Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 24, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39443 | |
Entity Registrant Name | NETSTREIT Corp. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 84-3356606 | |
Entity Address, Address Line One | 2021 McKinney Avenue | |
Entity Address, Address Line Two | Suite 1150 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75201 | |
City Area Code | 972 | |
Local Phone Number | 200-7100 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | NTST | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 66,993,020 | |
Entity Central Index Key | 0001798100 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Real estate, at cost: | ||
Land | $ 424,821 | $ 401,146 |
Buildings and improvements | 1,005,884 | 907,084 |
Total real estate, at cost | 1,430,705 | 1,308,230 |
Less accumulated depreciation | (80,527) | (62,526) |
Property under development | 24,192 | 16,796 |
Real estate held for investment, net | 1,374,370 | 1,262,500 |
Assets held for sale | 37,915 | 23,208 |
Mortgage loans receivables, net | 107,758 | 46,378 |
Cash, cash equivalents and restricted cash | 13,140 | 70,543 |
Lease intangible assets, net | 158,067 | 151,006 |
Other assets, net | 56,508 | 52,057 |
Total assets | 1,747,758 | 1,605,692 |
Liabilities: | ||
Term loans, net | 372,686 | 373,296 |
Revolving credit facility | 106,000 | 113,000 |
Mortgage note payable, net | 7,896 | 7,896 |
Lease intangible liabilities, net | 27,434 | 30,131 |
Liabilities related to assets held for sale | 83 | 406 |
Accounts payable, accrued expenses and other liabilities | 29,064 | 22,540 |
Total liabilities | 543,163 | 547,269 |
Commitments and contingencies | ||
Stockholders’ equity | ||
Common stock, $0.01 par value, 400,000,000 shares authorized; 66,991,597 and 58,031,879 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 670 | 580 |
Additional paid-in capital | 1,260,879 | 1,091,514 |
Distributions in excess of retained earnings | (90,329) | (66,937) |
Accumulated other comprehensive income | 24,082 | 23,673 |
Total stockholders’ equity | 1,195,302 | 1,048,830 |
Noncontrolling interests | 9,293 | 9,593 |
Total equity | 1,204,595 | 1,058,423 |
Total liabilities and equity | $ 1,747,758 | $ 1,605,692 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 66,991,597 | 58,031,879 |
Common stock, shares outstanding | 66,991,597 | 58,031,879 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues | ||||
Rental revenue (including reimbursable) | $ 29,707 | $ 22,048 | $ 58,180 | $ 42,970 |
Interest income on loans receivable | 1,923 | 586 | 2,901 | 997 |
Total revenues | 31,630 | 22,634 | 61,081 | 43,967 |
Operating expenses | ||||
Property | 3,530 | 2,685 | 7,467 | 5,617 |
General and administrative | 5,260 | 4,865 | 10,168 | 9,057 |
Depreciation and amortization | 15,847 | 11,751 | 30,795 | 22,730 |
Provisions for impairment | 2,836 | 1,114 | 2,836 | 1,114 |
Transaction costs | 15 | 488 | 124 | 653 |
Total operating expenses | 27,488 | 20,903 | 51,390 | 39,171 |
Other income (expense) | ||||
Interest expense, net | (5,521) | (1,522) | (9,465) | (2,691) |
Gain on sales of real estate, net | 615 | 1,858 | 296 | 2,019 |
Loss on debt extinguishment | (128) | 0 | (128) | 0 |
Other income | 68 | 36 | 220 | 36 |
Total other (expense) income, net | (4,966) | 372 | (9,077) | (636) |
Net (loss) income before income taxes | (824) | 2,103 | 614 | 4,160 |
Income tax benefit (expense) | 32 | (93) | 75 | (184) |
Net (loss) income | (792) | 2,010 | 689 | 3,976 |
Net (loss) income attributable to noncontrolling interests | (1) | 23 | 8 | 47 |
Net (loss) income attributable to common stockholders | $ (791) | $ 1,987 | $ 681 | $ 3,929 |
Amounts available to common stockholders per common share: | ||||
Basic (in dollars per share) | $ (0.01) | $ 0.04 | $ 0.01 | $ 0.08 |
Diluted (in dollars per share) | $ (0.01) | $ 0.04 | $ 0.01 | $ 0.08 |
Weighted average common shares: | ||||
Basic (in shares) | 61,043,531 | 48,140,041 | 59,600,630 | 46,279,122 |
Diluted (in shares) | 61,043,531 | 48,951,833 | 60,294,734 | 47,277,468 |
Other comprehensive income: | ||||
Net (loss) income | $ (792) | $ 2,010 | $ 689 | $ 3,976 |
Change in value on derivatives, net | 6,388 | 1,338 | 409 | 7,549 |
Total comprehensive income | 5,596 | 3,348 | 1,098 | 11,525 |
Comprehensive income attributable to noncontrolling interests | 48 | 38 | 8 | 138 |
Comprehensive income attributable to common stockholders | $ 5,548 | $ 3,310 | $ 1,090 | $ 11,387 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | IPO | IPO - Shares From Existing Shareholders | Total Stockholders’ Equity | Total Stockholders’ Equity IPO | Total Stockholders’ Equity IPO - Shares From Existing Shareholders | Common stock | Common stock IPO | Common stock IPO - Shares From Existing Shareholders | Additional Paid-in Capital | Additional Paid-in Capital IPO | Additional Paid-in Capital IPO - Shares From Existing Shareholders | Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interests | Noncontrolling Interests IPO - Shares From Existing Shareholders |
Beginning balance (in shares) at Dec. 31, 2021 | 44,223,050 | |||||||||||||||
Beginning balance at Dec. 31, 2021 | $ 789,815 | $ 779,170 | $ 442 | $ 809,724 | $ (35,119) | $ 4,123 | $ 10,645 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of stock (in shares) | 3,604,736 | |||||||||||||||
Issuance of stock | 75,497 | 75,497 | $ 36 | 75,461 | ||||||||||||
OP Units converted to common stock (in shares) | 25,629 | |||||||||||||||
Issuance of common stock in public offerings, net of issuance costs | $ 0 | $ 484 | $ 484 | $ (484) | ||||||||||||
OP Units converted to common stock | (8,997) | (8,888) | (8,888) | (109) | ||||||||||||
Dividends and distributions declared on common stock and OP Units | (128) | (128) | (128) | |||||||||||||
Vesting of restricted stock units (in shares) | 85,224 | |||||||||||||||
Vesting of restricted stock units | 0 | $ 1 | (1) | |||||||||||||
Repurchase of common stock for tax withholding obligations (in shares) | (16,651) | |||||||||||||||
Repurchase of common stock for tax withholding obligations | (362) | (362) | (362) | |||||||||||||
Other comprehensive income | 6,211 | 6,135 | 6,135 | 76 | ||||||||||||
Net income (loss) | 1,966 | 1,942 | 1,942 | 24 | ||||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 47,921,988 | |||||||||||||||
Ending balance at Mar. 31, 2022 | 865,047 | 854,895 | $ 479 | 886,351 | (42,193) | 10,258 | 10,152 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Repurchase of common stock for tax withholding obligations | 1,045 | 1,045 | 1,045 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 44,223,050 | |||||||||||||||
Beginning balance at Dec. 31, 2021 | 789,815 | 779,170 | $ 442 | 809,724 | (35,119) | 4,123 | 10,645 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
OP Units converted to common stock (in shares) | 47,894 | |||||||||||||||
Net income (loss) | 3,976 | |||||||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 50,341,288 | |||||||||||||||
Ending balance at Jun. 30, 2022 | 909,852 | 900,184 | $ 503 | 938,043 | (49,943) | 11,581 | 9,668 | |||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 47,921,988 | |||||||||||||||
Beginning balance at Mar. 31, 2022 | 865,047 | 854,895 | $ 479 | 886,351 | (42,193) | 10,258 | 10,152 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of stock (in shares) | 2,397,035 | |||||||||||||||
Issuance of stock | $ 50,000 | $ 50,000 | $ 24 | $ 49,976 | ||||||||||||
OP Units converted to common stock (in shares) | 22,265 | |||||||||||||||
Issuance of common stock in public offerings, net of issuance costs | $ 0 | 418 | 418 | (418) | ||||||||||||
OP Units converted to common stock | (9,692) | (9,588) | (9,588) | (104) | ||||||||||||
Dividends and distributions declared on common stock and OP Units | (149) | (149) | (149) | |||||||||||||
Other comprehensive income | 1,338 | 1,323 | 1,323 | 15 | ||||||||||||
Net income (loss) | 2,010 | 1,987 | 1,987 | 23 | ||||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 50,341,288 | |||||||||||||||
Ending balance at Jun. 30, 2022 | 909,852 | 900,184 | $ 503 | 938,043 | (49,943) | 11,581 | 9,668 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Repurchase of common stock for tax withholding obligations | 1,298 | 1,298 | 1,298 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 58,031,879 | |||||||||||||||
Beginning balance at Dec. 31, 2022 | 1,058,423 | 1,048,830 | $ 580 | 1,091,514 | (66,937) | 23,673 | 9,593 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of stock (in shares) | 2,759,481 | |||||||||||||||
Issuance of stock | 52,903 | 52,903 | $ 28 | 52,875 | ||||||||||||
OP Units converted to common stock (in shares) | 5,694 | |||||||||||||||
Issuance of common stock in public offerings, net of issuance costs | $ 0 | $ 105 | $ 105 | $ (105) | ||||||||||||
OP Units converted to common stock | (11,751) | (11,650) | (11,650) | (101) | ||||||||||||
Dividends and distributions declared on common stock and OP Units | (122) | (122) | (122) | |||||||||||||
Vesting of restricted stock units (in shares) | 83,428 | |||||||||||||||
Vesting of restricted stock units | 0 | $ 1 | (1) | |||||||||||||
Repurchase of common stock for tax withholding obligations (in shares) | (18,016) | |||||||||||||||
Repurchase of common stock for tax withholding obligations | (360) | (360) | (360) | |||||||||||||
Other comprehensive income | (5,979) | (5,930) | (5,930) | (49) | ||||||||||||
Net income (loss) | 1,481 | 1,472 | 1,472 | 9 | ||||||||||||
Ending balance (in shares) at Mar. 31, 2023 | 60,862,466 | |||||||||||||||
Ending balance at Mar. 31, 2023 | 1,095,622 | 1,086,275 | $ 609 | 1,145,160 | (77,237) | 17,743 | 9,347 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Repurchase of common stock for tax withholding obligations | 1,027 | 1,027 | 1,027 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 58,031,879 | |||||||||||||||
Beginning balance at Dec. 31, 2022 | 1,058,423 | 1,048,830 | $ 580 | 1,091,514 | (66,937) | 23,673 | 9,593 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
OP Units converted to common stock (in shares) | 5,694 | |||||||||||||||
Net income (loss) | 689 | |||||||||||||||
Ending balance (in shares) at Jun. 30, 2023 | 66,991,597 | |||||||||||||||
Ending balance at Jun. 30, 2023 | 1,204,595 | 1,195,302 | $ 670 | 1,260,879 | (90,329) | 24,082 | 9,293 | |||||||||
Beginning balance (in shares) at Mar. 31, 2023 | 60,862,466 | |||||||||||||||
Beginning balance at Mar. 31, 2023 | 1,095,622 | 1,086,275 | $ 609 | 1,145,160 | (77,237) | 17,743 | 9,347 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of stock (in shares) | 6,128,135 | |||||||||||||||
Issuance of stock | $ 114,536 | $ 114,536 | $ 61 | $ 114,475 | ||||||||||||
OP Units converted to common stock (in shares) | 0 | |||||||||||||||
OP Units converted to common stock | (12,275) | (12,173) | (12,173) | (102) | ||||||||||||
Dividends and distributions declared on common stock and OP Units | (128) | (128) | (128) | |||||||||||||
Vesting of restricted stock units (in shares) | 1,416 | |||||||||||||||
Repurchase of common stock for tax withholding obligations (in shares) | (420) | |||||||||||||||
Repurchase of common stock for tax withholding obligations | (8) | (8) | (8) | |||||||||||||
Other comprehensive income | 6,388 | 6,339 | 6,339 | 49 | ||||||||||||
Net income (loss) | (792) | (791) | (791) | (1) | ||||||||||||
Ending balance (in shares) at Jun. 30, 2023 | 66,991,597 | |||||||||||||||
Ending balance at Jun. 30, 2023 | 1,204,595 | 1,195,302 | $ 670 | 1,260,879 | $ (90,329) | $ 24,082 | $ 9,293 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Repurchase of common stock for tax withholding obligations | $ 1,252 | $ 1,252 | $ 1,252 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities | ||
Net (loss) income | $ 689 | $ 3,976 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 30,795 | 22,730 |
Amortization of deferred financing costs | 615 | 314 |
Above/below market lease amortization, net | 57 | 0 |
Noncash revenue adjustments | (839) | (1,427) |
Stock-based compensation expense | 2,279 | 2,344 |
Gain on sales of real estate, net | (296) | (2,019) |
Provisions for impairment | 2,836 | 1,114 |
Loss on debt extinguishment | 128 | 0 |
Gain on involuntary conversion of building and improvements | (47) | 0 |
Changes in assets and liabilities, net of assets acquired and liabilities assumed: | ||
Other assets, net | (2,227) | (3,325) |
Accounts payable, accrued expenses and other liabilities | 1,628 | (1,057) |
Lease incentive payments | (1,223) | (400) |
Net cash provided by operating activities | 34,395 | 22,250 |
Cash flows from investing activities | ||
Acquisitions of real estate | (163,934) | (207,289) |
Real estate development and improvements | (19,426) | (8,016) |
Investment in mortgage loan receivables | (61,422) | (46,466) |
Earnest money deposits | (1,066) | (39,659) |
Purchase of computer equipment and other corporate assets | (23) | 0 |
Proceeds from sale of real estate | 19,299 | 12,177 |
Proceeds from the settlement of property-related insurance claims | 47 | 0 |
Net cash used in investing activities | (226,525) | (289,253) |
Cash flows from financing activities | ||
Issuance of common stock in public offerings, net | 167,439 | 125,497 |
Payment of common stock dividends | (23,823) | (18,476) |
Payment of OP unit distributions | (203) | (213) |
Payment of restricted stock dividends | (93) | (106) |
Principal payments on mortgages payable | (63) | 0 |
Proceeds under revolving credit facilities | 221,000 | 245,000 |
Repayments under revolving credit facilities | (228,000) | (72,000) |
Proceeds under property development incentives | 0 | 605 |
Repurchase of common stock for tax withholding obligations | (368) | (363) |
Deferred offering costs | (185) | (694) |
Deferred financing costs | (977) | 0 |
Net cash provided by financing activities | 134,727 | 279,250 |
Net change in cash, cash equivalents and restricted cash | (57,403) | 12,247 |
Cash, cash equivalents and restricted cash at beginning of the period | 70,543 | 7,603 |
Cash, cash equivalents and restricted cash at end of the period | 13,140 | 19,850 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest, net | 8,045 | 2,345 |
Cash paid for income taxes | 477 | 45 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Dividends declared and unpaid on restricted stock | 250 | 277 |
Deferred Offering Costs Incurred but Not yet Paid | 121 | 0 |
Cash flow hedge change in fair value | 409 | 7,549 |
Accrued capital expenditures and real estate development and improvement costs | 3,858 | 2,848 |
Accrued lease incentives | $ 0 | $ 500 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business NETSTREIT Corp. (the “Company”) was incorporated on October 11, 2019 as a Maryland corporation and commenced operations on December 23, 2019. The Company conducts its operations through NETSTREIT, L.P., a Delaware limited partnership (the “Operating Partnership”). NETSTREIT GP, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, is the sole general partner of the Operating Partnership. The Company elected to be treated and to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with its short taxable year ended December 31, 2019. Additionally, the Operating Partnership formed NETSTREIT Management TRS, LLC (“NETSTREIT TRS”), which together with the Company jointly elected to be treated as a taxable REIT subsidiary under Section 856(a) of the Internal Revenue Code of 1986, as amended, (the “Code”) for U.S. federal income tax purposes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation and the Company’s net (loss) income is reduced by the portion of net (loss) income attributable to noncontrolling interests. Interim Unaudited Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto on the Annual Report on Form 10-K as of and for the year ended December 31, 2022, which provide a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties, and other matters. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2023 and 2022 are not necessarily indicative of the results for the full year. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make 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 period. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the useful lives of real estate assets, lease accounting, real estate impairment assessments, and allocation of fair value of purchase consideration. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates. Impairment of Long-Lived Assets Fair value measurement of an asset group occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable. An example of an event or changed circumstance is a reduction in the expected holding period of a property. If indicators are present, the Company will prepare a projection of the undiscounted future cash flows of the property, excluding interest charges, and determine if the carrying amount of the asset group is recoverable. When a carrying amount is not recoverable, an impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair market value. The Company estimates fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, and with regard to assets held for sale, based on the estimated or negotiated selling price, less estimated costs of disposal. Based on these unobservable inputs, the Company determined that its valuations of impaired real estate and intangible assets fall within Level 3 of the fair value hierarchy under ASC Topic 820. The following table summarizes the provision for impairment during the periods indicated below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Total provision for impairment $ 2,836 $ 1,114 $ 2,836 $ 1,114 Number of properties: (1) Classified as held for sale 6 — 6 — Disposed within the period — 1 — 1 (1) Includes the number of properties that were impaired and classified as held for sale as of year-end or impaired and disposed of during the respective periods. Excludes properties that did not have impairment recorded during the year. Cash, Cash Equivalents and Restricted Cash The Company considers all cash balances, money market accounts and highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Restricted cash includes cash restricted for property tenant improvements and cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Code. Restricted cash is included in cash, cash equivalents, and restricted cash in the condensed consolidated balance sheets. The Company had $1.6 million of restricted cash as of June 30, 2023, and $4.7 million of restricted cash as of December 31, 2022. The Company’s bank balances as of June 30, 2023 and December 31, 2022 included certain amounts over the Federal Deposit Insurance Corporation limits. Fair Value Measurement Companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value. The fair values of financial instruments are estimates based on market conditions and perceived risks as of June 30, 2023 and December 31, 2022. These estimates require management’s judgement and may not be indicative of the future fair values of the assets and liabilities. The fair value of the Company’s cash, cash equivalents and restricted cash (including money market accounts), other assets and accounts payable, accrued expenses and other liabilities approximate their carrying value because of the short-term nature of these instruments. Additionally, the Company believes the following financial instruments have carrying values that approximate their fair values as of June 30, 2023: • Borrowings under the Company’s Revolver (as defined in “Note 6 - Debt”) approximate fair value based on their nature, terms and variable interest rates. • Carrying values of the Company’s mortgage loans receivable approximate fair values based on a number of factors, including either their short-term nature, the availability of market quotes for comparable instruments, and a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads. • Carrying value of the Company’s mortgage note payable approximates fair value based on a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads. The following table discloses fair value information for the Company’s 2024 Term Loan, 2027 Term Loan, and 2028 Term Loan (each as defined in “Note 6 - Debt”) (in thousands): June 30, 2023 December 31, 2022 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value 2024 Term Loan (1) $ — $ — $ 174,532 $ 175,382 2027 Term Loan (1) 173,801 175,729 — — 2028 Term Loan (1) 198,885 201,466 198,764 201,108 (1) The carrying value of the debt instruments are net of unamortized debt issuance and discount costs. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company is exposed to credit risk with respect to cash held at various financial institutions, access to its credit facilities, amounts due under mortgage loans receivable, and amounts due or payable under derivative contracts. The credit risk exposure with regard to the Company’s cash, credit facilities, and derivative instruments is spread among a diversified group of investment grade financial institutions. During the three and six months ended June 30, 2023 and 2022, there were no tenants or borrowers with rental revenue or interest income on loans receivable, respectively, that exceeded 10% of total revenues. Segment Reporting ASC Topic 280, Segment Reporting, establishes standards for the manner in which companies report information about operating segments. Substantially all of the Company’s investments, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis or real estate that secures the Company's investment in mortgage loans receivable. The Company allocates resources and assesses operating performance based on individual investment and property needs. Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases Tenant Leases The Company acquires, owns and manages commercial single-tenant lease properties, with the majority being long-term triple-net leases where the tenant is generally responsible for all improvements and contractually obligated to pay all operating costs (such as real estate taxes, utilities and repairs and maintenance costs). As of June 30, 2023, the Company’s weighted average remaining lease term was 9.4 years. The Company’s property leases have been classified as operating leases and some have scheduled rent increases throughout the lease term. The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term. All lease-related income is reported as a single line item, rental revenue (including reimbursable), in the condensed consolidated statements of operations and comprehensive income and is presented net of any reserves for uncollectible amounts. There were no material reserves for uncollectible amounts during the three and six months ended June 30, 2023 and 2022. Fixed lease income includes stated amounts per the lease contract, which include base rent, fixed common area maintenance charges, and straight-line lease adjustments. Variable lease income primarily includes recoveries from tenants, which represent amounts that tenants are contractually obligated to reimburse the Company for specific to their portion of actual recoverable costs incurred. Variable lease income also includes percentage rent, which represents amounts billable to tenants based on their actual sales volume in excess of levels specified in the lease contract. The following table provides a disaggregation of lease income recognized under ASC 842 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Rental revenue Fixed lease income (1) $ 26,808 $ 19,653 $ 51,531 $ 37,721 Variable lease income (2) 2,715 2,229 6,252 4,918 Other rental revenue: Above/below market lease amortization, net 377 294 789 577 Lease incentives (193) (128) (392) (246) Rental revenue (including reimbursable) $ 29,707 $ 22,048 $ 58,180 $ 42,970 (1) Fixed lease income includes contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term. (2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, and lease termination fees, and the write-off of uncollectible amounts. There were immaterial write-offs of uncollectible amounts during the three and six months ended June 30, 2023 and 2022. Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight line rent adjustments for all properties) due to be received under the remaining non-cancelable term of the operating leases in place as of June 30, 2023 are as follows (in thousands): Future Minimum Base Remainder of 2023 $ 53,208 2024 108,320 2025 108,298 2026 105,548 2027 101,245 Thereafter 557,639 Total $ 1,034,258 Future minimum rentals exclude amounts that may be received from tenants for reimbursements of operating costs and property taxes. In addition, the future minimum rents do not include any contingent rents based on a percentage of the lessees' gross sales or lease escalations based on future changes in the Consumer Price Index (“CPI”) or other stipulated reference rate. Corporate Office Lease In August 2021, the Company entered into a lease agreement on a new corporate office space, which commenced in October 2021 and is classified as an operating lease. The lease has a remaining noncancellable lease term of 9.1 years that expires on July 31, 2032, with a one-time option to terminate in 2029 exercisable by the Company. The following table presents the lease expense components for the three and six months ended June 30, 2023 and 2022 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Operating lease cost $ 135 $ 135 $ 271 $ 270 Variable lease cost $ 68 $ 7 $ 135 $ 10 The Company recorded a right-of-use asset and operating lease liability of approximately $4.5 million at lease commencement. As of June 30, 2023, the right-of-use asset and operating lease liability was $4.1 million and $5.3 million, respectively. The right-of-use asset is included in other assets, net and the operating lease liability is included in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for the corporate office lease obligation as of June 30, 2023 (in thousands): Future Minimum Lease Payments Remainder of 2023 $ 285 2024 617 2025 636 2026 653 2027 670 Thereafter 3,311 Total lease payments 6,172 Less: amount representing interest (1) (868) Present value of operating lease liabilities $ 5,304 (1) Imputed interest was calculated using a discount rate of 3.25%. The discount rate is based on the estimated incremental borrowing rate, calculated as the treasury rate for the same period as the underlying lease term, plus a spread determined using factors including REIT industry performance. |
Real Estate Investments
Real Estate Investments | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
Real Estate Investments | Real Estate Investments As of June 30, 2023, the Company owned or had investments in 525 properties, excluding 23 property developments where rent has yet to commence. The gross real estate investment portfolio, including properties under development, totaled approximately $1.6 billion and consisted of the gross acquisition cost of land, buildings, improvements, and lease intangible assets and liabilities. The investment portfolio is geographically dispersed throughout 45 states with gross real estate investments in Illinois and Texas representing 9.5% and 8.9%, respectively, of the total gross real estate investment of the Company’s entire portfolio. Acquisitions During the three months ended June 30, 2023, the Company acquired 28 properties for a total purchase price of $96.2 million, inclusive of $1.0 million of capitalized acquisition costs. During the six months ended June 30, 2023, the Company acquired 48 properties for a total purchase price of $163.9 million, inclusive of $1.7 million of capitalized acquisition costs. During the three months ended June 30, 2022, the Company acquired 22 properties for a total purchase price of $117.3 million, inclusive of $0.7 million of capitalized acquisition costs. During the six months ended June 30, 2022, the Company acquired 56 properties for a total purchase price of $207.3 million, inclusive of $1.9 million of capitalized acquisition costs. The acquisitions were all accounted for as asset acquisitions. An allocation of the purchase price and acquisition costs paid for the completed acquisitions is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Land $ 19,748 $ 34,419 $ 34,052 $ 49,073 Buildings 56,869 67,682 100,002 127,770 Site improvements 5,490 5,314 8,969 11,852 Tenant improvements 1,168 1,016 1,559 2,176 In-place lease intangible assets 11,399 13,533 17,809 22,405 Above-market lease intangible assets 1,543 245 1,543 353 96,217 122,209 163,934 213,629 Liabilities assumed Below-market lease intangible liabilities — (4,893) — (6,316) Accounts payable, accrued expense and other liabilities — — — (24) Purchase price (including acquisition costs) $ 96,217 $ 117,316 $ 163,934 $ 207,289 Development As of June 30, 2023, the Company had 23 property developments under construction. During the three months ended June 30, 2023, the Company invested $17.7 million in property developments. During the six months ended June 30, 2023, the Company invested $22.2 million in property developments, including the acquisition of 20 new build-to-suit projects with a combined initial purchase price of $11.9 million. During the six months ended June 30, 2023, the Company completed development on two projects and reclassified approximately $14.8 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets. Rent commenced for the completed developments in the first quarter of 2023. The remaining 23 developments in progress are expected to be substantially completed with rent commencing at various points throughout the next twelve months. The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of June 30, 2023. During the three months ended June 30, 2022, the Company invested $4.6 million in property developments. During this period, the Company completed development on three projects and reclassified approximately $9.8 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets. During the six months ended June 30, 2022, the Company invested $9.6 million in property developments, including the acquisition of one new build-to-suit project with an initial purchase price of $1.0 million. During this period, the Company completed development on four projects and reclassified approximately $14.7 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets. Additionally, during the six months ended June 30, 2023 and 2022, the Company capitalized approximately $0.3 million and $0.1 million, respectively, of interest expense associated with properties under development. Dispositions During the three months ended June 30, 2023, the Company sold two properties for a total sales price, net of disposal costs, of $3.8 million, recognizing a gain of $0.6 million. During the six months ended June 30, 2023, the Company sold ten properties for a total sales price, net of disposal costs, of $19.3 million, recognizing a gain of $0.3 million. During the three months ended June 30, 2022, the Company sold two properties for a total sales price, net of disposal costs, of $9.9 million, recognizing a gain of $1.9 million. During the six months ended June 30, 2022, the Company sold three properties for a total sales price, net of disposal costs, of $12.2 million, recognizing a gain of $2.0 million. Investment in Mortgage Loans Receivable The Company’s mortgage loans receivable portfolio as of June 30, 2023 and December 31, 2022 is summarized below (in thousands): Loan Type Number of Secured Properties Effective Interest Rate (4) Stated Interest Rate Maturity Date June 30, 2023 December 31, 2022 Mortgage (1) 1 5.75% 6.00% 7/26/2023 $ 40,316 $ 40,316 Mortgage (1) (2) 2 5.77% 6.50% 6/30/2023 6,000 6,000 Mortgage 46 9.55% 9.55% 3/10/2026 41,940 — Mortgage (3) 3 8.03% 6.89% 4/10/2026 4,132 — Mortgage (3) 10 7.57% 7.57% 6/10/2025 15,505 — Total 107,893 46,316 Unamortized loan origination costs 6 62 Unamortized discount (141) — Total mortgage loans receivable, net $ 107,758 $ 46,378 (1) The Company has the right, subject to certain terms and conditions, to purchase all or a portion of the underlying collateralized property. (2) The balance is expected to be settled via a like kind exchange subsequent to June 30, 2023. (3) The stated interest rate is variable up to 15.0% and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement. (4) Includes amortization of discount and loan origination costs, as applicable. All of the Company’s mortgage loans receivable require monthly payments of interest only with principal payments occurring as borrower disposes of underlying properties, limited to the Company’s allocated investment by property. Any remaining principal balance will be repaid at or before the maturity date. Assets Held for Sale As of June 30, 2023 and December 31, 2022, there were fourteen and eleven properties, respectively, classified as held for sale. Provisions for Impairment |
Intangible Assets and Liabiliti
