Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
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 | 107,786,452 | |
Entity Shell Company | false | |
Entity File Number | 001-39529 | |
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 | |
Title of 12(b) Security | Common Stock, $0.00025 par value | |
Trading Symbol | BNL | |
Security Exchange Name | NYSE | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 37,000,000 | |
Title of 12(b) Security | Class A Common Stock, $0.00025 par value | |
Trading Symbol | BNL | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Accounted for using the operating method, net of accumulated depreciation | $ 3,304,002 | $ 3,415,400 |
Accounted for using the direct financing method | 30,902 | 41,890 |
Investment in rental property, net | 3,334,904 | 3,457,290 |
Cash and cash equivalents | 101,787 | 12,455 |
Accrued rental income | 97,517 | 84,534 |
Tenant and other receivables, net | 3,957 | 934 |
Prepaid expenses and other assets | 19,522 | 12,613 |
Interest rate swap, assets | 0 | 2,911 |
Goodwill | 339,769 | 0 |
Intangible lease assets, net | 288,971 | 331,894 |
Debt issuance costs – unsecured revolving credit facility, net | 7,027 | 2,380 |
Leasing fees, net | 11,015 | 12,847 |
Total assets | 4,204,469 | 3,917,858 |
Liabilities and equity | ||
Unsecured revolving credit facility | 0 | 197,300 |
Mortgages and notes payable, net | 108,752 | 111,793 |
Unsecured term notes, net | 1,433,495 | 1,672,081 |
Interest rate swap, liabilities | 81,326 | 24,471 |
Earnout liability | 13,177 | 0 |
Accounts payable and other liabilities | 55,339 | 37,377 |
Accrued interest payable | 9,453 | 3,594 |
Intangible lease liabilities, net | 81,220 | 92,222 |
Total liabilities | 1,782,762 | 2,138,838 |
Commitments and contingencies (See Note 17) | ||
Broadstone Net Lease, Inc. stockholders' equity: | ||
Preferred stock, $0.001 par value; 20,000 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, value | 27 | 26 |
Additional paid-in capital | 2,506,008 | 1,895,935 |
Cumulative distributions in excess of retained earnings | (239,520) | (208,261) |
Accumulated other comprehensive loss | (74,729) | (20,086) |
Total Broadstone Net Lease, Inc. stockholders’ equity | 2,191,794 | 1,667,614 |
Non-controlling interests | 229,913 | 111,406 |
Total equity | 2,421,707 | 1,779,020 |
Total liabilities and equity | 4,204,469 | 3,917,858 |
Class A Common Stock | ||
Broadstone Net Lease, Inc. stockholders' equity: | ||
Common stock, value | 8 | $ 0 |
Total equity | $ 8 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
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 | $ 0.00025 | $ 0.00025 |
Common stock, shares authorized | 440,000,000 | 320,000,000 |
Common stock, shares issued | 107,773,000 | 104,006,000 |
Common stock, shares outstanding | 107,773,000 | 104,006,000 |
Class A Common Stock | ||
Common stock, par value | $ 0.00025 | $ 0.00025 |
Common stock, shares authorized | 60,000,000 | 0 |
Common stock, shares issued | 33,500,000 | 0 |
Common stock, shares outstanding | 33,500,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Lease revenues, net | $ 80,744 | $ 76,401 | $ 239,346 | $ 213,884 |
Operating expenses | ||||
Depreciation and amortization | 31,363 | 28,392 | 102,503 | 77,989 |
Property and operating expense | 4,187 | 3,855 | 12,492 | 11,497 |
General and administrative | 7,214 | 1,315 | 18,756 | 3,807 |
Provision for impairment of investment in rental properties | 14,732 | 2,435 | 17,399 | 3,452 |
Total operating expenses | 57,496 | 43,705 | 154,886 | 118,711 |
Other income (expenses) | ||||
Interest income | 0 | 5 | 20 | 6 |
Interest expense | (18,511) | (18,465) | (59,015) | (51,025) |
Cost of debt extinguishment | (392) | (455) | (414) | (1,176) |
Gain on sale of real estate | 1,060 | 12,585 | 9,725 | 16,772 |
Income taxes | (129) | (405) | (1,080) | (1,153) |
Internalization expenses | (1,929) | (923) | (3,523) | (1,195) |
Change in fair value of earnout liability | 6,362 | 0 | 8,506 | 0 |
Other gains (losses) | 2 | 0 | (22) | 0 |
Net income | 9,711 | 25,038 | 38,657 | 57,402 |
Net income attributable to non-controlling interests | (961) | (1,650) | (3,738) | (3,942) |
Net income attributable to Broadstone Net Lease, Inc. | $ 8,750 | $ 23,388 | $ 34,919 | $ 53,460 |
Weighted average number of common shares outstanding | ||||
Basic | 111,155 | 98,568 | 108,228 | 93,575 |
Diluted | 123,381 | 105,516 | 119,747 | 100,523 |
Net earnings per share attributable to common stockholders | ||||
Basic and diluted | $ 0.08 | $ 0.24 | $ 0.32 | $ 0.57 |
Comprehensive income (loss) | ||||
Net income | $ 9,711 | $ 25,038 | $ 38,657 | $ 57,402 |
Other comprehensive income (loss) | ||||
Change in fair value of interest rate swaps | 4,352 | (16,380) | (59,766) | (52,182) |
Realized gain on interest rate swaps | (42) | (41) | (125) | (163) |
Comprehensive income (loss) | 14,021 | 8,617 | (21,234) | 5,057 |
Comprehensive (income) loss attributable to non-controlling interests | (1,387) | (557) | 1,510 | (315) |
Comprehensive income (loss) attributable to Broadstone Net Lease, Inc. | 12,634 | 8,060 | (19,724) | 4,742 |
Asset Management Fees | ||||
Operating expenses | ||||
Operating expenses | 0 | 5,610 | 2,461 | 16,048 |
Property Management Fees | ||||
Operating expenses | ||||
Operating expenses | $ 0 | $ 2,098 | $ 1,275 | $ 5,918 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity and Mezzanine Equity (Unaudited) - USD ($) $ in Thousands | Total | Class A Common Stock | 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 Income (Loss) | 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 | |||
Net income | 17,342 | 16,134 | 1,208 | |||||||
Issuance of shares of common stock | 76,230 | 1 | 76,004 | $ 225 | ||||||
Other offering costs | (300) | (300) | ||||||||
Distributions declared | (33,231) | (30,934) | (2,297) | |||||||
Change in fair value of interest rate swap agreements | (23,178) | (21,564) | (1,614) | |||||||
Realized gain on interest rate swap agreements | (41) | (38) | (3) | |||||||
Redemption of shares of common stock, value | (3,210) | (3,210) | ||||||||
Ending Balance at Jun. 30, 2019 | 1,605,638 | 24 | 1,702,911 | (185,647) | (18,584) | 106,934 | ||||
Net income | 25,038 | 23,388 | 1,650 | |||||||
Issuance of shares of common stock | 157,192 | 1 | 157,191 | |||||||
Other offering costs | (703) | (703) | ||||||||
Distributions declared | (34,883) | (32,531) | (2,352) | |||||||
Change in fair value of interest rate swap agreements | (16,380) | (15,288) | (1,092) | |||||||
Realized gain on interest rate swap agreements | (41) | (39) | (2) | |||||||
Redemption of shares of common stock, value | (7,361) | (7,361) | ||||||||
Ending Balance at Sep. 30, 2019 | 1,728,500 | 25 | 1,852,038 | (194,790) | (33,911) | 105,138 | ||||
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 | |||||||
Issuance of shares of common stock | 6,097 | 6,097 | ||||||||
Adjustment to carrying value of mezzanine equity non-controlling interests | (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) | |||||||
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 interests | 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 | |||||||
Beginning Balance at Dec. 31, 2019 | 1,779,020 | 26 | 1,895,935 | (208,261) | (20,086) | 111,406 | ||||
Adjustment to carrying value of mezzanine equity non-controlling interests | (2,513) | |||||||||
Ending Balance at Sep. 30, 2020 | 2,421,707 | $ 8 | 27 | 2,506,008 | (239,520) | (74,729) | 229,913 | |||
Beginning Balance at Mar. 31, 2020 | 1,699,979 | 26 | 1,899,616 | (233,067) | (73,138) | 106,542 | ||||
Net income | 16,345 | 15,353 | 992 | |||||||
Issuance of shares of common stock | 232 | 232 | ||||||||
Adjustment to carrying value of mezzanine equity non-controlling interests | (97) | (97) | ||||||||
Distributions declared | (12,518) | (11,817) | (701) | |||||||
Change in fair value of interest rate swap agreements | (5,789) | (5,438) | (351) | |||||||
Realized gain on interest rate swap agreements | (40) | (37) | (3) | |||||||
Ending Balance at Jun. 30, 2020 | 1,698,112 | 26 | 1,899,751 | (229,531) | (78,613) | 106,479 | ||||
Net income | 753 | 753 | ||||||||
Adjustment to carrying value of mezzanine equity non-controlling interests | 97 | 97 | ||||||||
Distributions declared | (581) | (581) | ||||||||
Change in fair value of interest rate swap agreements | (267) | (267) | ||||||||
Realized gain on interest rate swap agreements | (1) | (1) | ||||||||
Ending Balance at Jun. 30, 2020 | 178,535 | 66,376 | 112,159 | |||||||
Net income | 9,337 | 8,750 | 587 | |||||||
Stock-based compensation | 796 | 796 | ||||||||
Issuance of shares of Class A common stock | 569,500 | 8 | 569,492 | |||||||
Offering costs, discounts, and commissions | (37,180) | (37,180) | ||||||||
Reclassification of portion of contingent earnout liability | 18,436 | 6,809 | 11,627 | |||||||
Reclassification of shares of mezzanine equity common stock to shares of common stock | 66,376 | 1 | 66,375 | |||||||
Reclassification of mezzanine equity non-controlling interests to non-controlling interests | 112,698 | 112,698 | ||||||||
Repurchase of fractional shares of common stock | (35) | (35) | ||||||||
Repurchase of fractional OP Units | (1) | (1) | ||||||||
Distributions declared | (20,477) | (18,739) | (1,738) | |||||||
Change in fair value of interest rate swap agreements | 4,185 | 3,921 | 264 | |||||||
Realized gain on interest rate swap agreements | (40) | (37) | (3) | |||||||
Ending Balance at Sep. 30, 2020 | 2,421,707 | $ 8 | $ 27 | $ 2,506,008 | $ (239,520) | $ (74,729) | $ 229,913 | |||
Net income | 374 | 374 | ||||||||
Reclassification of shares of mezzanine equity common stock to shares of common stock | (66,376) | $ (66,376) | ||||||||
Reclassification of mezzanine equity non-controlling interests to non-controlling interests | (112,698) | (112,698) | ||||||||
Change in fair value of interest rate swap agreements | 167 | 167 | ||||||||
Realized gain on interest rate swap agreements | $ (2) | $ (2) |
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 | |||||
Apr. 30, 2020 | Jan. 31, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Redemption of shares of common stock, shares | 353,000 | |||||||
Issuance of shares of mezzanine equity common stock, shares | 3,124,000 | |||||||
Issuance of shares of common stock, shares | 341,000 | 293,000 | 7,360,000 | 3,567,000 | 3,532,000 | |||
Issuance of mezzanine non-controlling interests, shares | 5,278,000 | |||||||
Reclassification of mezzanine equity non-controlling interests to non-controlling interests shares | 5,278,000 | |||||||
Repurchase of fractional shares of common stock Shares | 2,000 | |||||||
Class A Common Stock | ||||||||
Issuance of shares of common stock, shares | 33,500,000 | |||||||
Common Stock | ||||||||
Distribution declared per share | $ 0.11 | $ 0.1075 | $ 0.11 | $ 0.135 | $ 0.11 | $ 0.11 | $ 0.11 | |
Redemption of shares of common stock, shares | 353,000 | 150,000 | 85,000 | |||||
Reclassification of mezzanine equity common stock to common stock | 3,124,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities | ||
Net income | $ 38,657 | $ 57,402 |
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 | 102,536 | 75,661 |
Provision for impairment of investment in rental properties | 17,399 | 3,452 |
Amortization of debt issuance costs charged to interest expense | 2,421 | 1,655 |
Stock-based compensation expense | 796 | |
Straight-line rent and financing lease adjustments | (14,696) | (15,882) |
Cost of debt extinguishment | 414 | 1,176 |
Gain on sale of real estate | (9,725) | (16,772) |
Change in fair value of earnout liability | (8,506) | 0 |
Leasing fees paid | (747) | |
Adjustment to provision for credit losses | (142) | |
Other non-cash items | 420 | 277 |
Changes in assets and liabilities, net of acquisition: | ||
Tenant and other receivables | (3,023) | 165 |
Prepaid expenses and other assets | (4,751) | (393) |
Accounts payable and other liabilities | 5,305 | 5,234 |
Accrued interest payable | 5,859 | (295) |
Net cash provided by operating activities | 132,964 | 110,933 |
Investing activities | ||
Acquisition of rental property accounted for using the operating method, net of mortgages assumed of $0 and $49,782 in 2020 and 2019, respectively | (76) | (957,820) |
Cash paid for Internalization | (30,861) | |
Capital expenditures and improvements | (7,629) | (4,044) |
Proceeds from disposition of rental property, net | 54,810 | 90,137 |
Change in deposits on investments in rental property | (37) | 1,500 |
Net cash provided by (used in) investing activities | 16,207 | (870,227) |
Financing activities | ||
Proceeds from issuance of common stock and Class A common stock, net of $35,514 offering costs, discounts, and commissions | 534,117 | 260,475 |
Redemptions of common stock | (12,374) | |
Repurchase of fractional shares of common stock | (36) | |
Borrowings on mortgages, notes payable and unsecured term notes, net of mortgages assumed of $0 and $49,782 in 2020 and 2019, respectively | 60,000 | 750,000 |
Principal payments on mortgages, notes payable and unsecured term notes | (393,294) | (316,191) |
Borrowings on unsecured revolving credit facility | 192,000 | 389,100 |
Repayments on unsecured revolving credit facility | (389,300) | (226,900) |
Cash distributions paid to stockholders | (52,447) | (45,219) |
Cash distributions paid to non-controlling interests | (5,395) | (6,980) |
Debt issuance and extinguishment costs paid | (6,140) | (7,491) |
Net cash (used in) provided by financing activities | (60,495) | 784,420 |
Net increase in cash and cash equivalents and restricted cash | 88,676 | 25,126 |
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 | 108,987 | 44,115 |
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 | 101,787 | 14,008 |
Restricted cash at end of period | 7,200 | 30,107 |
Cash and cash equivalents and restricted cash at end of period | $ 108,987 | $ 44,115 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Mortgages assumed | $ 0 | $ 49,782 |
Offering costs,discounts, and commissions | 35,514 | 35,514 |
Rental Property Acquisition | ||
Mortgages assumed | $ 0 | $ 49,782 |
Business Description
Business Description | 9 Months Ended |
Sep. 30, 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 September 30, 2020, the Corporation owned a diversified portfolio of 627 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”. 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 direction, oversight, and approval of the Company’s board of directors (the “Board of Directors”). 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. On September 18, 2020, the Corporation effected a four-for-one split on its then outstanding 26,944 shares of common stock (“Common Stock”) that previously had a $0.001 par value. Concurrent with the stock split, the OP effected a four-for-one stock split of its outstanding OP Units. No fractional shares or OP Units were issued as a result of the stock split. All historic share and per share amounts in these Condensed Consolidated Financial Statements have been adjusted to give retroactive effect to the stock split. On September 21, 2020, the Corporation closed its initial public offering (“IPO”) at $17.00 per share, of 33,500 shares of a new class of common stock, $0.00025 par value per share (“Class A Common Stock”) The terms of the Class A Common Stock are identical to the terms of the Common Stock, except that each share of Class A Common Stock will automatically convert into one share of Common Stock on March 20, 2021. The Common Stock will subsequently be listed on the New York Stock Exchange on March 22, 2021, which represents the first trading day following the 180-day period following the closing of the IPO. The Common Stock and Class A Common Stock are collectively referred to as the Corporation’s “common stock”. See further discussion of the Company’s IPO and stock split in Note 13. The following table summarizes the outstanding equity and economic ownership interest of the Corporation and the OP: September 30, 2020 December 31, 2019 (in thousands) Shares of Common Stock OP Units Total Diluted Shares Shares of Common Stock OP Units Total Diluted Shares Ownership interest 141,273 12,226 153,499 104,006 6,948 110,954 Percent Ownership of OP 92.0 % 8.0 % 100.0 % 93.7 % 6.3 % 100.0 % Refer to Note 15 for further discussion regarding the calculation of weighted average shares outstanding. On October 20, 2020, the Company issued an additional 3,500 shares of Class A Common Stock, pursuant to the underwriters’ partial exercise of their option to acquire up to 5,025 shares of Class A Common Stock at $17.00 per share. See Note 18. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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 the earnout liability, 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 September 30, 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 19), 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 each of 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. During the three and nine months ended September 30, 2020, the Company recorded impairment charges associated with three and six properties, respectively. Impairment indicators included changes in the Company’s long-term hold strategy with respect to the individual properties, which was due in part to unfavorable market trends resulting from the COVID-19 pandemic in geographic areas where the Company has vacant properties being marketed for re-lease or sale. 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 and nine months ended September 30, 2020 and 2019, the Company recorded impairment charges of $ 14,732 17,399 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 on the Condensed Consolidated Balance Sheets. Restricted cash consisted of the following: September 30, December 31, (in thousands) 2020 2019 Escrow funds and other $ 3,815 $ 2,311 Undistributed 1031 proceeds 3,385 5,545 $ 7,200 $ 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, d irect 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 and collectability of the lease payments is probable, 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. If the Company determines that collectability of the lease payments is not probable, the Company records an adjustment to Lease revenues, net to reduce cumulative income recognized since lease commencement to the amount of cash collected from the lessee. Future revenue recognition is limited to amounts paid by the lessee. 