intangible assets and liabilities, the provisions for uncollectible rent and credit losses, the fair value of earnout liabilities, the fair value of assumed debt and notes payable, the fair value of the Company’s interest rate swap agreements, and the determination of any uncertain tax positions. Accordingly, actual results may differ from those estimates. Long-lived Asset Impairment The Company reviews long-lived assets, other than goodwill, to be held and used for possible impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition. Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. An impairment loss is measured as the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. A significant judgment is made as to if and when impairment should be taken. The Company’s assessment of impairment as of March 31, 2020 was based on the most current information available to the Company. Based upon current market conditions resulting from the COVID-19 pandemic (see Note 17), certain of the Company’s properties may have fair values less than their carrying amounts. However, based on the Company’s plans with respect to those properties, the Company believes that their carrying amounts are recoverable and therefore, under applicable GAAP guidance, no impairment charges were recognized other than those described below. If the operating conditions mentioned above deteriorate or if the Company’s expected holding period for assets changes, subsequent tests for impairments could result in additional impairment charges in the future. Inputs used in establishing fair value for real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation. The main indicator used to establish the classification of the inputs is current market conditions, as derived through the use of published commercial real estate market information. The Company determines the valuation of impaired assets using generally accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations, and bona fide purchase offers received from third parties. Management may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. During the three months ended March 31, 2020 and 2019, the Company recorded impairment charges of $ 2,133 Restricted Cash Restricted cash includes escrow funds the Company maintains pursuant to the terms of certain mortgages, notes payable, and lease agreements, and undistributed proceeds from the sale of properties under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), and is reported within Prepaid expenses and other assets in the Condensed Consolidated Balance Sheets. Restricted cash consisted of the following: March 31, December 31, (in thousands) 2020 2019 Escrow funds and other $ 1,504 $ 2,311 Undistributed 1031 proceeds 2,057 5,545 $ 3,561 $ 7,856 Revenue Recognition The Company accounts for leases in accordance with ASC 842, Leases Certain of the Company’s leases require tenants to pay rent based upon a percentage of the property’s net sales (“percentage rent”) or contain rent escalators indexed to future changes in the Consumer Price Index (“CPI”). Lease income associated with such provisions is considered variable lease income and is not included in the initial measurement of the lease receivable, or in the calculation of straight-line rent revenue. Such amounts are recognized as income when the amounts are determinable. A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to the Company at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances. The Company accounts for the right to use land as a separate lease component, unless the accounting effect of doing so would be insignificant. Determination of significance requires management judgment. In determining whether the accounting effect of separately reporting the land component from other components for its real estate leases is significant, the Company assesses: (i) whether separating the land component impacts the classification of any lease component, (ii) the value of the land component in the context of the overall contract, and (iii) whether the right to use the land is coterminous with the rights to use the other assets. Revenue recognition methods for operating leases, direct financing leases, and sales-type leases are described below: Rental property accounted for under operating leases – Revenue is recognized as rents are earned on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as Accrued rental income on the Condensed Consolidated Balance Sheets. Rental property accounted for under direct financing leases – The Company utilizes the direct finance method of accounting to record direct financing lease income. The net investment in the direct financing lease represents receivables for the sum of future lease payments to be received and the estimated residual value of the leased property, less unamortized unearned income (which represents the difference between undiscounted cash flows and discounted cash flows). Unearned income is deferred and amortized into income over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Rental property accounted for under sales-type leases – For leases accounted for as sales-type leases, the Company records selling profit arising from the lease at inception, along with the net investment in the lease. The Company leases assets through the assumption of existing leases or through sale-leaseback transactions, and records such assets at their fair value at the time of acquisition, which in most cases coincides with lease inception. As a result, the Company does not generally recognize selling profit on sales-type leases. The net investment in the sales-type lease represents receivables for the sum of future lease payments and the estimated unguaranteed residual value of the leased property, each measured at net present value. Interest income is recorded over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Certain of the Company’s lease contracts contain nonlease components ( e.g. i.e. Rent Received in Advance Rent received in advance represents tenant payments received prior to the contractual due date, and is included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets. Rent received in advance is as follows: (in thousands) March 31, 2020 December 31, 2019 Rent received in advance $ 9,918 $ 13,368 Provision for Uncollectible Rent In accordance with ASC 842, provision for uncollectible rent are recorded as an offset to Lease revenues, net on the accompanying Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. The following table summarizes the changes in the provision for uncollectible rent: The following table summarizes the changes in the provision for uncollectible rent: For the three months ended March 31, (in thousands) 2020 2019 Beginning balance $ — $ 2,086 Provision for uncollectible rent 1,033 441 Write-offs — (2,527 ) Ending balance $ 1,033 $ — Goodwill Goodwill represents the excess of the amount paid over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is assigned to one or more reporting units. The Company’s reporting unit is the same as its reportable segment. Goodwill has an indefinite life and is therefore not amortized. The Company evaluates goodwill for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable, or at least annually. The Company will adopt an annual goodwill testing date during the fourth quarter. Deferred Initial Public Offering Costs The Company has incurred certain costs in connection with its anticipated initial public offering (“IPO”). The Company capitalizes such deferred IPO costs, which primarily consist of direct, incremental legal, professional, accounting and other third-party fees. The deferred IPO costs will be offset against IPO proceeds upon the consummation of an offering. Should the planned IPO be abandoned, the deferred IPO costs will be expensed immediately as a charge to operating expenses in the Condensed Consolidated Statement of Income and Comprehensive (Loss) Income. At March 31, 2020 and December 31, 2019, deferred IPO costs were $1,282 and $668, respectively, and were included within Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, The Company has estimated that the carrying amount reported on the Condensed Consolidated Balance Sheets for Cash and cash equivalents, Prepaid expenses and other assets, Tenant and other receivables, net, and Accounts payable and other liabilities, approximates their fair values due to their short-term nature. Earnout Liability – In connection with the Internalization, the Company recognized an earnout liability that will be due and payable to the former owners of BRE if certain milestones are achieved during specified periods of time following the closing of the Internalization (the “Earnout Periods”) related to either (a) the 40-day dollar volume-weighted average price of a share of the Company’s common stock (“VWAP per REIT Share”), following the completion of an IPO of the Company’s common stock, or (b) the Company’s adjusted funds from operations (“AFFO”) per share, prior to the completion of an IPO (see Note 4). The Company utilizes third-party valuation experts to assist in estimating the fair value of the earnout liability, and develops estimates by considering weighted-average probabilities of likely outcomes, and using a Monte Carlo simulation and discounted cash flow analysis. These estimates require the Company to make various assumptions about future share prices, timing of an IPO, and other items that are unobservable and are considered Level 3 inputs in the fair value hierarchy. A change in these inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date. As shown in the tables below, the Company’s weighted average expected IPO date upon close of the Internalization was April 15, 2020. Due to the market dislocation and uncertainty presented by the COVID-19 pandemic, management revised its weighted average expected IPO date as of quarter end to March 15, 2021. The Company anticipates commencing its IPO when market conditions allow, which may be before March 15, 2021. To the extent the expected IPO date advances, there would be a corresponding increase in the earnout liability’s fair value given the earnout’s fixed time horizon. Peer share price volatilities are used to estimate the Company’s expected share price volatility, and the Company’s corresponding ability to achieve the earnout targets. An increase in peer share price volatility would result in an increase in the earnout liability’s fair value. The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of February 7, 2020, the transaction date. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date April 15, 2020 March 2020 through May 2020 Peer stock price volatility 20.0% 16.22% to 23.09% The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of March 31, 2020. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date March 15, 2021 November 2020 through May 2021 Peer stock price volatility 30.0% 22.96% to 43.91% The following table presents a reconciliation of the change in the earnout liability: For the three months ended (in thousands) March 31, 2020 Allocation of Internalization purchase price at February 7, 2020 $ 40,119 Change in fair value subsequent to Internalization 4,177 Balance at March 31, 2020 $ 44,296 The increase in the earnout liability fair value between February 7, 2020 and March 31, 2020 is primarily a result of an increase in the peer stock price volatility assumption used, as detailed above, a direct result of changes in economic circumstances impacting global equity markets. Interest Rate Swaps – The balances of interest rate swap assets and liabilities (see Note 11) and earnout liability measured at fair value on a recurring basis are as follows: March 31, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (79,622 ) $ — $ (79,622 ) $ — Earnout liability (44,296 ) — — (44,296 ) December 31, 2019 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, assets $ 2,911 $ — $ 2,911 $ — Interest rate swap, liabilities (24,471 ) — (24,471 ) — Long-term Debt – The fair value of the Company’s debt was estimated using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“LIBOR”), U.S. Treasury obligation interest rates, and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect the Company’s judgment as to the approximate current lending rates for loans or groups of loans with similar maturities and assumes that the debt is outstanding through maturity. Market information, as available, or present value techniques were utilized to estimate the amounts required to be disclosed. Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist on specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation. The following table summarizes the carrying amount reported on the Condensed Consolidated Balance Sheets and the Company’s estimate of the fair value of the Mortgages and notes payable, net, Unsecured term notes, net, and Unsecured revolving credit facility: (in thousands) March 31, 2020 December 31, 2019 Carrying amount $ 2,144,118 $ 1,989,451 Fair value 2,233,159 2,047,860 As disclosed under the Long-lived Asset Impairment Right-of-Use Assets and Lease Liabilities The Company is a lessee under non-cancelable operating leases associated with its corporate headquarters and other office spaces as well as with leases of land (“ground leases”). The Company records right-of-use assets and lease liabilities associated with these leases. The lease liability is equal to the net present value of the future payments to be made under the lease, discounted using estimates based on observable market factors. The right-of-use asset is generally equal to the lease liability plus initial direct costs associated with the leases. The Company includes in the recognition of the right-of-use asset and lease liability those renewal periods that are reasonably certain to be exercised, based on the facts and circumstances that exist at lease inception. Amounts associated with percentage rent provisions are considered variable lease costs and are not included in the initial measurement of the right-of-use asset or lease liability. The Company has made an accounting policy election, applicable to all asset types, to not separate lease from nonlease components when allocating contract consideration related to operating leases. Right-of-use assets and lease liabilities associated with operating leases were included in the accompanying Condensed Consolidated Balance Sheets as follows: March 31, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,457 $ 1,614 Lease liabilities Accounts payable and other liabilities 3,059 1,209 Earnout Liability The Company’s earnout liability is payable in a combination of cash, common shares, and OP Units, in the same proportion as the initial consideration paid in the Internalization (see Note 4). The common shares and OP Units payable under the arrangement will be subject to a redemption rights agreement, whereby holders of the common shares and OP Units will have the right to require the Company to repurchase any or all of the common shares or OP Units if an IPO has not occurred (see discussion of the redemption rights agreement in Note 4). The common shares and OP Units are deemed to be freestanding financial instruments that, at inception, embody an obligation to repurchase the Company’s common shares and OP Units, and therefore have been classified as liabilities together with the cash portion of the earnout. The fair value of the earnout liability at the time of the Internalization was recorded in Earnout liability on the Condensed Consolidated Balance Sheets as part of the purchase price allocation. The fair value of the earnout liability is remeasured each reporting period, with changes recorded as Change in fair value of earnout liability in the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. Mezzanine Equity The Company issued common shares and OP Units as base consideration for the Internalization, each of which were subject to a redemption rights agreement, where the common shares (“mezzanine equity common stock”) and OP Units (“mezzanine equity non-controlling interests”) are economically equivalent to the permanent equity classified common shares and OP Units with the exception of certain contingent redemption rights that are not yet exercisable as of March 31, 2020 (see discussion of redemption rights agreement in Note 4). The Company presents the mezzanine equity common stock and mezzanine equity non-controlling interests as mezzanine equity in the Condensed Consolidated Balance Sheets as they are redeemable outside the Company’s control. The Company subsequently records mezzanine equity common stock at redemption value each reporting period, with changes in carrying value recorded as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets. The Company subsequently records mezzanine equity non-controlling interests at the greater of (i) carrying amount, increased or decreased for the non-controlling interest’s share of net income or loss, dividends and comprehensive income or loss or (ii) redemption value. Changes in carrying value of mezzanine equity non-controlling interests are recorded as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses Codification Improvements to Topic 326, Financial Instruments – Credit Losses In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Other Recently Issued Accounting Standards As more fully described in Note 17, during 2020 there have been business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic. In response, lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842, Leases Reclassifications The Company reclassified $443 of Income taxes from a component of Operating expenses to a component of Other income (expenses), on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income for the three months ended March 31, 2019, to conform with the current period presentation. The reclassification is a change from one acceptable presentation to another acceptable presentation. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 3. Related-Party Transactions Prior to the Internalization on February 7, 2020, BRE, a related party in which certain directors of the Corporation had either a direct or indirect ownership interest, and the Asset Manager were considered to be related parties. Property Management Agreement The Corporation and the OP were parties to a property management agreement (as amended, the “Property Management Agreement”) with BRE. Under the terms of the Property Management Agreement, BRE managed and coordinated certain aspects of the leasing of the Corporation’s rental property. In exchange for services provided under the Property Management Agreement, BRE received certain fees and other compensation as follows: ( i ) 3% of gross rentals collected each month from the rental property for property management services (other than one property, which called for 5% of gross rentals under the Property Management Agreement); and (ii) Re-leasing fees for existing rental property equal to one month’s rent for a new lease with an existing tenant and two months’ rent for a new lease with a new tenant. Upon completion of the Internalization, the Property Management Agreement was terminated and there will be no future property management fees payable to BRE. The Internalization was not considered a “termination event” under the Property Management Agreement, so no fees were payable to BRE as a result of the Internalization. See Note 4 for further discussion regarding the Internalization, including the associated payments related thereto. Asset Management Agreement The Corporation and the OP were parties to an asset management agreement (as amended, the “Asset Management Agreement”) with the Asset Manager, a single member limited liability company of which BRE was the sole member, and therefore a related party in which certain directors of the Corporation had an indirect ownership interest. Under the terms of the Asset Management Agreement, the Asset Manager was responsible for, among other things, the Corporation’s acquisition, initial leasing, and disposition strategies, financing activities, and providing support to the Corporation’s Independent Directors Committee (“IDC”) for its valuation functions and other duties. The Asset Manager also nominated two individuals to serve on the Board of Directors of the Corporation. Under the terms of the Asset Management Agreement, the Asset Manager was compensated as follows: (i) a quarterly asset management fee equal to 0.25% of the aggregate value of common stock, based on the per share value as determined by the IDC each quarter, on a fully diluted basis as if all interests in the OP had been converted into shares of the Corporation’s common stock; (ii) 0.5% of the proceeds from future equity closings as reimbursement for offering, marketing, and brokerage expenses; (iii) 1% of the gross purchase price paid for each rental property acquired (other than acquisitions described in (iv) below), including any property contributed in exchange for membership interests in the OP; (iv) 2% of the gross purchase price paid for each rental property acquired in the event that the acquisition of a rental property required a new lease (as opposed to the assumption of an existing lease), such as a sale-leaseback transaction; (v) 1% of the gross sale price received for each rental property disposition; and (vi) 1% of the Aggregate Consideration, as defined in the Asset Management Agreement, received in connection with a disposition event, as defined in the Asset Management Agreement. Upon completion of the Internalization, the Asset Management Agreement was terminated and there will be no future asset management fees payable to the Asset Manager. The Internalization was not considered a “termination event” under the Asset Management Agreement, so no fees were payable to the Asset Manager as a result of the Internalization. See Note 4 for further discussion regarding the Internalization, including the associated payments related thereto. Total fees incurred under the Property Management Agreement and Asset Management Agreement were as follows: (in thousands) For the three months ended March 31, Type of Fee Financial Statement Presentation 2020 (a) 2019 Asset management fee Asset management fees $ 2,461 $ 5,120 Property management fee Property management fees 1,275 1,885 Total management fee expense 3,736 7,005 Marketing fee (offering costs) Additional paid-in capital — 300 Acquisition fee Capitalized as a component of assets acquired — 730 Leasing fee and re-leasing fees Leasing fees, net — 258 Disposition fee Gain on sale of real estate 109 113 Total management fees $ 3,845 $ 8,406 (a) Fees were payable under the Property Management Agreement and Asset Management Agreement from January 1, 2020 through February 6, 2020. The Internalization was effective February 7, 2020. There were no unpaid management fees at March 31, 2020 and December 31, 2019. All fees related to the Property Management Agreement and the Asset Management Agreement were paid for in cash within the Company’s normal payment cycle for vendors. Tax Protection Agreement Upon closing of the Internalization, the Company entered into an agreement with Amy L. Tait, the Company’s founder, and certain members of her family (“Founding Owners”), pursuant to which the OP agreed to indemnify the Founding Owners against the applicable income tax liabilities resulting from the sale, exchange, transfer or other disposal of the assets of BRE that the Company acquired in the Internalization, through February 7, 2030, or the Company’s failure to allocate specific types of the OP’s indebtedness to the Founding Owners (the “Founding Owners’ Tax Protection Agreement”). The maximum amount the Company may be liable for under the Founding Owners’ Tax Protection Agreement is $10,000. Earnout Consideration In connection with the Internalization, the Company incurred a contingent liability that would be payable to certain members of the Company’s Board of Directors and employees who had previously been owners and/or employees of BRE, upon the occurrence of certain events (see Note 4). The fair value of the earnout liability was $44,296 as of March 31, 2020. Related Party Lease In connection with the Internalization, the Company assumed the lease agreement relating to the Company’s principal executive office with Clinton Asset Holdings Associates, L.P., an affiliated third party, approximately 1.6% of which is indirectly owned by the Company’s Chairman and member of the Board of Directors. The lease of 24,072 square feet of office space is scheduled to expire on August 31, 2023, with two five-year renewal options. The annual rent for 2020 is approximately $547, with 2% annual increases thereafter. See further discussion in Note 16. |
Internalization
Internalization | 3 Months Ended |
Mar. 31, 2020 | |
Internalization [Abstract] | |
Internalization | 4. Internalization On February 7, 2020, the Company completed the Internalization and the Company’s management team and corporate staff, who were previously employed by BRE, became employees of an indirect subsidiary of the OP. The consideration paid at closing of the Internalization is summarized in the following table: (in thousands) Issuance of 781 shares of common stock $ 66,376 Issuance of 1,320 OP Units 112,159 Cash 30,981 Base consideration 209,516 Initial estimate of fair value of earnout liability 40,119 Total consideration $ 249,635 The Company may be required to pay additional earnout consideration of up to $75,000 payable in four tranches of $10,000, $15,000, $25,000, and $25,000 if certain milestones related to either (a) the 40-day VWAP per REIT Share, following the completion of an IPO, or (b) the Company’s AFFO per share, prior to the completion of an IPO, (each, an “Earnout Trigger”) are achieved during the Earnout Periods. The consideration will consist of a combination of cash, shares of the Company’s common stock, and OP Units, based on the same proportions paid in the base consideration. The earnout tranches, applicable 40-day VWAP of a REIT Share and AFFO per share, and the applicable Earnout Periods are as follows: (in thousands, except per share amounts) If the Company has completed an IPO If the Company has not completed an IPO Earnout Tranche (a) 40-Day VWAP of a REIT Share Applicable Earnout Period AFFO per Share Applicable Earnout Period $10,000 $90.00 The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. $5.85 The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. $15,000 $95.00 The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. $5.95 The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. $25,000 $97.50 The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. $6.30 The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. $25,000 $100.00 The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. $6.70 The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. (a) Initial contractual value of applicable earnout tranche based on an $85.00 price per share/unit of common stock and OP Units. Does not take into account the actual per share price of common stock and OP Units at the time an applicable earnout tranche may be earned and paid. Should all earnout milestones be met, an additional 272 shares of common stock and an additional 465 OP Units would be issued, in addition to amounts payable in cash. As of the Internalization date, the Company estimated that the earnout liability had a fair value of $40,119, of which approximately $33,511 relates to the potential issuance of common shares and OP Units and approximately $6,608 relates to the potential payment of cash. The Company will estimate the fair value of the earnout liability at each reporting date during the contingency period and record any changes in estimated fair value in its Condensed Consolidated Statement of Income and Comprehensive (Loss) Income. Redemption Rights Agreement The mezzanine equity common shares and OP Units are economically equivalent to permanent equity common shares and OP Units with the exception of certain contingent redemption rights that are not yet exercisable as of March 31, 2020. If an IPO does not occur on or before December 31, 2020, then each holder of mezzanine equity common shares and OP Units shall have the right to require the Company to repurchase any or all of such holder’s shares and OP Units at a price equal to the greater of (i) the initial fair value of $85 of the common shares or OP Units at the date of the Internalization or (ii) the current fair value of such common shares or OP Units, as adjusted for interest and distributions. If an IPO does not occur on or before the satisfaction of any Earnout Trigger, then each holder of common shares or OP Units issued under the earnout shall have the right to require the Company to repurchase any or all of such holder’s shares or OP Units at a price equal to the greater of (i) the initial fair value of $85 of the common shares at the date of the Internalization or (ii) the current fair value of such common shares, as adjusted for interest and distributions. The Internalization was accounted for as a business combination and accordingly, the Company allocated the purchase price utilizing the acquisition method to record assets acquired and liabilities assumed at their estimated fair values. The allocation of the purchase price has not been finalized and is based upon preliminary estimates of these fair values, which is the best available information at the current time. The final determination of the fair values of the assets and liabilities will be based on the actual valuations of the tangible and intangible assets and liabilities that existed as of the date of completion of the acquisition, including the valuation of the earnout liability. The Company expects to finalize the valuations during the measurement period, not to exceed one year from the date of the Internalization. Consequently, amounts preliminarily allocated to identifiable tangible and intangible assets and liabilities could change. The following table summarizes the Company’s preliminary allocation of the purchase price associated with the Internalization: (in thousands) Prepaid expenses and other assets $ 1,336 Right-of-use assets 1,898 Goodwill 339,769 Accounts payable and other liabilities (986 ) Operating lease liabilities (1,898 ) Debt (90,484 ) $ 249,635 In connection with the Internalization, the Company recorded goodwill of $339,769 as a result of the consideration exceeding the fair value of the net liabilities acquired. Goodwill represents the synergies and costs savings expected from the acquired management functions and the Company’s ability to generate additional portfolio growth on a lower cost structure than when it was externally managed. The Company does not expect that the goodwill will be deductible for tax purposes. In connection with the Internalization, the Company assumed $90,484 of debt which was subsequently repaid through a combination of borrowings under its Revolving Credit Facility (as defined below) and entering into a new $60,000 term loan agreement (see Note 9). The Company incurred $1,205 in non-recurring costs associated with the Internalization during the three months ended March 31, 2020, which were classified as Internalization expenses in the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. The effect of the Internalization has been reflected in the Company’s operating results beginning on February 7, 2020. No incremental revenues were recorded as a result of the Internalization. From February 7, 2020 to March 31, 2020, the Company incurred $3,662 in expenses as a result of being internalized, which include general and administrative expenses associated with the Company’s performance of functions previously performed by BRE and the Asset Manager (primarily employee related costs), as well as interest expense associated with the borrowings related to the Internalization. These expenses do not include the $1,205 non-recurring costs discussed above. Condensed Pro Forma Financial Information The following pro forma information summarizes selected financial information from the Company’s combined results of operations, as if the Internalization had occurred on January 1, 2019. These results contain certain adjustments totaling $5,646 and $6,377 of income, respectively, for the three months ended March 31, 2020 and 2019. These pro forma adjustments reflect the elimination of Internalization expenses and asset management, property management, and disposition fees between the Company and BRE and the Asset Manager in historic financial results, and adjustments to reflect incremental interest expense associated with the borrowing related to the Internalization. This pro forma information is presented for informational purposes only, and may not be indicative of what actual results of operations would have been had the Internalization occurred at the beginning of the period, nor does it purport to represent the results of future operations. The condensed pro forma financial information is as follows for the three months ended March 31, 2020 and 2019: For the three months ended March 31, (in thousands) 2020 2019 Revenues $ 78,231 $ 68,430 Net income 13,751 17,685 |
Acquisitions of Rental Property
Acquisitions of Rental Property | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions of Rental Property | 5. Acquisitions of Rental Property The Company did not complete any acquisitions of rental property during the three months ended March 31, 2020. The Company closed on the following acquisitions of rental property during the three months ended March 31, 2019: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price January 31, 2019 Healthcare 1 $ 4,747 March 12, 2019 Industrial 1 10,217 March 15, 2019 Retail 10 13,185 March 19, 2019 Retail 14 19,128 March 26, 2019 Industrial 1 25,801 27 $ 73,078 (a) (a ) The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocation for completed real estate acquisitions: (in thousands) For the three months ended March 31, 2019 Land $ 7,149 Land improvements 10,506 Buildings and improvements 49,677 Acquired in-place leases (b) 6,618 Acquired above-market leases (c) 2,169 Acquired below-market leases (d) (836 ) $ 75,283 (b) (c) (d) The above acquisitions were funded using a combination of available cash on hand, borrowings under the Company’s Revolving Credit Facility, and proceeds from equity issuances. All real estate acquisitions closed during the three months ended March 31, 2019, qualified as asset acquisitions and, as such, acquisition costs have been capitalized. |
Sale of Real Estate
Sale of Real Estate | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Sale of Real Estate | 6. Sale of Real Estate The Company closed on the following sales of real estate, none of which qualified as discontinued operations: For the three months ended March 31, (in thousands, except number of properties) 2020 2019 Number of properties disposed 10 4 Aggregate sale price $ 37,185 $ 11,291 Aggregate carrying value (27,764 ) (9,212 ) Additional sales expenses (1,802 ) (679 ) Gain on sale of real estate $ 7,619 $ 1,400 |
Investment in Rental Property a
Investment in Rental Property and Lease Arrangements | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Investment in Rental Property and Lease Arrangements | 7. Investment in Rental Property and Lease Arrangements The Company generally leases its investment rental property to established tenants in the industrial, healthcare, restaurant, office, retail, and other industries. At March 31, 2020, the Company had 616 real estate properties which were leased under leases that have been classified as operating leases and 15 that have been classified as direct financing leases. Of the 15 leases classified as direct financing leases, four include land portions which are accounted for as operating leases (see Revenue Recognition Investment in Rental Property – Accounted for Using the Operating Method Rental property subject to non-cancelable operating leases with tenants was as follows: (in thousands) March 31, 2020 December 31, 2019 Land $ 545,846 $ 548,911 Land improvements 274,135 275,470 Buildings and improvements 2,827,111 2,850,571 Equipment 11,492 11,492 3,658,584 3,686,444 Less accumulated depreciation (291,018 ) (271,044 ) $ 3,367,566 $ 3,415,400 Depreciation expense on investment in rental property was as follows: For the three months ended March 31, (in thousands) 2020 2019 Depreciation $ 23,515 $ 18,753 Estimated lease payments to be received under non-cancelable operating leases with tenants at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 210,383 2021 284,505 2022 287,511 2023 290,357 2024 285,396 Thereafter 2,130,183 $ 3,488,335 Since lease renewal periods are exercisable at the option of the tenant, the above amounts only include future lease payments due during the initial lease terms. In addition, such amounts exclude any potential variable rent increases that are based on changes in the CPI or future variable rents which may be received under the leases based on a percentage of the tenant’s gross sales. Investment in Rental Property – Direct Financing Leases The Company’s net investment in direct financing leases was comprised of the following: (in thousands) March 31, 2020 December 31, 2019 Undiscounted estimated lease payments to be received $ 68,898 $ 72,753 Estimated unguaranteed residual values 19,827 20,358 Unearned income (48,459 ) (51,221 ) Reserve for credit losses (305 ) — Net investment in direct financing leases $ 39,961 $ 41,890 Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 3,047 2021 4,138 2022 4,220 2023 4,305 2024 4,385 Thereafter 48,803 $ 68,898 The above rental receipts do not include future lease payments for renewal periods, potential variable CPI rent increases, or variable percentage rent payments that may become due in future periods. The following table summarizes amounts reported as Lease revenues, net on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income: For the three months ended March 31, (in thousands) 2020 2019 Contractual rental amounts billed for operating leases $ 72,828 $ 58,419 Adjustment to recognize contractual operating lease billings on a straight-line basis 1,665 5,171 Percentage rent income 3 — Adjustment to revenue recognized for uncollectible rental amounts billed (1,033 ) (440 ) Total operating lease rental revenues 73,463 63,150 Earned income from direct financing leases 987 1,005 Operating expenses billed to tenants 3,732 4,275 Other income from real estate transactions 49 — Total Lease revenues, net $ 78,231 $ 68,430 |
Intangible Assets And Liabiliti
Intangible Assets And Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Liabilities | 8. Intangible Assets and Liabilities The following is a summary of intangible assets and liabilities and related accumulated amortization: (in thousands) March 31, 2020 December 31, 2019 Lease intangibles: Acquired above-market leases $ 60,394 $ 62,136 Less accumulated amortization (17,989 ) (17,433 ) Acquired above-market leases, net 42,405 44,703 Acquired in-place leases 346,165 349,645 Less accumulated amortization (68,152 ) (62,454 ) Acquired in-place leases, net 278,013 287,191 Total intangible lease assets, net $ 320,418 $ 331,894 Acquired below-market leases $ 113,091 $ 113,862 Less accumulated amortization (23,418 ) (21,640 ) Intangible lease liabilities, net $ 89,673 $ 92,222 Leasing fees $ 16,841 $ 17,013 Less accumulated amortization (4,349 ) (4,166 ) Leasing fees, net $ 12,492 $ 12,847 Amortization for intangible lease assets and liabilities was as follows: (in thousands) For the three months ended March 31, Intangible Financial Statement Presentation 2020 2019 Acquired in-place leases and leasing fees Depreciation and amortization $ 7,695 $ 5,557 Above-market and below-market leases Lease revenues, net 1,140 740 Estimated future amortization of intangible assets and liabilities at March 31, 2020 is as follows: (in thousands) Remainder of 2020 $ 17,706 2021 23,286 2022 22,738 2023 22,411 2024 21,644 Thereafter 135,452 $ 243,237 |
Unsecured Credit Agreements