Intangible Assets and Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Liabilities | Intangible Assets and Liabilities Intangible assets and liabilities consisted of the following (in thousands): June 30, 2023 December 31, 2022 Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Assets: In-place leases $ 168,425 $ (36,499) $ 131,926 $ 154,876 $ (28,472) $ 126,404 Above-market leases 21,508 (3,601) 17,907 20,091 (2,892) 17,199 Assembled workforce 873 (873) — 873 (873) — Lease incentives 9,244 (1,010) 8,234 8,021 (618) 7,403 Total intangible assets $ 200,050 $ (41,983) $ 158,067 $ 183,861 $ (32,855) $ 151,006 Liabilities: Below-market leases $ 34,027 $ (6,593) $ 27,434 $ 35,596 $ (5,465) $ 30,131 The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2023 and as of December 31, 2022 by category were as follows: Years Remaining June 30, 2023 December 31, 2022 In-place leases 9.2 9.4 Above-market leases 12.8 13.0 Below-market leases 11.4 11.6 Lease incentives 11.4 11.8 The Company records amortization of in-place lease assets and assembled workforce intangible assets to amortization expense, and records net amortization of above-market and below-market lease intangibles as well as amortization of lease incentives to rental revenue. The following amounts in the accompanying condensed consolidated statements of operations and comprehensive income related to the amortization of intangible assets and liabilities for all property and ground leases (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Amortization: Amortization of in-place leases $ 4,809 $ 3,734 $ 9,479 $ 7,288 Amortization of assembled workforce — 73 — 147 $ 4,809 $ 3,807 $ 9,479 $ 7,435 Net adjustment to rental revenue: Above-market lease assets (391) (333) (762) (660) Below-market lease liabilities 768 627 1,551 1,237 Lease incentives (193) (128) (392) (246) $ 184 $ 166 $ 397 $ 331 The following table provides the projected amortization of in-place lease assets to amortization expense and the net amortization of above-market, below-market, and lease incentive lease intangibles to rental revenue as of June 30, 2023, for the next five years and thereafter (in thousands): Remainder of 2023 2024 2025 2026 2027 Thereafter Total In-place leases $ 9,094 $ 18,035 $ 17,462 $ 16,233 $ 13,942 $ 57,160 $ 131,926 Above-market lease assets $ (785) $ (1,565) $ (1,564) $ (1,563) $ (1,535) $ (10,895) $ (17,907) Below-market lease liabilities 1,434 2,857 2,835 2,743 2,671 14,894 27,434 Lease incentives (396) (793) (793) (793) (743) (4,716) (8,234) Net adjustment to rental revenue $ 253 $ 499 $ 478 $ 387 $ 393 $ (717) $ 1,293 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following (in thousands): Amounts Outstanding Contractual Fully Extended Maturity Date (5) Interest June 30, 2023 December 31, 2022 Debt: 2024 Term Loan December 23, 2024 — 1.37% $ — $ 175,000 2027 Term Loan (1) January 15, 2026 January 15, 2027 1.37% 175,000 — Revolver (2) August 11, 2026 August 11, 2027 6.15% 106,000 113,000 2028 Term Loan (3) February 11, 2028 — 3.88% 200,000 200,000 Mortgage Note November 1, 2027 — 4.53% 8,435 8,498 Total debt 489,435 496,498 Unamortized discount and debt issuance costs (2,853) (2,306) Unamortized deferred financing costs, net (4) (2,313) (2,684) Total debt, net $ 484,269 $ 491,508 (1) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.15% as of June 30, 2023. The Company has entered into four interest rate swap agreements that effectively convert the floating rate to a fixed rate. (2) The annual interest rate of the Revolver assumes daily SOFR as of June 30, 2023 of 5.05% plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.00% as of June 30, 2023. (3) Loan is a floating-rate loan which resets monthly at one-month term SOFR plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.15% as of June 30, 2023. The Company has entered into three interest rate swap agreements that effectively convert the floating rate to a fixed rate. (4) The Company records deferred financing costs for the Revolver in other assets, net on its condensed consolidated balance sheets. (5) Date represents the fully extended maturity date available to the Company under each related debt instrument. Credit Facility On August 11, 2022, the Company entered into a sustainability-linked senior unsecured credit facility consisting of (i) a $200.0 million senior unsecured term loan (the “2028 Term Loan”) and (ii) a $400.0 million senior unsecured revolving credit facility (the “Revolver”, and together with the 2028 Term Loan, the “Credit Facility”). The Credit Facility may be increased by $400.0 million in the aggregate for total availability of up to $800.0 million. The 2028 Term Loan matures on February 11, 2028. The Revolver matures on August 11, 2026, subject to a one year extension option at the Company’s election (subject to certain conditions) to August 11, 2027. Borrowings under the Credit Facility are repayable at the Company’s option in whole or in part without premium or penalty. Borrowings under the Revolver may be repaid and reborrowed from time to time prior to the maturity date. Prior to the date the Company obtains an Investment Grade Rating (as defined in the credit agreement governing the Credit Facility (the “Credit Agreement”)), interest rates are based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of the 2028 Term Loan either (i) SOFR, plus a SOFR adjustment of 0.10%, plus a margin ranging from 1.15% to 1.60%, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.15% to 0.60%, based on the Company’s consolidated total leverage ratio and (B) in the case of the Revolver either (i) SOFR, plus a SOFR adjustment of 0.10%, plus a margin ranging from 1.00% to 1.45%, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.45%, based on the Company’s consolidated total leverage ratio. After the date the Company obtains an Investment Grade Rating, interest rates are based on the Company’s Investment Grade Rating, and are determined by (A) in the case of the 2028 Term Loan either (i) SOFR, plus a SOFR adjustment of 0.10%, plus a margin ranging from 0.80% to 1.60%, based on the Company’s Investment Grade Rating, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.60%, based on the Company’s Investment Grade Rating and (B) in the case of the Revolver either (i) SOFR, plus a SOFR adjustment of 0.10%, plus a margin ranging from 0.725% to 1.40%, based on the Company’s Investment Grade Rating, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.40%, based on the Company’s Investment Grade Rating. Additionally, the Company will incur a facility fee based on the total commitment amount of $400.0 million under the Revolver. Prior to the date the Company obtains an Investment Grade Rating, the applicable facility fee will range from 0.15% to 0.30% based on the Company’s consolidated total leverage ratio. After the date the Company obtains an Investment Grade Rating, the applicable facility fee will range from 0.125% to 0.30% based on the Company’s Investment Grade Rating. The Credit Facility also contains a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025% based on its performance against a sustainability performance target focused on the portion of the Company’s annualized base rent attributable to tenants with commitments or quantifiable targets for reduced greenhouse gas emission in accordance with the standards of the Science Based Targets initiative (“SBTi”). The Company has fully hedged the 2028 Term Loan with an all-in interest rate of 3.88%. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rate hedge is further described in “Note 7 – Derivative Financial Instruments.” In connection with the Credit Facility, the Company incurred $3.8 million of deferred financing costs which were allocated between the Revolver and 2028 Term Loan in the amounts of $2.4 million and $1.3 million, respectively. Additionally, $0.5 million of unamortized deferred financing costs associated with the Company’s previous revolving credit facility were reclassed to the Revolver. Deferred financing costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net in the Company’s consolidated statements of operations and comprehensive income. 2027 Term Loan In December 2019, the Company entered into an agreement governing a $175.0 million senior unsecured term loan that matured in December 2024 (the “2024 Term Loan”). On June 15, 2023, the Company amended and restated its 2024 Term Loan, providing for a $175.0 million senior unsecured term loan (the “2027 Term Loan”). The 2027 Term Loan matures on January 15, 2026, subject to a one year extension option at the Company’s election (subject to certain conditions). The 2027 Term Loan is repayable at the Company’s option in whole or in part without premium or penalty. The interest rate applicable to the 2027 Term Loan is determined by the Company’s Investment Grade Rating (as defined in the 2027 Term Loan). Prior to the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 1.15% to 1.60% or (ii) Base Rate (as defined in the 2027 Term Loan), plus a margin ranging from 0.15% to 0.60%, in each case based on the Company’s consolidated total leverage ratio. After the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 0.80% to 1.60% or (ii) Base Rate, plus a margin ranging from 0.00% to 0.60%, in each case based on the Company’s Investment Grade Rating. Interest is payable monthly or at the end of the applicable interest period in arrears. The Company has fully hedged the 2027 Term Loan. The interest rate hedges are described in “Note 7 – Derivative Financial Instruments.” Mortgage Note Payable As of June 30, 2023, the Company had total gross mortgage indebtedness of $8.4 million, which was collateralized by related real estate and a tenant’s lease with an aggregate net book value of $12.9 million. The Company incurred debt issuance costs of less than $0.1 million and recorded a debt discount of $0.6 million, both of which are recorded as a reduction of the principal balance in mortgage note payable, net in the Company’s condensed consolidated balance sheets. The mortgage note matures on November 1, 2027, but may be repaid in full beginning August 2027. Debt Maturities Payments on the 2027 Term Loan and the 2028 Term Loan are interest only through maturity. As of June 30, 2023, scheduled debt maturities, including balloon payments, are as follows (in thousands): Scheduled Principal Balloon Payment (1) Total Remainder of 2023 $ 92 $ — $ 92 2024 162 — 162 2025 170 — 170 2026 178 281,000 281,178 2027 170 7,663 7,833 Thereafter — 200,000 200,000 Total $ 772 $ 488,663 $ 489,435 (1) Does not assume the exercise of any extension options available to the Company. Interest Expense The following table is a summary of the components of interest expense related to the Company’s borrowings (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Revolving credit facilities (1) $ 2,567 $ 818 $ 3,716 $ 1,296 Term loans (2) 2,668 593 5,168 1,184 Mortgage note payable 100 — 193 — Non-cash: Amortization of deferred financing costs 186 101 371 201 Amortization of debt discount, net 150 56 301 113 Capitalized interest (150) (46) (284) (103) Total interest expense, net $ 5,521 $ 1,522 $ 9,465 $ 2,691 (1) Includes facility fees and non-utilization fees of approximately $0.2 million and less than $0.1 million for the three months ended June 30, 2023 and 2022, respectively, and facility fees of $0.3 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. (2) Includes the effects of interest rate hedges in place as of such date. Deferred financing, discount, and debt issuance costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income. During the three months ended June 30, 2023 and 2022, term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 6.41% and 1.94%, respectively. During the six months ended June 30, 2023 and 2022, term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 6.09% and 1.63%, respectively. During the three months ended June 30, 2023 and 2022, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs and facility fees, of 5.94% and 2.08%, respectively. During the six months ended June 30, 2023 and 2022, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs and facility fees, of 5.92% and 1.78%, respectively. The estimated fair values of the Company’s term loans have been derived based on market observable inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows. These measurements are classified as Level 2 within the fair value hierarchy. Refer to “Note 2 - Summary of Significant Accounting Policies” for additional detail on fair value measurements. The Company was in compliance with all of its debt covenants as of June 30, 2023 and expects to be in compliance for the twelve-month period ending December 31, 2023. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value. Assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach. The Company recognizes the entire change in the fair value in Accumulated Other Comprehensive Income (“AOCI”) and the change is reflected as cash flow hedge changes in fair value in the supplemental disclosures of non-cash investing and financing activities in the condensed consolidated statements of cash flows. Effective September 1, 2022, such derivatives were initiated to hedge the variable cash flows associated with the 2028 Term Loan. The interest rate for the variable rate 2028 Term Loan is based on the hedged fixed rate of 2.63% compared to the variable 2028 Term Loan one-month SOFR rate as of June 30, 2023 of 5.16%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15%. The maturity dates of the interest rate swaps coincide with the maturity date of the 2028 Term Loan. In anticipation of the settlement of the 2024 Term Loan, the Company converted and extended the existing cash flow hedges with an aggregate notional amount of $150.0 million to cover the base rate associated with the new 2027 Term Loan of $175.0 million. The remaining $25.0 million remained hedged under the original cash flow hedge with a maturity date of December 23, 2024. Subsequent to June 30, 2023, the Company entered into a $25.0 million cash flow hedge through the extended maturity date of the 2027 Term Loan of January 15, 2027. Effective June 30, 2023, the Company had a hedged fixed rate of 0.12% compared to the variable 2027 Term Loan SOFR rate as of June 30, 2023 of 5.05%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15%. This hedged fixed rate of 0.12% is effective through November 27, 2023, and then adjusts to 1.87%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% through December 23, 2024, and 2.40%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% thereafter through the fully extended maturity of the 2027 Term Loan of January 2027. Amounts will subsequently be reclassified to earnings when the hedged item affects earnings. The Company does not enter into derivative contracts for speculative or trading purposes and does not have derivative netting arrangements. The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate credit risk, the Company enters into agreements with counterparties it considers credit-worthy, such as large financial institutions with favorable credit ratings. The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Number of Instruments Notional Interest Rate Derivatives June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 Interest rate swaps 10 7 $ 525,000 $ 375,000 The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands): Derivative Assets Fair Value at Derivatives Designated as Hedging Instruments: Balance Sheet Location June 30, 2023 December 31, 2022 Interest rate swaps Other assets, net $ 24,476 $ 24,067 The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2023 and 2022 (in thousands): Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain (Loss) Reclassified from Accumulated OCI into Income Derivatives in Cash Flow Hedging Relationships 2023 2022 2023 2022 For the Three Months Ended June 30 Interest Rate Products $ 9,714 $ 1,591 Interest expense, net $ 3,326 $ 253 For the Six Months Ended June 30 Interest Rate Products $ 6,572 $ 7,779 Interest expense, net $ 6,163 $ 230 The Company did not exclude any amounts from the assessment of hedge effectiveness for the three and six months ended June 30, 2023 and 2022. During the next twelve months, the Company estimates that an additional $18.4 million will be reclassified as a decrease to interest expense. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The table below presents the Company’s derivative assets measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands): Fair Value Hierarchy Level Description Level 1 Level 2 Level 3 Total Fair Value June 30, 2023 Derivative assets $ — $ 24,476 $ — $ 24,476 December 31, 2022 Derivative assets $ — $ 24,067 $ — $ 24,067 |
Supplemental Detail for Certain
Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets | Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets Other assets, net consist of the following (in thousands): June 30, 2023 December 31, 2022 Accounts receivable, net $ 9,698 $ 7,167 Deferred rent receivable 6,586 5,629 Prepaid assets 3,548 3,864 Earnest money deposits 1,251 185 Fair value of interest rate swaps 24,476 24,067 Deferred offering costs 809 796 Deferred financing costs, net 2,313 2,685 Right-of-use asset 4,052 4,235 Leasehold improvements and other corporate assets, net 1,855 1,969 Interest receivable 664 256 Other assets, net 1,256 1,204 $ 56,508 $ 52,057 Accounts payable, accrued expenses and other liabilities consists of the following (in thousands): June 30, 2023 December 31, 2022 Accrued expenses $ 8,689 $ 5,745 Accrued bonus 1,030 1,305 Prepaid rent 4,177 2,937 Operating lease liability 5,304 5,464 Accrued interest 2,667 1,782 Deferred rent 2,517 1,756 Accounts payable 2,792 1,394 Other liabilities 1,888 2,157 $ 29,064 $ 22,540 |
Shareholders_ Equity, Partners_