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. Refer below to the Recently Adopted Accounting Standards 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) September 30, 2020 December 31, 2019 Rent received in advance $ 11,119 $ 13,368 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 perform its first annual goodwill testing during the fourth quarter of 2020. Initial Public Offering Costs Prior to the close of the IPO on September 21, 2020, the Company incurred and capitalized certain direct, incremental legal, professional, accounting and other third-party fees in connection with the IPO. The deferred IPO costs were offset against IPO proceeds, and reclassified as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets upon the consummation of the offering. At December 31, 2019, deferred IPO costs totaled $668 and were included within Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. See Note 13 for further discussion of net proceeds Earnout Liability The Company’s earnout liability is payable in four tranches, 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 were originally subject to a redemption rights agreement, whereby holders of the common shares and OP Units had the right to require the Company to repurchase any or all of the common shares or OP Units if an IPO had not occurred on or before December 31, 2020 (see discussion of the redemption rights agreement in Note 4). The common shares and OP Units were deemed to be freestanding financial instruments that, at inception, embody an obligation to repurchase the Company’s common shares and OP Units, and therefore were initially classified as liabilities together with the cash portion of the earnout, and 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 Income (Loss). Upon completion of the IPO, the redemption rights with respect to the common shares and OP Units terminated, and the $18,436 fair value of the 726 shares of common stock and 1,240 OP Units associated with the third and fourth earnout tranches as of the date of the IPO, was reclassified to equity as a component of Additional paid-in capital and Non-controlling interests on the Condensed Consolidated Balance Sheets. At September 30, 2020, the remaining balance in the earnout liability represents $5,207 that is potentially payable in the form of cash associated with all four tranches, and $7,970, representing the estimated fair value of 363 shares of common stock and 619 OP Units associated with the first and second earnout tranches, that remain potentially payable based upon the achievement of 2020 adjusted funds from operations (“AFFO”) targets. 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, Accrued interest payable, and Accounts payable and other liabilities, approximates their fair values due to their short-term nature. Recurring Fair Value Measurements The Company measures and records its interest rate swap instruments (see Note 11) and earnout liability at fair value, and discloses the fair value of its long-term debt, on a recurring basis. 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”). Under the terms of the agreement, the milestones 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 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 share price volatility and, prior to the IPO, about the timing of an IPO and net asset prices, each of which are unobservable and 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. Specifically, advancements in the estimated IPO date assumption increase 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. Increases in the volatility assumption would increase the earnout liability’s fair value. Increases in net asset values would also increase 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 September 30, 2020: Significant Unobservable Inputs Weighted Average Assumption Used Range Peer stock price volatility 40.0% 26.11% - 56.85% 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% Company's net asset value per diluted share $ 21.30 (a) (a) The following table presents a reconciliation of the change in the earnout liability during the three and nine months ended September 30, 2020: For the three months ended For the nine months ended (in thousands) September 30, 2020 September 30, 2020 Beginning balance $ 37,975 $ — Allocation of Internalization purchase price at February 7, 2020 — 40,119 Change in fair value subsequent to Internalization (6,362 ) (8,506 ) Reclassification as a component of additional paid-in capital and non-controlling interests (18,436 ) (18,436 ) Ending balance $ 13,177 $ 13,177 The Company closed its IPO on September 21, 2020, at which time a portion of the liability payable in common shares and OP units was reclassified to equity at fair value as a component of Additional paid-in capital and Non-controlling interests, respectively. See further discussion in Earnout Liability The decrease in fair value between the Internalization and the IPO closing was driven by a lower IPO price, correlating to the net asset value assumption, and the delayed closing of the IPO due to market disruption and uncertainty presented by the COVID-19 pandemic late in the first quarter of 2020. These factors were partially offset by an increase in peer stock price volatility, which is attributable to changes in economic circumstances impacting global equity markets. The balances of assets and liabilities measured at fair value on a recurring basis are as follows: September 30, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (81,326 ) $ — $ (81,326 ) $ — Earnout liability (13,177 ) — — (13,177 ) 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 comparab le 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 approx imate 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 d isclosed. 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 f air 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, which reflects the fair value of interest rate swaps: (in thousands) September 30, 2020 December 31, 2019 Carrying amount $ 1,549,076 $ 1,989,451 Fair value 1,683,505 2,047,860 Non-recurring Fair Value Measurements The Company’s non-recurring fair value measurements at September 30, 2020 and December 31, 2019 consisted of the fair value of impaired real estate assets that were determined using Level 3 inputs. 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, not to 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: September 30, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,167 $ 1,614 Lease liabilities Accounts payable and other liabilities 2,787 1,209 Stock-Based Compensation On August 4, 2020, the Board of Directors adopted the Broadstone Net Lease, Inc. 2020 Omnibus Equity and Incentive Plan (the “Equity Incentive Plan”) to provide long-term stock-based incentives to employees and non-employee directors of the Company. Subject to any adjustment as provided in the Equity Incentive Plan, up to 9,000 shares may be issued pursuant to awards granted under the Equity Incentive Plan in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, share awards and performance-based awards (including performance share units and performance-based restricted stock) and LTIP Units (as defined in the Equity Incentive Plan). On August 4, 2020, the Company awarded 341 shares of restricted common stock under the Equity Incentive Plan to certain officers and employees. The Company accounts for stock-based incentives in accordance with ASC 718, Compensation – Stock Compensation Equity Incentive Plan are recorded as Cumulative distribution in excess of retained earnings on the Condensed Consolidated Balance Sheets. Accumulated dividends related to forfeited a wards will be reversed through compensation expense in the period the forfeiture occurs. Earnings per Share Earnings per common share has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share, 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 In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) that focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under ASC 842, economic relief that was agreed to or negotiated outside of the original lease agreement is typically considered a lease modification, in which case both the lessee and lessor would be required to apply the respective modification frameworks. However, if the lessee was entitled to the economic relief because of either contractual or legal rights, the relief would be accounted for outside of the modification framework. Although the original lease modification guidance in ASC 842 remains appropriate to address routine lease modifications, the Lease Modification Q&A established a different framework to account for certain lease concessions granted in response to the COVID-19 pandemic, if certain criteria have been met. The Lease Modification Q&A allows the Company to make an accounting policy election to account for COVID-19 related lease concessions as either a lease modification or a negative variable adjustment to rental revenue. Such election is required to be appl ied consistently to leases with similar characteristics and similar circumstances. Refer to Note 19, COVID-19 Pandemic regarding information on COVID-19 related concessions and the associated impact on the Company’s results of operations. Reclassifications The Company reclassified $405 and $1,153 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 Income (Loss) for the three and nine months ended September 30, 2019, respectively, 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 | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, Type of Fee Financial Statement Presentation 2020 (a) 2019 2020 (a) 2019 Asset management fee Asset management fees $ — $ 5,610 $ 2,461 $ 16,048 Property management fee Property management fees — 2,098 1,275 5,918 Total management fee expense — 7,708 3,736 21,966 Marketing fee (offering costs) Additional paid-in capital — 703 — 1,303 Acquisition fee Capitalized as a component of assets acquired — 7,932 — 9,937 Leasing fee and re-leasing fees Leasing fees, net — 312 — 747 Disposition fee Gain on sale of real estate — 596 109 947 Total management fees $ — $ 17,251 $ 3,845 $ 34,900 (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 September 30, 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 obligation 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 consideration amounted to $31,613 at September 30, 2020, of which $13,177 is recorded as Earnout liability, $6,809 is recorded as a component of Additional paid-in capital, and $11,627 is recorded as a component of Non-controlling interests on the Condensed Consolidated Balance Sheets (see Note 2). Related Party Lease In connection with the Internalization, the Company assumed the lease agreement relating to its 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 expires on August 31, 2023, and contains two five-year |
Internalization
Internalization | 9 Months Ended |
Sep. 30, 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 Company paid base consideration of $209,516 at closing and may be required to pay additional earnout consideration of up to $75,000 in the future, as described below. In addition, the Company assumed $90,484 of debt in addition to other assets acquired and liabilities assumed, as detailed in the Allocation of Purchase Price The consideration paid at closing of the Internalization is summarized in the following table: (in thousands) Issuance of 3,124 shares of common stock $ 66,376 Issuance of 5,278 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 According to the terms of the Merger Agreement, 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 Company completed its IPO on September 21, 2020. The earnout tranches, applicable 40-day VWAP of a REIT Share and the applicable Earnout Periods are as follows: Number of Shares' 40-Day (in thousands, except per share amounts) OP Units Approximate VWAP of a Tranche Earnout Target (a) Payable (b) Amount of Cash REIT Share Applicable Earnout Period 1 $10,000 393 $ 1,646 $ 22.50 The two-year period beginning on September 21, 2020. 2 $15,000 589 $ 2,470 $ 23.75 The two-year period beginning on September 21, 2020. 3 $25,000 983 $ 4,117 $ 24.375 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. 4 $25,000 983 $ 4,117 $ 25.00 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. (a) (b) Should all earnout milestones be met, an additional 1,089 shares of common stock and an additional 1,859 OP Units would be issued, in addition to the payment of $12,350 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 related to the potential issuance of common shares and OP Units and approximately $6,608 related 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 Income (Loss). See Note 2 for further discussion of changes in the fair value of the earnout liability subsequent to the Internalization. Redemption Rights Agreement If an IPO did not occur on or before the satisfaction of any Earnout Trigger, then each holder of common shares or OP Units issued in connection with the Internalization had the right to require the Company to repurchase any or all of such holder’s shares or OP Units. Such rights terminated effective with the IPO. Upon occurrence of the IPO, the common stock and non-controlling interests issued as base consideration in connection with the Internalization and originally classified as mezzanine equity, were reclassified as a component of Common Stock, Additional paid-in capital, and Non-controlling interests on the Condensed Consolidated Balance Sheets. Allocation of Purchase Price 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 e stimates 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 liabilitie s 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. Con sequently, 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 revolving credit facility borrowings and entering into a new $60,000 term loan agreement (see Note 9). The Company incurred $1,929 and $3,523 in non-recurring costs associated with the Internalization during the three and nine months ended September 30, 2020, respectively, and $923 and $1,195 of such costs during the three and nine months ended September 30, 2019, which were classified as Internalization expenses in the Condensed Consolidated Statements of Income and Comprehensive Income (Loss). 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. Subsequent to the Internalization, during the three and nine months ended September 30, 2020, the Company incurred $5,528 and $13,762, respectively, in expenses as a result of being internalized. Such amounts 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 Internalization expenses discussed above, or amounts recorded to reflect changes in the fair value of the earnout liability. 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 $1,929 and $8,068 of income, respectively, for the three and nine months ended September 30, 2020 and $ 9,437 23,418 The condensed pro forma financial information is as follows: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Revenues $ 80,744 $ 76,401 $ 239,346 $ 213,884 Net income 11,640 28,941 42,982 65,913 |
Acquisitions of Rental Property
Acquisitions of Rental Property | 9 Months Ended |
Sep. 30, 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 nine months ended September 30, 2020. The Company closed on the following acquisitions of rental property during the nine months ended September 30, 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 April 30, 2019 Industrial 1 76,000 (a) May 21, 2019 Retail 2 6,500 May 31, 2019 Retail 1 3,192 June 7, 2019 Office 1 30,589 June 26, 2019 Industrial 2 11,180 July 15, 2019 Restaurant 1 3,214 July 15, 2019 Industrial 1 11,330 July 31, 2019 Healthcare 5 27,277 August 27, 2019 Industrial 1 4,404 August 29, 2019 Industrial/Office 23 735,740 September 17, 2019 Industrial 1 11,185 66 $ 993,689 (b) (a) February 2028 (b) 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 nine months ended September 30, 2019 Land $ 155,434 Land improvements 44,929 Buildings and improvements 745,116 Acquired in-place leases (c) 77,868 Acquired above-market leases (d) 2,800 Acquired below-market leases (e) (15,811 ) Mortgage payable (49,782 ) $ 960,554 (c) (d) (e) The above acquisitions were funded using a combination of available cash on hand, revolving credit facility borrowings and the issuance of unsecured term loans, and proceeds from equity issuances. All real estate acquisitions closed during the nine months ended September 30, 2019, qualified as asset acquisitions and, as such, acquisition costs have been capitalized. |
Sale of Real Estate
Sale of Real Estate | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, (in thousands, except number of properties) 2020 2019 2020 2019 Number of properties disposed 5 16 18 25 Aggregate sale price $ 9,816 $ 59,691 $ 57,539 $ 94,791 Aggregate carrying value (8,327 ) (43,920 ) (45,085 ) (73,365 ) Additional sales expenses (429 ) (3,186 ) (2,729 ) (4,654 ) Gain on sale of real estate $ 1,060 $ 12,585 $ 9,725 $ 16,772 |
Investment in Rental Property a
Investment in Rental Property and Lease Arrangements | 9 Months Ended |
Sep. 30, 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 September 30, 2020, the Company had 611 real estate properties which were leased under leases that have been classified as operating leases and 11 that have been classified as direct financing leases. Of the 11 leases classified as direct financing leases, three include land portions which are accounted for as operating leases (see Revenue Recognition 20 years 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) September 30, 2020 December 31, 2019 Land $ 542,487 $ 548,911 Land improvements 274,786 275,470 Buildings and improvements 2,806,916 2,850,571 Equipment 11,870 11,492 3,636,059 3,686,444 Less accumulated depreciation (332,057 ) (271,044 ) $ 3,304,002 $ 3,415,400 Depreciation expense on investment in rental property was as follows: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Depreciation $ 23,317 $ 21,843 $ 70,392 $ 60,128 Estimated lease payments to be received under non-cancelable operating leases with tenants at September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 71,570 2021 289,057 2022 291,801 2023 294,743 2024 290,463 Thereafter 2,230,494 $ 3,468,128 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) September 30, 2020 December 31, 2019 Undiscounted estimated lease payments to be received $ 48,713 $ 72,753 Estimated unguaranteed residual values 16,049 20,358 Unearned income (33,679 ) (51,221 ) Reserve for credit losses (181 ) — Net investment in direct financing leases $ 30,902 $ 41,890 Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 811 2021 3,304 2022 3,368 2023 3,433 2024 3,493 Thereafter 34,304 $ 48,713 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 Income (Loss): For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Contractual rental amounts billed for operating leases $ 69,270 $ 65,579 $ 209,440 $ 184,292 Adjustment to recognize contractual operating lease billings on a straight-line basis 6,768 5,575 16,709 16,015 Variable rental amounts earned 234 — 308 — Earned income from direct financing leases 757 1,005 2,599 3,014 Operating expenses billed to tenants 3,389 3,811 11,456 10,572 Other income from real estate transactions 64 431 795 431 Adjustment to revenue recognized for uncollectible rental amounts billed 262 — (1,961 ) (440 ) Total Lease revenues, net $ 80,744 $ 76,401 $ 239,346 $ 213,884 |
Intangible Assets And Liabiliti
Intangible Assets And Liabilities | 9 Months Ended |