Unsecured Credit Agreements | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Unsecured Credit Agreements | 9. Unsecured Credit Agreements The following table summarizes the Company’s unsecured credit agreements: Outstanding Balance (in thousands, except interest rates) March 31, 2020 December 31, 2019 Interest Rate (c) Maturity Date 2020 Unsecured Term Loan (a) $ 240,000 $ 300,000 one-month LIBOR + 1.25% Aug. 2020 (d) Unsecured Revolving Credit and Term Loan Agreement (a) Revolving Credit Facility 353,300 197,300 one-month LIBOR + 1.20% Jan. 2022 2023 Unsecured Term Loan 265,000 265,000 one-month LIBOR + 1.35% Jan. 2023 2024 Unsecured Term Loan 190,000 190,000 one-month LIBOR + 1.25% Jun. 2024 808,300 652,300 2022 Unsecured Term Loan (a) 60,000 — one-month LIBOR + 1.25% Feb. 2022 2026 Unsecured Term Loan (a) 450,000 450,000 one-month LIBOR + 1.85% Feb. 2026 Senior Notes (a) Series A 150,000 150,000 4.84% Apr. 2027 Series B 225,000 225,000 5.09% Jul. 2028 Series C 100,000 100,000 5.19% Jul. 2030 475,000 475,000 Total 2,033,300 1,877,300 Debt issuance costs, net (b) (7,413 ) (7,919 ) $ 2,025,887 $ 1,869,381 (a) The Company believes it was in compliance with all financial covenants for all periods presented. (b) Amounts presented include debt issuance costs, net, related to the unsecured term notes and senior notes only. ( c ) ( d ) The 2020 Unsecured Term Loan allow s two six-month extensions , at the Company’s option, subject to the Company’s being in compliance with the debt covenants and customary representations and warranties, and payment of a fee equal to 0.05% of the outstanding principal balance at the time of extension. On May 5, 2020, the Company gave notice that it was exercising the first of these options, effective as of August 2, 2020. On February 7, 2020, the Company entered into a $60,000 term loan agreement maturing on February 28, 2022 (the “2022 Unsecured Term Loan”) with JP Morgan Chase, N.A. as administrative agent. The 2022 Unsecured Term Loan was fully funded at closing and used to repay a portion of the debt assumed by the Company as part of the Internalization. Borrowings under the 2022 Unsecured Term Loan are subject to interest only payments at variable rates equal to LIBOR plus a margin based upon the Company’s credit rating, ranging between 0.85% and 1.65% per annum. Based on the Company’s current credit rating the applicable margin was 1.25% as of March 31, 2020. At March 31, 2020, the weighted average interest rate on all outstanding borrowings was 3.03%. In addition, the Revolving Credit Facility is subject to a facility fee of 0.25% per annum. For the three months ended March 31, 2019, the Company paid $5,229 in debt issuance costs associated with the 2026 Unsecured Term Loan and the Unsecured Revolving Credit and Term Loan Agreement. For each separate debt instrument, on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment Debt issuance costs are amortized as a component of interest expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. The following table summarizes debt issuance cost amortization: For the three months ended March 31, (in thousands) 2020 2019 Debt issuance costs amortization $ 888 $ 553 The Company is subject to various financial and operational covenants and financial reporting requirements pursuant to its unsecured credit agreements. These covenants require the Company, to maintain certain financial ratios, including leverage, fixed charge coverage, and debt service coverage, among others. As of March 31, 2020, the Company believes it was in compliance with all of its loan covenants. The Company’s continued compliance with these covenants depends on many factors and could be impacted by current or future economic conditions associated with the COVID-19 pandemic (see Note 17), and thus there are no assurances that the Company will continue to be in compliance with its covenants. Failure to comply with the covenants would result in a default which, if the Company were unable to cure or obtain a waiver from the lenders, could accelerate the repayment of the obligations. Further, in the event of default, the Company may be restricted from paying dividends to its stockholders in excess of dividends required to maintain its REIT qualification. Accordingly, an event of default could have a material and adverse impact on the Company. |
Mortgages and Notes Payable
Mortgages and Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Mortgages and Notes Payable | 10. Mortgages and Notes Payable The Company’s mortgages and notes payable consist of the following: Origination Maturity (in thousands, except interest rates) Date Date Interest March 31, December 31, Lender (Month/Year) (Month/Year) Rate 2020 2019 (1) Wilmington Trust National Association Apr-19 Feb-28 4.92% $ 48,787 $ 49,065 (a) (b) (c) (k) (2) Wilmington Trust National Association Jun-18 Aug-25 4.36% 20,225 20,318 (a) (b) (c) (j) (3) PNC Bank Oct-16 Nov-26 3.62% 17,789 17,885 (b) (c) (4) Sun Life Mar-12 Oct-21 5.13% 10,785 10,888 (b) (f) (5) Aegon Apr-12 Oct-23 6.38% 7,604 7,788 (b) (g) (6) M&T Bank Oct-17 Aug-21 one - month LIBOR+3% 4,878 4,913 (b) (d) (h) ( i ) (7) Note holders Dec-08 Dec-23 6.25% 750 750 (d) (8) Standard Insurance Co. Jul-10 Aug-30 6.75% — 544 (b) (c) (d) (e) 110,818 112,151 Debt issuance costs, net (354 ) (358 ) $ 110,464 $ 111,793 (a) Non-recourse debt includes the indemnification/guaranty of the Corporation and/or OP pertaining to fraud, environmental claims, insolvency and other matters. (b) Debt secured by related rental property and lease rents. (c) Debt secured by guaranty of the OP. (d) Debt secured by guaranty of the Corporation. ( e ) The interest rate represents the initial interest rate. The interest rate could have been adjusted at Standard Insurance’s discretion (based on prevailing rates) at 119 months from the first payment date. ( f ) Mortgage was assumed in March 2012 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. ( g ) Mortgage was assumed in April 2012 as part of the acquisition of the related property. The debt was recorded at fair value at the time of the assumption. ( h ) The Company entered into an interest rate swap agreement in connection with the mortgage note, as further described in Note 11. ( i ) Mortgage was assumed in October 2017 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. ( j ) Mortgage was assumed in June 2018 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. ( k ) Mortgage was assumed in April 2019 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. At March 31, 2020, investment in rental property of $176,805 was pledged as collateral against the Company’s mortgages and notes payable. The following table summarizes the mortgages extinguished by the Company: (in thousands, except number of mortgages) For the three months ended March 31, 2020 For the year ended December 31, 2019 Number of mortgages 1 4 Outstanding balance of mortgages $ 541 $ 13,905 The following table summarizes the cost of mortgage extinguishment: For the three months ended March 31, (in thousands) 2020 2019 Cost of mortgage extinguishment $ 22 $ 498 Estimated future principal payments to be made under the above mortgage and note payable agreements, and the Company’s unsecured credit agreements (see Note 9) at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 2,401 2021 258,006 2022 416,207 2023 273,332 2024 192,260 Thereafter 1,001,912 $ 2,144,118 Certain of the Company’s mortgage and note payable agreements provide for prepayment fees and can be terminated under certain events of default as defined under the related agreements. These prepayment fees are not reflected as part of the table above. |
Interest Rate Swaps
Interest Rate Swaps | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Interest Rate Swaps | 11. Interest Rate Swaps Interest rate swaps were entered into with certain financial institutions in order to mitigate the impact of interest rate variability over the term of the related debt agreements. The interest rate swaps are considered cash flow hedges. In order to reduce counterparty concentration risk, the Company has a diversification policy for institutions that serve as swap counterparties. Under these agreements, the Company receives monthly payments from the counterparties on these interest rate swaps equal to the related variable interest rates multiplied by the outstanding notional amounts. Certain interest rate swaps amortize on a monthly basis. In turn, the Company pays the counterparties each month an amount equal to a fixed rate multiplied by the related outstanding notional amounts. The intended net impact of these transactions is that the Company pays a fixed interest rate on its variable-rate borrowings. The following is a summary of the Company’s outstanding interest rate swap agreements: (in thousands, except interest rates) Fair Value Counterparty Maturity Date Fixed Rate Variable Rate Index Notional Amount March 31, 2020 December 31, 2019 Bank of America, N.A. November 2023 2.80 % one-month LIBOR $ 25,000 $ (2,178 ) $ (1,136 ) Bank of Montreal July 2024 1.16 % one-month LIBOR 40,000 (1,324 ) 740 Bank of Montreal January 2025 1.91 % one-month LIBOR 25,000 (1,806 ) (402 ) Bank of Montreal July 2025 2.32 % one-month LIBOR 25,000 (2,500 ) (970 ) Bank of Montreal January 2026 1.92 % one-month LIBOR 25,000 (2,118 ) (448 ) Bank of Montreal January 2026 2.05 % one-month LIBOR 40,000 (3,685 ) (1,014 ) Bank of Montreal December 2026 2.33 % one-month LIBOR 10,000 (1,231 ) (460 ) Bank of Montreal December 2026 1.99 % one-month LIBOR 25,000 (2,500 ) (577 ) Bank of Montreal December 2027 2.37 % one-month LIBOR 25,000 (3,497 ) (1,306 ) Bank of Montreal May 2029 2.09 % one-month LIBOR 25,000 (3,342 ) (799 ) Capital One, National Association December 2021 1.05 % one-month LIBOR 15,000 (213 ) 143 Capital One, National Association December 2024 1.58 % one-month LIBOR 15,000 (836 ) 10 Capital One, National Association January 2026 2.08 % one-month LIBOR 35,000 (3,291 ) (911 ) Capital One, National Association April 2026 2.68 % one-month LIBOR 15,000 (2,007 ) (944 ) Capital One, National Association July 2026 1.32 % one-month LIBOR 35,000 (1,844 ) 720 Capital One, National Association December 2027 2.37 % one-month LIBOR 25,000 (3,533 ) (1,278 ) M&T Bank August 2021 1.02 % one-month LIBOR 4,877 (45 ) 41 (a), (b) M&T Bank September 2022 2.83 % one-month LIBOR 25,000 (1,553 ) (862 ) M&T Bank November 2023 2.65 % one-month LIBOR 25,000 (2,097 ) (1,038 ) Regions Bank May 2020 2.12 % one-month LIBOR 50,000 (92 ) (104 ) Regions Bank December 2023 1.18 % one-month LIBOR 25,000 (793 ) 376 Regions Bank May 2029 2.11 % one-month LIBOR 25,000 (3,438 ) (827 ) Regions Bank June 2029 2.03 % one-month LIBOR 25,000 (3,260 ) (651 ) Truist Financial Corporation April 2024 1.99 % one-month LIBOR 25,000 (1,655 ) (451 ) Truist Financial Corporation April 2025 2.20 % one-month LIBOR 25,000 (2,260 ) (781 ) Truist Financial Corporation July 2025 1.99 % one-month LIBOR 25,000 (2,075 ) (524 ) Truist Financial Corporation December 2025 2.30 % one-month LIBOR 25,000 (2,676 ) (993 ) Truist Financial Corporation January 2026 1.93 % one-month LIBOR 25,000 (2,146 ) (458 ) U.S. Bank National Association June 2029 2.03 % one-month LIBOR 25,000 (3,263 ) (681 ) U.S. Bank National Association August 2029 1.35 % one-month LIBOR 25,000 (1,699 ) 881 Wells Fargo Bank, N.A. February 2021 2.39 % one-month LIBOR 35,000 (599 ) (302 ) Wells Fargo Bank, N.A. October 2024 2.72 % one-month LIBOR 15,000 (1,591 ) (795 ) Wells Fargo Bank, N.A. April 2027 2.72 % one-month LIBOR 25,000 (3,878 ) (1,845 ) Wells Fargo Bank, N.A. January 2028 2.37 % one-month LIBOR 75,000 (10,597 ) (3,914 ) $ (79,622 ) $ (21,560 ) (a) (b) Interest rate swap was assumed in October 2017 as part of an UPREIT transaction. The total amounts recognized, and the location in the accompanying Condensed Consolidated Statements of Income and Comprehensive (Loss) Income, from converting from variable rates to fixed rates under these agreements were as follows: Reclassification from Total Interest Expense Amount of Loss Accumulated Other Presented in the Recognized in Comprehensive Loss Consolidated Statements of (in thousands) Accumulated Other Amount of Income and Comprehensive For the three months ended March 31, Comprehensive Loss Location (Loss) Gain (Loss) Income 2020 $ (58,062 ) Interest expense $ (885 ) $ 20,991 2019 (12,624 ) Interest expense 836 15,828 Amounts related to the interest rate swaps expected to be reclassified out of Accumulated other comprehensive loss to Interest expense during the next twelve months are estimated to be a loss of $14,802. The Company is exposed to credit risk in the event of non-performance by the counterparties of the swaps. The Company minimizes the risk exposure by limiting counterparties to major banks who meet established credit and capital guidelines. |
Credit Risk Concentrations
Credit Risk Concentrations | 3 Months Ended |
Mar. 31, 2020 | |
Risks And Uncertainties [Abstract] | |
Credit Risk Concentrations | 12. Credit Risk Concentrations The Company maintained bank balances that, at times, exceeded the federally insured limit during the three months ended March 31, 2020. The Company has not experienced losses relating to these deposits and management does not believe that the Company is exposed to any significant credit risk with respect to these amounts. Prior to the Internalization on February 7, 2020, the Company’s rental property was managed by BRE and the Asset Manager as described in Note 3. Management fees paid to BRE and Asset Manager represented 8% and 19% of total operating expenses for the three months ended March 31, 2020 and 2019, respectively. These amounts do not include acquisition fees paid to the Asset Manager that were capitalized (see Note 3). The Company has mortgages and notes payable with three institutions that comprised 62%, 16%, and 10% of total mortgages and notes payable at March 31, 2020 and December 31, 2019. For the three months ended March 31, 2020 and 2019, the Company had no individual tenants or common franchises that accounted for more than 10% of total revenues. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Equity | 13. Equity Share Redemption Program The Share Redemption Program was terminated effective February 10, 2020, and as a result there were no redemptions during the three months ended March 31, 2020. The following table summarizes redemptions under the Company’s Share Redemption Program during the three months ended March 31, 2019: (in thousands, except number of redemptions) Number of redemptions requested 13 Number of shares 21 Aggregate redemption price $ 1,803 Distribution Reinvestment Plan The Corporation had adopted a Distribution Reinvestment Plan (“DRIP”), pursuant to which the Corporation’s stockholders and holders of OP Units (other than the Corporation), could elect to have cash distributions reinvested in additional shares of the Corporation’s common stock. The DRIP was terminated effective February 10, 2020. At March 31, 2020 and December 31, 2019, a total of 3,075 and 3,005 shares of common stock, respectively, have been issued under the DRIP. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 14. Earnings per Share The following table summarizes the components used in the calculation of basic and diluted earnings per share (“EPS”): For the three months ended March 31, (in thousands, except per share) 2020 2019 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. $ 10,816 $ 13,938 Diluted earnings: Net earnings attributable to Broadstone Net Lease, Inc. $ 10,816 $ 13,938 Net earnings attributable to non-controlling interests 1,032 1,084 $ 11,848 $ 15,022 Basic and diluted weighted average shares outstanding: Weighted average number of common shares outstanding used in basic earnings per share 26,527 22,335 Effects of convertible membership units 2,526 1,737 Weighted average number of common shares outstanding used in diluted earnings per share 29,053 24,072 Basic and diluted net earnings per common share $ 0.41 $ 0.62 In the table above, outstanding OP Units are included in the diluted earnings per share calculation. However, because such OP Units would also require that the share of the OP income attributable to such OP Units also be added back to net income, there is no effect on EPS. |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Disclosures | 15. Supplemental Cash Flow Disclosures Cash paid for interest was $14,010 and $16,777 for the three months ended March 31, 2020 and 2019, respectively. Cash paid for income taxes was $195 and $395 for the three months ended March 31, 2020 and 2019, respectively. The following are non-cash transactions and have been excluded from the accompanying Condensed Consolidated Statements of Cash Flows: • During the three months ended March 31, 2020 and 2019, the Corporation issued 69 and 173 shares, respectively, of common stock with a value of approximately $5,733 and $14,533, respectively, under the terms of the DRIP (see Note 13). • During the three months ended March 31, 2020, the Company issued shares of common stock and OP Units, with a total value of approximately $178,535, and earnout consideration with a fair value of $40,119 as consideration for the Internalization and assumed $90,484 of debt (see Note 4). • During the three months ended March 31, 2020, the Company adjusted the carrying value of mezzanine equity non-controlling interests by $2,416 with an offset to additional paid-in capital (see Note 2). • At March 31, 2020 and 2019, dividend amounts declared and accrued but not yet paid amounted to $13,160 and $10,734, respectively. • Upon adoption of ASC 326 on January 1, 2020, described in Note 2, the Company recorded a transition adjustment to record a provision for credit losses associated with its net investment in direct financing leases of $323, with an equal amount recorded as a reduction in retained earnings. The provision for credit losses is included as a component of Investment in rental property, net accounted for using the direct financing method on the Condensed Consolidated Balance Sheets. • Upon adoption of ASC 842 on January 1, 2019, the Company recorded right-of-use assets of $1,687 and lease liabilities of $1,261 associated with ground leases where it is the lessee. The right-of-use asset was recorded net of a straight-line rent liability of $7 and ground lease intangible asset, net of $432 as of the date of adoption. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Litigation From time to time, the Company is a party to various litigation matters incidental to the conduct of the Company’s business. While the resolution of such matters cannot be predicted with certainty, based on currently available information, the Company does not believe that the final outcome of any of these matters will have a material effect on its consolidated financial position, results of operations, or liquidity. Property and Acquisition Related In connection with ownership and operation of real estate, the Company may potentially be liable for cost and damages related to environmental matters. The Company is not aware of any non-compliance, liability, claim, or other environmental condition that would have a material effect on its consolidated financial position, results of operations, or liquidity. Balances associated with tenant improvement allowances are included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets as follows: (in thousands) March 31, 2020 December 31, 2019 Tenant improvement allowances $ 2,219 $ 2,706 The Company is a party to three separate tax protection agreements with the contributing members of three distinct UPREIT transactions and to the Founding Owners’ Tax Protection Agreement in connection with the Internalization (see Note 3). The tax protection agreements require the Company to indemnify the beneficiaries in the event of a sale, exchange, transfer, or other disposal of the contributed property, or in the case of the Founding Owners’ Tax Protection Agreement, the entire Company, in a taxable transaction that would cause such beneficiaries to recognize a gain that is protected under the agreements, subject to certain exceptions. Based on values as of March 31, 2020, taxable sales of the applicable properties would trigger liability under the Agreements of approximately $22,300. Based on information available, the Company does not believe that the events resulting in damages as detailed above have occurred or are likely to occur in the foreseeable future. Obligations Under Operating Leases Subsequent to the Internalization (see Note 4), the Company leases office space for its corporate headquarters and other locations under non-cancellable operating leases with remaining lease terms ranging from 2020 to 2023. These leases contain provisions for fixed monthly payments, subject to rent escalations. None of the leases are subject to any sublease agreement. The lease for the corporate headquarters is with a related party (see Note 3). The Company also leases land at certain properties under non-cancellable operating leases (“ground leases”) with initial lease terms ranging from 2034 to 2066. These leases contain provisions for fixed monthly payments, subject to rent escalations. One lease requires the Company to make annual rent payments calculated based upon sales generated at the property (“percentage rent”). None of the leases are subject to any sublease agreement. The following table summarizes the total lease costs associated with operating leases: For the three months ended March 31, (in thousands) Financial Statement Presentation 2020 2019 Operating lease costs Office leases General and administrative $ 52 $ — Ground leases Property and operating expense 33 35 Variable lease costs Ground leases Property and operating expense 18 12 Total lease costs $ 103 $ 47 The following table summarizes payments associated with obligations under operating leases, reported as Cash flows from operating activities on the accompanying Condensed Consolidated Statements of Cash Flows: For the three months ended March 31, (in thousands) 2020 2019 Operating lease payments $ 128 $ 72 Estimated future lease payments required under non-cancelable operating leases at March 31, 2020, and a reconciliation to the lease liabilities, is as follows: (in thousands) Remainder of 2020 $ 534 2021 711 2022 686 2023 505 2024 120 Thereafter 2,411 Total undiscounted cash flows 4,967 Less imputed interest (1,908 ) Lease liabilities $ 3,059 The above rental payments include future minimum lease payments due during the initial lease terms. Such amounts exclude any contingent amounts associated with percentage rent that may become due in future periods. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events Subsequent to March 31, 2020, the OP drew additional borrowings on the Revolving Credit Facility in the aggregate amount of $25,000. On May 5, 2020, the Company gave notice that it was exercising the first of two six-month extension options available under the terms of the 2020 Unsecured Term Loan Agreement (see Note 9), effective as of August 2, 2020, and extending the maturity date of the loan to February 2, 2021, subject to certain customary conditions and in exchange for the payment of a 0.05% fee payable on August 2, 2020. Subsequent to March 31, 2020, the Company paid $13,160 in distributions. At its May 7, 2020 meeting, the Board of Directors undertook a full review of the Company’s rent collection results for April, preliminary collection results for May, the outlook for collections in future months, and the Company’s overall liquidity position. Given the economic uncertainty and rapidly evolving circumstances related to the COVID-19 pandemic (discussed below) and current tenant rent relief requests, to preserve cash and strengthen the Company’s liquidity position, the Board of Directors determined that it would temporarily suspend the Company’s monthly distribution. The previously announced distribution of $0.44 per common share and OP Unit for the month of April 2020 will be paid on May 15, 2020. The Board of Directors will re-evaluate whether or not to reinstate a distribution at its August 2020 meeting. On May 7, 2020, the Board of Directors determined the share value for the Corporation’s common stock to be $82.00 per share for the period May 1, 2020 through July 31, 2020. However, as previously disclosed, on January 10, 2020, the Company suspended its private offering of shares of its common stock until further notice. Through May 7, 2020, the Company sold three properties with an aggregate carrying value of approximately $8,994 for total proceeds of $10,538. The Company incurred additional expenses related to the sales of approximately $489, resulting in a gain on sale of real estate of approximately $1,055. COVID-19 Pandemic Since its discovery in December 2019, a novel strain of coronavirus, which causes the viral disease known as COVID-19, has spread throughout most countries of the world, including the United States. The outbreak has been declared a pandemic by the World Health Organization, and the United States Secretary of Health and Human Services has declared a public health emergency in the United States. In response to the COVID-19 pandemic, many local, state and federal governments have instituted “stay at home” or “shelter in place” rules and restrictions on the types of businesses that may continue to operate, which resulted in closure of many businesses deemed to be non-essential. Many of the Company’s tenants, in particular those who operate in the retail and restaurant industries, depend on in-person interactions with customers to generate unit-level profitability, and have been negatively impacted by the pandemic, as have businesses who supply products and services to these industries. As a result, in March and subsequent to the end of the quarter, the Company received rent relief requests from 68 tenants representing approximately 36.3% of annualized contractual revenues. The Company is in various stages of discussion with these tenants and currently expects to grant relief to some of its tenants to defer rent payments as a result of their estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance the Company will reach an agreement with any tenant or if an agreement is reached, that any such tenant will be able to repay any such deferred rent in the future. The full extent of the impact of the COVID-19 pandemic on the Company’s financial condition, results of operations, income, expenses, and ability to pay distributions cannot be determined at this time and will depend on certain developments, including the duration and spread of the outbreak and its impact on the Company’s tenants, all of which are uncertain and cannot be predicted. For further discussion of the COVID-19 outbreak, refer to Part II, Item 1A. of this Quarterly Report on Form 10-Q. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Interim Information | Interim Information The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting Summary of Significant Accounting Policies |
Principles of Consolidation | Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts and operations of the Company. All intercompany balances and transactions have been eliminated in consolidation. To the extent the Corporation has a variable interest in entities that are not evaluated under the variable interest entity (“VIE”) model, the Corporation evaluates its interests using the voting interest entity model. The Corporation has complete responsibility for the day-to-day management of, authority to make decisions for, and control of the OP. Based on consolidation guidance, the Corporation has concluded that the OP is a VIE as the members in the OP do not possess kick-out rights or substantive participating rights. Accordingly, the Corporation consolidates its interest in the OP. However, because the Corporation holds the majority voting interest in the OP, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs. The portion of the OP not owned by the Corporation is presented as non-controlling interests as of and during the periods presented. |
Basis of Accounting | Basis of Accounting The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. |
Use of Estimates | Use of Estimates The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include, but are not limited to, the allocation of purchase price between tangible and intangible assets acquired and liabilities assumed, the value of long-lived assets and goodwill, the provision for impairment, the depreciable lives of rental property, the amortizable lives of intangible assets and liabilities, the provisions for uncollectible rent and credit losses, the fair value of earnout liabilities, the fair value of assumed debt and notes payable, the fair value of the Company’s interest rate swap agreements, and the determination of any uncertain tax positions. Accordingly, actual results may differ from those estimates. |
Long-lived Asset Impairment | Long-lived Asset Impairment The Company reviews long-lived assets, other than goodwill, to be held and used for possible impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the asset or asset group exceeds the sum of the undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition. Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition, and other factors. An impairment loss is measured as the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. A significant judgment is made as to if and when impairment should be taken. The Company’s assessment of impairment as of March 31, 2020 was based on the most current information available to the Company. Based upon current market conditions resulting from the COVID-19 pandemic (see Note 17), certain of the Company’s properties may have fair values less than their carrying amounts. However, based on the Company’s plans with respect to those properties, the Company believes that their carrying amounts are recoverable and therefore, under applicable GAAP guidance, no impairment charges were recognized other than those described below. If the operating conditions mentioned above deteriorate or if the Company’s expected holding period for assets changes, subsequent tests for impairments could result in additional impairment charges in the future. Inputs used in establishing fair value for real estate assets generally fall within Level 3 of the fair value hierarchy, which are characterized as requiring significant judgment as little or no current market activity may be available for validation. The main indicator used to establish the classification of the inputs is current market conditions, as derived through the use of published commercial real estate market information. The Company determines the valuation of impaired assets using generally accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations, and bona fide purchase offers received from third parties. Management may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. During the three months ended March 31, 2020 and 2019, the Company recorded impairment charges of $ 2,133 |
Restricted Cash | Restricted Cash Restricted cash includes escrow funds the Company maintains pursuant to the terms of certain mortgages, notes payable, and lease agreements, and undistributed proceeds from the sale of properties under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), and is reported within Prepaid expenses and other assets in the Condensed Consolidated Balance Sheets. Restricted cash consisted of the following: March 31, December 31, (in thousands) 2020 2019 Escrow funds and other $ 1,504 $ 2,311 Undistributed 1031 proceeds 2,057 5,545 $ 3,561 $ 7,856 |
Revenue Recognition | Revenue Recognition The Company accounts for leases in accordance with ASC 842, Leases Certain of the Company’s leases require tenants to pay rent based upon a percentage of the property’s net sales (“percentage rent”) or contain rent escalators indexed to future changes in the Consumer Price Index (“CPI”). Lease income associated with such provisions is considered variable lease income and is not included in the initial measurement of the lease receivable, or in the calculation of straight-line rent revenue. Such amounts are recognized as income when the amounts are determinable. A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to the Company at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances. The Company accounts for the right to use land as a separate lease component, unless the accounting effect of doing so would be insignificant. Determination of significance requires management judgment. In determining whether the accounting effect of separately reporting the land component from other components for its real estate leases is significant, the Company assesses: (i) whether separating the land component impacts the classification of any lease component, (ii) the value of the land component in the context of the overall contract, and (iii) whether the right to use the land is coterminous with the rights to use the other assets. Revenue recognition methods for operating leases, direct financing leases, and sales-type leases are described below: Rental property accounted for under operating leases – Revenue is recognized as rents are earned on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as Accrued rental income on the Condensed Consolidated Balance Sheets. Rental property accounted for under direct financing leases – The Company utilizes the direct finance method of accounting to record direct financing lease income. The net investment in the direct financing lease represents receivables for the sum of future lease payments to be received and the estimated residual value of the leased property, less unamortized unearned income (which represents the difference between undiscounted cash flows and discounted cash flows). Unearned income is deferred and amortized into income over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Rental property accounted for under sales-type leases – For leases accounted for as sales-type leases, the Company records selling profit arising from the lease at inception, along with the net investment in the lease. The Company leases assets through the assumption of existing leases or through sale-leaseback transactions, and records such assets at their fair value at the time of acquisition, which in most cases coincides with lease inception. As a result, the Company does not generally recognize selling profit on sales-type leases. The net investment in the sales-type lease represents receivables for the sum of future lease payments and the estimated unguaranteed residual value of the leased property, each measured at net present value. Interest income is recorded over the lease terms so as to produce a constant periodic rate of return on the Company’s net investment in the leases. Certain of the Company’s lease contracts contain nonlease components ( e.g. i.e. |
Rent Received in Advance | Rent Received in Advance Rent received in advance represents tenant payments received prior to the contractual due date, and is included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets. Rent received in advance is as follows: (in thousands) March 31, 2020 December 31, 2019 Rent received in advance $ 9,918 $ 13,368 |
Provision for Uncollectible Rent | Provision for Uncollectible Rent In accordance with ASC 842, provision for uncollectible rent are recorded as an offset to Lease revenues, net on the accompanying Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. The following table summarizes the changes in the provision for uncollectible rent: The following table summarizes the changes in the provision for uncollectible rent: For the three months ended March 31, (in thousands) 2020 2019 Beginning balance $ — $ 2,086 Provision for uncollectible rent 1,033 441 Write-offs — (2,527 ) Ending balance $ 1,033 $ — |
Goodwill | Goodwill Goodwill represents the excess of the amount paid over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is assigned to one or more reporting units. The Company’s reporting unit is the same as its reportable segment. Goodwill has an indefinite life and is therefore not amortized. The Company evaluates goodwill for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable, or at least annually. The Company will adopt an annual goodwill testing date during the fourth quarter. |
Deferred Initial Public Offering Costs | Deferred Initial Public Offering Costs The Company has incurred certain costs in connection with its anticipated initial public offering (“IPO”). The Company capitalizes such deferred IPO costs, which primarily consist of direct, incremental legal, professional, accounting and other third-party fees. The deferred IPO costs will be offset against IPO proceeds upon the consummation of an offering. Should the planned IPO be abandoned, the deferred IPO costs will be expensed immediately as a charge to operating expenses in the Condensed Consolidated Statement of Income and Comprehensive (Loss) Income. At March 31, 2020 and December 31, 2019, deferred IPO costs were $1,282 and $668, respectively, and were included within Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. |
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, The Company has estimated that the carrying amount reported on the Condensed Consolidated Balance Sheets for Cash and cash equivalents, Prepaid expenses and other assets, Tenant and other receivables, net, and Accounts payable and other liabilities, approximates their fair values due to their short-term nature. Earnout Liability – In connection with the Internalization, the Company recognized an earnout liability that will be due and payable to the former owners of BRE if certain milestones are achieved during specified periods of time following the closing of the Internalization (the “Earnout Periods”) related to either (a) the 40-day dollar volume-weighted average price of a share of the Company’s common stock (“VWAP per REIT Share”), following the completion of an IPO of the Company’s common stock, or (b) the Company’s adjusted funds from operations (“AFFO”) per share, prior to the completion of an IPO (see Note 4). The Company utilizes third-party valuation experts to assist in estimating the fair value of the earnout liability, and develops estimates by considering weighted-average probabilities of likely outcomes, and using a Monte Carlo simulation and discounted cash flow analysis. These estimates require the Company to make various assumptions about future share prices, timing of an IPO, and other items that are unobservable and are considered Level 3 inputs in the fair value hierarchy. A change in these inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date. As shown in the tables below, the Company’s weighted average expected IPO date upon close of the Internalization was April 15, 2020. Due to the market dislocation and uncertainty presented by the COVID-19 pandemic, management revised its weighted average expected IPO date as of quarter end to March 15, 2021. The Company anticipates commencing its IPO when market conditions allow, which may be before March 15, 2021. To the extent the expected IPO date advances, there would be a corresponding increase in the earnout liability’s fair value given the earnout’s fixed time horizon. Peer share price volatilities are used to estimate the Company’s expected share price volatility, and the Company’s corresponding ability to achieve the earnout targets. An increase in peer share price volatility would result in an increase in the earnout liability’s fair value. The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of February 7, 2020, the transaction date. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date April 15, 2020 March 2020 through May 2020 Peer stock price volatility 20.0% 16.22% to 23.09% The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of March 31, 2020. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date March 15, 2021 November 2020 through May 2021 Peer stock price volatility 30.0% 22.96% to 43.91% The following table presents a reconciliation of the change in the earnout liability: For the three months ended (in thousands) March 31, 2020 Allocation of Internalization purchase price at February 7, 2020 $ 40,119 Change in fair value subsequent to Internalization 4,177 Balance at March 31, 2020 $ 44,296 The increase in the earnout liability fair value between February 7, 2020 and March 31, 2020 is primarily a result of an increase in the peer stock price volatility assumption used, as detailed above, a direct result of changes in economic circumstances impacting global equity markets. Interest Rate Swaps – The balances of interest rate swap assets and liabilities (see Note 11) and earnout liability measured at fair value on a recurring basis are as follows: March 31, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (79,622 ) $ — $ (79,622 ) $ — Earnout liability (44,296 ) — — (44,296 ) December 31, 2019 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, assets $ 2,911 $ — $ 2,911 $ — Interest rate swap, liabilities (24,471 ) — (24,471 ) — Long-term Debt – The fair value of the Company’s debt was estimated using Level 2 and Level 3 inputs based on recent financing transactions, estimates of the fair value of the property that serves as collateral for such debt, historical risk premiums for loans of comparable quality, current London Interbank Offered Rate (“LIBOR”), U.S. Treasury obligation interest rates, and on the discounted estimated future cash payments to be made on such debt. The discount rates estimated reflect the Company’s judgment as to the approximate current lending rates for loans or groups of loans with similar maturities and assumes that the debt is outstanding through maturity. Market information, as available, or present value techniques were utilized to estimate the amounts required to be disclosed. Since such amounts are estimates that are based on limited available market information for similar transactions and do not acknowledge transfer or other repayment restrictions that may exist on specific loans, it is unlikely that the estimated fair value of any such debt could be realized by immediate settlement of the obligation. The following table summarizes the carrying amount reported on the Condensed Consolidated Balance Sheets and the Company’s estimate of the fair value of the Mortgages and notes payable, net, Unsecured term notes, net, and Unsecured revolving credit facility: (in thousands) March 31, 2020 December 31, 2019 Carrying amount $ 2,144,118 $ 1,989,451 Fair value 2,233,159 2,047,860 As disclosed under the Long-lived Asset Impairment |