Shareholders’ Equity, Partners’ Capital and Preferred Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Shareholders’ Equity, Partners’ Capital and Preferred Equity | Shareholders’ Equity, Partners’ Capital and Preferred Equity ATM Program On September 1, 2021, the Company entered into a $250.0 million at-the-market equity program (the “ATM Program”) through which, from time to time, it may sell shares of its common stock in registered transactions. The Company has issued shares of common stock in connection with the ATM Program for the periods presented as follows: • In June 2023, the Company issued 1,364,815 shares of common stock at a weighted average price of $17.53 per share for net proceeds of approximately $23.4 million, net of sales commissions and offering costs of $0.3 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 1,364,815 Class A OP Units. • In March 2023, the Company issued 146,745 shares of common stock at a weighted average price of $20.22 per share for net proceeds of approximately $2.9 million, net of sales commissions and offering costs of less than $0.1 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 146,745 Class A OP Units. • In March 2022, the Company issued 163,774 shares of common stock at a weighted average price of $22.08 per share for net proceeds of approximately $3.5 million, net of sales commissions and offering costs of less than $0.1 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 163,774 Class A OP Units. As of June 30, 2023, the Company has $127.3 million remaining gross proceeds available for future issuances of shares of common stock under the ATM Program. August 2022 Follow-On Offering On August 8, 2022, the Company completed a registered public offering of 9,000,000 shares of its common stock at a public offering price of $20.20 per share, which excluded an over-allotment option to the underwriters to purchase up to an additional 1,350,000 shares, which was exercised in full on August 10, 2022. In connection with the offering, the Company entered into forward sale agreements for 10,350,000 shares of its common stock. The Company did not initially receive any proceeds from the sales of shares of common stock by the forward purchasers upon registration of the offering. On March 30, 2023, the Company partially physically settled 2,612,736 shares of common stock at a price of $20.20 per share in accordance with the forward sale agreements. The Company received net proceeds from the settlement of $50.0 million, net of underwriting discounts and offering costs of $2.8 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 2,612,736 Class A OP Units. On June 28, 2023, the Company physically settled 4,763,320 shares of common stock at a price of $20.20 per share in accordance with the forward sale agreements. The Company received net proceeds from the settlement of $91.1 million, net of underwriting discounts and offering costs of $5.1 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 4,763,320 Class A OP Units. As of June 30, 2023, the Company fully physically settled the forward sale agreements (by the delivery of shares of common stock). January 2022 Follow-On Offering On January 13, 2022, the Company completed a registered public offering of 10,350,000 shares of its common stock at a public offering price of $22.25 per share. In connection with the offering, the Company entered into forward sale agreements for 10,350,000 shares of its common stock. On June 23, 2022, the Company settled 2,397,035 shares of common stock at a price of $22.25 per share in accordance with the forward sale agreements. The Company received net proceeds from the offering of $50.0 million, net of underwriting discounts and offering costs of $3.3 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 2,397,035 Class A OP Units. On March 30, 2022, the Company settled 3,440,962 shares of common stock at a price of $22.25 per share in accordance with the forward sale agreements. The Company received net proceeds from the settlement of $72.0 million, net of underwriting discounts and offering costs of $4.6 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 3,440,962 Class A OP Units. As of December 31, 2022, the Company fully physically settled the forward sale agreements (by the delivery of shares of common stock). Surrendered Shares on Vested Stock Unit Awards During the six months ended June 30, 2023 and 2022, portions of restricted stock unit awards (“RSUs”) granted to certain of the Company’s officers, directors, and employees vested. The vesting of these awards, granted pursuant to the NETSTREIT Corp. 2019 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), resulted in federal and state income tax liabilities for the recipients. During the six months ended June 30, 2023 and 2022, as permitted by the terms of the Omnibus Incentive Plan and the award grants, certain executive officers and employees elected to surrender a total of 18 thousand and 17 thousand RSUs, respectively both valued at approximately $0.4 million, solely to pay the associated statutory tax withholding. The surrendered RSUs are included in the row entitled “repurchase of shares of common stock” on the condensed consolidated statements of cash flows. Dividends During the six months ended June 30, 2023, the Company declared and paid the following common stock dividends (in thousands, except per share data): Six Months Ended June 30, 2023 Declaration Date Dividend Per Share Record Date Total Amount Payment Date February 21, 2023 $ 0.20 March 15, 2023 $ 11,650 March 30, 2023 April 25, 2023 0.20 June 1, 2023 12,173 June 15, 2023 $ 0.40 $ 23,823 Six Months Ended June 30, 2022 Declaration Date Dividend Per Share Record Date Total Amount Payment Date February 22, 2022 $ 0.20 March 15, 2022 $ 8,888 March 30, 2022 April 26, 2022 0.20 June 1, 2022 9,588 June 15, 2022 $ 0.40 $ 18,476 The holders of OP Units are entitled to an equal distribution per each OP Unit held as of each record date. Accordingly, during the six months ended June 30, 2023 and 2022, the Operating Partnership paid distributions of $0.2 million and $0.2 million, respectively, to holders of OP Units. Noncontrolling Interests |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock-Based Compensation Under the Omnibus Incentive Plan, 2,094,976 shares of common stock are reserved for issuance. The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted shares, RSUs, long-term incentive plan units, dividend equivalent rights, and other share-based, share-related or cash-based awards, including performance-based awards, to employees, directors and consultants, with each grant evidenced by an award agreement providing the terms of the award. The Omnibus Incentive Plan is administered by the Compensation Committee of the Board of Directors. As of June 30, 2023, the only stock-based compensation granted by the Company were RSUs. The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive income was $1.3 million for both the three months ended June 30, 2023 and 2022. Stock-based compensation expense was $2.3 million for both the six months ended June 30, 2023 and 2022. All awards of unvested restricted stock units are expected to fully vest over the next one Performance-Based RSUs (effectiveness of Initial Public Offering) Pursuant to the Omnibus Incentive Plan, the Company made performance-based RSUs to certain employees and non-employee directors. The performance condition required the Company to effectively file a shelf registration statement. Up until the point of filing the registration statement, performance was not deemed probable and accordingly, no RSUs had the capability of vesting and no stock-based compensation expense was recorded. As a result of the Company's initial public offering in August 2020, the performance condition was satisfied and the Company recorded a stock-based compensation expense catch-up adjustment of $1.4 million. The vesting terms of these grants are specific to the individual grant and vest in equal annual installments over the next two years. The following table summarizes performance-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 61,391 $ 19.75 Granted during the period — — Forfeited during the period — — Vested during the period — — Unvested RSU grants outstanding as of June 30, 2023 61,391 $ 19.75 For both the three and six months ended June 30, 2023, the Company recognized $0.1 million in stock-based compensation expense associated with performance-based RSUs. As of June 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $0.3 million and $0.4 million, respectively, and as of June 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 1.2 years. These units are subject to graded vesting and stock-based compensation expense is recognized ratably over the requisite service period for each vesting tranche in the award. The grant date fair value of unvested RSUs is calculated as the per share price in the private offering that closed on December 23, 2019. Service-Based RSUs Pursuant to the Omnibus Incentive Plan, the Company has made service-based RSU grants to certain employees and non-employee directors. The vesting terms of these grants are specific to the individual grant and vest in equal annual installments over the next one The following table summarizes service-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 247,079 $ 19.86 Granted during the period 160,152 19.83 Forfeited during the period (678) 20.19 Vested during the period (84,844) 20.40 Unvested RSU grants outstanding as of June 30, 2023 321,709 $ 19.70 For the three and six months ended June 30, 2023, the Company recognized $0.7 million and $1.3 million, respectively, in stock-based compensation expense associated with service-based RSUs. As of June 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $4.8 million and $3.0 million, respectively, and as of June 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 2.1 years. Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award. The grant date fair value of service-based unvested RSUs is calculated as the per share price determined in the initial public offering for awards granted in 2020, and as the per share price of the Company’s stock on the date of grant for those granted in years subsequent to 2020. Performance-Based RSUs (total shareholder return) Pursuant to the Omnibus Incentive Plan, the Company has made market-based RSU grants to certain employees. These grants are subject to the participant’s continued service over a three year period with 40% of the award based on the Company’s total shareholder return (“TSR”) as compared to the TSR of identified peer companies and 60% of the award based on total absolute TSR over the cumulative three-year period. The performance period of these grants runs through March 8, 2024, February 28, 2025, and February 28, 2026. Grant date fair value of the market-based share awards was calculated using the Monte Carlo simulation model, which incorporated stock price volatility of the Company and each of the Company’s peers and other variables over the performance period. Significant inputs for the current period calculation were expected volatility of the Company of 29.0% and expected volatility of the Company's peers, ranging from 32.2% to 102.8%, with an average volatility of 46.7% and a risk-free interest rate of 4.46%. The fair value per share on the grant date specific to the target TSR relative to the Company’s peers was $24.13 and the target absolute TSR was $20.15 for a weighted average grant date fair value of $21.57 per share. Stock-based compensation expense associated with unvested market-based share awards is recognized on a straight-line basis over the minimum required service period, which is three years. The following table summarizes market-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 177,350 $ 19.83 Granted during the period 81,751 21.57 Forfeited during the period — — Vested during the period — — Unvested RSU grants outstanding as of June 30, 2023 259,101 $ 20.38 For the three and six months ended June 30, 2023, the Company recognized $0.4 million and $0.8 million, respectively, in stock-based compensation expense associated with market-based RSUs. As of June 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $2.9 million and $2.0 million, respectively, and as of June 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 2.1 years. Alignment of Interest Program During March 2021, the Company adopted the Alignment of Interest Program (the “Program”), which allows employees to elect to receive a portion of their annual bonus in unvested RSUs in the first quarter of the following year that would then vest over a four-year service period beginning in the period that the bonus relates. The Program is deemed to be a liability-classified award (accounted for as an equity-classified award as the service date precedes the grant date and the award would otherwise be classified as equity on grant date), which will be fair-valued and accrued over the applicable service period. The total estimated fair value of the elections made for 2023 under the Program was approximately $0.4 million. The award will be remeasured to fair value each reporting period until the unvested RSUs are granted. For both the three and six months ended June 30, 2023, the Company recognized approximately $0.1 million in stock-based compensation expense associated with these awards. Previous awards under the Program that have been granted are included within service-based RSUs above. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per ShareNet (loss) income per common share has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is similarly calculated except that the denominator is increased by using the treasury stock method to determine the potential dilutive effect of the Company’s outstanding unvested RSUs and unsettled shares under open forward equity contracts and using the if-converted method to determine the potential dilutive effect of the OP Units. The Company has noncontrolling interests in the form of OP Units which are convertible into common stock and represent potentially dilutive securities, as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one-for-one basis. The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net (loss) income per common share for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share data) 2023 2022 2023 2022 Numerator: Net (loss) income $ (792) $ 2,010 $ 689 $ 3,976 Net loss (income) attributable to noncontrolling interest 1 (23) (8) (47) Net (loss) income attributable to common shares, basic (791) 1,987 681 3,929 Net (loss) income attributable to noncontrolling interest (1) 23 8 47 Net (loss) income attributable to common shares, diluted $ (792) $ 2,010 $ 689 $ 3,976 Denominator: Weighted average common shares outstanding, basic 61,043,531 48,140,041 59,600,630 46,279,122 Effect of dilutive shares for diluted net income per common share: OP Units — 527,539 509,588 539,054 Unvested RSUs — 235,295 164,322 264,784 Unsettled shares under open forward equity contracts — 48,958 20,194 194,508 Weighted average common shares outstanding, diluted 61,043,531 48,951,833 60,294,734 47,277,468 Net (loss) income available to common stockholders per common share, basic $ (0.01) $ 0.04 $ 0.01 $ 0.08 Net (loss) income available to common stockholders per common share, diluted $ (0.01) $ 0.04 $ 0.01 $ 0.08 For the three months ended June 30, 2023, diluted net loss per common share does not assume the conversion of 507,773 OP Units or 152,785 unvested RSUs as such conversion would be antidilutive. As of June 30, 2023 and December 31, 2022, there were 507,773 and 513,467 of OP Units outstanding, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation and Regulatory Matters In the ordinary course of business, from time to time, the Company may be subject to litigation, claims and regulatory matters, none of which are currently outstanding, which the Company believes could have, individually or in the aggregate, a material adverse effect on its business, financial condition or results of operations, liquidity or cash flows. Environmental Matters The Company is subject to environmental regulations related to the ownership of real estate. The cost of complying with the environmental regulations was not material to the Company’s results of operations for any of the periods presented. The Company is not aware of any environmental condition on any of its properties that is likely to have a material adverse effect on the condensed consolidated financial statements when the fair value of such liability can be reasonably estimated and is required to be recognized. Commitments In the normal course of business, the Company enters into various types of commitments to purchase real estate properties or fund development projects. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated or receives an option to purchase the properties. As of June 30, 2023, the Company had tenant improvement allowance commitments totaling approximately $4.1 million, all of which is expected to be funded over the next two years. Additionally, as of June 30, 2023, the Company had commitments to fund 23 properties under development totaling $27.9 million, which is expected to be funded over the next twelve months. In August 2021, the Company entered into a lease agreement on a new corporate office space, which is classified as an operating lease. The Company began operating out of the new office in February 2022. The lease has a remaining noncancellable term of 9.1 years that expires on July 31, 2032 and is renewable at the Company’s option for two additional periods of five years. Future minimum base rental payments under the lease are outlined in “Note 3 – Leases.” Annual rent expense, excluding operating expenses, is approximately $0.5 million during the initial term. As of June 30, 2023, the Company did not have any other material commitments for re-leasing costs, recurring capital expenditures, non-recurring building improvements, or similar types of costs. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated all events that occurred subsequent to June 30, 2023 through the date on which these condensed consolidated financial statements were issued to determine whether any of these events required disclosure in the financial statements. Common Stock Dividend On July 24, 2023, the Company's Board of Directors declared a cash dividend of $0.205 per share for the third quarter of 2023. The dividend will be paid on September 15, 2023 to stockholders of record on September 1, 2023. Revolver Activity In July 2023, the Company repaid $106.0 million under the Revolver. 2029 Term Loan On July 3, 2023, the Company entered into an agreement (“2029 Term Loan Agreement”) related to a $250.0 million sustainability linked senior unsecured term loan (the “2029 Term Loan”) which may, subject to the terms of the 2029 Term Loan Agreement, be increased to an amount of up to $400.0 million at the Company’s request. The 2029 Term Loan contains a 12-month delayed draw feature and $150.0 million was drawn on July 3, 2023. The 2029 Term Loan is prepayable at the Company’s option in whole or in part without premium or penalty. The 2029 Term Loan matures on July 3, 2026, subject to extension options at the Company’s election on two occasions, by one year and, on one occasion, by six months (subject to certain conditions). The interest rate applicable to the 2029 Term Loan is determined by the Company’s Investment Grade Rating. Prior to the date the Company obtains an Investment Grade Rating (as defined in the 2029 Term Loan Agreement), interest shall accrue at either (i) SOFR, plus a margin ranging from 1.15% to 1.60% or (ii) Base Rate (as defined in the 2029 Term Loan Agreement), plus a margin ranging from 0.15% to 0.60%, in each case based on the Company’s consolidated total leverage ratio. After the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 0.80% to 1.60% or (ii) Base Rate, plus a margin ranging from 0.00% to 0.60%, in each case based on the Company’s Investment Grade Rating. The Company has hedged the entire $250.0 million of the 2029 Term Loan at an all-in fixed interest rate of 4.99%, through January 2029, which consists of the fixed rate SOFR swap of 3.74%, plus a credit spread adjustment of 0.10% and, at current leverage levels, a borrowing spread of 1.15%. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The 2029 Term Loan also contains sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025% based on its performance against a sustainability performance target focused on the portion of the Company’s annualized based rent attributable to tenants with commitments or quantifiable targets for reduced GHG emission is accordance with the standards of the SBTi. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Interim Unaudited Financial Information | Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation and the Company’s net (loss) income is reduced by the portion of net (loss) income attributable to noncontrolling interests. Interim Unaudited Financial Information |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make 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 period. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the useful lives of real estate assets, lease accounting, real estate impairment assessments, and allocation of fair value of purchase consideration. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Fair value measurement of an asset group occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable. An example of an event or changed circumstance is a reduction in the expected holding period of a property. If indicators are present, the Company will prepare a projection of the undiscounted future cash flows of the property, excluding interest charges, and determine if the carrying amount of the asset group is recoverable. When a carrying amount is not recoverable, an impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair market value. The Company estimates fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, and with regard to assets held for sale, based on the estimated or negotiated selling price, less estimated costs of disposal. Based on these unobservable inputs, the Company determined that its valuations of impaired real estate and intangible assets fall within Level 3 of the fair value hierarchy under ASC Topic 820. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all cash balances, money market accounts and highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Restricted cash includes cash restricted for property tenant improvements and cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Code. Restricted cash is included in cash, cash equivalents, and restricted cash in the condensed consolidated balance sheets. The Company had $1.6 million of restricted cash as of June 30, 2023, and $4.7 million of restricted cash as of December 31, 2022. The Company’s bank balances as of June 30, 2023 and December 31, 2022 included certain amounts over the Federal Deposit Insurance Corporation limits. |
Fair Value Measurement | Fair Value Measurement Companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value. The fair values of financial instruments are estimates based on market conditions and perceived risks as of June 30, 2023 and December 31, 2022. These estimates require management’s judgement and may not be indicative of the future fair values of the assets and liabilities. The fair value of the Company’s cash, cash equivalents and restricted cash (including money market accounts), other assets and accounts payable, accrued expenses and other liabilities approximate their carrying value because of the short-term nature of these instruments. Additionally, the Company believes the following financial instruments have carrying values that approximate their fair values as of June 30, 2023: • Borrowings under the Company’s Revolver (as defined in “Note 6 - Debt”) approximate fair value based on their nature, terms and variable interest rates. • Carrying values of the Company’s mortgage loans receivable approximate fair values based on a number of factors, including either their short-term nature, the availability of market quotes for comparable instruments, and a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company is exposed to credit risk with respect to cash held at various financial institutions, access to its credit facilities, amounts due under mortgage loans receivable, and amounts due or payable under derivative contracts. The credit risk exposure with regard to the Company’s cash, credit facilities, and derivative instruments is spread among a diversified group of investment grade financial institutions. |
Segment Reporting | Segment Reporting ASC Topic 280, Segment Reporting, establishes standards for the manner in which companies report information about operating segments. Substantially all of the Company’s investments, at acquisition, are comprised of real estate owned that is leased to tenants on a long-term basis or real estate that secures the Company's investment in mortgage loans receivable. The Company allocates resources and assesses operating performance based on individual investment and property needs. Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Provision for Impairment | The following table summarizes the provision for impairment during the periods indicated below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Total provision for impairment $ 2,836 $ 1,114 $ 2,836 $ 1,114 Number of properties: (1) Classified as held for sale 6 — 6 — Disposed within the period — 1 — 1 (1) Includes the number of properties that were impaired and classified as held for sale as of year-end or impaired and disposed of during the respective periods. Excludes properties that did not have impairment recorded during the year. |
Fair Value of Term Loans | The following table discloses fair value information for the Company’s 2024 Term Loan, 2027 Term Loan, and 2028 Term Loan (each as defined in “Note 6 - Debt”) (in thousands): June 30, 2023 December 31, 2022 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value 2024 Term Loan (1) $ — $ — $ 174,532 $ 175,382 2027 Term Loan (1) 173,801 175,729 — — 2028 Term Loan (1) 198,885 201,466 198,764 201,108 (1) The carrying value of the debt instruments are net of unamortized debt issuance and discount costs. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Disaggregation of Lease Income | The following table provides a disaggregation of lease income recognized under ASC 842 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Rental revenue Fixed lease income (1) $ 26,808 $ 19,653 $ 51,531 $ 37,721 Variable lease income (2) 2,715 2,229 6,252 4,918 Other rental revenue: Above/below market lease amortization, net 377 294 789 577 Lease incentives (193) (128) (392) (246) Rental revenue (including reimbursable) $ 29,707 $ 22,048 $ 58,180 $ 42,970 (1) Fixed lease income includes contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term. (2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, and lease termination fees, and the write-off of uncollectible amounts. There were immaterial write-offs of uncollectible amounts during the three and six months ended June 30, 2023 and 2022. |
Schedule of Future Minimum Base Rental Receipts | Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight line rent adjustments for all properties) due to be received under the remaining non-cancelable term of the operating leases in place as of June 30, 2023 are as follows (in thousands): Future Minimum Base Remainder of 2023 $ 53,208 2024 108,320 2025 108,298 2026 105,548 2027 101,245 Thereafter 557,639 Total $ 1,034,258 |
Lease Expense Components | The following table presents the lease expense components for the three and six months ended June 30, 2023 and 2022 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Operating lease cost $ 135 $ 135 $ 271 $ 270 Variable lease cost $ 68 $ 7 $ 135 $ 10 |
Schedule of Future Minimum Base Rental Payments | The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for the corporate office lease obligation as of June 30, 2023 (in thousands): Future Minimum Lease Payments Remainder of 2023 $ 285 2024 617 2025 636 2026 653 2027 670 Thereafter 3,311 Total lease payments 6,172 Less: amount representing interest (1) (868) Present value of operating lease liabilities $ 5,304 (1) Imputed interest was calculated using a discount rate of 3.25%. The discount rate is based on the estimated incremental borrowing rate, calculated as the treasury rate for the same period as the underlying lease term, plus a spread determined using factors including REIT industry performance. |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
Allocation of Purchase Price Paid for Completed Acquisitions | An allocation of the purchase price and acquisition costs paid for the completed acquisitions is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Land $ 19,748 $ 34,419 $ 34,052 $ 49,073 Buildings 56,869 67,682 100,002 127,770 Site improvements 5,490 5,314 8,969 11,852 Tenant improvements 1,168 1,016 1,559 2,176 In-place lease intangible assets 11,399 13,533 17,809 22,405 Above-market lease intangible assets 1,543 245 1,543 353 96,217 122,209 163,934 213,629 Liabilities assumed Below-market lease intangible liabilities — (4,893) — (6,316) Accounts payable, accrued expense and other liabilities — — — (24) Purchase price (including acquisition costs) $ 96,217 $ 117,316 $ 163,934 $ 207,289 |
Schedule of Mortgage Loans Receivable | The Company’s mortgage loans receivable portfolio as of June 30, 2023 and December 31, 2022 is summarized below (in thousands): Loan Type Number of Secured Properties Effective Interest Rate (4) Stated Interest Rate Maturity Date June 30, 2023 December 31, 2022 Mortgage (1) 1 5.75% 6.00% 7/26/2023 $ 40,316 $ 40,316 Mortgage (1) (2) 2 5.77% 6.50% 6/30/2023 6,000 6,000 Mortgage 46 9.55% 9.55% 3/10/2026 41,940 — Mortgage (3) 3 8.03% 6.89% 4/10/2026 4,132 — Mortgage (3) 10 7.57% 7.57% 6/10/2025 15,505 — Total 107,893 46,316 Unamortized loan origination costs 6 62 Unamortized discount (141) — Total mortgage loans receivable, net $ 107,758 $ 46,378 (1) The Company has the right, subject to certain terms and conditions, to purchase all or a portion of the underlying collateralized property. (2) The balance is expected to be settled via a like kind exchange subsequent to June 30, 2023. (3) The stated interest rate is variable up to 15.0% and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement. |
Intangible Assets and Liabili_2
Intangible Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets and Liabilities | Intangible assets and liabilities consisted of the following (in thousands): June 30, 2023 December 31, 2022 Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Assets: In-place leases $ 168,425 $ (36,499) $ 131,926 $ 154,876 $ (28,472) $ 126,404 Above-market leases 21,508 (3,601) 17,907 20,091 (2,892) 17,199 Assembled workforce 873 (873) — 873 (873) — Lease incentives 9,244 (1,010) 8,234 8,021 (618) 7,403 Total intangible assets $ 200,050 $ (41,983) $ 158,067 $ 183,861 $ (32,855) $ 151,006 Liabilities: Below-market leases $ 34,027 $ (6,593) $ 27,434 $ 35,596 $ (5,465) $ 30,131 |
Weighted Average Amortization Period for Intangible Assets and Liabilities | The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2023 and as of December 31, 2022 by category were as follows: Years Remaining June 30, 2023 December 31, 2022 In-place leases 9.2 9.4 Above-market leases 12.8 13.0 Below-market leases 11.4 11.6 Lease incentives 11.4 11.8 |
Amortization of Intangible Assets and Liabilities | The following amounts in the accompanying condensed consolidated statements of operations and comprehensive income related to the amortization of intangible assets and liabilities for all property and ground leases (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Amortization: Amortization of in-place leases $ 4,809 $ 3,734 $ 9,479 $ 7,288 Amortization of assembled workforce — 73 — 147 $ 4,809 $ 3,807 $ 9,479 $ 7,435 Net adjustment to rental revenue: Above-market lease assets (391) (333) (762) (660) Below-market lease liabilities 768 627 1,551 1,237 Lease incentives (193) (128) (392) (246) $ 184 $ 166 $ 397 $ 331 |
Projected Amortization of Intangible Assets and Liabilities | The following table provides the projected amortization of in-place lease assets to amortization expense and the net amortization of above-market, below-market, and lease incentive lease intangibles to rental revenue as of June 30, 2023, for the next five years and thereafter (in thousands): Remainder of 2023 2024 2025 2026 2027 Thereafter Total In-place leases $ 9,094 $ 18,035 $ 17,462 $ 16,233 $ 13,942 $ 57,160 $ 131,926 Above-market lease assets $ (785) $ (1,565) $ (1,564) $ (1,563) $ (1,535) $ (10,895) $ (17,907) Below-market lease liabilities 1,434 2,857 2,835 2,743 2,671 14,894 27,434 Lease incentives (396) (793) (793) (793) (743) (4,716) (8,234) Net adjustment to rental revenue $ 253 $ 499 $ 478 $ 387 $ 393 $ (717) $ 1,293 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides the projected amortization of in-place lease assets to amortization expense and the net amortization of above-market, below-market, and lease incentive lease intangibles to rental revenue as of June 30, 2023, for the next five years and thereafter (in thousands): Remainder of 2023 2024 2025 2026 2027 Thereafter Total In-place leases $ 9,094 $ 18,035 $ 17,462 $ 16,233 $ 13,942 $ 57,160 $ 131,926 Above-market lease assets $ (785) $ (1,565) $ (1,564) $ (1,563) $ (1,535) $ (10,895) $ (17,907) Below-market lease liabilities 1,434 2,857 2,835 2,743 2,671 14,894 27,434 Lease incentives (396) (793) (793) (793) (743) (4,716) (8,234) Net adjustment to rental revenue $ 253 $ 499 $ 478 $ 387 $ 393 $ (717) $ 1,293 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following (in thousands): Amounts Outstanding Contractual Fully Extended Maturity Date (5) Interest June 30, 2023 December 31, 2022 Debt: 2024 Term Loan December 23, 2024 — 1.37% $ — $ 175,000 2027 Term Loan (1) January 15, 2026 January 15, 2027 1.37% 175,000 — Revolver (2) August 11, 2026 August 11, 2027 6.15% 106,000 113,000 2028 Term Loan (3) February 11, 2028 — 3.88% 200,000 200,000 Mortgage Note November 1, 2027 — 4.53% 8,435 8,498 Total debt 489,435 496,498 Unamortized discount and debt issuance costs (2,853) (2,306) Unamortized deferred financing costs, net (4) (2,313) (2,684) Total debt, net $ 484,269 $ 491,508 (1) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.15% as of June 30, 2023. The Company has entered into four interest rate swap agreements that effectively convert the floating rate to a fixed rate. (2) The annual interest rate of the Revolver assumes daily SOFR as of June 30, 2023 of 5.05% plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.00% as of June 30, 2023. (3) Loan is a floating-rate loan which resets monthly at one-month term SOFR plus a SOFR adjustment of 0.10% plus the applicable margin which was 1.15% as of June 30, 2023. The Company has entered into three interest rate swap agreements that effectively convert the floating rate to a fixed rate. (4) The Company records deferred financing costs for the Revolver in other assets, net on its condensed consolidated balance sheets. |