Sep. 30, 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) September 30, 2020 December 31, 2019 Lease intangibles: Acquired above-market leases $ 53,563 $ 62,136 Less accumulated amortization (18,397 ) (17,433 ) Acquired above-market leases, net 35,166 44,703 Acquired in-place leases 333,305 349,645 Less accumulated amortization (79,500 ) (62,454 ) Acquired in-place leases, net 253,805 287,191 Total intangible lease assets, net $ 288,971 $ 331,894 Acquired below-market leases $ 107,625 $ 113,862 Less accumulated amortization (26,405 ) (21,640 ) Intangible lease liabilities, net $ 81,220 $ 92,222 Leasing fees $ 15,655 $ 17,013 Less accumulated amortization (4,640 ) (4,166 ) Leasing fees, net $ 11,015 $ 12,847 Amortization of intangible lease assets and liabilities was as follows: (in thousands) For the three months ended September 30, For the nine months ended September 30, Intangible Financial Statement Presentation 2020 2019 2020 2019 Acquired in-place leases and leasing fees Depreciation and amortization $ 8,026 $ 6,549 $ 32,060 $ 17,861 Above-market and below-market leases Lease revenues, net (149 ) 875 (25 ) 2,335 Amortization expense for the three and nine months ended September 30, 2020, includes $2,459 and $14,517, respectively, of accelerated amortization resulting from early lease terminations, compared to zero in the prior year periods. Estimated future amortization of intangible assets and liabilities at September 30, 2020 is as follows: (in thousands) Remainder of 2020 $ 5,700 2021 22,494 2022 21,952 2023 21,626 2024 20,859 Thereafter 126,135 $ 218,766 |
Unsecured Credit Agreements
Unsecured Credit Agreements | 9 Months Ended |
Sep. 30, 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) September 30, 2020 December 31, 2019 Interest Rate (c) Maturity Date Revolving credit facilities (a) $ — $ 197,300 one-month LIBOR + 1.20% (d) 2020 Unsecured Term Loan (a) — 300,000 one-month LIBOR + 1.25% Feb. 2021 (e) 2022 Unsecured Term Loan (a) 60,000 — one-month LIBOR + 1.25% Feb. 2022 2023 Unsecured Term Loan (a) 265,000 265,000 one-month LIBOR + 1.35% Jan. 2023 2024 Unsecured Term Loan (a) 190,000 190,000 one-month LIBOR + 1.25% Jun. 2024 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 1,440,000 1,877,300 Debt issuance costs, net (b) (6,505 ) (7,919 ) $ 1,433,495 $ 1,869,381 (a) The Company believes it was in compliance with all financial covenants for all periods presented. (b) (c) (d) (e) On September 4, 2020, the Company entered into an agreement (the “Revolving Credit Agreement”) for a $900,000 unsecured revolving credit facility (the “Revolving Credit Facility”), with JPMorgan Chase Bank, N.A., as Administrative Agent. Closing of the Revolving Credit Agreement was subject to certain customary conditions, as well as the closing of the IPO, with a minimum condition on size, and listing of the Company’s common stock, as set forth in the agreement. 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% at September 30, 2020. At September 30, 2020, the weighted average interest rate on all outstanding borrowings was 2.80%, exclusive of interest rate swap agreements. For the three and nine months ended September 30, 2020, the Company paid $5,918 in debt issuance costs associated with the Revolving Credit Facility. For the three and nine months ended September 30, 2019, the Company paid $1,281 and $6,510, respectively, in debt issuance costs associated with the 2020 Unsecured Term Loan, the 2026 Unsecured Term Loan and its prior unsecured revolving credit agreement. For each separate debt instrument, on a lender by lender basis, in accordance with ASC 470-50, Debt Modifications and Extinguishment the term of the associated debt or expensed as incurred. Based on this assessment, $ 5,918 of the debt issuance costs incurre d during the three and nine months ended September 30, 2020, and $ 1,275 and $ 6,504 of the debt issuance costs incurred during the three and nine months ended September 30, 2019, respectively, were deemed to be related to the issuance of new debt, or the modification of existing debt, and therefore have been deferred and are being amorti zed over the term of the associated debt. The remaining $ 6 of the debt issuance costs incurred in the three and nine months ended September 30, 2019, were deemed to be related to the extinguishment of debt and were expensed and included in Cost of debt extinguishment in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Loss). Additionally, during the three and nine months ended September 30, 2020, $ 392 of unamortized debt issuance costs were expensed and included in Cost of debt extinguishment in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Loss). Such amounts totaled $ 113 and $ 328 during the three and nine months ended September 30, 2019, respectively. Debt issuance costs are amortized as a component of interest expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Loss). The following table summarizes debt issuance cost amortization: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Debt issuance costs amortization $ 819 $ 611 $ 2,528 $ 1,761 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 September 30, 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 19), 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 | 9 Months Ended |
Sep. 30, 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 September 30, December 31, Lender (Month/Year) (Month/Year) Rate 2020 2019 (1) Wilmington Trust National Association Apr-19 Feb-28 4.92% $ 48,234 $ 49,065 (a) (b) (c) (k) (2) Wilmington Trust National Association Jun-18 Aug-25 4.36% 20,042 20,318 (a) (b) (c) (j) (3) PNC Bank Oct-16 Nov-26 3.62% 17,597 17,885 (b) (c) (4) Sun Life Mar-12 Oct-21 5.13% 10,575 10,888 (b) (f) (5) Aegon Apr-12 Oct-23 6.38% 7,230 7,788 (b) (g) (6) M&T Bank Oct-17 Aug-21 one - month LIBOR+3% 4,807 4,913 (b) (d) (h) (i) (7) Note holders Dec-08 Dec-23 6.25% 591 750 (d) (l) (8) Standard Insurance Co. Jul-10 Aug-30 6.75% — 544 (b) (c) (d) (e) 109,076 112,151 Debt issuance costs, net (324 ) (358 ) $ 108,752 $ 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. (l) Notes were repaid in full on October 9, 2020, in connection with the sale of the property. At September 30, 2020, investment in rental property of $174,623 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 nine months ended September 30, 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 September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Cost of mortgage extinguishment $ — $ 336 $ 22 $ 842 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 September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 818 2021 18,006 2022 62,907 2023 273,173 2024 192,260 Thereafter 1,001,912 $ 1,549,076 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 | 9 Months Ended |
Sep. 30, 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 September 30, 2020 December 31, 2019 Bank of America, N.A. November 2023 2.80 % one-month LIBOR $ 25,000 $ (2,029 ) $ (1,136 ) Bank of Montreal July 2024 1.16 % one-month LIBOR 40,000 (1,542 ) 740 Bank of Montreal January 2025 1.91 % one-month LIBOR 25,000 (1,889 ) (402 ) Bank of Montreal July 2025 2.32 % one-month LIBOR 25,000 (2,565 ) (970 ) Bank of Montreal January 2026 1.92 % one-month LIBOR 25,000 (2,255 ) (448 ) Bank of Montreal January 2026 2.05 % one-month LIBOR 40,000 (3,880 ) (1,014 ) Bank of Montreal December 2026 2.33 % one-month LIBOR 10,000 (1,281 ) (460 ) Bank of Montreal December 2026 1.99 % one-month LIBOR 25,000 (2,664 ) (577 ) Bank of Montreal December 2027 2.37 % one-month LIBOR 25,000 (3,629 ) (1,306 ) Bank of Montreal May 2029 2.09 % one-month LIBOR 25,000 (3,486 ) (799 ) Capital One, National Association December 2021 1.05 % one-month LIBOR 15,000 (174 ) 143 Capital One, National Association December 2024 1.58 % one-month LIBOR 15,000 (885 ) 10 Capital One, National Association January 2026 2.08 % one-month LIBOR 35,000 (3,398 ) (911 ) Capital One, National Association April 2026 2.68 % one-month LIBOR 15,000 (2,014 ) (944 ) Capital One, National Association July 2026 1.32 % one-month LIBOR 35,000 (2,101 ) 720 Capital One, National Association December 2027 2.37 % one-month LIBOR 25,000 (3,601 ) (1,278 ) M&T Bank August 2021 1.02 % one-month LIBOR 4,805 (35 ) 41 (a), (b) M&T Bank September 2022 2.83 % one-month LIBOR 25,000 (1,315 ) (862 ) M&T Bank November 2023 2.65 % one-month LIBOR 25,000 (1,964 ) (1,038 ) Regions Bank May 2020 2.12 % one-month LIBOR 50,000 — (104 ) Regions Bank December 2023 1.18 % one-month LIBOR 25,000 (854 ) 376 Regions Bank May 2029 2.11 % one-month LIBOR 25,000 (3,515 ) (827 ) Regions Bank June 2029 2.03 % one-month LIBOR 25,000 (3,349 ) (651 ) Truist Financial Corporation April 2024 1.99 % one-month LIBOR 25,000 (1,632 ) (451 ) Truist Financial Corporation April 2025 2.20 % one-month LIBOR 25,000 (2,278 ) (781 ) Truist Financial Corporation July 2025 1.99 % one-month LIBOR 25,000 (2,131 ) (524 ) Truist Financial Corporation December 2025 2.30 % one-month LIBOR 25,000 (2,715 ) (993 ) Truist Financial Corporation January 2026 1.93 % one-month LIBOR 25,000 (2,230 ) (458 ) U.S. Bank National Association June 2029 2.03 % one-month LIBOR 25,000 (3,393 ) (681 ) U.S. Bank National Association August 2029 1.35 % one-month LIBOR 25,000 (1,902 ) 881 Wells Fargo Bank, N.A. February 2021 2.39 % one-month LIBOR 35,000 (269 ) (302 ) Wells Fargo Bank, N.A. October 2024 2.72 % one-month LIBOR 15,000 (1,550 ) (795 ) Wells Fargo Bank, N.A. April 2027 2.72 % one-month LIBOR 25,000 (3,924 ) (1,845 ) Wells Fargo Bank, N.A. January 2028 2.37 % one-month LIBOR 75,000 (10,877 ) (3,914 ) $ (81,326 ) $ (21,560 ) (a) Notional amount at December 31, 2019 was $4,912. (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 Income (Loss), from converting from variable rates to fixed rates under these agreements were as follows: Reclassification from Total Interest Expense Amount of Gain (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 September 30, Comprehensive Loss Location (Loss) Gain Income (Loss) 2020 $ 4,352 Interest expense $ (4,166 ) $ 18,511 2019 (16,380 ) Interest expense 387 18,465 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 nine months ended September 30, Comprehensive Loss Location (Loss) Gain Income (Loss) 2020 $ (59,766 ) Interest expense $ (8,467 ) $ 59,015 2019 (52,182 ) Interest expense 2,001 51,025 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 $16,073. 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 | 9 Months Ended |
Sep. 30, 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 nine months ended September 30, 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 the Asset Manager represented 0% and 2% of total operating expenses for the three and nine months ended September 30, 2020, respectively, and 17% and 18% of total operating expenses for the three and nine months ended September 30, 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 63%, 16%, and 10% of total mortgages and notes payable at September 30, 2020. The Company has mortgages and notes payable with three institutions that comprised 62%, 16%, and 10% of total mortgages and notes payable at December 31, 2019. For the three and nine months ended September 30, 2020 and 2019, the Company had no individual tenants or common franchises that accounted for more than 10% of total revenues. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Equity | 13. Equity On September 21, 2020, the Corporation completed the IPO and issued 33,500 shares of Class A Common Stock at an initial public offering price of $17.00 per share. As part of the IPO, the underwriters of the IPO were granted an option, exercisable within 30 days from September 21, 2020, to purchase up to an additional 5,025 shares of Class A Common Stock at the IPO price, less underwriting discounts and commissions. The net proceeds from the IPO, after deducting underwriting discounts and commissions of $34,170 and $3,010 of other expenses (including $1,656 of expenses that were recorded in Accounts payable and other liabilities at September 30, 2020), were $532,320 through September 30, 2020. The Company used the net proceeds to repay the remaining $216,488 principal and accrued interest due under the Company’s then existing revolving credit facility and the remaining $240,225 principal and accrued interest due under its 2020 Unsecured Term Loan. The remaining net proceeds will be used for general business purposes, including acquisitions. On October 20, 2020, the underwriters partially exercised their option. See Note 18. Share Redemption Program The Company’s Share Redemption Program was terminated effective February 10, 2020, and as a result there were no redemptions during the nine months ended September 30, 2020. The following table summarizes redemptions under the Company’s Share Redemption Program: (in thousands, except number of redemptions) For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Number of redemptions requested 20 49 Number of shares 353 588 Aggregate redemption price $ 7,361 $ 12,374 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 September 30, 2020 and December 31, 2019, a total of 12,301 and 12,019 shares of common stock, respectively, have been issued under the DRIP. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 14. Stock-Based Compensation On August 4, 2020, the Company awarded 341 shares of restricted common stock under the Equity Incentive Plan to certain officers and employees. The holder of a restricted stock award is generally entitled at all times on and after the date of issuance of the restricted common shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. The restricted stock awards vest over a three or four year period from the date of the Internalization, subject to the employee’s continued service through the applicable vesting dates and in accordance with the terms of the individual award agreements. None of the shares of restricted stock were vested at September 30, 2020. The following table presents information about the Company’s restricted stock awards: (in thousands) For the three months ended September 30, 2020 For the nine months ended September 30, 2020 Compensation cost $ 796 $ 796 Dividends declared on unvested restricted stock 46 46 The following table presents information about the Company’s restricted stock awards at September 30, 2020: (in thousands, except recognition period) Unamortized value of restricted stock awards $ 6,194 Weighted average amortization period (in years) 3.0 The following table presents information about the Company’s restricted stock activity during the nine months ended September 30, 2020: (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested at beginning of period — $ — Granted 341 20.50 Vested — — Forfeited — — Unvested at end of period 341 $ 20.50 The August 4, 2020 grant date fair value per share of $20.50 was based on the determined share value established by the Board of Directors (“Determined Share Value”). Prior to the IPO, the Company sold shares of common stock in a private offering at a price equal to the Determined Share Value, which was established at least quarterly by the Board of Directors based on the net asset value (“NAV”) of the Company’s portfolio, input from management and third-party consultants, and such other factors as the Board of Directors determined. The Company’s NAV was calculated using its established valuation process, starting with an estimate of the fair value of the properties in the portfolio as of that date based upon, among other factors, the implied market price for each asset based upon a review of market capitalization rates. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 15. 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 September 30, For the nine months ended September 30, (in thousands, except per share amounts) 2020 2019 2020 2019 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. common shareholders $ 8,750 $ 23,388 $ 34,919 $ 53,460 Less: earnings allocated to unvested restricted shares (46 ) — (46 ) — Net earnings used to compute basic earnings per common share $ 8,704 $ 23,388 $ 34,873 $ 53,460 Diluted earnings: Net earnings used to compute basic earnings per share $ 8,704 $ 23,388 $ 34,873 $ 53,460 Net earnings attributable to non-controlling interests 961 1,650 3,738 3,942 Net earnings used to compute diluted earnings per common share $ 9,665 $ 25,038 $ 38,611 $ 57,402 Weighted average number of common shares outstanding: 111,371 98,568 108,300 93,575 Less: weighted average unvested restricted shares (a) (216 ) — (72 ) — Weighted average number of common shares outstanding used in basic earnings per common share 111,155 98,568 108,228 93,575 Effects of convertible membership units (b) 12,226 6,948 11,519 6,948 Weighted average number of common shares outstanding used in diluted earnings per common share 123,381 105,516 119,747 100,523 Basic earnings per share $ 0.08 $ 0.24 $ 0.32 $ 0.57 Diluted earnings per share $ 0.08 $ 0.24 $ 0.32 $ 0.57 (a) (b) |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 9 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Disclosures | 16. Supplemental Cash Flow Disclosures Cash paid for interest was $50,853 and $49,828 for the nine months ended September 30, 2020 and 2019, respectively. Cash paid for income taxes was $1,385 and $809 for the nine months ended September 30, 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 nine months ended September 30, 2020 and 2019, the Corporation issued 275 and 2,199 shares, respectively, of Common Stock with a value of approximately $5,733 and $46,084, respectively, under the terms of the DRIP (see Note 13). • During the nine months ended September 30, 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 nine months ended September 30, 2020, the Company adjusted the carrying value of mezzanine equity non-controlling interests by $2,513, with an offset to Additional paid-in capital. • During the nine months ended September 30, 2020, the Company reclassified $112,698 of mezzanine equity non-controlling interests to Non-controlling interests. • During the nine months ended September 30, 2020, the Company reclassified $66,376 of mezzanine equity common stock, with an offset of $66,375 to Additional paid-in capital and $1 to Common stock. • During the nine months ended September 30, 2020, the Company reclassified $ 18,436 of the carrying value of the earnout liability, with an offset of $ 11,627 as a component of Non- controlling interests and $ 6,809 as a component of Additional paid-in capital (see Note 2). • During the nine months ended September 30, 2020, $1,656 of incurred but unpaid expenses associated with the IPO were recorded as an offset to Additional paid-in capital (see Note 13). • At September 30, 2020 and 2019, dividend amounts declared and accrued but not yet paid amounted to $20,722 and $11,932, respectively • During the nine months ended September 30, 2020, the Company executed lease modifications that resulted in the lease classification changing from direct financing lease to operating lease for four properties. At the modification date, the net investment in the original lease, and therefore the carrying value of the assets recognized, amounted to $9,055. • In connection with real estate transactions conducted during the nine months ended September 30, 2019, the Company accepted tenant improvement allowances of $2,517 in exchange for a reduction to the cash paid for the associated real estate assets • 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 | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 17. 