Right-of-Use Assets and Lease Liabilities/Rental Expense | Right-of-Use Assets and Lease Liabilities The Company is a lessee under non-cancelable operating leases associated with its corporate headquarters and other office spaces as well as with leases of land (“ground leases”). The Company records right-of-use assets and lease liabilities associated with these leases. The lease liability is equal to the net present value of the future payments to be made under the lease, discounted using estimates based on observable market factors. The right-of-use asset is generally equal to the lease liability plus initial direct costs associated with the leases. The Company includes in the recognition of the right-of-use asset and lease liability those renewal periods that are reasonably certain to be exercised, based on the facts and circumstances that exist at lease inception. Amounts associated with percentage rent provisions are considered variable lease costs and are not included in the initial measurement of the right-of-use asset or lease liability. The Company has made an accounting policy election, applicable to all asset types, to not separate lease from nonlease components when allocating contract consideration related to operating leases. Right-of-use assets and lease liabilities associated with operating leases were included in the accompanying Condensed Consolidated Balance Sheets as follows: March 31, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,457 $ 1,614 Lease liabilities Accounts payable and other liabilities 3,059 1,209 |
Earnout Liability | Earnout Liability The Company’s earnout liability is payable in a combination of cash, common shares, and OP Units, in the same proportion as the initial consideration paid in the Internalization (see Note 4). The common shares and OP Units payable under the arrangement will be subject to a redemption rights agreement, whereby holders of the common shares and OP Units will have the right to require the Company to repurchase any or all of the common shares or OP Units if an IPO has not occurred (see discussion of the redemption rights agreement in Note 4). The common shares and OP Units are deemed to be freestanding financial instruments that, at inception, embody an obligation to repurchase the Company’s common shares and OP Units, and therefore have been classified as liabilities together with the cash portion of the earnout. The fair value of the earnout liability at the time of the Internalization was recorded in Earnout liability on the Condensed Consolidated Balance Sheets as part of the purchase price allocation. The fair value of the earnout liability is remeasured each reporting period, with changes recorded as Change in fair value of earnout liability in the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income. |
Mezzanine Equity | Mezzanine Equity The Company issued common shares and OP Units as base consideration for the Internalization, each of which were subject to a redemption rights agreement, where the common shares (“mezzanine equity common stock”) and OP Units (“mezzanine equity non-controlling interests”) are economically equivalent to the permanent equity classified common shares and OP Units with the exception of certain contingent redemption rights that are not yet exercisable as of March 31, 2020 (see discussion of redemption rights agreement in Note 4). The Company presents the mezzanine equity common stock and mezzanine equity non-controlling interests as mezzanine equity in the Condensed Consolidated Balance Sheets as they are redeemable outside the Company’s control. The Company subsequently records mezzanine equity common stock at redemption value each reporting period, with changes in carrying value recorded as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets. The Company subsequently records mezzanine equity non-controlling interests at the greater of (i) carrying amount, increased or decreased for the non-controlling interest’s share of net income or loss, dividends and comprehensive income or loss or (ii) redemption value. Changes in carrying value of mezzanine equity non-controlling interests are recorded as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets. |
Recently Adopted Accounting Standards and Other Recently Issued Accounting Standards | Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses Codification Improvements to Topic 326, Financial Instruments – Credit Losses In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Other Recently Issued Accounting Standards As more fully described in Note 17, during 2020 there have been business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic. In response, lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842, Leases |
Reclassifications | Reclassifications The Company reclassified $443 of Income taxes from a component of Operating expenses to a component of Other income (expenses), on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income for the three months ended March 31, 2019, to conform with the current period presentation. The reclassification is a change from one acceptable presentation to another acceptable presentation. |
Business Description (Tables)
Business Description (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Outstanding Equity and Economic Ownership Interest | The following table summarizes the outstanding equity and economic ownership interest of the Corporation and the OP: March 31, 2020 December 31, 2019 (in thousands) Shares of Common Stock OP Units Total Diluted Shares Shares of Common Stock OP Units Total Diluted Shares Permanent equity 26,074 1,737 27,811 26,001 1,737 27,738 Mezzanine equity 781 1,320 2,101 — — — Total 26,855 3,057 29,912 26,001 1,737 27,738 Percent Ownership of OP 89.9 % 10.1 % 100.0 % 93.7 % 6.3 % 100.0 % |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Restricted Cash | Restricted cash consisted of the following: March 31, December 31, (in thousands) 2020 2019 Escrow funds and other $ 1,504 $ 2,311 Undistributed 1031 proceeds 2,057 5,545 $ 3,561 $ 7,856 |
Summary of Rents Received in Advance | Rent received in advance represents tenant payments received prior to the contractual due date, and is included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets. Rent received in advance is as follows: (in thousands) March 31, 2020 December 31, 2019 Rent received in advance $ 9,918 $ 13,368 |
Summary of Changes in the Provision for Uncollectible Rent | The following table summarizes the changes in the provision for uncollectible rent: For the three months ended March 31, (in thousands) 2020 2019 Beginning balance $ — $ 2,086 Provision for uncollectible rent 1,033 441 Write-offs — (2,527 ) Ending balance $ 1,033 $ — |
Summary of Significant Unobservable Inputs Used to Estimate Fair Value of Earnout Liability | The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of February 7, 2020, the transaction date. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date April 15, 2020 March 2020 through May 2020 Peer stock price volatility 20.0% 16.22% to 23.09% The table below provides a summary of the significant unobservable inputs used to estimate the fair value of the earnout liability as of March 31, 2020. Significant Unobservable Inputs Weighted Average Assumption Used Range Expected IPO date March 15, 2021 November 2020 through May 2021 Peer stock price volatility 30.0% 22.96% to 43.91% |
Summary of Reconciliation of Change in Earnout Liability | The following table presents a reconciliation of the change in the earnout liability: For the three months ended (in thousands) March 31, 2020 Allocation of Internalization purchase price at February 7, 2020 $ 40,119 Change in fair value subsequent to Internalization 4,177 Balance at March 31, 2020 $ 44,296 |
Balances of Interest Rate Swap Assets and Liabilities and Earnout Liability Measured at Fair Value on Recurring Basis | Interest Rate Swaps – The balances of interest rate swap assets and liabilities (see Note 11) and earnout liability measured at fair value on a recurring basis are as follows: March 31, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (79,622 ) $ — $ (79,622 ) $ — Earnout liability (44,296 ) — — (44,296 ) December 31, 2019 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, assets $ 2,911 $ — $ 2,911 $ — Interest rate swap, liabilities (24,471 ) — (24,471 ) — |
Summary of Carrying Amount Reported on Condensed Consolidated Balance Sheets | The following table summarizes the carrying amount reported on the Condensed Consolidated Balance Sheets and the Company’s estimate of the fair value of the Mortgages and notes payable, net, Unsecured term notes, net, and Unsecured revolving credit facility: (in thousands) March 31, 2020 December 31, 2019 Carrying amount $ 2,144,118 $ 1,989,451 Fair value 2,233,159 2,047,860 |
Summary of Right-of-Use Assets And Lease Liabilities Associated With Operating Leases Included In Condensed Consolidated Balance Sheets | Right-of-use assets and lease liabilities associated with operating leases were included in the accompanying Condensed Consolidated Balance Sheets as follows: March 31, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,457 $ 1,614 Lease liabilities Accounts payable and other liabilities 3,059 1,209 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property Management Agreement and Asset Management Agreement | |
Schedule of Related Party Transactions | Total fees incurred under the Property Management Agreement and Asset Management Agreement were as follows: (in thousands) For the three months ended March 31, Type of Fee Financial Statement Presentation 2020 (a) 2019 Asset management fee Asset management fees $ 2,461 $ 5,120 Property management fee Property management fees 1,275 1,885 Total management fee expense 3,736 7,005 Marketing fee (offering costs) Additional paid-in capital — 300 Acquisition fee Capitalized as a component of assets acquired — 730 Leasing fee and re-leasing fees Leasing fees, net — 258 Disposition fee Gain on sale of real estate 109 113 Total management fees $ 3,845 $ 8,406 (a) Fees were payable under the Property Management Agreement and Asset Management Agreement from January 1, 2020 through February 6, 2020. The Internalization was effective February 7, 2020. |
Internalization (Tables)
Internalization (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Internalization [Abstract] | |
Schedule of Base Consideration | The consideration paid at closing of the Internalization is summarized in the following table: (in thousands) Issuance of 781 shares of common stock $ 66,376 Issuance of 1,320 OP Units 112,159 Cash 30,981 Base consideration 209,516 Initial estimate of fair value of earnout liability 40,119 Total consideration $ 249,635 |
Summary of Earnout Tranches, Applicable VWAP of REIT Share and AFFO Per Share, and Applicable Earnout Periods | The earnout tranches, applicable 40-day VWAP of a REIT Share and AFFO per share, and the applicable Earnout Periods are as follows: (in thousands, except per share amounts) If the Company has completed an IPO If the Company has not completed an IPO Earnout Tranche (a) 40-Day VWAP of a REIT Share Applicable Earnout Period AFFO per Share Applicable Earnout Period $10,000 $90.00 The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. $5.85 The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. $15,000 $95.00 The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. $5.95 The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. $25,000 $97.50 The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. $6.30 The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. $25,000 $100.00 The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. $6.70 The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. (a) Initial contractual value of applicable earnout tranche based on an $85.00 price per share/unit of common stock and OP Units. Does not take into account the actual per share price of common stock and OP Units at the time an applicable earnout tranche may be earned and paid. |
Summary of Preliminary Allocation of Purchase Price | The following table summarizes the Company’s preliminary allocation of the purchase price associated with the Internalization: (in thousands) Prepaid expenses and other assets $ 1,336 Right-of-use assets 1,898 Goodwill 339,769 Accounts payable and other liabilities (986 ) Operating lease liabilities (1,898 ) Debt (90,484 ) $ 249,635 (in thousands) For the three months ended March 31, 2019 Land $ 7,149 Land improvements 10,506 Buildings and improvements 49,677 Acquired in-place leases (b) 6,618 Acquired above-market leases (c) 2,169 Acquired below-market leases (d) (836 ) $ 75,283 (b) (c) (d) |
Schedule of Pro Forma Financial Information | The condensed pro forma financial information is as follows for the three months ended March 31, 2020 and 2019: For the three months ended March 31, (in thousands) 2020 2019 Revenues $ 78,231 $ 68,430 Net income 13,751 17,685 |
Acquisitions of Rental Proper_2
Acquisitions of Rental Property (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions of Rental Property Closed | The Company did not complete any acquisitions of rental property during the three months ended March 31, 2020. The Company closed on the following acquisitions of rental property during the three months ended March 31, 2019: (in thousands, except number of properties) Number of Real Estate Date Property Type Properties Acquisition Price January 31, 2019 Healthcare 1 $ 4,747 March 12, 2019 Industrial 1 10,217 March 15, 2019 Retail 10 13,185 March 19, 2019 Retail 14 19,128 March 26, 2019 Industrial 1 25,801 27 $ 73,078 (a) (a ) |
Summary of Preliminary Allocation of Purchase Price | The following table summarizes the Company’s preliminary allocation of the purchase price associated with the Internalization: (in thousands) Prepaid expenses and other assets $ 1,336 Right-of-use assets 1,898 Goodwill 339,769 Accounts payable and other liabilities (986 ) Operating lease liabilities (1,898 ) Debt (90,484 ) $ 249,635 (in thousands) For the three months ended March 31, 2019 Land $ 7,149 Land improvements 10,506 Buildings and improvements 49,677 Acquired in-place leases (b) 6,618 Acquired above-market leases (c) 2,169 Acquired below-market leases (d) (836 ) $ 75,283 (b) (c) (d) |
Sale of Real Estate (Tables)
Sale of Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Schedule of Sale of Real Estate | The Company closed on the following sales of real estate, none of which qualified as discontinued operations: For the three months ended March 31, (in thousands, except number of properties) 2020 2019 Number of properties disposed 10 4 Aggregate sale price $ 37,185 $ 11,291 Aggregate carrying value (27,764 ) (9,212 ) Additional sales expenses (1,802 ) (679 ) Gain on sale of real estate $ 7,619 $ 1,400 |
Investment in Rental Property_2
Investment in Rental Property and Lease Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Rental Property Subject to Non-cancelable Operating Leases | Rental property subject to non-cancelable operating leases with tenants was as follows: (in thousands) March 31, 2020 December 31, 2019 Land $ 545,846 $ 548,911 Land improvements 274,135 275,470 Buildings and improvements 2,827,111 2,850,571 Equipment 11,492 11,492 3,658,584 3,686,444 Less accumulated depreciation (291,018 ) (271,044 ) $ 3,367,566 $ 3,415,400 Depreciation expense on investment in rental property was as follows: For the three months ended March 31, (in thousands) 2020 2019 Depreciation $ 23,515 $ 18,753 |
Estimated Lease Payments to be Received under Non-cancelable Operating Leases | Estimated lease payments to be received under non-cancelable operating leases with tenants at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 210,383 2021 284,505 2022 287,511 2023 290,357 2024 285,396 Thereafter 2,130,183 $ 3,488,335 |
Net Investment in Direct Financing Leases | The Company’s net investment in direct financing leases was comprised of the following: (in thousands) March 31, 2020 December 31, 2019 Undiscounted estimated lease payments to be received $ 68,898 $ 72,753 Estimated unguaranteed residual values 19,827 20,358 Unearned income (48,459 ) (51,221 ) Reserve for credit losses (305 ) — Net investment in direct financing leases $ 39,961 $ 41,890 |
Direct Financing Leases, Lease Receivable Maturity | Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 3,047 2021 4,138 2022 4,220 2023 4,305 2024 4,385 Thereafter 48,803 $ 68,898 |
Summary of Amounts Reported as Lease Revenues Net on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income | The following table summarizes amounts reported as Lease revenues, net on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income: For the three months ended March 31, (in thousands) 2020 2019 Contractual rental amounts billed for operating leases $ 72,828 $ 58,419 Adjustment to recognize contractual operating lease billings on a straight-line basis 1,665 5,171 Percentage rent income 3 — Adjustment to revenue recognized for uncollectible rental amounts billed (1,033 ) (440 ) Total operating lease rental revenues 73,463 63,150 Earned income from direct financing leases 987 1,005 Operating expenses billed to tenants 3,732 4,275 Other income from real estate transactions 49 — Total Lease revenues, net $ 78,231 $ 68,430 |
Intangible Assets and Liabili_2
Intangible Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Liabilities Relating to Amortization | The following is a summary of intangible assets and liabilities and related accumulated amortization: (in thousands) March 31, 2020 December 31, 2019 Lease intangibles: Acquired above-market leases $ 60,394 $ 62,136 Less accumulated amortization (17,989 ) (17,433 ) Acquired above-market leases, net 42,405 44,703 Acquired in-place leases 346,165 349,645 Less accumulated amortization (68,152 ) (62,454 ) Acquired in-place leases, net 278,013 287,191 Total intangible lease assets, net $ 320,418 $ 331,894 Acquired below-market leases $ 113,091 $ 113,862 Less accumulated amortization (23,418 ) (21,640 ) Intangible lease liabilities, net $ 89,673 $ 92,222 Leasing fees $ 16,841 $ 17,013 Less accumulated amortization (4,349 ) (4,166 ) Leasing fees, net $ 12,492 $ 12,847 |
Schedule of Amortization for Intangible Lease Assets and Liabilities | Amortization for intangible lease assets and liabilities was as follows: (in thousands) For the three months ended March 31, Intangible Financial Statement Presentation 2020 2019 Acquired in-place leases and leasing fees Depreciation and amortization $ 7,695 $ 5,557 Above-market and below-market leases Lease revenues, net 1,140 740 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization of intangible assets and liabilities at March 31, 2020 is as follows: (in thousands) Remainder of 2020 $ 17,706 2021 23,286 2022 22,738 2023 22,411 2024 21,644 Thereafter 135,452 $ 243,237 |
Unsecured Credit Agreements (Ta
Unsecured Credit Agreements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Debt Issuance Cost Amortization | The following table summarizes debt issuance cost amortization: For the three months ended March 31, (in thousands) 2020 2019 Debt issuance costs amortization $ 888 $ 553 |
Unsecured Debt | |
Summary of Unsecured Credit Agreements | The following table summarizes the Company’s unsecured credit agreements: Outstanding Balance (in thousands, except interest rates) March 31, 2020 December 31, 2019 Interest Rate (c) Maturity Date 2020 Unsecured Term Loan (a) $ 240,000 $ 300,000 one-month LIBOR + 1.25% Aug. 2020 (d) Unsecured Revolving Credit and Term Loan Agreement (a) Revolving Credit Facility 353,300 197,300 one-month LIBOR + 1.20% Jan. 2022 2023 Unsecured Term Loan 265,000 265,000 one-month LIBOR + 1.35% Jan. 2023 2024 Unsecured Term Loan 190,000 190,000 one-month LIBOR + 1.25% Jun. 2024 808,300 652,300 2022 Unsecured Term Loan (a) 60,000 — one-month LIBOR + 1.25% Feb. 2022 2026 Unsecured Term Loan (a) 450,000 450,000 one-month LIBOR + 1.85% Feb. 2026 Senior Notes (a) Series A 150,000 150,000 4.84% Apr. 2027 Series B 225,000 225,000 5.09% Jul. 2028 Series C 100,000 100,000 5.19% Jul. 2030 475,000 475,000 Total 2,033,300 1,877,300 Debt issuance costs, net (b) (7,413 ) (7,919 ) $ 2,025,887 $ 1,869,381 (a) The Company believes it was in compliance with all financial covenants for all periods presented. (b) Amounts presented include debt issuance costs, net, related to the unsecured term notes and senior notes only. ( c ) ( d ) The 2020 Unsecured Term Loan allow s two six-month extensions , at the Company’s option, subject to the Company’s being in compliance with the debt covenants and customary representations and warranties, and payment of a fee equal to 0.05% of the outstanding principal balance at the time of extension. On May 5, 2020, the Company gave notice that it was exercising the first of these options, effective as of August 2, 2020. |