Schedule of Debt Maturities | Payments on the 2027 Term Loan and the 2028 Term Loan are interest only through maturity. As of June 30, 2023, scheduled debt maturities, including balloon payments, are as follows (in thousands): Scheduled Principal Balloon Payment (1) Total Remainder of 2023 $ 92 $ — $ 92 2024 162 — 162 2025 170 — 170 2026 178 281,000 281,178 2027 170 7,663 7,833 Thereafter — 200,000 200,000 Total $ 772 $ 488,663 $ 489,435 |
Interest Income and Interest Expense Disclosure | The following table is a summary of the components of interest expense related to the Company’s borrowings (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Revolving credit facilities (1) $ 2,567 $ 818 $ 3,716 $ 1,296 Term loans (2) 2,668 593 5,168 1,184 Mortgage note payable 100 — 193 — Non-cash: Amortization of deferred financing costs 186 101 371 201 Amortization of debt discount, net 150 56 301 113 Capitalized interest (150) (46) (284) (103) Total interest expense, net $ 5,521 $ 1,522 $ 9,465 $ 2,691 (1) Includes facility fees and non-utilization fees of approximately $0.2 million and less than $0.1 million for the three months ended June 30, 2023 and 2022, respectively, and facility fees of $0.3 million and $0.1 million for the six months ended June 30, 2023 and 2022, respectively. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Number of Instruments Notional Interest Rate Derivatives June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 Interest rate swaps 10 7 $ 525,000 $ 375,000 |
Fair Value of Derivative Financial Instruments | The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands): Derivative Assets Fair Value at Derivatives Designated as Hedging Instruments: Balance Sheet Location June 30, 2023 December 31, 2022 Interest rate swaps Other assets, net $ 24,476 $ 24,067 |
Effect of Interest Rate Swaps | The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2023 and 2022 (in thousands): Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain (Loss) Reclassified from Accumulated OCI into Income Derivatives in Cash Flow Hedging Relationships 2023 2022 2023 2022 For the Three Months Ended June 30 Interest Rate Products $ 9,714 $ 1,591 Interest expense, net $ 3,326 $ 253 For the Six Months Ended June 30 Interest Rate Products $ 6,572 $ 7,779 Interest expense, net $ 6,163 $ 230 |
Schedule of Derivative Liabilities at Fair Value | The table below presents the Company’s derivative assets measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands): Fair Value Hierarchy Level Description Level 1 Level 2 Level 3 Total Fair Value June 30, 2023 Derivative assets $ — $ 24,476 $ — $ 24,476 December 31, 2022 Derivative assets $ — $ 24,067 $ — $ 24,067 |
Supplemental Detail for Certa_2
Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Other Assets, net | Other assets, net consist of the following (in thousands): June 30, 2023 December 31, 2022 Accounts receivable, net $ 9,698 $ 7,167 Deferred rent receivable 6,586 5,629 Prepaid assets 3,548 3,864 Earnest money deposits 1,251 185 Fair value of interest rate swaps 24,476 24,067 Deferred offering costs 809 796 Deferred financing costs, net 2,313 2,685 Right-of-use asset 4,052 4,235 Leasehold improvements and other corporate assets, net 1,855 1,969 Interest receivable 664 256 Other assets, net 1,256 1,204 $ 56,508 $ 52,057 |
Schedule of Accounts Payable, Accrued Expenses and Other Liabilities | Accounts payable, accrued expenses and other liabilities consists of the following (in thousands): June 30, 2023 December 31, 2022 Accrued expenses $ 8,689 $ 5,745 Accrued bonus 1,030 1,305 Prepaid rent 4,177 2,937 Operating lease liability 5,304 5,464 Accrued interest 2,667 1,782 Deferred rent 2,517 1,756 Accounts payable 2,792 1,394 Other liabilities 1,888 2,157 $ 29,064 $ 22,540 |
Shareholders_ Equity, Partner_2
Shareholders’ Equity, Partners’ Capital and Preferred Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Common Stock Dividends Declared and Paid | During the six months ended June 30, 2023, the Company declared and paid the following common stock dividends (in thousands, except per share data): Six Months Ended June 30, 2023 Declaration Date Dividend Per Share Record Date Total Amount Payment Date February 21, 2023 $ 0.20 March 15, 2023 $ 11,650 March 30, 2023 April 25, 2023 0.20 June 1, 2023 12,173 June 15, 2023 $ 0.40 $ 23,823 Six Months Ended June 30, 2022 Declaration Date Dividend Per Share Record Date Total Amount Payment Date February 22, 2022 $ 0.20 March 15, 2022 $ 8,888 March 30, 2022 April 26, 2022 0.20 June 1, 2022 9,588 June 15, 2022 $ 0.40 $ 18,476 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Restricted Stock Unit Activity | The following table summarizes performance-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 61,391 $ 19.75 Granted during the period — — Forfeited during the period — — Vested during the period — — Unvested RSU grants outstanding as of June 30, 2023 61,391 $ 19.75 The following table summarizes service-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 247,079 $ 19.86 Granted during the period 160,152 19.83 Forfeited during the period (678) 20.19 Vested during the period (84,844) 20.40 Unvested RSU grants outstanding as of June 30, 2023 321,709 $ 19.70 The following table summarizes market-based RSU activity for the period ended June 30, 2023: Shares Weighted Average Grant Date Fair Value per Share Unvested RSU grants outstanding as of December 31, 2022 177,350 $ 19.83 Granted during the period 81,751 21.57 Forfeited during the period — — Vested during the period — — Unvested RSU grants outstanding as of June 30, 2023 259,101 $ 20.38 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Attributable to Common Shares, Weighted Average Common Shares and Effect of Dilutive Securities | The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net (loss) income per common share for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, (In thousands, except share and per share data) 2023 2022 2023 2022 Numerator: Net (loss) income $ (792) $ 2,010 $ 689 $ 3,976 Net loss (income) attributable to noncontrolling interest 1 (23) (8) (47) Net (loss) income attributable to common shares, basic (791) 1,987 681 3,929 Net (loss) income attributable to noncontrolling interest (1) 23 8 47 Net (loss) income attributable to common shares, diluted $ (792) $ 2,010 $ 689 $ 3,976 Denominator: Weighted average common shares outstanding, basic 61,043,531 48,140,041 59,600,630 46,279,122 Effect of dilutive shares for diluted net income per common share: OP Units — 527,539 509,588 539,054 Unvested RSUs — 235,295 164,322 264,784 Unsettled shares under open forward equity contracts — 48,958 20,194 194,508 Weighted average common shares outstanding, diluted 61,043,531 48,951,833 60,294,734 47,277,468 Net (loss) income available to common stockholders per common share, basic $ (0.01) $ 0.04 $ 0.01 $ 0.08 Net (loss) income available to common stockholders per common share, diluted $ (0.01) $ 0.04 $ 0.01 $ 0.08 |
Organization and Description _2
Organization and Description of Business (Details) | Jun. 30, 2023 state property |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number owned or invested in properties | property | 525 |
Number of states in which entity operates | state | 45 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 USD ($) property segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) property | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
OP Unit conversion ratio per share | 1 | ||
Depreciation and amortization | $ 30,795 | $ 22,730 | |
Number of real estate properties held for sale | property | 14 | 11 | |
Restricted cash | $ 1,600 | $ 4,700 | |
Reportable segment | segment | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Provision for Impairment (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Provisions for impairment | $ | $ 2,836 | $ 1,114 | $ 2,836 | $ 1,114 |
Number of properties | ||||
Classified as held for sale | 6 | 0 | 6 | 0 |
Disposed within the period | 0 | 1 | 0 | 1 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Fair Value of Term Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Carrying Value | $ 484,269 | $ 491,508 |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying Value | 489,435 | |
Unsecured Debt | 2028 Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Carrying Value | 198,885 | 198,764 |
Estimated Fair Value | 201,466 | 201,108 |
Unsecured Debt | Prior Credit Agreement | Line of Credit | ||
Debt Instrument [Line Items] | ||
Carrying Value | 0 | 174,532 |
Estimated Fair Value | 0 | 175,382 |
Unsecured Debt | New Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Carrying Value | 173,801 | 0 |
Estimated Fair Value | $ 175,729 | $ 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Aug. 31, 2021 USD ($) renewalOption | Jun. 30, 2023 USD ($) state | Dec. 31, 2022 USD ($) | |
Lessor, Lease, Description [Line Items] | |||
Number of states in which entity operates | state | 45 | ||
Remaining term of leases | 9 years 4 months 24 days | ||
Right-of-use asset | $ 4,052 | $ 4,235 | |
Operating lease liability | $ 5,304 | $ 5,464 | |
Corporate Office Space | |||
Lessor, Lease, Description [Line Items] | |||
Lease term | 9 years 1 month 6 days | ||
Renewal options | renewalOption | 2 | ||
Lease extension term | 5 years | ||
Right-of-use asset | $ 4,500 | ||
Operating lease liability | $ 4,500 |
Leases - Disaggregation of Leas
Leases - Disaggregation of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Rental revenue | ||||
Fixed lease income | $ 26,808 | $ 19,653 | $ 51,531 | $ 37,721 |
Variable lease income | 2,715 | 2,229 | 6,252 | 4,918 |
Other rental revenue: | ||||
Above/below market lease amortization, net | 377 | 294 | 789 | 577 |
Lease incentives | (193) | (128) | (392) | (246) |
Rental revenue (including reimbursable) | $ 29,707 | $ 22,048 | $ 58,180 | $ 42,970 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Base Rental Receipts (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | |
Remainder of 2023 | $ 53,208 |
2024 | 108,320 |
2025 | 108,298 |
2026 | 105,548 |
2027 | 101,245 |
Thereafter | 557,639 |
Total Future Minimum Base Rental Receipts | $ 1,034,258 |
Leases - Lease Expense Componen
Leases - Lease Expense Components (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease cost | $ 135 | $ 135 | $ 271 | $ 270 |
Variable lease cost | $ 68 | $ 7 | $ 135 | $ 10 |
Leases - Schedule of Future M_2
Leases - Schedule of Future Minimum Base Rental Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Remainder of 2023 | $ 285 | |
2024 | 617 | |
2025 | 636 | |
2026 | 653 | |
2027 | 670 | |
Thereafter | 3,311 | |
Total lease payments | 6,172 | |
Less: amount representing interest | (868) | |
Present value of operating lease liabilities | $ 5,304 | $ 5,464 |
Lease discount rate | 3.25% |
Real Estate Investments - Narra
Real Estate Investments - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) property state | Jun. 30, 2022 USD ($) property | Jun. 30, 2023 USD ($) property state | Jun. 30, 2022 USD ($) property | Dec. 31, 2022 USD ($) property | |
Real Estate [Line Items] | |||||
Number owned or invested in properties | property | 525 | 525 | |||
Number of properties under development | property | 23 | 23 | |||
Gross real estate investment portfolio | $ 1,600,000 | $ 1,600,000 | |||
Number of states in which entity operates | state | 45 | 45 | |||
Number of properties acquired | property | 48 | 56 | |||
Payments to acquire real estate held-for-investment | $ 163,934 | $ 207,289 | |||
Acquisition fees incurred | $ 1,700 | 1,900 | |||
Property developments under construction | property | 23 | ||||
Investment in real estate development project | $ 17,700 | $ 22,200 | |||
Payments to acquire real estate | $ 11,900 | ||||
Properties developed | property | 2 | ||||
Interest expense capitalized (less than) | $ 150 | $ 46 | $ 284 | 103 | |
Payments to acquire and develop real estate | $ 19,426 | $ 8,016 | |||
Disposed within the period | property | 0 | 1 | 0 | 1 | |
Proceeds from sale of real estate | $ 19,299 | $ 12,177 | |||
Gain on sales of real estate, net | $ 615 | $ 1,858 | 296 | 2,019 | |
Mortgage loans receivables, net | $ 107,758 | 107,758 | $ 46,378 | ||
Completed development transferred | $ 14,800 | ||||
Number of real estate properties held for sale | property | 14 | 14 | 11 | ||
Provisions for impairment | $ 2,836 | $ 1,114 | $ 2,836 | $ 1,114 | |
2021 Acquisitions | |||||
Real Estate [Line Items] | |||||
Number of properties acquired | property | 28 | 22 | |||
2022 Acquisitions | |||||
Real Estate [Line Items] | |||||
Payments to acquire real estate held-for-investment | $ 96,200 | $ 117,300 | |||
Asset Acquisition, Acquisition Related Costs | $ 1,000 | $ 700 | |||
Texas | |||||
Real Estate [Line Items] | |||||
Percentage of total gross real estate investment | 8.90% | 8.90% | |||
Illinois | |||||
Real Estate [Line Items] | |||||
Percentage of total gross real estate investment | 9.50% | 9.50% | |||
Two Properties | |||||
Real Estate [Line Items] | |||||
Property developments under construction | property | 20 | ||||
Disposed within the period | property | 2 | 2 | 2 | ||
Proceeds from sale of real estate | $ 3,800 | $ 9,900 | $ 9,900 | ||
Gain on sales of real estate, net | $ 600 | 1,900 | $ 1,900 | ||
Three Properties | |||||
Real Estate [Line Items] | |||||
Payments to acquire real estate held-for-investment | $ 4,600 | ||||
Property developments under construction | property | 3 | ||||
Payments to acquire real estate | $ 9,800 | ||||
Disposed within the period | property | 10 | 3 | |||
Proceeds from sale of real estate | $ 19,300 | $ 12,200 | |||
Gain on sales of real estate, net | $ 300 | 2,000 | |||
Five Properties | |||||
Real Estate [Line Items] | |||||
Property developments under construction | property | 23 | ||||
Six Properties | |||||
Real Estate [Line Items] | |||||
Number of Real Estate Properties, Impaired | property | 6 | 6 | |||
Provisions for impairment | $ 2,836 | ||||
One Property | |||||
Real Estate [Line Items] | |||||
Payments to acquire real estate held-for-investment | $ 9,600 | ||||
Property developments under construction | property | 1 | ||||
Payments to acquire real estate | $ 1,000 | ||||
Number of Real Estate Properties, Impaired | property | 1 | 1 | |||
Provisions for impairment | $ 1,114 | ||||
Four Properties | |||||
Real Estate [Line Items] | |||||
Properties developed | property | 4 | ||||
Completed development transferred | $ 14,700 |
Real Estate Investments - Alloc
Real Estate Investments - Allocation of Purchase Price Paid for Completed Acquisitions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Real Estate [Line Items] | ||||
Asset acquisition, additions | $ 96,217 | $ 122,209 | $ 163,934 | $ 213,629 |
Liabilities assumed | ||||
Below-market lease intangible liabilities | 0 | (4,893) | 0 | (6,316) |
Accounts payable, accrued expense and other liabilities | 0 | 0 | 0 | (24) |
Purchase price (including acquisition costs) | 96,217 | 117,316 | 163,934 | 207,289 |
In-place leases | ||||
Real Estate [Line Items] | ||||
Finite-lived intangible assets acquired | 11,399 | 13,533 | 17,809 | 22,405 |
Above-market leases | ||||
Real Estate [Line Items] | ||||
Finite-lived intangible assets acquired | 1,543 | 245 | 1,543 | 353 |
Land | ||||
Real Estate [Line Items] | ||||
Property, plant and equipment, additions | 19,748 | 34,419 | 34,052 | 49,073 |
Buildings | ||||
Real Estate [Line Items] | ||||
Property, plant and equipment, additions | 56,869 | 67,682 | 100,002 | 127,770 |
Site improvements | ||||
Real Estate [Line Items] | ||||
Property, plant and equipment, additions | 5,490 | 5,314 | 8,969 | 11,852 |
Tenant improvements | ||||
Real Estate [Line Items] | ||||
Property, plant and equipment, additions | $ 1,168 | $ 1,016 | $ 1,559 | $ 2,176 |
Real Estate Investments - Sched
Real Estate Investments - Schedule of Mortgage Loans Receivable (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 USD ($) tenant | Dec. 31, 2022 USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Total | $ 107,893 | $ 46,316 |
Unamortized loan origination costs | 6 | 62 |
Unamortized discount | (141) | 0 |
Total mortgage loans receivable, net | $ 107,758 | 46,378 |
Mortgage Receivable Due July 26, 2023 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Secured Properties | tenant | 1 | |
Stated Interest Rate | 6% | |
Total | $ 40,316 | 40,316 |
Interest Rate | 5.75% | |
Mortgage Receivable Due June 30, 2023 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Secured Properties | tenant | 2 | |
Stated Interest Rate | 6.50% | |
Total | $ 6,000 | 6,000 |
Interest Rate | 5.77% | |
Mortgage Receivable Due March 10, 2026 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Secured Properties | tenant | 46 | |
Stated Interest Rate | 9.55% | |
Total | $ 41,940 | 0 |
Interest Rate | 9.55% | |
Mortgage Receivable Due April 10, 2026 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Secured Properties | tenant | 3 | |
Stated Interest Rate | 6.89% | |
Total | $ 4,132 | 0 |
Interest Rate | 8.03% | |