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 costs 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) September 30, 2020 December 31, 2019 Tenant improvement allowances $ 1,981 $ 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 September 30, 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 expiration dates ranging from 2021 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 September 30, For the nine months ended September 30, (in thousands) Financial Statement Presentation 2020 2019 2020 2019 Operating lease costs Office leases General and administrative $ 155 $ — $ 362 $ — Ground leases Property and operating expense 33 35 100 105 Variable lease costs Ground leases Property and operating expense 13 11 43 34 Total lease costs $ 201 $ 46 $ 505 $ 139 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 September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Operating lease payments $ 179 $ 27 $ 490 $ 127 Estimated future lease payments required under non-cancelable operating leases at September 30, 2020, and a reconciliation to the lease liabilities, is as follows: (in thousands) Remainder of 2020 $ 176 2021 711 2022 686 2023 505 2024 120 Thereafter 2,411 Total undiscounted cash flows 4,609 Less imputed interest (1,822 ) Lease liabilities $ 2,787 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 | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 18. Subsequent Events On October 15, 2020, the Company paid distributions totaling $20,722. On October 20, 2020, the underwriters of the Company’s IPO partially exercised their option to purchase up to an additional 5,025 shares of the Company’s Class A Common Stock at the IPO price of $17.00. The underwriters ultimately exercised the option by purchasing an additional 3,500 shares of Class A Common stock. The Company subsequently received $55,930 of additional IPO proceeds as a result of the underwriter’s exercise of their option, net of underwriting fees and discounts. On November 5, 2020, the Board of Directors declared a quarterly distribution of $0.25 per share on the Company’s common stock and OP Units for the fourth quarter of 2020, which will be payable on or before January 15, 2021 to stockholders and unit holders of record as of December 31, 2020. Through November 5, 2020 the Company sold two properties with an aggregate carrying value of approximately $5,019 for total proceeds of $8,615. The Company incurred additional expenses related to the sales of approximately $402, resulting in a gain on sale of real estate of approximately $3,194. Subsequent to September 30, 2020, the Company repaid in full the $591 outstanding balance of notes payable (see Note 10). |
COVID-19 Pandemic
COVID-19 Pandemic | 9 Months Ended |
Sep. 30, 2020 | |
Extraordinary And Unusual Items [Abstract] | |
COVID-19 Pandemic | 19. 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, during the second quarter of 2020, the Company received a number of requests for rent relief and ultimately granted relief to 15 tenants. For all but one of the 15 tenants granted relief, the Company granted relief in the form of a partial rent deferral. For the remaining tenant, the Company agreed to a partial abatement of rent over a nine-month three-year The partial rent deferrals ranged between two and six months of rent, with a weighted average deferral period of 3.4 months. Repayment periods range from three months to one year, with a weighted average payback period of 5.6 months beginning in July 2020. At September 30, 2020, the weighted average remaining payback period for these deferrals was 4.2 months. The Company has collected 100% of deferred rent that was required to be repaid during the three months ended September 30, 2020 and the balance of rent deferrals remains probable of collection. For partial rent deferrals expected to be repaid within a short period of time where the deferral of payments made no substantive changes to the total consideration in the original lease agreement, the amount of straight-line lease revenue recognized in the financial statements was not impacted. Deferred rents due under the agreements are recorded as Tenant and other receivables, net in the Condensed Consolidated Balance Sheets. In certain circumstances, as part of the deferral agreements, the Company negotiated lease extensions or the early exercise of tenant renewal options, resulting in cash flows under the agreements being substantially in excess of the original lease terms. The Company evaluated these agreements on a lease by lease basis, and accounted for the relief under the modification framework of ASC 842, resulting in adjustments to the amount of straight-line lease revenue that will be recorded prospectively. The Company also accounted for the partial abatement under the lease modification framework of ASC 842. As of and for the nine months ended September 30, 2020, the impact of the COVID-19 pandemic on the Company’s financial condition, and results of operations has been limited to effects of the grants of rent relief discussed above. The full extent of the pandemic on the Company’s future financial conditions, results of operations, liquidity, and ability to pay distributions will ultimately 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 risks associated with the COVID-19 outbreak, refer to Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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 the earnout liability, 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 September 30, 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 19), 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 each of 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. During the three and nine months ended September 30, 2020, the Company recorded impairment charges associated with three and six properties, respectively. Impairment indicators included changes in the Company’s long-term hold strategy with respect to the individual properties, which was due in part to unfavorable market trends resulting from the COVID-19 pandemic in geographic areas where the Company has vacant properties being marketed for re-lease or sale. 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 and nine months ended September 30, 2020 and 2019, the Company recorded impairment charges of $ 14,732 17,399 |
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 on the Condensed Consolidated Balance Sheets. Restricted cash consisted of the following: September 30, December 31, (in thousands) 2020 2019 Escrow funds and other $ 3,815 $ 2,311 Undistributed 1031 proceeds 3,385 5,545 $ 7,200 $ 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, d irect 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 and collectability of the lease payments is probable, 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. If the Company determines that collectability of the lease payments is not probable, the Company records an adjustment to Lease revenues, net to reduce cumulative income recognized since lease commencement to the amount of cash collected from the lessee. Future revenue recognition is limited to amounts paid by the lessee. 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. Refer below to the Recently Adopted Accounting Standards |
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) September 30, 2020 December 31, 2019 Rent received in advance $ 11,119 $ 13,368 |
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 perform its first annual goodwill testing during the fourth quarter of 2020. |
Initial Public Offering Costs | Initial Public Offering Costs Prior to the close of the IPO on September 21, 2020, the Company incurred and capitalized certain direct, incremental legal, professional, accounting and other third-party fees in connection with the IPO. The deferred IPO costs were offset against IPO proceeds, and reclassified as a component of Additional paid-in capital on the Condensed Consolidated Balance Sheets upon the consummation of the offering. At December 31, 2019, deferred IPO costs totaled $668 and were included within Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. See Note 13 for further discussion of net proceeds |
Earnout Liability | Earnout Liability The Company’s earnout liability is payable in four tranches, 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 were originally subject to a redemption rights agreement, whereby holders of the common shares and OP Units had the right to require the Company to repurchase any or all of the common shares or OP Units if an IPO had not occurred on or before December 31, 2020 (see discussion of the redemption rights agreement in Note 4). The common shares and OP Units were deemed to be freestanding financial instruments that, at inception, embody an obligation to repurchase the Company’s common shares and OP Units, and therefore were initially classified as liabilities together with the cash portion of the earnout, and 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 Income (Loss). Upon completion of the IPO, the redemption rights with respect to the common shares and OP Units terminated, and the $18,436 fair value of the 726 shares of common stock and 1,240 OP Units associated with the third and fourth earnout tranches as of the date of the IPO, was reclassified to equity as a component of Additional paid-in capital and Non-controlling interests on the Condensed Consolidated Balance Sheets. At September 30, 2020, the remaining balance in the earnout liability represents $5,207 that is potentially payable in the form of cash associated with all four tranches, and $7,970, representing the estimated fair value of 363 shares of common stock and 619 OP Units associated with the first and second earnout tranches, that remain potentially payable based upon the achievement of 2020 adjusted funds from operations (“AFFO”) targets. |
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, Accrued interest payable, and Accounts payable and other liabilities, approximates their fair values due to their short-term nature. Recurring Fair Value Measurements The Company measures and records its interest rate swap instruments (see Note 11) and earnout liability at fair value, and discloses the fair value of its long-term debt, on a recurring basis. 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”). Under the terms of the agreement, the milestones 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 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 share price volatility and, prior to the IPO, about the timing of an IPO and net asset prices, each of which are unobservable and 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. Specifically, advancements in the estimated IPO date assumption increase 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. Increases in the volatility assumption would increase the earnout liability’s fair value. Increases in net asset values would also increase 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 September 30, 2020: Significant Unobservable Inputs Weighted Average Assumption Used Range Peer stock price volatility 40.0% 26.11% - 56.85% 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% Company's net asset value per diluted share $ 21.30 (a) (a) The following table presents a reconciliation of the change in the earnout liability during the three and nine months ended September 30, 2020: For the three months ended For the nine months ended (in thousands) September 30, 2020 September 30, 2020 Beginning balance $ 37,975 $ — Allocation of Internalization purchase price at February 7, 2020 — 40,119 Change in fair value subsequent to Internalization (6,362 ) (8,506 ) Reclassification as a component of additional paid-in capital and non-controlling interests (18,436 ) (18,436 ) Ending balance $ 13,177 $ 13,177 The Company closed its IPO on September 21, 2020, at which time a portion of the liability payable in common shares and OP units was reclassified to equity at fair value as a component of Additional paid-in capital and Non-controlling interests, respectively. See further discussion in Earnout Liability The decrease in fair value between the Internalization and the IPO closing was driven by a lower IPO price, correlating to the net asset value assumption, and the delayed closing of the IPO due to market disruption and uncertainty presented by the COVID-19 pandemic late in the first quarter of 2020. These factors were partially offset by an increase in peer stock price volatility, which is attributable to changes in economic circumstances impacting global equity markets. The balances of assets and liabilities measured at fair value on a recurring basis are as follows: September 30, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (81,326 ) $ — $ (81,326 ) $ — Earnout liability (13,177 ) — — (13,177 ) 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 comparab le 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 approx imate 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 d isclosed. 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 f air 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, which reflects the fair value of interest rate swaps: (in thousands) September 30, 2020 December 31, 2019 Carrying amount $ 1,549,076 $ 1,989,451 Fair value 1,683,505 2,047,860 Non-recurring Fair Value Measurements The Company’s non-recurring fair value measurements at September 30, 2020 and December 31, 2019 consisted of the fair value of impaired real estate assets that were determined using Level 3 inputs. |
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, not to 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: September 30, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,167 $ 1,614 Lease liabilities Accounts payable and other liabilities 2,787 1,209 |
Stock-Based Compensation | Stock-Based Compensation On August 4, 2020, the Board of Directors adopted the Broadstone Net Lease, Inc. 2020 Omnibus Equity and Incentive Plan (the “Equity Incentive Plan”) to provide long-term stock-based incentives to employees and non-employee directors of the Company. Subject to any adjustment as provided in the Equity Incentive Plan, up to 9,000 shares may be issued pursuant to awards granted under the Equity Incentive Plan in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, share awards and performance-based awards (including performance share units and performance-based restricted stock) and LTIP Units (as defined in the Equity Incentive Plan). On August 4, 2020, the Company awarded 341 shares of restricted common stock under the Equity Incentive Plan to certain officers and employees. The Company accounts for stock-based incentives in accordance with ASC 718, Compensation – Stock Compensation Equity Incentive Plan are recorded as Cumulative distribution in excess of retained earnings on the Condensed Consolidated Balance Sheets. Accumulated dividends related to forfeited a wards will be reversed through compensation expense in the period the forfeiture occurs. |
Earnings per Share | Earnings per Share Earnings per common share has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share, |
Recently Adopted 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 In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) that focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under ASC 842, economic relief that was agreed to or negotiated outside of the original lease agreement is typically considered a lease modification, in which case both the lessee and lessor would be required to apply the respective modification frameworks. However, if the lessee was entitled to the economic relief because of either contractual or legal rights, the relief would be accounted for outside of the modification framework. Although the original lease modification guidance in ASC 842 remains appropriate to address routine lease modifications, the Lease Modification Q&A established a different framework to account for certain lease concessions granted in response to the COVID-19 pandemic, if certain criteria have been met. The Lease Modification Q&A allows the Company to make an accounting policy election to account for COVID-19 related lease concessions as either a lease modification or a negative variable adjustment to rental revenue. Such election is required to be appl ied consistently to leases with similar characteristics and similar circumstances. Refer to Note 19, COVID-19 Pandemic regarding information on COVID-19 related concessions and the associated impact on the Company’s results of operations. |
Reclassifications | Reclassifications The Company reclassified $405 and $1,153 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 Income (Loss) for the three and nine months ended September 30, 2019, respectively, 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) | 9 Months Ended |
Sep. 30, 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: September 30, 2020 December 31, 2019 (in thousands) Shares of Common Stock OP Units Total Diluted Shares Shares of Common Stock OP Units Total Diluted Shares Ownership interest 141,273 12,226 153,499 104,006 6,948 110,954 Percent Ownership of OP 92.0 % 8.0 % 100.0 % 93.7 % 6.3 % 100.0 % |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Restricted Cash | Restricted cash consisted of the following: September 30, December 31, (in thousands) 2020 2019 Escrow funds and other $ 3,815 $ 2,311 Undistributed 1031 proceeds 3,385 5,545 $ 7,200 $ 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) September 30, 2020 December 31, 2019 Rent received in advance $ 11,119 $ 13,368 |
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 September 30, 2020: Significant Unobservable Inputs Weighted Average Assumption Used Range Peer stock price volatility 40.0% 26.11% - 56.85% 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% Company's net asset value per diluted share $ 21.30 (a) (a) |
Summary of Reconciliation of Change in Earnout Liability | The following table presents a reconciliation of the change in the earnout liability during the three and nine months ended September 30, 2020: For the three months ended For the nine months ended (in thousands) September 30, 2020 September 30, 2020 Beginning balance $ 37,975 $ — Allocation of Internalization purchase price at February 7, 2020 — 40,119 Change in fair value subsequent to Internalization (6,362 ) (8,506 ) Reclassification as a component of additional paid-in capital and non-controlling interests (18,436 ) (18,436 ) Ending balance $ 13,177 $ 13,177 |