Mortgages and Notes Payable (Ta
Mortgages and Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Extinguished Mortgages | The following table summarizes the mortgages extinguished by the Company: (in thousands, except number of mortgages) For the three months ended March 31, 2020 For the year ended December 31, 2019 Number of mortgages 1 4 Outstanding balance of mortgages $ 541 $ 13,905 |
Summary of Cost Extinguished Mortgages | The following table summarizes the cost of mortgage extinguishment: For the three months ended March 31, (in thousands) 2020 2019 Cost of mortgage extinguishment $ 22 $ 498 |
Schedule of Estimated Future Principal Payments | Estimated future principal payments to be made under the above mortgage and note payable agreements, and the Company’s unsecured credit agreements (see Note 9) at March 31, 2020 are as follows: (in thousands) Remainder of 2020 $ 2,401 2021 258,006 2022 416,207 2023 273,332 2024 192,260 Thereafter 1,001,912 $ 2,144,118 |
Secured Debt | |
Summary of Unsecured Credit Agreements | The Company’s mortgages and notes payable consist of the following: Origination Maturity (in thousands, except interest rates) Date Date Interest March 31, December 31, Lender (Month/Year) (Month/Year) Rate 2020 2019 (1) Wilmington Trust National Association Apr-19 Feb-28 4.92% $ 48,787 $ 49,065 (a) (b) (c) (k) (2) Wilmington Trust National Association Jun-18 Aug-25 4.36% 20,225 20,318 (a) (b) (c) (j) (3) PNC Bank Oct-16 Nov-26 3.62% 17,789 17,885 (b) (c) (4) Sun Life Mar-12 Oct-21 5.13% 10,785 10,888 (b) (f) (5) Aegon Apr-12 Oct-23 6.38% 7,604 7,788 (b) (g) (6) M&T Bank Oct-17 Aug-21 one - month LIBOR+3% 4,878 4,913 (b) (d) (h) ( i ) (7) Note holders Dec-08 Dec-23 6.25% 750 750 (d) (8) Standard Insurance Co. Jul-10 Aug-30 6.75% — 544 (b) (c) (d) (e) 110,818 112,151 Debt issuance costs, net (354 ) (358 ) $ 110,464 $ 111,793 (a) Non-recourse debt includes the indemnification/guaranty of the Corporation and/or OP pertaining to fraud, environmental claims, insolvency and other matters. (b) Debt secured by related rental property and lease rents. (c) Debt secured by guaranty of the OP. (d) Debt secured by guaranty of the Corporation. ( e ) The interest rate represents the initial interest rate. The interest rate could have been adjusted at Standard Insurance’s discretion (based on prevailing rates) at 119 months from the first payment date. ( f ) Mortgage was assumed in March 2012 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. ( g ) Mortgage was assumed in April 2012 as part of the acquisition of the related property. The debt was recorded at fair value at the time of the assumption. ( h ) The Company entered into an interest rate swap agreement in connection with the mortgage note, as further described in Note 11. ( i ) Mortgage was assumed in October 2017 as part of an UPREIT transaction. The debt was recorded at fair value at the time of the assumption. ( j ) Mortgage was assumed in June 2018 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. ( k ) Mortgage was assumed in April 2019 as part of the acquisition of the related property. The debt was recorded at fair value at the time of assumption. |
Interest Rate Swaps (Tables)
Interest Rate Swaps (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Company's Outstanding Interest-rate Swap Agreement | The following is a summary of the Company’s outstanding interest rate swap agreements: (in thousands, except interest rates) Fair Value Counterparty Maturity Date Fixed Rate Variable Rate Index Notional Amount March 31, 2020 December 31, 2019 Bank of America, N.A. November 2023 2.80 % one-month LIBOR $ 25,000 $ (2,178 ) $ (1,136 ) Bank of Montreal July 2024 1.16 % one-month LIBOR 40,000 (1,324 ) 740 Bank of Montreal January 2025 1.91 % one-month LIBOR 25,000 (1,806 ) (402 ) Bank of Montreal July 2025 2.32 % one-month LIBOR 25,000 (2,500 ) (970 ) Bank of Montreal January 2026 1.92 % one-month LIBOR 25,000 (2,118 ) (448 ) Bank of Montreal January 2026 2.05 % one-month LIBOR 40,000 (3,685 ) (1,014 ) Bank of Montreal December 2026 2.33 % one-month LIBOR 10,000 (1,231 ) (460 ) Bank of Montreal December 2026 1.99 % one-month LIBOR 25,000 (2,500 ) (577 ) Bank of Montreal December 2027 2.37 % one-month LIBOR 25,000 (3,497 ) (1,306 ) Bank of Montreal May 2029 2.09 % one-month LIBOR 25,000 (3,342 ) (799 ) Capital One, National Association December 2021 1.05 % one-month LIBOR 15,000 (213 ) 143 Capital One, National Association December 2024 1.58 % one-month LIBOR 15,000 (836 ) 10 Capital One, National Association January 2026 2.08 % one-month LIBOR 35,000 (3,291 ) (911 ) Capital One, National Association April 2026 2.68 % one-month LIBOR 15,000 (2,007 ) (944 ) Capital One, National Association July 2026 1.32 % one-month LIBOR 35,000 (1,844 ) 720 Capital One, National Association December 2027 2.37 % one-month LIBOR 25,000 (3,533 ) (1,278 ) M&T Bank August 2021 1.02 % one-month LIBOR 4,877 (45 ) 41 (a), (b) M&T Bank September 2022 2.83 % one-month LIBOR 25,000 (1,553 ) (862 ) M&T Bank November 2023 2.65 % one-month LIBOR 25,000 (2,097 ) (1,038 ) Regions Bank May 2020 2.12 % one-month LIBOR 50,000 (92 ) (104 ) Regions Bank December 2023 1.18 % one-month LIBOR 25,000 (793 ) 376 Regions Bank May 2029 2.11 % one-month LIBOR 25,000 (3,438 ) (827 ) Regions Bank June 2029 2.03 % one-month LIBOR 25,000 (3,260 ) (651 ) Truist Financial Corporation April 2024 1.99 % one-month LIBOR 25,000 (1,655 ) (451 ) Truist Financial Corporation April 2025 2.20 % one-month LIBOR 25,000 (2,260 ) (781 ) Truist Financial Corporation July 2025 1.99 % one-month LIBOR 25,000 (2,075 ) (524 ) Truist Financial Corporation December 2025 2.30 % one-month LIBOR 25,000 (2,676 ) (993 ) Truist Financial Corporation January 2026 1.93 % one-month LIBOR 25,000 (2,146 ) (458 ) U.S. Bank National Association June 2029 2.03 % one-month LIBOR 25,000 (3,263 ) (681 ) U.S. Bank National Association August 2029 1.35 % one-month LIBOR 25,000 (1,699 ) 881 Wells Fargo Bank, N.A. February 2021 2.39 % one-month LIBOR 35,000 (599 ) (302 ) Wells Fargo Bank, N.A. October 2024 2.72 % one-month LIBOR 15,000 (1,591 ) (795 ) Wells Fargo Bank, N.A. April 2027 2.72 % one-month LIBOR 25,000 (3,878 ) (1,845 ) Wells Fargo Bank, N.A. January 2028 2.37 % one-month LIBOR 75,000 (10,597 ) (3,914 ) $ (79,622 ) $ (21,560 ) (a) (b) Interest rate swap was assumed in October 2017 as part of an UPREIT transaction. |
Total Amounts Recognized and Location of Gain (Loss) in Condensed Consolidated Statement of Income and Comprehensive Income, from Converting from Variable Rates to Fixed Rates | The total amounts recognized, and the location in the accompanying Condensed Consolidated Statements of Income and Comprehensive (Loss) Income, from converting from variable rates to fixed rates under these agreements were as follows: Reclassification from Total Interest Expense Amount of Loss Accumulated Other Presented in the Recognized in Comprehensive Loss Consolidated Statements of (in thousands) Accumulated Other Amount of Income and Comprehensive For the three months ended March 31, Comprehensive Loss Location (Loss) Gain (Loss) Income 2020 $ (58,062 ) Interest expense $ (885 ) $ 20,991 2019 (12,624 ) Interest expense 836 15,828 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Redemptions under Company's Share Redemption Program | The Share Redemption Program was terminated effective February 10, 2020, and as a result there were no redemptions during the three months ended March 31, 2020. The following table summarizes redemptions under the Company’s Share Redemption Program during the three months ended March 31, 2019: (in thousands, except number of redemptions) Number of redemptions requested 13 Number of shares 21 Aggregate redemption price $ 1,803 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Summary of Components used in Calculation of Basic and Diluted Earnings per Share | The following table summarizes the components used in the calculation of basic and diluted earnings per share (“EPS”): For the three months ended March 31, (in thousands, except per share) 2020 2019 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. $ 10,816 $ 13,938 Diluted earnings: Net earnings attributable to Broadstone Net Lease, Inc. $ 10,816 $ 13,938 Net earnings attributable to non-controlling interests 1,032 1,084 $ 11,848 $ 15,022 Basic and diluted weighted average shares outstanding: Weighted average number of common shares outstanding used in basic earnings per share 26,527 22,335 Effects of convertible membership units 2,526 1,737 Weighted average number of common shares outstanding used in diluted earnings per share 29,053 24,072 Basic and diluted net earnings per common share $ 0.41 $ 0.62 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Tenant Improvement Allowances Included in Accounts Payable and Other Liabilities | Balances associated with tenant improvement allowances are included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets as follows: (in thousands) March 31, 2020 December 31, 2019 Tenant improvement allowances $ 2,219 $ 2,706 |
Summary of Total Lease Costs Associated with Operating Leases | The following table summarizes the total lease costs associated with operating leases: For the three months ended March 31, (in thousands) Financial Statement Presentation 2020 2019 Operating lease costs Office leases General and administrative $ 52 $ — Ground leases Property and operating expense 33 35 Variable lease costs Ground leases Property and operating expense 18 12 Total lease costs $ 103 $ 47 |
Summary of Payments Associated with Obligations Under Operating Leases | The following table summarizes payments associated with obligations under operating leases, reported as Cash flows from operating activities on the accompanying Condensed Consolidated Statements of Cash Flows: For the three months ended March 31, (in thousands) 2020 2019 Operating lease payments $ 128 $ 72 |
Summary of Estimated Future Lease Payments Required Under Non-cancelable Operating Leases as well as Reconciliation to Lease Liabilities | Estimated future lease payments required under non-cancelable operating leases at March 31, 2020, and a reconciliation to the lease liabilities, is as follows: (in thousands) Remainder of 2020 $ 534 2021 711 2022 686 2023 505 2024 120 Thereafter 2,411 Total undiscounted cash flows 4,967 Less imputed interest (1,908 ) Lease liabilities $ 3,059 |
Business Description - Addition
Business Description - Additional Information (Detail) | Feb. 07, 2020USD ($) | Mar. 31, 2020USD ($)PropertyState |
Business Description [Line Items] | ||
Date of incorporation | Oct. 18, 2007 | |
Number of leased commercial properties owned | Property | 635 | |
Number of States in which properties located | State | 41 | |
Internalization fees | $ | $ 1,205,000 | $ 1,205,000 |
Property Management Agreement and Asset Management Agreement | Merger Agreement | ||
Business Description [Line Items] | ||
Internalization fees | $ | $ 0 | |
British Columbia, Canada | ||
Business Description [Line Items] | ||
Number of leased commercial properties owned | Property | 1 |
Business Description - Summary
Business Description - Summary of Outstanding Equity and Economic Ownership Interest (Detail) - shares shares in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Business Description [Line Items] | ||
Shares of Common Stock | 26,855 | 26,001 |
OP Units | 3,057 | 1,737 |
Total Diluted Shares | 29,912 | 27,738 |
Broadstone Net Lease, LLC | ||
Business Description [Line Items] | ||
Percent Ownership of OP, Shares of Common Stock | 89.90% | 93.70% |
Percent Ownership of OP, OP Units | 10.10% | 6.30% |
Percent Ownership of OP, Total Diluted Shares | 100.00% | 100.00% |
Permanent Equity | ||
Business Description [Line Items] | ||
Shares of Common Stock | 26,074 | 26,001 |
OP Units | 1,737 | 1,737 |
Total Diluted Shares | 27,811 | 27,738 |
Mezzanine Equity | ||
Business Description [Line Items] | ||
Shares of Common Stock | 781 | |
OP Units | 1,320 | |
Total Diluted Shares | 2,101 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | Mar. 31, 2020 | Feb. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | Dec. 31, 2019 |
Significant Accounting Policies [Line Items] | ||||||
Additional impairment charges | $ 0 | |||||
Impairment of real estate assets | 2,133,000 | $ 1,017,000 | ||||
Provision for credit loss | $ 323,000 | |||||
Income taxes | 549,000 | 443,000 | ||||
Other Nonoperating Income (Expenses) | ||||||
Significant Accounting Policies [Line Items] | ||||||
Income taxes | $ 443,000 | |||||
Fair Value Inputs Level3 [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Weighted average expected IPO date | Mar. 15, 2021 | Apr. 15, 2020 | ||||
IPO | ||||||
Significant Accounting Policies [Line Items] | ||||||
Deferred offering costs | $ 1,282,000 | $ 1,282,000 | $ 668,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Components of Restricted Cash (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Cash And Cash Equivalents [Abstract] | ||||
Escrow funds and other | $ 1,504 | $ 2,311 | ||
Undistributed 1031 proceeds | 2,057 | 5,545 | ||
Restricted cash | $ 3,561 | $ 7,856 | $ 1,434 | $ 377 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Rents Received in Advance (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Revenue From Contract With Customer [Abstract] | ||
Rent received in advance | $ 9,918 | $ 13,368 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Changes in the Provision for Uncollectible Rent (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract] | ||
Beginning balance | $ 2,086 | |
Provision for uncollectible rent | $ 1,033 | 441 |
Write-offs | $ (2,527) | |
Ending balance | $ 1,033 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Summary of Significant Unobservable Inputs Used to Estimate Fair Value of Earnout Liability (Detail) - Fair Value Inputs Level3 [Member] | Mar. 31, 2020 | Feb. 07, 2020 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Expected IPO date | Mar. 15, 2021 | Apr. 15, 2020 |
Range, Expected IPO date | November 2020 through May 2021 | March 2020 through May 2020 |
Weighted Average [Member] | Measurement Input, Price Volatility [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Peer stock price volatility | 0.300 | 0.200 |
Minimum | Measurement Input, Price Volatility [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Peer stock price volatility | 0.2296 | 0.1622 |
Maximum | Measurement Input, Price Volatility [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Peer stock price volatility | 0.4391 | 0.2309 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Summary of Reconciliation of Change in Earnout Liability (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Feb. 07, 2020 | |
Fair Value Disclosures [Abstract] | ||
Allocation of Internalization purchase price at February 7, 2020 | $ 40,119 | |
Change in fair value subsequent to Internalization | 4,177 | |
Earnout liability | $ 44,296 | $ 40,119 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Balances of Interest Rate Swap Assets and Liabilities and Earnout Liability Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Feb. 07, 2020 | Dec. 31, 2019 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Interest rate swap, liabilities | $ (79,622) | $ (24,471) | |
Earnout liability | (44,296) | $ (40,119) | |
Interest rate swap, assets | 2,911 | ||
Fair Value, Measurements, Recurring | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Interest rate swap, liabilities | (79,622) | (24,471) | |
Earnout liability | (44,296) | ||
Interest rate swap, assets | 2,911 | ||
Fair Value, Measurements, Recurring | Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Interest rate swap, liabilities | (79,622) | (24,471) | |
Interest rate swap, assets | $ 2,911 | ||
Fair Value, Measurements, Recurring | Fair Value Inputs Level3 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Earnout liability | $ (44,296) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Summary of Carrying Amount Reported on Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Summary Of Significant Accounting Policies [Abstract] | ||
Carrying amount | $ 2,144,118 | $ 1,989,451 |
Fair value | $ 2,233,159 | $ 2,047,860 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Summary of Right-of-Use Assets And Lease Liabilities Associated With Operating Leases Included In Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Lessor Lease Description [Line Items] | ||
Lease liabilities | $ 3,059 | |
Prepaid Expenses And Other Assets | ||
Lessor Lease Description [Line Items] | ||
Right-of-use assets | 3,457 | $ 1,614 |
Accounts Payable And Other Liabilities | ||
Lessor Lease Description [Line Items] | ||
Lease liabilities | $ 3,059 | $ 1,209 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Feb. 28, 2020USD ($)ft²RenewalOption | Mar. 31, 2020USD ($)Property | Feb. 07, 2020USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | ||||
Gross rental percentage | 1.00% | |||
Number of leased commercial properties owned | Property | 635 | |||
Maximum tax liability | $ 10,000,000 | |||
Fair value of earnout liability | $ 44,296,000 | $ 40,119,000 | ||
Manager and Asset Manager | ||||
Related Party Transaction [Line Items] | ||||
Unpaid management fees due to related parties | 0 | $ 0 | ||
Clinton Asset Holdings Associates, L.P. | Chairman and Member of Board of Directors | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 1.60% | |||
Office space leases in square feet | ft² | 24,072 | |||
Lease expiry date | Aug. 31, 2023 | |||
Number of renewal options | RenewalOption | 2 | |||
Lease renewal term | 5 years | |||
Annual rent | $ 547,000 | |||
Percentage increase in annual rent | 2.00% | |||
Property Management Agreement | ||||
Related Party Transaction [Line Items] | ||||
Property management fee payable | 0 | |||
Termination fees | $ 0 | |||
Property Management Agreement | Existing Tenant | ||||
Related Party Transaction [Line Items] | ||||
Existing rental property re-leasing fees term | 1 month | |||
Property Management Agreement | New Tenant | ||||
Related Party Transaction [Line Items] | ||||
Existing rental property re-leasing fees term | 2 months | |||
Property Management Agreement | 3% Gross Rentals Property | ||||
Related Party Transaction [Line Items] | ||||
Gross rental percentage | 3.00% | |||
Property Management Agreement | 5% Gross Rentals Property | ||||
Related Party Transaction [Line Items] | ||||
Gross rental percentage | 5.00% | |||
Number of leased commercial properties owned | Property | 1 | |||
Asset Management Agreement | ||||
Related Party Transaction [Line Items] | ||||
Receivable interest rate | 0.25% | |||
Interest rate paid from proceed | 0.50% | |||
Asset Management Agreement | Amendment Details | ||||
Related Party Transaction [Line Items] | ||||
Property management fee payable | $ 0 | |||
Termination fees | $ 0 | |||
Percentage of gross purchase price paid | 1.00% | |||
Asset Management Agreement | Amendment Details One | ||||
Related Party Transaction [Line Items] | ||||
Percentage of gross purchase price paid | 2.00% | |||
Asset Management Agreement | Amendment Details Two | ||||
Related Party Transaction [Line Items] | ||||
Percentage of gross sale price received | 1.00% |
Related Party Transactions - Ma
Related Party Transactions - Management Fees Incurred With Related Parties (Detail) - Property Management Agreement and Asset Management Agreement - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | $ 3,845 | $ 8,406 |
Asset Management Agreement | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 2,461 | 5,120 |
Property Management Fee | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 1,275 | 1,885 |
Management Fee Expense | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 3,736 | 7,005 |
Marketing Fee (Offering Costs) | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 300 | |
Acquisition Fee | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 730 | |
Leasing Fee and Re-leasing Fees | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | 258 | |
Disposition Fee | ||
Related Party Transaction [Line Items] | ||
Expenses incurred with related parties | $ 109 | $ 113 |
Internalization - Schedule of B
Internalization - Schedule of Base Consideration - (Detail) - USD ($) $ in Thousands | Feb. 07, 2020 | Mar. 31, 2020 |