Mortgage Receivable Due April 10, 2026 | Maximum | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Stated Interest Rate | 15% | |
Mortgage Receivable Due June 10, 2025 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Secured Properties | tenant | 10 | |
Stated Interest Rate | 7.57% | |
Total | $ 15,505 | $ 0 |
Interest Rate | 7.57% |
Intangible Assets and Liabili_3
Intangible Assets and Liabilities - Summary of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Gross Carrying Amount | $ 200,050 | $ 183,861 |
Accumulated Amortization | (41,983) | (32,855) |
Net Carrying Amount | 158,067 | 151,006 |
Liabilities: | ||
Gross Carrying Amount | 34,027 | 35,596 |
Accumulated Amortization | (6,593) | (5,465) |
Net Carrying Amount | 27,434 | 30,131 |
In-place leases | ||
Assets: | ||
Gross Carrying Amount | 168,425 | 154,876 |
Accumulated Amortization | (36,499) | (28,472) |
Net Carrying Amount | 131,926 | 126,404 |
Above-market leases | ||
Assets: | ||
Gross Carrying Amount | 21,508 | 20,091 |
Accumulated Amortization | (3,601) | (2,892) |
Net Carrying Amount | 17,907 | 17,199 |
Assembled workforce | ||
Assets: | ||
Gross Carrying Amount | 873 | 873 |
Accumulated Amortization | (873) | (873) |
Net Carrying Amount | 0 | 0 |
Lease incentives | ||
Assets: | ||
Gross Carrying Amount | 9,244 | 8,021 |
Accumulated Amortization | (1,010) | (618) |
Net Carrying Amount | $ 8,234 | $ 7,403 |
Intangible Assets and Liabili_4
Intangible Assets and Liabilities - Weighted Average Amortization Period for Intangible Assets and Liabilities (Details) - Weighted Average | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period, below-market leases | 11 years 4 months 24 days | 11 years 7 months 6 days |
In-place leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period, intangible assets | 9 years 2 months 12 days | 9 years 4 months 24 days |
Above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period, intangible assets | 12 years 9 months 18 days | 13 years |
Lease incentives | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period, intangible assets | 11 years 4 months 24 days | 11 years 9 months 18 days |
Intangible Assets and Liabili_5
Intangible Assets and Liabilities - Amortization of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization: | $ 4,809 | $ 3,807 | $ 9,479 | $ 7,435 |
Net adjustment to rental revenue: | ||||
Below-market lease liabilities | 768 | 627 | 1,551 | 1,237 |
Net adjustment to rental revenue | 184 | 166 | 397 | 331 |
In-place leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization: | 4,809 | 3,734 | 9,479 | 7,288 |
Assembled workforce | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization: | 0 | 73 | 0 | 147 |
Above-market leases | ||||
Net adjustment to rental revenue: | ||||
Above-market lease assets | (391) | (333) | (762) | (660) |
Lease incentives | ||||
Net adjustment to rental revenue: | ||||
Above-market lease assets | $ (193) | $ (128) | $ (392) | $ (246) |
Intangible Assets and Liabili_6
Intangible Assets and Liabilities - Projected Amortization of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Below-market lease liabilities | ||
Remainder of 2023 | $ 1,434 | |
2024 | 2,857 | |
2025 | 2,835 | |
2026 | 2,743 | |
2027 | 2,671 | |
Thereafter | 14,894 | |
Net Carrying Amount | 27,434 | $ 30,131 |
Net adjustment to rental revenue | ||
Remainder of 2023 | 253 | |
2024 | 499 | |
2025 | 478 | |
2026 | 387 | |
2027 | 393 | |
Thereafter | (717) | |
Total | 1,293 | |
In-place leases | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2023 | 9,094 | |
2024 | 18,035 | |
2025 | 17,462 | |
2026 | 16,233 | |
2027 | 13,942 | |
Thereafter | 57,160 | |
Total | 131,926 | |
Above-market leases | ||
Above-market lease assets | ||
Remainder of 2023 | (785) | |
2024 | (1,565) | |
2025 | (1,564) | |
2026 | (1,563) | |
2027 | (1,535) | |
Thereafter | (10,895) | |
Total | (17,907) | |
Lease incentives | ||
Above-market lease assets | ||
Remainder of 2023 | (396) | |
2024 | (793) | |
2025 | (793) | |
2026 | (793) | |
2027 | (743) | |
Thereafter | (4,716) | |
Total | $ (8,234) |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) $ in Thousands | 6 Months Ended | ||||
Jun. 15, 2023 | Sep. 01, 2022 | Aug. 11, 2022 USD ($) | Jun. 30, 2023 USD ($) derivative | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||
Total debt | $ 489,435 | $ 496,498 | |||
Unamortized discount and debt issuance costs | (2,853) | (2,306) | |||
Unamortized deferred financing costs, net | (2,313) | (2,684) | |||
Long-term debt | 484,269 | 491,508 | |||
Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 489,435 | ||||
Prior Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Unamortized deferred financing costs, net | $ (500) | ||||
Prior Credit Agreement | Line of Credit | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 1.37% | ||||
Total debt | $ 175,000 | $ 0 | 175,000 | ||
Long-term debt | $ 0 | 174,532 | |||
Prior Credit Agreement | Line of Credit | Unsecured Debt | Interest rate swaps | |||||
Debt Instrument [Line Items] | |||||
Interest rate swap agreements | derivative | 4 | ||||
Prior Credit Agreement | Line of Credit | SOFR adjustment rate | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 0.10% | ||||
Prior Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) Adjustment Margin | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 1.15% | ||||
New Credit Facility | Line of Credit | Revolver | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 6.15% | ||||
Total debt | $ 106,000 | 113,000 | |||
Debt instrument, extension term | 1 year | ||||
New Credit Facility | Line of Credit | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 3.88% | ||||
Total debt | $ 200,000 | 200,000 | |||
Long-term debt | $ 173,801 | 0 | |||
One-month LIBOR | 5.05% | ||||
Debt instrument, extension term | 1 year | ||||
New Credit Facility | Line of Credit | Unsecured Debt | Interest rate swaps | |||||
Debt Instrument [Line Items] | |||||
Interest rate swap agreements | derivative | 3 | ||||
New Credit Facility | Line of Credit | SOFR adjustment rate | Revolver | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 0.10% | ||||
New Credit Facility | Line of Credit | SOFR adjustment rate | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 0.10% | 0.10% | |||
New Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR) Adjustment Margin | Revolver | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 1% | ||||
New Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR) Adjustment Margin | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 1.15% | ||||
New Credit Facility | Line of Credit | Daily Secured Overnight Financing Rate (SOFR) | Revolver | |||||
Debt Instrument [Line Items] | |||||
One-month LIBOR | 5.05% | ||||
Mortgage Note Payable | Mortgages | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 4.53% | ||||
Total debt | $ 8,435 | 8,498 | |||
2026 Term Loan | Line of Credit | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 1.37% | ||||
Total debt | $ 175,000 | $ 0 | |||
Debt instrument, extension term | 1 year |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 15, 2023 | Aug. 11, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||||||||
Amortization of deferred financing costs | $ 186,000 | $ 101,000 | $ 371,000 | $ 201,000 | ||||
Interest expense | 5,521,000 | 1,522,000 | 9,465,000 | 2,691,000 | ||||
Revolving credit facility | 106,000,000 | 106,000,000 | $ 113,000,000 | |||||
Interest expense capitalized (less than) | 150,000 | $ 46,000 | 284,000 | $ 103,000 | ||||
Total debt | 489,435,000 | 489,435,000 | 496,498,000 | |||||
Debt Issuance Costs, Net | $ 2,313,000 | $ 2,313,000 | 2,684,000 | |||||
Credit Facility | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted average effective interest rate (as a percent) | 6.41% | 1.94% | 6.09% | 1.63% | ||||
Credit Facility | Revolver | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted average effective interest rate (as a percent) | 5.94% | 2.08% | 5.92% | 1.78% | ||||
New Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Deferred financing costs, gross (less than) | $ 3,800,000 | |||||||
New Credit Facility | Revolver | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 400,000,000 | |||||||
Debt instrument, extension term | 1 year | |||||||
Increase in borrowing capacity | $ 800,000,000 | |||||||
Total debt | $ 106,000,000 | $ 106,000,000 | 113,000,000 | |||||
Line of Credit Facility, Sustainability-linked Pricing, Rate Reduction Percentage | 0.025% | |||||||
Interest Rate | 6.15% | 6.15% | ||||||
Deferred financing costs, gross (less than) | $ 2,400,000 | |||||||
Line of Credit Facility, Accordion Feature, Increase Limit | $ 400,000,000 | |||||||
New Credit Facility | Revolver | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Adjustment Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Revolver | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Adjustment Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Revolver | Minimum | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolver facility fee (as a percent) | 0.15% | |||||||
New Credit Facility | Revolver | Minimum | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolver facility fee (as a percent) | 0.125% | |||||||
New Credit Facility | Revolver | Minimum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0% | |||||||
New Credit Facility | Revolver | Minimum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0% | |||||||
New Credit Facility | Revolver | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1% | |||||||
New Credit Facility | Revolver | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.725% | |||||||
New Credit Facility | Revolver | Maximum | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolver facility fee (as a percent) | 0.30% | |||||||
New Credit Facility | Revolver | Maximum | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolver facility fee (as a percent) | 0.30% | |||||||
New Credit Facility | Revolver | Maximum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.45% | |||||||
New Credit Facility | Revolver | Maximum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.40% | |||||||
New Credit Facility | Revolver | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.45% | |||||||
New Credit Facility | Revolver | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.40% | |||||||
New Credit Facility | Unsecured Debt | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 200,000,000 | |||||||
Variable rate | 5.05% | |||||||
Debt instrument, extension term | 1 year | |||||||
Total debt | $ 200,000,000 | $ 200,000,000 | 200,000,000 | |||||
Interest Rate | 3.88% | 3.88% | ||||||
Deferred financing costs, gross (less than) | $ 1,300,000 | |||||||
New Credit Facility | Unsecured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Adjustment Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Unsecured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Adjustment Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Unsecured Debt | Minimum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.15% | |||||||
New Credit Facility | Unsecured Debt | Minimum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0% | |||||||
New Credit Facility | Unsecured Debt | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.15% | |||||||
New Credit Facility | Unsecured Debt | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.80% | |||||||
New Credit Facility | Unsecured Debt | Maximum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.60% | |||||||
New Credit Facility | Unsecured Debt | Maximum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.60% | |||||||
New Credit Facility | Unsecured Debt | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.60% | |||||||
New Credit Facility | Unsecured Debt | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.60% | |||||||
Prior Credit Agreement | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Issuance Costs, Net | $ 500,000 | |||||||
Prior Credit Agreement | Unsecured Debt | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 175,000,000 | |||||||
Total debt | $ 175,000,000 | $ 0 | $ 0 | 175,000,000 | ||||
Interest Rate | 1.37% | 1.37% | ||||||
2026 Term Loan | Unsecured Debt | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 175,000,000 | |||||||
Debt instrument, extension term | 1 year | |||||||
Total debt | $ 175,000,000 | $ 175,000,000 | 0 | |||||
Interest Rate | 1.37% | 1.37% | ||||||
2026 Term Loan | Unsecured Debt | Minimum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.15% | |||||||
2026 Term Loan | Unsecured Debt | Minimum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0% | |||||||
2026 Term Loan | Unsecured Debt | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.15% | |||||||
2026 Term Loan | Unsecured Debt | Minimum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.80% | |||||||
2026 Term Loan | Unsecured Debt | Maximum | Base Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.60% | |||||||
2026 Term Loan | Unsecured Debt | Maximum | Base Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 0.60% | |||||||
2026 Term Loan | Unsecured Debt | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | Prior To Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.60% | |||||||
2026 Term Loan | Unsecured Debt | Maximum | Secured Overnight Financing Rate (SOFR) Interest Rate | Line of Credit | After Investment Grade | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate | 1.60% | |||||||
Mortgage Note Payable | Mortgages | ||||||||
Debt Instrument [Line Items] | ||||||||
Total debt | $ 8,435,000 | $ 8,435,000 | $ 8,498,000 | |||||
Interest Rate | 4.53% | 4.53% | ||||||
Deferred financing costs, gross (less than) | $ 100,000 | $ 100,000 | ||||||
Mortgages Outstanding | 8,400,000 | 8,400,000 | ||||||
Debt Instrument, Collateral Amount | 12,900,000 | 12,900,000 | ||||||
Debt Instrument, Unamortized Discount | $ 600,000 | $ 600,000 |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 484,269 | $ 491,508 |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Remainder of 2023 | 92 | |
2024 | 162 | |
2025 | 170 | |
2026 | 281,178 | |
2027 | 7,833 | |
Thereafter | 200,000 | |
Long-term debt | 489,435 | |
Unsecured Debt | Scheduled Principal | ||
Debt Instrument [Line Items] | ||
Remainder of 2023 | 92 | |
2024 | 162 | |
2025 | 170 | |
2026 | 178 | |
2027 | 170 | |
Thereafter | 0 | |
Long-term debt | 772 | |
Unsecured Debt | Balloon Payment | ||
Debt Instrument [Line Items] | ||
Remainder of 2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 281,000 | |
2027 | 7,663 | |
Thereafter | 200,000 | |
Long-term debt | $ 488,663 |
Debt - Components of Interest E
Debt - Components of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs | $ 186 | $ 101 | $ 371 | $ 201 |
Amortization of debt discount, net | 150 | 56 | 301 | 113 |
Capitalized interest | (150) | (46) | (284) | (103) |
Total interest expense, net | 5,521 | 1,522 | 9,465 | 2,691 |
Mortgages | ||||
Debt Instrument [Line Items] | ||||
Interest expense | 100 | 0 | 193 | 0 |
Revolver | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Interest expense | 2,567 | 818 | 3,716 | 1,296 |
Facility fees | 200 | 100 | 300 | 100 |
Unsecured Debt | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Interest expense | $ 2,668 | $ 593 | $ 5,168 | $ 1,184 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | 13 Months Ended | 25 Months Ended | |||||
Sep. 01, 2022 | Jun. 30, 2023 | Dec. 23, 2024 | Jan. 31, 2027 | Dec. 24, 2024 | Nov. 28, 2023 | Dec. 31, 2022 | Aug. 11, 2022 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Total debt | $ 489,435 | $ 496,498 | ||||||
Credit Facility | Term Loan | SOFR margin rate | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 1.15% | |||||||
Credit Facility | Term Loan | SOFR margin rate | Forecast | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 1.15% | 1.15% | ||||||
Prior Credit Agreement | Line of Credit | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Fixed rate SOFR swap | 0.12% | |||||||
Total debt | $ 0 | 175,000 | $ 175,000 | |||||
Prior Credit Agreement | Line of Credit | Unsecured Debt | Forecast | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Fixed rate SOFR swap | 2.40% | 1.87% | ||||||
Prior Credit Agreement | Line of Credit | SOFR adjustment rate | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Line of Credit | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 5.05% | |||||||
Fixed rate SOFR swap | 2.63% | |||||||
Total debt | $ 200,000 | 200,000 | ||||||
New Credit Facility | Line of Credit | Revolver | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Total debt | $ 106,000 | 113,000 | ||||||
New Credit Facility | Line of Credit | SOFR | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 5.16% | |||||||
New Credit Facility | Line of Credit | SOFR adjustment rate | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 0.10% | 0.10% | ||||||
New Credit Facility | Line of Credit | SOFR adjustment rate | Revolver | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 0.10% | |||||||
New Credit Facility | Line of Credit | SOFR adjustment rate | Revolver | Forecast | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 0.10% | 0.10% | ||||||