Balances of Assets and Liabilities Measured at Fair Value on Recurring Basis | The balances of assets and liabilities measured at fair value on a recurring basis are as follows: September 30, 2020 (in thousands) Total Level 1 Level 2 Level 3 Interest rate swap, liabilities $ (81,326 ) $ — $ (81,326 ) $ — Earnout liability (13,177 ) — — (13,177 ) 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, which reflects the fair value of interest rate swaps: (in thousands) September 30, 2020 December 31, 2019 Carrying amount $ 1,549,076 $ 1,989,451 Fair value 1,683,505 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: September 30, December 31, (in thousands) Financial Statement Presentation 2020 2019 Right-of-use assets Prepaid expenses and other assets $ 3,167 $ 1,614 Lease liabilities Accounts payable and other liabilities 2,787 1,209 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, Type of Fee Financial Statement Presentation 2020 (a) 2019 2020 (a) 2019 Asset management fee Asset management fees $ — $ 5,610 $ 2,461 $ 16,048 Property management fee Property management fees — 2,098 1,275 5,918 Total management fee expense — 7,708 3,736 21,966 Marketing fee (offering costs) Additional paid-in capital — 703 — 1,303 Acquisition fee Capitalized as a component of assets acquired — 7,932 — 9,937 Leasing fee and re-leasing fees Leasing fees, net — 312 — 747 Disposition fee Gain on sale of real estate — 596 109 947 Total management fees $ — $ 17,251 $ 3,845 $ 34,900 (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) | 9 Months Ended |
Sep. 30, 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 3,124 shares of common stock $ 66,376 Issuance of 5,278 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 Applicable Earnout Periods | The earnout tranches, applicable 40-day VWAP of a REIT Share and the applicable Earnout Periods are as follows: Number of Shares' 40-Day (in thousands, except per share amounts) OP Units Approximate VWAP of a Tranche Earnout Target (a) Payable (b) Amount of Cash REIT Share Applicable Earnout Period 1 $10,000 393 $ 1,646 $ 22.50 The two-year period beginning on September 21, 2020. 2 $15,000 589 $ 2,470 $ 23.75 The two-year period beginning on September 21, 2020. 3 $25,000 983 $ 4,117 $ 24.375 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. 4 $25,000 983 $ 4,117 $ 25.00 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. (a) (b) |
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 nine months ended September 30, 2019 Land $ 155,434 Land improvements 44,929 Buildings and improvements 745,116 Acquired in-place leases (c) 77,868 Acquired above-market leases (d) 2,800 Acquired below-market leases (e) (15,811 ) Mortgage payable (49,782 ) $ 960,554 (c) (d) (e) |
Schedule of Pro Forma Financial Information | The condensed pro forma financial information is as follows: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Revenues $ 80,744 $ 76,401 $ 239,346 $ 213,884 Net income 11,640 28,941 42,982 65,913 |
Acquisitions of Rental Proper_2
Acquisitions of Rental Property (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions of Rental Property Closed | The Company did not complete any acquisitions of rental property during the nine months ended September 30, 2020. The Company closed on the following acquisitions of rental property during the nine months ended September 30, 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 April 30, 2019 Industrial 1 76,000 (a) May 21, 2019 Retail 2 6,500 May 31, 2019 Retail 1 3,192 June 7, 2019 Office 1 30,589 June 26, 2019 Industrial 2 11,180 July 15, 2019 Restaurant 1 3,214 July 15, 2019 Industrial 1 11,330 July 31, 2019 Healthcare 5 27,277 August 27, 2019 Industrial 1 4,404 August 29, 2019 Industrial/Office 23 735,740 September 17, 2019 Industrial 1 11,185 66 $ 993,689 (b) (a) February 2028 (b) |
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 nine months ended September 30, 2019 Land $ 155,434 Land improvements 44,929 Buildings and improvements 745,116 Acquired in-place leases (c) 77,868 Acquired above-market leases (d) 2,800 Acquired below-market leases (e) (15,811 ) Mortgage payable (49,782 ) $ 960,554 (c) (d) (e) |
Sale of Real Estate (Tables)
Sale of Real Estate (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, (in thousands, except number of properties) 2020 2019 2020 2019 Number of properties disposed 5 16 18 25 Aggregate sale price $ 9,816 $ 59,691 $ 57,539 $ 94,791 Aggregate carrying value (8,327 ) (43,920 ) (45,085 ) (73,365 ) Additional sales expenses (429 ) (3,186 ) (2,729 ) (4,654 ) Gain on sale of real estate $ 1,060 $ 12,585 $ 9,725 $ 16,772 |
Investment in Rental Property_2
Investment in Rental Property and Lease Arrangements (Tables) | 9 Months Ended |
Sep. 30, 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) September 30, 2020 December 31, 2019 Land $ 542,487 $ 548,911 Land improvements 274,786 275,470 Buildings and improvements 2,806,916 2,850,571 Equipment 11,870 11,492 3,636,059 3,686,444 Less accumulated depreciation (332,057 ) (271,044 ) $ 3,304,002 $ 3,415,400 Depreciation expense on investment in rental property was as follows: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Depreciation $ 23,317 $ 21,843 $ 70,392 $ 60,128 |
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 September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 71,570 2021 289,057 2022 291,801 2023 294,743 2024 290,463 Thereafter 2,230,494 $ 3,468,128 |
Net Investment in Direct Financing Leases | The Company’s net investment in direct financing leases was comprised of the following: (in thousands) September 30, 2020 December 31, 2019 Undiscounted estimated lease payments to be received $ 48,713 $ 72,753 Estimated unguaranteed residual values 16,049 20,358 Unearned income (33,679 ) (51,221 ) Reserve for credit losses (181 ) — Net investment in direct financing leases $ 30,902 $ 41,890 |
Direct Financing Leases, Lease Receivable Maturity | Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 811 2021 3,304 2022 3,368 2023 3,433 2024 3,493 Thereafter 34,304 $ 48,713 |
Summary of Amounts Reported as Lease Revenues Net on the Condensed Consolidated Statements of Income and Comprehensive Income (Loss) | The following table summarizes amounts reported as Lease revenues, net on the Condensed Consolidated Statements of Income and Comprehensive Income (Loss): For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Contractual rental amounts billed for operating leases $ 69,270 $ 65,579 $ 209,440 $ 184,292 Adjustment to recognize contractual operating lease billings on a straight-line basis 6,768 5,575 16,709 16,015 Variable rental amounts earned 234 — 308 — Earned income from direct financing leases 757 1,005 2,599 3,014 Operating expenses billed to tenants 3,389 3,811 11,456 10,572 Other income from real estate transactions 64 431 795 431 Adjustment to revenue recognized for uncollectible rental amounts billed 262 — (1,961 ) (440 ) Total Lease revenues, net $ 80,744 $ 76,401 $ 239,346 $ 213,884 |
Intangible Assets and Liabili_2
Intangible Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 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) September 30, 2020 December 31, 2019 Lease intangibles: Acquired above-market leases $ 53,563 $ 62,136 Less accumulated amortization (18,397 ) (17,433 ) Acquired above-market leases, net 35,166 44,703 Acquired in-place leases 333,305 349,645 Less accumulated amortization (79,500 ) (62,454 ) Acquired in-place leases, net 253,805 287,191 Total intangible lease assets, net $ 288,971 $ 331,894 Acquired below-market leases $ 107,625 $ 113,862 Less accumulated amortization (26,405 ) (21,640 ) Intangible lease liabilities, net $ 81,220 $ 92,222 Leasing fees $ 15,655 $ 17,013 Less accumulated amortization (4,640 ) (4,166 ) Leasing fees, net $ 11,015 $ 12,847 |
Schedule of Amortization of Intangible Lease Assets and Liabilities | Amortization of intangible lease assets and liabilities was as follows: (in thousands) For the three months ended September 30, For the nine months ended September 30, Intangible Financial Statement Presentation 2020 2019 2020 2019 Acquired in-place leases and leasing fees Depreciation and amortization $ 8,026 $ 6,549 $ 32,060 $ 17,861 Above-market and below-market leases Lease revenues, net (149 ) 875 (25 ) 2,335 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization of intangible assets and liabilities at September 30, 2020 is as follows: (in thousands) Remainder of 2020 $ 5,700 2021 22,494 2022 21,952 2023 21,626 2024 20,859 Thereafter 126,135 $ 218,766 |
Unsecured Credit Agreements (Ta
Unsecured Credit Agreements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Debt Issuance Cost Amortization | The following table summarizes debt issuance cost amortization: For the three months ended September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Debt issuance costs amortization $ 819 $ 611 $ 2,528 $ 1,761 |
Unsecured Debt | |
Summary of Unsecured Credit Agreements | The following table summarizes the Company’s unsecured credit agreements: Outstanding Balance (in thousands, except interest rates) September 30, 2020 December 31, 2019 Interest Rate (c) Maturity Date Revolving credit facilities (a) $ — $ 197,300 one-month LIBOR + 1.20% (d) 2020 Unsecured Term Loan (a) — 300,000 one-month LIBOR + 1.25% Feb. 2021 (e) 2022 Unsecured Term Loan (a) 60,000 — one-month LIBOR + 1.25% Feb. 2022 2023 Unsecured Term Loan (a) 265,000 265,000 one-month LIBOR + 1.35% Jan. 2023 2024 Unsecured Term Loan (a) 190,000 190,000 one-month LIBOR + 1.25% Jun. 2024 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 1,440,000 1,877,300 Debt issuance costs, net (b) (6,505 ) (7,919 ) $ 1,433,495 $ 1,869,381 (a) The Company believes it was in compliance with all financial covenants for all periods presented. (b) (c) (d) (e) |
Mortgages and Notes Payable (Ta
Mortgages and Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Extinguished Mortgages | The following table summarizes the mortgages extinguished by the Company: (in thousands, except number of mortgages) For the nine months ended September 30, 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 September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Cost of mortgage extinguishment $ — $ 336 $ 22 $ 842 |
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 September 30, 2020 are as follows: (in thousands) Remainder of 2020 $ 818 2021 18,006 2022 62,907 2023 273,173 2024 192,260 Thereafter 1,001,912 $ 1,549,076 |
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 September 30, December 31, Lender (Month/Year) (Month/Year) Rate 2020 2019 (1) Wilmington Trust National Association Apr-19 Feb-28 4.92% $ 48,234 $ 49,065 (a) (b) (c) (k) (2) Wilmington Trust National Association Jun-18 Aug-25 4.36% 20,042 20,318 (a) (b) (c) (j) (3) PNC Bank Oct-16 Nov-26 3.62% 17,597 17,885 (b) (c) (4) Sun Life Mar-12 Oct-21 5.13% 10,575 10,888 (b) (f) (5) Aegon Apr-12 Oct-23 6.38% 7,230 7,788 (b) (g) (6) M&T Bank Oct-17 Aug-21 one - month LIBOR+3% 4,807 4,913 (b) (d) (h) (i) (7) Note holders Dec-08 Dec-23 6.25% 591 750 (d) (l) (8) Standard Insurance Co. Jul-10 Aug-30 6.75% — 544 (b) (c) (d) (e) 109,076 112,151 Debt issuance costs, net (324 ) (358 ) $ 108,752 $ 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. (l) Notes were repaid in full on October 9, 2020, in connection with the sale of the property. |
Interest Rate Swaps (Tables)
Interest Rate Swaps (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2020 December 31, 2019 Bank of America, N.A. November 2023 2.80 % one-month LIBOR $ 25,000 $ (2,029 ) $ (1,136 ) Bank of Montreal July 2024 1.16 % one-month LIBOR 40,000 (1,542 ) 740 Bank of Montreal January 2025 1.91 % one-month LIBOR 25,000 (1,889 ) (402 ) Bank of Montreal July 2025 2.32 % one-month LIBOR 25,000 (2,565 ) (970 ) Bank of Montreal January 2026 1.92 % one-month LIBOR 25,000 (2,255 ) (448 ) Bank of Montreal January 2026 2.05 % one-month LIBOR 40,000 (3,880 ) (1,014 ) Bank of Montreal December 2026 2.33 % one-month LIBOR 10,000 (1,281 ) (460 ) Bank of Montreal December 2026 1.99 % one-month LIBOR 25,000 (2,664 ) (577 ) Bank of Montreal December 2027 2.37 % one-month LIBOR 25,000 (3,629 ) (1,306 ) Bank of Montreal May 2029 2.09 % one-month LIBOR 25,000 (3,486 ) (799 ) Capital One, National Association December 2021 1.05 % one-month LIBOR 15,000 (174 ) 143 Capital One, National Association December 2024 1.58 % one-month LIBOR 15,000 (885 ) 10 Capital One, National Association January 2026 2.08 % one-month LIBOR 35,000 (3,398 ) (911 ) Capital One, National Association April 2026 2.68 % one-month LIBOR 15,000 (2,014 ) (944 ) Capital One, National Association July 2026 1.32 % one-month LIBOR 35,000 (2,101 ) 720 Capital One, National Association December 2027 2.37 % one-month LIBOR 25,000 (3,601 ) (1,278 ) M&T Bank August 2021 1.02 % one-month LIBOR 4,805 (35 ) 41 (a), (b) M&T Bank September 2022 2.83 % one-month LIBOR 25,000 (1,315 ) (862 ) M&T Bank November 2023 2.65 % one-month LIBOR 25,000 (1,964 ) (1,038 ) Regions Bank May 2020 2.12 % one-month LIBOR 50,000 — (104 ) Regions Bank December 2023 1.18 % one-month LIBOR 25,000 (854 ) 376 Regions Bank May 2029 2.11 % one-month LIBOR 25,000 (3,515 ) (827 ) Regions Bank June 2029 2.03 % one-month LIBOR 25,000 (3,349 ) (651 ) Truist Financial Corporation April 2024 1.99 % one-month LIBOR 25,000 (1,632 ) (451 ) Truist Financial Corporation April 2025 2.20 % one-month LIBOR 25,000 (2,278 ) (781 ) Truist Financial Corporation July 2025 1.99 % one-month LIBOR 25,000 (2,131 ) (524 ) Truist Financial Corporation December 2025 2.30 % one-month LIBOR 25,000 (2,715 ) (993 ) Truist Financial Corporation January 2026 1.93 % one-month LIBOR 25,000 (2,230 ) (458 ) U.S. Bank National Association June 2029 2.03 % one-month LIBOR 25,000 (3,393 ) (681 ) U.S. Bank National Association August 2029 1.35 % one-month LIBOR 25,000 (1,902 ) 881 Wells Fargo Bank, N.A. February 2021 2.39 % one-month LIBOR 35,000 (269 ) (302 ) Wells Fargo Bank, N.A. October 2024 2.72 % one-month LIBOR 15,000 (1,550 ) (795 ) Wells Fargo Bank, N.A. April 2027 2.72 % one-month LIBOR 25,000 (3,924 ) (1,845 ) Wells Fargo Bank, N.A. January 2028 2.37 % one-month LIBOR 75,000 (10,877 ) (3,914 ) $ (81,326 ) $ (21,560 ) (a) Notional amount at December 31, 2019 was $4,912. (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 (Loss), 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 Income (Loss), from converting from variable rates to fixed rates under these agreements were as follows: Reclassification from Total Interest Expense Amount of Gain (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 September 30, Comprehensive Loss Location (Loss) Gain Income (Loss) 2020 $ 4,352 Interest expense $ (4,166 ) $ 18,511 2019 (16,380 ) Interest expense 387 18,465 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 nine months ended September 30, Comprehensive Loss Location (Loss) Gain Income (Loss) 2020 $ (59,766 ) Interest expense $ (8,467 ) $ 59,015 2019 (52,182 ) Interest expense 2,001 51,025 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of Redemptions under Company's Share Redemption Program | The Company’s Share Redemption Program was terminated effective February 10, 2020, and as a result there were no redemptions during the nine months ended September 30, 2020. The following table summarizes redemptions under the Company’s Share Redemption Program: (in thousands, except number of redemptions) For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Number of redemptions requested 20 49 Number of shares 353 588 Aggregate redemption price $ 7,361 $ 12,374 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) - Restricted Stock | 9 Months Ended |
Sep. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of Restricted Stock Awards | The following table presents information about the Company’s restricted stock awards: (in thousands) For the three months ended September 30, 2020 For the nine months ended September 30, 2020 Compensation cost $ 796 $ 796 Dividends declared on unvested restricted stock 46 46 The following table presents information about the Company’s restricted stock awards at September 30, 2020: (in thousands, except recognition period) Unamortized value of restricted stock awards $ 6,194 Weighted average amortization period (in years) 3.0 |
Summary of Restricted Stock Activity | The following table presents information about the Company’s restricted stock activity during the nine months ended September 30, 2020: (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested at beginning of period — $ — Granted 341 20.50 Vested — — Forfeited — — Unvested at end of period 341 $ 20.50 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, (in thousands, except per share amounts) 2020 2019 2020 2019 Basic earnings: Net earnings attributable to Broadstone Net Lease, Inc. common shareholders $ 8,750 $ 23,388 $ 34,919 $ 53,460 Less: earnings allocated to unvested restricted shares (46 ) — (46 ) — Net earnings used to compute basic earnings per common share $ 8,704 $ 23,388 $ 34,873 $ 53,460 Diluted earnings: Net earnings used to compute basic earnings per share $ 8,704 $ 23,388 $ 34,873 $ 53,460 Net earnings attributable to non-controlling interests 961 1,650 3,738 3,942 Net earnings used to compute diluted earnings per common share $ 9,665 $ 25,038 $ 38,611 $ 57,402 Weighted average number of common shares outstanding: 111,371 98,568 108,300 93,575 Less: weighted average unvested restricted shares (a) (216 ) — (72 ) — Weighted average number of common shares outstanding used in basic earnings per common share 111,155 98,568 108,228 93,575 Effects of convertible membership units (b) 12,226 6,948 11,519 6,948 Weighted average number of common shares outstanding used in diluted earnings per common share 123,381 105,516 119,747 100,523 Basic earnings per share $ 0.08 $ 0.24 $ 0.32 $ 0.57 Diluted earnings per share $ 0.08 $ 0.24 $ 0.32 $ 0.57 (a) (b) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 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) September 30, 2020 December 31, 2019 Tenant improvement allowances $ 1,981 $ 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 September 30, For the nine months ended September 30, (in thousands) Financial Statement Presentation 2020 2019 2020 2019 Operating lease costs Office leases General and administrative $ 155 $ — $ 362 $ — Ground leases Property and operating expense 33 35 100 105 Variable lease costs Ground leases Property and operating expense 13 11 43 34 Total lease costs $ 201 $ 46 $ 505 $ 139 |
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 September 30, For the nine months ended September 30, (in thousands) 2020 2019 2020 2019 Operating lease payments $ 179 $ 27 $ 490 $ 127 |
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 September 30, 2020, and a reconciliation to the lease liabilities, is as follows: (in thousands) Remainder of 2020 $ 176 2021 711 2022 686 2023 505 2024 120 Thereafter 2,411 Total undiscounted cash flows 4,609 Less imputed interest (1,822 ) Lease liabilities $ 2,787 |
Business Description - Addition
Business Description - Additional Information (Detail) | Oct. 20, 2020$ / sharesshares | Sep. 21, 2020$ / sharesshares | Sep. 18, 2020$ / sharesshares | Feb. 07, 2020USD ($) | Sep. 30, 2020USD ($)PropertyState$ / sharesshares | Jun. 30, 2020shares | Mar. 31, 2020shares | Sep. 30, 2019USD ($)shares | Jun. 30, 2019shares | Mar. 31, 2019shares | Sep. 30, 2020USD ($)PropertyState$ / sharesshares | Sep. 30, 2019USD ($) | Dec. 31, 2019$ / sharesshares |