Business Acquisition Contingent Consideration [Line Items] | ||
Cash | $ 30,981 | |
Base consideration | 209,516 | |
Initial estimate of fair value of earnout liability | 40,119 | $ 4,177 |
Total consideration | 249,635 | |
Common Stock | ||
Business Acquisition Contingent Consideration [Line Items] | ||
Amount of equity interest issued or issuable in a business combination | 66,376 | |
OP Units | ||
Business Acquisition Contingent Consideration [Line Items] | ||
Amount of equity interest issued or issuable in a business combination | $ 112,159 |
Internalization - Schedule of_2
Internalization - Schedule of Base Consideration (Parenthetical) - (Detail) - shares | Mar. 31, 2020 | Feb. 07, 2020 | Dec. 31, 2019 |
Business Acquisition Contingent Consideration [Line Items] | |||
Common stock, shares issued | 26,074,000 | 26,001,000 | |
Common Stock | |||
Business Acquisition Contingent Consideration [Line Items] | |||
Common stock, shares issued | 781,000 | ||
OP Units | |||
Business Acquisition Contingent Consideration [Line Items] | |||
Operating partnership units | 1,320,000 |
Internalization - Additional In
Internalization - Additional Information (Detail) $ / shares in Units, shares in Thousands | Feb. 07, 2020USD ($)Tranche$ / sharesshares | Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) |
Internalization [Line Items] | ||||
Earnout liability | $ 40,119,000 | $ 44,296,000 | $ 44,296,000 | |
Price per share or unit | $ / shares | $ 85 | |||
Goodwill | $ 339,769,000 | 339,769,000 | 339,769,000 | |
Internalization fees | 1,205,000 | 1,205,000 | ||
Incremental internalization revenues | 0 | |||
Incremental expenses | $ 3,662,000 | |||
Property Management Agreement and Asset Management Agreement | ||||
Internalization [Line Items] | ||||
Expenses incurred with related parties | 3,845,000 | $ 8,406,000 | ||
Property Management Agreement and Asset Management Agreement | Internalization Expenses | ||||
Internalization [Line Items] | ||||
Expenses incurred with related parties | $ 5,646,000 | $ 6,377,000 | ||
2022 Unsecured Term Loan | ||||
Internalization [Line Items] | ||||
Repayment of debt | 90,484,000 | |||
Debt instrument, face amount | $ 60,000,000 | |||
Common Stock | ||||
Internalization [Line Items] | ||||
Additional common stock to be issued at earnout milestones | shares | 272 | |||
Estimated fair value of potential earnout consideration | $ 33,511,000 | |||
OP Units | ||||
Internalization [Line Items] | ||||
Additional OP units to be issued at earnout milestones | shares | 465 | |||
Estimated fair value of potential earnout consideration | $ 6,608,000 | |||
Merger Agreement | ||||
Internalization [Line Items] | ||||
Number of tranches | Tranche | 4 | |||
VWAP per REIT Share Days | 40 days | |||
Price per share or unit | $ / shares | $ 85 | |||
Merger Agreement | Maximum | ||||
Internalization [Line Items] | ||||
Additional consideration payable | $ 75,000,000 | |||
Merger Agreement | Tranche One | ||||
Internalization [Line Items] | ||||
Additional consideration payable | 10,000,000 | |||
Merger Agreement | Tranche Two | ||||
Internalization [Line Items] | ||||
Additional consideration payable | 15,000,000 | |||
Merger Agreement | Tranche Three | ||||
Internalization [Line Items] | ||||
Additional consideration payable | 25,000,000 | |||
Merger Agreement | Tranche Four | ||||
Internalization [Line Items] | ||||
Additional consideration payable | $ 25,000,000 |
Internalization - Summary of Ea
Internalization - Summary of Earnout Tranches, Applicable VWAP of REIT Share and AFFO Per Share, and Applicable Earnout Periods (Detail) - Merger Agreement - USD ($) $ / shares in Units, $ in Thousands | Feb. 07, 2020 | Mar. 31, 2020 |
Tranche One | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 10,000 | |
Tranche One | If the Company has completed an IPO | ||
Internalization [Line Items] | ||
40-Day VWAP of a REIT Share | $ 90 | |
Applicable Earnout Period | The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. | |
Tranche One | If the Company has not completed an IPO | ||
Internalization [Line Items] | ||
Applicable Earnout Period | The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. | |
AFFO per Share | $ 5.85 | |
Tranche Two | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 15,000 | |
Tranche Two | If the Company has completed an IPO | ||
Internalization [Line Items] | ||
40-Day VWAP of a REIT Share | $ 95 | |
Applicable Earnout Period | The two-year period beginning on the earlier of (i) the IPO closing date or (ii) December 31, 2020. | |
Tranche Two | If the Company has not completed an IPO | ||
Internalization [Line Items] | ||
Applicable Earnout Period | The two-year period consisting of the calendar years ended December 31, 2020 and December 31, 2021. | |
AFFO per Share | $ 5.95 | |
Tranche Three | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 25,000 | |
Tranche Three | If the Company has completed an IPO | ||
Internalization [Line Items] | ||
40-Day VWAP of a REIT Share | $ 97.50 | |
Applicable Earnout Period | The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. | |
Tranche Three | If the Company has not completed an IPO | ||
Internalization [Line Items] | ||
Applicable Earnout Period | The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. | |
AFFO per Share | $ 6.30 | |
Tranche Four | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 25,000 | |
Tranche Four | If the Company has completed an IPO | ||
Internalization [Line Items] | ||
40-Day VWAP of a REIT Share | $ 100 | |
Applicable Earnout Period | The four-year period beginning on the date that is exactly one year after the earnout period begins for the first and second tranches above. | |
Tranche Four | If the Company has not completed an IPO | ||
Internalization [Line Items] | ||
Applicable Earnout Period | The four-year period consisting of the calendar years ended December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. | |
AFFO per Share | $ 6.70 |
Internalization - Summary of _2
Internalization - Summary of Earnout Tranches, Applicable VWAP of REIT Share and AFFO Per Share, and Applicable Earnout Periods (Parenthetical) (Detail) | Feb. 07, 2020$ / shares |
Internalization [Line Items] | |
Price per share or unit | $ 85 |
Merger Agreement | |
Internalization [Line Items] | |
Price per share or unit | $ 85 |
Internalization - Summary of Pr
Internalization - Summary of Preliminary Allocation of Purchase Price (Detail) - USD ($) $ in Thousands | Feb. 07, 2020 | Mar. 31, 2020 |
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed Net [Abstract] | ||
Prepaid expenses and other assets | $ 1,336 | |
Right-of-use assets | 1,898 | |
Goodwill | 339,769 | $ 339,769 |
Accounts payable and other liabilities | (986) | |
Operating lease liabilities | (1,898) | |
Debt | (90,484) | $ (90,484) |
Total consideration | $ 249,635 |
Internalization - Schedule of P
Internalization - Schedule of Pro Forma Financial Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Business Acquisition Pro Forma Information [Abstract] | ||
Revenues | $ 78,231 | $ 68,430 |
Net income | $ 13,751 | $ 17,685 |
Acquisitions of Rental Proper_3
Acquisitions of Rental Property - Additional Information - (Detail) - Property | Mar. 31, 2020 | Mar. 31, 2019 |
Business Combinations [Abstract] | ||
Number of rental properties acquired | 0 | 27 |
Acquisitions of Rental Proper_4
Acquisitions of Rental Property - Acquisitions of Rental Property Closed - (Detail) $ in Thousands | Mar. 26, 2019USD ($)Property | Mar. 19, 2019USD ($)Property | Mar. 15, 2019USD ($)Property | Mar. 12, 2019USD ($)Property | Jan. 31, 2019USD ($)Property | Mar. 31, 2019USD ($)Property | Mar. 31, 2020Property |
Business Acquisition [Line Items] | |||||||
Number of Properties | Property | 27 | 0 | |||||
Real Estate Acquisition Price | $ | $ 73,078 | ||||||
Healthcare | |||||||
Business Acquisition [Line Items] | |||||||
Property Type | Healthcare | ||||||
Number of Properties | Property | 1 | ||||||
Real Estate Acquisition Price | $ | $ 4,747 | ||||||
Industrial | |||||||
Business Acquisition [Line Items] | |||||||
Property Type | Industrial | Industrial | |||||
Number of Properties | Property | 1 | 1 | |||||
Real Estate Acquisition Price | $ | $ 25,801 | $ 10,217 | |||||
Retail | |||||||
Business Acquisition [Line Items] | |||||||
Property Type | Retail | Retail | |||||
Number of Properties | Property | 14 | 10 | |||||
Real Estate Acquisition Price | $ | $ 19,128 | $ 13,185 |
Acquisitions of Rental Proper_5
Acquisitions of Rental Property - Acquisitions of Rental Property Closed (Parenthetical) - (Detail) $ in Thousands | Mar. 31, 2019USD ($) |
Business Combinations [Abstract] | |
Acquisition costs capitalized | $ 2,205 |
Acquisitions of Rental Proper_6
Acquisitions of Rental Property - Purchase Price Allocation for Real Estate Acquisitions (Detail) $ in Thousands | Mar. 31, 2019USD ($) |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, assets | $ 75,283 |
Land | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 7,149 |
Land Improvements | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 10,506 |
Buildings and Improvements | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 49,677 |
Acquired In-Place Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | 6,618 |
Acquired Above-Market Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | 2,169 |
Acquired Below-Market Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | $ (836) |
Acquisitions of Rental Proper_7
Acquisitions of Rental Property - Purchase Price Allocation for Real Estate Acquisitions (Parenthetical) - (Detail) | 3 Months Ended |
Mar. 31, 2019 | |
Acquired In-Place Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 15 years |
Acquired Above-Market Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 17 years |
Acquired Below-Market Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 13 years |
Sale of Real Estate - Schedule
Sale of Real Estate - Schedule of Sale of Real Estate (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)Property | Mar. 31, 2019USD ($)Property | |
Real Estate [Line Items] | ||
Number of properties disposed | Property | 10 | 4 |
Aggregate sale price | $ 37,185 | $ 11,291 |
Aggregate carrying value | (27,764) | (9,212) |
Gain on sale of real estate | 7,619 | 1,400 |
Real Estate | ||
Real Estate [Line Items] | ||
Additional sales expenses | (1,802) | (679) |
Gain on sale of real estate | $ 7,619 | $ 1,400 |
Investment in Rental Property_3
Investment in Rental Property and Lease Arrangements - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2020Property | |
Lessor Lease Description [Line Items] | |
Number of real estate properties under operating leases | 616 |
Number of real estate properties under direct financing leases | 15 |
Number of real estate properties under direct financing leases that include land option | 4 |
Lessee, operating lease, existence of option to extend | true |
Lessee, finance lease, existence of option to extend | true |
Minimum | |
Lessor Lease Description [Line Items] | |
Lessor operating lease, initial terms | 10 years |
Lessor direct financing leases, initial terms | 10 years |
Maximum | |
Lessor Lease Description [Line Items] | |
Lessor operating lease, initial terms | 20 years |
Lessor direct financing leases, initial terms | 20 years |
Investment in Rental Property_4
Investment in Rental Property and Lease Arrangements - Rental Property Subject to Non-cancelable Operating Leases (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | $ 3,658,584 | $ 3,686,444 |
Less accumulated depreciation | (291,018) | (271,044) |
Rental property subject to non-cancelable operating leases, net | 3,367,566 | 3,415,400 |
Land | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 545,846 | 548,911 |
Land Improvements | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 274,135 | 275,470 |
Buildings and Improvements | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 2,827,111 | 2,850,571 |
Equipment | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | $ 11,492 | $ 11,492 |
Investment in Rental Property_5
Investment in Rental Property and Lease Arrangements - Summary of Depreciation Expense on Investment in Rental Property (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Depreciation | $ 23,515 | $ 18,753 |
Investment in Rental Property_6
Investment in Rental Property and Lease Arrangements - Estimated Lease Payments to be Received under Non-cancelable Operating Leases (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Lessor Operating Lease Payments Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 210,383 |
2021 | 284,505 |
2022 | 287,511 |
2023 | 290,357 |
2024 | 285,396 |
Thereafter | 2,130,183 |
Estimated lease payments to be received under non-cancelable operating leases | $ 3,488,335 |
Investment in Rental Property_7
Investment in Rental Property and Lease Arrangements - Net Investment in Direct Financing Leases (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Undiscounted estimated lease payments to be received | $ 68,898 | $ 72,753 |
Estimated unguaranteed residual values | 19,827 | 20,358 |
Unearned income | (48,459) | (51,221) |
Reserve for credit losses | (305) | |
Net investment in direct financing leases | $ 39,961 | $ 41,890 |
Investment in Rental Property_8
Investment in Rental Property and Lease Arrangements - Undiscounted Estimated Lease Payments to be Received under Non-cancelable Direct Financing Leases (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Capital Leases Future Minimum Payments Receivable [Abstract] | |
Remainder of 2020 | $ 3,047 |
2021 | 4,138 |
2022 | 4,220 |
2023 | 4,305 |
2024 | 4,385 |
Thereafter | 48,803 |
Undiscounted estimated lease payments to be received under non-cancelable direct financing leases | $ 68,898 |
Investment in Rental Property_9
Investment in Rental Property and Lease Arrangements - Summary of Amounts Reported as Lease Revenues Net on the Condensed Consolidated Statements of Income and Comprehensive (Loss) Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Contractual rental amounts billed for operating leases | $ 72,828 | $ 58,419 |
Adjustment to recognize contractual operating lease billings on a straight-line basis | 1,665 | 5,171 |
Percentage rent income | 3 | |
Adjustment to revenue recognized for uncollectible rental amounts billed | (1,033) | (440) |
Total operating lease rental revenues | 73,463 | 63,150 |
Earned income from direct financing leases | 987 | 1,005 |
Operating expenses billed to tenants | 3,732 | 4,275 |
Other income from real estate transactions | 49 | |
Total Lease revenues, net | $ 78,231 | $ 68,430 |
Intangible Assets and Liabili_3
Intangible Assets and Liabilities - Schedule of Intangible Assets and Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Lease intangibles: | ||
Intangible lease assets, net | $ 320,418 | $ 331,894 |
Acquired below-market leases | 113,091 | 113,862 |
Less accumulated amortization | (23,418) | (21,640) |
Intangible lease liabilities, net | 89,673 | 92,222 |
Leasing fees | 16,841 | 17,013 |
Less accumulated amortization | (4,349) | (4,166) |
Leasing fees, net | 12,492 | 12,847 |
Acquired Above-Market Leases | ||
Lease intangibles: | ||
Intangible lease assets, gross | 60,394 | 62,136 |
Less accumulated amortization | (17,989) | (17,433) |
Intangible lease assets, net | 42,405 | 44,703 |
Acquired In-Place Leases | ||
Lease intangibles: | ||
Intangible lease assets, gross | 346,165 | 349,645 |
Less accumulated amortization | (68,152) | (62,454) |
Intangible lease assets, net | $ 278,013 | $ 287,191 |
Intangible Assets and Liabili_4
Intangible Assets and Liabilities - Schedule of Amortization for Intangible Lease Assets and Liabilities (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Acquired In-Place Leases | Depreciation and Amortization | ||
Finite Lived Intangible Assets [Line Items] | ||
Acquired in-place leases and leasing fees | $ 7,695 | $ 5,557 |
Above and Below Market Leases | Lease Revenues, Net | ||
Finite Lived Intangible Assets [Line Items] | ||
Acquired in-place leases and leasing fees | $ 1,140 | $ 740 |
Intangible Assets and Liabili_5
Intangible Assets and Liabilities - Schedule of Amortizable Intangible Assets (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Remainder of 2020 | $ 17,706 |
2021 | 23,286 |
2022 | 22,738 |
2023 | 22,411 |
2024 | 21,644 |
Thereafter | 135,452 |
Total | $ 243,237 |
Unsecured Credit Agreements - S
Unsecured Credit Agreements - Summary of Unsecured Credit Agreements (Detail) - USD ($) $ in Thousands | Feb. 07, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Carrying amount of debt | $ 2,144,118 | $ 1,989,451 | |
Long-term Debt | 2,144,118 | ||
2022 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Maturity Date | Feb. 28, 2022 | ||
Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Carrying amount of debt | 2,033,300 | 1,877,300 | |
Debt issuance costs, net | (7,413) | (7,919) | |
Long-term Debt | $ 2,025,887 | 1,869,381 | |
Unsecured Debt | Senior Guaranteed Notes Series A | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 4.84% | ||
Maturity Date | Apr. 30, 2027 | ||
Carrying amount of debt | $ 150,000 | 150,000 | |
Unsecured Debt | Senior Guaranteed Notes Series B | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 5.09% | ||
Maturity Date | Jul. 31, 2028 | ||
Carrying amount of debt | $ 225,000 | 225,000 | |
Unsecured Debt | Senior Guaranteed Notes Series C | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 5.19% | ||
Maturity Date | Jul. 31, 2030 | ||
Carrying amount of debt | $ 100,000 | 100,000 | |
Unsecured Debt | Senior Notes | |||
Debt Instrument [Line Items] | |||
Carrying amount of debt | $ 475,000 | 475,000 | |
Unsecured Debt | 2020 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.25% | ||
Maturity Date | Aug. 31, 2020 | ||
Carrying amount of debt | $ 240,000 | 300,000 | |
Unsecured Debt | 2020 Unsecured Term Loan | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | |||
Debt Instrument [Line Items] | |||
Carrying amount of debt | $ 808,300 | 652,300 | |
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.20% | ||
Maturity Date | Jan. 31, 2022 | ||
Carrying amount of debt | $ 353,300 | 197,300 | |
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | Revolving Credit Facility | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.20% | ||
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | 2023 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.35% | ||
Maturity Date | Jan. 31, 2023 | ||
Carrying amount of debt | $ 265,000 | 265,000 | |
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | 2023 Unsecured Term Loan | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.35% | ||
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | 2024 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.25% | ||
Maturity Date | Jun. 30, 2024 | ||
Carrying amount of debt | $ 190,000 | 190,000 | |
Unsecured Debt | Unsecured Revolving Credit and Term Loan Agreement | 2024 Unsecured Term Loan | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Unsecured Debt | 2022 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.25% | ||
Maturity Date | Feb. 28, 2022 | ||
Carrying amount of debt | $ 60,000 | ||
Unsecured Debt | 2022 Unsecured Term Loan | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Unsecured Debt | 2026 Unsecured Term Loan | |||
Debt Instrument [Line Items] | |||
Interest Rate | one-month LIBOR + 1.85% | ||
Maturity Date | Feb. 28, 2026 | ||
Carrying amount of debt | $ 450,000 | $ 450,000 | |
Unsecured Debt | 2026 Unsecured Term Loan | 1 Month LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.85% |
Unsecured Credit Agreements -_2
Unsecured Credit Agreements - Summary of Unsecured Credit Agreements (Parenthetical) (Detail) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Debt instrument extension options, description | two six-month extensions | |
Maturity extension fee on outstanding principal balance percentage | 0.05% | |
Unsecured Debt | 1 Month LIBOR | ||
Debt Instrument [Line Items] | ||
Interest rate | 0.99% | 1.76% |
Unsecured Credit Agreements - A
Unsecured Credit Agreements - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Feb. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Debt Instrument [Line Items] | ||||
Weighted average interest rate on all outstanding borrowings | 3.03% | 3.03% | ||
Cost of debt extinguishment | $ (22) | $ (713) | ||
Other Nonoperating Income (Expense) | ||||
Debt Instrument [Line Items] | ||||
Cost of debt extinguishment | 215 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Commitment fee percentage | 0.25% | |||
2022 Unsecured Term Loan | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 60,000 | |||
Maturity date | Feb. 28, 2022 | |||