New Credit Facility | Line of Credit | SOFR margin rate | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Variable rate | 1.15% | |||||||
Interest rate swaps | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Notional | $ 525,000 | $ 375,000 | ||||||
Interest rate swaps | Prior Credit Agreement | Line of Credit | Unsecured Debt | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Notional | 150,000 | |||||||
Interest rate swaps | Interest Expense | ||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||||
Amount estimated to be reclassified as increase to interest expense | $ 18,400 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Interest Rate Derivatives (Details) - Interest rate swaps $ in Thousands | Jun. 30, 2023 USD ($) instrument | Dec. 31, 2022 USD ($) instrument |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Number of Instruments | instrument | 10 | 7 |
Notional | $ | $ 525,000 | $ 375,000 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 24,476 | $ 24,067 |
Interest rate swaps | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 24,476 | $ 24,067 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Effect of Interest Rate Swaps (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | $ 9,714 | $ 1,591 | $ 6,572 | $ 7,779 |
Interest Expense | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 3,326 | $ 253 | $ 6,163 | $ 230 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Schedule of Derivative Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Fair value of interest rate swaps | $ 24,476 | $ 24,067 |
Recurring | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Fair value of interest rate swaps | 24,476 | 24,067 |
Recurring | Level 1 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Fair value of interest rate swaps | 0 | 0 |
Recurring | Level 2 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Fair value of interest rate swaps | 24,476 | 24,067 |
Recurring | Level 3 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Fair value of interest rate swaps | $ 0 | $ 0 |
Supplemental Detail for Certa_3
Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets - Schedule of Other Assets, net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets, net | Other assets, net |
Accounts receivable, net | $ 9,698 | $ 7,167 |
Deferred rent receivable | 6,586 | 5,629 |
Prepaid assets | 3,548 | 3,864 |
Earnest money deposits | 1,251 | 185 |
Fair value of interest rate swaps | 24,476 | 24,067 |
Deferred offering costs | 809 | 796 |
Deferred financing costs, net | 2,313 | 2,685 |
Right-of-use asset | 4,052 | 4,235 |
Leasehold improvements and other corporate assets, net | 1,855 | 1,969 |
Interest receivable | 664 | 256 |
Other assets, net | 1,256 | 1,204 |
Other assets, net | $ 56,508 | $ 52,057 |
Supplemental Detail for Certa_4
Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets - Schedule of Accounts Payable, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accounts payable, accrued expenses and other liabilities | Accounts payable, accrued expenses and other liabilities |
Accrued expenses | $ 8,689 | $ 5,745 |
Accrued bonus | 1,030 | 1,305 |
Prepaid rent | 4,177 | 2,937 |
Operating lease liability | 5,304 | 5,464 |
Accrued interest | 2,667 | 1,782 |
Deferred rent | 2,517 | 1,756 |
Accounts payable | 2,792 | 1,394 |
Other liabilities | 1,888 | 2,157 |
Accounts payable, accrued expenses and other liabilities | $ 29,064 | $ 22,540 |
Shareholders_ Equity, Partner_3
Shareholders’ Equity, Partners’ Capital and Preferred Equity - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||
Jun. 28, 2023 | Mar. 30, 2023 | Aug. 10, 2022 | Aug. 08, 2022 | Jun. 23, 2022 | Mar. 30, 2022 | Jan. 13, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 23, 2023 | Dec. 31, 2022 | Sep. 01, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Issuance of common stock in public offerings, net | $ 167,439,000 | $ 125,497,000 | |||||||||||||||||
Payments of offering costs | 185,000 | 694,000 | |||||||||||||||||
Payment of OP unit distributions | $ 203,000 | $ 213,000 | |||||||||||||||||
OP Unit conversion ratio per share | 1 | 1 | 1 | ||||||||||||||||
Restricted Stock Units (RSUs) | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Forfeited during period (in shares) | 18,000 | 17,000 | |||||||||||||||||
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation, Value | $ 400,000 | $ 400,000 | |||||||||||||||||
Netstreit, L.P. (The Operating Partnership) | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Non-controlling interest holders ownership | 0.80% | 0.80% | 0.80% | 0.90% | |||||||||||||||
Public Offering | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Number of shares sold (in shares) | 10,350,000 | ||||||||||||||||||
Shares sold (in dollars per share) | $ 22.25 | $ 22.25 | $ 22.25 | ||||||||||||||||
IPO - Shares From Existing Shareholders | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Units converted (in shares) | 5,694 | 47,894 | |||||||||||||||||
IPO - Shares From Existing Shareholders | Common stock | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Units converted (in shares) | 0 | 5,694 | 22,265 | 25,629 | |||||||||||||||
August 2022 Follow-On Offering | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Number of shares sold (in shares) | 10,350,000 | 9,000,000 | |||||||||||||||||
Shares sold (in dollars per share) | $ 20.20 | $ 20.20 | $ 20.20 | ||||||||||||||||
Over-Allotment Option | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Number of shares sold (in shares) | 1,350,000 | ||||||||||||||||||
Common stock | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Number of shares sold (in shares) | 2,397,035 | 3,440,962 | |||||||||||||||||
Issuance of common stock in public offerings, net | $ 50,000,000 | $ 72,000,000 | |||||||||||||||||
Payments of offering costs | $ 3,300,000 | $ 4,600,000 | |||||||||||||||||
Common stock | ATM Program | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
At-the-market sale of equity program | $ 127,300,000 | $ 127,300,000 | $ 127,300,000 | $ 250,000,000 | |||||||||||||||
Number of shares sold (in shares) | 1,364,815 | 146,745 | 163,774 | ||||||||||||||||
Shares sold (in dollars per share) | $ 17.53 | $ 20.22 | $ 22.08 | $ 17.53 | $ 20.22 | $ 22.08 | $ 17.53 | ||||||||||||
Issuance of common stock in public offerings, net | $ 23,400,000 | $ 2,900,000 | $ 3,500,000 | ||||||||||||||||
Payments of offering costs | $ 300,000 | $ 100,000 | $ 100,000 | ||||||||||||||||
Common stock | August 2022 Follow-On Offering | |||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||
Number of shares sold (in shares) | 4,763,320 | 2,612,736 | |||||||||||||||||
Issuance of common stock in public offerings, net | $ 91,100,000 | $ 50,000,000 | |||||||||||||||||
Payments of offering costs | $ 5,100,000 | $ 2,800,000 |
Stockholders_ Equity, Partners_
Stockholders’ Equity, Partners’ Capital and Preferred Equity - Common Stock Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |||||||||
Jun. 15, 2023 | Apr. 25, 2023 | Mar. 30, 2023 | Feb. 21, 2023 | Jun. 15, 2022 | Apr. 26, 2022 | Mar. 30, 2022 | Feb. 22, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Equity [Abstract] | ||||||||||
Cash dividend paid (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.40 | ||||
Cash dividend declared (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.40 | |||||
Dividends, common stock, cash | $ 12,173 | $ 11,650 | $ 9,588 | $ 8,888 | $ 23,823 | $ 18,476 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2021 | Aug. 31, 2020 | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares reserved for issuance | 2,094,976 | 2,094,976 | ||||
Stock-based compensation expense | $ 1,300 | $ 2,300 | ||||
Catch-up adjustment | $ 1,400 | |||||
Stock-based compensation expense | 2,279 | $ 2,344 | ||||
Restricted Stock Units (RSUs) | The Program | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | 100 | 100 | ||||
Award vesting period | 4 years | |||||
Total unrecognized compensation cost | 400 | $ 400 | ||||
Restricted Stock Units (RSUs) | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 1 year | |||||
Restricted Stock Units (RSUs) | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Performance-Based RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | 100 | |||||
Total unrecognized compensation cost | 300 | $ 300 | $ 400 | |||
Weighted average remaining contractual term | 1 year 2 months 12 days | |||||
Granted during the period (in dollars per share) | $ 0 | |||||
Performance-Based RSUs | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 2 years | |||||
Service-Based RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | 700 | $ 1,300 | ||||
Total unrecognized compensation cost | 4,800 | $ 4,800 | 3,000 | |||
Weighted average remaining contractual term | 2 years 1 month 6 days | |||||
Granted during the period (in dollars per share) | $ 19.83 | |||||
Service-Based RSUs | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 1 year | |||||
Service-Based RSUs | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Market-Based Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | 400 | $ 800 | ||||
Award vesting period | 3 years | |||||
Total unrecognized compensation cost | $ 2,900 | $ 2,900 | $ 2,000 | |||
Weighted average remaining contractual term | 2 years 1 month 6 days | |||||
Expected volatility (as a percent) | 29% | |||||
Minimum expected volatility (as a percent) | 32.20% | |||||
Maximum expected volatility (as a percent) | 102.80% | |||||
Weighted average expected volatility (as a percent) | 46.70% | |||||
Risk free interest rate (as a percent) | 4.46% | |||||
Targeted TSR (in dollars per share) | $ 24.13 | |||||
Absolute TSR (in dollars per share) | 20.15 | |||||
Granted during the period (in dollars per share) | $ 21.57 | |||||
Market-Based Awards | 40% vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 3 years | |||||
Award vesting rights (as a percent) | 40% | |||||
Market-Based Awards | 60% vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting rights (as a percent) | 60% |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Restricted Stock Unit Activity (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Performance-Based RSUs | |
Unvested Restricted Stock Grants Outstanding | |
Beginning balance (in shares) | shares | 61,391 |
Forfeited during the period (in shares) | shares | 0 |
Vesting during the period (in shares) | shares | 0 |
Granted during the period (in shares) | shares | 0 |
Ending balance (in shares) | shares | 61,391 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 19.75 |
Forfeited during the period (in dollars per share) | $ / shares | 0 |
Vesting during the period (in dollars per share) | $ / shares | 0 |
Granted during the period (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 19.75 |
Service-Based RSUs | |
Unvested Restricted Stock Grants Outstanding | |
Beginning balance (in shares) | shares | 247,079 |
Forfeited during the period (in shares) | shares | (678) |
Vesting during the period (in shares) | shares | (84,844) |
Granted during the period (in shares) | shares | 160,152 |
Ending balance (in shares) | shares | 321,709 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 19.86 |
Forfeited during the period (in dollars per share) | $ / shares | 20.19 |
Vesting during the period (in dollars per share) | $ / shares | 20.40 |
Granted during the period (in dollars per share) | $ / shares | 19.83 |
Ending balance (in dollars per share) | $ / shares | $ 19.70 |
Market-Based Awards | |
Unvested Restricted Stock Grants Outstanding | |
Beginning balance (in shares) | shares | 177,350 |
Forfeited during the period (in shares) | shares | 0 |
Vesting during the period (in shares) | shares | 0 |
Granted during the period (in shares) | shares | 81,751 |
Ending balance (in shares) | shares | 259,101 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 19.83 |
Forfeited during the period (in dollars per share) | $ / shares | 0 |
Vesting during the period (in dollars per share) | $ / shares | 0 |
Granted during the period (in dollars per share) | $ / shares | 21.57 |
Ending balance (in dollars per share) | $ / shares | $ 20.38 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 shares | Jun. 30, 2023 shares | Dec. 31, 2022 shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
OP Unit conversion ratio per share | 1 | 1 | |
Antidilutive securities excluded from computation of loss per share (in shares) | 507,773 | 152,785 | |
OP Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Units outstanding (in shares) | 507,773 | 507,773 | 513,467 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Net Income Attributable to Common Shares, Weighted Average Common Shares and Effect of Dilutive Securities (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||||
Net (loss) income | $ (792) | $ 1,481 | $ 2,010 | $ 1,966 | $ 689 | $ 3,976 |
Net loss (income) attributable to noncontrolling interest | (1) | 23 | 8 | 47 | ||
Net (loss) income attributable to common shares, basic | (791) | 1,987 | 681 | 3,929 | ||
Net (loss) income attributable to noncontrolling interests | 1 | (23) | (8) | (47) | ||
Net (loss) income attributable to common shares, diluted | $ (792) | $ 2,010 | $ 689 | $ 3,976 | ||
Denominator: | ||||||
Weighted average common shares outstanding, basic (in shares) | 61,043,531 | 48,140,041 | 59,600,630 | 46,279,122 | ||
OP Units (in shares) | 0 | 527,539 | 509,588 | 539,054 | ||
Unvested RSUs (in shares) | 0 | 235,295 | 164,322 | 264,784 | ||
Unsettled shares under open forward equity contracts (in shares) | 0 | 48,958 | 20,194 | 194,508 | ||
Weighted average common shares outstanding - diluted (in shares) | 61,043,531 | 48,951,833 | 60,294,734 | 47,277,468 | ||
Net loss available to common stockholders per common share, basic (in dollars per share) | $ (0.01) | $ 0.04 | $ 0.01 | $ 0.08 | ||
Net loss available to common stockholders per common share, diluted (in dollars per share) | $ (0.01) | $ 0.04 | $ 0.01 | $ 0.08 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 1 Months Ended | 6 Months Ended |
Aug. 31, 2021 USD ($) renewalOption | Jun. 30, 2023 USD ($) property | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected investment in real estate assets | $ 27.9 | |
Remaining funding period of real estate assets | 12 months | |
Tenant Improvement Allowance Commitment | $ 4.1 | |
Tenant Improvement Allowance Commitment Period | 2 years | |
Property developments under construction | property | 23 | |
Corporate Office Space | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Lease term | 9 years 1 month 6 days | |
Renewal options | renewalOption | 2 | |
Lease extension term | 5 years | |
Annual rent expense | $ 0.5 | |
Five Properties | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Property developments under construction | property | 23 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |||||||
Jul. 26, 2023 | Jul. 03, 2023 | Apr. 25, 2023 | Feb. 21, 2023 | Apr. 26, 2022 | Feb. 22, 2022 | Jul. 26, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Subsequent Event [Line Items] | |||||||||
Cash dividend declared (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.40 | ||||
Repayments under revolving credit facilities | $ 228,000,000 | $ 72,000,000 | |||||||
Amount drawn | $ 221,000,000 | $ 245,000,000 | |||||||
Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Cash dividend declared (in dollars per share) | $ 0.205 | ||||||||
Subsequent Event | Credit Facility | Line of Credit | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayments under revolving credit facilities | $ 106,000,000 | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | |||||||||
Subsequent Event [Line Items] | |||||||||
Maximum borrowing capacity | $ 250,000,000 | ||||||||
Increase in borrowing capacity | 400,000,000 | ||||||||
Amount drawn | $ 150,000,000 | ||||||||
Delayed draw period | 12 months | ||||||||
All-in fixed interest rate | 4.99% | ||||||||
Fixed rate SOFR swap | 3.74% | ||||||||
Credit spread adjustment | 0.10% | ||||||||
Borrowing spread | 1.15% | ||||||||
Interest rate reduction (up to) | 0.025% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR | Minimum | Prior To Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 1.15% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR | Minimum | After Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 0.80% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR | Maximum | Prior To Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 1.60% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR | Maximum | After Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 1.60% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR margin rate | Minimum | Prior To Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 0.15% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | SOFR margin rate | Maximum | Prior To Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 0.60% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) Base Rate | Minimum | After Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 0% | ||||||||
Subsequent Event | 2029 Term Loan Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) Base Rate | Maximum | After Investment Grade | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate | 0.60% |