Business Description [Line Items] | |||||||||||||
Date of incorporation | Oct. 18, 2007 | ||||||||||||
Number of leased commercial properties owned | Property | 627 | 627 | |||||||||||
Number of States in which properties located | State | 41 | 41 | |||||||||||
Internalization fees | $ | $ 1,929,000 | $ 923,000 | $ 3,523,000 | $ 1,195,000 | |||||||||
Common stock, shares outstanding | 26,944,000 | 107,773,000 | 107,773,000 | 104,006,000 | |||||||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.00025 | $ 0.00025 | $ 0.00025 | |||||||||
Issuance of shares of common stock, shares | 341,000 | 11,000 | 293,000 | 7,360,000 | 3,567,000 | 3,532,000 | |||||||
Class A Common Stock | |||||||||||||
Business Description [Line Items] | |||||||||||||
Common stock, shares outstanding | 33,500,000 | 33,500,000 | 0 | ||||||||||
Common stock, par value | $ / shares | $ 0.00025 | $ 0.00025 | $ 0.00025 | ||||||||||
Issuance of shares of common stock, shares | 33,500,000 | ||||||||||||
IPO | |||||||||||||
Business Description [Line Items] | |||||||||||||
Common stock, par value | $ / shares | $ 0.00025 | ||||||||||||
Issuance of shares of common stock, shares | 33,500,000 | ||||||||||||
Offering price | $ / shares | $ 17 | ||||||||||||
IPO | Class A Common Stock | Subsequent Event | |||||||||||||
Business Description [Line Items] | |||||||||||||
Issuance of shares of common stock, shares | 3,500,000 | ||||||||||||
Offering price | $ / shares | $ 17 | ||||||||||||
IPO | Class A Common Stock | Subsequent Event | Maximum | |||||||||||||
Business Description [Line Items] | |||||||||||||
Shares purchased by underwriters | 5,025,000 | ||||||||||||
Common Stock | |||||||||||||
Business Description [Line Items] | |||||||||||||
Stock split | 4 | ||||||||||||
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 | 1 |
Business Description - Summary
Business Description - Summary of Outstanding Equity and Economic Ownership Interest (Detail) - shares shares in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Broadstone Net Lease, LLC | ||
Business Description [Line Items] | ||
Percent Ownership of OP, Shares of Common Stock | 92.00% | 93.70% |
Percent Ownership of OP, OP Units | 8.00% | 6.30% |
Percent Ownership of OP, Total Diluted Shares | 100.00% | 100.00% |
Ownership Interest | ||
Business Description [Line Items] | ||
Shares of Common Stock | 141,273 | 104,006 |
OP Units | 12,226 | 6,948 |
Total Diluted Shares | 153,499 | 110,954 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) | Aug. 04, 2020shares | Sep. 30, 2020USD ($)Trancheshares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)Trancheshares | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Feb. 07, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) |
Significant Accounting Policies [Line Items] | |||||||||
Additional impairment charges | $ 0 | ||||||||
Impairment of real estate assets | $ 14,732,000 | $ 2,435,000 | 17,399,000 | $ 3,452,000 | |||||
Fair value of contingent consideration recorded in stockholders equity | 18,436,000 | ||||||||
Fair value of earnout consideration | 13,177,000 | 13,177,000 | $ 37,975,000 | $ 40,119,000 | $ 0 | ||||
Provision for credit loss | $ 323,000 | ||||||||
Income taxes | 129,000 | 405,000 | $ 1,080,000 | 1,153,000 | |||||
Other Nonoperating Income (Expenses) | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Income taxes | $ 405,000 | $ 1,153,000 | |||||||
Restricted Stock | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Number of shares of restricted stock awarded | shares | 341,000 | ||||||||
2020 Equity Incentive Plan | Restricted Stock | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Number of shares of restricted stock awarded | shares | 341,000 | ||||||||
2020 Equity Incentive Plan | Maximum | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Number of equity awards granted | shares | 9,000,000 | ||||||||
Earnout Liability | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Fair value of contingent consideration recorded in stockholders equity | $ 18,436,000 | ||||||||
Fair value of earnout consideration | $ 5,207,000 | $ 5,207,000 | |||||||
Number of tranches | Tranche | 4 | 4 | |||||||
Earnout Liability | Tranche Three and Four | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Number of shares issuable in future | shares | 726,000 | ||||||||
Number of OP units issuable in future | shares | 1,240,000 | 1,240,000 | |||||||
Earnout Liability | Tranche First and Second | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Number of shares issuable in future | shares | 363,000 | ||||||||
Number of OP units issuable in future | shares | 619,000 | 619,000 | |||||||
Fair value of earnout consideration | $ 7,970,000 | $ 7,970,000 | |||||||
IPO | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Deferred offering costs | $ 668,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Components of Restricted Cash (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash And Cash Equivalents [Abstract] | ||||
Escrow funds and other | $ 3,815 | $ 2,311 | ||
Undistributed 1031 proceeds | 3,385 | 5,545 | ||
Restricted cash | $ 7,200 | $ 7,856 | $ 30,107 | $ 377 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Rents Received in Advance (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenue From Contract With Customer [Abstract] | ||
Rent received in advance | $ 11,119 | $ 13,368 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Significant Unobservable Inputs Used to Estimate Fair Value of Earnout Liability (Detail) - Fair Value Inputs Level3 [Member] | Feb. 07, 2020$ / shares | Sep. 30, 2020 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Expected IPO date | Apr. 15, 2020 | |
Range, Expected IPO date | March 2020 through May 2020 | |
Measurement Input, Price Volatility [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Weighted Average Assumption Used, Company's net asset value per diluted share | $ 21.30 | |
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 | 0.200 | 0.400 |
Minimum [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 | 0.1622 | 0.2611 |
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 | 0.2309 | 0.5685 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Summary of Significant Unobservable Inputs Used to Estimate Fair Value of Earnout Liability (Detail)(Parenthetical) - Measurement Input, Price Volatility [Member] - Fair Value Inputs Level3 [Member] | Feb. 07, 2020 |
Minimum [Member] | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Market capitalization rate | 6.05% |
Maximum | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Market capitalization rate | 7.09% |
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 | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 37,975 | $ 0 |
Allocation of Internalization purchase price at February 7, 2020 | 40,119 | |
Change in fair value subsequent to Internalization | (6,362) | (8,506) |
Reclassification as a component of additional paid-in capital and non-controlling interests | (18,436) | (18,436) |
Ending balance | $ 13,177 | $ 13,177 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Balances of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Feb. 07, 2020 | Dec. 31, 2019 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Interest rate swap, liabilities | $ (81,326) | $ (24,471) | ||
Earnout liability | (13,177) | $ (37,975) | $ (40,119) | 0 |
Interest rate swap, assets | 0 | 2,911 | ||
Fair Value, Measurements, Recurring | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Interest rate swap, liabilities | (81,326) | (24,471) | ||
Earnout liability | (13,177) | |||
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 | (81,326) | (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 | $ (13,177) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Summary of Carrying Amount Reported on Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Summary Of Significant Accounting Policies [Abstract] | ||
Carrying amount | $ 1,549,076 | $ 1,989,451 |
Fair value | $ 1,683,505 | $ 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 | Sep. 30, 2020 | Dec. 31, 2019 |
Lessor Lease Description [Line Items] | ||
Lease liabilities | $ 2,787 | |
Prepaid Expenses And Other Assets | ||
Lessor Lease Description [Line Items] | ||
Right-of-use assets | 3,167 | $ 1,614 |
Accounts Payable And Other Liabilities | ||
Lessor Lease Description [Line Items] | ||
Lease liabilities | $ 2,787 | $ 1,209 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Feb. 28, 2020USD ($)ft²RenewalOption | Sep. 30, 2020USD ($)Property | Jun. 30, 2020USD ($) | Feb. 07, 2020USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | |||||
Gross rental percentage | 1.00% | ||||
Number of leased commercial properties owned | Property | 627 | ||||
Maximum tax liability | $ 10,000,000 | ||||
Fair value of earnout consideration | $ 31,613,000 | ||||
Fair value of earnout liability | 13,177,000 | $ 37,975,000 | $ 40,119,000 | $ 0 | |
Additional Paid-in Capital | |||||
Related Party Transaction [Line Items] | |||||
Fair value of earnout consideration | 6,809,000 | ||||
Non-controlling Interests | |||||
Related Party Transaction [Line Items] | |||||
Fair value of earnout consideration | 11,627,000 | ||||
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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | $ 17,251 | $ 3,845 | $ 34,900 |
Asset Management Agreement | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 5,610 | 2,461 | 16,048 |
Property Management Fee | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 2,098 | 1,275 | 5,918 |
Management Fee Expense | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 7,708 | 3,736 | 21,966 |
Marketing Fee (Offering Costs) | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 703 | 1,303 | |
Acquisition Fee | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 7,932 | 9,937 | |
Leasing Fee and Re-leasing Fees | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | 312 | 747 | |
Disposition Fee | |||
Related Party Transaction [Line Items] | |||
Expenses incurred with related parties | $ 596 | $ 109 | $ 947 |
Internalization - Additional In
Internalization - Additional Information (Detail) shares in Thousands | Feb. 07, 2020USD ($)Trancheshares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Internalization [Line Items] | |||||||
Base consideration | $ 209,516,000 | ||||||
Debt | 90,484,000 | $ 90,484,000 | $ 90,484,000 | ||||
Payment of cash at earnout milestone | 12,350,000 | ||||||
Earnout liability | 40,119,000 | 13,177,000 | 13,177,000 | $ 37,975,000 | $ 0 | ||
Estimated fair value of potential earnout consideration | 31,613,000 | 31,613,000 | |||||
Goodwill | 339,769,000 | 339,769,000 | 339,769,000 | $ 0 | |||
Repayment of debt | 90,484,000 | ||||||
Debt instrument, face amount | 60,000,000 | ||||||
Internalization fees | 1,929,000 | $ 923,000 | 3,523,000 | $ 1,195,000 | |||
Incremental internalization revenues | $ 0 | ||||||
Incremental expenses | 5,528,000 | 13,762,000 | |||||
Elimination of Internalization Expenses and Asset Management, Property Management, and Disposition Fees and Adjustments to Reflect Incremental Interest Expense | Internalization Expenses | |||||||
Internalization [Line Items] | |||||||
Business combination pro forma adjustments income | $ 1,929,000 | $ 9,437,000 | $ 8,068,000 | $ 23,418,000 | |||
Common Stock | |||||||
Internalization [Line Items] | |||||||
Additional common stock to be issued at earnout milestones | shares | 1,089 | ||||||
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 | 1,859 | ||||||
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 | ||||||
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 | ||||||
Maximum | |||||||
Internalization [Line Items] | |||||||
Additional consideration payable | 75,000,000 | ||||||
Maximum | Merger Agreement | |||||||
Internalization [Line Items] | |||||||
Additional consideration payable | $ 75,000,000 |
Internalization - Schedule of B
Internalization - Schedule of Base Consideration - (Detail) - USD ($) $ in Thousands | Feb. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition Contingent Consideration [Line Items] | |||||
Cash | $ 30,981 | ||||
Base consideration | 209,516 | ||||
Initial estimate of fair value of earnout liability | 40,119 | $ (6,362) | $ 0 | $ (8,506) | $ 0 |
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 | Sep. 30, 2020 | Feb. 07, 2020 | Dec. 31, 2019 |
Business Acquisition Contingent Consideration [Line Items] | |||
Common stock, shares issued | 107,773,000 | 104,006,000 | |
Common Stock | |||
Business Acquisition Contingent Consideration [Line Items] | |||
Common stock, shares issued | 3,124,000 | ||
OP Units | |||
Business Acquisition Contingent Consideration [Line Items] | |||
Operating partnership units | 5,278,000 |
Internalization - Summary of Ea
Internalization - Summary of Earnout Tranches, Applicable VWAP of REIT Share and Applicable Earnout Periods (Detail) - Merger Agreement - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Feb. 07, 2020 | Sep. 30, 2020 |
Tranche One | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 10,000 | |
Number of Shares/ OP Units Payable(b) | 393 | |
Approximate Amount of Cash | $ 1,646 | |
40-Day VWAP of a REIT Share | $ 22.50 | |
Applicable Earnout Period | The two-year period beginning on September 21, 2020. | |
Tranche Two | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 15,000 | |
Number of Shares/ OP Units Payable(b) | 589 | |
Approximate Amount of Cash | $ 2,470 | |
40-Day VWAP of a REIT Share | $ 23.75 | |
Applicable Earnout Period | The two-year period beginning on September 21, 2020. | |
Tranche Three | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 25,000 | |
Number of Shares/ OP Units Payable(b) | 983 | |
Approximate Amount of Cash | $ 4,117 | |
40-Day VWAP of a REIT Share | $ 24.375 | |
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 | ||
Internalization [Line Items] | ||
Additional consideration payable | $ 25,000 | |
Number of Shares/ OP Units Payable(b) | 983 | |
Approximate Amount of Cash | $ 4,117 | |
40-Day VWAP of a REIT Share | $ 25 | |
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. |
Internalization - Summary of _2
Internalization - Summary of Earnout Tranches, Applicable VWAP of REIT Share and Applicable Earnout Periods (Parenthetical) (Detail) | Feb. 07, 2020$ / shares |
Merger Agreement | |
Internalization [Line Items] | |
Price per share or unit | $ 21.25 |
Internalization - Summary of Pr
Internalization - Summary of Preliminary Allocation of Purchase Price (Detail) - USD ($) $ in Thousands | Feb. 07, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
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 | $ 0 |
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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Acquisition Pro Forma Information [Abstract] | ||||
Revenues | $ 80,744 | $ 76,401 | $ 239,346 | $ 213,884 |
Net income | $ 11,640 | $ 28,941 | $ 42,982 | $ 65,913 |
Acquisitions of Rental Proper_3
Acquisitions of Rental Property - Additional Information - (Detail) - Property | Sep. 30, 2020 | Sep. 30, 2019 |
Business Combinations [Abstract] | ||
Number of rental properties acquired | 0 | 66 |
Acquisitions of Rental Proper_4
Acquisitions of Rental Property - Acquisitions of Rental Property Closed - (Detail) $ in Thousands | Sep. 17, 2019USD ($)Property | Aug. 29, 2019USD ($)Property | Aug. 27, 2019USD ($)Property | Jul. 31, 2019USD ($)Property | Jul. 15, 2019USD ($)Property | Jun. 26, 2019USD ($)Property | Jun. 07, 2019USD ($)Property | May 31, 2019USD ($)Property | May 21, 2019USD ($)Property | Apr. 30, 2019USD ($)Property | Mar. 26, 2019USD ($)Property | Mar. 19, 2019USD ($)Property | Mar. 15, 2019USD ($)Property | Mar. 12, 2019USD ($)Property | Jan. 31, 2019USD ($)Property | Sep. 30, 2019USD ($)Property | Sep. 30, 2020Property |
Business Acquisition [Line Items] | |||||||||||||||||
Number of Properties | Property | 66 | 0 | |||||||||||||||
Real Estate Acquisition Price | $ | $ 993,689 | ||||||||||||||||
Healthcare | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Healthcare | Healthcare | |||||||||||||||
Number of Properties | Property | 5 | 1 | |||||||||||||||
Real Estate Acquisition Price | $ | $ 27,277 | $ 4,747 | |||||||||||||||
Industrial | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Industrial | Industrial | Industrial | Industrial | Industrial | Industrial | Industrial | ||||||||||
Number of Properties | Property | 1 | 1 | 1 | 2 | 1 | 1 | 1 | ||||||||||
Real Estate Acquisition Price | $ | $ 11,185 | $ 4,404 | $ 11,330 | $ 11,180 | $ 76,000 | $ 25,801 | $ 10,217 | ||||||||||
Retail | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Retail | Retail | Retail | Retail | |||||||||||||
Number of Properties | Property | 1 | 2 | 14 | 10 | |||||||||||||
Real Estate Acquisition Price | $ | $ 3,192 | $ 6,500 | $ 19,128 | $ 13,185 | |||||||||||||
Office | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Office | ||||||||||||||||
Number of Properties | Property | 1 | ||||||||||||||||
Real Estate Acquisition Price | $ | $ 30,589 | ||||||||||||||||
Restaurant | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Restaurant | ||||||||||||||||
Number of Properties | Property | 1 | ||||||||||||||||
Real Estate Acquisition Price | $ | $ 3,214 | ||||||||||||||||
Industrial/Office | |||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||
Property Type | Industrial/Office | ||||||||||||||||
Number of Properties | Property | 23 | ||||||||||||||||
Real Estate Acquisition Price | $ | $ 735,740 |
Acquisitions of Rental Proper_5
Acquisitions of Rental Property - Acquisitions of Rental Property Closed (Parenthetical) - (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | |
Business Combinations [Abstract] | ||
Mortgages assumed | $ 49,782 | $ 0 |
Interest rate | 4.92% | |
Mortgage, Maturity date | Feb. 29, 2028 | |
Acquisition costs capitalized | $ 16,647 |
Acquisitions of Rental Proper_6
Acquisitions of Rental Property - Purchase Price Allocation for Real Estate Acquisitions (Detail) $ in Thousands | Sep. 30, 2019USD ($) |
Business Acquisition [Line Items] | |
Mortgage payable | $ (49,782) |
Business combination, recognized identifiable assets acquired and liabilities assumed, assets | 960,554 |
Land | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 155,434 |
Land Improvements | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 44,929 |
Buildings and Improvements | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment | 745,116 |
Acquired In-Place Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | 77,868 |
Acquired Above-Market Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | 2,800 |
Acquired Below-Market Leases | |
Business Acquisition [Line Items] | |
Business combination, recognized identifiable assets acquired and liabilities assumed, Intangible assets | $ (15,811) |
Acquisitions of Rental Proper_7