2022 Unsecured Term Loan | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.25% | |||
2022 Unsecured Term Loan | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.85% | |||
2022 Unsecured Term Loan | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.65% | |||
2026 Unsecured Term Loan and Unsecured Revolving Credit and Term Loan Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs incurred | 5,229 | |||
New Debt Agreements | ||||
Debt Instrument [Line Items] | ||||
Unamortized debt issuance costs | $ 5,229 |
Unsecured Credit Agreements -_3
Unsecured Credit Agreements - Summary of Debt Issuance Cost Amortization (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Debt issuance costs amortization | $ 888 | $ 553 |
Mortgages and Notes Payable - S
Mortgages and Notes Payable - Summary of Mortgages and Notes Payable (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Mortgages and notes payable | $ 2,144,118 | $ 1,989,451 |
Mortgages and notes payable, net | 110,464 | 111,793 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Mortgages and notes payable | 110,818 | 112,151 |
Debt issuance costs, net | $ (354) | (358) |
Wilmington Trust National Association, Due February 28 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2019-04 | |
Maturity Date | 2028-02 | |
Debt instrument, interest rate | 4.92% | |
Mortgages and notes payable | $ 48,787 | 49,065 |
Wilmington Trust National Association, Due August 25 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2018-06 | |
Maturity Date | 2025-08 | |
Debt instrument, interest rate | 4.36% | |
Mortgages and notes payable | $ 20,225 | 20,318 |
PNC Bank | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2016-10 | |
Maturity Date | 2026-11 | |
Debt instrument, interest rate | 3.62% | |
Mortgages and notes payable | $ 17,789 | 17,885 |
Sun Life | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2012-03 | |
Maturity Date | 2021-10 | |
Debt instrument, interest rate | 5.13% | |
Mortgages and notes payable | $ 10,785 | 10,888 |
Aegon | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2012-04 | |
Maturity Date | 2023-10 | |
Debt instrument, interest rate | 6.38% | |
Mortgages and notes payable | $ 7,604 | 7,788 |
M&T Bank | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2017-10 | |
Maturity Date | 2021-08 | |
Interest Rate | one - month LIBOR+3% | |
Mortgages and notes payable | $ 4,878 | 4,913 |
M&T Bank | 1 Month LIBOR | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.00% | |
Notes holders | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2008-12 | |
Maturity Date | 2023-12 | |
Debt instrument, interest rate | 6.25% | |
Mortgages and notes payable | $ 750 | 750 |
Standard Insurance Company Due August 2030 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Origination Date | 2010-07 | |
Maturity Date | 2030-08 | |
Debt instrument, interest rate | 6.75% | |
Mortgages and notes payable | $ 544 |
Mortgages and Notes Payable -_2
Mortgages and Notes Payable - Summary of Mortgages and Notes Payable (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Instrument [Line Items] | |
Term of note | 119 months |
Mortgages and Notes Payable - A
Mortgages and Notes Payable - Additional Information (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
Investment in rental property pledges as collateral | $ 176,805 |
Mortgages and Notes Payable -_3
Mortgages and Notes Payable - Summary of Extinguished Mortgages (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)Mortgage | Dec. 31, 2019USD ($)Mortgage | |
Debt Disclosure [Abstract] | ||
Number of mortgages | Mortgage | 1 | 4 |
Outstanding balance of mortgages | $ | $ 541 | $ 13,905 |
Mortgages and Notes Payable -_4
Mortgages and Notes Payable - Summary of Cost Extinguished Mortgages (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Cost of mortgage extinguishment | $ 22 | $ 498 |
Mortgages and Notes Payable -_5
Mortgages and Notes Payable - Schedule of Estimated Future Principal Payments (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 2,401 |
2021 | 258,006 |
2022 | 416,207 |
2023 | 273,332 |
2024 | 192,260 |
Thereafter | 1,001,912 |
Long-term Debt | $ 2,144,118 |
Interest Rate Swaps - Summary o
Interest Rate Swaps - Summary of Interest-rate Swap Agreements (Detail) - Interest Rate Swap - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Fair Value | $ (79,622,000) | $ (21,560,000) |
Bank of America | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Nov. 30, 2023 | |
Derivative, Fixed rate | 2.80% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,178,000) | (1,136,000) |
Bank of Montreal One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jul. 31, 2024 | |
Derivative, Fixed rate | 1.16% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 40,000,000 | |
Fair Value | $ (1,324,000) | 740,000 |
Bank of Montreal Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2025 | |
Derivative, Fixed rate | 1.91% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,806,000) | (402,000) |
Bank of Montreal Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jul. 31, 2025 | |
Derivative, Fixed rate | 2.32% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,500,000) | (970,000) |
Bank of Montreal Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2026 | |
Derivative, Fixed rate | 1.92% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,118,000) | (448,000) |
Bank of Montreal Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2026 | |
Derivative, Fixed rate | 2.05% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 40,000,000 | |
Fair Value | $ (3,685,000) | (1,014,000) |
Bank of Montreal Six | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2026 | |
Derivative, Fixed rate | 2.33% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 10,000,000 | |
Fair Value | $ (1,231,000) | (460,000) |
Bank of Montreal Seven | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2026 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,500,000) | (577,000) |
Bank of Montreal Eight | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2027 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,497,000) | (1,306,000) |
Bank of Montreal Nine | ||
Derivative [Line Items] | ||
Derivative, Maturity date | May 31, 2029 | |
Derivative, Fixed rate | 2.09% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,342,000) | (799,000) |
Capital One, National Association One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2021 | |
Derivative, Fixed rate | 1.05% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (213,000) | 143,000 |
Capital One, National Association Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2024 | |
Derivative, Fixed rate | 1.58% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (836,000) | 10,000 |
Capital One, National Association Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2026 | |
Derivative, Fixed rate | 2.08% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (3,291,000) | (911,000) |
Capital One, National Association Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Apr. 30, 2026 | |
Derivative, Fixed rate | 2.68% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (2,007,000) | (944,000) |
Capital One, National Association Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jul. 31, 2026 | |
Derivative, Fixed rate | 1.32% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (1,844,000) | 720,000 |
Capital One, National Association Six | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2027 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,533,000) | (1,278,000) |
M&T Bank | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Aug. 31, 2021 | |
Derivative, Fixed rate | 1.02% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 4,877,000 | 4,912,000 |
Fair Value | $ (45,000) | 41,000 |
M&T Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Sep. 30, 2022 | |
Derivative, Fixed rate | 2.83% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,553,000) | (862,000) |
M&T Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Nov. 30, 2023 | |
Derivative, Fixed rate | 2.65% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,097,000) | (1,038,000) |
Regions Bank | ||
Derivative [Line Items] | ||
Derivative, Maturity date | May 31, 2020 | |
Derivative, Fixed rate | 2.12% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 50,000,000 | |
Fair Value | $ (92,000) | (104,000) |
Regions Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2023 | |
Derivative, Fixed rate | 1.18% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (793,000) | 376,000 |
Regions Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | May 31, 2029 | |
Derivative, Fixed rate | 2.11% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,438,000) | (827,000) |
Regions Bank Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jun. 30, 2029 | |
Derivative, Fixed rate | 2.03% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,260,000) | (651,000) |
Truist Financial Corporation One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Apr. 30, 2024 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,655,000) | (451,000) |
Truist Financial Corporation Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Apr. 30, 2025 | |
Derivative, Fixed rate | 2.20% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,260,000) | (781,000) |
Truist Financial Corporation Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jul. 31, 2025 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,075,000) | (524,000) |
Truist Financial Corporation Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Dec. 31, 2025 | |
Derivative, Fixed rate | 2.30% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,676,000) | (993,000) |
Truist Financial Corporation Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2026 | |
Derivative, Fixed rate | 1.93% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,146,000) | (458,000) |
U.S. Bank National Association | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jun. 30, 2029 | |
Derivative, Fixed rate | 2.03% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,263,000) | (681,000) |
U S Bank National Association One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Aug. 31, 2029 | |
Derivative, Fixed rate | 1.35% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,699,000) | 881,000 |
Wells Fargo Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Feb. 28, 2021 | |
Derivative, Fixed rate | 2.39% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (599,000) | (302,000) |
Wells Fargo Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Oct. 31, 2024 | |
Derivative, Fixed rate | 2.72% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (1,591,000) | (795,000) |
Wells Fargo Bank Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Apr. 30, 2027 | |
Derivative, Fixed rate | 2.72% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,878,000) | (1,845,000) |
Wells Fargo Bank Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | Jan. 31, 2028 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 75,000,000 | |
Fair Value | $ (10,597,000) | $ (3,914,000) |
Interest Rate Swaps - Summary_2
Interest Rate Swaps - Summary of Interest-rate Swap Agreements (Parenthetical) (Detail) - Interest Rate Swap - M&T Bank - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Notional Amount | $ 4,877,000 | $ 4,912,000 |
Umbrella Partnership Real Estate Investment Trust Transaction | ||
Derivative [Line Items] | ||
Interest rate swap assumed month and year | 2017-10 |
Interest Rate Swaps - Total Amo
Interest Rate Swaps - Total Amounts Recognized From Converting Variable Rates to Fixed Rates and Location of Gain (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative [Line Items] | ||
Total Interest Expense Presented in the Consolidated Statements of Income and Comprehensive (Loss) Income | $ 20,991 | $ 15,828 |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Amount of Loss Recognized in Accumulated Other Comprehensive Loss | $ (58,062) | $ (12,624) |
Reclassification from Accumulated Other Comprehensive Loss, Location | Interest expense | Interest expense |
Reclassification from Accumulated Other Comprehensive Loss, Amount of (Loss) Gain | $ (885) | $ 836 |
Total Interest Expense Presented in the Consolidated Statements of Income and Comprehensive (Loss) Income | $ 20,991 | $ 15,828 |
Interest Rate Swaps - Additiona
Interest Rate Swaps - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Derivative Instrument Detail [Abstract] | |
Interest rate swaps expected to be reclassified - (loss) | $ (14,802) |
Credit Risk Concentrations - Ad
Credit Risk Concentrations - Additional Information (Detail) - customer | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||
Number of tenants or common franchises | 0 | 0 | |
Operating Expenses | Management Contracts Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentrations risk percentage | 8.00% | 19.00% | |
Mortgages and Notes Payable | Credit Availability Concentration Risk | Financial Institution One | |||
Concentration Risk [Line Items] | |||
Concentrations risk percentage | 62.00% | 62.00% | |
Mortgages and Notes Payable | Credit Availability Concentration Risk | Financial Institution Two | |||
Concentration Risk [Line Items] | |||
Concentrations risk percentage | 16.00% | 16.00% | |
Mortgages and Notes Payable | Credit Availability Concentration Risk | Financial Institution Three | |||
Concentration Risk [Line Items] | |||
Concentrations risk percentage | 10.00% | 10.00% |
Equity - Additional Information
Equity - Additional Information (Detail) - shares | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Equity [Line Items] | |||
Redemption of shares of common stock, shares | 0 | 21,000 | |
Common stock, shares issued | 26,074,000 | 26,001,000 | |
Distribution Reinvestment Plan | |||
Equity [Line Items] | |||
Common stock, shares issued | 3,075,000 | 3,005,000 |
Equity - Summary of Redemptions
Equity - Summary of Redemptions under Company's Share Redemption Program (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020shares | Mar. 31, 2019USD ($)Stockholdershares | |
Equity [Abstract] | ||
Number of redemptions requested | Stockholder | 13 | |
Number of shares | shares | 0 | 21,000 |
Aggregate redemption price | $ | $ 1,803 |
Earnings per Share - Summary of
Earnings per Share - Summary of Components used in Calculation of Basic and Diluted Earnings per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic earnings: | ||
Net earnings attributable to Broadstone Net Lease, Inc. | $ 10,816 | $ 13,938 |
Diluted earnings: | ||
Net earnings attributable to Broadstone Net Lease, Inc. | 10,816 | 13,938 |
Net earnings attributable to non-controlling interests | 1,032 | 1,084 |
Net income (loss) attributable to parent, Diluted | $ 11,848 | $ 15,022 |
Basic and diluted weighted average shares outstanding: | ||
Weighted average number of common shares outstanding used in basic earnings per share | 26,527 | 22,335 |
Effects of convertible membership units | 2,526 | 1,737 |
Weighted average number of common shares outstanding used in diluted earnings per share | 29,053 | 24,072 |
Basic and diluted net earnings per common share | $ 0.41 | $ 0.62 |
Supplemental Cash Flow Disclo_2
Supplemental Cash Flow Disclosures - Additional Information (Detail) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Feb. 07, 2020 | Jan. 01, 2020 | Jan. 01, 2019 | |
Supplemental Cash Flow Elements [Line Items] | |||||
Cash paid for interest | $ 14,010 | $ 16,777 | |||
Cash paid for income taxes | $ 195 | $ 395 | |||
Issuance of shares of common stock, shares | 73 | 883 | |||
Fair value of earnout consideration | $ 44,296 | $ 40,119 | |||
Debt | 90,484 | $ 90,484 | |||
Adjustments to additional paid in capital mezzanine equity non-controlling interests | 2,416 | ||||
Dividend declared and accrued but not yet paid | 13,160 | $ 10,734 | |||
Provision for credit losses | $ 323 | ||||
Lease liabilities | 3,059 | ||||
ASC 842 | |||||
Supplemental Cash Flow Elements [Line Items] | |||||
Right-of-use assets | $ 1,687 | ||||
Lease liabilities | 1,261 | ||||
Rent liability | 7 | ||||
Ground lease intangible asset, net | $ 432 | ||||
Common Stock and OP Units | |||||
Supplemental Cash Flow Elements [Line Items] | |||||
Amount of equity interest issued or issuable in a business combination | 178,535 | ||||
Fair value of earnout consideration | $ 40,119 | ||||
Distribution Reinvestment Plan | |||||
Supplemental Cash Flow Elements [Line Items] | |||||
Issuance of shares of common stock, shares | 69 | 173 | |||
Common stock issued | $ 5,733 | $ 14,533 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Tenant Improvement Allowances Included in Accounts Payable and Other Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts Payable And Other Liabilities | ||
Loss Contingencies [Line Items] | ||
Tenant improvement allowances | $ 2,219 | $ 2,706 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Loss Contingencies [Line Items] | |
Potential liability due to taxable sales of applicable properties | $ 22,300 |
Minimum | Office Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases, remaining lease term | 2020 |
Minimum | Ground Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases term | 2034 |
Maximum | Office Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases, remaining lease term | 2023 |
Maximum | Ground Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases term | 2066 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Total Lease Costs Associated with Operating Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Variable lease costs | ||
Total lease costs | $ 103 | $ 47 |
General and Administrative | Office Lease | ||
Operating lease costs | ||
Operating lease costs | 52 | |
Property and Operating Expense | Ground Lease | ||
Operating lease costs | ||
Operating lease costs | 33 | 35 |
Variable lease costs | ||
Variable lease costs | $ 18 | $ 12 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Payments Associated with Obligations Under Operating Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flow Operating Activities Lessee [Abstract] | ||
Operating lease payments | $ 128 | $ 72 |
Commitments and Contingencies_5
Commitments and Contingencies - Summary of Estimated Future Lease Payments Required Under Non-cancelable Operating Leases as well as Reconciliation to Lease Liabilities (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Remainder of 2020 | $ 534 |
2021 | 711 |
2022 | 686 |
2023 | 505 |
2024 | 120 |
Thereafter | 2,411 |
Total undiscounted cash flows | 4,967 |
Less imputed interest | (1,908) |
Lease liabilities | $ 3,059 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ / shares in Units, $ in Thousands | May 07, 2020USD ($)Property$ / shares | May 05, 2020 | Apr. 01, 2020USD ($)Tenant | May 07, 2020USD ($)Property$ / shares | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) |
Subsequent Event [Line Items] | ||||||
Proceeds of borrowing | $ 167,000 | $ 43,800 | ||||
Debt instrument extension options, description | two six-month extensions | |||||
Aggregate carrying value | $ 27,764 | 9,212 | ||||
Aggregate sale price | 37,185 | 11,291 | ||||
Gain on sale of real estate | 7,619 | 1,400 | ||||
Real Estate | ||||||
Subsequent Event [Line Items] | ||||||
Additional sales expenses | 1,802 | 679 | ||||
Gain on sale of real estate | $ 7,619 | $ 1,400 | ||||
Unsecured Debt | 2020 Unsecured Term Loan | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument extension options, description | two six-month extension | |||||
Maturity date | Aug. 31, 2020 | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Cash distributions paid to stockholders | $ 13,160 | |||||
Common stock, price per share | $ / shares | $ 82 | $ 82 | ||||
Monthly distribution approved per OP units | $ / shares | $ 0.44 | |||||
Monthly distribution approved per OP units, record date | Apr. 30, 2020 | |||||
Monthly distribution approved per OP units, payable date | May 15, 2020 | |||||
Number of properties sold | Property | 3 | 3 | ||||
Aggregate carrying value | $ 8,994 | |||||
Aggregate sale price | 10,538 | |||||
Subsequent Event | COVID-19 Pandemic | ||||||
Subsequent Event [Line Items] | ||||||
Number of tenants rent relief requested | Tenant | 68 | |||||
Percentage of annualized contractual revenues | 36.30% | |||||
Subsequent Event | Real Estate | ||||||
Subsequent Event [Line Items] | ||||||
Additional sales expenses | 489 | |||||
Gain on sale of real estate | $ 1,055 | |||||
Subsequent Event | Unsecured Debt | 2020 Unsecured Term Loan | ||||||
Subsequent Event [Line Items] | ||||||
Maturity date | Feb. 2, 2021 | |||||
Maturity extension fee percentage | 0.05% | |||||
Subsequent Event | Revolving Credit Facility | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds of borrowing | $ 25,000 |