Acquisitions of Rental Property - Purchase Price Allocation for Real Estate Acquisitions (Parenthetical) - (Detail) | 9 Months Ended |
Sep. 30, 2019 | |
Acquired In-Place Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 13 years |
Acquired Above-Market Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 18 years |
Acquired Below-Market Leases | |
Business Acquisition [Line Items] | |
Weighted average amortization period | 10 years |
Sale of Real Estate - Schedule
Sale of Real Estate - Schedule of Sale of Real Estate (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($)Property | Sep. 30, 2019USD ($)Property | Sep. 30, 2020USD ($)Property | Sep. 30, 2019USD ($)Property | |
Real Estate [Line Items] | ||||
Number of properties disposed | Property | 5 | 16 | 18 | 25 |
Aggregate sale price | $ 9,816 | $ 59,691 | $ 57,539 | $ 94,791 |
Aggregate carrying value | (8,327) | (43,920) | (45,085) | (73,365) |
Gain on sale of real estate | 1,060 | 12,585 | 9,725 | 16,772 |
Real Estate | ||||
Real Estate [Line Items] | ||||
Additional sales expenses | (429) | (3,186) | (2,729) | (4,654) |
Gain on sale of real estate | $ 1,060 | $ 12,585 | $ 9,725 | $ 16,772 |
Investment in Rental Property_3
Investment in Rental Property and Lease Arrangements - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2020Property | |
Lessor Lease Description [Line Items] | |
Number of real estate properties under operating leases | 611 |
Number of real estate properties under direct financing leases | 11 |
Number of real estate properties under direct financing leases that include land option | 3 |
Lessee, operating lease, existence of option to extend | true |
Lessee, finance lease, existence of option to extend | true |
Minimum [Member] | |
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 | Sep. 30, 2020 | Dec. 31, 2019 |
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | $ 3,636,059 | $ 3,686,444 |
Less accumulated depreciation | (332,057) | (271,044) |
Rental property subject to non-cancelable operating leases, net | 3,304,002 | 3,415,400 |
Land | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 542,487 | 548,911 |
Land Improvements | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 274,786 | 275,470 |
Buildings and Improvements | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | 2,806,916 | 2,850,571 |
Equipment | ||
Property Subject To Or Available For Operating Lease [Line Items] | ||
Rental property subject to non-cancelable operating leases, gross | $ 11,870 | $ 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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Depreciation | $ 23,317 | $ 21,843 | $ 70,392 | $ 60,128 |
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 | Sep. 30, 2020USD ($) |
Lessor Operating Lease Payments Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 71,570 |
2021 | 289,057 |
2022 | 291,801 |
2023 | 294,743 |
2024 | 290,463 |
Thereafter | 2,230,494 |
Estimated lease payments to be received under non-cancelable operating leases | $ 3,468,128 |
Investment in Rental Property_7
Investment in Rental Property and Lease Arrangements - Net Investment in Direct Financing Leases (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Undiscounted estimated lease payments to be received | $ 48,713 | $ 72,753 |
Estimated unguaranteed residual values | 16,049 | 20,358 |
Unearned income | (33,679) | (51,221) |
Reserve for credit losses | (181) | 0 |
Net investment in direct financing leases | $ 30,902 | $ 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 | Sep. 30, 2020USD ($) |
Capital Leases Future Minimum Payments Receivable [Abstract] | |
Remainder of 2020 | $ 811 |
2021 | 3,304 |
2022 | 3,368 |
2023 | 3,433 |
2024 | 3,493 |
Thereafter | 34,304 |
Undiscounted estimated lease payments to be received under non-cancelable direct financing leases | $ 48,713 |
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 Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Contractual rental amounts billed for operating leases | $ 69,270 | $ 65,579 | $ 209,440 | $ 184,292 |
Adjustment to recognize contractual operating lease billings on a straight-line basis | 6,768 | 5,575 | 16,709 | 16,015 |
Variable rental amounts earned | 234 | 308 | ||
Earned income from direct financing leases | 757 | 1,005 | 2,599 | 3,014 |
Operating expenses billed to tenants | 3,389 | 3,811 | 11,456 | 10,572 |
Other income from real estate transactions | 64 | 431 | 795 | 431 |
Adjustment to revenue recognized for uncollectible rental amounts billed | 262 | (1,961) | (440) | |
Total Lease revenues, net | $ 80,744 | $ 76,401 | $ 239,346 | $ 213,884 |
Intangible Assets and Liabili_3
Intangible Assets and Liabilities - Schedule of Intangible Assets and Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Lease intangibles: | ||
Intangible lease assets, net | $ 288,971 | $ 331,894 |
Acquired below-market leases | 107,625 | 113,862 |
Less accumulated amortization | (26,405) | (21,640) |
Intangible lease liabilities, net | 81,220 | 92,222 |
Leasing fees | 15,655 | 17,013 |
Less accumulated amortization | (4,640) | (4,166) |
Leasing fees, net | 11,015 | 12,847 |
Acquired Above-Market Leases | ||
Lease intangibles: | ||
Intangible lease assets, gross | 53,563 | 62,136 |
Less accumulated amortization | (18,397) | (17,433) |
Intangible lease assets, net | 35,166 | 44,703 |
Acquired In-Place Leases | ||
Lease intangibles: | ||
Intangible lease assets, gross | 333,305 | 349,645 |
Less accumulated amortization | (79,500) | (62,454) |
Intangible lease assets, net | $ 253,805 | $ 287,191 |
Intangible Assets and Liabili_4
Intangible Assets and Liabilities - Schedule of Amortization of Intangible Lease Assets and Liabilities (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite Lived Intangible Assets [Line Items] | ||||
Acquired in-place leases and leasing fees | $ 2,459 | $ 0 | $ 14,517 | $ 0 |
Acquired In-Place Leases | Depreciation and Amortization | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Acquired in-place leases and leasing fees | 8,026 | 6,549 | 32,060 | 17,861 |
Above and Below Market Leases | Lease Revenues, Net | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Acquired in-place leases and leasing fees | $ (149) | $ 875 | $ (25) | $ 2,335 |
Intangible Assets and Liabili_5
Intangible Assets and Liabilities - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 2,459 | $ 0 | $ 14,517 | $ 0 |
Intangible Assets and Liabili_6
Intangible Assets and Liabilities - Schedule of Amortizable Intangible Assets (Detail) $ in Thousands | Sep. 30, 2020USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Remainder of 2020 | $ 5,700 |
2021 | 22,494 |
2022 | 21,952 |
2023 | 21,626 |
2024 | 20,859 |
Thereafter | 126,135 |
Total | $ 218,766 |
Unsecured Credit Agreements - S
Unsecured Credit Agreements - Summary of Unsecured Credit Agreements (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 1,549,076 | $ 1,989,451 |
Long-term Debt | $ 1,549,076 | |
2020 Unsecured Term Loan | ||
Debt Instrument [Line Items] | ||
Maturity Date | 2020-08 | |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 1,440,000 | 1,877,300 |
Debt issuance costs, net | (6,505) | (7,919) |
Long-term Debt | $ 1,433,495 | 1,869,381 |
Unsecured Debt | Revolving Credit Facilities | ||
Debt Instrument [Line Items] | ||
Interest Rate | one-month LIBOR + 1.20% | |
Carrying amount of debt | 197,300 | |
Unsecured Debt | Revolving Credit Facilities | 1 Month LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.20% | |
Unsecured Debt | Senior Guaranteed Notes Series A | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate | 4.84% | |
Maturity Date | 2027-04 | |
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 | 2028-07 | |
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 | 2030-07 | |
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 | 2021-02 | |
Carrying amount of debt | 300,000 | |
Unsecured Debt | 2020 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 | 2022-02 | |
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 | 2023 Unsecured Term Loan | ||
Debt Instrument [Line Items] | ||
Interest Rate | one-month LIBOR + 1.35% | |
Maturity Date | 2023-01 | |
Carrying amount of debt | $ 265,000 | 265,000 |
Unsecured Debt | 2023 Unsecured Term Loan | 1 Month LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.35% | |
Unsecured Debt | 2024 Unsecured Term Loan | ||
Debt Instrument [Line Items] | ||
Interest Rate | one-month LIBOR + 1.25% | |
Maturity Date | 2024-06 | |
Carrying amount of debt | $ 190,000 | 190,000 |
Unsecured Debt | 2024 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 | 2026-02 | |
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) - USD ($) $ in Thousands | Sep. 21, 2020 | Sep. 04, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Unsecured revolving credit facility | $ 0 | $ 197,300 | ||
2020 Unsecured Term Loan | ||||
Debt Instrument [Line Items] | ||||
Maturity date | 2020-08 | |||
Debt instrument extension options, description | two six-month extensions | |||
Maturity extension fee on outstanding principal balance percentage | 0.05% | |||
Debt instrument maturity date extension | Feb. 2, 2021 | |||
Unsecured Debt | 2020 Unsecured Term Loan | ||||
Debt Instrument [Line Items] | ||||
Maturity date | 2021-02 | |||
Unsecured Debt | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument extension options, description | twice for six months per extension | |||
Maturity extension fee on outstanding principal balance percentage | 0.0625% | |||
Unsecured Debt | Revolving Credit Facility | Revolving Credit Facility Maturing September 2023 | ||||
Debt Instrument [Line Items] | ||||
Unsecured revolving credit facility | $ 900,000 | $ 900,000 | ||
Maturity date | 2023-09 | |||
Unsecured Debt | Revolving Credit Facility | Revolving Credit Facility Maturing January 2022 | ||||
Debt Instrument [Line Items] | ||||
Unsecured revolving credit facility | $ 600,000 | $ 600,000 | ||
Maturity date | 2022-01 | |||
Unsecured Debt | 1 Month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.15% | 1.76% |
Unsecured Credit Agreements - A
Unsecured Credit Agreements - Additional Information (Detail) - USD ($) | Sep. 30, 2020 | Sep. 04, 2020 | Feb. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 21, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||||||||
Unsecured revolving credit facility | $ 0 | $ 0 | $ 0 | $ 197,300,000 | |||||
Debt instrument, face amount | $ 60,000,000 | ||||||||
Cost of debt extinguishment | (392,000) | $ (455,000) | (414,000) | $ (1,176,000) | |||||
Other Nonoperating Income (Expense) | |||||||||
Debt Instrument [Line Items] | |||||||||
Unamortized debt issuance costs | 6,000 | 6,000 | |||||||
Cost of debt extinguishment | $ 392,000 | 113,000 | $ 392,000 | 328,000 | |||||
Interest Rate Swap | |||||||||
Debt Instrument [Line Items] | |||||||||
Weighted average interest rate on all outstanding borrowings | 2.80% | 2.80% | 2.80% | ||||||
2022 Unsecured Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity date | Feb. 28, 2022 | ||||||||
Debt instrument, face amount | $ 60,000,000 | ||||||||
2020 Unsecured Term Loan and 2026 Unsecured Term Loan and Prior Unsecured Revolving Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs incurred | 1,281,000 | 6,510,000 | |||||||
New Debt Agreements | |||||||||
Debt Instrument [Line Items] | |||||||||
Unamortized debt issuance costs | $ 5,918,000 | $ 1,275,000 | $ 5,918,000 | $ 6,504,000 | |||||
LIBOR | 2022 Unsecured Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.25% | ||||||||
LIBOR | Minimum [Member] | 2022 Unsecured Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.85% | ||||||||
LIBOR | Maximum | 2022 Unsecured Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.65% | ||||||||
Unsecured Debt | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity date | Sep. 21, 2023 | ||||||||
Debt instrument extension options, description | twice for six months per extension | ||||||||
Maturity extension fee on outstanding principal balance percentage | 0.0625% | ||||||||
Unsecured revolving credit facility, maximum aggregate size | $ 2,000,000,000 | ||||||||
Commitment fee percentage | 0.25% | ||||||||
Debt issuance costs incurred | $ 5,918,000 | $ 5,918,000 | |||||||
Unsecured Debt | Revolving Credit Facility | Revolving Credit Facility Maturing September 2023 | |||||||||
Debt Instrument [Line Items] | |||||||||
Unsecured revolving credit facility | 900,000,000 | $ 900,000,000 | |||||||
Unsecured Debt | Revolving Credit Facility | Revolving Credit Facility Maturing January 2022 | |||||||||
Debt Instrument [Line Items] | |||||||||
Unsecured revolving credit facility | $ 600,000,000 | $ 600,000,000 | |||||||
Unsecured Debt | Revolving Credit Facility | Minimum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.125% | ||||||||
Unsecured Debt | Revolving Credit Facility | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.30% | ||||||||
Unsecured Debt | Revolving Credit Facility | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.20% | ||||||||
Unsecured Debt | Revolving Credit Facility | LIBOR | Minimum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.825% | ||||||||
Unsecured Debt | Revolving Credit Facility | LIBOR | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.55% |
Unsecured Credit Agreements -_3
Unsecured Credit Agreements - Summary of Debt Issuance Cost Amortization (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Disclosure [Abstract] | ||||
Debt issuance costs amortization | $ 819 | $ 611 | $ 2,528 | $ 1,761 |
Mortgages and Notes Payable - S
Mortgages and Notes Payable - Summary of Mortgages and Notes Payable (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Mortgages and notes payable | $ 1,549,076 | $ 1,989,451 |
Mortgages and notes payable, net | 108,752 | 111,793 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Mortgages and notes payable | 109,076 | 112,151 |
Debt issuance costs, net | $ (324) | (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 | $ 48,234 | 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 | $ 20,042 | 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 | $ 17,597 | 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 | $ 10,575 | 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 | $ 7,230 | 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 | $ 4,807 | 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 | $ 591 | 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) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Instrument [Line Items] | |
Term of note | 119 months |
Mortgages and Notes Payable - A
Mortgages and Notes Payable - Additional Information (Detail) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
Investment in rental property pledged as collateral | $ 174,623 |
Mortgages and Notes Payable -_3
Mortgages and Notes Payable - Summary of Extinguished Mortgages (Detail) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Secured Debt | |||
Debt Instrument [Line Items] | |||
Cost of mortgage extinguishment | $ 336 | $ 22 | $ 842 |
Mortgages and Notes Payable -_5
Mortgages and Notes Payable - Schedule of Estimated Future Principal Payments (Detail) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 818 |
2021 | 18,006 |
2022 | 62,907 |
2023 | 273,173 |
2024 | 192,260 |
Thereafter | 1,001,912 |
Long-term Debt | $ 1,549,076 |
Interest Rate Swaps - Summary o
Interest Rate Swaps - Summary of Interest-rate Swap Agreements (Detail) - Interest Rate Swap - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Fair Value | $ (81,326,000) | $ (21,560,000) |
Bank of America | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2023-11 | |
Derivative, Fixed rate | 2.80% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,029,000) | (1,136,000) |
Bank of Montreal One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2024-07 | |
Derivative, Fixed rate | 1.16% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 40,000,000 | |
Fair Value | $ (1,542,000) | 740,000 |
Bank of Montreal Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2025-01 | |
Derivative, Fixed rate | 1.91% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,889,000) | (402,000) |
Bank of Montreal Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2025-07 | |
Derivative, Fixed rate | 2.32% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,565,000) | (970,000) |
Bank of Montreal Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-01 | |
Derivative, Fixed rate | 1.92% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,255,000) | (448,000) |
Bank of Montreal Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-01 | |
Derivative, Fixed rate | 2.05% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 40,000,000 | |
Fair Value | $ (3,880,000) | (1,014,000) |
Bank of Montreal Six | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-12 | |
Derivative, Fixed rate | 2.33% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 10,000,000 | |
Fair Value | $ (1,281,000) | (460,000) |
Bank of Montreal Seven | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-12 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,664,000) | (577,000) |
Bank of Montreal Eight | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2027-12 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,629,000) | (1,306,000) |
Bank of Montreal Nine | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2029-05 | |
Derivative, Fixed rate | 2.09% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,486,000) | (799,000) |
Capital One, National Association One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2021-12 | |
Derivative, Fixed rate | 1.05% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (174,000) | 143,000 |
Capital One, National Association Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2024-12 | |
Derivative, Fixed rate | 1.58% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (885,000) | 10,000 |
Capital One, National Association Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-01 | |
Derivative, Fixed rate | 2.08% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (3,398,000) | (911,000) |
Capital One, National Association Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-04 | |
Derivative, Fixed rate | 2.68% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (2,014,000) | (944,000) |
Capital One, National Association Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-07 | |
Derivative, Fixed rate | 1.32% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (2,101,000) | 720,000 |
Capital One, National Association Six | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2027-12 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,601,000) | (1,278,000) |
M&T Bank | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2021-08 | |
Derivative, Fixed rate | 1.02% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 4,805,000 | 4,912,000 |
Fair Value | $ (35,000) | 41,000 |
M&T Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2022-09 | |
Derivative, Fixed rate | 2.83% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,315,000) | (862,000) |
M&T Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2023-11 | |
Derivative, Fixed rate | 2.65% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,964,000) | (1,038,000) |
Regions Bank | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2020-05 | |
Derivative, Fixed rate | 2.12% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 50,000,000 | |
Fair Value | (104,000) | |
Regions Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2023-12 | |
Derivative, Fixed rate | 1.18% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (854,000) | 376,000 |
Regions Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2029-05 | |
Derivative, Fixed rate | 2.11% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,515,000) | (827,000) |
Regions Bank Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2029-06 | |
Derivative, Fixed rate | 2.03% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,349,000) | (651,000) |
Truist Financial Corporation One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2024-04 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,632,000) | (451,000) |
Truist Financial Corporation Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2025-04 | |
Derivative, Fixed rate | 2.20% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,278,000) | (781,000) |
Truist Financial Corporation Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2025-07 | |
Derivative, Fixed rate | 1.99% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,131,000) | (524,000) |
Truist Financial Corporation Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2025-12 | |
Derivative, Fixed rate | 2.30% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,715,000) | (993,000) |
Truist Financial Corporation Five | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2026-01 | |
Derivative, Fixed rate | 1.93% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (2,230,000) | (458,000) |
U.S. Bank National Association | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2029-06 | |
Derivative, Fixed rate | 2.03% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,393,000) | (681,000) |
U S Bank National Association One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2029-08 | |
Derivative, Fixed rate | 1.35% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (1,902,000) | 881,000 |
Wells Fargo Bank One | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2021-02 | |
Derivative, Fixed rate | 2.39% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 35,000,000 | |
Fair Value | $ (269,000) | (302,000) |
Wells Fargo Bank Two | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2024-10 | |
Derivative, Fixed rate | 2.72% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 15,000,000 | |
Fair Value | $ (1,550,000) | (795,000) |
Wells Fargo Bank Three | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2027-04 | |
Derivative, Fixed rate | 2.72% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 25,000,000 | |
Fair Value | $ (3,924,000) | (1,845,000) |
Wells Fargo Bank Four | ||
Derivative [Line Items] | ||
Derivative, Maturity date | 2028-01 | |
Derivative, Fixed rate | 2.37% | |
Variable Rate Index | one-month LIBOR | |
Notional Amount | $ 75,000,000 | |
Fair Value | $ (10,877,000) | $ (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 ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Notional Amount | $ 4,805,000 | $ 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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative [Line Items] | ||||
Total Interest Expense Presented in the Consolidated Statements of Income and Comprehensive Income (Loss) | $ 18,511 | $ 18,465 | $ 59,015 | $ 51,025 |
Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss | $ 4,352 | $ (16,380) | $ (59,766) | $ (52,182) |
Reclassification from Accumulated Other Comprehensive Loss, Location | Interest expense | Interest expense | Interest expense | Interest expense |
Reclassification from Accumulated Other Comprehensive Loss, Amount of (Loss) Gain | $ (4,166) | $ 387 | $ (8,467) | $ 2,001 |
Total Interest Expense Presented in the Consolidated Statements of Income and Comprehensive Income (Loss) | $ 18,511 | $ 18,465 | $ 59,015 | $ 51,025 |
Interest Rate Swaps - Additiona
Interest Rate Swaps - Additional Information (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Derivative Instrument Detail [Abstract] | |
Interest rate swaps expected to be reclassified - (loss) | $ (16,073) |
Credit Risk Concentrations - Ad
Credit Risk Concentrations - Additional Information (Detail) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||||
Number of tenants or common franchises | 0 | 0 | 0 | 0 | |
Operating Expenses | Management Contracts Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentrations risk percentage | 0.00% | 17.00% | 2.00% | 18.00% | |
Mortgages and Notes Payable | Credit Availability Concentration Risk | Financial Institution One | |||||
Concentration Risk [Line Items] | |||||
Concentrations risk percentage | 63.00% | 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) - USD ($) $ / shares in Units, $ in Thousands | Sep. 21, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Equity [Line Items] | ||||||||||
Issuance of shares of common stock, shares | 341,000 | 11,000 | 293,000 | 7,360,000 | 3,567,000 | 3,532,000 | ||||
Other public offering expenses | $ 1,656 | |||||||||
Redemption of shares of common stock, shares | 353,000 | 0 | 588,000 | |||||||
Common stock, shares issued | 107,773,000 | 107,773,000 | 104,006,000 | |||||||
Distribution Reinvestment Plan | ||||||||||
Equity [Line Items] | ||||||||||
Issuance of shares of common stock, shares | 275,000 | 2,199,000 | ||||||||
Common stock, shares issued | 12,301,000 | 12,301,000 | 12,019,000 | |||||||
IPO | ||||||||||
Equity [Line Items] | ||||||||||
Issuance of shares of common stock, shares | 33,500,000 | |||||||||
Offering price | $ 17 | |||||||||
Underwriters option exercisable period | 30 days | |||||||||
Maximum additional shares granted to underwriters | 5,025,000 | |||||||||
Underwriting discounts and commissions | $ 34,170 | |||||||||
Other public offering expenses | 3,010 | |||||||||
Net proceeds from issuance initial public offering | 532,320 | |||||||||
IPO | 2020 Unsecured Term Loan | ||||||||||
Equity [Line Items] | ||||||||||
Repayment of term loan | 240,225 | |||||||||
IPO | Revolving Credit Facility | ||||||||||
Equity [Line Items] | ||||||||||
Repayments of lines of credit | 216,488 | |||||||||
IPO | Accounts Payable and Other Liabilities | ||||||||||
Equity [Line Items] | ||||||||||
Other public offering expenses | $ 1,656 |
Equity - Summary of Redemptions
Equity - Summary of Redemptions under Company's Share Redemption Program (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019USD ($)Stockholdershares | Sep. 30, 2020shares | Sep. 30, 2019USD ($)Stockholdershares | |
Equity [Abstract] | |||
Number of redemptions requested | Stockholder | 20 | 49 | |
Number of shares | shares | 353,000 | 0 | 588,000 |
Aggregate redemption price | $ | $ 7,361 | $ 12,374 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - $ / shares | Aug. 04, 2020 | Sep. 30, 2020 |
Restricted Stock | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of shares of restricted stock awarded | 341,000 | |
Weighted average grant date fair value per share | $ 20.50 | |
Determined Share Value | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Weighted average grant date fair value per share | $ 20.50 | |
2020 Equity Incentive Plan | Restricted Stock | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of shares of restricted stock awarded | 341,000 | |
Number of shares of restricted stock vested | 0 | |
2020 Equity Incentive Plan | Tranche One | Restricted Stock | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
2020 Equity Incentive Plan | Tranche Two | Restricted Stock | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Award vesting period | 4 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock Awards (Detail) - Restricted Stock - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Compensation cost | $ 796 | $ 796 |
Dividends declared on unvested restricted stock | $ 46 | $ 46 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Information About the Company's Restricted Stock Awards (Detail) - Restricted Stock $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unamortized value of restricted stock awards | $ 6,194 |
Weighted average amortization period (in years) | 3 years |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Restricted Stock Activity (Detail) - Restricted Stock shares in Thousands | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Granted | shares | 341 |
Number of Shares, Unvested at end of period | shares | 341 |
Weighted Average Grant Date Fair Value per Share, Granted | $ / shares | $ 20.50 |
Weighted Average Grant Date Fair Value per Share, Unvested at end of period | $ / shares | $ 20.50 |
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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic earnings: | ||||
Net earnings attributable to Broadstone Net Lease, Inc. common shareholders | $ 8,750 | $ 23,388 | $ 34,919 | $ 53,460 |
Less: earnings allocated to unvested restricted shares | (46) | (46) | ||
Net earnings used to compute basic earnings per common share | 8,704 | 23,388 | 34,873 | 53,460 |
Diluted earnings: | ||||
Net earnings used to compute basic earnings per common share | 8,704 | 23,388 | 34,873 | 53,460 |
Net earnings attributable to non-controlling interests | 961 | 1,650 | 3,738 | 3,942 |
Net earnings used to compute diluted earnings per common share | $ 9,665 | $ 25,038 | $ 38,611 | $ 57,402 |
Weighted average number of common shares outstanding: | 111,371 | 98,568 | 108,300 | 93,575 |
Less: weighted average unvested restricted shares | (216) | (72) | ||
Weighted average number of common shares outstanding used in basic earnings per common share | 111,155 | 98,568 | 108,228 | 93,575 |
Effects of convertible membership units | 12,226 | 6,948 | 11,519 | 6,948 |
Weighted average number of common shares outstanding used in diluted earnings per common share | 123,381 | 105,516 | 119,747 | 100,523 |
Basic earnings per share | $ 0.08 | $ 0.24 | $ 0.32 | $ 0.57 |
Diluted earnings per share | $ 0.08 | $ 0.24 | $ 0.32 | $ 0.57 |
Earnings per Share - Summary _2
Earnings per Share - Summary of Components used in Calculation of Basic and Diluted Earnings per Share (Parenthetical) (Detail) - shares | Sep. 30, 2020 | Sep. 30, 2019 |
Earnings Per Share [Abstract] | ||
Unvested restricted shares of common stock | 341,000 | |
Weighted average effects of OP Units outstanding | 12,226,000 | 6,948,000 |
Supplemental Cash Flow Disclo_2
Supplemental Cash Flow Disclosures - Additional Information (Detail) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2020USD ($)shares | Jun. 30, 2020USD ($)shares | Mar. 31, 2020USD ($)shares | Sep. 30, 2019USD ($)shares | Jun. 30, 2019shares | Mar. 31, 2019shares | Sep. 30, 2020USD ($)Propertyshares | Sep. 30, 2019USD ($)shares | Feb. 07, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Supplemental Cash Flow Elements [Line Items] | ||||||||||||
Cash paid for interest | $ 50,853 | $ 49,828 | ||||||||||
Cash paid for income taxes | 1,385 | 809 | ||||||||||
Issuance of shares of common stock, shares | shares | 341 | 11 | 293 | 7,360 | 3,567 | 3,532 | ||||||
Fair value of earnout consideration | $ 13,177 | $ 37,975 | 13,177 | $ 40,119 | $ 0 | |||||||
Debt | 90,484 | 90,484 | $ 90,484 | |||||||||
Adjustments to additional paid in capital mezzanine equity non-controlling interests | 97 | $ 2,416 | 2,513 | |||||||||
Reclassification of mezzanine equity non-controlling interests | 112,698 | |||||||||||
Reclassification of mezzanine equity common stock | 66,376 | |||||||||||
Reclassification of carrying value of earnout liability | 18,436 | |||||||||||
Unpaid expenses associated with IPO | 1,656 | |||||||||||
Dividend declared and accrued but not yet paid | 20,722 | $ 11,932 | 20,722 | 11,932 | ||||||||
Carrying amount of asset recognized | $ 9,055 | |||||||||||
Number of properties placed under lease modifications | Property | 4 | |||||||||||
Tenant improvement allowances | $ 2,517 | $ 2,517 | ||||||||||
Provision for credit losses | $ 323 | |||||||||||
Lease liabilities | 2,787 | $ 2,787 | ||||||||||
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 | |||||||||||
Additional Paid-in Capital | ||||||||||||
Supplemental Cash Flow Elements [Line Items] | ||||||||||||
Adjustments to additional paid in capital mezzanine equity non-controlling interests | $ 97 | $ 2,416 | ||||||||||
Reclassification of mezzanine equity common stock | 66,375 | |||||||||||
Reclassification of carrying value of earnout liability | 6,809 | |||||||||||
Common Stock | ||||||||||||
Supplemental Cash Flow Elements [Line Items] | ||||||||||||
Reclassification of mezzanine equity common stock | 1 | |||||||||||
Non-controlling Interests | ||||||||||||
Supplemental Cash Flow Elements [Line Items] | ||||||||||||
Reclassification of carrying value of earnout liability | 11,627 | |||||||||||
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 | $ 40,119 | ||||||||||
Distribution Reinvestment Plan | ||||||||||||
Supplemental Cash Flow Elements [Line Items] | ||||||||||||
Issuance of shares of common stock, shares | shares | 275 | 2,199 | ||||||||||
Common stock issued | $ 5,733 | $ 46,084 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Tenant Improvement Allowances Included in Accounts Payable and Other Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Loss Contingencies [Line Items] | |||
Tenant improvement allowances | $ 2,517 | ||
Accounts Payable And Other Liabilities | |||
Loss Contingencies [Line Items] | |||
Tenant improvement allowances | $ 1,981 | $ 2,706 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Loss Contingencies [Line Items] | |
Potential liability due to taxable sales of applicable properties | $ 22,300 |
Minimum [Member] | Office Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases, expiration year | 2021 |
Minimum [Member] | Ground Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases term | 2034 |
Maximum | Office Lease | |
Loss Contingencies [Line Items] | |
Non-cancellable operating leases, expiration year | 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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Variable lease costs | ||||
Total lease costs | $ 201 | $ 46 | $ 505 | $ 139 |
General and Administrative | Office Lease | ||||
Operating lease costs | ||||
Operating lease costs | 155 | 362 | ||
Property and Operating Expense | Ground Lease | ||||
Operating lease costs | ||||
Operating lease costs | 33 | 35 | 100 | 105 |
Variable lease costs | ||||
Variable lease costs | $ 13 | $ 11 | $ 43 | $ 34 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Payments Associated with Obligations Under Operating Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flow Operating Activities Lessee [Abstract] | ||||
Operating lease payments | $ 179 | $ 27 | $ 490 | $ 127 |
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 | Sep. 30, 2020USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Remainder of 2020 | $ 176 |
2021 | 711 |
2022 | 686 |
2023 | 505 |
2024 | 120 |
Thereafter | 2,411 |
Total undiscounted cash flows | 4,609 |
Less imputed interest | (1,822) |
Lease liabilities | $ 2,787 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ / shares in Units, $ in Thousands | Nov. 05, 2020USD ($)Property$ / shares | Oct. 20, 2020USD ($)$ / sharesshares | Oct. 15, 2020USD ($) | Oct. 01, 2020USD ($) | Sep. 21, 2020$ / sharesshares | Sep. 30, 2020USD ($)shares | Jun. 30, 2020shares | Mar. 31, 2020shares | Sep. 30, 2019USD ($)shares | Jun. 30, 2019shares | Mar. 31, 2019shares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) |
Subsequent Event [Line Items] | |||||||||||||
Issuance of shares of common stock, shares | shares | 341,000 | 11,000 | 293,000 | 7,360,000 | 3,567,000 | 3,532,000 | |||||||
Aggregate carrying value | $ 8,327 | $ 43,920 | $ 45,085 | $ 73,365 | |||||||||
Aggregate sale price | 9,816 | 59,691 | 57,539 | 94,791 | |||||||||
Gain on sale of real estate | 1,060 | 12,585 | 9,725 | 16,772 | |||||||||
Real Estate | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Additional sales expenses | 429 | 3,186 | 2,729 | 4,654 | |||||||||
Gain on sale of real estate | $ 1,060 | $ 12,585 | 9,725 | $ 16,772 | |||||||||
IPO | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Offering price | $ / shares | $ 17 | ||||||||||||
Issuance of shares of common stock, shares | shares | 33,500,000 | ||||||||||||
Additional proceeds from underwriters upon exercise of option | $ 532,320 | ||||||||||||
Class A Common Stock | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Issuance of shares of common stock, shares | shares | 33,500,000 | ||||||||||||
Subsequent Event | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Distribution paid | $ 20,722 | ||||||||||||
Quarterly distribution per share | $ / shares | $ 0.25 | ||||||||||||
Quarterly distribution declared date | Nov. 5, 2020 | ||||||||||||
Quarterly distribution payable date | Jan. 15, 2021 | ||||||||||||
Quarterly distribution date of record | Dec. 31, 2020 | ||||||||||||
Number of properties sold | Property | 2 | ||||||||||||
Aggregate carrying value | $ 5,019 | ||||||||||||
Aggregate sale price | 8,615 | ||||||||||||
Payment on notes payable | $ 591 | ||||||||||||
Subsequent Event | Real Estate | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Additional sales expenses | 402 | ||||||||||||
Gain on sale of real estate | $ 3,194 | ||||||||||||
Subsequent Event | IPO | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Additional proceeds from underwriters upon exercise of option | $ 55,930 | ||||||||||||
Subsequent Event | Class A Common Stock | IPO | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Offering price | $ / shares | $ 17 | ||||||||||||
Issuance of shares of common stock, shares | shares | 3,500,000 | ||||||||||||
Subsequent Event | Class A Common Stock | IPO | Maximum | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Shares purchased by underwriters | shares | 5,025,000 |
COVID-19 Pandemic - Additional
COVID-19 Pandemic - Additional Information (Detail) - COVID-19 Pandemic - Tenant | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | |
Unusual Or Infrequent Item [Line Items] | |||
Number of tenants received rent relief | 15 | ||
Number of tenants granted relief as partial deferral | 1 | ||
Period of partial abatement of rent | 9 months | ||
Lease term extension on partial abatement of rent | 3 years | ||
Partial rent deferrals percentage of rent revenues | 0.60% | ||
Abatement rent percentage of rent revenues | 1.40% | ||
Weighted average deferral period | 3 months 12 days | ||
Weighted average payback period | 5 months 18 days | ||
Weighted average remaining payback period for deferrals | 4 months 6 days | ||
Deferred rent percentage collected that was required to be repaid | 100.00% | ||
Minimum [Member] | |||
Unusual Or Infrequent Item [Line Items] | |||
Partial rent deferral period | 2 months | ||
Repayment period | 3 months | ||
Maximum | |||
Unusual Or Infrequent Item [Line Items] | |||
Partial rent deferral period | 6 months | ||
Repayment period | 1 year |